Corrections or additions?
These stories by Jeff Lippincott were published in U.S. 1 Newspaper on
December 9, 1998. All rights reserved.
Getting the Right Health Plan Fit
Looking around for an individual or small employer
benefits plan? You will want to attend the next meeting of the WEB
Network of Benefits Professionals when Wardwell Sanders,
director of the New Jersey Individual Health Coverage and Small
Health Benefits Program, moderates a discussion on "Small Employer
Health Insurance: Finding a Policy That Fits and Wears Well."
The meeting is Tuesday, December 15, at 8 a.m. at Smith, Stratton,
Wise, Heher & Brennan, 600 College Road East. Cost: $30. Call
The past decade has seen radical changes in the health plan
"Ten years ago most of the coverage available for small group
employers was indemnity based (a traditional fee for service plan
that allows the user to choose their physician or hospital) not
care. Now in the small employer market in New Jersey, and this
a national trend, probably 95 percent of it is managed care, either
HMO or POS (point of service)," says Sanders.
POS plans and PPOs (preferred provider organizations) represent the
middle of the health plan spectrum with HMOs being the most
and traditional indemnity plans being the least. Both POS and PPO
plans allow the choice of utilizing in or out-of-network providers.
In-network services typically require a small co-payment from the
user. However, unlike HMOs, should the user desire to see an out of
network provider they are free to do so. The price for that freedom
is a higher out of pocket expense in the form of deductibles and
"These hybrid plans have become very popular in the small employer
market," said Sanders.
The New Jersey Individual Health Coverage and Small Employer Health
Benefits Program is affiliated with the Department of Banking and
Insurance. The state legislature in 1992 created two separate boards
for the regulation of individual and small employer health insurance
markets as a result of the "reform legislation."
from the Department of Banking and Insurance, the Department of Health
and Senior Services, HMOs, the AFL-CIO, Blue Cross and Blue Shield
and indemnity health insurance carriers, along with consumer and
representatives, make up the boards.
In approaching the individual and small employer health
coverage marketplace, "the first step is to on arm yourself with
information and the best way to do that is to get the buyer’s guides
that are available from the state," said Sanders, whose agency
has produced buyer’s guides to help sort out coverage choices. There
are two, one for individuals and one for small employers. The guides
spell out exactly how to obtain coverage, list all the companies in
the market, who is eligible, what the delivery system is like and
what the benefits are among the various options. A list of carriers
with phone numbers is provided along with a spread-sheet outlining
the premiums associated with all the options.
Call 800-838-0935 to obtain a copy of the buyer’s guide for the
health coverage and 800-263-5912 for the small employer guide. Both
guides and other information about the plans are also available at
The four key components of health plan reform in New Jersey are
benefits, guaranteed issuance, guaranteed renewal, and specific loss
Standardized benefits mean that the benefit levels among the various
carriers for the specific programs are the same. "The idea is
to help people shop around especially in these markets where a small
business with five employees is not going to have a full time benefits
manager," says Sanders.
Guaranteed issue/guaranteed renewal means that an eligible person
or small employer can never be denied coverage or renewal. "That
means that no employer can be turned down due to type of
said Sanders. Individuals with a history of health problems are no
longer be faced with what Sanders terms "job lock" or the
inability of an individual to advance his or her career due to their
ineligibility for coverage in a prospective new employer’s health
Loss ratio refers to the ratio of benefits paid to dollars received
in premiums. A carrier participating in the IHC or SHE is required
to pay out 75 cents in benefits for every dollar received in premium.
If this minimum loss ratio of 75 percent is not met, the carrier must
refund some portion of the premium to the policyholder.
Sanders sees a correlation between the drop in the rate of health
plan premium increases and the market migration to managed care.
30, 40 and 50 percent rate increases that were common for employers
in the late ’80s and early ’90s have dropped off. It’s largely because
of the shift to managed care and other factors such as the marketplace
becoming friendlier with guaranteed access to coverage that came with
reform. This enabled employers to keep coverage and also allowed other
employers who previously didn’t offer coverage to do so," said
The number of covered lives in the small group market in New Jersey
has increased from 690,000 at the point of the implementation of
plan reform in 1994 to its present level of about 870,000 lives.
terms both the individual and small employer marketplace, "very
healthy, competitive" with 24 different carriers participating
in the individual and around 50 carriers in the small group market
(2 to 50 employees).
Sanders, an administrator with the program since 1994, joined the
state in 1991 as a deputy attorney general. Previously he worked at
the International Center, a Washington, D.C., foreign policy think
tank specializing in human rights work. Sanders has a degree in
from Franklin and Marshall College and a law degree from Villanova.
On the new legislation front, the so-called "mental health parity
bill," S86, which the Senate has passed and that is now before
the Assembly, would require all insurance carriers doing business
in the state to cover mental health benefits the same as any other
illness. The caveat for such benefits is that the mental health
covered would have to be "biologically based." The text of
the bill defines "biologically based" as "a mental or
nervous condition that is caused by a biological disorder of the brain
and results in a clinically significant or psychological syndrome
or pattern that substantially limits the functioning of the person
with the illness, including but not limited to, schizophrenia,
disorder, major depressive disorder, bipolar disorder, paranoia and
other psychotic disorders, obsessive compulsive disorder, panic
and pervasive development disorder or autism."
Should the mental parity bill become law, there may be an effect on
a company’s bottom line. "Mandated benefit bills that require
certain coverage cut both ways. There may be a good public policy
reason to make sure this kind of coverage is covered at a certain
level, but whenever you are adding benefits you are probably adding
cost," says Sanders.
While the number of workers and retirees covered by
a 401(k) pension plan has jumped by a third since 1982, recent survey
data reveals that employers and employees are not maximizing the
of such plans. How employers can better inform employees about the
benefits of contributing to a 401(k) program is the subject of a
sponsored by the Employers Association of New Jersey (EANJ) on Friday,
December 11, at 11 a.m. at the Sheraton Tara Hotel in Parsippany.
Cost: $35. Call 973-239-8600.
EANJ executive director John Sarno says the seminar would
employers who are thinking about establishing a pension plan as well
as those who would like to get maximum employee utilization. Sarno,
a lawyer, will moderate a discussion with representatives from Wheat
"A big problem for employers that have a pension plan is that
employees are not sufficiently informed on making investment decisions
for their retirement," says Sarno. When employees are not educated
as to the value of pension plan participation, they don’t participate.
In some cases, especially if employees have never been exposed to
a 401(k) type program, they will view it in a positive light but not
understand that they need to have an active role on their own
planning. Employees may view retirement plans in the same light as
health insurance, in that it’s nice to have but it’s something they
don’t think about it until it’s time for utilization.
"It’s easier for employees to visualize being sick than thinking
about retirement," said Sarno, "Ultimately, it’s the employee
that takes responsibility for making investment choices."
A 401(k) plan, like social security, is a "forced savings"
plan. And unlike in our forefathers’ day, modern America does not
like to save. "Americans save about one per cent or less of their
income — an all time low," says Sarno. A recent Wall Street
Journal article declared that more people probably know which eight
states border Tennessee than what the returns on their 401(k)
were last year.
About one third of EANJ’s member firms responded to a survey (339
of 1,005), and they were equally divided between manufacturing and
non-manufacturing companies. The vast majority (97 and 98 percent)
provided some kind of a retirement plan. For just under one-third
of the firms, this was a defined benefit plan, and about one-fifth
of the firms had a defined contribution plan. This compares with the
80 to 93 percent of the companies that had 401(k) plans.
EANJ is a Verona-based non-profit, comprised of over 1,000 employers,
dedicated to encouraging sound and responsible human resource
(http://www.EANJ.org.). It was established by manufacturers
seeking self-help strategies to cope with labor unrest and violence.
Sarno, 42, is married and has two daughters, ages six and three. He
went to Ramapo College, with a law degree from Seton Hall. He
law in Bergen County and had been an administrator and instructor
at Ramapo College. He has been executive director of EANJ for three
Sarno feels that employers and employees can play a meaningful role
regarding retirement policy in the United States. The Social Security
system is expected to have to pay out more than it brings in by 2013,
according to an article in the EANJ publication "Employers
And according to some national reports, it will run out all together
by 2030. This is because the 76 million strong "baby boom"
generation will be followed by just 59 million so-called
If employers do their part in encouraging plan participation
"maybe the retirement system can be fixed without onerous mandates
in the future," says Sarno. "Raising social security taxes
is a short term fix, it’s not a long term solution."
Corrections or additions?
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