Weather-regina Garrison - Melmark.fall2011

8/2/2019 Weather-regina Garrison - Melmark.fall2011

1/22

Benefits Analysis:

Melmark

Part 1: Benefits Matrix

Part 2: Inventory of Benefits

910929880911197368

RMI 3501

Dr. DrennanFall 2011


2/22

Exposure Analysis for MelmarkLoss Exposure Provided Coverage/ Benefits Provided

Loss of Income: Medical Expenses

Overall Medical Expenses Yes Independence Blue Cross: HDHP, PPO, HealthReimbursement Account, Flexible Spending

AccountDental Yes Guardian Dental PPO, Flexible Spending Account

Vision Yes Vision Benefits of America, Flexible SpendingAccount

Prescription Yes All Health plans*, Flexible spending account

Long Term Care No NONE

Retiree Health Care Yes Medicare, COBRA

Loss of Income: Death

Non-Accidental &Non- Occupational

Yes Basic Life Insurance, Supplemental Life Insurance,403(b) plan, OASDI

Accidental Yes Basic Life Insurance, Supplemental Life Insurance,403(b) plan, OASDI, AD&D

Occupational Yes Basic Life Insurance, Supplemental Life Insurance,

403(b) plan, OASDI, Workers Compensation

Loss of Income: Unemployment

Unemployment Yes State Funded Program

Loss of Income: Disability

Non-Occupational; Short-Term Yes STD, OASDI, Paid Time Off

Non-Occupational; Long-Term Yes LTD, 403(b) plan, OASDI, AD&D, Paid Time Off

Occupational Disability; Short-Term Yes 403(b) plan, OASDI ,AD&D, Paid Time Off,Workers Compensation

Occupational Disability; Long-Term Yes 403(b) plan, OASDI, AD&D, Paid Time Off,Workers Compensation

Loss of Income: Retirement

RetirementTax Sheltered Annuity Plan Yes TIAA-CREF Financial, 403(b) planRetirementPension Plan Yes Employer Funded Defined Contribution Plan(401a)

Other Exposures

Educational Assistance Yes Tuition Reimbursement

Work/Life Exposures Yes Employee Assistance Program, BereavementLeave, Discounted Meals, Global Fit DiscountProgram, Healthy Lifestyle Program

Dependent Care Yes Dependent Care FSA

Property-Liability No NONE

Legal Expenses No NONE

*= Members enrolled in any of the medical plans are automatically enrolled in the prescription drug benefit program


3/22

Summary of Benefits

Benefit Plan A.M. Best Rating Financing Funding Eligibility

Independence BlueCross

High DeductiblePPO*

n/a Contributory Self-funded Full-time activeemployees, Part-

time employeesand dependents

Independence BlueCrossPersonal ChoicePPO*

n/a Contributory Self-funded Full-time activeemployees, Part-time employeesand dependents

Vision Benefits ofAmerica

n/a FullyContributory

Fully Insured Full-time activeemployees, Part-time employeesand dependents

Ameriflex (HRA) n/a Contributory Self-funded Full-time activeemployees, Part-time employees

and dependentsGuardian Dental n/a Contributory Fully Insured Full-time activeemployees, Part-time employeesand dependents

Sun Life FinancialLife

n/a Non-Contributory Fully Insured Full-time activeemployees, Part-time employees

Sun Life FinancialAD&D

n/a Non-Contributory Fully Insured Full-time activeemployees, Part-time employees

Sun Life FinancialSupplemental Life


Fully Insured Full-time activeemployees, Part-time employees

Sun Life FinancialSupplementalDependent Life


Fully Insured Full-time activeemployees, Part-time employeesand dependents

Short-TermDisability

n/a Non-contributory Self-funded Full-time and Part-time Employees

Long-TermDisability

n/a Non-contributory Self-funded Full-time and Part-time Employees

RetirementTIAA-CREFFinancial Services

A++ (Superior)** Contributory Fully Insured Full-time and Part-time Employees

* =Includes prescription drugs** = Source of A.M. Best Rating iswww.ambest.com
http://www.ambest.com/http://www.ambest.com/http://www.ambest.com/http://www.ambest.com/


4/22

Introduction

Melmark is an all-inclusive agency that provides residential, educational,

therapeutic, and recreational services for children and adults with developmental

disabilities. They strive to provide the highest quality services to students and adults with

developmental disabilities. They also have the same ideals and goals when it comes to

providing quality coverage to their employees.

A full time employee at Melmark is someone who works 40 or more hours per

week and has completed 90 days of service and a part time employee is someone who

works 30 hours a week. Both are eligible for benefits . An active Melmark employee is

eligible to enroll in Medical, Dental and Vision coverage after 90 days of service. After

30 days of service, on the first of the month, an employee can be enrolled in Life/AD&D,

Voluntary Employee and Dependent Life insurance. Family members that are eligible for

coverage under Medical, Vision and Dental coverage are, dependent children and legal

spouse, same or different sex domestic partner. Melmark's open enrollment period goes

from April 18, 2011 through April 25, 2011. Once an employee selects his/her coverage

during this open enrollment period, the coverage chosen will become effective June 1,

2011. Employees who do not enroll in coverage by April 25th, forfeit their right to elect

coverage or receive any wavier payments.

Medical Expense

Melmarks medical plans are administered through Independence Blue Cross.

There are two types that employees can choose from; a High Deductible Health Plan


5/22

(HDHP) and Health Reimbursement Account (HRA) or the Personal Choice

Preferred Provider Organization (PPO).

High Deductible Health Plan (HDHP) and Health Reimbursement Account

(HRA)

A Health Reimbursement Account is employer created account, which

reimburses a portion of covered out of pocket health care expenses. Melmark established

an HRA to reimburse expenses applied to an employees deductible. Melmark will fund

an HRA for employees enrolled in the High Deductible Plan. The funding amount for

each employee is based on coverage level and length of service at the beginning of June

1, 2011. Funding levels are as follows; $3,000 deductible for single Coverage:

Employees Less than 2 years of service as of 6/1/11 are responsible for the first $750 of

the deductible. Melmark reimburses (or self-funds) up to $2,250. Employees with 2 or

more years of service as of 6/1/11 are responsible for the first $250 of the deductible.

Melmark reimburses (or self-funds) up to $2,750. For family coverage there is a $6,000

deductible: Employees with less than 2 years of service as of 6/1/11 pay the first $2,000.

Melmark reimburses or self-funds up to $4,000. Employees with 2 or more years of

service as of 6/1/11 pay the first $1,500. Melmark reimburses or self-funds up to $4,500.

Personal Choice Preferred Provider Organization ("PPO")

Melmark offers a PPO that works very differently from the High Deductible plan

in that most plan elements are covered 100% and there are minimal out of pocket

deductibles when the employee or a family member goes to the doctor. Employees who

have the PPO simply present their insurance card upon receiving care or treatment. The


6/22

employee pays the deductible and the provider bills Independence Blue Cross the

balance.

Prescription

Prescription drug coverage is included under both medical options but vary in

price depending on which coverage and employee chooses. Under the HDHP and HRA

option, there is a $10 fee after deductible for generic drugs, $35 after deductible for

preferred and $60 after deductible for non- preferred. Also it is 2.5X copayment after the

deductible for a 90day supply. Under the PPO generic drugs are $10, preferred are $20,

non-preferred are $35. Both plans have a 2.5X copayment for a 90-day supply.

Flexible Spending Account (FSA)

Melmark partners with AmeriFlex to provide employees the opportunity to pay

for out-of-pocket Medical, Dental, Vision and Dependent Care expenses with pre-taxed

dollars through the Flexible Spending Accounts. Employees can save 25% of each dollar

spent on these expenses. All employees get an AmeriFlex Convenience Card when

enrolled. Medical FSA funds are available on day one of the plan year and maximum

amount for the 2011 plan year is $2,000. The Dependent Care FSA maximum amount for

2011 is $5,000.

Dental

Melmarks Dental Plan is administered through Guardian Dental. There is a $50 single,

$150 family annual deductible for this plan. Preventive care is 100% in network, 60% out

of network and Basic Care is 100% in network, 50% out of network. There is a $2,000


7/22

lifetime orthodontics maximum for dependents under 19 years old in network, $1000 out

of network.

Loss of Income

Life Insurance

Basic Term Life, Accidental and Dismemberment (AD&D) Insurance, Supplemental

Life, Supplemental Dependent Life Insurance

Melmark provides Basic Term Life Insurance to help cover loss of income due to death

on a non-contributory basis. AD&D plans are also provided on a non-contributory basis to

arrange income protection as a result of accidental death and dismemberment. In addition to the

Basic Term Life Insurance, Melmark allows employees to purchase Supplemental Life and

Supplemental Dependent Life Insurance. All of the benefits mentioned above are fully insured

and are provided through Sun Life Financial Services. Melmark provides coverage for active full-

time employees that work 40 or hours per week and part-time active employees that work 30 or

more hours per week.

Basic Term Life Insurance and AD&D benefits are equal to one times the annual salary to a

maximum of $200,000 with a minimum benefit of $30,000.

Supplemental Life Insurance and Supplemental Dependent Life can be purchased in

increments of $10,000 with a maximum coverage of $600,000 or 5 times an employees salary,

whichever is lesser. There is no open enrollment period for voluntary life. An eligible employee

can apply at anytime; however an employee who does not apply during their new hire enrollment

period will be required to provide evidence of insurability and coverage is not guaranteed.

Disability Income Benefit

Melmark provides active full-time benefit eligible employees who have completed one year of

service with short-term and long-term disability income benefits and pays the full cost of this


8/22

coverage. In the event an employee becomes disabled from a non-occupational injury or sickness,

disability income benefits are provided as a source of income. Employees are not eligible to

receive short-term Disability benefits if they are receiving Workers Compensation benefits.

Employees have the option to choose the long-term disability benefit on a pre-tax or a post-tax

basis. Employees will be payroll taxed with imputedincome, a small tax on the premium paid

by Melmark. If an employee should receive long- term disability benefits, their monthly benefits

will be subject to federal income tax.

Short-Term Disability (STD) Insurance/ Paid Time Off (PTO)

To address the issue of potential loss of income due to non-occupational disability,

Melmark provides all full-time and part-time active employees with short-term disability.

Melmark Provides 60% of weekly earnings for qualifying disabilities after a 14-day waiting

period for up to 26 weeks for absence due to non-work related injury or illness. The benefit is

paid for by Melmark and is provided on a non-contributory basis and is self-funded through Sun

Life Financial. For short-term disability the benefit begins on the 15th day after accident or

illness. The benefits are payable weekly with a 60% of income replaced. The maximum monthly

benefit is $1000.

Time off benefits are provided to employees who are regularly scheduled to work 30 or

more hours per week. Time off benefits are pro-rated based on scheduled hours for employees

working 30 or more, but less than 40 hours per week.

Long-Term Disability (LTD) Insurance

Melmark also provides Long-Term Disability Insurance in the potential loss of income due to

non-occupational disability. Melmark Provides 60% of earnings after 26-week waiting period for


9/22

qualifying disabilities not related to work. This benefit is paid for by Melmark and is provided on

a non-contributory basis and is self-funded through Sun Life Finances.

For long-term disability the benefit has a 180-day elimination period. The benefits are payable

monthly with a 60% of income replaced. The maximum monthly benefit is $5000.

Short-term Disability

Retirement

Melmark provides eligible employees with an Employer Funded Defined Contribution

Plan (401a). Employees will become a Participant in the Plan as of the date, which coincides with

the date on which you complete one (1) Year of Service. No employee contributions are required,

nor are they permitted, under the Plan, except for rollover contributions and direct transfers from

other qualified plans. Melmark will bear the entire cost of funding the Plan and will pay any

administrative expenses not covered by the Trust. The Plan is designed to accomplish its

objectives without requiring you to invest your personal savings.

All contributions made under the Plan are managed and controlled by the Trustees.

Within the Plan document, Melmark has established trust provisions (Trust) to hold the assets

of the Plan. Neither the Trustees, Committee or Melmark in any way guarantees the Trust from

loss, nor do they guarantee the payment of any benefits, which may become due to any person

from the Trust. Nothing in the Plan will be deemed to give any employee, former employee or

beneficiary an interest in any specific part of the Trust or any other interest except the right to

receive benefits out of the Trust in accordance with the provisions of the Plan and Trust.

The Committee shall determine the percentage to be contributed for each Class of

employees. Melmarks contribution is a percentage of each employees compensation. All

employees in a Class will receive the same percentage of compensation as a contribution for a

plan year.


10/22

SUPPLEMENTAL TAX SHELTERED RETIREMENT ANNUITY (403 b)

Employees may elect to set up a tax-sheltered account to supplement their retirement

savings. Melmark will match each dollar that the employee contributes with an additional $.40

(forty cents) to a maximum of 5% of the employees annual earnings. Supplemental retirement

savings are deducted from an employees pay through payroll deductions.


11/22

Benefits Analysis:Melmark

Part 3: Benefits Analysis

910929880911197368

RMI 3501Dr. Drennan

Fall 2011


12/22

Part 3- Decision Making and Benefits Plan Design

Analysis

Introduction

Melmark is one of the premier organizations in the country offering services to

those with special needs. Melmark is located in Berwyn, Pennsylvania. Currently they

employ 681 employees. A lot of consideration and time goes into planning the benefits

for their employees. They take in to account cost first and for most as well as the number

of employees, their marital status and their age too. They take the time to have the

benefits explained clearly and more than once throughout the year to those who dont

understand them.

While working on this project, Colette Brown was gracious enough to take time

out of her busy schedule and help us collect information to analyze Melmarks present

benefit plan. Colette is the Vice President for Human Resources at Melmark with over 22

years of human resource experience. Some of Colettes responsibilities include

recruitment and retention, employee recognition, training and development and benefits

and compensation. Colette works closely with Melmarks broker John Cerami from

Radnor Benefits. The benefits committee includes Colette, Chief Financial Officer Delyn

M. Byerly, Chief Operating Officer George P. Linke and Human Resource Generalist

Jessica.


13/22


14/22

Demographics

When designing their benefits package, Melmark took into consideration the

demographics of their employees. Employees marital and family status, age and

occupation were all factors that were involved in the designing process. The average age

of the employees at Melmark is 36. Out of the 681 employees, 80% of the employees

enroll in employee only coverage, or employee child coverage. Not many of the

employees get coverage for their spouses. Of the 20% of employees that opt-out it was

assumed that they get coverage elsewhere mainly from their spouses.

Funding and Financing Considerations

Melmark uses an approach where they use a combination of self-funding and fully

insuring their benefits plan. Colette stated that the plan design was in the best interest of

the employees. Cost was one of those factors that went into consideration while designing

the plan. Melmark decided that on a non-contributory basis to self-fund their STD and

LTD as a recruit and retention tool. The organization has a philosophy of wanting to

provide good quality benefits when employees are having hardships such as disabilities.

Melmark also felt that it was cost effective to fully insure their Life, AD&D and their

supplemental Life insurance.

Problems, Issues, Concerns, and Considerations in the Design

of Health Benefits

Independence Blue Cross vs. United Healthcare

Prior to 2010 Melmark had a traditional PPO with United Healthcare. In June of

2010 their one year contract was up and it was time for their renewal process. United

Healthcare presented Melmark with a 52% increased premium. The organization knew


15/22

that they could not absorb the premium increase so they had to look elsewhere for

coverage. Two options that were presented to Melmark by the broker were to find a new

carrier or look at other plan designs. It was at that point where it was decided that

Melmark was going to move away from a PPO as a core benefit to a High Deductible

Health Plan with Independence Blue Cross.

High Deductible Health Plan and HRA

In order help contain costs and still give their employees adequate coverage,

Melmark decided to implement HDHP with and HRA through Independence Blue Cross.

With the high deductible in place, Melmark subsidized the deductible for their

employees. In a way they are self- insuring the coverage for their employees through the

health reimbursement account. The goal was to get the employees the most coverage they

could, at the least cost possible. In 2011 Melmark had a 13% increase from Independence

Blue Cross. Since the prior years new plan design took a while for employees to get

accustomed to, Melmark decided that they did not want to traumatize their employees

with a high deductible. Melmark absorbed the full cost of the premium increase.

Funding Considerations

Cost was a big part of the funding considerations. The other part was that they

wanted their employees to have access to not just any health care but to affordable health

care. Colette stated that it was more cost effective to go with what Independence Blue

Cross was offering than to self-insure the health benefits. She also looked into the

options of stop-loss insurance or gap insurance and it was more expensive. Assuming

more risk with self-insuring was something Melmark was not prepared to do. The cost

coupled with the risk made it an easy decision to go with Independence Blue Cross. If it


16/22

were significantly less expensive than Independence Blue Cross, Colette said she would

have considered it. Colette also expressed that employees had more confidence with a

big name like Blue Cross.

Problems, Issues, Concerns, and Considerations in the Design

of Other Non-Retirement Benefits

Flexible Benefits

Melmark offers its employee several Flexible Spending Accounts. Partnered with

Ameriflex the FSAs are used to pay for out-of-pocket Medical, Dental, Vision, and

Dependent Care expenses. Colette understood that employees needs are different and

their tolerance for risk is also different. The difference in employees financial situations

also played a factor in providing FSAs. The main goal of the FSA is to allow employees

flexibility in choice. Melmark wanted to provide employees choice to opt-in or opt-out

on an la catre basis.

Communication

With the switch to Independence Blue Cross from United Healthcare Melmark

had to spend more time educating employees on the new plan design. Several different

communication techniques were used to communicate the new plan design. Benefit

Enrollment Guides were mailed to employees homes with letters attached to them

informing them about open enrollment. The letters stated that the open enrollment period

was approaching and that they needed to make their plan elections or they would go

without benefits. The benefits committee also sent out the enrollment guides


17/22

electronically to employees. Flyers were placed around campus and employee work

areas reminding employees of open enrollment. There were also meetings held in the

auditorium where the benefits committee would give power point presentations and walk

through the plan design. One-on-one sessions were also available to assist with

enrollment.

During the open enrollment period, Melmark had a conference room set up with

15 laptops. Human Resource representatives and Radnor Benefits representatives were on

staff to help employees through the enrolment process. After enrolment, if any

employees had any questions, they were able to talk to the Human Resource Generalist

Jessica and she would help facilitate getting in touch with the carrier. Or the employee

could call Radnor Benefits directly.

Wellness Programs

Melmark being in a school setting, it is important that the teachers and other

specialist in the school are in good physical health. The wellness programs that are in

place are communicated during open enrollment and the time of hire. Flyers are also

used to communicate wellness programs throughout the year. The school has a small gym

in the building with several pieces of equipment free of charge. There is a shower that

employees can use if needed after a workout. The school offers healthy eating options in

the cafeteria. The program also offers employees discount memberships to participating

gyms outside of the organization.


18/22

Regulatory Compliance

HIPAA

With the rules and regulations of HIPAA being so strict, Colette takes extra

precautions when dealing with employees privacy. If an employee asks the Broker to

speak to a carrier or get information on their behalf, the Broker has the employee fill out

a privacy form. Whenever the Broker sends any information to Colette, it is sent in an

encrypted file where a password is needed. Any personal information sent through email

the transmissions of the files are secure.

Administratively Colette said that the changing of the carriers with Melmark is

usually a smooth process. The biggest issues were the drafting change of the plan design

and the strain it might cause to the employees. The Melmark employees were already

familiar with the PPO and just paying the co-pay every time they went to the doctor. Now

with the HDHP and HRA they are taking a much more active role in submitting claims to

the carriers. Employees now have to submit documentation to AmeriFlex, who handles

all the administrative issues for the HRA. The employees now have to submit estimates

of benefits and copies of claims to AmeriFlex in order for them to be reimbursed. For

many employees at Melmark this is more work on their part, many are only high school

prepared at best and not many of them know how to use these computer websites, and the

benefit paper work is not something that many of the employees enjoy either.

COBRA

Even though Melmarks COBRA compliance is out-sourced to Ameriflex, Colette

is fully aware and implements the requirements of COBRA. Colette has up to 30 days to

notify Ameriflex when an employee is no longer working for Melmark. Ameriflex then


19/22

has up to 14 days to sends out the notification of COBRA rights and coordinates the

COBRA process. COBRAs continuation coverage allows qualified beneficiaries with

qualifying events to continue their health care coverage for 18 months for a single

employee and 36 months for employees with dependents. With a great communication

system in place, the language and the coverage is easily understandable to employees.

ERISA

During the process of the benefit plan design Colette had to be aware of all

regulatory and compliance issues concerning ERISA. Melmark has Pension Attorneys

and a Chief Financial Officer to make sure that they are in compliance with all of the

ERISA requirements. Melmark does provide employees with a defined contribution

pension plan. With respect to fiduciary responsibility the plan has to be carried out in a

way that the sole purpose of the plan is in the best interest of the plan beneficiaries.

Colette and her benefits committee have established a great system that communicates

their benefits plan to employees. Enrollment Guides are mailed to employees homes. If

an employees needs assistance with understanding the plan designs, they are also

encouraged to go to the Human Resource Generalists office.

Health Reform

With regards to the health reform, Colette had a few concerns. One of the new

regulations that require employers to provide preventive care at 100% with no cost

sharing. With this new rule in place, it was estimated that it will increase the benefits cost

by 1%. Another regulation in place is that if an employer offers dependent care, the

employer must offer dependent care up to the age of 26. This regulation did not have any


20/22

effect on Melmarks benefits cost. Colette had expressed was that in 2013 it will be

mandatory that the value of employer sponsored health coverage be reported on

employees W-2 forms. The payroll staff and the finance department are now preparing

for the changes that will take place. Another concern Colette expressed was that

Melmark has a different health plan for executives. Executives or highly compensated

individuals have Independence Blue Cross Personal Choice which is a high end benefit

plan. The issue is that before health reform only self-insured plans were subject to non-

discrimination rules. The potential legislation to extend non-discrimination rules to fully-

insured medical plans keeps getting pushed back. Melmark will deal with the issue when

it is officially in effect.

Recommendations for the Future

During the process of analyzing Melmarks benefits plan, there was one area

where we noticed that may need to be addressed in the future. Melmark offers employees

an HDHP with an HRA where Melmark pays full cost of the deductible. When the one

year plan renewal was up, Independence Blue Cross set a 13% increased premium.

Melmark choose to stay with IBC and pay the high deductible in good faith because of

the prior year new plan design and the confusion it caused. Melmark is doing this for

2011. If the premiums stay the same or increase, Melmark has to make the decision to

continue to pay the deductible or let the employees pay their own deductible. This may

cause some concerns and issues with employees who now cannot afford to pay the high

deductibles. We recommend that Melmark in future years first pay the deductible on a

contributory basis where the employees can gradually get used to paying a deductible if

there would be any type of increase in premium.


21/22

Conclusion

Melmarks strong relationship between its human resource department and broker is

something that ensures their success in any benefits plan they implement. Although they

will have a renewal process soon and will have to choose once again which package or

plan they want to stick with or change, Melmarks benefits team has the knowledge and

experience to design a comprehensive benefit package that will bring them continued

success with their employees in the future.

Thomas, Robin. COBRA Health Insurance Plan Update. PayScale. 17 Feb. 2011. 6 Dec. 2011Brown, Colette. Personal Interview. 5 Dec. 2011.


22/22

December 9, 2011Colette BrownVice President for Human ResourcesMelmark2600 Wayland RoadBerwyn, PA 19312-2307

Dear Colette,

We are very thankful that you were able to take time out of your busy schedule to help us with ourgroup project. With your patience and your understanding, we were able to complete our assignment.We would also like to thank you for allowing us to interview you and ask the very importantquestions.

At the end of the interview you asked if you got an A for your knowledge of Employee Benefits andyes you earned an A. Talking with you allowed us to have a better understanding of the process thatgoes into designing a benefits plan for a company. We also left the interview with an understanding ofhow to link the topics we learn in class and how to apply them to real life situations. Once again wethank you for all of your support.

Sincerely

Weather-Regina GarrisonJamie Walters

Documents

Weather-regina Garrison - Melmark.fall2011