Upcoming Webinars
Upcoming Election & Regulatory/Legislative Update
As the election draws near, this webinar will cover some of the potential compliance impacts depending upon the election outcome. We’ll also take some time to review recent legislative action and agency guidance, and then wrap up with what is expected for the remainder of the year.
September 19th, 2024 @ 2pm
Registration link: https://assurexglobal.zoom.us/webinar/register/WN_4yGtFNQPQ9ixqgIuVwjqDw#/registration
Presenters: Bob Radecki, Principal, Benefit Comply LLC & Regan Debban, J.D. MBA, Principal, Benefit Comply LLC
Benefits Buzz
By: WA Group
Health Care Claim Trend Overview
Health care costs in the U.S. have been on the rise for many years. These cost increases have outpaced wage growth, general inflation and the consumer price index for medical services, to name a few barometers.
Definition and Determinants
So, what is claim trend? Many times, trend is used as a replacement for inflation, but the two are not equal. Trend is the forecasting means by which a population’s historical claims experience is adjusted to predict future claims expectations. Inflation is just one component that comprises trend. The main components of health care trend are:
- Price inflation or deflation
- Aging of and declining health of the population
- Increasing/decreasing utilization of services
- Improvements in technology, treatment patterns and therapies
- Leveraging effect of the benefit design
- Changes in federal or state legislation
- Cost shifting from public to private payors
- Consolidation of health care delivery systems
Why is trend important to understand? While there are several items that comprise a group’s renewal calculation, claim trend is complex and can have the most significant impact on how premiums may increase. Since most of the determinants are outside a plan sponsor’s direct control, it is vital that an employer focuses on a culture of health and makes employee well-being a key criterion of the organization. Trend will also differ by product. Dental trends tend to be lower than medical or pharmacy due to a lack of catastrophic claims, less impact by an aging population and no cost shifting from government plans. Pharmacy trends can run higher than medical, usually due to large price increases, greater utilization and rapid development of new drugs and therapies.
Industry Shifts That May impact Trend in the Next Couple Years
The health insurance market continues to evolve at a very rapid pace. As such, there are many developments shaping the industry that could impact health care trend in some fashion. Some of them are:
- How quickly more medical providers agree to accept reimbursements based on quality rather than volume.
- Possible changes in the pharmaceutical industry, legislative or other, that could impact specialty medications.
- Greater scrutiny on the prices charged by hospitals and doctors.
- Any increases in utilization of medical services, due to an improving economy and lower unemployment.
Final Thoughts
Health care trend has varied little over the past few years, even with the environmental shifts we’ve witnessed in the industry. Every employer will approach the subject of trend differently, but all will benefit from injecting creativity into the determinants that they can impact and control.
Compliance Corner
By: Benefit Comply
Correcting HSA Excess Contributions
The IRS sets the maximum annual HSA contribution each year and contributing more than an individual HSA account holder is eligible for is known as an excess HSA contribution. All excess contributions are subject to income tax and a 6% excise tax each year until corrected then owe additional payroll taxes, penalties and interest on such amounts.
Excess contributions can occur for several reasons, including the following:
- Failing to account for HSA contributions made by an employer or another individual. All contributions made by the HSA account holder, an employer, or by any other individual count toward the annual contribution limit.
- Failing to account for being HSA-eligible for only a portion of the year. HSA-eligibility is determined monthly, and an individual may generally contribute 1/12 of the annual limit for each month of HSA-eligibility. Individuals who are HSA-eligible for only a portion of the year can generally contribute only a pro rata portion of the annual contribution limit.
- Administrative error. For example, mistakes in payroll deduction amounts, incorrect tracking in a benefits administration system, or delays in transfers of contributions to the HSA vendor.