So Really, How Many Employees Do You Have?

The Answer Is Not As Easy As It May Seem
By Robert Falke, Benefits Consultant

Sometimes, it’s just not that easy to determine how many employees you have.  And in today’s world, it’s more important than ever for you know how to do it correctly.  So get your calculator out and listen up.  Particularly if you hire lots of part-time and/or seasonal employees.  Here’s a summary of what you should know.

Large vs. Small

The new rules of healthcare kicking into gear in the coming year are quite different for “large” companies vs. “small” companies.  And fifty is the magic number.  Large companies are companies who, on average, employ 50 or more full-time employees plus full-time equivalents from the proceeding calendar year.  Small companies are everyone else.  

Why Does it Matter?

The “pay or play” provisions of the ACA will apply if you are a large employer.  As a large employer, your employee’s medical program will need to pass the Essential Benefit and Affordability rules.  It also comes into play if you decide to abandon your employee medical program and send your employees to the newly established state/federal exchanges (expected to be available in late 2013).  If your plan does not pass the first scenario, penalties may apply.  If you elect to not offer coverage, penalties will apply.  So it’s important to know if you’re “big” or “little.”

Do the Math

The term “FT employees” in the tax code (Notice 2011-36) means the sum of your full-time employees and full-time equivalents. Full-time employees are employees who work on average 30 hours a week or more.  That part is relatively straightforward.  The catch is in the full-time equivalents  (FTE).  To determine your FTE:

(1) Calculate the aggregate number of hours of service (but not more than 120 hours of service for any employee) for all employees who were not full-time employees for that month.

(2) Divide the total hours of service in step (1) by 120. This is the number of FTEs for the calendar month.

For example, you may have only 35 employees (working full-time, or more than 30 hours a week). However, you have dozens of part-time and seasonal help whose total hours  in the proceeding year add up to 17 FTEs.  So now you are classified as a “large” company and must comply with the pay or play healthcare mandates.

New Notice Provides Safe Harbor

In early September, the IRS released new guidelines to help employees determine the full-time employment status of their employees.  The new,  look-back/stability period safe harbor method allows an employer to determine each employee’s full-time status by looking back at a defined period of not less than three but not more than 12 consecutive calendar months, to determine whether the employee averaged at least 30 hours of service per week. If the employee were determined to be a full-time employee during this period, then the employee would be treated as a full-time employee during a subsequent “stability period,” regardless of the employee’s number of hours of service during the stability period. 

Additional details and nuances are provided at

http://www.irs.gov/pub/irs-drop/n-12-58.pdf.

If you’re one of those companies who are not quite sure where you fall – or need help in accurately calculating the size of your workforce, contact your benefits advisor.  Getting a handle on these issues now will help you prepare for the new future of healthcare.

For more information found in the Internal Revenue Bulletin: 2011-21, click here (http://www.irs.gov/irb/2011-21_IRB/ar07.html#d0e145.

How Lucky Are You?

Odds are, most Americans will need long-term care at some point.
By Mike Ashley,  Senior Benefits Consultant, Inc.

It never ceases to amaze me that individuals and many financial planners apply a totally different set of risk management principles to long term care than they do for other types of risk. Life insurance is a sure bet.
As long as the policy is in force, there is a 100% chance that you will qualify to collect at some point.  Outside of that, other risks to our financial well-being require an evaluation of risk vs. reward.

According to the Department of Health and Human Services (2006), 70% of all Americans who reach age 65 need long term care at some point in their lives.

Now, compare this with other risks that people insure for without even giving it a second thought.

• Losing your home to a fire  -  1 in 1200
• Car Accident  -  1 in 240
• Hospital stay costing over $30,000  - 1 in 15

According to the latest Genworth Cost of Care Survey, the current cost in the Kansas City area for a private room in a nursing home is $50,000 per year and is projected to be $254,000 per yr. in 30 yrs. Home health care, for just an aide, is currently $48,000 per year and projected to be $210,000 in 30 years.

If a couple, now age 55 both required 2.5 yrs. of care (avg. length of care) at age 85, the cost would be in the neighborhood of $1,300,000.00.  A lot of people certainly do have sufficient assets to cover this kind of expense. The question is “do you want to”?

Consider that a policy covering the cost of 3 yrs. of care for couple age 55 would run about $2400 per year or $200 per month.  If the $ 1.3 million generated .002 % interest, this would cover the premium, leaving the $1.3 million intact.

We all need a little luck now and then. But you might not want that to be your only long-term care strategy.

User-Friendly Healthcare Information?

That's the Goal.
By SRA Benefits

New rules under the Affordable Care Act (ACA) requires businesses renewing their group healthcare plans after September 23, 2012, to provide consumers with clear, consistent, and comparable information about their health plan benefits.

Specifically, these rules will ensure consumers have access to two key documents that will help them understand and evaluate their health insurance choices:

• Short easy-to-understand Summary of Benefits and Coverage ( or “SBC”); and 
• A uniform glossary of terms commonly used in health insurance coverage, such as “deductible” and “co-payment." 

Who is Responsible for the SBC?
Insurance companies are working hard to prepare the SBC documents to share with their customers, but it is the business owner’s responsibility for distributing them to plan participants (for all insured and self-funded ERISA and non-ERISA group health plan customers, including those that are grandfathered).   Employers should check with their carrier or their advisor to see when their SBC documents will be available.

For self-insured plans, the employer is responsible but may make arrangements for their third party administrator to produce and distribute the SBC.

Key Features

One of the key features of the SBC is a plan comparison tool called “coverage examples” which will illustrate sample medical situations and how they would be covered under the plan.  The examples are meant to help consumers understand and compare what they would have to pay under each plan they are considering.

With the mandated timeframes and notification procedures it will become imperative that employers make their benefits decisions earlier to stay in compliance with these new requirements.   For example: For open enrollment and renewals on or after September 23, SBCs should be available to employers for distribution to their employees no later than 30 days before the start of the new policy year.

Guidelines for both a printed version of the SBC and requirements for electronic access to benefit information are also in place.  Your insurance carrier or advisor can provide more detail.

Penalties Can Be Costly

During the first year, the federal watch dog agencies have indicated they will not impose penalties on issuers and employers that are working diligently and in good faith to comply.  However, businesses that willfully fail to comply may be subject to a fine of up to $1,000 for each failure per enrollee. 

For more information on Summary of Benefits Coverage,  visit: http://www.healthcare.gov/news/factsheets/2011/08/labels08172011a.html

Women's Preventative Healthcare Coverage Now Mandatory

Coverage Began with August 1, 2012 Renewals
By David Wetzler, President and Senior Benefits Consultant

New and/or renewing groups that have a non-grandfathered plan* must now include an expanded line of healthcare coverage at no charge, that includes the following services for women:

• Well-woman visits;
• Screening for gestational diabetes;
• Testing for the human papillomavirus (HPV) as part of cervical cancer screening for women age 30 and older;
• Domestic and interpersonal violence screening and counseling;
• Counseling about sexually transmitted infections;
• Counseling and screening for HIV
• Counseling on breast-feeding, including breast-feeding equipment;
• Counseling on interpersonal and domestic violence;
• FDA-approved contraceptive methods, and contraceptive education and counseling;

Benefits for generic or generic equivalent prescriptions and supplies for these newly covered services will be paid at 100% as well.

Please Note:Religious employers who meet eligibility requirements, such as churches, synagogues, mosques, may opt-out entirely from the contraceptive coverage.  And nonprofit religious employers such as universities, hospitals, and social service organizations who, based on religious beliefs do not currently provide contraceptive coverage in their plans, are eligible for a one-year safe harbor from enforcement of these new guidelines.

Adding these services could result in an increase to the group's premium. SRA Benefits healthcare advisors will work with each client to determine how this change impacts the cost of coverage.

Some carriers are electing to offer this expanded coverage immediately, prior to renewals. Contact your benefits advisor for additional information.

*A grandfathered plan is one that was in existence on March 23, 2010. At least one person must have been enrolled as of that date.  Grandfathered plans are exempt from certain healthcare reform mandates.