In working with a new group client this morning, the usual question was asked…”How much should we contribute to employee and dependent premiums?” This particular employer had always paid 100% of the premium for employees as well as their dependents. However, premium increases of 20% over the last 3 years and the impact of a slow economy had this employer questioning their ability to continue this benefit.
At Benefaction, we have several recommendations. First, even if your company pays 100% of the premium for employees, make sure your contract with your insurance carrier reads 99%. For most carriers, if your contract states the company is paying 100% of the premium for employees, there are no valid waivers even if an employee has other coverage (for example, veteran coverage or Medicare). That means that the company would be paying for duplicate coverage. Secondly, we never recommend paying 100% of the dependent premium costs and here’s why. Let’s say you employ one spouse who has a working spouse and two children. The working spouse’s employer also offers group benefit coverage, but a large majority of employers only pay part (80%) of the employee premium and usually much less of the dependent premium (50%). Which employer is going to have the family enrolled? Obviously, the employer that is paying 100% of the premium costs will have the entire family enrolled even though the working spouse has employer provided benefits. Finally, we never recommend paying 100% of the total premium because part of what is needed in our healthcare reform is a true understanding of the associated healthcare costs and what each of us can do to stabilize those costs. We believe in fully educating the employees of our group clients so they understand the benefits, how to use and get the most from those benefits, the true costs, and how to be a better healthcare consumer.
In an effort to keep everyone up to date on what is happening with health care reform, I’m passing along information released today by NAIFA (National Association of Insurance and Financial Advisors).
Early this morning, the House Ways & Means Committee approved H.R>3200, the “America’s Affordable Health Choices Act of 2009” by a 23 to 18 vote. There are two other House committees- Education & Labor and Energy & Commerce that are reviewing the measure. The edits of all 3 committees will be combined into one bill that will go to the House floor by the end of the month.
H.R.3200 has one major impact for consumers – it limits the use of flexible spending (FSA, health savings account (HSA) and health reimbursement account (HRA) funds that are used to buy medicine. Currently FSA, HSA, and HRA funds may be used for both prescription medications as well as over the counter medications. H.R. 3200 limits these funds for prescription medications only.
Here’s an overview of H.R. 3200 as approved by the Ways & Means Committee:
- Includes an employer mandate, with employers who do not offer and pay most of the premium for health insurance on their employees subject to an eight percent of payroll tax
- Includes an individual mandate, with fines for individuals who do not purchase health insurance
- Creates a national exchange (although it permits states to set up their own exchanges) through which both a public health insurance plan and an unlimited number of private insurance plans could be purchased—initially, only individuals without access to employer-provided health insurance and small businesses could purchase their insurance through an exchange.
- Creates a public plan that is not subject to all the same rules (e.g., state premium tax liability) as private plans
- Imposes insurance reforms, including:
- Prohibition against pre-existing conditions
- Prohibition against use of health status or history in setting premiums
- Prohibition against annual or lifetime benefit caps
- Community rating (only age, family size and geography would be permissible premium variables)
- Required guaranteed issue/renewability
- Offsets the $1+ trillion cost of the reform bill by Medicare program savings (including substantial cuts in Medicare Advantage), and a new surtax on high-income Americans (1 percent on family income of $350,000 to $500,000; 1.5 percent on family income of $500,000 to $1 million; and 5.4 percent on family income in excess of $1 million).
- Restricts use of FSA/HSA/HRA funds used to buy medicine to prescription drugs
Tags: Add new tag, Reform, Universal Care
Especially in the Internet age, our tendency is to independently research whatever we can before initiating any significant action. Sometimes this leads us down the path that ultimately generates action based on something we read online, without the benefit of ever speaking to someone. I would caution you of ever doing this when it impacts your benefits program, a policy or anyone’s personal health. This blog, our webpage, or any other information you may read online is not a substitute for consultation with a qualified professional about your specific question or concern. This blog may have outdated or otherwise inaccurate information, or the information may not apply to your specific circumstance or in your jurisdiction. Please contact us personally at (415) 329-4299 or info@benefaction-ins.com. We’ll be happy to refer you elsewhere if we can’t assist you.
Tags: Disclaimer
Employers are required to provide a Medicare Part D disclosure notice to all of their Medicare-eligible employees by November 15th of each year. The notice is for all your Medicare-eligible employees regarding the creditability of the prescription drug coverage that is offered through the employer plan.
If a Medicare-eligible employee is enrolled on your group benefit plan and declines Medicare Part D as a result, but your group plan is not deemed creditable, the employee will be charged a higher premium when they leave your group plan and accept Medicare Part D.
If you need assistance drafting your annual notice or you need to know if your group plan’s prescription coverage is deemed creditable, give us a call (415-329-4299) and we will help you.
Tags: Employee Notice, Medicare, Medicare Part D
Recently, a client called seeking advice about their responsibility in notifying employees of a possible health concern. An employee whose wife was diagnosed with Swine Flu came to work not feeling well and after spending some time in the office was sent home by management once the situation became known. The employer wanted to notify other employees of the possible health concern and share information about Swine Flu local resources. I advised not to include the employee’s name in the email notification sent as the email contained “medical information” that is protected under HIPAA. As employers, you do have an obligation to inform other employees about possible health concerns, but you don’t have the right to disclose personal health information of another employee.
Tags: Disclaimer, HIPAA, Swine Flu
This issue came up again today so I thought I’d put it out there for everyone. In California, most of our insurance policies are written to allow domestic partners- same sex and opposite sex. However, tax issues and COBRA both fall under Federal oversight and the Federal government does not recognize domestic partners. Domestic partners are not a “tax eligible dependent” as defined by the IRS.
As a result, if you have any employees enrolling domestic partners, you cannot deduct their contribution towards the domestic partner’s premium pre-tax from their paychecks under your company Section 125 plan. Employee premium contribution for domestic partners must be taxed.
Benefaction Insurance wants to ensure that your business is in compliance and is using the newest forms. There is a new I-9 form that employers must start using effective April 3, 2009. The new form with the revision date of February 2009 is available for download by going to www.uscis.gov/files/form/i-9.pdf
So what’s new on this form?
- Employees cannot use any expired documents.
- Timeframe for replacement documents. Employees must present receipt for replacement document within 3 business days of the date the employment begins and must present valid replacement document within 90 days.
- Changes to LIST A. U.S. Passport Card has been added. Employees can no longer use Forms 10688, 10688A, or 10688B. Employees may use foreign passports with machine-readable visas.
- Changes to LIST C. Employment Authorization document which is issued by the Department of Homeland Security has been added.
Please make sure you update your employee new hire packets with the updated form.
Tags: I-9 Form
As you all know, the American Recovery and Reinvestment Act of 2009 was signed into law on February 17, 2009 and had serious changes to COBRA coverage that took effect on March 1, 2009. If a terminated employee qualifies as an “assistance eligible individual” (AEI), they are entitled to receive a 65% subsidy of their total COBRA premium for up to 9 months.
For employers that are classified as Cal-COBRA employers (less than 20 employees total), you are probably receiving COBRA inquiries from your insurance carriers. Your insurance carriers sent out the required COBRA notification letters to your terminated employees, but they still need information from you to determine if terminated employees are eligible for the subsidy. Each carrier has a different form or letter and you will need to answer their questions and complete the received forms to ensure the carrier can comply with the COBRA requirements. If you have any questions about these forms and how to complete the information, just give us a call and we will walk through them with you.
Tags: ARRA COBRA, CalCOBRA, COBRA Subsidy
As you know, the American Recovery and Reinvestment Act of 2009 was signed into law on February 17, 2009 and had serious changes to COBRA coverage that took effect on March 1, 2009. If a terminated employee qualifies as an “assistance eligible individual” (AEI), they are entitled to receive a 65% subsidy of their total COBRA premium for up to 9 months.
For employers that are classified as Federal COBRA employers (more than 20 employees total), you shoulder the COBRA notification responsibility. At this point, you’ve already sent out the required COBRA notices. Now, you may be receiving paperwork back from your terminated employees claiming subsidy eligibility. As COBRA paperwork is received back from your terminated employees, you will need to determine that member’s eligibility for the subsidy and then promptly submit the COBRA paperwork along with your approval or denial for the subsidy to your insurance carriers or Benefaction Insurance if we are your broker of record.
For Federal COBRA employers that have AEI’s approved for the COBRA subsidy, you will need to complete some additional paperwork to claim the subsidy on your payroll taxes. Employers will claim their paid COBRA subsidy premiums using IRS Form 941, updated in January 2009. Be sure that your payroll service is capturing the needed information to generate this information accurately.
In addition, Federal COBRA employers must ensure they are using the correct, updated COBRA notifications. You can access the sample COBRA notifications on the Department of Labor website, http://www.dol.gov/ebsa/COBRAmodelnotice.html or give Benefaction Insurance a call and we will send you the sample notifications.
Tags: ARRA COBRA, COBRA Subsidy, Federal COBRA
First, you should be aware that FMLA does not apply to all employers. FMLA (Family Medical Leave Act) applies to employers who employed 50 or more employees in 20 or more workweeks in the current or preceding calendar year.
Second, not all of your employees will be eligible for FMLA benefits. To be eligible for FMLA benefits, an employee must:
- Work for a covered employer
- Have worked for the employer for a total of 12 months
- Have worked at least 1,250 hours over the previous 12 months
- Work in a location in the US or any territory or possession of the US where at least 50 employees are employed by the employer within 75 miles
A covered employer must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12 month period and maintain the employee’s benefits as if the employee was actively at work (continue employer contribution) for one or more of the following reasons:
- Birth and care of a newborn child of the employee
- Placement with the employee of a son or daughter for adoption or foster care
- Care for a spouse, son, daughter or parent with a serious health condition
- Take medical leave when the employee is unable to work because of a serious health condition
- For qualifying exigencies arising out of the fact that the employee’s spouse, son, daughter or parent is on active duty or call to active duty status as a member of the National Guard or Reserves in support of a contingency operation
On January 16, 2009, a comprehensive overhaul of the US Department of Labor’s FMLA took effect. The overhaul contains changes, clarifications, modifications and updates which all need to be adopted by employers. The following provides some of the highlights:
New FMLA Posting Requirement- Employers will be required to provide employees with a general notice about FMLA (posters and part of employee handbook); an eligibility notice; a rights and responsibility notice; and a designation notice.
Two New Leave Entitlements For Covered Military Service Members – Military Caregiver Leave entitles family members of covered service members to take up to 26 workweeks of leave in a single 12 month period to care for a covered service member with a serious illness or injury incurred in the line of duty. Qualifying Exigency Leave helps families of members of the National Guard and Reserves manage their affairs while the member is on active duty in support of a contingency operation.
Clarifications And Updates Regarding Medical Certification – The final rule addresses the Health Insurance Portability and Accountability Act (HIPAA) as it applies to the communication between employers and the employee’s health care providers. Additional clarifications provide instructions on the employer’s responsibilities and timeframes regarding deeming a medical certification incomplete and requesting additional information.
Clarification Regarding the Definition and Implications of Light Duty – Time spent performing light duty work does not count against an employee’s FMLA leave entitlement.
Update To The Definition of Serious Condition – The final rule provides clarification and strict definitions of what qualifies as a serious health condition.
The changes to FMLA administration require much more information than we can cover in our newsletter. Benefaction Insurance has put together a white paper highlighting these changes. You can also find full information on the US Department of Labor website. Please give us a call and we will schedule a meeting with your HR staff to review these changes and ensure that your team is in compliance.
Tags: FMLA Compliance