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Dan Pink @ TED - Presentation on the Science of Motivation

  Listen in and apply these principles to our corporate-wellness initiatives.   We could not agree more that intrinsic over extrinsic motivators provide longer-term results.   We welcome your comments below and invite you to read Dan Pink's Drive to compare with Thaler and Sunstein's Nudge.  

 

IRS Affordability Standard - New Health Reform Guidance

What an interesting week in the land of employee benefits.   A federal appeals court struck down the constitutionality of the healthcare reform's individual mandate virtually guaranteeing that the Supreme Court will weigh in on the disputes now surfacing between the 11th Circuit and others.   Remember hanging-chad anyone?   Once again our politics got in the way so our  national policies will be determined by the "heavies" in the highest court in the land. Now onto two federal healthcare requirements that had our employer plan sponsor clients wondering if sanity would prevail in Washington.   As a reminder, the statute requires employers with 50 full-time employees or more to offer health insurance to employees and dependents in 2014.   The law requires the coverage to be both "affordable" and "qualifying" in order to avoid penalties.

The answer to both is good news for  employer plan sponsors.   The IRS  used broad discretionary powers to define affordability if the employee is not required to pay more than 9.5% of an employee's current W-2 wages.   The more muddier definition of  household income through AGI verfication now gives way to something the employer has in their purview as a data point.  So an employee earning $40k a year would be prohibited from single contributions in excess of $316.67 a month.

Additionally, employers caught a reprieve by IRS guidance on the new "qualifying" definition, which varies from the standard imposed in the state exchanges.   The 60% standard has now been interpreted to mean the percentage of charges covered by the plan.   So for every dollar of eligible health expenses incurred under the plan, Uncle Sam wants to see the plan picking up sixty cents of the tab.   Finally, employers were given another bonus by exempting plan sponsors from the "essential benefits" definition being crafted for plans under the state exchanges.

For more information and a nice write up by our Health Reform Advisor Practice, please go here.

Health Insurance - When You've Tried Everything Else

Are you no longer eligible for benefits under a group health plan? Have your COBRA benefits been exhausted? Have you been denied coverage due to a preexisting condition? Finding individual health coverage can be discouraging, especially when you have a health condition.   But this post is about throwing you   a lifeline.    Texas is among many states which offer the Pre-Existing Condition Insurance Plan (PCIP), a federally funded insurance  plan which offers insurance to people with ongoing or chronic medical conditions, at prices that are now more affordable.

These plans offer a broad range of coverage, including primary and specialty care, hospital care and prescription drug coverage.   Maximum annual out of pocket cost for covered services is $5950 for network services and $7000 for out-of-network care.      With a little help from the federal government, annual premiums are on the decline.   Kathleen Sebelius, Secretary of Health and Human Services,  announced  recently that premiums have been reduced 10-20% in Texas.   Similar cuts were made in Georgia, Indiana, Louisiana, Mississippi, Nebraska, South Carolina, Tennessee, West Virginia and the District of Columbia.   Even greater cuts, some up to 40%,  were  made  in Alabama, Arizona, Delaware, Florida, Kentucky, Minnesota, Nevada and Virginia.    And, most remaining states have opted to take this federal money and design their own  similar programs.   So, no matter where you reside, you should be able to find a plan to fit your needs without denial from a reputable insurance company.

You  may be eligible for the PCIP if you:

    1. Have been without health coverage for at least six months
    2. Have a preexisting condition or have been denied health coverage because of a health condition
    3. Are a U.S. citizen or reside in the U.S. legally

To  apply for coverage  in Texas, you  must provide proof of residency and proof that  you have been denied  coverage.   Proof of coverage denial may be a doctor's letter dated within the last 12 months, a denial letter from a Texas-licensed insurance company, a letter of ineligibility from a Texas-liscensed agent or insurance company, or an offer of coverage that excludes  one's preexisting condition.

Getting the protection you need is simple.    Apply online at www.pcip.gov, or visit the website to print out the application and submit it by mail or fax.

For questions about this and other state and federally supported insurance plans, you may  contact the Texas Consumer Health Assistance Program (CHAP); they have the resources to  help  you when  you need it the most.   Contact 1-855-TEX-CHAP, Monday through Friday, from 8 am to 5 pm CST, or go online at www.TexasHealthOptions.com.

If this post helped you or a former employee looking for assistance ... please let us know.   It is important for us to hear feedback when information we publish helps others.

Sources:   Dallas Morning News, TDI Newsletter

Welfare Calendar & Health Plan Notice Matrix

Take Advantage of our offer to furnish you a Welfare Plan Calendar and Health Plan Notice Matrix customized for your organization.

The employee benefit landscape continues to grow more administratively complex.    A recent posting on the  Independent Review Organization rules that came out of federal health reform is a prime example.   With so many dates to remember and notice obligations, we wanted to provide you with an updated edition of our Welfare Plan Calendar and Health Plan Notice Matrix.

In order to furnish you this hard copy spiral bound compliance resource, members of my team will need your ERISA plan anniversary date and contact information.

If you are interested in our offer, please go here and denote your organization's ERISA plan anniversary date in the "FEEDBACK"   section.   Your customized materials will arrive in the mail shortly thereafter.

 

 

 

A Debit Card for Dependent Care Savings Accounts?

Most employers will use a debit card to pay a service provider under our Flexible Spending Account (FSA).   We were curious if it is common to offer debit card functionality for dependent care savings accounts as well.   So we set out on a mission to survey the marketplace.   Here are our results ... Are debit cards available for dependent care accounts?

Select vendors that administer FSAs were surveyed and it was found that many do offer debit cards with the dependent care accounts.   When the debit card it swiped, the merchant category code (mcc) is used to determine if the charge is an eligible dependent care charge.

Is it common to offer a debit card with the dependent care account?

The majority of the vendors surveyed said it is not common to offer a debit card with the dependent care account.   This is mainly because there can be swipe issues with it through the automated mcc codes that get transcribed through the system.

Following are some of the issues with a dependent care account debit card:

  • * Dependent care provider does not accept debit cards
  • * Dependent care provide doesn't have mcc code, or has an incorrect mcc code
  • * Dependent care accounts must be funded before money can be taken out of the account (This causes the most noise because the card will be denied, even if the charge is only a penny over the funds available in the account.)

In summary, there is nothing wrong with allowing the aded convenience of a swipe when using your tax-efficient savings account vehicle for health or dependent care.   A company would be wise, however, not to tout the debit card features of DCSA given the low success rate of a successful transaction.

The HRSouthwest Conference - A Weigh Forward

The HRSouthwest Conference is the largest regional human resources Conference in the United States. The Conference offers world-renowned keynote speakers, two and a half days of educational sessions networking opportunities and exposure to the latest HR products, techniques and services. This educational session features Lockton Dunning Benefits Vice President, Steve Harris, CEBS and Health Risk Management Director, Hayley Hines, MS, CHES, CWPD.   They address how an employer can tackle the obesity epidemic, corporate health plan interventions, and successful wellness case studies in the workplace.

Uncle Sam Says Audit Dependents

This post is a must read for any plan sponsor who does client work with the federal government and submits employee benefit related expenses associated with contractors on the job.   I want to thank Dependent Audit Eligbility veteran, Brennan Clipp, for sharing with me an internal memorandum obtained  from the Federal Government's Deparment of Defense ("DOD").   Even if an employer  might not contract directly with DOD, we can be certain other government agencies issuing awarding contracts on large public works projects will follow similar protocol.   In fairness to our U.S. government, they are simply saying that reimbursement for the cost of fringe benefits are allowable from contractors and dependents of those contractors, as long as the dependent adheres to the eligibility under the plan.   Further, "contractor's that fail to implement sufficient procedures to identify and exclude health benefit costs associated with ineligible dependents are in noncompliance with FAR 31.201-6 and CAS 405.   They are recommending that contractors put in audit and process procedures to protect against ineligible dependents.  

As is a common practice for plan sponsors who do a lot of design and build  work for  the Federal Government, reimbursement is often a part of contract reimbursement sought for employee benefit expenses related to contractors and their dependents covered under an employee benefit plan.   The irony here is that the left hand of government recently gave us expensive health insurance legislation and the right hand of government is warning against seeking reimbursement of those expenses for [ineligible] contractor benefits.      

The Memo we obtained here  esentially warns a plan sponsor against submitting any healthcare related expenses associated with ineligible employees or dependents who do not strictly adhere to the eligibility guidelines under the ERISA plan.   Ms. Clipp's firm warns against an employer taking on this project themselves or leaving it to a service provider that does not follow evidence based guidelines for verification.   When done correctly, ineligible dependents can average between 12-18% disenrollment.   This does not come as a surprise with unemployment hovering near 10% and escalating healthcare costs.   Finally, an ongoing audit process can ensure ineligible insured's do not creep back onto the plan when the guard goes down.    Another reason for doing a dependent audit stems from the ERISA fiduciary obligation implicit to other eligible enrollees under the plan.  

There are a number of high-quality speciality firms and important cultural and senior management issues to address internally before human resources should launch.   The notion of eligibilty management as a cost saving tool is not new, but the federal government's validation of a dependent audit as a cost savings mechanism was strong enough to provoke this notice out to field auditors of the Federal Governement.  

  If you're not sure of the Top DOD contractos ... here's the list of the top 100:

http://en.wikipedia.org/wiki/List_of_United_States_defense_contractors

Insurers Use New Technologies to Predict Life Expectancy & Lifestyle

It's called Perspective Modeling and it represents a new form of calibrating risk.   This new technology is being used by insurers to predict life expectancy and lifestyle. As we move towards an era in 2014 where individuals will have a choice between  public or private risk pools, look for more splitting of hairs from large payors to use the latest techniques to find the healthy and avoid those with higher risks.

Let BenefitU know how you feel about this video blog.

Walgreens PBM Shopping for Suitors

As you may have seen in the news, Walgreens is taking a serious look at selling off their PBM.

What does this mean?   Clients with Walgreens as their PBM either directly, for on-site clinics, or for mail-order or specialty through a carrier or smaller PBM (for example, MedTrak), could be impacted.   This does NOT mean that employees will no longer be able to get prescriptions at Walgreens–Walgreens is looking to sell off their PBM business, not their pharmacy business.
Who will buy Walgreens PBM unit?   Biggest contenders are Medco and Express Scripts.   Express Scripts recently bought NextRx and has openly stated they are looking to acquire PBMs.   CVS Caremark is probably too much of a competitor of Walgreens to be a top contender, but they did submit a bid.
When?   Unknown.   Safe to say this is not an issue for 1/1/2011 renewals.
Why?   The industry is consolidating.   Walgreens as a PBM has less than 8% of the market, which is simply not enough to compete with the big three under their model.   In addition, retail pharmacies and PBMs are proving not to be a good business mix.   When CVS and Caremark merged, shares dropped significantly.
Walgreen PBM Sale
Source: Lockton Pharmacy Analytics

Pre-Existing Conditions on Endangered Species List

Dear Health Plan Sponsor: "My name is Pre-Existing Condition and soon I will become extinct.   We will look back in the annals of employee benefit text books and find I was used to deny coverage for those that needed it under health insurance plans."

Yes, it is true.   Our dear friend Mr. Pre-Existing Condition will soon become as extinct as the Do Do bird.   While I understand arguments against nasty insurance companies and employer-sponsored health plans denying coverage for someone who needs it, the pre-existing condition exclusion was purposefully used to help protect a risk pool from individuals jumping on and off an insurance plan in favor of using the   benefit only when the individual was sick.

Employers who self-fund their health plans have two paths they can elect to take.   The first path is to amend your health plan as the regulations require.   You must start by eliminating pre-ex for those under age 19, then open things up for those under age 26, subject to grandfather provisions.   By the first day of the 2014 plan year, you will be required to remove them entirely.   I have attached our health reform advisory practice guidance on how to repeal for enrollees under age 19 if you follow this first approach.

The second approach (which many progressive employers have already done) amends your health plan to remove pre-existing conditions entirely.   If you are in the camp that is afraid of the cost impact to your health plan, you can have your benefits consultant or health plan run the numbers to find out how many claims you are denying due to pre-existing conditions.   When you eliminate enrollees under HMO plans, those who send in HIPAA credible coverage notices without a 63 day break, consider new requirements for those un-grandfathered plans under age 26 and add back in the administration costs and goodwill lost ... my opinion is you will find the "pre-ex juice just ain't worth the squeeze."   This rationale is admittedly harder to make for a small business owner than a larger plan that can absorb a few outliers.   But if you use your health plan as a recruiting tool, it can make sense to clean out the closet and get rid of Mr. Preexisting Condition before the government puts him on the endangered species list ... right next to the DoDo bird.

Eliminate Pre-Existing Condition Exclusions on Enrollees Under Age 19 What's the Requirement?

All plans subject to the health reform requirements, including grandfathered plans, must remove preexisting condition limitations on enrollees who are under 19 years old.

What's the Deadline? First day of the first plan year that begins on or after September 23, 2010.   We believe "plan year" means the ERISA plan year, not the insurance contract year.

What's the Issue? Pre-existing condition restrictions are a dying pony.   Many plans no longer contain these restrictions.   For those that do, they must be amended to remove the restrictions as applied to individuals under age 19 and, by the first day of the 2014 plan year, remove them entirely.   Note that the obligation to remove the restriction for individuals under age 19 is not limited to dependent children; it applies to employees under age 19 as well.   Note also that exclusions that apply regardless of when the condition arose relative to the date of coverage are not pre-existing condition exclusions (for example, a plan provision excluding coverage for bariatric surgery is not a pre-existing condition exclusion, because it applies regardless of when the condition arose).

What Should You Do? Plans that currently apply a pre-existing condition exclusion to enrollees will need to be amended to remove the applicability of the restriction to enrollees under age 19. Ideally the amendment should be made prior to the beginning of the coming plan year.

Notice/Plan Amendment Obligation: Plans currently have an obligation to provide a General Notice of Pre-Existing Condition Restriction to enrollees prior to the date coverage begins. Plans should review this notice and modify it to make clear that it does not apply to enrollees under age 19. Amend the plan, ideally prior to the beginning of the coming plan year, to conform any pre-existing condition restriction to this requirement.

Health Claim Appeals - Two too Many IRO's

The law mandates that emplyees in non-grandfathered   health care plans be able to request a federal external review if a claim is being denied.   Under the interim final rules applicable to all plans with plan years on or after October 1, 2010, the group health plan must give claimants up to four months to request an external review after an adverse claim decision.   As an example, lets say a patient disagrees with a decision by the insurance company to cover an FDA approved procedure or device deemed to be experimental by one of the four national [monopolistic -sarcasm mine] health insurance companies.   This would be an adverse claim decision you may wish to appeal.   An "adverse benefit determination" is by  definition  a denial, reduction, or termination of, or a failure to provide or make payment for, a benefit. Many employers already have claim review processes in place, but utilize ONE independent review organization.   The new federal law will required to contract  with AT LEAST THREE independent reivew organization and rotate claims  assignments  among them.   The Feds must have feared market forces would have failed to keep the IROs honest if only one were required by law.   This part of the law is a big shock to employers who must now bear the cost of coordinating   this triple-contract vendor review.   While employers can follow a state's external review as an alternative to federal, we will be encouraging our clients to follow a uniform process across multiple state sites.   There are 43 IROs affiliated with URAC has accreditted and only 10 of these operate in multiple states.

Here are the timelines associated with the process:

  • Claimants have four (4) months to request an external review
  • Preliminary review must be completed within five (5) business days of request
  • External review must be copmleted within forty-five (45) business days
  • Claimant can ask for expedited review in life-threating situations
  • IRO must turn expedited reviews around within 72 hours

When seeking to contract with an independent review organization (IRO), an employer or their consultant will want to find a large panal of physicians in multiple specialties with a geographic presence that aligns where your plan participants reside.   Additionally, make sure they are a member of the National Association of Independent Review Organizations (NAIRO), as this is  the "good housekeeping seal of approval" in the IRO business.   The average cost for external review is around $600 and claims requiring.   Not adhering to these rules can subject a health plan sponsor or health insurance issuer to a $100 per day per violation excise tax imposed under the Internal Revenue Code, in addition to giving the claimant a green light to file suit.

It is true that only a fraction of the health plan claims undergo appeal, but requiring THREE IRO's is TWO TOO MANY.   Incidentally, my firm will soon be releasing guidance and recommended IRO's with model contract language as a service to our clients.

Win $10,000 in Aetna's Healthy Food Competition

It is gratifying to see a health insurance company not act like one when it comes to traditional stodgy branding.   Aetna is partnering with Celebrity Chef Bobby Flay and others to conduct a 10 city competition open to the public to take home the title of America's Healthiest Cook and win $10,000 in kitchen appliances. Look out for Texas stops in San Antonio on October 2nd and 3rd, 2010 and Houston on October 9th and 10th.

Original Source:  Celeb chef weighs in on cook-off | Business Insurance.

Aetna Press Release: http://www.aetna.com/news/newsReleases/2010/0831_BobbyFlay.html

Employers Ponder Where to Put Lactation Stations

Amid a flurry of new federal legislation, employers are beginning to gain a better understanding of the new Breaktime for Nursing Mothers law (Section 4207 of PPACA).   Employers with 50 or greater employees must provide a reasonable break time for expectant mothers to express milk at the workplace.   Many sources say a reasonable break time can be estimated at 30 minutes for every 4 hours. Employers who are under 50 employees who can show signs  of hardship through "difficulty of expense" in complying will be exempt.   Our employee benefits counsel has confirmed that it is not based on the number of employees at a given location, but rather the total number of employees that work for the company as a whole, subject to Fair Labor Standard Act (FLSA) definitions.   Employers will not be required to treat the break as compensable time.   While this law is already the standard for many larger employer worksites, many  small to mid-size employers cramped for space are scratching their heads.   Furthermore, it is logical to  question a burden of compliance  for certain industries (oil & gas rig, coal mines, etc...)     The new guidance confirms the station cannot be a bathroom and that it must be free from intrusion and shielded from view.

While the effective date is coincident with the day President Obama signed PPACA into law, the rules for enforcement have not yet been released.   We anticipate Department of Labor (DOL) to provide the penalties for non compliance and give employers a time frame to  comply.   For more guidance on employer best practices, you can visit the United States Breastfeeding Committee available links.

Unintended Consequences of Losing "Grandfather"

As President Barrack Obama stated in his push for federal healthcare reform, "If you like your current coverage, you can keep it."   This pledge has been upheld as employers who offer group health coverage grapple with the decision to essentially freeze their coverage provisions to maintain "grandfathered" status or make greater changes to keep their programs affordable.   The first plan sponsors to make this decision are those with ERISA plans with October 1, 2010 anniversary dates. As we have been counseling our clients using our company's Actuarial  Reform Modeling and Compliance Forecaster, most employers cannot afford to maintain "grandfathered" status in this economy and are electing to move ahead with reform's 2010 provisions.   We feel certain grandfathered plans will become rarer than living survivors of the Titanic, but for the majority of employers who lose grandfathered status it is important to understand the new guidelines.

I must give credit to Strasburger & Price, LLP's esteemed ERISA attorney, Gary Lawson, J.D. for pointing out one such guideline at the law firm's Annual Tax Symposium on Monday, August 23rd at The Westin Galleria Dallas.   Gary reminded the attendees that non-discrimination rules (IRS Sec. 105(h) that prohibited favorable treatment for highly compensated employees for eligibility and benefits would now be applicable to fully insured plans that lose grandfathered status.   The example he Gary illustrated is commonly used in mergers and acquisition situations when severance packages are awarded to an executive.   The common practice would allow the company to pick up all or a portion of the the cost of COBRA for the executive, as negotiated in the severance agreement.   This practice will now be prohibited under a health plan that loses grandfathered status.

If you forego the new rules, the penalty is equivalent to $100 per day / per participant.   So saying goodbye to "grandfather" will also mean saying goodbye to executive perks that could get expensive if we neglect the fine print of PPACA.