Spring to Speak at 2019 CICA International Conference

The Spring team is excited to once again break from Boston’s cold winter and head to Arizona for the 2019 Captive Insurance Companies Association (CICA) annual international conference, which takes place from March 10th to 12th in TucsonCICA 2019 Conference

Spring has been involved with the annual CICA event for over a decade, and has acted as a sponsor, exhibitor, and speaker in the past. This year, Spring’s Managing Partner, Karin Landry, will be leading a session, “Getting Smart with Lost Time: Integrating Workers Comp & Disability”, on Monday, March 11th at 2:15 PM. The discussion will center around the advantages of integration between programs and the related trends, challenges and approaches. We will also cover optimization and impacts on various stakeholders. Several case studies will demonstrate cost savings opportunities as well as the different strategies available. The audience will leave with a framework for implementation and be able to draw upon real-life examples and best practices from large, leading global organizations.

We hope you have the chance to stop by Karin’s session, or at least find one of our team members amidst the workshops and networking opportunities to chat in person.

 

Let’s Give Them Something to Talk About

The Massachusetts Paid Family and Medical Leave Listening Sessions

Spring attended the listening sessions in Boston and Springfield where employers and their advocates provided constructive feedback to the proposed Massachusetts Paid Family and Medical Leave (“MA PFL”) regulations, a draft of which was released in late January.  We gained a lot of insight into the proposed plan, its gaps and possible hurdles to its approval, and we wanted to share with industry professionals who were unable to join.

To set the tone, those sharing their questions and identifying areas that require clarification were thoughtful and balanced in their approach.  Many voiced their concerns after an introduction that included appreciation for the core tenants of the statute.  Top-of-mind was a struggle with the lack of guidance around the exemption process, clarification on definitions and administrative complexities.  As an advisor in this field, who has worked with employers to implement paid leave in other states, multi-state employers were definitely highlighting provisions that have proven to be an ongoing challenge with other state paid leave programs. Paid Family Leave

At each session approximately twelve individuals submitted verbal commentary.  Although the Boston commentary was primarily from attorneys representing smaller employers that are struggling to implement the regulation, the Springfield representatives were primarily from employers and represented groups of all sizes.  The representatives from the Commonwealth were in listening mode, diligently taking notes and occasionally asking for clarification on the comments.  Feedback could be summarized into five primary categories, which we will further elaborate on:

  1. Definitions
  2. Exemption process and impacts
  3. Certification process, including retaliation and appeals
  4. Coordination with employer policies
  5. Taxation and cost considerations

Definitions

  • Organizations were looking for additional clarification on the definition of domestic partner, qualifying reason and increments of time.  The goal was to refine them to be more specific and, where possible, more in line with the federal regulation.  Similarly, for any time tracking (i.e. 90 days for certification, 6 months for retaliation) employers are seeking more specificity around when the clock begins.
  • Within the regulations there is a reference to providing information related to an employee’s position; clarification was requested on what that represents.  For example, will a job description suffice or will physical demands be required?
  • When considering the exemption process, employers want to better understand the definition of equivalency.
  • The regulation leverages 1099’s as a point of reference for “employees”, however many spoke about 1099’s not being the best assessment and the need for additional consideration to be given to defining employees.
  • The group was curious as to how the look back provision will work in the first year.

Exemption Process

  • Employers are anxious for more information related to the exemption process, especially private plan requirements.  Questions centered around how vendors will be approved and leveraged, what reporting will be required, and what will the bond process entail.  The timeline of the process was also discussed with particular interest in what happens to contributions from July 2019 – January 2021 (assuming exemption if approved) for exempted employers.
  • The sharing of wage information was of concern to many speakers, including both process and timelines.

Certification Process

  • The certification process prompted dialogue around expanding the list of who can certify time.  In addition, extensions on certifications were identified as administratively complex under the draft regulations, as notice requirements may be compromised if employers are waiting for employees to see their provider before certifying an extension.
  • Given the timeline for certifications, employers raised concern over protecting time before an actual approval is made.  Similarly, when no claim is filed, how and when can an employer take action?
  • The retaliation provision was an issue for many.  Advisors and employers are seeking additional guidance in order to limit their potential liability.
  • Although appeal details are unclear, it is believed that an appeals process will exist in the final regulations.

Coordination with ER Policies

  • In the current state, employers are required to allow employees to continue to earn time while on leave; however, if earned time off is based on hours worked, what will be the requirement?
  • Some employers questioned how this leave will coordinate with complex policies related to time off.  For example, if an employee must work the day before a holiday and/or the day after a holiday to receive holiday pay, how will that impact employees that leverage MA PFL?  Will employers be able to maintain those provisions, or will MA PFL not allow for those constraints?
  • Coordination with workers’ compensation was highlighted as an area needing additional thought.  Similarly, how the regulation would impact an employer’s ability to explore restrictions and accommodations during leave could be negatively impacted.
  • Employers noted that a feature of the FMLA that could be transferred to MA would be to ensure employees that have no intent to return to work are not given paid time arbitrarily.

Taxation and Cost

  • Although the cost of the program including staffing and health care premium dollars were mentioned, we do not expect any sweeping changes. However, there may be an opportunity to add language that specifies if any costs can be recouped, especially if employees do not return to work.
  • A handful of people spoke about the need for clarification surrounding how the contribution will be calculated.
  • Taxation of the contribution as well as the earned income was a worry and requires resolution.

 

The Commonwealth seems to be setting a strong foundation by openly seeking feedback from its constituents and giving themselves a long runway, which we hope and expect will assist in a smoother roll out than experienced by other states.  In addition to the listening sessions there is a lot of work going on behind the scenes develop the infrastructure.  In February, they will be seeking feedback on digital tools they are developing to help employers understand the impacts of the law.  It is expected that this will also include contribution calculators and other tools.

Employers who did not attend the sessions should feel welcome to attend a session in the future submit written comments for consideration.  Written presentations may be sent to MassPFML@Mass.gov.  The Commonwealth will be used to refine the next draft of the regulation.  Although responses can reference the statute, changes to a passed statute are unlikely; however, the regulations supporting that statute and providing further details can provide necessary clarification to ensure the MA PFL can be managed with limited ambiguity.  Spring will continue to follow the MA PFL; if you would like to submit commentary please contact us at teri.weber@springgroup.com or karen.english@springgroup.com.

Government Shutdown and Its Impact on Employee Benefits

As the federal government partial shutdown continues, employers who rely on government contracts or have business models that depend on a fully operational government are now forced to make difficult decisions regarding their workforce. Some employers are contemplating reductions in force, layoffs, or furloughs to weather the financial ramifications of the
shutdown. This leads to questions about employee benefits, and how benefits should be handled during these leaves of
trump maternity leaveabsence.

Employers contemplating a reduction in force, layoff, unpaid leaves of absence, or furloughs, should review the following:

  1. Review their employee handbook and plan document for eligibility provisions. How plan eligibility is determined will be critical in determining how benefits are or are not continued.
  2. Review their carrier contracts, including stop-loss or reinsurance provisions regarding eligibility.
  3. If they are an applicable large employer, review their obligations under the employer mandate
    play or pay provisions.
  4. Communicate process for benefit premium payments, if applicable.
  5. Provide COBRA notices appropriately, when necessary.

Eligibility Policies

Employers are obligated to follow the provisions put forth in their plan documents, and mirrored in their employee handbooks, for benefit eligibility. Employers whose handbooks do not contemplate layoffs, furloughs, or reductions in force, or who have conflicting language between documents, should consult with their legal counsel.

Carrier Contracts

Employers should work closely with their carriers, including stop loss and reinsurance carriers, to ensure that both parties agree about who is and who isn’t eligible for benefits. Conflicts between parties will require legal counsel.

Applicable Large Employers (ALE)

To comply with the ACA, applicable large employers must offer their full-time employees health coverage or pay one of two employer-shared responsibility/play or pay penalties. An applicable large employer has 50 or more full-time or full-time equivalent employees in the prior calendar year. Full-time employees are employees who are credited with 30 hours of service a week or more. A full-time equivalent employee is calculated by combining the number of hours of service of all non-full-time employees for the month (not including more than 120 hours of service per employee) and dividing the total by 120.

Under the ACA, any hour for which an employee is paid or entitled to payment must be counted as an hour of service. This includes:

  • An hour worked
  • Holiday
  • Incapacity (including disability)
  • Military duty
  • Vacation
  • Sick time
  • Layoff
  • Paid leave

This means that employees of applicable large employers will continue to accrue hours of service during a leave of absence due to the layoff provision if they are paid. If the employer is an ALE, and the employee is still considered full-time (e.g., due to being in a stability period), the employer will continue to be obligated to offer the full-time employees affordable, minimum value health coverage. Failure to do so would risk triggering ACA penalties (i.e., the “affordability” penalty, as the COBRA coverage offered due to the reduction in hours is likely to be “unaffordable”).

Employers are provided with two methods to determine an employee’s full-time status: the monthly method, and the measurement
and lookback method.

  • Under the monthly method, the employer looks at each employee’s actual hours of service each calendar month (an hour worked or an hour of paid time for vacation, holiday, sick time, incapacity including disability, layoff, jury duty, military duty, or other paid leave) each calendar month. An employee is full-time for the month if he or she works 130 hours, no matter how long or short the month is.
    • Under the look-back method, the employer looks at the number of hours the employee averaged during a look-back period called a “measurement period.” Once the employer determines whether the employee worked full-time during the measurement period, that determination generally will apply throughout the immediately following stability period regardless of the number of hours the employee actually works during the stability period (unless the employee’s employment ends).

Layoffs

If the employee is laid off during a stability period (not terminated) and is considered full-time, affordable coverage must be offered during the layoff to avoid exposure to potential penalties. Once the layoff is over, if the employee returns to work within 13 weeks (26 weeks for educational institutions), coverage must be reinstated by the first day of the month
following his return to work.

The time on layoff will not count as hours of service for purposes of the measurement period if the leave is unpaid. If coverage is terminated and the layoff exceeds 13 weeks, the employee can be treated as a new employee, with a new waiting period or initial measurement period, when he returns (of course, the plan may be designed to reinstate all returning employees immediately upon return). Generally, if the employee had coverage during the layoff (e.g., through COBRA or another extension of coverage), coverage will be reinstated upon return. There will be no hours of service to measure during unpaid leave (except for unpaid jury duty, FMLA or USERRA leave).

Unpaid Leave

If the employee is on an unpaid leave of absence (except FMLA) and in a stability period as full-time, the employee must be offered affordable coverage through the stability period to avoid potential penalties. When the employee’s hours are calculated during the measurement period, the leave of absence (except FMLA) will count as zero hours of service. Employers that are ALEs should seek experienced legal counsel to ensure that their plan documents reflect their practices during any furlough, layoff, reduction in force, or leave of absence to mitigate risk under the ACA.

Payment of Premiums

Employers who continue offering benefits during a furlough, layoff, or reduction in force will need to establish a process for premium payment.

Employers that already have an established process for premium payment during unpaid FMLA leave or during a pay shortage (for example, for tipped employees) should utilize those policies. The IRS has not provided guidance or regulation for handling pay shortages without a loss of benefit eligibility. Employers often refer to the rules provided for handling employee contributions during an employee’s unpaid Family Medical Leave Act (FMLA) leave. There are three options that employers have during unpaid FMLA leave:

  • Pre-payment
  • Pay-as-you-go on an after-tax basis
  • Catch-up salary reduction upon return from leave

During the government shutdown, it is likely that only the second two options would be feasible. The premium payment policy should be uniformly enforced for all employees. Employers may set a time limit for the employee to catch up on contributions before terminating coverage, as well as a maximum period of time over which employees may spread payments. Employees should be allowed uniform periods of time to pay back missed contributions; for instance, management should not be given three months to pay back missed contributions when other employees are only given one month.

COBRA

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows qualified beneficiaries who lose health benefits due to a qualifying event to continue group health benefits.COBRA

COBRA qualifying events include what is called a “reduction in hours.” A reduction of hours commonly occurs when an employee goes from full-time to part-time, when an employee is temporarily laid off or furloughed, or when an employee goes on a leave of absence. The IRS COBRA regulations provide that a reduction of hours in a covered employee’s employment “occurs whenever there is a decrease in the hours that a covered employee is required to work or actually works, but only if the decrease is not accompanied by an immediate termination of employment.”

In this event, employers who are subject to COBRA should timely provide affected employees with their COBRA election notice if their reduction in hours results in a loss of coverage under the plan.

COBRA Strategy for ACA Compliance or Culture Concerns

In the event that a plan document, employee handbook, or carrier policy determines a furloughed or laid off employee is no longer a benefits eligible full-time employee, employers who are subject to COBRA could offer impacted employees COBRA coverage and assist the employee with premium payment.

Under the ACA play or pay provisions, an offer of COBRA coverage is considered an “offer of coverage” and if an employer assists in premium payments, COBRA coverage could potentially be made affordable to ensure the employer was not triggering ACA penalties for failing to offer affordable, minimum value coverage.

Spring to Speak at World Captive Forum 2019

We’ll be packing our bags for sunny Florida soon enough! Spring’s Managing Partner, Karin Landry, will be speaking on three different panels at this year’s World Captive Forum.

The three-day event will run from January 30th to February 1st in Turnberry Isles, Florida and we expect a great turnout of employers, regulators and service providers alike, all there to share their experiences and perspectives.World Captive Forum 2019

Karin will lead the following sessions:

  • State Regulation Again! Time for a Fresh Look! from 10:45-11:45 AM on January 31st. She will be speaking alongside Joseph Holahan, Attorney at Morris, Manning & Martin, LLP about the varied regulatory issues facing the captive industry today. They’ll be looking at Washington state and others who have passed recent tax regulations related to captives, and fleshing out how captive professionals can move forward.
  • US Benefits – It’s a Better Year from 1PM to 2PM on January 31st. Karin and David Slenn, Partner at Shumaker Loop & Kendrick LLP, will discuss benefits captives – where they stand today and where they’re headed. They will specifically address updates from the Department of Labor (DOL) and share a case study to bring the topic to light.
  • Stop-Loss in Captives from 2:15-3:15PM on January 31st. In this session, Karin will be joined by Steve Kroll of International Capital Investment Company and Tom DeNoma of Nationwide to discuss the growing trend of stop-loss captives and best practices in doing so. They will represent the employer, insurer and consultant viewpoints.

Spring has been to the World Captive Forum several times and always finds it to be a strong indicator of industry hot topics. Karin is excited to learn and share her knowledge. Not to mention she’ll get to escape from the Boston cold! If you’ll be in Florida too, don’t forget to catch a session (or two or three) or Karin’s and say hello.

Spring to Exhibit at Yankee Dental Congress 2019

Our team is excited to head to the Yankee Dental Congress in Boston’s Seaport from January 30th to February 2nd. As a long-time broker and partner for hundreds of Massachusetts Dental Society (MDS) members, this event has always been a rewarding way to meet with small business owners and vendors in the dental arena. In fact, this will be Spring’s 10th year in a row being involved with the Yankee Dental conference, and we are thrilled!

Captive Insurance

The four-day event is sure to bring the best and brightest in the field, drawing a crowd of almost 20,000. We look forward, as always, to this networking and learning opportunity. If you will be at the conference – which takes place at the Boston Convention and Exhibition Center – please stop by booth 2234 and say hello! We will have plenty of fun giveaways, as well as information about the services we offer to so many of the area’s dentists (among others).

The 4 Biggest Themes from the 2018 Cayman Captive Forum

As we unpack our suitcases from another successful appearance at the Cayman Captive Forum – our 11th one attended as a company! – I’m also taking the time to unpack my thoughts on the event.

As a sponsor and exhibitor at the conference, which ran from November 27th to the 29th in the Grand Cayman Islands, our team had the pleasure of meeting a range of new faces and familiar colleagues. This is an event that we look forward to each year, and not just because it gives us a break from the cold weather. Drawing over 1,000 attendees, this is a top-notch event catered to captive professionals of all kinds, whether they are seasoned experts or newcomers.Cayman Captive Forum

The Cayman Captive Forum is one of many ways that we keep up with trends, priorities and news. So between ice cream socials and poolside receptions, I noted the four most prevalent categories from this year’s educational sessions.

1  –  Taxes
No surprise here, as taxes and captives go hand-in-hand. This year, audience members learned about captive considerations for taxable and tax-exempt entities. Further, a group of accountants and lawyers covered US tax reform in detail, highlighting how it all affects captives (i.e. CFC rules, changes to attribution rules, etc.).

2  –  Current Events
Naturally, any modern conference would take inspiration from current events, but I noticed quite a few sessions at Cayman that were focused on unrelated topics frequently seen in the headlines.

First, there was “Ridesharing in Healthcare”, which explored the role of transportation in population health management. Then, a panel explained the impact of the “#MeToo” movement on the healthcare industry – addressing harassment, bias and recommended solutions. Thirdly, a team from CHRISTUS Health told audiences of their experiences with Hurricane Harvey and its consequences, arming listeners with suggestions for future catastrophic events. Another session dealt with workplace violence, something we hear about far too often, and, finally, some healthcare specialists provided a defense strategy for an Ebola outbreak.

3  –  Blockchain
Blockchain is another hot topic, so it got some spotlight at Cayman this year. In “Blockchain Technology Global Trends”, we learned about blockchain regulations and issues pertinent to insurance and healthcare. Then a panel of accountants discussed the opportunities and challenges presented by blockchain as it relates to insurance.

4  –  Cyber
Cyber has been top-of-mind for risk professionals for several years. Unfortunately there has been no magical solution, so the subject remained front-and-center once again this year at Cayman. Charles Kolodkin and Rebecca Cady explained how to use Miscellaneous Professional Liability (MPL) to strategize for cyber risk. Their lessons learned included, “hone the ability to manage the claim” and “work with operational leadership and board”. Another session discussed how to control for vendor cyber risks, highlighting the increased interconnectivity between areas like big data, social media, cloud computing and the Internet of Things (IoT) and the role it all plays on cybersecurity.

 

All in all, the 2018 Cayman Captive Forum was an event to remember. Myself and my Spring team members enjoyed all of the networking and learning opportunities that the event brought about, and are already looking forward to next year’s!

Captive Insurance

Spring to Sponsor 2018 Cayman Captive Forum

The Spring team is delighted to announce that we will be sponsoring the Cayman Captive Forum which runs from November 27th to the 29th in the Cayman Islands.

While the conference’s location and weather (especially in November) are certainly a treat, we swear that’s not the only reason we’re going. In fact, Spring has been involved with the Insurance Managers Association of Cayman (IMAC, the host group) for over a decade, and its events and resources have never let us down. This year we will be joining over 1,400 otherCayman Captive Forum industry professionals to network and share our experiences and best practices. Attending conferences is one of the strongest ways that we keep our pulse on trends, and with such a large captive market in the Cayman Islands, this is one of the best.

A group of impressive speakers will present on topics like:

  • Risk distribution
  • Tax considerations
  • Regulatory updates
  • Cyber risk
  • Telemedicine

And much more!

If you are heading to the Cayman Captive Forum too, please stop by booth #7 to say hello to our team. We’ll be giving out a great raffle prize!

5 Questions to Answer Before Renewing Your Health Insurance Plan

Whether you’re an office manager, business owner, or a human resource or benefits professional, renewing your company’s health insurance plan may become automatic. Considering alternatives is a daunting task that many feel they lack the bandwidth to handle. However, at a time when healthcare costs are rising, the market is in flux, and employees are expecting more and unique benefits, choosing the most convenient option is probably not your best bet.

It’s imperative to routinely review your package, your results and rethink your strategies to make sure you’re minimizing your costs while giving employees the best coverage at a reasonable rate. You may think you’ve considered everything, but you probably haven’t. Before your renewal date, make sure to address the following questions.

  1. Does your medical trend align with market standards?

Before you renew, take a hard look at the medical trend being used this year for next year’s renewal. The market has been seeing downward trends, so you’ll want to make sure you’re seeing that in your rates.  For 2019, renewals are in the low single digits.

  1. If you’re self-insured, have you considered medical stop-loss?

While advantages of self-insurance include flexibility and savings opportunities, self-insured companies are also exposed to an extra level of risk – unexpected, catastrophic loss that they’re expected to cover themselves. Stop-loss insurance, sometimes called catastrophic insurance, can help mitigate this risk. Medical stop-loss is coverage specific to healthcare spenEmployee Benefits Communicationd, and involves the establishment of a threshold by the employer over which they have external coverage for.

With an uncertain future for US healthcare, medical stop-loss is something all self-insured organizations should include in their program. Employers will need to consider where the stop-loss program attaches to make sure you don’t over or under purchase coverage.  Also, captive stop-loss solutions should be considered to maximize your savings, providing a savings of 10% or more on your stop loss spend.

  1. Do you have the right tools in place to support and communicate benefits with your employees?

You may have an impressive health plan and competitive benefits offerings, but if your employees aren’t aware of them, don’t know how to utilize them, or find them irrelevant, you’re not going to see the results you’re hoping for.

It might be time to give these questions some thought:

  • How and when are you telling employees about what’s available to them?
  • Do they truly understand their options?
  • Do you know what benefits your workforce finds most valuable? Are you giving them what they want, or what you think they want? Think about your demographics here.
  • Do you have streamlined processes for benefits administration, claims filing, etc.?

Consider a formal or informal survey of employees to find out what is working and not working. Further, there are a number of administrative tools, such as Bswift, that you may want to evaluate. For compliance and HR initiatives, ThinkHR and like platforms may be appropriate.

  1. Is it time to consider an actuary?

An actuary is a certified professional that measures and predicts insurance risks and premium rates. They are math-based risk experts and can help organizations with insurance policy development, forecasting, valuations, audits, and more.

Most small businesses believe they have no need for actuarial services. However as organizations grow and consider more advanced and varying insurance options, the greater the need for an actuary becomes. While the work of an underwriter is crucial, actuaries take a deeper look at the numbers. They are a neutral third party, and can offer crucial information such as how much volatility you can expect over a one and five-year period. These insights allow you to make smarter insurance decisions.

  1. Could your organization benefit from alternative funding strategies?

If you’re fully-insured, have you thought about aiming for a self-funded structure? If you’re self-insured, have you thought about a captive insurance company? If you’re a small businesses, have you thought about an Association Health Plan (AHP)?Employee Benefits Funding

We recommend thinking about these alternatives every couple of years. As businesses change and grow, along with market regulations and options, what once made sense for an organization may no longer be the best fit.

Captives provide unparalleled transparency of and control over an insurance program, which helps with cost savings and customization. Once only an option for jumbo-sized employers, more and more smaller organizations are utilizing a captive structure, either as a standalone captive or part of a cell or group captive.

Further, the AHP market is expanding quickly, due in part to new regulations passed earlier this year. This is a great avenue for a small business to benefit from economies of scale and get the same rates as a large employer. For more information about how to set up or join an AHP, please get in touch.

 

Healthcare is complicated, but with that complexity comes new and exciting opportunities. Before you decide to maintain the status quo and renew your plan, take some time to think about what’s truly best for your organization and its workforce.