Presentation Transcript

1. A full-service voluntary and health benefits company
2. Introduction Visor was incorporated in 2009 after a successful 2007 acquisition and subsequent merger of the largest worksite benefits agency in Washington by Gateway Benefits, established in 1995 by Bill Hill. The purpose of the merger was designed to add core competencies to both agencies so as to adequately address the coming changes imposed by healthcare reform. Visor now has decades of experience in the employee benefits field working with clients nationally from its Midwest and West Coast offices.
3. History of BetterFits The design of the BetterFits program began as a response to a failing group health plan. The first client was paying $841/month for a $5,000 deductible group health plan and facing another 24% increase. Participation had dropped below 50% and the plan was now in jeopardy of cancellation . This event is commonly known in the industry as a “death spiral”. In late 2007, a tax regulation change clarified the eligibility of individual medical plans to be reimbursed through Section 125 of the tax code. Research and analysis of the individual medical premiums allowed the employer to offer a flat dollar amount as a credit for the employees to purchase coverage. The credit was determined based on the mean premium needed to purchase coverage and took into consideration a contribution from the employee. The total employee credit was 75% less than the annual group policy premium and allowed the client to offer every employee the same level of benefits. Individual medical policies were offered in a cafeteria style which allowed employees to personally design “their program”. In 2009, the BetterFits program was brought to full fruition when Visor approached Total Administration Services Corporation, the largest TPA in the country, to help develop a system to easily process payments of individual medical policies to multiple carriers. Since then, the program has been expanded to include a Bronze level group option and a flex plan to which allows employees to fully develop a comprehensive personalized plan.
4. Current Context of Group Health Plans Group rates are less expensive than individual medical plan rates. Technology drives claims & rates up. Group health plans assume all employees have same need for benefits or desire for good health. Employees view plans with the least out of pocket as “good”. Employees perceive group ID cards as a credit card without a spending limit for which they will never receive a bill. Employer perspective of group health plan rates tends to be annual. Lack of strategic planning typically results in the premium doubling every 5-7 years which has become the accepted norm.
5. Resulting Cost Drivers Insurance companies have changed from a risk based profit model to a financing based profit model and have no incentive to bring lower cost alternatives to market. Technological improvements drive cost up because new treatments have no protocol or standards allowing artificially high market pricing so as to set the reimbursement at an acceptable level when treatment standards are established. Younger and healthier employees perceive little or no value from group health plans as rates rise and they refrain from participation if possible. Employees are shielded from accountability Employers try to keep out of pocket low for employees Employees are not involved in the cost of care decision No penalty for poor health or care decisions Annual rate analysis or planning will not allow a response to the accelerating demographic shift.
6. Likely outcomes from PPACA “reform” Growing regulatory compliance cost Reporting and responding to HHS, CMS, DOL and IRS Fully insured client of 120 had to respond to CMS. Establish share of tax responsibility between insurer and administrator Constant confusion due to “fixes” Calculating employee eligibility for exchange participation Higher than expected claims and premiums Additional mandated benefits Expansion of eligible employees Insurance companies will shift non-deductible industry fees to insurance clients In 2014, this will result in an average increase of $50 per insured of the private market. Non-deductible fees on service providers Employer/Employee excise tax(penalties) Fees on Brand Name pharmacy manufacturers and importers Fees on certain medical device manufacturers Tax on tanning Employer fees per employee of $72 to fund self-funding research and pre-existing conditions Payment of higher taxes in the form of fees and fines Many companies will chose to pay the fines rather than participate Aggregate amount of coverage subject to excise tax “Cadillac Tax” will include cost of medical, dental, vision and FSA *Excise taxes and fees are non-deductible
7. “With the focus now on containing cost, the state must avoid market-distorting actions, like Governor Patrick’s recent price control recommendations. Instead the state should reduce burdensome insurance regulations, promote the direct purchase of health insurance by consumers and eliminate the free care program left over from the days before universal coverage.” -Tim Murphy, Secretary of Health and Human Services under former Governor Mitt Romney Paradigm Shift-The Only Solution Defined Contribution Plans will come to center stage as the only solution that can fix the problem for employers and address all of the cost drivers. Employees are fully aware and responsive to premiums and the cost of care. Wellness is rewarded. Demographic shift is taken out of the equation as each person is charged based on age. Improves perceived value of plan as each employee utilizes resources to fit need. Insurance companies will respond to the market by competing for the employees much like the they do for the Federal Employees during open enrollment.

8. INTRODUCINGBetterFits

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9. How Benefit Bucks Works Visor helps educate employees on benefit options to purchase any qualified insurance products
10. Cost of doing the same thing 2011 Year end total medical cost- 1266 EEs $17.4M Projected premium growth at: 10%*15% 2012 19.1M 20M 2013 21M 23M 2014 23.1M 26.4M 2015 25.4M 30.3M 2016 27.9M 34.8M Annual BetterFits cost each year for the next 5 years: @ $500/EE $6.3M @ $750/EE $9.49M @ $1,000/EE $12.6M * The Cadillac Tax will start in 2018 and includes all benefits in the calculation. A $500 employee medical COBRA equivalent rate will breach the tax point in 2016. The tax is 40% of the amount over $10,200.
11. Enrollment Process Education through Awareness Campaign Multi-stage information campaign to include email, payroll stuffers, and website Group Meetings Powerpoint presentation explaining the process and answering questions Individual Enrollments & Education Consultative meetings to explain strategies for utilizing financial resources
12. Funding Design Examples of credit offering: Flat Amount per month Low flat amount + age actuarial table Increased credit for Pool Participants Flat amount for employee + flat amount for children This design is not restricted but some standardized classification is recommended.
13. The Bronze Trap Every employer will be required to provide a baseline benefit equivalent to the Bronze plan design in the Exchange. The minimum Bronze plan design must maintain a 60% Actuarial Value(AV) and can have a deductible no greater than $2000. Any lesser benefit offering by an employer shall make the employees eligible for the Exchange. Employees receiving a credit for the coverage in the Exchange shall subject the employer to a $3,000 tax(fine). As rates explode in 2014, employers will be left with no benefit adjustments to ameliorate increases. At that time, the only choice will be to pay the increase, pay the fine or both. PPACA created a new distribution channel known as Navigators. Navigators are non-profit, unlicensed, non-professional advisors whose single purpose is helping the insurance buying public apply for credits to join an Exchange.
14. ContactInformation Toll Free 866.989.9790 advisor@visorbenefits.com www.visorbenefits.com Articles can be found at: www.visorbenefits.com/news-notes http://www.facebook.com/pages/Visor-Benefits/244505892273414