The Patient Protection and Affordable Care Act (PPACA) made sweeping changes to the insurance industry landscape.

“Business owners and HR professionals will need to be in compliance with the rules and regulations set forth by PPACA. And, individuals will have increased questions about the health insurance marketplaces, individual mandate and underwriting,” says Michael Galardini, sales executive at JRG Advisors, the management arm of ChamberChoice. “As a result, employee benefits professionals will be asked to help guide both businesses and individuals through the changing marketplace.”

Smart Business spoke with Galardini about employee benefits trends small and large employers can expect to see in 2014.

What changes will small employers face?

Small employers, categorized as any employer with fewer than 50 full-time employees, will see a drastic change in 2014 in the way health insurance rates are developed for each group. Before PPACA, insurance companies could develop rates based on gender, industry, group size, health status and medical history. Post PPACA, small group rates are no longer rated, and small group insurers will only be able to vary premiums by family size, geography, tobacco use and age.

With the changes in underwriting, there also will be changes to the plan designs being offered to small employers. The establishment of Health Insurance Marketplaces and their product offerings has created a change in product design. The plan designs being offered are 90 percent, 80 percent, 70 percent and 60 percent coinsurance plans, which share the financial responsibility with the employees. These plans create larger out-of-pocket costs that most individuals are not accustomed to paying. Particularly in Western Pennsylvania, the population as a whole is most familiar with rich plan designs with no coinsurance, low deductibles and copays.

Explaining these product differences with a one-on-one approach is important to help each individual understand how his or her plan works. The business owner and/or HR professional as well as an outside advisor need to engage each employee to ensure everyone properly understands the available solutions.

What can large employers expect to see?

Large employers or those with 50 or more full-time employees also will notice significant changes in the future.

Beginning in 2015, large employers will be required to offer coverage to employees working 30 hours or more a week. There also are requirements to the type of plan that must be offered to these individuals as well as a contribution limit. The plan design must be at least a 60 percent coinsurance plan, and the employee’s contribution cannot be more than 9.5 percent of his or her household income. There are two fines an employer could receive:

  • Penalty A: Employers that do not offer coverage to full-time employees (working 30 hours or more a week) will be subject to a penalty equal to $2,000 per full-time employee minus the first 30.
  • Penalty B: Employers that offer coverage that is not of minimum value or not affordable (or both) will be subject to a penalty equal to $3,000 for every employee who receives subsidized coverage through the marketplace.

Large employers should be talking to their advisor in 2014 to determine if they will meet these guidelines.

Are there any other upcoming changes?

Lastly, and probably most significantly, is the individual mandate. Individuals are required by March 31, 2014, to have a qualified health insurance plan or pay a fine. The fine for 2014 is the greater of $95 or 1 percent of income. Individuals can purchase insurance through the marketplace or directly from an insurance company. The marketplace could offer a subsidy based on an individual’s income to help pay for premiums.

A qualified advisor will be well versed on the products available to individuals and business owners. The changes due to PPACA provide more options to purchase health insurance products, but the marketplace for health insurance is ever changing. Business owners and HR professionals need to be aware of when these changes occur and how they can impact their business.

Michael Galardini is a sales executive at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7235 or michael.galardini@jrgadvisors.net.

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Published in Pittsburgh

The Patient Protection and Affordable Care Act (ACA) will have a profound effect on most employers that offer health plans in 2014.

“Passing the law was the easy part. The process of issuing regulations and guidance between three separate federal agencies — Health and Human Services, Department of Labor and the IRS — is the difficult part. Add to the mix an occasional court ruling and you have the perfect recipe for confusion and the risk of misinformation,” says Chuck Whitford, client advisor at JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Whitford about points to consider in the coming year with the ACA.

What’s the first step going into 2014?

Going back to basics, determine if your plan is ‘grandfathered.’ A plan that essentially hasn’t changed since March 23, 2010, is most likely grandfathered. However, if you changed insurance companies before Nov. 1, 2010, or passed along the majority of the rate increases to employees, the plan you thought was grandfathered may not be.

You must tell employees if you have a grandfathered plan. A grandfathered plan can be exempt from some of the ACA rules, such as covering preventive care at 100 percent, continuing coverage for ‘adult dependents’ to age 26 and nondiscrimination rules for fully-insured plans.

How will the exchanges affect employers?

You will most likely be asked questions about the new health insurance benefits exchanges, also known as marketplaces. They are primarily online marketplaces for purchasing health insurance, run either by a state or the federal government. The federal government has a hand in, at least, running exchanges in 33 states. There are two types — one for individuals and one for small employers, generally up to 50 employees.

There have been glitches in these online systems. Once problems are fixed, it should be easier for individuals to review available plans and see if they qualify for subsidies to reduce premiums or, in some cases, reduce the cost sharing of deductibles and coinsurance.

What’s important to know about full-time equivalent (FTE) employees?

For the purpose of the ACA, a full-time employee works 30 or more hours per week, or 130 hours per month. The law requires employers to track the number of full-time employees and add up the hours worked by their part-time employees each month (up to 120 hours per month) and divide by 120 to determine the number of fractional ‘equivalent’ employees.

Employers with 49.99 or fewer FTEs don’t have any requirements to offer coverage and won’t be assessed penalties. The ACA still will impact their health plan’s rates, and they must comply with the 90-day waiting period limit and other ACA provisions.

Employers with 50 or more FTEs must offer coverage, deemed affordable and of minimum value, to all full-time employees and dependents to age 26. If any full-time employee receives subsidized coverage in an exchange, it triggers employer penalties. The ACA defines affordability as the employee’s cost for single coverage not exceeding 9.5 percent of income. A plan covering at least 60 percent of costs on average is considered minimum value.

In July, the Obama administration announced a one-year delay in the penalties and employer reporting. This can create a different set of issues for an employer that offers coverage to employees that work, say, 40 hours per week and has employees who work between 30 and 39 hours per week. These employers may want to hold off extending coverage to their 30- to 39-hour employees until 2015. However, with the individual mandate, employees not offered employer-sponsored coverage might go to the exchange. Some will qualify for a subsidy and also may qualify for cost-sharing reductions. Fast forward to 2015, employers wishing to avoid the nondeductible excise taxes (penalties) may extend eligibility of an affordable plan that meets minimum value to these employees, removing exchange subsidies and increasing the employees’ cost.
Because of the complex nature of the ACA, employers are encouraged to review their employee benefits strategy and communications for 2014 and beyond with a qualified advisor.

Chuck Whitford is a client advisor at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or chuck.whitford@jrgadvisors.net.

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Workplace dynamics continue to change. Regardless of industry, employers need to set themselves apart.

“With more women in the workforce, a divorce rate of 50 percent creating more single parents, and a significant increase in mobile or remote employees, the need for a competitive and employee-centric benefits package is critical,” says Ron Carmassi, a sales executive at JRG Advisors, the management arm of ChamberChoice.

“A package that includes voluntary benefits will help attract and retain quality employees, while at the same time reducing overhead and improving morale. A win-win scenario,” he says.

Smart Business spoke with Carmassi about how your company can use voluntary benefits to create flexibility for employees, while saving money on benefit premiums and underwriting.

What are voluntary benefits?

Voluntary benefits consist of a variety of insurance products offered at the workplace through the convenience of payroll deduction. They can be added to your current benefits package.

Employers might offer a mix of products including critical illness, cancer, accident, disability, life, pet, auto, homeowners insurance and more. Employees then have the flexibility to choose the coverage that fits their personal needs and budget.

What is the value of voluntary benefits?

The needs of each employee vary based on family and financial dynamics. There is no one-size-fits-all solution for benefits in today’s work environment.

Full-time employees still expect their employer to provide some level of health insurance. However, they are looking for additional offerings to protect themselves and their families. One employee may have a need for pet insurance. Another may have young children and find peace of mind in an accident plan. While another has a family history of cancer, thereby finding great value in a cancer policy.

In addition to choice, voluntary benefits offer a one-stop shopping experience, making it easier for employees to purchase insurance that typically is not offered at the workplace, such as auto and homeowners. These types of benefit packages also often have discounted premiums and/or reduced underwriting.

What is the future of voluntary benefits?

There is a marked increase in the number of employers offering a defined contribution model, which provides a complementary platform for voluntary products. A defined contribution or cafeteria-style approach offers choice among medical, dental and vision benefits and also includes a variety of voluntary benefits.

The defined contribution model allows employers to identify a specific dollar amount or ‘defined contribution’ for each employee, typically by coverage tier. Each employee selects benefits based on their individual needs. Any costs in excess of the defined contribution allowance are the responsibility of the employee.

The defined contribution model gets away from the one-size-fits-all mentality and allows employees greater choice while offering the employer more budget certainty.

How can business owners get started with adding voluntary benefits to their benefits package?

Voluntary benefits are a great way to enhance your benefits package, differentiate from competitors and increase employee satisfaction — all with little or no impact on your budget.

Work with your advisor to decide what voluntary product offering makes sense for your team and educate your employees on the advantages of these voluntary benefits so you both can reap the rewards.

Ron Carmassi is a sales executive at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7015 or ron.carmassi@jrgadvisors.net.

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The U.S. government enacted Medicare 48 years ago to help senior citizens who were finding it difficult to obtain private health insurance coverage.

It originally consisted of Medicare Part A for hospital insurance and Part B for supplemental medical insurance. A payroll tax paid by employees, employers and the self-employed funded Part A, available to those 65 or older; it had a $40 annual deductible. Part B was open to aged citizens and legal aliens who lived in the U.S. for at least five years for a $3 monthly premium.

Medicare costs have climbed at rates substantially above growth in general inflation or GDP. Today the Part A deductible is $1,184 and the Part B premium is $104.90 with a $147 annual deductible.

“Nearly 50 million Americans — 15 percent of the nation’s population — depend on Medicare for their health insurance coverage. With increasing life expectancies and more baby boomers turning 65 every day, that number is expected to double between 2000 and 2030,” says Crystal Manning, a Medicare specialist at JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Manning about how Medicare coverage operates.

Why is Medicare important?

Medical costs have become expensive, especially for those older than 65 and already retired. They are more prone to diseases and injuries, and need a plan that covers drugs, hospital stays and doctor’s visits to ensure necessary medical care. The Medicare benefit structure has remained stable, but medical technology has rapidly increased the tools available to diagnose and treat patients.

Medicare applies to individuals who can’t afford private health insurance, which prevents severe financial hardships from chronic or long-term diseases like kidney failure. Medicare also is available to people of all ages with qualifying disabilities that keep them from earning a living.

How is Medicare funded?

Medicare funding comes partially from payroll taxes. Federal Insurance Contributions Act (FICA) taxes are comprised of a Social Security tax that contributes to Social Security retirement benefits and a 2.9 percent Medicare tax. With Medicare taxes, employers withhold 1.45 percent from employees and then match it. High-income Social Security beneficiaries also pay income tax on Social Security income. Some of that goes into a trust fund used to pay doctors, hospitals and private insurance companies when Medicare patients use their services.

How were Medicare Parts C and D created?

Prescription drug costs are increasing as more seniors rely on new drug therapies to treat chronic conditions. Many cannot afford to maintain their health. This trend will continue as out-of-pocket spending for prescription drugs rises.

In 1997, Medicare benefits became available through private health plans. Now known as Medicare Advantage plans (Part C), they replace and cover all Part A and Part B benefits, with the option to add prescription drug coverage. The Medicare Prescription Drug, Improvement, and Modernization Act created a specific drug only benefit (Part D) through private insurance companies.

In the 2000s, 25 percent of Medicare beneficiaries had no drug coverage. Today, beneficiaries can join a Prescription Drug Plan for drug coverage, or join a Medicare Advantage plan, which covers medical services and prescription drugs. However, seniors need to join a drug plan when first eligible to avoid paying a monthly late enrollment penalty of 1 percent.

What’s critical to know about Medicare?

The drug benefit has a major coverage gap called the ‘doughnut hole,’ which begins when total retail drug costs — not what you personally spend at the pharmacy — reach $2,970. In 2013, anyone reaching the doughnut hole receives a 52.5 percent discount on brand-name formulary drugs and a 21 percent discount on generic formulary medications. Part D beneficiaries remain in the doughnut hole until their true out-of-pocket costs exceed $4,750.

Seniors need to choose the right Medicare coverage. However, know that Medicare isn’t part of the Affordable Care Act’s health insurance exchanges. Your benefits won’t change and you don’t need to do anything.

Crystal Manning is a Medicare specialist at JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7254 or crystal.manning@jrgadvisors.net.

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Economic hardships, the sluggish job market and continued uncertainty surrounding the future of health care reform have taken a toll on employees. Now is the time to demonstrate your commitment to your workforce and boost morale by finding ways to effectively communicate your organization’s employee benefits package.

“Employers in the United States spend nearly 40 percent of payroll on benefits. That being said, a strategic approach to benefits communication is no longer a business tactic geared toward only large organizations; it is a necessity for employers of all sizes,” says Jessica Galardini, chief operating officer at JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Galardini about taking a strategic approach to benefits communication.

Why should employers be taking a strategic approach to benefits communication?

A strategic approach can boost employee appreciation and comprehension. Maximize your annual open enrollment period by reiterating the positive aspects of what your company offers. ‘Value-adds’ such as paid holidays, vacation time or paid time off, and profit-sharing plans should not be overlooked.

Remind employees about the relevance of the financial contributions made on their behalf. Employers often pay a significant portion of the premiums for medical, dental and vision benefits, and full premium for life and disability insurance benefits. It’s not uncommon for employees to overlook how much employers pay for all components of the benefits package, which is why personalized benefit statements can be powerful communication tools. Referred to as the ‘hidden paycheck,’ these statements incorporate annual salary, the total value of all employee benefits, paid time off, etc.

What should be considered when preparing a benefits communication strategy?

A variety of factors should be considered, including life stages. In what stage of life are your employees? Are they single? Newly married? Ready for retirement? Employees have different needs from their benefits packages at different stages of their lives.

Employees respond differently to technology, which also should be taken into consideration. Email communications, a company intranet site and/or webinars might be well received by some, while others will benefit more from group forum discussions and presentations. Technology creates greater efficiencies and a new approach to benefits communication, but it should not be substituted for face-to-face and ongoing personal communication.

Another challenge is communicating with employees working remotely or in other locations, as well as those working weekends and/or shifts other than 8 a.m. to 5 p.m. Monday through Friday. You also are faced with new employees entering your workforce and older employees who might retire. People get promoted, married, divorced and have children. All of these life stages and factors can present challenges to effective communication if not taken into consideration upfront.

How do employers develop a benefits communication strategy?

Utilize your benefits advisor to help develop the communication strategy that will work for your organization. Ongoing education and communication are critical since the benefits needs of employees change throughout the year. So, provide employees with instruction and access to make needed changes. Effective programs work best when communication is employee friendly. Employees need to be shown how benefits work together, and they need guidance in order to make the best decisions.

If your organization is facing a change in benefit or contribution structure, make sure to plan how it will be communicated. Be honest, accurate and concise when delivering any message that relates to change. Your advisor can provide benchmarking data to compare your package to others in your industry, geography, etc., to help keep changes in perspective.

Because benefits have a profound impact on job satisfaction, effective benefits communication is one of the most challenging responsibilities facing employers today. The right approach and techniques can put some control back in the hands of employers, and boost employee morale.

Jessica Galardini is the chief operating officer of JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7231 or jessica.galardini@jrgadvisors.net.

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Friday, 31 May 2013 22:57

How PPACA will impact small employers

Most news surrounding the implementation of the Patient Protection and Affordable Care Act (PPACA) pertains to the employer penalties for noncompliance with the large employers’ shared responsibility provision that begins with the 2014 plan year. However, how does PPACA apply if an employer has fewer than 50 full-time equivalent employees?

“This has been a subject of great confusion among business owners,” says Chuck Whitford, client advisor, JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Whitford about how smaller business owners need to be counting employees carefully and preparing for PPACA provisions.

How is employer size defined?

A large employer is defined as having 50 or more full-time equivalent employees during a testing period that can be from six to 12 months. Full time is defined by the government as 30 hours per week.

The term equivalent is used to account for those who work less than 30 hours per week. For example, if an employer has 30 full-time employees working 30 hours each week and three part-time employees working 20 hours each week, it has 32 full-time equivalent employees. The part-time hours per month are added, then divided by 130 to determine additional full-time equivalent employees.

There is some relief for seasonal workers.

How does PPACA apply to small employers?

The employer penalties are just one piece. All employers are subject to certain rules if providing a health insurance plan, such as:

  • Waiting periods for eligibility cannot exceed 90 days, beginning in 2014.

  • Continuing to cover dependents of employees until age 26, in most cases.

  • Providing a Summary of Benefits and Coverage to each employee at specific events, such as open enrollment.

  • Supplying 60-day notification for any plan changes, except at renewal.

What are some other considerations?

If a plan is not grandfathered — hasn’t changed since the law went into effect in 2010 — then it must continue to waive all cost sharing for preventive care services, which includes women’s preventive care for plans renewing on or after Aug. 1, 2012.

Employers also must offer employees information on the public insurance exchange whether providing health coverage or not. The law requires this notice be distributed each March; however, it has been delayed in 2013, pending Department of Labor guidance.

In 2014, all non-grandfathered small group plans will have limits on the deductibles charged in-network. The maximum deductible will be $2,000 per individual and $4,000 per family. There also will be out-of-pocket limits that apply to all non-grandfathered plans. These limits are the same as those for high deductible health plans, which this year is $6,250 for an individual and $12,500 for a family.

How will the pricing methodology change?

The biggest change for small employers will be the pricing methodology applied to group insurance plans. Insurance companies will be unable to use gender, industry, group size or medical history, and therefore are limited to family size, geography, tobacco use and age. The companies can charge the oldest ages no more than three times what they charge the youngest ages. Many insurance companies use a ratio of 7:1 or higher, so this should result in higher rates for younger, healthier groups and better rates for older, less healthy groups. In addition, there will be new taxes and fees passed through to the employer in 2014.

Where do small employers have flexibility?

A small employer, with fewer than 50 full-time employees, has more flexibility in determining how many hours an employee must work to be benefits-eligible. For example, a small employer can establish 37.5 hours as the minimum to be eligible for the company health plan, so employees regularly working less than 37.5 hours aren’t eligible. Those employees most likely are eligible for a subsidy to purchase coverage in the public insurance exchange. But, as a small employer not subject to the employer penalties, there are no financial consequences.

Because of the complexities, employers are encouraged to review their employee count and other pending health care reform legislation with a qualified advisor.

Chuck Whitford is a client advisor at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7257 or chuck.whitford@jrgadvisors.net.

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Most employers offer a defined benefit plan, where they select one or two health insurance options to offer their employees. This approach is being replaced by defined contribution plans.

“Under a defined contribution plan, the employer is choosing a fixed dollar amount for employees and they use this money to purchase their benefits. Employees can select from multiple options, not just the traditional one or two plans, and personalize their selections based on their needs,” says Mary Spicher, sales executive with JRG Advisors, the management arm of ChamberChoice.

Smart Business spoke with Spicher about utilizing defined contribution plans.

Why the shift to define contribution plans?

The shift is directly related to health care reform and an effort to reduce insurance costs. This is not a new concept; for the past 20 years most employers have used a defined contribution plan for retiree benefits. Retirees are given a defined amount of income to apply toward defined contribution 401(k) plans, removing employer risk and allowing employees to make investment decisions based on their needs.

In the 1990s, rising costs led companies to evaluate retiree health plans and cap the amount they pay for benefits. As costs continued to rise, companies declined to raise the capped amount, creating a defined contribution health plan. This has now migrated to active employee health plans.

How do these plans work?

Employers can control costs and keep expenses more predictable from year-to-year. A defined contribution plan creates a consumer-driven health plan where employees use the employer’s defined contribution to purchase health insurance specific to their needs. The employer can keep the defined contribution the same for all or use a tiered structure where employees pay the difference for more expensive plans and benefits. Exchanges, including benefit options with low to high deductible plans combined with a health savings account, copayments and ancillary products, were developed so employees can purchase plans with defined contributions.

An employer can change the defined contribution by a set amount annually, regardless of the actual plan increase, or simply keep it the same based on its financial stability. The decision to alter benefits plans — i.e. increase the deductible, change the copayments on medical and prescription drugs, etc. — is the employee’s responsibility.

What’s the effect on ancillary products?

The one-stop shopping through exchanges simplifies administration and allows employees to purchase ancillary products as part of their health plan. The convenience predicts substantial growth in everything from short- and long-term coverage to pet insurance.

Insurance is viewed as protection of an employee’s income and assets against unpredictable events. If employees get sick, they use their health insurance. If they need time off work for an illness or accident, they have short-term or long-term disability insurance. Some expenses for a serious illness like cancer might not be covered by the employee’s health plan. And, if the employee were to die from the illness, life insurance protects the family financially.

What does health care reform mean for the future of defined contribution? 

Employers are deciding whether to continue to offer a health plan, and if so, what type, based on the new legislation and cost. So, employees may become more familiar with a defined contribution health plan through the public insurance exchanges. Products sold through the state or federal exchanges will be limited to essential health benefits or a benchmark plan for health, dental and vision. Health plans in a private health insurance exchange offer more inclusive coverage.

Bottom line, defined contribution is the future. Employers have been waiting to see how reform affects rising costs before changing their traditional thinking. Early indications predict that health care reform won’t eliminate increases, so providers still need to deliver more efficient care, especially with high-cost cases. However, defined contribution, consumer-driven plans are helping employers control their costs.

Mary Spicher is a sales executive at JRG Advisors, the management arm of ChamberChoice. Reach her at (800) 377-3539 or mary.spicher@jrgadvisors.net.

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Your relationship with your insurance and employee benefits advisor is an important aspect of your business.

“Your advisor should take the time to learn about your business so he or she can find the right solutions for your needs,” says Amy Broadbent, vice president at JRG Advisors, the management arm of ChamberChoice. “The goal should be working together to implement a long-term strategy for your business.”

Smart Business spoke with Broadbent about what to look for when selecting an insurance and employee benefits advisor.

Why is choosing the right insurance and employee benefits advisor so important?

Today’s demanding environment dictates a change in the way you purchase and manage your insurance programs. Securing the best insurance and benefits package for your business begins with planning. Your advisor should be a partner who provides ongoing assistance, consultation, and service that will help you control expenses and choose the best plans for your company’s needs. A consultative advisor will be engaged with you and your business throughout the year — not only to deliver your renewal.

What should you look for in an advisor?

The current benefits arena requires far more than brokering quotes from multiple insurance companies. The value proposition of a successful advisor must encompass more in order to bring value to your employee benefits management and insurance programs. You need an advisor who will:

  • Analyze your risks and make cost containment recommendations.

  • Evaluate, negotiate with and recommend insurance companies and business partners based on a rigorous selection criteria and performance objectives.

  • Implement an action plan to control costs.

  • Offer resources for your employees when they have benefits questions and claim problems.

  • Promote a healthy work environment for you and your employees.

  • Research and recommend possible technology solutions.

  • Ensure you are compliant with health care reform, COBRA, HIPAA, FMLA, Medicare, ADA and state-specific legislation.

Employee satisfaction is paramount to retaining top employees and, ultimately, your success. An advisor should help you measure employee satisfaction and engagement,and offer strategies to improve these areas. Employee communications are critical. Many employees do not take full advantage of their benefits because they do not understand them. Your advisor should help you educate employees about their benefits and how to best utilize them; plus, help employees understand how various laws such as health care reform, COBRA and FMLA impact them and their families. Is your advisor creating customized education materials, tools and communications to help streamline and simplify things, not only during open enrollment but also on an ongoing basis throughout the plan year?

When selecting a qualified advisor, what should you specifically ask?

When seeking an advisor, request referrals from existing clients. Also inquire about the advisor’s relationships with insurance companies. Often overlooked, this should be taken into consideration as the advisor will have an easier time resolving issues, securing coverage and getting things accomplished in a timely manner with companies with which he or she has positive working relationships.

Also, ask your advisor to explain how he or she is compensated. A reputable advisor will be happy to disclose this information and will not make recommendations based on insurance company commission or bonus money. Instead, he or she will have the client’s best interest at heart regardless of the payment from any given insurance company. Your advisor relationship is an important aspect of your business and you have a right to know how he or she is compensated for the work done for you.

The main priority for an advisor should be obtaining the best possible plans at the most competitive prices, while providing the best possible client service, technology risk management and cost containment. Not all advisors are created equal. Choosing an advisor to be your long-term strategic partner will make working with him or her much more meaningful to your business.

Amy Broadbent is a vice president at JRG Advisors, the management arm of ChamberChoice. Reach her at (412) 456-7250 or amy.broadbent@jrgadvisors.net.

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Young adults ages 19 through 29 are the largest growing age group in the U.S. at risk for being uninsured. Officials estimate this age group accounts for approximately 13 million of the 47 million Americans living without health insurance.

“As young adults transition into the job market, they often have entry-level jobs, part-time jobs, or jobs in small businesses and other employment that typically come without employer-sponsored health insurance,” says Keith Kartman, client advisor at JRG Advisors, the management arm of ChamberChoice.

The Dependent Insurance Coverage provision in the Patient Protection and Affordable Care Act (PPACA) was designed to address the millions of young adults currently uninsured.

Smart Business spoke with Kartman about how dependent coverage laws work.

What are the dependent coverage laws?

The PPACA requires private insurers that offer dependent coverage to children to allow young adults up to the age of 26 to remain on their parent’s insurance plan.

A number of states also require insured health plans to cover dependents past age 26. Every group health plan purchased by employers from commercial health insurers and health maintenance organizations must comply with Pennsylvania’s dependent coverage laws. However, self-funded plans subject to the Employee Retirement Income Security Act are exempt from this dependent coverage law. Pennsylvania’s dependent coverage only applies to medical. This excludes dental and vision only, hospital indemnity, accident or specified disease only, Medicare supplement, long-term care and individual health insurance policies.

Who qualifies for this dependent coverage? 

Regulations specify a young adult can qualify for this coverage if he or she is no longer living with a parent, is not a dependent on a parent’s tax return or is no longer a student. Both married and unmarried young adults can qualify, although that coverage does not extend to a young adult’s spouse or children.

The law also states that young adults can only qualify for dependent coverage through group health plans in place prior to March 23, 2010, if they are not eligible for another employer-sponsored insurance plan. In other cases, a young adult can choose to remain insured through a parent’s dependent coverage, even if the young adult is eligible for other employer-sponsored coverage.

What do employers need to know?

The Department of Health and Human Services has stated that young adults gaining dependent coverage under the PPACA can’t be charged more for coverage than similar individuals who didn’t lose coverage due to the end of their dependent status. Also, young adults newly qualifying as dependents under the law must be offered the same benefit package as similar individuals who were already covered as dependents.

What are the tax implications?

Treasury Department-issued guidance on the tax benefits states that employer-provided health coverage for an employee’s child is excluded from the employee’s income through the end of the taxable year in which the dependent turns 26. The benefit applies regardless of whether the plan’s coverage is required or voluntarily.

Key elements include:

  • The tax benefit continues beyond extended coverage requirement. Some employers may decide to continue coverage beyond the 26th birthday. In that case, if an adult child turns 26 in April but stays on the plan through Dec. 31 — the end of most people’s taxable year — all health benefits that year are excluded for income tax purposes.

  • Broad eligibility. This tax benefit applies to various workplace and retiree health plans, as well as self-employed individuals qualifying for the self-employed health insurance deduction on federal income tax returns.

  • Health premium shares for both employer and employee are excluded from income. In addition to excluding any employer contribution toward qualifying adult child coverage from income, employees can receive the same benefit by contributing toward the cost of coverage through a cafeteria plan. The IRS states that a cafeteria plan allows employees to choose from two or more benefits consisting of cash or qualified benefit plans.

Keith Kartman is a client advisor at JRG Advisors, the management arm of ChamberChoice. Reach him at (412) 456-7010 or keith.kartman@jrgadvisors.net.

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According to The World Health Organization, the United States spends more annually on health care than any other country in the world. Many health problems are a direct result of smoking, lack of exercise, poor diet, excess stress and other unhealthy lifestyle choices.

An unhealthy employee costs U.S. employers an average of $670 per year and obesity accounts for about $400 of those costs, according to the Society of Human Resource Management.

“Through workplace wellness programs, an employer can raise awareness on leading health issues and offer options to help impact the overall health of their employees,” says Renay Gontis, communications coordinator at JRGAdvisors, the management arm of ChamberChoice.

Smart Business spoke with Gontis about how to create a workplace wellness program to lower health benefit costs over time.

What is a workplace wellness program?

Workplace wellness programs are made up of long-term strategies and activities geared toward reducing benefit costs through improved employee health. Wellness programs may include education classes, onsite health screenings, subsidized use of fitness facilities, healthier options in vending machines, and internal policies designed to promote and encourage healthier behavior.

Individual employee health is directly tied to employee morale, absenteeism and productivity — healthier employees are less likely to miss work, be more productive during the day and be happier overall. Improved employee health can also reduce health plan utilization, which will, in turn, lower health benefit costs over time and improve a company’s bottom line.

What are common wellness initiatives?

Common initiatives include onsite flu shots, general health and safety communications for employees, weight management programs, smoking cessation, health fairs, health risk assessments and walking programs. Learn about your employees to develop a program based on their goals, risks and needs. In addition, employers are offering incentives, as well as connecting participation to the medical premium cost.

How will the Patient Protection and Affordable Care Act (PPACA) impact health insurance and employee wellness decisions?

PPACA includes enhanced wellness incentives through health insurance plan designs that reward targeted wellness participation and the attainment of specific improvement in health outcomes.

How does PPACA encourage wellness incentives into health plan design?

Specifically, proposed regulations provide for increases in the maximum reward or penalty from 20 to 30 percent of the total cost of employee coverage and increase the reward or penalty from 30 to 50 percent for tobacco cessation programs in 2014.

How do you create a wellness program?

To develop a successful program:

  • Gain upper management support.  Management must understand the benefits for employees and the organization, and be willing to put funds toward development, implementation and evaluation.

  • Create a wellness team. The team — made up of all levels of employees — will be responsible for developing, implementing and evaluating the results of the program.

  • Tailor initiatives to employee needs. Gather data through internal focus groups or surveys to help assess your employees’ health interests and risks.

  • Establish an annual plan. An annual operating plan should include a mission statement for the program, along with measurable short- and long-term goals.

  • Create a supportive environment. It is important to provide ongoing encouragement, support, opportunities and rewards to keep employees engaged.

  • Consistently evaluate outcomes. Throughout the program, especially at the end, review whether goals and objectives have been achieved. It’s important to adjust as needed to achieve the most favorable outcome for the employee and company.

If an employer is interested in starting a wellness program, contact your adviser and insurance company for ideas on cost-effective wellness programs. Most insurance companies offer their own programs, which can be used individually or in conjunction with your company’s customized program.

Renay Gontis is the communications coordinator at JRGAdvisors, the management arm of ChamberChoice. Reach her at (412) 456-7000 or renay.gontis@jrgadvisors.net.

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Insights Employee Benefits is brought to you by ChamberChoice

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