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Tuesday AM Daily | November 28, 2017
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Rate increases drive Iowa small groups to seek creative solutions
By Joe Gardyasz | Senior Staff WriterOn average, small employer groups in Iowa will see their health care premiums rise 15 to 20 percent in 2018, according to an expert with
Holmes Murphy & Associates. And the rising costs are driving more Iowa small businesses to venture into newer types of self-funded plans as a cost-saving strategy.
"The rate increases for small groups have been fairly high," said Nataliya Boychenko, assistant vice president of employee benefits with Holmes Murphy. Among small groups of 50 or fewer employees that are subject to community rating (not grandmothered under an Affordable Care Act plan), the average premium increase in Iowa is over 15 percent. "In our region, it’s closer to 20 percent," she said. "For small employers, that’s a large increase."
Small employers are seeing more innovative solutions offered by insurance carriers, Boychenko said. "For example, Aetna came out with its Advantage Funding plan, which allows employers in good performance years to get some of that money back. Holmes Murphy is also coming out with solutions to help those groups
‘beat the market,’ as we would call it."
Over the past two years, there has also been significantly greater interest from companies with between 50 and 100 employees in forming self-funded plans known as "employee benefit captives" as a strategy for stabilizing their rates, which can also enable them to avoid some of the Affordable Care Act fees. By pooling with other like-minded employers, it’s almost like they’re creating their own insurance company to buy medical coverage, Boychenko said.
Factors such as the company’s demographics, culture and goals will determine whether that strategy is a good fit, but more companies are considering employee benefit captives for the first time, she said. "The idea is that you’re creating a cleaner benefits pool than you would have in the insurance company pool -- you can influence the behavior of your own employees through wellness strategies."
Some companies are also moving to partial self-funded plans, in which they offer a high-deductible fully insured plan, which the company would buy down from perhaps a $5,000 deductible to a more manageable $1,500 or $2,000 deductible for its employees. "That has been a good strategy for some of the employers this year," Boychenko said.
For those companies that chose to shop for a different carrier, both large and small employers had just three options for coverage in 2018: Aetna, UnitedHealthcare and Wellmark.
"This year we did notice that Aetna went down to one plan option, and it doesn’t look like they’re trying to stay in that under-50 segment," Boychenko said. "So for the small employer it’s really down to two carriers — Wellmark versus
UnitedHealthcare."
No Iowa employers that Holmes Murphy works with have stopped offering employer-based coverage for 2018; the current low unemployment rate is probably a driving factor, Boychenko said.
Overall, the average deductible level continues to creep up, and more companies are introducing a dual option that includes a high-deductible plan at a lower premium cost alongside a core plan offering equivalent to a Bronze level plan. For groups with 51 to 99 lives, the average deductible for 2018 is $2,500, versus $2,000 a year ago.
Looking ahead to the 2019 plan year, the West Des Moines-based benefits broker is working on a health reimbursement arrangement (HRA) partnership that will enable employers to take advantage of the executive order signed by the president earlier this year. Under the new rules, companies would be given more flexibility to fund HRAs to assist employees with
purchasing their own individual coverage.
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NEWS BRIEFS
Fiduciary rule delay now final
The Department of Labor released a final rule Monday that would delay implementation of the enforcement mechanisms of its fiduciary duty regulation until the middle of 2019, Investment News reported. The rule
would postpone from Jan. 1, 2018, to July 1, 2019, the applicability of a legally binding contract between brokers and retirement account clients that requires brokers to act in their best interests, among other disclosure provisions and prohibited-transaction exemptions being pushed back. The Consumer Federation of America, an advocate for the rule, asserted that delay means death for the regulation. The DOL said it needs the extra time to conduct a reassessment of the rule's impact on retirement advice that was ordered by President Donald Trump.
Cybersecurity tool aims to help Iowa small businesses
A new tool aims to help small businesses evaluate their cybersecurity risk. IowaCyber.com allows small businesses to take one of three online and free assessments. After taking the test, an individual gets a report and
additional resources. The information on the website is targeted to small-business owners and employees who are nontechnical. "It is important for small-business owners to be aware of the variety of cyber threats out there and learn ways to help reduce their risk of a cyber attack," said Lisa Shimkat, state director for America’s SBDC Iowa, the Iowa State University Ivy College of Business-run program behind the site.
State to resume oversight for some Medicaid members
State administrators will resume direct oversight of Medicaid benefits for a portion of the 215,000 Iowans who are being dropped this week by a private management
company, The Des Moines Register reported. The Iowa Department of Human Services confirmed on Monday that more than 10,000 of those Iowa Medicaid members who will lose coverage from AmeriHealth Caritas will be provided coverage through the state-run Medicaid system, rather than being transferred to UnitedHealthcare’s Medicaid plan. State officials announced Oct. 31 that AmeriHealth, which has the largest share of Iowa Medicaid members, would withdraw from the program Nov. 30.
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THE INSIDER NOTEBOOK
Willett is almost famous
BY PERRY BEEMAN: Here’s a quick Iowa roots story from the Greater Des Moines Partnership’s new Small Business Success Summit held in early November. At the event, we heard from keynote speaker Chad J. Willett, who used lessons from his acting and improv background to help small-business owners try to think differently, generate new ideas and come up with new solutions to, in his words, "smash the box." Read
more
MORE NOTEBOOK ITEMS: Read more Insider bits and bites of the finer side of Iowa business online.
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MEMBERSHIP EXCLUSIVE CONTENT
A Closer Look: Angela Powers
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Angela Powers took over as director of the Greenlee School of Journalism and Communication at Iowa State University on July 1. She’s already working on a big seminar to be held April 6. She’s looking to remodel part of Hamilton Hall, headquarters of ISU’s journalism department. She is reaching out to alums. Before this, she ran the A.Q. Miller School of Journalism and Mass Communication at Kansas State University from 2004 to 2012 before returning to teaching. Read more
MORE INSIDER CONTENT: See all Business Record Insider content and become an Insider.
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NEWS BRIEFS
Boom in RV shipments keeps rolling
Reuters: The boom in U.S. recreational vehicle sales keeps on rolling, thanks to a strong economy and a wave of retiring baby boomers and others filled with wanderlust. Shipments of RVs in 2017 are expected
to hit their highest in nearly four decades. That would mark the eighth straight year of growth. Michael Happe, chief executive of Forest City-based Winnebago Industries Inc., cites several reasons, including an increasing focus on outdoor living, a greater number of vehicles on the road that are capable of pulling trailers, and a growing demand for RVs used for tailgating at sport events.
Arby's restaurant owner to buy Buffalo Wild Wings for $2.4 billion
Reuters: Arby’s restaurant owner Roark Capital Group will buy Buffalo Wild Wings Inc. for $2.4 billion, months after an activist investor won seats on the chicken wing restaurant’s board following a proxy fight demanding management change. The deal is the latest in a flurry of restaurant takeovers by private equity firms.
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ONE GOOD READ
1/100th of a bitcoin and a partridge in a pear treeBY KURT HELLAND: I don’t get bitcoin.
I’ve read many stories about the rise of the digital currency, and I still don’t get it. But at least I can give it. This story from MarketWatch tells you what you need to know about giving bitcoin as a Christmas present. It cautions that the person you give it to should know and care what bitcoin is all about. Otherwise, socks might be a better idea. (I do understand socks.) You should also be conscious of scams and of keeping digital currency safe. And don’t worry about the $10,000 value of a single bitcoin -- you can buy any amount above $1 on most exchanges.
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KCCI TOP STORIES
ISU Coach Matt Campbell agrees to 6-year contract
Iowa State University announced Monday that football coach Matt Campbell had agreed to a new six-year contract worth $22.5 million. Campbell's guaranteed annual salary will increase from $2.1 million to $3.5 million effective immediately. The athletics department has also agreed to provide Campbell an additional $1 million for incremental raises for his staff. Read more
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Today:
Cloudy skies early, followed by partial clearing. High around 55. Winds N at 10 to 20 mph.
Tonight:
Mainly clear. Low 27. Winds N at 5 to 10 mph.
Get the latest KCCI weather.
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BUSINESS RECORD IOWA INDEXThe Iowa Index is an unweighted average of all 23 Iowa-based public companies. Below is a live look at those 23, plus 14 additional companies with large operations in Iowa.
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