Learning Objective 3 Flashcards
Definition of employee benefits [Card 126]
Acronym - MR PLM (Mr Plum)
Def: Virtually any form of compensation other than direct wages
MEDICAL related payments
RETIREMENT payments
PTO
LEGALLY required payments - Social Security
MISC benefits
Reasons for growth of employee benefit plans [Card 127]
Acronym - BC of the LEWT
BUSINESS reasons - attract and retain employees
COLLECTIVE bargaining - Taft-Hartley Act requires good faith bargaining over work conditions
LEGISLATIVE encouragement
EFFICIENCY - marketing through employer
WAGE increases - can increase total compensation
TAX benefits
Characteristics of the group technique of providing employee benefits [Card 128]
Acronym - WE NAPALM
All but admin reduce adverse selection
WAITING period
ELIGIBILITY requirements
NEW membership churn to keep adding healthy people
AUTO determination of benefits - like a multiplier
PARTICIPATION percentage requirements
ADMIN agency to minimize expenses and handle details
LIMITS on benefits for any one person - prevent excess
MINIMUM size requirements - to spread expense of less healthy lives
Questions to ask in evaluating employee benefit plans [Card 129]
Acronym - COCO FAB
Who should be COVERED under the benefit plan?
What is the OBJECTIVE of the employer/employees?
How should the plan be COMMUNICATED?
Should employees have benefit OPTIONS?
How should the plan be FINANCED?
How should the plan be ADMINISTERED?
What BENEFITS should be provided?
Reasons for using the functional approach to designing and evaluating employee benefits [Card 130]
Acronym - I WOO 3 C’s
Must be sure various benefits can be INTEGRATED
Avoiding WASTE in benefits can control costs
Benefits must be ORGANIZED to be effective
Must analyze where benefits OVERLAP to save costs
Must keep benefits:
CURRENT
COST effective
COMPLIANT
Steps in applying the functional approach to employee benefit plan design and evaluation [Card 131]
Acronym - CAGE RAD ICE
CLASSIFY needs of the group into functional categories
CLASSIFY the people that may need or want benefits
ANALYZE current benefits with respect to needs
Determine any GAPS in benefits or overlap
ESTIMATE costs or savings from changing benefits
Come up with RECOMMENDATIONS for changes
Evaluate ALTERNATIVE methods of financing
DECIDE which benefits are most appropriate
IMPLEMENT changes
COMMUNICATE changes to members
EVALUATE employee plans on a regular basis
Common loss exposures covered by employee benefit plans [Card 132]
Acronym - DR COLLECT DMD
Losses due to DISABILITY
RETIREMENT needs of employees and dependents
CAPITAL accumulation needs or goals OTHER employee benefits LTC needs LIABILITY exposures EDUCATIONAL assistance Financial COUNSELING TERMINATION of employment
DEATH of active employees
MEDICAL expenses
DEPENDENT care assistance
Categories of persons the employer may want to or be required to provide benefits for [Card 133]
Acronym - SPLT RFD (Split our funds Dutch)
SURVIVING dependents of former employees
PART-time employees
Employees on a LEAVE of absence (military)
TERMINATED employees
RETIRED former employees
FULL-time employees
DISABLED employees
Typical elements of CDHPs [Card 134]
Acronym - CHIPS Consultant
COMMUNICATIONS program to promote consumerism
HDHPs
INFORMATION to help find good doctors at low cost
PROFESSIONAL help for chronic conditions to coordinate care
SPENDING accounts (HSA, HRA, FSA)
CONSULTANT or health coach to provide guidance
Basic plan structures of CDHPs [Card 135]
Acronym - FDCT
FIRST dollar coverage
Member pays the DIFFERENCE until the deuctible
COST sharing between deductible and OOP Max
TIERING causes different deductible, coinsurance etc.
Types of health care accounts [Card 136]
HSA
a. Employee can contribute
b. Portable if you leave the company
c. Ded = 1200/2400; OOP = 5950/11900
HRA
a. Employer contributes
b. Can rollover funds each year
FSA
a. Employer contributes at beginning of year
b. Cannot roll over funds, must forfeit what isn’t used
Plan design considerations for CDHPs [Card 137]
Acronym - PECS FC
Level of PREVENTIVE care coverage
ESTABLISH parameters of HDHP
CONTRIBUTION strategy
Select a SPENDING account
Is it FULL replacement or will there be options?
Will HRA plan be able to CARRYOVER unused balance?
Advantages of voluntary benefits [Card 138]
Acronym - Employer = RIMS; Employee = PP CD
Def: Voluntary benefits are offered by the employer but employees purchase them on their own
Employer:
RETENTION or recruitment tool
INCENTIVES for meeting performance targets
MORE benefits can be offered with little added cost
SUPPLEMENT or replace benefits
Employee:
PORTABLE
Use PRETAX dollars to purchase them
CONVENIENT to get them through work
Can get your employer’s DISCOUNT
Types of voluntary plans [Card 139]
Acronym - CLADDAGHS VD LATCHS
CRITICAL care insurance LTC coverage AD&D DISABILITY income insurance DEPENDENT life insurance ADOPTION assistance GROUP term life HOMEOWNERS insurance
VISION benefits
DENTAL insurance
LEGAL services plan AUTO insurance TRAVEL accident insurance CANCER insurance HOSPITAL indemnity insurance STUDENT medical insurance
Common functions for administering employee benefits [Card 140]
Acronym - DCE DCR DCT
DESIGN the plan
COMMUNICATE the benefits and procedures
Monitor EXTERNAL environment
DELIVER benefits - orientation, data collection
COST management - develop risk management approach
Management REPORTING - Util, cost, risk exposure
DECISIONS need to be made about new features (ACA)
Legal and regulatory COMPLIANCE
TECHNOLOGY - setting up databases for benefit info
Complexity in administering an employee benefit program depends on: [Card 141]
Acronym - PUGS BS
Number of PROVIDERS
UNIFORMITY of plan designs
GEOGRAPHIC dispersion
SIZE of group
BENEFIT complexity
Havign SELF-FUNDED arrangements
Considerations in designing benefit options [Card 142]
Acronym - CATCH CE CRAT (Catch secret)
COST considerations ACA mandates Industry TREND CULTURE of the organization HISTORICAL plan design
COMPETITION plan designs
EMPLOYEE needs
Easily COMMUNICATED
Consider RISK MANAGEMENT
Easily ADMINISTERED
Consider TAXES
Activities required for serving plan participants [Card 143]
Acronym - COPE
CLARIFICATION and COUNSELING when members have questions on benefits, coverage, transitioning to retirement, disability etc.
ORIENTATION for new members
PROCESSING of claims and enrollment data
Dealing with EXCEPTIONAL circumstances and unusual cases
Technological tools used by benefit directors to support customer-driven processes [Card 144]
Acronym - CEE + S (Think C++)
COMMUNICATION is easier between plan sponsor and insurance carrier, investment custodians etc.
EXECUTIVE SUMMARIES - helps ID util and cost trend\
ELECTRONIC files - easier to share on a server
SELF-SERVICE tools and models for members to use - like mobile apps, web applications, retirement modeling
Methods for comparing benefit programs to the competition [Card 145]
Acronym - MC PB
MEMBER cost share
COST to employer
PRICE POINTS
BENEFIT features - line by line to identify differences
External features that impact benefit management activities [Card 146]
Acronym - GRO PT in DC (Grow pot in DC)
GOVERNMENT policies change
RETAINING and attracting employees
ORG structure changes
PRODUCT development - have to stay up to date with new concepts
TECH advances
DEMOGRAPHICS shift - older people want retirement benefits, younger may want more flexible options
COMPETITIVE conditions - need to stay competitive with other carriers
