09 Cobra Presentation 5 11 09 Final


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09 Cobra Presentation 5 11 09 Final

  1. 1. Business Solutions Webinar Topic: New Administration Laws Meeting Facilitator: Vince Megna - ADP Area Sales Executive Wednesday, May 13th 2009 at 10:00AM [EST] Audio Conferencing: (1) 800-924-3217 & Thursday, May 14th 2009 at 2:00PM [EST] Audio Conferencing: (1) 800-742-6164
  2. 2. Today’s Agenda Legal Challenges for HR - The First 100 Days – Eric Gordon Esq., Akerman Senterfitt Impact of Cobra on Group Plans – Mike Barreto, USI ADP Cobra Service – Schon Parris Overview of ADP Workforce Management Solutions - Kim Heald ADP Broker Channel Manager
  3. 3. "LEGAL CHALLENGES FOR HR – THE FIRST 100 DAYS" Presented By: Eric A. Gordon, Esq.
  4. 4. The First 100 Days • President Obama's agenda could have tremendous impact on businesses. • Only 9 days into office, made clear that workplace issues were a top priority. • Continued to address workplace issues in the next 91 days, and as part of the stimulus package signed into law on Feb. 17, 2009.
  5. 5. Ledbetter Fair Pay Act • Applies to all claims of discrimination in compensation under Title VII, the ADEA, the ADA and the Rehab Act, that are pending on or after May 28, 2007. • Overturns Supreme Court decision. • Resets SOL every time employee is paid money based on a prior discriminatory decision.
  6. 6. Employee Free Choice Act ("EFCA") • Currently, two ways a union may become the collective bargaining representative: • Voluntary recognition by employer; or • Secret ballot election • Once workplace is unionized, employer is required to negotiate in good faith for a contract.
  7. 7. Unemployment Coverage • Final bill includes a 9-month extension of a program that offers an additional 7 weeks of unemployment benefits. • Increased benefits by $25 per week. • Also includes a 7-week extension of jobless benefits – which provides unemployed workers up to 33 weeks of benefits.
  8. 8. E-Verify and the New Employee Verification Act • Final bill removed all provisions referring to E-Verify. • NEVA: Introduced by Rep. Samuel Johnson (R-TX) in February 2008. • Currently – Revised Form I-9 in effect.
  9. 9. ADA Amendments Act • Under the Amendments, coverage is to be to the "maximum extent" possible. • What this means for employers: when in doubt, "assume" the employee qualifies as disabled. • Mitigating measures – can now be considered when determining if someone was disabled – examples: prosthesis, medication, corrective lenses
  10. 10. Family & Medical Leave Act ("FMLA") • National Defense Authorization Act – Military Caregiver Leave • Leave for up to 26 workweeks • Care for a member of the Armed Forces • Medical treatment, recuperation, or therapy, or is otherwise in outpatient status, for a serious injury or illness. – Qualifying Exigency • Leave for up to 12 workweeks • Due to any "qualifying exigency" • Active duty • Contingency operation
  11. 11. Genetic Information Non- Discrimination Act ("GINA") • Prohibits employers from discriminating against individuals on the basis of genetic information. – Prohibits discharging, refusing to hire or other forms of discrimination • Mirrors Title VII's enforcement and remedy provisions for intentional discrimination claims. • Result for employers: Increased employment- related claims.
  12. 12. The COBRA Subsidy • What? U.S. Treasury provides a subsidy of 65% of the cost of the COBRA premium. • Who? Involuntary termination between Sept. 1, 2008 and Dec. 31, 2009. • Exclusions? Phased out for individuals with AGI between 125k and 145k (single) and 250k and 290k (joint).
  13. 13. THANK YOU! Presented By: Eric A. Gordon, Esq.
  14. 14. May 13th, 2009 Discussion Guide • Employer Concerns • Employee Concerns • Vendors and Providers • Claims and Underwriting Issues • Top 10 Employer Strategies • Closing Thoughts
  15. 15. May 13th, 2009 Employer Concerns • Recession, improve top line • Claims costs associated with revenue and sustain profitability COBRA participants, especially self-insured employers • Compliance with COBRA subsidy • Impact of COBRA on renewals • Administration of COBRA • Census changes subsidy • Carrier underwriting rules • Significant bottom line impact • Communicating the changes to • Difficulty in collecting participants and beneficiaries premiums
  16. 16. May 13th, 2009 A Few Points • ARRA COBRA benefits include medical, dental, vision, Health Reimbursement Accounts • COBRA election rates range from 12% to 15%, before ARRA (ADP Automation’s election rates in March 2009 are 13%) • Election rates can increase to 20% or more, expect longer COBRA durations • ADP reports COBRA durations of 9 months for 18 month elections and 18 months for 36 months elections • COBRA claims can run at 145% to 150% of active employee claims
  17. 17. May 13th, 2009 Disqualifiers • The individual is eligible for other group coverage, participate in the spouse’s plan or employer’s plan or Medicare • Subsidy ends when the individual becomes eligible for coverage or • Fails to make a payment or • After 9 months or • The maximum COBRA period ends
  18. 18. May 13th, 2009 Employee Concerns…Lead to • Stress from the financial sector, • Increased use of health services 401(k) losses, consumer price increases, declining housing • Higher utilization for values, layoffs discretionary treatments, dental, vision, prescription • Cost of COBRA and refills, preventive care, lab tests affordability, fear of not finding a job • Increased stress related claims, depression, back pain, use of • For those remaining, what will EAP happen to the current benefits expense, cost, plan design? • Higher disability & FMLA, workers compensation claims (protection from layoffs)
  19. 19. May 13th, 2009 Vendor and Provider Concerns • Stock market performance and • Providers exposure to bad debt lower interest rates have due to the uninsured is impacted health insurers’ increasing investment portfolios • Provider rates for liability • Health insurers will try to coverage are increasing negotiate rate increases to cover their losses in claims and • For the not for profits, investments donations are down • Federal cuts in Medicare • Renegotiate rates with insurers funding • Asking for full payment at the • Decline in group enrollment time of service (less group premium) • Looking for new or complex = • Higher utilization, higher dollar “expensive” treatments claims and increased claim severity
  20. 20. May 13th, 2009 Claims and Underwriting Issues • COBRA elections are made by persons willing to pay the high premiums because they or a covered family member have a medical condition and need the coverage • Adding more COBRA cases is likely to cause higher claim totals, although there could be some benefit of healthier people enrolling that can normalize some of the risk • Review carrier eligibility rules regarding the percentage of COBRA participants relative to the number of eligible active participants, depending on the size of the group • Impact on demographic mix can result in rate adjustment
  21. 21. May 13th, 2009 Top 10 Employer Strategies 1. Review current versus most recent renewal demographic mix 2. Track and monitor monthly or quarterly loss ratios and claims for active and COBRA participants 3. Stay ahead of the carrier/renewal six months out 4. Utilize predictive modeling to design future programs 5. Review dependent eligibility files and verification 6. Apply wellness and incentives strategies and plan modeling 7. Review cash flows and funding arrangements 8. Use voluntary benefits to fill gaps in employee coverage 9. Impact of reductions on funding arrangement
  22. 22. May 13th, 2009 Change in Enrollment Example At Renewal Post RIF Enrolled 500 400 -20% Expected Claims (monthly) $600 $300,000 $240,000 Minimum Attachment Point 90% of Renewal Enrollment $337,500 $337,500 Maximum Claims 125% $750 $375,000 $300,000 Maximum Annual Claims Liability (by formula) $4,500,000 $3,600,000 Minimum Attachment Point (by contract) $4,050,000 Additional Claims Corridor (employer liability) $450,000 Additional Aggregate Exposure 12.5%
  23. 23. May 13th, 2009 10. Individual Coverage • Cost or ending of COBRA • Active employees during waiting period or cannot afford contributions • Is there potentially a lower cost alternative to COBRA? • Best time to enroll is directly from employer plan • Underwriting = higher rates, exclusions, limitations, or decline if COBRA is elected or there is a gap in coverage • Growing vendor and voluntary market = on-line, AARP, Univers, USI INCompass™
  24. 24. May 13th, 2009 Closing Thoughts for Employers • Outsource COBRA or review vendor relationships • Ensure that participants are tracked (eligibility & oversight) • Clear communications • HR systems, finding the COBRA participants and collecting premiums • Review cost containment strategies • Dedicated Health Advocate to partner with HR workload • Clean up eligibility files
  25. 25. May 13th, 2009 Thank You Mike Barreto, MBA Employee Benefits Practice Leader USI Southeast Region 786.454.2158 Mike.Barreto@usi.biz www.usi.biz
  26. 26. ADP COBRA Services ARRA Impact toClient Service Manager Schon Parris – COBRA
  27. 27. ARRA Impact to COBRA 1. Second chance to elect COBRA for involuntary terms from September 1, 2008. 2. 65% Subsidy for COBRA premiums for involuntary terms from September 1, 2008 through December 31, 2009. American 3. Subsidy initially paid by employer but Recovery, and recaptured via tax credit towards payroll tax Reinvestment submission. Act of 2009
  28. 28. ;;; COBRA / ARRA Process Qualified Event ADP sends ADP applies 65% Client provides ADP processes sent to ADP Election Packet ARRA ARRA eligibility continuant election w/new language subsidy if applicable ADP mails ADP collects ADP applies credits/ coverage coupon premiums and issues refunds for benefit updates carriers where applicable continuance ADP forwards ADP provides premiums to client detailed support with detailed for support tax credit filing CLIENT ADP
  29. 29. More Information ADP www.adp.com Department of Labor www.dol.gov/cobra American Internal Revenue Service www.irs.gov Recovery, and Reinvestment Act of 2009
  30. 30. About ADP: Who We Are Workforce Management Company 40,000 Fortune 200 ADP associates NYSE: ADP 1 of 4 More than companies 570,000 AAA rated by clients Standard & worldwide Poor’s and World Class Service Moody’s Electronically move over Pay 1-in-6 U.S private sector $1 trillion in client tax, workers and 32 million direct deposit and related people in 50 countries client funds in FY 2007
  31. 31. Workforce Management Solutions “Managing the Business & Employee Lifecycles from Recruitment to Retirement” Business Recruitment Time & Labor Payroll HR Benefits Outsourcing on & Management Management Management Administration Services Demand Hiring Tools Accounting • Background • Bio-Metric Devices • Web-based or • HRIS Solutions • Benefits Call BPO • AP, AR, Financials screening • Swipe Clocks Client Server • Unemployment Center Benefits Processing • Shipping Drug Testing Payroll Solutions Claims Carrier Bill Outsourcing • • Web Based • • Inventory Payroll Banking Management Reconciliation ADP Resource • Online Timesheets • • Shipping Complete HR & Applications • PC Timesheets • Tax Filing Services • Vacation tracking • Benefit Statements • Web-Based Travel Payroll Outsourcing & Expense Reports • Job Fit • Non-ADP Payroll • On-line Pay • Performance • COBRA Assessment Interfaces Statements & W-2’s Evaluations FSA Plan ADP Total Source eCommerce • Professional • Web Store Testing • Scheduling & • Pay Cards • Training & Administration Tax Credits Certification Employment • Web Site • Absence • Check Fraud • Connection to Processing Tracking Organization • Customer Portal Management Protection Insurance Carriers • Vendor Portal Recruitment HR Support 401(k) Administration • • Phone, PDA & • Wage Garnishment • • Section 125 CRM Services Mobile Employee Administration Tax & Regulatory • Employee Benefits • Work Comp Plan Design • Sales Force Data Collection Compliance • W2 processing Insurance Plan Administration Automation POS Interfaces Employee & • Marketing • • General Ledger • • Benefits Open Supplemental Interfaces Manager Enrollment Benefits • Customer Support Unlimited Custom Self-Service Benefits Statements • Partner Portal • • Order Management Report Writing • Company Portal Custom Integration • New Hire reporting & Internet
  32. 32. State Tax Credits and Incentives • Tax credit savings vary by state and program • Individual states may offer different incentive programs to encourage business to: • Locate or relocate • Maintain or expand operations • Increase or maintain workforce or train new and current employees • Revitalize economically distressed areas • Move people from public assistance into employment situations • ADP Tax Credit Services can help clients determine what, if any, state tax incentive programs are available and what is required from the client to capture the credit. • The Client will also need to review their state tax liability to determine if they will be able to utilize a specific credit.
  33. 33. Tax Credits • Federal, State and Local governments provide tax credits and incentives to employers based upon location and employee demographics. • Work Opportunity Tax Credit (WOTC) – Designed to encourage employers to hire individuals from 1 out of 9 different groups. – Companies nationwide may claim a tax credit of up to $2,400 per eligible new hire. • Welfare to Work Tax Credit – A tax credit against Federal income taxes for businesses that hire long-term family assistance recipients. – The potential credit amount is up to $9,000 per eligible new hire.
  34. 34. Tax Credits Continued… • Federal Empowerment Zone & Renewal Community Employment Credit (EZ/RC) • Tax credits that reduce the Federal income tax liability of companies that hire individuals who live and work in geographically designated urban and rural areas. • New, existing, or relocated businesses that operate in an EZ/RC may claim a tax credit of up to $3,000
  35. 35. Contact Info: Eric Gordon, Esq. Akerman Senterfitt 561-671-3651 Eric.Gordon@akerman.com Mike Barreto, MBA USI Insurance Services 786-454-2158 Mike.Barreto@usi.biz Schon Parris ADP 770-619-7321 Schon_Parris@adp.com Vince Megna ADP 954-717-6954 Vince_Megna@adp.com Kim Heald ADP 561-625-5819 Kimberly_Heald@adp.com