COBRA In Pennsylvania

It wasn't all that long ago that I was exploring the benefits of being an employer with fewer than 20 employees. One of them being the exemption for COBRA laws. What a difference a few weeks can make. That's no longer the case in Pennsylvania - thanks to Governor Rendell. For all you proponents of "big government" takeovers - here's what you get. Here's an overview of the new regulations for small businesses:

On June 10^th Governor Rendell signed into law the state’s Mini COBRA legislation. Employers who employ 2-19 employees will now be required to offer health insurance continuation post employment and also will be obligated to comply with the Federal subsidy of COBRA under the American Recovery and Reinvestment Act (ARRA).

This law becomes effective on July 10, and will mirror the federal COBRA regulations in many ways. Highlights of the Mini COBRA provisions:

• Requires employers who employ 2-19 employees and offers health insurance to offer COBRA
• Only applies to Medical Plans (does not include HRAs, FSAs, dental, or vision)
• To be eligible, an employee must have been on the employer’s insurance for at lease 3 months prior to the qualifying event
• COBRA qualifying events remain the same as those under Federal regulations
• Eligible for COBRA coverage lasting up to 9 months
• Employers (or their designated administrator) are responsible for notification to eligible individuals
• Assistance Eligible Individuals are included in State COBRA
• Employers may charge up to 105% of the medical premium
• Timeline for getting out notices differs from federal COBRA

The state plan lacks the lookback feature of the federal COBRA Subsidy program in that only individuals terminated on or after July 10th will be eligible to participate. The federal program, enacted in February, allowed participation of individuals separated back to September of 2008.

For more information on this and other government regulations on employee benefits email me at bknauss@employeemployersolutions.com

Healthy Employees Are Productive Employees!

Small businesses constantly struggle with the rising cost of health care premiums to cover their employees. I've talked in recently blogs about some of the very effective short-term fixes such as higher deductibles, implementing "Health Saving Accounts" on qualifying plans and the onslaught of great voluntary benefits designed to fill in some of the gaps left by higher deductibles. These solutions are, however, short-term and in and of themselves don't provide a long-term solution. So what's the answer? Employee wellness! That's right, there's no current solution to get us out of this health care mess other than promoting employee wellness. I liken this to the analogy of fixing a car. If your car is leaking oil, one of the short-term fixes would be to add more oil as needed. Very inexpensive and easy to do. However, we would all agree that this isn't a long-term solution that gets down to the root of the problem. To do that, you need to go to a professional, spend a lot more money then just adding oil but you're on your way to providing a more lasting solution. The health and well being of our valued employees is really no different. Until your employees make long lasting life changes about their own health and well being they will continue to be a drain on an already over-burdened health care delivery system. As the employer, you have an obligation to try and facilitate that healthy lifestyle because it will benefit you as well. This is definitely an example where the old saying, "a healthy employee is a productive employee" is true. Think of all the lost productive time being saved on employee absenteeism! How much happier and eager are healthy employees to want to come into work everyday?

I know what some of you business owners are saying, "it sounds very time-consuming and difficult to implement for a small business". Well, it's not at all. In fact, many times either health care or network providers offer it as a free service to participating businesses. Take Valley Preferred of example. They're a local health network of doctors and hospitals in the greater Lehigh Valley area. They offer to participating members a comprehensive employee wellness and education program called BeneFit. BeneFit offers a comprehensive range of health screenings (through corporate health fairs), worksite wellness programs, health awareness profiles and more to help Valley Preferred clients promote better health among employee populations.

Employee Wellness - the only way to create lasting reductions in you company's health care premiums. For more information on implementing an employee wellness program in your company email me at bknauss@employeemployersolutions.com or visit my website for a "Free Report" on employee wellness at www.employeemployersolutions.com/free_report.html

Tax-Free Health Premium Dollars

Many small businesses aren't yet familiar with something called Section 125 or Premium Only Plans. It's a section in the IRS code that allows employers to set-up employee paid payroll deductions for their health care on a pre-tax basis. This plan is basically a "no-brainer" if your anything like me and want to pay as little taxes as possible to Uncle Sam. There are very few provisions to getting the plan set-up and many insurance carriers actually provide the administration part of the plan for free. The only restriction is, once you've signed up for the pre-tax plan you must keep it in effect until the open enrollment period starts. This is because of the lowering of your taxable income by being in the plan. You can get out of the plan mid-stream only if you've had a "major life change" as defined by the IRS. There is a formal 5500 form that needs to be filed with the IRS to administer the plan. That's why having an expert handle it for free makes all the sense in the world.

Here's a simple example of how the plan works:

Weekly Gross Pay $500.00
Weekly payroll deduction for Health Benefits $100.00
My weekly taxable amount (for FICA tax) $400.00

A tax savings of ($100 * 7.65%) $ 76.50

For more information on how you can set-up your employees payroll deductions for health benefits on a tax free basis email me at bknauss@employeemployersolutions.com or visit me http://www.employeemployersolutions.com/

Reducing Health Care Premiums! How?

Every year small businesses grapple with health premiums continuing to go up. The renewal paperwork comes from their health insurance agent [whom they have seen since this same time last year] and it has a 20%, 30% or even 40% increase in premium for the same policy. So the business owner is left with some hard decisions that have to be made. Most employers are extremely reluctant to reduce benefits. So, what left to do? Well, they can pass along the entire increase to the employees which never goes over well. They can absorb the entire increase themselves but that will erode an already fragile profit margin. The typical employer tends to opt for some happy medium option whereby the employer is absorbing some of the shock and the employee picks up the rest. One of the ways to have the employee pick up a portion is by increasing the co-pay amount that's built into the plan design. The problem with that approach is you're never going to make up the gap in the premium increase by adjusting the co-pay for office visits from $25.00 to $40.00. The only thing that left is increasing the deductible that the employee has to meet before benefits kick in. Employers typically go kicking and screaming to implement this but it's the only way to make a real impact.

There is hope though! By increasing the deductible you may be able to qualify for a Health Saving Account where the employee is paying for out-of-pocket expenses out of a tax-deferred medical savings account that bears interest. In addition, now that the employee has to pay more out-of-pocket expenses then before, the employer can offer a myriad of supplemental coverages that help fill in the gaps. For example, a hospital confinement policy is very inexpensive and pays the employee directly a lump-sum benefit daily for a hospital stay. There are also Limited-Medical Benefit plans that cover such things as doctors visits and preventative care. Again, typically the covered amount is paid directly to the employee. These are actually individual plans that the employer can help fund or the employee pays the full amount of the monthly premium. The advantage to the employee of an individual policy is that it's portable - they can take it anywhere they go. In either case, the monthly premiums are very affordable and will help cover some of the new expenses employees have to pay as a result of an increase in deductibles.

For more information on this and other ways to reduce health premiums such as wellness programs and lessen the impact on your employees email me at bknauss@employeemployersolutions.com.

Too Small for a Group Plan?

Many small businesses struggle with wanting to provide benefits to their few faithful employees but just can't seem to make it happen. They have 2 or 5 employees and can just never get to the 75% percent participation requirements set by most insurance carriers for group plans. Maybe it's just that the business owner can't afford to cover the single rate on each eligible employee required by most carriers as well. So, what's left for the business owner to do? Sit back and watch good employees leave and go to a company that does provide some sort of benefits plan. Fortunately, if you find yourself in this position, you do have options. One option is actually very attractive and makes a lot of sense.

The answer is - individual health insurance policies for your small group of employees. Why not? Before you discount this idea out-of-hand - hear me out. We already know you can't qualify for a group plan. You either don't have the minimum participation needed or you can't afford your employer portion of the cost. Having each of your employees set-up their own individual plan solves many of those problems. No, it can't be an "employer sponsored" plan, which means the employer can't have it set-up in the company name and pay the monthly premium. They can, however, encourage their employees to get their own plan and contribute to their monthly or weekly pay in the form of additional income to help cover some of the expenses. Check with your accountant about the tax ability of such additional income. The employer can pick what that amount would be, so there's flexibility. I would caution against varying amounts by employees. Establish one flat amount for all those participating and incorporate into your company handbook. You could also set a flat amount for single coverage, family coverage, etc. You get the idea. There are many advantages of this strategy for both the employer and the employee:

Employer Advantages:

1. Being able to have employees covered for health benefits.
2. Increased retention.
3. Individually underwritten so no adverse risk associated with a group.
4. Flat amount for reimbursements enable employers to control costs.
5. Able to attract quality employees.

Employee Advantages:

1. The plan is portable. It goes with the employee where ever they go.
2. Premium isn't adversely affected by group plan members.
3. You control what insurance carrier and plan you go with. You're not locked into one single option. Plus, if you and your family are in relatively good health, you can shop it every year if you wish.

For more information about how I might be able to assist you on establishing an employee benefits program email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com.

Thanks