intergenerational benefits section divider title goes here · ppaca medicare intergenerational...

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Section Divider Title Goes Here INTERGENERATIONAL BENEFITS

Erica N. Cordova, J.D.

Employee Benefits Attorney

PROGRAM OVERVIEW

I. Generational Values

Defining the generations and evaluating their values

II. Group Medical Plan Rules and Mandate

What rules impact the multigenerational workforce

III. Customizing Your Benefits Menu for All

Generations

Benefit strategies to engage all generations

IV. Risk Profiles and Benefits Expectations

Developing an intergenerational approach to workforce risk and reward

Intergenerational Benefits | 2

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GENERATIONAL

VALUES

Section one

GENERATIONAL VALUES – Defined

Born 1925-1945

Smallest percentage of

workforce

Experienced; Dedicated;

Loyal

Born 1946-1964

Largest percentage of

workforce

Service and team-oriented;

Dedicated

Born 1965-1980

Second largest percentage of

workforce

Adaptable; Independent;

Creative

Born After 1980

Third largest percentage of

workforce

Optimistic; Multi-task;Tech

savvy

Traditional Baby Boomer Generation X Millennial/Gen Y


GENERATIONAL VALUES – What’s Important

Traditional Baby Boomer Generation X Millennial/Gen Y

Motivation

Personalization; Managers invested in

overall good of company

Rewards

Tangible symbols of recognition

Motivation

Flexibility; Challenges; Leaders who involve them to make a difference

Rewards

Recognition; Promotion

Motivation

Ability to work independently on their own flexible

schedule

Rewards

Free time; Development

Motivation

Flexibility; Opportunity for

personal and career growth

Rewards

Tangible evidence of credibility

http://assets.aarp.org/www.aarp.org_/articles/money/employers/leading_multigenerational_workforce.pdf


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GROUP MEDICAL PLAN

RULES & MANDATES

Section two

RULES & MANDATES

Considerations for the Employer-Sponsored Plan

PPACA

• Employer mandate

• Adult dependents

• Preexisting conditions

• Non-discrimination

• Preventive care

• Wellness

ERISA

• Reporting requirements

• Fiduciary requirements

• Disclosure requirements

Medicare

• Medicare secondary payer

• Medicare Part D

Marketplace

• Premium reimbursement arrangements

• New mid-year election change

MARKET

ERISA

MEDICARE PPACA


THE EMPLOYER MANDATE

PHASE IN BASED ON EMPLOYER SIZE

Employer Size 2015 Plan Year 2016 Plan Year +

1–49 full-time employees or

full-time equivalents

Does not apply Does not apply

50-99 full-time employees

or full-time equivalents*

Does not apply Employer must offer

coverage to 95% of full-time

employees and dependents

to age 26

100 or more full-time

employees or full-time

equivalents

Employer must offer



to age 26

Employer must offer



to age 26

“PAY OR PLAY” THRESHOLD

PPACA


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THE EMPLOYER MANDATE

“PAY OR PLAY” WORKBOOK

No penalty

NO

NO

NO

$3,000 / Full-Time Employee receiving tax credit

$2,000 / Full-Time Employee (less first 30)*

Do you offer coverage to substantially all full-time

employees?

YES

YES

YES

Is the coverage affordable? (< = to 9.56% of income)

Does the plan provide “minimum value”? (60%+ of total allowed costs)

*80 for plan years beginning in 2015; 30 for PYB in 2016 and after

PPACA


HEALTHCARE REFORM IMPLEMENTATION

Mandates Impacting The Intergenerational Workforce

Employer Mandate

• Applicable Large Employer (ALE) must offer affordable, minimum value coverage for full-time employees. Must also offer minimum essential coverage to dependents (natural born and adoptive children) of full-time employees.

Adult Dependent Coverage

• A group health plan offering dependent coverage must make dependent coverage available until the child reaches age 26.

Preexisting Conditions

• A group health plan or insurer may not impose any preexisting condition exclusion with respect to the plan or coverage.

PPACA



Hypothetical Illustrations

Employer Mandate

• Employer plan provides that Medicare eligible employees are ineligible to enroll.

• An ALE must offer coverage regardless of age or entitlement to other coverage.

Adult Dependents

• Employee’s 25 year-old son is married and employed with an offer of coverage. Employee wishes to enroll her son on the plan.

• Eligibility may not be conditioned on financial status, alternative coverage, residency, student status or marital status.

Pre-Existing Conditions

• Applicant with history of breast cancer treatment receives job offer contingent on waiver of the health plan.

• A group health plan or insurer cannot impose any preexisting condition exclusions on the plan.

PPACA


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Mandates Impacting The Intergenerational Workforce

Non-discrimination

• Soon, insured group health plans must comply with non-discrimination requirements for self-funded plans, including rules against discrimination in favor of HCIs with respect to eligibility and benefits.

Preventive Care

• Non-grandfathered health plans are required to provide coverage, without cost-sharing, for preventive services including immunizations, screenings, physicals and certain pharmaceuticals

Health Outcomes Differentials and Incentives

• Must: (1) offer chance to earn reward at least once per year; (2) not provide reward exceeding 30% (50% tobacco) of EE-only cost; (3) be reasonably designed to promote health; (4) offer uniform availability and Reasonable Alternative Standard (RAS); (5) disclose RAS.

PPACA



Hypothetical Illustrations

Non-

Discrimination

• Employer seeks to reward seniority with increasing HSA contributions per year of service.

• Proceed with caution! Senior employees tend to be HCEs so the plan may be discriminatory.

Preventative Care

• Employer denies coverage for birth control as a preventive service based on a religious exception.

• Access to birth control is a required preventive service for all but a few employers. Certain closely-held companies may avoid the mandate, but most may not.

Wellness Initiatives

• Employer offers a $80 premium discount for non-smokers on a $150 monthly premium with no alternative to obtain the incentive.

• The $80 differential for smokers exceeds the 30% and 50% thresholds. Also, the plan failed to offer a RAS.

PPACA


REGULATION OF TAX-ADVANTAGED PLANS

ERISA

Reporting Requirement

Fiduciary Duties

Disclosure Requirement

ERISA Mandates Impacting an Intergenerational Workforce

Federal Law Regulating

“Employee Benefit Plans”

• 100+ Participant plans

required to file form

5500 annually

• Excludes plans not

subject to ERISA

• Excludes church and

governmental plans

• Exclusive benefit of plan

participants and

beneficiaries

• Prudent person – Use

care, skill, diligence

• Abide by plan

documents

• Plan document

• Summary Plan

Description (SPD) &

Summary of Material

Modification (SMM)

• Summary Annual

Report (SAR)

ERISA


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ERISA

Reporting Requirement

Fiduciary Duties

Disclosure Requirement

Understanding ERISA Risk Tolerance

Federal Law Regulating

“Employee Benefit Plans”

• Low risk

• Reporting obligation

unchanged by demographics

• Moderate risk

• +/- Treatment of certain

employees or groups is risky

• High risk

• Electronic disclosure of

plan documents

ERISA



Compliance Considerations for Intergenerational Employers

FIDUCIARY DUTIES

Written instrument naming one or more fiduciaries

Exclusive purpose of providing benefits and defraying reasonable admin costs

Prudent person acting in a similar capacity

and like expertise

Must follow governing documents to the extent consistent with ERISA

Personal liability, civil penalties and

criminal penalties

DISCLOSURE REQUIREMENTS

Must provide plan document within 30 days upon request

Must provide SPD within 90 days of the participant entering the plan

Must provide SAR within 9 months after the end of the plan year

Electronic distribution safe harbor (workplace access = yes; no access = consent)

Civil penalties up to $110 a day (Max. $1,100 Per Request

ERISA



Employer Potholes Along the Compliance Highway

FIDUCIARY DUTIES

“We want to allow one of our longtime executives to add his domestic partner even though domestic partner coverage is not in

our contract.”

“There may be some other reasonable plan options available that would best serve our

participants but we tend to go with the cheapest option available.”

“We always offer COBRA to ex-spouses, even where not required by state law, but it turns out that our plan documents do not allow for this.”

DISCLOSURE REQUIREMENTS

“I am the new Director of Benefits and I’ve asked about the plan documents. Everyone says Frank (who left 5 years ago) used to handle that and no one knows if we have

documents now.”

“We give all new hires a 10-page new hire packet with our Benefits Guide, but I’m pretty sure it doesn’t have SPDs. The SPDs are the

really long documents, right?”

“We have a lot of industrial jobsites and find it easier to mail a postcard to all of our

employees with a link to the company intranet where they can view all of the documents.”

ERISA


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NON-EMPLOYER MEDICAL OPTIONS

Other Coverage Options for the Intergenerational Workforce

Medicare

• Health insurance program for: (1) age 65+; (2) under age 65 with disabilities; and (3) all ages with ESRD

• Provides: (1) hospital insurance; (2) medical insurance; and/or (3) prescription drug coverage

Medicaid/CHIP

• Health insurance program for: (1) low-income; (2) families & children; (3) pregnant women; (4) elderly; and (5) disabilities

• Provides free or low-cost care – coverage and costs vary from state to state

Marketplace

• Health insurance program for all U.S. Citizens or nationals living in the U.S. And not enrolled in Medicare

• Provides: (1) hospital insurance; (2) medical insurance; and/or (3) prescription drug coverage

MEDICARE MARKET



The Medicare Formula

Medicare

Part A – Hospital

Insurance

Part B – Outpatient

Medical Insurance

Part C – Medicare

Advantage

Part D – Prescription

Drug Coverage

MEDICARE

• Parts A & B equal “traditional” Medicare. The combination of

hospitalization and outpatient service make up the core of the

Medicare benefit.

• Part C is the Medicare equivalent of an HMO or a PPO, referred to

as “Medicare Advantage.” These plans are insured by a private

insurance company and include

hospitalization and outpatient service.

• Part D is the Medicare Prescription

Drug Program, referred to as “Part D,” which provides supplemental

pharmacy benefits through a private insurance company

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Medicare Compliance Considerations for Employers

MEDICARE SECONDARY PAYER

Determine whether employer or Medicare pays first

Generally applies to 20+ EE employers with limited exceptions

Prohibits financial or other incentives not to enroll in

employer coverage - $5,000/EE

MEDICARE PART D

Provides for Medicare prescription drug coverage

All plan sponsors must provide Medicare Part D notice by Oct. 15

annually & disclosures to CMS

Employee enrollment in part D could cause permanent loss of

employer coverage

MEDICARE


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Considerations for Employers with Other Medical Coverage Options

Mid-Year Election Change – Below 30

Hours Per Week

• Hours reduced below 30 hours/week even if no loss of eligibility

• Must obtain other MEC by 1st of the month following revocation

• Employer may rely on employee’s reasonable representation

Premium Reimbursement Arrangements

• Reimbursement of individual premiums prohibited under the PPACA

• Prohibited for pre-tax and post-tax reimbursement arrangements

• Compensation in lieu of benefits permissible – exercise caution

Mid-Year Election Changes – Intent to Enroll in Exchange

• ER non-calendar open enrollment or exchange special enrollment

• Must have other MEC effective by day following last day of coverage

• Employer may rely on employee’s reasonable representation

MARKET


CUSTOMIZING YOUR

BENEFITS MENU

Section three

CONSUMER-DRIVEN HEALTH EXPENSE MANAGEMENT

Unlocking the Potential of the High-Deductible Health Plan

HIGH DEDUCTIBLE HEALTH PLANS

Lower premiums/higher OOP costs

EE pays until high deductible met

HSA compatible

Minimum deductible: $1,300/$2,600

Pros & Cons

Manage your own health care costs

Tax-free HSA funds; High OOP now

Great if mostly preventive care

TRADITIONAL HEALTH PLANS

Higher premiums/lower OOP costs

Copays with lower deductible

Not HSA compatible; FSA available

Minimum deductible: None

Pros & Cons

Less control over your health costs

Use-or-lose FSA – limited rollover

Better for non-preventive care


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HSA Must Be

Enrolled in QHDHP

Min. Deductible:

$1,300/$2,600

Limits: $3,350/$6,650

55+ Catch Up: $1,000

Qualified Medical

Expenses

(Rollover & Portable)

LTC / Medicare Premiums;

Non-Qualified Medical

Expenses 65+

No Other Non-HDHP Coverage

(Medicare; FSA; HRA; Clinic)

Comparable ER Contributions

Required

(Unless 125 Plan)


Unlocking the Potential of the Health Savings Account

HSA


HSA Employer Must

Sponsor a Section 125 Plan

Cafeteria Plan

Up to $2500 per year (2015)

Employee-only Contributions

Available for Health &

Dependent Care

“Use it or Lose it” with Grace Period or Roll-

over

Pre-tax Contributions


Fortify the Platform with Financial Savings Accounts

FSA


HSA Employer-only contributions

Reimbursement of medical expenses

(No premiums)

General purpose requires

integration with medical plan

May fund with employer wellness

incentives

Non-integrated for Limited Excepted Benefits

(Vision & Dental)

Subject to non-discrimination rules under section 125


Fortify the Platform with Health Reimbursement Arrangements

HRA


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PLAN RESTRICTIONS & HEALTH OUTCOMES

EMPLOYEE ASSISTANCE

Counseling & support for

personal issues

Considerations

All EEs or plan participants

Discrimination

WELLNESS

Incentives up to 30% of EE-only

cost

Considerations

Health-contingent

Reasonable alternative Std.

Discrimination

TOBACCO

Incentives up to 50% of EE-only

cost

Considerations

Random testing

Reasonable alternative Std.

Reward/Penalty

SPOUSAL RESTRICTIONS

Exclusions & restrictions on spousal plan participation

Considerations

Cost vs. Benefit

Based on other coverage

Discrimination

Focus on Health & Sustainability to Balance the Risk/Reward Equation


NON-MEDICAL BENEFITS

Adding Value With Non-Traditional Benefits

• On-site fitness

• Childcare

• Free snacks & drinks

• Casual dress

• Personal development

• Tuition reimbursement

• Mentoring

• Financial planning

• Commuter benefits

• Retirement funding

• Equity

• Flex Time

• Telecommute

• Compressed work week

• Vacation Time & leave

Work-Life

Balance

Financial Support

Workplace Perks

Development

Boomers; Gen X; Gen Y

All Generations

Gen X; Gen Y Gen X; Gen Y


RISK PROFILES AND

BENEFIT

EXPECTATIONS

Section four

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UNDERSTANDING THE ISSUES

An Intergenerational Approach to Workforce Risk & Reward

RISK PROFILE

Presenteeism (medical issues or depression)

Absence related to medical concerns

Resistant to change

Lifestyle consequences (alcohol & tobacco)

Intolerant of inconsistency

Appreciate organizational hierarchy and respect leadership

BENEFIT EXPECTATIONS

Traditional health plans

Long-term care

Retirement strategies with emphasis on private pension and Social Security

Healthcare transition assistance

Face-to face interaction

Employer Paternalism

Resistant to health outcomes with complex reward structures

TRADITIONAL WORKFORCE (1922-1945)




RISK PROFILE

Financial issues related to retirement planning & wage replacement

Adverse to isolation and telecommuting

Preseentism & absence related to care of ailing relatives and long-term care

Expectation of relationship between compensation and tenure

Sense of self defined by work-related accomplishments

Effects of chronic illness and a life-time of working condition injuries appearing


Traditional health plans w/ rich pharmacy benefits

Wage replacement, disability, long-term care

Combination of defined contribution & defined benefit retirement strategies

Healthcare transition assistance

Traditional welfare benefits (dental, vision, receptive to EAP)

Health outcomes programs designed to reduce illness/promote prevention

BABY BOOMER WORKFORCE (1946-1964)




RISK PROFILE

See self as a marketable commodity

Appreciate and respect a diverse workplace

Expect internal promotion

Life indicators of marriage, divorce, child custody, paternity

Pregnancy & smoking-related illness prevalent

Comfortable with authority but not impressed with titles


Low-deductible consumer-driven health

Wage replacement & disability insurance

Individual account-based retirement strategies

Dependent care

Education-related benefits (tuition reimbursement & workplace flexibility)

Severance-related assurances

GENERATION X WORKFORCE (1965-1980)


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RISK PROFILE

Financial issues (savings, credit, loan & debt management)

Desire to create change & make an impact

Flexibility in work-life balance (emphasis on life)

Require instant gratification with a short attention span

Effort can be separated from reward (+/- pay for performance)

Multi-taskers requiring team-based work in a creative atmosphere


High-deductible/consumer driven health

Catastrophic Accident/Illness

Equity Incentives (Stock, SARs, Options)

Commuter & transportation benefits

Adoption, embryo services, related counseling

On-sight dining, health care, wellness

MILLENNIAL (GEN Y) WORKFORCE (1980-1994)


DISCUSSION


BENEFIT SUMMARY BY

GENERATION

Summary

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SUMMARY

Benefit Strategies By Generation

Traditional Baby Boomer Generation X Millennial

HDHP - Higher √ √

HDHP - Lower √ √ √ √

Traditional √ √

HSA* √ √ √ √

FSA √ √ √ √

Wellness √ √ √

√

EAP √ √ √


SUMMARY



Dental √

√

√ √

Vision √ √ √ √

Flexibility √ √ √

Financial √ √ √ √

Development √ √

Office Perks √ √


SUMMARY



Eldercare √

√

Childcare √ √

Retirement

Incentive

√

√

Life √ √ √ √

Long-Term

Care

√

√

Supplemental √ √ √ √


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