Walmart Woos High-Schoolers

studentloansA recent announcement stated that by year end, Walmart will triple the number of employees taking advantage of company-provided tuition benefits. With 25,000 high school students among their 1.3 million U.S. employees, the company expects to help many avoid the hefty cost of higher education. Disney, Discover and MGM Resorts International are just a few large employers offering free tuition for college or certificate programs in order to attract talented young people.

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Fewer Spouses Covered on Employee Benefit Plans

This article was published on August 5, 2019 on IFEBP.org written by Lois Gleason, CEBS.

More and more employers are seeking cost savings by discouraging or blocking employees from enrolling a spouse in the employer’s health plan. Here’s what you need to know about the growing trend of spousal carve-outs:

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Image Source: IFEPB.org

Employers often use one of the following four methods to reduce the number of spouses they cover:

  1. Charging employees more to cover spouses who have access to employer-sponsored coverage through their own jobs.
  2. Charging employees more to cover spouses whether or not they have access to other coverage.
  3. Choosing not to cover any spouses who have access to their own employer-sponsored coverage.
  4. Choosing not to offer coverage for any spouses under any circumstances.

Recent survey data reveals a clear trend:

  • The 2018 International Foundation Employee Benefits Survey showed that 20.1% of responding health plan sponsors imposed spousal surcharges or exclusions.
  • The June 2019 PWC Health and Well-being Touchstone Survey results showed that 38% of survey respondents apply a spousal surcharge if the spouse has access to coverage through another employer. The median surcharge is $100 per month.
  • The December 2018 issue of AYCO Compensation & Benefits Digest reported that just over 25% of its survey participants are imposing a spousal surcharge in 2019. The most commonly used surcharge amount is $100 per month.
  • The 22nd Annual Willis Towers Watson Best Practices in Health Care Employer Survey shows that 27% of companies used a spousal surcharge in 2017.

At least three factors are driving this spousal carve-outs trend:

  1. Plan sponsors are looking for new ways to stem the rising tide of health care benefit costs.
  2. Employees, especially those on single-only coverage, may view spousal surcharges as a more equitable way for an employer to allocate health benefit costs among single and married employees.
  3. As more plans impose surcharges or exclusions, plans that cover spouses without a surcharge could be at risk for adverse selection.

In an effort to save costs, health plan sponsors are increasingly nudging (or pushing) spouses of employees to obtain coverage somewhere else.

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Can Your Plan Recover Money It Wasn’t Responsible for Paying?

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That’s What Subrogation and Reimbursement Are All About

When a plan member requires medical treatment following an injury or accident, their health plan is almost always the first line of defense. In some instances, however, the responsibility for medical treatment should really lie with another insurance plan, such as the member’s auto policy or workers compensation coverage.

In most cases, the health plan pays the claim and has the option to use subrogation to recover the funds from another insurance company. In other instances where a third party may have been responsible for the injury or accident, it may be necessary for the health plan beneficiary to seek compensation from the third party’s insurance carrier. This process, known as reimbursement, will require that the responsible third party pay for the damage they caused, including the plan member’s medical treatment.

Serving the Plan’s Best Interests

Diversified Group helps self-funded clients use these tools to make sure their plan only pays health claims it is responsible for paying. While some employers are hesitant to use subrogation and reimbursement, plan sponsors have a fiduciary duty to ensure prudent management of plan assets. And while there are costs associated with these activities, the funds recovered will help cover future claim costs incurred by all plan beneficiaries. To learn more about subrogation, reimbursement and other matters related to fiduciary responsibility, talk to Diversified Group today.

Tell Us How You Feel!

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Get Eligibility Right the First Time or Pay for It Later

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Missing, incorrect, or late information regarding eligibility can lead to mistaken interpretation of coverage, no coverage/denied claims, or incorrect participant information. These can all lead to overbilling, underbilling, and claim payment errors. Additionally, eligibility errors can “over-obligate” the plan by allowing an invalid member to linger on the plan, for example: enrolling in COBRA for 18 months or longer. The ACA prohibits a rescission of coverage except in cases where the individual has engaged in fraud or made an intentional misrepresentation of material fact. This emphasizes the importance of getting eligibility correct the first time!

One area that is often overlooked or not tracked efficiently are the circumstances surrounding when a member terminates their coverage under the group health plan. Coverage in the group health plan will end based on the termination language outlined in the plan’s medical plan document. It is important to be aware of these terms and to realize that termination of coverage does not necessarily mean termination of employment. There are situations when a member may no longer be eligible for the health plan while still maintaining their employment with the employer, for example:

  • Illness / Disability
  • Federal FMLA
  • State Continuation/FMLA
  • Workers’ Compensation
  • Leave of Absence
  • Reduction of Hours

Termination Pitfalls:

Divorce This is a difficult area to track as the employer may have to rely solely on the member’s notification. Without that, ex-spouses could be left on the plan and only discovered when a claim is filed with stop loss.
Aging off Dependents are no longer eligible upon attainment of age 26. Refer to your plan document for the actual coverage end date/qualifying event for dependents.
Workers’ Compensation WC typically leads to a reduction in hours which is considered a COBRA event. Also, if your plan specifies that an employee working under a specified number of hours is not eligible, then extending coverage to someone with reduced hours will contradict the plan and will lead to concerns with stop loss coverage.
Actively at Work Employees who are left on the plan but are not actively at work can be flagged when a stop loss claim is filed. Medical records and/or payroll records will show that the person could not/was not at work.
Leaves of Absence Be sure to follow your plan document language as to any continuation of coverage provisions for leaves of absence. FMLA requires continuation of coverage for up to 12 weeks. Various states have implemented paid family and medical leave that will require continuation of coverage for a certain time period. Once this time period is exhausted, employees must be offered COBRA if they have not returned to work.
COBRA Be familiar with COBRA rules concerning qualifying events, secondary qualifying events, the timeframe to offer COBRA, and when COBRA can be terminated.
Late Terminations As a self-funded plan, you are responsible for paying your member’s claims. A late termination could mean costly, high dollar claims for medical and Rx being incurred and paid for by the plan for an inactive member.

Diversified Group encourages all plan sponsors to follow its best practices for enrollment, such as:

  • Fully completed enrollment forms, annually
  • Verification of loss of other coverage
  • Verification of marriage, divorce, birth or adoption
  • TPA and COBRA administrator should be the same or at least working together in real time

The plan administrator has a fiduciary duty to manage a self-funded plan in a manner that serves the best interests of the participants and the beneficiaries. This includes following the instruments of the plan, such as the rules outlined within the plan document. Failure to do so can be costly!

Always contact Diversified with any questions concerning an enrollment, eligibility, or termination.

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Flexibility Means Retention

dgb-millennialsResearch reported by the Execu Search Group shows that flexibility may very well be the key to keeping millennials engaged. Allowing more vacation time, better training and a more flexible work schedule, including the ability to work at home when needed, are keys that will make young people happier and more productive. The SHRM says that more companies are offering these benefits in order to retain young workers in today’s competitive labor market.

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ACA Affordability Percentage for 2020

On July 23, 2019, the Internal Revenue Service (IRS) issued Revenue Procedure 2019-29 which indexes the contribution percentages for 2020 for purposes of determining affordability of an employer’s plan under the Affordable Care Act (ACA). For plan years beginning on or after January 1, 2020, employer-sponsored coverage will be considered affordable if the employee’s required contribution for self-only coverage does not exceed 9.78 percent of the employee’s household income for the year for purposes of the employer shared responsibility rules. This is a decrease from the 2019 affordability threshold percentage of 9.86%. The 2020 decrease in the affordability percentage for employer shared responsibility purposes means that employers will have to charge employees a slightly lower price for their health benefits to meet the “affordability” test.

Since an employer would not know an employee’s household income, IRS Notice 2015-87 confirmed that ALEs using an affordability safe harbor may rely on the adjusted affordability contribution percentages if they use one of three affordability safe harbor methods. The three safe harbors to measure affordability are Form W-2 wages from that employer, the employee’s Rate of Pay or the Federal Poverty Line (FPL) for a single individual. The affordability test applies only to the portion of the annual premiums for self-only coverage and does not include any additional cost for family coverage. Also, if an employer offers multiple health coverage options, the affordability test applies to the lowest-cost option that also satisfies the minimum value requirement.

Below is an example of how the percentage change impacts an employer’s monthly affordable amount using the three safe harbor tests. The example assumes an employee earns $11/hour.

*Based on Jan. 2018 FPL of $12,140 for 2019 and Jan. 2019 FPL of $12,490 for 2020

Under the ACA, employees (and their family members) who are eligible for coverage under an affordable employer-sponsored plan are generally not eligible for the premium tax credit from the Exchange. This is significant because the ACA’s employer shared responsibility penalty for applicable large employers (ALEs) is triggered when a full-time employee receives a premium tax credit for coverage under an Exchange.

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Mental Health Days

As more workers struggle with stress in and out of the workplace, some are requesting time off in order to cope. This is not a problem for companies with sick-day policies that allow employees to use their paid personal days for any reason. In other workplaces, people who are honest about asking for a mental health day can sometimes be looked upon as suffering from a mental health issue. Regardless of how your organization may handle these issues, it is important to respect employees’ right to privacy and avoid probing for sensitive information about a person’s well-being.

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