Benefits Administration (HRMG 3400)

Question 1

Key questions to ask when administering a Benefits Plan (3)

Answer 1

1. Who should be covered?
2. How much choice should employees have?
3. How should benefits be financed?

Question 2

Benefit Plan Administration

Answer 2

• multi-faceted discipline
• general and managerial skills
• technical proficiencies in several areas
• team coordination of internal and external specialists (such as HR, law, tax, finance, medical care, risk management, and information systems)
• leadership, communication, project management, and general management skills

Question 3

Administration Arrangements (4)

Answer 3

1. Insurer Administration
2. Third Party Administration (TPA)
3. Administration Services Only (ASO)
4. Self-Administration

Question 4

Why outsource Benefits Administration?

Answer 4

1. Function can be complex
2. Specialized service providers are efficient
3. Business volume = beneficial pricing
4. Technology is easier to use (web-based employee self-service portals, apps, and drug cards from insurers)

Question 5

What services can be outsourced?

Answer 5

1. Enrollment
2. Communications
3. Claims Administration
4. Reporting
5. Administrative services only (for self-insured plans)

Question 6

Benefits Administration Manual

Answer 6

• Provided by insurer
• Customized by employer
• Used by HR
• Contains details regarding status changes, benefits continuance, termination, reinstatement, coordination of benefits, etc.
• Eligibility, enrollment

Question 7

Enrollment

Answer 7

Employers drive the collection, maintenance, and communication with employee enrollment information

Communicate information to Insurer, TPA or ASO providers.

Question 8

Who should be covered/eligible? (considerations)

Answer 8

1. Probationary period
2. Which dependents
3. Retirees (and their dependents)
4. Survivor benefits (who, which benefits)
5. Disability benefits (which benefits, for how long)
6. Benefits during layoff, LAO
7. Employment status: full-time vs part-time
8. Leave status and rules

Question 9

Maintenance of Records

Answer 9

Employer bears burden of responsibility to maintain employee records to a satisfactory level.

Employee bears a burden of responsibility to inform insurer and/or employer of material changes in status (such as birth of a child - adding of a dependent to benefits plan)

Question 10

Plan Review

Answer 10

• detailed review of plan coverages, usage, cost, and performance - typically annual
• procedure done with broker/consultant

Question 11

HR Activities (related to benefits admin)

Answer 11

1. Price/feature negotiation
2. Benefits orientation and enrollment
3. Plan details communication
4. Claims administration
5. Benefits counselling
6. Plan review
7. Management reporting

Question 12

Communication Challenges

Answer 12

1. Diverse workforce in levels of education, financial sophistication, language, and culture
2. Lack of interest until point of access / utilization
3. Multi-regional/national legal and tax jurisdictions
4. Increased program choices and associated complexity
5. Changing technologies

Question 13

Addressing Communication Challenges

Answer 13

1. Use a multi-channel approach
2. Communicate frequently
3. Use total compensation statements

Question 14

Flexible Benefits

Answer 14

1. Modular plans (options A, B, or C) - simplest
2. Core plus options - employer establishes minimum coverage, employee chooses options, employer provides a fixed budget the employee may allocate to different options
3. Cafeteria Style
4. Flexible spending account (HCSA)

Question 15

Non-Contributory

Answer 15

• employer pays total costs; simple admin, highest benefit cost to employer (remember about LTD - employee should pay for this benefit)

Question 16

Contributory

Answer 16

• costs are shared between employer and employee: payroll deductions for premium

Question 17

Employee-Financed

Answer 17

• employee pays total costs for some benefits

Question 18

Cost Management

Answer 18

• increasingly assumed by HR (from Finance)
• requires knowledge of insurance pricing
  
  • underlying actuarial assumptions
  • reserve requirements
  • comparison of actual plan experience
  • program metrics
  • medical procedures, utilization patterns, lengths of hospital stay, types of treatments, outcomes
  • achievement of HR objectives

Question 19

Analytical methods of Cost Management

Answer 19

1. Compare benefits actually payable to representative employees under different circumstances (actual or hypothetical)
2. Compare actual costs to employer for different benefits plans
3. Measure plans on a basis that uses uniform actuarial methods and assumptions (“apples to apples”) and focuses on the relative value of different benefits provided
4. Compare plans, feature by feature, to isolate specific plan provisions which may be appealing to certain employee groups and offer a competitive package

Question 20

Pacific Blue Cross

Answer 20

• not for profit
• group and individual plans
• direct to end user
• about 1.5 million BC residents covered
• mixed reputation on services

Question 21

Statutory Benefits and Paid Time Off

Answer 21

1. Canada Pension Plan (CPP)
2. Employment Insurance (EI)
3. Worker’s Compensation (WCB)
4. Vacation Pay

NOTE: Supplementary Unemployment Benefits (SUB) requires EI commission registration and approval, BUT registration is not required for Maternity Leave, Parental Leave, or Compassionate Care Leave top-up payments

Question 22

Employment Insurance (EI)

Answer 22

• Max insurable earnings: $50,800
• 55% of earnings up to max
• Premium rate is $1.88 per $100
• Premium rate and MIE means insured workers will pay a max of $955 annually in 2016 (up from $930 in 2015)
• Employers pay 1.4 times employee amount ($1337)

Question 23

Meal Breaks

Answer 23

• one 30 minute break must be given after 5 hours of work
• can be unpaid if employee does no work
• MUST be paid if employee does work