MISHRM 2014 Annual Conference

MISHRM 2014 Annual ConferenceHR Amplified: Driven to be…

Gimme the Keys:What Employers Need to Consider Before Driving Employees to a Private or Public Exchange

Sue Mathiesen

Director of Research

McGraw Wentworth, a Marsh & McLennan Agency LLC company

MISHRMP.O. Box 99463Troy, Michigan 48099

(844) 4-MISHRMhttp://mishrm.org

Today’s Agenda

• Health Care Reform – Big Picture Impact – Creates Public Exchanges

– Spillover effect of health reform-private exchange options for active employees

• Public Exchanges– State-based

– Premium subsidies for moderate incomes

– Plan options available

• Private Exchanges– Conceptual design

– Options available

– Employer considerations

• Concluding Thoughts



The Big Picture



In 2014 – Market Changes• Public exchanges launched

• Individual (non-employer) market accessible/viable alternative

– No medical underwriting

– No pre-existing condition limitations

– No rating based on health conditions, gender

• Subsidies are available to qualifying individuals to help pay for coverage

• Individual mandate requires coverage or tax penalty

• Half of states expand eligibility for Medicaid

• Employer mandate delayed until 2015



Sources: Pre-2006 Mercer National Survey of Employer Health Plans

Post-2006 Hewitt Health Value Initiative CPI data Bureau of Labor Statistics,

• Many initial HCR provisions increased employer cost• Many employers did not absorb full cost increase• When benefits modified over past few years, most employers

quick to communicate added burden of HCR with employees• Larger employers pressing for innovation • Vendor marketplace responding with new ideas

– Improve marketplace information– Create new incentives to control cost and improve quality of care

• One of the innovative ideas – Private Exchanges– Mirrors feel of public exchange-but not the same thing– Most pair with defined contribution approach to financing benefits

HCR Spillover Effect - Employer Market



Financing Benefits, a Problem?• In most years, employer cost rising 2 to 3 time inflation• Two major slowdowns in employer plan increases• Will pace of increase remain calm or jump back up ?

Sources: Pre-2006 Mercer National Survey of Employer Health PlansPost-2006 Hewitt Health Value Initiative CPI data Bureau of Labor Statistics,

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

6.9%

18.6% 17.1%

12.1%

10.1%

8.0%

-1.1% 0.0%

6.1%7.3%

8.1%

11.2%

14.7%

10.1%

7.5%

6.1%5.3%

6.2%

8.5%

4.9%

3.3%3.6%

4.1%

5.4%

4.2%

3.0%

3.0%

2.6%2.8%

2.2%2.8%

2.3%3.2% 2.8%

3.8%

-0.4%

2.1% 1.5%

Employer Plan Cost

Consumer Prices



Retirees

2014

2015 and beyond

21%

22%

17%

20%

Most Employers Committed to Health Plans

Importance of providing subsidized health benefits for the following populations:

Active Full-Time Employees

Source: 2014 Employer Survey on Purchasing Value in Health Care, Towers Watson and National Business Group on Health

2014

2015 and beyond

96% 1%

95% 2%

Active Part-Time and Seasonal Employees2014

2015 and beyond

33% 26%

30% 25%

Spouses

2014

2015 and beyond

71% 21%

56% 30%

Very Important Somewhat Important

Source: 2014 Employer Survey on Purchasing Value in Health Care, Towers Watson and National Business Group on Health



Exchanges – Important Options

• Public Exchanges– ACA Marketplaces and subsidies– National picture– New Michigan Marketplace– Considerations for retirees

• Private Exchanges– Why are employers interested?– Evaluating Exchanges for your organization

• Administration of benefits • Long term financial impact

– What’s available for mid-market employers?

“Get Out” Strategy

What would employees/participants see if you dropped

your plan?

“Stay In” Strategy

Emerging strategy focused on Defined

Contribution approach



PublicExchanges



What Is A Public Exchange• ACA mandates each state has a “Marketplace”

– Online facilitator to purchase health insurance (individuals, groups <50)

– Subsidies provided for those who qualify based on income

Provide financial management

Ensure plan accountability

Assist consumers

Determine eligibility, enroll individuals

Manage plan activities

Determine Medicaid and Federal Subsidy Assistance



Exchange Enrollment Rights

• Enrollment in the Exchange is limited – Initial enrollment (October 1, 2013 – March 31, 2014)– Open enrollment (generally from October 15 – December 7)– Special enrollment (permitted in specific situations)

• Special enrollment (60 day window to enroll) permitted for:– Loss of minimum essential coverage– Gaining a dependent or becoming a dependent through marriage,

birth, adoption or placement for adoption – Newly attained status as US citizen, national or lawfully present

individual– An Exchange error, misrepresentation or inaction of Exchange

party– QHP materially violated contract provision– Becoming newly eligible for premium assistance– Gaining access to QHP because of permanent move– Exceptional circumstances defined by DHHS



Medicaid Expansion – Current Status

• Goal of HCR - standardize eligibility provisions across states– Standard income-based eligibility, no asset requirements

• Reality – Almost ½ of states not expanding– Exchange subsidies not available under 100% of FPL– Leaves many low income earners in “No Man’s Land”

Source: Kaiser Family Foundation, January 27, 2014



Initial Enrollment in “Metal Tiers”• Plan options in public Exchange named after metals• Subsidy based on “2nd Lowest Cost Silver Plan”• Can buy up to Gold plan (pay more) or buy down to Bronze

plan (pay less)

Metal Tier Plan Value

Bronze Silver Gold Platinum Catastrophic age <30

Features

Plan value 60% 70% 80% 90% HSA rulesPercent Enrollment

19% 62% 12% 7% 1%United States

Michigan 12% 73% 12% 3% 1%http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Feb2014/ib_2014feb_enrollment.pdf



Who is Eligible for Subsidized Coverage?

Household income < 138% FPLEligible for Medicaid*

(assuming State expands Medicaid)

Federal Poverty Level (FPL) 2014 Eligibility Threshold

Household size of 2014Medicaid138% FPL

Exchange400% FPL

1 (single) $11,670 $16,105 $46,680

2 $15,730 $21,707 $62,920

3 $19,790 $27,310 $79,160

4 $23,850 $32,913 $95,400

5 $27,910 $38,516 $111,640

6 $31,970 $44,119 $127,880

Household income < 400% FPLCould be eligible for

subsidized Exchange coverage

* ACA specifies income threshold of 133% FPL but requires an “income disregard” of 5% of FPL in meeting income test; effective income threshold for eligibility is 138%



2014 Exchange Subsidies

% Poverty level

Annual household income for Individual

Benefit Subsidy(increased Plan Value)

Maximum monthly employee contribution in Exchange for

second lowest cost silver plan

% Household income Dollars

<100% <$11,670 Medicaid / Access gap N/A N/A

<138% <$16,105 Medicaid (if expanded) N/A N/A

138% $16,105 94% 3.00% $40

150% $17,505 87% 4.00% $58

200% $23,340 73% 6.30% $123

250% $29,175 70% 8.05% $196

300% $35,010 70% 9.50% $277

400% $46,680 70% 9.50% $370

>400% >$46,680 70% No maximum Full cost



Michigan Marketplace StatisticsNo. of Individuals:

United States

Michigan

As of April 19, 2014

Selecting Marketplace Plan

8,019,763 272,539

Eligible for Marketplace Coverage

28,605,000 725,000

% of Eligible Population Enrolled

28.0% 37.6%

Increase in Medicaid enrollment as a percent since January 1, 2014

10.3% 8.4%

Source: Kaiser Family Foundation, July 2014

12%

38%

49%

Ineligible for Financial AssistanceEligible for SubsidiesMedicaid Eligible

Eligibility for Coverage for Current 1.1 Million

Michigan Uninsured



Carrier Plans Offered in Michigan

• Marketplace pricing released for single (age 27 & 50) and family (age 45) rate tiers

• Included all 83 Michigan counties• All counties had access to

Bronze, Silver and Gold plans• Only 31 counties had access

to Platinum options• On average, counties had 4

carriers offering coverage (min 1 carrier, max 9 carriers)

Vendor# of

CountiesBCBSM 83BCN 70Priority Health 70Consumers Mutual 47McLaren Health 28HAP 23Total Health Care 4Humana 3Meridian / Bronson 3Molina 3



Carrier Specific Pricing

• Humana offered lowest cost plans (all 5 tiers) for Wayne, Oakland and Macomb counties– These three counties most populated (39% of the state’s population)– Humana did not offer any plans outside these three counties– All Humana offerings are HMO plans– LIMITED NETWORK: 12 hospitals included in Humana network –

majority are DMC locations (Crittenton, Henry Ford Macomb were included)

• Outside these three counties, BCN had lowest cost plans in majority of counties

• More on limited network options coming– BCBSM releasing a limited network Marketplace product later this

year– CMS pushing back with regulations in January for 2015– Providers appear very concerned



What Do Plans Cost on the Exchange?

Monthly Premium for Family of 4 (age 45)

All Federal Exchanges

Iowa(Des Moines)

Michigan(Wayne)

Virginia(Arlington)

@ 150% of FPL $58 $58 $58 $58

@ 250% of FPL $196 $196 $196 $196

@ 400% of FPL $370 $370 $370 $370

2nd Lowest Silver N/A $888 $732 $888

Average Silver HMO $1,115 N/A $875 $906

Average Silver PPO $997 $973 $1,109 $2,807

Highest Silver Plan $7,404 $1,049 $1,291 $5,680

Incremental Increase

in HHIOver $95k “The Cliff”

Cost to Buy Up to PPO

Plan significant especially for older workers without

access to subsidies

Wayne County400% of FPL Buy Up to PPO: $370 + ($1,109 -

$732) = $737/mo.



What Do Benefits Look Like on the Exchange?

Impact on Employer decisions in the futureRoom to move to higher deductibles?Trend to higher deductibles, not necessarily to HDHP compliant plans?

TOTAL HEALTHCARE (2nd Lowest Plan) Silver Gold

Single Cost (Age 27) $184 $203Single Cost (Age 50) $313 $346Family Cost (Age 45) $732 $810

Single Cost (Age 27)

$138 $156 $181 $203

Single Cost (Age 50)

$235 $266 $308 $347

Family Cost (Age 45)

$549 $622 $720 $811

HUMANA Bronze Silver Gold PlatinumDeductible $6,300 $4,600 $2,500 $1,000Coinsurance 0% 20% 20% 20%OOP Max $6,300 $6,300 $3,500 $1,500PCP Copay Ded. $25 $25 $25Specialist Copay 100% after $35 $35 $35Rx 100% after ded. $1,500 Rx ded.

$10/$20/$50/50%$500 Rx ded.

$5/$10/$20/35%

$500 Rx ded.$5/$10/$20/35

%



Wayne County – All Plans Sorted by Tier

• Overlapping pricing between tiers (for instance, highest cost Silver vs. lowest cost Gold) suggest vastly different approaches to setting pricing between carriers.

Rates for Single coverage for a 50 year old



40-year-old making $51,705 per year (450% of Poverty), with no financial assistance

$154

$261

$311

$365

$481

At 450% FPL, an enrollee would not be eligible for premium tax credits

Cost for 40 Year Old – No Subsidy

Notes: Premiums indicate the amount a 40-year-old would need to spend on the second-lowest cost silver plan in a given county or region.Source: Premiums for state-based exchanges were obtained through a Kaiser Family Foundation review of insurer rate filings to state regulators. Premiums for federally-facilitated and partnership exchanges were obtained from data published by HealthCare.gov, as of January 22, 2014, available at https://www.healthcare.gov/health-plan-information/.

https://www.healthcare.gov/health-plan-information/




40-year-old making $40,215 per year (350% of Poverty), with moderate financial assistance

Cost for 40 Year Old – Limited Subsidy


At 350% FPL, eligible enrollees would have to pay a maximum of 9.5% of their income on premiums for a benchmark silver plan

$154

$261

$311

$318 $47

$318 $163





40-year-old making $28,725 per year (250% of Poverty), with significant financial assistance

Cost for 40 Year Old – Larger Subsidy


$311

$318

$318

At 250% FPL, eligible enrollees would have to pay a maximum of 8.05% of their income on premiums for a benchmark silver plan

$154

$193

$193

$193

$193

$69

$118

$173

$289





What Does 2015 Look Like in MI Marketplace?

• Open enrollment for 2015 starts on November 15, 2014

• Still finalizing plans and rates

• Looks like carriers will be consistent

Michigan2015 Rate Information

2015 Average Rate

$342

Average Premium increase

1.6%

Median Premium Increase

6.5%

Premium increase Range

-21.6% - 15.4%

Number on insurers

15

Number on New Plan Bids

9

Source: 2014 PriceWaterhouse Coopers, A Preliminary Look at 2015 Individual Market Health Insurance Rate Filing



Retirees



Retirees Covered By Employer Plan

• Include in active plan– Plans must meet many ACA coverage requirements– No “Employer Mandate Penalty” for affordability/benefits tests – No Exchange Notices required

• Segment into “retiree-only” plan– Pay taxes/fees– Otherwise exempt from many ACA requirements

• Annual/lifetime maximums can apply, preventive care can be excluded, etc.

• HRA plans can exist without medical plan

– Must have separate ERISA plan and cannot cover ANY active employees (i.e., if a retiree returns part-time and keeps retiree benefits, it would not be a “retiree-only” plan)



Retirees – Subsidy Eligibility

• Pre-65– Eligible for subsidies as long as not ENROLLED in ANY employer

plan • “Eligibility” for a qualified plan doesn’t matter, but enrollment in ANY

employer-sponsored medical plan EXEMPTS retiree from subsidy • FAQs disrupted many employer plans to exit market via HRA funding and

leveraging subsidies

• Post-65– Eligible if not enrolled in Medicare A/Medicare Advantage

• Both groups may be eligible for Medicaid– States who expanded Medicaid removed asset tests (just Income)

• Retirees should evaluate what is better for their situation, employer coverage or Exchange coverage

• Difficult communication role for employers as decision specific to individual decision (income, assets, state of residence, etc.)



Summary Insights

• Public Exchanges not currently an equitable strategy for replacing current employer coverage– Benefits and networks significantly different– Costs for non-subsidy and especially older employees high– Regulations keep closing loopholes for employers to leverage

Exchange subsidies

• Market continues to evolve– Technology challenges will continue in short-term– Pricing impact of actual enrollment versus projections will be seen in

2015 and beyond (age mix, volume of enrollment)• Usually takes about 2 years to learn how claims are running vs.

premiums



Public Exchange vs. Private Exchange

PUBLIC PRIVATEState or Federal

Government

Consultant/Broker, Insurer, Tech FirmSPONSOR

Medical/Rx Dental, Vision, Life, Voluntary, +MorePRODUCTS

Individual GroupCONTRACTS Individual(Get Out Strategy or Retiree)

Single or MultipleCARRIERS

Actives, RetireesELIGIBLES

Self-fundedFUNDING Insured

TOOLS Comparison Tools

Decision Support,

Education

PAYMENTEmployer Pre-Tax, Employee

Pre-Tax

Individual Post-Tax, Federal Subsidies

ENROLLMENTOnline and Telephonic

OpenACCESS Closed



Private Exchanges



Private Exchanges

• Why are Employers interested in Private Exchanges?• Evaluating Exchanges for Your Organization

– Administration of Benefits – Long Term Financial Impact

• What’s Available in Exchanges for Mid-Market Employers?– Options were limited in 2014 – expanding in 2015– Targeted quoting plus delays in insured rates due to HCR– Several Exchanges now expanding marketing efforts



Lots of Confusion

• Do they wrap around Public Exchanges? No

• Can Employees receive subsidies? No

• Are active and retiree Exchanges the same? No

• Can employees choose from lots of carriers? Not Yet

• Is my experience “pooled” with other employers? No



Lots of Advertising Messages

• You only need to make one strategic decision• Best prices through market leveraging• Improves buying experience for employees

– Personalizes benefit decisions– Lots of choice, lots of decision support tools

• Eliminates employees from being “overinsured”– 60% or more employees will “buy down”– Reductions in overall gross costs of 25%+

• Works just like a 401(k)• Reduces administrative and compliance burdens• Simplifies communication

Percent of employers that would consider

offering a private exchange

Within 2 yrs Within 5 yrs

33%47%



What’s the Real Deal?

• Fit varies by employer• Short and long term considerations• Private Exchanges new and continually evolving• Goal today is to provide:

– Fundamental understanding of Private Exchanges– Framework for how to evaluate these options for your

organization– Information about current Exchange marketplace

• Focus on administrative and financial aspects of Exchanges



The Benefits Management Process

PROCUREMENT TECHNOLOGY SERVICES

PROCESS DESIGN

PROCESS DESIGN

PR

OC

ES

S

DES

IGN

Data Management• Bill Reconciliation• Data management

(transferring between systems)

• Internal Cost Allocation/ Bill Payment• Data analysis/reporting

Financial Structure• Funding

• Contribution Approach

• Budgeting/Renewal Process

• Plan and Carrier Selection

Enrollment/Communication• Open Enrollment• New Hires/Qualifying Events• Terminations• Mergers / Acquisitions• Paper/Online/Call Center/

Face to FaceBENEFITSMedical/Rx

Dental, VisionIncome Replacement

FSA, 401(k)Voluntary Benefits

Wellness


Process Management• Compliance• Eligibility Rules• Dependent

Verification/Audits• Evidence of Insurability• COBRA

PR

OC

UR

EM

EN

T

TEC

HN

OLO

GY S

ER

VIC

ES



Private Exchange Solutions

• Benefit Management Process still responsibility of employer• Bundles online enrollment system with carrier solutions

– Automatically sends eligibility to all Exchange carrier partners– Unique decision support tools – Can leapfrog employers into online solution (inc. email with employees)

• Pre-defined plan/carrier menus– Limits time on plan design and pricing decisions– Offers more choice of benefit options (typically 5+ plans)– Plan materials pre-developed (benefit summaries, certs, etc.)

• Facilitates commitment to defined contribution approach– Most employers can do with current process, but don’t– Systems built to communicate and price DC plans– Primary driver of savings when moving to Private Exchange approach



Data Management and Enrollment

Enrollment Process

(Manual or Online)

Payroll System

Enrollment SystemEnrollment SystemEnrollment

SystemCarrierSystems

Adds & TermsDemographic Data

Benefit Elections for Contributions

Adds, Terms, Benefit

Election, Demographic and Dep Data

Service Providers(COBRA)

NewGovernmentReporting?Wellness

Vendors

Incentive Compliance

Benefits of Online System:• Feeds create integrated

system• Eliminates manual entry• Reduces billing differences• Enrollment and

communication material can be mix of online and paper-based approach

• Paper bills continue for most carriers

• List bill from life/disability



Data Management with Exchanges

• Exchange facilitates carrier enrollment feeds/owns issues• Expands review beyond selecting a “medical vendor”

– Moving carriers becomes tied to Exchange options • Single carrier Exchanges more risky than multi-carrier• Exchange can also tie the employer to a broker partner

– Can create administrative complexity (deductions, bill reconciliation)

– Can be more expensive than independent systems • Carriers indicating plans priced the same off and on Exchanges• System can be free…but many cost $5-$20+ PEPM

– Some solutions are not all-encompassing (medical/dental only)

• Challenging situation if already have an online system• Can bring wide variety of “pre-packaged” voluntary

benefits



Data Management with Exchanges

• Exchanges don’t necessarily talk to payroll or support upload process

• Goal of Exchange partner to support connecting as many systems as possible

EXCHANGEPayroll System

Exchange Carriers

Enrollment SystemEnrollment

SystemNon-

Exchange Carrier

Systems

Adds & TermsDemographic Data

Benefit Elections for Contributions

Adds, Terms, Benefit Election, Demographic and Dep Data

Service Providers(COBRA)

NewGovernmentReporting?Wellness

Vendors

Incentive Compliance

Connected to Exchange Carrier

Partners?

??

?



Online Enrollment Systems vs. Private Exchange

Online Enrollment System

Private Exchange

Defined ContributionSometimes Most of the time

Products and Carriers

Limited selection of plans

One carrier per employer

Fully insured or self-insured

Wide selection of plans and benefit options

Sometimes multi-carrier

Fully insured or self-insured

Administrative SupportOften not end-to-end processing, more open enrollment focused

Generally includes year-round eligibility, enrollment, QLEs, billing, payroll feeds, carrier feeds, COBRA and FSA admin, call center

Consumer Experience

Automation

Some decision support

Some employee engagement

Automation

High degree of decision supportHigh degree of employee engagement



Defined Contribution Approach

John chooses:CDHP health planHSALife insuranceSTDLTD

Total cost = $6,420John’s cost = $420

Jane chooses:PPO health planDentalLife insuranceSTDLTDHealth FSACritical Illness

Total cost = $7,210Jane’s cost = $1,210

Health FSACritical IllnessHealth Sav-ing AccountShort-Term DisabilityLong-Term Disability

Employer Fund

John Jane

Employer provides $6,000 annual contribution Employee shops the online exchange



Non-Defined Contribution Trend Management – “The Balancing Act”

2013 2014 2015 2016

$6,600 $7,128 $7,698 $8,314

$4,400$4,752

$5,132$5,543

Average Employee CostAverage Employer Cost

$11,000

$11,880

$12,830

$13,857

Employee Costs

Payroll Contribution

What can they afford?What cost should be shared by all?

Employer CostWhat can we afford?

What benefits do we need tooffer to attract and retainemployees?

?Out of Pocket

What should those who use the plan pay?How much risk are we willing to allow them to take?



Defined Contribution ApproachExample: 5-Plan Menu with $6,300 Employer Funding

2013 2014 2015 2016

$6,600 $6,300 $6,300 $6,300

$4,400 $4,200$5,040

$5,947


Assumes: 8% annual trend

$11,000 $10,5

00

$11,340

$12,247

Employee Costs

Employer CostWhat can we afford?

What funding level do we need to offer to attract and retain employees?

Commitment to aggressive management of trend line

Out of Pocket/Payroll Contributions

Employee DecidesExchange support tools help to educate

Buy-DownOccurs When MoreChoices are Offered ?



Trend Management Strategies Still Required

2013 2014 2015 2016

$6,600 $6,300 $6,300 $6,300

$4,400 $4,200$5,040

$5,947


Assumes: 8% annual trend 100% PPO enrollment 60% employer contribution

Assumes: 8% annual trend 60% PPO enrollment, 40% CDHP

enrollment Employer contribution fixed at 60% of

2014 gross cost

2013 2014 2015 2016

$6,600 $7,128 $7,698 $8,314

$4,400$4,752

$5,132$5,543


$11,000

$11,880

$12,830

$13,857

$11,000 $10,5

00

$11,340

$12,247



Long-Term Considerations In DC Design

• Underlying plans – employer-funded defined benefit plans– Unlike 401(k)s, year over year deficits add to cost– If 30% increase received, will you react via increased funding/vendor

review?– If self-funded, budget variance felt immediately

• Adverse selection may have impact over time– Initial pricing set based on plan differences– What will impact be of employees “buying down”?

• Small percent of employees drive most costs• Individual employees may be “over insured” but employer groups typically not• Adverse selection can “load” rates for some plans by 3-15%

– If gross premiums drop by 25%, but claims don’t, what happens?

• Cadillac tax impact based on “gross plan” costs and plan offerings - cost needs to be managed to avoid tax



Snapshot of Exchange Marketplaces

Product Suite

• Medical/Rx only• Medical/Rx, dental, vision

only• Comprehensive portfolio

including dental, vision, life, disability, voluntary

Carriers Available

• Single carrier• Multi-carrier

• Online enrollment platform • Payroll / carrier integration• Decision support tools• Call center support• Employee

communications

Benefits Administration

Services

Target Market Segments

• Small to mid-size• Large to jumbo• All employer sizes• Individual/Non-Covered

Employee Segments• Retirees

Exchange Sponsor

• Consultant/broker• Technology firm• Insurer

Funding Flexibility

• Fully-insured only• Both fully-insured and

self-funded



Michigan Options–BCBSM’s GlidePath

• Limited roll-out 1/1/2014, expanding for 2015– 30 clients (4 self-funded)– High HDHP adoption

• Pre-defined menus of HDHP, PPO, and HMO– BCBSM medical mandatory (single carrier), dental/vision optional– No other benefits supported on platform– Must use Defined Contribution strategy (can have classes)

• 75 day implementation• $5 per eligible employee per month (PEEPM) administrative

fee• Standard payroll reports, employer works with payroll vendor

to load deductions• Broker neutral



Michigan Options – Mercer Marketplace

• Available 100+ employees, fully-insured or self-funded• Many carrier options – employer picks one (with some

flexibility for larger locations) – Aetna, United HealthCare, CIGNA– Many regional players (Anthem)

• Pre-defined menus, all lines of coverage• Six month implementation schedule• High level of integration services and employee

communication support including call center, compliance services

• $21 PEEPM plus $5,000 minimum implementation fee

• Not broker neutral (Mercer or MMA)



Michigan Options – iSelect

• Small to large group – fully-insured (for now)• Multi-carrier options – employer must pick one

– Priority Health and Health Alliance Plan– UHC will be a national option for 2015

• Pre-defined menus of HDHP, PPO, and HMO– Medical/dental/vision/voluntary benefits mandatory – Life/disability carrier options available or can use own– Must use Defined Contribution strategy (can have classes)

• 45 day implementation schedule, quote through iSelect• Administrative fee paid by carriers• Support provided for integrating payroll• Broker neutral (unlerlying Liazon system recently purchased by

TowersWatson)



Michigan Options - Other

• Other Private Exchanges (retiree only) exist and will continue to emerge

• Available options may vary by employer size (3,000+)• BCBSM indicating they may partner with Exchanges other than

GlidePath as long as they are the exclusive provider• Interesting new capabilities to watch for:

– Ability to offer many carriers at same time (targeting discounts or offering more choice)

– Regulations creating flexibility to leverage Public Exchanges – Technology reduces employer administrative/compliance

responsibilities– Neutral Exchange partners not tied to single carriers or broker partners– Individual insurance Exchanges for “get-out” approach integrating

public Marketplace and other individual product offerings



Private Exchanges - RecapAn online portal that offers multiple plan options

to the employee

Benefit administration powers the technology of a Private Marketplace

Most platforms offer a shopping mall experience with decision support for employees

Employers can shift to a Defined Contribution strategy, and set a limit on healthcare spend

Employees get a range of easy-to-compare plans

Employers get a complete benefit administration solution



Why are Employers Interested?

Introduction of Defined Contribution to control corporate contribution

One-stop shopping across core medical, life, disability and voluntary benefits

Technology eases employee decision-making and employer administration

Employees are not necessarily opposed to change, as long as they see financial benefit;

60%+ select a cheaper plan



Ownership of Benefits Administration Remains


PROCESS DESIGN

PROCESS DESIGN

PR

OC

ES

S

DES

IGN

Data Management• Bill Reconciliation• Data management

(transferring between systems)

• Internal Cost Allocation/ Bill Payment• Data analysis/reporting

Financial Structure• Funding

• Contribution Approach

• Budgeting/Renewal Process

• Plan and Carrier Selection

Enrollment/Communication• Open Enrollment• New Hires/Qualifying Events• Terminations• Mergers / Acquisitions• Paper/Online/Call Center/

Face to FaceBENEFITSMedical/Rx

Dental, VisionIncome Replacement

FSA, 401(k)Voluntary Benefits

Wellness


Process Management• Compliance• Eligibility Rules• Dependent

Verification/Audits• Evidence of Insurability• COBRA

PR

OC

UR

EM

EN

T

TEC

HN

OLO

GY S

ER

VIC

ES



Will it Work for You?

• Is moving to a Defined Contribution approach and offering more plan choices a driving goal of your benefits program?

• Are you a fit for online benefits management? • Do you have internal technical support for payroll integration? • Can you communicate with all employees via e-mail?• Are you tied to a specific carrier (i.e., BCBS)?• Is it a less expensive approach than current benefit offerings? • Do you have segments of employees that cannot adopt this

approach (i.e., Union)?



Summary Insights

• Significant shift in benefits management approach• Evaluation goes beyond a medical RFP…start process

early!• Commitment over time means managing new sets of

issues• Exchange Market is new and options will evolve• Current employer fit fairly focused

– Online enrollment with a DC approach– Competitive fully-insured solution– “Get Out” approach– Other employer situations where Exchange is aligned with benefit

strategy

Concluding Thoughts



The Landscape is Changing• HCR has brought a monumental change to health care

delivery and payment system

• The landscape has changed either directly by HCR or in response to HCR provisions– More resources and time needed to manage the administrative

requirements

– Time will be needed to assess whether to “play or pay” decision and understand cost control options going forward

– Over the next few years, new options for employers to consider• Private Exchanges – viable for some employers now

• Limited network plans – may be available

• Changing benchmarks – public



Exchanges Will Play a Role

• Understanding public exchange options critical– “Get Out” completely or for segments of employees – implications of

purchasing coverage in individual market– As understanding of Exchange marketplace grows, employees with

high contributions may want to evaluate individual market options– These options may or may not be alternatives to employer plan (non-

calendar year employer plans will never align open enrollments)

• Private Exchange understanding critical– Will be a huge publicity push in the next several years-Leadership

will be asking about these exchanges– The sales pitch is a fast ball...critically think about the implications of

moving to private exchange• Relinquishing control of the plan options offered (and annual changes)

• Private exchange may tie you to broker, insurance carrier-moving is harder



Any Questions?

William D. Wentworth, Vice President McGraw Wentworth,a Marsh & McLennan Agency LLC company3331 W. Big Beaver Rd., Ste. 200Troy, MI 48084(248)[email protected]

Documents

MISHRM 2014 Annual Conference