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Nov 21, 2019

New Approaches to Evaluate Health Benefits for Corporate CPAs

CPAs working in the corporate arena are often thrust into the role of health plan administrator, which is something they likely had little – if any – exposure to at any other point in their accounting careers. Aaron Risden, CPA, CFO of VBA in Pittsburgh, shares in this podcast some of the knowledge he’s gained over the years working in this space. This topic will be explored in greater depth at PICPA’s CFOs and Controllers Conference, March 19, 2020, in King of Prussia, Pa.

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By: Jim DeLuccia, Manager, Learning Content


Podcast Transcript

CPAs working in the corporate arena are often thrust into the role of health plan administrator, which is something they likely had little, if any, exposure to at any other point in their accounting careers. Luckily, I'm joined today by Aaron Risden, CPA, who is CFO and treasurer of VBA in Pittsburgh and an active member of PICPA's corporate finance cabinet. Aaron joins me on the phone to discuss new approaches to health benefits for corporate CPAs.

Aaron, thanks so much for joining the program today.

[Risden] Happy to be here, Jim. Thanks a lot.

Briefly before we get into our conversation, what does VBA do?

[Risden] VBA's a nonprofit insurer. We are based in Pennsylvania just outside of Pittsburgh. We've been around for over 50 years, and we were founded by optometrists. Today, we serve just under a million members, mostly in the mid-Atlantic part of the U.S., but with members across the country as well.

I should mention that this topic of new approaches to health benefits for corporate CPAs will actually be discussed at greater length at PICPA's CFOs and Controllers Conference on March 19, 2020, in King of Prussia. First off, Aaron, many corporate CPAs, as I mentioned in the intro there, are new to being a health plan administrator for company employees. Now, what are a few high-level tips you can provide to them as they navigate this area for the first time?

[Risden] Yeah, Jim, I think I was fortunate coming into this position. I had the opportunity to work in the employee benefits plan space as an auditor in my public accounting career. Then, VBA was also a client of mine before coming to work here, so I had a little bit of a leg up. But for the listeners out there that are CPAs and are new in this space and maybe haven't had those opportunities, I think there's a few things they could pay attention to when they first get into it.

First, I think you want to educate yourself on the present state of benefits within your company. That could include reading human resources type documents, reviewing your plan documents, reviewing plan summaries, as well as taking a look at documentation from your insurer or benefits vendor, benefits summaries, and so forth.

Beyond that, I think it's important to talk to your new colleagues, understand their satisfaction with the benefits, get an idea how the benefits are being used in the real world by your employees, get that firsthand knowledge. Then lastly, I think it's important to understand and review the plan advisers, right? So, you want to make sure you have strong legal advisers, hopefully you don't need them too frequently, but that you have them there, and they're specialists and employee benefits.

Then also, benefits broker adviser is generally important. You want to have someone who's familiar with the options in the market, help you navigate those options, and make decisions that are best for your company. I think if you don't have those advisers, I think leaning on your fellow CPAs, particularly CPAs in industry, can be a great way to help find some references.

Of course. If they're PICPA members, they could certainly go on to picpa.org and check out the PICPA Connect, which is our discussion board to post questions to their peers, where they can get some guidance on this issue.

[Risden] Absolutely.

What are a few items corporate CPAs need to consider with the potential repeal of the Affordable Care Act?

[Risden] I don't know if the Affordable Care Act is going anywhere. It's certainly in the news often enough that there's discussion of changing some of the provisions. I think there's a couple things you want to keep your antenna up for, right? First would be the requirement for applicable large employers, right? Applicable large employers are employers that have 50 or more employees.

I think that's probably most CPAs that would be in industry would probably have 50 employees or more, unless you're a very small entity, but the Affordable Care Act set the requirement that employers of that size need to offer coverage in the first place. That would be something to monitor. I think that'd be pretty hard to pull back on, but you never know.

Then secondly, the impact on plan design by the Affordable Care Act. The Affordable Care Act mandated certain features must be included in a medical plan. So preexisting condition coverage, preventative care, and other features such as those were mandated by the Affordable Care Act. I think lastly, and related to that previous thing to monitor there with the plan design, would be the impact on your plan costs.

So as those plans got broader and had those mandated coverages, so for preexisting conditions, preventative care and so forth, that made coverage a little bit more expensive. A lot of companies tried to delay coverage as long as they could under the Affordable Care Act by shifting their effective dates and such.

Then also, the Affordable Care Act mandated certain fees on the insurers and benefit providers that also make coverage a little bit more expensive. So, potentially if some of that was lifted, that would give employers maybe some more options to customize a plan or shop around for coverage that is maybe a little less expensive.

Along the lines of the Affordable Care Act, and you mentioned this a little bit earlier, what are a few tips you have for evaluating benefit advisers and brokers?

[Risden] I think most importantly, you want to make sure the adviser or broker you're working with is a specialist. So, this person isn't selling liability coverage. They're not worried about the coverage for your automobiles, that they're really focused on benefits and they understand that niche of the business. So taking that one step further, do they understand the underwriting variables for various coverages.

Particularly medical, the demographics of your group, the history of your group, how all that will be evaluated by potential vendors or insurers to ultimately understand what's the cost today and what's the cost outlook for your organization moving forward? Beyond that, it's nice to see a decent amount of experience in the industry, and I think you also want to make sure that they're not just shopping. You're not hiring someone to go out and just get as many quotes as they can and bringing them back to you. While that can be helpful, you want someone who is more knowledgeable than just soliciting quotes.

The second thing I think that's important is a nice capability that many advisers and brokers who are specialists offer is benchmarking of plan costs and features. So as you're an employer, and as I've worked through some of these situations, with escalating costs of the overall, particularly, medical benefit, it's important to know where do you stand in relation to your competitors and other employers and your regional area.

How do your benefits compare outside of the organization? Should your employees want to look around maybe for another job. That's one thing, being able to benchmark. I think lastly, what kind of resources can that adviser bring to you as far as regulatory compliance. The Affordable Care Act, HIPAA, offering benefits is a pretty complex area, particularly if you don't have an extensive HR department within your organization, which some of our members might not.

I think that's a valuable resource that a broker can bring: is that a regulatory compliance. You can build on top of that too. You could think about designing a wellness program that's compliant, but can also help control your employee population health costs down the road. You can design flexible spending arrangements and so forth. There's a lot a good broker or adviser can bring to the table for your organization.

I know this question will be a little bit near and dear to your heart here, but why is it important for plan administrators to spend time considering other medical benefits outside of a traditional health care plan? I'm thinking dental and, of course, vision and maybe there's some other ones out there too.

[Risden] I think medical has become a baseline standard and an expectation for employees. Employees going into just about any job expect medical coverage. You'll see differences from employer to employer and how much cost sharing there is with the employee, so what portion of the overall medical costs does the employer bear versus the employee? Then sometimes, you'll see some differences in the medical related to network access, maybe you're restricted to a certain health system, or maybe you have almost an open network where you can go anywhere.

But so, I think you want to get beyond just that. If you want to design a truly competitive or attractive benefits plan for your employees, dental and vision I think are slam dunks. Just about everyone needs to visit the dentist at some point to maintain good oral health. Lots of us, particularly those of us who are in knowledge work, like CPAs who are on computers all day long, benefit from a vision benefit.

I think by having both of those benefits, employees that use them realize significant savings that you really don't otherwise, as an individual retail customer visiting a dentist or an optician or optometrist, it can be very intimidating to try and negotiate pricing, and the retail pricing can be pretty substantial at some of those establishments.

I think beyond that, those were opportunities to really increase employee satisfaction with the plan. If you've been having to pass more cost sharing to the employee on the medical side, offering them these other benefits that can save them money for sure, but then also improve their health or, otherwise, enhance their quality of life, it can be a great way at fairly substantially less cost than you're looking at with medical.

How can CPA plan administrators institute other benefits connected to wellness and productivity? What types of things should they be considering there?

[Risden] I think maybe still building off a little bit of the dental and vision for a second. Dentists and optometrists can really play a critical role in preventing and early detection of significant medical conditions. Dentists, for example, I've read a little bit of information where routine dental care can help prevent some significant issues. Infections from the mouth can be transmitted to other parts of the body, including the heart for example.

Then vision, I think of as more preventative and diagnostic. You'd be amazed the things that an optometrist can detect by looking inside your eye. Again, heart issues, high blood pressure, things you just wouldn't otherwise think of can be early detected by maintaining these other fairly simple routine, medical, or a dental and vision altogether.

I think it should be obvious, but maybe it isn't obvious for everyone, that maintaining all aspects of health, including oral and vision health, impacts productivity pretty substantially for employees. I think CPAs can relate that you spend a lot of time on your computer, maybe you experience eye strain.

If you can't see well, and I think for many employees across a lot of different industries out there, if you can't see well or your vision is just not comfortable, that can be a significant detriment to overall productivity within your organization. Enabling employees to be able to take control of those types of issues at an affordable cost can really pay dividends.

Great. Finally, Aaron, it seems like plan funding would be in the sweet spot of a corporate CPA, but what are a few items that could be overlooked in that area?

[Risden] It wasn't all that long ago that you really only thought of anything but fully insured coverage for very large organizations. We've been seeing it for our own organization. We're under a hundred employees, not that long ago, under 50 employees. We've seen self-funding options for medical in the marketplace for us. We've investigated that some, but I didn't think that was something five years ago that I would have seen any time in the near future, but innovations in that marketplace are continuing to occur.

Some of the sales pitch there is you potentially have the opportunity to share in any lower claims experience on the medical side. Medical can tend to be more spikes for major claims. Say someone has heart surgery, or someone has a major accident, any kind of major incident can be very costly for your plan, but assuming you have maybe a younger population or great wellness plan in place, those could be options for smaller employers these days.

I think there's still pitfalls that you want to be aware of out there, particularly if you're a smaller organization. You want to make sure you understand compliance requirements for non-insured benefits or self-funded benefits, particularly relative to the Affordable Care Act that we've already talked about a little bit, as well as HIPAA. Definitely greater responsibility passes to the employer when you have these types of arrangements. So, you just want to make sure that you're not just focused on potential dollar savings from the benefit itself, and you have the total picture in mind.

You do get more access potentially to claims information in different funding arrangements, but I think also before getting into them, you want to make sure you have an idea of what prior claims experience your insurer should be willing to share that with you so you get an idea of what your potential exposure looks like, and that's what they should be underwriting into your new plan as well.

You could also think about self-funding, whether it's dental or vision, those types of benefits tend to be more predictable. They generally have much more controlled costs and lower exposures on a per member basis. There's options there as well that you should talk to your advisers about if you're interested.

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Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.