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Client Question #1
I have already maxed out my 401K and was told I could use life insurance as a deferred compensation plan. What advantages, if any, does this strategy provide over typical investments?
HealthSure’s Answer
Client Question #2
Q: We have recently outsourced all our billing and coding to a third party company. Does this mean I’ve eliminated liability for billing errors or regulatory penalties? Do I still need to consider a billing (regulatory) errors and omissions policy?
HealthSure’s Answer
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Property Insurance: Market Update
As most of us know, 2011 and 2012 were marked with record catastrophic disasters from major tornadoes, hurricanes, wildfires and drought. In fact the spring 2011 tornado and storm season, taken as a single event, was the 4th costliest event in US insurance history.
Read the Article
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D&O Insurance: Market Update and a Few Important Facts
Insurers offering Directors & Officers/Employment Practices Liability coverage have been struggling to make a profit on these products for many years.
Read the Article
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ACA silver cloud has a dark lining
Many employers and their advisors saw it as good news when the Treasury Department announced some employer mandate provisions under the Affordable Care Act’s (ACA) Shared Responsibility requirements, would be postponed from 2014 to 2015.
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New program saves money and simplifies equipment maintenance and repair
Healthcare organizations can now consolidate all their vendor maintenance agreements into one comprehensive program.
Read the Article
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NEW!
Educational Modules Now Available
HealthSure is constantly developing, discovering and acquiring new and better ways to help you Prevent surprises in the boardroom, Protect your people and assets, and Prosper in these increasingly complex times. And, as part of our commitment to making your life simpler, we are now offering a growing number of educational and self-assessment modules for you to download.
View Modules
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Property Insurance: Market Update
As most of us know, 2011 and 2012 were marked with record catastrophic disasters from major tornadoes, hurricanes, wildfires and drought. In fact the spring 2011 tornado and storm season, taken as a single event, was the 4th costliest event in US insurance history. By comparison the 3 costliest events on record are hurricanes Andrew, Katrina and the attacks of 9/11. What is most unusual is that thunderstorm and tornado losses were 2½ times the 30-year average.
The statistics are endless, but it’s important to recognize that due to these abnormal losses and reduced capacity in the reinsurance markets (i.e. those global carriers who back up domestic carriers like C.N.A) the cost of property insurance continues to rise.
The good news for many of our clients is that we have been able to hold increases to a bare minimum. The other good news is our client base has grown (for example, we now have over 35 hospitals in the TORCH Property Program underwritten by C.N.A one of the largest, A-rated commercial property carriers in the country), our purchasing power is quite significant.
While C.N.A has been a good partner, it is HealthSure’s duty to perform due diligence, ensure carriers provide great service at the best price, and be there for you when market conditions worsen. We will be comparing several carriers this year and, as always, can obtain different quotes at a client’s individual request.
In direct reference to the TORCH Property Program, our loss ratio has suffered because we took several hits over the last 12 months with losses exceeding $1,000,000. However, we only anticipate a 10% increase at this time based on discussions with C.N.A leadership and current models.
As we learn more about changing market conditions, we will pass that information on to you. Please contact us if you have any questions.
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D&O Insurance: Market Update and a Few Important Facts
Insurers offering Directors & Officers/Employment Practices Liability coverage have been struggling to make a profit on these products for many years.
The tendency to underprice as a means to capture market share is changing and we have seen prices creep upwards over the past three to four years. And, while insurers “self-correct” their pricing, other forces are also driving price increases.
Among these other forces, regulatory claims are a significant source of concern. (Private Directors and Officers Liability policies are generally combined policies including Directors & Officers and Employment Practices Liability.) It is important to note that in 2012 there were more complaints made to the EEOC (Equal Employment Opportunity Commission) in Texas than any other state.
Significant increases in EPL litigation and the corresponding rise in defense costs has caused insurers to pull out of specific regions (like southern California), gradual elevate retentions, increase premiums, reduce limits available and decline risks with specific employee count ranges.
In general, private and nonprofit organizations are seeing higher increases. Which adds to the challenge we already face as our experience shows non-profits do not purchase D&O insurance coverage at the same rate as their for-profit counterparts.
Healthcare organizations are being hit particularly hard hit because of what could be described as a perfect storm of events including:
- Healthcare reform increasing whistle blower incentives and providing for
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new fraud and abuse investigative techniques
- A significant increase in the number of mergers and acquisitions
- Revenues decreasing while the number of patients being treated is increasing
- Hi-tech (e.g.: EMR) has caused state privacy laws to evolve and change rapidly
- The increasing number of employed physicians along with a corresponding increase in law suits between physicians and employers
In addition, experience also tells us many physicians who have been advised on liability products by their local property and casualty insurance guru have no idea that D&O is even available or that it is distinct from their general liability, malpractice and E&O coverage.
And, because a non-profit board is subject to the same management liability exposures as found in private for-profit organization, it is important to have adequate D&O coverage to protect individual directors and officers, employees and the organization from the allegations of a covered wrongful act.
The bottom line is that while the market gets tougher and the coverage offered shifts, it is important to evaluate the risk your organization and its directors, board, and employees are exposed to. We can help you identify where there are coverage gaps, overlaps and provide simple, cost effective solutions.
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ACA silver cloud has a dark lining
Many employers and their advisors saw it as good news when the Treasury Department announced some employer mandate provisions under the Affordable Care Act’s (ACA) Shared Responsibility requirements, would be postponed from 2014 to 2015.
Since the postponement provides additional time to ensure compliance with the law, it was good news. But, to turn an old phrase inside out, this silver cloud is lined with a lot of black because not all employer provisions were postponed and the individual mandate (employee provisions) remain in their entirety.
For employers, the most significant provision still on the books for 2014 is the requirement to track hours of service in 2014 to identify the employees who become “full-time” once the employer mandate becomes effective in 2015.
Other important employer requirements still in effect for 2014 include various fees, plan design requirements, wellness provisions, and changes to waiting periods.
And, while some employer shared responsibility requirements are delayed to 2015, all individual responsibility requirements (AKA individual mandate) still take effect in 2014. This means practically everyone residing in the U.S. will be required to have minimum essential coverage, or pay a penalty.
As of Jan. 1, 2014, the penalty for an adult is the greater of $95 or one percent of household income above the tax-filing threshold. The penalty for a child under age 18 is 50 percent of the adult penalty. The maximum penalty per family is three times the individual penalty. The penalty amount increases after 2014. The penalty will be calculated and paid as part of the employee’s federal income tax filing.
To avoid a penalty a person must have minimum essential coverage: basic medical coverage that can be provided through an employer, Medicare, Medicaid, CHIP, TRICARE, some VA programs, and an individual policy through or outside of a marketplace/exchange.
When someone has access to employer-provided coverage as an employee or eligible dependent, affordability of the coverage is the only factor considered.
- For employees, unaffordable coverage (so no penalty would apply for failure to have coverage) is single coverage that costs more than eight percent of household income.
- For dependents, it is unaffordable when the least expensive employer-provided dependent coverage is more than eight percent of household income.
- When an employee and spouse each have access to coverage through their own employers, the totals are combined and may not exceed eight percent of household income.
When a person does not have access to employer (or other non-marketplace / exchange) coverage, the measure of unaffordability is the person’s premium after the premium subsidy is applied to the lowest cost bronze plan available through the marketplace/exchange.
For a quick check-up of your current healthcare reform compliance, consider downloading our free HCR Compliance Checklist. And, if you wish to discuss any aspect of how the changing regulations will impact your organization, call us. We can bring greater simplicity to managing compliance.
Information resources
- Employer Mandate: At the time of writing, the IRS had posted this notice on its FAQ page. “Updated questions and answers will be posted soon. For the latest information on Employer Shared Responsibility Provision transition relief for 2014, please go to Notice 2013-45.”
- Individual Mandate:
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New program saves money and simplifies equipment maintenance and repair
Healthcare organizations can now consolidate all their vendor maintenance agreements into one comprehensive program.
Available through HealthSure, the Maintenance Value Plan (MVP) eliminates the high costs and inefficiencies of multiple vendor service agreements while enabling hospital administrators to retain control over who services their equipment.
“Being able to choose who does your maintenance and when they do it is one of the most appealing features of the program,” says Brant Couch, president at HealthSure. “And, the average cost reduction has been proven to be 25% or more.”
Consolidating OEM service agreements into one comprehensive plan helps avoid unnecessary and expensive down time resulting from improperly scheduled maintenance. It also eliminates paying for services you do not need. By consolidating multiple service agreements into one MVP agreement, you can schedule the preventive and corrective maintenance your equipment needs and also experience significant savings through lower monthly costs, improved cash flow and overall operational efficiencies.
MVP is most effective for organizations with a significant number of OEM service contracts. “For example, we have found it to be a great fit for hospitals with $200,000 or more in service contracts,” says Couch.
The program works like an insurance contract; a retention amount and a service agreement cost are established based on the equipment to be covered. If the retention amount is exceeded, the hospital is reimbursed for the repairs and scheduled maintenance performed on covered equipment.
The program also provides coverage for emergency advice and assistance on service providers and parts suppliers.
Here is a simple example of potential savings based on a hospital with a total annual cost of all service agreements of $500,000:
- MVP Cost $ 125,000
- Retention $ 300,000
- Total Equipment Maintenance Program Cost $425,000
- Total Annual Cost of all Service Agreements $500,000
- Savings $75,000
In the event the entire retention amount is not required, there are potential additional savings as follows:
- Retention $300,000
- Actual Repair Costs – $250,000
- Additional Savings $50,000
While actual savings will vary by organization and are not guaranteed, the combined potential savings in this example is $125,000.
“Finding out if MVP is a good fit for your organization is simple,” Couch says. “We need two to three weeks to conduct a review of all your contracts. Once the review is completed, we provide an accurate estimate of the savings available to your hospital.”
For more information about MVP, including endorsements from existing MVP clients, contact HealthSure.
TEL: (512) 292-3315
Toll Free: (888) 665-1539
brantc@healthsure.com
www.HealthSure.com
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NEW!
Educational Modules Now Available!
HealthSure is constantly developing, discovering and acquiring new and better ways to help you Prevent surprises in the boardroom, Protect your people and assets, and Prosper in these increasingly complex times.
Over the next few months, you will have the opportunity to download a selection of educational and do-it-yourself assessment and planning modules to help you simplify your world and make the most out of your risk and insurance opportunities.
Now available:
Click any of the links above to be directed to our web site where you can download these modules at no cost.
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| It isn’t always easy to get the answer to the questions you have. Sometimes it isn’t even easy to come up with the right question!That is why each issue of HealthSure Headlines will feature one or two questions from our clients and answers from our team or, if need be, outside experts.
If you have a question you can’t find a satisfactory answer to, send it to brantc@HealthSure.com
Client Question #1
I have already maxed out my 401K and was told I could use life insurance as a deferred compensation plan. What advantages, if any, does this strategy provide over typical investments?
Life insurance can be a good vehicle for this. When used as a Non-Qualified deferred compensation plan, it is not subject to the same onerous legal and regulatory requirements that apply to qualified retirement plans. A few examples are:
- No benefit limits
- No minimum funding requirements
- No participation requirements
- No vesting requirements
These types of plans can also shield your earnings from taxes, protect these assets from creditors, and financially protect your family in the case of premature death.
This strategy is popular with high-earning executives, but you should talk to a qualified professional before making any investment decisions.
Client Question #2
We have recently outsourced all our billing and coding to a third party company. Does this mean I’ve eliminated liability for billing errors or regulatory penalties? Do I still need to consider a billing (regulatory) errors and omissions policy?
Outsourcing the billing function is becoming very popular. Unfortunately, while you can outsource many things you can’t outsource all your liability. In fact, when it comes to things like RAC or CMS audits they are really looking at the provider and follow the provider number. For example, when it comes to determining medical necessity, this can only be established by the provider and often these cases are the most expensive to defend. In many cases, your medical malpractice carrier may provide some coverage, but is often very limited. Our opinion is if you have not already looked at billing (regulatory) errors and omissions insurance, it is worth finding out more considering the increased effort by our government to audit this area.
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