We have been called “super moms” and given accolades on radio, TV and in print. Many of us have worked very hard to get where we are, while Wall Street and those who decided to play by their own rules have undermined not only the economy in the United States, but the values this country was founded on. Read more
Congratulations to Jeannene Scearce for being award the Trusted Advisor Award! Read more
Smart Business August Insight. Advice. Strategy
How Insurance Carriers Are Dealing with Health Care Problems and What Employers Can Do to Help
Productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year and $225.8 billion annually, according to the U.S. Centers for Disease Control and Prevention. So what is creating these problems with health care claims and insurance, which ultimately lead to poor health and lower productivity?
“It is the delivery system, administration and billing,” says Danone Simpson, founder and CEO at Montage Insurance Solutions. “I have no doubt about this, as our firm battles away at claims that take hours, weeks, months and sometimes years to sort through.”
Smart Business spoke with Simpson about what she sees as the problems with health care, how carriers are coping and what employers can do about it.
What is the problem with health care today?
From wait times for approvals to multiple bills being sent to carriers, carriers are denying needed PET scans, MRIs and other tests so doctors can determine care — partially because of what they deem as ‘abuse’ from doctors who overtreat or analyze treatment. Approvals can sometimes take two months when patients need major surgery to remove cancer.
The real issue with health care is not only who is paying what premiums, fines or co-payments, it’s more about the overall cost of health care and billing complications. Doctors desperate to earn more may overbill, even though they know the contracted amount they agreed to. However, that may be a different amount with each carrier, which makes the administrator’s job a nightmare.
How will private exchanges and mandated health care impact the system?
It’s likely that health care insurance exchanges won’t necessarily lead to better health care pricing. In addition, private health insurance carriers will be forced to offer coverage on the exchanges and compete with themselves.
Surveys prove that employers are angry about being forced to pay for coverage, even if they already cover 100 percent. They expect employees to ask for more coverage of dependents, and some employers who stretch to pay a portion of dependent coverage are feeling backed into a corner. It’s not required to cover dependents, but most plans today do.
What are carriers doing to help with costs?
With expensive fines that can account for more than the actual premium amounts, carriers are helping form Accountable Care Organizations (ACOs) to hold doctors and hospitals responsible. These organizations use incentives to cause providers to work together when treating a patient across care settings such as doctors’ offices, hospitals and long-term care facilities, according to HealthCare.gov. For example, the Medicare Shared Savings Program rewards ACOs that slow health care cost increases while meeting performance standards on quality of care and putting patients first. Patient and provider participation in an ACO is purely voluntary.
What can employers do to lower health insurance costs?
Offering a wellness program is one way to truly impact the heart of the problem of the country’s health care costs. An unhealthy work force is a major issue for businesses large and small. For example, 20 million Americans — 7 percent of the population — have diabetes and 30 percent of this population remains undiagnosed, according to Katz. Moreover, a recent Newsweek article states that two-thirds of adults and one-third of children and adolescents are overweight or obese.
The law might require an employer to buy an insurance policy for employees, but it causes anger and rebellion on the part of many employers. The more proactive approach is to dive down into the parts of the reform that assist in either lowering premium costs or aiding in the retention and well being of your employees.
There are a number of tax credits available to help you with this proactive approach, if they are available to companies of your size.
The Patient Protection and Affordable Care Act includes a variety of provisions aimed at encouraging wellness and disease prevention. As shrm.org reports, effective Jan. 1, the ‘law will permit rewards or penalties such as premium discounts of up to 30 percent of the cost or coverage. Existing wellness regulations permit incentives of up to 20 percent of the total premium, provided that the program meets certain conditions. The law increases the amount of the potential reward/penalty to 30 percent of the premium.’ There is also the possibility of an even higher amount after national studies are performed.
Another option is the Small Employer Health Insurance Tax Credit. The U.S. GAO states, ‘Fewer small employers claimed the Small Employer Health Insurance tax credit in tax year 2010 than were estimated to be eligible.’ Calculators are available on the National Federation of Independent Business, http://www.nfib.com and many other websites.
Employers also can ask their carriers about the Medical Loss Ratio reimbursement, which was just issued for the first time.
Take care to avoid fines and earn tax credits on wellness incentives. Many employers are starting to offer a carrot approach to motivate employees, and then a stick with some sort of penalty for not participating to truly see employees take advantage of a wellness-based plan.
Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at 1 (888) 839-2147 or [email protected].
Insights Business Insurance brought to you by Montage Insurance Solutions
Montage was on the back cover of the July 2012 issue of Smart Business. Danone was also an honored guest at the Ernst & Young Entrepreneur of the Year awards. Below are some photos of the event!
Check out Danone’s article in Smart Business Insights – “The CEO Decision; Benefits or Fines” Read more
I sincerely believe the information below is indeed quite important for the stewards of our local finance departments to fully understand. Read more
Montage Insurance Solutions as seen in the San Fernando Valley Business Journal’s CFO issue June 25, 2012. Read more
Too many companies operate under the false belief that their organization is not a good candidate for Directors and Officers Insurance without proper knowledge of the full breadth of its coverages and protection. This can be a very dangerous supposition on the part of a company that could see its directors and/or officers held personally liable—thus risking their personal assets including family assets and estates. The statistics are alarming enough to make one consider the various reasons a claim might be brought against a company or even an individual personally.
According to a Chubb 2004 Private Company Risk Survey, nearly 40% of privately held companies stated that is was likely their Directors and/or Officers would be sued, and 18% of those surveyed were sued during the past few years.
Beyond that, almost a third of surveyed companies reported a direct or indirect effect from the Sarbanes-Oxley (SOX) Act of 2002.
Even if a lawsuit is baseless or fraudulent, companies still have to pay to defend them. The Tillinghast Towers Perrin D&O survey of 2004 stated the average defense cost for all reported D&O suits was $370,002 with an average indemnity of $2,160,909.
After looking into it, many companies decide that, as it turns out, D&O coverage is a necessary company safeguard after all, as many of the things they thought were covered by their general liability policies, are in fact not. When that happens, it is important to note that unlike most general liability policies, which are somewhat standard, D&O policies can differ greatly. If one is shopping for a policy one must give credence to the need for understanding both the definitions of the terms below and how they factor into the policies they are considering:
With the tremendously high propensity for employers to face lawsuits, and so many aspects of coverage left out by other policies, finding out whether or not your organization needs a D&O policy may be the difference between an executive team member exhaling a sigh of relief at a policy stepping in to do its job, and seeing his car towed away after being sued for his own personal assets.
The cost of health care continues to increase every year. We all feel it in the pocket books, read about it in the newspaper, and talk about in finance meetings. With the myriad of plan designs offered by the various carriers that compete in California, it can be a difficult task to pick the right plan.
How does one weigh cost versus coverage? Increases versus changing carriers?
One option that many groups have taken to is implementing a Health Savings Account, or HSA.
What we often hear in response to this is something surrounding the difficulty in presenting these types of plans to the employee population. However, with the right educational enrollment meeting, you might be surprised how many of your employees realize that it can represent a better option for them.
Let’s take a look at an actual sample client of ours. This company has the traditional HMO and PPO option, but also offers an HSA. The way they pay for benefits is to cover 100% of the cost of an HMO and the employees can buy up to either the PPO or the HSA. Obviously 100% coverage for an HMO is getting less and less common as companies combat rising prices, but HMO plan designs are not the right fit for all people. Many people choose to “buy up” to PPO products, believing the freedom of choice and wider network is worth the premium increase. For those people, let’s consider some facts.
At this company the family rates are $846 for the HMO, $1,691 for the PPO ($750 family deductible), and $1,162 for the HSA ($5,000 family deductible)—taking out the employer contribution ($846) the PPO costs the employee $845 per month, and the HSA $316 per month.
If you look at a person considering a PPO product, they are actually better off taking the HSA when you consider total annual cost. Simply on premium savings, a family will save $529 per month, or $6,348 per year—more than enough to cover the $5,000 deductible.
Now that we know the savings on premium, let’s take a look at the plan year. Even if the year is extreme, and the employee actually does hit that lofty deductible, once the $5,000 deductible is reached, all services are covered at 100%. Simply by using $5,000 of the $6,348 premium savings, the employee has reached a place where all services are free, and remains $1,348 better off than (s)he would have been on the PPO. When you factor in the co-pays along the way that the PPO plan has, the $750 deductible, the fact that all costs are PRE tax dollars on an HSA, and the employer contributions to the account that some organizations make, the HSA becomes a much more financially sound choice for the employee.
On the other hand, if an employee has a more typical year, and does not use the premium savings for $5,000 in services, there is no “use it or lose it” clause that plagues FSA’s, so the employee simply enjoys more growth in the account.
When employers consider what percentage of contribution they offer, and how much less expensive HSA plans are than PPO’s, you can see their incentive for offering too!
In the right instances, and with the right education, HSA plans can be a good fit for the employee and a great relief for the bottom line.
“We have come along way baby” and we still have a long way to go. As one of the few female owners of an Insurance Brokerage firm I can tell you not only can we can do it, we can do it well. It has not been easy, but it is completely worth it. Today as businesses and families struggle men and women are realizing it takes partnership. Both parents work today more than ever in history and women are rising to the top, as men are staying home more to care for the children. Studies show that men are still earning more than women according to US Business today. However, this trend is slowly changing.
USA today states, “The January Harvard Business Review includes a 360-degree feedback study by Herminia Ibarra and Otilia Obodaru. It finds that female leaders are seen by all around them to be strong in such traits as tenacity and emotional intelligence, but trail men in one important aspect: Their superiors, peers and subordinates say that women leaders lack vision.”
Still today university scholars know we are unique and have that something, they just cannot put their finger on what that something is. I have asked a few of my fellow female CFO’s, CEO’s and executive peers, what that something is. This is what they say:
Sue Fries, The Terminate Lady, CEO of Ecola and of the KKLA Sue Fries Show says, “Women are willing to be available. Churches are filled with women and if we ask why I believe that women are willing to learn and be more teachable. Men are the warriors the hunters, more stern. Women are the nurturer, the submitter. Leaders need to have a willingness to stand up for what we believe. Women are constantly seeking to do better. Sue says she believes in people and credits her unique success to being a woman. She cares for our homes with natural products and being a mother she understands the insistence on it.”
University of California-Irvine professor emeritus Judy Rosener says, “brain scans prove that men and women think differently. At age 79, Rosener says she’s concluded that a company with a mix of male and female leaders, with their differing attitudes regarding risk, collaboration and ambiguity, will outperform a competitor that relies on the leadership of a single sex. It happens that companies are dominated by men, but they probably would not perform better if dominated by women. Women aren’t better”, Rosener says, “but they bring to the table something that men don’t have.”
According to USA Today, “13 female CEOs are running the USA’s largest 500 publicly traded companies. With the Jan. 1 addition of Kullman at DuPont, 2.6% of the Fortune 500 companies have female CEOs. However, women are doing better at the largest mega-companies. With Kullman, 52, now on board, 7.4% of the largest 81 corporations with annual revenue of $31 billion and more have a woman at the helm.”
Separate studies in 2008 by Catalyst, “an organization that supports expanded opportunities for women at work, and management consultant McKinsey & Co., found that companies with more female executives and directors perform better. The employment policy Foundations says, More than 9 million women earned more than the median male income in 2002.”
Ann Freeman, CFO of Data Select Systems, Inc says, “Our computer software business is dedicated to working with the banking industry. Therefore, we have the opportunity to interact with many women at various banks across the U.S. Banking provides many opportunities for women, and most banks promote the talented women to executive positions. Even though men still outnumber women at the executive levels, the banking industry is definitely a place for women who have financial skills and accuracy, who are willing to work hard, and who aspire to become executives.”
As men stay home more with the children, women are advancing in their careers and it is ok. Susan Curry, US Presentation Executive for IBM for thirty plus years used to feel bad as she left her little ones with caregivers, pre-school and afterschool programs, but today she says she is proud of her decisions to be a working mother. She looks at her children who have graduated from college, which she supported and sees promise in their futures as they are now seeking their own careers. As basically a stay at home mom years back, I cared for her daughter along with mine. She was a great example in many ways to me. Susan has inspired by her example and I still seek her counsel.
Suzanne Sutter of Make-A-wish Foundation of Greater Los Angeles says, “I have always focused on the essentials of great leadership. Clarity is the most significant driver of human behavior. Thus, great leaders take time to clarify the values of operating principles that are important to the organization. Co-workers want to do the “right thing” and values and operating principles provide this clarity on what is “right”. Moreover, great leaders encourage the heart and in turn inspire the spirit. Personalizing appreciation and recognition for a job well done at the individual and team level is critical to achieving the “best”. We all want to feel we are making a difference…every day. Positive feedback IS the breakfast of champions!” Suzanne owned Things Remembered, a National retail company.
A most successful woman, rated as the first female billionaire, Mary Kay Ash, wrote a book; You Can Have it All, and after reading it I realized she started her company at forty. I was then forty and after ten years of working at MGM on the set of Dallas, as Kendal Chapman, the receptionist of Ewing Oil for Lorimar Pictures, I was grateful I could still call myself a stay at home mom returning home at 9:30am usually before my husband even had a chance to take our daughter Breana to his parents. Her book inspired me and now I look back and think women need mentors and she was another one of mine. Her view of sales was nurturing and it obviously works, as her company thrives still today, despite her passing. She has helped millions of women worldwide earn a living and her company, Mary Kay Cosmetics was featured three times as one of the top 100 companies to work for.
Perhaps the words we use to describe women are “nurture” and “balance”. We strive for it, need it and have the tenacity to make it happen. Today, flexibility is key in family life and business, and women are naturals at multi-tasking. Our vision is that our husband and children are loved, successful and happy. Our careers are our babies too, so it is obvious we want the same for our employees, which naturally brings success. Maybe male executives will one day see our vision, because we don’t send up flags or banners, we just do it. Our vision is written in our hearts and it includes them. – Danone Simpson
Montage was on the second page of the June 2012 issue of Smart Business. Our ad featured the My HR Summit event “Make Your Benefits Count: Cost, Delivery, Self-Insurance and Innovation”. Our top-level speaker panel included, Alan Katz, Cora Tellez, Michael Anne Browne, Tobias Kennedy, and Tammy Tucker. Click here to view more information on this seminar, or to purchase the DVD.
Check out Danone’s article in Smart Business Insights – “How to Manage Your Company’s Health Insurance Plan in an Uncertain Industry”
