Q: How would you describe the current state of tech in the absence management space?

A: To preface the discussion, I want to quickly illustrate the current state of paid family and medical leave (PFML) regulations. Although eligible employees may quality for the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), or other national policies, there is no national PFML program. Instead, many states, municipalities, and cities have developed their own plans. This is positive, but means employers have more and varied regulations to keep up with while managing and integrating internal policies. For this and other reasons, many employers are turning to Leave of Absence (LOA) software to help track employee leave. In layman’s terms, it is software that helps employers manage and track employee absences including sick leave, vacation time, federal holidays, jury duty, etc. Outside of LOA software and services, we are seeing components of absence recording in payroll services, benefits administration programs, time tracking software, HRIS modules etc.

Q: How do employers feel about these developments?

A: We’ve seen many employers embrace these technologies. As an impartial entity, at Spring we provide employers with all options when it comes to Leave of Absence (LOA) software, benefits administration programs and other technology options, including taking a look at internal processes for opportunities to streamline. Our surveys indicate that employees tend to favor newer LOA programs as opposed to traditional, more manual practices. Having a system in place mitigates the stress of trying to figure out what to do and where to go for information about leave options available, or to request a leave. These programs also allow employers to track patterns in utilization of different leave types and critical metrics surrounding return to work and leave duration. In this way, absence management technology can have an indirect impact on employee productivity and morale.

Q: What are some of the limitations/pitfalls to tech in absence management?

A: Although it may seem like we are in the prime of technological innovation, with new devices and tools popping up everywhere, macro advancements are slow to develop. Many LOA systems offer similar services when it comes to recording/managing leave, but the main benefits come from tracking and data analytics. With that being said, leave technologies may not be worth the monetary investment for smaller companies with fewer leaves to manage. Another concern relates to privacy and security, as many of these programs require sensitive company and employee information, but this is no more true for absence management technology than it is for any other digital tool that houses sensitive information We haven’t seen a large-scale breach in this space yet, but it remains a concern for some employers. Lastly, our employer clients have seen the most success with these types of technologies when they have the bandwidth to assign a point person or point team, as appropriate, so that there are in-house experts on the tool that can not only maintain the system and answer questions, but can also be looking for process improvements.

Q: What should employers do if they are considering implementing more tech within their absence programs?

A: I would recommend employers first review their current policies and pinpoint areas for improvement. Some do this through employee benefits surveys, one-on-one interviews, benchmarking, market research, etc. Absence management software ranges drastically and it is essential that employers understand exactly what they are looking for in a tool, before reviewing available options. It is important to first compile any pertinent data related to leaves of absence and a clear line of sight into your different leave benefits and how they interact. Once you have conducted this landscape/needs assessment, we recommend working with a consultant like Spring to conduct a Request for Proposal (RFP) for technology partners, market research to give you a detailed overview of solutions, benchmarking to understand what similar employers are utilizing, and/or surveys to determine the priorities of your employees and stakeholders.

Q: What can we expect to see in the coming months/years?

A: The pandemic completely flipped leave approaches and tools upside down. Many companies have shifted to hybrid and remote models, with a more dispersed workforce than ever. Those offices that have implemented a return-to-office (in-person) policy are seeing an influx of accommodations requests because employees are reluctant to return.  Complexities and market shifts like these are what made LOA software the norm among many larger employers, and it remains a viable solution in the post-pandemic world as well. It is difficult to predict macro-economic and social changes, but I predict current LOA technologies will continue to improve and gain traction. I expect we will see more employers reevaluating their absence programs to stay competitive and attract talented workers, and having an employee-friendly system in place is part of that equation.

Although AI, ChatGPT and other groundbreaking technologies are dominating global headlines, the absence management space has remained mostly untouched. But who knows? Maybe one day we will have absence software that can predict our sick days before we even take them. Stay tuned for more food for thought!

As today marks National Insurance Awareness Day, we wanted to share some current trends in the insurance landscape and considerations for businesses. Healthcare costs have skyrocketed for employers, it is estimated in 2023 that healthcare will cost employers $13,800 per employee.¹ Over the years, as we have moved in an unaffordable direction, employers are increasingly turning to self-insurance as a mechanism for risk management and control over costs.

In simple terms, fully insured plans consist of employers paying a monthly premium directly to an insurance company to cover their employees (and dependents).  On the other hand, with self-insurance, employers take on a set portion of the financial risk of a program instead of paying a fixed premium amount. In 2022, 82% of firms with 200+ workers adopted insurance plans that were wholly or partially self-funded.² Why is self-insurance so popular today? Here’s a quick snapshot.

If you are thinking of transitioning to a self-funded insurance model, or have questions about medical stop-loss, please check out our alternative risk financing services overview, or get in touch.

¹ https://www.healthcarefinancenews.com/news/health-benefits-costs-expected-rise-54-2023#:~:text=Average%20costs%20for%20U.S.%20employers,to%20professional%20services%20firm%20Aon.
² https://www.statista.com/statistics/985306/self-funded-health-insurance-covered-workers-by-firm-size-us/

Background

In 2018 the State of Hawaii Legislature passed a bill, Session Law Act 109, directing the Legislative Reference Bureau (LRB) to conduct an analysis to determine the impacts of establishing a state paid family leave (PFL) program. Stakeholders considered in the impact analysis included industry, consumers, employees, employers, and caregivers. The goal of Act 109 was to create a potential framework for the development of a PFL program that would offer paid leave for workers who need to care for a family member. The bill allowed the LRB to contract with a consultant for completion of the impact study, and after a formal Request for Proposal (RFP) process, Spring was selected to partner with the State of Hawaii on this initiative.

The Challenge

The objectives of the impact study were to:

• Conduct an objective and unbiased study analyzing and comparing existing models of PFL programs in other states
• Model the impacts of adopting similar methods of PFL programs in Hawaii, including the projection of costs and other quantifiable effects of each model
• Examine objectively the compliance and enforcement options for a PFL program in Hawaii and make recommendations for additional staffing and support needs

At the time, six states plus D.C. had a paid leave program for family and/or medical reasons in place, and part of our evaluation was not only a cross-model comparison of existing plans, but also a provision of the PFML landscape overall, including states with pending or rejected legislation. Both qualitative and qualitative factors needed to be assessed, including required operational activities, outreach and education approaches, state administration models, headcount modeling, IT infrastructure development, and projected startup costs. Integration with Hawaii’s existing State Temporary Disability Insurance (TDI) program was also explored.

Spring’s Work

Through Spring’s three-phased approach, the impact study covered a wide range of areas in detail that were critical in deciding on the development of a PFL plan in Hawaii. Starting with a deep dive into existing state PFL programs which included California, Massachusetts, New Jersey, New York, Rhode Island, Washington D.C., and Washington as seen below.

Plan Structure:

• Plan model
• Rating method
• Plan design including benefit amount, wage replacement ratio, maximum benefit, length of leave, employer eligibility, employee eligibility, qualifying events, covered relationships, job protection, and interaction with TDI program funding

Funding:

• Taxable wage base for funding
• Contributions to funding
• Updated costs

Administration:

• Administrative structure
• Claims management
• Ongoing monitoring

Implementation Timeline

• Rollout sufficient to gain industry and employer support
• Education and communications strategy
• Protocol for contributions and pre-funding

Within this evaluation, factors like gender equity, hiring practices, speed of benefit payments, ease of making applications or claims, financial sustainability, data collection capabilities, and compliance monitoring capabilities were also assessed. To arrive at these impact answers, Spring’s actuaries developed an actuarial impact model that utilizes actual PFL claim and other industry data to project claim incidence rates, duration of benefits, average benefit payments, expected costs and funding rates under existing state models and Hawaii’s current TDI structure.

The Results

Spring’s comprehensive impact study for the State of Hawaii’s Legislative Reference Bureau is available for public viewing here. Our team presented it in person to various legislators. While the State has not moved forward with a PFL program to date, we continue to keep the dialogue open and all parties are pleased with the framework set out in this project, as it was an imperative piece of due diligence on behalf of the State.

Our Senior Vice President, Prabal Lakahpal, and Senior Consulting Actuary, Nick Frongillo have been listed in Captive International’s Forty under 40. The list is comprised of up-in-coming talent that is helping shape the future of captive insurance. You can access the complete list here.

Employees have a whole host of responsibilities outside of work, and compassionate and strategic employers understand this and act accordingly. Below is our checklist of considerations for an employee benefits program that is family-friendly, enabling work-life balance and lessening the need to choose between job and familial needs, ultimately helping solve for some of HR’s biggest challenges: recruitment, retention, absenteeism, mental health and productivity.

	Get familiar with your population and demographics o   Does your workforce trend younger, older, or a balanced mix? o   Are there cultural, regional, or gender-based considerations at play? o   Do your claims demonstrate specific health issues among employees or dependents? o   Are most of your employees remote, hybrid or on-site? o   Does the nature of employees’ work or work schedule present any concerns (e.g., physical labor, night shifts, healthcare staff susceptible to illness)?
	Evaluate family-oriented provisions that are already in place via your health plan, corporate policies, voluntary benefits, or wellness programs  o   Where are there gaps or room for improvement? o   Have you accounted for nontraditional families in a way that aligns with diversity, equity, and inclusion (DEI) goals?  o   What benefits do you provide compared to similar companies with whom you are competing with for talent?
	Armed with this information, consider a broad range of benefits or perks: o   Paid parental leave (for mothers and fathers), including for adoption o  Take it a step further by designing a plan that offers insurance coverage and/or assistance related to fertility treatments, adoption, surrogacy, and post-partum needs o   Paid family leave / caregiver leave, for employees to care for aging parents, sick children, partners recovering from surgery, and more o   Bereavement leave, so that workers have space to grieve and spend time with loved ones during a time of need o   Flextime or alternative work schedules, for daycare pickup, doctors’ appointments, sporting events, and the like o   Childcare assistance, such as an on-site facility or a stipend o   Eldercare assistance, which could include financial and/or counselling and navigational help o   Financial wellness benefits, for traditional use cases like retirement but extending to consider things like tuition, student debt and long-term care planning o   Long-term care insurance, or related financial/educational resources, especially as states begin to consider statutory long-term care programs o   Paid Time Off (PTO) – in many cases this represents a set number of days that can be used for various reasons, including the fun (vacation) and the not-so-fun o   Enhanced mental health benefits or resources beyond standard EAP benefits for all members of the family o   Pet insurance or “pawternity” leave – while it may seem offbeat, most pet owners consider their pets to be family members
	Identify which family-focused benefits are most appropriate and feasible for your population, and fit with your company culture
	Determine your budget or how desired benefits could be funded (e.g., fully funded by employer, fully funded by employee, or some combination) and contribution methods
	Understand how different leave types and benefits would integrate with current offerings or if adjustments will be needed (e.g., phasing out sick banks for a more flexible paid time off policy)
	Ensure compliance and cohesion with national, state and local policies surrounding family leave (FMLA, state Paid Family and Medical Leave, parental leave policies, etc.)
	If appropriate, conduct a Request for Proposal (RFP) for any vendor-provided products or services
	Consider engaging a consultant like Spring to guide you through this checklist!

The Challenge

A private equity group, backed by a family office, was struggling with a piece-meal insurance approach between its 22 portfolio companies representing a diverse range of industries (e.g., hospitality, farming, technology) and related risks. Each entity was purchasing their own insurance individually. Over time, hardening insurance markets caused healthcare costs to increase and the organization’s fragmented structure did not allow for effective cost savings and risk management tactics.

The Goal

At the outset, we worked with the client to establish goals and set expectations. The first order of business was to bring the portfolio companies together into an integrated insurance program that can yield cost savings due to economies of scale. Then, we would explore alternative funding mechanisms for that single entity that would enable customized coverage at reduced rates. The end result would be a holistic view of the risk profiles represented within the organization which would improve enterprise risk management.

The Process

We helped the family office file and establish a captive insurance company to fund employee benefits and property & casualty risks. This included:

• Placing excess coverage for all lines to limit exposure
• Leveraging our strong carrier relationships to negotiate
• Providing M&A due diligence on target acquisitions insurance coverage and cyber security services
• Producing captive financial statements and ROI analysis
• Guiding the firm in selecting best-in-class vendors and acting as a liaison with partners on their behalf to ensure a painless, seamless execution
• Keeping the client up-to-date on regulatory updates from the DOL and other agencies

Based on our analysis, the client decided it would be advantageous to include all Property and Casualty (P&C) lines, medical stop-loss coverage, employee benefits and the family’s personal coverage within the captive program.

The Results

The captive structure enabled great advantages for the client across two significant areas:

1. Cost Savings: By unifying its subsidiaries into one large group and moving away from the commercial market, the organization is projected to reduce its total insurance related costs by 25%, with increased coverage.
2. Enterprise Risk Management: The parent company now has the sum total of its risk in front of them, allowing for more informed decision-making and a better understanding of their exposures and vulnerabilities across the board. The captive has also diversified the client’s risk and created an improved risk profile, both important for a long-term, stable and successful

A captive can be a valuable unifying tool among diverse family offices and private equity firms, producing lower operating expenditures (opex), enhanced products/services not available in the commercial market, favorable tax incentives, additional cashflow, and a seamless transition from your current model. If you would like to learn more about taking this path for your organization, please get in touch.

Title:

Senior Consulting Actuary

Joined Spring:

I joined Spring in April 2019, around a year before the pandemic.

Hometown:

I was born in Maryland and grew up in both Maryland and California.

At Work Responsibilities:

As a Senior Consulting Actuary at Spring, I provide employers with customized solutions that manage costs and improve performance of employee benefit programs. Some of the most common programs I am involved with include retirement, life, and disability plans.

Outside of Work Hobbies/Interests:

Lately, I am enjoying running, hiking, and yoga.

Fun Fact:

I am a multi-state backgammon champion (Massachusetts and Connecticut)!

Favorite Part of Spring:

I genuinely enjoy the work we do. Every day, I get to work with bright professionals and industry pioneers to make a difference for our clients.

Favorite Food:

Sushi.

Favorite Place Visited:

Anywhere with a lighthouse, but especially the North Carolina coastline. I have seen about 200 lighthouses, and I look forward to seeing more!

As we wrap up Mental Health Awareness Month, it was only fitting that the New England Employee Benefits Council (NEEBC) hosted their Annual Summit just a couple of weeks ago. Mental health awareness and wellbeing resources are top of mind for employers and HR teams across the nation, and, as we saw at NEEBC, specifically a focus in New England. Some additional hot button topics during the conference included:

1) Inflation/cost control strategies

Maneuvering around inflation and costly claims are top priorities for benefits professionals nationwide and was a constant topic of discussion by both presenters and attendees. The first keynote panel focused on the “Current Economic, Political and Cultural Landscape:  Where We Are. Where We’re Going. Why It Matters.” They explored typical cost drivers, workplace trends (hybrid, remote, and on-site), and how HR teams can help preserve New England’s unique culture within their workforce.

2) Understanding the needs of your workforce

As many employers have shifted to remote and hybrid models, communication and understanding the needs of the workforce has been challenging for many. One session that really resonated with me included two benefits specialists from ZOLL Medical; they reviewed how benchmarking and survey data helped give their workforce a voice when it comes to their benefits. On the other side, they also looked at pitfalls and obstacles they faced initially and how they overcame them, and steps they took to optimize their survey process.

3) Promoting wellbeing and mental health

Finally, mental health and employee wellbeing continue to be top-of-mind at HR and benefits conferences across the nation. As mental health resources have become a mainstream benefit area, employers are now looking at alternative and new programs to stand out and retain/attract talent. A professor from Northeastern University’s Department of Health Sciences presented on social determinants and their impact on employee health and wellbeing. He leveraged his research to outline best practices and how HR teams can alter their offerings to fit the needs of a diverse workforce.

As a pharmacy consultant, I was excited to see the interest people had in Rx cost control tactics, PBM logistics, and specialty drug strategies. The costly and challenging landscape of pharmacy benefits should motivate employers to implement program changes; we can help. Here are some considerations and tools employers can utilize to address employee wellness, which, in turn has a direct impact on pharmacy costs. Thank you to NEEBC for another insightful event and we look forward to the next one.

Business Insurance has released finalists for their 2023 U.S. Insurance Awards. Spring’s team has been shortlisted for the Insurance Consulting Team of the Year category. You can find the full article here.