Check out this article by Captive International, where they spotlight Spring’s experience with captives and how we approach captive and risk optimization.

Our Managing Partner, Karin Landry was in an interview with Captive.com in which she discussed the current state of captives and what we can expect to see in the future. Check out this Q&A Recap by Captive.com.

COVID-19 Update

In light of the global pandemic, the federal government’s Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was passed in late March, has several provisions related to student loan debt that employers and employees should be aware of including:

1 – Payments on student loans will not be required through 9/30/2020.Nonpayment during this time will not yield any negative repercussions for the payer (such as a credit score hit), and interest will not accrue during the six months. This exception applies to direct and federal family education loans, but not private loans. In addition, borrowers who can afford to continue making minimum payments (or make additional payments), will have all of these payments apply toward principal during this period, allowing them to further benefit by paying off their student debt more quickly.

2 – If an employer would like to help an employee pay down their student loan debt as an added benefit during this difficult time, the employer can make a tax-free payment of up to $5,250 per employee during 2020.Prior to the CARES Act, employer payments were fully taxable to employees. Employers are hopeful that additional legislation will make these tax changes permanent.

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

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, asseen 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.

Our Senior Consulting Actuary, Peter Johnson has been selected for Business Insurance’s 2019 Break Out Awards! Check out this quick Q&A with Peter that gives insights into his background.

For employers with robust benefits programs in place, an integrated approach is continuing to become an increasingly popular way to take things to the next level, and for good reason. Although the concept is not new, and our team of experts has been developing solutions for years, certain aspects are getting employers’ attention.

Spring’s 2016 and 2018 employer surveys, led by Spring’s Senior Vice President Karen English, show that the core drivers to developing an integrated program are:

There’s a lot more impacting these areas than you might think, so let’s take a deeper dive.

Cost Savings:

Having an efficient benefits program with systems that speak to and work with each other can go a long way for your bottom line. Integration provides greater transparency into your workforce – absence management challenges, productivity, employee health – among other things. This knowledge is an opportunity to create a healthier, more present workforce.

If this sounds like qualitative “fluff”, it’s not. One healthcare client was able to save over $10M in direct and indirect costs through integration. These savings resulted from savings in the following areas:

Their program, done in tandem with captive insurance company funding, also yielded risk diversification and stability, as well as further savings of 10% of premiums.

The graph below shows the average levels of employer savings achieved by implementing an integrated program, spanning a range of direct and indirect cost categories.

Source: Spring Consulting Group’s 2018 Integrated Employer Survey

Simpler Administration:

All parties benefit from an integrated benefits system. An immeasurable amount of time and effort is saved from not having to go to different platforms for critical information. This will speed up the claims process.

The best integrated programs send notifications and communications, and offer automated triggers, case management and documentation. For managers, results are easier to explain. For employees, access is simpler and more approachable. At the corporate level, you can expect faster turnaround time and greater visibility.

Upgraded Employee Experience:

Employees do not typically understand the nuances surrounding absences, nor the various policies, plans, and processes involved. They simply need time away. By integrating absence to include occupational and non-occupational events, your employees will experience:

These benefits lead to an enhanced employee experience including higher engagement, both at the organization and with their health. As all HR professionals know, engagement is critical for recruiting, retention and overall performance. Whether at risk or not, all employees will appreciate a smarter, more robust benefits program and an employer that is looking out for their wellbeing.

Enhanced Tracking Capabilities:

To make sustainable improvements, it is imperative to track your integrated program and mine the data across all absences to investigate patterns and draw predictions. An integrated program allows for metrics across plans and policies with drill-down features such as:

With all these different facets captured uniformly, you have reporting that is comprehensive; supports workforce planning and budget; allows for strategic planning with HR as a business partner; and offers opportunities for prevention; so that your organization can be proactive instead of reactive. These kinds of insights allow employers to move into population health management.

Improved Compliance:

With the hub of intelligence that an integrated program offers, employers have a more reliable way of remaining compliant when it comes to things like the ADA, FMLA and ERISA, as well as any state-specific regulations and policies unique to the company. Automation will make leave requests and absence tracking much easier to manage, and accurate documentation will aid accountability for employers and employees alike.

Ultimately, an integrated workers’ compensation and disability program can have significant positive impact on a company and its employees, especially for larger employers. We have seen great, quantifiable success with integrated programs from our clients. If you are thinking that this process seems too big a task to take on, don’t worry. Any company can start at any point along the continuum shown below, and gradually work their way to a model that facilitates population health management in the workforce.

Most Common Approach is Phased
Programs are implemented in a phased manner, with priorities for services varying by workforce type, size culture, buying sophistication and product awareness.

and this is one of the many reasons I love my work. One component of my role is assisting organizations in managing their disability and leave programs, which includes being compliant with the American’s with Disabilities Act (ADA) and Amendments Act (ADAAA). The ADA has pained employers for years due to its regulatory complexity, and although they are making strides and building functional processes to address it, it can sometimes feel like two steps forward and one step back.

I recently conducted a training on the ADA for a large employer team of subject matter experts. After a challenging week of what felt like personal parental fails, I used an analogy that managing your ADA program is a lot like raising a pre-teen! Truth be told, that wasn’t in the script, but it was top of mind at the time and I knew that most of the audience could relate to both parental and ADA struggles.

If you still aren’t convinced of the overlap, I have outlined four challenges with the ADA (that I also experienced with my 12-year-old daughter).

1) Everything must be managed on a case-by-case basis

Organizations must have a prescribed process to identify and manage ADA cases to ensure potential accommodations do not slip through the cracks. However, the regulation is clear in that every case must be reviewed based on its own merit. Employers must consider every request, examine what is needed, and consider solutions that will satisfy the employee’s needs without causing undue hardship to the organization. Key elements of any job must be considered, such as location, essential functions, organizational structure, hardship potential, duration and the like. A simple yes or no is rarely enough. There are often conditions that must be met, including the potential for extensive negotiation, and any decision may be accompanied by resistance from different parties.

At home I also take into consideration things like location, duration, hardship to the family unit and every request must be reviewed on its own merits. Just like with your ADA requests, a yes is always met with delight, but a no will always cause additional work and difficult discussions. That said, that doesn’t mean that you can routinely go the “yes” route just because it’s the path of least resistance.

2) There is a constant demand for “things”

Regardless of whether the request is for Instagram or a sit-stand desk, the requests just keep rolling in! Giving a simple “no” just isn’t going to work. You must engage with your employee (or child) by asking questions, digging into the details, justifying your rationale and following documented policies and regulations (or family rules). Why do they need what they are asking for? Examine both sides of the argument.

With accommodation requests, a simple “yes” is rarely the optimal solution. The key is to really understand what is needed versus what is requested, as there are often gaps in between. The dialogue and documentation need to support what the employee can do and what will ensure they are able to do the essential functions of their job with or without accommodations. Simply approving their request for something may not actually yield a successful solution. Instead as the employer you need to fi nd an accommodation that suits not only the employee but as many stakeholders as appropriate. I recently worked with a client surrounding parking accommodations which were on the rise and extremely challenging given their various office locations and distances to sites. It highlighted how a simple “yes” doesn’t always work. Instead great care needs to be taken with each request and each potential accommodation.

With my daughter it started with an iPod and grew to the iPhone, which has now turned into social media requests. Just saying yes doesn’t work for me – I need to dig in and see what I can provide her that might satisfy her need to fi t in without creating an undue hardship for me. And if I do say yes, you can bet there is going to be a social meeting agreement (similar to an accommodation agreement) to hold us both accountable!

3) Your voice is drowned out by others

Employees requesting an accommodation typically have resources to work with at an organization. They may be working with a disability or workers’ compensation partner, their supervisor, HR, benefits and even occupational health resources. All those voices become noise in the ADA process. Even with the best of intentions, those sources put pressure on the situation that may drown out the voice of the accommodation team. Some parties may be encouraging return to work too aggressively or not aggressively enough. Silence from those resources may be perceived as lack of support the same way that vocalization may be viewed as intimidating. How do you fi nd the right balance?

The key is to manage expectations within the ADA process and bring the stakeholders together by giving them a seat at the table. The interactive process is a very critical part of accommodation reviews; it cannot be avoided in a compliant process. Instead of dreading that part of the process, try to embrace it. Use it to get to the best solution for the employee and the stakeholders and then make a firm decision on what can be implemented.

All parents understand that our children aren’t always listening to us even though we may think every word we utter is critical and wisdom-filled (just like a strong HR professional). Further, what they hear from us may differ from what they hear from their friends, friends’ parents, teachers, or even your spouse. But regardless of the frustration or eyerolls, the ultimate decision related to our children rests with us. They may try to change our minds or tell us all the reasons why other opinions should be valued, but we determine the best solution and do our best to implement it at home.

4) Everything must be managed on a case-by-case basis

An organization cannot be compliant with the ADA, or appropriately manage absence, unless they are dedicated to developing an accommodation program and following through with clear processes and documentation. With that said, it is a long game – a marathon, not as print. Most employees and supervisors will not be singing your praises immediately. At first, they will feel like you are making it “too easy” for employees, or “rewarding” employees who are abusing the system. At the same time employees may think you are “asking too many questions” or “forcing them to pay more money to get paperwork completed.” On any given day all those things may be true, but you are also working to provide a compliant work environment that accommodates employees fairly. You want a solution that returns employees to productive work, processes that are in good faith and interactive and a way that documents what steps were taken and what was agreed to. All of those are beneficial to your organization and to the individual as well.

I was recently working with a client that learned the hard way about documentation. They had a healthcare resource that was given an accommodation around not performing CPR as it was not viewed as an essential function. This employee was transitioned to a new role where CPR was required but the knowledge of her accommodation and lack of ability to perform this function was missed during transition. Unfortunately, this placed an unanticipated strain on the organization, which could have been avoided with greater documentation. Instead, the involved parties were working to solve the immediate need without thinking about the long-term impact on the employee or the organization.

As you focus on return to work and accommodations, try to aim for incremental change toward the most successful program possible, keeping the long-term vision in your view. Start with your policies and procedures, ensuring they reflect the type of program your organization needs. Consider them as living documents that will require revisions as your accommodation program matures. Build an efficient process around those policies, doing your best to move toward that pre-defined,
distant goal post.

At home, incremental change is necessary as well. Do I want a clean room, laundry done, dishes finished and homework perfect? Yes. But I will settle for incremental change toward a successful and productive member of society. This may mean taking things one step (or chore) at a time or placing more focus on the achievements compared to the gaps.

So next time my daughter tells me I am “annoying” and “all the other kids have Instagram” and “I don’t know what it’s like,” I will remind myself that on any given day those things may be true, but I’m trying to raise a healthy, happy kid and building this foundation is necessary to create long-term success. Right now, it’s hard for me to see the goal post but I know it’s there.

Regulation around the ADA is complex, like my pre-teen, but it’s important to remember that it is built on the core premise of avoiding discrimination and pushing employers to do what is right. It sometimes forces a difficult dialogue between employers and employees, but the goal is optimal for both parties.

Our Managing Partner, Karin Landry was quoted in Business Insurance’s article on ways employers can offer effective worker’s comp while still reducing costs. Check out the full piece here.

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. For2019, renewals are in the low single digits.

2) 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 spend, 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.

3) 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 fi nd them irrelevant, you’re not going to see the results you’re hoping for.

It might be time to give these questions some thought:

Consider a formal or informal survey of employees to fi nd 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.

4) 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.

5) 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)?

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 fi t.

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.