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involving ee's in the design process of benefits
methods used in benchmarking analysis
- Employee Surveys
- Benefits committees
- Focus groups
- Different benefit packages for Employees in different geographic areas
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)
what are examples of work life benefits?
- Convenience Benefits
life cycle benefits
- Specific insurance products or benefits
- Tied to different stages in your life cycle
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
what are disabled ee's and their dependents entitled to
- access cobra coverage
- continue health ins
- continue life ins
- 401k contributions
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
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
Any benefit offered through an Employer on a group basis and Employee pays the full cost
examples of voluntary benefits
- Group auto (Classic voluntary)
- Group homeowners insurance (Classic voluntary)
- Pet insurance
- Group Universal life (GULP)
- Cancer insurance/dread disease policies
most employers that offer benefits unknowingly set up what?
an erisa plan
section 125 plan
A plan where Employees have a choice between benefits normally considered taxable and benefits normally considered non-taxable
constructive receipt is blocked by what?
section 125, yo
section 125 plan has to offer what?
a taxable and a non taxable benefit
Because you have the option to select you are treated as if you did such
what are the two types of fsa's?
dependent care and medical care
what does a medical care fsa cover?
- any non covered items or non fully covered items
- and vision expenses if no vision insurance
examples of non fully covered items
“cost sharing items”
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
how much can be carried forward in a fsa?
500, if you chose to forgo the 2 1/2 month extension
in a dependent care fsa, money is available
on a per month basis as it is contributed
in a medical fsa money is available
right away, and all funds are available
uniform coverage rule
the rule in health fsa's where all all money is available right away
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
why is a fsa a section 125 plan?
because you are choosing between a salary(taxable benefit) and the fsa(nontaxable benefit)
salary reduction vs salary deduction?
- reduction=pre tax
- deduction=post tax
what is a premium only plan (pop)?
a medical plan offered on a contributory basis using either a salary reduction or a salary deduction
what happened before section 125 plans were introduced(pre 1978)
health plans were taxed using the doctrine of constructive receipt
in sectio 125, favorable tax treatment is only guaranteed to _____.
what happens when a plan fails discrimination testing?
it becomes taxable
in simple terms, what is financing?
who pays the cost
possible financing options
- 1.Employer pays the full cost of benefit in question
- 3Employee pays the entire cost
what is funding?(essentially)
who is the risk bearer
possible funding options(4)
- Guaranteed Cost Arrangement
- Experience Rating
- Alternative Funding Arrangement
the guaranteed cost of the benefit in question
the fixed cost to the employer is defined by what?
two types of rating systems
community rating and manual rating
community rating by class
what type of plan has
No guaranteed cost to the Employer
Employer bears all claims + admin. risk
a fully self insured arrangement
- 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
two types of experience ratings
retrospective and prospective
retrospective experience rating
- Premium is the initial cost to the employer
- and the experience rating takes place at the end of the coverage period
- Assign a “weight” to the loss experience of a particular group or employer
- Based on the Law of Large Numbers
Under Experience Rating if you are ______ the bad new isn’t so bad and
the good news isn’t so good.
- settlement services
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)