Chapter 10 - Legally Required Benefits

FMLA

12 weeks of unpaid leave for: Birth, adoption, foster care Serious family medical problems Worker's serious medical problem Retention of: Seniority Health insurance coverage Credit for previous service Accrued retirement benefits

Unemployment Insurance Eligibility

Able and available for work Actively seeking work Has not refused suitable work Must be employed for the last four or five quarters prior to becoming unemployed, known as the base period

PPACA 10 Essential Benefits

Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance use disorder services Prescription drugs Rehabilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care

Point of Service (POS)

Combine features of health maintenance organizations and fee-for-service arrangements Employees pay a nominal copayment for each visit to a designated network of physicians Employees possess the option to receive care from health care providers outside the designated network of physicians, but they pay somewhat more for this choice

Fee for service plan features

Deductibles Coinsurance Out-of-pocket maximums Preexisting condition clauses (now eliminated by PPACA) Maximum benefit limits (now eliminated by PPACA)

OASDI (Old Age, Survivors, and Disability Insurance)

Enacted in 1935 Based on Eligibility Status and Relationship Deceased was fully insured Dependent, unmarried children Widows age 60 and older Dependent parent age 62 and older Average monthly benefit was $1,253 in 2015

FMLA Revision in 2015

Expanded definition of spouse to include individuals in legal same-sex marriages

PPACA penalties and taxes

Failure to provide health insurance to employees results in a penalty equal to about $2,000 per employee (less the first 30 employee) each year

Consumer-Driven Health Care Plans

Flexible-spending accounts (FSAs) Health reimbursement accounts (HRS) Health savings accounts (HSA)

HIPAA

Guarantees ready access to coverage under a subsequent employers health plan, regardless of health or claims experience Limits the length of preexisting condition clauses (preexisting condition clauses now unlawful under PPACA) Protects the transfer, disclosure, and use of health care information

managed care plans

HMO PPO POS

Medicare

Health insurance coverage for citizens age 65 and older Provided insurance coverage for: Hospitalization Convalescent care Major doctor bills Prescription drug costs

PPACA non-grandfathered plans

Health plans established after the enactment of PPACA

PPACA grandfathered plans

Health plans in existence prior to the enactment of PPACA on March 23, 2010

How HR managers can minimize costs:

How can HR managers, other business professionals minimize the cost of benefits -Integrate workers' compensation benefits into the rest of the benefits program -Contain costs for unemployment insurance

Benefits and Costs

Legally required benefits are costly HR professionals can take steps to maximize the benefits of these costly benefits: -Implement workplace safety programs -Implement health promotion programs that include inspections of the workplace to identify health risks

Patient Protection and Affordable Care Act of 2010 (PPACA)

Obama Care PPACA provides the basis for health care reform in the U.S. PPACA mandates health care coverage and sets minimum standards for insurance

Flexible-spending accounts (FSAs)

Permit employees to pay for specified health care costs that are not covered by an employer's insurance plan DOES NOT ROLLOVER Prior to each plan year, employees elect the amount of pay they wish to allocate Advantage → ability to make contributions on a pretax basis Disadvantage → "use it or lose it" provision of FSAs

Origins of Legally Required Benefits

Provide a form of social insurance Established to protect individuals from catastrophic events Disability Unemployment Protection programs to: Promote worker safety and health Maintain family income streams Assist families in crisis Enable retirees to maintain subsistence income levels

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Provide employees opportunity to continue receiving employer-sponsored medical care insurance temporarily if their coverage otherwise ceases due to: Termination Layoff Other change in employment status

Workers' Compensation Objectives

Provide income and medical benefits Reduce litigation Relieve charities' financial drain Eliminate legal fees and time Encourage employer safety Promote accident study and avoidance

Fee-Fore-Service Plans

Provide protection against health care expenses in the form of a cash benefit (DINOSAUR OUTDATED) Three types of eligible health expenses Hospital expenses Surgical expenses Physician charges Types: Indemnity plans Self-funded plans

Health Maitenance Organization (HMO)

Provides prepaid medical services Primary care physicians determine when patients need the care of specialists Copayments represent nominal payments Common copayment amounts Between $15 and $50 for each doctor's visit Between $10 and $50 per prescription drug Between $50 and $500 for hospital or emergency room admission

Health reimbursement accounts (HRA)

Purpose of HRAs and FSAs are similar but with three differences Employees do not contribute to HRAs Permit employees to carry over unused account balances from year to year Employees may offer HRAs as well as FSAs and use of these accounts is not limited to participation in high deductible health care plans

Preferred Provider Organization (PPO)

Select group of health care providers Employees choose from a list Financial incentives to use list Physicians must Meet quality standards Abide by PPO cost containment Accept PPO fee structure Does not provide prepaid benefits

Four Categories of Legally Required Benefits

Social Security Programs Workers' Compensation Family and Medical Leave Health insurance

Cadillac Tax

Starting in 2018, expensive employer-sponsored plans will be taxed to equal 40% of the amount that exceeds the following limits (2015): $14,000 for single coverage plans (employee only) $27,500 for family coverage plans (employee and eligible family members)

Unemployment Insurance

Temporary income for spells of unemployment that result through no fault of the employee Terminated for layoff, disability

Employer Mandate

The employer mandate requires that most employers provide health insurance to full-time employees

FMLA Revisions in 2009

These changes create leave opportunities for the military and require employees to adhere to stricter guidelines for taking leave Relatives of seriously injured members of the military may take up to 26 weeks off to care for their injured military family members Relatives of members of the National Guard or reserves who are called to active duty may receive up to 12 weeks of leave to attend military programs (official send off of the family member's troop), arrange child care, or make financial arrangements

COBRA Coverage

Up to 18 months for individuals and their spouses and dependents May extend for up to 36 months for spouses and dependents facing a loss of employer-provided coverage because of an employee's: Death Divorce Legal separation Other (termination, retirement, layoff)

Workers Compensation

compensation programs, run by states individually, are designed to cover expenses incurred in employees' work-related accidents.

consumer-driven health care plans

refers to the objective of helping companies maintain control over costs while also enabling employees to make greater choices about health care

individual mandate

requires that persons who do not receive health care through employment must purchase their own health insurance