Benefits FAQ


Frequently Asked Questions


Following are the responses we have provided to commonly asked client questions:




1. What is HIPAA?


HIPAA stands for the Health Insurance Portability and Accountability Act of 1996. This Federal legislation resulted from the perceived need for “portable” health coverage. Portable is, when a person changes jobs, he or she ought to be able to either continue current coverage or obtain new coverage without penalties such as waiting periods, or denial of coverage for pre-existing conditions. In order to implement some of the provisions of HIPAA, certain changes needed to occur in the way health information is gathered, recorded, and shared. The federal Health and Human Services agency (HHS) wrote The Administrative Simplification Rule to provide specific direction regarding the security and confidentiality of health information. The Administrative Simplification Rule and all the sections of HIPAA are all referred to as HIPAA.


HIPAA provides for a uniform national standard floor for transaction standards and code sets, privacy, and security of health information.


2. Why are the HIPAA rules necessary?

More than ever, health information is being sent by many different modes of communication. Every employer, hospital, and insurance carrier is sending this information in a different format. It is important to have rules and regulations to protect this sensitive information. One way to facilitate the portability of coverage is to provide for a consistent, national standard for how health information is handled.


• Who is responsible for HIPAA implementation activities?
The regulations state that the Privacy Officer designated by your company is responsible for HIPAA compliance.


• Who will be affected by HIPAA?
HIPAA affects all employees.


• How does HIPAA impact the employer?
HIPAA impacts how each company stores, protects, and communicates Protected Health Information (PHI).


Benefits: General


1. What is an Explanation of Benefits (EOB)?

An Explanation of Benefits (EOB) is the form that is sent to the patient from the carrier to explain the charges that have been assigned to the carrier and the amount that the carrier has indicated that they will pay for the services rendered.


• I have received an EOB from my insurance carrier, what do I need to do?
We are here to assist you with all your benefit questions! Please contact your Benefits Specialist with questions about your EOB.


• What is a Section 125 Plan?
Qualified flexible benefit programs allow employees to pay for certain benefits on a pre-tax basis. This means that contributions are made before income and payroll taxes are calculated (FICA, Medicare, Federal Unemployment or Federal income). The FICA and Medicare savings apply to both the employee and the employer.


• What plans qualify under Section 125?
In order for a plan to qualify, employers must follow certain rules. Employees must be given a choice between at least one eligible nontaxable benefit and one eligible taxable one. The employer must provide plan documents and a summary of the plan in writing. The plan may only benefit employees and their dependents (disqualifying sole proprietors, partners and Subchapter S shareholders who are not technically employees of the company). The plan may not discriminate by favoring highly compensated employees. Finally, elections for coverage under the plan must be made in advance of the coverage period, be irrevocable (except for a Change of Status) and may not defer compensation beyond the end of the plan year (also referred to as the “use it or lose it” rule for flexible spending plans).


• What is a Flexible Spending Account (FSA)?
A FSA is an account that allows an employee to have money taken out of the employee paycheck pre-tax for either unreimbursed medical expenses, dependent or childcare reimbursement or other insurance premiums that pay for insurance that isn’t offered through the employer.


• What is a Premium Only Plan (POP)?
A POP or a Premium Only Plan is a plan that allows the employee to have medical/dental insurance premiums taken out of their paychecks on a pre-tax basis.


• Do you offer the best possible rates from insurance carriers?
Health insurance premiums are filed with and regulated by your state’s Department of Insurance. Therefore, whether you receive quotes from REAL HR or another broker, you’ll be given the same rates for the same plans.


• Does working with REAL HR cost me anything?
No. All the REAL Employee Benefit services offered by REAL HR are provided at no extra cost to you. As your healthcare broker, we provide our Benefits Service Model for free. We use the commission dollars we earn from your business and reinvest them back into our clients.


• Can I change my coverage during the year?
You may change your elections only during the open enrollment period or within 30 days following a Qualifying Event. Qualifying Events include the following: marriage; divorce; birth, adoption or death of a dependent; change in employment status for you, your spouse or dependent; loss of, or enrollment in, other coverage; and change in residence. The type of change requested must be consistent with the change of family status.


• What should I do in the case of a family status change?
Within 30 days of the Qualifying Event (such as the birth of a child or marriage), you have a special enrollment window during which you may change your benefits. Please contact your Benefit Specialist for more information.

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