Special Focus: Managing health
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Minnesota ahead in health insurance reform By Marie Wood
Dan Weir
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he single biggest expense for employers after payroll is health insurance. Employers are continuously looking for ways to lower their costs and still provide coverage. Meanwhile health care costs are expected to rise 7.5 percent in 2013 according to Reuters.com. Employers are paying higher premiums to hang on to their plans and employees are shelling out more from their paychecks and pockets. “Health care costs have doubled in the past 10 years and are expected to double again over the next 10 years,” said Dan Weir, president of Employee Benefits & Insurance Services in Mankato.
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s employers prepare for 2014, “2013 will be a year of planning,” says Dan Weir, president of Employee Benefits & Insurance Services in Mankato.
Cost-benefit analysis Weir recommends running a cost-benefit analysis to determine if it’s more economical to cover your employees or to drop health coverage and pay the $2,000 fee for each employee over the first 30 employees. “The disadvantage to employees is that they may lose pretax premiums,” said Weir. Affordability tests Weir advises running 9.5 percent affordability tests for your employees to identify employees that can benefit from the Exchange. If the employee’s cost for single coverage exceeds 9.5 percent of their salary noted on their W-2 compared to the employee’s cost for single (employee only) coverage based on the employer’s lowest cost plan that meets the minimum essential coverage and including total household income; the
18 • november 2012 • MN Valley Business
As a consultant to public sector employers, Weir is an expert on insurance law, employee benefits and employerprovided health insurance. Weir holds a Juris Doctor degree from the William Mitchell College of Law in St. Paul. Beginning in 2014, employers with more than 50 employees must comply with the Patient Protection and Affordable Care Act. The Act is designed to cover more Americans and make coverage more affordable for employers and employees. “There is a lot of uncertainty by employers who are waiting for the final rules and regulations,” said Weir. According to Weir, the good news for Minnesota is that our state has already experienced health care reform in 1992 with the passage of Minnesota Care. The legislation provided subsidized insurance and enacted health care principles. The reform required that insurance carriers be non-profit which gave rise to four dominant carriers: HealthPartners, Preferred One, Medica and BlueCross BlueShield of Minnesota. All are regulated by the Minnesota Department of Commerce. “We’ve been a leader in health care, a leader in health care reform,” said Weir. Many features of federal health care reform were part of Minnesota reforms. State law already requires small group coverage to be sold and renewed on a guaranteed issue basis, which means carriers must issue and renew coverage to any small employer regardless of past claims or employee health conditions. . MV
employee may qualify for a lower cost plan from the Minnesota Exchange. Managing health coverage costs There are a number of strategies to manage health care costs. According to Reuters.com, health plans with higher deductibles and co-pays for workers tend to dissuade unnecessary purchases and offer lower premium costs for employers, while wellness programs can reduce the need for medical services. High deductible plans High deductible plans are a cost-effective way to provide major medical coverage. For example, employees receive coverage for medical care after they meet a deductible of $3,000 for a single person or $6,000 for a family. “Here is something you can offer employees as an option,” said Weir. The advantage is low premiums, but the disadvantage is out-of-pocket costs. These plans can be a cost saver for healthy