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ACA Deductible Limits Repealed

On April 1, 2014, President Obama signed the “Protecting Access to Medicare Act of 2014″ into law. The new law mainly focuses on Medicare reimbursement rates for doctors. A small, easily-overlooked provision of the law retroactively eliminates the Affordable Care Act’s (ACA) annual deductible limit for health plans in the small group market.

The ACA’s annual deductible limit was effective for plan years beginning on or after January 1, 2014, but many small employer plans were not required to comply with the limit due to an actuarial value exception created by the Department of Health and Human Services (HHS). The repeal of the ACA’s deductible limit is retroactively effective to the date of the ACA’s enactment in March 2010. Due to the repeal, small employers will have more flexibility to select health plans with higher deductibles. The new law does not affect the ACA’s out-of-pocket maximum, which applies to all non-grandfathered health plans for plan years beginning on or after January 1, 2014.

Source: Zywave Communications

 


Shake, Rattle and Roll!

Many Southern Californians were definitely rocking and rolling after the 5.1 earthquake that was centered in La Habra this past Friday night, March 28th.   Not only did it shake up a few items around the house, but it also served as an important reminder:  Are we adequately prepared for the “big one?”  The fact is, a 5.1 earthquake is only considered moderate, yet many homes and buildings close to the epicenter experienced quite a bit of damage.  The following article provides great tips on how to get ready for California’s next big quake —  definitely worth the read:

http://www.nbcsandiego.com/news/local/Getting-Ready-for-Californias-Next-Big-Quake-253060061.html?akmobile=o&nms=y


Yin & Yang: Workers’ Compensation & Employee Health

Every employer strives to increase productivity and profitability. Every employer hopes to decrease workers’ compensation costs and absenteeism. Yet, most employers cling to the traditional approach of handling their workers’ compensation and employee benefits programs separately. To gain control of soaring workers’ compensation and healthcare costs, however, employers need to adapt a more pro-active approach.

New research and studies continue to prove that workers’ compensation costs and employee health are incredibly intertwined. Like yin and yang, these two areas may at first seem opposite or contrary to one another, while in reality they are interconnected, and even complimentary to one another. A healthy employee is always more productive than an unhealthy employee, thus a workforce made up of healthy individuals is less prone to the challenges of absenteeism and presenteeism. While most people are familiar with the term “absenteeism,” the term “presenteeism” may require additional explanation. Presenteeism is when an employee reports for duty in a limited capacity due to injury, illness or behavioral issues, often resulting in reduced productivity and increased risk on the job.

So, which is worse? While no employer wants the burden of absenteeism or presenteeism, research conducted by Kaiser Permanente indicates that presenteeism can have more long-term negative effects. When an employee reports to work despite illness or injury, he becomes a substantially greater risk. Illnesses can spread to other employees and lack of awareness can result in accidents and oversights, potentially costing your company thousands of dollars in claims and lawsuits. Employees with chronic conditions, such as diabetes, depression, back pain or obesity are at an especially high risk and more likely to file a workers’ compensation claim. Ultimately, an employee who shows up to work when he is not well ends up costing a company much more than an employee who stays home. This brings us full circle, emphasizing the importance of reviewing your company’s workers’ compensation and employee benefits programs side by side.

Introducing CompWell, a comprehensive solution by SullivanCurtisMonroe Insurance Services, LLC. CompWell is SCM’s proprietary approach to minimizing workers’ compensation and healthcare costs by advancing employee health. The CompWell process includes:

  • Benchmarking your employees’ health and company’s workers’ compensation experience
  • Comparing your employees’ health and company’s workers’ compensation statistics to others in the same industry
  • Implementing a customized population health management program tailored to succeed
  • Monitoring and managing progress through analytics and dashboard reporting

In a world of inherent risk, where yesterday’s methods of addressing workers’ compensation costs continually prove to be ineffective, it is more important than ever to explore alternative solutions. SCM’s team is ready to partner with you in designing a workers’ compensation and employee benefits strategy to restore balance to the workplace, resulting in a healthier employee population, reduced claims, greater productivity and improved company morale.


Are You Stuck in the ’60s?

After nearly 50 years, it is time to get rid of the tie dyed shirts and join the 21st Century.

No, I’m not referring to 1968 and the Summer of Love; rather, business owners who continue to use an antiquated process for bidding their insurance – the marketplace selection process. After nearly 50 years, it is time to get rid of the tie-dyed shirts and join the 21st Century.

Many companies continue to obtain property and liability renewal quotes using the market selection process, without understanding how outdated and ineffective this method can be. The marketplace selection process was first used in the mid 1960’s, whereby multiple brokers were assigned specific insurance companies to obtain property and casualty renewal quotes. At that time, there were 75,000 independent insurance agencies across the country. There was little difference between them, except in one important area — the carriers they represented. You may recall some of these names, The Continental, The Home, The Aetna, Kemper, USF&G, The Royal, Legion and Reliance. These relationships were memorialized by plaques proudly displaying the insurers’ logo, which hung in the lobby, adorned the walls and shown prominently in conference rooms. These symbols recognized milestone anniversaries, and it was not uncommon for these relationships to exist for decades, many spanning well into the second generation of agency owners.

Over time, the top agencies used their unique ability to access specific carriers as the main point of their value proposition. After all, from that point forward, most competing agencies looked the same.

In an effort to control a process that often involved over 30 competing national, multi-line carriers and up to six brokers, the marketplace selection process was born. While cumbersome and inefficient, it allowed buyers to bring some sense into the process that was necessary to obtain desired results. By assigning markets to specific brokers, the buyer could ensure access to the large scope of alternatives available, thus keeping the playing field level. In most cases, you still needed a scorecard.

A PARADIGM SHIFT

Flash forward nearly five decades: The bulk of the major national carriers that existed when the process was developed, along with the companies mentioned above, are no longer around. They either went out of business or merged with other companies. Today, the marketplace does not offer a large selection of alternatives. Only seven multi-line national insurance companies are in existence. Further, the remaining major carriers have contracts with most agencies, which now number half of what existed in the 1960’s. Insurer contracts are no longer a differentiator among brokers.

During the last decade, systemic changes have caused our industry to evolve. As insurers consolidated, buyers became astute in the difference between price and cost, while recognizing the need for more services that reduce claims, mitigate costs, increase productivity and generate more profit. Forward-thinking insurance brokers adopted a new approach, offering value added services. In the process, they became cost reduction resources. These value added services are typically not related to an agency’s contracts with carriers, but uniquely individual to the agency. The primary objective of a broker is to offer services that help businesses achieve their goals.

Because of these factors, savvy business owners and executives understand that obtaining insurance coverage goes beyond choosing the most competitive program, it also involves engaging multiple brokers. The best results come from a strategic risk management approach, which reduces the Total Cost of Risk and positions the business as an attractive risk. This is accomplished by identifying an operation’s exposures, developing a strategy to manage that risk and mitigating claims through an effective loss prevention and control program. The broker selection process relies on developing a partnership with a qualified broker, whose services are aligned with the needs of your company. The selected broker then represents you in the marketplace to negotiate the best terms and conditions.

THE IMPORTANCE OF BROKER SELECTION NOW

The insurance market is transitioning into a new cycle of increasing rates. Fewer insurers are willing to provide coverage and underwriting is more disciplined. Previously, numerous insurers were willing to quote with year-over-year rate reductions, now only one or two may be interested. This is especially true for organizations experiencing increased workers’ compensation claim activity, deteriorating results and high experience modifications. These conditions require different strategies and tactics to maximize results. At this particular point in time and in the foreseeable future, proper broker selection is crucial to obtaining the best outcome.

SCM has long been at the forefront of the shift from market selection to broker selection. What separates us from other brokers are the measurable results our clients achieve from the programs and services we offer. Based on the numerous pricing transitions we have experienced, the following tips may offer some insight on how to best manage your broker selection process:

  • Select your broker based on its experience and proven ability to meet your needs or solve a specific situation.
  • Make your choice far enough in advance of the renewal, so the broker has ample time to understand your operation, perform the necessary analysis and evaluation and establish the program design with enough time to go to market.
  • Consider a broker that not only meets your needs today, but is also positioned to support you in the future.
  • Establish a process to periodically review and measure the progress and results of both parties to ensure accountability.
  • Unless special circumstances dictate, do not obtain renewal quotes too frequently. Bidding the program more frequently than every three to four years makes underwriters wary about writing your business.
  • Avoid getting alternative quotes unless you are willing to change insurers.

SCM has a suite of services focused on helping businesses manage their property, liability, workers’ compensation and employee benefits insurance. Our goal is to help clients improve risk management, reduce costs and increase profit.

For details about any of the above items, contact:

Stephen Paulin, CIC
Senior Vice President
949.852.4812
<http://www.privatedaddy.com?q=b3JcbHNKU2d6NT5zXVd5NhISf0hFUXNqdQ-3D-3D_19>


SCM Relocates to Downtown Los Angeles!

SCM has relocated from Pasadena to a beautiful 12,000 square foot office in Downtown Los Angeles!  The move will provide the firm the opportunity to serve clients more efficiently, with regard to convenience and available resources in the middle of a business district.

With continued growth, SCM is seeking to add more brokers, account executives, account managers, as well as claims and loss control staff. 

The new office is located at:

550 South Hope Street, Suite 1000, Los Angeles,  CA 90071                                                  P: 213.233.0400    F: 213.892.1593

 


SCM Partners with IREM

SCM has recently partnered with the Institute for Real Estate Management (IREM).   Over the past few months, SCM has participated in numerous IREM speaking engagements, with a specific focus on ADA Compliance and current solutions available to property owners.  Chad Lupia, a Property/Casualty Consultant in SCM’s Real Estate Division, is also scheduled to speak at the 2013 Leadership and Legislative Summit in April.  Over 800 people are expected to attend theWashington,D.C.event.

 


SCM Participates in 2013 PIHRA Annual Legal Update

SCM has been participating in the 2013 PIHRA Annual Legal Update at the Garden Grove, Los Angeles, Ontario and Burbank conferences held January 22 – 31.  Hunt Turner, a vice president in SCM’s Pasadena office, is sharing the stage with Marilyn Monahan, an employee benefits and insurance corporate and regulatory lawyer at Monahan Law Office.

Turner and Monahan are discussing “What HR Absolutely Needs to Do to Comply with Health Care Reform.”  Highlights of their presentation include:

  • Shared responsibility rules or “Pay or Play” options and how to avoid penalties
  • How the California Health Exchange will impact your organization and employees
  • New ACA taxes, penalties and reporting requirements
  • Employer requirements for the Summary of Benefits and Coverage (SBC) and other new notice requirements
  • Employer responsibility of the 2013 Medicare Tax

Turner possesses over 16 years of employee benefits experience and has held positions in management and sales on both the carrier and broker sides of the business.  Monahan has extensive experience counseling human resource and insurance industry professionals on compliance obligations under federal and state employee benefit and insurance laws and regulations.


Health Care Reform Update

Exchange Notice Requirements Delayed

The Affordable Care Act (ACA) requires employers to provide all new hires and current employees with a written notice about ACA’s health insurance exchanges (Exchanges), effective March 1, 2013.

On Jan. 24, 2013, the Department of Labor (DOL) announced that employers will not be held to the March 1, 2013, deadline. They will not have to comply until final regulations are issued and a final effective date is specified.

This update details the expected timeline for the exchange notice requirements.

In general, the notice must:

  • Inform employees about the existence of the Exchange and give a description of the services provided by the Exchange;
  • Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction, if the employer’s plan does not meet certain requirements;
  • Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of this employer contribution may be excludable for federal income tax purposes; and
  • Include contact information for the Exchange and an explanation of appeal rights.

This requirement is found in Section 18B of the Fair Labor Standards Act (FLSA), which was created by the ACA. The DOL has not yet issued a model notice or regulations about the employer notice requirement.

When do Employers have to Comply with the Exchange Notice Requirements?

Section 18B provides that employer compliance with the notice requirements must be carried out “[i]n accordance with regulations promulgated by the Secretary [of Labor].” Accordingly, the DOL has announced that, until regulations are issued and become applicable, employers are not required to comply with the exchange notice requirements.

The DOL has concluded that the notice requirement will not take effect on March 1, 2013, for several reasons. First, this notice should be coordinated with HHS’s educational efforts and IRS guidance on minimum value. Second, the DOL is 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 DOL 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.


What is the Fiscal Cliff?

On Jan. 1, 2013, when the terms of the Budget Control Act of 2011 take effect, the United Stateswill face what has been referred to as the “fiscal cliff.” In general, this refers to widespread tax increases and spending cuts that will occur if the tax cuts put in place by former President George W. Bush expire as scheduled.

Congress is working to negotiate a deal to avoid the fiscal cliff but faces significant challenges in reaching a compromise. If a deal cannot be reached, the economy could be significantly impacted:  the U.S. could face another recession, unemployment rates could skyrocket and many individuals and businesses could suffer the effects. However, reaching the fiscal cliff would cut the federal deficit and some sources say negative effects would be gradual and could be addressed after Jan. 1.  

The following information is an overview of the fiscal cliff and how it could affect you and your organization.

EFFECTS OF THE FISCAL CLIFF

If Congress does not agree on a solution to the fiscal cliff issue, a number of tax changes will go into effect Jan. 1, 2013, including: 

  • Across-the-board individual income tax rate increases (ranging between 3 and 5 percent);
  • Dividend tax rate increase to ordinary tax rates (15 percent increased to 39.6 percent);
  • Increase in capital gains tax rates (15 percent increased to 20 percent);
  • Expiration of Alternative Minimum Tax (AMT) patch so that more households will pay the AMT; and
  • Increase in estate tax rates and decrease in exclusions (35 percent with $5 million exclusion increased to 55 percent with $1 million exclusion);

New tax rates provided for by the health care reform law are set to take effect on Jan. 1, 2013, as well, whether the fiscal cliff is resolved. These include an additional 0.9 percent payroll tax on income for high wage-earners ($200,000 for individual filers and $250,000 for joint filers) and an additional 3.8 percent tax on investment income.

In addition to the tax increases, $1.2 trillion in automatic spending cuts are set to begin. These cuts would be spread out over a 10-year period and are divided between defense and non-defense federal spending. Programs affected would include overseas defense operations and weapon systems as well as housing assistance and energy subsidy programs. Certain programs, such as Medicaid, are exempt from the cuts. 

POSSIBLE SOLUTIONS

Both political parties have stated that they want to avoid the fiscal cliff. Aside from letting the tax increases and spending cuts take place as scheduled, Congress has two options on how to solve the fiscal cliff issue. They could reach a comprehensive agreement to address the deficit issue—a bargain that would include a combination of revenue increases and spending reductions. Or they could implement stop-gap measures that would patch the problem until a more permanent agreement can be reached (or until a new patch is needed). 

If Congress allows the scheduled policies to take effect, it is projected that gross domestic product (GDP) will decrease by four percent and unemployment will increase by one percent in 2013. If a full-scale extension of the expiring tax cuts is granted, without any spending modifications, it is projected that the economy would not be negatively affected, but the deficit would continue to grow to unmanageable levels.

If Congress reaches a compromise that allows some taxes to increase and some spending cuts to take effect, it would likely be a short-term solution, but could significantly decrease the deficit, and avoid another recession. Any fiscal cliff negotiations could also potentially impact the implementation of the health care reform law, with premium subsidies, Medicaid expansion and the implementation schedule potentially on the bargaining table.

Until Congress reaches a decision, it will not be clear how these changes will affect you. There is speculation, however, that the lack of resolution will cause individuals and businesses to hold off on scheduled or potential spending in anticipation of the changes. Because of this, GDP could be reduced by up to half a percentage point in the second half of 2012.

SCM will continue to monitor the fiscal cliff situation and provide information on important developments to you.


2013 IRS Plan Limits

The Internal Revenue Service recently announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2013.

 Below is a summary:

 Deferral Limit Changes

  • The elective deferral limit for employees who participate in 401(k), 403(b) and most 457 plans is increasedfrom $17,000 to $17,500
  • The catch up contribution limit for employees age 50 and over who participate in 401(k), 403(b) and most 457 plans remains unchanged at $5,500

 Benefit Limit Changes

  • The limitation for defined contribution plans is increasedfrom $50,000 to $51,000
  • The limitation on the annual benefit under a defined benefit plan is increased from $200,000 to $205,000
  •  Highly Compensated & Key Employee Definition Changes
  • The definition of a highly compensated employee remains unchanged at $115,000
  • The definition of a key employee in a top-heavy plan remains unchanged at $165,000

See a full chart outlining the 2013 limits:

http://www.sullivancurtismonroe.com/files/2013%20IRS%20Pension%20Plan%20Limits%20SCM%201112.pdf

 


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