Employee Benefits White Papers

Employee benefits aren’t always simple.

In fact, for many young employees, they’re downright confusing. Look at basic health insurance term knowledge, for example. Only 7% of individuals can define terms like premium, deductible and coinsurance, according to UnitedHealthcare. And that limited understanding can result in significant—and often unnecessary—expenses for both employees and employers. To put it monetarily, low health literacy is estimated to cost between $106 billion and $238 billion annually, according to the National Library of Medicine.

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Employees again this year contributed about 32% of the premiums while employers covered approximately 68%, quelling fears that we were moving rapidly away from the typical 70/30 employer/employee split.

As the Coronovirus pandemic sweeps the nation in 2020, a crucial pillar supporting the U.S. workforce is employer-sponsored healthcare. While we wait to see how postponed preventive care and delayed elective surgeries will affect the health of the nation's workforce, and how the total costs of COVID-19 testing, treatment, and vaccinations will be financed, we are already leveraging our local knowledge, as well as the data from this survey to recommend renewal strategies for 2021.

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The Affordable Care Act (ACA) imposes a fee on health insurance issuers and self-insured plan sponsors in order to fund comparative effectiveness research.

These fees are widely known as Patient-Centered Outcomes Research Institute (PCORI) fees, and were originally scheduled to expire for plan or policy years ending on or after Oct. 1, 2019. However, a federal spending bill enacted at the end of 2019 extended the PCORI fees for an additional 10 years.

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Employees again this year contributed about 32% of the premiums while employers covered approximately 68%, quelling fears that we were moving rapidly away from the typical 70/30 employer/employee split.

As the Coronovirus pandemic sweeps the nation in 2020, a crucial pillar supporting the U.S. workforce is employer-sponsored healthcare. While we wait to see how postponed preventive care and delayed elective surgeries will affect the health of the nation's workforce, and how the total costs of COVID-19 testing, treatment, and vaccinations will be financed, we are already leveraging our local knowledge, as well as the data from this survey to recommend renewal strategies for 2021.

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Average health plan premiums rose more modestly in 2020. At 5.4%, up slightly from the 4.6% increase in 2019, but still considerably less than the nearly 10% increase seen in 2018 (which marked a ten-year high).

As the Coronovirus pandemic sweeps the nation in 2020, a crucial pillar supporting the U.S. workforce is employer-sponsored healthcare. While we wait to see how postponed preventive care and delayed elective surgeries will affect the health of the nation's workforce, and how the total costs of COVID-19 testing, treatment, and vaccinations will be financed, we are already leveraging our local knowledge, as well as the data from this survey to recommend renewal strategies for 2021.

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While These National Trends Tell One Story, There Are Significant Differences In Some Areas Of The Country, As Well As Within Different Industries Or Group Sizes.

The balance of this report expands on these national trends but also uncovers more localized findings that are critical when benchmarking more strategically.

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Many employee benefits are subject to annual dollar limits that are periodically updated for inflation by the IRS. The following commonly offered employee benefits are subject to these limits:

• High deductible health plans (HDHPs) and health savings accounts (HSAs); • Health flexible spending accounts (FSAs); • 401(k) plans; and • Transportation fringe benefit plans. The IRS typically announces the dollar limits that will apply for the next calendar year well in advance of the beginning of that year. This gives employers time to update their plan designs and make sure their plan administration will be consistent with the new limits.

Legal Update HeaderThe IRS has released Revenue Procedure 2020-45, which includes cost-of-living adjustments for employee qualified transportation fringe benefits for the 2021 taxable year, along with annually adjusted numbers for 2021 for a number of other tax provisions.

The combined monthly limit for transportation in a commuter highway vehicle and a transit pass remains unchanged from 2020 at $270. The monthly limit in 2021 for qualified parking is also unchanged from 2020, also at $270.

Employers that sponsor group health plans should provide certain benefit notices in connection with their plans’ open enrollment periods. Some of these notices must be provided at open enrollment time, such as the summary of benefits and coverage (SBC).

Other notices, such as the Women’s Health and Cancer Rights Act (WHCRA) notice, must be distributed annually. Although these annual notices may be provided at different times throughout the year, employers often choose to include them in their open enrollment materials for administrative convenience. In addition, employers should review their open enrollment materials to confirm that they accurately reflect the terms and cost of coverage. In general, any plan design changes for 2021 should be communicated to plan participants either through an updated summary plan description (SPD) or a summary of material modifications (SMM).