Open Enrollment Strategies: Know Your Options
It’s the start of renewal season for many Fire Districts and I often hear “We can’t make any changes to our benefit plans because of our CBA, but we also can’t continue to take on renewal increases. What should we do?” Sound familiar? My advice for any of you with this frustration is to take a moment to make sure you know and understand your options.
Available Markets: Do you review all insurance vendor and carrier options each year? As part of your annual due diligence, make sure you are discussing all possible packages with your Broker (AFFI marketplace for Union Districts, HRA/HSA funding strategies, etc.) and leveraging these options when finalizing your renewal. Looking at self-insurance brings in many new options as well. As carrier options continue to become more restricted, making sure non-traditional markets are explored becomes more important.
Fully-Insured vs Level-Funded/Self-Insured Health plans: It’s important to know that you can consider alternate health insurance options and still maintain benefits that are “substantially the same” as required in most CBAs.
Understanding the benefits and risks associated with alternative funding health plan options can bring savings, transparency and a higher level of customization to the benefits. What does this mean? In short, Fire Districts in IL have traditionally offered “fully insured” or “fully funded” health plans. With fully insured plans, you are passing all of the claims risk on to the insurance carrier and the insurance carrier charges you a flat monthly premium. A self-funded health plan places the responsibility of medical claims on the employer rather than the insurance carrier, but with this comes savings in administrative fees and greater flexibility in plan design. Risk is highly variable and can be mitigated with appropriately designed stop-loss coverage. The downside to traditional self-funding is the volatility in monthly cost which can be challenging with a fixed budget. Level-funded plans offer the benefits of self-funding with the added benefit of stable monthly costs. It also presents an opportunity rarely found in fully insured plans….the ability to get money back at the end of the year in a good claims year! If you have at least 25 members enrolled, it’s definitely an option to consider.
Opt-Outs Payments: Discussions about opt-out payments (or cash in lieu of benefits) are coming up more and more in the Fire Services.
With opt-out programs, employers offer individuals who are eligible to enroll in their group health plan a sum of money (often paid monthly or quarterly) to members who waive coverage.
These opt-out arrangements can take two different structures:
- Conditional opt-out arrangements require the employee to satisfy a condition in order to receive the opt-out benefit. Typically the condition is proof of other health coverage that meets the individual mandate of minimum essential coverage (MEC).
- Unconditional opt-out arrangements simply require the employee to waive coverage under the group health plan (no proof of other coverage is required).
Spousal Carve-Outs & Spousal Surcharges: Spousal carve-outs and surcharges in concept save the employer premium contributions that would have otherwise been made on behalf of the employee’s spouse. The type of spousal carve-outs and surcharges that are being discussed at Fire Districts specifically address working spouses who have coverage offered by their own employers.
For example, you could have a spousal carve-out option that requires working spouses to enroll in coverage offered through his/her employer to be eligible for coverage under your District’s health plan. In effect, your District’s group health plan becomes a secondary payer to other plans where your members’ spouses are covered.
Another option is to charge additional premium or contribution to members who have working spouses who are eligible for coverage through their own employer. The surcharge is designed to encourage spouses to use their own employer’s health coverage and to contribute to the added cost of covering spouses who choose not to do so.
Health Savings Account (HSA) limits for 2018: Whether you currently have an HSA in place or are considering it for the coming year, below is a summary of the limits and what’s changing in 2018:
|Type of Limit||2017||2018||Change|
|HSA Contribution Limit||Self-only||$3,400||$3,450||Up $50|
|HSA Catch-up Contributions
(not subject to adjustment for inflation)
|Age 55 or older||$1,000||$1,000||No change|
|HDHP Minimum Deductible||Self-only||$1,300||$1,350||Up $50|
|HDHP Maximum Out-of-pocket Expense Limit
(deductibles, copayments and other amounts,
but not premiums)
While all of the above are options for you to examine further, I strongly encourage you to do so with a trusted Benefits Advisor to ensure you understand all of your District’s options fully – including all pros-and-cons.
Corkill Insurance Agency, Inc.
Published in the Summer 2017 issue of FireGuard by the Northern Illinois Alliance of Fire Protection Districts (NIAFPD)