A previous article for the Huffington Post is still very relevant today.
Here is the introduction and link to the remainder of the article.
The Top Four Reasons Owners Need A Healthcare Buyer’s Advocate
Compensation, healthcare & employee benefits are often significant sources of frustration for business owners. By the end of this article, you’ll see that finding your own buyer’s advocate is not only a good idea; but, a necessity.
There is a new service called independent evaluators that focuses on helping business owners and their employees. This new service changes the purchase paradigm by offering a business owner their own buyer’s advocate. A good advocate puts control in the owner’s hands, giving them back control they may have inadvertently given away.
Here are the top four reasons to consider a healthcare buyer’s advocate:
Small Businesses are putting their businesses at serious risk
In talking with prospective employers one of the most popular topics that arise is self-funding. It being sold like it is the magic solution for employers. The fact is, it’s being sold because it’s an expedient way for carriers and group agents to “stay in the group market.” This means, by offering self funding as the preferred option to “save money” the agent can keep an employer in a “group” policy.
A group policy is much better for a group agent because they can maintain the employer relationship and write greater premium with one policy, the commission is greater too. It is much easier to sell the “popular” fad solution than to dig into the specific details of your plan. There is a large investment of time needed to do the best job comparing all the possible options.
Unfortunately, in the process to “win the sale” important facts about self-funding are left out. There are pitfalls to self funding no matter what your agent, consultant, carrier, TPA or administrator may say. Employers must consider the small print about self-funding before jumping in.
For larger employers, there are benefits to self-funding, but for a group of 25, 40 or 75 employees it is a bad idea. The proposed gain can easily be outweighed by an unexpected $1,000,000 unpaid claim.
Here’s a short list of reasons that should give a small business owner pause before self funding.
1 – Being an Insurance Company Isn’t On Your Bucket List
Being self funded means you move out from under the safety of having an insurance company paying claims. There’s the potential that you may have to pay claims when the TPA/administrator/insurer decides not to pay.
Not to mention, all the new rules and obligations.
2 – You Want to Buy Coverage, Not Be the Coverage
Here is a quote that most people would call the “small print.” You won’t find it in the typical sales material or presentation. You will find it when you’re asked to defend the non-payment in court.
“The participating employer agrees to be solely responsible for compliance with all laws, including the payment of any required benefits that are not covered as illustrated in the Summary Plan Description or the stop loss policy.”
Administrator Actual Policy Language
3 – You Become The Expert In Making This Decision
This carrier is being honest when they say, you should have experts telling you what to expect before you choose self-funding. This quote is a warning found in the sales material.
“While many employers can benefit from a self-funded plan, it may not be the right choice for every business. The biggest question a small group employer has to consider is if the additional risk will jeopardize their business.”
Administrator Advertising Materials
If you self-fund you will need a qualified person to evaluate your risk before making the decision. Your sales agent, consultant, insurer, CFO, HR person are not qualified to make this assessment. Will they pay the claim or will that come from you, the owners pocket?
This is a skill that is working for others every day why not ask for help after all, you hope people hire you for your expertise.
4 – You Didn’t Have Time to Read the Small Print
The Big Print makes promises but the small print takes those promises away. When your self-funded administrator, TPA,insurer decides not to pay a claim, you’re on the hook. You as a business owner become the checkbook.
It’s true, in today’s sophisticated and complicated healthcare world it’s becoming more necessary to independently evaluate your options.
CAN YOU SAY DOUBLE TALK
This is just one example of the big print:
“Your maximum self-funding cost for the plan year is determined up front – and it’s guaranteed not to change, …
And here’s one example of the corresponding small print written into the policy of the carrier who published the “big print” quote above. There are many statements like this and you should know them all, or have someone who does.
“We issued this coverage in reliance upon the accuracy and completeness of the information provided in the application form and during the enrollment process. If a material or fraudulent omission or misstatement is made in the application form, We have the right to deny any claim, rescind the coverage and/or modify the terms of the coverage or the premium amount.”
Actual policy language, page 1.
5 – You Didn’t Make a Benefit Plan to Tell Employees They Aren’t Covered
It happens, google the topic of “self-funded plans that couldn’t pay claims” and you will find 42 million website hits (graphic below). The point is, there’s not shortage of problems for those who get in over their head.
Do you Still Need Convincing?
Show me the options in front of you and I’ll show you the trouble.
Send any quote you have received and the comparisons I’ll give you my two cents for free.
This offer is available to owners only. Send them to my email without PHI, firstname.lastname@example.org.
Source: Actual administrator and carrier language from marketing promotions and specimen policy.
The story starts with a business who engaged us for our Decoder because they asked the simple question, “we know it’s different than it use to be, and we perceive we could do better but we don’t know how to make the right decision.” In the first post, a couple days ago, you learned about the background a little bit. Feel free to review that post below.
Today, we’ll begin to cover details about who is being covered and who is not. It’s very common to have employers who cover individuals that should not be covered. Would you be surprised to know that employers have been known to cover deceased employees, or family members? When we visit with employers we never expect problems but we’re never surprised to find them either.
Job One, Research
Our first job is to research the details about all those covered and all those who are, or were, working for a company. We ask for lists that would show us this information. For instance, tax statements that provide lists of employees and payroll reports that show hours worked plus HR rosters of employees and former employees and other data. The research starts almost immediately and it usually entails asking questions about documentation that’s available that an insurance company would ask to prove the status of an employee or dependent. Identifying problems can be as easy as doing this research.
Our research immediately draws our attention to questions about a former board president who is still covered. In asking questions, it’s obvious there is no current relationship with the former executive. They had been involved and were made promises by the company. As we discuss this with current ownership, no one wants to address the issue with the board or the former executive. We helped solve the problem by including a proper commentary about the liability to both parties for covering someone who should not be covered.
But the former executive had an agreement?
Insurance companies can audit large claims any time, that’s in the small print. If they audit a claim on a former executive, like in our story, and they discover this person is covered it would be bad for both the employer and former employee. Coverage for groups means employees of the group must be covered and individuals who are not employees can not be covered. This is why it’s called group coverage.
So what actually would happen?
If an audit were to occur by the insurance company they would deny the claim of the former employee stating they’re not an employee of the company and not eligible for “group” coverage. This is bad because the former employee and covered individual could use promises by the government to impose upon the employer the need to pay the claim. To keep the story simple, I’ve eliminated all the details and possibilities for how this could happen. The point is, there’s a chance the employer would be stuck paying the claims of the employee without insurance coverage. This is bad for everyone.
When we arrived the former employee had been on the plan more than 10 years. Why this had been left to linger is anyone’s guess.
What was the outcome?
The employer and former employee understood the risk to both employer and former employee. We introduced an agent who could help with individual coverage. We directed them to seek individual coverage immediately. This was completed within a week. As a note about how this worked, ACA makes transition from group to individual possible because it eliminated pre-existing conditions and medical underwriting. In the old days, these two rules made doing what we did much more difficult.
This small adjustment to the rules gave us the understanding to help the employer. Because the Decoder puts all of these facts in writing, it made it much easier for the employer to make the change with confidence. They just had to see it in writing and be able to show the former employee as well. This is the purpose of the Decoder.
If you enjoyed the story, or learned something from it, please let me know in the comment below. Do you have your own insurance story?
The name you might use to describe what individuals are getting by going to the healthcare.gov marketplace has many different names. The tax credit, the subsidy, the pretax credit, the government hand-out, advance payments of the premium tax creditand other names.
Employers and advisors should take notice that the IRS is the final decision maker about how much someone gets by way of the “final” tax credit. If you’ve advised someone to take a tax credit, if someone has premiums that are being paid by the government this article and youtube video’s are for you.
“For most people, filing their returns in the spring of 2015 is going to be fairly simple – with regard to this issue, and that is they’ll simply check a box indicating that they have qualifying insurance or they’ll indicate that they’re eligible for an exemption. Otherwise, they’ll calculate their shared responsibility payment and add it to their tax return,”
IRS Commissioner John Koskinen
Your customer who loses some or all of their premium payment from the government will find out when they owe taxes 4/15, or audit someday afterward.