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Wednesday, March 28, 2012

Five Effective Ways to Control Benefit Costs

Focusing on five cost-saving measures could significantly lower benefit costs while minimizing the affect on employees, according to a white paper by Colonial Life. Colonial used in-house and industry-wide research as well as case studies to show the effectiveness of strategies to contain employee health benefit costs. The white paper finds the following strategies to be effective in controlling costs:
• Offering Wellness initiatives — Wellness initiatives were among the top cost-control strategies implemented by employers in a recent survey of government financial officers. Nearly 80% added wellness initiatives to their benefit programs and 90% of those would recommend them to others, according to a survey by the Government Finance Officers Association. A Society for Human Resource Management report reveals that 75% of employers offer wellness resources and information.
• Pre-taxing benefits/Section 125 participation – Seventy-seven percent of employers in the government financial officers survey offer pre-tax benefit plans and 86% of them recommend this option. It was the most enthusiastically endorsed strategy of the survey options.
• Providing Benefit communications and education — In the government financial officers survey, only 31% of employers were using an external service provider for benefit enrollment and 52% shifted benefit education and communication expense to suppliers. However, 78% of those who outsourced enrollment would recommend it and 84% recommended using a benefit carrier to handle benefit education and communication.
• Voluntary benefits — Only about a third of employers in the government financial officers study have moved non-core benefits to employee-paid voluntary coverage. However, 87% of employers that did so recommended this strategy.
• Dependent verification — Health plan audits can reveal a significant number of ineligible participants, including dependents who are over age or who aren’t a blood relative or a spouse, or former employees who haven’t been removed from the plan. The potential cost savings offered by dependent verification can be considerable and the service is sometimes available at no cost to the employer. Government employers who implemented these kinds of strategies report significant savings in their employee healthcare benefits. Fifty-five percent of participants in the government financial officers study saved at least 6% while 40% of them saved more than 10%. Other studies show an employer return on investment for wellness initiatives ranging from $3 to $6 for every dollar spent. The complete white paper is available in Colonial Life’s online newsroom at ColonialLife.com.

Wednesday, March 21, 2012

Health Care Reform Employer Compliance Obligations 2012

Following are compliance obligations under the Patient Protection and Affordable Care Act (" Health Care Reform Act") forthcoming in 2012.

Summary of Benefits and Coverage
Employer health plans (and insurers for insured plans) are required to prepare and distribute a document called a Summary of Benefits and Coverage ("SBC"). The purpose is to assist individuals in understanding and comparing their health coverage options. The SBC is in addition to, and not in lieu of, the Summary Plan Description (SPD) that employers must already provide to participants.

SBCs are subject to content and formatting rules and must be provided in a culturally and linguistically appropriate manner. Regulations recently issued by the governing federal agencies include SBC templates (along with instructions, sample language and uniform glossary).

The requirement to provide an SBC applies for disclosures to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period beginning on the first day of the first open enrollment period that begins on or after September 23, 2012. For disclosures to participants and beneficiaries who enroll in group health plan coverage other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees), the requirement applies beginning on the first day of the first plan year that begins on or after September 23, 2012.

Self-insured employers should consult with their third party administrators to determine whether they will be preparing, or will assist in preparation of, SBCs for the plans.

Comparative Effectiveness Fees
These are fees imposed on health insurance issuers and self-insured health plans to fund research. The purpose of the research is to determine the effectiveness of medical treatments, services and items. Some plans such as certain dental, vision and health flexible spending accounts are exempt.

Fees will begin to be imposed for policy and plan years "ending after" September 30, 2012. The fee is not imposed for policy or plan years "ending after" September 30, 2019. For calendar year plans, this means the fee will apply for years 2012 through 2018. The fees will be treated as a tax and are imposed on the insurer for insured plans and the plan sponsor for self-insured plans. The fee imposed is equal to $2 ($1 in the case of plan years ending before October 1, 2013) times the average number of lives covered under the plan or policy for the year.

The IRS asked for public comments and plans to publish guidance on methods for determining the average number of lives covered by a plan or policy and other logistics. We will update you as further guidance is issued.

W-2 Reporting of Health Coverage Value
Required W-2 reporting of the value of certain health benefits begins with the W-2s for tax year 2012 (due in 2013). The IRS issued guidance on this requirement. Until further guidance is issued, an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 W-2 Forms for the preceding calendar year. Special rules apply in determining whether fewer than 250 W-2s have to be filed.

Cap on Health Flexible Spending Account Salary Reductions
Effective January 1, 2013, the annual limit on salary reductions to a health flexible spending account program is $2,500 per year. The limit is inflation adjusted annually. Employers will need to amend their plans and employee communication materials this year to accommodate this change.

Wednesday, March 14, 2012

New Tax Rules Seek to Help Employers Provide Retirement Plans with Lifetime Income Options

"Although not all of the provisions have been finalized, employers may wish to begin exploring potential plan design changes, as well as examining the administrative, economic, and fiduciary implications of offering lifetime income distribution options, to accommodate the trend toward providing these options in defined contribution plans."

Ask us about your retirement plans and how we can assit you with our 401K palns?

Saturday, March 10, 2012

Consumers Make Better Healthcare Choices with the Right Information

When asked to choose a healthcare provider based only on cost, consumers choose the more expensive option, according to a study funded by HHS’ Agency for Healthcare Research and Quality. Consumers worry that lower cost means lower quality care.

However, when consumers are shown the right mix of cost and quality information, they are more likely to choose providers that deliver high-quality care at a lower cost. The study appears in the March issue of Health Affairs. For more information about public reporting, visit

Thursday, March 01, 2012

How to get the most from outside consultants

Getting the Most from Outside Consultants

At various points in its development, your business may benefit from the expertise and insight that only an external consultant can provide. But without the right selection process and procedures in place, bringing in an outside consultant can be a waste of time and money.

Here are some tips for selecting and effectively utilizing outside consultants: read more here: