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Group Helath Plans - Self Insured

Bookmark and Share Under the Affordable Care Act, almost all Americans must buy health insurance, and many choose to participate in employer-sponsored coverage. Self-insured group health insurance is one option some companies choose.

What is Self-Insured Group Health Insurance?

With self-insured group health insurance, a company takes on the financial responsibility and risk of providing its employees with health insurance benefits. The company collects premiums from employees and their dependents. The company then pays medical claims directly instead of paying an insurance carrier.

The company may contract with a third party administrator (TPA) to perform certain insurance services such as setting up the plan, reviewing services and arranging network contracts.

Self-insured group health insurance is more common in larger companies than in smaller companies because of the financial risk. However, companies with as few as 25 people do choose this type of health insurance.

Which Laws Apply to Self-Insured Group Health Plans?

Self-insured group health plans must comply with a variety of federal laws. They include:

  • Age Discrimination in Employment Act
  • Americans with Disabilities Act (ADA)
  • Civil Rights Act
  • Consolidated Omnibus Budget Reconciliation Act (COBRA)
  • Employee Retirement Income Security Act (ERISA)
  • Health Insurance Portability and Accountability Act (HIPAA)
  • Pregnancy Discrimination Act
  • Various budget reconciliation acts
What are the Advantages of Self-Insured Group Health Insurance?

Companies choose self-insured options for several reasons, including these.
  1. Easy to customize.

    Rather than purchase a pre-packaged insurance plan, a company may customize its plan based on the needs of covered employees.

  2. Choose providers.

    Because a company decides to be self-insured, it may also choose its providers and provider network that suits its employees' needs.

  3. Maintain financial control of plan reserves.

    A typical self-insured group health insurance plan requires a company to earmark premiums for future claims. The employer may invest those premiums to maximize the interest earned.

  4. Improve cash flow.

    With a self-insured group health insurance plan, the company is relieved from pre-paying for coverage. This perk improves cash flow instead of tying up funds.

  5. Reduce conflict and confusion caused by state health regulations.

    Federal laws regulate self-insured group health insurance plans. That means the company is free from conflicting and confusing state regulations and benefit mandates.

  6. Relieve tax burden.

    Some states charge a tax on health insurance premiums. A self-insured company does not pay these taxes.
A self-insured group health insurance plan may be a smart decision for a company. Understand its risks and benefits as you ensure you comply with the Affordable Care Act and obtain valuable health insurance.

Don't Get Trapped!

Bookmark and Share The administrative exemption creates one of the most difficult distinctions in the wage and hour area. Whether somebody works in an “administrative capacity” has a lot to do with whether they work “in the business” or “on the business.” A telling case was recently decided in the Northern District of West Virginia, Desmond v. PNGI Charles Town Gaming (08-1216).

In this case, racing officials at the Charles Town Gaming racetrack were treated as exempt employees. After extensive analysis, the appellate court overturned the previous court, ruling that the employees were not exempt and overtime was owed.

Remember, an employer bears the burden of proving, by clear and convincing evidence, that an employee’s job falls within the administrative exemption.

These exemptions are “narrowly construed against the employee seeking to assert them.” In viewing the dichotomy, the court made these points to keep in mind:

The indispensability of an employee’s position within the business cannot be the determining factor of whether the position is directly related to the employer’s general business operations.

Regulations generally exclude “run of the mill” jobs with administrative classification. So although secretaries and clerks might be “indispensable,” they are not exempt under the FLSA. In the same way, just because an employee is required under state law (i.e., posting a flagman around highway work), it does not mean that they are indispensable for purposes of exemption analysis.

The employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from being a secretary, working on a manufacturing production line, or selling a product in a retail or service establishment.
According to the DOL, administrative exempt work includes -- but is not limited to -- functional areas such as
  • Tax
  • Finance
  • Accounting
  • Budgeting
  • Auditing
  • Insurance
  • Quality Control
  • Purchasing
  • Procuring
  • Advertising
  • Marketing
  • Research
  • Safety and Health
  • personnel management
  • Human Resources
  • Employee Benefits
  • Labor Relations
  • Public Relations
  • Government Relations
  • Computer Network
  • Internet and Database Administration
  • Legal and Regulatory Compliance
  • Other Similar Activities
Not included would be work consisting of tasks similar to those performed on a manufacturing production line or selling of a product in a retail or service establishment. (See 29 C.F.R. § 541.241) To learn more, please click here.

HSA Accounts

Bookmark and Share Health Savings Accounts (HSAs) allow you to pay for qualified medical expenses that aren't covered by your high-deductible health insurance policy. It can be a wise investment, so learn more about how health savings accounts work and why you should have one.

How to Qualify for an HSA

If you have a high-deductible health insurance policy, you qualify for an HSA. Your eligibility is re-evaluated annually.

How is an HSA Funded?

After you enroll in an HSA, you'll fund your account with post-tax dollars. The money you contribute but don't use is rolled over to the next year. You may take your HSA funds with you if you switch jobs, and you can even invest your HSA money in mutual funds, stocks or bonds when the total reaches a certain amount.

What Does an HSA Cover?

An HSA will cover a variety of medical expenses as long as they are not reimbursed by other means such as a long-term care policy, and you can use your HSA funds for your own medical expenses or those accumulated by your dependents. Qualifying medical expenses include:

  • Acupuncture
  • Addiction treatment
  • Artificial limbs or prosthetics
  • Chiropractors
  • Dental services and dentures
  • Emergency care
  • Fertility enhancements
  • First aid supplies
  • Health insurance premiums from COBRA coverage or if you're receiving unemployment compensation
  • Laser eye surgery
  • Long-term care insurance premiums
  • Medical equipment
  • Medicare Part A or B premiums
  • Mental health treatment
  • Nursing services
  • Prescribed smoking cessation tools or weight loss medicine
  • Prescription medications
  • Surgery
  • Vision care and aids
Remember that HSA will typically not cover several expenses such as:

  • Babysitting or household help
  • Cosmetic surgery that is unrelated to a medical condition
  • Diaper service
  • Electrolysis for hair removal
  • Funeral expenses
  • Hair transplants
  • Health club dues
  • Maternity clothing
  • Medications that are not prescribed
  • Over-the-counter diet drinks or vitamins  
  • Swim lessons
  • Teeth whitening
  • Weight-loss programs that are not prescribed by a doctor
If you use your HSA to pay for a non-qualifying expense, you must pay income tax on the funds you withdraw plus a tax penalty.  

How do you Use Your HSA Funds?

Use the debit card or checks associated with your HSA account to pay for qualifying medical expenses.   You will pay no taxes on your HSA distributions.

How do you Enroll in an HSA?

Talk to your employer, insurance agent or bank about starting an HSA. As soon as the account is funded, you may begin withdrawing from it.

Health Savings Accounts supplement your health insurance policy. They can be a wise investment you should consider.

Department of Labor - Protecting Workers

Bookmark and Share Several recent events prove that the U.S. Department of Labor (DOL) is set to deliver on its previous promises that it will go to great lengths to help workers, at the expense of employers.

As we’ve informed you in previous newsletters, the DOL has received significant funding for investigating employers who misclassify workers as independent contractors or as exempt from the overtime provisions of the Fair Labor Standards Act. A DOL news release issued April 22, 2010, indicated that the DOL has requested $12 million for this initiative in 2011 alone, and that the department is working closely on these initiatives with the Vice President’s Middle Class Task Force. In the news release, Secretary of Labor Hilda Solis vowed to “help middle-class families remain in the middle class.”

Just before this, in March 2010, the DOL announced its intent to stop a longstanding practice of issuing fact-specific opinion letters to employers. For nearly a decade, employers with questions regarding federal wage and hour laws could seek the department’s opinion on whether they were in compliance, which could serve as evidence of an employer’s good faith efforts if they were sued. Now, however, the DOL will only issue opinions that “set forth a general interpretation of the law and regulations, applicable across-the-board to all those affected by the provision at issue.

The DOL contends that this will be a much more efficient and productive use of resources than attempting to provide definitive opinion letters in response to fact-specific requests submitted by individuals and organizations, where a slight difference in the facts could change the outcome.” This position is set forth on the DOL Web site at www.dol.gov/whd/opinion/opinion.htm. Of course, the net effect of this shift away from fact-specific opinion letters is even less guidance for employers than before.

The department made this announcement about the same time that it issued an opinion letter finding mortgage loan officers non-exempt (despite employers’ arguments that they were white-collar administrative employees in accordance with a prior DOL opinion letter issued during the Bush administration, which found such employees exempt).

Also, in May 2010, Secretary Solis signed a Workers Rights Joint Declaration along with Ambassador Sarukhan of Mexico, committing to “inform Mexican workers in the United States about their labor rights through information sharing, outreach, education, training, and exchange of best practices.” This declaration will clearly lead to more complaints, investigations, penalties, and the use of employer resources.

Lesson: Collectively, these actions amply demonstrate that the current DOL is preparing (if it has not already begun) to get tough on employers. Consequently, you should redouble your efforts to classify workers properly and make sure that your pay practices comply fully with the law. Article courtesy of Work law® Network firm Pilchak Cohen & Tice (www.mi-worklaw.com).