Post on 23-Aug-2014
Special People in the NortheastBenefits Analysis
Parts I & II
RMI 3501
912080506
912173425
Healthcare Benefits..............................................................................................3
Keystone HMO………………………………………………...…………4
Keystone POS.............................................................................................4
Independence Blue Cross PPO……………………………..…………..5
Colonial HealthCare Inc. Dental……………………………...…..…….5
Colonial HealthCare Inc. Vision……………………………...…..…….6
Express Scripts Prescription……………………………………......…...6
Flex Benefit Plan…………………………………………………...…..6-7
Loss of Income………………………………………………………………......7
Life Insurance and AD&D……………………………………….....…7-8
Short-Term Disability Insurance……………………………...………8-9
Long-Term Disability Insurance……………………..……………...….9
Retirement………………………………………………………...…......10
Other Exposures……………………………………………………….…...….10
Tuition Assistance…………………………………………………...….10
Employee Assistance, Legal Expenses…………………….………....11
Table of Contents
Benefits Matrix
Loss Exposure Coverage Coverage and Benefits ProvidedMEDICAL EXPENSESHospital/Physician Yes Independence Blue Cross Keystone: HMO and POS,
Personal Choice PPO, Flexible Benefits Plan-HSADental Yes Dental Program – Colonial HealthCare Inc.,
Flexible Benefits Plan-HSAVision Yes Vision Program - Colonial HealthCare Inc.,
Flexible Benefits Plan -HSAPrescription Yes Prescription Program -Express Scripts Inc.,
Flexible Benefits Plan-HSALTC Yes Flexible Benefits Plan-Dependent Care AccountRetiree Health Care Yes COBRA, OASDILOSS OF INCOME - DEATHNon-Accidental andNon-Occupation Death Yes
Group Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b)
Accidental Death YesGroup Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b),AD&D Insurance
Occupational Death YesGroup Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b),Workers’ Compensation
LOSS OF INCOME - UNEMPLOYMENTUnemployment Yes Unemployment InsuranceLOSS OF INCOME – DISABILITYShort-Term,Non-Occupational Disability
Yes STD Insurance, AD&D, OASDI, 403(b), Family and Medical Leave, Leave Time
Long-TermNon-Occupational Disability
Yes LTD Insurance, AD&D, OASDI, 403(b)
Short-TermOccupation Disability Yes STD Insurance, AD&D, OASDI, 403(b),
Workers’ CompensationLong-TermOccupational Disability Yes LTD Insurance, AD&D, OASDI, 403(b),
Workers’ CompensationLOSS OF INCOME – RETIREMENTRetirement Yes 403(b), OASDIOTHER LOSS EXPOSURESEducation Assistance Yes Tuition reimbursement through Tuition Assistance
Provided as a part of Flexible Benefits Account with Reliance Standard Life Insurance Company. Combination of sick, vacation, and personal time.
ProgramWork/Life Yes Prudential ComPsych ProgramDependent Care Yes On-site Daycare, Dependent Care AccountProperty-Liability No -Legal Expenses Yes Prudential ComPsych Program
Summary of BenefitsBenefit Plan A.M.
Best Rating
Funding Financing Eligibility
Independence Blue Cross Keystone HMO n/a Fully Insured Contributory
Employees working a
minimum 30 hours per week
Independence Blue Cross Keystone POS n/a Fully Insured Contributory
Employees working a
minimum 30 hours per week
Independence Blue Cross Personal Choice PPO
n/a Fully Insured ContributoryEmployees working a
minimum 30 hours per week
Colonial HealthCare Inc.- Dental n/a Fully Insured Contributory
Employees working a
minimum 30 hours per week
Colonial HealthCare Inc.- Vision n/a Fully Insured Contributory
Employees working a
minimum 30 hours per week
Express Scripts Prescription Plan n/a Self-Insured Non-
Contributory
Employees working a
minimum 30 hours per week
Prudential Annuities Life Assurance Corp. –Group Life Insurance
A+ Fully Insured Non-Contributory
Employees working a
minimum 30 hours per week
ING Life Insurance and Annuity Company - Voluntary Universal Life Insurance
A Fully Insured Employee-Pay-All
Employees working a
minimum of 30 hours per week
Reliance Standard Life Insurance Company - Voluntary Term Life Insurance
A Fully Insured Employee-Pay-All
Employees working a
minimum of 30 hours per week
Prudential Annuities Life Assurance Corp. – A+ Fully Insured Non-
ContributoryEmployees working a
Source: http://www.ambest.com/ Based on “Financial Strength” **
AD&D Insurance minimum of 30 hours per week
Prudential Annuities Life Assurance Corp. –STD Insurance
A+ Fully Insured Non-Contributory
Employees working a
minimum 30 hours per week
Prudential Annuities Life Assurance Corp. –LTD Insurance
A+ Fully Insured Non-Contributory
Employees working a
minimum 30 hours per week
Principal Financial Group – 403(b) A+ Fully Insured Contributory
Employees working a
minimum 20 hours per week
Healthcare BenefitsSpecial People in the Northeast (SPIN) offers three distinct health
plans for their employees to choose from to help mitigate losses in the form
of health expenses. Specifically, SPIN offers Keystone HMO, Keystone POS,
and Independence Blue Cross (IBC) Personal Choice PPO. The Keystone
HMO and POS are both owned and operated by IBC. This wide range of pan
options allows employees to choose a plan which best fits their lifestyle,
family, and earnings.
All three plans have the same eligibility requirements and guarantee
full coverage for certain services and scheduled prices for others. Any
employee who works 30+ hours at SPIN is eligible for medical benefits
along with their dependents, which include spouses and children up the age
26. Domestic partners who have lived with an employee for the last six
months can also be considered a dependent, but premium deductions for a
partner are made post-tax. Domestic partners must also show their financial
interdependence status by providing at least three documents which
Source: http://www.principal.com/about/financialstrength.htm
support this claim, such as a joint lease, driver’s license with common
address, common ownership of a vehicle, proof of joint bank account, or
proof of designation as the primary beneficiary for life insurance.
The plans all provide full coverage for preventive care, which include
annual physicals, routine gynecological exams and mammograms,
immunizations, and other preventive screenings. There is a $30 co-payment
per primary care physician (PCP) visit, $50 co-payment per specialist visit,
and a $125 co-payment for emergency room visits. Inpatient hospital
services are also scheduled for $400 a day with a maximum of five co-pays.
Keystone HMO
SPIN HMO offering is Keystone HMO, a subsidiary plan of IBC. Of the
three medical plans that SPIN offers, the Keystone HMO is the least
expensive with a per pay contribution of $4.60 (premium for medical
coverage for employee only). Like any HMO, this plan requires the selection
of a PCP from the network who acts as the employee’s “health advisor” for
addressing specialist and extended care. There is no coverage for out-of-
network use.
The Keystone HMO plan is fully insured and operates on contributory
financing. Employees pay a premium each pay period, the cost of which
reflects individuals covered (employee only, employee & one or more
children, employee & spouse, etc.); all payroll deductions are made pre-tax.
Keystone POS
SPIN also offers Keystone POS to eligible employees. The Keystone
POS is in the middle of the cost spectrum of the three plans offered with a
$31.46 premium per pay period (premium for medical coverage for
employee only). This plan also utilizes a PCP, but allows participants to go
to most specialists at any time without a referral. A referral from a PCP is
required, however, for X-rays, podiatry, spinal manipulation, and physical or
occupational therapy. To receive care out of the Keystone network an
annual per person deductible of $500 applies and expenses are covered at
70%. The Keystone POS is fully insured and participating employees
contribute to the plan.
Independence Blue Cross Personal Choice PPO
The final plan SPIN offers is a Personal Choice PPO, again through
IBC. The IBC PPO is the most expensive of the three plans SPIN offers with
a premium deduction of $58.13 per pay period (medical coverage for one
employee only). Participants do not need to select a PCP and may utilize any
specialist within the PPO network at their own discretion. Preventive care is
again covered at 100% of costs. Choosing to go out of the PPO network
applies an annual $1,500 deductible to each person, after which expenses
are covered at 50%. Certain emergency out-of-network claims may be
covered depending on the situation and a claim review. The Personal Choice
PPO is fully insured and requires employees contribute to the plan.
Colonial HealthCare Inc. Dental
SPIN offers a dental plan to all its employees who work 30+ hours a
week. The plan is fully insured through Colonial HealthCare and requires
employees make monthly contributions to the plan if they enroll
dependents. For an employee to enroll there is no cost per month, and
employee with one dependent pays $14 a pay period, two dependents pays
$28 per pay period, and three or more dependents pays $38 per pay period.
After a $25 per year deductible, the plan covers 100% of preventive care
(annual checkup, x-ray every six months, etc.), 80% of basic dental care
(fillings, extraction, etc.), and 50% of major dental care (crowns, dentures,
etc.). The dental plan has a maxim claims limit of $1,500 per year.
Colonial HealthCare Inc. Vision
Colonial HealthCare Inc. is also SPIN’s insurer for its employee vision
plan. Similar to Colonial HealthCare Dental, the plan is fully insured and
employees contribute monthly if they enroll dependents. Adding one
dependent is $3 per pay period, two dependents is $6 per period, and three
or more dependents is $7.50 per period. This plan only covers seven
different vision costs, each of which has its own maximum: ophthalmologist
visit, single vision prescription, bifocal prescription, trifocal prescription,
lenticular prescription, contact lenses, and frames.
Express Scripts Prescription PlanSPIN offers the Express Scripts Prescription Plan to their employees
who work 30+ hours a week. Express Scripts, a pharmacy benefit management company, allows SPIN employees to access its network of pharmacies along with its mail-order pharmacy. An employee using an in-network pharmacy can get a 30-day supply of medications at different prices depending on brand: generic medications are $10, preferred brand-name medications are $20, and non-preferred brand-name medications are $35. Employees who have 90-day prescriptions can utilize Express Scripts’ mail order service for even larger savings: $20 for generics, $40 for preferred brand-name medications, and $70 for non-preferred brand-name medications.
Flexible Benefits Plan
Employees who work a minimum of 30 hours a week are eligible to
participate in SPIN’s flexible benefits, which include a Medical Expense
Reimbursement Plan and a Dependent Care Assistance Plan. Both plans are
fully insured and administered by Colonial HealthCare. Additionally, the
Flexible Benefits Plan allows for a Flex Convenience debit card which can
be used to pay for eligible costs; funds are deducted directly from an
employee’s respective benefit account and later reviewed.
Employees who enroll in the Medical Expense Reimbursement Plan
have a Health Care Flexible Spending Account set up in their name.
Employees may have their salary reduced by a maximum of $3,000 each
year, which is credited to their account. A list of defined medical costs can
be reimbursed by submitting a claim to the plan administrator or using their
convenience card. Claims such as copayments or deductibles, prescription
drugs and over-the-counter( no script needed) drug costs, medical supply
costs, orthodontics, certain vision and dental costs, and psychiatric care are
all examples of reimbursement eligible expenses. Money left over in the
account at the end of the plan year is forfeited.
Employees may also establish a Dependent Care Flexible Spending
Account which has a $5,000 limit for single or married jointly filing
employees and $2,500 for married participants filing separately.
Participants may submit claims to this account (or use their Convenience
debit card) for the care of dependents who are under the age of 13 or
dependents of any age who cannot mentally or physically care for
themselves.
Loss of Income Life Insurance and Accidental Death & Dismemberment
SPIN offers three types of Life Insurance to its employees along with
Accidental Death and Dismemberment Insurance (AD&D).The company provide all
eligible employees a small Group Life Insurance plan through Prudential Annuities
Life Assurance, which has an A.M. Best rating of A+. Coverage is based on 1 x
Annual Earnings or a minimum benefit of $25,000. These employees are further
enrolled in AD&D, which is also provided by Prudential. Basic AD&D coverage is set
to equal a participant’s Group Life Insurance. Employees are eligible for these
benefits when they work a minimum of 30 hours a week and are beyond their
probationary period.
A Voluntary Universal Life Insurance program is offered to SPIN employees
through ING Life Insurance Company, which received a rating of “A” by A.M Best.
This program allows employees to purchase a Universal Life Insurance policy for
themselves, their spouse and/or dependent children through payroll deductions.
Employees who work at least 30 hours per week are eligible for this coverage. This
employee pay-all benefit requires no waiting period and supplements SPIN’s Group
Life insurance.
Finally, SPIN provides employees the option to purchase Voluntary
Term Life Insurance through Reliance Standard Life Insurance Company,
who received a rating of “A” by A.M Best. For employees to be covered they
must work at least 30 hours per week. This term insurance supplements
SPIN’s basic life coverage, which is a part of the customary benefits
package. Employees can acquire an additional $10,000, $25,000 or $50,000
worth of term life coverage for themselves by means of SPIN’s Flexible
Benefits Account. This is employee pay-all benefit which an individual can
choose to purchase from SPIN at a lower rate than in the individual market.
Short-Term Disability Insurance
SPIN offers Short-term Disability Insurance through Prudential
Life Assurance, which has a A.M. Best Rating of “A+.” Coverage under the
policy is provided on the 15th day following a non-occupational sickness or
injury. The duration of the benefit is 11 weeks for employees who work at
least 30 hours per week. Eligible employees may not be part-time, seasonal
or temporary and must be legally allowed to work in the United States. This
plan is offered on a non-contributory basis and coverage can only start
while the employee is insured under the policy. An employee is considered
disabled if an injury or illness prevents them from doing all their usual
duties required for work; that disability must result in a loss of weekly
income of at least 20 percent. The plan provides that covered employees
receive 2/3 of their weekly earnings to a minimum of $25 per week and
maximum of $2,000 per week.
Long-Term Disability Insurance
SPIN‘s Long-Term Disability Insurance is also offered through
Prudential Annuities Life. Coverage under the policy is provided following a
90-day waiting period for non-occupational sickness or injury. The duration
of the benefit is up to the age of retirement determined by the Social
Security Act. Eligible employees must work a minimum of 30 hours a week
and cannot have a status part-time, seasonal or temporary. This plan is
offered on a non-contributory basis and coverage can only start while the
employee is insured under the policy. An employee is considered disabled if
an injury or illness prevents them from doing all their usual duties required
for work and that disability results in a loss of weekly income of at least 20
percent. The plan provides that covered employees receive 2/3 of their
monthly earnings with a minimum of $100 and a maximum of $8500 per
month. Disabilities due to mental illness such as depression, anxiety, bipolar
illness, schizophrenia and substance related disorders are limited to 24
months of benefit coverage. Long-term benefits will not be paid for a
disability that begins during the first 12 months of coverage or is part of a
pre- existing condition.
Retirement
Employees can invest in a 403(b) plan as a way to save for retirement
with pre-tax income payroll deductions. By contributing to a 403(b) plan,
employees can build tax-free savings and interest until they are ready to
withdrawal funds .SPIN’s 403(b) Plan is offered through Principal Financial
which received a rating of “A+” from A.M Best .Employees who work a
minimum of 20 hours a week are eligible for the account and can begin to
make deferrals on their first paycheck. An employee may defer maximum of
$16,500 per year into the 403(b). SPIN matches an employee’s salary
deferral up to 6%, or the amount deposited if less than 6%.
Other ExposuresTuition Assistance
SPIN offers tuition assistance to employees who work 30 or more
hours a week and have completed their three month probationary period
with the company. Assistance will be provided for employees seeking a
degree from a scheduled list that will enhance their career development
within SPIN. A navigation form must be completed by the employee and
reviewed by management prior to submission of the actual tuition
assistance material. Assistance will be paid directly to the institution with a
max benefit of $2,500 per year (defined as a period of Fall through
Summer). Students must receive a C or better in undergraduate courses
and B or better in graduate courses to receive the benefit.
Employee Assistance Program
SPIN offers employee assistance through a program called ComPsych,
which is administered by Prudential. Eligible employees work at least 30
hours per week and have completed the 3 month probationary condition.
The EPA is designed to sort out an array of personal, legal or financial mat-
ters an employee may face. Generally, this program helps address personal
matters such as marital and family struggles, drug and alcohol problems,
and job stress depression all through a 24 hour counselor phone line. The
objective of The EPA program is to help employees cope with problems that
occur outside of work, so that those circumstances do not affect job produc-
tivity.
LegalConnect is the legal component of the EPA program. Experi-
enced attorneys can answer any legal questions over the phone. If an em-
ployee desires legal representation this service supplies the attorney, a free
30 minute consultation and 25 percent discount in standard legal fees.
FinacialConnect is the economic component of the EPA program. Fi-
nancial Specialists are available by phone to aid employees in areas such as
debt management, savings, investing, tax inquiries and retirement planning.
Special People in the NortheastBenefits Analysis
Parts I & II
Introduction...............................................................................................................1
Employee Benefits Plan Description and Objectives……………………….…..1
Goals………………………………………………...…………………..…1-2
Demographics.............................................................................................2-3
Funding and Financing……………………………..……………….…..3-4
Design of Health Benefits………………………………………………..……......4
Design Considerations and History……………………………….....…4-5
Funding………………………………………………………….….......……6
Modes of Utilization and Communication…………..……….………...6-7
Medical Expenses Reimbursement Account………………….....…......7-8
Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement Benefits………………………...….…...............................................….8
Life Insurance and Accidental Death & Disability…………………….…8
Short-Term and Long-Term Disability Insurance……….…………..…....9
Regulatory Issues……………………………………………………………………9
ERISA…………………………………………………………..……….…9-10
Table of Contents
HIPAA………………………………………………………………...……..10
COBRA……………………………………………………….………………10
PPACA…………………………………………………………………….10-11
Important Changes and Suggestions…………………………..……………...11-12
Conclusion…………………………………………………………………...…..….13
1
IntroductionSpecial People in the Northeast (SPIN) is a non- profit human services agency
headquartered in Philadelphia, Pennsylvania. SPIN designs programs to support adults
and children with intellectual disabilities, as well as their families. The organization
began in 1971 as a small summer camp for parents who wanted a program for their
special needs children. Since then, SPIN has evolved into an organization which offers
community living care, supported independence care, and constant care called
“Lifeshare” To make their service possible, SPIN retains a workforce of 968 employees.
The organization recognizes the needs of not only residents, but also its employees, and
has created an employee benefits plan to provide more compensation to its workers
beyond take-home pay.
Throughout this project Donna Hyde, SPIN’s Corporate Human Resources
Officer, and Gail Meersand, head of Human Resources, played crucial roles in helpings
to understand the organization’s benefit package. Both work hard to maintain SPIN’s
benefits package by balancing the goals of the plans with their respective costs.
Employee Benefits Plan Design and ObjectivesGoals
Almost any company that offers benefits to it employees does so in order have a
competitive hiring edge. SPIN conforms to this notion; the organization seeks to attract
and retain talent in order to provide the best care possible for residents. Ms. Meersand
stated that, because the organization is non-profit, it does not have the capacity to offer
big salaries so SPIN seeks to draw in potential hires by providing extensive
compensation through an array of benefits. Ms. Meersand also believes most SPIN
Special People in the Northeast Benefit Analysis, Parts 1&2
2
applicants view the organization’s offered benefits as a major decision factor when
ultimately deciding on employment. So far, SPIN has primarily used employee feedback
to confirm the value of its benefits plan and the impact it has on prospective employees
and their retention. An example of such feedback would be comments from transfer
employees from other care facilities, who have found SPIN’s benefits to be more of more
value than what was offered at their previous employer.
The structure and contents of SPIN’s benefit package seeks to achieve the
organization’s plan goal by offering an array of insurance and programs that suit most
employee’s needs and financial status. The plan relies heavily on options to
accommodate the different needs of different employees. Examples of this include three
different health plans, basic and supplemental life insurance, and varying disability
insurance length options. It should be noted that, until recently, there has not been
significant changes made to the benefits package structure in several years, a fact
which purports its ability to support a wide range of employee needs.
DemographicsSPIN’s workforce has an average age of 37 and can be largely divided into two
groups which have similar needs in benefits, but have differing incomes and financial
positions. One group is primarily made of administrative professionals and specialized
care staff and the other is made of non-specialized, general care givers. Both groups
have similar healthcare needs, but utilize services in different ways. Enrollment in
disability insurances and supplemental life insurances are higher in the specialized
workforce because of the group’s older average age and its members’ understanding of
the offered programs and their respective values. SPIN’s 403(b) offers different
matching rates to these two groups; professionals and management receive a six
percent matching benefit while regular staff and employees receive a matching
schedule based on their time with the organization. SPIN operates its matching this way
Special People in the Northeast Benefit Analysis, Parts 1&2
3
to retain management and also to provide an incentive for the non-specialized group to
remain with the organization while lessening the risk they may leave and SPIN’s 403(b)
contributions with them.
Geographically, employees mostly reside in the tri-state area, with much of the
non-specialized workforce residing right in Philadelphia. The benefits plan’s many
options, specifically in healthcare choices, allow employees to customize their care
while also considering location and cost. Because of the centrality of the workforce,
SPIN has no need for far reaching national health plans.
Funding and Financing SPIN’s funding and financing selections have become more of concern for the
organization as costs of offering and maintaining certain benefits has risen. Presently,
SPIN only self-funds its dental and vision plans1; it is able to do this because each
benefit contains a coverage maximum which allows the organization to more accurately
predict and prepare for the plans’ costs. The funding vehicle for this self-insurance is a
general asset plan. Both of benefits are contributory if dependents are added to
coverage, this along with co-payments distributes costs so the full burden is not place
on SPIN.
All other benefits offered by SPIN are fully insured through four different
companies. Ms. Meersand stated that the organization has been seriously considering
self-insuring other benefits, especially its healthcare plans because it would be easier to
control costs and renewal increases (Schultz). Unfortunately, recent budget cuts in the
state by the Corbett administration have drastically decreased SPIN’s income from the
government sector. Therefore, the organization has decided to revisit the self-insurance
option again when financial support is more solid. Healthcare and the organization’s
403(b) are financed based on a contributory basis in order to move costs and some 1 It should be noted that Part 1&2 of this project mistakenly lists SPIN’s dental and vision plans as fully insured; they are not. Colonial HealthCare Inc. acts as the plans’ administrators, not insurers. Special People in the Northeast Benefit Analysis, Parts 1&2
4
responsibility to employees. Group Life Insurance and AD&D coverage, which is
provided to every eligible employee automatically, is financed on a non-contributory
basis. SPIN does this because both plans provide the most basic coverage and is meant
to attract potential employees. The two additional life insurance policies provided by
SPIN are examples of supplemental coverage and are therefore finances on an
employee-pay-all basis
Design of Health BenefitsDesign Considerations and History
The structure of SPIN’s health benefits plan reflects the organization’s goal of
retention but also shows the influence of administrators. Former CEO and current board
president David Losinno insisted that SPIN use Independence Blue Cross as its
healthcare provider, and so Ms. Meersand and the HR department worked heavily with
brokers from Alliant and representatives from IBC to craft a plan that suited the
benefits goals of the organization. Originally, administrators sought to offer an HMO
and PPO as the main healthcare benefits. The HMO would provide the lowest cost of
coverage while offering a wide network of physicians and specialists located all over
Philadelphia. The PPO was meant to act as an alternative to the HMO to accommodate
people who wanted more autonomy in their healthcare decisions. During the design
process, Alliant brokers also presented SPIN with a POS plan which would be used as a
middle-of-the-road option for employees who wanted the low costs of the HMO but more
freedom of specialist choice as is seen in the PPO.
Today, 87% of SPIN’s 657 health plan enrollees use the HMO option. This trend
can most likely be attributed to the considerable difference in cost of the HMO versus
the POS and PPO (HMO: $4.60 vs. POS: 31.46 and PPO $58.13 per pay period). The
constantly rising cost of healthcare for all types of plans has led many people to use
Special People in the Northeast Benefit Analysis, Parts 1&2
5
price as their key factor in choosing healthcare (Aon Consulting and Sharon). Because
HMO’s can better contain and control costs and utilization, they are able to offer lower
premiums (Markovitch). It is evident that employees forgo the benefits of a more open
network as seen in POS and PPO plans, in favor of saving money. Of the total
participants who receive health benefits, only 13% choose the POS plan and 2%
participate in the PPO plan. This unbalanced scale has lead SPIN to question whether
the continued operation of a POS and PPO plan provides a large enough benefit to the
organization compared to the costs the organization incurs to offer them. While both
plans allow the benefits package to offer a wide range of services, the costs associated
with their maintenance is an issue, especially because so few utilize the options.
Funding As previously stated, SPIN’s health benefits with the exception of the dental,
vision, and prescription plan, are fully insured through IBC. Ms. Meersand stated that,
despite the decrease in government support, the organization is still very interested in
moving to a self-inured plan. Having more control of its benefit options, and escaping
state mandates, would save SPIN money overall (Schreck). Presently, the organization
is most concerned with securing solid sources of funding to offset lost monetary
support; once this is achieved, the organization will most likely self-insure all of its
health benefits.
Modes of Utilization and Communication IssuesAn important factor Ms. Meersand mentioned that contributes to SPIN’s rising
healthcare costs is how enrolled employees use their health plans. One particular
example that Ms. Meersand shared was how some employees in the non-specialized
segment of SPIN’s workforce regularly use emergency rooms as primary care facilities.
This, of course, can greatly contribute to premium increases for the organization, which Special People in the Northeast Benefit Analysis, Parts 1&2
6
would probably be shifted to employees. Theoretically, these co-payments should deter
such behavior; all three health plan options SPIN offers charge a $30 co-payment for
physician visits and a $125 co-payment for emergency room visits (Gruber). Ms.
Meersand believes that such co-payments do not have a large effect on participant’s
behavior and instead the organization must rely more on communication to inform
employees of how their actions impact their premiums.
Communication is an important part of any benefits plan, and SPIN’s HR
department does its best to educate employees on how their health benefits operate.
Employees can attend monthly informational meetings, and receive regular newsletters
on how their respective plans may be changing. Despite these efforts, it seems that
many employees simply turn a blind eye to this important information, which could help
them and the organization, save money (Rice). Ms. Meersand mentioned that the lack of
employee attention also leads to increased administrative costs and headaches. An
example can be seen in SPIN’s switch from a Keystone Prescription plan to its current
service with Express Scripts. Some employees ignored numerous mailings and
information which explained the move, the larger network gained and costs savings.
Certain employees did not even realize that SPIN had made the switch until they were
denied coverage for drugs because their Keystone card was no revoked at the
pharmacy.
Medical Expense Reimbursement Account (MERA)SPIN’s Medical Expense Reimbursement Account is an important service that the
organization has greatly supported in order to help employees with the burdens of
medical related fees. The wide array of eligible expenses that can be paid by the
account and the issuance of MERA debit cards make saving money and ease of access
easy. Unfortunately, not many employees take advantage of this service. One main
factor which probably contributes to this is a lack of employee understanding of the
Special People in the Northeast Benefit Analysis, Parts 1&2
7
MERA and how exactly it can benefit them. This seems to be another communication
issue, in which SPIN offers a great deal of information on the benefit, but not many take
the time to read and understand it. Most participants in the MERA are part of SPIN’s
specialized staff. Ms. Meersand pointed out that more people were beginning to inquire
about the account, and ultimately enroll because of rising costs.
Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement BenefitsLife Insurance/Accidental Death and Dismemberment
SPIN has offered group term life and AD&D insurance for the last 25 years. These
benefits are paid 100% by the organization. Ms. Meersand informed us that employees
are very satisfied with these services because it allows them to obtain coverage without
having to answer any medical questions. Since there is a cap on Group Term Life
Insurance, SPIN offers Voluntary Universal Life Insurance to suit the needs of
employees who want to purchase additional coverage. Voluntary Universal Life has
been available to SPIN’s workforce for the last 15 years, there is significant
participation in this plan, as some employees feel that the $25,000 limit on Group Term
Life Insurance isn’t sufficient. According to Ms. Meersand, employees are able obtain
cheaper life insurance through employment and appreciate the convenience of having
the voluntary aspect of this benefit deducted from their payroll.
SPIN has been fortunate enough not to have encountered any issues where AD&D
needed to respond. In an event this benefit was triggered, there is a schedule of
indemnities if an employee becomes dismembered and if an employee dies as a result of
an accident. This coverage also does not require the employees to provide proof good
health and is paid 100% by SPIN.
Special People in the Northeast Benefit Analysis, Parts 1&2
8
Short-Term and Long-Term Disability InsuranceSPIN wanted to diversify its benefits package, so it decided to propose long term
and short term disability to personnel. Ms. Meersand believes that disability insurance
is an essential benefit offering, thus SPIN chooses to pay the full cost of both benefits.
Long-Term Disability coverage usually starts when the period for Short-Term Disability
Insurance has been exhausted. SPIN has had to deal with several disability claims
during its course of business. When an employee is out on disability the productivity of
the work environment takes a hit so the main purpose of this insurance is to relieve
financial stress so recipients can make a quick recovery. The workforce at SPIN is
proactive at recovering in a timely manner when out on disability, so most claims are
short-term. The reasoning behind this is because employees only receive 66% of their
weekly salary through these insurances; they appreciate the assistance provides but aim
to get well so they can earn their full wage again.
Regulatory IssuesERISA
SPIN is required under ERISA to comply with certain standards. These provisions
include complying with fiduciary responsibilities, proper plan communication, and
discrimination testing. When management is considering the design mechanisms for the
benefits plan, the employees’ best interest is always paramount.
Plan communication is done through benefit and wellness seminars with
employees. Plan participants are given a Summary Plan Description (SPD) either
electronically or by mail. SPIN most recent government audit was performed over ten
years ago and found no compliance issues.
HIPAA
Special People in the Northeast Benefit Analysis, Parts 1&2
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Ms. Meersand recognizes HIPAA as an important policy that is potentially
dangerous if not complied with fully. Her prime concern is the confidentiality of resident
medical information. SPIN makes sure that the privacy and integrity of all healthcare
records are properly protected. The organization also makes sure that employees at all
levels take a role in protecting the privacy of the residents they support. SPIN has had
no major compliance issues with HIPAA.
COBRASPIN has encountered a few problems with respect to COBRA. Ms. Meersand
explained that sometimes the most problematic aspect is effectively explaining the
regulation to employees. Employees assume that, under COBRA, their contribution to
the cost of their health plan will not be altered, when in actuality there is a significant
disparity in cost. Ms. Meersand is mindful of COBRA’s complex language, and tries to
address employees concerns in the simplest method possible.
PPACAThe Patient Protection and Affordable Care Act has already caused minor
problems within SPIN. Specifically, Ms. Meersand stated that IBC may have
overestimated the first provisions of the plan to go into effect. As a result, SPIN faced
more than a 10% premium increase for the 2011 year. For the 2012 though, SPIN saw a
decline in the usual amount increase of their premiums. Ms. Meersand attributes this to
the fact that IBC has had time to understand and plan accordingly for PPACA.
Overall, Ms. Meersand and SPIN’s HR department are still waiting to see how
future provisions may impact their plan. They love PPACA’s requirements for preventive
care coverage, but believe that certain language regarding other mandates may drive
up the costs incurred from offering health benefits.
Important Changes and Suggestions Special People in the Northeast Benefit Analysis, Parts 1&2
10
In a recent meeting with Meersand, she stated that SPIN had decided to change
insurance companies which provide life insurance options for 2012 along with altering
the structure of its health benefits. SPIN has chosen to insure its life insurance policies
with Unum, which provided the organization with better rates than Prudential. Unum
will also operate SPINs Employee Assistance Plan.
With healthcare costs on the rise, SPIN came to the conclusion that it was too
expensive to offer three different health plans, especially when two of them were
underutilized. The organization decided to switch to a High Deductible PPO plan
(through IBC) for all employees except union workers, who will be allowed to still
choose the Keystone HMO. This new plan will be paired with a Healthcare
Reimbursement Account (HRA) to help ease costs.
So far, many employees have reacted negatively to the upcoming change. The
plan payment structure is quite different from plans previously offered and the high
deductible can be somewhat daunting. For in-network use an employee is responsible
for a $3000 yearly deductible, after which the PPO will pay all expenses (families have a
doubled deductible of $6000). SPIN will also offer a Healthcare Reimbursement Account
that they will partly contribute to. After a participant deposits at least $300 in the
account, the organization will make $1500 deposit to help with eligible costs. Ms.
Meersand considers the required employee deposit a way to show participants the true
cost of healthcare. Again, extensive communication is key to making employees
understand why SPIN made this change. Many employees are probably not aware of the
benefits of the new HRA, and therefore find the costs of the new PPO intimidating.
We believe that SPIN made the right choice in slimming down their three
healthcare programs down to one. Budget cuts and low enrollment made supporting
three plans untenable, and despite losing options that could attract employees, we
believe the new PPO combined with the HRA can still act as a lure to potential hires. Special People in the Northeast Benefit Analysis, Parts 1&2
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Both the consumer driven plan and the HRA force participants to act as rational
consumers because they shoulder a large amount of initial costs; this is an important
costs-savings feature. One suggestion we have deals with communication. Although
SPIN’s HR department certainly does its part in making information about benefits
available, it is hard to force employees to read newsletters or attend seminars. For
these reasons, we suggest SPIN have mandatory small group meetings with employees
throughout the year. These meetings could explain important changes in benefit options
and also act as question and answer session for the plan in general.
ConclusionOverall, SPIN’s benefit package is most affected by the rising cost of healthcare.
The organization has realized this trend and has reacted appropriately. Elimination of
unused plans and the establishment of a CDHP will help to better spread costs to
participants. The creation of an HRA, to which SPIN contributes, will also help ease the
financial burden of medical costs on employees. Non-healthcare benefits, such as the
supplemental life insurance policies and STD/LTD insurance still act as an effective tool
which attracts potential employees. If SPIN can successfully explain their benefits
package and how its proper use helps saves costs, the organization could see some of
their lowest premium inc
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Special People in the Northeast Benefit Analysis, Parts 1&2