Viewing posts from: January 2012

Top Benefits Administration and Group Health Blogs

Posted January 30, 2012 by Megan DiMartino

We’ve been blogging profusely at AP Benefit Advisors about benefits administration, the healthcare industry, group health and employee wellness strategies, and other important issues. Here are a few of the most popular recent blogs:

Emerging Healthcare Technologies to Keep an Eye On

Posted January 26, 2012 by Megan DiMartino

By Ed Smith

Chief Information Officer, Alere Health

Medicine and technology have matured, dramatically improving outcomes for critical conditions, and yet we still have epidemic levels of diabetes and obesity. As healthcare has become more specialized, it has also become more fragmented; losing site of the fact that patient engagement in the treatment plan is the key to sustained health improvement.

We are seeing an explosion of at-home biometric devices, real-time care alerts, and a variety of social applications that are being used to facilitate engagement. Clearly one size does not fit all, so maybe the answer is all of the above.  Mass customization based on personal preferences couldn’t be more critical than in healthcare where it’s the personal context (i.e. history, location, goals, etc.) of a situation and timeliness of an alert or intervention that can be the difference between life or death.

So if long-term behavior change and relevant/timely interventions are the key to reducing healthcare costs and improving quality of life, what emerging solutions are we experimenting with?

  • Social communities − An obvious trend in healthcare, they are providing the appropriate support group to enhance engagement.  Sometimes gaming-styled competition promotes participation by making it fun; sometimes support from other people who care is what makes the difference. What is critical to improve outcomes is mitigating privacy concerns and integration with the provider’s care plan. Social media solutions like Facebook and Twitter are enabling patients to connect with natural support groups – sometimes family, friends or strangers to provide the support that a clinician alone may not be able to.  Social communities can also make healthcare more fun by linking online education games, trackers and contests with incentive programs with financial and health benefits. Tracking devices can be used to promote activity. According to Jawbone, a provider of these devices, tracking can increase activity as much as 26 percent simply because  measuring behavior increases awareness of it.
  • Analytics and Visualization −  With the deluge of personal biometric tracking devices, increasing access to electronic medical records, and an abundance of free health information, how will payers, providers and patients make sense of it?  This deluge of data requires enhanced visualization technology, which analyzes, interprets and presents data to show patterns and trends that would otherwise be missed, as well as predictive analytics and large data management solutions. Technologies like Hadoop and EMC’s Greenplum will be critical to solving this increasingly complex issue.
  • Globalization – Although there are enormous differences between payment models, diet, and language – people are people and treatments vary less than we think.  The key is to share best practices, adapt to regulatory and cultural change while still adapting infrastructure costs effectively.  Pegasystems provides a scalable technology platform, simplifying many of the workflow, clinical, customer and country-specific rules while still providing deployment consistency  and global management through a variety of cloud-based infrastructure-as-a-service offerings. This approach delivers economies of scale and a platform for transferring best practices across populations.

Each of these technical trends provides exciting new solutions and challenges with privacy, speed and scale, all while the industry is changing.  Although there are many complexities – the patient will continue to be at the center of the solution.

Lastly, this wouldn’t be a tech blog if we didn’t mention the roles of the cloud and mobile technologies in driving increased patient engagement.  The increased ubiquity of mobile access devices and rapid availability of cloud solutions are becoming the fabric of these trends accelerating time to test new ideas, gain feedback and reach more people in a more natural and cost-effective way. Just like DNA-tailored drug therapies which were once cost prohibitive, new technologies are empowering users to tailor solutions that fit their needs vs. one size fits all.

Getting on the Path to Better Employee Communications

Posted January 23, 2012 by Megan DiMartino

By Mary Frank, RHU, GBA

Manager, Health Benefits, Stryker

How many times have you immediately deleted an email you thought was spam or perused a poster and then immediately forgot what you read? Communicating effectively with employees may sound easy, but inspiring them to actually read and retain the information in your wellness program newsletters and email campaigns can be challenging.

A few years after implementing a wellness program at Stryker ─ a FORTUNE 500 company in the medical device industry with 10,000 domestic employees ─ we realized the need to create an effective communication strategy. Our objectives were to inform employees about the wellness program and help employees not only understand the value of their benefits, but also how to use them.

First Steps

We first needed to develop an overall strategic positioning statement for the program, followed by three core messaging platforms, each supported by support points. The positioning statement conveyed that participating in the program would provide financial benefits as well as better health for individuals, their families and Stryker. The three core platforms took that a step further by outlining three key benefits to participation:

  • Income protection (premium discounts, incentives)
  • Better healthcare decisions
  • Higher productivity

The Stryker population is an incredibly driven group of people, and we wanted to make sure that the content we were creating spoke to them personally. Our methods included:

  • Working with the Communication department, consultants and HR professionals across the organization
  • Conducting employee focus groups to learn the most effective ways to get the right message to the right people
  • Asking “employee ambassadors” selected from focus groups to review communications and provide feedback

Employee Feedback

What we learned from this effort was invaluable in helping us decide what we needed to do. We were advised to:

  • Simplify the language with action-oriented statements
  • Eliminate “fluff” in the language and get to the point quickly
  • Be direct regarding the action we are requesting
  • Use icons, graphics and pictures to illustrate and simplify the message
  • Communicate often

Communications Plan

As a result of our findings, the team learned that we had to get creative in our communications by combining striking visuals with content made to stick. We came up with the idea of “Get on the Path” as our message and created a five-step map with a path outlining the steps employees needed to take to get on the path to Annual Enrollment, good health care plan decisions and wellness.

In addition, the team developed a package of messages that showed employees that we were trying to take care of them in many ways. At the same time, we did not want to try to mask that we were doing this for Stryker as well. We wanted to get across that a gain for Stryker is a gain for the employee.

Our efforts paid off. Last year, we passed on a 0% increase in health plan contributions, and we were able to sustain the cost because employees responded to the communications by doing what we asked them to do: use in-network providers, decreased use of Emergency Rooms for minor illness, chose lower cost medications, etc. As a result we were able to reward them by not increasing the amount deducted from their paychecks.

Ongoing Communications

One of the biggest lessons we learned is that the marketing campaign for wellness has to keep going. As a result, it cannot remain static; it has to be dynamic. If you want to engage and keep the attention of your employees, you can’t keep going out with the same messages. You have to constantly develop new creative strategies for getting the word out about whatever features and benefits you want to advertise. Since starting the campaign, our messaging focus has evolved to managing costs. A phrase we use now is “Get active to manage costs.”

If you take the time to understand your population, communication preferences and what language would grab their attention, you will build a firm foundation from which to build future communications strategies. We do not have all the answers, and we are continuing to work hard to learn and improve our process.

Benefits of Enhancing Employee Communications:



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An Ounce of Prevention..

Posted January 19, 2012 by Megan DiMartino

Benjamin Franklin was fond of the aphorism “An ounce of prevention is worth a pound of cure”. Few concepts are more pertinent to benefits administration, employee wellness, and overall success in the workplace. Wellness begins not with the cure, but with prevention – this includes a number of activities or behaviors that many may take for granted. Walking regularly, using the stairs in lieu of the elevator, standing up for a least a few minutes of each hour seated, staying away from soda, beer, and fried foods, and stretching regularly can all contribute to increased lifespan and increased quality of life. And best of all, these are all behaviors that can be encouraged by employers with little effort and substantial potential gain (on both ends). Wellness initiatives in the workplace are undoubtedly a win-win situation.

2012 Revised Healthcare Reform Timelines, Version 5.0

Posted January 18, 2012 by PHaynes

If you want to see 10 pages of health reform in a 1 page timeline (well, 1 page for Employers and 1 page for Employees) then please visit our website (

But, if you are looking for details specific to just a certain year or plan, then you can’t do better than this implementation timeline from The Kaiser Family Foundation.

AP Benefit Advisors’ Timelines

**Get Revised/Updated timelines (as of 07-10-2012):


Kaiser Family Foundation Implementation Timeline


Webinar Tomorrow: New Regulations for Exchanges and PPACA For Employers

Posted January 16, 2012 by Megan DiMartino

Join us for this complimentary, educational webinar and learn the key information that employers must know about Insurance Exchanges and PPACA. CMS (Centers for Medicare & Medicaid Services) recently released a 360 page “draft” on new regulations regarding Exchanges. These regulations still leave a great deal of flexibility for States to design their own Exchanges.

The Dept. of Health & Human Services (HHS) has decided to give Exchanges until January 2013 to attain compliance. Expert speaker, Attorney Patrick Haynes, will give an overview of the new regulations and guidelines, explain what employers need to know to achieve compliance, and offer guidance for employers regarding the new rules. Key highlights will include:

* What happens if States decline to create their own Exchange?
* How will State Exchanges change the way Benefits are designed and delivered?
* What tax subsidies will be available for Exchange-participating employers?
* What features will the 4 different Exchange levels have?

Date & Time: Tuesday, January 17, 2012 @ 12:00 pm – 12:40 pm ET

Space is limited. Reserve your seat now at

HHS v. Florida (the Affordable Care Act litigation) – The Supreme Court has been briefed

Posted January 13, 2012 by PHaynes

On January 6, 2012, four briefs were filed at the US Supreme Court related to the Affordable Care Act case that is pending before the USSC.  On January 10, 2012, an additional brief was filed by the 26 states regarding the constitutionality of the Medicaid expansion mandated by the Affordable Care Act.

Highlights of the briefs include:

  • The United States’ brief addressing whether the minimum essential coverage provision exceeds Congress’s constitutional authority.
    • The Department of Justice brief supports the constitutionality of the provision.
  • The brief of the 26 states and the brief of the National Federation of Independent Business (NFIB) addressing whether the minimum essential coverage provision is severable from the rest of the Affordable Care Act if the provision is found to be unconstitutional.
    • Both the states and the NFIB argue that the individual mandate is unconstitutional and is so integral to the Affordable Care Act that the entire law must be declared unconstitutional.
    • Both cite, at length, the straightforward proposition that without an individual mandate, you cannot have guaranteed issue for all, and without those two pieces, the law means very little; and
  • The Court-appointed amicus curiae (friend of the court) brief of attorney Robert Long addressing whether the Anti-Injunction Act (AIA) bars the lawsuit until any penalties have been assessed.
    • This brief argues that the AIA should apply and therefore all challenges to the Affordable Care Act should be dismissed until the individual mandate is actually enforced.  Meaning, the litigation would have to begin, anew, in January of 2015, if and when the first taxpayers are “harmed” by being fined (via a tax) for failing to obtain and keep creditable coverage in place.
    • In addition, the brief argues that the AIA is also binding on the states if the law is applicable to challenges to the individual mandate.

The Briefs

 2/22/2012 – Update – Supreme Court extends health care arguments:

With the extra 30 minutes, the court is slated to spend 90 minutes on the Anti-Injunction Act, 120 minutes on the law’s individual mandate that all Americans purchase health insurance, 90 minutes on whether just parts of the act can be invalidated while allowing other parts to stand, and an hour on the Medicaid expansion contained in the new law, over a three-day period in March.

If the justices decide the Anti-Injunction Act applies, they could put off a decision on whether the health care law is constitutional for several years.

Please see The Washington Times for additional details.

HHS Issues Final Rule for PPACA Medical Loss Ratio Rebates

Posted January 10, 2012 by PHaynes

On December 2, 2011, HHS and CMS (the Departments of Health and Human Services and the Centers for Medicare & Medicaid Services) released new final rules that addresses an assortment of issues with respect to the PPACA medical loss ratio (MLR) requirements.  In conjunction with the new rules, the DOL (Department of Labor) has issued a Technical Release as well.  Keep in mind that PPACA’s MLR requirements do NOT apply to self-funded health plans.

According to the existing MLR standard, private health insurers are required to spend 80% to 85% of consumer’s premiums on patient care.  Insurers must provide rebates to enrollees if their spending for the benefit of policyholders for clinical services and quality improving activities, in relation to the premiums charged, is less than the MLR standards established.

The new rule and related DOL guidance include information that makes fundamental changes to the existing interim rules. The releases address how plans sponsored by ERISA and non-federal governmental employers must use rebates received from insurers and how insurers must calculate the amount of rebates.  The HHS final rule directs health plan issuers to provide any rebates owed to the group policyholder and it also contains information regarding the notice insurers must provide to employers and employees.

Below are some selected highlights of the DOL guidance for employer-sponsored, fully insured plans.

Who Gets the Rebates?

The biggest news in the guidance is the change in the rule on who receives the rebates. Under the final regulations, insurers must provide the rebates for individuals covered by group health plans subject to ERISA or the PHSA to the policyholder—typically the employer sponsoring the plan. Keep in mind that ERISA generally applies to private-sector employer plans, while the PHSA generally applies to non-federal governmental employer plans.  According to HHS, the interim final rule had unintended administrative and tax consequences for insurers, employers and enrolled members.  In an effort to correct these problems, the final rule permits insurers to apportion and pay rebates directly to policyholders. Rebates must be paid by August 1st of each year and if handled properly in accordance with the final rule, will not be subject to taxes.

Guidance for ERISA Group Health Plans Receiving Rebates

The DOL Technical Release, which applies to ERISA plans, explains that existing fiduciary duty and plan asset rules govern treatment of insurer rebates. If the Affordable Care Act’s ratios aren’t met and MLR rebates are paid, the DOL notes that they may qualify as ERISA plan assets, in whole or part, depending on various factors, including the terms of governing documents, whether the insurance policy is issued to the plan itself (or a related trust), and whether insurance premiums are paid from trust assets. Other considerations may also apply, such as the relative proportion of premiums paid by plan participants and the amount of plan administrative expenses paid by the plan sponsor. Any portion of a rebate that constitutes plan assets must be used for the exclusive benefit of plan participants and beneficiaries, and ERISA fiduciary principles must be followed in choosing how to use that portion/allocation of the rebate.

The DOL notes that, in choosing an allocation method, “the plan fiduciary may properly weigh the costs to the plan and the ultimate plan benefit as well as the competing interests of participants or classes of participants provided such method is reasonable, fair and objective.” Examples of allocation methods mentioned in the guidance include refunds to participants or reductions in future participant contributions or benefit enhancements. [And, for Section 125 Cafeteria plans (such as premium only plans), they may collect/obtain and distribute the rebates without the need for a trust or other plan-asset-holding mechanism, provided the distributions are made or used with three (3) months of their receipt In addition, the new Technical Release references previous DOL Technical Releases 92-01 and 88-1 that excuse certain insured group health plans from the obligation to hold participant contributions in trust.  The DOL indicated in these previous releases that no violation would be asserted solely because an employer failed to hold participant pre-tax (Cafeteria) health plan premium contributions in trust].

While carriers’ MLR ratios have been at or near the required levels during the past few years, these rules envision the potential that the receipt of these rebates could become a bit more commonplace for plan sponsors.  In light of that, those plan sponsors and employers that are unfamiliar with the applicable

ERISA fiduciary rules may wish to study them and consider what steps might be advisable in advance of the August 1, 2012 due date for the first rebates.    Preparations might include, for example, amending plan documents to address how the plan assets portion of a rebate should be determined or to address the propriety of using the plan assets portion of a rebate for plan administrative expenses paid by the employer.

Assuming you have a health insurance carrier (issuer) that does not meet the Medical Loss Ratio (as specified for your group’s size), here are the questions to be answered before you can absolutely determine who gets what premium rebates

  • Who is the policyholder?
  • Do participants pay the entire cost of the insurance coverage?
  • Do the employer and the employee each pay a fixed cost for the coverage?
  • Does the policy require the employer to pay a specific dollar amount or set percentage?
  • What does the employer/s/plan sponsor’s plan document state with regard to any such rebates?
  • Can the employer/plan sponsor guarantee that premium rebates will be used within three (3) months of receipt by the policyholder?
  • Would the employer/plan sponsor prefer, for example, to direct the insurer to apply the rebate toward future participant premium payments or toward benefit enhancements adopted by the plan sponsor?  What would those enhancements be?

Please contact your Account Manager or one of our Sales Executives to discuss your fully-insured plan’s specifications, to determine how your carrier is performing, and what efforts your organization would like to make if, when and should your coverages be subject to premium rebates.


Update:  In her February 16, 20102, press release, HHS Secretary Kathleen Sebelius said:  “With today’s notice, we’re taking a big step toward making insurers accountable to consumers. Some of these insurance companies have already changed their behavior by lowering premiums or spending more on medical care and quality improvement, while the remainder will need to refund this money to their customers this year.”

According to the press release, the HHS is seeking comments on these model notices, and “is considering requiring insurers notify consumers if their insurer did meet the 80/20 standard.”  More information on the MLR requirements can be found here.

Specifically, the HHS has made available the following documents:

IRS Issues Additional/Revised Guidance on W-2 Reporting of Health Benefits

Posted January 6, 2012 by PHaynes

With the release of Notice 2012-9, the Internal Revenue Service (IRS) has given more advice about how employers, benefit plan administrators and others should go about applying the new Form W-2 health benefits cost reporting requirements that were mandated by PPACA.  This latest guidance (23 pages) updates, expands and replaces prior IRS Notices 2010-69 and 2011-28.  For webinar slides specific to this topic, including a handy single-page reference chart (page 3) click here.

Background:  PPACA (the Patient Protection and Affordable Care Act of 2010) also referred to as the “Affordable Care Act” seeks to expand coverage for many more Americans than are currently covered.  Part of that effort (Section 6051(a)(14)) requires that plan participants know and understand the true cost of their coverage—not just what comes out of their paycheck, but also how much their employers (and plan sponsors) contribute towards that coverage.  You may have attended our webinar in November or the updated webinar in December or even read a previous article on this website discussing prior IRS Notices on this topic.

To kick-start the provision’s requirements, the IRS is asking for voluntary reports on group health expenditures on the 2011 W-2s and will be requiring certain employers (that issued 250 or more W-2s in 2011) to begin issuing W-2s containing this information by January 31, 2013 for 2012 earnings.  See more on Timing below.

IRS has also made an effort to clarify where there might be a reporting requirement for a Health Care Flexible Spending Account (HCFSA).  Generally, employers that only permit employees to make a pre-tax salary deferral will not include those amounts in the healthcare component of Box 12, code DD on the employee’s W-2.

IRS Offers 39 Questions and Answers

Where this new guidance departs from prior guidance is notable.  For example, the Question/Answer to number 37 and 38 are noteworthy – that employers must include the cost of fixed indemnity coverage in the health benefits cost total reported on the W-2.

“An employer is required to include in the aggregate reportable cost reported on Form W-2 the cost of coverage provided under hospital indemnity or other fixed indemnity insurance, or the cost of coverage only for a specified disease or illness, if the employer makes any contribution to the cost of coverage that is excludable under IRC Section 106 (of the Internal Revenue Code) or if the employee purchases the policy on a pre-tax basis under an IRC Section 125 cafeteria plan,” officials say.

With Question/Answer # 38, they make the case for the converse of that: “[t]o the extent the employer merely provides the opportunity for employees to purchase an independent, noncoordinated fixed indemnity policy and the employee pays the full amount of the premium with after-tax dollars, the cost of coverage provided under that policy is not required to be reported on Form W-2,” officials say.

IRS Clarified Exemptions This Notice clarifies that the reporting requirement does not apply to certain types of coverage, including the following:

  • Dental and vision plans meeting the conditions of an “excepted benefit” for certain HIPAA purposes (if your dental and vision plans are bundled with your medical/Rx plans then they are not excepted benefits).
  • Coverage in an EAP (Employee Assistance Plan), wellness program or on-site medical clinic if COBRA enrollees aren’t charged a premium for that coverage.
  • Health Care Flexible Spending Accounts (HCFSAs) funded solely by salary reduction contributions (if you offer credits to a HCFSA then it will be reportable).
  • Certain independent, non-coordinated hospital or fixed indemnity insurance offered on an after-tax basis to employees (if you, the employer pay for these coverage, or permit your employees to pay for them on a pre-tax basis, then they’ll become reportable).

While the IRS did issue prior guidance (see links below) under Notices 2010-69 and 2011-28, there are a few areas where this latest guidance expands and replaces prior guidance.

You will want to note the following differences:

  • Coverage costs may be based on your (the employer’s) available information as of December 31st.  As such you won’t have to reissue and recalculate a W-2 merely because, for example, an employee informs you in January that he divorced his spouse in late November, and you’ve got to process her COBRA offering.  You may rely upon the information that you had, in your possession as of December 31st and issue your W-2 with confidence.
  • Alternative methods are available to calculate the reportable amounts for coverages that extend over payroll periods that might span past December 31st.  You just need to remain consistent in how you calculate that for all employees.
  • The prior guidance for employers that do not need to calculate and report these amounts on their W-2s is based upon the number of W-2s you issues in the prior calendar year.

Your immediate attention to this is appreciated, as many employers, should be tracking these elections now for reporting on the W-2s they’ll be issuing as soon as January 31, 2013.

Short example:  You’ll track that Bob Smith had EE-only coverage for January 2012 in the PPO at a cost of $505.  For February 2012, Bob will add his new wife and have EE-Spouse coverage in the PPO at a cost of $715.  Then, in May 2012, Bob will add his newborn daughter to the plan and switch to the HMO (family coverage) at a cost of $1450, which he’ll maintain until December.  Here’s the math:  ($505 x1) + ($715 x3) + ($1,450 x8) = $14,250 added to Bob’s W-2 in Box 12, using code DD.

Peace of mind?

In section IV of this Notice, the IRS makes it clear that future guidance will be prospective.  If future guidance is issued that requires employers to report additional amounts, such guidance will be prospective only and will not apply until January 1 of the calendar year beginning at least six months after the date the guidance is issued.  Again, they want employers to rely upon this guidance and plan accordingly.


  • 2013: Beginning with W-2s issued on 1/31/2013 for 2012 earnings, employers will provide this cost data in Box 12, using code DD (an information only box).
  • 2014: Less than 250 employees? In 2012, your company is relieved from tracking & reporting the value of health care coverage on Forms W-2.  You’ll start with your 1/31/2014 issued W-2s for calendar year 2013.

IRS Notices regarding W-2 reporting for employer-sponsored group health plan coverage:

  • Notice 2010-69:  the IRS altered the reporting requirement for W-2s.
  • Notice 2011-28: the IRS offered transitional guidance as stated on the pages above.
  • Notice 2012-9:  the IRS clarified a few matters with regard to HCFSAs, different organizational types and the inclusion of EAP or other non-ERISA-excepted-benefits for which COBRA premiums are charged to Qualified Beneficiaries.
  • IRS’ Chart based on Notice 2012-9 is available here.

AP Benefit Advisors’ Links

COBRA Administration

Posted January 3, 2012 by Megan DiMartino

AP Benefit Advisors offers a number of insurance and administration services to optimize the cost and effectiveness of significant and complex programs needed to keep businesses running smoothly. One such service is the COBRA process, ensuring that companies are in compliance with all regulations. COBRA regulations can be numerous and intricate, like recent ARRA and extension of benefit legislation, as well as any and all extensions or amendments likely to be added in the future. Leveraging experienced and qualified expertise in these matters can lead to a number of positive factors such as reduced liability and reduced expenditure.

Services include:

  • New Hire Notifications
  • Qualifying event notifications
  • FMLA Compliance
  • Direct billing to qualified beneficiaries
  • Remittance to insurance companies of paid premiums
  • Record keeping of all transactions
  • Employer reporting capabilities

For more on this and other important services, click here.

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