Thursday, November 26, 2009
How will retiree health care benefits be treated under the ‘‘Affordable Health Care for America Act’’?
The Act bars group health care plans from “substantially” reducing benefits paid to retirees and/or their beneficiaries, however, plans are allowed to place a “cap” on the total benefits paid to retirees. (Is this not a contradiction to the ban on annual and lifetime max’s?) Furthermore, plans may reduce benefits to retirees if and only if they also reduce benefits to active plan participants, correspondingly. Retirees are typically more expensive, claims wise, than active employees, which has resulted in many plan sponsors eliminating retiree health care plans. (Does this provide an incentive to plan sponsors to reduce benefits to both groups?) The Act defines “substantially” to mean a 5% increase in participant premiums and/or a 5% decease in the actuarial value of benefits. A decease in the actuarial value of benefits could be the result of changes in premiums, co-pays, co-insurance amount or percentages, covered procedures, and even possibly provider networks.
The Act allows the Secretary waive adherence to these restrictions if the plan sponsor, i.e., employer can demonstrate their application would result in undue hardship (i.e., pending bankruptcy) on the plan sponsor.
A retiree “reinsurance” trust fund (funded with $10b) is established by the Act to pay for certain excess health care claims. Within health care, “reinsurance” is commonly referred to as “stop-loss” insurance and is used to mitigate health care claims above a specific and fixed dollar amount when a plan is “self-insured”. Example: Plan A buys a stop-loss policy to cover any individual participant health care claims in excess of $125,000 within any single plan year and any plan aggregated health care claims in excess of $1,000,000 within any single plan year. This allows the plan to protect itself against any unexpected and excessive claims by shifting the excess portion of the claims to a third party.
To be reimbursed for excess retiree health acre claims, plans must request reimbursement from the trust fund. Once approved by the Secretary, the fund will reimburse plans 80% of the cost of the actual retiree claims paid in excess of $15,000 but less than $90,000. These amounts are annually indexed to the medical portion of the CPI in multiples of $1,000. Reimbursement must be applied to the overall cost of the retiree’s health care plan and cannot be used as general revenue by the plan’s sponsor. (Does this lessen the fiscal dependency on the plan sponsor’s revenue stream by maintaining overall plan costs? Does this encourage the retention of retiree health care plans in the face of FAS 106?)
Thursday, November 26, 2009
Wednesday, November 25, 2009
I was recently asked to share my thoughts on talent retention and responded with:
Retention of top organizational talent is essential during both good and bad economic times.
Yes, you can raid your competition’s top talent pool, but that is a two way street and can lead to a bidding war, loss of customers, and public image.
Retention of top organizational talent is essential during both good and bad economic times.
Yes, you can raid your competition’s top talent pool, but that is a two way street and can lead to a bidding war, loss of customers, and public image.
The 10 Laws of Talent Retention:
1. Know the job and hire the right person for the right job.
The smartest and brightest person will fail if hired for the wrong job
and/or the wrong reason.
2. Integrate the new hire into the organization’s culture quickly.
That high achiever cannot perform unless they assimilate into your
organization, painlessly and quickly.
3. Reward them with the right monetary incentives.
Pay them for what they are worth and allow them to grow
monetarily with the organization. Use a total rewards strategy
that uses a holistic approach to rewarding the high achiever.
4. Recognize them to the organization.
Let others in the organization know about their
achievements and often. Let them mentor others as a
form of recognition, use the organization’s informational
outlets, make them the organization’s standard.
5. Fast track them on a “sustainable” track.
Build a career track that they cannot out grow. If they out
grow their development plan in 3-5 years they are going
to be easy targets for your competition.
6. Challenge them with each next hurdle.
Make them work for that next level of achievement. Pre-position
them as the only “one” who can get that assignment done.
7. Have a customized retention plan for each high achiever.
One size does not work in shoes and it does not work in career
development plans. Allow them an opportunity to pick that next
assignment, location, office or plant.
8. Ensure a proper work-life balance.
All work and no play makes for a burned out, de-motivated under
performing Jack. A divorced Jack, a Jack with substance issues or
an over taxed Jack will be no good to you, them or the organization.
9. Provide for life long learning opportunities.
That high achiever is going to need a different set of knowledge, skills, and
abilities at each new level. The skills they brought to the original job,
may not be the skills they need in 2, 3, 4 or 5 years.
10. Measure the retention climate.
You must be able to measure whether your retention plans are doing
what they are intended to do. Gather data through performance
review feedback sessions, formal and informal, talk to their peers,
and subordinates.
Some possible books:
Managing Talent Retention: An ROI Approach by Jack J. Phillips and Lisa Edwards (Hardcover - Dec 22, 2008)
Competing for Talent: Key Recruitment and Retention Strategies for Becoming an Employer of Choice by Nancy S. Ahlrichs (Hardcover - Nov 25, 2000)
The Retention of Talent: How to Connect with Young Workers by Ken Dychtwald, Tamara J. Erickson, and Robert Morison (Digital - Mar 3, 2009)
Reinventing Talent Management: How to Maximize Performance in the New Marketplace by William A. Schiemann and Susan R. Meisinger (Hardcover - Jul 7, 2009)
Some possible websites:
Talent Management Magazine
www.talentmgt.com/recruitment_retention
The Center for TALENT SOLUTIONS (CTS)
www.centerfortalentretention.com
American Institutes for Research
www.air.org/topics/topic_talent_retention.aspx
This Special Report on Talent Retention
www.deloitte.com/view/en_US/us/Services/additional-service...VCM100000ba42f00aRCRD.htm
Wednesday, November 25, 2009
How will the ‘‘Affordable Health Care for America Act’’ treat pre-existing conditions?
The Act removes the current “look-back” timeframe of 6 months and replaces it with a 30-day look-back period. In addition, the Act reduces the exclusionary period from the current 12 to 3 months. Furthermore, the Act reduces the 18-month exclusionary period in the case of late enrollees to 9 months. This, obviously, shortens the time period that a plan can review the individual’s prior medical history for possibly pre-existing conditions and lessens the future time period the plan can use to exclude coverage for pre-existing conditions that occurred prior to an individual’s enrollment into the plan. However, once a health care plan is subject to § 211 of the Act all application of pre-existing conditions are prohibited. Most group health care plans will be subject to § 211 on January 1, 2010, certain exceptions apply for collectedly bargained plans.
The Act specifically notes that group and individual plans may not treat “domestic violence” as a pre-existing condition for any plan “offered, sold, issued, renewed, in effect, or operated” on or after January 1, 2010.
The Act prohibits, group and individual health care plans that offer surgical benefits, from denying coverage and treatment of a “minor child’s congenital or developmental deformity or disorder”. For the purposes of this provision, a minor child is any otherwise dependent child under the age of 21. However, the Act does exclude cosmetic surgery used to alter a normal body structure to “improve appearance or self-esteem”.
The Act prohibits the imposition of “aggregate dollar lifetime limits” on payable benefits for members and their dependents of group and individual health care plans. This provision is effective for plan years beginning on or after January 1, 2010.
How will the ‘‘Affordable Health Care for America Act’’ treat pre-existing conditions?
The Act removes the current “look-back” timeframe of 6 months and replaces it with a 30-day look-back period. In addition, the Act reduces the exclusionary period from the current 12 to 3 months. Furthermore, the Act reduces the 18-month exclusionary period in the case of late enrollees to 9 months. This, obviously, shortens the time period that a plan can review the individual’s prior medical history for possibly pre-existing conditions and lessens the future time period the plan can use to exclude coverage for pre-existing conditions that occurred prior to an individual’s enrollment into the plan. However, once a health care plan is subject to § 211 of the Act all application of pre-existing conditions are prohibited. Most group health care plans will be subject to § 211 on January 1, 2010, certain exceptions apply for collectedly bargained plans.
The Act specifically notes that group and individual plans may not treat “domestic violence” as a pre-existing condition for any plan “offered, sold, issued, renewed, in effect, or operated” on or after January 1, 2010.
The Act prohibits, group and individual health care plans that offer surgical benefits, from denying coverage and treatment of a “minor child’s congenital or developmental deformity or disorder”. For the purposes of this provision, a minor child is any otherwise dependent child under the age of 21. However, the Act does exclude cosmetic surgery used to alter a normal body structure to “improve appearance or self-esteem”.
The Act prohibits the imposition of “aggregate dollar lifetime limits” on payable benefits for members and their dependents of group and individual health care plans. This provision is effective for plan years beginning on or after January 1, 2010.
Tuesday, November 24, 2009
Tuesday, November 24, 2009
How will the ‘‘Affordable Health Care for America Act’’ ensure lower health care premiums‘‘?
The Act provides that a individual or group market plan’s “medical loss ratio” cannot be less that 85%, if it is, the Act allows for rebates back to the enrollees. However, the Secretary is permitted to apply an exception to individual market plans if such rebates “destabilize” that market. Some carriers currently allow for similar rebates under certain contract or plan conditions. Furthermore, the Secretary is empowered by the ACT to establish a definition for medical loss ratios and the methodology for their calculations, excluding State taxes and licensing/regulatory fees. Provisions for rebates do expire once Health Insurance Exchanges are established, currently expected to place by 2012.
Rescission is the process by which a carrier declines renewal of either an individual or group health care plan. The Act allows for rescission only in cases of fraud and only then after the individual or group policy holder has been informed of such proposed rescission and after a “third party review” process has taken place. While the “rescission process” is under review, individual or group health care coverage remains in force.
The Act requires the Secretary, in conjunction with States, to review annual premium increases proposed by the various insurance carriers, who then must justify such increases. A typical employer based heath care group plan that renews on January 1 or each year will start that renewal process in the July-August-September time frame. This means that an additional amount of time will need to be built into the renewal to allow for the Secretary’s review process. So, even after the employer’s broker/consultant has negotiated the best possible renewal rate, that rate may not pass muster with the Secretary’s review.
Coverage for a Qualified Child, the Act allows for continued coverage of an uninsured dependent through the age of 26 within group and individual plans. The individual must be a dependent as defined by the plan and must be uninsured.
How will the ‘‘Affordable Health Care for America Act’’ ensure lower health care premiums‘‘?
The Act provides that a individual or group market plan’s “medical loss ratio” cannot be less that 85%, if it is, the Act allows for rebates back to the enrollees. However, the Secretary is permitted to apply an exception to individual market plans if such rebates “destabilize” that market. Some carriers currently allow for similar rebates under certain contract or plan conditions. Furthermore, the Secretary is empowered by the ACT to establish a definition for medical loss ratios and the methodology for their calculations, excluding State taxes and licensing/regulatory fees. Provisions for rebates do expire once Health Insurance Exchanges are established, currently expected to place by 2012.
Rescission is the process by which a carrier declines renewal of either an individual or group health care plan. The Act allows for rescission only in cases of fraud and only then after the individual or group policy holder has been informed of such proposed rescission and after a “third party review” process has taken place. While the “rescission process” is under review, individual or group health care coverage remains in force.
The Act requires the Secretary, in conjunction with States, to review annual premium increases proposed by the various insurance carriers, who then must justify such increases. A typical employer based heath care group plan that renews on January 1 or each year will start that renewal process in the July-August-September time frame. This means that an additional amount of time will need to be built into the renewal to allow for the Secretary’s review process. So, even after the employer’s broker/consultant has negotiated the best possible renewal rate, that rate may not pass muster with the Secretary’s review.
Coverage for a Qualified Child, the Act allows for continued coverage of an uninsured dependent through the age of 26 within group and individual plans. The individual must be a dependent as defined by the plan and must be uninsured.
Monday, November 23, 2009
Monday, November 23, 2009
How will excess claims cost exposure be limited for “high risk pools” under the ‘‘Affordable Health Care for America Act’’?
The Act allows for three limiting or controlling factors; the premiums charged, an annual individual deductible of $1,500, and an annual out-of-pocket expenses of $5,000 and $10,000 for individuals and families respectively. The Act does allow for higher deductables for family coverage “as determined by the Secretary”. There will be individuals, due to whatever reasons, who fail or refuse (even with penalties) to enroll in a high risk plan even with subsidized premiums. Even for those who do elect to enroll, some will not seek care since the deductibles and out-of-pocket expenses will act as a gatekeeper.
Depending on the funding sources for high risk pools, states will be required to continue funding pools at a level no less than the current level. In those states where health insurance carriers are assessed fees for funding the pool, states will be required to continue that process.
Under the Act, participation in a state high risk plan will be treated as “Creditable Coverage”. That means at some future point in time, a high risk pool participant could, conceivably, obtain coverage from a standard risk plan, either through their employer or from the individual plan market. Thus it may be possible for uninsured or for individuals with gaps in their coverage to transfer into a lower cost employment based or individual plan at standard rates as their high risk health conditions are mitigated over time.
The Act does appropriate $5 billion dollars (in excess of premiums collected) to cover administrative and claims expenses from the Treasury and does so “without fiscal year limitation”. Furthermore, the Act permits the Secretary (HHS) to reduce benefits, increase premiums, and/or establish waiting lists as a means of managing costs.
Finally, high risk pools will terminate once the Health Insurance Exchanges are established. While Health Insurance Exchanges are expected to be in place by 2012, to avoid a lapse in coverage for high risk individuals, the Secretary may authorize high risk pools to be extended beyond 2012.
How will excess claims cost exposure be limited for “high risk pools” under the ‘‘Affordable Health Care for America Act’’?
The Act allows for three limiting or controlling factors; the premiums charged, an annual individual deductible of $1,500, and an annual out-of-pocket expenses of $5,000 and $10,000 for individuals and families respectively. The Act does allow for higher deductables for family coverage “as determined by the Secretary”. There will be individuals, due to whatever reasons, who fail or refuse (even with penalties) to enroll in a high risk plan even with subsidized premiums. Even for those who do elect to enroll, some will not seek care since the deductibles and out-of-pocket expenses will act as a gatekeeper.
Depending on the funding sources for high risk pools, states will be required to continue funding pools at a level no less than the current level. In those states where health insurance carriers are assessed fees for funding the pool, states will be required to continue that process.
Under the Act, participation in a state high risk plan will be treated as “Creditable Coverage”. That means at some future point in time, a high risk pool participant could, conceivably, obtain coverage from a standard risk plan, either through their employer or from the individual plan market. Thus it may be possible for uninsured or for individuals with gaps in their coverage to transfer into a lower cost employment based or individual plan at standard rates as their high risk health conditions are mitigated over time.
The Act does appropriate $5 billion dollars (in excess of premiums collected) to cover administrative and claims expenses from the Treasury and does so “without fiscal year limitation”. Furthermore, the Act permits the Secretary (HHS) to reduce benefits, increase premiums, and/or establish waiting lists as a means of managing costs.
Finally, high risk pools will terminate once the Health Insurance Exchanges are established. While Health Insurance Exchanges are expected to be in place by 2012, to avoid a lapse in coverage for high risk individuals, the Secretary may authorize high risk pools to be extended beyond 2012.
Saturday, November 21, 2009
Saturday, November 21, 2009
How will premiums for “high risk pools” be set under the ‘‘Affordable Health Care for America Act’’?
Anyone with an actuarial or underwriting background understands that determining the risk and setting of premiums associated with large health care plans is as much an art as it is a science. Even in a large group plan, a small number of high dollar claims can skew premiums in an upward direction in only one plan premium cycle. Presumably, since many of these individuals are going to be newly insured or have had significant gaps in prior coverage, they may have latent medical issues that have not been properly addressed. The potential for high dollar medical issues, yet to be discovered and treated looms large as these individuals are brought into the insurance arena.
The House bill proposes to allow premiums to be age and geographic specific so long as the highest premium does not have a ratio greater than 2 to 1 to the lowest premium, or premiums do not exceed 125% of prevailing standard rates for similar coverage. Clearly, without some correlation to actual claims experience, these high risk pools cannot have an actuarial basis for premium setting. By the very nature of applying only age and geographic factors and ignoring actual claims experience, resulting premiums will under price coverage thus leading to a deficit in premium dollars collected. It can reasonably be assumed that individuals eligible for a high risk pool will experience more and larger claims than their non-high risk pool counterparts.
If premiums collected from high risk pooled individuals are insignificant to cover administrative and claims expenses, from where will the balance come? It must come from Federal and/or state revenues?
How will premiums for “high risk pools” be set under the ‘‘Affordable Health Care for America Act’’?
Anyone with an actuarial or underwriting background understands that determining the risk and setting of premiums associated with large health care plans is as much an art as it is a science. Even in a large group plan, a small number of high dollar claims can skew premiums in an upward direction in only one plan premium cycle. Presumably, since many of these individuals are going to be newly insured or have had significant gaps in prior coverage, they may have latent medical issues that have not been properly addressed. The potential for high dollar medical issues, yet to be discovered and treated looms large as these individuals are brought into the insurance arena.
The House bill proposes to allow premiums to be age and geographic specific so long as the highest premium does not have a ratio greater than 2 to 1 to the lowest premium, or premiums do not exceed 125% of prevailing standard rates for similar coverage. Clearly, without some correlation to actual claims experience, these high risk pools cannot have an actuarial basis for premium setting. By the very nature of applying only age and geographic factors and ignoring actual claims experience, resulting premiums will under price coverage thus leading to a deficit in premium dollars collected. It can reasonably be assumed that individuals eligible for a high risk pool will experience more and larger claims than their non-high risk pool counterparts.
If premiums collected from high risk pooled individuals are insignificant to cover administrative and claims expenses, from where will the balance come? It must come from Federal and/or state revenues?
Friday, November 20, 2009
Friday, November 20, 2009
As with most legislation, the “devil is in the details”, this is also true for H. R. 3962: the ‘‘Affordable Health Care for America Act’’ recently passed by the U. S. House of Representatives on November 7, 2009, by a vote of 220-215.
Title I—Immediate Reforms: the ‘‘Affordable Health Care for America Act’’ addresses the creation of temporary “high risk pools” to allow certain uninsurable individuals to purchase health insurance coverage through a state based pooled risk program. The Act provides the Secretary of Health and Human Services the power to form such pools in cooperation with states using existing or newly created pools beginning on January 1, 2010.
To be eligible to participate in such pools, individuals, including dependents, must not be eligible for an employment based plan, any of the various public health care plans (Medicare, Medicaid, … etc.), must have been without employment based coverage for at least 6 months, must have applied for and been denied coverage by a private health insurance carrier, must have applied for private coverage but been rated at a premium higher than the high risk pool rate, and/or “who has an eligible medical condition as defined by the Secretary”.
The Act provides the Secretary with the ability to assess health insurance carriers and employment based plans (i.e., employers) with penalties if the Secretary determines that the carrier and/or employment based plan “discouraged” the individual from remaining enrolled in the prior plan. Would a 25%, 50%, 75% or 100% increase in premiums constitute discouragement? If the premium increase is applied to ALL enrolled individuals, is that considered discouragement?
As with most legislation, the “devil is in the details”, this is also true for H. R. 3962: the ‘‘Affordable Health Care for America Act’’ recently passed by the U. S. House of Representatives on November 7, 2009, by a vote of 220-215.
Title I—Immediate Reforms: the ‘‘Affordable Health Care for America Act’’ addresses the creation of temporary “high risk pools” to allow certain uninsurable individuals to purchase health insurance coverage through a state based pooled risk program. The Act provides the Secretary of Health and Human Services the power to form such pools in cooperation with states using existing or newly created pools beginning on January 1, 2010.
To be eligible to participate in such pools, individuals, including dependents, must not be eligible for an employment based plan, any of the various public health care plans (Medicare, Medicaid, … etc.), must have been without employment based coverage for at least 6 months, must have applied for and been denied coverage by a private health insurance carrier, must have applied for private coverage but been rated at a premium higher than the high risk pool rate, and/or “who has an eligible medical condition as defined by the Secretary”.
The Act provides the Secretary with the ability to assess health insurance carriers and employment based plans (i.e., employers) with penalties if the Secretary determines that the carrier and/or employment based plan “discouraged” the individual from remaining enrolled in the prior plan. Would a 25%, 50%, 75% or 100% increase in premiums constitute discouragement? If the premium increase is applied to ALL enrolled individuals, is that considered discouragement?
Thursday, November 19, 2009
Thursday, November 19, 2009
I believe that we are living in unprecedented times. Those of us in HR are faced and have been faced with many significant challenges and are now faced with the real possibility of some form of mandated national health care policy. With the debate in the House over, all that is left to be seen is the outcome of the pending vote before the Senate. I entered HR long after ERISA was passed so I can only image the debate that occurred as that historic legislation was being argued. Whether you agree or disagree on the national health care policy unfolding, you must admit that it is truly a historic event. It is hard to image that the insurance and healthcare industries will look the same in 10 years as they do today. This legislation will impact virtually every American employer and their workers and should be seen in the bright light of other social enactments that have preceded it.
While the volume and lack of details are to be found or not found in the pages of the legislation, it will fall to various departments of several Federal agencies to write the regulations to actually implement this experiment. Even with a scheduled implementation spread over many years, the challenge HR professionals face is how to help our organizations cope with such massive cultural, social, and economic changes.
Having helped one organization through the implementation of The 2006 Massachusetts Health Care Reform Law, I see many similarities to the national health care policy that every employer and citizen is now facing. If the past is any predictor of the future, our Government will need some process to “certify” that employers and citizens are complying with this new national policy. For me, that means new reports or amended reports (IRS 5500’s) for annual health care plan filings.
As an HR professional, I should begin thinking about how this will or will not impact my organization(s).
I believe that we are living in unprecedented times. Those of us in HR are faced and have been faced with many significant challenges and are now faced with the real possibility of some form of mandated national health care policy. With the debate in the House over, all that is left to be seen is the outcome of the pending vote before the Senate. I entered HR long after ERISA was passed so I can only image the debate that occurred as that historic legislation was being argued. Whether you agree or disagree on the national health care policy unfolding, you must admit that it is truly a historic event. It is hard to image that the insurance and healthcare industries will look the same in 10 years as they do today. This legislation will impact virtually every American employer and their workers and should be seen in the bright light of other social enactments that have preceded it.
While the volume and lack of details are to be found or not found in the pages of the legislation, it will fall to various departments of several Federal agencies to write the regulations to actually implement this experiment. Even with a scheduled implementation spread over many years, the challenge HR professionals face is how to help our organizations cope with such massive cultural, social, and economic changes.
Having helped one organization through the implementation of The 2006 Massachusetts Health Care Reform Law, I see many similarities to the national health care policy that every employer and citizen is now facing. If the past is any predictor of the future, our Government will need some process to “certify” that employers and citizens are complying with this new national policy. For me, that means new reports or amended reports (IRS 5500’s) for annual health care plan filings.
As an HR professional, I should begin thinking about how this will or will not impact my organization(s).
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