New Study Links ESC Indemnity to Employee Retention
December 22, 2017
December 22, 2017
December 22, 2017
Essential StaffCARE has been contacted by several staffing companies reporting they have received unexpected mid-year termination notices from their Voluntary Employee Beneficiary Association (VEBA) Trust/Captive plan. These notices made reference to their networks pulling out of the plans.
The possibility of VEBA Trust/Captive plan promoters putting their clients at risk was predicted by Essential StaffCARE in our October 2015 Industry Alert.
The U.S. Department of Labor has issued a temporary restraining order to protect enrollees and beneficiaries who had been participating in this plan, and has filed a Cease and Desist order to prevent further marketing of the failed fund.
The abrupt failure of these VEBA Trust/Captive self-funded plans leaves their clients potentially exposed to ACA penalties and employee claims that are not being paid.
Continue to Exercise Caution
Staffing companies that offer major medical healthcare benefits through alternative plan funding scenarios should remember to exercise caution and diligence. Group plans structured under VEBA Trusts, Captive insurance scenarios or those designated as ERISA-exempt are likely to draw attention from industry regulators, and for good reason.
VEBA Trusts and captive off-shore organizations such as these are not regulated by state law, the way a licensed health insurance company would be. The plans they offer are often appealing because of their perceived low pricing, tax advantage and self-operated structure. Their status as exempt, however, can open the door to a host of operational and financial pitfalls if not managed with proper oversight.
The Federation Of Regulatory Counsel (FORC) – a national association of attorneys specialized in the arena of insurance regulatory law – saw this coming as ACA legislation was being enacted. In 2010, they quickly warned, “Some unauthorized insurance promoters, wary of the administrative burden and cost of insurance regulation, seek to avoid state regulation of these products as insurance. They do so by cloaking these programs as “exempt” from regulation by flawed reference to federal law, such as the Internal Revenue Code or the Employee Retirement Income Security Act (ERISA).”
Employers May Be Responsible for Unpaid Claims
It is important to not only understand the inherent risks involved with unlicensed insurance scenarios, but also the liability of cost should the claims fund become insufficient. In self-funded scenarios, the employer is ultimately responsible.
Essential StaffCARE urges any staffing company currently participating in a VEBA Trust/Captive scenario or other ERISA-exempt plan to evaluate the financial stability, managerial acumen and funding equilibrium behind their plan.
If you have recently received an unexpected termination letter from your VEBA Trust/Captive self funded plan, or have any questions surrounding this industry issue, ESC can assist.
October 23, 2015
Following dramatic growth in 2014 business from staffing firms urgently seeking ACA-compliant solutions to eliminate penalties, Insurance Applications Group enrolled members surged at a record pace from August to September 2015 with the addition of scores of new staffing clients from across America.
With more than 500 new staffing company clients on-boarded in late 2014, and the introduction of new ACA-compliant plans and technologies in 2015, IAG’s leadership announced that its block of business has increased “significantly” over 2014 levels.
J. Marshall Dye, CEO of IAG, attributed the growth to the introduction of the new insurance products and ACA enrollment and reporting technologies. New products include the IAG MEC Wellness/Preventive plan that is available with NO employer contribution or minimum participation requirement, and the Fully Insured IAG Bronze Major Medical plan, that is also available to IAG Indemnity groups with NO employer contribution or minimum participation requirement. All IAG products are available to staffing groups without any employer contribution or minimum enrollment.
New enrollment and reporting technology provided by the proprietary IAG Audit Log System (ALS) enables IAG to unbundle elements of its ACA compliance system, including providing a low-cost solution for any group that needs year-end 2015 reporting.
Over 1,500 staffing companies currently offer IAG employee benefit plans using IAG’s proprietary Staffing Specific Administrative Platform (SSAP).
“We are averaging over 35 new staffing group contracts per day being processed by our New Business Department,” cited Dye. “A significant number of these companies are adding solutions in the form of our ACA-compliant MEC Wellness/Preventive plans, our fully-insured Major Medical plans, along with the IAG Fixed Indemnity plans designed to fill the gap of high-deductible bronze level coverage.”
A national sampling of staffing firms recently joining IAG’s growing family include:
Submit your company’s census to receive an IAG quote and to ensure your MEC or Bronze plan is in place in 2016. Email us now.