Defined Contribution Health Plans

Are you asking yourself, what in the world is a "Defined Contribution Health Plan"? I'm sure it's not a term that most of you are aware of or even know that it could be a viable option for you, the small business owner, to implement for your workforce. It's really a fancy term for a health plan that is established by the employer but the method of paying for the monthly premiums are based on a fixed contribution made by the employer toward paying for health insurance. Okay, I've got you confused. Sorry! So by way of comparison, a regular employer-sponsored plan is one in which the employer offers its employee groups of 2 or more but the ultimate legal guardian of the plan is the company. Things like the payment monthly premium, renewing the plan each year, being responsible for the administration of the plan and finally being in compliance with federal and state laws governing them (eg. COBRA). This type of health plan is also know as a "Defined Benefit Health Plan". The employees simply opt in or out of the plan. If they opt in, the employer has an established pre-determined amount that the employee has to contribute each month toward covering their dependents and such. This amount is usually deducted from the employees paycheck every pay cycle. Sometimes the employer has the deductions set-up on a pre-tax basis to add tax savings for both the employer and employee. This is typically the way most group health plans are set-up.

However, this is not necessarily the best advise for the small business who is struggling with the mounds of administrative responsibility now incurred, not to mention, the continued escalation in health insurance premiums every year. There is a better way - Defined Contribution Health Plans.

The defined contribution concept can manifest in numerous ways. The ideologically purest model is one in which employers remove themselves completely from administering health benefits by either giving the employees cash (as a separate payment or increased wages) or a voucher that they can use in the market to purchase coverage. At the other end of the spectrum is a defined-choice model in which employers continue to offer a range of health-benefit options at varying price levels. The employer provides a specified premium dollar contribution (perhaps tied to the lowest-cost plan), and the employee pays for any premium difference above the contribution level. Between the two end points, there are numerous permutations. Some of these “in between” models rely on a combination of an employee personal health care account with contributions from employers, employees, or both (which can roll over annually), and major medical coverage with a deductible above the cap of the personal account. For a copy of this free report go to: http://hcfo.net/pdf/definedcontribution.pdf

This is the absolute best option for small businesses in the Lehigh Valley trying to find ways to reduce cost and liabilities, as well as, get out of the health insurance business. For more information on establishing a defined contribution health plan at your company please email me at: bknauss@employeemployersolutions.com or visit my website at http://www.employeemployersolutions.com/ Now go take on the day!!

46 Million Uninsured Americans

Wow, August just flew by but there's been a lot going on in the news cycle these days. I've tried for the longest time not to weigh in on the political battle currently being waged in Washington centered around health care but it hits home too closely for me to be silent anymore. There's so much misinformation out there and flat out ignorance that I feel the need to set the record straight on a few points of contention. The first is, the figure of 46 million uninsured Americans currently in the United States. Let's just take it on face value that this number is somewhat accurate (it's not because it includes many young and wealthy Americans who choose not to have health insurance as well as illegal immigrants). However, for the sake of this discussion, let's say it's true. The debate is expressed two-fold in terms of the need to get those who are uninsured access and the affordability of health care for all. Let's just talk about the accessibility aspect of this debate first. Access to health insurance for these uninsured people is available right now to anyone. In fact, insurance companies are standing by waiting to sign them up with their own individual health policy that's completely portable to take with them from employer to employer. In fact, they can call directly to the insurance carrier or shop on-line to access this health insurance without even getting an agent involved.

The second issue, affordability, is a little bit more complicated because it's a relative term. The real question is, how much can they afford. On this note, the variety of options are absolutely endless. I know for a fact that an individual can get a limited-medical benefit plan for less than 100 dollars in monthly premium or an individual comprehensive major medical plan in upwards of 200 dollars in premium per month. So affordability isn't completely the issue either. So what is it really?

Ahhh, I think I know what the real issue is - pre-existing conditions. That's the real sticking point in the whole health care debate. It's the real reason why employer-sponsored group plans continue to see average increases of 20 plus percent each year. You see with employer plan the insurance carrier typically can't exclude pre-existing conditions, so, they therefore have to accept everyone in the plan at the same rate - healthy or not. Now, you're probably saying, "so, what's wrong with that"? The answer is, nothing, if you're the employee. To the employer and the health insurance carrier, it means everything.

Let's take the employer first. The basis on which the insurance carrier uses to adjust employer plan rates is what type of claim exposure they've had. If employees are becoming a heavy burden on the health care system then they have to increase the premium every year at renewal time.

To the insurance carrier, it doesn't give them the ability to properly assess rates on an individual basis. Now, before you start shouting to me, "that's not fair". I want you to first consider another type of insurance that we're all familiar with - Auto Insurance. Just imagine if I came to you and said that your auto insurance premium was going way up because there's been a rash of auto accidents and DUI's in your area. You would be extremely upset at me and rightfully so. Why should you be punished for someone else's reckless behavior. You don't and that's the point. Somehow we've taken the health insurance concept into an entirely different realm where no one wants to pay more because they may have a certain disposition to sickness for one reason or another.

Now, I now our present system is in need of some changes - not an overhaul. There are some things we can do to address pre-existing conditions and get a handle on the overall cost. However, we must not exclude equally weighty matters such as personal choices about our individual lifestyles and wellness and be a bit more open to the reality that if you're a heavy user on the health care system you may need to pay more than others who aren't. I don't know how the finale of this current debate will end up legislatively but I can say this. As a benefit specialist, I'll personally commit to signing up as many of those 46 million uninsured who find themselves left out of an employer group as possible to get them into their own individual option. Those of you in Pennsylvania - I can help. I'd like to hear your opinions on this and other health care related matters at email at bknauss@employeemployersolutions.com or by visiting me at my website http://www.employeemployersolutions.com/. Thanks

Vacation Time

Well, we're in the midst of summer and vacation planning is well underway. It's a time of year that we all look forward to. Visions of sandy beaches, blue water, historical landmarks and much more preoccupy our minds. I bet that most of us don't think of something very important when we travel - especially internationally. That is, what would happen if we got sick or injured while on vacation in another country? Most of us think about the standard travel insurance that is typically offered by every travel agent when flying outside the country. In addition, most of us naively think that our domestic health insurance benefits will cover us for injuries or sickness when outside our home country. In most cases, that's not true. I don't know about you but when I'm in a foreign country the thought of being cared for by a local doctor or hospital scares me to death. The quality of health care in many popular travel destinations throughout the world are primitive at best.

Travel medical insurance should be the ticket on everyone's mind who will be vacationing outside the country this summer or anytime of the year for that matter. A good travel medical policy is relatively inexpensive and covers things like doctor's visits, hospital stays, surgery and most of all, repatriation and emergency medical evacuations. I know that for most of us, we don't want to consider those types of things along side dreams of fabulous countryside scenery but I guarantee that it would be well worth the investment to guard yourself against substandard health care.

For more information on travel medical insurance email me at bknauss@employeemployersolutions.com or visit my website at www.employeemployersolutions.com

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