GHDP - Employee Benefit Strategy

Reasons Why Individual Market Trend has Been Towards Leaner Plans (HDHPs)

1) High cost of unsubsidized premiums 2) Premium tax credit leveraging 3) Tax, portability and ownership qualities of HSAs 4) Age curve compression

Benefit Policy Formulation Considerations

1) Human resource questions and issues such as: 1.1) Denial of claims by a carrier 1.2) Confusion over waiting periods 1.3) Service areas of a managed network 1.4) Whether or not a new medical procedure will be covered 2) Many benefit functions are contracted out to insurance carriers and TPAs

Reasons Why More Small Employers Did Not Transition to Nongroup Marketplaces

1) 2014 small group premiums remained stable 2) Uncertainty and rocky rollout of individual marketplace 3) Employer sponsored coverage may still be an expectation for ERs and EEs in some industries

Benefits Management - Applying Technology

1) A common relational database becomes the respository for census, demographic characteristics, eligibility, and plan info 2) A common relational database removes information silos 3) Info can be accessed by plan participants to check balances, coverages, or pending claims 4) Data-Accessing Capabilities: participants access individualized info without requiring a benefits specialist 5) Security: protect against fraud and unauthorized access to participant info 6) Executive Information Systems (EIS) provide management information in summary format 6.1) Utilization patterns, risk exposures, and factors driving benefit costs 6.2) Imaging and optical storage eliminates paper records 6.3) Access to internet information 6.4) Client server technology integrates networked applications with desktop and mobile tools 6.5) EE self-service allows updating of personal data and benefits

Cafeteria Plan Advantages and Disadvantages to the Employee

1) Advantage to employee 1.1) Can select benefits most appropriate to their personal needs 1.2) Savings because benefit expenses are paid on tax-favored basis 1.3) Not subject to federal income, FICA, or FUTA tax 2) Disadvantage to employee 2.1) Benefit elections are made beginning of year and are irrevocable 2.2) Use it or lose it rule 2.3) May be unfavorable to pay for dependent care

Voluntary Benefits Advantages

1) Advantages for employers 1.1) Offering more benefits without significant added costs 1.2) Supplement or replace ER sponsored benefits 1.3) Benefits act as EE recruitment or retention tool 1.4) Offering benefits to EEs that meet performance goals 2) Advantages of EEs 2.1) EEs like convenience of benefits through the workplace 2.2) In many cases, benefits are portable so they can take them to a new job 2.3) Advantageous pricing 2.4) Purchase is made through salary reduction

Cafeteria Plan Advantages and Disadvantages to the Employer

1) Advantages to the employer 1.1) Employer does not pay FICA or FUTA tax on amounts contributed 1.2) Not considered wages, so expenses tied to payroll are reduced 1.3) Help employees gain awareness of value of benefits 1.4) May lead to wise EE decisions and greater appreciation of benefits 2) Disadvantages to employer 2.1) Ongoing cost of admin and operation 2.2) Full amount of benefit must be available during entire year 2.3) Adverse selection of beneftis 2.4) Subject to complex coverage and nondiscrimination testing

Management Reporting / Management Information Systems (MIS)

1) Allows benefits management to monitor financial results, utilization, risk exposures, deviations from compliance targets 2) PPACA - Need to compile actuarial data to determine whether their health plans comply 3) Measure program costs and quality

How to Apply the Functional Approach Analyze Benefits Presently Available AND Consider Cost-Saving Techniques

1) Analyze benefits presently available 1.1) Types of benefits 1.2) Levels of benefits for each categories of needs 1.3) Probability periods create gaps in coverage 1.4) Eligibility requirements 1.5) Employee contribution requirements 1.6) Flexibility available to employees 1.7) Actual employee participation in benefit plans 2) Consider cost-saving techniques 2.1) Changes in benefit design 2.2) Reduction of benefits 2.3) Flexible benefits 2.4) Managed care 2.5) Utilization review 2.6) Disability management 2.7) Wellness programs 2.8) Change insurers 2.9) Self-fund

Benefits Management Legal and Regulatory Compliance

1) Benefit programs must comply with: 1.1) Reporting and disclosure documents 1.2) Performance requirements for claims 1.3) Fiduciary and funding requirements 2) Many compliance standards come from ERISA 3) The Tax Reform Act instituted nondiscrimination testing 4) Enactment of PPACA: 4.1) Required individuals to obtain health coverage 4.2) ERs required to provide affordable benefits or pay EE subsidies or penalty taxes

Benefits Director Proficiencies

1) Benefits Plan Design 2) Benefits Plan Delivery 3) Benefits Policy Formulation 4) Communications 5) Applying Technology 6) Cost management and resource controls 7) Management reporting 8) Legal and regulatory compliance 9) Monitoring the external environment

Reasons for the Growth of Employee Benefit Plans

1) Business Reasons 1.1) Attract capable employees 1.2) To retain current employees 1.3) Corporate efficiency, productivity, and improved employee morale 1.4) Employees' welfare and social objectives 2) Collective Bargaining 3) Favorable Tax Legislation 4) Efficiency of the Employee Benefits Approach 5) Limitations on the size of wage increases 6) Various legislative action 7) Benefits integrated with governmental benefits

Different Models and Approaches of Private Exchanges

1) Carrier approach (single-carrier vs. multi-carrier) and funding methodology (self vs fully-funded) 1.1) Single-carrier: offer a range of plan options, more control, flexibility in funding mechanism, and carrier reporting 1.2) Multi-carrier: offer a choice from several insurance carriers with various prices, provider networks and coverage levels 1.3) Fully insured, multi-carrier model: includes risk-adjustment 2) Model Types 2.1) Fully insured, Single Carrier: risk transfer but cost increase 2.2) Fully insured, Multi-Carrier: Leveraged competition, best-in-market efficiencies 2.3) Self insured, Single Carrier: Traditional model 2.4) Self insured, Multi-Carrier: EE choice, best-in-market efficiencies but less leverage over carriers

Comparison with the Competition Challenges and Methodologies

1) Challenges 1.1) Many non-homogenous plan provisions and benefit programs 1.2) An ER may have geographically dispersed workforce 2) Comparative Methodologies 2.1) Compare benefits payable to EEs under different circumstances 2.2) Compare actual costs to the ER for different benefit plans 2.3) Measure plans using uniform actuarial methods and assumptions 2.4) Compare plans feature by feature to isolate provisions appealing to certain EE groups

Services Typically Offered by Private Exchanges

1) Claims experience reporting 2) Facilitation of employee education and communication 3) HRA/HSA admin 4) Provision of stop-loss insurance 5) Quotes for unbundled services such as network access fees, PBM fees and experience reporting fees

How to Apply the Functional Approach

1) Classify employee needs 2) Classify categories of persons 3) Analyze benefits presently available 4) Determine gaps in benefits and any overlapping benefits 5) Consider recommendations for changes in present plan 6) Estimate costs for each recommendation 7) Evaluate methods of financing 8) Consider cost-saving techniques 9) Decide on appropriate benefits and financing methods 10) Implement changes 11) Communicate changes to employees 12) Periodically reevaluate

Employee Benefits Program What Influences Complexity of Program

1) Comprehensiveness of benefits design 2) EE group size 3) Program uniformity across different EE categories 4) EE geographic dispersion 5) Existence of self-funded or self-administered arrangements

Other Factors That Could Make HDHPs Work Better

1) Cost Transparency 2) Discussions between providers and patients 3) Pre-Funding of HSAs 4) Allowing more first dollar coverage 5) Lengthened Consumerism

Cafeteria Plan Administration

1) Coverage and nondiscrimination testing/cafeteria plan tests 1.1) Eligibility test: classification, length service, participation 1.2) Contributions and benefits test: nondiscrimination with respect to availability and utilization of contributions and benefits 1.3) Key EE concentration test: key EEs <= 25% of agg. beneftis 1.4) If fail testing, highly compensated and key EEs are taxed 1.5) Additional tests for underlying benefits (FSAs) 2) Taxation: qualified benefits are not taxable 3) Trust requirements 4) ERISA 4.1) Reporting, disclosure, and fiduciary requirements 5) Simple Cafeteria Plans 5.1) PPACA allows small ERs (less than 100 EEs) to establish these 5.2) Advantages 5.2.1) Plan not subject to nondiscrimination testing of cafeteria plans 5.2.2) Lower admin costs 5.2.3) Avoid tax consequences if nondiscrimination tests unfavorable

Benefits Plan Delivery Critical Activists AND Activities Vary Depending On

1) Critical Activities 1.1) New EE orientation 1.2) Policy clarification on benefits eligibility, coverage, and applicability of plan provisions 1.3) Dealing with exceptional circumstances and unusual cases 1.4) Processing enrollment data, claims info, and plan distributions 1.5) Benefits counseling - responses to EE inquiries including termination and retirement and forms of leave 2) Activities vary depending on 2.1) Activities vary depending on benefits program scope 2.2) Dependent upon the nature of the organization 2.3) Dependent upon EE workforce characteristics

Key Topics in Recommending an Employee Benefits Strategy

1) Data collection 2) Understanding Senior leadership benefits philosophy 3) Guiding Principles and Objectives 4) Understanding regulatory constraints

Basic Approaches for Establishing Employee Payroll Contributions

1) Defined Benefit 1.1) Employees contribution is a specified percentage of premium or some other amount determined by employer 1.2) Results in employer giving a greater dollar subsidy for employees enrolling in richer plans 2) Defined Contribution 2.1) Employer provides a defined dollar subsidy, regardless of plan choice 2.2) Protects employer against budget variation occurring from unexpected changes in enrollment across plans

Cafeteria Plan - Health Care FSA

1) Defined as a plan that meets requirements under Code Section 105 2) Pays for qualified medical expenses 3) Funds not used during period of coverage are forfeited 4) Under PPACA medicines may only be reimbursed under FSA if: 4.1) Prescribed by doctor 4.2) Is OTC medicine and individual obtains a prescription 4.3) The medicine is insulin

Advantages of Group Technique

1) Designed to prevent adverse selection 2) Only certain groups eligible term-0 3) Steady flow of lives through the group 4) Minimum number of persons in a group 5) Minimum participation 6) Eligibility requirements 7) Max limits 8) Automatic determination of benefits 9) Efficient admin

Benefits Plan Management Disadvantages and Advantages of Outsourcing

1) Disadvantages 1.1) Can result in fragmentation and lack of database integration 1.2) Communications can vary causing confusion among participants 2) Advantages 2.1) Benefits administration complexity, efficiencies of specialized providers, beneficial pricing, technological applications and trend monitoring 2.2) Attractive if need to upgrade systems and make significant technology investments

Flexibility of Private Exchanges Compared to Public Considerations - Considerations

1) Don't have to follow ACA small group rules 2) Can offer customized benefit plans, be fully insured or self insured, have special coverage for different classes of employees and have flexibility in defining employee vs employer rates and tiers 3) Can be adjusted at any time

Factors Keeping Enrollment Low in SHOP Plans

1) Dysfunctional websites 2) Low interest from insurers and brokers 3) Limited complex eligibility process for tax credits

Medical Insurance Reasons a Small Company Should Require EE Contributions for Medical

1) EEs are accustomed to paying some level of contribution 2) Motivates EEs who have coverage elsewhere to decline their small ERs plans 3) Changing to a contributory plan at a later date can create EE ill will 4) To avoid legal problems when EEs opt out of a noncontributory plan

Voluntary Benefits Excluded from ERISA if 4 Requirements Are Met

1) ER does not make any contributions 2) Participation in the program is completely voluntary 3) ERs sole functions with respect to program are: 3.1) Permit insurer to publicize program 3.2) Collect premiums 3.3) Remit premiums to insurer 4) ER receives no consideration (cash or otherwise) other than for admin services rendered

Elements of a Private Exchange

1) Employee choice: Private exchanges often offer more plan design options 2) Employer subsidies 3) Ancillary product offerings: products like dental and vision 4) Online enrollment and decision-making tools 5) Benefits admin: enrollment, eligibility, customer service and billing

Overall Employee Benefit Concerns

1) Employer and Employee objectives 2) What benefits should be provided 3) What should be covered 4) Should employees have options 5) How should plans be financed 6) How should the plan be administered 7) How should the plan be communicated

Defined Contribution Approach Elements

1) Employer defines how much they want to contribute for the specific group of employees 1.1) Employees have freedom to choose among the products available 2) Employees pay difference between cost of products chosen and the employer contribution

Incentives Under ACA for Some Small Employers to Drop Coverage Entirely

1) Employer mandate not applied less than 50 employees 2) Guarantees health coverage to individuals 3) Low and moderate income qualify for federal tax credits 4) Tax exclusion not as valuable to employers and employees if lower wage workers

Why Flexible Accounts are Popular

1) Expand benefits with little additional ER cost 2) Offer benefit that might appeal to small segment of EEs 3) Contain costs 4) Test the appeal without committing to a full-choice program 5) HSAs can: 5.1) Deliver compensation tax-effectively 5.2) Encourage EEs to self-insure 5.3) Replace existing coverage

Categories of Bills and Regulatory Guidance for Changes Relating to HDHPs and HSAs

1) Expansion of plans that can be paired with HSAs 2) Expansion of contributions 3) Expansion of major medical use of HSA funds 4) Expansion of nonmajor medical use of HSA funds

Benefit Plan Design Factors Affecting Benefit Plan Design AND PPACA Health Care Reform

1) Factors affecting benefit plan design 1.1) Cost considerations and EE needs 1.2) Organizational culture 1.3) Historical development of benefits programs 1.4) Industry trends and competition 1.5) Local market conditions for service providers 1.6) Collective bargaining agreements 1.7) Negotiations between labor management 2) PPACA Health Care Reform 2.1) Mandates that individuals attain health coverage 2.2) Restructures plan offerings by insurers and plan providers 2.3) Includes tax incentives and subsidies for coverage affordability 2.4) Individuals select plans through state exchanges if offerings are more attractive than ERs plan 2.5) Such alternatives make ER plan design more complex 2.5.1) Must consider tax and market-place contexts 2.5.2) EE benefits versus ER risk

Advantages of the Functional Approach

1) First, employee benefits very significant element of total compensation 2) Second, employee benefits a large labor cost for employers 3) Third, determine overlapping benefits and gaps in benefits 4) Fourth, keep benefits current, competitive, and in compliance with regulations 5) Finally, so various benefits programs can be integrated properly

Monitoring the External Environment Trends Likely to Impact Benefits Management (1/2)

1) Government Policy 1.1) Benefits designed to coordinate with social insurance programs are affected by regulations and alterations in govt. social insurance 1.2) Policymakers have become involved in benefit protection issues 1.2.1) Employment nondiscrimination for disabled and based on age 1.2.2) Required leave for EEs when they or family are ill 1.2.3) Protecting employment rights for military personnel 1.2.4) Protections for EEs covered by pensions 1.2.5) Safeguards on the collection and use of generic information 1.3) PPACA reforms could be categorized as protection issues 1.3.1) Prohibits lifetime and annual limits on essential benefits 1.3.2) Stipulations against recissions of coverage unless fraud 1.3.3) Prohibits dropping coverage for children (up to age 26) 1.3.4) Stipulation against Pre-ex exclusions on enrollees under age 19

Discuss Changes During the Year in Flexible Accounts

1) HSAs 1.1) Allocations made at start of year and irrevocable except for family status changes 1.2) Terminations: Balances forfeited 1.3) Retirements: Treated same way as terminations 1.4) Deaths: Balance treated as if a termination has occured 2) Personal accounts 2.1) Family status changes: Same approach as health accounts 2.2) Termination, retire, death: paid to the EE or beneficiary 3) Perquisite accounts 3.1) Family status: No changes are necessary to the allocation 3.2) Terminations, retirements, and deaths: paid or forfeited

Medical Insurance - Special Considerations for Small Companies (aka why group medical is challenging for small companies)

1) If fully insured, they are subject to state-mandated plan options 2) Plans must use options available in small geographic area 3) Provide documentation so insurers can verify not just a banding together of people soley to obtain insurance

Advantages of Private Exchanges vs. Traditional ER Sponsored Plans

1) In a multi-carrier private exchange, potential cost savings comes from: 1.1) Carrier best-in-class pricing 1.2) Increased carrier competition 2) Increased employee choice 3) Increased consumerism from members buying-down benefits 4) Robust online decision-support tools and customer service 5) Benefits administration simplification 6) Shift financial and regulatory risks 7) Cost predictability under a fully insured model 8) Improved cost transparency

Payroll Contribution Levers for Employers to Meet Objectives

1) Income based Contributions 2) Dependent Subsidy / Spousal Surcharge 3) Health Incentives

Major Forces Driving the Private Exchange Movement

1) Increasing populatiry of defined contribution approach to health insurance 1.1) Fueled by high cost inflation and struggle to reduce trend to sustainable level 1.2) When consumers are financially engaged, they are expected to help slow health care spending growth 2) Evolution of online purchasing technology 2.1) Efficient and preferable for many consumers 2.2) Governments vision of exchanges becoming like amzon.com or other marketplaces is coming to fruition, though process still not perfectly smooth 2.3) Private exchanges should have quicker growth and more diversity than public exchanges

Disadvantages of Private Exchanges vs. Traditional ER Sponsored Plans

1) Items Increasing Costs 1.1) Costs of moving from a self funded to a fully insured model: Premium tax, state-mandated benefits and insurer risk charges 1.2) The exchange operator will charge for running the exchange 1.3) Additional risk assumed by carrier in a fully insured model 2) Less control/flexibility over plan design, clinical management, member outreach 3) Need to increase defined-contribution amount over time 4) Member concerns

Voluntary Benefits Types of Voluntary Benefits

1) Life insurance: group term, supplemental life, and dependent life 2) LTD and STD 3) Dental and Vision 4) LTC 5) Adoption assistance 6) AD&D 7) Legal services plan 8) Critical care insurance 9) Cancer insurance 10) Hospital indemnity 11) Travel accident 12) Travel interruption 13) Student medical

Design Approaches to Minimize Adverse Selection

1) Limit the frequency of choice 2) Limit the degree of change 3) Level the spread between options 4) Require proof of insurability 5) Group certain coverages together 6) Delay full payment 7) Offer a HSA 8) Maintain parallel design 9) Test the program with employees 10) Use judiciously so as not to reduce excessively the flexibility

Cafeteria Plan Contributions, Benefit Elections, and Changes

1) May pay for plan through EE contributions, ER contributions, or a combo 2) Negative and evergreen elections 3) Prior to start of plan year, EE must make elections 4) Changes during the year 4.1) Generally, a participant cannot change their coverage within the plan year 4.2) Permitted to change participant's account: Changes in marital status, number of dependents, employment status, dependent eligibility, residence 4.3) Permitted to change dependent's account: Changes in marital status, number of dependents, changes in work status, spouse's employment 4.4) May revoke if participant becomes entitled to Medicare or Medicaid

How Bundling Lowers Two Major Barriers to Self-funding for Small ERs

1) Minimize admin burden 2) Minimize ER exposure to unexpected, large medical claims

Observations From the States Regarding Small Business Under ACA

1) Not closely monitoring enrollment in small-group markets 2) SHOP continues to have minimal enrollment 3) In some states, many in non-ACA-compliant plans 4) Some small employers are dropping health coverage for EEs to go to the individual marketplace 5) More self-funded arrangements are available 6) Shifting away from association health plans, sometimes to other types of group purchasing arrangements 7) 2017 will be critical for the future of the small group market

Discuss Taxation of Personal Accounts and Perquisite Accounts

1) Personal Accounts 1.1) If deposits pretax, then reimbursed count as taxable income to EE 1.2) Otherwise, can roll indefinitely and cash out at termination of employment 2) Perquisite Accounts 2.1) Tax treatment depends on the type of perquisite 2.2) Likely that unused amounts have to be paid out or forfeited at year-end

HSAs Replacing Traditional Health and Dental Advantages and Disadvantages

1) Positives 1.1) Employer contribution is fixed 1.2) Tax-effective 1.3) Provide flexibility 1.4) Simple to administer and communicate 1.5) ER controls the growth of costs, EE controls use of funds 1.6) Plan documentation straight forward 2) Drawbacks 2.1) Inadequate coverage for large expenses 2.2) Inequities for some employees 2.3) A flat contribution means family EEs receive relatively less 2.4) % of pay contribution means lower-paid EEs receive less

Cafeteria Plans Qualified Benefits, Taxable Benefits, and Non-Permitted Beneftis

1) Qualified Benefits in a Cafeteria Plan 1.1) Acc or health cov, group term life, A 401(k) plan, contributions to an HSA 2) Taxable benefits in a cafeteria plan 2.1) Cash, Paid Vacation days, Group term life in excess of $50,000 3) Non-permitted benefits: educational assistance, MSAs, athletic facilities, LTC

Benefits Management - Cost Management Resource Controls

1) Reasons for benefits mgmt role in fiscal responsibility 1.1) Plan costs represent a significant portion of total compensation 1.2) Compliance issues, such as FAS 106 requirements 2) Benefits Director Responsibilities 2.1) Question actuarial assumptions that vary from plan experience 2.2) Evaluate reserve requirements 2.3) Understanding negotiate retention, interest, and penalty charges 2.4) Design compensation programs capable of recruiting the best workers

The Outsourcing Alternative Remaining Plan Sponsor Responsibilities

1) Retain legal responsibilities related to plan sponsorship under federal law 2) Retain oversight and ensure benefits programs serve HR and organizational objectives

Pricing Alternatives to Minimize Adverse Selection

1) Risk-based Pricing 1.1) Used in medical and Dental through tiered pricing 1.2) Why don't all group life plans recognize age, gender, smoker 1.2.1) Administering different premium schedules increases cost 1.2.2) Premiums by gender may be prohibited someday 2) ER Subsidization - Higher participation helps spread the risk 3) Anticipating Adverse Selection in Pricing 3.1) Adjustment of the price tags for anticipated experience 3.2) Loading the prices of the lesser valued options 3.3) Push cost adverse selection into the highest valued option 3.4) Spread cost adverse selection over the price of all options 4) May encourage adverse selection to phase out on option

Examples of Consumer Behavior in HDHPs

1) Savings for Health Care Services 2) Selecting a more appropriate treatment value 3) Avoiding unnecessary care 4) Selecting Generic drugs instead of Brand name 5) Comparing quality ratings of providers 6) Negotiating prices with providers 7) Improving own health and taking illness avoidance measures

Two Key Employer Shared Responsibility Rules Provisions under PPACA

1) Section 4980H(a) 1. employer must offer MEC toa t least 95% of FTEs AND 2. at least one FTE enrolls in Echange and receives a federa subsidy 1.1) Penalty if not met - $2,000 per year for each FTE (minus first 30 FTEs), regardless of whether some employees elected employer-provided coverage 2) Section 4980H(b) employer offers MEC to at least 95% of FTEs but coverage is unaffordable or doesn't meet minimum actuarial value 2.1) Penalty if not met - $3,000 per year for each FTE who enrolls in exchange and receives subsidy

Benefits Management Communications General Requirements to Comply with Federal Law

1) Summary plan descriptions (SPDs) 1.1) Summary of plan provisions in understandable language 1.2) SPD must include: 1.2.1) How a participant can make a claim for benefits 1.2.2) Procedure for appeal if claim is denied 1.2.3) Name and address of person to be served with legal actions against the plan 2) Summary of material modification (SMM) 2.1) A written document that describes any material change 2.2) There is a prescribed time frame 3) Summary annual report (SAR)

Benefits Plan Delivery Quality Standards for Evaluating Customer Service

1) The desired quality as determined by management 2) Standards that ensure the prgoram is in compliance with regulations 2.1) Provide personal benefits statement at least annually if requested by EE 2.2) ERISA standards for responding to request for benefits, to deny claims and respond to appeals 2.3) Make plan financial info available and disclosure mandates for certain plan info 2.4) COBRA notification requirements to terminating EEs on right to coverage continuation 2.5) Certificates of creditable coverage mandated by HIPAA

Cafeteria Plans - Written Plan Requirements

1) To be considered qualified, the written plan must include 1.1) A specific description of each benefit 1.2) Rules governing eligibility and participation 1.3) Procedures for making elections 1.4) The manner in which contributions shall be made 1.5) The maximum ER contributions available 1.6) The plan year 1.7) Nondiscrimination testing rules

Factors Determining Employers Financial Commitment Towards Benefits

1) Total Compensation Philosophy 2) Benefits Budget 3) Benefit Competitiveness 4) Collective Bargaining 5) Legislative and Regulatory Issues

Steps for Financial Analysis of Plan Design

1) Total Cost Rates - average expected cost per employee paid by plan 2) Enrollment Distribution 3) Employee Contributions 4) Company Subsidy equals Total Cost Rates minus Employee Contribution 5) Total Company Cost - cross multiply company subsidy with enrollment for each group of employees

Benefits Management Assessing and Managing Program Risks

1) Understand risks the organization is assuming and means managing for them 2) Risk-management techniques must be understood in terms of how they operate and how they are priced 3) Model possible future outcomes under various risk-management techniques 4) Benefits director may add a stop-loss reinsurance feature 5) Could create a captive insurance company to handle EE benefit risks

Compare Public and Private Exchanges

1) Who sponsors 1.1) Government (public), Employer (private) 2) Who can enroll 2.1) Individuals and small groups (public), EEs and retirees of sponsoring ER (priv) 3) Types of coverage available 3.1) Medical and Rx (public), Medical, Rx, dental, vision and other (priv) 4) Plan designs available 4.1) Plan must provide actuarial values of 90, 80, 70, or 60 percent as defined by the federal AV calculator (public), Exchange operator or employer defines the plan designs (priv) 5) Who pays for coverage 5.1) Individuals and small ER groups pay the premiums. Individuals may be eligible for government subsidies. Small ERs may be eligible for tax credits (public) 5.2) Employers provide a subsidy toward the cost of coverage and covered members pay the balance (priv)

Benefits Management Communications Why is it Challenging? AND Targeted Communications

1) Why is it challenging? 1.1) Communication challenges: 1.1.1) Workforce is diverse 1.1.2) Some benefits have little EE interest until point of use 1.1.3) Multiple regulatory requirements lead to confusion 1.2) Complexity increases when: 1.2.1) ER offers multiple insurers with differing features 1.2.2) Participant-directed accounts, flex programs, and legal changes 2) Targeted Communications 2.1) Targeted communications must be provided when specific conditions are met: 2.1.1) Benefit statement to terminated vested participants 2.1.2) COBRA rights 2.1.3) Explanation of tax witholding for rollover distributions 2.1.4) Joint survivor information 2.1.5) Certificates of creditable coverage 2.2) Both general and targeted communications are prescribed by law and must occur within noted time periods

Monitoring the External Environment Trends Likely to Impact Benefits Management (2/2)

1) Workforce demographic trends 1.1) Dependent care benefits have become more important with more working couples, single parents, and aging parents 1.2) Flexible benefits result in EE self-selection that affects actuarial assumptions 1.3) The aging workforce 1.3.1) Greater interest in retiree health 1.3.2) Reduction in social insurance affects adequacy of ER programs 2) New Product Development: more rapid introduction of new products 3) New organizational structures: The elimination of various managerial levels, decentralized organization, and outsourcing of non-core activities 4) Importance of Technology 4.1) Requires the exchange of data with: 4.1.1) Insurers 4.1.2) TPAs 4.1.3) Consultants

Comparison of Health Care Accounts - HSA vs HRA vs FSA

Memorize the grid provided in condensed outline

HSAs Requirements and Eligible Expenses

Requirements 1) Annual elections - in advance of the plan year, irrevocable 1.1) If change in EEs family status, election changes acceptable 2) Rollover/Forfeiture 2.1) Either a 1 year rollover of unused balances or unpaid claims 2.2) After 2nd year, unused amounts from the 1st year are forfeited Eligible Expenses : any health related expense eligible for tax credit 1) Deductibles, Coins., Practitioners, Dental, Facilities, Devices