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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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