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S.P.I.N., Inc.
Benefits Analysis Parts I & II
912038604 912387186 RMI 3501 Dr. Drennan Fall 2011

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Table of Contents
LOSS MATRIX..1 SUMMARY OF BENEFITS...............2 INTRODUCTION TO SPIN, INC....3 ELIGIBILITY..3 MEDICAL BENEFITS....3 Keystone HMO.......3-4 Keystone POS..4 Personal Choice PPO....4-5 Dependents...5 Prescription Drugs........6 Dental...6 Vision....7 FSA....7-9 LOSS OF INCOME......9 Retirement.......9 Life.9-10 Short Term Disability.10-11 Long Term Disability.....11-12 ADDITIONAL BENEFIT OPTIONS..12 Voluntary Universal Life.12 Additional Voluntary Term Life....12 Tuition Assistance Program....13 Family and Medical Leave Act...13-14 Leave of Absence.14 Day Care Benefits14 Philadelphia Federal Credit Union..14-15 Workers Compensation...15 Leave Time..15 Holidays...15 Norcom Community Center....16

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Loss Exposures for Special People in the Northeast (SPIN) INC.

Loss of Income: Medical Expenses Loss Exposures: Provided: yes/no Benefits/ Coverage Provided: Overall Medical Yes IBC: Keystone HMO, Keystone POS, Personal Choice PPO, Flexible Spending Account Dental Yes Colonial HealthCare, Inc.: Dental Insurance Vision Yes Colonial HealthCare, Inc.: Vision Insurance Prescription Yes Express Scripts Prescription Plan Retiree Health Care Yes OASDI, COBRA Loss of Income: Disability Occupational Short Term Yes Prudential: Short Term Disability Insurance, AD&D Insurance. OASDI, Workers Compensation Occupational Long Term Yes Prudential: Long Term Disability Insurance, AD&D Insurance. OASDI, Workers Compensation Non-Occupational Short Term Yes FMLA, Leave of Absence, OASDI Non-Occupational Long Term Yes OASDI Loss of Income: Death Accidental Yes Prudential: Basic Accidental Death and Dismemberment, Basic Term Life Occupational Yes Prudential: Basic Accidental Death and Dismemberment, Basic Term Life Non-Accidental & NonYes prudential: OASDI Occupational Loss of Income: Retirement Retirement Yes 403(b), Retirement Plan, OASDI Loss of Income: Unemployment
Unemployment

No Other Benefits Yes Tuition Assistance Program Yes Dependent Care Flexible Spending Account No Yes Norcom Community Center, Day Care Benefits, Philadelphia Credit Union

Educational Assistance Dependent Care Mass Transportation Work/Life Benefits

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Summary of Benefits
Benefit Plan Keystone HMO Keystone POS Personal Choice PPO Express Script Prescription Drug Colonial Health Care: Dental Colonial Health Care: Vision Prudential: Life Prudential: AD&D Prudential: STD Prudential: LTD

A.M. Best Rating B+ B+ B+

1

Funding Fully Insured Fully Insured Fully Insured

Partially Insured

Financing Contributory Contributory Contributory

Contributory

Eligibility Full-time employees and their dependents Full-time employees and their dependents Full-time employees and their dependents
Full-time employees and their dependents

AAA+ A+ A+ A+

Self-Funded

NonContributory NonContributory

Full-time employees and their dependents Full-time employees and their dependents

Self-Funded

Fully Insured Fully Insured Fully Insured Fully Insured

NonContributory NonContributory NonContributory NonContributory

Full-time employees Full-time employees Full-time employees Full-time employees

All ratings cited on Works Cited page

No rating found for Express Scripts

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Special People In the Northeast, Inc. (SPIN), is a non-profit firm headquartered in Philadelphia, PA. SPIN offers services and quality care to individuals throughout Philadelphia and surrounding areas with intellectual and developmental disabilities, and their families. SPIN currently employs approximately 1,200 employees. SPIN offers benefit packages through Colonial HealthCare, Inc., Independence Blue Cross, Prudential Insurance Company of America and Principal Financial Group. Eligibility: Employees that work at least 30 hours a week are eligible for SPINs benefits package on the first of the month following their date of hire. Eligible dependents can participate at the same time the employee becomes eligible. Eligible dependents include a legal spouse, domestic partner, or disabled dependent of any age that is incapable of self-support because of a mental or physical handicap. For Medical Insurance, the employees dependent children are covered through the end of the month in which he/she turns 26 years of age. For Dental and Vision Insurance, dependents are unmarried children through the end of the month in which he/she turns 19 years of age, or the end of the month in which he/she turns 25 years of age, provided they are full time students at an accredited institution.

Medical Benefits:
SPIN offers three medical plans to their employees. Keystone HMO, Keystone POS, and Personal Choice PPO are all offered through IBC. Keystone HMO (Health Maintenance Organization): SPIN offers a Keystone HMO (C4-F5) Single Coverage Plan. Employees are required to select a primary care physician (PCP) from the Keystone network. Preventive care, such as annual physicals, mammograms, and immunizations, are covered 100%. Co-payments for PCP

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visits are $30, while specialist visits with a referral require a copayment of $50. Inpatient hospital services are covered at $400 per day. Emergency room visits consist of a $125 co-pay. If a SPIN employee decides to utilize health care goods and services outside of this network, they will receive no coverage. Reimbursement may be attainable for certain expenses; however the reimbursements are strictly limited to only employees. Keystone POS (Point-Of-Service): A Keystone POS (Point-Of-Service) plan is also available through SPIN to its employees. The Keystone POS (C4-F5-01) Single Coverage Plan requires participants to select a primary care physician from the Keystone network. This plan allows freedom to go directly to most specialists within the network without a referral. However, for x-rays, laboratory work, podiatry services, spinal manipulation, and PT or OT, referrals are required. Like the Keystone HMO offered, preventive care costs are covered fully. Co-payments for PCP visits are $30, while specialists require a $50 co-pay. Inpatient hospital services are covered at $400 a day. Emergency room visits are covered at a $125 co-pay. If an employee desires, he/she can feel free to go outside of the PPO network. For out-of-network utilization, there is an annual deductible of $500, and expenses following the deductible are covered at a rate of 70%. Reimbursements are available for certain expenses, and the employee is only valid to receive such stipends. Personal Choice PPO (Preferred Provider Organization): Lastly, SPIN offers a Single Coverage Personal Choice PPO (C4-F5-02) Plan. This plan does not require participants to pick a primary care physician. Participants are free to directly visit any specialists within the PPO network without a referral. Preventive care is covered at 100%. Co-payments are $30 per family physician visit and $50 per specialist visit. Inpatient hospital services are covered at $400 a day. Emergency room visits require a $125 co-pay.

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Participants are free to go outside of the network if they desire. Out of network coverage starts with an annual deductible of $1,500. Following expenses are covered at a rate of 50%. Reimbursement can be attained for certain expenses and employees are the only parties valid to accept reimbursements. Dependents on Medical Plans: The eligible employee is able to add dependents onto any of these plans. The employee is required to pay the entire cost. The cost of dependent coverage is deducted 26 times per plan year. The deductions are taken through payroll on a pre-tax basis. The fee schedule is as follows: KEYSTONE HMO: Medical Coverage for Employee.............................................................................$4.60 Medical Coverage for Employee & 1 or more Children......................................$185.68 Medical Coverage for Employee & Spouse....................................................... $305.01 Medical Coverage for Employee & Family (Spouse and Child/ren)...$451.21 KEYSTONE POINT OF SERVICE : Medical Coverage for Employee...........................................................................$31.46 Medical Coverage for Employee & 1 or more Children.....................................$233.60 Medical Coverage for Employee & Spouse........................................................$366.81 Medical Coverage for Employee & Family (Spouse and Child/ren) $530.01 PERSONAL CHOICE PPO Medical Coverage for Employee...........................................................................$58.13 Medical Coverage for Employee & 1 or more Children.....................................$268.08 Medical Coverage for Employee & Spouse........................................................$428.17 Medical Coverage for Employee & Family (Spouse and Child/ren). $608.22

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Prescription Drug Plan: SPIN also issues an Express Scripts Prescription Plan. In order to receive the in-network level of benefits, plan participants must use a pharmacy within the Express Scripts network. The prescription plan is laid out as follows: Prescriptions from a Pharmacy in-Network Up to a 30-day supply Generic medication: $10 Preferred brand-name medication: $20 Non-preferred brand-name medication: $35 Prescriptions from the Express Scripts Pharmacy Up to a 90-day supply Generic medication: $20 Preferred brand-name medication: $40 Non-preferred brand-name medication: $70

Dental: SPIN offers a self-insured dental plan to its employees that is administered through Colonial HealthCare. Each treatment has a maximum coverage of $1,500.00 per year. Treatment: Maximum Coverage: 100% Preventative Treatment (check-up, cleaning and x-ray every 6 months) 80% Basic Treatment (fillings, extraction of teeth; wisdom teeth, root canals, etc. after $25 per year deductible) 50% Major Restoration (dentures, caps, crowns, etc. after $25 per year deductible)

Dental coverage for dependents is charged according to the following chart: Dental Coverage for Employee......................... NO COST Dental Coverage for one dependent....................$ 14.00 Dental Coverage for two dependents...................$ 28.00 Dental Coverage for three or more dependents............$ 38.00

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Vision: SPIN also self-insures a vision plan and administers it through Colonial HealthCare.

Examinations: Opthalmologist or Optometrist Single Vision Prescription Bifocal Prescription Trifocal Lenticular Prescription Contact Lenses Frames

Maximum Benefit: $60.00 annually $40.00 annually $60.00 annually $75.00 annually $100.00 annually $100.00 annually $55.00 every two years

FSA: Health Care FSA and Dependent Care FSA are both offered by SPIN. FSAs allow employees to pre-deduct a portion of their salary on a tax-free basis to pay for covered expenses. Any employee who is scheduled to work 30 hours per week or more is eligible for the plan after their first 90 days of employment. The plan year is from January 1st to December 31st. If an employee elects to participate in the medical expense reimbursement plan, their aggregate salary reduction for contribution cannot exceed $3,000 per calendar year. This contribution is credited to the employees Heath Care FSA. Eligible expenses under the medical care expenses reimbursement are defined by Section 213 (d) of the Internal Revenue Code for an employee, their spouse, or their dependent. Most medical expenses are deemed eligible for reimbursement, however a list of expenses are not: - Cosmetic surgery - Domestic help fees - Health club memberships - Lens replacement insurance - Supplements prescribed by alternative provider - Union dues - Over the counter vitamins - Weight loss programs

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- Physical therapy treatments

- Pre-tax insurance premiums

If an employee elects to participate in the dependent care assistance plan, their aggregate salary reduction for contribution cannot exceed $5,000 per calendar year for a single parent and cannot exceed $2,500 for a married couple filing separately. This contribution is credited to the employees Dependent Care FSA. Coverage for a participant generally terminates on the earliest of the following dates:
1.

Midnight of the day the participant terminates employment or fails to satisfy the requirements of eligibility.

2. 3.

The midnight on the date that contributions by the participant are discontinued. The date on which all benefits are terminated by the amendment of the Plan.

If an employee is terminated and rehired within 30 days, they will re-enter the plan with the same elections as before unless any eligibility requirements are not met. There are some important rules and restrictions under the Dependent Care FSA.
1.

If an employee is married, their spouse must also be working, a full-time student, or incapable of caring for his/her self.

2.

If an employees expenses are from a dependent day care center, the center must meet state requirements and must receive a fee for services.

3.

Once an employee decides how much money to allocate to the account, the amount cannot be changed.

4.

If an employees expenses are less than the amount allocated to the account, the remaining amount is forfeited.

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Eligible dependents include: children under age 13 who are tax exempt, an employees spouse who is physically or mentally unable to care for his/her self, or your dependent who is physically and mentally unable to care for his/her self and for whom you cannot receive an exemption.

Loss of Income Benefits

Retirement: SPIN offers a 403(b) plan for both union and non-union employees; these plans mirror each other. The 403(b) plan uses a custodial account held by a bank or an approved non-bank trustee as its funding vehicle to hold contributions made to the plan. Employees must meet all eligibility requirements in order to participate in this plan. Excluded employees include those who work less than 20 hours per week. The entry date for eligible employees for salary reduction is on the date of hire. For non-salary reductions, the employee will be eligible once they have completed three months of service with SPIN. An employees total deferral may not exceed a limit that is set by law; in 2011 that limit is $16,500. SPIN will contribute to the plan the following amounts: (a). the total amount of the salary reduction you elected to defer and/or (b). a discretionary matching contribution equal to a uniform percentage of the amount of salary reduction. Life: Basic Term Life Insurance and Basic Accidental Death and Dismemberment Policies are both offered to SPIN employees through Prudential on a non-contributory basis. SPINs Basic Term Life Insurance Plan automatically enrolls employees for 1 times their annual earnings up to $300,000 with a minimum coverage amount of $25,000. Terminally ill employees can receive a partial payment of their group life insurance benefit. This payment can be used as the employee

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wishes. Payouts to beneficiaries are deposited into a Prudential Alliance Account. These accounts are personalized and interest bearing. Upon opening, the account earns interest and the beneficiary can transfer or withdraw funds at any time. The payment of premium can be waived if the employee is totally disabled for 6 months, they are less than 60 years old when they become disabled, and they continue to be disabled. This waiving of premium terminates at age 70. Upon turning 70, the amount of insurance reduces by 50%. Employees lose coverage upon termination. This policy can be converted into an individual life insurance policy offered by Prudential. SPINs AD+D policy mirrors the Life policy. The AD+D policy pays the employee and their beneficiary a benefit for the loss of life or other injuries resulting from a covered accident. Coverage for loss of life is 100% and a lesser percentage is offered for other injuries. AD+D benefits are paid regardless of other coverages that the employee may have. Employees are automatically enrolled for an amount that is equal to their Basic Term Life coverage amount upon enrollment. STD: Short Term Disability coverage is applied to all SPIN participating employees through Prudential on a non-contributory basis. The STD benefits are 66 % of weekly pre-disability earnings, up to a maximum of $850, less deductible sources of income. Deductible sources may include benefits from statutory plans, unemployment income, and salary continuation. The stated minimum weekly benefit is $25. Upon disability, the employees benefits begin on the 15th day following a non-occupational injury or sickness. The benefit duration is 11 weeks. During the elimination period, disability is defined as being under the regular care of a doctor, being unable to perform the material and substantial duties of the regular occupation, and not working at any job because of injury or sickness. After the elimination period, employees are defined as disabled

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when they are under the regular care of a doctor, unable to perform the material and substantial duties of the regular occupation, and the disability results in a loss of weekly income of at least 20%. Exclusions include, but are not limited to, disability caused by war or act of war, intentional self-inflicted injury, active participation in a riot, and commission of a crime for which the employee has been convicted. Benefits are not payable for any period of incarceration as a result of a conviction. LTD: SPIN offers through Prudential a Long Term Disability Plan to cover its employees on a non-contributory basis. The employees benefit is 66 % of the monthly pre-disability earnings, up to a maximum of $7,500, less deductible sources of income. There are no medical questions asked if the employee enrolls when first eligible. Deductible sources of income may include benefits from statutory plans, Social Security to the employee and their dependents, workers compensation, unemployment and other income. The stated minimum monthly benefit is the greater of 10% of your gross monthly benefit or $100. Upon reaching the definition of disabled, the employees benefits begin 90 days following the accidental injury or sickness. The benefit duration is up to the normal retirement age under the Social Security Act. Employees are considered disabled when, because of injury or sickness, they are unable to perform the material and substantial duties of the regular occupation, are under the regular care of a doctor, and the disability results in a loss of income of at least 20%. After receiving benefits for 18 months, the employee is considered disabled when, due to the same sickness or injury, they are unable to perform the material and substantial duties of any gainful occupation for which the employee is reasonably fitted by education, training or experience, and the disability results in a loss of income of a specified percentage determined in the plan. Disabilities due to mental illness are

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limited to 24 months of benefits during your lifetime. Some covered illnesses include, but are not limited to, schizophrenia, depression, anxiety, and substance related disorders, including drug and alcohol abuse. These disabilities have a combined limited pay period during the lifetime of the employee. Benefits will not be paid for a disability that begins during the first 12 months of coverage due to a pre-existing condition. During the first 24 months of part-time work while disabled, the employee can receive full benefits as long as the employees combined income and disability benefits do not exceed the monthly pre-disability earnings. If the employee dies while collecting disability benefits, a lump sum payment may be paid to their eligible survivors. Some exclusions are disability caused by war or act of war, intentional self-inflicted injury, active participation in a riot, and commission of a crime for which the employee has been convicted. Benefits are not payable for any period of incarceration as a result of a conviction. Additional Benefit Options: Voluntary Universal Life: A voluntary Universal Life Insurance program is offered to employees through ING (Reliastar) Life Insurance Company. This program allows employees to purchase a universal life insurance policy for themselves, spouse, and/or dependents through payroll deductions. Additional Voluntary Term Life Insurance: SPIN allows employees to purchase Additional Term Life Insurance through Reliance Standard Life Insurance Company. This term insurance is in addition to the life insurance that is a part of the standard benefits package. Employees can buy additional coverages for the amounts of $10,000, $25,000, or $50,000.

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Tuition Assistance Program: SPIN offers tuition assistance to eligible employees for a degree program that is related to the employees current job. Employees who wish to take advantage of this benefit must work at least 30 hours a week and must seek further education at a fully accredited licensed educational institution. SPIN closely monitors this program with a Navigation Plan. This plan must be kept on file for review by the employee or manager prior to the acceptance of Tuition Assistance. Once an employee is approved, tuition assistance can be used for tuition costs and/or for any related college or computer fees. Employees will never receive tuition assistance that exceeds the cost of the Universitys tuition. Costs such as late fees, transcript fees, program admission, degree candidacy, application, books, equipment, deferred fees, graduation fees, travel or living expenses are not reimbursable. These costs must be incurred by the employee. Employees can receive a maximum benefit of $2,500.00 per calendar year as long as all requirements are met. In order to receive the benefit an employee must maintain at least a C or higher in undergraduate courses and a B or higher in graduate courses. Family and Medical Leave Act: SPIN provides eligible employees with access to Family Medical Leave Act benefit. To be deemed eligible, one must have been employed with SPIN for at least one year and for 1,250 hours over the course of a 12 month period. Family and Medical Leave is used to cover employees for 12 weeks of unpaid, job-protected leave for reasons relating to family or personal needs. The following reasons are acceptable for leave under the FMLA: birth of a child, placement of child for adoption or foster care, serious medical condition of a child, spouse, or parent, serious medical condition of self, qualifying urgency due to a spouse, child, or parent

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being on active military duty or notification of impending call to duty, or a spouse, child, parent, or next of kin recovering from a serious illness or injury sustained in the line of active duty. Leave of Absence: SPIN allows eligible employees to be granted six months of leave for educational reasons or reasons that are not covered by the Family and Medical Leave Act. Employees become eligible after three years of employment with SPIN. While the employee is on leave, their position is held and redeemed to them on their return. Benefits are only paid by SPIN for the first 30 days of employee leave. Once these 30 days expire, an employee can opt to continue coverage through COBRA. Opting for COBRA would put the employee in charge of paying their premium up to 102%. Leaves of absence are only granted once every five years for any one employee. Day Care Benefits: SPIN Day Care Benefits are offered on a daily basis for employees to use for their children. Employees can choose to use this day care center each day or as the need arises. Those employees whose children are not regularly enrolled in the day care service may still make use of the center at no cost. With a weeks notice, an employee not normally enrolled can utilize the day care services on high traffic days such as school holidays. Use of the day care center on school holidays comes at a 50% discount of the regular non-staff rate. While employees children may be placed on a waiting list, employees receive preferential treatment over the general community as that wait is waived. Philadelphia Federal Credit Union: As an employee of SPIN, all staff are eligible to join the Philadelphia Federal Credit Union for financial services. Services include free checking, MAC cards, VISA credit cards, car

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loans, mortgages, and personal loans. SPIN employees can elect to use PFCU for direct deposit of all or part of their paycheck. However, employees are also given the option to use the bank of their choice for direct deposit. Workers Compensation: As a statutory requirement in the state of Pennsylvania, all employees are provided with workers compensation insurance. SPIN provides this to employees through a contract with Eagle Trust Management. Workers compensation pays for medical expenses and lost wages for all work-related injuries, or illness whether or not SPIN is liable. Leave Time: SPINs leave time plan combines sick, vacation, and personal leave time into one plan. Employees leave time is earned with each payroll, starting from the first day of employment. Like most benefits, SPINs leave time cannot be utilized until the requirements of the probationary period are met. Employees earn the following leave time per hours per year based on a 40-hour work week: Management/Confidential Staff Year 1: Year 2: Years 3 and 4: Years 5 through 10: Years 11 and more: 120 hours or 3 weeks of leave time (earn 4.62 hrs/payroll) 160 hours or 4 weeks of leave time (earn 6.15hrs/payroll) 200 hours or 5 weeks of leave time (earn 7.69 hrs/payroll) 240 hours or 6 weeks of leave time (earn 9.3 hrs/payroll) 280 hours or 7 weeks of leave time (earn 10.77 hrs/payroll)

Holidays: The following days are deemed as holidays to all employees, both full-time and parttime: January 1st, Martin Luther King Jr.s Birthday, Presidents Day, Memorial Day, July 4th, Labor Day, Thanksgiving Day, day after Thanksgiving, Christmas Eve, and Christmas Day.

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Discount to Norcom: As an added bonus, SPIN offers employees and staff access to the Norcom Community Center. Use of these facilities comes at a discounted membership for SPIN employees of $150.00 per year. This full service community center is part of SPINs wellness initiatives to keep employees healthy.

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Works Cited Bests Rating Center. A.M. Best. A.M. Best. <http://www.ambest.com> "Ratings." Prudential. 2 Nov. 2011. Web. 3 Dec. 2011. <http://www.investor.prudential. com/phoenix.z html?c=129695&p=irol-ratings>.

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S.P.I.N., Inc.
Plan Design and Decision Making Analysis Part III
912038604 912387186 RMI 3501 Dr. Drennan Fall 2011

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Part III: Decision Making and Plan Design Analysis:

Funding: Since SPIN is a non-profit organization that provides services to individuals with intellectual and development disabilities, it operates primarily through funding made by the state of Pennsylvania and Philadelphia County, and donations paid by individual members, groups, and corporate entities. Driven by its non-profit status, SPIN does not offer major salaries and limits salary gaps from executives to staff. However, due to constant uncertainty of funding cuts, SPIN has been unsure of how accurate its projections are now and for the future. With an overall 6% decrease in funding for the past plan year, SPIN needed to make radical changes in its design and implementation of its benefits package. This issue is discussed under the heading Cost Management/Future Plan Design. Plan Design: SPIN believes that benefits offer a huge draw to its employees, and therefore SPIN offers comprehensive plans. In creating an environment of compensation equality, SPIN has had the ability to receive its employees entrustment of their benefits. For a number of years, SPIN had only offered two medical plans through corporate decision making: the current Keystone HMO and the current Personal Choice PPO. With the advice of its broker Alliant, SPIN began to administer what was described as a hybrid plan. Since the implementation of that plan, Keystone POS, it has become the second most active plan, trailing SPINs Keystone HMO. Because of SPINs Executive Team being fairly complacent over past years, and a consistent package offered through Independence Blue Cross (IBC), SPIN did not make huge changes to its plan for 2011. Due to a 20% increase in costs, however, SPIN was not able to think as seriously into completely self-funding as it had hoped.
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A change that was enacted involved SPINs contributions to its employees retirement plans. Upon noticing the exit of participation from employees in these plans, SPIN upped their maximum match contribution to 6% for plan participants. To also retain employees and persuade them from pulling their money out of their retirement plans, SPIN attempted to inform employees that contribution is necessary, for in our economy, it is very unclear of where Social Security will be standing upon their retirement. Because of this, SPIN has efficiently and successfully altered its retirement plan design and employee participation. SPIN strives to provide the post possible benefits package to its employees to attract and retain them. Through this, SPIN has gained recognition for its renowned and comprehensive benefits. Gail Meersand, director of Human Resources, explained how not only are these far from a boasting point for SPIN, employees from other organizations have informed the company that its benefits package is shocking and distant from any plans they have seen. As a result, SPINs package has placed them above their competition, its participation rates are very high, and its employee turnover rate is statically low. Outsourcing: SPIN utilizes Colonial Health Care, the third party administrator (TPA) for Alliant, to perform the administrative functions of its dental and vision plans. SPIN also works closely with Alliant, its broker, to ensure that all appropriate coverages are available for employees. Meersand mentioned that the use of Alliant helped expand SPINs knowledge of plans, as well helping implement plans and coverages that are satisfying to employees. Compliance: Meersand described that SPIN has never had major complications with compliance of federal legislation or entities. She did, however, inform of the difficulties that arise from Health

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Reform discussions and the constant need to let its employees know of prospective changes. Although hectic to keep track of, alterations made in the healthcare industry need to be maintained throughout companies benefits packages to prohibit legal issues. PPACA: The Patient Protection and Affordable Care Act (PPACA) holds new and strict regulation for health insurance. For plan year 2011, SPIN effectively instituted the new mandates to steer the company away from any compliance issues. Administratively, SPIN successfully fulfilled the automatic enrollment requirement. Upon enlisting all employees in a health plan who had not individually enrolled, SPIN gave its workers prompt notice that they still face the option to opt out. If the employees wished to opt out, they were informed that they would be able to at no penalty. SPIN also implemented the optional W-2 form reporting requirement for 2011 under PPACA. The legislation made it voluntary for employers to offer W-2 forms that contained a section in which the total value of benefits (employer and employee contributions) would be reported. The belief that many had on this operation was that in the future, this total value of benefits would become taxable. SPIN decided to apply this form sooner rather than later because in 2012, this option will become mandatory. In other words, all employers who offer employersponsored health coverage must include this W-2 tax form in their annual reporting documents for employees. IRS: Prior to new IRS regulation, SPIN had not had its retirement plans audited in over 10 years. However, due to new IRS mandates, SPIN is required to allow an external auditor access

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to its retirement plans once a year, as well as all information associated with each plan. SPINs most recent audit came in July/August 2011. COBRA: The Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) states that those who are terminated from their jobs can still find coverage. Compliance issues with COBRA deal mostly with the administration of who is considered covered and for the amount of time they can receive extended coverage. For SPIN, the company has to be concerned with who is deemed eligible. Eligible people are called qualified beneficiaries; those that have the right to elect continuation coverage following certain qualifying events. Under COBRA, qualified beneficiaries include employees and their dependents. SPIN must also be aware of the maximum duration that someone could continue coverage. For an employee, the maximum duration is 18 months, and for a dependent the maximum duration is 36 months. Since turnover tends to be consistently low, SPIN manages this mandate competently. The main issue with COBRA that SPIN must be aware of is the enrollees in COBRA. Most enrollees in COBRA are those with high risks. This would essentially raise the cost of the plan for everyone since these employees are still a part of the risk pool. To address this issue, SPIN should carve out COBRA from the rest of the health plan. As most reforms and federal laws are implemented, administrative costs for new legislation tend to increase for companies. Issuing new paperwork and deeming employees eligible or ineligible are two examples of tasks of which administrators must be conscious. SPIN has begun to prepare for health reform by starting to reduce its costs to mitigate the administrative strain that comes from reform.

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HIPAA: The Health Insurance Portability and Accountability Act of 1996 (HIPAA) is another federal enactment with which SPIN must comply. HIPAA sets forth guidelines that must be followed to ensure that all patient information is properly protected. Under the Privacy Rule, employers are required to keep a record of any information in which they disclose protected health information (PHI). SPIN must be careful not to violate privacy of employees as this could result in heavy fines and even jail time. The Privacy Rule was modified in August of 2002, stating that The Department of Health and Human Services must include administrative simplification provisions which implemented national standards for electronic health care transactions. To this end, SPIN must be careful about what information they keep electronically. Meersand stated that SPIN keeps detailed records on health information and that she is aware of all the implications of HIPAA. Meersand also mentioned that SPIN has never had any compliance issues with HIPAA because she makes sure to keep all employees up to date on regulations by holding meetings when new issues arise. ERISA: SPIN is careful to comply with all requirements imposed by the Employee Retirement Income Security Act (ERISA). SPIN must adhere to the requirements of fiduciary responsibility, communication, and discrimination testing. In order to comply with the fiduciary responsibility imposed by ERISA, SPIN must put the employees best interests first. SPIN does an especially good job at this by offering its employee assistance programs which allow employees to access telephonic assistance along with face-to-face visits. This shows that on top of the medical plans offered, SPIN genuinely is putting its employees interests first.

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As per ERISA requirements, employers must also follow specific communication guidelines. SPIN communicates (see below) its plans through meetings, emails, SPIN portal, calendars, seminars, and using representatives to explain the enrollment processes. SPIN also provides every employee with the Summary Plan Description and Summary Material Modifications. Meersand mentioned that right now since the plan is going through major changes, SPIN is having multiple meetings a week to ensure that all employees understand how these changes will affect coverages in 2012. Communication: Meersand explained that one of SPINs biggest issues with employees and their benefits is employees not knowing or understanding the cost associated with the plan in which they are enrolled. It is essential for employees to gain knowledge of the true cost of health care goods and services. Having employees realize that SPIN goes to extensive lengths to provide a large spectrum of benefits results in increased morale among workers. To ensure this, SPIN engages in numerous communication activities. SPIN advises all new and eligible employees on the benefits offered by the company at their time of hire. Upon enrollment, every employee is given an Employee Benefits Guide, for the plan year, which explains effectively every aspect of the employees coverage and participation. Aside from initial documentation, SPIN performs other quality acts of communication to participants. One change that occurred, which required effective communication, was carving out a prescription plan from its medical plans, and instead self-insuring a prescription plan through Express Scripts. This measure was enacted for the sole purpose of cost savings. The premiums required for its existing medical plan far exceeded the estimated expenses incurred from self-

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insuring. Obviously, through the early stages of plan change, employees experienced some difficulties. Although SPIN sent out numerous memos, emails, and mailed documents to ensure communication standards, employees did not seem to understand the new plan. Meersand stated that numerous instances occurred that involved disgruntled employees calling to inquire about their previous prescription card not being accepted upon pick-up of prescriptions. Recently, these difficulties have been subdued. SPINs administrators effectively educated its employees on the separation of its prescription plan from its previous medical plan. Under PPACA, expenses for over the counter medicines are only considered reimbursable through consumer directed health plans when they are prescribed to employees. These plans, like SPINs Health and Dependent Care FSAs, have caused issues with communication. SPINs employees were not aware of the required prescription upon the plan year beginning. Upon hearing complaints about the lack of reimbursement, SPIN was forced to notify employees of the need for prescriptions, as well as the doctor visits that pre-empt those prescriptions. In the future, SPINs plan administrators must report mandates more efficiently to their employees. SPINs employees always seem to want more benefits and do not always know everything they should about their current plans, Meersand stated. To mitigate this issue, SPIN holds meetings very often to explain what is offered, listen to employee requests, as well as provide information on how new/existing plans can/will affect them. One example of the explanation of new benefits (explained below) is SPIN advising employees on the 100% coverage of preventive services under a new medical plan. This 100% coverage is mandated through PPACA. Included in these preventive services is Physical Screenings. Upon employment, and every year thereafter, some management positions and all staff positions

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require a physical. Resulting because of this, SPIN encourages employees to utilize their benefits package to complete this requirement of employment. Informing employees about this coverage helps SPIN by creating employee satisfaction, as well as reducing the hassle of reminding employees to get their annual physicals completed. Lastly, SPIN uses a Health and Wellness Calendar on its website portal to inform employees on anti-smoking initiatives, give advice on personal health and well-being, as well as provide documents that pertain to their rights and benefits as an employee and participant. SPIN gives its employees easy access to answer general questions they may have about their package. Future - Cost Management/Future Plan Design: SPINs plan changes for 2012, of which enrollment is going on currently, are expansive. Due to a desire to cut costs for both SPIN and its employees, SPIN is cutting its three medical plans: Keystone HMO, Keystone POS, and Personal Choice PPO. Instead, SPIN has decided to convert each Management/Confidential employee to a Personal Choice High Deductible Health Plan (HDHP HD4-HC1). Union members are given the option of remaining on SPINs Keystone HMO (if previously enrolled), switching to the Keystone HMO, or adopting the new Personal Choice HDHP. This option was due to members of the union rejecting the first offer regarding the new HDHP. By implementing the HDHP, more responsibility is placed on the employees as a cost containment technique. This monumental change results in a decrease in premiums paid by SPIN and eliminates any premium paid by an employee for single coverage. Equipped with this new medical plan is a $3,000 deductible that will be administered through a Health Reimbursement Arrangement (HRA) from broker Alliant. SPIN has agreed to pay half of this cost. The first $300 of the account will be contributed by the employee through payroll deductions. Meersand declared this notion of employee expense is SPINs way of

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attempting to give its employees an idea of how insurance works. Benefit plans that combine an HDHP with an HRA or HSA offer employees company provided financial protection from significant health care costs, but shift accountability for lower-cost services and discretionary spending decisions to the consumer (Towers). The following $1,500 of deductible will be funded by SPIN, and the remaining $1,200 by the employee via payroll deductions. SPIN chose the layout of an HRA rather than an HSA because any remaining money at the end of the plan year will be forfeited to SPIN. SPIN owns the funds contained in the arrangement. An IRS regulation requires that employees send usage statements and other relevant documentation of the HRA to their broker within 55 days of payment with their medical cards. Infringing on this mandate will result in employees cards being shut off. Another change will arise in SPINs Dental and Vision self-insured plan. The plan remains self-insured and identical to that of 2011; however it will now be administered through Meritain Health. This plan is funded through a general asset plan. Meritain will offer administrative, claims, and design services to SPIN. SPINs decision to switch administrators from Colonial HealthCare to Meritain Health was based on reducing costs associated with the administrators as well as a slight increase in administrative help. SPINs life insurance and disability plans will be slightly modified. SPINs main Group Basic Term Life Insurance Policy will now be offered through Unum. The plan design will remain the same. SPINs voluntary Universal Life Insurance program through ING Life Insurance will remain static. Additional Term Life Insurance will still be available in 2012. Contrary to 2011 however, this coverage will be offered through Unum as well. All of SPINs disability policies (AD+D, STD, LTD) will remain static, except they will be switched from Prudential to Unum. All changes in SPINs life and disability policies are due to cost savings.

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While aiming to retain the same coverage, SPIN wished to reduce rates. Unum offered great rates and great guarantees that ultimately led SPIN to terminate its association with Prudential and join Unum, Meersand said. SPIN had also dealt with Unum in the past, and due to Unums excellent customer service, SPIN factored that into its decision. These drastic alterations of plan design come partly due to a shift in executive staff. The long time CEO and founder of SPIN, David Losinno, and his wife and Executive Director, Trina Losinno, stepped down in 2011. Following these changes, Kathy Brown-McHale and Judy Dotzman filled those holes, respectively. The presence of new forces within the company brought about ideas of shifting the companies traditional ways of providing benefits through IBC to a more modernized and fitted solution to its employees needs. For an early period of time, discussions surfaced of the possibility of self-funding. After coming extremely close to implementing that risk-bearing strategy, SPIN decided that major changes to its existing benefits package may be beneficial in the long run towards goals of self-funding. SPIN thinks that the new adjustments will bring the company one step closer to a self-funding arrangement. In 2013, due to PPACA, SPIN will need to reduce its maximum contribution allowed to its FSAs to $2,500 annually. Currently and in 2012, SPINs FSA carry limits of $3,000 and $5,000 for Health Care and Dependent Care FSAs respectively. Further in the future, SPIN may need to reduce its well-known comprehensive benefit package, or at least reduce its costs, to comply with an implementation known as the Cadillac Tax in 2018. This tax will require all employers to pay a 40% tax on health plans that are very rich. Since SPIN offers many attractions in its package, it may face uncertainty as to whether it will be subject to taxation. The excise tax will charge employers 40% of the amount of total benefits exceeding a stated limit for

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individuals and families participating. Today, the limits are $10,200 and $27,500, respectively. These extremes are subject to change with current and future trends in the market. Recommendations for the Future: In analyzing SPINs current benefits plan, suggestions are limited due to SPINs profit status and the fluctuation of government funding. Comprehensively, SPIN offers vast benefits, excluding the 2012 change to only one medical plan offered to Management participants. Chances are that groups of employees will opt-out of coverage due to the lack of choice or the dissatisfaction with the new plan design. Though opting out does not hurt SPIN as a whole, the action may bring down its reputation that is paired with its benefits package and impact its low employee turnover rate. SPINs current and future goals are to reduce costs in an effort to counter the lack of funding the company is receiving. Like most businesses, SPIN is concerned with cutting costs in this time of economic downturn. Recently, ERISA has been tougher on companies who are cutting costs against the best interest of employees. While this seems to be an effective business strategy, SPIN must also comply with ERISA. ERISA requires plan administrators to act in the best interests of their employees under the Fiduciary Responsibility clause. SPIN must be weary of cutting too much and thus not putting the employees best interests first (Marcotte). Organizing benefits packages in order to subsidize its financial costs may result in compliance issues with ERISA. In conjunction with the new HRA that SPIN is implementing, it may be a wise decision to also incentivize employees to use this HRA. As stated in the article, Employers are using Account-Based Plan Designs to Engage Employees in Health Care, it states that if employees do not change the way they use health care that their out of pocket costs will be higher under the

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HDHP than with the previous PPO. To combat this problem, the article suggests that employers should use various incentives to get their employees to use the HRAs more. SPIN may want to use some of these incentives such as contributing to employees accounts if they participate in activities that help keep them healthier. SPIN could add cash to employees accounts for various activities such as accessing their health, checking their blood pressure regularly, joining weight watchers, enrolling in disease management programs, and/or visiting SPIN portal, the e-health website (Towers). Not only will these incentives help to alleviate some out of pocket costs that employees may face, but it also will benefit SPIN by reducing turnover from the healthier employees. Conclusion: Stemming from SPINs decision making to cut costs while still offer inclusive benefits, it has placed itself in a comfortable position to satisfy and retain employees. SPIN has executed impressively in implementing these plans, regardless of the lack of funding or its profit status. SPINs benefits team works efficiently to provide coverage that attracts employees as well as protects its bottom line. Upon new plans being offered, however, SPIN must make sure all requirements are met to distance the company from regulatory issues. Due to SPINs consistent efficiency, this problem does not seem to be a huge possibility in the future. SPIN has defined itself as an upper echelon company regarding benefits, and strives to use this important tool of employment to get the most out of its employees as well as attract top talent.

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Works Cited Meersand, Gail. Personal Interview. 6 Dec. 2011. Jones, Mark C. "Health Care Reform Update: Changes Plan Sponsors Should Make This Year." Pillsbury Law. 8 Sept. 2010. Web. 7 Dec. 2011. <www.pillsburylaw.com>. Marcotte Stamer Esq., Cynthia. "Tough Times Are No Excuse for ERISA Shortcuts." Employee Benefit News (2010). Source Media. Web. 7 Dec. 2011. <https://blackboard.temple .edu/webapps/blackboard/content/contentWrapper.jsp?content_id=_2402810_1&display Name=Current+Economic+Situation+No+Excuse+for+ERISA+Shortcuts&course_id=_4 310_1&navItem=content&href=http%3A%2F%2Febn.benefitnews.com%2Feletter%2Fp rofile%2F14%2F534.html%3FET%3Debnbenefitnews%3Ae534%3A2130205a%3A%26 st%3Demail>. Towers Perrin. "EMPLOYERS ARE USING ACCOUNT-BASED PLAN DESIGNS TO ENGAGE EMPLOYEES IN HEALTH CAR." Towers Perrin HR Services. Web. 5 Dec. 2011. <https://blackboard.temple.edu/webapps/blackboard/content/contentWrappe r.jsp?content_id=_24 16121_1&displayName=Employers+Are+Using+AccountBased+Plan+Designs+to+Engage+Employees+in+Health+Care+%28PDF%29&course_i d=_4310_1&navItem=content&href=http%3A%2F%2Fwww.towersperrin.com%2Ftp%2 Fgetwebcachedoc%3Fwebc%3DHRS%2FUSA%2F2006%2F200607%2FHW_PlanDesig n.pdf>.

Benefits Analysis: Special People in the Northeast INC.