Month: August 2014

With Fall open enrollment around the corner, most employers will need to provide a Summary of Benefits and Coverage (SBC) to eligible individuals. Here are some highlights of the requirement (as of August 2014):

– Plan administrators of group health plans must provide a Summary of Benefits and Coverage (SBC) to eligible individuals

• Insurer is responsible for creating the SBC for fully insured plans, and the insurer and plan administrator are both responsible for distributing to participants in insured plans
• Plan administrator (which is usually the employer) is responsible for creating and distributing the SBC for self-funded plans

– Requirement applies to all employers, regardless of size or type (private, government, not-for-profit), including grandfathered plans

– Requirement primarily applies to medical (PPO, HDHP, HMO, etc.) coverage

• Applies to HRAs — may include HRA information in the medical SBC if the plans are integrated
• Applies to EAPs and wellness only if the program provides medical services, such as direct counseling may include the EAP or wellness information in the medical SBC if they are linked

– An SBC is not needed for:

• Stand-alone dental and vision benefits (stand-alone means these benefits are elected separately from medical)
• Health FSAs unless the employer makes a significant contribution or group medical is not offered
• Health savings accounts (HSAs), although the high-deductible health plan will need an SBC; the HSA can be mentioned as a source of funds to meet deductibles, coinsurance, etc. if desired
• Hospital indemnity or specified illness coverage
• Long-term care, disability or accident coverage
• Retiree only plans

– Must use the standard format prescribed by the regulatory agencies

• The 2015 SBC template (which is the same as the 2014 template) can be found at http://www.dol.gov/ebsa/correctedsbctemplate2.doc
• The instructions can be found at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf

– May show multiple benefit options (such as coverage tiers or different deductibles and out-of-pocket maximums) on one SBC if can do that clearly

– Do not need to include premium/contribution information

– Must include a coverage example that is based on cost assumptions provided by the regulatory agencies and the plan’s actual cost sharing design (deductible, copays, coinsurance, exclusions)

– Must provide a standard glossary, which may not be modified

• Plan may either distribute the glossary or provide a link to where it is posted
• The glossary can be found at http://www.dol.gov/ebsa/pdf/SBCUniformGlossary.pdf

– May include the SBC in the SPD, as long as the prescribed format is followed, the SBC information is prominently displayed, and the timing requirements are met 

– Must provide in an alternate language (Chinese, Navajo, Spanish, or Tagalog) if the SBC is being delivered in a county in which more than 10 percent of the population is literate only in that language 

– Must be given with open enrollment materials (annual and to new hires)

• If the individual is currently enrolled, only need to provide an SBC for the plan the employee/retiree is currently enrolled in
• If the employee is not yet enrolled, the employer must provide an SBC for every available option

– Electronic delivery of the SBC is allowed if:

• Enrollment is online, or
• The employee receives a paper or email notice explaining the SBC has been posted on the internet; the notice must include the posting address, state that a paper copy will be provided at no charge upon request, and include contact information to request a paper copy, or
• For an employee who is already enrolled and who regularly uses a computer in his job, the SBC is either emailed to the employee or the employee is notified that the SBC has been posted, the location of the posting, why the SBC is important and how to obtain a free paper copy

– The SBC must state whether the coverage is minimum essential coverage and whether it provides minimum value

There is a penalty of up to $1,000 per employee for willful (deliberate) failures to provide the SBC, and of up to $100 per participant per day for negligent failures to provide the SBC.

Download a copy of UBA’s “Summary of Benefits and Coverage FAQs” at: http://ubabenefits.sites.hubspot.com/summary-of-benefits-and-coverage-faqs

By Peter Freska, CEBS, Advisor
The LBL Group 
A United Benefit Advisors Partner Firm 

I have sat with hundreds of employers that want to make a difference. They want to make a difference in how their teams work, how productive the employees are, and better yet…in how they, as an employer, can attract, retain and engage the best and brightest people for long-term sustainable (profitable) growth of the organization. But many companies fall short. And, while most employees are 100% engaged when they start a new job, a recent Dale Carnegie Training study indicated that only 29% are fully engaged. In another article entitled “Overcoming Employee Disengagement,” the author mentions that the “2013 RAND Health Study found that less than half of employees (46%) participate in health risk assessment (HRA) or clinical screenings, and out of those identified as needing a wellness program, less than one fifth chose to participate.” (August 2014, Benefits Magazine) The point of the article was simple, that people create their own barriers to success.

So the question to pose is: With such low levels of overall engagement and low participation in something like an HRA, a simple thing that could help save a person’s life, what can an employer do to really affect personal change for their employees? The answers are in Total Population Health Management, but let’s concentrate on why employees maintain barriers and what is needed to make a difference.

When companies build and develop programs, they typically have productivity, efficiency, or most likely cost reduction motives. Well, what if a company builds a program that changes this paradigm by concentrating on more than just the bottom line?

For example, Costco is well noted for turning its nose to Wall Street in years past. Costco pays its employees a living wage, provides benefits for almost 90% of its employees, the CEO earns much less than others in similar size companies, and it paid workers $1.50 per hour more over three years during economic crisis. And the result of all these things is a fantastic shopping experience for you and me, with employees who tend to be fiercely loyal to the company and the members they serve.

There are more examples of service to the employees and customers that come to mind…Trader Joe’s, TOMS Shoes, and Dogeared to name a few. All of these companies are working to do their part to make this world a better place, while still being a profitable company.  

The methods that these organizations implement tend to break down the personal barriers that employees build up. These personal barriers come in many varieties; from emotional to cognitive, to environmental and deep-rooted habits, and even physiological. By creating a unified mission, vision, and set of core values at the root of an organizations culture, these personal barriers gradually diminish. And, as you know, just saying or writing it is not enough. Organizations need to actually live it every day. In fact, to really establish an organization’s foundation of culture and values, these things need to happen every day through ongoing learning and reinforcement.       

Download the complimentary UBA white paper, “A Business Case for Benefits Communications,” from http://bit.ly/1gJR3GE for further information on employee engagement and communication strategies.

Recently, UBA Partner Mike Humphrey, Senior Benefits Advisor at The Wilson Agency, shared some great insights for those who are considering doing a dependent audit.  He points out three reasons why you shouldn’t do these audits and offers a much better approach to reining in costs associated with covering dependents that should no longer be on your plan.  Humphrey’s long tenure counseling large employers shows once again that sometimes quick-fix solutions for eliminating wasteful spending aren’t worth it in the end, no matter how well intended. Instead, simple changes to the up front enrollment process can avoid a lot of headaches and keep costs in line.

Here’s what he says:

Have you been considering a dependent audit and wondering if it is really worth it?

From personal experience, having done dependent audits, I can say that it is questionable.

The main idea behind a dependent audit is that it will save employers money by finding and removing all the dependents that should no longer be on the plan, for example divorced spouses or aged-out children.  These audits can be done using internal resources or, more often than not, contracted to an outside vendor who can manage all the paperwork.  Some vendors claim they save employers a lot of money through dependent audits.  But, I have a different experience and point of view that may save you the time, trouble and expense of going through an audit.

1. Costs

The reason why a company may consider a dependent audit is the belief that many of the “dependents” on the health plan are not eligible and are costing the company money.

But is the amount of money that these dependents “may” be costing the company worth the expense of a dependent audit? Maybe not for self-insured plans.

Most dependent “children” that are on the plan are not even using the plan and, in the case of marriages, an employee who wishes to keep an ex-spouse on the plan can still send in the original marriage certificate and claim they are still married.

Dependent audits aren’t cheap. The audit company gets paid a pretty penny to track employees’ compliance, look over all the documents and at the end of the day; they are the only ones that are truly benefiting from the audit.

2. Time-intensive

For large companies with thousands of employees, there are thousands of documents that must be collected and reviewed. Even if you hire a vendor to do your audit, HR will spend a lot of time dealing with employee appeals, complaints and questions. There will also be a number of unique situations that will require the vice president of HR to review, e.g., children born in other countries, common law marriages, natural disasters that have caused the loss of records, and more.

3. Employee backlash

One of the biggest issues with the dependent audit is the way employees react. Many employees are, needless to say, offended. They are being asked for documentation to prove that they were married to their wife or that a child is truly theirs. Many employees are also sensitive about releasing these private documents to a third party in this age of identity theft. In addition to the emotional aspect involved, putting together the required information and documents is a major inconvenience to employees and may have a cost to the employee when they request a new copy of their documents.

So how do you fix the problem?

The underlying issue that some ineligible dependents are on the plan will always exist, and a dependent audit is not going to fix this. Employees will continue to misunderstand who is a “dependent,” such as a grandchild living with the employee (unless the employee has legal custody).

In my 25 years of HR experience, 95% of employees are very honest people and the other 5% will find ways to beat the system. To help lessen the chance that your health plan has ineligible dependents and to not create a backlash from employees; I propose a gradual fix.

The first step is to require all new employees to present documents to HR during the new hire process; much in the same way that they must document their eligibility for the I-9 form. Secondly, tell employees that after a specific date if they have a life event, documentation will need to be presented to HR to add a dependent.  Third, be sure to code the benefits/payroll system to automatically drop dependent children from the plan once they reach 26 years of age. 

Using these steps, if just 10% of your employees turn over each year, in a few years you will have documented the eligibility of most of the dependents on the plan – and saved your company a lot of money, time, and undue stress.

(This is the third article of a three-part series. Read Part One here and Part Two here.)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA
In this blog series we’re taking a look at the unforeseen ways The Af…

(This is the second article of a three-part series. Read Part One here.)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA
In this blog series we’re taking a look at the unforeseen ways The Affordable Care Act may affec…

The Department of Labor (DOL) requires that participant notices and other plan information (“disclosures”) be provided in a way that is reasonably calculated to ensure delivery to all plan participants. The Department of Health and Human Service (HHS) typically follows the DOL’s rules. There are two primary ways to deliver plan information — by paper and electronically.

Part 1 (the first article of a three-part series)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA 
No matter who you are, no matter where, the Affordable Care Act, one of the largest pieces of legislation in recent hi…