Benefit Planning Strategies for 2019-2020

Although employer-sponsored group health benefit open enrollment is behind us, it’s not too early to start looking at what strategies will be in favor in 2019 to curb costs.

The Society for Human Resource Management (SHRM) reports that group health benefits are expected to approach $15,000 to $20,000 per employee this year. And while some employers are paying as much as 70-100 percent of employees’ premiums, health benefit costs still are rising at twice the rate of wage increases and three times general inflation, according to National Business Growth on Health, a human resources consultant.

Employers are taking matters into their own hands and are looking at new products and benefit changes for the 2019-2020 season.

Popular Health Insurance Trends

Consumer-Directed Health Plans combine a high-deductible health insurance plan with a tax-advantaged account that employees use to pay for eligible medical expenses — a health savings account (HSA) or health reimbursement arrangements (HRA). Any unused funds in an HSA can be rolled over to the next year. Also, employees can continue to use the funds for medical expenses after they reach age 65 and are enrolled in Medicare. The National Business Group on Health says many employers are helping employees by contributing to their employees’ HSAs, on average $500 for an individual and $2,000 for a family. In contrast, an HRA is a company-funded, tax-advantaged health benefit used to reimburse employees for personal health care expenses, and may be aligned with any type of health plan, not just a qualified high deductible health plan. However, HRAs can only be funded with employer contributions. HRAs may rollover funds at the employer’s discretion in plan design.

Employee purchase programs help employees pay for things they really need — such as appliances, tires or computers — but don’t have the emergency funds to pay for unexpected expenses. Bankrate, a consumer financial services company, estimates that nearly one-fourth of all Americans do not have adequate emergency savings. An employee purchase program means that employees facing a financial crisis are less likely to withdraw funds from their 401(k) plan or put the expenses on a high-interest credit card if they have access to emergency funds through the program. Employees pay back the loan over several pay periods through payroll deduction.

Group legal insurance plans give employees low-cost access to attorneys for will preparation, adoptions, estate planning, tax audits, traffic violations, real estate purchases, child custody issues and document review and preparation. One reason many people don’t seek legal assistance is fear of high fees. Having a ready bank of attorneys also saves employees’ time from having to search for appropriate legal assistance. The benefit is not a new one. It was first offered in the United States in the 1970s and become more mainstream in the 1990s.

Student loan repayment programs. According to a report by CNBC, more than one million people default on their student loans every year. And CollegeinColorado.org says that many of those loans average $25,000. Student loan repayment programs allow employers to assist employees with repaying their student loans. The Internal Revenue Service in 2018 issued a private letter ruling allowing a company to amend its 401(k) plan to allow employer contributions of up to 5 percent toward student loans to individuals who contribute at least two percent to their student loan. It’s assumed that this ruling may lead to more student loan debt solutions. Employers who can’t afford to assist with student loan costs can opt to provide educational tools about navigating debt.

Virtual care, also called telehealth or telemedicine, is becoming more and more popular as a way to provide easy and inexpensive access to board-certified physicians. Employees who have access to virtual care can have a phone or video conference with a professional physician or behavioral professional at low or no cost. Many of the telehealth physicians can prescribe medications.

Voluntary benefits are insurance products employers can offer employees at rates lower than they would pay for individual coverage. These products cover a large range of needs, such as life, disability, critical illness and accident insurance, plus pet coverage, ID theft protection, legal services and financial counseling. Employees’ premiums usually are automatically deducted through paychecks.

For planning guidance on your group health benefits, please contact us.