Employee Benefits – It’s More Than Just Health Care NameTitleCompany Date
Overview • Examples of Employee Benefits • Careers in Benefits • Top Priorities for Employers and Employees • Group “Welfare” • Retirement • Voluntary • Scenarios
Careers in Benefits More than just HR • Insurance Broker • Underwriting • Claims Administration • Accounting • Actuary • Financial Planning • Investment and Trust Services • Legal Services • Trust Administrator (multi-employer) • Consultant • Internal Revenue Service (retirement) • Department of Labor (Employee Benefits Security Administration)
Why care about Employee Benefits? • Attract and retain employees • 40% of payroll is spent on benefits (average) • $8.65/hour or $18,000/year • You are paying for it!
Top Five Priorities Deloitte Consulting LLC Survey Findings: 1. The cost of providing healthcare benefits to employees. 2. The willingness of employees to pay an increasing portion of benefit plan coverage and to manage their own reward budget. 3. The ability of reward programs to attract, motivate and retain talent. 4. The ability to adjust to and comply with current and future provisions of Health Care Reform legislation. 5. Clear alignment of Total Rewards strategy with business strategy and brand. Annual survey conducted by Deloitte and ISCEBS
Healthy Enterprise Survey Sibson Consulting Survey Findings: • Strategic focus is important to program effectiveness • Metrics matter • Most employers focus on treatment, a narrow focus that tends to be correlated with only one outcome Survey examined the business case for being a healthy enterprise and explore the nature and scope of employers’ healthy enterprise efforts make a difference to their ROI, as measured by savings. Survey conducted by Sibson Consulting and ISCEBS
Healthy Enterprise Survey • The average organization’s Healthy Enterprise Index was 57% (out of 100%). • Establish a dedicated initiative leader and a wellness committee. • Develop a healthy enterprise strategy that is aligned with the organization’s business strategy. • Inventory and assess the “current state.” • Involve key stakeholders. • Re-evaluate the many investments the organization makes to become a healthy enterprise. • Take steps to get employees to embrace the initative. • Create an effective workplace. • Pay attention to dependents. • Measure outcomes.
Group Health Benefits • Changes with the passage of PPACA • Coverage for dependents until age 26 • No lifetime limits • Freedom to choose pediatrician/OBGYN regardless of network • OTC purchases no longer covered by FSA dollars
Health Care Reform • Changes are being made on a regular basis • 2014 will be the “best” gauge of the reform – most all of the provisions will be in place at this time • Resource: www.ifebp.org/healthcarereform
Group “Welfare” Benefits Additional offerings • Wellness Programs • Short/Long-term disability • Long-term care insurance • Life insurance • Retiree medical insurance • Cafeteria plans • Vision/Dental/Prescription
Retirement Plans • Defined Contribution • 401(k) / 403(b) • Defined Benefit • Pension • Hybrid Plans Resource: www.ifebp.org/pensionreform
Voluntary Benefits • Pet Insurance • Legal Services • Homeowners insurance • Automobile insurance • Reduced Gym Membership Rates • Critical illness/cancer insurance
Scenarios The following are seven real life situations encountered by benefits professionals. Let’s discuss what YOU would do I’ve included “expert” responses after each question.
Scenario #1 - FMLA • An employee’s out-of-state daughter is on total bed rest for complications during a pregnancy. Employee is wondering if she can use FMLA to help her daughter during this time?
Scenario #1 • “Expert 1” - Yes, of course, she can use FMLA to help her daughter.Have the daughter's OB/GYN fill out the medical certification and process whatever paperwork you use - and let the employee go. • “Expert 2” - When an employee came to me with request to care for their son or daughter, I always hated having to ask the age.....I believe that to qualify the son or daughter needs to be under age 18. An exclusion would be if the child was an overage dependent due to disability. This usually made me appear heartless, but I would go back to the definitions. • FMLA – allows 12 weeks of unpaid leave within a 12-month period for the following reasons: • Employee’s serious health condition • Birth and care of employee’s child • Placement with EE of a child for adoption or foster care • Care of the EE’s spouse, child, or parent with a serious health condition.
Scenario #2 – Holiday Pay for Temporary Staff • Does anyone know if it is legally required to pay temporary staff who are on your payroll for holidays?
Scenario #2 • “Expert 1” - To my knowledge, no it is not. I have worked at companies that pay them like their own employees, and companies that don’t. • “Expert 2” - If there was work available you could allow them (I assume they are temps through an agency, not temps on your payroll) to work 4 – 10s so they would still get their 40 hours. • “Expert 3” - You probably should check with the labor & wage laws for your state, but in my history in HR, temporary staff were not eligible for benefits and that included holiday pay. It did not matter whether the person was on the payroll of the temporary staffing agency or our company's payroll. I'm assuming you are referring to holidays that are not worked. • “Expert 4” - The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays (federal or otherwise). These benefits are generally a matter of agreement between an employer and an employee (or the employee's representative). apply to employees in the "non-exempt" class.
Scenario #3 – FMLA • If an employee is on Family Medical Leave and uses unpaid time to cover a month long absence, we do not credit the employee with sick or vacation time since our rules state the employee must be in pay status to accrue time. • A question has arisen on whether we should credit the employee with hours of sick and vacation time merely since he is using Family Medical Leave time. This employee is pursuing legal action against us on other matters and I do not wish to become another item in the lawsuit. • I do not believe that we should credit the employee with sick or vacation accrual since the FMLA time was unpaid. What are your thoughts ?
Scenario #3 • “Expert 1” - I concur, the employee does not accrue sick/vacation leave while on unpaid FMLA leave. If this employee was on any other kind of unpaid leave they would not accrue this time. However, I suggest you double check your employee handbook to see if this situation is addressed just so you know what specific wording may be in there
Scenario #3 • “Expert 2” - DOL web site regarding accrual of sick/vacation while someone is on unpaid FMLA. • Other Benefits • Other benefits, including cash payments chosen by the employee instead of group health insurance coverage, need not be maintained during periods of unpaid FMLA leave. • Certain types of earned benefits, such as seniority or paid leave, need not continue to accrue during periods of unpaid FMLA leave provided that such benefits do not accrue for employees on other types of unpaid leave. For other benefits, such as elected life insurance coverage, the employer and the employee may make arrangements to continue benefits during periods of unpaid FMLA leave. An employer may elect to continue such benefits to ensure that the employee will be eligible to be restored to the same benefits upon returning to work. At the conclusion of the leave, the employer may recover only the employee's share of premiums it paid to maintain other "non-health" benefits during unpaid FMLA leave. • FMLA requires you to continue to offer health benefits on the same basis as if the employee were continuously employed. Employers are not required to provide any non-health plan benefits to employees on FMLA leave, unless such benefits are provided to employees on non-FMLA leaves. I think you are fine with your current practice as long as you are consistently administering it.
Scenario #4 – HRA vs. MERP • Can anyone help me understand the differences between a CDHP plan with an HRA account and a CDHP plan with a Section 105 MERP (Medical Expense Reimbursement Plan) on top of it? I’ve seen a plan design with a $5000 individual deductible which is also the annual OOP maximum, then 100% coinsurance; the plan also has a separate MERP that is included with it that has a $250 deductible and, generally, a 80% coinsurance. MERP also has a $1500 annual OOP max. Enrolled employees automatically are enrolled in the MERP at the same time. The CDHP plan seems to be operating as a sort of “stop loss” protection for the MERP. The employer was a small group, less than 100. • In general, this seems like an innovative approach but I’m not sure of it’s true effectiveness. The CDHP premium for employee only is $180 month—which sounds pretty good.
Scenario #4 • “Expert 1”- But it does sound like this is a small company that could not afford the last couple of renewal rates and are trying to self-fund part of the cost. The premiums are lower but I guess I would want to look at past claims and census data before going down this road. Then are you better off just going to self-funding, depending on the size of your insured population. • “Expert 2” - I am not really seeing the difference between HRA and MERP in this situation; to many of us, especially here in the East where some carriers marketed their insured Executive Reimbursement plans as “MERP”, I admit my first reaction was that usually there is a limited number of people in the MERP. That doesn’t seem to be the case here. • I am presuming that your “MERP” is self insured and is just really substituting that plan for the underlying coverage that would otherwise be administered by the carrier if the combined plans were insured together. There is probably some lower admin, lower taxes and lower commissions in the insured CDHP as a result of the existence of the HRA that they are calling a MERP.
Scenario #4 • This won’t relieve them of all the other headaches that go with health care inflation, etc., they are just splitting the funding of their program. • I will admit to be confused as to how anyone ever meets the out of pocket limit of $1,500 if they are only funding coinsurance of 20% up to $5,000, but that is a minor consideration in this whole spectrum – all they have done is take dollars from their left (self insured) pocket instead of their right (insured) pocket. • “Expert 3” - Before you go down that road, make certain you are fully aware of the upcoming deductible limits imposed by PPACA. Ask both your broker and Anthem to explain how those plan designs will hold up under PPACA, both today and after 2014. Knowing that might influence your decision today.
Scenario #5 – ERISA/5500 Filing/MHPA • A friend told me yesterday that if a group is not subject to ERISA they will be given the choice as to whether they want to adopt this federal mandate. So, if a group is exempt from 5500 filing, would it necessarily be true that they can choose whether to adopt this mandate only on a voluntary basis?
Scenario #5 • “Expert 1” - Unless you are referring to a self-funded, nonfederal governmental plan, I don’t think you may opt out of mental health or addiction parity. Please see the link below to the memo from HHS/OCIIO below for more information. (http://www.hhs.gov/ociio/regulations/opt_out_memo.pdf) • “Expert 2” - All of our self funded clients made the decision to (1) adopt the federal mandate to cover mental health and addiction, (2) keep mental health parity but drop all addiction benefits, or (3) drop all mental health and addiction benefits. • This includes governmental, church and ERISA plans. The law gives you the right to mental health and addiction the same as medical benefits, or exclude them entirely, but nothing in between. • If you are fully insured, you are limited by what your fully insured insurance company allows.
Scenario #5 • “Expert 3” - if you are referring to a small group, 50 or less, then an exemption for size may also apply: http://www.dol.gov/ebsa/newsroom/fsmhpaea.html
Scenario #6 – Vacation/Sick Time • How other employers handle fulltime hourly employee vacation and sick leave. • Currently our full-time employees accrue leave each pay period regardless of hours worked. Our employees’ hours vary from week to week; one week they may work 30 hours and the next 38. • Does anyone prorate vacation hours based on hours worked by the employee?
you accrue a set number of vacation hours each pay regardless of hours worked. Scenario #6 • “Expert 1” - Employees accrue a set number of vacation hours each pay period regardless of hours worked. • “Expert 2” - Regardless of number of hours worked, employees puts in 5 days (or more) per week. Vacation is accrued throughout the year based on number of weeks they get. • “Expert 3” - In my distant past days in restaurants, hourly full time employees were given vacation based on the average number of hours worked in the previous year. That was in the days before computers, and wasn’t THAT fun to calculate! • “Expert 4” - We have set accrual rates based on years of service. We are just now switching to this and beginning January 1 employees will earn PTO based on actual hours worked.
Scenario #7 - Policy • Does anyone know if e-cigarettes violate an employers smoke free policy or counts as smoking when an employer charges more for smokers then non-smokers when it comes to health insurance?
Scenario #7 • “Expert 1” - Question for those with clinical knowledge - is it strictly the nicotine, or all the other junk in burnt tobacco as well that causes problems? • “Expert 2” - I've seen e-cigarettes on the L in Chicago. It was confusing to see someone with what looks like a cigarette in a place where smoking is verboten. The device has a blue light but no smoke. I'm not a smoker so I don't understand the addiction. But hey, if it works, great! • “Expert 3” - It’s an electronic device that has capsules containing liquid which gets heated and delivers vapor. The capsules come with or without nicotine. FDA classifies them as a drug delivery system. In my opinion the ones with nicotine should be a violation of a smoke-free policy. I guess policies would need to be revised to specify e-cigarettes.
Scenario #7 • “Expert 4” - We have provisions for both no tobacco AND no nicotine (which is delivered by the E-Cigarette). I would suggest that if your policy is "no tobacco", then E-Cigarette's are fine. If it is more strict to include nicotine specifically, then E-Cigarette would disqualify them for the non-smoker discount. • One other issue that might come up - if you test for smoker status (i.e.; smokers quit and want their discounts for being non-smokers) then you'll have to find out how the test works and whether it can make a distinction between smokers and e-smokers. • For those of you who have implemented smoking-cessation programs, I'd suggest talking with your vendor(s) about it. Is the policy's intention: • 1. to limit second-hand smoke--not infringe upon the rights of others? • 2. to reduce health insurance premium expense related to employees who use tobacco/nicotine in any manner (cigarettes, cigars, chewing tobacco)?
Scenario #7 • “Expert 5”- Sounds like we may need to update smoke-free and tobacco-free policies to be nicotine-free. • “Expert 6” - I Would suggest reviewing (and keeping a copy handy) of HIPAA's exception to its non-discrimination rules. • The "way" the individual tries to quit smoking to avoid paying higher contributions can be specifically dictated by your plan. • You can't surcharge a smoker who goes through whatever program or process you set up and still cannot quit - but you can certainly surcharge a smoker who doesn't give it a try.
Scenario #8 – COBRA Notices • What is our obligation to allow a divorced spouse to elect COBRA if she never received the COBRA notice? • Our employee got divorced in May. He took his wife off the plan 5/31. The COBRA notice was sent out timely to the ex-spouse. However, it was sent to the address of the employee. There are extenuating circumstances with their relationship that would have caused our employee to NOT forward the COBRA notice to his ex-wife. • She has now reached out to us to find out about electing COBRA. She only contacted the insurer recently, who told her to contact us about the COBRA packet. • Do we have any obligation to let her elect coverage if the deadline has passed even when it was our employee’s intent not to share the information with her?
Scenario #8 • “Expert 1” - I would allow it, to make her whole. While it is not your intention to block her from COBRA election, she could claim she was not given proper notice and could have a claim with DOL against the plan administrator. If you allow her to enroll now, retro back to the date of event, you are “making her whole”. • “Expert 2” - It appears a good faith mistake, complicated by possible spousal interference. As such it is always better to offer the 60 days upon notice or discovery than end up in court. • “Expert 3” - You are obligated to send COBRA notices to the last known address for spouses or children. Did you have another address for her back in May? If not, you have complied with COBRA and are not required to allow her to enroll now. You have no obligation to monitor that the employee shares the information.
Scenario #8 • “Expert 4” - As an employer, you have an obligation to mail the notice timely to the ex-spouse at the address on record. You have no obligation concerning delivery by the US postal system. Hopefully the divorce decree spells out an obligation for the ex-husband to provide the spouse with medical coverage in which case he will have to go the more expensive individual coverage route • “Expert 5” - I’ve been involved in a couple of situations like this at different employers. For one, we took the stance that the employer properly sent out the notice to the address of record and did not allow the spouse to elect COBRA because she missed filing deadline. At the other employer we allowed the spouse to pick up COBRA but she had to go back and pay all retro premiums to the COBRA effective date – she couldn’t elect it now and go forward.
Scenario #8 • “Expert 6” - Here's what we do to protect ourselves. • 1. We mail the initial notice to the employee and "to the family of" and keep proof of mailing (we keep a copy); • 2. We print the COBRA notices in our SPD's so they have yet another opportunity to be aware of their rights and deadlines; • 3. We include the COBRA notices in our Open Enrollment materials every year; • 4. We mail the COBRA notice to the last known address. We will check the copy of the divorce decree to see if there is another address listed for the spouse. If so, we use that address.; • 5. We take the position that there were multiple opportunities for a person to know about the deadlines. It is their responsibility to notify us within 60 days of the date of the divorce. If they do not, they are not eligible for COBRA coverage. • Without at least the first step, I would be concerned about holding firm to the deadlines especially if you had any reason to believe that the COBRA notice wasn't going to reach the now ex-spouse.
Scenario #8 • “Expert 7” - We had this happen as well. Not sure what the legal answer is, but discounting the fact that the employee has questionable ethics, which is a whole other employee relations issue, we did the right thing and offered her COBRA coverage when she contacted us. We figure she had already been punished enough by having married a jerk. :) • “Expert 8” - I'm not sure you have an "obligation" if the address you had on file and current was the employee's. • But my advice would be to offer her COBRA again. • When in doubt, and if your carrier(s) is / are amenable, it is best to always offer duplicate COBRA notices in such circumstances...
Certified Employee Benefit Specialist • What is it? • A specialty designation focusing on Group Health, Retirement and Compensation. • It is offered through IFEBP and the Wharton School • Who enrolls? • Benefits professionals • HR professionals • Insurance professionals • Many, many more • How can CEBS help in today’s business world? • Statistics: • More than 26,000 credentialed holders in the U.S. and Canada • Eight courses (six required and two electives) to earn CEBS designation • 30 credits for HRCI from each course
Additional Resources www.cebs.org www.ifebp.org www.iscebs.org Contact infoEmailPhone