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Table of contents

OCTOBER 2018 VOL 120

W W W. S I P C O N L I N E . N E T

FEATURES 4 SIIA Endeavors: On the Record with SIIA President & CEO Mike Ferguson

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mind over matter Depressed employees at higher risk for workplace injuries and longer recovery times when out on workers’ comp, but solutions are at hand to buck this troubling trend

By Bruce Shutan

ARTICLES 20 INside the beltway: ‘Most Active’ Federal Policy Environment Motivates SIIA Member Engagement

36 Rated Captives Segment Thriving According to A.M. Best

24 outside the beltway: SIIA Members Are Vigilant Advocates In State Challenges to Self-Insurance

44 Embracing Prudence History of collectively bargained plans steeped in stewardship

29 ACA, HIPAA and Federal Health Benefit Mandates The Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA)

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Explanations that Benefit

58

News from siia members

and other federal health benefit mandates

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC). Postmaster: Send address changes to The Self-Insurer Editorial and Advertising Office, P.O. Box 1237, Simpsonville, SC 29681,(888) 394-5688

Self-Insurer’s Publishing Corp.

PUBLISHING DIRECTOR Erica Massey, SENIOR EDITOR Gretchen Grote, CONTRIBUTING EDITOR Mike Ferguson, DIRECTOR OF OPERATIONS Justin Miller, DIRECTOR OF ADVERTISING Shane Byars, EDITORIAL ADVISORS Bruce Shutan and Karrie Hyatt, 2018 Self-Insurers’ Publishing Corp. Officers James A. Kinder, CEO/Chairman, Erica M. Massey, President, Lynne Bolduc, Esq. Secretary

OCTOBER 2018

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FEATURE

SIIA Endeavors: On the Record with SIIA President & CEO Mike Ferguson

SIIA ENDEAVORS

S

SIIA President & CEO Mike Ferguson

S

elf-Insurer Contributing Author Dave Kirby sat down with SIIA President & CEO Mike Ferguson for a wide-ranging interview to talk about how the association continues to evolve and play an increasingly important role in helping its members be successful in the self-insurance marketplace.

Dave Kirby: So, let’s jump right in. Why do you think it so important for companies involved in the self-insurance marketplace to be SIIA members? Mike Ferguson: I think SIIA is doing some very important work to promote the expansion of this marketplace, while fending off regulatory threats affecting our members in various ways. Of course, our ability to effectively execute this mission depends on a growing and active membership base.

SIIA members are always the first to learn about important industry developments and we consistently deliver important information and educational resources through a variety of formats including a monthly magazine, multiple educational conferences and various social media platforms.

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ENDEAVORS I should also point out the networking value of SIIA membership. Our industry is really relationship-driven and most of the major players are highly active in our association. It’s really hard to count the number of members who have told me they have been able to build highly successful businesses, thanks in large part due to the connections they have made through their SIIA involvement. I obviously love hearing these stories and they are great to share with potential members.

DK: We’ve seen numerous announcements over the last couple of years of companies upgrading to Diamond or Gold member status, can you talk a little about SIIA’s approach relative to these membership categories and the factors that have contributed to the apparent growth?

SIIA has been doing and would like to see us continue to “scale,” to put in growth company terms, so that we can further promote and protect their business interests.

DK: So, with this increased scale, what can we expect to see with regard to new initiatives and/or improved membership services going forward? MF: We are actually hustling on several fronts. Live conferences are obviously a key membership service, so we have been working to improve the attendee experience by incorporating technology tools to encourage more interactive educational sessions, expanding food and beverage offerings and creating environments to facilitate more efficient networking.

And while most members will still rely on our live conferences for educational content, we are developing the capability to deliver this content in alternative formats and expect to have more details to announce in the next few months.

We are also investing resources to encourage the next generation of industry executives to get involved with the association through our SIIA Future Leaders Initiative. This appears to be working so far with a large number of SFLs who we expect to attend our conference in Austin.

MF: Unlike many other trade organizations that are relatively homogeneous in terms of size and business focus, SIIA is much more heterogeneous. We have smaller members with varying degrees of industry focus to companies with billion-dollar balance sheets that focus exclusively on the self-insurance marketplace. Because of this disparity, it does not make sense to have a single membership category, so we have created multiple membership categories with different dues rates and benefit packages. This has enabled companies to plug into SIIA at various entry points.

With regard to the increase in higher level membership, I think the bigger companies in our industry like what

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ENDEAVORS And of course, we continue to invest in our team of lobbyists and communications professionals necessary to help protect and promote the selfinsurance marketplace.

DK: SIIA’s Fusion initiative seems to be getting a lot of attention lately. What is this all about? MF: SIIA’s membership is comprised of individuals with diverse expertise and business contacts within the broad self-insurance marketplace. The Fusion initiative is intended to facilitate the sharing of information and business referrals among members involved with self-insured health plans, captive insurance and self-insured workers’ compensation programs. Several members have been doing this very effectively on an individual basis, but we hope to greatly expand these types of interactions, which have the potential to be game-changers for many companies.

As the starting point, we have incorporated a dedicated Fusion educational track as part of the Austin conference, which features topics that we believe will be of interest to multiple membership constituencies. And these sessions have the added benefit of getting people in the same room who normally would not be, so we anticipate some organic networking will occur.

This initiative is still in the early development stage and we are optimistic that it will take form in a way that delivers real value to our members that they will not be able to get anywhere else.

DK: Obviously SIIA has a big focus on lobbying and advocacy so as we head into the fall, can you tell us about current legislative and regulatory developments on the radar screen of your team in DC? MF: It’s important for our members to know that SIIA continues to develop relationships with federal and state policymakers to educate them on self-insurance issues and keep them apprised of both challenges and opportunities. Over the course of this past year, more and more states have sought 1332 waiver from the US Department of Health and Human Services (HHS) to increase state funding to qualify for federal funds to boost individual exchanges. While a good exercise on its own, SIIA remains concerned about some approaches to increase state funding, including the imposition of taxes on stop-loss, TPAs or brokers. We view these as “rob Peter to pay Paul” exercises in which states are looking to tax portions of the industry that would see no benefit in order to pay specific market players. Earlier this year, the SIIA Government Relations Committee approved a formal position paper to help engage state and federal regulators on the issues related to these waiver applications. The arguments outlined in the position paper were helpful in SIIA joining with a broader coalition to halt a stop-loss excise tax in Oklahoma as part of their 1332 waiver process.

DK: What else should members know about important state developments and related SIIA responses?

MF: We are always monitoring state legislation and regulations and working to make the self-insured marketplace as flexible as possible to meet the needs of clients. This year, SIIA has filed numerous letters of support and comment letters with state legislators and regulators and has met with Maine regulators twice about the state’s forthcoming small group stop-loss regulation. We have also been working with a stakeholder group in Nevada on the state’s redrafted small group stop-loss regulations and plan to meet with the regulators once they schedule a stakeholder’s workshop on the regulations.

In New York, SIIA lobbyists, along with several of our members, pressed for the permanent reopening of the 51100 stop-loss market. We held a lobby day in Albany where our members met with about two dozen legislators and the staff from the Department of Financial Services. While we did not get everything that we wanted by the end of the session, legislation allowing grandfathered stop-loss policies to be renewed an additional five years is on the governor’s desk. SIIA will meet with the governor’s staff and ask them to have the governor sign the legislation.

SIIA also monitors the activities of the National Association of Insurance Commissioners (NAIC), engaging directly with various regulators and, when necessary, advocating or educating on behalf of the self-insurance industry. Maintaining a constant presence at events like these increases SIIA’s

OCTOBER 2018

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ENDEAVORS credibility when we do need to meet with individual state regulators. This is also a great opportunity to see captive regulators and support them if there are any pending matters at the NAIC.

DK: You have commented publicly on several occasions about how important it is for SIIA to become more a major player in terms of political contributions. Can you elaborate a bit on why this should be such a priority and any progress that has been made to move in this direction? MF: I have actually been saying this for the past several years and this objective has continued to move up the list of association priorities. There are two primary reasons for this emphasis, with the one reason being fairly obvious for most members, with the second reason less obvious for those who are not creatures of the DC lobbying world.

The obvious reason, of course, is that it is much easier to make and keep friends on Capitol Hill if you provide financial support for their campaigns. This does not mean that if you contribute to a specific member of Congress that they are certain to vote a specific way, but it’s certainly easier to get a meeting with the member and/or their senior staff to explain your issues.

Not so obvious to those outside the beltway is that when an organization establishes itself as a political financial player, it raises your “street cred,” so to speak, with other important organizations

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in town that we may need to partner with on various lobbying efforts.

In this regard, I am pleased to report that SIIA is now well positioned with some of the powerful associations in DC, including the U.S. Chamber of Commerce, National Association of Manufacturers, and at least one major labor organization.

Our progress has been somewhat slow but steady since we established the SelfInsurance Political Action Committee (SIPAC) about seven years ago as a vehicle for SIIA members to channel political contributions to key members of Congress. Things have accelerated this year. Thanks to this more dedicated focus, combined with increased staffing resources, you are now starting to see SIIA really establishing itself as a money player in DC. Obviously, we are not the biggest player by any means but it’s solid progress that is sure to greatly assist our advocacy efforts.

DK: So how has SIPAC positioned itself, given that we are in a hot election year? MF: The 2018 mid-term elections have obviously received a lot of attention, and rightfully so considering how they have the potential to change the federal policy landscape. SIIA, and SIPAC specifically, are always looking ahead. For this election cycle SIPAC has supported more candidates for federal office than ever before, and we couldn’t do it without support from our members. This support allows us to further leverage our membership and offer support to candidates who understand and are helpful to our industry. It is also important to note that SIPAC supports both Democrat and Republican candidates to ensure that we are not viewed as a partisan organization.


ENDEAVORS DK: How do you view SIIA’s role in the captive insurance space, as this membership constituency appears to be growing fairly rapidly? MF: My view is that SIIA is playing a very unique and useful role in the captive insurance space by integrating its stakeholders into the much broader self-insurance world. This is important because mid-market employers are becoming increasingly sophisticated in how they manage risk, understanding that they can integrate multiple self-insurance strategies that may include the formation of a captive insurance company. SIIA brings this all together, giving captive insurance professionals more educational and networking resources.

And the captive policy front continues to be a busy one for SIIA. Earlier this year, SIIA was able to spearhead important legislative clarifications on look-through and specified holder provisions previously passed as part of the PATH Act. These changes, while legislatively small, will help our captive members better able to comply with the important changes in reporting made by Congress. In addition to these clarifications, the association continues to monitor the data collection related to IRS Notice 2016-66 and the burden it places on the good actors within the industry. Lastly, SIIA’s Captive Committee has been busy this year developing a Captive Manager Code of Conduct that will be released soon. This has been several years in the making and many of our captive members have played an integral role. This is just part of larger SIIA activities to create better industry practices among not only our members but the industry in general.

SIIA’s Workers’ Compensation Executive Forum, some key initiatives are the development of online educational content for group fund trustees, addressing expected regulatory staffing turnover in many states, and identifying issues where SIIA’s lobbying and media relations team can provide value.

DK: With SIIA’s 2018 conference calendar finishing up in Austin this month, what does the association’s event schedule look like for 2019? MF: It has shaped up nicely with something for all of our members, both in terms of content and location. Our 2019 conference season will start with the Self-Insured Health Plan Executive Forum, scheduled for March 18-20th in Charlotte, NC. The program format content will be completely new and fresh.

For these reasons and others, I think SIIA will further enhance its reputation as the key organization for those involved in the captive insurance space.

DK: SIIA has a distinct membership constituency comprised of companies involved with self-insured workers’ compensation programs. Can you give us an idea of some association initiatives that appeal specifically to these members? MF: Yes, we have a very active segment of members involved with self-insured worker’s compensation programs, including group self-insured funds. In addition to

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ENDEAVORS

We’ll be in Nashville, TN May 7-9th for the Self-Insured Workers’ Compensation Executive Forum. This is a great event with content and networking opportunities valuable to those involved with both single employer workers’ compensation programs as well as group self-insured workers’ compensation funds.

Then to finish up the year, we’ll be heading to the West Coast where the National Conference & Expo will be held at the Marriott Marque in San Francisco, CA September 29-October 2nd. It’s been more than a decade since SIIA has been in San Francisco and we look forward to returning there!

We are still scouting locations for our International Conference and hope to announce its location and date soon. I can say that it will continue with a Latin American focus.

DK: On that point, SIIA has held some high-profile International conferences in recent years, most recently in Costa Rica, Panama, Puerto Rico and Mexico. What’s the strategy behind this regional focus? MF: We recognize that the insurance industry, like make other industries, has become increasingly global in nature and an increasing number of our members have told us they are looking for new business opportunities outside the United States.

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In this regard, SIIA believes it can play an important role of helping members identify these opportunities and facilitate the necessary business connections to take advantage of these opportunities. We have decided to continue to focus on Latin America due to the geographic proximity and the fact that there is an uptick in interest in self-insurance and/or captive insurance from multiple countries within this region.

DK: There certainly sounds like a lot of exciting things going on at SIIA. What advice would give industry executives who want to become more active in the organization? MF: Well of course, become a member if you are not already. Showing up at association events is a big deal because SIIA is a very interactive and social organization and there is no substitute for being there. We also recruit members to serve on our various volunteer committees and participate in periodic grassroots lobbying campaigns, which are great involvement opportunities. I like to say we are happy to put our members to work, so be on the lookout for announcements.

For more information visit www.siia.org.


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FEATURE

MIND over MATTER

WRITTEN BY BRUCE SHUTAN

Depressed employees at higher risk for workplace injuries and longer recovery times when out on workers’ comp, but solutions are at hand to buck this troubling trend

O O

ne critical lesson plan for the self-insured community from a holistic standpoint is that the mind is capable of inflicting bodily harm, sparking safety concerns in the workplace. The Center for Workplace Mental Health (CWMH) notes that depression affects more than 16 million Americans and is the leading cause of disability worldwide, costing the U.S. economy $210.5 billion per year in absenteeism, reduced productivity and medical costs. When depression is present along with other medical conditions, which often happens, an employer’s health care costs are about two to three times higher, reports Darcy Gruttadaro, director of the CWMH. “Mental health conditions, including depression, are a fast-growing category under disability,” she says, assuming a potential connection in the rate at which work comp claims are increasing. Experts point out that depression, whose economic impact is about $210 billion a year,


MIND OVER MATTER

can cause not only sleep deprivation or over sleeping, but also interfere with concentration or slow thoughts – leading to chronic fatigue or clouding judgment. “All of these things can be factors in the propensity for injury or result in major health and safety concerns,” she says. “If you’re on a factory floor, working with tools or heavy equipment, or even making important decisions at a bank, the likelihood that your health and safety or stress level will be impacted is very high.” More than half of people who suffer from depression or another mental health issue don’t seek treatment, says Terri L. Rhodes, CEO of the Disability Management Employer Coalition. Given this startling fact, she’s concerned about the implications of depressed employees not paying full attention to their work, particularly in higher-risk jobs.

Darcy Gruttadaro

“We have individuals in the workplace going about their daily jobs and have no idea what their mental health status is or if they’re hiding it,” she observes. Indeed, depressed people have a 2.5 times higher risk of on-the-job-injury, according to the Disability Management Employer Coalition’s 2016 Mental Health in the Workplace Survey. In addition, the National Institute of Mental Health estimates that as many as one-fifth of U.S. adults experience mental illness in a given year.

“If you are depressed, you have a tendency to have more injuries,” explains Fernando Branco, M.D., medical director for Midwest Employers Casualty Company (a Berkley Company), an excess carrier that manages catastrophic cases. With injuries also causing depression, he describes this phenomenon as a Catch

“If you already had a tendency to deal with things by going into depression, most likely as you get injured, you will exacerbate feelings of low self-worth,” he says.

22.

Fernando Branco

Depression is one of several factors that can place an injured worker into an at-risk or “needlessly disabled” category that can result in a dramatically higher claim cost, adds Michael Stack, a national expert in the field of work comp and CEO of Amaxx LLC. Missing work can isolate work comp claimants from co-workers and a work routine that provides positive reinforcement and an opportunity to socialize in addition to earning financial rewards, Stack says. Removing workplace connections can potentially rob injured employees of their identity and self-esteem, turn them into an outcast and trigger depression. “That happens far too frequently in that people don’t reach out to people who are injured and feel like they don’t know what to say to them,” he observes. Depression also can significantly lengthen the duration of disability or recovery time. If a claimant, for instance, has a partially torn rotator cuff injury with a physiological

Michael Stack

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MIND OVER MATTER Rhodes reporters, while pregnancy rounds out the latter list.

Source: Center for Workplace Mental Health required healing time of 42 days, Stack says the claims data suggests that depression could easily add a few months to their recovery. The fact is, claims involving physical conditions are much more likely to spin out of control if there’s not also a focus on the mental aspect and any other biopsychosocial factors, he cautions.

Perverse patterns What often transpires is that adjusters must wade through multiple psychological diagnoses when reviewing physical injuries and, therefore, are reluctant to approve “anything that has to do with psychology,” according to Branco. “What adjusters end up getting is this old-fashioned approach to psychological issues and pain in workers’ comp.” Therefore, he believes there’s a pressing need for targeted intervention with clear and reasonably attainable goals in mind that will help return depressed claimants to work sooner rather than later. The idea is not to tackle all of a claimant’s problems at once. “We cannot possibly fix everybody’s marital status or their upbringing,” Branco explains. A staunch proponent of integrated absence management to improve health outcomes, Rhodes laments that the workers’ comp system tends to label depression or other mental illnesses as a preexisting condition that’s unrelated to an injury. There’s also a tendency to not even acknowledge that an injury could worsen someone’s mental health, she adds. Mental health issues, along with musculoskeletal disorders, are two of the top three disabling conditions on both the occupational and non-occupational sides,

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While claimants suffering from musculoskeletal disorders benefit from physical or occupational therapy and workconditioning programs, she points out that injured workers who also are diagnosed with depression or another psychological condition lack the same level of resources.

Embracing the biopsychosocial model Despite an uphill battle for claimants, clinicians, case managers and selfinsured employers, there are multiple ways to reduce or even prevent any collateral damage involving depression in workers’ comp claims. Stack has noticed greater adoption of holistic medicine such the biopsychosocial model and predicts a deeper acceptance in the years ahead. This type of approach offers what he believes is “the best chance of the best outcome” for claimants and self-insured employers alike. Branco is an enthusiastic supporter of biopsychosocial solutions for addiction and chronic pain – areas for which he’s board certified to treat. The bio component refers to physical ailments, while psychosocial elements involve coping skills based on personality, family


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MIND OVER MATTER background, cultural outlook, or similar factors. However, he notes that the vast majority of patients have a combination of physical and psychological issues that needs to be addressed. Colorado has been a leader in improving treatment protocols for depression in workers’ comp cases. In 1992, it became the first state to mandate a biopsychosocial medical treatment model for work comp. Medical inflation was reportedly only one third that of the national average in the first 15 years since legislators reformed the state’s work comp system. While Branco has noticed a general tendency for more liberal states to structure their workers’ comp system in favor of claimants, he says the downside

is “people make bad choices.” One example is a preference for doctors who overprescribe opioids and enable poor behaviors. However, he believes the tide is turning on this issue with the help of work comp formularies and tighter controls. Half of 20.2 million U.S. adults who experienced a substance use disorder also had a co-occurring mental illness, according to a 2015 report by the Substance Abuse and Mental Health Services Administration. Most of the cases Branco handles involve so-called migratory claims, while many of his patients have abused narcotics. As a physiatrist, he specializes in catastrophic cases such as brain and spinal cord injuries, as well as amputations, multi-trauma and musculoskeletal issues. Branco cites a need for practice patterns or standards, as well as better educated psychologists and work comp insurance adjusters, when it comes to treating claimants. For example, while cognitive behavior therapy is a form of psychotherapy, he cautions that it’s “much more focused on changing thoughts and behaviors.” Moreover, he says psychoanalysis may be a highly effective treatment, but it has nothing to do with injuries.

EAPs and early intervention Promoting the use of employee assistance programs (EAPs) also “could be helpful considering how alienated employees will feel before or after they get injured,” Branco says.

The trouble with EAPs is that they’re “woefully underutilized,” according to Rhodes. “Employees don’t use even confidential resources that are available to them for mental health issues.” She’s intrigued by the notion of polling her members about whether they also use their EAP for workers’ comp claims. To ensure higher use of these valuable programs, Gruttadaro suggests that employers regularly remind their employees that EAPs support mental health issues vs. only when they’re hired or during the annual benefits enrollment. Another solution to speed return to work involves telemedicine, particularly for those who live in rural areas, Branco notes. The larger thinking is that early intervention can keep work comp claimants from falling into a deeper depression.

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MIND OVER MATTER Experts agree that early intervention is critical. “If somebody has a knee problem, it’s going to just continue to degenerate the longer they wait before getting help, just like your mental health might,” Rhodes opines. “Most psychological conditions can be treated effectively within six to eight weeks barring that they have medication issues. In terms of early identification of ailments, Stack says best practices can be applied to claims management. For example, case managers can assess a claimant’s attitude, behavior and resilience at work to determine whether the individual is at risk for depression. This will help them decide if some additional interventions are needed. One forward-thinking employer is Crown Corporation-owned New Brunswick Power Corporation, the largest electric utility in Atlantic Canada. Gruttadaro lauds the organization for its total health approach, which includes raising mental health awareness. NB Power leverages its work with a disability management services provider to support an effective return-to-work process for employees as part of this effort.

CWMH also offers tools and programs to tackle mental health issues in the workplace. One such resource involves a depression calculator that determines how much time and money employers lose to depression, as well as how much can be recovered, based on just a few key demographics. In addition, a joint initiative of CWMH and Employers Health Coalition, Inc. provides customizable resources and materials to increase awareness, reduce stigma, and motivate employees and their families to seek help when needed.

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MIND OVER MATTER Stigmas and silos While there’s still a stigma associated with seeking treatment for mental health, it may be waning. Rhodes recalls how 15 years ago, it was a largely taboo topic that nobody wanted to discuss, whereas now there’s no shortage of free resources. In addition, she says studies show that Millennials are more likely to get help than Baby Boomers or Gen Xers, which is a promising sign. Another positive development she cites is that most health insurance plans cover mental health between mental health parity legislation and the Affordable Care Act. Still, Rhodes believes more progress is needed before depression and mental health diagnoses are treated the same

as physical conditions on both the occupational and non-occupational side. It’s also important to break the silo mentality that stands in the way of better health care integration.

“A lot of times, risk management and HR don’t always communicate as well as they should,” she says. “There might be resources available on the company intranet or through the health plan that maybe risk management doesn’t know about because they tend to work within the workers’ compensation claim by itself, as opposed to what options might be available and offered through the employer that could also help them.” Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for 30 years.

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‘Most Active’ Federal Policy Environment Motivates SIIA Member Engagement

A A

s the self-insurance industry matures in its service to the American public – for example, a majority of employees and their dependents covered by employer health plans are now in self-insured plans – it attracts greater government attention each year. Increasingly, federal legislation, regulation and taxation issues can have great impact, for better or worse. The breadth of public policy affecting selfinsurance is at its historic high point. “This is clearly the most active government relations environment I’ve seen for SIIA,” said Larry Thompson, chair of the Government Relations Committee who earlier served terms as president and chairman. “Volunteer involvement by members is also at a higher volume than ever before,” Thompson said.

INSIDE the Beltway written by Dave Kirby

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INSIDE THE BELTWAY Supporting SIPA In recent years the greatest ongoing government relations effort by SIIA staff and members has been pursuit of the Self-Insurance Protection Act (SIPA), which SIIA was instrumental in introducing in Congress during the previous administration. SIPA would prevent the federal government from being able to define stoploss insurance as health insurance with all the resulting taxation and regulatory challenges.

“This issue has been like the sword of Damocles hanging over our heads for decades,” said Larry Thompson at the time that SIPA was passed by the U.S. House of Representatives in the 2017 session by an overwhelming landslide vote of 400-16.

Larry Thompson It’s no mystery why the ability to influence public policy has become a primary reason for SIIA membership. Engagement in government advocacy is the members’ direct path to protecting their businesses, clients and the millions who depend on their coverage. “A good example of SIIA member engagement is the annual DC Fly-In that brings members to the capital to advocate for our top issues before Congress,” said Ryan Work, Vice President of Government Relations. “At this event last spring SIIA members spread across Capitol Hill to meet with over 50 congressional offices, educating Members of Congress and their staff on the issues that are important for our industry.” Following are summaries of SIIA advocacy on current federal government issues:

A number of states, of course, have in the past tried to define stop-loss insurance as health insurance in order to bring that element of self-insurance under state control and weaken the federal ERISA preemption of interference with selfinsurance. SIIA has always countered that stop-loss insurance is not health insurance because it does not provide coverage to individuals or pay any health claims; rather it is casualty insurance that indemnifies self-insuring employers from extraordinarily high losses. “If SIPA becomes law stop-loss insurance will be clarified and codified as not health insurance. It will end that argument once and for all,” Thompson said. SIIA is working with Senate offices to advocate and push for the introduction of a companion SIPA bill, following its passage by the House last year. “We are doing all we can through advocacy meetings and member engagement to bring this up for a vote in the Senate” Ryan Work said.

Self-Insured AHP Options SIIA continues to work with members to seek potential solutions with the U.S. Department of Labor (DOL) to achieve a workable approach to allow self-insured association health plans (AHP). The DOL’s recently released final rules do not include the hoped-for “class exemption” that would have given ERISA preemption. As the rule stands, AHPs will operate as multi-employer welfare arrangements (MEWA) under state laws, thus operating under a patchwork of regulations across various jurisdictions. “The DOL rules are definitely an improvement over what has existed to date but still where we need them to be,” said Government Relations Committee chair Thompson at the time the rule was released.

OCTOBER 2018

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INSIDE THE BELTWAY SIIA will continue to advocate for an appropriate self-insured AHP option, according to Ryan Work. “We will have ongoing discussions that follow up on the president’s stated goal of AHPs being able to operate across state lines,” he said.

Health Savings Accounts New rules that create additional flexibility for the administration of health savings accounts (HSA) were contained in legislation passed by the House of Representatives and that still must be passed by the Senate on their way to the president’s desk. HSAs may be offered to employees who are members of a high-deductible health plan (HDHP) and provide employees with the ability to seek care that is appropriate to each individual.

“HSAs have become more and more important in recent years,” said Ashley Gillihan, attorney with SIIA member Alson & Bird LLC of Atlanta, an international law firm with a specialty in ERISA law that has brought “top firm” kudos from U.S. News magazine the last three years. “HSA enrollment has increased as employers become comfortable with high-deductible plans, which in some cases are replacing traditional self-insured plans,” he said. The new rules approved by the House would make HSAs more attractive for employees, which may make them more attractive for employers. For example, Gillihan points out that employers could operate an on-site health clinic whose free services would not disqualify an employee from belonging to an HSA, as is currently the case. The House bill would also protect an employee’s eligibility for an HSA if their spouse enrolls in a general purpose Health FSA. And expenses incurred after the HSA is established but before the account is funded could still be reimbursed from the HSA. These are just a few of the improvements. SIIA’s current challenge is to encourage the Senate to pass a companion bill before the House bill expires at the end of the current session. “We originally didn’t sense a lot of support for this by the Senate but our contacts in Washington have seen some encouraging signs recently,” said Gillihan. “Now we see this as a real possibility.”

EEOC Wellness Rules Wellness programs – typically educational experiences that help employees reduce the possibility of serious disease – have gained in popularity among self-insuring employers to help restrain health care treatment costs. The programs are governed by the federal Equal Employment Opportunity Commission (EEOC). A wrench was tossed into the works in the form of a federal lawsuit (AARP v. EEOC) that resulted in eliminating proposed rules on incentives employers may offer for employees to participate in the programs.

Without new rules being established,

“Programs will be operating in an

air of uncertainty,” said Catherine Bresler, Vice President of Government Relations for The Trustmark Companies. The problem is that a full rewrite of the wellness incentive rules would likely require a full EEOC membership but the slate of nominated commissioners has not been confirmed by the Senate.

Catherine Bresler

22

THE SELF-INSURER

In the meantime, the greater scope of wellness programs remain available to employers, according to Bresler. “Incentive programs must observe the key word ‘voluntary’ in creating and communicating them,” she said.


INSIDE THE BELTWAY SIIA joined a letter to Senate leadership urging a confirmation vote on EEOC Commissioner nominees to help the agency undertake a rewrite of wellness incentive program rules. SIIA’s Policy Webinar Series presented a program, “The Changing EEOC Wellness Incentive Rules” last month with panelists including SIIA members Catherine Bresler of Trustmark; Ernie Clevenger of CareHere; Shane Doucet of Doucet Consulting Solutions and Michael Eastman of NT Lakis LLP.

Lifting ACA Tax Burdens

Also being considered is three-year retroactive relief of the ACA’s employer mandate. SIIA, along with health coalition partners, continues to advocate for such actions and remains hopeful of Congressional action. As always, questions or volunteering for advocacy duty are welcomed by SIIA’s Ryan Work at rwork@siia.org.

SIIA staff continues to work with Congress on relief measures on several longterm taxes implemented by the Affordable Care Act (ACA). While debate has been ongoing in Congress over further delaying or eliminating the Health Insurance Tax (HIT) and Cadillac Tax, there were indications that further action in the House and Senate may occur this fall.

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SIIA Members Are Vigilant Advocates In State Challenges to Self-Insurance

s S

elf-insurance, particularly self-insured employee health plans, continues to be targeted by an increasing number of states with restrictive laws, regulations or taxation schemes that trespass on ERISA protections. The threatening environment continues to test SIIA’s ability to fulfill its mission to protect and promote self-insurance. An ongoing state-by-state government relations process has taken SIIA staff and member activists to many state capitals as they advocate for beneficial measures or defend against those that could harm the self-insurance industry. Following are summaries of diverse political issues prompting SIIA intervention in states of New York, Maine and Louisiana.

OUTSIDE the Beltway written by Dave Kirby

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THE SELF-INSURER


OUTSIDE THE BELTWAY Defending Small Group Stop-Loss In New York SIIA’s campaign to protect stop-loss insurance availability for employee groups of 51-100 has run longer than most Broadway shows. Annual Lobby Days have brought members to meet with legislators in Albany, and many meetings have been held with legislative leaders and committees as well as the Department of Insurance. “Our strategy has been to demonstrate the value of stop-loss insurance to smaller employee groups by putting self-insurance employers and industry members into direct contact with key legislators,” said Adam Brackemyre, vice president of state government relations. A 2016 New York law denied new stoploss policies to groups of 51-100. SIIA was instrumental in gaining a two-year grandfather period for existing stop-loss plans that expires at the end of this year. Further, SIIA has initiated bills to set the permanent minimum stop-loss policy at 51 members; that bill was passed by the NY Senate and still awaits action by the Assembly. Participants in Lobby Days and other meetings included SIIA members who earlier commented on their advocacy experiences as they occurred: “With health costs out of control, employers need any ability for more access and more transparency.” –David Antalek, Allied Benefit Systems “New York would become the only state in the country to hold to the 100-member minimum for this purpose.” –David Kane, York International Agency

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THE SELF-INSURER

“I would think New York would encourage employers to stay in the state rather than risk seeing them move across a border such as Pennsylvania’s to gain more complete insurance options.” –Bob Madden, Lawley Benefits “Our company will follow up by encouraging clients and employers to make sure their legislators know how important this issue is to their employee benefits plans. Comparable coverage would be impossible for employers to find in the traditional commercial insurance market.” --Mindi Smith, Stop-Loss Insurance Services

Bob LaFond

Shaping Maine Small Group Regs SIIA joined other stakeholders in meetings with the Bureau of Insurance (BOI) to review early draft proposals of a new set of regulations for small-group employee health plans. A key provision that has been opposed by SIIA would increase minimum stop-loss policy attachment points to $20,000. In his letter to Insurance Superintendent Eric Cioppa, Adam Brackemyre noted, “Thirty-three states have either no regulation or legislation governing small group stop-loss attachment points or set them at $10,000. In these states there has been no evidence of adverse selection in the fully-insured market, or complaints of employer harm.” SIIA member Bob LaFond, district sales manager of Starmark, a Trustmark Company, testified at a BOI hearing on the draft regulations. “Employers that really need the help to maintain employee coverage are those who are being hurt most by tighter regulations,” LaFond commented following that hearing. “They are seeing fewer carrier options and more traditional carriers leaving the markets. Where else can smaller employers go to meet the challenges of the current economy?” The final draft of Maine’s small-group stop-loss insurance regulations is expected to be released this fall.


OUTSIDE THE BELTWAY Louisiana TPA Tax Defeated SIIA was instrumental in a stakeholder coalition that succeeded in defeating, in a state Senate vote at the last hurdle before becoming law, legislation that would have included TPAs for self-insured employee health plans in a monthly fee on all health insurance elements to create a reinsurance program for the Louisiana individual health insurance market. “At first, nobody thought this bill had a chance, but after it survived votes in two House committees and a favorable vote in the House Chamber, a lot more people started taking it seriously when it reached the Senate,” said Cheryl Tolbert, president and CEO of the Louisiana Business Group on Health, who organized the coalition to oppose the fee. Tolbert reported a general view by employers that if the bill passed it would violate ERISA provisions, but she reported the bill’s supporters claimed that a fee applied evenly to all health insurance elements would be legal. That opinion was not tested because the opposing coalition grew to such a powerful group representing employers, labor organizations, health care institutions and others became an irresistible political force.

Cheryl Tolbert

“We were active every day in briefing senators, holding meetings and communicating on all available platforms,” Tolbert said. “Adam Brackemyre was a great help in dayto-day strategy. He would monitor committee meetings and Senate floor debate online and text rebuttal to me in real time.”

Questions or information about involvement in these or other state issues are welcomed by Adam Brackemyre, abrackemyre@siia.org.

OCTOBER 2018

27


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Q&A

ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

Q&A

T

he Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on ACA, HIPAA and other federal benefit mandates. Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Dan Taylor provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte, Dallas and Washington, D.C. law firm. Ashley Gillihan, Steven Mindy, Carolyn Smith and Dan Taylor are members of the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com.

OCTOBER 2018

29


Passage of House Bills Warrants a Fresh Look At Health Savings Accounts: Part Two This is part two of a two-part article. Part one can be found in the September issue of The Self-Insurer

H H

ealth savings accounts (HSAs) provide a tax-favored means for individuals to save and pay for medical expenses not covered by insurance. In order to contribute to an HSA, the individual must be enrolled in a specially defined type of plan called a high deductible health plan (HDHP) and have no other health plan coverage (other than certain limited types of permitted coverage such as vision, dental, accident, specified disease, and certain fixed indemnity coverage).

The combination of an HDHP and an HSA is commonly referred to as a consumer driven health plan. While the premium for the HDHP may be only slightly lower than the premiums for health plans with a lower deductible, the tax savings from the HSA is what generally makes these arrangements attractive.

HSAs were first available starting in 2004. Since then, as traditional health coverage premiums have continued to increase, interest in these types of consumer driven health plans has increased. Survey data indicates that in 2017, 43.7% of persons under age 65 with private health insurance were enrolled in an HDHP, including 18.2% who were enrolled in an HDHP with an HSA.1

House passage of proposed HSA improvement legislation (the “HSA Bills�) in July could resolve many potential compliance issues and make HSA/HDHP arrangements even more accessible and easier to use.

30

THE SELF-INSURER


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This two-part article provides a brief overview of HSAs and addresses key legislative developments based on the HSA Bills. In Part One we addressed the tax benefits associated with an HSA, who can establish an HSA, what types of coverage qualify as HDHP coverage and what additional coverage may be allowable. In this Part Two we address how much can be contributed, what medical expenses are eligible, and certain ERISA compliance issues

6. What are the HSA contribution rules?

The maximum permitted HSA contribution varies based on whether the coverage is self-only or family coverage, and is subject to adjustment for inflation.

HSA Annual Contribution Limits

32

Type of HDHP Coverage

2018

2019

Self-only

$3,450

$3,500

Family

$6,900

$7,000

THE SELF-INSURER

The HSA Bills would increase these amounts so that contributions could be made potentially all the way up to the employee’s out-of-pocket exposure.

Individuals age 55 and older and not enrolled in Medicare may make an additional $1,000 contribution each year. This amount is not indexed for inflation. Spouses who are both eligible to contribute to an HSA cannot make this additional contribution to the same account. Each spouse needs to have their own account in order for both spouses 55 or older to make the additional $1,000 contribution. The HSA Bills would simplify this by allowing the additional contribution to go into either spouse’s HSA.


Both employers and employees may contribute to an HSA. Total combined contributions cannot exceed the maximum contribution limit.

Employer contributions may be subject to nondiscrimination rules that require the employer to make “comparable contributions” for comparable participating employees in the HDHP. In practice, these comparable contribution requirements seldom apply, as there is an exception for any employer that allows employees to make salary reduction contributions through a cafeteria plan.

Under this definition, medical expenses include the cost of diagnosis, cure, mitigation, treatment or prevention of disease and the cost for treatments affecting any part or function of the body. Thus, for example, qualified medical expenses include amounts paid to medical care providers before the deductible under the HDHP is met and for any co-payments or co-insurance after the deductible is met.

7. What medical expenses can be paid tax-free from an HSA?

In general, qualifying medical expenses for HSA purposes are out of pocket medical expenses incurred after the HSA is established. For HSA purposes, medical expenses are defined in the same way that medical expenses are defined under the federal tax laws for purposes of the itemized deduction for medical expenses (without regard to the adjusted gross income limitation on deductible medical expenses).2

Qualified medical expenses also include medical expenses that are not covered by the HDHP, such as vision or dental benefits (if not covered). There is no complete list of qualifying medical expenses; however, the IRS has provided a listing of common expenses in IRS Publication 502.

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• The medical expenses must be incurred after the HSA is established. Medical expenses incurred before the HSA was established don’t count, even if the individual was HSA eligible when the expense was incurred. As a result of this limitation, HSA eligible individuals may want to establish their HSA as soon as possible. As we discuss in our next article, the requirement that an expense be incurred after the HSA has been established has caused some administratively difficulty related to the timing of the HSA establishment that would be addressed by the proposed HSA Bills. Individuals can receive tax-free distributions for qualifying medical expenses, even if they are no longer eligible to contribute to an HSA. Qualifying medical expenses also include expenses incurred by the HSA owner’s spouse and dependents.

There are also some important limitations on medical expenses that can be paid tax-free from an HSA:

• Insurance premiums, including for the HDHP, do not qualify for tax-free treatment, unless the premiums are for:

o Long-term care insurance, o COBRA continuation coverage, o Health coverage while receiving unemployment compensation under federal or state law,

o Medicare or other health coverage for an individual age 65 or older

8. Are HSAs subject to ERISA?

Whether an HSA is subject to ERISA depends on the level of involvement of the employer. The Department of Labor (DOL) has issued guidance that employers may follow so that their HSAs are not subject to ERISA. Most employers structure their HSA program in accordance with the DOL guidance in order to avoid triggering ERISA application to the HSA. Note that a group HDHP offered by the employer is likely to be a group health plan subject to ERISA even though the corresponding HSA may not be.

(other than premiums for a Medicare supplemental or Medigap policy).

• Medicines that can be legally purchased without a prescription (over-thecounter medicines) cannot be reimbursed from an HSA unless the individual gets a prescription for the medicine. Insulin may be paid for by an HSA without a prescription. The HSA Bills would allow OTC expenses to be an eligible medical expense.

34

THE SELF-INSURER

Under DOL guidance, an HSA will generally not be subject to ERISA if the following six requirements are satisfied:


• Establishment of the HSA is completely voluntary on the part of the

References:

employee.

• The employer does not limit the ability of eligible individuals to move their funds to another HSA beyond restrictions imposed by the federal tax laws.

• The employer does not impose conditions on utilization of HSA funds beyond those permitted under the federal tax laws.

1 https://www.cdc.gov/nchs/data/nhis/ earlyrelease/insur201805.pdf 2 The adjusted gross limit is 7.5% in 2018, and increases to 10% in 2019.

• The employer does not make or influence the investment decisions with respect to funds contributed to an HSA.

• The employer does not represent that the HSAs are an employee welfare benefit plan established or maintained by the employer.

• The employer does not receive any payment or compensation in connection with an HSA.

Conclusion: An HDHP coupled with an HSA program may be an attractive choice for many employers and employees. Surveys indicate that such arrangements are becoming more popular as HDHP coverage becomes more predominant. Stay tuned for future articles as we provide an update of new HSA developments.

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OCTOBER 2018

35


Rated Captives Segment Thriving According to A.M. Best

I

WRITTEN BY KARRIE HYATT

I

n July, A.M. Best released a “Best’s Market Segment Report” on the state of rated captives in the U.S. This is the 18th year that they’ve compiled this report and once again, they have only positive things to say about captives. According to the report, “Our statistical analysis shows that the rated captive segment remains exceptionally strong and continues to outperform its counterparts in the commercial casualty segment.”

To analyze the segment, A.M. Best used a captive insurance composite (CIC) made up of U.S. captives rated by the company. Their report found that in 2017 captives showed a profit of $1.3 billion before taxes. This number was down 18% from 2016’s number of $1.58 billion. Due to the rough hurricane season last year, underwriting results were worse than expected and impacted both traditional and captive insurers. However, according to the report, “U.S. captives still posted a healthy net underwriting profit and a combined ratio of 91.4% for the year.”

36

THE SELF-INSURER


The CIC showed that captives’ investment income increased in 2017, going from $881.3 million in 2016 to $773.0 million, or an increase of 14%. Over the last five years, the compound growth of capital and surplus showed an annual growth rate of 5%. This change was in addition to captives in the CIC paying approximately $1.7 billion in dividends to their parent companies and owners.

While this report is glowing, it only covers the captives rated by A.M. Best. Best rates more than 200 captives worldwide, with about 140 captives in the United States. There are an estimated 3,000 captives in the U.S. and more than 5,500 total worldwide. Best’s compilation includes only a fraction of the captives in operation and captives that, in general, are already well-structured and successful.

A good rating can give a big boost to a captive’s reputation and solidify its standing as a profitable business. Of course, the opposite is true too. If a captive gets a low rating it would overshadow any good points the company would like to promote. Often times, when an already rated company’s rating is lowered, they will withdraw from the process entirely rather than be faced with a score that reflects poorly on their business operations.

A.M. Best’s CIC leaves out a broad spectrum of captives doing business—captives that can conduct their business without a credit rating. This is not to say that Best’s report is not informative of the market. When rated captives are doing so well then that is a good indicator that the greater market and non-rated captives are also doing well.

The report outlines several ways in which captives excel. Captives in Best’s CIC are doing better than their commercial market counterparts, they are also doing well despite a market that is not especially favorable to their business, and captives have taken the lead in implementing enterprise risk management (ERM) which goes a long way to mitigating risk.

Captives that seek ratings through A.M. Best or another rating company tend to be established, have both the time and money to invest in a third-party rating, and have a good reason to get one. One of those reasons is to secure reinsurance and solidify fronting arrangements. Good credit ratings can improve business relations with service providers, especially in the reinsurance market. Other reasons are that a good rating can help support the parent company’s operations, it can help promote the captive to new policyholders, and it can help provide more transparency for a captive’s business operations.

OCTOBER 2018

37


Captives are Doing It Better

“Captives generally outperform the commercial market. Since they rarely seek out new, unrelated classes of business, these companies rarely stumble into poor risk selection or underpricing, and so have more consistent business profiles.” The report states that the CIC outpaced the underwriting and operating results of Best’s composite of traditional insurance companies by a margin of 14% and 12%. It also describes how captives have almost no competition from traditional insurers, and that group captives and risk retention groups have renewal rates of over 90%.

According to Anne Marie Towle, Captive Practice Leader with JLT Insurance Management, there are six reasons that captives typically outperform the commercial market: customized coverage for insureds, preventative mitigation strategies for handling losses, limited or no commissions, focused loss control, pricing according to risk based on third-party actuarial analysis, and focus on minimizing operating expenses to maximize shareholder returns. “The combination of these factors helps drive both the loss ratio and expense ratio lower than the commercial market,” said Towle.

Best’s captive ratings are based on how captives fit within their parent organization, the level of risk tolerance, and their business model. The reason that assessments of captives are so different than those of traditional insurance companies is that captives generally will have integrated risk management that closely aligns with their parent company or owners’ interests. Captives also benefit from having a narrow focus on the risks they insure. It is because captives and their owners work in tandem to mitigate risk.

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THE SELF-INSURER

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“There is an alignment of interests between a captive and its insured,” said Joseph Holahan, Of Counsel with Morris, Manning & Martin, LLP. “The insured owner is in the best position to understand and manage its own risks and stands to gain by doing so. There is also the fact that unlike a traditional carrier, a pure captive does not have any costs to acquire and retain business, which can be a substantial savings.”

According to Jeffrey K. Kehler, Captive Program Administrator, Captive Division, South Carolina Department of Insurance, “Those that form, or participate in, a captive generally have a management team that is comfortable in taking risk, is well financed, has a sound risk management program in place, and generally better loss experience than is typical for their class of business. This is what makes the difference between captive results and the traditional insurer results.”

Captives and ERM

According to the report, “Enterprise risk management—establishing a risk-aware culture and using tools to consistently identify and manage, as well as measure risk and risk correlations—is the thread that links balance sheet strength, operating performance, and business profile.”

Captives have the ability to quickly identify emerging risks due to the embedded mindset of risk management. They must have in-depth knowledge of their insured’s risks in order to successfully mitigate that risk. Traditional insurers, insuring a broad swath of risks for dozens of different types of companies can’t enter into the same type of risk management that a captive can. “Traditional carriers and captives both benefit from ERM, but an organization with a captive has a stronger incentive to manage risk, meaning the benefit is likely greater for captives,” said Holahan. “Having a captive often is either part of or helps establish a virtuous circle that leads to more effective risk management and loss control.”

Captives must work with their parent company or their member insureds to make the most out its risk mitigation properties. Used properly, as the Best report indicates, captives can help improve their parent company’s mindset about risk. According to Kehler, “ERM is supported and enhanced by a captive due to better access to data, an actuarial funding study that may uncover uninsured or unfunded risks, a clear view of the total cost of risk, the ability to use surplus funds to provide bonus/incentive programs for controlling losses, and the elevation of risk management to the board level through reporting systems. Traditional insurance does not provide any of these benefits.”

40

THE SELF-INSURER

Captives and Adverse Market Conditions

“Captive insurers remain nimble and steady despite headwinds from low interest rates, changes in U.S. tax law, and prolonged periods of soft market conditions—which also demonstrates how well these companies readily identify emerging risks, as well as their ability to take advantage of reinsurance pricing when opportunities arise.” As the report states, recent and current market conditions are not what economists would think of as the right conditions for captives the thrive.

Captives have continued to grow despite the market conditions due to their flexibility to adapt to the needs of their insureds. At their core, they are meant to find solutions to complicated risk issues. According to Holahan, “I think captive owners are looking at the long-term picture and realize that the value of their captive program may fluctuate from year to year but brings cost savings over the long-term. Also, a captive program can be modified as needed to fit what is going on in the market and respond to changes in the law.”

“Captives will survive and flourish even in these strange financial times in which we live,” said Kehler. “The reason they survive is captives provide a means to enhance risk management and an alternative risk financing mechanism that generates value for a firm in all economic conditions. A captive can reduce the amplitude of market swings and provide greater control of a firm’s insurance destiny.”


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According to Towle, “Captives at their core have been designed to solve risk challenges for their owner, whether [writing] a broader policy with limited exclusions or insuring risk the commercial market doesn’t have capacity for, captives will continue to thrive as an alternative to the commercial market.”

Future Challenges

“A continued soft market may slow captive growth,” said Holahan. “But I believe the value of captives is sufficient that we will continue to see an expansion. I see many creative things going on with captives, and I doubt market conditions will put a stop to that.” Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years. More information about her work can be found at: www.karriehyatt.com.

Best’s report anticipates another good year for captives, “Although a captive’s mission is to break even, the CIC has had an excellent profitability track record, and we believe that, barring any unforeseen issues, captives’ results should again be favorable in 2018.”

While the prospects for 2018 might look good, there are obstacles that captives may face in the future. Some of the most obvious challenges are the changing federal tax landscape, strategies that companies are misusing to avoid paying taxes, and abuse of captive laws which could lead to more rigorous scrutiny and regulation.

For Kehler, there are three main threats to captive insurance companies, “Changes in federal or state insurance regulation, NAIC attempts to regulate captives directly or through accreditation standards, and tax law changes. As it stands at the moment, the captive industry has survived and thrived the most recent legislative and tax law changes.”

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THE SELF-INSURER

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Embracing Prudence

History of collectively bargained plans steeped in stewardship

C C

WRITTEN BY BRUCE SHUTAN

ollectively bargained plans have enjoyed a long love affair with selfinsurance. So it’s only natural that all self-funded entities can learn a thing or two from that passion and commitment. As many as 86% of multiemployer or Taft-Hartley plans are self-funded, according to the International Foundation of Employee Benefit Plans’ (IFEBP) latest biennial Employee Benefits Survey, which was just released in August. One significant reason these unionized plans have turned to self-funding “is because they would generally have a sufficient number of participants for acceptable risk exposure,” explains Julie Stich, IFEBP’s associate VP of content. The ones that choose fully insured coverage may be too small or uneasy about taking on the potential risk or uncertainty of volatile claims, she adds.

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THE SELF-INSURER


Another major motivation is cultural. “Certainly, there is the sense of paternalism,” she says “and that’s just grown out of the history of this type of plan. And in some cases, for a long time, there was maybe only one type of health plan that was being offered.” Other reasons include more plan design flexibility and less cost, depending on each plan’s situation and claims experience, Stich notes. These plans are known for hands-on involvement. Multiemployer plan trustees tend to be “very cognizant of what’s going on with the fund,” as well as involved in knowing about the flow of claim dollars and how the welfare fund’s investments are faring, Stich observes. Oftentimes, she says there’s a committee or board of trustees subgroup involved with claims appeals.” The terms “multiemployer” and “TaftHartley” are often interchangeably used to describe the same plan, but there are key structural differences. IFEBP defines the former as “an employee benefit plan maintained under one or more collective bargaining agreements to which more than one employer contributes.” The latter involves “a joint board of trustees consisting of equal representation from labor and management,” according to IFEBP, while some industries (i.e., sports), “have multiemployer plans that are not Taft-Hartley plans.”

From data mining to telemedicine These plans are actively looking for ways to manage costs without reducing benefits, observes Megan Kelly, SVP and national multiemployer health practice leader at the Segal Co. “We’re seeing a

lot around data mining,” she says, as well as efforts to weed out cost inefficiencies and base decisions on clinical data. Other hot areas she cites include population health, wellness programs, and the use of onsite and near-site clinics. Taft-Hartley plans are incrementally examining telemedicine, consumer-directed care and Grand Rounds’ personalized, high-performance network and decision-support tools as part of their self-governance charter, notes John Hennessy, SVP of business development for WellRithms. He foresees better selection and timely review of these “interesting bolt-on products,” which would be replaced if they’re simply not paying off.

“The beneficiaries are the governors,” explains Hennessy, whose firm offers market-based re-pricing of out-of-network bills to Taft-Hartley trust funds and

“That’s very different than a self-funded employer where it’s typically the CFO making these decisions.”

self-funded employers, as well as regional health plans.

Careful customer service The underlining philosophy of these plans is good stewardship, which he says “means you don’t overpay for things” and stand behind members who receive a surprise balance bill. Indeed, Hennessy believes growing awareness about an evolution of reference-based pricing offers another tool to help the plans define benefits that best meet their members’ needs. “They’re much more forward-thinking than most private employers that are making decisions based on the next renewal rather than what do things look like two, three, four or five years in the future,” he says of collectively bargained plans. In the multiemployer arena, Kelly mentions that customer service is supremely important to rank-and-file members when it comes to their benefit plans. If a claims issue arises, she says callers are directed to a self-administered fund office vs. an impersonal insurance company call center. Given this setup, she doesn’t believe union members care much about Blue Cross Blue Shield, UnitedHealthcare, Cigna or Aetna health plan branding associated with an administrative-services-only contract and, therefore, value an independent TPA model. Multiemployer plans have a history of self-administration with a salaried staffer or third-party administrator (TPA) that may specialize in this sector, according to Stich. The arrangement is unusual outside the multiemployer realm because it can be costly, she says, while there’s also a lack of time and resources associated with “learning how to do it and doing it well.”

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Leading the way on wellness Taft-Hartley plans also have taken a leadership role in using preventive medicine and wellness to reduce health care costs and improve the health of each member, says Don Powell, Ph.D., president and CEO of the American Institute for Preventive Medicine (AIPM), who has worked with these plans for 35 years. Improving the health and wellbeing of rank-and-file has always been part of organized labor’s DNA, as well as a key issue for collective bargaining, he notes. One example includes Teamsters Local 436 in Valley View, Ohio, which distributed a copy of AIPM’s Healthier at Home self-care book to 900 active members and Health at Home Lifetime edition to 240 retirees. A self-reported survey showed that employees avoided 47 doctor visits and 23 emergency room visits within the first year, and incurred 14 fewer days of absenteeism. Producing a total savings of $10,865, or $119.40 per member, Powell says there was a 20:1 return on investment for the cost of those books. Retirees avoided 14 doctor visits and eight ER visits, producing a total savings of $3,705, or $78.82 per retiree, for a 13:1 ROI. Another medical self-care study involving the United Teachers of New Orleans Health and Welfare Fund in Louisiana showed that teachers and staffers who received a copy of Healthier at Home avoided 41 doctor visits and 26 ER visits, savings $11,615 or $89.35 per member with a 16:1 ROI. In addition, absenteeism plummeted by 32 days.

In addition, Powell cites an FCA Chrysler audit of Blue Cross Blue Shield claims data showing employees who participated in a wellness program cost less than those who did not take part ($3,815 on average vs. $4,932). A 2017 IFEBP wellness survey found that 65% of multiemployer funds covered chiropractic services, 26% covered acupuncture, 9% offered yoga or Tai chi classes, about 6% offered coverage for massages and 2% offered ergonomic training and support. As is the case with all self-insurance, Powell knows Taft-Hartley plans have much at stake with health care expenditures that are directly tied to utilization. “Clearly, you have a vested interest in improving the health and wellbeing of your membership when you’re taking on your own fiscal

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responsibility for health care more so than a company where the rates are just always going to increase by 10% a year no matter what,” he says.

Use of Stop-Loss Insurance It is also interesting to note that collectively bargained plans are less likely to purchase stop-loss insurance than single employer plans. Nearly 23% of such plans go without stoploss coverage vs. almost 13% for public-sector employers and 10.4% for corporations, IFEBP found. Dominance also was noted in two of three other self-funding categories that were examined in the Foundation’s

2018 research. Multiemployer plans, for example, are more apt to be self-funded with specific stop-loss coverage (29.1%) than corporations (21.3%) or public employers (14.5%). The same was true for being self-funded with aggregate stop-loss coverage (15.1% for multiemployer plans vs. 9.1% for corporations and 6.5% for public employers). However, IFEB noted that more corporations self-fund with both aggregate and specific stop-loss coverage (nearly 23%) vs. public employers (19.4%) and multiemployer plans (19%). For fully insured coverage, public employers lead the pack at nearly 47% vs. 36.3% among corporations and 14% among multiemployer plans. Almost half of multiemployer plans that opt for a fully insured approach for active participants have head counts of 500 to 2,499, while 92% of those with 2,499 or fewer retirees do the same. Danger of dwindling reserves.

Danger of dwindling reserves While it’s easy for Taft-Hartley plans to structure benefits to be robust, Hennessy cautions that it’s challenging to fund them. Requirements under the Affordable Care Act have not only driven up hospital rates, he says they also have made these plans “a little less sound in terms of reserves.” As the union population ages and the price for medical services and utilization rise, he adds that the fear is “at some point you run out of money.”

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A TPA who’s managing a plan in the Pacific Northwest told him how a longterm pediatric case dramatically eroded the reserves of a Taft-Hartley client in recent years to a point where it was difficult to obtain reinsurance. The larger concern is that the plan may need to switch to a fully insured option if those reserves evaporate. As one of two pillars in multiemployer plans, the other being pensions, Stich believes health care coverage represents a tangible benefit that’s immediate and seen on a daily basis for workers and their families. Without it, she says people in industries such as construction and entertainment would hop from one job to the next without health care or pension coverage. As union members age and start families, Kelly believes they develop a better understanding of how much their health care costs and appreciate the value of their benefits. That certainly makes benefits communication much easier, she suggests. And in some small way, the beneficiaries of this coverage can potentially mirror the stewardship of their plan trustees.

Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefits industry for 30 years.

Self-Care Case Histories Teamsters Local Saves Money for Actives and Retirees Teamsters Local 436 in ValleyView, Ohio gave 900 active members and 240 retirees the Health at Home® book. A research study showed the active employees avoided 47 doctor visits and 23 E.R. visits. This produced a total savings of $10,865 or $119.40 per member. The Return on Investment (ROI) was 20:1. The active employees also reported reducing absenteeism by 14 days which produced additional savings. The retirees showed similar success. They avoided 15 doctor and 8 E.R. visits. The total savings was $3,705 or $78.82 per retiree. This amounted to a Return on Investment (ROI) of 13:1. Teachers Union Saves $89 Per Member The United Teachers of New Orleans (UTNO) Health and Welfare Fund in Louisiana provided Health at Home® to both teachers and staff. An evaluation showed the members avoided 41 doctor visits and 26 E.R. visits. This came out to a total savings of $11,615 or $89.35 per member. Factoring in the cost of the self-care guide, the Return on Investment (ROI) was 16:1. In addition, the members decreased absenteeism by 32 days and 71% stated the guide was a valuable employee benefit.

Organization

# of People

# of Months

Savings/Person Dr. Visits E.R. Visits Total

R.O.1.**

United Teachers New Orleans

130

12

$17.35

$72.00

$89.35

17:1

Teamsters Local 436-Actives

91

12

$28.41

$ 90.99

$ 119.40

20:1

Teamsters Local 436-Retirees

47

12

$ 17.55

$ 61.28

$ 78.83

13:1

OCTOBER 2018

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Explanations that Benefit

WRITTEN BY JON JABLON, ESQ.

I I

n the course of working with many different third-party administrators, it has become clear that every TPA operates differently. Claims processes are no exception; although federal law prescribes certain rules and regulations for the basics of what must be done and how, TPAs and health plans are left to their own devices to figure out the nuts and bolts of their particular processes. The only real requirement is that those processes fit in with the regulators’ rules and vision for how the industry should operate.

As a form that is given to a claimant along with payment (or, perhaps more relevantly, without payment), the Explanation of Benefits (or EOB) form is often the first, and sometimes the only, document a claimant sees that explains why the claim was adjudicated as it has been.

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For that reason, although it would probably not be accurate to suggest that the regulators treat EOBs as “special” compared to any other regulations, in practical matters the EOB can be considered to be perhaps more important to get right than certain other things. That’s because it’s the first line of defense when denying or partially denying a claim, and the primary vehicle for a health plan’s justification of its denial.

29 USC § 1133 and accompanying regulations address a plan’s internal appeals procedures and require that claimants must be notified of the reasons why a claim has been denied and must be given a reasonable opportunity for a full and fair internal review of a claim1.

In one particular case, for instance, a health plan required arbitration as a mandatory stage of plan appeal, after the initial written appeal was denied. The EOB, however, was silent on that requirement.

The court in that case applied the normal doctrine that courts use to rectify cases of inadequate notice: the health plan was directed to allow the claimant to file a late appeal, despite the timeframes stated within the applicable plan document and the fact that those timeframes had run out.

Known as “tolling,” this remedy effectively stops the “countdown” of the appeal time requirement due to inadequate notice from the plan. In this case, then, the timeframes for appeal stated in the plan document were deemed inapplicable, since the plan did not adequately communicate them.

One can argue that the plan document’s inclusion of the relevant information should be sufficient to convey the information to a claimant – but according to courts, plan members can only reasonably be expected to know what is shown to them with respect to a specific case, rather than in the Plan Document in general.

The regulations go on to require that a group health plan provide – among other things – the specific reason for the denial, reference to the specific plan provisions upon which it has been based, a description of the plan’s appeals procedures, and a way to connect an applicable clinical judgment to the plan’s provisions.

Those rules seem fairly straightforward – but due to the numerous situations that courts and regulators have encountered through the years, there are some nuances in this language that are perhaps not quite clear, and which TPAs should be acutely aware of when addressing matters such as EOB compliance. As usual, the black-letter law leaves room for interpretation.

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As one court put it, “[j]ust as a fiduciary must give written notice to a plan participant or beneficiary of the steps to be taken to obtain internal review when it denies a claim, so also, we believe, should a fiduciary give written notice of steps to be taken to obtain external review through mandatory arbitration when it denies an internal appeal.2”

Even though the arbitration itself is not explicitly governed by ERISA, once it was made a part of the plan’s claim procedures, it became a provision that must be brought to the claimant’s attention. This case and others like it demonstrate that simply including a provision in the Plan Document is sometimes not enough to adequately inform a claimant of that provision.

That’s an example of a situation where plan provisions (timelines, specifically) were actually ignored by a court, because the plan and TPA failed to adequately disclose certain plan requirements on the EOB.

Where does it end, though? Surely the regulations can’t list every conceivable item that must be present on the EOB; even if a very long list were created, there would always be some new situation not previously contemplated.

Hence, there is case law like this, that is designed to both give guidance in this specific instance, but also help inform future interpretations of these same rules. For instance, if a health plan required mediation rather than arbitration, surely the case law described above would still apply, even though it’s not an identical situation. It’s close enough, though, that the required “good faith, reasonable interpretation” of unclear regulations can be colored by this example.

In a longstanding series3 of somewhat more egregious examples of deficient EOBs, courts have opined that the regulations explaining the EOB requirements are not designed to invite “conclusions,” but instead “reasons” or “explanations.”

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So, rather than state that a claim is denied because pre-authorization was not given, the EOB should state why pre-authorization was not given, and therefore the conclusion4. Put simply, and again parroting the established regulations, “[a]n ERISA fiduciary must provide the beneficiary with the specific reasons for the denial of benefits.5”

Noncompliance, or an instance of a questionable nature, is somewhat common with reference-based pricing. The prevailing attitude seems to be that since reference-based pricing is such a fundamental change to the plan itself, there’s so much else going on that an EOB note such as “claim denied due to reference-based pricing” is somehow sufficient.

Based on courts’ interpretations of the prevailing regulations, a remark this generic would neither be literally compliant with the text of the regulations, nor satisfy the intent of the regulations (which is to provide the claimant with information sufficient to file a meaningful appeal on the merits, or ultimately file suit to enforce benefits pursuant to ERISA)6.

My mention of the intent of the regulations was deliberate. In the legal system, intent is not always necessary to be held liable; at the risk of going on a tangent, there’s something called “strict liability” which imposes legal liability even without intent or even knowledge of wrongdoing.

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In the process of interpreting ERISA, this country’s courts have in some situations refused to apply a comparable doctrine of strict liability to violations of ERISA. In other words, sometimes a violation occurs, but the offending fiduciary is not held liable, due to other actions of that fiduciary.

To illustrate this, consider a situation where a claimant is given a compliant EOB containing one denial reason, the claimant appeals, and the health plan or its TPA denies the appeal, and also cites additional reasons for the denial that were not provided on the original EOB.

For some context, it isn’t compliant with ERISA to provide additional denial reasons after the claimant has already exhausted or “used up” the available appeals, since that wouldn’t afford the claimant the opportunity to actually appeal the newly-given denials reasons7.

In some situations, though – when the claimant is given the opportunity to appeal the other denial reasons, despite already having exhausted appeals for the initial denial reason – compliance with one provision of ERISA has actually saved the fiduciary from noncompliance in another area.


In a situation like this, the health plan is not in compliance when it issues a separate denial reason after already denying appeals for the initial denial reason – but the fiduciary was able to “cure” its noncompliance by providing the claimant ample opportunity to appeal the new denial reasons.

Sometimes referred to as “substantial compliance8,” courts have noted that certain instances of technical noncompliance can be excused as long as the purpose of the regulations9 is not frustrated. In this case, that purpose is ensuring that claimants receive adequate recourse to appeal claims denials, which has been done.

As a final note, although the majority of this article discusses procedural matters related to EOBs, it’s worth taking a brief look into the substance of denials. Although the relevant regulations provide that the claimant must be given the “specific reasons” for the denial of benefits, an interesting nuance of this rule apparently involves a sort of meta-reasoning: as one court put it, “The administrator must give the ‘specific reasons’ for the denial, but that is not the same thing as the reasoning behind the reasons...10”

Admittedly, that sounds very odd. The nuance is that although the Plan Administrator must provide a reason for denial, the Plan Administrator, oddly, isn’t required to provide a good reason. The fiduciary duty extends to providing a reason, and then the law places the burden on the claimant to refute that reason.

Of course, the regulations explaining what must be present on an EOB are designed to give the claimant the tools it needs to refute the denial – but the fact remains that the Plan Administrator may provide a nonsensical reason for denial, and the Plan Administrator has then literally satisfied its duty to compliantly notify the claimant of the specific reason for the denial. After all, the law does not assume that Plan Administrators are perfect, or even logical; only that they explain themselves.

A PPROACH A BLE. KNOWLEDGEA BLE. DEPENDA BLE.

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According to one particular court, requiring the Plan Administrator to

‘reasoning behind the reasons’ “would turn plan administrators not just into arbitrators, for arbitrators are not usually required to justify their decisions, but into judges, who are.11”

explain its

Interestingly, despite the doctrine of “substantial compliance” noted above, perhaps courts should adopt a doctrine of “substantial noncompliance,” which can place a fiduciary out of compliance for providing an egregiously poor reason for denial, and thus violating the spirit of the law, despite following the black letter of the law.

Regardless, the regulations are neither clear nor all-inclusive – but there is case law designed to educate Plan Administrators regarding things that must be on an EOB, and what doesn’t need to be. The rules are not as intuitive as the regulations make them out to be…but then again, in this industry, what is?

Attorney Jon Jablon joined The Phia Group’s legal team in 2013. Since then, he has distinguished himself as an expert in various topics, including stop-loss and PPO networks, focusing on dispute resolution and best practices. In 2016, Jon assumed the role of Director of The Phia Group’s Provider Relations department, which focuses on all things having to do with medical providers – including balance-billing, claims negotiation, PPO and provider disputes, general consulting, and more.

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References: 1 Chappel v. Lab. Corp. of Am., 232 F.3d 719, 726 (9th Cir. 2000). 2 Id. 3 Accord VanderKlok v. Provident Life and Accident Ins. Co., 956 F.2d 610 (6th Cir. 1992); Wolfe v. J.C. Penney Co., 710 F.2d 388 (7th Cir. 1983); Richardson v. Central States, Southeast and Southwest Areas Pension Fund, 645 F.2d 660, 665 (8th Cir. 1981) 4 Weaver v. Phx. Home Life Mut. Ins. Co., 990 F.2d 154, 158 (4th Cir. 1993) 5 Makar v. Health Care Corp. of Mid-Atlantic (CareFirst), 872 F.2d 80, 83 (4th Cir. 1989) (dicta), emphasis preserved. 6 See Halpin v. W.W. Grainger, Inc. 962 F2d 685 (CA7 Ill, 1992) 7 Urbania v Cent. States, Southeast & Southwest Areas Pension Fund, 421 F3d 580 (CA7 Ill 2005). 8 Lacy v. Fulbright & Jaworski, 405 F.3d 254, 256-257 & n.5 (5th Cir. 2005). 9 Robinson v. Aetna Life Ins., 443 F.3d 389, 393 (5th Cir. 2006). 10 Gallo v. Amoco Corp., 102 F.3d 918, 923 (7th Cir. 1996), internal citations omitted. 11 Id.

OCTOBER 2018

57


NEWS

NEWS FROM SIIA MEMBERS

2018 OCTOBER MEMBER NEWS SIIA Diamond, Gold & Silver Member News SIIA Diamond, Gold, and Silver member companies are leaders in the self-insurance/captive insurance marketplace. Provided below are news highlights from these upgraded members. News items should be submitted to Wrenne Bartlett at wbartlett@siia.org. All submissions are subject to editing for brevity. Information about upgraded memberships can be accessed online at www.siia.org. For immediate assistance, please contact Jennifer Ivy at jivy@siia.org. If you would like to learn more about the benefits of SIIA’s premium memberships, please contact Jennifer Ivy at jivy@siia.org. 58

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NEWS

Diamond Members

Sun Life Financial Reports Second Quarter 2018

Medical stop-loss sales increased 5% and we achieved a milestone US$1.5 billion business in-force in the quarter, up 22% from the same period in the prior year, reflecting our leadership position as the largest independent stop-loss provider in the market.

Sun Life Financial Inc. announced its results for the second quarter ended June 30, 2018. Second quarter reported net income was $706 million and underlying net income was $729 million.

In addition to acquiring insurtech company Maxwell Health in the quarter, we introduced a new product to the U.S. stop-loss market, helping our Clients manage costs. Using Collective Health’s integrated end-to-end health benefits platform for self-funded employers, this stop-loss offering provides financial protection from highdollar claims with seamless claims reimbursement, convenient employer reporting, improved clinical and risk management, and the opportunity to share in favorable results with other employers via a pooled experience. This is another example of how SLF U.S. is innovating to bend the cost curve on medical expenses to help our Clients.

A Leader in U.S. Group Benefits

About Sun Life Financial

SLF U.S.’s reported net income was $105 million, a significant increase from Q2 2017, when assumption changes and management actions (“ACMA”) resulted in a net loss. Underlying net income of $125 million was up $24 million from the same period in the prior year, primarily due to favorable morbidity experience and a lower income tax rate in the U.S., partially offset by less favorable mortality experience. The after-tax profit margin for Group Benefits was 6.5% as of the second quarter of 2018, compared to 3.3% as of the second quarter of 2017.

Sun Life Financial Inc. (“SLF Inc.”) is a leading international financial services organization providing insurance, wealth and asset management solutions to individual and corporate Clients. Sun Life Financial has operations in a number of markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, Australia, Singapore, Vietnam, Malaysia and Bermuda. As of June 30, 2018, Sun Life Financial had total assets under management (“AUM”) of $986 billion. Visit www.sunlife.com and www.sunlife.com/us.

Results Reports Medical Stop-loss Sales Up 5%

SLF U.S. Group Benefits sales decreased 2% compared to the second quarter of 2017 as a result of a decrease in employee benefits large case sales.

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NEWS Swiss Re A&H Division Seeks Actuary

About HHC Group

Swiss Re’s A&H division is looking for an Actuary to lead a team of actuaries dedicated to the Stop Loss business. Ideal candidates would have their FSA or FCAS designation (Associate with equivalent work experience will be considered), and 3-5 years of experience working in Medical Stop Loss, Medical Reinsurance or Group Commercial Health Insurance. Swiss Re is looking to fill this exciting opportunity in the Windsor, CT area. Interested applicants should apply online today!

HHC Group is a leading national health insurance consulting company providing a wide range of cost containment solutions for Insurers, Third Party Administrators, Self-Insured Employee Health Plans, Health Maintenance Organizations (HMOs), ERISA and Government Health Plans. HHC Group utilizes a combination of highly skilled professionals and advanced information technology tools to consistently deliver targeted solutions, significant savings and exceptional client service.

Silver Members HHC Group Receives Approval for Independent Review from Alaska, Now Approved in 30 States The State of Alaska has approved HHC Group’s application as an Independent Peer Review Organization and will now begin assigning external review cases to the company. Alaska is the 30th state to approve HHC Group as a licensed/certified IRO, Utilization Review Agency, Private Review Agency or Licensed Medical Claims Review Agency.  URAC accredited since 2004, HHC Group provides Internal and External Independent Peer Reviews for insurance companies, health maintenance organizations, self-insured companies and ERISA plans. The team overseeing the review process utilizes its combined 100 plus years of healthcare experience to ensure that every review fully answers all questions being asked, cites the appropriate medical guidelines, and is clearly written and grammatically correct.

HHC Group’s services include Claim Negotiation, Claim Repricing, Medicare Based Pricing, DRG Validation, Medical Bill Review (Audit), Claims Editing, Medical Peer Reviews/Independent Reviews, Independent Medical Examinations (IME), Case Management Utilization Review, Data Mining, Disease Management and Pharmacy Consulting. For additional information about HHC Group and our services, visit www.hhcgroup.com or contact Bob Serber at rserber@hhcgroup.com or 301-963-0762 ext. 163. 

CAPTIVE INSURANCE SOLUTIONS

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NEWS D.W. Van Dyke & Co. FebJuly Persistency and New Business Industry Stop Loss Survey Chris Koehler, President of DDR Holdings, Inc., announced that questionnaires had been sent inviting Stop Loss Carriers and MGU’s to participate in D.W. Van Dyke & Co., Inc’s February-July Persistency and New Business Survey. All Stop Loss organizations (Carrier and MGU) are welcome and invited to participate. Those interested in participating who did not receive a survey questionnaire should contact Michelle Marzella at mmarzella@ dwvd.com.

How do you choose, if all your choices look the same?

About D.W. Van Dyke & Company Founded in 1978, DWVD provides intermediary and advisory support for reinsurance placements, distribution, product development consulting and direct brokering services on behalf of institutional clients. DWVD works throughout the Life, Accident & Health space, most prominently in the stop loss business. DWVD’s customers and markets include Insurance Companies, Reinsurers, TPAs, MEWAs, Cooperatives, MGAs, distribution companies and others. Contact Walt Roland at wroland@ dwvd.com and visit www.dwvd.com.

Reputation, experience and superior customer service. That’s how you choose.

SPECIAL RISK

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Your Trusted MGU For Over 40 Years Creative Solutions • Consultative Approach • Exceptional Service

Meet with Barbara Klingenberg at SIIA or contact her at your convenience to discuss your stop loss needs. 781.270.7458 bklingenberg@suttonspecialrisk.com suttonspecialrisk.com

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AmQUE: DESIGNED FOR BROKERS, EMPLOYERS & EMPLOYEES

ITE WR ER

QUO TE

UN D

INTRODUCING AmQUE:

THE NEW, EXCLUSIVE TECHNOLOGY PLATFORM FOR HEALTHYADVANTAGE™

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• Web based platform to quote, underwrite and enroll • Broker and Employer Dashboards to measure enrollment campaigns • Mobile app for employees to complete underwriting and enroll in benefits • Electronic signature and submission of employer paperwork via DocuSign • Aggressive compensation • Attract and retain clients on one Enterprise System

An AmWINS Group Company

Contact GBS today at sales@gbsio.net to find out more.


Gold Members Berkshire Hathaway Specialty Insurance (BHSI) Seeks Experienced Senior Underwriter Berkshire Hathaway Specialty Insurance (BHSI) is seeking an experienced Senior Underwriter for their busy medical stop loss unit. The Senior Underwriter will be responsible for establishing, developing and expanding customer, broker, and external partner relationships. Additionally, the Senior Underwriter will partner with their stop loss sales team to build a book of business while achieving new business sales and renewals. The ideal candidate will have 10+ years of medical stop loss underwriting experience, thrive in an entrepreneurial and collaborative environment, and exhibit a thorough understanding of the principals of stop loss underwriting. This role can be based from their Atlanta, Boston, Indianapolis, or Irvine offices, as well as home based in the Minneapolis area.

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Berkshire Hathaway Specialty Insurance (BHSI) is a strong and trusted insurance partner. We provide commercial property, casualty, healthcare professional liability, executive and professional lines, surety, travel, programs, medical stop loss, accident and health, and homeowners insurance to customers worldwide. Part of Berkshire Hathaway’s insurance operations, we offer you the security of a top-rated balance sheet and the expertise of a worldwide team of professionals with excellent capabilities and character. Visit www.bhspecialty.com.

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About Berkshire Hathaway Specialty Insurance

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Interested candidates should see: https://bhspecialty.com/career/senior-stop-lossunderwriter/

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Crafted to guard financial health.

At the heart of a smart business decision is the integrity of the transaction. With HM Insurance Group, you can count on the consistent delivery of coverage that is designed to help protect financial well-being. You can rely on our responsiveness so you can focus on your business goals. And you can be confident in the quality of protection that has expert risk evaluation, financial stability and market knowledge at its core. Make connections and learn more about our people and products at hmig.com

STOP LOSS

MTG-3065 (R4/18)

MANAGED CARE REINSURANCE

Products are underwritten by HM Life Insurance Company, Pittsburgh, PA, or HM Life Insurance Company of New York, New York, NY.


TRU Services Seeks Claims Specialist TRU Services, A Liberty Mutual Company is looking for a Claims Specialist. Responsibilities •

To apply, please email Robyn Eagan at robyne@truservices.com with your resume and cover letter. About TRU Services

The Claims Specialist will handle a book of business of specialty lines claims throughout the entire claim’s life cycle.

Would be responsible for conducting investigations, recommending adequate reserves, monitoring, documenting, and settling/closing claims in an expeditious and economical manner within prescribed authority limits for the line of business.

Some travel required.

Experience •

Bachelors’ or equivalent. 2+ years claims/legal experience; or in a related field.

Functional knowledge of claims handling concepts, practices and techniques, to include but not limited to coverage issues, and product line knowledge.

Functional knowledge of law and insurance regulations in various jurisdictions.

Demonstrated strong verbal and written communications skills. Demonstrated strong negotiation skills.

TRU Services was founded in 1995 and was acquired by Liberty Mutual in April 2017. Since then we have merged our brands and are issuing the Liberty Insurance Underwriters Inc. (LIU) Policy. With the acquisition by Liberty Mutual, the principles represented by TRU for the past 20 years have not changed and it is these shared principles with Liberty Mutual that led to the acquisition. Liberty Mutual has been a trusted entity in the insurance industry for over 100 years! Liberty Mutual boasts an A rating for both A.M. Best and Standard & Poor’s. The merger with Liberty Mutual has allowed TRU to create a completely new Stop Loss Policy to meet the demands of the marketplace that include: Plan Mirroring availability, elimination of Disclosure statements on renewal business, and specific Advanced Funding ability with enhanced features for qualified producers.  Visit www.truservices. com.

REFERENCE-BASED PRICING D O N E R IGHT WE HAVE THE EXPERTISE, EXPERIENCE AND BULLDOG TENACITY TO DO THE JOB AND DO IT RIGHT

N

o two groups are exactly alike and no one Reference Based Pricing program design is right for them all. That’s why HHC Group starts by learning each group’s objectives and constraints. Then we help design and implement the right Reference Based Pricing program for them. Some want pre-cert and concierge services. Others want just claims repricing or repricing, provider appeal support and patient advocacy. Some want customized models and some provider contracting. We have the experience and expertise to help the group design and deliver the RBP program that’s just right for you.

163 CONTACT US 301.963.0762 sales@HHCGroup.com EXT.

www.HHCGroup.com Claims Negotiation & Repricing | Claims Editing | Medical Bill Review (Audit) | Reference-Based Pricing

| DRG Validation | Utilization Reviews and Independent Reviews | Independent Medical Examinations

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The Self-Funded Opportunity for Health Insurers Liz Mariner, Senior Vice President, Risk Strategies In recent years there has been significant growth in self-funded health plans. Back in 1999, 44% of covered workers were in self-funded health plans compared to 55% in 2008 and 60% in 2017*. And between 2008 and 2017 the percentage of workers working for small employers (3 to 199 workers) that self-funded their health benefits increased from 12% to 15%*. At the same time, there has also been a commensurate increase in medical stop loss insurance that protects self-funded health plans, with medical stop loss gross written premium growing as follows**:

• 2015 $14.2 billion

Particularly for regional health insurers, there is a growing trend toward building proprietary regional medical stop loss programs where rates and structure are significantly tailored to a health insurer’s specific demographics, thereby creating a more competitive and effective product. However, growing in the self-funded market requires a focused approach. A health insurer entering this market and considering offering a medical stop loss product needs to address questions such as:

• How do we incentivize our sales team? • What paper will we use for the medical stop loss policy? • How will we make sure that the claims and administration processes seamlessly integrate with the medical stop loss insurance process?

• How will we price our medical stop loss product to take account of our provider network?

• How will we manage quote requests, policy issuance, premium processing, claim adjudication …? There is much to think through when considering growing in the self-funded market as a health insurer. Risk Strategies has explored this opportunity in depth in a 2-part white paper series that can be downloaded at www.risk-strategies.com/healthinsurer-self-funding.

• 2016 $15.6 billion, 9.9% growth

• 2017 $17.1 billion, 9.3% growth The self-funded market therefore represents a growth opportunity for health insurers, both from the point of view of retaining business and adding new group business. Providing third-party administration (TPA) services to self-funded employers on an Administrative Services Only (ASO)/ fee basis creates non-risk revenue. By bringing a self-funded product to its local market, a health insurer can integrate its ASO services with a private labeled medical stop loss product, thereby driving more volume to providers. The result is increased brand awareness in the insurer’s local market.

68 THE SELF-INSURER

Sources: * Kaiser Family Foundation ** Risk Strategies analysis of NAIC filings


SIIA 2018

BOARD of directors & committee chair

Chairman of the Board*

Robert A. Clemente CEO Specialty Cace Management LLC Lahaska, PA

President/CEO

Mike Ferguson SIIA, Simpsonville, SC

Chairman Elect* Adam Russo Chief Executive Officer The Phia Group, LLC Braintree, MA

Treasurer and Corporate Secretary* David Wilson President Windsor Strategy Partners, LLC Princeton, NJ *Also serves as Director

SIEF Board of Directors Nigel Wallbank Chairman

Directors

Committee Chairs

Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA

CAPTIVE INSURANCE COMMITTEE Michael P. Madden Division Senior Vice President Artex Risk Solutions, Inc. San Francisco, CA

Mary Catherine Person President HealthSCOPE Benefits, Inc. Little Rock, AR

GOVERNMENT RELATIONS COMMITTEE Lawrence Thompson CEO BSI Fresno, CA

Kevin Seelman Senior Vice President Lockton Dunning Benefit Company Dallas, TX Jeffrey K. Simpson Attorney Gordon, Fournaris & Mammarella, PA Wilmington, DE Robert Tierney President StarLine East Falmouth, MA

HEALTH CARE COMMITTEE Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem, NC INTERNATIONAL COMMITTEE Robert J. Repke President Passport For Health Novato, CA WORKERS’ COMP COMMITTEE Mike Zucco Business Development AL Trucking Association Fund Montgomery, AL

Heidi Leenay President Freda Bacon Director Les Boughner Director Alex Giordano Director

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SIIA new members OCTOBER 2018 Regular Corporate Members Dorothy Cociu President Advanced Benefit Consulting & Insurance Services, Inc. Fullerton, CA Paul Hacker Senior Account Executive Axis Insurance Services, LLC Franklin Lakes, NJ Dan McGill Senior Vice President Capstone Group North Wales, PA Alex Soria Cardinal Point South Miami, FL Kyle Johnson VP - Sales ClearScript St. Paul, MN Brenda Motheral CEO EpiphanyRx Nashville, TN Mary Anne Casey GBAS Product Manager FIS Houston, TX

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THE SELF-INSURER

Scott McEwan President Gulf Coast Underwriters Tampa, FL Eddy Kimura President Point6 Healthcare, LLC Plano, TX Michael Riley, Jr. Managing Partner Sustainable Health Idex LLC Belleville, IL Jeff Wilson Principal Wilson & Co Washington, MO Stephen Gaus Director of Business Development The Leapfrog Group Washington, DC

Ricardo Almeida Americas Business Development Leader MAXIS Coral Gables, FL

Employer Corporate Members Barry Couch Managing Director Community Hospital Insurance Coalition Reciprocal, IC Austin, TX Chip Trefry Administrator Texas Professional Service Provider Benefits Trust Jacksonville, FL

Gold Members Silver Corporate Members Lisa Kendrick President, Self Funded Solution Maestro Health Matthew, NC

Sarahjene Sacchetti SVP, Marketing Collective Health San Francisco, CA

Affiliate Members John Gedney Managing Director AST Risk LLC East Norristown, PA


Paying Usual & Customary IS PAYING TOO MUCH

Zelis Healthcare drives over $1 BILLION IN ANNUAL SAVINGS on out-of-network charges Cost variances on out-of-network claims make budgeting for healthcare nearly impossible for the self-insured. Zelis Healthcare delivers savings with a proven, comprehensive approach that includes market-driven and acceptable reimbursement, expert support and member advocacy processes. Reduce your liability and experience sustainable cost management. Partner with Zelis to get your share of $1 billion in annual savings.

Better Service. Better Performance.

Copyright 2018 Zelis Healthcare. All rights reserved.

Contact Zelis today at 888.311.3505 or visit zelis.com to find out how our pre-payment solutions are helping control the rising cost of healthcare.


Pay it Right THE FIRST TIME

Through our integrated PREPAYMENT REVOLUTION Zelis is the market leader in integrating network solutions, payment integrity and electronic payments to deliver insights that drive even greater savings before a claim is paid. Working in a prepayment environment, we price the claim correctly before you pay, avoiding unnecessary costs, time and reducing member and provider abrasion. In fact, 85% of the time we find claim savings that other vendors don’t. We do this by focusing on every step of the pre-payment claim cycle and delivering value-driven solutions from payment to reconciliation.

Contact Zelis today at 888.311.3505 or visit zelis.com to find out how our pre-payment solutions are helping control the rising cost of healthcare.

Better Service. Better Performance.

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Copyright 2018 Zelis Healthcare. All rights reserved Copyright 2017 Zelis Healthcare. All rights reserved.

Self Insurer October 2018  
Self Insurer October 2018