S&S Benefits.....Opinion, Hearsay & News Review

Why be like everyone else?

Here is something to be sure to check. We have noticed in our research that many firms over 100 employees have no 5500 forms or Schedule A information with the IRS! This information is due on or before the last day of the seventh month after the close of the plan year. Also, SPD’s must be filed within 120 days of when the plan becomes effective or is adopted. A new SPD must be filed once every five years after the initial filing date if the plan is amended; otherwise, it must be filed every 10 years.

A MAJOR CHANGE: Our e-mail readers received an excellent article the other day detailing the NEW CHANGED 5500 forms that are to be filed in for the 1999 plan year written by a major accounting firm. The new forms are to be filed with the DOL. If you would like to see this article, you can request it from us via e-mail and become an e-mail client for this newsletter.

Speaking of 5500 information, some carriers are not providing this information automatically. For one of our clients a carrier told us that they would not supply the information for accounts with less than 125 employees, even though the law says the account needs to file the information! There is no excuse from filing simply because the carrier has rules that don't match the law. We prevailed in this case and the carrier provided the information.

Are your company enrollment records complete and correct? Recently we have seen more than a couple of groups who were not paying premium for certain employees on a non-contributory plan for all employees. If your contract is non-contributory, the insurance company must pay for claims on those employees. If a premium audit indicates that premium was not paid, the company will collect for all premiums that were due and unpaid (if the error goes back several years, this could be substantial). Plus, by not having enrollment information or a waiver card for every employee not enrolled (or enrolled) in each plan (contrib or non-contrib), there is substantial risk of a lawsuit down the road. We’ve uncovered these situations by auditing census data of all eligibles verses all enrolled. It’s worth a double check of your data.

HMO LOCK-IN: What is it? It’s when you have too many people in an HMO that is not providing useable experience information (most) for other carriers to evaluate. A prime example might be a plan having 130 out of 200 employees in an HMO with no real data for claims experience where capitation is involved. Another example might be a 1000 employee group with 6 HMOs covering 400 lives when premiums are rising. You might feel that your company best interests would now be best served by consolidating all coverage with one carrier or administrator. How do you get a quote? It is getting harder to even get a self-funded quote in these situations since the stop loss market has been burned by just these type of situations. Insured quotes might only be available on the same basis as you have now, which doesn’t solve the overall problem of not having good data. If you can afford the aggregate risk, you might be able to get a quote for specific stop loss only. If you can get an aggregate quote, chances are it will be high. Can you take the chance with either quote? We have just recently been made aware of a product that tries to overcome HMO LOCK-IN. If you would like to give it a try, we would too. Give us a call and let’s see if it will work for you or if other solutions are available to help.

NEWS: The UICI proposed merger with Health Plan Services reported in our March newsletter has been disbanded due to monetary problems at UICI’s credit card division. ING has announced deal to purchase Reliastar (formerly Northwestern National). The Dutch insurer recently has made a combined offer with Wellpoint to purchase Aetna, which Aetna turned down. Citing a lack of interest and consumer disdain for HMO’s, the Illinois Manufacturer’s Association (IMA) has pulled the plug on a joint health insurance purchasing alliance for small businesses. GE Financial has announced the purchase of Phoenix Home Life’s group life and health operations. You can now get a home loan and a refrigerator with your group health plan. Met Life raised $2.88 billion with its IPO at the beginning of April, less than half of its previous $6.1 billion target. Aetna settled a lawsuit with Texas on April 11, promising to remove financial incentives and disincentives that might cause doctors to limit care. In the settlement Aetna denied any wrongdoing and there were no penalties or fines assessed. Another national suit was filed against Humana alleging similar items about Humana as part of the RICO statutes. Once again, while prices go up and care is denied there is one thing we can be sure of given the composition of our Congress….the lawyers will get paid. Group Insurance Disability sales continued a strong upward trend (11%) according to LIMRA. LTD sales were up 5% and STD sales were up 21%. This is the fourth consecutive upward year for these products. According to Marsh, P&C prices are expected to firm up. All lines of coverage are expected to take a hit. The Marsh forecast came out before the recent stock market decline, which further lowered investment income for the insurance companies (among others).