New COBRA requirements

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Late on Friday, the Senate approved the economic stimulus legislation sending the bill to the President for his signature. It is unclear when he will sign the legislation, but his signature is expected this week.
As I indicated last week, the bill contains a number of important COBRA revisions that plan sponsors will need to immediately implement. These provisions are discussed in more detail below. In addition, beginning March 1, 2009, the bill also increases the monthly amount for transit passes to the level allowed for parking, and the bill also makes certain changes with respect to the HIPAA privacy and security rules implemented as part of the health information technology provisions. For those who would like to review the actual language, I have attached Division B of the bill to this email. The COBRA provisions begin on page 396 of the PDF.
The COBRA revisions are effective March 1, 2009. Due to this very short deadline, a conference call has been scheduled for Wednesday between Treasury and the benefits community. We expect that a number of questions will be answered during that call. Due to the importance of Treasury input in this process, we will be distributing our Legal Alert after this call so that we can incorporate the guidance which is expected to flow from that call. With that in mind, the following is a summary of the final COBRA revisions.
COBRA Subsidy
The COBRA premium subsidy applies to involuntary losses of employment between September 1, 2008 and December 31, 2009. Under the subsidy, the qualified beneficiary would pay 35% of the applicable COBRA premium and 65% of the premium would be subsidized by the employer. The employer may then claim the amount of that subsidy as a credit against its payroll taxes. The subsidy would expire after 9 months, leaving the remaining months as unsubsidized. If a second qualifying event occurred during that timeframe, it appears that the qualified beneficiary would be able to continue utilizing the subsidy (e.G., a divorce or death). The bill requires a special 60-day election period for those who are eligible for the subsidy but failed to previously elect COBRA - e.g., an individual who terminated employment in October 2008 and who did not elect COBRA would receive a second chance to enroll currently. Further, the bill allows, but does not require, employers to allow current COBRA participants to switch to any other medical option under the employer’s plan. The COBRA provisions specifically do not apply to health FSAs. Finally, the subsidy starts to phase out for individuals with incomes above $125,000 for single and $250,000 for married couples.
COBRA Expansion
The House version of the bill would have expanded COBRA for those individuals who are at least 55 years old or who have at least 10 years of service. This provision was eliminated by the conference committee, and is not in the final bill.
Preparation for Change
A number of administrative revisions will be needed to implement the new COBRA provisions. These revisions include the following:
1. Employers/COBRA administrators will need to prepare a special enrollment notice and send that notice to all employees who terminated employment since September 1, 2008. These employees could then elect COBRA currently with the premium subsidy. COBRA would continue for the remainder of its original term.
2. Employers/COBRA administrators will need to prepare a special notice to existing COBRA participants informing them of the new premium subsidy and their new premiums going forward, and possibly allowing them the opportunity to change to another medical option offered by the employer. The bill includes a 60-day grace period that allows refunds of previously paid premiums.
3. Administrative procedures will need to be developed to implement all of the changes (e.g., new premium structure, new notices, and calculating the amount of the subsidy actually utilized each month so that the proper amount can be credited against the employer’s payroll taxes). In addition, the subsidy only applies to involuntary terminations. Failure of employers to properly identify those who are eligible for the subsidy will mean that the employer’s payroll taxes are unpaid, potentially subjecting employers to underpayment penalties.
4. Additional notices will need to be developed to inform COBRA participants when they reach the maximum subsidy limit.
5. Additional procedures and notices will need to be developed to allow high income enrollees to opt out of the subsidy. An attestation process is included in the final bill.
6. The existing COBRA initial notice and election notice will need to be modified to include the new subsidy rules on a going forward basis.
Some of these issues should be become clearer after the Treasury conference call on Wednesday. We will incorporate the Treasury guidance in our Legal Alert that will be sent later this week. If you have any questions, please feel free to contact me.
recovery_bill_div_b
Mark L. Stember
Kilpatrick Stockton LLPSuite 900607 14th Street, NWWashington, DC 20005t 202.508.5802f 202.585.0018
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Effective Benefits Communication

Effective Benefits Communications Saves Your Company Money, Time and Energy

by J. Keith Johnson
Agency Development Manager
Colonial Life


As health care costs continue to rise, it’s more important than ever that your employees understand and appreciate the benefits you provide for them. Along with increasing health insurance costs comes increasing competition for quality employees, and you want to attract and retain the best. In fact, the average turnover rate of top-performing employees is 17 percent at companies that offer rich benefits programs but poorly communicate them to workers, as opposed to 12 percent at businesses with less comprehensive programs but better communication strategies.[1]
A sound benefits package is a plus but only if employees know and understand what you make available to them. A quality voluntary benefits partner can help by providing professional, consistent communications throughout the entire enrollment process. As a result, employees will not only understand their benefits but also appreciate them.
Effective benefits communications has two integral phases: before the enrollment and during the enrollment. For each phase, your voluntary benefits partner should be able to deliver a wide range of services and capabilities.

Pre-Enrollment Communications
Custom Communications. A quality voluntary benefits provider can provide enrollment communications such as letters, fliers, PowerPoint presentations, brochures, e-mails, posters, tent cards — whatever works best to help employees learn the about the upcoming enrollment and the key details of the benefits offerings.
Group Meetings. To help provide background on the overall benefits program, highlight any major changes in the program and introduce any new offerings, the enrollment process should begin with a group employee meeting that covers key highlights of the benefits program.

Enrollment Communications Through One-on-One Sessions With a Benefits Professional
Advances in enrollment technology have made enrollments simpler and easier to administer; however, nothing can replace the value of having a trained benefits professional meet with employees individually to review and enroll their benefits. Two-way communications between a benefit professional and an employee is critical for effective benefits communications.
Using the latest enrollment technology, a benefits professional can help employees consider their personal benefits situation and see the impact of their benefits selections on their paycheck. Communication services can include:
· Helping employees verify and update basic employee data.
· Highlighting each employee’s existing benefits, pointing out what the employee contributes and what the employer contributes.
· Reviewing the employee’s benefits selections and how each affects the paycheck so the employee can see exactly what the deductions will be and, if pretaxing, what the savings can be.
· Showing the employee his or her entire benefits package, including paid time off, uniform costs or any specific benefits you want to highlight. Again, the employee can see his or her own contributions to the benefits package, as well as what you contribute.
· Providing a detailed listing of the employee’s selections and contributions as one last verification of plan information and premiums.

So what’s the advantage of effective benefits communication? You’ll save costs, time and energy — plus, you’ll gain greater employee satisfaction through personal, quality benefits communication.


About the Author
J. Keith Johnson is an Agency Development Manager for Colonial Life. Keith is responsible for marketing Colonial Life’s products, programs and services in the Kansas/Missouri area.
Colonial Life & Accident Insurance Company is a market leader in providing insurance benefits for employees and their families through their workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states, the District of Columbia and Puerto Rico. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group.
For more information about Colonial Life’s products and services or opportunities with the company, call Keith at 913-205-6396 or visit www.coloniallife.com.


[1] 2005 Watson Wyatt Worldwide WorkUSA® study on effective employee-driven financial results

CMS requirements

Employers, health carriers, and their health insurance brokers are busy during a usual quiet time due to the government requiring dependent SSN's on all covered employee's. Extra requirements mean extra costs.

Benefits Solutions

Benefits Solutions to Health Insurance Dilemma

by J. Keith Johnson
Benefits Representative- Olathe, KS
Colonial Life


Rapidly rising health care costs and the plight of the uninsured have reached the status of nearly daily mention in most news media. As health care costs continue to increase, many businesses are moving toward high-deductible major medical plans in an effort to better manage benefits program costs. Yet this approach can put employees at greater financial risk, forcing them to pay the expanding difference between what their health insurance covers and what their medical care costs. In addition, premiums for employer-sponsored health insurance have been rising four times faster on average than workers’ earnings since 2000.1
While that’s bad enough news for workers with health insurance, it’s a potential disaster for those who don’t have health coverage to help buffer these costs. A recent Census Bureau report estimated 47 million Americans have no health coverage.2 Still more worrisome is the fact that most uninsureds belong to a family with at least one working member. 3
The good news is employers have access to two solutions to meet this health coverage dilemma:
§ A voluntary supplemental health insurance plan can help fill gaps in coverage under a high-deductible major medical plan, such as increased deductibles and out-of-pocket maximums.
§ A group limited benefit hospital confinement indemnity insurance plan for employees who don’t have access to major medical insurance through their workplace or their spouse’s workplace.

Voluntary Supplemental Health Insurance
With voluntary supplemental health insurance, businesses can offer their employees a solution to help fill coverage gaps and protect employees against increasing out-of-pocket expenses. These products typically pay lump-sum benefits for medical expenses resulting from inpatient hospitalization and rehabilitation unit or outpatient services, diagnostic testing, doctor’s office visits and wellness checkups. For example, an employee who has to go into the hospital may have to pay a $1,500 deductible before health insurance kicks in — money the employee has to pay up front. With voluntary supplemental health insurance, the employee would receive a lump-sum benefit payment for the inpatient confinement and could use it to help pay for the deductible.

Group Limited Benefit Hospital Confinement Indemnity Insurance
This type of insurance is a group product that provides benefits to help insureds pay many routine, noncatastrophic health care expenses. It’s not major medical coverage, and it isn’t a replacement for major medical coverage. Offered through the workplace at group rates, this plan can meet the need for affordable, limited and clearly defined health benefits for full-time and part-time workers who don’t have access to major medical insurance and need some coverage for basic, routine medical expenses. Coverage is available for:
Doctor’s office visits
Outpatient diagnostic and lab tests
Inpatient hospital stays
Surgery
Prescription drugs

With either plan, benefits communication plays a critical role in successful implementation. Consistent, clear communication through group and one-on-one meetings with employees helps ensure they understand what their plan covers and what it doesn’t. This leads to much greater satisfaction with the benefits plan. A quality voluntary benefits provider can deliver this service at no direct charge to the employer.
Rising health care costs and the resulting plight of the working uninsured are not likely to go away anytime soon. But innovative products like voluntary supplemental health insurance and group limited benefit hospital confinement indemnity insurance provide workable solutions for the health care cost issue.

About the Author
J. Keith Johnson is an agent for Colonial Life. A veteran of more than six years in the insurance and benefits industry, Mr. Johnson is responsible for marketing Colonial Life’s products, programs and services in the Kansas/Missouri area.
Colonial Life & Accident Insurance Company is a market leader in providing insurance benefits for employees and their families through their workplace, along with individual benefits education, advanced yet simple-to-use enrollment technology and quality personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states, the District of Columbia and Puerto Rico. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group.
For more information about Colonial Life’s products and services or opportunities with the company, call J. Keith Johnson 913-205-6396 or visit www.coloniallife.com.
# # #


1 The Henry J. Kaiser Family Foundation, 2006 Employee Health Benefit Survey, September 26, 2006.
2 U.S. Census Bureau report, Aug. 28, 2007.
3 California Health Care Foundation, 2005.
4 “Growth Potential of Small Business Markets,” LIMRA, 2006.
5 “Statistics of U.S. Business,” U.S. Census Bureau, 2004.

Government now requires SSN on dependents

Office of Financial Management/Financial Services Group
DATE: June 23, 2008
SUBJECT: Collection of Social Security Numbers (SSNs), Medicare Health Insurance Claim Numbers
(HICNs) and Employer Identification Numbers (EINs) (Tax Identification Numbers) –
ALERT
This ALERT is to advise that collection of SSNs, HICNs, or EINs for purposes of compliance with the reporting requirements under Section 111 of Public Law 100-173 is appropriate.
SSNs and EINs:
The SSN is used as the basis for the Medicare HICN. The Medicare program uses the HICN to identify Medicare beneficiaries receiving health care services, and to otherwise meet its administrative responsibilities to pay for health care and operate the Medicare program. In performance of these duties, Medicare is required to protect individual privacy and confidentiality in accordance with applicable laws, including the Privacy Act of 1974 and the Health Insurance Portability and Accountability Act Privacy Rule. Please note that The Centers for Medicare & Medicaid Services (CMS) has a longstanding practice of requesting SSNs or HICNs for coordination of benefit purposes.
The EIN is the standard unique employer identifier. It appears on the employee’s federal Internal Revenue Service Form W-2, Wage and Tax Statement received from their employer. The Medicare program uses the EIN to identify businesses. The establishment of a standard for a unique employer identifier was published in the May 31, 2002 Federal register, with a compliance date of July 30, 2004.
A new Mandatory Insurer Reporting Law (Section 111 of Public Law 110-173) requires group health plan insurers, third party administrators, and plan administrators or fiduciaries of self-insured/selfadministered group health plans to report, as directed by the Secretary of the Department of Health and Human Services, information that the Secretary requires for purposes of coordination of benefits. The law also imposes this same requirement on liability insurers (including self-insurers), no-fault insurers and workers’ compensation laws or plans. Two key elements that will be required to be reported are SSNs (or HICNs) and EINs. In order for Medicare to properly coordinate Medicare payments with other insurance and/or workers’ compensation benefits, Medicare relies on the collection of both the SSN or HICN and the EIN, as applicable.
As a subscriber (or spouse or family member of a subscriber) to a group health plan arrangement, your SSN and/or HICN will likely be requested in order to meet the requirements of P.L. 110-173 if this information is not already on file with your insurer. Similarly, individuals who receive ongoing reimbursement for medical care through no-fault insurance or workers’ compensation or who receive a settlement, judgment or award from liability insurance (including self-insurance), no-fault insurance, or workers’ compensation will be asked to furnish information concerning their SSN and/or HICN and whether or not they (or the injured party, if the settlement, judgment or award is based upon an injury to someone else) are Medicare beneficiaries. Employers, insurers, third party administrators, etc. will be asked for EINs.
To confirm that this ALERT is an official Government document and for further information on the mandatory reporting requirements under this law, please visit the CMS website at www.cms.hhs.gov/MandatoryInsRep.
MMSEA111AlertSSNandHICNandEINcollection062308final