The Employee Benefits Marketplace. Presentation before Insure NM! Council By: Anne Sperling, CSA Daniels Insurance, Inc. October 15, 2004. Introduction.
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Presentation before Insure NM! Council
By: Anne Sperling, CSA
Daniels Insurance, Inc.
October 15, 2004
Business “Doing Business As” name
It’s important to have the exact legal name because of the legal contract that is issued by the insurance company.
It’s important to have the DBA because that will be how the business in recognized in the community.Fact Finding ProcessWith this example, the name of the business will not be disclosed.
Mary Smith (not her real name), Human Resources Director.
It’s important to identify who this person is for the purposes of law compliance, e-service correspondence, and administration communications.Fact Finding Process
January 1, 2005
The effective date of coverage opens a discussion of deductible satisfaction, carryover provisions, open enrollment, communication during the holidays, and the marketing and implementation timeline.Fact Finding Process
Business mailing address
999 Cerrillos Road, Santa Fe, NM 87505
PO Box 999, Santa Fe, NM 87504
It’s important to have a physical address for the insurers because it’s one of the factors used to prove that the business is based in NM and thereby allowing to receive NM compliant plans and rates.Fact Finding Process
Business fax number
Business email address
Important for communication purposes.
The preferred communication method is noted.
It is noted with the prospect that no coverage can be bound by email or voicemail.
Business telephone numbers also allow the insurers to search for the business Standard Industry Code (SIC), which plays a part in rating the group.Fact Finding Process
Number of Years in Business
Provide social services to individuals and families struggling with addiction
35 years in business
The nature of business will enlighten the insurers beyond the SIC for purposes of offering coverage. Insurers have the right to deny coverage for life insurance, short term and long term disability, but not health, dental or vision coverage based on the nature of business if the group is under 50 employees on the payroll.
If a business is new, (less than three months), an insurer can deny coverage based on the fact that one quarter of wages has not been paid and not yet filed with the state.Fact Finding Process
Type of entity
July 1 – June 30
The fiscal year is important for incorporating it into the summary plan description and for establishing a cafeteria plan.
The type of entity is important for tax consequences, financial consequences, and communication purposes.Fact Finding Process
Is workers compensation coverage placed on the owners of the business?
New York Mutual Casualty Company
Non-profits have no owners, so all employees are covered by the workers compensation plan.
It’s important to learn about an employer’s workers compensation plan because some health insurers charge an extra fee for covering owners, partners, directors on a 24-hour basis because they have opted out of WC coverage. Ranches do not have to offer WC and health insurers will rate those groups up for 24-hour coverage on all ranch employees.Fact Finding Process
Number of full time employees
Number of part time employees
Number seasonal employees
48 total employees
40 full time employees
8 part time employees
0 seasonal employees
The total number of employees is important to know for the purposes of discussing various benefit laws like HIPAA, COBRA, FMLA, Age Discrimination Act, Pregnancy Discrimination Act, NM State Continuation Law, Mothers and Newborns Law, etc.
The other numbers will indicate how many employees will be eligible for the plan.Fact Finding Process
Number COBRA recipients
Number employees on NM State Continuation Coverage
Number union employees
Number contract employees
Number eligible to be covered
10 employees on other coverage
5 COBRA recipients
0 on NM State Continuation Coverage
0 union employees
0 contract employees
30 eligible employees and 5 COBRA recipients to be covered
This count is important for the maintenance of proper participation in the plan. Most carriers with the exception of the NMHIA must maintain 75% participation of eligible employees. This group must enroll at least 23 employees.Fact Finding Process
An eligible employee is defined by the number of hours worked in a week
An eligible employee is defined by the number of days he/she has worked for the company
An eligible employee is defined by their class of employment status
30 hours is full time
30 days for management and 180 days for all others as the new employee waiting period
Management employees will be given more life insurance than non-management. Only management employees will be given disability coverage.
Some insurers will go down to 20 hours in a work week. This is important to know for COBRA purposes. The long waiting period of 180 days indicates that the employer suffers from high turnover with their non-management staff. The different classification of employees allows the employer to discriminate and offer different benefits to the highly qualified and/or loyal employees.Fact Finding Process
Employer definition of eligible dependent worked in a week
Children of the insured, legally adopted children, stepchildren residing in the insured’s home.
Domestic partner who can prove a bonafide relationship with the insured.
It’s important to know this definition because not all insurers will cover domestic partners. It’s also important for COBRA and HIPAA purposes.Fact Finding Process
Employer contribution to employee premiums worked in a week
Employer contribution to dependent premiums
60% contribution to the medical, dental plans for employees and dependents.
100% contribution to the life and disability plans for the employees
The medical and dental plans are considered to be “contributory” in this example and that has tax consequences for the employer and employee.
The life and disability plans are “non-contributory” and this also has tax consequences as well as enrollment consequences.Fact Finding Process
Number of business locations worked in a week
Addresses of business locations
Number of employees at each location
3 business locations
Santa Fe, Espanola, and Las Vegas, NM
20 employees in Santa Fe, 11 employees in Espanola, 17 employees in Las Vegas. All 5 COBRA recipients are in Santa Fe.
It’s important to know the location of the employees for physician and facility network issues. It’s also important for contract compliance. If more than 50% of the employees reside outside the state, the coverage can be denied. The employer group is rated based on where the home office is located. FMLA is measured on mileage distanced among the employees in groups of over 50 employees.Fact Finding Process
Current Agent Information worked in a week
John Jones from ABC Agency in Albuquerque, NM
3 years with this agent
Reason for exploring coverage with a new agent is the agent is unresponsive to their needs.
It’s important to know this information so that the client can be best served. If they are looking outside of their current consultant arrangement, it means that the current agent has failed in some fashion.Fact Finding Process
Owners and their percentage of ownership worked in a week
Do any of the principal owners have any other ownership interest in other businesses?
Board of Directors Information
Who is the decision maker?
Has the business ever declared bankruptcy?
How is the business financed?
There are no owners with a non-profit organization
There are 9 board members and their names can be found on the business website
The Executive Director is the decision maker
Never declared bankruptcy
The non-profit is financed by grants @ 30%, state funds @ 25%, federal funds @ 25%, donations @ 5%, patient payments @ 15%.
All this information is important for the sales process to finalize as well as assuring the insurance carrier that this entity will be able to pay its premiums. Ownership in other businesses has a ramification for jointly insuring the businesses and COBRA issues.Fact Finding Process
Existing group medical coverage worked in a week
Desired group medical coverage
HMO NM as a fully insured plan through the NMHIA
The employer desires a PPO plan that is fully insured outside of the NMHIA. Currently the group is out of compliance with its participation for a carrier outside of the NMHIA. They have 50% of their eligible employees enrolled rather than 75%. They feel that if they can get their rates down, more will enroll. The current average single rate is $530.00 per employee per month. At renewal in January, the rate will go up.Fact Finding Process
Current group dental plan worked in a week
Desired group dental plan
Delta PreferredOption plan
An indemnity plan that allows the employees to go to any dentist. The single dental rate is $35.00 per member per month.Fact Finding Process
Current group vision plan worked in a week
Desired group vision plan
No vision plan in place
A vision plan that offers 12 months on exams, 12 months on lenses, and 24 months on frames and can be a PPO arrangement.Fact Finding Process
Current group basic life insurance worked in a week
Desired group basic life insurance
No current group basic life insurance
A life plan that pays 1 X salary for management up to $100,000 of salary and $15,000 of coverage on all other employeesFact Finding Process
Current short term disability coverage worked in a week
Desired short term disability coverage
No short term disability coverage
No short term disability coverage desiredFact Finding Process
Current long term disability coverage worked in a week
Desired long term disability coverage
No long term disability coverage
Long term disability on management staff only with a 90-day elimination period, 60% of covered monthly earnings payable to normal social security retirement age.
Discussion regarding self-insuring disability events was appropriate for Federal Accounting Standards and for discrimination issues.Fact Finding Process
Current group long term care coverage worked in a week
Desired group long term care coverage
No long term care coverage
No desire for long term care coverage
The tax ramifications of long term care coverage were discussed. The HR director was shocked to learn that the medical plan contained no long term care coverage. Open for discussion at a later date.Fact Finding Process
Current qualified pension plan worked in a week
Desired qualified pension plan
403B retirement program
401K retirement program. The group wants to shift to a 401K because this savings vehicle allows higher contributions and allows a vesting schedule to encourage employee longevity.Fact Finding Process
Current tax incentive programs worked in a week
Desired tax incentive programs
No current tax incentive programs in place
Desire Premium Only Plan for employee premium contributions. Desire Flexible Spending Account for unreimbursed medical expenses and child care expenses.Fact Finding Process
Current COBRA Administration worked in a week
Desired COBRA Administration
HR Director is currently relying on HMO NM to administer COBRA for the group. HR Director did not know that COBRA applied to dental plan as well and was not offering this benefit to COBRA qualified beneficiaries. She was not aware that COBRA is an employer law and therefore the insurance carrier could not be held liable.
The desire of the HR Director was to outsource this obligation after hearing the rules of the law.Fact Finding Process
Current HIPAA Administration worked in a week
Desired HIPAA Administration
HR Director was not aware that HIPAA was an employer law and that she had any obligation under the law. She did not supply initial notifications, nor did she understand special, timely, open, and late enrollment. She did not know that her group could be denied coverage if it grew to 50+ employees. She did not know the meaning of Certificate of Creditable Coverage.
The desire of the HR Director was to outsource this obligation after hearing the rules of the law.Fact Finding Process