What is an Employer Group Waiver Plan “Egg Whip” (EGWP) and why is it important?
Whether you are a Union, Hospital, Public or Private Company, or even a Government Entity (ex. Wisconsin), in March of 2010 President Obama signed into law the new Healthcare Reform Act, better known as “ObamaCare”, which changed the way most employers provide their retirees medical and health insurance (something that is shrinking rather rapidly because of its cost). PriceWaterhouseCoopers (PWC touts EGWP) and Milliman (Milliman medicare-part-d-taking-another for Not For Profits have recommended to their clients that they thoroughly review their existing plans for possible enhancements because of both the governmental funding of these programs and the accounting impacts that these changes have had.
An Employer Group Waiver Plan (EGWP) is also known as a Series 800 Plan and is a Center for Medicare Service (CMS) approved program for both employers and unions. An employer may contract directly with CMS or go through an approved TPA such as AmWINS (a preferred vendor of ours) to establish the plan. They are usually Self Funded, are integrated with Medicare Part D, and sometimes include a fully insured “wrapper” around the plan to cover non-Medicare Part D prescription drugs. By designing the program this way, the employer may be able to lower their out of pocket cash flow on a yearly basis, increase the federally subsidy, reduce the present value of the liability (ASC 715, FASB 106, or GASB 43 & 45), and also provide a “stop loss”. While these plans were attractive pre-2010, it was perceived to be an administrative nightmare to implement because of contracting directly with CMS. But today there are alternatives.
Schiff Benefits Group, LLC works with a number of TPA’s who specialize in the implementation and administration of the”Egg Whips”. It’s our goal to help you, the employer, take advantage of as much subsidies/rebates available, outsource the administration, and basically do the “heavy lifting” with regards to your retirees. The following are just a few benefits to the employer:
- Reduced Employer Cash Flow for Post Age 65 Retirees
- Higher CMS Subsidy
- Reduced RDS Reimbursement from quarterly to monthly.
- Low Income Subsidies
- Cap Risk Exposure
- Reduced Liability on balance Sheet for Other Post Employment Benefits (OPEB), and
- Outsourcing of the administration of the plan and the RDS reimbursement
All of the above is accomplished with the added benefit of:
- Transferring of some or all of the benefit risk cost
- No longer needing plan attestation
- Maintaining control of plan
- While providing enhanced flexibility that enhances the benefits to retirees, and
- Reducing the ASC 715 (FASB 106) or GASB 43/45 liability
The following Articles outline the issue for Employers with Post Retirement Benefits
SBG EggWhip Flowchart
The_Trillion_Dollar_Gap_Pew report 2010
Iceberg Ahead -The hidden costs of public sector retiree health benefits in New York
AMWINS Corporate Overview
The Egg Whip Mechanics vs RDS Subsidy