Bruce Bishop

Monday, 02 February 2004 06:04

Eliminate liability

On April 14, 2004, the other shoe will drop on the requirements outlined in the Health Insurance Portability and Accountability Act for all employers who offer health benefits. If your health benefits expenses have been $5 million or more, then your compliance deadline date was April of last year.

This law states that any third party (insurance agent, broker or consultant) who assists with claim problems or handles protected health information is considered a business associate and must be in compliance with the regulations of HIPAA.

Your agent's helping hand may land you in court if any of your employees or ex-employees (COBRA) experience a problem with your agent. Having your agent sign a Business Associate Agreement is the first step in confirming that your agent is in compliance.

If your agent is in full HIPAA compliance but simply made a mistake, you may come away with just a slap on the wrist. But if your agent is not in HIPAA compliance and/or has no signed Business Associate Agreement, you may be in jeopardy of a large fine or even jail time.

The responsibilities of a business associate can be found in any correctly written Business Associate Agreement. A sample agreement can be found at www.kybabenefits.com (Click on Resources, then Helpful Links.)

Just getting your agent to sign a correctly written Business Associate Agreement will not completely eliminate your liability. As the employer (covered entity) you have a responsibility to "audit" your agents' compliance. The best audit is a physical audit.

If you are unable to conduct a site visit audit, at least ask your agent to provide you a copy of its HIPAA Policy & Procedures Manual. Most are in excess of 200 pages.

The following responsibilities of a business associate should be included in any agreement.

* Business associate will not use or further disclose protected information for any purposes other than as permitted or required in the business agreement or as otherwise required by law.

* Business associate will use appropriate safeguards to prevent use or disclosure of protected information other than as provided in this agreement.

* Business associate will report to covered entity any use or disclosure of protected information for a purpose other than as provided in this agreement, within a reasonable time after which business associate becomes aware of such use or disclosure.

* Business associate agrees to mitigate any harmful effect from a use or disclosure of protected information outside of the scope of this agreement.

* Business associate will ensure that any subcontractors and agents to whom it provides protected information agree to the same restrictions and conditions to which business associate is bound pursuant to this agreement.

* Business associate will make available protected information in accordance with applicable law. To the extent required by such law and regulations, business associate will make available protected information for purposes of allowing access to the protected information by the individual to which such protected information pertains or his or her duly appointed personal representative; amending protected information; and providing an accounting of disclosures of such protected information.

* Business associate will incorporate amendments to protected information as required by applicable law and regulations promulgated under HIPAA.

* With reasonable notice, covered entity may audit business associate to monitor compliance with this agreement. Business associate will make its internal practices, books, records, and policies and procedures relating to the use and disclosure of protected health information received from, or created or received by business associate on behalf of covered entity, available to the U.S. Department of Health and Human Services, the Office for Civil Rights, or their agents or to covered entity for purposes of monitoring compliance with the law.

Employers will continue to rely on their agent's help in handling claim problems, so agents who do not take the necessary steps to meet HIPAA requirements will find themselves either out of a job or in court on shaky ground.

Bruce W. Bishop is the director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts ranging in size from 20 employees to more than 7,000. Reach him at (770) 425-6700, (800) 874-2244, ext. 205, or bruce@kybabenefits.com

Thursday, 27 April 2006 07:41

Employee benefit land mines III

First there was “Rocky V” and “Die Hard 3.” Now — back by popular demand — is the follow-up to “Employee benefit land mine I” in 2004 and “EBL II” in 2005. Just when you thought you had cleared the mine field, we bring you episode III.

As in the movie “Kelly’s Heroes,” once you know you are in the mine field, you can work your way out. Don’t wait until you hear the click of the land mine to start taking these seriously. Remember, even seasoned veterans sometimes miss land mines until they explode.

  • Informing an employee a benefit will or will not be paid. It’s common to find an employee asking a human resource manager whether a benefit is covered or not. The H.R. manager, in good faith, looks at the benefit summary or even the certificate booklet and, in good faith, tells the employee that the benefit will be paid. The employee takes action ... and the claim is denied.

Although a certificate booklet is the contract that determines if a benefit will be paid, you may misinterpret that language. Certificate booklets or SPDs are often 50 to 100 pages of disclaimers, definitions, restrictions and requirements. The best answer an H.R. manager can give is an opinion on whether the benefit will be paid and to instruct the employee to contact the carrier or plan administrator before services are rendered.

In addition to contract language interpretations, there are always exceptions to the contract. We have seen time and time again where a carrier will pay outside of the contract based on circumstances surrounding a claim. Many appeals that are filed with the insurance carrier after claims are denied are paid based on these circumstances.

  • Failing to distribute certificate booklets. This task can become a monster project, because most insurance carriers do not send the certificates to employees’ homes. Most employers have benefits administered by multiple carriers. When your supply of booklets comes in at different times and in the event that booklets are delayed 60 to 90 days or longer after open enrollment, a host of serious problems can occur.

The law is very clear on the necessity to distribute certificate booklets to all enrolled parties in a timely manner. Although employers are encouraged to post the certificates on their company Web page, that may not satisfy compliance requirements unless 100 percent of your employees have access to the Internet. It is important to have proof that you have distributed certificates. Getting employees to acknowledge receipt of their certificates is ideal. Too many times we find employers with unopened boxes of certificates in a closet. An employee can have a valid claim against an employer for a denial of a claim if a certificate booklet was not distributed.

  • Failure to audit payroll records against health care benefit invoices. Although the best time to audit payroll and carrier invoices is immediately following open enrollment, it is also important to audit these throughout the year. Changes occur throughout the year: new hires, terminations and qualifying events.

Auditing is a time-consuming project, but you will find that most audits will reveal mistakes. Carriers will typically allow only 60 to 90 days for retroactive credits. In addition, employees typically will not volunteer that they are being under charged through payroll deductions.

Auditing will save you headaches and company money.

  • Not collecting enrollment forms from new hires and all employees during open enrollment. We all know how painful openeEnrollment can be in collecting enrollment forms from every employee. Some employers have taken the stand that if the employee fails to return a form they will not be enrolled in a benefit. This approach is acceptable only if your employee communications clearly indicate the consequence of failing to return forms. Even this approach is dangerous, because an employee can claim that he or she did return the forms.

The best solution to nonreturned forms is a letter back to the employee indicating his or her form was not received and the consequences of this lack of action. Keep this letter in the employee’s file. An even better solution is a post-enrollment confirmation letter of all benefit elections. These letters can resolve other issues, including confirmation of correct enrollment elections and payroll deductions.

The landscape of employees can be filled with land mines. Make sure you get your benefits agent to help you identify all of them before you enter the field of employee benefits.

BRUCE BISHOP (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. The company provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 to more than 7,000 employees. Reach Bishop at (770) 425-6700 or (800) 874-2244 x205.

Tuesday, 31 January 2006 09:44

Rising prices

During the month of January, industry experts put their own spin on the possibility of benefits increases in 2006. Headlines predicted increases in cost from as low as 5 percent to a miserable 19 percent. Only by reading the entire article carefully did you find that each article was correct based on what costs were being reported.

When you read that costs are increasing only mid-single digits, you eventually found in the article that the cost being referenced was the employer’s cost. Employers are keeping their increases low, based in part on changes in plan design and increases in employee costs.

Trends for medical and prescriptions combined are still higher than general inflation and range between 8 percent and 17 percent, based on the medical carrier and their delivery system.

Most employers are choosing plan designs that limit increases in their employees’ payroll deductions. Employee surveys consistently indicate that employees are more concerned about their payroll deductions than their copays and out-of-pocket expenses.

With 80 percent of the general population incurring less than $2,000 in medical claims a year, most people realize that what they really need is affordable major medical insurance.

The transition to high deductible plans and, eventually, health savings account plans will be predicated by the renewal increase.

Let’s examine the question, “How much are my medical rates going up in 2006 from my current carrier?”

Assuming your incurred loss ratio (claims / premium) is 80 percent (the target loss ratio) and there are no changes in your demographics (age and gender), your increase would be whatever trend is for the insurance carrier you are with at the time of your renewal. This is one of the reasons why you want to review trends of the health insurance carriers during your annual review.

The other 20 percent (100 percent to 80 percent target loss ratio) is used for the carrier overhead and profit. If your loss ratio is lower than 80 percent, you should receive a reduction in the trend increase from claims.

In other words, if your incurred loss ratio was 75 percent and the medical trend from the carrier 15 percent, then the increase from claims would be 10 percent (5 percent less than trend of 15 percent). If your loss ratio was 85 percent, your increase from trend would be 20 percent (5 percent more than trend of 15 percent).

Depending on the size of your group, underwriters will blend the claims experience increase and the manual rates to yield your actuarial increase. This is called credibility.

The answer to the primary question of predicting a group’s increase is answered with the following four questions.

  • What is your current carrier’s health care trend?

  • What is your group’s claims experience?

  • What changes will you make in your plan design?

  • What changes will you make in employee contributions?

The primary culprit is still the inflationary factor of providing medical benefits. This factor referred to as trend is more than double general inflation in the best-managed plan and triple that for most health care plans.

Is there any relief in sight? Fortunately, the answer is yes. When most of the insured population of Americans return to major medical plans, you should see trends actually reverse.

When Americans have $2,000 deductibles with no copays, except for preventive health services, simple economics will step in. If Americans stop buying certain services because they feel they can’t afford it, the cost will have to come down. That’s a simple economic fact.

Also, more than 60 percent of Americans are overweight and a shocking 30 percent are obese, and most experts agree that more than 50 percent of health care expenses can be attributed to lifestyle choices. So the other trend reversal is that people will realize that the best way to avoid health care expenses is to stay healthy.

Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to moe than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Friday, 22 April 2005 09:54

Paying more

The biggest trend in health care this past year is not the introduction of health savings account (HSA) plans, it is the movement toward high-deductible plans.

As health care costs continue to climb at double-digit rates, employers are looking at the only thing left with teeth. Deductibles are increasing and, in some cases, being added even to HMOs. Although not new to the market, more and more employers are pulling the trigger on deductible changes.

Although deductible plans still have co-pays, the sting of these plans is starting to be felt by employees. The deductible comes into play primarily outside of the office visit or prescription drug purchase. Lab work or X-rays that are provided or billed outside of doctor visits are typically employees' first exposure. With the most common deductible of $500, the employee usually pays the entire cost the first time these services are rendered.

The concern with HSA plans has been that employees will not seek recommended services due to an inability to pay. It is important to remember this when questioning your employees' ability to pay more.

But although health care costs are at record highs, several independent sources show that employees still put more disposable income toward entertainment than toward health care, something to consider when looking at how much your employees can tolerate in health care expenses.

This trend toward deductible plans is simply a return to what Americans had prior to 1970. Until the introduction of co-pays by PPOs in the late '70s, everyone had a major medical plan, insurance for a major medical problem.

In the 1970s, the most common deductible was $200. To put that into perspective, the average cost of a new automobile was $2,700. With the average cost of automobiles today around $30,000, that could justify a deductible of $2,222 for a plan with no co-pays.

The next step will be the elimination of co-pays for office visits. Then, and only then, will prescription plans fall to the power of the deductible.

Economists predict that trends for increases in the cost of medical premiums will continue to be in the low double digits for the rest of the decade. With the diminishing return of deductible changes, co-pays will be the next logical choice in offsetting increases.

Whenever that inevitable time comes, HSA plans will be the most common financial tool to prepare employees. The power of the HSA plan is not the high deductible; it is the tax advantage of saving for the day employees have to pay their high deductible.

HSA plans will need to be presented to employees like 401(k) plans are today -- get in while you're young, because someday you will need it. And it can be hard to convince employees to save for retirement when it seems so far away, even to a 30-year old.

With great tax advantages and a target of $5,000 in savings, it will not take a lifetime to save for completely funding the deductible. Once the deductible is funded, employees will have 100 percent coverage with no concern for withholding recommended services.

Both political parties secretly admit the prospect of additional government solutions is dead. Americans have made it clear that they want no interference in their access to health care, be it by the government or managed care companies.

Some day, our kids will be sitting around the fireplace telling their grandchildren about how their parents paid just $10 for a knee replacement, and those kids will look at him in wonderment.

Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Tuesday, 22 March 2005 09:46

Maintaining HIPAA compliance

Last April, the remaining classification of employers was required to get into HIPAA compliance. This resulted in a furry of activity for many employers to discover what was required and then implement their programs.

Now that the one-year anniversary is here for all employers with less than $5 million in health care expenses, you should remember what it takes to continue to be in compliance. If you are your company's privacy officer, this responsibility sits squarely on your shoulders.

For those ostriches with your heads in the sand, let me remind you that the penalties are stiff -- including jail time -- for individuals who intentionally violate HIPAA. Getting into HIPAA compliance is not hard, but it does require properly executed documents and procedures. Maintaining compliance is even easier.

* Retrain your entire HIPAA work force annually.

Every year, you must retrain your HIPAA work force. This can be accomplished in about an hour if your training materials are complete. Many times, employers are more puzzled with who is considered a member of the work force than in the training that must occur.

Your HIPAA work force generally includes several departments. Human resources is the primary group and includes anyone who touches an enrollment form or is the primary source for employees to seek assistance with benefit problems.. Certain members of the finance department can be included because finance handles payroll, and payroll deductions are related to plan selection.

The last department that most people forget is members of the IT group. When HR or finance needs assistance with their systems, IT members have access to that information.

* Train your new members of your HIPAA work force within 30 days.

Thirty days is not much time to get a new employee trained on HIPAA, let alone all the other aspects of a new job, but it must be done. Training a new employee doesn't have to be any more time-consuming than retraining.

* Maintain your training log.

HIPAA states that the employer must maintain a log. This log should include:

* The name of the employee and his or her department

* Date the member was initially notified that he or she was a member of the HIPAA work force

* Date the member was initially trained (required within 30 days of notification date)

* Date member was retrained (at least once a year)

* Date member was terminated as a member of HIPAA work force

Your log must be stored for six years, along with all of your other HIPAA-required documents.

* Audit your business associates for HIPAA compliance.

Most employers believe that having a business associate agreement with your agent or vendors provides protection from liability. The law is very clear that the employer should audit its business associates for compliance. Although the audit does not eliminate liability, it does comply with the requirements, which may result in penalties being less severe.

Many times, your benefits agent is your primary business associate. How do you audit your agent? The recommended format is to pay a visit to its office and review each HIPAA process to see if it is in compliance. Use your business associate agreement as your roadmap to your audit. A properly written agreement will list all those processes.

Most canned agreements include a right to correct. Employers who find a violation may be bound to allow 30 days to 90 days for the associate to correct the violation.

Violations on behalf of your agent may be your greatest exposure. As the privacy officer, your selection of your benefits agent goes beyond getting quotes from the same old carriers and HMOs. Your agent should be an extension of your HR department and, in turn, should be managed as a member of your team.

Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Tuesday, 30 November 2004 06:52

Bush's war on health care

"We must reform health care in America. We must build a modern, innovative health care system that gives patients more options and fewer orders, and strengthens the doctor-patient relationship." -- President George W. Bush

Although not a major talking point in this election, health care may be President Bush's largest and most ambitious campaign during his next term. The price tag on his future health care programs could make the war in Iraq look like a minimal expense.

Many people believe the health care problem is too big to correct or that any action will have to be implemented slowly to ease the pain of a transition. That's true when you have time, but health care does not have that much time.

In another four years, health care will be the most debated item in the presidential debate. The Republicans will be vulnerable with a transition of leadership, and Hillary Rodham Clinton is preparing now for the next campaign, which will begin in three years or sooner.

The Republicans know they could have a distinct advantage if they have a plan underway and not just a promise. If that's the case, something needs to happen next year.

President Bush has the secret ingredient in this complicated problem -- government funding. No matter how you slice it, the government is going to pay more.

With the groundwork already established in his Health Savings Account programs, Bush is promising the following.

* Expanded Health Savings Accounts (HSAs). President Bush will propose a tax credit for low-income families and individuals to purchase health insurance. Families will receive up to $2,000 for their premiums and $1,000 cash to put in their HSAs to help meet the deductible. Individuals will receive up to $700 for their premiums and $300 for their HSAs.

* An above-the-line deduction for health insurance premiums. Individuals who purchase low-premium, high-deductible insurances policies can deduct the premiums.

* An HSA tax credit to help small business employees. Small businesses and their employees who set up an HSA will get a tax rebate for contributions of up to $500 per worker with family coverage and $200 per worker with individual coverage.

Although we have been telling clients that HSA plans are the real solution, the story becomes more believable when the government gives you money only if you have an HSA plan.

* Affordable health care for children. The president will launch a nationwide, billion-dollar Cover the Kids campaign to sign up more children for quality health care coverage. The campaign will combine the resources of the federal government, states and community organizations, including faith-based organizations, with the goal of covering all State Children's Health Insurance Program-eligible children within the next two years.

* A tax deduction for long-term care. This is a new above-the-line tax deduction that individuals could claim for long-term care insurance premiums.

In addition to throwing money in the pot, Bush is proposing the following regulatory changes.

* Allow small businesses to establish Association Health Plans (AHPs). To give small employers and their workers more purchasing power, the president has proposed allowing small businesses to band together and negotiate on behalf of employees and their families.

* Allow shopping for health coverage across state lines. It's easy to use the Internet or toll-free numbers to shop for products. But different rules apply to health insurance. Consumers can only purchase health insurance in the state in which they live. The president proposes giving people the freedom to shop across state lines to find the best rates for their health coverage.

* Promote health information technology (IT). The president has undertaken a new initiative to make electronic health records universally available within the next decade. This will improve health care quality, reduce its cost and improve access to affordable care by applying to health care the same information technology that has transformed so many other industries. Health IT will also help eliminate medical mistakes, leading to increased quality and safety for patients.

With the Republicans in control, they have an opportunity they may not get again. Political scholars and economists have predicted that health care will dominate the next election. One way or another, health care is going to change.

Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Friday, 20 August 2004 09:51

Fallout

As carriers prepare for the first wave of enrollees in HSA plans, critics are mounting attacks. Although HSA plans have technically been available since January of this year, delays in definitions and additional language have pushed the primary implementation by carriers and employers to January 2005.

Most, if not all, of the concerns of naysayers are valid. But despite these concerns, HSA plans are going to take over as the core medical benefit within the next five years. Trends in health care costs have slowed but are still multiples of general inflation. Economists are still predicting high inflation on health care costs through the rest of the decade.

Employees won't like HSA plans because they are simply a shift in expense to the employee or patient. HSA medical plans require the first $1,000 of expenses to be paid by the member. The HSA account provides wonderful tax advantages, but a tax advantage doesn't make it free.

Employees will feel the financial burden the first time they seek medical attention. Instead of a co-pay, they could be faced with hundreds of dollars of expenses. The effect on the employee will be multifaceted. They will only seek medical attention when they feel it justifies the substantial expense. They may also drop coverage when they look back on the year and see that for their contribution, they didn't get a return from their investment.

If a person has one office visit and pays a co-pay, with the balance paid by the plan, the employee feels a return. It may not be a good return, but is one nonetheless. However, when the employee has the HSA $1,000 deductible, no co-pay plan, he or she could pay $999 out-of-pocket and get zero return. Employees will question why they have coverage at all.

Health care providers are not going to like HSA plans, either, because of the lower utilization and higher bad debt exposure. When HMOs and managed care plans first came on the scene, one of the lures to join as a provider was reduced bad debt. An employee can afford a co-pay, and the balance was coming from a more reliable source. Now providers are going to see more bounced checks and uncollected fees.

Once again, providers will be caught in the middle, trying to keep their fees down while expenses continue to mount. Doctors are going to eventually require payment before services are performed versus after.

Insurance carriers are not too anxious, either. Because all carriers can and will provide similar plans, there will not be any real marketing advantages to offering an HSA plan. Carriers make margins off of premiums. HSA plans with high deductibles and no co-pays are priced lower than current common plans. Unless margins are increased with the HSA plans, the end results will be lower profits for the carriers.

Employers will also taste the bitter aspects of HSA plans. Employee complaints will increase, with the employer as the sounding board. The HSA may not lower the employer's expense but it may maintain it.

If everyone is against HSAs, why are they being introduced and why are they inevitable? The reality is, affordability is the No. 1 priority. Employers and employees cannot afford to stay with current plans. Premiums are just too expensive.

Every generation is famous for something that their grandchildren will be fascinated with. Our generation will be the 20- to 30-year period out of the entire history of health insurance in which the consumer was removed from the process.

Would that be the golden era? Maybe not. With the greatest health care system in the world, more Americans are morbidly overweight and unhealthy.

HSAs are most definitely coming, and hopefully with them, a return to healthier and happier Americans. BRUCE BISHOP (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Tuesday, 27 April 2004 14:55

Dental HMOs vs. traditional indemnity

As with the Rocky Balboa story, many people would not pick a dental HMO over the long-standing champion, traditional insurance. But before automatically discounting the dental HMO (DHMO), consider the following.

The champion

In this corner, we have traditional coverage, arguably the most popular plan. The cornerstone of this classic plan is the freedom to use any dentist. With the frequency of at least two preventive visits a year, many people's relationship with their dentist has become more important than that with their medical doctor.

Even so, traditional plans have been changing over the years from pure indemnity to passive dental PPO plans. They are referred to as passive because there is no penalty for using nonnetwork providers. If an employee does not use a network dentist, he or she has the same benefits as with the age-old indemnity plan.

Driven in part by some state laws, most dental PPO plans must offer the same deductibles, co-insurance and maximum payment limits whether patients use a network provider or not. Many times, employees who are enrolled in a passive dental PPO plan don't even know or remember they have an incentive to use network providers.

The primary advantage of using network providers is that the employee participates in an average discount from UC&R charges of 25 percent, as well as no balance billing from the dentist. Despite this incentive, many employees are not motivated enough to change dentists. Even the largest networks in the country only cover one-third of licensed dentists. As a result, the reductions in premiums for these passive PPO plans compared to pure indemnity is only 4 percent to 8 percent. Nevertheless, Passive PPO is the current champion of dental plans.

The Achilles' heal of these plans is their limit on benefit payments. The most common plan has a maximum calendar year benefit of $1,000. Although less than 7.5 percent of people enrolled have more than $1,000 a year in claims, over a five-year period, you could have 37.5 percent of your employees find the $1,000 limit a problem. Increasing the maximum to as much as $2,000 does not resolve this issue.

Because of this benefit cap, I refer to traditional dental plans and PPO plans as dental "assistance" not dental "insurance."

The challenger

In the other corner we have the challenger, the leaner, tougher dental HMO.

The typical DHMO has no deductibles, no claim forms, uses predictable co-pays versus co-insurance, protects you from UC&R cutbacks and has no dollar limit on dental services. If you require $5,000 of dental services, you'll get it. Last but not least, the premiums can be 50 percent less than those of traditional or PPO plans.

Many companies have purchased a DHMO on this simple comparison, but you must truly understand the limits of DHMOs before determining if it's right for your employees.

The biggest hurdle is the network. You must receive services exclusively from providers within the network. The lists are much smaller than those for even PPO networks, and in some rural areas, they are non-existent.

The other concern is that procedures outlined in the benefit summaries are the only services covered. There are hundreds of different procedure codes for dental services. If a procedure is performed that does not match one on the list, it's not covered. This is one of the reasons employees should take their benefit summaries with them to DHMO dental appointments.

Some employees may also find difficulty in scheduling their first preventive service. Although not uncommon with any dentist, DHMO dentists typically push preventive services like your semi-annual teeth cleaning four to six months out. Of course, if you have any pain or require immediate attention, a DHMO patient will be seen immediately.

The DHMO is not the best fit for everyone. If you're interested in a DHMO, consider offering both it and a traditional plan, letting employees choose which is right for them. Typically, 30 percent of employees will choose the DHMO over the more expensive traditional or PPO dental plan.

Educating employees on the advantages and disadvantages of the DHMO is critical to a successful DHMO program. If you want a dental plan that can go 15 rounds, like Rocky Balboa, then the DHMO and its unlimited benefits can be the champion. Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

Thursday, 26 February 2004 09:59

Employee benefit landmines

The danger of a landmine is that you don't know you've stepped on one until it's too late. Here are some employee benefit landmines that even the most seasoned veterans sometimes may not see until it's too late.

Owners and officers waiving workers' compensation coverage

Owners and officers can and often do waive workers' compensation insurance. However, medical plans do not automatically cover work-related medical claims, unless a rider is elected. Medical carriers seldom inquire about workers' compensation coverage on group paperwork, so this problem can slip through the cracks.

The cost to add 24-hour coverage to the medical plan is many times more expensive than the workers' compensation premium. The most common solution is to keep the owners and officers on workers' compensation.

Offering severance packages that include continuation of benefits

From time to time, employers offer severance packages to ex-employees that include a continuation of benefits for a period of time.

Unless you have set up your eligibility language in the carrier's contracts to include severance package timetables, the ex-employee no longer qualifies for coverage based on your group contract. The problem typically doesn't surface until the end of the normal COBRA timetable (assuming the employee takes COBRA for the maximum duration.)

The employee assumes and may even have been notified by the employer that the COBRA qualifying event was at the end of their severance package timetable. The actual timetable, according to common carrier contracts and COBRA law, is the beginning of the severance timetable, when the employee's hours were reduced. The carrier has every right to decline any claims that were incurred beyond the normal timetables.

The solution is to simply agree to pay for the ex-employee's COBRA premium.

Waiving waiting periods for new hires without written approval from the carrier

Requests for exceptions to established eligibility waiting periods should be rare. Although most requests are approved, they are not guaranteed. Carriers are starting to ask for evidence of insurability on the prospective employee before waiving waiting periods.

The best solution for offering benefits to new employees sooner than normal is to offer to pay their current COBRA premium until they have satisfied the normal waiting period. This typically accomplishes

the ultimate goal of the prospective employee. We recommend requiring the employee to pay his or her normal employee contributions as soon as the company starts paying the COBRA premium.

Canceling current coverage before receiving written approval from your new carrier

This problem occurs more often than people think. Every insurance carrier has some level of underwriting before it will approve coverage. Carriers can take anywhere from 24 hours to 30 days to process your application(s) before the underwriting department approves or declines coverage.

The gravest of problems arises from declining your application for coverage with the new carrier. If you cancel current coverage and afterward are declined by your new carrier, you may be uninsurable. Some carriers are glad to get rid of your risk and would not automatically reinstate your canceled coverage. The end result could include absorbing the entire risk that even the insurance carriers didn't want.

The most common solution is to start your renewal cycle early enough to complete all the required tasks. Every insurance carrier will need some amount of time to process forms and applications before issuing an approval letter.

When employers wait too long to complete these requirements, they are pressed with a new problem, paying premiums for both new and old coverage for a period of time.

You can wait to renew group coverage up to the last working day of your plan year. On the other hand, you are required to give 30 to 60 days notice on canceling coverage, which is any time after the anniversary date.

As you approach your anniversary date without an approval letter for new coverage, your choices are to either double pay your premiums or cancel coverage assuming you will be approved. Can you hear the click of the landmine?

Starting your renewal process and open enrollment early enough is the key to avoiding this problem.

Bruce Bishop (bruce@kybabenefits.com) is director of marketing and managing partner of KYBA Benefits. KYBA Benefits provides consulting and administrative services to more than 400 corporate accounts, ranging in size from 20 employees to more than 7,000. Reach Bishop at (770) 425-6700 or (800) 874-2244, ext. 205.

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