Articles by Robert Cirkiel

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It’s Easier (and Cheaper) to Stay Well than to Get Well

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The Patient Protection and Affordable Care Act (PPACA) is intended to make health insurance more affordable for Americans. Inherent in this Act is the requirement that preventive care be covered as it is well understood that prevention is key to better treatment options and outcomes and, basically, healthier people. Healthier people mean lower costs, right? Right!

The Act specifically requires that insurance companies and employers offer free preventive services to help people improve their health before they need costly interventions. Most agree that covering preventive health care services now that will eventually lead to lower health care costs over time is a good thing. However, we don’t think the writers of this Act are in on the dirty little secret known by HR professionals and benefits actuaries: providing preventive health care services without any penalty or incentive does not lead to sick or at risk people getting the early diagnosis or treatment they need. In fact, in our experience, when employees are provided with free health screenings, weight loss programs and fitness classes, the people who take advantage of them are those who are already in good health! Not surprisingly, the Act does not require that employees take advantage of preventive screenings, nor does it penalize employees for not taking advantage of them. Furthermore, by removing pre-existing condition limitations, the Act sends the message that it’s ok to not deal with your health until the symptoms are such that you have to.

The idea, though, is that these preventive screenings could lead to lowering health care costs and improving employee productivity. But just as people don’t eat brussels sprouts despite the numerous health benefits, many shy away from utilizing preventive care. And no amount of cajoling will change that. What could change this behavior? How about a “pocket book approach” where incentives and penalties that may reach 50%. That’s a significant cost or benefit, making an otherwise “voluntary” program something that “giveth or taketh away” a significant amount of money based on utilization.

As Michael Booth says in his article for the Denver Post, “Colorado has some pricey choices to make soon on how steep Obamacare penalties should be for smokers, and how sweet the rewards for the healthy and fit.” Andit’s not just in Colorado. Insurance commissions in all fifty states will be looking at how much insurers can increase or reduce rates based on the perceived health (or lifestyle) of the policy holder.

Do “lifestyle-based” incentives and penalties make sense? Perhaps they do. Over the past decade, preventive programs have become “all the rage”.  As Robert Cirkiel said: “Ten years ago companies were concerned that there was no discernible return on investment for preventive programs, today it is clear that there is a measurable and valuable ROI both from an employee productivity perspective and lowered health care costs.” And with the continuing concerns about escalating health care costs in the US, reducing cots or at least slowing the speed of ascent is important.

Filed under: Expert Perspective



Affordable Care Act: “Shared Responsibility” is Just Around the Corner

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When the Affordable Care Act was passed in 2010, the rules requiring employers and individuals to have health insurance or pay a penalty commencing in 2014 may have seemed a long way off. Well 2014 is just around the corner and the laws are about to kick in. Rather than wait a few paragraphs before confusing everyone, why don’t I get right to it?

Large employers are required to offer their employees’ health insurance coverage or risk paying a penalty.

What is a large employer?

It is one that employs at least 50 “employee equivalents”. One way to be an “employee equivalent” is to work at least 30 hours per week. Another way would be to work less than 30 hours per week and be aggregated with others in the same situation. For example, two part timers working 15 hours per week each aggregate into one “employee equivalent”. Add up the number of employee equivalents in your organization. If the number is less than 50 there is no penalty for not offering health insurance and you can stop reading now.

If you are still reading this, your organization needs to offer health insurance or be subject to penalties. These penalties are not called penalties anymore; they have been immortalized by the regulators as “shared responsibility”. Just to make sure that you are still confused, the Supreme Court had already decided that they were not penalties but rather taxes that you pay for not buying something (an un-sales tax) but the regulators liked “shared responsibility” better.

You will need to offer the coverage to full time employees (30 hours per week or more) only. Once you’ve aggregated part timers into “employee equivalents” for determining the abovementioned “over 50 test” you no longer need to consider them and there is no penalty for not covering them.

What kind of coverage must you offer?

In order to avoid penalties, the organization must offer a comprehensive level of benefits to at least 95% of the full time workforce and pay for at least 60% of the actuarially derived cost (with the employee paying no more than 9.5% of the family’s combined W-2 pay). The comprehensive level of benefits is known as “Essential Health Benefits” (“EHB”), the definition of which can vary a bit by State but needless to say covers most everything you’d expect including hospitals, doctors, tests, drugs, etc. for all kinds of care.

If your plan does not meet the 95% test, the EHB test, the 60%/9.5% test, and at least one of your low paid full time employees receives subsidized coverage from an Exchange, your organization will be subject to a penalty based on Calculation Number One.

If your plan meets the 95% test, the EHB test, the 60%/9.5% test, and at least one of your low paid full time employees receives subsidized coverage from an Exchange, your organization will be subject to a penalty based on the lesser of Calculation Number One and Calculation Number Two below.

Calculation Number One: Multiply $2,000 by the total number of employees in excess of 30.

Calculation Number Two: Multiply $3,000 by the number of low paid employees who receive subsidized coverage from the Exchange.

If your plan meets the 95% test, the EHB test, the 60%/9.5% test, and no low paid full time employee receives subsidized coverage from an Exchange, your organization will not be subject to any penalties.

By the way, “low paid” is not so low – in 2014 it is about $88,000 for a family. This will encompass a lot of people. And, an employee that is offered coverage from an employer-based plan that passes all the tests and turns it down is subject to individual penalties but the employer is spared.

Employers are deciding who to cover, what to contribute, or whether to have a plan at all. These deliberations are known as “Pay or Play.” Some employers are considering meeting the requirements of the Act by giving stipends to employees and letting them buy coverage on their own from one of the Exchanges. Others will not offer coverage at all, and pay the penalties. For now, most seem to be content to offer an employer-based plan that complies with the Act and covers all full time employees. There is no right answer. Grahall can help you choose the right path for your organization.

This sidebar is just a brief summary. There is plenty of “fine print” not covered. Contact us to learn more.

Or access the IRS’ Q&A on Employer Shared Responsibility Provisions.

 

Filed under: Expert Perspective



The Suggestion Box…

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“It is the God given right of all workers to bitch about their boss.”

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Money, Mix and Messages

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“With all this talk about no hitters, when Harvey Haddix was a Pirate and pitched a 12 inning perfect game, they gave him a car.  Shouldn’t they have given him a boat?”

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Now that Health Care Reform has Passed, What’s Next for Employers”

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10:47 PM Sunday March 21st, 2010 Health Care Reform Passed the House with a Vote of 219 to 212.  About 10 minutes later the “fixes” to the Senate bill pass by one vote more. As Yahoo News Blog “House Passes Second Historic Healthcare Vote”  says:

“While the senate still has to weigh in on an amended bill, most observers think that shouldn’t be much more than a formality especially at this late stage of the process. At the very least, the House vote ensure that there will be a health care bill on President Obama’s desk, perhaps as early as the end of this week.  And the president’s signature will set I motion the most dramatic change to American health care since Lyndon Johnson signed Medicare into law in 1965.

The bill, which the Congressional Budget Office says will cost $940 billion over the 10 years, is expected to cover 32 million Americans who are presently uninsured”

Now what?  We asked Grahall’s Robert Cirkiel what’s next for employers.  Here are Robert’s recommendations.
Continue reading “Now that Health Care Reform has Passed, What’s Next for Employers”” »

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Grahall Named America’s Healthiest Consulting Firm

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Expert Perspective by Grahall’s Robert Cirkiel

expert perspective telescopeIn a recent United Health Foundation study, “The Healthiest and Unhealthiest States”, Vermont — which is the home of the beautiful Grahall Properties  and birthplace of Grahall partner Michael Graham — finished first.  Forbes published the study finding.  We are extremely proud of this achievement.  For the record, full disclosure, and transparency we have no relationship with either Forbes or the Foundation that would affect these findings.

The study considers the 22 factors they consider to be most important, but let me discuss my personal eight which are somewhat different.  I discovered them a few years ago in Italy.  At the time, I was chaperoning my son’s eighth grade class trip. My job was to be the “surrogate parent” – I did the “parenting” so that the teacher would be free to do the teaching.  In one week’s time, I lost ten pounds along with all of my little aches and pains and rediscovered my energy.  For the record I am a “50 something” who expected the constant touring and pasta consumption to have the opposite effect.

So, to what do I attribute this? Was it happiness, engagement, meaningfulness, achievement, exercise, sunshine, rest, and food quality?  Notice I did not say stress-less.  In fact, keeping an eighth grade Latin class out of the Arno is anything but.   But it was good stress, as in what I was doing was difficult but important and getting the students home in one piece and with fine memories was all the achievement and satisfaction I needed. 

Seems like such a simple formula, right?  I submit that it is a contributing factor to why Italians spend 9% of GDP on health care and we spend over 16%.  We can pass all the laws we want and vilify insurance companies, doctors and the government all we want but until we get healthier our spending will never come under control. 

Employers need to take a close look at my list because they can impact every item on it.  For many, the workplace is their primary source of engagement, meaningfulness and achievement.  The workplace must engender these things.  And, while an employer cannot turn unhappy people into happy people or fix everything that is wrong in an employee’s life, it does control what happens during the work day.  And, employers certainly can have a large influence on wellness by using the company medical plan to drive it and all employers should do so.

As far as our country’s efforts to get our health equation under control via Federal legislation, note that Massachusetts, the State with the laws most closely resembling the bills before Congress, finished third in the study.  This suggests that legislation can help.  But at the end of the day, the Vermont model with its outdoorsy lifestyle and ample supply of medical services works even better.

Grahall can help your organization get control of your medical costs, improve outcomes, and increase productivity.  Contact us and let us show you how.  

For more information about renting Grahall Properties for conferences, training sessions or simply for rest and relaxation in an environment that inspires reflection and creative thinking contact Robert Cirkiel at robert.cirkiel@grahall.com.

Filed under: Expert Perspective



Swine Flu Update #7

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expert perspective telescopeExpert Perspective by Grahall’s Robert Cirkiel

According to the article “H1N1 has killed 2,837, but not more serious: WHO”, by Reuter’s journalist Stephanie Nebehay, the World Health Organization has reported updated information on the H1N1 virus based on data from South America, which is coming out of winter, and parts of Asia, which are experiencing an early flu season.  So far, in terms of its deadliness, the H1N1 has not evolved into a very deadly strain.  So far, so good.
Continue reading “Swine Flu Update #7″ »

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We Wish We Were WRONG

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Expert Perspective by Grahall’s Robert Cirkiel

expert perspective telescopeAn August 28, 2009 article by Reuters journalist Maggie Fox (WHO Warns of Severe Form of Swine Flu) shares that “Doctors are reporting a severe form of swine flu that goes straight to the lungs, causing severe illness in otherwise healthy young people…”.

Grahall could be gloating.  We predicted way ahead of the “experts” that H1N1 was trending badly (see H1N1 (Swine Flu) Update #4 ) and that it was affecting young adults more than children and the elderly, and that its virulence was its attack on the lungs (see Swine Flu Update #6 .)

However we are not gloating; in fact, we would have preferred to be wrong.

Now, let’s take a look at the cost impact on employers. 
Continue reading “We Wish We Were WRONG” »

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Swine Flu Update #6

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Expert Perspective by Grahall’s Robert Cirkiel

expert perspective telescopeIn a Reuters article published on CNBC.com (“Novavax Reports Progress on Swine Flu; Shares Jump”) Novavax reports that they have developed a “new kind of influenza vaccine works against the new swine flu virus in animals… in fewer than four weeks after the U.S. Centers for Disease Control and Prevention released the genetic sequence of the H1N1 swine flu virus, which is now causing a pandemic.”  Novavax may be the first to report, but there are a number of pharmaceutical companies developing H1N1 flu vaccines.  This attention bodes well for lowering concerns about scarcity or delays, in North America and Europe where flu season is soon approaching.
Continue reading “Swine Flu Update #6″ »

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Grahall News Alert: Obama’s Death Panel Plan Unveiled By Palin

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Expert Perspective by Grahall’s Robert Cirkiel

expert perspective telescopeAny doubt that the Health Care Reform debate is all about politics should be dispelled by the August 8, 2009 article by AP reporter Mark Theissen titled “Palin Says Obama’s Health Care Plan is ‘Evil’” summarizing  a  posting on Facebook attributed to Sarah Palin (although its interesting that her statements need to be authenticated, like those of another reclusive “freedom fighter” ).  
Continue reading “Grahall News Alert: Obama’s Death Panel Plan Unveiled By Palin” »

Filed under: Expert Perspective