4 Strategies for Reducing Health Benefits Costs in 2022

Health care costs continue to rise each year, and 2022 will likely be no exception. In the new year, experts predict a 6.5% increase in medical expenses alone, according to PricewaterhouseCoopers. In terms of health plan premiums, employers anticipate they may rise more than 5% in 2022, a Willis Towers Watson survey reports.

With these increases in mind, employers will want to strategize methods to rein in benefits spending. This article offers four ways to help.


DOL Announces Rule to Increase Federal Contractor Minimum Wage

DOL Announces Rule to Increase Federal Contractor Minimum Wage

On Nov. 22, 2021, The U.S. Department of Labor (DOL) announced a new rule that will increase the minimum wage rate for federal contractor employees. The new rule implements Executive Order 14026 and increases the minimum wage for individuals performing work on or in connection with federal contracts to $15 per hour on Jan. 30, 2022. The rule also allows the DOL to adjust this minimum wage rate beginning Jan. 1, 2023, and creates standards and procedures to implement and enforce minimum wage protections created by the executive order.


Benefits Buzz December 2021

New Rule Requires Reporting of Medical and Prescription Drug Costs

On Nov. 17, 2021, federal agencies released an interim final rule requiring health plans and issuers to report information regarding the cost of prescription drugs and certain medical expenses. This rule is a continuation of the Biden administration’s efforts to promote greater transparency in health care spending.

Overview of the Interim Final Rule

This rule requires plans and issuers in the group and individual markets to submit certain information on prescription drug and other health care spending to federal agencies annually, including:

  • General information regarding the plan or coverage;
    Enrollment and premium information;
  • Total health care spending by enrollees versus employers and issuers;
  • The 50 most frequently dispensed brand prescription drugs, the 50 costliest prescription drugs by total annual spending and the 50 prescription drugs with the greatest increase in expenditures from the previous year;
  • Prescription drug rebates, fees and other compensation paid to the plan or issuer; and
  • The impact of prescription drug rebates, fees, and other compensation on premiums and out-of-pocket costs.

For 2020 and 2021 information, reporting must be submitted by Dec. 27, 2022, and by June 1 of each year thereafter. Starting in 2023, federal agencies will issue biennial public reports on prescription drug pricing trends as well as the impact of prescription drug costs on premiums and out-of-pocket costs.

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December 2021 Benefits Buzz

December 2021 Benefits Breakdown

What Happens if an Employee Misses Open Enrollment?

For an employee, missing open enrollment can mean losing coverage or being unable to change benefits elections, which can have a significant financial impact on the employee. For employers, when employees miss this deadline, it can result in additional administrative burdens and unhappy or unproductive employees.

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December 2021 Benefits Breakdown

Benefits Buzz Newsletter - October 2021

Each year, Medicare Part D requires group health plan sponsors to disclose whether the health plan’s prescription drug coverage is creditable to individuals eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS).

Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2021—the start date of the annual enrollment period for Medicare Part D. CMS has provided model disclosure notices for employers to use.

Medicare beneficiaries who do not have creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with the notice requirement, failing to provide the notice may be detrimental to employees.

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Benefits Buzz Newsletter - October 2021

Open Enrollment 2022 - Benefit Notices

Employers that sponsor group health plans should provide certain benefit notices in connection with their plans’ open enrollment periods. This Compliance Overview includes a chart that summarizes the benefit notices that employers should provide in connection with their 2022 open enrollment periods.

Other notices, such as the Women’s Health and Cancer Rights Act (WHCRA) notice, must be distributed annually. Although these annual notices may be provided at different times throughout the year, employers often choose to include them in their open enrollment materials for administrative convenience.

Read more by downloading our Compliance Overview below:

2022 BENEFITS COMPLIANCE OVERVIEW

Voluntary Benefits Benchmarking Overview

Introduction

In early 2021, employers across the country were surveyed about various employee benefits and human resources topics, and roughly 150 employers responded. The information collected demonstrates how employers across the country are utilizing their voluntary benefits. Most importantly, it shows how some are using voluntary benefits to combat the lingering effects of the COVID-19 pandemic. Voluntary benefits are those that employees can pick and choose from, offered in addition to core benefits (e.g., health insurance).

Typical voluntary benefits include dental coverage, vision insurance, financial counseling, critical illness insurance and others. Many voluntary offerings are 100% paid for by employees, but some employers may cover a portion of the premiums. As such, they can be an excellent way to provide meaningful perks to employees without raising costs. Amid the COVID-19 pandemic, these benefits have been particularly helpful. For many, COVID-19 has increased financial insecurity and negatively affected mental health. Voluntary benefits can help counteract these issues by arming employees with the tools they need to improve. And the survey data suggests exactly how some employers are leveraging their voluntary benefits.

Continue reading for key takeaways from the survey findings.


6 Benefits to Attract and Retain Small Business Employees

Attracting and retaining employees is a constant struggle for organizations of any size, but it’s particularly so for small businesses. With smaller teams, employers need to hold onto talent whenever possible. And that can be a challenge, especially when resources are scarce as they are currently amid the lingering effects of the COVID-19 pandemic.

That’s why it’s critical for small employers to tailor their benefits offerings in a way that attracts and retains the most employees. One of the best ways to start this process is by surveying existing and potential employees. Employers can ask workers what types of benefits would interest them the most, then use that data to inform benefits decisions.

While each workforce will have unique needs and interests, there are some commonalities seen among small business employees. This article outlines six of the most popular benefits that small businesses are using to attract and retain employees.

1. Health Insurance

Health insurance is consistently one of the most desired benefits among small business employees. That may be because health care is so expensive and is unaffordable without employer-sponsored insurance. Amid the COVID-19 pandemic, having good health coverage is more critical than ever. This provides employers with an opportunity. By offering generous health benefits, employers can compete for top talent. In fact, doubling down on health insurance might be a better option for some employers than adding other ancillary benefits that employees don’t need or want.

2. Leave Benefits

The ability to take time away from work is an important consideration for employees. And, in the wake of the COVID-19 pandemic, employees may have more caregiving responsibilities than they had before—making scheduling flexibility all the more important. Leave benefits will vary by workplace, but they typically include paid time off (PTO), vacation days and sick time. These types of leave usually come with specific use requirements. For employers looking to attract and retain employees, expanding these benefits could be a great leverage tool. This may include allowing faster PTO accrual, providing more sick days or allowing for flexible scheduling.

3. Performance Bonuses

Employees want to be recognized for their hard work. Failing to do so can lower morale and affect retention. Introducing performance bonuses as an employee benefit can be a way to combat this. Performance bonuses will vary, but the general idea is to compensate employees in some way for a job well done. How this looks in practice will depend on the employer. For instance, employees might receive incentives such as gift cards, cash, additional PTO or other perks, depending on their achievement. However, before implementing such bonuses, employers should ensure compliance with any applicable workplace laws regarding employee compensation.

4. Retirement Planning

Financial security is very important to employees, and that sentiment grows as employees near retirement age. It’s also top of mind for those struggling financially thanks to the COVID-19 pandemic. Employees invest their time and energy into their work. As a tradeoff, many employees want their employers to invest service. Offering a 401(k) with contribution matching can be a powerful attraction and retention tool, as it demonstrates an employer’s investment in their workers in the long term.

5. Professional Development

Employees may leave a workplace simply because they want other opportunities or need more of a challenge, rather than being driven solely by compensation. Additionally, surveys suggest employees have been putting off job changes during the COVID-19 pandemic, meaning a wave of turnover may be coming soon. Employers may want to think proactively about ways to keep employees around.

In other words, when it comes to top performers, employers should be reluctant to let these employees go. That’s where professional development comes in. Generally, this involves cross-training employees on other positions or otherwise preparing them to take on additional responsibilities. This helps provide the employee with more growth opportunities while still keeping them within the business. Offering such development opportunities also signals to prospective employees that a workplace has upward mobility and is willing to help workers along with their career pathing goals—two factors that can weigh heavily in recruiting conversations.

6. Wellness Benefits

Wellness is a hot topic these days, and employees are looking more and more for employers who take wellness seriously. This can be especially true in the wake of the COVID-19 pandemic, where health consequences are interwoven with everyday decisions. In fact, through the lens of the pandemic, ignoring wellness initiatives may be interpreted as ignoring overall health—something employers obviously want to avoid.
Different workplaces will offer different wellness benefits, but the purpose of any of them is generally to increase employees’ overall well-being. For instance, benefits may include mental health counseling, health breakroom snacks, gym memberships, fitness trackers, yoga sessions or other perks. When it comes down to it, employees want to feel like their employers care about them as individuals. This means prioritizing well-being.

Conclusion

Knowing which employee benefits to offer as attraction and retention tools isn’t always easy. One of the best places to start is by surveying current and prospective employees, as the offerings are meant for them. Beyond that, the perks listed in this article have been shown to be popular among employees—making them a viable option to try as well.
However, these benefits aren’t employers’ only option to help attract and retain employees. Reach out to C3 Group LLC today to learn more about these perks and other potential incentives.

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Benefits Buzz Newsletter - June 2021

HSA/HDHP Limits Increase for 2022

On May 10, 2021, the IRS released Revenue Procedure 2021-25 to provide the inflation-adjusted limits for health savings accounts (HSAs) and high deductible health plans (HDHPs) for 2022. The IRS is required to publish these limits by June 1 of each year.

Eligible individuals with self-only HDHP coverage will be able to contribute $3,650 to their HSAs for 2022, up from $3,600 for 2021. Eligible individuals with family HDHP coverage will be able to contribute $7,300 to their HSAs for 2022, up from $7,200 for 2021. Individuals who are age 55 or older are permitted to make an additional $1,000 “catch-up” contribution to their HSAs.

The minimum deductible amount for HDHPs remains the same for 2022 plan years ($1,400 for self-only coverage and $2,800 for family coverage). However, the HDHP maximum out-of-pocket expense limit increases to $7,050 for self-only coverage and $14,100 for family coverage.

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Legal Update: IRS Issues Guidance on American Rescue Plan’s COBRA Subsidy

IRS Issues Guidance on American Rescue Plan’s COBRA Subsidy

On May 18, 2021, the IRS issued Notice 2021-31, a guidance document on the American Rescue Plan Act (ARPA) subsidy for continuation health coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).

The Notice discusses the background of the subsidy and includes 86 questions and answers (Q&As) about its application.

The COBRA Subsidy

The ARPA subsidy covers 100% of COBRA and state mini-COBRA premiums from April 1–Sept. 30, 2021, for certain assistance-eligible individuals whose work hours were reduced or whose employment was involuntarily terminated. The subsidy is funded via a tax credit provided to employers, insurers or group health plans, according to the terms of the statute.

The IRS Guidance

Among the topics covered by the 40-page Notice are how to calculate and claim the tax credit, including when a third-party payer is involved. According to the guidance, employers must document individuals’ eligibility for COBRA premium assistance in order to claim the credit.

The Q&As further clarify that:

  • The subsidy is available for extended periods of COBRA coverage between April 1 and Sept. 30, 2021, due to a disability, second qualifying event or extension under state mini-COBRA.
  • Involuntary termination includes constructive discharge and termination for cause, but not gross misconduct.
  • Health reimbursement arrangements, dental-only plans and vision-only plans are covered by the subsidy.