The PPACA is on every employer’s radar these days, with the “pay or play” rules going into effect in early 2014. Rather than pay a penalty, employers may offer only bare-bones major medical at their expense, and focus on voluntary benefits chosen by employees to make up the rest of their plan options.

This shift toward the employee paying for more of their major medical premiums and all of their voluntary benefits has been happening over the past few years, before the PPACA passed, and it has only increased since the Supreme Court’s rule upholding the legislation. If voluntary benefits are going to be a substantial part of your benefits package in 2014, it’s time to start evaluating your plan now and thinking about how you’ll communicate the changes to your employees.

If your office decides to save money by lowering their health benefits or increasing deductibles, voluntary benefits can help workers manage that transition.

One voluntary benefit to consider is gap coverage. Depending on the amount of coverage, it can pay any costs that go toward a deductible or coinsurance. Individual plans are typically less than $30 a month. With the PPACA eliminating most pre-existing condition limits, gap coverage can help right away. Let’s say your employee breaks his leg and requires a $20,000 surgery to put pins in his bones and then physical therapy. His plan’s deductible is $5,000 and then 80/20 coinsurance, so that employee will be out thousands of dollars.. An investment of $30 a month in gap insurance now seems like a very good bet.

Another voluntary benefit that is being taken more seriously in light of the PPACA is short-term disability insurance. Sometimes workers will forego short-term disability and spend it only on long-term disability and long term care, assuming their savings will cover any short-term issues. The above employee with the broken leg — let’s say he makes $5,000 a month and has $10,000 in savings. He may have felt like anything that would keep him out of work for two to eight weeks wouldn’t bankrupt him because it’s not as serious as say, cancer, and he does have insurance and savings. Well, if he misses eight weeks of work with no short-term disability coverage, he’s out $10,000 in salary. His savings are gone. If he doesn’t have gap coverage, he’s got no savings and now owes thousands to the hospital.

In one skiing accident, he went from being above the curve with a 2 month emergency fund to being thousands in debt. If he had short-term disability to insure up to 60% of his income, plus the gap coverage to pay the medical bills, he’d only be missing $4,000 in salary. He can dip into his savings for that or make temporary changes in his lifestyle to cover the shortfall.

Gap coverage and short term disability will go a long way towards improving your voluntary benefits package and insuring that the PPACA doesn’t unexpectedly leave your employees with huge medical bills. These two elements will cover almost all scenarios, but still other voluntary benefits will help more. Cancer, critical illness, transplant and hospital policies can all help as well. Also, when negotiating rates for dental, vision, life insurance or other voluntary benefits not specifically changed by the PPACA, shop around. Try and get the lowest possible rates for your employees so they have more money to spend on gap coverage, short-term disability, etc.

It will be your job as the benefits administrator to communicate all of this to your employees and help them make the best choices in light of any changes made to your plans by the PPACA. Employees will definitely have questions and want to protect themselves from any unexpected large expenses. Explain that while these voluntary benefits may just look like more money coming out of their check, they really do add value and can keep them healthy, wealthy and working.

Article written by Michael Motyka

Medical problems caused 62% of all personal bankruptcies filed in the U.S. in 2007, according to a study by Harvard researchers. And in a finding that surprised even the researchers, 78% of those filers had medical insurance at the start of their illness, including 60.3% who had private coverage, not Medicare or Medicaid.Medically related bankruptcies have been rising steadily for decades. In 1981, only 8% of families filing for bankruptcy cited a serious medical problem as the reason, while a 2001 study of bankruptcies in five states by the same researchers found that illness or medical bills contributed to 50% of all filings. This newest, nationwide study, conducted before the start of the current recession by Drs. David Himmelstein and Steffie Woolhandler of Harvard Medical School, Elizabeth Warren of Harvard Law School, and Deborah Thorne, a sociology professor at Ohio University, found that the filers were for the most part solidly middle class before medical disaster hit. Two-thirds owned their home and three-fifths had gone to college.

But medically bankrupt families with private insurance reported average out-of pocket medical bills of $17,749, while the uninsured’s bills averaged $26,971. Of the families who started out with insurance but lost it during the course of their illness, medical bills averaged $22,658. “For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments, and deductibles that illness can put you in the poorhouse,” said lead author Himmelstein. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”

The study underscores President Barack Obama’s arguments in calling for health-care reform legislation this year. In a letter to Democratic Senate leaders this week, the President said: “Health-care reform is not a luxury. It’s a necessity we cannot defer. Soaring health-care costs make our current course unsustainable. It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Highest Costs for Diabetes, Neurological Illness

The study was funded by the Robert Wood Johnson Foundation and published online June 4 by the American Journal of Medicine. It will appear in the Journal‘s August print edition. The researchers examined the court records of a random sample of 2,314 bankruptcy filings across the nation during early 2007, and also contacted those filers for written explanations. The researchers then followed up with extensive phone interviews of 1,032 of those filers.

They found that a number of medical factors contributed to a family’s financial disaster. More than 90% of medically related bankruptcies were caused by high medical bills directly or medical costs that were so high the family was forced to mortgage their home. The remaining 8% went bankrupt because a medical problem caused them to lose income. The authors were not able to track credit-card defaults caused by medical bills, but a 2007 study found that, of low- and middle-income households with credit-card debt, 29% used their plastic to pay off medical expenses.

Individuals with diabetes, one of the most common chronic diseases in the U.S., and those with neurological illnesses such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167, respectively. Hospital bills were the largest single expense for half of all medically bankrupt families.

Dr. Woolhandler, an advocate of a single-payer health-care system, said lawmakers in Washington should reconsider health-care reform in light of the study. “Covering the uninsured isn’t enough,” she said. “Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it.”

Article written by Catherine Arnst for Bloomberg Businessweek. Arnst is a senior writer for BusinessWeek based in New York.

NEW YORK (CNNMoney) — When the unexpected strikes, most Americans aren’t prepared to pay for it.

A majority, or 64%, of Americans don’t have enough cash on hand to handle a $1,000 emergency expense, according to a survey by the National Foundation for Credit Counseling, or NFCC, released on Wednesday.

Only 36% said they would tap their rainy day funds for an emergency. The rest of the 2,700 people polled said that they would have to go to other extremes to cover an unexpected expense, such as borrowing money or taking out a cash advance on a credit card.

“It’s alarming,” said Gail Cunningham, a spokeswoman for the Washington, DC-based non-profit. “For consumers who live paycheck to paycheck — having spent tomorrow’s money — an unplanned expense can truly put them in financial distress,” she noted.

That’s the case for Allyson Curtis, 35. “I think about it every day,” she said.

Curtis was unemployed for only three months last year, but in that time she accumulated $5,000 in credit card debt that she’s now struggling to pay down. In the case of an emergency, Curtis said she would likely postpone other payments and pile on additional debt.

She is already putting off $450 in dental work and a car inspection due to a crack in her windshield, which will cost $300 to replace, she said.

Budgeting for an emergency fund

Many respondents, 17%, said they would borrow money from friends or family. Another 17% said they would neglect other financial obligations — like a credit card bill or mortgage payment — in order to free up some funds.

Alternatively, 12% of the respondents said they would have to sell or pawn some assets to come up with $1,000 and 9% said they would need to take out a loan. Another 9% said they would get a cash advance from a credit card, according to the NFCC.

0:00 / 3:10 Trick yourself into saving more

Cunningham finds that particularly troubling. Neglecting other debt obligations — or worse piling on more debt — “really exacerbates the problem,” she said.

An earlier study by the same organization found that 30% of Americans have zero dollars in non-retirement savings. A separate study by the National Bureau of Economic Research found that 50% of Americans would struggle to come up with $2,000 in a pinch

The previous article was originally published on August 10, 2011: 1:40 PM ET at CNNmoney.com by Blake Ellis

Open enrollment is an optimal time to distribute federal notices at once rather than throughout the year to streamline the administrative process, speakers said during a Mercer webinar.

The HIPAA notice of privacy practices, for example, requires that employers send a reminder to enrollees at least once every three years saying the notice is available on request. Although this notice is not required to be sent to employees annually, adding it to the open enrollment materials makes things easier. “If you do so, you’ve sort of eliminated this three-year [HIPAA] reminder requirement,” said Mike Sinkeldam, principal and compliance consultant with Mercer’s health and benefits business.

Open enrollment can also satisfy requirements for summary plan descriptions (SPDs), summary of material modifications (SMMs), summary of material reductions (SMRs), HIPAA special enrollment rights notice, CMS creditable coverage notice (must be out by October 15) , the initial COBRA notice, the USERRA (military leave) notice and certain state reporting mandates.

Employers must distribute new materials this year, many a result of health care reform. Mercer thinks it is best practice to send these materials at one time during open enrollment, rather than “piecemealing” them through the year, he added.

These materials include:

• Health care FSA limit at $2,500 for the 2013 plan year;
• Newly updated state children’s health insurance program (CHIP) notice effective July 31, 2012;
• Women’s preventative health requirements for non-grandfathered plans;
• New Medicare tax on high-wage earners;
• Explanation on the value of coverage on employees w-2 and that amount is not taxable; and
• Explanation on medical loss ratio (MLR) and how it will be used.
• Another new communication requirement is the summary of benefits and coverage (SBC), which is a uniform, easy-to-understand format that can facilitate comparison shopping. This does not replace an SPD, Sinkeldam said.
• Most employers will want their vendors to draft the SBCs, Sinkeldam said, adding that employers should discuss who will be responsible for distributing these materials after they are created.
• Under the Employee Retirement Income Security Act (ERISA), which covers many notices, employers must deliver them in a way that is “reasonably calculated to ensure actual receipt of the material” using a method “likely to result in full distribution.” This means employers cannot just post notices on an office bulletin board or leave them in a pile in the break room, said Wade Symons, employee benefits attorney at Mercer.
• “They really want individual receipt as the key,” he said.

This article was cited from plansponsor.com and written by Corie Russell