The self-insurance/alternative industry is a major force in the U.S. economy, but it is largely invisible to most members of Congress. It is similarly cloaked at the state level.
So why the disconnect? Follow the money trail, or should I say the absence of such a trail.
While it’s rare these days that political contributions can explicitly “buy votes,” the reality is that financial support normally does get you access to politicians, which allows interest groups to deliver their messages in an unfiltered way.
Almost every major industry gets this concept. Sadly, our industry is one of the few notable exceptions.
This conclusion is easily quantified by looking at the political contributions made by the business community generally and the traditional insurance industry more specifically. They dwarf what has been contributed by those with an interest in protecting and promoting self-insurance.
As my role within our industry has evolved over the past few years, I have become what political operatives call a “money man,” which means I am responsible for passing the hat to collect contributions for politicians that we hope will support various legislative/regulatory priorities.
Obviously this role has provided me a unique perspective on our industry’s historic stinginess and naivety about how the political process really works.
Now of course there are exceptions. Many companies and individuals reach for their checkbooks immediately upon request and do this enthusiastically. But in my experience, soliciting political contributions is a tough sell in most cases.
Complicating matters is that political contributions at the federal level must be done through personal checks or credit cards. No corporate money is allowed.
Interestingly, there are countless individuals who have made a very nice living though their involvement in the self-insurance/ART industry, but hesitate when asked to financially support political initiatives that will help the industry. It’s difficult to square this reality.
Other individuals have the mindset that they are willing to write a check, but only when there’s a hot issue. That’s short sighted.
For those of us who clearly understand the concept of insurance, you know you can’t purchase property insurance when your house is burning down or health insurance when in an ambulance on the way to the hospital.
Making targeted political contributions is the equivalent of purchasing insurance to mitigate possible future legislative/regulatory risks.
One complication is that our industry is comprised of corporate buyers (employers) and service providers. These two segments have different motivations and capabilities for political involvement.
Service providers generally have a top-line interest in legislative/developments. In other words, they consider how such developments will affect revenue generation. In my experience this is the most powerful motivation to write a check.
Risk/benefit manager types, on the other hand, are focused on the expense line. They just want to be able to utilize self-insurance vehicles to control costs with minimal regulatory hassles. And while most view this as important, it’s uncommon that they will write a personal check in support of a corporate objective for which they do stand to directly benefit financially.
That’s not a criticism, it’s simply reality. And because of this reality, a large number of people in our industry will be confined to the sidelines of political involvement making it even more important that service providers pick up the slack.
Despite our industry’s historical underperformance in the money game, I am actually cautiously optimistic for the future. My sense is that the messaging just needs to be sharpened so that political contributions are viewed as both insurance and investments.
I will be directly involved in some targeted political fund-raising efforts over the next couple months and expect to have many one-on-one conversations as part of passing the hat. This will give me a new opportunity to test my assumptions.
Will people show me the money? I’ll circle back on this topic in the near future and let you know.
Wednesday, February 9, 2011
Wednesday, February 2, 2011
ADA 2.0 Packs a Sharper Edge for Workers' Comp. Self-Insurers
The landmark Americans with Disabilities Act (ADA) of 1990 substantively changed workplace rules in ways that required employers to adapt a variety of hiring and return-to-work practices in order to maintain compliance.
Now 20 years later, the ADA has been amended and the implications for workers’ compensation self-insurers are significant. At issue is that ADA 2.0 will impose several new restrictions on how return-to-work programs can be structured.
The new final regulations are expected to be released this spring, but in anticipation of this expanded regulatory reach some self-insured employers have already felt the sting.
Over the past the year, the Equal Employment Opportunity Commission (EEOC) has been quietly adding nearly 300 investigators to enforce ADA requirements. Most recently, they have been targeting larger companies (generally self-insured) to determine if their return-to-work programs are ADA 2.0 compliant.
This is a fundamental change in EEOC’s historical approach of investigating claims made by specific employees. In other words, the EEOC is now essentially conducting on-site “audits” to determine possible ADA 2.0 violations.
Companies are already starting to pay big fines as part of negotiated settlements as the EEOC flexes its muscles in advance of the release of final regulations – proactive enforcement, indeed.
For example, late last year Sears settled an EEOC complaint for $6 million in connection with its employee absence policy that was deemed to improperty accommodate disabled workers. United Airlines recently paid more than $600,000 for a policy that refused the allow returning workers with disabilities to work reduced hour shifts.
With the EEOC investigative staffing ramp up, it’s clear that audit and enforcement efforts will pick up significantly this year and likely entangle many workers’ compensation self-insurers with carefully structured return-to-work programs.
The good news is that there are ways that employers can make sure they are ADA 2.0 compliant and we’ll report on that in the coming months.
In the meantime, the march of big government continues.
Now 20 years later, the ADA has been amended and the implications for workers’ compensation self-insurers are significant. At issue is that ADA 2.0 will impose several new restrictions on how return-to-work programs can be structured.
The new final regulations are expected to be released this spring, but in anticipation of this expanded regulatory reach some self-insured employers have already felt the sting.
Over the past the year, the Equal Employment Opportunity Commission (EEOC) has been quietly adding nearly 300 investigators to enforce ADA requirements. Most recently, they have been targeting larger companies (generally self-insured) to determine if their return-to-work programs are ADA 2.0 compliant.
This is a fundamental change in EEOC’s historical approach of investigating claims made by specific employees. In other words, the EEOC is now essentially conducting on-site “audits” to determine possible ADA 2.0 violations.
Companies are already starting to pay big fines as part of negotiated settlements as the EEOC flexes its muscles in advance of the release of final regulations – proactive enforcement, indeed.
For example, late last year Sears settled an EEOC complaint for $6 million in connection with its employee absence policy that was deemed to improperty accommodate disabled workers. United Airlines recently paid more than $600,000 for a policy that refused the allow returning workers with disabilities to work reduced hour shifts.
With the EEOC investigative staffing ramp up, it’s clear that audit and enforcement efforts will pick up significantly this year and likely entangle many workers’ compensation self-insurers with carefully structured return-to-work programs.
The good news is that there are ways that employers can make sure they are ADA 2.0 compliant and we’ll report on that in the coming months.
In the meantime, the march of big government continues.
Monday, January 31, 2011
Judge Heard What Healh Care Law Did Not Say
It’s ironic that the ultimate fate of the nearly 3,000 page Patient Protection and Affordable Act (PPACA) may hinge on what was not included in the legislation.
Today’s ruling by a federal appellate court judge in Florida that the law’s individual mandate provision is unconstitutional is certainly important, but even more significant is that the judge also ruled that entire law must be struck down on the basis on non-severability. In other words, if a single provision does not pass constitutional muster, then it all gets thrown out.
This is particularly interesting because shortly after the passage of PPACA, it came to light that the law did not include a severability provision, which is a pretty standard clause for most comprehensive legislation. To this day no one really knows for sure the reason for this important omission, although the most likely theory is that it was drafting error made in the rush to pass the legislation.
Then-Speaker Nancy Pelosi famously said that we needed to pass the bill to know what’s in it. Apparently we also needed to pass the bill to know what was not in it.
I have written and commented about this small but important legislative detail frequently over the past year. On more than one occasion someone has challenged me that it is not realistic to think that the entre law could be thrown out even if specific provision were voided by the courts. Conventional wisdom misses the mark once again.
So it’s off to the Supreme Court we go and we’ll see if at least five justices hear what the health care law did not say.
Today’s ruling by a federal appellate court judge in Florida that the law’s individual mandate provision is unconstitutional is certainly important, but even more significant is that the judge also ruled that entire law must be struck down on the basis on non-severability. In other words, if a single provision does not pass constitutional muster, then it all gets thrown out.
This is particularly interesting because shortly after the passage of PPACA, it came to light that the law did not include a severability provision, which is a pretty standard clause for most comprehensive legislation. To this day no one really knows for sure the reason for this important omission, although the most likely theory is that it was drafting error made in the rush to pass the legislation.
Then-Speaker Nancy Pelosi famously said that we needed to pass the bill to know what’s in it. Apparently we also needed to pass the bill to know what was not in it.
I have written and commented about this small but important legislative detail frequently over the past year. On more than one occasion someone has challenged me that it is not realistic to think that the entre law could be thrown out even if specific provision were voided by the courts. Conventional wisdom misses the mark once again.
So it’s off to the Supreme Court we go and we’ll see if at least five justices hear what the health care law did not say.
Thursday, January 27, 2011
Self-Insurance Faces a Triple Regulatory Threat
SIIA has reported recently on a series of the meetings with DOL and HHS officials to discuss PPACA-mandated studies on self-insurance. Our assumption is that at a minimum there is ignorance among regulators, but more likely a negative bias pervades.
We are working to head off a DOL report that concludes smaller employers should not self-insure due to solvency concerns and a separate HHS report suggesting that self-insured health plans will negatively impact health insurance exchanges due to adverse selection concerns.
While the policy battle rages on these two fronts, self-insurance is now being targeted by a third team of regulators. The Treasury Department has recently developed a keen interest in stop-loss insurance of all things.
The hook for the IRS folks is that the new health care law limits the tax deduction companies that sell fully-insured health insurance products may take for the compensation they pay to their employees. In other words, if a company sells “health insurance,” the company is subject to this tax deduction limitation. And guess what, it looks like the IRS and Treasury officials are confusing stop-loss insurance with health insurance.
Consider the following excerpt from an IRS publication regarding this tax deduction limitation, requesting comments from the public on:
"the application of the deduction limitation for services performed for insurers who are captive or who provide reinsurance or stop loss insurance, and specifically with respect to stop loss insurance arrangements that effectively constitute a direct health insurance arrangement because the attachment point is so low." (See IRS Notice 2011-2).
So, not only are the Treasury officials asking insurance practitioners how they should treat, for example, stop-loss policies, Treasury is explicitly asking for comments on how they should treat these policies, especially policies with a low attachment point.
Interestingly, this was reported to be a hot subject of discussion at an American Bar Association meeting for tax practitioners last week in Florida. Can you picture a bunch of tax lawyers with no background in self-insurance trying to figure out stop-loss insurance? Yep, that’s a scary thought.
But back to the IRS. Should it conclude that stop-loss insurance can be defined as health insurance for even its limited tax treatment purposes, a troublesome precedent will be established. For more than two decades, SIIA has been largely successful in pushing back on state efforts to regulate stop-loss insurance like health insurance.
A contrary interpretation by the feds will likely embolden those who seek to impose new regulations on self-insured plans via their stop-loss insurers. That’s the last thing the industry needs.
So, with stop-loss insurance under a Treasury Department microscope, self-insurance now faces a true regulatory triple threat. Watch for additional updates on this important developing story.
We are working to head off a DOL report that concludes smaller employers should not self-insure due to solvency concerns and a separate HHS report suggesting that self-insured health plans will negatively impact health insurance exchanges due to adverse selection concerns.
While the policy battle rages on these two fronts, self-insurance is now being targeted by a third team of regulators. The Treasury Department has recently developed a keen interest in stop-loss insurance of all things.
The hook for the IRS folks is that the new health care law limits the tax deduction companies that sell fully-insured health insurance products may take for the compensation they pay to their employees. In other words, if a company sells “health insurance,” the company is subject to this tax deduction limitation. And guess what, it looks like the IRS and Treasury officials are confusing stop-loss insurance with health insurance.
Consider the following excerpt from an IRS publication regarding this tax deduction limitation, requesting comments from the public on:
"the application of the deduction limitation for services performed for insurers who are captive or who provide reinsurance or stop loss insurance, and specifically with respect to stop loss insurance arrangements that effectively constitute a direct health insurance arrangement because the attachment point is so low." (See IRS Notice 2011-2).
So, not only are the Treasury officials asking insurance practitioners how they should treat, for example, stop-loss policies, Treasury is explicitly asking for comments on how they should treat these policies, especially policies with a low attachment point.
Interestingly, this was reported to be a hot subject of discussion at an American Bar Association meeting for tax practitioners last week in Florida. Can you picture a bunch of tax lawyers with no background in self-insurance trying to figure out stop-loss insurance? Yep, that’s a scary thought.
But back to the IRS. Should it conclude that stop-loss insurance can be defined as health insurance for even its limited tax treatment purposes, a troublesome precedent will be established. For more than two decades, SIIA has been largely successful in pushing back on state efforts to regulate stop-loss insurance like health insurance.
A contrary interpretation by the feds will likely embolden those who seek to impose new regulations on self-insured plans via their stop-loss insurers. That’s the last thing the industry needs.
So, with stop-loss insurance under a Treasury Department microscope, self-insurance now faces a true regulatory triple threat. Watch for additional updates on this important developing story.
Monday, January 24, 2011
A Tale of Two Domiciles
This month brought interesting news from two neighboring captive domiciles that portend two different paths in the years ahead.
In Tennessee, Governor Bill Haslam appointed Julie McPeak as the new commerce and insurance commissioner. This is big news for the self-insurance world because not only does McPeak understand alternative risk transfer, she has been an advocate for self-insureds and captives in her capacity as an attorney over the past few years.
Before that, she was the chief insurance regulator for the state of Kentucky and directly contributed to the captive insurance industry taking hold in that state.
Several months ago, then candidate Haslam approached Ms. McPeak to solicit her opinion on how the insurance industry could contribute to economic development in that state. She talked-up captives among other initiatives and apparently her input made a positive impression on the soon-to-be governor.
Tennessee can best be described today as a “dormant” captive domicile because it has a captive insurance statute, but no energy or resources have been committed by either the private or public sector to encourage captive formations in that state.
Ms. McPeak’s appointment has the real potential to change this. Work is already underway to update the state’s captive law to make it one of the most progressive and competitive in the country,
With a favorable law (assuming it can be passed through the Legislature) combined with a regulator who is willing to champion alternative risk transfer solutions, the key ingredients are in place to transform this domicile from dormancy to vibrancy.
Now let’s compare and contrast Tennessee with the nearby domicile South Carolina.
As most industry observers know, South Carolina has seen a reversal of fortune over the last several years as a captive insurance domicile. Its rapid growth and success in the early years has been stalled for some time, largely due to the state’s insurance department, which has increasingly been at odds with the captive insurance industry.
Industry leaders pleaded with newly-elected Governor Nikki Haley to appoint a new insurance commissioner who could restore the state’s status as one of the world’s premiere captive domiciles.
Interestingly, Ms. McPeak’s name had been floated last year as a possible candidate who could rescue captives in South Carolina, but it was obviously not to be.
Instead, Government Haley last week named David Black, CEO of Liberty Life Insurance Company to the post.
Now, Mr. Black does have solid business credentials but he is clearly not an altenative market guy, which means there will be a learning curve about captives at a minimum and no guarantee that he will be an advocate.
This latter point is important because it’s not good enough to be just luke warm about captives. The reason for this is that in order for any captive insurance domicile to grow the bureaucracy must be constantly tamed and that takes top-down leadership imposing a vision of true public-private partnership and demanding results.
The bureaucracy inside the South Carolina Department of Insurance is particularly challenging with regard to the captive application and review process, so the leadership demands are particularly acute.
We will soon see if Mr. Black is up to his challenge. Ms. McPeak is certainly up to hers.
This tale of these two domiciles will continue.
In Tennessee, Governor Bill Haslam appointed Julie McPeak as the new commerce and insurance commissioner. This is big news for the self-insurance world because not only does McPeak understand alternative risk transfer, she has been an advocate for self-insureds and captives in her capacity as an attorney over the past few years.
Before that, she was the chief insurance regulator for the state of Kentucky and directly contributed to the captive insurance industry taking hold in that state.
Several months ago, then candidate Haslam approached Ms. McPeak to solicit her opinion on how the insurance industry could contribute to economic development in that state. She talked-up captives among other initiatives and apparently her input made a positive impression on the soon-to-be governor.
Tennessee can best be described today as a “dormant” captive domicile because it has a captive insurance statute, but no energy or resources have been committed by either the private or public sector to encourage captive formations in that state.
Ms. McPeak’s appointment has the real potential to change this. Work is already underway to update the state’s captive law to make it one of the most progressive and competitive in the country,
With a favorable law (assuming it can be passed through the Legislature) combined with a regulator who is willing to champion alternative risk transfer solutions, the key ingredients are in place to transform this domicile from dormancy to vibrancy.
Now let’s compare and contrast Tennessee with the nearby domicile South Carolina.
As most industry observers know, South Carolina has seen a reversal of fortune over the last several years as a captive insurance domicile. Its rapid growth and success in the early years has been stalled for some time, largely due to the state’s insurance department, which has increasingly been at odds with the captive insurance industry.
Industry leaders pleaded with newly-elected Governor Nikki Haley to appoint a new insurance commissioner who could restore the state’s status as one of the world’s premiere captive domiciles.
Interestingly, Ms. McPeak’s name had been floated last year as a possible candidate who could rescue captives in South Carolina, but it was obviously not to be.
Instead, Government Haley last week named David Black, CEO of Liberty Life Insurance Company to the post.
Now, Mr. Black does have solid business credentials but he is clearly not an altenative market guy, which means there will be a learning curve about captives at a minimum and no guarantee that he will be an advocate.
This latter point is important because it’s not good enough to be just luke warm about captives. The reason for this is that in order for any captive insurance domicile to grow the bureaucracy must be constantly tamed and that takes top-down leadership imposing a vision of true public-private partnership and demanding results.
The bureaucracy inside the South Carolina Department of Insurance is particularly challenging with regard to the captive application and review process, so the leadership demands are particularly acute.
We will soon see if Mr. Black is up to his challenge. Ms. McPeak is certainly up to hers.
This tale of these two domiciles will continue.
Sunday, January 10, 2010
How to Get Life Insurance Even When You Have Cancer?
The first news of being informed that a person in your family has cancer can be annihilating emotionally. The experiences are mostly negative, but it is important to remain positive during this crucial phase in life. There will be surely a lot of thoughts and feelings are going on during this moment.
Often the thought of "I just purchased a life insurance policy before it took place" surfaces. And previously, the chance to be even considered for a life insurance policy wasn't an option or if it is it can be very costly and only offered after a significant period of time after remission.
Nowadays however, you have a lot better opportunities of obtaining for life insurance for men and women with certain kinds of cancer. And the chance to get policies at a normal basis without any extra premium surcharges is quite high and in a few cases it does not involve a long waiting period after the approval.
A couple of life insurance firms in recent decades have upgraded their underwriting features on specific kinds of prostrate and breast cancer.
For instance, a firm will accept a normal issue policy (it subjects to positive medical record, laboratory - x-ray and additional examination results), like a first-time breast cancer patient with insignificant (10 mm. or less; Stage 1) neoplasms and with solid prognosis of high survival rate.
Most companies do this and they provide insurance right away after a surgery but still with a low added charge for a couple of years, then you need to pay for standard premiums. They'll also include preferred premium prices for females with non-invasive (Stage 0) tumors. And Stage 1 cancer bigger than 10 mm. Possibly given after a 'one-year' waiting phase with a non permanent overload. Other cancer cases can qualify you or life insurance policy after a specific time has gone by and you can subject to a favorable offer.
Life Insurance for Cancer Survivors
Many time cancer survivors are simply out of luck the moment they want to purchase life insurance policy. It can be crushing as life insurance policy is an important factor of any solid financial strategy, particularly for a person who is young and productive.The dilemma confronted by life insurance companies is that actuarial figuring for evaluating cancer survivors' risks is simply erroneous. There is a lot of fluctuation in each person and medical fact that cancer survivors can live long is not well understood.
Luckily now, recent medical discoveries and better knowledge on the way to lessen person's risks of having a cancer recurrence make it a lot more probable that cancer survivors can live long on into old age. Consequently, most life insurance companies currently provide insurance coverage to cancer survivors who live well on for a few years, typically 5 years, after the cancer was cured.
A few life insurance firms are increasingly even more generous. For example, by providing insurance policy at normal rates for females at forty or above who suffered breast cancer. The company criteria is that the cancer must a small and localized, still in stage one condition and physicians who certify the consumer has solid forecast for survival rate. They must also finish treatments and follow-up visits with no evidences of the cancer found.
Subscribe to:
Posts (Atom)