All posts by Ron Theriault

About Ron Theriault

Ronald Theriault specializes in the healthcare and public sector markets. Ron has more than 22 years of experience as a consultant in the insurance industry. Elements of his work include managing RFP processes, developing annual budget projections, disciplined understanding of insurance underwriting, formulating progressive plan designs, creating collective bargaining strategies and providing expert testimony at arbitration hearings. Ron is an active member of the Connecticut Association of Boards of Education, Connecticut Association of School Board Officials, Connecticut Government Finance Officers Association and Connecticut Association of Healthcare Facilities. He graduated with a B.A. in Mathematics from Bates College.

Health Insurance Mergers 2015: Winners and Losers

Recent mega-mergers in the health insurance arena continue to gain momentum in 2015. Earlier this summer, Aetna proposed a deal to purchase Humana (the nation’s third and fourth largest health insurers by revenue) for $37 billion. If the deal is approved by the Federal Trade Commission and The United States Department of Justice, the combined company could create the nation’s second largest health insurer behind UnitedHealth Group.

In the industry’s most recent development, Anthem announced their bid to purchase Cigna Healthcare for nearly $48 billion. Although the transaction is subject to shareholder and government approval, this deal could continue to reshape the health insurance landscape; where improving market share is a high priority for those looking to survive and grow. However, the question now is whether or not federal officials will allow this level of consolidation to pass. All eyes will be on state and federal regulators over the next 12-18 months as they determine how the marketplace will be affected by the insurance consolidations. The central issue federal officials will focus in on is whether or not these merged companies will become so powerful, that they unfairly dominate regional markets thereby violating anti-trust laws. Continue reading Health Insurance Mergers 2015: Winners and Losers

When it Comes to Open Enrollment, Don’t Settle for the Status Quo

For many businesses and their employees, the benefits calendar begins and ends each January 1st. This means that as we are now accelerating towards the fourth quarter of 2014, open enrollment is nearly upon us.

As employers begin to sift through all of the different health care options that are now available to them, their focus will be solely on affordability. This is primarily because of employer requirements now in place via the Affordable Care Act (ACA). Over the past year or so, the health insurance options available for employers have changed to adapt to the new environment prompted by the ACA. Many employers will begin to consider:

  • Changing health insurance companies
  • An exclusive focus on “Consumer Driven Health Plan Designs”
  • Alternative Funding Methods (self-insurance, minimum premium, level-funding)
  • Alternative Employee contribution scenarios (spousal surcharge, tobacco surcharge, etc.)
  • Incentive Based Health Improvement Programs (Wellness)
  • Private Exchanges (Defined Contribution)
  • Access Health (CT Public Exchange)

…or some combination thereof. Continue reading When it Comes to Open Enrollment, Don’t Settle for the Status Quo

When Developing a Self-Insurance Strategy, Stop-Loss Coverage is Key

Are you considering self-insuring your company’s group health insurance plan?  Many employers are but there is some concern that the appropriate level of individual stop-loss coverage will not be available when it comes time to make that move.

Many smaller employers across the country are exploring self-insurance for the first time.  In most cases this is being driven by a new tax or fee being assessed as part of the Affordable Care Act (ACA). If your plan is self-insured you are exempt from paying this fee. The law’s Health Insurers Fee (HIF)—also called the Health Insurance Industry Tax or Health Insurance Provider’s Fee— can be as much as 2.5% of gross premium costs and applies to all fully insured health insurance plans.

Beginning in 2014, health insurance companies will pay the annual HIF fee based on net written premiums. Of course this fee will be passed along through the health insurance premiums paid for by employers and subsequently by their employees. The fee is permanent and will be used to fund premium tax subsidies for low-income individuals and families who purchase insurance through Public Exchanges, more recently known as Health Insurance Marketplaces.

An example of the impact on an employer group with 100 employees enrolled in their health plan is as follows.

  • 100 employees x $10,000 (avg. annual premium per employee) = $1,000,000 total premium
  • 2.5% (HIF) x $1,000,000 = $25,000 HIF, which would be added to the needed premium for that policy year

This cost will undoubtedly be burdensome for employers offering group health coverage; and as a result many health insurance advisors have begun to explore self-insured products for groups as small as 50 enrolled employees.  Self-insured products have historically been designed for much larger groups.  In fact most insurance companies would not have offered self-insured plans to groups unless they had at least 300 enrolled employees.  Over the past two years, though, it is not coincidental that many health insurance companies have lowered their threshold so groups with 50+ enrolled employees could consider some form of self-insurance, capitalizing on the market opportunity.

Let’s assume many smaller businesses with 50+ employees begin to migrate toward self-insured plans. Makes sense for the employer, right?  Well, consider the effect of this phenomenon on the ACA.  Remember, the ACA is counting on $8 billion in revenue from the HIF in 2014 alone!  This needed revenue is indexed upwards annually reaching $14.3 billion in 2018.

Understanding that this could pose a problem, states that support the ACA have raised concerns regarding the mass exodus of small businesses from the insurance marketplace.  Yes, this would mean millions of dollars of lost tax revenue, but that is not the only concern.  Businesses that are prime candidates for self-insurance tend to be those with a younger, healthier population. If these groups leave the insurance market place for self-insurance, the state and federal exchange pools will be doomed, all but guaranteeing devastating future rate hikes for public exchange products due to adverse selection.

As a result some states have begun initiatives to create laws that effect and/or limit the purchase of stop-loss insurance by smaller groups.  Stop-loss insurance is a key element necessary when developing a self-insured program.  It is an insurance policy that protects the plan from the exposure of individual catastrophic medical claims.

To date, four states passed legislation in 2013 that restrict or limit stop-loss coverage for small businesses. Read more here>>

The stop-loss industry is currently lobbying to prevent more states from adopting such laws claiming that stop-loss is not a health insurance policy and should not be subject to the ACA provisions involving the taxation of health insurance plans.

Momentum on this subject will most likely slow in 2014, with mid-term elections right around the corner. However, if you are an employer or an advisor keep a keen eye on this topic as it develops and check back here for a mid-year update.

Health Savings Account Enrollments on the Rise… Again

As American employers continue to battle through tough economic conditions, many more have changed their employee benefits strategies to include programs that emphasize consumer choice and accountability.  Health Savings Accounts and Health Reimbursement Accounts  have become the predominant vehicles that employers have turned to for long term cost control of their health benefits.

You’ll recall that I addressed this trend back in July with a post titled: Are You Missing the Boat When it Comes to HSA Strategy? There’s Still Time! While that was several months ago, HSA enrollments are still in the news, as evidenced by this piece on InsuranceJournal.com: More Employers Offering Consumer-Driven Health Plans: Survey.

Ron Theriault
Ron Theriault

According to a recent Aon Hewitt survey, “Consumer-driven health plans (CDHPs) have surpassed health maintenance organizations to become the second most common plan design offered by U.S. employers.” That’s right in line with the data I shared in July. You heard it here first, folks.