Learning Objective 3 Flashcards

Question

Types of cafeteria plans in the US [Card 150]

Answer 1

Acronym - Funkmaster Flex Converted to an FSA Full flex plans - give the employee credits to apply to benefits and the employee picks from cafeteria plan or puts it into an account Premium conversion plan - NO employer contributions, but employees can pay for their own benefits on a pre-tax basis FSAs - employee can fund on a pre-tax basis, must decide contribution at beginning of the year, forfeit what you don't use

Answer 2

Acronym - Robin Fox is HARDLY 50 & has $ and PTO Life, Accident and Health Coverage ``` HSA contributions ADOPTION assistance RETIREMENT contributions DEPENDENT care assistance LEGAL plan - provides legal council ``` Life insurance over 50,000 is taxable CASH Paid vacation days (PTO)

Answer 3

Acronym - PREF 3(DMCL) PARKING RETIREMENT benefits for working employees EDUCATION assistance FRINGE benefits DISCOUNTS De Minimis benefits DEFERRED compensation MEDICAL savings account contributions MEALS MOVING expenses CASH value COLLEGE savings account contributions COSMETIC surgery reimbursement LEGAL assistance LODGING LTC insurance

Answer 4

Acronym - CHIVED COST CONTAINMENT - promote preventive services and wellness programs Support HR recruitment and retention objectives Demonstrate VALUE OF BENEFITS to total compensation EDUCATE members on the plan's provisions DISCLOSURE requirements

Answer 5

Acronym - BC WE MARCH SW BENEFIT elections COBRA notices WELLNESS program disclosure ERISA rights ``` MODIFICATIONS to benefits ANNUAL summary REDUCTION in covered services Medical CHILD support order notices HIPAA notices ``` SPDs WOMEN'S Health and Cancer Rights Act notices

Answer 6

Acronym - A ESCAPE Plan ADMINISTRATION ``` ELIGIBILITY requirements SUMMARY of benefits CLAIMS process APPEALS process PENSION Benefit Guaranty Corp (Pensions only) ERISA rights ```

Answer 7

Acronym - Life Changing RAIN Employees going through major LIFE CHANGES RETIREES - must spend more on these communications bc of FAS 106 and high trends. Have frequent design changes and pricing changes. ALL Employees - during open enrollment, must communicate all changes to benefits, cost, eligibility etc. Employees with INVESTMENTS (401Ks) - provide info to allow member to control their own investment strategy NEW hires - need to be sure they understand benefits, and have high morale about joining company

Answer 8

Acronym - D-MAC-D ``` DISABILITY MEDICAL AD&D CAFETERIA plan DENTAL ```

Answer 9

Acronym - GSP FD (George St. Pierre f'ing destroys small competitors) GEOGRAPHIC area - confined to whatever is available in a small area STATE mandated benefits PURCHASING POOLS - not allowed to join w other carriers to get group discounts FULLY insured DOCUMENTATION is necessary to prove the existence of the company

Answer 10

Acronym - BLUM Charge at the BEGINNING of coverage since it's hard to start after the fact Avoid LEGAL problems since contributions makes it very clear who opted out and who has coverage Employees today are USED to paying some sort of contribution MOTIVATE employees to use other coverages if they have them

Answer 11

Acronym - 25/35/50/50/50 Must have less than 25 FTEs Average annual wages must be less than $50,000 Employer must pay at least 50% of premium Credit is a percentage of paid premium: ``` 2010-2013 = 35% 2014+ = 50%, can only be taken for 2 years in a row and if on exchange ``` Highest credit goes to < 10 FTEs and salary < $25000

Answer 12

Acronym - HSA-PE HSA - non taxable, covers any health expense that is tax deductible under the Income Tax Act (as long as not covered by provincial plan or private insurer) PERSONAL account - taxable, covers non-health related expenses at the employees discretion EXECUTIVE perquisite account - sometimes taxable depending on the expense, used for perks for senior leadership (car services)

Answer 13

Acronym - FACETS (They call faucets, facets) FLEXIBILITY of how funds are spent (EE decision) Might APPEAL to only a small segment of the population COST containment - by setting defined contributions EXPAND benefit offerings at no additional cost TEST appeal of flexible plans without committing No SUBSIDIZING of expensive areas

Answer 14

Acronym - CRIME Deliver COMPENSATION tax effectively REPLACE existing coverage - gives employer control of cost increases Softens the IMPACT of high cost sharing MAXIMIZES value of health benefits under Quebec tax system ENCOURAGE employees to self insure budgetable expenses (vision and dental)

Answer 15

Employee election to pay into pay into the fund must be made at the BEGINNING of the year and cannot be changed You must forfeit any unused funds using either: One year rollover of unused balances a. If you have a fund balance, you can pay the next year's claims with it and they you forfeit whatever remains the following year One year rollover of unpaid claims a. Your claim debt rolls over into the next year, and you can use the next year's fund balance to pay off the debt b. All funds are forfeited at year end

Answer 16

Acronym - BCNS (beacons) Annual BONUSES can be allocated to flexible account Employer provided CREDITS NEW contributions from employer (new plan) SAVINGS to employer from reduced medical costs

Answer 17

Acronym - FLAIMD FUNDING considerations - monthly, annually etc LIMITS on how much can be allocated to fund APPROACH - do you want a flexible account & what kind IMPACT on other benefits - HSA may lead people with low claims to opt out and put credits in the fund MID YEAR changes - vary by account type and reason (termination, retirement, family status etc) DISPOSAL of funds at year's end - rollover? forfeit? cash?

Answer 18

Acronym - Think FAT Advantages (Employer) = Fat CAT FIXED contribution COMMUNICATION is easy ADMIN is easy TAX deductible Advantages (Employee) = Fat NBC FLEXIBILITY as to how money is spent NON-TAXABLE Can BUY insurance with it Can decide what expenses are COVERED Disadvantages = Fat chicks = PIFI PERCENT of PAY contributions - people who earn less, get less benefits INADEQUATE benefits since there is no insurance FLAT contribution means families get relatively less protection that singles INFLATION is borne by the employees

Answer 19

Acronym - REAL [IMPOSSIBLE TO GET ALL 4] Credit based pricing vs. NET pricing a. Each service has a price tag and members get credits to apply to services b. Credit based lets member see both components c. NET = Price Tag - Credits d. Same overall cost, diff is what the member knows REALISTIC prices - should reflect value of coverage EQUITY - credits should be equal for all employees No ADDITIONAL company cost - new plan should cost the same as the old plan would have in the next plan year No LOSERS - each employee should be able to repurchase prior coverage at no additional cost

Answer 20

Acronym - These plans "BE F AS F" (Flexible as f*ck) Buy-Back pricing a. Credits = Averages employer cost for Singles/Family b. Equity isn't achieved since credits differ Election-based pricing a. Same as Buy-Back, but you get less credits for picking less rich plans b. Plan A Credits = Avg for single/family c. Plan B/C Credits must be backed into by keeping the singles credits the same, and finding the family credits to get to the same employee cost Flat credits: (Family, Average, Single coverage) a. Family Credits = Everyone get the avg family cost 1. No losers, but costs more b. Average credits = Everyone gets the average employer cost across both single/family (weighted) 1. There will be losers c. Single coverage credits = Everyone gets avg employer cost of single person 1. Reduce family costs by the single credits 2. Not realistic

Answer 21

Acronym - GRANDPA TIT BAGS GROUP pricing - by tier REALISTIC price tag adjustment - subsidizing or carve out AREA pricing NO coverage option - option to opt out DATA collection and analysis PRELIMINARY option pricing - examples w credits ANTICIPATION of changes - adjustments (IT BAGS) TAXES and fees INFLATION TECHNOLOGICAL advances BENEFIT changes ADVERSE selection GOVT benefit changes - private plan costs increase SMARTER consumers - consumerism

Answer 22

Acronym - (+) = Selection; (-) = MR. PR Def: Subsidize the value of the lowest cost option, so it is free Advantages: Encourages selection of cost effective options Limits adverse selection Disadvantages: MASKS the true value of an option RENEWAL rating can be tough since the prices are artificially derived in the first place PRICE TAGS no longer equal expected claims RESTRICTS cost management since members don't know the true cost

Answer 23

Acronym - Think of all the "SA"s (FSA) and how they Allocate credits SOURCES of credits - where are they coming from? AMOUNT of credits - how many for the next year? ALLOCATION of credits a. Equity b. No Losers - allowing repurchase of current program c. Organizational objectives

Answer 24

Acronym - AW CRAB ADDITIONAL employer funding WELLNESS credits CURRENT benefits cost RENEGOTIATION of salary - bonuses AFTER-TAX payroll deductions BENEFIT reductions - if a plan is eliminated (vision)

Answer 25

Acronym - Healthy to watch CBS on PSP HEALTH awareness COST management BENEFIT equity - same for everyone SOCIAL responsibility - minimum coverage PROFIT sharing - how is the company doing? SERVICE recognition - based on years of service PERFORMANCE - you do better, you get more

Answer 26

Acronym - Winners & Losers in the ER when you have a BAD PC Winners/Losers analysis - see how employee costs change Employer Cost analysis - ID costs in these categories a. Benefit utilization b. Adverse selection c. Dependent coverage d. Price subsidies e. Credits Reasonableness - are the options understandable? do the price tags make sense? are credits adequate?

Answer 27

Acronym - PD CONTROLL PARALLEL designs should be maintained DELAY full payment - lower benefits during waiting period COVERAGES can be grouped together - predictable (dental/vision) with less predictable OFFER HSA instead of insurance NOT allow a large spread between options TEST program with employees REQUIRE proof of insurability for increases in coverage Off cycle changes only for life-changing events LIMIT frequency of choice LIMIT degree of change

Answer 28

Risk-Based pricing a. vary rates by age, gender, smokers etc b. reflects expected cost of the benefit Employer subsidization a. encourages broad participation, which will better spread risk

Answer 29

Acronym - Spread em Up and Down Load prices to reduce the reward for buy downs Load prices to push people to into buy downs Spread the risk across the prices of all the options

Answer 30

Acronym - CLASH COMMUNICATION - before, during and after launch LISTEN to employees - focus groups ADMIN system needs to be robust SENIOR management must buy in HELP - ask for it if there are professionals who have designed them before