On August 31, 2017, Federal District Court Judge Amos Mazzant overturned the Fair Labor Standards Act (FLSA) Final Overtime Rule that would have doubled the annual salary level to qualify for exemption from overtime from $23,660 to $47,476. The same judge issued an injunction stopping implementation of the final rule nine months ago, and the Trump administration did not challenge the decision.
In granting summary judgment invalidating the overtime rule for plaintiffs in a lawsuit filed by several business groups and 21 states, Judge Mazzant stated, ““The Department has exceeded its authority and gone too far with the Final Rule,” he ruled. “Nothing in [FLSA] Section 213(a)(1) allows the Department to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.”
This may not be the end of the issue. Earlier, Labor Secretary Alex Acosta requested public comments on the rule and indicated that his department planned to review and possibly adjust the salary thresholds for exemption. The Department of Labor could also appeal the ruling.
For now, employers that have already made changes to their compensation plans can determine if they want to continue with the changes, suspend the changes, or roll back those changes pending new developments. These decisions should be made in accordance with any applicable state or local laws.
ThinkHR and Benefit Administration Group will monitor this issue and provide you with more information as it becomes available.
For many businesses, the process of choosing and administering a health insurance benefits program is a daunting one. They often turn to benefits brokers to help them select and implement plans.
Traditional benefits brokers offer assistance in choosing plans, but typically lack the technological systems and solutions that help companies operate more efficiently and save money. In contrast, technology-backed brokers can use a variety of resources to not only aid in the selection of a health insurance plan, but to administer it and provide year-round support. Ultimately, a benefits broker should make the job of a company’s human resources (HR) department easier. If a broker is not achieving this goal, it may be time to investigate options for a new broker.
What Is A Broker?
Benefits brokers are licensed professionals who assist companies, small business owners, individuals and families in choosing and administering health insurance plans. Using their health insurance expertise, they help businesses choose health insurance networks and plans that fit their needs and budget. In many cases, brokers have long-standing relationships with their clients and can assist them with paperwork, compliance, and annual renewals.
What A Broker Should Be Doing
Establishing a comprehensive health insurance package for employees can be a challenging task for any business owner. With a seemingly endless array of choices, complicated enrollment procedures, and ever-changing legal requirements, even seasoned HR professionals may find the task overwhelming. For this reason, many companies turn to a benefits broker. Taking advantage of a broker’s expertise in plan options, procedures, and rules is a smart choice for business owners. A good benefits broker will make sure that a client has the best benefits package for their needs and budget, and will reduce the workload for an HR department by handling the plan’s administration and paperwork. Part of this process is helping to ensure that you are aware of the types of plans and costs that your competitors are employing, as a part of the benchmarking process.
Utilize Technology Systems and Solutions Appropriately
One of the ways that brokers should be assisting their clients is through the use of technology solutions and systems. Utilizing technology to select and administer a benefits program can streamline the process, ensure compliance with rules, and verify that plan information is readily accessible to both the client and its employees.
A benefits broker should use innovative technology to help clients compare and select plans, educate employees about plan options, send customized open enrollment communications, and comply with all applicable rules and regulations. Specialized programs and applications can reduce paperwork and provide easy access to necessary information.
Provide Help Throughout the Year
Brokers should also be available to their clients throughout the year, offering support for problems or questions that arise about health insurance plans. A good broker will have sufficient staff to provide year-round assistance to clients—not only when it is time to renew a plan. If a company has an employee with a major health problem or life event, for example, a benefits broker should be available to discuss these issues – as well as assisting with other routine questions, and employee education related items.
Provide Assistance in Selecting Health Insurance Programs
When it comes to selecting a health insurance programs, a broker should have access to a variety of products and plans offered by a number of carriers to meet a business’ needs and budgets. Brokers with limited options often cannot respond to their clients’ requirements, leaving companies with health insurance plans that are too expensive or that just do not meet employees’ needs. A top ranked broker brings more to clients by way of leverage – including the ability to help troubleshoot challenging situations that may arise throughout the year.
Explain and Support Compliance
Finally, because the rules and regulations surrounding health insurance plans are complicated, a good benefits broker should protect their clients on all applicable compliance and regulatory issues. This includes making sure that the plan complies with all federal and state laws and regulations, that it is offered to all eligible employees and filing the required paperwork with the IRS and other government agencies. These tasks are important and necessary but may overwhelm an HR staff. A benefits broker should take on this work for clients, easing the burden of administering a health plan – including the tools, and invaluable resources, often through on-staff HR professionals to assist with local, federal, and ACA compliance support.
Is It Time for a New Broker?
A benefits broker should be doing a variety of things to meet client needs, including offering technology-based systems and solutions, offering a range of plan options, providing year-round support, and protecting clients on regulatory and compliance issues. If a broker is not doing any of these tasks, companies should consider finding a broker who can meet their needs.
Companies who are not adequately supported by their brokers may find that their business is negatively impacted. HR professionals may feel stressed and overworked if a broker is not providing assistance in administering a health insurance program, which may ultimately lead to a high turnover rate.
Without technology-backed solutions, plan administration may be over costly and time-consuming. Employees may also be dissatisfied if they do not have their preferred health insurance options, or if they feel that they do not have access to the information that they need and want about their benefits.
If a broker is not offering a range of plans and carrier options, a company may not even be aware of lower-cost plans or plans that meet their needs better. If a broker is not assisting a business with compliance, the company may be penalized through fines and penalties for not filing the correct forms with state or federal government, or even through missed opportunities to lower their tax burden.
The Advantage of Technology-Backed Brokers
When it comes to selecting and administering a health insurance plan, using the proper technology is key. The world of health insurance is a fast-changing one, with evolving laws and market conditions that make it hard for the average business owner to keep up with the changes.
A good benefits broker should deliver expertise on a broad variety of topics, from compliance with the Affordable Care Act (ACA) to tax matters and benefits administration. A good broker should also stay on top of changing regulations and premium rates for their clients. Given the complex nature of health insurance benefits, brokers which provide ease of access to technology-backed systems and solutions offer many advantages over traditional brokers.
Compliance Needs
One such advantage of working with a broker can be seen in how brokers handle compliance with the ACA. While health care reform has provided more affordable insurance options for individuals and employers, it has also brought many rules and regulations. Employers need to determine how many full-time employees they have, ensure that their health insurance plans have the minimum value, determine what they have to report to the IRS, and then make sure that the proper paperwork is filed in a timely manner.
Failing to comply with these regulations can trigger compliance violations, resulting in penalties and missed tax savings. Traditional brokers do not provide support to their clients on these matters, leaving businesses on their own when it comes to navigating this complicated system. However, a technology-backed broker may be able to provide valuable resources to their clients to ensure compliance and help avoid any potential penalties. These tools can help employers save time and money, and allow companies to focus on what is really important—running their business smoothly and profitably.
HR Needs
Beyond compliance, technology-backed brokers may also be able to assist employers with their human resources needs. Traditional brokers are not seasoned in the field of human resources, leaving clients on their own to create their own HR policies and draft an employee handbook. They often do not provide HR support for their clients, and cannot answer questions on thorny HR issues.
In contrast, technology-backed brokers may give their clients access to a wealth of information and resources to assist their human resources team. This could include topical articles on issues that are relevant to employers, forms, sample employee handbooks and communications tools. Utilizing these tools could help an employer avoid claims of wrongful termination, discrimination, and harassment. Technology-backed brokers may also offer support on HR issues to help their clients successfully handle any problems that arise. In this way, technology-backed brokers have a distinct advantage over traditional brokers.
Pre-Renewal Planning Ahead of the Curve
When it comes to providing support, most traditional brokers limit their client contact to renewal time. Employers are left to navigate compliance and HR issues on their own, with little to no ongoing support from their brokers. Unlike traditional brokers, technology-backed brokers understand how important year-round support is to companies.
They may help clients develop strategic plans to lower costs, such as designing employee wellness programs or encouraging healthy employee behavior and habits. Technology-backed brokers may help clients choose the best benefits and support them through the open enrollment process, offering customized communications and education to increase employee participation in the plan. They understand that benefits are about more than just complying with the law; benefits can be a valuable recruiting tool and a way to improve employee satisfaction and retention. With that in mind, technology-backed brokers may provide year-round support and compliance information, ensuring that clients are never left to struggle with plan administration on their own.
Comprehensive Open-Enrollment Support
The advantages of working with a technology-backed broker can be seen in one of the most stressful parts of plan administration for HR professionals: open enrollment. A technology-backed broker may be able to set up an automated enrollment process, which eliminates the expense and hassle of distributing and collecting paper enrollment forms.
It also improves the overall efficiency and accuracy of the process. Using online enrollment typically shortens the enrollment cycle, as employees can learn about their benefits options, compare costs and coverage, and pick plans based on their eligibility for different options.
Employees can complete the enrollment process independently, finding answers to questions directly on the enrollment site, and can review their benefits information and report life changes at any time, without the involvement of the HR department. Online enrollment also simplifies plan administration, with elections, applies directly to employee records. Employees can readily view and update their records and plans, and the HR department can check enrollment status in real time. Depending on the program used, they may also be able to generate detailed reports on the cost of employee benefits.
Plan Designs and a Discerning Benchmark Analysis
Technology-backed brokers also have an advantage when it comes to initial plan selection. Traditional brokers will research plans, provide quotes and negotiate rates, but they often fail to do a deeper analysis to help companies design a competitive health insurance plan. Having a health plan that is comparable or superior to what other companies in a given industry or region is critical to recruitment and retention of top employees.
A technology-backed broker could perform a benchmarking analysis to determine what others in a given industry or area are providing for their employees, which can help companies choose plans that will give them a competitive advantage. Technology-backed brokers may also utilize programs to project the impact of medical, vision and dental plan changes, estimated renewal cost and streamline the selection process for employees.
Using the right technology to choose and implement a health insurance program through a benefits broker should help a company offer a competitive, cost-effective benefits package to its employees.
Data Analysis and Plan Comparisons
Finally, technology-backed brokers may utilize online systems to analyze clients’ plan data to determine how to adjust plans to save money. These programs may also be able to model recommended changes so that clients can see how suggested changes could save money or provide better benefits for employees. In contrast, traditional brokers do not have the analytical tools or technology to dig into plan data and identify areas for improvement.
Employers who use traditional benefits brokers will never see how their plan data compares to others in the industry, and may waste money. In this manner, technology-backed brokers may help their clients tighten their benefits budget.
In Conclusion
When it comes to selecting and administering a health insurance plan, a benefits broker should make life easier for clients. If a company is not receiving year-round support and access to technology to manage their health benefits, it may be time to look for a new broker. An experienced, knowledgeable, and highly dependable technology-backed broker such as those working at Business Benefits Group is a fantastic option for most companies—offering a range of services to help save our clients time and money, and allow them to focus every effort on running their business. Contact Benefit Administration Group to learn more.
There is quite a bit of talk these days about how uncertainty around CSR Payments could cripple the individual health insurance market (see article). This brings up a good question – What are CSR Payment Plans?
A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace, cost-sharing reductions are often called “extra savings.” If you qualify, you must enroll in a plan in the Silver category to get the extra savings.
1. What is the Summary of Benefits and Coverage (SBC)?
The Summary of Benefits and Coverage (SBC) describes the plan’s benefits and limits, provides contact information, and illustrates hypothetical coverage scenarios in a standardized format. Using templates and instructions provided by federal agencies, health insurers and employers insert case-specific information to create an SBC for their plan. See a sample SBC.
The SBC is sometimes called the uniform four-page summary, although it may be longer due to double-sided pages. The format requires presenting specific information in a specific order which is intended to help employees easily understand the plan’s key features and compare different plans.
2. Who is responsible for the SBC? The insurance company or the employer?
Group health plans are required to provide the SBC to plan participants before enrollment or re-enrollment. For plans provided through group insurance, the insurance carrier is responsible for producing the SBC and providing it to the plan administrator (employer). Both the insurer and employer are responsible for distributing the SBC to the plan participants. Either one may handle the distribution, but the employer needs to ensure it is done.
For self-funded health plans, the plan sponsor (employer) is responsible for producing and distributing the SBC. Most self-funded employers choose to contract with their third-party administrator or claims administrator for this service, but the employer retains ultimate responsibility for compliance.
3. Is an SBC required for every health plan? If the employer offers multiple plans, can the information be consolidated into a single SBC?
An SBC generally is required for any health plan providing medical benefits, but not for plans that primarily provide excepted benefits. For example, SBCs are not required for the following:
A separate SBC is required for each health plan that can be chosen for enrollment. For instance, if the employer offers one PPO plan and two HMO plans, there will be three separate SBCs. A consolidated summary describing multiple plans may be helpful to employees, and may be provided in addition to the SBCs, but cannot take the place of the required SBCs.
Different options within a plan can be shown on the same SBC provided the information is clear. For instance, different coverage levels (self/family) or different cost-sharing options (high deductible/low deductible) can be presented in the same SBC as long as the remainder of the coverage information is very similar.
4. Is an SBC required for a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA)?
A Health Savings Account (HSA) is a savings program—not health plan—so no SBC is required. However, a High Deductible Health Plan (HDHP), which sometimes is called an HSA-compatible plan, is a health plan requiring an SBC. Employers that contribute to their employees’ HSAs may want to show that information on the HDHP SBC.
A Health Reimbursement Arrangement (HRA) is a group health plan. In almost all cases, the HRA is integrated with another plan, such as a major medical plan or HDHP. Employers usually choose to include information about HRA amounts, and how they reduce deductibles or other cost-sharing, on the medical plan SBC.
5. What is the deadline for distributing the SBC?
The insurer or employer must distribute the SBC at each of the following times:
6. Do all eligible employees receive the SBC? What about dependents?
The SBC must be distributed to all plan participants including employees, retirees, and COBRA beneficiaries. Separate distribution for dependents is not required, unless the employer knows that they have a different address.
New hires (or employees newly eligible to enroll) must be given SBCs for all the plans for which they are eligible. At open enrollment, however, enrolled participants only need to receive the SBC for the plan in which they are currently enrolled, unless they request SBCs for other plans.
Also at open enrollment, it is not necessary to provide SBCs to employees who are eligible but not enrolled. Instead, they can be given a notice, such as a postcard, explaining that SBCs are available and how to request them. The Department of Labor (DOL) provides model language for this purpose that the employer may customize for its use:
Availability of Summary Health Information
“As an employee, the health benefits available to you represent a significant component of your compensation package. They also provide important protection for you and your family in the case of illness or injury.
“Your plan offers a series of health coverage options. Choosing a health coverage option is an important decision. To help you make an informed choice, your plan makes available a Summary of Benefits and Coverage (SBC), which summarizes important information about any health coverage option in a standard format, to help you compare across options.
“The SBC is available on the web at: http://www.website.com/SBC. A paper copy is also available, free of charge, by calling 1-XXX-XXX-XXXX (a toll-free number).”
7. Can the SBC be distributed electronically or are paper copies required?
SBCs can be distributed electronically provided the method complies with the DOL safe harbor for electronic delivery of benefit notices. The usual DOL guideline is a little less strict for SBCs. For instance, if enrollment is conducted exclusively online, SBCs can be provided electronically. Otherwise, for enrolled participants who use a computer as part of their regular job duties, the SBC can be sent to that computer, or it can be posted and a notice sent explaining how to access it, along with information about how to request a paper copy at no charge. For eligible participants who are not enrolled, it is sufficient to post the SBCs online as long as persons are notified of availability (see model notice above). In any case, a paper copy must be furnished upon the participant’s request.
More Information
For copies of the new templates, instructions, and related materials, see the following:
In summary, employers offering group health coverage are encouraged to work with their carriers and benefit advisors to ensure that SBCs are prepared and distributed according to the federal rules.
Here is a quick video explanation for a concept that is gaining in popularity. Take a look and let us know if you have any questions:
As health care costs continue to rise, level funding and self-funding are becoming a more and more attractive option for smaller companies. Technically speaking Benefit Administration Group uses level funded health insurance and insurance captives as the funding mechanisms for each pay-per-use health plan. In more simple terms, here is what that means for customers like you:
We’ve hired a new employee and have agreed to reimburse their COBRA premium until they become eligible for our insurance. They provided us with proof (copies of checks and invoices) that they paid a 3rd party administrator for their COBRA coverage. Is this reimbursement taxable to the employee when processing through payroll?
An employer could choose to offer to pay for COBRA for some period of time but keep in mind that COBRA premium payment arrangements while sometimes convenient, can expose an organization to potential liability so we also recommend discussing any arrangements with legal counsel to ensure compliance. Specifically, any agreement in writing to pay for COBRA should be reviewed in partnership with legal and be explicit in terms of the boundaries of what will be provided and for exactly how long. Paying the COBRA fees directly to the employee is not unusual but it has different tax implications than paying the insurance carrier directly or paying the employee based on substantiated expenses (i.e. receipts).
Below is a link to a copy of IRS Information Letter 2006-0042 (INFO 2006-0042) discussing a particular case. In that case, the employer paid its former employee’s COBRA premiums. The IRS determined that the payments were excludable from gross income (thus exempt from income taxes and employment taxes) provided that the employer either (a) paid the insurer directly, or (b) paid the employee based on documented expenses. If, however, the employee had the discretion to use the funds for any other purposes (i.e. he or she just got a lump sum cash “COBRA” payment from the employer) the amount would be taxable income. Please note that we cannot provide tax advice to clients and recommend seeking guidance from a tax professional where appropriate.
For those of you who haven’t heard, level funding is the next big thing in small business insurance options. But how do you know if it’s right for your company? And if you decide it’s a good solution, what is your next step?
Fully Insured Vs. Self-Insured Vs. Level Funding Plans
First, let’s start with a basic review of how most companies purchase insurance. Traditionally there are two ways of doing things:
A fully insured plan means that you are passing all of the risk onto your insurance carrier who charges you a flat monthly fee based on how they gauge the risk of insuring your employees.
If covered employees experience health issues and use the plan more, you will probably face a hefty increase in the monthly premium your business pays when your plan renews. Conversely, if your employees rarely use the insurance, you’re stuck playing a flat monthly rate no matter what. This model decreases the risk of month-to-month fluctuations but doesn’t provide any meaningful incentive for having healthy employees.
A self-insured plan is one in which the business pays the actual claims and essentially assumes the role of the insurance carrier in terms of managing risk. Many large companies offer at least one plan that is fully self-insured because they have a large pool of covered employees and also have the cash reserves to protect against a spike in claims volume or amount.
Historically, self-insurance has been perceived as far too risky in the small business market for a number of reasons. Small businesses typically have less cash on hand and can’t weather a dramatic increase in costs as easily. Also, claims data is very hard to come by in small business so it’s difficult to judge if self-insuring is worth the risk because you don’t even know the risk! Most small businesses also lack the manpower in-house to actually review and process claims so they still pay an insurance company to act as a Third Party Administrator (TPA). Though the business is paying the claim, the insurance company will actually process it accordance with the plan documents and ensure that all protocol is followed.
Today, level funding is emerging as a third option somewhere in between fully insured and self-insured. Proponents of level funding argue that it offers the benefits of both insurance models with none of the risks. So how does it work?
The “level” in level funding refers to the fact that you self-insure, but pay a level or steady fee each month as determined by your TPA. Level-funded plans also come fully integrated with individual and aggregate stop-loss insurance. Individual stop-loss insurance will kick in if a covered employee or dependent exceeds a certain dollar amount in claims. Aggregate stop-loss will be activated above a certain dollar amount for all claims. After you pay your level monthly fee for a year, your TPA will compare what you’ve paid with the actual claims and refund you any difference if you’ve paid more than you’ve spent. In summary, you get the regular and predictable cost of a fully insured plan, but because you’re actually self-insured, you only end up paying for the healthcare costs actually incurred by your employees.
Benefits of Level-Funding for Small Business
Level-funding is becoming popular because plans following this model are not subject to several key regulations of the Affordable Care Act. For example, they don’t have to offer a package of mandated benefits. Because plans are self-insured, they can be written to the specifications of the business owner. Also because level funded plans are technically self-insured, business owners also avoid paying the Health Insurance Tax (HIT) levied as part of the Affordable Care Act. Furthermore, self-insuring your plan gives you more control and discretion as a business owner to approve claims outside of the contract. If you have a tenured employee whose medical treatment would be denied under a fully insured plan, a level-funded approach would let you choose if you wanted to cover it anyway as a gesture of goodwill.
Level-funding is surely the wave of the future in the small business market. If you think it might be a good strategy for your business, contact Benefit Administration Group for more information. Many large insurance carriers are offering a level-funded option and your broker can help you choose a plan that’s right for you. The Helios team are considered experts in this innovative new model and can help your business evaluate options and decide if level-funding can save your company money.
A summary plan description (SPD) is the primary vehicle for informing participants and beneficiaries about their plan and how it operates. It must:
SPDs are to be distributed automatically to participants within 90 days of becoming covered by the plan and to pension plan beneficiaries within 90 days after first receiving benefits. However, a plan has 120 days after becoming subject to the Employee Retirement Income Security Act (ERISA) to distribute the SPD. An updated SPD must be furnished every five years if changes are made to SPD information or the plan is amended — otherwise the SPD must be furnished every 10 years.
Plan documents are all documents related to plan, including the SPD. The plan administrator must furnish copies of certain documents upon written request and must have copies available for examination. These documents include the latest updated SPD, latest Form 5500, trust agreement, and other instruments under which the plan is established or operated. Copies must be furnished no later than 30 days after a written request. The plan administrator must make copies available at its principal office and certain other locations.
Evidence of coverage (EOC) is further information regarding the plan that details coverage for the plan period. Each insurance carrier will have an EOC booklet, also called a schedule of benefits. These documents are often called certificates of insurance. This EOC/schedule of benefits does not meet the SPD requirements under ERISA. The EOC explains the health benefits participants and their dependents have under the plan. It details the services that will and will not be covered and the actions employees must to take to receive the health benefits — such as paying a co-pay, meeting a deductible, or using particular health care providers. The EOC can also refer to a certificate or contract provided to a health plan member that contains information about coverage and other rights.
ERISA requires the plan sponsor (employer) to provide an SPD to all plan participants. The SPD may incorporate the carrier’s EOC by reference, which generally provides sufficient description of the plan’s benefits. However, the SPD also must include specific content, such as ERISA plan number, Employer Identification Number (EIN), plan financing method, and other information that would not be found in a carrier EOC. Many employers choose to do an SPD wrap, which incorporates all benefits in one document instead of having a separate one for each line of coverage.
According to the Department of Labor’s Final Rules Relating to Use of Electronic Communication and Recordkeeping Technologies by Employee Pension and Welfare Benefit Plans; Final Rule, you can distribute insurance certificates and various ERISA required plan documents electronically via a company website. The department allows electronic notification and distribution of documents by email, attachment to an email, or by posting documents on a company website. However, just placing the documents on a company website does not, by itself, satisfy ERISA’s disclosure requirements.
Under ERISA, the rules allow for electronic delivery of all documents that must be furnished or made available to participant and beneficiaries. This includes SPDs, summary annual reports, individual benefit statements, and investment-related information for participant-directed accounts. These rules are limited to disclosures that plans are required to make to participants and beneficiaries under ERISA.
Prior to implementing, a plan administrator must notify all participants and beneficiaries of the availability of the particular disclosure document by sending written or electronic notice that directs them to the document on the website.
NOLA.com | The Times-Picayune and WVUE Fox 8 News have partnered with ClearHealthCosts, a New York journalism startup, to set up the PriceCheck tool, listing hundreds of prices from health care providers in our region. Check it out, and use your insurer’s Explanation of Benefits, or EOB, form to add your prices. (Information on how to read your EOB form can be found here.)
This is part of our project “Cracking the Code: The real cost of health insurance.” Read our coverage here.
Benefits @ Work 