Following a period of rate stability, we are now seeing substantial increases in medical insurance premiums. For our clients with less than 50 employees, some carriers are increasing premiums more than 10%. For mid-size employers, we have seen increases of 18%. There are things we can do to help your organization control the cost of providing medical insurance. These include:
Auditing Your Carrier’s Performance – As a leading medical claims auditing and utilization review firm, our experience has shown that insurance carriers and third party administrators make errors in paying medical claims. These errors affect how much you pay for health insurance. Errors result from the carrier not properly administering the plan, paying duplicate claims, failing to coordinate benefits with the spouse’s carrier and paying for medically unnecessary hospital admissions and medical/surgical procedures and for services after the employee has terminated service.
Changing the Plan Design Can Result in Savings – The amount the employee pays for office visit co-pays, out-of-network and drug deductibles, and the maximum out-of-pocket payment for covered services has a direct impact on what it costs the employer to provide medical insurance. Other items that impact costs are employee utilization of the plan, how the plan is financed and the amount of premiums the employee pays.
Changing carriers can result in savings and more meaningful management reports.
With our software, we are able to match the names of the employee’s doctors to their network affiliation to select a managed care plan that has the best fit. Let us competitively bid the plan under alternative financing techniques and see how much you can save.
Our utilization analysis of paid claims has enabled us to identify claims submitted by providers for medically unnecessary procedures. Changes in the plan design for employers with more than 50 employees will often eliminate these utilization abuses.
Flexible Spending Accounts (FSA) can be a useful tool in controlling medical expenses – These plans are growing in popularity.
In a typical FSA plan, employees elect to defer a portion of their salary to pay for child and dependent care and for medical, dental, vision and other health related expenses not paid under the group health plan.
Paying covered health and dependent care expenses with before-tax dollars will result in tax savings to the employee of 25%-50%.
Employers find the FSA plan to be a low cost benefit used to retain and attract employees. They also realize a tax savings by not having to pay Social Security, and most state workers’ compensation and unemployment insurance taxes on the money the employee pays in premiums or contributes to the FSA account. These plans are frequently introduced at the start of the year or when the employer changes plan design or carriers.
One of our clients saved a significant amount of money in medical premiums by purchasing an insured medical plan with a high deductible. They then have employees submit medical claims to us and we pay them out of the FSA plan after the employee has satisfied a smaller deductible.
How Recent Changes In The Tax Law Will Affect Your Organization’s Retirement Plan
As part of the Internal Revenue Service’s audit of an employer’s books, they are reviewing the retirement plan. The IRS agent has an extensive checklist. If the agent finds a defect in how the plan is operating, or a failure to amend the plan document to conform to changes in legislation and regulations, he can impose severe penalties.
The IRS is also requiring that all qualified retirement plans be amended to reflect changes in 1994 and later tax acts. Most plans have to be amended next year to incorporate the provisions of the General Agreement on Tariffs and Trade (GATT), the Uniformed Services Employment Act (USERRA), the Small Business Jobs Protection Act (SPJPA), the Taxpayers Relief Act (TRAS’97) as well as other more recent law changes. This legislation is being referred to among ERISA professionals as “GUST”.
GUST requires that 401(k), profit sharing, money purchase, defined benefit, Keogh’s and other qualified plans to be amended. In many cases, the plan will have to be filed with the IRS to obtain a qualification letter. Among the provisions of GUST that may be beneficial are:
More money can be put away for highly-compensated employees (HCE), and
Discrimination testing rules for 401(k) plans have been revised and, combined with a non qualified management savings plan, HCEs can now save move than $10,000 a year.
If your organization has adopted an insurance company, bank or mutual fund prototype retirement plan or if you are not dealing with an Enrolled Actuary or ERISA attorney, then you may not be getting the best advice as to how to amend and administer your retirement plan in the most appropriate and cost effective way.