Early Deliverables will hit this election year and include the following:

• Dependent Children can stay on Parents’ policy until Age 26:  Parents will be allowed to keep their children on their health insurance plan until age 26, unless the child is eligible for coverage through a job. Insurance plans cannot exclude pre-existing medical conditions from coverage for children under age 19, although insurers could still reject those children outright for coverage in the individual market until 2014.  This reform will be in place within 6 months of the legislation date.
• Uninsured could qualify for coverage through federal program:  People with a medical condition that has left them uninsurable may be able to enroll in a new federally subsidized insurance program that is to be established within 90 days. The legislation appropriates $5 billion for this, although that may not be enough to cover all who apply; it’s not clear how much consumers would pay as their share of the cost.  This reform will be in place within 3 months of the legislation date.
• Ban on life-time limitations on medical coverage:  All existing insurance plans will be barred from imposing lifetime caps on coverage. Restrictions will also be placed on annual limits on coverage.  This reform will be in the place within 6 months of the legislation date.
• Some seniors may get help paying for prescription drugs:  The approximately 4 million Medicare beneficiaries who hit the so-called “doughnut hole” in the program’s drug plan will get a $250 rebate this year. Next year, their cost of drugs in the coverage gap will go down by 50 percent. Preventive care, such as some types of cancer screening, will be free of co-payments or deductibles starting this year.
• Tax credits for small businesses:  Tax credits for businesses: Businesses with fewer than 25 employees and average wages of less than $50,000 could qualify for a tax credit of up to 35 percent of the cost of their premiums.

 We will have to wait until 2014 for the majority of the passed reforms, including:

• Creation of State Exchanges:  Individuals as well as small businesses may elect to purchase insurance coverage through state exchanges.  The exchanges are expected to involve much greater regulatory oversight than insurers now typically face and to alter their business models drastically.
• No Pre-Existing Limitations:  Insurance carriers will no longer be able to deny individuals insurance coverage due to health history or pre-existing conditions.  Insurance policies will no longer contain pre-existing condition limitations.
• Expansion of State Medicaid Programs
• No life-time or annual benefit limitations
• Federal mandate requiring all individuals to purchase insurance coverage or face penalties.
• Medicare changes including gradual elimination of prescription drug donut hole

• The end date of eligibility for the ARRA subsidy changes from December 31, 2009, to February 28, 2010.
• The ARRA premium subsidy expands to 15 months, increased from current nine months.
• Those who have lost their subsidy by completing their nine months in November or later would be grandfathered in under the new legislation.
• Involuntary terminations that occur on or before February 28, 2010, would be eligible for the subsidy, regardless of when the individual’s COBRA eligibility period begins. This addresses a Congressional oversight in the original bill pertaining to December 31, 2009, qualifying events.
• Additional notices will be sent with information regarding the amendments to Assistance Eligible Individuals, as well as those experiencing a COBRA qualifying event consisting of termination of employment.

Further Details of the Subsidy Extension

• The COBRA subsidy provision requires additional notices describing the new 15-month premium subsidy. It will be sent to all assistance-eligible individuals who are on COBRA on or after November 1, 2009, or whose qualifying event is a termination of employment occurring on or after that date.
• The provision also allows a period for the retroactive payment of premiums for assistance-eligible individuals whose subsidy period expired on November 16, 2009, and who failed to continue to pay their premiums.

The same refund/credit rules under the original ARRA bill apply to any assistance-eligible individual whose subsidy expired in November and who has since paid the full COBRA premium.

In addition, the provision addresses a Congressional oversight in the original subsidy by making eligibility for the subsidy hinge only on the involuntary termination of employment occurring on or before the new February 28, 2010, sunset date. Subsidy eligibility is no longer tied to the date the COBRA eligibility period begins. Under the original subsidy bill, anyone whose benefits terminate on December 31, 2009, would not be eligible for the COBRA premiums reduction program under ARRA because COBRA eligibility also had to occur on or before December 31, 2009. If a worker is involuntarily terminated on December 31, 2009, COBRA eligibility would begin on January 1, 2010, making them ineligible for the subsidy.
 
The House Rules Committee has introduced another subsidy extension in H.R. 2847, Jobs for Main Street Act, 2010. The COBRA provision in this bill would extend the subsidy until June 30, 2010. Although the Senate will not be taking up this bill this year, it presumably will be a starting point for the Jobs bill discussions next year.

Look for new COBRA Template letters on the Department of Labor’s website to use for your December terminations once the Senate passes the provision.  If you have any questions about what you’ll need to do, just give us a call or email.

Section 125 or POP:  An Employer will need to offer a Section 125 Plan that will allow employees to have their premium costs deducted from paychecks on a pre-tax basis.  This plan will run about $100 to $125 per year and will lower the employees’ tax base and in turn the employer’s FICA tax base - a win-win.

A Section 105 plan is essentially a Health Reimbursement Account (HRA) that is typically self-funded by the employer.  The employer pays into the fund and the employees can use the funds for qualified health expenses.  The plan is defined by the employer and can cover any combination of health expenses that are approved as a tax qualified expense.  In this plan, the tax write-off goes to the employer, not the employee and unused funds belong to the employer.  This type of plan will generally cost $300 as a one-time implementation fee and then a $5 per employee per month charge for administration.  Employees submit their claims for unreimbursed health expenses to the administrator who pays the claims to the employee.

If you as the employee are looking to pay qualified health expenses on a pre-tax basis, there are two methods.  The first is a Health Savings Account.  In order to open a HSA at any bank, you must first be enrolled on a HSA compatible medical plan.  If you are enrolled on this type of plan, you can open an HSA account at your personal bank and then have your employer deduct money at your direction from your paycheck to deposit in the HSA account.  You just need to check with your employer to confirm their payroll service works with your bank.  

If you are not enrolled on a HSA compatible medical plan, then the employer may set-up a Flexible Spending Account.  You then decide how much to deduct from your paychecks for unreimbursed health expenses and submit claims when the expense is incurred.  Again, your deductions lower your tax base and the employer’s tax base.  However, unused money in this type of plan is forfeited so you have to estimate your health expenses carefully.  A FSA can also include Dependent Care as well where you can have costs for childcare deducted pre-tax and then be reimbursed.

Contra Costa Health Services  Seasonal Flu Vaccine and *H1N1

FREE Flu Clinics (Flu Vaccinations given from 10:00 a.m. – 3:00 p.m.)

Saturday, November 7^th, 2009, Hilltop Mall in Richmond

Saturday, November 14^th, 2009, Somersville Towne Center in Antioch

Saturday, November 21^st, 2009, Ygnacio Valley High School in Concord

Saturday, November 21^st, 2009, San Ramon (Location and walk-in or drive through model to be determined)

*H1N1 vaccines will only be available to high risk individuals. Please see the definition of “high risk” below.

Doctor’s Medial Center H1N1 only

H1N1 Influenza Vaccination Drive-Thru Clinics to high risk people

2000 Vale Road, San Pablo near hospital parking lot

Thursday, November 5^th, 2009 3:00p.m. – 7:00p.m.

Saturday, November 7^th, 2009  10:00a.m. – 12:00 noon

A high risk person is one that meets the following criteria:

pregnant women, persons who live with or provide care for infants younger than six months of age, healthcare personnel, persons between 6 months to 24 years of age and persons 25 - 65 years of age who have medical conditions that put them at higher risk for influenza-related complications (chronic lung disease, diabetes, cardiac disease, kidney disease or immune compromised). Persons who have egg allergies should not get the vaccine.

 Steps For Staying Healthy:

A few things you need to know:

1.  Individual Insurance policies are priced by the applicants’ age, home zipcode and health history.  The sample rates I’ve shown you will be different than the rates you can anticipate unless your age and zipcode match the illustration.

2.  The process of purchasing an individual policy takes about 30 to 45 days as medical records may be ordered.  As a result, if you want to have an individual policy active by January 1st, you should apply by November 15th.  The one exception to this guideline is Kaiser.

3.  There are many individual policies available, but you need to fully understand what the plans cover.  Some plans have limited prescription drug benefits or offer no maternity coverage.  Make sure you understand what you are purchasing.

Kaiser Enrollees:

For those of you currently enrolled with Kaiser on DWR, you would pay $833 a month to have your family (spouse and children) on the plan at the current 2009 rates.  However, you have several options in purchasing a Kaiser Individual Plan that could save you serious money.

I used pricing for a 40 year women with two children ages 7 and 4 in San Francisco.  If you are younger, the rates would be lower and if you are older, the rates may be higher.

Kaiser $25 Copay Plan- $864 mo / Kaiser 50 Copay Plan- $672 mo / Kaiser 30 Copay - $1500 Deductible Plan - $598 mo / Kaiser $0-$1500 HSA Plan - $567 mo.

If you only have a spouse enrolled with Kaiser today, your options and possible savings are different.  If you keep your spouse on the DWR Kaiser group plan, you would pay $470 a month using the current rates - again those rates will increase in 2010.  I ran sample rates for a 30 year old female spouse in San Francisco.  If you purchased an individual plan, you would pay the following:  $296 month for the Kaiser 25 Copay Plan or $180 a month for the $30 Copay / $1500 Deductible Plan.

Blue Cross Enrollees:

For those of you enrolled on the Blue Cross PPO or HMO plans, there are many options avaible with Blue Cross and Blue Shield that may meet your needs.  The affordable plan options available to individuals are all PPO plans (HMO plans are expensive), but you will typically find your doctors are in the network for both Blue Cross and Blue Shield.

If you were to keep your family (spouse and children) enrolled on the DWR Blue Cross PPO Plan, you would pay $725 a month based on the current rates or $833 a month for the HMO Plan.  Again, I’d factor about a 20% increase for 2010 rates under the DWR plan.

Again, I ran rates for a 40 year old women with two children ages 7 and 4 in San Francisco.  Anthem has a great plan called the SmartSense PPO 500 with Generic and Brand Name RX Coverage.  The rate is just $444 a month!  There are also two options with Blue Shield that may make sense for your family, the Blue Shield 3600 HSA Plan at $476 mo and the Blue Shield Balance 2500 Plan at $545 mo.

If you only have a spouse enrolled on the DWR Blue Cross plans today, you would pay $431 a month for the PPO Plan or $470 a month for the HMO plan using the current 2009 rates.  Again, you have an opportunity to save money in purchasing an individual plan.  The rate for a 30 year old female spouse in San Francisco would be $198 a month on the Blue Cross Smart Sense PPO 500 Plan with Brand and Generic RX Coverage. 

Again, the rates shown are sample rates.  Health insurance coverage is important and it’s also confusing.  We would be happy to talk with you to answer your questions, prepare a specific rate quote for your family and discuss the options.  If you would like a specific rate quote for your family, just give us a call at 415-329-4299  or send me an email at samantha@benefaction-ins.com to briefly discuss your health history and obtain basic information such as your names, dates of birth and home zipcodes.  We will prepare a quote for you with several options and then we can review the options together so you fully understand the plans.  If you decide to apply, we will send you a link to apply right online with Kaiser, Blue Cross or Blue Shield.  Please know that there is no obligation or pressure - we just think it is important to know your options and make the right decision for your family.

At Benefaction, our answer is to wait to change the employer contributions until open enrollment.  That means if you are keeping the same insurance plans, you would wait until the next policy anniversary.  If you are revamping your insurance plans, it would be the effective date of the new plans or the new policy anniversary date.

When you change employer contribution levels, you want to be sure that your employees have the opportunity to make any changes necessary in their plan elections in relation to the new contribution levels.  For example, if the company is decreasing the contribution for dependent premiums, you want to be sure that your employees have ample notice (we recommend 60 days) and time to determine how best to provide coverage for their dependents.  Employees may want to research individual policies for their dependents or enroll dependents on a spouse’s employer’s group plan.  If your employees want assistance in researching individual policies, Benefaction Insurance provides 1:1 assistance to your employees in researching, pricing, and applying for  individual policies.

Both prospects are small business with approximately 20 to 30 employees and both were looking to avoid hiring HR staff as they are growing and believed that a PEO solution may be their answer.

PEO’s offer the small group employer outsourcing of payroll, benefits, taxes, and HR administration.  Of course, this is attractive to small employers that want to get back to focusing on their business.  However, this arrangement comes at a high price.

The biggest issue with a PEO solution is that your employees are no longer your employees.  All employees of your company become employees of the PEO.  Paychecks, tax forms, and work documentation are issued under the name of the PEO.  The second biggest issue is the PEO contract itself – once you sign the contract it is extremely difficult and costly to cancel.

The following offers a summary of the disadvantages of joining a PEO:

• Employer’s employees become employees of the PEO.  This changes the workplace culture.  Paychecks and other correspondence are all issued under the PEO name.  How do you create a workplace culture when your employees don’t recognize you as their employer?
• Employer has no input in selecting employee benefit coverage.  The PEO selects the health insurance plan and can change or cancel it anytime.
• Service fees are based on a percentage of payroll.  Employers with high wages pay higher fees.  Each time you give an employee a raise or a bonus, you are increasing your PEO fees.
• Liability is NOT avoided.  This is the most common misperception that a PEO offers small employers protection from lawsuits.  It doesn’t.  If there is a claim for harassment or discrimination in the workplace, the employer is still liable.
• Hidden charges:  PEO contracts are based on a percentage of payroll.  However, there are many other additional fees.  COBRA for example is a big issue.  Contracts will typically read that if you have a COBRA enrollment greater than a certain percentage, additional fees are applied.  However, employers cannot control COBRA enrollment and now due to the ARRA subsidy act which provides up to 9 months of COBRA subsidy for employees who are involuntarily terminated, COBRA participation is higher than ever.
• Terminating a PEO agreement is difficult.  PEO’s often have a one year mandatory contract.  If the employer terminates the contract after the mandatory contract period, the employer has just one pay period to establish new health insurance, new 401k plans, new State ID#, work comp coverage and liability coverage.
• Employer loses control of settlement of employee issues.  If an employee has a complaint or problem, they have to go through the PEO.  Again, this creates a big challenge in creating the workplace culture and loyalty needed in today’s business climate.
• A small employer loses the benefits due a small employer in terms of regulations.  Because the employees are now employees of the large PEO, the small employer is required to follow the policies of a larger employer including overtime, PTO, holiday pay, FMLA, and COBRA administration.

 Our solution:  Benefaction Insurance can meet your specific HR needs without taking over your employees or a difficult contract.  We offer different flat rate plans for specific HR outsourcing that enable you to retain your employees, select the benefit options that fit your business and employee needs, and focus on running your business.

Finally, probably of greatest discussion in specific product trends today is the huge number of employers switching to high-deductible, “consumer-driven” plans. For more than a year, brokers have reported a huge shift in interest, but many have mistakenly lumped health savings account-based versions with health reimbursement models.

“There is no doubt that the greatest trend in health benefits right now is employers switching to high-deductible offerings,” said San Rafael-based Benefaction Insurance Agency President Samantha Ehlen.

“At the same time, there is still a great deal of misunderstanding in the plans.”

She said the main difference between HSAs and HRAs is the unused money in the account. If the employee is generally healthy and does not use any of the money in an HSA account, those dollars stay with the employee. With a reimbursement account, the funds go back to the employer. Brokers more recently have said both versions experienced large premium increases in recent months, but generally HRA cost surges are less severe than savings accounts.

The article was short and did not include all the information we provided about the differences between an HRA and an HSA plan.  The HRA has some advantages for employers:  (1) it is flexible and the employer can choose how to fund and structure the HRA; (2) as mentioned, any unused funding is retained by the employer and the employer decides if they will allow unused funds to roll-over to the next year; (3) premium increases on the approved HRA plans have been less than the premium increases on HSA plans across all carriers; and (4) for a healthy, stable employee population a HRA plan offers employers real cost savings.

If you want full information and quotes on how an HRA plan may save your company money, just give us a call at 415-329-4299.

In November, the federal government issued new rules to clarify the Family and Medical Leave Act (FMLA), a complex law that had confused many employers and employees. The employers were given until January 16, 2009, to comply with the new guidelines.

Understanding the changes, which were issued by the Department of Labor, may help you in dealing with plan providers. Here are some of the key provisions of the new rules:

Eligibility notice. The employer must have a policy manual that explains who is eligible for FMLA leave. When an employee requests an FMLA leave, the employer must:

• Respond within five business days (up from one or two)
• Advise the employee whether he or she is eligible
• Provide at least one reason if the leave is denied
• Discuss arrangements for payment of health insurance premiums
• Discuss the use of concurrent paid leave

Employee eligibility. An employee must work for an employer for 12 months to be eligible for FMLA leave, and separate periods of employment count toward the total as long as the break in service is no longer than seven years (unless the longer break was caused by military service or there was a written agreement with the employer).

Retroactive designations. The employer may retroactively designate leave time as FMLA leave after appropriate notice to the employee if the designation does not harm the employee.

Employee notification to employer. An employee must notify the employer that he or she hopes to take a “foreseeable” FMLA leave at least 30 days in advance or as soon as possible. If the employee doesn’t give 30 days’ notice, the employer may require an explanation, with the possibility of delaying or denying the leave.

Medical certification. When an employee is certified to be in medical need of a leave, the employer may have a human relations professional, a leave administrator, or manager contact the healthcare provider. The employee’s direct supervisor may not contact the provider.

Recertifications. The employer may request a recertification of medical problems once every six months, up from once a year.