June 2014 Newsletter
In this issue:
- IRS Bars Employers from Dumping Workers into Health Exchanges
- $23,215: The Cost of Health Insurance for a Typical Family
- Counter Top Triggers of Short-Term Disability
- Virginia: Employer Penalties for Workers' Compensation Violations Increased
- Did You Know? HRi Offers Prove It! Testing
The IRS recently issued a brief FAQ explaining that setting up a plan to which an employer contributes un-taxed cash that an employee can then use to pay premiums for insurance plans purchased on their own violates the Affordable Care Act's ban on limits for essential health benefits.
The penalty for establishing such a plan – also known as a stand-alone health reimbursement arrangement (HRA) – will be $100 per day, per employee. That's a possible $36,500 per year, per employee. Under the ACA, these kinds of arrangements are considered stand-alone health plans with set limits of coverage – the limit being the maximum amount of money the employer promises to contribute. And the law clearly bans lifetime and annual dollar limits on coverage.
What is allowed, however, are "integrated" HRAs. These are HRAs that are coupled with an employer's group health plan. Many employers have currently established these accounts under high-deductible health plans for the reimbursement of copays and deductibles. The IRS has also made it clear that an employer-sponsored HRA will only be considered "integrated" with a health plan if the employee who has the HRA is enrolled in that plan.
The typical cost of health care for a family of four with employer-based insurance this year is $23,215, according to a new report from the Milliman actuarial firm.
The $23,215 figure isn't what the employee pays, though. Employers pay about 60% of those costs ($13,520), while workers pay the rest through payroll deductions ($5,908) and out-of-pocket costs ($3,787).
The employee share of the costs have been rising faster – increasing 73% since 2007 – than the employer contribution, which has grown 52% over the same period. The Milliman numbers are for family coverage under preferred provider plans, so it excludes the increasing prevalence of consumer-driven health plans, in which employees handle a higher share of the costs.
Employer health plans have been undergoing a major transition and will continue to. Higher out-of-pocket costs are fueling efforts around health care price transparency, and that's making consumers become better health care shoppers. They are also increasingly looking at things like "reference pricing" and private health insurance exchanges, which put more responsibility on employees to control their health care costs.
An analysis of 20 years of Cigna's short-term disability claims shows that absences related to obesity, treatment for skin cancer, and herniated disc surgery increased significantly from 1993 to 2012, while a reduction in absences related to depression coupled with an increase in prescribed antidepressants may signal a hidden problem.
According to the data, the most frequently approved short-term disability claims – both 20 years ago and today – remain musculoskeletal disorders, which make up 25% of all non-maternity absences. Understanding disability leave trends can help employers structure a wellness and absence management program to improve workforce productivity.
Here are some of the leading triggers of short-term disability, along with recommended employer actions to help employees stay healthy and return to work sooner:
Herniated Discs: Employers should consider putting in place programs that target specific conditions. For those who may not need surgery, employers may want to take a fresh look at the employee's workstation and other factors that may contribute to back and muscle issues. For those who require surgery, vocational rehabilitation programs are designed to help individuals successfully re-enter the workforce.
Obesity: Although bariatric surgery has improved the lives of many people, it can only be as effective as the healthy life changes the individual adopts after surgery. Employers that provide resources and coaching, such as employee assistance programs (EAPs) and vocational rehabilitation services, can help workers become more productive and enjoy long-lasting health.
Cancer: Employers should implement absence management strategies that integrate wellness programs, disease management programs, and vocational rehabilitation services to meet the needs of cancer patients. Getting a head start on engaging employees who are on FMLA leave can lead to nearly seven fewer days away from work when an integrated disability and FMLA administration strategy is in place.
Depression: The longer a person fails to seek mental health treatment, the longer and more deeply depression can have an impact, both on an individual's wellbeing and an employer's workforce. This underscores the importance of an EAP to help people with behavioral health needs access early care.
If you have questions about a current or upcoming Short-Term Disability claim, please contact our Client Services Department at 410-451-4202.
The Virginia Workers' Compensation statute was amended during the 2014 legislative session to increase the fines the Commonwealth can impose on employers who fail to provide workers' compensation coverage to employees or fail to provide proper notice to employees.
An employer doing business in the Commonwealth of Virginia is required by law to provide workers' compensation coverage when it regularly employs more than two part-time or full-time employees.
The amended statute (Chapter 204 of the Laws of 2014) will impose a $250 fine for each day of non-compliance, up to a maximum penalty of $50,000 for non-compliance with the Commonwealth's workers' compensation statute. The amendment goes into effect on July 1, 2014. The previous fine ranged from $500 to $5,000.
In addition to the new fines, employers will remain liable – in cases of non-compliance – to any employee either for compensation under Virginia law or in a lawsuit for damages by the employee.
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