Even the most optimistic person will concede that the world won’t be returning to exactly how it was before the coronavirus pandemic. The coronavirus and its disease, COVID-19, has killed tens of thousands, and infected hundreds of thousands more, forcing the majority of Americans to stay home—many without a paycheck. This pandemic has impacted nearly every aspect of life in the United States and beyond: Jobs have been lost, stocks have plummeted and no one is sure when a new “normal” will arrive.
Despite these and other uncertainties, employers have an opportunity to assess the current benefits landscape and take stock of improvement areas. In other words, what’s changing and how might that impact the marketplace down the road?
This article will examine how drastically things have shifted during the coronavirus pandemic and what shake-ups to expect in the future.
Cost Increases & the Financial Impact
A primary development in the near future will be cost increases. This is unsurprising, given the bloated health care system and the drastic uptick in patients. While many health care providers are waiving fees associated with COVID-19 testing right now, those costs will likely trickle down in the long run to employers with fully insured and self-funded health plans.
According to CBIZ’s National Actuarial Services Director, Dave Rubadue, the financial impact of COVID-19 on health care can be divided into four buckets: testing, hospitalization, delay in services and vaccines.
Getting tests performed costs money, ranging from the swabs to the lab assessments. Nothing in the world is free. It may be free for some individuals who have certain health care plans, but in those scenarios, someone, usually the employer, is picking up the cost.
A lot of positive tests are able to be treated in quarantine, but for others positive tests lead to hospitalization. The at-risk likelihood is dependent on demographic factors such as age, pre-existing conditions, etc. Hospitalization leads to more expenses to one’s health care plan.
People are delaying receiving “non-essential” services, such as wellness checks and orthopedic services, out of fear of contracting the virus; this is leading to a lot of pent-up demand. It is known that early detection of diseases translates to people being more likely to be treated; however, if one unknowingly develops a disease, such as cancer, during quarantine, they won’t know until COVID-19 diminishes and they’re comfortable going to the doctor to get checked. This leads to not only further disease progression but also, ultimately, higher health care costs.
Somewhere down the line a vaccine will be developed. For health insurance, when pricing and evaluation work is being done, the evaluation is over a period of time. For example, employer groups that have a July 1, 2020 renewal date with a one-year renewal, the evaluation will be one year. If by chance, the vaccine comes by December 2020, that’s going to be a cost to the benefit plan that’s covering July 2020 to July 2021. The cost of vaccines and the amount of people who will get the vaccine are currently unknown, but those factors need to be considered in the model. Variables are able to control those costs.
Expansion of Virtual Health Care
Virtual health care—or telehealth—is the practice of communicating electronically with a physician, typically via telephone or video chat. The medium has risen in popularity over the past few years, but the coronavirus pandemic has proven just how viable it can be. Many insurers are already covering telehealth under their plans, and it’s a safe bet that others will do the same.
Many doctor’s offices are using telehealth to screen patients for COVID-19. In fact, official guidance from the Centers for Disease Control and Prevention (CDC) implores individuals who suspect they may be infected with COVID-19 to call ahead to their doctor before showing up unannounced. This is just one example of how telehealth is becoming part of mainstream medicine.
Adding to the appeal, telehealth is typically much more affordable (for employers and employees) than traditional doctor visits—even outside of a pandemic.
Changes to HSA Marketplace
Health Savings Accounts (HSAs) remain some of the most popular plan designs, but will that change after the coronavirus pandemic? Already, the IRS has adopted regulations to make it easier to pay for expenses related to COVID-19 testing.
However, it’s unclear whether these lower barriers will remain a few months from now. If the influx in HSA use by employees is significant enough, employers may need to consider restructuring their cost-sharing structures.
For instance, employees may want to use telehealth every week during the coronavirus pandemic. This may create an undue burden for employers with generous cost-sharing arrangements—especially for employers with reduced revenue streams.
Beyond HSAs, employers may be considering restructuring their entire benefits arrangements. No plan design is guaranteed to shelter employers during the coronavirus pandemic—it comes down to unique circumstances.
For instance, some self-funded employers may be covering significantly more costs now than what they’re used to. These organizations may consider going fully insured to make more predictable payments.
On the other hand, some fully insured groups may feel restricted by their locked-in premiums or may predict much higher costs in 2021, so self-funding could appeal to them.
Some organizations may wish to restructure even further, using reference-based pricing or other plan designs aimed at shifting costs away from the employer.
There is no one-size-fits-all plan design when it comes to mitigating COVID-19-related costs. Employers will need to evaluate their unique circumstances and consider whether they need to shift some of their cost-sharing burden with a new plan design.
Remote Enrollment Opportunities
With such a huge portion of Americans working from home, many question whether all those people will ever go back to the office. The coronavirus pandemic has shown that remote workers can be productive and adaptable, so what if they wish to continue working from home when the coronavirus clears up? Employers must consider this possibility and all the changes it may bring. Chief among them: open enrollment.
Open enrollment is traditionally done in the office during a specific time frame. Many organizations hold town hall meetings and pepper employees with near-daily communications—mixing necessary administration with personal touches.
For remote workers, this structure doesn’t actually need to change much. Some organizations are already successfully holding virtual open enrollments. Instead of meetings, employees receive video messages and instructions. For personal touches, HR may even send out individual reminder texts or emails about the enrollment period.
The coronavirus is reshaping society and everything that comes with it. Benefits and the insurance marketplace will evolve in the future, but that’s always been the case. For more information, please contact us.
Looking for more COVID-19 resources? Visit our resource center for expertise on impacts to expect and how your business can respond.
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