Special People in the Northeast

Benefits Analysis
Parts I & II

RMI 3501 912080506 912173425

Table of Contents
Healthcare Benefits..............................................................................................3 Keystone HMO...4 Keystone POS.............................................................................................4 Independence Blue Cross PPO....5 Colonial HealthCare Inc. Dental......5 Colonial HealthCare Inc. Vision......6 Express Scripts Prescription.........6 Flex Benefit Plan.....6-7 Loss of Income......7 Life Insurance and AD&D.....7-8 Short-Term Disability Insurance...8-9 Long-Term Disability Insurance......9 Retirement.........10 Other Exposures.....10 Tuition Assistance....10 Employee Assistance, Legal Expenses.....11

Benefits Matrix
Loss Exposure
MEDICAL EXPENSES
Hospital/Physician Dental Vision Prescription LTC Retiree Health Care LOSS OF INCOME - DEATH Non-Accidental and Non-Occupation Death Accidental Death Yes Yes Yes Yes Yes Yes Yes Yes Independence Blue Cross Keystone: HMO and POS, Personal Choice PPO, Flexible Benefits Plan-HSA Dental Program Colonial HealthCare Inc., Flexible Benefits Plan-HSA Vision Program - Colonial HealthCare Inc., Flexible Benefits Plan -HSA Prescription Program -Express Scripts Inc., Flexible Benefits Plan-HSA Flexible Benefits Plan-Dependent Care Account COBRA, OASDI Group Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b) Group Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b), AD&D Insurance Group Life Insurance, Voluntary Universal Life Insurance, Voluntary Term Life Insurance, OASDI, 403(b), Workers Compensation Unemployment Insurance STD Insurance, AD&D, OASDI, 403(b), Family and Medical Leave, Leave Time LTD Insurance, AD&D, OASDI, 403(b) STD Insurance, AD&D, OASDI, 403(b), Workers Compensation LTD Insurance, AD&D, OASDI, 403(b), Workers Compensation 403(b), OASDI Tuition reimbursement through Tuition Assistance Program Prudential ComPsych Program On-site Daycare, Dependent Care Account

Coverage

Coverage and Benefits Provided

Occupational Death

Yes

LOSS OF INCOME - UNEMPLOYMENT

Unemployment Short-Term, Non-Occupational Disability Long-Term Non-Occupational Disability Short-Term Occupation Disability Long-Term Occupational Disability Retirement Yes

LOSS OF INCOME DISABILITY

Yes Yes Yes Yes

LOSS OF INCOME RETIREMENT

Yes Yes Yes Yes

OTHER LOSS EXPOSURES

Education Assistance Work/Life Dependent Care

Provided as a part of Flexible Benefits Account with Reliance Standard Life Insurance Company. Combination of sick, vacation, and personal time.

Property-Liability Legal Expenses

No Yes

Prudential ComPsych Program

Summary of Benefits
Benefit Plan
A.M. Best Rating

Funding

Financing

Eligibility
Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum of 30 hours per week Employees working a minimum of 30 hours per week Employees working a minimum of 30 hours per week

Independence Blue Cross Keystone HMO Independence Blue Cross Keystone POS Independence Blue Cross Personal Choice PPO Colonial HealthCare Inc.Dental Colonial HealthCare Inc.Vision Express Scripts Prescription Plan Prudential Annuities Life Assurance Corp. Group Life Insurance ING Life Insurance and Annuity Company Voluntary Universal Life Insurance Reliance Standard Life Insurance Company Voluntary Term Life Insurance Prudential Annuities Life Assurance Corp. AD&D Insurance

n/a

Fully Insured

Contributory

n/a

Fully Insured

Contributory

n/a

Fully Insured

Contributory

n/a

Fully Insured

Contributory

n/a

Fully Insured

Contributory

n/a

Self-Insured

Non-Contributory

A+

Fully Insured

Non-Contributory

Fully Insured

Employee-Pay-All

Fully Insured

Employee-Pay-All

A+

Fully Insured

Non-Contributory

Source: http://www.ambest.com/ Based on Financial Strength

**

Prudential Annuities Life Assurance Corp. STD Insurance Prudential Annuities Life Assurance Corp. LTD Insurance Principal Financial Group 403(b)

A+

Fully Insured

Non-Contributory

Employees working a minimum 30 hours per week Employees working a minimum 30 hours per week Employees working a minimum 20 hours per week

A+

Fully Insured

Non-Contributory

A+

Fully Insured

Contributory

Healthcare Benefits
Special People in the Northeast (SPIN) offers three distinct health plans for their employees to choose from to help mitigate losses in the form of health expenses. Specifically, SPIN offers Keystone HMO, Keystone POS, and Independence Blue Cross (IBC) Personal Choice PPO. The Keystone HMO and POS are both owned and operated by IBC. This wide range of pan options allows employees to choose a plan which best fits their lifestyle, family, and earnings. All three plans have the same eligibility requirements and guarantee full coverage for certain services and scheduled prices for others. Any employee who works 30+ hours at SPIN is eligible for medical benefits along with their dependents, which include spouses and children up the age 26. Domestic partners who have lived with an employee for the last six months can also be considered a dependent, but premium deductions for a partner are made post-tax. Domestic partners must also show their financial interdependence status by providing at least three documents which support

Source: http://www.principal.com/about/financialstrength.htm

this claim, such as a joint lease, drivers license with common address, common ownership of a vehicle, proof of joint bank account, or proof of designation as the primary beneficiary for life insurance. The plans all provide full coverage for preventive care, which include annual physicals, routine gynecological exams and mammograms, immunizations, and other preventive screenings. There is a $30 co-payment per primary care physician (PCP) visit, $50 co-payment per specialist visit, and a $125 co-payment for emergency room visits. Inpatient hospital services are also scheduled for $400 a day with a maximum of five co-pays.

Keystone HMO
SPIN HMO offering is Keystone HMO, a subsidiary plan of IBC. Of the three medical plans that SPIN offers, the Keystone HMO is the least expensive with a per pay contribution of $4.60 (premium for medical coverage for employee only). Like any HMO, this plan requires the selection of a PCP from the network who acts as the employees health advisor for addressing specialist and extended care. There is no coverage for out-of-network use. The Keystone HMO plan is fully insured and operates on contributory financing. Employees pay a premium each pay period, the cost of which reflects individuals

covered (employee only, employee & one or more children, employee & spouse, etc.); all payroll deductions are made pre-tax.

Keystone POS
SPIN also offers Keystone POS to eligible employees. The Keystone POS is in the middle of the cost spectrum of the three plans offered with a $31.46 premium per pay period (premium for medical coverage for employee only). This plan also utilizes a PCP, but allows participants to go to most specialists at any time without a referral. A referral from a PCP is required, however, for X-rays, podiatry, spinal manipulation, and physical or occupational therapy. To receive care out of the Keystone network an annual per person deductible of $500 applies and expenses are covered at 70%. The Keystone POS is fully insured and participating employees contribute to the plan.

Independence Blue Cross Personal Choice PPO

The final plan SPIN offers is a Personal Choice PPO, again through IBC. The IBC PPO is the most expensive of the three plans SPIN offers with a premium deduction of $58.13 per pay period (medical coverage for one employee only). Participants do not need to select a PCP and may utilize any specialist within the PPO network at their own discretion. Preventive care is again covered at 100% of costs. Choosing to go out of the

PPO network applies an annual $1,500 deductible to each person, after which expenses are covered at 50%. Certain emergency out-of-network claims may be covered depending on the situation and a claim review. The Personal Choice PPO is fully insured and requires employees contribute to the plan.

Colonial HealthCare Inc. Dental

SPIN offers a dental plan to all its employees who work 30+ hours a week. The plan is fully insured through Colonial HealthCare and requires employees make monthly contributions to the plan if they enroll dependents. For an employee to enroll there is no cost per month, and employee with one dependent pays $14 a pay period, two dependents pays $28 per pay period, and three or more dependents pays $38 per pay period. After a $25 per year deductible, the plan covers 100% of preventive care (annual checkup, x-ray every six months, etc.), 80% of basic dental care (fillings, extraction, etc.), and 50% of major dental care (crowns, dentures, etc.). The dental plan has a maxim claims limit of $1,500 per year.

Colonial HealthCare Inc. Vision

Colonial HealthCare Inc. is also SPINs insurer for its employee vision plan. Similar to Colonial HealthCare Dental, the plan is fully insured and employees

contribute monthly if they enroll dependents. Adding one dependent is $3 per pay period, two dependents is $6 per period, and three or more dependents is $7.50 per period. This plan only covers seven different vision costs, each of which has its own maximum: ophthalmologist visit, single vision prescription, bifocal prescription, trifocal prescription, lenticular prescription, contact lenses, and frames.

Express Scripts Prescription Plan

SPIN offers the Express Scripts Prescription Plan to their employees who work 30+ hours a week. Express Scripts, a pharmacy benefit management company, allows SPIN employees to access its network of pharmacies along with its mail-order pharmacy. An employee using an in-network pharmacy can get a 30-day supply of medications at different prices depending on brand: generic medications are $10, preferred brand-name medications are $20, and non-preferred brand-name medications are $35. Employees who have 90-day prescriptions can utilize Express Scripts mail order service for even larger savings: $20 for generics, $40 for preferred brand-name medications, and $70 for non-preferred brand-name medications.

Flexible Benefits Plan

Employees who work a minimum of 30 hours a week are eligible to participate in SPINs flexible benefits, which include a Medical Expense Reimbursement Plan and a Dependent Care Assistance Plan. Both plans are fully insured and administered by Colonial HealthCare. Additionally, the Flexible Benefits Plan allows for a Flex Convenience debit card which can be used to pay for eligible costs; funds are deducted directly from an employees respective benefit account and later reviewed.

Employees who enroll in the Medical Expense Reimbursement Plan have a Health Care Flexible Spending Account set up in their name. Employees may have their salary reduced by a maximum of $3,000 each year, which is credited to their account. A list of defined medical costs can be reimbursed by submitting a claim to the plan administrator or using their convenience card. Claims such as copayments or deductibles, prescription drugs and over-the-counter( no script needed) drug costs, medical supply costs, orthodontics, certain vision and dental costs, and psychiatric care are all examples of reimbursement eligible expenses. Money left over in the account at the end of the plan year is forfeited. Employees may also establish a Dependent Care Flexible Spending Account which has a $5,000 limit for single or married jointly filing employees and $2,500 for married participants filing separately. Participants may submit claims to this account (or use their Convenience debit card) for the care of dependents who are under the age of 13 or dependents of any age who cannot mentally or physically care for themselves.

Loss of Income
Life Insurance and Accidental Death & Dismemberment
SPIN offers three types of Life Insurance to its employees along with Accidental Death and Dismemberment Insurance (AD&D).The company provide all eligible employees a small Group Life Insurance plan through Prudential Annuities Life Assurance, which has an A.M. Best rating

of A+. Coverage is based on 1 x Annual Earnings or a minimum benefit of $25,000. These employees are further enrolled in AD&D, which is also provided by Prudential. Basic AD&D coverage is set to equal a participants Group Life Insurance. Employees are eligible for these benefits when they work a minimum of 30 hours a week and are beyond their probationary period. A Voluntary Universal Life Insurance program is offered to SPIN employees through ING Life Insurance Company, which received a rating of A by A.M Best. This program allows employees to purchase a Universal Life Insurance policy for themselves, their spouse and/or dependent children through payroll deductions. Employees who work at least 30 hours per week are eligible for this coverage. This employee pay-all benefit requires no waiting period and supplements SPINs Group Life insurance.

Finally, SPIN provides employees the option to purchase Voluntary Term Life Insurance through Reliance Standard Life Insurance Company, who received a rating of A by A.M Best. For employees to be covered they must work at least 30 hours per week. This term insurance supplements SPINs basic life coverage, which is a part of the customary benefits package. Employees can acquire an additional $10,000, $25,000 or $50,000 worth of term life coverage for themselves by means of SPINs Flexible Benefits Account. This is employee pay-all benefit which an individual can choose to purchase from SPIN at a lower rate than in the individual market.

Short-Term Disability Insurance

SPIN offers Short-term Disability Insurance through Prudential Life Assurance, which has a A.M. Best Rating of A+. Coverage under the policy is provided on the 15th day following a non-occupational sickness or injury. The duration of the benefit is 11 weeks for employees who work at least 30 hours per week. Eligible employees may not be part-time, seasonal or temporary and must be legally allowed to work in the United States. This plan is offered on a non-contributory basis and coverage can only start while the employee is insured under the policy. An employee is considered disabled if an injury or illness prevents them from doing all their usual duties required for work; that disability must result in a loss of weekly income of at least 20 percent. The plan provides that covered employees receive 2/3 of their weekly earnings to a minimum of $25 per week and maximum of $2,000 per week.

Long-Term Disability Insurance

SPINs Long-Term Disability Insurance is also offered through Prudential Annuities Life. Coverage under the policy is provided following a 90-day waiting period for non-occupational sickness or injury. The duration of the benefit is up to the age of retirement determined by the Social Security Act. Eligible employees must work a minimum of 30 hours a week and cannot have a status part-time, seasonal or temporary. This plan is offered on a non-contributory basis and coverage can only start while the employee is insured under the policy. An employee is considered disabled if an injury or illness prevents them from doing all their usual duties required for work

and that disability results in a loss of weekly income of at least 20 percent. The plan provides that covered employees receive 2/3 of their monthly earnings with a minimum of $100 and a maximum of $8500 per month. Disabilities due to mental illness such as depression, anxiety, bipolar illness, schizophrenia and substance related disorders are limited to 24 months of benefit coverage. Long-term benefits will not be paid for a disability that begins during the first 12 months of coverage or is part of a pre- existing condition.

Retirement
Employees can invest in a 403(b) plan as a way to save for retirement with pre-tax income payroll deductions. By contributing to a 403(b) plan, employees can build taxfree savings and interest until they are ready to withdrawal funds .SPINs 403(b) Plan is offered through Principal Financial which received a rating of A+ from A.M Best .Employees who work a minimum of 20 hours a week are eligible for the account and can begin to make deferrals on their first paycheck. An employee may defer maximum of $16,500 per year into the 403(b). SPIN matches an employees salary deferral up to 6%, or the amount deposited if less than 6%.

Other Exposures
Tuition Assistance

SPIN offers tuition assistance to employees who work 30 or more hours a week and have completed their three month probationary period with the company. Assistance will be provided for employees seeking a degree from a scheduled list that will enhance their career development within SPIN. A navigation form must be completed by the employee and reviewed by management prior to submission of the actual tuition assistance material. Assistance will be paid directly to the institution with a max benefit of $2,500 per year (defined as a period of Fall through Summer). Students must receive a C or better in undergraduate courses and B or better in graduate courses to receive the benefit.

Employee Assistance Program

SPIN offers employee assistance through a program called ComPsych, which is administered by Prudential. Eligible employees work at least 30 hours per week and have completed the 3 month probationary condition. The EPA is designed to sort out an array of personal, legal or financial matters an employee may face. Generally, this program helps address personal matters such as marital and family struggles, drug and alcohol problems, and job stress depression all through a 24 hour counselor phone line. The objective of The EPA program is to help employees cope with problems that occur outside of work, so that those circumstances do not affect job productivity.

LegalConnect is the legal component of the EPA program. Experienced attorneys can answer any legal questions over the phone. If an employee desires legal representation this service supplies the attorney, a free 30 minute consultation and 25 percent discount in standard legal fees. FinacialConnect is the economic component of the EPA program. Financial Specialists are available by phone to aid employees in areas such as debt management, savings, investing, tax inquiries and retirement planning.

Special People in the Northeast

Benefits Analysis
Parts I & II

Table of Contents
Introduction...............................................................................................................1 Employee Benefits Plan Description and Objectives...1 Goals.....1-2 Demographics.............................................................................................2-3 Funding and Financing.....3-4 Design of Health Benefits........4 Design Considerations and History.....4-5 Funding........6 Modes of Utilization and Communication......6-7 Medical Expenses Reimbursement Account...........7-8 Problems, Issues, Concerns, and Considerations in the Design of Other NonRetirement Benefits....................................................8 Life Insurance and Accidental Death & Disability.8 Short-Term and Long-Term Disability Insurance.......9 Regulatory Issues9 ERISA...9-10 HIPAA.....10 COBRA.10 PPACA.10-11 Important Changes and Suggestions.....11-12 Conclusion......13

Introduction
Special People in the Northeast (SPIN) is a non- profit human services agency headquartered in Philadelphia, Pennsylvania. SPIN designs programs to support adults and children with intellectual disabilities, as well as their families. The organization began in 1971 as a small summer camp for parents who wanted a program for their special needs children. Since then, SPIN has evolved into an organization which offers community living care, supported independence care, and constant care called Lifeshare To make their service possible, SPIN retains a workforce of 968 employees. The organization recognizes the needs of not only residents, but also its employees, and has created an employee benefits plan to provide more compensation to its workers beyond takehome pay.

Throughout this project Donna Hyde, SPINs Corporate Human Resources Officer, and Gail Meersand, head of Human Resources, played crucial roles in helpings to understand the organizations benefit package. Both work hard to maintain SPINs benefits package by balancing the goals of the plans with their respective costs.

Employee Benefits Plan Design and Objectives

Goals
Almost any company that offers benefits to it employees does so in order have a competitive hiring edge. SPIN conforms to this notion; the organization seeks to attract and retain talent in order to provide the best care possible for residents. Ms. Meersand stated that, because the organization is non-profit, it does not have the capacity to offer big salaries so SPIN seeks to draw in potential hires by providing extensive compensation through an array of benefits. Ms. Meersand also believes most SPIN applicants view the organizations offered benefits as a major decision factor when ultimately
Special People in the Northeast Benefit Analysis, Parts 1&2

deciding on employment. So far, SPIN has primarily used employee feedback to confirm the value of its benefits plan and the impact it has on prospective employees and their retention. An example of such feedback would be comments from transfer employees from other care facilities, who have found SPINs benefits to be more of more value than what was offered at their previous employer.

The structure and contents of SPINs benefit package seeks to achieve the organizations plan goal by offering an array of insurance and programs that suit most employees needs and financial status. The plan relies heavily on options to accommodate the different needs of different employees. Examples of this include three different health plans, basic and supplemental life insurance, and varying disability insurance length options. It should be noted that, until recently, there has not been significant changes made to the benefits package structure in several years, a fact which purports its ability to support a wide range of employee needs.

Demographics
SPINs workforce has an average age of 37 and can be largely divided into two groups which have similar needs in benefits, but have differing incomes and financial positions. One group is primarily made of administrative professionals and specialized care staff and the other is made of non-specialized, general care givers. Both groups have similar healthcare needs, but utilize services in different ways. Enrollment in disability insurances and supplemental life insurances are higher in the specialized workforce because of the groups older average age and its members understanding of the offered programs and their respective values. SPINs 403(b) offers different matching rates to these two groups; professionals and management receive a six percent matching benefit while regular staff and employees receive a matching schedule based on their time with the organization. SPIN operates its matching this way to retain management and also to provide an incentive for the non-

Special People in the Northeast Benefit Analysis, Parts 1&2

specialized group to remain with the organization while lessening the risk they may leave and SPINs 403(b) contributions with them.

Geographically, employees mostly reside in the tri-state area, with much of the nonspecialized workforce residing right in Philadelphia. The benefits plans many options, specifically in healthcare choices, allow employees to customize their care while also considering location and cost. Because of the centrality of the workforce, SPIN has no need for far reaching national health plans.

Funding and Financing

SPINs funding and financing selections have become more of concern for the organization as costs of offering and maintaining certain benefits has risen. Presently, SPIN only self-funds its dental and vision plans1; it is able to do this because each benefit contains a coverage maximum which allows the organization to more accurately predict and prepare for the plans costs. The funding vehicle for this self-insurance is a general asset plan. Both of benefits are contributory if dependents are added to coverage, this along with co-payments distributes costs so the full burden is not place on SPIN.

All other benefits offered by SPIN are fully insured through four different companies. Ms. Meersand stated that the organization has been seriously considering self-insuring other benefits, especially its healthcare plans because it would be easier to control costs and renewal increases (Schultz). Unfortunately, recent budget cuts in the state by the Corbett administration have drastically decreased SPINs income from the government sector. Therefore, the organization has decided to revisit the self-insurance option again when financial support is more solid. Healthcare and the organizations 403(b) are financed based on a contributory basis in order to move costs and some

It should be noted that Part 1&2 of this project mistakenly lists SPINs dental and vision plans as fully insured; they are not. Colonial HealthCare Inc. acts as the plans administrators, not insurers. Special People in the Northeast Benefit Analysis, Parts 1&2

responsibility to employees. Group Life Insurance and AD&D coverage, which is provided to every eligible employee automatically, is financed on a non-contributory basis. SPIN does this because both plans provide the most basic coverage and is meant to attract potential employees. The two additional life insurance policies provided by SPIN are examples of supplemental coverage and are therefore finances on an employee-pay-all basis

Design of Health Benefits

Design Considerations and History
The structure of SPINs health benefits plan reflects the organizations goal of retention but also shows the influence of administrators. Former CEO and current board president David Losinno insisted that SPIN use Independence Blue Cross as its healthcare provider, and so Ms. Meersand and the HR department worked heavily with brokers from Alliant and representatives from IBC to craft a plan that suited the benefits goals of the organization. Originally, administrators sought to offer an HMO and PPO as the main healthcare benefits. The HMO would provide the lowest cost of coverage while offering a wide network of physicians and specialists located all over Philadelphia. The PPO was meant to act as an alternative to the HMO to accommodate people who wanted more autonomy in their healthcare decisions. During the design process, Alliant brokers also presented SPIN with a POS plan which would be used as a middle-of-the-road option for employees who wanted the low costs of the HMO but more freedom of specialist choice as is seen in the PPO.

Today, 87% of SPINs 657 health plan enrollees use the HMO option. This trend can most likely be attributed to the considerable difference in cost of the HMO versus the POS and PPO (HMO: $4.60 vs. POS: 31.46 and PPO $58.13 per pay period). The constantly rising cost of healthcare for all types of plans has led many people to use price as their key factor in choosing healthcare (Aon
Special People in the Northeast Benefit Analysis, Parts 1&2

Consulting and Sharon). Because HMOs can better contain and control costs and utilization, they are able to offer lower premiums (Markovitch). It is evident that employees forgo the benefits of a more open network as seen in POS and PPO plans, in favor of saving money. Of the total participants who receive health benefits, only 13% choose the POS plan and 2% participate in the PPO plan. This unbalanced scale has lead SPIN to question whether the continued operation of a POS and PPO plan provides a large enough benefit to the organization compared to the costs the organization incurs to offer them. While both plans allow the benefits package to offer a wide range of services, the costs associated with their maintenance is an issue, especially because so few utilize the options.

Funding
As previously stated, SPINs health benefits with the exception of the dental, vision, and prescription plan, are fully insured through IBC. Ms. Meersand stated that, despite the decrease in government support, the organization is still very interested in moving to a self-inured plan. Having more control of its benefit options, and escaping state mandates, would save SPIN money overall (Schreck). Presently, the organization is most concerned with securing solid sources of funding to offset lost monetary support; once this is achieved, the organization will most likely self-insure all of its health benefits.

Modes of Utilization and Communication Issues

An important factor Ms. Meersand mentioned that contributes to SPINs rising healthcare costs is how enrolled employees use their health plans. One particular example that Ms. Meersand shared was how some employees in the non-specialized segment of SPINs workforce regularly use emergency rooms as primary care facilities. This, of course, can greatly contribute to premium increases for the organization, which would probably be shifted to employees. Theoretically, these coSpecial People in the Northeast Benefit Analysis, Parts 1&2

payments should deter such behavior; all three health plan options SPIN offers charge a $30 copayment for physician visits and a $125 co-payment for emergency room visits (Gruber). Ms. Meersand believes that such co-payments do not have a large effect on participants behavior and instead the organization must rely more on communication to inform employees of how their actions impact their premiums.

Communication is an important part of any benefits plan, and SPINs HR department does its best to educate employees on how their health benefits operate. Employees can attend monthly informational meetings, and receive regular newsletters on how their respective plans may be changing. Despite these efforts, it seems that many employees simply turn a blind eye to this important information, which could help them and the organization, save money (Rice). Ms. Meersand mentioned that the lack of employee attention also leads to increased administrative costs and headaches. An example can be seen in SPINs switch from a Keystone Prescription plan to its current service with Express Scripts. Some employees ignored numerous mailings and information which explained the move, the larger network gained and costs savings. Certain employees did not even realize that SPIN had made the switch until they were denied coverage for drugs because their Keystone card was no revoked at the pharmacy.

Medical Expense Reimbursement Account (MERA)

SPINs Medical Expense Reimbursement Account is an important service that the organization has greatly supported in order to help employees with the burdens of medical related fees. The wide array of eligible expenses that can be paid by the account and the issuance of MERA debit cards make saving money and ease of access easy. Unfortunately, not many employees take advantage of this service. One main factor which probably contributes to this is a lack of employee understanding of the MERA and how exactly it can benefit them. This seems to be another communication issue, in
Special People in the Northeast Benefit Analysis, Parts 1&2

which SPIN offers a great deal of information on the benefit, but not many take the time to read and understand it. Most participants in the MERA are part of SPINs specialized staff. Ms. Meersand pointed out that more people were beginning to inquire about the account, and ultimately enroll because of rising costs.

Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement Benefits
Life Insurance/Accidental Death and Dismemberment
SPIN has offered group term life and AD&D insurance for the last 25 years. These benefits are paid 100% by the organization. Ms. Meersand informed us that employees are very satisfied with these services because it allows them to obtain coverage without having to answer any medical questions. Since there is a cap on Group Term Life Insurance, SPIN offers Voluntary Universal Life Insurance to suit the needs of employees who want to purchase additional coverage. Voluntary Universal Life has been available to SPINs workforce for the last 15 years, there is significant participation in this plan, as some employees feel that the $25,000 limit on Group Term Life Insurance isnt sufficient. According to Ms. Meersand, employees are able obtain cheaper life insurance through employment and appreciate the convenience of having the voluntary aspect of this benefit deducted from their payroll. SPIN has been fortunate enough not to have encountered any issues where AD&D needed to respond. In an event this benefit was triggered, there is a schedule of indemnities if an employee becomes dismembered and if an employee dies as a result of an accident. This coverage also does not require the employees to provide proof good health and is paid 100% by SPIN.

Special People in the Northeast Benefit Analysis, Parts 1&2

Short-Term and Long-Term Disability Insurance

SPIN wanted to diversify its benefits package, so it decided to propose long term and short term disability to personnel. Ms. Meersand believes that disability insurance is an essential benefit offering, thus SPIN chooses to pay the full cost of both benefits. Long-Term Disability coverage usually starts when the period for Short-Term Disability Insurance has been exhausted. SPIN has had to deal with several disability claims during its course of business. When an employee is out on disability the productivity of the work environment takes a hit so the main purpose of this insurance is to relieve financial stress so recipients can make a quick recovery. The workforce at SPIN is proactive at recovering in a timely manner when out on disability, so most claims are short-term. The reasoning behind this is because employees only receive 66% of their weekly salary through these insurances; they appreciate the assistance provides but aim to get well so they can earn their full wage again.

Regulatory Issues
ERISA
SPIN is required under ERISA to comply with certain standards. These provisions include complying with fiduciary responsibilities, proper plan communication, and discrimination testing. When management is considering the design mechanisms for the benefits plan, the employees best interest is always paramount.

Plan communication is done through benefit and wellness seminars with employees. Plan participants are given a Summary Plan Description (SPD) either electronically or by mail. SPIN most recent government audit was performed over ten years ago and found no compliance issues.

HIPAA
Special People in the Northeast Benefit Analysis, Parts 1&2

Ms. Meersand recognizes HIPAA as an important policy that is potentially dangerous if not complied with fully. Her prime concern is the confidentiality of resident medical information. SPIN makes sure that the privacy and integrity of all healthcare records are properly protected. The organization also makes sure that employees at all levels take a role in protecting the privacy of the residents they support. SPIN has had no major compliance issues with HIPAA.

COBRA
SPIN has encountered a few problems with respect to COBRA. Ms. Meersand explained that sometimes the most problematic aspect is effectively explaining the regulation to employees. Employees assume that, under COBRA, their contribution to the cost of their health plan will not be altered, when in actuality there is a significant disparity in cost. Ms. Meersand is mindful of COBRAs complex language, and tries to address employees concerns in the simplest method possible.

PPACA
The Patient Protection and Affordable Care Act has already caused minor problems within SPIN. Specifically, Ms. Meersand stated that IBC may have overestimated the first provisions of the plan to go into effect. As a result, SPIN faced more than a 10% premium increase for the 2011 year. For the 2012 though, SPIN saw a decline in the usual amount increase of their premiums. Ms. Meersand attributes this to the fact that IBC has had time to understand and plan accordingly for PPACA.

Overall, Ms. Meersand and SPINs HR department are still waiting to see how future provisions may impact their plan. They love PPACAs requirements for preventive care coverage, but believe that certain language regarding other mandates may drive up the costs incurred from offering health benefits.

Special People in the Northeast Benefit Analysis, Parts 1&2

Important Changes and Suggestions

In a recent meeting with Meersand, she stated that SPIN had decided to change insurance companies which provide life insurance options for 2012 along with altering the structure of its health benefits. SPIN has chosen to insure its life insurance policies with Unum, which provided the organization with better rates than Prudential. Unum will also operate SPINs Employee Assistance Plan.

With healthcare costs on the rise, SPIN came to the conclusion that it was too expensive to offer three different health plans, especially when two of them were underutilized. The organization decided to switch to a High Deductible PPO plan (through IBC) for all employees except union workers, who will be allowed to still choose the Keystone HMO. This new plan will be paired with a Healthcare Reimbursement Account (HRA) to help ease costs.

So far, many employees have reacted negatively to the upcoming change. The plan payment structure is quite different from plans previously offered and the high deductible can be somewhat daunting. For in-network use an employee is responsible for a $3000 yearly deductible, after which the PPO will pay all expenses (families have a doubled deductible of $6000). SPIN will also offer a Healthcare Reimbursement Account that they will partly contribute to. After a participant deposits at least $300 in the account, the organization will make $1500 deposit to help with eligible costs. Ms. Meersand considers the required employee deposit a way to show participants the true cost of healthcare. Again, extensive communication is key to making employees understand why SPIN made this change. Many employees are probably not aware of the benefits of the new HRA, and therefore find the costs of the new PPO intimidating.

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We believe that SPIN made the right choice in slimming down their three healthcare programs down to one. Budget cuts and low enrollment made supporting three plans untenable, and despite losing options that could attract employees, we believe the new PPO combined with the HRA can still act as a lure to potential hires. Both the consumer driven plan and the HRA force participants to act as rational consumers because they shoulder a large amount of initial costs; this is an important costssavings feature. One suggestion we have deals with communication. Although SPINs HR department certainly does its part in making information about benefits available, it is hard to force employees to read newsletters or attend seminars. For these reasons, we suggest SPIN have mandatory small group meetings with employees throughout the year. These meetings could explain important changes in benefit options and also act as question and answer session for the plan in general.

Conclusion
Overall, SPINs benefit package is most affected by the rising cost of healthcare. The organization has realized this trend and has reacted appropriately. Elimination of unused plans and the establishment of a CDHP will help to better spread costs to participants. The creation of an HRA, to which SPIN contributes, will also help ease the financial burden of medical costs on employees. Non-healthcare benefits, such as the supplemental life insurance policies and STD/LTD insurance still act as an effective tool which attracts potential employees. If SPIN can successfully explain their benefits package and how its proper use helps saves costs, the organization could see some of their lowest premium inc

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Works Cited

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The Council for Affordable Health Insurance. "Health Savings Accounts and Preventive Care." The Council for Affordable Health Insurance 153 (Apr. 2009). Print.

Gruber, Jonathan. The Role of Consumer Copayments for Health Care: Lessons from the RAND Health Insurance Experiment and Beyond. Rep. The Henry J. Kaiser Family Foundation, Oct. 2006. Web. 8 Dec. 2011. <www.kff.org/insurance/upload/7566.pdf>.

Halterman, Steve L. "Self-Funding Health Insurance for Small Employers: Is It the Right Way to Go?" The Employee Benefits Journal (2000): 3-8. Web. 7 Dec. 2011. <https://blackboard.temple.edu/webapps/blackboard/content/listContent.jsp?course_id=_4310 _1&content_id=_2421213_1>.

Markovich, Martin. "The Rise of HMOs." Diss. Rand Corporation, 2003. Rand Corporation. Rand Corporation, 2003. Web. 7 Dec. 2011. <http://www.rand.org/pubs/rgs_dissertations/RGSD172.html>.

Meersand, Gail. Personal interview. 6 Dec. 2011.

National Business Group on Health. "Consumer-Directed Health Care: The Employer Perspective." Critical Issues (Apr. 2011). Print.

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content&href=http%3A%2F%2Fwww.innovativeemployeesolutions.com%2Fknowledge%2Far ticles%2Fmarketing-employee-benefits%2F>.

Schreck, Tom. "Self-funded Health Insurance: It's about Risk, Vulnerability, Cost Savings." The Business Review (2005). Web. 7 Dec. 2011. <http://www.bizjournals.com/albany/stories/2005/12/05/focus4.html?page=all>.

Schultz, Roger S. "Self-Funded Medical Plans." Journal of CF Financial Service Professionals (200): 14+. Web. 8 Dec. 2011. <https://blackboard.temple.edu/webapps/blackboard/content/listContent.jsp?course_id=_4310 _1&content_id=_2421213_1>.

"Workers Motivated by Richer Benefits." Employee Benefit News. Employee Benefit News, 31 Aug. 2006. Web. 08 Dec. 2011. <http://ebn.benefitnews.com/news/workers-motivated-richerbenefits-270378-1.html>.

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