September 2008 Newsletter

NISI PROVIDES VALUE-ADDED SERVICES

In today’s employee compensation and benefits environment, many employers are decreasing or removing employer-paid benefits because of the rising costs of providing health care benefits.

Employers looking for creative ways to combat rising costs while maintaining employee satisfaction can do so by offering worksite benefit options versus employer-paid plans.

Worksite benefits are attractive to employers because they can supplement benefits that have been reduced because of budgetary constraints. Worksite benefits are also a good way for employers to improve overall employee satisfaction. This type of plan allows you to offer your employees more benefit choices without impacting your company's benefits budget, while still sending the message “We care about you.”

Some of the advantages for you include:

  • Tax savings. Employers can reduce their FICA costs by offering a Section 125 plan. Neither the employee nor the employer has to pay FICA tax on the employees’ contributions run through a Section 125 Plan.
  • No company premium costs. Voluntary benefits are a great way to provide employees with the benefits they want with little or no premium cost to the company.
  • Enhanced benefit program. Employees or prospective employees have access to a greater array of discounted benefits at group rates than they can afford directly, based on their individual needs.
  • Employee retention. Companies with strong employee benefit packages have lower employee turnover and find it easier to attract new employees. This is critical as the employment pool is reduced and baby boomers leave the workforce.
  • Favorable underwriting. Disability coverage and life insurance are difficult to acquire individually if the insured has a less than favorable medical history.
  • Individual counseling. Our trained enrollers/insurance agents meet with each of your employees to assist in the selection of programs that meet your employees’ needs, avoiding wasted spending on unnecessary coverage and continuing to reinforce your message of caring for each employee. Consider NISI an extension of your HR department.

We believe products should be both high quality and affordable. However, the real value of providing worksite benefits goes beyond simply providing products: It’s about providing service. We will work with you every step of the way to make sure your plan works for you and your employees.

NEW PRODUCTS AVAILABLE TO YOUR EMPLOYEES

NISI will be offering the following products soon. Please ask me if these products have been approved for you and your employees in the states where they live.

  • Critical Care Insurance
  • Hospital Indemnity Insurance
  • Whole Life Insurance

FLEX DEBIT CARD CHANGES

Effective January 1, 2009, the flex debit card may only be used at merchants with health care merchant category codes. The IRS made it clear that unless a merchant uses IIAS (Inventory Information Approval System) to substantiate at the point of purchase, the debit card may only be used at merchants with a health care merchant category code (MCC). The MCC code is the code used by MasterCard that defines the type of merchant, such as day care provider, hospital or pharmacy.

This change affects a cardholder’s ability to use the card at supermarkets, Wal-Mart, Costco and Target, to name a few. If the pharmacy at these stores uses a non-pharmacy MCC code, the card may not be used at the pharmacies located within these stores.

If the pharmacy inside a supermarket, Wal-Mart, Costco or Target store uses a pharmacy MCC code, the Benefits Debit Card may be used at the pharmacy only. Examples of stores using the pharmacy MCC code and where the card can be used include Walgreens, Longs Drugs, Drugstore.com, AdvanceRX.com, Eckard Drug, Pharmacy Plus, CVS Pharmacy, Osco Drug and Rite-Aid Stores.

If your local pharmacy does not have a health care merchant code, it may be because that pharmacy sells gifts, cards and candy, among other items, in addition to prescription drugs and over-the-counter medications. If so, you will not be able to use your flexible benefits debit card for medical spending at that specific merchant effective January 1, 2009, according to IRS Notice 2006-69.

HEART ACT AFFECTS FLEXIBLE SPENDING ARRANGMENTS

On June 17, 2008, President Bush signed into law the Heroes Earnings Assistance and Relief Tax (HEART) Act of 2008, which was passed by Congress last May. The HEART Act includes a provision that permits special distributions from health flexible spending arrangements (FSA) to employees who are called to active military service.

The HEART Act permits “qualified reservist distributions” from health FSAs, according to Discovery Benefits web site.

A qualified reservist distribution means a distribution to a participant in a health FSA of all or a portion of the participant's FSA balance if:

  1. The participant is a reservist called to active duty for a period of at least 180 days or is called for an indefinite period; and,
  2. The distribution is made during the period beginning with the call to active duty and ending on the last day of the coverage period of the FSA that includes the date of the call to active duty.

Kilpatrick Stockton, Attorneys at Law, points out in its June 28 Legal Alert a number of important issues still need to be clarified with respect to how qualified reservist distributions will operate. These include:

  • Amount of distribution. It is unclear whether the amount of the distribution should be calculated based on the amount that the reservist is “out-of-pocket” (i.e. the amount he/she has actually contributed), or whether the amount of the distribution should be based on the reservist’s annual election.
  • Timing of distribution. It is unclear whether this means the end of the plan’s regular run-out period for filing claims or the last date expenses can be incurred for the plan year.
  • Taxation. Though it appears from the law that the distributions are subject to income tax because the distribution is not due to qualified medical expenses, it is not entirely clear.
  • COBRA and nondiscrimination testing. It is unclear how the qualified reservist distributions will affect continuing coverage under COBRA or the impact it will have on nondiscrimination testing for cafeteria plans.

LONG-TERM CARE EDUCATION OPPORTUNITY

Rhnda Peterson of NISI is working with the North Dakota Long-Term Care Association to help educate North Dakota communities about long-term care. She has developed a presentation, complete with questions for people to ask and resources to help them in shopping for long-term care insurance.

If employers are interested in finding out more about long-term care and the options of offering it as an employee benefit--with or without employer contributions--and ways to offer long-term care with guaranteed, simplified and full medical underwriting, contact Rhonda at 701-282-1595 or 866-392-4834.

1 IN 5 CONTACTED BY COLLECTORS BECAUSE OF MEDICAL BILLS

In a recent Kaiser Family Foundation survey, one in five adults said in the past five years they have been contacted by a collection agency because of medical bills. The survey was conducted in April among a nationally representative random sample of 2,003 adults ages 18 and older.

The survey found that low- and middle-income families in particular are feeling the squeeze of health care costs. Below are results of survey questions about how changes in the economy have affected people’s lives.

  • 28% reported problems paying for health care and health insurance.
  • 46% of those earning less than $30,000 had serious problems paying for health care and insurance compared with just 12% of those with incomes of $75,000 or more.
  • 28% of those earning $30,000-$75,000 reported problems paying for health care and insurance.
  • 20% have been contacted by a collection agency because of medical bills.
  • 17% said they had used up all or most of their savings in the past five years because of medical bills.
  • 12% were unable to pay for basic necessities.
  • 10% had to borrow money or take out a second mortgage.
  • 3% declared bankruptcy.
  • 37% said they have experienced at least one of these problems due to medical bills in the past five years.

Get an RSS feed of this newsletter XML Icon for the RSS feed
Learn more about RSS feeds