LOSS EXPOSURE MATRIX

LOSS EXPOSURE MEDICAL EXPENSES Hospital/ Physician Dental Vision Prescription LTC Retiree Health Care LOSS OF INCOME: DEATH Non-Accidental, NonOccupational Death Accidental Death Occupational Death COVERAGE? BENEFITS PROVIDED

YES YES YES YES NO NO

High-Option PPO; Low-Option PPO; Flexible Spending Account (FSA) Dental Plan - Delta Dental; FSA Vision Service Plan (VSP); FSA Prescription Drug Plan Medco; FSA

YES YES YES

OASDI; Term Life Insurance; AD&D Insurance; Supplemental Life Insurance OASDI; Term Life Insurance; AD&D Insurance; Supplemental Life Insurance OASDI; Term Life Insurance; AD&D Insurance; Supplemental Life Insurance; Workers Compensation Unemployment Insurance through the state of PA

LOSS OF INCOME: UNEMPLOYMENT LOSS OF INCOME: DISABILITY Short Term, Non-Occupational Long Term, Non-Occupational Short Term, Occupational Long Term, Occupational

YES

YES YES YES YES

Short-Term Disability Insurance; OASDI; AD&D Insurance; Workers Compensation; 401(k) Long-Term Disability Insurance; OASDI; AD&D Insurance; Workers Compensation; 401(k) Short-Term Disability Insurance, OASDI, AD&D Insurance; Workers Compensation; 401(k) Long-Term Disability Insurance; OASDI; AD&D Insurance; Workers Compensation; 401(k) 401(k); Pension Plan; Roth 401(k)

LOSS OF INCOME: RETIREMENT OTHER EXPOSURES Educational Assistance Work/Life

YES

YES YES

Dependent Care Property/Liability Legal Expenses

NO NO NO

Tuition Reimbursement Wellness Programs; Health Club Reimbursement; Employee Assistance Program (EAP); G. Berwind Scholarship Foundation None None None

COMPANY OVERVIEW CRC Industries is a company that specializes in the in the production of specialty chemicals for the maintenance and repair of professional, serving automotive, marine, electrical, industrial, and aviation equipment. As a company with only 175 employees, motivation, dedication, and overall positive employee morale is needed for this company to perform at its highest. CRC Industries provides employees with multiple benefits in order to address the employees everyday needs. Employee benefits range from medical benefits to work/life benefits. Overall, the majority of these benefits are self-funded by CRC Industries, and are offered to all full-time employees and or their eligible dependents. MEDICAL EXPENSES Preferred Provider Organization CRC Industries offers its employees a preferred provider organization (PPO) medical health plan. The plan is self-funded by CRC Industries, and it is administered by Independence Blue Cross. Independence Blue Cross has received a B+ rating from A.M. Best1. The PPO is available to eligible employees and their eligible dependents on a contributory basis. An employee is eligible for medical coverage one month from the date of hire if he or she is a full-time associate who is scheduled to work at least 40 hours per week. Eligible dependents include an employees spouse, an employees approved same and or opposite sex domestic partner, and an employees unmarried children under the age of 26. Coverage for unmarried children under the age of 26 will terminate at the end of the month in which they turn age 26. Other eligible dependents are those children who continue to be a tax exemption
1

All A.M. Best Ratings in this paper were retrieved from www.ambest.com.

(i.e., disabled children). A domestic partner is eligible when both partners have registered and provided proof of such registration of domestic partnership, or when qualifications under the CRC Industries Domestic Partner Benefit Policy2 are met. Employees can elect for companysponsored medical coverage either during open enrollment, when they become first eligible, or when they experience a qualified change in family status. If an employee experiences a qualifying change in family status during the year, changes can be made to his or her medical benefits within 31 days of the event. The requested benefit change must be consistent with the qualifying change in family status. The PPO plan has a High-Option and a Low-Option. Under the High-Option plan, participants receive the highest level of benefits by using a network provider. With this option, participants save money since rates are negotiated at a discount, and therefore out-of-pocket expenses are less. Participants using the Low-Option and utilizing out-of-network providers will experience higher out-of-pocket expenses since there are no discounted negotiations with these providers. Dental Plan Employees of CRC Industries and their eligible dependents can receive benefits for dental coverage administered through Delta Dental. Delta Dental of Pennsylvania received a rating of B+ from A.M. Best. The dental plan is self-funded and offered to employees on a non-contributory basis. Under this dental plan, employees are reimbursed according to whether or not they use a dentist in the Delta Dental network. Employees receive a benefit

See page 14 for CRC Industries Domestic Partner Benefit Policy.

enhancement by staying in the network because fees charged to them will be lower. This is because the fees are pre-negotiated by Delta Dental. Also, employees will not have to file claim forms. If employees use a non Delta Dental provider, benefits will be paid in the 90th percentile for out-of-network services. Also, dentists who are not in the Delta Dental network may bill plan participants for the balance above the 90th percentile fee. Additionally, employees will have to file claim forms. An employee is eligible for dental coverage one month from the date of hire if he or she is a full-time associate who is scheduled to work at least 40 hours per week. Eligible dependents include an employees spouse, an employees approved same and or opposite sex domestic partner, and an employees unmarried children under the age of 19. Other eligible dependents are unmarried children under the age of 25 if they are a full-time student. Coverage for dependents will terminate at the end of the calendar year in which they reach age 19 or 25 (if a full-time student). Eligible dependents are also those children who continue to be a tax exemption. Prescription Drug Plan Medco is the prescription drug carrier administering prescription drug coverage under the High-Option PPO plan. Therefore this plan is also offered on a contributory basis, and employees and their eligible dependents enrolled under the High-Option PPO plan are also eligible for this prescription drug coverage. The Medco Containment Group received a rating of A- from A.M. Best. Since an employee is eligible for coverage if he or she is eligible for and enrolled in the High-Option PPO medical plan, that employee is eligible for prescription drug

coverage one month from the date of hire if he or she is a full-time associate who is scheduled to work at least 40 hours per week. Eligible dependents include an employees spouse, an employees approved same and or opposite sex domestic partner, and an employees unmarried children under the age of 26. Coverage for unmarried children under the age of 26 will terminate at the end of the month in which they turn age 26. Other eligible dependents are those children who continue to be a tax exemption. For the retail service of the drug plan, participants have fixed copayments of $10 for the generic formulary, $20 for the brand formulary, or $35 for the non-brand formulary. Additionally, if a plan participant is taking a prescription drug daily, Medcos direct mail order program allows for up to a 90-day supply of a drug through the mail order service. For this service, participants have fixed copayments of $20 for the generic formulary, $40 for the brand formulary, or $70 for the non-brand formulary. Vision Plan CRC Industries offers its eligible employees and their dependents vision benefits on a contributory basis. The plan is self-funded and administered through Vision Service Plan (VSP). Vision Service Plan, Inc. has a rating of A according to A.M. Best. Employees who use a VSP Signature participating provider pay fewer out-of-pocket expenses and do not have to complete claim forms. Benefits provided are as follows:

BENEFIT Eye Exam Lenses

FREQUENCY 1x every 12 months 1x every 12 months

IN-NETWORK COPAYMENT $10 $25

OUT-OF-NETWORK Up to $45 $45 Single $65 Bifocal $85 Trifocal Up to $47 Up to $105

Frames Contact Lenses

1x every 24 months 1x every 12 months*

$150 Allowance $150 Allowance

*Contact lenses in lieu of lenses and frames An employee is eligible for vision benefits one month from the date of hire if he or she is a full-time associate who is scheduled to work at least 40 hours per week. Eligible dependents include an employees spouse, an employees approved same and or opposite sex domestic partner, and an employees unmarried children under the age of 19. Other eligible dependents are unmarried children under the age of 25 if they are a full-time student. Coverage for dependents will terminate at the end of the calendar year in which they reach age 19 or 25 (if a full-time student). Eligible dependents are also those children who continue to be a tax exemption. Flexible Spending Account (FSA) On a fully-contributory basis, CRC Industries offers its eligible employees two types of flexible spending accounts: Health Care Flexible Spending Accounts and Dependent Care Flexible Spending Accounts. The FSA plans are self-funded and are administered by CBIZ. An employee is eligible for an FSA one month from the date of hire if he or she is a full-time

associate who is scheduled to work at least 40 hours per week. Employees can enroll only when they are first eligible, or during open enrollment. Employees can choose to have a Health Care FSA, a Dependent Care FSA, or both. The employee must enroll and choose a contribution amount each year in order to participate in the FSA. Employee contributions are made on a pre-tax basis. For both FSAs, a maximum of $5,000 may be contributed per year. The plan has a 3 month grace period after the end of the plan year in order for employees to submit claims. The plan year runs January 1 st through December 1st. Also, claims can be submitted for reimbursement that were incurred during the first 2 months following the close of the plan year. Health Care accounts can be used for health-related expenses that are not covered by an associated health plan. These expenses may be incurred by the employee, the employees spouse, or the employees eligible dependent children. Dependent Care accounts are used to pay for the care of persons that can be claimed as dependents on an employees federal income tax return. This includes children under the age of 13. This also includes a disabled spouse or dependent that is mentally or physically incapable of self-care and spends at least eight hours a day in the employees home. Day care expenses that allow the employee (if single) or the employee and his or her spouse (if married) to work are considered eligible expenses. LOSS OF INCOME DUE TO DEATH Term Life Insurance with Accidental Death and Dismemberment (AD&D) After one month of employment, eligible employees are automatically provided with a Term Life Insurance benefit. This plan is offered on a non-contributory basis, is self-funded, but administered through the Principal Financial Group. The Principle Financial Group received an

A- rating from A.M. Best. Eligible employees are full-time employees who are scheduled to work for at least 40 hours a week. The benefit is equal to two times the employees annual earnings plus an extra $20,000 up to a maximum of $520,000. Annual earnings are defined as base salary plus the average of the last two calendar period bonuses. Basic AD&D Insurance is offered to eligible employees in addition to their Term Life Insurance. This benefit is equal to two times the employees annual earnings plus an extra $20,000 up to a maximum of $520,000. The AD&D benefits are payable if the employee dies or is seriously injured as the result of an accident. Supplemental Life Insurance Supplemental Life Insurance is available to eligible CRC Industries employees on a fullycontributory basis. The plan is fully insured and provided by The Principal Group. The plan may be purchased for the employee, his spouse, or his dependents. Employee coverage is available as one, two, three, four, or five times the employees annual salary. The maximum is the lesser of 500% of salary or $500,000. Guaranteed coverage is the lesser of 300% of salary or $500,000. Spousal coverage is available in $5,000 increments to a maximum of $50,000. Spousal guaranteed coverage is $25,000. Dependent coverage is available to eligible children older than 14 days old. Dependent coverage can be elected in the amount of $5,000 or $10,000.

LOSS OF INCOME: DISABILITY Short-Term Disability CRC Industries provides its employees with Short-Term Disability Insurance administered by Principal Financial Group. The plan is self-funded and is provided on a noncontributory basis. Only approved eligible employees, which are those who are full-time and scheduled to work at least 40 hours per week, can obtain this coverage. This coverage is for full-time employees with more than six months of constant service at the period of disability. Depending on the employees length of service, he can collect a portion of his normal pay. For employees who have worked more than six months but less than one year, they will collect two weeks of full pay and then ten weeks of pay. On the other hand, if the employee worked in the company for over five years, then he or she will collect the maximum amount of twelve weeks of full pay. Long-Term Disability CRC Industries provides employees Long-Term Disability Insurance that is fully-insured by the Principal Financial Group. This coverage is offered to employees on a non-contributory basis, and it offers continuous monthly income during prolonged injury or illness. Eligible employees, who are full-time and scheduled to work at least 40 hours a week, once approved, can receive this coverage and at 60% of their monthly earnings. The effective coverage date is one month after being hired. This coverage will begin on the 91st day of consistent disability and will continue until recovery or retirement age.

LOSS OF INCOME: RETIREMENT Retirement All employees who are full-time and working at least 40 hours per week are eligible to participate in CRC Industries 401(k) plan. This future planning will help employees meet their retirement income needs. This is provided on a contributory basis. The plan is self-funded and administration is provided by Wells Fargo. Employee contributions are vested 100 percent and invested pre-tax. At the maximum of 2 percent of annual compensation, the company will match half of the first 4 percent of an employees contributions. Six years of service will equal to full vesting in this plan. Eligibility is immediate for all employees at the age of 21 or older. CRC Industries also provides a Roth 401(k), which allows an employee to contribute to his 401(k) with after-tax dollars in exchange for tax-free withdrawals.
VESTING SCHEDULE

VESTING SCHEDULE Years of Percentage Service 1 0% 2 3 4 5 6 20% 40% 60% 80% 100%

CRC Industries offers its employees a pension plan which is a defined benefit plan. This is a self-funded plan that is offered on a fully contributory basis. It is optional for employees to contribute into this pension plan. However, this plan will provide normal and early retirement benefits along with lump sum distributions.

OTHER EXPOSURES Educational Assistance CRC Industries encourages its employees to increase their job skills and professionalism through education. All employees are eligible for tuition reimbursement; however this will require the supervisors approval. CRC Industries will reimburse employees 100 percent up to $6,000. Work/Life Exposures Employees are offered an opportunity to participate in a wellness program that is selffunded by CRC Industries but offered through Independence Blue Cross. This program is noncontributory and will have calendar events educating the employees of good health and wellness. In addition, they will have seminars for healthy eating and a program challenges with incentives to join. For example, an incentive that the company offers employees is a $200 reimbursement for Weight Watchers class fees upon completion of the program. CRC Industries also provides a health club reimbursement where the company will reimburse the employee 50% of the cost of a gym membership up to $300 per calendar year. This is only for employees that have memberships for 90 days or longer. All of these benefits are offered to full-time employees that have worked for at least 30 days within the company. In addition, CRC Industries provides Employee Assistance Programs (EAP) on a noncontributory basis. This program was created to help solve a broad range of personal and workrelated issues that may affect an employees performance. Some issues may include personal relationship problems, stress, depression, or addiction problems. This program is completely confidential and is accessible 24 hours a day to employees. The program provides consulting

services, and it also connects employees to specialists and/or community resources. Lastly, CRC Industries provides an opportunity for children of employees to receive the Charles G. Berwind Scholarship. This provides scholarships for students that plan to attend accredited colleges and universities. These scholarships are based on scholastic achievements and financial needs. All children of full-time employees are eligible except for children of the vice president, corporate officers, or members of the foundation.

Introduction In 1958, CRC Industries was formerly known as Corrosion Reaction Consultants, founded by Charles J. Webb II and Norman Larsen. This company started out producing only anti-corrosion and lubricant spray, but it quickly became a worldwide leader in manufacturing and distributing chemical supplies for the maintenance of electrical, industrial, marine, automotive, and aviation equipment. CRC Industries is placed at the top tier in its competitive area because of its ability to achieve levels of profitability and growth. Companies in this top tier are at constant competition when it comes to securing highly valued employees. Because of this, CRC Industries offer its employees multiple benefits to address their health and personal needs. With that being said, the company seriously takes costs into consideration, especially since most benefits are self funded and offered on either a contributory basis or a non-contributory basis. In 1981 the company was acquired by Berwind, an investment management company. With that being said CRC Industries is still responsible for the design of its employee benefits. In order to inquire about the design of employee benefits, interviews and constant contact was made with Cheryl Hayden who is the director of Human Resources. Even though Hayden does not have the final decision on what benefits are offered, she plays a major role in assisting the President and CEO when it comes to making the decisions. Hayden has over 20 years of experience, but he has only been with the company since 2009. Since then has helped with the design of the benefits offered to the employees.

Overall Design Considerations and Objectives in Offering Employee Benefits in General Since 2009, CRC Industries has been offering the same coverage to its employees. It offers its employees benefits for medical coverage, vision coverage, prescription drug coverage, dental coverage, life insurance, short-term and long-term disability insurance, a pension plan, and a 401(k) retirement savings plan. CRC Industries is satisfied with its ability to offer benefits to its employees with most administration performed by CBIZ. Since CRC Industries wants to maintain the best quality of benefits and services to its employees, it relies on Cheryl Hayden to be the liaison between employees and executive decision makers. Hayden believes that it is the companys responsibility to find ways to offer employees inclusive benefits that not only address their health needs but also their personal needs. We chose certain options because we feel that giving employees choices is a major benefit in and of itself, said Hayden. In addition, CRC Industries wants to attract and retain its employees because of competitive market of business the company is in. When asked how effective the company is on attracting and retaining employees, Hayden comments that the employer turnover ratio has been low since she has been with the company from 2009. She also states that merely choosing to offer benefits is not enough, the benefits must be satisfactory to employees. In order to get information about employee satisfaction, Hayden hands out a survey asking the employee how content they are with their benefits. The survey only asks about satisfaction with current benefits. From recent results, human resources concludes that changes to plans shouldnt be considered since complaints received are minimal and only about customer service, not coverage. In communicating offered benefits, Hayden personally, hands out a company benefits booklet to all employees once a year with their paycheck. This booklet is 22 pages long and it also

explains benefits offered to employees in detailed language easily understood by the average person. Hayden states that by doing this, the company wants it employees to know they are highly valued and that is why they are being offered these comprehensive benefits. In addition to offering coverage, the company allows an employee to opt-out of certain coverages. However, the company has decided that the employee will not receive money in place of this, and he or she has to sign a waiver stating an employer-sponsored benefit is not wanted. The percentage of employees choosing to opt-out is around 5% which is around 8 to 9 eligible employees. This decision was made to try and avert a moral hazard issue. If money was offered, some employees may opt-out of coverage and chose to receive money instead. They would then later enroll into the medical plan when they needed health coverage. This would cause an adverse selection problem to the company. By not offering money when an employee opts out, the company hopes that employees will be steered to enroll in the benefit anyway. Hayden states that most plans are self-funded because this allows the company more flexibility in coverage option and planning for future events. Also, if most plans were fully insured, the company would be paying more money in premiums since the company is not very large and credible. Problems, Issues, Concerns, and Considerations in the Design of Health Benefits Plan Designs Every year a meeting is held with the CEO, the CFO, the Director of Human Resources, a representative from the CBIZ, and a benefit consulting firm. Together, the group reviews statistics on how the health care coverage has been utilized by plan participants. From this information, the group then decides on whether any alterations to plan premiums, employee contributions, or offered coverages will be needed in the future. One thing that is surprising is that the company

does not inquire about new coverages that employees would like to see offered. Surveys are only about the satisfaction of current coverages. When asked why these inquiries arent made, Hayden comments this is because the executive personnel of the company feel that the health benefits that are offered to plan participants are plentiful and comprehensive on a necessity basis. She also states that the company will only look into the change of a plan if many complaints incur. She comments that complaints from employees about the health plans are very low and are not usually related to coverage or costs. Instead, most complaints received from employees are about customer service or about service bills not getting paid on time, which is usually due to an internal error where doctors forget to submit certain bills. Independence Blue Cross By Berwind having all nine of the small companies within their portfolio using Independence Blue Cross, Berwind is able to negotiate discounts for each company within its portfolio. With that being said, since the acquisition in 2009 CRC Industries has been offering employees a PPO through Independence Blue Cross. Hayden comments that compared to the previously offered health plan, this one with Independence Blue Cross is much better in that it offers many more choices to employees along with a larger network allowance. Ultimately, it was the cheaper cost that made the company decide to use the PPO provided by Independence Blue Cross. Medco By being enrolled in the High-Option PPO plan, employees are automatically given prescription drug coverage administered by Medco. Hayden states that they have switched to Medco this year because of issues with the previous prescription drug administrator who was unnamed. One reason for switching was because of a lower negotiated price with Medco. Another reason was because of complaints CRC Industries received about the previous prescription drug

plan. For instance the company received many complaints that pertained to participants being told that certain drugs werent covered when in fact they were. The company also received numerous complaints where plan participants were improperly being charged rates that were higher than they should have been. Vision Service Plan (VSP) and Delta Dental Since CRC Industries values its employees and wants to offer them comprehensive coverage in all areas of health, it chooses to offer vision and dental coverage. The company utilizes VSP and Delta Dental because both plans have low costs. More specifically, the company stays with these plans because the negotiated prices that both of these networks have contracted with their providers have been the lowest that CRC Industries have seen as far. Funding and Financing Considerations All of the medical health plans offered to employees by CRC Industries are self-funded. However, administration of the health plan is outsourced to a third-party named CBIZ. By outsourcing administration to a third-party administrator (TPA), the company is substantially reducing its costs. Hayden states that if the company were to do administration on its own, CRC Industries would be spending a lot of money on acquiring personnel in order to address claims handling and processing, government compliance issues, and constant customer service. Besides the other advantages of self-funding such as the elimination of premium taxes and also having no need to pay an insurers risk charge, another benefit that CRC receives from self-funding is having control of the plan design. The President and CEO of the company has the final say in any changes relating to what coverages are offered and the coverage amount that is available to all employees. CRC industries has around 175 employees and is headquartered in Warminster, Pennsylvania. Since CRC Industries self-funded health care is governed by ERISA, a federal law, the

company does not have to offer State-Mandated benefits, a state law. This is beneficial since CRC Industries does not have to include certain benefits that would cause the cost of the health plan to increase. This cost increase for the company would inevitably be shifted to the employees as well. By self-funding, the company continues to avoid costs associated with having to require coverage for all 57 Pennsylvania state-mandated benefits. When it comes to funding decisions, medical, vision, and prescription plans are offered on a contributory basis, while dental is offered on a non-contributory basis. The company chose to cover the entire cost of the dental plan because the negotiated prices were very cheap. Since CRC Industries receives low complaints about the dental plan, there will probably be no plan changes in the near future. Demographic Issues Within 175 employees, the average age of the CRC Industries employee is 40 years old. The company currently does not offer any coverage for Long Term Care (LTC), but should seriously consider looking into it for the future. The company should look into offering this coverage on a voluntary basis via full insurance. If this coverage were to be offered, a large number of participants would be entitled to this benefit around the same time. The company would avoid problems arising from adverse selection and a potential catastrophic loss by fully insuring this coverage. Controlling Costs With the cost of health care rising, it is an advantage that CRC Industries self-funds all of its health benefit plans. This way, the company can easily make plan changes in response to costs and claims made. Hayden explains that the company also makes use of claims information in order to try and control cost. While the Human Resources department of CRC Industries does not receive information about an employees personal claims, the department is able to obtain general claims

information about the employees of the company as a whole from CBIZ. In particular, prescription drug claims information from Medco regarding which types of prescriptions and how many refills are being administered, are especially useful information. From this information, Human Resources decides on which areas of health the company should focus more on educating its employees about in the Wellness Works For You program that is offered to employees. Hayden states that Were hoping that finding out what ails our employees and helping to address those problems will result in a reduction of medical and prescription drug claims. And because of this, the company hopes to see its costs diminish. Design of Other Types of Non-Retirement Benefits CRC Industries has a philosophy in offering the best coverage to its employees. This is reflected in the designing of Short-Term (STD) and Long-Term Disability (LTD) benefits. These benefits are both non-contributory. When offering Short-Term Disability the company implements ways to control moral hazard. CRC Industries has safety training programs, because they are a manufacturing company and they want to educate the employees on safety. However, if an employee falls and gets hurt at work, CRC industries has a worker compensation doctor to take a look at the employee. In addition, they will send the employee to physical therapy and when the doctor says it is okay to come back, CRC Industries will allow this while accommodating the employees needs. For example, if they employee cannot work in the position he was in before, they will make accommodations for him to work in another position until he can work at his previous position. This decision was made because even though the employee may not be able to work in his previous position, the employer still needs a job in order to meet his income needs. Furthermore, since the company values its employees and has spent time educating and training

employees for certain positions, CRC Industries wants the employee to eventually return to his original position. In addition, CRC Industries decided to offer a Wellness Program in order to keep employees healthy while hopefully lowering medical and prescription drug claims costs. To get employees to participate in this program, CRC Industries decided to give employees incentives to join the program such as program reimbursements. Also, since the health of an employee is key to not only company value and lowered costs, CRC Industries decided to offer this on a non-contributory basis. Additionally, CRC Industries chose to provide and Employee Assistance Program (EAP). This was because problems outside of the work place can potentially affect the work performance of an employee, which again is very valuable to the company. CRC Industries chose to provide this through a third-party because if they didnt, administration costs and customer service needs would cost the company a lot of money. Hayden states that when employees are better able to focus on the job than on personal issues, their performance can be maximized. CRC Industries states that the money and hours spent on providing this program will be well worth the effort in the long-run. Because CRC Industries encourages all of its employees to increase their professionalism and job skills through education, it has chosen to provide its employees a benefit that reimburses employees for money spent on education. By offering this, CRC Industries hopes that employees will seek out higher education which will then lead to the company to having a valuable and elite workforce. CRC Industries also offers a Charles G. Berwind Scholarship to children of employees. The company chose to offer this because most of its employees happen to be parents of children who will hopefully attend a college or university in the future.

The Impact of Regulatory Compliance COBRA As amended by COBRA, ERISA requires plan sponsors that employ 20 or more employees to offer continuation coverage to qualified beneficiaries who lose health coverage under an employee benefit plan for a specified reason. Although much of the COBRA administration is outsourced to CBIZ, it has become Cheryl Haydens job to notify CBIZ and to tell the TPA who to contact and provide with information regarding COBRA. For example, recently a CRC Industries employee had passed away and his spouse was eligible for continuation of coverage through COBRA. It was Cheryls job to give CBIZ the contact information of the spouse, and then it was CBIZs job to send an information package to the spouse of the passed employee. Hayden states that most of the people seeking coverage through COBRA are the spouses who have been recently separated from an employee. One requirement under COBRA is the continuation of coverage for health care for a period of up to 18 months which can be extended to 36 months. Hayden states that the company decides the coverage period depending on the situation. In the previous instance, the spouse of the passed employee received the full 36 months of coverage. Within the comprehensive benefits user guide that CRC distributes to employees, there is no information pertaining to COBRA. The company cannot assume that all employees are aware of this amendment and furthermore it cannot assume that employees would know what qualifying events would entitle them or their dependents to a continuation of health care coverage. A section of the benefits user guide should include an explanation of COBRA to employees. This is very important because one of the eligibility requirements for dependents seeking medical and prescription drug coverage is to be unmarried up to the age of 26. By getting married, a person under the age of 26 is no longer qualified as a dependent and may wish to continue seeking health coverage. While it may be easy for Human

Resources to identify terminated employees or the spouse of a deceased employee, it is impossible for the department to keep track of the status of every single dependent, especially student status with regards to the eligibility requirement for dental and vision health benefits. PPACA The company has already implemented changes regarding benefit coverage and administration in order to comply with the law regarding the Patient Protection and Affordable Care Act (PPACA). Hayden has stated that because of the law, her Human Resources department has had to spend a lot of time adding coverage for adult children on their parents medical and prescription drug coverage, regardless of the childs student or marital status until he or she turns age 26. Hayden states that although this has increased the costs for the company, the executive personnel of CRC Industries, including herself, are for many of the changes brought about by the reform. For the future, the company should be prepared to employ changes regarding FSA accounts for employees. Currently, the maximum Health FSA contribution limit for employees is $5,000. In 2013, PPACA requires a new Health FSA maximum contribution limit of $2,500 a year. One change that the company should start to implement is the requiring of proof of medical health coverage for employees who choose to opt-out of the employer-sponsored health benefits. The company has already addressed the issue of moral hazard by not offering money to employees who choose to opt-out, and then only enroll when they need health coverage. But because the company philosophy focuses on the value of employees, the company should make sure that its employees do have health coverage, especially with the forthcoming individual insurance coverage mandate in 2014.

ERISA Because of ERISA, CRC Industries has had to comply with certain requirements. One of these requirements deals with providing employees with a document of the Summary Plan Description. Once a year, Hayden physically hands these documents to employees because 60 out of 175 employees are in the production and warehouse sector and do not sit at desks with computers. This is very wise of the company and definitely exercises fiduciary responsibility because although they can send these documents out electronically, they cannot assume that every employee has access to a computer at home. New employees also receive this document physically upon hire. Also, discrimination testing is needed for the retirement savings plan. All discrimination testing is performed by Wells Fargo after the company gives them the statistics about the participation rate and what the deferrals are. Hayden states that the company has recently been passing discrimination testing. She believes this has been mostly because not only does the benefits handbook provide employees with details about the pension and 401(k) plans, but also because most employees are at an age where planning for retirement is essential. Considerations and Conclusion Based on the criteria used to make decisions about employee benefits offered, it can be said that cost is a major factor. It can also be said CRC Industries values its employees, and wants to offer them essential and high quality benefits. Being a small company, it is very fitting that CRC Industries utilizes self funding for most of its plans because costs can be easily controlled and minimized. Furthermore, CRC Industries should take into consideration the offering of benefits that can be essential to its work force such as the addition of Long term Care. Finally, the company should look to plan ahead with regards to the future changes surrounding PPACA.

Work Cited Bunce, Victoria Craig and JP Wieske. "Health Insurance Mandates in the States 2010." CAHI. Web. 9 December 2010. <http://www.cahi.org/cahi_contents/resources/pdf/MandatesintheStates2010.pdf>. CRC Industries. 2011. 9 December 2011. < http://www.crcindustries.com/crcwebmain/>. Tinnes, Christy, Brigen Winters, and Christine Keller. Preparing for Health Care Reform a Chronological Guide for Employers. US.practiallaw. Web. 9 December 2010. < https://blackboard.temple.edu/bbcswebdav/courses/Drennan_RMI205/gbaupdateoct1 0.pdf>.