6 Reasons Self-Funded Plans Are Gaining Popularity

6 Reasons Self-Funded Plans Are Gaining Popularity

Since the ACA was enacted eight years ago, many employers are re-examining employee benefits in an effort to manage costs, navigate changing regulations, and expand their plan options. Self-funded plans are one way that’s happening.

In 2017, the UBA Health Plan survey revealed that self-funded plans have increased by 12.8% in the past year overall, and just less than two-thirds of all large employers’ plans are self-funded.

Here are six of the reasons why employers are opting for self-funded plans:

1. Lower operating costs frequently save employers money over time.
2. Employers paying their own claims are more likely to incentivize employee health maintenance, and these practices have clear, immediate benefits for everyone.
3. Increased control over plan dynamics often results in better individual fits, and more needs met effectively overall.
4. More flexibility means designing a plan that can ideally empower employees around their own health issues and priorities.
5. Customization allows employers to incorporate wellness programs in the workplace, which often means increased overall health.
6. Risks that might otherwise make self-funded plans less attractive can be managed through quality stop loss contracts.

If you want to know more about why self-funding can keep employers nimble, how risk can be minimized, and how to incorporate wellness programs, contact us for a copy of the full white paper, “Self-Funded Plans: A Solid Option for Small Businesses.”

by Bill Olson
Originally posted on ubabenefits.com

With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact

With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact

When most experts think of group healthcare plans, Preferred Provider Organization (PPO) plans largely come to mind—though higher cost, they dominate the market in terms of plan distribution and employee enrollment. But Consumer-Directed Health Plans (CDHPs) have made surprising gains. Despite slight cost increases, CDHP costs are still below average and prevalence and enrollment in these plans continues to grow in most regions—a main reason why it was one of the top 7 survey trends recently announced.
In 2017, 28.6% of all plans are CDHPs. Regionally, CDHPs account for the following percentage of plans offered:
Prevalence of CDHP Plans
CDHPs have increased in prevalence in all regions except the West. The North Central U.S. saw the greatest increase (13.2%) in the number of CDHPs offered. Looking at size and industry variables, several groups are flocking to CDHPs:
Regional offering of CDHPs
When it comes to enrollment, 31.5% of employees enroll in CDHP plans overall, an increase of 19.3% from 2016, after last year’s stunning increase of 21.7% from 2015. CDHPs see the most enrollment in the North Central U.S. at 46.3%, an increase of 40.7% over 2016. For yet another year in the Northeast, CDHP prevalence and enrollment are nearly equal; CDHP prevalence doesn’t always directly correlate to the number of employees who choose to enroll in them. Though the West held steady in the number of CDHPs offered, there was a 2.6% decrease in the number of employees enrolled. The 12.6% increase in CDHP prevalence in the North Central U.S. garnered a large 40.7% increase in enrollment. CDHP interest among employers isn’t surprising given these plans are less costly than the average plan. But like all cost benchmarks, plan design plays a major part in understanding value. The UBA survey finds the average CDHP benefits are as follows:
CDHP benefits
By Bill Olson
Originally Published By United Benefit Advisors

With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact

Top 7 Trends from 2017 UBA Health Plan Survey

We recently unveiled the latest findings from our 2017 Health Plan Survey. With data on 20,099 health plans sponsored by 11,221 employers, the UBA survey is nearly three times larger than the next two of the nation’s largest health plan benchmarking surveys combined. Here are the top trends at a glance.
Cost-shifting, plan changes, and other protections influenced rates

  • Sustained prevalence of and enrollment in lower-cost consumer-driven health plans (CDHPs) and health maintenance organization (HMO) plans kept rates lower.
  • For yet another year, “grandmothered” employers continue to have the options they need to select cheaper plans (ACA-compliant community-rated plans versus pre-ACA composite/health-rated plans) depending on the health status of their groups.
  • Increased out-of-network deductibles and out-of-pocket maximums, with greater increases for single coverage rather than family coverage, as well as prescription drug cost shifting, are among the plan design changes influencing premiums.
  • UBA Partners leveraged their bargaining power.

Overall costs continue to vary significantly by industry and geography

  • Retail, construction, and hospitality employees cost the least to cover; government employees (the historical cost leader) continue to cost among the most.
  • As in 2016, plans in the Northeast cost the most and plans in the Central U.S. cost the least.
  • Retail and construction employees contribute above average to their plans, so those employers bear even less of the already low costs in these industries, while government employers pass on the least cost to employees despite having the richest plans.

Plan design changes strained employees financially

  • Employee contributions are up, while employer contributions toward total costs remained nearly the same.
  • Although copays are holding steady, out-of-network deductibles and out-of-pocket maximums are rising.
  • Pharmacy benefits have even more tiers and coinsurance, shifting more prescription drug costs to employees.

PPOs, CDHPs have the biggest impact

  • Preferred provider organization (PPO) plans cost more than average, but still dominate the market.
  • Consumer-driven health plans (CDHPs) cost less than average and enrollment is increasing.

Wellness programs are on the rise despite increased regulations and scrutiny
Metal levels drive plan decisions

  • Most plans are at the gold or platinum metal level reflecting employers’ desire to keep coverage high. In the future, we expect this to change since it will be more difficult to meet the ACA metal level requirements and still keep rates in check.

Key trends to watch

  • Slow, but steady: increase in self-funding, particularly for small groups.
  • Cautious trend: increased CDHP prevalence/enrollment.
  • Rapidly emerging: increase of five-tier and six-tier prescription drug plans.

By Bill Olson
Originally posted by www.UBABenefits.com

With Below Average Cost, Increasing Enrollment, CDHPs Have Big Impact

PPOs Dominate Despite Savings with HMOs and CDHPs

The findings of our 2017 Health Plan Survey show a continuation of steady trends and some surprises. It’s no surprise, however, that costs continue to rise. The average annual health plan cost per employee for all plan types is $9,934, an increase from 2016, when the average cost was $9,727. There are significant cost differences when you look at the data by plan type.
Cost Detail by Plan Type
Health Plan Cost Detail by Plan Type
PPOs continue to cost more than the average plan, but despite this, PPOs still dominate the market in terms of plan distribution and employee enrollment. PPOs have seen an increase in total premiums for single coverage of 4.5% and for family coverage of 2.2% in 2017 alone.
HMOs have the lowest total annual cost at $8,877, as compared to the total cost of a PPO of $10,311. Conversely, CDHP plan costs have risen 2.2% from last year. However, CDHP prevalence and enrollment continues to grow in most regions, indicating interest among both employers and employees.
Across all plan types, employees’ share of total costs rose 5% while employers’ share stayed nearly the same. Employers are also further mitigating their costs by reducing prescription drug coverage, and raising out-of-network deductibles and out-of-pocket maximums.
More than half (54.8%) of all employers offer one health plan to employees, while 28.2% offer two plan options, and 17.1% offer three or more options. The percentage of employers now offering three or more plans decreased slightly in 2017, but still maintains an overall increase in the last five years as employers are working to offer expanded choices to employees either through private exchange solutions or by simply adding high, medium-, and low-cost options; a trend UBA Partners believe will continue. Not only do employees get more options, but employers also can introduce lower-cost plans that may attract enrollment, lower their costs, and meet ACA affordability requirements.
By Bill Olson
Originally Published By United Benefit Advisors

Small Businesses Healthcare Competitive, But Faces Two Big Challenges

Small Businesses Healthcare Competitive, But Faces Two Big Challenges

We recently revealed how competitive small business health plans are when compared to national averages—and even how they are doing a better job of containing costs. But the UBA Health Plan Survey also uncovers two challenges these groups face in its new special report: “Small Businesses Keeping Pace with Nationwide Health Trends”.

  1. Small businesses are passing nearly 6.6 percent more of the costs for single coverage and nearly 10 percent more of the costs of family coverage on to employees—and that number increases to 17.8 percent and over 50 percent more respectively when you compare small employers to their largest counterparts.
    Small Business Average Healthcare Premiums
  2. Small businesses also have higher out-of-pocket maximums, particularly for families.
    Small Business Average Out of Pocket Maximum

To help attract and retain employees, Peter Weber, President of UBA, recommends small businesses should “benchmark their plans against their same-size peers and communicate how competitive their plans are relative to average national costs, deductibles, copays, and more.”

By Bill Olson
Originally Published By United Benefit Advisors