Medical insurence

 

Under a Group Employee Medical Plan benefits are provided to each employee/dependent in many different forms. Health Maintenance Organizations (HMO’s) provide coverage for doctors and hospitals that are in their networks only. Point of Service (POS’s) provides coverage both in network and out of network at different usual, customary and reasonable (UCR) levels. Preferred Provider Organizations (PPO’s) provide coverage both in network and out of network with no referrals needed in network.

Health Savings Accounts (HSA’s), Health Reimbursement Arrangements (HRA’s), and Flexible Spending Accounts (FSA’s) are methods used to reduce medical premiums and have the employee share in the management of their health care. They may be administered by a third party administrator (TPA).

A key to a successful plan is making sure the employee’s annual out of pocket expense is kept at a reasonable level and that most of the doctors and hospitals currently used by employees are in the network chosen.

Group employee benefits

Attracting and retaining employees by enriching compensation packages is obviously essential in today’s marketplace. Finding and fine-tuning plans that provide the most benefit to personnel at reasonable costs to employers is a distinctive AKD goal.

Over 50 years, AKD has discovered and vetted numerous medical, dental, drug and life insurance programs that are priced competively.

For example, AKD does exhaustive and uncommon research before a group medical insurance plan is recommended to a client. One of our key objectives is to match the doctors of choice to the majority of employees, with networks that include those doctors. This helps control the out-of-pocket expenses each employee is exposed to annually.

Find out other ways AKD can help you strengthen your compensation packages by giving us a call.

Disability income

Disability Income Insurance coverage is designed to replace earned income (W-2), not passive income such as dividends and interest. Definitions of total and partial disability differ by carrier, so this must be checked thoroughly before deciding which carrier is right for your situation.

The monthly benefit, the elimination period (deductible before claim payments begin), and the benefit period (how long will the carrier pay a claim) are key points to examine so that the policy specifications fit your needs. Decide your budget and let our advisor guide you so that you will have income in the event of an unforeseen accident or sickness.

 

Umbrella Liability Insurance

 

Umbrella Liability Insurance is probably the most important part of an individual’s or family’s insurance program. It provides limits upwards of $1,000,000 for third party actions brought against a member of the household as a result of bodily injury or property damage caused accidentally.

Umbrella Liability Insurance covers the cost of the defense against a lawsuit, as well as damages that may be awarded to the third party. The limit of the policy piggybacks on top of the primary personal liability carried, the automobile liability in force, and any other primary liability such as boat (protection and indemnity), aircraft, and employer’s liability (workers compensation).

Carrying this protection helps to insulate the insured’s assets and future earnings from third parties.

 

ANNUITIES

 

An annuity is basically the exact opposite of life insurance. While proceeds of life insurance are paid at the time of death of the insured, the proceeds of an annuity are paid while the annuitant is alive. Generally, the annuitant can never outlive the income from the annuity. However, you can also purchase an annuity which will provide income only for a specified period of time.

Annuities are primarily intended to provide a source of retirement income. Payments can be made to the annuitant monthly, quarterly, semi-annually or annually. While there are many types of annuity products available, they can be classified into three general categories: single premium immediate payment annuities, deferred annuities and variable annuities. Both the deferred and variable types are available on a single premium or flexible premium basis.

Trip Cancellation

Besides reimbursement for a cancelled trip, Trip Cancellation Insurance may provide you with other benefits both prior to and during your planned vacation. The primary purpose for purchasing this type of insurance is to recover the cost of any non-refundable deposits that were required from the travel service providers. In some cases, your travels may be interrupted during your vacation. This is called the Trip Interruption Benefit that is described under your trip cancellation insurance policy.

Most trip cancellation insurance policies will also provide you with financial assistance if there is an unexpected delay in your trip. This assistance is usually a maximum amount per day that is provided to assist you with making other arrangements or paying for hotel accommodations that were necessary because of the situation. This can also be caused due to a missed flight connection that was not a fault of your own.

Trip cancellation policies will usually provide some assistance to cover the cost of lost luggage and will have a maximum benefit, regardless of the value of the lost items in your luggage. There may be additional compensation if your luggage is delayed but is eventually returned to you intact.

Your insurance policy may also provide coverage for emergency medical evacuation or repatriation of remains. If, during your travels, you become ill or injured and need to return to the United States, your insurance policy may cover the costs associated with your transportation and return. In the event of a death while traveling, the insurance company may provide benefits that will pay for the return of your remains to your home place of residence. If you are hospitalized overseas, the insurance company may also offer an emergency reunion benefit that will pay for a loved one to travel to your destination.

Some trip cancellation insurance policies may also provide common carrier accidental death life insurance benefits that would be paid to your beneficiary in the event that you die in a plane crash during your trip.

Long Term Care Insurance

Long Term Care Insurance covers not only care in a nursing home, it can also mean nursing care in your own home to help with the daily activities of living such as dressing, eating, toileting, bathing, continence, and transferring.

Services provided would include institutional care i.e. nursing facilities and assisted living facilities. Non-institutional care would include home health care, personal care, adult day care, respite care and hospice care.

When implementing a policy, care should be given to the following: monthly benefit to be paid, the elimination period (deductible before claim payments begin), the benefit period (how long will the carrier pay a claim), and an inflation factor so the monthly benefit increases as costs for care increase. Decide what your budget is and let our advisor guide you so that your assets are preserved should you need care.

 

Automobile Insurance

Automobile Insurance allows you to insure for certain types of financial losses or obligations resulting from the use of an automobile. Third party liability, including defense, is an integral part of the policy. Appropriate no-fault coverage as well as uninsured and underinsured motorist coverage round out the liability part of the policy.

Physical damage to the vehicle (comprehensive fire, theft and vandalism as well as collision) should be explored based upon the value of the vehicle. Full glass coverage, rental reimbursement and towing are also options that can be purchased.

 

Personal insurance

Some unusual things can come up when we sit down with you to review your personal insurance needs. At your initial meeting with an AKD counselor, he or she will compile a needs analysis that may surprise you in its comprehensiveness and its attention to far-ranging matters that might not seem obviously relevant to your insurance coverage. The objective is to get a comprehensive understanding of all your potential exposure, in order to provide the appropriate protection.

Your counselor will confer with other AKD team members, who will also review your needs; then survey various insurance carriers (chosen only from the world’s most reliable), in search of an appropriate risk management plan that works best for all aspects of your personal insurance coverage.

Your AKD insurance counselor works for you, not the insurance companies. He or she is your advocate, who is respected by the insurance companies for knowledge, experience and integrity.

 

Cobra subsidy and model notice

The Department of Labor (“DOL”) and the Internal Revenue Service (“IRS”) hosted a conference call and webcast recently on the COBRA Subsidy and the recently released Model Notices. Although many questions still remain, there was some clarification on several key points, including:

  • The ability of employers to use a single notice for each of the affected groups, as opposed to multiple notices for certain affected individuals. It now appears clear that just the Notice in Connection with Extended Election Periods can be sent to those entitled to the so-called “second chance” election, as opposed to sending it as a supplement to the General Notice. Note, though, that the informal guidance did not fully address how to provide information to certain former employees who might believe that they are eligible for the “second chance” election but are not identified as involuntarily terminations by the employer. See the discussion below for a practical solution.
  • Additional information on what might constitute an “involuntary termination”, including:
    • termination at the direction of the employer;
    • voluntary retirements where the employer is soliciting resignations prior to a reduction in force;
    • reductions in hours to zero (e.g. layoff or furlough);
    • certain constructive discharge scenarios, such as closing a plant in one State and offering employment at a location in another State; and
    • termination in response to a change in working conditions, such as a resignation in response to a reduction in hours.
  • Clarification of what will not constitute an “involuntary termination”, including:
    • divorce;
    • loss of coverage by a dependent;
    • death of the employee;
    • a reduction in hours that does not reach zero; and
    • military call up.
  • The unavailability of the subsidy to the portion of the COBRA premium applicable to a domestic partner.
  • The unavailability of the subsidy for certain premiums paid by an employer under severance agreements. The subsidy will not apply to employer paid premiums where the coverage provided under the severance agreement is not treated as COBRA coverage by the employer; and will only apply to the employee portion of the premium where the coverage is structured as COBRA coverage. See the discussion below for more details.

Single Notice

Based on the information presented in the conference call, an employer need only send one of the notices to any particular person who had a qualifying event on or after September 1, 2008 and before February 17, 2009. Although formal guidance has not been issued, the agencies appear to be encouraging the avoidance of duplicate notices. Nevertheless, some confusion still remains and we hope and expect that additional clarification will be issued quickly. Those employers that have already acted and have used multiple notices should not have to be concerned, as long as each affected individual received at least one notice that applied to him or her.

We do know that anyone who has a qualifying event on or after September 1, 2008 needs a notice of some sort, regardless of whether that person was involuntarily terminated and is, therefore, an Assistance Eligible Individual (“AEI”). We also know that those in that group who elected and remained on COBRA can get either the full or abbreviated General Notice, which will explain the availability of the subsidy.

Those who did not elect or keep COBRA are either AEIs, and therefore eligible for both the “second chance” election and the subsidy; or not AEIs, and therefore not entitled to either. AEIs can get the Notice in Connection with Extended Election Periods. This leaves those with qualifying events on or after September 1, 2008 through February 16, 2009 who didn’t elect COBRA or dropped it and who are not considered AEIs. We believe that these individuals are entitled to either the full version of the General Notice or the Notice in Connection with Extended Election Periods. Sending one of these notices to individuals in this group will, we believe, be fully compliant with the intent of the new rules.

A logical and straightforward approach would, therefore, be to:

  • Send the Notice in Connection with Extended Election Periods to everyone with qualifying events on or after September 1, 2008 through February 16, 2009 who is not on COBRA, regardless of whether they are AEIs; and
  • Send the abbreviated version of the General Notice to everyone with qualifying events on or after September 1, 2008 through February 16, 2009 who has elected and remained on COBRA.
  • Use the full version of the General Notice for all those with qualifying events, for whatever reason, on or after February 17, 2009.

Those who get the Notice in Connection with Extended Election Periods can assert AEI status and the employer can process those claims for the “second chance” election, based on its determination of each individual’s status. Those that are rejected would then be able to appeal to the DOL through the expedited appeal process.

Involuntary Termination

While the informal guidance on involuntary terminations is helpful, it leaves open the issue of constructive discharge and terminations in response to changes in working conditions. We expect that these will be subject to factual determinations that will vary from case to case (e.g. a severe reductions in hours). In the absence of more definitive guidance, it is likely that the DOL’s expedited appeals process will be used frequently.

Domestic Partner Issues

Unlike spouses, domestic partners are not eligible for COBRA on their own under Federal guidelines. So, for example, if a domestic partner loses coverage due to the death of the employee, he or she cannot elect COBRA coverage. But, if a plan provides domestic partner coverage, a terminating employee who has covered a domestic partner can elect to continue coverage for himself and his domestic partner under COBRA. If a domestic partner is receiving COBRA coverage under these circumstances and the employee is eligible for the subsidy, the IRS informally commented that the domestic partner’s portion of the premium would not be eligible for the subsidy (as the domestic partner is not an AEI). This will require an apportionment of the premium between the domestic partner and the others covered by the COBRA coverage similar to that done to determine the taxable portion of domestic partner coverage.

Severance Agreements

Severance agreements may be designed to either continue health care coverage as if it were active coverage, or treat the coverage as COBRA. In either case, the employer may pay all or part of the premium. Where severance is treated as active coverage, the former employee gets the COBRA election for the full COBRA period, beginning at the end of the severance. Where it is treated as COBRA, the employee gets the remainder of the COBRA period after the severance ends (measured from the date of termination) at full cost.

The IRS informally commented that where continued coverage under the severance agreement is structured as active coverage, the subsidy will apply to the 9 months after the end of the severance (assuming, of course that the involuntary termination giving rise to the severance was on or after September 1, 2008 and before December 31, 2009). This means that employer paid premium under this type of severance agreement is not reimbursable from the government, since it is not for COBRA.

If the severance agreement structures the continuation of coverage as COBRA, the subsidy will apply beginning March 1, 2009 (or the later date of termination) and will only apply to the amount that the former employee actually pays under the severance agreement. In these cases, the employer will have to “front” 65% of the employee’s portion of the premium for the subsidy period and seek reimbursement for that amount from the government. Any remaining amount that the employer pays for COBRA premiums under the terms of the agreement is not eligible for reimbursement.

Heed the Caution

The guidance described above is all informal and nonbinding. We expect either the DOL or the IRS to release additional guidance in official form in the coming week and will report to you on these developments. In the meantime, employers that act on a reasonable basis to provide appropriate notices to all affected individuals should not be concerned about being second guessed. However, since we are still at least three weeks from the deadline for providing notices, it might be helpful to receive some additional guidance before acting.

You can view and listen to the DOL/IRS webcast on the DOL’s website at: