Self-Insurer Jan 2011 by SIPC

January 2011

Rosy

Golden Years for BaBy BoomeRs

What will you feel like when you offer Sun Life’s catastrophic claim forgiveness?

ABigKahuna Sun Life is one of the nation’s leading providers of medical stop-loss. We understand that large claims happen. Our No New Lasers at Renewal product comes with a Renewal Rate Cap. We don’t impose new or higher deductibles. And we pool renewal rates for price stability. Think of it as catastrophic claim forgiveness. For more details about how we can make things easier for employers, contact your local Sun Life stop-loss specialist or call 866-683-6334.

G ro u p L i fe • G ro u p D i s a b i l i t y • G ro u p D e n t a l • M e d i c a l S t o p - L o s s • Vo l u n t a r y B e n e f i t s

Group insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states, except New York, under Policy Form Series 93P-LH, 98P-ADD, 02P-STD TDBPolicy-2006, 02-SL, 07-SL, and 01C-LH-PT. In New York, group insurance policies are underwritten by Sun Life Insurance and Annuity Company of New York (New York, NY) under Policy Form Series 93P-LH-NY, 06P-NYDBL, 02P-NYSTD, 98P-ADD-NY, 02-NYSL, 07-NYSL, and 01NYC-LH-PT. Group insurance policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Wellesley Hills, MA) in all states under Policy Forms Series GP-A and GP-D (or appropriate state edition). Product offerings may not be available in all states and may vary depending on state laws and regulations. ©2010 Sun Life Assurance Company of Canada, Wellesley Hills, MA 02481. All rights reserved. Sun Life Financial and the globe symbol are registered trademarks of Sun Life Assurance Company of Canada. Visit us at www.sunlife.com/us. SLPC 22507 10/10 (exp. 10/12)

sIIa oFFICers Chairwoman of the Board* Freda Bacon, Administrator Alabama Self-Insured WC Fund Birmingham, AL President* Alex Giordano Bellmore, NY Vice President operations* John T. Jones, Partner Moulton Bellingham PC Billings, Montana

January 2011

FeaTures

Vice President Finance/CFo/ James E. Burkholder , President/CEO TPABenefits, Inc. San Antonio, TX

Les Boughner, Executive VP and Managing Director Willis North American Captive and Consulting Practice Burlington, VT

Volume 29

reporTs 8 SIIA Tour of India 10 From the Bench: Wisconsin Federal Court

executive Vice President Erica Massey Midland, NC

sIIa dIreCTors

Concludes Stop Loss Carrier May Not Second-Guess Plan’s Eligibility Decision

Ernie A. Clevenger, President CareHere, LLC Brentwood, TN

looks like There’s rosy Golden Years on Tap For Baby Boomers By Karen A. Fiordaliso

Donald K. Drelich, Chairman & CEO D.W. Van Dyke & Co. Wilton, CT

Washington Report for Self-Insurers

2011 Editorial Advisory Committee

ART Gallery: Forging Healthcare Beyond State Lines

PPACA, HIPAA and Federal Health Benefit Mandates: Practical Q&A

Mather’s Grapevine

Steven J. Link, Executive Vice President Midwest Employers Casualty Company Chesterfield MO

Physician Shortage: Fact or Fiction? A Look Into the Rumors of a Shortage

Robert Repke, President Global Medical Conexions Inc. San Francisco, CA

From the Desk of Erica Massey

sIIa CoMMITTee CHaIrs Chairman, alternative Risk Transfer Committee Kevin Doherty, Partner Burr Forman Nashville, TN

purchasing Group essentials: The Why & How of pG’s By Karrie Hyatt, Managing Editor, Risk Retention Reporter

deparTMenTs 2 President’s Message 40

Chairman’s Report: Why SIIA Works!

Chairman, Government Relations Committee Jay Ritchie, Senior Vice President HCC Life Insurance Company Kennesaw, GA Chairwoman, Health Care Committee Beata Madey, Senior Vice President, Underwriting HM Insurance Group Pittsburgh, PA Chairman, International Committee Liz Mariner, Executive Vice President Re-Solutions Intermediaries, LLC Minneapolis, MN Chairman, Workers’ Compensation Committee Skip Shewmaker, Vice President Safety National Casualty Corporation St. Louis, MO

January 2011 The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’

Publishing Corp. (SIPC), PO. Periodical Postage Rates paid at Tustin, California and at additional mailing offices. Postmaster: Send address changes to The Self-Insurer, P.O. Box 1237, Simpsonville, SC 29681 The Self-Insurer is the official publication of the Self-Insurance Institute of America, Inc. (SIIA). Annual dues are $1495. Annual subscription price is $195.50 per year (U.S. and Canada) and $225 per year (other country). Members of SIIA subscribe to The Self-Insurer through their dues. Copyright 2010 by Self-Insurers’ Publishing Corp. All rights reserved. Reproduction in whole or part is prohibited without permission. Statements of fact and opinion made are the responsibility of the authors alone and do not imply an opinion of the part of the officers, directors, or members of SIIA or SIPC. Publishing Director - James A. Kinder Managing Editor - Erica Massey Editor - Gretchen Grote Design/Graphics - Indexx Printing Contributing Editor - Tom Mather and Mike Ferguson Director of Advertising - Justin Miller Advertising Sales - Shane Byars Editorial and Advertising Office P.O. 1237, Simpsonville, SC 29681 • (864) 962-2201 Self-Insurers’ Publishing Corp. Officers (2010) James A. Kinder, CEO/Chairman Erica M. Massey, President Lynne Bolduc, Esq. Secretary 2010 Editorial Advisory Committee John Hickman, Attorney, Alston & Bird David Wilson, Esq., Wilson & Berryhill P.C. Randy Hindman, Deloitte & Touche, LLP Jason Davis, Global Excel Management, Inc.

The self-Insurer P.O. Box 184, Midland, NC 28107 Tele: (704) 781-5328 • Fax: (704) 781-5329 e-mail: ggrote@sipconline.net. The Self-Insurance Institute of America, Inc. (SIIA) is the world’s largest trade association dedicated exclusively to the advancement of the self-insurance industry. Its goal is to improve the quality and efficiency of self-insurance plans through education and to create a general acceptance in the public and business communities of this viable alternative to conventional insurance. Founded in 1981, SIIA represent the interest of self-funded employers, independent administrators, utilization review companies, managed care companies, underwriting management companies, insurance companies, reinsurers, agents, brokers, CPAs, attorneys, financial institutions, manufacturers, trade associations, retail and service companies, municipalities, and others. SIIA designs and implements programs and services for the benefit of its members, the industry, and the general public to increase the general level of knowledge about self-insurance plans, achieve greater professionalism in the industry, and enhance the general well-being and mutual interests of its membership. SIIA achieves its goals and objectives through several means: n International/national conferences and industry forums which provide educational opportunities, with substantial discounts on the registration fees offered to SIIA members. n Distributed monthly, The Self-Insurer, features useful technical articles as well as updates on topical issues of importance to the self-insurance industry. n The Self-Insurance Educational Foundation (SIEF) conducts statistical research regarding the industry and grants educational scholarships to promising students whose studies focus on the self-insurance industry. SIIA enjoys federal representation in our nation’s capital through counsel and staff on key legislative and regulatory issues. SIIA is the only national voice encompassing the whole self-insurance industry. If your company is involved or interested in self-funding risk for workers’ compensation insurance programs, employee benefit plans, or property and casualty exposures, then it should be a member of the association serving the industry - the Self-Insurance Institute of America, Inc.

The self-Insurer

January 2011

PRESIDENT’S MESSAGE

or readers who are disappointed to miss Freda Bacon’s photo in this space, I offer my condolences – but all is not lost, Freda’s leadership messages will continue this year in her reports from the board chair.

Being elected president of SIIA was a great honor for me, and a great joy. Maybe the Dodgers coming back to Brooklyn would make me happier, but not by much. I have been a SIIA member long enough to be vastly impressed by the dedication and talent of our volunteer leaders through the years and I will do my best to uphold that tradition. I was probably as surprised as anyone when I was nominated as president and then elected at our annual meeting in Chicago. I view this office as my opportunity to give back some of the benefits that SIIA membership has given me through the years in friendships, in development of my capabilities and in my business. I’m not sure where this year will take us, but I’m starting from the position that I would like SIIA’s business to be as open and transparent as possible. The one area of improvement I have sensed through the years is to gain greater SIIA membership among self-insuring corporations and organizations. We are working on their behalf and their voices could help us do an even better job. If we could begin talking to our clients about SIIA membership that would be a good start. I’m sure that the board will consider some new membership promotion programs that you will learn about in the months to come.

“I was probably as surprised as anyone when I was nominated as president and then elected at our annual meeting in Chicago.”

The next order of business for members will be attendance at the 25th Annual Legislative/Regulatory Conference in Washington on March 14-16. I wanted to decree that attendance will be mandatory for all SIIA members, but they told me my power doesn’t extend that far. So, rather than decree that members attend, I will do my best to convince each of you that coming to Washington for this conference is in your best interest and that of your businesses. Whether you are involved in health care, workers’ compensation, risk retention groups or other forms of self-insurance, the federal government will affect your business in positive or negative ways. I think I know why some people hang back from attending this conference. I have to admit that I didn’t regularly attend in the earlier years of my membership. I felt that important people in our government wouldn’t listen to me, so why bother? Turns out I was wrong. I know that my representatives listen because I’ve seen it work. There are no more important influences on a member of Congress than political contributions and constituent communications. Now SIIA members can contribute through the Self-Insurance PAC and we all can let our representatives know what’s on our minds during the “Walk on Capitol Hill” that is the key event of the Legislative/Regulatory Conference. I also have a hunch that some people don’t come to this conference because they think it is not a business networking event. Well, that’s not true either. This conference provides plenty of time to meet with each other, discuss the important

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January 2011

issues and even do some business. This is the year when many of the wrenching changes in our health care system will be put in place, and they will change the landscape of self-insurance. But that’s not all bad. There will be new opportunities to explore, and educating our members about them will be an important part of SIIA’s agenda this year. But you will have to join us in Washington to learn about those opportunities. We’ll all find this to be a challenging year, but those who know how to exploit the new realities will be those who adapt and find new success. That’s it for now,

President

Mind over risk: The secret weapon of visionaries, leaders and the people who insure them.

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The self-Insurer

January 2011

Looks Like Thereâ&#x20AC;&#x2122;s Rosy

Golden

Years

on Tap For The

BaBy BoomeRs By Karen a. Fiordaliso

www.siia.org

January 2011

t’s hard to remember a time when the baby boomers weren’t a cutting edge topic. They have been a household name and the center of worldwide media attention for more than 60 years now. Simply put, this post-World War II generation is the most talked about cohort of all time. Everything from the phenomenal 78.2 million babies that were born into it to the legendary, free spirited lifestyles that the Leading-edge Baby Boomers led when they came of age captured the world’s attention. Now those Leading-edge Baby Boomers are once again hogging the spotlight, as they are about to come of age for the second time. But, this time, they are not about to relive the antics of their younger days. Instead, they, along with an unparalleled number of aging boomers to follow, are about to be propelled into their golden years where over 26 million of them could be diagnosed with at least one chronic condition or disease before the next decade comes to a close. But don’t despair — there’s a lot of good news on tap.

The news about how our Nation’s older population will be increasing dramatically in the coming years has been front and center in almost every aspect of the media for quite some time now. It’s very big news, of course, because for the first time in our Nation’s history, an approximate 72 million people will comprise the age-65 plus category by the close of the year 2030, an amount that will equate to approximately 20 percent of the total expected U.S. population. That history making number will be the direct result of the aging of the U.S. Baby Boomer Generation, the 78.2 million people born during the years that spanned 1946 through 1964. It will not, however, take too long for the boomers to trigger the start of our Nation’s aging process, as the first crop of baby boomers, the nearly 3 million Leading-edge Baby Boomers, (those born between 1946 and 1955) will start to turn age 65 in January, 2011. That certainly does not sound like music to our ears because we know that as people age, their susceptibility to contracting chronic diseases is magnified. It is also no secret that when we speak of that magnified susceptibility, we automatically associate possible increases in health benefit plan utilization with it, followed by the theory that loss ratios and profit contingencies could be compromised as a result of that age driven utilization. Undoubtedly, those scenarios, to date, have been right on target, as those concepts are based upon our historical, hands-on experience and actual facts, not speculation. But our adverse experiences are possibly a thing of the past, as positive national steps are being taken to either prevent or delay the onset of chronic disease in the senior population, the consequence of which could mean that reductions in age related health benefit plan utilization, and, subsequently, more attractive loss ratios, are on the horizon. Communities Putting Prevention To Work Chronic Disease Self-Management Program, a U.S. Department of Health & Human Services’ initiative funded by the American Recovery and Reinvestment Act of 2009, is aiming to prevent or delay the onset of chronic disease in the senior population by giving the elderly the opportunity to learn how to adopt and exercise healthy behavior patterns, take control of their health and better manage their illnesses. It is aiming to promote this newfound wellness among the elderly by allowing 45 states, Puerto Rico and the District of Columbia to use $27 million in grants to develop and build statewide delivery systems that can effectively deploy self-managed wellness programs known as Evidence-based Disease and Disability Prevention programs, or EBDDP programs, that are specifically targeted at teaching the elderly how to maintain healthy lifestyles, the consequence of which could prevent or delay the onset of chronic disease in the senior population. These programs teach wellness techniques to older adults with various chronic conditions and diseases through workshops that are conducted in their own communities, familiar nonclinical settings, such as community centers, senior centers, meal programs, faith organizations, libraries,YMCAs,YWCAs, senior housing settings and in peer learning groups that provide support, socialization, and reinforcement of positive health behavior changes. The workshops, which are two and a half hours per session and are held once a week over a six week period, are facilitated by trained and certified leaders, at least one of which has been diagnosed with a chronic illness. The one consistent focus of all of the topics that are covered in the workshops is specifically geared toward reducing or preventing chronic disease in the senior population. These topics include appropriate use of medications, how to communicate effectively with

health care professionals, proper nutrition, exercise for maintaining and improving strength, flexibility and endurance as well as techniques for dealing with problems such as fatigue, pain, isolation and frustration. EBDDP programs date back to 1994 when the prototype EBDDP program, the Stanford University Chronic Disease SelfManagement Program, was developed and, subsequently, tried and tested in a controlled environment for effectiveness. That program’s design, along with the mechanics of its workshops, mirrored the program description outlined above. During the test trial period, the Stanford Program taught the elderly how to live healthier lives by emphasizing the importance of the patient’s role in managing their own illnesses and by showing them how to build their self-confidence, the latter of which was a point that was well stressed, as that trait plays a pivotal part in being able to adopt healthy behavior patterns. The Stanford University EBDDP Program, funded by the Agency for Healthcare Research and Quality, was tested for effectiveness in the senior population for two years, and by the close of the test period, it proved successful in helping the elderly positively change their health behavior patterns, improve their overall health and reduce their use of hospital services. Consequently, it now serves as the model for each state and territory EBDDP program that is implemented. It was the success of the Stanford University Chronic Disease Self-Management Program that prompted our Federal Government to take a step forward and test the effectiveness of EBDDP programs in uncontrolled settings to determine if desirable results could be produced in

The self-Insurer

January 2011

environments that were less restricted than that in which the Stanford Program was performed. The first environment of choice was to test trial the programs at the community level. Consequently, through funding from the Administration On Aging (AOA), the first pilot EBDDP programs, the design of which was a mirror image of the Stanford Program, were launched in the year 2003 in the Aging Services Networkâ&#x20AC;&#x2122;s community based settings. Based upon the positive results of those pilot programs, the AOA increased its Federal support of EBDDP programs, and by the year 2006, the AOA, in collaboration with the Centers for Disease Control and Prevention (CDC), the Agency for Healthcare Research and Quality (AHRQ), the Centers for Medicare and Medicaid Services (CMS) and a variety of private foundations, awarded funds to 15 states* and, subsequently, launched the first EBDDP programs at the state and local levels to senior citizens. Once again, the designs of those programs mirrored that of the Stanford Program. The state and local level programs proved as successful as the ones that were initiated at the community level which, thereby, prompted the AOA to continue its support to fund the implementation of state based EBDDP programs. Consequently, during the year 2007, eight more states* were awarded funds to do so. The Federal Awards that are allowing the remaining 22 states,** Puerto Rico and the District of Columbia to implement EBDDP programs were announced in the spring of 2010. Each participating state and territory that is awarded funds to implement EBDDP programs is required by the AOA to mirror the design of the Stanford University Chronic Disease SelfManagement Program. That requirement ensures that all of the EBDDP programs that are implemented will be delivered with fidelity and will achieve results that are comparable to the programs in the original research. Each state and territory,

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January 2011

however, is also given the option to select specific workshops that are offered by organizations that were not a part of the original Stanford Program, provided that those workshops are geared toward preventing or reducing chronic disease in the senior population. Those workshops can include specific programs such as Enhance Fitness or Healthy Moves, both of which are physical activity programs that provide safe, effective, low impact aerobic exercise, strength training and stretching. A fall management program that addresses the fear of falling, such as Matter of Balance, can be instituted or programs that help to build muscle strength and improve balance to prevent falls, such as Stepping On and Tai Chi, can be included as part of any underlying EBDDP program. Depression and substance abuse programs, such as PEARLS and Healthy IDEAS, can also be included on the workshop agendas so that older adults will be able to learn how to properly manage mild to moderate depression and substance abuse. Proper nutrition is a point that is strongly emphasized to seniors in the workshops. A nutrition program, such as Healthy Eating, a program that not only teaches older adults the value of choosing and eating healthy foods but also stresses the importance of maintaining an active lifestyle, is one of many nutritional programs that can be selected and initiated in an effort to achieve the initiativeâ&#x20AC;&#x2122;s goals. EBDDP programs have been garnering a lot of attention recently, mainly because of the positive influence that each one has been having on the senior population. Older Americans, through the services that are being rendered by these programs, are now being empowered with the hands-on knowledge that it takes to help them maintain healthy lifestyles through self-managed behaviors, the consequence of which could prevent or delay the onset of chronic disease in the senior population. It is essential for the elderly to be armed with that knowledge because chronic disease can negatively affect the quality of their lives, threaten their ability to remain independent in their own homes or communities and make it more likely for them to be hospitalized. Statistics already show that 21 percent of the U.S. population age 60 and older, an approximate 10.3 million people, is living with diabetes, more than one-third of adults age 65 and older fall each year, and sadly, seven out of every 10 Americans that die each year, an amount that equates to more than 1.7 million people, die as a result of a chronic disease. EBDDP programs can be the solution that keeps these statistics from rising or, at the very least, the tactic by which stability can be promoted in these statistics, as our society dramatically ages in the coming years.

These programs can also help to minimize health benefit plan utilization by the senior population as the elderly become more and more educated on how to exercise healthy behavior patterns. Therefore, the next time a new piece of business that has a high concentration of older eligible employees is submitted for underwriting consideration or when renewal terms are being prepared for an existing risk wherein the composition of the group reflects an older population, the risk of affording coverage to the eligible employees might not be as great as it had been historically if the risk is located in geographical areas wherein EBDDP programs have been initiated, as these programs are playing an integral part in helping our Nation’s senior population to become healthier. Better health set ff a positive chain reaction that touches every aspect of our society. It gives the elderly the opportunity to enjoy optimal lifestyles. It is also the core component that helps to reduce

age related health benefit plan utilization which, in turn, can produce competitive market conditions, more profitable loss ratios and maximized profit contingencies for direct and reinsurance health benefit carriers. Better health among the elderly can also equate to a reduction in national health care costs which, consequently, can lead to a much needed strengthening of The United States of America’s health care infrastructure. Undoubtedly, better health is where a multitude of win-win situations begin. n

*States awarded funds for the implementation of EBDDP programs in 2006 & 2007 Arizona, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Texas, Wisconsin **States and U.S. Territories awarded funds for EBDDP programs in 2010Alaska, Alabama, Delaware, District

of Columbia, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, Nevada, New Hampshire, New Mexico, Pennsylvania, Puerto Rico, Rhode Island, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia Karen is a two time award winning freelance writer, specializing in the non-fiction market who was named in 2007 and 2008 as one of Cambridge’s Who’s Who Among Professional Women in Writing and Publishing. Formerly, she was involved in the founding of Excess Reinsurance Underwriters Agency, Inc., a MGU, where she also served in the position of a Medical Stop Loss Underwriting Director for nearly a decade. Prior to Excess Re, Karen was employed for five years as a Medical Stop Loss Underwriter by IOA Re, Inc., a MGU. She spent the six years preceding IOA Re working in the direct market as a Senior Special Risk Underwriter for The Home Insurance Company. Karen can be reached at 856-589-4937 or kafiordaliso@verizon.net.

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The self-Insurer

January 2011

sIIa

Tour oF IndIa

he Self-Insurance Institute of America, Inc. (SIIA) has partnered with DaoAsia, a leading company specializing in helping American business executives learn how the insurance business is conducted in India for a special “Self-Insurance Exploration Tour of India” scheduled for January 29 - February 5, 2011.

Saturday after the tour at a cost of $300 per person.

If you have ever thought seriously about self-insurance/alternative risk transfer business opportunities in the Indian marketplace but didn’t know where to start in evaluating such opportunities, then this is the perfect tour.

If you are interested in participating in this tour, please contact Erica Massey, emassey@siia.org or call 800-851-7789.

This self-insurance exploration tour is open to SIIA members only and is limited to the first 25 who sign up. This Tour will directly connect participants with India-based insurance industry executives, key government officials, representatives of multi-national corporations and others who will provide practical information about what needs to be done to do business in India, as well as opportunities that may be available in the employee benefits/risk management marketplace. The full schedule of business meetings will be complimented by several social/ networking events and sight-seeing excursions to some of India’s most popular tourist attractions. The per-person fee to register for the tour is $5,500. This fee includes all scheduled tour events/meetings, lodging at a five star hotel each night, breakfasts, lunch, selected dinners, networking receptions, flight from Mumbai to New Delhi, ground transportation and related tour guide services. For those who would like to extend their stay, an optional one-day sightseeing excursion is available the

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January 2011

Tour participants will be responsible for their air travel arrangements to India.

Given that the tour cannot accommodate any more than 25 participants, SIIA will assign slots on a first-come basis.

Case For IndIa selF-InsuranCe eXploraTIon deleGaTIon Information gathered from study and recommendations from the United States Agency for International Development and the Insurance

Regulatory and Development Authority, prepared by BearingPoint, Inc. India’s health insurance market has experienced significant changes when the insurance industry was opened to the private sector. The number of persons covered has been growing at a rate of around 25% year after year and premiums are increasing 35% annually. The government of India’s Insurance Regulatory and Development Authority has worked to build a strong enabling environment for health insurance be developing efficient regulations on products and consumer protection and assisting in the development of information infrastructure. For the first time in India, specialized health insurance companies have entered the market. New types of health insurance products using a variety of risk sharing models have been launched. Although there remain challenges, the opportunity for a team of experts from the US to meet with employers, TPA’s, insurers, regulatory officials from India, seem significant enough to investigate. With the report’s recommendation to expand the self-insurance market

If you have ever thought seriously “about self-insurance/alternative risk transfer business opportunities in the Indian marketplace but didn’t know where to start in evaluating such opportunities, then this is the perfect tour.

”

in India but the acknowledgement that even simple insurance (risk) specialists are lacking in India, opens the association member experts to “export” how self-insurance is utilized and how to manage the risk through self-funding arrangements. By the mid 1990’s, due to increase in certain industries in remote areas, employers began to create their own townships close to their factories and provided pharmacies, clinics and hospitals so that works could have access to free or heavily subsidized medical care. This was the birth of the first set of self-funded health plans in India. Tata Group, Birla Group and Godrej

Group have all provided healthcare services or financial reimbursement to their employees and in most cases continue to be self-funded. Companies have recognized that self-insurance allows them the flexibility to design their own benefits structures without the typical health insurance exclusions, thus minimizing labor relations issues to claim rejections. With the deregulation of non-life insurance rates as of January 2007, there is an expectation that premiums for most non-life insurance products will drop significantly. However, health insurance rates were never fixed and were heavily discounted to counter the high fixed prices of other types of insurance. For this reason, health insurance rates are expected to rise significantly. A recommendation from the study was to 1. Promote and legally recognize self-insurance and 2. Provide assistance in and access to reinsurance. SIIA International is in a unique position to create a forum for the exchange of ideas with the Indian health and health insurance business community. There are some things about health care cost control that we can learn from India and some things that the Indian market can learn about delivering health insurance and regulation. n

The self-Insurer

January 2011

Bench from the

By Thomas Croft

Wisconsin Federal Court Concludes stop loss Carrier May not second-Guess plan’s eligibility decision (Diversatek, Inc. v .QBE Ins. Corp. and SLG Benefits and Ins., LLC, No. 07-C-1036, in the United States District Court for the Eastern District of Wisconsin, November 30, 2010). [Author’s note: I represent the carrier and MGU in this case, in which proceedings are ongoing. For that reason, my commentary on the case will be brief, and will stick to reporting the holdings of the Court without comment or argument at this time. In other words, my tongue bleeds profusely throughout this write up.]

Wisconsin federal court, resurrecting the CADSI doctrine, held that a stop loss carrier had no right to second guess the Plan administrator’s decision as to eligibility, and acted in bad faith as a matter of law in doing so. It further held that, since the MGU was not a party to the stop loss contract, it could not be liable for acting in bad faith. The group, Diversatek, had a Plan that lacked any “leave of absence” provision, although it did provide for other forms of continuation of coverage, such as FMLA, COBRA, military leave, and layoff. Participant X was a victim of a drive-by shooting and hospitalized for several months. At the time of the shooting Participant X was an employee of Diversatek working the requisite 40 hours per week to maintain his eligibility as a member of the eligible class of employees under the Plan. The Plan defined “employee” as “an active employee of the Company receiving compensation for services rendered to the Company.” The Plan provided for automatic and immediate termination of coverage on

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January 2011

the date that an employee ceased to be in a class of participants eligible for coverage. Diversatek ceased compensating Participant X the day of the shooting, but it kept him on the Plan for several months until it “terminated” him and offered him COBRA, which he then declined. When stop loss claims were submitted for Participant X, the MGU made repeated inquiry as to how his eligibility was being maintained under the Plan. Each time, Diversatek responded that Participant X” was on a leave of absence, although there was no written “leave of absence” provision in the Plan, or anywhere else. The carrier ultimately denied the claims on the grounds that Participant X was not a covered person under the Plan during his hospitalization, and Diversatek sued. In a 23 page opinion, the Court

“A reasonable entity would understand the Policy to prohibit QBE from denying reimbursement based on its determination that [Participant X] was not a covered plan participant as QBE has no right under the Policy to make a benefit determination. Moreover, a reasonable entity would believe that the claims submitted to QBE for reimbursement were covered as long as Diversatek was complying with documentation requirements.” The following section of the opinion analogized QBE’s position to that of a Plan beneficiary challenging a benefit determination, invoking the principles espoused in Computer Aided Design Systems, Inc. v. Safeco by an Iowa federal court several years ago. In other words, in order to challenge Diversatek’s eligibility determination, QBE would have to prove the decision was arbitrary and capricious. Despite the facts that Participant X was not working forty hours per week

and was not even an employee because Diversatek was not paying him, the Court concluded that Diversatek’s benefit determination was reasonable. It did so by looking to the enrollment eligibility section of the Plan, which stated: “A group health plan may not base rules for eligibility for coverage upon an individual being “actively at work,” if a health factor is present….”

to affect his/her eligibility under the Plan, such that Participant X remained covered until his termination several months after his injury. The Court went on to conclude that the stop loss carrier acted in bad faith by not recognizing these principles and therefore awarded prejudgment interest at 12 % and attorneys’ fees to the Plaintiff.

Finally, the Court accepted the MGU’s argument that it was not a party to the stop loss contract, and could not The Court concluded that this therefore be held11:40 liable on claim1or provision evidenced an intent not to VHN_SelfInsurer_4.5x6.75_bw:Layout 1 6/24/09 AM thePage for bad faith. n allow and employee’s medical condition

first noted the coverage provision in the stop loss policy, which provided for reimbursement upon proof of “Plan Benefits Paid,” which was defined as benefits covered under the Plan; benefits not covered by the Plan were specifically excluded from the definition. The Court then focused on the language in the stop loss policy stating that determination of benefits under the Plan was the group’s responsibility. (Language to this effect is routinely included to eschew any implication that the carrier makes benefits decisions under the Plan for ERISA purposes). From this, the Court concluded that “whether [Participant X’s] medical expenses are plan benefits is Diversatek’s ‘sole responsibility.’ ” Next, the Court reviewed the standard language of the Plan itself, granting the administrator sole authority and discretion to determine eligibility and benefits, and used this to buttress its conclusion that Diversatek—and only Diversatek—had the power to decide whether a given claimant was eligible under the Plan. The Court stated:

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The self-Insurer

January 2011

WasHInGTon REPORT for Self-Insurers

s the 112th Congress convenes later this month in Washington, we can expect several developments of interest to those involved with self-insured and alternative risk transfer programs. The following is a preview.

ppaCa â&#x20AC;&#x201C; act II With Republicans taking control of the House of Representatives and picking up seats in the Senate, the Patient Protection & Affordable Care Act (PPACA) passed last year will be the focus of significant legislative activity. The House will likely pass legislation to repeal PPACA in its entirety early in the session, but since such a bill will not clear the Senate, much less a presumed presidential veto, the real action will come from a series of more targeted legislative initiatives and hearings designed to block and/or slow down various implementation components of the new law. Hearings are likely to showcase specific cases of market disruption caused by the new health care law, which will create additional pressure for legislative â&#x20AC;&#x153;fixesâ&#x20AC;? that could possibly attract bipartisan support as moderate and conservative Democrats seek political cover ahead of the 2012 elections. SIIA has been working to compile stories and information about how PPACA is negatively affecting self-insured employers in preparation of participating in these hearings.

www.siia.org

January 2011

By michael W. Ferguson

HHs/dol studies on self-Insurance One provision tucked into the nearly 3,000 page PPACA, was a requirement that the U.S. Department of Labor (DOL) and Health & Human Services Agency (HHS) prepare separate reports that could affect future legislative proposals. The first report is to be focused on assessing the financial solvency of selfinsured group health plans. SIIA lobbyists are in discussions with DOL officials to explain why this is not a simple research initiative as the true financial solvency of any self-insured health plan is directly connected to the financial condition of the plan sponsor, and for privately-held companies this data is generally not available. At this point, discussions are ongoing with regard to the survey methodology. The findings of the report will be significant because of the DOL concludes that self-insured health plans are under-funded, this could very well prompt new legislation placing new requirements on how such plans are funded. On the other hand, a positive finding by DOL should boost the case the self-insurance is an important and legitimate risk financing option. Concurrent with the DOL study, will be a study initiated by HHS examining the private group health marketplace, including a comparison of fully-insured versus selfinsured plans. More specifically, HHS will be looking at whether the reported cost savings associated with self-insured plans are due to proactive plan management efficiencies or because of a reliance on denials of coverage. Like with the DOL study, SIIA has initiated discussions with HHS officials on their approach to compiling the report to ensure that they are properly educated about self-insured plans. And also like the DOL report, the HHS private group market report, could either have a positive or negative affect on the self-insurance industry depending on the findings. Both reports are expected to be completed by this summer. At this time, they will be sent to the committees of jurisdiction in both the House and Senate where future legislation may be considered.

lrra Modernization Legislation was introduced in the House of Representatives intended to modernize the Liability Risk Retention Act (LRRA). There were three main components of the bill: 1) standardized corporate governance requirements; 2) allow risk retention groups to write commercial property coverage, and 3) provide a new federal dispute resolution mechanism to resolve issues involving nondomiciliary regulation of RRGs. Unfortunately time ran out last year before a companion bill was able to be introduced in the Senate. SIIA has confirmed, however, that Senator Jon Tester (D-MT) does plan on introducing the bill early in the new Congress as soon as a Republican co-sponsor signs on. The Senate bill will include the dispute resolution

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The self-Insurer

January 2011

provision, which had been an earlier sticking point. Going forward, lobbying in support of the legislation will focus on the fact this is really as “small business” bill rather than an “insurance” bill because by making it easier for small businesses to participate in RRGs, this enables them to generally reduce their insurance costs, which is just as important as tax cuts/credits, if not more so.

Gao report on risk retention Groups Closely related to the LRRA legislation just discussed is new a new report that the General Accounting Office (GAO) has been tasked to prepare examining non-domiciliary regulatory practices affecting risk retention groups. This is particularly important given that California regulators recently blocked a Montana domiciled RRG from conducting lawful business in that state.

And as of time of this writing, a Vermont domiciled RRG is in litigation with the state of Nevada over that state’s action to shut it down from conducting lawful business. In both cases, such state action directly conflict with the LRRA’s federal preemption provision. In a conference call with GAO investigators last month, SIIA representatives provided an overview of industry concerns and responded to specific questions. As a follow-up to this dialogue, the association provide to GAO as list of interview sources who could provide more details on specific cases on non-domiciliary regulatory abuses.

The Gao report is expected to be released this summer. Medicare Secondary Payer Act Legislation that would have made it easier for workers’ compensation self-insurers and insurance companies to comply with the Medicare Secondary

Payer Act stalled last year. It is expected that the legislation will be introduced this year. The prospects of passage during 2011 is uncertain at this early date.

Federal review of state Workers’ Compensation system A bill requiring a federal study of the state workers’ compensation system died in a House committee last year, although a “show hearing” was held before the end of the session. No companion legislation in the Senate. With Republicans taking control of the House it unlikely that such legislation will have any chances of passage in the new Congress assuming it is rereintroduced. n Mr. Ferguson services as chief operating officer and federal lobbyist for the SelfInsurance Institute of America, Inc. (SIIA).

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www.siia.org

January 2011

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The self-Insurer

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purCHasInG Group ESSENTIALS

THE

WHY&HoW OF pGs By Karrie Hyatt, Managing Editor, Risk Retention Reporter

www.siia.org

January 2011

What are pGs

he 1981 Product Liability Risk Retention Act and 1986 Liability Risk Retention Act (LRRA), both federal laws, were enacted to provide a marketplace solution for buyers of commercial liability insurance which would give them an alternative to the traditional insurance market.Two entities were enabled by this legislation—risk retention groups (RRGs) and purchasing groups (PGs). Risk retention groups were explained in the October issue of The Self-Insurer, here purchasing groups will be defined and described. A purchasing group is an entity organized for the sole purpose to purchase liability insurance for individuals or organizations that share similar liabilities. PGs are comprised of insurance buyers who band together, typically on a national basis, to purchase their liability insurance coverage from an insurance company, including a company operating on an admitted basis, a surplus lines basis, or a risk retention group. As the name implies, the PG serves as an insurance purchasing vehicle for its members. PGs are required to register in every state in which they intend to operate using registration forms either developed by the state or uniform registration forms developed by the National Association of Insurance Commissioners (NAIC). Each state has different requirements for PGs operating in their state, whether domiciled or registered. Some states require an initial fee and some states require taxes to be paid on premium (usually by the PG’s insurers). The LRRA does not require that a PG have any particular legal structure. However, for most PGs, the choice comes down to three basic options: forming as an unincorporated association; forming as a for-profit corporation, or forming as a not-for-profit corporation. A PG’s legal structure depends on several factors, including the potential liability of its members, control of the PG, and tax issues. Added to these considerations are each individual PG’s own unique situation.The most used legal structure for PGs is the not-forprofit model. PG members stem from three key sources: trade and professional associations, homogeneous books of business, and industry affinity groups. While the developers of the LRRA intended that most PGs would form from existing trade or professional associations, only about a third to half of PGs have formed from existing associations. PGs also obtain members when agents, brokers, or insurers with books of homogeneous program business convert their programs to purchasing groups. Still other PGs are formed from industry affinity groups that have been identified as having liability needs.They are typically reached through direct mail and other marketing campaigns. The LRRA preempts various aspects of state regulation and extends the preemptions to PG members and also to their insurers, as well as to agents and brokers or others representing the PG. Preemption of state regulation results in providing regulatory advantages to PGs, but offers business benefits as well. The LRRA preempts state fictitious group laws, which previously had prohibited or made difficult the formation of groups for purchase of commercial liability insurance.The LRRA states that PGs are exempt from any state laws that would “make it unlawful for an insurer to provide or offer to provide insurance … to a purchasing group or its members, advantages, based on their loss and expense experience, not afforded to other persons with respect to rates, policy forms, coverages, or other matters.” The definition of “liability” in the LRRA excludes workers compensation and property. Where commercial insurance buyers require other types of coverage, such as workers’ compensation and property that cannot be covered in the PG, some PGs utilize wraparound or parallel programs to meet the needs of PG members. PGs can also be utilized for the cross-selling of other products and services.

advantages vs. Challenges of pGs PGs provide substantial benefits for the parties involved in the PG arrangement—insurance buyers, insurance companies, agents, and brokers—but there can be disadvantages as well. Among the key benefits provided to PGs by the LRRA is the ability to obtain tailor-made coverage that meets the specialized needs of its members. With the bargaining power provided by group purchase, the PG is typically able to secure broader coverage and better policy terms. PGs can use their group purchasing power to negotiate more favorable rates with the PG’s insurer than would be possible on an individual basis, or even in some other kind of group-buying arrangement. Because PGs offer insurers the chance for greater profitability through economies of scale and the ability to amass critical premium, members can reap benefits when insurers pass on their cost savings to insureds. The leverage of the group is a strong bargaining tool, particularly where several insurers are competing for the business. With PGs, insurance companies can carve out profitable market niches and can realize economies of scale which gives them a greater ability to compete in the marketplace. Similarly, agents and brokers who can assist insurance buyers in developing insurance programs that are tailored to their needs and provide relevant coverage, have a better chance of success in the competitive marketplace of today and the future. The advantages of purchasing groups and their insurers can be summed up quite succinctly:

The self-Insurer

January 2011

advantages for pGs

a negative effect on PGs and their related companies.

•

Favorable rates and tailormade coverage

•

Ownership of loss experience

Regulatory Red Tape

•

Reward for good experience

•

Risk management/loss prevention

•

Long-term insurer commitment

In the late 1990s, when the Risk Retention Reporter asked readers involved with PGs what they considered to be the greatest disadvantage of PGs, almost all responded that it was excessive bureaucracy within state insurance departments.

advantages to Insurers •

Market specialist

•

Mass marketing

•

Preemption of state regulation

•

Fictitious group laws

•

Countersignature laws

•

Rate and form advantages

•

Speed to market

•

Greater profitability

The challenges for purchasing groups are more varied. State over-regulation, complex business arrangements, set liability parameters, and market volatility can all have

PG managers continually point out that state regulators have ample authority to regulate those representatives of PGs, such as agents, brokers, and PG insurers through state licensing laws and the LRRA, yet many states still require non-domiciled PGs to bear, what can be thought of as, excessive regulatory burden in the shape of forms, fees, and taxes.

these. However, many PGs utilize cross-selling arrangements. Some insurers view the PG as an efficient mechanism for aggregating a group of insurance buyers, providing liability coverage through the PG and then using a wrap-around or parallel program to provide other products. Complex Business Arrangements PGs involve at least three key parties— insurance buyers, insurance companies, and agents/brokers. In order for the PG to thrive during all stages of its development, it is essential that all parties understand, agree to, and perform their respective roles and responsibilities. If any of the parties do not fulfill their part of the operation, it could undermine the PG, causing it to experience problems or to fail.

Restricted to Liability The LRRA permits only liability insurance to be purchased by a PG. If members require more coverage than just liability—such as property and workers’ compensation—the PG cannot provide

Market Conditions Market cycles have shaped the growth and development of PGs since passage of the LRRA. Although PGs have formed in both hard and soft markets, formations of

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January 2011

PGs tend to drop dramatically, and existing PGs are more likely to cease doing business, during a hard market, a buyer’s market, when liability insurance becomes more readily affordable.

companies owned by their members. PGs ensuring that the group is in compliance with the LRRA and its own state requirements. are not insurance companies, butINSURERS groups / TPAs NegotiationTypically, – All Handled Attorneys & the this entailsbymaking sure that of insurance buyers who band together Health Care Adjusters PG’s registration is in order, that it has met to purchase liability insurance coverageLicensed on Repricing the - Less Than 1% of Reversal Rate requirements the LRRA, and that the a group basis from a qualified insurance Bill Reviews, Hospital Audits - Be Certain insurer is qualified to provide the coverage. company. While RRGs (as insurers) typically You’re Paying Appropriate Charges retain certain layers of risk and cede higher Independent Medical Reviews layers to reinsurers, PGs (as insurance We Can Determine GrowthIfof It’spG Industry buyers) transfer risk and are not usuallyMedical Necessity or After theExperimental LRRA was implemented in Other Services!!! concerned about reinsurance. Plus Many1986, and unlike the market’s response

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purchasing Groups vs. rrGs

The LRRA requires that members of both PGs and RRGs be engaged in similar or related businesses or activities that expose them to similar liabilities. RRGs and PGs are similar in terms of the criteria or composition of the group and the type of liability coverage they can provide their members.These similarities are significant in two respects: first, they enable a PG to reorganize as an RRG in the future, should it be determined that this is an advantageous course of action; second, they provide for implementation of effective risk management and loss prevention programs, enabling the group to benefit from good loss and claims experience. The fundamental difference between RRGs and PGs is that RRGs retain risk and PGs do not. RRGs form as actual liability insurance

Since RRGs are insurance companies, passage of the 1981 Product CONSUMERfollowing SERVICES they require capital contributions from Liability Risk Retention Act when only a few Patient Services - We’ll Contact Your Doctor or members in order to establish a sound RRGs andYour PGs Health formed,Care large Bill numbers of Hospital and Settle financial structure. By contrast, PGs require both RRGs and PGs began to organize to Let the Experts Lower Your Medical Bills no capital contributions from members. As a take immediate advantage of the benefits result, PGs are much easier to form and can PROVIDERS created by the federal law. FAST Electronic Claims Submissionbe up and running in a matter of months, From 1987 to 1988, following the a Claim Fast? website while RRGs typically take at least a yearNeed to to Fileenactment of the Visit LRRA,our roughly 200 at www.hhcgroup.com 18 months to organize before they become PGs formed in each year with very few operational. Since PGs are so much easier retirements. Some of these PGs were and less costly to form, it is not surprising formed by entrepreneurial operators that they outnumber RRGs by about four before legal decisions challenging ambiguous to one. provisions of the LRRA determined the extent to which state laws were preempted For an RRG, its domiciliary state issues by the LRRA. its certificate of authority or license, enabling

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The self-Insurer

January 2011

2011 EDITORIAL ADVISORY COMMITTEE CHAIRPERSON erica Massey Executive Vice President Self-Insurance Institute of America, Inc. ed Costner President Casualty Actuarial Consultants, Inc. Member of the Workers’ Comp Committee

david rennie VP Development for North America Global Excel Management Member of the Health Care Committee

John Herzfeld Consulting Actuary Milliman Member of the Workers’ Comp Committee Christopher l. Kramer Director of Marketing - Captives ULLICO Member of the ART Committee

Catherine stowers Senior Attorney Kreig DeVault LLP Member of the Health Care Committee skip shewmaker Vice President Safety National Casualty Corporation Member of the Workers’ Comp Committee

Gary d. d’orsi Director, Sales and Marketing Pequot Healthcare Member of the Health Care Committee

donald McCully Vice President Roundstone Member of the ART Committee

stephen diCenso Consulting Actuary, Boston Casualty Practice Milliman Member of the ART Committee

robert Melillo National Sales Consultant Sun Life Financial Assurance Company Member of the Health Care Committee

Happy New Year from the SIEF Board of Directors: Nigel Wallbank, Dick Goff and Heidi Svendsen .

2010-11 GOVERNMENT RELATIONS Vision: COMMITTEE To expand the modes, mediums and audiences Mission: To provide opportunities for education about and within the Self-Insurance Industry

to which education regard self insurance is delivered. Values: To provide fact-based, unbiased education in order to enhance the understanding of and involvement in the self insurance industry.

Mark your calendar for April 13, 2011 – SIEF’s next golf tournament fundraiser in Palm Springs, California. 20

www.siia.org

January 2011

formed in each of the years, matched by an equal number of retirements. During this phase, the total number of operating groups remained in the range 350 to 400. From 1993 to 2000, the number of retirements dropped sharply, and expansion grew at a rate that sometimes exceeded 100 per year, while retirements never exceeded 50. This third phase culminated in the year 2000 when the number of operating PGs peaked at 794. Beginning in 2001, there was a sharp reversal in the number of formations which drove the number of PGs down to 659 by 2004.Through most of the middle of the last decade, PGs numbers held steady, always between 660 and 750 active groups.With the softening insurance market, beginning around 2007, numbers of formations again began to rise. At the end of 2009, for the first time PGs topped 800 and have held steady above 800 during 2010. However, formations and retirements of PGs have been about equal in 2010, so while the market is still soft the number of PGs have not dramatically grown in the last year.This seems to be a new development in this particular soft market. As of the end of 2010, there are 808

PGs operating.The Healthcare sector is the largest, as it is with RRGs, and has 162 groups. Following closely in the number two and three spots are Property Development (147) and Professional Services (144). The other 355 PGs are spread fairly evenly among the other business areas, with no other business sector having more than 80 groups. Illinois and Delaware are the largest domiciles for purchasing groups with 140 and 128 respectively. California comes in a distant third with 66 PGs. Besides these three top domiciles, there are 38 other states in which at least one purchasing group is domiciled. In 2010, the Risk Retention Reporter produced a study of PG premium, the first of its kind in over a decade.The survey found that 2009 premium of purchasing groups was $1.52 billion, as reported by their insurers. The survey results were based on what was reported to the NAIC for year-end 2009. However, the analysis revealed that there may have been some discrepancies, in that not all insurers providing coverage to PGs have reported their premiums to the NAIC.The analysis revealed that PG premium topped at $2.22 billion in 2006 and fell dramatically in 2007 to $1.36 billion, and have experienced

slow growth since then. purchasing Groups Future As with most alternative risk transfer vehicles, purchasing groups have gained a strong foothold in the insurance marketplace. Despite market volatility, PGs have been shown to be able to weather economic storms and still offer a unique structure for providing liability insurance. The exceptional benefits that PGs have to offer—quick set-up, group rates for insurance, the ability to operate across state lines, etc.—means that PGs will have a role to play for a long time to come. Finally, PGs have the unique ability to offer competitively priced insurance to individuals or organizations who share similar liabilities—a structure that find beneficiaries across all business areas in all types of liability insurance. n This article was adapted from the Practical Guide to Purchasing Groups, edited by the late Karen Cutts, J.D., and articles appearing in the Risk Retention Reporter, both published by Insurance Communications. For more information about these publications, visit the website: www.rrr.com.

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The self-Insurer

January 2011

arT GALLERY By Dick Goff

a Whole new Frontier: Forging Healthcare Beyond state lines

ver the last few decades employersponsored health plans have settled at opposite ends of a narrow spectrum: mainly either traditionally funded through commercial health insurance companies or self-funded through ERISA plans by employers who want to cover their employees across state lines with federal preemption of state regulation. Along the way, many of us in the ART world have longed for other options that would better fit some employers’ strategic needs. SIIA has been working for nearly two decades on federal legislation that would enable professional or trade associations to provide health plans for their members’ employees across state lines, but so far this concept has eluded the wisdom of Congress. Another ART structure would be simpler: setting up captive insurance companies to serve employers in given states without the need for ERISA preemption or further Congressional action. Come to find out, this structure has been in place for eight years and has successfully provided coverage to employers. Say hello to the Association Mutual Health Insurance Company (AMHIC) licensed in the District of Columbia and serving not-for-profit education, research and public service-related associations in DC. It currently has 50-some association members.

www.siia.org

January 2011

The fact of AMHIC’s existence could be educational for many in our industry, and that’s my point in relaying it to readers of the Self-Insurer. Large TPAs or MGUs with homogeneous instate books of business could emulate the model as a service to their clients and a profitable opportunity for themselves. While AMHIC serves not-for-profit association members, it is a for-profit company that evolved from a 501(c)(9) trust dating to 1989. In 2002 it was licensed by the District of Columbia as a direct-writing for-profit captive. This structure could be applied in the approximately 30 states that have captive insurance laws. In other states such a captive could operate with a fronting company and appear as a traditional health insurer. As national health care reform continues to evolve, insurers will soon begin to measure themselves against the state health care exchanges that will presumably appear by 2014. “Most of our members with fewer than 100 employees will likely be eligible for a state exchange,” says Chris Bartnik, senior vice president and east region benefits leaders of Wells Fargo Insurance Services USA, Inc., captive manager of AMHIC. He poses the question, “Will we be more viable than a public exchange? That’s how we judge ourselves now and into the future in terms of value and member service. We will either lose groups to some aspects of health care reform or we may be the solution to the problem.”

Bartnik says there is no other captive insurer like AMHIC in the District of Columbia and I would add that I know of no other in any captive jurisdiction. Self-governance by a board comprised of member insureds is an important element of the captive’s success, according to Rhona Byer, executive director of the AMHIC Select Benefit Plan Administrators. “People in our plan know we’re governed by a board that is looking out for their interests,” she says. “Any CEO of a member association can be on the board.”

“These are nonprofits working on a budget and they don’t want premium volatility. Financial stability is crucial to their business.” Mr. Bartnik says that AMHIC is a for-profit company that doesn’t focus on maximizing profits. “It’s more about service to members and providing good value,” he says. AMHIC operates with all the expected professional service providers including a TPA, auditing firm, actuaries, attorneys, a liability insurer covering both members and the captive, and an investment advisor.

The AMHIC board rules on all rate changes, plan design changes and medical management strategies. Ms. Byer says that process results in management transparency and financial stability:

Ms. Byers says the AMHIC board has been proactive in such matters as allowing member retirees to stay in the plan with no restrictions on prescription coverage, and in extending coverage to domestic partners as long as ten years ago.

“Stable premiums are our most important value to members,” she says.

AMHIC leaders say that the company remains committed to the

core values of the plan when it was first established in its earlier structure in 1989: Provide access to affordable medical and dental coverage through group purchasing power. Offer benefit design flexibility not normally available to small groups. Deliver the value of individualized professional advice and administrative assistance. Achieve cost stability through increased spread of risk. That’s a good list for anyone in the health benefits business, and could be a good start on a mission statement for those who would emulate this unique captive elsewhere.” n Dick Goff is managing member of The Taft Companies LLC, a captive insurance management firm and Bermuda broker at dick@taftcos.com.

The self-Insurer

January 2011

PPACA, HIPAA AND FEDERAL HEALTH BENEFIT MANDATES:

Practical

The Patent Protection and Affordable Care Act (PPACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefit mandates (e.g., the Mental Health Parity Act, the Newborns and Mothers Health Protection Act, and the Women’s Health and Cancer Rights Act) dramatically impact the administration of self-insured health plans. This monthly column provides practical answers to administration questions and current guidance on PPACA, HIPAA and other federal benefit mandates. Attorneys John R. Hickman, Ashley Gillihan, Carolyn Smith, and Johann Lee provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefits Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte and Washington, D.C. law firm. Ashley Gillihan, Carolyn Smith and Johann Lee are members of the Health Benefits Practice. Answers are provided as general guidance on the subjects covered in the question and are not provided as legal advice to the questioner’s situation. Any legal issues should be reviewed by your legal counsel to apply the law to the particular facts of your situation. Readers are encouraged to send questions by E-MAIL to Mr. Hickman at john.hickman@alston.com.

www.siia.org

January 2011

Q&a

2010 a Health plan Year in review

s 2010 comes to a close, benefits professionals will naturally begin to look ahead to 2011. The key question, as it is every year, is what does next year hold in store for health and welfare benefits. However, as Carl Sagan noted, “you have to know the past to understand the present”. Thus, it seems prudent to first look back over 2010 before moving headlong into 2011. And what a year 2010 has been!!!!!! Congress and the various administrative agencies were busy this year providing us with a flurry of vertigo-inducing health plan related statutes, regulations, and other guidance, including the following: February 2010- The agencies issue interim final regulations under the Mental Health Parity and Addiction Equity Act. The regulations provide much needed clarification as well as a few surprises (e.g. the regulations impose restrictions on non-quantitative treatment limitations). The regulations are generally effective for plan years beginning on or after July 1, 2010 (January 1, 2011 for calendar year plans). March 2010- President Obama signs the Temporary Extension Act, which, among other things, extends the federal COBRA subsidy sunset date from February 28, 2010 to May 31, 2010 (i.e. the date on or before which an involuntary termination of employment or employer-initiated reduction in hours of employment to zero must occur in order to qualify for the Subsidy). COBRA administrators scramble to update notices accordingly. NOTE: Congress did not act to extend the Subsidy sunset date beyond May 31, 2010. March 23/30, 2010- President Obama signs the Patient Protection and Affordable Care Act (March 23, 2010) and the Health Care and Education Reconciliation Act

(March 30, 2010). These two bills, which are collectively referred to as “Health Care Reform” are perhaps the most comprehensive pieces of legislation affecting employer health plans ever enacted. The agencies issue numerous pieces of guidance throughout the summer and fall of 2010 in an attempt to clarify the extremely complex and lengthy bills. Despite the agencies’ attempt to provide clarification, the general consensus is that everyone is still confused, which means much of 2011 will be spent trying to make sense of health care reform.You can find many of the regulations and other guidance issued by the Department of Labor at http://www. dol.gov/ebsa/healthreform/ June 2010- HHS issues Early Retiree Reinsurance Program application, which begins the ERRP filing and reimbursement process. HHS also establishes a website dedicated solely to the ERRP, which you can find at http://www.errp.gov July 2010- HHS issues proposed HITECH privacy and security regulations. The HITECH regulations address a number of privacy and security provisions set forth in HITECH such as the definition of marketing, status of a business associate’s subcontractors as business associates, and extending privacy requirements directly to business associates, just to name a few (note: regulations on notice of privacy breaches were issued in August 2009). Most importantly, recognizing that it would be difficult for covered entities and business associates to comply with the new regulations until after they are finalized, HHS indicated in the proposed regulations that it will allow covered entities and business associates an additional 180 days beyond the effective date of the final rules, whenever they are issued, to comply.

Act (GINA). The Department of Labor,Treasury, and HHS jointly issued regulations on Title I, which directly impacts group health plans, in December 2009. The primary focus of EEOC’s regulations is on employment related actions of an employer; however, the regulations likely impact an employer’s administrative policies and procedures associated with non-health benefits offered by employers, such as life and disability benefits. In this holiday season of compassion and giving, we would like to give to the benefits community a gift—an overview of some of the most critical aspects of 2010’s legislative and regulatory activity---the mental health and substance abuse parity regulations, health care reform, and the expiring tax cuts. As noted above, the 2010 legislative and regulatory activity related to health and welfare benefits has been dizzying. We do not have the capacity to cover in detail each and every legislative and regulatory action in this article; however, we do provide an overview of Health Care Reform. On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act and then, on March 30, 2010, President Obama signed the Health Care and Education Reconciliation Act (collectively referred to as PPACA). The two bills that form PPACA had an immediate impact on health plans and will continue to have an impact on health plans well into the future.The following is an overview of the provisions in PPACA that had an impact in 2010.

1. small employer Tax Credit for small employers Section 1421 of PPACA adds new Section 45R to the Code. Code Section 45R provides a federal income tax credit to eligible small employers that make nonelective contributions for their employees’ health insurance premiums under a qualifying health arrangement. The credit is effective for tax years beginning after

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January 2011

December 31 2009. In other words, qualifying employers may take a credit for premiums paid in 2010. The IRS has issued the following pieces of guidance that explain various aspects of the rule: •

IRS Rev. Rul. 2010-13

•

IRS Notice 2010-44

•

IRS Notice 2010-82

•

IRS Form 8941

In order to be an eligible small employer, (1) the employer must have fewer than 25 full-time equivalent employees (FTEs) for the taxable year; (2) the average annual wages of its employees for the year must be less than $50,000 per FTE; and (3) the employer must maintain a qualifying arrangement. A qualifying arrangement is an arrangement under which the employer pays a uniform percentage of at least 50% of the premiums for each employee enrolled in “health insurance coverage” offered by the employer. For 2010, the employer need only contribute at least 50% of the cost of single coverage. practice pointer: Sole proprietors, partners in a partnership, shareholders owning more than two percent of an S corporation, and any owners of more than five percent of other businesses are not taken into account as employees for purposes of the credit. Family members of these owners and partners are also not taken into account as employees. For purposes of section 45R, a family member is defined as a child (or descendant of a child); a sibling or stepsibling; a parent (or ancestor of a parent); a step-parent; a niece or nephew; an aunt or uncle; or a son-in-law, daughter-in-law, father-in-law, mother-in-law, brother-in-law or sister-in law. Finally, any other member of the household of these owners and partners who qualifies as a dependent under section 152(d)(2)(H) is not taken into account as an employee for purposes of Section 45R. The amount of the credit is based on a

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percentage of the lesser of: 1) the amount of nonelective contributions paid by the eligible small employer on behalf of employees under a qualifying arrangement during the taxable year, and 2) the amount of nonelective contributions the employer would have paid under the arrangement if each such employee were enrolled in a plan that had a premium equal to the average premium for the small group market in the State (or in an area in the State) in which the employer is offering health insurance coverage. See IRS Rul. 2010-13 for a compilation of the average premiums in each state for 2010. Health insurance coverage for purposes of the Code Section 45R tax credit also includes not only traditional accident and health insurance but also the following plans described in Code Section 9832(c) (2), (3) and (4): limited scope dental or vision; long-term care, nursing home care, home health care, community-based care, or any combination thereof; coverage only for a specified disease or illness; hospital indemnity or other fixed indemnity insurance; and Medicare supplemental health insurance; certain other supplemental coverage, and similar supplemental coverage provided to coverage under a group health plan. Health insurance coverage does not include certain benefits that are always considered excepted benefits in all situations under ERISA Sec. 732(c )(1) (see also I.R.C. 9832(c)(1)). practice pointer: Employers who are eligible for the credit must weigh the tax credit against any deduction that might otherwise be available for the payment of such premiums---eligible employers may take the credit or the deduction, but not both.

2. Expansion of the Definition of Dependent Under Code section 105(b) Effective March 30, 2010, PPACA Section expanded the health care tax exclusion under Section 105(b) of the Internal Revenue Code to any “child” (as defined in Code Section 152(f)(1)) who will not reach age 27 at any time during the tax year. Child, as defined in Code Section 152(f)(1), is a natural child, step child, adopted child, child placed with the employee for adoption, or an “eligible foster child”. The IRS has issued IRS Notice 2010-38 to explain various aspects of the expanded tax exclusion. This expansion had an immediate impact on plans that define eligibility based on reference to a dependent defined in Code Section 105(b), including health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs). For example, if your Health FSA or HRA defines “dependent” by reference to Code Section 105(b), the expansion related to children who will not turn age 27 during the year automatically went into effect on March 30, 2010. Thus, expenses incurred on or after March 30, 2010 by an employee’s child who will not turn age 27 during the year became reimbursable as of March 30, 2010 without any additional changes in the plan. On the other hand, if your Health FSA has a more narrow definition of dependent (e.g. dependent is defined by reference to Code Section 152 and not I.R.C. Section 105(b)), then no changes are required but you must amend your plan if you wish to take advantage of the new expanded definition. Fortunately, IRS Notice 2010-38 allows plan sponsors to amend the plan retroactively to March 30, 2010 to the extent that such amendments are executed no later than December 31, 2010. practice pointer: Although PPACA expanded the definition of tax dependent for purposes of health plans, it did not expand the definition of “dependent” for purposes of Health Savings Accounts. The net result is that unreimbursed expenses of certain adult children who are added to the high deductible health plan (as required by the health insurance reforms added by PPACA) and who receive tax free coverage by virtue of the expanded definition in Code Section 105(b) will not be eligible for reimbursement

through the HSA unless they qualify as a tax dependent under the much more narrow definition set forth in Code Section 223.

3. early retiree Insurance program Section 1102 of PPACA added the early retiree reinsurance program (“ERRP”). On May 3, 2010, HHS issued interim final regulations for the ERRP. HHS has since established a website dedicated to the ERRP on which you can find the regulations, FAQs ,and other information. You can access the website at http:// www.errp.gov/index.shtml. Under the ERRP, the plan sponsor is eligible to receive reimbursements equal to 80% of eligible health benefit claims for early retirees incurred during the plan year that are between $15,000 and $90,000 (as indexed for medical inflation after October 1, 2011). An “early retiree” is a plan participant who is age 55 or older, who is not eligible for Medicare, and who is not actively employed by any employer maintaining the plan, as determined by the plan sponsor is accordance with the rules of the plan. Enrolled spouses, surviving spouses, and dependents (as defined under the plan) are also included in the definition of early retiree.The ERRP is scheduled to run through January 1, 2014 or until the $5 billion set aside for the ERRP is exhausted. As a threshold matter, the plan sponsor must complete an application and submit it to HHS to participate in the ERRP. You can access a copy of the application at http://www.hhs.gov/ociio/Documents/ official-errp-program-application_.pdf. There is also an FAQ on the application, that you can access at http://www.hhs. gov/ociio/Documents/application_faq. html. HHS must approve the application and certify that the plan sponsor and the plan sponsor’s employment-based plans meet the requirements for participation. To be qualified, the employer’s plan must

include programs that have generated or have the potential to generate cost-savings with respect to participants with “chronic and high-cost conditions” (a condition for which $15,000 or more in health benefit claims are likely to be incurred during a plan year by any one participant). Once approved, claims may be submitted for reimbursement of certain health benefits, which are generally defined as medical, surgical, hospital, prescription drug, whether self-funded or provided through insurance or otherwise. Health benefits do not include “excepted benefits” as defined under HIPAA. In addition, HHS has identified certain items not otherwise covered by Medicare that will not be credited towards the $15,000 threshold or be eligible reimbursement. You can find the list at http://www.errp.gov/download/ Claims_Eligible_for_Reimbursement[1].pdf. practice pointer: HHS has indicated that all qualified applications will be approved, regardless of when received; however, HHS will reject applications if it appears that the $5 billion set aside under PPACA will be insufficient as claims are paid out. The regulations clarify that, a sponsor must use the reinsurance proceeds under this program (1) To reduce the sponsor’s health benefit premiums or health benefit costs, (2) To reduce plan participants’ health benefit premium contributions, copayments, deductibles, coinsurance, or other out-of-pocket costs, or any combination of these costs, or (3) To reduce any combination of these costs specified in (1) and (2). Proceeds received pursuant to the ERRP cannot be used as general revenue of the sponsor.

4. Health Insurance reforms effective for plan years beginning on or after september 23, 2010 Section 1001 of PPACA added a number of “health insurance reforms” (HIRs) to Title 27 of he Public Health

Service Act. Title 27 is the “HIPAA subpart” of the PHSA (e.g. this subpart includes special enrollment, nondiscrimination based on health status, mental health parity, etc). These provisions were incorporated by reference into the HIPAA subparts of ERISA (new ERISA section 715) and the Internal Revenue Code (new Code Section 9815) to incorporate the provisions of Title 27 of the PHSA. The HIRs added by Section 1001 of PPACA are effective for plan years beginning on or after September 23, 2010. Practice Pointer: What is the “plan year”? PPACA does not specifically provide a definition; however, the regulations applicable to the HIPAA subparts of ERISA, the Code and the PHSA to which the health insurance reforms were added define “plan year” as: The year that is designated as the plan year in the plan document • If the plan document does not designate a plan year, then the plan year is the year in which deductibles or limits are calculated • If there are no deductibles or limits, then the plan year is the policy year. • If there is no policy year, then the plan year is the employer’s tax year. In any other case, it is the calendar year. (see 29 C.F.R. 2590.701-2). PPACA’s HIRs will prompt a number of costly changes to group health plans. Successfully managing and mitigating the potential cost increases associated with these HIRs depends almost entirely on being able to effectively answer the following 4 questions: What are each of the HIRs? To which group health plans do the HIRs apply? What is a grandfathered plan? What is the impact of losing grandfathered plan status? The following Q&As are designed to answer these fundamental questions.

The self-Insurer

January 2011

What are the HIrs?

As long as a grandfathered plan

The HIRs effective for plan years beginning on or after September 23, 2010 and some of the nuances with respect to each HIR are listed in Appendix A to this article.

maintains grandfathered plan status, it is exempt from some, but not all of the HIRs. See Appendix A for the list of HIRs that are not applicable

To which group health plans do the HIrs apply?

to grandfathered plans (including but

Since the HIRs were added to the HIPAA Subpart of the PHSA, ERISA, and the Code, the analysis regarding applicability of the HIRs to a specific plan is the same as the applicability of HIPAA’s portability rules to a health plan. The HIPAA subparts, and the HIRs, apply to all “group health plans” (including plans subject to collectively bargained agreements) other than those arrangements that are limited to “excepted benefits” or that otherwise meet the “small plan” exception (described in more detail below). The analysis is rather simple:

not limited to grandfathered plans

Is the plan a “group health plan”? If NO, STOP! It is not subject to the HIRs. If YES, go to B.

any one of certain enumerated

Is the plan an “excepted benefit”? If YES, STOP!!! It is not subject to the HIRs even though it is a group health plan. If NO, go to C.

C for a full list of disqualifying changes.

Is the plan a “small plan”? If YES, STOP! It is not subject to the HIRs, even though it is a group health plan. If NO, the plan is generally subject to the HIRs.

interim final regulations regarding

A group health plan generally includes major medical, dental, vision, behavioral health, a Health Reimbursement Arrangement (HRA), and even an employee assistance program.

at http://www.dol.gov/federalregister/

practice pointer: Some benefits that are otherwise group health plans, such as dental and vision benefits, might qualify as “excepted benefits” under certain circumstances. Excepted benefits are benefits that fall into one of the following categories of benefits described in the HIPAA subparts of ERISA, the Code and the PHSA. See Appendix B for a general description of the Excepted Benefit categories. The small plan exception applies to any plan that does not have at least 2 current employees participating in the plan on the first day of the plan year. Thus, stand alone retiree health plans (i.e. plans that are separate from an active health plan based on the documentation and/or the plan’s operating procedures) are not subject to the HIRs. practice pointer: Under the existing statutory framework, plans that cover part-time and hourly employees are subject to the HIRs unless the plan exclusively provides excepted benefits or the plan is a “small plan”.

subject to a collectively bargained agreement). Except as otherwise provided for a fully insured collectively bargained plan, a grandfathered plan will maintain its grandfather status unless it makes “disqualifying” changes. See Appendix The agencies have issued grandfathered plans, which you can find HtmlDisplay.aspx?DocId=23967&Agenc yId=8&DocumentType=2

What does it mean to lose grandfathered plan status? If a grandfathered plan/benefit package option makes impermissible changes and loses grandfather plan status, it will become subject to the remaining HIRs. See Appendix A for an overview of the HIRs applicable to plans that loses grandfather status. practice pointer: Maintaining grandfathered plan status is not a matter of “if ” but “when”. Clients

What is a grandfathered plan?

would be well advised to analyze

Technically, a grandfathered plan is a plan or policy covering an individual on March 23, 2010. Nevertheless, a plan will not lose grandfather plan status if it allows new employees or newly eligible employees or family members to enroll after March 23, 2010. In essence, if a plan is in existence on March 23, 2010, it is grandfathered plan as long as it has continually covered someone since March 23, 2010.

grandfathered plan status in light of

practice pointer: The grandfathered plan rule is applied separately to each benefit option offered under the plan. For example, assume that the ABC health plan has a PPO option, an HMO option, and an indemnity option. Grandfather status is determined separately with respect to each option.

associated with complying with the

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January 2011

the following formula, where X equals the costs savings associated with the disqualifying changes you propose to make and Y equals the costs additional reforms applicable to nongrandfathered plans. In many cases, X will be greater than Y (i.e. X>Y).

appendIX a HealTH InsuranCe reForM TaBle Mandates effective First Plan year on/after September 23, 2010 The following table provides (in chronological order) the effective date of the application of Patient Protection and Affordable Care Act (PPACA) as well as which of these provisions are applicable to grandfathered health plans.

Insurance reform (pHsa §)

Coverage of adult children § 2714

Uniform explanation of coverage § 2715

Bringing down the cost of health coverage (minimum medical loss ratio) § 2718 Applicable only to fully insured plans

Coverage of preventive care (without cost sharing) § 2713

Provision of additional information (transparency requirements) §2715A

Nondiscrimination rules for insured plans §2716 Applicable only to fully insured plans.

applicable to Grandfathered plans?

description Group health plans and health insurance issuers offering group or individual health insurance coverage that provide dependent coverage for a “Child” must provide make such coverage available to children until age 26. practice pointer: Subsequent guidance indicates that “Child” is defined in accordance with Code Section 152(f)(1). For a child under age 26, no restrictions on eligibility are permitted; however, a grandfathered plan may deny access to children who are eligible for other eligible employer sponsored coverage other than a parent’s plan. In addition, benefits for such children may not be based on age other than age 26 or older. Thus, if a plan typically limits a benefit for children under age 19, plans must revise such limitation to age 26.

Yes

Requires the Federal government to develop standards for use by group health plans and health insurance issuers in compiling and providing an accurate summary of benefits and explanation of coverage for applicants, policyholders or certificate holders, and enrollees. The explanation of coverage must describe any cost sharing, exceptions, reductions, and limitations on coverage, and give examples to illustrate common benefits scenarios. practice pointer: Although technically effective for plan years beginning on or after September 23, 2010, the agencies were provided 12 months to develop the criteria for reporting and then plans will be given at least another 12 months in which to comply.

Yes

Requires health insurance issuers offering group or individual health insurance coverage to submit annual reports to the Federal government on the percentages of premiums that the coverage spends on reimbursement for clinical services and activities that improve health care quality, and to provide rebates to enrollees if this spending does not meet minimum standards for a given plan year. practice pointer: HHS recently issued regulations, which you can access at: http://edocket.access.gpo.gov/2010/pdf/2010-29596.pdf

Yes provision applies to insured plans only)

Group health plans and health insurance issuers offering group or individual health insurance coverage must cover certain preventive services, immunizations, and screenings, without any cost sharing. practice pointer:Only recommended preventive services identified by HHS must be provided at no cost. You can find the list of recommended preventive services at http://www.healthcare.gov/center/regulations/prevention/ recommendations.html

Requires group health plans and health insurance issuers offering group or individual health insurance coverage to disclose, to the Federal government and the State insurance commissioner, certain enrollee information such as claims payment policies and practices and enrollee rights. Requires such plans and issuers to provide information to enrollees on the amount of cost-sharing for a specific item or service.

Prohibits fully-insured group health plans from discriminating in favor of highly compensated individuals with respect to eligibility and benefits. practice pointer: Section 2716 incorporates by references the nondiscrimination tests set forth in Code Section 105(h) as well as the definition of highly compensated employee used in Code Section 105(h) (generally, the top 25% in pay). However, instead of tax implications for highly compensated employees, failure to comply will result in a $100 per day penalty for each person the plan discriminates against. See IRS Notice 2010-63.

The self-Insurer

January 2011

appendix a Continued Certain reporting requirements (statutory heading is “Ensuring Quality of Care”) §2717

Claims appeal procedures § 2719

Patient protections (choice of primary care provider and emergency services without prior authorization) §2719A

Requires the Federal government to develop guidelines for use by health insurance issuers to report information on initiatives and programs that improve health outcomes. Prohibits a wellness program from requiring the disclosure or collection of any information relating to the presence or storage of a lawfully possessed firearm or ammunition in the residence or the lawful use, possession or storage of a firearm or ammunition by an individual.

Claims appeal procedures § 2719 Group health plans and health insurance issuers offering group or individual health insurance coverage must provide an effective internal appeals process of coverage determinations and claims and comply with any applicable State external review process. If the State has not established an external review process that meets minimum standards or the plan is self-insured, the plan or issuer shall implement an external review process that meets standards established by the Federal government.

Group health plans and health insurance issuers offering group or individual health insurance coverage must permit an individual to select a participating primary care provider, or pediatrician in the case of a child. Provides direct access to obstetrical or gynecological care without a referral. Prohibits prior authorization or increased cost sharing for out-of-network emergency services.

appendIX B: TaBle oF eXCepTed BeneFITs Group health plans that provide “excepted benefits” are exempt from HIPAA's portability requirements and the HIRs. There are essentially five subcategories of excepted benefits excluded from HIPAA's portability rules. Those categories are as follows: 1. Benefits that are excluded under all circumstances: •

Accident or disability income insurance

•

Liability insurance, including general liability and auto liability insurance

•

Workers' compensation;

•

Automobile medical payment insurance

•

Credit only insurance;

•

Coverage for on-site medical clinics

2. The following benefits are exempt when offered through a separate policy or, alternatively, if they do not otherwise constitute an integral part of the plan. For this purpose a benefit is not an integral part of the plan if the participant has the right to elect the coverage separately from medical and, if the participant elects to receive the coverage, the participant is charged a separate premium or contribution. •

“Limited scope” dental or vision benefits. “Limited scope dental coverage” is defined as coverage substantially all of which consists of treatment of the mouth. Likewise, limited scope vision coverage is defined as coverage substantially all of which is treatment for the eyes.

•

Long-term care

•

Nursing home care

•

Home health care

•

Community-based care

practice pointer: Dental or vision benefits offered under the same plan as medical benefits may still be “limited scope” as long as the coverage is voluntary, and the dental and/or vision benefits can be elected separately and a separate contribution is required.

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January 2011

3. Limited scope specified diseaseand hospital (or other fixed) indemnity coverage is exempt from HIPAA provided that: Such coverage is provided under a separate policy, certificate or contract of insurance; No coordination exists between the provision of such benefits and any exclusion under any plan maintained by that employer; Benefits are paid for an event regardless of whether benefits are provided under any group health plan maintained by the same plan sponsor. practice pointer: The final regulations clarify that hospital indemnity insurance will qualify as an excepted benefit only if it provides a fixed amount of benefits per day (or other period) for each day the individual is in the hospital, regardless of the amount of expenses. If the policy provides benefits other than a fixed amount per day for hospitalization, the plan fails to qualify as an excepted benefit. For example, if the plan provides benefits only for a fixed percentage of hospital expenses up to a fixed maximum (e.g., 75 percent up to $100 per day), the plan is not an excepted hospital indemnity plan.

4. The following types of benefits if offered under a separate policy or contract: •

Medicare supplemental policy;

•

TRICARE supplemental policy;

•

Coverage providing “similar” supplemental coverage to a group health plan.

•

Increases in fixed amount cost sharing: For fixed amount cost sharing other than copayments (e.g., deductibles) the maximum permitted increase in the fixed amount (since March 23, 2010) without loss of grandfathered status is Medical Inflation (from March 23, 2010), expressed as a percentage, plus 15 percentage points. For co-payments, the maximum permitted increase (since March 23, 2010) without loss of grandfather status is the greater of (a) the maximum percentage increase as described in the preceding sentence (Medical Inflation plus 15 percentage points), and (b) $5 increased by Medical Inflation. “Medical Inflation” is a defined term and means the increase since March 2010 in the overall medical care component of the CPI for all Urban Consumers. That increase is computed according to a formula set forth in the regulations.

•

Changes in employer contributions to premiums: A decrease in the employer contribution rate of more than 5 percentage points below the rate on March 23, 2010 for any tier of coverage for similarly situated individuals results in loss of the grandfather status. NOTE: For a self insured plan, the contribution rate is the employer’s share of the cost compared to the total cost of coverage, expressed as a percentage. For plans that contribute pursuant

The final regulations clarify that the exception for “similar supplemental coverage” is limited to coverage that is specifically designed to fill gaps in the primary health coverage such as coinsurance or deductibles (e.g., such as a Medi-Gap or CHAMPUS/TRICARE supplement plan). Coverage that is supplemental only because of the plan's coordination provisions is not “similar supplemental coverage.” 5. Health Flexible Spending Arrangement. If a Health Flexible Spending Arrangement (as defined in Code Section 106(c)) satisfies the following two equirements, then the health flexible spending arrangement is an excepted benefit: •

Other group health plan coverage is made available to the class of participants and

•

The maximum reimbursement does not exceed two times the participant’s salary reduction or, if greater, the participant’s salary reduction plus $500.

appendIX C: IMperMIssIBle CHanGes GrandFaTHer plan rules Maintenance of Grandfather Status The regulations severely limit the changes that may be made without losing grandfather status. Any one of the following changes will result in the loss of grandfathered status. NOTE: The Rules apply separately to each benefit package under a plan-- A change to one benefit package that results in loss of grandfather status to that package (e.g., a change in insurance carriers) does not affect other benefit packages. •

Changes in insurance contracts/policies: Until recently, a change in insurance contract would end grandfather status for that benefit package option unless the plan was subject to a collectively bargained agreement ratified prior to March 23, 2010. However, the agencies recently amended the regulations such that a change in contract would not cause a loss of grandfather plan status as long as no other disqualifying changes were made. See http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId =24413&AgencyId=8&DocumentType=2

•

Changes in the scope of benefits. The elimination of benefits to diagnose or treat a particular condition, even if the condition affects relatively few individuals under the plan, results in loss of grandfather status. The elimination of benefits for any necessary element to diagnose or treat a particular condition also results in loss of grandfather status. For example, if a plan covers a particular mental health condition, the treatment for which includes prescription drugs and counseling, then elimination of counseling would result in loss of grandfather status.

•

Increases in percentage cost sharing requirements: ANY increase in percentage cost sharing amounts (such as increasing a 20 percent coinsurance requirement to 30 percent) results in loss of grandfather status.

The self-Insurer

January 2011

to a formula, such as hours worked, the contribution rate is the formula. Example: If the COBRA cost of single coverage under a benefit package option offered under a Plan on March 23, 2010 is $5000 and the employees contribute $1000, your contribution rate for March 23, 2010 is 80%. Assume that the COBRA cost in 2014 for single coverage is still $5000 but the employee's share is now $1250 instead of 1000 (meaning, you contribute 3750 instead of 4000). Your contribution rate on January 1, 2014 in this example is 75%. You do not lose grandfather plan status because the contribution rate, expressed as a percentage, did not decrease by more than 5% percentage points from the contribution rate in effect on March 23, 2010 (80%) even though your actual contribution, expressed as a Ethicare_Ad_05_01.pdf 1 12/8/10 dollar amount, decreased by 6.2% from

in the regulations as resulting in loss

the dollar amount on March 23, 2010. •

Changes in annual limits: The addition of an overall annual limit on the dollar value of benefits to a grandfathered plan that did not impose an overall annual or lifetime dollar limit on March 23, 2010, result in loss of grandfather status. If a grandfathered plan that had only a lifetime dollar limit on March 23, 2010 is modified to add an annual dollar limit on benefits, grandfather status is lost unless the annual limit is not less that the lifetime limit. If a grandfather plan lowers an annual dollar limit on benefits below the limit in effect on March 23, 2010, grandfather status is lost.

of grandfather status do not affect the grandfather. Changes to voluntarily comply with PPACA and changes in third party administrators do not result in loss of grandfather status. n

According to the preamble, changes other than those described

3:51 PM

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January 2011

MATHER’S GRAPEVINE

any of us thought that with the 2010 Mid-Term elections ending and our new hopes for moving forward in Washington on dozens of issues would bring about a positive approach to things, many of which are extremely important to our industry. In the words of the late Billy Shakespeare, “What Fools We Mortals Be!” The contentiousness and never-ending arguments go on, now spread across three parties, and perhaps a few more in the back room that we don’t know much about yet. I keep looking for some evidence of cooperation, intelligent thinking and some effort to get things done right for all of the American people. But why would I be looking for it inside the beltway? Moreover, why would I expect to find it reported in the mainstream media, to either the right or left? The best news this week is that with the Thanksgiving break some of the turmoil will subside, at least to the general public. But rest assured that when this publication reaches your hands it will have begun again, probably at a considerably increased volume. I kept searching for positive thinking, and then I sat down to read Erica Massey’s article in the November issue of this magazine. I have known this lady since she was a teenager. Then, as now, there was never a time when her intelligence and bright approach to all matters failed to impress me. She has always, from the

“I keep looking for some evidence of cooperation, intelligent thinking and some effort to get things done right for all of the american people. But why would I be looking for it inside the beltway?” earliest times of this organization’s development, been active in its positive forward motion. Whether it was national conferences or specific industry meetings, awards celebrations or meetings with politically important people, Erica was always there, smiling, greeting, making sure the troops were in touch with the total picture. And when she wasn’t in public view she was hard at work in the back room making sure everything went well. Her charming personality rings through in her November article. She is positive, well informed, always looking to the future for improvements in approaches. She has traveled the World on our behalf and done one super deluxe job of bringing home new players to the game and building new relationships that in the old days were never even thought to be possible. Of course there have been some rewards. I can assure you that she has earned them. Now, as Executive Vice President of SIIA and President/Managing Editor of the publishing arm of SIIA, Erica has earned her successes but at the same time brought other very bright folks forward in the day to day management of this ever growing and dynamic organization. Most of us work a regular shift in life. Erica is on call 24 hours a day, seven days a week, while at the same time doing a great job as a wife and mother to a great family. If you, like I, are looking for some positive news in today’s world and having great trouble finding it, take the time to sit down and read Erica’s recent article and I’m sure those yet to come. I think you will immediately pick up on her approaches and thought for the future of SIIA. We should be proud to have this lady, and the others in this organization that have chosen leadership positions at the front. God only knows what the future will bring in political ramblings and poor decisions in Washington and elsewhere. Rest assured that Erica Massey will be there for our causes. n Hats Off to you Erica!. Tom Mather Contributing Editor

The self-Insurer

January 2011

Physician shortage:

Fact or Fiction? a look Into the rumors of a shortage By Richard a. Longo, RN, FaCHe, FaCmPe

o, you need to see a primary care doctor. You’ve had a nagging lump in your neck that is causing concern and you figure it’s time to get it checked. After dialing your family physician, you’re told that you can schedule an appointment, but you’ll have to wait for almost 2 months before the doctor has time to see you. This is a scary scenario, but unfortunately this is what some patients in Massachusetts are facing today. In 2006, the state legislature passed a healthcare reform that bears similarities to the Obama administration’s recent bill. This healthcare reform, combined with an already stressed healthcare system, is making it a little bit tougher for Massachusetts residents to access healthcare. Does the healthcare situation in Massachusetts serve as a warning for the rest of the country?

Growing shortage Concerns For years, the healthcare industry has been plagued with growing concerns over a potential physician shortage. As a nation, we have been blessed with ready access to healthcare. Sure, you still hear the stories of people that have to wait in emergency rooms for hours with a gaping wound before they are seen by a nurse or physician. Urgent care is unpredictable, and thus, there is no way to gauge how long one would have to wait before gaining entrance to a curtained bed to be examined. It is also not uncommon having to wait for 30 minutes to an hour for a primary care doctor to glance down your throat to confirm that, yes, you do in fact have a strep infection and hand you a prescription for an antibiotic.The chronic condition of waiting for medical

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January 2011

care is infamous, and there does not appear to be any hope of this lessening in the years to come; in fact, it is only looking to get worse. Several studies by different organizations have reached forecast assumptions about what the shortage could look like in terms of patient to doctor ratios. The lowest projection from the Department of Health and Human Services shows a shortage of over 65,000 by 2020, while other projections have the shortage upwards toward the 200,000 mark.

Impact of Healthcare reform President Obama’s signature sealed the Patient Protection and Affordable Care Act (hereafter referred to as the healthcare reform act). With that flick of the pen, the President introduced an additional 30 million patients into the

healthcare system.This increase of just 4% has the potential to stress an already ailing system to the max. Any person who has needed medical care in their life time knows the importance of having access to care. But the question remains if our hospitals and primary care doctors’ offices are ready for the influx of patients.

other Contributing Factors Aside from the healthcare reform act, there are other major factors contributing to the impending physician shortage.The “baby boomer” generation is quickly reaching retirement age, and with it, many physicians will be hanging up their stethoscopes in exchange for postretirement vacations and other leisurely activities. According to the Association of American Medical Colleges, one-third of the active physician population is over the age of 55.The Pennsylvania Medical Society reported that in 2006, fewer than 8 percent of physicians in the state were under the age of 35. According to the U.S. Census Bureau, the trend from 1990 to 2000 in population growth showed an increase of 13.2 percent, representing 32.7 million people. Data from the 2010 census has yet to be released; however, there does seem to be a continued rise in the nation’s population growth rate. The Association of American Medical Colleges has recommended that admissions into medical school increase by 30 percent in an attempt to close the gap. However, even if the rate of admissions does go up, many of these medical students will choose to go into a specialty, leaving primary and urgent care doctors still in short supply. It is likely that many patients will start being seen by nurse practitioners and physician assistants, as opposed to a doctor.

What You Can do It is nearly impossible to tell if the predictions of the physician shortage

will come into full bloom, and if they do, whether it will be as harsh as expected. Now, the question becomes, if a shortage rears its ugly head in the next few years, what, if anything, can you do to make sure that your employees are getting the care they need? The answer is that, yes, you can be instrumental in ensuring that you and your employees stay covered. review Your ppo network: Take another look at your PPO network to make sure that there is strong coverage for primary care physicians and urgent care facilities, such as hospitals. Make sure that this includes facilities not only close to your office locations, but also within close proximity to your employees’ home locations. If there is significant holes in your network, contact your PPO network to find out if they can negotiate contracts with facilities within the range that you want them.Your network should be willing to attempt to contract with out-of-network providers to expand your in-network options. Find a primary Care physician: Encourage your employees to find a primary care physician as soon as possible if they do not currently have one. New employees, in particular, may not have a family doctor if they relocated for their job or if their former doctor is no longer in-network. Many physicians will stop accepting new patients if their patient load becomes too great. When “shopping” for a new primary care physician, it is important to ask about their policy for same day appointments in case of sickness or injury.This will help lessen the need to go to the emergency room for urgent care, where a longer wait is likely. educate employees on retail Health Clinics: The consumer world of healthcare has arrived, and it can be a viable option when urgent care is needed quickly. Even though retail clinics have been around for 10 years, many people are still relatively uneducated about their existence. Instead of visiting a physician

office or the emergency room, your employees can pull up to a Walgreens, MinuteClinic, or other retail clinic to be seen by a medical professional, who is typically a nurse practitioner or physician assistant. Retail health clinics are an excellent alternative to traditional office or emergency room visits. Not only are they convenient, but they tend to be less expensive as well.The only drawback to retail clinics is that they only treat certain minor conditions.Your network should include retail clinics, and if it doesn’t, you will want to speak to your PPO network about including them to the network. Not every state has retail clinics, but they are becoming more popular. Urban areas are more likely to have multiple retail clinics than rural parts of the country. While not much can be done by the general populations in terms of the broader medical care issues, every precaution and strategy should be taken to ensure that your employees are able to receive care in an effective and efficient manner.

about the author Richard A. Longo, RN, FACHE, FACMPE, possesses extensive and varied experience in healthcare management and strategy development gained through over 25 years in the healthcare industry. He is currently the Senior Vice President of Network Management for Devon Health Services, Inc., one of the largest regional PPOs in the Northeast. He currently holds an adjunct faculty position in the Doctor of Nursing Practice program at Waynesburg University. He is also duly “Fellowed” in both the American College of Health Care Executives (ACHE) and the American College of Medical Practice Executives (ACMPE) and only one of a few individuals nationally who have attained this dual status. For more information on Devon Health, please visit www.devonhealth.com. Richard can be reached at rlongo@devonhealth.com.

The self-Insurer

January 2011

InsIder INFORMATION spectrum underwriting Managers, Inc. adds Two stop loss Insurance sales professionals INDIANAPOLIS, IN – Spectrum Underwriting Managers, Inc. is pleased to announce that Kathy Johnson and Kent Haynes have joined Spectrum as Regional Sales Directors. Kathy Johnson brings 23 years of stop loss and sales experience to Spectrum and will serve as Regional Sales Director of the Northeast Region. Based in the Hartford, Connecticut area, Kathy is responsible for managing all existing producer relationships and developing new TPA and broker relationships in Connecticut, Delaware, the District of Columbia, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont,Virginia & West Virginia. Kent Haynes brings 22 years of stop loss and sales experience to Spectrum and will serve as Regional Sales Director of the Southwest Region. Based in the Dallas,Texas area, Kent is responsible for managing all existing producer relationships and developing new TPA and broker relationships in Arizona, Arkansas, Colorado, Kansas, Louisiana, Missouri, New Mexico, Oklahoma,Texas & Utah. “We are thrilled to add two true stop loss sales professionals to Spectrum’s team. Kathy and Kent have the drive and experience necessary to excel. With Spectrum’s comprehensive product portfolio, they each have all the tools needed to thrive in the small employer stop loss market” said Kurt Ridder, president of Spectrum Underwriting Managers, Inc. “Our producers in the Northeast and Southwest regions can expect unparalleled service and attention” added Mike Finn,Vice President of Sales & Marketing for Spectrum. Please contact Mike Finn,Vice President of Sales & Marketing, at 800-804-7732, at m.finn@spectrumhq.com or visit www. spectrumhq.com for more information. Ca Hardware retailers take d.I.Y. approach to Workers’

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January 2011

Comp Insurance

University in Kalamazoo, Michigan.

WOODLAND HILLS, CA – The Home Improvement Self-Insurance Group (HISIG), a California Workers’ Compensation program, achieved a significant milestone this month by surpassing $100 million in total payroll for its 135 members statewide. Scanlon Guerra Burke Insurance Brokers (SGB) of Woodland Hills, California, the program’s master broker, specializes in workers’ compensation coverage and sees HISIG as an innovator in loss prevention and management.

“I am very excited that Tina has decided to join us,” said Paul Fallisi, President and CEO of Munich Re Stop Loss. “Her experience and deep knowledge of the ESL market will make her a great addition to our very talented team.Tina will lead our Southeast Region, which includes the Carolinas,Virginia, and Georgia.This is another example of Munich Re Stop Loss’s long term commitment to the ESL market.”

“These payroll figures are a testament to HISIG’s strength,” says recently appointed SGB senior vice president Rusty Russell. “We expect many more qualified retailers to join up in 2011.” After five years of relatively stable rates, workers’ compensation premiums are on the rise again. Weary of the insurance merry-go-round, a growing number of independent business owners are pooling resources with like-minded retailers to purchase more cost-effective self-insurance plans. “The home improvement self-insurance group is expanding by leaps and bounds in California,” says Russell of SGB. “We expect continued growth in this sector, especially as rates for traditional plans are expected to increase by as much as 27 percent next year.” For more information, please visit www.hisig.com. Tina Willenborg Joins Munich re stop loss, Inc. ANDOVER, MA – Munich Re Stop Loss, an industry leader in employer stop loss insurance, today announced that Tina Willenborg has joined the company as Regional Director. Tina brings more than 25 years of senior sales leadership and medical stop loss underwriting experience in the Employer Stop Loss market to her position. Most recently, she was with R.E. Moulton/ OneAmerica where her responsibilities included sales and territory management. She is a graduate of Western Michigan

Brokers and TPA’s can contact Tina at twillenborg@munichrestoploss.com. Her office phone number is: (704) 246-6198. For more information about Munich Re Stop Loss, please visit www. munichrestoploss.com. pHX Honored at nJBIZ 2010 awards Ceremony BEDMINSTER, NJ – For the second year running, PHX has been honored by NJBIZ as one of New Jersey’s 2010 Fifty Fastest Growing Companies. PHX was ranked #34 on this year’s list, from over 1,000 entries. NJBIZ honored the top fifty businesses that have made significant contributions to the growth, strength, and success of New Jersey during the award ceremony. PHX is proud of this recognition and will continue to make great strides in delivering innovative cost management solutions for our clients. “We are pleased to be honored with this award in recognition of our efforts, and I would like to especially thank the outstanding executive management team and staff at PHX,” said PHX CEO,Todd Roberti. “This award is a testament to their hard work, dedication, and tireless devotion to not only delivering much sought after solutions, but also providing superior customer service to all of our clients.” NJBIZ, one of New Jersey’s leading statewide newspapers, revealed the list of top 50 New Jersey businesses who after meeting the selection criteria were ranked according to revenue growth over a fouryear period.Visit www.phx-online.com for more information.. n

sIIa NEWS sIIa names Julie Mcpeak as special Counsel to naIC

he Self-Insurance Institute of America, Inc. (SIIA) today announced that it has named Julie McPeak special counsel for the organization with specific responsibilities to represent SIIA on regulatory matters considered by the National Association of Insurance Commissioners (NAIC). Such matters are expected to include implementation details associated with the Patient Protection and Affordable Act (PPACA) as well as the regulation of captive insurance companies and risk retention groups. “We are very pleased that Julie will be joining our government relations team given her expertise and solid reputation within the self-insurance industry,” said SIIA Chief Operating Officer Mike Ferguson. “Her addition will nicely compliment our strong lobbying capabilities at the federal level.”

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Ms. McPeak is a former insurance commissioner for the state of Kentucky. She currently is an attorney in the Nashville office of Burr & Forman LLP, one of the country’s top law firms with specific expertise in insurance law. Rounding out her unique qualifications, Ms. McPeak is a volunteer member of SIIA’s Alternative Risk Transfer Committee. SIIA is a non-profit trade association that represents companies involved in the self-insurance/ alternative risk transfer marketplace. Additional information about the association can be accessed on-line at HYPERLINK “http://www.siia.org” www.siia.org, or by calling 800/8517789. n

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“We are very pleased that Julie will be joining our government relations team given her expertise and solid reputation within the self-insurance industry”.

The self-Insurer

January 2011

FROM THE DESK OF

ERICA MASSEY

It Just Keeps Getting Better...

s everyone welcomes the New Year, we welcome several positive developments here at The Self-Insurer.

To further improve the quality of this important industry resource, a new editorial advisory committee has been appointed to assist with evaluating article submission and provide suggestions on future editorial features. A listing of the new committee members is included in the magazine. As you will see, it includes some of the most respected executives within the self-insurance/alternative risk transfer industry. Starting this month, we are also including a new legislative/regulatory update report authored by SIIA Chief Operating Officer and Chief Lobbyist Mike Ferguson. I am sure you will find this information very useful. Finally, you may have noticed the increase in advertisements in this edition. We are pleased that an increasing number of leading industry companies are using the Self-Insurer as a forum to communicate how they can help selfinsured/ART programs operate more efficiently. This complements the value of our editorial content for corporate buyer readers. If you are interesting in advertising in The Self-Insurer, please contact Shane Byars at sbyars@siia.org or (800) 851-7789. Watch for more exciting Self-Insurer news later in the year. In the meantime, I hope you enjoy reading this monthâ&#x20AC;&#x2122;s edition. n Until next timeâ&#x20AC;Ś Erica M. Massey Executive Vice President, SIIA President/Managing Editor, SIPC

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January 2011

siia new Members REGULAR MEMBERS Voting representative/ Company name Bradley Dumbauld Vice President Gregory & Appel Indianapolis, IN Glenn Backus Senior Vice President Alternative Service Concepts Canyon,TX Marie Steckbeck Vice President of Operations Colorado Access Denver , CO Mark Earles CEO Context 4 Healthcare Naperville, IL Steve Scissors Director of Business Relationships Evans & Dixon, L.L.C. St. Louis, MO

Travis West CEO Fringe Benefit Group Austin,TX

Pat Lund, VP Group Benefit Services Pancoast & Associates, Inc. Nashville,TN

Michael Wozny President LifeWise Assurance Company Mountlake Terrace, WA

Woody Sprouse CEO Roxford Niche Benefits, LLC Raleigh, NC

Adria Garneau President & Chief Claims Officer Marble Arch Services, LLC Salem, NH

EMPLOYER MEMBERS Voting representative/ Company name

Thomas Jones Attorney McDermott Will & Emery LLP Chicago, IL

Larry Bush Executive Director Intergovernmental Risk Management Agency (IRMA) Westchester, IL

Jason White Vice President MM, Inc. Davenport, IA Joann DeBlasis President Accident & Health Navigators Re, Navigators Mgmt Co, Rye Brook, NY

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The self-Insurer

January 2011

CHAIRMAN’S REPORT Freda Bacon

Happy new Year!

he holidays are over, the New Year has begun, and many of us spend this time to reflect on the past, and look to the future. The great philosopher Winnie the Pooh is quoted, “You can’t stay in the corner of the forest waiting for others to come to you. You have to go to them sometimes”. In the vast forest of our membership and the self-funding industry, SIIA has been successful over the past 30 years in finding and utilizing the top leaders and innovators to make our organization the premier promoter and preserver of self-insurance and alternative risk transfer. It is my pleasure to serve the membership and leadership of SIIA as Chairwoman for the 2011 year. Perception would present that this would be a demanding task, tireless hours, and tremendous stress. But not so. Your organization is blessed with incredible volunteer support from the Board of Directors, Committee Chairs, and Committee Members. The dedicated SIIA staff is responsible for putting into motion the directives of these decision makers, and is constantly seeking out new ideas and concepts from our members. While the calendar for 2011 is already getting full, our first event is the 25th Annual Legislative/ Regulatory Conference March 14-16th. For those of us who have been to these conferences over the years, we all know the value of

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January 2011

“You can’t stay in the corner of the forest waiting for others to come to you. You have to go to them sometimes”.Winnie The pooh

first-hand insight into our federal issues. For those of you who have not attended, I urge you to make this event number-one on your list. The opportunity to meet with your congressional delegation, hear from policy makers the particulars on our specific issues, and the chance to meld with those who make a difference in our industry is vital in making our voice be heard.

I am honored to be part of this organization, and look forward to our 31st year, and the next decade. n

God Bless our Troops, Freda Bacon, Chairwoman

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35 th

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The companies of OneAmerica®: American United Life Insurance Company®, The State Life Insurance Company, OneAmerica Securities, Inc., McCready and Keene, Inc., R.E. Moulton, Inc., Pioneer Mutual Life Insurance Company and AUL Reinsurance Management Services, LLC. © 2010 OneAmerica Financial Partners, Inc. All rights reserved. OneAmerica® and the OneAmerica banner are all registered trademarks of OneAmerica Financial Partners, Inc.

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