Tag Archives: employee benefits

Will Amazon, Berkshire Hathaway and JP Morgan Change Healthcare for Employers?

Contributed by Suzannah Wilson Overholt, February 19, 2018

What happens when you combine Amazon, Berkshire Hathaway and JPMorgan Chase? Apparently, a new non-profit health care company. That was the news last month when the three companies announced that they are forming their own health care company to increase transparency for their employees.

Health Insurance and Money

Health insurance policy and dollar bills on white background 

Anyone involved with employee benefits knows that one of the most dreaded moments annually is getting the renewal quote for the health benefit plans. The quote starts the agonizing dance of trying to get the astronomical increase to a manageable number while calming the budgeting folks, panicked by the opening salvo. The idea of somehow removing the mystery and agony of that process is incredibly appealing. But is it possible? Maybe.

The push for transparency appears to be aimed at the elimination of the overhead costs that are built into the health insurance expense. According to the Wall Street Journal, the new venture plans to help current vendors work better by focusing on technology solutions, improved patient experience and customer service.  Initiatives might include flat fees and using technology to provide more tracking and care outside traditional health-care settings. The final outcome could result in providers being adequately paid for the services they provide, new technology for streamlining services, and reduced costs due to elimination of unnecessary overhead charged by the insurance companies.

While the new company will be focused on the employees of its founders, its success will likely have a ripple effect. The companies hope the project will save them hundreds of millions of dollars and possibly be a blueprint for others.

The gain for employers would be a potential reduction in the cost of insurance, which, as reported by SHRM, currently consumes on average around 10% of operating budgets. While CNN reports that the rate of increase has slowed over the past few years, a recent study found that employers expect health care costs to increase by more than 5% this year. Thus, reduced costs could eliminate the annual debate between giving raises or keeping insurance contributions in check.

Don’t expect changes anytime soon, though. The existing insurance marketplace has big players with the infrastructure to provide services to millions of people. The new company will have to prove itself. We’ll keep you posted.

 

Salary History Inquiry Bill Down But Far From Out

Contributed by Noah A. Frank, September 19, 2017

wage

On June 28, 2017, HB 2462, an amendment to the Illinois Equal Pay Act, passed both chambers of Illinois General Assembly. The bill would have made an employer’s inquiry into an applicants’ wage, benefits, and other compensation history an unlawful form of discrimination. Even worse for Illinois employers, the bill would allow for compensatory damages, special damages of up to $10,000, injunctive relief, and attorney fees through a private cause of action with a five (5) year statute of limitations.

On August 25, 2017, Governor Rauner vetoed the bill with a special message to the legislature that, while the gender wage gap must be eliminated, Illinois’ new law should be modeled after Massachusetts’s “best-in-the-country” law on the topic, and that he would support a bill that more closely resembled Massachusetts’ law.

The bill, which passed 91 to 24 in the House, and 35 to 18 in the Senate, could be reintroduced as new or amended legislation following the Governor’s statement, or the General Assembly could override the veto (71 votes are needed in the House, and 36 in the Senate, so this is possible) with the current language.

Why is this important?

With the Trump Administration, we have seen an increase in local regulation of labor and employment law. This means that employers located in multiple states, counties, and cities must carefully pay attention to the various laws impacting their workforces. Examples of this type of “piecemeal legislation” we have already seen in Illinois and across the country include local ordinances impacting minimum wage, paid sick leave, and other mandated leaves. Additionally, laws that go into effect in other jurisdictions may foreshadow changes at home as well (e.g., Illinois’s governor pointing towards Massachusetts’s exemplary statue).

Had it become law, this amendment would have effective required employers to keep applications and interview records (even for those they did not hire) for five years to comply with the statute of limitations for an unlawful wage inquiry (the Illinois Equal Pay Act already imposes a five year status of limitations for other discriminatory pay practices). By contrast, under Federal law, application records must be kept for only one year from the date of making the record or the personnel action involved (2 years for educational institutions and state and local governments).

What do you do now?

While the law has not gone into effect as of the date of this blog, it is likely that some form of the salary history amendment will ultimately become law in Illinois. Businesses should carefully review their job applications, interview questions, and related policies to avoid inquiries that may lead to challenges in the hiring process.

Additionally, record retention (and destruction!) policies should be reviewed for compliance with these and other statutes – as well as to ensure data integrity and security.

Finally, seek the advice of experienced employment counsel for best practices in light of national trends to remain proactive with an ounce of prevention

Will Your Employees be More Interested in Health Insurance Subsidies than Your Group Health Plan?

Contributed by Rebecca Dobbs Bush

While most of us have had just about enough when it comes to discussing Health Care Reform, the discussions aren’t even close to being over.  The most anticipated provisions, the individual and employer mandates, are scheduled to take effect January 1, 2014. 

Many employers are focused on more of an internal analysis – evaluating whether they need to implement a group health plan or change the structure of their current benefit offerings to manage their exposure to penalties under the employer mandate provisions.  At the same time, it is critical to understand the options for individuals to receive subsidies and the availability of individual plans for purchase on state/federal insurance exchanges.  Along with the mandate provisions, insurance exchanges and individual subsidies also become available as of January 1, 2014.  As an employer, have you determined how many in your workforce might be eligible for subsidies in the event you didn’t offer insurance or in the event your group health plan offering is not “affordable” and of “minimum value?”  Not only should you be looking at this to be able to evaluate compensation and benefits offerings to employees, whether an individual is eligible for a subsidy can determine whether you have any penalty exposure for that particular individual.

Citizens and legal residents with household incomes between 100% and 400% of the federal poverty level (who purchase coverage through a health insurance exchange and do not have access to an “affordable” health plan of “minimum value” through their employer) are eligible to receive a monthly advance tax credit to reduce the cost of their coverage.  The amount a person can receive is based on the premium for the second lowest cost plan available on the exchange (i.e., a silver plan) and varies based on their income. 

For example, a household of 4 earning approximately $46,100 is at 200% of the federal poverty level.  This family would not have to pay more than 6.3% of their income ($2,904.30) if they decide to purchase coverage on the exchange at a benchmark level of silver or lower.  For the sake of example, if you assume the annual cost of family coverage in a silver plan is around $10,000, this family would receive monthly tax credits in advance totaling approximately $7,000 annually.  The amount they receive in subsidies is tied to the cost of the silver plan.  However, they are free to access the same amount of subsidy and use it to purchase the cheaper bronze plan. 

For those between 100% to 250% of the federal poverty level, they would also be eligible for subsidies to assist with out-of-pocket costs at the point of service, such as deductibles, copayments and coinsurance.  In the above example, if the family purchased a silver plan (which will have an actuarial value of 70%), they would receive additional subsidies to essentially improve the actuarial value of their coverage to 87%.

But remember, access to all of these subsidies for the family in the example above disappears where an employer offers “affordable coverage” at a “minimum value.”  Based on IRS clarification, an employer’s coverage is “affordable” and of “minimum value” if the cost of covering the employee only is no more than 9.5% of that employee’s income and the actuarial value of the plan is at least 60%.  The test for affordability is not based on the cost of family coverage in an employer’s health plan.

It is estimated that approximately 68% of the population is at or below 400% of the federal poverty level.  Have you evaluated how many employees in your workforce might be eligible to receive a subsidy and how your anticipated benefit offerings compare?  The Kaiser Family Foundation has published a subsidy calculator to use in examining the impact of the subsidy at different income levels, ages, family sizes, and regional costs.  It can be found here:  http://healthreform.kff.org/subsidycalculator.aspx