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EMPLOYER Frequently Asked Questions

Please use the links below to aid you in your search for answers to your small business insurance and wellness questions.

What is the difference between HMO and PPO?
An HMO is a Health Maintenance Organization that covers services solely by providers within their specific network. A Primary Care Physician (PCP) is required, the PCP is responsible for coordinating all medical care and makes referrals to in-network specialty providers.

A PPO is a Preferred Provider Organization that has a network of providers but also allows use of medical providers outside of the plan’s network, typically with greater employee cost sharing. A PPO is generally more flexible than an HMO, as a Primary Care Physician (PCP) and referrals for specialty providers are not generally required.

How long can the waiting process be for employees to be eligible for benefits?
The Affordable Care Act prohibits group health plans from including a benefit waiting period that exceeds 90 calendar days for full-time employees.
Who do I have to offer insurance coverage to?
The Affordable Care Act Employer Mandate requires employers with 50 or more full time employee equivalent (FTE) employees to provide group health coverage to full-time employees or pay a tax penalty. Health coverage must be offered to full-time employees and their dependents.
What is a Qualified Life Event (QLE) and when can employees make changes to their elections?
For an employee to make changes to their elections outside of the open enrollment period, an employee must experience a qualified life event.

Qualified life events include:

  • Change in legal Marital Status (marriage, divorce, legal separation, death of a spouse)
  • Change in number of dependents (birth, death, adoption)
  • Gain or loss of eligibility of other Group Coverage
  • Change in employment status of employee or spouse (loss of employment, start of employment, change in worksite, leave of absence)
  • Change in place of residence of employee, spouse or dependent
What is FMLA and does my company need to comply?
FMLA stands for the Family Medical Leave Act and applies to employers with 50 or more full-time employees or employee equivalents. It provides unpaid, job protected leave for specified family and medical reasons with continuation of group health coverage under the same terms and conditions as if they employee had not taken leave. For an employee to be eligible for FMLA, they must be employed for at least 12 months and worked at least 1,250 hours in the past 12 months. Eligible employees are allowed:

Twelve workweeks of leave in a twelve-month period for the following reasons:

  • The birth of a child and to care for a newborn child within one year of birth
  • The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement.
  • To care for a family member’s serious health condition (spouse, child or parent)
  • An employee’s serious health condition that makes the employee unable to perform the essential duties of his or her job;
  • Any qualified exigency arising out of the fact that the employee’s spouse, son, daughter, or parent is a covered military member on “covered active duty” OR

Twenty-six workweeks of leave during a single twelve-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, son/daughter, parent or next of kin.

What is COBRA and does my company need to comply?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act; it is a federal law that requires employers that offer group health plans to offer the benefit of continuing coverage at group rates to those individuals who are losing coverage due to termination or a reduction in the number of hours of employment. COBRA benefits must be offered when a company has 20 or more employees in the previous calendar year.
Are we subject to 1094 & 1095 reporting? If so, what are they and what is the deadline?
Employers with 50 or more full-time employees (including full-time equivalents) in the preceding calendar year are required to submit 1094-C and 1095-C forms to the IRS. The 1094-C form provides summary information for each employer and the form 1095-C provides report information on each employee. These forms are used to determine if an employer is liable for payment under the employer shared responsibility provisions of the Affordable Care Act. Form 1095-C is also used by the IRS and the employee to determine the eligibility of the employee for premium tax credits.

2016 Tax Year Deadlines:

January 31, 2017 – Forms 1095-B & 1095-C due to employees.

February 28, 2017 – Forms 1094-B & 1094-C due to IRS if filing on paper.

March 31, 2017 – Forms 1094-B & 1094-C due to IRS if filing electronically.

What is LTD Tax Choice?
LTD Tax Choice is when employers offer both an employer-paid and an employee-paid plan long term disability plan. When an employee is paying for the insurance benefit, should they go out on disability, the would not have to pay taxes on their disability income. If the plan is employer paid, the disability income would be taxed and would result in less net disability income.
How does Long Term Disability (LTD) work?
Long Term Disability Insurance will pay an employee a portion of their pay if they are unable to work due to an illness or injury for more than several weeks. Most Long Term Disability plans are designed to go into effect after the Short Term Disability policy ends and can extend up until age 65 or lifetime in some cases. Keep in mind that both short and long term disability policies generally have waiting periods from the time of the illness or accident before they begin paying-out.
How does Short Term Disability (STD) work?
Short Term Disability Insurance will pay an employee a portion of their pay if they are unable to work for several weeks due to a covered illness or injury. It is intended to cover employees who cannot work for brief periods of time. The employer determines the exact benefit period as well as the percentage that is paid to employees.
What is Dependent Care FSA?
A Dependent Care FSA is an account that is set-up for individuals to set aside pre-tax money to be used for dependent care expenses. It can pay for the care of dependent children under age 13, by a babysitter, day care center, or before and after school programs. Care for a disable spouse, parent or child is also eligible if the individual lives with the employee and cannot care for himself or herself. Care must be given during normal working hours (for example, a babysitter that watches your children on the weekend for recreational time is not allowed). The annual contribution limit for a dependent care FSA for 2017 is $5,000 ($2,500 for a married individual filing taxes separately). Dependent Care expenses cannot be reimbursed until they are incurred and expenses must be substantiated by a third party to make sure that they are eligible expenses. Also, you can only use the funds that have been deposited into the account, you cannot use the funds in advance of the money being available in the account.
What is a Flexible Spending Account (FSA)?
A Flexible Spending Account is an account that is set up for individuals to set aside pre-tax money to be used for eligible health care expenses. Many FSAs provide debit cards for employees to use, rather than having to seek reimbursement after the fact. The limit on FSA contributions for 2017 is $2,600, up $50 from 2016. If an employee leaves your company, the FSA account only remains available to them if they elect COBRA and the contributions are continued. If they do not elect COBRA, the FSA funds are not available after they leave the company, unlike an HSA.
What is a Health Savings Account (HSA)?
Health Savings Accounts are savings accounts for individuals with High Deductible Health Plans (HDHP). These savings accounts allow individuals to pay for qualified out-of-pocket expenses with pre-tax dollars. Unlike a Flexible Spending Account (FSA), the funds in an HSA belong to the individual, not to the employer, and remain with the individual even if they change jobs. Funds in an HSA can grow tax deferred and after age 65, you can withdraw HSA funds and they are only taxed as ordinary income.

By offering a HDHP, employers can give their employees additional options and allow them to be more involved in their healthcare decision making.

What is Preventative Advantage?
Preventative Advantage is offered by several dental carriers. If your employees seek care from an in-network dentist, they can access all preventative care without having the benefit deducted from their annual maximum. The annual maximum will be preserved for other, generally more expensive, dental services including fillings, root canals and crowns.
How are broker commissions affected by a change in broker?
Most group insurance contracts require employers to pay premium on a monthly basis. The insurance company or service provider then pays the Broker of Record according to the terms of a commission agreement. In most cases, the insurer will commence payment to a newly appointed broker beginning on the date of a change in the Broker of Record. In certain instances, commissions are vested with a broker who originally placed the insurance or investment contract. This vesting period can be as short as the remainder of the policy period, to as long as the balance of the life of the insurance contract. If you are compensating a new broker via commissions, it is important to understand how the commissions are affected by a change in Broker of Record.
How do I change my Benefits Advisor to John J Boyd?
Changing your Benefit Advisor to John J Boyd is easy. Once you have decided to make the change, we will walk you through the process. There are five steps that are required when changing you benefits advisor.

  •  Step 1: Review any contract between your company and your existing benefits advisor to identify any terms that address the termination of the agreement. Usually, benefit brokers are retained via a simple Broker of Record letter, and termination provisions are not addressed.
  • Step 2: Notify your existing benefits advisor(s) of your decision with respect to their services. While this is not mandatory, it is the professional thing to do.
  • Step 3: Execute a Broker of Record letter for your new benefits advisor. In the letter, address the effective date of the change and identify the actions your new benefits advisor is authorized to take on your behalf. Your dedicated John J Boyd account manager will provide you this template.
  • Step 4: Your new benefits advisor should take responsibility for filing the Broker of Record letter with your insurance carriers and service providers. This often requires that you provide the advisor with a comprehensive list of the contracts you have in force.
  • Step 5: Your new benefits advisor should be able to obtain copies of contracts and other required data from your plan providers. In certain situations, it may be quicker for you to provide this information.
When is the best time to change to a different benefits advisor?
The best time to change your benefits advisor is at least six months before your next renewal date. Six months is recommended to allow ample time for your new benefits advisor to build their files, learn about your needs, address urgent plan or provider issues, and lead you through an organized assessment of insurance, benefit and communication options. Although six months is optimal, we have worked with many new clients with condensed timelines. Please contact us at 586-314-3400 to discuss your specific needs.
Can we keep the same benefit plan provider if we change our consultant or broker?
Yes, you may keep the same benefit plan provider if you change your consultant or broker. Your current insurance and service providers do not have to change just because you change your benefits advisor. If you are retaining a new broker, you should confirm they either are, or will be, appointed with your existing insurers.