December 2011

The Family and Medical Leave Act (FMLA) allows employees to take up to 12 weeks of job-protected unpaid leave for certain specified reasons, including to care for their own or a family member’s serious health condition. To avoid abuse of this provision, you as an employer are entitled to request a medical certification from the employee’s physician. FMLA regulations outline the information that may be required as part of the certification, and the process for obtaining it.

What types of medical issues amount to a “serious health condition” as contemplated by FMLA? The regulations require that the illness or injury involve either inpatient care (meaning an overnight stay), or continuing treatment by a health care provider that includes one or more of the following:

1. Incapacity of more than three consecutive full days, together with treatment; the treatment must occur on two or more occasions within 30 days of the first day of incapacity (unless extenuating circumstances exist), or an initial treatment must result in a regimen of continuing treatment (for example, medication, physical therapy).
2. Pregnancy or prenatal care.
3. A chronic condition that requires periodic treatment and continues over an extended period of time (but may include conditions that are episodic rather than continuous, such as asthma or epilepsy).
4. A permanent or long-term condition for which treatment might not be effective; the patient must be under continuing medical supervision, but need not be receiving active treatment (examples include Alzheimer’s, stroke, or the terminal stages of a disease).
5. Conditions requiring multiple treatments, such as restorative surgery following an accident, chemotherapy/radiation for cancer, physical therapy or dialysis for kidney disease.

To verify the presence of a serious medical condition, you may require a medical certification from the employee’s or family member’s medical provider. Employers can use Department of Labor Form WH-380-E, “Certification of Health Care Provider for Employee’s Serious Health Condition,” or may devise their own form, but in that case cannot require the employee to provide more information than that requested on the model certification form. You should notify the employee that certification of the medical condition will be required, either at the time leave is requested or within five business days of that date. If the leave was unforeseen, notice that certification will be required should be given within five business days after the leave has commenced. The employee then has 15 days to provide the certification.

If the certification is incomplete, vague, non-responsive or ambiguous, you can request in writing that the employee correct the deficiency, specifying what additional information is required to make the certification complete. The employee has seven days to correct the deficiency. You may also contact the medical provider directly for authentication or clarification of the information on the certification, but the individual from your organization who makes this contact cannot be the employee’s direct supervisor.

If the employee fails to provide a sufficient medical certification you can deny the FMLA leave request. The employee should be advised of this potential consequence at the time you first request the certification. If the employee’s need for leave lasts longer than a year, certification may be required on an annual basis. You also may require certification at a later date if you have reason to question the appropriateness of the leave, or its duration. If the employee’s medical condition can also be a disability within the definition of the Americans with Disabilities Act (ADA), information obtained through ADA procedures may be used in the FMLA leave determination.

Though FMLA leave is an entitlement for qualifying employees, employers have tools to control the risk that this entitlement is abused. Make use of the procedures allowed to ensure that only truly qualifying employees in your organization go out on FMLA leave.

Although the morale of many employees is below an optimal level, benefits education continues to be effective in boosting satisfaction in the workforce. More than half of employees in the United States feel that their employers value their work. However, this number seems to have declined from the average percentage in recent years. There can be several different reasons for a continuously low morale among employees. The reasons they’re not bouncing back are mostly due to varying personal experiences and situations. However, a benefits education program that is structured properly can be highly effective in boosting engagement. It is also a low-cost way to gain interest among employees.

In a world where many employees have experienced salary freezes or witnessed their colleagues being laid off, it’s important for employers to invest more time in communicating benefits options with them. This makes employees feel valued. Research shows that most employees don’t feel that they are valued in the workplace, so this issue should be a top priority. In an economy with jobs in high demand, employees feel more insecure and replaceable. They might not know how expensive and detrimental it is for employers to replace them and hire new employees. They might also doubt the longevity of the companies they work for. It’s important for employers to show how much they value their employees. They should shift some of their attention from the areas in which their business is affected by the economy to finding better ways of engaging employees with benefits education.

A benefits education program that is structured properly can have a significant impact on workforce satisfaction. If employees rate their benefits education favorably, they are more likely to rate their employers as very good or excellent. The same ratings usually also apply to the workplace. However, if employees feel that their benefits education is poor, they’re more likely to give their employer and workplace poor satisfaction ratings. Employees who rate their benefits education highly also say they would be more likely to continue working for their current employer. They usually say that they would stay with the employer if they were offered identical benefits packages and pay elsewhere. In the fluctuating economy, employers must work hard to show their employees how much they care. Neglect or care for an individual’s well-being is often what destroys or builds loyalty. If the employees experience benefits, the entire business also benefits. It’s much more difficult for a business to survive without content employees.

Employee health bills are fluctuating because of uncertainty related to the 2010 healthcare reform bill. Companies are trying to contain the damage by paying employee health claims out of pocket. Joseph Berardo, Jr., CEO of MagnaCare, said that the total savings from doing this could be between 10% and 20%. MagnaCare administers self-funded health insurance plans to municipalities and businesses in New Jersey and New York.

When employers debate whether to adopt a self-funding plan, the possibility of lower monthly healthcare costs should be considered in comparison with the risk of covering employees’ healthcare bills. There is no concrete answer for this issue that is right for all situations. The best answer depends on the demographics of employee bases and the company’s financial situation. The risk of an employee having an accident or developing a serious illness is a major concern.

Although nearly 93% of companies with more than 5,000 workers have self-funded plans, many smaller companies don’t. According to a recent survey conducted by Kaiser Family Foundation, the reason for reluctance among smaller companies is the possibility of being hit with a large employee healthcare bill and not having enough cash to pay it. The survey found that only 16% of companies with fewer than 200 workers had self-funded plans. However, industry experts expect interest in these plans to rise in the future.

The Benefits of Self-Funded Plans. From the data gathered, it’s clear that there are some benefits to self-funded plans. Other benefits might not be as apparent:

1. Quality of Data. Employers have better access to health claims of employees. In addition to this, they also have more information about their employees’ demographic information. Exposure is limited only to employees instead of a broad population. This is a major benefit over regular health plans, which only offer generalized information.
2. Customized Plans. Employers decide what is covered in the plan. This includes benefits, exclusions and eligibility provisions. Employee cost sharing, retiree benefits and policy limits are also decided by the employer. With exemption from state rules, employers are able to decide on specific provisions without state considerations.
3. Control of Cash. Since coverage isn’t prepaid, employers have access to interest and cash income that wouldn’t be available under regular insurance policies. Self-funded plans might also delay payment of health plan fees until the services have been charged. However, if claims are lower, the employer is able to retain the savings instead of allowing the insurer to keep that money. Another benefit is that self-funded companies are not under obligation to pay state health insurance premium taxes.
4. Lower Employee Premiums. Workers will enjoy lower premiums for both single and family plans. In addition to this, they also pay less up front when they’re enrolled in complete or partial self-funded plans than they would at a company that is fully insured.
5. ERISA Laws Replace State Regulations. This federal law exempts self-funded plans from the state’s regulations. This includes reserve requirements, insurance laws, premium taxes, mandated benefits and consumer protection regulations. Employers must still abide by rules from the following entities:
   • ADA
   • U.S. Tax Code
   • Health Insurance Portability & Accountability Act
   • Newborns’ & Mothers’ Health Protection Act
   • Pregnancy Discrimination Act
   • Mental Health Parity Act
   • Women’s Health & Cancer Rights Act

The Cons of Self-Funded Employee Plans. Although there are many benefits to enjoy by implementing self-funded plans, there are also potential downfalls. It’s important to consider these.

1. Financial Risk. With fewer employees than a larger company, there is a higher statistical risk of costly claims for illnesses or accidents. Most employers with self-insured plans purchase stop-loss coverage in order to get a reimbursement for claims totaling amounts over a specific dollar level. In a description posted by the Self-Insurance Institute of America, stop-loss coverage is insurance that indemnifies a plan sponsor from claim frequency or severity that is abnormal. Companies such as Zurich, Gerber Life and Arch Insurance, which are all considered large companies, provide this type of coverage.
2. Administrative Risks. The Department of Labor has researched how self-funded employers fail to implement efficient administrative systems. Failure to administer a plan correctly is considered a breach of fiduciary duty. Employers take full legal responsibility for operating the plan, so it’s important to realize just how crucial this responsibility is. In addition to worrying about this, there are also strict rules for private claims information. Since employers have access to such information, they must take further measures to protect it and keep it secure. In some cases, this might require hiring one or more security workers.
3. Administrative Costs. Self-insured claims can be administered within the company or handled by a subcontracted party, which is commonly called a TPA. These administrators assist employers in setting up self-insured group plans. They also coordinate stop-loss coverage, utilization review services and provider network contracts. However, there are extra costs for these services.
4. Economic Weakness. It might be necessary to keep a self-funded plan for a minimum of three to five years in order to fully enjoy the benefits. This might be extremely difficult for some companies during economic hardship.

Be sure to weigh the benefits and disadvantages of self-funded plans before making any changes. If the task of determining how profitable such a change would be is too difficult, consider hiring the services of a professional analyst.