4 ways for advisers to protect and build business during fourth quarter

As the end of the year approaches, it's important for your business to thrive. In this article from Employee Benefit Advisors, Ron Goldstein addresses the fundamental ways to protect and build your business during your fourth quarter. Check it out below.


The fourth quarter is one of the busiest and most chaotic times for brokers. It is also the “make-or-break” period for protecting and building their respective books of business for the coming year.

It is wise for agents to move quickly during this busy season to help clients get a head start on health plan renewals, annual budgeting and more. Here are four tips for brokers to keep in mind:

1) Identify network disruptions. The time is now to proactively talk with clients about any network disruptions or problems they may have with their coverage. For instance, it is well-established that people want to see their own doctors, specialists, pharmacies and hospitals. But when they unexpectedly cannot — or when access requires expensive out-of-network and out-of-pocket costs — substantial upset will occur. The result can be a significant business threat for brokers. It is best, then, to identify any network “pain points” before the busy season is in full swing. This provides brokers with the needed time to work with clients to resolve any issues while also helping to assure that they are avoided and averted in the future.

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2) Understand plan disrupters and alternatives. This may seem obvious, but it is a vital point worth driving home. Whether a plan is bronze, platinum or somewhere in between, there are often adjustments made from one year to the next. Agents need to be intimately familiar with any changes, whether significant or minor, that might disrupt a client’s existing coverage. This can include network modifications, premiums, copays and so forth. So, clearly understand any variations and be prepared to discuss alternative options based on a business owner’s needs and expectations.

3) Address client budgets. Remember to talk with employers about any budgetary changes to their business. Depending on the discussion, this can be the optimal time to kick-start a conversation about alternative defined-contribution options. For instance, perhaps there are opportunities to raise the fixed-dollar amount for employees and/or to explore value-added benefits such as dental, vision, life insurance and other ancillary offerings. On the flip side, you can consider basing your client’s contribution on a different plan option that may provide costs savings if they’re looking to try and reduce their healthcare expenditure. Either way, addressing budgets early on helps brokers ensure they are tailoring plans that best meet client needs.

4) Move off a Dec. 1 renewal period: Moving off of this date may help provide clients with a better open enrollment and underwriting experience. Many renewals get stacked up right before this deadline, putting more pressure on agent customer service. At the same time, it can be easy to get bogged down and rushed with multiple clients requiring quoting, enrollment, plan administration and more to meet looming deadlines. Beginning the renewal process earlier in the quarter provides brokers and their clients with plenty of time to work together to address and select the right plan offerings. Additionally, it may make sense to also explore a larger array of options and pricing advantageous to brokers and clients alike.

While the end of 2017 is ahead, the beginning to a successful 2018 is right now for brokers, agents and benefits professionals. Those who anticipate client needs early-on and take pre-emptive efforts now will be better positioned to lock-in and expand business for the coming year.

 

You can read the original article here.

Source:

Goldstein R. (20 October 2017). "4 ways for advisers to protect and build business during fourth quarter" [Web Blog Post]. Retrieved from address https://www.employeebenefitadviser.com/opinion/4-ways-for-employee-benefit-brokers-to-protect-and-build-business-during-fourth-quarter


IRS Releases Draft Forms and Instructions for 2017 ACA Reporting

Here are the latest updates in ACA Reporting, including the released IRS draft forms and instructions.


Read the original article here.

Source:

Capilla D. (5 October 2017). "IRS Releases Draft Forms and Instructions for 2017 ACA Reporting" [Web Blog Post]. Retrieved from address http://blog.ubabenefits.com/irs-releases-draft-forms-and-instructions-for-2017-aca-reporting-1

 

Under the Patient Protection and Affordable Care Act (ACA), individuals are required to have health insurance while applicable large employers (ALEs) are required to offer health benefits to their full-time employees.

Reporting is required by employers with 50 or more full-time (or full-time equivalent) employees, insurers, or sponsors of self-funded health plans, on health coverage that is offered in order for the Internal Revenue Service (IRS) to verify that:

  • Individuals have the required minimum essential coverage,
  • Individuals who request premium tax credits are entitled to them, and
  • ALEs are meeting their shared responsibility (play or pay) obligations.

2017 Draft Forms and Instructions

Draft instructions for both the 1094-B and 1095-B and the 1094-C and 1095-C were released, as were the draft forms for 1094-B1095-B1094-C, and 1095-C. There are no substantive changes in the forms or instructions between 2016 and 2017, beyond the further removal of now-expired forms of transition relief.

In past years the IRS provided relief to employers who make a good faith effort to comply with the information reporting requirements and determined that they will not be subject to penalties for failure to correctly or completely file. This did not apply to employers that fail to timely file or furnish a statement. For 2017, the IRS has unofficially indicated that the “good faith compliance efforts” relating to reporting requirements will not be extended. Employers should be ready to fully meet the reporting requirements in early 2018 with a high degree of accuracy. There is however relief for de minimis errors on Line 15 of the 1095-C.

The IRS also confirmed there is no code for the Form 1095-C, Line 16 to indicate an individual waived an offer of coverage. The IRS also kept the “plan start month” box as an optional item for 2017 reporting.

Employers must remember to provide all printed forms in landscape, not portrait.

When? Which Employers?

Reporting will be due early in 2018, based on coverage in 2017.

For calendar year 2017, Forms 1094-C, 1095-C, 1094-B, and 1095-B must be filed by February 28, 2018, or April 2, 2018, if filing electronically. Statements to employees must be furnished by January 31, 2018. In late 2016, a filing deadline was provided for forms due in early 2017, however it is unknown if that extension will be provided for forms due in early 2018. Until employers are told otherwise, they should plan on meeting the current deadlines.

All reporting will be for the 2017 calendar year, even for non-calendar year plans. The reporting requirements are in Sections 6055 and 6056 of the ACA.

 

For an at-a-glance chart of all reporting requirements, as well as information on penalties for failure to file, 6055 requirements and instructions for certain boxes/lines on 1095C, request UBA’s ACA Advisor, “IRS Releases Draft Forms and Instructions for 2017 ACA Reporting“.

 

Read the original article here.

Source:

Capilla D. (5 October 2017). "IRS Releases Draft Forms and Instructions for 2017 ACA Reporting" [Web Blog Post]. Retrieved from address http://blog.ubabenefits.com/irs-releases-draft-forms-and-instructions-for-2017-aca-reporting-1


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Who’s using what in P&C insurance

With the emergence of 21st century technology, there are bountiful risks for the cyber lives of millions. In this article written by PROPERTYCASUALTY360, learn how different companies grow to combat the threat of employer risk.

You can read the original article here.


Guidewire Software, Inc. has entered into a definitive agreement to acquire Cyence, a software company that applies data science and risk analytics to enable P&C insurers to grow by underwriting “21st century risks” that have gone underinsured or uninsured. These emerging risks include cyber, reputation, and new forms of business interruption risk. “As traditional actuarial approaches struggle to address the unique characteristics of emerging risks like cyber, Cyence’s next-generation approach will enable insurers to broaden the scope and value of the products their policyholders need,” , Guidewire Software CEO and Co-Founder Marcus Ryu said in a press release.

In other news from Guidewire: MetLife Auto & Home has begun deploying Guidewire’s InsurancePlatform™ in a new cloud environment for customers using its MetLife Auto & Home MyDirect portal. MetLife Auto & Home is the first P&C insurer in the United States to offer a 100-percent digital experience from quoting to claim service. Rollout of the platform is expected to continue over the next several quarters.

Hearsay Systems recently announced a strategic alliance with Microsoft to help financial services firms empower advisors to be both high-tech and high-touch at scale in the digital age. The companies will focus on addressing the specific challenges faced by financial institutions, including the need for compliant advisor-client engagement technology that will enable advisors to better manage client relationships and grow business. The alliance will bring together the data-driven relationship insights from Microsoft Dynamics 365 with the financial industry-specific workflows, data and compliance capabilities from Hearsay, allowing advisors to more effectively acquire, convert and deepen client relationships.

Allianz Global Corporate & Specialty® (AGCS) has teamed up with Silicon Valley-based software company Zeguro, whose mission is to simplify and streamline cyber security and risk management  in small to medium-sized businesses (SMBs). Through its easy-to-use platform, Zeguro will serve as a virtual Chief Information Security Officer (CISO) to those who purchase Allianz’s cyber insurance coverage to further manage their cyber exposure and decrease the overall risk of financial loss following a cyberattack.

Accenture and Duck Creek Technologies recently teamed up to create several new digital and emerging technology solutions for P&C insurers that are designed to improve efficiency and value. The companies have integrated Accenture’s IoT and analytics technologies with Duck Creek’s core platform and launched a blockchain proof-of-concept for medical bill auditing. “These new tools are the product of our focus on providing a new generation of digital solutions to our insurance clients working in collaboration with our joint venture partners,” Cindy DeArmond, managing director and P&C Core Platforms Lead for Accenture in North America, said in a press release.

Louisiana-based Aparicio Walker & Seeling, Inc. (AWS Insurance) is live on TechCanary’s insurance platform replacing its outdated legacy agency management system.  TechCanary’s breadth and depth of insurance functionality built in Salesforce and flexibility to easily customize it further were key to the decision.

Speedpay, Inc., a Western Union company, and Nordis Technologies recently announced an alliance to offer cloud-based customer communications management services to Speedpay clients. This strategic agreement provides current and future Speedpay clients with the opportunity to add Expresso®, an easy-to-use, self-service application to organize, automate and execute print and electronic communications. Nordis also delivers print/mail and email production services, thus enabling a seamless end-to-end communications solution.

 

You can read the original article here.

Source:

PropertyCasualty360 (9 October 2017). "Who’s using what in P&C insurance" [Web Blog Post]. Retrieved from address http://www.propertycasualty360.com/2017/10/09/whos-using-what-in-pc-insurance-oct-9-2017?t=agency-technology?ref=channel-news


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Better risk management means balancing old, new skills

What changes are happening within the P&C industry? Read this informative article written by  STEVEN R. CULP  and DUNCAN BARNARD of Property Casualty 360 degrees to find out!

You can read the original article here.


The P&C industry is undergoing fundamental change, with significant consequences for the risk function. New approaches to data, the workforce, partners and customers are changing the way insurers operate.

The stakes are high, and with interest rates low, revenue streams are under threat while new competitors are entering from all sides.

At the same time, insurers are encountering new obstacles — from regulatory uncertainty to reduced demand among millennials.  The Internet of Things, autonomous vehicles and other major shifts present major challenges along with large opportunities.

P&C insurers and insurance professionals can use these AI tools right now to run smarter, faster — and ahead of...

To survive — let alone thrive — insurers need to evolve. The scale of the evolution could be challenging, but many of the changes that are needed should add significant long-term value. For example, the availability of real-time data allows P&C insurers to think about new products and propositions to unlock predictive and opportunistic strategies.

 

Insurers are also rethinking their relationships with all stakeholders, becoming a "partner" to customers, brokers and other intermediaries while establishing deeper ties in adjacent industries such as automotive and home security. An openness to new technologies also demands a broader ecosystem of supply partners, including technology companies, insurtech firms, venture capitalists and digital specialists.

As we have done in alternate years since 2009, Accenture conducted extensive research in 2017 among nearly 500 global risk management executives in the financial services industry, including 190 in insurance.

We wanted, in part, to understand how insurers view the challenges facing the risk management function. We found that P&C insurers are facing the world with a bit more confidence than their life insurance counterparts. For example, only 61 percent of P&C respondents saw balancing the responsibilities for control and compliance with the need for effective customer service as a major impediment to effectiveness, versus 84 percent of insurers. And only 65 percent of P&C respondents reported being hampered by shortages of skills in new and emerging technologies, versus 71 percent of life insurers.

However, while there were some differences from sector to sector, we found that both P&C and life insurers are taking a more progressive approach to risk management when compared to our earlier research. They are investing to develop their risk functions in three key areas

Innovation is everywhere in insurance.

Innovation is everywhere in insurance. (Photo: iStock)

Harnessing digital innovation

Advances in big data and analytics are helping insurers better understand risk, build stronger predictive models and tailor customer relationships to suit personal preferences and risk attitudes.  At the same time, robot brokers are on the rise, new platforms are providing micro-pooling “social insurance” models, and sensors allow insured cargo to report every bump, scrape and drop impact it endures in transit. In parallel, some of the most transformative technologies are being implemented deep in the back offices of the world’s leading insurers.

P&C insurers and insurance professionals can use these AI tools right now to run smarter, faster — and ahead of...

The cloud is a great example. Our 2017 Global Risk Management Study finds that cloud technology is virtually ubiquitous—91 percent of insurers are using it — but just 26 percent are highly proficient in using cloud within their organization, 36 percent are not using it to its full potential, and 29 percent are only just introducing it. Respondents want to improve efficiency in response to cost pressures, and cloud is the top choice in this regard, with 77 percent indicating their risk function uses it to reduce costs.

Balancing old and new skills

New tools and processes change how risk teams interact with the business, alliances, regulators, customers and other external stakeholders, requiring new skills and a better balance of attributes across teams. Beyond quantitative skills, the risk management function needs to be able to deliver value by providing economic insights, generating new ideas and building strong relationships throughout the organization in pursuit of the overall strategic objectives.

To support these goals, some insurers are bringing staff into the risk function from other areas of the business to enhance credibility and facilitate relationships. Others are hiring from diverse disciplines, including economics, the law and engineering. There are few professionals who possess every skill the risk function needs. From general quantitative competencies to technology acumen, industry knowledge, niche risk specialties, communication skills, creativity and management experience, candidates with the whole package are extremely rare.

Integrating across the business

Currently, 54 percent of insurance respondents say there is limited coordination between risk management activities at the local level and the group level. While some aspects of centralization are desirable to enable a more aggregated and consistent picture for analysis and evaluation, the reality is that risk exists everywhere in the business and risk professionals need to be engaged throughout the business — not only at an aggregate level.

Central frameworks and tools help to provide a more standardized and coordinated response to regulation, a consistent set of rules for managing the portfolio of risks and the capability to perform complex and high-value calculations to measure risk exposure, liquidity and solvency. But decentralization is also valuable because local or specialized teams can focus on local regulatory requirements and market-specific topics. Any effective risk management function must be able to exist locally and centrally, being close to the business and connected across the organizational structure to manage the overall portfolio, including strategic and emerging risks.

As the study results indicate, the nature of risk is changing. It is up to P&C firms and their risk management functions to create and continually develop a dedicated emerging-risk working group that can identify and evaluate the nature of emerging risks and their potential impacts. That may be the best way to address the constant and disruptive change confronting the industry.

 

You can read the original article here.

Source:

Culp S., Barnard D. (6 October 2017). "Better risk management means balancing old, new skills" [Web Blog Post]. Retrieved from address http://www.propertycasualty360.com/2017/10/06/better-risk-management-means-balancing-old-new-ski?t=commercial-business%3Fref%3Dchannel-feature&page=2


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Using data to identify high-intent consumers

Does your company struggle with acquiring high performing leads? Check out this article from Property Casualty 360 degrees written by JAIMIE PICKLES.

You can read the original article here.


For years, insurance companies and agents have acquired third-party internet leads as an efficient way to supplement their own lead generation efforts. But with the shift toward digital engagement and increasing regulatory compliance concerns, acquiring high performing leads has become a much more complicated venture.

According to a recent study by J.D. Power, 74% of auto insurance consumers use insurance brand or aggregators websites for obtaining quotes and information. This is something that holds true across almost all lines of insurance.

Regardless of device, the preferred platform for shopping is now digital.

But while brand websites generate a percentage of insurance leads, more consumers are choosing the choice model that internet lead generators and aggregators offer to research and obtain quotes. This is because more consumers prefer to have access to what they perceive as independent and unbiased sources for information and quotes.

 

Mitigate TCPA compliance risk

Compliance with the Telephone Consumer Protection Act (TCPA) has become more of a priority for insurance brands and their partners over the past few years. TCPA lawsuits filed by consumers are on the rise — growing by a factor of 1,273 percent since 2010 — and a number of large insurance brands have been part of multimillion-dollar TCPA settlements.

For example, in May 2017, a Florida-based insurer settled a class action TCPA lawsuit for $4.25 million. And that does not include the court costs and legal fees or the cost to counter bad the bad PR and lost brand reputation from the case.

Knowing definitively that a consumer has given consent to be contacted is a must. Ted Todd Insurance is a multi-office agency in Florida which generates leads on its own website and buys online leads from third party lead generators. They assure TCPA compliance by using a SaaS-based solution to track and verify consumer consent.

CEO Charley Todd says, "the technology tracks and assures the existence of the consumer’s consent, delivering a positive first experience for every new customer, and provides persuasive evidence in the event of a consumer complaint or lawsuit."

 

Analyze the right data

With the overabundance of data that insurance brands have, from internal and external sources, it is not always easy to make sense of it all. Even with a sophisticated data science and analytics program, the key is getting access to the right data at the right time, to help optimize your marketing programs.

In the case of customer acquisition, that begins with having access to data that you can  use to help score, prioritize and route higher-performing leads. By knowing the origin and history of your leads, you’ll be able to mitigate TCPA compliance risk and prioritize selection of and engagement with higher-intent consumers.

The majority of the top ten insurance companies in the United States are doing just that — connecting the dots and using sophisticated technology and data — to gain real-time intelligence into the origin, history and intent of the leads they are acquiring. Such solutions enable insurance companies and agents to follow consumers in real time on their buying journeys until the end when consumers purchase a policy, helping insurers observe and access behavioral data which they can use to analyze the intent of the consumer.

When marketers gain the ability to identify and take action on consumer behavioral data, buying low-intent leads is no longer part of the "cost of doing business" in lead management and analysis. Brands that leverage these insights gain efficiencies and can better focus their precious time and budgets on productive leads.

 

Optimize lead acquisition and marketing

In implementing technology solutions, here are five tips to supercharge your lead generation.

  1. Know the age of your leads. If you’re measuring speed-to-lead from the moment you received a lead post, you are missing a key data point. It’s not about when you received the lead, but rather when the consumer actually submitted the inquiry.
  1. Be proactive in avoiding fraudulent leads and those that are not TCPA compliant. Consumers who didn’t fill out the form or who filled it out six months ago have no intent to buy from you. Also, these leads put you at risk for TCPA complaints. Only purchase leads that are TCPA compliant. You don’t want to damage your brand and reputation, or take on the costs if you are sued by a consumer. You need a vendor who can help you identify, in real-time, that your leads are compliant and provide persuasive proof that a consumer gave consent to be contacted.
  1. Don’t get dupedMany marketers assume that a duplicate is the result of recycled data. They think that the same consumer means it is the same inquiry. In fact, it could very likely be the same consumer with a brand new inquiry, which is actually indicative of a high-intent consumer. Know the difference.
  1. Understand if leads are shared vs. exclusive. Know if your leads are being shared with some of your competitors. If they are, you need to determine how many other competitors that lead is being shared with and whether you are the first or last to receive it.
  1. Right price your leads. If you find a vendor who will help you identify low intent leads, you can reallocate that spend and pay more for higher intent leads. This is a key strategy to quickly and notably improve lead conversion.

 

You can read the original article here.

Source:

Pickles J. (9 October 2017). "Using data to identify high-intent consumers" [Web Blog Post]. Retrieved from address http://www.propertycasualty360.com/2017/10/09/using-data-to-identify-high-intent-consumers?ref=hp-news


Connecting Business with the College Community, the Next Step in HR Education

Written by Mark Fogel on the SHRM blog is this informative article on connecting business with the college community, and how it is a fantastic next step in HR education. How do you feel about this update in HR eduction?

You can read the original article here.


 

Many of you know I am passionate about preparing our next generation of HR practitioners for the workforce of tomorrow. I have been teaching graduate, and occasionally undergraduate HR courses, in the business school at a major university on Long Island for close to a decade. It is hard to integrate my classes with local businesses when the courses are primarily at 6 or 8pm at night. I am sure many if not most graduate HR programs face a similar challenge.

I try to bring practitioners in to speak, host panels and do an online HR simulation in one of my classes. But, the real-life experiences of being integrated into a business is and will always be the best learning experience as far as I am concerned. So short of the occasional internship opportunity, my students and those at the university have faced a void of HR reality that I have looked to fill throughout my tenure.

I have now found a solution that I want to share with the HR community in hopes that you think about partnering with local schools too.

I have partnered with GEICO insurance to do a case competition in my graduate selection and recruiting class on Attraction and Retention of Millennials for GEICO’s Management Development Program. The project involves having 6 teams of students research millennial hiring and retention trends as it relates to Geico’s current and future employment needs.

GEICO’s local talent team is providing support and opening their doors at a major work center to have my students come into their business to interview and observe their employment practices. Their regional facility has expanded hours of operation and this helps in coordinating schedules for on-sites too. The project/competition ends late in the semester with formal presentations and prizes for the best research. They bring in a few senior executives along with the Talent team to listen, question, and discuss the research results, which adds to the overall experience and creates great networking opportunities.

This is an amazing partnership that can be replicated by other businesses on a variety of projects and is a win-win for all. Students get a bird’s eye view of HR challenges and Geico gets great insight and research in return. With minimal to no cost and great ROI, this is a no brainer.

This is not to say that SHRM and other learning systems, courses, and conferences are not great value adds in the learning experience. They obviously are and I continue to do my part in volunteering in the conference space myself, however this is a missing piece of the puzzle for HR education. Especially for early and emerging practitioners or those wishing to enter the field.

What are you waiting for?

You can read the original article here.

Source:

Fogel M. (3 October 2017). "Connecting Business with the College Community, the Next Step in HR Education" [Web Blog Post]. Retrieved from address blog.shrm.org/…/connecting-business-with-the-college-community-the-next-step-in-hr-educatio


Self funded health care – a big business advantage

Check out this article from Business Insurance by one of their staff writers. In this article, Business Insurance dives into the awesome advantages of self-funding for big businesses.

You can read the original article here.


Health insurance benefits are expensive. The rising costs of health care has driven up insurance premiums to levels where many businesses have been forced to reduce these benefits or drop them altogether. There is, however another option that is less regulated, taxed less and typically results in cost savings: self funded health insurance. The problem is, it's not always the best option for all employers, particularly the smaller ones. And there's a number of reasons for this:
What is self funded health care a.k.a. self-insurance?

Self-insurance is a method of providing health care to employees by taking on the financial liabilities of the care instead of paying premiums to an insurance agency to do the same. In other words: when a person covered under a self-funded plan needs medical care, the company is financially responsible for paying the medical bill (minus deductibles). It's an alternative risk transfer strategy that assumes the risk and liability of medical bills for those covered instead of outsourcing it to a third party. It's a surprisingly common practice:

In 2008, 55% of workers with health benefits were covered by a self-insured plan….and 89% of workers in firms of 5,000 or more employees.
Most (but not all) self-insurance plans are administered by a third party, usually a health insurance company, in order to process claims. The bills are simply paid for by the employer. Health insurance companies act as a third party administrators in what are called ASO contracts (Administrative Services Only)

Another common component of self insurance plans is stop-loss insurance. This is a separate insurance plan that the employer can purchase to reduce the overall liability of claims. With this type of insurance, if claims exceed a certain dollar amount, stop-loss kicks in paying the rest. There are two kinds of stop-loss insurance:

Specific – covers the excess costs from larger claims made by individuals in the group
Aggregate – kicks in when total claims by the group exceed a set amount
For example, a company who self-insures their $1000 employees projects $100,000 in medical care claims for the year. If they purchase aggregate stop-loss insurance for claims that exceed 120% of the expected amount or $120,000, the insurance will pick up the bill for the remaining claims. If the company purchases specific stop-loss insurance at 200%, if any single claim exceeds $2,000, the stop-loss pays the remainder.

Typically, self-funded insurance providers will purchase both specific and aggregate stop-loss insurance unless the conditions are such that specific stop-loss provides enough financial protection.
Benefits of self-insurance

There are a number of financial and administrative advantages to using self-funded health insurance plans for employers. According to the Self-Insurance Institute of America (SIIA) these include:

The employer can customize the plan to meet the specific health care needs of its workforce, as opposed to purchasing a 'one-size-fits-all' insurance policy.
The employer maintains control over the health plan reserves, enabling maximization of interest income – income that would be otherwise generated by an insurance carrier through the investment of premium dollars.
The employer does not have to pre-pay for coverage, thereby providing for improved cash flow.
The employer is not subject to conflicting state health insurance regulations/benefit mandates, as self-insured health plans are regulated under federal law (ERISA).
The employer is not subject to state health insurance premium taxes, which are generally 2-3 percent of the premium's dollar value.
The employer is free to contract with the providers or provider network best suited to meet the health care needs of its employees.
There are, however, some drawbacks to self-insurance policies:

Health care can be costly, so heavy claims years can be extremely expensive
Self insurance isn't tax deductible the same way the costs of providing health insurance is.
Financial benefits are long-term, particularly with an investment component.
Small businesses at a disadvantage

Self insurance is much more prevalent for larger companies mostly because it is easier to predict health care costs from a larger group. The more people in the group, the less potentially damaging a single expensive claim will be to the plan overall. That's why less than 10% of companies with less than 50 employees use self-insurance. The graphic to the right [source: businessweek.com] gives a telling breakdown of its prevalence based on company size.

Because risk is more difficult to predict with smaller groups, stop-loss insurance is also more expensive for smaller businesses. The practice of “lasering”, or increasing deductibles for specific higher risk employees can also be much tougher on small firms. As a result, self-insurance tends to be a less cost effective option than it is for larger companies.

Another roadblock for small businesses is a lack of cash-flow that is necessary to finance self-insurance. This doesn't mean, however, that small businesses can't benefit from a self-insurance plan. In fact, an increasing number of small businesses still are. But fully understanding the risks and rewards for doing so can sometimes be difficult.
Regulations

Because the only 3rd party administration of insurance (stop-loss) is between the employer and the insurance company directly, it is not subject to state level regulation the way traditional insurance policies are. Instead, they're regulated by the department of labor under the Employee Retirement Income Security Act – ERISA. Benefit administrators must still comply with federal standards despite the lack of state regulation.

California SB 1431

California is considering a proposed legislation to regulate the sale of stop-loss policies to smaller businesses. On the surface, the regulation looks as though it is an attempt to prevent small businesses from taking on too much risk. But the true intentions of the legislation may be to prevent cherry-picking of generally healthier small businesses (effectively removing them from the health insurance pool). This cherry-picking would theoretically cause traditional insurance premiums to become more expensive.

According to the SIIA, SB 1431 would prohibit the sale of stop-loss policies to employers with fewer than 50 employees that does any of the following:

Contains a specific attachment point that is lower than $95,000;
Contains an aggregate attachment point that is lower than the greater of one of the following:
$19,000 times the total number of covered employees and dependents;
120% of expected claims;
$95,000

This legislation would effectively limit the options of small businesses as it would force them to purchase a more expensive low deductible stop-loss policies. And according to the SIIA, with this legislation, almost no small business under 50 employees would (nor should they) consider self-insurance as an option.

If the legislation is passed in California, it has been suggested that it is only time before other states follow suit and/or enact even stricter regulations on small businesses. The SIIA even has a facebook page dedicated to defeating the bill they say is:

“…unnecessary and will only exasperate the problem that small employers in California face in being able to afford the rising cost of providing quality health benefits to their employees.”

So while self insurance can be a relatively risky option for small businesses, with legislation like this, it could no longer be a realistic option at all… And, in effect: another competitive advantage big businesses will have over their smaller counterparts.

You can read the original article here.

Source:

Staff Writer. (Date Unlisted). "Self funded health care – a big business advantage" [Web Blog Post]. Retrieved from address http://www.businessinsurance.org/self-funded-health-care-a-big-business-advantage/


Risk Insights: Donating to Disasters and Avoiding Scams

Hurricane Harvey is the strongest storm to make landfall in the United States since Hurricane Charley in 2004. News of the damage it has caused to southeastern Texas is prompting people to help in whatever ways they can. Unfortunately, there are dishonest people who prey upon people’s good intentions, creating fake charity campaigns to exploit victims and take advantage of those who want to help.

How to Avoid Scams

Despite the sense of urgency to help when disaster strikes, it is important to do some research before donating. Consider the following best practices to ensure that your resources go to a legitimate charity with experience in disaster relief:

  • Never wire money to someone who claims to be a charity. Legitimate charities do not ask for wire transfers. Once you wire the money, you’ll probably never get it back.
  • Be cautious about bloggers and social media posts that provide charity suggestions. Don’t assume that the person recommending the charity has fully researched the organization’s credibility.
  • Only donate through a charity’s official website, never through emails. Scammers have a knack for creating fake email accounts that seem legitimate.
  • Ensure that the charity explains on its website how your money will be used.

  • Be wary of charities that claim to give 100 percent of donations to victims. That is often a false claim, as well-structured organizations need to use some of their donations to cover administrative costs.
  • Never offer unnecessary personal information, such as your Social Security number or a copy of your driver’s license. However, it is common for legitimate charities to ask for your mailing address, and it is safe for you to provide it.

Despite the sense of urgency to help when disaster strikes, it is important to do some research before donating money. Don’t let dishonest people take advantage of your good intentions.

How to Choose a Charity

Even legitimate charities need to be considered with care. The Federal Trade Commission suggests avoiding new charities because, despite their legitimacy, they may not have the resources needed to get your money to its intended recipients.

Donors looking for a worthy charity can access an unbiased, objective list on a website called Charity Navigator. The site receives a Form 990 for all of its charities directly from the IRS, so it knows exactly how

the charities spend their money and use their donations. It also rates charities based on their location, tax status, length of operation, accountability, transparency and public support.

Gaining popularity for charitable donations is a crowdfunding website called GoFundMe, which allows people to raise money for a wide variety of circumstances. Despite its popularity, visitors to the site should be cautious about the campaigns to which they donate. Visitors can report suspicious campaigns directly to GoFundMe via its official website or to their state’s consumer protection hotline.

National Organizations

The following national organizations have long-standing reputations for providing disaster relief and accepting donations:

  • The American Red Cross provides shelter, food, emotional support and other necessities to people affected by disasters.
  • AmeriCares takes medicine and supplies to survivors.
  • Catholic Charities USA supports disaster response and recovery efforts that include direct assistance, rebuilding and health care services.
  • The Salvation Army provides shelter and emergency services to displaced individuals.

Remember that there are other ways to provide disaster relief that don’t involve monetary donations, especially if you live near the affected area. Local food banks and blood centers commonly ask for donations during relief efforts.

 

Sourced from – Zywave.com


Court denies NAFA in DOL fiduciary rule case

Department of Labor fiduciary rule survives its first challenge, by Nick Thornton

The National Association for Fixed Annuities has lost its challenge to the Department of Labor’s fiduciary rule.

In a decision issued today in the United States District Court for the District of Columbia, Judge Randolph Moss denied NAFA’s motions for a preliminary injunction and summary judgment.

Among other things, NAFA claimed DOL violated the Administrative Procedure Act when it shifted the regulation of fixed indexed annuities to the rule’s Best Interest Contract Exemption. In the proposed version of the rule, FIAs were scheduled for regulation under the less restrictive Prohibited Transaction Exemption 84-24.

In shifting FIAs to the BIC exemption in the final rule, NAFA argued industry was not given adequate notice to comment on the implications, as the APA requires.

But Judge Moss cited case law showing that a final rule “need not be the one proposed” in the rulemaking process.

“It is enough that the final rule constitute a logical outgrowth” of the proposed version, wrote Moss.

Moss reasoned that NAFA was given adequate notice that the Department was considering regulating FIAs under the BIC exemption when it explicitly sought comments on whether annuities were adequately regulated in the proposal.

NAFA argued the proposal gave “no inkling whatsoever that the Department was considering moving FIAs from PTE 84-24 to the BIC.”

But Moss ruled that NAFA’s reading of the proposal, and DOL’s request for comment on the viability of how annuities were treated, was “not tenable.”

“The Department expressly requested comment on its decision to ‘continue to allow IRA transactions involving’ fixed indexed annuities ‘to occur under the conditions of PTE 84-24,” wrote Moss.

“That is, it (DOL) asked whether fixed indexed annuities should be grouped under PTE 84-24 or not,” added Moss. “And, if there were any doubt on this, it would be put to rest by the fact that NAFA, along with other industry groups, provided comments on that very issue.”

Full analysis of the ruling will follow.

See the original article Here.

Source:

Thornton, N. (2016 November 04). Court denies NAFA in DOL fiduciary rule case. [Web blog post]. Retrieved from address http://www.benefitspro.com/2016/11/04/court-denies-nafa-in-dol-fiduciary-rule-case?ref=hp-news&slreturn=1478547367