Larry M

how old is the sole proprietor? If under 65, and disabled (as defined by the plan - which can be much less severe than social security defn of disability), a disability benefit does not get reduced for retirement prior to age 65. So, if participant is age 55 and disabled, he can get the pv of a life annuity of 160,000/yr commencing at 55.

yes, your plan provides forms of beneift other than lump sum. These "options" are for the beneficiary to choose, they are not for the plan to choose.

You are more likely to get helpful responses if you post your question in the section called "Health Plans (Including COBRA and HIPAA)"

I thought Federal COBRA requirement ended when sponsoring employer's plan terminated. Of course, there can be a conversion and there could also be a more lenient structure to a MEWA.

If the plan sponsors (the "docs" in this case) want to be able to contribute money to the plan before year end, and if they want the money allocated to each individual's account; and if they want the individuals to have the right to direct the investment of the money; then amend the plan to allow this. Individuals terminating employment before their accounts are fully vested, will forfeit the non-vested amounts and those amounts reallocated to the remaining participants. If the doctors don't want to abide by the plan document, especially after you describe the penalties involved in not doing so, then run, do not walk, to the nearest "I resign from this account" letter.

As I read the change in law, the onus for the continuation remains on the employer. From that standpoint, it appears as if this change is headed for the courts to determine whether it conflicts with ERISA's preemption clause.

Before we go too much deeper into whether self funding is better than being fully insured, I believe we should step back, go to the original post, and identify the problem. "Due to increased medical inflation the City..." is thinking of solving that problem by going self funded. Self funding, will not stop medical inflation!! If anything, it could create a higher jump in claim costs if the City loses the significant discounts (an assumption I have made) the current carrier has negotiated with providers. By far, the major costs of any group employee health plan involve claims. If your claims are high, your costs are high; if your claims are low, your costs should be low. Even in those situations where your experience is partially pooled, your overall costs should follow the level of your claims. With self funding, you have the potential advantage of eliminating certain marginal expenses associated with the plan. These are commissions, premium taxes and the insurer's margin for profit and risk. With self funding, you take on the expenses of adminstration of the plan and the risk of having claims exceed your budget. [With an insured plan, you can walk away from the insurer if your claims are too high and leave it with the deficit....well, maybe one or two times.] You also have a more direct line of liability in the case of claims or eligibility which are perceived to have been mishandled. If the City wishes to regain control of the costs of the health plan, it can do so by directing its attention to the design of the plan. It is possible to save a substantial portion of the City's costs by appropriate changes in the plan. If it self funds the plan, the City will have to hire persons or firms to do the chores curently performed by the carrier - such as: claims administration; developing and printing certificates of coverage and summary plan descriptions; maintaining knowledge of changes in the laws which affect the plan; negotiating discounts and standards of care with various providers of care -physicians, hospitals, pharmacies. It appears as if the City also is thinking of bringing all the adminstrative capabilities in house. I believe such an approach, if it could be done, will prove to be much too expensive for the City - just for the administrative expenses alone. In my opinion, the logical step for the City to follow is to engage a good group health consulting actuary - on a fee for service basis - to help it identify, and expense, the options available to the City. There is an article on the Small Business Council of America's website which discusses the handling of group insurance renewals and expands upon these comments. It is at http://www.sbca.net/archieve.asp

My wonderfully Jewish mother was called for jury duty many times. Then she would be thrown off each jury during deliberations. She kept claiming she was guilty.

Your plan may state it will pay for any services rendered by an out of network provider if the services were prescribed by an in network provider. In these situations, the question then becomes what portion of the out of network provider's fee is covered. The document will state whether it accepts the fee charged by the out of network provider as "reasonable", or limits it to what an in network provider's fee would have been. As with most questions concerning a specific plan, the answer lies in the wording of the plan document - and the administrative procedures derived from it.

It all depends upon what the plan document says. For many people, the words deductible and copayments seem to be interchangeable. In either case, it defines the amount of out of pocket expense the individual has (in addition to charges which are not covered by a plan). For an indemnity plan, the common method is to add up the covered medical expenses, subtract the deductible and apply the copayment to the remaining excess. For example, assume the individual incurs $6,000 of medical expenses, of which $900 is not covered, and the plan has a $100 deductible and an 80% reimbursement (20% copayment). From the 6,000, subtract the 900 of non-covered expense. From the 5,100 balance, subtract the 100 deductible. The individual's copayment is 20% (or $1,000) and the plan pays 80% (or 4,000). Some plans treat outpatient prescription drugs as a separate benefit, not subject to the deductible, but with its own copayment - $5 or $10 per prescription or 10% or 20% per prescription. Some plans compound the confusion by having prescription drugs subject to the deductible but with a separate copayment. There are other plans where the deductible applies only to certain inpatient medical expenses, or where the deductible varies as to type of medical expense (emergency room care may have a separate deductible or copayment). When you get into prepaid medical plans (hmo type), there are mixes of deductibles and copayments which vary not only by type of service, but also whether it is in or out of the network.

I believe Texas has a continuation provision which is applicable to group insurance policies and which allows certain individuals (and their families) to have 6 months of continuation.

It is rare that claims will exceed a 1,000,000 or, rarer still, 2,000,000. However they do occur. The basic question is whether you want your plan to provide a higher maximum (and incur the costs - directly or through reinsurance). And the related questions: What would happen to the particular individual whose claim exceeded the maximum you impose? Would providers (hospital, physicians, etc.) stop giving care? Would the individual be forced to use some of his/her savings? Would the individual become eligible for governmental assistance? Would your company advance the money? Would additional care suddenly become unnecessary?

About 2% is a rough approximation of the fee for diagnostic Xray and lab, excluding any cost for the specific physician visit - with the usual caveats concerning definition of terms, design of plan, etc. I do not have the cost of physician visits for diagnostic purposes only readily available.....but, for a modest fee.........

The question is not whether other administrators provide the service; nor is it what reasons administrators provide for doing or not doing a particular service. It seems as if the real problem revolves around money. The client does not want to pay for this additional service and you do not want to do it without payment. It appears as if you need to remind the client the fee you are being paid is for certain, discrete, delineated administrative functions. If he wishes you to add to these functions, you will be delighted to do so if, and only if, (1) you are qualified to do so, and (2) you are paid for the additional work. If the client refuses to pay for the additional services, your decision becomes a choice between whether you wish to discount your services (to include the extra work involved for no additional cost), or telling the client to go elsewhere.

to pax and mgb, "Jordan"??? You young whippersnappers, you should be reviewing Hall & Knight and Sturgeon - now, THOSE were texts!!

[expanding upon BFree's response:} the top heavy contribution is the lesser of a. 3%, and b. highest % contribution by HCE. Since HCE's highest contribution in 2002 plan year was 0, the top heavy contribution for the 2002 plan year is 0.

I found the local (Los Angeles) Mexican Consulate very helpful. Try the one nearest to you.

first, recognize my opinion is not without bias...but is based upon bitter experiences. There are many investment firms available to your friend's company in the Los Angeles area. And all of them will provide plan document, administrative filings and investment opportunities for soft dollars (deducting fees from the assets, rather than charging the client directly). However, I strongly advise your friend to invest about $1,000 per year to hire an independent fee-based advisor who will make sure the plan document does not, inadvertently, create problems for your friend (for example, the prototype document may require the friend to include persons who are not employed by her company); it may not give her/him the flexibility s/he should have; it may not keep him/her abreast of changes which could benefit or harm theplan; it may not allow investments which are outside the investment firm's family; etc., etc. In the 40+ years of my practice, the most troubling cases are those where we are brought in to repair the plans originally established by those investment companies (banks, funds, insurance companies) whose primary function is to keep the money. Cleaning up these plans costs much more in fees than the nominal $1,000 per year would have cost. And, not insignificantly, the advisor can help negotiate a reduction in the investment company's which would more than offset the annual retainer.

Do they have duplication in the members of the Boards of Directors?

You are making me jog a memory about something which was put into effect umpteen years ago. My recollection of our thought processes is: The stimulus was our seeming to be working long hours with lots of customer satisfaction but relatively little financial reward. So, we reviewed our system (which was having individuals charge time according to their own interpretation of what was "chargable"), and then: 1. we estimated the amount of billable hours necessary to meet our expenses (including salaries) and profit goals (and checked with other professional firms - including those outside the actuarial/consulting field - to determine their expected work loads). 2. we compared that to the hours being charged by our staff, and found we were far short of the ideal. So, we established some interim goals - as minimums - and set higher goals with the financial incentives to those who reached the higher goals. (A monthly incentive was paid if the individual met something like 10% of the annual goal - quarterly incentives were reached if 1/3rd the annual was reached.) Goals for hours charged varied according to staff functions - so file clerks, secretaries and assistants could get bonuses as well. We defined "chargable time" as any time spent with or on behalf of a client. The staff person was to record that time and the work performed - even if it was to correct something we had done. [Monthly, we reviewed the individual time sheets and would adjust charges to a client to reduce time spent on corrections or if we felt there was some waste.] Chargable time also included training time (the client was our firm) and time spent promoting business. The latter encouraged our staff to become sources of business. The results were almost immediate - we increased our hours charged and net billings (and collections!!) and improved our staff's income and attitude. A win-win situation. Then, after we implemented this "perfect" method, we kept amending it to reflect our needs and capabilities.

Richard, Our charges were almost entirely fee for service. Therefore, we tracked time - billable and non-billable. And we had goals which were set for each category of employee. The goals recognized some non-billable time was necessary in order to provide efficient and appropriate billable time. Client development, continuing ed, staff meetings, etc., were the kinds of non-billable time which were part of the individual's goal. Further, the rewards were both periodic and annual - recognizing there are times when an individual is out of the office (physically, mainly). In addition, the billable time was reviewed, monthly, for each client and for each project to determine whether the project's time (and fee) was beyond a reasonable expectation. When we first established the procedure, all members of the staff were told its purposes and were told it was in a state of flux - to be revised as warranted (and warrants arose on occasion - among the first was to change the reward from annual only to include those who exceeded their goals within a month or quarter). At our peridic staff meetings, this was one of the items available for discussion...and we encouraged staff comments and improvements.

Years ago, some carriers used a modification of charging a higher premium to those making a higher salary. The major medical plan designed had a deductible which varied by the employee's salary. The deductible is the amount which an employee can afford to pay on his/her own without undue hardship, and yet is still high enough to discourage small claims or frivolous expenditures. It made sense then, and still makes sense. Unfortunately, major medical plans became more and more "first dollar through catastrophic" in coverage, and the idea became almost extinct. There are some still in existence - and working well.

Each employer (State of Hawaii excepted) has the right to determine how much money it wishes to spend for employee benefits and how it is to be spent. What is "wrong" with a plan where the employer chooses to allocate a set amount of money each year for each employee as that employee's "medical savings plan"? For example, the employer may establish a medical plan which reimburses each employee's medical expenses but no more than $1,000 per month - or $12,000 in a calendar year. Here, the employER wishes to limit its financial exposure, and does so, even if it means getting involved in the reimbursement of every little medical expense claim. On the plus side, it appears as if such a plan could get the employer out of any concerns with state (or federal) mandated coverages changing. [The dollar limit would apply to any medical expenses.] The employEE can use his/her own resources to purchase specific excess coverage...or go bare and let the public take care of the portion of the costs which are unaffordable. If the employer purchases the specific stop loss (or aggregate) coverage, it loses control of the amount of money it will be laying out in the future....all plans end up costing the employer the total of the benefits plus the expense of maintaining the plan [i know of very few - none, really - insurance firms which deliberately allow stop loss claims to continue to be higher than the premiums they charge to employers]. Therefore, the catastrophic claims, if covered by the plan will be a charge to teh employer - even if they are, initially, transferred to the stop loss carrier.

Are you looking for (a) those we consider the top 50 consultants (in which case I might overcome my modesty and list myself and a few others) or (B) a listing of consulting firms in the order of their employee benefit consulting revenue?

Originally, I thought this was a one subject thread. However, the more explanations of the explanations I read, the more confused I get. This thread has bounced all over the place by using "DC health Plans" to refer to (1)a method of funding of benefits; or (2) a mechanism for individuals to choose providers; or (3) a type of benefit structure ; or (4) whatever topic the respondent wishes to address. In my simple world, I have considered the term "Defined Contribution Plan" to encompass those plans where the employer provides the employee with cash (or equivalent) and allows the employee to choose among an array of benefit plans which the employer may have chosen; then, the employee buys the chosen plan with the employer's cash and whatever additional employee cash is needed. Within that fairly broad and generic definition, there is an infinite variety of combinations - some of which may turn out to be successful (in the eyes of the employer or the employee or the broker/consultant or the carrier - we hope mutually, but, most likely only selectively) and others are doomed to fail.