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Employer health plans change with, without Obamacare

11:22 AM, Oct 31, 2013   |    comments
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DENVER, Colo. -- President Barack Obama has been on the defensive after repeatedly promising Americans that they can keep their current health insurance if they're happy with it, despite knowing that many plans would not comply with the new law.

FactCheckers.org had decried the president's promise an oversimplification for years.

It also ignores a simple reality for the 55 percent of Americans who get their health coverage through their employers: the plans offered in the workplace change on a yearly basis.

That's certainly been the case at OfficeScapes.

One perk of working at the Denver business is being able to use the swanky, modern office furniture that the company sells-- another is a health insurance program.

Three-hundred employees are signed up for plans, with a total premium cost of $25 million last year. The company picks up 65 percent of that. The rest is up to the employees.

"It's a big number," CEO Jim Perry said. "It's the second largest number on our expenses other than payroll."

It's no wonder Perry wants to keep that number down. So, he's taken it up on himself to manage health costs rather than be managed by them.

Workers were lining up for a flu shot clinic in the office when KUSA visited, helped by full-time employee Nancy Littleford, who serves as the wellness director.

"Instead of treating disease we need to encourage people to stay healthy and get healthier," Littleford said.

That includes a host of wellness initiatives like fresh fruit delivered to the office kitchen.

Those programs help control costs, but OfficeScapes also changed the actual insurance plans it offers.

The company steers people to a newer "consumer-driven" plan.

The premiums are cheaper, the deductibles are higher, and the employee is responsible for their medical bills until they reach the deductible.

To sweeten the deal, the company sets each worker up with a pre-tax savings account just for health expenses called an HAS (Health Savings Account) and deposits $500 of seed money.

That's in contrast to the company's other plan: a traditional HMO with low deductibles and small co-pays for medical services.

The workers who like that plan will not be able to keep it-at least not for long.

"I expect that that will go away next year or the year after as an option," Perry said.

While that may run afoul of President Obama's promise, Perry doesn't pin the blame for the change he's making on Obamacare.

"Absolutely not, It has to do with trying to manage our healthcare costs," Perry said. "People do a much better job of managing their healthcare costs in self-directed plan than they do in an HMO."

On average, people on the HMO racked up $952 dollars per month in actual medical costs last year, Perry said.

On the new plan with HAS, that figure is only $500 a month. He says that's because when employees have to pay for care, they naturally shop around.

"They know where the cheapest MRI's are in this group, in [the HMO] they're paying a copay, they don't pay much attention to it," Perry said.

Starting in 2015 companies like OfficeScapes that have more that 50 full-time employees will have to offer insurance or pay a fine.

Because it helps attract good employees, only a handful don't offer insurance already, says attorney Ryan Sarni with the Mountain States Employers Council.

"But employers who do offer insurance regardless of what size they are, they still have all these insurance reforms to deal with next year," Sarni said.

At OfficeScapes, that meant making sure certain women's health items were covered, which Perry says was a cheap fix-adding only a couple of dollars per month for each person covered.

Sarni helped other companies that had to change more.

"They still had some exclusions for pre-existing conditions, and you can't have that as of next year," Sarni said.

In those cases, higher standards under Obamacare can mean higher premiums.

But the bigger shift-- getting employees to shoulder costs-- was already in motion before the new law came around.

KUSA

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