Benefits Resource Group

Will One-Third of Employers Drop Health Coverage in 2014?

2011-07-29T16:04:00.000-04:00

By Charles J. Farro

That’s what a 2011 McKinsey & Company survey predicts. Of more than 1,300 employers surveyed, 30 percent responded that they will "definitely" or "probably" stop offering employer-sponsored health insurance after 2014.

That is significantly higher than the Congressional Budget Office (CBO) estimation that 7 percent of empoyees currently covered by employer-sponsored plans would be forced to switch to subsidized exchange policies that year. The discrepancy between the CBO’s numbers and the McKinsey findings throws yet another wrench into the health care reform controversy.

Not surprisingly, the White House and many Democrats are questioning the validity of the study and claiming that the numbers are grossly overstated. While McKinsey admits that their survey found "a bigger effect than expected," they are standing by the results. In their defense, spokeswoman Yolande Daeninck said in a recent interview , "The article presents the results of a survey of more than 1,000 companies on U.S. health care reform in February 2011. The article reflects the opinions of the respondents at that point in time. Obviously the survey is only one indicator of the employers’ view of likely future actions. Many uncertainties remain, and the actions and timing of actions of employers will ultimatley depend on numerous variables."

Of course, one of those variables will be an employer’s ability to attract and retain employees without a company-sponsored health plan. While dropping coverage and paying the penalty may make financial sense on the surface, employers will have to carefully weigh the impact of that decision on other areas of their business. Interestingly, McKinsey’s consumer research found that more than 85% of employees – and almost 90% of higher income employees – would stay with an employer that dropped health coverage.

While a lot can happen between now and 2014, it is clear that health care reform will continue to meet with resistance and may not ultimately achieve the goals of its supporters. Our team at BRG will continue to stay on top of new developments and bring you all of the information and guidance you need to make the tough decisions along the way.

Chuck Farro is Chairman, CEO and co-founder of BRG. He manages BRG’s operations and directs marketing services. You can contact Chuck by phone at 216-393-1800 or by email at cfarro@benefitsrg.com.

New Responsibilities and Risks for Plan Administrators under Participant Disclosure Rules

2011-05-05T15:55:00.000-04:00

By Linda A. Cahill, CLU, ChFC, RPA

Since the Department of Labor (DOL) first issued proposed regulations requiring the disclosure of information to participants in self-directed individual account plans, including 401(k) plans, plan administrators and third party vendors have been wrestling with the implications of the new requirements. Now that final regulations have been released and will apply to plan years beginning on or after November 1, 2011 (January 1, 2012 for calendar year plans), it is clear that all parties – especially plan administrators – have increased responsibilities and fiduciary risks.

What the Final Regulations Require

Under the final regulations, plan administrators for any ERISA participant-directed individual account plan (excluding IRA’s, SEP’s and SIMPLE’s) must make disclosures in two main categories: plan-related information and investment-related information.

Click here to view a summary chart of the plan disclosure requirements.

Most of the disclosures must be made before participants first become eligible to make an investment election under the plan, and then annually thereafter. However, there are some specific fee disclosures that must be communicated quarterly.

More Fiduciary Responsibilities and Risks

The new regulations require plan administrators to regularly disclose information to participants and beneficiaries far beyond what most are disclosing today. Several provisions of the new rules create a significant burden, and added fiduciary risk, for plan administrators.

For example, the regulations define "participants" to include all eligible employees, not just those who are currently participating in the plan. Because most plan administrators do not typically distribute disclosures to eligible non-participants, the new regulation places an increased administrative burden – and potential costs – on plan administrators.

In addition, plan administrators must provide advance notice of all plan-related changes, not just those that are deemed "material". The "material" requirement was in the proposed regulations, but dropped in the final regulations based on the DOL’s assessment that all changes are "material". The volume and frequency of communication required to comply with this requirement could overwhelm both plan administrators and participants.

The DOL does provide some flexibility, allowing information to generally be distributed either by paper or electronically. However, the requirement to provide information in a format that allows participants to compare investment options is cumbersome, to say the least. The DOL has provided a model comparison chart to assist plan administrators and their vendors with this requirement but, depending on the number and variety of investment options offered, preparation will be a challenge.

Ensuring Your Investments and Vendors are Competitive

While the new regulations allow plan administrators to delegate some responsibilities to other individuals and entities, failure to meet the requirements could be considered a breach of fiduciary duty, exposing the plan administrators to remedies under ERISA. More than ever, plan administrators must carefully evaluate, select and monitor their third party vendors. Not only is their ability to accurately comply with the new disclosure requirements critical, but their fees and expenses will be more visible than ever before.

Please let us know if we can assist you in preparing for compliance with the new regulations, or in evaluating third party vendors for your plan. Your choice of partners can have an enormous impact on your ability to comply and your potential fiduciary risk.

Linda Cahill is a Principal with BRG. You can contact Linda by phone at 216-393-1812 or by email at lcahill@benefitsrg.com.

Securities and Investment Advisory Services Offered through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC; BRG is independently owned and operated; This material is intended for informational purposes only and is not intended to replace the advice of a qualified tax advisor; Product guarantees are subject to the claims paying ability of the issuing insurance company; Variable life insurance products are long-term investments and may not be suitable for all investors. An investment in variable life insurance is subject to fluctuating values of the underlying investment options and entails risk, including the possible loss of principal. The performance of your account will vary and you may receive more or less than the amount invested.

IRS issues PPACA guidance on W-2 reporting

2011-03-31T10:03:00.000-04:00

The Internal Revenue Service has issued interim guidance to employers on the informational reporting requirements on each employee's annual Form W-2 of the cost of the health insurance coverage they sponsor for employees.

The IRS is also asking for comments on the interim guidance. The IRS emphasized that the new reporting to employees is for their information only, to inform them of the cost of their health coverage, and does not cause excludable employer-provided health coverage to become taxable; employer-provided health coverage continues to be excludable from an employee's income, and is not taxable.

The Patient Protection and Affordable Care Act provides that employers are required to report the cost of employer-provided health care coverage on the Form W-2.

Notice 2010-69, issued last fall, made this requirement optional for all employers for the 2011 Forms W-2 (generally furnished to employees in January 2012).

In the guidance, the IRS provided further relief for smaller employers (those filing fewer than 250 W-2 forms) by making this requirement optional for them at least for 2012 (i.e., for 2012 Forms W-2 that generally would be furnished to employees in January 2013) and continuing this optional treatment for smaller employers until further guidance is issued.

Using a question-and-answer format, Notice 2011-28 also provides guidance for employers that are subject to this requirement for the 2012 Forms W-2 and those that choose to voluntarily comply with it for either 2011 or 2012.

The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage. The 2011 Form W-2, prior IRS Notice 2010-69 deferring the reporting requirement for 2011, and Notice 2011-28 containing the new guidance are available on IRS.gov.

The notice provides interim guidance that generally applies beginning with 2012 Forms W-2 (that is, the forms required for the calendar year 2012 that employers generally are required to furnish to employees in January 2013 and then file with the Social Security Administration. Employers are not required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2013.

See Notice 2010-69. However, any employers that choose to report earlier (on the 2011 Forms W-2 generally furnished to employees in January 2012) may look to this notice for guidance regarding that voluntary earlier reporting.

The notice also provides additional transition relief for certain employers and with respect to certain types of employer-sponsored coverage. This transition relief will continue at least through the 2012 Forms W-2 that are required to be furnished to employees in January 2013.

In other words, those employers for whom the additional transition relief applies, including smaller employers that are required to file fewer than 250 2011 Forms W-2, will not be required to report the cost of health coverage on any forms required to be furnished to employees prior to January 2014.

The transition relief will continue until the issuance of further guidance.

Setting self-funding strategy

2011-02-23T15:17:00.000-05:00

Small employers increasingly turning to self-funding to ease cost increases

By Samuel H. Fleet

February 1, 2011

Self-funding used to be exclusively for big companies that had a solid cushion of assets, plenty of cash flow and a large employee population across which to spread risk.

In the past few years, however, more small and midsize employers are finding that self-funding gives them the flexibility they are looking for in health care benefits for employees.

With the continuing rise in medical care costs driving fully insured premiums higher and more options available to take the volatility out of risk, today more employers are looking at self-funding as an escape hatch to avoid the anticipated consequences of the Patient Protection and Affordable Care Act.

Under PPACA, insurers face new, costly requirements like providing free preventive care and covering young adults through age 26. They also will operate under restrictions, such as no annual or lifetime caps, and the requirement that they spend 80% to 85% of premiums on health care services.

At the same time, insurers will continue to build a profit margin into their products; they will structure coverage to suit their marketing strategy, rather than an individual company's needs, and will present employers with already-contracted provider networks of their choosing.

None of these factors will lead to lower premium costs. In fact, Aon Hewitt estimates that premiums will rise 8.8% in 2011, the highest increase in five years.

To get out from under these costs and gain the flexibility to create a benefits program they can control, many employers are taking a second look at self-funding.

Today, self-funded plans cover almost 41 million workers - 59% of the private-sector workforce, according to federal statistics. Taking into account family members, self-funded plans cover about 70 million Americans.

It's also worth noting that the 2010 Kaiser Family Foundation survey on employer-provided health benefits identified a jump in small and midsized companies turning to self-funding. Between 2008 and 2010, the rate of companies with fewer than 200 workers that self-funded health care rose from 12% to 16%, while the rate of companies with 200 to 999 workers increased from 47% to 58%.

Self-funding options

When an employer decides to self-fund, there are two options to consider. The first option is to self-fund on their own; to do that, most companies purchase medical stop-loss insurance.

By setting a ceiling for individual costs, aggregate costs or both, an employer can draw a line in the sand to make sure unexpected expenses do not exceed the resources to pay them. Stop-loss insurance is an economical way to protect against the unpredictable nature of health care costs that comes with having a small pool of workers.

One of the newest options in self-funding is to join other small and midsized self-funding companies in a captive insurance structure to pool risk and provide economies of scale. Because the structure often takes a regional approach, local provider networks can be arranged that make sense for each employer.

Best of all, the captive structure returns excess premiums to members of the captive on a pro-rata basis, rewarding employers that do an effective job of managing health risks.

Overall, the benefits to a self-funded captive include:

* Plan design flexibility.

* Protection to large groups by pooling the most volatile risk.

* Cohesive plan administration.

* Tiered structure of costs that allows employers to choose varying degrees of member services and interventions.

* Eliminates the requirement and cost to interview, select, monitor and coordinate multiple vendors necessary to effectively manage health care risk, services and cost.

* Retained carrier profits (positive experience).

Options to control risk

One reason companies used to steer clear of self-funding is the danger in any one year of high medical costs. With smaller workforces, there are fewer healthy people to dilute the costs if someone needs expensive care.

Today, however, there are a number of options to make self-funding less of a gamble, while still retaining plan flexibility and cost-effective care:

1. Provide for organ transplants separately. The number of organ transplant recipients is increasing, with more than 180,000 people living with a transplanted organ by the end of 2007. With costs from surgery and post-operative care that can quickly exceed $250,000, employers can protect their budgets by buying organ transplant insurance.

2. Control specialty pharmacy costs. As drugs become more expensive - especially for treatment of cancer and chronic diseases - many employers are contracting with pharmaceutical benefits management experts. They can reduce costs by arranging for discounts, eliminating the added costs charged by doctors who purchase drugs and then administer them, and using rigorous utilization review.

3. Manage dialysis treatment carefully. In 2007, 365,000 people were undergoing dialysis at a cost of $35 billion. With the cost of treatment ranging up to $50,000 per month, using dialysis management specialists is one way to make sure patients get the treatment they need in the most economical way possible. Among their strategies are vetting invoices against usual and reasonable rates, arranging for home dialysis when appropriate and obtaining discounted drug prices.

4. Focus on chronic conditions. Diabetes, heart disease and other chronic conditions can become costly when patients do not follow their doctor's advice. By arranging for patient-focused case management or providing incentives for workers to comply with treatments, an employer can not only reduce costs, but also help their workers live healthier lives.

5. Use administrative audits. Periodic pharmaceutical and medical audits can identify anomalies, such as double-billing and inappropriate treatments. They can also be used to identify trends that can be addressed through wellness programs and other strategies to lower health care costs.

While the full scope of changes required under PPACA will not be clear until all of the regulations are written and put into place by 2014, most experts agree that the next few years will be a time of rising health insurance costs.

For employers who see their health benefits as an important tool for attracting and retaining a talented workforce, it is important to find cost-effective strategies for continuing to provide coverage. By exploring self-funding options, including joining a captive structure and taking steps to mitigate risk, employers can position themselves to take control of their benefits and rein in costs.

Why Survey Your Employees? Because You Can’t Afford Not To

2011-01-17T08:29:00.000-05:00

As the cost of employee benefits continues to increase, employers feel the pressure to maximize the return on every benefits dollar they spend. Most companies look to their consulting and legal advisors, as well as benchmarking studies, to help them determine what benefits will appeal to their current and prospective employees. However, many companies never consider the input of their employees.

Employers are often nervous about employee surveys in general, and particuarly regarding their benefits. Opinion Research Corporation recently published the results of a "survey about surveys." They found that only 40% of companies conducted any kind of employee survey at all. Yet, of those that did, 80% of the employees felt good about being asked for their opinions and believed their performance improved as a result.

So, if employees actually like to be asked for their opinions, how can a company use a survey about employee benefits to their best advantage? How can they gather input without raising unrealistic expectations and generating data that is actually useful in the plan design and implementation process. The answer is through careful survey design, execution and communication.

What You Can Learn From an Employee Benefits Survey

An employee benefits survey is designed to capture employees’ understanding and perceptions of your company’s benefit package, including:

• How well do your employees understand their existing benefits plan?

• How important are individual benefits to your employees?

• How satisfied are they with their benefits?

• How competitive do they perceive your benefits to be?

• How effective are your benefit communications?

• What additional benefits would employees like to have?

• What benefits are they willing to pay for?

A survey can help you determine which benefits are most important to employees and if your benefit dollars are being spent "wisely." You can also determine if employees are willing to pay for new benefits, and if so which would have the broadest appeal.

Utilizing quantitative data captured by your survey, you and your consultant will be better equipped to design and implement a benefits package that strategically allocates benefits dollars appropriately. The right benefit package will make your company more attractive to quality employees, while simultaneously helping you apply benefit dollars judiciously and control costs. Studies show that effectively communicating the value of benefits actually increases employee satisfaction and reduces turnover.

Surveying Beyond Benefits

While it’s a good idea to keep your survey fairly focused, it may also be a good opportunity to gather some additional employee input. For example, you may include a question in your survey about the employee’s general experiences working at your company.

Whatever your survey topics, it’s important to communicate the results to your employees and share with them any changes you are making, or contemplating making, as a result of their input. It’s critical that employees know that you heard them, even if you aren’t taking all of their suggestions.

Learn More

If you are interested in conducting a survey of your employees, BRG can help you:

• Determine the right questions to ask,

• Implement the survey via internet or paper with minimal effort from your staff,

• Interpret and communicate the results, and

• Determine any changes you may want to consider in your plan design and/or communications.

Give us a call. We look forward to assisting you.

Ross W. Farro is a Principal with BRG and specializes in assisting clients with their Health and Wellness needs. You can contact Ross by phone at 216-393-1820 or by email at rfarro@benefitsrg.com.

2011-01-03T09:53:00.000-05:00

What’s New with Health Care Reform? More Than You Think

By Cindy LaQuatra, RHU, GBA

Whether the 2010 mid-term elections will present a signficant opportunity for future changes to federal health care reform legislation remains to be seen. In the meantime, millions of U.S. employers are preparing for the first round of compliance requirements in 2011.

While there has been no change in the law since the Patient Protection and Affordable Care Act (PPACA) was passed, much guidance and interpretation has been – and continues to be – published on the subject. Staying on top of the relevant information can be a challenge for employers, particularly when the federal regulations seemingly conflict with state regulations, such as the dependent age extension for Ohio employers. In this article, we will review some of the recent guidance and hot topic discussions to help you with your company’s compliance efforts.

Key Provisions Effective for 2010/2011

For most employer plans, the key federal provisions that must be implemented for 2011 include:

•

Elimination of most annual and lifetime plan limits

•

100% Preventive Care coverage for non-grandfathered plans

•

Specific coverage for emergency services

•

No pre-existing limits for members under the age of 19

•

Extension of dependent age limit to age 26 (see State vs. Federal Dependent Age Limit Extension below)

•

Elimination of over-the-counter medications as a reimbursable expense under Flexible Spending Accounts (FSAs), Health Reimbursement Accounts (HRAs) and Health Savings Accounts (HSAs), unless the employee obtains a prescription.

The requirement for employers to report the cost of coverage under an employer-sponsored group health plan on each employee’s W-2 form has been delayed until 2012. Reporting this information for tax year 2011 is optional. The government intends to use this information to calculate the "Cadillac health plan tax" by 2018.

For a detailed Health Care Reform implementation timeline visit the

HealthCare.gov website

State vs. Federal Dependent Age Limit Extension

Both the federal government, through the PPACA, and the state government, through the budget passed in July of 2009, have enacted legislation allowing older age children to remain covered under their parents’ coverage. The two laws are not exactly the same.

The federal law applies to all group and individual plans, including self-funded ERISA plans, and requires plans to extend the eligibility age for dependents to age 26. The state law does not apply to self-funded ERISA plans; however, self-funded public entities such as city or county governments are subject to the state law. The state law requires that employees be allowed to pay for extending

coverage for children until age 28. There are also many differences in the details of which dependents the extension applies to and how it must offered.

Virtually all employers must comply with the federal law; those with insured plans generally must comply with both. The Ohio Department of Insurance (ODI) has issued an

FAQ

addressing the differences in the laws and how they should be coordinated.

Grandfather Status: Making the Decision

Group health plans in existence on March 23, 2010 when PPACA was enacted, are eligible to retain "grandfather status" and, as a result, enjoy certain exemptions and special treatment under various provisions of the law. However, as many employers have discovered, the advantages of grandfather status must be weighed against the limitations placed on the employer's ability to make cost containment changes to the plan without jeopardizing its status.

In general, any of the following changes which reduce benefits or increase costs for participants would cause a plan to lose its grandfather status:

• The elimination of all or substantially limit benefits to diagnose or treat a particular condition;

• Any increase in a percentage cost-sharing requirement, such as an individual's coinsurance, above the amount that applied on March 23, 2010;

• An increase in a fixed-amount cost-sharing requirement that applied on March 23, 2010 other than a copayment (for example, deductible or out-of-pocket limit) by a total percentage that is more than the medical inflation percentage rate plus 15%;

• An increase in a fixed-amount copayment that applied on March 23, 2010 by more than the greater of $5 (increased for medical inflation) or the medical inflation percentage rate plus 15%;

• A decrease by an employer in its contribution rate towards the cost of any tier of coverage for any class of similarly situated individuals by more than 5% below the employer's contribution rate for the coverage period that included March 23, 2010; or

• The imposition of a new overall annual limit or a decrease in the amount of an existing annual limit on the dollar value of benefits.

Grandfathered plans may also lose their status if they transfer employees to another plan or plan option without a bona fide employment-based reason for the transfer. There is a transition rule to regain grandfathered status. If a change made after March 23, 2010 causes loss of grandfathered status, that change may be revoked prior to the beginning of the first plan year beginning after September 10, 2010. If timely revoked, then the plan is considered to be grandfathered.

Mini-Med Plans and the Impact of Medical Loss Ratios

Approximately two million Americans currently have limited medical benefit plans, also known as "mini-med plans." Mini-med plans have gained popularity in recent years, especially among companies that employ low-wage, seasonal and part-time workers, and contractors. Mini-meds allow these employers to offer a health plan at a low cost to both the company and employees.

Federal health care reform requirements pose several challenges for mini-med plans, threatening their future viability as an employer-sponsored benefit. The Department of Health and Human Services

(HHS) has addressed one issue (though not effectively, according to many industry leaders), by offering insurers the ability to apply for waiver of the restricted annual benefit limits – a cornerstone of mini-med plans. While many insurers have already obtained these waivers, they are now facing another hurdle – meeting the law’s medical loss ratio (MLR) requirement. Health care reform requires that insurers spend at least 85 cents out of every premium dollar on medical claims for its large-group policyholders. For small-group and individual policies, the figure is 80 cents. The remaining 15 -20 cents of each premium dollar can be used to pay expenses that do not directly benefit customers -- like payroll, advertising, overhead and profits. Because of mini-med plans’ high expense structure relative to low spending on claims, insurers will find it difficult, if not impossible, to meet the MLR standard.

On September 30, HHS released a statement acknowledging the special circumstances involved in providing coverage to certain types of workers through mini-med plans. HHS stated that it will balance a commitment to implementing the provisions of the PPACA in a way that causes the least disruption to currently available coverage while "ensuring that consumers receive the benefits the PPACA provides," and that it will exercise discretion when drafting regulations that address the application of the MLR standards to mini-med plans. The insurance industry – as well as several large employers, including McDonalds – is actively communicating with HHS to encourage a reasonable solution.

Potential Impact of Mid-Term Elections

While the new GOP majority in the House is likely to pursue a full repeal of health care reform, the Democrat majority in the Senate and promise of presidential veto, makes a full repeal highly unlikely. It is more likely that the GOP will look to repeal pieces of the law and potentially impede implementation. Repeal efforts may be focused on some of the more unpopular provisions, including new taxes and the requirement for all Americans to carry health insurance. James P. Gelfand, director of health policy at the

United States Chamber of Commerce

, said recently that a top priority would be to alter or eliminate the provision that will require many employers to contribute to the cost of coverage for employees. The requirement, he said, would hurt job creation and increase the cost of hiring workers. Some labor unions may join employers in trying to roll back a new tax on high-cost, employer-sponsored health plans, scheduled to take effect in 2018.

Cindy LaQuatra, RHU, GBA is

a Senior Consultant in BRG’s Health and Wellness Division. If you have a comment about this article or questions regarding health care reform and your business, contact Cindy by phone at 216-393-1848 or by email at mailto:claquatra@benefitsrg.com.

Put down the 10-foot pole: Wellness is not a poisonous snake

2010-12-09T09:09:00.000-05:00

Every year, large consulting and brokerage firms conduct surveys on what companies are doing to mitigate the impact of rising health care costs.

Questions about wellness initiatives have become a standard feature in such surveys. It always amazes me to see what percentage of companies indicate that they don't have any plans to implement programs or initiatives to help employees make better lifestyle choices.

Often, these companies cite lack of time, money or resources for their failure to even consider such plans. Some even make vague and defensive statements such as, "We have no interest in wellness programs," or "Wellness programs just don't work for us."

It's certainly true that a large percentage of companies have failed to make wellness programs work financially. Two common pitfalls include a lack of commitment from senior leaders (who must function as role models) and the failure to integrate the health promotion program with the delivery of benefits and incentives.

Get off the sidelines

However, companies no longer can afford to sit on the sidelines and play the reluctant spectator. Health care costs won't ever magically decrease.

Well-planned and well-managed health promotion efforts have a proven return on investment that ranges anywhere from a $2 return for each $1 invested to more than a $6 return for $1 spent. In some cases, companies have cited $10 returned on medical expenses alone for each dollar invested.

If professionals do their homework and commit to helping employees to manage their health more effectively, their companies can expect to get at least a 200% return on their investment.

Considering that a large percentage of businesses operate on a less than 10% profit margin, that 200% return on investment is an excellent way of increasing net profits.

Nevertheless, some companies still treat wellness plans like poisonous snakes - keeping them at a distance with the proverbial 10-foot pole.

Could it be that such erroneous business decisions are made because not all facts are considered and wellness is seen only as a tool to manage health care cost? Health improvement among the workforce has a much broader impact.

By not accounting for these secondary benefits, one can easily dismiss the case for workforce health promotion - especially by senior leaders unprepared to personally demonstrate the type of lifestyle choices that a wellness program would require.

At that point, naysaers further substantiate their point by referring to the many anecdotal reports - reports that usually leave out critical facts that would invalidate them - from companies that have failed to demonstrate a positive return on investment.

Although, a comprehensive and fully integrated wellness program can have a significant impact on future medical claims, the financial impact generated through the secondary benefits is in actuality multiple times greater than the cost savings generated through lower medical claims.

Research over the last 10 years has repeatedly confirmed that productivity gains outweigh health care cost savings of as little as two- and as much as four-fold.

In case you are still hanging on to the old and outdated methods of managing health care cost, let me be very clear on this: absenteeism and presenteeism numbers are only positively affected if the overall health of the employee improves.

The kind of synergy effects necessary to truly take your company to the next level and protect it from health care costs cannot be achieved through any other cost cutting strategy (such as shifting cost, reducing benefits or eliminating access.)

Only when you make the required paradigm shift and invest in the health of your employees will you experience changes in productivity.

Once you combine the impact a health promotion program has on health care cost and productivity (as well as other cost drivers such as workers' compensation, short-term and long-term disability, accident rates and even overtime and training costs) it becomes a no-brainer and perhaps even a mandatory business pursuit.

There are absolutely no reasons left not to make health promotion a top focus. Business leaders who still opt not to implement a health promotion program are knowingly putting their companies and their employees in harm's way.

Based on what we know today, there are absolutely no reasons left not to make health promotion a top focus. Business leaders who still opt not to implement a health promotion program are knowingly putting their companies and their employees in harm's way. -M.P.

Contributing Editor Michael Puck, SPHR, is the benefits innovation leader for a global defense, security and aerospace company, author of "The High Road - Total Health Care Transformation Program" and founder of www.8020wellness.com.

5 ways GOP might untrack health reform

2010-11-15T15:04:00.001-05:00

Flush with victory from election night, Republican strategists are delving into possible measures to repeal or significantly hamper existing health care reform legislation.

As the smoke cleared Wednesday morning the new political landscape for 2011 began to reveal itself. It showed that Democrats retained a narrower grip on the Senate, by a projected 53 to 47 margin over Republicans, with some votes still being counted at this writing. In the House, projections say the GOP gained 60 seats for a controlling 243 members vs. 192 for Democrats.

What’s more, incoming Republicans bring with them the strong sense that voters want them to throw a wrench in the health reform machinery.

In a USA Today/Gallup poll of 1,500 likely voters released Nov. 1, 38% of Republicans said repealing the health care law should be the top legislative priority next year.

How might they go about it? After speaking with experts, we’ve compiled the following list of five things Republicans might do to disrupt the implementation of the Patient Protection and Affordable Care Act.

1. "Repeal and replace." Despite presumptive Speaker of the House John Boehner’s call for repeal, Daniel Sulton, partner with Ford & Harrison LLP, believes this is a long shot.

In the realm of possibilities, this option "probably ranks pretty low on the list," he says. After all, the Republican Party does not have sufficient votes to push repeal through the Senate, and even if they did the President would exercise his veto power and neither Houses of Congress would be able to override a veto.

"A lot of [the "repeal and replace" language] was campaign rhetoric. Realistically, the President is not going to sign legislation that significantly alters one of his signature legislation," says Steve Wojcik, vice president of public policy at the National Business Group on Health. So not until 2012 would they likely have the ability to repeal the entire law.

2. A piecemeal approach. The President himself says he’s willing to "tweak" aspects of the law, and most likely this is the approach to hinder reform that would have the greatest impact and is most likely. Provisions most likely to be addressed would be the individual mandate, the "play or pay" requirement for employers, and the medical loss ratios.

Republicans in Congress may even garner support from more conservative Democrats in amending the law.

"I think we’ll see a lot of compromise, a lot of mending of the legislation or perhaps even releasing certain provisions, but certainly not a repeal of the entire legislation," says Sulton.

3. "Starvation." In what Sulton refers to as "starvation," House Republicans could decide not to appropriate any funds for further development for certain regulations, which would put that aspect of the law in limbo.

By delaying a provision, as seen with the W-2 reporting requirements, fees could be delayed, reduced, or eliminated altogether.

The issue is whether it will have a mitigating effect on the implementation of health care reform, wonders Sulton.

4. Legal challenge and investigations. Legal suits have already been filed by 21 states, declaring, primarily, that the individual mandate is unconstitutional. This issue will most likely make its way to the Supreme Court, experts predict, though they don’t expect it to slow the implementation process.

Additionally, the government oversight committee can subpoena and investigate administration agencies. They may, for example, examine more closely how the White House struck deals with the health care industry, specifically with hospitals and physicians.

5. State-level intervention. Due to large GOP gains in gubernatorial and state legislature contests, Republicans could begin to pass mandates stating that the states would not be obligated to enforce an individual mandate or incur additional expense on health care reform.

Further, the Republican majority of Governors are tasked with implementing Medicaid expansions as well as the state-run health insurance exchanges for small businesses and the uninsured. They could decide how many resources go into developing exchanges with the option not to develop exchanges and leave their set-up to the Federal government.

"One important factor in the election was the pick-up at the state level. The states have a significant role in implementing this health care law, in terms of the exchanges and the Medicaid expansions. The elections have profound implications at the state level possibly even more than the congressional level here in Washington," Wojcik informs.

Whether this will be a top priority in Congress remains to be seen. Sulton guesses that Congress will attempt to address unemployment at the same time as health care reform due to the intertwined nature between the two.

Wojcik believes Congress will primarily focus on jobs, and adds that it wouldn’t be wise to spend too much time on health care repeal or retardation because if they do, then they will be in the same position the prior congress was in.

After all, exit polls show that while health care reform was an issue, it was not a decisive factor as was the rebuilding the economy and creating more jobs. He concludes that Republicans will work "around the edges," delaying the implementation of the landmark legislation. They may even add amendments to buy insurance across state lines while delaying, reducing or even eliminating certain taxes and fees in reform.

In both the short and long term this means confusion and great uncertainty for employers, says Sulton. In the short term, employers are unsure whether upcoming implementation dates will come to pass, but Sulton expects them to continue making changes based off current law.

In the longer term, there is uncertainty as to business strategy.

Until employers know for sure what alterations Republicans will make to health care reform’s structure and implementation, they will wait and see, says Sulton, leaving them in an uncomfortable position. Still the goal for conservatives is added flexibility for employers, says Sulton, who predicts that long term changes will be favorable for health plan sponsors.

"In the big picture it probably means more flexibility for employer plans," says Wojcik. "Employer plans are part of the health care coverage system that has been working so to the extent that the law created some unintended consequences, I would imagine that there would be a lot more flexibility for employer plans to continue and not be hindered," he adds.

2010-10-13T09:10:00.001-04:00

Deferred Compensation Plans Help Executives Battle Increases in Tax Rates

By Joseph R. Crea, CLU, ChFC

We’ve all felt the impact of the difficult economy over the last few years. While some impacts receive a lot of media attention – the struggling housing market, high jobless rates, etc. – others are less obvious, but can still dramatically affect our financial security.

For example, the economic climate, along with increasing federal deficits, has lead to a number of tax law changes that increase our effective tax rates including:

• Medicare contribution taxes on unearned income

• Increased hospital insurance tax

• Lower Health FSA limits

• Increases to earned and investment tax for filers over $250,000 household, $200,00 single

Nonqualified Deferred Compensation Plans (NDCPs) are an excellent way for executives and business owners to mitigate the effect of these increases while, at the same time, building long-term savings.

The Nonqualified Deferred Compensation Advantage

Nonqualified Deferred Compensation Plans provide participants with a tax deferred investment and accumulation opportunity that is not limited by qualified plan rules. Deferring taxes on the original investment and earnings until payout can generate substantially greater earnings than a similar outside taxable investment.

Of course, taxes are payable at ordinary income rates upon distribution. However, the advantage of tax-deferred accumulation still results in a better investment, even if the individual’s tax rate is higher at payout. For example, assume an executive invests $50,000 investment in an NDCP and another $50,000 in a comparable outside taxable investment. Also assume the executive has a 45% tax rate at the time of investment and a 50% tax rate at the time of distribution. After 25 years of 6% earnings, the lump sum value of the NDCP account is approximately double the fully taxed outside investment balance.

Call BRG Today

Nonqualified Deferred Compensation Plans can provide your executives and business owners with a powerful tool to accumulate long term savings and battle the effects of rising taxes. Contact BRG today to discuss plan options that meet the needs of your organzization.

Joe Crea is the President and co-founder of Benefits Resource Group. He manages the development of leading edge solutions and services for BRG clients. You can contact Joe by phone at 216-393-1818 or by email at jcrea@benefitsrg.com.

Projection: PPACA to have “moderate effect” on health spending growth rates

2010-09-15T08:58:00.000-04:00

By Kathleen Koster

September 14, 2010

U.S. health spending is expected to reach nearly $4.6 trillion by 2019, growing at an average annual rate over the next decade of 6.3%, as opposed to a 6.1% rate anticipated before reform, according to economists at the Centers for Medicare and Medicaid Services.

By 2019, health care is predicted to account for nearly one of every five U.S. dollars spent or about 19.6% of the gross domestic product, 0.3 percentage points higher than projected previously.

"In the aggregate, it appears that the Affordable Care Act will have a moderate effect on health spending growth rates and the health care share of the economy," says Andrea Sisko, lead author of the study and economist at CMS.

At the same time, she explains that "differences in spending patterns, by year and by payer, reflect reform’s many major changes to health care coverage and financing."

In 2010, CMS analysts project health spending to reach $2.6 trillion and account for 17.5% of the GDP, up 0.2 percentage point from pre-reform approximations.

This growth is driven primarily by the postponement of cuts to Medicare physician payments and legislative changes to CORBA premium subsidies, say CMS experts.

However, in 2011, public and private health spending is estimated to grow more slowly as Medicare physician payment rates are lessened (including a 23% reduction in December of 2010) and COBRA premium subsidies expire.

When an estimated 15.8 million people gain private health insurance coverage through Health Insurance Exchange plans in 2014, private health insurance spending is, predictably, expected to climb steeply. Spending growth is prophesized to be 12.8%, more than double what CMS projected in February.

This expanded coverage means overall spending is expected to increase by 9.2%, much higher than the 6.6% rate proffered pre-reform.

Public spending is expected to increase by 9.7% in 2014, while private spending is anticipated to increase by 8.6%. By 2019, private health insurance spending is predicted to account for about 32% of national health spending.

With more people insured in 2014, out-of-pocket spending is projected to decline by 1.1% instead of rising 6.4% as calculated before health care reform.

Before that time, out-of-pocket spending is predicted to slow for 2010 as more people retain private health insurance through subsidized COBRA coverage (1.1 percentage points slower than previously expected). In 2011, as the subsidies expire, out-of-pocket spending is predicted to grow at a slightly faster rate of 3.1%.

Even though out-of-pocket spending is anticipated to grow slower than previously thought until 2017, when the excise tax on high-cost employer sponsored plans is exacted in 2018, out-of-pocket spending is projected to grow at a rate of 9.6%, four percentage points faster than what CMS projected in February.

Overall, from 2015 to 2019, national health expenditures are expected to grow at an average annual rate of 6.7%, slightly less than the pre-reform projection of 6.8%.

CMS economists tie this to a reduction in Medicare spending growth, which is projected to be 1.4 percentage points lower than pre-reform predictions.

In total government expense, CMS analysts estimate that the spending brought about by new and expanded administrative roles for the federal and state governments under health reform (inclusive of HHS, state exchanges—startup and operating expenses—and Medicaid) will amount to $71.1 billion.

The administrative function for health reform at HHS is projected to cost $2.4 billion between 2010 and 2019. Separate federal and state outlays to create and operate the Health Insurance Exchanges are estimated to cost $37.7 billion.

Medicaid administration costs at the state and federal level are predicted to increase by $31 billion over the same period.

PPACA’s aim for universal insurance will come near fruition by 2019 when CMS estimates that nearly 93% of people will be insured, a level that is roughly 10 percentage points higher than the share of the population that was expected to be insured without passage of national reform.

More than half of the projected 32.5 million newly insured people are expected to gain coverage through Medicaid.

Enrollment in Medicaid and the Children’s Health Insurance Program (CHIP) is expected to increase by 21.8 million in 2014 to 85.2 million people. Significantly, by 2019, Medicaid and CHIP expenditures are estimated to represent nearly 20% of national health spending, up from nearly 18% in the pre-reform estimate.

Expanded Medicaid eligibility beginning in 2014 is expected to augment spending by 17.4% in 2014 to $634.1 billion, 11.1 percentage points faster than projected prior to reform.

PPACA isn’t the only piece of legislation expected to change health insurance spending, COBRA-related changes are projected to result in an additional 1.6 million insured and an additional $15.4 billion in spending by private health insurance in 2010.

Therefore, private health insurance spending is predicted to grow 4.3% for 2010, higher than the 2.5% projected in February.

CMS predicts that the expiration of subsidized COBRA coverage and a decline in private health insurance enrollment and spending growth due to high unemployment will bring down the rate of growth in private health insurance spending in 2011. Spending is expected to rise just 2.2% in 2011, slightly more than half of what was projected in February.

Finally, Medicare provisions in the health care reform law are expected to result, on net, in much slower Medicare spending growth from 2009 to 2019. In particular, average annual Medicare spending growth is projected to be 1.4 percentage points slower than previously predicted for 2010 through 2019.

This is attributable to cuts in Medicare payments to providers and managed care plans intended to gradually close the “doughnut hole” or the coverage gap in the Part D prescription drug benefit.

PPCA makes strange bedfellows: Medicare, corporate wellness

2010-08-31T09:01:00.000-04:00

By Lydell C. Bridgeford

Under the Patient Protection and Affordable Care Act, the Centers for Medicare and Medicaid Services is required to provide, with no co-payments or deductibles, Medicare beneficiaries with an annual wellness visit and a personalized prevention plan.

The success of the new services, which go into effect on Jan. 1, 2011, may result from whether a beneficiary, as an employee, had access to workplace wellness programs and services.

"The success of the Medicare wellness initiatives under health care reform is clearly linked to employer-sponsored wellness programs,” said Paul Bonta, associate director of policy and government affairs with the American College of Preventive Medicine, at the fifth annual forum on "ROI for Wellness and Sustainable Behavior Change."

Ideally, by the time the employee is eligible of Medicare, he or she should be familiar with participating in a wellness program, Bonta explained yesterday to attendees at the Washington, D.C. event, which was sponsored by the World Research Group.

"The participation in the annual wellness visit and personalized prevention plan will be enhanced considerably if we work to increase access to workplace wellness programs and promote wellness prior to patients joining Medicare,” he added.

The PPACA rules issued by CMS also require that the annual wellness visits include a health risk appraisal standardized by the Department of Health and Human Services.

"With respect to the HRA, it is important that we monitor this because the June 26 rule by CMS states that PPACA requires that an HRA be included in the annual wellness visits beginning on Jan. 1, 2011,” said Bonta. So far, HHS hasn’t created the standardized HRA, but the rules state that the Secretary of HHS has a year to create one.

"From our perspective, the use of an HRA in a wellness program is critical, so to move forward with an annual wellness visit that does not require the use of an HRA is something we would not support,” he added. “Some have pointed out that the National Committee for Quality Assurance already has a standardized HRA. We will probably advocate that the HHS Secretary adopt this HRA, rather than try to create a standardized HRA over the next year,” Bonta added.

ROI fatigue

At the conference, a panel discussion focused on how health reform might influence wellness programs and the concept of return on investment on the programs.

"With health reform, there is some desperation among employers that is driving them to look at positive solutions as to what works for wellness, such as examining their work culture," said Bob Merberg, wellness manager at Paychex, Inc., a New York-based company that provides payroll, human resource, and benefits outsourcing services.

A post-reform environment will bring about a movement where employers are looking beyond cost containment, instead focusing on the bigger picture on health savings costs, he said. "Still, wellness is being held to a different standard, because on some level, a lot of folks really don’t believe in it."

Wellness is part of the health care continuum. "It’s as important, if not more important, than medical procedures in which we spend 100 times more money on and never question the ROI. Our single-minded focus on ROI sometimes stands in our way of fully understanding the potential of wellness programs," Merberg said.

Pediatric, Specialty Drugs drive Rx trends

2010-08-04T08:46:00.001-04:00

Employers with prescription drug benefits should take notice that more American children are taking prescription drugs, according to the research by Medco.

In its 2010 Drug Trend Report, Medco researchers found that growth in prescription drug use among children was almost four times higher than the increase seen in the general population. The use of antipsychotic, diabetes and asthma drugs over the past nine years drove the spike.

Pharmaceutical experts point out that prescription drugs for children tend to cost more than drugs used by the elderly. "This could change the face of chronic and complex disease in the United States, significantly affecting future health care costs as these children enter adulthood," Medco analysts explain.

Analyzing 2009 data on pediatric medication use, researchers found that more than one in four insured children in the United States, and nearly 30% of adolescents (10-19 year olds), took at least one prescription medication to treat a chronic condition.

"Plan sponsors need to have comprehensive wellness and prevention programs that help identify children with those chronic conditions. The obesity epidemic is no longer just an adult problem. As a result, we are seeing more adult diseases in the 10-to-19 age group that require drug therapy," says Susan O' Connor, senior director of medical initiatives at Medco Health Solutions.

According to the research, the drug trend among children 0-19 surged 10.8% last year, more than triple the trend for senior citizens. Utilization rose 5%, far greater than the 0.2% growth among seniors.

About 13.2% of the prescription drug benefit dollars spent on children went to ADHD treatments. Still, the biggest jump in growth occurred in adults aged 20-34, where use of ADHD drugs rose 21.2%.

"We are not sure whether the continuation of ADHD treatments reflects children staying on the drugs as they get older and/or older individuals starting new drug therapy," says O'Connor.

When it comes to ADHD drugs and older individuals, plan sponsors should be mindful of their coverage management rules. "It's important for plan sponsors to be assured that ADHD drugs are properly used, because the drugs do have some recreational impact as well," she adds.

Specialty pharmacy

Meanwhile, specialty drug spending continues to hit double-digit growth, at 14.7%, sparked by a 2.6% increase in utilization and a 12.1% jump in unit costs. Overall, drug trend increased 3.7% in 2009 because of specialty drugs.

Still, generic drugs aided in the offset of spending on high-cost, specialty drugs for rheumatoid arthritis, multiple sclerosis, cancer and other conditions.

Additionally, inflation for branded drugs was 9.2% in 2009, up about a full percentage point from 2008, according to the report. Prescription drug utilization, however, rose modestly at 1.3%.

Plan sponsors should try to maximize the use of generics, because it's their best opportunity to control cost and to help manage inflation. Brand inflation was a very significant story in 2009, coming in at 9.24%, says O'Connor.

"This is the highest level of inflation we have seen, so the ability to promote generics, which were pretty much flat in terms of inflation, is really the best way for plans to manage pharmacy spending," she adds.

Diabetes topped the list as the largest driver of drug trend, representing 16.7% of all growth in drug spending. For example, costs in the category rose by 11.1%, driven by unit-cost inflation and increased utilization.

Medco analysts also project pharmacy spending to increase up to 18% through 2012, with diabetes, oncology and rheumatology treatments serving as the leading cost drivers.

Prescription drug spending is estimated to grow 3% to 5% in 2010, eventually jumping to a rate increase of 4% to 6% the next two years - a period in which pharmacy spending for diabetes/endocrine, oncology and musculoskeletal/rheumatology treatments are expected to increase 31% to 38%, 40% to 48%, and 37% to 44%, respectively, the report notes. By the end of 2012, about $46 billion in brand drug sales will fall to generic competition.

The wave of first-time generics that will become available over the next three-to-five years represents over $100 billion in brand-name drug sales today.

This will be a huge cost savings for plan sponsors, says Keith Bradbury, executive director of drug information at Medco Health Solutions. About a third of those brand-name drugs go off patent in 2012.

"It's going to be important for plan sponsors to take advantage those saving opportunities, because they are going to need that money to fund the expenses on the specialty pharmacy side," explains Bradbury. Keep in mind, "about 40% of the overall tread could be attributed to specialty drugs alone," he adds.

Reform sparks alternative approach

Medco officials also believe that health care reform will spark more employers to rethink their retiree prescription benefit strategies.

Employers embraced the Retiree Drug Subsidy program because of its tax advantages, but the new health care law requires the government to eliminate, in 2013, the tax advantage on the RDS.

Although the RDS, which generally represents 28% of an organization's eligible retiree prescription costs, will continue under the health law, the tax-free status of the subsidy will be eliminated.

This year, employers who received an RDS had to record an accounting charge in their first quarter 2010 financial results to reflect the impact of the change in the RDS tax status. Industry experts projected the charges cumulatively at more than $14 billion.

Medco officials project "the incremental tax liability for an average taxable RDS plan sponsor to be in the range of $14 to $21 per member per month (assuming a 35% tax rate)," which for a typical plan means millions to tens of millions of dollars of lost value annually.

Analysts at the pharmaceutical company believe that the change in RDS tax status will prompt more employers to consider other Medicare Part D solutions, such as the employer group waiver plan (also known as an EGWP or "egg whip").

Under an EGWP contract, an employer enters into an agreement with a Medicare-contracted prescription drug plan to provide group benefits under Medicare Part D.

The federal subsidy available under an EGWP is projected to increase over time, outpacing the RDS subsidy, due to the gradual elimination of the coverage gap under Medicare Part D.

"The direct subsidy under the EGWP will be greater then under a RDS, which means additional financial savings to the employers," says Steve Wogen, a senior vice president in the retiree solution group at Medco Health Solutions.

For employers that are sponsoring benefits, in general, many are up against actuarial equivalence thresholds under the RDS program, so over time they may no longer qualify for the program, explains Wogen.

The EGWP platform can facilitate flexible benefit designs and help an employer retain sponsorship of their retiree benefit plan at a lower cost, according to Medco. An employer can save up to 50% or more of their current retiree prescription drug costs by moving into an EGWP platform.

Additionally, an EGWP system allows for limited member disruption and provides employers with options for member cost sharing and premium contributions, notes Wogen.

Peds prescriptions: Other key findings from Medco's 2010 Drug Trend Report

* Type 2 diabetes medication use by juveniles increased 5.3% in 2009, the largest increase across all age groups, and higher than overall utilization growth of 2.3%.

* The obesity epidemic may be contributing to the higher prevalence of hypertension and gastroesophageal reflux disease (GERD) in youngsters. From 2001 to 2009, there was a 17% increase in the use of antihypertensives in children, with the greatest growth (29%) seen in boys ages 10-19.

* The number of children on proton pump inhibitors, which are used to treat heartburn and GERD, and in some cases are prescribed for colic in infants, rose by 147% from 2001 to 2009.

* Among the drugs that have experienced substantial gains in the pediatric population are atypical antipsychotics. Traditionally used to treat schizophrenia, the drugs have more recently been prescribed for a variety of psychiatric disorders. The nine-year analysis revealed that the use of these treatments in children has doubled over that time period.

* Respiratory drug use increased 5% for children in 2009 and was up 42% since 2001. Rising asthma rates accounted for much of the increase, as well as greater awareness of the disease and the importance of early intervention in controlling disease progression.

Source: Medco

DOL Issues Fee Disclosure Regulation

2010-07-27T10:55:00.000-04:00

The Department of Labor (DOL) has issued an interim final regulation requiring pension plan service providers to disclose to plan fiduciaries detailed information about the fees they charge. The new rule is scheduled to become effective on July 16, 2011 and applies to plan service providers that expect to receive $1,000 or more in compensation and that:

Provide certain fiduciary or registered investment advisory services,
Offer plan investment options in connection with brokerage or recordkeeping services, or
Otherwise receive indirect compensation for providing certain services to the plan.

The new rule is intended to help fiduciaries assess the reasonableness of fees charged by their service providers and to identify any potential conflicts of interest that may impact a service provider's performance. Public comments are due on the new rule by August 30.

Phyllis Borzi, the head of the DOL's Employee Benefits Security Administration (EBSA) said the DOL expects to release additional regulations later this year requiring plan fiduciaries to make certain fee disclosures to plan participants.

New Regulations Provide Clarity for "Grandfathered" Health Plans

2010-07-19T11:03:00.003-04:00

A recently issued interim final regulation provides much anticipated guidance to health plans that qualify for "grandfathered" status under federal health care reform legislation. While the Affordable Care Act requires all health plans to comply with certain provisions of the law, plans that existed as of March 23, 2010 are exempt from some of the new requirements.

The new regulation allows plans to make routine cost adjustments to keep pace with inflation, make modest adjustments to existing benefits, voluntarily adopt new consumer protections under the new law, and make change to comply with other state or federal laws. However, plans will lose their grandfathered status if they chose to make significant changes that reduce benefits or increase costs to participants. Specifically, compared to coverage in effect on March 23, 2010, grandfathered plans cannot:

Significantly cut or reduce benefits for specific conditions, for example diabetes, cystic fibrosis or HIV/AIDS
Raise co-insurance percentages paid by the participant (e.g. increase employee co-insurance from 20% to 30%)
Significantly raise copayments paid by the participant (limit is the greater of $5, adjusted annually for medical inflation or a percentage equal to medical inflation plus 15 percentage points
Significantly raise deductibles (limit is percentage equal to medical inflation plus 15 percentage points)
Significantly lower employer contributions (employer paid premiums cannot be decreased by more than 5 percentage points)
Add or decrease annual limits; plans without an annual benefit limit as of March 23, 2010 cannot add one (unless it replaces and matches the plan's lifetime maximum) and plans that currently have an annual limit cannot decrease it.
Change in insurance companies. Insured plans will lose their grandfathered status if they change insurance companies (except in the case of collectively bargained plans). Self insured plans may change administrators without losing their status.

If a plan loses its grandfathered status, participants in the plan must be offered certain new benefits including coverage of specific preventive services with no cost sharing and certain patient protections, such as guaranteed access to OB-GYNs and pediatricians.

More details can be found in the full text of the interim regulation. If you have questions or need assistance ensuring your plan does not lose its grandfathered status, please contact Cindy LaQuatra at BRG. You can reach Cindy by phone at 216-393-1848 or by email at claquatra@benefitsrg.com.

April 15 COBRA Subsidy Extension

2010-04-21T12:07:00.000-04:00

On April 15, 2010, Congress approved another short term extension for COBRA health insurance premium subsidy for jobless Americans.

The Continuing Extension Act of 2010, which extends the COBRA subsidy provided under the federal stimulus bill, includes employees involuntarily terminated between April 1 and May 31, 2010. The 65% subsidy continues to be available for qualifying individuals for a maximum period of up to 15 months.

At a minimum, employers should expect that they will be required to provide updated notices to individuals in the following two groups:

1. Employees who were involuntarily terminated since April 1, 2010. It appears this notice will permit a retroactive election and a 60-day period within which to elect coverage.

2. Individuals who experience a qualifying event (of any type) on or after April 1, 2010 but prior to May 31, 2010.

The DOL has acted quickly in the past to provide updated model notices. BRG anticipates they may provide updated notices and related guidance in the next few weeks.

There is additional legislation in Congress, The American Workers, State, and Business Relief Act of 2010, that will potentially extend the subsidy through the end of 2010. We will provide more information on any future extensions and the impact on employers as the legislation develops.

If you have any questions, please contact Cindy LaQuatra at 216-393-1848 or by email at claquatra@benefitsrg.com .

Intercontinental warfare

2010-04-14T16:23:00.000-04:00

Global employer pits U.S., U.K. workforces against each other for wellness bragging rights

Theresa Ayala had a tall order when it came to implementing a wellness program at National Grid, an electricity and natural gas delivery company that serves 3.4 million customers.

The organization had never had any kind of formal wellness program, but Ayala, National Grid's wellness program manager, wasn't daunted. A nurse practitioner by training, she had a pretty good understanding of the health issues confronting employees and decided to forgo trying to get them to complete a health risk assessment.

"Even though we have 18,000 U.S. employees, we're still a sample of what's happening in society at large," she says. "Rather than spend the time and energy and an entire year trying to find out about the problems I already knew existed, I decided to jump right in, understanding the three drivers to disease development are lack of physical activity, smoking and obesity."

Through her research, Ayala came across Shape Up the Nation, a wellness company founded in 2006 that uses social networking to promote weight loss and healthy behavior. (Read more about how the Shape Up the Nation program posted big results on a smaller scale in "Small state, big ideas: Rhode Island on reform," from EBN March.)

"The support, motivation and accountability our peers can provide dramatically increase our chances of succeeding at reaching our health goals," says Rajiv Kumar, co-founder of Shape Up the Nation. "There's been a great deal of research showing that behaviors related to health actually spread within a social network, so that if someone loses weight, the people who are around them in their trusted social network are likely to lose weight as well."

Shape Up the Nation creates a calendar of events for employers, usually a series of 12-week challenges related to exercise, weight loss, healthy eating and healthy behavior. Employees sign on to participate in the challenges, using Shape Up the Nation's social networking Web site.

Kumar says that about 3% to 5% of an organization's employees are "early adopters" - people who are naturally inclined to sign up for a wellness program. "We get those individuals engaged, they sign up, and then they start to invite their peers, and they start to form teams," he says. "And they're sending out e-mail invitations and recruiting their colleagues in a grassroots fashion."

A walk across the pond

Last year, National Grid implemented Shape Up the Nation's 12-week pedometer challenge. Ayala and her colleagues challenged National Grid's parent company in the U.K. to see which division - U.S. or U.K. - could walk across the pond first.

The program was launched using all of National Grid's usual communication channels - e-mails, newsletters and posters. "I know the popular thing to do is offer incentives to get people to participate," says Ayala. "It's a way to attract people, but it's not a way to keep people. We just put the program out there, and employees were very interested to see it and get involved. And I found we were very competitive, which drove participation."

Employees who signed up received a kit containing a wristband, a pedometer and a tracking calendar. They created profiles on Shape Up the Nation's social networking platform, formed teams and started walking. Approximately 700 teams, comprising 5,500 employees from both the U.S. and U.K., participated. Employees were able to track their progress through an online map, updated every two weeks, which showed each division's movement across the ocean.

And even though the U.K. employees made it across the pond first, Ayala says the program more than exceeded her expectations. "I didn't expect the popularity of the program. I didn't expect it to be the talk of the building," she says. "No matter where you went, you could see people with their pedometers. We'd hear stories from employees who were on teams with people they didn't normally work with, which was great. It supported the whole teamwork piece, and I didn't expect that."

She still gets requests for pedometers, even though the program is over, and employees continue to ask if National Grid will run the program again this year.

And while it's tough to say whether the program had an impact on health claims data, Ayala believes employee testimonials speak far louder than numbers ever could. "When you're running something that's 12 weeks, it's hard to say what we did in 12 weeks impacted [claims]," she says. "It's much stronger to show the real changes you've made in the employees by their personal testimonials, and that's what we're going for."

Social incentives

Could the power of social incentives be the demise of financial incentives for wellness program participation? "We've seen cases of employees getting thousands of dollars simply to take a health risk assessment," notes Kumar. "It doesn't change behavior. It simply gives you a baseline of information. Financial incentives have been a response to programs that were not activating employees."

Instead of financial incentives, Shape Up the Nation relies on the grassroots, peer-to-peer interaction to motivate employees and keep them interested. A little friendly competition doesn't hurt either, as National Grid's experience showed.

"That inner competitive nature we all have to some degree makes people more likely to participate and stick with the program," says Kumar. "And we make it fun. Traditional wellness programs have been focused on coaching or health risk assessments, and they haven't been fun. People are looking for something that's fun and enjoyable to participate in."

The average team size across the company's book of business is nine. "One team captain is getting eight other people to be a part of his or her team, and I think that really speaks to the viral nature of a peer-to-peer approach to wellness."

Employers are responding to the idea of social incentives, says Kumar, who says clients report improved morale and retention, decreased absenteeism, increased productivity and increased collaboration between departments. And, "the platform becomes an engagement engine that drives utilization of other wellness offerings. Most wellness programs do work. They can help people change their behavior, but if people don't sign up and use them, then they're useless. The Holy Grail of wellness programs is actually getting people to engage, and I think we've been able to do that."

--------------------------------------------------------------------------------
Numbers at a glance

Here are the average results per U.S. employee who participated in National Grid's 12-week pedometer challenge:

Weight loss: 6.4 lbs

Exercise: 38 minutes a day

Steps: 8,772 per day

IRS offers guidance on tax credits in healthcare reform law

2010-04-09T09:11:00.001-04:00

The Internal Revenue Service recently launched a new Web page that provides guidance on tax credits in the new health reform law for small employers and tax-exempt organizations that provide health insurance coverage.

Under the new law, the maximum credit is 35% of premiums paid in 2010 by eligible small businesses and 25% of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit jumps to 50% of premiums paid by eligible small employers and 35% of premiums paid by eligible employers that are tax-exempt organizations.

“This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,” explains IRS Commissioner Doug Shulman. “We urge small businesses and tax-exempt employers to look closely at this important tax break — which is already effective — to see if they qualify,” he adds.

The online portal helps small-business owners determine if they are eligible for the tax credit and outlines the financial rewards earned by taking advantage of the credit. In addition, users can review a “Frequently Asked Questions” section that discusses, in part, the calculation of the credit and how to claim the credit. The Web page also includes a section that illustrates scenarios on how the credit applies to employers in different circumstances.

The government defines a small employer as one with fewer than 25 full-time equivalent employees paying wages averaging less than $50,000 per employee per year. However, “because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers,” IRS officials report. The maximum credit goes to smaller employers with 10 or fewer FTEs that pay annual average wages of $25,000 or less.

The tax credit on health-insurance premiums was created to encourage small employers to provide health insurance coverage for the first time or maintain coverage they already have, according to IRS officials. The credit is also aimed at small businesses and tax-exempt organizations that primarily employ low and moderate income workers.

IRS officials state that “eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011.”

Employers Begin to Offer Eldercare as a Benefit

2010-03-29T09:11:00.000-04:00

A few employers are beginning to offer eldercare as a benefit, realizing that many Baby Boomers have parents in need of a much-needed lifeline. In fact, 19% of Americans over the age of 18 are caring for someone 50 or older, according to the National Alliance for Caregiving.

The alliance also found that people responsible for taking care of an elderly relative or friend suffer poor health themselves, including depression, diabetes, hypertension or heart disease—which may cause many workers to take time off or distract them from their job. These unfortunate effects cost U.S. employers an additional 8% in healthcare a year, or $13.4 billion annually, reports the MetLife Study of Working Caregivers and Employer Health Care Costs.

As Prudential Vice President of Health, Life and Inclusion Maureen Corcoran succinctly put it, “If you have a care issue and you’re working on deadline and expected to be at your desk, what are you going to be thinking about?”

Thus, to head off these problems, many employers are beginning to provide eldercare to their employees. The most comprehensive offers in-home services for a maximum number of hours a year for a co-pay of as little as $4 an hour.

The MetLife report notes that 20% of employers with more than 500 workers offer eldercare referral services, 15% eldercare leave, 3% emergency eldercare, and 2% subsidized eldercare, while 1% paid for eldercare or had an on-site eldercare center

2010-03-16T08:40:00.000-04:00

Life Insurance Products Play Valuable Role in Estate Planning
By Joseph R. Crea, CLU, ChFC
While Washington debates its next move in dealing with estate tax legislation (as summarized in the article by John Tullio, Esq. in this newsletter), proactive estate planning continues to be an important focus for business owners and other individuals with significant wealth. Although federal taxes are a valid consideration in estate planning, there are many other factors that may impact your planning:
• Federal estate taxes
• State inheritance taxes
• Estate administration costs (e.g., attorneys, probate)
• Debt repayment (especially with highly leveraged assets earmarked for heirs’ retention
• Equalizing inheritances in family business estates between children who are active in the business and those who are not.
• Creating legacies for charitable organizations
• Planning for children or family members with special needs
• Protecting wealth against the potential erosion of the estate due to market values in volatile times
• Personal situation (e.g., divorce, separation)
Protecting your estate and ensuring that it is distributed in the way you intend requires careful planning and a variety of tools and strategies. Particularly during times of legislative and financial uncertainty, the enduring value of life insurance makes it an extremely attractive estate planning component.
Insurance Products That Work for You
Life insurance has traditionally been included in estate plans to provide family members with quick access to cash to take care of immediate financial needs and daily living expenses. Because life insurance proceeds are paid to named beneficiaries, they are not tied up in potentially lengthy probate proceedings. Properly designed life insurance policies are income tax-free and can be structured to be estate tax-free, making them even more attractive to beneficiaries.
Life insurance can also be useful in other ways in your estate planning. For example, life insurance can be used to:
• Provide a floor amount of assets for your heirs no matter what;
• Provide for transfer of wealth on a leveraged basis utilizing irrevocable trust (ILIT);
• Maximize wealth transfer; and
• Serve as a creative planning tool for charity and families with Charitable Lead and Remainder Trusts.
How life insurance fits into your estate plan will depend on your estate planning philosophy, your needs and your unique personal situation. A variety of life insurance products are available on the market today. Here are the most common options:
• Term Insurance. With term life insurance, the premium and death benefit is known and guaranteed for a period of time only – premiums are paid for a limited time and so is the death benefit. While the policyholder bears no risk with this type of policy (the full value is paid out even if the policyholder dies much earlier than expected), there is also no potential for an increase in value, decrease in premium, or flexibility to access value prior to death. If the insured lives beyond the term period, the premiums increase dramatically or the insurance terminates.
• Whole Life. Whole life policies were developed to share some of the downside risk as well as the upside potential with policyholders. In times of favorable mortality, interest and expense results, these policies pay dividends, which can be used to suspend premiums or increase the face amount.
• Universal Life and Variable Universal Life. Universal life insurance offers the same risks and opportunities as whole life, but with a more transparent and “unbundled” approach. Variable universal life takes the risk and opportunity sharing one step further, allowing the policyholder to almost completely assume the investment allocation control and investment risk. A hybrid of universal life and variable universal life, called Equity Index Universal Life, provides a combination of the two – allowing for investment participation while providing a guaranteed floor and typically a cap on earnings credited.
• Joint Second to Die Life. This life insurance provides coverage for two individuals and is specially designed for estate planning. It pays proceeds upon the second death (when the estate taxes are due). Premiums are based on two lives and are substantially reduced when compared to single life policies.
• Guaranteed Not to Lapse Policies. These policies stay in force through a designated age between 100 – 120 years of age.
Purchasing life insurance, particularly for high net worth individuals, can be complex. It is important to understand the different types of life insurance – including the risks and opportunities they include – as well as carefully evaluate different carrier’s offerings. BRG helps many clients evaluate and select the right combination of life insurance for their general and estate planning needs. Because the market and available offerings are constantly changing, it is also important to review your life insurance policies regularly – at least every three to five years. See Linda Cahill’s article, “Have You Reviewed Your Life Insurance Lately?” for more information about conducting life insurance policy audits.
BRG Can Help
Effective estate planning requires a comprehensive understanding of your family, business and financial situation. It requires a team of trusted advisors, which should include a qualified insurance professional to help you evaluate and select the products that are best suited to your needs. Contact BRG for assistance with your estate planning.
Joe Crea is the President and co-founder of Benefits Resource Group. He manages the development of leading edge solutions and services for BRG clients. You can contact Joe by phone at 216-393-1818 or by email at jcrea@benefitsrg.com.
Securities and Investment Advisory Services Offered through M Holdings Securities, Inc., A Registered Broker/Dealer, Member FINRA/SIPC; BRG is independently owned and operated; This material is intended for informational purposes only and is not intended to replace the advice of a qualified tax advisor; Product guarantees are subject to the claims paying ability of the issuing insurance company; Variable life insurance products are long-term investments and may not be suitable for all investors. An investment in variable life insurance is subject to fluctuating values of the underlying investment options and entails risk, including the possible loss of principal. The performance of your account will vary and you may receive more or less than the amount invested.

New law modifies COBRA subsidy rules

2010-03-15T08:55:00.000-04:00

by John Hickman, Esq. and Ashley Gillihan, Esq.

On March 2, 2010, President Obama signed into law the Temporary Extension Act of 2010 (the “Act”). The Act contains several modifications to the COBRA subsidy rules originally included in the American Recovery and Reinvestment Act of 2009 and later modified by the Department of Defense Appropriations Act of 2010.

The following is a summary of those key modifications.

New sunset date

The Act changes the subsidy eligibility sunset date---the date on or before which the qualifying event that is an involuntary termination of employment must occur--from Feb. 28, 2010 to March 31, 2010.

Assistance eligible individuals

Typically, a qualified beneficiary will qualify as an assistance eligible individual (AEI) only if the qualifying event is an involuntary termination of employment occurring prior to the sunset date.

However, under the Act, qualified beneficiaries who experience/d a qualifying event that is a reduction in hours of employment occurring anytime on or after Sept. 1, 2008, followed by an involuntarily termination of employment between March 2, 2010, and March 31, 2010, qualify as AEIs even though the subsequent involuntary termination of employment is not the qualifying event for COBRA purposes.

Although it is not the qualifying event giving rise to COBRA, the Act treats the subsequent involuntary termination of employment as the “qualifying event” for purposes of determining eligibility for the subsidy (and for purposes of identifying the notice due date—see “Notices” below for more information).

This new subsidy rule only applies to periods of coverage beginning after March 2, 2010. Thus, if the COBRA periods typically begin on the first of the month, the first subsidized COBRA coverage period resulting solely from this new rule would begin April 1, 2010.

Practice Pointer: The rule does not operate to extend the qualified beneficiary’s COBRA coverage; the COBRA period is still measured based on the original qualifying event that was a reduction in hours of employment. It simply provides a subsidy for any remaining periods of COBRA coverage beginning after that involuntary termination of employment.

However, it does operate to provide a new election period for those who would be AEIs under this rule but failed to elect or elected and subsequently lost coverage. See “New election period” below for more information.

Illustration of the new rule:

#1: ABC, Inc. sponsors a group health plan that only covers full-time employees of the company. Prior to Jan. 15, 2010, Bob was a full-time employee of the company and a participant in ABC’s group health plan.

On Jan. 15, 2010, Bob changes from full-time status to part-time status. Assume for purposes of this illustration that the transition from full-time to part-time status was not a “material negative change” that would otherwise cause the reduction in hours to be treated as an involuntary termination of employment.

Under the terms of ABC’s plan, Bob’s coverage will continue until the end of the month, Jan. 31, 2010, after which he is offered an opportunity to elect 18 months of COBRA.

Bob elects COBRA continuation coverage but he must pay 102% of the applicable premium since the qualifying event was a reduction in hours of employment and not an involuntary termination of employment. On March 10, Bob is involuntarily terminated from the company due to a reduction in force.

Even though Bob’s COBRA qualifying event was a reduction in hours of employment, he is an AEI who may be eligible for up to 15 months of federally subsidized continuation coverage (assuming he is not eligible for other coverage).

Since ABC’s COBRA coverage periods begin on the first of each month, Bob’s first federally subsidized COBRA period will be April 1, 2010 (the first coverage period after the enactment date March 2).

New election period

Individuals who would be an AEI under the new rule described above, but who failed to elect COBRA or elected COBRA and subsequently lost coverage, are entitled to a new election.

Illustrations of this rule:

#2: Same facts as Illustration #1 above except that Bob did not elect COBRA continuation coverage following his qualifying event that was a reduction in hours of employment (i.e., transition from full-time to part-time). Bob is now an AEI entitled to a new election.

#3: Same facts as Illustration #1 above except that Bob’s spouse was also covered under ABC’s health plan on the date of the qualifying event. Although Bob chose COBRA, Bob’s spouse did not. Bob’s spouse is now an AEI entitled to a new election.

Practice Pointer: This new rule does not operate to give would-be AEIs whose COBRA period has already expired a new COBRA continuation period simply because they have an involuntary termination of employment between March 2 and March 31, 2010.

Although the involuntary termination of employment is treated as the qualifying event for purposes of determining eligibility for the new election and the subsidy, the maximum COBRA period is determined in this instance based on the original qualifying event that was a reduction in hours of employment (e.g., if COBRA is typically measured from the date of the qualifying event, COBRA will be measured here from the date of the reduction in hours of employment).

Also, any break in coverage between the reduction in hours and the involuntary termination of employment is not treated as a "break in coverage" for HIPAA portability purposes.

Thus, periods of creditable coverage preceding this break must be included on any certificate of creditable coverage otherwise required by HIPAA and applied towards any pre-existing condition exclusion or limitation period.

Practice Pointer: This new election period should operate similarly to the special extended election period provided under the original ARRA legislation to those would-be AEIs who experienced an involuntary termination of employment on or after Sept. 1, 2008, and who chose not to elect coverage or elected coverage but lost it prior to Feb.17, 2009.

Thus, the same procedures adopted to comply with that rule should, with appropriate modifications, apply here as well.

This new rule is only applicable for periods of coverage beginning after March 2, 2010. Thus, if the plan typically requires that COBRA continuation coverage be paid for on a calendar month basis, then the date that continuation coverage would begin in this instance is April 1, 2010 (see, e.g., Q-48 of IRS Notice 2009-27).

If, however, the plan typically requires COBRA continuation to be paid for on a monthly basis computed from the date coverage is lost, then the coverage start date is not as clear.

The date that COBRA coverage would appear to begin in this instance is the first day of the next COBRA period determined as though the qualified beneficiary elected COBRA following the reduction of hours in employment—and not the date that the subsequent involuntary termination of employment occurs.

This is because the maximum COBRA period is determined based on the qualifying event that is the reduction in hours of employment.

Illustration of this rule:

#4: Same facts as Illustration #2 except that ABC typically requires COBRA continuation coverage be paid for on a monthly basis computed from the date coverage is lost. In this illustration, Bob would have lost coverage on Jan. 15, 2010, and his monthly COBRA periods would run from the 15th of each month through the 14th of the next month. The next COBRA period following Bob’s March 10 termination, if Bob had elected COBRA following the reduction in hours, would begin March 15, 2010.

Arguably, this is the date that Bob’s subsidized COBRA continuation coverage would start under this new rule (although the maximum COBRA coverage period would be measured from the date of the reduction in hours of employment in this example).

Practice Pointer: Using prior IRS guidance, it would appear that plan sponsors may permit would-be AEIs entitled to a new election under this rule to choose a later start date.

Notices

The same general election rules applicable under ARRA and the Defense Act apply equally to qualified beneficiaries whose qualifying event occurs between March 1, 2010, and March 31, 2010. Election notices should be revised to reflect the new sunset date.

In addition, there are special notice rules for those individuals who are AEIs under the Act as a result of a reduction in hours of employment. If AEIs are already receiving COBRA, notice of the new rules must be furnished to such AEIs within 60 days of the date of the involuntary termination of employment.

Although not specifically stated in the Act, the DOL’s reasoning with respect to prior notices suggests that the notice must be furnished to those qualified beneficiaries who experience a voluntary or involuntary termination of employment.

If the would-be AEI is not currently enrolled but is entitled to a new election under the Act, then a revised election notice describing the availability of the subsidy (and the corresponding terms and conditions of eligibility) must be furnished within 60 days of the date of the involuntary termination of employment.

Practice Pointer: The Act refers to the relevant ARRA provisions to describe the notice contents. Under those ARRA rules, notice of the option to enroll in less expensive coverage, if available, had to be included.

Thus, it would appear that same opportunity may be offered would-be AEIs entitled to a new election under the Act.

Other issues

The Act allows the regulators to impose up to a $110/day penalty on plan sponsors who fail to implement the DOL's/Treasury's determination of eligibility within 10 days after receiving notice of the determination.

The Act revised the date that the now 15-month subsidy period begins. Under ARRA, the subsidy period began as of the “first of the month” that the COBRA subsidy period applied.

Thus, if the first COBRA period to which the subsidy applied was July 15, 2009, through August 14, 2009, the subsidy period was measured from July 1, 2009. The act deletes the “first of the month” language. Therefore, the 15-month COBRA subsidy period will be measured from the first day of the first COBRA coverage period to which the subsidy applies.

The Act codifies the clarifications made by the DOL in its model notices with respect to the transition period provided under the Defense Act.

Dental ASO Plans Offer More Value at Lower Cost

2010-03-08T08:34:00.000-05:00

By Jack Egan

With health care budgets constrained, companies that want to provide employees with quality dental benefits are discovering an attractive option – Administrative Services Only (ASO) insurance plans. Under an ASO arrangement, an employer self-insures for the benefits it pays out, but uses an outside company to deal with the nuts and bolts of handling claims and paying providers.

One main reason employers choose to go the ASO route is the potential to reduce dental coverage costs by eliminating the need to buy insurance. There are other advantages. A firm is free to customize the dental plan it offers its workers under an ASO. That’s because these self-insured contracts are generally outside the jurisdiction of state insurance regulators.

Self-insured ASO plans are especially appealing to employers with 500 to 5,000 lives because the level of annual claims is fairly predictable. With an ASO a firm is only responsible for paying a claims-processing fee to the administrator, bypassing the risk charge and premium taxes associated with fully insured benefits.

Sophisticated claims system

The Guardian Life Insurance Company of America’s cumulative knowledge and experience with these plans has made it No. 1 in new ASO business cases sold for six out of the past seven years.* “As ASO administrator, we offer the same sophisticated claims system whether a dental plan is fully insured by Guardian or it’s a self-funded ASO company plan,” says Chris Swanker, VP of Guardian Group Dental.

ASO clients gain access to Guardian’s extensive Preferred Provider (PPO) network and leading-edge back-office technologies. “There is no difference in how we administer the benefits or pay claims,” he declares. We treat the ASO customer’s money as if it were our own.”

Reviewing the strength of an ASO carrier’s dental network is also important. Guardian’s DentalGuard Preferred provider network has more than 70,000 dentists at more than 128,000 locations throughout the country. Such breadth permits Guardian to provide dental care discounts of up to 30% below what dentists ordinarily charge.

By having so many dentists in the Guardian PPO network “we can save the employer money for self-funded plans, and we can offer a more competitively priced product on our fully-insured plans,” Swanker observes.

Guardian also offers a unique guarantee to self-insuring employers, a point that brokers should emphasize. Guardian’s pledge is that the combination of our PPO network and automated Dental Review Logic (DRL) program will save companies an amount equal to their annual ASO fee. DRL is a sophisticated claims-processing system that detects unbundling, upcoding and other billing issues. For example, if a cavity is filled and local anesthesia is used, separate bills are sometimes submitted for each procedure. DRL combines the two, resulting in claims savings.

Response time is another factor companies should consider when selecting an ASO carrier. At Guardian, turnaround time for claims submitted is usually three days for either an insured dental plan or an ASO plan. “Our claims approvers do not know if a claim is from a fully insured plan or one in which we are only doing the administration,” notes Lloyd Tereno, second vice president of Guardian Dental Claims.

Guardian is known for its innovative, flexible menu of dental features that also add value – and these are all available on ASO plans as well. Maximum Rollover, for example, lets members store unused annual benefits for later use. The ability to tap what has been rolled over comes in handy if an employee’s benefits exceed the annual maximum at some point in the future. Another feature called Preventive Advantage allows members to obtain preventive care without subtracting the cost from their annual maximum. This frees up money for more extensive dental work.

Maximize choice, minimize cost

For employers, Guardian offers several ASO funding choices to dovetail with an employer group’s financial needs and billing preferences. A direct bill option helps a company manage its cash flow. Guardian pays claims as received and bills an ASO client at the end of month, along with the administrative fee.

With its comprehensive and innovative portfolio of dental plans that helps maximize choice and minimize costs, Guardian has earned a top reputation for servicing the needs of small companies. But midsize employer groups with 500 to 5,000 lives increasingly are finding that Guardian can address their dental coverage requirements with the same broad range of cost-effective options. Dental ASO is a great example of this.

“Guardian understands the needs of employers and their employees and offers options to match anyone’s target price point,” Swanker concludes. “And all of our products and services are available and useful for the entire spectrum of employers.”

* (Listed companies, LIMRA/NADP 2003-2009)

About the author
Jack Egan is a freelance writer based in Los Angeles who has covered most aspects of business, financial markets and personal investing.

DOL Publishes Model CHIP Notice for Employers

2010-03-04T09:12:00.000-05:00

The DOL has published a model notice that employers can use to satisfy the employer notice requirement under the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA). This legislation imposes notice and disclosure requirements on employers with group health plans in states that provide premium assistance for Medicaid or Children’s Health Insurance Programs (CHIPs).

Please note: Ohio does not have a CHIP premium assistance program, so employers who have employees ONLY in Ohio are not subject to this notification requirement. However, companies with employees who reside in any of the 40 states listed in the model notice must meet the requirement and may use the model notice to do so.

Employers subject to the requirement must provide the employer CHIP notice annually. The initial notice must be distributed by the
later of:

• the first day of the first plan year after February 4, 2010, or
• May 1, 2010.

For calendar-year plans, the first notice must be provided by
January 1, 2011.

Employers can satisfy the requirement by distributing a separate notice or by incorporating it in other plan materials, such as open enrollment materials. A single version of the notice can be distributed in multiple states, and may even be distributed to employees in states that don’t currently provide premium assistance.

If your company has employees outside of Ohio and you would like help ensuring that you meet these requirements, please contact Cindy LaQuatra at BRG. You can reach Cindy by phone at 216-393-1848 or by email at claquatra@benefitsrg.com.

Employee Communications: trends, fads, and what's next

2010-03-02T18:15:00.001-05:00

Communication plays a critical role in engaging employees. Social media, eco-friendly, Web 2.0, traditional- which strategies and tactics connect most effectively with today's workforce?

Employee communications link the goals of the HR and benefits departments with employee awareness, commitment and engagement.

Messages from HR tend to concentrate on issues that have the most impact on the value of the employment experience: compensation, benefits, career development, training and work-life balance.

That means the effectiveness of these communications has a lot to do with how employees view their jobs. According to the 2009 Aon Consulting Benefits and Talent survey, one-third of employers believe communications have a significant impact on employee appreciation of the employment "deal."

With unemployment expected to ease, retaining and engaging employees will again be a critical issue for C-suite leaders. Yet, over the last several years, job satisfaction has been on the decline, with only 45% of Americans being satisfied with their jobs, as reported in the 2009 edition of The Conference Board annual job satisfaction survey.

In a recent study by CareerBuilder, 24% of workers report that they no longer feel loyal to their current company and 19% intend to leave this year. So, what can an organization do?

Clearly, employee communications play a critical role in engaging employees. But even the savviest organizational leaders can be challenged when it comes to effectively reaching their employees. How do you connect with employees when they represent different generations, cultures and communications styles? Should you integrate social media into your communications strategy? How do you get the most value for your communications dollar? What is the best way to deliver eco-friendly communications?

As employers consider how to modernize their employee communications strategies to succeed in today's business environment - and look to you for help - they may have to answer some or all of these questions. The responses will depend on each organization's culture and employee population. It's a challenging balance that requires finding the right mix of the new and the "tried and true."

Green communications

Organizations are embracing technology to reduce costs, be more environmentally friendly and increase efficiency. However, there is a right way to be "green" and a wrong way. Forcing print communications into a paperless format that is distributed electronically without considering how the materials will be used can be a path to failure.

Print communications are linear - typically read in order from the first page to the last page. Electronic and Web communications are more dimensional, with the reader, not the writer, selecting how to access the information.

As a result, electronic content should be organized and formatted differently, with information "chunked" into smaller components that are able to stand alone. Navigation is a key element, and graphics, color palettes and design elements play a different role.

In an effort to be eco-friendly and to save money, many organizations post electronic versions of print materials (such as PDFs) on their company Intranet site. There are several reasons why this is not "green," effective, or less costly:

* Cost-shifting, not cost-saving: It's hard to read print materials on a computer screen. So, the reader usually prints the electronic document to a local office printer. The document is no longer paperless and the cost is shifted from a commercial printer to the office supply vendor.

* Less return on your creative investment: The investment made in the design, look and feel of your important document may be lost when the materials are printed on a one-color office printer which has a much lower quality than the professional press for which it was intended. And, even if the reader doesn't print the document, the content is generally less effective because it was not written to be read and absorbed from a screen.

If your objective is to produce more eco-friendly communications and your documents are designed as print materials, work with your printer to use soy inks and recycled paper or paper that has been certified by the Forest Stewardship Council and the Sustainable Forestry Initiative.

If your intent is to make information available via the Web or an Intranet site, for optimal results make the investment from the beginning to develop communications that are designed to be consumed electronically.

The next level

Being more environmentally friendly is only one reason for using technology in your communications. LinkedIn, Facebook, Twitter, blogs, wikis and other social media have dramatically changed the way we interact with each other. Often referred to as Web 2.0, new media allows people to form communities based on common interests and shared ideas.

Originally popular with young people as a high-tech way to connect with each other, social media is now mainstream. For example, many corporations have Facebook pages and Twitter accounts. So, it makes sense for the HR community to embrace Web 2.0 as another way to communicate with employees.

For example, consider:

■ Creating blogs and wikis as part of the launch of a new program, initiative, or benefit plan to invite feedback and ideas.
■ Using text messages, instant messaging and tweets (Twitter updates) to send brief announcements and reminders (e.g., enrollment deadlines).
■ Building an internal social network site, a la Facebook, that allows employees to share information, ideas, photos, videos and documents, and stay connected.
■ Developing a YouTube-like repository for company videos and recorded presentations.
There are many ways in which new media can be used to engage employees from recruitment through retirement. With some creativity and a little IT help, social media can help employers rethink their HR communications beyond the traditional forms.

Don't abandon the traditional

Everyone is aware of the diversity of today's workforce. For the first time in American history, four different eras are represented in the workforce. Generally defined by age or generation, these groups can be loosely defined as:

■ Generation Y or millenials - born after 1982
■Generation X - born between 1960 and 1982
■Baby Boomers - born between 1943 and 1960
■Traditionalists - born before 1943
Each of these generations has been shaped by the experiences of their time, which affects their approach and preferences for work and communications. For example, consider how the telephone has evolved for each generation:

■Generation Y - everyone has a cell phone and can be reached anytime, anywhere.
■Generation X - home phones became cordless and cell phones were introduced but, early on, were too big to fit into a pocket.
■Baby Boomers - push-button phones were the new innovation.
■Traditionalists - party line phones were not unusual and phone numbers often started with letters, not numbers.
Layered on top of generational differences, employee demographics are diverse and multicultural. So, while there is a strong temptation to embrace technology, new media and eco-friendly methods of communications distribution, it's important to consider the effectiveness traditional communications methods may have for the organization, such as mailing to the home and face-to-face meetings.

If a large percentage of your workforce does not have access to a computer at work, you risk alienating these employees with a heavy reliance on electronic communications. In addition, there is research that shows that both print and Web "cues" are needed to make electronic communications perform as well as traditional print.

Learning information on the Web can be difficult because of the distractions of its interactive nature, such as following hyperlinks, navigating the site, scrolling down, etc. Therefore, if the information you need to share requires concentrated attention and careful decision-making, you may need to offer a variety of media, including print and in-person meetings.

Plus, the low-tech method of mailing communications to the home enables you to reach a very important audience - employees' families.

A matter of balance

As you navigate the new frontiers available in employee communications, you may feel you are in a world where you don't speak the language, completely fluent and well-acclimated, or somewhere in between. But, no matter how you integrate new approaches and techniques into your employee communications strategy, keep in mind these guiding principles:

■ Know your audience and its communications preferences.
■ Make your messages clear and communicate them in ways employees will understand.
■ Know how you need the information to be used by your workforce.
This will help ensure you have the right balance of communications methods that engage employees and achieve your communications objectives. EBA

--------------------------------------------------------------------------------
Box-Farnen is a vice president and communications consultant in Aon's Human Capital Consulting practice in Baltimore, and a member of EBA's editorial advisory board. She can be reached at helen_box-farnen@aon.com.

Health Reform Update: The Latest from Aetna

2010-02-24T13:40:00.000-05:00

Response to President Obama's Health Care Reform Proposal

The White House on Monday released President Obama's newest health care reform proposal, which the President intends to use as the starting point for discussions at a bipartisan health care reform summit scheduled for Thursday.

Estimated to cost $950 billion over 10 years, the proposal is a detailed road map of what President Obama wants from health reform. The plan received extensive coverage Monday from media such as The New York Times, The Washington Post and
USA Today.

The White House says the proposal bridges the gap between the Senate and House bills and includes new provisions meant to "crack down on waste, fraud and abuse." Among the provisions in the President's plan: increasing the threshold for the excise tax on health plans from $23,000 to $27,500 for a family plan, and implementing the same threshold for all plans in 2018; closing the Medicare prescription drug "donut hole;" and creating a new Health Insurance Rate Authority.

Soon after the President’s proposal was made available to the public, Senate and House Republican leadership released statements condemning the plan. House Republican Leader John Boehner (R-OH) issued a statement, and Senate Republican Minority Leader Mitch McConnell issued a news release addressing the plan.

With the Administration ratcheting up the negative insurance company rhetoric last week, it appears the partisan discussions over health care reform show no signs of easing even as a bipartisan summit on health reform rapidly approaches. Despite the current political environment, Aetna supports reasonable, comprehensive health care reform and will continue to work for a bipartisan solution.

2010-02-16T08:51:00.000-05:00

Complying with the new COBRA extension: Employee Benefit News Legal Alert

by Alden J. Bianchi, Esq.

The American Recovery and Reinvestment Act of 2009 was signed on Feb.17, 2009 with the announced purpose of providing a massive economic stimulus to the U.S. economy.

ARRA also included temporary provisions requiring employers to provide federally subsidized premium assistance to certain former employees—referred to as “assistance eligible individuals”—who timely elect health care continuation or “COBRA” coverage.

Although ARRA’s temporary premium subsidies were originally set to expire at the end of 2009, they were extended by the Department of Defense Appropriations Act (DDAA), which was signed into law on Dec. 19, 2009.

This article describes the particulars of this extension, and it explains what employers must do to comply.

Background

Under the ARRA’s COBRA subsidized premium assistance rules, each “assistance eligible individual” is treated as having paid the full amount of the premiums for his or her COBRA continuation coverage for a period of up to nine months if he or she pays 35% of the premium.

The employer, plan, or carrier (depending on the nature and source of the health care continuation obligation) must pay the remaining 65% of the cost of the COBRA continuation coverage. The plan, employer, or carrier, as the case may be, recoups the subsidy, generally through the mechanism of a tax credit against employment taxes.

ARRA defines the term “assistance eligible individual” to mean any qualified beneficiary who elects COBRA continuation coverage and (i) whose loss of group health plan coverage is (or was) on account of an involuntary termination of employment other than by reason of gross misconduct; (ii) who is (or was) eligible for COBRA coverage during the period beginning Sept. 1, 2008 and ending Dec. 31, 2009; and (iii) who elects coverage in accordance with the requirements of COBRA and the DDAA.

Defining involuntary

The determination of whether a termination is “involuntary” is based on all the facts and circumstances. Initially, there was some confusion over what constituted an “involuntary termination.”

In Notice 2009-27, the IRS helpfully defined “involuntary termination” broadly as “a severance from employment due to the independent exercise of the unilateral authority of the employer to terminate the employment, other than due to the employee’s implicit or explicit request, where the employee was willing and able to continue performing services.”

Availability of and access to premium assistance is based on “periods of coverage.” Eligibility for the subsidy generally begins as of the “first period of coverage” during which a qualified beneficiary first satisfies the requirements of an assistance eligible individual.

An assistance eligible individual’s eligibility for COBRA premium assistance under the Act ceases 9 months after initial eligibility or, if earlier when the assistance eligible individual is eligible for coverage under another group health plan.

ARRA also provided special election periods for certain qualified beneficiaries who were eligible for a reduced premium but who had not elected COBRA continuation coverage as of Feb. 17, 2009. ARRA established certain notice requirements that were in addition to the general prior law COBRA notice requirements.

These included a “general” notice to be provided in connection with a qualifying event; an alternative notice for use by group health insurance issuers/carriers that offer group health insurance coverage under state mini-COBRA laws; and a specialized notice tailored to assistance eligible individuals. The COBRA premium subsidy under ARRA ended Dec. 31, 2009.

Not only did the involuntary termination have to occur before Dec. 31, 2009, but the assistance eligible individual also had to lose health coverage prior to that date. (Thus, an individual involuntarily terminated in December 2009 who did not lose coverage until Jan. 1, 2010 was ineligible.)

Extension of the COBRA subsidy

The DDAA affected ARRA’s COBRA subsidy in two key ways:

• The subsidy is now available for up to 15 months (a six-month extension from the original nine-month maximum coverage period).

• The subsidy is available for workers involuntarily terminated who lose coverage on or before Feb. 28, 2010 who elect COBRA (under ARRA, coverage had to be lost on or before Dec. 31, 2009).

Unlike prior law, under the DDAA, the loss of health coverage by the end date of the subsidy is no longer required. The DDAA determines eligibility for the subsidy based only on the date of the involuntary termination.

The new law requires that individuals who reached the end of the original premium reduction period must be provided with additional time to pay extension-related reduced premiums that were due prior to notice being provided.

The DDAA amendments establish a “transition period” for assistance eligible individuals with respect to any period of coverage beginning before Dec. 19, 2009 to which the subsidy extension applies. An individual’s “transition period” begins immediately after the end of the maximum number of months (generally nine) of premium reduction available under ARRA.

Individuals in a transition period must be provided notice of the extension within 60 days of the first day of their transition period. The notice must include information on the extension from nine to 15 months and the ability to make retroactive payments for certain unpaid reduced premiums.

An assistance eligible individual is deemed to have timely paid a COBRA premium for a transition period if he or she (i) had COBRA coverage for the period of coverage immediately prior to the transition period, and (ii) pays the premium by Feb. 17, 2010 or, if later, within 30 days of receipt of notice of the availability of the transition period.

Any assistance eligible individual who pays an unsubsidized COBRA premium during his or her transition period is entitled to either a reimbursement of the excess paid, or a credit towards future premiums.

There is a special rule for assistance eligible individuals whose eligibility for the premium reduction under ARRA expired, and who thereafter dropped coverage. These individuals are allowed to re-enroll and get the benefit of the additional six months of subsidy, provided they pay the 35% portion of the full premium.

Notice of the extension must be provided:

• By Feb. 17, 2010 to any individual who was an AEI or otherwise experiences a qualifying event relating to termination of employment on or after Oct. 31, 2009;

• As part of the standard COBRA election package, to any individual who experiences a qualifying event after Dec. 19, 2009;

• To any individual who did not timely pay his or her COBRA premium during a transition period, disclosing the ability to pay retroactive COBRA premiums and continue coverage, within the first 60 days of such transition period; and

• To any AEI who paid an unsubsidized COBRA premium during a transition period, disclosing his or her entitlement to either a reimbursement of the excess paid, or a credit towards future premiums.

The DDAA Notice requires that plans notify certain current and former participants and beneficiaries about its changes to the premium reduction rules. The U.S. Department of Labor has issued the following model notices to assist employers and plan sponsors in meeting the DDAA's notice requirements:

Updated General Notice

Plans subject to the Federal COBRA provisions must provide the updated General Notice to all qualified beneficiaries (not just covered employees) who experience a qualifying event at any time from Dec. 19, 2009 through Feb. 28, 2010, regardless of the type of qualifying event, and who have not yet been provided an election notice.

In addition, plan administrators must provide this notice no later than Feb. 17, 2010 to all qualified beneficiaries who experienced a termination of employment and lost coverage on or after Oct. 31, 2009 but were not eligible to begin COBRA until Jan. 1, 2010 or later, have already been provided a COBRA election notice that did not include information regarding the Act, and have not elected COBRA.

In addition, these individuals are entitled to an extended election period of 60 days from the date of the updated General Notice.

Premium Assistance Extension Notice

Plan administrators must provide this notice no later than Feb. 17, 2010 to all qualified beneficiaries who experienced a termination of employment and lost coverage on or after Oct. 31, 2009 and were eligible to begin COBRA prior to Jan. 1, 2010 and who have already been provided a COBRA election notice that did not include information regarding the Act.

Individuals who were assistance eligible individuals as of Oct. 31, 2009 (but who are not in a transition period) must be provided this notice no later than Feb. 17, 2010. Individuals who are in a transition period must be provided this notice within 60 days of the first day of the transition period.

Updated Alternative Notice

This notice is intended for insurance carriers that provide group health insurance coverage under State mini-COBRA laws. It must be provided to persons who are eligible for continuation coverage under a State law.

Alden J. Bianchi can be reached at ajbianchi@mintz.com.

Employee Benefit News Legal Alert is a free, weekly e-newsletter featuring articles from the nation’s leading benefits attorneys.
THIS WEEK'S UPDATE
IS FROM:
Mintz Levin

About the author
Alden J. Bianchi is the practice group leader of Mintz Levin’s employee benefits and executive compensation group.

Editor: Lydell C. Bridgeford
Editorial advisor: Frank Palmieri, Palmieri and Eisenberg
Editorial contributors: Alston & Bird LLP; Curran Tomko Tarski LLP; Groom Law Group, Chartered; Mintz Levin Cohn Ferris & Popeo, P.C.; Keightley & Ashner LLP and Sutherland, Asbill & Brenan.

Interim Final Regulations Issued for Mental Health Parity and Addiction Equity Act

2010-02-10T09:13:00.001-05:00

The Department of the Treasury, Department of Labor, and the Department of Health and Human Services jointly issued interim final regulations on February 2, 2010, implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEAA) replacing existing regulations in place for the Mental Health Parity Act of 1996.

Effective Date
These regulations generally apply to group health plans for plan years beginning on or after July 1, 2010 (i.e., beginning January 2011 for calendar year plans). The statutory provisions were effective for plan years beginning on or after October 3, 2009; however, the agencies will take into account efforts to comply with a reasonable interpretation of the statutory provisions until the Interim Regulations are effective.

General Information
The Interim regulations prohibit a plan or health insurer from applying any financial requirement or treatment limitation on mental health or substance abuse disorders that are more restrictive than the predominate financial requirement or treatment limitation imposed on substantially all medical/surgical benefits in the same “classification.”
These classifications segment services by network, venue, emergency treatment and prescription drugs, but do not define inpatient, outpatient or emergency care, as these terms differ by plan design and by State regulation. Nevertheless, a plan must apply these terms uniformly for both medical/surgical benefits and mental health/substance use disorder benefits. In addition, the requirements of the interim regulations are applied separately for each coverage unit (i.e. single EE + spouse, etc.).

Definitions
The interim regulations do not offer definitions of “mental health conditions” and “substance abuse disorders,” rather, this is left to each individual plan with the caveat that such definitions must be generally accepted in the relevant medical community.
It is important to remember that the interim regulations do not require a plan to provide any specific mental health or substance abuse disorder benefits. Moreover, providing benefits for one or more mental health conditions or substance abuse disorders does not require the provision of benefits for any other condition or disorder. However, if a plan provides benefits for a mental health condition or substance abuse disorder, benefits must be provided for that condition in each classification for which medical/surgical benefits are provided.
These guidelines have raised questions about certain types of procedures as to whether they are physical or mental health conditions. For example, a smoking cessation benefit could possibly fall into the category of a “substance abuse disorder” (e.g., nicotine dependency) under the interim regulations. A plan sponsor is well advised that if a particular condition falls in to a gray area, and there is substantial doubt as to whether it is physical or mental in nature, the plan should err on the side of conservatism and remove any benefit or financial limitations.
Further, for each benefit classification, there must be a comparison for each type of financial requirement or treatment limitation. For example, co-pay and annual visit limitations applicable to out-patient/in-network medical surgical benefits must be compared to co-pay and annual visit limitations applicable to out-patient/in-network mental health or substance abuse benefits.

Non-Quantitative Treatment Limits
The interim regulations, in addition to enumerating “quantitative” treatment limits (e.g. numerically based limits such as visit limitations), also contain certain “non-quantitative” treatment limits, (such as including medical management standards and requirements for using lower cost therapies before the plan will cover the more expensive therapies). As long as the factors used in applying the non-quantitative limits to mental health and substance use disorder benefits are comparable to, and applied no more stringently than, the factors used in applying to medical/surgical benefits, such criteria is deemed compliant.

Prescription Drugs
To the extent that a plan imposes different levels of financial arrangements on differing tiers of prescription drugs, the plan will satisfy the parity requirement with respect to the prescription drug classification of benefits if the financial requirements are based on reasonable factors (such as generic vs. brand name), determined in accordance with the non-quantitative treatment limitations, and without regard to whether a drug is generally prescribed for medical/surgical benefits or mental health/substance use disorder benefits.
MHPAEA Grab Bag For a plan to be deemed compliant , mental health/substance use disorder providers must be treated the same as primary care providers in terms of comparing financial/treatment limits within the six categories.
Employee Assistance Plans (EAPs) cannot be used as a gatekeeper (no major medical plan mental health benefits until you have exhausted EAP benefits), unless there is a similar exhaustion requirement for medical/surgical.
No cumulative limits may be applied separately to medical/surgical and mental health/substance abuse disorder benefits. For example, a plan cannot have a $1,000 deductible on medical/surgical benefits and a $1,000 deductible on mental health/substance abuse disorder benefits. Instead, a plan must establish a combined deductible for both.
Employers who employed at least 2 employees, but less than 50 employees on business days during the preceding calendar year, are exempt from these requirements. In this case, there is no distinction between full and part-time employees.
Plan providers are encouraged to review their current plan designs for noncompliant designs, and make changes accordingly.

Final Rules Released on Mental Health Parity Act

2010-02-05T09:55:00.000-05:00

Federal agencies, including the Treasury Department, the Department of Labor and the Department of Health and Human Services, have issued final rules for providing parity to group health plan participants who receive treatment for mental health and substance abuse disorders. The interim final rules were published in the February 2, 2010 Federal Register and apply to plan years starting after June 30, 2010. The new rules will require many employers to make additional modifications to their medical plans.

The new rules provide employers and insurers with long-awaited clarification and guidance on complying with the Paul Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). Among the key clarifications provided in the new rules is a breakdown of benefits into six categories:

• Inpatient in network
• Inpatient out of network
• Outpatient in network
• Outpatient out of network
• Emergency care
• Prescription drugs

The rules require that mental health and/or substance abuse benefits provided in any one of these categories must be on par with other medical and surgical benefits in that category. The rules further clarify “parity” to mean that plans may not impose more restrictive financial requirements (e.g., deductibles, copayments, out-of-pocket maximums) or treatment limitations (e.g., number of visits) on mental health/substance abuse care than the predominant financial requirements and limitations imposed on other services in the same category.

When MHPAEA was first enacted in 2008, many employers removed specific day and visit limitations that applied only to mental health treatments. However, many have maintained separate deductibles and out-of-pocket maximums for these benefits. The new rules prohibit plans from including “separate but unequal deductibles and maximums,” which will require many employers to modify their plan designs.

Contact Cindy LaQuatra, RHU a Senior Consultant within the Health & Wellness department at BRG for assistance in reviewing your plan and ensuring it complies with the new rules. You can reach Cindy by phone at 216-393-1848 or by email at claquatra@benefitsrg.com.

COBRA Extension Impacts Small Ohio Employers

2010-01-26T14:38:00.000-05:00

The COBRA subsidy provided under the federal stimulus bill was recently extended under a defense spending bill (Department of Defense Appropriation Act of 2010) to provide for an additional 6 months of COBRA premium subsidy (from 9 months to 15 months), as well as an extension of the subsidy eligibility period to February 28, 2010.

Employers with fewer than 20 employees who are covered by state continuation coverage ("mini-COBRA") rather than the federal law are also impacted by the new bill. The Ohio Department of Insurance has issued a guidance sheet that details how the bill impacts small Ohio employers and what employers and insurers must do to comply. Here are a few highlights:

Individuals receiving state continuation coverage under Ohio law may now be eligible for up to 12 months of federal subsidy (but not the entire 15 months provided under federal COBRA law).
Employees who are involuntarily terminated through February 28, 2010 are eligible for the subsidy.
Employers/insurers are not required to offer retroactive state continuation coverage to employees who declined it. However, they must notify individuals currently enrolled in state continuation coverage of the potential subsidy extension. The Ohio Department of Insurance has provided a modified version of the model notice issued by the DOL. This notice must be distributed no later than February 17, 2010.
Please review the guidance sheet for more detailed information about the bill, including how the subsidy and remaining premium are paid. If you have any questions, please contact Cindy LaQuatra at 216-393-1848 or by email at claquatra@benefitsresourcegroup.com .