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SIIAâ€™s Virtual 40th Annual National Conference & Expo October 12-15, 2020 | www.siia.org
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TABLE OF CONTENTS
OCTOBER 2020 VOL 144
W W W. S I P C O N L I N E . N E T
ON THE RECORD WITH SIIA PRESIDENT & CEO MIKE FERGUSON
COVID & COMP THE PANDEMIC’S IMPACT ON WORKERS’ COMPENSATION CLAIMS HAS BEEN MINIMAL AS STATES MOVE TO PROTECT FIRST RESPONDERS, BUT CONCERN PERSISTS ABOUT ITS LASTING EFFECT ON A NUMBER OF TANGENTIAL ISSUES
By Bruce Shutan
ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES THE AFFORDABLE CARE ACT (ACA), THE HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996 (HIPAA) AND OTHER FEDERAL HEALTH BENEFIT MANDATES
42 PLANNING AHEAD: COVID-19 AND OTHER CONSIDERATIONS FOR 2021 HEALTH PLAN RENEWALS
NEWS FROM SIIA MEMBERS
23 U.S. EMPLOYERS AND BUSINESS COMMUNITIES LEAD AMERICA’S RESPONSE TO BEHAVIORAL HEALTH CHALLENGES DURING AND POST COVID-19 35 RISK MANAGEMENT IN THE TIME OF COVID-19 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 2020 3
SIIA Endeavors: On the Record with SIIA President & CEO Mike Ferguson
SIIA President & CEO Mike Ferguson
he Self-Insurer Editor Gretchen Grote 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.
Gretchen Grote: So ongoing COVID developments have obviously disrupted virtually every business and organization to some degree. How has SIIA been affected? Mike Ferguson: We were affected almost immediately after a pandemic was declared with the abrupt cancellation of our Self-Insured Health Plan Executive Forum, which was scheduled to be held in Charleston. Then over the next weeks we worked to cancel and/or postpone other live events scheduled for the first half of the year.
Of course, during this time period and though early June, most members were completely focused on attending to their business and clients, so we unfortunately lost most engagement aside from the COVID webinar series which generated a lot of interest.
ENDEAVORS As things settled down a bit over the summer months, we were able to re-start some volunteer committee/task force projects through video calls, but the inability to get together in person has certainly made things more challenging. I do expect, however, that we will continue to adapt to current realities and find opportunities to better maximize member engagement.
Of course, we ultimately had the cancel our National Conference & Expo and convert it into a virtual event. This has required our professional staff team to quickly learn new skills and strategies and has kept us extremely busy working to produce a highquality event.
So all in all, it has been a very eventful time period for Team SIIA.
GG: Since converting the National Conference into a virtual format is a pretty big deal, can you expand a little on what people can expect? MF: I think participants will be very pleased with the significant amount of highquality educational content. We quickly realized that one of the major advantages of this virtual format is that we are not confined by the limits of physical meeting space, so the content is easily scalable. And we have taken full advantage of this by offering about 50 educational sessions…the most content ever for a SIIA conference.
We’ve also incorporated a virtual exhibit hall, which will obviously be a very different experience. On the one hand, we are losing the energetic atmosphere and that’s a big disappointment. But on the other hand, this does have the potential to be a very efficient way to shop nearly 100 vendors offering a variety of specialized products and services, so we’ll see how it all turns out. We really appreciate all of the exhibiting companies have been willing to roll with us on this big experiment.
GG: One last related question is how did SIIA decide on a pricing strategy for this conference as it seems event organizers are over the map this year with regard to charging for virtual events? MF: It’s a fair question and one that event producers have really been grappling with this year. Ultimately, we determined that the best approach was to produce a highquality event and that people should be expected to pay something for such quality.
In this regard, the fees have been discounted as compared to what would have been charged for a live conference given that we were not able to provide the full SIIA experience, so we think it is the right approach and may be the new realty for some time given that virtual events are unlikely to go away even when the pandemic is behind us.
GG: Switching gears just a bit, can you update our readers about Canoe, SIIA’s on-line educational platform? MF: I think Canoe actually blends nicely with the virtual conference direction because this a great resource that allows SIIA members easy access to a huge library of self-insurance content. I like to call it the “Netflix for Self-Insurance” and now includes more than 100 pieces of unique content. For those members who have not already checked it out, I encourage them to do so at www. siiacanoe.org It's really a great benefit that can be utilized by all employees of SIIA member companies.
GG: It’s been about two years since the launch of the SIIA Future Leaders Initiative. How have things been going and what can we expect going forward? MF: Let me first say that this remains one of the association’s most important strategic initiatives as the generational shift continues to accelerate in our industry. We did lose some momentum this year with the COVID developments, including cancellation of our Mentor Connection Forum, but things are picking up now.
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ENDEAVORS Our SIIA Future Leaders Committee has developed content for Virtual National Conference and we have converted the Mentor Connection Forum into a virtual event to be held in November. I expect the SFL committee to hold a strategic planning meeting soon to map out a strategy for 2021, so I am excited to see what direction this initiative will take in the new year.
GG: There is a big election coming up. How is SIIA preparing for the outcome? MF: Yeah, “big” is probably an understatement given the increased political divide in this country. Our government relations team is already developing updated lobbying strategies in anticipation of the different possible outcomes. One common component will be the need for greater member engagement.
It’s important to note that the time period when Congress is most likely to act is after a presidential election, so we expect 2021 to be a very active year. And depending on the actual election results, we could be facing a real threat to the employer-based health care system that is going to require the most robust SIIA response since the run-up to the Affordable Care Act. So I guess my message to the members is to get ready for action if they are serious in ensuring that the self-insurance industry remains viable for the long-term.
GG: I guess on a related note, 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 give 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 in town that we may need to partner with on various lobbying efforts.
Our progress has been somewhat slow but steady since we established the SelfInsurance Political Action Committee (SIPAC) about eight years ago as a vehicle for SIIA members to channel political contributions to key members of Congress. Things have accelerated over the past few years thanks to this more dedicated focus, combined with increased staffing resources, and 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 has already directly complimented advocacy efforts and we expect even more positive results after the upcoming election.
GG: I have seen that SIIA has been involved in some litigation efforts this year. Can you bring our readers up to speed on this? MF: For those who may not be aware, SIIA has a long history of either leading or supporting litigation efforts to support the interests of our members when legislative/ regulatory advocacy opportunities are not viable. These efforts are financed though the association’s Legal Defense Fund (LDF), which in turn is funded by voluntary contributions from the members.
This year, at the specific request of various members, SIIA’s LDF has funded the filing of three separate Amicus Briefs, two at the federal level and one at the state level. The legal issues have ranged from protecting health plan sponsors and participants from nefarious hospital billing practices, ensuring plan sponsors can take advantage of specialty cost containment opportunities, and confronting the Internal Revenue Service over its rule-making process that has adversely affected many captive insurance companies and advisers.
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, networking and advocacy resources.
I am particularly pleased to see how much progress SIIA has made over the past year with political advocacy in Washington, DC in order to better position the captive insurance market segment with key policymakers.
Unfortunately, many of those who influence the legislative and regulatory process affecting captives, have minimal or no understanding of why an increasing number of employers rely on them to deal with risk management strategies. We are making real progress and look forward to even more positive results in 2021.
GG: So on that last note, how do you view SIIA’s role in the captive insurance space, as this membership constituency continues to grow?
GG: Returning to the COVID topic, how do you forsee 2021 playing out with regard to live SIIA events?
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 selfinsurance world.
MF: That sure is an obvious question and one which we are grappling with right now as planning is underway for the new year. My best guess at this point is that live events will not be viable through at the least the first quarter of the year, with the second and third quarters seeing some events coming back but structured differently to accommodate lingering public health concerns. Then hopefully by the fourth quarter we may be able to get back to some variation of normal.
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There are 34 people working on Delaware’s Captive team. Of this total 15 are financial analysts. Under Delaware’s regulatory organization, the financial analyst is the first-line regulator who communicates with the captive manager or owner. As a result, all inquiries, business plan changes, dividend requests, and other related matters are first addressed by the analyst. The experience level of these analysts is unmatched. STEVE KINION, DIRECTOR
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ENDEAVORS Operating under these assumptions, SIIA expects to organize its live event schedule accordingly and supplement with virtual events where it makes sense. Of course, many predictions for this year, including my own, have turned out to be wrong so we’ll try to maintain maximum flexibility where possible. Members should watch for an announcement by early December confirming our 2021 schedule.
GG: There certainly sounds like a lot of exciting things going on at SIIA. What advice would you 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 – when we can have them again – 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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COVID & Comp
Covid & Comp THE PANDEMIC’S IMPACT ON WORKERS’ COMPENSATION CLAIMS HAS BEEN MINIMAL AS STATES
MOVE TO PROTECT FIRST RESPONDERS, BUT CONCERN PERSISTS ABOUT ITS LASTING EFFECT ON A NUMBER OF TANGENTIAL ISSUES
For more on this topic join the LIVE session “COVID-19 Comp-lications for Self-insured Employers” at SIIA’s Virtual National Conference. The COVID-19 pandemic presents a unique circumstance where workplaces that were not typically considered hazardous have suddenly become very dangerous for workers. In response, at least 14 states have expanded workers compensation benefits to cover COVID-19 as a work-related illness for certain types of front-line employees including health care workers, mass transit operators and grocery store clerks. This presumption places the burden on employers to prove that the infection was not work-related, making it easier for those workers to file successful claims. As such, employers have raised concerns that these presumption laws will increase work comp program costs at a time when businesses are already facing significant financial hardship due to the pandemic. This session will explore the impact expanded work comp benefits for COVID-19 infections is having on selfinsured workers compensation programs. What is the frequency and severity of COVID-19 claims? How much are they costing self-funded employers? How do the treatment protocols for COVID-19 compare with other types of occupational illnesses? What protocols should employers deploy within their return-to-work strategies? What processes can they implement to screen and test their employees regularly, and what care continuums can they build with clinical or primary care partners? What precautions should employers implement for employees recovering from COVID-19? The session will also address reserving for potential future medical expenses for claimants who suffer complications. Speakers: Andrea Buhl, Will Kimbrough, Kim Pfingstag, Don Lipsy
Written By Bruce Shutan
s was the case almost two decades ago when 9/11 terrorist attacks turned the world upside down, the nation’s first responders have re-emerged as heroes and heroines in the age of COVID-19. This time, fear of catching the fastest-growing infection since the Spanish Flu while they help save lives has replaced horror over search-and-rescue missions imploding right along with the World Trade Center’s crumbling twin towers. Police, fire and emergency medical technicians are clearly on the frontlines and more susceptible to the worst pandemic in a century as are health care professionals, teachers and service-sector employees. And a number of states have taken action to protect them financially from exposure. While the implications for self-insured workers’ compensation insurance is still uncertain, there’s growing concern about the long-term impact on treatment costs and health outcomes for all infected workers. As this issue went to press, nearly 25 million people (and counting) have been infected by COVID-19 worldwide, roughly one-quarter of whom reside in the U.S.
COVID & Comp How the pandemic affects work comp claims depends on numerous variables. “It matters what type of underlying business the self-insurer is operating,” says Fred Karlinsky, co-chair of insurance regulatory and transactions for Greenberg Traurig, LLP. For example, a lockdown that substantially limited business will likely decrease claims because people weren’t on the job or jobsites, whereas a self-insured local government covering first responders might have seen a spike in claims. He notes that early data indicates that as COVID-19 claims grew, “initially reports for injuries related to other causes shrunk. We’ll obviously have to wait for the claims data to mature before we see if there is any actual impact.” Casually connecting COVID-19 to occupational disease, whose statutes differ across all 50 states, can be difficult due to the broad reach of the pandemic. Thus far, the financial impact has been less than expected, reports David Ives, chairman of Northshore International Insurance Services, Inc., which provides excess claims management, audit and consulting services to a range of risk-bearing clients.
“Those states where people are David Ives finding connections, the exposure is definitely remaining within the retained self-insured layer,” he says. In recently reviewing a large workers’ comp national insurer, Ives learned that the total gross COVID exposure was $6.1 million, while net exposure was just $640,000. The reason? A large national accounts program featuring selfinsured retentions up to $100,000, $250,000 and $500,000 with exposure kept below retention.
STATES SPRING INTO ACTION The pace of illness, treatment and recovery is playing out very differently across the U.S. as trouble spots literally change in real time. In nearly all states, workers who are infected with the coronavirus on the job must show proof of such an occurrence to qualify for work comp. Fewer than one-third of states have shifted the burden of proof for coverage of job-related COVID-19 to ease the burden on first responders and nurses who report for risky assignments. More than a dozen red and blue states alike have relieved essential workers of this step.
The National Conference of State Legislatures (NCSL) recently identified 52 executive orders and administrative policy changes addressing work comp coverage of COVID-19 that were enacted, failed or are pending. Some of those actions involved multiple activities within certain states and one was enacted in Puerto Rico, while 15 states targeted first responders. NCSL also notes that 14 states have included COVID-19 as a work-related illness and half a dozen states have created a presumption of coverage for various types of workers. In addition, COVID-19 coverage is limited to first responders and health care workers in Alaska, Minnesota, Utah and Wisconsin, while Illinois covers all essential workers and Wyoming covers all workers. “Some states have bifurcated the presumption of compensability for COVID-related claims between first responders and all other workers,” according to Karlinsky. He says California, Kentucky, Illinois and Minnesota enacted policies that created a rebuttable presumption that COVID arose out of work performed by first responders and health care workers. California also issued a related executive order for residents who contracted the virus while working outside of their homes during the stay-at-home order. Another key development occurred in Florida, where he says work comp claims related to COVID that front-line state employees submit are being accepted as those being covered by the state Division of Risk Management. Since there have been presumptive state statutes for years, if not decades,
COVID & Comp regarding policemen and firemen being more prone to developing heart disease, hypertension and certain cancers, Ives says “the idea that special eligibility provisions were being created for first responders is not new; it’s just new to the COVID environment.” Lack of uniformity across all states on removing any burden of proof that first responders or other essential workers became infected while working can be attributed to forces that have nothing to do with the law, disease state or employment. For example, Ives points out that many state legislatures don’t meet full time and aren’t in session over the summer. Another factor to consider is that police and fire unions have stronger advocacy levels in some jurisdictions over others, he adds. But first responders aren’t the only ones who are potentially in harm’s way. Health care workers who use personal protective equipment (PPE) are three times more likely to be infected with COVID-19 compared to the public, according to a recent study by researchers from Kings College in London and Harvard University. Risks also were found to dramatically increase for workers with inadequate PPE. While the National Council on Compensation Insurance expects to compile data on COVID-19’s impact on work comp claims by the fourth quarter of 2020, NCCI is projecting a drop in work comp premiums that exceeds the nation’s unemployment rate. The organization offers a tool to gain insight into the potential implications of states enacting legislation related to the compensability of COVID-19-related claims in certain occupations.
With many school systems weighing remote learning and a hybrid option involving limited classroom instruction, Ives believes the next big question for states to answer with regard to COVID-19’s impact on workers’ comp will affect teachers and other school personnel.
LONGER RECOVERY TIMES However, there may be longer-term concerns associated with deferred treatment at hospitals where emergency care has been largely confined to anything threatening life or limb. For example, Ives worries that putting off back surgeries or total knee replacement could prolong disabilities and extend indemnity periods of benefits, as well as delay recovery or return to work. On top of that, administrative hearings and procedures addressing treatment protocols and eligibility issues have been put on hold because of pandemic restrictions. He says not having access to a complete set of data or knowing when it will be made available surely will affect data capture, tracking claim patterns and trends, ratemaking, reserve establishment and other elements of important management relative to a self-insured work comp program
“We’re in unprecedented times,” Karlinsky notes. “Employers on both the self-insured and traditional carrier Fred Karlinsky side are going to have to pay more attention to risks and losses related to illness and disease. We’ll likely see a heightened standard of care for maintaining a safe workplace as it pertains to disease control. Carriers will begin to look at how a company protects its employees from disease in the underwriting process.” In a blog post by Jeff Seibert and Mike Kenitz of Willis Watson Towers on how the pandemic will affect any backlog of work comp claims, several steps were suggested to soften the blow of increased claim costs. They include a review of all reopened claims to ensure validity, light-duty claims to determine if current restrictions meet regular job functions and high-value claims to ensure an effective resolution strategy is set up and being implemented.
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COVID & Comp Other recommendations include regular communication with employees who haven’t been released to full duty to remove any barriers they’re facing, as well as checking into the availability of telemedicine. Telemedicine certainly will continue to promote safe distances between patients and medical providers for both work comp and group health. “It’s convenient, and 90% of what happens in the doctor’s visit is you explaining your issues and them asking you questions, so that if you need testing or some sort of follow-up, that can be arranged,” according to Ives, noting that it will continue to evolve. Looking ahead, Ives believes the work environment will be forever altered. “Work-at-home has become a far more common and accepted experience, and I don’t see that rolling back completely,” he says. In addition, “all information indicates that masking, social distancing and even travel restrictions are going to remain in place well into 2021, if not throughout the entire next year.” Bruce Shutan is a Portland, Oregon-based freelance writer who has closely covered the employee benefits industry for more than 30 years.
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A QQ& A
ACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:
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 Womenâ€™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, and Carolyn Smith 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 and Carolyn Smith are senior 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 questionerâ€™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 email@example.com.
VENDOR CREDITS AND COMPLIANCE ISSUES Over the last few years, it has become quite common for insurance carriers and service providers to offer employee benefit plans and their employer plan sponsors certain “credits” that can be used to pay for items such as employee benefit plan communications, benefit administration system improvements, or in certain instances unspecified future special administration projects. Terms used for these credits include innovation fees or credits, communication credits as well as technology credits. We will use the term innovation credits as a catch-all for purposes of this article. In this article we will explore whether there are constraints on use of these innovation credits under ERISA including possible fiduciary and prohibited transaction implications. In a future article we will suggest planning mechanisms and plan designs to reduce possible ERISA liability or concerns. Innovation credits can also raise state law issues such as commission splitting, insurance rebating, etc. but this article and our follow up are devoted to ERISA considerations.
WHAT ARE INNOVATION CREDITS? These arrangements vary as to how the innovation credits “flow” back to the employer or plan.
They can come directly to the employer sponsoring the plan as a “reimbursement” for third party expenses incurred.
They can come to the plan itself in instances where the plan has a trust or other funding vehicle.
They can be held by a third party administrator, broker or consultant to be disbursed or offset against future plan expenses as they are incurred.
They can be paid directly by the carrier to a vendor such as for a benefit administration platform.
How these credits are calculated also varies. For example, a carrier for a voluntary benefit could pay a benefit administration platform vendor a per-employee-per-month (PEPM) credit of $0.60 for every employee enrolled in voluntary life and a $0.30 PEPM for any employee enrolled in vision etc. Those credits would then reduce the cost of the platform to the employer. Or, the arrangement could be less transparent with different tiers of pricing based on the carriers selected. A benefits administration platform vendor could indicate that the cost of a benefits administration system can vary based on which “partner” carriers are selected and for which lines of coverage, with no disclosure on precisely how much the carrier is paying the benefit administration platform vendor so that vendor can provide preferred pricing to the employer.
As mentioned, these innovation credits are often generated by “voluntary benefit” carriers but may also be available from PBMs, life insurers, wellness vendors, communication vendors, etc. Voluntary benefits are typically offered on an employee/ participant pay-all basis and can include dental, vision, supplemental short- and long-term disability, supplemental group life, critical illness, hospital indemnity, etc. The employee funding arrangements can either be pre-tax through an employer sponsored cafeteria plan or post-tax for benefits such as short- or long-term disability. In some instances there are employer contributions/premiums in addition to employee contributions/ premiums to these benefits.
INNOVATION CREDITS AS ERISA PLAN ASSETS
For ERISA purposes, we know that employee/participant contributions are considered to be “plan assets” as soon as they can reasonably be segregated from an employer’s general assets. ERISA strictly regulates the use of plan assets and provides that plan assets may only be used to provide benefits under an employer’s welfare benefit plan and/or to offset reasonable plan administration expenses. While the United States Department of Labor (DOL) issued ERISA Tech Rel. 92-01 providing (as long as certain conditions are met) that participant contributions do not have to be held in trust, DOL emphasized that those participant contributions are still plan assets subject to ERISA fiduciary duties. DOL cautioned that the technical release “in no way relieves plan sponsors and fiduciaries of their obligation to ensure that participant contributions are applied
only to the payment of benefits and reasonable administrative expenses of the plan.” DOL also stated that: “Utilization of participant contributions for any other purpose may result not only in civil sanctions under Title I of ERISA but also criminal sanctions…” Innovation credits, however, are not participant contributions or premiums. Although there is no specific ERISA statutory definition of plan assets, based on past guidance and anecdotal experience with DOL, we believe that innovation credits paid by insurance carriers or third parties who received premiums or fees from participant contributions (or other trust or plan assets) would be considered to be plan assets. DOL has repeatedly stated that distributions from carriers including but not limited to refunds, dividends, demutualization payments, rebates, and excess surplus distributions may be plan assets. DOL has provided specific guidance on several types of carrier distributions, including demutualization proceeds, litigation settlement proceeds, and medical loss ratio (MLR) rebates required under the Affordable Care Act (ACA). In this guidance, DOL stated that to the extent employees pay a portion of the carrier premiums, the appropriate plan fiduciary must treat as plan assets the portion of any proceeds or rebates attributable to employee contributions for those premiums. Based on this DOL guidance, if the innovation credits are generated by insurance premiums or contributions paid entirely by employees, the entire innovation credit would likely be considered a plan asset. In instances where both the employer and the employees pay the premiums or contributions then at least the employee pro-rata share of the innovation credit would likely be a plan asset.
While this past guidance provides insight into how DOL views refunds and rebates from carriers—especially the MLR rebate and the demutualization guidance—there is no specific guidance on innovation credits. And, DOL has repeatedly emphasized that plan assets are generally “to be identified on the basis of ordinary notions of property rights”. This is a fact specific analysis based on each particular arrangement. For welfare plans, this concept becomes even murkier where this is frequently no trust to hold plan assets. So if, for example, the employee benefit plan itself never takes possession of the innovation credit and sits unsegregated with a third party is it a plan asset? If the credit goes directly from the carrier to the vendor as part of the vendor’s compensation is it a plan asset?
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If the carrier makes the payment to a benefit administration platform vendor because that platform makes it easier for the carrier to receive premiums from that particular employer/plan is that a use of plan assets or just a solid business decision by the carrier? These arrangements vary so greatly as to the parties to the arrangement; the calculation of the innovation credit; who holds the innovation credit before it is applied and how the innovation credit is ultimately applied. As a result, legal counsel should be consulted on each arrangement to determine if there are “plan assets” involved.
ERISA FIDUCIARY BREACH AND PROHIBITED TRANSACTIONS Assuming that innovation credits are (at least partially) plan assets, then whoever controls the allocation and payment over those innovation credits would be a plan fiduciary. Under ERISA, a fiduciary includes a person who exercises any authority or control respecting management or disposition of plan assets. And, if those plan assets are used for anything other than providing benefits or defraying reasonable expenses of administering the plan then there is a fiduciary breach. Also ERISA has prohibited transaction provisions that, in many ways, mirror these fiduciary obligations. It is a prohibited transaction for a plan fiduciary to:
Deal with plan assets for the fiduciary’s own interest or account;
Act on behalf of a party whose interests are adverse to the plan; or
Receive any consideration for the fiduciary’s own personal account from any party dealing with such plan in connection with a transaction involving plan assets.
Innovation credits raise significant questions under ERISA’s fiduciary and prohibited transaction provisions. For example, retention and use of an innovation credit by an employer for its own purposes unrelated to plan administration would be a fiduciary breach and a prohibited transaction. A fiduciary decision to take the innovation credits generated by the assets of one plan and apply them to the administrative expenses of another ERISA plan would also be a fiduciary breach and a prohibited transaction. The next step in the analysis, explored in a future article, is to determine what is the “plan” and what is a legitimate plan expense. For example, if an innovation credit is generated by a long-term disability carrier can that credit be used to pay for communications that also include a self-insured medical benefit or a fully insured dental benefit? Similarly, if the innovation credit goes toward a benefit administration platform does an employer need to ascertain the proportional cost of the use of that platform for the benefit that generated the innovation credit? Also, does the innovation credit benefit the employer outside of the plan administration context? If the innovation credit pays for communications is it permissible for that communication to include non-ERISA employer-based benefits
such as vacation, paid time off, office holiday parties etc? ACA reporting is an employer and not a plan related expense so if the innovation credit also goes toward a benefit administration platform that also assists in ACA reporting has there been a fiduciary breach or a prohibited transaction? Our next article will suggest some “guardrail” and plan design considerations that might minimize any ERISA risk presented by innovation credits as well as further exploring what are appropriate plan expenses.
U.S. EMPLOYERS AND BUSINESS COMMUNITIES LEAD AMERICAâ€™S RESPONSE TO BEHAVIORAL HEALTH CHALLENGES DURING AND POST COVID-19 Written by Bill Oldham, Founder and Chairman of the Board, Thought Leadership & Innovation Foundation (TLI) and Shawn Murphy, Executive Director, Thought Leadership & Innovation Foundation (TLI)
upport for Community Collaborative model galvanizes business leaders, healthcare systems, law enforcement agencies and community organizations toward a meaningful response to behavioral health issues.
Despite the economic fall-out of the current pandemic, COVID-19 is providing an opportunity for employers to reassess, discover and strengthen the fabric of communities and states across the country to proactively address behavioral health challenges created by the pandemic.
A growing number of companies are discovering the extraordinary value and impact of a community collaborative approach to effectively build solutions outside of government programs, take action and set the agenda for tackling the mental health problems that affect employees and their families: many adults report specific negative impacts on their mental health and wellbeing, such as difficulty sleeping (36%) or eating (32%), increases in alcohol consumption or substance use (12%) and worsening chronic conditions (12%) due to worry and stress over the coronavirus.
The impact upon mental health issues is palpable: findings from a study The American Worker in Crisis of more than 1,200 U.S.based employees who receive health insurance through their employer show that 83% of American workers are experiencing mental health problems and are almost equally impacted by both the pandemic and the racial justice movement.
Meanwhile, 40% don’t believe their employer cares about their mental health beyond being productive at their job. The research also found that amid all of the uncertainty and work disruption, employees who don’t believe their employer supports their mental health are almost twice as likely to be considering a career change.
As the pandemic wears on, many people are experiencing situations linked to poor mental health outcomes, such as isolation and job loss. According to new research from the Economic Policy Institute, over the past seven pandemic-ridden months, more than six million Americans have lost the health insurance they previously received from their employer. Once spouses and children are taken into account, the real number is closer to 12 million. Other estimates from the Kaiser Family Foundation found that as many as 27 million people could become uninsured following job loss.
The good news is that by working together through community collaboratives and with employers and organizations taking the lead in supporting these initiatives, this tragic pandemic serves as a learning experience to move forward toward repair and improved access to care for behavioral health problems. Employers should view this as an opportunity to make positive changes.
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BEHAVIORAL HEALTH IS COST-EFFECTIVE A World Health Organization study reported the cost of mental health disorders in developed countries is estimated to be between 3% and 4% of gross national product, costing national economies billions of dollars in care and lost productivity. The average annual costs, including medical, pharmaceutical and disability, for employees with depression may be 4.2 times higher than those incurred by those without depression. Yet, studies show that the cost of treatment can be largely offset by reducing the number of days of absenteeism and productivity lost while at work.
UNDERSTANDING THE VALUE OF A COMMUNITY COLLABORATIVE
Employers and company leadership teams are struggling to identify coordinated, cohesive actions to effectively combat these corrosive problems – many of which intertwine with behavior health problems. A number of forward-thinking community organizations and projects utilize a collaborative strategy to effect change. Unfortunately, too often their outcomes across a complex network of issues, such as behavioral health, remain poorly understood – and can oftentimes generate unintended consequences in unpredictable ways.
Apart from this current pandemic and its impact upon the mental health of employees, the marketplace recognizes and appreciates that businesses and communities across the United States face a barrage of serious issues, such as the opioid epidemic, economic disparities impacting access to healthcare services, gun violence, homelessness and many other problems that affect population health and well-being.
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Complex and severe community issues cannot be resolved by quick fixes but rather require a broad multiple stakeholder perspective and action plan to fully address every dimension.
The approach must be carefully constructed, responsible, far-reaching and lasting. When community organizations coordinate their work and join forces on innovative interventions, they can mitigate the “butterfly effect” that leads to chaos and chance circumstances.
The Community Collaborative model developed by the Thought Leadership & Innovation Foundation (TLI), a notfor-profit (501c3) organization formed in 2011 that is focused on driving innovative
thinking and action on global issues relating to health, education and economic empowerment, is designed to bring together all relevant groups and stakeholders. This includes those who have not traditionally been included to overcome the deep societal challenges related to health and well-being.
As background, TLI is a member of The Well Being Alliance which brings organizations and communities together to accelerate systemic change towards intergenerational well-being for all in the United States.
Alliance members are co-creating a common framework for action; adopting shared standards and metrics; assuring a focus on equity; and advancing organizational practice changes, public policies and investment strategies — in service of a broadbased social movement to achieve population-level well-being outcomes in the nation. Additionally, TLI has collaborated with the Robert Wood John Foundation (RWJF) and the Institute for Alternative Futures (IAF) to support the Health Equity and Prosperity Project, a national engagement assembling multiple sectors.
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TLI developed common strategic action pathways that directly correlated to the work of 100 Million Healthier Lives (100MHL), convening hundreds of diverse participants who reached out to millions of people through social media to bring people together, share and cultivate ideas and information, and encourage progress toward a national culture of Health Equity and Prosperity.
TLI is a â€œforce multiplierâ€? with an approach that incorporates visionary and practical strategies designed to have a positive, supportable impact on a wealth of projects. Over the years, TLI has solved some of the most staggering societal challenges and is currently focusing its attention on employee access to care for behavioral health issues.
This can be accomplished by eliciting the input of an extensive grouping of local employers and healthcare leaders and serving as a depository for information and guidance needed in the event of a significant healthcare crisis, such as the current COVID-19 pandemic.
This requires extensive experience with implementing community collaboratives, as well as involvement with government and community leaders. These collaboratives can be leveraged to launch a coordinated and educational outreach plan to business groups, coalitions, grantors and others with a vested interest in supporting these programs.
HIGH COST OF DEPRESSION Depression is a silent epidemic that is widespread and costly to employers who pay an estimated $44 billion each year in lost productivity due to depression. Employees with depression miss an average of 31.4 days per year and lose another 27.9 to presenteeism. About half of employees with depression go untreated, yet more than 80% who are treated for mental illness report improved levels of work efficacy and satisfaction..
SIX PHASES OF A COMMUNITY COLLABORATION TLIâ€™s six-phase Community Collaborative model leverages various means to bring together organizations, people and data to meet the objectives of the collaborative. As the project progresses through the six phases, hard science is applied to the data collected while benchmarks, best practices and milestones are identified across the community.
The lessons learned, the innovation that emerges and the networks expanded in the community can spread throughout the rest of the country. Community teams will have the opportunity and support to publish their ideas and highlight their successes, as well as their lessons learned on a local, state and national stage.
POPULATIONS AT HIGH RISK FOR MENTAL HEALTH ISSUES By developing partnerships with these leaders in public and private businesses the outcome will be a better-prepared community to deal head-on with behavioral health and related issues, without any hesitation or time lost due to a lack of preparation or resources. By developing partnerships with business coalitions, hospital systems, community groups and others in targeted geographic locations, community collaboratives are creating plans for businesses to protect their communities and workforces.
Mental health conditions are disproportionately affecting specific populations, especially young adults, Hispanic persons, Black persons, essential workers, unpaid caregivers for adults, and those receiving treatment for preexisting psychiatric conditions. Unpaid caregivers for adults, many of whom are currently providing critical aid to persons at increased risk for severe illness from COVID-19, had a higher incidence of adverse mental and behavioral health conditions compared with others.
Elements of a learning community are utilized to address the most important issues from the perspective of the collaborative participants. The collaborative is focused on action and utilizes the structures and processes of a formal breakthrough collaborative to move from idea generation to action to implementation of innovation. This unique hybrid model benefits from the rigor of a breakthrough collaborative while maintaining the flexibility seen in learning communities.
CASE STUDY: LOS ANGELES
prescription opioids in the past year in LA County is 4.7 percent, higher than the national average of 4.3 percent.
The County of Los Angeles is the most populous county in the United States and leads the nation in terms of job growth, the number of minority-owned business and being one of the top public health systems.
Unfortunately, LA County also leads the nation in unsheltered homelessness, poverty rate and STD outbreaks. While life expectancy is higher than much of the rest of the country, strong disparities exist within the county. A difference in life expectancy of nearly 15 years exists between the highest and lowest performing communities.
California had the fourth highest number of drug overdose deaths in the nation, 4,868 in 2017:
In LA County, there were an average of 464 accidental opioid-related deaths per year from 2011-2017
On average, individuals who died from drug overdoses died 30 years prematurely
Hospitalizations and emergency department visits related to opioid diagnoses have increased 31 percent and 51 percent, respectively, between 2006-2017, with a substantial increase in costs associated with hospitalizations from opioid diagnoses According to the National Survey on Drug Use and Health 2012-2014, the prevalence rate of misusing/abusing
In most communities, the opioid crisis is slow to develop and lasts a long time. The areas of the country that are not yet in full crisis are experiencing a slow increase in opioid use. Communities may not notice the impending crisis until it is too late to prevent the destruction of lives and community resources.
For this project, TLI partnered with the LA County Department of Mental Health and the Department of Public Health to organize a community collaborative. By fostering the economic and social health of communities – while improving access to care and resources to prevent overdose – this approach strengthens virtually every member of the community. It takes a multipronged approach to build resilience among families and communities through actions that strengthen education, health and economic development.
Communities are empowered with the tools that they need to grow and flourish and develop lasting bonds with other communities. The idea is to harness the diversity, leadership and influence of the most innovative communities to create a model for the nation to propagate social capital and build communities of recovery and wellness in states, cities and rural areas across the country.
LOOKING FORWARD Given the complicated fabric of society, solutions often overlap, intersect and carry unpredictable results that can be detrimental or sub-optimal unless a systematic collaborative approach is undertaken.
This requires a broad multiple stakeholder perspective and action plan to fully address every dimension of the mental health problems that are deeply associated with the COVID-19 pandemic.
When community organizations coordinate their work and join forces on innovative interventions to impact behavioral health problems, they can avoid siloed actions that are not effective in solving complex problems, such as:
Disparities in access to behavioral health care: race, gender, sexual orientation, rural vs. inner city et. al.
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Social determinants of health (SDoH), such as food, nutrition inadequacies, housing insecurities, transportation challenges, social isolation and loneliness.
Patient engagement strategies and outcomes measures
Development of new programs
PROACTIVE EMPLOYER ENGAGEMENT = POSITIVE CHANGE Several business groups are taking action. For example, The Mental Health Collaborative – a group of nine organizations that are members of the non-profit Midwest Business Group on Health – identified access to mental health services as the primary concern in the assessment and treatment of the disease. The group seeks to work across all stakeholders to identify and implement solutions. Their initial goal was to learn more about the barriers to access and benchmark Illinois against the greater United States. The initiative supports the 100 Million Healthier Lives Pathways to Population Health that engages employers and other key stakeholders to positively impact the lives that can be influenced within communities.
Building on existing efforts, this type of approach is based upon a process that organizes community resources, fosters public-private partnerships and supports key stakeholder actions. Well-orchestrated community-based collaboratives deal with the root causes of poor access to behavioral healthcare services and other factors impacting this public health crisis.
It centers on engaging community leaders from all sectors, inviting them to share their stories, ideas and innovation – moving them from dialogue to vision and action. By bringing together multiple groups throughout each city or region, the collaborative engages diverse organizations that deal with socioeconomic disparities, structural racism, resource injustice and the loss of a sense of community.
Interventions to disrupt the symptoms of a distressed community, such as a pandemic crisis, are critical but insufficient to promote community wellness. SDoH are among the most powerful cultural factors at work. They are either re-created by people or altered and can, therefore, be reshaped with the intention of improving mental healthcare services and healing social or economic ills. Improved mental health has the power to change the position and growth trajectory of a company, helping the business to optimize the potential of all its employees and move toward better health, happiness and prosperity. Well communities that include robust businesses have strong immune systems that protect them from the diseases of despair and enable them to learn to grow through adversity.
The COVID-19 pandemic is just another opportunity for business leaders to embrace these changes and proactively tackle the issues related to behavioral health.
RISK MANAGEMENT IN THE TIME OF COVID-19 Written by Karrie Hyatt
isk management for every type of company is changing more quickly than ever before due to the novel coronavirus pandemic. Companies are facing new risks that need to be covered by insurance as well as finding gaps in their existing coverage that is leaving them exposed in a way that was unthinkable at the beginning of the year. Risk managers are having to work to keep up with the rapid changes that COVID-19 is creating. Right now, they are looking for ways to optimize their current risk while also looking ahead with what they have learned now to mitigate future disruptive events. According to Karin Landry, managing partner for Spring Consulting Group, “COVID-19 has created some of the most difficult challenges the industry has seen in quite some time, so some of our most worrying ‘ifs’ have been become more real ‘whens.’ Companies who had never invested in risk management before will start to do so. Those that already had a program will look to make it more robust, and have it play more of a central role in overall organizational strategy. Enterprise risk management will see an uptick. Both employers and carriers will be looking for ways to add additional coverage like business interruption. Captives will be a big part of this shift, as they allow for more customizable coverage and cost savings opportunities.”
“Risk management, to a large degree, is basic blocking and tackling,” said Harry Tipper, chief operating officer-insurance, CaptiveOne Advisors LLC. “It’s trying to anticipate the things that might disrupt your business and, then, trying to figure out how you might mitigate them or eliminate them. Most times the decision is how to mitigate them. In a few cases ‘bad things’ are going to happen no matter what you do; so, you look to see how you either might transfer the financial risk (that is, buy commercial insurance) or how to finance the financial risk (that is, self-insure or form a captive insurer).” For Michael O’Malley, senior vice president and managing director with SRS, for his clients, which include many nursing homes, “The business model has evolved and there is even more focus on risk management now. A lot of businesses are being forced to change while dealing with a unique crisis.”
He offers the example of nursing home clients that finance both workers’ compensation and professional liability in their captive. “They have been impacted, from a risk management prospective, by potential employee exposures while at work. In some states, there is an assumption that the employee was exposed while at work, so it is compensable under the workers compensation program. For employees exposed outside of work, there is the risk to patients from an asymptomatic spreader resulting in exposure under the professional liability coverage. Nursing homes must now develop additional testing, affectively testing employees upon arrival. From a risk management perspective, it’s been a dramatic change.”
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RISK MANAGEMENT AND NEW EXPOSURES
“I can say that for most captive owners,” said Tipper, “COVID-19 has made things very interesting.” The pandemic is revealing shortfalls and gaps in insurance coverage for many captive owners. Ranging from business interruption to workers’ compensation to cyber security, even companies with detailed risk management plans are finding exposures where before the pandemic risk they seemed to be adequately covered. COVID-19 also revealing how crucial it is for risk managers to be on top of exclusionary language in policies. Business interruption liability is at the top of everyone’s exposure list. The risk is often well insured but, as many insureds found out when the “shelter-in-place” order went into effect, that business interruption due to pandemic was excluded from their policies.
“As a business owner, how do you deal with the fact that you have to shut down your business—not from a hurricane or something that damages your physical business but from a civil order that forces you to stop doing business?” asked Tipper. “As many are learning to their dismay, standard business interruption insurance doesn’t handle that. On the other hand, and with some forethought, properly structured captives could provide a short term back stop.” Tipper continued, “Here is another aspect of risk management. How much will captive insurance take care of the essential things of the business, but at a level where you don’t wipe the captive out financially with this one risk. Here we care talking about the risk management of captive’s solvency.” Another exposure is potentially being liable for an employee or a customer’s exposure to COVID-19 and the expenses involved for contact tracing. For risk managers, the question comes down to how much should a company spend on prevention and containment of exposures versus the cost of the risk. “When you’re a public facing business, such as a restaurant, managing risk from COVID-19 becomes harder. For example, you have little or no ability to find out who has been in contact with whom, to do contact tracing,” said Tipper. “There’s that whole issue of do you have legal liability because one of your customers has come down with COVID? That’s yet to be seen if you do or how much since there is little judicial guidance in this regard.” According to Landry, medical stop-loss coverage is trending for captives as employers do not want to just give captured profits back to the carriers. The pandemic has seen new medical technology, such as telemedicine, come to the forefront, bringing with it its own set of risks. Health plan premiums are expected to rise as a response to the pandemic.
“A global health crisis like this gives new meaning to the phrase ‘catastrophic claims,’ and organizations want to make sure they can look out for their workforce and offer solid benefits that they can afford, while protecting themselves against future unprecedented events,” said Landry. With the rush to shutter business offices in March, many companies were forced to create ad hoc plans for cyber security for their employees working from home. Some companies had been operating from a policy where their employees could work from home a few days a week, and had appropriate security measures in place. However, most companies found that from a security standpoint they were not ready to make the transition.
“Larger companies can handle cyber risk better than the smaller ‘Main Street’ businesses. For example, before they sent employees home to work remote, some of the larger companies were able to give them laptops that had been vetted for security from their IT department, hence mitigating the risk of cybercrimes,” said Tipper. “On the other hand, the average ‘Main Street’ businesses are hoping that a commercial cyber security product such as Norton and Lifelock will do the job; because, they don’t have an IT department to provide the heavy stuff— cyber security.”
“Because of some gaps in cyber security coverage from traditional insurance policies, insureds don’t feel secure in terms of the insurance coverage being comprehensive. We’ve had clients move their cyber coverage into their captives so they could control the policy language and breadth of coverage while using the captive to access reinsurance,” said O’Malley. Employees working from home also revealed how little risk managers had thought about telecommuters and workers’ compensation. “Workers’ comp has seen a great shift in exposure and a gap in coverage. With many people working remotely, an injury that takes place in a home office could potentially yield a claim, but some organizations may not have appropriate coverage,” said Landry. “Companies are now looking at captives as the over-arching insurance instrument,” continued Landry. “We have a client who got sick and said the employer did not take enough cautionary measures to keep him/her safe. If that person files a claim—is that a workers’ compensation or a disability claim? It often is unclear who owns the claim. We are seeing companies turn to captives for this reason—a claim that doesn’t fit anywhere else can fall to the captive.”
INCREASING INTEREST IN CAPTIVES
Captive professionals are seeing a marked increase in interest in captives. This was expected at the beginning of the year as the market was hardening, but a lot of the current interest is due to new exposures created by the pandemic and risk managers scrambling to get adequate coverage. When asked if he had seen an increase in captive interest, O’Malley answered, “Yes, and it’s dramatic. The umbrella market has hardened significantly, so we are seeing lots of opportunity where our existing group captives are increasing their retentions to push the umbrella attachment higher while expanding the primary layer and financing the additional risk in their own captive. There is just an overall increase in captive interest with insureds wanting to consider a captive.” Landry has also seen an increase of interest in captives—both new captives and expanding established captives. “At the beginning of the year, captive owners had a different perspective—they were looking to maximize their capital for underwriting purposes and add lines of coverage. When COVID hit, and carriers were already starting to increase premiums, they began to look at it differently.” “Employers became concerned when they started seeing areas that their policies didn’t cover—like business interruption for COVID exposures,” Landry continued. “Then they began to ask about captives for different reasons. For those folks who didn’t have captives, they were asking because they were realizing they had these uncovered exposures and were asking what they could do to minimize their costs. A captive can play a great role if the coverage is not available or unaffordable.”
“It’s a very robust time for captives, insureds are looking for alternatives to access capacity and finance their risk,” said O’Malley. “Due to the impact of COVID on the overall economy, we were thinking that captives demand might lessen, but because of the hard market it’s actually been the reverse. There’s been a real demand and real interest in studying the benefits of a captive focused on increasing overall program control.” 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.
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PLANNING AHEAD: COVID-19 AND OTHER CONSIDERATIONS FOR 2021 HEALTH PLAN RENEWALS Written by Jennifer M. McCormick, Esq.
s summer fades away and the leaves start to fall, many of us must start planning for 2021. The expectations and goals we set in January of 2020 have likely required review and adaptation.
As a result of COVID-19, employers encountered unprecedented hurdles. In addition to the economic costs facing employers due to this pandemic, employers need action plans to address the logistical and morale challenges of COVID-19.
While financial considerations are typically on the list of perpetual concerns, employers must now ensure they have action plans for employees needing to balance work and childcare, workplace safety, and the continually evolving regulations regarding COVID-19.
Thankfully, with 2021 around the corner, employers have an amazing opportunity to boost employee morale and mitigate costs with thoughtful plan design. Employers can (and should) use the upcoming renewal opportunity to let their health benefits shine and invite excitement for employees about their 2021 health benefits.
In planning for the upcoming benefit year, design modifications can generally be categorized into two categories: (1) regulatory changes; and (2) recommended changes. Lingering uncertainty and future unknowns make both categories of design modifications equally important.
REGULATORY CHANGES While the list of regulatory items that must be changed may seem overwhelming, some of the changes may ultimately be welcomed by employers or employees.
For example, benefit updates for COVID-19 related services and modified rules regarding continuation coverage were likely well received by employees.
In addition to the benefits and continuation coverage provided for by The Coronavirus Aid, Relief, and Economic Security (CARES) Act and Families First Coronavirus Response Act (FFCRA), the Department of Labor (DOL) and Internal Revenue Service (IRS) issued regulations offering additional relief for participants.
Specifically, the regulations allow additional time for participants to take actions such as electing (or paying premiums for) continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) and filing an appeal of an adverse benefit determination or requesting an external review. Relief will apply retroactively from March 30, 2020 until 60 days after the end of the national emergency.
Is Performing Your
Renewals a Constant Balancing Act?
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Relevant regulations did specify that penalties would not be imposed if plans were administered in compliance with the extended timeframes, even if contrary to the specific terms of the underlying plan document materials.
Ambiguity surrounding deadlines, however, leads to unnecessary confusion for individuals enrolled in the health plan. To eliminate this concern, plan materials should be updated and include details regarding the extended timeframes. Disclosure and inclusion of such information will also function to mitigate potential gaps that may arise between plan materials and stop loss policies.
In addition to the tolling of certain timeframes, employees may also welcome the updated Summary of Benefits and Coverage (SBC) templates for 2021, also requiring revision and implementation. The SBC is intended to provide uniform and consistent information regarding available plan benefits.
In addition, the IRS sets the standard for high-deductible health plans. These iterations are expected annually and should be reviewed and applied in alignment with employer intentions.
The interesting twist on out-of-pocket maximums that employers may be contemplating (or have already addressed) is the policy change on drug manufacturer assistance calculations for non-grandfathered plans.
An employer plan is not required, but may, count toward the out-of-pocket maximum drug manufacturer assistance, coupons, or other cost reductions. This is true even if the assistance in question is available on a drug without a generic equivalent. This update may create an opportunity for cost-savings as plan out-of-pocket maximums are reviewed; however, employers should examine whether any other state laws require consideration.
Another regulatory update seemingly well received by both employers and employees is the relief contained within IRS Notice 2020-29. This relief, while temporary until December 31, 2020, relaxed the rules for mid-year election changes offered under Section 125 cafeteria plans.
While modifications to the 2021 SBC template are not extensive, they do include updates to the coverage examples and the removal of information pertaining to the individual mandate.
Regarding employers, however, certain review and revision may be needed pertaining to plan out-of-pocket maximums. Specifically, on an annual basis the Department of Health and Human Services (HHS) determines the adjustments for the Affordable Care Act (ACA) in-network out-of-pocket maximums for non-grandfathered plans.
Pursuant to this guidance, employees (if the employer decides to offer this optional election and documents the offering accordingly by way of amendment) could revoke an existing health plan election if certain factors were met.
For employees, this opportunity might be the flexibility needed to reduce or modify coverage as finances face greater and continued uncertainty. For employers, this offering might foster goodwill among employees anxious to make plan modifications as a result of less certain financial times.
RECOMMENDED CHANGES Since the list of 2021 required regulatory changes may not be as extensive as in prior years, employers may want to consider modifying benefits to account for the evolving needs of their workforce.
Health benefits remain valuable during the pandemic. Employers who consider implementation of 2021 updates that coalesce with employee needs and wants will only enhance goodwill.
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No Guarantee of Results – Outcomes depend upon many factors and no attorney can guarantee a particular outcome or similar positive result in any particular case.
For example, as part of end of year discussions, an employer should consider polling employees to identify benefits they consider absent or not robust enough. It is possible the stress of a pandemic means more employees are desirous of holistic health options such as acupuncture or nutritional counseling. Identifying benefit enhancements that most effectively promote employee wellness and have the greatest potential to improve employee happiness and productivity is of paramount importance.
Incentivization of certain behaviors under the plan is one avenue employers might explore. It is evident that certain benefits were more heavily accessed than others during this past year. Heeding feedback regarding the needs of employees during this trying time poses an opportunity to incentivize utilization that benefits both the employer and the employee.
For example, many appointments with primary care physicians were postponed due to limited availability, discouraged, or canceled, and employees did not have access to care as they would under traditional circumstances.
An alternative, offering focused medical care for employees while promoting financial predictability (i.e. potential cost savings) for the health plan, is direct primary care. As permissible per other plan agreements, the addition of a direct primary care benefit should be considered. This additional benefit would create direct access for employees to connect with a physician and receive the customized, tailored care needed during these challenging times, simultaneously easing ‘access to care’ anxiety during a pandemic.
In addition to direct primary care, technology offers availability of greater connections to care via telehealth and telemedicine. Telehealth services have been valuable as this option reduces the risk of exposure or transmission of COVID-19, while still providing the necessary virtual care.
For example, telehealth has been useful for screening and accessing whether potential COVID-19 patients need to be seen in a hospital setting or care can be managed from home. Over the course of the pandemic, eased restrictions encouraged providers and patients to utilize telehealth services.
Employers should revisit their benefit designs to determine whether and to what extent telehealth services are currently available to participants, and whether further modifications are necessary. By way of illustration, employers should review whether telehealth is a current standalone benefit or offered only through a specific vendor.
The availability of telehealth services should be clearly addressed and denoted within the plan materials to eliminate coverage related confusion under the health plan.
At the outset of COVID-19, many individuals feared limited supplies, supply chain disruptions, or quarantine status restrictions would impact the ability to access necessary medications. It is very common, and for myriad reasons, however, for health plans to impose prescription refill restrictions.
Limited access has the potential of leaving employees in a situation where they are without life-saving medications. With the continued unknowns of the pandemic, employers may consider relaxing refill protocols, ensuring access to critical prescriptions.
As permissible by the relevant plan agreements, employers could allow a 90-day supply instead of a 30-day supply in certain circumstances, investigate the availability of home delivery for prescription drugs, or evaluate mail-order pharmacy services. Prescription drug design flexibility not only has the potential to safely improve employee access to medication, but also create alternative prescription options that save money for the health plan.
Do you aspire to be a published author? We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIAâ€™s official magazine is distributed in a digital and print format to reach 10,000 readers all over the world. The Self-Insurer has been delivering information to top-level executives in the self-insurance industry since 1984. Articles or guideline inquires can be submitted to Editor Gretchen Grote at ggrote@ sipconline.net The Self-Insurer also has advertising opportunties available. Please contact Shane Byars at sbyars@ sipconline.net for advertising information.
Employees continue to face uncertainty as it relates to COVID-19, and this likely creates additional worry, stress and anxiety. Many employees are parents and caregivers and entering another school year with distance and remote learning, presents challenges for everyone.
Pandemic related hardships and disruptions have had a negative impact on mental and behavioral health. As a result, taking care of mental and behavioral health needs is essential. Enhanced benefits should be prioritized as employees need access to resources to address any mental and behavioral health concerns they face during these challenging times. Employers should examine the current health plan to determine whether revised benefits are necessary to offer increased support.
NEXT STEPS With the end of the year rapidly approaching, employers must soon make critical decisions about employee benefit offerings. Once solidified, a review and update of the current health plan materials is necessary to ensure these benefit modifications are described accurately.
In addition to updating plan document materials, employers must review and revise other corresponding agreements and policies to ensure seamless and gap free benefit administration. For example, the updated plan document materials should be compared against the stop loss policies, network agreements, and vendor agreements to identify (and eliminate) coverage gaps.
It may seem like an overwhelming task, but by proactively revising employee benefit materials to address these items employers can generate employee enthusiasm for the upcoming 2021 benefit year.
No matter the challenge,
. ou y h it w is QBE
In a changing world, our commitment to our customers and partners will never waver. As an international insurer and reinsurer, QBE is dedicated now more than ever to business and community resilience. From employees who remain ready to assist, to a philanthropic foundation that continues to support worthy causes, QBE is with you. See how our guidance is helping businesses predict, prepare and protect against emerging risks. qbe.com/us
QBE and the links logo are registered service marks of QBE Insurance Group, Limited. ÂŠ 2020 QBE Holdings, Inc.
NEWS FROM SIIA MEMBERS 2020 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 firstname.lastname@example.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 email@example.com. If you would like to learn more about the benefits of SIIAâ€™s premium memberships, please contact Jennifer Ivy at firstname.lastname@example.org. 50
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NEWS DIAMOND MEMBERS THE PHIA GROUP ANNOUNCES THE PROMOTION OF NICK
FITZSIMMONS AS SENIOR DIRECTOR OF PROVIDER RELATIONS Canton, MA - The Phia Group LLC, the health benefit industry's leading costcontainment service provider, announces the promotion of Nick Fitzsimmons as Senior Director of Provider Relations.
"Nick has been partnered with The Phia Group for 2 years, helping us grow our Provider Relations department where, as part of that team, he distinguished himself as a key strategic contributor,” stated Adam Russo, CEO of The Phia Group. “Nick is a seasoned and experienced cost-containment guru and I look forward to his continued leadership in Provider Relations as we continue to grow and add to our suite of services.”
Nick Fitzsimmons’ cost-containment journey began with Global Excel Management in 1996, managing a team of over 50 employees comprised of negotiators and sales representatives. He also led the network utilization, negotiation strategies, and later rose to the ranks of senior executive leadership. “The Phia Group is a good fit for me as we they are all about innovation, which is what I am looking for.” stated Nick Fitzsimmons. “I want to be where the action is, and The Phia Group never sits still pursuing their deep commitment to lower the cost of healthcare.” For more information regarding The Phia Group, please contact Vice President of Sales and Marketing, Tim Callender, by email at email@example.com or by phone at 781-535-5631.
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NEWS About The Phia Group The Phia Group, LLC, headquartered in Canton, Massachusetts, is an experienced provider of health care cost containment techniques offering comprehensive services, designed to control health care costs and protect plan assets. By providing industry leading consultation, plan drafting, subrogation and other cost containment solutions, The Phia Group is truly Empowering Plans. Visit www. phiagroup.com.
GOLD MEMBERS PARTNERS MANAGING
ANNOUNCES BRIAN MILLER’S PROMOTION TO CHIEF EXECUTIVE OFFICER
a great company. I have every confidence in Brian and the incredible team that surrounds him.”
PARTNERS MANAGING GENERAL UNDERWRITERS ANNOUNCES
DONICA EASTLAND’S PROMOTION TO CHIEF FINANCIAL OFFICER Partners Managing General Underwriters (Partners) is proud to announce Donica Eastland’s promotion to Chief Financial Officer (CFO). Donica has been a trusted teammate and resource for 25+ years across multiple companies. She has been with Partners for over three years and has continued to be a model of excellence in the performance of her duties and her contributions to our team members and company culture. Donica has an amazing team around her and maintains an enviable balance between a demand for accuracy and an insistence on having fun. Former CFO, Ed Printy, is not going anywhere. Ed will continue as a Senior Advisor with Partners and will maintain his strategic projects and mentorship.
“I have no doubt Donica will tackle this role head on. Her success up until now speaks volumes about the positive impact she will continue to have on our organization for long term growth.”
Phoenix, AZ -- Partners Managing General Underwriters (Partners) is proud to announce that Brian Miller has been promoted to Chief Executive Officer (CEO). Brian is one of the founders of Partners, and, as the Chief Operating Officer since 2016, has been instrumental in developing each of the departments within Partners’ and setting the tone for the company culture and commitment to excellence. Former CEO, Mark Mertel, will move to the position of Chairman and continue to help guide the strategic direction of Partners. Mertel comments, “I see this change as a natural evolution and a timely progression in our journey to build
NEWS PARTNERS MANAGING
ANNOUNCES STEVE KOLB’S PROMOTION TO CHIEF
UNDERWRITING OFFICER Partners Managing General Underwriters (Partners) is proud to announce Steve Kolb’s promotion to Chief Underwriting Officer (CUO). As one of the founders of Partners, Steve has been integral to our development and success. This is a new role within Partners and is reflective of our dedication to servicing the needs of both our Producer and Carrier partners. Brian Miller, CEO at Partners, comments “Steve’s expertise in both the technical underwriting process and building lasting partnerships makes him the perfect choice to lead us into the challenging and exciting times ahead.”
About Partners Partners Managing General Underwriters is an entrepreneurial and full service MGU, underwriting medical Stop Loss for the self-insured marketplace. Licensed in all 50 states, our team is comprised of seasoned professionals with a long history in employee benefits. We started Partners in 2016 and have already grown to one of the largest independently owned MGUs in the country. We do this by providing superior service and offering a unique value building opportunity unlike anything in the marketplace today. Visit partnersmgu.com.
SILVER MEMBERS SPECIALTY CARE MANAGEMENT HIRES SEAN WHALEY, EXPANDING BUSINESS DEVELOPMENT
Doylestown, PA – Specialty Care Management (SCM) is pleased to announce and welcome Sean Whaley as a Director of Business Development. Joining the newly expanded Business Development staff, Whaley will further SCM’s marketing and sales efforts, contribute to service/product development, and, ultimately, drive revenue.
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He brings to the company more than 30 years’ experience in the employee benefits arena, with several years in medical cost containment, specializing in the realm of cost-savings and improving outcomes in catastrophic claims and CKD-ERSD (chronic kidney disease and end stage renal disease), the main aspect of SCM’s business.
“His experience in the insurance world – with underwriters, agents, brokers, third party administrators, and stop loss carriers – will drive his ability to help us positively impact the self-funded market. Sean has a great understanding of what we do: help selffunded companies manage their risk and overwhelming costs that accompany catastrophic healthcare claims, particularly in cancer and renal disease. We are excited about the possibilities he brings to us, and our clients.” SCM COO Craig Clemente said of Whaley,
Most recently, Whaley had spent several years in the medical cost containment arena, eventually specializing in managing associated high risk and cost of renal care for the self-funded marketplace. Prior to that, he had moved toward the broker niche, advising brokers as to how to add value to their clients’ products. Whaley started his career in the business world, turning to employee benefits, eventually having his own agency for nearly 20 years. A lifelong resident of the Chicago metropolitan area, he is happily married to Terry and lives in Algonquin, IL. Whaley attended Loras College in Dubuque, IA.
Stop Loss that does more than stop loss Looking for an insurance carrier that does more than identify trends? At Voya Employee Benefits, we take the next step, providing in-depth insights into what’s driving costs. Our proprietary data and analytics tools reveal the solutions that help your self-funded clients manage risk better—and protect assets over time.
For Stop Loss insurance that does more, contact your local Voya Employee Benefits sales representative or to download our latest proprietary insights visit voyastoploss.com.
Stop Loss Insurance is underwritten by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York (Woodbury, NY). Within the State of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya® family of companies. Voya Employee Benefits is a division of both companies. Product availability and specific provisions may vary by state. ©2020 Voya Services Company. All rights reserved. 1151065 205914 - 05012020
YOUR BEST PARTNER LEADS THE WAY
For more than 35 years, self-funded employers have trusted Sun Life to deliver ﬂexible stop-loss solutions and seamless claim reimbursement. And now, with our new Clinical 360 program, our clinical experts will review your claims data to identify cost savings and care optimization. With high-cost medical and pharmacy claims growing every year, you need your best partner with you every step of the way. Ask your Sun Life Stop-Loss specialist about our latest innovations.
DENTAL / VISION
For current ﬁnancial ratings of underwriting companies by independent rating agencies, visit our corporate website at www.sunlife.com. For more information about Sun Life products, visit www.sunlife.com/us. Stop-Loss policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states except New York, under Policy Form Series 07-SL REV 7-12. In New York, Stop-Loss policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Lansing, MI) under Policy Form Series 07-NYSL REV 7-12. Product offerings may not be available in all states and may vary depending on state laws and regulations. © 2019 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us. BRAD-6503k SLPC 29427 02/19 (exp. 02/21)
NEWS H.H.C. GROUP PARTNERS WITH VPAY FOR TOTAL PAYMENT
Based in Doylestown, PA, SCM is a national company which pioneers value-added strategies for the selfinsured healthcare industry. A leader in managing and significantly reducing the high cost of catastrophic healthcare claims, the company specializes in minimizing the extraordinary costs and managing risk of renal disease, and cancer care. With some of its key executives working together in this healthcare niche since 2002, SCM was created in 2006. Visit specialtycm.com.
H.H.C. Group, a leading healthcare cost containment company, and VPay, the premier turnkey claim payments platform, announced that HHC will begin offering VPay’s total payment solution to its clients nationwide. Both companies are known for partnering with other quality innovators to meet the marketplace’s ever evolving needs. “HHC and VPay are both dedicated to delivering maximum value and superior, personalized service to their clients”, said Bruce D. Roffe’, HHC’s President and CEO. “Both have built their businesses by efficiently and effectively providing costcontainment services to Group Health, Workers’ Comp and Auto Health insurers nationwide”. “More than ever, today’s healthcare payer groups need access to innovative solutions that streamline claim processes and maximize bottom-line potential,” said Jeff Brown, President of VPay. “We are looking forward to partnering with HCC and drawing on our inherent synergies to provide next- generation payment solutions that keep insurers one step ahead in a competitive market.”
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58 THE SELF-INSURER
NEWS About H.H.C. Group H.H.C. Group provides containment solutions for Insurers, Third Party Administrators, Self-Insured Employee Health Plans, Health Maintenance Organizations (HMOs), ERISA and Government Health Plans. H.H.C. Group utilizes a combination of highly skilled professionals and advanced information technology tools to consistently deliver targeted solutions, significant savings and exceptional client service. H.H.C. Group's services include Claim Negotiation, Claim Repricing, Medicare Based Pricing, DRG Validation, Medical Bill Review (Audit), Claims Editing, Specialty Drug Cost Containment, Medical Peer Reviews/Independent Reviews, Independent Medical Examinations (IME), and Pharmacy Consulting. H.H.C. Group is an URAC accredited Independent Review Organization for Internal and External Reviews. For additional information about H.H.C. Group and cost containment services, please visit www.hhcgroup.com or contact Stella Chung at schung@hhcgroup. com or 301-963-0762 ext. 130. About VPay VPay® delivers better claim payment experiences. Offering the insurance industry’s only total payment solution, the company equips insurers with configurable, next-generation digital solutions that streamline every aspect of payment processes. Workers’ compensation, auto and property insurers, health plans, dental plans and third-party administrators trust VPay to design solutions that reduce costs, drive higher epayment adoption, boost efficiency and improve retention by increasing payee satisfaction.
By replacing checks with fast and secure electronic payments and remittance advice, VPay simplifies the reconciliation process while also eliminating processing and management costs. The company’s proprietary, best-in-class software; patented claim payment technology; decades of financial and insurance payment expertise; and commitment to developing breakthrough payment technologies have made it an established industry leader. Visit www.vpayusa.com.
SIIA 2020 BOARD OF DIRECTORS & COMMITTEE CHAIR ROSTER
CHAIRMAN OF THE BOARD*
David Wilson President Windsor Strategy Partners, LLC Princeton, NJ
Kari L. Niblack, JD, SPHR CEO ACS Benefit Services Winston-Salem
Jeffrey K. Simpson Attorney Womble Bond & Dickinson (US) LLP Wilmington, DE
CAPTIVE INSURANCE COMMITTEE John R. Capasso, CPA, CGMA, PFS President & CEO Captive Planning Associates, LLC Medford, NJ
Peter Robinson Managing Principal EPIC Reinsurance San Francisco, CA
Mike Ferguson SIIA Simpsonville, SC Robert Tierney President StarLine Osterville, MA
TREASURER AND CORPORATE SECRETARY*
Gerald Gates President Stop Loss Insurance Services AmWins Worcester, MA *Also serves as Director
SIEF BOARD OF DIRECTORS Nigel Wallbank Chairman Heidi Leenay President Freda Bacon Director Les Boughner Director Alex Giordano Director
Thomas Belding President Professional Reinsurance Marketing Services Edmond, OK Laura Hirsch Co-CEO Aither Health Carrollton, TX Lisa Moody President & CEO Renalogic Phoenix, AZ
GOVERNMENT RELATIONS COMMITTEE Steven B. Suter President & CEO Healthcare Management Admtrs., Inc. Bellevue, WA CHAIR, INTERNATIONAL COMMITTEE Liz D. Mariner Ford Senior Vice President Re-Solutions, a Risk Strategies Company Minneapolis, MN CHAIR, SIIA FUTURE LEADERS COMMITTEE Brady Bizarro Director, Healthcare Attorney The Phia Group, LLC CHAIR, TPA BEST PRACTICES TASK FORCE Jerry Castelloe Principal Castelloe Partners, LLC CHAIR, WORKERSâ€™ COMP COMMITTEE Shelly Brotzge Regional Underwriter, Group Self-Insurance Midwest Employers Casualty
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SIIA NEW MEMBERS OCTOBER 2020 REGULAR CORPORATE
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Mind over risk. That’s how we properly assess risk – enabling our clients to focus on their businesses. We provide innovative stop loss solutions to protect self-funded employers from potentially catastrophic losses. We offer flexible captive solutions to help control the severity risk of your self-insured program. We have developed medical stop loss solutions specifically dedicated to meeting the unique needs of Taft-Hartley union plans. Our Organ & Tissue Transplant policy is a fully-insured option to protect your self-funded plan from losses due to transplant exposures. Our clients have been benefiting from our expertise for over 45 years. To be prepared for what tomorrow brings, contact us for all your medical stop loss and organ transplant insurance needs.
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Telehealth | Expert Medical Services | Behavioral Health Learn more about what we can do for your self-funded clients. TeladocHealth.com | 1-844-798-3810 ÂŠ 2020 Teladoc Health, Inc. All rights reserved.