According to findings by AHIP, a national association whose members provide health care coverage and services, here's how every dollar spent on health care is allocated:

• Hospitals: 40.7 cents, including inpatient, outpatient and emergency room costs: 
  • Emergency Room Costs: 3.2 cents go to ER visits, including payments to physicians, facility costs and ambulance transport.
  • Inpatient Hospital Costs: 17.6 cents is for services, including for the administration of prescription drugs and payments to physicians and facilities.
  • Outpatient Hospital Costs: 19.9 cents for physician and facility non-drug related payments for treatment.

• Prescription Drugs: 24.2 cents for outpatient prescription drugs and those administered in physician’s offices or clinics.
• Doctor Visits: 11.6 cents for payments to doctors and clinics for all non-drug-related outpatient services.
• Ambulatory Surgery, Labs and Other Outpatient Care: 7.1 cents for all outpatient services incurred outside hospitals, doctor offices and clinics.
• Other Costs: The remaining 16.4 cents cover non-drug-related outpatient services, administrative expenses and other overhead.
  • Administrative Expenses: A small portion of this amount is used for claim adjustment appeals, fraud and abuse prevention, case management and management of provider and prescription drug networks.
  • Quality Improvement: Less than one penny is aimed at reducing hospital readmissions, promoting wellness, improving patient safety and enhancing health information technology.

This breakdown highlights why many employers are turning to level-funded plans, like Allied National’s Funding Advantage, which provides detailed reports on plan utilization. These reports help employers understand where their health plan dollars are going, unlike many fully insured plans that are reluctant to share claims data.

​Level-funded plans offer the insight needed to make annual adjustments based on plan utilization. 

Whether you refer to it as Reference-Based Pricing (RBP), Medicare Reference, Cost Plus or something else, the important thing is to understand what it is and why it’s being used to lower health plan costs.

​Level-funded health plans with reference-based pricing provide high quality coverage at a lower cost by using Medicare fee schedules as a base. Then they negotiate with hospitals and physicians to determine an acceptable percentage margin over and above Medicare. Margins often fall within a range of 25% to 65%. 

The absence of PPO networks takes many of the “unknowns” out of play. Rather than operating at the mercy of networks that traditionally save their largest discounts for the largest health plans, reference-based pricing takes the mystery out of network discounts by fixing fees for covered services.

In addition to lower out-of-pocket expenses, members also gain the flexibility they need to search for a physician that meets their needs rather than settling for a smaller network in order to save on out-of-pocket expenses.

Fears Addressed
Many employers fear reference-based pricing because of balance billing, which can occur when the established fee does not pay a provider’s bill in full and the provider chooses to bill the unpaid balance to the member directly

Fortunately, third-party administrators like Allied National often take steps to resolve balance bill issues. For instance, Allied created the Elite Experience team to protect Freedom Plan members against balance billing. The Elite Experience team is empowered to enforce the terms of the reimbursement agreement

​While reference-based pricing may not be appropriate for all employer groups, the ability to control future health care costs certainly makes it worth exploring.

​Allied National​
​Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. As the small group benefit experts, Allied works with small business employers to provide unique and affordable group health benefits.

​Anyone who has health benefit coverage has been, or will soon be, asked to review their current health benefit coverage for 2025. Here is what you need to know whether you have employer-sponsored coverage, coverage from the federal government’s health care Marketplace or private individual insurance.

Employer-sponsored coverage
An employer’s open enrollment period varies from employer to employer, but generally occurs in the fall. You will probably be asked to renew the plan you have or choose a new one from the ones your employer selected. Your employer also may offer supplemental coverage like dental and vision plans and/or health and wellness programs.

Premiums usually increase annually, so it’s important you not just assume the plan you have will work for you. Look at all the plan options your employer offers to see not only what you can afford, but which plan best meets your needs.

If you need to change your coverage later due to a specific event, such as the birth of a child or marriage, you can make changes as long as it’s a qualifying life event.

Marketplace coverage
Open Enrollment for 2025 health insurance runs Nov. 1, 2024, through Dec. 15, 2024, if you want your coverage to start Jan. 1, 2025.

You can apply for new health coverage or make changes to your existing plan for next year. Enroll at www.healthcare.gov.

However, if you have no problem with your coverage starting Feb. 1, you have until Jan. 15 to enroll or change your plan.

To get coverage after the last open enrollment date, you’ll have to qualify for a Special Enrollment Period due to a life event or based on your income. You also might be able to apply any time for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP).

Private health insurance
The Affordable Care Act’s federal individual mandate penalty was eliminated in 2019, but some states still require you have coverage and include Massachusetts, New Jersey, Washington D.C., Rhode Island and California.

Contact an agent if you want to investigate your options. This type of coverage generally is more expensive than group or Marketplace plans. And, even though you are not purchasing coverage from the federal Marketplace, you can only purchase private insurance during Marketplace open enrollment.

​Your agent will contact you when it’s time to renew.

​Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. As the small group benefit experts, Allied works with small business employers to provide unique and affordable group health benefits.

​The start of the school year is upon us, and for many college students, especially those living away from home for the first time or participating in sports, securing adequate health insurance can be a significant concern. But short-term medical insurance can be a flexible solution for addressing temporary health needs during the academic calendar. Here's why:

Key Benefits for College Students

Affordability
Short-term medical plans are often more cost-effective for parents or young adults paying their own way when compared to traditional health insurance. This can be particularly beneficial for students who may have limited budgets and need coverage without breaking the bank.

Flexibility
Until August 30, 2024, short-term medical insurance can be an option for one month, up to nearly a year, depending on state availability. This flexibility is perfect for students who only need insurance during certain times, such as while they are away from home or during athletic seasons. On Aug. 31, 2024, additional short term medical duration options will be available. 

Immediate Coverage
Short-term plan effective dates are available as soon as the next day, providing students with immediate health insurance coverage. This is crucial for first-time students in the flurry of paperwork who need insurance to finalize the registration process.

Broad Network Access
Most short-term medical insurance offers open access to any doctor without network restrictions, ensuring students can receive care from reputable doctors and hospitals, regardless of their location.

Customizable Plans
Students can choose from various plan options to fit their specific needs, such as a variety of deductibles, coinsurance and doctor office copays to best align with their personal health needs and budget.

Coverage for Unexpected Events
For student-athletes who may be subject to injuries on the field, short-term medical insurance provides essential coverage for unexpected athletic injuries while students are away from home.

​Ease of Enrollment
Applying for short-term medical insurance can be completed online in about five minutes or less. This ease of enrollment can be particularly advantageous for busy parents or college students who might be overwhelmed with other responsibilities.

Short-term medical insurance can offer college students a practical and flexible solution for their health coverage needs. Whether they are away from home for the first time or engaged in rigorous athletic activities, these plans can provide essential protection and meet the standards required by a university.

​Contact your agent representative to learn more about offering short-term medical insurance as an option for employees with college-age dependents. 

​Beginning Sept. 1, 2024, new short-term health plans will be limited to three months and a one-month extension providing a duration maximum of four months per insurance carrier over a 12-month period (additional state rules may apply). 
 
Short-term health insurance plans (STM) are designed to provide individuals with economical, temporary coverage for illnesses and accidents. Benefits can include wellness visits, doctor office copays, and coverage for hospital emergencies, surgery and more. A range of deductible options usually are available to keep monthly premiums lower.

​The Departments of Treasury, Health and Human Services, and Labor on March 28, 2024, imposed these new duration limits on STM plans effective Sept. 1, 2024, in order to ensure that short-term coverage will not be used as long-term coverage. The federal government also wanted to make it easier for consumers to distinguish between Affordable Care Act-compliant individual/family health insurance and STM plans so that they won’t accidently purchase short-term coverage when trying to buy comprehensive coverage.
 
Short-term health plans are currently NOT available in the District of Columbia and 14 states: California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Rhode Island, Vermont and Washington.
 
Options
Despite these changes, there are consumers who are fans of the plan and the level of coverage STM plans provide. STM plans are excellent options for recent college graduates, student athletes, workers who are between jobs or for employees who can’t afford COBRA coverage after losing a job. 
 
It’s important to note that these changes do not affect STM coverages already in effect. If a consumer purchased a short-term insurance plan for 36 months up to Aug. 30, 2024, they are grandfathered in and can keep their coverage for the entire 36 months.
 
In addition, some marketers, like Pivot Health, have developed a way to give consumers up to 12 months using three independent insurance carriers in specific states. This option will be available starting Aug. 31, 2024.
 
Talk to your broker today if you have questions or need short-term coverage. 

Under federal law, employers that offer a group health plan to employees have up to 90 days to implement a new team member on a company health insurance plan. Some offer coverage right away, and some stretch out their risk up to the allowable 90 days for financial or administrative reasons. But even if a new employee doesn’t have health insurance through the company, you want them to remain healthy and financially viable while orienting to their new job. And we know COBRA is not feasible for a majority of the working population. Is there an economical option to keep employees from going uninsured?

Absolutely. Employees can get budget-friendly medical insurance coverage any time of year. For instance, short-term medical insurance policies like those offered by Pivot Health are available year-round and start at just 30 days of coverage and up to three years of coverage in many states for team members who do not qualify for the group health plan. Short-term medical plans are portable as well, so employees can take their insurance coverage with them if they move on to another job during the company’s probationary period.
 
Benefits often include:

• Preventive office visits
• Emergency room coverage
• Childhood immunizations paid at 100%
• Joint, neck, and spine injury coverage
• An all-access open doctor network
• Free and unlimited non-insurance virtual doctor visits 365/24/7

 
If your employees are in a health insurance waiting period and cannot afford COBRA, consider educating your employees about short-term medical insurance as an option to get coverage for accidents and illnesses instead of remaining uninsured. With insurance coverage, your employees can be healthier, miss fewer days of work due to sickness, and have additional financial protection should the unexpected arise. 

Contact your insurance broker about short-term medical plan options that your new employees can take advantage of.

Artificial intelligence (AI) is infiltrating many areas of our daily lives. For instance, every time you say “Siri” or “Alexa, can you…” you are using AI technology. The goals for AI were to enhance learning, boost speed, precision and effectiveness of tasks that were otherwise done manually.

The impact of AI on employee benefits, health care and insurance industries is going to be significant. It’s not a matter of whether these sectors will be affected, but rather how soon and by how much.
 
For the employee benefits industry, AI is expected to transform the way claims are analyzed, fraud is detected, customer interactions take place and diagnoses are made, among other things. It is intended to lighten the administrative burden by streamlining back-office processes in addition to being a valuable asset to marketing departments.
 
It is anticipated that those who embrace these changes will enjoy a distinct competitive advantage. While AI is not designed to replace key players in the benefits industry, it is anticipated that those who fail to leverage its power will fall drastically behind their competitors.
 
Here are some possible ways brokers can use AI in the employee benefits industry:

• Brokers could use AI driven tools to craft highly personalized benefit packages, tailored to suit the unique preferences and needs of each employee. This level of customization will enable brokers to provide superior service and offer a wider array of services.
• Assisting consumers with price comparisons along with information about providers and health systems.
• Educate consumers regarding their benefit plan-offering explanations and examples on topics like deductibles, coinsurance and in- and out-of-network benefits.
• Risk managers could use AI as a valuable tool for estimating costs and outcomes for specific diseases to model risk and probability scenarios.

 
These are exciting times, and no one is sure how far artificial intelligence will go. It’s safe to assume that AI could eliminate some jobs, make some jobs easier and create new jobs.

There are a couple of things AI cannot do like listen to an exasperated member and help them find answers or express empathy and it can’t deal with complex issues with many moving parts. That is where the human touch is still required.  

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One of the expressed goals of the Affordable Care Act, when it was passed by Congress in 2010, was to make affordable health insurance available to more people. Unfortunately, that didn’t materialize for everyone – even for those covered by their employers’ health benefits.

For instance, the Kaiser Family Foundation and Los Angeles Times’ 2019 survey found that two in five adults covered by employer-sponsored insurance reported difficulty affording medical care, prescription drugs or premiums.

In an attempt to lower premiums, many employers have turned to level-funded plans that offer health benefits. Level-funded plans can save employers money by paying the claims of their employees with their own money instead of insurance premiums. Plus, 12 level monthly payments each year cover all the costs for an employer’s group plan.

One of the most affordable level-funded options are Minimum Essential Coverage Plans (MEC).

An Affordable Solution
MEC Plans are limited benefit plans designed to help group plan sponsors satisfy the ACA Part A requirement to provide Minimum Essential Coverage at a very low cost. This cost is well below the potential penalty exposure. 

A basic MEC plan offers coverage for federally mandated preventive services at 100% of eligible charges with no copays, deductibles or annual or lifetime limits. This is the cheapest of the essential health benefits to provide and is popular amongst large employers who can’t afford standard coverage plans, but want to help their employees anyways. Plans, like Allied National’s MEC Plus and MEC Advantage, offer preventive care plus additional benefits such as a copay on generic drugs, primary care visits, lab and x-ray services and diagnostic testing.

Guaranteed Issue
An added benefit to purchasing a MEC Plan is that the plan is guaranteed issue. All eligible employees and/or dependents can be covered, and no one has to answer health questions or undergo a medical exam. This can be particularly beneficial to an employer who has a large or unhealthy workforce.

MEC Plans also can be used in conjunction with carve-out plans. With a carve-out plan, employers can reward certain employees with more generous benefits while still offering other employees coverage such as a MEC Plan. Many companies need to offer generous benefits to attract top candidates, but cannot afford to offer these types of benefits to all employees.

If you are an employer, your broker can help you determine how best to use a MEC plan to avoid the Affordable Care Act “A” penalty and support your employees.

More and more individuals have increasingly turned to self-employment, freelance jobs and contract employment opportunities in the wake of the COVID-19 pandemic. This has contributed to a gig economy that experts say is now growing at a faster pace than the traditional employment market.

According to Statista, a global data and business intelligence platform, the gig economy to date boasts an estimated 73.3 million workers, and 44% of those workers make more at their gig jobs compared to employer work. Prevalent among millennials, Gen Z, and young boomers, gig employment offers workers the freedom to pursue their passions and interests, the flexibility to create their own schedules, and the ability to earn extra income as needed.    

But for all of the perks of being a gig worker, there also can be some challenges. The rewards typically associated with traditional full-time employment, such as a steady paycheck and health insurance, often aren’t readily available to gig workers. Instead, these individuals find it necessary to keep their fixed costs lower, save more, and creatively build safety nets for emergency savings.  

Because gig workers don’t receive or qualify for employer-sponsored health insurance, many individuals consider purchasing Affordable Care Act (ACA) coverage through the Health Insurance Marketplace  – only to find that they earn too much to qualify for a financial subsidy or that premium costs are much higher than they can comfortably afford. But without health insurance coverage, even healthy individuals can run the risk of a financial catastrophe should a medical illness or injury occur.

That’s why it’s important for insurance brokers to keep cost-effective insurance alternatives top of mind for this expanding sector, such as short-term medical, which provides fast, flexible coverage for individuals who may need to adjust their insurance needs frequently, depending on their employment situation.   

You might be a good candidate for short-term insurance if:
●  You don’t qualify for employer-sponsored insurance
●  You make too much money to qualify for an ACA subsidy through the Health Insurance Marketplace
●  You recently missed the annual open enrollment period and don’t qualify for a special enrollment
●  You are turning 26 and aging off your parents’ insurance coverage

Contact your account executive for more information on which short-term medical products might be the best for your client base.