3502(drennan) topic 3 notes

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  1. benchmarking analysis
    involving ee's in the design process of benefits
  2. methods used in benchmarking analysis
    • Employee Surveys
    • Benefits committees
    • Focus groups
    • Different benefit packages for Employees in different geographic areas
  3. what has been the shift in emphasis of ee benefit plans over the years?
    favorable tax treatment used to be a strong driving force in pal design, now it is employee needs (particularly work life benefits)
  4. what are examples of work life benefits?
    • Fitness
    • centers/Gyms
    • Convenience Benefits
    • etc
  5. life cycle benefits
    • Specific insurance products or benefits
    • Tied to different stages in your life cycle
  6. who should be protected under ee benefits?
    • full time active ee's
    • dependents of full time active ee's
    • part time active ees
    • former ee's and dependents
    • retirees and their dependents
  7. what are disabled ee's and their dependents entitled to
    • access cobra coverage
    • continue health ins
    • continue life ins
    • 401k contributions
  8. what are terminated ee's and their dependents entitled to?
    • Severance package
    • Unemployment insurance
    • Access to COBRA coverage
    • Continuation of health insurance for a period of time
  9. what are typical examples of plans with minimum choice in plan design for ee's?
    Ex. Retirement, life, disability, dental, AD+D choice pf health plans
  10. voluntary benefit
    Any benefit offered through an Employer on a group basis and Employee pays the full cost
  11. examples of voluntary benefits
    • Group auto (Classic voluntary) 
    • Group homeowners insurance (Classic voluntary)
    • Pet insurance
    • Group Universal life (GULP)
    • Cancer insurance/dread disease policies
  12. most employers that offer benefits unknowingly set up what?
    an erisa plan
  13. section 125 plan
    A plan where Employees have a choice between benefits normally considered taxable and benefits normally considered non-taxable
  14. constructive receipt is blocked by what?
    section 125, yo
  15. section 125 plan has to offer what?
    a taxable and a non taxable benefit
  16. constructive receipt
    Because you have the option to select you are treated as if you did such
  17. what are the two types of fsa's?
    dependent care and medical care
  18. what does a medical care fsa cover?
    • any non covered items or non fully covered items
    • and vision expenses if no vision insurance
  19. examples of non fully covered items
    “cost sharing items”



  20. use it or lose it rule
    • Any unused funds remaining at the end of the plan year are forfeited by employee
    • Employers have the option to allow employees to submit claims for expenses incurred up to 2 ½ months beyond the end of the year
  21. how much can be carried forward in a fsa?
    500, if you chose to forgo the 2 1/2 month extension
  22. in a dependent care fsa, money is available
    on a per month basis as it is contributed
  23. in a medical fsa money is available
    right away, and all funds are available
  24. uniform coverage rule
    the rule in health fsa's where all all money is available right away
  25. who is at risk under the uniform coverage rule and why?
    the er if an ee dies or quits after already using the money, they are out of that fsa cash
  26. why is a fsa a section 125 plan?
    because you are choosing between a salary(taxable benefit) and the fsa(nontaxable benefit)
  27. salary reduction vs salary deduction?
    • reduction=pre tax
    • deduction=post tax
  28. what is a premium only plan (pop)?
    a medical plan offered on a contributory basis using either a salary reduction or a salary deduction
  29. what happened before section 125 plans were introduced(pre 1978)
    health plans were taxed using the doctrine of constructive receipt
  30. in sectio 125, favorable tax treatment is only guaranteed to _____.
    qualified plans
  31. what happens when a plan fails discrimination testing?
    it becomes taxable
  32. in simple terms, what is financing?
    who pays the cost
  33. possible financing options
    • 1.Employer pays the full cost of benefit in question
    • 2.Employee/Employer 
    • 3Employee pays the entire cost
  34. what is funding?(essentially)
    who is the risk bearer
  35. possible funding options(4)
    • Guaranteed Cost Arrangement
    • Experience Rating
    • Alternative Funding Arrangement
    • Self-Insurance
  36. the guaranteed cost of the benefit in question
  37. the fixed cost to the employer is defined by what?
    the premium
  38. two types of rating systems
    community rating and manual rating
  39. manual rating
    community rating by class
  40. what type of plan has
    No guaranteed cost to the Employer
    Employer bears all claims + admin. risk
    a fully self insured arrangement
  41. experience rating
    • Claims/losses or “loss experience” for a given time period is used to:
    • Determine a rate or Ultimate cost of benefit
    • Insurer and employer share in the claims risk through:
    •           Retrospective Experience Rating
    •           Prospective Experience Rating
  42. two types of experience ratings
    retrospective and prospective
  43. retrospective experience rating
    • Premium is the initial cost to the employer 
    • and the experience rating takes place at the end of the coverage period
  44. credibility factor
    • Assign a “weight” to the loss experience of a particular group or employer
    • Based on the Law of Large Numbers
  45. Under Experience Rating if you are ______ the bad new isn’t so bad and
    the good news isn’t so good.
    partially credible
  46. catastrophic insurance
    • 1.    
    • Catastrophic
    • coverage

    • 2.    
    • Claims
    • settlement services
  47. under erisa, the required communication of benefits a firm must provide are
    • Summary plan
    • description (SPD)
    • Summary of
    • Material Modifications (SMM)
    • Summary of
    • Benefits + Coverages (SBC)
  48. aso vs tpa?
    • aso=isurer
    • tpa=noninsurer
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3502(drennan) topic 3 notes
2014-10-20 00:35:16
rmi 3502

rmi 3502 topic 3 cards
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