Blue Shield Insurance for Small Business, Blue Shield Health Insurance in Bay Area

The Benefits World

Benefits Benchmarking

California Employer Health Benefits Survey

This annual report provides information on benefit design, premium increases, and employer/employee cost sharing. Published by the California Healthcare Foundation.

The first pdf contains "Shargel Highlights" from 2011 - the charts that are of most interest to our clients. The second pdf contains the full report.

	Highlights
	Full Report

Start up and Small Business Protections: California’s AB 1672

Business start ups, small businesses and not-for-profits enjoy critical insurance protections under California’s small group health reform, AB 1672.

There are several key provisions

Guaranteed Acceptance - What is it?

Carriers are required to market to and sell all available plans to all eligible small groups.

Eligible groups have 2-50 full time employees, can provide payroll records for six weeks prior to applying, and meet minimum participation requirements set by the carrier. Contact us for carrier specific information.

Standardized Premiums - What does it mean?

Under AB1672, carriers are required to standardize rates for all small group employers.

No single employer can be charged more than 10% above or below these standard rates, regardless of the health history of the employees, the industry or any other factor. Carriers are allowed to adjust standard rates twice a year. Within the allowed range, rates are based on geography, group size and plan utilization.

Age Banded Rates - What are they?

In the small-group market, carriers use age-bands to define premiums for coverage.

The premiums, for both single coverage and family, are based on the group employees' ages. Age bands include: <29, 30-39, 40-49, 50-54, 55-59, 60-64, 65+

Structuring a Benefits Plan

Sample Comprehensive Benefits Plan

	Medical, dental and vision coverages

	Long term disability and life insurance

	Pretax premium and flexible spending accounts

	Pre-tax transit and parking

	401K Retirement Plan (403B for not-for-profits)

Designing Plans which provide Choice for Employees

Your employees are unique individuals with different lifestyles. How can you satisfy them all?

One way to appeal to a broad employee base is by offering choices in benefits. In the small group market, you can offer a range of plans, and even a range of carriers, while keeping control of your costs.

Single carrier-wide options

The simplest way to provide choice is offering a variety of plans from a single carrier.

For example, you can offer an HMO, a PPO, and an HSA-qualified plan. Or you can offer a high-deductible PPO, a lower deductible PPO, and an HMO.

Multiple carriers-more choice

Another way to offer choice is by offering plans from more than one carrier, usually a major carrier plus Kaiser Permanente.

This can be done through a purchasing pool.

With a purchasing pool like California Choice, the employer/ employees can choose from several major carriers and a few smaller carriers. Plans differ from the carriers' standard plans, and premiums will be higher. California Choice works with small (2-50) groups. California Choice 51+ works with mid-size (51-199) groups.

Next steps: pre-tax benefits

Once you've determined your cost-sharing levels, you can ease the financial burden on employees by offering pre-tax benefits.

Using cost sharing effectively

In order to keep costs under control, employers can choose how to best cost-share with employees.

Some employers will choose to pay the premium for a certain plan and allow employees to buy up or down from that level to a more or less expensive plan. This approach gives employees leeway to have extra funds to use for dependent coverage.

Other employers will choose a set dollar amount for employees to use for any plan they choose. This approach works well in the mid-size and large group markets where premiums are composite rates rather than age-banded.

Next steps: pre-tax benefits
Once you've determined your cost-sharing levels, you can ease the financial burden on employees by offering pre-tax benefits.

Tax Qualified Benefits

You can get even more value from providing your employee benefits on a pre-tax basis.

There are several ways to take advantage of tax benefits.

Premium-Only Plans for employee contributions

If your employees pay for any part of their insurance premiums - for themselves and/or their dependents - a Premium Only Plan (POP) allows them to do so pre-tax.

The "plan" is a legal document that makes it legal for you, the employer, to withhold money from employees' paychecks to pay premiums.

Employees income taxes are reduced, and employer payroll taxes are reduced. It's a win-win!

We can help you complete the required paperwork.

Flexible Spending Arrangements (FSAs)

Flexible spending arrangements (FSAs) allow the employer and/or employee to contribute pre-tax dollars to special accounts to reimburse medical and dependent care expenses.

Monies not used during the calendar year or during the documented grace period revert to the employer.

	Medical Expense Reimbursement Accounts can be used to pay for qualified medical expenses under IRS Pub 502, including listed over-the-counter (OTC) products. The employer sets a cap on contributions; the employee chooses how much to contribute. Funds are "use it or lose it," but current rules allow employers to offer a 2-1/2 month grace period after the end of the plan year.

	Dependent Care Expense Reimbursement Accounts can be used for childcare expenses up to $5,000 tax-free per year under IRS Dependent Care Expenses rules. (If married, both spouses must work and earn income to exclude funds from taxable wages.)

Health Reimbursement Arrangements (HRAs)

Health Reimbursement Arrangements are funded by employers to reimburse employees for qualified medical expenses per IRS Publication 502.

Employees can also use HRA funds to pay for medical premiums.

They can be structured in a variety of ways, but are often used in conjunction with a high deductible health plan.

Health Savings Accounts (HSAs)

Health Savings Accounts are special tax-qualified accounts that can only be used with compatible qualified High-Deductible Health Plans.

These plans differ from traditional plans in significant ways.

Both the employer and employee can contribute on a pre-tax basis. Accounts are fully portable and are owned by the employee.

Read more

401k Retirement Plans

With a 401k plan, employers and employees contribute pre-tax to a retirement account.

Usually employers will match a percentage of employee contributions. Even small companies can set up a 401k. It is one of the most valuable benefits you can offer.

Pre-tax Transit & Parking

The IRS allows public transportation and parking costs to be paid for pre-tax, up to annual limits.

Communicating about Benefits

Benefits program summary

The benefits program summary we provide is an easy way for employees to see their complete benefits package at a glance.

Total compensation statements

One of the best ways to communicate benefits value is through total compensation statements.

We have prepared a template our clients can personalize for each employee. You will include salary and bonus, employer contributions to Social Security and Medicare, health benefits premiums, 401K plan contributions, etc.

Business Owner & Key Protections

Most small businesses owners are actively involved in their companies. It's important to have a financial plan in the event that an owner becomes disabled or dies, to ensure that choices are available regarding the future of the business.

We offer these types of insurance for business owners:

	Disability Income Insurance
	Overhead Business Expense Insurance
	Key Person Insurance
	Employer Income Protection
	Buy-Sell Agreement Funding

Retirement Planning: Long Term Care Considerations

Life is unpredictable, but we all want the most from our retirement dollars. Planning for long-term care is an essential part of any comprehensive retirement plan.

Not everyone will choose to purchase long-term care insurance to cover the risks of needing care, but it should be an informed decision. We recommend a review with a long-term care specialist and your financial planner.

Contact us for a consultation with our long-term care specialist

Here is some information to get you started:

Long-term care: what it is and isn't

Long-term care includes a range of skilled professional and supportive services received for an extended period due to illness or injury.

Long-term care services are provided for assistance with activities of daily living (ADLs), such as bathing, dressing, toileting, continence, eating and transferring (as in from bed to chair).

Services can be provided:

	At home
	In an assisted living facility
	In a nursing home

One of the goals of long-term care planning is to allow you to stay at home for as long as possible.

Likelihood of needing care

It's estimated that over half of us will need some type of long-term care in our lifetime. That doesn't mean a nursing home stay is in everyone's future, but some period of dependency on others is common, whether provided at home or in a facility. Home care services are more likely, are needed sooner, and are often more desirable to the person needing care.

Options to pay for long-term care

There are three sources of funding for long-term care: personal funds, public funds, and insurance policies.

	Personal funds include your own and your family's resources - income and savings
	Public funds include MedicAid after spend-down to poverty level
	Insurance policies include customized personal and/or group coverage from private insurers

Reasons people buy long-term care insurance

People have many reasons to choose insurance to pay for long-term care costs. Here are some of the most common reasons:

	To remain financially independent
	To retain control and responsibility for their own care
	To spare family the financial and emotional burden of their care
	To preserve their estate for children, grandchildren and/or charity

How much care costs

Long-term care is expensive and costs keep rising. Here is some information on average cost of services from Genworth's 2010 Cost of Care Survey:

Average Cost of Long-term Care Services, Bay Area and National

Service/Average Cost	San Francisco	Oakland	National
Nursing home, private room, annual	$100,101	$92,740	$76,460
Nursing home, semi-private room, annual	$77,485	$73,828	$68,408
Assisted living, 1 bedroom, annual	$44,011	$38,358	$36,090
Adult day care, annual	$19,100	$25,314	$15,236
Home health aide, hourly	$34	$47	$29

How much insurance costs

Long-term care insurance pricing varies with age, health and benefits selected.

You can design a policy to cover all or some of your daily expenses, for a limited or unlimited period, choose which types of services to cover (nursing home, assisted living, home care), etc.

Different carriers offer different features - it's important to work with a specialist who knows the products inside out.

Here are sample premiums for basic coverage that includes 100% home health care for reference.

Long-term care insurance premiums, CA Partnership Plan, $200/day benefit, 3-year benefit, 90-day wait, 5% compound interest, preferred health, lifetime premium payment

Annual Premium	Single/Partner Age 50	Single/Partner Age 55	Both Partners with Discount
Carrier 1	$2,346	$2,835	$3,657
Carrier 2	$1,900	$2,118	$2,931

Insuring vs self-funding

Insuring for long-term care can save hundreds of thousands of dollars over self-funding, if care is needed for a significant time period.

If care is needed full-time, premiums can easily be recovered within a year or less.

Here's a comparison for our sample single 55-year-old needing 3 years of care at age 80:

Benefits for business owners

Business owners can realize significant tax benefits from purchasing long-term care insurance.

While everyone can include a portion of long-term care insurance premiums in their annual medical expense tax deduction, business owners can deduct 100% of the premiums for themselves and their spouses (S-Corps, C-Corps, partnerships and self-employed).

Another intelligent option is to pay the entire premium amount before retirement—either through a 10-year-pay (where available) or a pay-to-age-65 policy. This lets you use your retirement income for living your dreams.

Here is an example of 10-pay premiums for our sample clients:

Long-term care insurance premiums, CA Partnership Plan, $200/day benefit, 3-year benefit, 90-day wait, 5% compound interest, preferred health, 10-year premium payment

Annual Premium	Single/Partner Age 50	Single/Partner Age 55	Both Partners with Discount
Carrier 1	$7,038	$7,597	$10,331
Carrier 2	$5,568	$5,466	$7,969

Costs of waiting

The younger you purchase LTC insurance, the lower your costs.

Long-term care insurance must be purchased when you are in good health. Once you've had significant health issues, it's too late.

Premiums are lower at younger ages, and the total costs over time are lower as well. Not only do premiums on new policies rise with age, they rise with inflation. Purchasing early with a compound inflation protection locks in a good rate.

HR Resources

Shargel clients receive two valuable complimentary HR resources, a monthly newsletter and a state-of-the-art online human resources library.

We have partnered with HR & Benefits Essentials to provide you with access to the library which contains the most current federal and state employment laws as well as a complete range of downloadable forms, posters and a lawyer reviewed sample employee handbook.

The website has a wonderful array of help areas, including:

	Employee Benefits, Human Resource Issues, State Employment Laws, Hiring and Termination
	Hundreds of downloadable HR forms and a selection of frequently asked questions
	The most current HR & Benefits news that will impact your company

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