Barham Benefit Group | Blog

How to make the most of your health care dollars

2012-02-14T10:31:00.000-06:00

It’s possible to lower out-of-pocket health care costs by understanding what your health plan covers, what it does not cover and how to make the most of every dollar spent on health care and health insurance. Blue Cross Blue Shield of Delaware offers these suggestions for optimizing a health care budget this year:

Stay in-network. Make sure your doctor(s), laboratory and hospital are a part of your health plan’s provider network so you save on copays and coinsurance amounts.

Have a referral. Before you see a specialist, check to see if you need a referral and, if so, find out how to request one. Without a referral, you may have to pay for services at the full out-of-pocket cost.

Use alternatives to emergency services. A visit to the hospital emergency department is generally unnecessary for issues such as the flu, minor cuts and sprains, or urinary tract infections. Overall costs are usually lower at medical aid units and urgent care centers. Check your health plan’s provider directory for an MAU nearby.

Consult with your physician about alternative surgical locations. Depending on your health condition, you may be able to schedule your elective surgery at an ambulatory surgical center.

Take the tests. Receive the screenings, tests, vaccines and other care that your plan covers, as recommended by your doctor. When you and your family stay healthy, you can avoid doctor's visits and time off from work.

Take your medicine. To receive the full benefit of your medicine, remember to take the recommended dosage for as long as your doctor prescribes it. People who take their medicine(s) as prescribed need less health care—and less expensive care. If you don't understand how to take your medicine, ask your doctor or pharmacist.

Find the best price for the medication you need. Always ask if a generic prescription drug or an over-the-counter drug would be best for you. Some generics are up to 80 percent less expensive than brand names, and also have the lowest copays. For any brand-name drug, research the manufacturer before you fill the prescription. Then check its website for any discount coupons or free copay programs that may be available for that drug.

Use your health flexible spending account dollars. If you don’t use the money that you have contributed to your account, you'll lose it at the end of the year.

What You Need to Know about the Small Business Health Care Tax Credit

2012-02-14T10:28:00.000-06:00

How will the credit make a difference for you?
For tax years 2010 through 2013, the maximum credit is 35 percent for small business employers and 25 percent for small tax-exempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively.

Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums – and if you qualify for a 15 percent credit, you save … $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $12,000 a year.

Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments are more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return there’s still time to file an amended return

Affordable Care Act Provisions by Year

2012-01-18T09:46:00.001-06:00

Affordable Care Act Provisions by Year

Health & Welfare Plan Reporting Checklist

2012-01-18T09:32:00.000-06:00

Disclosure Requirements for Health Checklist January 2012

MLK Celebration

2012-01-10T15:45:00.002-06:00

MLK Flier 011312

2012 HSA and FSA Information

2011-12-01T13:49:00.000-06:00

What are they?
HSAs are tax-advantaged medical savings accounts available to taxpayers who are enrolled in an HSA-qualified high-deductible health plan. The funds contributed to the account are not subject to federal income tax at the time of deposit. Unused amounts in one year can be carried over to following years and added to subsequent contributions.

What’s new for 2012?
HSA contribution limits and HDHP out-of-pocket maximums will increase slightly, while the HDHP minimum required deductibles remain unchanged.

HSA Contribution Limits:
• Individual (self-only HDHP): $3,100 ($50 increase from 2011)
• Family: $6,250 ($100 increase from 2011)

Limits for catch-up contributions (for persons over age 55): $1,000 (unchanged from 2011)

HDHP Minimum Required Deductibles:
• Self-only: $1,200
• Family: $2,400

HDHP Out-of-Pocket Maximum:
• Self-only: $6,050 (a $100 increase from 2011)
• Family: $12,100 (a $200 increase from 2011)

What changed in 2011?

Effective Jan. 1, 2011, expenses incurred for over-the-counter medicines, with the exception of insulin, will not be eligible for reimbursement under a health FSA, HRA or HSA without a prescription. The penalty for using HSA funds for ineligible expenses increased from 10 percent to 20 percent.

Flexible Spending Accounts

What are they?

• Also known as a flexible spending arrangement, a flexible spending account is a tax-advantaged account that allows an employee to set aside a portion of earnings to pay for qualified medical expenses.

• Unlike health savings accounts or health reimbursement accounts, FSAs are more commonly offered with traditional medical plans.

• Unlike health savings accounts, funds in the account that are unused when the plan year is over are lost and cannot be carried over to the following year.

• Paper forms or a debit card may be used to access account funds.

• The flex spending account allows you to contribute money to the FSA for costs not covered by insurance: deductibles, copays, and coinsurance. In addition, you can use your FSA to pay for health care costs that health insurance doesn’t cover.

What’s new for 2012?

Contribution limits

2012 is the last year that there are no limits. Although there is no limit as mandated by law, the plan must prescribe either a maximum dollar amount or maximum percentage of compensation that can be contributed to the FSA.

What changed in 2011?

Beginning in 2011, FSA funds cannot be used for over-the-counter medicines unless specifically prescribed by a doctor.

What to expect for 2013:

FSA contributions will be limited to $2,500 each year with annual inflation increases

Employees value benefits more than ever

2011-11-01T13:10:00.000-05:00

Benefits matter more than ever to employees. The third annual study of employees’ views by Unum toward their benefits and enrollment was conducted online in December following the 2010 benefits enrollment period among more than 1,700 working adults. The research finds the perceived importance of many employee benefits notably increased from 2008 to 2010 across all age groups.

“This economic environment has caused employees to take a hard look at how to protect their income and savings from not only another recession, but from personal hardship, as well,” says Bill Dalicandro, vice president at Unum. “Employees are recognizing the important role financial protection benefits in particular can play in protecting their financial stability.”

When employees were asked to rate benefits in terms of their importance, regardless of whether or not they were available through their employer, financial protection benefits saw some of the highest gains.

* On a scale of importance from 1 (not at all important) to 10 (extremely important), 53% of employees rated long-term disability insurance an 8 or higher, a seven-point increase from 2008.

* Half of employees rated short-term disability insurance an 8 or higher, up from 45% in 2008.

* Fifty percent of employees gave an 8 or higher rating to accidental injury coverage, a 10-point increase from 2008.

Further, the study finds employees age 45 and older consider long-term disability more important than life insurance as a benefit. “This is an encouraging trend because research shows that employees are far more likely to become disabled than die,” Dalicandro says. “So while life insurance is still very important to have, employees are also recognizing the need to protect their paychecks should they become disabled during their working years.”

But although employees rate the importance of benefits higher, participation has remained relatively constant since 2008 across benefits. Unum’s research also shows employees have had less access to printed benefits education materials and in-person benefits education since 2008, and that some employees are not provided enough time to make informed choices.

“Employees clearly value these benefits, particularly in a struggling economy,” Dalicandro says. “Ensuring that they understand their options and feel comfortable making benefits decisions helps them choose the coverage they need and want.”

From Employee Benefit News

Health Care Reform Timeline

2011-10-13T09:49:00.000-05:00

Health Care Reform Summary & Timeline

Champaign-Urbana International Humanitarian Awards

2011-09-06T10:13:00.000-05:00

2011 Cuiha Flyer

Illinois Department of Insurance-New External Review Regs

2011-09-01T09:18:00.001-05:00

http://contentm.mkt2527.com/lp/4021/21439/IDOI_External_Review_Fact_Sheet.pdf

Employers focus more on dental plans when seen in larger health promotion context

2011-08-26T09:38:00.001-05:00

Employers understand that improving employee health is not only highly desirable in itself, but also the most effective long-term solution to the high and rising cost of health benefits. A fact unknown to many employers, however, is that a strong, prevention-oriented dental benefit can play a critical role in promoting employee health.

Focus on health habits

Fresh evidence of employers' priorities came in this year's Aon Hewitt Healthcare Survey of Employers: Nearly 69% of employers said they want to "improve health habits" of their employees, while less than half picked achieving a "lower medical cost trend" in a list of top priorities. "Yet what many employers don't realize," according to Swanker, "is the close connection between oral health and overall health, not to mention the workplace impact of dental illness."

According to the National Center for Health Statistics, in one year, dental illness causes more than 160 million lost work hours (not to mention another 51 million lost school hours for students) for treatment. "This is a staggering cost to business," Swanker says.

Those statistics do not even reflect the fact that poor dental health (including periodontal disease) is commonly linked to a host of major medical conditions including diabetes, cardiovascular and respiratory disease, cancers, stroke and complications from pregnancy. These are some of the biggest drivers of health plan costs.

Window on diseases

Dentists can detect many disease symptoms through the mouth in many cases, catching it before it worsens, during the window when it is more treatable.

The health care costs of patients with severe periodontal disease are 21% higher than those without, citing a 2007 study reported in the Journal of Periodontology.

Some additional statistics that may seize employers' attention when discussing the importance of dental benefits:

Diabetics who have regular periodontal services can lower their overall medical and pharmacy costs by more than 10%, and their diabetes-related costs by up to 19%;¹
Periodontal treatment reduces the medical costs of patients with coronary artery disease and cerebrovascular disease by 16% and 11%, respectively;²
Patients who ignore regular dental care have a higher chance of visiting hospital emergency departments.³

Dental wellness

Employers who see that a well-designed dental benefit plan with preventive care features can be an integral component of a wellness strategy can distinguish themselves from other employer groups. Providing comprehensive employee education on the importance of oral health may be a perfect fit, and fill an important gap, within an employer's wellness program.

Motivating employee action

Even when employers fully grasp the importance of dental health in the larger medical and health promotion context, some may question what it will take for employees to take full advantage of a dental plan that includes preventive benefit elements. While employers may pay greater attention to plan design when the benefit is employer-paid, many are also interested even when dental is offered on a voluntary basis when they see the benefit's potential to have a big impact on employee health.

New law requires coverage by group plans for more than 50 workers

2011-08-25T13:11:00.000-05:00

News-Gazette Drug Abuse Treatment Limit

Illinois Health Exchange

2011-08-25T13:10:00.001-05:00

The Illinois Department of Insurance has been awarded a $5.1 million federal grant to develop and maintain a health insurance exchange where consumers can shop for coverage.

The nation's new health care law requires the exchanges to be running in states by 2014

Insurance exchanges will allow people and small businesses to comparison shop online for insurance.

The grant will help Illinois design the data infrastructure. It will go toward hiring staff to plan and coordinate with consultants to create the design features.

Gov. Pat Quinn said in a statement released Tuesday that the grant will help create a good exchange and develop tools to make it easy to use.

Illinois State Legislation Update – Recently Enacted Laws During its recently concluded legislative session, the Illinois General Assembly passed a va

2011-08-23T14:21:00.000-05:00

Public Act 97-0091 (House Bill 1191) – Routine Care in Clinical Cancer Trials
Signed into law on July 11, this new law prevents a group accident and health insurance policy from excluding routine patient care administered to an insured participating in a qualified cancer trial if the policy covers that same routine patient care for an insured not participating in a qualified cancer trial. It further requires no difference in out-of-pocket liability between an insured in a trial versus one not in a trial. This law is effective Jan. 1, 2012.

Public Act 97-0142 (Senate Bill 1555) – Illinois Health Benefits Exchange Law / State Employees HSA Law
Also effective as of July 14, this law requires Illinois to establish a Health Insurance Exchange program that consists of a marketplace where individuals and businesses can purchase subsidized health care plans. The law includes the creation of a Legislative Study Committee to study and report on the implementation needs to establish the exchange. To ensure balance, six of the 12 appointed members will come from the Illinois House of Representatives and six members from the Illinois Senate. The committee is required to report on the governance of the program by Sept. 30.

This law does not create the actual health insurance exchange; it simply provides guidelines as to how the exchange will be set-up at the legislative level.

In addition, PA 97-0142 includes the creation of a health savings account (HSA) for employees of Illinois state agencies and departments. Beginning in taxable year 2011, each employer shall make available to each eligible individual a HSA program and deposit $2,750 annually into each individual’s account. The law provides that funds can only be used for:

the purpose of paying qualified medical expenses of the eligible individual or his or her dependents,
to purchase a health coverage policy, certificate, or contract, or
to pay for health insurance other than a Medicare supplemental policy for those who are Medicare eligible.

This law also repeals the Health Care Justice Act.

Public Act 97-0198 (House Bill 1825) – Oral Cancer Drug Parity
Signed by Governor Quinn on July 27, this law requires that health insurance plans that provide coverage for cancer medications cannot have more restrictive treatment limitations or more restrictive financial requirements for oral cancer medications than intravenous and injected cancer medications. However, the law does not mandate coverage for cancer medications.

Public Act 97-0281 (House Bill 2249) – A1C Diabetes Self-Management Training and Education
Signed on Aug. 9, this law requires a group policy of accident and health insurance that is amended, delivered, issued or renewed after the law’s Jan. 1, 2012, effective date to provide coverage for outpatient self-management training and education, equipment and supplies. Further, the law defines “diabetes self-management training” as instruction in an outpatient setting which enables a diabetic patient to understand the diabetic management process and daily management of diabetic therapy as a means of avoiding frequent hospitalization and complications. This is specifically designed to help diabetics maintain their A1C levels within the normal range.

Public Act 97-0282 (House Bill 3039) – Heart Disease Prevention Notification
This law requires insurers to provide annual information regarding the importance and value of early detection and proactive management for cardiovascular disease. It was effective immediately upon the governor’s signature on Aug. 9. However, doctors have up to 60 days to update their information.

Top Ten Reasons for using Dental Insurance

2011-08-23T13:49:00.001-05:00

1. To Prevent Oral Cancer--According to The Oral Cancer Foundation, someone dies from oral cancer, every hour of every day in the United States alone. When you have your dental cleaning, your dentist is also screening you for oral cancer, which is highly curable if diagnosed early.

2. To Prevent Gum Disease—Gum disease is an infection in the gum tissues and bone that keep your teeth in place and is one of the leading causes of adult tooth loss. If diagnosed early, it can be treated and reversed. If treatment is not received, a more serious and advanced stage of gum disease may follow. Regular dental cleanings and check ups, flossing daily and brushing twice a day are key factors in preventing gum disease.

3. To Maintain Overall Good Physical Health—Recent studies have linked heart attacks and strokes to gum disease, resulting from poor oral hygiene. A dental cleaning every six months helps to keep your teeth and gums healthy and could possibly reduce your risk of heart disease and strokes.

4. To Keep your Teeth—Since gum disease is one of the leading causes of tooth loss in adults, regular dental check-ups and cleanings, brushing and flossing are vital to keeping as many teeth as you can. Keeping your teeth means better chewing function and ultimately, better health.

5. To Detect Dental Problems Early—Your dentist and hygienist will be able to detect any early signs of problems with your teeth or gums. Early detection of cavities, broken fillings and gum disease are easily treatable. If these problems go untreated, root canals, gum surgery and removal of teeth could become the only treatment options available.

6. To Maintain Good Oral Health—Your dental hygienist will help to ensure that you are maintaining your good oral health by visual examination and comparing your previous dental check-ups. If you are falling off track with your oral hygiene, your hygienist will help put you back on the right path.

7. To Use Your Dental Plan—Dental insurance plans usually pay for all or most of the cost of dental cleanings and check-ups every six months. Take advantage of this and save a lot of money in the long run by avoiding costly dental procedures that can result from poor oral hygiene. If you can’t afford insurance, get a discount dental plan for a few dollars a month, and you will pay a vastly reduced cost for the procedures. Even if the cleaning isn’t free, it’s cheap with a discount plan. It is more expensive later on if you don’t take care of these preventive items up front.

8. To Create a Plan for Treatment—If your dentist diagnoses any problems in your mouth, he will most likely give you a treatment plan. This treatment plan should have the cost of each procedure that you will need, so that you can discuss financial arrangements with the front office.

9. To Have a White, Bright Smile—Your dental hygienist can remove most tobacco, coffee and tea stains. During your cleaning, your hygienist will also polish your teeth to a beautiful shine.

COBRA subsidies finally at an end?

2011-08-22T14:45:00.001-05:00

Remember those pesky COBRA subsidies? The federal COBRA subsidy, originally introduced in March of 2009, provided that 65% of the cost of COBRA health insurance premiums would be covered by the employer for up to 15 months. To be subsidy eligible, recipients must have originally become eligible for COBRA as the result of an involuntary termination of employment occurring between September 2008 and May 2010.

Well, it is possible that they are coming to an end. The last group eligible recipients (those who began receiving assistance in May 2010) would cease to be subsidy eligible as of August 31, 2011. That means that if you still have former employees receiving subsidies for COBRA coverage, that should end as of next month. Also, there is presently no action from Congress pending to extend the subsidy further.

Although there is no specific notice requirement, we recommend that if you have COBRA participants that are still receiving the subsidy, you provide them with some notice that their subsidy eligibility is coming to an end. Consider a simple notice that the subsidy period has expired and that they are now responsible for 100% of the COBRA premiums if they want to continue coverage.

fromm Employee Benefit News

IRS to Issue New Health Care Reform Law Affordability Test

2011-08-17T12:36:00.000-05:00

August 15, 2011

IRS to Issue New Health Care Reform Law Affordability Test

The Internal Revenue Service said it will develop new rules that will make it easier for employers to determine if their health care plans are “affordable” and exempt from a stiff financial penalty mandated by the health care reform law.

Under the law, starting in 2014, employers are liable for an annual $3,000 penalty for those employees whose required health insurance premium contribution for single coverage exceeds 9.5 percent of family income and the employees are eligible for federal premium subsidies to buy coverage through state insurance exchanges.

In rules proposed Aug. 12 that were welcomed by employers, the IRS said it will develop a safe harbor in which coverage would be considered affordable so long as the premium contribution for single coverage did not exceed 9.5 percent of employees’ W-2 wages.

The IRS said it is developing the new safe harbor to give employers more certainty on whether their plans will pass the affordability test.

“Giving employers the ability to base their affordability calculations on their employees’ wages [which employers know] instead of employees’ household income [which employers generally do not know] is intended to provide a more workable and predictable method of facilitating affordable employer-sponsored coverage for the benefit of both employers and employees,” the IRS said in its notice of proposed rule-making. That notice is expected to be published in the Aug. 17 Federal Register.

Employers had complained that it would be difficult—if not impossible—for them to know employees’ household income, creating a big obstacle to determine whether their plans would be considered affordable, said Anne Waidmann, a director with PricewaterhouseCoopers in Washington, D.C.

The IRS safe harbor “would provide more certainty and effective planning,” said Frank McArdle, a principal with Aon Hewitt Inc. in Washington, D.C.

“This will make it easier for employers to do the necessary calculations,” said Chantel Sheaks, a principal with Buck Consultants, also in the District.

The IRS also affirmed that the 9.5 percent affordability test is to be applied only on single coverage, allowing employers to charge higher amounts for family coverage.

“While we think that was clear in the law, employers will welcome the additional clarity,” said James Klein, president of the American Benefits Council in Washington, D.C.

from Workforce Management

New Guidelines Provide Additional Women’s Preventive Care with No Cost Sharing

2011-08-03T15:11:00.000-05:00

On August 1, 2011, the Department of Health and Human Services (HHS) released an amendment to the Interim Final Regulations for preventive care under the Patient Protection and Affordable Care Act (PPACA). The amendment applies to non-grandfathered individual insurance policies as well as non-grandfathered insured and self-insured group health plans.

The amendment provides additional guidelines for women’s preventive services. Health plans will need to cover women’s preventive services, including birth control, without copayments or deductibles. The guidelines reflect the recommendations made last month by the independent Institute of Medicine.

For plan years beginning on or after August 1, 2012, non-grandfathered plans will be required to cover the following additional preventive care services for women with no cost sharing:

Annual well-woman visits
Screening for gestational diabetes
HPV DNA testing for women 30 years and older
Sexually-transmitted infection counseling
HIV screening and counseling
FDA-approved contraception methods and contraceptive counseling
Breastfeeding support, supplies, and counseling
Domestic violence screening and counseling

For more detail on the amendment and the additional preventive care services for women, visit: www.hrsa.gov/womensguidelines/.

For more information on the existing PPACA preventive care guidelines, visit: http://www.healthcare.gov/center/regulations/prevention/taskforce.html.

Plans may impose cost sharing on brand name preventive drugs if a generic version is available and is just as effective and safe for the patient to use. Cost sharing would not be permitted on the generic drug.

Religious Exemption
The regulations do not provide for a religious exemption. However, the regulations permit the Health Resources and Services Administration (HRSA) to establish exemptions from these guidelines for coverage of contraceptive services for group health plans of religious employers. A religious employer is defined as an organization that meets all of the following criteria:

The promotion of religious values is the purpose of the organization
The organization primarily employs individuals who share the religious beliefs of the organization
The organization primarily serves people who share the religious beliefs of the organization
The organization is a nonprofit organization as described in the Internal Revenue Code Sections 6033(a)(1) and 6033(a)(2)(A)(i) and (iii).

No religious exemption is available for individual policies; they must cover contraceptives with no cost sharing.

Champaign-Urbana International Humanitarian Awards

2011-07-29T09:16:00.000-05:00

Governor Signs Illinois Exchange Bill

2011-07-28T08:49:00.001-05:00

Illinois Governor Pat Quinn signed SB 1555 to establish a health benefits exchange in Illinois. The bill creates a legislative study commission and requires the State to establish the Illinois Health Benefits Exchange (Exchange).

SB 1555 requires establishment of the Exchange beginning October 1, 2013, for individuals and small employers with no more than 50 employees. It further declares that the Exchange shall supplement, not replace, existing private health insurance markets for individuals and small employers.

The Exchange law requires the Legislative Committee to report all findings concerning the implementation and establishment of the Exchange to executive and legislative branches by September 30, 2011. The report is to include, but not be limited to, the following.

Governance and structure of the Exchange
Financial sustainability of the Exchange
Stakeholder engagement, including an ongoing role for the Legislative Committee or other legislative oversight of the Exchange

The Legislative Committee must also report its findings with regard to the operating model of the Exchange, the size of the employers to be offered coverage through the Exchange, coverage pools for individuals and businesses within the Exchange and the development of standards for the coverage of full-time and part-time employees and their dependents.

The bill requires members of the Legislative Committee to be appointed within 30 days after the effective date of the law and they must convene their first meeting no later than 45 days after the effective date of the law.

Watch for public meetings on this issue in the coming weeks.

Highlighting Health Insurance Value on Forms W-2

2011-07-25T14:16:00.000-05:00

The Patient Protection and Affordable Care Act (PPACA) requires that employers report the cost of providing health insurance to an employee on the employee's Form W-2. This provision raises many questions: Which employers must report the cost of providing health insurance? What, precisely, must employers report and when? Most of these questions have been answered by the Internal Revenue Service (IRS) in Notice 2011-28, which provided a bit more time for some employers to comply.

It’s critical to note that health insurance benefits are not being taxed. Reporting the cost of health insurance on W-2s might seem like a path to taxation, but the reason for reporting is to convey to employees the value of their health insurance, because many employees do not realize how expensive it is. While the PPACA does include a provision to tax health insurance starting in 2018, this applies only to so-called "Cadillac" health insurance coverage that is more valuable than that provided by most employers. In short, health insurance coverage will not be taxed under current law unless it is very expensive.

When Must Employers Report?

Large employers must report the cost of health insurance coverage on 2012 Forms W-2. Small employers (those that filed 250 or fewer Forms W-2 for the 2011 tax year) must report this information on their 2013 Forms W-2. Remember, employers issue Forms W-2 in January following the tax year they cover, so this means the first required reporting starts in January 2013. IRS Notice 2010-68 and IRS Notice 2011-28 clarify that reporting the cost of health insurance coverage is optional for the years before it is mandatory.

Which Employers Must Report?

The reporting requirement applies to all employers, including churches and other religious organizations, all levels of government, and employers not subject to COBRA continuation coverage requirements.

The reporting requirement, however, does not apply to all types of coverage offered under plans. The cost of coverage under church plans—plans that are offered by religious organizations and are not subject to the Employee Retirement Income Security Act or COBRA continuation—does not have to be reported. So while the reporting requirement applies to religious organizations, if a religious organization offers only church plans, it has nothing to report.

Calculating and Reporting the Cost Coverage

Employers must report the "aggregate cost of applicable employer-sponsored coverage," which is the total cost of coverage under all the group health insurance provided to the employee. The IRS provides employers with a few different options for how to relay this. The key principle underlying the employer’s options for cost calculation is that once the employer chooses a method, the employer must apply that method uniformly to all employees receiving coverage under the same plan.

Essentially, employers must report the cost of medical coverage under their group health plan that is tax-free. There are several benefits and lines of coverage that do not count toward the reportable aggregate cost:

• Stand-alone dental and vision plans.

• Amounts contributed to Archer medical savings accounts, health savings accounts (HSAs) and health reimbursement arrangements (HRAs).

• Amounts contributed by the employee to health flexible spending arrangements (FSAs), although amounts contributed by the employer to FSAs are included in reportable cost.

• "Excepted benefits," including accident, death and disability (AD&D) insurance; liability insurance; and automobile health insurance.

• Long-term-care insurance.

• Any health-like insurance (for example, covering a specific condition) that is not excludable from taxable income.

The aggregate reportable cost includes the entire amount of the coverage, including employer and employee contributions. For fully insured plans, this is easy enough to calculate: Employers may report just the premium charged for the employee’s coverage. Employers with self-insured plans (and those with fully insured ones, if they wish) can use the COBRA premium rate to determine the aggregate cost of covering an employee. Alternatively, if the employer does not calculate precise COBRA premiums from year to year, it can use a good-faith estimate of the total COBRA premium, including employer subsidization.

Cost Changes During the Year

When the reportable cost changes in the middle of a tax year, employers must ensure that the reported cost accounts for the changes. Most employers probably will calculate the costs on a monthly basis, which makes adjusting for changes easier. Sometimes a change—such as the employee’s beginning, ending or changing coverage—occurs in the middle of a month. In that case, the employer may include, exclude or prorate the changes in costs for that month, as long as the employer uses the same method for all employees covered by that plan.

In addition, employers must incorporate in the calculation any method changes, such as when the employer recalculates the COBRA premium in the middle of the year. When calculated on a monthly basis, the reportable cost is simply the annual sum of the monthly costs.

Once the cost of coverage is determined, employers must report it in Box 12 on the Form W-2 using code DD. As usual, employers must distribute the Forms W-2 to employees in January following the applicable tax year and must file the forms with the Social Security Administration.

From the Society for Human Resource Management

Impact of Civil Union Law

2011-07-22T10:43:00.001-05:00

Executive Summary: The Illinois Religious Freedom Protection and Civil Union Act (Public Act 096-1513), which took effect June 1, 2011, provides civil union partners in Illinois all of the legal rights and obligations to which opposite-sex spouses are entitled under Illinois law. Employers who offer welfare benefit plans (such as health, dental and vision plans) using insurance contracts issued in Illinois are affected by the new law, as those insurance contracts must extend benefits to civil union partners to the same extent as they are offered to opposite sex spouses.

Definitions

Although the law does not change the definition of marriage under Illinois law, it provides that the term "party to a civil union" "means and shall be included in, any definition or use of the terms 'spouse', 'family', 'immediate family', 'dependent', 'next of kin', and other terms that denote the spousal relationship, as those terms are used throughout the law." Additionally, the law provides that Illinois will recognize as a civil union any same-sex marriage, civil union or substantially similar legal relationship other than common law marriage entered into in other states.

Impact on Employee Benefit Plans

Employers who offer welfare benefit plans (such as health, dental and vision plans) using insurance contracts issued in Illinois are affected by the new law, as those insurance contracts must extend benefits to civil union partners to the same extent as they are offered to opposite sex spouses. Employers who provide such benefits through self-funded plans are not required to extend coverage to civil union partners.

The Illinois Department of Insurance has issued guidance stating that all insurance policies issued on or after June 1, 2011, must immediately conform to the Civil Union Law. The Department also stated that all in-force insurance policies subject to the Law (generally, all insurance policies issued in Illinois) are amended by operation of law to conform with the Civil Union Law on that date. The guidance, in question and answer form, is available on the Department's web site at: http://www.insurance.illinois.gov/.

Health Insurance Continuation Coverage

COBRA is the federal law requiring employers to offer an extension of health insurance coverage to employees and their "eligible beneficiaries" (spouses and dependents) in certain situations. Because of the federal Defense of Marriage Act (DOMA), which defines marriage as a legal union between a man and a woman, civil union partners of employees are not "eligible beneficiaries." However, continuation coverage may be required under the Illinois Spousal Continuation Law.

Tax Issues Relating to Benefits

The new law may complicate the analysis of the tax treatment of employer-provided benefits. Although the Internal Revenue Code and its regulations do not define spouse, they must be interpreted in a manner consistent with DOMA. Thus, for federal tax purposes, benefits provided to an Illinois civil union partner (who is not a dependent of the employee) generally will not be treated the same way as benefits provided to an opposite-sex spouse or to a dependent. For example, the Code excludes from an employee's gross income the value of employer-provided accident or health plan coverage of the employee and the employee's spouse and dependents. If an employer provides such coverage to a civil union partner, the value of the coverage provided to the partner must be included in the employee's gross income and is treated as taxable wages that must be reported on a W-2 form and are subject to federal income tax and Social Security tax withholding.

Additionally, the Illinois Department of Revenue has stated that the Civil Union law did not change the Illinois tax law, which conforms to, and is applied in the same manner as, federal tax laws. Thus, the value of employer-provided benefits provided to an employee's civil union partner is generally included in the employee's income for state income tax purposes as well.

Employers should also remember that benefits offered through a cafeteria plan (a/k/a Section 125 plan), which are subject to favorable tax treatment under Code § 125, will not be eligible for this favorable treatment when offered to civil union partners who do not meet the definition of spouse or dependent under federal law. Employees may still be offered the choice to purchase coverage for a civil union partner, but it would have to be offered either as a taxable benefit under a cafeteria plan, or outside the plan altogether.

Other types of benefits that are available only to employees' dependents or spouses under federal law are also not available to civil union partners, such as Health Savings Account payments for medical expenses or reimbursements under Health Reimbursement Accounts or Flexible Spending Accounts.

Retirement Benefits

As noted above, civil union partners are not "spouses" under the DOMA. Accordingly, they are not required to receive "spousal" protection under their partners' retirement plans, including pension plans, 401(k) plans, and 403(b) plans that are subject to ERISA. An employee may designate his or her civil union partner as a beneficiary under a plan, but that designation will not be automatic, as it often is for a spouse.

Other Employment Related Issues

State leave laws, such as the Illinois Family Military Leave Act, may be interpreted to apply to civil union partners. However, the federal Family and Medical Leave Act (FMLA) is interpreted in accordance with the DOMA. Accordingly, an employee is not entitled to take leave to care for a civil union partner under the FMLA. If an employee is permitted to take such leave, the employer could not count this against the employee's twelve weeks of FMLA leave.

Employers may want to review their leave policies to ensure they comply with both federal and state law.

From SHRM Online

Illinois State Tax Treatment of Domestic Partner Health Coverage

2011-07-12T16:06:00.001-05:00

The Illinois Religious Freedom Protection and Civil Union Act became effective June 1, 2011. The Illinois Act provides for civil unions between same-sex or opposite-sex couples to have the same rights, protections and benefits of spouses.

The Illinois Department of Revenue confirms that there is no change for state income tax purposes. Illinois will continue to follow the federal tax rules. As a result, civil union partners in Illinois will have imputed income for purposes of state income tax (unless the partner is certified as a tax dependent). There should be no changes to payroll systems. The result is somewhat unexpected considering the breadth of the Illinois civil union law, but the Department explained that the Illinois tax code incorporates the federal tax code. Illinois Department of Revenue published an announcement that confirms Illinois state income tax does not recognize civil unions.

The key components of implementing a wellness program

2011-07-06T10:04:00.000-05:00

Implementing a wellness plan is much easier said then done if you want to roll out a successful program. There are key elements necessary for success to happen; the most important being how your company defines success.

What is a successful program for us?

Ask senior level what they expect and by when. The answer to this question will allow you to determine what the program goals should and how aggressive a plan you need to develop. If your senior level want to control health care costs, ask them what is specifically driving the costs. While you have senior level available, ask them what your budget is for the program, what types of incentives they support and if they will support the program by actively participating as well as sharing success stories.

Write your plan!

Once you know your goals, put the plan in writing. Remember: The document can always be tweaked and should be reviewed regularly. The plan should include your goals, specific programs you plan to implement, communication plan, timeline, how you plan to evaluate movement toward your goals and your incentive strategy. This is a great document to help keep staff on track and to share with your senior level staff.

One size fits one.

You may not know all the answers to complete your plan. If not, ask your employees! Gather feedback from them by implementing an employee interest survey. You can ask your employees what types of programs they would participate in, how often, where and what types of incentives would keep them motivated. In addition, you can ask employees if they would like to be wellness champions or part of a wellness committee. This is a great way to get and keep employees involved in the program, get others excited to participate, and to obtain regular feedback from employees on how the program is going and what they’d like to see. Remember: the program must be a good fit for your employees and your culture to be successful.

Ready, set, launch…

Once you have a structure in place with either a wellness committee and/or champions, your plan is in writing and your budget is set, then you are ready to launch your program. Give yourself plenty of time to communicate with employees and provide them with enough time to ask questions and feel comfortable with the program. This is especially important if you are implementing an outcomes-based program or including spouses in your program. Make sure you monitor participation as you go. If you are working with a vendor program or your health care carrier program, they should provide you with reports on both participation and aggregate reports showing outcomes for each program. If something looks like it isn’t working, address it right away.

Good luck! And remember, implementing a new program takes time. Ask for feedback as much as you can and share your success with both your senior level management and your employee population.

Employee Benefit News recently published hundreds of tips on improving open enrollment. Log on and view the collection of pdf documents today.

— Robyn Harmon is the assistant vice president and director of Health Risk Management for Lockton Companies.

Health Reform Prompts Most Employers To Begin Modifications

2011-06-23T09:24:00.000-05:00

from Spencer’s Benefits Reports: In the year since the Patient Protection and Affordable Care (ACA) was enacted, employers continue to maintain their health care benefits, implement cost-sharing methods, and assess the long-term impact of reform on their organizations, according to a recent survey released by the International Foundation of Employee Benefit Plans (IFEBP). The survey, Health Care Reform: Employer Actions One Year Later, reviewed actions employers have taken in the 12 months since the ACA became law and explored their plans for the upcoming year. It is the second in a series of IFEBP surveys on the effect of the (ACA) on single employer plans. The majority of survey respondents (62.5%) are focused on making necessary changes to make their plans ACA compliant, the IFEBP found.

“For the most part, employers have moved beyond the ‘wait and see’ phase they were in just a year ago and are beginning to take action,” explained Sally Natchek, senior director of research at the IFEBP. “Although many employers are concerned about rising costs, very few have drastically altered or ended their health care benefits. Most employers remain committed to offering quality health care benefits to their employees.”

Rising Costs, Employee Cost-Share Expected

The majority of employers (60%) have conducted an analysis to determine how the ACA will affect their 2011 plan costs. Among respondents analyzing ACA cost effects, 85% expect their health care costs to rise, with the largest proportion (36%) estimating a cost increase in 2011 of 1%-2% due to the ACA. Although extending coverage to adult children to age 26 is still seen as the top driver of cost increases (by 33.4% of respondents), administrative costs and cost-shifting due to reduced Medicare/Medicaid payments to providers have emerged over the past year as major concerns by 27.5% and 28% of respondents, respectively. Approximately one in ten responding organizations (10.5%) currently is redesigning their primary health plan to reduce premiums and avoid triggering the 2018 excise tax on “Cadillac plans” with vlaues that exceed a specified dollar amount.

In anticipation of increased costs, employers are boosting employees’ share of premium costs (40%), in-network deductibles (29%), and employees’ proportion of dependent coverage cost (28%). Many employers also plan to increase out-of-pocket limits and copayments or coinsurance for primary care (27% and 24% respectively). Also, about one-third of (32.4%) employers have conducted dependent eligibility audits in the past 12 months, or plan to do so in the next 12 months.

Although many employers are looking for employees to help manage rising costs, few plan to eliminate or reduce their health plan benefits as the result of health care reform. Just 2.6% are planning to cut health benefits for new hires, 1.6% are planning to drop dependent coverage, 0.9% will close health benefits to new hires, and 0.8% will discontinue health benefits for active workers or retirees. Less than 1% of employers (0.7%) plan to stop providing employees with health care coverage in 2014, when “play or pay” provisions become effective. This finding is radically different from the McKinsey & Company survey conclusion that 30% of employers will definitely or probably stop offering employer-sponsored insurance in the years after 2014.

Additionally, although required only to extend health care benefits to adult children until age 26, 60% of employers are extending the eligibility requirements to other benefit plans (primarily for dental and vision benefits) to conform to the requirements of their medical plans.

Few Will Maintain Grandfathered Status

Although employers report some benefits of maintaining their plan’s grandfathered status—such as the exemption from the appeals process and the mandatory coverage for preventive care with no cost sharing or annual limits—just 30% (of the 44.6% of respondents whose primary plan is currently grandfathered) expect to maintain grandfathered status beyond the next three years.

“Maintaining grandfathered status will be very challenging for employers,” stated Ms. Natchek. “Plans can lose the status in numerous ways, including reducing benefits, raising coinsurance or significantly raising copayments or deductibles. To remain grandfathered, an employer will be able to make only limited changes in their health care plan. This does not appear feasible for most organizations.”

More Wellness And Related Programs

In light of the ACA, 18% of employers have adopted or expanded their use of wellness initiatives in the last 12 months, and more than one-quarter (27%) plan to do so in the next 12 months. Additionally, 38% are expanding the use of financial incentives to encourage healthy behaviors, and 27% are adopting or expanding their disease management offerings.

High-Deductible Plan Interest Continues

Employers continue to perceive value in the role of high-deductible health plans (HDHPs) for cost management. As a result of the ACA, approximately one-third of responding organizations (33%) are increasing their emphasis on or assessing the feasibility of HDHPs with a health savings account (HSA). Rarely are employers reducing their emphasis or assessing the feasibility of dropping HDHPs.

The survey is based on responses from 1,350 individuals, including benefits and human resources professionals, general and financial managers, and other professionals, who are members of the IFEBP and the International Society of Certified Employee Benefit Specialist (ISCEBS). For more information, visit http://www.ifebp.org/books.asp?7051E.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

Visit our News Library to read more news stories.

Lower health care costs: Employers struggle to change employee behavior

2011-06-07T15:53:00.000-05:00

By Pat Speer, Employee Benefit News

Employers are putting the onus on employees to help curb rising health care costs, and the inability to motivate and change employee habits is prompting concern, according to Aon Hewitt, a global human resource consulting and outsourcing business of Aon Corp.

“As employers wrestle with the reality of continued increasing costs, they are ramping up efforts to ensure cost efficiency, including negotiations with insurers, elimination of ineffective programs, and pursuit of new approaches to motivate employees to use cost effective, high quality providers,” Jim Winkler, Large Employer Segment leader in the Health & Benefits Practice with Aon Hewitt, told Insurance Networking News.

In its 2011 Health Care Survey, Aon Hewitt surveyed 1,028 employers nationwide, and discovered that the top health care outcomes that organizations would like to achieve this year are improving employee health habits (56%), lowering the health care cost trend (49%), decreasing worker health risk (44%), increasing participant awareness of health issues (37%) and enhancing participation in health improvement/disease management programs (37%).

This survey suggests that success may be difficult, as 56% of respondents say motivating participants to change unhealthy behaviors is the most significant challenge to accomplishing 2011 health care program goals. This was followed by issues involving reluctance to change (26%), unpredictability of costs (23%), government regulations/compliance (22%) and managing the health of an aging workforce (21%).

Both companies and health insurers have a vested interest in taking a proactive approach to wellness. In particular, the survey revealed that many companies offer disease management (70%), health and wellness improvement (64%) and behavioral health (60%) as key components to health care strategies. In an acknowledgement that more needs to happen to achieve success, many organizations are looking to expand efforts during the next three to five years and implement strategies that focus on total well being to improve physical and mental health (60%), absence management (53%), and integrated safety and health improvement efforts (50%).

"Despite reform, organizations still face rising costs and worsening population health," says John Zern, Americas Health & Benefits Practice leader with Aon Hewitt. "It's clear that traditional annual trend mitigation tactics alone won't work. As a result, leading employers are implementing a 'house money, house rules' environment, using a mix of incentives, penalties and targeted messaging to reward healthy behaviors."

While some companies are budgeting for a medical trend increase during the next four years, many do not have a long-term increase built into their budgets as of yet. Nearly one-third of respondents (30%) have budgeted an annual medical trend increase between 4% and 7% from 2011 to 2015, and 22% have budgeted an increase of more than 8% during that time. Meanwhile, 42% have not built an annual long-term increase into their budget at this point.

"Employers are spending millions of dollars annually on health care, and yet many report they do not have a specific plan for how best to manage that investment," Winkler says. "Given the risks and opportunities presented by health care reform, it is imperative that employers develop a written strategy for controlling cost and improving health."

Rewarding & penalizing participants

The Aon Hewitt survey also showed that 22% of employers will have programs in place by the end of 2011 to reward participants for achieving specific health outcomes, and 10% will have similar programs to penalize participants for exhibiting unhealthy behavior. However, by 2016, 64% of organizations said they will add programs that reward for good health, while 46% said they will add programs that penalize for unhealthy outcomes.

Respondents currently offer incentives to employees for participation in key initiatives, such as biometric screenings (33%), health risk assessments (33%), wellness programs (31%) and tobacco cessation programs (27%). Conversely, some employers are imposing a penalty for non-participation in biometric screenings (5%), health risk assessments (5%), wellness programs (2%) and tobacco cessation programs (6%).

Money serves as the primary incentive and penalty these employers use to promote employee participation in key programs, including health risk assessments (66% have a monetary incentive; 9% have a monetary penalty); biometric screenings (65% have a monetary incentive; 8% have a monetary penalty); disease/condition management (54% have a monetary incentive; 9% have a monetary penalty); and wellness programs (59% have a monetary incentive; 6% have a monetary penalty).

"In a challenging economy, organizations are using financial incentives, as a mix of rewards and penalties, to motivate behavior change," says Jennifer Boehm, principal in the Aon Hewitt Health & Benefits Practice, and a project leader for the survey. "However, leading employers also recognize that success requires more than just dollars; those organizations also focus on marketing health improvement services, eliminating barriers to needed care and measuring the impact of specific interventions."

Insurers have long sponsored employers’ use of wellness programs to reduce health care costs. But these workplace health care programs have a downside, reports wellnessprograms.com. At issue from a company’s perspective, notes the site, is an insurance carrier’s ability to use information gathered during a wellness program as justification for increasing an employer’s rates at renewal.

(Aon Hewitt contributed to this story.)

Speer is the Editor-in-Chief of Insurance Networking News, a SourceMedia publication.

Employers often fail to estimate costs of absences

2011-06-02T09:47:00.002-05:00

By Brian M. Kalish
Employee Benefit News

June 1, 2011

Despite state and federal mandates that require employers track data on when employees are out of the office, companies fail to use the data to manage the associated cost implications, according to a new survey.

The survey of 331 human resources and benefits executives and managers of companies with over 500 employees by Liberty Mutual found an organizational disconnect between collecting absence data to satisfy state and federal regulations and using that data to understand costs and savings to function more effectively.

In the survey, 49% of respondents say they do not know the cost of absence in their organizations. Yet, 53% of respondents say they are focused on being compliant with state and federal leave laws. This turns into what Liberty Mutual calls a failure by companies to convert “data into dollars.”

“[Employers] are so focused on compliance that they are not tracking the cost associated,” says Heather Luiz, Liberty Mutual’s disability and leave product manager. “They recognize it’s an important thing to do, but they’re not looking at it.”

“Employers say it doesn’t cost anything,” besides short- or long-term disability, “but the reality is it does cost them money,” Luiz adds.

According to Liberty Mutual, using Labor Department data, absences could cost companies nationwide as high as $100 billion annually and in 2010, 3% to 5% of an average employer’s workforce was absent on any given day.

Luiz said it costs companies money because if one employee is out, the rest of the team must make up the work. Those left behind lose productivity and often feel overworked. Seventy-eight percent of survey respondents say they cover absences by having co-workers “share the pain.” The firm may also hire a temporary worker – which also involves an added cost. And if there is a missed deadline, Luiz says, there is a business impact to that.

One way to mitigate cost, Luiz explains, is to cross-train employees so they can cover everybody’s expertise and also for companies to be accommodating, such as changing desk setups for injured employees or allowing them to work at home.

Illinois Civil Union Clarification

2011-05-31T09:10:00.000-05:00

Here are a few more details about the Illinois Religious Freedom Protection and Civil Union Act (PA 96-1513) that takes effect on June 1, 2011. The Illinois Department of Insurance has released their guidance on the law. It can be viewed here.

For all fully insured plans, the effective date of the new law is June 1, 2011.
Starting June 1, 2011, the date a civil union partnership is officiated will be considered a qualifying event. Employees, spouses and dependents can enroll in the plan due to this qualifying event and the plan will be effective on the date the civil union is officiated.
For existing civil unions, there will be a 30-day special enrollment period beginning on June 1, 2011 to enroll an existing civil union partner from a union officiated in another state before June 1, 2011. A civil union officiated in another state will be recognized as a civil union in Illinois as of June 1, 2011. From Health Alliance Medical Plans

Health Alliance: Illinois Civil Union Law Effective June 1

2011-05-20T14:58:00.001-05:00

The Illinois Religious Freedom Protection and Civil Union Act (PA 96-1513) takes effect on June 1, 2011. The new law provides civil union partnerships between same-sex and opposite-sex partners with the same state law protections as those provided under marriage.

As a result of the new law, Health Alliance will now offer coverage to a legally recognized civil union partner as standard. A legally recognized civil union partner shall also be included in any definition or use of the terms spouse, family and dependent, as these terms are used for insurance coverage purposes. This law does not apply to self-funded ERISA plans in which the term spouse would be in accordance with federal law.

Unlike domestic partnership, a civil union partnership is officiated by a judge, public official or any person with the power to solemnize marriages under Illinois law. The date a civil union is officiated would be treated as a qualifying event for special enrollment under a group health insurance plan to add a legally recognized civil union partner as a dependent of the enrollee. In addition, the State of Illinois will automatically recognize an existing same-sex marriage or a civil union officiated in another state as an Illinois civil union partnership starting June 1, 2011. Employers and brokers may contact their account representatives for details.

For My Health Alliance individual plan plans, the applicant would make a selection on the Health Alliance standard application supplemental form that they are applying for coverage of a civil union partner. Coverage would be effective on the first day of the month following underwriting approval for coverage.

Should the Illinois Department of Insurance issue guidance on civil unions, Health Alliance will provide additional details.