Every year the Internal Revenue Service (IRS) announces new contribution limits for tax-advantaged accounts. Many of these accounts are indexed for inflation so the limits rise year over year. This article is geared at educating you about the new contribution limits for two tax-advantaged accounts in relation to healthcare.
Flex Spending Account (FSA) 2020 Limits:
FSA limits have been announced for 2020. If you have health insurance through your job, you can utilize an FSA for using pre-tax money to cover your out-of-pocket healthcare expenses. FSAs are more of a use it or lose it type of account so it’s best to estimate the amount of healthcare you typically consume before making your elections.
The IRS announced on October 31, 2013, that employers would be allowed to either offer a carryover or a grace period for FSAs effective in 2014. If you have access to an FSA through your employer we advise you check with them on whether or not they offer one of the following options:
- Two and a half months grace period in the new year to use up the previous year’s dollars
- $500 carryover to use in the new year
Here are the health FSA contribution limits for 2020 compared to 2019 and 2018:
Dependent care FSA limits are not indexed for inflation and so they remain at:
Health Savings Account (HSA) 2020 Limits:
If you are on an HSA qualified plan you are able to contribute to an HSA. If you qualify, HSAs have several benefits over FSAs:
- The contribution limits are higher
- You never lose the money
- You can invest HSA funds in mutual funds
Here are the HSA contribution limits for 2020 in comparison to 2019 and 2018:
We realize healthcare costs continue to increase so any opportunity to save on taxes should be considered. Please check with your employer’s human resource department to confirm which of these accounts you may be eligible for.
Theme pic by Emma Matthews Digital Content Production on Unsplash
‘Tis the season for open enrollment in the world of health insurance! Open enrollment for Medicare 2020 has already begun (October 15th – December 7th, 2019). Additionally, individual open enrollment is underway (November 1st – December 15, 2019). Lastly and most important to this article is the fact that many employers are in the midst of their group health plan open enrollment. Many group plans renew January 1st so it’s a busy time of year for employers, brokers, and insurance carriers.
This article is designed to assist employers in knowing what to focus on during this busy season.
The most important thing we need to focus on is the premiums that you pay to the insurance carriers. We know this is a huge expense and we work with you to keep this competitive to what’s available in the marketplace.
Most of the January 1st group health insurance renewals are out. Perhaps your increase is palatable enough to forgo shopping and just renew as is. However, that is more the outlier than the norm. Typically, it’s best to assist us with the necessary data needed in order to shop your policy with the competing carriers in the marketplace. By now, your account managers at BBG have been working hard to gather the necessary data for shopping. These items include:
- Current Census
- Average Total Number of Employees (ATNE). This is based on how many total employees you employed each month and dividing by 12. Estimates are used for the remaining months of the year.
- Names of your employees who are eligible but waive off the plan
- The reason they are waiving
- If you are a 51+ group we’ll need what is called an Employer Risk Assessment Form (ERAF)
The above will allow us to obtain street rates in the small group market place and potentially underwritten rates in the 51+ marketplace. Street rates are off the shelf rates that are based on your group’s census alone. They are still subject to underwriting but give us a good benchmark to know if we should pursue underwritten rates
Medical Health Questionnaires (MHQs)
The dreaded MHQs need not be so dreaded anymore! Most insurance carriers prefer to receive electronic MHQs via programs like FormFire. Some carriers now require FormFire MHQs. BBG has dedicated team members who can assist your employees in completing this process. We’ve worked hard this year to streamline the process to allow us to help a larger number of you in a shorter amount of time.
So when are MHQs needed? This answer is different depending upon what market segment you are in…
1-50 Small Groups
If you have 50 and under total employees, FormFire MHQs will be needed to obtain underwritten rates from any competing carriers. However, BBG is all about efficiency so we first obtain street rates to determine if this is even worthy of your time. If we determine that it is then we highly suggest proceeding with FormFire.
The only exception here is when we obtain community rates. Community rates are different from underwritten rates and are typically more expensive than their underwritten counterparts. We’ve been finding that mostly micro groups and other groups with certain characteristics that may adversely impact underwriting are served best by community rates.
51-99 Mid-Size Groups
If you have between 51-99 total employees some carriers require MHQs to release any underwritten rates. However, there are a few carriers who will release underwritten rates if your renewal is <25% and you’ve completed an ERAF.
100+ Large Groups
Typically MHQs are not needed in the 100+ market segment; although, there are exceptions where MHQs can be helpful. Your account manager will assist to know when this applies to you.
When Not to Shop the Market
There are only two instances when it makes sense to not shop the market. 1.) If you are in the 51-99 market and your incumbent carrier asks for your “no shop” number. A no shop number is an increase you are willing to accept in agreement for not shopping.
In our experience, if a carrier is asking for your “no shop” number, they are willing to play ball and negotiate. If you are not sure what a reasonable no shop number is, talk to your account manager and they can assist you with this. However, you can always be aggressive and ask for a flat increase. What’s the worst they can say? No? If the carrier cannot meet it, we can always shop your policy.
2.) Or if you are in the 1-50 market your incumbent carrier may be able to provide some rate relief in an agreement to not shop your policy. The amount of rate relief available in the small group market is much smaller but if you received a favorable renewal a few points of rate relief may be enough for you to decide to stay put. Your account manager and BBG will let you know if this is a feasible option for your specific group.
At BBG, we are fully aware that the most important work we do is to assist the employers we work for in keeping healthcare costs and the coverage your employees receive competitive to what’s in the marketplace. The most important benchmark number we look at is your average cost per employee per year. This number is found by taking your total costs and dividing by your total employees enrolled in the health plan. We realize your enrollment can fluctuate and by looking at this number we are looking at a comparable number year over year.
Open enrollment is always a busy time of the year but the exercise of shopping, completing FormFire, and allowing BBG to negotiate with the carriers on your behalf is the important work. This work allows you to maintain strong benefits year after year.
A dog’s sense of smell can be 10,000+ times more powerful than humans. It’s no surprise that we ingenious humans have figured out how to train these loving creatures with their amazing sniffing abilities.
We’ve all seen dogs at the airport and/or in cop cars. These dogs are particularly trained to sniff out illegal drugs. However, dogs can also be an effective solution in some healthcare situations.
Disclaimer: All dogs featured in this post belong to (or previously belonged) a BBG team member. The theme photo may just happen to be the president’s dog…or should I say the dog who owns the president may just happen to be featured in the theme. 😉
Life is good!
Wait, you want me to work??
Did you know there are seizure alert dogs? That’s right if you have a loved one who is challenged with epilepsy, there are organizations who can pair them with a trained seizure alert dog.
Here are several such organizations that we’ve come across in our research on the internet:
Ready to please!
According to Canine Partners for Life these dogs can do the following:
- Alert its partner of an oncoming seizure
- Stay close to its partner in the event of a seizure to prevent injury
- Alert a caretaker
- Fetch an alert device
- Open a door and/or turn on a light
The Epilepsy Foundation states that “dogs can be trained as service animals for people with seizures, just like they can be trained to serve people with other disabilities. The law protects a person’s right to use a service animal in any public place.”
It’s quite amazing that these fuzzy, friendly creatures can not only be our best friend but also provide a valuable service.
Everyone needs a best friend.
Diabetes is another health condition for which dogs can be trained to detect. The key with many medical conditions is early detection. Blood sugar levels which go too low (hypoglycemia) or too high (hyperglycemia) pose serious health risks.
Diabetic alert dogs are trained to alert their partner in advance of levels becoming dangerous.
According to the American Kennel Club, “diabetic alert dogs can function as blood sugar level detectors.” While dogs cannot give exact measurements of blood sugar levels, like a blood glucose meter, they can preemptively alert their partners when levels are out of range.
If you are looking for organizations to pair you or your loved one with a diabetic alert dog, here are several organizations and resources:
Early Cancer Detection
Did you know I have 220 million smell receptors?
So if a dog’s sniffing ability is so phenomenal at early detection of certain health conditions, what about cancer? If so, wouldn’t it seem like a grand solution to have dogs in our primary care physicians waiting room? Well, we are probably a long way from that ever happening but there are dogs being trained.
However, no one can deny that some dogs are already being credited with life-saving abilities. This article from American Veterinarian has some great stories of normal dogs alerting their owners in creative ways about cancer. Many of the owners have good reason to believe their dogs saved their lives!
According to Medical News Today, dogs can detect certain cancers in a person’s:
This seems like a no brainer, right? It’s a low-risk, noninvasive method; however, there are still many inconsistencies.
Who me? I’d never present a challenge.
The first double-blinded studies were published in 2006. Dr. Klaus Hackner, a pulmonary physician at Krems University Hospital in Austria reports in this article on Scientific American.
First, let’s look at why/how dogs can detect cancers. Cells give off volatile organic compounds, also known as VOCs. According to Hackner, each type of cancer would have a distinct smell and it would be different from a normal cell.
“Given that dogs have more than 220 million smell receptors in their noses, they’re excellent animals for sniffing out disease,” Hackner said. “In comparison, humans have a ‘mere’ 5 million smell receptors in their noses,” he said.
Most dogs can be trained, in about 6 months, to detect the odors associated with certain cancers. However, the study failed due to the lab environment being set up in a way that neither dog nor handler knew if samples selected by the dogs were actually cancerous. Dogs will lose interest without positive reinforcement.
In this same article from Scientific American, Dr. Hilary Brodie, a professor in the Department of Otolaryngology at the University of California, expounds on some arguments of why dog detection of cancer is not ideal even if the lab situation was different:
- It would take an immense amount of time and energy to train dogs on the many types of cancer.
- Dogs can have a bad day and misdiagnose.
- No test is perfect but doctors know the accuracy of certain tests such as mammograms while rates would vary from dog to dog.
Both Hackner and Brodie believe it may be more feasible to think that dogs will be aiding researchers in the creation of biochemical “nose” machines, known as e-noses.
The nose knows.
Dogs make wonderful companions and very apparently aid in improving our lives in various ways and especially with those who are challenged with health conditions. Dogs are already making a positive impact in the world of healthcare in regards to seizure and diabetic alert.
There is more research needed before dogs can be of assistance in the detection of certain cancers. However, the good news is that they possess a valuable key component (amazing sniffing abilities) and now it’s up to us to figure out how to best train and utilize them.
We are capable of more than just looking cute.
The value of SharedFunding is that it creates a gap between what you were paying for traditional insurance and what you pay with SharedFunding.
Unfortunately it’s typical for insurance costs to increase annually. However, we’ve found that by creating a gap with SharedFunding, that increase can be on less premium.
You’ll be glad you brought it! Photo by Ricardo Resende on Unsplash
When you have traditional insurance, you need to buy the plan that you want to offer your employees. Makes sense, yes? The problem is that you are paying for this plan for every employee regardless if they use it or not.
The real benefit of insurance can be compared to an umbrella. You’ll be glad you have it with you when it downpours. Additionally, you’ll never mind when the sun comes out and you are carrying your umbrella.
At BBG, Inc., we’ve come up with a way to provide the protection of an umbrella at a fraction of the cost of traditional insurance.
With SharedFunding, you can reduce the high premiums you are paying to the insurance company by buying catastrophic coverage. You are still buying an umbrella but just with a little more gap between you & the umbrella.
Typically we recommend purchasing the highest deductible available ($5,000, $6,350, $6,650). However, BBG will work with you to determine the appropriate amount of risk.
Then we’ll build out the plan that you want to promise your employees and deliver it to them. This is called SharedFunding:
- You buy catastrophic coverage from the insurance company
- Your annual premium costs go down ↓
- We deliver the plan you want to your employees
- It’s a promise to pay rather than buying from the insurance company
But won’t we fund the difference back in claims?
Healthcare is used unevenly and in the 14 years we’ve been doing ShareFunding, no client has ever funded back the entire premiums savings in claims.
Here is a simple example:
Things are starting to look up. Photo by Jude Beck on Unsplash
Let’s say that traditional insurance costs you $1.00 (haha, I know what world do I live in?? Just trying to keep it simple).
BBG comes in and recommends you buy the highest deductible possible for $0.60. Right now things are looking up as you’ve reduced your healthcare costs by 40%.
The next step involves building the SharedFunding plan you would like to promise to your employees. BBG can build any type of ShareFunding plan you’d like. Most employers choose to mimic their former traditional plan. This way employees still get the same benefit they are used to receiving.
Most likely you’ll end up funding approximately $0.20 in claims for employees who utilize the SharedFunding plan.
That brings your final cost up to $0.80 for a 20% savings. Not too bad, eh?
The Compound Savings of ShareFunding
Saving 20% on your healthcare costs when you initially set up SharedFunding is lovely, yes? But what makes it even lovelier is what happens in the years to come.
Since pictures speak 1,000 words, let me explain with a graph:
Here at BBG we tend to look at the average cost per employee per year as a benchmark. The reason is that your enrollment fluctuates each year. You can calculate your average cost per employee per year by taking your total costs divided by your current enrollment.
The above graph includes numbers from a real client who has been SharedFunding since 2012.
As you can see their average cost per employee per year were at $15,197 with traditional insurance in 2012/2013. By switching to SharedFunding that year, we were able to reduce that number by 39%. Whoa!! Then in 2014/2015 they embraced a more robust form of SharedFunding and reduced their cost another 21%.
While we are pretty good, we are not magical. Unfortunately, you’ll notice their healthcare costs did rise through the years with SharedFunding. However, the true value of SharedFunding is that your increases are on a smaller premium amount; hence, the compound savings of SharedFunding.
To show this we assumed they would have received a trend increase of 5% each year if they had stayed on the traditional route. Based on past renewal trends, this was an appropriate average increase to assume.
Firstly, they are not even close to what their average cost per employee was in 2011/2012. Secondly, while both graphs go up the gap between them grows!
Healthcare is likely one of your biggest expenses as an employer. The math of self-funding may not work for small employers, but the math of SharedFunding most likely will. Here are BBG, we have fun delivering strong benefits to your employees while reducing the amount of premium you pay to the insurance company.
Your employees will still have access to the network that the insurance carriers provide. Additionally, you will be protected from catastrophic claims with a mini stop loss in purchasing a high deductible plan from the carrier. Furthermore you can deliver the same benefits to your employees by promising to fund. Lastly, with a promise to fund, you, the employer, will be able to retain more dollars in your business.
If you are interested in seeing if SharedFunding might be a good fit for your company, don’t hesitate to reach out to us for a no obligation analysis.
Lastly, we will be running a series on SharedFunding and in this series we plan to get into the details on a more granular level.