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Special People in the Northeast Benefits Analysis Parts I & II RMI 3501 912080506 912173425
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Gabriel f Stellar - Rmi 3501 - Complete

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Page 1: Gabriel f Stellar - Rmi 3501 - Complete

Special People in the NortheastBenefits Analysis

Parts I & II

RMI 3501

912080506

912173425

Page 2: Gabriel f Stellar - Rmi 3501 - Complete

Healthcare Benefits..............................................................................................3

Keystone HMO………………………………………………...…………4

Keystone POS.............................................................................................4

Independence Blue Cross PPO……………………………..…………..5

Colonial HealthCare Inc. Dental……………………………...…..…….5

Colonial HealthCare Inc. Vision……………………………...…..…….6

Express Scripts Prescription……………………………………......…...6

Flex Benefit Plan…………………………………………………...…..6-7

Loss of Income………………………………………………………………......7

Life Insurance and AD&D……………………………………….....…7-8

Short-Term Disability Insurance……………………………...………8-9

Long-Term Disability Insurance……………………..……………...….9

Retirement………………………………………………………...…......10

Other Exposures……………………………………………………….…...….10

Tuition Assistance…………………………………………………...….10

Employee Assistance, Legal Expenses…………………….………....11

Table of Contents

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Benefits Matrix

Loss Exposure Coverage Coverage and Benefits ProvidedMEDICAL EXPENSESHospital/Physician Yes Independence Blue Cross Keystone: HMO and POS,

Personal Choice PPO, Flexible Benefits Plan-HSADental Yes Dental Program – Colonial HealthCare Inc.,

Flexible Benefits Plan-HSAVision Yes Vision Program - Colonial HealthCare Inc.,

Flexible Benefits Plan -HSAPrescription Yes Prescription Program -Express Scripts Inc.,

Flexible Benefits Plan-HSALTC Yes Flexible Benefits Plan-Dependent Care AccountRetiree Health Care Yes COBRA, OASDILOSS OF INCOME - DEATHNon-Accidental andNon-Occupation Death Yes

Group Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b)

Accidental Death YesGroup Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b),AD&D Insurance

Occupational Death YesGroup Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b),Workers’ Compensation

LOSS OF INCOME - UNEMPLOYMENTUnemployment Yes Unemployment InsuranceLOSS OF INCOME – DISABILITYShort-Term,Non-Occupational Disability

Yes STD Insurance, AD&D, OASDI, 403(b), Family and Medical Leave, Leave Time

Long-TermNon-Occupational Disability

Yes LTD Insurance, AD&D, OASDI, 403(b)

Short-TermOccupation Disability Yes STD Insurance, AD&D, OASDI, 403(b),

Workers’ CompensationLong-TermOccupational Disability Yes LTD Insurance, AD&D, OASDI, 403(b),

Workers’ CompensationLOSS OF INCOME – RETIREMENTRetirement Yes 403(b), OASDIOTHER LOSS EXPOSURESEducation Assistance Yes Tuition reimbursement through Tuition Assistance

Provided as a part of Flexible Benefits Account with Reliance Standard Life Insurance Company. Combination of sick, vacation, and personal time.

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ProgramWork/Life Yes Prudential ComPsych ProgramDependent Care Yes On-site Daycare, Dependent Care AccountProperty-Liability No -Legal Expenses Yes Prudential ComPsych Program

Summary of BenefitsBenefit Plan A.M.

Best Rating

Funding Financing Eligibility

Independence Blue Cross Keystone HMO n/a Fully Insured Contributory

Employees working a

minimum 30 hours per week

Independence Blue Cross Keystone POS n/a Fully Insured Contributory

Employees working a

minimum 30 hours per week

Independence Blue Cross Personal Choice PPO

n/a Fully Insured ContributoryEmployees working a

minimum 30 hours per week

Colonial HealthCare Inc.- Dental n/a Fully Insured Contributory

Employees working a

minimum 30 hours per week

Colonial HealthCare Inc.- Vision n/a Fully Insured Contributory

Employees working a

minimum 30 hours per week

Express Scripts Prescription Plan n/a Self-Insured Non-

Contributory

Employees working a

minimum 30 hours per week

Prudential Annuities Life Assurance Corp. –Group Life Insurance

A+ Fully Insured Non-Contributory

Employees working a

minimum 30 hours per week

ING Life Insurance and Annuity Company - Voluntary Universal Life Insurance

A Fully Insured Employee-Pay-All

Employees working a

minimum of 30 hours per week

Reliance Standard Life Insurance Company - Voluntary Term Life Insurance

A Fully Insured Employee-Pay-All

Employees working a

minimum of 30 hours per week

Prudential Annuities Life Assurance Corp. – A+ Fully Insured Non-

ContributoryEmployees working a

Source: http://www.ambest.com/ Based on “Financial Strength” **

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AD&D Insurance minimum of 30 hours per week

Prudential Annuities Life Assurance Corp. –STD Insurance

A+ Fully Insured Non-Contributory

Employees working a

minimum 30 hours per week

Prudential Annuities Life Assurance Corp. –LTD Insurance

A+ Fully Insured Non-Contributory

Employees working a

minimum 30 hours per week

Principal Financial Group – 403(b) A+ Fully Insured Contributory

Employees working a

minimum 20 hours per week

Healthcare BenefitsSpecial People in the Northeast (SPIN) offers three distinct health

plans for their employees to choose from to help mitigate losses in the form

of health expenses. Specifically, SPIN offers Keystone HMO, Keystone POS,

and Independence Blue Cross (IBC) Personal Choice PPO. The Keystone

HMO and POS are both owned and operated by IBC. This wide range of pan

options allows employees to choose a plan which best fits their lifestyle,

family, and earnings.

All three plans have the same eligibility requirements and guarantee

full coverage for certain services and scheduled prices for others. Any

employee who works 30+ hours at SPIN is eligible for medical benefits

along with their dependents, which include spouses and children up the age

26. Domestic partners who have lived with an employee for the last six

months can also be considered a dependent, but premium deductions for a

partner are made post-tax. Domestic partners must also show their financial

interdependence status by providing at least three documents which

Source: http://www.principal.com/about/financialstrength.htm

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support this claim, such as a joint lease, driver’s license with common

address, common ownership of a vehicle, proof of joint bank account, or

proof of designation as the primary beneficiary for life insurance.

The plans all provide full coverage for preventive care, which include

annual physicals, routine gynecological exams and mammograms,

immunizations, and other preventive screenings. There is a $30 co-payment

per primary care physician (PCP) visit, $50 co-payment per specialist visit,

and a $125 co-payment for emergency room visits. Inpatient hospital

services are also scheduled for $400 a day with a maximum of five co-pays.

Keystone HMO

SPIN HMO offering is Keystone HMO, a subsidiary plan of IBC. Of the

three medical plans that SPIN offers, the Keystone HMO is the least

expensive with a per pay contribution of $4.60 (premium for medical

coverage for employee only). Like any HMO, this plan requires the selection

of a PCP from the network who acts as the employee’s “health advisor” for

addressing specialist and extended care. There is no coverage for out-of-

network use.

The Keystone HMO plan is fully insured and operates on contributory

financing. Employees pay a premium each pay period, the cost of which

reflects individuals covered (employee only, employee & one or more

children, employee & spouse, etc.); all payroll deductions are made pre-tax.

Keystone POS

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SPIN also offers Keystone POS to eligible employees. The Keystone

POS is in the middle of the cost spectrum of the three plans offered with a

$31.46 premium per pay period (premium for medical coverage for

employee only). This plan also utilizes a PCP, but allows participants to go

to most specialists at any time without a referral. A referral from a PCP is

required, however, for X-rays, podiatry, spinal manipulation, and physical or

occupational therapy. To receive care out of the Keystone network an

annual per person deductible of $500 applies and expenses are covered at

70%. The Keystone POS is fully insured and participating employees

contribute to the plan.

Independence Blue Cross Personal Choice PPO

The final plan SPIN offers is a Personal Choice PPO, again through

IBC. The IBC PPO is the most expensive of the three plans SPIN offers with

a premium deduction of $58.13 per pay period (medical coverage for one

employee only). Participants do not need to select a PCP and may utilize any

specialist within the PPO network at their own discretion. Preventive care is

again covered at 100% of costs. Choosing to go out of the PPO network

applies an annual $1,500 deductible to each person, after which expenses

are covered at 50%. Certain emergency out-of-network claims may be

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covered depending on the situation and a claim review. The Personal Choice

PPO is fully insured and requires employees contribute to the plan.

Colonial HealthCare Inc. Dental

SPIN offers a dental plan to all its employees who work 30+ hours a

week. The plan is fully insured through Colonial HealthCare and requires

employees make monthly contributions to the plan if they enroll

dependents. For an employee to enroll there is no cost per month, and

employee with one dependent pays $14 a pay period, two dependents pays

$28 per pay period, and three or more dependents pays $38 per pay period.

After a $25 per year deductible, the plan covers 100% of preventive care

(annual checkup, x-ray every six months, etc.), 80% of basic dental care

(fillings, extraction, etc.), and 50% of major dental care (crowns, dentures,

etc.). The dental plan has a maxim claims limit of $1,500 per year.

Colonial HealthCare Inc. Vision

Colonial HealthCare Inc. is also SPIN’s insurer for its employee vision

plan. Similar to Colonial HealthCare Dental, the plan is fully insured and

employees contribute monthly if they enroll dependents. Adding one

dependent is $3 per pay period, two dependents is $6 per period, and three

or more dependents is $7.50 per period. This plan only covers seven

different vision costs, each of which has its own maximum: ophthalmologist

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visit, single vision prescription, bifocal prescription, trifocal prescription,

lenticular prescription, contact lenses, and frames.

Express Scripts Prescription PlanSPIN offers the Express Scripts Prescription Plan to their employees

who work 30+ hours a week. Express Scripts, a pharmacy benefit management company, allows SPIN employees to access its network of pharmacies along with its mail-order pharmacy. An employee using an in-network pharmacy can get a 30-day supply of medications at different prices depending on brand: generic medications are $10, preferred brand-name medications are $20, and non-preferred brand-name medications are $35. Employees who have 90-day prescriptions can utilize Express Scripts’ mail order service for even larger savings: $20 for generics, $40 for preferred brand-name medications, and $70 for non-preferred brand-name medications.

Flexible Benefits Plan

Employees who work a minimum of 30 hours a week are eligible to

participate in SPIN’s flexible benefits, which include a Medical Expense

Reimbursement Plan and a Dependent Care Assistance Plan. Both plans are

fully insured and administered by Colonial HealthCare. Additionally, the

Flexible Benefits Plan allows for a Flex Convenience debit card which can

be used to pay for eligible costs; funds are deducted directly from an

employee’s respective benefit account and later reviewed.

Employees who enroll in the Medical Expense Reimbursement Plan

have a Health Care Flexible Spending Account set up in their name.

Employees may have their salary reduced by a maximum of $3,000 each

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year, which is credited to their account. A list of defined medical costs can

be reimbursed by submitting a claim to the plan administrator or using their

convenience card. Claims such as copayments or deductibles, prescription

drugs and over-the-counter( no script needed) drug costs, medical supply

costs, orthodontics, certain vision and dental costs, and psychiatric care are

all examples of reimbursement eligible expenses. Money left over in the

account at the end of the plan year is forfeited.

Employees may also establish a Dependent Care Flexible Spending

Account which has a $5,000 limit for single or married jointly filing

employees and $2,500 for married participants filing separately.

Participants may submit claims to this account (or use their Convenience

debit card) for the care of dependents who are under the age of 13 or

dependents of any age who cannot mentally or physically care for

themselves.

Loss of Income Life Insurance and Accidental Death & Dismemberment

SPIN offers three types of Life Insurance to its employees along with

Accidental Death and Dismemberment Insurance (AD&D).The company provide all

eligible employees a small Group Life Insurance plan through Prudential Annuities

Life Assurance, which has an A.M. Best rating of A+. Coverage is based on 1 x

Annual Earnings or a minimum benefit of $25,000. These employees are further

enrolled in AD&D, which is also provided by Prudential. Basic AD&D coverage is set

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to equal a participant’s Group Life Insurance. Employees are eligible for these

benefits when they work a minimum of 30 hours a week and are beyond their

probationary period.

A Voluntary Universal Life Insurance program is offered to SPIN employees

through ING Life Insurance Company, which received a rating of “A” by A.M Best. 

This program allows employees to purchase a Universal Life Insurance policy for

themselves, their spouse and/or dependent children through payroll deductions.

Employees who work at least 30 hours per week are eligible for this coverage. This

employee pay-all benefit requires no waiting period and supplements SPIN’s Group

Life insurance.  

Finally, SPIN provides employees the option to purchase Voluntary

Term Life Insurance through Reliance Standard Life Insurance Company,

who received a rating of “A” by A.M Best. For employees to be covered they

must work at least 30 hours per week. This term insurance supplements

SPIN’s basic life coverage, which is a part of the customary benefits

package.  Employees can acquire an additional $10,000, $25,000 or $50,000

worth of term life coverage for themselves by means of SPIN’s Flexible

Benefits Account. This is employee pay-all benefit which an individual can

choose to purchase from SPIN at a lower rate than in the individual market.

Short-Term Disability Insurance

       SPIN offers Short-term Disability Insurance through Prudential

Life Assurance, which has a A.M. Best Rating of “A+.”  Coverage under the

policy is provided on the 15th day following a non-occupational sickness or

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injury. The duration of the benefit is 11 weeks for employees who work at

least 30 hours per week.  Eligible employees may not be part-time, seasonal

or temporary and must be legally allowed to work in the United States. This

plan is offered on a non-contributory basis and coverage can only start

while the employee is insured under the policy. An employee is considered

disabled if an injury or illness prevents them from doing all their usual

duties required for work; that disability must result in a loss of weekly

income of at least 20 percent. The plan provides that covered employees

receive 2/3 of their weekly earnings to a minimum of $25 per week and

maximum of $2,000 per week.

Long-Term Disability Insurance

SPIN‘s Long-Term Disability Insurance is also offered through

Prudential Annuities Life. Coverage under the policy is provided following a

90-day waiting period for non-occupational sickness or injury. The duration

of the benefit is up to the age of retirement determined by the Social

Security Act. Eligible employees must work a minimum of 30 hours a week

and cannot have a status part-time, seasonal or temporary. This plan is

offered on a non-contributory basis and coverage can only start while the

employee is insured under the policy. An employee is considered disabled if

an injury or illness prevents them from doing all their usual duties required

for work and that disability results in a loss of weekly income of at least 20

percent. The plan provides that covered employees receive 2/3 of their

monthly earnings with a minimum of $100 and a maximum of $8500 per

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month. Disabilities due to mental illness such as depression, anxiety, bipolar

illness, schizophrenia and substance related disorders are limited to 24

months of benefit coverage. Long-term benefits will not be paid for a

disability that begins during the first 12 months of coverage or is part of a

pre- existing condition.

Retirement

Employees can invest in a 403(b) plan as a way to save for retirement

with pre-tax income payroll deductions.  By contributing to a 403(b) plan,

employees can build tax-free savings and interest until they are ready to

withdrawal funds .SPIN’s 403(b) Plan is offered through Principal Financial

which received a rating of “A+” from A.M Best .Employees who work a

minimum of 20 hours a week are eligible for the account and can begin to

make deferrals on their first paycheck. An employee may defer maximum of

$16,500 per year into the 403(b). SPIN matches an employee’s salary

deferral up to 6%, or the amount deposited if less than 6%.

Other ExposuresTuition Assistance

SPIN offers tuition assistance to employees who work 30 or more

hours a week and have completed their three month probationary period

with the company. Assistance will be provided for employees seeking a

degree from a scheduled list that will enhance their career development

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within SPIN. A navigation form must be completed by the employee and

reviewed by management prior to submission of the actual tuition

assistance material. Assistance will be paid directly to the institution with a

max benefit of $2,500 per year (defined as a period of Fall through

Summer). Students must receive a C or better in undergraduate courses

and B or better in graduate courses to receive the benefit.

Employee Assistance Program

SPIN offers employee assistance through a program called ComPsych,

which is administered by Prudential. Eligible employees work at least 30

hours per week and have completed the 3 month probationary condition.

The EPA is designed to sort out an array of personal, legal or financial mat-

ters an employee may face. Generally, this program helps address personal

matters such as marital and family struggles, drug and alcohol problems,

and job stress depression all through a 24 hour counselor phone line. The

objective of The EPA program is to help employees cope with problems that

occur outside of work, so that those circumstances do not affect job produc-

tivity.

LegalConnect is the legal component of the EPA program. Experi-

enced attorneys can answer any legal questions over the phone. If an em-

ployee desires legal representation this service supplies the attorney, a free

30 minute consultation and 25 percent discount in standard legal fees.

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FinacialConnect is the economic component of the EPA program. Fi-

nancial Specialists are available by phone to aid employees in areas such as

debt management, savings, investing, tax inquiries and retirement planning.

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Special People in the NortheastBenefits Analysis

Parts I & II

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Introduction...............................................................................................................1

Employee Benefits Plan Description and Objectives……………………….…..1

Goals………………………………………………...…………………..…1-2

Demographics.............................................................................................2-3

Funding and Financing……………………………..……………….…..3-4

Design of Health Benefits………………………………………………..……......4

Design Considerations and History……………………………….....…4-5

Funding………………………………………………………….….......……6

Modes of Utilization and Communication…………..……….………...6-7

Medical Expenses Reimbursement Account………………….....…......7-8

Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement Benefits………………………...….…...............................................….8

Life Insurance and Accidental Death & Disability…………………….…8

Short-Term and Long-Term Disability Insurance……….…………..…....9

Regulatory Issues……………………………………………………………………9

ERISA…………………………………………………………..……….…9-10

Table of Contents

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HIPAA………………………………………………………………...……..10

COBRA……………………………………………………….………………10

PPACA…………………………………………………………………….10-11

Important Changes and Suggestions…………………………..……………...11-12

Conclusion…………………………………………………………………...…..….13

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1

IntroductionSpecial People in the Northeast (SPIN) is a non- profit human services agency

headquartered in Philadelphia, Pennsylvania. SPIN designs programs to support adults

and children with intellectual disabilities, as well as their families. The organization

began in 1971 as a small summer camp for parents who wanted a program for their

special needs children. Since then, SPIN has evolved into an organization which offers

community living care, supported independence care, and constant care called

“Lifeshare” To make their service possible, SPIN retains a workforce of 968 employees.

The organization recognizes the needs of not only residents, but also its employees, and

has created an employee benefits plan to provide more compensation to its workers

beyond take-home pay.

Throughout this project Donna Hyde, SPIN’s Corporate Human Resources

Officer, and Gail Meersand, head of Human Resources, played crucial roles in helpings

to understand the organization’s benefit package. Both work hard to maintain SPIN’s

benefits package by balancing the goals of the plans with their respective costs.

Employee Benefits Plan Design and ObjectivesGoals

Almost any company that offers benefits to it employees does so in order have a

competitive hiring edge. SPIN conforms to this notion; the organization seeks to attract

and retain talent in order to provide the best care possible for residents. Ms. Meersand

stated that, because the organization is non-profit, it does not have the capacity to offer

big salaries so SPIN seeks to draw in potential hires by providing extensive

compensation through an array of benefits. Ms. Meersand also believes most SPIN

Special People in the Northeast Benefit Analysis, Parts 1&2

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2

applicants view the organization’s offered benefits as a major decision factor when

ultimately deciding on employment. So far, SPIN has primarily used employee feedback

to confirm the value of its benefits plan and the impact it has on prospective employees

and their retention. An example of such feedback would be comments from transfer

employees from other care facilities, who have found SPIN’s benefits to be more of more

value than what was offered at their previous employer.

The structure and contents of SPIN’s benefit package seeks to achieve the

organization’s plan goal by offering an array of insurance and programs that suit most

employee’s needs and financial status. The plan relies heavily on options to

accommodate the different needs of different employees. Examples of this include three

different health plans, basic and supplemental life insurance, and varying disability

insurance length options. It should be noted that, until recently, there has not been

significant changes made to the benefits package structure in several years, a fact

which purports its ability to support a wide range of employee needs.

DemographicsSPIN’s workforce has an average age of 37 and can be largely divided into two

groups which have similar needs in benefits, but have differing incomes and financial

positions. One group is primarily made of administrative professionals and specialized

care staff and the other is made of non-specialized, general care givers. Both groups

have similar healthcare needs, but utilize services in different ways. Enrollment in

disability insurances and supplemental life insurances are higher in the specialized

workforce because of the group’s older average age and its members’ understanding of

the offered programs and their respective values. SPIN’s 403(b) offers different

matching rates to these two groups; professionals and management receive a six

percent matching benefit while regular staff and employees receive a matching

schedule based on their time with the organization. SPIN operates its matching this way

Special People in the Northeast Benefit Analysis, Parts 1&2

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3

to retain management and also to provide an incentive for the non-specialized group to

remain with the organization while lessening the risk they may leave and SPIN’s 403(b)

contributions with them.

Geographically, employees mostly reside in the tri-state area, with much of the

non-specialized workforce residing right in Philadelphia. The benefits plan’s many

options, specifically in healthcare choices, allow employees to customize their care

while also considering location and cost. Because of the centrality of the workforce,

SPIN has no need for far reaching national health plans.

Funding and Financing SPIN’s funding and financing selections have become more of concern for the

organization as costs of offering and maintaining certain benefits has risen. Presently,

SPIN only self-funds its dental and vision plans1; it is able to do this because each

benefit contains a coverage maximum which allows the organization to more accurately

predict and prepare for the plans’ costs. The funding vehicle for this self-insurance is a

general asset plan. Both of benefits are contributory if dependents are added to

coverage, this along with co-payments distributes costs so the full burden is not place

on SPIN.

All other benefits offered by SPIN are fully insured through four different

companies. Ms. Meersand stated that the organization has been seriously considering

self-insuring other benefits, especially its healthcare plans because it would be easier to

control costs and renewal increases (Schultz). Unfortunately, recent budget cuts in the

state by the Corbett administration have drastically decreased SPIN’s income from the

government sector. Therefore, the organization has decided to revisit the self-insurance

option again when financial support is more solid. Healthcare and the organization’s

403(b) are financed based on a contributory basis in order to move costs and some 1 It should be noted that Part 1&2 of this project mistakenly lists SPIN’s dental and vision plans as fully insured; they are not. Colonial HealthCare Inc. acts as the plans’ administrators, not insurers. Special People in the Northeast Benefit Analysis, Parts 1&2

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4

responsibility to employees. Group Life Insurance and AD&D coverage, which is

provided to every eligible employee automatically, is financed on a non-contributory

basis. SPIN does this because both plans provide the most basic coverage and is meant

to attract potential employees. The two additional life insurance policies provided by

SPIN are examples of supplemental coverage and are therefore finances on an

employee-pay-all basis

Design of Health BenefitsDesign Considerations and History

The structure of SPIN’s health benefits plan reflects the organization’s goal of

retention but also shows the influence of administrators. Former CEO and current board

president David Losinno insisted that SPIN use Independence Blue Cross as its

healthcare provider, and so Ms. Meersand and the HR department worked heavily with

brokers from Alliant and representatives from IBC to craft a plan that suited the

benefits goals of the organization. Originally, administrators sought to offer an HMO

and PPO as the main healthcare benefits. The HMO would provide the lowest cost of

coverage while offering a wide network of physicians and specialists located all over

Philadelphia. The PPO was meant to act as an alternative to the HMO to accommodate

people who wanted more autonomy in their healthcare decisions. During the design

process, Alliant brokers also presented SPIN with a POS plan which would be used as a

middle-of-the-road option for employees who wanted the low costs of the HMO but more

freedom of specialist choice as is seen in the PPO.

Today, 87% of SPIN’s 657 health plan enrollees use the HMO option. This trend

can most likely be attributed to the considerable difference in cost of the HMO versus

the POS and PPO (HMO: $4.60 vs. POS: 31.46 and PPO $58.13 per pay period). The

constantly rising cost of healthcare for all types of plans has led many people to use

Special People in the Northeast Benefit Analysis, Parts 1&2

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5

price as their key factor in choosing healthcare (Aon Consulting and Sharon). Because

HMO’s can better contain and control costs and utilization, they are able to offer lower

premiums (Markovitch). It is evident that employees forgo the benefits of a more open

network as seen in POS and PPO plans, in favor of saving money. Of the total

participants who receive health benefits, only 13% choose the POS plan and 2%

participate in the PPO plan. This unbalanced scale has lead SPIN to question whether

the continued operation of a POS and PPO plan provides a large enough benefit to the

organization compared to the costs the organization incurs to offer them. While both

plans allow the benefits package to offer a wide range of services, the costs associated

with their maintenance is an issue, especially because so few utilize the options.

Funding As previously stated, SPIN’s health benefits with the exception of the dental,

vision, and prescription plan, are fully insured through IBC. Ms. Meersand stated that,

despite the decrease in government support, the organization is still very interested in

moving to a self-inured plan. Having more control of its benefit options, and escaping

state mandates, would save SPIN money overall (Schreck). Presently, the organization

is most concerned with securing solid sources of funding to offset lost monetary

support; once this is achieved, the organization will most likely self-insure all of its

health benefits.

Modes of Utilization and Communication IssuesAn important factor Ms. Meersand mentioned that contributes to SPIN’s rising

healthcare costs is how enrolled employees use their health plans. One particular

example that Ms. Meersand shared was how some employees in the non-specialized

segment of SPIN’s workforce regularly use emergency rooms as primary care facilities.

This, of course, can greatly contribute to premium increases for the organization, which Special People in the Northeast Benefit Analysis, Parts 1&2

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6

would probably be shifted to employees. Theoretically, these co-payments should deter

such behavior; all three health plan options SPIN offers charge a $30 co-payment for

physician visits and a $125 co-payment for emergency room visits (Gruber). Ms.

Meersand believes that such co-payments do not have a large effect on participant’s

behavior and instead the organization must rely more on communication to inform

employees of how their actions impact their premiums.

Communication is an important part of any benefits plan, and SPIN’s HR

department does its best to educate employees on how their health benefits operate.

Employees can attend monthly informational meetings, and receive regular newsletters

on how their respective plans may be changing. Despite these efforts, it seems that

many employees simply turn a blind eye to this important information, which could help

them and the organization, save money (Rice). Ms. Meersand mentioned that the lack of

employee attention also leads to increased administrative costs and headaches. An

example can be seen in SPIN’s switch from a Keystone Prescription plan to its current

service with Express Scripts. Some employees ignored numerous mailings and

information which explained the move, the larger network gained and costs savings.

Certain employees did not even realize that SPIN had made the switch until they were

denied coverage for drugs because their Keystone card was no revoked at the

pharmacy.

Medical Expense Reimbursement Account (MERA)SPIN’s Medical Expense Reimbursement Account is an important service that the

organization has greatly supported in order to help employees with the burdens of

medical related fees. The wide array of eligible expenses that can be paid by the

account and the issuance of MERA debit cards make saving money and ease of access

easy. Unfortunately, not many employees take advantage of this service. One main

factor which probably contributes to this is a lack of employee understanding of the

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MERA and how exactly it can benefit them. This seems to be another communication

issue, in which SPIN offers a great deal of information on the benefit, but not many take

the time to read and understand it. Most participants in the MERA are part of SPIN’s

specialized staff. Ms. Meersand pointed out that more people were beginning to inquire

about the account, and ultimately enroll because of rising costs.

Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement BenefitsLife Insurance/Accidental Death and Dismemberment

SPIN has offered group term life and AD&D insurance for the last 25 years. These

benefits are paid 100% by the organization. Ms. Meersand informed us that employees

are very satisfied with these services because it allows them to obtain coverage without

having to answer any medical questions. Since there is a cap on Group Term Life

Insurance, SPIN offers Voluntary Universal Life Insurance to suit the needs of

employees who want to purchase additional coverage. Voluntary Universal Life has

been available to SPIN’s workforce for the last 15 years, there is significant

participation in this plan, as some employees feel that the $25,000 limit on Group Term

Life Insurance isn’t sufficient. According to Ms. Meersand, employees are able obtain

cheaper life insurance through employment and appreciate the convenience of having

the voluntary aspect of this benefit deducted from their payroll.

SPIN has been fortunate enough not to have encountered any issues where AD&D

needed to respond. In an event this benefit was triggered, there is a schedule of

indemnities if an employee becomes dismembered and if an employee dies as a result of

an accident. This coverage also does not require the employees to provide proof good

health and is paid 100% by SPIN.

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Short-Term and Long-Term Disability InsuranceSPIN wanted to diversify its benefits package, so it decided to propose long term

and short term disability to personnel. Ms. Meersand believes that disability insurance

is an essential benefit offering, thus SPIN chooses to pay the full cost of both benefits.

Long-Term Disability coverage usually starts when the period for Short-Term Disability

Insurance has been exhausted. SPIN has had to deal with several disability claims

during its course of business. When an employee is out on disability the productivity of

the work environment takes a hit so the main purpose of this insurance is to relieve

financial stress so recipients can make a quick recovery. The workforce at SPIN is

proactive at recovering in a timely manner when out on disability, so most claims are

short-term. The reasoning behind this is because employees only receive 66% of their

weekly salary through these insurances; they appreciate the assistance provides but aim

to get well so they can earn their full wage again.

Regulatory IssuesERISA

SPIN is required under ERISA to comply with certain standards. These provisions

include complying with fiduciary responsibilities, proper plan communication, and

discrimination testing. When management is considering the design mechanisms for the

benefits plan, the employees’ best interest is always paramount.

Plan communication is done through benefit and wellness seminars with

employees. Plan participants are given a Summary Plan Description (SPD) either

electronically or by mail. SPIN most recent government audit was performed over ten

years ago and found no compliance issues.

HIPAA

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Ms. Meersand recognizes HIPAA as an important policy that is potentially

dangerous if not complied with fully. Her prime concern is the confidentiality of resident

medical information. SPIN makes sure that the privacy and integrity of all healthcare

records are properly protected. The organization also makes sure that employees at all

levels take a role in protecting the privacy of the residents they support. SPIN has had

no major compliance issues with HIPAA.

COBRASPIN has encountered a few problems with respect to COBRA. Ms. Meersand

explained that sometimes the most problematic aspect is effectively explaining the

regulation to employees. Employees assume that, under COBRA, their contribution to

the cost of their health plan will not be altered, when in actuality there is a significant

disparity in cost. Ms. Meersand is mindful of COBRA’s complex language, and tries to

address employees concerns in the simplest method possible.

PPACAThe Patient Protection and Affordable Care Act has already caused minor

problems within SPIN. Specifically, Ms. Meersand stated that IBC may have

overestimated the first provisions of the plan to go into effect. As a result, SPIN faced

more than a 10% premium increase for the 2011 year. For the 2012 though, SPIN saw a

decline in the usual amount increase of their premiums. Ms. Meersand attributes this to

the fact that IBC has had time to understand and plan accordingly for PPACA.

Overall, Ms. Meersand and SPIN’s HR department are still waiting to see how

future provisions may impact their plan. They love PPACA’s requirements for preventive

care coverage, but believe that certain language regarding other mandates may drive

up the costs incurred from offering health benefits.

Important Changes and Suggestions Special People in the Northeast Benefit Analysis, Parts 1&2

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In a recent meeting with Meersand, she stated that SPIN had decided to change

insurance companies which provide life insurance options for 2012 along with altering

the structure of its health benefits. SPIN has chosen to insure its life insurance policies

with Unum, which provided the organization with better rates than Prudential. Unum

will also operate SPINs Employee Assistance Plan.

With healthcare costs on the rise, SPIN came to the conclusion that it was too

expensive to offer three different health plans, especially when two of them were

underutilized. The organization decided to switch to a High Deductible PPO plan

(through IBC) for all employees except union workers, who will be allowed to still

choose the Keystone HMO. This new plan will be paired with a Healthcare

Reimbursement Account (HRA) to help ease costs.

So far, many employees have reacted negatively to the upcoming change. The

plan payment structure is quite different from plans previously offered and the high

deductible can be somewhat daunting. For in-network use an employee is responsible

for a $3000 yearly deductible, after which the PPO will pay all expenses (families have a

doubled deductible of $6000). SPIN will also offer a Healthcare Reimbursement Account

that they will partly contribute to. After a participant deposits at least $300 in the

account, the organization will make $1500 deposit to help with eligible costs. Ms.

Meersand considers the required employee deposit a way to show participants the true

cost of healthcare. Again, extensive communication is key to making employees

understand why SPIN made this change. Many employees are probably not aware of the

benefits of the new HRA, and therefore find the costs of the new PPO intimidating.

We believe that SPIN made the right choice in slimming down their three

healthcare programs down to one. Budget cuts and low enrollment made supporting

three plans untenable, and despite losing options that could attract employees, we

believe the new PPO combined with the HRA can still act as a lure to potential hires. Special People in the Northeast Benefit Analysis, Parts 1&2

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Both the consumer driven plan and the HRA force participants to act as rational

consumers because they shoulder a large amount of initial costs; this is an important

costs-savings feature. One suggestion we have deals with communication. Although

SPIN’s HR department certainly does its part in making information about benefits

available, it is hard to force employees to read newsletters or attend seminars. For

these reasons, we suggest SPIN have mandatory small group meetings with employees

throughout the year. These meetings could explain important changes in benefit options

and also act as question and answer session for the plan in general.

ConclusionOverall, SPIN’s benefit package is most affected by the rising cost of healthcare.

The organization has realized this trend and has reacted appropriately. Elimination of

unused plans and the establishment of a CDHP will help to better spread costs to

participants. The creation of an HRA, to which SPIN contributes, will also help ease the

financial burden of medical costs on employees. Non-healthcare benefits, such as the

supplemental life insurance policies and STD/LTD insurance still act as an effective tool

which attracts potential employees. If SPIN can successfully explain their benefits

package and how its proper use helps saves costs, the organization could see some of

their lowest premium inc

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Aon Consulting, and Bill Sharon. 2010 Healthcare Trend Survey. Issue brief. Aon

Consulting, 2010. Print.

The Council for Affordable Health Insurance. "Health Savings Accounts and Preventive

Care." The Council for Affordable Health Insurance 153 (Apr. 2009). Print. Special People in the Northeast Benefit Analysis, Parts 1&2

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Gruber, Jonathan. The Role of Consumer Copayments for Health Care: Lessons from the

RAND Health Insurance Experiment and Beyond. Rep. The Henry J. Kaiser Family

Foundation, Oct. 2006. Web. 8 Dec. 2011.

<www.kff.org/insurance/upload/7566.pdf>.

Halterman, Steve L. "Self-Funding Health Insurance for Small Employers: Is It the Right

Way to Go?" The Employee Benefits Journal (2000): 3-8. Web. 7 Dec. 2011.

<https://blackboard.temple.edu/webapps/blackboard/content/listContent.jsp?

course_id=_4310_1&content_id=_2421213_1>.

Markovich, Martin. "The Rise of HMOs." Diss. Rand Corporation, 2003. Rand

Corporation. Rand Corporation, 2003. Web. 7 Dec. 2011.

<http://www.rand.org/pubs/rgs_dissertations/RGSD172.html>.

Meersand, Gail. Personal interview. 6 Dec. 2011.

National Business Group on Health. "Consumer-Directed Health Care: The Employer

Perspective." Critical Issues (Apr. 2011). Print.

Rice, Elizabeth M. "Marketing Benefits to Employees." Innovative Employee Solutions.

Web. 8 Dec. 2011.

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?

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%2Fmarketing-employee-benefits%2F>.

Schreck, Tom. "Self-funded Health Insurance: It's about Risk, Vulnerability, Cost

Savings." The Business Review (2005). Web. 7 Dec. 2011.

<http://www.bizjournals.com/albany/stories/2005/12/05/focus4.html?page=all>. Special People in the Northeast Benefit Analysis, Parts 1&2

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Schultz, Roger S. "Self-Funded Medical Plans." Journal of CF Financial Service

Professionals (200): 14+. Web. 8 Dec. 2011.

<https://blackboard.temple.edu/webapps/blackboard/content/listContent.jsp?

course_id=_4310_1&content_id=_2421213_1>.

"Workers Motivated by Richer Benefits." Employee Benefit News. Employee Benefit

News, 31 Aug. 2006. Web. 08 Dec. 2011.

<http://ebn.benefitnews.com/news/workers-motivated-richer-benefits-270378-

1.html>.

Special People in the Northeast Benefit Analysis, Parts 1&2