elizabeth a winkowski - thewoodlandsinnandresort.fall2011

8/2/2019 Elizabeth a Winkowski - Thewoodlandsinnandresort.fall2011

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Benefits Analysis

Part I: Benefits Matrix

Part II: Inventory of Benefits

912495011912028654

RMI 3501Dr. Drennan

Fall 2011


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Benefit Analysis: The Woodlands Inn and Resort Page | 2

Benefits MatrixExposure Analysis for The Woodlands Inn and Resort

Loss Exposure Provided Coverage/Benefit ProvidedLoss of Income: Medical Expenses

Overall Medical Expenses Yes Three Tier Geisinger ChoicePPO

Dental Yes United Concordia Flex

Vision Yes Within Geisinger Choice PPO

Prescription Yes Geisinger Choice PPO: TripleChoice Option

LTC NoRetiree Health Care Yes Medicare, COBRA

Loss of Income: DeathNon-Accidental &Non-Occupational

Yes Basic Life Insurance, 401(k)plan, OASDI

Accidental Death Yes Basic Life Insurance, 401(k)plan, OASDI, AD&D Insurance

Occupational Death Yes Basic Life Insurance,401(k)plan, OASDI, Workers

Compensation

Loss of Income: UnemploymentUnemployment Yes Unemployment Insurance

Loss of Income: DisabilityShort Term, Non Occupational Yes 401(k) plan, OASDI, AD&D

Insurance, Paid Time OffLong Term, Non Occupational Yes LTD, 401(k) plan, OASDI,

AD&D Insurance

Short Term, Occupational Yes 401(k) plan, OASDI, AD&DInsurance, Workers

Compensation

Loss of Income: RetirementRetirement Yes 401(k) plan, OASDI

Other ExposuresEducational Assistance No None

Work/Life Yes Complimentary Meals,Geisinger Accessories Program

Dependent Care No NoneProperty-Liability No None

Legal Expenses No None


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Summary of BenefitsBenefit Plan A.M. Best Rating Financing Funding Eligibility

GeisingerChoice PPO :

Plan 1

N/R FullyContributory

FullyInsured

Full-time and Part-time active

employees anddependents

GeisingerChoice PPO:

Plan 2


FullyInsured



GeisingerChoice PPO:

Plan 3


FullyInsured



Triple ChoiceOption forOutpatient

PrescriptionDrugs


FullyInsured



UnitedConcordia Flex

Dental Plan:Option 1

A- (excellent) ** FullyContributory

FullyInsured



UnitedConcordia Flex

Dental Plan:Option 2

A- (excellent) ** FullyContributory

FullyInsured



BCS LifeInsurance Co.

Basic Life

A (excellent) * FullyContributory

FullyInsured

Full-time SalariedEmployees

BCS LifeInsurance Co.

AD&D

A (excellent) * FullyContributory

FullyInsured


Kansas CityLife Insurance

Co. LTD

A (excellent) ** FullyContributory

FullyInsured


John HancockLife Insurance

Co. 401(k)Plan

A+ (superior) *** FullyContributory

FullyInsured

Full-timeEmployees

*= Source of A.M. Best Rating ishttp://www.bcsigroup.com/plan/about/introduction.html

**= Source of A.M. Best Rating iswww.ambest.com

***= Source of A.M. Best Rating iswww.johnhancock.com
http://www.bcsigroup.com/plan/about/introduction.htmlhttp://www.bcsigroup.com/plan/about/introduction.htmlhttp://www.bcsigroup.com/plan/about/introduction.htmlhttp://www.ambest.com/http://www.ambest.com/http://www.ambest.com/http://www.johnhancock.com/http://www.johnhancock.com/http://www.johnhancock.com/http://www.johnhancock.com/http://www.ambest.com/http://www.bcsigroup.com/plan/about/introduction.html


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Inventory of Benefits________________________________Loss of Income: Medical ExpensesOverall Medical Expenses

The Woodlands Inn and Resort offers employees the option of participating in a

preferred provider organization (PPO) plan through Geisinger Quality Options, Inc.

Although the PPO is the only healthcare policy option offered to eligible employees, it does

have the three different plan options within the policy. This PPO has three levels of

deductibles and premiums, and is identified as the Geisinger Choice PPO with No Referral

Required and Preventative Services. This policy is fully insured by Geisinger Quality

Options Inc. The plan is voluntary and all three levels of this policy are offered to eligible

employees and eligible dependents on a fully contributory basis. Employees do have the

option to opt out of participating in the plan. The Woodlands Inn and Resort is experience

rated for this plan.

Both full-time and part-time active employees can be eligible for any level of the

plan, including their dependents. The Woodlands Inn and Resort requires employees to be

employed for 90 days before eligibility begins. An employee is considered full-time if they

work a minimum of 30 hours per week, and part-time employees must work 16 hours per

week. Eligible dependents are defined as a legal spouse or unmarried children. Dependent

coverage ends once the dependent reaches age 19. If the dependent is a full-time student,

the coverage ends at age 23.

Coverage, exclusions, and conditions are the same for each level of the PPO. The

differences are within the premiums, deductibles, coinsurance, and out of pocket costs.


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Participants premiums, deductibles and out of pocket costs will vary based on level of the

plan they choose. For example, if an employee chooses a higher premium level, the amount

of their deductible decreases. Participants do have the option to choose either a preferred

provider, or a non-preferred provider, but this will also cause a variation in costs. The three

options and how the premiums, deductibles, and coinsurance will vary, can be

demonstrated within a chart.

Plan Option 1

Option 1 has the highest premium, but also has no deductible, when a single

employee or family chooses a preferred provider. The coinsurance maximum is

nonexistent when an employee or dependent chooses a preferred provider. If the employee

chooses a non-preferred provider, there is both a deductible and a coinsurance maximum.

Premium Deductible Coinsurance MaximumPreferredProvider

Non-preferredProvider

PreferredProvider

Non-preferredProviderSingle $508.03 None $250 None $2,500

Family $1,376.81 None $750 None $7,500

Plan Option 2

In relation to option 1, option 2 has a decreased premium for both a single employee

and a family. Although the premium is lower, there is an increase in the deductible for both

a preferred provider and a non-preferred provider. Coinsurance still remains the same for

a preferred-provider, and significantly increases for a non-preferred provider.



PreferredProvider



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Single $432.13 $500 $2,000 None $6,000Family $1,171.12 $1,500 $6,000 None $18,000

Plan option 3

Option 3 has the lowest monthly premium of all the options, but has the highest

deductible for the use of a preferred provider, for both family and single. The deductible

for using a non-preferred provider and all coinsurance maximums remains the same for

both option 2 and 3, whether a single employee or a family.



PreferredProvider

Non-preferredProviderSingle $396.08 $1,000 $2,000 None $6,000

Family $1,073.41 $3,000 $6,000 None $18,000

For all options, the lifetime benefit maximum, when choosing a preferred provider,

is unlimited. When an employee chooses a non-preferred provider there is a $1,000,000

limit per member. In relation to the co-payment costs for in-network office visits and

services, the costs are the same for all three options. Any cost variation will be based on

whether the employee chooses a preferred provider or a non-preferred provider. For

example, co-payment for a preferred provider is $20 for a primary care physician and $35

for a specialist. If the plan participant chooses to go out of network for such visits, the cost

is 20% of non-preferred provider fee schedule, after deductible.


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DentalThe Woodlands Inn and Resort offers two dental options that are both fully insured

through United Concordia Companies Inc. Both dental options are voluntary and offered

on a fully contributory basis to eligible employees and dependents. Full-time and part-time

employees are both offered coverage, when eligible. Both of these plans pay 100% of

diagnostic and preventative services and 80% of basic services. Only option 2 provides

coverage for 50% of major services and 50% of orthodontic costs. Each plan has a $50 per

calendar year deductible per member which is not to exceed $150 per family. There is a

$1,000 per calendar year maximum per member for both plan 1 and 2. Due to the fact that

option 2 offers orthodontic coverage, it includes a $1,000 lifetime maximum per member

for orthodontics.

VisionVision coverage is provided within the Geisinger Choice PPO when using a preferred

provider for services. Full and part-time employees, including dependents, are considered

eligible for vision coverage by being a participant in the PPO. It makes no difference which

of the three plans they select within the PPO, dental coverage is the same. One eye exam

per year is covered, with no primary care physician referral required. If the participant

chooses a preferred provider for their yearly eye exam, there is no co-pay. If the participant

chooses a non-preferred provider, there is no coverage for the eye exam. The PPO does not

provide coverage for hardware expenses. Participants can use money saving discounts for

frames, lenses, and even LASIK vision correction through Geisingers Accessories Program.


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Prescription DrugSimilar to vision coverage, prescription drug coverage is provided within the PPO.

Geisinger uses The Triple Choice Option for Outpatient Prescription Drugs within their

Choice PPO and participants of the PPO are automatically enrolled in the drug plan. It is

broken into three tiers. Tier 1 includes most generic drugs, and prior authorization is

generally not required. Tier 2 includes certain generic drugs and formulary brand name

drugs with no generic equivalent. Participants may need prior authorization for these

drugs. Tier 3 includes some formulary brand name drugs with generic equivalents, other

brand name drugs, including those not listed on the formulary, and some generic drugs.

Prior authorization is required. Contraceptives are covered, and the co-payment amount

depends on the tier.

Tier 1 $15 for a 34-day supplyTier 2 $30 for a 34-day supplyTier 3 $45 for a 34-day supply

These tiers are entirely separate from the three plan options within the PPO.

Employees can choose any of the three plan options within the PPO and still receive the

same coverage for The Triple Choice Option for Outpatient Prescription Drugs. This

coverage applies at participating pharmacies only. There are also two flat co-payment

amounts, depending on the tier, for a 90-day supply through the plans mail order pharmacy

program.


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Loss of Income: DeathBasic life, Accidental Death and Dismemberment (AD&D) Insurance

The Woodlands Inn and Resort offers both Basic Life Insurance and Accidental

Death and Dismemberment Insurance within the same Group Term Life policy through BCS

Life Insurance Co. This policy is fully insured, and offered to eligible employees on a

voluntary and fully contributory basis. Eligible employees include active full-time salaried

employees who work 20 hours per week and are U.S. citizens or U.S. residents. Coverage

for eligible employees takes effect after 90 days of active, full-time employment.

In the event that an employee suffers a long term injury or death, such types of

insurance will help protect employees and their dependents, financially. Basic Life and

AD&D benefits are equal to one times the employees Basic Annual Earnings. There is a

maximum of $150,000 rounded, if needed, to the next $1,000 multiple. Both Basic Life and

AD&D benefits are on a reduction schedule where up to 75% of the scheduled amount will

be lost when the insured reaches age 75. AD&D benefits are on a set schedule of losses

depending on the extent of the injury. The percentage of the principal sum paid out in the

event of a loss ranges from 100%, for a loss such as death or loss of both legs, to 25% for a

loss such as hearing in one ear. AD&D Insurance pays for a loss only if the loss occurred

within 90 days of the date of injury. If more than one loss occurs, the larger amount will be

paid. All insurance for both Basic Life and AD&D will be terminated in the event of

retirement or termination of the employee.


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Loss of Income: DisabilityPaid Time Off (PTO)

Although The Woodlands Inn and Resort does not currently offer any Short-Term

Disability (STD) Insurance, they do offer eligible employees Paid Time Off (PTO). Both full

and part-time employees are eligible for PTO, if they work a minimum of 30 hours per

week. For the amount of hours an employee works, on average per week, they will receive

that amount of hours in PTO the following year. For example, if an employee works an

average of 36 hours per week throughout the year, they will receive 36 hours of PTO in the

following year. This PTO can help to protect against loss of income due to sickness of injury.

AD&D insurance could also potentially help cover this exposure in the event that an injury

was sustained and the employee ran out of PTO.

Long Term Disability (LTD) InsuranceLong Term Disability Insurance is offered to employees of The Woodlands Inn and

Resort on a voluntary and fully contributory basis. The plan is offered to eligible employees

through Kansas City Life Insurance Co. and is fully insured through this company as well.

This plan of LTD Insurance provides employees with income protection in the event they

become disabled from a covered accidental bodily injury, sickness, or pregnancy.

Employees are considered eligible as active, full-time salaried employees who work a

minimum of 20 hours a week. As a current employee of the company on the plan effective

date, there is no waiting period. If an employee begins working after the plan effective date,

there is a 90 waiting period where the individual must be an active full-time employee. A


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participant must also be disabled for 90 consecutive days before benefits become payable.

The benefit amount is 60% of the monthly income loss. There is a maximum monthly

benefit of $7,500 and a minimum monthly benefit of $100.

Loss of Income: RetirementRetirement

Through John Hancock Life Insurance Co., The Woodlands Inn and Resort offers

eligible employees the option of participating in a 401(k) plan to help plan for their

retirement income needs. This plan is fully insured by John Hancock Life Insurance Co.,

Which has an A.M. Best Rating of A+, which is superior. The Woodlands Inn and Resort

does not match participating employees contributions to the plan. The 401(k) is offered on

a fully contributory basis to employees who are of 21 years of age, have worked over 1,000

hours, and have been employed for at least 12 months. Employees are entitled to the funds

within their 401(k) account once they reach the Normal Age of Retirement.

Other ExposuresWork/Life Exposure

Through the Geisinger Choice PPO, participating employees have the option to

utilize the Accessories Program. This program provides participating employees with

access to money saving discounts for a variety of products and services not covered within

the PPO. Some of these health related products include acupuncture, fitness center

memberships, massage therapy, Weight Watchers, and chiropractic care. All of the

products and services offered are designed as an additional improvement in the

participants wellbeing beyond just the basic healthcare plan.


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While only employees participating in the PPO have the benefit of the Accessories

Program, every employee working within the resort is provided with a complimentary

meal, for each shift they work. Employees that are employed on salary are also entitled to

six paid holidays through the calendar year.


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Benefits Analysis

Part III

912495011912028654

RMI 3501Dr. Drennan

Fall 2011


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Introduction and Company HistoryThe Woodlands Inn and Resort is a private company located in historic Wilkes-

Barre, Pennsylvania. It is currently owned by second generation owners and has been a

staple within the community since it was founded in 1977. The resort includes nine

banquet halls and meeting rooms in addition to the 170 hotel rooms. There are two

different restaurants, four bars, and a night club. In order to provide this wide array of

amenities, The Woodlands Inn and Resort has a staff of 180 full and part-time employees in

all areas of work.

Out of their 180 employees, 19 employees and 11 dependents participate in the

healthcare plan. In respect to other areas of the benefit plan, a few salaried employees

participate in the life insurance, 401(k), and long term disability insurance. All employees

participate in the work life benefit of complimentary meals during work. With such variety

in participation, the company has the challenge of providing benefits that encompass all

areas. Michelle Valenti is the current Chief Financial Officer (CFO) for the company, and the

primary source for any and all information provided to complete this analysis. Although

she is the CFO, she is the primary individual overseeing the functioning of The Woodlands

Inn and Resorts employee benefit plan. She has both a financial and employee based

perspective on the plan due to the fact that she is responsible for several human resource

responsibilities as well.


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Overall Considerations and Objectives in Employee BenefitsLike many other companies today, The Woodlands Inn and Resort primarily offers

an employee benefit plan to attract potential assets and retain their current employees. The

Woodlands Inn and Resort has designed this plan with the goal of trying to provide a wide

array of benefits that is both cost efficient to the company and to participating employees.

Originally, starting as a small family owned business, the resort understands the

importance of being able to provide employees the option for coverage for both themselves

and their families.

Due to the nature of the business, The Woodlands Inn and Resort employs many

different types of workers. The total amount of employees create several different types of

staff including bar staff, restaurant staff, banquet staff, housekeeping, grounds

maintenance, and office staff. Different staffs work a wide range of hours and shifts

throughout the daily business day, which results in a large amount of part-time employees.

Taking this into account, providing the option of benefits to their large quantity of part-

time staff is an additional goal of the company. Part-time employees are eligible to

participate in all levels of the healthcare plan and both dental plans.

Benefits other than the healthcare plan are only offered to eligible full-time

employees. The amount of employees paid on a salary basis is much smaller than the

amount of employees working on an hourly wage. Taking the group size into consideration,

The Woodlands Inn and Resort only offers one option for Basic Life, Accidental Death and

Dismemberment (AD&D), Life Insurance, and a 401(k) plan.


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Problems, Issues and Concerns in the Design of the Health Benefits

Limited Plan Options

The overall healthcare plan currently offered by The Woodlands Inn and Resort

covers a larger area of exposures, but is somewhat limited in choices. For employees who

are eligible and choose to participate in the current healthcare plan, options are limited to a

three tiered preferred provider organization (PPO), through Geisinger Quality Options Inc.

The Woodlands Inn and Resort has been fully insured through Geisinger for several years,

and plan on staying with this PPO.

Although there are three plans within this PPO, participating employees only have

the PPO as an option for healthcare. The three options allow employees to choose between

different premium and deductible amounts, and also the option of going to either a

preferred or non-preferred provider. Both of these choices will lead to variation in costs to

the employee. The PPO is offered on a fully contributory basis to both part-time and full-

time employees. The Woodlands Inn and Resort says the plan is offered on an employee-

pay-all basis due to the extreme inflation of healthcare costs. Previously, they were able to

offer a PPO on a contributory basis, but since the cost of the premium is very high, it would

not be cost efficient to contribute currently.

Low Participation Rate

The lack of plan options may be a contributing factor to the low participation rate,

but primary reasons are the high monthly premiums for all options within the PPO. As


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shown by the estimated 11% participation rate, the company encounters a serious issue of

low participation for the offered healthcare plan. Due to the high monthly cost of the plan,

many employees who are eligible choose to opt out of coverage and find it elsewhere.

Management realizes that the amount of participation is extremely low, but currently the

financial state of the company does not allow them to consider beginning to contribute.

Moral Hazard & Adverse Selection

The design of the plan that allows part-time employees to be eligible for healthcare

coverage exposes the company to a moral hazard problem. Knowing that a part-time

employee is eligible when working at least 16 hours per week may encourage individuals

to apply for employment with the sole intention of receiving benefits. This would primarily

apply to high risk individuals who may not be eligible at another place of employment. The

moral hazard problem of individuals seeking employment solely for coverage leads into the

addition problem of adverse selection.

There is an adverse selection problem also associated with the group plan, low

participation and rising cost. Due to the extremely high cost to employees, several

employees are covered elsewhere. A large percentage of the workers are young, part-time,

and low risk. The cost of this PPO is too high for it to benefit such a category of workers.

They may also be covered under their guardians insurance. A majority of those who are

full time and eligible have coverage under their spouses benefits, which may be more

affordable. This high percentage of non-participating, eligible employees leaves only the

high risk individuals to participate. These high risk individuals will take advantage of the

group benefits and lack of individual underwriting, despite the high cost of the plan. High


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risks participating in the plan leave the company with a poor experience rating and high

premiums.

Healthcare ConsiderationsThe Woodlands aims to provide its employees with a fulfilling workplace. Part of

this goal is satisfying the employees needs, keeping them healthy, and maintaining their

happiness. The obvious solution to this is providing an effective healthcare plan. Employees

whose own needs are met are able to and willing to perform efficiently. The Woodlands

offer this benefit in order to provide a gratifying workplace.

Like many other small businesses, key employees often perform a wide range of

duties that extend beyond their area of work. Being that Mrs. Valenti is the CFO, but also

responsible for the companys benefit plan, she had to educate herself as best she could in

order to make the best decisions for the company. Having limited knowledge about

healthcare, she researched and explored her options before deciding on the current plan.

Deciding a PPO was the best option for the company, she sent out requests for proposals

from various carriers. Knowing the company had a low participation percentage, primarily

due to high cost, her goal was to choose the plan where her employees would have options,

but kept the premium relatively low.

Current Healthcare Options

Currently, The Woodlands Inn and Resort offers employees the option of

participating in a preferred provider organization (PPO) plan through Geisinger Quality

Options, Inc. As stated above, there are three options within the PPO, all varying in


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deductibles and premiums. The premiums are split into two categories, one for single

employees and another for employees with a family. The Woodlands chose this plan mainly

because of quality and cost. They chose a PPO with different tiers because they knew some

flexibility would be available to their employees. Choosing a plan with too many options

would not be viable or cost effective since the participation was so low.

There are two dental plans offered through United Concordia Companies Inc. Both

of these plans are voluntary and offered to eligible employees and their dependents. Dental

coverage is a valuable benefit for which employees are willing to pay, therefore, this is

offered on a fully contributory basis. As mentioned previously, the main difference between

the two dental plans is the inclusion of orthodontic coverage within one plan. Mrs. Valenti

explained that two plans were offered due to the diverse composition of The Woodlands

employees. Several employees have their children as dependents and having the option of

orthodontic care is extremely important to them. Employees that are single with no

dependents can choose the more basic plan, as to not pay for unnecessary benefits.

Vision coverage is provided within the Geisinger Choice PPO when using a preferred

provider for services. This benefit is covered under the PPO when employees select a

preferred provider. The vision coverage within the PPO is fairly basic, only covering one

eye exam per year. Taking this into consideration, there is an addition of the Geisinger

Accessories Program that allows participating employees to use discounts for frames,

lenses, and LASIK surgery. This program allows the plan to become more comprehensive

without driving up the cost of the premium.


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Exploring Alternative Healthcare Options

Mrs. Valenti said Geisinger was the best option for the employees at The Woodlands

at the most reasonable price. Although The Woodlands currently provides the Geisinger

PPO, this was not always the case. Formerly, the company has tried self-funding their

employee benefits plan in an effort to reduce costs. Due to an extreme in fluctuation of

large claims, this self-funded plan ended in a loss of over $300,000. No stop loss insurance

existed and the company did not have enough in their reserve to effectively cover the large

claims. In addition to this, they did not have the correct experience of claims history, or

knowledge of healthcare to self-fund. Mrs. Valenti said she did as much research as she

could about self-funding, but could not have anticipated the large loss that occurred. They

now know in order to self-fund, a company must be certain of their claims history,

purchase stop loss insurance, and also have a sufficient financial reserve to recover from

unexpected large claims.

Other Non-Retirement Benefits Considerations

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

The Woodlands Inn and Resort offers both Basic Life Insurance and Accidental Death

and Dismemberment Insurance within the same Group Term Life policy through BCS Life

Insurance Co. This benefit is important to the employees of The Woodlands, especially

those with families with dependents. This coverage is fully contributory and has an


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eligibility waiting period of 90 days of active employment in order to ensure employees do

not acquire a job specifically for this benefit. Although many employees are part-time and

may not be eligible for this benefit, there are full-time, salaried employees that can utilize

this coverage. More specifically, salaried employees working within grounds maintenance

and kitchen staff were taken into consideration when planning this coverage. These

employees, by nature of their work, have more of an exposure to risks such as injury, death

or dismemberment. Both Basic Life and Accidental Death and Dismemberment would be

extremely important to such employees so they know that their family will be taken care of

if anything were to happen. This adds value to their jobs and meaning to their position at

The Woodlands.

Paid Time Off (PTO)

Paid time off is a popular benefit with employees. This allows employees to take off for

vacation or sickness at their own leisure. It must be approved by management, but once

PTO is earned, they may take off for the hours they have accrued and receive payment. PTO

helps employees from losing income due to sickness or vacation. Since PTO must be

accrued, or earned, before an employee takes off, it keeps them from abusing the benefit.

Although it is offered to eligible part-time employees, Mrs. Valenti explains that PTO is not

a large part of the benefit plan to these employees simply because the company is

extremely flexible with scheduling. If a part-time employee needs a day off occasionally,

schedule arrangements can be made to accommodate this. PTO is much more utilized by

full-time employees that may need a longer amount of time off, such as for sickness or

personal reasons.


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Long Term Disability (LTD)

Like Basic Life and AD&D, long term disability is voluntary and on a fully contributory

basis. This plan is offered through Kansas City Life Insurance Co. There are a few

restrictions on this benefit to, again, ensure employees do not acquire employment at The

Woodlands solely for this benefit. An employee must be a full-time employee for at least 90

days and then must be injured for 90 days before the benefits coverage is payable. This

coverage also adds value to employees job within The Woodlands. It ensures income for an

employee if an accident occurs. Since this benefit is offered on a fully contributory basis, it

does not cost The Woodlands to offer this benefit and they felt it was necessary to provide

their employees with the option.

Regulatory ConsiderationsWhen asked about keeping up to date with regulatory considerations, Mrs. Valenti

stated that The Woodlands has experienced few complications with their regulatory

requirements. This could be due to the lack of knowledge about the constantly changing

regulations. Many small businesses do not have the administrative capacity to be as

focused on health benefits as they should be. Considering the low participation rate she

knew complying with Employee Retirement Income Security Act (ERISA), Health

Insurance Portability and Accountability Act (HIPAA) and upcoming changes with

Healthcare Reform would not be too extensive.

.


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Under ERISA, companies providing an employee benefit plan have certain fiduciary

responsibilities to up hold. The Woodlands hold fiduciary responsibility simply within the

act of choosing a benefits plan to best fit employee needs. In terms of communication

requirements, The Woodlands provides participating employees with a summary plan

description (SPD) for the healthcare plan, through Geisinger. This SPD provides an overall

description of benefits, premiums, and co-pays, written in a simple easy to read format. In

addition to this, Geisinger representatives are readily available to speak to potential and

current participating employees concerning any questions that cannot be answered by Mrs.

Valenti.

One requirement of HIPAA exists in order to prevent healthcare providers from

sharing confidential information about individuals. In addition to this requirement, HIPAA

also places limitations on preexisting condition exclusions (PCEs) within healthcare plans.

The Woodlands is able to easily comply with this requirement by choosing a PPO that does

not include any PCEs.

Concerning the Patient Protection and Affordable Care Act (PPACA) and its effect on

current healthcare plans, Mrs. Valenti was aware of the upcoming changes, but not clear on

the details. One specific change that will affect The Woodlands is the age specifications for

dependents. Mrs. Valenti explained that the PPO that is currently offered has stated age

requirements for dependents as 19 for a nonstudent and 23 for a student. This has changed

to age 26 regardless of the adult child's student or marital status. New summaries of

insurance plans are another part of PPACA that will affect The Woodlands. Descriptions

and summaries of benefits will now be required to include things such as definitions of


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standard medical and insurance terms and example of common benefits scenarios to

illustrate coverage.

Conclusion and RecommendationsAlthough the current plan offered by The Woodlands is sufficient in providing

necessary coverage, it is not extremely comprehensive and affordable. Offering the PPO on

a fully contributory basis can often cause eligible employees to seek coverage elsewhere.

For example, a nearby employer offers employees various plan options, including a

Consumer Driven Health Plan (CDHP), on a non-contributory basis. This is an extremely big

factor in The Woodlands not being able to retain key employees. One former participant of

The Woodlands PPO commented that she applied to the nearby competitor solely because

of the fantastic benefit plan. Despite the difficult economic situation, The Woodlands should

seriously consider contributing at least somewhat to the cost of the benefit plan.

A more drastic change to the current benefit plan would be to consider no longer

offering the PPO and switching the plan entirely to a CDHP with a health savings account.

Although a CDHP would increase out-of-pocket costs to the employees, the overall cost

would be significantly lower than the current monthly premium for the PPO. This type of

plan would also create incentive for employees to participate, raising The Woodlands

extremely low participation rate.

Additional work/life benefits would also help make any plan offered by The

Woodlands more comprehensive. Only participants of the PPO can take advantage of the

Accessories Program and its benefits. Benefits such as free gym and pool access and child


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care could greatly improve work/life benefits for employees not participating in the plan.

Any and all advice given above would greatly help improve the overall condition and

participation of The Woodlands employee benefit plan.

Works Cited

Geisel, Jerry. "Self-funded Health Plans under Scrutiny." Business Insurance (2011). 13

Mar. 2011. Web. 2 Dec. 2011.

Groom Law Group, Chartered. "Preparing for Health Care Reform A Chronological Guide

for Employers." Certified Employee Benefits Specialist Program (October 2010).

Web. 9 Dec. 2011.

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December 9, 2011

Michelle ValentiChief Financial OfficerThe Woodlands Inn and Resort1073 Highway 315Wilkes-Barre, PA 18702

Dear Michelle,

We would like to thank you for assisting us with our group project. All of theinformation you so generously provided us with was extremely helpful in allowing us tocomplete our analysis efficiently. Our success could not have been possible without yourhelp and insight. We understand you are extremely busy and greatly appreciate you takingtime out of your day to speak with us on multiple occasions. By having the opportunity toanalyze The Woodlands benefit plan we have gained a greater understanding of thematerial we are taught in class. We thank you again and wish you the best.

Sincerely,

elizabeth a winkowski - thewoodlandsinnandresort.fall2011

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