This company, Freshbenies, has a really great package. Not only do they offer unlimited physician visits by phone or video, but they add doctor consults by email, and an employee advocacy program that can really help employees navigate the system, and solve problems. Check out the video.
Zenefits announced on Friday that it would reduce its workforce by 250 employees, or about 17% of the total. The benefits firm positioned the cuts, which were made almost entirely within the HR tech firm’s sales organization, as part of its effort to refocus its operations on small businesses.
Calling it a “reduction in force,” Zenefits co-founder and new CEO David Sacks wrote in an internal memo that “Within the sales organization, we are eliminating the Enterprise team (although some members will be offered other roles). We are also making a large reduction in Sales Development Representatives (SDR), the organization that prospected for the largest accounts.”
About a dozen employees in recruiting have also been cut. A company spokesman says no advisers/brokers were included in the layoffs.
“We are not cutting these jobs for performance reasons,” Sacks notes. “We are letting go of many great people today, and it is not their fault. It is no secret that Zenefits grew too fast, stretching both our culture and our controls. This reduction enables us to refocus our strategy, rebuild in line with our new company values, and grow in a controlled way that will be strategic for our business and beneficial for our customers.”
Sacks took the reigns as CEO of Zenefits earlier this month when its former CEO Parker Conrad, who co-founded the tech firm along with Sacks, resigned amid regulatory compliance issues.
“It is no secret that Zenefits grew too fast, stretching both our culture and our controls.”
The company has been under investigation by the California Department of Insurance since last year, the state agency disclosed two weeks ago. California Insurance Commissioner Dave Jones said he had directed the agency to use additional resources to investigate whether Zenefits had complied with regulations that require the licensing and training of insurance agents and brokers.
“We are communicating and cooperating fully with regulators regarding compliance issues that we discovered and self-reported to them,” Kenneth Baer, a Zenefits spokesman says.
by Melissa Winn, Employee Benefits Advisors
From Kaiser Health News
Stung by losses under the federal health law, major insurers are seeking to sharply limit how policies are sold to individuals in ways that consumer advocates say seem to illegally discriminate against the sickest and could hold down future enrollment.
In recent days Anthem, Aetna and Cigna, all among the top five health insurers, told brokers they will stop paying them sales commissions to sign up most customers who qualify for new coverage outside the normal enrollment period, according to the companies and broker documents.
The health law allows people who lose other coverage, families with new children and others in certain circumstances to buy insurance after enrollment season ends. In most states the deadline for 2016 coverage was Jan. 31.
Last year, these “special enrollment” clients were much more expensive than expected because lax enforcement allowed many who didn’t qualify to sign up, insurers said. Nearly a million special-enrollment customers selected plans in the first half of 2015, half of them after losing previous coverage.
In addition, Cigna and Humana, another big health insurer, have ceased paying brokers to sell many higher-benefit “gold” marketplace plans for individuals and families while continuing to pay commissions on more-profitable, lower-benefit “bronze” plans, according to documents and interviews.
Gold plans typically enroll sicker members than do less comprehensive policies, say insurance experts. As of June, more than 695,000 people had enrolled in gold plans.
Those who want to buy individual and family plans can still do so directly through the Affordable Care Act’s online marketplaces or via navigators working for nonprofit groups.
But the retreat from broker sales, which includes last year’s decision by No. 1 carrier UnitedHealthcare to suspend almost any commissions for such business, erodes a pillar of the health law: that insurers must sell to all customers no matter how sick, consumer advocates say.
By inducing brokers to avoid high-cost members — whether in gold plans or special enrollment — the moves limit access to coverage and discriminate against those with greater medical needs, said Timothy Jost, a law professor at Washington and Lee University and an authority on the health law.
“The only explanation I can see for them doing this is risk avoidance — and that is discriminatory marketing and not permitted,” he said. “When people wonder why we’re not getting millions more enrollees in Affordable Care Act health plans, one reason is, the carriers are discouraging it.”
The insurance industry says it is not discriminating but adjusting to market realities including higher-than-expected medical claims and the failure of a government risk-adjustment program called “risk corridors” to cover much of that cost.
“Without making necessary changes to coverage and benefits, there was no way for health plans to remain in the market or to offer the kind of coverage as they had in the past without sustaining huge losses,” said Clare Krusing, spokeswoman for America’s Health Insurance Plans, an industry lobby.
The adjustments are critical to keeping coverage affordable and sustainable, said individual insurers contacted by a reporter.
If insurers are telling brokers they won’t be paid for enrolling people in gold plans, “that to me is pretty discriminatory,” said Sabrina Corlette, research professor at Georgetown University’s Center on Health Insurance Reforms.
The changes don’t affect job-based insurance or the government’s Medicaid and Medicare programs.
The nonpartisan Congressional Budget Office estimated as recently as last March that 21 million consumers would be enrolled by now in private health insurance plans sold through online marketplaces. Now CBO forecasts 13 million will sign up this year.
Brokers are critical to sign-ups and the success of the health law. For 2014, 44 percent of Kentucky enrollees bought through brokers. So did 39 percent of the California enrollees. No similar figures are available for the marketplace that serves most states, healthcare.gov.
Brokers are a “very important” part of enrollment for individuals and families despite alternatives provided by the health law, said Robert Laszewski, an insurance consultant. “They’re still big.”
With varying commissions, brokers will be tempted to promote only plans they make money on, even if those aren’t the best for some customers, said John Jaggi, an Illinois broker and consultant.
“Now they’re really forcing the agent to think only of the plan that he gets compensated for,” he said.
The race to lower commissions began last year with United’s move along with decisions by several, smaller insurance co-ops to suspend sales fees shortly before they failed, brokers said. Other insurers feared they might end up getting their competitors’ unprofitable business, so they too adjusted fees.
Last week, BlueCross BlueShield of North Carolina also told brokers it would stop paying commissions for special enrollment starting April 1, reported The News and Observer of Raleigh.
“We expect that at some point in time all of these companies will continue to reduce commissions where we’re not able to be compensated in a way that we can continue to run our businesses,” said Kelly Fristoe, who sells health insurance in Wichita Falls, Texas.
Federal regulations prohibit insurers from marketing practices that “have the effect of discouraging the enrollment of individuals with significant health needs.” Violations can bring penalties of up to $100 a day for each adversely affected person.
The Department of Health and Human Services did not respond to requests for comment on the practices.
Insurers “can’t market their plans in ways that discriminate,” said Sarah Lueck, a policy analyst at the Center on Budget and Policy Priorities, a left-leaning think tank. “It’s going to take some more statements from regulators to make sure insurers get the message.”
What’s unclear is whether insurers intend to resume paying full commissions when open enrollment begins for 2017.
In its Monday letter to brokers, Anthem said it “remains committed” to individual and family insurance. United, however, said last year it might leave that business altogether — a drastic move because under federal law it couldn’t reenter for five years.
Few if any carriers want to go that far, said Laszewski.
“They can’t withdraw from the market,” he said. But by adjusting commissions, “they’re doing everything they can to slow it down until it gets fixed.”
Special-enrollment business is typically costlier than average because sick people are more motivated to sign up outside the normal marketing season, insurance experts say.
But last year’s special enrollments were especially unprofitable because regulators did little to ensure that consumers followed the rules — that they had lost previous coverage, gotten married, moved or otherwise qualified for off-season sign-ups, insurers say. As a result, any consumer could wait until he or she needed care to enroll, they say.
Aetna told HHS that a fourth of all its marketplace members joined through special enrollment last year and that many dropped out soon after receiving expensive care. Special-enrollment members used as much as 50 percent more care than those who sign up before the deadline, said the Blue Cross and Blue Shield Association.
Of the top seven health insurers, only Kaiser Permanente and Health Care Service Corp., which owns Blues plans in Illinois, Texas and elsewhere, haven’t changed commissions recently for gold plans or special enrollment, brokers say.
“Kaiser Permanente won’t be making any broker commission changes,” said spokeswoman Amy Packard Ferro. “It’s business as normal but we are always evaluating our commission structure,” said HCSC spokesman Greg Thompson.
The risk corridor program was supposed to reimburse insurers with sicker-than-average members. In November, however, HHS said it had only enough money to pay 13 percentof what it owed under the program for 2014.
The result for gold plans is that “the risk adjustment system does not work at all,” said Ana Gupte, a health insurance analyst at Leerink Partners. “So it’s impossible to make money.”
Analysis by Standard and Poor’s shows Humana, which is owed $243 million for 2014, as the biggest risk-corridor loser. United, Anthem, Aetna and Cigna, however, aren’t in the top 20.
For most of the largest insurers, blaming risk corridors for cutting broker fees “seems more like an excuse than a reason,” said Jost.
KHN Senior Correspondent Julie Appleby contributed to this story.
From Ed Bray, via Employee Benefits Advisor
ACA reporting aftermath. Ensure you keep all the documentation supporting the reporting decisions made (e.g., employee benefits eligibility coding, alternative reporting methods, transitional relief, control group decisions, etc.) and profusely thank everyone who helped you complete this arduous task!
Benefit information websites to visit. Benefits information – good, bad, and ugly – is everywhere you look these days. Here are opportunities to obtain free credible information: Employee Benefit News, BenefitsLink and government ACA websites such as healthcare.gov and the DOL’s healthcare reform site.
Consider self-insurance (even if you have fewer than 1,000 employees.) According to the 2015 PwC Health and Well-being Touchstone Survey, 66% of employers with 500-1,000 employees are self-insured, up from 59% in 2014. This is not surprising given the cost impact of the ACA, state taxes, and state mandates on fully insured plans. Perform a cost/benefit analysis to determine if self-funding is right for your organization. Don’t forget to calculate the expected ACA fees (PCORI and transitional reinsurance) and “cost” of performing extra reporting responsibilities.
Develop an annual compliance calendar. Given multiple employee benefit legal requirements throughout the year, create an annual compliance calendar so you can keep track of what you must comply with and when. Major requirements will fall in the following areas: ERISA, ACA, COBRA, HIPAA, etc.
Execute appropriate benefit strategies. Re-focus on determining strategies to control rising organizational healthcare costs. According to the 2015 Towers Watson/NBGH Best Practices in Health Care Employer Survey, the top priorities of employers’ healthcare activities over the next three years include: increasing focus on employee well-being, including health, financial and workplace experience (96%); evaluating health and pharmacy plan design strategy (95%); and developing/enhancing a workplace culture where employees are responsible for their health (94%).
Familiarize yourself with ERISA section 510. Lawsuits are already being filed by employees alleging that their employer reduced their hours to keep them from having health insurance coverage. To minimize your risk and exposure, consult counsel before taking any dramatic actions that will affect employee benefits eligibility.
Growing interest in benefits technology. Employee Benefit News’ second annual technology survey indicates that 38% of respondents plan to increase their spending on employee benefits technology next year, with 44% having already increased their spending from 2014 to 2015. Much of that spending is directed toward new employee portals and front-end systems to better integrate and utilize various benefits functionalities (health, retirement, voluntary benefits and more).
Here comes HIPAA. The U.S. Department of Health and Human Services Office of Civil Rights has announced a new phase of covered entity and business associate audits for compliance with the privacy and security rules under HIPAA in the fourth quarter of 2015 and into 2016. If you haven’t already, ensure that your organization is complying with the appropriate HIPAA privacy and security rules (policies and procedures, privacy notice, training, etc.). A HIPAA breach can be very expensive and embarrassing to your organization.
Impact of U.S. Supreme Court ruling on same-sex marriage. The U.S. Supreme Court ruled in Obergefell v. Hodges that the Constitution guarantees same-sex couples the right to marry. Consult legal counsel and your health insurance carriers to discuss any legal and business decisions (plan eligibility, taxation, documentation, communication, etc.) as a result of this ruling, including whether to offer domestic partner benefits into the future.
Jury still out on private exchanges. According to the Deloitte Center for Health Solutions 2015 Survey of U.S. Employers, 89% of respondents have not moved to a private exchange. However, 30% are interested and early adopters feel that private exchanges make it easier to offer a defined premium approach (62%), simplify their company’s role in benefits administration (60%), and improve access to broader physician/hospital networks (57%). While a private exchange may ultimately not be the right fit for your organization, the value-add promulgated by the adopters provide enough reason to consider performing a pros/cons analysis.
Keep the Cadillac tax in mind. According to the IFEBP 2015 Employer-Sponsored Health Care: ACA’s Impact Survey, 34% of employers, up from 24.5% in 2014, have started taking action to avoid triggering the 2018 Cadillac tax. Actions include moving to a CDHP (52.9%), reducing benefits (36.9%), and adopting wellness and preventive initiatives (28.3%). Run a financial projection to determine if your organization is expected to be impacted by the Cadillac tax. If you expect to be impacted, consider cost mitigation strategies and keep an eye out for upcoming proposed regulations. Although the effective date for this tax was recently delayed for two years, keep it on your radar.
Learn financial wellness. Financial wellness is the new buzz phrase in employee benefits and 93% of employers are very or moderately likely to create or broaden their efforts on financial wellness topics in a manner that extends beyond retirement decisions according to Aon Hewitt’s 2015 Hot Topics in Retirement Survey. Such topics include basics of financial markets, healthcare planning, financial planning, debt management, budgeting, and saving for life stages. Given employee interest, look into which topic/s will provide the greatest value-add and work with your current retirement provider to lead financial wellness meetings.
Make the business case for help. Now and over the next few years, ACA administrative requirements are going to become unmanageable for one department/person to handle on their own (ACA benefits eligibility measurement/tracking, IRS reporting requirements, addressing Exchange/IRS appeal letters, new SBC for 2017, etc.). In fact, according to the IFEBP 2015 Employer-Sponsored Health Care: ACA’s Impact Survey, employers say their biggest challenge isn’t cost (20.6%), but rather administrative issues (56.9%). Given significant penalties for non-compliance, engage help as soon as possible, especially from your broker/consultant and internal departments (payroll, IT, communications).
Notify your CFO. It’s a whole new world of corporate healthcare costs. Whereas costs have historically been based on trend and experience, the cost impact of the ACA (new employee eligibility, fees, etc.) and internal/external support resources (consultants, third-party vendors) must now be figured in. Determine your 2016 costs and discuss them with your CFO in order to avoid any surprises.
Obey state and local laws. With so much attention being paid to ACA compliance, it’s easy to lose sight of the fact that some states and cities are introducing legislation affecting employee benefits, especially paid sick leave laws. Ensure that you have the means to learn and comply with such legislation.
Prepare for telehealth-mania. Seventy-four percent of employers plan to offer telehealth this year (exchange of medical information to improve health using two-way video, email, smartphones, etc.) in states where it is legal, up from 48% last year, according to the National Business Group on Health’s Large Employers’ Health Plan Design Survey. Given the costs associated with in-person visits and the upcoming Cadillac tax, this may be a great opportunity for your organization to mitigate health insurance costs.
Questions galore. Given the complexity of the ACA, employees are confused and questions will increase. According to the IFEBP 2015 Employer-Sponsored Health Care: ACA’s Impact Survey, common questions benefit managers should be prepared to answer include: How will our benefits change? Is this benefits change because of the ACA? How does the law affect me? Do I need to do anything (tax-related) or otherwise? What will this cost me? Why are my costs going up? Remind employees that you (and not the news, neighbors, or relatives) are in the best position to answer their questions, especially at open enrollment and employee benefit meetings. When talking about the ACA with employees, however, make sure you are not providing legal or tax advice.
Ramp up proactive employee communication. Given the ACA individual mandate and exchange opportunities, communicate proactively with employees in key situations that could have a negative effect on them or the organization (e.g., remind newly benefits-eligible employees to determine their exchange subsidy eligibility, require employees who decline benefits coverage to sign a waiver, ensure employees know if and when they are eligible for employee benefits or not, etc.).
Study the ACA. In addition to the obvious compliance reasons, the ACA’s requirements will have a significant impact on current and future benefit program costs (plan design, eligibility, fees, etc.). Thus, it’s critical to learn and understand the ACA to allow you to develop appropriate short- and long-term cost control strategies.
Tackle your low-hanging employee benefits compliance fruit. Between the ACA reporting requirements (W-2 cost of benefits, IRS reporting) and payment of new fees (PCORI, transitional reinsurance), the federal government’s magnifying glass over your benefits program has increased significantly, thus increasing its exposure to an audit. If the government arrives at your organization, they may inquire about non-ACA benefits compliance including plan documentation (ERISA, Section 125), HIPAA (policies and procedures, training), non-discrimination testing, wellness programs, etc. If your organization is not compliant in these areas, they may stay for a while.
Understand employee benefits eligibility. Ensure you truly understand how the employee benefits eligibility rules work and are applying them accurately because there are three policing functions: the federal government, employees, and tax advisers through the ACA’s IRS reporting process. You could be subject to significant penalties if you don’t offer health insurance coverage to the appropriate employees. This is especially important for 2016 where the offer of benefits coverage threshold increases from 70% to 95% of full-time employees.
Visualize the light at the end of the tunnel. There’s a good chance that over the past five years you have done more heavy lifting in the employee benefits space than you have in your entire career. Between learning and implementing the ever-changing ACA, coupled with managing your pre-ACA benefit responsibilities, you should be very proud of the work you have accomplished. The good news is that there is light at end of the tunnel in that the ACA implementation requirements should slow down over the next year allowing you to focus on the strategy side of this new world of employee benefits.
Write your broker/consultant’s job description. In this new world of employee benefits, task your broker/consultant with providing hands-on support in the following areas: compliance, communications, analytics, administration, and strategic solutions. If they are unable to meet your wants, needs and expectations, find a new one that will. It’s a buyer’s market.
X-amine new notices, regulations, instructions, etc. There was a good chance that the ACA would roar like a lion once the U.S. Supreme Court decided King v. Burwell and it certainly has. We are seeing compliance regulations being issued on a continuous basis with no end in sight. Ensure that you have external resources in place to make you aware of any new information affecting your health insurance plan.
Year of new vendors and services. When it comes to determining benefits eligibility and completing IRS ACA reporting, new vendors have entered the market. If you decide to use a third-party vendor, perform a thorough vetting process. Key areas to cover include: determining exactly what they are going to do for your organization, gaining assurance in writing that they will meet key IRS compliance dates, learning how they will collect necessary information from all sources, and determining the accessibility of your dedicated support team.
Zero in on employee well-being. According to the 2015 PwC Health and Well-being Touchstone Survey, more employers (73%, up from 71% in 2014) have introduced wellness programs to mitigate the impact of their major cost drivers and more CFOs are willing to listen. Eighty-seven percent of employers with wellness programs offer incentives; of those, 27% offer cash incentives of at least $100. Determine what type of wellness program can positively impact your key cost drivers and then take the appropriate implementation action.
This is pretty good:
One of the best private exchanges is the Bright Choices Private Exchange.
According to recently posted messages by insurance Brokers, Zenefits is often successful in luring employer groups away from their current broker relationship. This is generally done through the promise of impressive enrollment and payroll technology.
However, employers soon realize that Zenefits does not have the capacity to provide the advisory and support services that local and regional brokers and agents can provide.
In a short period of time, the clients return to their previous brokers, realizing that the technology advantage of Zenefits, does not surpass the TLC and advisory services that brokers provide.
Here are quotes from real brokers:
from Susan in NYC;
Last year I lost 3 clients to Zenefits and they were all back in 3 months. Whenever I have a client or prospect brings them up I tell them about my clients experience and make intros to them to speak so they can get firsthand experience. Since then we haven’t lost a client to Zenefits. The biggest complaint my clients made was the knowledge and response time. They would call with what all of us in the business would consider an easy question and they would take a week plus to respond.
As for companies we are using to offer a solution, Www.allay.io is basically a Zenefits that only works with brokers and has been a dream to work with. Also Benetrac that is owned by Paychex has been good too!
Susan Combs PPACA
From Nelson in Nashville:
An adviser sent me an email thread from an employer who was a Zenefits client at the time. Zenefits sent notice of a 16% renewal increase from the carrier, Aetna. The Zenefits broker attached Aetna’s 45-page renewal packet and offered that this was “slightly above the 12-15% average increase we are seeing across the board…. If you would like to set up a call to discuss some of the alternatives that Aetna laid out for you in the renewal packet, I would be happy to do that.”
The client’s email reply was “Sure we want to talk about that.” The client’s frustration level with Zenefits was so high that they signed an AOR with the new adviser within 10 minutes of the meeting.