eflex Compliance Newsletter for Spring 2010

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Who should read?

• HR Professionals • Brokers of Insurance • Employers

In This Announcement:

• eflex Service Reaches New Heights

• Over the Counter Medicine Changes

• Update on Adult Child Premiums

• Obama Extends Hospital Rights to Same-Sex Partners

• Small Employer Gets Health Care Tax Credit for 2010

• HRA Utilization reaches 23%!

• ARRA is Extended Again

• Breast Milk Expression Requirement in the Health Care Reform Bill


eflex Service to Customers Reaches New Heights

By Ric Joyner, Customer Experience Officer

“THANK YOU THANK YOU THANK YOU, for your great service”! “I love the speed of your claim payments!”… “Smoothest renewal year ever!”

These comments represent about 98% of the feedback we receive in our customer service surveys. Customers and brokers can fill out a survey after experiencing any type of service from eflex employees. Our staff has worked hard this year to streamline, change and listen to customers. The results are outstanding by the comments coming forward in the surveys.

Did you know that when you fill out a survey, your comments are reviewed by all eflex staff? Many respondents also receive a personal phone call or email to follow up on survey comments. We thank customers for their kind words and act quickly to assist anyone who may be experiencing a problem.

Celebrating our 10-year anniversary in 2010, eflex continues to set the highest standards for customer service and innovation in the consumer-driven health market. We post our service metrics daily on our home page: www.eflexgroup.com. We are unaware of any other TPA providing posted service metrics.

Typically January and March are the heaviest for claim volume. At eflex, we process 75,000 fax pages each month (our capacity is 1,000,000). Take a look how quickly eflex paid claims and answered calls for our nearly 90,000 participants in the busiest season of the year.

March Stats

Processed claims within limit 99.6% of the time (within 2 business days, only 1 missed on sample)

Average time of paying claims in March was .59 days

Accuracy-.19% error rate (99.81% accuracy)

We believe our service metrics (updated on our home page each day) are an industry record and quickly becoming a standard. Our staff has other ideas using Lean Six Sigma methodology to automate more processes. Look for further service enhancements to be coming out this year.

Over the Counter Medicines are changing as of January 1, 2011

We are sending a special flyer in the next few days that will bring you the updates or check www.benefitblog.com

Adult Child Taxation Issues Change Under New Health Care Bill

By Ric Joyner, MBA, CEBS, GBA, CFCI

A benefits attorney (also an agent) asked my thoughts on Adult Child Premiums and when the pre-tax premiums start under the new regulations. Below are answers to his four questions.

1. Does the pre-tax premium start after the 6-month waiting period in the bill or right away when the law was signed March 30th?

The answer from Harry Beker at the Department of Treasury is that it is on the day the bill was signed. So, people can have pre-tax adult child premiums starting the next day. (Note I was previously saying that it was after the 6-month wait which is in the bill). The fact that it’s effective March 30 is good information for employees. HR should let them know.

2. The law reads that the dependent status for pre-tax doesn’t matter. Is that true?

The employee who adds the child can get the premium reduction tax free starting March 31, whereas prior to the bill signing, the employee had to pay taxes on the premiums. This is great news.

3. Will the tax benefit for mandated adult child premiums retro back to January 1?

Even though some states enacted mandated adult child premiums on January 1, 2010, the tax benefit (after-tax to pre-tax) does not RETRO back to January 1.

4. Does the State of Wisconsin recognize Section 105 for adult child premiums?

Yes. Changing Section 105 gave the “cover” to allow states to recognize adult child premiums. Without changing Section 105, employees would have been forced to pay taxes on the premiums.

*Sources: Harry Beker 4-15-10 at 4.35 pm EST. Todd Martin, JD Reinhart Law, 3.32 pm EST.

Obama Extends Hospital Rights to Same-Sex Partners

Excerpted from Politico.com April 16, 2010

President Obama called on Health and Human Services Secretary Kathleen Sebelius Thursday to expand hospital visitation rights to non-family members, a step that would aid same-sex couples who are often barred from their partners’ bedsides. In a presidential memorandum, Obama requested that Sebelius use her rulemaking authority to require all hospitals that participate in Medicare or Medicaid to respect the rights of patients to designate visitors. He wrote that failing to respect patients’ wishes about who may visit them or make medical decisions of their behalf has “real consequences.”… Obama said “uniquely affected are gay and lesbian Americans who are often barred from the bedsides of the partners with whom they may have spent decades of their lives” but are “unable to be there for the person they love, and unable to act as a legal surrogate if their partner is incapacitated.”

Small Employers Get Health Care Tax Credit for 2010

By Cynthia Van Bogart, JD Boardman Law

Here is your latest Employee Benefits Update from Cindy Van Bogaert, Partner and Chair of the Employee Benefits Practice Group at Boardman Law Firm LLP.  This Employee Benefits Update provides information about one of the Health Care Reform changes that has an immediate impact for employers with group health plans.

As you may know, Health Care Reform has staggered effective dates for different changes. For example, the so-called “Cadillac Plan” excise tax is not effective until 2018. There are items that will be effective much sooner. One of those changes is the small-employer health insurance tax credit which is available in 2010. Qualifying small employers are entitled to a tax credit. One of the limitations is that employers have no more than 25 full-time equivalent employees who meet other requirements in the law. However, as with many things in the tax code, even counting to 25 is not straightforward. The new law includes a number of special rules, including exclusions for some employees and rules for assessing how part-time employees are taken into consideration.

The IRS has issued informal guidance on the small-employer tax credit on its website in several places:

Ø http://apps2.irs.gov/newsroom/article/0,,id=220809,00.html?portlet=6

Ø http://www.irs.gov/newsroom/article/0,,id=220839,00.html

Ø http://apps2.irs.gov/newsroom/article/0,,id=220848,00.html

What should employers do? We recommend that employers check with legal counsel to see if it meets the various requirements in the law for the tax credit.

HRA Utilization Averages 23%!

By Ric Joyner, Customer Experience Officer

Health Reimbursement Arrangements (HRAs) continue to be the best CDH (consumer driven health) product on the market. I say that with statistical knowledge spanning four years. The average utilization is 23% over four years. This news is exceptional for employers considering HRA plan designs for their employees.

How does an HRA work? The employer will purchase a higher deductible product, for example: $2,500. The employer will determine the amount of HRA to “buy back” for the employee. Let’s assume $1,500. Once the employer funds the HRA with the $1500, the employee now has a deductible of $1,000 that is out-of-pocket.

Next, the employer will offer an FSA plan. The employee will fund the $1,000 in the FSA saving approximately 30% (savings dependant on state taxes). The result is that employers such as eflex save thousands in the overall cost of health insurance per year even with funding of the HRA deductible, as shown by our statistics.

Offering the HRA allows employees to be part of the shopping process for health care. For the employer, it creates a flexible health insurance plan that can change deductibles as experience is gained.

The benefits of offering HRAs far outweigh any risks. Employers essentially have two risks.

1. Utilization of the dollars the employer funds into the HRA for employees could be used at 100%. Please note that our results encompass more than 300 HRA plans and 16,000 participants. The average utilization for all four years was 23%! Thus 77% of the potential funds or “risk” to the employer is never realized.

2. The “richer” the plan design the more “risk” of employee utilization. eflex created a 5 year benefits business plan and we operate from this plan. Last year we saved $120,000 in health insurance cost, were able to increase deductibles, and the insurance carrier we selected lowered our rates!!!

3. Providing COBRA for the HRA. A few years ago it was thought to be cumbersome and a risk for employers. The IRS has stated on benefitblog.com that treating the HRA like an FSA for COBRA purposes is an acceptable approach for COBRA. Remember, if the FSA has funds remaining when the employee leaves, the employer must offer COBRA for the remaining amounts. The employee has to fund the remaining amounts with after-tax dollars with his or her own funds. Few employees use FSA COBRA. The same is true for the HRA. In the FSA if the employee has no remaining funds, COBRA is not offered.

4. With the IRS blessing, the employer only offers the remaining balance to the employee who is no longer in service. And the employee will have to fund the remaining balance.

Please talk to your agent or one of our eflex Sales Associates at efgsales@eflexgroup.com if you are interested in saving money and planning for the future with an HRA program.

ARRA Extended Again

Excerpted from the Kilpatrick Stockton Health and Welfare Team

On April 15, 2010, the Senate passed HR 4851, the Continuing Extension Act of 2010, which included an extension of the COBRA subsidy.  Later, the House approved the bill as well; President Obama signed the measure.

The bill extends the end of the COBRA subsidy period from March 31, 2010 to May 31, 2010. 

Plans will need to update notices as well as send updated notices to individuals who terminated on or after April 1, 2010 that did not receive a subsidy notice previously. They must also allow late enrollments for individuals who did not receive a subsidy notice previously. 

Breast Milk Expression Requirement in the Health Care Reform Bill

By Ric Joyner, MBA, CEBS, GBA, CFCI

A B Stoddard of The Hill newspaper/website was on Brett Bair Fox News Special Report on Friday (April 16, 2010). The session was regarding surprise information in the health care reform bill. Stoddard reported that employers with 50 or more employees must provide a private area—aside from a bathroom—for women to express breast milk whenever it is necessary.


At eflex, we are committed to staying ahead of industry changes and developments, so please watch for future updates. If you would like more information on these or other topics, please call eflex toll-free at 877-933-3539 or visit www.benefitblog.com.