How ICHRAs Can Help.
To understand the need for voluntary medical benefits in low-wage sectors of the workforce, it is important to understand how fundamental components of the ACA changed insurance models that had worked for many decades.
Proponents of the ACA point to a number of statistics showing a significant drop in uninsured workers since its inception. But these statistics actually ignore very important realities. The ACA-mandates cover preexisting conditions with no limits, upend actuarial charts and expose insurance companies to limitless liability. Now, the only variables left in the equation are plan deductibles and cost-sharing.
Deductibles and cost-sharing have to increase exponentially to offset this unlimited liability. For the low-wage worker, these plans do not provide accessible coverage for everyday medical expenses. With an average annual deductible now greater than $7,000 for an ACA-compliant Bronze plan, low-wage workers can face financial hardships just by paying for their everyday medical expenses.
For employers who are competing for labor, the first and most important take-away is that just having an ACA-mandated MEC or MV plan will NOT help attract or retain employees. In actuality, the ACA created a level playing field for employers by mandating high levels of required coverage and infinite claim liability after satisfaction of a maximum out-of-pocket spending threshold.
ACA mandates created an environment where high deductibles and high co-pays are the only way to balance the equation and to create “affordable” plans. This leaves low-wage workers without access to the coverage they need for their everyday healthcare expenses. High deductibles mean employees must come out-of-pocket for most of their medical needs, which can spell financial disaster for low-wage workers.
Hourly-wage workers have always faced an uphill battle just by having to pay living expenses. In fact, most temporary workers are just one paycheck away from financial ruin:
* 56% Have Less Than $100 in Discretionary Income Monthly
* 68% Have Less than $1000 In Savings
* 78% Live Paycheck to Paycheck
These workers can face financial ruin with one unexpected healthcare emergency. A bout of the flu that affects the entire family, an injury on the ball field, or a sudden need for outpatient surgery are just a few examples.
Being underinsured is comparable to being uninsured. Forty-one percent of underinsured, non-elderly adults forgo medical care because of costs. Voluntary Fixed Indemnity health insurance can close the gap for the most common out-of-pocket expenses not covered under ACA-mandated plans. The vast majority of studies on employee benefit programs show that medical insurance is the number one benefit desired by employees.
With the right combinations, employers can combine affordable, voluntary healthcare benefits with ACA plans, giving their employees the best of both worlds. Benefit-rich, fixed Indemnity voluntary plans can cover out-of-pocket expenses that are not accessible under ACA plans.
It is well established that employers need to provide valuable voluntary benefits in order to best compete for scarce workers in all job sectors. In fact, offering usable, affordable healthcare benefits is the biggest single factor in recruiting and retaining employees in the post-ACA world, and voluntary medical benefits have emerged as the best way to close the substantial gaps in coverage. Employers need to evaluate plans based on the providers’ capabilities, the medical coverage and the plan details in that order. Why? Because a provider may have great medical coverage, but without systems for implementation, the plan will fail.
To evaluate the effectiveness of a voluntary medical benefits plan, one must first vet providers on their capabilities in implementing systems and best practices to administer their plan. Second, employers need to evaluate the actual medical coverages offered and, third, compare providers on specific elements of plan coverage, including deductibles, waiting periods, the ease of filing claims, etc.
Essential StaffCARE performed several important studies and found that employee retention went up 47% for those who enrolled in its’ voluntary healthcare plan versus those who did not. In another study, participation in the employers’ voluntary benefits plan showed dramatic increases when they switched to a value-based voluntary indemnity plan. For employers, the conclusion is obvious. The right voluntary healthcare plan is crucial to recruiting and retaining employees in a post-ACA world.
You Don’t Know What You Don’t Know
Employers need to focus on their businesses, but in the current labor and economic environment the success of an enterprise depends on its ability to recruit and retain employees. There are many strategies that have been advanced including improving company culture, transparency, employee engagement, clear paths for advancement, and opportunities for on-the-job education and training. But studies show the biggest reasons for employees choosing a job or looking elsewhere are healthcare benefits.
Do a google search on telemedicine, telehealth, virtual healthcare and virtual primary care and you get similar results from a plethora of providers. As an SME Employer you need to know there are big differences in these providers. Here’s why:
Workforce Shortages in Lower-Wage Jobs Will Still Be Around After the Pandemic Recovery
One thing the current statistics don’t tell you, is there was a growing labor shortage in many low-wage sectors of the workforce, BEFORE the pandemic. In fact, here is a quote from the Monthly Labor Review, published by the US Bureau of Labor Statistics in October 2018:
Small and Medium-Sized Employers: 3 Key Factors to Consider When Building Your Benefits’ Strategy. A Necessary Change of Perspectives on Healthcare, Post-Pandemic
The Affordable Care Act is credited for giving millions of previously uninsured Americans access to affordable healthcare coverage. But a closer examination of the facts reveals that ACA-compliant plans do not necessarily translate to usable coverage for low-wage, hourly workers.
As an employer, it is imperative for you to discern between truth and fiction when it comes to employee benefits and strategies.