We welcome your thoughts! Agree, take issue, have a question or comment? Get into the conversation and tell us what you think.

Thursday, July 9, 2015

Supreme Court Provides One More Piece of Critical Puzzle for Managing Your Classified Health Costs

Last week, the Supreme Court ruled that the health care premium subsidies granted in the Affordable Care Act will remain available to income-qualified individuals in all states, regardless of whether that state had set up their own health care exchange or not.  That includes Georgia!
So, for those Georgia school systems  struggling with the cost of State Health for classified staff and looking for a less costly health insurance alternative, this decision removes, for the foreseeable future anyway, one of the big unknowns:  Will the cost of an alternative plan fall to our system and our employees alone or will funding from a third source be possible?  Now we know.
Why is this important?  Because despite what a number of intrepid insurance brokers are peddling, a financially viable group health  insurance plan for this population is not feasible.  If it was, State Health would simply adjust the contribution requirements slightly and the problem would largely be solved.  After all, they can do it cheaper than an insurance company can.  Why?  Because SHBP is a huge, self-funded plan that has extremely low administrative cost and no insurance coverage or cost -- no individual stop-loss, no aggregate stop-loss --  and no commissions being paid to insurance brokers.  Let's say these costs are only 15% of the total (A very low guess).   That means a district's stand-alone plan would need to have claims costs that were at least 15% lower than what they are today to break even.  But why doesn't State Health want to keep these folks in the plan?   Because their claims costs are much higher than the SHBP average!   So what's the bottom line?   If it's a cost problem for State Health, it's a complete non-starter for your system or RESA.  And that's before you consider the additional responsibilities and  financial liability that will fall to your system with a stand-alone plan.  In short, any comparable, stand-alone plan will cost much more than SHBP.  Your system could never lower its cost and stay in compliance with the affordability test in the ACA and even if you could, the cost to the employee -- whether it be to join or to pay high deductibles, would never be affordable.
What the Court decision means to us in Georgia is that if we conclude that the cost to keep our classified staff in SHBP is simply unaffordable to our system -- either for our entire classified population or perhaps just those working under 30 hours -- then we are now free to devise a solution that has these lower-paid folks accessing the ACA Marketplace and taking advantage of the subsidies they can get there.  This will be more challenging and more costly to pull off for the over-30 hours folks but it would likely be financially feasible, where a stand-alone plan would not.  For the under-30 hour population, it will be far easier.
The lone, missing data point is how much SHBP will demand for each classified participant. 
We know the original 3-year plan was to increase that amount by $150/month for an aggregate increase of $450/month and a grand total of about $750/month.  But the third $150 increment was never taken.  We anticipate that the 2016 increase will be much more than the foregone $150 and that it could take us from the current level (just under $600/month) to $850 or more.  We should know the actual number very soon.   How many systems can find that money?   For those who can't, the solution will lie in taking advantage of the ACA subsidies and not in a stand-alone plan.
Taking  advantage of an ACA exchange-based approach will still require significant planning, employee education and assistance, and potentially significant system funding to create a workable plan if the goal is to keep these much needed people working for you.  Finding a trusted advisor to help you create and implement such a plan, rather than a broker interested in selling you more insurance and capturing more commissions will be key to your success.    

Tuesday, January 27, 2015

Responding to the Governor's Proposal on Classified Staff Working Less Than 30 Hours and State Health

Governor's Office of
Planning and Budget
Several days ago, the Governor's proposed budget was released for the 2015-2016 Fiscal Year. In it, there is a proposal to declare classified staff working less than 30 hours per week ineligible for State Health benefits effective in 2016.

The Governor's proposal points out the high cost of covering this cohort of workers -- cites some actual costs -- and expresses an expectation that those affected will be able to find coverage elsewhere. If passed, how does this affect school systems? 

Our new Whitepaper briefly discusses the cost considerations for public school systems and the individuals affected as well as practical considerations for both, in a health care coverage environment that is in turmoil due to the Affordable Care Act.

We hope it is helpful to you as you frame your System's response.  And as always, we welcome your calls and emails if you'd like to talk to us about this in more depth.

Click Here to Download the Whitepaper.

Friday, April 11, 2014

Should Georgia School Districts Establish a Stand Alone Medical Plan for Classified Participants?

I have debated writing and distributing an opinion on this topic because, as a fee-based consultant, our firm has "no horse in this race".  In other words, we're not trying to convince you to purchase a medical plan for classified staff (or related products -- such as hospital plans or telemedicine services).  Quite the opposite actually.  But at the same time, if we truly have your best interest at heart - we need to speak up when there is real danger in a particular path.  So here we go.
We recently became aware of a sales pitch that's being made to convince school systems  to pull their classified folks out of State Health and establish a separate medical plan (either as a single system or by RESA).  We understand the financial impact of State Health's 3-year premium increase (a cumulative increase of $450/month/person by the third fiscal year) and thus the motivation to search for alternatives.  That's as real as it gets.  But there are a host of practical and technical reasons why establishing a separate plan for classified staff is a terrible idea for school systems and not a viable solution to this cost problem.
The sales pitch we've reviewed suggests that The Affordable Care Act is a key reason to establish a separate plan, so that you can take control of your own destiny.  This is nonsense.  While we see very few real positives in the ACA, thanks to State Health and their handling of most of the compliance issues so far (and there will be more to come if the law survives), school systems are more protected than they are exposed.  And that will continue to be true in our opinion -- even if the employer mandate and the so-called "shared responsibility" provisions eventually go into effect.  If you establish a separate plan you take on ALL the responsibility -- not only for compliance -- but for everything: strategy, plan design, employee education, wellness, cost containment and administration.   And with all these new tasks comes much-increased and unavoidable financial risk that defies budgeting.  To be clear, much worse than anything State Health is throwing at you.
The take-away is this:  A separate medical plan, that your system would maintain for classified folks is very bad idea.  Maintaining and managing a RESA-based plan would be enormously complex and carry even more financial risk for members.  We have written a White Paper that provides all the analysis.  I hope you find it to be clear and helpful.  You can Download it here.   It's offered with your best interests in mind.

Best Regards-

Tuesday, June 4, 2013

Optimizing HR for Mobile

Where is your smart phone at this very moment?  Maybe you don’t have one, but if you do, we bet it’s within easy reach.  Not just now, but most of the time.  According to studies, over 90% of people keep their mobile devices next to them at all times.  What does this mean for School System HR and Benefits?  It means you have a powerful opportunity to reach people wherever they may be.  Not only can you reach people, but you can make their lives easier by optimizing your HR and Benefits operations for mobile devices.  And that helps you. We’ve seen bus drivers struggle to use a mouse with a computer, but in a world full of intuitive touch-screen devices, why should they have to? 

Optimizing HR for mobile is the next logical step in the HR technology evolution.  Mobile capability and opportunities will only continue to expand.  In our new Whitepaper "Optimizing HR for Mobile"  we explore ways to use mobile devices to streamline your HR activities and show you how some school districts are already making use of these powerful devices to communicate with applicants and employees in an efficient and compelling way.

Click Here to Download the Optimizing HR for Mobile whitepaper.

Posted By: Ali Stinson

Friday, April 26, 2013

Find Money Hidden in Your Benefit Program - Foil the Broker Shell Game

Historically, it’s been fairly simple for insurance brokers to conceal the dirty truth about how much extra money they collect when you allow them to call you their client.  We’ve shined a light on this topic many times over the years, but seen no action to stop it.  But now, it looks like school system HR folks and their purchasing departments are beginning to get wise to ways insurance brokers siphon money from benefits programs – sort of.

In 2012, we were pleased to see four RFPs requiring that at least some specific services be  broken out with an accompanying cost for each.  Two went so far as to declare group insurance commissions to be school district money (and it really is!) and require that a robust set of HR-related services be provided in exchange for any dollars a broker receives from an insurance company.  Most RFPs required that a commission percentage be attached to each line of coverage or that a fixed commission dollar amount be disclosed.  
While on the right track, these RFP requirements fail to break through the broker smoke screen. Instead, they seem to have served as a catalyst for brokers to become even stealthier on the compensation front.  It’s easy for a broker to disclose a lower fee or commission amount in their official response, then turn around and require the insurance carrier to pay them an "implementation fee" to the tune of tens of thousands of dollars. Is having the carrier make a contribution to the servicing of your business wrong?  Not necessarily.  But if it’s done behind the scenes and the broker communicates the requirement to the carriers in his bidding process, then the carrier payment just becomes an additional (hidden) cost that gets buried in your (and your employees’) rates and the broker thus obscures a cost that would otherwise be visible – at least to someone who knew where to look.  We saw insurance brokers employ some variation of this tactic on every one of the RFP’s mentioned above.
Best Firm Never Chosen!
Besides pushing up your rates, hidden/undisclosed compensation has another huge consequence.  In the RFP processes discussed above, the systems did not select the advisor that scored the highest on their technical proposal evaluation!  In other words, the firm deemed most capable was never chosen.  With the more frequent use of the State purchasing methodology, which works reasonably well when costs can be clearly identified – the points awarded for (artificially) low bids, tipped the scales in favor of a less qualified firm.  We all make the cost/value decision every day in our personal and work lives – but if the cost element is not clear, then no process, however disciplined, can make up for it.  In this situation, the buyers not only ended up with less capable “partners” -- they likely paid more to a firm that wasn’t deserving of their trust, let alone their business.
With school systems starting to demand that compensation be fully disclosed so that they can ensure value for every dollar they and their employees spend on benefits, brokers have simply moved the shells around to continue to hide their compensation.  We’re not saying that compensation is a bad thing.  You can’t get great work done without paying for it.  We’re just saying you have the right to know exactly what it is.  And ideally, your selected advisor is motivated to keep your costs as low as possible.  No such motivation is evident in the insurance broker community – especially those working with school systems.
Excessive Compensation in Plain Sight
While this article is largely about how cleverly insurance brokers conceal compensation, let’s not forget about the excessive compensation that is hiding in plain sight.  Has your broker installed whole life or universal life products in your benefits program?  Cancer insurance?  If so, you can anticipate your broker receiving 60-90% commissions on your employees’ contributions.  Did your broker put AFLAC or Colonial products in your program?  Why?  They would never win a competitive bid process, so how were they selected?  Think big, undisclosed compensation.  These are technically individual policies that require no disclosure whatsoever.
There is no justification for these high-priced, high-commission products in your program. 
If you’re planning an RFP in 2013, be aware of the new (and old!) hidden ways insurance brokers find to make money off your district and your employees.  Keep in mind that an insurance broker, by definition, makes his money selling insurance for commissions.  If you’re content with the limited services they provide, at least make sure you know where all the dollars are so that you can make a legitimate cost/value analysis.  Hint: you should either be paying a lot less than you are now, or getting much more from someone who can provide a broader scope of service.  You know that benefits are only a piece of the pie in HR—so don’t squander hard-to-find dollars (your system’s or your employees’) on limited or sub-par services.
In an effort to help school systems across Georgia avoid these money-burning pitfalls, we’ve drafted agreements that you can require be signed as part of your RFP process, or to keep your current broker/consultant and carriers honest and transparent.  We’ve also included a chart showing the various types of costs buried in your benefits program so you have a better idea of where to look.  ClickHere to download this packet and protect your System and your employees from being overcharged!

Posted By: Eric Kiesshauer 

Monday, March 11, 2013

Can the new ACA save your school system money on State Health?

Clear Concepts has analyzed the new healthcare law and how it might impact Georgia school systems with State Health.  Check out our white paper for the surprise conclusion.

So far, State Health has taken care of most of the compliance requirements in the Affordable Care Act (commonly known as ObamaCare).  As anticipated, all of them have driven the cost of State Health higher.  Beginning in 2014, school systems will have some compliance responsibilities of their own.  Our whitepaper summarizes your tasks – but also highlights an unintended consequence of the new law – it may actually help you save some big money in the latter half of the 2013 fiscal year and beyond!   Click here to learn how the ACA could help your system avoid the increases in classified staff cost-sharing and lower your employees’ cost without depriving them of a quality health plan.
Posted by: Eric Kiesshauer

Monday, October 22, 2012

Six Ways to Deal with the Rising Cost of State Health

State Health has announced their plan changes and new rates for 2013.  Rates will increase for nearly all plans/options, but not in the usual across-the-board manner.  For example, if you’re covering just yourself and your children, your costs could stay the same – but family costs will jump more than usual – about $1,100 per year!  The spouse surcharge is eliminated – yet overall, the cost to cover spouses has increased.  Cost-sharing and out of pocket limits increase in all plans, but more so in the standard plans. 

At the same time these costs are increasing, many districts have been forced to slash days and cut pay to manage the relentless budget crunch.  This is hitting families particularly hard.  None harder perhaps than bus drivers and other lower paid staff.

What can one do to mitigate the hit to their wallet?  Quite a lot, actually.  Here's a list of things that can save you money.  not every idea can be used by every plan tier, and some take more work than others, but the savings can add up very quickly.

1. Join Wellness -  It costs less and the benefits are richer.

2. Quit Tobacco -  You will save the $80 surcharge and the cost of tobacco. Help and resources are available to support you in the process.

3. Join the Disease State Management Program (DSM) - if you have asthma, diabetes, or coronary artery disease, you can save a bundle on prescriptions.

4. Choose HRA - The HRA plan is a better deal because of the lower HRA premiums, the 85% coverage for doctor visits, hospital stays, tests, etc. after the deductible is met, and the free HRA account dollars to help you pay for your initial expenses.

5. Work the prescription plan to save – if you can’t take advantage of the DSM, there are many other ways to save on prescriptions.  For example, use 90-day mail order whenever possible.  Know what tier your drugs are in and choose the insurance company which categorizes them in the lowest tier.  Or, forget about using your State Health card and check the $4 list at Walmart, Kroger, CVS etc. to see if your drug (or one you can switch to) is available for $4.

6. Consider PeachCare – If you have kids and you qualify for PeachCare, you could save a bundle.  PeachCare includes your child’s healthcare coverage, but it also includes dental and vision coverage.  Not to mention, kids under 6 are free.  A family of 3 making less than $44,868 or a family of 4 making less than $54,180 could qualify.

We have created a series of one-page guides to help you get the word out to your people on how to save as much as possible in 2013.  CLICK HERE to download this series which includes our Prescription Guide, Disease State Management Enrollment Guide, Quit Tobacco Resource Guide, and more.

And don't forget about our State Health 2013 Open Enrollment Webinars.  They are also free and will guide you through all the important changes for 2013.