| Issue: # 18 |
June 23, 2008 |
Greetings!
Keeping you informed of the latest developments in the employee benefit marketplace.
If you have any questions, e-mail Bill or Vanessa. To learn more about Advantage Benefits, click here. Many of our clients have found these newsletters to be quite helpful and we have now set up a link to hold all the archived newsletters on-line that can be accessed at anytime.
If you know anyone, who may find this information of interest, please forward them this newsletter (there is a link on the bottom), and they can subscribe themselves.
Sincerely,
Bill Randell, CLU, CHFC Vanessa Costa, CLU,CHFC
Advantage Benefits Group, Inc. |
Two HMO Designs
Carriers Allow It |
| In the past, HMO's would only allow employers to offer one plan design, unless you were a large group. In most cases, you can now offer two plan designs for employees to choose from. Since employees have different needs & expectations from their health plan, some employers have found it helpful to let employees decide which plans best suits their needs.
In many cases, employers downgrade plans to save on premium. There will always be employees who are not happy with the employers decision to do this. The employer may now keep the old plan design with the higher rates, but can have employees pay the difference between the two plans.
In most cases, when presented with these two options, the employee opts for the new plan design with higher co-payments & lower weekly deductions. An employee, however, who has high utilization, or maybe an upcoming hospitalization, will opt to keep the current plan design and the higher weekly deduction.
In the end, offering two plan designs gives the employer & employee flexibility. The administrator of the plan will need to set up 2 deduction amounts, notify payroll of the changes, and keep track of who has what.
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Health Savings Accounts
For Owners
Health Savings Accounts are still very new and have not taken off in this area yet. Since it is a more complex product with many moving parts employers are hesitant to offer. It is posible, however, to implement the HSA product ( a high deductible plan ) and have only the owners or key people elect to participate.
Example: In closely held businesses, owners sometimes can not contribute/defer the maximum annual contribution into the 401(K) plan, unless they elect the Safe Harbor Option. As the cost of living continues to rise, one area cutback is deposits into the 401k plan by non owners.
In this case, a 2nd HMO plan design that is Health Savings Compliant (high deductible) was implemented. The owner was the only one to choose this option and is now able to contribute (tax deductible and tax deffered), $5,800 into the HSA account. In essence, the monies no longer deposited into 401(K) are now repositioned tax deductible into the HSA.
Unlike 401k and other benefit plans, this is not seen as a discriminatory transaction.
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| COBRA Administration
More Paperwork |
| We receive phone calls with questions on Cobra all the time. Since this is a Federal Law employers must be sure to have a procedure in place to offer the Cobra Benefit to terminated/ eligible participants.
Since the burden in on the employer to administer and collect the funds, the first recommendation we give you is to Terminate the employee from your invoice immediately. Too many employers have simply left the employee on the bill waiting to hear back. In many cases, employees never respond and if you neglect to notify the insurance carrier on a timely basis, you may end up paying premiums in error.
Also, we suggest you notify the employee in writing via Registerd Mail. In that way, you have a paper trail to monitor the transaction. If you are small enough, you may have the employee sign off on Cobra at their Exit Interview on the last day of employment.
On our website, www.advantagebenefits.com, you will find more detailed Cobra Guidelines as well as Sample Letters. We even have a more simplfied version of the Sample Letters available. Just email Bill or Vanessa to see that version. |
Domestic Partner Employers Discretion |
| Another topic we see more frequently now is the Domestic Partner Rider. Domestic partner benefits are benefits that an employer chooses to offer an employee's unmarried partner, whether of the same or opposite sex.
An employer wishing to implement this program needs to create a defintion of what an eligible domestic partner is. The most common definitions contain 4 or 5 core elements: 1) The partners must have an attained minimum age (usually 18): 2) Neither person is related by blood closer than permitted by state law for marriage: 3) The partners must share a committed relationship: 4) The relationship must be exclusive: 5) The partners must be financial interdependent.
An employer must also decide whether the domestic partner program is to cover opposite-sex couples only or include same-sex couples.
The key point to remember with Domestic Partner Rider is that the carriers once again shift the burden to the employer. It is 100% at the Employers Discretion to offer this or not. Usually employers never think about this until they are approached by an employee.
The carriers prefer you add this rider at anniversary or renewal date. However, you can make a special request off anniversary. There is no additional cost to add this rider to your plan. You need to make the decision on whether you want to go down this path. Some employers are morally opposed to this, other don't care, others are concerned about the additional potential financial burden.
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