HEB24 Benefit plan management

Question 1

Benefit director proficiencies

Answer 1

1. Benefits plan design
2. Benefit plan delivery
3. Benefit policy formulation
4. Communications
5. Applying technology
6. Cost management and resource control
7. Management reporting
8. Legal and regulatory compliance
9. Monitoring the external environment

Question 2

Benefit plan design

Factors affecting benefit plan design and PPACA health care reform

Answer 2

1. Factors affecting benefit plan design
   
   1. 1 cost considerations and EE needs
   2. 2 organization structure
   3. 3 historical development of benefit program
   4. 4 industry trends and complications
   5. 5 local market conditions for service providers
   6. 6 collective-bargaining agreements
   7. 7 negotiations between labor and management
2. PPACA health care reform
   
   2. 1 Mandates that individuals attend health coverage
   3. 2 restructures plan offerings by insurers plan providers
   4. 3 includes tax incentives and subsidies for coverage affordability
   5. 4 individuals select plans through state exchanges if offerings are more attractive than ERs plan
   6. 5 such alternatives make ER plan design more complex
   7. 5.1 must consider tax and marketplace contexts
   8. 5.2 EE benefits versus ER risk

Question 3

Benefits plan delivery

critical activities and activities vary depending on

Answer 3

1. Critical activities
   
   1. 1 new EE orientation
   2. 2 policy clarification on benefits eligibility, coverage and applicability of plan provisions
   3. 3 dealing with exceptional circumstances and unusual cases
   4. 4 processing enrollment data, claims information and plan distributions
   5. 5 benefits counseling responses to EE inquiries including termination, retirement and forms of leave
2. Activities vary depending on
   
   2. 1 benefit program scope
   3. 2 nature of the organization
   4. 3 EE workforce characteristics

Question 4

Benefit plan delivery

Quality standards for evaluating customer service

Answer 4

1. The desired quality as determined by management
2. Standards that ensure the program is in compliance with regulations
   
   2. 1 provide personal benefits statement at least annually if requested by EE
   3. 2 ERISA standards for responding to a request for benefits, to deny claims and respond to appeals
   4. 3 make financial information available and disclosure mandates for certain plan information
   5. 4 COBRA Notification requirements to terminating EEs on right to coverage continuation
   6. 5 certificates of credible coverage mandated by H IPAA

Question 5

Benefit policy formulation considerations

Answer 5

1. Human resource questions and issues such as:
   
   1. 1 denial of claims by a carrier
   2. 2 confusion over waiting period
   3. 3 service areas of managed network
   4. 4 whether or not a new medical procedure will be covered
2. Many benefit functions are contracted out to insurance carriers and TPAs

Question 6

Benefits management communications

why is it challenging? and targeted Communications

Answer 6

1. Why is it challenging?
   
   1. 1 communication challenges:
      
      1. 1.1 workforce is diverse
      2. 1.2 some benefits have little EE interest until point of use
      3. 1.3 multiple regulatory requirements lead to confusion
   2. 2 complexity increase when
      
      1. 2.1 ER offers multiple insurers with differing features
      2. 2.2 Participant-directs accounts, flex programs, and legal changes
2. Targeted communications
   
   2. 1 targeted Communications must be provided specific conditions are met:
      
      2. 1.1 Statement to terminated vested participants
      3. 1.2 COBRA rights
      4. 1.3 Explanation of tax withholding for rollover distribution
      5. 1.4 Joint and survivor information
      6. 1.5 certificates of credible coverage (HIPAA)
3. 2 both general and targeted communications are prescribed by law must occur within noted time periods

Question 7

Employee benefits program

What influences complexity of program?

Answer 7

1. Comprehensiveness of the benefit design
2. EE group size
3. Program uniformly across different EE categories
4. EE geographic dispersion
5. Existence of self-funded or self-administered arrangements

Question 8

Benefit management communications

General requirements to comply with federal law

Answer 8

1. Summary plan descriptions (SPD)
   
   1. 1 summary of plan provisions in understandable language
   2. 2 SPD must include:
      
      1. 2.1 how a participant can make a claim for benefits
      2. 2.2 Procedure for appeal if claim is denied
      3. 2.3 Name and address of person(s) to be served with legal actions against the plan
2. Summary of material modification (SMM)
   
   2. 1 A written document that describes any material change
3. Summary annual report

Question 9

Benefit management

Applying technology

Answer 9

1. A common relational database becomes the repository for census, demographic characteristics, eligibility, and plan information
2. A common relational database removes information silos
3. Information can be assessed by plan participants to check balances, coverages or pending claims
4. Data assessing capabilities: participants access individualized info without requiring a benefits specialist
5. Security: protect against fraud and unauthorized access to participant info
6. Executive information system (EIS) provide management information in summary format
   
   6. 1 Utilization patterns, risk exposures, and factors driving benefit costs
   7. 2 imaging and optical storage eliminates paper records
   8. 3 access to Internet information
   9. 4 client server technology integrates networked applications with desktop and mobile tools
   10. 5 EE self-service allows updating of personal data and benefits

Question 10

Benefit management

Cost management resource control

Answer 10

1. Reasons for benefits mgmt role in fiscal responsibility
   
   1. 1 plan costs represent a significant portion of total compensation
   2. 2 compliance issues, such as FAS 106 requirements
2. Benefits director responsibilities
   
   2. 1 question actuarial assumptions that vary from plan experience
   3. 2 evaluate reserve requirement
   4. 3 understand and negotiate retention, interest, and penalty charges
   5. 4 design compensation programs capable of recruiting the best workers

Question 11

Management reporting

Management information system (MIS)

Answer 11

1. Allows benefits management to monitor financial results, utilization, risk exposures, deviations from compliance target
2. PPACA - need to compile actuarial data to determine whether their health plans comply
3. Measure program costs and quality

Question 12

Comparison with competition

Challenges and methodologies

Answer 12

1. Challenges
   
   1. 1 many non-homogenous plan provisions and benefit programs
   2. 2 an ER may have geographically dispersed workforce
2. Comparative methodologies
   
   2. 1 compare benefits payable to EEs under different circumstances
   3. 2 compare actual costs to the ER for different benefit plans
   4. 3 measure plans using uniform actuarial methods and assumptions
   5. 4 compare plans feature by feature to isolate provisions appealing to certain EE groups

Question 13

Benefit management

Assessing and managing program risks

Answer 13

1. Understand risks the organization is assuming and means for managing them
2. Risk management techniques must be understood in terms of how they operate and how they are priced
3. Model possible future outcomes under various risk management techniques
4. Benefits director made add a stop loss reassurance future
5. Could create a captive insurance company to handle EE benefit risks

Question 14

Benefits management

Legal and regulatory compliance

Answer 14

1. Benefit programs must comply with:
   
   1. 1 reporting and disclosure documents
   2. 2 performance requirements for claims
   3. 3 Fiduciary and funding requirements
2. Many compliance standards come from ERISA
3. The Tax Reform Act instituted nondiscrimination testing
4. Enactment of PPACA:
   
   4. 1. Required individuals to obtain health coverage
   5. 2 ERs required to provide affordable benefits or pay EE subsidies or penalty taxes

Question 15

Monitoring the external environment
Trends likely to impact benefits management
Part 1 of 2

Answer 15

1. Government policy
   
   1. 1 benefits designed to coordinate with social insurance programs are affected by regulations and alternations in government social insurance
   2. 2 policymakers have become involved in benefit protection issues
      
      1. 2.1 employment nondiscrimination for the disabled and based on age
      2. 2.2 required leave for EEs when they or family are ill
      3. 2.3 protecting employment rights for military personnel
      4. 2.4 protections for EEs covered by pensions
      5. 2.5 safeguards on the collection and use of genetic information
   3. 3 PPACA reforms could be categorized as protection issues
      
      1. 3.1 prohibits lifetime and annual limits on essential benefits
      2. 3.2 stipulations against rescission of coverage unless fraud
      3. 3.3 prohibits dropping coverage for children up to age 26
      4. 3.4 stipulation against pre-ex exclusions on enrollees under age of 19

Question 16

Monitoring the external environment
Trends likely to impact benefits management
Part two of two

Answer 16

1. Workforce demographic trends
   
   1. 1 dependent care benefits have to become more important with more working couples, single parents and aging parents
   2. 2 flexible benefits result in EE self-selection that affects actuarial assumptions
   3. 3 The aging workforce
      
      1. 3.1 greater interest in retiree health
      2. 3.2 reduction in social insurance affects adequacy of ER programs
2. New product development: more rapid introduction of new products
3. New organizational structures: the elimination of various managerial levels, decentralized organizations and outsourcing of non-core activities
4. Importance of technology
   
   4. 1 requires the exchange of data with
      
      4. 1.1 insurers
      5. 1.2 TPAs
      6. 1.3 consultants

Question 17

Benefits plan management disadvantages and advantages of outsourcing

Answer 17

1. Disadvantages
   
   1. 1 can result in fragmentation and lack of database integration
   2. 2 Communications Can vary causing confusion among participants
2. Advantages
   
   2. 1 benefits administration complexity, efficiencies of specialized providers, beneficial pricing, Technological applications and trend monitoring
   3. 2 attractive if need to upgrade systems and makes significant technology investments

Question 18

The outsourcing alternative remaining plan sponsor responsibilities

Answer 18

1. Retain legal responsibilities related to plan sponsorship under federal law
2. Retain oversight and ensure benefits program serve HR and organizational objectives