business officers institute · 2015-05-01 · prior 1/1/2014 - 12/31/2014 current 1/1/2015 -...

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Business Officers Institute

Corporate Employee Benefit Trends and Implications

Presented by: David Blanchard, Principal

April 9, 2015


Agenda

• Landscape

• Goals

• Trends

• Cost Containment

• Recruitment / Retention

2


Landscape

• Overall

– Confusion

– Frustration

– Expensive

– Political

• Employers

– Ditto above!

– And often blamed, not thanked

3


Goals?

• Employers

– Recruit and retain the best employees while managing ever-

tightening budgets

– Do more with less

• Social (and employers)

– Healthier population

– Improve access to care

4


Premium Increases vs.

Salary Increases

5


Premiums vs. Employee Ctrb.

6


Premiums vs. Employee Ctrb.

5,000+ in South Region

7


Bottom Line? (#1)

Cost Containment

• Typical Levers – Strategic planning

– Tactical/Budget planning/timing

– Aggressive negotiations with carriers

– Plan design and contribution management

• New Levers – Financial risk management

– Risk Bearing Entity participation

– Defined Contribution

8


Multi-Year Strategy

9

PRIOR 1/1/2014 - 12/31/2014 CURRENT 1/1/2015 - 12/31/2015 NEXT (GOALS) 1/1/2016 - 12/31/2016

Initial Employer Increase

$ $150,646 $258,175

% 10.9% 17.5%

Final Employer Increase

$ $113,382 $213,917

% 8.2% 14.5% Budget?

Insured X x

Participating

Minimum Premium

Self-Funded

NotesHeld employee contributions at current

level

Discuss possibility of alternative

funding options for renewal

Traditional

Deductible x x

HRA

HDHP x x

H S A x (no ER contribution) x (no ER contribution)

InternationalAdded LTD for global employees 4/1;

added executive LTD for US

Renewal typically received early May

for July effective date

Notes2014 moved to UHC due to service;

consolidated number of plan offerings

Other Benefits

Expanded coverage by adding

Accident, CI and Whole Life; assisted

with total compensation statements

FU

ND

ING

FIN

AN

CIA

LB

EN

EF

ITS


Multi-Year Strategy

10

PRIOR 1/1/2014 - 12/31/2014 CURRENT 1/1/2015 - 12/31/2015 NEXT (GOALS) 1/1/2016 - 12/31/2016

Paper x

On-line OE Only x (call center and face-to-face)

On-line w/Carrier Feeds

Notes

Discuss Employee Navigator set-up for

2016; use survey results to improve

process

Penalty Exposure N/ASafe-harbor reached (min salary

$3,703); Variable hour employees?

Reporting N/Adiscussed data needs for reporting;

payroll vendor will assist

Notes

OT

HE

R

OTHER

Increased focus on Wellness via

accessing UHC embedded programs

and wellness coordinator

Continued focus on wellness

More employee education and

direction towards available assistance

(e.g. member service center)?

AC

A/

CO

MP

LIA

NC

ET

EC

HN

OL

OG

Y


Financial Risk Management

(Self-Funding)

• Generally self insuring can produce economic advantage

– Reduced fully insured margin (3-5%)

• reduced premium, PPACA taxes and perhaps state mandates

– (1-3%)

– Initial cash flow (IBNR)

• Other benefits

– Greater flexibility in benefit design (more a function of size)

– Claims reporting is more transparent

• Self funding requires more of the group

– Transfers funding risk, increases economic volatility

– Decision making somewhat more complex

• Who is doing this?

– <500 = 30%

– 500-999 = 52%

– 1000-4,999 = 58%

– 40,000(+) = 82%

11


• Depending on the risk tolerance of the employer, there

are several options available.

12

What Are the Funding Options?

Fully Insured

Minimum Premium: 110%

Aggregate Stop Loss (ASL): 120%/ 125%

Administrative Services Only (ASO)

Fully Insured High Ded w/ Health Reimbursement Account

Gain Sharing/ Level Funding

High Risk/

Reward

Low Risk/

Reward

(ISL): $110K, $125K


13

NEW Options -

Small-Business

• Now funding alternatives down as low as 25 employees

• Level Funding

• Minimum Premium

• Essentially the advantages of self-funding, without the top-end risk – Establishes a worst-case scenario figure for the year, and returns a

surplus to the organization


14

Risk Bearing Entity

Captives, Consortiums, etc.

• Essentially a different type of self-insurance vehicle

• Comingled risk with other entities in a common pool

• Can provide incremental savings compared to fully insuring risk, but tradeoffs in autonomy

• Historically successful in Property/Casualty insurance, not in health and welfare


15

Defined Contribution

• Very common among larger employers

• Transition away from employers paying a percentage of premium to a fixed – dollar amount

• Normalizes budget fluctuations based on enrollment changes

• Potentially freezes budget at defined level

• Seemingly the easiest lever to pull – but requires strategic planning and communication

• Commonly associated with addition of a cafeteria plan or private exchange


Bottom Line? (#2)

Recruitment/Retention

• Change in job market – Falling unemployment means more competition for

employees (most since 2007)

16


Bottom Line? (#2)


• Enticements

– Cash (is king)

• But limited availability – stewards of a budget

– Benefits

• Private exchange

• Voluntary options

17


Premium Increases vs.

Salary Increases (again)

18


19

Deductible Increases


Bottom Line? (#2)


• Enticements

– Cash (is king)

• But limited availability – stewards of a budget

– Benefits

• Private exchange

• Voluntary options

20


Conclusions?

• Plan Ahead

• Consider new funding

• Enhance employee experience with choice

• Don’t do this alone!

21


Thank you!

22

David Blanchard > Principal 9954 Mayland Drive, Suite 2200, Richmond, VA 23233 P: 804.967-9126 M: 804-405-5680 F: 855.862.8450 Customer Service: [email protected] [email protected] :: www.digitalbenefitadvisors.com

business officers institute · 2015-05-01 · prior 1/1/2014 - 12/31/2014 current 1/1/2015 -...

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