Employee Benefits

Employee Benefits are employer sponsored programs delivering various benefits to enhance the quality of life of employees. They can be funded by employer or employee contributions or a combination of both. Most are federally tax qualified though not all are.

  • Group Life and Accidental Death—Provides benefits to the designated beneficiaries of an employee in the event of their death. Additional group life can be offered through a voluntary program on the life of the employee with ancillary coverage availability for spouses and children being an option, if desired. Accident death and dismemberment is an additional benefit with can be added providing an additional payment if death from an accident occurs within a specified number of days from the date of accident.

  • Group Short and Long Term Disability—Provides protection for an employee’s most precious asset – the ability to earn money. Coverage is written for a percentage of salary after a deductible period and pays for a specified period time. Short term disability pays for periods of up to one year while long term disability pays for longer periods of time generally up to the start of retirement social security.

  • Group Medical—Provides for the payment of medical bills from most sources for the insured and their insured dependents. The major exclusions include dental, routine vision claims for glasses or routine exams and workers compensation eligible expenses. Coverage is generally provided through the use of a “network” or listing of providers. These are known as preferred providers who have agreed to a set of charges which are usually less than normal in exchange for having patients “steered” to their practice. Virtually all plans today utilize some form of network and operate in some form of the following plan:

  • Health Maintenance Organizations (HMO’s)—A plan built around a generally smaller group of providers who are dedicated to keeping patients (insured) healthy. Coverage sought outside of the group is generally NOT covered except in a medical emergency. Most charges are cost shared through the use of co-payment by members.

  • Preferred Provider Organizations (PPO’s)—These plan s utilize a larger network of providers both hospital and physician. Deductible are employed with co-insurance employed for larger claims up to an annual maximum. Claim services obtained outside the network are covered but with a larger employee share of the cost.

  • Point of Service Plans (POS)—A hybred of HMO’s and PPO’s, the there is a smaller group of in-network providers but still allows out of network claims. The difference between in network and out of network is generally larger.

  • Health Reimbursement Accounts (HRA’s)—This is usually a “high deductible health plan,” usually a $ 1,000.00 or more which employs an HRA which is employer funded to pay the first $ xx.00 of annual medical claims. The idea is that since most employees sustain claims under $ 500.00 per year that the account will pay for those before the deductible comes into play. Employees spend their own dollars much more carefully than they spend employer dollars causing employees to shop for services and do what they can before spending employer dollars. Plans generally contain preventive benefits and prescription drug card coverage. Balances in the HRA’s not spent at plan year end can be carried over to the following year in accordance with the terms of the employers benefit program. Employees terminating employment with the employer forfeit the unused portions accumulated in their HRA accounts.

  • Health Savings Accounts (HSA’s)—A recent addition to the types of program is similar to HRA’s except that the side account must be vested with the employee and maintain by a qualified fiduciary. The program can have another supplemental pan to pay un-reimbursed expenses and cannot by federal law have a prescription drug card. Everything is subject to the HAS account and then the high deductible and co-insurance to the annual stop loss maximum. The Federal government sets the minimum limits for the plan’s eligible deductible annually.

  • Group Dental and Vision—These plans function much similar to medical plans in that almost all utilize a network of providers or a list which afford higher benefit levels when services are obtained from them. Both plans place emphasize preventive care with major services of crowns or glasses covered on a discounted basis with the paying a sizable portion of the charges. Dental orthodontics is an added feature on some dental plans and generally only applies to children under a specific age.

  • Group Voluntary Programs, Worksite Marketing Programs—These programs are usually offered as supplemental programs sponsored but not paid by employers. They can include group life, disability, accidental death, dread disease diagnosis or dread disease coverage plans. They can include group home/auto or long term care programs. The advantage is that they can contain more lenient underwriting for timely employee enrollment, lower rates and payroll deduction.

Disclaimer: The terms and conditions contained in employee benefits programs differ greatly from plan to plan and must be throughly reviewed before acceptance by the employer and employee alike. Programs often contain sub-limits or terms that limit coverage to annual, lifetime maximums or pre-existing conditions clauses. Finally, these programs are subject to many federal conditions and procedures that must be followed by the carrier and the employer to insure fairness and confidentiality to the employee and their family.

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