Tufts & Harvard Pilgrim – Will They Really Merge, And What Happens If They Do?

As many of you now know, on August 14th, Harvard Pilgrim Health Care (Harvard Pilgrim) and Tufts Health Plan (Tufts) reached an agreement to combine into a single company that would serve nearly 2.4 million lives in New England. Since the announcement, our team as been working to collect as much information as possible on the pending merger. We did not want to rush to judgement the day of the announcement, and instead have done our due diligence, speaking to carriers and lawmakers alike to get a full picture of what this could mean for our clients and the industry at large. Here is what we’ve uncovered.

Tufts & Harvard Pilgrim merger

 

The Goal

First, what’s in it for the carriers? What are they trying to accomplish? Primarily, they are looking for increased market share and membership. Currently Blue Cross Blue Shield has over 40% of the commercial market in Massachusetts, with 2.8 million subscribers. Tufts and Harvard Pilgrim follow with 12.6% and 12.4% of the market, respectively. By joining forces, the two would still follow behind Blue Cross Blue Shield, but by a much smaller margin. Their new size could allow them greater influence over hospitals, doctors and drug companies.

By expanding its coverage network to five states (CT, MA, RI, NH, ME), Tufts and Harvard Pilgrim will also be in a better position to compete with national providers like Aetna and Humana. Further, Harvard Pilgrim has been experiencing decreased membership numbers over the past few years, and this is their latest attempt, following the proposed merger with Partners HealthCare in 2018, to boost their subscriber base.

The new group plans to offer employer-sponsored plans, Medicare and Medicaid. Tufts, already a big player in the Medicare market, can build upon its footprint in this area. The two carriers have also stated their plans to innovate and use new tools to improve population health quality.

The Patient Experience

CEO of Tufts Health Plan, Tom Croswell, who would lead the unnamed unified organization as CEO, noted four areas that health plan subscribers in New England are currently struggling with:

  1. Affordability
  2. Access
  3. Quality
  4. Continuity (or lackthereof)

Croswell stated that by combining resources, the two carriers will be able to tackle each of these issues.

Will it Pass?

This proposed merger is far from a done deal. While leaders from both Tufts and Harvard Pilgrim have spoken out about their intent to use this partnership to alleviate healthcare costs for consumers in New England, many worry it could have the opposite effect.

Harvard Business School research shows that insurance mergers typically lead to higher premiums, and we know that the Aetna and Prudential merger of 1999 did in fact just that. When it comes to Tufts and Harvard Pilgrim combining, there are major concerns that consumers would be negatively impacted both through costs and the choices offered, which could be lessened as a result of the merger.

Details of the merger must now go through review by the Massachusetts Attorney General, Maura Healey, the Massachusetts Division of Insurance, and federal regulators as well. The state departments will be assessing whether the merger will disrupt access to healthcare for consumers, among other things. Governor Charlie Baker has said that any healthcare merger should result in greater transparency, lower prices and better outcomes for patients, so we do expect regulators to be looking at the full patient experience when considering the deal. Financial terms of the agreement have not yet been released, but those will also be assessed.

I personally don’t see this as an easy approval process or a slam dunk, but if it does pass, here’s what you can expect.

Looking Ahead

I believe that more competition is better for the consumer and with a limited number of carriers that offer health insurance in Massachusetts already, I don’t see how having less options will offer more affordable health coverage for consumers and businesses in the Commonwealth of Massachusetts.  Consumers and businesses will have fewer overall choices of insurance plans and, more than likely, higher rates.  Further, this could result in lower reimbursements to insurance providers, which could reflect in higher costs passed on to the consumer. Also, with these consolidations, there is always a possibility of minor disruptions due to incompatible systems for claims payments and enrollments.

If Harvard Pilgrim and Tufts do go through with the merger, it will be following another major merger in the New England healthcare market – that of Beth Israel Deaconess Medical Center and Lahey Health – which closed in May. This trend toward centralization and rapid expansion is an indicator of healthcare at the national level, where smaller players are finding it nearly impossible to remain profitable. However, there is something to be said for having regional expertise, which Tufts and Harvard Pilgrim could still keep even if combined.

No matter which way things end up, you can be certain that the deal will take 18 to 24 months to be truly approved, finalized and implemented. You can also count on our team at Spring Insurance Group being there to help you every step of the way – deal or no deal – to ensure you still have the best coverage at the best rates available, with minimal interruptions to your business operations.

 

Navigating Transgender Leave

The societal understanding of what it means for an employer to be truly inclusive of all diversity groups has expanded exponentially since the turn of the 21st century. Employers are increasingly faced with multifaceted Human Resources related topics including cannabis, cybersecurity, sexual harassment, and a push, in many states, for equal opportunity for paid leave. Equal opportunity accommodations do not just vary between male and female employees but also between groups based on race, religion, and gender identity.

Gender identity itself varies extensively, but one concentration is the difference between individuals that identify as either cisgender (the same gender as their sex at birth) or non-cisgender (not the same gender as their sex at birth). The non-cisgender identity includes a wide umbrella of individuals who do not identify or present themselves with the sex they were assigned at birth, including transgender (not the same gender as their sex at birth) and non-binary (neither exclusively female or male) individuals. This particular group of individuals has historically faced major roadblocks in society and until recently, had not experienced inclusion and accommodations in the corporate world. Even with the progress that has been made, there is still a gap in today’s employee benefits environment for anyone deviating from “the norm”.

Fill out the form below for the full white paper, which covers:

  • Unique challenges faced by LGBTQ employees and their employers, including leaves of absence and insurance coverage
  • Terminology and proper usage
  • Protective regulations, including a state-by-state analysis
  • How to expand inclusivity to the LGBTQ population and tips for building a benefits program and culture that accommodates accordingly

 

Spring Wins Two of Captive Review’s 2019 Awards

We are incredibly excited to announce that the Spring team had a great night this past Monday at the CaCaptive Review Award Winner 2019ptive Review awards reception in Burlington, Vermont.

Spring took home the award for Employee Benefits Specialist of the year, and our Senior Consultant, Prabal Lakhanpal, won the Emerging Talent award for service professionals.

Our team works tirelessly day in and day out to deliver the best, research-driven and innovative service to our clients, with the goal of always producing tangible results. All of our staff is encouraged to participate in educational and industry related events and organizations so they can continue to build their skills and knowledge, and Prabal is a prime example of this development and growth. Always at the forefront of employee benefits and how they intersect with captives, we are constantly thinking outside-the-box to help clients fund competitive benefits packages that makes sense for their organization, its culture and its risk profile. This has been a particularly strong year for us, and we thank Captive Review for the recognition.

Spring to Speak in 3 Sessions at DMEC Annual Conference

As a long-time sponsor and advocate for the Disability Management Employer Coalition (DMEC), Spring is excited to continue our involvement in this year’s annual conference.

The event, which takes place from August 5-8 in Washington, D.C., will bring together around 500 professionals in HR, Benefits, Disability and Absence Management fields, and is sure to be a thought-provoking and fun few days. This year, Spring team members will be featured a few times on the conference agenda:DMEC Annual Conference

  • Launching Your Organization’s Self-Audit Checklist: Tuesday, August 6th, 3:35PM
    Senior Vice President Teri Weber will be running this short quick-dive session, which will guide audience members on effectively conducting an internal compliance audit.
  •  The RFP Process: A Deep Dive: Wednesday, August 7th, 2:30PM
    Teri Weber and Senior Vice President Karen English will be joined by clients on this panel that outlines the who, what, and the how of conducting an RFP. Best practices and case studies will be shared.
  • Got ROI?: Thursday, August 8th, 9:30AM
    In this general session, Karen, Teri and Disability Management professionals from Baystate Health Systems and Chevron will speak to how to determine if an absence management program is producing ROI. The audience will be left with a framework to overcome common challenges and learn from the success of large employers.

So, if you are heading to the DMEC Annual Conference, be sure to catch us at one (or all!) of these sessions, and say hello to our team at booth #312. We promise good conversation and fun giveaways!

Spring to Speak at VCIA 2019

Our team has long been involved with the Vermont Captive Insurance Association (VCIA), an organization that has done much to advance the captive industry in one of the country’s strongest captive domiciles. The VCIA Annual Conference is a hot event in this sphere, bringing over 800 professionals together each year in Burlington, Vermont to share their experienceCaptive Insurance and learn from each other.

This year, not only is Spring an exhibiting sponsor at VCIA, but our Managing Partner, Karin Landry, will also be leading a session, Association Health Plans & Captives: New Regulations, New Opportunities. This advanced session will feature a panel and will cover why Association Health Plans (AHPs) came to be, the shifting regulatory landscape around them, where that leaves us today, and an employer case study that ties in captives. The session will represent multiple perspectives: the consultant, the attorney, and the insurer.

The presentation will take place on Wednesday, August 7th from 10-11AM. We hope you can join, but if not, be sure to say hello to our team at booth 44 at VCIA!

5 Things to Think About Before Introducing a Student Debt Benefit

In 2018, Americans held a whopping $1.5 trillion in student loan debt, beating both the national auto and credit card debt rates. This number has grown exponentially in recent years, having an impact on all employees but arguably hitting the millennial generation hardest. As a result, employees are deferring home purchases and retirement savings due to their student loan obligations. In turn, this creates a challenge for employers working to recruit these employees, who are experiencing financial challenges and not at optimal productivity or engagement.

Employers across the country are recognizing this crisis, and implementing solutions to mitigate its effects for employees. However, nothing is simple. In considering a student debt relief benefit, organizations need to think about:

  1. Strategic goal(s)

  2. Financial wellness

  3. Funding and taxability

  4. Administrative complexity

  5. Employee demographics

In this article, we will elaborate on these factors and outline the pros and cons of several established student debt benefit programs. We will also provide our perspective on the future of the market – is this a short-term trend or something that is here to stay? Click here to read the full article.

The Latest in MA Paid Family and Medical Leave

By Karen English and Teri Weber

What You Need to Know

In June of 2018, Massachusetts passed a paid family and medical leave policy, making it the fifth state to do so after California, New Jersey, Rhode Island, New York, and Washington, and almost in tandem with D.C. Since then, Massachusetts employers, employees and industry professionals like ourselves have been closely following the regulatory progress and stipulations of this new program.

The Law: A Brief Overview

The Massachusetts Paid Family and Medical Leave law provides employees working for a Massachusetts employer with up to 26 weeks of job protected, paid family and medical leave for qualifying reasons, which include but are not limited to:

  • One’s own or a family member’s serious health condition
  • Bonding with a newborn or adopted child
  • Tending to a family member who is an injured servicemember

The law also offers job protection during and after a leave. The nuances of the policy and modifications have been slowly rolled out over the last year. More details about employee eligibility, employer requirements and readiness, and pay allocation can be found here. As with all state-wide legal overhauls, the policy is quite complex.Paid Family and Medical Leave Massachusetts

The program is meant to be funded through employer and employee contributions, with employers using MassTaxConnect to determine contributions and appropriate tax filing.

The Latest

The Paid Family and Medical Leave benefits were set to be available to employees starting January 1st, 2021 for bonding, military exigency and one’s own serious health condition, with a second wave being rolled out on July 1st, 2021 for other available and applicable benefits. To ensure sufficient funding for the program, employers were to start paying paid leave taxes starting July 1st, 2019.

As the deadline approached, however, employers in the state became concerned over unanswered questions and lack of time to prepare. Members of the Associated Industries of Massachusetts sent more than 2,500 messages to Governor Charlie Baker explaining that they lacked the time and clarity to stay on track for the July 1st deadline. Massachusetts lawmakers heard the grievances and acted accordingly. On June 11th, 2019, the state agreed to a three-month delay on paid leave tax collection, which will now begin on October 1st, 2019.

What This Means For Employers

The extension allows us all to get more familiarized with the ins and outs of the law and plan accordingly. Employers will be focused on whether an exemption applies, how the breakdown of corporate tax vs. payroll deduction will work, and what portion(s) of their workforce are eligible for the different benefits outlined. The additional time will also enable employers to effectively communicate the changes. Updated key dates to be aware of include:

  • Required Withholding Now Starts October 1, 2019
  • Contribution Rate Has Been Adjusted from 0.63% to 0.75% of Employee Qualifying Earnings
  • Remittance of Contributions for the October 1 to December 31 Quarter Will Be Due January 31, 2020
  • Timeline Has Been Extended for Required Employee Notices to September 30, 2019
  • Timeline Has Been Extended for Exemption Applications to December 20, 2019
  • PFML Final Regulations Are Scheduled To Be Posted on June 17, 2019 and Become Effective on July 1, 2019

Please get in touch if you have questions about the Massachusetts Paid Family and Medical Leave law and how to prepare for the program’s rollout. We have experts in leave management and compliance that are happy to help you navigate this new policy.

 

Syzygy Insurance Co. v. Commissioner of Internal Revenue

What You Should Know

Recently, the Courts ruled that Syzygy Insurance Company (“Syzygy”), a micro captive created by Highland Tank & Manufacturing Co. and its Associates (“HT&A”) did not qualify as an 831(b) micro-captive entity between the years of 2009 and 2011. Federal courts have been especially assertive outlining bad fact patterns for certain captives, as seen in similar case results such as Avrahami v. Commissioner (“Avrahami”) and Reserve Mechanical Corp v. Commissioner (“Reserve”).

Understanding the criteria and results of these court rulings is imperative to ensure that your clients’ captives, or even your own, are appropriately managed and operated.

In this whitepaper, we outline an in-depth analysis of the court case and decision, and provide you with a checklist for ensuring compliance and validity for your captive, no matter its size. Download to learn more about:

  • Circular flow of Funds
  • Arm’s-Length Contract
  • Valid and Binding Policies

and more, so that your captive isn’t the next one getting negative press!