Spring Consulting Group provides a wide range of Captive Services when it comes to the Employee Benefits and Property & Casualty (P&C) industries. In this Whitepaper, you can learn more about our captive services and how we approach captive implementation/optimization.
In 2023 we are expecting to see lots of changes when it comes to Paid Family and Medical Leave on both the state and nation-wide level. In this whitepaper, we break down the current landscape of paid leave programs and recommendations for employers to adopt and manage effective paid leave policies.
Title:
Senior Vice President and Co-Founder.
Joined Spring:
I was one of the original founders of Spring (alongside Karin Landry) back in 2004, as a spin out from Watson Wyatt Insurance & Financial Services, Inc.
Hometown:
I was born and raised in Golden Valley, Minnesota (Minneapolis area), but went to college in Wisconsin.
At Work Responsibilities:
I lead our absence management team, and work with employers of all sizes and industries and leading insurance carriers and administrators in the space. I also head up our Spring’s market research surveys and benchmarking.
Outside of Work Hobbies/Interests:
Being outside, going for walks; spending time with family, and of course, watching my kids play basketball.
Fun Fact:
One thing many people don’t know about me is that I actually use to run track in high school and led the 4×100 relay.
Describe Spring in 3 Words:
Interesting work & caring culture, I guess that’s actually 5 but that’s how I would describe Spring. The people all care about each other and have each other’s backs and support each other. We have a motivated team that is eager to collaborate.
Do You Have Any Children?
Yes, I have two beautiful children, my daughter is 17 and my son is 15.
Favorite Place Visited:
Greece, by land and sea! It has to be my favorite because of the history, beautiful architecture and amazing weather!
If You Were a Superhero, Who Would You Be?:
It would be Elastigirl from The Incredibles because her arms are so long and she can hold everybody. She can take care of everything!
Last week we wrapped up Business Insurance’s 2023 World Captive Forum (WCF) in Miami, FL. This year’s conference brought together hundreds of stakeholders in the captive space to network and discuss leading trends in the industry. As a member of the advisory board, I’m glad the event was such a success; below are some of the topics I found most prevalent during this year’s conference.
1) Captive Updates
When it comes to captive regulations, we have seen many changes in just the last year. With the growth and development of different domiciles all around the world comes new regulations to which captive owners and employers must adhere. Below I have included a couple interesting sessions that explain how regulations surrounding captives have changed across the globe.
– Government insurance representatives from North Carolina, Vermont, Oklahoma, Bermuda and Michigan discussed trends, best practices and laws impacting the captive industry (and their respected domiciles).
– As Latin America has been growing their position in the captive space, a session featuring the Official Advisor for Latin American Affairs from the Government of Bermuda spoke about current LATAM trends and what we can expect to see from the region moving forward.
2) Cyber Captives
Although writing cyber liability coverage into a captive is not a new practice, it is still nowhere near as common as placing medical stop-loss or property & casualty lines into a captive. This year cyber coverage was a hot-button topic at the conference and will most likely continue to be, as cyber attacks continue to pose substantial risks.
– In a breakout session titled “Cyber Captives” a group of risk experts discussed current trends in cyber insurance and the limitations for captive coverage in cyber.
– In a session titled “Secrets Cyber Criminals Don’t Want the Insurance Industry to Know”, the CEO of BlackShield Cyber, Dioly Alexandre, explained how cybercrime has changed over time and what insurance companies need to do to keep up.
3) Healthcare & Captives
Whether an employer in the retail space is looking to use a captive to fund health benefits, or whether a hospital organization is leveraging a captive for its medical malpractice and other unique liabilities, captives and healthcare have always been closely intertwined. At WCF this year some highlights of this dynamic included:
– Spring’s Managing Partner, Karin Landry, presented on trends in medical stop-loss (MSL) and how this tactic can help employers proactively manage healthcare costs and lessen the impact of catastrophic claims. The discussion included a deep dive into what is driving upticks in healthcare costs; walk-throughs of case studies illustrating MSL advantages, including an overview of Canon USA’s captive story; and a detailed explanation of Medical Expense Cost Containment (MECC) and how it comes into play.
– The first session of the final day reviewed implications of medical malpractice coverage following the Supreme Court’s decision on abortion services and best practices for healthcare providers.
– In the session “Global Medical Claims Developments – Covid-19, Hyperinflation, Musculoskeletal and Mental Health,” the panelists discussed how captive managers should address specific medical conditions and unusual medical claim patterns.
4) The Future of Captives
Although nobody knows for certain the future of the captive industry, we are seeing various patterns that suggest we will see many changes to come. Aside from new domiciles and new types of coverages, we are also seeing different approaches when it comes to current captive practices.
– In a session on “Hybrid Captives,” I presented on innovations in the property & casualty market that allow captives to more meaningfully control property exposures and premiums.
– As a newer member to the World Captive Forum Advisory Board, I was joined by University of California’s Karen Hsi in a roundtable for younger professionals entering the industry, including a discussion of what the next generation of talent is looking for and how they can get themselves on a promising career trajectory.
– As diversity, equity, and inclusion (DE&I) is a current top priority for many companies, this session discussed how by reinvesting underwriting profits, captive programs can be used to finance DE&I strategies to meet the needs of a diverse workforce.
Getting a break from Boston winter was a plus, but the ability to reconnect with industry leaders and collaborate on strategies was the real draw. We are excited to see what the World Captive Forum holds in store for us next year and we will continue to keep you up-to-date with developments in the captive space.
Our captive insurance team was spotlighted in an article by Captive Intelligence, after helping a client reinsure their employee benefits under the United States’ Employee Retirement Income Security Act (ERISA) into their captive. Our client received final approval from the Department of Labor (DOL) in February 2022, with the last successful applicant obtaining approval in 2017. Check out the full article here.
the International Foundation of Employee Benefit Plans recently wrapped-up their 32nd Annual Health Benefits + Conference Expo (HBCE) in Clearwater Beach, Florida. The conference brought together healthcare and benefits professionals from a range of industries to discuss leading topics and share expectations for the future. Having heard such positive feedback about the event, Spring was glad to attend, exhibit, and speak at the conference. Below are some of our biggest takeaways.
1) Pharmacy Cost Containment
This year there was a lot of talk surrounding the price of prescription drugs and tactics employers can adopt to help control costs without cutting benefits. There are many factors influencing the high costs of pharmacy drugs, some of which include chronic disease prevalence, the aging population and the growing volume of specialty medications. Below are some of the top sessions focused on controlling Rx costs.
– Representatives from Express Scripts explained the upsides to working with a Pharmacy Benefit Manger (PBM) and how they can help address pharmacy policies in their session titled, “How to Work With Your Pharmacy Benefit Manager.”
– The CEO and Co-Founder of TruDataRx, Cataline Gorla, discussed how comparative effectiveness research (CER) is being used by other countries to decide which drugs work best for specific medical conditions, and how self-insured employers can save money with said data.
2) Addressing Chronic Conditions
According to the Center for Disease Control (CDC), 90% of the nation’s healthcare spending goes towards people with chronic and mental health conditions1. As chronic diseases are very common among the American workforce, employers have started implementing specific benefits and policies to address common conditions, such as diabetes and obesity. Some of the sessions around this topic that we found most interesting include:
– Speakers representing the Nashville Public School System explained how they were able to introduce free resources such as telenutrition and fitness center access to help combat obesity and other health disparities.
– Dr. Mudita Upadhyaya from St. Jude Children’s Research Hospital presented on prevention strategies to address mental health and obesity in a pre- and post-COVID world; and why a mixed approach may be best.
– The Diabetes Leadership Council’s CEO, George J. Huntley spoke on diabetes and chronic disease risk management strategies, including medicines and technology that can help patients manage and prevent the disease.
3) The Future of Healthcare & Benefits
In recent years we have seen a great shift in the healthcare and benefits industry; we saw a great increase in telehealth, mental health resources, new/alternative types of paid leave, including sick leave and more. As we transition to a post-COVID world, we expect the evolution to continue. Below are some of the top trends professionals believe we will face in the coming years.
– Our Senior Vice President, Teri Weber, presented on market forces employers can utilize to meet future absence management challenges. Her session listed techniques employers can adopt to improve day-to-day administration of disability, absence and accommodations.
– In a session titled “Innovative Health Care Models—The Future of Direct Primary Care,” the presenter explained how many employers are changing to value-driving healthcare models to boost access and reduce costs.
– A session titled “Breaking the PTO Mold, Without Breaking the Bank,” reviewed how typical Paid Time Off (PTO) programs can be altered to better support employees’ well-being and financial health.
– The final session of the conference spotlighted how the pandemic has led to an increase in personal, economic and other stressors and has had a drastic impact on mental health, substance misuse and addiction. Attendees were informed on how they can implement workplace solutions that address these issues as well as identify warning signs.
The warmer weather was certainly a bonus, but the insights we gleaned and connections we made were what will keep us coming back to the HBCE conference. We want to thank IFEBP and our fellow colleagues who took the time to share their experience, stop by our booth, and make the energy so positive.
1https://www.cdc.gov/chronicdisease/about/costs/index.htm
Following Business Insurance’s 2023 World Captive Forum, an article was written about our SVP, Prabal Lakhanpal‘s session on how captives can be a solution to the changing property insurance market. During which he was quoted on tactics employers can take to help control coverage gaps. Check out the full article here.
Our Senior Vice President, Prabal Lakhanpal wrote an article for the Boston Business Journal on how employers can continue to provide strong benefit packages during a time of high inflation. You can find the full article here.
As seen in the New England Employee Benefits Council (NEEBC)’s blog.
Last year around this time, I gave a year-one progress report on the Massachusetts Paid Family and Medical Leave (PFML) program, as it had finished its first year of paying out benefits to eligible workers. Since then, the MA PFML program has continued to mature and adjust according to experience, and, around New England, Connecticut has had PFML benefits available for one year, and there are related updates from Rhode Island, New Hampshire, Vermont and Maine to report.
Massachusetts: A Year in Review
In fiscal year 2022 (July 1, 2021 – June 30, 2022), the Massachusetts Department of Family and Medical Leave (DFML) experienced1:
– Over 112,500 applications, with 20% being denied
– 59% of applications were related to medical leave, 31% for bonding, and 10% to care for a family member
– Only 32 approved applications for military exigency leave and 7 approved applications to care for a service member
– Claimants aged 31-40 had the most approved claims (40%) and more than 1.5 times as many women had an approved leave (61% of claims), compared to men (35% of claims)
– Average weekly benefits were $793.55 for family leave and $754.84 for medical leave
– Turnaround times from the time the application was submitted to an initial decision was a median of 17 calendar days
– Average duration of leave was 12 weeks, assuming a 5-day work week
– Total benefits paid was equal to about $603 million (an increase of about 245% from FY21 which accounted for January 1, 2021-June 30, 2021)
In 2023, Massachusetts will be updating maximum benefit amounts and reducing total contributions.
– The maximum weekly benefit is increasing to $1,129.82, effective 1/1/2023. This is an increase of about $45 from the 2022 weekly maximum. For any employees who may have leave that runs from 2022 into 2023, the weekly benefit that was determined when leave was approved will continue. The new maximum will not be applied until there is a new MA PFML leave application.
– Contributions, however, will be reduced in 2023. The total contribution is decreasing from 0.68% to 0.63%, for employers with 25 or more covered individuals. The medical leave contribution will be 0.52%, with employers funding 0.312% and employees responsible for up to 0.208%. The family leave contribution will be 0.11%, with employers able to collect the total contribution from employees. Employers with less than 25 employees are not required to submit the employer portion of premium.
The financial earnings requirement was also updated in 2023. Employees must have earned at least $6,000 and 30 times the PFML benefit amount during the base period to be considered eligible for MA PFML.
Connecticut: First Year Activity
Connecticut has now had PFML benefits available for 1 year. During the first six months of the program2:
– Over 44,127 applications, with 40% being denied of those that received a decision
– 44% of approved applications were related to medical leave, 29% for bonding (own child and adoption/foster care), 18% for pregnancy/childbirth, and 9% to care for a family member
– Only 15 applications were approved for family violence, 12 for organ and bone marrow donation, and 2 for qualifying exigency
– Claimants aged 26-41 had the most filed claims (53%) and more than double the number of females applied for leave (28,814), compared to males (14,213)
– Average weekly benefits paid were $562.01
– Average approved duration of leave was 6.79 weeks
– Total benefits paid was equal to about $81 million
– Almost 137,000 businesses have registered with the CT Paid Leave Authority and claim applications have been received from every city and town in the state
Based on the experience in the state in 2022, Connecticut is not making any major changes to the program in 2023. However, the social security contribution and benefit base increased to $160,200 on January 1, 2023, and CT minimum wage increases to $15/hour on June 1, 2023, which will impact benefit and contribution amounts.
Please note that the program has some key differences when compared to MA PFML, such as the availability of leave for organ and bone marrow donation, as well as leave related to family violence. Differences in benefit amounts, leave duration, and eligibility conditions also make it difficult to directly compare CT and MA PFML experience.
Other New England Updates
Massachusetts and Connecticut are not the only New England states to be seeing PFML progress. Rhode Island has an established temporary disability insurance program (TDI), which was the first statutory disability program in the country, established in 1942. In 2014, they became the third state to offer family leave benefits through temporary caregiver insurance (TCI). In addition, the state does not allow private plans, making the model slightly different than other PFML programs in the region. On January 1, 2023, a few updates to TDI and TCI became effective. The state’s taxable wage base increased to $84,000, which will impact the contribution calculation. The benefit duration also increased to 6 weeks, from 5 weeks in 2022. Finally, the financial eligibility conditions claimants must meet increased so that employees must have paid at least $15,600 in the base period or meet the alternative conditions wherein they earned at least $2,600 in one of the base period quarters and base period taxable wages equal to at least $5,200.
A new outlier is New Hampshire’s first-in-the-nation, state-sponsored voluntary plan where NH employers and eligible NH workers can purchase a paid family and medical leave plan through the state’s insurance carrier. New Hampshire selected MetLife as its insurance partner and began paying benefits on January 1, 2023.
Similarly, Vermont spent 2022 developing a voluntary program to be administered by The Hartford, their selected insurance carrier. Beginning July 1, 2023, state employees will be covered under the program, with other private and public employers with 10 or more employees eligible for coverage in 2024, and small employers and individuals able to purchase coverage in 2025.
Maine also made strides in developing the structure of their state mandated PFML program. Maine created a commission to study PFML programs and to propose a PFML model for the state, which kicked off in May 2022. Policy recommendations are expected to be presented to the Legislature in 2023.
Are You Up to Speed?
As the PFML landscape continues to evolve at the local, state and federal leaves, policies need to be monitored on an ongoing basis. Employers should ensure they are compliant with the requirements of each individual leave program, as differences exist between all established paid family and medical leave policies. If any of your employees are impacted by a state PFML policy, organizations should review plans, policies, and processes to confirm they are in line with any legislative changes. To do so, the following checklist can be followed:
– Register in any new states where employees are located, if required
– Ensure contributions are being collected appropriately
– Update employee notices and benefit documentation, as appropriate
– Confirm employee count to determine if any changes to contributions are required
– Review private plan strategies based on previous year experience and changes to contributions
– Renew private plans as appropriate
– Validate company sponsored leave programs coordinate with PFML to the extent possible
If you need assistance ensuring PFML compliance or to assess the optimal plan set up for your organization, Spring’s consultants are happy to help www.springgroup.com