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Montage Insurance Solutions featured in Forbes September 10, 2012 issue “The 100 Most Powerful Women” (page 98).

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Smart Business Insight. Advice. Strategy – September Issue

Wellness Credits, What Are They Really?
The Department of Health and Human Services (HHS) awarded $372 million to 44 various communities to help with the efforts of reducing obesity, smoking, increase physical activity and improve nutrition (HHS.gov, 3/19/10). It is uncertain if this American Recovery and Reinvestment Act of 2009 has impacted the communities; and when the government grants were researched these amounts were earmarked for senior citizens. Today another award was released for 2012.

Employer groups are hearing from various sources the importance of wellness, says Danone Simpson, founder and CEO of Montage Insurance Solutions. Carriers are offering to assist with wellness efforts and many add as much as $44 in cost per year to the premiums. For larger employers Kaiser will send a bus to park outside workplaces testing employees for high cholesterol or strokes for a fee. “High cholesterol is one of the major risk factors leading to heart disease, heart attack and stroke. 2,200 Americans die of cardiovascular disease each day” (American Heart Association, http://www.heart.org).

Lifestyle changes are needed and yet Americans are sitting in front of computers all day urged to be more physically active. The balance is falling on the employers’ shoulders who know if they have more than 50 employees they are now required to pay for medical insurance or be fined $2,000 per employee per year. So the Human Resources Departments are asked to create wellness programs to keep premium costs down. Pooled groups will have to have a community effort in order to accomplish this goal unless they are planning to grow into a larger employer who has control over their premium costs.

Yet, the buzz on the street is wellness. Today, August 29, 2012, the Obama administration announced, “The Public Health Training Centers (PHTC) is to improve the Nation’s public health system by strengthening the technical, scientific, managerial, and leadership competence of the current future public health workforce” (http://bhpr.hrsa.gov/grants/publichealth/phtc.html). Approximately 36 U.S. Government Universities have been given a grant worth an average of $650,106 in financial assistance to promote public health training for the third year in a row.

So what does this mean for employers? We are not sure yet. “Employer wellness incentive programs take a variety of forms, ranging from employer-provided direct incentives, such as pedometers or discounted health club memberships (participation only programs) to group health plan incentives that link healthcare discounts to meeting certain health targets, such as cholesterol or blood pressure standards (standard-based programs). The codified support for employer wellness programs in the PPACA demonstrates Congress’s intent to encourage these programs and, thus, enhance and encourage public wellness. However, whether offered as part of a health plan program subject to HIPAA or the PPACA extension, or as a separate employer program or policy not subject to HIPAA or the PPACA, wellness programs are still generally bound by federal, state and local nondiscrimination and privacy laws, such as the Americans with Disabilities Act (“ADA”); Genetic Information Nondiscrimination Act of 2008 (“GINA”); Title VII of the Civil Rights Act of 1964, as amended (“Title VII”); and the Age Discrimination in Employment Act. Employers contemplating penalty or reward wellness programs should consider that few, if any, cases have addressed the application of these nondiscrimination laws to the wellness program penalty and reward provisions” (Hall, 2012, gshllp.com).

The only reimbursements are from employers to employees who participate in the employer sponsored programs. Today the employer is allowed to reimburse the employee a portion of their premium dollars by up to 20% of the cost of employee-only coverage and in 2014 that amount goes up to 30%; however this costs the employer more, while many are struggling to pay their portion of the premiums.

So what can an employer do? Employers need to make sure their broker is providing some of these services to their employees in a compliant way on a volunteer basis. And make sure their program is compliant or it can be deemed discriminatory in a court of law, “Despite PPACA’s clear legislative support for wellness efforts, employers fashioning penalty and reward wellness programs must consider nondiscrimination and privacy implications of such provisions” (Hall, 2012, gshllp.com).

Unraveling the Patient Protection and Affordable Care Act (“PPACA”) is a full time job and the penalties and compliance landmines are plenty. Overtaxed HR departments need brokers who are working 24/7 to guard the employees and employer from tax burdens and who offer employee wellness incentives, since the government is not.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at 1 (888) 839-2147 or [email protected].
Insights Business Insurance brought to you by Montage Insurance Solutions.

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We have been called “super moms” and given accolades on radio, TV and in print. Many of us have worked very hard to get where we are, while Wall Street and those who decided to play by their own rules have undermined not only the economy in the United States, but the values this country was founded on. Read more

Congratulations to Jeannene Scearce for being award the Trusted Advisor Award! Read more

Smart Business August Insight. Advice. Strategy

How Insurance Carriers Are Dealing with Health Care Problems and What Employers Can Do to Help

Productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year and $225.8 billion annually, according to the U.S. Centers for Disease Control and Prevention. So what is creating these problems with health care claims and insurance, which ultimately lead to poor health and lower productivity?

“It is the delivery system, administration and billing,” says Danone Simpson, founder and CEO at Montage Insurance Solutions. “I have no doubt about this, as our firm battles away at claims that take hours, weeks, months and sometimes years to sort through.”

Smart Business spoke with Simpson about what she sees as the problems with health care, how carriers are coping and what employers can do about it.

What is the problem with health care today?
From wait times for approvals to multiple bills being sent to carriers, carriers are denying needed PET scans, MRIs and other tests so doctors can determine care — partially because of what they deem as ‘abuse’ from doctors who overtreat or analyze treatment. Approvals can sometimes take two months when patients need major surgery to remove cancer.

The real issue with health care is not only who is paying what premiums, fines or co-payments, it’s more about the overall cost of health care and billing complications. Doctors desperate to earn more may overbill, even though they know the contracted amount they agreed to. However, that may be a different amount with each carrier, which makes the administrator’s job a nightmare.

How will private exchanges and mandated health care impact the system?
It’s likely that health care insurance exchanges won’t necessarily lead to better health care pricing. In addition, private health insurance carriers will be forced to offer coverage on the exchanges and compete with themselves.
Surveys prove that employers are angry about being forced to pay for coverage, even if they already cover 100 percent. They expect employees to ask for more coverage of dependents, and some employers who stretch to pay a portion of dependent coverage are feeling backed into a corner. It’s not required to cover dependents, but most plans today do.

What are carriers doing to help with costs?
With expensive fines that can account for more than the actual premium amounts, carriers are helping form Accountable Care Organizations (ACOs) to hold doctors and hospitals responsible. These organizations use incentives to cause providers to work together when treating a patient across care settings such as doctors’ offices, hospitals and long-term care facilities, according to HealthCare.gov. For example, the Medicare Shared Savings Program rewards ACOs that slow health care cost increases while meeting performance standards on quality of care and putting patients first. Patient and provider participation in an ACO is purely voluntary.

What can employers do to lower health insurance costs?
Offering a wellness program is one way to truly impact the heart of the problem of the country’s health care costs. An unhealthy work force is a major issue for businesses large and small. For example, 20 million Americans — 7 percent of the population — have diabetes and 30 percent of this population remains undiagnosed, according to Katz. Moreover, a recent Newsweek article states that two-thirds of adults and one-third of children and adolescents are overweight or obese.

The law might require an employer to buy an insurance policy for employees, but it causes anger and rebellion on the part of many employers. The more proactive approach is to dive down into the parts of the reform that assist in either lowering premium costs or aiding in the retention and well being of your employees.

There are a number of tax credits available to help you with this proactive approach, if they are available to companies of your size.

The Patient Protection and Affordable Care Act includes a variety of provisions aimed at encouraging wellness and disease prevention. As shrm.org reports, effective Jan. 1, the ‘law will permit rewards or penalties such as premium discounts of up to 30 percent of the cost or coverage. Existing wellness regulations permit incentives of up to 20 percent of the total premium, provided that the program meets certain conditions. The law increases the amount of the potential reward/penalty to 30 percent of the premium.’ There is also the possibility of an even higher amount after national studies are performed.

Another option is the Small Employer Health Insurance Tax Credit. The U.S. GAO states, ‘Fewer small employers claimed the Small Employer Health Insurance tax credit in tax year 2010 than were estimated to be eligible.’ Calculators are available on the National Federation of Independent Business, http://www.nfib.com and many other websites.

Employers also can ask their carriers about the Medical Loss Ratio reimbursement, which was just issued for the first time.

Take care to avoid fines and earn tax credits on wellness incentives. Many employers are starting to offer a carrot approach to motivate employees, and then a stick with some sort of penalty for not participating to truly see employees take advantage of a wellness-based plan.

Danone Simpson is the founder and CEO at Montage Insurance Solutions. Reach her at 1 (888) 839-2147 or [email protected].
Insights Business Insurance brought to you by Montage Insurance Solutions

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I sincerely believe the information below is indeed quite important for the stewards of our local finance departments to fully understand. Read more

Montage Insurance Solutions as seen in the San Fernando Valley Business Journal’s CFO issue June 25, 2012. Read more

Too many companies operate under the false belief that their organization is not a good candidate for Directors and Officers Insurance without proper knowledge of the full breadth of its coverages and protection. This can be a very dangerous supposition on the part of a company that could see its directors and/or officers held personally liable—thus risking their personal assets including family assets and estates. The statistics are alarming enough to make one consider the various reasons a claim might be brought against a company or even an individual personally.

According to a Chubb 2004 Private Company Risk Survey, nearly 40% of privately held companies stated that is was likely their Directors and/or Officers would be sued, and 18% of those surveyed were sued during the past few years.

Beyond that, almost a third of surveyed companies reported a direct or indirect effect from the Sarbanes-Oxley (SOX) Act of 2002.

Even if a lawsuit is baseless or fraudulent, companies still have to pay to defend them. The Tillinghast Towers Perrin D&O survey of 2004 stated the average defense cost for all reported D&O suits was $370,002 with an average indemnity of $2,160,909.

After looking into it, many companies decide that, as it turns out, D&O coverage is a necessary company safeguard after all, as many of the things they thought were covered by their general liability policies, are in fact not. When that happens, it is important to note that unlike most general liability policies, which are somewhat standard, D&O policies can differ greatly. If one is shopping for a policy one must give credence to the need for understanding both the definitions of the terms below and how they factor into the policies they are considering:

• Claims-Made Coverage vs. an Occurrence Policy
• Extended Reporting Period/Tail Issues
• Policy Limits
• Defense Inside the Limit
• Failure to Provide Insurance Exclusion
• Retroactive Date/Prior and Pending Litigation Date
• Employment-Related Practices Issue

With the tremendously high propensity for employers to face lawsuits, and so many aspects of coverage left out by other policies, finding out whether or not your organization needs a D&O policy may be the difference between an executive team member exhaling a sigh of relief at a policy stepping in to do its job, and seeing his car towed away after being sued for his own personal assets.

The cost of health care continues to increase every year. We all feel it in the pocket books, read about it in the newspaper, and talk about in finance meetings. With the myriad of plan designs offered by the various carriers that compete in California, it can be a difficult task to pick the right plan.
How does one weigh cost versus coverage? Increases versus changing carriers?

One option that many groups have taken to is implementing a Health Savings Account, or HSA.

What we often hear in response to this is something surrounding the difficulty in presenting these types of plans to the employee population. However, with the right educational enrollment meeting, you might be surprised how many of your employees realize that it can represent a better option for them.

Let’s take a look at an actual sample client of ours. This company has the traditional HMO and PPO option, but also offers an HSA. The way they pay for benefits is to cover 100% of the cost of an HMO and the employees can buy up to either the PPO or the HSA. Obviously 100% coverage for an HMO is getting less and less common as companies combat rising prices, but HMO plan designs are not the right fit for all people. Many people choose to “buy up” to PPO products, believing the freedom of choice and wider network is worth the premium increase. For those people, let’s consider some facts.

At this company the family rates are $846 for the HMO, $1,691 for the PPO ($750 family deductible), and $1,162 for the HSA ($5,000 family deductible)—taking out the employer contribution ($846) the PPO costs the employee $845 per month, and the HSA $316 per month.

If you look at a person considering a PPO product, they are actually better off taking the HSA when you consider total annual cost. Simply on premium savings, a family will save $529 per month, or $6,348 per year—more than enough to cover the $5,000 deductible.

Now that we know the savings on premium, let’s take a look at the plan year. Even if the year is extreme, and the employee actually does hit that lofty deductible, once the $5,000 deductible is reached, all services are covered at 100%. Simply by using $5,000 of the $6,348 premium savings, the employee has reached a place where all services are free, and remains $1,348 better off than (s)he would have been on the PPO. When you factor in the co-pays along the way that the PPO plan has, the $750 deductible, the fact that all costs are PRE tax dollars on an HSA, and the employer contributions to the account that some organizations make, the HSA becomes a much more financially sound choice for the employee.

On the other hand, if an employee has a more typical year, and does not use the premium savings for $5,000 in services, there is no “use it or lose it” clause that plagues FSA’s, so the employee simply enjoys more growth in the account.

When employers consider what percentage of contribution they offer, and how much less expensive HSA plans are than PPO’s, you can see their incentive for offering too!
In the right instances, and with the right education, HSA plans can be a good fit for the employee and a great relief for the bottom line.