Millennials & Their Impact on Your Workforce

Thank you for your interest in our seminar. Below is a link to the materials that we will be covering during the event. Please feel free to print and bring a copy with you or download it to your mobile device. 

View the presentation and supporting materials.

Event Information

Thursday, June 20, 2013
8:30-11:30 AM (breakfast and registration begin at 8 AM)

Golden Valley Golf & Country Club
7001 Golden Valley Road
Golden Valley, MN 554027

Thank your for your interest in our seminar. Below you will find a link to the presentation materials.

View the presentation PDF.

Do you have a question or specific area of interest you'd like our speaker to address?

Let us know! 

Thanks for submitting your request for additional information on cyber liability insurance. We will be in touch with you soon!

 

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Health Care Reform & Benefits Compliance 

Thank you for your interest in our seminar in Owatonna.

Below you will find a link to the seminar presentation and a link to our upcoming events.

Health Care Reform & Benefits Compliance presentation

Upcoming Seminars

Health Care Reform & Benefits Compliance 

Thank you for your interest in our seminar.

Below you will find a link to the seminar presentation and a link to our upcoming events.

Health Care Reform & Benefits Compliance presentation

Upcoming Seminars

OSHA Audits & How to Defend Against a Citation

Thank you for your interest in our seminar. If you would like a copy of the presentations at the seminar, please feel free to print them out and bring them with you or download them to a portable device.

OSHA Audits Presentation

Defend Citations Presentation

Upcoming Seminars

Labor & Employment Law Updates 

Thank you for your interest in our seminar that took place on January 16, 2013.

Below you will find a link to the seminar presentation and a link to our upcoming events.

Labor & Employment Law Updates presentation

Upcoming Seminars

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Your inquiry is important to us, and you should hear from us shortly. If you have more immediate concerns, please contact us at PREVENT@rjfagencies.com. 

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Complete insurance protection starts with an insurance agency that understands your business.

RJF, a Marsh & McLennan Agency LLC company, has developed a professional liability insurance program for companies in the drug testing and substance abuse program management industry. This program is now available to SAPAA members to protect them from the risks unique to this specialized industry.

Regardless of your size, RJF’s service platform can reduce your risk, provide coverage consistency and make the insurance process easier, providing you with added time and resources to build your business. The RJF team is prepared, experienced and excited to help.  

To get a quote, please complete the following form. You should hear back from us within just a few days.

If you want more information or have questions, contact Emily Tschimperle at 763-746-8247.

You will be redirected shortly to our partner's Web site where you can get a free online quote. If your browser doesn't automatically redirect you, click here.

Thanks for signing up to receive RJF email publications. If you have any suggestions for content, please never hesitate to let us know at PREVENT@rjfagencies.com. 

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RJF offers several online tools that help make dealing with insurance and all its complexities easier.

DEALERS MONTHLY REPORT: Helps auto dealer clients quickly and easily report inventory and calculate monthly premium payments.

RJF RISK MANAGEMENT CENTER: Manage COIs, accidents and access library of best practices, forms and policies.

MYWAVE®: Your insurance, employee benefits and Human Resource tools are easily accessible 24 hours a day.

HRCONNECTION®: Helping you keep employees well informed for a better employer/employee relationship.

ETFILE ONDEMAND: Access your insurance documents electronically through this secure, HIPAA-compliant online portal.

Access Online Certificates of Insurance

• Townhome and Condo
• All Other

Who, what, why, and how?

September 14, 2011

September is Life Insurance Awareness Month, so we'd provide a quick overview of the product and some things you might want to consider.

Many of your employees rely on your company for all or most of their insurance coverage. Because of this, you may want to consider offering life insurance. Whether group-sponsored or voluntary, this coverage offers protection and security for your employees’ families.

The Statistics

• According to LIMRA, one-third of adults in the United States carry no life insurance.
• Many more have less coverage than experts recommend, and in the event of their death, the coverage may not adequately provide a secure financial future for their families.
• 95 million adult Americans have no life insurance, and most of those who do have far less coverage than most financial experts recommend.[1]
• Both men and women are less likely to own life insurance today than they were in 2004—only 61 percent of men and 57 percent of women have some sort of life insurance coverage.[1] 
• Today, more insured adults depend solely on group life insurance for their only life insurance coverage than in the past.[1]

Who needs life insurance?

Life insurance is for anyone who has dependents who rely on them for financial security. Dependents can include children, spouses, parents or other relatives for whom the insured individual is a caretaker.

Why offer life insurance?

Life insurance protects surviving family members and dependents from unexpected financial strain.

Because terminal illnesses and death are unplanned—and therefore unbudgeted—events, life insurance is designed to help cover immediate and future costs that would have been funded through future earned income. This can include funeral expenses, housing, income that maintains the family’s standard of living, and children’s tuition bills.

Without life insurance, families are often forced to dip into their savings, work additional hours, obtain additional loans, and downgrade their lifestyle.

Lastly, the perceived value of this benefit to employees often greatly outweighs the costs, which are usually nominal or nonexistent for you, the employer. A more secure employee is a more productive one.

Find out more

Employers can easily offer the benefits of life insurance to their employees. RJF’s Benefits representatives would be happy to discuss the many options and types of plans available.

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Seminars, Webinars, Workshops and other Trainings

RJF wants clients and the business public to understand risk and how it can be prevented. By gaining a better understanding of business risk and how insurance and risk management practices can be used effectively to prevent risk, you’ll be able to make the best decisions for you and your organization.

Broadly, our topics include:

• Human resources
• Health management
• Safety and loss control
• Regulatory compliance
• Claims management and prevention
• Commercial property & casualty insurance
• Employee benefits

EVENT TYPES

Click on the type of event below to learn more, view schedules and register.

Organizational Leadership 

If you have attended any of our seminars or Webinars, you know that in order to create a world-class culture, it is imperative to have leaders at all levels who are open to change, including changing the way they view themselves and the people around them. This shift in thinking allows them to become more intentional about their thoughts and actions.

FINDING A SOLUTION

Intrinsic Coaching® focuses on how to foster a real shift in thinking with repetition and practical application in day-to-day life. We advise companies to consider Intrinsic Coaching® as part of a comprehensive wellbeing, culture change or leadership development strategy.

In partnership with Intrinsic Solutions International, RJF/MMA holda Certified Intrinsic Coach^® training, lead by Rosie Ward. The program is comprised of two segments, each 12 weeks in length. It is held via conference call two hours per week (50 hours total). Upon completing this program, you will also earn a certification as a Certified Intrinsic Coach^®, the goal is not really necessarily to become a coach but to learn the foundation of Intrinsic Coaching^® – which allows you to be more intentional about your thinking, increase your self-awareness and better develop people.

Who should attend?

• C-Level Executives
• Company Leaders
• Directors

We are currently in the middle of an Intrinsic Coach Training series. To be notified when our next training is scheduled, please email Emily Reller to be placed on the interest list. 

If you have any questions about training, please contact Rosie Ward. 

For more information about Intrinsic Coaching^®, visit their Website.

At this Webinar, Rosie Ward will talk about how the key to sustainable change is to move away from trying to change and control behaviors to focusing on shifting how a person thinks about choices.

Leaders need to shift how they think about people in order for culture improvement and employee engagement efforts to succeed. Likewise, sustainable change on an individual level requires people to take ownership of their own engagement and well-being.

Key discussion points:

• The meaning and value of "best thinking" and how it changes the way people interact with each other. 
• Real life examples of organizations who found success in improving culture and engagement by shifting the way they think.
• The affect sustainable change can have on an organization.

View the presentation.

View the recorded Webinar.

The Affordable Care Act has the best in the business confused and overwhelmed by the many provisions that go into effect in 2014. Learn what you need to do to be in compliance with the law while managing the benefits your employees have come to expect. 

RJF/MMA Compliance Consultant Terra Hudlow will discuss the latest issues in Health Care Reform and compliance. Make sure you are aware of all of the changes that are going into effect this year and in 2014.

Key discussion points:

• Public vs. Private Exchanges
• 90-day waiting period limits
• PCORI fees
• Summary of Benefits & Coverage requirements
• Wellness Program regulations

View the presentation.

View the recorded Webinar.

During this Webinar we will explore the Risk Management Center, a tool employers can use to prevent risk to their organization. The Risk Management Center enables employers to access to numerous features that include a safety library, automated MSDS storage, incident tracking, training, job hazard analysis developer and more. Find out how the Risk Management Center can help you control costs and lower your insurance premiums.

Key discussion points:

• Features of the Risk Management Center
• How the Risk Management Center can lower your cost of risk
• Best practices 
• Case studies

View the recorded Webinar.

Many employers are finding themselves challenged to provide competitive benefits packages that attract and retain top talent. During this Webinar, we will discuss the top trends in voluntary benefits. Learn how your company's benefits package compares to national trends and some new offerings you can bring to your employees for little or no cost to you.

Key discussion points:

• Importance of traditional benefits 
• Why offer voluntary benefits to employees
• How voluntary benefits can help you attract and retain employees
• Ideas for companies considering adding voluntary offerings to their benefits package
• National voluntary benefits trends

View the recorded Webinar.

View a PDF of the presentation.

This is a free Webinar brought to you by RJF, a Marsh & McLennan Agency LLC company. If you have any questions regarding any of our events, please contact Emily Reller.

There are many options available to employers to fund their benefits program. It can be challenging to assess which option will have the most benefit for your employees and balance sheet. It is imporant for employers to evaluate their options on a regular basis and choose a funding strategy that will pose the least amount of risk to their company's financial stability.

RJF/MMA Benefits Consultant John McDonough will discuss different options available to fund heath care benefts and things that should be considered as an organization grows and the market changes.

Key discussion points:

• Different funding mechanisms to fit your environment
• Risk vs. reward
• How to affect your total cost of risk
• Regular strategic evaluation of funding sources as your company grows

View the recorded Webinar.

View the presentation PDF.

This is a free Webinar brought to you by RJF, a Marsh & McLennan Agency LLC company. If you have any questions regarding any of our events, please contact Emily Reller.

During this Webinar, RJF Claims Consultant Cassandra Coopet will discuss what your duty is as an employer concerning workers' compensation injury identification and reporting. She will also talk about workers' compensation program best practices and how to effectively measure your workers' compensation process. 

Key discussion points:

• Defining workers' compensation
• The waiting period for workers' compensation benefits 
• The importance of timely reporting
• Return-to-work/ Light Duty Practices
• Evaluating your workers' compensation process.

View the recorded Webinar.

View the presentation.

Fraudulent workers' compensation claims can be a resource drain on your organization. They take up time, money and can even affect the productivity of other employees. To make matters worse, fraudulent claims that go into litigation can add toxicity to the workplace.

RJF Claims Consultant,Cassandra Coopet, discusses how to navigate the workers' compensation system when dealing with a potentially fraudulent case.

Key discussion points include:

• Define and explore workers' compensation fraud.
• How to communicate with an injured employee.
• Tips for investigating a claim's validity.
• How to avoid having a claim go to litigation.
• A guide to the litigation process.

View the recorded Webinar.

This is a free Webinar, brought to you by RJF, a Marsh & McLennan Agency LLC company. If you have any questions regarding RJF events, contact Emily Reller.

A Webinar Led by Dan Hanson, Director of Management Liability

Most organizations hold a great deal of confidential data such as social security numbers, credit cards, protected health information, intellectual property of clients, and much more. Breaches occur from simple acts or oversights such as a laptop with confidential information being stolen or printouts intended for shredding being thrown out and retrieved. Breaches can happen because of outside hackers and even from the inside through customers, employees or vendors.

RJF's cyber liability expert, Dan Hanson, discusses the most common causes of breaches and some simple risk prevention measures you can take within your organization to minimize your exposure.

Key discussion points:

• Common causes of breaches.
• Proper data disposal procedures.
• Prevention steps you can take to lessen the impact of a cyber crime should your company fall victim to one.

View the recorded Webinar

This is a free Webinar, brought to you by RJF, a Marsh & McLennan Agency LLC company. If you have any questions regarding RJF events, contact Emily Reller.

A Webinar led by Surety Consultant Jeff Settem

Businesses often lump surety with insurance. While both products help prevent risk, they are very different. If bonding is a part of your business, it’s vital you understand the effects surety can have on your business.

In this Webinar, Surety Consultant Jeff Settem will provide insights into how surety works, and what is required of all parties (buyer, agent, and carrier) to make it work effectively and help youstay focused on building and growing your business.

Key discussion points include:

• Why financials are important to surety
• Indemnity agreements and why spouses have to sign along with the business owner
• What are the surety agent’s responsibilities
• Strategies to help reduce bond costs
• Does a surety’s credit rating have an effect on bonding
• What to expect in a claim situation

VIEW THE WEBINAR RECORDING

Employee turn-over can drain your organization's resources. Not only does it have a financial impact, but it also affects your company culture. It is important to evaluate your company's hiring process to ensure you hire the right person the first time.

During this Webinar, RJF consultants will discuss hiring process best practices and the importance of pre-employment screening. They will also lead you through a self-scoring process so you can assess where your company is doing well and where improvements can be made in your hiring process. 

Key discussion points:

• The importance of a formal hiring process.
• The impact a formal hiring process can have on worksite safety and workers' compensation claims.
• Procedures and practices you can implement in your company to improve your hiring process.
• EEOC compliance.

Speakers:

• Cassandra Coopet, Claims Consultant
• Heather Roiger, HR Consultant
• David Rumsey, Safety Consultant

Materials:

Pre-Employment Screening Checklist

View the presentation.

RJF Compliance Consultant, Terra Hudlow discusses the latest in Health Care Reform and compliance. Make sure you are aware of all of the changes that are going into effect in 2013.

Key discussion points:

• Preparing for 2013
• An overview of current guidance and regulations
• Review of the guidance to determine full-time status and why it is important
• The latest information about insurance exchanges

View recorded Webinar.

View the presentation.

This is a free Webinar brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding any of our events, please contact Emily Reller. 

We all know that due to the Affordable Care Act, changes are coming. 

During this Webinar, RJF Compliance Consultant Terra Hudlow, will discuss the changes you need to be ready for to make sure your benefits and compensation plans are in compliance with the ACA.

View the Webinar recording.

For the past 20 years the National Council of Compensation Insurance (NCCI) has not made any changes to the to how an experience modification factor for a company is calculated. Beginning January 2013, the NCCI will make changes to how an employers’ experience modification factor is calculated, which may influence your insurance rates.

Your e-mod factor is a telling statistic of the effectiveness of your safety and claims procedures and can directly impact your workers’ compensation premium. Join us as RJF Claims Consultant, Cassandra Coopet, discusses why these changes are being made and what they will mean to you as an employer.

Key discussion points: 

• Steps to take before these changes take effect.
• Experience Modification update facts.
• How the NCCI change may impact your company.

For most mid-size employers, health care benefits costs continue to increase and have become one of their largest company expenses. Managing these costs is a business priority.

During this Webinar RJF, in partnership with Trion, a Marsh & McLennan Agency LLC company, discusses a creative new strategy for long-term health care cost control and savings called a medical plan captive. 

Key discussion points:

• Lowering fixed costs through aggregate purchasing programs.
• Improving cost-control decisions through transparent medical claims reporting and analytics.
• Implementing risk prevention programs that impact future, long-term health care costs.

View the Webinar recording.

Having a safety committee seems simple enough, however many organizations struggle with how to start and maintain an effective safety committee. While having the best intentions, a committee without the right support and guidance can quickly become defunct.

During this Webinar RJF Safety Consultant David Rumsey, discusses how to keep your safety committee effective to help you to attain the ultimate goal of a culture of safety.

Key discussion points:

• Utilizing the talents of your safety committee.
• Keeping committee members engaged.
• Equipping your safety committee with tools and resources they need to be effective.
• How to solicit employee buy-in regarding committee initiatives

View the Webinar recording.

View the presentation.

This is a free Webinar, brought to you by RJF, a Marsh & McLennan Agency LLC company.
For questions, email Emily Reller or call her at 763-548-8896.

The safety of your employees is of the utmost importance. Not only do accidents affect your insurance premiums, but they also affect your culture and your most important investment, your employees.

During this Webinar RJF Safety Consultant David Rumsey, discusses the indicators of success in an effective safety program. You will learn how to evaluate the effectiveness of your safety initiatives and how to measure your safety culture.

Key discussion points:

• How safety culture can influence at-risk behaviors.
• The importance of the ABC's (accountability, behavior, culture) in achieving excellence in safety.
• How to use leading and lagging indicators to gauge your safety program.

View the Webinar recording.

For questions, email Emily Reller or call her at 763-548-8896.

During this Webinar, RJF's Health Management Services Manager Rosie Ward talks about how the key to sustainable change is to move away from trying to change and control behaviors to focusing on shifting how a person thinks about choices.

Leaders need to shift how they think about people in order for culture improvement and employee engagement efforts to succeed. Likewise, sustainable change on an individual level requires people to take ownership of their own engagement and well-being.

Key discussion points:

• The meaning and value of "best thinking" and how it changes the way people interact with each other. 
• Real life examples of organizations who found success in improving culture and engagement by shifting the way they think.
• The affect sustainable change can have on an organization.

View the recording.

View the presentation.

Developing current and future leaders is critical to the growth and sustainability of any organization. No culture change or employee engagement effort can succeed without quality leaders.

During this Webinar, Rosie Ward and Heather Roiger discuss how effective leadership development needs to be approached with a long-term strategy, just like any other organizational initiative.

Key discussion points:

• Tools and considerations for addressing the strategic and practical needs for developing effective leaders. 
• Creating career ladders, talent management plans and competency models.
• Effectively leveraging performance evaluation systems.
• Creating a culture that encourages people to take on leadership roles and responsibilities.

View the recording.

View the presentation.

Building a world-class culture requires having clear baseline measurements of your current culture and engagement. It also requires you to utilize quality metrics to guide change and improvement efforts on both an organizational and individual level.

During this Webinar, RJF's Health Management Services Manager Rosie Ward and HR Consultant Heather Roiger discuss:

• How to effectively implement a culture survey.
• How to leverage and communicate culture survey results.
• Practical considerations for utilizing the Judgment Index™ assessment instrument.
• How individual reports can be combined with culture survey feedback to maximize results

View the presentation.

Bridging the Generational Gap

Recruiting and retaining top talent is crucial for any organization to be successful. Employees from different generations have very different attitudes and motivators when it comes to choosing a place of employment. 

During this workshop, RJF HR Consultant Heather Roiger will show employers how to appeal to different generations in an employment offer and then deliver on the promises that were made. Attendees will walk away with practical examples and templates of career ladders, talent management programs, benefits packages that appeal to specific generations and career maps. 

Space is limited and registration will be disabled once we reach our maximum capacity. 

All attendees should bring their hiring plans for the year as well as information on their turnover rates.

INFORMATION

Tuesday, October 29 PLEASE NOTE THE NEW DATE
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

REGISTER HERE

Creating a Three to Five Year People Strategy

It can be a struggle to take the time to think strategically about your hiring practices, let alone map out a plan. The importance of thinking about your long term hiring plan in just as important as having a solid business plan.

During this workshop, MMA HR Consultant Heather Roiger will walk attendees through how to create a three to five year people strategy. Attendees will walk away with a customized template they can use to craft a strategic plan as well as the knowledge needed to analyze their company's future needs. 

Information

Wednesday, December 4
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

Register Here

More information will be available soon. Please check back. 

More information will be available soon. Please check back. 

Under the Employer Shared Responsibility Rules, an employer must offer coverage to all full-time employees or possibly pay a penalty. Most employers have no clear picture of how their organization may be impacted financially by this rule.

Join us as RJF Compliance Consultant Terra Hudlow leads a "Pay or Play" workshop where we will analyze each impact scenario specific to your organization. Get the hard numbers and find out which option will be best for your organization and your employees.

The tool will estimate the number of employees you have who may be eligible for subsidized coverage on the insurance exchange, and if purchased, what penalties may be triggered to you, the employer. We will also look at other scenarios such as the requirement to offer coverage to all full-time employees and the impact if an employer chooses to not offer coverage at all.

Key discussion points:

• Health Care Reform update.
• Review of the 2014 employer shared responsibility rules.
• The financial impact and options available to workshop attendees.
• Ways you can minimize potential penalties.

Please note: Each attendee will received a financial impact analysis specific to their company. In order to provide this, we will need each attendee to provide census and basic plan information in advance. RJF's Benefits team will guide all attendees through this process. RJF's impact analysis tool only works for companies with at least 50 full-time equivalent employees and companies that do not have age-banded medical rates.

Space is limited and registration will be disabled once we reach our maximum capacity. 

Information

Tuesday, October 15
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

Register will open soon. Please check back. 

More information will be available soon. Please check back. 

Tap Into the Talent & Realize the ROI

Engaging and motivating the incoming workforce is a task many companies are finding challenging. This generation is tech savvy, works well in teams and has very high expectations of their place of employment. Many have also never experienced failure, have unrealistic expectations and still have a lot to learn when it comes to fuctioning in an office environment.

During this workshop, you will learn strategies to develop and motivate this generation. Attendees will walk away with practical programming they can put into place that will engage and develop this new generation of employees.

Information

Tuesday, August 27
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

Register Here

Health Care Reform Impact Analysis

Under the Employer Shared Responsibility Rules, an employer must offer coverage to all full-time employees or possibly pay a penalty. Most employers have no clear picture of how their organization may be impacted financially by this rule.

Join us as RJF Compliance Consultant Terra Hudlow leads a "Pay or Play" workshop where we will analyze each impact scenario specific to your organization. Get the hard numbers and find out which option will be best for your organization and your employees.

The tool will estimate the number of employees you have who may be eligible for subsidized coverage on the insurance exchange, and if purchased, what penalties may be triggered to you, the employer. We will also look at other scenarios such as the requirement to offer coverage to all full-time employees and the impact if an employer chooses to not offer coverage at all.

Key discussion points:

• Health Care Reform update.
• Review of the 2014 employer shared responsibility rules.
• The financial impact and options available to workshop attendees.
• Ways you can minimize potential penalties.

Please note: Each attendee will received a financial impact analysis specific to their company. In order to provide this, we will need each attendee to provide census and basic plan information in advance. RJF's Benefits team will guide all attendees through this process. RJF's impact analysis tool only works for companies with at least 50 full-time equivalent employees and companies that do not have age-banded medical rates.

Space is limited and registration will be disabled once we reach our maximum capacity. We will be holding one more Pay or Play workshop in December.

Information

Tuesday, August 20
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller. 

Register here

Health Care Reform Impact Analysis

Under the Employer Shared Responsibility Rules, an employer must offer coverage to all full-time employees or possibly pay a penalty. Most employers have no clear picture of how their organization may be impacted financially by this rule.

Join us as RJF Compliance Consultant Terra Hudlow leads a "Pay or Play" workshop where we will analyze each impact scenario specific to your organization. Get the hard numbers and find out which option will be best for your organization and your employees.

The tool will estimate the number of employees you have who may be eligible for subsidized coverage on the insurance exchange, and if purchased, what penalties may be triggered to you, the employer. We will also look at other scenarios such as the requirement to offer coverage to all full-time employees and the impact if an employer chooses to not offer coverage at all.

Key discussion points:

• Health Care Reform update.
• Review of the 2014 employer shared responsibility rules.
• The financial impact and options available to workshop attendees.
• Ways you can minimize potential penalties.

Please note: Each attendee will received a financial impact analysis specific to their company. In order to provide this, we will need each attendee to provide census and basic plan information in advance. RJF's Benefits team will guide all attendees through this process. RJF's impact analysis tool only works for companies with at least 50 full-time equivalent employees and companies that do not have age-banded medical rates.

Space is limited and registration will be disabled once we reach our maximum capacity. We will be holding two more Pay or Play workshops, one in August and one in October.

Information

Thursday, June 13
8:30-10:30 AM (breakfast and registration begin at 8 AM)

RJF, a Marsh & McLennan Agency Office
7225 Northland Drive North, Suite 300
Minneapolis, MN 55428

This is a free workshop brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller. 

Registration is now closed. Please look at our workshop schedule for future dates. 

Many, many thanks to you for taking up our challenge. We couldn't do it without you!

Platinum ($10,000 +)
                                

Gold ($5,000 - $9,999)

Employees of RJF/MMA

Silver ($2,500 - $4,999)

• Western National Insurance

Bronze ($1,000 - $2,499)

• Assurant
• Delta Dental of Minnesota
• Harleysville Insurance

Challenge Friends (All other donations)

• Neil Machen
• MetLife - Eric Svobodny
• Tor Forsgren

WE CHALLENGE YOU!

With the help of our insurance carriers, business partners, clients, and employees, RJF will officially lauched the 2013 Charity Challenge drive on June 3.

This year's goal is to raise $280,000 by August 30 for two non-profit organizations that focus on the health (Children's Hospitals and Clinics of Minnesota) and development (College Possible) of young people in our community.

JOIN US AND IMPACT THE LIVES OF CHILDREN AND THEIR FAMILIES

These two deserving charities count on support from the community. Together, we can help more children than we ever have before. 

When you donate, you will be helping to support two mother-baby rooms at Children's Hospital Minneapolis Campus and provide low-income students with crucial college preparation courses and financial aid through College Possible. 
           
Pledge to contribute today. RJF and Marsh & McLennan Agency will provide a 30% match to all contributions made. Learn more about our sponsorship levels. Make a pledge online!

Hear from RJF CEO Bill Jeatran about why we sponsor Children's Hospitals and Clinics of Minnesota and College Possible.

 We appreciate our contributors! See who has met the challenge!

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LEARN MORE about the charities

Children's Hospitals and Clinics of Minnesota

We selected Children's Hospitals and Clinics of Minnesota because they champion the special needs of children and their families by providing affordable, accessible, and adequate health care regardless of economic or cultural barriers they might have elsewhere. It also recognizes that when a child is sick, it affects the entire family. Children’s Hospitals and Clinics of Minnesota is committed to the well-being of each child and family that comes into its care. Make a pledge.

 

College Possible

We selected College Possible because it is making a direct impact on the development of youth in our communities by providing college preparation and admission support to low-income students in the Twin Cities and Milwaukee areas. Help children in our community by making a pledge today.

See what we've done in years past

2011

• Amount raised: Over $145,000
• Beneficiary: Admission (now College) Possible and Children’s Hospitals & Clinics of Minnesota.
• How we helped: Prepared low-income students for college and funded a private room in the new Mother-Baby Center at Children’s Minneapolis campus.
• Events: On-site volunteer event for Children’s involved nearly 100 RJF employees and carrier partners.

2010

• Amount raised: Over $110,000
• Beneficiary: Admission (now College) Possible and Children’s Hospitals & Clinics of Minnesota.
• How we helped: Prepared low-income students for college, funded a private neonatal intensive care unit (NICU) room at Children’s and supporedt Children’s Hospital’s Charitable Care Fund.
• Events: On-site volunteer event for Children’s involved nearly 100 RJF employees and carrier partners

2009

• Amount raised: Over $60,000
• Beneficiary: Second Harvest Heartland and CommonBond.
• Events: On-site volunteer events alongside our carrier partners at both organizations (sorted dry goods; “spring cleaning” a CommonBond property).

Last week, RJF held a reception to celebrate its 2012 Charity Challenge, which is our capstone philanthropic event. I was extremely proud to present more than $250,000 to Children’s Hospitals and Clinics of Minnesota and College Possible, two outstanding and deserving charities devoted to improving the lives and wellbeing of children and their families in the communities served by RJF.

Giving to local charities is part of what makes us who we are. In addition to its financial support, RJF provides numerous opportunities throughout the year for employees to support other charitable causes. Our charity committee meets regularly to come up with ideas of how we can provide the most help, whether through donations of peoples’ time, talents or assets. And RJF regularly has teams participate in various charity walk/runs or bicycle rides throughout the year.

We established a corporate philanthropic vision a few years ago to help guide our efforts and ensure that we keep our energy focused. And while we’ve narrowed our focus, our impact has widened. Over the past few years, we’ve collected and contributed—thanks to the generosity of our insurance carrier and business partners and even some clients—more than half a million dollars to these two organizations alone.

The money we gave to College Possible will enable that organization to put 110 high school students through their core program, which helps students attain access to a college education by funding and providing ACT and SAT practice tests, coaching, campus visits and even postage for college applications. Taking into account their 98% success rate, these donated funds will help 107 of those 110 kids get accepted to college—a dream for many of these disadvantaged youth and their parents.

The donation to Children’s Hospitals and Clinics of Minnesota will help fund two rooms at The Mother Baby Center, which will open in February. This facility will “integrate Abbott Northwestern’s maternity and newborn services with Children’s NICU, Special Care Nursery and Infant Care Center (ICC), all under one roof.” I’ve been amazed at how many of our own employees’ lives have been intimately touched by Children’s. In fact, the doctors and nurses at Children’s saved my son’s life when he was only days old.

RJF’s Charity Challenge allows us to give back and pay it forward at the same time. And it allows us to do this alongside and in partnership with the people who help make our own organization successful—our partners at all levels: Carriers, suppliers, clients and advisors. Your ongoing support and efforts on our behalf are appreciated more than you might realize. Knowing the people with whom we do business are concerned about and trying to improve their communities makes those business dealings richer and more rewarding. Thank you.

Next year we expect even greater results. Consider joining us and helping us create better lives for children. Be prepared, we’ll come asking.

Enjoy your fall!

Bill Jeatran is the chief executive officer of RJF. 

>> Read the press release on the 2012 Charity Challenge.

More information will be coming soon. Please check back. 

RJF/MMA Compliance Consultant, Terra Hudlow discusses the latest in Health Care Reform and compliance. Make sure you are aware of all of the changes that are going into effect in 2014.

Registration Information

Wednesday, December 11, 2013
12-1 PM CST

REGISTER

This is a complimentary Webinar brought to you by Marsh & McLennan Agency. If you have any questions about any of our events, please contact Emily Reller.

During this Webinar, RJF HR Consultant Heather Roiger will discuss the importance of teaching your company's managers how to develop their direct reports.

Key discussion points:

• Defining developmental management
• How to guide direct reports and promote independent thinking
• How to help a manager become a developmental manager

Registration information

Wednesday, November 13, 2013
12-1 PM CST

REGISTER NOW

More information coming soon. Please check back. 

More information coming soon. Please check back. 

More information is coming soon. Please check back. 

No matter how good your safety program is, every company experiences accidents. Accidents leading to a workers' compensation claim can be detrimental. It is important to have proper proceedures in place for accident reporting and investigation. This will help you reassess safety proceedures to prevent future accidents and help keep your workers' compensation liabilities to a minimum.

During this Webinar, MMA Safety Consultant David Rumsey will discuss best practices when it comes to incident reporting and investigation. He will also address the importance of having proceedures in place before an accident occurs.

Key discussion points:

• Formal reporting and investigation programs
• Investigation best practices
• Minimizing the financial impact an accident has on your company

Information

Wednesday, August 14, 2013
12-1 PM CDT

REGISTER

This is a free Webinar brought to you by Marsh & McLennan Agency. If you have any questions regarding our events, please contact Emily Reller.

Directors and Officers of private companies, large or small face many risks. Often, those risks are just the cost of doing business. Mitigate your exposure and properly protect your company by having full knowledge of the risks you are facing, the cost benefit of being proactive versus reactive, and prevention measures you can take to limit your personal and entity liability.

Key discussion points:

• Understanding exposures involving sales, mergers and acquisitions.
• Competitor law suits alleging violations of non-competes, the taking of talent, ideas, client lists and designs. 
• Allegations of non-disclosure or fiduciary duty breaches.
• Lawsuits from shareholders, creditors or debtors.

Who Should Attend?

• C-Level Executives
• Company Leaders
• Controllers
• Anyone involved in financial business transactions

Information

Thursday, October 17
7:30-9:00 AM (breakfast and registration begin at 7 AM)

Golden Valley Golf and Country Club
7001 Golden Valley Road
Golden Valley, MN 55427

This is a free seminar brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

Register today

True risk prevention encompasses every facet of an organization. Safety, human resources, culture, benefits, property and intellectual liability all play a crucial part in ensuring a company is properly protected against risk. Learn how integrated risk profiling can help you identify and fix problem areas that could cause your business harm. 

Who Should Attend?

• Company Leaders
• HR Managers, Directors & Generalists
• Managers and Supervisors
• Anyone responsible for employee recruitment and retention

Registration Information

Thursday, September 19
8:30-11:30 AM (breakfast and registration begin at 8 AM)

Golden Valley Golf and Country Club
7001 Golden Valley Road
Golden Valley, MN 55427

This is a free seminar brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

REGISTER HERE

A free seminar

Millennials' unique generational and developmental traits can be challenging for employers. But attracting, retaining and developing Gen Y – today’s entry-level employees and tomorrow’s leaders – with their unique aspirations and traits are key factors in the ability of organizations to reach their strategic goals. 

Leaders must understand the dynamics of Millennial employees to assess if their organization is ready for Gen Y as this group brings specific expectations to the workplace unique to their generation.

Join us as we learn about Gen Y

Terese Corey Blanck and Judy Anderson with Emerging Advantage, our guest speakers for this seminar, will discuss how organizations can gain a competitive edge by engaging and accelerating the development of entry-level employees.  

Key discussion points:

• Understand the quantitative reality of the changing demographics from the Boomers to Gen Y and breakdown talent myths hindering strategic planning. 
• Differentiate between generational nuances (Gen Y filter) and the unique dynamics of “Emerging Adulthood” in the United States as well as the unique experiences and timeframes occurring globally.
• Align your investment in developing Gen Y talent with your long-term 2020 workplace strategy.
• Learn what is required to develop a deep Gen Y talent pool ready for significant responsibility and leadership.

Who Should Attend?

• Company Leaders
• HR Managers, Directors & Generalists
• Managers and Supervisors
• Anyone responsible for employee development

Registration Information

Thursday, June 20, 2013
8:30-11:30 AM (breakfast and registration begin at 8 AM)

Golden Valley Golf and Country Club
7001 Golden Valley Road
Golden Valley, MN 55427

This is a free seminar brought to you by RJF, a Marsh & McLennan Agency LLC company. For questions regarding RJF events, please contact Emily Reller.

REGISTER HERE

Risk Consultant, Business Insurance

+1 763 548 8585
+1 800 444 3033 ext. 8585
johnsonl@rjfagencies.com

Biography

Leif has a broad range of valuable skills, education and experience combined with a deep desire to serve that his clients find valuable. He launched his career in the banking world, quickly moving into commercial finance. In both industries, Leif was repeatedly recognized for his leadership and sales performance. Now in the insurance industry, Leif’s background helps him achieve his mission of helping grow and strengthen his clients’ organizations by reducing and preventing risk and providing support, advice and guidance on business strategy and long-term direction.

His drive to help pushes Leif to dive deep into his clients’ operations to uncover and identify the causes of risk. He then looks for new and creative ways to leverage the resources available through Marsh & McLennan Agency to structure a comprehensive risk prevention plan. He doesn’t stop working until the client’s expectations are exceeded and they have the resources they need to achieve their goals.

Leif is active in the Manufacturers Alliance and the Construction Financial Management Association. He has two small children and in his free time enjoys following St. John’s University football.

Experience

Financial Advisor, The Principal Financial Group, Lake Elmo, MN, 2009 to 2011
Vice President/Senior Account Manager, GE Commercial Finance, Bloomington, MN, 2004 to 2009
Licensed Banker/Loan Officer, Wells Fargo Bank, St. Paul, MN, 2002 to 2004

Education

B.A. English & Management, St. John’s University, Collegeville, MN
MBA Finance, St. Thomas University, St. Paul, MN

Amy Diedrich, CEBS

Consultant, Employee Benefits

+1 763 548 8594
+1 800 444 3033 ext. 8594
diedricha@rjfagencies.com

Biography

Amy offers clients, particularly those in the public sector, a unique blend of experience gained from working in multiple capacities within the world of employee benefits. Prior to joining Marsh & McLennan Agency, Amy worked as a benefits consultant for another broker. Before that, she was the benefits coordinator for Minnetonka Public Schools where, in addition to managing their benefits program, she served as president of the local union for multiple terms. This gave her intimate knowledge of the workings of collective bargaining relationships along with an acute awareness of the various levels and roles of government and how they relate with public institutions.

Throughout her career, Amy has always sought to solve problems and make her clients’ jobs easier. She helped create the Alliance of Metro Schools, which helped save 14 school districts $1.5 million on their insurance costs. She also is known as a leader in helping school districts fund retiree health benefits and controlling health care costs through an HRA/VEBA (Health Reimbursement Account/Voluntary Employees’ Beneficiary Association).

When not working or spending time with her family, Amy is active in the Minnesota Association of School Business Officals (MASBO), Minnesota Association of School Adminstrators (MASA), Minnesota Association of Counties and International Foundation of Employee Benefits Plans associations.

Experience

Sr. Benefits Consultant, CBIZ Benefits and Insurance Services, 1998 to 2013
Employee Benefit Coordinator, Minnetonka Public Schools, 1988 to 1998

Education

B.A., St. Olaf College, Northfield, MN

Surety Consultant

+1 763 763 8500
+1 800 444 3033 ext. 8500
settemj@rjfagencies.com

BIOGRAPHY

As a former surety underwriter and account executive, Jeff understands how sureties operate and what they look for. Now with RJF, he brings this knowledge and insight to clients, helping ensure their bonds and bonding programs are reliable, flexible and competitive to help ensure their ability to execute on their business strategies is secure.

He works closely with clients to make sure he understands not only their bonding needs, but also their larger business issues, in order to make sure he is able to provide the assistance, guidance and advice they really need. This approach, along with his dedication to always looking out for his clients’ best interests, has helped him build trusting relationships.

Jeff is active in the Minnesota and North Dakota Chapters of the Associated General Contractors association, the Minnesota Surety Association and the Construction Financial Management Association.

EXPERIENCE

Regional Surety Underwriter, Chubb Group of Insurance Companies, 2010 to 2011
Surety Account Executive, Travelers, 2006 to 2010
Tax Accountant/Treasury Analyst, St. Paul Companies/St. Paul Travelers, 2000 to 2006

EDUCATION

B.A. Business Administration–Financial Management, University of St. Thomas

Producer

218-348-5122

simensonj@rjfagencies.com

Producer

715-5523630

ericksonj@rjfagencies.com

Producer

Executive Vice President, Producer

Executive Vice President

Risk Consultant, Business Insurance

+1 612 270 1544
+1 763 746 8506
+1 800 444 3033 ext. 8506
taggartl@rjfagencies.com

Biography

With over 15 years of insurance and risk prevention experience, LeRoy has developed a solid reputation within RJF/MMA and among his clients for delivering value. His focus is always to identify an employer’s risk, assemble the best team, and aggregate the most effective resources to drive down risk costs. This drive has secured him a 94% retention rate over the past three years.

LeRoy began his insurance career at Federated Insurance, where he learned many of the technical intricacies of the industry and how to support clients. He moved to RJF to gain access to a broader and more innovative service platform, allowing him to bring ever-greater value to clients by combining non-insurance resources into programs designed to eliminate or prevent risk.

When not working, LeRoy stays busy raising four children and in leadership roles in his church.

Experience

Insurance Producer, Federated Insurance, Owatonna, MN, 1998 to 2001

Education

M.A. History, Mankato State University, Mankato, MN
MBA, St. Thomas University, St. Paul, MN

Risk Consultant, Business Insurance

763-746-8544  
800-444-3033 ext.8544
nepperc@rjfagencies.com

Biography

Casey’s varied experience brings clients a well-rounded, tested and proven business advisor. From running a restaurant P&L to ensuring consistent service delivery for a Web service company to spending time with an insurance carrier, Casey understands the nuance necessary to run an effective business, while simultaneously knowing in detail what insurers are looking for when determining premiums. He uses his experience, training and resources to develop and deliver risk prevention solutions that protect his clients’ assets while maximizing profitability.

He focuses on serving the hospitality, nonprofit/human service organizations, manufacturing, food distribution, production and processing, and retail food service industries by specializing in product recall coverage, food safety and FDA compliance issues.

Casey is active with Enterprise Minnesota, the McNeely Center for Entrepreneurship and the Minnesota Council of Nonprofits. He has been active in Minnesota hockey since he was a kid.

Experience

Commercial Lines Underwriting Program, Westfield Group, 2008 to 2009
Project Manager, Reside, 2005 to 2008
Restaurant Manager, Maynard’s Restaurant, 2002 to 2005

Education

B.A. Business Management, St. John’s University, Collegeville, MN

Director, Commercial Lines

763-746-8296 
800-444-3033 ext.8296
gallaghert@rjfagencies.com

Biography

Tim has been in the insurance industry for over 20 years. Before joining RJF in 2006, he spent the first 18 years of his career with the Chubb Insurance Company where he advanced through the ranks and held progressively more challenging positions. At RJF, Tim seized the opportunity to lead its dynamic and vibrant Commercial Lines group.

Tim is committed to ensuring that RJF continues to grow and expand its capabilities to provide its customers with the products and services they require. He works diligently with insurance carriers to obtain the most comprehensive and cost-effective insurance and risk management products available. He also works with people at all levels of the RJF organization to ensure that it is providing world-class customer service to all clients.

Tim is very involved in community athletics as a coach for a number of youth sports as well as serving on the board of Family Fest Ministries since 2003.

Education

B.S. in Psychology, St. John’s University

Insurance & Risk Management Consultant

763-548-8879
watkinsr@rjfagencies.com

Biography

Ryan learned early on that there are few things that excite him more than being able to help a client improve their business. That, and the appeal of developing long-standing relationships, is why he chose a career in the insurance and risk management industry.

Now with seven years of industry experience under his belt, Ryan knows the ins and outs of insurance and risk management. He understands that providing solid insurance isn’t enough to be considered a valuable asset by his clients. He sets himself apart by understanding the nuances within an organization and how they may hold back future plans. He then develops plans and assembles resources to help eliminate risks that may act as barriers to achieving business goals.

His consultative style and genuine concern for his clients’ best interests along with the results he delivers have earned him the trust and confidence of clients in a wide range of industries.

Ryan is an avid outdoorsman, and he and his wife are the devoted parents of two young children.

Education

B.A. Business Management, Gustavus Adolphus College

Producer

763-746-8229
800-444-3033 ext. 8229
sandvigg@rjfagencies.com

Biography

Greg brings to RJF customers his wide-ranging experience in the insurance and risk management industries. He began his career as a property claims adjuster in 1980, and later made the transition into a multi-line adjuster position, where he gained invaluable insight into how insurance carriers operate.

Since that time, Greg began helping companies find cost-effective and innovative solutions to their organizational risk management issues. His previous experience provides Greg’s clients with an dedicated advocate who understands what insurance underwriters are seeking and how to maximize the effectiveness of all risk management investments.

While he works with many construction and manufacturing companies, Greg’s background and technical expertise allow him to assist numerous clients in a variety of industries. Over the past couple years, Greg has been honored as one of the top-producing consultants within RJF. A member of the Minnesota Chapter of the National Fire Sprinkler Association, Greg supports the risk management efforts of many of these contractors.

Greg is married and has four sons. He keeps active in sports, and coaches basketball — his passion of more than 20 years.

Education

B.S. in Organizational Administration, Northwestern College

Risk Management Consultant
Business Development Manager, Property & Casualty

763-746-8252
800-444-3033 ext.8252
moorel@rjfagencies.com

Biography

Laura’s extensive background in safety and loss control coupled with her time as a basketball coach and referee puts her in a distinctive position to both find risk management solutions and encourage her clients to achieve the best risk reduction techniques possible.

In her role as Risk Management Consultant, Laura works as an advisor and coach to help her clients understand risk management and the advantages of implementing practical risk management initiatives at their companies. After assessing a client’s needs, Laura helps to create and launch their proactive risk management programs designed to reduce their total cost of risk and improve their safety culture.

Laura was a four-year starter for the women’s basketball team at the University of Minnesota and became a member of their 1,000 point club. Later, Laura served as a collegiate basketball coach for her alma mater University of Minnesota, Duluth.

Education

B.S. in Community Health with a Minor in Psychology, University of MN - Duluth
Master’s in Environmental Health & Safety, University of MN - Duluth

Risk Consultant, Business Insurance

763-548-8867
800-444-3033 ext. 8867
maresj@rjfagencies.com

Biography

John has been in the insurance business for over 20 years. During his career he has taken on a number of different responsibilities and excelled at all of them. John’s many roles in the insurance industry include producer, sales manager, underwriting and loss control. His broad base of experience gives him the ability to examine any situation from a number of different perspectives.

John dedicates himself to finding the perfect solution for his clients. He especially prides himself on his ability to solve a problem for a new prospect when no one else can. John has worked with clients across a wide variety of industries, which has helped him develop a real knack for spotting possible risk exposure that could have easily gone overlooked by a less experienced consultant.  His work ethic, drive, tenacity and commitment are second to none.  

John is involved with a number of charitable and support organizations including Big Brothers Big Sisters, Alliance for Heart Failure Patients and Sudden Cardiac Arrest-Survivor Network.

Education

B.S. in Agricultural Engineering, University of Wisconsin – River Falls

Account Manager, Manufacturing Practice Group

763-746-8234
800-444-3033 ext.8234
lindquistd@rjfagencies.com

Biography

If you asked Debbie what one thing she was committed to above all others, it would be the success of her clients’ businesses. Every day she brings a drive, enthusiasm and commitment to find her clients better, more efficient and more effective tools to help them reach their unique business goals. Always seeking to go beyond insurance coverage, Debbie is constantly looking for ways to make her clients’ lives easier.

Utilizing a team approach to maximize value for her clients, Debbie’s high level of energy and creativity on the job allows her to recommend solutions that may otherwise be overlooked. She especially enjoys learning everything there is to know about her clients’ business and their unique nuances and risks. Armed with this information, she can recommend specific solutions tailored to the client’s business needs.

Debbie is very involved in her local school district and frequently volunteers her time for school functions.

Education

B.S. in Business, University of Minnesota

Risk Management Sales Executive

763-746-8535
800-444-3033 ext.8535
johnsons@rjfagencies.com

Biography

Shalin has nearly 20 years of experience in the insurance industry. He draws on every facet of that experience on a daily basis to provide his clients with sound timely advice on their risk management programs. He prides himself on his ability to help his clients clearly understand risk exposures and helping them find the best way to protect against it.

While there are certainly some people who simply “wound up selling insurance” for a living, you’ll find Shalin to be the exact opposite. He targeted this industry and pursued it with a passion. He earned his Bachelor’s degree in Risk Management and Insurance to have the full knowledge he needed to help his clients properly protect their businesses, employees and property.

Shalin is involved in a number of professional organizations that help to keep him abreast of all the new developments in the area of risk management. He is also a passionate fundraiser for local youth charities.

Education

B.S. IN Risk Management and Insurance, St. Cloud State University

Risk Consultant, Retail/Hospitality/Franchising

763-746-8221
imholted@rjfagencies.com

Biography

Doug Imholte is passionate about finding solutions that support his clients’ success. “I spend my days thinking about my clients and how we, as partners, can help them manage and improve their business,” he says.

Doug’s career has been marked by growth—at every position Doug has developed new sales strategies, repeatedly exceeded his sales quotas, and expanded the business. Doug began his career as an insurance underwriter and quickly moved to leadership positions. Over the next 20 years, he built strong teams at several companies, working to deliver the best solutions for his customers’ needs. While at e-learning company LearningByte International, Doug developed and grew two regional sales teams and served on the Strategic Leadership Team, where he helped steer the direction of the organization.

In 2004, Doug purchased the Minnesota master franchise rights for Wireless Toyz, a national wireless franchise. He managed operations from strategy, sales, finances, and marketing to the P&L insurance. “I understand the daily duties and pressures that franchisees face in growing and operating their businesses,” Doug says. “I have faced the same challenges and dealt with the same risks.” After developing the territory from zero stores to seven, Doug sold the business.

Doug’s experiences in insurance, sales, and business strategy, and as a business owner have developed his deep understanding of business risk. Today, Doug is a member of the International Franchise Association, and has served on the boards of the Saint John’s University National Alumni Association, the Lakes Street Council. He volunteers with the Leukemia-Lymphoma Society and coaches his daughter’s basketball team. He enjoys spending time with his kids, golf, travel, and has completed three marathons.

Education

B.A. in Government, Saint John’s University

Life Sciences & Technology Risk Advisor

763-746-8515
612-804-9846 cell
800-444-3033 ext.8515
ellingsont@rjfagencies.com

Biography

As a Risk Management Consultant at RJF Agencies, Todd relies on his extensive experience in the medical device, high tech, and pharmaceutical industries every day. Todd forms his partnerships on the basis of integrity and trust, and his passion lies in his desire to exceed the expectations of his clients and ensure that they are covered against potential risks.

Todd brings a consultative, needs-based approach to his work. He strives to learn as much as he can about his clients, their business and their challenges. He conducts a thorough needs analysis and develops solutions that will best fit those needs. These solutions offer comprehensive, cost-effective coverage for the client’s current situation and are flexible enough to accommodate future company growth. Todd also speaks frequently on risk management issues and is currently pursuing his CIC designation.

Todd and his wife have three daughters. He is involved in his church and children’s activities as well as a number of professional organizations. He is an avid traveler, golfer and sports fan.

Education

B.A. in Business & Communications, Concordia College, Moorehead
M.B.A. in Marketing, University of Texas

Account Manager, Auto Dealers

763-746-8258
800-444-3033 ext. 8258
curtisc@rjfagencies.com

Biography

Corie has over ten years of experience in the insurance industry and currently works as an Account Manager in the RJF Auto Dealer Group. A more perfect match has never been seen before at RJF. All her life, Corie has been passionate about everything automotive and she brings that passion to work every day as an advocate for her clients in the auto industry.

The consummate problem solver, Corie relentlessly pursues the perfect solution for her clients. To make sure she can deliver, Corie is on a never-ending quest for knowledge of new products, solution and options. Because the auto dealer market is very specialized, Corie frequently has to develop unique, creative solutions to fulfill her clients’ needs and she delivers every time.

Corie was a three-time All-American in Women’s Soccer at Macalester College. She continues to be deeply involved in Minnesota soccer through coaching and local associations.

Education

B.A. in Environmental Studies, Macalester College
B.A. in Geography, Macalester College
A.A. in Auto Mechanics, Dunwoody Institute

Commercial Insurance/Employee Benefits Consultant

715-634-6513
800-378-4318
chapins@rjfagencies.com

Biography

Scott has nearly 15 years experience in the insurance industry and has become known among his clients as a trusted and committed business partner. His consultative manner, thoughtful evaluation and ‘client-first’ attitude allow him to make honest, objective recommendations designed to ensure the long-term health of the client’s business and employees.

Scott especially enjoys working with his clients on risk management programs. After a thorough assessment process of his client’s business, Scott designs and recommends a comprehensive proactive risk management program including human resource consulting, loss control and insurance.

Scott is very involved in the Hayward community. He is a member of several local business and civic organizations and has held board positions on many of them. Scott also enjoys many outdoor sports including competitive cycling and skiing.

Education

B.A. in Economics and Mathematics, University of Wisconsin - Eau Claire

Risk Management Consultant

763-746-8285
800-444-3033 ext.8285
bakerr@rjfagencies.com

Biography

Risk management has been a key focus at every stop of Reesa’s career. She holds her master’s degree in Risk Management & Insurance and is a published author on the subject.

Along with the credentials, Reesa has practical, hands-on experience. She has served as a Risk Manager for two major corporations, where she acquired intimate knowledge of employers’ needs and how to assess a corporation’s risk/reward appetite. Her experience and insight consistently saves her clients time and money.

Reesa is involved in a number of local and national business organizations which helps keep her on top of industry trends and changes.

Education

B.S. in Finance, University of Nebraska – Lincoln
Master’s of Risk Management & Insurance, University of Georgia – Athens

Risk Management Consultant

763-746-8202
800-444-3033 ext.8202
aanensonm@rjfagencies.com

Biography

Mary Pat relies on her extensive experience in the areas of underwriting, marketing and technical insurance knowledge to help bring risk prevention solutions to her clients. She works to thoroughly understand each client’s business before determining the most appropriate coverage and most cost-effective insurance programs for the client’s transfer of risk. Mary Pat’s talent is the ability to do the right thing at the right time for the client while providing strong technical support and advice.

Mary Pat brings a tactical-based plan of action for client’s strategic initiatives based on their needs, financial strength, culture and values as well as appetite for risk. Throughout her 30 years of experience within the risk management industry she has handled clients from start-up or R&D to larger publicly-held companies.

Mary Pat currently specializes in medical and computer technology, a field she finds very rewarding. In addition to servicing many of RJF’s top accounts, Mary Pat keeps her industry knowledge and contacts fresh as a board member of the St. Paul Companies’ and Chubb Insurance Group’s Advisory Councils.

Mary Pat volunteers at nursing homes and local civic events. She spends her free time fishing, hunting, camping and working with her three champion-bred dogs.

Education

Business Administration, University of Mankato

Risk Prevention Consultant

763-746-8276
800-444-3033 ext. 8276
carlsonm@rjfagencies.com

Mindy devotes her professional career to helping clients protect themselves and their assets. Her in-depth knowledge of insurance products and insurance carriers’ ability to perform has secured her a loyal and diversified client base. Clients value their relationship with Mindy not only because of her integrity and honesty, but also because she loves helping navigate risk and insurance issues and works diligently to deliver them with the best solution for their business, regardless of complexity.

With more than 20 years of insurance experience, Mindy has become particularly well known among law firms and sign contractors. Her reputation within these disparate industries is a testament to her well-rounded insurance knowledge and her service to clients’ industries.

Mindy is on the board of directors for the Minnesota Sign Association, for whose membership she developed its unique insurance program, and is active in the Association of Legal Administrators, for which she is the endorsed VIP insurance program agent in Minnesota, Wisconsin, South Dakota and North Dakota.

Community Association Specialist

763-746-8547
800-444-3033 ext. 8547
finkj@rjfagencies.com

Biography

Jackie has strong critical analysis skills and is highly creative, two traits that make her uniquely qualified to identify risk and find solutions.

Jackie joined RJF in 2004, and works closely with boards of directors, attorneys, and property managers to address community association needs. Jackie drills down into policy details to find high quality matches for her clients. As part of her role with the community associations practice group at RJF, she maintains close ties with community, neighborhood and home associations in order to be the most reliable and informed resource possible. That diligence and commitment makes it possible for Jackie to see potential risks before they actually become issues for her clients.

Jackie is a former board member of the Minnesota Chapter of the Community Associations Institute (CAI-MN) and previously served on the CAI-MN’s Legislative Action Committee. She holds a Community Insurance and Risk Management Specialist (CIRMS) certification with CAI.

Education

B.A. in English, Metropolitan State University
Associate of Science in Nursing, Normandale Community College

Community Association Specialist

763-746-8278 
800-444-3033 ext.8278
fjellangers@rjfagencies.com

Biography

As an agent, agency owner and community association specialist with over 35 years of experience, Sarah brings a dynamic vision, expertise and capability to her job. Sarah is an authority on Minnesota law regarding community associations and is a frequent speaker and published author on the topic.

Sarah is committed to staying ahead of the game when it comes to changes in laws, regulations and other potential issues that could impact her clients. She is constantly seeking out information about changes in the community housing, construction and related industries so she can proactively recommend enhancements to prevent an unforeseen lack of coverage.

Sarah is a frequent consultant to local legislators on the Minnesota Common Interest Ownership Act. She also has taught a number of courses at Prosource and area community colleges that help to train property managers.

Education

Metropolitan State University

Community Association Specialist

763-746-8272 
800-444-3033 ext.8272
mirochaj@rjfagencies.com

Biography

Joe is celebrating his thirtieth year of service in the insurance industry.  His career has been a journey of advancement, achievement and recognition that we don’t see very often.  From his beginnings as a claims adjuster and agency manager to his current status as an industry expert in the areas of community association governing documents and insurance; Joe is truly a leader in his area of expertise.

As a Community Association Specialist at RJF, Joe is passionate about helping his clients stay ahead of the curve by anticipating future needs before they become liabilities.  He is diligent in his review of community association governing documents and ensuring that the coverages meet their requirements.  Joe is a strong advocate of education as a means of decreasing claims and, to that end, is a frequent contributor to association newsletters and other publications.

Joe is a prominent member of in the Community Associations Institute and is one of less than 100 Community Insurance and Risk Management Specialists (CIRMS) in the entire nation.  He is also involved in a number of other local and national professional organizations.

Education

B.S. in Health and Physical Education, University of Minnesota

Community Association Specialist

651-480-1739
fasbenderh@rjfagencies.com

Biography

Herman has been in the insurance business for over 25 years and brings a creative, enthusiastic and entrepreneurial spirit to his work every day. His experience as a former insurance agency owner has given him a keen eye for the big picture and, in particular, the ability to see potential risk exposure that needs to be addressed.

Herman specializes in community association and construction risk management. In his role as a Community Association Specialist at RJF, he has his finger on the pulse of the industry at all times to keep informed about any new developments that may impact his clients and their coverage. He believes that the risk management approach to insurance is in the best interest of his clients and the only way to ensure a decrease in their total cost of risk.

Herman is involved in numerous local professional organizations and charitable efforts. He is married and has two sons.

Education

B.S. in Natural Science, St. John’s University

Senior Vice President, Benefits Consultant

763-746-8536
800-444-3033 ext.8536
krihap@rjfagencies.com

Biography

PK brings incredible creativity, energy and drive to her job as an employee benefits consultant at RJF. She joined RJF after a 10+ year career as a strategic account manager at Pro Staff, one of the nation’s largest staffing agencies. During her time there, PK became extremely adept at earning the client’s business and ascertaining their needs; an absolutely critical skill in her role at RJF.

PK’s clients look to her to make sound recommendations about benefit options that serve the best interests of their businesses and their employees. PK has a special knack for developing and launching customized benefits programs that provide all the necessary coverages employees need while simultaneously reducing the client’s expenses in a world of ever-increasing health care costs.

Due to PK’s continued success at RJF, she became a principal in July 2009. PK is one of ten principals at RJF and is actively involved in company-wide decisions and future strategic initiatives.

PK devotes much of her free time to a variety of professional and charitable organizations and also stays busy volunteering at her kids’ schools.

Education

B.A. in Liberal Studies & Psychology, College of St. Benedict

Senior Vice President, Employee Benefits

763-746-8264 
800-444-3033 ext.8264
scrogginsd@rjfagencies.com

Biography

Donn has a genuine passion for building comprehensive benefit solutions for his clients. His goal is always to design a solution that provides maximum coverage for employees in the most cost effective manner for the client. He works closely with clients to help them understand market trends and other factors that affect their benefits program.

Donn is also a strong proponent of health management initiatives as part of a comprehensive cost containment strategy. He counsels his clients on the value of structured wellness programs as a way to help curtail future costs.  His programs have helped to make employees better healthcare consumers while still positively impacting his client’s bottom line.

Donn has worked in the insurance industry since 1996. You can always count on him to go the extra mile to design a customized benefits solution and be there with you to implement new strategies as your company grows and changes.

Education

B.A. in Management, St. John’s University

Benefits Consultant

Senior Vice President, Employee Benefits & Carrier Relations

Director of Employee Benefits Operations

763-548-8878
800-444-3033 ext. 8878
arndtt@rjfagencies.com

Biography

Working closely with the sales leadership and executive management, Tara leads RJF’s employee benefits service team to ensure the delivery of uncompromising customer service. So far, while at RJF, she has developed a new client service delivery plan, and refined and instituted a new business model that elevates employees while enabling greater levels of client satisfaction while overseeing continued growth in the department.

Tara has worked in the employee benefits industry since 1999. This, along with her previous work as a human resource professional, helps her ensure client expectations are being proactively addressed. Her HR background combined with her history of account management and benefits administration provides clients and employees with a well-rounded and understanding advocate. 

Tara’s knowledge and abilities have not gone unnoticed by others. She has been invited to participate in multiple insurance carriers panels and is a regular contributor to Marsh & McLennan Agency’s benefits practice conferences and meetings.

Education

MBA, Project Management, Capella University

BS, Human Resources Management, Metropolitan State University

Employee Benefits Consultant

763-548-8569
800-444-3033 ext. 8569
szczechb@rjfagencies.com

Identifying and deciphering problems and delivering solutions to clients drives Brian. His service- and business-oriented nature leads him to probe deeply into an organization to find its core strengths and challenges. He then brings together the necessary resources to build and implement a cost-effective risk prevention solution that goes beyond just health plan brokering.

Brian brings to RJF several years of experience helping human resource professionals and executive leadership solve business issues. His dedication to and success in helping clients has been recognized by former employers through multiple awards. Ensuring projects and solutions are thoroughly delivered and then looking for the next challenge area has kept his relationships with clients strong and growing as he has transitioned into new positions.

When he’s not helping clients, Brian stays active running, playing golf, and volunteering with his church and other nonprofits.

Employee Benefits Consultant

763-746-8211
800-444-3033 ext. 8211
uhrichj@rjfagencies.com

In addition to his previous experience at another benefits broker, Justin also spent time helping develop complex IT solutions for employers nationwide. His goal in both positions was to find ways to help businesses become more efficient and productive while finding ways to reduce costs. In both positions, Justin was honored for his willingness and ability to better serve his clients.

In his off-time, Justin maintains an active schedule between volunteering at various nonprofits, playing hockey and spending time with his family and friends.

Chief Executive Officer

763-746-8201
800-444-3033 ext. 8201
jeatranb@rjfagencies.com

Biography

Bill launched RJF in 1986 with the goal of creating an agency with a strong value proposition based on integrity and respect. He wanted to create a firm that would positively impact both its customers and employees. By positioning the company as a business advisor with expertise in organizational risk management, RJF has grown to represent more than 5,000 corporate clients. RJF now employs more than 160 professionals in five offices.

Bill devotes a large portion of his time to coaching the leadership within RJF and helping them achieve new levels of personal and professional success. He dedicates himself to promoting the RJF culture of values within all levels of the company. This leadership has produced exemplary results — RJF has been named the best medium-sized employer in Minnesota, has been one of the fastest growing private companies in Minnesota six times in nine years and is one of the “100 largest brokers of U.S. business,” and was awarded the 2009 Minnesota Business Ethics Award.

Bill’s passion for innovative ideas has earned him the position of chairman from 2007-2009 of the board of Assurex Global, the third largest risk management brokerage group in the world, with more than 20,000 professionals spanning the globe. Bill now serves as a board member of Children’s Hospitals and Clinics of Minnesota.

In 2006, he was named Entrepreneur of the Year by TwinWest Chamber of Commerce, the most active chamber in Minnesota. Ernst & Young selected him as a finalist for their Entrepreneur of the Year award in 2007 and 2008.

Bill and his wife have three children and enjoy spending time at their cabin in Northern Wisconsin.

Education

B.A. in Economics, St. John’s University

President

763-746-8204
800-444-3033 ext. 8204
flemingt@rjfagencies.com

Biography

In 1988 Tim joined his former college roommate, Bill Jeatran, at RJF Agencies. Tim and Bill shared a vision to build a company based on quality and integrity that provided unique, focused risk management and insurance resources to middle-market clients. Over the years, Tim has served RJF’s clients in several leadership capacities. As president, Tim primarily focuses on developing the sales team and sales platforms. Additionally, his passion for carrier relationships has inspired him to become an active member of several local and national advisory boards. Tim currently serves on the board of directors for The Council of Insurance Agents & Brokers.
Tim began his career with Aetna, servicing large commercial clients throughout North and South Carolina. He earned his CPCU designation in 1987, and his CIC designation in 1995. He continues to service clients, including nearly 40 middle-market companies that have been with him for over 10 years.

Above and beyond continued client service, Tim’s current activities revolve around recruiting top sales talent and leading RJF’s client retention committee. His retention efforts focus on increasing and affirming RJF’s ability to provide valuable and trusted advice.

Tim is active in his community and has coached football, baseball and hockey for a number of years, as well as serving in various roles within his church. Tim also continues to be active with his alma mater, and currently serves on board of directors for St. John’s Vianney Seminary.

Education

B.S. in Business Administration, St. John’s University

Chief Operating Officer and EVP

763-746-8205
800-444-3033 ext. 8205
lowderj@rjfagencies.com

Biography

Jill joined RJF in 1984. With the growth of the company, she was instrumental in creating management systems for the firm, which led to providing leadership in a variety of roles.  

During her RJF tenure, Jill has filled a variety of leadership positions including group leader, department manager and vice president of corporate operations. Now as chief operating officer--and an active member of the executive management team--she oversees eight departments and more than 100 employees.

In addition to directing RJF's overall operational resources, policies and initiatives, Jill has been instrumental in creating a company that focuses on partnering with forward-thinking clients to prevent risk. She has also played a key role in integrating RJF's approach into the company's service strategy and platform..

Education

B.A. in Sociology, University of Minnesota

Vice President, Sales and Marketing

763-746-8271
800-444-3033 ext. 8217
johnsonj@rjfagencies.com

Biography

Jim has been a member of the insurance industry for over 30 years. He began his career as an underwriter and underwriting manager of a large national carrier and has since held positions at brokerages or agencies utilizing his knowledge of and connections with insurance carriers.

In 1988, Jim joined Marquette Insurance Group as a marketing specialist. The company eventually became Wells Fargo Insurance via several mergers and acquisitions. While at Wells Fargo, Jim held a variety of positions, including marketing manager, agency manager of its largest agency and national marketing director.

In May 2001, Wells Fargo purchased Acordia, a large national broker. For nine months Jim led the domestic marketing group of Wells Fargo/Acordia and served as a member of the merger transition team.

Jim has held a variety of positions on regional and national insurance company advisory boards and has built a number of programs since joining RJF in 2002.

Education

B.A. in Business Finance and Political Science - Constitutional Law, University of Wisconsin - River Falls

Claims Manager

763-746-8293
800-444-3033 ext. 8293
arayad@rjfagencies.com

Biography

Dawn has spent her entire career involved with insurance, with much of that time involving effectively managing claims from inception to resolution. Her extensive experience as a senior claims representative and claims manager earlier in her career has prepared her well for her role as claims manager at RJF.
   
Dawn specializes in workers’ compensation claims. She has handled claims from both the insurance company and employer sides of the table, which gives her a powerful perspective that few people possess. Dawn is committed to getting the most favorable outcome possible for her clients and works diligently with insurance carriers and others toward that goal. She works closely with loss prevention, health management, and carrier claims specialists.

Dawn is actively involved with professional organizations and boards that help her to continually develop her skill set to provide exemplary service to her clients. She is also fully fluent in Spanish.

Education

B.A. in Spanish, University of Minnesota
B.A. in Speech Communication, University of Minnesota

Claims Consultant

763-746-8263
800-444-3033 ext. 8263
coopetc@rjfagencies.com

Biography

Cassandra specializes in workers’ compensation claims and understands the employer perspective as well as the broker management side. She works as an advocate for her clients to achieve claim resolution through aggressive claims management.

Cassandra is committed to providing exemplary customer service to her clients, working closely with insurance carriers and others to obtain the most favorable outcome possible. But claims management isn’t the whole picture. To help reduce claims in both severity and quantity, Cassandra works closely with safety and human resources professionals to develop programs that encourage a positive safety, HR, and claims culture.

Cassandra is actively involved with multiple volunteer organizations within her community.

Education

B.S. in Business Administration, Northwestern College

Safety Consultant, Hospitality/Retail

763-746-8295 
800-444-3033 ext.8295
martind@rjfagencies.com

Biography

Dan has over 14 years experience in the safety industry. He is dedicated to helping clients achieve business objectives that help manage their cost of risk while simultaneouly fostering a safe and healthy workplace. He easily adapts to any client in any industry to understand their issues and objectives to establish measurable practices that are supported by their existing work environment.

Dan’s previous experience with two insurance carriers uniquely positions him to help clients develop policies and procedures that insurers consider valuable. This insight into the carrier world helps align short- and long-term strategies that can provide premium discounts. He has also developed and implemented countless tactics for employers such as safety committees, OSHA compliance policies, train-the-trainer and employee training courses, and general safety procedures.

Dan is a Certified Safety Professional (CSP) and Associate in Risk Management (ARM). He is also a professional member of the American Society of Safety Engineers - Northwest Chapter.

Education

B.S. in Community Health Education, University of Minnesota - Duluth
Master’s of Industrial Safety, University of Minnesota - Duluth

Safety Consultant

763-746-8284 
800-444-3033 ext.8284
rumseyd@rjfagencies.com

Biography

Going back to his days as a volunteer firefighter in Michigan, David has always been keenly aware of safety issues and what it takes to ensure a safe working environment. For the last 15 years, David has taken his passion for safety and used it to help his clients implement comprehensive risk management and jobsite safety programs.

David especially enjoys helping clients understand the importance of employee safety as a means of lowering their cost of risk. He works closely with management to analyze company processes and ensure that all necessary safety considerations have been taken into account.

David is actively involved in several local professional organizations that keep him current on changes and new trends in the industry. He is also in the process of obtaining his CRM certification.

Education

B.B.A. in Marketing, Western Michigan University

Health Management Services Manager

763-548-8861
wardr@rjfagencies.com

Biography

Dr. Rosie Ward is passionate about helping employees create more fulfilled lives through improved well-being, and engagement with their jobs. Through her research and experience working with many organizations, Rosie has discovered developing supportive employee cultures is the key to achieving individual and organizational well-being.

Rosie works with companies to establish a long-term vision and plan to create a safe, well, and engaged culture. By focusing on individual and organizational behavior, intrinsic motivation, culture change, employee engagement, and health education, the plan is customized to address each company’s unique needs.

Rosie is a Certified Intrinsic Coach®, and a frequent speaker on well-being, engagement, and motivation, and is very active in the wellness, coaching and professional communities, and serves as a mentor to others in her industry. She is a contributing author to the book, Organization Development in Healthcare: High Impact Practices for a Complex and Changing Environment, published in March 2011.

Education

B.S. in Kinesiology (emphasis in worksite health promotion), University of Minnesota
Master of Public Health in Community Health Education, University of Minnesota
Ph.D. in Organization and Management, Capella University

Safety Consultant

763-746-8213
sutherlandj@rjfagencies.com

Commercial Insurance Claims Consultant

763-548-8266
800-444-3033 ext. 8266
wheelera@rjfagencies.com

Biography

Angela helps employers prevent and minimize the impact of claims on their organization. From identifying and aligning the best insurance company to developing claims management programs to helping handle employee communication post-claims, she considers her primary responsibility to be an advocate for the client.

Her experience working for several years at other agencies and a large national insurance carrier enables Angela to provide well-rounded advice and guidance to clients. This is most important right after a claim occurs, and she has a history of delivering better-than-expected results to employers of various sizes in locations across the country and globe.

Experience

Commercial Lines Claims Analyst, Associated Financial Group, 2006 to 2009
Commercial Lines Claims Management Specialist, The Horton Group, 2005 to 2006
Claims Resolution Specialist, St. Paul Travelers, 2002 to 2005

Education

B.A. Communication Arts, Cardinal Stritch University

Director of Employer Services

763-746-8502 
800-444-3033 ext.8502
wissbroeckera@rjfagencies.com

Biography

Alan’s experience and expertise revolve around helping companies in all industries identify, eliminate and mitigate organization-wide risks. He focuses on helping organizations develop long-term strategies to reduce losses by incorporating a dedication to safety into their corporate culture.

To establish an effective safety culture, Alan begins by gaining the commitment of executive management. Working with a company’s safety committee and management, he helps find cost-effective ways to reduce their total cost of risk. His process integrates safety, loss control, human resources and insurance claim analysis and management to create a comprehensive program.

Alan spent several years in the U.S. Army, followed by an accelerated path through college. Immediately following college, Alan worked for Federated Insurance where he began his risk management career. He is active in several trade associations, helping to educate members on the value of organizational risk management. A Certified Safety Professional and Certified Risk Manager, Alan also is a professional member of the American Society of Safety Engineers.

Education

Computer Science, University of New Mexico

HUMAN RESOURCE CONSULTANT

+1 763 746 8219
+1 800 444 3033 ext. 8219
roigerh@rjfagencies.com

BIOGRAPHY

Helping clients with HR policies and procedures is just the beginning for Heather. Her true talents come through when helping a business eliminate its risks before they occur—specifically as they relate to people through surveys and trainings. This could also include addressing compliance issues to avoid future litigation risk or implementing talent management process to provide bench strength for an employer with an aging workforce.

Her experience includes talent management, crisis management, and aligning multiple international sites’ HR programs. She earned a master’s degree in industrial, organizational psychology in 2008, which positions her uniquely to help employers execute HR projects and initiatives while developing long-term strategies to move the business forward while reducing its risk.

Heather came to RJF from Freudenberg Group, where she spent several years in multiple HR management roles, most recently as the global HR manager for its Dichtomatik business in Shakopee, Minn.

EDUCATION

Health Management Consultant

763-746-8510
800-444-3033 ext. 8510
kratze@rjfagencies.com

Biography

Emily is a consultant who lives by the advice she gives. Her career, education, training and experiences revolve around improving peoples’ wellbeing.

Her past experience as a wellness consultant at a large insurance brokerage gave her a solid base upon which to expand her ability to help clients. Now, Emily develops more well-rounded sustainable health management solutions that support all areas of wellbeing—career, social, financial, physical and emotional.

Her work helps organizations foster cultures that improve the engagement, productivity and health of employees, bringing greater cost management and profitability to the company. Rather than trying to fit employers into existing turnkey or off-the-shelf products and services that offer limited potential returns, Emily takes employers through a process designed to create both short- and long-term strategies to deliver measurable impact on their people and their bottom lines. This approach creates custom programs to meet the unique needs of each client and their employees—including both budgetary demands and human expectations.

The Milwaukee Business Journal awarded Emily with its “40 Under 40 Award,” she has competed in and finished multiple Ironman World Championships and is a three-time USA Triathlon All-American. She volunteers for several organizations focused on improving peoples’ lives.

Experience

Wellness Consultant, Willis, 2005 to 2012

Education

M.S. in Community Health Education, Minnesota State University, Mankato, 2004
B.S. in Exercise Sport Science, University of Wisconsin-La Crosse, 2002
Associates Degree, Bethany Lutheran College, 1999

Loss Control consultant

763-548-8862
800-444-3033 ext. 8862
hansonl@rjfagencies.com

Biography

Lindsey is a consultant who believes that it is imperative that companies address safety concerns with prevention being the goal, rather than waiting to react after an accident happens.

Her past experiences in the construction industry gave her the opportunity to consult on several high profile site safety initiatives. Some of these include BP Deepwater Horizon oil spill, Nissan LEAF facility, NASA Stennis Space Center, and multiple Air Force Bases. She has a well-rounded perspective on safety and loss control.

Her work helps clients foster cultures of safety and healthy working environments. She is able to assess client’s needs and create customized recommendations and programs that align with short and long-term safety goals. Lindsey understands that each organization she works with is unique, with their own set of strengths and challenges. The safety and loss control programs she creates not only bring safety to an environment, but help prevent risk, driving down worker’s compensation claims. This allows employers to benefit from long term savings in worker’s compensation premiums.

Lindsey currently serves on the American Builders and Contractors Board of Directors and is a member of the American Society of Safety Engineers and Women in Safety Engineering. She is an active supporter of the Wounded Warrior Project and regularly volunteers with the Animal Humane Society of Minnesota.

Education

M.S. in Environmental Health and Safety, University of MN, Duluth, 2006

B.S. in Mass Communications, St. Cloud State University, 2002

Senior Vice President, Management Liability Group

763-746-8507
hondab@rjfagencies.com

Biography

Bjorn Honda is the Executive Vice President of RJF Agencies’ Management Liability Group and a partner in the company. He identifies executive risk exposures; advises boards of directors; and structures and procures directors and officers, employment practices and fiduciary liability insurance programs for companies. Bjorn’s clients represent the business spectrum from nonprofit organizations to multi-billion dollar public corporations.

Bjorn has spent 18 years focused on complex international and domestic risks in financial and professional lines. Prior to joining RJF, he served in underwriting, management and technical positions with the Chubb Group of Insurance Companies, including Practice Leader of Executive Risk in Minneapolis. His technical expertise is matched only by his ability to quickly and accurately identify exposures and explain the intricacies of this coverage in lay terms.

He is an active member of the Professional Liability Underwriters Society and serves on the steering committee of the North Central Chapter. Bjorn frequently speaks on Directors & Officers liability topics throughout the United States.

Education

B.A. in International Economics, Allegheny College

Director, Management Liability Group

763-548-8599
hansond@rjfagencies.com

Biography

Management Liability is a highly technical, complex and ever-changing field of insurance. Dan Hanson, Director of Management Liability, relies on his extensive experience to design programs that will protect his clients, and manage and reduce their executive risk exposures. Dan specializes in directors and officer liability (D&O), employment practices liability (EPL), fiduciary liability, Errors and Omissions, and Network Security/Cyberliability insurance. 

Dan has spent over 15 years working with executive risk processes and claims handling. Prior to joining RJF, he held several underwriting, management and technical positions with St. Paul Companies and Travelers, and frequently taught errors and omissions workshops.

From 2006-2007, Dan served as the chapter president of the Minnesota Chartered Property Casualty Underwriters (CPCU) Society, a community of credentialed property and casualty insurance professionals who promote excellence through ethical behavior and continuing education. He achieved his Chartered Property and Casualty Underwriter designation in 1998.

Dan earned his undergraduate degree in History from Carleton College, Northfield, Minn., and his Master of Business Administration in Finance and Accounting from the Carlson School of Management, University of Minnesota.

Education

B.A. in History, Carleton College 
MBA in Finance and Accounting, Carlson School of Management, University of Minnesota

We have a single-minded goal: Prevent your risk. Our multi-faceted approach could involve anything from strengthening safety procedures to supporting employee well-being to providing the right mix and level of insurance coverage.

Our people are listed below, alphabetically by first name. 

June 7, 2013

Background

The Departments of Health and Human Services, Labor, and Treasury (The Departments) have issued final wellness program regulations. These regulations are based on the existing HIPAA wellness rules and the requirements contained in proposed rules issued in November 2012.

Wellness programs are divided into two categories: “participatory wellness programs” and “health-contingent wellness programs.” Participatory wellness programs are permissible under the HIPAA nondiscrimination rules, as amended by the Affordable Care Act (ACA), provided they are available to all similarly-situated individuals regardless of health status. Health-contingent wellness programs are permissible under the rules provided they meet the five specific criteria described below.

These final regulations regarding wellness plans generally apply for plan years beginning on or after January 1, 2014.

Types of Wellness Programs

Participatory Wellness Programs

Participatory wellness programs are defined as “programs that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard that is related to a health factor.” The rules do not impose a limit on incentives or rewards for participatory programs.

Examples described in the guidance include:

• A program that reimburses employees for all or part of the cost of membership in a fitness center
• A diagnostic testing program that provides a reward for participation and does not base any part of the reward on outcomes; and 
• A program that provides a reward to employees for attending a monthly, no-cost health education seminar.

Health-Contingent Wellness Programs

Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward. This standard may be performing or completing an activity relating to a health factor, or it may be attaining or maintaining a specific health outcome. Under the final regulations, health-contingent wellness programs are further divided into activity-only wellness programs and outcome-based wellness programs.

In an important change from previous guidance, some programs that previously have been considered participatory programs, such as a walking program, are now classified as an activity-only health-contingent program.

• Activity-only health contingent wellness program - A program where an individual is required to perform or complete an activity related to a health factor in order to obtain a reward, but is not required to attain or maintain a specific health outcome. Examples include walking, diet or exercise programs. Some individuals participating in an activity-only wellness program may be unable to participate in or complete (or have difficulty participating in or completing) the program’s prescribed activity due to a health factor, so these individuals must be given a reasonable alternative opportunity to qualify for the reward.
• Outcome-based health contingent wellness program - A program where an individual must attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) in order to obtain a reward. As with the activity-based programs, individuals who do not attain or maintain the specific health outcome must be offered an alternative to earn the reward. An activity-based option may be offered as an alternative to the outcome-based program to achieve the same reward.

Five Criteria for Health-Contingent Wellness Programs

1. Frequency of Opportunity to Qualify. Individuals eligible for the program must be given the opportunity to qualify for the reward at least once per year.
2. Size of Reward. The maximum reward offered to an individual with respect to a group health plan cannot exceed 30% of the total cost of employee-only coverage under the plan. This percentage is increased to 50% for any programs designed to prevent or reduce tobacco use. The combined incentive for a program that includes both outcome-based rewards and a reward related to tobacco may not exceed 50% of the cost of coverage. For example, a combined program could provide an outcome-based reward equal to 30% of the plan’s premium with a tobacco-based reward worth another 20% of premium for a total reward of 50%. In addition, if dependents may participate in the wellness program, the reward cannot exceed 30% (or 50% for tobacco-related programs) of the total cost of the coverage in which the employee and any dependents are enrolled.
3. Reasonable Design. “A wellness program is reasonably designed if it has a reasonable chance of improving the health of, or preventing disease in, participating individuals, and is not overly burdensome, is not a subterfuge for discrimination based on a health factor, and is not highly suspect in the method chosen to promote health or prevent disease.”To be considered reasonably designed, an outcome-based wellness program must provide a reasonable alternative standard to qualify for the reward for all individuals who do not meet the initial standard that is related to a health factor. More detail on the reasonable standard requirement is included below.
4. Uniform Availability and Reasonable Alternative Standards. The full reward must be available to all similarly-situated individuals, and individuals who qualify by satisfying a reasonable alternative standard in place of the otherwise applicable standard. The reasonable standard requirements in the final regulations are significantly more detailed than prior HIPAA wellness rules guidance, and will require new procedures be adopted by many existing wellness programs. Additional detail on the reasonable alternative standard is included below.
5. Notice of Availability of Reasonable Alternative Standard. Plans are required to disclose the availability of a reasonable alternative standard to qualify for the reward in all plan materials describing the terms of a health-contingent wellness program. The disclosure must include; (i) contact information for obtaining the alternative, and (ii) a statement that recommendations of an individual’s personal physician will be accommodated. For outcome-based wellness programs, this notice must also be included in any disclosure that an individual did not satisfy an initial outcome-based standard.

Model notice language was provided in the guidance:

“Your health plan is committed to helping you achieve your best health. Rewards for participating in a wellness program are available to all employees. If you think you might be unable to meet a standard for a reward under this wellness program, you might qualify for an opportunity to earn the same reward by different means. Contact us at [insert contact information] and we will work with you (and, if you wish, with your doctor) to find a wellness program with the same reward that is right for you in light of your health status.”

If plan materials merely mention that a wellness program is available, without describing the wellness program terms, this disclosure is not required in that material.

Reasonable Alternatives

In arguably the most significant change to prior guidance, the final regulations impose considerable new requirements related to the offer of an alternative standard that allows individuals to receive an incentive.

Plans are not required to establish a reasonable alternative standard in advance of an individual’s request, and can provide the same reasonable alternative standard for an entire class of individuals, or provide the reasonable alternative standard on an individual basis.

All facts and circumstances are taken into account in determining whether a plan has provided a reasonable alternative standard, such as factors listed in the final regulations:

• If the reasonable alternative standard is completion of an educational program, the educational program must be made available at no cost to the individual. 
• The time commitment required must be reasonable.
• If the reasonable alternative standard is a diet program, the membership or participation fee must be paid by the plan (but not the cost of food). 
• If an individual’s physician states that a plan standard is not medically appropriate, a reasonable alternative standard must be provided that accommodates the recommendations of the physician.

Some of the requirements apply differently depending on whether the program is an activity-only, or an outcome-based wellness program:

Activity-only wellness programs

• The program must allow a reasonable alternative standard for any individual for whom it is either unreasonably difficult due to a medical condition, or for whom it is medically inadvisable to attempt to satisfy the standard. 
• The plan is permitted to seek verification, such as a statement from the individual’s personal physician, that a health factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy the standard.

Outcome-based wellness programs

• The program must allow a reasonable alternative standard for obtaining the reward for any individual who does not meet the initial standard based on a measurement, test, or screening. 
• In another notable expansion of earlier requirements, a program consisting solely of a measurement, test, or screening must provide a reasonable alternative to earn the incentive to individuals who do not meet the initial standard. 
• If the alternative standard is to meet a different (easier) level of the same standard, reasonable additional time must be given to meet the new alternative.
• An individual must be given the opportunity to comply with the recommendations of the individual’s personal physician as a second reasonable alternative standard to meeting the reasonable alternative standard defined by the plan. 
• In a change to previous guidance, plans are not allowed to require verification, such as a statement from the individual’s physician, that a health factor makes it unreasonably difficult or medically inadvisable for the individual to satisfy the outcomes based standard. However, if a plan or issuer provides an activity-only wellness program as an alternative to the measurement, test, or screening of the outcome-based wellness program, then verification may be requested with respect to the activity-only component of the program.

Summary

While the amount of an incentive employers can provide has been significantly increased, the final rules contain new requirements that will require employers to redesign many existing wellness programs that include “health-contingent” components. Employers must also remember that recent guidance has clarified that the “affordability” of a plan, for the purposes of determining employer penalties under the ACA shared responsibility rules, will be based on the employee contribution level associated with non-participation in wellness programs.

May 31, 2013

The IRS, Department of Labor and Health and Human Services (the agencies) has released Frequently Asked Questions (FAQs) regarding the summary of benefits and coverage (SBC) requirement contained in the Affordable Care Act (ACA). Under this provision, health plans and health insurance issuers must provide a SBC to applicants and enrollees that communicates the health plan’s benefits in a simple, easy-to-understand format.

The new information was included in the FAQs Part XIV and applies to the “second year of applicability” which is coverage that begins on or after January 1, 2014 and before January 1, 2015. This guidance is in addition to final regulations and three prior sets of FAQs that were previously released.

The new FAQs address issues related to providing SBCs in the second year of applicability, including:

• Changes made to the SBC template
• Transition relief with respect to the minimum essential coverage and minimum value disclosure requirements
• Extension of certain existing SBC safe harbors and other enforcement relief

Summary of FAQs Part XIV

The initial SBC template that was provided in February 2012 did not include a statement regarding whether or not the plan provides minimum essential coverage (MEC) or whether or not the plan provided minimum value, but noted that updated materials would later be issued. The updated template received in April 2013 now includes this information. It is important that an individual know if the coverage offered is MEC so that they know if they have the “right” coverage to avoid the individual mandate penalty. As well, it is important to know if employer-provided coverage has minimum value (60% value) because this impacts eligibility for exchange-based subsidy.

If it is administratively burdensome for an employer to add this new information, the agencies have provided relief where a plan may use the initial templates, provided that the SBC is furnished with a communication or similar disclosure that includes a statement about the plan’s MEC and minimum value status. The following model language was provided:

Does this Coverage Provide Minimum Essential Coverage?

The Affordable Care Act requires most people to have health care coverage that qualifies as “minimum essential coverage.” This plan or policy [does/does not] provide minimum essential coverage.

Does this Coverage Meet the Minimum Value Standard?

The Affordable Care Act establishes a minimum value standard of benefits of a health plan. The minimum value standard is 60% (actuarial value). This health coverage [does/does not] meet the minimum value standard for the benefits it provides.

No other changes were made to other components of the SBC such as the uniform glossary, instructions for completing the SBC, the “Why This Matters” language or the coverage examples. In addition, other safe harbors were extended, such as:

• Circumstances in which the SBC can be provided electronically
• Use of the coverage examples calculator
• Relief for plans and insurers with respect to products that are no longer being offered.

The agencies will continue with compliance efforts that are aimed at assisting, rather than imposing penalties, on issuers and others that are working diligently and in good faith to comply.

The FAQs can be found on the Department of Labor's Website.

May 24, 2013

Important Note

Certain employers may be responsible for paying a PCORI (Patient-Centered Outcomes Research Institute) fee as soon as July 31, 2013. This usually would be for plan years that ended on October 31, 2012, November 30, 2012, or December 31, 2012.

Employers who sponsor a self-funded health plan or who sponsor a health reimbursement arrangement (HRA) that is integrated with a fully-insured medical plan will want to pay close attention to the information below.

Background

The Affordable Care Act (ACA) created a new nonprofit entity, the Patient-Centered Outcomes Research Institute, to fund and support clinical effectiveness research. This research will be partially funded by health insurance companies and sponsors of self-insured health plans.

Employers who sponsor fully-insured health plans will not be required to pay the fee directly. The fee will be paid by the health insurance company issuing the insurance policy. However, it can reasonably be assumed that carriers will include the fee when setting the employer’s premium rates.

The plan sponsor, however, is responsible for paying the fee for “applicable self-insured health plans.” Employers that sponsor a self-funded health plan, including health reimbursement arrangements (HRAs), must pay the fee for each plan or policy year on an annual basis.

Amount of Fees

In general, the fee is calculated by multiplying $2.00 per year times the average number of covered lives in the plan. However, for plan or policy years ending before October 1, 2013, the fee is based on $1.00 per covered life. For plan or policy years ending after October 1, 2014, the fee will increase based on the percentage increase in National Health Expenditures as published by the IRS.
The fee is based on the average number of lives covered under the plan. This means not just employees covered under the plan, but covered spouses and dependents as well. See below for details on the calculation of the average number of covered lives.

Effective Date and Payment Due Date

Fees are payable for plan or policy years ending after October 1, 2012. The fee sunsets and no longer applies for plan years ending after Sept. 30, 2019. Another way to look at the effective date is that for plans that begin on the first day of the month, the first plan or policy year subject to the fee is November 1, 2011 – October 31, 2012.

Fees are reported and paid once a year. Payments for a particular plan or policy year are due by July 31 of the calendar year following the year in which the plan ends. To put it another way, fees for plan or policy years ending during 2012 must be paid by July 31, 2013; fees for plan or policy years ending in 2013 must be paid by July 31, 2014, etc.

For example:

• The sponsor of a plan or policy year beginning 01/01/2012 and ending 12/31/2012 must report and pay the fees for that plan or policy year by 07/31/2013. 
• The sponsor of a plan or policy year beginning 03/01/2012 and ending 02/28/2013 must report and pay the fee for that plan or policy year by 07/31/2014.

Plan sponsors will use the IRS Form 720 (Quarterly Federal Excise Tax Return) to report the fees. The IRS has not yet released a new version of the Form 720 but is expected to do so soon. Even though fees are reported on the quarterly Form 720, plan sponsors only need to report and pay the fee once per year for each applicable plan or policy year.

Treatment of Multiple Plans Offered by the Same Plan Sponsor

Multiple Self-funded Plans

If one plan sponsor maintains more than one self-insured health plan (such as a self-funded medical plan with an HRA, or a self-funded Rx plan offered with a medical plan), the arrangements can be treated as a single plan for purposes of the fee as long as the arrangements have the same plan year.

HRAs Offered in Conjunction with Fully-Insured Health Plans

IMPORTANT NOTE FOR SPONSORS OF A FULLY-INSURED HEALTH PLAN WITH AN HRA - The special treatment for HRAs integrated with a self-funded medical plan described above does not extend to HRAs offered in conjunction with a fully-insured plan. An employer who sponsors an HRA with a fully-insured medical plan is required to pay the fee with respect to HRA participants.

Determining the Annual Fee

Plan sponsors with self-insured plans may use any of three alternative methods to calculate the fee. Plan sponsors may use only a single method for a particular plan or policy year, but they are not required to use the same method from one plan or policy year to the next.

Actual Count Method

A sponsor may determine the average number of lives covered for the plan or policy year by calculating the sum of the lives covered for each day of the plan or policy year and dividing that sum by the number of days in the plan or policy year.

Snapshot Method

A plan sponsor may determine the average number of lives covered for the plan or policy year by adding the totals of lives covered on a particular date during each quarter of the plan or policy year, or an equal number of dates for each quarter, and dividing the total by the number of dates on which a count was made.

The regulations do not require that a specific date be used for each month or quarter, but do require that similar dates be used each month (for example - the 15th day of the second month of each quarter).

In addition, there are two methods within the snapshot method to count family members.

• The “snapshot count method” requires the plan to count the actual number of lives, including dependents, covered on the designated date. 
• The “snapshot factor method” allows the plan to count the number of participants with self-only coverage on the designated date, plus the number of participants with coverage other than self-only coverage (i.e. family coverage) on the designated date multiplied by 2.35.

Form 5500 Method

A sponsor may determine the average number of lives covered for the plan or policy year based on a formula that includes the number of participants actually reported on the Form 5500. A plan sponsor may use this method only if the Form 5500 is filed no later than the due date for the fee.

If a plan offers single and family coverage, the total number of lives is determined by simply adding the total participant counts at the beginning and end of the plan or policy year. Under the 5500 method the term “participant” means only covered employees and principal subscribers such as COBRA participants. Participant in this context generally does not include covered spouses and dependents.

Note that since a plan adds the number of participants on the first and last day of the plan or policy year, using the 5500 method has the effect of assuming approximately 2 covered lives per participant contract.

Special Rules for Calculating the Fee When an HRA Is Offered

For HRA coverage, each participant can be treated as a single life, regardless of how many other individuals (e.g., spouse, dependents, and other beneficiaries) are actually covered by the HRA.

May 15, 2013

The Internal Revenue Service (IRS) released a proposed rule on the minimum value and affordability rules under the Affordable Care Act (ACA). In this proposed rule, the IRS provides guidance on determining whether health coverage under an employer-sponsored plan is affordable and provides minimum value for purposes of determining the employer “pay or play” penalties. In particular, the proposed regulation:

• Explains how to calculate minimum value (MV);
• Outlines special rules for determining how health reimbursement arrangements (HRAs), health savings accounts (HSAs) and wellness program incentives are counted in determining MV and affordability; and
• Provides new safe harbors for determining MV.

This proposed rule would apply for tax years ending after Dec. 31, 2013.

Background

Effective for 2014, the Affordable Care Act (ACA) provides premium tax credits and cost-sharing reductions to eligible individuals who purchase qualified health plan coverage through a health insurance exchange. To qualify for the premium tax credit and cost-sharing reductions, an individual cannot be eligible for other minimum essential health coverage, including coverage under an employer-sponsored plan that is affordable to the individual and provides minimum value.

A large employer may be liable for a penalty under ACA’s “pay or play” rules if any of its full-time employees receives a premium tax credit or cost-sharing reduction through an exchange. This may happen if a large employer’s plan does not provide minimum value. An employer is a “large employer” for a calendar year if it employed an average of at least 50 full-time employees, including full-time equivalents, on business days during the preceding calendar year.

In addition, under ACA’s individual mandate, individuals are generally required to pay a penalty if they do not have minimum essential coverage. ACA also contains reporting requirements to implement the law’s penalty provisions for large employers and individuals.

Minimum Value Requirements

ACA provides that a plan does not provide minimum value (MV) if the plan’s share of total allowed costs of benefits provided under the plan is less than 60 percent. MV is calculated by dividing the cost of essential health benefits (EHBs) the plan would pay for a standard population by the total cost of EHBs for the standard population (including amounts the plan pays and amounts the employee pays through cost-sharing) and then converting the result to a percentage.

Health Benefits Measured in Determining Minimum Value

In determining the share of benefit costs paid by a plan, the proposed regulations do not require employer-sponsored large group plans to cover every EHB category or conform their plans to an EHB benchmark that applies to QHPs. Employer-sponsored group health plans are not required to offer EHBs unless they are health plans offered in the small group market. MV is measured based on the provision of EHBs to a standard population and plans may account for any benefits covered by the employer that also are covered in any one of the EHB benchmark plans.

The proposed regulations provide that MV is based on the anticipated spending for a standard population. The plan’s anticipated spending for benefits provided under any particular EHB-benchmark plan for any state counts towards MV.

Rules for HRA and HSA Contributions

The proposed regulations also address how employer contributions toward HSAs or HRAs should count toward the plan’s share of costs in determining MV. The proposed rule provides that all amounts contributed by an employer for the current plan year to an HSA are taken into account in determining the plan’s share of costs for purposes of MV and are treated as amounts available for first dollar coverage. Amounts newly made available under an HRA that is integrated with an eligible employer-sponsored plan for the current plan year count for purposes of MV in the same manner, as long as the amounts may be used only for cost-sharing and may not be used to pay insurance premiums.

Rules for Wellness Program Cost-sharing Reductions

In addition, the proposed rule addresses how nondiscriminatory wellness program incentives that may affect an employee’s cost sharing should be taken into account for purposes of the MV calculation. The proposed regulations provide that a plan’s share of costs for MV purposes is determined without regard to reduced cost-sharing available under a nondiscriminatory wellness program.

However, for nondiscriminatory wellness programs designed to prevent or reduce tobacco use, MV may be calculated assuming that every eligible individual satisfies the terms of the program relating to prevention or reduction of tobacco use. This exception is consistent with other ACA provisions (such as the ability to charge higher premiums based on tobacco use) reflecting a policy about individual responsibility regarding tobacco use.

Standard Population

The proposed regulations provide that the standard population used to determine MV reflects the population covered by self-insured group health plans. HHS has developed the MV standard population and described it through summary statistics (for example, continuance tables). MV continuance tables and an explanation of the MV Calculator methodology and the health claims data HHS has used to develop the continuance tables are available on the Center for Consumer Information & Insurance Oversight Website.

Affordability Requirements

Under the ACA, eligible employer-sponsored coverage is affordable only if an employee’s required contribution for self-only coverage does not exceed 9.5 percent of household income. Although the rule measures affordability based on household income, employers may find it difficult to determine an employee's household income because they generally will not know the income levels of their employees' family members. As a result, the IRS established three safe harbors for employers to use, which measure affordability based on the employee's W-2 wages, the employee's rate of pay or the federal poverty level for a single individual.

The proposed regulation includes special rules for determining how HRAs and wellness program incentives are counted in determining the affordability of eligible employer-sponsored coverage. The proposed rule provides that amounts made newly available under an HRA that is integrated with an eligible employer-sponsored plan for the current plan year are taken into account only in determining affordability if the employee may either:

• Use the amounts only for premiums; or
• Choose to use the amounts for either premiums or cost-sharing.

Treating amounts that may be used either for premiums or cost-sharing only toward affordability prevents double counting the HRA amounts when assessing MV and affordability of eligible employer-sponsored coverage.

The proposed rules also contain clarification on affordability when premiums may be affected by wellness programs. Under the proposal, the affordability of an employer-sponsored plan is determined by assuming that each employee fails to satisfy the wellness program's requirements, unless the wellness program is related to tobacco use. This means the affordability of a plan that charges a higher initial premium for tobacco users will be determined based on the premium charged to non-tobacco users, or tobacco users who complete the related wellness program, such as attending smoking cessation classes.

Transition relief is provided in the proposed rules for plan years beginning before Jan. 1, 2015. Under this relief, if an employee receives a premium tax credit because an employer-sponsored health plan is unaffordable or does not provide minimum value, but the employer coverage would have been affordable or provided minimum value had the employee satisfied the requirements of a nondiscriminatory wellness program that was in effect on May 3, 2013, the employer will not be subject to the employer mandate penalty. The transition relief applies for rewards expressed as either a dollar amount or a fraction of the total required employee premium contribution.

New Safe Harbors for Determining Minimum Value

In May 2012, the IRS issued Notice 2012-31 to propose several methods for determining MV: the MV Calculator, a safe harbor, actuarial certification and, for small group market plans, a metal level. The proposed regulations provide that taxpayers may determine whether a plan provides MV by using the MV Calculator. Taxpayers must use the MV Calculator to measure standard plan features (unless a safe harbor applies), but the percentage may be adjusted based on an actuarial analysis of plan features that are outside the parameters of the calculator.

Certain safe harbor plan designs that satisfy MV will be specified in additional guidance. It is anticipated that the guidance will provide that the safe harbors are examples of plan designs that clearly would satisfy the 60 percent threshold if measured using the MV Calculator. The safe harbors are intended to provide an easy way for sponsors of typical employer sponsored group health plans to determine whether a plan meets the MV threshold without having to use the MV Calculator. Plan designs meeting the following specifications are proposed as safe harbors for determining MV if the plans cover all of the benefits included in the MV Calculator:

• A plan with a $3,500 integrated medical and drug deductible, 80 percent plan cost sharing and a $6,000 maximum out-of-pocket limit for employee cost-sharing;
• A plan with a $4,500 integrated medical and drug deductible, 70 percent plan cost sharing, a $6,400 maximum out-of-pocket limit and a $500 employer contribution to an HSA; and
• A plan with a $3,500 medical deductible, $0 drug deductible, 60 percent plan medical expense cost-sharing, 75 percent plan drug cost-sharing, a $6,400 maximum out-of-pocket limit and drug co-pays of $10/$20/$50 for the first, second and third prescription drug tiers, with 75 percent coinsurance for specialty drugs.

Comments are requested on these and other common plan designs that would satisfy MV and should be designated as safe harbors. The proposed regulations require plans with nonstandard features that cannot determine MV using the MV Calculator or a safe harbor to use the actuarial certification method. The actuary must be a member of the American Academy of Actuaries and must perform the analysis in accordance with generally accepted actuarial principles and methodologies and any additional standards that subsequent guidance requires.

Other Issues in the Proposed Regulations

Definition of Modified Adjusted Gross Income

The term “household income” means the modified adjusted gross income of the taxpayer plus the modified adjusted gross income of all members of the taxpayer’s family required to file a tax return for the taxable year. The final regulations provide that the determination of whether a family member is required to file a return is made without regard to Code section 1(g)(7), which allows a parent to elect to include in the parent’s gross income the gross income of his or her child, if certain requirements are met. If the parent makes the selection, the child is treated as having no gross income for the taxable year.

The proposed regulations remove “without regard to section 1(g)(7)” from the final regulations because that language implies that the child's gross income is included in both the parent's adjusted gross income and the child's adjusted gross income in determining household income. Thus, the proposed regulations clarify that if a parent makes an election under section 1(g)(7), household income includes the child’s gross income included on the parent’s return and the child is treated as having no gross income.

Retiree Coverage

An individual who may enroll in continuation coverage required under federal or state law that provides comparable continuation coverage is eligible for minimum essential coverage only for months that the individual is enrolled in the coverage. The proposed regulations apply this rule to former employees only. Active employees eligible for continuation coverage as a result of reduced hours should be subject to the same rules for eligibility of affordable employer-sponsored coverage offering MV as other active employees.

The proposed regulations add a comparable rule for health coverage offered to retired employees (retiree coverage). Accordingly, an individual who may enroll in retiree coverage is eligible for minimum essential coverage under the coverage only for the months the individual is enrolled in the coverage.

Coverage Month for Newborns and New Adoptees

A month is a coverage month for an individual only if, as of the first day of the month, the individual is enrolled in a QHP through an Exchange. A child born or adopted during the month is not enrolled in coverage on the first day and therefore would not be eligible for the premium tax credit or cost-sharing reductions for that month. Accordingly, the proposed regulations provide that a child enrolled in a QHP in the month of the child’s birth, adoption or placement with the taxpayer for adoption or in foster care, is treated as enrolled as of the first day of the month.

Adjusted Monthly Premium for Family Members Enrolled for Less Than a Full Month

The premium assistance amount for a coverage month is computed by reference to the adjusted monthly premium for an applicable benchmark plan. The final regulations provide that the applicable benchmark plan is the plan that applies to a taxpayer’s coverage family. The final regulations do not address whether changes to a coverage family (for example, as the result of the birth and enrollment of a child or the disenrollment of another family member) that occur during the month affect the premium assistance amount. The proposed regulations provide that the adjusted monthly premium is determined as if all members of the coverage family for that month were enrolled in a QHP for the entire month.

Premium Assistance Amount for Partial Months of Coverage

The final regulations do not address the computation of the premium assistance amount if coverage under a QHP is terminated during the month. The proposed regulations provide that when coverage under a QHP is terminated before the last day of a month and, as a result, the issuer reduces or refunds a portion of the monthly premium, the premium assistance amount for the month is prorated based on the number of days of coverage in the month.

Family Members Residing at Different Locations

The final regulations reserved rules on determining the premium for the applicable benchmark plan if family members are geographically separated and enroll in separate QHPs. The proposed regulations provide that the premium for the applicable benchmark plan in this situation is the sum of the premiums for the applicable benchmark plans for each group of family members residing in a different state.

Correction to Applicable Percentage Table

The applicable percentage table in the final regulations incorrectly states that the 9.5 percentage applies only to taxpayers whose household income is less than 400 percent of the FPL. The proposed regulations clarify that the 9.5 percentage applies to taxpayers whose household income is not more than 400 percent of the FPL.

Additional Benefits and Applicable Benchmark Plan

Under section 36B(b)(3)(D) and the final regulations, only the portion of the premium for a QHP properly allocable to EHBs determines a taxpayer’s premium assistance amount. Premiums allocable to benefits other than EHBs (additional benefits) are disregarded. The final regulations do not address, however, whether a taxpayer’s benchmark plan is determined before or after premiums have been allocated to additional benefits.

The proposed regulations provide that premiums are allocated to additional benefits before determining the applicable benchmark plan. Thus, only EHBs are considered in determining the applicable benchmark plan, consistent with the requirement in section 36B(b)(3)(D) that only EHBs are considered in determining the premium assistance amount. In addition, allocating premium to benefits that exceed EHBs before determining the applicable benchmark plan results in a more accurate determination of the premium assistance amount.

By Jason Kleid

Leading a group of human beings is very complex. One of the keys to being successful in a leadership role is the knowledge that people will interact with their environment in different ways. How a person approaches problems, people, the pace of the environment and procedures demonstrate a person’s preferred behavioral styles. People, in general, are a combination of behavioral traits and those behaviors will change based on what the situation is calling for and the emotions involved.

Behavior is what we see; it’s how a person interacts with their surroundings. A person’s values or motivators are the reason why they interact the way they do.

Values are formed early in life. We all have good and bad experiences as we grow up. Experiences cluster and as a result we form our values. For instance, you may have had a number of very positive experiences with animals so you will tend to value them. Your co-worker had the opposite experiences in their life so they would never consider owning and taking care of pet. It follows that what a person values will cause that individual to place greater importance on something than others might. Values will cause a person to move toward something or away from it.

Scenario One

Sally loves helping her co-workers solve problems. They view her as the go-to person. They know they can always come to her when they are stuck. And they always do. Unfortunately this is not her job.

John, the department head, is concerned that Sally is helping others to the detriment of herself and her own work. He wonders about the most effective way to help refocus her efforts on her own work and as a result, become more productive. He is also concerned about de-motivating her. He decides to talk to Sally and comes away feeling he has made his point. He is convinced that he has accomplished his role as her manager. But did he appeal to Sally’s values and motivators in a way that will help her to see why she needs to refocus her efforts?

Scenario Two

Loretta has been assigned to lead her company’s philanthropic committee, a team whose mission is to give back to the community. Mark, one member of her team believes any money/resources that are being devoted to this project would be better used internally. Mark truly believes this assignment is a waste of his valuable time and that this project is nothing more than another distraction. He is convinced that this project is not going to help him achieve his personal goal of moving up in the organization. Loretta is concerned about alienating Mark and creating resentment in her attempt to help him understand the value behind the company’s philanthropic work. She also realizes that emotions might run high and make life difficult for those involved. How can Loretta encourage Mark to be open to new values and motivators? What can she do to get him aligned with the project? Simply telling Mark that this assignment is important will not appeal to his personal values and motivators.

As I describedin scenario one, Sally is moved to help others. She is being motivated by a social/altruistic value. Sally needs to help others. If you as her manager knew that helping others is important to her your approach to coaching Sally would no doubt be different than it would coaching someone who couldn’t care less about helping other people.

Others motivators are: utilitarian (think $ or ROI), theoretical (passion for knowledge), individualistic (in control of themselves and others), traditional (passion for principles and standards), and aesthetic (form and harmony, seeing the beauty in the world).

In scenario two, Loretta is trying to help the high utilitarian/individualistic, low social/altruistic person on her team get engaged in the giving back to the community. If a person is driven by a utilitarian motivation, his/her passion is practicality in all areas of life, surpassing others in attainment of wealth, creative application of resources, etc. An overextension may be displaying little or no concern for others.

Knowing those things, Loretta can now help coach this person by focusing on what drives his decisions to do or not to do. Proving to Mark that there will be a return on investment of their time and/or resources would be the way to create alignment. In a conversation with Mark, Loretta creates a scenario where he is able to see how great this project would look on his résumé and will become especially important when the company begins looking for people to promote. Mark’s values are now aligned with the project and he is engaged.

A true leader does more than respond to what everyone can see. They take the time to understand the why of a person’s behavior. What is really driving him/her? This only happens when values are discovered through conversation and listening.

About Jason Kleid: Jason is focused on optimizing performance and getting results. Underscoring this philosophy is a belief that it is always the individuals in any organization, where the greatest potential for improvement and possibility of change resides. “It is the mind or one’s thinking where new ideas broaden understanding and cause things to happen. However, it is the heart, the inner person, where transformation occurs.”

May 13, 2013

The Department of Labor (DOL) has released guidance and model notice language for employers to use to meet the Affordable Care Act (ACA) employee exchange notice requirement. The guidance can be found on the DOL's Website.

Background

The ACA requires that employers provide each employee with a written notice containing information about insurance exchanges, and potential subsidies that may be available when purchasing individual coverage through a public exchange. The statute requires that the following information be addressed in the notice:

• Inform the employee of the existence of the Marketplace (referred to in the statute as the Exchange) including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
• If the employer plan's share of the total allowed cost of benefits provided under the plan does not provide minimum value, the employee may be eligible for a premium tax credit if the employee purchases a qualified health plan through the Marketplace; and
• If the employee purchases a qualified health plan through the Marketplace, the employee would lose the tax-free employer contribution to any health benefit plan offered, and premiums paid for individual coverage would be made on an after-tax basis.

The ACA required the notice be provided to employees by March 1, 2013; however, on January 24, 2013, the DOL issued guidance delaying the notice requirement until guidance was released.

Effective Date

Employers are required to provide the notice to current employees no later than October 1, 2013. Employers are also required to provide the notice to each new employee at the time of hiring beginning October 1, 2013. For new hires, a notice provided within 14 days of an employee’s start date will be considered timely through the end of 2014 (pending additional guidance).

• The guidance specifically states the notice may be provided by first-class mail, or electronically if the requirements of the DOL’s electronic disclosure safe harbor are met.
• While this guidance does not specifically endorse the distribution of the notice directly to employees at the worksite, previous comments by the DOL have implied that distribution of the notice with other benefits and enrollment material would be allowed. Further clarification from the DOL regarding this possible method of distribution would be helpful.
• The notice must be provided to all employees, full-time and part-time, regardless of enrollment status. Employers are not required to provide the notice to spouses and/or dependents.

Employers Subject to the Notice Requirement

The requirement applies to all employers subject to the Fair Labor Standards Act (FLSA). In general, the FLSA applies to employers that employ one or more employees who are engaged in, or produce goods for, interstate commerce. However, an exception exists for some small firms with less than $500,000 in annual revenue. The DOL provides guidance relating to the applicability of the FLSA.

New Guidance and Model Notice

A model notice has been provided by the DOL and can be found on their Website. Employers are not required to use the model notice as long as the required elements described in the statute are included in an employer’s communication.

• The model contains no requirement to provide specific exchange contact information. The model notice simply directs the employees to www.HealthCare.gov to find information on how to contact the exchange in their area. This is welcome news for multi-state employers who were concerned about providing various contact details for different state exchanges.
• The model notice contains a more extensive section on the employer’s current plan offering than was anticipated. This section includes plan eligibility information, employer EIN, employee contact information, etc.
• There is also an “optional section” of the notice that the employer can use to provide employee-specific information including the cost to participate in the plan, employee-specific eligibility dates, and more. This section is designed to assist the employee in supplying information to an exchange when applying for individual coverage.

New Model COBRA Election Notice Also Released

In conjunction with the model exchange notice, the DOL has released an updated model COBRA election notice. The new COBRA notice contains information about the availability of subsidized coverage through the public exchanges. This new notice can be found at www.dol.gov/ebsa/cobra.html.

Beginning in 2014, the availability of individual health insurance with no medical underwriting, and the possibility of subsidies, will significantly reduce the need for former employees and dependents to elect COBRA. Since COBRA coverage generates additional claims costs for employer-sponsored plans, it will benefit employers to clearly communicate the new individual health insurance options to individuals experiencing a COBRA event.

Summary

Employers have until October 1, 2013 to distribute the notice to employees. However, many employers will likely distribute it much sooner. Employees are already starting to ask questions about the availability of coverage and subsidies through exchanges. It is also expected that media coverage will increase as the October 1 open enrollment period for the exchange begins, generating even more questions from employees.

For many employers, the answer to employee questions is simple. If the employer offers affordable, minimum value coverage (as defined by the ACA) to an employee, the employee and their family will not be eligible for subsidized individual coverage on the exchange.

On the other hand, employers may wish to more aggressively promote the availability of these options to categories of employee’s (such as part-time or seasonal employees) that are not eligible for the employer’s plan.

RJF/Marsh & McLennan Agency Earns Highest Honors From The Hanover Insurance Group

COMPANY RECOGNIZES AGENCY FOR OUTSTANDING CUSTOMER SERVICE

WORCESTER, Mass. (May 13, 2013) – The Hanover Insurance Group, Inc. (NYSE: THG), a leading provider of property and casualty insurance products and services nationwide, recently honored RJF/Marsh & McLennan Agency with its Top Franchise Partner Award—the company’s highest honor.

The award was presented at The Hanover’s 2013 President’s Club business conference, an annual gathering of an elite group of high performing agencies from across the country.

CEO Bill Jeatran founded the Minneapolis-based company in 1986, with the goal to build a firm that represents industry leading companies and provides high quality risk prevention advice and resources to its clients. President Tim Fleming joined Bill soon after and together, they built one of the most successful independent insurance agencies in the country. In 2011, they joined Marsh & McLennan Agency to lead and build its upper Midwest region.

The Hanover Insurance Group selected RJF/MMA for this award from its agent partners countrywide. The honor was granted in recognition of the agency’s ability to deliver value to customers through strong insurance product expertise, its responsive service and sales culture; as well as a continued commitment to insurance expertise and specialization. In addition, RJF/MMA was recognized for its deep commitment to providing outstanding local community support.

“It is with great pride that we presented RJF/Marsh & McLennan Agency with this award,” said Dick Lavey, senior vice president field operations and marketing for The Hanover. “Bill, Tim and their entire team continually are raising the bar, delivering the highest level of customer service and value to their customers.”

In addition to its dedication to business values, RJF maintains an active commitment to the communities in which it does business. Last year RJF/MMA’s signature Charity Challenge event set the goal of raising $161,000 and exceeded that goal by raising $254,000. The funds were donated to Children’s Hospitals and Clinics of Minnesota and College Possible to serve and improve the well-being and development of children.

Lavey continued, “In alignment with The Hanover’s core values, RJF/MMA prides itself on being a good corporate citizen by providing support to local non-profit organizations where it does business. We are proud to be their partner.”

“It is a tremendous honor for RJF/MMA to accept this award,” said Jeatran. “This award demonstrates the extremely successful partnership we have developed with The Hanover’s and its commercial insurance segments such as small commercial, middle market, specialty, professional lines and management liability divisions. We are proud to partner with The Hanover, as we create value by working together to help our clients effectively address their insurance needs.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S. RJF leads the upper Midwest region for MMA. More information is at www.rjfagencies.com.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

ABOUT THE HANOVER

Founded in 1852, The Hanover Insurance Group, Inc. (NYSE: THG) is proud to be celebrating 160 years of delivering on its promises to its agent and broker partners, and their customers. The Hanover Insurance Group, Inc., based in Worcester, Mass., is the holding company for a group of insurers that includes The Hanover Insurance Company, Worcester, Mass., Citizens Insurance Company of America, Howell, Mich., Chaucer Holdings plc, London, and their affiliates. The Hanover offers a wide range of property and casualty products and services to businesses, individuals, and families through a select group of agents and brokers. The company is ranked among the top 25 property and casualty insurers in the United States. Through Chaucer, the company also underwrites business at Lloyd's of London in several major insurance and reinsurance classes, including property, marine and aviation, energy, U.K. motor and casualty. For more information, please visit www.Hanover.com.

CONTACT

Amy Banek
Media Relations
abanek@hanover.com
(508) 855-4486

Briefly From Bill

By Bill Jeatran

May 10, 2013

Cyber-crime, network security, denial of service attacks, data breach. These are all terms that had little relevance to anyone other than a handful of IT dudes scattered in basements somewhere in Silicon Valley until relatively recently. My, how times have changed. 

Now, you can’t pick up a newspaper (or, rather, open a news Web site on your tablet or smartphone) without reading about some company somewhere being hacked and the countless numbers of customer or patient records—along with their social security, telephone and credit card or bank account numbers—being stolen. Even the White House and the rest of our esteemed national Congress are concerned, particularly when these attacks come from outside the United States.Cyber-crime, network security, denial of service attacks, data breach. These are all terms that had little relevance to anyone other than a handful of IT dudes scattered in basements somewhere in Silicon Valley until relatively recently. My, how times have changed.

So why, given this barrage of attention, aren’t mid-size and smaller companies in our region more concerned and taking measures to protect themselves in the event of a breach?

The media typically glom onto the extraordinary cyber-crime cases, those involving huge multi-national companies and millions of compromised records. But the reality is that most of these crimes are committed against small and midsize employers. In fact, the U.S. Secret Service and Verizon Communications found that 63.5% of data breaches in 2010 were to companies with 100 or fewer employees. The Ponemon Institute reports that half of companies with up to $10 million in revenue have experienced a data breach. This may be because these smaller companies have fewer controls in place due to their perception that they aren’t exposed to high levels of risk.

We recently conducted a survey to learn more about companies we work with. The results show that most (83%) of those who participated in the survey have five or more substantial cyber risks in place. Sadly, most of them do not have insurance coverage that could protect them financially if a breach occurs. Fortunately, the number of employers who do have cyber liability insurance is growing, based on other reports.

This is a relatively new insurance product designed to protect against these relatively new threats. We are fortunate to have a cyber liability insurance expert—Dan Hanson—who the rest of Marsh & McLennan Agency looks to for advice, guidance and support on this line of coverage. He is one of the very best in the country at helping middle market employers understand the risks they face and their insurance protection options. Underwriters trust him, too, which helps get good prices and policy enhancements or modifications when needed for a customer.

If you are like most employers and haven’t explored this topic lately, consider spending a little time learning about it. We’ve built a great Web page with resources and information galore. Just visit www.rjfagencies.com/CyberLiability or contact Dan directly at hansond@rjfagencies.com.

Enjoy your summer!

Bill

SMALL AND MIDSIZE EMPLOYERS IN MINNESOTA LARGELY UNINSURED AGAINST CYBER CRIME

RJF/MARSH & MCLENNAN AGENCY SURVEY FINDS 4 IN 5 LACK COVERAGE

MINNEAPOLIS, May 8, 2013— Despite growing awareness of the prevalence and dangers of corporate cyber-attacks and data breaches, more than 83% of small and midsize employers are without insurance policies designed to provide financial support and protection in the event of an IT breach, according to a survey report released today by RJF/Marsh & McLennan Agency (MMA).

Additionally, nearly four of five employers report having five or more significant cyber risks, showing that a substantial risk of costly damages exists for most of them. Data breaches are extremely costly, averaging nearly $200 per compromised record, according to data security research firm Ponemon Institute, which also states that half of employers under $10 million in revenue have experienced a data breach.

“While we’ve seen increased interest in cyber liability insurance policies, smaller employers have yet to fully grasp their exposure to a cyber-incident,” said Dan Hanson, Director of the Management Liability Group for RJF/MMA. “Sadly, the reality is that these organizations are big targets of cyber criminals, and the recovery costs can ruin these firms if they don’t have proper and adequate insurance protection.”

In general, companies have an obligation to protect the confidential information of others, and if that information is compromised or stolen, they would be held liable. A cyber liability policy -- also known as network security coverage, privacy liability or data protection coverage – is designed specifically to protect against that liability, although the extent and amount of the coverage can vary. Cyber liability insurance policies are priced based on industry, company size and risk exposures. Premiums start around $1,000.

Additional key survey findings include:

• Nearly two-thirds of employers discuss cyber risk and security at the executive level no more than twice a year. Fourteen percent never discuss it.
• Half of employers reported being exposed to seven or more cyber risks. Many of these risks are no longer seen as extraordinary, but rather part of normal business operations. 
• CEOs and CFOs were less likely to see a need for insurance than respondents overall. They also ranked their security levels and their knowledge of the issue higher than the average respondent.

A survey report is available at www.rjfagencies.com/CyberRiskSurvey. There were 167 respondents to the online survey, across a variety of industries. Minnesota employers made up 82% of respondents.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S. RJF leads the upper Midwest region for MMA. More information is at www.rjfagencies.com.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact 

Jeff Mulfinger
+1 763 746 8257
mulfingerj@rjfagencies.com

By Dan Hanson

May 7, 2013

One of the most common questions we receive is: ”What is the cost to my organization if I fail to protect the confidential information of others?” One of the most trusted resources for this type of data is the Ponemon Institute.

As you can see in the chart at right that was taken from the Ponemon Institute's 2011 Cost of Data Breach Study: United States, they estimate the cost was $194 per record lost in 2011 . Also, you will note 2011 was the first year we saw a decline in the cost per record since they started tracking this data in 2005.

It is important to understand what goes into the $194 average cost per record breached as reported by Ponemon. Direct costs account for $59 of the cost. These costs include those necessary for notification, credit monitoring, forensics, public relations and systems fixes. The remainder, or $135 per record are associated with indirect costs such as lost customers, loss of future customers, less frequent purchases by current customers resulting from their loss of faith in the security of your organization.

According to this survey, the cost per record varies by industry. The communications industry has the highest cost per record at $334 per record, while the media industry has the lowest cost per record lost at $89.

By Dan Hanson

May 7, 2013

We have discussed the obligation to protect the confidential information of others, but we haven’t in great detail discussed what is considered confidential information. Clearly, for an organization to understand their risk to a confidential information breach, it first has to understand what type of information may be considered confidential.

Confidential information is any information your organization has an obligation to protect that may result in financial, or other harm, to an individual or organization if it were compromised. Some obvious examples are credit card numbers, social security numbers, driver license information, bank account, healthcare information, and financial records.

Quite often we find that businesses do not consider the intellectual property they hold that belongs to their clients, potential clients, vendors, and the information they may hold as a result of potential M&A. This information can be much more costly if it should leak out.

Consider a multi-billion dollar company that comes out with a new phone. Prior to launch, they approach the following parties in advance:

• A components manufacturer that develops the one key piece in the technology that makes this phone unique
• A case manufacturerthat develops the special case that is able to adapt around this unique technology that will differentiate the phone and potentially make it a top seller
• Retailers that will be in on the marketing campaign right before the holiday buying season
• Ad and PR firms that will design the TV, radio and print ads that will create the buzz to make it a top seller

If any of these vendors were breached and lost the highly guarded secret of the new phone, it would potentially cost the phone manufacturer millions or billions of dollars. These vendors have an obligation to protect the confidential information of others.

Most businesses hold a tremendous amount of information of others that they are obligated to protect. If the information were to leak out, at the very least it would be embarrassing to the business, and, in many cases, it would result in the obligation to notify others or even result in class action law suits.

May 7, 2013

The IRS has released the 2014 limits affecting Health Savings Accounts (HSAs) and High Deductible Health Plans (HDHPs). The minimum required deductibles will not change from the 2013 amounts, but the HSA contribution limits and the HDHP out-of-pocket (OOP) maximums will increase for 2014.

HSA contribution limit in 2014:

• Self-only $3,300 (increased from $3,250 in 2013)
• Family: $6,550 (increased from $6,450 in 2013)
• Catch-up contribution limit for HSA-eligible individuals who are age 55 or older: $1,000 (no change)

Deductible limit in 2014:

• Self-only: Not less than $1,250 (no change)
• Family: Not less than $2,500 (no change)

Out-of-pocket maximum limit in 2014:

• Self-only: Not more than $6,350 (increased from $6,250 in 2013)
• Family: Not more than $12,700 (increased from $12,500 in 2013)

Effect on the Affordable Care Act Cost-Sharing Limits

The OOP maximum limit is of particular importance this year since the Affordable Care Act (ACA) restricts all group health plans to an OOP amount that is tied to the level set by these rules for HSA-qualified HDHP plans. For plan years beginning in 2014, cost-sharing limits cannot exceed the maximum OOP limits published for HSA-compatible HDHPs. This overall cost-sharing limitation applies to all non-grandfathered group health plans, both fully-insured and self-funded.

Millennials and the Recruitment/Retention Process

May 6, 2013

Part 2 of a 3-part series

In Part One, The Millennial Workforce: What Management Should Know, of our 3-part series on the Millennial Workforce, Heather Roiger, RJF human resources consultant, offered insights into what employers need to know about the millennial employee. In The Millennial Workforce: Millennials and the Recruitment/Retention Process (Part Two), Roiger will discuss how to recruit and retain the millennials. Part Three will address how to create a cohesive, collaborative workplace environment that encompasses multiple generations.

Not surprising, this generation that grew up in highly techno-driven and e-communication society, Millennials use a variety of online resources when job-hunting, and may even prescreen potential employers based on how e-literate they are. Employers have to understand that and update their recruitment process if they want to attract the cream of the Millennial crop, says Roiger. “Of course, it all starts with making sure employers have the right benefits and culture in place—flexibility, balance and opportunities for development—to even attract someone in that group. But once they have that, they need to look at recruiting from a different standpoint.”

Instead of just relying on the traditional headhunter or classified want-ad approach, companies also need to use social media, Twitter, LinkedIn and Facebook to reach out to potential Millennial employees, because that is where they are looking. “When millennials see employers using those social media networks, they think those companies are really up to speed, into technology and are much more advanced,” explains Roiger. “It starts to get their thoughts triggered that ‘this could really be a good employer. This is somewhere where I might want to go.’”

Bottom line? Employers have to have the right culture, offer the benefits most important to Millennials and then recruit the right people, says Roiger. “This will go a long way to helping compensate for the loss of the Baby Boomer workforce.”

Once the Millennials have come on board, however, companies need to provide those benefits that the new employees deem most important if they want to retain them. According to the Society for Human Resource Management (SHRM) 2012 Employee Job Satisfaction and Engagement survey, employees in the Millennial demographic rated “opportunities to use skills/abilities at work” as their number one job satisfaction factor (60%), with career advancement opportunities also high as a job satisfaction factor (50%). As an article in the Harvard Business Review reported, “dissatisfaction with some employee-development efforts appears to fuel many early exits,” leading to a “vicious circle: companies won’t train workers because they might leave, and workers leave because they don’t get training.”

Unfortunately, employee development seminars aren’t free—companies not only need to invest money in presenting these seminars, but they must also account for the absence of the participating employees. This is a cost that some businesses are not willing to bear—either because they don’t have funds budgeted for it or fail to recognize the long-term advantages.

But, Roiger says, “companies have to look at it from talent management perspective. They have to recognize that there might be some costs, but the ROI is much greater. Companies that have invested in employee development programs have a lower turnover and a higher retention rate. They also have a stronger skillset in their employees so they have less of that skill gap. As long as you keep employees educated and smart, and you are providing them with training opportunities, you will see a return. You’ll be much more efficient, more profitable, you’ll have new creative ideas and your employees will want to work there.”

As generational expert and founder of RainmakerThinking Inc., Bruce Tulgan recommends in an article in SHRM’s Workplace Visions publication, organizations need to provide Millennials with “teaching-style managers, advisers, organizational supporters and maybe even mentors” to help them develop “both technical and applied, nontechnical skills, all of which are critically important for future success in leadership roles.”

And this involves training for managers as well, adds Roiger, so they can coach and mentor while managing. “They are going to have to shift their styles completely from where they are at in order to meet the needs of those who are coming into the workforce, instead of having just one management style.”

This is not an easy task, but one for which RJF/Marsh & McLennan Agency is prepared to offer assistance. “At RJF, we provide them with guidance and do workshops and training on how to engage Millennials and how to shift their thinking to be more of a developmental manager,” says Roiger. “We also help companies identify what their strategy should look for in the next three to five years regarding people and offering talent management programs. Recruiting, retention, talent management, benefits, culture: that’s going to be the core that holds it together.”

For more information about upcoming seminars offered by RJF, visit www.rjfagencies.com/Events/Seminars/.

What Management Should Know

May 6, 2013

Part 1 of a 3-part series

Every generation brings with it a specific identity and mindset, from the “nose to the grindstone” mentality of the workaholic Baby Boomers to the entrepreneurial attitude of Generation X, which can have an impact on company culture and the workforce as a whole. Both management and employees have had to find ways to communicate and adjust to each other’s expectations and requirements.

In the coming years, companies and management will find it far more challenging to create a cohesive workforce and maintain a productive work environment. They not only have to adapt to the unique mindset of the incoming Millennial (or Generation Y) employees but also face the loss of the retiring Boomers, who take with them decades of knowledge.

In this article, the first in a three-part series on the Millennial workforce, Heather Roiger, RJF/Marsh & McLennan Agency human resources consultant, offers insights into how this change will affect business operations and what employers need to understand about the millennial employee. Part Two will explore how to recruit and retain the Millennials, and Part Three will discuss how to create a cohesive, collaborative workplace environment that encompasses multiple generations.

The demographic shift in the workplace

The workforce has undergone a dramatic change in the last 40 years. According to the Society of Human Resource Management (SHRM) 2012 Employee Job Satisfaction and Engagement survey, in 1971, the average age of a U.S. worker was 28, while, in 2007, the average age of a U.S. worker was 46. Boomers represent 38% of the workforce, and when those workers retire—with statistics noting that 10,000 Baby Boomers become eligible for retirement each day— companies are going to suffer a significant skill gap.

“Think about the Boomers currently on the payroll. They have 20 to 30 years of experience that’s going to be walking out the door with them when they leave. So not only are companies losing employees, they are losing valuable skillsets. And the new people coming in probably have just a few years of experience,” says Roiger. “I think that is the point that employers are missing. They think, ‘We can replace people,’ and yes, you absolutely can. Everybody is replaceable. But you can’t always replace the skills.”

And that loss can be expensive to replace, ranging from 50 to 150 percent of their annual salaries when costs for recruiting, orienting and training new employees are combined, adds Roiger. But employers are not just facing a loss of skills but also a loss of manpower, since for the first time in history, there will be more employees exiting the ranks than entering.

“The Gen X folks—the group right behind the Boomers—are still in the workforce,” says Roiger. “But the problem is that, even including both Gen X and Millennials, there still are not enough people in both of those groups to make up for that gap of Boomers.”
Companies will need to understand what business environment attracts and retains Millennials to maintain an adequate staffing level.

The Millennial mindset

“Ten years ago, we were in a boom,” says Roiger. “The economy was great, the housing market was great and jobs were available. People were getting into the workforce easier, and they weren’t as demanding [of employers] as you see in the Millennials. They just wanted to work.”

It’s not that Millennials don’t want to work, adds Roiger. “They actually do have a very strong work ethic and it’s pretty similar to Traditionalists—the World War II generation. What’s different is that they crave and need a balance, which Boomers don’t. So they unfortunately get stereotyped as not wanting to work. It’s not that they want to leave at 4 o’clock because they have softball league or whatnot; they just want flexibility and balance. They want to work smarter, get their job done in less time or have some flexibility—be able to work remotely or at odd hours such as late at night or early in the morning. And if your business can support some flexibility, that’s going to be a huge factor in attracting and retaining them.”

Rather than comparing benefits packages and 401K options, Millennials are more interested in the ancillary benefits—vacations, flex-time, culture and opportunities for development. “They want meaningful and challenging work, a clear career path,” says Roiger. “They need to know exactly where they are going and have immediate access to managers and bosses who are going to support them in their quest to expand their skill level. That can be a deal-breaker for them.”

But even if companies provide everything the Millennials prize so highly, it doesn’t mean they will remain there until gold watch time. Instead, says Roiger, most will stay a few years and then move on. That loyalty to the employer is no longer there, but instead has been replaced with loyalty to oneself. This is understandable, given that so many had parents who were affected by the recession or corporate decisions that resulted in lost jobs. Believing that they are expendable from an employer’s point of view, Millennials are doing what’s necessary to safeguard their future, even if that means transitioning from one company to the next.

RJF offers a variety of seminars and training programs designed to help companies adapt to the changing workforce demographic. More information is at http://www.rjfagencies.com/Blog/PreventingTalentVoids.aspx.

By Dan Hanson

May 6, 2013

Failing to protect the confidential information of others creates many exposures to your business. At a high level these exposures can be broken down into third-party exposures and first-party costs to your business.

The third-party exposure is easier to understand. If you fail to protect the confidential information of others (e.g., credit card number, social security number, etc.) and it results in financial damages to that party, they can bring suit against you to make them whole. The cost to defend—and ultimately pay for— these matters can be enormous. An example would be Heartland Payment Systems. Their 2008 data breach has cost the company more than $100 million.

We will spend more time on first party costs in future articles, but there can be a multitude of potential first-party costs to your organization, including:

• Notification expenses
• Public Relations expenses
• Business interruption
• Credit monitoring
• Regulatory defense

Due to statutory laws in 46 states, these are expenses your organization would incur even if your failure to protect the confidential information of others did not result in any financial damages to that third party.

May 2013

RJF/Marsh & McLennan Agency recently conducted a survey to find out how and what small and mid-sized employers are thinking about cyber risk and the insurance protection available to them. There were 167 respondents to the survey, encompassing a wide spectrum of industries, with most (82%) being in Minnesota.

OVERVIEW & KEY FINDINGS

Even though half of employers with revenues under $10 million have experienced a data breach and the average breach costs nearly $200 per compromised record, according to data security research firm Ponemon Institute, most small and mid-size businesses responding to this survey still do not consider cyber security to be an immediate and substantial threat.

While there are several noteworthy results, the key items to note are that:

• The vast majority of employers reported having multiple cyber risks that expose them to potentially damaging attacks and claims.
• Most employers do not discuss cyber risk at the executive level frequently enough to make a significant impact on their exposures. 
• A growing number of companies have insurance coverage in place to protect themselves in the event of a data breach or cyber-attack.

As more and more data is digitized and business is increasingly being conducted online, it is becoming common for organizations to hold electronic records and transfer or share electronic records with customers, suppliers, employees and other business partners. This means the risk will continue to increase.

EMPLOYERS FACE SUBSTANTIAL RISK FROM “NORMAL” BUSINESS ACTIVITIES

Nearly four out of five employers responding in this survey face five or more cyber risks. In fact, half of employers are confronting seven risks or more, with seven being the most common number of risks. The risks identified in the survey are varied, and include:

• Having computers connected to the Internet
• Processing banking information
• Holding client or customer information
• Holding past or present employee information
• Having employees use laptops or PDAs linked to the employer’s network
• Holding supplier information
• Processing credit card transactions
• Holding information subject to HIPAA
• Using the Cloud
• Having a Web site that collects personal or confidential information from visitors

While it is true that many of these activities are not outside what would be considered normal business operations, each of them presents risk to an employer. The more activities they conduct, obviously the greater amount of risk an employer assumes.

The average number of risks facing the respondents was 6.10, with a median score of 7. Construction, financial services, nonprofit, and retail industries all facing an average of more than 6.10, ranging from 6.26 to 6.82 risks. Health care, manufacturing, and wholesale trade industry groups reported having fewer risks than average, ranging from 5.33 to 5.94.

Overall, this shows that the risks facing employers across industries are substantial. The difference between the lower-than-average-risk industries and higher-than-average-risk industries is relatively minor. Cyber risk is confronting all industry groups, and all employers should be aware of the dangers and take steps to prevent unnecessary risk to themselves.

EXECUTIVES AREN’T TALKING ABOUT IT

Despite the risk facing employers, and the continued growth in electronic data, this concern typically isn’t making it into c-suite discussions. Nearly two-thirds of respondents report discussing IT security at an executive level only twice a year or less, with one in seven (14%) never discussing it at all. This seems to correspond with the fact that respondents ranked their need for insurance at about 2.6 on a five-point scale.

Curiously, though, respondents rate their level of protection at only 3 out of 5, so they appear to be aware that they are under-protected. However, c-level respondents responded slightly higher than the overall average, demonstrating that executives are slightly more optimistic when evaluating their organization’s cyber security.

This may be related to the fact that most people do not consider themselves to be knowledgeable on the cyber and data security risks facing their own organizations. On a scale of 1-5, respondents reported an average score of 2.48, with c-level executive reporting only slightly better at 2.68.

Interestingly, it is the c-suite that typically ends up buying this line of insurance, with 62% of those employers with policies in place stating the CEO, CFO or COO decided to make the purchase.

A Growing Number of EMPLOYERS HAVE cyber liability INSURANCE PROTECTION

While only 16% of employers report having cyber liability insurance policies designed to provide financial coverage in the event of a data breach or other cyber attack, this number reflects an upward trend in the prevalence of this coverage. A recent study by the Marsh US FINPRO Practice showed that 33% more of its clients had purchased cyber liability insurance in 2012 compared to 2011. This is positive movement to reduce the damage to employers in the event of a cyber security breach. As more companies of all sizes become better educated on the dangers and costs of cyber risk, this insurance will likely gain added prominance.

While retail and professional services employers were more likely to have policies than many other types of organizations, it is difficult to draw strong industry specifics from this survey due to the relatively small number of employers with policies in place.

With the average cost of a data breach approaching $200 per record compromised, most employers likely would not be able to bear this cost without the financial support that insurance provides. Premiums are based on company revenue s, industry and overall risk exposures, and start as low as $1,000.

For more information

You can get more details and information specific to your organization by contacting your Marsh & McLennan Agency representative or Dan Hanson, Director of Management Liability Group, at +1 763 548 8599 or hansond@rjfagencies.com.

More information on cyber and data security risk is also online at www.rjfagencies.com/CyberLiability.

> GET A PDF VERSION OF THIS REPORT.

April 30, 2013

Background

Proposed regulations addressing the Affordable Care Act’s prohibition on waiting periods exceeding 90 days were recently released by the Department of Labor, the Department of Health and Human Services, and the Internal Revenue Service. The proposed regulations are substantially similar to the August 2012 temporary guidance, but with some additional clarification. These proposed regulations, along with the guidance provided in August 2012, may be relied upon at least through the end of 2014.

PHS Act section 2708 provides that “a group health plan or health insurance issuer offering group health insurance coverage shall not apply any waiting period (as defined in PHS Act section 2704(b)(4)) that exceeds 90 days.” This rule applies to all group health plans for plan years beginning on or after January 1, 2014.

PHS Act section 2704(b), ERISA section 701(b)(4), and IRS Code section 9801(b)(4) define a waiting period to be “the period that must pass with respect to an individual before the individual is eligible to be covered for benefits under the terms of the plan.”

Under the proposed rules, employers are not required to offer coverage to any particular employee or class of employees, but rather cannot impose a waiting period of more than 90 days before coverage is effective for an otherwise eligible employee or dependent.

90-Day Requirement

Commenters have suggested some flexibility regarding the 90-day limitation to allow for the use of three calendar months or coverage that begins on the first day of the month following 90 days; however, due to the clear text of the statute, the regulations state that “the waiting period may not extend beyond 90 days and all calendar days are counted beginning on the enrollment date, including weekends and holidays.” If the 91st day is a weekend or holiday, coverage may be made effective earlier than the 91st day, but coverage must be effective no later than the 91st day.

For those individuals hired or newly eligible prior to the beginning of the 2014 plan year, the rules have no phase-in period. Therefore, the days of employment prior to the start of the 2014 plan year will count toward the 90-day waiting period limitation. If 90 days has already been incurred before the 2014 plan year renewal, such individual(s) must be allowed to commence coverage on the first day of the 2014 plan year.
 
Below are examples assuming a 5/1/2014 plan year renewal:

• If the employee is hired 4/15/2014 (subject to a waiting period of first day of the month following 90 days), the employee must be offered coverage no later than 7/14/14 (90 days after date of hire).
• If the employee is hired 1/15/2014 (subject to a 6-month waiting period), and the new plan year begins 5/1/2014, the employee must be offered coverage no later than 5/1/2014.

Eligibility Requirements

The August 2012 guidance provides that “eligibility conditions based solely on the lapse of a time period are permissible for no more than 90 days. Other conditions for eligibility under the terms of a group health plan are generally permissible under PHS Act section 2708, unless the condition is designed to avoid compliance with the 90-day waiting period limitation.” Following are several specific scenarios that have been approved under the proposed regulations. However, it is important for employers to remember that an applicable large employer subject to the shared responsibility rules for employers under IRS Code section 4980H may still be liable for potential penalties if coverage is delayed beyond 90 days and even if substantive eligibility conditions (such as examples 1 and 2) that delay coverage are allowed.

• Meeting certain sales goals or earning a certain level of commission, as well as attaining job-related training or licensure are generally allowed and do not trigger the 90-day waiting period limitation until eligibility is met.
• Requiring a certain number of cumulative hours of service (not to exceed 1200 hours) is allowed, and the 90 days would begin upon the employee achieving such the required cumulative hours of service. Note: this is designed to be a one-time eligibility requirement only and cannot be re-applied to the same individual each year.
• If an employer chooses to use the optional measurement period method to determine eligibility for variable hour or seasonal employees, the employer may require a measurement period of up to 12 months and any applicable administrative period consistent with the employer shared responsibility rules under IRS Code section 4980H. If this method is used, new employees must be offered coverage no later than 13 months from the employee’s hire date (plus a fraction of a month if the hire date is not the first day of the month).

This RJF, a Marsh & McLennan Agency LLC company document is intended to inform our clients and employers on general information relating to employee benefit plans and related topics. They are based on general information at the time they are prepared. They should not be relied upon to provide either legal or tax advice. Before making a decision on whether or not to implement or participate in implementing any welfare, pension benefit, or other program, employers and others must consult with their benefits, tax and/or legal advisor for advice that is appropriate to their specific circumstances. This information cannot be used by any taxpayer to avoid tax penalties.

MARSH-RIMS SURVEY FINDS GREATER RISK MANAGEMENT ENGAGEMENT IN DELIVERING STRATEGIC VALUE

ROLE OF DATA AND ANALYTICS GROWING IN IMPORTANCE

New York, April 22, 2013 – Senior executives and risk professionals are more aligned than ever on their views of the role that risk management should play in strategic planning. However, the strategic value that risk professionals can deliver may not be fully tapped, according to findings from a survey released today by Marsh and RIMS.

A majority — 52% of C-Suite executives and 47% of risk professionals responding to the 10th annual Excellence in Risk Management survey agreed that the top reason why risk management is included in strategic planning and executive activities is to identify and assess risks arising from the strategic plan. Additionally, 46% of C-Suite and 40% of risk professional respondents agree that the function should provide strategic risk input to the strategic planning process.

Despite the clear role for risk management, however, only 15% of the risk professionals and 20% of the C-Suite respondents said the risk manager is a full member of the strategic planning and/or execution teams, suggesting that risk management has yet to be fully integrated strategically.

“This general move toward risk professionals adding more value to organizations’ strategic decisions is encouraging,” said Carol Fox, director of the strategic and enterprise risk practice at RIMS. “Yet, there is still much room for growth, and gaps remain between what senior leaders and risk professionals expect from the risk function in its delivery of strategic value.”

The report notes that building organizational risk capabilities through education, providing greater risk input into strategic planning/execution, and establishing key risk indicators (KRIs) to guide the overall risk framework within their organizations are desired by the C-Suite.

One of the ways to achieve this is through the use of data and analytics, which risk professionals and senior leaders ranked as the number one and number three focus areas, respectively, for developing risk management capabilities in 2013, the report found. In fact, 74% of respondents said their organizations need to conduct deeper analysis on their risk-related data.

“Data analysis of key risk, financial, and performance indicators that will support the organization’s overall risk strategy will help risk professionals close the gap between being an insurance cost center and a strategic thought center,” said Marsh’s Director of Client Engagement Yvette Connor.

Other significant findings from the survey include:

• The top risks for 2013 reflect shifting priorities as political, regulatory, and environmental conditions changed over the past year. C-Suite executives ranked business disruption as the biggest risk for 2013, while risk managers cited economic conditions as their top risk. In 2012, C-Suite executives and risk professionals ranked economic conditions and legal or regulatory shifts as their number one top risk.
• The risks related to data security and privacy breaches ranked number 12 for risk professionals and number 26 among C-Suite respondents, while exposure to technology and systems failures ranked number 16 and number 18 respectively. The findings are somewhat surprising given the coverage the topic has received in the media and other venues including the Davos World Economic Forum.
• 80% of C-Suite respondents and 75% of risk professionals say they do not aggregate risks at the portfolio level, demonstrating an immediate opportunity for risk managers to coordinate information into a portfolio view.

The survey was compiled from online responses received in February 2013 from more than 1,200 risk managers, C-suite executives, and others involved in risk-related functions. Those responding to the survey were from public and private companies (39% each), non-profit (12%), and the government (10%).

Findings from the survey were published jointly by Marsh and RIMS and released today at the RIMS 2013 Annual Conference & Exhibition. Copies of the survey are also available on www.rims.org.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy, and human capital. With over 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

About RIMS

As the preeminent organization dedicated to advancing the practice of risk management, RIMS, the risk management society™, is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS is dedicated to advancing risk management for organizational success, bringing networking, professional development and education opportunities to its membership of more than 11,000 risk management professionals who are located in more than 60 countries. For more information on RIMS, visit www.RIMS.org.

Contacts

Sally Roberts
Marsh
+1 303 952 9453
sally.roberts@marsh.com

Josh Salter
RIMS
+1 212 655 6059
jsalter@rims.org

Free Educational Opportunities

Employers in a variety of industries are having trouble finding and keeping qualified employees, and many experts expect this situation to worsen. The workforce is aging, more people are retiring or approaching retirement than are joining the workforce, and education systems seem to lag behind the needs of business.

Getting ahead of this trend can help you prepare your organization and position it for the future.

That’s why RJF/MMA is offering several learning opportunities on the changing employment realities. We’ll take a strategic look at what’s driving these changes, their impact and what you can do about them. 

RJF/MARSH & MCLENNAN AGENCY’S JILL LOWDER ELECTED TO THE SOCIETY OF CERTIFIED INSURANCE COUNSELORS BOARD OF GOVERNORS

MINNEAPOLIS, April 16, 2013—The National Alliance for Insurance Education & Research’s Society of Certified Insurance Counselors recently elected Jill Lowder, chief operating officer of RJF/ Marsh & McLennan Agency (MMA), to its Board of Governors. In this role, she will help lead the organization that is important to the advancement of insurance agents throughout the country.

“Jill has created a learning environment in our organization, supported by strategic individual education plans and dedicated to the continuous professional development of all employees,” said Bill Jeatran, chief executive officer of MMA’s upper Midwest hub. “This is a great opportunity for Jill and MMA to promote educational opportunities within the insurance community.”

The National Alliance is recognized as a leading source for continuing education, designation opportunities and knowledge for insurance and risk management professionals.

According to William T. Hold, Ph.D., CIC, CPCU, CLU, president of The National Alliance, “Each of our new board members is a top industry professional and leader with extensive knowledge of our programs and designations. As The National Alliance continues to grow, we will rely on their guidance and experience.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S. RJF leads the upper Midwest region for MMA. More information is at www.rjfagencies.com.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact 

Jeff Mulfinger
+1 763 746 8257
mulfingerj@rjfagencies.com

April 5, 2013

The signing of the health insurance exchange bill in March authorizing the creation of a state-run health insurance exchange has been a game-changer for the health insurance arena in Minnesota. Known as MNsure, its impact will initially be felt most directly by those businesses who employ 50 or fewer and those people who want to purchase an individual policy.

Open enrollment in MNsure starts October 1, 2013, with health plan coverage beginning January 1, 2014. This makes it imperative that business owners quickly get up to speed on how this new health insurance exchange will affect their bottom line.

In this article, RJF Compliance Consultant Terra Hudlow, GBA, RHU, provides important information to help employers understand the ramifications of this program.

What is MNsure?

MNsure is Minnesota’s new health insurance exchange, created as a result of the passage of the Patient Protection and Affordable Care Act of 2010 (ACA). MNsure is essentially a marketplace for individuals and businesses to compare, choose, and buy affordable health insurance for high quality care. All individuals who lawfully reside in Minnesota will be able to purchase coverage on the state exchange, although the premium tax credits will only be available to low- and middle income individuals who meet certain criteria.

The plans will also be available to self-employed and/or self-insured people, although the cost of this coverage is not yet known.

Initially, only employers with fewer than 50 employees will be able to purchase coverage through MNsure, although in 2016, this option will be extended to employers with no more than 100 employees.

What impact will MNsure have on consumers? On businesses?

Coverage that is available on the exchange is subject to a number of market reforms. For example, individuals cannot be denied coverage due to their health status, insurance companies will determine premium rates in a manner that is different from what has been done in the past, and those who purchase coverage on the exchange may be eligible for a premium tax credit. It will also be easier for those seeking coverage to compare the value of one plan from another.

From a small employer's (those with 50 or fewer employees) perspective, however, it is currently unknown what the impact will be to medical premium costs, although it is anticipated that some small employers will see a larger-than-average increase to costs.

Larger employers (those with more than 50 employees) must be cognizant of the exchange’s options and understand that, if the benefits they offer to their employees do not meet minimum legislated standards or affordability thresholds and employees purchase health insurance through the exchange, they may face financial penalties.

Can all insurers participate?

This has been a critical issue throughout the legislative process. The final bill allows "any willing plan" to be offered in 2014, but in future years, this will be determined by the exchange's board.

How many plan options will be available through this channel?

It is not currently known how many plans will be offered on the exchange. This is an issue that is currently being worked out.

Do ACA rules apply to coverage offered through the exchange?

ACA rules apply to both coverage sold through the exchange as well as outside of it. This makes the coverage subject to the same rules such as guarantee issue, benefits that will be required to be included, modified community rating and plan pricing. What may differ is the availability of tax credits when purchasing coverage on the exchange.

What criteria should employers use when deciding whether to participate in the exchange?

While employers are not required to purchase coverage on the exchange, they should evaluate this option and determine if there are any advantages for purchasing exchange-based coverage.

For example, beginning in 2014, certain small employers may be eligible for a tax credit for coverage that is purchased through an exchange if they meet the following criteria:

• employ no more than 25 employees, 
• those employees must have average annual wages that are no more than $50,000, and 
• they contribute to the cost of coverage.

In addition, in 2014, coverage must be purchased on the exchange and other requirements may apply.

The amount of tax credit can vary from employer to employer. In general, the maximum credit that is currently available is up to 35% of the employer's contribution or up to 25% for tax-exempt employers. These amounts will increase in 2014.

What are the tax implications that employers need to understand?

Tax implications will vary from employer to employer. However, while the cost that an employer pays for their employees' coverage is a tax-deductible expense to the business, employer penalties under the law are not tax-deductible. Employers should determine their penalty risk and consider the impact of not being able to deduct penalties.

In addition, if an employer chooses to not offer coverage but rather provide employees with additional taxable income, payroll taxes may apply to this additional compensation.

How should employers prepare now for the impact of MNsure?

Employers should begin assessing the impact of the law as soon as possible to allow enough time to make decisions about coverage adjustments or modifications. For example, large employers with 50 or more full-time employees plus full-time equivalents may be subject to penalties if an employee is eligible for and purchases subsidized coverage on the exchange instead of getting coverage through an employer-sponsored plan. Employers should evaluate the risk of incurring a penalty in this scenario as soon as possible. In most cases, the ACA's impact will be felt at their 2014 renewal.

Also, while not an employer responsibility, employees will likely turn to their employers with questions about the exchange. Employers should be prepared, either having someone knowledgeable on staff to or know where to direct employees for more information about exchange-based coverage.

“The ACA is a complex law, and will affect individuals and employers in different ways,” says Hudlow. “Employers should begin evaluating the ACA's impact on their business to best prepare for 2014 and engage with a trusted advisor.”

For smaller employers, this would include working closely with their advisors to understand cost and plan implications, and the impact of the new market reforms on their organization. For larger employers, the law's requirement to offer coverage to employees that work 30 hours or more per week or possibly pay a penalty can have significant implications to a company's bottom line. For example:

• Will an employer have to offer coverage to more employees in 2014 if coverage is not currently available to all employees that work 30 hours or more per week? 
• Will employees that are currently eligible but waive coverage today choose to enroll on the employer's plan in 2014 to due to the individual mandate? 
• Is the employer offering the ‘right’ level of coverage at an ‘affordable’ cost so that penalties are avoided?

These are all questions that larger employers need to ask, and if a problem exists, determine how to eliminate or reduce their risk.

For more information about MNsure, visit the Exchange Website.

--Image used under Creative Commons from GovernorDayton.

April 3, 2013

The Department of Health and Human Services (HHS) has announced that one of the options planned for small group insurance purchased through federally-operated exchanges will be delayed until 2015. Under what is referred to as the “choice option,” small employers will be able to select a level of coverage (i.e. bronze, silver, gold, or platinum coverage tier), and participating employees would be allowed to choose from any carrier offering coverage within that tier.

Note: States that will default to a federally-run exchange include North Dakota, South Dakota and Wisconsin. In contrast, Minnesota has declared that it will establish a state-based exchange.

Small employers will still be able to purchase small group plans through the federal exchange, but for 2014, all participating employees would be covered by the particular plan chosen by the employer. Also, beginning in 2014 the federal tax credit (of up to 50% of the employer’s cost) offered to some small employers is available only if an eligible employer purchases group coverage through a public (state or federal) exchange. Generally, the tax credit is available to employers with fewer than 25 employees who meet certain compensation and contribution requirements.

State-operated exchanges are still allowed to offer a choice option to small employers, and a number of states have announced that this model will be available in 2014. In addition, in most states, health insurance carriers will continue to offer small group health insurance policies to employers outside the public exchanges. So far, only Vermont and the District of Columbia plan to require all small group plans to be sold through the state exchange.

This delay has no effect on individual health insurance plans sold through a public exchange. It also does not affect the availability of subsidies (i.e. premium tax credits and cost-sharing reductions) for individuals who qualify and purchase individual health insurance policies through a public (state or federal) exchange in 2014. The federal government has already announced plans to make available at least two individual health insurance options nationwide through both federal and state operated exchanges.

COMMERCIAL FLOOD INSURANCE RATES JUMP, AVAILABILITY DECLINES AS UPPER MIDWEST FLOOD DANGER LOOMS

SUPERSTORM SANDY CLAIMS DRIVING UP PRICES

MINNEAPOLIS, March 28, 2013—Commercial flood insurance prices are rising as underwriters attempt to recoup significant flood losses sustained by Superstorm Sandy. An analysis by RJF/Marsh & McLennan Agency, the risk prevention and insurance agency based in Brooklyn Park, Minn., found average rate increases of more than 7%, with double-digit rate hikes quite common. This is unwelcomed news for businesses in the upper Midwest as significant flooding is expected this spring in parts of Minnesota, North Dakota, Wisconsin and Iowa.

The tightening market is due, largely, to the volume and cost of claims related to Superstorm Sandy, which ravaged the eastern seaboard last October causing an estimated $65 billion in damages according to Munich Re.

“Even though Sandy did not physically impact businesses located in the upper Midwest, the damages were large enough to cause dramatic ripple effects throughout the insurance industry,” said Doug McCarthy of RJF/MMA. “Unfortunately, employers in the upper Midwest are being affected at a time when many are unable to easily absorb additional costs.”

In addition to price increases, many private insurers are also restricting the amount of flood coverage they are willing to offer businesses. In one instance, RJF was only able to secure $5 million of the $25 million in commercial flood coverage being sought by a Twin Cities client located on the Mississippi River.

To secure more favorable terms, conditions, and pricing where possible, RJF advises that companies:

• Differentiate themselves from their peers by providing complete underwriting submissions with accurate and high-quality data.
• Establish and share with underwriters comprehensive disaster recovery plans that detail how the company will respond to the threat of a flood. 
• Demonstrate to underwriters, where applicable, how the company mitigated a previous flood loss.

Companies also should consider other types of insurance to help protect their balance sheets in the event of a flood event, including business interruption, ingress/egress, and civil authority coverage.

Private commercial flood policies are generally purchased by businesses to provide protection above coverage offered through the federal National Flood Insurance Program (NFIP). Under the NFIP, businesses can purchase up to $500,000 in building and $500,000 in content coverage.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S. RJF leads the upper Midwest region for MMA. More information is at www.rjfagencies.com.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact

Jeff Mulfinger
+1 763 746 8257
mulfingerj@rjfagencies.com 

March 28, 2013

Background

The Affordable Care Act (ACA) has placed new emphasis on the need to determine when and if related organizations must be treated as a single employer for purposes of meeting various ACA requirements. Simply setting up different companies under separate tax ID numbers does not relieve related employers from being treated as a single employer under controlled group rules.

Developing strategies for managing obligations under various ACA rules (such as the shared responsibility assessable penalty for large employers) makes it imperative that employers know whether they are a member of a group of companies that the law considers as a single employer. Several ACA rules specify that entities will be treated as a single employer based on the rules under Internal Revenue Code §§414(b), (c), (m), and (o), which define so-called “controlled groups” and “affiliated service groups.”

While the §414 rules are complex and often require detailed analysis by an advisor familiar with the rules, this document provides basic guidelines to help employers and their advisors identify whether a particular employer is actually a member of a controlled group or an affiliated service group.

The concept of a “controlled group” relies on the relative ownership structure of two or more entities, while the concept of an “affiliated service group” relies primarily on the service support relationship between two or more entities. Each of these types of single employer groups will be considered separately in the following sections.

Controlled Groups

At a basic level, a “controlled group” includes each company whose relationship with the employer in question (the “Subject Employer”) falls within the description of Type A, B, or C in the table on the following page. While some corporate structures are simple enough to allow the determination of controlled group status to be made relatively easily, in other cases, the complex web of ownership requires a detailed (and sometimes time-consuming analysis) of all the facts and circumstances.

Types A and B in the following table are referred to as “parent-subsidiary” controlled groups. Type C is referred to as a “brother-sister” controlled group.

In a basic initial analysis, if a company owns at least 80% of another organization, the two entities will generally be treated as a controlled group. Similarly, if a group of five or fewer owners owns at least 80% of two organizations, those two organizations may be treated as a controlled group. Conversely, if ownership is spread among enough separate companies, individuals, or trusts, the separate entities may be treated as separate companies for ACA purposes. This characterization is not meant to be a simple answer to a complex question; rather, it is meant to give a sense of when an employer should look more carefully into these rules.

Considering the fact that significant ACA employer penalties may hinge on the determination of controlled group status, this analysis must be done carefully. Other matters affected by this determination include application of benefit plan nondiscrimination rules, qualified retirement plans, and various business income tax-planning strategies.

Controlled group Examples

Other Controlled group Issues

Special Brother-Sister Ownership Rule

In addition to the 80% test indicated in the table for a Type C controlled group, the brother-sister relationship requires that, when considering the smallest percentage interest of each of the controlling owners among the companies, the sum of the smallest interests must exceed 50%.

In the example, John’s smallest interest is 15%, the Trust’s smallest interest is 40%, and Mary’s smallest interest is 15%, so the total of the smallest interests is easily more than 50%, making the two restaurants a brother-sister controlled group.

Ownership Control

For corporations, the type of control that is examined is the voting control of the shareholders or the percentage value of the outstanding shares. For partnerships, the percentage of capital or profits interest is used. For trusts and estates, beneficial or actuarial interest is used.

Chains of Ownership

These basic controlled group structures can become quite complicated. For example, several parent-subsidiary chains may be involved, with many “parent” companies actually being intermediary companies such as Subsidiary B in the Type A diagram. Or, as another example, Restaurant A in the Type C diagram may also be a parent company for other entities, resulting in a mixed controlled group (i.e., both Type A and Type C) by drawing in any 80%-or-more-owned entity of Restaurant A. Consequently, it is important to ask about ownership of, and by, each entity.

Family, Trust, and Estate Relationships

With regard to only the brother-sister form of controlled group, ownership can be attributed from and to parents, children, and grandchildren, as well as to grantors and beneficiaries of trusts and beneficiaries of estates. So if ownership or control is distributed among such persons or entities, a closer review of the arrangements would be required.

Affiliated Service Groups

By arranging the ownership of related businesses in an artificial manner, an employer could avoid controlled group status under the foregoing controlled group rules. The purpose of the affiliated service group rules is to prevent such circumvention by expanding the type of related companies that must be considered as a single employer.

Key to affiliated service group analysis is the concept of a “service organization.” The principal business of an organization will be considered the performance of services if capital is not a material income-producing factor for the organization. On the other hand, if a substantial portion of gross income is attributable to investment in, for example, machinery, plant, inventories, or equipment, capital is likely a material income-producing factor and the company would generally not be considered a “service organization.”

Basic examples of an affiliated service group would include the following:

• The sole function of Management Company X is to provide managerial services to restaurants A, B, C, and D. The spouse and three children of the president of Management Company X together own more than 50% of the interest in each of the four restaurants.
• Medical Clinic M is owned by three physicians in equal shares. The support staff of Medical Clinic M is employed by Regional Staffing Corporation, which provides medical staffing services to a variety of companies. Medical Clinic M is a shareholder in Regional Staffing Corporation.

Yellow Flag Test

If a group of companies includes a “service organization,” then companies falling within one of the following descriptions should be analyzed for purposes of determining whether the group of companies forms an “affiliated service group” that must be treated as a single employer.

• Company A provides services to one or more other entities (e.g., Companies B1, B2, etc.) that are also service organizations, and there are any of the following types of relationships between Company A and the other companies:
• Company Bx is a shareholder or partner of Company A, or
• 10% or more of the interest in Company Bx is held by someone who is a highly compensated person either in Company A or in another Company Bx.
• The principal business of one of the companies is to perform ongoing management functions for the other.

If two or more companies are identified as possibly being in one of the foregoing arrangements, additional evaluation will be needed to determine whether there is, in fact, an affiliated service group. This evaluation should be conducted by an experienced professional.

Summary

As this document makes clear, the determination of controlled group or affiliated service group status can be extremely complex. However, in the case of a related organization with significant common ownership, sometimes the answer is very simple and clear. If one person owns at least 80% of each of two separate companies, it would not appear necessary to engage a lawyer to determine that the two companies must be treated as a single company for ACA purposes.

Any group of related organizations that wants to assume they will be treated as separate entities should be sure, based on their ownership structure, that they do not fall under the controlled group or affiliated service group classification. If they are not sure, they must seek the advice of a qualified advisor to make the determination.

One final note: Given the impact of these rules under the ACA, owners may be inclined to “reorganize” their holdings to avoid single employer status among several entities currently falling within these groups. Caution is advised insofar as the IRS retains authority to regulate abusive situations, and the ACA specifically states that “employer” includes “any predecessor of such employer” – a provision that could be interpreted in a way that would restrict the ability of an existing entity to divide itself into smaller parts for purposes of avoiding ACA requirements.

Because these rules are very complex and RJF/MMA cannot provide legal advice, employers may wish to engage qualified legal counsel to make the determination.

MID-DAY EXERCISES IMPROVE MOVEMENT, ENERGIZE WORKERS

By Laura Muhlstein, Director of Human Resources

March 14, 2013

RJF is building on its effort to improve employee wellbeing by adding an emphasis on increasing movement during the workday. While our business requires people to spend significant time using computers and in meetings, RJF doesn’t think this means employees need to—or ought to—sit for eight hours every day.

In late 2012, a group of RJF employees volunteered to participate in functional movement screening (FMS). Facilitated by our internal Employer Services group, the FMS established a baseline score for each participant, identifying movement limitations and asymmetries – issues that can cause future injuries or negatively affect normal daily activity. Employees received individual reports, and RJF received an aggregate summary that identified three key issues within the group – poor balance, core strength and limited shoulder mobility.

As a follow-up to the screening, RJF introduced daily 10-minute stretch breaks in January. The early afternoon break consists of corrective exercises designed to improve those identified key issues: Balance, core strength and shoulder mobility. All employees are invited to participate, and you’re likely to find several people participating on any given day.

In a 2012 Forbes article, Dr. Jack Groppel, sports scientist and co-founder of the Human Performance Institute, states that interspersing short movements and exercises throughout the workday can boost employee energy, engagement, and efficiency. We’re finding that to be true at RJF. In addition to employees reporting improved balance and mobility, regular participants comment on the difference the breaks make in their afternoon energy levels. One employee said, “The impact of the ten minute stretch is unbelievable. It makes a huge difference in my day. Everyone thinks they are ‘too busy’ to attend, but once you go, you realize the ten minutes or less is worth it and you will be more productive after.”

Later this year, the volunteer group will complete another screening and compare these scores against their original benchmarks to determine the effectiveness of the corrective exercises. In the meantime, the 10-minute stretch breaks positively influence employees’ social and career wellbeing, allowing an opportunity to laugh, to talk, and to build relationships away from their desks.

AMY DIEDRICH JOINS RJF/MARSH & MCLENNAN AGENCY AS EMPLOYEE BENEFITS CONSULTANT

FORMER DISTRICT BENEFITS ADMIN ADDS EXPERTISE TO SERVE SCHOOLS

MINNEAPOLIS, March 12, 2013 – RJF, a Marsh & McLennan Agency, recently expanded it employee benefits department with the addition of Amy Diedrich, an experienced employee benefit expert in public school districts.

Diedrich has worked in the employee benefits arena, structuring plans and brokering business for several years, most recently serving as senior benefits consultant with CBIZ. Prior to that, she was the employee benefits coordinator with Minnetonka Public Schools, where she also spent several terms as president of the local union.

“Amy’s tremendous knowledge and experience from serving school districts and other public-sector organizations is a welcomed and valued addition to our team,” said RJF President Tim Fleming. “Her reputation for helping her clients find cost-lowering solutions while working with integrity has been earned and proven time and again. We’re thrilled to have her, and look forward to the great work she will deliver.”

Over the past several years, RJF/MMA has made significant investments in gaining the resources and expertise needed to serve the school district and public entity sector. The agency is highly involved with the Minnesota Association of School Board Officials (MASBO), the Minnesota Association of School Administrators (MASA), the Wisconsin Educators Risk Management Cooperative (WERMC) and other associations. In 2011, it acquired Gallagher & Associates Inc., a Twin Cities insurance agency specializing in school district risk management. All employees and its president, Tom Gallagher, joined the firm.

Diedrich can be reached at 763-548-8594 or diedricha@rjfagencies.com.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S. RJF leads the upper Midwest region for MMA. More information is at www.rjfagencies.com.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

The IRS and the Department of Health and Human Services (HHS) have released a preliminary version of an employer plan minimum value (MV) calculator. The MV calculator is designed to assist employers in determining whether an employer-sponsored health plan meets minimum value requirements contained in the Affordable Care Act (ACA).

Background

To satisfy the minimum value requirement under the ACA, an employer plan’s share of the “total allowed costs of benefits provided under the plan” must equal or exceed 60%. If an employer’s plan does not meet the minimum value requirement, employees may qualify for subsidized individual health insurance purchased through a public exchange, exposing applicable large employers to possible penalties under the ACA’s employer shared responsibility rules.

Methods Employers May Use to Determine Minimum Value

Regulatory guidance defines three methods for an employer to determine if a plan meets the ACA minimum value requirements.

• Use of the minimum value (MV) calculator developed by HHS and the IRS. The calculator will permit an employer-sponsored plan to enter information about the plan’s benefits, coverage of services, and cost-sharing terms to determine whether the plan provides minimum value.
• Use of a design-based safe harbor based on checklists developed by HHS and the IRS. This method will provide a way to ascertain that an employer-sponsored plan provides minimum value without the need to perform any calculations or obtain the assistance of an actuary. As of February 22, 2013 the proposed “checklist” and guidance have not yet been released.
• For plans with nonstandard features that preclude the use of the MV calculator, an employer can rely on an appropriate certification by a certified actuary, in accordance with prescribed continuance tables, recognized actuarial standards and other regulatory conditions

Using the Calculator

The MV calculator, instructions for use, and details on underlying assumptions, can be found at the CMS Center for Consumer Information & Insurance Oversight regulations Webpage. The current version of the MV calculator is described as preliminary, and the agencies are taking comments regarding its use. However, it is expected that changes to the calculator will be minimal and are not likely to significantly affect the results for the majority of employer-sponsored plans.

HIPAA requires that plan participants of employer-sponsored health plans receive a Notice of Privacy Practices (NPP). The requirement applies to health plans such as medical, dental, vision, prescription drug, Section 125 health flexible spending account (HFSA) and health reimbursement arrangements (HRA).

Note: Final rules were published in January 2013 that resulted in changes to the HIPAA Privacy Rule, Security Rules, Breach Notification Rule and enforcement. In most cases, covered entities and business associates must comply by September 23, 2013, and as a result, modify the NPP later this year.

Content Requirements

The Notice of Privacy Practices must be written in plain language and should:

• Explain how the health plan may use and disclose an individual’s PHI;
• Describe the individual’s rights with respect to his or her PHI; and
• Summarize the health plan’s legal duties with respect to the PHI.

Delivery Deadlines

HIPAA required that a NPP be provided to health plan participants at the time the plan was first subject to the HIPAA Privacy rules. Most plans were originally subject to this in April 2003 or 2004, depending on the size of the plan. Thereafter, it is required that a reminder of the availability of the NPP be sent to plan participants at least once every three years. The reminder must tell participants how to obtain a copy of the NPP for the plan.

• Health plans that previously sent a notice or reminder by April 14, 2009, have until April 14, 2012 to send the next notice or reminder. 
• Small health plans (those with annual receipts of $5 million or less) that previously sent a notice or reminder by April 14, 2010, have until April 14, 2013 to send the next notice or reminder. 

In addition, health plans must provide the Privacy Notice in the following circumstances:

• To new enrollees at the time of enrollment;
• Within 60 days of a material change to the notice; and
• Any time upon a participant’s request.

If the actual NPP is distributed more often than every three years, the notice requirement has been satisfied and a reminder does not need to be sent. Many employers will include the notice with open enrollment or other plan materials.

If the employer’s insurance carrier sends a NPP to plan participants, the employer is not required to send a separate notice. Most carriers provide a NPP annually to participants of fully-insured health plans.

Delivery Methods

• The reminder, or an actual NPP, does not need to be sent to the plan participant’s home. Plans can include the notice in other benefit materials sent to participants or distributed at work. 
• Many insurance companies and employers include the NPP with the plan’s annual open enrollment materials.

Action Steps and Additional Information

Employers should answer the following questions to determine if they are meeting their HIPAA notice obligations:

• Does your NPP contain all the required content?
• Is the employer’s insurance company or TPA distributing a NPP to all plan participants? If so the employer is not required to send a duplicate NPP for that plan.
• Is an NPP being distributed to plan participants for all of their health plans that are subject to HIPAA?

Employers must remember that HIPAA applies to a variety of plans. While it is common for fully-insured medical and/or dental insurance carriers to provide the NPP to plan participants, this will not satisfy the requirement for other plans subject to HIPAA such as the Section 125 HFSA or a health reimbursement arrangement (HRA). An employer can distribute one NPP that covers all of their plans subject to HIPAA. However, to do this, the employer must draft an employer-specific notice that correctly refers to all employer-sponsored plans subject to HIPAA.

Employers should also determine changes that may be required in late 2013 to comply with the final rule.

DETERMINE IF YOUR PLAN IS DISCRIMINATORY

The impact of Health Care Reform Requirements

The Affordable Care Act¹ applies the Section 105(h)(2) nondiscrimination rules to non-grandfathered, fully-insured health plans. The rules prohibit employers from offering health benefits in a manner that discriminates in favor of highly compensated employees.

Section 105(h)(2) nondiscrimination rules are complex; however, a quick review of the employer’s benefit, contribution and eligibility strategies will help most employers determine whether or not they need to perform the detailed nondiscrimination tests.

It is also important to remember that employers are able to provide highly compensated employees with additional taxable income which could be used to pay for benefits. The Section 105(h)(2) testing exists to ensure that benefits provided to employees on a tax-free basis are limited to plans that are nondiscriminatory.

PENALTY FOR NON-COMPLIANCE

If a fully-insured plan is found to be discriminatory, a penalty will be imposed on the employer/plan sponsor. Regulations are needed to define exactly how the employer penalty will be applied. Currently, it appears that the employer will pay a penalty of at least $100 per day per highly compensated participant.

HIGHLY COMPENSATED EMPLOYEES

Employers must determine which employees are considered highly compensated employees (HCE). Section 105(h)(2) defines an HCE as:

• One of the five highest-paid officers.
• A shareholder who owns more than 10 percent of the employer’s stock
• An individual who is among the highest-paid 25 percent of all employees

Certain individuals can be excluded from the group of the highest 25 percent of paid employees and disregarded from the testing as long as they do not participate in the plan. Excluded individuals include:

• Employees who have not completed three years of service
• Employees who have not attained age 25
• Part-time (defined as less than 35 hours per week) or seasonal employees
• Collectively bargained employees
• Non-resident aliens who receive no U.S. source earned income

PERFORM A QUICK CHECK

Before analyzing the Section 105(h)(2) requirements in detail, an employer can consider these criteria to more quickly determine if the employer passes or fails.

QUICK CHECK #1 – EMPLOYER PASSES

Barring special circumstances, such as a plan being part of a common group according to the IRS 414 rules, an employer who offers benefits in the following ways would not violate the Section 105(h)(2) nondiscrimination rules.

• An employer offers the identical health benefits to all full-time employees, with the same contribution requirements regardless of age, years of service, or compensation.
• Employees covered by a collective bargain agreement, and not covered by the plan, can be ignored for testing purposes. These employees can be offered a separate plan with different benefits and different contribution requirements.

It is possible for an employer to offer health benefits in a manner that varies in terms of eligibility, coverage or contribution for different employees, but then it must consider and pass the Section 105(h)(2) tests.

QUICK CHECK #2 – EMPLOYER FAILS

If an employer offers health benefits that clearly favor individuals in the highly compensated group (defined above) in terms of benefits, eligibility or contribution, the plan will likely fail the Section 105(h) rules based on the “benefits test” described below. Failure to comply with Section 105(h) will mean that the benefit plan must alter its terms or be subject to penalties.

PERFORM THE SECTION 105(H)(2) TESTS

This summary will provide enough detail for most employers to perform an analysis of how the rules apply to their plan. However, there are additional strategies (i.e. combining multiple plans into one plan or creating complex classifications of employees) that have been used by some employers wishing to offer dissimilar benefits to separate groups of employees. Any employer considering one of these more complex approaches should seek the advice of a qualified advisor or legal counsel.

To pass the Section 105(h)(2) nondiscrimination rules an employer must meet two separate tests:

1. The Benefits Test
2. The Eligibility Test

The names of the tests have long been the source of confusion, and subject to some criticism, since the “benefits test” considers a number of factors including eligibility, and the “eligibility test” principally measures who actually benefits under the plan.

THE BENEFITS TEST

The benefits test has two components, which we will discuss below:

• Is the plan offered in a manner that is discriminatory on its face?
• Is the plan operated in a discriminatory manner?

The statute requires that “all benefits provided for [HCEs] are provided for all other participants” and that “all the benefits available for the dependents of HCEs must also be available on the same basis for dependents of all non-HCE participants.”

DISCRIMINATORY ON ITS FACE

A plan must meet the following four requirements to be considered nondiscriminatory on its face.

1. Required employee contributions must be the same for HCEs and non-HCEs for each benefit level.
2. The same type of benefits that are available to HCEs must be available to non-HCEs.
3. The maximum benefit level cannot vary based on age, years of service, or compensation.
4. HCEs and non-HCEs must have the same waiting periods.

Differences can exists in these areas between different classes of employees as long as the requirements of the eligibility test are met (discussed below). For example, an employer could have different contribution requirements for salaried employees vs. hourly employees, but not for “executives” vs. other employees. If the plan is determined to be discriminatory on its face, it does not comply with Section 105(h)(2) rules and may be subject to penalties.

DISCRIMINATORY IN OPERATION

A less common reason for a plan to be deemed discriminatory is in its actual operation. For example, if a plan added a benefit for a particular treatment for one plan year during which an HCE received coverage for that treatment, then terminated the benefits as soon as the HCE no longer needed the treatment, the plan would be considered discriminatory, and fail to comply with Section 105(h)(2) rules.

THE ELIGIBILITY TEST

An employer passes the eligibility test if it passes any one of three different tests.

• The 70% Test – At least 70 percent of employees must benefit from the plan.
• The 70%/80% Test – If at least 70 percent of all non-excludable employees are eligible, the plan benefits at least 80 percent of the eligible employees.
• The Nondiscriminatory Classification Test – The plan benefits a nondiscriminatory classification of employees. This test requires (1) eligibility based on a bona fide business classification, and (2) a sufficient ratio of benefiting non-HCEs to benefiting HCEs.

The first two tests provide a method to pass the eligibility test using a clear measure of participation rates. If the employer does not meet either of these tests, it may still pass based on the more subjective classification test. There is some debate whether employees need to actually enroll in, or simply be eligible for, the plan to be counted in the eligibility test. The more conservative approach, and the approach we recommend, is to count only the employees who actually enroll in a benefit.

EXAMPLE: THE 70% TEST

XYZ Company has 100 employees.``All employees are eligible for the health benefits.

• 30 employees are considered highly compensated individuals.
• 10 employees have less than three years of service and excluded from testing.
• 65 non-excludable employees (counting both HCEs and non-HCEs) actually participate in the plan.

The employer passes the 70 percent test. Participation equals 72 percent (65 ÷ 90).

EXAMPLE: THE 70%/80% TEST

XYZ Company has 100 employees.

• 70 employees are eligible for the health benefits.
• 30 employees are considered highly compensated individuals.
• 56 non-excludable employees (counting both HCES and non-HCEs) actually participate in the plan.

The employer passes the 70%/80% test: 70 percent are eligible (70 of 100) and 80 percent of those eligible participate (56 ÷ 70).

THE NONDISCRIMINATORY CLASSIFICATION TEST

Employers need to consider this test if it offers different benefits to different groups of employees and cannot meet either of the first two eligibility tests. There are a number of strategies employers can consider when attempting to pass the classification test. This summary describes a common approach most employers can use to determine if they offer benefits in a nondiscriminatory manner. If an employer fails to meet the requirements described below, it may still be possible to pass the test using a more complex strategy such as combining multiple plans into a single plan. If an employer wants to consider other alternatives, they should retain a qualified advisor or legal counsel.

To meet the classification test, the employer must show two things:

1. Benefits are offered based on reasonable classifications.
2. The classifications are not discriminatory in favor of highly compensated employees.

BENEFITS MUST BE OFFERED TO EMPLOYEES BASED ON REASONABLE CLASSIFICATIONS

The rules allow an employer to offer different benefits to different “reasonable” classifications of employees. Reasonable classifications generally include specified job categories, nature of compensation (i.e., salaried or hourly), geographic location, and similar bona fide business criteria.

CLASSIFICATIONS ARE NOT DISCRIMINATORY

The IRS will consider the “facts and circumstances” of the classifications to determine if classifications are discriminatory. If the employer is not confident that their classifications will be deemed non-discriminatory, the employer may be able to meet the safe harbor test described below.

The subjective criteria include:

• The underlying business reason for the classification. The greater the business reason for the classification, the more likely the classification is to be non-discriminatory.
• The percentage of employees benefiting under the plan. The higher the percentage, the more likely the classification is to be non-discriminatory.
• Representative number of employees. Measures whether the number of employees benefiting under the plan in each salary range is representative of the number of employees in each salary range of the employer’s workforce.

As stated above, the classifications are also not discriminatory if the employer can meet an objective “safe-harbor” test. The test compares the ratio of the percentage of non-HCEs to HCEs who participate in the plan.

The safe-harbor test involves comparison of participation rate to a table included in the regulations. The results of a simple formula may answer the question for most employers.

• Compare the percentage of non-HCEs who participate in the plan to the percentage of HCEs who participate.
• If the non-HCEs participant rate is at least 50 percent of the rate HCEs participate, the plan passes.

This is a fairly low bar to meet. An employer would have to have very low non-HCE participation to fail this test.

EXAMPLE: SAFE HARBOR

Employer XYZ has 150 non-excludable employees: 100 non-HCEs, 50 HCEs

• All 50 of the 50 HCEs participate (100 percent)
• Only 50 of the 100 non-HCEs participate (50 percent)
• The ratio equals 50 percent (50 percent ÷ 100 percent) and the employer meets the safe harbor.

It is possible to pass the safe harbor with even lower participation of non-HCEs. For the sake of simplicity, this more complex calculation is described in the appendix at the end of this paper.

SUMMARY

Many employers will satisfy the Section 105(h)(2) nondiscrimination rules simply because they offer the same benefits, contributions and eligibility to all employees. Employers who vary their benefit plan provisions for different groups of employees need to carefully consider the Section 105(h)(2) nondiscrimination rules to avoid paying what could be a significant penalty.

If an employer has a more complicated situation or wishes to maintain a benefits strategy that may be discriminatory, a more detailed analysis must be conducted, and expert or legal advice should be sought.

APPENDIX 1 - SAFE HARBOR TEST

STEP 1: Determine the plan’s Ratio Percentage. A plan’s Ratio Percentage is the percentage determined by dividing the percentage of the non-HCEs who benefit under the plan by the percentage of - Employer XYZ has 150 non-excludable employees - 100 non-HCEs, 50 HCEs.

• All 50 of the 50 HCEs participate (100 percent).
• Only 50 of the 100 non-HCEs participate (50 percent).
• The ratio equals 50 [percent (50 percent ÷ 100 percent).

STEP 2: Determine the plan’s Non-HCE Concentration Percentage. A plan’s Non-HCE Concentration Percentage is the percentage of all employees who are non-HCEs. Employees who can be excluded are not taken into account.

STEP 3: Determine the Safe Harbor Percentage from the Nondiscriminatory Classification Table. Next, the employer must determine the applicable Safe Harbor Percentage for the plan by consulting the Code §410(b) Nondiscriminatory Classification Table published by the IRS. The Non-HCE Concentration Percentage determined in step 1 dictates the applicable Safe Harbor Percentage. The test is easier to pass as the percentage of non-highly compensated employees increases.

In the Nondiscriminatory Classification Table, find the applicable Non-HCE Concentration Percentage in left column, and match that with the corresponding Safe Harbor Percentage. For example, if the Non-HCE Concentration Percentage is 75 percent, the applicable Safe Harbor Percentage is 38.75 percent.

STEP 4: Compare the plan’s Ratio Percentage With the Safe Harbor Percentage. Compare the Ratio Percentage from step 1 with the Safe Harbor Percentage from step 3. If the plan’s Ratio Percentage is equal to or greater than the Safe Harbor Percentage, then the plan’s employee classification meets the safe harbor and is deemed nondiscriminatory.

Nondiscrimination Classification Table

DISCLAIMER

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.

¹ “Affordable Care Act” refers to The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA).

A Q&A with Dan Hanson, director of Management Liability

February 13, 2013

“Cyber attack”: two words that strike fear in the hearts of business owners, regardless of their company size, industry or method of operation.

While entry alarms, reinforced access points and security personnel can go a long way to protecting a business facility from a physical intrusion, the intangible nature of a hacker’s method of attack is far more difficult to circumvent.

But it can be done — as long as businesses are aware, on guard and up to date with their defenses. In this interview with Dan Hanson, director of management liability for RJF, a Marsh & McLennan Agency LLC company, he explains what types of coverage are provided by cyber liability policies, and how companies can analyze their actual risks from these “virtual attacks.”

For a more detailed look at cyber attacks and liability, register for our upcoming free webinar, “Cyber Liability: Protect Yourself from Data Thieves,” with Dan Hanson, on Wednesday, March 6, from 12-1 PM CST.

What does a cyber liability policy cover?

A cyber liability policy — also known as network security coverage, privacy liability or data protection coverage — provides support if there are suits against an organization for failing to protect the confidential information of others.

In general, companies have an obligation to protect the confidential information of others, and if that information is compromised or they have it stolen from them, they would be liable. A cyber policy is designed specifically to protect against that liability, although the extent and amount of the coverage can vary.

What are some examples of information that could be targeted by cyber thieves?

This can vary depending on the type of business or industry. For example, a cyber thief can go after a retail store’s records of customer credit card numbers or their employees’ Social Security numbers, while in the case of a health care organization, the focus would be on medical records and related confidential information. For banks and other financial institutions, the goal is to access financial records of their customers.

The bottom line is that everyone is fair game for a cyber attack. Unless you are a pure cash business with no employees, you have exposure.

What are the types of coverage?

Cyber policies can provide both first party coverage and third party coverage.

First party coverage is for costs a business would incur as a result of the cyber breach, such as:

• Notifying those affected that confidential information was potentially compromised. As of August 2012, 46 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands have enacted legislation requiring notification of security breaches involving personal information, according to the National Conference of State Legislatures. (Alabama, Kentucky, New Mexico, and South Dakota currently have no security breach law requirement.)
• Hiring a crisis management firm to ensure that these notifications are handled and documented in accordance with state-specific requirements. Otherwise, the company could face fines for not handling the process correctly and in a timely manner.
• Covering any potential fines and penalties assessed by regulators.
• Providing free credit monitoring to those whose information was affected — a service companies often offer as a goodwill gesture so as not to lose those customers.
• Covering the business interruption costs that resulted from a cyber attack. If a company’s Website was hacked, for example, it may not be able to transact business via the Internet for a period of time, which could represent a huge business interruption loss.

What may be the most important feature of a policy is the support it provides to hire a forensic specialist to 1.) determine if there was in fact a breach, 2.) help determine the scope of the breach, and 3.) identify who must receive notification.

Third-party coverage is much simpler to understand. If it is alleged that a company did not protect confidential information, the affected person(s) could bring a suit attempting to recover damages. A cyber liability policy would provide protection to the company against those lawsuits, as well as the defense costs it incurs in responding to such claims. Since multiple records are often compromised, class action suits are commonplace and can be costly for an organization to defend on its own.

Also, many policies provide defense dollars for actions brought by both federal and state regulatory bodies.

Do all cyber liability policies carry first and third party coverage?

No, they don’t, and often carriers will mix and match coverage, which results in a lot of variances in terms of what is included. And there is also a lot of variance in pricing too. That’s where relying on insurance agents or brokers is essential. It’s their job to explain the nuances of the policies to their clients.

Are businesses taking cyber liability more seriously now than five or 10 years ago?

Even though we at RJF have been talking about cyber liability with our customers for at least five years, it’s only in the past few years that they are taking it more seriously. Unfortunately, given the issues with the economy, most companies are also looking for more ways to cut costs, and adding another insurance policy is often the last thing they want to do.

And, unlike D&O (Directors and Officers) or property insurance policies or workers’ compensation, which companies are familiar with, cyber liability isn’t as easily understood. One change that has occurred is with the tech people’s attitude. In the past, they might try to dissuade company owners from purchasing cyber liability by pointing out that they have encryption and firewalls in place.

But now, because they know not only how much smarter these cyber thieves have become, and also because they realize their security is only as strong as the salesperson or executive who mislaid the smart phone or laptop, IT people are realizing the benefits of the policy. The challenge is in justifying to management the added cost of an additional insurance policy. Yet, when you compare the policy cost to the average loss amount per record — which in 2011 were estimated at $194 between direct and indirect costs — you can see that, regardless of the cost of the policy, it is worth it from a financial and reputational standpoint to the company.

What services does RJF provide with regards to cyber liability?

We start by meeting with our clients to find out what types of information they have and how vulnerable that data is to breaches. Our goal is to help them assess the risk and exposure, and then show them how we can protect that.

We also evaluate contracts they have with outside vendors such as cloud providers so they are contractually protected in case the vendor is hacked. We want to make sure that, if their vendors are doing the work, their vendors are picking up the liability.

And if a breach occurs, we make sure they are contacted immediately, and that a claim is started with the insurance company. We then work with our client to review the reservation of rights letter to make sure they are utilizing that policy as properly as they can. And through the whole process, we do our best to reassure our clients that everything will be handled in the best possible manner so they will be able to return to operations with peace of mind.

February 12, 2013

On February 6, 2013, the US Department of Labor made updates to the Family Medical Leave Act (FMLA). The DOL removed certification and notice forms from its FMLA regulations. For the latest and most current versions, employers should visit the Department of Labor’s Website.

Medical certifications help employers try to manage employee intermittent and standard leave. Employers can still utilize the standard forms. However, there will be more frequent changes and updates to the form as the DOL no longer needs to go through the notice and commitment period to update them.

The DOL also made changes to the military section of FMLA rules. The changes are outlined below:

• Eligible employees can obtain certification of a service member’s serious illness or injury from any healthcare provider. Previously the requirement was that a service member must obtain certification from a provider affiliated with the departments of Defense or Veterans Affairs or TRICARE networks. 
• Extending qualifying exigency leave to eligible employees who are in, or have family members in the regular armed forces. Also, adding the requirement that military members must be deployed in a foreign country in order to be on “covered active duty” under FMLA. 
• Increasing the amount of time a military employee or family member of military personnel may take for qualifying exigency leave related to rest and recuperation leave from five days to up to 15 days. 
• The changes also cover the rights of veterans in addition to active personnel.

These changes and updates will have minimal impact on employers. However, employers should be aware updated forms. For additional information regarding these updates, visit the Department of Labor and the Society for Human Resource Websites.

February 5, 2013

The IRS has issued an amendment to final regulations originally issued May 23, 2012, regarding qualification for a premium tax credit (premium assistance) when purchasing individual health insurance through a public exchange. In the case of family members who are eligible for an employer-sponsored plan, affordability for family members will be based on the employee’s required contribution for self-only coverage (i.e. employee-only coverage), not the required contribution for family coverage.

In a separate set of guidance issued the same day, the IRS clarified exemptions from the “individual mandate” tax beginning in 2014. Taking the opposite approach to the qualification for the tax credit described above, family members eligible for an employer-sponsored plan will be exempt from the tax if the required contribution for family coverage is “unaffordable.”

Qualification for Premium Tax Credits

Beginning in 2014, individuals with incomes of 100% - 400% of the federal poverty level may qualify for premium assistance when purchasing individual health insurance through a public (state or federal) exchange. However, individuals who are eligible for an “affordable” employer-sponsored plan are not eligible for the premium assistance. In May 2012, the IRS released final regulations clarifying the definition of an affordable employer-sponsored plan as it relates to an employee. An employee whose required contribution to participate in an employer plan is no more than 9.5% of their household income is not eligible for the premium assistance.

The May final regulations delayed a ruling on affordability as it applied to family members. Many expected the IRS to make a family member’s qualification for premium assistance contingent on the required contribution for family coverage of the employer’s plan. However, this guidance clarifies that the premium assistance will only be available to family members if the employee’s required contribution for self-only (i.e. employee-only) coverage is more than 9.5% of the family household income.

Liability for Individual Mandate Tax

In separate guidance, the IRS released additional rules regarding the shared responsibility payment for individuals who do not maintain minimum essential coverage (commonly referred to as the individual mandate tax). A family member who is eligible for an employer-sponsored plan which is “unaffordable” will not be liable for the individual mandate tax.

The definition of “affordable” for the purpose of the individual mandate tax is different from what is considered affordable for premium assistance. In the case of individual mandate tax liability, an individual is generally exempt from the tax if the coverage available costs more than 8% of their household income.

How will this Rule Impact Employer Plans?

A family member’s qualification for premium assistance does not affect an employer’s liability under the Act’s employer shared responsibility rules. Potential employer penalties in this context are based only on an employee qualifying for exchange-based premium assistance.

However, family member qualification for premium assistance will have an impact on employer plan enrollment rates. Had the IRS ruled that family members could qualify for premium assistance based on the cost of family coverage, employers may have seen a decrease in the number of employees electing family coverage, especially employers with a significant number of lower income employees.

February 5, 2013

"Sweeping changes" is how Leon Rodriquez, of the Department of Health and Human Services Office of Civil Rights (OCR), characterized the effect of the final omnibus Health Insurance Portability and Accountability Act (HIPAA) rule published in the Federal Register on January 25, 2013 at 78 Fed. Reg. 5566 (Omnibus Rule). There can be no disputing that statement. Indeed the 563-page Omnibus Rule makes a long list of significant changes to existing regulations. These include, among others:

• modification to the standard for reporting breaches of unsecured personal health information (PHI);
• extension of HHS enforcement authority over business associates;
• expansion of the definition of the term business associate to include Health Information Organizations, E-prescribing Gateways, entities that provide data transmission services for PHI and which require routine access to such PHI, and personal health record vendors;
• modifications to the requirements for business associate agreements;
• new obligations for business associates to enter into business associate agreements with their own subcontractors;
• the removal of limitations on the liability of covered entities for the acts and omissions of business associates;
• changes to the requirements for notices of privacy practices;
• new limitations on the sale of PHI;
• new limitations on and clarifications concerning the use and disclosure of PHI for marketing;
• relaxation of certain limitations on the use of PHI for fundraising; and
• improvement to the regulations concerning authorizations for the use or disclosure of PHI for research.

Except as noted below with respect to provisions related to the requirements for business associate agreements and arrangements relating to the sale of PHI, the deadline for complying with the amended HIPAA regulations is September 23, 2013. Accordingly, covered entities, business associates, and business associate subcontractors will have to act expeditiously to come into compliance with the Omnibus Rule.

Below, we review the changes implemented in the Omnibus Rule in greater detail, and address some of the action steps that covered entities and business associates should take to comply.

Provisions of the Omnibus Rule

1. Tougher Breach Reporting Standard Adopted

Section 13402 of the HITECH Act requires covered entities to provide notification to affected individuals and to the Secretary of HHS following the discovery of a breach of unsecured protected health information. HITECH requires the Secretary to post on an HHS Web site a list of covered entities that experience breaches of unsecured protected health information involving more than 500 individuals. The Omnibus Rule substantially alters the definition of breach. Under the August 24, 2009 interim final breach notification rule, breach was defined as the "acquisition, access, use, or disclosure of protected health information in a manner not permitted under [the Privacy Rule] which compromises the security or privacy of the protected health information." The phrase "compromises the security or privacy of [PHI]" was defined as "pos[ing] a significant risk of financial, reputational, or other harm to the individual."

According to HHS, "some persons may have interpreted the risk of harm standard in the interim final rule as setting a much higher threshold for breach notification than we intended to set. As a result we have clarified our position that breach notification is necessary in all situations except those in which the covered entity or business associate, as applicable, demonstrates that there is a low probability that the protected health information has been compromised. . . ." To demonstrate that there is a low probability that PHI has been compromised, a covered entity or business associate must perform a risk assessment that addresses, at a minimum, the following factors:

(i) the nature and extent of the protected health information involved, including the types of identifiers and the likelihood of re-identification;
(ii) the unauthorized person who used the protected health information or to whom the disclosure was made;
(iii) whether the protected health information was actually acquired or viewed; and
(iv) the extent to which the risk to the protected health information has been mitigated.

While these factors are similar to those recommended by HHS in the preamble to the interim final rule for use in assessing the risk of harm, HHS contends that the former "risk of harm" standard resulted in an analysis that was too subjective. Accordingly, HHS indicates that under the Omnibus Rule, the risk assessment analysis should be an objective test focusing on whether PHI has been "compromised." Nevertheless, other than listing the risk assessment factors, the Omnibus Rule does not define the term "compromise" or explain what it means for PHI to be compromised. HHS did note in the preamble, however, that it will issue additional guidance "to aid covered entities and business associates in performing risk assessments with respect to frequently occurring scenarios."

2. Expansion of HHS Enforcement Authority over Business Associates and Related Changes to Requirements for Business Associate Agreements

As expressly required by HITECH, the Omnibus Rule amends 45 C.F.R. § 164.104 to make certain HIPAA privacy and security rules directly applicable to business associates, but only where those rules so provide. The rules that are made applicable to business associates under this provision are: 45 C.F.R. § 164.306 pertaining to security standards, 45 C.F.R. § 164.308 pertaining to administrative safeguards, 45 C.F.R. § 164.310 pertaining to physical safeguards, 45 C.F.R. § 164.312 pertaining to technical safeguards, 45 C.F.R. § 164.316 pertaining to policies and procedures, 45 C.F.R. § 164.502 pertaining to disclosures of PHI, and 45 C.F.R. § 164.504 pertaining to organizational requirements.

The Omnibus Rule also requires business associates to agree in business associate agreements to comply with the requirements imposed on them under HIPAA. In addition, under the Omnibus Rule, business associate agreements now must require business associates to enter into business associate agreements with subcontractors who will receive, create, or transmit PHI on their behalf. HHS has released a new model form business associate agreement that includes revisions pursuant to the requirements of the Omnibus Rule. The model form is available.

Notably, the Omnibus Rule provides that business associate agreements that were effective prior to January 25, 2013 are deemed compliant with the preexisting regulations until September 22, 2014, unless they are amended within one year before that date.

3. Expansion of Definition of Business Associate

The Omnibus Rule broadens the definition of business associate to include, in addition to those entities that would qualify as business associates under the preexisting regulations, the following entities: (1) a Health Information Organization, E-prescribing Gateway, or other person that provides data transmission services with respect to protected health information to a covered entity that requires routine access to such protected health information; and (2) a person who offers a personal health record to one or more individuals on behalf of a covered entity. As a result, these entities will be subject to the requirements imposed on business associates under HIPAA including various requirements under the Security Rule, and the new requirement to enter into business associate agreements with subcontractors. They also will be subject to direct enforcement action by HHS. HHS, however, has declined to define the term "Health Information Organization," noting that "the type of entities that may be considered Health Information Organizations continues to evolve." HHS has indicated that it anticipates issuing guidance in the future on its Web site on "the types of entities that do and do not fall within the definition of a business associate."

With respect to what it means to require access to PHI on a "routine basis," HHS distinguishes entities that require access to PHI on a "routine basis" from entities that serve as "mere conduits." HHS cautions, however, that the "mere conduit" exception is intended to be narrow and to apply only to courier services such as the Postal Service "and their electronic equivalents, such as Internet service providers (ISPs) providing mere data transmission services." HHS also notes that "an entity that maintains [PHI] on behalf of a covered entity is a business associate and not a conduit, even if the entity does not actually view the [PHI]."

4. New Requirements Related to Business Associate Subcontractors

According to the Omnibus Rule, a subcontractor is "a person to whom a business associate delegates a function, activity, or service, other than in the capacity of a member of the workforce of such business associate." The Omnibus Rule provides that there must be an agreement between the business associate and its subcontractor that provides that the subcontractor is subject to the same HIPAA requirements for access and use of PHI as the business associate. In effect, the Omnibus Rule places the subcontractors of business associates in the same position that business associates were in before HITECH made business associates directly subject to certain HIPAA requirements. Specifically, business associates' subcontractors now will be contractually obligated to comply with certain HIPAA requirements, but not directly subject to HHS enforcement authority.

5. Expanded Liability of Covered Entities and Business Associates for Acts of Their Agents

Prior to the promulgation of the Omnibus Rule, 45 C.F.R. § 160.402 established civil monetary penalty liability for covered entities under HIPAA based on the acts and omissions of their agents, including workforce members, but exempted covered entities from liability for the acts of their business associates if the following conditions were met: (1) the relevant business associate agreement requirements; (2) the covered entity did not know of a pattern or practice of the business associate in violation of the business associate agreement; and (3) the covered entity did not fail to act as required by the HIPAA Privacy or Security Rule with respect to such violations. The Omnibus Rule now provides that covered entities will be liable under the "federal common law of agency" for the acts and omissions of their business associates, and eliminates the exception to such liability that was included previously in 45 C.F.R. § 160.402. The Omnibus Rule also provides that like covered entities, business associates may be held liable under the "federal common law of agency" for the acts and omissions of their subcontractors.

The preamble to the Omnibus Rule discusses two contexts in which covered entities and business associates may be held liable for the acts of their agents: (1) when they "delegate out" obligations under HIPAA to another party; and (2) when they retain authority to give interim instructions concerning a particular task, such as where a business associate agreement provides that the business associate must make available PHI based on instructions to be provided by the covered entity. Imposing agency liability in both these contexts would appear to leave little ground uncovered, as it indicates that covered entities and business associates may be liable for the acts of third parties both when they retain control of the performance of a certain task, and when they do not. The preamble, however, does provide a number of examples of situations where a covered entity or business associate will not be subject to agency liability. These include a business associate hired by a small health care provider to perform de-identification. The preamble explains that such an arrangement should not give rise to agency liability because the provider would be unable to provide guidance to the business associate. HHS cites a business associate who performs credentialing for a covered entity where the covered entity lacks the authority to award accreditation as another example of an arrangement that would not give rise to agency liability. The common thread in these two examples appears to be the lack of ability for the business associate to control or direct the performance of its agent.

In sum, the elimination of a bar to liability for the acts of business associates represents a significant expansion of HHS's enforcement authority. Covered entities and business associates will have to consider carefully how decisions to delegate responsibility for tasks such as handling breach notification and their retention of authority to provide instructions to their business associates and contractors with respect to certain tasks will affect their exposure to liability.

6. New Requirements for Notices of Privacy Practices

Notices of Privacy Practices (NPPs) for all covered entities now must include the following information: (1) that the sale of protected health information and the use of such information for paid marketing require authorization from the individual; (2) that other uses and disclosures not described in the NPP will be made only with authorization; (3) that covered entities must notify affected individuals of breaches of their PHI; and (4) that individuals can restrict disclosures to their health plan for services for which they pay "out of pocket."

In addition, NPPs for health plans that underwrite (excluding certain long-term care plans) must state that the plan cannot use or disclose genetic information for underwriting purposes. NPPs for covered entities that intend to contact individuals for fundraising also must note that individuals have a right to opt out of receiving fundraising communications from the covered entity. Finally, entities that maintain psychotherapy notes must note in their NPPs that most uses and disclosures of such notes require authorization.

The Omnibus Rule also eliminates one existing requirement relating to NPPs: whereas NPPs previously had to state that the covered entity may contact individuals to provide appointment reminders or information about treatment alternatives or other health-related benefits, such a statement is no longer required. It is worth noting, though, that authorization will generally be required for the use or disclosure of PHI for marketing activities that are supported by payments from third parties.

The Omnibus Rule also includes important provisions concerning requirements for distributing revised NPPs. Specifically, the Omnibus Rule provides that health plans that post their NPPs on their Web sites must post material changes on their Web sites by the effective date of the change, and provide information about the change in their next mailing to covered individuals. Plans that do not post their NPPs on their Web sites must provide information about any material change to their NPP to covered individuals within 60 days of the material revision to the NPP. These provisions are intended to enable health plans to avoid the cost of having to make a separate mailing of their revised NPPs, which would have been required under preexisting regulations.

Health care providers are not required to mail out revised NPPs. But health care providers must post the revised notice on their Web sites if they maintain one, post the revised notice in a clear and prominent location in their facility if they maintain a physical service delivery site; and make the revised notice available to patients upon request after the effective date of the revision.

7. Limitations on the Sale of PHI

The sale of PHI without authorization is prohibited under the Omnibus Rule. The "sale of [PHI]," however, is defined to exclude disclosures for public health purposes, for treatment and payment for health care, for the sale, transfer, merger, or consolidation of all or part of a covered entity and for related due diligence, to a business associate in connection with the business associate's performance of activities for the covered entity, to a patient or beneficiary upon request, and as required by law. In addition, the disclosure of PHI for research purposes or for any other purpose permitted by HIPAA will not be considered a "sale" if the only remuneration received by the covered entity or business associate is "a reasonable, cost-based fee to cover the cost to prepare and transmit the protected health information for such purpose or a fee otherwise expressly permitted by other law." Notably, under the Omnibus Rule, an authorization to sell PHI must state that the disclosure will result in remuneration to the covered entity. Notwithstanding the changes in the Omnibus Rule, the disclosure of limited data sets (a form of PHI with a number of identifiers removed in accordance with specific HIPAA requirements) for remuneration pursuant to existing agreements is permissible until September 22, 2014, so long as the agreement is not modified within one year before that date.

8. Limitation on the Use of PHI for Paid Marketing

Under preexisting regulations, covered entities are required to obtain authorization to use or disclose PHI for marketing purposes, but not for activities that constitute treatment or health care operations. Marketing is defined as "a communication about a product or service that encourages recipients . . . to purchase or use the product or service." However, prior to the implementation of the Omnibus Rule, no prior authorization was required to make communications related to treatment and health care operations. The practical effect was that covered entities could use PHI to conduct marketing for a variety of purposes, such as recommending alternative therapies, without obtaining authorization from the patient or beneficiary.

The Omnibus Rule limits the ability of covered entities to make such communications. Specifically, under the Omnibus Rule, covered entities must obtain authorization to use PHI to make any treatment and health care operations communications if they receive financial remuneration for making the communication from a third party whose product or service is being promoted. HHS notes that the authorization requirement applies even when a business associate will receive the remuneration for making a communication, and the covered entity will not receive direct remuneration.

There are several important limitations to this requirement. First, "refill reminders" are excluded, so long as the remuneration for making such a communication is "reasonably related to the covered entity's cost" for making the communication. The preamble notes that permissible costs that can be reimbursed do not include indirect costs, and are limited to labor, supplies, and postage. The preamble also notes that communications about generic equivalents and adherence communications reminding patients to take medication as directed are both considered to be "refill reminders." Additionally, for self-administered drugs and biologics, communications about all aspects of the delivery system (such as a communication about an insulin pump) are considered to be "refill reminders" as well.

Second, face-to-face marketing communications are not subject to the authorization requirement. Permissible face-to-face communications can include handing someone written material such as a pamphlet.

Third, promotional gifts of nominal value are not subject to the authorization requirement.

Additionally, for purposes of determining whether authorization is required to use PHI to make a paid marketing communication, financial remuneration does not include nonfinancial benefits such as in-kind payments, and payments for a purpose other than making a communication, such as payments to implement a disease management program.

HHS also notes in the preamble that authorizations from patients and beneficiaries need not be limited to a single product or service or the products or services of a single entity, but can allow subsidized communications more generally.

9. Relaxation of Restrictions on the Use of PHI for Fundraising

The Omnibus Rule expands the type of information that can be used for fundraising without patient authorization to include the department of service information, the identity of the treating physician, and health insurance status. But providers should note the requirement to describe disclosures that may be made for fundraising in their NPP. In addition, the new rule heightens the requirement for including an opportunity for patients to opt out of receiving future fundraising communications in any such notice. Covered entities also are prohibited from conditioning treatment on any decision with respect to the receipt of fundraising information.

10. Improvements to Requirements for Authorizations Related to Research

The Omnibus Rule includes two noteworthy changes concerning authorizations for the use or disclosure of PHI for research. First, the preamble notes that HHS has changed its position with respect to authorizations for the use of PHI for future research. Previously HHS had taken the position that such authorizations were not valid. HHS now states, however, that such authorizations will be considered valid if they adequately describe future uses. Second, the provisions of the privacy regulations relating to the use of compound authorizations for research have been amended to clarify that when a compound authorization is used, and the provision of research-related treatment is conditioned on the provision of an authorization, the compound authorization must differentiate between conditioned and unconditioned components.

11. Additional Modifications to HIPAA Regulations

The Omnibus Rule includes a number of additional noteworthy changes. Although they are of somewhat lesser import than those highlighted above, they are not inconsequential. They include:

• a provision requiring covered entities to agree, upon request, to restrict disclosures to health plans of PHI when the PHI pertains to items or services for which an individual has paid "out of pocket." As a result, covered entities will have to implement procedures for complying with such requests;
• a requirement for covered entities to provide access to PHI in electronic format upon request if they maintain information in designated record sets electronically;
• a requirement for covered entities to comply with requests by individuals to transmit copies of PHI to third persons when such requests are made in writing;
• a provision allowing covered entities to disclose PHI to family members of a deceased patient who were involved with the patient's care or payment for their care, so long as such disclosure is not contrary to "any prior expressed preference of the individual that is known to the covered entity,"
• establishment of a 50-year limit on the obligation to protect the PHI of deceased individuals;
• a provision allowing covered entities to disclose immunization records to a school if the school is required by law to obtain such records prior to admission and the covered entity obtains and documents the agreement to the disclosure from the parent or individual as applicable; and
• a provision implementing requirements of the Genetic Information Nondiscrimination Act of 2008 (GINA) by prohibiting the use of genetic information for underwriting purposes, such as eligibility determinations and the computation of premiums.

Action Items for Covered Entities and Business Associates

In light of the many significant changes to the HIPAA regulations, covered entities and those who provide services to covered entities as business associates will have to take prompt action to comply. Specifically, covered entities will have to:

• revise their NPPs;
• review and, as necessary, revise their policies and procedures concerning: (1) breach notification; (2) the sale of PHI; (3) the use of PHI for paid marketing activities; (4) the use of PHI for fundraising; (5) requests to restrict disclosure of PHI to health plans from individuals who pay "out of pocket" for services; (6) requests for access to PHI in electronic format; (7) requests to transmit copies of PHI to third persons; (8) disclosure of the PHI of deceased patients to family members; (9) disclosure of immunization records; and (10) authorizations for research;
• develop new forms for business associate agreements;
• review any agreements pertaining to the sale of PHI or the use of PHI for marketing to assess the impact of the new regulations on such agreements; and
• as necessary, develop authorizations for the sale of PHI and the use and disclosure of PHI for paid marketing.

In addition, changes in the regulations with respect to liability for the acts and omissions of business associates should prompt covered entities and business associates to review their current business associate agreements and to consider how they will approach future business associate agreements. For example, covered entities that have delegated responsibility to a business associate for making determinations with respect to, and providing, breach notifications may wish to amend their agreement or to retain those duties in future agreements. Similarly, even where a covered entity has not expressly delegated responsibility to a business associate for making breach determinations, covered entities also should review language in current and future business associate agreements relating to breach notifications carefully. Often, such agreements require business associates to provide notice concerning a breach of unsecured PHI. Such a provision, however, can be construed as providing the business associate with the authority to not inform covered entities of potential breaches on the basis that there has been no "breach." Covered entities may wish to seek language that more clearly delineates the parties' rights and obligations in this area. Finally, both covered entities and business associates should now consider seeking indemnification in their business associate agreements.

Business associates, including Health Information Organizations, E-prescribing Gateways, entities that provide data transmission services for PHI and require routine access to such PHI, and personal health record vendors will have additional work to do as well, including:

• drafting and adopting policies, procedures and related documents if they do not have them in place already;
• performing and documenting risk assessments if they have not done so; and
• reviewing their relationships with subcontractors and entering into business associate agreements with them as necessary.

In short, there is much work for covered entities and business associates to do, and, in large part, that work will have to be completed by September 23, 2013.

Disclaimer
This publication is a service to the clients and prospects of RJF/MMA with content courtesy of Proskauer Rose. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice or render a legal opinion.

OSHA in 2013 — Looking Ahead

January 30, 2013

Each new year inevitably brings change that impacts business: Tax code updates, insurance premium adjustments and increases in overhead costs. And for employers in Minnesota, 2013 brings a substantial rise in OSHA penalty amounts.

In this article, Risk & Safety Consultant David Rumsey discusses OSHA compliance and overall workplace safety, and how they can work together to positively impact a company’s bottom line.

For more information on OSHA compliance, register for the upcoming “OSHA Audits and How to Defend Against a Citation” seminar with experts Gary Robertson, Training Officer and Safety Investigator for MN OSHA and Aaron Dean, attorney with Fabyanske, Westra, Hart & Thomson, P.A., scheduled for Thursday, Feb. 21, from 8:30-11:30 AM in Golden Valley, MN. 

Let’s start with the OSHA penalty increase. What led to the increases?

During a recent audit, the Federal OSHA audited the Minnesota Occupational Safety and Health (MNOSHA) program, and discovered that MNOSHA penalties for citations are were among the lowest in all the 50 states. As a result of this audit, MNOSHA was instructed to increase citation penalties. RJF Risk Consultants have begun to notice significant increases in penalties (nearly 100% in some cases). What used to be an average total penalty of $1,000-$2,000 for an employer is now a wild card.

And in the last two years, for the first time in my career — and I’ve been in safety for 20 years—I’ve seen “willful” citations being issued. In the past, the willful violation was usually reserved for employers who have committed egregious safety violations and have shown a willful disregard for OSHA standards. That’s not necessarily the case anymore. Since these changes have occurred, one of our clients received a willful citation that resulted in a $63,000 penalty, and another client received a “failure to abate” citation for $13,000.

OSHA has also hired more investigators, which means there is no shortage of enforcement people. The moral of the story is that OSHA’s directive and objective is to protect employees and more than ever they are doing their job.

Do employers tend to respond differently to OSHA citations compared to increases in their Workers' Compensation premiums?

Yes; this is an interesting phenomenon in safety. The total cost of OSHA penalties doesn’t really compare to the total cost of business insurance, but many employers seem to worry more about the threat of inspection and OSHA citations. It makes sense when viewed through the eyes of a business owner; OSHA’s coming to find something wrong and it intends to take a bite out of hard-earned profits. But at the same time, a company might have to pay increased insurance premiums for employee injuries. So, my encouragement is to use the time and energy spent on OSHA compliance to build a culture of safety.

What are the benefits to employers of going beyond OSHA-compliance to have a broader focus on workplace safety?

While many employers comply with OSHA standards for the sake of compliance, RJF suggests compliance for the sake of injury prevention. There are multiple benefits to this, not the least of which is avoiding an OSHA citation. Also, employers who go beyond just being OSHA-compliant tend to have excellent safety performance, which translates to improved E-mod rates and reduced workers compensation premiums, which can represent major savings.

Finally, safety-focused companies are demonstrating that they care about their employees and about providing a safe working environment. And this has a major positive impact on employee retention, morale and productivity, which ultimate results in a more profitable bottom line.

How does RJF help companies not only be OSHA-compliant but also more safety-focused?

RJF has a comprehensive team available to help our clients not only achieve OSHA-compliance but also improve workplace safety: Risk & Safety, Health Management, and Human Resource consultants, along with our entire claims team.

As part of our PREVENT Process, we do a risk assessment, which includes providing new insights into your known and unknown risks. RJF’s Risk Consultants provide a variety of services including conducting workplace safety inspections, facilitating safety committees, and providing employee safety training. Our HR consultants write employee handbooks and our health management consultants help to increase efforts in well-being.

What I like to say is that we are an extension of the employer’s staff. We help clients determine where the greatest need and the greatest hope for improvement are in the organization, and then assist them in those areas (including OSHA compliance). Our goal is to help companies in risk management by helping good companies get better, and excellent companies maintain their high standards.

January 24, 2013

As anticipated and based on prior informal comments, the Department of Labor (DOL) has delayed the employer requirement to send a “Notice of Exchange” to employees.

The Affordable Care Act (ACA) amended the Fair Labor Standards Act (FLSA) requiring employers to send a notice describing certain elements of the exchanges and subsidy eligibility to employees by March 1, 2013. However, citing a number of factors, the DOL has delayed the requirement until after guidance is issued later in 2013.

In a FAQ on the department’s website, the DOL states that it expects notice distribution will be required late summer or fall of 2013, which will coordinate with the open enrollment period for exchanges. The announcement also states that the DOL plans to release model language, or additional guidance regarding the format and content of the notice.

For now, employers need not worry about meeting the March 1, 2013 notice deadline, but should stay tuned for future guidance and details regarding an updated distribution date later this year.

Text of DOL Announcement

Notice of Coverage Options Available Through the Exchanges

Section 18B of the Fair Labor Standards Act (FLSA), as added by section 1512 of the Affordable Care Act, generally provides that, in accordance with regulations promulgated by the Secretary of Labor, an applicable employer must provide each employee at the time of hiring (or with respect to current employees, not later than March 1, 2013), a written notice:

• Informing the employee of the existence of Exchanges including a description of the services provided by the Exchanges, and the manner in which the employee may contact Exchanges to request assistance;
• If the employer plan's share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs, that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code (the Code) if the employee purchases a qualified health plan through an Exchange; and
• If the employee purchases a qualified health plan through an Exchange, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

Q1: When do employers have to comply with the new notice requirements in section 18B of the FLSA?

Section 18B of the FLSA provides that employer compliance with the notice requirements of that section must be carried out "[i]n accordance with regulations promulgated by the Secretary [of Labor]." Accordingly, it is the view of the Department of Labor that, until such regulations are issued and become applicable, employers are not required to comply with FLSA section 18B.

The Department of Labor has concluded that the notice requirement under FLSA section 18B will not take effect on March 1, 2013 for several reasons. First, this notice should be coordinated with HHS's educational efforts and Internal Revenue Service (IRS) guidance on minimum value. Second, we are committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time. The Department of Labor expects that the timing for distribution of notices will be the late summer or fall of 2013, which will coordinate with the open enrollment period for Exchanges.

The Department of Labor is considering providing model, generic language that could be used to satisfy the notice requirement. As a compliance alternative, the Department of Labor is also considering allowing employers to satisfy the notice requirement by providing employees with information using the employer coverage template as discussed in the preamble to the Proposed Rule on Medicaid, Children's Health Insurance Programs, and Exchanges: Essential Health Benefits in Alternative Benefit Plans, Eligibility Notices, Fair Hearing and Appeal Processes for Medicaid and Exchange Eligibility Appeals and Other Provisions Related to Eligibility and Enrollment for Exchanges, Medicaid and CHIP, and Medicaid Premiums and Cost Sharing (78 FR 4594, at 4641), which will be available for download at the Exchange web site as part of the streamlined application that will be used by the Exchange, Medicaid, and CHIP. Future guidance on complying with the notice requirement under FLSA section 18B is expected to provide flexibility and adequate time to comply.

by Jason Kleid

What contributes to people believing that rules do not apply to them? How can you help younger generations value interdependence? The answer is complex. Those in HR and many managers struggle with how to understand and work with any person who displays those kinds of attitudes. Many organizations are finding themselves dealing with a number of people with these attitudes from the newest generation to join the workforce… millennials.

Below are some examples of what managers have experienced in working with the millennial generation. Please keep in mind that the observations to follow can also be seen in older generations too.

According to the opinion of some:

• Many of this generation have been raised without being allowed to experience the pain of failure. This may be due to parents and teachers educating and mentoring with the caveat of not wanting young people to feel bad or wanting everyone to feel special. 
• The information age has allowed instantaneous access. As a result, many today lack patience and don’t seem to value ‘knowing or memorizing things’ since they can find what they need quickly on the internet.
• Old assumptions about the workplace don’t apply. Millennials work hard at what they want and not necessarily what the organization would like.
• Being conditioned to expect instant gratification, success and recognition, there are those who don’t understand why they are not president of their company even though they are just out of college and this is their first job.

Whether you agree, somewhat agree or disagree with some or all of the above observations, understanding the thinking and behavior of younger employees will make a difference for everyone.

Dependence to Independence – Reinforced

All of us at one time were dependent on our parents or caretakers for food, clothing and shelter. As we grew older we began wishing we were adults, gaining the freedom that independence would bring. The voice we heard in our head kept saying; “I wish I could stay out as long I want. I wish I could do what I want”. The desire for freedom from authority and the constraints rules placed upon us was driving force in our lives.

There are also other forces at work that influence us as we grow up and mature. Those forces are impacting the thinking ability and decision-making of many entering today’s workforce. Starting with what was labeled the latchkey generation (those who came home to an empty house after school) many entering today’s workforce have been raised without point-of-need guidance and corrective discipline. This reality is in part due to both parents having to work to survive and/or to achieve a lifestyle that they value. Parents weren’t able to be home as much as they were when previous generations were growing up. As a result, the amount of time dedicated to guiding and directing these young saplings was greatly reduced.

Others, responsible for teaching youths, have applied the thinking that disciplining stifles the growth of young minds. Putting this philosophy into practice has allowed students greater freedom to do whatever they want and do so without consequence. Could it be that being overly concerned about our children’s feelings and egos has been a contributing factor to today’s reality? I believe it to be so.

Our belief systems, what we value and our view of ourselves in the world are formed early in our lives. Our home life, associations and the messaging bombarding us from television and other media affect how we think. When we judge something as important we move to action. If we don’t believe something is important, our decisions reflect those beliefs as well. Perhaps having the spirit of independence reinforced has caused young people to become stuck in the independent paradigm. Naturally the time arrives for newer generations to enter the workforce and they arrive as it were, in the middle of their lives. The angst you and they are feeling is a result of values in conflict, both yours and theirs.

How you can help younger generations value Interdependence

The next level of growth comes when a person realizes they need other people and that others need them. This is called interdependence. The company challenge is how to help those in the independent stage to move to the interdependent stage of maturity.

Since thinking precedes behavior, a person has to change the way they think in order to change their behavior. A different set of values needs to be created. The reality is that people don’t transform overnight. What is needed is a strategy that includes patiently growing your employee’s understanding of self, understanding of others and how best to interact with others.

Real coaching conversations:

• How aware are people that they can and will affect the lives of those around them? Leaders need to help create a greater level of awareness. Helping people no matter what their age to understand that what they do and how they feel impacts others. The realization that it’s not always about you is important to every personal and professional relationship we have or will have. In way of illustration, think about a spider web. If a fly lands on one part of a spider web, it sends vibrations throughout the entire web. In an organization each department has its own web and each web in turn causes tremors to be felt in other departments. Recognize that behavior, good or bad, impacts others.
• Teach your employees to ask themselves: How will what I am about to do affect others? A person’s natural inclination may be to ignore how their superior feels or disregard rules in general and do what they want. However, if a person learns that others with whom they work also contribute to the end result, they hopefully will begin acting in a way that benefits the entire team. Understanding the value of interrelationships with others should cause a person to begin thinking about others first. 
• What new choices can you help your employee to create? You might ask:
• How else might you have handled that situation? 
• What might you do differently the next time? 
• What should you stop doing…start doing…do more of…less of? 
• Three fundamentals to remember and act upon: 
• Questions are more powerful than statements.
• Telling is not selling! Just because you made a statement does not mean your message has been bought.
• Get to know each employee in your department. Understand a person’s desires, goals and motivations. Then create alignment between who they are as a person, the creativity and energy they bring and what they need to do to in order to succeed.

Resist the tendency to always tell your employees the answers to their problems. If you tell a person what to believe, the concepts you are trying to convey are just your beliefs and will most likely fall into the category of more meaningless rules. Rather, ask powerful questions to guide a person toward creating their own solutions.

About Jason Kleid: Jason is focused on optimizing performance and getting results. Underscoring this philosophy is a belief that it is always the individuals in any organization, where the greatest potential for improvement and possibility of change resides. It is the mind (one’s thinking) where new ideas broaden understanding and cause things to happen. However, it is the heart (inner person/motivation) where transformation occurs.

January 14, 2013

On the heels of providing parity for qualified mass transit and parking benefits under the American Taxpayer Relief Act of 2012 (ATRA), the Internal Revenue Service released inflation-adjusted amounts for these plans on January 11, 2013. These increased amounts apply to the 2013 tax year:

• Qualified parking: $245 per month (previously $240)
• Qualified mass transit: $245 per month (previously $240)

Unlike a Section 125 Flexible Spending Account, employees who participate in a Qualified Transportation Plan may make or change their elections monthly, even if they did not experience a qualifying event.

January 14, 2013

The IRS has released additional guidance related to the Affordable Care Act (ACA) employer shared responsibility rules. The guidance includes proposed regulations published in the Federal Register on January 2, and a series of questions and answers published on the IRS website. For the most part, the new guidance closely follows previous guidance released by the IRS. However, there are a number of clarifications and new considerations for employers.

Background

Beginning in 2014, an “applicable large employer” may be subject to an “assessable payment” (i.e. penalty) under one of two different circumstances:

1. 4980H(a) liability – Applies if an employer fails to offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage (MEC), and any full-time employee is certified as having received a subsidy (i.e. a premium tax credit or cost-sharing reduction) when purchasing individual health insurance through a public exchange. In this case, the employer may be liable for a penalty of $2,000 per year times the total number of full-time employees (not counting the first 30).
2. 4980H(b) liability – Applies if the employer does offer its full-time employees (and their dependents) MEC, but the plan is unaffordable or does not provide minimum value, and at least one full-time employee is certified as having received a subsidy when purchasing individual health insurance through a public exchange. In this case, the employer may be liable for a penalty of $3,000 per year times the number of full-time employees who are certified to receive, and purchase, subsidized individual health insurance through a public exchange.

An applicable large employer is an employer that employed an average of at least 50 full-time employees (taking into account full-time employee equivalents) during the preceding calendar year. The proposed regulations include guidance on how to count seasonal employees, new employees and other employee types in this determination. In addition, see below for additional details on how related organizations and corporations under common control will be treated for the purpose of this rule.

Transition Rule

In an important and welcome development, the IRS guidance provides transition relief for non-calendar year plans. Employers who sponsor non-calendar year plans will not be liable for any 4980(H) liability until the first plan year beginning after January 1, 2014 if certain criteria are met. If an employer maintains a non-calendar year plan as of December 27, 2012, they will not be assessed a penalty until the plan year that begins in 2014 if:

• For full-time employees who were eligible for coverage (whether or not actually covered) on December 27, 2012, the employer will not pay a penalty if they are offered affordable, minimum value coverage on the first day of the 2014 plan year.
• If the plan (a) covered one-quarter of employees (full-time and part-time) as of December 27, 2012, or (b) was offered to at least one-third of all employees (full-time and part-time) at the most recent open enrollment period prior to December 27, 2012, the employer is not subject to the penalty for any full-time employees provided they are offered affordable, minimum value coverage on the first day of the 2014 plan year.

This provision eliminates the opportunity for an employer to change plan years in an attempt to delay being subject to 4980(H) liability.

Offering Coverage to all Full-time Employees – The 95% Rule

As stated above, an employer faces potential penalties under 4980H(a) if it fails to offer minimum essential coverage to all full-time employees. The IRS has previously commented that the penalty should not apply in the case of an employer that intends to offer coverage to all of its full-time employees, but fails to offer coverage to a few full-time employees. IRS Notice 2011–36 initially addressed this issue by indicating that the IRS was contemplating a rule stating that an employer offering coverage to “substantially all” of its full-time employees would not be subject to a 4980H(a) assessable payment. In the new guidance, the IRS allows a margin of error regarding this requirement by introducing a “95%” standard.

Under this standard, an applicable large employer will be treated as offering coverage to its full-time employees if it offers coverage to all but 5% (or if greater, five) of its full-time employees. This rule alleviates employer fears that a small administrative mistake could trigger significant employer penalties.

Entities under Common Control

All entities and organizations treated as a single employer under the rules contained in Code §414 are combined in determining if an employer is an “applicable large employer”. Consequently, a number of smaller organizations (that may not each have 50 FTEs) could be subject to 4980(H) liability if they are considered an applicable large employer under common control according to §414 rules.

The new IRS guidance defines each company that is part of a controlled group as an “applicable large employer member” and applies special rules to each separate member of the controlled group:

• Penalties will apply separately to each member organization of a controlled group. For example, if one member organization fails to provide MEC to its full-time employees, the penalty would be based on the number of full-time employees in that particular organization, not the total number of employees in the entire controlled group. 
• In calculating the 4980H(a) liability, the “not counting the first 30 rule” would apply proportionality to each member entity. For example, a member entity that accounts for 50% of the total full-time employees in the controlled group would pay a penalty of $2000 per year times the number of full-time employees in that specific entity not counting the first 15 (50% of 30).

Dependent Coverage

To avoid 4980(H) liability, employers must offer coverage to full-time employees and their dependents. It is important to note that the cost of the dependent coverage is not used in determining the plan’s affordability under 4980(H). Plan affordability for employer penalty purposes is based only on the amount the employee must pay for self-only coverage of the lowest cost plan that provides minimum value.

In what was a surprise to many observers, the requirement to offer coverage to dependents does not apply to spouses. The proposed regulations define an employee’s dependent for purposes of 4980(H) as an employee’s child who is under 26 years of age.

Affordable Coverage Safe Harbors

Employers face potential liability under 4980(H)(b) if the employer coverage is not affordable to an employee.

• Coverage is affordable if the employee’s required contribution for self-only coverage of the lowest cost plan that provides minimum value does not exceed 9.5% of the employee’s household income. 
• Household income is defined as the modified adjusted gross income of the employee and any members of the employee’s family (including a spouse and tax dependents) who are required to file an income tax return.

Recognizing that it is difficult for an employer to structure contributions so that coverage is affordable as described above, the IRS outlined a proposed affordability safe harbor (referred to as the W–2 safe harbor) in prior notices. The proposed regulations provide two new additional safe harbors for determining affordability.

1. W-2 Safe Harbor – An employer will not be subject to an assessable payment if the required employee contribution toward the self-only premium for the employer’s lowest cost coverage that provides minimum value does not exceed 9.5% of the employee’s W–2 wages.
2. Rate of Pay Safe Harbor – An employer can take the hourly rate of pay for each hourly employee and multiply that rate by 130 hours per month to determine a monthly “rate of pay”. The employee’s monthly contribution amount (for the self-only premium of the employer’s lowest cost coverage that provides minimum value) is affordable if it is equal to or lower than 9.5% of the computed monthly wage estimate. For salaried employees, monthly salary would be used instead of hourly salary multiplied by 130.
3. Federal Poverty Line Safe Harbor - An employer may also rely on a design-based safe harbor using the Federal Poverty Level (FPL) for a single individual. Coverage offered to an employee is affordable if the employee’s cost for self-only coverage of the lowest cost plan that provides minimum value does not exceed 9.5% of the FPL for a single individual. For example, in 2012, affordable coverage under this method would have been set at a monthly contribution in the lower 48 states of $88.43 for self-only coverage (FPL is slightly higher in Alaska and Hawaii).

Election Changes under Section 125 Plans

Under Section 125 rules, employees may not change their plan elections mid-year without the occurrence of an allowed status change. This presented a problem for employees who are enrolled in a non-calendar year plan and are eligible on January 1, 2014 for subsidized coverage when purchasing health insurance through a public exchange. In this scenario, the current Section 125 rules would not allow an employee to terminate pre-tax salary reduction elections for the employer’s group medical plan due to gaining eligibility to purchase subsidized coverage on an insurance exchange.

However, the proposed regulations allow an employer to amend their Section 125 plan to permit this change. Interestingly, the rules do not require the employer to allow this election change. Some employers may be inclined not to permit such a change if an employee moving to subsidized individual coverage triggers employer liability under the shared responsibility rules.

Additional Guidance on Definition of Full-Time Employees

In August 2012, the IRS released significant guidance on defining an employee’s full-time status, including an optional look back measurement period and corresponding stability/eligibility period. The new proposed regulations clarify and expand on a number of issues related to these full-time employee rules.

• The guidance clarifies that an employer can use the standard look back measurement period each year to determine the full-time status of all ongoing employees. However, for new employees, an initial measurement period can only be applied to “variable hour” and seasonal employees. A plan may not have a waiting period of more than 90 days for all other employees expected to work 30 hours or more per week.
• When determining eligibility for 2014, an employer who uses a 12-month measurement and stability period is allowed to use a shorter measurement period in 2013, which will apply to the 2014 stability period. However, the 2013 one-time “short” measurement period must be at least 6 months long and begin no later than July 1, 2013.
• An employee hired to work an average of at least 30 hours per week cannot be treated as a variable hour employee simply because they are hired into a high turnover position. These employees must be treated as full-time employees and can have no more than a 90 day waiting period before being eligible for coverage.
• The guidance clarifies how hours of service must be counted toward an employee’s full-time status, including a requirement to count all paid leave as hours of service.
• The proposed regulations also provide guidance on determining full-time status for: work performed outside of the United States, teachers and other employees of educational organizations, changes in employment status or rehired employees, and temporary staffing agencies.

Summary

While the proposed rules are complex, their impact on any particular employer will vary dramatically. Employers who already offer affordable, minimum value coverage to most, or all, of their employees working an average of 30 hours per week may find very little to change in their current practices. However, employers who do not offer coverage to all full-time employees, or offer coverage that may not be affordable to a significant number of their employees, will need to study these rules in detail as they develop their benefits strategy for 2014 and beyond.

The proposed regulations and IRS Q&A can be found at:

• IRS Proposed Regulations: http://www.gpo.gov/fdsys/pkg/FR-2013-01-02/pdf/2012-31269.pdf
• IRS Q&A: http://www.irs.gov/uac/Newsroom/Questions-and-Answers-on-Employer-Shared-Responsibility-Provisions-Under-the-Affordable-Care-Act

January 14, 2013

In part one of our two-part series (Trends in Employment Law Claims — Looking Back), Heather Roiger, RJF HR Consultant, and Dan Hanson, RJF Director of Management Liability, provided a thumbnail analysis of recent years’ employment claims. In part two, Roiger and Hanson will explore what employers can expect in 2013 and what factors will influence the potential for employment liability issues.

Anticipated uptick in claims

Both Roiger and Hanson expect that 2013 will bring an increase in employment law claims, with claims relating to the gray area of acceptable social media behavior and claims resulting from the full implementation of the Patient Protection and Affordable Care Act (PPACA) just two potential “hot areas.”

“The laws have not caught up with social media and how it can impact the workplace,” said Roiger. “For example, if two employees are having a ‘Facebook war,’ the employer may not know what action, if any, should be taken. The default decision may be to ignore the situation, assuming that, because it takes place outside the workplace, it isn’t a workplace issue. But that’s not the case. The old saying ‘what happens outside of work stays outside of work,’ doesn’t apply if actions taking place beyond the business doors ultimately affect the workplace environment. In those instances, the employer is obligated to deal with it.”

As for Obamacare, a recent article in the Wall Street Journal illustrates the financial fallout that can occur as a business becomes more successful and needs to hire more employees. As the article points out, the new law requires those businesses with 50 or more full-time equivalent employees have two choices: offer workers health insurance or potentially pay a penalty. 

Some companies might opt to split the existing company into two separate entities (as the business owner in the article is contemplating), while others, said Hanson, hire more employees but ratchet down their individual work hours to keep them at “part-time” levels. “However,” added Hanson, if the company reduces employee hours below the required threshold simply so the workers wouldn’t qualify for benefits, this could be viewed as a discriminating practice.”

Hanson is also seeing a flurry of activity in the business world: family-owned businesses deciding to liquidate and get out of the game because the cost of staying in business may be too great, while others choose to go the merger or acquisition route or even consider ESOP-type arrangements. “When the business environment is unsettled due to ownership changes or modifications to workplace operations or policies, the exposure to Employment Practices Liability typically increases.”

Proactive strategies to minimize potential for lawsuits

One of the best ways to help minimize the potential for employment law claims is to follow the old adage: “The best offense is a great defense.” By implementing appropriate plans and policies, employers can reduce the risk of giving disgruntled employees grounds for filing suit.

At the very basic level, said Hanson, “have a written policy in place and an employee handbook that spells out rules, regulations and common expectations of workplace conduct — and then follow it. Too often, business owners believe that they can do whatever they want with regards to how they treat employees — for example, giving some preferential treatment or making exceptions for others — but doing so opens the door to claims of discrimination or unequal treatment.”

Just a few of the sections that an employment handbook should include, said Roiger, are information on leaves—such as Family and Medical Leave Act (FMLA) or parenting issues—and company policies on attendance, harassment and workplace violence. The manual should also have a paragraph describing the company as an Equal Opportunity Employer and a Handbook Acknowledgement section, stating that all employees have received a copy of the company rules, regulations and policies.

This is where seeking input from the company’s human resources director or an outside human resources consultant can be invaluable, since they are versed in the laws and workplace regulations, and can identify potential risks.

In cases of terminations or layoffs, consult with an employment law attorney to ensure that there are no issues unaddressed, and that all actions are taken within parameters that are clear and established.

Also, said Roiger, “have better communication with your employees, using a variety of options from newsletters and meetings to surveys and feedback requests. And you need to do legally mandated training, with all employees and management educated on ‘hot button’ issues,” she added emphatically. “For example, you have to be trained on harassment in the State of Minnesota every two years, while in California it’s every 12 months.

Make sure you are heading up those compliance pieces that you need to train on, and educating your managers and employees.”

For those businesses that don’t know what the compliance rules are for their state or how to create an effective communication plan, RJF not only offers training and assistance but also works with them to create a strategy plan, said Roiger. “A big part of that is helping management and owners first understand the culture of their company before they try to change it,” she explained. “Because if you don’t know who your employees are and how they think and behave, you’re not going to be able to effectively resolve problems before they become legal issues.”

January 9, 2013

The Internal Revenue Service has released proposed regulations on the employer shared responsibility rules contained in the Affordable Care Act (ACA) and a series of questions and answers. For the most part, this guidance closely follows previous guidance released by the IRS, but with a number of clarifications and other new considerations for employers, including:

• A transition rule that may apply to non-calendar year plans
• How the rules apply to entities that are under common control
• Offering coverage to 95% of full-time employees will be considered to be offering coverage to all full-time employees
• Affordability safe harbors

RJF will provide a detailed analysis of the guidance in the coming weeks. In the meantime, you can access the proposed regulations and Q&A.

January 9, 2013

The American Taxpayer Relief Act of 2012, which was passed by Congress and signed into law in the first days of 2013, is legislation that partially averted the “fiscal cliff”. In addition to addressing tax increases and automatic spending cuts, the law also included an extension for Qualified Transportation Plans.

The Act extends, through December 31, 2013, an increase in the fringe benefit for qualified mass transit, making it equal to the fringe benefit provided for qualified parking. Therefore, due to the extension, the monthly limits for these benefit is $240. This amount previously was $125 for qualified mass transit prior to the extension.

Unlike a Section 125 Flexible Spending Account, employees who participate in a Qualified Transportation Plan may make or change their elections monthly, even if they did not experience a qualifying event.

We have compiled a list of benefit changes that happened in 2012. This is an overview of requirements that may apply to your company’s benefits progams. This information is not exhaustive. If you have additional questions, contact your RJF representative.

EMPLOYEE BENEFITS UPDATE AND REVIEW

Health Care Reform

• Compliance in 2012 - 2018
• Grandfathered plan status
• Summary of Benefits and Coverage Requirement
• 2014 Employer Shared Responsibility Rules

OTHER COMPLIANCE UPDATES AND REMINDERS

• Health Savings Account Plan Limitations
• Transportation Fringe Benefits Limits
• Adoption Assistance Program
• Dependent Care Regulations
• Annual Reporting Requirements
• Section 105(H) Nondiscrimination Requirements
• Cafeteria Plan Nondiscrimination Requirements
• Disability Benefit Taxation
• Medicare Prescription Drug Improvements & Modernization Act
• Group Term Life Imputed Income
• Domestic Partner Benefits
• Annual Notice Requirements

RJF RESOURCES

Marsh & McLennan Agency Acquires McGraw Wentworth

ACQUISITION EXPANDS MMA’S FOOTPRINT INTO MICHIGAN

White Plains, New York, January 7, 2013 – Marsh & McLennan Agency LLC (MMA), a subsidiary of Marsh Inc., today announced that it has acquired McGraw Wentworth, Inc., an employee group benefits consulting and brokerage firm based in Troy, Michigan. Terms of the transaction were not disclosed.

Founded in 1997 by Thomas P. McGraw and William D. Wentworth, McGraw Wentworth has annual revenues of approximately $15 million. The firm offers a broad range of strategic benefit consulting services to midsize organizations including manufacturers, automotive suppliers, financial services, non-profits, public schools, and local municipalities.

McGraw Wentworth will operate out of MMA’s upper Midwest hub, expanding MMA’s footprint into Michigan. All of the firm’s 72 employees including Messrs. McGraw and Wentworth will join MMA and continue operating out of their existing office.

”McGraw Wentworth’s quality employees, leadership and capabilities make it a tremendous addition to MMA in the upper Midwest,” said Bill Jeatran, CEO of MMA’s upper Midwest region based in Minneapolis. “With this transaction we will be able to offer greater resources and a broader platform to serve the needs of our clients throughout the region and country."

“Joining MMA is the right fit for McGraw Wentworth, our employees and our clients,” said Thomas McGraw, president. “MMA’s agency structure ensures that we retain our unique service model and workplace culture while also having access to the resources and expertise of the world’s leading broker.”

“We are excited to join MMA, as they share our commitment to satisfying the complex and diverse needs of the region’s midsize employers,” added William Wentworth, vice president.

Commenting on the transaction, David Eslick, Chairman and CEO of Marsh & McLennan Agency said: “McGraw Wentworth is a terrific addition to our expanding roster of high-performing agencies that now make up Marsh & McLennan Agencies. I welcome Tom, Bill and the rest of the McGraw Wentworth team to MMA and look forward to expanding our presence in Michigan.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

2014 EMPLOYER SHARED RESPONSIBILITY RULES (“PLAY OR PAY”)

The Affordable Care Act requires that employers with 50 or more full-time equivalent employees (FTE) must offer “minimum essential coverage” to all full-time employees. If an employer’s plan does not meet certain requirements, they may be subject to penalties, which are triggered when an employee purchases subsidized coverage on the exchange. Full-time is defined as 30 or more hours per week. IRS Notice 2012-58 provided some relief to certain employers who have “variable hour” employees or “seasonal” employees.

• If no employer-sponsored plan is offered: $2,000 multiplied by the number of full-time employees, not counting the first 30 employees.
• If employer-sponsored plan is offered: $3,000 multiplied by the number of full-time employees who receive an exchange-based premium tax credit; this is capped at the amount of penalty that would have been assessed had the employer not provided any coverage, not counting the first 30 employees.

SUMMARY OF BENEFITS AND COVERAGE REQUIREMENTS

The ACA requires health plans and health insurance issuers to provide a summary of benefits and coverage (SBC) to applicants and enrollees to help them understand their coverage and make medical insurance decisions.

Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period beginning with the first open enrollment period that begins on or after Sept. 23, 2012. The SBC also must be provided to participants and beneficiaries who enroll at a time other than an open enrollment period (including individuals who are newly eligible for coverage and special enrollees) effective for plan years beginning on or after Sept. 23, 2012. An SBC template, instructions and related materials are available.

For a plan’s 2013 open enrollment period, the SBC should be included with the plan’s application materials. If plan coverage automatically renews for current participants, the SBC must generally be provided no later than 30 days before the beginning of the new plan year.

For self-funded plans, the plan administrator is responsible for providing the SBC. For insured plans, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should work with your health insurance issuer to determine which entity will assume responsibility for providing the SBCs. Please contact your RJF representative for assistance.

The rules also require a 60-day advance notice of mid-year changes if the changes alter information included in the SBC.

GRANDFATHERED PLAN STATUS

Since 2010, employers have needed to determine the “grandfathered status” of their plan. A grandfathered plan is one that was in existence when health care reform was enacted on March 23, 2010. However, if certain changes are made that go beyond the permitted guidelines, the plan is no longer grandfathered. Contact your RJF representative if you have questions about changes you have made, or are considering making, to your plan.

• If you have a grandfathered plan, determine whether it will maintain grandfathered status for the 2013 plan year. Grandfathered plans are exempt from some of the health care reform requirements, and will affect compliance obligations from year to year. 
• If the plan is non-grandfathered, confirm that the plan has all of the additional patient rights and benefits required by ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

Timeline of Events

Compliance in 2012

• Employers need to distribute the Summary of Benefits and Coverage (SBC) to participants for the first open enrollment period beginning on or after September 23, 2012, or at other times as required by the law (i.e. new hires, special enrollees and upon request). See additional information below.
• Certain large employers must report the aggregate cost of health coverage on employees’ Form W-2s for the 2012 calendar year (W-2 that is provided to employees by January 31, 2013). This requirement applies to employers who filed 250 or more Form W-2s in the prior year. Employers subject to this requirement should identify the plans and the costs that are to be reported and ensure that payroll is collecting appropriate information.
• Non-grandfathered plans must provide coverage for certain women's preventive care services with no member cost-sharing. This applies for plan years beginning on or after August 1, 2012.
• Under the minimum loss ratio (MLR) rules, insurers in the large group market (100+ employees) must maintain a loss ratio of no less than 85%, while insurers in the individual and small group market must maintain a loss ratio of no less than 80%. If an employer receives a rebate, they must analyze plan documents and applicable guidelines to determine how the rebate should be used. This requirement applies to fully-insured plans only.

Compliance in 2013

• For plan years beginning on or after January 1, 2013, the maximum amount that an employee may elect for a Health FSA salary-reduction is $2,500 per plan year.
• The Act requires that plans pay a fee to fund clinical effectiveness research by the Patient-Centered Outcomes Research Institute. These fees apply to “specified health insurance policies” and “applicable self-funded health plans”, and begin for plan years ending after September 30, 2012 (i.e. plan years beginning November 1, 2011). The fee is $1 per covered life per year for first year; $2 for the second year and indexed thereafter. The fee expires for plan years ending after September 30, 2019 (i.e. plan years beginning November 1, 2018).
• For plan years beginning on or after September 23, 2011 but before September 23, 2012, the Act allows annual dollar limits on essential health benefits of no less than $1.25 million. For the following period from September 23, 2012 to January 1, 2014, plans cannot impose an annual limit that is less than $2 million. In 2014, no annual limit will be allowed.
• Employers must notify employees about exchanges by March 1, 2013. At the time of publication of this document, employers are awaiting additional guidance and a model notice.
• The Act imposes an increased Medicare payroll tax on higher income earners effective for taxable years beginning after December 31, 2012. The tax rate will increase by 0.09% for those with incomes over $200,000 (single) or $250,000 (filing jointly), representing an increase from 1.45% to 2.35%. It only applies to income over these threshold amounts. In addition, a new 3.8% Medicare tax on investment gains will apply to these individuals.
• Change in Medicare retiree drug subsidy tax treatment takes effect. 
• Health insurance exchanges, which may be established by a state or the federal government, will open for an initial enrollment period to begin in October 2013.

Compliance in 2014

• Health insurance exchanges begin to provide coverage to enrolled individuals on January 1, 2014. Financial assistance (subsidy) for coverage purchased on an exchange is available to eligible lower- and middle-income individuals who meet certain criteria.
• The individual coverage mandate takes effect by requiring most individuals to obtain coverage.
• Health insurers in the small group market must comply with reforms such as guarantee issue, inability to vary premiums except for a limited set of factors (e.g. age, rating area) and other requirements. 
• States may choose to expand Medicaid eligibility up to 138% of the federal poverty level and receive additional funding. If a state chooses to not expand eligibility, no additional funding is provided.
• Wellness programs that condition the receipt of a reward on meeting a standard related to a health factor may provide a reward that may not exceed 30% of the cost of coverage. The wellness guidance provided under the ACA builds on HIPAA’s regulations.
• Beginning in 2014, the employer shared responsibility rules (play or pay) take effect. Under this requirement, an “applicable large employer” must offer coverage to all full-time employees or potentially pay penalties for not offering overage, not offering coverage with minimum value or offering unaffordable coverage. See additional information below.
• Employers will be subject to additional reporting and disclosure requirements in 2014.
• Employers must offer coverage to dependent children up to age 26 for all health plans, regardless of access to other employer-sponsored coverage.
• After a multiple year phase-in of annual dollar limits on essential health benefits, plans will no longer be able to apply this limit. 
• Plans cannot apply a pre-existing condition limitation to any individual. Prior to this, pre-existing condition limitations could not be applied to anyone less than 19 years of age. 
• Employers cannot apply a new hire waiting period that exceeds 90 days. The exception to this applies to employees who are “variable hour” employees or “seasonal” employees as provided in IRS Notice 2012-58.
• Cost-sharing limits on out-of-pocket maximum amounts (approx. $6,250 single and $12,500 family; 2014 amounts are currently unknown), and a limit on deductibles in the small group market ($2,000 single and $4,000 family) will apply. However, recent guidance is providing flexibility in these limitations.
• Temporary reinsurance program applies and requires contributions from insurers and self-funded plans. The program is intended to stabilize premium uncertainty for insurers that incur high claim costs as a result of guarantee issue, prohibition on pre-existing conditions and other mandates.
• The Act has delayed the application of nondiscrimination rules to fully-insured plans, and the effective date is unknown. It is expected that these plans will not be able to discriminate in favor of highly compensated employees in a manner that is similar to the rules that currently apply to self-funded plan.
• Automatic enrollment expected to begin sometime after 2014 (delayed until regulations are issued)

Compliance in 2018

• The Act imposes an excise tax or “Cadillac Tax” if a plan’s value exceeds the allowed thresholds ($10,200 single and $27,500 family). If the plan’s cost exceeds the maximum, the insurer or employer will be responsible to pay a tax of 40% on the amount over the limit.

HEALTH CARE REFORM

The Supreme Court’s decision to uphold the Patient Protection and Affordability Care Act (PPACA) and the outcome of the 2012 elections have prompted employers to put greater focus on the law’s short term compliance requirements and implement a strategic plan for longer term obligations.

Marsh & McLennan Agency Acquires Liscomb Hood Mason

White Plains, New York, January 4, 2013 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced the acquisition of Liscomb Hood Mason Co., a $2.2 million revenue agency based in Duluth, Minnesota.

With roots dating back to 1927, Liscomb Hood Mason offers a wide range of property/casualty and employee benefit products and services to businesses and individuals in Minnesota. All of the firm’s leadership and employees, including its president Larry Sumbs, will join MMA and operate within MMA’s upper Midwest hub.

“Liscomb Hood Mason’s strong community presence in Duluth, dedication to service excellence, and top-notch leadership make it an excellent fit for MMA,” said Bill Jeatran, Minneapolis-based CEO of MMA’s upper Midwest region. “With Liscomb Hood Mason, we are able to offer greater resources and a broader platform to serve the needs of our clients in the upper Midwest.”

”We are pleased to be joining MMA and view this move as an opportunity to build on the success Liscomb Hood Mason has had over the last 85 years,” Mr Sumbs said. “As part of MMA, our clients will now have access to a wider range of products and services to address their emerging and evolving risk and benefit issues.”

Commenting on the transaction, David Eslick, chairman and CEO of Marsh & McLennan Agency, said: “Liscomb Hood Mason is another example of how we are adding high caliber, local talent and expertise to enhance the resources available to our MMA clients. I welcome Larry and the rest of the Liscomb Hood Mason team to MMA.”

*Editor’s note: Marsh & McLennan Companies co-founder Donald R. McLennan was a Duluth native who in 1894 began his insurance career at Stryker, Manley & Buck, later renamed McLennan-Manley Agency. In 1905, McLennan-Manley Agency merged with two other firms to form Chicago-based Burrows, Marsh & McLennan, which was renamed Marsh & McLennan in 1906. Jon Welles, a principal shareholder in Liscomb Hood Mason and current chief financial officer, is the great nephew of Mr. McLennan. New York-based Marsh & McLennan Companies is the global parent of Marsh Inc.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

HEALTH SAVINGS ACCOUNT PLAN LIMITATIONS

If an employer offers a high deductible health plan (HDHP) to employees that is compatible with a health savings account (HSA), the HDHP must comply with minimum deductible and out-of-pocket maximum limits for 2013. Also, the 2013 increased HSA contribution limits should be communicated to participants.

Maximum annual HSA contribution limit

• Self only coverage: $3,250 (previously $3,100)
• Family coverage: $6,450 (previously $6,250)
• Catch-up contribution for those age 55 or older: $1,000

Minimum annual deductible to qualify as a high deductible health plan

• Self only coverage: $1,250 (previously $1,200)
• Family coverage: $2,500 (previously $2,400)

Maximum annual out-of-pocket maximum to qualify as a high deductible health plan

• Self only coverage: $6,250 (previously $6,050)
• Family coverage: $12,500 (previously $12,100)

TRANSPORTATION FRINGE BENEFIT LIMITS

The IRS issued final regulations on “qualified transportation fringe benefits” under Code Section 132. These benefits include employer-provided mass transit passes, reimbursement for parking and employer-provided transportation in a “commuter highway vehicle” (vanpools). The statutory income exclusion limit for qualified parking – parking provided to an employee at or near the employer’s business premises– is $240 per month for 2013. The combined income exclusion limit for transit passes and vanpooling is $125 per month.

ADOPTION ASSISTANCE PROGRAMS

For employer-sponsored adoption assistance programs, the maximum amount excludible from an employee’s income in 2013 for the adoption of a child (both for regular and special needs adoptions) will be $12,650. The excludible amount starts to phase out for a taxpayer with a modified adjusted gross income that exceeds $189,710 and is completely phased out when such income reaches $229,710.

Taxpayers adopting children are eligible for both the adoption credit and the adoption assistance exclusion of adoption expenses paid for through an employer’s adoption assistance plan. However, the same adoption expense cannot qualify for both the adoption credit and the adoption assistance exclusion.

DEPENDENT CARE REGULATIONS

Sponsors of dependent care assistance plans are required to notify plan participants of the total tax-free benefit they received through the plan during the calendar year by January 31, 2013.

The total benefit received must be reported on an individual’s Form W-2. Most plan sponsors use the W-2 to notify participants of the plan’s benefits. The maximum tax-free dependent care benefit an individual may receive is $5,000 if filing jointly or $2,500 if married and filing separately. Dependent care assistance plans must also satisfy certain nondiscrimination requirements. These include the following:

• Five percent shareholders or owners cannot receive more than 25% of the total plan benefits 
• Average non-highly compensated benefits must equal at least 55% of average highly compensated benefits

Dependent care assistance plans must be tested for nondiscrimination annually.

ANNUAL REPORTING REQUIREMENTS

Welfare benefit plans that have 100 or more participants enrolled on the first day of the plan year are required to file Form 5500 (and attachments) each year. Filing must be completed by the last day of the seventh month after the end of the plan year. Plan sponsors should take inventory of their benefit plans to determine if any plans are subject to the Form 5500 requirements.

In addition, the Summary Annual Report (SAR) is a narrative (Form 5500) which must be distributed to all participants two months after Form 5500 is due.

SECTION 105(H) NONDISCRIMINATION REQUIREMENTS

Self-funded, or self-insured, health plans are also subject to certain nondiscrimination requirements in terms of benefits, eligibility and contributions. There are two “tests” that a plan must pass: the Benefits Test and the Eligibility Test. Testing can be complex and plan sponsors of self-insured health plans should ensure their plan is in compliance.

Note: Nondiscrimination requirements will apply to fully-insured plans at some point in the future. This was included as part of the Affordable Care Act; the effective date is yet to be determined.

CAFETERIA PLAN NONDISCRIMINATION REQUIREMENTS

Cafeteria plans must meet certain nondiscrimination requirements to ensure highly compensated key employees do not receive a disproportionate amount of tax-advantaged benefit. These tests are complex and it is recommended that an advisor perform the tests to ensure compliance.

DISABILITY BENEFIT TAXATION

Employees who receive disability benefits (long term or short term) may be taxed on these benefits based on how the premiums are paid. If an employee contributes towards the premium for the disability coverage with post-tax dollars, the benefits, should he/she become disabled, are generally tax-free. On the other hand, if the employee does not contribute towards the premium or contributes with pre-tax dollars, the benefits received are subject to taxation.

If you have made changes to the taxable proportion of premiums (e.g. pre-tax contributions to post-tax contributions), be sure to discuss this change with your insurer.

In addition, employers should be mindful of W-2 reporting and FICA requirements and responsibilities for claimants who have received disability income from an insurer.

MEDICARE PRESCRIPTION DRUG IMPROVEMENT AND MODERNIZATION ACT

Employers must continue to fulfill annual requirements related to Medicare Part D with both their employees and the Centers for Medicare and Medicaid Services (CMS).

Group health plans must provide notice to Medicare-eligible participants advising them whether prescription drug coverage provided under the plan is “creditable” or “non-creditable” at the following times:

• Prior to the Medicare Part D Annual Coordinated Election Period (ACEP) beginning October 15- December 7 of each year.
• Prior to an individual’s Initial Enrollment Period (IEP) for Part D.
• Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan.
• Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable.
• Upon a beneficiary’s request.

A prescription plan is deemed creditable if it is expected to pay out as much as the standard Medicare prescription drug coverage will pay. If the employer’s coverage is on average at least as good as standard Medicare prescription drug coverage, Medicare eligible employees can keep this coverage and not pay extra if they later decide to enroll for Medicare’s coverage.

Employers must also provide a disclosure of creditable coverage status to CMS. An entity is required to provide the disclosure through completion of a form on the CMS Creditable Coverage Disclosure Website.

At a minimum, disclosure to CMS must be made at the following times:

• Within 60 days after the beginning date of the plan year for which the entity is providing the disclosure to CMS.
• Within 30 days after the termination of the prescription drug plan.
• Within 30 days after any change in the creditable coverage status of the prescription drug plan.

GROUP TERM LIFE INSURANCE IMPUTED INCOME

Employer-Paid

Internal Revenue Code Section 79 permits an employee to receive up to $50,000 of group term basic life insurance on a tax-free basis. The value of an amount over $50,000 must be added to the individual’s taxable income using Uniform Premium Table I (certain exceptions may apply in the case of a discriminatory life plan or if life insurance is provided through a cafeteria plan).

In addition, the cost of employer-paid group term life insurance on an employee’s spouse and/or dependents is not taxable to the employee if the face amount of the coverage does not exceed $2,000. If the $2,000 limit is exceeded, all dependent life insurance amounts, including the first $2,000 of coverage, is taxable. The Uniform Premium Table (Table 1) rates below—using the dependent’s age to select the applicable rate—must be used in calculating the amount to impute to the employee’s gross income.

Employee-Paid

In addition, imputed income rules also may apply to voluntary or optional life insurance depending on the benefit plan structure. In some cases, if all rate tiers are neither completely over nor completely under Table 1, the rates “straddle” and you may be required to impute income for the value of the coverage for rate tiers that fall below Table 1. Your organization will need to review your voluntary life age bands and benefit plan structure to determine whether you need to calculate imputed income for certain employees.

All Plans

Plan sponsors should determine the amount of imputed income for group term life plan participants and report this information to the payroll administrator to ensure that the imputed income amount is reported on employees’ Form W-2s which are due by January 31. Plan sponsors may wish to include the imputed income in the employees’ last paycheck(s) of the year as the imputed income is also subject to Social Security taxes.

ANNUAL NOTICE REQUIREMENTS AND REMINDERS

Group health plan sponsors should ensure compliance with the following notice requirements:

• Initial COBRA Notice: Plan administrators must provide an initial COBRA notice to participants and certain dependents within 90 days after plan coverage begins, such as a new hire, an employee or spouse who enrolls during open enrollment or due to a HIPAA special event. The initial COBRA notice may be incorporated into the plan’s SPD. The DOL’s model initial COBRA Notice is available on their Website. 
• HIPAA Privacy Notice: If a group health plan is required to maintain a privacy notice, it must be distributed to new participants when they enroll for coverage. For fully-insured plans, the issuer is generally responsible for providing the privacy notice to new enrollees.
• Notice of HIPAA Pre-existing Condition Exclusions: Plans with pre-existing condition exclusions must distribute a notice that describes the exclusions and how prior creditable coverage can reduce the exclusion period. The notice must be provided to participants with any written enrollment materials. If the plan or issuer does not distribute written enrollment materials, the notice must be provided as soon as possible following a participant’s request for enrollment.
• Notice of HIPAA Special Enrollment Rights: At or prior to the time of enrollment, a group health plan must provide each eligible employee with a notice of his or her special enrollment rights under HIPAA.
• Annual CHIPRA Notice: Group health plans covering residents in a state that provides a premium subsidy to low-income children and their families to help pay for employer-sponsored coverage must send an annual notice about the available assistance to all employees residing in that state. The DOL has provided a model notice, which is available on their Website. 
• WHCRA Notice: Plans and issuers must provide notice of participants’ rights under the Women’s Health and Cancer Rights Act (WHCRA) at the time of enrollment and on an annual basis. Model language for this disclosure is available at on the DOL Website. 
• Medicare Part D Notices: Group health plan sponsors must provide a notice of creditable or non-creditable prescription drug coverage to Medicare Part D eligible individuals who are covered by, or who apply for, prescription drug coverage under the health plan. This creditable coverage notice alerts the individuals as to whether or not their prescription drug coverage is at least as good as the Medicare Part D coverage. The notice generally must be provided at various times, including when an individual enrolls in the plan and each year before October 15 (when the Medicare annual open enrollment period begins). Model notices are available. 
• Michelle’s Law Notice: Group health plans that condition dependent eligibility on a child’s full-time student status must provide a notice of the requirements of Michelle’s Law in any materials describing a requirement for certifying student status for plan coverage. Under Michelle’s Law, a plan cannot terminate a child’s coverage for loss of full-time student status if the change in status is due to a medically-necessary leave of absence.
• HIPAA Opt-out for Self-funded, Non-federal Governmental Plans: Sponsors of self-funded, non-federal governmental plans may opt out of certain federal mandates, such as the mental health parity requirements and the WHCRA coverage requirements. Under an opt-out election, the plan must provide a notice to enrollees regarding the election. The notice must be provided annually and at the time of enrollment. Model language for this notice is available.

Transitioning to the MMA name and logo

by Bill Jeatran

Two years ago, RJF was acquired by Marsh & McLennan Agency. Hopefully you’re aware of this fact, and hopefully, if you’ve been associated with us for more than 24 months, the changes you’ve seen have been positive. While the process was lengthy, the decision was simple. We’d done our homework, weighing all options, and ultimately knew that joining this vigorous, young organization early on was the best option for our clients, employees and other stake holders.

Now, 24 months in, I’m more confident than ever that our decision was wise. Marsh & McLennan Agency (MMA) now has revenues approaching half a billion dollars and approximately 2,000 employees. Its acquisitions are bringing innovative resources and brilliant people into the organization, allowing us to better help employers strengthen their assets, employees and bottom lines.

Our people now have more stability and advancement opportunities than ever. They are collaborating daily with other MMA offices in other parts of the country to solve client problems and establish new standards of excellence. For example, we were recently named a center of excellence for all of MMA in cyber liability. This is leading to record organic growth for us locally. We have more services and products available now than before joining MMA, many of which are not available anywhere else, and we are able to deliver our services and expertise to more clients through markets served by other MMA agencies.

The best firms in the country, many of which were not for sale, are vying to become part of MMA after they learn about it and meet the people who make it what it is. Only the best of these agencies are actually being invited to join. As MMA continues its merger and acquisition activities, it will only accept world class firms because that is an overriding component of its brand.

For all these reasons and more, we are taking steps to completely adopt the Marsh & McLennan name and logo. You’ll see it happening more and more over the coming months, with the expectation that in July, the RJF name and logo will no longer be used.

While there is an element of sadness to this—after all, I’m the J in RJF—my excitement for what the future holds trumps any short-lived feelings of nostalgia that might creep up. The greatness of RJF is not in the name we go by or colors and graphics we use on our Web site. Those things are important, but only when you have something of value underneath. The greatness that exists here at RJF is in the process we take clients through, the people who deliver our solutions, and in the culture that keeps me coming back to the office day after day. Those things won’t change just because our name changes. Those things are being strengthened through our involvement in the MMA enterprise.

Our people remain—we’re just adding more of them. Our services aren’t changing—we’re just acquiring new ones. And our culture is still vibrant—it’s growing as we grow. Our name is changing, and I’m excited. Not for what it means to me, but because of what it means to you, our valued client, and our employees.

December 19, 2012

There’s an old saying, “The only two things to be certain of are death and taxes.” But as the number of employment law claims continues to rise, and as the number of issues leading to those claims continues to expand, business owners would be wise to add “employment liability claims” as a third certainty.

Employment lawsuits themselves are not a new phenomenon. However, the increase in both claims and award amounts has generated significant concern among all employers, both large and small. In this article (part one of a two-part series), Heather Roiger, RJF HR Consultant, and Dan Hanson, RJF Director of Management Liability, will provide a thumbnail analysis of recent years’ employment claims. Part two will explore what employers can expect in 2013 and what factors will influence the potential for employment liability issues.

Increase in complaints and award amounts

According to U.S. Equal Employment Opportunity Commission (EEOC) statistics, the number of employment-related complaints is on the rise. In FY1997, the total of individual charge filings charges brought equaled 80,680, followed a period of several years when the number stayed either relatively steady or decreased. But in FY2007, the number jumped from the previous year’s figure of 75,768 to 82,792, with steady increases in the next four years until FY2011’s current number of 99,947.

While most people might assume the majority of EEOC complaints are frivolous and without merit, Hanson pointed out that the reverse is true. “Of the close to 100,000 complaints that were filed and investigated in FY2011, more than half resulted in some action being taken against the company.”

Why the increase? “Most people are pointing toward the economy and the increased emphasis on whistleblower type matters, as well as more focus from a federal standpoint into businesses and how they are conducting themselves,” said Hanson. “There’s definitely been more federal scrutiny, certainly from the SEC (U.S. Securities and Exchange Commission).”

This is borne out by figures from the SEC’s 2012 financial report, which noted that the agency had “brought 734 enforcement actions in FY 2012, the second highest number ever filed in a fiscal year (and one less than the 735 filed the prior year). Of these actions, 150 were filed in investigations designated as National Priority Cases, representing the [Division of Enforcement's] most important and complex matters – an approximately 30 percent increase over 2011.. In addition, the Division obtained orders for $3.1 billion in penalties and disgorgement… [and] made its first whistleblower payout to an individual who provided high-quality, significant information that helped stop a multi-million dollar fraud.”

Not only has the number of complaints risen, but so has the award figures. Using EEOC figures as an example, the overall jury awards median in discrimination cases rose from $224,000 to $241,000 between 2002 and 2008. While $15,000 may not seem a substantial increase, said Hanson, “when you take that figure and multiply it by 50,000 cases, it becomes quite significant.”

“Hot button” employment law issues

In addition to whistleblower-type claims (which could fall under the “retaliation” category), other “hot button” employment law claims in FY2011 include race (35%), sex (28.5%), disability (25.8%) and age (23.5%). Retaliation — all statutes, however, claims the top percentage at 37.4%.

Interestingly, both Hanson and Roiger see a connection between the economy and the increase in claim filings. “During a down or tightened economy, employees who have lost their jobs frequently are unable to find another. The twin conditions of having no income and no employment to fill their time increases the propensity that they will file an employment lawsuit against their former employer,” said Hanson.

Ironically, an improving economy can also lead to more discrimination and harassment claims, said Roiger. “People are a little bit more comfortable and safe in their roles at work because they’re seeing the economy hopefully going in right direction. Before, they were afraid to say anything because they didn’t want to lose their jobs. But now they are being much more vocal and less willing to tolerate situations that are discrimination or harassment-related.”

Future expectations

If the past predicts the future, then employers can anticipate that the trend will continue with regard to a steady increase in employment law claims. With that in mind, Part Two of this series will examine what employers can expect regarding employment law issues in 2013, with future articles exploring how employers can minimize their vulnerability in this area.

>> RJF is sponsoring a Labor and Employment Law Updates seminar January 16, 2013, in Golden Valley, MN. Learn more and register.

FOR IMMEDIATE RELEASE

MARSH & MCLENNAN AGENCY ACQUIRES BROWER INSURANCE AGENCY LLC

OHIO AGENCY TO SERVE AS MMA’S MIDWEST HUB

White Plains, New York, December 5, 2012 – Continuing its strategy to build a national platform, Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced the acquisition of Brower Insurance Agency, one of the largest independent agencies in Ohio. Terms of the transaction were not disclosed.

Founded in 1935 and headquartered in Dayton, Ohio, Brower has annual revenues of approximately $24 million and 164 employees in four Ohio offices: Dayton, Cincinnati, Columbus, and Springfield. Brower provides property/casualty insurance, employee benefits services, and consulting services to midsize businesses and individuals. The firm has specialty practices in surety, construction, health care, transportation, and schools and municipalities.

Brower will serve as MMA’s Midwest hub and will seek to expand MMA’s footprint in the region through further spoke and fold-in acquisitions. All of Brower’s leadership and employees, including Managing Principal Chris McAtee, will join MMA.

“Brower’s strong regional presence, top-notch leadership, sales-oriented culture, and diversified mix of business were very attractive as we looked for a quality partner to join MMA,” said David Eslick, chairman and CEO of MMA. “We welcome Chris and the rest of the Brower team to MMA and look forward to expanding our presence in the Midwest.”

“Joining MMA represents an excellent growth opportunity for Brower,” Mr. McAtee said. “As part of MMA, we will be able to continue our strong legacy of developing and delivering innovative, value-driven insurance and risk management programs to our clients while also having access to the support and resources of the world’s leading insurance broker and risk advisor.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact

Sally Roberts
303 952 9453
sally.roberts@marsh.com

Anand Poola
212 345 4292
anand.poola@marsh.com 

INCREASED MEDICARE TAX FOR HIGHER INCOME EARNERS

December 4, 2012

The Affordable Care Act (ACA) imposes an increased Medicare tax on higher income individuals. This additional tax goes into effect for taxable years beginning after December 31, 2012. The tax rate will increase by 0.09% for those with incomes over $200,000 (single) or $250,000 (filing jointly), representing an increase from 1.45% to 2.35%. It only applies to income over these threshold amounts.

It is important to note that the employer’s portion (1.45%) of Medicare taxes does not change. However, employers do need to withhold extra from an employee’s paycheck beginning with the pay period in which the employee’s pay exceeds $200,000.

The Act also requires a new 3.8% Medicare tax on investment gains for those earning more than $200,000 (single) or $250,000 (filing jointly). This tax applies to investment income such as interest, dividends, capital gains, rents, royalties, etc.

Additional information can be found  on the IRS Website.

NEW GUIDANCE ON WELLNESS PROGRAMS ISSUED

December 4, 2012

OVERVIEW

On November 20, 2012, the Departments of Health and Human Services, Labor and Treasury (hereinafter, the Departments) issued long-awaited guidance on several key provisions of the Affordable Care Act (ACA), including requirements on essential health benefits, preventing pre-existing condition discrimination, and employment-based wellness programs. This client alert summarizes the proposed rules (the Proposed Rules) implementing and expanding employment-based wellness programs. The Proposed Rules track the final wellness program regulations under the Health Insurance Portability and Accountability Act of 1996 (HIPAA) published in 2006 by the Departments (hereinafter, the 2006 Regulations) and provide additional clarification and modifications with respect to the standards for health-contingent wellness programs.

BACKGROUND: THE AFFORDABLE CARE ACT AND WELLNESS PROGRAMS

Wellness programs take many forms; however, the common feature of all wellness programs is that they are designed to encourage healthier lifestyles, often by rewarding participants for attaining or improving certain health factors. Most wellness programs are subject to HIPAA's nondiscrimination rules, which generally prohibit group health plans and group health insurers from denying similarly situated individuals eligibility for benefits, varying benefits available to similarly situated individuals, or charging similarly situated individuals a higher premium based on an individual's health factor (e.g., health status, medical history, genetic information, etc.). However, the HIPAA nondiscrimination rules contain an exception whereby group health plans or issuers may offer employee premium/contribution discounts or rebates, or modify copayments, coinsurances, or deductibles based on participation in certain programs that promote health or disease prevention (wellness programs).

The 2006 Regulations set forth the standards for permissible wellness programs and formed the basis for the ACA's statutory exception of wellness programs from the HIPAA nondiscrimination rules. The ACA amended the Public Health Service Act by adding new sections incorporating the 2006 Regulations, with some clarifications, and increasing the maximum reward that can be provided under the health-contingent wellness programs from 20 percent to 30 percent. The ACA also authorized the various Departments to promulgate rules as necessary to carry out the new provisions.

THE PROPOSED RULES: WHAT HASN'T CHANGED

The Proposed Rules retain the basic structure of the 2006 Regulations (and the five requirements for certain wellness programs, as explained below). They also retain the rule that there are two categories of wellness programs that may be permissible, provided certain requirements are met – namely, participatory wellness programs and health-contingent wellness programs.

PARTICIPATORY WELLNESS PROGRAM

A participatory wellness program is a program that either does not offer a reward or does not condition receipt of a reward on an individual satisfying a health status requirement. A participatory wellness program is exempt from the nondiscrimination requirements provided it is available to all similarly situated individuals. Examples of participatory wellness programs include employer-paid gym memberships or smoking cessation programs with no requirement of program success.

HEALTH-CONTINGENT WELLNESS PROGRAM

A health-contingent wellness program is a wellness program that conditions the receipt of a reward on an "individual satisfying a standard that is related to a health factor." It is often referred to as a standard-based wellness program and must satisfy the five wellness program requirements described below to be legally permissible. Examples of health-contingent wellness programs include attaining certain results on biometric screenings or meeting targets for exercise.

THE PROPOSED RULES: SIGNIFICANT CHANGES AND CLARIFICATIONS

GRANDFATHERED AND NON-GRANDFATHERED GROUP HEALTH PLANS

The Proposed Rules apply beginning January 1, 2014 and they would apply to grandfathered as well as non-grandfathered group health plans. A "grandfathered health plan" is any group health plan or individual coverage that was in effect on March 23, 2010 and that is not changed in ways specified in the implementing regulations. Many of the ACA rules do not apply to grandfathered plans. However, the Proposed Rules would apply the same set of wellness program standards to both grandfathered and non-grandfathered health plans to "avoid inconsistency across group health coverage and to provide grandfathered plans the same flexibility to promote health and prevent disease as non-grandfathered plans."

CLARIFICATION OF THE FIVE REQUIREMENTS FOR HEALTH-CONTINGENT WELLNESS PROGRAMS

The 2006 Regulations require a health-contingent wellness program to meet five requirements in order to comply with HIPAA's nondiscrimination rules. The Proposed Rules maintain the five requirements but provide important modifications and clarifications.

Amount of the Reward Requirement

Under the 2006 Regulations, the total reward for a health-contingent wellness program is limited to no more than 20 percent of the total cost of employee-only coverage under the plan. If dependents (such as spouses and/or dependent children) may participate in the wellness program, the total reward must not exceed 20 percent of the cost of the coverage in which an employee and any dependents are enrolled (e.g., family coverage or employee-plus-one coverage).

One question that is left unanswered by the Proposed Rules is whether and how, in the case of health-contingent wellness programs that allow dependents to participate, rewards should be apportioned. For example, should a reward be prorated if only one family member fails to qualify? The Departments specifically invited comments on these issues.

Uniform Availability and Reasonable Alternative Standard Requirement

As under the 2006 Regulations, the Proposed Rules provide that a reward under a health-contingent wellness program must be made available to all similarly situated individuals. Also, a reasonable alternative standard (or a waiver of the otherwise applicable standard) for obtaining the reward must be provided for those individuals for whom it is unreasonably difficult, due to a medical condition, to meet the otherwise applicable standard or for whom it is medically inadvisable to attempt to satisfy the otherwise applicable standard. The Proposed Rules also provide the following clarifications:

• Individual or class-based waivers may be provided in lieu of a reasonable alternative standard: In lieu of providing a reasonable alternative standard, a plan or issuer may waive the otherwise applicable standard and provide the reward. However, the preamble to the Proposed Rules clarifies that the plan or issuer may apply the waiver to an entire class of individuals or on an individual basis depending on the circumstances presented.
• Advance establishment of particular reasonable alternative standards is not required: Plans and issuers are not required to establish a particular alternative standard in advance of an individual's specific request for one; however, a reasonable alternative must be provided by the plan or issuer upon request or the condition for obtaining the reward must be waived.
• Prior unsuccessful attempts do not preclude the requirement to provide a reasonable alternative standard: A plan or issuer cannot cease to provide a reasonable alternative standard merely because it was previously not successful; the plan or issuer must continue to offer the same, or a new reasonable alternative standard.
• Factors to determine existence of a reasonable alternative standard: All facts and circumstances must be considered in determining the existence of a reasonable alternative standard. The Proposed Rules provide the following non-exhaustive list of factors to aid in the determination.
• Educational Programs: If the reasonable alternative standard requires completion of an educational program, the plan or issuer must make the program available instead of requiring the individual to find the program unassisted. The plan or issuer cannot require the individual to pay for the cost of the program.
• Diet Programs: If the reasonable alternative standard is a diet program, the plan or issuer is not required to pay for the cost of food but must pay the membership or participation fees of the diet program.
• Compliance with the Recommendation of Medical Professional: If an individual's personal physician states that the recommendations of the plan's or issuer's medical professionals are not medically appropriate for the individual, the plan must provide a reasonable alternative standard that accommodates the recommendations of the individual's physician with regard to medical appropriateness. The plan or issuer may impose standard cost sharing under the plan or coverage for medical items and services furnished in accordance with the physician's recommendations (but likely not the recommendations of the plan's or issuer's medical professionals).

The Departments have invited comments on this list of factors as well as what, if any, additional facts and circumstances should be addressed by the Proposed Rules.

• Physician verification: The 2006 Regulations permit a plan or issuer to seek verification, such as a statement from the individual's personal physician, that a health factor makes it unreasonably difficult for the individual to satisfy or medically inadvisable for the individual to attempt to satisfy the otherwise applicable standard provided it is reasonable under the circumstances. The Proposed Rules clarify that it would be unreasonable for a plan or issuer to seek verification of a claim that is obviously valid based on the nature of the individual's medical condition that is known to the plan or issuer; however, the plan or issuer may seek verification of claims that require the use of medical judgment to evaluate. Comments are invited as to whether additional clarifications would be helpful regarding the reasonableness of physician verification. One potential issue that plans and issuers might face when complying with this new rule is how also to ensure compliance with the HIPAA privacy rules.

Reasonable Design Requirement

Health-contingent wellness programs must be reasonably designed to promote health or prevent disease, not be overly burdensome, not be a subterfuge for discrimination based on a health factor, and not be highly suspect in the method chosen to promote health or prevent disease. The Proposed Rules provide further clarification as follows:

• The determination of whether a health-contingent wellness program is reasonably designed to promote health and prevent disease is a facts and circumstances inquiry. The facts and circumstances were not outlined in the Proposed Rules; however, comments are invited regarding whether standards are needed to ensure compliance with this requirement.
• Health-contingent wellness programs that condition receipt of a reward on the results of a measurement, test, or screening related to a health factor are not reasonably designed unless they provide other reasonable means of obtaining the reward to individuals who do not meet the standard.

Notice of Availability of Other Means for Qualifying for the Reward Requirement

The Proposed Rules require plans and issuers to disclose the availability of other means of qualifying for the reward or the possibility of a waiver in all plan materials that describe the terms of a health-contingent wellness program, consistent with the 2006 Regulations. Thus, if plan materials merely mention that a program is available, without describing the terms, the disclosure is not required. The Proposed Rules acknowledge the shortcomings of the prior sample disclosure language in the 2006 Regulations and provide new disclosure language that is easier for individuals to understand and increases likelihood that those who qualify for a different means of obtaining the reward will contact the plan or issuer.

Frequency of Opportunity to Qualify for Reward Requirement

The Proposed Rules confirm that the health-contingent wellness program must provide individuals an opportunity to qualify for the reward at least once every year.

WHAT'S NEXT?

It is clear from the Proposed Rules that the Departments are very supportive of the continued and expanded use of wellness programs by employers as a means of promoting health and preventing diseases. At the same time as the Proposed Rules add meaningful flexibility for employers to establish wellness programs consistent with those goals, however, the Departments recognized that neither the ACA nor the Proposed Rules enact any changes to other laws that impact the provision of wellness programs, such as the Americans with Disabilities Act ("ADA") or the Genetic Information Nondiscrimination Act of 2008 ("GINA").

Guidance issued by the Equal Employment Opportunity Commission (the "EEOC") has provided that, for a wellness program to be permissible under the ADA and Title II of GINA, it must be "voluntary." To be voluntary, an employer may not require participation nor penalize employees who do not participate. The EEOC has yet to provide specific guidance about what level of financial incentive can be provided as a condition of participation in a wellness program before the program is rendered involuntary, thus making it difficult for employers attempting to ensure that their wellness programs comply with all applicable laws. (In the final GINA Title II regulations, the EEOC suggested that offering a financial inducement of up to $150 for wellness program participation would be a permissible financial inducement. However, it is unclear whether financial inducements in excess of $150 would be permissible.)

Despite clear support for wellness programs expressed in the ACA and the Proposed Rules, it is not clear whether the EEOC will provide more definitive guidance on permissible financial incentives in the wellness program context. Indeed, in certain instances, the EEOC seems to be making it more difficult for employers to implement wellness programs. For example, earlier this year, the EEOC indicated informally that when an employer offers an incentive in return for a spouse's family medical history, such as through completion of a spousal health risk assessment, this may lead to a violation of Title II of GINA.

Similarly, the EEOC's characterization of the 11th Circuit's holding in the Seff v. Broward County appeal, affirming the lower court's ruling that the wellness program constituted a bona fide benefit plan and was therefore permissible under the ADA, leaves employers wondering. The EEOC explained that the 11th Circuit's decision was based on very narrow grounds, neither court addressed issue of whether the wellness program was "voluntary," and there is no official EEOC policy on the district court's interpretation of the safe harbor provision. Although the EEOC itself indicates that the agency has not taken a formal position on spousal HRAs or the applicability of the ADA safe harbor exception for bona fide benefit plans to wellness programs, employers must still consider this informal guidance when weighing the risks of their wellness program designs.

Going forward, in addition to reviewing their existing and proposed wellness programs to ensure compliance with the 2006 Regulations for years before 2014, and the Proposed Rules, for years on and after January 1, 2014, plan sponsors and health insurance carriers should also review these programs in light of the existing EEOC guidance under the ADA and Title II of GINA. In addition, plan sponsors and health insurance issuers should also bear in mind other federal laws that may apply to their wellness programs, such as ERISA, COBRA, the Internal Revenue Code, and HIPAA privacy rules, as well as any other applicable state laws.

Disclaimer
This publication is a service to the clients and prospects of RJF with content courtesy of Proskauer Rose. It is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice or render a legal opinion.

Post-disaster, the preference of business owners is to get company operations back up and running as soon as possible. That is understandable, given that every delay has a negative impact on profits and overall market future.

However, employers need to recognize that, while their employees want to support the rebuilding and recovery process, they are also struggling with personal priorities and issues. They are worried about the health and welfare of family members and the financial impact of the losses they have suffered, just to name two key concerns.

And then there is the emotional and psychological trauma of what they have experienced, which can lead to behaviors and responses that are not the norm. For example, the National Center for Post Traumatic Stress Disorder (part of the US Department of Veterans Affairs) notes that, while most people respond and react appropriately during the impact of a disaster, focusing on saving their lives and the lives of others, others may seem disorganized, stunned and somewhat disassociated from the event or show high levels of anxiety. Other emotional responses include grief reactions to loss, anger, despair, sadness or feelings of hopelessness, or conversely, a sense of elation, because they have survived, despite the losses inflicted by the disaster.

It’s essential that business owners understand what their employees are facing and feeling, and institute plans and develop resources to aid and support the needs of employees post-disaster. In this article, Angela Wheeler, RJF claims consultant and specialist on property damage, and Heather Roiger, RJF human resources consultant, share their insights on what companies can do to help employees “weather the storm” so they can return to work fully productive and ready to support disaster recover strategies.

Business owners are understandably focused on getting the operation back up and running post-disaster. But what do they also need to take into account when it comes to their employees’ needs and situation?

First and foremost, says Wheeler, “employees are worried about rebuilding their lives. They need to fund rebuilding their homes and recovering their lives. Essentials such as having working utility services to their homes, getting gas for their vehicles and going to the bank to access money can present new challenges, as was recently demonstrated in many areas in the wake of Hurricane Sandy.”

With this in mind, and recognizing that employees are the business’s most important asset, companies must reassess their priorities. “It is important to take care of employees first by attending to any of their medical needs,” says Wheeler. “For example, if there is a weather-related event, you will need to locate your staff and assure that they and their families have the necessary medical care, housing, food, and other necessities. This is something that should be included in any disaster plans.”

Companies have to understand that, after a disaster, it can’t be “business as usual,” adds Roiger. “Instead, owners have to support their employees as they rebuild their personal lives. They may need additional time off work or handle some personal affairs while on the job. It is more important to support those needs and allow for some adjustments to general policies versus, for example, adhering to a strict attendance code or other policies.”

What can business owners do to help reassure and support their employees?

The most important priority? “Stay in touch with your people,” says Wheeler. “In a situation where the business is impacted by a disaster — for example, a fire — that causes a temporary shut-down or slowdown of operations, the employees are primarily worried about their job and providing for their families. It’s up to the business owner to look at the event from the employees’ perspective and make modifications to operations to deal with the situation.”

With this in mind, Wheeler suggests that businesses should consider taking the following steps:

• Provide cash advances, if appropriate
• Decide whether to continue payroll and who will be subject to this benefit. “Business owners should check to see if their policy allows for this coverage,” she recommends.
• Evaluate whether flexible or reduced work hours or even telecommuting are realistic alternatives. “In today’s world of technology, we often see that clients are able to accommodate their work force from the comforts of their home. For example,” says Wheeler, “we saw a lot of the workforce on their home computers during the aftermath of Sandy while roads and subway systems were being re-opened.”
• Consider making temporary adjustments to business policies or employee regulations. This could include anything from permitting a more casual dress code to allowing employees to use office phones for personal business. 
• Provide crisis counseling, if appropriate. This benefit can often be found through the group health insurance plan.
• Arrange for care packages with essentials such as water, food, calling cards and over-the-counter medication.
• Hold frequent meetings at libraries or other community centers to update employees on next steps. A clear action plan should be outlined with a focus on an employee’s needs. “The most important action I have seen our clients undertake post-disaster is team up with the local unemployment office to go over the benefits they are allowed and help expedite the process,” says Wheeler.

What does RJF offer their clients post-disaster to help address employee needs?

Wheeler states that RJF offers resources such as those found on the disaster planning and recovery page on the Web site, with links to articles about what people can and should do and expect in the event of a disaster. As a claims consultant, I personally meet with clients after a disaster to walk with businesses through the steps following a disaster.

As Sandy and other natural disasters that have occurred in the past years have demonstrated, the best defense is a good offense — in this case, the offense being a comprehensive disaster preparedness plan. But it’s not enough to create the plan, points out Roiger. Companies also need to practice the plan on an annual basis to work out any flaws or weak areas. This ensures that everyone, from management to hourly to part-time or contract workers, knows what to do.

“For instance, are escape routes and safe areas clearly marked and accessible? How will employees be notified of plant closings? What type of emergency communication system is available — and what are the back-up arrangements should the primary method be unusable? Who are the key people available to address any questions — whether from employees or customers or the media — and how can they be reached? These are just a few of the areas that need reviewed and evaluated.

“An emergency situation is not the time to test the plan,” Roiger emphasizes. “Companies are accountable for the safety of their workers. Advance planning to address potential issues that could arise in a disaster situation and making employee welfare a priority post-disaster are two major responsibilities of any business operation.”

For More Information

Visit the RJF website for additional disaster and employee safety articles:

• Helping Businesses Prepare For and Deal With Disasters has links to informative articles on a variety of disaster preparedness and recovery topics.

HHS RELEASES SMALL GROUP INSURANCE REGULATIONS

On Tuesday, November 20, the Department of Health and Human Services (HHS) released two sets of proposed regulations related to provisions of the Affordable Care Act (ACA) that are important to individual and fully-insured small group health plans. Rules were released regarding essential health benefits, plan actuarial valuation, and small group rating and underwriting rules.

While the group health plan guidance is specific to the small group market, some provisions will be of interest to all employers. Notably:

• HHS has released a calculator which may be helpful for employers attempting to estimate the actuarial value (AV) of a plan. 
• The underwriting and rating rules could apply to fully-insured large employers beginning in 2017 if a state opens its exchange to the large group market.

IMPORTANT BACKGROUND NOTES FOR EMPLOYER-SPONSORED GROUP PLANS

The ACA defines the small group market as employers with 100 or fewer employees; however, states have the option to define small group as 50 or fewer until 2016. Beginning with plan years starting 1/1/2016, all employers with 100 or fewer employees will be included in the small group market rules.

• The insurance rating and underwriting rules apply to all fully-insured small group plans offered both through a state or federal exchange, and also to plans sold outside, or separate from, an exchange. While a health insurance carrier may offer different plan designs inside or out of the exchange, they will not be able to apply different underwriting or rating rules. 
• The essential health benefits rules apply only to fully-insured small group health insurance plans. Fully-insured large group plans and self-funded plans are not required to offer plan designs which meet the essential health benefit set requirements.
• Most of the rating and underwriting requirements described in the rules apply directly to the health insurance “issuer” (the term used in the regulations for the health insurance carrier). Consequently, small employers will not be directly responsible for the implementation of, and compliance with, most of these rules. However, the group health plans which will be available for purchase by small employers beginning in 2014 will be dramatically impacted.

RULES OF PARTICULAR INTEREST TO EMPLOYERS

Executives and product managers at health insurance carriers will be very busy redesigning their small group plans to meet a wide range of new requirements beginning in 2014. In particular, carriers will need to redesign plans to provide all essential health benefits as defined by the HHS and each state’s specific requirements. The regulations contain detailed and extensive rules controlling how carriers will design and rate small group plans. Following is a more detailed description of a couple of issues of particular interest to small employers.

LIMIT ON DEDUCTIBLES

Beginning in 2014, the ACA limits plan deductibles in the small group market to no more than $2,000 for self-only coverage and $4,000 for non-self-only coverage (indexed in future years). In the preamble to the rules, HHS recognized that it may not be practical to design a 60% “bronze plan” as required by the law, while still maintaining the $2,000 deductible maximum.

In a welcome development for small employers, the proposed rules allow carriers to offer plan designs with a higher deductible, if necessary, to offer a 60% plan. While plan design details will vary from carrier to carrier, it is expected that due to this rule, some carriers will offer “bronze” small group plans with deductibles exceeding $3000.

“MODIFIED COMMUNITY RATING” RULES

Health insurance issuers may vary premiums based on a very limited set of specified factors:

1. Whether the plan or coverage applies to an individual or family
2. Rating areas within a state
3. Age, limited to a variation of 3:1 for adults
4. Tobacco use, limited to a variation of 1.5:1

All other rating factors are prohibited. Consequently, small employer rates may not be based on the group’s claims experience. The rules permit the use of both age-banded and composite rating, and employers are allowed to set required employee contributions based on either approach.

ACTUARIAL VALUE CALCULATOR

The ACA requires carriers to offer different level plans, referred to as the metal tiers (bronze, silver, gold and platinum). Plans in each tier must meet an actuarial value within a specific range (e.g. 60% for bronze, 70% for silver, etc.). HHS has released an actuarial value (AV) calculator to assist health insurance issuers in determining the value of different plan designs. The calculator will be used by carriers to make sure a specific plan design falls within the allowed value ranges for each metal tier.

WHAT ABOUT LARGE AND SELF-FUNDED EMPLOYERS?

A separate section of the ACA (the shared responsibility or “play or pay” rules) requires large fully-insured and self-funded employers, to offer a “minimum value” plan to all full-time employees, or face the risk of paying an employer penalty. Minimum value (MV) is defined as an actuarial value of at least 60% (similar to a “bronze” plan in the small group market).

The AV calculator released with this guidance uses assumptions and claims data specific to the small group market, thus it does not directly address the MV requirement for large employers. However, in a separate section of the guidance, HHS states they will also be releasing a minimum value calculator for large and self-funded employers to use, and that the MV calculator will be very similar to the existing AV tool for carrier use.

Until the large employer MV calculator is released, employers can get at least a rough estimate of their plans by using the new HHS AV calculator. Once the MV calculator is released, employers can more accurately verify their plan’s status using that tool. The rules also allow an employer to obtain an actuarial valuation by a qualified actuary to determine plan value. The HHS AV calculator can be found at under the “Plan Management” section of the page.

SUMMARY

This new guidance primarily provides health insurance companies with many of the rules they need to begin to design their 2014 plan offerings in the individual and small group market. It is widely expected that the regulatory agencies will be releasing a large volume of additional ACA-related guidance in the coming months applicable to all employer-sponsored health plans.

MINNESOTA WORKERS’ COMPENSATION INSURANCE PAYROLL THRESHOLD CHANGES FOR EXECUTIVE OFFICERS AND OWNERS

The Minnesota Department of Commerce is changing the formula used for calculating workers’ compensation premiums. This change takes effect Jan.

 1, 2013, and increases the minimum and maximum individual weekly remuneration for executive officers, partners, sole proprietors, and members/owners of limited liability companies.

This is the first of three phases designed to align the MWCIA and Minnesota ratings with those of the NCCI and other states. Beginning on Jan. 1, 2013, the maximum annual remuneration amount for the listed individuals will increase from $93,194 to $190,258. Minimum annual remuneration will increase from $23,296 to $31,772.

These changes apply to all Minnesota workers’ compensation premiums, and will take effect on renewals occurring after Jan. 1, 2013.

WHAT DOES THIS MEAN?

This may cause your premiums to increase.

The maximum remuneration amount is the capped figure on which your work comp premium is calculated. So if, for example, your company’s owner makes $92,000 a year, you would see no impact. But if the owner’s salary is $200,000 a year, the insurance premium will now be based on $192,258 rather than $93,194, meaning the premium for these identified individuals could more than double. You could also be affected similarly for lower-wage officers and owners affected by the minimum amounts.

Two important things to keep in mind:

• Employers whose owners and officers are involved in more dangerous or strenuous field work (not clerical or sales activities) face the largest potential increases because these rates are typically higher than the rates on office work. 
• These changes will not affect the rates of employees other than executive officers, partners, sole proprietors, and members/owners of limited liability companies.

RJF can forecast the impact of this change on your company. Contact your service team to learn more.

WHAT DO I NEED TO DO?

While you should be conscious of this change and consider how it might affect you in the future, there is little you need to do. Many insurance carriers will adjust these amounts automatically, based on previous payroll audits. This will lessen likelihood of additional premiums needed at the time of audit.

RJF will work with clients at renewal to help ensure payrolls are updated with the carriers and as accurate as possible. This will reduce the chance of overpaying workers’ compensation premiums, and having to wait 15 months for a refund.

MORE INFORMATION & QUESTIONS

November 12, 2012

With the re-election of President Obama and very little change in the make-up of Congress, the path to full implementation of the Affordable Care Act (ACA) now seems clear. The ACA impacts employers in different ways depending on their size, employee demographics, current benefit strategy and where they are located. Fortunately, we have been studying and planning for how it may affect employers for over two years. Now it is time to move forward to implement what is necessary for each particular employer.

Issues Employers Must Address In the Short Term

A number of ACA provisions are taking effect now, or in the very near term, including SBCs (FAQs), W-2 reporting, limits on Health FSAs, and others. The first thing an employer must do is make sure that any of these provisions relevant to that particular employer are addressed as soon as possible.

Additional Regulations and Guidance Expected

It is expected that the regulatory agencies will move forward quickly with the release of additional guidance and regulations. There are a number of ACA issues important to employers where significant questions still exist, and further regulatory guidance is necessary.

Individual Subsidies and Individual Mandate Tax Effective 2014

Beginning in 2014, individuals with incomes less than 400% of the Federal Poverty Level (FPL) may qualify for a premium tax credit which would be applied toward the cost of purchasing individual health insurance through an Exchange. It is important for employees to understand that the tax credit is not available to individuals who are eligible for “affordable” employer sponsored insurance. Employers will also be required to send a notice to employees early in 2013 that informs them of Exchanges and the availability of the tax credit. This notice is guaranteed to generate many questions from employees.

Employer Coverage Requirements and Penalties

Beginning in 2014, the ACA requires employers with more than 50 employees to offer health insurance to all full-time employees, or face the possibility of paying a penalty. The impact of the coverage requirement affects various kinds of employers very differently, depending on current employee income demographics, employer plan design, and employer contribution strategy.

As we have analyzed specific employers, a few trends have become apparent. One of the most important things employers have discovered is that many face little or no risk of paying a significant ACA penalty. For example, employers with average (or above average) income employees, that offer “affordable” health insurance, are unlikely to pay an employer penalty. On the other hand, employers that currently do not offer qualifying coverage to all full time employees, or that require employees to pay relatively high contributions to participate, face greater challenges.

Decisions Facing States

Some major provisions of the ACA are greatly impacted by decisions made by individual states.

Exchanges

The ACA requires states to set up insurance marketplaces, called Exchanges, where health insurance companies and non-profit organizations will sell individual and small employer plans. The ACA defines small employers as less than 100 employees; however, states have the option to define it as less than 50 employees until 2017. If the state does not set up an Exchange, the Federal Government will operate one in that state.

It is also expected that insurance companies will continue to offer small group products outside the exchange in most states. However, the ACA imposes similar rules on policies sold inside or outside the exchange, so there may not be large differences between polices in the two markets.

Medicaid

Under the ACA, Medicaid eligibility is expanded to include anyone with an income up to 138% of Federal Poverty Level (FPL). Currently Medicaid eligibility differs significantly from state to state, with many states not offering any Medicaid coverage to adults without children regardless of income. Because of the recent Supreme Court decision, states have the option to opt-out of the expanded Medicaid eligibility. We expect many state legislatures to take up and debate this issue early in 2013.

Summary

It is expected that Congress will make additional changes to the law, and further guidance from the regulatory agencies could affect the way we interpret various provisions. However, the employer related rules in 2014 are likely to look very much like what is currently in place. We plan to issue regular updates, information, and guidance, not just on details related to regulations, but also practical help for employers to use to implement the policies and procedures required by the ACA.

EMPLOYEE BENEFIT COMPLIANCE YEAR-END REMINDERS

NOVEMBER 7, 2012

As the close of 2012 draws near, we wanted to provide employers with some year-end reminders.

DEPENDENT CARE REGULATIONS

Sponsors of dependent care assistance plans are required to notify plan participants of the total tax-free benefit they received through the plan during the 2012 calendar year by January 31, 2013.

The total benefit received must be reported on an individual’s W-2 form. Most plan sponsors use the W-2 form to satisfy as a notification. The maximum tax-free dependent care benefit an individual may receive is $5,000 if filing jointly or $2,500 if married and filing separately. Dependent care assistance plans must also satisfy certain nondiscrimination requirements and should be tested for nondiscrimination annually.

ANNUAL REPORTING REQUIREMENTS

Welfare benefit plans that have 100 or more participants enrolled on the first day of the plan year are required to file a Form 5500s (and attachments) each year. Filing must be completed by the last day of the seventh month after the end of the plan year. Plan sponsors should take inventory of their benefit plans to determine if any plans are subject to the Form 5500 requirements.

In addition, the Summary Annual Report (SAR) is a narrative (Form 5500) which must be distributed to all participants two months after Form 5500 is due.

SECTION 105(H) NONDISCRIMINATION REQUIREMENTS

Self-funded, or self-insured, health plans are also subject to certain nondiscrimination requirements in terms of benefits, eligibility and contributions. There are two “tests” that a plan must pass: the Benefits Test and the Eligibility Test. Testing can be complex and plan sponsors of self-insured health plans should ensure their plan is in compliance.

CAFETERIA PLAN NONDISCRIMINATION REQUIREMENTS

Cafeteria plans must meet certain nondiscrimination requirements to ensure highly compensated key employees do not receive a disproportionate amount of tax-advantaged benefit. These tests are complex and it is recommended that an advisor perform the tests to ensure compliance.

DISABILITY BENEFIT TAXATION

Employees who receive disability benefits (long-term or short-term) may be taxed on these benefits based on how the premiums are paid. If an employee contributes towards the premium for the disability coverage with post-tax dollars, the benefits, should he/she become disabled, are generally tax-free. On the other hand, if the employee does not contribute towards the premium or contributes with pre-tax dollars, the benefits received are subject to taxation.

If you have made changes to the taxable proportion of premiums (e.g. pre-tax contributions to post-tax contributions), be sure to discuss this change with your insurer.

In addition, employers should be mindful of W-2 reporting and FICA requirements, and responsibilities for claimants who have received disability income from an insurer.

MEDICARE PRESCRIPTION DRUG IMPROVEMENT AND MODERNIZATION ACT

Employers who provide prescription drug coverage under a group health plan must disclose to employees and to the Centers for Medicare and Medicaid Services (CMS) the creditable (or non-creditable) status of this coverage.

Group health plans must provide notice to Medicare-eligible participants advising whether prescription drug coverage provided under the plan is “creditable” or “non-creditable” at the following times:

• Prior to the Medicare Part D Annual Coordinated Election Period (ACEP) beginning October 15- December 7 of each year
• Prior to an individual’s Initial Enrollment Period (IEP) for Part D, as described under 423.38(a)
• Prior to the effective date of coverage for any Medicare-eligible individual that joins the plan
• Whenever the entity no longer offers prescription drug coverage or changes the coverage offered so that it is no longer creditable or becomes creditable
• Upon a beneficiary’s request

A prescription plan is deemed creditable if it is expected to pay out as much as the standard Medicare prescription drug coverage will pay in 2012. If your company’s creditable coverage is on average at least as good as standard Medicare prescription drug coverage, Medicare eligible employees can keep this coverage and not pay extra if they later decide to enroll in Medicare coverage.

Employers must also provide a disclosure of creditable coverage status to CMS. An entity is required to provide the Disclosure Notice through completion of the disclosure form on the CMS Creditable Coverage Disclosure Webpage.

At a minimum, disclosure to CMS must be made at the following times:

• Within 60 days after the beginning date of the plan year for which the entity is providing the disclosure to CMS
• Within 30 days after the termination of the prescription drug plan
• Within 30 days after any change in the creditable coverage status of the prescription drug plan

GROUP TERM LIFE INSURANCE IMPUTED INCOME

Employer-Paid

Internal Revenue Code Section 79 permits an employee to receive up to $50,000 of group term basic life insurance on a tax-free basis. The value of an amount over $50,000 must be added to the individual’s taxable income (certain exceptions may apply in the case of a discriminatory life plan or if life insurance is provided through a cafeteria plan).

In addition, the cost of employer-paid group term life insurance on an employee’s spouse and/or dependents is not taxable to the employee if the face amount of the coverage does not exceed $2,000. If the $2,000 limit is exceeded, all dependent life insurance, including the first $2,000 of coverage, is taxable. The Uniform Premium Table (Table 1) rates below—using the dependent’s age to select the applicable rate—must be used in calculating the amount to impute to the employee’s gross income.

Employee-Paid

Imputed income rules also may apply to voluntary or optional life insurance depending on the benefit plan structure. In some cases, if all rate tiers are neither completely over nor completely under Table 1, the rates “straddle” and you may be required to impute income for the value of the coverage for rate tiers that fall below Table 1. Your organization will need to review your voluntary life age bands and benefit plan structure to determine whether you need to calculate imputed income for certain employees.

All Plans

Plan sponsors should determine the amount of imputed income for group term life plan participants and report this information to the payroll administrator to ensure that the imputed income amount is reported on employees’ W-2 forms which are due by January 31. Plan sponsors may wish to include the imputed income in the employees’ last paycheck(s) of the year as the imputed income is also subject to Social Security taxes.

The government’s Table 1 (see table below) is used to determine the tax reportable cost of the extra protection. Reg.Sec.1.79-3(d)(2).

 

DOMESTIC PARTNER BENEFITS

More employers are extending health care coverage to the domestic partners of their employees (often this can include couples of the same sex or opposite sex), but federal law does not treat domestic partners as “spouses”. Only health benefits provided to domestic partners who qualify as IRS dependents or legal spouses can be excluded from taxable income. Otherwise, the “fair market value” of the coverage provided by the health plan to a non-IRS dependent domestic partner, over the amount paid by the employee participant for such coverage, must be treated as income of the participant. This means that these benefits are viewed as wages for FICA, FUTA and income tax withholding purposes by the IRS. In addition, Section 125 flexible benefits and spending accounts may not be provided to domestic partners, and employers are not required to offer domestic partners COBRA.

FOR IMMEDIATE RELEASE

MARSH & MCLENNAN AGENCY ACQUIRES PROTECTOR GROUP

MASSACHUSETTS AGENCY DOUBLES SIZE OF NEW ENGLAND REGION

White Plains, New York, November 8, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced that it has acquired Worcester, Massachusetts-based The Protector Group Insurance Agency, Inc., one of the largest independent agencies in New England. Terms of the transaction were not disclosed.

Founded in 1928, Protector Group offers a wide range of property/casualty insurance, employee benefits services, personal insurance, and individual financial services to midsize companies and individuals in New England. The agency generates approximately $13.6 million in annual revenues and has 84 employees operating out of three offices in Massachusetts: Worcester, Leominster, and Wellesley.

Protector Group will operate out of MMA’s New England hub further expanding the region’s employee benefit capabilities and adding new property/casualty insurance resources. All of the agency’s leadership and employees, including Bob Vaudreuil and Jack Cahill, will join MMA and continue to operate out of Protector Group’s existing offices.

“Protector Group’s strong regional presence, top-notch leadership, and blend of property/casualty and employee benefits make it a perfect fit for MMA in New England,” said Jim Blue, CEO of MMA’s New England region. “With the addition of Protector Group we double the size of the region and further enhance our ability to offer property/casualty and employee benefit capabilities to our clients.”

“Joining MMA represents an exciting opportunity for all of the members of our firm to build upon the strong foundation we have built over the last 84 years,” said Mr. Vaudreuil, Protector Group president and CEO. “Together, MMA and Protector Group will be able to offer greater resources to our clients to address their increasingly complex needs.”

Commenting on the transaction, David Eslick, chairman and CEO of Marsh & McLennan Agency, said: “I’m delighted to welcome Bob, Jack and the rest of the Protector Group team to MMA as we continue to build what is quickly becoming one of the nation’s preeminent insurance organizations serving the needs of the middle market.”

Protector Group is the 24th acquisition Marsh & McLennan Agency has completed since it began to build its national platform in November 2009. MMA currently generates approximately $410 million in annualized revenue.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the US. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the US.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact

Sally Roberts 
Marsh
303 952 9453
sally.roberts@marsh.com

Megan Toohey
MMA-New England
617 587 2393
megan.toohey@mma-newengland.com

AGENCY EXPANDS MMA’S FOOTPRINT INTO SOUTH DAKOTA

White Plains, New York, November 5, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced that it has acquired Howalt+McDowell Insurance, Inc., the largest independent agency in South Dakota. Terms of the transaction were not disclosed.

Founded in 1946, Howalt+McDowell has annual revenue of approximately $16 million and offers a wide range of property/casualty, surety, personal protection, and employee benefits insurance to individuals and midsize businesses in the upper Midwest. All of the agency’s leadership and employees, including CEO Jeff Scherschligt, will join MMA’s upper Midwest hub and operate out of the firm’s existing Sioux Falls, South Dakota office.

“With Howalt+McDowell, we are adding high-quality, local talent and expertise in the upper Midwest to complement and expand the resources available to our clients,” said David Eslick, chairman and CEO of MMA. “We welcome Jeff Scherschligt and the rest of the Howalt+McDowell team to MMA and look forward to expanding our presence in South Dakota.”

“Joining forces with MMA provides our clients with access to even greater depth and breadth of risk and benefit expertise and a wider array of services and solutions to help them grow in this increasingly challenging risk environment,” Mr. Scherschligt said. “We are thrilled to become a part of MMA and look forward to helping to build what is fast becoming one our industry’s top national agencies.”

Howalt+McDowell is the 23rd acquisition Marsh & McLennan Agency has completed since it began to build its national platform in November 2009. MMA currently generates approximately $395 million in annualized revenue.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the US. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the US.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact

Sally Roberts 
Marsh
303 952 9453
sally.roberts@marsh.com

Jeff Mulfinger
MMA-upper Midwest
763 746 8257
mulfingerj@rjfagencies.com

Helping Businesses Prepare For and Deal With Disasters

No amount of planning can tell you when and what type of disaster will strike your business. But there are things you can do to help ensure your business survives.

The articles below can help you better understand what you can and should do and expect in the event of a disaster.

RJF has experience helping employers prepare for the unknown and getting back on their feet after a disaster. From preventive planning to recovery efforts, check out the articles below to learn more about how you minimize damage from natural disasters.

DISASTER PREPAREDNESS

>> Disaster Preparedness and Recovery—Useful Resources
>> Covering Your Bases—Insuring Against Disasters
>> Preparing for and Responding to Flooding
>> White Paper—Business Income Analysis Critical to Risk Assessments

FLOOD ISSUES

>> NFIP Extended Five Years
>> Preparing for and Responding to Flooding

DISASTER RECOVERY

>> What to Expect From Your Insurance Carrier, Post-Disaster
>> Disaster Preparedness and Recovery—Useful Resources
>> Tip Sheet—Documenting Damages and Losses
>> Tip Sheet—Resources for Employees Following a Disaster
>> Post-Disaster—Mitigating the Impact on Business Operations
>> Addressing Employee Needs Following a Disaster

WHITE PAPER

Tip Sheet: Resources for Employees

Following a disaster, knowing where to get assistance can make a huge difference in the lives of your employees and their families. We've assembled a listing of various agencies and programs that provide support to people post-disaster. 

Disaster Assistance.gov (www.disasterassistance.gov)

Disaster Assistance.gov provides information on obtaining help from the U.S. Government before, during and after a disaster.

• Apply online at Disaster Survivor Assistance (www.fema.gov/disaster-survivor-assistance), via a smartphone at m.fema.gov, or by phone (call 800-621-3362 or TTY 800-462-7585 for people with speech or hearing disabilities)

Federal Emergency Management Agency (www.fema.gov)

FEMA’s mission supports the nation to build, sustain, and improve its capability to prepare for, protect against, respond to, recover from, and mitigate all hazards.

• Disaster Recovery Center Locator (http://asd.fema.gov/inter/locator/home.htm): A searchable database (by address, city, and state and/or Zip code) of Disaster Recovery Center locations
• Grants & Assistance Programs for Individuals (www.fema.gov/grants-assistance-programs-individuals): A list of grants and assistance programs.
• Disaster Assistance (www.fema.gov/site-page/what-disaster-assistance): Information on money or direct assistance for individuals, families and businesses in a disaster area whose property has been damaged or destroyed and whose losses are not covered by insurance.
• National Flood Insurance Program (www.fema.gov/national-flood-insurance-program): Information about flood insurance for property owners to protect against flood losses in exchange for State and community floodplain management regulations that reduce future flood damages.
• State Offices and Agencies of Emergency Management (http://www.fema.gov/regional-operations/state-offices-and-agencies-emergency-management): Searchable list of state emergency management agencies

Catalog of Federal Domestic Assistance (CFDA) (https://cfda.symplicity.com)

CFDA is a government-wide compendium of Federal programs, projects, services, and activities that provide assistance or benefits to the American public.

• Disaster Legal Services (Go to https://cfda.symplicity.com and type 97.033 under Find Programs): Information on free legal assistance to low-income individuals unable to secure legal services adequate to meet their disaster-related needs.
• Disaster Unemployment Assistance Program (Go to https://cfda.symplicity.com and type 97.034 under Find Programs): Information about unemployment benefits and re-employment services to individuals who have become unemployed because of major disasters.

Substance Abuse and Mental Health Services Administration (SAMHSA) (www.samhsa.gov/Disaster/indexMH.aspx)

SAMHSA has programs for people affected by mental health and substance abuse problems as well as those coping with disaster-related stress. Post-disaster services include individual crisis counseling, basic supportive or educational contact and community networking and support.

• 24-Hour toll-free Treatment Referral Helpline: 1-800-662-HELP (1-800-662-4357)
• Coping with Traumatic Events (www.samhsa.gov/MentalHealth/TraumaticEvent.aspx): Tips and resources for handling physical and mental stress after a disaster.
• Disaster-related publications: List of informational materials on coping with disasters. (Go to www.samhsa.gov, click on Publications and search for Disaster Relief Resources.)

American Red Cross (www.redcross.org)

The American Red Cross provides compassionate care to those in need.

• Get Assistance (http://www.redcross.org/find-help): Information and resources for disaster victims.
• Disaster Recovery Guides (www.redcross.org/find-help/disaster-recovery): Useful information from various natural disasters and other events.

How to Locate Family Members

• FEMA’s National Emergency Family Registry and Locator System (NEFRLS) (https://egateway.fema.gov/inter/nefrls/home.htm): A system for use when individuals or families are displaced due to a major disaster, providing secure Web-based environment for families to communicate with each other. FEMA also has a call center to assist people who do not have Internet access.
• National Center for Missing and Exploited Children (NCMEC) National Emergency Child Locator Center (Go to www.missingkids.com and click on Natural Disasters): A collaboration between FEMA and NCMEC to report a child missing because of the disaster. Contact 1-866-908-9572
• American Red Cross’s Safe and Well system (safeandwell.communityos.org/cms/index.php): Web-based service to help reunify friends and family displaced by a disaster.

This calendar will help you determine your plan's compliance obligations. To find out the specific dates for your current plan year, locate the month in which your plan year ends from the list below. Then click on the applicable compliance calendar to find a month-by-month outline of the deadlines for required filings and notices.

Basic Notice Requirements for Employer-Sponsored Health Plans

2012

• December

2013

2014

• January
• February
• March
• April
• May
• June
• July
• August
• September
• October
• November

November 1, 2012

As part of the claims process, you will need to provide evidence of the damage sustained and the loss (both current and anticipated) that resulted from the event, both in terms of property damage and business interruption. In the following article, RJF claims consultant Angela Wheeler provides a checklist of what information business owners will need to provide as part of the claims process.

“In most, if not all, cases of large losses, an adjuster will be onsite documenting the damage,” says Wheeler. “But while the initial walk-through survey may identify the extent of the physical damage that has occurred to the structure and contents, there will probably be additional costs involved in the clean-up and recovery-and-restoration stages, not to mention the financial losses incurred due to business interruption.”

Documenting Business Interruption and Extra Expense

Losses to business income represent the amount of lost income that would have been earned during the period of interruption had the loss never occurred. But it’s important to understand that business interruption is only triggered if there is a covered cause of loss, explains Wheeler. For example, if a policy provides coverage for power outages and a fire or water event results in loss of power and a business shutdown, the policy would pay under the Business Interruption coverage. But if a business shuts down due to flooding, and it does not have flood insurance, business interruption coverage will not kick in.

Extra expenses relating to the disaster can encompass costs ranging from acquiring generators to run equipment or securing the property to relocating to another site to continue operations.

But to support their claims relating to losses sustained and expense incurred due to business interruption, business owners will need to submit the following among other items specifically requested by the insurance carrier:

Detailed Operating Statements

• Income Statements
• Profit and Loss Statements
• Financial Statements

Tax Returns

Sales Data

• Sales Journals/Cash Receipts
• Daily Sales Reports/Cash Registers

Income Statement Detail

• Gross Revenue/Net Sales
• Cost of Sales (materials, merchandise)
• Gross Profit (net sales less cost of sales)
• Operating Expenses
• Net Income

“Most companies back up their data,” says Wheeler. “But in the event that some or all the information is lost, vendors, accountants and past tax returns can be helpful in rebuilding data.”

The Business Interruption and Extra Expense coverage is the last part of the claim to be settled, with business owners first focusing on resuming operations and settling the property part of the claim before addressing the interruption piece, explains Wheeler.

At that point, “it’s typical for an adjuster to use a forensic accountant to help put together this piece of the claim. We at RJF find that often the adjuster and forensic accountant are able to work together to resolve the interruption claim with business owners amicably.”

Extenuating and complicated claims might also require the services of a hired forensic accountant to help put together the interruption claim. Some business owners may opt to hire their own forensic accountant, says Wheeler, due to the extremely complicated nature of the business such as currency issues or translation concerns, because the business is engaged in very complex nature of manufacturing a high-end product such as a very expensive pharmaceutical drug. Bringing a forensic accountant on board “is an option they can discuss with their agent.”

“It can take anywhere from a month to several years for the claim to be settled, depending on the complexity of the claim and other factors,” adds Wheeler. “But with the ‘extra expense provision,’ companies will be provided with funds in the meantime to minimize the impact and continue operations. While most policies have this provision, it’s important to check with your agent to determine if it’s included on your specific policy and what terms and limitations may apply.”

For more disaster-related information

Post-Disaster —Mitigating the impact on business operations

October 31, 2012

After a disaster, do you know what to do? In the following article, RJF claims consultant Angela Wheeler shares key strategies that will help mitigate the overall impact on business operations.

When disaster strikes, employers have two immediate priorities:

• Ensure the protection and well-being of their employees by implementing all relevant safety measures and evacuation procedures
• Secure the inventory and equipment as much as possible to safeguard them from damage and destruction.

For companies that had the wisdom and foresight to develop a comprehensive disaster preparation strategy, the process works — as much as possible under those difficult circumstances — according to plan.

But once the actual event — fire, flood, blizzard or tornado, for example — has passed, business owners are faced with the unpredictable and extensive aftermath of the event, and the beginning of the next phase: recovery and rebuilding. At this stage, it’s essential that companies do everything possible to mitigate the impact of the disaster, both physically and financially, in order to begin the recovery process as soon as possible — all the more critical since, according to Institute for Business & Home Safety (IBHS), at least one in four businesses will not re-open after a catastrophic event.

The following is an overview of what to do following a disaster to mitigate the damage and increase the odds that your business will be able to reopen its doors.

Activate your Employee Support Services system

Arranging medical support for injured employees or others on the premises is the absolute first step after a disaster, says Angela Wheeler, RJF claims consultant and specialist on property damage. This also includes notifying family members if an employee was hurt. Next, identify and contact those critical people needed to maintain the business.

“For example,” says Wheeler, “store or plant managers may be critical in setting up a temporary location. Also, employee such as engineers, chemists, programmers, etc. could have a niche expertise that cannot be replaced.”

“Then,” she continues, “implement the established communication plan — which can be any combination of text, email, telephone or company website — updating employees as to the status of operations and advising them where to go for further information. Often business owners will engage the support of the local unemployment office to discuss benefits and procedures going forward as well as make crisis counseling available.”

“It’s also important at this time to determine which jobs can be done remotely or from home, and how much of your workforce can operate that way.”

Notify your insurance provider and any other emergency services

While all businesses should report a claim as soon as possible, whom they report it to can differ, says Wheeler. “Some companies will report directly to their insurance carrier. In the case of RJF client, they would contact us directly since we are their agent.”

But even more critical is not to underestimate your disaster. “If it feels like an emergency situation to you, then it is an emergency. Trust your gut,” she emphasizes. “If you work with an agent, call your agent as soon as possible. Most agents want to know about an emergency situation immediately, even if it is after working hours. In today’s world of cell phones and mobile work centers, you should feel comfortable contacting your agent in an emergency situation any time of day or night. Your agent can escalate the claim with the insurance carrier and get a representative on scene the quickest. In many cases, your agent will want to work with you as a guide as early as possible.”

If your insurance is placed directly with an insurance carrier, use the carrier’s emergency claim reporting numbers to talk to a live person about your situation. But whether you contact your agent or go directly to your carrier, you should be provided with the following information as a way of documenting your call:

• Claim number
• Adjuster’s name and contact information

Confirmation can be via text or telephone call or in writing, says Wheeler. “But if you don’t receive any confirmation in 24 hours, follow up with your agent.”

In addition to your insurance carrier, you may need to notify other agencies. For example, said Wheeler, if an employee suffered a serious injury requiring hospitalization, OSHA might also need to be notified. “Depending on the type of business, the Environmental Protection Agency (EPA), unemployment bureau, historical society, or other governmental agencies may need to be contacted,” she adds.

Conduct a damage assessment

The next stage is to do a damage assessment, says Wheeler. “We recommend walking the property to determine the magnitude of the damages. You will likely do this process many times with different people to continue to address the scope of damage. And when the adjuster arrives, you’ll most likely walk the property again to help determine the scope and assess the value of the damaged property.

Secure the premises and protect business assets

“It’s essential that this step be undertaken as soon as possible, without putting the personnel engaged in the operation in jeopardy,” says Wheeler. “Business owners shouldn’t wait for the insurance adjuster to come out to start that process.” In fact, it’s written into an insurance policy that a business owner is responsible for preventing any further damage to the property or business assets.

“Also, securing a premise keeps the general public safe,” says Wheeler. “It is your responsibility to keep people from exploring your damages and sustaining injuries.”

Securing the premise can involve a multitude of things, from hiring security or contacting specialized clean-up/restoration companies to stabilizing weak areas or tarping leaking or missing roof areas. “If a building is not stable or there is debris scattered throughout the premise, fencing will be needed,” she points out. “Business owners may need to hire security until the fencing is installed. Other times, board-up is adequate. We recommend that business owners use a professional board-up company that uses a specialty screw to provide additional security.”

Prompt and proper cleanup can significantly reduce property damage and business downtime, according to the CNA Disaster Planning Guide. However, be sure that all procedures are undertaken in full compliance with local, state, and federal regulations and codes, including those pertaining to OSHA, EPA, and the National Fire Protection Association (NFPA), among others.

For more disaster-related information

>> Disaster Preparedness and Recovery--Useful Resources
>> Flood Prep and Response — Tips for Business Before and After a Flood
>> Covering Your Bases: Insuring Against Disasters
>> What to Expect From Your Insurance Carrier Post-Disaster
>> Tip Sheet — Documenting Damages and Losses

Article Resources

Affiliated FM: AffiliatedFM specializes in commercial property insurance for business and industry. 

CNA: CNA is the 7th largest U.S. commercial insurer and the 13th largest U.S. property & casualty insurer, providing insurance protection to more than one million businesses and professionals in the U.S. and internationally.

October 2, 2012

The Affordable Care Act (ACA) has a significant impact on the health plans that employers offer to their employees. Some provisions, such as the employer shared responsibility rules, only apply to “applicable large employers” by requiring these employers to offer health coverage to their full-time employees or face possible penalties. Other provisions may only apply to the small group market. This summary provides an overview of many of the significant elements of the Act that are of particular importance to small employers.

There are some items that are discussed below where, as of this time, outstanding questions still remain that need to be answered through additional guidance from the appropriate regulatory agencies.

EMPLOYER SHARED RESPONSIBILITY RULES

The ACA requires large employers to provide health insurance that qualifies as “minimum essential coverage” to all full-time employees or pay a penalty. The rules, often called the “play or pay” rules, apply only to applicable large employers which is defined as an employer who employed an average of at least 50 full-time employee equivalents (FTE) on business days during the preceding calendar year.

In calculating the total number of full-time employees, the employer must count part-time employees on a pro-rated basis. For example, an employer with 40 full-time employees and 100 part-time employees (each working 20 hours per week) would be considered a large employer for purposes of the shared responsibility rules.

Therefore, if an employer does not meet this threshold of being an applicable large employer, certain portions of the law, such as the requirement to offer coverage to all full-time employees, do not apply.

SMALL EMPLOYER INSURANCE EXCHANGE

The ACA requires states to set up two different types of insurance exchanges. One, the American Health Benefit Exchange, is designed to facilitate the sale of individual health insurance policies, while the other, the Small Business Health Option Program (SHOP), will be where carriers can offer small group health insurance to employers. States have the option to combine the participants covered by each exchange into a single risk pool, or to keep the two exchanges completely separate. If a state fails to set up a state based exchange, the federal government will operate an exchange in that state.

An exchange will perform a number of functions, but at its core, it is essentially a marketplace where insurance companies, and possibly other payers such as cooperatives, will sell health insurance policies to individuals and small employers. The general concept of combining small businesses together to purchase health insurance is not new, and has gone by many names: purchasing cooperatives, insurance alliances, and connectors to name a few.

However, beginning in 2014, the ACA also makes significant changes to the rules that the insurance companies must follow when offering health insurance plans to individuals and small groups. Many of the new rules apply to policies sold both inside and outside the exchange.

Currently, health insurance carriers typically use underwriting strategies to try to select and price individual and small group policies based on the projected risk of that particular policyholder. Many states have existing rules that restrict this selection process, but these rules vary dramatically from state to state. The ACA imposes a number of rules on organizations offering individual and small group insurance designed to eliminate risk selection as a competitive strategy and “level the playing field” for individuals and small groups purchasing health insurance.

Rules that apply to small group policies sold inside or outside an exchange

• Guarantee issue and renewability: Carriers must accept all individuals and small groups and cannot cancel coverage due to utilization.
• Modified community rating: Rates charged to different customers for the same policy can vary only by age, smoker/non-smoker and some regional adjustments. Rates cannot be based on the medical status of participants or employees.
• Risk sharing across carriers: One of the most significant reforms to the individual and small group market is the introduction of risk sharing between health insurance carriers. Carriers which end up covering a greater proportion of lower risk individuals will be required to make payments that will be shared with carriers with a higher cost pool of participants. Carriers are also prohibited from intentionally marketing to try to attract better risk groups and individuals.

Rules that only apply to policies sold through an exchange

• Defined contribution option: Carriers selling small group polices sold through an exchange must offer an option that permits an employer to select a target “coverage tier” and set employer contributions based on that tier. Employees could then choose coverage from any qualified plan in that tier. The employer would pay a single premium to the exchange, and the exchange would handle the payments to the various carriers involved.
• Small employer tax credit: Beginning in 2014, the small employer tax credit (described below) will be available only for plans sold through an exchange.

COST-SHARING LIMITATIONS

The ACA limits deductibles in the small group market to $2,000 individual / $4,000 family, (indexed in future years). Based on the statutory language, it appears that this amount may be increased by the amount of reimbursement available to an employee though a health reimbursement arrangement (HRA). For example, if the employer-sponsored coverage features a $3,000 individual deductible but $1,000 is available via a HRA, this effectively would satisfy the $2,000 deductible cost-sharing limit requirement.

Additionally, cost-sharing under a small group health plan is also limited to the maximum cost-sharing allowed in 2014 for HSA qualified high deductible health plans (currently $5,950 for individual/ $11,900 family). In subsequent years, the limitation on cost-sharing is indexed to the rate of average premium growth.

It is possible that funds available to employees through a flexible spending arrangement will also impact the maximum allowed amounts, but additional clarification from the regulatory agencies is necessary regarding this point.

SMALL EMPLOYER TAX CREDIT

Effective January 1, 2010, eligible small employers can receive a tax credit of up to 35% of the contributions they make toward the cost of health insurance offered to their employees. The credit is available to employers with 25 full-time employee equivalents (FTE) or less. There are also average wage and employer contribution requirements. Small not-for-profit employers may also be eligible for a credit even though they do not owe federal corporate taxes.

Beginning in 2014, the small employer tax credit will only be available to employers who purchase their group coverage through a SHOP exchange.

OTHER PROVISIONS IMPACTING SMALL BUSINESSES

Since the law’s inception in 2010, small group plans have also been subject to a number of provisions that have already taken effect, such as extending dependent eligibility to age 26, the prohibition of pre-existing condition limitations on children under age 19, and the inability to impose a lifetime limit or annual limit (some exceptions apply) on benefits. It is believed that many plans sold in the small group market are no longer grandfathered and are therefore subject to additional requirements including providing coverage for certain preventive care services without member cost-sharing and certain patient protections.

FOR IMMEDIATE RELEASE

RJF HIRES BRIAN SZCZECH AS NEWEST EMPLOYEE BENEFITS CONSULTANT

MINNEAPOLIS, Sept. 28, 2012—Brian Szczech recently joined RJF, a Marsh & McLennan Agency LLC company, as its newest employee benefits consultant.

Szczech comes to RJF after spending several years working with human resource professionals in other consultative sales and account management roles with Paychex, LexisNexis and Landmark Recruiting. During his time with those companies, he earned several awards for his performance delivering solutions to clients.

"I’m looking forward to continuing to help employers as they struggle with health care issues and cost,” said Szczech. “This is such a critical area of concern for employers nowadays; I’m eager to help them bring a long-term strategy and predictability to their benefits programs and help them make their way through the increasing complexities surrounding compliance issues. RJF and Marsh & McLennan Agency have an abundance of tools, services and expertise to help in all these areas and more."

Szczech can be reached at 763-746-8569 or szczechb@rjfagencies.com.

CONTACT

Understanding How Upcoming Changes will Affect Your Business

By Cassandra Coopet

September 26, 2012

E-Mod: It may be a short word but it can have a major impact on businesses unprepared for changes in how premium costs are calculated.

First, a short primer. Your workers’ compensation e-mod (aka Experience Modification Rating, EMR or mod) is a multiplier used by your work comp insurance company to help determine the amount of your premium. This figure is based on your past three policy years of loss experience, not including the current year as to allow for claim development. According to the National Council on Compensation Insurance, Inc., the largest provider of workers compensation and employee injury data and statistics in the nation, there are three types of modification factors:

• A credit modification — a modification lower than 1.00, resulting in lower than average business premium costs
• A debit modification — a modification higher than 1.00, resulting in higher than average premium costs
• A unity factor — the employer meets any one of the following criteria: not meeting eligibility requirements for experience rating, not meeting the minimum data requirements, a new business with no data available to produce an experience rating modification, an e-mod rating of 1.00, unavailable data due to ownership change. (See the NCCI booklet, ABCs of Experience Rating for more details.)

Generally speaking, a credit modification can be achieved if an employer has a safe workplace with safety programs in place, while a debit modification can be an indication that the business should review its workplace safety programs. Essentially, the more frequent or more costly your losses, the higher your e-mod will be.

There are changes coming in how these ratings are calculated that may affect the price of your premium, says Cassandra Coopet, RJF Claims Consultant. “The National Council on Compensation Insurance (NCCI), the Wisconsin Compensation Rating Bureau (WCRB) and the Minnesota Workers’ Compensation Insurers Association, Inc. (MWCIA) will be changing their formulas. Effective Jan. 1, 2013, the NCCI will be adjusting the split point upward, with both the WCRB and MWCIA making similar changes; however, the WCRB will not make the change until much later in October 2013.”

What does this mean for you? If your business has good experience, you could see a decrease, while a poor experience will most likely cause the reverse. If your current e-mod is near 1.0, however, the outcome will be harder to predict. (For a more detailed explanation, read our article Learn the Facts About Upcoming Changes to E-Mod Calculations.)

But it’s not only rating changes that can affect your premiums. A hardening insurance market means that final premiums are more frequently determined by profitability demands, which means carriers are no longer fighting to add premium for growth and are more likely to determine pricing by losses more than the experience mod. Higher losses — and the concomitant expenses associated with them — translate to a lower profitability, which can send your insurance premiums skyrocketing upward.

That’s the bad news. But while you can’t rewrite the past, control the decisions of workers’ comp bureaus, or affect the changes in the insurance marketplace, you can actively work to improve the future. By analyzing claim trends, you can pinpoint areas, such as in training, equipment or procedures, where improvements are needed. Reducing future claims then quite literally translates to “money in your pocket.”

Top three weapons Against runaway e-mods

Step 1: Have a specialist on board

If your business has a qualified insurance specialist on staff, someone trained in analyzing claims data, providing cost projections and evaluating coverage options, you are two steps ahead of the rest. Otherwise, your insurance agent or broker should be able to provide this support by objectively reviewing your history and helping you develop strategies that will improve your company’s performance and rating.

Step 2: Implement safety strategies

But that’s only part the solution. Without implementing those strategies, the only change you’ll see will be for the worse. For example, far too many companies resist investing in workplace safety strategies, like training personnel, improving processes, or maintaining equipment, because of budgetary constraints. However, the National Safety Council estimates that, for every dollar spent on the direct costs of a workplace accident, there are 1.1 to 4.5 times in additional soft costs, such as the cost of production downtime, decreased quality, training new or replacement employees, employee morale and higher insurance premiums.

As an example, for the 2006-2007 policy year, a retail chain with stores throughout the upper Midwest had an e-mod factor of 1.84 and 152 total workers’ compensation claims. Prior to bringing RJF on board, the company did not have a well-developed workplace safety strategy. Over a few years, RJF helped implement several safety-related improvements: new hire training to reduce injuries to recently hired employees and several “train the trainer” tactics to help individual managers take charge of their own losses.

Subsequently, claims dropped to 73 for the 2010-2011 policy year, and are projected to be even lower at 42 claims for 2011-2012. The company’s 2011-2012 policy is nearly $400,000 less per year than in 2006-2007 and its e-mod factor for 2012-2013 is projected to be 0.77 — a significant drop from its 2006-2007 factor of 1.84.

Clearly, it’s essential that any changes that are intended to reduce loss numbers be supported from the top-down, and implemented company-wide, but combating the “that’s not the way we have done it in the past” thinking isn’t always easy. For executives, managers and employees to adopt the improvements, the method, purpose and result need to be clearly defined and explained.

Many times, it’s the numbers that win over the objections. For example, by recalculating figures based on suggested safety changes, a qualified insurance specialist can create an example of how implementing improvements can affect projected loss history, increase profitability, improve e-mod ratings and ultimately reduce premium cost.

Step 3: Improve your claims management process

However, even if you have a qualified insurance specialist available (on staff or an outside advisor) and make necessary safety-related changes, chances are that employees will still sustain work-related injuries. How you handle the claim can also affect your e-mod rating, points out Coopet. “Properly managing claims once they occur is critical to reduce the impact on an experience modification factor. This involves communication with the employee, adjuster,  doctor and supervisor, timely reporting, safety committee claim reviews to avoid similar incidents, accident investigation, proper medical care, trending and stay-at-work programs” she explains. “At RJF, our claims department monitors claims as well as the calculation of experience mods. When appropriate we re-file, which gets the rating agency to issue an update mod. This can reduce premium costs.”

For example, in the past 16 months, RJF had 16 re-files on behalf of 12 clients, who had previously received an e-mod rating based on claims that were over reserved and have since closed out to a lower value. Subsequently, each case was re-evaluated, and the e-mod factors reduced, for a total reduction of 1.04 points for these 16 re-files and a related savings of nearly $7,000 per client.

“These were, by no means, isolated outcomes,” Coopet emphasizes. “Working with Jefferson Lines, a regional motor coach transportation company with about 200 employees, we helped close 80% of open cases, reduced the company’s loss ratio from 105% to 26% and its cost of claims by more than $275,000. This resulted in a reduction in e-mod rating from 1.78 to 1.46 in two years. In short, by better managing claims, we’ve consistently saved our clients a significant amount of money: in 2010, an average of $15,815 per client, and in 2011, $9,228 per client.”

Reserve reductions are trended by the RJF claims department at key points in the employer’s policy period including Unit Stat Filing and Pre-Renewal. Reserve reductions include requests for file closures or lowering of the file’s reserves to match the current known exposure. Unfortunately, refiles are not always successful because of the 5% aggravated inequity rule  that states the re-file must result in a 0.05 drop in the modification rating.

Therefore, the RJF claims department is proactively advocating for their clients prior to the Unit Stat Card filing period in order to mitigate the impact on the experience modification calculation. The lower an employer’s total incurred cost of claims that are inputted into the mod calculation, the lower their mod will be.

Battlefield advisor

Navigating through the morass of rules and regulations, changes in data and trends can be a full-time job. If your company lacks an on-staff insurance specialist, ask your agent to recommend improvements and options that can improve your loss numbers and your bottom line. Or contact RJF and ask about our PREVENT Process, a comprehensive strategic analysis we provide to our clients. With the PREVENT Process, you’ll gain a detailed loss history analysis combined with E-Mod modeling as well as insights into known and unknown risks. (Read more about the PREVENT process.)

Remember, the best defense is a good offense. Once armed with the information to help better understand historical trends and the future impact on your workers’ compensation premiums, you’ll be able to counteract the e-mod attack that might be coming your way.

HIDDEN FACTORS THAT CAN LEAD TO FAILURE

by Jason Kleid

The purpose of this article is not to discuss all the contributing factors to failure of those in the position of Sales Manager (SM), but rather to address some of the hidden reasons for lack of success. The SM position is one of the most difficult in a company. The success or failure directly impacts the profitability of the company.

Handling the Pressure

The pressure placed upon the SM can be intense. If the SM does not do a good job of controlling his/her emotions while under pressure, that person will most likely not be making good decisions. Emotions trump competencies, experience, values and behaviors. Bad decisions negatively impact everyone including their producers. The SM who allows emotions to rule, runs the risk of losing the endorsement of their team. This is never a good scenario. Why or how might this happen?

When a salesperson realizes that their SM cannot handle the pressure they are under, they will most likely delay any conversation until their manager is in a better frame of mind. Personally a wise decision on their part but the impact of that delay in communication and the subsequent delay in resolving business issues will negatively impact everyone and everything including; closing sales, customer retention and the motivation of the sales force.

It is vital that upper management consider how able the person in this role handles pressure. Success in leading is directly connected to making good decisions. Staying in control and making good decisions contribute to an engaged, high-performing team. However, when conditions exist as mentioned above, the whole organization including its customers will be negatively impacted.

Good Salesperson-Bad Sales Manager

Sales people thrive in an environment that provides the resources that help them to be successful. Just try taking a valued resource away and you will have a mutiny on your hands. If a SM doesn’t understand this and arbitrarily removes a valued resource there are bound to be repercussions. One such consequence is the salesperson losing respect for the SM. What follows is the loss of motivation. You are no doubt aware that it is easier to demotivate than to motivate. A consequence of being managed poorly and no longer being happy is that good sales people may leave. If they don’t actually leave they may quit and forget to tell you. In other words, they will show up and collect a paycheck, but they have checked out emotionally.

Sales people are typically value personal recognition, freedom, making money, control over their own destiny and the destiny of others. They thrive on DOING. Their desire is closing as many sales as they can. The big mistake organizations make is trying to clone a good salesperson by promoting the top seller into a Sales Manager position. When the salesperson moves to managing others, he/she needs to understand that their role is no longer doing but rather, getting others to do.

I received a call from a frustrated salesperson who shared the following story: She had set up a face-to-face meeting with a prospect with whom she had a number of previous conversations. Her objective for this meeting was to close the sale. She invited her manager to come along to observe and provide feedback on the way back to the office. To her disbelief the sales manager completely took over the call devaluing her in front of her prospect and closed the sale.

Why did this happen? First, the SM didn’t review how the sales call would go and what his role would be. In this case, the SM loved to sell and wanted the adrenaline rush of closing the sale. He wanted to do. Unfortunately his good feelings were at the expense of the seller who had worked long and hard to position the prospect for the close. How upsetting and demoralizing it was when she watched her manager close her prospect!

I quickly realized that this good salesperson turned sales manager was not afforded the opportunity to develop the skills and values of managing others. After similar reports, my recommendation to the CEO was to return this person to his previous sales position before any more damage could be done and until such a time as proper coaching could be provided and he actually understood what being a SM really is.

Understanding the competencies, acumen and skills of a SM is crucial for those responsible for hiring and developing others for this position. Placing a person in the role of SM before they are ready is poor management. Sales Managers should score relatively high in the following competency areas: 

• Self management
• Developing others
• Leading others
• Accountability for others
• Personal accountability
• Results oriented
• Goal Achievement

The Ability to Influence

As far as communication is concerned the SM must be able to apply good selling techniques internally. Remember, TELLING IS NOT SELLING! Just because a SM tells the account manager that they should be doing a better job in a certain area doesn’t mean that the salesperson has been sold on improving. People buy for their reasons. Salespeople are people too. So they naturally will buy for their personal reasons. What does that say? The SM must be able to sell improvement for the salesperson’s reasons. The connection must be made between what’s important to the salesperson, i.e. money, recognition, customer satisfaction and development. Also, people don’t care how much you know until they know how much you care. The SM must build trust with their team and demonstrate that they care. How do they do that? They need to be great listeners. This point about how a leader communicates would be true for any person in a leadership role.

Sales Process

Having a sales process is missing in most sales organizations.

Which is easier, managing a sales process or managing personalities? Process of course. Manufacturing has their processes. The accounting department certainly has its own well-defined processes. As a result both of those departments are able to count on predictable results and there is no mystery to what happens in those environments. Methodology and procedure provides predictability for those departments.

How predictable are sales? I think I heard you chuckle. Certainly sales are not as predictable as a manufacturing line. Could it be that there is a connection between a sales organization having a well-defined sales process and predictability in sales? I believe there is. A sales process doesn’t have to be complicated. It should be ethical with no gimmicks or tricks. The professional salesperson will reject those types of methods and the potential customer will know that they are being manipulated.

Company Contribution to Success or Failure

Identifying and addressing the key reasons for failure will mitigate risk; prevent a poor hiring decision and all the unintended consequences of that decision. Another thing that must be considered is the leadership team’s contribution.

In many companies upper management will promote the idea that the SM should spend a large portion of his/her time in the role of a coach. But how much time is upper management actually allowing for their SM to spend coaching their team? How much time during regular working hours is the manager spending filling out reports, going to internal meetings instead of coaching? We all appreciate a person who not only talks the talk, but walks the talk. Upper management should follow that example.

Great care must be taken before hiring or promoting anyone to the position of Sales Leader/Manager. That is the sole responsibility of upper management. It’s important to understand the following distinction: Managers manage things, process, or money. Leaders lead people. It is crucial that a SM understand how to do both and those hiring or promoting a candidate for this position should take this into consideration. It is crucial to benchmark the position (not the SM) and clearly understand the accountabilities, values, soft skills, hard skills and behaviors required by the role. Then match or groom candidates to meet the requirements of the job.

Like everyone else, the SM needs a coach. The manager of managers should have an in-depth understanding of the job of leading and managing others, while being equipped themselves with appropriate mentoring and coaching skills and the commitment to follow through.

Failing is a combination of lack of a sales process, the right qualities, abilities, values, soft skills, hard skills and not having a professional sales force (Good Manager – Poor Salesperson).

After your organization becomes aware of some of the hidden reasons for failing, the leadership can then make the needed improvements in development processes.

September 11, 2012

Disasters can strike with little warning. The key is to know how to prepare and what to do during and after the event to mitigate the impact on your business, your community and your loved ones.

Because September is National Preparedness Month, we've assembled a list of Websites that provide useful information to help you prepare for and recover from disasters and weather-related events.

Federal Resources

CDC Emergency Preparedness & Response

Provides information and resources for preparing for and responding to public health emergencies caused by natural disasters and severe weather. The Small Business Resource Guide has a section on emergency preparedness.

DisasterAssistance.gov

Provides information on getting help from the U.S. Government before, during and after a disaster.

Environmental Protection Agency (EPA)

Natural Disasters section has tis on reducing or avoiding risks to health and the environment due to natural disasters as well as link to online reporting page for National Response Center in case of spills or discharges after a disaster.

FEMA Plan, Prepare and Mitigate

Protecting Your Businesses section has links to mitigation and insurance programs create safer and more resilient places of business.

FloodSmart.gov

Information about the National Flood Insurance Program (NFIP) for residential and commercial coverage. Includes section on flood preparation and recovery.

Internal Revenue Service

IRS Disaster Assistance and Emergency Relief for Individuals and Businesses provides details on special tax law provisions that may help taxpayers and businesses recover financially from the impact of a disaster.

National Archives and Records Administration

Emergency Preparedness section has tools to assist private individuals and public institutions in preparing for small or large scale events.

National Oceanic and Atmospheric Administration / National Weather Service (NWS)

StormReady section provides links to evaluate how an area will be affected by the ravages of severe weather.

Ready.gov

Preparedness Planning for Your Business page offers information for planning and protecting businesses from natural and human-caused hazards and widespread serious illness.

RestoreYourEconomy.org

A one-stop shop of disaster preparedness and post-disaster economic recovery resources, tools and event announcements, funded by the U.S. Economic Development Administration (EDA).

SBA and Agility Recovery

Prepare My Business offers testable, turn-key disaster recovery solutions and business continuity services for small and mid-size businesses.

State and Local Government Resources--Michigan

Michigan Prepares

State-sponsored site with links information about natural disasters, and radiological, chemical or biological emergencies. Protecting the Business Community section has links and downloadable pdfs covering emergency plans for a variety of business types and establishments.

Michigan Department of Agriculture & Rural Development

The site offers an Emergency Action Plans for Retail Food Establishments and Emergency Planning for the Farm guide.

State and Local Government Resources--Minnesota

Homeland Security and Emergency Management (a division of Minnesota’s Department of Public Safety)

Planning and Preparedness section provides information about state emergency planning and preparedness programs, with resources to help avoid and overcome the effects of a disaster.

Minnesota Department of Health

Emergency Preparedness, Response and Recovery: The Individual/Family Preparedness section contains links and downloadable guides that can be adapted for business use. Floods: Protecting Your Health has tips on avoiding health risks during and after a flood.

Minnesota Department of Agriculture

Emergency Preparedness section includes links to Advance Planning for Emergency Management and Resources for Storm Victims.

State and Local Government Resources--Missouri

Missouri Department of Public Safety

State Emergency Management Agency includes links to disaster preparedness, and recovery and rebuilding.

Missouri Department of Health and Senior Services

Disaster and Emergency Planning section has links for Medical & Public Health Professionals and Training and Resources.

National Weather Service

Springfield, MO, disaster preparedness page has links for weather preparedness and printable weather tips.

City of Columbia, MO

Office of Emergency Management Disaster Preparedness section provides tips for disaster preparedness, homeland security and natural disaster.

State and Local Government Resources--North Dakota

North Dakota Department of Emergency Services (NDDES)

Get Ready, Get Set, Get Safe section has links to information on preparing for natural and seasonal-related disasters.

North Dakota Department of Health

Emergency Preparedness and Response section includes links to Planning & Safety guidelines and publications including a Be Aware and Prepare guide.

State and Local Government Resources--South Dakota

bReadySD (a collaboration between South Dakota Department of Health and South Dakota Department of Public Safety)

bReady for Anything has resources for individuals and business to prepare for disasters.

Disaster Recovery SD

Site offers information on flood information and publications and First Steps to Flood Recovery.

State and Local Government Resources--Wisconsin

Wisconsin Emergency Management (WEM)

ReadyWisconsin provides wide range of information, with the Manager Resources section offering PowerPoint presentations, PSAs and downloadable guides.

Miscellaneous Resources

American Red Cross

Prepare Your Workplace section includes links to health and safety training and information on Ready Rating, a free program that helps businesses, schools and organizations become prepared for disasters and other emergencies.

Conservation OnLine (CoOL)

Disaster Preparedness and Response page provides links to information on disaster preparedness and response for library, archives and museum materials.

Do 1 Thing

Michigan-based non-profit web-based, twelve-month preparedness program that focuses on a different area of emergency preparedness each month.

Formulating a Communication Strategy

RestoreYourEconomy.org, a project funded by the U.S. Economic Development Administration (EDA). This website provides resources and best practice information for public and private stakeholders seeking to rebuild their local economies after a major disaster as well as assisting the business community to prepare for a disaster.

Institute for Business & Home Safety (IBHS)

Open for Business® is a property protection and recovery planning tool for small to mid-sized businesses.

Minnesota Historical Society (MHS)

Conservation of Collections, Emergency Response provides advice and guidance for responding to a disaster and for dealing with wet and damaged historic material and possessions. The Disaster Preparedness guide provides information relevant to museums, historical societies and other similar organizations.

Missouri Small Business & Technology Development Centers (MO SBTDC)

Disaster response and preparedness resources for Missouri section has links to Publications and information to help prepare businesses for disaster and recover post-disaster.

TechTarget Storage Media Group /SearchDisasterRecovery

The free business continuity and disaster recovery testing templates help companies conduct a business continuity test, determine who should be included and learn how to develop a successful BC/DR testing strategy.

The American Institute for Conservation of Historic and Artistic Works (AIC)

Disaster Response & Recovery Resource Section includes tis for salvaging heirlooms and other valuables post-flood as well as contact information for the American Institute for Conservation Collections Emergency Response Team.

University of Missouri Extension

Emergency management section has links to information covering a wide range of weather-related and other disasters and emergencies.

MARSH & McLENNAN AGENCY ACQUIRES ROSENFELD EINSTEIN

AGENCY EXPANDS MMA’s FOOTPRINT INTO SOUTH CAROLINA 

White Plains, New York, September 10, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced that it has acquired Rosenfeld Einstein, a $9 million property/casualty and employee benefits agency based in Greenville, South Carolina. Terms of the transaction were not disclosed.

With roots dating back to 1933, Rosenfeld Einstein offers a wide range of property/casualty and employee benefit services to clients in the Southeast and mid-Atlantic regions. All of the agency’s 55 employees, including principals Dan Einstein, Howard Einstein, and Nathan Einstein will join MMA’s mid-Atlantic hub led by Rutherfoord, a Marsh & McLennan Agency LLC company, and continue operating out of the firm’s Greenville, South Carolina office.

“As a well-managed and growing enterprise with a strong platform of property/casualty and employee benefits and a reputation for service excellence, Rosenfeld Einstein is a perfect fit to join MMA in the mid-Atlantic,” said Thomas R. Brown, vice chairman of Rutherfoord/MMA. “With this transaction, we are expanding our market position into South Carolina and enhancing our property/casualty and employee benefit capabilities to better serve the needs of our clients.”

“As the risk management, health care, and employee benefit landscapes continue to evolve, joining forces with MMA provides our clients with access to even-greater depth and breadth of risk expertise and a wider array of services and solutions to meet the emerging and complex risk issues they face,” said Howard Einstein, principal of Rosenfeld Einstein. “We are thrilled to be joining forces with MMA and look forward to helping to build what is fast becoming one of our industry’s top national businesses.”

Commenting on the transaction, David Eslick, chairman and CEO of Marsh & McLennan Agency, said: “Rosenfeld Einstein is another example of MMA’s ability to attract high-quality talent and expertise to our growing firm. We welcome Dan, Howard, Nathan, and the rest of the Rosenfeld Einstein team to MMA.”

MARSH & McLENNAN AGENCY ACQUIRES EIDSON INSURANCE

AGENCY EXPANDS MMA’S FOOTPRINT INTO CENTRAL FLORIDA

White Plains, New York, September 6, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced it has acquired Eidson Insurance, a $3.4 million revenue property/casualty and employee benefits agency based in Orlando, Florida. Terms of the transaction were not disclosed.

Established in 1943, Eidson offers a wide range of property/casualty and employee benefit services to individuals and businesses in central Florida, with a particular focus on the health care industry. All of Eidson’s employees and leadership team, including President Laura Eidson Cosgrove, will join MMA and continue operating out of the agency’s existing Orlando office. Eidson will join MMA’s Florida hub created last year by the acquisition of Seitlin Insurance, which now operates under the Marsh & McLennan Agency name.

“Eidson Insurance is a high-quality firm with a strong reputation for professionalism and service excellence,” said Tom Cornish, President and CEO, Florida Region, for Marsh & McLennan Agency. “With the addition of Eidson, MMA will now have offices in Miami, Fort Lauderdale, West Palm Beach, Jacksonville, and Orlando with 190 associates providing risk, insurance, and benefit solutions to middle market companies and individuals in Florida.”

“Joining MMA represents an exciting opportunity for all of the members of our firm to build upon the strong foundation we have forged over the last 70 years,” Ms. Cosgrove said. “Together, MMA and Eidson will be able to offer greater resources to our clients to address their increasingly complex needs.”

Commenting on the transaction, David Eslick, Chairman and CEO of Marsh & McLennan Agency, said: “I am delighted to welcome Laura and the rest of the Eidson team to MMA. Spoke acquisitions such as this are an essential component of our strategy to become one of the nation’s preeminent insurance agencies serving the needs of the middle market.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

GUIDANCE ISSUED ON THE DEFINITION OF FULL-TIME EMPLOYEE AND 90 DAY WAITING PERIOD RULES

September 5, 2012

On Friday, August 31, 2012 the IRS released Notice 2012-58 which includes much anticipated guidance related to the definition of full-time employee for the purpose of the employer shared responsibility rules and related penalties contained in the Affordable Care Act (ACA). On the same day, the Departments of Labor, Health and Human Services, and the Treasury (the Departments) released coordinated guidance on the ACA’s 90 day waiting period limit in Notice 2012-59.

This guidance is of particular importance to employers that have employees with variable work hours or seasonal employees. The safe harbor described in Notice 2012-58 will allow many of these employers to limit the number of variable hour and seasonal employees who must be considered full-time.

BACKGROUND

Beginning in 2014, an “applicable large employer” may be required to pay a penalty (technically called an assessable payment) under two circumstances:

• The employer does not offer minimum essential coverage to all full-time employees, and at least one employee receives a premium tax credit or cost-sharing reduction (referred to collectively as a subsidy) when purchasing individual coverage through an exchange
• The employer offers its full-time employees the opportunity to enroll in a medical plan, but an employee receives a subsidy because the employer’s coverage either is “unaffordable”, or does not provide minimum value.
• Coverage under an employer-sponsored plan is considered “affordable” if an employee’s required contribution for single only coverage does not exceed 9.5% of the employee’s household income. 
• Coverage provides minimum value if the plan has an actuarial value of at least 60%.

Since the Act’s coverage requirements apply only to full-time employees, this definition is critical to defining plan’s eligibility rules and determining an employer’s risk for penalties. Unfortunately, the ACA statutory language is brief and leaves many questions unanswered. The ACA provides only that a full-time employee, for any given month, is an employee who works at least 30 hours per week.

Since the ACA was passed, employers have been looking for additional guidance to help determine exactly how this rule will be applied. Notice 2012-58 goes a long way toward clarifying the definition of full-time employee, but still leaves some questions unanswered.

FULL-TIME STATUS BASED ON A “LOOK BACK MEASUREMENT PERIOD”

In Notice 2012-58, the IRS describes an optional safe harbor that employers may use to determine an employee’s full-time status. Under the safe harbor, 130 hours of service in a calendar month will be treated as the equivalent of 30 hours of service per week. Furthermore, employers may base an individual employee’s full-time status on a look back measurement period as described below. Use of this approach is not required; rather, it is an option employers may consider when determining health plan eligibility based on an employee’s full-time status.

MEASUREMENT PERIODS

Employers will have the option to determine an employee’s full-time status based on the employee’s average hours worked over the course of a measurement period of between 3-12 months. If the employee has not worked an average of 30 hours per week (or 130 hours per month) for the entire measurement period, that employee would not be considered full-time.

STABILITY PERIODS

Once an employee has attained full-time status, the employer must continue to treat the employee as full-time for a corresponding stability period, regardless of the average number of hours worked during the stability period. The stability period must be at least as long as the measurement period, but can be no shorter than 6 months.

ADMINISTRATIVE PERIOD

Since employers will need some time for administrative purposes between the date an employee qualifies as full-time and the date coverage must be offered, the rules allow for an administrative period of up to 90 days between the end of the measurement period and the beginning of the stability period.

The following example from the IRS notice illustrates the use of 12 month measurement and stability periods:

ABC Company’s health plan eligibility rules state that only employees who work full-time during the measurement period are offered coverage. The company defines its relevant periods as follows:

• A 12-month stability period that begins January 1 to coincide with its health plan year.
• A 12-month measurement period that runs from October 15 to October 14 of the following year.
• An administrative period between the end of the standard measurement period (October 14) and the beginning of the stability period (January 1)
• The administrative period allows the employer time to determine which employees worked full-time during the measurement period and notify them of their eligibility for the stability period/plan year beginning January 1.

Effect of the rule on two different employees:

• Employee A worked full-time during the measurement period 10/15/2012 through 10/14/2013, and for all prior years. Employee A must be offered coverage for the entire 1/1/2014 – 12/31/2014 stability period/plan year, even if the employee A’s average hours are reduced to less than full-time during 2014.
• Employee B also worked full-time in prior years, but does not work full-time during the entire measurement period 10/15/2012 through 10/14/2013. Employee B is not required to be offered coverage for the stability period in 2014.

RULES APPLY TO VARIABLE HOUR AND SEASONAL EMPLOYEES ONLY

Importantly, the optional approach to defining full-time status only applies to “variable hour employees” and “seasonal employees”. If an employee meets the definition of a variable hour or seasonal employee, then full-time status can be made contingent upon meeting the requirements of the measurement period described above.

However, if at hire date, an employee is expected to work 30 hours per week for the entire initial measurement period, that employee must be treated as full-time, and the measurement period rules would not apply. For these regular full-time employees, the 90 day waiting period limit applies.

VARIABLE HOUR EMPLOYEE DEFINED

According to the guidance, a new employee is a variable hour employee if:

• Based on the facts and circumstances at the start date, it cannot be determined that the employee is reasonably expected to work at least 30 hours per week. 
• A new employee who is expected to work 30 hours per week may still be a variable hour employee if their period of employment is expected to be of limited duration, and it cannot be determined that the employee is expected to work full-time over the initial measurement period. 
• Example: a retail worker hired at more than 30 hours per week for the holiday season, who is expected to continue working after the holiday season, but is not expected to work at least 30 hours per week after the holiday season

SEASONAL EMPLOYEES

The ACA addresses the meaning of seasonal worker in the context of whether an employer meets the definition of an applicable large employer; however, the statute does not address how the term “seasonal employee” might be defined for purposes of determining the amount of any assessable payment. Due to this, the IRS states that “through at least 2014, employers are permitted to use a reasonable, good faith interpretation of the term seasonal employee for purposes of (these rules)…” It is expected that the IRS will release additional guidance on seasonal employees in the future.

OTHER IMPORTANT ELEMENTS OF THE FULL-TIME EMPLOYEE RULES

SPECIAL RULES APPLY TO NEW EMPLOYEES

For new employees, the measurement period and the administrative period combined may not extend beyond the last day of the first calendar month on or after the one-year anniversary of the employee’s start date. In other words, the stability period (and coverage) must begin no later than 13 plus a fraction of a month after the employee’s hire date.

VARIOUS CATEGORIES OF EMPLOYEES

The rules allow an employer to apply different full-time definitions for various categories of employees:

• Collectively-bargained employees and non-collectively bargained employees 
• Salaried employees and hourly employees
• Employees of different entities
• Employees located in different states

90 DAY WAITING PERIOD

Remember, however, that for new variable hour employees, coverage must begin no later than 13 months (plus a fraction of a month) after the hire date, so an employer could not impose a 12 month measurement period plus a full 90 day waiting period.

If a new full-time employee does not qualify as a variable hour or seasonal employee, the employer may not impose any more than a 90 day waiting period.

SUMMARY AND OPEN ISSUES

Notices 2012-58 and 2012-59 provide valuable guidance on an employer’s options for defining full-time status, however, a number of questions remain to be answered. The IRS has requested comments on a number of these issues including how the measurement period approach may (or may not) be applied to high turnover positions. Under the current guidance, it does not appear that an employer is allowed to impose a measurement period on newly hired full-time employees just because the position has a high turnover rate.

Obviously, if an employer’s workforce is made up primarily of full-time employees with very little variability in work hours, these rules will be of little use or interest. However, many employers with a significant number of variable hour or seasonal employees will find the safe harbor described here to be of utmost importance. Careful definition of full-time status could result in a significant reduction in the number of employees required to be offered coverage, and a decrease in the risk of potential employer penalties.

Notice 2012-58
Notice 2012-59
 

August 24, 2012

BACKGROUND

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) includes a requirement that employers maintaining group health plans notify their employees of potential opportunities for group health plan premium assistance through Medicaid and the Children’s Health Insurance Program (CHIP). The CHIP notice must be sent to all employees, regardless of their plan enrollment status, who reside in states in which the premium assistance is available. As noted in the regulations issued by the Department of Labor (DOL), if it is administratively easier to send the notice to all employees, rather than identify employees by residency, the employer is permitted to do so.

This notice must be provided on an annual basis prior to the start of the plan year, and may be sent to employees along with health plan eligibility information and enrollment packets, open enrollment materials, or the plan’s summary plan description. It should appear as a separate notice to ensure that employees will become aware of the significance of the notice. The notice may also be sent by first class mail, or if furnished electronically, can be provided as long as the requirements of DOL Regulation § 2520.104b-1(c) are satisfied.

CHIP MODEL NOTICE

The DOL has updated the model notice that employers may use to satisfy this requirement. It can be found on the DOL Website.

SUPREME COURT UPHOLDS THE AFFORDABLE CARE ACT’S INDIVIDUAL MANDATE: WHAT IT MEANS FOR EMPLOYERS AND PLAN SPONSORS

The Supreme Court of the United States (the "Court") ruled, in a 5-to-4 landmark decision that the individual mandate under the Patient Protection and Affordable Care Act ("the Act") is constitutional, although it also held that certain Medicaid expansion provisions are unconstitutional. The Act's coverage mandates remain in effect and the implementation and administration of its various mandates will need to continue. Although the Act was upheld we expect that the legal challenges to health care reform are far from over.

BACKGROUND AND PROCEDURAL HISTORY

A variety of plaintiffs, including 26 states, challenged the constitutionality of the Act. The challengers argued that Congress exceeded its authority when it established the individual mandate, and that the Medicaid expansion provisions exceeded Congress' Spending Clause powers. With respect to the individual mandate, the plaintiffs argued that the Constitution does not grant Congress the power to require private citizens to buy a private product from a private enterprise. The Obama administration responded that Congress had the authority to establish this mandate under the power to regulate commerce (the "Commerce Clause") and the power to "lay and collect taxes" (the "Tax and Spend Clause"), each of which is set forth in Article I of the U.S. Constitution.

As to Medicaid expansion, the challengers asserted that the Act unconstitutionally coerced states to expand Medicaid by threatening to withhold all federal Medicaid grants for non-compliance. The administration countered that the Medicaid expansion provisions were mere modifications of the existing program that offered financial inducements to comply with the new law. The lower courts generally divided along four lines: (i) the individual mandate and the entire Act was constitutional; (ii) the individual mandate was unconstitutional but severable from the rest of the Act; (iii) both the individual mandate and the entire law was unconstitutional; and (iv) the issue was not ripe for review because of the Anti-Injunction Act, which prohibits taxpayers from preemptively seeking to stop the government from assessing any tax before it is imposed.

THE SUPREME COURT'S RULING

As noted, in a much anticipated decision, the Court upheld the Act as a constitutionally valid exercise of congressional power. There were four separate opinions on the various issues, with Chief Justice Roberts writing for the Court. 

The Court upheld the individual mandate as constitutional, on the basis that it is within Congress' authority under the Tax and Spend Clause. In so ruling, the Court explained: "The Federal Government does not have the power to order people to buy health insurance [but it] does have the power to impose a tax on those without health insurance." Interestingly, the Chief Justice agreed with four other Justices, ruling that the individual mandate exceeded Congress' authority under the Commerce Clause, noting that the Commerce Clause does not authorize Congress to order individuals to engage in commercial activity. However, the Chief Justice determined that the Court should resort to "every reasonable construction . . . in order to save a statute from unconstitutionality." The Tax and Spend Clause, which grants Congress broad powers to assess and collect taxes, provided a basis for a reasonable construction that would permit the Court to find the Act constitutional.

Separately, the Court held that the Act's Medicaid eligibility expansion provisions were unconstitutional because the government cannot coerce states to expand Medicaid by threatening to withhold existing federal Medicaid funds. In other words, even non-participating states must still receive existing Medicaid funding. Further, the unconstitutional part of the Medicaid provisions could be severed and remedied, leaving the remainder of the statute fully operable.

WHAT THE RULING MEANS FOR EMPLOYERS AND PLAN SPONSORS

Generally, the ruling means that it is back to business as usual for employers and plan sponsors, who must continue to implement the Act's various coverage mandates.

Although the Act was deemed largely constitutional, issues concerning the implementation and administration of the Act's various coverage mandates may be litigated in years to come. For example, dozens of Catholic dioceses and schools filed lawsuits in a number of states charging the Act's contraception coverage requirement violates their rights under the First Amendment to the U.S. Constitution. Separately, employers and plan sponsors could face litigation over whether the Act's coverage mandates were implemented and administered correctly. These issues will likely be among the next round of challenges to, or under, the Act.

In the near term, employers and plan sponsors must continue implementing the Act's various reforms and coverage mandates. The Act's various reforms and mandates in effect or coming into effect in 2013 include:

• Form W-2 reporting requirement (for larger employers for the 2012 tax year)
• $2,500 limit on employee contributions to health flexible spending accounts (FSAs) (for plan years beginning in 2013)
• Summary of Benefits and Coverage requirements (for open enrollment periods starting on or after September 23, 2012)
• Requirement for employers to notify employees of the availability of health insurance exchanges (March 2013)
• Expansion of FICA to include an additional 3.8% tax on the unearned income of high income individuals (for the 2013 tax year); 
• 0.9% Medicare payroll tax increase on high income individuals (for the 2013 tax year).

Additional coverage mandates and market reforms become effective in 2014, including:

• The "pay-or-play" mandate
• Employer certification to the U.S. Department of Health and Human Services regarding whether its group health plan provides "minimum essential coverage"
• Increase in permitted wellness incentives from 20% to 30%
• For large employers (200+ employees), automatic enrollment of new employees in a group health plan (effective date unknown)
• 90 day limit on waiting periods
• Coverage under non-grandfathered plans for certain approved clinical trials
• Initial phase of the Medicare Part D "donut hole" fix, which will completely eliminate the Medicare Part D coverage gap by 2020
• Guaranteed availability and renewability of insured group health plans
• Prohibition on preexisting condition exclusions
• Complete prohibition on annual dollar limits.

In addition, states will be required to have their health insurance exchanges up and running by 2014. The rules governing many of these mandates and the exchanges have not yet been drafted by the regulators. Thus, employers and plan sponsors should move carefully through the implementation phase of these mandates and continue to work closely with qualified advisors to attempt to make informed decisions that comply with applicable law.

WHAT THE SUPREME COURT'S RULING ON MEDICAID ELIGIBILITY MEANS

In 2014, the Act called for an expansion of Medicaid eligibility from incomes below 100% of the federal poverty level to incomes below 133% of the federal poverty level (in effect 138% of the federal poverty level due to an additional 5% income disregard provided under the Act). Under the Court's ruling, states may decide to forego the Act's Medicaid expansion provisions. If states do not expand Medicaid coverage, individuals who would have been eligible for Medicaid will now likely find coverage available under the Act's health insurance exchanges. In addition, these individuals could be eligible for federal subsidies for exchange-based coverage.

The impact of this on employers may be an increased exposure to shared responsibility payments under the Act's "pay-or-play" mandate for the following reasons. Under the "pay-or-play" mandate, employers are responsible for a shared responsibility payment if the employer either fails to offer group health plan coverage or offers coverage that fails to meet certain quality and affordability standards. In addition, the payment is imposed only if an employee receives a federal subsidy for, and enrolls in, coverage through a public health insurance exchange.

Therefore, in states that do not expand their Medicaid eligibility, the affected employees will potentially be eligible for a federal premium subsidy for exchange coverage. For example, an individual whose income puts him or her at 120% of the federal poverty level will not be eligible for Medicaid if his or her state declines to participate in the Act's Medicaid expansion. Such an individual may put his or her employer at risk for a shared responsibility payment under the "pay-or-play" mandate if the employer's plan fails certain quality and affordability standards (generally, if premiums for single coverage exceed 9.5% of the employee's household income or if the plan fails to provide at least a 60% "actuarial value") and the individual enrolls in coverage through a public health insurance exchange.

Content provided by Proskauer Rose.

Tips for Business Before and After a Flood

July 12, 2012

So far, the summer of 2012 has been a season of weather challenges and contradictions. Wildfires in the west, unrelenting heat waves across many parts of the country, and, in northeastern Minnesota and northwestern Wisconsin, record-setting rainfall and flooding in mid-June. With rainfall amounts ranging from six to 10 inches, the area suffered damage to road infrastructure and flooding of rivers and streams, with up to $80 million in estimated damage to Duluth’s infrastructure alone, according to city officials.

After a flood, the impact on the residential and business communities can be both overwhelming and long-lasting. And for those companies don’t have flood insurance, the losses can be financially devastating as well. Almost 40 percent of small businesses never reopen their doors following a disaster, according to the National Flood Insurance Program or NFIP. Even just a few inches of water can cause tens of thousands of dollars in damage, with statistics from NFIP showing that, in a five-year period (2006 to 2010), the average commercial flood claim amounted to just over $85,000.

Forewarned is forearmed — and with that in mind, Angela Wheeler, RJF claims consultant and specialist on property damage, provides some recommendations on how to safeguard your company from flood damage and what to do after a flood occurs, as well as some general flood safety tips.

General flood preparedness tips

Know your environment. If you’re near a body of water or in a high-risk flood zone, you are more likely to experience flooding and may need to take more drastic steps such as establishing a relationship with a sandbagging contractor. However, anywhere it rains it can flood, according to the NFIP, and the causes can range from hurricanes and overtopped levees to outdated or clogged drainage systems and rapid accumulation of rainfall.

Be proactive

Develop an evacuation plan for employees as well as a strategy for minimizing damage to equipment, inventory and the structure itself. Identify off-site locations that can serve as warehouse for good and equipment, and, if necessary, as temporary business locations until all repairs and clean-up are completed.

Update your records

Maintain an accurate inventory of all equipment, vehicles and inventory, and keep a copy (along with visual proof such as pictures or videos) either off-site or in a cloud-based (online) location, where it can be easily accessed.

Purchase flood insurance if appropriate>

Most flood insurance policies are issued by the National Flood Insurance Program, which is federal government program. It’s important to work with a knowledgeable insurance agent who understands this program, your business and any gaps that may exist. These gaps can often be filled with supplement insurance coverages.

Four Specific Steps To Help Mitigate Flood Damage

While some natural disasters (hurricanes, for example) provide plenty of warning before they strike, others, such as tornadoes and floods, can catch inhabitants unawares, says Wheeler. “It’s too late when the waters are rising to start developing a flood crisis plan. Businesses need to think ahead to what damages can occur in the event of a flood, and evaluate what they can do in advance to minimize the impact.”

Check the location of critical building equipment

For businesses in a Special Flood Hazard Area, the Institute for Business & Home Safety (IBHS) recommends that electrical, plumbing and Heating/Ventilation/Air Conditioning (HVAC) equipment be installed above either base flood elevation (BFE) or, ideally, design flood elevation. Equally important is to create a list of the computer equipment, hardware and software needed to fulfill critical business functions, and a source for replacement in case the existing equipment is damaged.

Evaluate your building’s structure

According to IBHS, buildings in Coastal A Zone or V Zone should have an open foundation (piles, piers, etc.) or breakaway wall system for any portions of the building below the BFE, while those in A Zone (coastal or non-coastal) should have a minimum of two openings or flood vents on each opposite exterior walls for each enclosed area. The vents should be one foot above grade with at least 1 square inch of opening for each square foot of enclosed area.

Conduct a Vulnerability/Readiness Assessment

You may be an expert at running your business but not necessarily at identifying disaster-related weaknesses. As part of this assessment, talk with your insurance adviser to discuss the exposures you have and what insurance options may be available.

Develop a relationship with a remediation contractor

Firms like Restoration Professionals, ServiceMaster, ServPro and others specialize in helping employers get back on their feet following disasters like floods. Water damage costs increase over time, and having a contractor who already knows you can help assure your damage gets dealt with sooner rather than later.

Three Immediate Steps To Take After A Flood

“Do not underestimate the damages water can cause. It can be catastrophic,” emphasizes Wheeler. “If left unattended, the building will become inhabitable and ultimately be condemned. A quick response to water damage reduces costs and the amount of interruption.”

Take necessary precautions

Floodwaters can leave behind dangerous debris and contamination, both visible and invisible. Make sure all workers have current tetanus shots and wear appropriate protective gear for cleaning flood damage: gloves, clothing, hearing protection and at least N-95 NIOSH-approved respiratory masks.

Document and report the damage

Use a camera to document both contents and the structure itself, paying particular attention to damaged areas. Provide the visual record along with a copy of your current inventory to your insurance agent. Ask about coverage for water damage due to sump pump failure, sewage back-up or broken pipes, which might be in your policy even if you lack flood insurance.

Begin the clean-up process

Remove contents and clutter to promote air circulation, storing damaged or discarded items outside the building or in a separate location until the insurance claim is processed. Open windows and doors, and use fans and dehumidifiers to expedite the drying process. Clean and disinfect every surface. If water damage is substantial or mold growth covers more than 10 square feet, consult a professional specializing in floodwater remediation or experienced in cleaning mold.

Useful Resources

For more information and assistance, visit these sites:

• Ready.gov offers tips on developing a preparedness program on its Preparedness Planning for Your Business page at www.ready.gov/business.
• Information about the National Flood Insurance Program and additional flood-related information is available at FloodSmart.gov.
• The Centers for Disease Control and Prevention (www.cdc.gov) provides clean-up recommendations at its Storm, Flood, And Hurricane Response section while the Mold Prevention Strategies and Possible Health Effects in the Aftermath of Hurricanes and Major Floods page focuses specifically on mold prevention and cleanup strategies.

MARSH & MCLENNAN AGENCY ACQUIRES SECURITY INSURANCE SERVICES

ACQUISITION EXPANDS MMA’S PRESENCE IN WISCONSIN

FOR IMMEDIATE RELEASE

White Plains, New York, July 9, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced the acquisition of Security Insurance Services Inc., one of the largest insurance agencies in Wisconsin. Terms of the transaction were not disclosed.

Established in 1983, Security Insurance Services has annual revenue of approximately $10 million and offers a broad range of property/casualty and employee benefits products and services to a variety of businesses and individuals throughout the Midwest. It has particular specialties in the senior living health care, construction, and manufacturing industries.

Security Insurance Services will operate as a division of RJF, a Marsh & McLennan Agency company, expanding MMA’s presence in Wisconsin. All of Security Insurance Services’ 65 employees, including President and CEO Scott Naze, will join MMA’s upper Midwest hub and continue to work out of their existing offices in New Berlin and Appleton, Wisconsin.

“Security Insurance Services is a high-quality firm with a well-earned and longstanding reputation for professionalism and service excellence,” said David Eslick, chairman and CEO of Marsh & McLennan Agency. “We’re thrilled to welcome the leadership and employees of Security Insurance Services to MMA and look forward to growing our market position in Wisconsin.”

“We’re excited to be joining forces with such a dynamic, growing firm,” Mr. Naze said. “As part of MMA, our clients will enjoy the same superior service they’ve come to expect from us while gaining new and enhanced capabilities and resources to meet their evolving risk management and employee benefit needs.”

Security Insurance Services is the 19th acquisition Marsh & McLennan Agency has completed since it embarked on its strategy in November 2009 to build a preeminent national agency primarily serving the needs of the middle market. MMA currently generates approximately $365 million in annualized revenue.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contacts

MMA's Acquisition of Security Insurance Services

Security to collaborate with RJF

July 9, 2012

RJF and Marsh & McLennan Agency LLC recently acquired Security Insurance Services, based in Milwaukee. This is RJF’s third acquisition since joining Marsh & McLennan Agency, and the 19th for Marsh & McLennan Agency as a whole, bringing MMA’s total revenue to around $365 million.

While we continue pursuing acquisitions as a growth strategy, we will only select quality firms that put clients’ interests first, provide innovative risk prevention solutions, deliver exceptional service and expertise, and nurture their entrepreneurial environment. Security exemplifies these attributes and their culture fits well with ours and those of other MMA firms nationwide.

We’re excited about the additional capabilities, knowledge and market leadership we have gained with this transaction and look forward to delivering ever greater service to clients.

MORE INFORMATION

By Tim Gallagher, Director of Commercial Lines

July 6, 2012

On Friday, June 29, Congress extended the National Flood Insurance Program (NFIP) until September 31, 2017, and vowed to make it more financially sound. Since 2008, Congress has approved only short-term extensions, due in part to disagreements over rate increases to make the program more financially viable. Raising the cap on rate hikes from 10% to 20% on annual premium charges is part of the new law under the extension.

The program was self-financing through annual premiums collected from participating property owners until 2005. Hurricanes Katrina and Rita overwhelmed the NFIP with claims, which created a debt of $18 billion to the U.S. Treasury. As a result of this deficit, the new law will contain the following changes:

• Raise the cap on annual premium hikes from 10% to 20%.
• Require annual premium increases of 25% for properties that are currently subsidized, such as vacation homes or homes with repeated claims.
• Set minimum deductible levels of $1,000 or $2,000, depending upon the age of the home and the amount of coverage.

The good news is that the NFIP will remain in place uninterrupted until September 31, 2017. A two-month lapse in the program in 2010 resulted in the cancellation of approximately 1,400 home sales per month. However, the new program comes with a higher cost to certain property owners over the coming years in an effort to rebuild financial stability.

The NFIP was established in 1969 in an effort to fill the void that private insurers were reluctant to fill. The program allows property owners—both residential and commercial—in participating communities to buy insurance against flood losses. There are 5.6 million property owners nationwide participating in the program.

June 28, 2012

In what may be the most anticipated decision in at least a generation, the Supreme Court has upheld the constitutionality of the so called “individual mandate” contained in the Affordable Care Act (ACA). In a split 5-4 decision, the court has ruled that it is constitutional for the government to require individuals to maintain health insurance or pay a tax if they fail to do so. Since the individual mandate was held to be constitutional the court did not need to rule on issues related to the rest of the law. Consequently, by taking this position on the individual mandate, the court has affirmed that the entire ACA is constitutional, other than a particular provision related to Medicaid expansion explained below.

Medicaid Expansion

The ACA expands Medicaid eligibility to anyone with an income of less than 138% of the Federal Poverty Level (FPL). The federal government will initially pay 100% of the costs of newly Medicaid eligible individuals. States will be responsible for 10% of those costs in future years. Under current ACA rules, states are required to accept expanded Medicaid eligibility or risk losing all federal Medicaid funding.

In a separate portion of the decision, the court ruled that the federal government cannot deny existing Medicaid funds to states that choose not to participate in the Medicaid expansion. This creates an opportunity for individual states to opt out of the expansion without losing existing federal Medicaid funding.

Effect on Employer Sponsored Plans

The decision by the court means that the elements in the ACA which directly impact employer sponsored plans remain in force. Employers will need to implement requirements such as distribution of the new Summary of Benefits and Coverage (SBC), and the limit on health FSA elections scheduled to go into effect in the upcoming months. We also expect regulatory agencies to move forward with pending guidance such as the IRS’s proposed alternative definition of full time status.

Obviously the results of the elections this fall have the potential to alter the course of health reform. However, it is now clear that employers need to continue to prepare for the impact the ACA will have on their plans, with an eye toward being ready to implement changes to benefit strategies beginning in 2013 if necessary.

While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept  liability  for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it. This publication is distributed on the understanding that the publisher is not engaged in rendering legal, accounting or other professional advice or services. Readers should always seek professional advice before entering into any commitments.

by Lindsey Hanson, MEHS, CSP, CHST, RJF Risk Consultant

A recent Harris Poll found that 98% of people believe that using cell phones while engaged in the act of driving a motor vehicle is “somewhat” to “very dangerous”. Yet, everyday on the roads we see more and more people driving distracted.

Distracted driving is defined as any activity that could direct a person’s attention away from the primary task of driving. The three main types of distractions include visual, manual and cognitive.

• Visual distractions happen when the driver’s eyes are taken off the road. They include texting, emailing, grooming, and adjusting radio and navigation systems.
• Manual distractions happen when the driver removes their hands from the wheel. Reaching for an object, eating, drinking are all examples of manual distractions.
• Cognitive distractions occur when a drivers mind is off the task at hand. Phone conversations, including hands free options are a main source of cognitive distraction. How many times have you driven home while on the phone, placed your car in park and thought, “wow, I have no recollection as to how I got here.”

The statistics regarding distracted driving are startling;

• A University of Utah study, distracted drivers are more dangerous on the road than those drivers with a blood alcohol level of .08%. 
• The National Highway Traffic Safety Administration (NHTSA) estimates that approximately 25% of police-reported crashes involve some form of driver inattention-the driver is distracted, asleep or fatigued, or otherwise “lost in thought”.
• Text Messaging creates a crash risk 20 times worse than driving while not distracted, according to a Virginia Tech Transportation Institute study. 
• Distracted driving is the #1 killer of American teens, according a study by the Children’s Hospital of Pittsburg, State Farm Mutual & NHTSA.

If those statistics aren’t enough, consider that sending a text message while going 55 miles per hour, takes your eyes off the road for an average of 4.6 seconds – equivalent of driving the length of an entire football field, blindfolded.

Some practical tips to avoid it include placing your phone out of sight (in a glove box or trunk), turning all notifications off, putting your phone on silent mode, have a passenger text or make a phone call for you, or downloading a phone application that will restrict communications. Many of these applications direct incoming calls to your voicemail and text messages are held until the vehicle is not in motion.

Talk to your employees, family and friends about the dangers of distracted driving. Ask all driving members in your family to take a pledge to end distracted driving.

Learn the Facts About Upcoming Changes to E-Mod Calculations

By now you’ve probably heard that the National Council on Compensation Insurance (NCCI) will be changing how it calculates the workers’ compensation experience mod (mod or e-mod) by adjusting the split point upward. You may have also heard these changes will have a negative effect on you. Unfortunately, there is a lot of misinformation out there, and while some employers will see negative consequences from this change, you may very well see some positive changes. 

This brief article will attempt to simply explain what’s happening and who will be affected. It will not cover every detail, but it should provide a working understanding of the issue so you can filter good information from bad, and know when you need to dig deeper and seek expert advice.

What is the split point and why is it changing?

To understand the split point, you first need to know that the mod uses a formula that separates your losses into two categories: Primary and Excess. The split point is a dollar-value point that separates the loss into the primary and excess amounts. Primary losses have a greater overall impact on your experience mod, so a typical incorrect message being communicated to businesses is that because the split point is increasing, so is your mod. This view is too simplistic, leaves out some important information, and can lead to inaccurate assumptions.

The current split point is $5,000 and has been for 20 years. NCCI feels that, with inflation, it is time to increase the split point to $10,000 in 2013, 13,500 in 2014 and an indexed $15,000 in 2015. The split point will then continue to be indexed against inflation and will change every year going forward.

Changes to the D-ratio (Discount ratio)

What is often neglected from discussions is that in addition to the changes to the split point, NCCI is also making changes to the D-ratio (discount ratio). The D-ratio is used in the mod formula to weight the effect of primary losses on the overall modifier. NCCI has not published the updated D-ratios, but suggests they will increase by approximately 50%. The increase in D-ratio will offset a portion of the impact of the increase in the split point.

The Overall Effect of NCCI’s Mod Formula Changes

Overall the new formula is intended to be premium neutral. According to NCCI, the effect of the change will be as follows:

• 8.1% of employers will see a decrease between 0.05-0.10
• 38% of employers will see a decrease between 0.05-0.02
• 35.8% of employers will see a deviation of +/- 0.02
• 4.3% of employers will see an increase between 0.02-0.05
• 6.5% of employers will see an increase between 0.05-0.10
• 7% of employers will see an increase of more than 10%  

As you can see, a larger percentage of business will see a decrease than those that will see an increase. NCCI reports that as a rule of thumb, those businesses with good experience will see a decrease, while those with poor experience will see an increase. Those businesses with a current mod near 1.0 will be harder to predict.

Minnesota-specific work comp e-mod changes

• Overall there will be no measurable change to the experience mod level in the state
• 82% of rated business will see decrease or increases of less than 2%
• 12% will see an increase between 0.02-0.10
• 6% will see an increase greater than 0.10
• Future increase in the split point should affect only 5% of business

Wisconsin-specific work comp e-mod changes

Wisconsin’s rating bureau, the Wisconsin Compensation Rating Bureau (WCRB) is also making changes to its formula, but essentially it will follow the changes set out by the NCCI. 

Key Lessons

The important lesson in all this is that by controlling your losses, you will also control your experience mod. Those businesses that have not controlled their losses and have a poor mod will likely be further punished under the new model, but more importantly, those that have maintained a good loss ratio, and are enjoying a good mod, are likely to receive even greater rewards.

It’s also important to keep in mind that any e-mod changes that occur can be trumped by the insurance marketplace, which is currently changing, ushering in higher prices and less favorable terms. Final premiums are being determined more frequently by losses rather than the experience mod. No longer are carriers fighting to add premium for growth. They are aggressively pursuing profitability. 

What to do

First of all, don’t panic. Chances are that you won’t be affected too dramatically, as illustrated by the above numbers. Secondly, if you think you are one of those employers who may be negatively affected, have your agent run a forecast, modeling your e-mod and its potential impact on your business.

References

MARSH & MCLENNAN AGENCY ACQUIRES PROGRESSIVE BENEFIT SOLUTIONS

BENEFITS FIRM EXPANDS RUTHERFOORD’S CAPABILITIES IN NORTH CAROLINA

White Plains, New York, June 8, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of broker Marsh Inc., today announced that it has acquired Progressive Benefit Solutions (PBS), a $5 million revenue employee benefits agency based in Raleigh, North Carolina. Terms of the transaction were not disclosed.

PBS will operate as a division of Rutherfoord, a Marsh & McLennan Agency LLC company, expanding Rutherfoord’s employee benefits capabilities and resources in the Raleigh market. PBS offers a wide-range of health, wellness, compliance, and executive compensation products and services to midsize clients. John McDonnell, William Salmon, Rick Kelly, and the rest of the PBS team will join Rutherfoord and continue operating out of PBS’ existing Raleigh office. The transaction is the fourth complementary acquisition for Rutherfoord/MMA.

“We are delighted to welcome Progressive Benefit Solutions’ talented and experienced employee benefit professionals to Rutherfoord,” said Thomas R. Brown, Vice Chairman of Rutherfoord/MMA. “With PBS, we are able to offer greater resources and a broader platform to serve the needs of our clients in Eastern North Carolina and beyond.”

“We’re thrilled to be joining Rutherfoord/MMA and view this move as an excellent opportunity for PBS to build on the success it has built over the last 14 years,” said William Salmon, Co-Founder of PBS. “As a part of Rutherfoord/MMA, our clients will now have access to a wider range of products and services to address their emerging and evolving needs.”

Commenting on the transaction, David Eslick, Chairman and CEO of Marsh & McLennan Agency said: “PBS is a welcome addition to our expanding roster of high-quality agencies that now make up Marsh & McLennan Agency. Spoke acquisitions such as this are an essential component of our strategy to become one of the nation’s preeminent insurance agencies serving the needs of the middle market.”

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has approximately 26,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of professional services companies offering clients advice and solutions in the areas of risk, strategy and human capital. With 53,000 employees worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies is also the parent company of Guy Carpenter, a global leader in providing risk and reinsurance intermediary services; Mercer, a global leader in human resource consulting and related services; and Oliver Wyman, a global leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

June 8, 2012

Many business owners believe that, just by having a property insurance policy, they are guaranteed a loss will be fully reimbursed. However, policyholders need to understand how their insurance coverage will respond in the event of a major disaster and what their role is in the process. After a major event, policyholders should be prepared to secure the loss site, notify the insurer, and prepare to rebuild.

Having a properly written insurance property policy will protect businesses during the process and help them return to operational status more quickly. In this interview, Angela Wheeler, RJF claims consultant and specialist on property damage, provides a thumbnail look at commercial property insurance policies, endorsements and enhancements. (For more information or to discuss specialized needs, consult with your insurance provider or carrier.)

UNDERSTANDING COMMERCIAL PROPERTY INSURANCE POLICIES

“Commercial property policies are not meant to be a maintenance policy. Rather, they are intended to protect business owners in the event of natural disasters,” explains Wheeler. “However, not all natural disasters are covered. It’s critical that policyholders read and understand their policy coverage — its limitations and exclusions as well as endorsements and add-ons — to ensure coverage in the case of natural disasters."

This can be a challenging task, especially for small to middle market companies, adds Wheeler. While large companies generally have risk management teams in place to review policies and assess needs, at smaller companies, that task often falls to the owner, who is overburdened with other management responsibilities and unaware of the risks, ramifications and potential outcomes in the event of a disaster.

“As a result, says Wheeler, “they can be unprepared for the impact of a natural disaster on their businesses, which can be devastating.”

Correct Insurance Coverage Can Be Tricky

While a commercial property insurance policy is intended to protect business owners in the event of natural disasters, not all such events are covered in a standard policy. For example, hurricanes, floods, earthquakes, mudslides and sewer back-ups require additional coverage in the form of endorsements to protect businesses against these perils.

“Business owners and risk managers need to discuss these options with their agent as well as ask what other coverage should be added to the existing policy,” says Wheeler. “It is crucial to walk through the entire facility, as well as any additional structures and the surrounding property, to identify areas that may be compromised should a natural disaster occur. It’s too late after the event to realize that something was overlooked.”

With so many factors to consider, it’s imperative that company owners know their business, understand their needs and use insurance as a risk management tool. They should also be able to rely on the expertise of their agent to provide them with insights and recommendations as well as endorsements that are more industry-specific.

POLICY ENDORSEMENTS FOR POST-DISASTER EVENTS

Wheeler recommends that business owners evaluate and consider the following policy endorsements to protect against natural disasters. “If a client sustains damages after a large event, these endorsements are typically a welcome benefit. A large, once-in-100-years event, speaks to severity exposure versus frequency. Having the right endorsements can be critical to an operation after a large loss.”

Sewer Backup

If you own a building that has indoor drains this could be a crucial coverage. Most policies have some type of coverage for sewer backup, but is it enough? Locate all indoor drains and evaluate the area adjacent to them. Is the space finished? Is there valuable equipment or inventory near these drains? Is a furnace or elevator shaft located close by and at risk should the sewer back up?

“Don’t count on the city to pay your claim in case of a sewer back-up,” warns Wheeler. “Cities most often do not pay these types of claim and the process could take a long time."

This is also a good time to verify that the check valves, which prevent floodwaters from backing up into the building, on underground sewer or drainage lines are operating properly. As a final measure, make sure the location of these drains is clearly marked on the structure’s floor plans.

Business Interruption/Business Income Insurance

This coverage comes into play when a covered event results in the business curtailing, interrupting or even stopping operations at its existing location. The funds usually cover the cost of lost income.

Business income coverage has been typically calculated in the policy for a six-month time period. However, Wheeler notes that it is now shifting to a year, since it can take a substantial amount of time for the business to return to full operation. “Each business is different,” she emphasizes. “Business owners need to evaluate what all would be involved in getting back up and running after a worst case scenario incident. For example, would the company be able to tap into supplies, materials and equipment at other plant locations unaffected by the disaster? Could operations be shifted to other sites?”

Extra Expense Provision

This coverage reimburses the policyholder for additional losses that result from a covered loss, such as renting space at another location to continue to business operations, expediting costs, temporary equipment, etc.

“It may also include expenses associated with advance preparation undertaken to minimize the impact of the disaster, such as moving valuable equipment from a lower level to a higher one when flooding is anticipated,” says Wheeler. “However, should the expected event not occur, the policyholder is usually not reimbursed for those costs. It’s critical that policyholders check with their agent first."

Debris Removal

After a disaster, clean-up is costly, and can involve not only removal of debris (anything from trees to garbage to structural materials) but also, if needed, demolition of a building itself, with wrecking and hauling companies called upon to provide their services before rebuilding can take place.

“Again, given how important this coverage is, business owners should discuss projected costs with their agent, keeping in mind that these expenses are separate from the cost of removal,” says Wheeler. The specific community can affect the expected costs, given that permits may be needed for the dumpster, the equipment, shutting down the street or parking, and other fees may be required.

Pollution Cleanup and Removal

While during normal operation a business may be fully in compliance with all rules and regulations established by the EPA and other regulatory bodies, that can quickly change in the event of a natural disaster. Power loss or damage to the structure can affect normal functioning and make it difficult or impossible to control pollutants.

“Pollution cleanup and removal coverage is critical for businesses that are near a body of water or a storm drain,” says Wheeler. “Since it is not part of a standard policy, it can expose the company to lawsuits and governmental fines.”

For example, says Wheeler, a fire at a manufacturing plant can lead to a runoff full of contaminants and pollutants into water sources, while the resulting smoke can contaminate the air for miles around the facility. In a case like this, the EPA and other environmental agencies will be testing the air, soil and water to evaluate pollution levels. Depending on the outcome, the company can face huge fines as well as lawsuits.

Ordinance and Law or Increased Cost of Construction

After a devastating event, rebuilding can be a daunting task. This can be further complicated by any new ordinances or laws that took effect after the original structure was constructed but now requires compliance.

“Depending on a building’s age, there could be changes in building codes that require new systems or relocation of existing systems,” Wheeler explains. “This endorsement covers the costs associated with complying with these new codes, ordinances or laws.”

However, the endorsement varies by insurer in both the provisions and the limits of insurance. “It’s imperative that business owners become familiar with their community and any changes to these regulations when they are determining the amount of coverage they need,” Wheeler adds.

Fire Department Service Charge

In the case of an extensive fire, a fire department may need to call for assistance from neighboring communities. While the help is welcome, it comes at a price, which can be levied again the affected business. Having a fire department service charge endorsement on the policy will help cover this expense.

DIFFERENCE IN CONDITIONS COVERAGE — WHO NEEDS IT?

A Difference in Conditions policy (DIC) is a separate policy designed for business that have exposures to named storms (hurricanes), flood, earth movement (mudslides) or earthquakes. DIC policies also can be used to supplement coverage in operations with unusual transit, burglary, and international exposures. While it’s written in conjunction with an underlying property policy, it has separate deductibles and limits of insurance, with each DIC policy tailored to the specific needs of the policyholder.

CALCULATING THE COVERAGE

While having the right components in place is critical, it’s equally important to have the right dollar figure for each section, from valuing inventory and equipment to covering the cost of rebuilding. This is not the time for guesswork or estimates. Instead, says Wheeler, policyholders should have an up-to-date inventory of their assets and, if relevant, their resale items using replacement cost figures.

Annual reviews with agents or brokers are essential, with additional policy evaluations if the business expands operations, opens additional locations or institutes any other significant changes, to ensure proper coverage based on the company’s assets, geography, risk factors and needed coverage limits.

As a broker, RJF not only helps its clients get the best coverage but also acts in an advisory capacity. “Our team meets with client midway through the year to discuss the business operations and ensure they have proper insurance coverage in place. RJF works with employers to identify risks and proactively install counter measures to protect their assets and their people from the negative effects of natural disasters.”

While increasing coverage or adding endorsements might be reflected in an increase in the premium amount, Wheeler cautions that business owners shouldn’t be “penny wise and pound foolish.” “After experiencing a disaster or suffering a loss, I find that business owners are, more often than not, surprised at how expensive it is to rebuild, repair or replace what was lost and how long it takes to recover,” noted Wheeler. “They tend to underestimate the cost and recovery time. I’ve never worked on a claim where a policyholder has said, ‘I had too much insurance.’ It’s usually the opposite scenario. When evaluating coverage, business owners need to use ‘worst case’ thinking: ‘What is the worst thing that can happen and how will my business be affected should a natural disaster take place?’ This ensures that the policy they have will protect them in the event of a disaster.”

Under the Affordable Care Act (ACA), health insurers are required to disclose the percentage of medical plan premium that is spent on claims and health quality improvement initiatives versus the portion spent on administration, marketing and insurance company profits. Under the Medical Loss Ratio (MLR) rules, insurers in the large group market (100+ employees) must maintain a loss ratio of no less than 85%, while insurers in the individual and small group markets must maintain a loss ratio of no less than 80%. Keep in mind that the MLR rules only apply to fully-insured plans. Self-funded medical benefit plans are not subject to these requirements.

Beginning in 2012, insurers must report their prior year MLR data to the Department of Health and Human Services by June 1 and if the minimum standards described above are not satisfied, premium rebates must be provided to policyholders no later than August 1.

So what happens to these rebates once they are received by policyholders? In the case of individual policies, the answer is simple: the money flows directly into the pocket of the policy owner, which is typically the individual insured under the contract. With group insurance plans, however, the answer is a bit more complex.

IT'S A MATTER OF PLAN ASSETS

The Employee Retirement Income Security Act’s (ERISA) prohibited transaction and exclusive benefit rules require that plan assets be used solely for the benefit of plan participants and their beneficiaries. So, to the extent that MLR rebates are deemed to be plan assets, they immediately become subject to these rules. In situations where the benefits are paid through a trust and either the plan or the trust is the policyholder, the entire MLR rebate will be a plan asset and flow directly back into the trust for the benefit of plan participants.

However, if there is no trust involved and the employer is the policyholder (which is the case for the vast majority of employer-sponsored health plans), the rebate’s status becomes more difficult to determine. In these situations the DOL has ruled that only the portion of the rebate that is attributable to participant contributions will be considered plan assets.

This means plan sponsors will need to calculate the percentage of total plan cost contributed by employees and then apply this same percentage to the rebate received, in order to determine the portion of the rebate that must be treated as plan assets. Similar rules will need to be followed by the fully-insured plans of state and local governments and by fully-insured church plans even though these plans are not subject to ERISA.

Although employers will need to exercise care in determining the portion of the rebate that is considered plan assets (and therefore used for the exclusive benefit of plan participants), the guidance provided by the DOL does allow employers some flexibility in this regard. For example, employers may use the rebate for the benefit of current participants rather than former participants (on whose contribution the calculation was based) where the cost of identifying and locating former participants is deemed unreasonable.

HOW CAN AN EMPLOYER USE THE REBATE? 

The portion of the rebate that is determined to be plan assets can be used in a number of ways as long as the method ultimately selected is consistent with ERISA fiduciary standards. Perhaps the most popular use will be to offset future participant contributions, a so called “premium holiday.” (Note: when applying a rebate to reduce future premiums, care must be taken to assure that participants realize the full cost reduction, lest a portion of the rebate be deemed to inure to the benefit of the employer, a prohibited transaction under ERISA.) Alternatively, the rebate might be used to enhance the benefits available under the plan.

Technically, the portion of the rebate due to employee contributions could also be distributed in cash to plan participants. However, where contributions are made on a pre-tax basis through a cafeteria plan, this approach will raise taxation issues for which there is no clear guidance. Employers may wish to avoid providing rebates in cash until additional guidance is provided by the IRS.

Additional guidance issued by the Department of Labor can be found in Technical Release 2011-04.

IRS PROVIDES GUIDANCE ON $2,500 HEALTH FSA LIMIT

On May 30, 2012, the IRS issued Notice 2012-40, which provides guidance regarding the effective date of the $2,500 (indexed annually for inflation) limit on salary reduction contributions for Section 125 cafeteria plan health care flexible spending arrangements (Health FSAs) and the deadline for amending plans to comply with the limit. The notice also provides relief for certain contributions that mistakenly exceed the $2,500 limit.

Under a provision of the Patient Protection and Affordable Care Act (PPACA) that becomes effective January 1, 2013, an employee’s salary reduction contributions to a Health FSA will be limited to $2,500 per “taxable year”. For Health FSA plans with plan years beginning January 1, it was clear that employers would need to restrict employee contributions beginning with the January 1, 2013 plan year. However, there was confusion regarding how the rule would apply to plans with non-calendar year plan years.

In response to concerns raised about the provision’s impact on plans with non-calendar year effective dates, the guidance issued in Notice 2012-40 specifically provides that:

• In reference to this provision, the term “taxable year” is the plan year of the cafeteria plan. 
• The $2,500 limit does not apply to plan years that begin before January 1, 2013.

Additionally, the notice states that:

• Plans may retroactively adopt the required amendments reflecting the $2,500 limit at any time through December 31, 2014 – as long the plan still operates under the $2,500 limit for any plan years beginning on or after January 1, 2013.
• For plans that have a grace period, unused salary reduction contributions for plan years beginning in 2012 or later that are carried over into the grace period will not count against the $2,500 limit for the following plan year.
• Relief is provided for certain salary reduction contributions exceeding the $2,500 limit that are due to a reasonable mistake rather than willful neglect and are corrected by the employer.
• The $2500 limit applies on an employee-by-employee basis. Thus, $2500 is the maximum salary reduction contribution each employee may make for a plan year, regardless of the number of other individuals (e.g. a spouse or dependent) whose expenses are reimbursable under the plan. 
• If each of two spouses is eligible to elect a Health FSA, each spouse may elect to make salary reduction contributions of up to $2500 to his or her Health FSA, even if both participate in the same Health FSA sponsored by the same employer.

The notice also reinforces that the $2,500 limit applies only to employee salary reduction contributions to Health FSAs and not to employer non-elective contributions such as flex credits, to other types of FSAs, health savings accounts or health reimbursement accounts, or to employee health premium contributions.

Finally, the notice requests comments regarding whether, in light of the new $2,500 limit, the use-it-or-lose-it rule should be modified to provide additional flexibility with respect to the rule and, if so, how the modification might be designed. Any comments must be submitted by August 17, 2012 and the subject line must reference Notice 2012-40.

IRS RELEASES 2013 LIMITS FOR HEALTH SAVINGS ACCOUNTS

The Internal Revenue Service (IRS) issued Revenue Procedure 2012-26 which included maximum contribution, deductible and out-of-pocket maximum limits for Health Savings Accounts and HSA-compatible high deductible health plans (HDHP) for the 2013 calendar year. These amounts are updated each year to reflect cost-of-living adjustments.

Contribution limit in 2013

• Self-only $3,250 (increased from $3,100 in 2012)
• Family: $6,450 (increased from $6,250 in 2012)
• Catch-up contribution limit for HSA-eligible individuals who are age 55 or older: $1,000 (no change)

Deductible limit in 2013

• Self-only: Not less than $1,250 (increased from $1,200 in 2012)
• Family: Not less than $2,500 (increased from $2,400 in 2012)

Out-of-pocket maximum limit in 2013

• Self-only: Not more than $6,250 (increased from $6,050 in 2012)
• Family: Not more than $12,500 (increased from $12,100 in 2012)

Upcoming risks for employers

By Bill Jeatran

May 31, 2012

There are a lot of things going on in the world outside of RJF that have a direct effect on us and our clients. Three prominent ones include the upcoming health care reform ruling by the United States Supreme Court, a changing property and casualty insurance marketplace, and the pending storm season.

While the Supreme Court is set to rule on the health care issue in June, the compliance issues and complexities of the health care systems will necessitate increasing diligence by employers, regardless of the actual ruling. At this time there is no clear direction as to which way the Court will rule. Any changes to legislation—while some may welcome them and some may oppose them—will require new and additional scrutiny by lawyers and analysts to determine what impact it will have on employers and employees.

Even if the legislation is nullified in full, both parties say they want to “fix” the health care industry. So while you won’t have to worry about how any of the planned changes of the Affordable Care Act will affect you, you’ll have to refocus on previous compliance issues while waiting and seeing what the next Congress will do to enact their prescription for the system.

The point I’m trying to make is that, while the ruling is very important, you likely don’t have the resources to devote to understanding the complexities of this system and the relevant legislation. Find someone who does, and who will keep you and your plans and employees up to date, on target and legal. Keep that trusted partner close and work with them—daily if necessary—to ensure you don’t get hit with unexpected fees, penalties or additional taxes. RJF recently launched a Web site to help keep employers aware of what’s going on in the health care arena—www.PreventHealthCareConfusion.com.

The second issue I mentioned is the changing commercial insurance marketplace. Chances are that you are not going to be able to just coast through your next renewal and get a premium reduction. We’re just not seeing that happening. Many within the insurance industry are saying that the market has shifted. Ken Crerer, president and chief executive officer of the Council of Insurance Agents and Brokers, has said recently that, “…the market has made a hard turn after two quarters of price increases and tighter underwriting.” 

RJF has been communicating this eminent marketplace change for the past two years, and we have done our best to advise our clients on the importance of establishing best-in-class risk prevention practices to prepare for and manage the impact of the market changes. 

RJF has also written about this subject over the past several months and even launched a Web site on the topic—www.PreventInsuranceRateHikes.com. Some articles we’ve written include:

• Prepare for Insurance Market Changes: Backgrounder, Fact Sheet & What You Can Do 
• Softening the Impact of a Hardening Market—Part One 
• Softening the Impact of a Hardening Market—Part Two 
• How to deal with changing commercial insurance market (written for Finance and Commerce)

As the market continues to firm, it’s more important than ever to eliminate accidents preemptively by instituting safety, health, HR and claim management practices. Improving your loss ratio is the most likely way to ensure your premiums will increase as little as possible. You and we can’t control pricing, but we can institute plans and strategies to address accidents at their core

Lastly, storm season is upon us. I was recently reminded that the tornado that roiled north Minneapolis happened just a year ago, and some residents and businesses are still recovering. It’s important to be prepared, know what to expect, and take smart precautions to reduce damage and protect yourself and your business. Getting through a catastrophe is not fun and takes time and energy, but it can be made a little easier with a team supporting you—a team that knows how carriers and adjusters think and work.

Working with a claims team that can not only help manage the insurance side of things, but also support you in handling human resource issues, finding and retaining contractors, and ensuring you stay in compliance with various requirements can help get your business back up and running as quickly as possible and reduce the impact on your future insurance premiums.

We often talk internally about our role being to help eliminate unplanned surprises for our clients. With that said, there are so many factors and forces that affect our clients’ businesses and their risk. Thank you very much for your valued business. Please continue to rely on the RJF team to help navigate the uncertainty and change affecting your business.

As we know, summers in the Upper Midwest are short yet wonderful. I hope yours is enjoyable and prosperous.

May 24, 2012

On January 13th, 2009, the Wisconsin Compensation Rating Bureau (WCRB) issued a cease and desist circular about the wage continuation practice in which carriers were not issuing employers reimbursement for wages paid to employees while out on workers’ compensation. This circular stated that an employer may still continue an employee’s wage while they are off work completely or they are unable to accommodate; however, the carrier must be notified and the carrier must issue the reimbursement directly to the employer.

As of December 14, 2011, the Minnesota Workers’ Compensation Insurers Association (MWCIA) adopted a similar stance as the WCRB. These two agencies have deemed the practice of wage continuation inappropriate when the carrier is not notified and therefore not reimbursing the the employer for the lost time wage, as this results in inaccurate reporting to the state bureau for unit statistical purposes regarding a company’s experience modification rating.

The experience modification rating is used in the calculation of an employer’s workers’ compensation premium by the insurance carrier and is intended as a measure of that employer’s safety program. If an employer has less than the expected losses; the experience modification rating will be low, resulting in a lesser workers’ compensation premium. If an employer is issuing wage continuation without receiving reimbursement from the carrier all of those claims are entered in as medical only with a 70% reduction and that employer is at an unfair advantage in regard to the experience modification rating. While both the MWCIA and WCRB allow wage continuation by employers, this practice must be communicated to the insurance carrier and both bureaus state that the workers’ compensation carrier must issue the reimbursement to the employer and report the wage loss benefits to the bureau.

Finance and Commerce: How to deal with changing commercial insurance market

May 24, 2012

RJF's Laura Moore wrote a commentary piece for Finance and Commerce, discussing some of the reasons why the commercial insurance marketplace is changing, ushering in premium increases and less-favorable terms. She provides solid evidence and rationale for what's going on and offers ideas employers can take to help reduce the impact of the hardening market on their business. 

>> View the article.

by Liz Poeschl, Meagher & Geer

May 18, 2012

The False Claims Act (FCA) is a set of statutes that are intended to discourage individuals and businesses from defrauding the government by making false claims for payment. The FCA is considered to be one of the major weapons in the Federal Government’s efforts to combat fraud, waste and abuse in contracts and grants. 

The Minnesota state legislature recently passed a Minnesota False Claims Act (MFCA) in 2009 and it became effective on July 1, 2010. With this adoption, the FCA and MFCA, and all applicable rules and penalties, apply to all projects that receive government funds, including private projects that are receiving grant funds. 

Elements of a False Claim

The FCA establishes penalties for knowingly submitting a false or fraudulent claim for payment to State, Federal and local governments. The required elements for a false claim under the FCA are: (1) claim; (2) knowingly; (3) false.

What is a Claim? 

A claim is any statement or records intended to cause the Government to pay when it otherwise would not have done so.

Claim examples include:

• Pay requests – statements of amount earned, subcontractor payments, compliance with contract requirements.
• Requests for extras – contractors’ own request, subcontractor pass-through request.
• Retaining money or property that rightfully belongs to the Government.
• Concealing records that would decrease or eliminate an obligation that must be paid by the Government. 

What Constitutes Knowingly?

Knowingly is a vague term with a somewhat ambiguous application. A contractor can knowingly make a false claim when it has the following types of knowledge of the fraud.

• Actual knowledge – I know 
• Deliberate ignorance – I don’t want to know
• Reckless disregard – I don’t care to know

Any type of knowledge will support a false claim. Knowingly does not include acting negligently, inadvertently or mistakenly. A lie is an offense; an error is not. If the government entity knows about the false statement, an FCA claim will fail. Since the root of an FCA violation is intentionally deceiving the government, no violation exists when the government has not been deceived. 

What Constitutes False?

To show that a statement or record is false, there must be objective proof and not just a difference of opinion. An FCA claim cannot be based on an interpretation of a breach of contract; it must be direct actions of fraud. 

The FCA applies to the person submitting the false claims and to anyone who may have had knowledge of the false claim. This is important for contractors because both a general contractor and a subcontractor may be held liable for a subcontractor’s false statements.

Penalties

Any company that violates the FCA can expect some or all of the following penalties: 

• A fine between $5,500 and $11,000, per claim.
• A penalty that is three times the governments’ damages.
• The government’s costs in pursuing the claim, including attorneys’ fees. 
• Disbarment and loss of licensure. 

How the FCA Applies to Contractors

The FCA applies to many aspects of a construction project. False statement can be made from errors on bid documents, pay applications, change orders, and material and labor invoices. False statements can also arise from a contractor’s failure to warn an owner of overpayments, submitting false EPA or other regulatory statements, or failing to comply with other governmental regulations that may apply to a contractor or a particular project. 

Each false statement in a record or document is considered a separate event. Each separate event is individually subject to the penalties outlined above. 

For example, if a subcontractor provides a general contractor with a pay application that contains five falsified statements related to the work it performed, and the general contractor submits the pay application to the owner (or includes the false statement in its own pay application). This one pay application constitutes five separate violations and subjects the general contractor and subcontractor to five separate penalties under the FCA. Also if the general contractor resubmits the same false statement in ten subsequent pay applications, each resubmittal constitutes another five violations that is subject to separate penalties, for a total of fifty violations. This example shows how these penalties can easily accumulate. 

Contractors and subcontractors need to ensure that all claims made on publicly funded projects are completely accurate, and that the accuracy is well documented to avoid any violations.

Liz Poeschl, a partner at the law firm of Meagher & Geer, focuses her practice on the prevention and the litigation of business-related disputes — especially those involving construction law, products liability law and employment law. Liz defends contractors, project owners, land developers, architects, engineers, manufacturers, and suppliers involving private and public construction projects of all types.

Stillwater Fire Department Receives Grant For Fire Rescue Boat$12,989 Grant Helps Make Community Safer

STILLWATER, Minn. (May 14, 2012) – Thanks to a $12,989 donation from Fireman’s Fund Insurance Company and RJF, a Marsh & McLennan Agency LLC company, Stillwater Fire Department is retrofitting a 24-foot surplus Coast Guard fire boat they recently acquired, providing the fire department with a critical tool that will increase the safety of all who spend time on or near the river.

The Stillwater Fire Department previously used a 14-foot flat bottomed boat that could carry only three people and lacked fire suppression capabilities. They were fortunate to obtain a surplus Coast Guard fire boat, but the Stillwater Fire Department lacked the funds needed to make the boat fully operational. Specifically, the funds are being used to purchase a fire pump, steering brackets, motor mounting, oil tanks, and other engine parts, as well as repaint the boat to match existing fire trucks.

“This boat will allow us to respond to emergencies much more quickly, efficiently and safely,” said Chief Stuart Glaser, of Stillwater Fire Department. “That speed and stability can literally be the difference between life and death for people in trouble.”

Stillwater Fire Department officials, firefighters, executives and employees from RJF and Fireman’s Fund will come together for a special public event and demonstration of the new rescue boat:

Date / Time:
Thursday, May 17, 2012, at 11 a.m.

Location:
Lowell Park (along river’s edge)
201 Sam Bloomer Way
Stillwater, MN

The grant is part of a nationwide philanthropic program funded by Fireman’s Fund Insurance Company. The program is designed to provide needed equipment, training and educational tools to local fire departments and burn prevention organizations. Since 2004, Fireman’s Fund has issued grants to nearly 1,800 different organizations totaling more than $29 million. Through the program, independent insurance agencies and brokers that sell Fireman’s Fund products, like RJF, are able to direct these grants to support the fire service.

In addition, Fireman’s Fund employees can nominate fire departments for a grant.

In this case, local resident Julie Thompson and colleague Kaleb Bronson worked cooperatively with RJF to secure the funds that the Stillwater Fire Department needed for this boat.

“As a resident of Stillwater, I am honored to direct this grant to the rescue squad,” said Thompson. “It’s vital that our first responders have the proper equipment to help our community when it’s needed most. I am proud to work for a company that allows me and my colleagues to give back to our communities.”

“It brings us great pleasure to add the Stillwater Fire Department and the Stillwater community to the list of organizations and communities we’ve been able to help through RJF’s ongoing philanthropic efforts, which includes our partnership with Fireman’s Fund,” said Tracey Lund, of RJF. “This grant will benefit both the residents of Stillwater as well as the many visitors that come to visit this great area.”

About RJF, a Marsh & McLennan Agency LLC company

RJF, a Marsh & McLennan Agency LLC company, is a risk prevention organization dedicated to helping businesses proactively reduce risk by anticipating the needs of their people and their assets. Its unique prevention-driven assessment and monitoring process helps forward-thinking clients strengthen their employees, assets and bottom line. As the Upper Midwest hub for Marsh & McLennan Agency, RJF has offices throughout the region and United States, and is supported by March & McLennan, the premier global provider of advice and solutions in risk, strategy and human capital. More information is at www.rjfagencies.com.

About Fireman’s Fund Insurance Company

Founded in 1863, Fireman’s Fund Insurance Company is a premier property and casualty insurance company providing personal and commercial insurance products backed by industry-leading claims and risk management solutions. Fireman’s Fund is a leader in high-net-worth, entertainment, and green insurance. Fireman’s Fund is a member of the Allianz Group, one of the world’s largest providers of property and casualty insurance, ranked 27th on Fortune’s Global 500 list of the world’s largest corporations. For additional information, visit www.firemansfund.com, www.facebook.com/SupportingFirefighters or www.twitter.com/ffundheritage.

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Media Contact: Shoni Honodel, 415.899.3006, shoni.honodel@ffic.com

May 15, 2012

Hurricanes, tsunamis, earthquakes and wildfires—there’s no denying that 2011 was a year for the weather record books. The U.S. experienced 99 FEMA Major Disaster Declarations and 14 weather and climate disasters each causing $1 billion or more in damages, according to the National Oceanic and Atmospheric Administration (NOAA). Worldwide, there were more than 300 natural disasters, with the United Nations’ International Strategy for Disaster Reduction (ISDR) putting the total value of damage at a record $366 billion.

The new year has continued the devastating trend, with damage estimates for just one U.S.-based event in the first quarter of 2012 reaching as high as $475-plus million, according to Aon Benfield’s April 2012 Global Catastrophe Recap report.

When disaster strikes, insurance carriers are tasked with assisting their clients to help mitigate the impact of the natural disaster and assist with rebuilding communities. In this interview, Angela Wheeler, RJF claims consultant and specialist on property damage, explains what businesses can and should expect from their carrier in the event of a weather-related catastrophe.

Are all natural disaster alike in terms of insurance carrier response?

Wheeler: The type of disaster expected makes a tremendous difference. Businesses have little warning of a tornado or earthquake. However, most often there is advance warning of hurricanes, floods, and wildfires. There are critical things that businesses can do with advance warning of a natural disaster. Insurance companies can help with that stage. For example, employing specialists to help move valuables to another location or equipment to a higher level can minimize the impact of the event.

Are expenses associated with pre-disaster preparation included in the insurance policy?

Wheeler: Every good policy should have what’s called an extra expense provision, which can cover the costs of preparing for a business for a disaster to minimize the impact as well as expenses necessary to continue business operations. Ultimately, it may cost the insurance company less to pay for an expensive and valuable piece to be moved out of harm’s way than to repair or replace the damage, and any downtime that the business experiences.

However, the extra expense provision can have dollar limit, and generally only comes into play if the disaster occurs. It’s essential that policyholders check with their agents to understand the terms and limitations of the provision.

After the disaster, what can business reasonably expect from their agent or carrier?

Wheeler: Insurance companies have become very sophisticated in terms of how they are responding to natural disasters, both before and after the event. If there is enough warning, carriers may be able to reach policyholders by phone or via text messages, providing them with instructions should they experience damage.

After the event, they continue to reach out, providing information about the location of their mobilized team of adjusters who can help them through the claims process. Many times carriers are working through agents who have the cell phone number of the owner as well as other designated key people such as the risk manager or operations manager.  Businesses should expect their insurance carrier to be a partner in helping to rebuild after suffering damage.  An adjuster will be onsite to evaluate the damages and make the necessary payments to continue operations.

Insurance carriers know that not only is their initial response to these events and to their policyholders critical to a community, but that they also play a major role in the rebuilding process. A major weather-related event affects residents physically and financially, with many people also experiencing a loss of income due to post-disaster business shutdown. Insurance carriers and business leaders share in the task in getting companies up and running so that the community can return to work.

What are some of the new ways insurance companies are responding to weather related incidents?

Wheeler: Most carriers have mobilized teams of adjusters in trailers that go from disaster to disaster. The onsite team can help get equipment such as generators or specialized products that a business will need, even if necessary making phone calls on behalf of policyholder. Carriers may help the business set up temporary offices or locations so they can continue operating until the permanent location is rebuilt. Insurance companies can anticipate a business’s needs and will bring to a community the critical items needed after a weather-related event. Often adjusters will be armed with an arsenal of tools including water, cleaning materials, internet services, generators, and even chain saws in the event that a road or drive is blocked by a fallen tree.

What are the steps of the process?

Wheeler: After the policyholder or carrier initiates communication, the business owner must make any necessary repairs: secure the building with boards or fencing, relocate equipment and inventory, even hire security people if needed. Business owners shouldn’t wait for the insurance adjuster to come out to start that process. In fact, it’s written into an insurance policy that a business owner is responsible for preventing any further damages. Business continuity plans are a critical piece for businesses after a major weather related event. Businesses continuity plans range from basic instructions to detailed books that are updated regularly and practiced, and often detail relationships with vendors that can help with the initial needs of a business after suffering damage from a weather related loss.

Business owners should arrange to meet with an adjuster and their agent to inspect the damage. Business owners should have a clear understanding of what their insurance policy will allow in order to resume their operation. At the time of the initial meeting, a strategy should be developed with clear action plans on rebuilding the business operation.

The claims and rebuilding process is often long. Business owners will need to locate contractors to make the necessary repairs, and will need to submit estimates of the repairs to the insurance carrier so payments can be made to initiate the work. Often, insurance carriers will make an advance payment to help businesses get started until numbers for the damages are developed.

Businesses that experience an interruption in their operations should be prepared to provide inventory numbers, average daily values, profit statements and any other details that will help the insurance carrier calculate the business interruption. Depending on the significance of a loss, it could take six months to a year, or longer for a business to be fully operational again. 

What else policyholders should expect from their insurance company?

Wheeler: They should expect their insurance carriers to be courteous, polite and understanding of their situation, with highly trained professionals to provide the needed assistance. Insurance carriers should be making their life easier, not harder. At RJF, our goal after a client experiences a major event is to get that business into best possible situation as quickly as possible and get them as much money as we possibly can to keep their businesses operating.

May 2, 2012

The IRS may be stepping up their efforts to ensure that employers are complying with COBRA when it recently updated its COBRA audit procedures on its Website last month in a posting titled “Audit Techniques and Tax Law to Examine COBRA Cases" (Continuation of Employee Health Care Coverage). This revision, with very few updates or surprises, may be signaling the need for employers to evaluate their current COBRA practices and make changes in light of stepped up enforcement.

BACKGROUND

COBRA is a federal law that allows for the continuation of most group health plan coverage (medical, dental, vision, Health FSA, HRA, etc.) to covered persons (qualified beneficiaries) upon the occurrence of certain events (qualifying events) such as termination of employment, divorce, loss of dependent eligibility and other events.  In addition, COBRA also requires that certain notices are provided, addresses premium payment by qualified beneficiaries, duration of continuation coverage and more.

Noncompliance may result in significant risks to the employer, including penalties for not providing notices in a timely manner or for any potential recovery of benefits should an employee demonstrate that an employer failed to provide an individual the opportunity to elect continuation. In addition, employers who do not comply may be subject to excise taxes as described below.

UPDATED AUDIT PROCEDURES FOR NONCOMPLIANCE

The updated procedures provide a glimpse into the process that an auditor should follow when reviewing an employer’s COBRA compliance and the extensive nature that an audit can bring. For example, if a covered employee is denied COBRA continuation due to gross misconduct, the procedures instruct an auditor to check to see if the covered employee was denied unemployment benefits for the same reason.

When beginning an audit, the procedures state that an auditor will first request the following:

• A copy of the employer’s health care continuation coverage procedures manual 
• Copies of standard health care continuation coverage form letters sent to the qualified beneficiaries 
• A copy of the employer’s internal audit procedures for health care continuation coverage 
• Copies of group health care plan information
• Details pertaining to any past or pending lawsuits filed against the employer for failing to provide appropriate continuation coverage.

In addition, “the examiner should probe specific areas for noncompliance” and “interview responsible parties” for the following:

• The number of qualifying events (for example, terminations, reduced hours, etc.) occurring in the year under examination through the current date
• The method by which qualified beneficiaries are notified of their rights to continuing health care coverage under COBRA
• The method by which the plan administrator is notified that a qualifying event has occurred
• The election made by qualified beneficiaries to continue health care coverage 
• The premium paid by qualified beneficiaries for continuing coverage under the Plan
• Copies of Federal and state employment tax returns filed during the current period under examination and the preceding year (returns will show changes in the number of employees on the payroll between the two years) 
• List of all individuals affected by a qualifying event (for example, termination, death, etc.) during the current year 
• List of all individuals covered on 1-1-YY and 12-31-YY of the current and preceding years for each plan; this list should include all qualified beneficiaries (in other words, covered employee, spouse and dependent children)
• Personnel records, including:
• Name and address of each beneficiary (for purposes of third party confirmation if necessary) 
• Date the qualifying event took place 
• Copies of the notification letters sent to qualified beneficiaries (to determine the period they were eligible to elect coverage, and in fact were offered coverage, and also to confirm they received their notice of rights under COBRA)
• Type of coverage received under COBRA (to determine if the qualified beneficiary received the proper coverage) 
• Premium payments required under COBRA (review of health plan documents previously requested may indicate whether the premium charged was excessive) 
• Copy of employer’s letter to the insurance company/plan administrator notifying them of a qualifying event 
• Reasons for termination of COBRA coverage properly elected by the beneficiary 
• Reasons for employment termination 

THE COBRA EXCISE TAX

COBRA includes excise taxes that can be assessed to employers for noncompliance.  In 2010, the IRS published guidance related to Form 8928 that an employer uses to self-report COBRA violations and pay applicable excise taxes.  

More recently, the updated guidance includes a detailed computation of the tax if an employer fails to comply with COBRA’s requirements. In general, the tax is determined by the number of days in the “noncompliance period”, multiplied by the number of qualified beneficiaries for which a failed occurred, multiplied by $100.

The noncompliance period begins on the date that the failure to comply occurred and ends on the date the failure is corrected, and will be no longer than six months after the last day of the applicable maximum COBRA period.  For example, for a qualifying event whose maximum COBRA period is 36 months, the period of noncompliance could be up to 3 ½ years.

The updated guidelines also include a minimum and maximum tax penalty amount that varies by whether or not the failure to comply was inadvertent, if the failure was de minimis or not, if the employer has been notified that an audit will occur, if the failure was corrected within 30 days of its discovery, and other factors.

For example, the maximum tax that can be imposed on a single employer plan for inadvertent failures is the lesser of 10% of the employer’s total expenditures on the group health plan or $500,000.  At minimum, the tax may be $2500 for each qualified beneficiary for whom the failure to comply is de minimis or up to $15,000 for each qualified beneficiary if more than de minimis.

WHAT EMPLOYERS SHOULD DO

The recent changes to COBRA audit procedures may signal an increase in COBRA compliance enforcement.  Employers who are subject to COBRA should review their documentation and procedures to ensure compliance.  This may include a review to determine that COBRA notices are correct and provided to individuals as required by the law, a review of the plan’s COBRA premium and how it is determined, tracking qualified beneficiaries coverage elections and premium payments, and record retention policies.

Employers who are also subject to state continuation law should ensure that these requirements are also being met while clearly demonstrating COBRA compliance.  As well, if an employer uses a third party administrator (TPA), the employer is still responsible for some of the requirements under COBRA such as notifying new hires of their COBRA rights and providing the TPA with timely, accurate information regarding COBRA events.

Additional information from the IRS.

May 2, 2012

Recent written audit requests to health and welfare plans from the U.S. Department of Labor (DOL) have included inquiries related to various mandates under the Affordable Care Act (the Act). This is a significant development in the ongoing implementation of the Act's various coverage and related mandates, in that it marks the first appearance of Act-related topics in DOL auditing practices. While the recent U.S. Supreme Court oral arguments caused speculation as to the future of the Act, unless and until the Act is ruled unconstitutional by the Supreme Court, it is enforceable and will be enforced by the DOL. Thus, employer-provided group health plans must continue to comply and otherwise implement the Act's various coverage and related mandates. Likewise, plan sponsors must comply with any Act-related DOL audit requests, and be prepared to produce documents to prove that their plan complies with the Act's various mandates.

Areas Addressed in Audits

The DOL audit requests relating to the Act can be divided into three types:

• Requests as to plans claiming grandfathered status
• Requests as to plans not claiming grandfathered status
• Requests as to all health plans regardless of grandfathered status. For each type of request, the DOL has asked to examine the types of documents listed below.

For grandfathered plans (i.e., that are claiming or have claimed grandfathered status under Section 1251 of the Act)

• Disclosure statements regarding grandfathered status included in material distributed to participants and beneficiaries describing the benefits provided under the plan
• Records documenting the terms of the plan on March 23, 2010, along with any ancillary documents required to verify the status of the grandfathered plan.

The DOL audit questions listed above appear to be aimed at substantiating that the plan in question complies with two requirements under the final interim regulations on grandfathered health plans under the Act issued by the Departments of Labor, Health and Human Services, and Treasury on June 14, 2010; namely that plans must:

• Provide a specific notice that the plan believes it is a grandfathered health plan in any materials that describe the plan's benefits to participants or beneficiaries
• Maintain, and make available upon a government agency's request, records documenting the terms of the plan or health insurance coverage in effect on March 23, 2010, as necessary to verify, explain, or clarify the plan's grandfathered status. 

Requests applicable to non grandfathered plans

• The plan's choice provider disclosure notice, along with a list of participants who received that notice
• Documents relating to the plan's emergencies services benefits
• Documents relating to the preventative services for each plan year on or after September 23, 2010
• The plan's internal claims and appeals procedures
• Notices relating to adverse benefit determinations, the plan's final internal adverse determination notice, and the plan's final external review determination notice
• Contracts or agreements with independent review organizations or third-party administrators providing external review.

The DOL audit requests listed above appear to be aimed at substantiating that the plan in question complies with certain coverage mandates that apply only to nongrandfathered health plans, including covering certain preventive care services without cost sharing, as well as that any emergency hospital services must be provided without requiring prior authorization or higher cost sharing amounts, even for out-of-network services. In addition to these mandates, nongrandfathered health plans must adopt new internal and external claims procedures pursuant to guidance issued under the Act. This guidance provides a safe harbor for compliance with the Act's requirement to offer a binding external review process under the plan. For this purpose, the nongrandfathered health plan must contract with three independent review organizations to handle external claims appeals. 

Requests applicable to all plans

• For plans with dependent care coverage, a sample of the notice describing enrollment opportunities relating to coverage of children up to age 26
• A list of any participants who had coverage rescinded and the reason for such rescission
• If the plan imposes or has imposed a lifetime limit since September 23, 2010, documents relating to that limit for each plan year
• If the plan has imposed an annual limit since September 23, 2010, documents relating to that limit.

These requests appear to be aimed at eliciting information necessary for the DOL to determine a group health plan's compliance with four primary mandates applicable to all group health plans, regardless of the plan's grandfathered status. First, the Act requires group health plans and insurance issuers that provide dependent child coverage to make that coverage available for children until they attain age 26. In addition, the Act does not permit the rescission of coverage absent fraud or material misrepresentation on behalf of the individual claiming coverage under the group health plan. For this purpose, a rescission is simply the retroactive termination of coverage for any reason other than non-payment of premiums. Finally, the Act does not permit group health plans to impose lifetime or annual limits on benefits deemed to be "essential," a term that needs further definition by the oversight agencies.

Best Compliance Practices

Generally, plan sponsors and administrators must be able to demonstrate that their plans comply with the Act, which requires documentary evidence – from plans, record keepers, and/or service providers. Written records of the steps taken to comply with the Act since September 23, 2010, including detailed records of participation information and communications with participants about enrollment periods and coverage, should be retained in a readily accessible fashion. For example, plans should keep and be able to produce notices of coverage for children up to 26 years of age, and evidence of distribution. Likewise, any plan amendments or written policies that were adopted to implement the Act mandates discussed above should be ready for production.

Upon receiving such an audit request, you should contact counsel immediately, as the issues are complex, and swift action is often necessary to protect the various rights and interests of the numerous entities involved in administering health and welfare plans. 

Content provided by Proskauer Rose.

May 1, 2012

INTRODUCTION

The IRS has issued proposed rules addressing the comparative effectiveness research fees imposed by the Patient Protections and Affordable Care Act (PPACA) on health insurance carriers and plan sponsors of self-insured health plans. The IRS is taking comments on the proposed rules for 90 days and is expected to issue final regulations shortly thereafter.

BACKGROUND

PPACA creates a nonprofit corporation, the Patient-Centered Outcomes Research Institute, to conduct and promote clinical effectiveness research. The institute will be funded by a patient-centered outcomes research trust fund. The trust fund will be funded in part by fees to be paid by issuers of health insurance policies and sponsors of self-insured health plans.  

The Act imposes fees on “specified health insurance policies” and “applicable self-insured health plans” based on the average number of lives covered under the policy or plan. The fees are effective for plan years ending after September 30, 2012. Thus, for employer-sponsored plans that begin on the first day of the month, the first plan year subject to the fees will be plan years beginning November 1, 2011 (which will end October 31, 2012). The fee no longer applies for plan years ending after September 30, 2019. 

The fee is $1 per year, multiplied by the average number of lives, which includes employees, spouses and dependents, covered under the plan for plan years ending before October 1, 2013, and $2 per year for plan years ending after that date. Beginning in 2014, the fee will be adjusted based on a formula that takes into account the increase in national health care expenditures. 

IRS GUIDANCE

The IRS previously issued a request for comments regarding the fees in IRS Notice 2011-35 released in June 2011. The proposed rules address a number of outstanding issues included in the request for comments.

WHO PAYS THE FEE?

For fully-insured plans, the fee will be paid by the health insurance carrier (referred to as the issuer in the regulations). For self-insured plans, the fee must be paid by the plan sponsor (generally the employer in the case of a single-employer plan). 

The IRS had requested comments regarding the possibility of allowing third parties, such as the employer claims administrator, to pay the fee on behalf of a self-funded employer. Unfortunately, the IRS has decided that the fee for self-funded plans must be paid directly by the plan sponsor/employer.

PLANS SUBJECT TO THE FEE

The fee applies to a “specified health insurance policy” which is defined as any accident or health insurance policy (including a policy under a group health plan and self-funded plans) issued with respect to individuals residing in the United States. The fee does not apply to plans that are treated as excepted benefits under HIPAA (i.e. limited scope dental and vision plans). 

• The effect of the fee on a Health Reimbursement Arrangement (HRA) will depend on if the HRA is integrated with a self-funded or fully-insured health plan.
• Under the proposed rule, multiple self-insured arrangements maintained by the same employer with the same plan year are subject to a single fee. Thus, a health reimbursement arrangement (HRA) is not subject to a separate fee as long as the HRA is integrated with a self-insured health plan.
• However, an HRA offered in conjunction with a fully-insured health plan will be considered a self-funded plan and will be subject to the fee.

• No fee will apply to a Health Flexible Spending Account (HFSA) that satisfies the HIPAA definition of an "excepted benefit".
• An employee assistance program, disease management program or wellness program will generally not be considered a plan subject to the fee as long as the plan does not provide significant medical care or benefits. 

CALCULATING AND PAYING THE FEE

The fee will be based on the average number of lives covered under the policy or plan. To determine the average number of lives covered under a self-funded health plan during a plan year, a plan sponsor must use one of the following methods: 

• The actual count method: the average number of lives covered under a plan for a plan year is determined by adding the total lives covered for each day of the plan year and dividing that total by the number of days in the plan year.
• The snapshot dates method: a plan sponsor may determine the average number of lives covered under a plan by adding the total lives covered on one date in each quarter (or more dates if an equal number of dates are used for each quarter) and dividing that total by the number of dates on which a count was made. For this purpose, the date for each quarter must be the same (for example, the first day of the quarter, the last day of the quarter, the first day of each month, etc.).
• The Form 5500 method: a plan sponsor may determine the average number of lives covered under a plan for a plan year based on the number of reportable participants on the plan’s Form 5500. If the plan covers individuals other than the employee (e.g. spouses and dependents) as most employer plans do, the average number of lives covered under the plan equals the sum of total participants reported in the Form 5500 covered at the beginning plus the number at the end of the plan year. 

This methodology was created to address the fact that the fee includes spouses and dependents covered by the plan but those spouses and dependents are not included in the count of participants reported on the Form 5500. Adding the number of Form 5500 “employee” participants at the beginning of the year to the number at the end of the year to determine the participant count essentially estimates that there are approximately 2 “covered individuals” to every participant reported on the Form 5500.

Plan sponsors of self-funded plans will report and pay the fees once a year on IRS Form 720, which will be due by July 31 of each year. The Form 720 will cover plan years that end during the preceding calendar year. For example, an employer with a plan year ending December 31, 2012 will need to report and pay the fee by July 31, 2013, while an employer with a plan year ending January 31, 2013 will not need to report and pay the fee until July 31, 2014.

SUMMARY

Employers who sponsor only fully-insured plans have little to do since the insurance carrier is responsible for paying the fee. Assumedly, the fee will be reflected in the premiums paid by the employer to the carrier. Note:  Employers who sponsor a fully-insured health plan, but also offer an HRA, will need to report and pay the fee for the HRA plan.

Employers who sponsor self-funded health plans have some work to do. They must first determine which method they will use to calculate the fee. It is also possible that different allowable methods will result in different fee amounts due, so employers may want to calculate the fee each way to determine the lowest amount due.

IRS guidance is available and includes examples of the different types of participant calculation methods. 

May 1, 2012

Lost productivity due to disabled employees is one of the most expensive costs for employers. Economic, demographic and societal trends have led to an increasingly aging, mobile and diverse workforce. In addition, increased stress in the workplace and the home are taking a toll on overall employee health, productivity and safety. The result is higher health care and disability costs that have a measurable impact on employers and the employee benefits packages that they offer. These trends and costs are expected to continue to interact with and influence the marketplace, so making appropriate benefit choices remains important for employers.

Group disability insurance provides income protection for employees as well as cost-saving management strategies for employers. For employers, lost time on the job due to a disability can significantly impact workplace productivity and profitability. However, disability insurance provides partial replacement of lost income for employees while also covering overtime and costs of hiring replacements. Most employers offer salary continuation plans. Many states also mandate temporary disability insurance that requires employers to provide benefits equivalent those working in non-statutory states.

Lost time and medical costs are on the rise, and the risk of disability is greater than most employers and employees realize. Consider these statistics:

• Disabilities affect 19 percent of Americans (approximately 54 million people).
• On average, about 3,000 disabling injuries occur every hour during the year.
• A disabling injury occurs every eight seconds at work.
• Thirty percent of employees age 35 to 65 will become disabled for 90 days at least one time while working.
• By age 35, there is a 50 percent chance of becoming disabled for three or more months.
• The Social Security Administration claims that there will be a 37 percent increase in disability insurance incidences because the workforce is getting older. 

The likelihood of becoming disabled is on the rise for working Americans and so are the financial consequences and costs associated with employee absence. The population is aging, which also translates into rising benefit utilization and cost. Beyond that, unscheduled absences disrupt workflow and increase cost, while human resource pressures are impacting the ability to dedicate adequate time and attention to lost-time experience. 

Any organization or individual that does not currently have disability insurance coverage should weigh their liability.

The EEOC (Equal Employment Opportunity Commission) voted and approved revisions to the use of arrest and conviction records in the hiring process on April 25, 2012. The approval addresses which factors an employer should consider when utilizing criminal conviction history. Additionally, the update includes when and how an employer should ask an applicant about their criminal history. 

Highlights of the new guidance:

• The guidance discusses the differences between arrest and conviction records.
• The fact of an arrest does not establish that criminal conduct has occurred, and an exclusion based on an arrest, in itself, is not job related and consistent with business necessity. However, an employer may make an employment decision based on the conduct underlying an arrest if the conduct makes the individual unfit for the position in question.
• In contrast, a conviction record will usually serve as sufficient evidence that a person engaged in particular conduct. In certain circumstances, however, there may be reasons for an employer not to rely on the conviction record alone when making an employment decision.
• The guidance discusses disparate treatment and disparate impact analysis under Title VII.
• A violation may occur when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin (disparate treatment liability).
• An employer’s neutral policy (e.g., excluding applicants from employment based on certain criminal conduct) may disproportionately impact some individuals protected under Title VII, and may violate the law if not job related and consistent with business necessity (disparate impact liability).

Access the full report.

Clarification on the April 1 Star Tribune Q&A with RJF's Mary Setter

Sunday’s Star Tribune business section featured a health care reform Q&A with RJF’s Mary Setter. The paper did a really good job distilling many of the complexities of the legislation in a way that makes sense to employers who don’t have the resources of a full-time compliance specialist or in-house counsel. It’s a difficult job—we know, and we’re in it every day—keeping up with the details.

Based on how the article was edited, we believe there may be a little confusion around the details of how health care reform penalties work and are applied to employers, so we wanted to provide some additional clarity around that topic.

There are different penalties for employers who offer coverage than for those who do not offer coverage.

Penalties for employers not offering a health plan

If an employer with 50 or more employees or full-time equivalents (FTEs) does not offer a health plan to their employees, and at least one employee purchases subsidized coverage through an exchange, they will pay a penalty of $2,000 per year times the total number of full-time employees (excluding the first 30 employees).

Penalties for employers offering a health plan

If the employer offers a health plan to all full-time employees and the plan is considered unaffordable, the employer will pay a penalty of $3,000 per year times the total number of full-time employees that purchase subsidized coverage through the exchange.

March 27, 2012

HIPAA requires that plan participants of employer-sponsored health plans receive a Notice of Privacy Practices (NPP). The requirement applies to health plans such as medical, dental, vision, prescription drug, Section 125 health flexible spending account (HFSA) and health reimbursement arrangements (HRA). 

CONTENT REQUIREMENTS

The Notice of Privacy Practices must be written in plain language and should:

• Explain how the health plan may use and disclose an individual’s protected health information (PHI).
• Describe the individual’s rights with respect to his or her PHI.
• Summarize the health plan’s legal duties with respect to the PHI.

DELIVERY DEADLINES

HIPAA required that a NPP be provided to health plan participants at the time the plan was first subject to the HIPAA Privacy rules. Most plans were originally subject to this in April 2003 or 2004, depending on the size of the plan. Thereafter, it is required that a reminder of the availability of the NPP be sent to plan participants at least once every three years. The reminder must tell participants how to obtain a copy of the NPP for the plan.

• Health plans that previously sent a notice or reminder by April 14, 2009, have until April 14, 2012 to send the next notice or reminder. 
• Small health plans (those with annual receipts of $5 million or less) that previously sent a notice or reminder by April 14, 2010, have until April 14, 2013 to send the next notice or reminder.

In addition, health plans must provide the Privacy Notice in the following circumstances:

• To new enrollees at the time of enrollment.
• Within 60 days of a material change to the notice.
• Any time upon a participant’s request.

If the actual NPP is distributed more often than every three years, the notice requirement has been satisfied and a reminder does not need to be sent.

If the employer’s insurance carrier sends a NPP to plan participants, the employer is not required to send a separate notice. Most carriers provide a NPP annually to participants of fully-insured health plans.

DELIVERY METHODS

• The reminder, or an actual NPP, does not need to be sent to the plan participant’s home. Plans can include the notice in other benefit materials sent to participants or distributed at work. 
• Many insurance companies and employers include the NPP with the plan’s annual open enrollment materials. 

ACTION STEPS AND ADDITIONAL INFORMATION

Employers should answer the following questions to determine if they are meeting their HIPAA notice obligations:

• Does your NPP contain all the required content?
• Is the employer’s insurance company or TPA distributing a NPP to all plan participants? If so the employer is not required to send a duplicate NPP for that plan. 
• Is an NPP being distributed to plan participants for all of their health plans that are subject to HIPAA? 

Employers must remember that HIPAA applies to a variety of plans. While it is common for fully-insured medical and/or dental insurance carriers to provide the NPP to plan participants, this will not satisfy the requirement for other plans subject to HIPAA such as the Section 125 HFSA or a health reimbursement arrangement (HRA). An employer can distribute one NPP that covers all of their plans subject to HIPAA. However, to do this, the employer must draft an employer-specific notice that correctly refers to all employer-sponsored plans subject to HIPAA.

Additional information from HHS.

HHS PUBLISHES FINAL RULE FOR HEALTH INSURANCE EXCHANGES

March 27, 2012

The Department of Health and Human Services (HHS) published a final rule on Affordable Health Insurance Exchanges. Affordable Health Insurance Exchanges (Exchanges) will be operational starting in 2014, providing consumers and small businesses a one-stop marketplace for purchasing private health insurance plans. In addition, the final rule provides states with a framework for establishing their exchanges while preserving flexibility. The final rule includes standards for:

• Establishment and operation of an exchange
• Health insurance plans that participate in an exchange
• Determinations of an individual’s eligibility to enroll in exchange health plans and in insurance affordability programs
• Enrollment in health plans through exchanges
• Employer eligibility for and participation in the Small Business Health Options Program (SHOP)

HIGHLIGHTS OF THE FINAL RULE

The rule is effective 60 days after publication in the Federal Register (scheduled for March 27, 2012). HHS is issuing certain provisions as interim final rules and those are open to public comment for 45 days from the publication date in the Federal Register.

ESTABLISHMENT OF EXCHANGES

The final rules provide that a state may establish its exchange as a non-profit entity, an independent public agency or as part of an existing state agency. A state may also operate its exchange through a regional exchange with other states or may operate multiple exchanges in different areas of the state.

The Patient Protection and Affordable Care Act provides that a state’s exchange must be approved by HHS no later than January 1, 2013, with a provision for conditional approval if a state is in advanced stages of preparation but not able to demonstrate readiness by that date. The final rule allows states that are not ready for 2014 to apply to operate an exchange in 2015 or later.

QUALIFIED HEALTH PLANS

Exchange health plans must provide high-quality coverage and meet minimum standards as defined in the law to be considered “qualified health plans.” Exchanges will have the flexibility to establish additional standards, and may choose to allow any plan meeting the minimum standards to participate.

ELIGIBILITY AND ENROLLMENT

The exchanges will also administer the premium tax credits available to certain qualifying individuals. Beginning in 2014, individuals with incomes less than 400% of the federal poverty level who do not have affordable employer-sponsored insurance available may qualify for federal tax credits to be used toward the purchase of individual health insurance on the exchange.

The final rule establishes a streamlined, coordinated, web-based system for applying and receiving an eligibility determination and insurance affordability programs. The enrollment process will include toll-free call centers and state-selected “Navigator” organizations that will provide consumers education and assistance in selecting plans.

SMALL BUSINESS HEALTH OPTIONS PROGRAM

Exchanges will also establish and operate Small Business Health Options Programs (SHOPs) that will provide small employers the opportunity to offer exchange health plans of their choosing to employees. The final rule provides states flexibility with regard to the size of businesses that can participate and the structure of choices for businesses. Initially, states may set the size of the small group market at either 1 to 50 or 1 to 100 employees until 2016. Beginning in 2016, employers with between 1 and 100 employees can participate in a SHOP. In 2017, states have the option to let businesses with more than 100 employees buy large group coverage through the SHOP.

HHS Press Release

Fact Sheet on final rule

FAQ ON THE IMPLEMENTATION OF SBC REQUIREMENT

March 27, 2012

The Departments of Labor (DOL), Health and Human Services (HHS) and the Treasury (the Departments) released a series of Frequently Asked Questions (FAQ’s) regarding the implementation of the Summary of Benefits and Coverage (SBC) provisions contained in the Affordable Care Act. The FAQ contains answers to 24 questions received by the Departments regarding implementation of the SBC rules.

BACKGROUND

On February 9, 2012, the Departments released the final rules regarding the SBC. Included in these rules is the requirement that health plans provide participants with a uniform summary of benefits and coverage (SBC) beginning later in 2012. The final regulations and the requirements to provide the new, standardized SBC are effective for group health plans on the following dates:

• With respect to participants and beneficiaries who enroll or re-enroll during an open enrollment period, the SBC must be provided beginning on the first day of the first open enrollment period that begins on or after September 23, 2012.
• With respect to participants and beneficiaries who enroll in a plan at a time other than during an open enrollment period (e.g. new enrollees and HIPAA special enrollees), the SBC must be provided beginning on the first day of the first plan year that begins on or after September 23, 2012.

For example, an employer whose plan year begins October 1, 2012 but whose open enrollment period begins on September 1, 2012 would not be required to provide the SBC during open enrollment, but would be required to use the SBC for new enrollees beginning on the first day of the new plan year. 

The final regulations confirmed that, in the case of fully-insured plans, the insurance carrier is responsible for producing and providing a valid SBC to employers who sponsor group health plans. Employers who sponsor self-funded plans are technically responsible to produce their own SBCs; however, it is anticipated that third party administrators (TPAs) will assist with the development of required SBCs. Employers will be responsible for the distribution of the SBC to participants, both during open enrollment periods and to new participants.  

HIGHLIGHTS OF THE FAQ

• The Departments stressed that during the first year of implementation their approach to compliance will be “marked by an emphasis on assisting (rather than imposing penalties on) plans, issuers and others that are working diligently and in good faith to understand and come into compliance with the new law.”…and that during the first year “the Departments will not impose penalties on plans and issuers that are working…in good faith to provide the required SBC content…consistent with the final regulations.” 
• Separate SBCs are not required for different tiers of coverage (i.e. single vs. family).
• Plans can combine coverage provided under separate plans, such as a high deductible health plan combined with a health reimbursement arrangement (HRA) into a single SBC.
• SBCs may be provided electronically to participants and beneficiaries in the following manner: SBCs provided electronically to participants must meet the requirements of the existing DOL safe harbor rules related to electronic communications of plan information. SBCs may also be provided electronically to an individual eligible who is not yet participating in a plan, as long as the individuals is notified as to where and how to access the information. The Departments also provided sample language for this notification.
• Unless the plan or insurer knows of a separate address for a beneficiary, the SBC may be provided to the employee on behalf of other family members.

SUMMARY OF WHEN THE SBC MUST BE PROVIDED TO PARTICIPANTS

The FAQ also provides a summary of when the SBC must be provided to participants. These distribution rules are covered in greater detail in the final regulations. The SBC must be provided at the following times:

Upon Application

If a plan (including a self-insured group health plan) or an issuer distributes written application materials for enrollment, the SBC must be provided as part of those materials. For this purpose, written application materials include any forms or requests for information, in paper form, through a website or email, which must be completed for enrollment. If the plan or issuer does not distribute written application materials for enrollment (in either paper or electronic form), the SBC must be provided no later than the first date on which the participant is eligible to enroll in coverage.

By first day of coverage (if there are any changes)

If there is a change to the information required by the SBC that was provided upon application and before the first day of coverage, the plan or issuer must update and provide a current SBC no later than the first day of coverage.

Special enrollees

The SBC must be provided to special enrollees no later than the date on which a summary plan description is required to be provided (90 days from enrollment).

Upon renewal

If a plan or issuer requires participants and beneficiaries to actively elect to maintain coverage during an open enrollment period, or provides them with the opportunity to change coverage options during this time, the plan or issuer must provide the SBC at the same time it distributes other open enrollment materials. If there is no requirement to re-elect or renew coverage(sometimes referred to as an "evergreen" election), and there is no opportunity to change coverage options, renewal is considered to be automatic and the SBC must be provided no later than 30 days prior to the first day of the new plan or policy year.

Upon request

The SBC must be provided upon request for an SBC or summary information about the health coverage as soon as practicable but in no event later than seven business days following receipt of the request.

PROVIDING THE SBC IN A CULTURALLY AND LINGUISTICALLY APPROPRIATE MANNER

If the SBC is sent to an address in a county in which ten percent or more of the population is literate only in a non-English language, the plan must meet the language requirements contained in the claims and appeals regulations released last year. Current county-by-county data is available.

These rules outline three requirements that must be satisfied for notices sent in these counties. The plan is generally required to:

• Provide oral language services in the non-English language.
• Provide notices upon request by an individual in the non-English language.
• Include in all English versions of the notices, a statement in the non-English language clearly indicating how to access the language services provided by the plan. Sample language for this statement is available on the model notice of adverse benefit determination. 

Versions of SBC language are available on the HHS Website for a number of languages. Written translations in Spanish, Chinese, Tagalog and Navajo will be available. 

SUMMARY

Employers must determine how to incorporate the SBC into current employee communication processes and materials. Additional guidance is expected this year as the Departments continue to receive questions about this process. Employers with fully-insured plans can expect to see SBCs from their carriers soon. Self-funded employers should work with their third party administrators to determine who will be responsible for SBC creation.

The full text of the Departments FAQ is available on the DOL Website.

MARSH & MCLENNAN AGENCY ACQUIRES KSPH

VIRGINIA EMPLOYEE BENEFITS AGENCY TO JOIN RUTHERFOORD

New York, March 13, 2012 – Marsh & McLennan Agency LLC (MMA), a subsidiary of insurance broker Marsh Inc., today announced that it has acquired KSPH LLC, a $5 million revenue employee benefits agency based in Glen Allen, Virginia. Terms of the transaction were not disclosed.

Launched in 2000, KSPH offers a wide range of employee benefits and retirement plan services to middle market clients in Virginia. KSPH will operate within Rutherfoord, a Marsh & McLennan Agency LLC company, further expanding Rutherfoord’s Richmond, Virginia, market position and adding to its employee benefit capabilities. The transaction is the third complementary acquisition for Rutherfoord, which MMA acquired in March 2010 to serve as its mid-Atlantic hub.

All of KSPH’s leadership and employees will join Rutherfoord/MMA and continue operating out of KSPH’s existing Glen Allen, Virginia, office.

“Adding KSPH to Rutherfoord enables us to offer greater resources and a broader platform to serve the needs of our clients throughout the mid-Atlantic,” said Thomas R. Brown, Vice Chairman of Rutherfoord/MMA. “We are delighted to welcome the KSPH team as we share the same core values of putting clients’ interests first and providing exceptional service and expertise.”

“Joining Rutherfoord/MMA is an excellent opportunity for KSPH to build upon its success over the last decade,” said Jeff Penny, Co-Founder and Principal of KSPH. “With the resources that Rutherfoord and MMA bring to bear, our clients will now have access to a wider range of products and services to address their emerging needs.”

Commenting on the deal, David Eslick, chairman and CEO of Marsh & McLennan Agency, said: “KSPH is another example of MMA’s ongoing strategy of adding high caliber, local talent and expertise to enhance the resources available to our clients.”

Since embarking on its strategy in November 2009 to build a preeminent, nationwide middle market agency, MMA has completed 17 acquisitions and currently generates approximately $340 million in annualized revenue.

About Marsh & McLennan Agency

Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to meet the needs of midsize businesses in the U.S. MMA operates autonomously from Marsh to offer commercial property, casualty, personal lines, and employee benefits to clients across the U.S.

About Marsh

Marsh, the world’s leading insurance broker and risk advisor, teams with its clients to define, design, and deliver innovative industry-specific solutions that help them protect their future and thrive. It has around 25,000 colleagues who collaborate to provide advice and transactional capabilities to clients in over 100 countries. Marsh is a member of Marsh & McLennan Companies, a global professional services firm with 52,000 employees worldwide and annual revenue exceeding $10 billion, which is also the parent company of Guy Carpenter, the risk and reinsurance specialist; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. Its stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. Follow Marsh on Twitter @Marsh_Inc.

March 5, 2012

The Middle Class Tax Relief and Job Creation Act of 2012 will extend the two percentage point payroll tax cut that has been in effect since the beginning of 2011, continuing the reduction of Social Security tax withholding rate from 6.2 percent to 4.2 percent. The reduced rate was previously extended through the end of February 2012, and now with this latest extension, employees will continue to take home more earnings through the end of this year. The lower rate does not have an effect on an employee’s future Social Security benefits.

The Act also repealed a “recapture” provision that was included in the extension through February. 

March 5, 2012

The Department of Labor (DOL) recently issued a technical release providing  responses to questions from employers and other stakeholders regarding the Affordable Care Act (ACA) provisions governing automatic enrollment, employer shared responsibility (sometimes referred to as “play or pay”) and waiting periods. It also outlines and requests comments on various approaches the Departments of Labor, Health and Human Services and Treasury are considering proposing in future regulations or other guidance. 

AUTOMATIC ENROLLMENT

The automatic enrollment provision directs any employer with more than 200 full-time employees to automatically enroll new full-time employees in one of the employer’s health plans. Information released by the Departments in December 2010 indicated that employer compliance with the provision would not be required until final regulations are issued, which was anticipated by 2014. According to this technical release, the DOL has since concluded its guidance on the matter will not be ready to take effect by 2014. Thus, employers won’t be required to comply until the final regulations are issued and become applicable. 

90-DAY LIMITATION ON WAITING PERIODS

The 90-day waiting period limitation provision provides that, in plan years beginning on or after January 1, 2014, a plan may not apply an eligibility waiting period greater than 90 days. The technical release indicates the provision will not require an employer to offer coverage to part-time employees or to any other particular category of employees. It merely prohibits requiring an otherwise eligible employee to wait more than 90 days before coverage is effective. 

The release uses various scenarios to explain which waiting period provisions and employee situations require compliance with the regulations. Additionally, the release indicates that the proposed guidance is expected to address situations in which employees (or certain classes of employees) are eligible for coverage once they complete a specified cumulative number of hours of service within a particular period (such as 12 months). It is expected that eligibility conditions won't be treated as “designed to avoid compliance with the 90-day waiting period limitation” as long as the required cumulative hours of service do not exceed a number of hours to be outlined in that guidance.

EMPLOYER SHARED RESPONSIBILITY

The employer shared responsibility provisions state that beginning in 2014, any employer with 50 or more full-time equivalent employees could be subject to a penalty if any full-time equivalent employee is certified to receive a premium tax credit or cost-sharing reduction payment for coverage offered through insurance exchanges if the employer does not offer minimum essential coverage or offers coverage that is unaffordable. The technical release indicates the Treasury and Internal Revenue Service (IRS) intend to propose guidance that will:

• Permit employers to use an employee's W-2 wages as employee income safe harbor in determining the affordability of employee-only contributions required to purchase employer-sponsored coverage. 
• Address the intersection of this provision with the rules applicable to the 90-day waiting period limitation so that for at least the first three months after an employee's date of hire, the employer will not be subject to penalty by reason of failing to offer coverage during that three-month period.
• Allow employers to use a look-back/stability period safe harbor approach (likely not exceeding 12 months) to determine whether an employee is a full-time employee. If implemented, this would be welcomed by employers who employ seasonal or variable hour employees.

move past programs to achieve lasting cultural change

Improving your company culture can positively affect everything from employee satisfaction and wellbeing to profits and insurance rates, and move your company past good to great.

By Rosie Ward, Ph.D., & Alan Wissbroecker, CSP, OHST

In “Healthy Culture, Healthy Company,” a paper published for The State of Manufacturing® in 2009, we outlined why a healthy organizational culture is one of the most important factors in moving a company from good to great. In that paper, we concluded success—both cultural and financial—comes when executives lead the charge to empower employees, engage them in processes that drive their own health and safety practices, and allow them to share in the tangible reward®s that come as a result of their efforts.

Two years later, in an economy where, according to a recent study by Mercer, nearly one in three U.S. workers is seriously considering leaving his or her organization, there is still no better competitive advantage than healthy, engaged employees who feel their companies genuinely care for their wellbeing.

Disengaged employees not only affect the bottom line—with disengagement costing American businesses more than $328 billion per year in lost productivity, according to a recent Gallup study—they have also been proven to sustain 62 percent more accidents than their engaged counterparts, according to another study by Gallup Consulting. Further, more accidents often mean increased insurance costs across the board.

A healthy culture made up of an engaged and motivated workforce, conversely, improves efficiency through productivity gains and reduces costs associated with insurance through fewer claims due to both the reduction of accidents and the improvement of overall health and wellbeing. In fact, a Gallup-Healthways Well-Being Index Community Survey and Wellmark Corporate Survey (2008) found employees who reported they were thriving in overall wellbeing had 20 percent lower medical costs than their peers. Those in the suffering category reported an average of 50 percent higher medical costs.

Developing a process to change your company culture, then, is not only an effective way to engage your workforce, it is the only way to make lasting changes to overall productivity, employee satisfaction and, consequently, the bottom line.

Uncovering the Root Cause of Risk

In order to succeed—and manage the overall cost of risk—a company needs healthy, safe and engaged employees. To get there, it is necessary to address the underlying causes of risk. Uncovering and understanding those risks requires a full commitment from all management and leadership teams. A single champion—even the CEO—cannot drive this type of cultural shift because culture is driven by teams working together, not through individuals mandating change. Once leadership teams are on board, the next step is to learn where you need to improve.

Most insurance brokers will perform an in-depth study of your business in order to understand the root cause of your risk. This could include scouring health claims and loss runs, checking OSHA records, and performing health assessments and facility inspections. But, standard data is not enough. The best brokers will aim to get to the core of risks that are costing you money and corroding your company’s culture.

In addition to surveying hard data, it is valuable to learn about your employees, specifically their ability to make good on-the-job decisions. Good judgment plays a major factor in the success or failure of a company’s culture. In fact, more than 75 percent of all workplace injuries can be attributed to poor judgment. Measuring employees’ capacity for good judgment through a thor-ough assessment can offer valuable insight and be used to address core causes of risk.

Possibly the best way to learn about the inner workings of your company, though, is by directly surveying employees about their everyday work experiences. By partnering with a third party to conduct a comprehensive cultural survey, employees will have the freedom to honestly assess what is working and, more importantly, what is not. This type of cultural survey can lay the groundwork for building a healthy culture by finding out what your employees really think, feel and care about.

Another benefit to surveying employees directly is the message it sends. According to Stephen M. R. Covey in The Speed of Trust, a mere 29 percent of employees believe management cares about them developing their skills. Only 42 percent believe management cares about them at all. When you take time to ask employees what they think, and encourage them to answer honestly, you can begin to build a trust relationship between employees and leaders.

When the results from a cultural survey are returned, management should be prepared to respond to criticism without placing blame back on employees. If management resists change or ignores survey results, employees will lose trust in their leaders and disengagement will increase. Creating credibility and trust requires management acting in the best interest of their employees, and following through on the results of a survey where employees express a need for change.

CASE STUDY

In 2008, a manufacturer with about 230 employees completed a comprehensive employee cultural survey that uncovered positive and negative aspects of the operation. While employees had a strong sense of community, they were unclear on how they fit within the company’s overall vision for the future. About 34 percent said they were experiencing great stress, and 31 percent reported not having a good work/life balance. This played into additional comments about stress levels on the job, namely fatigue due to 12-hour workdays. This was reflected in health surveys, which showed employees visiting the emergency room an average of 82 times in 2009.

Unfortunately, this company opted not to act immediately on the survey’s findings. Between the policy year 2008 and 2009, the manufacturer experienced several workers’ compensation accidents. The next year incidents increased by 10 percent and losses increased by almost 19 percent. Then, in 2010, the company replaced a disengaged safety director and once again amped up its focus on cultural improvement. Management committed to spending more time listening to employees and opened lines of communication. Leadership also opened up more development opportunities for employees. As a result, the number of incidents dropped by 50 percent, and losses decreased by nearly 87 percent for the 2011 policy year. In addition, emergency room visits were cut in half once the company implemented healthcare consumerism skill-building workshops and ongoing reinforcement. This dramatic claim reduction will lead to a reduction of the company’s workers’ compensation experience modification factor (EMR), thus lowering its ultimate insurance premium cost.

This example demonstrates that engaged employees are not only more satisfied on the job and in their personal lives, but they also have fewer accidents, are safer overall and make fewer health claims than their disengaged counterparts.

Once data is collected, it is time to formulate a vision for the future. Without a vision of what your company will look like in three to five years, it is easy to get sidetracked or downright derailed. A lack of clear vision also causes employees and management teams to become disengaged when they see programs being implemented with no real results or clear picture of the end game.

Teaming up with an accountability partner from the beginning can help establish a path to success and ensure you stay focused. A partner with proven tools to survey your employees and measure their capacity for good judgment can give you a leg up on data collection and get you moving in the right direction toward realigning your company’s culture. The result will be meaningful data and a specific plan of action that will serve as a baseline for successful cultural change.

From Programs to Process

In an attempt to correct fundamental risk, your company may have focused on programs that force compliance on employees. These one-off ventures into undoing unhealthy behavior or promoting health and safety do not work for a variety of reasons. Employees naturally resist forced behavioral modification and, even when they start off excited, grow weary of multiple programs that begin and end with no real, lasting change. Instead, changing a company culture requires a shift in thinking, which will lead to more engaged employees, who then become the innovators and instigators of deep-seated, positive change rather than reluctant participants in small behavioral shifts.

To accomplish this, leadership has to set the example for employees. If employees feel they are being handed down one more program, they will resist. It is up to a company’s owners and managers to lead by example and lay a strong foundation for fundamental change.

The entire leadership team should start by evaluating how you view your employees. Are your managers interacting with employees as if they are simply things, working to get tasks done in the company? Or, do employees feel like valued team members whose ideas and interests are appreciated and encouraged? If the former sounds more familiar, your company may require a serious shift in how its leaders regard the people within their employ.

People who feel undervalued—as if their only contribution to a company is to perform tasks for someone else—are disengaged. Among the myriad negative consequences of disengagement, employees who feel undervalued are more likely to experience workplace stress, which directly affects a company’s productivity and overall wellbeing. According to the Journal of Occupational and Environmental Medicine, 90 percent of all visits to primary care doctors are related to stress. Additionally, healthcare costs for employees with high stress levels are nearly 50 percent higher than for those with low stress.

Because the vast majority of an insurance premium is based on past and expected future claims, you can see how premiums can be lowered or at least reined in by keeping employees at a low stress level. Lower stress equates to fewer claims, which ultimately means lower insurance costs.

When a focus on culture and engagement becomes a way of life within the leadership of a company, rather than just a means to a financial end or just one more wellness or safety program, employees respond positively and begin to take ownership of their own attitudes and actions.

CASE STUDY

A manufacturer with fewer than 100 employees had been struggling with safety without much impact. In 2009, the company recruited a partner to reposition its “Wellness” programs as wellbeing benefits of employment. A cultural survey uncovered the need for improved communication and employees’ concerns with favoritism and other issues within a portion of the leadership team. The claims proved to be serious enough to warrant an investigation, which led to a termination. This sent a strong message to employees—who had become apathetic—that inappropriate behavior at the leadership level would no longer be tolerated. Two months later, a Health Assessment and Screening revealed significant improvement in job satisfaction and career wellbeing metrics. The fact that leadership took action and began to listen to employees’ concerns made a near instant impact.

The above example demonstrates the importance of a healthy and supportive community culture. A culture in which employees feel disengaged is less likely to retain workers, and more likely to experience workplace injuries. A survey by Randstad U.S. found that 35 percent of employees report that company culture has the greatest impact on morale with 22 percent believing it has a major effect on productivity.

Programs that force compliance on employees and try to correct behavior may appear to be working for a while, but they are a temporary fix and cannot be sustained over time. While workshops on self care, safety, cost of risk and effective communication between employees and managers may play a role in your path toward cultural change, they should be part of a broader process that requires constant nurturing by the entire company—from C-suite executives to the newest hires on the manufacturing floor. A partner can facilitate this type of process aimed at keeping employees engaged and therefore more productive. The end result will be reduced claims, lower costs and an overall healthier organization.

Partnering for Success

Drastic improvement to company culture is an investment in the human capital of your organization. While some components of changing the culture are cost-free, like improving communication or working on relationships between managers and employees, it is important to look at achieving a healthy culture and engaged employees as an essential business expense, and therefore, to invest adequate resources into the process. Designating a budget for health and safety management resources and initiatives allows a company to walk through the process of improving company culture uninterrupted. The results of data collection and cultural surveys will help direct where resources are most needed.

When done well, these costs can be recouped through insurance savings and productivity gains. In fact, a Towers Perrin survey found that organizations that successfully implemented a culture of caring benefitted from a 100 percent return on investment. Every dollar invested in injury prevention returned two dollars through increased productivity. In addition, for every dollar spent on the direct costs of a workplace accident, The National Safety Council estimates there are 1.1-4.5 times that in additional soft costs, such as the cost of production downtime, decreased quality, training new or replacement employees, employee morale and higher insurance premiums.

A thoughtful process for implementing a healthy company culture should be designed to head off risk and prevent it before it causes loss to a company’s bottom line. Recruiting an accountability partner who is knowledgeable and has resources in place to help you along the way can ease the process of creating a healthy company culture. In addition to tools, resources and expertise, a third party offers a fresh perspective and can keep the process on track by getting to know your business and implementing practical solutions that help prevent risk and foster a culture of health and safety. Additionally, employees may view hiring an accountability partner as a gesture of serious intention on the part of managers. When they see the company investing resources into improving company culture, they are more likely to trust in the process and be open to significant change.

Conclusion

Changing a company’s culture is a complex process, but it is worth the effort. In moving a culture from good to great, you improve overall employee engagement levels, which affect safety, health and productivity. You can also dramatically lower medical costs and reduce claims, which can be directly linked to lower insurance premiums. Creating a healthy company culture can also influence unexpected metrics within the business, like job performance, turnover, profit and time-to-delivery. Additionally, a healthy culture equals a significant competitive advantage by attracting top recruits and ensuring current employees remain engaged and invested in the company’s future. In short, healthy, safe and engaged employees are more productive, have fewer accidents, report fewer injuries and contribute positively to a company’s financial and overall success.

To create this significant, lasting change within your company, it is imperative to move away from one-off programs that aim to change a single behavior among employees. These programs, while sometimes met with enthusiasm in the beginning, almost always fizzle out without any lasting impact on wellbeing, safety or the bottom line. Instead, significant cultural change is a living, breathing entity that continues beyond programs and exists within the day-to-day operations of employees, managers and owners alike.

Rosie Ward is a health management consultant and Alan Wissbroecker is the director of risk services with RJF. Both individuals work with a variety of clients throughout Minnesota and Wisconsin.

With a doctorate in organization and management and additional degrees in the health field, Dr. Ward helps employers develop and implement cultural improvements and changes that improve employees’ wellbeing while positively affecting the company’s bottom line. She is involved in numerous national, state and local health initiatives, and is a regular speaker at many health, wellness and organizational development events. Contact Rosie Ward at wardr@rjfagencies.com.

Mr. Wissbroecker helps employers reduce risk exposures and their associated costs. His well-rounded approach takes a realistic view of human nature and work environments. He works with clients at the executive level to ensure complete understanding of an employer’s long-term strategic needs and to help shape the corporate culture, which is imperative to reducing long-term costs. Contact Alan at wissbroeckera@rjfagencies.com.

Build a world-class sales organization using a rigorous recruitment, training and support process.

By Tim Fleming

I believe that strong organic growth depends on the successful execution of four disciplines. These four disciplines function as pillars that form the structural integrity of your talent development plan. If even one pillar is weak, the entire structure will collapse. Let’s explore how these four pillars support your own organic growth plan.

Pillar 1:Recruitment and hiring

Successfully recruiting a world-class sales force demands a clear understanding of your business goals and the ideal candidate that will help you achieve those goals. As part of your recruitment and hiring strategic planning, you should:

• Create a disciplined three- or four-step hiring process. Challenge yourself to include all key stakeholders in the interviewing process, including your CEO and COO.
• Consider hiring a professional sales recruiter to identify and screen candidates.
• Target the first year salary at a practical level that new sales talent can reasonably validate in three years.
• Develop an assessment tool to benchmark successful behaviors, motivators and attributes. Use this to evaluate candidates.

Target candidates who demonstrate:

• Ability to sell at the C-suite level
• Ability to thrive and persevere in a long sales cycle
• Success with sales activities
• A “hunter” mentality
• Passion for business and the confidence to deliver business solutions

Pillar 2: Onboarding and Training

The second critical pillar is your new sales talent development plan, also called a learning path. Most firms’ learning paths focus on a graduation date that ranges from one week to 90 days, concluding by handing the new graduate the telephone to make cold calls. In contrast, a world-class learning path builds on agreed-upon success metrics and a thorough understanding of your most successful producers’ strategies. To ensure meaningful progress, define proficiency expectations at six, 12, 26, 52, and 104 weeks, and design a detailed training guide to achieve individual results. The most valuable secret to a successful learning path is to make sure your trainees experience the learning objective with a customer or prospect the same week that they learn the concept.

Pillar 3: Sales Methodology

Strive to develop one sales methodology for your entire business development team and hold them accountable to it. Your goal is to teach them how to gain a deeper understanding of their client’s business, discover a business fit, and deliver business solutions. Similar to a professional sports playbook, everyone must run the offensive plan with great precision. Your playbook can offer multiple options to allow for individual creativity, but failure to execute the fundamentals every day should result in bench time and ultimately termination.

Pillar 4: Sales Management

Finding leaders who are fearless, disciplined, confident and selfless is a challenge. Your goal is to uncover an individual who enjoys developing others, building a team, helping others succeed, encourages disciplined sales activities, and is motivated by working with talented people.

Excellent sales talent and leaders are rare, but following the four pillars above will help you attract and retain these valuable employees. In fact, I believe that executing a disciplined approach to achieving the four pillars can result in 10-percent or more increase in organic revenue growth for your organization.

In qualifying internships, the intern benefits most from the experience.

By Heather Roiger, M.S.

Many employers offer internships to students and other persons new to a field or industry. Applying the term “intern” to these positions, however, does not automatically exempt the employer from federal and state minimum wage and overtime requirements. Unless the positions meet certain criteria, interns will be subject to the same wage and hour requirements as employees. 

Unpaid Interns

The Department of Labor (DOL) has established six criteria to help employers determine whether interns are considered employees or trainees under the Fair Labor Standards Act. The criteria:

• The individual receives training similar to what would be given in a vocational school or academic educational instruction.
• The training is for the benefit of the intern or trainee.
• The interns or trainees do not displace regular employees, but work under close observation.
• The employer that provides the training derives no immediate advantage from the activities of the individuals and on occasion the employer’s operations may actually be impeded.
• The interns or trainees are not necessarily entitled to a job at the conclusion of the training period.
• The employer and the individual understand that no wages are paid for the time spent in the internship. 

Internship programs that do meet these requirements may be unpaid or be offered a stipend. Internships that do not meet these standards must be offered as paid positions. Interns in paid roles are entitled to the same wage and hour laws as other employees. 

Avoiding Misclassifications

When designing an internship program, employers should ensure that the intern, not the business, obtains the primary benefit of the experience. The more a program is structured around a classroom or academic experience, rather than the company’s actual operations, the more likely the intern will not be considered an “employee.”  

Additionally, employers should maintain documentation on the structure and features of the internship program, including an agreement detailing the parties’ mutual intent that: (1) their relationship will not be one of employment but rather an internship for the individual’s benefit, (2) the intern does not expect employment or compensation, and (3) the relationship is to provide the intern with skills that can be used in multiple settings. Employers should periodically review their internship program to determine how well it is working in practice. 

Additional Information

Department of Labor Fact Sheet: Internship Programs under the FLSA 

eLaws® – Fair Labor Standards Act Advisor 

By Jason Kleid

Think back to when you found yourself at the crossroads of how you impart knowledge. The scene is usually this: An employee describes a problem and then asks: ‘What should I do?’ In this instance they want you to tell them what to do perhaps to avoid accountability. Or they might ask: ‘What would YOU do if you were me?’ Tempting isn’t it? The trap has been set. Obviously you could just tell them what to do and save time. You might reason; it’s my job to provide direction and telling them exactly what to do will ensure the project is done correctly. 

Experience has taught me that I don’t want to be the answer man. Why? First, I am not that smart! I’ve only done this living thing once and fortunately, I’m still at it. Second, what may be right for me may not be right for someone else. In addition, the way I would go about executing a decision is probably different from the way someone else would. This difference in execution would have the potential of creating a different outcome. Third, what if I’m wrong and they follow my advice and disaster ensues?  I am partly responsible for the outcome.

A better way of handling employee questions is this. Instead of telling them what to do, you could choose the more challenging and yes, time-consuming route by asking questions. Here you would be applying a best practice coaching technique. You are helping them to think things through and thus teaching them how to reach their own conclusions. New thoughts create new pathways in the brain and if used often enough the way a person thinks begins to change.

Part of our job as leaders is to help our team make good decisions and not to make decisions for them.  (Good Coach) If your management team has a track record of making good decisions you no doubt have been applauded for producing exceptional results. 

Since your role as a leader involves the coaching and mentoring of others, you should consider this next question as food for thought. Why is it better to help a person by asking questions rather than just giving them the solution? The answer is simple. Since thinking precedes behavior an employee who is making bad decisions must change the way he/she thinks. Reasoning Point: If someone else is always solving your problems (Bad Coach) you are being denied the opportunity to grow your thinking ability. 

Thinking ability requires carefully weighing options before making important decisions. At the same time the decision-maker needs to recognize that no one option may have all the benefits. The person who develops and utilizes thinking ability also draws upon their past experiences in business and in life. They should also have the humility to seek the experience of others. 

It is also important to understand that what follows a decision may be more important than the decision itself. The commitment to have the decision succeed also counts. Persistence, follow-through and personal accountability are all crucial to a successful outcome. The book Overcoming Indecisiveness, by Dr. Theodore Isaac Rubin, points out: “It almost always is the decision-maker and not the particular choice that makes the decision work. . . . The failure of the decision has little or nothing to do with the choice. The failure is directly traceable and proportional to lack of dedicated commitment.”

It takes self-discipline and patience to be the Good Coach but it’s beneficial to everyone in the long run.

About Jason Kleid: Jason is focused on optimizing performance and getting results. Underscoring this philosophy is a belief that it is always the individuals in any organization, where the greatest potential for improvement and possibility of change resides. It is the mind (one’s thinking) where new ideas broaden understanding and cause things to happen. However, it is the heart (inner person/motivation) where transformation occurs.

FINAL REGULATIONS ON SUMMARY OF BENEFITS AND COVERAGE RELEASED

Feb. 15, 2012

The IRS, Department of Labor and Health and Human Services (the agencies) released final regulations regarding the Summary of Benefits and Coverage (SBC) requirement contained in the Affordable Care Act (the Act). The agencies had previously released proposed regulations in August 2011, which were scheduled to go into effect in March 2012. However, the agencies subsequently delayed the effective date until after final regulations were released.  

EFFECTIVE DATE FOR GROUP HEALTH PLANS

The final regulations and the requirement to provide the new, standardized SBC are effective for group health plans on the following dates:

• Beginning on the first day of the first open enrollment period that begins on or after Sept. 23, 2012, plans must provide the SBC to participants and beneficiaries who enroll or re-enroll for coverage during the open enrollment period.
• Beginning on the first day of the first plan year that begins on or after Sept. 23, 2012, plans must provide the SBC to participants and beneficiaries who enroll for coverage other than through an open enrollment period, such as newly eligible individuals and special enrollees.  

For example, an employer with a plan year that begins October 1, 2012, but starts their open enrollment period on September 1, 2012, would not be required to provide the SBC during open enrollment, but would be required to use the SBC for new enrollees beginning on the first day of the new plan year.

In addition, calendar year plans with an annual open enrollment period that takes place before the start of the plan year will generally need to start providing the SBC on the first day of the open enrollment period for the 2013 plan year.

NEW SAMPLES AND TEMPLATES ALSO RELEASED

The agencies have also published new samples and templates that can be used as a basis for developing an SBC. The new templates and instructions can be found on the DOL Website.

WHO IS RESPONSIBLE TO CREATE AND SEND THE SBC?

The final regulations confirm that, in the case of fully-insured plans, the insurance carrier is responsible to produce and provide a valid SBC to employers who sponsor group health plans. While self-funded employers are technically responsible to produce their own SBC’s, it is anticipated that firms which assist employers in the administration of self-funded plans are likely to assist with the development of required SBC’s. Employers will have to play a role in the distribution of the SBC to participants during open enrollment periods and to new participants.  

SUMMARY

Since employer group health plan years generally begin on the first of the month, the first employers who will be subject to these new rules will be those with plan years beginning October 1, 2012. Most employers will be able to depend on their carrier or claims administrator to actually produce the SBC’s, but employers will need to adjust their enrollment procedures to comply with the new disclosure rules.

The IRS issued final regulations on “qualified transportation fringe benefits” under Code Section 132. These benefits include employer-provided mass transit passes, reimbursement for parking and employer-provided transportation in a “commuter highway vehicle” (vanpools). The statutory income exclusion limit for qualified parking – parking provided to an employee at or near the employer’s business premises– is $240 per month for 2012 (increased from $230 in 2011). The combined income exclusion limit for transit passes and vanpooling is decreasing to $125 per month (from $230 in 2011).

Cafeteria plans must meet certain nondiscrimination requirements to ensure highly compensated key employees do not receive a disproportionate amount of tax-advantaged benefit. These tests are complex and it is recommended that an advisor perform the tests to ensure compliance.

Feb. 7, 2012
Certain states mandate short term disability (STD) coverage for employees who work in those states. States have varying eligibility requirements that determine if an individual is eligible for disability insurance. Download a summary of these states and their requirements below.

Statutory Disability Requirements for 2012

FSA/HRA/HSA

The Affordable Care Act established a uniform standard effective January 1, 2011 that applies to all tax-favored arrangements, such as flexible spending arrangements (FSAs), health reimbursement accounts (HRAs) and health savings accounts (HSAs). The IRS has issued guidance for these changes as they apply to tax-favored arrangements used to pay for over-the-counter medicines and drugs. Under this standard, the cost of an over-the-counter (OTC) medicine or drug cannot be reimbursed from the account unless a prescription is obtained; whereas previously, OTC drugs were permissible for reimbursement under FSAs without a prescription.

This standard does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles. The standard applies only to purchases made on or after January 1, 2011. 

In 2011, the tax penalty on withdrawals from HSAs for reasons other than the reimbursement of qualified medical expenses increased to 20%.

FEDERAL AND STATE TAX CONSEQUENCES OF DOMESTIC PARTNER HEALTH PLAN COVERAGEJANUARY 2012

BACKGROUND

Many employers provide health plan coverage to their employees’ domestic partners (and sometimes the domestic partner’s child).  This coverage may be taxable on a federal level to the employee depending on:

• Whether the domestic partner or child satisfies the conditions to be a Code §105(b) tax dependent for the entire taxable year in question.
• How coverage is paid for (pre-tax or after tax).

In some cases an employer may need to impute the fair market value of coverage provided to domestic partners (and their children).  If income is imputed due to employer-paid health coverage, the domestic partner's coverage will be treated as having been purchased with after-tax dollars for purposes of Code §104(a)(3), with the result that any health benefits paid on behalf of the domestic partner (or child) under the plan will be tax-free to both the employee and the domestic partner.

As well, as more and more states grant various rights to same gender or opposite gender domestic partners, taxation issues on a state level should also be addressed.

DEFINING FEDERAL TAX DEPENDENT

SAME GENDER PARTNERS AS THE EMPLOYEE’S DEPENDENT

To be a federal tax dependent of an employee, a domestic partner must meet the requirements of a “qualifying relative” under Code §105(b).  The partner must:

• Have the same principal place of abode as the employee and be a member of the employee's household.
• Receive over half of his or her support from the employee.
• Not be anyone's qualifying child.
• Be a (1) citizen of the U.S., or (2) a resident of the U.S. or a country contiguous to the U.S.

In many cases, employees are not able to show that they provide more than half of the support for the partner and thus the partner would not qualify as a §105(b) dependent.  The IRS allows employers to rely on the certification of the employee regarding the dependent status of their partner, relieving the employer from collecting income and support information.

CHILDREN OF SAME GENDER PARTNERS AS THE EMPLOYEE’S DEPENDENT

The children of domestic partners (who are not otherwise children of the employee) will be entitled to receive tax-free health coverage only if they qualify as Code §105(b) tax dependents by being an employee's “qualifying child” or “qualifying relative”.  In most cases, such a child will most likely not have the necessary family relationship with the employee to qualify as the employee's “qualifying child”.  The child will typically either be the qualifying child of the domestic partner or of the child's other parent.  And since one of the conditions of the qualifying relative test is that a qualifying relative cannot be the qualifying child of any other taxpayer, the child of a domestic partner will usually fail to satisfy the qualifying relative test for the same reason.

On the other hand, in cases where the same gender couple adopts a child, or where a child is treated as a stepchild under state law, the child will typically qualify as the employee’s dependent.

DETERMINING THE FAIR MARKET VALUE OF HEALTH COVERAGE PROVIDED 

As a general matter, when income must be imputed because health coverage is provided to domestic partners (or children) who are not Code §105(b) tax dependents, the amount includible in the employee’s gross income is the fair market value of the coverage (less any after-tax payments by the employee).  However, no official guidance addresses how to determine the value of health coverage for this purpose.  Employers may want to consider the following approaches:

• The more cautious approach is to use the plan’s COBRA applicable premium for self-only (individual) coverage when coverage is added for an individual who is not a Code §105(b) tax dependent.  This means that when coverage is added for more than one such individual, the COBRA premium for that number of individuals (e.g., the rate for self-plus-one or family coverage) would be used.
• Another possibility would be to determine the value based on the incremental cost of adding coverage for the individual.  For example, if the monthly premiums for self-only and self-plus-one coverage are $160 and $310, respectively, and the employee and one domestic partner are covered, the fair market value of the domestic partner's coverage would be $310 minus $160 or $150.  But in some cases, the incremental cost of adding coverage for an individual may be very small, or even zero (i.e., if the employee already has family coverage).  In this event, because the individual’s coverage is not valueless, the employer may want to use the COBRA applicable premium.
• Some employers may also rely on actuaries to determine the fair market value of coverage.

Regardless of which approach is used, any amount paid for the coverage on an after-tax basis by the employee would be subtracted from the fair market value to arrive at the amount includible in the employee’s gross income.

FEDERAL TAX CONSEQUENCES WHEN A DOMESTIC PARTNER (OR CHILD) IS A TAX DEPENDENT FOR HEALTH COVERAGE

In general, when a domestic partner (or child) is an employee's Code §105(b) tax dependent, the value of the domestic partner's health coverage and any benefits provided under the health plan will be tax-free to the employee and domestic partner.

More specifically, the following are the tax consequences when a domestic partner (or child) is the employee’s Code §105(b) Code §105(b) tax dependent: 

• Employer Pays for the Entire Cost of Coverage. When the employer pays the entire cost of the domestic partner's (or child's) health coverage, the value of the coverage is not taxable to the employee.
• Salary Reductions and Employer Flex Credits Are Used to Purchase Coverage. When the domestic partner (or child) qualifies as a Code §105(b) tax dependent, the employee can make any required employee contributions for the health coverage with pre-tax salary reductions under a cafeteria plan. The employee can also use employer flex credits under the cafeteria plan to pay any required employee contributions for the domestic partner's health coverage on a pre-tax basis.
• Employee Pays for Coverage With After-Tax Dollars. When an employee pays for the domestic partner's (or child's ) health coverage with after-tax dollars, the employee will have no imputed income, and any health benefits paid on behalf of the domestic partner will be tax-free to both the employee and the domestic partner.

DOMESTIC PARTNERS (OR CHILDREN) WHO WERE NEVER FEDERAL TAX DEPENDENTS FOR HEALTH COVERAGE

When health coverage is provided to a domestic partner (or child) who is not the employee's Code §105(b) tax dependent, the tax consequences vary, depending on how the coverage is paid, as follows:

• Employee Pays for Coverage With After-Tax Dollars. When an employee pays with after-tax dollars for coverage of a domestic partner (or child), the coverage will not be taxable to the employee, provided that the employee pays at least the fair market value of the coverage.  An employee who pays less than the fair market value for the coverage is taxed on the difference.  Where health coverage is provided on an after-tax basis for the domestic partner (or child) but on a pre-tax basis for the employee, separate payroll slots must be maintained for pre-tax and after-tax coverage, and an allocation must be made as to the amount of premium attributable to the domestic partner (or child) coverage.
• Employer Pays for Entire Cost of Coverage. If an employer pays for the domestic partner's (or child's) health coverage, then the value of the health coverage is includible in the employee’s income.  The employee will have imputed income reported on Form W-2 equal to the value of the domestic partner's (or child's) coverage.  This amount will also be subject to income tax withholding and employment taxes (e.g., FICA and FUTA).
• Salary Reductions and Employer Flex Credits Can Be Used to Purchase Coverage If Benefits Are Treated as Cash. Cafeteria plan rules permit non-Code §105(b) tax dependent health coverage to be offered under a cafeteria plan as a taxable benefit.  When such coverage is offered under a cafeteria plan, the employee must be treated, for all purposes under the Code (including, for example, reporting and withholding purposes), as receiving, at the time that such benefit is received, cash compensation equal to the full value of such benefits (i.e., the fair market value of the coverage) at such time and then purchasing the benefit with after-tax employee contributions.  In other words, the employee has to elect the coverage as a taxable benefit before the beginning of the plan year (or other coverage period).  Thus, with proper plan design, a participant may use salary reductions or employer flex credits to purchase health coverage for a domestic partner who is not a Code §105(b) Code §105(b) tax dependent as a taxable benefit under the cafeteria plan—the coverage will be treated as a cash election and will be taxed at the time it is received.
• Employee Cannot Pay for Coverage on a Pre-Tax Basis. An employee cannot pay for domestic partner (or child) coverage on a pre-tax basis under a cafeteria plan.

DOMESTIC PARTNERS (OR CHILDREN) WHO CEASE TO BE FEDERAL TAX DEPENDENTS FOR HEALTH COVERAGE DURING THE PLAN YEAR

A domestic partner (or domestic partner's child) who fails to satisfy the conditions for being a Code §105(b) tax dependent during any portion of a taxable year will fail to qualify as a Code §105(b) tax dependent for the entire taxable year. In that event, the employee will be required to include the value of employer-provided domestic partner (or child) coverage in the employee's gross income. In the event a domestic partner (or child) loses Code §105(b) tax dependent status mid-year (e.g., because of income changes or a dissolution of the partnership), the employer should impute in income the value of the domestic partner (or child) coverage provided between the beginning of the year and the date that Code §105(b) tax dependent status was lost. The employer should also immediately cease allowing for pre-tax payment of health coverage for the domestic partner (or child). Failure to do so, and failure to impute income in this fashion, could jeopardize the cafeteria plan's qualified status.  In addition, expenses may not be reimbursed by the Health FSA.

STATE TAX TREATMENT OF COVERAGE PROVIDED TO SAME GENDER COUPLES

A number of states recognize same gender marriages, same gender domestic partnerships, opposite gender domestic partnerships (California only) and civil unions. Individuals in these relationships are often granted the same state and local tax treatment of employer-provided benefits as individuals in opposite gender marriages. These state rules apply only to the state tax and not the federal tax treatment of benefits as described above.

As of the end of 2011, states that provide state tax benefits for same gender couples similar to those afforded to opposite gender couples are: 

• California 
• Connecticut 
• Delaware 
• District of Columbia 
• Hawaii 
• Illinois 
• Iowa 
• Massachusetts 
• New Jersey 
• New York 
• Oregon
• Rhode Island 
• Vermont 

Employers who provide benefits to the partners of employees in same gender relationships in these states should consult with their tax and payroll advisers as to how to handle the state taxes for that particular state. State tax treatment of these benefits in other states may also vary from state to state but often mirrors the federal tax treatment of benefits.

by Laura Muhlstein, HR Director

January 31, 2012

Working with employers in the employee benefits business, we’re often asked how we approach wellness with our own employees. Much like any other employer, our approach has evolved over time. We began years ago, not knowing what we didn’t know. Over time, however, we learned several lessons and have gradually embraced a more well-rounded approach to our employees' overall wellbeing.

In 2005, we started with a team-based weight loss competition with huge cash purses for the winning team. While the short-term weight loss was significant, the only long-lasting impact is the memory of our president, Tim Fleming, wearing sweats and blowing his whistle as he led his team in a lap around the building. Tim’s team later conceded, with CEO Bill Jeatran’s team emerging victorious…and 213 pounds lighter.

As we continued to learn, we focused less on short-term incentives and more on long-term impact. We continued to see year-over-year changes in our health assessment results, but it still didn’t feel like a cohesive approach to employee wellbeing.

By 2010, we started to act on our own belief that there’s more to it than just fitness challenges or healthy eating competitions. Anyone who has listened to or spoken with our health management consultant, Rosie Ward, knows that she bases much of her work on Gallup’s five components of wellbeing. Promoting the wellbeing of employees is more complex than encouraging healthy eating and exercise habits, and Gallup and others have research that supports this.

So in 2011, RJF rolled out its “A Balanced You” platform, which encompasses all the ways that RJF supports an employee’s physical and mental, career, social, financial and community wellbeing. Components vary and include things like healthy food guidelines that promote physical health and RJF’s Charity Challenge, which encourages volunteering with peers and business partners. The platform is reinforced in management and email communications, our monthly employee newsletter and through events hosted by employee-based committees.

We still offer annual no-cost health assessments to all employees and participation in our Wellbeing Rewards program is tied to reduced health insurance premiums. However, we now put less focus on things like spending time at the gym. Instead more emphasis is now placed on helping each employee, a unique person who happens to be a part of the RJF team, identify what wellbeing means for him or herself and take steps toward improvement.

Employers with 11 or more employees are required to maintain records of occupational injuries and illnesses as they occur. The purposes of keeping these records are to permit survey material to be compiled, to help define high hazard industries, and to inform employees of the status of their employer's record. These records must be maintained for five years at the establishment and must be available during an OSHA inspection. Failure to keep these records accurate and up to date can lead to OSHA fines.

Employers required to maintain records of occupational injuries and illnesses are reminded to do the following by February 1 to comply with OSHA's record keeping requirement:

• Review your Log(s) of Work-Related Injuries & Illnesses (OSHA's Form 300) for accuracy.
• Complete the Summary of Work-Related Injuries and Illnesses (OSHA's Form 300A) for each log (companies with no recordable injuries or illnesses must still post the summary with zeros on total lines). 
• Certify the Summary by having it signed by a company executive. 
• Post the Summary (OSHA's Form 300A) - not the Log - from February 1 until April 30 in a common area (i.e. where notices to employees are usually displayed).

For more information on completing OSHA's 300 or 300A form go to http://www.osha.gov/recordkeeping/index.html or http://www.dli.mn.gov/osha/Recordkeeping.asp.

January 10, 2012

The IRS recently released IRS Notice 2012-9 that provides employers additional guidance on the Form W-2 reporting requirement created under the Affordable Care Act1. The Notice clarifies a number of issues addressed in earlier guidance and extends the small employer exemption (for employers filing fewer than 250 W-2s) from the reporting requirement.

BACKGROUND

The Act established a requirement that employers must report the “aggregate cost” of employer-provided health coverage on an employee’s Form W-2. This requirement is informational and does not affect an employee’s taxable income.

The aggregate cost of coverage is the entire cost, including both the employer and employee contributions, to an applicable plan. Self-funded plans are generally allowed to utilize the method used to determine applicable COBRA rates to calculate the aggregate cost of a plan. Applicable cost must be calculated on a monthly basis, based on the specific coverage maintained by the employee.

The Form W-2 reporting requirement was originally effective for the 2011 tax year. However, in March 2011, the IRS provided interim guidance that delayed the requirement so that employers who file 250 or more Form W-2’s in the preceding calendar year were not required to report health costs on Form W-2 until the 2012 tax year (i.e. W-2’s that are provided to employees generally in January 2013).  The guidance also delayed the requirement for smaller employers.

The requirement raised many questions from employers and plan administrators such as what types of coverage must be included on Form W-2 and how to calculate the cost of this coverage. The IRS solicited comments on various aspects of the reporting requirement, and as a result, has now amended its guidance to address some of these questions. The updated guidance is effective for reporting in 2012 and may be relied upon for employers who voluntarily report in 2011.

NEW GUIDANCE AND CLARIFICATIONS

Below is a summary of the guidance and clarifications:

• Employers who file fewer than 250 Form W-2’s in the preceding calendar year are exempt from the reporting requirement and “… until further guidance is issued, an employer is not subject to the reporting requirement for any calendar year if the employer was required to file fewer than 250 Forms W-2 for the preceding calendar year.”
• The reporting requirement does not apply to payments or reimbursements of health insurance premiums for a 2% shareholder-employee of an S corporation who is required to include the premium payments in gross income.
• Tribally chartered corporations that are wholly owned by a federally recognized Indian tribal government are exempt from the reporting requirement.
• The same standards that determine if a group dental or vision plan is subject to HIPAA will also be the same standards that apply to determine if the plan’s cost is includible in this reporting requirement (e.g. stand-alone plans are generally exempt from the reporting requirement). 
• The reporting requirement does not apply to Health FSA coverage that is solely funded through employee salary reductions; however, employer contributions to a Health FSA are reportable.
• Employers who provide employees with access to Employee Assistance Programs (EAP), wellness programs or on-site health clinics are not required to include the cost of this coverage on Form W-2 if the employer does not charge a premium for that coverage for COBRA purposes; otherwise, this coverage would be included in the reported cost of coverage to the extent that it is a group health plan.
• Employers may include the cost of coverage under programs not required to be included under applicable interim relief, such as the cost of coverage under a Health Reimbursement Arrangement (HRA). Some employers may choose to include HRA costs, even though not required, since it may make it administratively easier to calculate an employee’s aggregate cost.
• An employer may use either a composite rate or other method used to calculate COBRA premiums. Regardless of which method is used, the employer must use that method consistently when reporting the cost of coverage.
• The cost of reported coverage may be based on the cost information available to the employer as of December 31 and does not need to be adjusted for future changes in enrollments.
• The guidance also addresses items such as the applicability of supplemental health benefits such as cancer policies, the reporting requirement for related employers that do not use a common paymaster and how to complete reporting for coverage provided during a payroll period that straddles two calendar years.

IRS Notice 2012-9




1 “Affordable Care Act” means The Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010 (HCERA).

Jan. 4, 2012

On December 27, 2011, the National Labor Relations Board announced that it was delaying the implementation of its rule requiring covered employers to post notice of employee rights under the National Labor Relations Act. The new date for posting requirements will be April 30, 2012.

According to a press release from the NLRB, it has agreed to postpone the effective date of its employee rights notice posting rule at the request of the federal court in Washington, DC pending a legal challenge which would change the rule.

Additional information

January 4, 2012

The Federal Motor Carrier Safety Administration (FMCSA) issued a new rule, effective, Jan. 3, 2012, prohibiting interstate commercial motor vehicle (CMV) drivers from using hand-held cell phones while driving.

These drivers are banned from holding, dialing or reaching for a hand-held cell phone. While using a phone with push-to-talk capabilities is not allowed, hands-free set-ups can be. Using CBs and two-way radios is also allowed.

Companies allowing employee drivers to operate hand-held cell phones while driving will face a maximum penalty of $11,000. Individual employees can face up to $2750 in federal civil penalties for each offense. The U.S. Department of Transportation estimates that about 4 million drivers will be affected.

The U.S. Department of Transportation has published a list of frequently asked questions on their Website. 

Minnesota Statute 221.0314 subd. 6 adopts part 392 of the federal regulations. This means the new rule, using a hand held mobile telephone, will also apply to intrastate CMV drivers. 

Thank you for your interest in the Benefits Buzz newsletter. Each month, new benefits and HR tips are featured. Below is a link to this month's newsletter as well as links to past editions.

Benefits Buzz June 2013

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Thank you for your interest in the Live Well, Work Well newsletter. Each month, tips for healthy living are featured. Below is a link to this month's newsletter as well as links to archived editions.

Live Well, Work Well June 2013

Archived Live Well, Work Well Newsletters

2013

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2012

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The Internal Revenue Service (IRS) released the 2012 cost-of-living-adjusted HSA limits.

Maximum annual HSA contribution limit

• Self only coverage: $3,100 (previously $3,050)
• Family coverage: $6,250 (previously $6,150)
• Catch-up contribution for those age 55 or older: $1,000

Minimum annual deductible to qualify as a high deductible health plan

• Self only coverage: $1,200 (no change from prior year)
• Family coverage: $2,400 (no change from prior year)

Maximum annual out-of-pocket maximum to qualify as a high deductible health plan

• Self only coverage: $6,050 (previously $5,950)
• Family coverage: $12,100 (previously $11,900)

December 28, 2011

Most Minnesota manufacturers are predicting 2012 to be as good or better than 2011, according to a Minnesota Department of Employment and Economic Development (DEED) report. The report provides an overview of a survey done by the department with the Federal Reserve Bank in November.

"Manufacturing is an integral part of the state's economy," said DEED Commissioner Mark Phillips in a news release. "It's impossible to overstate its importance in terms of wages, employment and exports, so it's reassuring that the industry continues to grow."

Read the release and full report.

Employers continue to analyze the impact that the “Play or Pay” mandate will have on their organization. The law requires that employers with 50 or more full-time equivalent employees (defined as 30 or more hours per week) must provide a minimum level of medical insurance for their employees. If organizations do not meet the government requirements, they must pay a penalty.

• If no employer-sponsored plan is offered: $2,000 multiplied by the number of individuals employed, not counting the first 30 employees.
• If employer-sponsored plan is offered: $3,000 multiplied by the number of full-time employees who receive an Exchange-based premium tax credit; this is capped at the amount of penalty that would have been assessed had the employer not provided any coverage, not counting the first 30 employees