Frequently Asked Questions - EMPLOYERS
• For Employers • For Employees • Glossary

Things to Consider

What do benefit plans do?
Help employees meet insurance needs that otherwise cannot be met. This is the fundamental reason for employee benefit plans, and planners should always keep it in focus. Employee benefits have primarily been developed to help employee's meet fundamental needs.

What Health Benefits do my employees want?
The first step in adopting a new benefit design or change is to make a preliminary determination of the types of health benefits that will be most valued by employees. In smaller firms this can often be done by personal interviews and management’s personal knowledge of employees. Larger firms often use questionnaires used by benefit consultants.

When choosing a health insurance plan:

• What is the monthly or annual cost of the plan?
• Is there a deductible that must be met before the plan begins to cover my medical expenses?
• After the deductible, what portion of medical expenses will the plan cover?
• What kinds of doctors are part of the plan and where are the medical facilities located?
• Are there limits on the amount of coverage the plan will offer under certain medical conditions?
  

Eligibility

Who can I, as an employer, allow to enroll in my benefit plans?
Well, only those employees who are eligible, based on the criteria you set up when you originally created your plans. For example; Full-time (W2) employees who work at least an average of 30 hours a week are allowed to participate. Individuals who are on the Board of Directors, contractors doing business with your firm (exceptions can be made for independent contractors in the "small group" arena) or family members not working for your company are all examples of individuals not eligible for your plan.

COBRA

When must our firm comply with the COBRA Laws?
Employers who in the last calendar year employed 20 or more full-time/part-time employees on 50% or more of the working days, must comply. New provisions allow for a formula in regard to counting part time employees (how many hours count to make up 1 employee). Yet, when the numbers are close it may be best to comply.

What do we need in order to comply with COBRA?
For a more in depth answer, please refer to our Laws & Rules page and follow the COBRA links. However a brief overview is as follows:

Timely notice to employees is an important issue. Employees must receive notice of their rights by way of the mail to their home address when they become covered for benefits as well as termination of employment. Verbal communication does not constitute notice. In addition, other tips and opportunities to convey this important information are:

• Include general notice in employees enrollment packet;
• Post on bulletin boards;
• Establishing procedures for COBRA administration is important. Keep a log of COBRA Events- dates, actions, follow-up timeline, etc. COBRA has become tricky and complex. Many employers have hired third party administrators to handle COBRA.

Plan Design

What type of medical plan design would best suit our firm?
This answer can only be determined by analyzing many different issues particular to specific employer:
1. Where do the employees live and how will they access healthcare?
2. How much can the employees afford to pay in premiums, deductibles, co-pays, co-insurance, etc.?
3. Do we want our plan to pay for/cover only major illnesses or do we want our plans to address day in and day out Health Care- office visits, routine care, drugs, etc.?

Should we entertain the idea of being self-funded on a portion of our medical plan?
Most firms of under 100 employees (exceptions do exist for some firms 25 to 100 range) usually decide it is safer, wiser, and easier to let the insurance company/health plan take all the risk. In this scenario the only thing employers have to do is pay their premium. However, once an employer reaches a certain size and financial strength, the opportunities/benefits to partially self insure do exist. Being self funded is not just a one way street to saving money every year; it is a risk sharing opportunity. This will include years in which claims are low and years in which claims are high. Under a fully insured plan there is no opportunity to cash in on favorable claim years. This decision requires a good bit of thought, a solid Human Resource Dept., and the financial strength to endure year after year.

 

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