Benefits Analysis: Crozer-Keystone Health System

Table of Contents
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Exposure Analysis.. 2
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Medical Expenses Loss of Income

Inventory of Existing Benefits .. 3

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Medical Expenses Death Disability Retirement Other Expenses

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o
Benefit Analysis for Crozer-Keystone Health System Loss Exposure Overall Medical Expenses Provided Coverage / Benefits Provided Medical Expense Yes CKHS Advantage Plan, CKHS Advantage PLUS Medical Plan, CKHS Indemnity Plan, Aetna HMO, Keystone Health Plan East HMO, FSA, DCFSA, Optional Critical Illness Insurance Yes Yes Yes No Yes Loss of Income: Yes Yes Yes Delta Dental PPO, FSA Davis Vision PPO, FSA CHOICES Prescription Drug, FSA N/A COBRA, Medicare Death Basic Life & AD&D, Optional AD&D, Term Life, Optional Whole Life Optional Business Travel, Optional Whole Life

Dental Vision Prescription Long Term Care Retiree Health Care Non-Accidental & Non-Occupational Accidental Occupational

Unemployment

Optional Business Travel, Optional Whole Life, OASDI Loss of Income: Unemployment Yes PA State: Unemployment Insurance Loss of Income: Disability Yes Optional Short Term Yes Basic Long Term, Optional Long Term Yes Optional Short Term Yes Basic Long Term, Optional Long Term Loss of Income: Retirement Yes TSA- 403(b) or 401(k), Defined Contribution Benefit Plan, Defined Benefit Plan, OASDI Other Exposures Yes Tuition Assistance, On-Site Educational Opportunities Yes FSA, DCFSA, TFSA, Time Off, Employee Assistance Program (EAP) Yes DCFSA No N/A No N/A

Non-Occupational; Short-Term Non-Occupational; Long-Term Occupational Disability; Short-Term Occupational Disability; Long-Term Retirement

Educational Assistance Work/Life Exposures Dependent Care Property/Liability Legal Expenses

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Part II Inventory of Benefits Introduction to Crozer- Keystone Health Systems Plan Crozer-Keystone Health System (CKHS) consists of eight medical facilities throughout Delaware County. The system offers benefits to 5,600 employees and their dependents. The plan is highlighted by their award winning employee wellness program and a variety of basic plans with optional coverages available to meet the special needs of enrollees. Because of CKHS robust benefit plan, they are able to attract and retain employees. In addition, they administer their plan via Internet, which makes enrollment easy and convenient. CKHS understands that every employee has different needs and emphasizes this through their benefit program called Crozer-Keystone CHOICES. CHOICES is a cafeteria plan that covers medical expenses with multiple options. These options include two PPO plans, an Indemnity plan, two HMO plans, and a Flexible Spending Account (FSA). Along with the basic medical coverages, employees are also given the option to participate in CKHSs Wellness Works program, which gives an incentive for employees to maintain a healthy lifestyle. CHOICES also offers three different defined benefit plans for profit and non-profit entities within the system. The three plans that are offered are: Tax Sheltered Annuity (TSA) - 403(b) or 401(k), a Defined Benefit Retirement Plan, and a Defined Contribution Benefit Plan. These plans essentially give employees the opportunity to maximize their savings for future retirement. CKHS values their employees by providing them with desired benefits that subsequently enhance their performance and the work environment around them. CKHS Employee and Dependent Eligibility All regular full-time or part time employees, that is employees scheduled to work at least 40 hours per pay, are eligible to receive benefits. Dependents are defined as an employees spouse,

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same sex domestic partner and unmarried children under the age of 19. In order to be eligible after the age of 19, a dependent must be a full-time student, a full-time student who becomes disabled while covered under the plan or disabled prior to age 19. There is a three month waiting-period after initial employment before an employee is eligible to receive benefits. Coverage will last up to the final day of the month after an employee becomes ineligible to receive benefits.

Medical Expenses Preferred Provider Organization (PPO) Plans Crozer-Keystone Health System offers two PPO plans, CKHS Advantage Medical Plan and CKHS Advantage PLUS Medical Plan. The distinct difference between these two plans is that the Advantage PLUS plan has less out-of-pocket payments when care is provided. There are three different levels of coverage, the highest being when a Crozer-Keystone facility or a participating physician is used and the lowest when an enrollee goes Out-Of-Network. There is a middle level of coverage offered if a provider from the Amerihealth Administrators Network of physicians is used. The PPO plans are fully self-funded and are financed on a contributory basis. By establishing a self-funded plan, CKHS bears all the risk. The eligibility for the PPO plans is stated in the CKHS Employee and Dependent Eligibility section of the introduction. CKHS Indemnity Plan Crozer-Keystone Health System provides the option for an Indemnity Plan. This plan, like the PPOs, is self-funded and financed on a contributory basis. Generally, inpatient care is covered at 100% and 80% of reasonable and customary amounts for other services. There is a $100 annual deductible per person and a $250 annual deductible per family, along with a $400 out-of-pocket maximum. This plan is unique because indemnity plans do not typically have any networks where benefits would be enhanced. CKHS creates an unofficial network with their indemnity plan
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where benefits are enhanced for employees who use Crozer-Keystone facilities. For inpatient hospital care the plan pays 100% for the first 120 days and then only 80% for any days following. If the employee receives inpatient hospital care in a CKHS medical center the plan will pay 100% of costs, which can be a significant savings due to the high costs of inpatient care. The eligibility for the CKHS Indemnity Plan is stated in the CKHS Employee and Dependent Eligibility section of the introduction. Health Maintenance Organization (HMO) Plan Crozer-Keystone Health System offers two types of HMOs. One is provided by Aetna Health Inc. and the other by Keystone Health Plan East, a subsidiary of Independence Blue Cross. Both plans are fully-insured and financed on a contributory basis. The Aetna HMO has maximums of $1,500 per person annual copay and $3,000 per family annual copay. KHPE has lower maximums of $1,000 and $2,000 per person and per family, respectively. Both plans have the same copay amounts for services provided. Aetna has an A.M. Best Rating of A which stands for Excellent [1]. Independence Blue Cross has a rating of NR which stands for Not Rated because it has been withdrawn from public records in 2009[1]. The eligibility for the HMO plans is stated in the CKHS Employee and Dependent Eligibility section of the introduction. The Keystone HMO consists of the same eligibility requirements except a same sex domestic partner is not eligible. There is a three month waiting-period after initial employment before an employee is eligible to receive benefits. Coverage will last up to the final day of the month after an employee becomes ineligible to receive benefits.

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Flexible Savings Account (FSA) Medical Flexible Spending Account (MFSA) Crozer-Keystone Health System also offers a Medical Flexible Spending Account which gives employees an opportunity to use pre-tax dollars on qualified expenses through a payroll deduction (up to $3,000 per year). Some of the expenses include: childcare, medical, dental, vision, or prescription out-of pocket expenses, and mass transit transportation. This plan is self-funded and administered through AmeriHealth. When enrolled, employees are issued an AmeriHealth+ Card which acts as debit card containing the pre-tax dollar balance. If the employee chooses to optout of the FSA, they will be subject to regular taxation. In addition to the plan, CKHS provides employees with an online FSA calculator that estimates expected utilization through a questionnaire. This is an important tool, because employees lose any money that is in the account at the policys termination date. The eligibility for the MFSA plan is stated in the CKHS Employee and Dependent Eligibility section of the introduction. In addition to this, over age dependents up to age 26 are covered. Dependent Care Flexible Spending Account (DCFSA) In addition to MFSA, Crozer-Keystone Health System offers a Dependent Care Flexible Spending Account, in which an employee can contribute a maximum of $5,000 per year (single or married with a joint income tax return) or a maximum of $2,500 per year (if married but file separate tax returns). This plan operates the same way as a MFSA but is designed to pay for eligible dependent care expenses, such as day care, babysitters and after-school programs. To be an eligible dependent, the family member must be: claimed on the employees income tax return, a child under age 13, a spouse, or a dependent that lives with the employee and is physically or mentally unfit to care for him or herself.

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Other Medical Expense Optional Critical Illness Optional Critical Illness is a voluntary CHOICES benefit. It is insured by UNUM, which received an A A.M. Best Rating , administered by The Farmington Company and is a fully-contributory. A stated amount is paid if an employee or a dependent is diagnosed with covered illness. Of the illnesses covered, 100% of the benefit is paid in the case of a heart attack, stroke, major organ transplant, end-stage kidney failure, permanent accidental paralysis and cancer, 25% is paid for coronary artery bypass surgery and carcinoma in situ. Coverage ranges from $5,000 to $50,000 for the employee, $5,000 to $25,000 for his or her spouse, and a flat rate of $2,500 or $5,000 for his or her dependent children. Spouses and dependent children are only eligible if the employee is covered. Dental Crozer-Keystone Health System provides their employees with two Dental options: Basic Dental and Enhanced Dental. The plans are self-funded and administered through Delta Dental on a contributory basis. Delta Dental has a B+ A.M. Best Rating which represents it being one of the better companies to receive a rating of Good [1]. There are two networks of providers to choose from - Delta Dental PPO or Delta Dental Premier Network. Both plans cover preventive, basic, orthodontia and major care with a maximum of $1,500 per person. The Basic and Enhanced Dental options gives the employee the freedom to see any dentist, however if the selected dentist is in one of the above networks, costs are usually lower and the dentist is responsible for filling claim forms. The Basic Dental option pays following a fixed fee schedule, a list of specified fees for services. The Enhanced Dental option pays 100% of preventive care and fewer out-of-pocket expenses. The eligibility for the Dental Plan is stated in the CKHS Employee and Dependent Eligibility

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section of the introduction.. Employees can use their FSA to cover cost sharing (copays or deductibles) and other eligible expenses. Vision Crozer-Keystone CHOICES includes a Vision option that covers exams, prescription glasses or contact lenses every twelve months. This option is self-funded, but administered through David Vision PPO, and offered on a fully-contributory basis. Benefits are enhanced if an employee selects a doctor who participates in the Davis Vision Network. Some of the benefits of staying in network include fixed discounted fees for additional optional items and some optional services with no additional costs. The eligibility for the Vision Plan is stated in the CKHS Employee and Dependent Eligibility section of the introduction. Employees can use their FSA to cover cost sharing and other eligible expenses. Prescription Drug Crozer-Keystone Health System offers a very unique prescription drug plan. The plan is self-funded and offered on a contributory basis. CVS Caremark administers the plan which consists of a four tiered copayment system generic, preferred brand, non-preferred brand and specialty. CKHS has its own employee pharmacy with lower copays and more coverage for specialty brands than a retail pharmacy. Employees can use their FSA to cover cost sharing and other eligible expenses. The eligibility for the Prescription Drug Plan is stated in the CKHS Employee and Dependent Eligibility section of the introduction.

Loss of Income Due to Death Basic Term Life, Accidental Death and Dismemberment (AD&D) Insurance Crozer-Keystone Health System provides Basic Life Insurance and AD&D on a non-contributory basis, meaning no cost to the employee. The plans are insured through The Hartford, an insurer with an A.M. Best Rating of A, signifying Excellent [2]. Basic Term Life Insurance
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coverage amount is one times the employees base salary, or a $50,000 maximum and $15,000 minimum, and AD&D Insurance has the same coverage amounts but is in addition to the Basic Life. Both plans protect against the loss of income that results if an employee dies. AD&D and Term Life cover occupational and non-occupational accidents that result in death, both paying a one-time death benefit. The eligibility for these plans is stated in the CKHS Employee and Dependent Eligibility section of the introduction. Optional AD&D, Optional Term Life, Optional Whole Life, Business Travel Accident Plan There are four optional insurances that can be used to supplement or modify Basic Life and AD&D that are issued on a fully-contributory basis, meaning the employee pays all costs. Optional AD&D, Optional Term Life and Business Travel Accident Plan are insured by The Hartford and Optional Whole Life is insured by UNUM. If the $50,000 maximum does not seem adequate, an employee may elect Optional AD&D which increases the coverage from one to ten times the employees annual pay (up to a $500,000 maximum). Optional AD&D allows for dependents and spouse to be covered, as well. Optional Term Life can be supplemented in order to provide Term Life Insurance for an employee, their spouse and/or eligible dependent children. This also allows for the coverage to increase from one to five times the employees annual pay, with a maximum of $1,300,000. The cost per pay period for an employee is calculated through biweekly payments where a coverage amount, which is based on age per $1,000 of coverage, is multiplied by the amount of coverage desired. For example, a 40 year old wants $20,000 of coverage so you would multiply the coverage amount for a 40 year old, $.053 per $1,000 of coverage, by 20 equaling a payment of $1.06 per pay period. Optional Life Insurance for children is a flat rate and does not vary with number of children you have. Optional Whole Life can be purchased in order to add even more protection. This plan offers permanent coverage for the employee, spouse, dependent children and grandchildren. The employee can elect different amounts of additional life insurance
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benefits and optional benefits to modify coverage, called riders. An Accidental Death Benefit Rider can be added to the Whole Life policy that gives an additional death benefit of equal value of the policy amount if a covered accident causes a death. Business Travel Accident will pay for a loss that occurs within one year of an accident resulting from business travel. The coverage amount is one times your annual base salary up to a maximum of $500,000. All four optional coverages listed above have the same eligibility requirements for employees and dependents as stated in the CKHS Employee and Dependent Eligibility section of the introduction.

Loss of Income Due to Disability Optional Short-Term Disability (STD) Insurance Crozer-Keystone Health System offers Optional Short Term Disability coverage that pays 60% of an employees weekly pay up to the plan maximum when disabled as a result of illness or injury. The coverage is fully-contributed starts after all accrued sick days have been used, or 30 post illness or injury happened. It is fully-insured and administered by UNUM. The eligibility for the STD is stated in the CKHS Employee and Dependent Eligibility section of the introduction. Long Term Disability (LTD) Insurance LTD is fully-insured by UNUM and is offered on a non-contributory basis. Like the STD, the benefit pays 60% of the employees base monthly pay up to a monthly maximum. For increased coverage, 66.67% of the employees base monthly pay with a maximum of $8,000, an employee could buy Optional Long Term Disability. Benefits for LTD begin after being disabled for 60 or 90 consecutive days. The eligibility for the LTD plans is stated in the CKHS Employee and Dependent Eligibility section of the introduction, except they stop at age 65 because LTD is offset by OASDI or retirement benefits and instead of the three month waiting period for LTD, coverage starts after a year of employment.

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Loss of Income: Retirement Defined Contribution Retirement Plan, Tax Sheltered Annuity (TSA) Plan- 403 (b) or 401 (k), Crozer- Keystone Health System offers a Defined Contribution Retirement Plan, where an eligible employee can receive money through a qualified Fidelity Investment option. Specifically, CKHS offers a Tax Sheltered Annuity in the forms of a 403 (b) and a 401 (k). A 403 (b) plan is for non-profit entities within the system, which are offered through Fidelity Investments and/or TIAACREF. The TIAA-CREF currently has an A.M. Best rating of A++ which can be classified as Superior [1]. Those employed by for-profit entities may contribute to a 401 (k) through Fidelity Investments. The benefits for the two plans are based on employee and employer contributions made to the TSA. This means that Crozer-Keystone will match a percentage of what the employee contributed to his or her TSA. The amounts are determined through a contribution percentage formula. This formula uses factors such as age, percentage of the employees salary, and any investment returns or losses. The table on the next page shows the age-based contribution schedule:

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When looking at the 403 (b) and a 401 (k) contribution plan, It is evident that CKHS values their employees by offering a 50% rate of contribution to all employees. These high rates give all CKHS employees the incentive to save more for retirement on a tax-deferred basis. This can be demonstrated in the chart below. In order to enroll in this plan, an employee must be hired or rehired on or after January 1 of the current year, have completed at least one year of service with CKHS, and are at least 21 years Age <20 20-29 30-39 40-49 50-59 60+ Contribution Percentage 1.00% 1.75% 2.50% 3.50% 4.75% 6.25% of age. Along with employee eligibility standards,

there are predetermined vesting requirements that must be met. In order to become fully vested, an employee must work for three years where he or she is paid for at least 1,000 hours and reach normal retirement age of 65. One can also be 100% vested if he or she becomes totally or permanently disabled and/or if the individual's employment ends. In addition, if an employee reaches the normal retirement age, they will remain fully vested and may continue to make contributions. When an employee is eligible to withdrawal funds from his or her plan, they have the option of single lump sum payment or can be paid in the form of a monthly annuity. TSA Incentive Contributions Years of Service Maximum Contribu- Maximum CKHS tion Matched Matching Contribution $1,000 $2,000
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Rate of Contribution

Under 10 10 - Plus

$2,000 $4,000

50% 50%

Defined Benefit Retirement Plan In addition to CKHSs Defined Contribution Retirement Plan, a Defined Benefit Plan is also an option for employees. It is important to note that unlike a contribution plan, a defined benefit plan is a retirement plan that has a fixed annual amount that is stored into the employees retirement funds. A defined benefit plan also uses actuarial calculations (time value of money) to determine amount needed to be invested to reach a specified goal. To become vested, the employee must wait five calendar years in which the employee is paid for at least 1,000 hours. An employee can receive benefits when he or she reaches a normal retirement age of 65. This plan can paid out in a monthly annuity or a lump sum. The eligibility requirements are the same as stated before in the defined contribution plan.

Other Exposures Educational Assistance Crozer-Keystone Health Systems offers Tuition Assistance and on-site educational opportunities in order to promote further education of their employees. Full-time employees can only receive 100% (up to $4,000 a year) while Part-time can receive 50% (up to $4,000 a year). Both are contingent upon receive a grade of C or better. This would include the costs of books, lab fees, registration fees, mileage, meals and any other incidental expense. On-site educational programs are held throughout the health system. Examples of such programs include training, credit/degree programs, and clinical schools. The eligibility for Tuition Assistance and on-site educational programs is stated in the CKHS Employee and Dependent Eligibility section of the Introduction but the employee must also have been hired 90 days prior to be eligible to receive the Tuition Assistance benefit. Work/Life Exposures

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Crozer-Keystone Health System provides an Employee Assistance Program (EAP) which offers consulting and referrals. CKHS partners with Carebridge, a group of trained counselors that can help various problems, such as family or marital problems, stress or anxiety, and drug or alcohol abuse. The goal is to balance work and family to promote a healthy and enjoyable lifestyle. Employees have a quick and easy access to Health Management programs through CKHSs PPO and Indemnity plans. These programs include nutritional and diabetic counseling, smoking awareness, and even provide a fitness reimbursement plan (up to $400 annually) for employees who actively use Crozer-Keystone Healthplex Facility. CKHS also has an Employer Assisted Homebuyer Program, which gives a $5,000 forgivable loan-to-grant and additional assistance in order to promote living in Chester or Delaware County.

Part IIIBenefits Analysis

Company Overview Crozer-Keystone Health System (CKHS) is a health system that consists of five hospitals, several outpatient centers, Healthplex Sports Club and a network of primary-care and specialty practices. Established in 1990 by the merger of Crozer-Chester Medical Center and Delaware County Memorial Hospital, the system covers around one million people today. CKHS serves Delaware County, Pennsylvania, and parts of New Jersey and Delaware. Improving the health status of their patients is goal of CKHS. There is also a stress on working with the community and building a healthy environment throughout the health system.

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We were fortunate enough to get in contact with Christine Keck, the Employee Benefits Director of Crozer-Keystone Health System. She currently works with CKHSs Benefits Managers, Brokers, and the vice president of HR department. Ms. Keck contributes a substantial amount of her work in the overall development of benefits. This includes the creation, implementation and distribution of benefits.

Overall Design Considerations and Objectives in Offering Employee Benefits

Crozer-Keystone Health System designs their employee benefit package with the employees needs and desires at the forefront of all decisions. The goal is to offer a comprehensive, yet affordable, benefit package that will attract and retains employees, while creating a productive work environment. The CHOICES benefit package is designed to cover any employee from a medical specialist to a facilitys janitor. Christine Keck stressed that that CKHS is constantly evaluating and refining programs to ensure that they are competitive with other area health systems. Ms. Keck stated that Crozer-Keystone Health System offers a high-middle salary to their employees and it is their robust benefits that are a key factor in attracting and keeping employees. By offering a cafeteria plan, the employees have the power to choose what plans fit their needs and at what level of coverage. Ms. Keck explained that this kind of flexible plan is beneficial because it eliminates coverage that employees may not need. The closer the plan can be to covering the employees needs, the more productive and loyal they will be. Demographics

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Demographics is an important tool that can be used in the designing of benefits. Specifically, CKHS uses factors such as age, gender and family status to create a benefits package that best fits the needs of the employees. Currently, CKHSs average employee age is 45 and has a gender distribution of 80% female and 20% male. Because the ratio of females is much higher then male, CKHS made sure to increase the variety of benefits directed towards females. As a result, Child care and Maternity Leave were added to the plan. This is an example where CKHS utilized the demographics of their company to further enhance their benefit plan. Funding and Financing Considerations Crozer-Keystone Health System incorporates self-insured and fully insured funding in their benefit plan. Because CKHS is a large network they are able to use the law-of-large numbers to predict expected losses. Selecting to self-fund allows them to customize the plan and save money if there is a favorable loss experience. CKHS self-funds using a General Asset Plan as their selffunding vehicle. They do not currently have any stop loss because it was removed twelve years ago. The reasoning behind this was that CKHS is big enough to handle a high dollar claim and in their experience they had only one claim it the stop loss limit. CKHS decided to fully-insure their HMOs, various Life Insurance, and short and long-term disability. This is because they wanted to offer HMOs to provide a variety of medical plans and for the different Life Insurance and disability they did not want to bear the financial risk that could result from a catastrophic loss. This is especially important that they fully-insure these because the health system does not have a reserve. When choosing an insurer Ms. Keck and her coworkers look at cost, customer service and competency. She looks at companys ratings and how many locations they have.

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In terms of financing, they offer benefits on both a contributory and non-contributory basis. CKHS subsidizes benefits differently for full time and part time employees. For medical benefits, CKHS pays 87% of the premiums for full-time employees and 67% for part time employees. CKHS uses different forms of communication, such as print materials and small group sessions, in order to educate the employees on the true cost of their benefits and to evaluate satisfaction of the plans. For Tax Sheltered Annuities, CKHS matches contributions up $2,000 if the employed under ten years and $4,000 if over ten years. Non-contributory benefits include Basic Life, AD&D, Long Term Disability and Retirement Plan. Ms. Keck stated that these are necessary to provide and something that the employees value, especially for employees with families.

Design of Health Benefits

Types of Plans Offered In order to answer the issue of providing a benefit plan to suite the wide needs of their employees, Crozer-Keystone Health System offers plans with differing combinations of deductibles, covered services and payment levels. After the merger in 1990, CKHS did not have a cohesive benefit plan until 1996. Delaware County Memorial Hospital had its own self-insured PPO - very similar to the PLUS plan, and Crozer-Chester Medical Center had its own self-insured indemnity plan - similar to the indemnity plan CKHS offers today. In 1996, using their current broker Foster Higgins, Crozer-Keystone Choices Flexible Benefits Plan was designed and offered to all employees in the health system. The cafeteria plan allows for every employee to choose a plan that meets his or her needs without paying for unnecessary coverage. The two PPOs have been the most utilized health plans, particularly the CKHS Advantage PLUS Medical Plan. Ninety-percent of employees are currently
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enrolled in one of these plans. She stated, Our employees use our doctors. The PLUS plan gives them 100% coverage when using CKHS doctors and facilities. But it also gives them the choice to go to any provider they want. They like the great coverage in-network and having the choice to go anywhere. One problem that has been reoccurring is the low participation rate in the indemnity plan. Ms. Keck said this is a result of it being too expensive and in the future they are phasing this plan out. Beyond the medical plans CKHS offers dental, vision, basic life, AD&D, business travel accident, long term disability, Retirement Plans and many optional coverages, in order to satisfy different needs. Most of the plans offer different level of coverage one can elect and have the option to add on dependents if not initially offered. Subsidy Decisions In order to decide on the percentage of employee and employer contribution, CKHS used a percentage very similar to the one DCMH and CCMC used with their HMOs and PPOs. The reasoning behind this was, Employees were happy with this contribution amount and we wanted to keep is close to that to keep employee satisfaction. The percentage of employee contribution has increased slightly because of increasing healthcare costs and the size of the benefit plan. Ms. Keck mentioned that the 13% of employee contribution is still lower than the average employee contribution. Potential Problems with High Average Age and High Rate of Female Employment As stated previously in the Demographics section, the average age is around 45 years old. Ms. Keck addressed this issue Our higher average age means higher expense in medical and disability. This can be an issue if these higher expenses drive up premiums in these areas. Younger, healthier employees may forego insurance if the cost is too much thus destroying a key
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principal of insurance - risk sharing. The United States Department of Labor states, Average medical-costs of a 50-year-old are two to three times those of a 30-year-old. This higher average age combined with the employees being 80% female, who generally use more health care services than men, leads to even further increases in health care costs. It creates an incentive for younger, male employees to not enroll because costs may be too high. Cost Containment Crozer-Keystone Health System utilizes a number of cost containment techniques in order to combat the problem of cost inflation in healthcare. There are three ways to do this: decrease the frequency or severity, and supplement costly services with cheaper ones. Ms. Keck mentioned the employee wellness program, Wellness Works, as a way to decrease frequency and stated, The wellness program incentivizes employees with annual rewards for healthy lifestyles if they participate in educational programs, healthy habits, and preventive screenings. It can be as simple as attending a fitness class offered in the same hospital where they work. This program is a way of keeping CKHSs employees healthy and may result in decreased demand for healthcare. In 2012, CKHS is implementing a $0 copay initiative program as another technique to control healthcare costs. In this program CKHS will pay for the first three 30-day fills of a generic drug, if a person is currently taking name-brand medications. This programs goal is to have employees try and then switch to generic medications which would mean lower healthcare costs because generic drugs are less expensive than brand-name drugs. Other cost containment strategies include: making CKHS smoke free, the Clear the Air quit smoking program, the employee assistance program, and the use of steerage, small to no co-payments, to increase the use of CKHS facilities.

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Problems, Issues, Concerns, and Considerations in the Design of Other Non-Retirement Benefits
Crozer-Keystone Health System strongly promotes employees to further enhance their skills and knowledge within their specified profession. They demonstrate this by offering tuition assistance and discounted on-sight educational opportunities. These two programs help strengthen CKHSs employee base, which in turn creates a better quality of service. Mrs. Keck affirms, It is very important to give our employees the incentive to better themselves, especially in the realm of education. This essentially will help the overall quality and capacity of our health system. By investing in their employees, CKHS creates a sophisticated working environment and ensures a strong future. In addition, by providing educational assistance, CKHS is able to determine all the employees who are dedicated in their fields. Flexible Spending Accounts Flexible Spending Accounts (FSAs) can be extremely beneficial to employers by attracting and retaining key employees. CKHS had this in mind when they incorporated three different FSAs into their health plan: Medical FSA, Dependent Care FSA and a Transit FSA. Although the Medical FSA was the most popular account, CKHSs employees substantially participated in the Dependent Care FSA. This is due to the fact that the number of eligible dependents (5,877) surpasses the number of eligible employees (5,400). Because both of the accounts fit the needs of most employees, Mrs. Keck was pleased to announce the success behind the plans. Although CKHS has implemented a well working FSA plan, a new issue arises in the realm of legality. Because CKHS offers employees a choice between taxable benefits and non-taxable benefits, they have inadvertently created a Section 125 plan. By forming a Section 125 plan,
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CKHS is required to undertake additional administrative procedures including: writing a plan document, distributing a summary plan description (SPD) to all participants, and most importantly they must pass nondiscriminatory testing. Failure to comply with these section 125 requirements, CKHS may experience harsh penalties. To mitigate any future losses through the failure of compliance, it is imperative for CKHS to keep track of all of their employees and the benefits offered to them. Communication to the Employees CKHSs benefits department uses multiple communication techniques to inform the employees about their choices of benefits. One of the main attractions is their online website (www.crozerbenefits.org), where employees have their own personal accounts. The website provides all the information needed to fully understand the benefits that are offered. It also shows the specific plans that each employee has signed up for, the premiums that need to be paid, and the overall guidelines that need to be followed in order to participate. In addition, CKHS distributes enrollment guides, benefit programs, summary plan descriptions, and even monthly newsletters that focus on current topics. When it come time for enrollment, CKHS also holds benefit fairs and small group presentations for a more in-depth explanation of benefits. All of these communication techniques are vital to CKHSs distribution of benefits. When asking Mrs. Keck about the importance of communicating with employees, she enlightened us with the following: Without communication, our health plan would be inexistent. It is our job to make sure every employee knows bout all the benefits offered to them. If we fail this task, we will lose our competitive edge, essentially loosing our employee base. CKHSs benefits department allocates about half of their time communicating with their employees.

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Regulatory Compliance
With constant reforms in the health market, it is very hard for an employer to keep track and adhere to all of the new regulations. This especially holds true with Crozer- Keystone Health System, because they offer benefits to a large number of employees. They address this issue by outsourcing its regulatory duties to other third party administrators (TPA). Mrs. Keck explains why: There are allot of administrative duties and cost that go along with HIPAA and COBRA. So we decided to outsource and shift the burden to professionals, ones that we know will do the job right. Another issue with CKHSs regulatory compliance is that it has an insufficient amount of personnel in the benefits department to take on the work. This dilemma creates a heavy debate within CKHSs benefits department - either to outsource by using a TPA or handle it internally and hire more employees. CKHS currently outsources its COBRA administrative duties to AmeriHealth Administrators and works with a leading Philadelphia law firm to comply with HIPAA (Mrs. Keck was reluctant to disclose the name of the law firm). By outsourcing to these firms, CKHS relieves itself from duties such as: comprehensive administration and communication materials, notifying qualified beneficiaries, collection and remittance of premium billing, eligibility maintenance, customer services and most importantly reporting. Mrs. Keck was pleased to say that CKHS has only has to send a record file every two weeks. Another key benefit that CKHS has in outsourcing is that they shift large portion of their liability and fiduciary responsibilities, which is in important because of the heavy costs associated with them. Although CKHS outsources, they still encounter issues with the complexity of notification requirements within COBRA. In order to deal with this situation, Mrs. Keck makes sure that any new information on a qualified beneficiary is promptly filed and

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passed on to the TPA. Fortunately, CKHS has never encountered a problem with regulatory compliance. Conclusion Crozer-Keystone Health System provides their employees with benefits that fit their needs, while taking into account effectiveness and costs. Implementing a plan that has choices is crucial in achieving this. By knowing what the employees and their families need, is a way that CKHS attracts and retains employees. The plan encourages their employees to utilize CKHS facilities in order to reduce costs. By offering five medical plans and then a number of voluntary and optional plans, CKHSs benefit plan thoroughly covers employees needs.

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Thank You Letter Dear Ms. Keck, We would like to thank you for your assistance and participation throughout the process of writing our project. Through our meeting and other contact, we really got to understand the benefit plan and the reasoning behind it. We appreciate the time you put aside for us, as we know you are very busy. Attached is the final version of our project. Please feel free to share it with whomever and do not hesitate to give us your feedback. Please let us know if you have any questions or would like additional information. Thanks again! Sincerely, David Kremer and Nicholas Patrylak

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Work Cited-

Keck, Christine. Personal Interview. 5 December 2011. Chapter 2 - Employment, Wages, and Benefits. The U.S. Department of Labor Home Page. Web. 07 Dec. 2011.

<http://www.dol.gov/oasam/programs/history/herman/reports/futurework/report/chapter2/ main.htm>.

[1] A.M. Best Rating: http://www.ambest.com/ [2] Insurance Journal: http://www.insurancejournal.com/news/national/2011/04/12/194334.htm

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