While the future of health care reform in its entirety remains uncertain, many provisions of health care reform are already in place as a result of the Patient Protection and Affordable Care Act (PPACA). And there are things that businesses must be doing now to stay on the right side of the law.
As an employer, have you taken the necessary measures to ensure your business is compliant? If you haven’t, you could find yourself in trouble with the Department of Labor, says Ron Smuch, insurance and benefits analyst at JRG Advisors, the management arm of ChamberChoice.
“The DOL has begun exercising its investigative authority to enforce compliance with the health care reform law, requesting that health plan sponsors provide proof of compliance with PPACA’s mandates,” says Smuch.
Smart Business spoke with Smuch about the DOL’s audit requests related to PPACA compliance and what businesses need to know to stay on the right side of the law.
What areas has the DOL been looking into?
The DOL’s audit requests related to PPACA compliance have been divided into three categories — requests for grandfathered plans, requests for nongrandfathered plans and requests for all health plans.
A grandfathered plan is a group health plan that existed as of March 23, 2010 — the date PPACA was enacted — and that has not had certain prohibited changes made to it since that date. If a plan is grandfathered, it is exempt from certain health care requirements, such as providing preventive health services without cost sharing. However, if a plan makes changes — including changing providers, increasing co-insurance charges, significantly raising co-pays or deductibles, significantly lowering employer contributions, etc. — it loses its grandfathered status and must comply with additional health care reform requirements.
Regulations require a plan to disclose to participants (every time it distributes materials describing plan benefits) that the plan is grandfathered and, therefore, not subject to certain PPACA requirements. For grandfathered health plans, the DOL has been requesting records documenting the terms of the plan on March 23, 2010, and the participant notice of grandfathered status included in materials that describes the benefits provided under the plan.
If a plan has lost its grandfathered status, what must it do differently?
Plans that do not have a grandfathered status must comply with additional PPACA mandates, including providing coverage for preventive health services without cost sharing. For nongrandfathered health plans, DOL audits are requesting documents related to preventive health services for each plan year beginning on or after September 23, 2010, the plan’s internal claims and appeals procedures, contracts or agreements with third-party administrators, and documents relating to the plan’s emergency services benefits.
Some of PPACA’s mandates apply to all health plans, regardless of whether they have grandfathered status. For example, all plans must provide dependent coverage to age 26 and must comply with the PPACA’s restrictions on rescissions of coverage and on lifetime and annual limits on essential health benefits.
The DOL has been requesting the following information from both grandfathered and nongrandfathered health plans: a sample notice describing enrollment opportunities for children up to age 26; a list of participants who have had coverage rescinded and the reason(s) why; documents related to any lifetime limit that has been imposed under the plan since September 23, 2010; and documents related to any annual limit that has been imposed under the plan since September 23, 2010.
What else do employers need to demonstrate?
Employers should be prepared to further demonstrate their compliance by producing records of the steps they have taken to comply with PPACA requirements, including plan participation information, plan amendments or procedures that were adopted, and notices that were provided to those covered, such as the notice of grandfathered status or notice of enrollment for children up to age 26. Plans must also show that they cover out-of-network emergency services without requiring more cost sharing that would otherwise be required by covered participants using in-network emergency services.
If a plan’s PPACA compliance documents are maintained by a service provider, the employer should make sure the necessary documents are being retained and can be produced upon request. Your adviser can work as an intermediary with the insurance company/service provider to ensure compliance requirements are satisfied.
And if your company receives a PPACA audit request from the DOL, consult with your advisors immediately for more information on how to proceed.
What are the penalties for failing to comply?
Penalties are significant. Under PPACA, employers with more than 50 employees are required to provide coverage. Those that fail to do so will be assessed a fine of $2,000 per employee per year, minus the first 30 employees. So an employer with 50 employees that does not provide coverage would pay a penalty on 20 employees, or $40,000 a year.
An employer that offers coverage can also find itself in trouble. For example, an employer’s willful and intentional failure to comply with the Summary of Benefits and Costs requirement may result in a penalty of $1,000 per day per participant. And while the cost of providing coverage for employees is tax-deductible for employers, the cost of paying penalties is not.
Ron Smuch is an insurance and benefits analyst with JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7017 or firstname.lastname@example.org.
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Reaching age 65 is an important turning point for many baby boomers, particularly if they are not retiring from work. In the past decade, Americans working past the Medicare-eligibility age has become far more common.
Accordingly, companies are in a unique position to take steps to coordinate their health care coverage options for employees who are eligible for Medicare, says Crystal Manning, Medicare specialist at ChamberChoice, the management arm of JRG Advisors.
“As an employer, knowing the rules and assisting employees can be difficult,” says Manning.
Smart Business spoke with Manning about Medicare rules and what employers need to know about this challenging arena.
What is Medicare?
Medicare is a federal health insurance program established by Congress in 1965 that provides health care coverage for those ages 65 or older. It also covers those younger than 65 who have certain disabilities or end-stage renal failure. Medicare is not a welfare program and should not be confused with Medicaid.
Medicare is financed by a portion of the payroll taxes paid by workers and their employers. Coverage under Medicare is similar to that provided by private insurance companies, as it pays a portion of the cost of medical care. Often, deductibles and co-insurance (partial payment of initial and subsequent costs) are required of the beneficiary.
What are the different parts of Medicare?
Medicare is composed of several different parts, or insurance:
- Part A is hospital insurance and covers any inpatient care a Medicare recipient may need. It also covers skilled nursing facilities and hospices. Most U.S. citizens qualify for zero premium Medicare Part A upon attainment of age 65.
- Part B is the actual ‘health’ coverage under Medicare. It covers physician visits, screenings and the like. As with Part A, most U.S. citizens qualify for Part B upon attainment of age 65.
- Part C is a Medicare Advantage Plan. This is a plan that offers Parts A and B, sometimes with Part D, through a private health insurer.
- Part D is the newest Medicare coverage, established with the Balanced Budget Act of 1997, which provides prescription drug coverage to the elderly.
What are Medicare enrollment periods?
Medicare enrollment periods are a surprisingly complex subject. Medicare Initial Enrollment Period is the seven-month period that starts three months before turning 65, includes the month when an individual turns 65, and ends three months later. During that time, individuals can sign up for Medicare Advantage and/or a Medicare Part D prescription drug plan.
Those who do not sign up for Parts A, B and D can face penalties for every month they do not have coverage. An enrollment penalty may be assessed from Social Security payments if the employee does not apply when eligible for either Part B or D.
What is required of an employer?
Employers are required to file annual Centers for Medicare and Medicaid Reporting and Employee-Notice Distribution letters even if one employee has coverage under Medicare Parts A, B, or C. Usually companies receive letters from their insurance companies asking for a Federal Tax Identification number and the group size of employees each year.
If your company has 19 or fewer full- and part-time employees, Medicare is almost always primary. Here, it is essential that employees turning 65 enroll in Medicare Parts A and B. If they do not, generally they will have to pay anything that Medicare would have covered. If your company is larger, various rules determine whether your group plan is the primary or secondary payer. MSP requirements also apply for Medicare-eligible employees who are disabled or have end-stage renal disease.
Once per year, written notice distribution is required to all Medicare-eligible employees. This must inform the employee whether the employer’s prescription drug coverage is ‘creditable’ or ‘noncreditable.’ Notice can be sent electronically, but it is often easier to distribute in written format. These need to be sent before October 31.
It is a good idea for employers to provide employees with written details about their employer-provided coverage, which will help them decide how to handle their Medicare choices.
What does an employer need to do if the employee in question is on COBRA?
COBRA coverage is usually offered when leaving employment; if the employee has COBRA and Medicare coverage, Medicare is the primary payor. If an employee has Medicare Part A only, signs up for COBRA coverage and waits until the COBRA coverage ends to enroll in Medicare Part B, he or she will have to pay a Part B premium penalty.
Employees should be disenrolled in COBRA once they turn 65. A number of Medicare beneficiaries have delayed enrolling in Medicare Part B, thinking that because they are paying for continued health coverage under COBRA, they do not have to enroll in Medicare Part B. COBRA-qualified beneficiaries who have delayed enrollment in Medicare Part B do not qualify for a special enrollment period to enroll in Part B after COBRA coverage ends.
According to the Department of Labor Bureau of Labor and Statistics, the number of workers age 65 and older has increased dramatically since the late 1990s. With that trend expected to continue, companies have an excellent opportunity to assist employees in their health insurance decisions. Navigating the ever-changing Medicare rules can be tricky.
However, with the help of a qualified Medicare specialist, the process can be rewarding for the employer and employees.
Crystal Manning is a Medicare specialist at ChamberChoice, the management arm of JRG Advisors. Reach her at (412) 456-7254 or email@example.com.
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The Supreme Court ruled in June that health care reform is constitutional and upheld the Patient Protection Affordable Care Act (PPACA) in its entirety. As a result, health care reform will continue to be implemented as planned and provisions that are already in effect will continue, says Jessica Galardini, president and COO of JRG Advisors, the management company of ChamberChoice.
“The individual mandate requiring individuals to purchase health insurance or pay a penalty is the major component of the law. Because the court upheld that mandate, it did not need to decide whether other provisions of the law are constitutional,” says Galardini.
Smart Business spoke with Galardini about the impact of the PPACA on employers and the benefits that they offer to employees.
What does this ruling mean for employers?
All aspects of the law already implemented will remain in effect. These include the ability for adult children to remain on their parents’ coverage until age 26, no exclusions for children with pre-existing conditions and certain preventive services without cost sharing for nongrandfathered plans. A grandfathered plan is one that has been in existence continuously since before the act was passed and is not required to comply with select provisions of PPACA as long as it meets certain other requirements.
Provisions of the law not yet in effect will be implemented as planned. Although much attention has been paid to the big changes slated for 2014, there are numerous smaller requirements that employers need to be aware of and prepare for now.
For example, insurers have already started issuing rebates to employers with fully insured health plans who qualify due to medical loss ratio (MLR) rules. The MLR rules require insurance companies to spend a certain percentage of premium dollars on medical care and health care quality improvement rather than on administrative costs.
Rebates can be issued in the form of a premium credit, lump sum payment or premium ‘holiday’ during which premium is not required. Any portion of a rebate that is a plan asset must be used for the exclusive benefit of the plan’s participants and beneficiaries, for example, reducing participants’ premium payments.
What other changes do employers need to be aware of regarding benefits?
Effective September 23 of this year, insurers must provide a summary of benefits and coverage (SBC) to participants and beneficiaries. The SBC is to be a concise document with stringent criteria as to the number of pages and print font that provides information about the health benefits in a simple and easy-to-understand format. The SBC will need to be distributed to employees during open enrollment, with any material modifications to the plan throughout the year being communicated at least 60 days in advance.
Additionally, beginning with the 2012 tax year, employers that issue 250 or more W-2 forms must report the aggregate cost of employer-sponsored group health insurance on employees’ W-2 Forms. The cost must be reported beginning with the 2012 W-2 Forms, which are due in January 2013.
What changes are looming for 2013?
Changes scheduled for 2013 include limiting pretax contributions toward flexible spending accounts (FSAs) to $2,500. This limit will be indexed for cost-of-living adjustments for 2014 and later years.
Employers will also be required to provide all employees with written notice about health insurance exchanges and the consequences if an employee decides to forego employer-sponsored coverage and purchase a qualified health plan through an exchange.
Finally, employers will be required to withhold an additional 0.9 percent Medicare tax on an employee’s wages in excess of $200,000, or $250,000 for married couples filing jointly.
What is happening in 2014?
By all accounts, 2014 will be the most significant year. Annual dollar limits for health services will be eliminated, as will medical underwriting and exclusions for pre-existing conditions. Additionally, insurance exchanges will be enacted for individuals and small employers with fewer than 50 employees. This is a key component of health care reform law. Individuals will be required to have health insurance or pay a tax for not having it.
Businesses with 50 or more full-time employees must provide health insurance for employees or pay a tax for not doing so. And for states that choose not to set up their own exchanges, the federal government will do it for them. To date, Pennsylvania has not passed legislation authorizing its own exchange.
Although the Supreme Court upheld the health care reform law, the future remains somewhat uncertain. Opponents will continue to challenge the law and debate its constitutionality through the November 2012 elections, and the strength of the economy and the response of private insurance companies with innovative products and funding solutions will also impact private and public options for individuals and employers.
What is certain is that health care benefits, funding and delivery are changing. Employer and employee decisions are far more complex and require educated consideration. Work with your advisor to learn more about your options and to understand exactly what is required of your company to remain compliant with the law.
Jessica Galardini is president and COO of JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7231 or Jessica.firstname.lastname@example.org.
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Employee productivity is important to any business’ success, and if an employee is too overwhelmed by personal or behavior problems to perform at his or her highest level, the company’s productivity will suffer as a result.
To address those issues, many employers are turning to Employee Assistance Programs (EAPs). An EAP can help identify issues facing troubled employees and direct employees to resources such as short-term counseling, referrals to specialized professionals or organizations, and follow-up service to help them address those issues, says Ron Carmassi, a sales executive with JRG Advisors, the management arm of ChamberChoice.
“EAPs offer a safe environment where an employee can discuss problems with a counselor who can make a confidential and professional assessment and provide referral to a mental health professional if necessary,” says Carmassi.
Smart Business spoke with Carmassi about EAPs and how they can assist your employees, improving both the lives of your workers and the productivity of your business
What are EAPs designed to accomplish?
First created many years ago in response to businesses’ concerns about the impact of employee alcohol and drug abuse on bottom-line productivity, employee assistance programs are now designed to deal with a much wider and more complex range of issues that are confronting today’s work force. Modern EAPs are designed to help workers with issues including family and/or marriage counseling, stress, depression, financial difficulties, crisis planning, illness, pre-retirement planning and other emotional, personal and wellness needs.
The expansion in the scope of EAP counseling is often attributed to the change in our social fabric. Double wage-earning households, an increase in the number of single parent households, economic crises, changing and more demanding career patterns, and technological advances have created new and different types of stresses, which affect the health and productivity of many employees.
Individuals experiencing a personal or family crisis and who are under chronic stress often have nowhere to turn for advice and assistance other than the EAP that is offered by their employer.
What is the benefit to employers that offer EAPs?
Many employers realize a direct link between employee well being and employee productivity. The difference in value and productivity between happy and unhappy employees can be profound, as personal and work-related problems can manifest themselves in poor job performance, adversely impacting the company’s overall productivity.
Employers often perceive that the biggest advantage of an EAP is the positive impact it can have on employee productivity, but there are other benefits as well. For example, businesses offering EAPs often see a reduction in absenteeism, an increase in morale, fewer work-related accidents, a reduction in incidents resulting from substance abuse and an overall reduction in medical costs, resulting in a significant savings for the company.
In addition, employers that include an EAP as part of their benefits package are often viewed as more ‘employee-supportive’ than competitors that do not offer this type of program. That, in turn, makes the EAP a tool for both employee attraction and retention, potentially resulting in lower turnover.
Another advantage of the EAP is that it frees up the company and its personnel to focus on operations, rather than devoting work time to issues that are not directly related to productivity, deadlines and other business activities that result in growth and added revenue.
What should an employer consider when choosing an EAP?
The characteristics of EAP programs vary, so it is important to compare programs to understand exactly what you are getting before you sign on. In addition to cost structure, other factors to consider before purchasing an EAP include the qualifications of the staff that will provide counseling.
Staff should be professionally licensed with established relationships with local and/or national health groups and they should also be engaged in continuing education initiatives so that they remain current. Be sure to inquire about the extent of training services because EAP training programs vary in scope and subject matter.
Convenience of services and responsiveness of staff are also important factors to consider, and business owners should seek out EAP providers with facilities in the same geographic region as the company so that employees can visit before, during or after work. The EAP should also include a toll-free telephone line that is operational around the clock
What would you say to employers who say they can’t afford to sponsor yet another benefit?
While employers understand the value of an EAP, many are concerned about the cost of implementing and maintaining this type of program, particularly with increasing costs for other insurance and employee benefit programs. And while it is true that the employer generally bears the cost of the EAP, many employers are surprised to learn they can institute an EAP at a relatively small expense to the company, often with monthly fees ranging from just $2 to $6 per employee.
More often than not, once employers become involved in an EAP, they come to believe that the return on that investment is well worth the cost.
Insights Employee Benefits is brought to you by JRG Advisors, the management arm of ChamberChoice.
With health care costs continuing to rise, many employers are turning to their health plans to find ways to cut costs. And one way to do so is to make sure that your health plan covers only those who are eligible, which can result in significant cost savings. Most employers do not like to hear the word audit, but a dependent eligibility audit can save a business a significant amount of money on their employee benefits, says Craig Pritts, a sales executive with JRG Advisors, the management arm of ChamberChoice.
“The objective of a dependent eligibility audit is to identify dependents who are not eligible to be on the health plan,” says Pritts. “Those can include dependents who have exceeded the age limit that allows them to be covered, divorced spouses or even friends, roommates or other relatives who are not eligible.
It is estimated that between 3 percent and 15 percent of dependents on an average plan are not actually eligible for coverage. And just one ineligible participant can have a substantial impact on a health plan, depending on the costs of their claims.
Smart Business spoke with Pritts about how performing a dependent eligibility audit and removing ineligible dependents from a health plan can translate into significant cost savings for employers.
Why should employers consider performing a dependent eligibility audit?
ERISA includes stringent eligibility rules for plan sponsors, and employers need to ensure that all plan documents, including the summary plan description (SPD), are consistent when defining dependents. A dependent audit helps ensure that you are in compliance with ERISA by providing benefits only to eligible participants.
It is recommended that plan documents be amended to reflect the process that will be followed in determining dependent eligibility going forward, i.e., frequency of audits, the verification process, potential penalties, etc.
One important factor to remember is the rule for dependent children based on the 2010 Patient Protection and Affordable Care Act (PPACA). For all plan years beginning on or after Sept. 23, 2010, children can be considered dependents until age 26, regardless of marital status and student status.
What are the steps to performing an audit?
There are typically two steps to performing a dependent audit. First, employers should establish a period of amnesty during which employees can voluntarily remove ineligible dependents from the plan with no penalty. The most common way of doing this is to notify employees of eligibility rules in writing so that they can review the status of covered dependents. Employers generally give employees one month to notify them of ineligible dependents they may have on the plan. Ineligible dependents that are voluntarily removed are then terminated from the plan at the end of the following month.
Second, for all dependents remaining on the plan after the initial amnesty period, employers should require employees to provide documentation to verify the dependent status/relationship and to confirm that such a relationship still exists. Examples of required documentation could include marriage certificates, domestic partner affidavits, birth certificates, adoption papers, tax forms, etc.
If an employee is unable to show proof of a dependent relationship — or declines to do so — the employer may impose penalties, terminate coverage or seek reimbursement for claims that were paid for dependents during the time in which they were deemed to be ineligible. While employers typically do not seek disciplinary action as a result of the initial audit, this is an option.
Many cases of dependent ineligibility are the result of oversight, such as forgetting to remove a child when that child reaches the maximum age limit, but other instances, such as failing to remove a former spouse, or stepchildren who live elsewhere, can be intentional and can be a serious issue to the employer. The health plan’s ability to provide for its intended beneficiaries is significantly compromised when ineligible dependents receive benefits.
Who should conduct the dependent eligibility audit?
Many employers choose to hire an independent firm to conduct an audit. This can be done on a risk-sharing basis, in which payment to the firm is based on the percentage of recovered amounts or estimated savings as a result of the removal of ineligible dependents from the plan. Using an outside firm can help your business with your employees’ perception of the independence and objectivity of the audit and make them less suspicious of the company gathering what they may perceive to be private information.
For a smaller employer who chooses to perform the audit internally, this may result in additional work but the potential savings can be worth the time and effort exerted to do so. It is important to weigh your company resources against the potential payoff of cost control and ongoing risk exposure when determining if a dependent eligibility audit is right for your company.
Talk to your benefits advisor to learn more and determine if a dependent eligibility audit is right for you. Because as many as 15 percent of dependents enrolled in a plan may not actually be eligible, spending money on an audit could prove to be an investment that saves your company a significant amount of money.
Craig Pritts is a sales executive with JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7253 or Craig.email@example.com.
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Health care reform is a topic that is on everyone’s mind, and for good reason.
How health care reform evolves over the next several years will impact all of us. We have already witnessed more than 1 million dependents under the age of 26 being added to their parents’ employer group insurance plans.
In addition, these plans no longer have lifetime limits for coverage and many plans have removed any cost sharing, such as copays, deductibles and coinsurance for selected preventive services. High-risk pools have also been established for those who have previously had difficulty obtaining coverage, says Chuck Whitford, a client advisor with JRG Advisors, the management arm of ChamberChoice.
“As we move through 2012, there are several events that will determine exactly what health care reform will look like in 2014, the first full year of full reform implementation as spelled out in the Patient Protection and Affordable Care Act (PPACA) legislation that President Barack Obama signed into law more than two years ago,” says Whitford.
Smart Business spoke with Whitford about health care reform and the impact it will have on your business.
What is the first major action that will impact health care reform?
The first major action that will have an impact on reform will come in June from the United States Supreme Court. In March, the Supreme Court heard arguments over legal challenges to the health care reform law. The main controversy with the law has been whether Congress had the authority under the Constitution’s Commerce Clause to require individuals to purchase a product — health insurance -— or be required to pay a penalty (referred to as the individual mandate).
The court also heard a challenge to the health care reform law’s expansion of the eligibility requirements of Medicaid to cover individuals beginning in 2014. A third issue is whether the law can function as intended if the individual mandate is found to be unconstitutional.
Are there new requirements in the law that will impact employers?
The health care reform law does contain new requirements for 2012 that employers need to be aware of. The first one is the Summary of Benefits and Coverage (SBC), which must be provided to participants following the guidelines established by the regulations. The SBC will be limited to four double-sided pages and provides straightforward and consistent information about health benefits and coverage provided by the employer.
Its purpose is to help health plan consumers better understand the coverage that they have and to help make easy comparisons of different options. The SBC must be provided on the first day of the first open enrollment period that begins on or after Sept. 23, 2012.
What does the Patient Protection and Affordable Care Act require plans to provide?
PPACA requires plans and issuers to provide at least 60 days’ notice of any material modifications in plan terms or coverage. The final regulations clarify that plans and issuers are required to issue the 60-day advance notice when:
- A material modification is made that would affect the content of the SBC
- The change is not already included in the most recently provided SBC
- The change is a mid-plan year change — that is, it does not occur in connection with a renewal of coverage
Under the final regulations, plan and issuers must provide the SBC each year at renewal. When a plan timely provides the 60-day advance notice in connection with a material modification, the final regulations provide that the plan will also satisfy ERISA’s requirement to provide a Summary of Material Modification (SMM)
What changes are coming later this summer?
Effective for health plan years starting on or after Aug. 1, 2012, nongrandfathered plans must cover specific preventive health services for women with no cost sharing. These services include well-women visits, STD screening and contraceptives.
In addition, fully insured plans may be entitled to receive rebates in August 2012 if they qualify due to the medical loss ratio rules requiring insurance companies to spend a certain percentage of premium dollars on health care, rather than on administrative or other expenses. The rebates must be used for the benefit of the plan’s enrollees, which may include reducing enrollees’ premium payments.
Also, beginning with the 2012 tax year, employers that are required to issue 250 or more W-2 forms must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 forms. For now, smaller employers are exempt from this requirement until further guidance is issued, but they may be subject to it at a later date.
It has never been more critical for employers to understand what they must do to be in compliance with health care reform as it continues to evolve and be absolutely clear on their responsibilities from a reporting standpoint.
Advisors who are knowledgeable on health care reform can be a great asset to any organization as employers undertake a level of change that has never been seen before.
Chuck Whitford is a client advisor with JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or firstname.lastname@example.org.
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The cost of providing health benefits to employees continues to be a burden for many employers that are already struggling with tight finances. Now, more than ever, offering competitive benefits is an important tool for companies seeking to recruit and retain employees, but it is becoming more difficult, as health benefits often account for one of the top three expenses for a business.
As a result, balancing value for employees with cost management can be a challenge, says Joanne Tegethoff, account executive with JRG Advisors, the management company of ChamberChoice.
“As the cost of benefits continue to rise, employers are looking for ways to manage those costs while still remaining an attractive employer of choice,” says Tegethoff.
Smart Business spoke with Tegethoff about some strategies that businesses can employ to offer competitive benefits without causing an undue burden.
What strategies should employers consider?
Voluntary benefits provide a venue for businesses to offer value to employees without increasing their costs for providing benefits. Voluntary benefits allow a company’s employees to purchase insurance and benefit products based on their own personal needs, through the convenience of payroll deductions. And most of these benefits are available on a pre-tax basis to employees.
Employers should consider offering a High Deductible Health Plan (HDHP), in conjunction with a medical savings account such as a Health Savings Account (HSA), as their primary health plan, or as an alternative option. HDHP options include up-front deductibles that must be satisfied before services are covered — minimum HDHP deductibles for 2012 are $1,200 for individual coverage and $2,400 for family coverage. The large deductible results in lower premiums than a traditional health plan, encouraging employees to become more educated consumers by better understanding how health care works.
The reasoning is that if health care consumers — your employees — are spending their own money for care, then they are more likely to question that care and not blindly accept procedures such as unnecessary tests. The system encourages them to do so because, until they reach the higher annual deductible, the cost is coming directly out of their pockets.
Can dependent eligibility audits help curb costs?
It is crucial to conduct dependent eligibility audits to ensure that everyone receiving benefits through your plan is eligible to do so. Most employers have policies and procedures in place that outline plan eligibility for their employees and dependents. If someone is on the plan who is not eligible for benefits, the employer is losing money by paying for their care. By conducting eligibility audits and enforcing policies, employers can ensure that everyone who is on the plan should be.
How can employers make employees better consumers of health care?
Provide education that encourages employees to become smarter health care consumers and take responsibility for their health care costs. Structure your policy in such a way that employees are paying more for more expensive services. For example, show them the costs of visiting the emergency room versus a visit to a doctor’s office or to an urgent care center. Also encourage them to purchase generic drugs rather than brand name when available, and show them the cost benefits of doing so.
Finally, educate them about using mail order prescription refill services, and questioning physicians about treatment options and costs.
What other steps can employers take?
Develop and implement a wellness program. Focus on healthy, sustainable lifestyle changes that employees can make. Emphasize that you are concerned for their health and well-being, and show them how being healthier can both improve their lives and help lower their health care costs, as a healthier work force will ultimately lead to lower health care costs for all.
Offering financial incentives for participation, such as gift cards and reduced health care premiums, can encourage employees to participate. In addition, support from upper management for wellness and employee education is critical. Employee health affects productivity and overall financial performance, so it is in your company’s best interest to encourage employee health and wellness. And a little prevention can go a long way.
How can employers address chronic illnesses?
Implement a disease management program for employees with chronic illness, such as diabetes and high blood pressure. These programs typically include health screenings, blood tests and more frequent check-ups, and many insurers offer these services free of charge or for a minimal fee to encourage healthier behaviors.
Also encourage employees to receive routine preventive examinations, including screenings and check-ups. The goal is to keep healthy employees healthy and ensure that those who are at risk or who have medical conditions are receiving the appropriate care. And many employers host onsite health fairs and conduct onsite screenings or health clinics in conjunction with the insurer, which provides the company-sponsored health benefits.
Finally, offering customized benefit statements that show employees how much you pay for health care costs can be eye-opening. Cost transparency can lead to employees making more economical decisions about their health, along with an increased appreciation of benefits provided by their employer.
Talk with your adviser to learn how to begin making these cost containment strategies part of your long-term employee benefits strategy.
Joanne Tegethoff is an account executive with JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7233 or email@example.com.
Health and welfare benefits are a powerful tool to attract and retain employees. But as costs continue to escalate, employers are finding it more difficult to maintain competitive benefits, which are often one of the top three expenses for a business. When coupled with the multitude of other expenses associated with doing business, many employers are looking for ways to reduce the expense of benefits, says Amy Broadbent, vice president, JRG Advisors, the management company of ChamberChoice.
“Imagine an approach that would enable employers to control costs by establishing a predictable employee benefits budget for the next three to five years, while at the same time offering increased freedom of choice and flexibility for employees,” says Broadbent. “This is not as unrealistic as it might first appear, as a defined contribution approach allows employers to control costs while offering employees a wide range of benefit plans from which to choose.”
Smart Business spoke with Broadbent about how a defined contribution approach can help employers control costs and give employees a wider range of options.
How does the defined contribution approach work?
The driving product line is employer-sponsored health insurance. This unique approach is designed to lower both employer and employee costs, and the concept is simple.
In the traditional approach, the employer selects and funds the same insurance plan for all employees in a one-size-fits-all approach. The employer chooses one or two plans to satisfy all employees, yet, in reality, this canned approach only satisfies a few. A diverse work force equates to diverse needs. Every employee’s needs are different, and no one solution is going to meet all of them when it comes to benefits.
Alternatively, in a defined contribution approach, the employer designates a fixed amount of money, or a defined contribution, to each employee. Employees then use that money to purchase individual health care insurance, selecting products that specifically meet their needs and those of their dependents.
The defined contribution scenario enables employees to choose what they want, not what they are told they can have. This approach extends beyond medical benefits. Employers can make a strategic decision as to the amount of money they will make available and offer a wide range of insurance products, including dental, vision, life, disability, long-term care, cancer insurance, auto/homeowners insurance and so on.
How is the amount of money allotted to employees determined?
Typically, the amount of money allotted to employees is based on their eligibility tier (employee, employee/spouse, family) or their tenure with the company. The amount does not have to be the same for each employee. According to federal law, ‘a plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups of participants is based on a bona fide employment-based classification consistent with the employer’s usual business practices.’
There is no maximum amount that employers can contribute, and no minimum that is required.
How can a defined contribution plan benefit employees?
A defined contribution, coupled with a Private Exchange platform will include employee tools and personal support to assist with the decision-making and selection process. This employee engagement results in a better understanding of the true cost of each product. Employees purchase based on their own personal needs and build their own custom benefits portfolio to guard against their personal risks, resulting in increased employee satisfaction.
Defined contribution offers multiple advantages for the employer, as well. Making a strategic decision relative to how much to spend per employee per year enables the employer to set predictable long-term goals, while eliminating multiple administrative tasks such as employee education, benefit communications, enrollment assistance, ongoing customer service support, compliance issues, etc.
A defined contribution approach allows employers to focus on their business, not on benefits. Employers can control their benefits budget and save money, expand their benefits and increase service administration at no added cost, and enable employees to have the tools and resources they need to purchase the benefits that work for their families and their personal budgets.
How can the defined contribution approach lower costs?
The approach shifts financial responsibility for health care from the employer to the employees, giving employees more responsibility and choice in how they spend their health care dollars. They have a direct financial incentive to spend those dollars wisely. The defined contribution approach to benefits offers an innovative solution for employers. This platform transforms the traditional approach to employee benefits and offers a sustainable win-win for employers and employees alike.
Amy Broadbent is vice president, JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7250 or firstname.lastname@example.org.
People tend to think that listening is the same thing as hearing, but this is inaccurate.
Listening requires being alert and realizing that the person that you are conversing with needs to be understood. Most people do not listen with the intent to understand, but, rather, with the intent to reply. And many times, a person who is “listening” will interrupt to share his or her opinion before even acknowledging what the other person has said, says Keith Kartman, senior sales executive with JRG Advisors, the management company for ChamberChoice.
“This can be dangerous, particularly when it comes to business,” says Kart- man. “Are your employees really hearing the message that you want to deliver? Are they fully grasping the feedback from customers?”
Smart Business spoke with Kartman about really hearing what people are saying, and not just listening to calculate a response.
Why is being a good listener so important?
Listening is one of the most effective ways of learning what your customers truly value. Effective listening is an invaluable skill that can help you and your employees better understand your customers’ needs, wants and expectations. When listening with total engagement, communication is not just saying something; it is really being heard.
Although listening is a primary activity, most individuals are inefficient listeners. Why? Because most people were never taught how to listen and some are too busy talking or thinking about what they are going to say next. You cannot talk and listen at the same time. As a result, they miss out on new business opportunities, a chance to learn new ideas and to meet new people. Listening is an active process that consists of three primary activities: hearing, understanding and judging.
What are some tips for being a good listener?
- Give your full attention to what the other person is saying. Do not look out the window, talk with others or daydream while an individual is speaking to you.
- Be focused. It can be easy to let your mind wander. You need to be attentive; do not assume that you know what the speaker is going to say next. If you have that expectation, the chances are good that you could be wrong.
- Do not interrupt. Let the individual finish speaking before you respond. Speakers appreciate the opportunity to say everything that they want to say and do not appreciate being interrupted.
- Take the opportunity to truly listen. Let the speaker finish before fashioning a response. It is difficult to listen if you are too busy thinking about how to respond before the speaker has finished his or her thoughts.
- Be empathetic and nonjudgmental. Each of us has quirks. Instead of focusing on distracting behaviors that the speaker may exhibit, concentrate on what the speaker is saying.
- Ask questions. If the speaker’s point is unclear, ask concise questions to clarify. It is also a good idea for the listener to repeat what the speaker said in his or her own words to ensure that the message is understood correctly. This is commonly called three-way communication. After repeating what the listener heard, the speaker then has an opportunity to clarify any confusion.
- Give feedback. Be attentive, sit up straight and establish eye contact with the speaker. Use nonverbal signs such as a facial expression to help connect with the speaker.
How can asking the right questions help you become a better listener?
Once you have learned to keep yourself from speaking and interrupting the person who is talking to you, learning the right way to ask questions can also help with effective listening. Asking questions is often the most practical way to find out what you need to know. Here are some examples for asking questions:
- Ask a question that allows you to confirm or correct the thoughts you may have formed.
- Pause for silence; try not to talk over a crowd when asking a question.
- Plan your questions carefully. This will help you avoid being long-winded.
- Do not make excuses, as this can be annoying to the crowd and unnecessary.
- Remember that you will be happy that you asked a question. This allows one to feel more engaged and interested in the topic at hand.
A good listener should find it easy to establish positive working relationships with bosses, clients and colleagues. Oftentimes, people will try to avoid bad listeners altogether rather than spend the energy required to properly communicate complex matters. This leads to missed opportunities that would be readily accessible otherwise.
Careful listening is difficult and will require practice to improve. Make an at- tempt to understand the other person’s point of view and perspective before passing judgment and offering a response. Take the time to listen, and you might be surprised at what you learn.
KEITH KARTMAN is senior sales executive with JRG Advisors, the management company for ChamberChoice. Reach him at (412) 456-7010 or email@example.com.
From 1999 to 2009, employer-sponsored family health insurance premiums have increased an average of 131 percent, from $5,791 to $13,375, according to the National Conference of State Legislatures.
Of that, workers contributed an average of $3,515, with the rest of the burden falling on the employer.
As a result, rising costs have forced employers to choose alternative solutions that shift cost sharing to the employee in the form of higher deductibles and/or co-payments, creating a greater interest in voluntary benefits, says Joanne Tegethoff, account executive at JRG Advisors, the management company for ChamberChoice.
“The work force today is much different than it was 25 years ago,” says Tegethoff. “More women are working today. And with the divorce rate at around 50 percent, there are more single parents seeking benefits. Long-term employment is becoming the exception, and employees are more mobile. All of these factors are making voluntary benefits more appealing.”
And because competition for top-notch employees is stiff, offering quality and comprehensive benefits is key to recruiting and retaining employees.
Smart Business spoke with Tegethoff about how voluntary benefits can help attract quality employees and lower your cost of doing business.
What are voluntary benefits?
Voluntary benefits are insurance products available to employees for elective purchase via payroll deductions. These benefits are sponsored and made available by the employer, but the employee is typically paying 100 percent of the premiums. Many of the products can be taken as a pre-tax deduction, which provides additional savings to both the employee and employer.
The benefits offered often depend on the type of medical coverage the employer offers. For example, employers with a high-deductible health plan with at least a $1,000 individual deductible typically offer short-term disability insurance, which provides income protection should an employee be disabled in an accident outside of work; accident insurance; critical illness insurance; cancer insurance; term-life insurance; and universal life insurance, which is a flexible, permanent policy offering the protection of life insurance, as well as a savings element that is invested and builds cash value.
Short-term disability is typically offered if the employer does not offer group disability, and universal life is typically made available to a work force with a younger average age.
If an employer has a medical plan with a low or no deductible, they will not generally offer critical illness insurance, which pays a lump-sum benefit upon diagnosis of a critical illness.
Less common voluntary benefits that are appreciated by employees include long-term care insurance, dental and vision insurance, prepaid legal services, identity theft insurance, auto and homeowner’s insurance, and pet insurance.
Keep in mind that employees may feel overwhelmed and find it difficult to make a decision when too many products are offered. A successful agent will help the employer sort through the choices and narrow down the product offering.
How can a company begin to implement a voluntary benefits plan?
The employer first needs to determine whether employees have interest in taking advantage of voluntary benefits. Survey your employees to determine the level of interest and need.
Once interest is determined, you will need to select an insurance company that best meets your needs. Not all companies and policies are the same. Talk with your consultant or adviser to determine your needs and for assistance with the insurance company selection and implementation process.
An employer will select an insurance company that hosts group meetings to explain the available benefits to its employees. The insurance company should also conduct one-on-one meetings with employees to discuss their individual needs. If they are not interested, employees should sign a waiver stating they are declining the offered benefits.
In addition, the agent and the insurance company should conduct open enrollment meetings every year for new hires and for those employees who may have changed their minds about participating.
Do employers have any fiduciary responsibilities associated with offering voluntary benefits, even though they are not contributing financially?
Although most employers do not contribute to the cost of voluntary benefits, they still have a fiduciary responsibility under ERISA to police such plans if they engage in the promotion or distribution of benefits information related to these programs. They also have a fiduciary responsibility if they allow payroll-deducted payments on a pretax basis through a Section 125 cafeteria-style plan.
What does an employer gain by offering voluntary benefits?
Voluntary benefits add value and financial security to a company’s employees without impacting the employer’s bottom line. By implementing voluntary benefits, employers acknowledge the needs of their employees and allow the employees to select benefits based on their individual needs.
Joanne Tegethoff is an account executive at JRG Advisors, the management company of ChamberChoice. Reach her at (412) 456-7233 or firstname.lastname@example.org.