Boca Benefits Consulting Group Inc.

BBCG is represented on the board of NAIFA-Pinellas (National Association of Insurance and Financial Advisors, Pinellas County, Florida). The below bullet points are insurance/benefits related items addressed in the Week #8 dispatch from the 2010 regular Florida Legislative Session.  Please see below link to access the dispatch.

• LEGISLATURE SENDS NAIFA-FLORIDA PRIORITY BILL TO THE GOVERNOR (HB 159)
• LEGISLATURE APPROVES LIFE INSURANCE BILL WITH NAIFA-FLORIDA SUITABILITY CE EXEMPTION PROPOSAL (HB885)
• NOVEMBER BALLOT WILL CONTAIN CONSTITUTIONAL AMENDMENT TO EXEMPT FLORIDA  FROM FEDERAL HEALTH REFORM MANDATE (HB 37)
• 2010 SESSION WILL ADJOURN WITHOUT SIGNIFICANT HEALTHCARE REFORMS
• PROPERTY BILL CLEARS SENATE FLOOR; CONSUMER CHOICE STALLED (SB 2044/HB 447)
• NUMEROUS COSTLY MANDATE BILLS FILED

Go to NAIFA archive page for full details.

— Speaking As a Broker 

Twelve Critical Items to Consider 

1. When replacing one stop-loss carrier with another will there be any gap in coverage or significant difference in terms? If the rates and coverage seem too good to be true, there is always a reason. The fundamentals of stop-loss underwriting are the same for every carrier and normally only differences in policy terms or claims handling can allow for large premium and/or claim limit swings. At times carriers will enter into periods of higher than market risk acceptance. This should be a major red flag for employers.  Conversely, carriers which profess to have a “premium book of business” which allows below market underwriting should also be approached with equal caution. It is rarely true, and if so, will likely not be so for long.
2. Never make a carrier change until you have addressed all the potential gaps in coverage (i.e., run-in claims, actively at work requirements, carve-outs sometimes referred to as “lasers”, on-going large claims). The protection of your prior insured carrier’s run-out when you first shifted to self-insurance may be providing you with false comfort regarding the risk of stop-loss carrier change in subsequent years.
3. Know as much as possible about what is in the pipeline on the date of stop-loss carrier change. Don’t be shocked when a large six months old delayed hospital claim comes in to your claims payor the day after you change stop-loss carriers. If your new terms are only on a 15/12 basis (i.e., covering claims three months old but nothing prior to that), it will not be covered by either the prior carrier or the new one. If it is a million dollar heart transplant claim for an out of state dependent you did not know about, a visit to you corporate counsel will likely be next. Unfortunately, neither carrier has done anything wrong. Your broker’s E&O coverage may be a source of recovery. However, even there, the majority of brokers carry E&O policies with severe limits on self-insured activities.
4. Is the stop-loss carrier going to be a “flash in the pan” participant in the excess loss marketplace? Some carriers enter briefly for a quick cash infusion but have no intention of being a long-term player. Short-term carrier strategies mean they do not have to be nearly as customer conscious (i.e., with the plan sponsor and with brokers). They may be out of the business before their poor business practices catch up with them.
5. Is the first year offer no more than a means to gaining an initial foothold with large renewal rates to follow?
6. Don’t be taken in by immature claims to mature claims comparisons. First year renewals will always be big. However, if a carrier bought the business with first year rates, its subsequent first renewal will exceed even normal immature to mature transitions.
7. If virtually every other stop-loss carrier is shying away from a particular underwriting technique, a plan sponsor should be extra diligent in vetting the carrier who offers it.
8. If it is a two-year guarantee on claims limits, or on premium, a plan sponsor needs to ask why the carrier can afford to take on that risk when most other carriers won’t? What has been built into the premium structure or the claims limits over that two year period which makes the risk acceptable to this one underwriter? The answer is likely not favorable to the employer plan sponsor.
9. What is the nature of the carrier’s investment portfolio? If there are large holdings of marginal securities generating high but risky current yields, it may have later underwriting impact on an employer’s stop-loss renewal if those investments suddenly go south.
10. How much of the risk of its book of business does the carrier hold and how much is ceded to reinsurers? If it is a fronting company only (i.e., holds minimal risk internally) employers should be cautious.
11. What is the carrier’s existing loss ratio on its entire block of existing business? If it is eroding fast, the losses will be loaded into future underwriting on all its business.
12. Is the carrier admitted into the state where the employer’s plan situs has been established? If it is a surplus lines carrier (e.g., Lloyds and others) have all the downside risk issues been considered? Has the broker explained to the employer plan sponsor the fundamental differences between the surplus lines market and the admitted carrier market? They are substantial.

Please email us at stoploss@bocabenefits.com for assistance with your self-insured plan’s stop-loss needs.


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In his November 7, 2008 New York Times Economix blog post titled “The Health Care Challenge: Sailing Into a Perfect Storm” Princeton economist Ewe E. Reinhardt tells it the way it is: health care costs accelerate faster than incomes. What he does not say is that it is not a new trend. Having been an employee benefits practitioner of one sort or another for 28 years, I have been an empirical observer of the phenomenon since Read the rest of this entry »

[Below Excepted from Recent Carrier Communication]

 

On October 3, 2008, President Bush signed into law H.R. 1424 – an economic stabilization, energy, and tax extenders package – that included the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

The new law amends the Employee Retirement Income Security Act (ERISA), the Public Health Service Act (PHSA), and the Internal Revenue Code (IRC) to prohibit group health plans that provide mental health or substance use disorder benefits from establishing more restrictive financial requirements (e.g., deductibles and co-payments) or treatment limitations (day/visit limits) for mental health or substance use disorder services than those established for medical and surgical benefits.

The legislation does not require group health plans to offer mental health or substance use disorder benefits. Rather, it establishes parity requirements between medical/surgical benefits and mental health or substance use disorder benefits for group health plans that provide mental health or substance use disorder benefits.

Scope:  Applies to group health plans that provide both medical/surgical benefits and mental health or substance use disorder benefits. Small employers (50 or fewer employees) are exempt from the requirements in this law.

Parity Requirements: Requires parity with respect to both treatment limitations and financial requirements.

• General requirements. Prohibits plans from applying specific financial requirements or treatment limitations to mental health or substance use disorder benefits that are more restrictive than the predominant (most common or frequent) financial requirements or treatment limitations applied to substantially all medical and surgical benefits. Prohibits separate cost-sharing requirements or treatment limitations applicable only to mental health or substance use disorder benefits.
• Financial requirements are defined to include deductibles, copayments, coinsurance or limits on out-of-pocket expenses.  Current federal parity requirements for annual and lifetime limits for mental health services continue to apply.
• Treatment limitations include limits on frequency of treatment, number of visits, days of coverage, or other similar limit on the scope or duration of treatment. 

Definition of Mental Health Benefits: Provides for mental health benefits and substance use disorder benefits to be defined under the terms of the plan and in accordance with applicable state and federal law. 

Medical Management: Plans may be able to utilize medical management practices since the bill states that nothing shall be construed as affecting the terms and conditions of the plan or coverage to the extent that the plan terms and conditions do not conflict with the new parity requirements, but the bill does not specify if medical management practices may vary between medical and surgical benefits and mental health and substance use disorder benefits.  Plans are required to disclose the criteria used for medical necessity determinations, upon request.  The law also requires plans to make available the reason for any denials of reimbursement for such services to participants or beneficiaries, upon request or as otherwise required.  

Out-of-Network Coverage: Plans are required to provide out-of-network coverage of mental health or substance use services in a manner consistent with the parity requirements, if out-of-network coverage is provided for medical and surgical benefits. It is expected that plans will be allowed to manage out-of-network mental health and substance use disorder benefits in a manner consistent with how in-network mental health and substance use disorder benefits may be managed, but the interpretation of this rule is not entirely clear and is likely to be subject to significant scrutiny during the rulemaking process.  

Cost Exemption: The bill includes a cost exemption for employers that experience an increase in claim costs of at least 2% in the first plan year and 1% in subsequent years.  The plan must be in place for the first 6 months of the plan year and the increased costs must be certified by a qualified actuary. 

Relation to State Laws:  Retains current law “HIPAA floor” standard, meaning that federal parity requirements are the “floor”, but state laws may apply to insured plans so long as they do not prevent the application of the federal law.   Florida’s current mental health and substance abuse treatment coverage laws are not as comprehensive as this federal law, so large group plans, whether fully-insured or self-funded, will be required to comply with the federal law. 

Effective date: Plan years beginning on or after one year from the date of enactment unless the plan is collectively bargained, then the effective date is the later of 1/1/09 or the termination date of the collective bargain agreement excluding any extensions.

 

[Below Excepted from Recent Carrier Communication]

 

On October 9, 2008, President Bush signed into law H.R. 2851, “Michelle’s Law,” which requires group and individual health plans to continue to cover otherwise eligible dependent children who take a medical leave of absence from a postsecondary educational institution (e.g., a college, university, or vocational school) due to a serious illness or injury.

 

Key Provisions

The bill applies to both group and individual coverage and amends ERISA, the Public Health Service Act, and the Internal Revenue Code with substantially similar provisions:

 

• “Dependent child” includes a dependent child who was enrolled in the plan or coverage on the basis of being a student at a postsecondary educational institution immediately before the first day of a medically necessary leave of absence.
• “Medically necessary leave of absence” triggers continued coverage for the dependent child and is defined as a leave of absence – or any other change in enrollment – that begins while a dependent child is suffering from a serious illness or injury that causes the child to lose their student status for purposes of coverage under the plan.
• Physician certification. The bill requires that health plans and insurers receive certification by the dependent child’s treating physician that the dependent child is suffering from a serious illness or injury and that the leave of absence is medically necessary.
• No change in benefits. Dependent children on a medically necessary leave of absence are entitled to receive plan benefits, and if the plan changes, these dependents are entitled to receive benefits as provided by the amended plan until their coverage ends.
• Duration of leave of absence. Dependent children on a leave of absence must be covered until the earlier of one year from the first day of the leave of absence or the date on which the coverage otherwise would terminate.
• Notice. Health plans and insurers must include a description of the requirements for continued coverage during medically necessary leaves of absence with any notice about required certifications of student’s eligibility status.
• Effective Date. Plan years beginning on or after one year from the date of enactment.

[For Florida Plans Only — New State Regulation — Some State Clarification Pending]

The below legislation is applicable to all insured medical plans and all self-insured plans not otherwise exempted under ERISA (i.e., governmental, church, etc.). It is not applicable to stand alone products such as dental or vision. As of this writing the major health carriers in Florida have requested further clarification and have indicated that the protocols established to implement it on its effective date may be subject to change.

Dependent coverage legislation (FL SB 2534) enacted by the State of Florida became effective on October 1, 2008.  In new plans starting on or after this date, eligible dependents will have the option to maintain dependent coverage up to the end of the calendar year in which the dependent reaches his or her 30th birthday. For existing plans, the option to offer coverage will occur on the next renewal date after October 1, 2008.  In addition, there is a special open enrollment period between October 1, 2008 and April 1, 2009 for dependents who aged out of their plans prior to October 1, 2008.

A dependent child between the ages of 26 and 30 may request to continue as a dependent on his or her parent’s coverage even after the child reaches the limiting age under the terms of the policy if he or she:

• Is not yet 30 years old
• Is unmarried
• Has no children
• Is a resident of Florida or, if not a Florida resident, is a full or part-time student at an accredited institution of higher education
• Is not eligible for Medicare and is not actually covered under another group or individual health plan.

The employee may make the request to continue the dependent child’s coverage:

• When he or she reaches the limiting age, or
• During the open enrollment period for the group of which the parent is a member on or after October 1, 2008

If you have not been contacted by your carrier rep or broker about this important change in policy wording, you should speak to them as soon as possible.

Notes to this post:

1. BBCG has licensed agents in Florida and Washington D.C.  For other prospects, we will most often make the appropriate referral. In cetain cases, where it makes economic sense, BBCG will have an agent request a non-resident license in the appropriate state.

2. Golden Rule has changed its name to UnitedHealthOne as a subsidiary of United Healthcare.

3. BBCG now offers CIGNA indidivual and small group health plans in this same market segment.

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BBCG has selected Golden Rule, a United Healthcare company since 2003, as its primary carrier for the needs of individuals and families in Florida. We offer qualified HSA, traditional high deductible, and traditional copay type plans for individuals and families without access to employer sponsored group insurance programs. In addition to full benefit plans, there are also available “saver” type plans which provide high cost services coverage while trading off frequent lower cost services in return for lower premium levels (i.e., sometimes referred to as “catastrophic” type plans). Short term medical plans (i.e., up to six months) are also available for those temporarily between group sponsored plans.

These plans are excellent for those persons who are self-employed, who have taken early retirement, who are at the end of their COBRA eligibility, for students who have exceeded the limiting age of their parent’s group plan, who individually purchase health coverage with the assistance of their employers, etcetera.

These plans are also excellent for the public sector employee with one young dependent child (25 or less) who is in relatively good health. We have seen the standard underwriting of school systems, cities, tax districts, etc., pass along the average age skewing of the group to the “+1” dependent even when that dependent is actually substantially younger than the average. Retirees who may pay the entire true cost of the dependent coverage on a college age child would be well served to consider Golden Rule individual coverage. In addition to price, there is substantial flexibility in plan designs.

Those purchasing individual Golden Rule medical are also now eligible for two excellent Golden Rule dental plans.

Golden Rule plans are individually medically underwritten and are issued under a group association master contract. As such they cannot be considered “group insurance” plans per se. However, for smaller employers who facilitate the individual purchase of health coverage by their employees, a list bill to the employer can be provided as a vehicle for individual employee payment.

Although we feel Golden Rule’s on-line quoting and application procedures are state-of-the-art, as well as both flexible and price competitive, if a client does not feel they meet their needs adequately, BBCG has numerous other individual carrier markets from which we can solicit proposals.

Link for Free On-line Golden Rule Quote

 

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