Benefits of an Annual Exam | California Benefit Advisors

Have you ever heard the proverb "Knowledge is power?" It means that knowledge is more powerful than just physical strength and with knowledge people can produce powerful results. This applies to you and your staff's annual medical physical as well! The #1 goal of the annual exam is to GAIN KNOWLEDGE. Annual exams offer you and your doctor a baseline for your health as well as being key to detecting early signs of diseases and conditions.


of your annual exam is


According to Malcolm Thaler, MD, "A good general exam should include a comprehensive medical history, family history, lifestyle review, problem-focused physical exam, appropriate screening and diagnostic tests and vaccinations, with time for discussion, assessment and education. And a good health care provider will always focus first and foremost on your health goals."

Early detection can cut costs that result from chronic diseases. By encouraging your employees to schedule AND attend their annual physical, you will see that their productivity will not suffer because of an undiagnosed condition. Early detection reduces no-shows or call-outs; it reduces costs of training a temporary worker brought in to substitute for the employee while out on sick leave; early detection can also cut costs that result from chronic diseases. Employers spend on average $18,000 yearly per employee for costs related to illness and loss of productivity.

So how can you combat these rising costs? Your workplace can sponsor Wellness Programs such as a Nutrition Fair where your employees learn how to make healthy meals for their family, healthy snacks, and how to make wise food choices when going out to eat with co-workers.  Find an exercise program that can be employee led such as a running or walking club, group fitness programs that only require a TV and DVD player, or an employee run cross-fit style fitness program.

"By providing employee wellness programs that include event-specific physicals, many nationwide employers have decreased their employee health care burden by $1 - $3 for every $1 spent.  Other analyses show that wellness programs, including annual physical exams, have reduced employers' health costs by an average of 26.1%."

Here are some tips on fun and easy ways to promote overall health and wellness in your workplace:

1.    Stock the snack cabinets with healthy, pre-portioned snacks.

2.    Offer standing desks to allow workers options to get moving while working.

3.    Find a 5K in your community and put together a company team.

4.    Sponsor different "challenges" like "8 glasses of water a day" or "A mile a day" and the winner of these challenges receives a prize at the end of the month.

Through these easy changes, you will see your workforce gain confidence and better health while losing weight and bad habits! Win-Win!


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Disability Income Protection is an Employee Benefits Rising Star | California Employee Benefits

According to recent studies disability income is a rising star in the employee benefits market. This is due to a variety of factors. Most poignantly insurance company attempts to court and educate employee benefit advisers about the product, historically low national unemployment and financial impact of the recent tax reforms.

In discussions with successful financial and employee benefits professionals across the country, one of the common traits observed is their ability to adapt their business in the midst of market change.  To accomplish this, professionals must not only pay attention to industry trends, but also anticipate how to shift an organizational process to maximize positive outcomes.  Of equal importance is optimizing the client experience.  Executed successfully, this type of innovation will result in phenomenal business rewards.

Is this disability income protection trend an opportunity wave you should ride?

When reviewed more closely, Disability Income Protection placements within the context of employee benefits programs is a triple-win scenario for today’s economic environment.

The employer wins because it enhances the ability to attract, retain and recruit employees.

The employee wins as they are provided easy and efficient access to more adequately protect their most valuable asset, the ability to earn income.

The advisor wins because these new product placements drive new revenue and deepen the engagement with the customer. 

If your clients believe in providing traditional group long term disability coverage to their employees, they will likely engage in a discussion pertaining to enhanced disability income protection for executives and key contributors.

In an April 2018 article featured in Think Advisor titled, “Maybe Employers Are Ready to Be Aware of Disability Insurance”, Allison Bell cites comments on two major disability insurance companies’ recent earnings calls that securities analysts see increased employer interest in adding to disability benefits. This is thought to be attributed to the current state of the U.S. economy where near full employment levels have convinced employers that they have to do more to attract and retain good workers.

How can you position this opportunity?

  1. Focus On Incentive-Based Compensation - Most group long term disability insurance programs insure only base salary. However, most executives, sales professionals and other key contributors within an organization are compensated beyond base salary alone. Bonus, ownership distributions, stock bonus plans, and other fringe benefits add up to a significant portion of income uninsured by the group disability insurance program. When disability occurs without any other form of planning beyond a group program, these valuable employees are left in a devastating financial state, drastically disrupting their lifestyles.
  2. C-Suite Engagement. Although disability income programs are often implemented by an HR Team, they may not always have influence to make company decisions or recommendations for benefit programs. These programs are most successful when the executive team is engaged in the initial discussions for development. Focus on your clients where you have a strong relationship with the C-Suite to gauge their interest. After all, they are the most likely to benefit from this type of disability income protection program.

A Life Happens recent study called “What Do You Know About Disability Insurance?” concluded 7 in 10 employed Americans would have trouble in a month or less if they couldn’t earn a paycheck. This statistic emphasizes the importance of disability income protection insurance and why advisers need to be talking to clients about their options.


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Opioids in America | California Benefit Advisors

Lately, there’s been a big focus on America’s opioid addiction in the news. Whether it’s news on the abuse of the drug or it’s information sharing on how the drug works, Americans are talking about this subject regularly. We want to help educate you on this hot topic.

Check out this short video on Opioids to learn more!

Disability Insurance

“Your most valued asset isn’t your house, car, or retirement account. It’s the ability to make a living.”

No one foresees needing disability benefits.  But, should a problem arise, the educated and informed employee can plan for the future by purchasing disability insurance to help cover expenses when needed.

When you ask people what is the number one reason disability insurance is needed, most will answer that it is for workplace related injuries. However, the leading causes of long-term absences are back injuries, cancer, and heart disease and most of them are NOT work related.   In addition, the average duration of absences due to disability is 34 months.  So how do you prepare for an unplanned absence from work as a result of an injury or illness? Disability insurance is a great option.

Disability insurance is categorized into two main types.

·      Short Term Disability covers 40-60% of the employee’s base salary and can last for a few weeks to a few months to a year. There is typically a short waiting period before benefits begin after the report of disability.  This plan is generally sponsored by the employer.

·      Long Term Disability covers 50-70% of the employee’s base salary and the benefits end when the disability ends or after a pre-set length of time depending on the policy. The wait period for benefits is longer—typically 90 days from onset of disability.  This plan kicks in after the short-term coverage is exhausted. The individual purchases this plan to prevent a loss of coverage after short-term disability benefits are exhausted.

While the benefits of these disability plans are not a total replacement of salary, they are designed for the employee to maintain their current standard of living while recovering from the injury or illness. This also allows the individual to pay regular expenses during this time.

There are many ways to enroll in a disability insurance plan. Often times your employer will offer long-term and short-term coverage as part of a benefits package. Supplemental coverage can also be purchased.  Talk with your company’s HR department for more information on how to enroll in these plans.  Individuals who are interested in purchasing supplemental coverage can also contact outside insurance brokers or even check with any professional organizations to which they belong (such as the American Medical Association for medical professionals) as many times they offer insurance coverage to members.

As you begin planning for your future, make sure you research the types of coverage available and different avenues through which to purchase this coverage. For more information on disability and the workplace, check out:

·      Americans with Disabilities Act

·      The National Organization on Disability

·      Council for Disability Awareness

·      Social Security Administration

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The Future of the Office

By Bill Olson, VP Marketing & Communications, United Benefit Advisors

Earlier this spring, the quarterly Randstad Workmonitor survey revealed that while 82% of United States workers say the option to work remotely does help them maintain a healthy work-life balance, 62% of these same workers prefer to work in the office anyway. Perhaps most surprisingly, this preference is higher among millennial and Gen Z workers, despite the common perception that these groups prefer digital interactions over real-time ones.

What might be the reasoning behind these preferences? Some employees say their employers don’t support the technology needed to work remotely effectively. Other employees say they prefer face-to-face interaction for directness and efficiency, especially in offices that utilize open work plans and rotating seats. These options are widely understood to support dynamic, productive office cultures.

On the flip side, many employees can and do choose to work remotely, and feel that it increases their productivity, creativity, and job satisfaction. As a result, many employers are growing to embrace these preferences, and find that doing so has dramatically widened their talent pool. Remote work options allow employers not only to partner with the growing professional freelance workforce around the world, but to provide new opportunities for engagement and retention with local employees who benefit from open office flexibility.

While the option to work remotely doesn’t always increase employee productivity and satisfaction, when it does the payoff is substantial. One way to fine-tune remote connection is through increasingly effective learning and development programs, or L&D. In a recent article, HR Technologist investigated new and advanced solution-driven programs for increased connection and productivity. Techniques include microlearning, interactive training formats, and innovative delivery.

Read more:
“Given the choice, most workers prefer working at the office. But they still want a choice."
“The importance of real-time visibility in HR"


Can You Handle the Truth?

By Bill Olson, VP Marketing & Communications, United Benefit Advisors

Direct feedback culture, according to “Mastering the Art of Negative Feedback,” from Society for Human Resource Management means simultaneously challenging someone while also showing you care. Many employees skew toward caring over candor, and that can lead to dissatisfaction.

The feedback employees want can be very different from the feedback delivered. Direct, real time feedback is highly valued, and valuable, but HR professionals rank it lower compared to other managerial traits and are ill-equipped to deliver it.

Beyond offering a more traditional evaluation performance, the best feedback provides a developmental framework to improve performance.

When critique or hard conversations are needed, creating a script and keeping the conversation focused on specific behaviors rather than personality traits can be helpful for HR professionals and other managers.

Learning to be open to feedback is an essential tool as well. Modeling how to give—and receive—direct feedback is one of the best ways an HR practitioner can foster best practices work.

Read “Mastering the Art of Negative Feedback” here.

IRS Updates for Fringe Benefits

By Danielle Capilla, Senior VP of Compliance and Operations, United Benefit Advisors

Recently the Internal Revenue Service (IRS) issued its 2018 Publication 15-B, which informs employers about employment tax treatment of fringe benefits.  Updates include:

  • the suspension of qualified bicycle commuting reimbursements from an employee's income for any tax year after December 31, 2017 and before January 1, 2026;
  • the suspension of the exclusion for qualified moving expense reimbursements from an employee's income for tax years after December 1, 2017 and before January 1, 2026 (with exceptions for active duty U.S. Armed Forces members who move because of a permanent change of station);
  • limits on employers' deductions for certain fringe benefits including meals and transportation commuting; and
  • the definition of items that aren't tangible personal property for purposes of employee achievement awards.

Premiums to Rise 15%, says CBO

By Tami Luhby, CNN

Obamacare rates are going up next year.

The premium for the benchmark Obamacare silver plan is projected to jump an average of 15% next year, according to a Congressional Budget Office report released Wednesday.

The increase is being driven in large part because people will no longer be penalized for not having insurance, as of 2019. Congress eliminated the penalty associated with Obamacare's individual mandate as part of its tax reform package last year.

This change alone will cause premiums to be 10% higher because fewer healthy people will buy coverage, leaving insurers with a sicker and costlier group of policyholders, the CBO projected.

Going forward, the agency projects premiums will increase an average of 10% a year between 2019 and 2023 and then 5% annually between 2024 and 2028. Most of those who buy coverage on the Obamacare exchanges are shielded from these rate hikes because they receive federal subsidies.

Insurers in a handful of states, including Maryland and Virginia, have released their preliminary rate requests for 2019. Many are asking for double-digit premium increases.

The elimination of the penalty, as well as the jump in premiums, will also cause the number of uninsured to rise by 3 million next year, to a total of 32 million, CBO said. The uninsured rate of non-elderly Americans will rise to 13%.

By 2027, 35 million people will lack coverage, 5 million more than the agency projected in September. Some 8 million will have coverage through the Obamacare exchanges, 3 million fewer than last year's estimate.

IRS Changes HSA Limit for 2018--again

By Danielle Capilla, Senior VP of Compliance and Operations at United Benefit Advisors

The Internal Revenue Service (IRS) recently released Revenue Procedure 2018-27 to modify the 2018 health savings account (HSA) family contribution limit back to $6,900. This is the second, and likely final, change in limit during 2018.


In May 2017, the IRS released Revenue Procedure 2017-37 that set the 2018 HSA family contribution limit at $6,900.

However, in March 2018, the IRS released Revenue Procedure 2018-10 that adjusted the annual inflation factor for some tax-related formulas from the Consumer Price Index (CPI) to a new factor called a “chained CPI.” As a result, the 2018 HSA family contribution limit was lowered to $6,850 from $6,900, retroactively effective to January 1, 2018.

Stakeholders informed the IRS that the lower HSA contribution limit would impose many unanticipated administrative and financial burdens. In response, and in the best interest of sound and efficient tax administration, the IRS will allow taxpayers to treat the originally published $6,900 limit as the 2018 HSA family contribution limit.

What if an individual received a distribution based on the earlier HSA limit?

Individuals who received a distribution from an HSA of an excess contribution (with earnings) based on the earlier $6,850 limit may repay the distribution and treat it as “the result of a mistake in fact due to reasonable cause.” Further, an individual’s repayment by April 15, 2019, will not be included in the individual’s gross income or subject to the 20 percent excess contributions excise tax. However, the IRS notes that a trustee or custodian is not required to allow individuals to repay mistaken distributions.

Individuals who received a distribution from an HSA of an excess contribution (with earnings) based on the earlier $6,850 limit and who choose not to repay the distribution may treat the distribution as an excess contribution returned before the individual’s tax return due date. This means that the excess contribution will not be included in the individual’s gross income or subject to the 20 percent excess contributions excise tax, as long as the distribution was received by the individual’s 2018 tax return filing date (including any extensions).

In the example directly above, if the HSA distributions are attributable to employer contributions and if the employer doesn’t include any portion of the contributions in the employee’s wages because the employer treats $6,900 as the limit, then the distribution is includible in the employee’s gross income and subject to the 20 percent excess contributions excise tax, unless the employee uses the distribution to pay for qualified medical expenses.

U.S. Department of Labor Updates CHIP Notice

By Bill Olson, VP, Marketing & Communications at United Benefit Advisors

In March, the U.S. Department of Labor (DOL) updated its model Premium Assistance Under Medicaid and the Children's Health Insurance Program notice, otherwise known as the CHIP notice. (This update is standard process, and usually happens biannually.)

What is the CHIP notice? It provides information to employees applying for premium assistance, including how to contact their state Medicaid or CHIP office. Here is the most updated version. 


Eat to Live Well: Health Benefits of the Mediterranean Diet

By Bill Olson, VP, Marketing & Communications at United Benefit Advisors

Promoting workforce wellness never tasted so good. For heart-healthy living, it turns out a great dietary option for many dates back centuries.

Based on the traditional cuisine of communities along the coasts of Italy and Greece, the Mediterranean diet is gaining increasing popularity among nutrition experts in this hemisphere.

In the ‘50s, researchers noticed the poor villagers along the Mediterranean coasts tended to live longer than the wealthiest New Yorkers. Further study revealed that, in addition to their vigorous lifestyle, a big contributor to their longevity was their cuisine of basic ingredients, rich in local produce, fish harvested daily from the bountiful ocean waters and a splash or two of red wine from neighboring vineyards.

According to the Mayo Clinic, research involving more than 1.5 million healthy adults following a Mediterranean diet showed a strong association with reduced risk of heart disease, far and away this country’s leading killer. It’s much lower in fat and complex carbohydrates than typical North American fare. As a result, this diet promotes lower levels of “bad” LDL cholesterol, which can build up on artery walls and eventually cause total blockage.

The Mediterranean diet is also associated with reduced risk of a range of other afflictions, including cancer. Women who eat a Mediterranean diet supplemented with extra-virgin olive oil and mixed nuts may reduce their risk of breast cancer. It also fights cognitive diseases such as Parkinson's and Alzheimer’s. Some studies have shown that the diet even enhances one’s memory and ability to focus.

Key components:

  • Plant-based foods — fruits and vegetables, whole grains, nuts and legumes
  • Replaces butter and saturated fats with olive and canola oils
  • Uses herbs and spices instead of salt and artificial flavorings
  • Fish and poultry predominate over red meats
  • Red wine in moderation

For more information:
Mayo Clinic: Mediterranean Diet: A Heart-Healthy Eating Plan
HealthLine: Mediterranean Diet 101

Notifying Participants of a Plan Change

By Danielle Capilla, Senior VP of Compliance and Operations, United Benefit Advisors

Curious about when you should notify a participant about a change to their health care plan? 

The answer is that it depends! 

Notification must happen within one of three time frames: 60 days prior to the change, no later than 60 days after the change, or within 210 days after the end of the plan year.

For modifications to the summary plan description (SPD) that constitute a material reduction in covered services or benefits, notice is required within 60 days prior to or after the adoption of the material reduction in group health plan services or benefits. (For example, a decrease in employer contribution is a material reduction in covered services or benefits. So is a material modification in any plan terms affecting the content of the most recent summary of benefits and coverage (SBC).) While the rule here is flexible, the definite best practice is to give advance notice. For collective practical purposes, employees should be told prior to the first increased withholding.

However, if the change is part of open enrollment, and communicated during open enrollment, this is considered acceptable notice regardless of whether the SBC, SPD, or both are changing. Essentially, open enrollment is a safe harbor for all 60-day prior/60-day post notice requirements.

Finally, changes that do not affect the SBC and are not a material reduction in benefits must be communicated and summarized within 210 days after the end of the plan year.


Higher Satisfaction Through Higher Education

By Bill Olson, VP Marketing & Communications at United Benefit Advisors

When evaluating employee benefits, essentials such as health and dental plans, vacation time and 401(k) contributions quickly come to mind. Another benefit employers should consider involves subsidizing learning as well as ambitions. Grants and reimbursements toward advanced degrees and continuing education can be a smart investment for both employers and employees.

Educational benefits are strongly linked to worker satisfaction. A survey by the Society for Human Resource Management revealed that nearly 80 percent of responding workers who rated their education benefits highly also rated their employers highly. While only 30 percent of those rating their higher education benefits as fair or poor conversely rated their employer highly.

These benefits are popular with businesses as well. In a survey by the International Foundation of Employee Benefit Plans, nearly five of six responding employers offer some form of educational benefit. Their top reasons are to retain current employees, maintain or raise employee satisfaction, keep skill levels current, attract new talent and boost innovation and productivity. Tax credits offer additional advantages. Qualifying programs offer employers tax credits up to $5,250 per employee, per year.

At the same time, companies should offer these benefits with care as they do pose potential pitfalls. Higher education assistance can be costly, even when not covering full costs. Workers taking advantage can become overwhelmed with the demands of after-hour studies, affecting job performance. Also, employers would be wise to ensure their employees don’t promptly leave and take their new skills elsewhere.

When well-planned, educational benefits will likely prove a good investment. Seventy-five percent of respondents to SHRM’s survey consider their educational-assistance programs successful. To boost your employee morale, skill levels and job-satisfaction scores, consider the benefit that may deliver them all, and more.

Find out more:
IFEBP: Why Educational Assistance Programs Work
EBRI: Fundamentals of Employee Benefit Programs

The Rap on Wraps

By Nicole Quinn-Gato of ThinkHR

There’s a good chance you use a wrap document to help satisfy your Employee Retirement Income Security Act (ERISA) summary plan description (SPD) obligations. Yet if you look for a definition of wrap document in ERISA statutes or regulations, you will not find one. The wrap is not a defined term or required document; it is simply a format. So why do you need a wrap document? Here are three (of many) reasons why a wrap document is a solid choice.

Reason 1

Your insurance carrier materials are not enough in most cases.

A common misconception is that carrier materials or benefit description booklets meet all ERISA SPD requirements. They rarely do; in fact, they usually fall short.

For example, the SPD must define or explain eligibility for benefits. A carrier’s materials may indicate that a benefit is available for all full-time employees, but not define what constitutes “full-time.” An SPD that does not completely communicate eligibility is deficient, may confuse employees, and could result in costly litigation for your company.

Therefore, to address gaps like these, it’s advisable to use a wrap document to “wrap around’ the existing carrier documents and fill in any required ERISA provisions the carrier documents are missing.

Reason 2

You are an applicable large employer (ALE) and use the lookback measurement method.

ALEs who use the lookback measurement method to determine eligibility for medical benefits must meet a complex set of rules for determining whether and how certain employees are eligible for healthcare coverage under the Affordable Care Act (ACA). The rules are complex and daunting for employers. Even more daunting, however, is explaining these eligibility rules to employees.

Carriers are not required to communicate this information, and very likely will not. Therefore, it is up to you to ensure the information is communicated. While your specific lookback measurement method is not required to be explained in an SPD – and some employers choose to put it in an employment policy or handbook — the SPD is a logical place to include this information because it also communicates your other benefits eligibility requirements.

Reason 3

A wrap reduces your reporting obligations.

You may use a wrap document to combine multiple insurance policies into a single document, which results in one ERISA plan for all combined benefits. This simplifies and reduces reporting requirements for employers who are subject to Form 5500 filing requirements.

Most employers with 100 or more health and welfare benefit plan participants as of the first day of the plan year, as well as certain employers with fewer than 100 participants, are required to file a Form 5500 annually. (Participants include covered employees and former employees who elect COBRA, but spouses and dependents are not counted.) Some plans, such as governmental plans or certain church plans, are exempt from filing a Form 5500.

The wrap document may be a time saver if you have multiple health and welfare benefit plans subject to Form 5500 filing requirements. For example, if you have a vision, dental, and medical plan that each meet the “100 or more participant” threshold, then you would be required to file a Form 5500 for each plan. However, if the plans are all wrapped together into a single document, then they are considered one ERISA plan and you would only have to file one Form 5500.

Do it Right

While there are many other reasons an employer should consider investing in a wrap document, not all wrap documents are made equal. Work with a reputable vendor and/or competent counsel to ensure your wrap document meets all compliance requirements.

Handling Harassing Behavior in the Workplace

Courtesy of ThinkHR

Question: An employee confided to our HR department about an incident that made her uncomfortable, where her supervisor made a comment about her skirt. How should we handle this?

Answer: A company has an affirmative duty to conduct a thorough investigation every time it is made aware that harassment may be taking place in the organization. Inappropriate sexual comments, discrimination based upon gender and/or sexual orientation, and inappropriate behavior all fall under the definition of illegal sexual harassment. The Equal Employment Opportunity Commission (EEOC) and state agencies take harassment complaints seriously, and failing to conduct an investigation could leave a company subject to liability for a sexual harassment discrimination claim as well as owing damages if the company does not act immediately.

Although not every inappropriate comment will be viewed as harassment, every report of such should be treated with respect and followed up in accordance with company policy. Typically, the nature of the complaint will determine how you should begin the investigation. In the case of your employee, consider taking the following steps:

  • Listen to your employee’s concern with consideration and advise the employee that the company takes reports of wrongdoing seriously and will investigate thoroughly, and that confidentiality will be observed to the extent practical to protect everyone’s privacy.
  • Ask if the employee had responded to her supervisor and let the supervisor know that the comments made her uncomfortable.
  • Ask if there were any other witnesses to the comments and if this was a one-time remark or if comments on the employee’s appearance have occurred previously with the employee or others.
  • Determine what the employee wants or expects will be done as a result of bringing this concern to you (either simply wanting the remark(s) to stop or more aggressive action).
  • Tell the employee that you will be investigating this issue and addressing it with the involved party to make him or her aware that the comments caused discomfort so that the company can ensure that this no longer occurs.
  • Let the employee know that retaliation for making a report of misconduct or harassment is forbidden by the company and that she should immediately advise you of any perceived retaliation or of further incidents of misconduct or harassment.
  • Be sure that during the initial interview with the employee, you obtain:
    • The description of each incident, including date, time, place, and nature of conduct.
    • A description of her responses to the individual with each incident.
    • The names of any witnesses to the alleged incident.

Although this type of situation can be difficult when the accused party holds a supervisory position in the company, the law still holds the company accountable for following up on complaints of inappropriate behavior, conducting a prompt and impartial investigation, and taking appropriate action if the claim is substantiated.

If the investigation does not result in a violation of company policy or harassment, the matter should still be addressed with the supervisor and others in management to ensure future issues do not arise. 

Lawsuit Challenging ACA

Courtesy of Modern Healthcare

Disappointed that the GOP-controlled Congress failed to repeal and replace the Affordable Care Act, red-state lawmakers continue to look for ways to take down the law. But many are finding that they must balance that goal with the need to shore up insurance exchanges and address persistent gaps in coverage.

Twenty state attorneys general filed a lawsuit last week challenging the ACA, adding another twist to a political drama that shows no sign of abating and will play a significant role in this year's midterm elections.

"It would be a decision to destabilize the markets," said George Horvath, health law scholar at the University of California at Berkeley law school. "It is not just the individual market, it is Medicaid expansion and insurance regulations."

Texas Attorney General Ken Paxton led the group of state attorneys general in the complaint filed in a north Texas federal court, where it will be heard by U.S. District Judge Reed O'Connor, who was appointed by President George W. Bush.

The attorneys general are using the recently enacted Tax Cuts and Jobs Act as the basis for challenging the ACA. Since the tax law zeroed-out the individual mandate penalty, they argue the mandate can no longer qualify as a tax. The U.S. Supreme Court upheld the ACA in 2012 as a tax penalty

Wendy Netter Epstein, professor of law and director of the Jaharis Health Law Institute at the DePaul University College of Law, said this argument may very well stand. However, she added, the case likely falls apart on a second point that the attorneys general are making, namely linking the entire ACA to the mandate. 

Timothy Jost, a health law scholar and ACA expert, said the fact the attorneys general want to repeal the entire law regardless of the impact shows a lack of understanding. "Does that mean the donut hole comes back for Medicare?" Jost said. "Do 12 million to 14 million people lose Medicaid coverage? Do 10 million people lose exchange coverage?"

Those broader implications aren't lost on providers. "Our concern is more practical—what happens when hundreds of thousands of marketplace enrollees would lose coverage?" said Dave Dillon, spokesman for the Missouri Hospital Association, whose state joined the plaintiffs in the suit. 

Missouri's hospitals said their uncompensated-care costs continue to rise despite the recent ACA coverage gains, Dillon said. 

And this is where the politics get sticky. On one hand, plaintiff states are suing to end the ACA. On the other hand, governors are publicly espousing the virtues of health coverage for their citizens.

GOP Gov. Rick Scott of Florida, whose state is also among the plaintiffs, wants an immediate "repeal and replace," his spokesperson said in response to a Modern Healthcare query about whether Scott supported the lawsuit or would prefer lesser changes to some ACA provisions, such as insurance regulations. 

However, Scott's "primary focus remains replacing Obamacare with a new healthcare policy that allows Florida families to have access to quality healthcare at an affordable price," said McKinley Lewis, Scott's deputy communications director.

Legal experts see the Trump administration's role as the wild card in the case. Epstein said it's unlikely that the administration will defend the law, even though HHS Secretary Alex Azar is named as a defendant, along with David Kautter, acting commissioner of the Internal Revenue Service. That could throw Democratic attorneys general in the mix as proxy defendants, especially given the precedence of their intervention in the lawsuit over ending cost-sharing reduction payments. 

Horvath noted that the financial implications for stakeholders could motivate private parties such as insurance companies to intervene. Epstein found that unlikely since many of the provisions that carriers would want to defend are gone. Yet the various scenarios and potential fallout of this case, even if the states lose, point to ongoing turmoil over the ACA. 

"We've all known all along the ACA wasn't the end of the process," Horvath said. "In so many ways it's the beginning of the process, and I don't see this radically ending any time soon."

By Susannah Luthi

Susannah Luthi covers health policy and politics in Congress for Modern Healthcare. Most recently, Luthi covered health reform and the Affordable Care Act exchanges for Inside Health Policy. She returned to journalism from a stint abroad exporting vanilla in Polynesia. She has a bachelor’s degree in Classics and journalism from Hillsdale College in Michigan and a master’s in professional writing from the University of Southern California.

DOL Adopts New Test for FLSA Applicability to Interns

Courtesy of hr360

The U.S. Department of Labor (DOL) has adopted the "primary beneficiary" test for determining whether interns of for-profit employers count as employees under the federal Fair Labor Standards Act (FLSA), according to an agency statement. The statement noted that four federal appellate courts have adopted the standard, which is different from the six-part test the DOL previously used to make this determination.

New Test for Unpaid Interns and Students
The FLSA requires "for-profit" employers to pay employees for their work, and includes minimum wage and overtime requirements. Interns and students, however, may not be "employees" under the FLSA—in which case the FLSA does not require compensation for their work. Courts have previously used the primary beneficiary test to determine whether an intern or student is, in fact, an employee under the FLSA. This test allows courts to examine the "economic reality" of the intern-employer relationship to determine which party is the "primary beneficiary of the relationship." On January 5, 2018, the DOL announced its adoption of this test for purposes of its enforcement of the FLSA.

The primary beneficiary test includes the following seven factors: 

  1. The extent to which the intern and the employer clearly understand that there is no expectation of compensation. Any promise of compensation, express or implied, suggests that the intern is an employee—and vice versa.
  2. The extent to which the internship provides training that would be similar to that which would be given in an educational environment, including the clinical and other hands-on training provided by educational institutions.
  3. The extent to which the internship is tied to the intern's formal education program by integrated coursework or the receipt of academic credit.
  4. The extent to which the internship accommodates the intern's academic commitments by corresponding to the academic calendar.
  5. The extent to which the internship's duration is limited to the period in which the internship provides the intern with beneficial learning.
  6. The extent to which the intern's work complements, rather than displaces, the work of paid employees while providing significant educational benefits to the intern.
  7. The extent to which the intern and the employer understand that the internship is conducted without entitlement to a paid job at the conclusion of the internship.

The primary beneficiary test is flexible, and no single factor is determinative. Instead, whether an intern or student is an employee under the FLSA depends on the unique circumstances of each case. If analysis of these circumstances reveals that an intern or student is actually an employee, then he or she is entitled to both minimum wage and overtime pay under the FLSA. If the analysis confirms the intern or student is not an employee, he or she is not entitled to minimum wage or overtime pay under the FLSA.  

To read the DOL statement in its entirety, click here. To read a fact sheet on the issue from the DOL, click here.

For more information on the compensation of interns, please visit our section on Internships and Pay.

Rethinking How We Define and Track Workforce Diversity

Courtesy of Dana Theus, SmartBrief

Diversity is now reported to be the No. 1 recruiting trend for 2018 for businesses. However, despite decades of trying to improve workforce diversity in the workplace, the commercial sector has yet to make much progress. Even though there are few signs of statistical progress, the workforce diversity discussion seems to be moving on and evolving anyway.

Specifically, it is exploring the question of why diversity matters at all, and what kind of diversity matters most when it comes to building an effective workforce.

Evolving the workforce diversity discussion

It’s worth stepping back to look at what “diversity” means in the 21st century. “I’ve always defined diversity as ‘any differentiation between one person and another,’” says Michael Hyter, managing partner of the Korn Ferry Washington, D.C., office. “We’re all a stew of experiences and talents. To leverage those different talents, companies must be inclusive of these differences.”

Hyter makes the point that these differences don’t always break out into a few neat categories. For example, “[g]enerational differences cut across all other categories. The way a 25-year-old black woman views the world and the way a 45-year-old black woman views the world are completely different.” Along with his leadership responsibilities in the D.C. office, Hyter manages Korn Ferry’s diversity and inclusion practice.

In part to recognize these kinds of differences, diversity discussions founded decades ago in social justice objectives have evolved beyond simple categories. Diversity explorations have also expanded as research has found strong correlations between improved business results and diversity on teams, in leadership and in the workplace at large.

Such research underlies a strong business case for continuing to seek ways of building diverse workforces, not just because hiring women and minorities is “the right thing to do,” but also because it’s “good for business.” As the reasons for building a diverse workforce expand, so does the idea of what kind of diversity produces such improved results. Together, these trends generate new and better ways of thinking about diversity overall.

Traditional definitions of diversity stem from the civil rights movement’s benefits of a workforce with diverse external characteristics like race, ethnicity and binary gender expression. Newer ways of examining the workforce diversity question, however, still reference these demographic categorizations but are more motivated by the demands for employee populations to be innovative in order to keep up with the speed of disruption. This has given birth to new definitions of diversity itself, including experiential, age and cognitive (or thought)diversity.

New voices (especially millennials) in the diversity discussion have noticed that groupthink and undynamic work cultures can persist even in externally diverse groups, potentially dampening an organization's’ potential to respond creatively and quickly to external market changes. Thus the question has been raised, regardless of what the people around the table look like on the outside, is a team’s potential to respond innovatively more affected by what each participant carries on the inside? And does the company culture invite these inner strengths forward or shut them down (i.e., force people to “cover” aspects of themselves)?

Should we expand our definition of workforce diversity?

In researching the wisdom of including aspects of personality, experiential and cognitive endowments in our workforce planning dialogs, I’m truly divided on whether and how to start adding these new dimensions of diversity into the discussion.

The upside of an expanded definition of diversity seems obvious if it can lead us to find sound business reasons to be even more inclusive of people who have been shut out of the system due to unconscious bias. It gives us reasons to encourage budding trends towards greater inclusion for people regardless of military work history, marital status, genetic proclivities, personality type, gender expression and dis/ability status1.

As the research showing business benefits indicates, evolving our concept of diversity provides individual leaders an expanded lens through which to examine their own leadership style and potential for unconscious bias. It provides sound business reasons to invite everyone on the team (regardless of their race, gender or extrovertism) to participate fully in conversation and problem-solving. For organizations, it provides a new challenge for us to grow our leaders to become more aware of their biases and give them tools to challenge themselves to grow beyond them.

As Hyter advises, “Effective leadership has always been about managing each individual based on what they’re interested in and what they bring. Even when your employees look the same, good leaders don’t manage them as though they are the same.”

On the other hand, and this is my major hesitation about expanding definitions of diversity, I am concerned that such an evolution has the potential to water down, if not shut down, efforts to pursue the social justice that is inherently buoyed within genuinely multicultural and gender-equal groups. I worry that by shifting the conversation to what we carry inside that makes us diverse, we may decide we no longer need to measure and strive for a workforce that looks diverse on the outside.

In redefining what a diverse workplace looks like, I worry that it will give the leaders who’ve made the least progress, and who are unwilling to be introspective, an excuse not to take unconscious bias and workplace discrimination head-on.

In short, I am afraid that headlines like “demographic diversity isn’t the whole picture” could be read by some as a reason to step away from efforts toward workplaces that aspire to simple civil rights for their employees.

Hyter agrees. “Representation of women and people of color in the C-suite is embarrassingly low. No executive gets a pass on race and gender diversity in favor of abstract ideas of diversity such as cognitive or personality differences. We can’t let core definitions of diversity become collateral roadkill in our pursuit of truly diverse business cultures.”

It’s far too early to allow such collateral damage to be done to traditional metrics of diversity. For one thing, our access to data even in these basic race/gender categories is seriously lagging. In addition, says Hyter, “Even these basic categorical differences can be enlightening when you look at more granular data than number of people interviewed or employed.”

According to Hyter, when you look for race, gender and veteran statistics in analyses such as employee engagement, customer complaints, interview-to-hire ratio and employee turnover you can see some very dramatic trends that show you where you can improve. “As I told one CEO, ‘If you’d kept every black and brown person you’d ever hired over the last few years, we wouldn’t be having this conversation,’” Hyter shared wryly.

As we reframe the workplace diversity we seek, we must be vigilant and ensure that the discussion is an expansion, instead of an excuse to leapfrog, the harder cultural problems that obscure unconscious bias, racism, sexism and discrimination against all kinds of people in our workplaces today.

1Employment is up in all these sectors, though it’s unclear whether the generally positive employment environment is simply lifting all boats.

By Dana Theus, president and CEO of InPower Coaching. An executive coach and thought leader on change, she cracks the code on personal power in the workplace. In addition to her private practice, Theus helps organizations bring emotionally intelligent coaching services to middle management through facilitation, consulting and group coaching. Follow her on Twitter @DanaTheus and on LinkedIn.

DOL’s New Disability Plan

Courtesy of Seyfarth Shaw

The Department of Labor’s new regulations governing disability claims and appeals published on December 19, 2016 will go into effect on April 1, 2018, as announced by the DOL on January 5, 2018.

The stated purpose of the new regulations is to strengthen the current disability claims rules under ERISA primarily by adopting certain procedural protections and safeguards applicable to group health plans under the Affordable Care Act. The new regulations were originally effective as of January 18, 2017, but were intended to apply only to disability claims filed on or after January 1, 2018. After a short delay by the DOL, the regulations now will apply to claims filed on or after April 1, 2018. The DOL announced that comments received during the delay did not establish that their “final rule imposes unnecessary regulatory burdens or significantly impairs workers’ access to disability insurance benefits.” This clearly establishes the April 1, 2018 effective date and there is unlikely to be another extension.

What Do the Final Rules Require?

The final regulations make several substantive changes to the existing regulations applicable to disability claims and appeals:

  • To ensure the independence and impartiality of claims and appeals decision-makers, any decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to any individual (such as a claims adjudicator or medical expert) must not be made based on the likelihood that the individual will support a denial of benefits.
  • Adverse benefit determinations must:
    • Include a discussion of the decision, with the basis for disagreeing with the views or decisions of any treating health care professionals, vocational experts, or other payers of benefit who granted the claimant’s similar claims (including disability determinations by the SSA);
    • Include the plan’s specific internal rules, guidelines, protocols, standards, or other similar criteria relied upon in making the adverse determination or, alternatively, a statement that such plan rules, guidelines, protocols, standards or other similar criteria do not exist;
    • Include a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim (previously, this statement was only required for adverse determinations at the appeals stage);
    • Be provided in a culturally and linguistically appropriate manner; and
    • Describe (in addition to the claimant’s right to bring an action under ERISA §502(a)) any applicable contractual limitation period that applies to the claimant’s right to bring such an action, including the calendar date on which the contractual limitations period expires.
  • A plan’s disability claims procedures must:
    • Allow a claimant to review the claim file and present evidence and testimony as part of the claims and appeals process;
    • Provide that the plan administrator shall provide the claimant, free of charge, with any new or additional evidence considered, relied upon, or generated by the plan (or at the direction of the plan) in connection with the claim. Such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to give the claimant a reasonable opportunity to respond before that date; and
    • Provide that before a plan administrator can issue an adverse benefit determination on review based on a new or additional rationale, the plan administrator must provide the claimant, free of charge, with the rationale. Such rationale must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to give the claimant a reasonable opportunity to respond before that date.
  • Failure to establish or follow claims procedures consistent with the new (and existing) requirements will result in the claimant being deemed to have exhausted the administrative remedies under the Plan and entitled to pursue any available remedies under ERISA §502(a). When this occurs, the claim or appeal will be deemed to have been denied on review without the plan fiduciary exercising any discretion, unless the violation is de minimisDe minimis errors are those that:
    • Do not cause, or are not likely to cause, prejudice or harm to the claimant;
    • Were violations for good cause or due to matters beyond the control of the plan;
    • Occurred in the context of an ongoing, good faith exchange of information between the plan and claimant; or
    • Are not part of a pattern or practice of violations by the plan.

In the event of any error, the claimant may request a written explanation from the plan, including a specific description of the plan’s bases, if any, for asserting that the error is de minimis and should not result in deemed exhausting of administrative remedies. The Plan must provide this written explanation, if requested, within 10 days. The claimant may then decide whether or not to pursue remedies under ERISA §502(a). If a court rejects a claimant’s request for immediate review on the basis that the Plan’s error was de minimis, the claim shall be considered as re-filed on appeal upon the Plan’s receipt of the court’s decision, and the plan must provide the claimant with notice of the resubmission within a reasonable period of time.

  • The term “adverse benefit determination” will include any rescission of disability coverage with respect to a participant or beneficiary (whether or not, in connection with the rescission, there is an adverse effect on any particular benefit at that time.) For this purpose, rescission means a cancellation or discontinuance of coverage that has retroactive effect, except to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.

Impact on Employee Benefit Plans

These regulations will change the manner in which disability claims and appeals are processed with respect to both disability welfare plans and retirement plans.


If your long-term disability plan is fully insured, the insurer will be incorporating the new regulatory requirements into their processes. For those sponsors with self-funded long-term disability plans, the third party administrator will similarly have to modify its internal processes to incorporate the new regulations. (Note that short term disability plans are not generally subject to these regulations as they are typically an exempt payroll practice, not subject to ERISA.)


Retirement plans may also be impacted by the final regulations if, upon a disability, the plan either pays a distribution inservice or vests accrued benefits. In these cases, a determination must be made as to whether the participant has incurred a disability within the meaning of the plan. Where the plan relies on a definition of disability as a determination made by the Social Security Administration or the plan sponsor’s long-term disability insurer, then the retirement plan administrator does not have a concern. However, if the determination of disability resides with the retirement plan administrator, the retirement plan must be amended to reflect the standards in the new regulations and administration must also be adjusted accordingly.

Action Items:

  • Employers who handle disability claims and appeals internally will need to re-evaluate their existing procedures and tailor them to the new requirements. Even employers who utilize third-party administrators for disability claims and appeals will need to work with their third-party administrators to ensure that any necessary changes are incorporated into existing procedures.
  • All plan sponsors will need to review their plan documents and update as appropriate to reflect these new regulations.
  • Plan administrators will need to ensure that summary plan descriptions reflect the new regulatory requirements.

By Diane V. DygertBrian W. Barrett

8 Questions Employees Are Still Asking About ACA 1095s

Courtesy of International Foundation of Employee Benefit Plans

For the third year in a row, the Affordable Care Act (ACA) 1095 forms are ready and going out to employees. This form still confuses many employees. You’re going to get questions.

With the individual mandate disappearing this year as a result of the Tax Cuts and Jobs Act, employees may be more confused than ever. If you’re the one in charge of providing the answers, remember the best offense is a great defense. You’ll want to answer the most common questions before they’re even asked.

We’ve put together a list of some basic things employees will want to know about the 1095s they receive, along with sample answers. Tweak these Q&As as needed for your organization. Once you’ve assembled them, push them out to employees using every channel you can (mail, e-mail, employee meetings, company website, social media, posters). Tell employees how to get more detailed information if they need it.

Employee questions about the 1095s

  1. What is this form I’m receiving?
    A 1095 form is a little bit like a W-2 form. Your employer or insurer sends one copy to the Internal Revenue Service (IRS) and one copy to you. A W-2 form reports your annual earnings. A 1095 form reports your health care coverage throughout the year. 
  2. Who is sending it to me, when, and how?
    Your employer or health insurance company should provide one to you either by mail or in person. They may send the form to you electronically if you gave them permission to do so. You should receive it by March 2, 2018. 
  3. Why are you sending it to me?
    The 1095 forms will show that you and your family members either did or did not have health coverage during each month of the past year. Because of the Affordable Care Act, in 2017 every person had to obtain health insurance or pay a penalty to the IRS. 
  4. I thought the Affordable Care Act requirement to have health insurance was repealed. Do I still need this form?
    The Affordable Care Act was in effect for the entire year of 2017. IRS tax forms will still require you to report whether or not you had health coverage in 2017. 
  5. What am I supposed to do with this form?
    Keep it for your tax records. You don’t actually need this form in order to file your taxes, but when you do file, you’ll have to tell the IRS whether or not you had health insurance for each month of 2017. The Form 1095-B or 1095-C shows if you had health insurance through your employer. Since you don’t actually need this form to file your taxes, you don’t have to wait to receive it if you already know what months you did or didn’t have health insurance in 2017. When you do get the form, keep it with your other 2017 tax information in case you should need it in the future to help prove you had health insurance. 
  6. What if I get more than one 1095 form?
    Someone who had health insurance through more than one employer during the year may receive a 1095-B or 1095-C from each employer. Some employees may receive a Form 1095-A and/or 1095-B reporting specific health coverage details. Just keep these—You do not need to send them in with your 2016 taxes. 
  7. What if I did not get a Form 1095-B or a 1095-C?
    If you believe you should have received one but did not, contact the Benefits Department by phone or e-mail at this number or address. 
  8. I have more questions—Who do I contact?
    Please contact Chris Freitas  at You can also go to our website and find more detailed questions and answers. An IRS website called Questions and Answers about Health Care Information Forms for Individuals (Forms 1095-A, 1095-B, and 1095-C) covers most of what you need to know.

By Lois Gleason, Manager, Reference/Research Services at the International Foundation