Sears/Darden- Getting Rid of Group Plans

[Yagents]

This is HUGE, and what we all have been expecting. Did you hear that sound? It's called an "implosion". Good for us who do IFP.
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The Wall Street Journal is reporting: Sears Holdings Corp. plans to to fundamentally change the way it provides health insurance, opting to give its workers a fixed sum on money to purchase their own coverage from an online marketplace instead of having them participate in a company-provided plan.

Sears and Darden Restaurants Inc., which is also making the change, say the shift is designed to offer more choice, not make workers pay more of the cost of their coverage
Sears plans to overhaul health insurance, offering cash instead of plan - chicagotribune.com

 

[Josh]

This is HUGE, and what we all have been expecting. Did you hear that sound? It's called an "implosion". Good for us who do IFP.
--------------------------------
The Wall Street Journal is reporting: Sears Holdings Corp. plans to to fundamentally change the way it provides health insurance, opting to give its workers a fixed sum on money to purchase their own coverage from an online marketplace instead of having them participate in a company-provided plan.

Sears and Darden Restaurants Inc., which is also making the change, say the shift is designed to offer more choice, not make workers pay more of the cost of their coverage
Sears plans to overhaul health insurance, offering cash instead of plan - chicagotribune.com

You guys could use some good news

 

[Yagents]

Most of these employees will probably end up on Medicaid anyways. Why pay for group insurance, when you can dish them off to a fully paid for gov't plan. This will give cover for other companies to follow suit. Surprised they didn't wait for the election first with it being so close

 

[Ann H]

They specifically chose to announce this immediately before the election. This is a clear message. Implosion coming. Large corporations will send their employees to the exchanges with subsidies. A HUGE tax bill is coming, to pay for more subsidies than were originally anticipated, with a huge addition to the cost of PPACA and a huge addition to the US debt. Ryan should pick this up immediately and start preaching!

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I just read another article, with more details. It appears this is a private exchange created by Sears, that's self-funded in the final financing. It's still group insurance. It's like dual/triple choice to the max. They aren't sending their employees to the individual market (as there is no federal/state exchange right now anyway). But it's clearly a move in that direction, and a big message for Washington.

Big Firms Overhaul Health Coverage - WSJ.com



Carriers are also beginning to design "exchange" ideas for small groups. This may very well be the wave of the future whether PPACA survives or not. It could come with adverse selection risks. If an employee receives cash, they could try the Individual market. If approved through underwriting, their premium could be lower. If declined by underwriting, they could fall-back on the Employer's plan. Adverse selection.

 

[Yagents]

This is a big &^%$*# deal. Was it Tater or Biden that said this?

 

[YouGotMyMoney]

so is the money they get to buy health ins , treated as taxable income?

 

[Yagents]

so is the money they get to buy health ins , treated as taxable income?

Of course, this is America. Not taxable if done through an HRA which they will probably be doing.

 

[AllenChicago]

Big Firms Overhaul Health Coverage - WSJ.com

Carriers are also beginning to design "exchange" ideas for small groups. This may very well be the wave of the future whether PPACA survives or not. It could come with adverse selection risks. If an employee receives cash, they could try the Individual market. If approved through underwriting, their premium could be lower. If declined by underwriting, they could fall-back on the Employer's plan. Adverse selection.

My thoughts exactly when I heard about this on the local newsradio station this morning. Go to a Red Lobster, Olive Garden, or Long Horn Steak House and give your business card to the employees..after a suitable explanation of course.

BTW Ann... that link to the Wall Street Journal is for subscribers. I'm not that well-heeled!
-AC
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Update: Sears & Darden Issue a Correction/Clarification.

Apparently the President of Sears and the Darden Group have either had a change of heart, or the WSJ story was incorrect, or something else...

Sears, Olive Garden To Offer Employees Money To Pay For Health Care (UPDATE)

-ac

 

[Ann H]

Sorry about the link. Below is the text of the article. Of course, we must take this with a grain of salt considering the recent contradictory articles.

Two big employers are planning a radical change in the way they provide health benefits to their workers, giving employees a fixed sum of money and allowing them to choose their medical coverage and insurer from an online marketplace.

Sears Holdings Corp. SHLD +2.77% and Darden Restaurants Inc. DRI +0.22% say the change isn't designed to make workers pay a higher share of health-coverage costs. Instead they say it is supposed to put more control over health benefits in the hands of employees.

The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.

"It's a fundamental change…the employer is saying, 'Here's a pot of money, go shop,' " said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that "the money may not be sufficient and it may not keep up with premium inflation."

Neither Sears nor Darden would say how much money employees would receive to buy health insurance. Darden says its sum would rise as health-care costs rise. Sears declined to disclose details of its contributions strategy.

Darden did say that employees will pay the same contribution out of their own pockets that they currently do for approximately the same level of coverage. Employees who pick more expensive coverage will pay more from their paychecks to make up the gap. Those who opt for cheaper insurance, which may involve bigger deductibles or more limited networks of doctors and hospitals, will pay less.

"It puts the choice in the employee's hands to buy up or buy down," said Danielle Kirgan, a senior vice president at Darden. The owner of chains including Olive Garden and Red Lobster will let its approximately 45,000 full-time employees choose the new coverage in November, to kick in Jan. 1. Darden says that employees with families to cover will be given more money to buy insurance than employees covering just themselves.

The hope is that insurers will compete more vigorously to get workers to sign up, which will lower overall health-care costs. Darden and Sears are both currently self-insured, meaning that the cost of claims each year comes out of company coffers.

On average, U.S. employers and workers are estimated to spend $15,475 in annual premiums for health insurance this year for a worker with family coverage, according to a survey by the Kaiser Family Foundation and Health Research and Educational Trust. The average employee pays about 28% of that amount and the employer picks up the balance.

The approach isn't directly tied to the federal health overhaul law, which largely goes into effect in 2014. That law will make it easier for employers to funnel workers toward purchasing plans in the individual insurance market, perhaps aided by an employer contribution. The exchange used by Sears and Darden still involves employer-backed group plans, not individual insurance, however, so it doesn't rely on the law's changes.

Several big benefits consultants and health insurers are betting on the employee-choice model. Major consulting firm Aon Hewitt, a unit of AonAON +1.41% PLC, is behind the insurance exchange that Sears and Darden will use, while rival Towers WatsonTW +0.32% & Co. in May bought Extend Health Inc., an online marketplace used by employers to hook retirees up with Medicare coverage. It plans to expand the marketplace to include active workers buying individual plans, starting in 2014.

"Within the next two or three years, it's going to be mainstream," said Ken Goulet, executive vice president at WellPoint Inc. WLP +0.75% The insurer will roll out a product next year called Anthem Health Marketplace that lets employers offer a variety of its plans to workers, paired with a fixed contribution. Mr. Goulet said it is close to signing up more than 30 midsize and large employers for early next year, including one with more than 50,000 workers.

Other insurers say big companies will hold back until they see early successes. "There will be a lot of interest in taking a look at those results," said Yasmine Winkler, chief product and marketing officer at UnitedHealth Group Inc.'s UNH +0.82% insurance arm, the nation's largest. But, she said, "The jury's out" on whether the approach will become widespread.

Though some employers today offer workers more than one health plan design, they don't provide as many choices as the exchanges will. The Aon Hewitt version will have five different levels of health plan, and five different health insurers. Workers also don't get the "shopping" experience, where they see the full cost of the plan, and apply their own allotted money to it.

A spokesman for Sears, which will have around 90,000 full-time employees eligible for the new health-benefits program, said the approach "is about increasing associate choice and options for their health care," and should benefit both the company and its employees.

But some consultants question whether the exchange setups will achieve overall savings for big employers, particularly those who already self-insure to shave costs.
Exchange operators today say they offer employers more predictable costs, as well as potential savings gleaned from workers' voluntary choice of skinnier coverage and competition among insurers offering plans on the exchanges.

"It drives competition and drives efficiency," said Ken Sperling, Aon's national health exchange strategy leader.
Aon's marketplace is expected to have around 100,000 employees, including Aon's own, when it launches next year. Bloom Health Corp., which is working with Health Care Service Corp. and Minnesota's Medica Health Plans, in addition to WellPoint and others, said it also expects to have around 100,000 workers at the beginning of 2013. Other employer-focused exchanges, including ConnectedHealth LLC, of Chicago, also say they are seeing growth.

Write to Anna Wilde Mathews at [email protected]
A version of this article appeared September 27, 2012, on page A1 in the U.S. edition of The Wall Street Journal, with the headline: Big Firms Overhaul Health Coverage.​

 

[somarco]

Fundamental change. Sounds familiar . . .