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MEDICARE
PART B - "WARNING" Medicare Part B covers physician services and many other “outpatient” medical expenses.
Unlike Medicare Part A, Part B is not “automatic”. The 2010 Part B monthly premium cost
is $110.50 for most Medicare eligible individuals. Our clients are reporting an increasing
number of problems regarding the coordination of Part B benefits with employer-sponsored Group Medical Plans.
Medicare eligible individuals are receiving claim denials from the employer’s group insurance carrier and Medicare.
Individuals are also being charged significant “late entry” premium penalties for Part B. While most employers should not try to provide Medicare advice, the following
general points of information need to be consistently communicated to all individuals who are eligible
for Medicare benefits due to age or disability. Ø Whether working or retired, individuals (and their spouses)
may need to enroll in Part B, even if they are covered by an employer-sponsored Group Medical Plan. Ø Individuals need to contact
both Medicare and the group insurance carrier prior to becoming eligible for Medicare to determine if they should enroll in
Part B. Ø If
enrollment in Part B is delayed or ignored; individuals can incur significant unreimbursed medical expenses and significantly
increased premiums for Part B coverage. We would be happy to discuss general Medicare Part B guidelines with you.
401(k) PLAN INVESTMENTS Most 401(k) Plans enjoyed better than average investment returns
in 2006, due to generally favorable equity markets. Now may be a good time to review your plan’s
investment options to help produce the best possible 2007 results. Retirement plan advisors often
recommend diversification as a strategy to produce consistently positive returns. Diversification requires
that plan participants understand and utilize a number of different types of equity and fixed-income investments. Following are two options that you might not yet have in your plan. Ø “Dynamic”
Lifecycle Funds/Accounts – These are normally structured as a series of related funds/accounts targeted at specific
estimated retirement dates. A professional investment manager creates unique, diversified portfolios appropriate
for each estimated retirement date. These portfolios are automatically managed to become more conservative
as the target date approaches. The manager also automatically “rebalances” these portfolios
periodically to maintain appropriate asset allocation percentages. These funds/accounts are attractive
to plan participants who want professional management at a reasonable cost. Ø
Real Estate Funds/Accounts – These can be structured as “owned” real estate funds/accounts
which emphasize longer-term holdings and lease/rental income. They can also be structured as Real Estate
Investment Trust (REIT) funds/accounts which emphasize shorter-term holdings and resale appreciation. We would be happy to discuss 401(k) Plan investment options with you.
HEALTH PROMOTION Many
local employers offer various Health Promotion activities and resources for their employees. The time,
effort, and dollars devoted to Health Promotion have a positive impact on medical insurance costs, paid time off costs, and
workplace productivity. In addition to positive financial outcomes, there are positive “attitude”
outcomes for employees who appreciate these employer initiatives. While the positive outcomes take time
to develop, the long term advantages can be significant. Some
popular Health Promotion activities and resources are: Ø Worksite programs (sometimes with participation incentives) that emphasize healthy diet, healthy body weight,
physical activity, heart health, stress management, and smoking cessation Ø Quarterly
newsletters that provide Health Promotion education in an attractive, easy to read format Ø
Health risk assessment tools (electronic or paper) that help employees identify
their unique “lifestyle based” health risks Ø Worksite screening of blood pressure, cholesterol, and glucose to identify health issues that employees may not
be aware of. Medical insurance carriers can provide some
activities and resources at minimal or no cost. There are also local Health Promotion management firms
that provide customized programs. Employers normally survey employees to help
identify the activities and resources that employees feel would be helpful. We would be happy to provide
a brief, sample employee survey form on request.
PRESCRIPTION DRUG BENEFITS STRATEGIES
PRESCRIPTION DRUG BENEFITS STRATEGIES Costs for prescription drug benefits
are almost 30% of the total cost for Medical Insurance. The annual “inflationary cost trend”
is approximately 18% for prescription drugs, compared to approximately 15% for all other medical services. While
these drugs add to the quality of life, they can also be over-utilized. It’s important to design
financial incentives so employees (and physicians) make effective decisions when considering treatment options.
For example, the average cost for a 30 day supply of brand name drugs is approximately $70, compared to an average
cost of approximately $17 for a 30 day supply of generic drugs. Our clients have used the following strategies to control prescription drug benefits
costs without unreasonable out-of-pocket costs for employees. ü Self-insuring
just the prescription drug benefits portion of the total medical insurance plan. ü
Implementing reasonable deductibles before any prescription drug benefits are payable. ü
Utilizing percentage co-pays for brand name
drugs (instead of flat-dollar co-pays), so employees know the total costs for their prescriptions. ü
Educating employees on the differences (real and perceived) between brand name and generic
drugs. ü
Educating employees and physicians on the most cost effective ways to manage very expensive
injectable drugs. We
would be happy to discuss prescription drug benefits strategies with you. RETIREE MEDICAL BENEFITS – SOME GOOD NEWS Western New York employers can offer their retirees better medical benefits at lower
costs than most other areas of the country. Changes in Medicare reimbursements to our local carriers have
produced improvements in retiree benefits, and some reductions in premium rates. Medicare “Advantage” programs through
our local HMO’s can reduce claims paperwork requirements for retirees. These plans replace traditional
Medicare benefits, and eliminate the process of coordinating benefits between traditional Medicare and “Medicare Supplement”
type plans. Following are some other points
of information that apply to retiree plans available through our local carriers. ü
While employers don’t have to contribute to premium costs for retirees, retirees can
gain better benefits if the employer acts as the “billing agent” for retirees. ü
Some plans can also be “direct-billed” to retirees, which removes the employer
from the billing / collection process. ü All of our local carriers have
special “Medicare Eligible” service and enrollment representatives who are available to meet individually with
retirees. These representatives can also provide basic information on Medicare and the New York State EPIC
Prescription Drug program. ü Retiree plans designed specifically
for individuals who no longer reside in Western New York are also available from some of our local carriers. We would be happy to discuss retiree medical benefits
options with you.MEDICAL BENEFITS STRATEGIES
Medical insurance “community” rates in Upstate
New York have increased by more than 10% annually for the last 4 years. These increases create serious concerns for employers
and employees. While no single approach is appropriate for every group, following are strategies that have helped
our customers manage these rapidly rising costs.
 | • | Dual
choice “high option / low option” programs that fit different employee needs. |
 | • | Experience-rated
or partially self-insured programs to take advantage of favorable group demographics. |
 | • | Self-insured
prescription drug benefits programs that can provide lower administrative costs, unique provider networks, and customized
benefit designs. |
 | • | Alternative
rate structures and employee contribution requirements that can be based on income and the number of covered dependents. |
 | • | Proposals
from national commercial carriers to take advantage of unique benefit designs, provider networks, and alternative funding
options. |
 | • | New
benefit options from our Upstate NY carriers that provide better value for local employees with attractive benefits and rates
for “out-of-area” employees in multiple locations. |
 | • | New
benefit and funding options for retirees that recognize the new Medicare prescription drug benefits. |
 | • | Proper
communication of State subsidized programs such as Child Health Plus, Family Health Plus, and Healthy New York. |
 | • | Flexible
benefits programs that allow employees to direct dollars towards the benefits that best meet unique needs, such as Flexible
Spending Account (FSA) and Health Reimbursement Arrangement (HRA) plans. |
 | • | “High
Deductible” plans that utilize the new Health Savings Account (HSA) program. |
LONG-TERM DISABILITY PROTECTION
Due to adverse claims experience, carriers
are raising rates and cutting benefits. Claimants are complaining that their benefits are not being paid fairly, or
for appropriate benefits durations. As a result of this (unhappy) marketplace climate, you may want to ask the following
questions regarding your Group Long-Term Disability Benefits Plan.
 | • | Are
the premium rates competitive in the marketplace? |
 | • | Are
the benefits levels appropriate, based on current earnings? |
 | • | Are
definitions of “disability” clearly understood (and are the definitions appropriate)? |
 | • | Should
different employee groups have unique benefits levels and definitions of disability? |
 | • | Are
benefits waiting periods (deductibles) reasonable and cost effective? |
 | • | Have
Short-Term and Long-Term Disability Benefits Plans been properly coordinated to achieve maximum value? |
 | • | If
the benefits currently are taxable to claimants, have options been explored to deliver tax-free benefits? |
 | • | Are
group benefits properly coordinated with individual policy benefits? |
 | • | Are
appropriate “return to work” incentives included in the current plan? |
 | • | Is
the current carrier making appropriate claim decisions, as viewed by claimants and the employer? |
 | • | Are
employee contributions being used effectively, if required? |
 | • | Should
employee contributions be required if the employer is currently paying 100% of plan costs? |
 | • | Is
the plan communicated effectively? |
VOLUNTARY BENEFITS
“Voluntary Benefits” is a generic label for any type of employee benefit program that is 100% paid for
by participating employees. Many of our customers have run out of “corporate” dollars for benefits, and
are using voluntary benefits to supplement employer-paid programs. These programs are provided on a payroll deduction
basis, and they feature discounted rates and liberalized medical underwriting requirements. Employee participation requirements
range from as few as 2 employees to 75% of the defined “eligible group”. Following are some of the more
popular voluntary benefits.
 | • | Long Term Disability
Insurance |
 | • | Short Term Disability
Insurance |
 | • | Dental Insurance |
 | • | Term Life Insurance |
 | • | Cash Value Life
Insurance |
 | • | Dependent Life Insurance |
 | • | Critical Illness
Insurance |
 | • | Accidental Death
& Dismemberment Insurance |
 | • | Prepaid Legal Services |
 | • | Automobile Insurance |
 | • | Homeowners Insurance |
 | • | Long Term Care Insurance |
We work with most of the leading insurance companies for these different types of
programs, and we help our customers identify the most effective plans and providers. Please contact us if you would
like to discuss voluntary benefits.
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