KIP KRAUS

Kirk, you are correct as far as I recall too. COB doesn't apply to individual health policies.

This is just my opinion based on medical plan design, but the underwriter must be assuming that there is a perceived additional risk that their exposure to higher inpatient hospital expenses will occur. Without pre cert a person may have an inpatient procedure performed when in fact the procedure may be done on an outpatient bases at a lower cost. However, having said this I’m not sure about the justification for the additional $18,000. Have the stop loss carrier explain the rational for the additional cost. If there is sufficient outpatient and inpatient claims experience they should be able to explain their reasoning, or not.

K man I don’t understand how a plan can provide for participant loans when the plan document does not specifically allow them? Wouldn’t it be advisable to amend the plan and add the loan provisions?

Concept Corner makes some excellent points, however it has been my experience that group insurers including Principal and Guardian will not offer minimum premium or any other financial arrangement for a group of 50 participants. In addition, a minimum premium plan is typically an experienced rated plan and a 50-employee group is not a good candidate for an experienced rated plan. Shop the plan or redesign it to be more cost effective.

Self-insuring 50 employees is too risky. There is absolutely no claims credibility to a group this small. In addition, even if you can get someone to write stop loss coverage for a group this small the premiums will be astronomical and they will laser out the person with the major medical problem. If you are looking to contain costs see if you can get a plan that has more cost containment features such as higher deductibles and co-payments for a starter.

My advise is to contact a P&C broker. The broker should know where to get the E&O coverage.

My recollection of California disability law is that you can replace the state fund with a commercial plan provided a majority of the covered employees agree to do it. I recommend contacting the California state fund. They will be able to give you the details.

It has always been my understanding that ERISA frowns on employers altering the SAR format. Reporting multiple plans on one SAR to me would be altering the reporting format since each plan is required to issue a SAR. My personal opinion is that SARs provide nebulas information that means little or nothing to plan participants other than indicating that the plan has filed the required 5500, and informs the participants that they can request a complete copy of the filing exclusive of any confidential information. In over 25 years I have had two plan participants request the complete 5500 filings.

I have never considered an employee who has not met the eligibility requirements as a plan participant for 5500 purposes. Even though a person may be given credited service based on past service once he enters the plan I wouldn’t consider this person an active participant until he actually enters the plan.

Sounds like the employer is allowing employees to purchase a non-group individual LTD policy via payroll deduction. If this is not a group product I believe that ERISA doesn’t apply. If the employer is merely allowing employees to purchase individual LTD policies via payroll deduction I wouldn’t consider that sponsoring the plan.

The LTD policy/SPD should define those items that LTD benefits are offset from.

Workers’ Comp. premiums are paid by the employer. So I don’t understand the question about them being pre-taxed. They are usually a business expense to the employer.

HIAA, for one has established UCR rates that TPAs can use. Some major insurers have over the years established their UCR schedules based on actual experience by zip code areas.

What kind of fees and to which coverages do they apply?

Most medical plans I've been envolved with use the 90th percentile when using a UCR schedule. Dental plans sometimes use lower percentiles. I don't understand GBurns' question. POS Medical plans for years have used UCR to reimburse medical expenses.

Try Aetna, Travelers and Hartford, however I'm not sure they will write this coverage direct. You may need to contact your property and casualty broker.

Normally an employer and the insurer need to know that dependents are legal dependents eligible for coverage as defined in the group insurance contract or the plan document. Unless there is some reason to suspect that an employee is trying to cover someone not eligible as a dependent I see no need to ask for birth certificates or a marriage license. Providing, names, social security numbers and addresses of the dependents should be sufficient and reasonable. Usually employers and insurers are protected from insurance fraud by state insurance laws, which can be very stringent. On the other hand, if the employer is self-insured the employer may be unprotected. I have been involved with a medical plan where an employee had eligible dependents with different last names and addresses. In this case we investigate and ask for documentation that the dependents are legitimate. Seems odd to me that an employer would routinely ask for birth certificates and marriage licenses except in the case of a newborn or new marriage related to an employee wanting to add a new dependent.

Excellent point papogi. In addition, isn’t it correct that the Plan Administrator has the obligation to obtain the employer ID or social security number of the dependent childcare provider? I believe it is the Plan Administrator’s obligation to police the plan.

I know that CA as well as NY have some weird group insurance laws, but many employers have employees in many states and they are able to have HMOs and PPOs written for their employees in these states. In fact CA will require your client to continue to provide STD benefits through the state fund in CA. I would do a few things: Contact the CA State Insurance Department Contact Blue Cross Blue Shield of CA Contact Kaiser Permanente of CA Ask PacifiCare to issue the contract to the CA subsidiary.

If the mistake was the Plan Administrator’s mistake, why not refund the as taxable income? The Plan Administrator has the obligation to determine eligibility to participate in any employee welfare plan. In my opinion if they allowed an ineligible employee to participate they should rectify their mistake. In this case I would refund the money as taxable income. While the Plan Document may not specifically state that a person must have a qualified dependent it should have language that addresses eligibility to participate and what the definition of a qualified dependent is. If so, this person did not meet the qualifications, because she had no qualified dependent.

I have never heard of any requirement to put excess medical plan funds in a trust just because costs were lower than contributions. However, typically if the plan has had an excess at plan year-end reducing costs for the upcoming year is expectable. Keep in mind that just because there was an excess one year doesn’t mean that this will occur every year. In fact, based on projections for the next year costs may be higher than the previous year. There are still some variables that we don’t know such as: Was this the first year of self-insurance? Are employees only paying 100% of paid claims and the company is paying the administration fees and stop-loss premiums? Is the employer booking reserves and taking this into consideration with regard to employee costs? What is the employer going to do when costs exceed premiums? How many employees are in this plan? This is a very odd situation at best. In the 30 years I've been in this business I've never heard of an employer of any size requiring a 100% contribution for medical coverage.

As long as the premium increases come at the start of the plan year it makes sense to me. If, for some freak reason, the premiums are increased during the plan year they must be substantial in order for them to be passed on the to the employees at that time.

Without knowing the details of your STD policy, I would suggest that if the teacher has no loss of income as a result of his/her disability then no benefits would be paid. STD is typically there to replace a portion of a person’s lost income do to an inability to work. If the teacher normally does not work during summer break, then why would STD be payable? Check your STD policy.

I agree with Jeanine. It is highly unlikely that the amount the employees pay for their medical coverage is going to be more than enough to cover claims, admin fees, and stop-loss coverage. If it is, the employees are getting the royal shaft. Even if they were paying 50% of the expected cost of the plan, it’s highly unlikely that there would be any money to return to the employees. First of all, medical claims are going to be approximately 75% to 80% of the total cost of the plan so if employees are paying 50% of the cost there is not going to be any overpayment by the employees. Why are you stuck on this particular feature of a self-insured medical plan Rooster?

In the simplest self-funded medical plan, benefits are paid from the general assets of the employer and this does not require setting up a special bank account for employee contributions. In addition, the plan would be wise to purchase stop loss insurance, which would also be a charge to the plan. In addition, the TPA will have to be paid to process claims, which is another charge to the plan. In the absence of giving you an underwriting lesson on this message board, keep in mind that whatever is going to be charged to the employees is going to be determined by the expected total cost of the plan less what the employer is going to contribute. In my estimation, unless the employer is going to expect the employees to pay the major portion of the cost then any excess over the expected cost would typically exceed employee contributions and therefore no refunds would to need be given back to employees.