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Click here
for the
November 2003: Health
Insurance Industry News
Thank you to all who attended our recent HR Seminar and helped to make it a
success! By your feedback the most popular
section was the Workers’ Compensation. Test your knowledge by reading the
following article taken from the California Chamber of Commerce web site.
Ten Most Common Workers’
Compensation Misconceptions
1. Employees
should be treated by their own physician for all work-related illness or injury.
You have the right to select the doctor who provides care for your employee’s
work-related injuries or illnesses for the first 30 days following an incident,
unless the employee has predesignated his/her
personal physician.
2. Time away
from work for work-related illness or injury is not included in other protected
leaves of absence.
Employers subject to FMLA/CFRA should advise eligible
employees that workers’ compensation leave runs concurrently with leave under FMLA/CFRA for up to 12 weeks and give them applicable
family medical leave notices.
3. If I
offer an injured employee temporary modified duty, I must pay his/her regular
rate of pay.
An offer of
temporary modified duty to an employee who is receiving temporary disability
benefits does not have to be at his/her regular salary. The pay rate can
be appropriate for the modified job and the employee can receive partial
temporary disability pay from workers’ compensation.
4. I must
continue my employee’s health benefits for the entire duration of workers’
compensation leave.
Employers with health plans subject to ERISA do not
have to continue health benefits for the duration of an employee’s workers’
compensation leave. Benefits must be continued
for as long as you would provide them for employees on non-occupational medical
leaves. Thereafter, COBRA rights must be offered.
5. Workers’
compensation insurance only covers injuries occurring on the company’s
premises.
Injuries that
occur outside the workplace, even in an employee’s home, may
be covered by workers’ compensation, provided they arise out of
employment and occur in the course of employment. This may include
injuries that occur during commuting to and from work, if you control the
employee’s route of travel or the employee is allowed
to engage in work activities during the commute, such as cell phone calls.
6. Stress in
an employee’s personal life is a major factor in workers’ compensation stress
claims.
In order to
receive workers’ compensation for stress, the employee must show that work
accounts for more than 50% of all sources of stress. Thus, evidence that
the majority of stress factors can be attributed to
non-work circumstances is an effective defense against stress claims.
7. A new
employee who is unable to cope with the pressures of his/her job is a prime
candidate for a successful workers’ compensation stress claim.
An individual who has been employed by you for less
than six months will not be compensated for work-related stress, unless the
stress results from a sudden and extraordinary employment condition. Also, lawful, non-discriminatory, good faith personnel
actions (such as discipline and terminations) are not grounds for stress
claims. Early action should therefore be taken
when a new employee is identified as unable to cope with a job.
8. First aid
cases need not be reported to my workers’ compensation
carrier.
If an injured worker requires only first aid treatments and suffers no time
lost from work beyond the date of the illness or injury, you may pay the doctor
for the services direct, and avoid payment by your workers’ compensation
carrier. The Doctor’s First Report must still be filed.
9. I can
refuse continued employment to an employee unless and until he/she fully
recovers from a work-related injury.
An employee who
is disabled as a result of work-related illness or
injury will likely be considered disabled under state and/or federal law.
Employers must comply with disability discrimination laws and provide
reasonable accommodation to such injured workers who can perform essential job
functions. Failure to do so may result in a claim under both workers’
compensation law and disability discrimination law. However, you are not
required to create a position or displace another employee.
10. A case
of serious injury or death from a work-related incident need
not be reported to Cal/OSHA until all the details have been identified.
You must report any work-related serious injury or death to Cal/OSHA within 8
hours after you know of the incident. Failure to properly report can
result in heavy fines and criminal prosecution.
In our last health
insurance issue we told you about the recently passed
SB 2, also known as, “Pay or Play”. In summary, this bill would mandate
minimum levels of health insurance, as well as set contribution levels for
companies with 50 or more employees. Those who do not meet the minimum
standards would have to pay into a state fund which
would be used to provide health coverage.
SB 2 - Pay or
Play: What Happens Now?
The Managed Risk Medical Insurance Board (MRMIB) is
planning for SB 2 implementation, but opponents of the legislation may
challenge it through one or more routes:
For more information on
the bill and the challenges it faces see the links below. All information
is provided through the California HealthCare
Foundation (CHCF) website. (http://www.chcf.org)
The Legislation and
Related Information
See the final
text and legislative analyses of Senate Bill 2.
Read a fact sheet on Hawaii's Prepaid HealthCare Act, the only
state employer-mandate law in effect. (This law was
passed before ERISA and was granted an
exemption from ERISA.)
Legal Issues and
Challenges
A CHCF fact sheet discusses the law's potential
conflict with ERISA. See ERISA Implications for SB 2.
The
The California Chamber of Commerce is seeking to overturn SB2
by referendum. Read information on the Chamber's plan and its opposition to SB2.
Do your employees know
how much your company spends on benefits? It is a good practice to
provide employees with a summary of their total compensation including
benefits. (Don’t forget to include workers’
comp!) Below is a summary of the averages statewide and in private
industry. For a further breakdown by company
size and industry follow the link to the report.
Benefits Were
28.3% of Total Compensation in June 2003, BLS Finds
Statewide. Employer-provided benefits costs
for civilian workers in private industry and state and local governments in
June 2003 averaged $6.84 per hour worked, accounting for 28.3% of total
compensation costs, which averaged $24.19 per hour worked. These are
among the findings of the most recent Employer Cost for Employee Compensation
report, produced quarterly by the Bureau of Labor Statistics (BLS).
Legally required benefits
averaged $1.93 per hour or 8% of total compensation in June 2003, representing
the largest nonwage employer cost. Employer
costs for paid leave benefits averaged $1.63 (6.7%), insurance benefits
averaged $1.81 (7.5%), and retirement and savings benefits averaged 86 cents
(3.6%) per hour worked.
Private
Industry. According to the BLS, private
industry benefits costs averaged $6.30 per hour, accounting for 27.9% of total
compensation costs, which averaged $22.61 per hour worked. Private
industry employer costs for paid leave averaged $1.46 per hour worked (6.5%),
insurance benefits averaged $1.57 (6.9%), retirement and savings benefits
averaged 67 cents (3%), and legally required benefits averaged $1.93 (8.4%) per
hour worked. The remaining costs were supplemental pay (64 cents or 3%),
and severance and supplemental unemployment (3 cents or .1%). Of the
total insurance benefits, health insurance costs rose from $1.31 per hour
worked and 6% of total compensation in June 2002, to $1.45 per hour and 6.4% in
June 2003.
For more information,
visit http://www.bls.gov/ncs/ect/home.htm.
ER Use Rise
Attributed to Insured
People with insurance are
increasingly using emergency rooms, even for non-urgent care, a study found –
perplexing experts who thought the uninsured were the chief reason for ER
overcrowding. Emergency room visits jumped to an average of 107.7 million a
year in 2001 and 2000, up 16.3 percent from 1996 and 1997.Most
of the increase came from insured patients, according to the Center for
Studying Health System Change, a
Privately insured
patients’ use of the emergency room rose 24.3 percent to 43.3 million visits
over that six-year period. People covered by Medicare visited the ER 16
million times, a 10 percent increase. Visits by uninsured patients rose 10.3
percent to 18 million, while those by patients covered by Medicaid, the
government program for the poor, were flat at 18.4
million. Only 46 percent of the ER visits by privately insured patients were considered either emergent – requiring care within 15
minutes of arrival – or urgent – requiring care within an hour of arrival.
“The results were
surprising,” said Peter Cunningham, a senior health researcher at the Center
for Studying Health System Change, who conducted the study using data from the
Centers for Disease Control and Prevention as well as his organization’s own
information. “Uninsured people clearly are not a major factor in
increased crowding at most hospital emergency departments, but uninsured
people’s growing reliance on emergency care indicates decreased access to other
sources of care.”
Some experts speculate
that more patients are turning to the ER because doctor’s offices do not
accommodate people’s working schedules. Emergency rooms are open 24 hours
a day and no appointments are necessary. The study cited other research
showing that patients are having difficulty making appointments with their
doctors, and having to wait longer for appointments. Some doctors are
closing their practices to new patients. And
some people may go to the emergency room believing they have a true medical
emergency, even though it turns out to be a minor problem.
“Sometimes people think
they are having a heart attack, and it is only bad indigestion,” said Carmela
Coyle, senior vice president for policy at the American Hospital Association.
Observers say the trend
will only add to rising health care costs because treating someone in a
hospital is more expensive than tending to them in a doctor’s office. Dr.
Joseph Guarisco, chairman of
emergency medicine at the Ochsner Clinic Foundation
in
But a patient can see a doctor, have
some tests and consult with the doctor again when the results come in all in
one visit, instead of three separate appointments. That option is
especially appealing for those who do not want to take time off from work to
see a doctor, Guarisco said.
September 2003 - Insurance
Industry News
July 2003 - Insurance
Industry News
More Employers Offering Long Term Care
Should You Take a Reduced Early Social Security Benefit?
Health Insurance Increases 18% CPI
Increases 2.8%...WHY?
More Health Care Costs Increase RX Costs Going Higher– Why?
Late Fees on Premium Payments Good News from Sutter and Blue Shield
Blue Shield of CA Revises Small Group Plans
What Happened To My Medical Carriers Network of Doctors?
Domestic Partner Benefits: Overview
September 2003 - Health Insurance
Industry News
The U.S. Department of
Labor's Employee Benefits Security Administration (EBSA)
announced a new compliance assistance guide to help employers, plan sponsors, service providers and state officials understand
the federal health benefits law regarding qualified medical child support
orders.
Assistant Secretary of
Labor Ann L. Combs said, "By developing this new publication as part of
our continuing commitment to assist plan officials comply with the law, we will
ultimately assist thousands of children secure health insurance coverage when
their parents divorce or when mandated by state authorities."
The publication, which
also will assist state child support enforcement agencies, explains the
provisions of the Employee Retirement Income Security Act (ERISA)
that require employer-sponsored group health plans to extend health care
coverage to children of a employees who are divorced, separated or never
married when ordered to do so by state authorities.
A state court or
agency may require an ERISA-covered health plan to
provide benefits coverage to children by issuing a medical child support order.
A state child support enforcement agency may also
obtain group health coverage for a child by issuing a qualified National
Medical Support Notice.
Read the Compliance Guide for Qualified Medical Child
Support Orders http://www.dol.gov/ebsa/publications/qmcso.html
The Society for Human Resource
Management conducted a survey during the week of September 2 – September 9,
2003, regarding the changes organizations have made since September 11, 2001.
Human resource professionals were asked, “In your opinion, what lasting changes, if any, have taken place in the workplace as a result of the September 11 terrorist attacks?”
|
64 percent |
Organizations have put higher
security provisions in place |
|
48 percent |
Higher expectations of employers
for security |
|
34 percent |
Employees do not consider travel as glamorous |
|
31 percent |
Greater screening of employees for hire |
|
27 percent |
More training in crisis management |
|
26 percent |
Business travel has been curtailed |
|
24 percent |
Employees are reluctant to travel for business |
|
22 percent |
Workers have been more wary of their work environment |
|
16 percent |
Higher stress levels in the workplace |
|
15 percent |
HR is relied upon more for its expertise and input |
|
13 percent |
Employees are more caring towards one another |
|
12 percent |
Greater use of Employee Assistance Program (EAP) |
|
10 percent |
Business events have been cancelled |
|
10 percent |
No lasting change |
|
6 percent |
Other |
For additional information on SHRM visit www.shrm.org.
|
The Department of Labor announced
the creation of a new online resource for employees. You may want to include this information
in the health benefits area of your hiring and exit packets. The DOL media
release below can be found at http://www.dol.gov/ebsa/newsroom/pr072103.html.
|
|
|
Release Date: 07/21/2003 |
|
|
New Labor Department Web Site Can
Help Millions Find Valuable Information On Health Benefits |
|
|
|
|
|
Assistant Secretary of Labor Ann L. Combs called
the Web site, "an outstanding resource for the 131 million Americans and
their families who rely on coverage from private-sector group health plans.
It will be especially helpful when unanticipated events happen." |
|
|
The Web site gives consumers information about: §
Health coverage under private
plans and federal and state programs §
Definitions of key terms §
Links to other resources,
including public health plans and state insurance offices nationwide. |
|
|
The new Web site, which can be found at elaws Health Benefits Advisor,
(http://www.dol.gov/elaws/ebsa/health/) asks employees questions,
guiding them through easy-to-use helpful tools and facts about health
benefits. Visitors to the site will learn the specific requirements and
rights under laws like the Consolidated Omnibus Budget Reconciliation Act
(COBRA) and the Health Insurance Portability and Accountability Act (HIPAA). More importantly, the Web site allows the public
to obtain information about their rights and responsibilities under a group
health plan upon the occurrence of specific life and work changes --
including marriage, childbirth, death, divorce, job loss, new job, or
retirement. |
|
|
EBSA is an agency within the Labor Department that
oversees nearly 2.6 million health benefit plans nationwide. As part of its
ongoing Health Benefits Education Campaign, the agency conducts education and
outreach about health benefit issues in order to explain the rights and
responsibilities associated with coverage by a group health plan. Other free
publications under the campaign are available on EBSA's
Web site or by calling toll-free 1.866.444.EBSA
(3272). |
|
|
This Employment Law
Advisor is one of a series of elaws advisors
(Employment Laws Assistance for Workers and Small Businesses), which are
interactive e-tools that help individuals understand federal employment laws,
such as the Fair Labor Standards Act (FLSA), the
Family Medical Leave Act (FMLA) and the Uniformed
Services Employment and Reemployment Rights Act (USERRA). |
|
|
U.S. Department of Labor
news releases are accessible on the Internet. The information in this news
release will be made available in alternate format
upon request (large print, Braille, audio tape or disc) from the Central
Office for Assistive Services and Technology. Please specify which news
release when placing your request. Call 202.693.7773 or TTY
202.693.7755. The Department of Labor
has proposed regulatory changes to COBRA.
The intent is to further clarify the notice requirements and ease the
administrative burden. Of course, the
impact of these changes is unknown and industry response has
been varied. Once the proposed
regulations are finalized we will update the COBRA
section of our Employee Benefits Resource Guide and distribute the updated
materials. For now, we wish for you
to be aware of the possible changes. The following can be found at www.dol.gov/ebsa
under Publications and Reports.
|
|
Duration
of Health Benefits for those on Workers Comp
There has been some dispute on whether an employer is
required to maintain
health benefits for an employee who is out on a workers compensation claim.
The source of this confusion stems from California Labor Code section 132(a),
which makes it illegal to discriminate against a worker who suffers an injury
covered by workers comp. Recently the Workers’ Compensation Appeals Board (WCAB)
resolved the dispute by deciding that the federal Employee Retirement Income
and Security Act (ERISA) places employee benefit
plans under federal regulation.
Therefore the state cannot require an employer to provide health benefits to
an employee it would not otherwise cover.
What should you do? We
advise our clients to create and administer, within
your employee manual, a non-discriminatory policy defining whether an employee
who is out on any disability, not just workers comp, is eligible for any
continuation
of health benefits. Any policies established should be in
compliance with the
minimum requirements of FMLA/CFRA and pregnancy
disability leave. You should
also make sure that whoever handles the COBRA administration, knows that a
workers
comp claim is a “qualifying event” and takes the appropriate action.
Use of Social Security
Numbers in
The phasing in of
to help guard against identity theft and provide additional privacy protection.
As is the case with most new legislation, what the functional requirements are
and when are we required to comply, can be somewhat confusing. Essentially this
law prohibits the public posting of social security numbers and/or requiring
the use of social security numbers in accessing products or services. Since
most insurance company’s use the social security number as the individual
identification
number, we will need to prepare ourselves for change. Our
understanding of the
practical impact, for health care and insurance purposes, is as follows:
Effective
1/1/03 Social Security numbers (a) cannot be publicly posted or displayed, (b)
cannot be required in any internet transmissions unless the connection is
secure
or the number is encrypted, (c) cannot be required in accessing a website
unless
a password or other unique personal ID number is also required, (d) other than
on forms or applications, cannot print an individuals number on any materials
that are mailed to the individual. Any new individual or group contract
issued
on or after 1/1/04 will no longer be allowed to print
the individual’s social
security number on the ID card. Any contract Renewing
on or after 7/1/04 will
no longer be allowed to print the social security number on the ID cards. While
we’re not aware of any providers not currently using
the social security number,
the bill does include a provision that says if the number is not currently
being
used, effective immediately no one can start using it. We will keep you posted
on any additional requirements or changes in the interpretation of this bill
and it’s requirements.
Relief from Filing
Form 5500
Employers with less than
100 participants in their Section 125 cafeteria plans
received some administrative relief through a recent IRS amendment to the 5500
filing requirements. In the past any employer who
maintained a Section 125 flexible
benefit plan, regardless of size, was required to file Schedule F attached to
a completed Form 5500. Under this new ruling, if you have less than 100
participants
in your 125 plan (this includes those participating in the premium only
portion)
you no longer are required to make this filing. Furthermore, this ruling is
effective immediately and applies to all plan years for which information
returns
have not been filed. This notice does not affect any
other filings you are required
to make under Title 1 of ERISA.
Most employers are seeing
the renewal increases, for their health benefits,
range from 25% to as much as 60%. Even CALPers, the
largest health contract
purchaser in the state, has experience increases of 25% and 28% over the last
two years. With the economy still struggling, most employers are
being forced
to pass at least part of the cost increases on to their employees. They are
doing this by either reducing the benefits through adding some form of hospital
co-payments or increasing the deductibles, and/ or increasing the amount the
employees themselves are charged for benefits. Recent
national statistics show
that employee’s payroll deductions for medical coverage have gone up 50%.
employers are seeing higher increases than many other parts of the country.
As we have stated in previous newsletters,
“managed care” contracts that in the past has kept our health insurance costs
comparatively lower than the high cost of living would normally dictate.
However,
with the number of IPA’s that have gone bankrupt and
the hospital groups struggling,
many say these increases were inevitable. It may be some consolation that
employers still pay a smaller amount, as a percent of payroll, for benefits
than the national average. Unfortunately we see double
digit increases continuing
for the next couple of years.
Recently
into compliance with the new Federal Economic Growth and Tax Relief
Reconciliation
Act of 2001. The new state provisions are retroactive to coincide with the
federal
effective date and affects taxable income years on or after January 1, 2002.
One key benefits of these changes is the increased
contribution limits people
are allowed to contribute to their retirement accounts. We are advising all
of our clients to review their contributions to make sure they are taking full
advantage of the increased limits.
More
Employers Offering Long Term Care
During the 90’s the
number of Americans purchasing Long Term Care insurance
more than tripled, and the number of employers offering LTC
as a benefit to
their employees grew from a mere 135 to over 3,200 during the same time.
Furthermore,
the federal government is poised to offer a Long Term Care insurance plan to
all federal employees, and their families. With the life expectancy of
Americans
increasing, the need for assisted living facilities, nursing homes, home health
care, hospice and respite care, has skyrocketed. People who need the services
of a qualified facility are finding the cost to be in the area of $40,000 per
year. More and more of the “Baby Boomers” are seeing their parents in need of
these facilities and in many cases find it necessary to assist in the financial
burden. Many of the group contracts, allow the employees to extend lower
premium
plans available through the group plans, to members of their immediate family,
including parents and grand parents. The rapidly increasing cost for
traditional
employee benefits, such as medical coverage, has mandated that a larger portion
of the premiums be shared by the employees. Employers are finding that
offering
a relatively low cost benefit, such as Long Term Care, not only provides a
tremendous
benefit to their employees but also eases the “sticker shock” of the additional
contributions required for the other benefits. For more information, please
feel free to contact us at Lafayette Square Insurance Services, Inc. for more
information.
Should You Take a Reduced Early Social Security Benefit?
If you will still be
receiving some earned income, you should rethink taking
a reduced Social Security benefit, at age 62. While the Federal Government
reduced
the age (from 70 to 65) at which you can have earned income without any
penalties
to your SSI benefit, the reduction could still be
substantial. Prior to your
full retirement age your Social Security benefit is reduced $1 for every $2
you earn over $11,280. In your full-retirement year, the government will deduct
$1 for every $3 you earn over $30,000 and only in the months prior to your 65th
birthday. As an example, if you turn age 65 in August and are making $5,000
per month you will have earned $35,000 by your birthday. This is $5,000 over
the limit so they would reduce your Social Security benefit by one third of
that $5,000, or $1,667. (You can test the ways that collecting benefits at
various
ages would affect your payout with an online calculator at
www.ssa.gov/fetire2/retcalc.htm)
Health
Insurance Increases 18% CPI Increases 2.8%...WHY?
Most of us have seen
double-digit increases on our health insurance plans over
this last year. According to the National Health Care Trend Survey, this
soaring
rate of inflation is not going to let up. A comment frequently heard from
people
in a variety of different industries is “The CPI (Consumer Price Index) is
under
3%, and if I tried to raise my prices by over 10% to 15%, I’d be out of
business.
How do the insurance companies get away with this?”
In addressing this
problem it’s important to identify whether this is truly
a cost increase across the board, or is it at least in part, a shifting of the
cost from one area to another. One such occurrence, that those outside the
medical
community are generally not aware of, is the lowering of reimbursements made
by Medicare. Hospitals are required to accept Medicare payment as payment in
full. If Medicare reduces or even freezes the level of benefits paid, the
hospital
needs to make up that loss of revenue from the non-Medicare patients. The largest
user of medical services is the portion of our population eligible for
Medicare.
Consequently, a 4% reduction in Medicare reimbursements could conceivably
require
a 10% increase from the private sector in order to make up the difference.
Another specific area of
health care that happens to have the highest increase
in cost is that of pharmaceuticals. There are two areas that are quite apparent
when addressing the almost 20% projected increase in cost for prescription
drugs.
One is the obvious increase is the usage of prescription drugs.
Not only are some treatments that used to require hospitalization now being
treated pharmaceutically at home, but also many “healthy” people are
also taking
prescription drugs such as Prozac and Viagra to improve their quality of life.
Another driving force in this arena is the increase in Generic Drugs. For years
one of the largest costs in the pharmaceutical arena has been that of research
and development. The actual production costs are fairly
minimal and so in the
past the drug companies could afford to recoup their R & D cost over a
longer
period of time. With the rapid increase in generic equivalents and the ongoing
push to allow their introduction sooner, the companies that develop these
modern
miracles are forced to recoup these costs over a shorter period
of time.
Still another contributor
to the increases is the continual stream of new legislation
mandating what and how certain illnesses or conditions should
be covered. Every
time a new piece of legislation is introduced and passed
it brings with it a
cost. As an example, last year’s Mental Health Parity Act required insurers
to build in an estimated 1% to 2% increase in premium rates. We don’t think
anyone calls these legislative mandates “bad” but they do have a price.
Is there any good news in
all this? Well if putting a little different perspective
on the circumstances qualifies, then the answer is yes. Looking back 20 years,
the average cost of fringe benefits to an employer was about 27% of payroll
and the cost for medical insurance alone was a little less than 10% of payroll.
If we look at the proportional cost of medical benefits and in fact fringe benefits
as a whole, we believe we’ll discover that those percentages are still about
the same. Like we said, it doesn’t change the size of
the check we need to write
each month but it may reduce the “writers cramp” a little.
More Health Care Costs Increase
CHICAGO, Dec. 11
(Reuters) - The average cost of health care nationally, for
consumers and employers who help pay for employees’ health insurance, is
expected
to go up by 11% next year. This is on top of an 8.1% national average for this
year. This will bring the average health care cost per employee to over $4,900.
Several reasons are to
blame for the rise in health care costs including an
aging population, rising prescription drug costs, and pressure on companies,
by their shareholders, to improve profit margins.
About 40% of employers in
the survey said that they will increase their
employees’
contribution levels in 2001 and 17% said they will raise deductibles,
co-payments
or out-of-pocket maximums. A notable number of employers in the survey also
terminated their medical plans for retirees. The number of large employers offering
medical care for retirees who are not eligible for Medicare fell from 35% to
31% in 2000, and from 28% to 24% offering coverage to Medicare-eligible
retirees.
Some reports are saying
that prescription drug expenses now represent about
20% of the total benefit dollar being paid out. This
is up 100% from where it
was just five years ago. Several California HMO’s are
calling for a 250% increase
for the pharmacy portion of their benefits.
Five contributors to
escalating cost:
There are currently no
feasible solutions to these rising costs. We hope, by
keeping you informed of the causes of the problem, that the sting of paying
for them is somewhat lessened.
The HMO Chaos
The
negotiation difficulties between insurance carriers and their networks of
hospitals
and providers appear to be here for the unforeseen future. As you may have read
the California Public Employees Retirement System (CalPERS)
has dropped four
of the system’s 10 HMO’s (
announced they are canceling their contracts with all capitated
HMO plans and
a number of insurers have filed a notice with the Department of Managed Care,
to withdraw their HMO product from rural areas of the state.
As we have mentioned
earlier, the hospitals and doctors can no longer afford
to maintain their practice with the low capitated
levels of reimbursements they
have been receiving from the carriers. The direction CalPERS
is taking, with
their benefit plan offerings, will cause their estimated costs to increase from
6% to 24%. Since CalPERS is the largest purchaser of
health insurance in the
country, other employers should expect even larger increases. To avoid the
disruptive
confusion of the HMO’s, many employers are moving back towards the PPO plans,
or at least adding a PPO option that their employees
can “buy up” to. The slower
economy we are currently dealing with, coupled with the substantial increase
in the cost of benefits, almost mandates a greater
sharing of the cost by employees.
Blue Cross has announced
that they will now charge a $20.00 late fee for any
premium payments not received by the 15th of the month. The reinstatement fee
has been changed to a flat $50.00 in lieu of the $10
per enrollee previously
charged. The rules regarding the reinstatement of coverage after cancellation
for late payment has also tightened up. It should not be assumed that you will
always be able to reinstate your coverage. Is this another sign of the times?
We feel it is. Blue Cross has joined HealthNet, who
is already very strict on
their rules regarding late payments and subsequent cancellations, and we feel
other carriers will be following suit. A word to the wise is to avoid late
charges
and cancellations by submitting premium payments on time.
Good News from Sutter and Blue Shield
Sutter, one of
of California have reached an agreement in their 2002 contract negotiations.
In a climate that has agreements being reached at the
last minute of the deadline,
it is a welcome change to have a settlement, months before the due date. It
also has been reached in time for the annual fall open
enrollment period many
workplaces have.
Reimbursements Continue
to Restrict Health Care Availability—Palo Alto Medical
Foundation is, for an indefinite period of time, no longer accepting new
patients
for “basic care”. The high cost of housing coupled with low reimbursements to
the physicians has made it extremely difficult to recruit new doctors. This
last year, the Internists, Family Practitioners, and Pediatricians at the Palo
Alto Foundation, have served, on average, twice the normal number of patients.
This overload has brought about a frustrating three-month waiting period for
people wanting to schedule their regular, routine physicals. Since several
other
large groups have closed, there are not many options left for many of the Bay
Area Residents.
|
IRS Code |
What it Means |
2001 |
2002 |
2003 |
|
402(g) |
Increases amount a participant can defer
each year. |
$10,500 |
$11,000 |
$12,000
(increases
$1,000 each year to $15,000 in 2006, then indexed in
$500 increments) |
|
415 |
Increases
total amount of deferrals, matching and profit-
sharing dollars that can be added to a participant
account each year. |
Lessor of $35,000 or 25% of
compensation |
$40,000 or 100% of
compensation |
Indexed in
$1,000 increments or 100% of
compensation |
|
Catch
Up Contributions |
Increases amount participants over 50
can defer each year over 402(g) deferral limit. |
n/a |
$1,000 |
$2,000
(increases
$1,000 each year to $5,000 in 2006, then indexed in
$500 increments) |
|
Top
Heavy distribution look-back period |
Limits look
- back for distributions and terminations |
5
years |
1
year (other than in-service distributions) |
|
|
Start-up
Credit Determination
Fees |
Gives
small employers (fewer than 100
employees) two incentives to start plans. |
n/a $125- $1,250
fee |
Tax credit equal to 50% of
qualifying start-up costs (up to $500) for first three
years. No fee for requests made within first 5 years of plan’s existence. |
|
|
Low-income
savers |
Adds
tax credit of up to $1,000 for |
n/a |
Tax
credit up to
50% on up to $2,000 on deferrals per year. |
|
|
Safe
Harbor Hardship withdrawal suspension |
Reduces length of suspension after |
12
months |
6
months |
|
|
Rollovers |
Encourages rollovers among various types
of retirement plans. |
Limited
by plan type or IRA |
All
rollovers
between IRA, 457, 403(b), 401(a) and 401(k)
plans permitted. |
|
|
Vesting
Schedules |
Lowers
the maximum vesting for
matches. |
5-year
cliff or 3/20 (7- year schedule) |
3-year
cliff or 2/20
(6-year schedule) on vesting for
matching contributions. |
|
|
Loans
to owners |
Okays
loans to partners, SubS
owners and sole proprietors. |
n/a |
Loans
allowed to
subchapter S owners, partners and sole
proprietors. |
|
You may have heard things
are stirring up again between Blue Cross, Redwood
Empire Medical (REMG) of
Rosa
provider group 7/1/00. If your PCP is in REMG there
are two possibilities: (1)
if that PCP belongs to another medical group, you may keep your PCP and change
the group only; (2) if that PCP is not a member of another provider group, you
need to pick a new PCP by 6/15/00 or Blue Cross will do it for you.
On another front, Blue
Cross and Catholic Hospitals West are at loggerheads
over contract negotiations. Last year this happened with Blue Cross/Sutter
Hospital
group (more on Sutter in a minute), but a settlement was reached at the last
minute. A termination of the Blue Cross/Catholic Hospital’s contract would
result
in huge dislocations of members in
or you can call us for updates.
Now,
about Sutter Hospital Group (which includes Alta Bates locally).
and Sutter are at a crossroads. As we write this they
have been in day long
negotiations.
PCP’s on 7/1/00. Alta Bates, and other Sutter Hospital Group members, have advised
members to put pressure on your agents and the companies to give us what we
need to survive.
At
of the managed care system is being pulled to pieces.
Doctors and hospitals
want more money to provide care. Members want lower rates and full access to
all that medical technology is promising (a little compassion and better access
to their doctors would help too). Insurance Companies and Managed Care
Providers
would like to please both (impossible?) and make a profit. Where will we end
up? We’re not sure, but we are sure we’re on the move.
Have you heard you can
buy all kinds of insurance online? Promise: “No broker
to talk to.” An interesting factoid: prices online with no broker are
the same
prices from
who’s merging or will merge, whose network matches
your employee’s MD’s, plan
design for effective benefits and more.
Maybe the slogan should be: “Shop Online - Buy From Your Broker -
Blue Shield of CA Revises Small Group Plans
Please be advised that
effective 7/1/2000 Blue Shield of California is changing
their plan designs. These changes will take effect for each group on their
anniversary
date, starting with 7/1/00.
Blue Shield has sent out
notices directly to their insureds on or around May
15th. The packet, which was sent
directly to the employer, outlined the changes
thoroughly and advised how the transition is to take place.
However, we would like to
take this opportunity to remind our valued customers
of some of the major changes that are forthcoming.
What Happened To My Medical Carriers Network of Doctors?
You’ve undoubtedly noticed there has
been numerous changes to the networks
of medical providers. A large number of these changes have to do with the
fiscal
condition of the IPA’s the doctor’s belong to. In our on going effort to keep
our client’s apprized of any contract negotiations and / or financial problems
involving IPA’s and the insurance carriers; it has
become apparent that a large
number of people are unclear of what an IPA is and what they do.
An Independent Practice
Association (IPA) is exactly what the name indicates;
an association that various doctors and groups of doctors belong or subscribe
to. To understand their purpose requires a little
history lesson. Back when
“managed care” was still relatively new, the administrative duties and the
contract
negotiations with all the myriad of insurance companies was becoming too
burdensome
for individual practices to handle. This gave rise to groups of individual
practices
banding together in an effort to maximize their bargaining power and
administrative
efficiency. Over the years these IPA’s
have grown to where virtually all doctors,
who want to be on an HMO or PPO list, must belong to
an IPA.
The power of these IPA’s has also grown over the years. Now the IPA’s don’t
just handle the contract negotiations but also the billings as well as
approving
the referral of a patient to a specialist.
Many people think that
the insurance carriers pay their doctors directly when
in fact most of the monies are paid to the IPA , which
then distributes the
money to the doctors. Often times this is why you may get a notice from your
doctor’s office that it hasn’t been paid while the
insurance company says they
issued a check weeks ago. The payments have been held up
in “IPA Limbo”.
The hope was that these
associations would also be profit centers in themselves.
Unfortunately, recent reports have indicated that if an IPA shows a profit of
a tenth of one percent, it is among the more successful ones out there. The
answers to these problems are difficult. The consumer is tired of paying the
high price of medical insurance. The medical community says it needs more money
from the insurance carriers. The insurance carriers are
continually required,
by new legislation, to expand services while trying to avoid raising premiums
even higher than they currently are. Hence, the never-ending
merger of insurance
carriers in an effort to use economies of scale to accomplish this. What
do
we think the answer is? The reception on our crystal
ball is a bit fuzzy, but
stay tuned for future updates.
Domestic Partner Benefits: Overview
In recognition of the
growing number of domestic partner relationships, and
to remain competitive and develop employee goodwill, many employers have
implemented
benefit programs for their employees’ domestic partners. What follows is an
overview of things you should know.
Eligibility: Buck Consultants advises
employers to include a “verification
clause” in a domestic partner benefit plan. The status of a domestic partner
is usually established through an affidavit process
that requires an employee
to attest that the domestic partnership has existed for a minimum amount of
time (e.g. two years).
Cost considerations: Employers offering domestic
partner benefits have
not experienced skyrocketing health care costs. Studies reveal no
disproportionate
cost increase following the addition of same sex partners to an employers health
care plan.
Benefits: Employers may provide the same
benefits to domestic partners
that are provided to a spouse or dependent, or the
benefits may be limited to
specific benefits such as health insurance, and/or dental insurance. The City
and
to a domestic partner.
Cafeteria Plans: The cost of domestic partner
health coverage may not
be paid on a pretax basis or by using flexible credits. These rules
apply because
amounts paid on behalf of a domestic partner for health costs are not
deductible
as medical expenses on the employee’s income tax return.
COBRA: The Consolidated Omnibus Budget
Reconciliation Act of 1985 (COBRA)
requires employers to offer continued health coverage to qualified
beneficiaries.
Since a domestic partner would not generally be a qualified beneficiary under
COBRA, this coverage is not required to be offered.
FMLA: Employers that provide domestic
partner benefits are not required
to offer leaves of absence under the Family and Medical Leave Act (FMLA) for
the care of a domestic partner who has a serious health condition.
HIPAA: The Health Insurance Portability
and Accountability Act of 1996
(HIPAA) requires employers to provide certifications
of health coverage when
covered employees and their dependents lose coverage for any reason. Since a
domestic partner would not generally be a qualified dependent under HIPAA, providing
certificate of coverage is not required. However, offering a certificate of
coverage is suggested to help the domestic partner
avoid pre-existing health
issues on their next health plan.
Spencer’s
Benefits Reports 5/26/00
Have you been having
problems getting your lab bills paid? If you are an HMO
participant, it may be because the lab billed your insurance incorrectly.
Please
note the IPA or Medical Group, not the insurance carrier, pays most providers,
including labs, for professional services. The insurance carrier is responsible
for the facility charges. If you receive a bill from the lab, here are some
helpful hints to assist in getting it resolved.
Do not ignore it. You don’t want to risk getting turned over to collections.
Find out how the lab company billed your insurance.
HMO’s: Your Medical Group
gets billed. PPO’s: Your
Insurance Carrier gets billed.
POS’s: Depends on level: HMO (See above); PPO: (See
above).
As with all claims, it is
vital that you document the date, who you talk to,
phone number and extension, and the result of the phone call. If you need
assistance,
please contact us.