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Dental and Vision Benefits Remain Popular and Stable in Iowa

Dental and Vision Benefits Remain Popular and Stable in IowaIowa employers continue to offer two important ancillary benefits within their workplace setting – dental insurance and vision coverage. Both benefits are perceived by employees to be of high value and important to their overall health. And, there is good evidence that the long-term benefits to employee well-being can outweigh the associated costs of offering these plans.

Dental Coverage in Iowa

Overall, our 2019 study revealed that almost two-thirds (64 percent) of Iowa employers offer dental coverage – whether or not the cost was subsidized by employers. This offering compares to 60 percent in 2012. Organizational size usually determines whether these benefits are offered in the workplace. For Iowa employers with 101+ employees, 94 percent offered dental coverage, compared to 87 percent in 2012. However, 43 percent of employers with fewer than 101 employees offer dental, compared with over 50 percent seven years ago. It should be noted that employers with fewer than 10 employees are less likely to offer dental coverage, which greatly affects the <101 size category.

In addition to organizational size, location of employers can also determine whether dental coverage is offered: 69 percent of urban employers offer dental compared to 57 percent of rural organizations. In urban settings, a higher-populated geographical area, competition for personnel can be very intense, which usually results in more benefits being offered than in rural communities. NOTE:  Prior to the 2016 survey year, urban and rural employers were not broken out for comparison purposes.

Unlike the instability of health insurance costs, dental premiums have remained relatively stable over a large time period – providing a great amount of budget certainty for both employers and their employees. For example, dental insurance premiums reported by Iowa employers in 2012 were at $35 for Single and $92 Family, while in 2019, seven years later, the premiums were at $34 for Single and $99 for Family – very marginal differences.

The following graphic illustrates the great variance of employers offering dental coverage based on industry. All Colleges and Universities in Iowa responding to the 2019 survey indicate offering dental coverage, while only 49 percent of Construction and Retail organizations offer this benefit.

Vision Coverage in Iowa

Our 2019 study revealed that over 40 percent of all Iowa employers offer vision coverage – again, whether or not the cost was subsidized by employers. This offering compares to 39 percent in 2012. Similar to dental coverage, organizational size definitely determines whether these benefits are offered in the workplace. For Iowa employers with 101+ employees, 63 percent offered vision coverage, while only one-quarter of employers with fewer than 101 employees offer this benefit.

Again, urban employers are more likely to offer vision (45 percent) versus their rural counterparts (35 percent).

By industry, Financial Organizations and Iowa Colleges and Universities are most likely to offer vision coverage, while both Retail and Construction employers are least likely to provide this coverage.

For many obvious reasons, health insurance is often the most dominant topic of conversation (and concern) within employer-sponsored benefits. As a result, dental and vision benefits are regularly overshadowed. But, as demonstrated here, these two benefits continue to be both important and popular within the Iowa workplace.

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A New Employer-Financed Approach to Health Coverage

A New Employer-Financed Approach to Health CoverageAs we know, employer-sponsored health insurance consists of employers offering health plans that are purchased (or self-funded) from insurance companies (or third-party administrators). These health plan(s) are reviewed annually and rolled out to eligible employees and family members. Some employees may have only one plan to choose from, or if employed by a larger organization, have been given a handful of plan options. Employee decisions are usually based on premium cost and cost-sharing arrangements, such as deductibles, copayments and network provider selections.

Individual Coverage Health Reimbursement Arrangements (ICHRAs)

On June 13, 2019, the U.S. Departments of Health and Human Services, Labor and the Treasury issued a final rule that will allow employers (of all sizes) to fund a new kind of health reimbursement arrangement (HRA) – known as an individual coverage HRA (ICHRA). The ICHRA is a tax-free reimbursement that will help pay the insurance premiums for employees who purchase individual-market health insurance, including insurance purchased on the public exchanges that were formed by the Affordable Care Act (ACA). More about the Iowa individual insurance markets can be found at the Iowa Insurance Division website.

Employers may continue to sponsor their own health plans. But, using the ICHRA also provides tax-deferred funds to other employees who are not eligible for the employer-sponsored health plan. The ICHRA program was scheduled to begin January 1, 2020, allowing employers to pay all or a portion of the plan’s coverage cost purchased by the employee in the individual market.

To learn more, the departments posted FAQs on the new rule.

Employer-sponsored health coverage takes a great deal of employer time and expense to analyze, negotiate, communicate, comply with regulations and monitor throughout each plan year. It can be a huge headache to employers, who are, first and foremost, concentrating on their services and products to remain financially viable. Becoming a distributor of health insurance to their employees is secondary and, frankly, can be a costly distraction from the core business. Obviously, attracting and retaining qualified employees is critical to successfully remain in business. The ICHRA attempts to allow employers to focus on their core business strengths while finding new ways to subsidize the cost of employees’ health insurance.

More About ICHRAs

Employers who are interested in pursuing ICHRAs will need to know some key requirements:

  • Employers may either offer an ICHRA or a traditional group health plan, BUT MAY NOT OFFER EMPLOYEES A CHOICE BETWEEN THE TWO.
  • Employers can create classes of employees who are eligible for ICHRAs, using employment distinctions such as salaried versus hourly, full-time versus part-time, or employees located in certain geographic locations. Certain classes can be offered ICHRAs, while providing other classes with the traditional health plan.
  • Employers cannot discriminate within classes when offering ICHRAs, but they can increase the ICHRA reimbursement amount for older employees and for those with more dependents.
  • If desired, employers can keep their traditional group health plan for existing employees, but offer only new hires an ICHRA. This may invite adverse selection issues over time, but this is at least allowable.
  • If an employee purchases an individual health insurance plan outside an ACA-related exchange, and the employer reimbursement does not cover the full premium, the employer is allowed to permit the employee to pay the balance of the premium for coverage on a pre-tax basis through its cafeteria plan.
  • Employees who purchase individual coverage through ACA-related exchanges and receive premium reimbursements through ICHRAs may not qualify to receive any federal premium subsidies typically allowed through the ACA. Additionally, the tax code states the employer may not permit employees to make salary reduction contributions to a cafeteria plan to purchase coverage.
  • There are minimum-size requirements for the class of employees offered ICHRAs. This can be found in both the final rule and posted FAQs.
  • The Department of Labor has issued ICHRA Model Attestations that employees can sign to confirm they have purchased individual health insurance coverage. Medicare Part A and B, or Medicare Part C can also be covered by the ICHRA.

There are a number of other nuances that employers must know about before seriously considering whether or not to implement ICHRAs. There are just too many to mention in this particular blog.

As mentioned earlier, the ICHRA is yet another option for employers to financially assist their employees in purchasing health insurance coverage without having to fight the hassles of implementing and maintaining their own health plan – if they wish to completely relinquish offering traditional coverage. ICHRAs, however, are not designed to fundamentally cut healthcare prices and reign in bloated waste and eliminate inefficiencies. Combating these hefty issues goes well beyond the discussion of insurance products and how they are financed.

Because ICHRAs will expand employer options and employee choices for healthcare coverage in the future, our upcoming 2020 Iowa Employer Benefits Survey© will include a module of questions that will attempt to learn more about whether Iowa organizations are aware of ICHRAs and whether they may consider pursuing the ICHRA in the next few years. Stay tuned…

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A Cluttered Desk and a New Resolution!

I like to think that I keep my office and desk clean and organized. Most of the time, it is. I have learned at a very young age, thanks largely to my mother, to always keep my bedroom ‘spic and span’ and make sure the bed is made before beginning my day.

I decided to write this particular blog because I was immediately struck by something I saw in my office after grabbing a fresh cup of coffee…and I realized it would not be flattering – especially to my mother!

When I’m not working on my own research, I spend a great deal of my office time developing benchmarks for clients, writing blogs and articles, and dabbling in other more mundane business-related activities. Writing for me has always been a challenge, primarily because it requires a combination of perseverance, creativity, and mostly – deep thought.

Sitting down and quickly typing something for immediate release is not my usual approach. Perhaps the best way to explain my writing process is to think of marinating your favorite meat in the refrigerator using a good concoction of ingredients. It takes time and a quality seasoning mix to alter the taste of that meat. Doing so will usually result in a pleasing meal for the palate.

Writing is a process of ‘marinating’ a myriad of ideas with adequate time to allow the end product to become ‘consumable.’ However, for this particular blog, the marination process was completely bypassed – so my apologies!

During the past year, a number of people have contacted me to request that I write about certain subject matters, specifically relating to healthcare and employee benefits issues. A few examples include Medicare-For-All, surprise medical bills, reviewing an on-line analytical pharmacy, physician conflict-of-interest, medical errors, and proposed mergers of health systems. As you can imagine, each topic requires a great deal of ‘research’ time, ensuring there is enough backroom ‘due diligence’ to provide a balanced discussion.

As I write this specific piece, I was struck by how messy and chaotic my desk appeared when I walked back with a newly-brewed cup of coffee. I’ve come to the realization that whatever I decide to write, must be somewhat similar to how sausage must be made in the back room.  Making sausage, we are led to believe, is somewhat sickening to watch and may not render complete confidence about the process.

The holidays provide a good time to work on resolutions for the upcoming year.  Having a cleaner desk to set my cup of coffee will serve as a great start. Perhaps ‘making sausage in my office’ will not be as painful as what the picture suggests!

I wish you a very Happy Holiday season and a peaceful and prosperous (and tidy) 2020!

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