Category: Blog

A Summary of Benefits and Coverage (SBC) must contain:

• Uniform definitions of standard insurance terms and medical terms (provided in the glossary)
• A description of the coverage for certain categories of benefits
• The exceptions, reductions, and limitations of the coverage
• The cost-sharing provisions of the coverage (deductible, coinsurance, and copayment obligations)
• A statement as to whether the plan offers minimum essential and minimum value coverage
• The renewability and continuation of coverage provisions
• Coverage examples
• A statement that the SBC is only a summary and that the plan document, policy, certificate, or contract of insurance should be consulted to determine the governing contractual provisions of the coverage
• Contact information for questions and obtaining a copy of the plan document or the insurance policy, certificate, or contract of insurance (such as a telephone number for customer service and an Internet address for obtaining a copy of the plan document or the insurance policy, certificate, or contract of insurance)
• For plans and issuers that maintain one or more networks of providers, an Internet address (or similar contact information) for obtaining a list of network providers
• For plans and issuers that use a formulary in providing prescription drug coverage, an Internet address (or similar contact information) for obtaining information on prescription drug coverage
• An Internet address for obtaining the uniform glossary, a contact phone number to obtain a paper copy of the uniform glossary, and a disclosure that paper copies are available

Important: The agencies have issued very specific instructions on how to complete the SBC. If you are completing an SBC, you need to read and follow the instructions. The instructions are available at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf.

Since these instructions were issued, the DOL has made a few liberalizations. They are:

• If a plan’s terms deviate significantly from the template or instructions, you may modify the template/entries to the extent needed to be accurate
• You only need to include the footer on the first and last page and the header only needs to be on the first page
• When completing the header, either the company name, any insurer name or the plan name can be listed first
• If there are multiple plan options, list the name commonly used; if there is no common name, a generic name is fine

In addition, for 2014 and 2015 employers and carriers may address the prohibition on annual dollar limits for essential health benefits by either:

• Deleting the row that asks about annual limits; or
• Completing the annual limits question with “no” and stating in the “Why It Matters” column: “The chart starting on page 2 describes any limits on what the plan will pay for specific covered services, such as office visits.”

A blank SBC to use with 2014 and 2015 plan years is at http://www.dol.gov/ebsa/correctedsbctemplate2.doc.

A sample completed SBC for 2014 and 2015 is at http://www.dol.gov/ebsa/pdf/CorrectedSampleCompletedSBC2.pdf.

What do you do if you have multiple benefit options? Dental or vision benefits?  HRA or HSA? EAP or wellness program?

For these answers and additional information on completing the coverage examples, providing the glossary, distribution, language requirements and more, Download a copy of UBA’s “Summary of Benefits and Coverage FAQs” at: http://ubabenefits.sites.hubspot.com/summary-of-benefits-and-coverage-faqs

The Equal Employment Opportunity Commission (EEOC) has sued an employer because the penalty it applied for not participating in its wellness program was, in the eyes of the EEOC, so high that participation was not, as a practical matter, “voluntary.” Under EEOC rules, an employer may conduct medical examinations, which includes obtaining medical histories and blood draws, only in limited situations. One of those permitted situations is a voluntary wellness program. Because the program did not qualify as “voluntary,” the questions employees were asked about their health on a health risk assessment, a blood draw, and a range of motion assessment violated the Americans with Disabilities Act (ADA), according to the EEOC’s Complaint.

This is the first lawsuit brought by the EEOC challenging the incentives of an employer’s wellness program. The situation that created the complaint is a bit unusual, because the employee was terminated shortly after complaining about the wellness program. However, the EEOC also seems disturbed by the terms of the program itself. The program was designed so that the company paid 100% of the health insurance premium for employees who participated in the wellness program and paid nothing toward the premium of any employee who did not participate. The EEOC has described this penalty as “steep” and “enormous.” It remains to be seen whether the court will agree with the EEOC that the penalty violates the ADA rules, but employers considering significant penalties for non-compliance with, or incentives for participating in, a wellness program should understand that their design could lead to an EEOC charge or lawsuit. 

As a reminder, in addition to the ADA requirements, wellness programs need to comply with PPACA’s rules for these programs. Under the 2014 rules, wellness programs are either “participatory” or “health-contingent.” A participatory program is one that either has no reward or penalty (such as providing free flu shots) or simply rewards participation (such as a program that reimburses the cost of a membership to a fitness facility or the cost of a seminar on nutrition). As long as a participatory program is equally offered to all similar employees, no special requirements will apply to the program.

A number of rules apply to “health-contingent” wellness programs. Health-contingent wellness programs are programs that base incentives or requirements in any way on an employee’s health status. Health status includes things like body mass index (BMI), blood glucose level, blood pressure, cholesterol level, fitness level, regularity of exercise, and nicotine use. A wellness program with health-contingent requirements must meet all of these requirements:

• Be reasonably designed to promote health or prevent disease
• Give employees a chance to qualify for the incentive at least once a year
• Cap the incentive at 30% of the cost of coverage if the incentive does not relate to non-use of tobacco and to 50% of the cost of coverage if the incentive relates to non-use of tobacco
• Provide a reasonable alternative way to qualify for the incentive
• Describe the availability of the alternative method of qualifying for the incentive in written program materials

The case was filed in Wisconsin against Orion Energy Systems.

On August 22, 2014, the Departments of Health and Human Services (HHS), Labor, and Treasury released an interim final rule and a proposed rule that provide some new accommodations to employers that have religious objections to covering contraception under their group health plans. The agencies also released a fact sheet on the rules and an alternate form that religious organizations (like religious hospitals, universities and charities) may use.

The Patient Protection and Affordable Care Act (PPACA) requires non-grandfathered health insurance carriers and employer-sponsored group health plans to cover preventive services without cost sharing.

This includes women’s preventive health services, including all forms of contraceptives that have been approved by the Food and Drug Administration. (This includes sterilization; there is no requirement that abortion be covered.) This requirement is an issue for both for-profit and non-profit organizations that have a religious objection to covering some or all types of contraception.

HHS has attempted to accommodate the concerns of non-profit religious organizations by completely exempting “religious employers” (essentially, churches) that have religious objections to covering contraceptives from the requirement. HHS also created a process under which “eligible organizations” (non-profits that are religious organizations and that have a religious objection to providing all or some contraceptives) are not required to directly cover, arrange, or pay for contraceptive coverage for their employees or students. Instead, these eligible organizations must provide a copy of a self-certification form to their insurer or third party administrator (TPA). The insurer or TPA then must provide or arrange for coverage for contraceptives at no cost to the women or the organization. It was assumed that the insurers would save enough money from fewer maternity claims to cover the cost of contraceptive coverage. The TPA for a self-funded plan is responsible for contracting with an insurer to provide the coverage; the insurer then is to deduct the cost of coverage from fees that it would otherwise owe a federally facilitated exchange.

Some eligible religious organizations felt that completing the form amounted to sanctioning this coverage and have filed lawsuits. To respond to those objections, HHS has created an alternative process. Under the new process these organizations may simply notify HHS that they have a religious objection to providing coverage for some or all types of contraception, and HHS will take care of coordinating coverage with the insurer or TPA. HHS has provided a model notification form.

The agencies did not originally offer a similar accommodation to for-profit organizations, on the assumption that for-profit corporations could not hold religious beliefs. However, in the Hobby Lobby case, the U.S. Supreme Court found that “closely held” for-profit employers could hold religious beliefs that covering contraception could violate. To comply with that decision, the agencies have issued a proposed rule that would allow a closely held for-profit organization to qualify as an “eligible organization” and obtain the same exemption as a non-profit religious organization. To prove its objection, under the proposal the for-profit organization would need to take a valid action in accordance with its governing structure under state law (such as a Board resolution) to state its religious objection to providing contraceptive coverage.

The proposed regulation has asked for comments on how to define a “closely held” corporation. One option would be to define it in terms of a maximum number of owners, such as fewer than 100 or 45.

Another option would be to define it in terms of minimum fraction of ownership owned by a set number of owners, such as at least 50% owned by five or fewer individuals.

For further information about health care reform compliance, visit UBA’s PPACA Advisor Resource Center.

With Fall open enrollment around the corner, most employers will need to provide a Summary of Benefits and Coverage (SBC) to eligible individuals. Here are some highlights of the requirement (as of August 2014):

– Plan administrators of group health plans must provide a Summary of Benefits and Coverage (SBC) to eligible individuals

• Insurer is responsible for creating the SBC for fully insured plans, and the insurer and plan administrator are both responsible for distributing to participants in insured plans
• Plan administrator (which is usually the employer) is responsible for creating and distributing the SBC for self-funded plans

– Requirement applies to all employers, regardless of size or type (private, government, not-for-profit), including grandfathered plans

– Requirement primarily applies to medical (PPO, HDHP, HMO, etc.) coverage

• Applies to HRAs — may include HRA information in the medical SBC if the plans are integrated
• Applies to EAPs and wellness only if the program provides medical services, such as direct counseling may include the EAP or wellness information in the medical SBC if they are linked

– An SBC is not needed for:

• Stand-alone dental and vision benefits (stand-alone means these benefits are elected separately from medical)
• Health FSAs unless the employer makes a significant contribution or group medical is not offered
• Health savings accounts (HSAs), although the high-deductible health plan will need an SBC; the HSA can be mentioned as a source of funds to meet deductibles, coinsurance, etc. if desired
• Hospital indemnity or specified illness coverage
• Long-term care, disability or accident coverage
• Retiree only plans

– Must use the standard format prescribed by the regulatory agencies

• The 2015 SBC template (which is the same as the 2014 template) can be found at http://www.dol.gov/ebsa/correctedsbctemplate2.doc
• The instructions can be found at http://www.dol.gov/ebsa/pdf/SBCInstructionsGroup.pdf

– May show multiple benefit options (such as coverage tiers or different deductibles and out-of-pocket maximums) on one SBC if can do that clearly

– Do not need to include premium/contribution information

– Must include a coverage example that is based on cost assumptions provided by the regulatory agencies and the plan’s actual cost sharing design (deductible, copays, coinsurance, exclusions)

– Must provide a standard glossary, which may not be modified

• Plan may either distribute the glossary or provide a link to where it is posted
• The glossary can be found at http://www.dol.gov/ebsa/pdf/SBCUniformGlossary.pdf

– May include the SBC in the SPD, as long as the prescribed format is followed, the SBC information is prominently displayed, and the timing requirements are met 

– Must provide in an alternate language (Chinese, Navajo, Spanish, or Tagalog) if the SBC is being delivered in a county in which more than 10 percent of the population is literate only in that language 

– Must be given with open enrollment materials (annual and to new hires)

• If the individual is currently enrolled, only need to provide an SBC for the plan the employee/retiree is currently enrolled in
• If the employee is not yet enrolled, the employer must provide an SBC for every available option

– Electronic delivery of the SBC is allowed if:

• Enrollment is online, or
• The employee receives a paper or email notice explaining the SBC has been posted on the internet; the notice must include the posting address, state that a paper copy will be provided at no charge upon request, and include contact information to request a paper copy, or
• For an employee who is already enrolled and who regularly uses a computer in his job, the SBC is either emailed to the employee or the employee is notified that the SBC has been posted, the location of the posting, why the SBC is important and how to obtain a free paper copy

– The SBC must state whether the coverage is minimum essential coverage and whether it provides minimum value

There is a penalty of up to $1,000 per employee for willful (deliberate) failures to provide the SBC, and of up to $100 per participant per day for negligent failures to provide the SBC.

Download a copy of UBA’s “Summary of Benefits and Coverage FAQs” at: http://ubabenefits.sites.hubspot.com/summary-of-benefits-and-coverage-faqs

By Peter Freska, CEBS, Advisor
The LBL Group 
A United Benefit Advisors Partner Firm 

I have sat with hundreds of employers that want to make a difference. They want to make a difference in how their teams work, how productive the employees are, and better yet…in how they, as an employer, can attract, retain and engage the best and brightest people for long-term sustainable (profitable) growth of the organization. But many companies fall short. And, while most employees are 100% engaged when they start a new job, a recent Dale Carnegie Training study indicated that only 29% are fully engaged. In another article entitled “Overcoming Employee Disengagement,” the author mentions that the “2013 RAND Health Study found that less than half of employees (46%) participate in health risk assessment (HRA) or clinical screenings, and out of those identified as needing a wellness program, less than one fifth chose to participate.” (August 2014, Benefits Magazine) The point of the article was simple, that people create their own barriers to success.

So the question to pose is: With such low levels of overall engagement and low participation in something like an HRA, a simple thing that could help save a person’s life, what can an employer do to really affect personal change for their employees? The answers are in Total Population Health Management, but let’s concentrate on why employees maintain barriers and what is needed to make a difference.

When companies build and develop programs, they typically have productivity, efficiency, or most likely cost reduction motives. Well, what if a company builds a program that changes this paradigm by concentrating on more than just the bottom line?

For example, Costco is well noted for turning its nose to Wall Street in years past. Costco pays its employees a living wage, provides benefits for almost 90% of its employees, the CEO earns much less than others in similar size companies, and it paid workers $1.50 per hour more over three years during economic crisis. And the result of all these things is a fantastic shopping experience for you and me, with employees who tend to be fiercely loyal to the company and the members they serve.

There are more examples of service to the employees and customers that come to mind…Trader Joe’s, TOMS Shoes, and Dogeared to name a few. All of these companies are working to do their part to make this world a better place, while still being a profitable company.  

The methods that these organizations implement tend to break down the personal barriers that employees build up. These personal barriers come in many varieties; from emotional to cognitive, to environmental and deep-rooted habits, and even physiological. By creating a unified mission, vision, and set of core values at the root of an organizations culture, these personal barriers gradually diminish. And, as you know, just saying or writing it is not enough. Organizations need to actually live it every day. In fact, to really establish an organization’s foundation of culture and values, these things need to happen every day through ongoing learning and reinforcement.       

Download the complimentary UBA white paper, “A Business Case for Benefits Communications,” from http://bit.ly/1gJR3GE for further information on employee engagement and communication strategies.

Recently, UBA Partner Mike Humphrey, Senior Benefits Advisor at The Wilson Agency, shared some great insights for those who are considering doing a dependent audit.  He points out three reasons why you shouldn’t do these audits and offers a much better approach to reining in costs associated with covering dependents that should no longer be on your plan.  Humphrey’s long tenure counseling large employers shows once again that sometimes quick-fix solutions for eliminating wasteful spending aren’t worth it in the end, no matter how well intended. Instead, simple changes to the up front enrollment process can avoid a lot of headaches and keep costs in line.

Here’s what he says:

Have you been considering a dependent audit and wondering if it is really worth it?

From personal experience, having done dependent audits, I can say that it is questionable.

The main idea behind a dependent audit is that it will save employers money by finding and removing all the dependents that should no longer be on the plan, for example divorced spouses or aged-out children.  These audits can be done using internal resources or, more often than not, contracted to an outside vendor who can manage all the paperwork.  Some vendors claim they save employers a lot of money through dependent audits.  But, I have a different experience and point of view that may save you the time, trouble and expense of going through an audit.

1. Costs

The reason why a company may consider a dependent audit is the belief that many of the “dependents” on the health plan are not eligible and are costing the company money.

But is the amount of money that these dependents “may” be costing the company worth the expense of a dependent audit? Maybe not for self-insured plans.

Most dependent “children” that are on the plan are not even using the plan and, in the case of marriages, an employee who wishes to keep an ex-spouse on the plan can still send in the original marriage certificate and claim they are still married.

Dependent audits aren’t cheap. The audit company gets paid a pretty penny to track employees’ compliance, look over all the documents and at the end of the day; they are the only ones that are truly benefiting from the audit.

2. Time-intensive

For large companies with thousands of employees, there are thousands of documents that must be collected and reviewed. Even if you hire a vendor to do your audit, HR will spend a lot of time dealing with employee appeals, complaints and questions. There will also be a number of unique situations that will require the vice president of HR to review, e.g., children born in other countries, common law marriages, natural disasters that have caused the loss of records, and more.

3. Employee backlash

One of the biggest issues with the dependent audit is the way employees react. Many employees are, needless to say, offended. They are being asked for documentation to prove that they were married to their wife or that a child is truly theirs. Many employees are also sensitive about releasing these private documents to a third party in this age of identity theft. In addition to the emotional aspect involved, putting together the required information and documents is a major inconvenience to employees and may have a cost to the employee when they request a new copy of their documents.

So how do you fix the problem?

The underlying issue that some ineligible dependents are on the plan will always exist, and a dependent audit is not going to fix this. Employees will continue to misunderstand who is a “dependent,” such as a grandchild living with the employee (unless the employee has legal custody).

In my 25 years of HR experience, 95% of employees are very honest people and the other 5% will find ways to beat the system. To help lessen the chance that your health plan has ineligible dependents and to not create a backlash from employees; I propose a gradual fix.

The first step is to require all new employees to present documents to HR during the new hire process; much in the same way that they must document their eligibility for the I-9 form. Secondly, tell employees that after a specific date if they have a life event, documentation will need to be presented to HR to add a dependent.  Third, be sure to code the benefits/payroll system to automatically drop dependent children from the plan once they reach 26 years of age. 

Using these steps, if just 10% of your employees turn over each year, in a few years you will have documented the eligibility of most of the dependents on the plan – and saved your company a lot of money, time, and undue stress.

(This is the third article of a three-part series. Read Part One here and Part Two here.)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA
In this blog series we’re taking a look at the unforeseen ways The Af…

(This is the second article of a three-part series. Read Part One here.)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA
In this blog series we’re taking a look at the unforeseen ways The Affordable Care Act may effec…

Part 1 (the first article of a three-part series)
By Jordan Shields, PrincipalThe SSM Group, a UBA Partner Firm in Petaluma, CA 
No matter who you are, no matter where, the Affordable Care Act, one of the largest pieces of legislation in recent hi…