• Critical Deadlines are Looming

    Staffing companies that have delayed making final decisions on their 2016 ACA-compliant health plans and supplemental benefits — ALERT!

    Whether Fixed Indemnity, MEC and/or Major Medical Bronze level plans are right for your company, the time is now to finalize plans, gather census data, arrange for implementation, and schedule open enrollment if you want your plans in place for a January 1, 2016 effective date.

    If you have not made your 2016 benefit plan determinations — or if you have, but have not yet provided the necessary data and scheduled your implementation with IAG — please contact your IAG representative today.


    Following Columbia’s 1,000-Year Flooding, Patience Please!

    This weekend’s flooding across South Carolina and the Southeast proves once again Mother Nature is a force to be reckoned with. 

    IAG’s third party administrator PAI– a wholly owned subsidiary of BlueCross BlueShield of SC (one of only two A+ Superior rated health insurance companies in America) and headquartered in Columbia, South Carolina — is particularly proud of its award-winning customer service metrics, SAS-70 data center and national reputation for performance excellence. 

    But 24 inches of rain, over 150 bridges shut down and nearly 500 roads closed (including two major interstates) have temporarily cut off water, electricity and driving access to much of the city… with President Obama declaring the area a Federal Disaster Zone last evening.  While no physical damage was sustained to PAI’s state-of-the-art facility, it has made it virtually impossible for many of PAI’s associates to get to work to handle calls and inquiries this week.  The team is temporarily operating with a limited staff to meet your needs.

    PAI and IAG ask for your thoughts and prayers for the hundreds of impacted families, and a little extra patience this week while the community dries out and returns to normal.

  • Promoters Push VEBA Trust

    Essential StaffCARE, along with national brokerage firms, consulting firms and major insurance carriers, have observed health plan scenarios being presented to staffing companies that provide major medical benefits through a VEBA trust and/or a Captive insurance entity.

    Serious questions have come forward from a number of staffing companies that are confused as to the type of plans they are being presented that are part of these VEBA/Captive arrangements.  Staffing companies are unclear if they are fully insured or self-funded.

    It is critically important to understand the significant differences between self-funded major medical plans and fully insured major medical plans from both a contractual and regulatory perspective.

    Self-Funded Major Medical

    The Employer is ultimately responsible for claims liability incurred by plan members.  Not the stop-loss carrier. The employer can however purchase stop-loss coverage to limit their exposure to major medical claims that are now unlimited under ACA rules. A Self-Funded major medical stop-loss contract is between the stop-loss carrier and the employer, and does not extend to the employee. Stop-loss carriers offer casualty insurance not health insurance, and are not regulated by state insurance departments as health insurance.

    Fully Insured Major Medical

    The Health Insurance Company is responsible for claims liability incurred by plan members.  Not the employer.  Fully insured plans are contracts issued to the employer and enrolled employees.  Benefits and claims payments are guaranteed by rated health insurance companies that spread risk over many plans and many members. Major medical insurance companies and their contracts are highly regulated by both state and federal law to protect both the employer that offers the plan, and the employee that depends on the coverage they are purchasing. 

     The National Association of Insurance Commissioners (NAIC) has issued a white paper to inform the public of risks involved in self-funded major medical plans under ACA rules and mandates. These plans are increasingly being marketed without full disclosure of the financial construction of the plan or the risks involved. 

    We have included a link to the NAIC white paper Stop Loss Insurance, Self-Funding and the ACA, along with other informative links that will assist staffing companies in understanding the risk they may be obligating themselves. 

    Excerpts from the NAIC’s white paper include:

    • “Most stop loss insurance policies contain explicit statements that the stop loss insurer is not the plan fiduciary, but the policy does not define what a plan fiduciary is…”
    • “Before an employer can easily compare the cost of self-funding against the cost of private (fully insured) health insurance, he/she would have to have a clear and accurate picture of all the cost components of self-funding. There is no law requiring these costs to be made transparent to employers and no rate stabilization laws for stop loss insurance…”
    • “Because stop loss insurance products are not generally required to conform to state or federal health insurance law, including the ACA, there may be exposure to additional risk in some stop-loss insurance products that is not immediately apparent…”
    • “Many stop loss insurance policies state that premiums can increase at any time or even retroactively during the policy year when additional, unforeseen risk occurs, making financial planning very difficult…”
    • “The concept of an “unforeseen risk” is problematic. The risk of plan participants developing medical problems during the year is precisely the risk the employer might reasonably believe it is insuring against when it buys a stop loss policy…”
    • “Early termination or rescission of the stop loss insurance policies for the reasons stated above could result in financial disaster…”

    Historically, self-funded major medical plans have worked well for larger standard ris (low turnover) companies able to analyze 3 to 5 years of fully insured major medical claims experience, and with 75%+ employee participation within their group. 

    Contrast this to the staffing industry, where newly deemed full-time employees have little or no claims experience for a stop-loss underwriter to analyze, and low participation levels. ACA requirements allowing unlimited claims exposure makes estimating claims in this self-funded environment risky, even dangerous.

    Captives Defined (Source: NAIC)

    “In its simplest form, a captive is a wholly owned subsidiary created to provide insurance to its non-insurance parent company (or companies). Captives are established to meet the risk-management needs of the owners or members. They are essentially a form of self-insurance whereby theinsurer is owned wholly by the insured…”

    The Federation Of Regulatory Counsel (FORC) is a national association of attorneys specialized in the arena of insurance regulatory law. FORC published the paper  VEBAS, ERISA, AND OTHER CLOAKING DEVICES, that describes the use of VEBAs and Captives and the potential regulatory issues that could develop.

    FORC’s CONCLUSION

    “A program will draw regulatory attention for review as unauthorized insurance by utilizing descriptions such as “VEBA,” “ERISA exempt,” and similar reference to federal nomenclature while avoiding licensure as an admitted insurer or MEWA or registration as an RRG, or causing the transfer of benefit risk to an entity unauthorized to accept such risk. A program which boasts low rates and minimal or no underwriting will invite heightened regulatory attention. An “exempt” program, which employs insurance agents to transact the program, will ensure regulatory attention, even when the agents are characterized as “labor consultants” or “business agents” to “enroll” or “negotiate” with potential association or union members. Legitimate ERISA plans, if properly established, may avert state insurance regulation. The funding of a benefit program through a VEBA will not, alone, evoke similar federal preemption or state exemption unless provided by state law…”.

    While attorneys agree that a VEBA Trust structure is legal, any company being presented a product concept that includes a VEBA Trust or Insurance Captive arrangement should require the promoter to provide the following in writing:  

    • Is this plan fully insured or self-funded?
    •  If fully insured, why do I need stop-loss insurance?
    •  Who is the originator of the VEBA? (Require an exact copy of the Trust Document and proof of its filing date and home situs)
    •  Who are the current VEBA members (employers, not vendors)?
    •  Who is on the VEBA’s Operating Committee, Board of Directors and/or Board of Trustees?
    •  What actuarial firm developed the rates and claims projections?
    •  How many groups were used in the analysis? 
    •  What was the average participation rate in the groups? How many insured employees vs. total eligible employees were analyzed?
    •  How many years of claims data were analyzed?
    • If there is a captive entity involved, where is the captive located and to what level is it capitalized?  (This is important with unlimited claims liability under ACA rules).

    Because these elements are unbundled and not regulated by states as a health insurance company, a staffing company should ask for copies of all contracts between the VEBA Trust and the Fiduciary, its TPA, its Stop-loss carrier, any Captive entity, and any other wellness, underwriter or operations vendor, including coverage limits.  

    ESC advises staffing companies to conduct thorough due diligence when presented an ACA solution that is not fully insured by a rated domestic health insurance company.

    Self-funded major medical insurance exposes employers to regulatory and financial risk not associated with fully insured plans — exposure which can be significant under the unlimited benefits rule of the ACA.

  • IAG expands Bronze level offerings

    Insurance Applications Group entered 2015 with every single IAG client able to offer a fully ACA-compliant insurance and benefit solution to their employees – all 1,500 IAG groups were able to reassure their customers that they were with a responsible staffing firm with fully ACA-compliant insurance solutions. 

    Today, as we enter the critical decision period for 2016 planning, crafting regulatory compliant and sustainable solutions for use by IAG clients is still our number one task. The private health insurance market continues to assess, evolve, and react to the dramatic changes brought on by the ACA and unexpected Government rulings. 

    IAG continues our close scrutiny of all these market forces and players. As carriers, consultants, brokers, advisors and other “experts” in benefits try new tactics to stay relevant, we thoroughly vet and evaluate each and every one using our experience and rigorous analytical tools to gauge utility, value and safety for our clients.

    In an attempt to help you finalize your direction and decision, we have outlined key points of information for you to consider. These points include current IAG products available to the staffing industry and evolving trends in ACA strategy by national firms.

    Insurance Applications Group Expands Bronze Plan Offerings

    IAG’s major medical plan options now include fully insured, fully compliant Bronze level plans underwritten by the largest and most financially sound carriers in the business. BCS, Anthem Blue Cross, United Healthcare and Aetna are all available to you as an IAG client. 

    These large major medical underwriters have reviewed IAG’s Staffing Specific Administrative Platform, including our proven implementation and enrollment processes. They understand IAG’s leadership position in the Staffing Industry, and have agreed to process fully insured major medical quotes specifically for IAG clients.

    IAG can now quote a fully insured bronze level plan in all states including New York, New Jersey and California.

    These providers have been assembled purposefully to serve the varied needs of our national client base. Each is a specialist in a regional or state venue, with a few so powerful as to reach all 50 states. Combined, they provide a comprehensive menu of quality offerings for our clients.

    No single carrier or product fits every staffing firm’s situation, and no other agency or consultant provides such a wide range of solutions from such a varied and quality group of underwriters.

    Now is the time to submit your company’s census to receive a quote! The deadline to establish a practical implementation timeline for Jan. 1 is rapidly approaching!  For more details, call 855.249.1680 or email us now.

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