Thursday, January 29, 2009

FMLA Update

There is a very nice summary of New FMLA requirements here.

Monday, January 26, 2009

COBRA Changes in Stimulus Will Bite Employers

In my many years I have come to a conclusion that one useless man is a shame, two is a law firm, and three or more is a congress. - John Adams

IGoogle has a neat new feature that includes 3 daily quotes on my home screen and I chuckled at the one above because in these turbulent times the world needs humor and most of us enjoy using our attorney friends for fodder right?I stopped laughing when I read later today about the proposed reforms to COBRA being considered in the US Congress in the form of "The American Economic Recovery and Reinvestment Tax Act (H.R. 598). Namely, there are two potential components of the stimulus package relating to COBRA being debated which will have a serious impact on Employer Health Plan Expenses;

  1. Having the taxpayer fund 65% of the cost of COBRA for employees who lose their job for 12 months or until new coverage is obtained.

  2. A mandate for employers to make COBRA available until employees who are both 55 with 10 years of service are Medicare Eligible or secure alternative coverage.

The HR Policy Association has a nice summary of all the reasons such proposals would be estimated to expand COBRA costs by an estimated $65B as well as directly impacting employer health plan costs via adverse selection I strongly suggest you read.

By continuing to expand the scope of COBRA on the backs of the taxpayers and employers the Congress will quickly create just another Cost shift on those who work for a living. John Adams was a wise man.

Thursday, January 22, 2009

He's Fine

My Mom was diagnosed with brain cancer last year and shortly thereafter so was Senator Ted Kennedy. Now I am no fan of Senator Kennedy's politics but any man who would find anything but sadness in such a diagnosis is not much of a man in my book. I feel for the Kennedy family and Senator Kennedy. So imagine my surprise in hearing from Senate Majority Leader Harry Reid and Senator John Kerry tell us he's in good shape or he's fine.
I assure you he is not fine. Have you seen his picture? I will not print it but less disciminating "journalists" have done so and they should be ashamed
Anyone with his diagnosis or those who are familiar with the diagnosis know what a blatant lie such a statement represents or is either seriously out of touch with reality or engaged in another pattern of deceit while unable to distinguish between todays news cycle and tomorrow's headlines which hold an actuarial inevitability the average American can readily understand.
So get ready to have healthcare reform jammed down your throat from the same folks who told you Senator Kennedy is fine.

Lies, Damn Lies and Statistics

I guess I have just been too busy to expose any PBM abuses lately but this article by Neal Lerner in Drug Benefit News does a nice job in reminding folks it does not really matter if your PBM says they are transparent if they lack a systematic process and plan design which moves your members to lower cost in class generics as appropriate.

Check here or here for my prior posts on PBM's.

I may be busy but Iam still watching you untransparent PBM's.

Thursday, January 8, 2009

Pay No Attention To That Man Behind The Curtain II

Last year I wrote about my own personal encounters with anti-competitive behavior that was being exhibited by brokers who placed business with carriers purely based on their compensation, which was frequently not disclosed on an ERISA 5500 schedule A. Such payments whether referred to as overrides or contingency commissions had a common characteristic--the customer who hired the broker usually did not know. It simply was not disclosed.

An old friend who worked at an alphabet house called me up and advised my blog post had made the morning read at his firm and people were quite upset and surely I had exaggerated. i assured him I had not written 10% of what I personally witnessed. So lets compare what I said then with this weeks news Marsh has settled charges with 9 states.

I wrote;

1. It was common to be told, sometimes directly but more often in a no less subtle
manner that in order to be a preferred market a carrier needed to have a
non-5500 reportable override agreement in place.

2 .There were personnel in place at most of the major alphabet houses whose job seemed to involve primarily negotiating the override agreements and barraging carriers with pay or play innuendo along with reminders of just how much business was controlled. In short there was the A list and the B list. Guess who earned most of the business?

3. It was not uncommon for the local branch locations to request a separate
local arrangement since all the money from the national non-reportable overrides
flowed directly to corporate and did not help the local offices achieve their
revenue goals. "Can you help us, so we can help you with your goals?"

Marsh was involved with a "pay-to-play" arrangement centered on its receipt
of contingent commissions, in addition to standard commissions and fees, from
certain insurance companies. Contingent commissions, also known as profit
sharing commissions, are incentive-based compensation programs offered to
brokers by insurance companies. These arrangements were often undisclosed to
consumers, and provided an incentive for brokers to steer business to the
insurer that offered the most lucrative contingent commissions, often in
violation of their clients' interests, according to the officials.

Wednesday, January 7, 2009

Disability Challenges Ahead in 2009

Employers in planning cycles have good cause to strongly consider both their plan design along with the competency of the vendors who administer their FMLA, short and long term disability programs given the current business and compliance environment.

With reduced employment the incidence of disability will increase as people who work with a disability seek disability benefits out of fears their job may be eliminated. There are many Americans with Disabilities who get up and go to work everyday with conditions which could disable them. Take away their job and they pursue disability benefits.

Those on disability will also find it difficult to find employment which is consistent with their functional capacity leading to longer claim durations. Many Long Term Disability contracts contain provisions where the definition of disability changes from the inability to perform your own occupation to the inability to perform any occupation for which you are suited by education training or experience which would pay 60-80% of pre-disability earnings. A 24 month own occupation period is the most common point for the change in definition. Insurers use a transferable skills analysis and a local labor market assessment and when they find a position which meets the earnings requirement, 60% or 80% being the most common earnings thresholds, they terminate LTD benefits. Of course with skilled jobs being scarce it is more difficult to find positions which meet the earnings requirement so claims remain open that would have closed in a better economy.

Employers also need to consider that The Americans With Disabilities Act (ADA) has been expanded as of January 1, 2009 (Nice summary is available here form Chicago Tribune ) to consider episodic chronic conditions covered disabilities. To qualify as a covered disability the ADA has also expanded the definition of a major life activity to include such tasks as concentrating, thinking, communicating, working, bending, lifting, standing, reading, performing manual tasks and caring for oneself.

Amended FMLA Regs become effective 1/16/2009 and there is a nice summary located on Ohio Employers Law Blog. It is now an even better idea to have an independent 3rd party handle the medical certification of an FMLA Leave.
Insurance markets for disability harden in a recession and acquisition pricing strategys go away.

Now would be an opportune time to evaluate the plan design and disability claim capabilities of existing disability vendors in order mitigate the harsh reality employers face from the economy along with FMLA & ADA compliance.
  1. More Disability Claims will Occur
  2. Claims will last longer
  3. ADA has been expanded and increased litigation will result.
  4. FMLA regulations have been amended but your FMLA process must be ready to combat fraud.
  5. If your claims experience factors into your rates are you ready?

Add this to the agenda for planning this year and be sure to retain a qualified consultant, like me for instance, who has deep experience in these matters to assist you as you will need the right plan design and the right vendors. Employers who act now will not be facing massive premium and claim increases two to three years down the road or answering hard questions from management.