Benefits ConnectionTrending News in Employee Benefits

Paid Family Leave Updates: New Jersey and Washington

"Cross-Plan Offsetting" Decision Warrants New Questions of TPAs

Reference-Based Pricing Concerns

Podcast: Single Payer Developments and State Law Individual Mandates

Getting Wellness Right: Three Steps to Building an Effective Employee Wellness Program

March 2019

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1. Identify Generational Needs

Employers can get a good idea of the health care needs of their workforce by stratifying them generationally. For example, providing education and focusing on chronic condition management can help Boomers navigate their new medical concerns. Conversely, Millennials, who are generally healthy and highly active, tend to be attracted to fitness and other healthy living programs. For Gen Xers, a wellness program that motivates self-care and incorporates stress reduction and holistic health can go a long way. (Email me if you’d like more info on this topic. I’ll send you our 12-page brochure, Optimizing Benefits for a Multi-Generational Workforce.)

2. Gauge Interest

Before you plunge into implementation, you’ll probably want to gauge the temperature of your workforce. Consider investing in a survey or providing a suggestion box.

This is an opportunity to reinforce that you care about your employees. So don’t let your employees send good ideas to die; be ready to respond. Be transparent and let them know why you are gauging feedback and that difficult decisions will be made as to how resources will be invested. Your employees will appreciate their input is truly valued—and their engagement is the start of a successful program.

Getting Wellness RightThree Steps to Building an Effective Employee Wellness Program

3. Collect Data

A data collection program is an objective and detailed approach to identifying the wellness needs of your employees. It consists of obtaining biometric data, ideally from a physician using an affidavit-style program. Once data is collected and stratified, the biometric results can help employers to identify areas where they should focus their wellness program. Your employee benefits consultant may conduct this process as a core service. Additionally, your advisor should be able to analyze your claims activity and utilization trends (if you are a large enough employer) to identify cost drivers and recommend corrective action to help your reduce costs.

by Andrew Savarese

What does wellness look like at your organization? Without a structured wellness program in place, chances are you really don’t know. And, if you’ve implemented a program but it’s inefficient or can’t be measured, you won’t have a clear picture. There are a myriad of options for building an employee wellness program, but it’s my experience that core to a successful one, are these three strategic steps.

1 Assess the Workforce in Three Ways

2 Get Buy In

The sobering fact is, for all your team’s hard-earned sweat and dedication, without buy in from your C-suite, any wellness program your organization implements is destined to fail. To achieve an effective wellness program, your organization’s leadership will want to embrace wellness as the ultimate goal. A happier, healthier workplace means more effective, engaged employees, less absenteeism and ultimately, higher productivity and workforce retention.

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Additionally, a well-built wellness program can help to attract the most highly talented candidates. Increasingly, an organization’s corporate social responsibility is a key factor in how people choose their employer, especially among younger generations. With unemployment at its lowest in almost twenty years, people can afford to be choosy, and take into consideration not only wages and health benefits, but also corporate culture and identity.

3 Select the Type of Program

Based on your analysis and budget considerations, you can determine if your wellness program is one grounded on education, awareness, lifestyle management (focusing on high risk reduction, like smoking and obesity) or disease management. According to RAND, employers generally see higher engagement with lifestyle management programs. Additionally, because lifestyle management programs decrease risk, their value is experienced over a longer period of time, whereas disease management programs immediately impact health and provide better cost containment outcomes.

Once you select from these four general types of programs, you can customize its features so that it reflects and responds to your organization’s unique needs.

Making Wellness a Reality

Various studies place the number of employers with wellness programs at fifty to over sixty percent (e.g., RAND, IPMA-HR), yet many programs aren’t optimally designed and they miss the mark on achieving organizational goals. Once you assess and analyze your wellness needs with this guideline, you’ll be well on your way to creating a solution that’s unique to your employee health needs, organizational culture and vision of your future.

Andrew Savarese is First Vice President/Unit Manager for Alliant Employee Benefits. Under his leadership, a team of consultants support client employee benefits programs by providing strategic advice, plan implementation, financial and benefit plan

performance reviews and ongoing plan administration.

Contact Andrew at 212.504.1856 or andrew.savarese@alliant.com

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Paid Family Leave—Revised Reporting Timeline for 2019On March 13, 2019, the Washington Employment Security Department (ESD) announced a change to the first quarterly reporting timeline for the Paid Family and Medical Leave (PFML) program which was due by April 30, 2019. The new deadline is July 31, 2019.

Beginning July 1, 2019, employers will be able to start submitting both first quarter and second quarter reports and premium payments through ESD’s online customer management system. Importantly, this change is for 2019 only. Premium withholding began on January 1, 2019 and time off and wage replacement benefits will become available beginning January 1, 2020.

State Considerations

NEW JERSEY

WASHINGTONPaid Family Leave—ExpandedRecently New Jersey significantly expanded its Family Leave Act to provide greater benefits for employees. Some of the highlights include:

• Effective June 30, 2019, a covered employer includes

those with 30 or more employees, no longer 50+

employees, for each working day of 20 or more

calendar workweeks in the current or preceding

calendar year.

• The definition of “parent,” “family leave,” and “family

member” have been expanded.

o “Parent" now includes foster parents and those who are parents through a gestational carrier.

o “Family leave” expands to care for children born via a gestational carrier and for foster children.

o “Family member” includes siblings, grandparents, parents-in-law, domestic partners, grandchildren, any individuals related to the employee by blood, and any other individual that the employee shows to have a “close association with the employee which is the equivalent of a family relationship.”

• Under the New Jersey Security and Financial

Empowerment Act (“NJ SAFE Act”) employees can

take leave to care for any family member in the event

of domestic violence or a sexually violent incident.

• Employees can now use intermittent leave upon birth,

adoption or foster care placement of a child without

the employer’s approval.

• Employees will be entitled to more time off and a large

portion of wages covered starting July 2020:

o Employees can now have a reduced leave schedule for up to 12 consecutive months for any one period of leave, up from 24 consecutive weeks.

o Employees can receive up to 12 weeks of benefits for family temporary disability leave, or 56 days of intermittent leave, for any one period of family temporary disability leave during any 12-month period. (up from 6 weeks of benefits, or 42 days of intermittent leave)

o Employees will be entitled to 85% of their average weekly wage, up to a maximum of 70% of the statewide average weekly wage, for up to 12 weeks of consecutive leave or 56 days of intermittent leave.

Employers should review their current policies and practices to capture the latest developments.

New PodcastSingle Payer Developments and State Law Individual MandatesThe Tax Cuts and Jobs Act effectively eliminated the ACA’s Individual Mandate tax penalty beginning in 2019. This legislative act spurred renewed litigation challenging the constitutionality of the ACA. A Texas District Court Judge ruled that without the individual mandate the entire ACA was unconstitutional.

Although that litigation is far from final, certain states have been acting to stabilize their individual markets and exchanges by implementing their own individual mandates. There is also movement towards a single payer system at the federal level. Although there is virtually no chance of single payer passing within the next two years, several bills attempt to move incrementally towards single payer. These bills include a Medicare-X program for states with uncompetitive exchanges and a Medicare Fallback bill that would allow individuals to elect to enroll in Medicare at age 50.

These are just some of the evolving issues Alliant is monitoring. The full Compliant with Alliant podcast is available on iTunes, Spreaker and SoundCloud.

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"Cross-Plan Offsetting" Decision Warrants New Questions of TPAsLate last month the Eighth Circuit Court of Appeals issued a long-awaited decision in Peterson v. UnitedHealth Group, Inc. relating to "cross-plan offsetting."

Cross-plan offsetting describes a practice where a self-funded plan TPA believes it has overpaid an out of network provider and then "offsets" the amount they believe they overpaid by reducing a subsequent amount owed to the provider by a different health plan.

The Department of Labor filed a brief indicating that it believes this practice violates ERISA's fiduciary duty rules, including the requirement that plan assets of one plan be used for the exclusive purpose of benefiting individuals covered by that plan. The practice also creates balance billing issues for participants if the provider seeks recovery of the amount offset by the plan from the participant.

The court ruled against UHC and held in favor of the provider, noting that nothing in the plan documents allowed UHC to conduct cross-plan offsetting. The court did not expressly rule that the practice violated ERISA fiduciary rules. As a result, some TPAs are asking employer plan sponsors to agree to amend underlying plan documents to expressly allow cross-plan offsetting (also called overpayment bulk recovery) but we do not think that incorporating this language obviates these issues.

In terms of next steps, self-funded plan sponsors should ask their TPAs if they engage in this practice. If they do, plan sponsors should ask if they can opt out. If opting out is not an option, plan sponsors should consider switching TPAs or at least asking that strong indemnification language related to this practice be added to the agreement.

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Reference-Based Pricing ConcernsReference-based pricing has been gaining popularity over the last several years. It has also generated a significant amount of recent litigation.

In a reference-based pricing arrangement, the health plan pays a set dollar amount (reference price) for a specific procedure or service regardless of what the actual charges are. Originally, reference-based pricing was used only for specific procedures with wide variation in pricing but minimal variation in outcomes. Hip and knee replacements are common examples. However, it is being expanded to a more comprehensive plan design which can be a cause for concern.

Here’s how reference-based pricing works: A plan pays $30,000 for a hip replacement. If a participant uses a provider that accepts the reference price as payment in full, then the participant pays nothing for the procedure. If the participant uses a provider that charges more than the reference price, then the participant will be billed for the difference between the reference price and the provider's actual charges.

Reference-based pricing can encourage participants to be mindful of cost when choosing a provider and/or facility. However, when a plan sets a reference price too low, there may be too few providers who will accept the reference price, which can result in substantial cost-shifting to participants.

Referenced based pricing also raises concerns under the ACA. ACA cost sharing limits apply to in-network essential health benefits. Plans using reference-based pricing for essential health benefits must ensure that participants have access to an adequate number of providers that accept the reference price for costs not to count towards ACA limits. An exceptions process and specific disclosure are also generally required. Plans adopting reference-based pricing should continually monitor the market conditions in the geographic area to make sure the reference price is acceptable to a reasonable number of high-qualifying providers to avoid unintended cost-shifting to participants. Plans would also have to communicate changes in the pricing and update the list of providers that will accept the reference price as full payment.

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The information contained in this document is neither intended nor implied to be legal or regulatory advice or counsel. It is provided for general informational purposes only and represents a summary based on publicly available sources. We make no representations about and assume no responsibility for the accuracy or completeness of information contained in this document and such information is subject to change without notice. Sources available upon request.

To learn more about Alliant, please visit www.alliant.com.