Download - Strategies For Controlling Benefit Costs
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Strategies for Controlling Benefit Costs in Hard Economic Times - Part 2
Presented by:
Barbara Hostetler
Hostetler Insurance Associates, Inc.
April 14, 2009
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AGENDAAGENDA
I. Controlling FUTURE Costs
II. Individual Health Plans
III.Mini-Medical Plans
IV.Disability Insurance
V. Structuring Fringe Benefits on Government Work
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CONTROLCONTROL
How can you work with your employees to control future
costs?
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CONTROLCONTROL
How do you work with your employees on benefits now?
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COMMUNICATION!COMMUNICATION!
Communication is the most effective tool for working to
control benefit costs.
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COMMUNICATION…COMMUNICATION…
Communication does not require that you institute a
democracy for benefit decisions.
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COMMUNICATION…COMMUNICATION…
Why do employers want to keep benefit costs a secret?
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COMMUNICATION…COMMUNICATION…
Instead of keeping costs a secret, you need to SHARE
them!
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COMMUNICATION…COMMUNICATION…
Consider shifting your focus from “Salary & Benefits” to
“Total Compensation”
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TOTAL COMPENSATIONTOTAL COMPENSATION
Total Compensation =
Cash
Health & Welfare Benefits
Other Benefits
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TOTAL COMPENSATIONTOTAL COMPENSATION
Explaining “Total Compensation” allows the
employee to see the true cost of his compensation package.
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TOTAL COMPENSATIONTOTAL COMPENSATION
Explaining “Total Compensation” will help
employees to appreciate their benefits.
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TOTAL COMPENSATIONTOTAL COMPENSATION
Explaining “Total Compensation” will allow you to show how increasing one benefit may reduce another.
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TOTAL COMPENSATIONTOTAL COMPENSATION
Excel Template for Small Groups
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TOTAL COMPENSATIONTOTAL COMPENSATION
Software / Services Available for Large Groups
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RESOURCESRESOURCES
http://www.freetotalcompstatements.com/ws/Home.php
http://www.charltonconsulting.com
http://www.compackage.com/
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COMMUNICATION…COMMUNICATION…
Think about who would best-present your benefits
information…
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COMMUNICATION…COMMUNICATION…
Consider holding your annual benefits meeting AFTER
hours and inviting spouses…
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WELLNESSWELLNESS
Tap into your plan’s built-in wellness benefits
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WELLNESSWELLNESS
Encourage healthy practices by example – eat well and
exercise
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WELLNESSWELLNESS
Encourage healthy practices by rewarding good behaviors
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WELLNESSWELLNESS
Consider basing your employee contributions on
unhealthy practices, i.e. charging more for smoking or
obesity.
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WELLNESSWELLNESS
Know what wellness benefits your health plan provides and
explain them to your employees
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WELLNESSWELLNESS
Wellness will NOT impact your rates immediately, but
they will lead to lower premiums in the long-run.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
When rates go so far out of control that you cannot
continue your group health plan…
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
the last option will be to cancel your group plan and
allow your employees to purchase health plans on
their own.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
There are many things that you need to know before moving toward individual
insurance…
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Individual health insurance is AVAILABLE to everyone, but
not necessarily AFFORDABLE for everyone.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Individuals / Families in excellent health have many
options that are less expensive than group health
plans.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
•Fewer “mandated” benefits
•Pre-existing condition limitations that are not cancelled-out by HIPAA
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
•Specific condition exclusions
•Limited Rx benefits
•Limited or no Mental / Nervous benefits
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
If your individual health plan rate is more than $581 / month
today, you may want to consider moving to individual health plans that are partially
employer-paid.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Highmark Blue Shield offers a health plan of “last resort” in the
state of Pennsylvania – available to all Pennsylvanians
who do not have access to other health insurance.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Under many circumstances, full coverage for pre-existing
conditions is available – regardless of the condition
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
$750 Deductible Comprehensive Plan
80/20 Coinsurance
$3,750 Annual Maximum Out-of-Pocket
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
No Office Visit Copayments
Separate Rx Deductible and 50% Rx Copay
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
No agent representation or commissions
Direct relationship with Highmark
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Pennsylvania requires that group health plans offer a conversion option when
coverage is lost.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
In some cases, the conversion option is less
expensive than the Highmark guaranteed
program.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Employees should pay the premium for an individual
health plan, and any employer contribution should
be run through payroll and be taxed.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Employees over age 65 should seriously consider moving to the Medicare system for their benefits.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Employers may not discriminate based on age, and therefore cannot force employees to move out of
the group health plan into a Medicare plan.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Replacing your group health plan with cash
toward individual benefits may hurt your ability to
hire and retain employees.
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INDIVIDUAL HEALTH PLANSINDIVIDUAL HEALTH PLANS
Employees may not know where to turn – help them
by recommending a broker who can provide
multiple options.
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BREAKBREAK
Take a 5-Minute Break…
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MINI-MED PLANSMINI-MED PLANS
Limited health plans that provide up-front benefits
and max-out at a low benefit level.
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MINI-MED PLANSMINI-MED PLANS
Available on a group basis – either partially employer-paid or entirely voluntary through
payroll deduction
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MINI-MED PLANSMINI-MED PLANS
Provides benefits for:
Several Office Visits / Year
Preventive Visits / Tests
Daily Hospital / ICU Care
Accidents
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MINI-MED PLANSMINI-MED PLANS
Additional benefits may sometimes be purchased:
Vision
Dental
Short-term Disability
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MINI-MED PLANSMINI-MED PLANS
Backwards Insurance – covering the front end
instead of the catastrophic claims.
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MINI-MED PLANSMINI-MED PLANS
Not “Insurance” – will not prevent the patient from
getting Medicaid benefits.
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MINI-MED PLANSMINI-MED PLANS
Often guaranteed-issue / no medical underwriting
required.
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MINI-MED PLANSMINI-MED PLANS
Often used for part-time employees as a retention
tool.
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MINI-MED PLANSMINI-MED PLANS
Better than “nothing” but not a good replacement for group
or individual health insurance.
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DISABILITY INSURANCEDISABILITY INSURANCE
When money is tight you may be tempted to eliminate
disability benefits
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DISABILITY INSURANCEDISABILITY INSURANCE
If you are going to eliminate disability benefits – eliminate
the short-term disability benefit and/or exchange it for a long-term disability benefit.
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DISABILITY INSURANCEDISABILITY INSURANCE
Consider a change to a Paid Time Off (PTO) benefit with
accumulating unused days in lieu of a short-term disability
benefit.
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DISABILITY INSURANCEDISABILITY INSURANCE
Short-term disability is a much-used and much-
abused benefit, making it very expensive for the very
limited protection it provides.
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DISABILITY INSURANCEDISABILITY INSURANCE
Short-term disability provides benefits for lost wages due to
a disability, often starting immediately and lasting up to
6-months.
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DISABILITY INSURANCEDISABILITY INSURANCE
Short-term disability is much-used to allow for a short-term recovery following an illness
or injury.
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DISABILITY INSURANCEDISABILITY INSURANCE
Short-term disability insurance does help to
reduce your workers comp claims by allowing for
benefits without “faking” a work-related injury.
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DISABILITY INSURANCEDISABILITY INSURANCE
Short-term disability insurance will NOT help your employee much in the event
of a total disability.
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DISABILITY INSURANCEDISABILITY INSURANCE
Long-term disability insurance will make the difference in
allowing your employee to live a comfortable life while totally
disabled – pay the mortgage, buy groceries, pay the bills, etc.
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DISABILITY INSURANCEDISABILITY INSURANCE
Long-term disability insurance is hardly ever used, but when
needed, it will be a true benefit to your employee and
their family.
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DISABILITY INSURANCEDISABILITY INSURANCE
Long-term disability costs much less premium because
it is used so infrequently.
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DISABILITY INSURANCEDISABILITY INSURANCE
Consider adding long-term disability benefits in lieu of
low-deductible health insurance.
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BREAKBREAK
Take a 5-Minute Break…
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PREVAILING WAGEPREVAILING WAGE
Contractors who do State or Federal work need to plan
their Fringe Benefits carefully to bid competitively.
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PREVAILING WAGEPREVAILING WAGE
Base Wage = $30 / Hour
Fringe = $10 / Hour
Total = $40 / Hour
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PREVAILING WAGEPREVAILING WAGE
Paying the Fringe portion in cash means that you must pay payroll
taxes on those “wages” – that adds substantially to your labor
cost.
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PREVAILING WAGEPREVAILING WAGE
Paying the Fringe portion in benefits allows you to avoid those taxes – that is how the Fringe was meant to be used.
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PREVAILING WAGEPREVAILING WAGE
You may take credit against the Fringes for “bona fide” benefits only – such benefits must be communicated in writing with
premiums paid to a third party.
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PREVAILING WAGEPREVAILING WAGE
Examples of “bona fide” benefits are:
Medical Insurance
Dental / Vision Insurance
Disability Insurance
Life Insurance
Retirement Benefits
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PREVAILING WAGEPREVAILING WAGE
Retirement benefits may be used for the balance of the fringes that are not used for
other benefits.
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PREVAILING WAGEPREVAILING WAGE
Retirement plans must be specifically written to be able to accept the fringe money
legally.
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PREVAILING WAGEPREVAILING WAGE
Fringe Benefit retirement plans may be administered along-side of your existing
retirement plan.
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PREVAILING WAGEPREVAILING WAGE
Fringe Benefit retirement plans may not have a vesting schedule
– the fringes must be used for the immediate benefit of the employee who earns them.
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QUESTIONS?QUESTIONS?
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THANK YOU!THANK YOU!
Have a great day!