Providing quality affordable health care is one of the great stresses placed on employers as costs keep rising, plans keep changing, and employees factor in such benefits when choosing where to work. As such, employers in New York must ensure that their company offers the best health care options possible.
The 2019 rates in New York will increase by:
| Type | Rate Increase Requested | DFS Weighted Average Approved |
| Individual Market | 24.7% | 8.6% |
| Small Group Market | 7.5% | 3.8% |
(Source David Capo, One Group)
The average medical cost trend is a 6% increase. A small group has 1-99 employees and a large group is 99 and up. So what types of health plans can be offered? Here are the main options:
- PPO (Preferred Provider Offering) or POS (Point of Service)
A plan with a strong network of providers which also provides coverage for out of network providers, usually a rich plan with lower out of pocket costs for the member - EPO (Exclusive Provider Offering)
A plan with a strong or limited network of providers and does not offer any type of out of network coverage (except for emergencies). Also tends to have richer benefits - EPO Cost Share (EPOc)
An EPO plan with a deductible that applies to hospital and sometime other services such as lab work, MRI’s and x-rays.This is the most popular plan type for New York employers. - HDHP High Deductible Health Plan (or HSA Plan)
Can either be a PPO/POS or EPO and is a plan that has no first dollar coverage (except for routine preventative). There is a deductible which applies to all non-routine preventative services. Allows pre-tax contributions to a Health Savings Account (HSA) which is an individually owned bank account setup for medical expenses. This is a popular option for healthier people with low or inexpensive utilization. Deductibles ranged from $1,300 and to $6,550 in 2017.
It is vital for the small group market to set cost containment strategies through defined contributions, provide a set amount you will reimburse an employer instead of a flat % of premium. Then allow employees the option to buy-up to a richer plan. Health Pass works well for this type of setup because of the many options an employer can offer. It is important to be careful though, as employee out of pocket costs rise they may very well look to leave and/or work less efficiently for you.
Health Pass Examples:
Defined Monthly Single Employer Contribution = $350
- PPO Monthly Premium = $780
Less Employer Contribution- $350
Employee Cost = $430 - EPO Monthly Premium = $590
Less Employer Contribution- $350
Employee Cost = $240 - HSA Monthly Premium = $430
Less Employer Contribution- $350
Employee Cost = $ 80
(Source David Capo, One Group)
Another cost containment strategy is known as HRA (Health Reimbursement Account) gap funding. This is a means of self-insuring a small piece of medical plan with the potential to drastically reduce cost.
HRA is a vehicle for employers to provide tax free funds to employees for out of pocket medical expenses. The employer decides what type of expenses are eligible for reimbursement and retains any unused funds at the end of the plan year. Here’s how it looks:
| Example | Current Plan W/O HRA | Plan With HRA |
| Carrier | Oxford | Oxford |
| Deductible | $1,250 | $2,750 |
| Office Copay | $15-No Deductible | $15-No Deductible |
| Lab Work | No Charge | No Charge |
| Hospital/Surgery | Deductible | Deductible |
| Emergency | $100 Copay-No Deductible | $100 Copay-No Deductible |
| Prescription | $10-Generic, $20-Brand, $40-Non-Formulary | $10-Generic, $20-Brand, $40-Non-Formulary |
| HRA Benefit | None | $2,500/$5,000 for Deductible |
| Total Premium | $522,000 | $412,000 |
| HRA Expense | NA | $28,000 |
| Total Cost | $522,00 | $440,000 |
| Savings | $82,000 |
(Source David Capo, One Group)
Some small groups may wish to use PEO’s (Professional Employer Organizations) under which an employer can outsource employee management tasks, such as HR, employee benefits, payroll and workers’ compensation. Some firms also can help with recruiting, risk/safety management, and training and development. The pros of this are access to large company type benefits, the ability to reduce benefit costs, and human resources and payroll functions transferred to the PEO. The cons are payroll must be moved to the PEO, may lose some freedom to hire and fire at will, and employees technically become ‘leased’ where they will be paid by the PEO.
Lastly, small groups may look to Limited Network Plans which are health plans that use a smaller network of providers. These providers usually have demonstrated they can provide more efficient care or have agreed to accept lower contracted rates from the health plan which allows for lower premiums on average 5% to 20%. In New York they are:
| Oxford Health Plans | Empire BCBS | Aetna |
| Freedom | PPO | Elect Choice EPO |
| Liberty | Blue Priority | Managed Choice POS |
| Freedom Metro | HMO |
(Source David Capo, One Group)
Providing the plan is just one aspect of course. The second is education. The more informed all employees are about how the plan works the better. Don’t just hand them a packet and be done with it. Really make sure they understand. It is not a bad idea to have your insurance broker come to the office to go over the health care plan with employees once a year. Someone from HR or management should go over the plan upon hiring as well. In fact, there are laundry lists of requirements and notices that must be given:
Notice Due Upon Hire
| Due Date | Benefit Notice | Explanation | Given |
| No later than 14 days after hire | Availability of Health Insurance Options | Marketplace Existence | All New Employees |
(Source: Sharika Gordon, St. John’s Episcopal)
Notices Due when Enrollment is Offered
| Due Date | Benefit Notice | Explanation | Given |
| With enrollment materials & renewal of coverage
Within 90 days of special enrollment No later than 7 business days following request |
Summary of benefits & coverage and uniform glossary | Short, easy to understand summary of the plan’s benefits and coverage, as well as a uniform glossary of standard terms | Persons eligible to enroll |
| At or before each enrollment period | Notice of special enrollment rights | Describes the plan’s special enrollment rules | Persons eligible to enroll |
| With any materials describing the plan’s benefits
Grandfathered plans only |
Disclosure of Grandfathered plan status | Statement that the plan is grandfathered & contact info | Persons eligible to enroll |
| At enrollment & annually | Women’s Health & Cancer Rights Act | Describes required plan benefits for mastectomy-related services | Persons eligible to enroll |
| At enrollment & annually | Employer CHIP Notice | Information about possible premium assistance under state’s Medicaid or CHIP | All eligible employees |
(Source: Sharika Gordon, St. John’s Episcopal)
Notices Due when Enrollment is Made
| Due Date | Benefit Notice | Explanation | Given |
| Upon enrollment in the plan | HIPAA Notice of privacy practices for protected health information | Describes ways the plan may use & disclose individual protected health information, employee’s rights, and the plans duties to protect them | Plan participants & beneficiaries |
| Within 90 days after health coverage begins | General notice of COBRA rights | Explains rights to purchase temporary extension of group health coverage when coverage is lost to qualifying event | Plan participants & beneficiaries |
| With materials describing the terms of a wellness program | Wellness program disclosure | Depending on program:
HIPPA is required for health-contingent wellness program
EEOC notice is required if program collects participant’s health information |
Eligible Participants |
(Source: Sharika Gordon, St. John’s Episcopal)
Notices Due by Certain Events
| Due Date | Benefit Notice | Explanation | Given |
| At least 30 days before rescission of coverage | Notice of recession of coverage | Advance written notice of recession including date of & reason for | Affected participants & beneficiaries |
| Upon request for certification of student status (plans offering coverage for students age 26 and up) | Michelle’s Law enrollment notice | Describes child’s right to continue coverage during medically necessary leave of absence from postsecondary education institution | Plan participants |
| Varies depending on the type pf claim involved | Notice of benefit determination | Information regarding benefit claim determinations
Additional information based upon adverse decisions/appeals |
Claimants |
| Promptly upon receipt of the medical child support order | Medical Child Support Order | Notification regarding receipt of a support order & description of the plan’s procedures for determining status | Participants, any child named in the order and the child’s representative |
| No later than 20 days of the date of the notice, send Part A to the state agency or Part B to the plan administrator
Must notify affected persons ASAP Plan administrator must complete and return Part B to the state agency & affected persons within 40 business days |
National Medical Support Notice | Notice used by state child support enforcement agencies, directing employer’s plan to enroll the child | State agencies, employers, plan administrators, participants, custodial parents, child representatives |
| Upon request | Mental Health Parity & Addition Equity Act Disclosure | Describes criteria for determining medical necessity for mental health or substance use disorder benefits | Current or potential participants, beneficiaries, or contracting healthcare providers. |
| For affected individuals no later than 60 calendar days after discovery of breach
For annual report: if breach affect fewer than 500 individuals, no later than 60 days after the end of the calendar year in which breach occurred. If breach affect more than 500 individuals, no later than 60 calendar days after discovery |
HIPPA notice of breach unsecured protected health information | Provides information related to the discovery of a breach of unsecured protected health information with steps individuals should take to protect themselves and what the administrator is doing to fix the situation | Affected individuals, US Department of Health & Human Services, and media outlets for large breaches affecting more than 500 residents of a state or jurisdiction |
| COBRA | |||
| Within 30 days of a covered dependent losing coverage | Notice of qualifying event | Notice of covered dependent’s loss of eligibility if a qualifying event that triggers COBRA | Plan administrator |
| Within 14 days after receiving notice of COBRA qualifying event OR within 44 days of the qualifying event if the employer is also the plan administrator | COBRA election notice | Describes right to COBRA continuation coverage, along with election form and cost information | Qualified beneficiaries |
| Within 14 days after receiving notice of qualifying event | Notice of Unavailability of COBRA coverage | Notice that the individual is not entitled to COBRA with reasons for denial | Individuals not qualified for COBRA |
| No less than 30 days after COBRA payment deficiency | Notice of underpayment of premium | Used when COBRA participant makes a timely but incorrect amount of payment for the premium | Participant making the underpayment |
| ASAP following determination that COBRA will terminate | Notice of early termination of coverage | Provides notice of termination earlier than the maximum period of coverage including date of, and reason for, termination as well as alternative coverage options | Qualified beneficiaries whose COBRA will terminate early |
(Source: Sharika Gordon, St. John’s Episcopal)
Notices Due by A Certain Date
| Due Date | Benefit Notice | Explanation | Given |
| Prior to October 15 each year
Prior to initial enrollment for Part D |
Medicare Part D | Informs Medicare eligible participants about prescription drug coverage | Medicare eligible plan participants |
| Prior to date of employer’s plan enrollment | |||
| Within 9 months after each plan year | Summary Annual Report | Summary of plan’s 5500 report |
(Source: Sharika Gordon, St. John’s Episcopal)
The last thing to mention is Association Health Plans. These are somewhat controversial and currently banned in New York State. Association Health Plans are an idea from the Trump administration to allow small employer groups and individuals to band together to obtain health insurance through associations such as:
- Professional organization
- Industry group
- Trade organization
- State or local chamber of commerce
This could go a long way to driving down costs of group health insurance plans, while allowing more employers the ability to offer health insurance. The controversy surrounding them stems from what is offered. These plans may have less regulations than essential health plans and may not be ACA (Obamacare) compliant. To that end, though they will increase membership to trade groups and various associations there is no guarantee that the plans offered will be any good. Certainly, any plan health plan offered on the market aught to be ACA complaint. That said, the ability for small businesses and industry to negotiate as one could go a long way to working through the myriad issues managers have to deal with while providing decent health care options. As health insurance works the larger the group, the more bargaining power they have and small businesses particularly ones with a few employees don’t have much.
One last thing to be aware of is the possibility of New York trying a single payer health care system. This concept has been discussed for years and is gaining popularity nationally, though the exact specifications vary. This is a major issue for Democrats who may be in control all branches of New York State’s government come 2019. It should be noted that single payer proposals failed in Colorado and Vermont recently.
*Note this article is based on a forum co-hosted by the Queens Chamber of Commerce.
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