Wellness Ideas to Reduce Employer Health Insurance Costs

There are some new approaches to wellness that employers are starting to utilize to reduce their spending on health insurance premiums.  Some of the new ideas to reduce costs by using a wellness program include:

1. Employers may require that employees pass biometric screenings to receive discounts on their health insurance premiums. Those who don’t meet the necessary biometric levels would have to enroll in a wellness program and after achieving a healthy body mass index and other biometric numbers, would then be eligible for the discounts.

2. More employers may use the services of a health care advisor to teach employees how to make better treatment choices, find quality providers and make better use of their employers’ health management programs, thereby reducing health care costs.

3.Employers may begin to  use social media to reinforce healthy behaviors, such as  losing weight, exercising more and  becoming healthier.

4.In spite of the economic downturn, one-third of employers plan to increase their  spending on wellness programs  in order to reduce overall premium expenditures.

Our President, Gary Whiddon is well workplace certified from Welcoa University.  He would be happy to assist in the implementation of any employer wellness program.  Please call him at (888) 474-6627 x 116, or email him at gary@hpo.biz


IRS Guidelines for W-2 Health Coverage Reporting

 The Patient Protection and Affordable Care Act requires employers to report the aggregate cost of employer-sponsored health coverage on the W-2 forms for their employees.  The IRS issued notice 2012-9, which includes some of the information below:

 Exemption for small employers. Employers filing fewer than 250 Forms W-2 for the preceding calendar year are not required to report the aggregate cost of coverage.

Stand-alone dental and vision plan reporting. The Notice clarifies that the standard for determining whether the cost of coverage under a dental plan or vision plan is included in the aggregate cost is the same standard for determining whether such coverage is an excepted benefit under HIPAA. Thus, certain stand-alone dental and vision plans may be exempt from the reporting requirement.

Excess reimbursement for highly compensated individuals. The reporting requirement does not apply to the cost of coverage includible in income under Section 105(h) of the Internal Revenue Code, or payments or reimbursements of health insurance premiums for a 2% shareholder-employee of an S corporation that is required to include the premium payments in gross income.

Coverage under employee assistance program or similar program. An employer that does not charge a premium for an EAP, wellness program or on-site medical clinic to COBRA-qualifying beneficiaries is not required to include the cost of such coverage in the aggregate reportable cost. For arrangements that are not subject to any federal continuation coverage requirements (such as church plans), the employer is not required to include the cost of such coverage on the Form W-2.

Optional reporting of exempted benefits. Employers may, for convenience, include in the aggregate reportable cost the cost of coverage that is not required to be included (e.g., cost of coverage under a Health Reimbursement Account, provided that certain conditions are satisfied.

Reporting non-applicable employer-sponsored coverage. Employers may use any reasonable method to determine the relative allocation of cost for benefit programs that make available both applicable employer-sponsored coverage (e.g., group health plans) and other coverage (e.g., long‐term disability programs).

Employee election changes after year-end. The aggregate reportable cost for a calendar year reported on a Form W-2 may be based on the information available to the employer as of December 31 of the calendar year, without regard to any election or notification made or provided in a subsequent calendar year that has a retroactive effect on a previous year’s coverage.

Payroll periods crossing two taxable years. The Notice provides employers with various options for reporting the aggregate reportable cost for a payroll period that spans two taxable years.

Hospital indemnity/specified disease insurance. Employers are required to include the cost of coverage in the aggregate reportable cost on Form W-2 if the employer makes any contribution to the cost of coverage that is excluded from the employee’s income, or if the employee purchases a policy on a pre-tax basis under a cafeteria plan. However, if the employer provides the opportunity for employees to purchase an independent, non-coordinated fixed indemnity policy and the employee pays the full amount of the premium with after-tax dollars, the cost of coverage provided under that policy is not required to be reported on Form W-2.

Third-party sick pay. The aggregate reportable cost is not required to be reported on a Form W-2 furnished by a third-party sick pay provider. However, a Form W-2 furnished by the employer to an employee must include the aggregate reportable cost, regardless of whether that Form W-2 includes sick pay, or whether a third-party sick pay provider isfurnishing a separate Form W-2 to report sick pay.

2013 FSA Limits Announced

  Health care reform legislation imposed a new, $2,500 limit on annual contributions to health care flexible spending accounts (FSAs). This limit applies to all FSA plans in taxable years beginning after Dec. 31, 2012 — even plans grandfathered under other provisions of health care reform.

Plans that currently allow a health care FSA election of more than $2,500, must amend plan documents before Jan. 1, 2013, and change employee communications.

To simplify administration of this change, sponsors of non-calendar year plans may want to adopt the new limit as of the first day of the plan year rather than waiting until Jan. 1, 2013. For example, if the current plan year begins May 1 and ends April 30, the plan sponsor may:

  • Communicate the change to employees.
  • Amend their plan documents to implement the new $2,500 maximum election.
  • Initiate  the changes to the contribution effective May 1, 2012, rather than wait until the mid-plan year in Jan. 1, 2013

How to Be a Slimmer Santa This Holiday Season


Happy Holidays to everyone.  May you and your family enjoy the best in 2012!!

In order to avoid the naughty list this season and possibly fit down the chimney, here are a few suggestions to avoid the tempting treats of the holidays:


1. Avoid all the candy, cakes and sweets that you may be sent.  instead, sample from the fruit basket or have a handful of almonds.

2. Limit the fattening meats and gravies on your holiday plate.  Why not have more vegetables instead?

3. Get up and move!  It is so hard to want to be outdoors in cold winter weather.  If you cant go outside, why not try a few laps around the office hallway or a few sit-ups at lunchtime?

4. Bring a healthy entree or salad to the next pot luck.  Your will be surprised how many people will really want to have something healthy as an alternative to all the heavy and fattening treats of the season.

5. When baking or cooking, try low fat or sugar alternatives such as Splenda or apple sauce instead of sugar or margarine instead of butter.

6. Try to de-stress and not expect so much of yourself.  It is so easy to fall off the healthy eating wagon when under stress.  Try yoga, walking or calling a friend instead of that cookie.

7. Don’t wait for a New Years resolution, don’t even make them! Just try your best to maintain a healthy diet and exercise program.  Even if you slip and don’t work out for a while or gobble down junk food during the season or the year, its important to try again.  Better to not maintain for two weeks than two years, right?

Medical Loss Ratio Regulations Updated

On December 2, 2011, the Department of Health and Human Services (HHS) issued revised regulations on the Medical Loss Ratio (MLR) provision of the Patient Protection and Affordable Care Act.

Beginning in 2011, insurers and HMOs must annually calculate their MLR and provide rebates to policyholders if their MLR (percent of premium revenue spent on claims/medical care) is less than 85 percent for large groups and 80 percent for small groups or individuals. The revised rules make important changes to the MLR calculation and rebate distribution requirements.

Rebate Distribution

To simplify the rebate distribution process for group insurance, the revised rules call for rebates to be paid to the group policyholder in the case of group plans sponsored by governmental entities and private employer-sponsored plans subject to ERISA.

At the same time HHS issued the revised regulations, the Department of Labor issued a Technical Release that describes how ERISA’s fiduciary rules respecting plan assets govern the distribution of rebates for employer-sponsored ERISA plans. Generally, employers are required to apply the proportion of the rebate attributable to employee contributions to the benefit of current plan participants either in the form of a cash payment or a reduction in future contributions toward the cost of coverage. Rebates can be paid to group policyholders of non-ERISA plans if the policyholder provides written assurance that the rebates will be used to benefit enrollees.

The revised regulations also clarified that consumers will not pay taxes on any rebates they receive.


Insurers are required to provide individual policyholders and subscribers under group plans information about their MLR regardless of whether there is a rebate.

Mini-Med Plans

Special adjustments for limited medical (“mini-med”) plans with total annual benefit limits of $250,000 or less have been extended through 2014. The numerator will be multiplied by 2.0 in 2011, 1.75 in 2012, 1.5 in 2013 and 1.25 in 2014. Previously, this adjustment was available only for 2011.

Currently, experience for mini-med plans must be reported quarterly. For 2012, 2013 and 2014, mini-med experience will be reported annually.

Expatriate Plans

The final rule keeps the expatriate plan multiplier adjustment at 2.0 indefinitely in recognition of the higher administrative costs and special circumstances of international plans. The rule also changes the reporting period from quarterly to annually.

Quality Improvement Activities

For purposes of the MLR calculation, ICD-10 conversion costs related to improvements in coding of medical conditions of up to 0.3 percent of an insurer’s earned premium can be considered quality improvement activities in 2012 and 2013.

Community Benefit Expenditures

An issuer may deduct from earned premiums the higher of either the amount paid in state premium tax or actual community benefit expenditures up to the highest premium tax rate in the state.

HHS has solicited comments on the revised rules, particularly those regarding rebate distribution and quality improvement activities.