CCF&N Insurance

To “play or to pay”: no easy answer

United Benefit Advisors — Thu, 23 May 2013 08:00:35 +0000

The Patient Protection and Affordable Care Act (PPACA) requires all employers with 50 or more full-time employees to offer affordable health care coverage to their employees and their dependents or pay penalties.

For many companies, especially those not far above the 50-employee cutoff line with seasonal or lower-paid employees, whether to “play or pay” is a tough decision complicated by incomplete information and uncertainty over how much health care costs will increase.

Ultimately, there are a number of factors to consider when making the decision. For example, while the penalties are less than the cost of providing coverage, choosing the “pay” option may result in demands from employees for additional compensation and lost productivity.

Employers face two potential penalties. Large employers that don’t offer at least 95 percent of their full-time employees minimum essential coverage during a given month will be subject to a $2,000 per full-time employee (minus 30 employees) penalty if any of their full-time employees enroll in an exchange and receive a premium tax subsidy. Employers that offer coverage that is deemed either unaffordable or below minimum value are subject to a penalty of $3,000 per employee – but only employees who enroll in an exchange and receive a subsidy are counted. The real cost of the penalties is likely greater, as employers who face penalties also lose an important deduction (insurance costs can typically be deducted), Business & Legal Resources reported.

Accounting for increased health care coverage costs further complicates matters. Such costs are projected to rise significantly, perhaps 20 to 50 percent. But the exact amount is uncertain, Human Resource Executive reported.

“We still don’t know how the exchange system will work or what the rules, prices and products will be,” Joe Trauger, vice president of HR policy for the National Association of Manufacturers, told Human Resource Executive.

Linda Rowings, Chief Compliance Director with United Benefit Advisors, said that employers who choose to “play” need to make sure they meet the minimum PPACA public option guidelines (available on the Department of Health and Human Services website), have affordable plans and cover all full-time employees.

Multi-state employers face the biggest compliance challenge, Haraden added, since rules and plans differ in various states.

Since many PPACA changes involve “hard numbers crunching,” a skill many HR departments do not possess, employers should start working with employment attorneys or benefit consultants, advised employment attorney Kathy Kudner.

Employee benefit advisor, Mick Constantinou, summarized a number of hidden costs of health care reform in the United Benefit Advisors Insight and Analysis Blog. These hidden costs include:

Increased reporting burdens (whether you “play” or “pay”)
Recruitment and retention challenges
Impacts to employee productivity and morale
Changes in taxable income for both employers and employees

The workforce costs are especially important to consider.

As Business & Legal Resources reported, employees will likely apply pressure to increase wages if employers choose to drop insurance. Since wages are taxable, however, equalizing through compensation would cost more than the cost of coverage.

Employers also need to consider the impact that not offering coverage would have on their ability to attract talent.

Another possible effect of eliminating coverage could be lost productivity. Companies that drop coverage may assume that employees will get insurance from an exchange. However, just as it costs employers less to pay the penalty than it does to pay for coverage, the same is true for individuals.

Ultimately, to play or pay is not an easy decision and many factors are involved. Whatever employers ultimately choose, they need to make the most informed decisions possible – which means they should start preparing now.

About Us
Connelly, Carlisle, Fields & Nichols (CCF&N) specializes in Commercial Risk Services, Employee Services, Human Resource Solutions, Private Client Services and Personal Insurance Services. USAmeriBank (USAB) is the parent company of CCF&N, enabling us to provide the broadest array of insurance and financial solutions possible to help our clients grow.

About United Benefit Advisors (UBA)
One of the nation’s leading independent employee benefits advisory organizations, United Benefit Advisors (UBA) is a Member-owned alliance of more than 140 premier independent benefit advisory firms with more than 165 offices throughout the U.S., Canada and the U.K. As trusted and knowledgeable advisors, UBA partners collaborate with more than 2,000 professionals to deliver expertise, thought leadership and best-in-class solutions that positively impact employers and make a real difference in the lives of their employees and families. Employers, advisors and industry-related organizations interested in obtaining powerful results from the shared wisdom of our Members should visit UBA online at www.UBAbenefits.com.

(Photo credited to: nebgh.org)

DISCLAIMER: Because of the generality of this update, and based on particular situations, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice, financial advice and/or the advice of a licensed insurance or certified human resource professional.

© Connelly, Carlisle, Fields & Nichols 2013

Health care exchanges: just five months away

United Benefit Advisors — Wed, 22 May 2013 08:00:49 +0000

Health care exchanges, a foundation of the Patient Protection and Affordable Care Act (PPACA), launch in five months, yet there is still great uncertainty about how effective they will be among legislators, insurance brokers and advisors.

The central idea of the exchanges is “more choices, greater competition.” Yet, when the exchanges launch in October, people in many states aren’t expected to have a lot of choices, reports Stateline, the daily news service of the Pew Charitable Trusts.

Health economists believe the exchanges will drive more competition to states that already have robust competition among insurance companies (Colorado, Minnesota, Oregon) but won’t add much to states that are dominated by a single insurance company (Alaska, Hawaii, Michigan and Delaware, among others).

The exchanges are designed as private markets operating within federal guidelines, with the purpose of giving Americans who don’t get health insurance from employers the opportunity to choose from an array of private insurance plans, and to generate competition among insurers that will lead to lower premiums, Stateline reported.

Individuals and businesses with up to 100 employers will be able to shop on the exchanges, and people who can’t afford coverage on their own will get government subsidies to help them.

There is some hope that new entrants to the insurance market may provide extra competition.

Some predict that new insurance carriers, made up of hospitals and large physician practices, will emerge. Medicaid managed-care companies, which are used to providing care to low-income people, may decide to offer commercial plans on the exchanges, Stateline reported.

Another option, as reported by Politico, could be CO-OPs (member-governed, nonprofit health carriers), which are new to the scene. CO-OPs, however, have a challenge to compete with large, established insurers, which already have provider networks in place, established reputations and large marketing budgets. Most CO-Ops, on the other hand, have operated for less than a year and have limited resources to mount their challenge.

(Photo credited to: bizjournals.com)

© Connelly, Carlisle, Fields & Nichols 2013

Companies get aggressive on wellness

United Benefit Advisors — Tue, 21 May 2013 15:37:21 +0000

Given that the potential benefits of wellness programs include reigning in runaway health care costs, decreasing turnover and improving productivity, it’s no surprise that companies are eager to increase employee participation.

The most popular way of raising participation rates is through incentives. This is primarily done through rewards and prizes, but increasingly companies are using penalties as a way of spurring employees to take part in wellness programs.

A recent survey by Fidelity Investments and the National Business Group on Health found that nearly 90 percent of employers are offering wellness incentives, rewards or prizes, up from 57 percent in 2009. Reported in The Wall Street Journal, the study also found the perks to be worth more: $521 per employee, compared with $260 four years ago.

Penalties, however, don’t come without risk, including negative reactions from employees. To minimize potential dissatisfaction, companies must communicate clearly and regularly about their wellness programs and goals, ensuring that penalties don’t come as a surprise to employees.

(Photo credited to: corporatewellnessmagazine.com)

© Connelly, Carlisle, Fields & Nichols 2013

Market update on workers’ compensation trends

Charles Chunn — Fri, 17 May 2013 08:00:37 +0000

At the beginning of this year, the National Council on Compensation Insurance (NCCI) changed the methodology that determines an individual employer’s experience modification factor (ex-mod). According to NCCI, the “split-point” change was needed because the average claim cost had increased threefold since the last update, which was two decades ago.

See NCCI changes methodology for ex-mod factors.

In 26 of the 38 states where the plan has been approved, NCCI actuaries sampled over 75,000 risks and calculated the experience mod under each system. NCCI’s sample study indicated the following:

62 percent would see their rates fall less than 5 percent in 2013.
11 percent realized decreases between 5 percent and 10 percent.
4.5 percent of risks realized unchanged rates.
Less than 25 percent of risks would see a rate increase.

Overall, the average mod was 0.98 (a 2 percent discount) under the old system and 0.97 (a 3 percent discount) under the new system.

(Photo credited to: insurancejournal.com)

© Connelly, Carlisle, Fields & Nichols 2013

How to shop and compare homeowner coverage

Jennifer Rabon — Thu, 16 May 2013 08:00:14 +0000

Homeowner insurance rates have climbed 69% in the last 10 years. At the same time, deductibles have increased, certain coverages have scaled back and new restrictions have been added to policies.

Coverage varies widely between carriers and most consumers shop based on price and reputation. Key decision drivers, of course, but it is not always clear what the consumer is buying in terms of exclusion clauses and the dozens of pages of legalese buried in a policy.

Unfortunately, for many consumers, it is not until disaster strikes when they discover what is and what is not covered by their homeowners policy and/or liability coverage.

The reasons for the changes in homeowner coverage and costs are complex:

Homeowners insurance is one of the least profitable types of insurance. According to the National Association of Insurance Commissioners (NAIC), on average firms have lost money on these policies over the past 10 years.
There were 953 “weather events” insurers considered catastrophes in the U.S. in the past five years, compared with 602 in the previous five, according to industry data.

In 2011 the amount insurers paid out for the average claim was nearly double the amount in 2002, according to the Insurance Research Council.
Insurance companies make money in part by investing your premiums. The financial crisis and low interest rates have impacted the industry as a whole.
To help consumers overcome these financial factors and the changing landscape of homeowner coverage, consumers should demand the following from their broker:

- Find a broker who has the greatest access to the market of insurers and get five quotes.

- Compare policies based on the coverage with the same importance as cost and reputation.

- Ask the right questions. Your agent should give you a list of all the riders each carrier provides.
Bundling riders may earn you a discount. Ask how replacement-cost coverage is handled.

- Request a sample policy and read it. A good broker will provide them in advance before they
are bound.

For additional support related to homeowners insurance and protecting one of your greatest investments, read these additional blogs:

(Photo credited to: blog.agentisure.com)

© Connelly, Carlisle, Fields & Nichols 2013

IRS role in health care reform law

Anthony Arcaro — Wed, 15 May 2013 16:06:16 +0000

It has been estimated that over 16,000 new Internal Revenue Service Agents (IRS) will be hired by the time health care reform is fully implemented in 2014. Clearly, the IRS will play a dominate role in health care reform and be the enforcement arm of the government – even deciding who gets included in the health-care mandates.

While other agencies like the Department of Labor (DOL), the Social Security Administration, and the Department of Health and Human Services (HHS) will be monitoring compliance and execution of the law, all agree – and the new applications and tax forms support it – that the IRS will have the biggest role with health care reform.

The Supreme Court ruling last summer largely upheld the law and the law’s mandate that Americans must have health insurance. Noting that the IRS will collect the penalties related to the mandates, the Supreme Court decision labeled the penalties as a tax.

The IRS will be administering 47 tax provisions under the law, including the right to levy a penalty against businesses and individuals who do not provide or acquire qualified insurance coverage. The IRS also has to determine how to distribute annual subsidies to 18 million people who make less than $45,000 a year and thus qualify for subsidies in buying health coverage, as well as how to deliver tax credits to small businesses that buy coverage for workers.

The financial burden for all this IRS enforcement is expected to total $881 million for fiscal years 2010 through 2013, according to the Treasury Department.

The paradox is that the law severely limits the agency’s ability to collect penalties. It can ask for the money, but there are no civil or criminal penalties for refusing to pay it. The IRS cannot seize bank accounts or dock wages to collect it. No interest accumulates for unpaid penalties, but he law allows the IRS to withhold tax refunds to collect the penalty but only if someone overpaid taxes.

Updates on PPACA will continue to happen at a feverish pace throughout 2013. As a partner firm of United Benefit Advisors (UBA), Connelly, Carlisle, Fields & Nichols (CCF&N) has access to the most current information related to PPACA and the tools that help employers and employees determine the impact based on their individual situations.

Email your questions and/or requests for additional information, to PPACAAdvisor@ccfninsurance.com.

(Photo credited to: cnbc.com)

© Connelly, Carlisle, Fields & Nichols 2013

Employers changing work hours as a consequence of health care reform

Anthony Arcaro — Tue, 14 May 2013 08:00:38 +0000

The largest movie theatre chain in the nation, Regal Entertainment Group, recently announced that thousands of their employees will have their work hours cut. The movie chain joins a list of major employers that are preparing for the added costs of the new health care reform mandates, some of which will come into effective later this year.

Whether an intended consequence of the law or not, many of the nation’s employers that depend on the discretionary spending habits of consumers (i.e. entertainment, hospitality, restaurants) are being forced to re-look at their workforce models.

These industries are already challenged by the economic climate and impacts to profit margins. Combine the economic climate with the increased costs of health care related to the law, and the law’s new definition of “full-time employee” and “full-time equivalent” and you have the perfect storm for workforce model changes.

The impact to employee income has been, and will continue to be, dramatic if you consider that your classic 40 hour per week employee in some cases is being reduced to less than 30 hours per week – a greater than 25% reduction in take home pay.

With the economics and politics associated with health care reform, comes the tendency for companies to “knee-jerk” their response. Understanding all available options and their specific impacts to a company’s budget and culture is the most important step a company can take prior to 2014.

As a partner firm of United Benefit Advisors (UBA), Connelly, Carlisle, Fields & Nichols (CCF&N) has access to the most current information related to PPACA and the tools – PPACA Summary Report, PPACA Effects Template, PPACA Calculator, etc. – that help employers determine the impact based on their individual situations.

Email your questions and/or requests for additional information, to PPACAAdvisor@ccfninsurance.com.

(Photo credited to: szeryf.wordpress.com)

DOL releases temporary guidance on the employee notice of exchange options

Mick Constantinou — Mon, 13 May 2013 16:44:51 +0000

The Department of Labor (DOL) has issued two versions of a model exchange notice and basic instructions on issuing the notice. These have been provided as temporary guidance and model notices that employers can use to inform their employees about the Exchanges.

Technical Release No. 2013-02

It should be noted that the Department of Health and Human Services (HHS) now calls the Exchange the “Health Insurance Marketplace,” and DOL refers to the notice as the “Employee Notice of Coverage Options.”

The original deadline for providing this notice to employees was March 1, 2013. The effective date has been changed to October 1, 2013 to coincide with the Exchange or Marketplace open enrollment period. Employers who want to start providing notices sooner can follow this temporary guidance and use these model notices.

IMPORTANT: Employers are not required to provide notices under this temporary guidance and can wait until formal guidance is provided later this year.

One model notice applies to employers that currently offer group health insurance coverage.
http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

One model notice applies to employers that do not offer group health insurance coverage or plan to discontinue offering coverage during 2013.
http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

Employers will be required to distribute notices to their employees by October 1, 2013. The notices require some basic information about the employer — data employees need if they apply for coverage through the exchanges. Open enrollment for the exchanges begins October 1, 2013. The notice is not required to include state-specific information about the exchange.

The notice requirement applies to all employers that are subject to the Fair Labor Standards Act (FLSA). Most employers fall into this category, but there are exceptions. The following link may assist employers in making this determination: http://www.dol.gov/elaws/esa/flsa/scope/screen24.asp.

Email your questions and/or requests for additional information, to PPACAAdvisor@ccfninsurance.com.

(Photo credited to: opuswindowreading.co.uk)

National Flood Insurance Program changes effective October 1, 2013

Charles Chunn — Fri, 10 May 2013 08:00:35 +0000

As a result of the Biggert-Waters Flood Insurance Reform Act of 2012 (BW12), below is a brief summary of changes that will go into effect on October 1, 2013 as part of the National Flood Insurance Program (NFIP). For further details on how these changes will impact flood insurance policies, please contact the Connelly, Carlisle, Fields & Nichols (CCF&N) Commercial Risk Services team at 1-800-797-0441.

Premiums will increase an average of 10% for policies written or renewed on or after October 1, 2013.
A Reserve Fund ratio will be applied to each NFIP policy, except Preferred Risk policies and Group Flood insurance policies, effective on or after October 1, 2013. Reserve Fund amounts will be part of the premium calculation for each policy. The Reserve Fund Assessment for policies effective on or after October 1, 2013 is 5% of the total premium.
The Federal Policy Fee will increase from $40 to $44 for Non-Preferred Risk policies and from $20 to $22 for Preferred Risk policies.
Elimination of no waiting period due to lender requirement – The 30-day waiting period applies to a new application when the lender determines that a loan on a building is in a special flood hazard area that requires flood insurance and does not have it.
Preferred Risk policies issued under the Eligibility Extension Program will see annual increases averaging 20% beginning with new business and renewals effective on or after October 1, 2013. The Extended Eligibility issued policies will be rated with a separate rating table than those properties that are currently mapped in B, C, or X zones.
Pre-Firm increases (including the Reserve Fund Assessment) include a 25% increase above the rates in effect when BW12 was enacted for policies issued on certain properties.
No extension of subsidy to new policies or lapsed policies for Pre-Firm properties in special flood hazard areas and Zone D.

For further details on how these changes will impact flood insurance policies, please contact the Connelly, Carlisle, Fields & Nichols (CCF&N) Commercial Risk Services team at 1-800-797-0441.

(Photo credited to: fema.gov)

Top 10 benefits communication strategies cited by employees

Mick Constantinou — Thu, 09 May 2013 08:00:04 +0000

According to MetLife’s 11th Annual Study of Employee Benefits Trends, employees who gave their companies a benefits communication grade of A or B cited the following as the most-valued benefits communication strategies:

Post-enrollment confirmation of benefits elections – 58%
Personalized messages and materials reflecting individual needs and/or life stages – 53%
Employer benefits website – 53%
Enrollment opportunities throughout the year (voluntary benefits) - 50%
One-on-one meetings – 49%
Online decision-support tools (e.g., calculators, frequently asked questions or FAQs) – 48%
Suggested benefit actions and product options in response to a life event (e.g., birth, marriage) – 43%
Group meetings - 42%
Ongoing education about benefits after enrollment – 40%
Benefits fairs – 38%

The landscape of health care reform is dynamic. Most individuals (i.e. employees) have limited information/education — or worse misinformation — concerning the individual mandate, the employer mandates and the options that will be available to them and their families.

Updates on PPACA will continue to happen at a feverish pace throughout 2013. As a partner firm of United Benefit Advisors (UBA), Connelly, Carlisle, Fields & Nichols (CCF&N) has access to the most current information related to PPACA and the tools – PPACA Summary Report, PPACA Effects Template, PPACA Calculator, etc. – that help employers determine the impact based on their individual situations.

Email your questions and/or requests for additional information, to PPACAAdvisor@ccfninsurance.com.

(Photo credited to: benefitsconnection.co.uk)