Can I use Claremont’s eQuote-to-Enrollment service to manage changes during the plan year?

You can. Your client’s employees can make normal, qualified changes (add dependents, change address, etc.) by accessing their benefits portal in Ease (which is offered through your own account or Claremont’s – at no cost to you by the way). Ease can be configured to notify you, the group’s administrative contact or Claremont (or all three) that a change has been made. Then, depending on your arrangement with the client, one of the three can submit that change to the carrier just like normal. Or, in the case of Principal, which has just launched a direct link with Ease for ongoing administration, during-the-plan-year changes can be configured to transmit directly from Ease to Principal with no need for the group administrator, the broker or the general agent to get involved.

Can my client offer one set of medical benefits to salaried employees and a different set to hourly employees?

Yes, but with caution. Note: this answer is limited to health benefits, benefits such as retirement plans may be treated differently and should be discussed with a financial advisor.

Employers can offer different benefits or different levels of benefits (a “Program”) to different classes of employees provided that each employee who is in a similarly situated class is offered the same Program and provided that the classes are constructed from “bona fide employment-based classifications.”

Examples of employee classes:

• Full-time and part-time.
• Those in different geographic locations.
• Those with different lengths of service.
• Paid salary and paid hourly.

Two important factors to consider when designing Programs that differ by employee class. In general, the Program must be non-discriminatory. Specifically:

1. A Program cannot discriminate based on health and other medical factors (see DOL publication below).
2. A Program cannot discriminate in favor of highly-compensated individuals if a Section 125/Cafeteria Plan is in place (see Thomson Reuters guide below).

If an employer wishes to implement a Program whose benefits differ based on employee classification, especially if the classification is salary and hourly, where the likelihood of discrimination in favor of highly compensated individuals is much higher, we strongly recommend that you or the employer engage the services of a firm that specializes in compliance testing to ensure that all nondiscrimination requirements are satisfied. We encourage you to contact one of our partners below.

Resources

• Department of Labor: FAQs on HIPAA Portability and Nondiscrimination Requirements for Employers and Advisors (see Questions 12-24)
• Thomson Reuters Tax: What Nondiscrimination Tests Apply to Cafeteria Plans…

Claremont has vetted and partnered with a number of firms that offer HR Compliance services: Vendor Partners – HR Compliance.

What travel assistance services (e.g. worldwide travel and medical assistance 24 hours a day) do group life policies typically offer to employees and their families?

Travel Assistance services included in most group life policies provide employees and their families with several helpful services when traveling more than 100 miles from home (including international travel) whether it’s for business or personal reasons. These services provide peace of mind to travelers, supplementing other coverage by further protecting against an unforeseen medical emergency that happens while traveling away from home.

Typical services include, but are not limited to:

General Travel Information

• Visas, Passports
• Immunization Requirements
• Local Customs
• 24-hour pre-Departure Information on Weather and Currency

Lost Documents and Lost Article Assistance

Legal Referrals

Emergency Cash and Bail Assistance

Medical Assistance Services

• Medical and Dental Referrals
• Coordinate Hospital Admission
• Critical Care Monitoring
• Dispatch of a Prescription Medication Eyewear

Indemnified Medical Transportation Services

• Emergency Medical Evacuation:
  Medical team will determine if care is best provided locally or if the patient needs to be moved to a facility that can provide the required level of care. If evacuation is required, the medical team will recommend the appropriate method of transportation (air ambulance, commercial flight, ground transportation, etc) and make arrangements, including a medical escort when needed.
• Transport of Family Member:
  When a member is traveling alone and is hospitalized, the vendor makes travel arrangements for a friend or family member to join him/her. If a parent or legal guardian is unable to complete a trip with his/her children, arrangements for the children’s return home with an escort are handled.
• Return of Mortal Remains:
  The carrier vendor will arrange the transportation of the mortal remains to the member’s location of permanent residence. They help obtain and organize documentation and authorization for such transportation, as well as assist in the preparation for the transport of the remains, including arrangements for an appropriate container.
• Vehicle Return Services:
  In the event that a traveler needs to be medically repatriated or evacuated to the traveler’s home, the carrier will coordinate and manage all arrangements needed for the return of your unattended vehicle. There is a maximum benefit tagged to this service, see contract for details.

For information, download the following marketing materials:

• Blue Shield
• UnitedHealthcare
• MetLife
• Principal
• Reliance Standard

For a group life quote, including travel assistance services, contact us at 800.696.4543 or quotes@claremontcompanies.com.

What can you tell your client or prospect when a payroll company tries to win their group benefits business?

It happens a lot this time of year. Payroll companies, that sell benefits on the side, know that the beginning of the year is the best time to win clients looking to make a change. They sell the ease and convenience of having one entity responsible for both payroll and benefits. So, what do you tell your client or prospect who gets the hard sell from a payroll company wanting to be the broker of record?

Here are the talking points you can use if you find yourself in this situation:

• Payroll companies approach the client relationship as transaction-based. Brokers take a holistic approach and strive to be a trusted advisor for the employer.
• Benefits brokers are experts in benefits services, plans and what works best for their clients. Payroll providers are in the business of selling and servicing payroll and benefits are a sidekick.
• It is not in a payroll company’s DNA to provide personalized, customized support. They support their clients through call centers and websites. Benefits brokers recognize the personal and customized nature of selecting and using benefits and provide a higher level of service.
• Payroll companies may require the employer to bundle other lines of coverage or services (401K, Workers Compensation, extra payroll-related services) that the employer may not want to purchase from the payroll company:
  • The employer should pay for only what they will use. Brokers can craft a tailored solution that fits the employer’s need exactly.
  • The payroll vendor is often not an expert in these lines.
  • Employers can find themselves stuck if they’ve subscribed to a suite of services from the payroll vendor and then want to unbundle them.
• Payroll companies often have high turnover and can’t provide consistency for clients.
• Benefits brokers understand compliance, which is a big issue for clients. Payroll vendors don’t understand benefits compliance as well. Do they understand WRAP, Section 125, ACA and other compliance matters?

In our view, independent brokers provide a superior experience. It is clear that your client or prospect should let you, the expert, help them structure the best benefits solution possible and then provide the best service possible throughout the year.

My client now has more than 50 employees, are they required to offer health coverage?

Not necessarily, but you will want to help them evaluate their situation carefully. The Affordable Care Act (ACA) requires that employers with an average of 50 or more full-time (FT) plus full-time equivalent (FTE) employees offer affordable, minimum value coverage to all full-time employees or they may be penalized. Employers that meet this employee count criterion are considered Applicable Large Employers (ALE’s).

Here are the key elements to consider:

• Did the employer average 50 or more FT plus FTE employees during this year for the first time?
  • If so, then for next year, not this year, they will be considered an ALE and required to offer coverage to full-time employees as stated above.
  • Were they an ALE last year? If so, then they would have been required to offer coverage this year and each year thereafter until they no longer have 50 or more.

• How do you calculate the average FT plus FTE count? Here is a good approximation:
  • Any employee working 130 hours or more in a month is counted as one FT employee.
  • For employees working less than 130 hours per month, sum their hours worked for the month and divide by 120. This is the FTE count.
  • Sum the FT and FTE counts to get the total count for a month. Sum total counts for a 12-month period and divide by 12 to get the average FT plus FTE count. If it is 50 or more for the first time, then the employer is an ALE and would be required to offer coverage in the following year or they may be penalized.

Returning to the original question, you can see how it is possible to have more than 50 employees and not be required to offer coverage. If, for example:

• there is a high ratio of part-time to full-time employees, then the employer may have significantly less than 50 FT plus FTE employees when using the ACA’s method of counting and they would not be considered an ALE.
• the employer exceeded 50 FT plus FTE employees for a small portion of the year, then their average FT plus FTE employee count will be below 50 and they would not be considered an ALE.
• the employer is clearly exceeding 50 FT plus FTE employees for all months during the year for the first time, they will definitely be considered an ALE for next year, but not this year and would not be required to offer coverage until next year.

The calculation method described above provides an approximate count and is not to be used for final decision-making. Factors such as whether there are seasonal employees or if the employer is part of a controlled group, will impact the calculation. Claremont can assist with providing you and your client with an estimate by using standard payroll data. However, if it is a close call and the employer is near the 50 FT plus FTE employee threshold, it is strongly recommended that you engage with the company’s tax advisor or professional payroll vendor, both of which may offer ACA Large Employer compliance services.

Why is my client receiving a letter from Covered California and what should I do?

We have recently seen an uptick in the number of letters sent from Covered California to employers (here’s a sample).

Covered California is obligated to notify an employer when an individual is approved for a subsidy (APTC) and states they are employed. An employee cannot qualify for APTC if their employer offers coverage that meets certain requirements. If the employer receiving the letter is an Applicable Large Employer (ALE), they are being put on notice that the employee has told Covered California that they were not offered qualified coverage. If not true, the employer’s normal ACA reporting will prove this out. If true, the employer may be subject to a penalty. The penalty can be substantial, so it is critical that ALE’s take these letters seriously and act on them quickly.

Since Covered California has no idea if an employer is an ALE when sending the notice, even those who are not ALE’s and have no obligation to offer coverage may be notified. Those who are not an ALE can view the letter as informational, however, those who are an ALE should take the letter seriously and act quickly if necessary.

We have developed this informational piece: Responding to an APTC Letter from Covered California that should help you understand the rationale behind the letter and provide concrete next steps for you and your client.

Which small business exchange in California offers full-network PPO plans?

Covered California for Small Business (CCSB) is the only small business exchange that offers full-network PPO plans. The other small business exchange, California Choice, only offers limited-network PPO plans.

Employers want to provide the widest range of options to employees and often require that agents design solutions that include broad-network PPO plans alongside traditional HMO plans. CCSB’s robust portfolio of full-network PPO plans, from both Blue Shield of California and Health Net, allows brokers and employers to better meet the needs of employees.

Does the benefit for group life insurance always decline as the subscriber ages?

No. Most group life insurance plans start reducing the benefit according to an age-reduction schedule, however, MetLife’s voluntary life plan does not. A little nugget that may be helpful for you to discuss with your clients.

Typically, the benefit for group life insurance (both employer-sponsored and voluntary) declines starting at age 65. Below is the average reduction schedule for the most common group plans (the reduction is expressed as a percentage of the original benefit amount):

Age                       Benefit Reduction

65                                     30%

70                                     55%

75                                     75%

Retirement                       100%

As you can see, starting at age 65, the benefit declines dramatically. For example, a basic life policy with a $50,000 benefit will decline to $35,000 at age 65 and will only pay $12,500 by age 75.

On the other hand, the benefit amount of MetLife’s voluntary life insurance plan does not decline as the subscriber ages. A $50,000 benefit established at age 60, stays at $50,000. In addition, the plan:

• Is portable (the employee can continue the plan as an individual even after termination, voluntary or involuntary, from the employer).
• Is convertible into a whole or universal policy.
• Benefits can be increased (to certain levels) without submitting a statement of health.
• Is bundled with no-cost services such as will preparation and estate resolution.

As with most ancillary coverage, terms are flexible if you are willing to pay. Carriers will allow the contract owner to “buy out” the age reduction schedule by paying more in premium. This is true of most plans, including MetLife’s employer-sponsored plans, but the beauty of MetLife’s voluntary life plan is that there is no cost for eliminating the age reduction schedule.

Are there participation requirements for voluntary benefits plans?

Yes. Voluntary benefits (those for which the employee pays 100% of the premium) can be a great way for employers to begin offering benefits if they currently do not. And for those that have a robust offering, “voluntary” can round out that offering by giving employees access to coverages not available on an individual basis. Keep in mind though that there are participation requirements for voluntary plans just as there are for employer-sponsored plans.

The following are examples showing how participation requirements differ between voluntary and employer-sponsored Dental and Life plans from carriers in the small group market:

Dental Coverage

Delta Dental

• Voluntary: A minimum of five eligible employees must participate, except if there are less than five eligible, then a minimum of two must participate.
• Employer-Sponsored:
  – If the employer pays 100% for both employees and dependents: 100% of eligible employees and 100% of their dependents must participate.
  – If the employer pays 75-99%: 75% of eligible employees and 50% of their dependents must participate.

Principal

• Voluntary: Must have 10 or more eligible employees, 25% of whom participate, but with no less than five participating.
• Employer-Sponsored:
  – If the employer pays 100%: 100% of eligible employees and 50% of their dependents must participate.
  – If the employer pays 50-99%: 75% of eligible employees and 50% of their dependents must participate.

Humana

• Voluntary: Two must participate.
• Employer-Sponsored: 50% of eligible must participate.

Life Coverage

MetLife

• Voluntary: 25% of, but no fewer than 10, eligible employees must participate.
• Employer-Sponsored: 100% of eligible must participate.

Principal

• Voluntary: 20% of, but no fewer than five, eligible employees must participate.
• Employer-Sponsored:
  – If the employer pays 100%: 100% of eligible employees must participate.
  – If the employer contributes <100%: 75% of, but no fewer than three, eligible employees must participate.

Reliance Standard

• Voluntary: 10% of, but no fewer than five, eligible employees must participate.
• Employer-Sponsored: 100% of eligible must participate.

As you can see, the participation requirements for voluntary plans are quite reasonable, making them a good solution for employers looking to offer coverage for the first time or to expand on what they currently offer.

Is it too early to start preparing for Q4?

No. In fact, there are many steps you can take to prepare for Q4 during this relatively quiet time of the year:

• Review your list of clients to determine who will be renewing in Q4.
• Map out a rough timeline of how you would like to manage “busy season.” Factor in holidays and how they reduce your clients’ availability, especially if Q4 is their busy season.
• Begin working early with those who have complex needs or who need extra assistance.
• Identify clients who could benefit from a switch in plans or carriers. Start working early on crafting solutions.
• Interested in learning about new products or services that could benefit your clients? Now is the best time to familiarize yourself so you have that knowledge or service lined up when your clients need it.
• Identify clients who should be offering ancillary benefits and start presenting those options early. The labor market is highly competitive and offering ancillary benefits could help your clients retain and attract good employees.
• Start running market check quotes to get an idea of what your clients’ renewals will look like…well before they receive their renewal packets.
  – Kaiser, Sutter, Sharp, and CCHP (Chinese Community Health Plan)
  have already published rates through the end of 2018.
  – Anthem and Blue Shield will publish by the first week in July.
  – All others should publish between early July and early August.

If you execute a plan for completing Q4 renewals early, you will see benefits, including:

• Despite the best of intentions, it’s inevitable that there will still be a scramble for certain clients in November and December. You will be far less stressed if you’ve completed renewals early for your other clients.
• Locking down Q4 renewals early takes away the possibility that a competitor could poach.
• Conversely, the time that you free up allows you to pursue new business, at exactly the right time – when so many prospects are renewing and when other brokers are busy and are not prospecting.

Need assistance preparing for Q4? We’re standing by to help – yes even now. Want to learn about new Claremont products and services that can help you win clients?

Contact your Claremont sales representative at 800.696.4543 or info@claremontcompanies.com.