Help with Insurance Choices in a Dawn of Change

On Oct 28, 2015

Bankers Cooperative Group (BCG) is an employee benefit adviser and brokerage affiliate of the New Jersey Bankers Association. Since 1982, BCG has provided the New Jersey banking industry and qualifying service providers to the industry one-source shopping for their insurance needs – whether the need is for healthcare benefit plans for employees, property and casualty programs or specialty insurance lines.  Its 80-plus participants include both smaller and larger organizations with more than covered 8,000 employees.

BCG members have access to a greater number of insurance choices. BCG’s negotiating power generates pricing and coverage enhancements – and something more; returns of more than $2 million in patronage dividends have been distributed to shareholders and BCG participants since 1998.

According to Richard Siderko, president and CEO, “The insurance industry is changing rapidly in many critical ways because of factors such as consolidation, which could drive up prices and reduce choices in the future. But the elephant in the room these days is the Affordable Care Act (ACA).

“Many companies don’t have the resources or benefit staff to analyze the ACA’s costs, requirements and regulations. We spend a great deal of our time these days advising our members about the elements of this mandate and the best way to control pricing,” he says.

“We don’t just advise our smaller company clients,” Siderko adds.  “Large banks, with 400 employees or more, also look to us for guidance. We serve as consultants, broker the programs, provide quotes and run employee open enrollment meetings.”

Looking down the road, Siderko points to the ACA’s “Cadillac Tax” on more generous healthcare benefit plans presently enjoyed by some employees. Under this provision, a 40 percent excise tax will be imposed in 2018 on group health plans exceeding $10,200 for single coverage and $27,500 for family coverage.  It doesn’t matter whether you employ 20, 200 or 1,000 people.

While many companies still hope provisions of this tax will be modified due to industry pressure, there is certainly no guarantee that alterations will be made. If modifications aren’t implemented, and companies with generous plans don’t act appropriately, they could face large tax consequences.

Are organizations ready to handle this tax?  The results of a BCG healthcare survey this past spring painted a picture of continued procrastination among clients. Seventy-nine percent of respondents indicated that they will wait until they see if the tax survives. However, a word of cautionary advice is needed here. “It may be easier to start taking baby steps in 2016, slowly adjusting benefit offerings, rather than taking giant steps in 2017 or later if needed,” Siderko advises.

An even more immediate element of the ACA requiring attention effective for 2015 is the new filing requirements for employers. Employers will need to collect and track a significant amount of information about their plan, coverage and demographics about their full-time employees. Informational form filings must be made in 2016 by February 28 (or March 31 if filing electronically).  Failure to provide this information could result in a penalty of $200 per participant.

The IRS will use the information to verify which individuals have healthcare coverage through an employer and are therefore not subject to the individual mandate penalty tax. Preparing this information may require significant software modifications, which will need to be applied in-house or coordinated with an outside vendor such as a payroll provider.

Still another potential source of healthcare angst for companies involves document compliance with ERISA (Employee Retirement Income Security Act of 1974), a federal law that sets minimum standards for most pension and health plans in private industry. Companies are required to review their Summary Plan Descriptions (SPDs) and Plan Document distribution related to this act. The Department of Labor plans to audit US companies of all sizes in the next five years to ensure that they are in compliance with these documents. “This requirement is directed at employers,” Siderko says. BCG recently kicked off a service to help its’ clients comply.

Another value-added benefit BCG offers its clients that has become available in the last year is the HR-360 program; available on the BCG website. A “mini-Human Resources Department” is at a BCG client’s fingertips. HR-360’s interactive tools include a job description builder, salary benchmarking, an employee cost calculator, and more than 500 downloadable forms. “It’s a fantastic resource, and we provide this service free to our clients,” Siderko says.

Healthcare reform, its cost and compliance issues, can often seem a daunting task for banks and those who provide services to banks. BCG can guide organizations during these increasingly difficult challenges.

Siderko sums up the attributes that have made BCG such value to the industry. “BCG offers a purchasing power advantage that is passed to participants; eligibility and claims support; invoicing and COBRA administration; benefits communications to employees and benefits consultation to banks at no cost; and comparisons of options for various types of insurance and patronage dividends.  All of these things set us apart, well beyond the help offered by many independent brokers,” Siderko concludes.

 

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