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The Best Approach to Health Care Consumerism

Posted on April 10, 2012 by in From our Newsletter, Healthcare Refrom

Employers are making stronger efforts to educate their employees about health care and manage costs. However, they’ve also realized that encouragement alone is not enough to produce employees who are better health care consumers. In order to make their employees better health care consumers, employers must equip them with the incentive and tools to become what they need to be. For many companies, the answer to their problems has many facets. Health care consumerism requires education and tools for adequate exercising, eating a balanced diet, monitoring health numbers, avoiding smoking and taking the initiative to make changes when health numbers aren’t optimal. In addition to this, health consumerism involves employees being aware of the costs of health care and taking measures to lower those costs. Plan designing, communication and incentives are all important parts of the equation. There are several important issues to consider with this idea.

Helping Employees Care About Their Health
Employers are realizing that simply offering options to employees isn’t enough. They know that employees must receive incentives for doing something difficult that ultimately benefits the employer. In addition to providing employees with the necessary tools to become better healthcare consumers, employers must also give them a reason to use those tools. For example, many pharmacies have varying prices among brand-name drugs and generic equivalents. Educating employees about this difference is important. If they realize all their HSA, HRA or FSA fund allowance will be used to pay for the expensive name-brand drug, they’ll be more driven to shop smart and use the generic equivalent.

Implementing Consumer-Directed Plans

Many companies that are designing plans are using consumer-directed health plans with health reimbursement arrangements or health savings accounts. To learn how these plans work, discuss the details with a qualified consultant. Some employers are now offering more options for their employees. However, reaching optimal health and maintaining it is the overall goal. Many companies are realizing the importance of trying to run an active health plan to encourage a healthy lifestyle instead of just offering a sick plan to deal with illnesses.

Offering Attractive Incentives

The efforts employers have made to help their employees save for retirement with defined contribution plans are similar to their efforts to move employees toward better health care consumerism. The main similarity is that both plans involve a greater amount of responsibility being placed on employees. While they face more responsibilities, their employers use incentives to offer rewards for desired behavior. Just as employers use matching contributions to retirement plans to encourage participation, many are now offering contributions toward HSAs and HRAs to encourage participation and better health care consumerism.

Keeping On Track

In order to keep health care consumerism alive, employers must keep track of their efforts. This allows them to determine whether employees are changing their behaviors or not. Some companies have developed special systems for tracking progress. One company developed a helpful dashboard of metrics, which is reviewed monthly for success. It shows the progress of employees as they work toward earning incentives. It also shows interaction rates with health plan representatives through the company’s work sites. There are several ways to implement these valuable changes. To learn more, discuss the possible options with a qualified consultant.

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Don’t Let Unfounded Fear and Lack of Understanding Hold Employees Back From Participating in HRAs

Posted on June 8, 2011 by in Benefits Education, Employee Communications, From our Newsletter, Healthcare Refrom

When employers were faced with rising health care costs, the obvious initial choice was to attempt getting the costs under control. However, as costs have continued to rise and actions like plan redesigns and cost shifting haven’t yielded the desired results, many employers have since shifted their focus to how they could better engage their employees to actively manage their own health.

Some experts believe that health risk appraisals, or HRAs, are one of the best first steps employers can take to engage their employees in their own health management. An HRA is a simple tool that gathers information about various aspects of an employee’s health, such as weight and body mass index, lifestyle choices, exercise habits, and personal and familial medical histories. The information is generally gathered from an online questionnaire that’s provided by either the company’s insurer or wellness program provider. The HRA is often accompanied by blood pressure, diabetes, and cholesterol screenings. After the HRA information is gathered, it will provide feedback to the employee on their health status, suggestions on how to make improvements, and any appropriate follow-up medical care and interventions. For example, the HRA may specifically recommend an employee enter a disease management program or see a nutritionist.

Even though HRAs are a very logical method to get employees more involved in their own health management, many employees choose not to participate. Sometimes this participation reluctance stems from employees being unsure how the information they provide will be used and what their employer’s motives are in offering the HRA to them. For example, an employee might be concerned that the information they’d share on the HRA wouldn’t be kept confidential. Employees are also commonly concerned that their answers could result in them paying higher insurance premiums. Of course, such fears aren’t the reality of HRAs.

To address employee fears, employers need to ensure that their employees fully understand that the HRA information they provide will be protected under their HIPAA privacy rights; the HRA information will be for their own use and benefit, not for their insurer or employer; and that their health information will be protected from disclosure.

In addition to addressing employee privacy concerns, employers need to effectively communicate what the employee will get from participating in the HRA. To do this, HRA communications to employees should include the following key points:

* Knowledge is one of the best tools you can arm yourself with to stay healthy, and you will gather important information about your health by completing an HRA.

* What you gather from participating in an HRA can give you an early warning about any health issues you’re in the early stages of or are prone to developing. Knowing this can help you get the disease management, preventive care, or screenings you need.

* By staying healthier, you can usually lower your health care costs over the long run. Generally, treating a health issue at the early stages will both cost less and afford you more treatment options.

Offering incentives for their participation can provide employees with some additional encouragement to complete an HRA. In fact, a recent Watson Wyatt Worldwide and the National Business Group on Health survey found that over half of those participating offered their employees some sort of financial incentive if they completed an HRA. Only 12% of the respondents didn’t offer any incentive. The survey also found that incentives in the form of deductible or premium credits were most effective, as 67% of the respondents offering deductible credits and 73% of those offering premium credits reported that more than half of their employees participated in an HRA.

An HRA is a practical first step to take in engaging employees on their health management, and it can even serve as an entrance for other wellness programs. Do keep in mind that the employee and employer alike benefit when the employee maintains better health and lowers their health care expenses.

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New Guidelines from the IRS on W-2 Reporting of Health Care Costs

Posted on May 4, 2011 by in Benefits Education, From our Newsletter, Healthcare Refrom, PPACA

New Guidelines from the IRS on W-2 Reporting of Health Care Costs

On March 29, 2011, the IRS issued Notice 2011-28 to employers regarding the information reporting requirements on each employee’s annual Form W-2 of health insurance coverage. This new reporting to employees is for informational purposes only. It is to inform employees of the cost of their health care coverage. Furthermore, the IRS has stressed that employer-provided health care coverage continues to be excludable from an employee’s income, and is therefore not taxable.

The PPACA (Patient Protection and Affordable Care Act), which was enacted in March of 2010, ensures that employers must report the cost of health care coverage on the Form W-2.

Helpful to Small Employers

With the new guidelines, the IRS provided additional relief for small businesses (filing less than 250 W-2 forms) by making the requirement voluntary for them at least in tax year 2012. The optional treatment for smaller employers will remain in effect until further IRS guidelines are issued.

Opportunity for Benefits Communications

Employers can utilize health care reform as a chance to better communicate with employees regarding their health and wellness benefits. The new requirements will help employees gain a better understanding of the cost, and value, of their coverage. Many employees are going to be surprised at the cost of their health care benefits, and employers can use this opportunity to open a discussion about health care cost containment. They can also emphasize the investment the company makes in each employee in the form of benefits.

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Debit Cards Can Be Used to Purchase OTC Drugs Only When IRS Requirements Are Met

Posted on March 3, 2011 by in From our Newsletter, Healthcare Refrom, PPACA

The Patient Protection and Affordable Care Act (health care reform) limited the ability of health plans to cover over-the-counter (OTC) drugs, permitting reimbursement from flexible spending accounts (FSAs) and health reimbursement accounts (HRAs) beginning January 1, 2011, only when OTC drugs are purchased with a prescription. In a departure from guidance issued last fall, the Internal Revenue Service has announced that debit cards linked to FSAs and HRAs can continue to be used to pay for prescribed OTC drugs, so long as certain procedures are followed.

These procedures are set out in IRS Notice 2011-5. According to this guidance, after January 15, 2011, FSA and HRA debit cards may continue to be used to purchase OTC medicines or drugs at drug stores and pharmacies, at non-health care merchants that have pharmacies (such as grocery stores with a pharmacy), and at mail-order and Web-based vendors that sell prescription drugs, so long as all of the following conditions are met:

1. Prior to purchase-

a. the prescription for the OTC medicine or drug is presented (in any format) to the pharmacist,

b. the OTC medicine or drug is dispensed by the pharmacist in accordance with applicable law and regulations pertaining to the practice of the pharmacy, and

c. an Rx number is assigned.

2. The pharmacy or other vendor retains a record of the Rx number, the name of the purchaser (or the name of the person for whom the prescription applies) and the date and amount of the purchase in a manner that meets IRS recordkeeping requirements.

3. All of these records are available to the employer or its agent upon request.

4. The debit card system will not accept a charge for an OTC medicine or drug unless an Rx number has been assigned.

5. All other requirements for use of debit cards associated with health plans are followed.

So long as the above procedures are followed, the debit card transaction will be considered fully substantiated at the time and point of sale.

OTC drug purchases made at other vendors that have health-care-related merchant codes (such as hospitals and physicians), and purchases made at “90% pharmacies” (pharmacies for which 90% or more of gross receipts in the prior taxable year were for tax-code-qualified medical expenses), are permitted under a less stringent set of requirements.

Importantly, for other merchants that sell OTC drugs, but which are not covered in the notice (such as a grocery store or convenience store without a pharmacy), an FSA or HRA debit card cannot be used to purchase OTC drugs. Employees need to be aware of this limitation, as well as of the conditions that now must be met to use debit cards for any OTC medication purchases, to ensure that health plan-related debit cards are used properly.

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