3 reasons to self-fund health benefits under the ACA

3 reasons to self fund acaSelf-funding controls costs.

Under the ACA, fully insured carriers are facing higher exposure to claims without the ability to include rate adjustment factors for health conditions and demographics. New rules limit the insurance carriers’ ability to charge higher premiums for older, riskier individuals now that certain risk reduction strategies are not allowed. These costs will most likely be passed on to employers and individuals.

Self-funding keeps the employers best interest as the priority.

There are some fixed costs of administering a self-funded healthcare plan, such as claims processing, stop loss premiums and administrative fees. Self-funded employers only pay the direct costs of administering employee claims. If the employee base is relatively healthy, having a self-funded plan can be one of the best ways to manage rising costs. When employers choose to self-fund their health plan, they have access to all claims submitted, including Minimum Essential Coverage (MEC) plans. The claims administrator should be able to provide reports of what claims were paid and when they were paid.

Self-funding is customizable.

The costs of fully insured plans are unpredictable for employers since carriers have control over monitoring employee health and underwriting for risk. With fully insured plans, employers don’t have access to employee health claims which is a significant advantage of self-funded plans.

In conclusion, the ACA has changed the healthcare landscape. But your self-funded client will be better positioned to save on healthcare costs while providing a quality health benefit plan that meets or even exceeds the requirements of the ACA. Take advantage of our experience and quality products, give FreedomCare a call today.

4 tips when determining how many full-time employee’s under the ACA

  1. First add up the low-hanging fruit.4 Tips FT employees

If an employee is expected to work 30 or more hours per week, he/she is classified as a full-time employee. You can immediately put all of these people in one category.

  1. Decide how you’ll track hours for variable-hour or seasonal employees

An employee is a variable-hour employee if his/her weekly schedule fluctuates above and below 30 hours.

The IRS has proposed a safe harbor method for employers to determine each employee’s full-time status by counting employee hours using a look-back/stability period. There are two types of measurement periods:

  • The initial measurement period for new employees and;
  • The standard measurement period for ongoing employees. The measurement must be between 3 and 12 consecutive calendar months.

If the variable-hour employee averages at least 30 hours per week during the measurement period, then the employee will be considered full-time during the following stability period (which needs to stay consistent with the measurement period). The employee’s status is “locked in,” regardless of the average hours worked during the stability period.

The stability period always begins immediately after the end of the measurement period and must be at least six consecutive months or the duration of the measurement period, whichever is greater. For example, if the employer used a 12-month look-back period, the duration of the subsequent stability period must be 12 months.

  1. Review your company’s eligibility definition 

The ACA full-time employee definition differs from the 40-hour per week full-time eligibility requirement that many companies currently use. Adjust accordingly to make things less confusing for you.

  1. Don’t forget about ERISA while trying to become ACA compliant.

In a class action suit filed by Dave & Buster’s employee, Maria De Lourdes Parra Marin, claims her employer announced that compliance with the ACA would require a cut in hours to reduce the number of full-time employees from 100 to 40 for the purpose of avoiding $2 million in additional health insurance costs. After the employer mandate took effect, she alleges her hours were in fact cut, she lost full-time status, and her insurance was cancelled.

While an employer who reduces employee hours would not violate any specific provision of the ACA, Dave & Buster’s employees are pursuing their claim under ERISA.

“Under Section 510 of ERISA, an employer cannot intentionally interfere with an employee’s right to benefits,” says Lorie Maring an attorney with the Atlanta office of Fisher & Phillips LLP. “What plantiffs are claiming is that by reducing their hours, the company was intentionally interfering with their right to receive health insurance.

How can your clients stay out of trouble and protect themselves? Self-funding health care benefits with FreedomCare can give them peace of mind and control over their health benefits. We have guaranteed ACA compliant solutions available at different rates to meet the needs of most employers. Reach out today.


This article is not to be offered as legal or tax advice. Neither Freedomcare nor the publisher are engaged in legal or tax advisory services. For advice on specific tax or legal questions, contact an attorney, CPA or other professional advisor. IRS CIRCULAR 230 DISCLOSURE: Pursuant to requirements imposed by the Internal Revenue Service, any tax advice contained in this communication is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code or promoting, marketing or recommending to another person any tax-related matter.

How MEC plans are a great benefit to employees and employers

How preventative and wellness benefits employee and employerEach year, preventable chronic diseases are responsible for millions of premature deaths among Americans. Because health problems impact productivity, they are a major drain on the U.S. economy, resulting in 69 million workers reporting missed days due to illness each year. This loss of productivity reduces economic output by $260 billion per year.

Under the Affordable Care Act (ACA), the overarching goal of the National Prevention Strategy is to increase the number of Americans who are healthy at every stage of life. Nationally, Americans use preventative services at about half the recommended rate. Chronic diseases, such as heart disease, cancer, and diabetes, are responsible for 7 of every 10 deaths among Americans each year and account for 75% of the nation’s health spending. These chronic diseases can be controlled with preventative and wellness care and detected earlier with appropriate screenings.

Businesses can greatly benefit by allowing their employee’s access to preventative and wellness programs because a healthier workforce reduces long term health care costs, and increases stability and productivity. With better health, adults are more productive and show up for work more often. Preventing disease increases productivity – asthma, high blood pressure, smoking and obesity each reduce annual productivity by $200-$440 per person.

Minimum Essential Coverage (MEC) plans regulated by the ACA include a wealth of preventative and wellness benefits including but not limited to:

  • Diabetes Screening
  • Immunizations
  • Depression Screening
  • STI Counseling
  • Contraception
  • Heart Disease Prevention
  • Colon Cancer Screening
  • Skin Cancer Counseling
  • Breastfeeding Counseling
  • Breast Cancer Screening
  • Autism Screening
  • Dental Cavities Prevention
  • Iron Supplementation
  • Blood Pressure Screening
  • Tobacco Use Interventions

The right preventative care at every stage of life helps all Americans stay healthy, avoid or delay the onset of disease, lead productive lives, and reduce costs. The FreedomCare MEC plan includes all of these benefits and more. Give us a call today.

Beyond the ACA, the top 5 reasons to offer employee’s health benefits

Beyond the ACA, top 5 reasons to offerThe Affordable Care Act has been around for several years now, the employer mandated penalties regulated by the IRS are in full effect. Most employers are offering at least Minimum Essential Coverage plans to their employees. If we look past the law, beyond the $2,000 and $3,000 penalties, why should employers offer health benefits to their employees?

It’s simple, one of the most vital components of running a successful business is attracting and keeping great employees. While there are different ways to accomplish this, offering your employees benefits tends to be one of the most cost-effective ways.

We’ve gathered the top 5 reasons for employers to offer coverage below.

  1. Attract top talent.

    • A survey by McKinsey Quarterly showed that attracting and retaining talent was the biggest reason that companies offered employee benefits. 46% of employees say their company’s health care program was an important reason they chose to work for their current employer. It helps to attract top talent by having tangible benefits that differentiate your business from your competitors.
  2. Minimize your turnover rate.

    1. It’s difficult for a business to make serious progress when employees are constantly coming and going. 55% of employees say their company’s health care program is an important reason they stay with their current employer. By investing in your employees and offering benefits, it shows that you have their best interest in mind and value their job performance. This also helps to improve your stability as a company.
  3. Better morale.

  4. Healthier employees.

    • When your employees have health coverage, there is a higher likelihood that they will have regular checkups and take preventative medical steps, which will lead to fewer unexpected sick days.
  5. Better job performance.

    • By offering benefits, you give employees more of a reason to care about your company and remain loyal. According to a survey done by the Society of Human Resource Management, 71% of employees who are satisfied with their benefits reported that they are more loyal to their employer. As a result, they will be motivated to work harder, which can lead to greater productivity and a higher quality of work.

These all sound like no brainers but what if my client’s company is barely scraping by and can’t afford health benefits from traditional carriers? Check out our article about self-insuring your health benefits, you might be surprised what a small business can afford with the help of FreedomCare.

Voluntary Benefits – A lifeline for the American worker

“Voluntary benefits have developed into a lifeline for the American worker, as employees seek to meet their needs for financial protection and benefits not provided as part of a group structure by employers.” - Rich Williams, senior vice president of growth markets at Colonial Life and Accident Insurance Co.

Voluntary Benefits - A lifelineIn a survey done by MetLife, nearly 40 percent of employees say a wide selection of benefits would make them feel more loyal to their employer, and 55.5% are willing to bear more of the cost in order to have a choice that meets their needs.

The top 4 Voluntary benefits for 2015 were:

  1. Life-Insurance
  2. Disability
  3. Dental
  4. Accident

With employee retention gaining importance to maintain the success of businesses, voluntary, employee-paid benefits give employers a way to offer a competitive benefits package without impacting their bottom line.

The problem is, voluntary benefit programs were previously primarily available to employees of large companies. Williams says, “Our research shows the concerns of their employees aren’t that much different than larger firms when it comes to personal finances. Employees in companies of all sizes tend to worry about having enough savings to retire, to cover an emergency or to cover being out of work if they’re injured or sick.”

Smaller employers no longer have to settle for small benefits packages. Here at FreedomCare, we have a large selection at different price ranges to fit an employer’s needs.

Telehealth – employee perk & innovative cost savings

Telehalth BlogTelehealth programs have the ability to connect patients with doctors no matter where they are located. Virtual visits, both by phone or online video chat, are more convenient and may be as effective as in-person doctor visits. Doctors and Therapists are able to diagnose and prescribe treatment without the patient having to leave their home.

The average number of telehealth visits per patient is 1.3 times per year. 5.6% of patients who used the virtual visits would otherwise have gone to an emergency department while 45.8% to urgent care. 83% of the conditions were resolved by a virtual visit. The most common diagnoses made during a telehealth visit are sinusitis, followed by cold/flu and UTIs.

These programs aren’t just convenient and cost-saving for employees. According to Modern Healthcare, “Advocates of the virtual-visit model argue that expanding access to telehealth services would reduce costs by heading off more expensive urgent care and emergency department care, and that consumers increasingly will substitute virtual visits for in-person visits.” This could mean fewer high-dollar urgent care and emergency room claims for an employer’s self-funded plan.

A 2014 Towers Watson survey found that 37% of employers planned to offer their workers telemedicine consultations in 2015, with another 34% planning to do so by 2017. FreedomCare has partnered with the leading telehealth providers to include unlimited 24/7 telehealth access, with many of our programs, to every employee at no additional cost. Give us a call to learn more.

U.S. citizens pay 3 times more for RX drugs

Americans Pay 3x more for RX drugsAccording to a study conducted by Reuters, Americans pay 3 times more for certain prescription drugs than Great Britain, on average. Not only that, U.S. prices are 6 times higher than in Brazil. Prices for top brand-name drugs jumped 127% between 2008 and 2014 and continue to climb.

As a broker, what can I do to help?

You can give employers access to discount RX programs like those available through FreedomCare. Each FreedomCare plan includes services that allows individuals and families to find the drug at the best current rate, compare cash pricing versus insurance co-pays and have the prescription sent to the pharmacy with the best price and most convenient pickup.

Give us a call to learn more about how you can offer this to your clients at no additional charge.

Self-Funded Benefit Plans are on the rise.

Rise of Self funded benefitsWith the advent of the Affordable Care Act and skyrocketing healthcare costs, the concept of Self-Insurance is on the rise. It has been commonplace with large companies for some time but rare among small and midsized employers. So how does self-insurance work?

Self-funded health care has been described as an arrangement whereby an employer provides health or disability benefits to employees with its own funds.

Well, with health insurance costing close to $6,800 per employee per year, self-insuring your benefits can save you 12% or more. So if you have 100 employees, your insurance alone can cost $680,000 annually. A 12% savings would be $81,600. It seems like a no brainer at that point. What would your clients do with an extra $81,600 a year?

Because self-insurance allows an employer to break down virtually every component of their health care claims and administrative expenses, it allows for transparency to see the hard numbers and where all of those hard earned dollars are actually being used. This helps employers to plan better and allocate funds for certain contingencies.

Ask yourself 3 things if you want to self-insure your benefits plan:

  1. Do you want to save money?

  • According to ADP, the average monthly health plan premium rose 13.9% between 2010 and 2013, making a 12% savings hard to pass up.
  1. Are you compliant?

  • Employers still have to comply with the Employer Mandate portion of the ACA, not all companies offer compliant plans. FreedomCare offers the only 100% ACA compliance guarantee.
  1. Can you do this alone?

  • FreedomCare handles all of the details including administration, COBRA, paying claims, enrollment, etc.

According to the U.S. Department of Health and Human services, only about 26 percent of employers between 100 and 499 employees self-insure compared with more than 82 percent of employers with 500 or more employees. With no minimum participation, FreedomCare has made self-insuring possible for employers of all sizes, not just the large ones.

The ACA is hear to stay.

ACA is here to stayAccording to NBC news, 9 in 10 in Americans have health insurance. “More than 7 million people who didn’t have health insurance last year got coverage this year.”

With the ACA being such a hot topic among presidential candidates, it will be an uphill battle to repeal. It seems like the ACA is here to stay.

American attitudes about the law have become more positive in recent months and the Supreme Court is on board. The time has come and passed for employers to ensure their compliance.

Just in case you have been living under a rock, employers are facing major penalties that have the potential to bankrupt their companies if they don’t get a compliant plan in place.

Be careful, there are a lot of non-compliant plans out there that will leave you vulnerable. Check out the FreedomCare difference to learn how FreedomCare stands apart from everyone else to make sure your business is protected.

What if I told you there are opportunities for small business owners to attract better talent and have healthier employees? Here are 3 ways the ACA can benefit small business owners.

1. Better recruiting and higher retention.

You now have the opportunity to reinvent your employee benefits for your small business. Gone are the days when only the larger employers could offer the benefits it takes to recruit the best employees. With the ACA, you are now able to offer employees access to discounted health insurance benefits such as individual health insurance which provides qualifying individuals access to premium tax credits.

2. Think outside of the box – Self-Insurance.

Your Group is never too small to self-insure. Before the ACA small business owners had limited options for providing health insurance to employees and the idea of self-insurance was just for the big boys like Walmart, Target, etc. but now it’s available to all business owners. We want to help you offer affordable competitive benefits through self-insuring.

3. Increased productivity.

We have programs in place to improve your employees productivity, employees who have enhanced access to health insurance services and options tend to be healthier and cost your business less. Healthy employees are able to come to work more and produce at a higher level of productivity versus an employee who does not have access to health insurance services and is constantly sick. Some of the unforeseen costs of having sicker absentee employees are their replacement costs. The expense of finding a new worker, training them, allowing for their learning curve, et cetera.

These are just some of the ways the Employer Mandate benefits small business owners. Stay educated, we are a resource for your questions and here to help you. Contact FreedomCare today.

*For purposes of the employer mandate – FTE classifies all employees who work 30 hours or more.