Connecticut Paid Family and Medical Leave Law

On June 25, 2019, Governor Ned Lamont signed into law Connecticut’s Paid Family and Medical Leave law. Below are some highlights from the new law:

Connecticut Paid Family and Medical Leave Law
Key Dates June 25, 2019 – CT Governor signs legislation into law;
January 1, 2021 – Employee payroll tax begins;
January 1, 2022 – Benefits become available and final regulations are due;
July 1, 2022 – Annual notice of benefits to all new employees required.
Governing Body New state agency, the Paid Family Leave Insurance Authority.
Covered Employers Employers with at least one employee working in the state. The law exempts municipalities, local or regional boards of education, and nonpublic elementary and secondary schools. Municipal union employees can bargain to be covered under the state program. If the union bargains and is granted inclusion, non-union employees for that municipality will automatically be included.
Eligible Employees An employee who has earned at least $2,325 in a base period (ex:  first four of the five most recently completed calendar quarters) and have been employed at least 3 months preceding the leave request. Available to full-time, part-time and former employees (if they apply within 12 weeks of losing their job).
Leaves Covered Family leave to bond with a newborn or adopted child. Medical leave to care for a family member with a serious illness (family member’s include spouse, child, parent, parent-in-law, stepparent, others who are equivalent to a family member, grandchild, grandparent or sibling).  Medical leave is also available for the employee’s own serious illness. Paid leave is also available to serve as an organ or bone marrow donor.

Intermittent leave will also be allowed except in the case of bonding with a newborn or adoption.

Length of Leave Up to 12 weeks of paid family and medical leave during a 12 month period, with another two weeks available for a serious health condition related to pregnancy.
Benefit Amount 95% of base weekly earnings up to 60 times the minimum wage rate (maximum weekly amount will be approximately $780 per week in 2022 up to $900 per week in 2023).
Payroll Contribution Beginning January 1, 2021, a new payroll tax up to .5 percent of the employee’s wages will be deducted to fund the program. Wages are capped at the Social Security wage base ($132,900 in 2019).
Concurrent Benefits If an employee is receiving worker’s compensation, unemployment compensation and another other state or federal wage replacement, they will not be eligible for benefits under the CT Paid Family and Medical Leave.
Private Employer Plans Connecticut employers can opt out of the state program if they have an employer sponsored private plan that provides the same or more generous benefit. Private plans must be approved by a majority of covered employees.

The above is a brief overview of the law as it stands today and is subject to change. Final regulations are due by January 1, 2022 which is the same date that benefits are first payable. The regulations should clarify issues surrounding implementation, coordination with CT’s unpaid FMLA leave and provide sample model notices. Diversified Group will keep you informed of any developments.

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Is It Time to Self-Fund Your Benefit Plans?

After reading the article included below, we couldn’t help but agree that the question every employer should be asking this year is…Should I self-fund my employee benefit plan?

As the article discusses, this is a great time of year for companies to review their status, evaluate changes that have been made and consider new items for their 2018 benefit to-do list. The article includes 8 questions benefits managers should be asking themselves this year. But, we’d like to help you address one key question – Is Self-Funding Right for You or Your Client?

Whether you’ve been asking this question for some time or you’re new to the concept of self-funding, we’d be happy to explain the flexibility and potential for savings that a self-insured plan can offer. Gain control over your group health plan, eliminate the high costs of insurance premiums and obtain access to monthly claim reports – all with help from Diversified Group!

8 benefit management items to evaluate in 2018

This article was published on January 24, 2018 on Employee Benefit News, written by Zack Pace

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Even 20 years into the benefits business, I still can’t always immediately remember details about my clients’ benefits plan — a given employer’s standard measurement period, affordability safe harbor or health savings account trustee, for example. That’s why I track all of these details across 32 columns in a simple spreadsheet.

While I use this reference tool most every day, I find that January is a great month to go even further with the employers I work with, carefully reviewing each company, considering how the employer’s circumstances have changed, and proposing items of consideration for our mutual 2018 benefit to-do list.

Employers are wise to have a similar benefit to-do list when it comes to their 2018 planning process. Here are eight common questions that benefits managers may find wise to ask.

1. For calendar year 2018, is your organization a “large employer” subject to ACA employer shared responsibility? Meanwhile, is your organization a “large employer” per your state’s fully insured group health plan market?

Generally, employers that averaged 50 or more full-time employees + full-time equivalents in calendar year 2017 are subject to ACA shared responsibility for all of calendar year 2018. Importantly, penalty risks generally now begin accruing in January, not when the plan year begins (if the date differs).

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However, confusingly, in most states, the threshold to be considered a large employer for group health insurance contracts is an average of 51 or more full-time employee + full-time equivalents in the previous calendar year. How do the rules work in your state?

Now’s the time to finalize your 2017 calculation and determine your 2018 status for both employer shared responsibility and your state’s group health insurance market. And, yes, I’ve seen several employers average exactly 50 and be deemed a large employer regarding ACA employer shared responsibility and a small employer in reference to their fully insured group health plan contract. Talk about bad luck.

2. Is it time to self-fund the group medical plan?

The financial headwinds faced by fully insured plans have never been greater. Fully insured premiums are laden with the roughly 4% ACA premium tax (aka the Health Insurer Annual Fee), state premium taxes, the cost of various state-mandated benefits, and often robust retention and pooling point charges.

Thus, employers sponsoring group fully insured health plans should consider if moving to a self-funded contract (including so-called level-funding contracts) could be advantageous. Given the varying state regulations, state stop-loss minimums, organizational risk tolerance, reserve requirements and other variables, there is no one-size-fits-all answer to this question. Especially good times to perform a comprehensive self-funding evaluation are when your company crosses over from small group to large group and/or when meaningful claims experience becomes available from your fully insured vendor.

3. Is it time to self-fund the dental and short-term disability plans?

For most employers of size sponsoring plans that are not 100% employee paid (aka not voluntary), the answer to this question is simply “yes.” Run the math and make your decision.

4. Does benefit eligibility for life and disability vary by class?

For start-up companies, it’s not uncommon to offer better group life and disability benefits to certain classes, including management and executives. However, as employers grow, the budgetary and cultural reasons for doing so can quickly diminish or go away. A quick litmus test is simply asking yourself if the continuing benefit discrimination still makes sense.

Regardless if these benefits vary by class, is your group life plan compliant with the Section 79 nondiscrimination rules? Double-check with your attorney, accountant and benefits consultant.

5. Who is the health savings account trustee (i.e., the bank)? Is it linked to the health insurer?

If your organization sponsors a qualified high-deductible health plan, you likely allow employees to contribute to an HSA pre-tax through your Section 125 plan. Is the bank you selected still the best fit? Is the bank tied to your fully insured group health vendor? If yes, if you change your group health vendor, are your employees allowed to maintain the HSAs with this trustee with no fee changes? Should you consider moving to a quality stand-alone HSA vendor?

6. Does your firm employ anyone in California, Hawaii, New Jersey, New York, Rhode Island or Puerto Rico?

Most employers headquartered in these states (and territory) are acutely aware of the state disability requirements. However, given the advent of liberal telecommuting policies, it’s becoming more common for employers without physical locations in these states to employ individuals in these states. If you answered yes to this question, double-check your compliance with the state disability requirements. Your disability insurer or administrator can assist.

And, please note that, just this month (January 2018), New York became the latest state/jurisdiction to require paid family leave.

7. For firms offering retiree health plan benefits, are benefits for Medicare-eligible retirees and spouses self-funded?

While retiree health benefits have generally gone the way of the American chestnut tree, these benefits remain fairly common among certain sectors, such as higher education, government and certain nonprofits. Historically, most employers simply allowed Medicare-eligible retirees to remain on the employer’s active health plan, with the employer’s plan paying secondary to Medicare for Part A and Part B expenses and primary for prescription drug costs.

This arrangement was just fine when a really high annual prescription claim was $15,000. Now, $90,000 claims are not uncommon and $225,000 claims are possible. Does it still make sense to self-fund this retiree risk? In states where it is permissible, would it be prudent to transfer the risk by adopting a fully insured group Medicare Advantage plan or supplement program?

Regardless, all employers self-funding retiree health benefits should double-check that their individual stop-loss policy includes retirees.

And, regardless if retiree benefits are offered, all employers sponsoring self-funded health benefits should double-check that their individual stop-loss policy covers prescription drugs.

8. Is your firm required to file health and welfare Form 5550s? If so, who is handling the filings?

Generally, employers subject to ERISA that sponsor benefit plans that, at the beginning of the plan year, cover 100 or more participants, are required to file health and welfare 5500s and the related schedules. Some smaller employers must also file. Most multiple employer welfare arrangements (MEWAs) must file.

It’s very easy for health and welfare Form 5500 filing requirements to fall through the cracks. While U.S. Treasury’s penalties for non-filers are substantial, Treasury doesn’t keep track of who is required to file and thus doesn’t individually remind employers of this requirement. Further, this requirement doesn’t seem to be on the checklist of most auditors and accountants.

Employers should review all enrollment counts of all plans at the beginning of each year and consult with their accountant, attorney, and benefits consultant on the filing requirement and next steps.

I recommend avoiding the shortcut of saying “5500” in these discussions. Always say “the health and welfare 5500.” This practice will mitigate the risk that someone hears “5500” and thinks retirement plan 5500.

self-fundingCTA

5 ways to keep benefit costs down in 2018

The article below was published on December 20, 2017 by BenefitsPRO, written by David Hines.

Photo Source: BenefitsPRO

As we head into 2018, large employers are bracing for a 5 percent rise in the cost of providing employee health care benefits, according to the latest National Business Group on Health survey.  In a world where health care costs seem to only go in one direction, that may not be a surprise. Yet, new data and insights related to employee health are enabling employers to craft novel strategies to bend, or at least stay on top of, the cost trend. Here are five things we learned in 2017 that can help employers turn the cost challenge into an opportunity to better manage expenses in 2018 and beyond.

1. High-cost claimants are the key

In late 2016, the American Health Policy Institute analyzed claims data from 26 large employers and found that the average high-cost claim has a price tag of $122,382 per year, or 29.3 times as much as the average member claim. Though they represent just 1.2 percent of all members, high-cost claimants make up 31 percent of total health care spending for the surveyed employers. Cancer treatments, heart disease, live birth/perinatal conditions, and blood infections are among the costliest claims, the report says, adding that 53 percent of those costs represent chronic conditions, while 47 percent cover acute conditions.

Recognizing this reality, savvy employers are developing new and improved strategies to better manage the care of these costly claimants. For instance, some are taking a closer look at how to manage the big C word – cancer.

For example, one large manufacturing employer has just begun some groundbreaking work to help identify and assist cancer patients earlier in their diagnosis, which is improving outcomes and reducing costs. We’re excited to see more about those results soon.

2. Stay ahead of high-cost, high-variation surgeries

While there may be some overlap with high-cost claimants, another area of high spend is employees who have surgeries for preference-sensitive conditions, e.g., joint replacement surgery (knees and hips), back surgery, hysterectomy or bariatric surgery.

These are called preference-sensitive because in most cases the employee has alternative treatment options.

In 2017, ConsumerMedical reviewed Truven’s Marketscan data and learned that, on average, an employer with 10,000 employees has approximately 258 individuals contemplating surgery for one of the five conditions noted above. The average cost-per-episode for these surgeries is a staggering $29,700. That means employers spend around $90 billion annually on these procedures and their related costs.

Many of these patients might actually choose a lower-cost option with a better health outcome if they were fully aware of their choices. This represents an enormous opportunity for employers to save money and improve health outcomes. One way to help guide employees is by offering a medical decision support program. A study of one large employer that leveraged predictive modeling and financial penalties to spur decision support engagement realized savings of $4.7 million from just 206 employees.

Guiding these surgery candidates toward high-quality providers is an equally powerful strategy for avoiding costs, including the costs of misdiagnosis and unnecessary drugs. The National Business Group on Health (NBGH) reported 88 percent of employers expect to use COEs in 2018 for certain procedures such as orthopedic surgery, in an effort to contain costs and improve the value of care.

3. Keep experimenting with new ways to manage the cost of drugs

The rising cost of specialty drugs is a major reason why health care expenses are continuing to rise. As Mike Thompson, President and CEO of the National Alliance of Healthcare Purchaser Coalitions recently said, “If you’re in the kitchen and one of these new specialty drugs rolls under the refrigerator, you’ll throw out your fridge, because the pill costs more.”

According to PwC, in 2018, employers will explore new technologies, such as artificial intelligence, to match people with the best treatments, along with traditional strategies, such as requiring prior authorizations for costly specialty drugs and instituting step therapies. In addition, employers are paying closer attention to treatment environments, looking for opportunities to shift the delivery of care to lower-cost settings.

4. Employees need more support with behavioral health

With more employees experiencing a behavioral health issue,employers are recognizing the need to provide greater employee support in this critical area as well.  A 2017 survey conducted by ConsumerMedical found that almost half of U.S. employees had dealt with a mental health issue on behalf of themselves or a loved one in the last year―and most reported that this was a distraction for them while at work.

The reality is that healthcare expenses, such as medical and pharmacy claims, are only the tip of the cost iceberg for employers; they are compounded by the productivity, absenteeism and related expenses that result from employees with behavioral health concerns.

Unfortunately, the traditional support platforms offered by employers may not be enough. For example, studies show that only about 5 percent of employees take advantage of their company’s Employee Assistance Program (EAP). Employers are learning they need to do more.

According to Willis Towers Watson survey of 314 mid- and large-sized companies, employers’ top health care priorities over the next three years include: locating more timely and effective behavioral health care, integrating behavioral health with medical and disability case management, providing better support for complex conditions, and expanding access to care.

5. Consumerism is no longer the panacea

While most large employers continue to lean on consumer-directed health care as a strategy, we are entering a new era, and that is good news for consumers. According to PwC, after shifting healthcare costs to employees for years, employers are starting to ease off.

Employers are beginning to recognize that cost sharing has its limits. In 2017, research showed us―yet again―that cost sharing may cause employees to skip needed care.

Today, employers are realizing that health benefits need to place a greater focus on the employee experience.

NBGH President and CEO Brian Marcotte says, “One of the most interesting findings from the (NBGH) survey is that employers are focused on enhancing the employee experience….For example, there is a big increase in the number of employers offering decision support, concierge services and tools to help employees navigate the health care system. The complexity of the system and proliferation of new entrants has made it difficult for employees to fully understand their benefit programs, treatment options and where to go for care.”

As we head into 2018, we will face another year of rising health care costs. But thanks to research, surveys and some trial and error, employers are learning more about the drivers of costs and the strategies designed to control them―while improving employees’ health outcomes. It is a constant struggle to stay ahead of the cost curve and meet employees’ needs, but that is the goal we are all committed to pursuing as benefits leaders and professionals.

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What are your clients’ most-pressing issues?

The article below was published on October 17, 2017 by BenefitsPRO, written by Alan Goforth.

Benefits professionals have been on a roller-coaster ride since the 2016 presidential election. That ride includes the highs of lofty rhetoric, the lows of as-yet unfulfilled promises, and uncertainty about what may lie around the next curve.

Every now and then, it helps to step off the ride, catch your breath and collect your thoughts. That’s why BenefitsPRO takes time each year to ask employers to share their insights on the most important issues they face. Their responses provide a valuable roadmap for brokers as they plan ahead for this fall’s abbreviated open enrollment period.

Not surprisingly, the economy is top of mind for the 125 decision-makers who participated this year (see box on last slide). Overall, employers give the Trump administration low marks for its economic policies. Thirty-seven percent said these policies have had a moderately or extremely negative effect on their business outlook, with 20 percent reporting a moderately or extremely positive impact.

Perhaps the most important takeaway message for brokers is that most employers adjust their benefits spending to economic conditions. Sixty-four percent said their benefits spending is influenced by the economy.

Coping with costs

The rising cost of health care benefits tops the list of concerns, with most citing increased expenses over the previous year:

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However, there is good news for brokers among the economic concerns. The overwhelming majority of employers (85 percent) use a benefits broker or agent. Compensation is divided somewhat evenly between commission-based (54 percent) and fee-based (46 percent). Seventy percent of employers said their broker either conducts enrollment or helps them conduct it.

The even better news is that more than 91 percent of respondents have no thoughts of dropping their broker and going it alone. Still, it would be smart to pay attention to the factors that they say would cause them to consider such a bold move:

broker-stat

Communication is critical

Timely, actionable communication is more important than ever in today’s fast-changing benefits environment. Nine employers in 10 said they are satisfied with the frequency of communication with their broker. How often do they connect?

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One potential topic of conversation is the new Department of Labor fiduciary rule and its potential impact. Eighty-three percent of employers said they understand it extremely or moderately well, and the rest said not very well or not at all.

Although many conversations take place about benefits products, technology is an increasingly hot topic. Thirty-six percent of employers consult with their broker multiple times each year about such topics as enrollment, administration and compliance platforms. Another 25 percent do so once a month or more frequently. More than 80 percent of employers are satisfied with the frequency of technology communications with their broker.

Speaking of technology, nearly every employer said it is essential to his or her business:

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Employers seek out a variety of print and online sources for information about health-care reform, led by electronic newsletters from an insurance magazine (66 percent). Not to blow our own horn, but BenefitsPRO.com is the most popular information site, mentioned by 81 percent of employers.

Expanded product offerings

Although many employers are expanding the menu of voluntary benefits, health insurance (including HMOs and PPOs) remains the overwhelming favorite. Eighty percent said their employees consider health insurance their most important benefit. Sixteen percent cited consumer-driven health care options, such as HSAs and HRAs. A majority—60 percent—now offer health savings accounts. About half of employers surveyed said they are used by between 1 percent and 25 percent of their employees.

Not many employers are open to the idea of health insurance exchanges. Forty-four percent have consulted with their broker about an exchange. However, only 13 percent have considered moving their employees onto a public exchange, while 21 percent have considered a private exchange option.

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Positive outlook

The bottom line for this year’s survey is that the vast majority of employers look to their broker as a valued business partner. Brokers who listen to what they have to say, communicate clearly, and deliver practical solutions will be well positioned to build strong relationships during enrollment and look forward to a mutually prosperous 2018.

Meet the respondents

The 125 survey respondents represent a broad cross-section of the benefits industry (although not every participant answered every question). Three-fourths of them are involved in making benefits decisions for their company.

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BenefitsPRO takes time each year to ask employers to share their insights on the most important issues they face. Their responses provide a valuable roadmap for brokers as they plan ahead for this fall’s abbreviated open enrollment period.

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Tailored wellness programs improve the bottom line

The article below was published on June 21, 2017 by Employee Benefit News, written by Alicia Kelsey.

Employer-sponsored health plans are taking up an increasing amount of real estate on companies’ operating budgets, and management has had to get creative in order to slow the rise in costs.

One creative solution that companies have turned to is a customized employee wellness program. By using data of the health of their population, enlisting industry specialists and vendors to help structure plans, and applying new technologies, many employers are seeing that tailored plans are surprisingly effective at managing costs.

“Tailored” is the key word when creating an effective employee wellness program. The first step is for an employer to know the health issues that their employees, and their spouses and dependents face. This is commonly done by asking plan members to complete a health risk assessment. Health reimbursement arrangements now include such details as average hours of sleep per night, nutritional and exercise habits, and biometric data including weight, cholesterol levels and blood pressure.

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Image Source: benefitnews.com

The latter information in particular, introduced into the HRA process in the past decade, adds the critical physician component into health management. Typically collected by third-party vendors following doctor visits for privacy reasons, biometric details provide a superior snapshot of the overall well-being of a person. This data, when paired with advanced claims details and analysis, have vastly improved companies’ abilities to tailor their employee wellness programs to their employees’ needs. The more a company can perfect that tailoring, the more effective that company will be at managing costs and risks.

Technology has notably played a key role in improving the data available to companies and increased the participation and utilization of their wellness programs. Whereas physical activity was once self-reported, for example, a fitness device can now provide not only more accurate, but also more extensive information.

Similarly, programs can be administered online, increasing ease of use and reducing implementation costs. Many wellness companies have the ability to sync fitness activity from devices into their platforms so it can be managed all in one place.

It’s difficult for companies to manage all of this on their own, and it’s not a one-size-fits all solution. While there are many pre-existing program options out there, it’s better to tailor it to a company’s population. In the past decade, the number of options available has increased exponentially. Companies now have access to wellness tools of all shapes and sizes — arguably to an overwhelming degree. In other words, now is a good time for companies to look at their wellness programs and ask some sharp questions. Is the program tailored to the company’s employees? Does it meet the employer’s goal?

An effective program requires a concerted effort from the company’s leadership team. To incorporate a properly designed wellness program, a company must take time to determine both the needs of its employees and the goals of the company.

A third party — usually in the form of an insurance broker — can provide key assistance in these efforts by bringing in both the health claims data, benefits plan integration and an extensive knowledge of the wellness program options available. They have the ability to help the employer research and vet the right wellness vendor for the issues plaguing their population as well as fit it into the companies’ overall employee benefits strategy.

Wellness programs are no longer a stand-alone initiative. They are becoming more baked into the overall management of a company’s health population. With increasing healthcare costs, now is a perfect time for companies to revisit how they are managing their wellness program and what can be done to align it with their overall benefits goals.

Corporate Fitness & Health

10 compliance issues for 2018 health and benefit planning

The article below was published on June 18, 2017 by Employee Benefit News, written by Brian M. Kalish.

Compliance

Image Source: benefitnews.com

Introduction
Despite the uncertain future of the Affordable Care Act and pending replacement legislation, clients should continue finalizing their 2018 health and benefit offerings, contribution strategies, vendor terms, plan operations and employee communications, according to Mercer. The company hosted a recent webinar to share the top 10 issues for 2018.

“As employers begin to strategize for their 2018 benefit programs, it is important not to lose sight of new and ongoing compliance obligations and prepare to make any changes that may be necessary in employee benefit plan design and administration,” says Katharine Marshall, principal at Mercer. “Despite what may – or may not – come of ACA repeal and replace legislation, there are a number of compliance concerns that employers can count on sticking around – like HIPAA privacy and security requirements, mental health parity requirements and ERISA fiduciary duties, just to name a few.”

Employers and their advisers, Marshall adds, should keep these issues in focus because the consequences of sidelining them can be costly.

Employed shared responsibility strategy and reporting
Even with plans to dramatically alter or eliminate the Affordable Care Act pending in Congress, most of the legislative body’s reconciliation rules do not allow for the repeal of the employer shared responsibility, says Katharine Marshall, principal at Mercer.

While the minimum value requirement remains unchanged for 2018, affordability has decreased and an employer cannot charge a full time employee more than 9.56% of household income, down slightly from 9.69% in 2017.

It is critical for employers to document their offers of coverage and “most importantly,” waivers of that coverage, Marshall says. “As you head to 2018, correct any mistakes in prior year filings,” she adds.

Cadillac Tax
Employers should review their risk of exposure for when the tax is scheduled to begin in 2020. Although the American Health Care Act as it stands now delays the implementation of the tax until 2026, the fate of that bill is uncertain, Marshall says.

The best way to do that is to review an employer’s risk of exposure by identifying plans and benefits that could be a factor, such as flexible spending accounts, health reimbursement arrangements and health savings accounts, she says. An employer should also focus on pre-65 retiree plans and high-cost plans due to geographic location and claims history.

Preventive services
For employers to comply with this requirement they need to stay abreast of updates to what must be covered.

Changes are made on a rolling basis. For Jan. 1, 2018, preventive services now include screening for depression in adults, low dose aspirin for certain at-risk adults ages 50-59, syphilis screening for asymptomatic non-pregnant adults, among others, Marshall says. Continue reading