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Archive for September, 2012

Middle Market Captives – an old product with a new sense of urgency

September 28, 2012 Leave a comment

The Worker’s Compensation market continues to tighten, especially since insurance companies now use a .96 combined loss ratio in the market as the breakeven point between making a profit or a loss. For middle market companies struggling to lower their operating costs, the use of captives is a more appealing option, mainly for transferring risk off of their balance sheet or for other wealth planning considerations.

Middle market companies are generally described as those with a total premium range from $250,000 to $2,000,000. In the past, it’s been thought that captives were only available for risks generating a premium well over $2,000,000. Here are two important terms which will help bring down captive eligibility Read more…

Electronic Health Records: Why can’t they save money?

September 24, 2012 Leave a comment

In a recent blog entry, influential Harvard physician and professor, Ashish Jha, discusses whether the right questions are being asked about Electronic Health Records (EHRs). Faced with the developing reality that EHR’s do not seem to be producing any notable savings to health care providers and purchasers, Dr. Jha suggests that EHRs have been overhyped from the start and that the focus has been on making these systems into tools that help providers get money from payers sooner. Not that Dr. Jha wants to stop the progress, he just wants to eliminate the expectation of a financial return for the investment.

Dr. Jha also suggests that EHR financial returns don’t look positive since healthcare payment incentives are wrong. He insists that if a provider becomes more efficient that they “will likely lose revenue to insurance companies or to government payers.”  He notes that EHR’s Read more…

Explaining a “claims made” insurance policy

Two differing approaches are used by insurers to determine coverage when it comes to liability insurance — occurrence and claims made. The difference between the two is when the actual event that triggers coverage occurred.

Claims made coverage is triggered by an actual claim for damages, not a notice of an “occurrence” or “incident.”  However, it is important to note that the date of the occurrence or incident must be more recent than the retroactive date of the policy.  This retroactive date determines the cut-off date for claims: if the incident occurred before the retroactive date, the insurer has no obligation and the insured has no coverage.  While the “claim” has to be “made” during the policy period, the occurrence which gave rise to the claim has to fall after the retroactive date of the policy.

A claims-made policy covers you for any covered claim provided it meets two criteria: Read more…

Private equity tax strategies investigated in NY – insurance coverage under the D&O or E&O policies?

September 17, 2012 1 comment

New York Attorney General Eric Schneiderman recently announced an investigation that has sparked what is being seen as an attack on the Private Equity community. The practice in question here is whether some firms convert certain management fees into investments that are eligible for more favorable tax treatment. Some PE firms have used this practice for years, while others have taken a pass due to its risky nature and potentially illegal ramifications. The IRS has not contested the practice, giving some confidence in the acceptance of the practice. But others argued that the IRS has failed to do its job in regards to this matter and that the silence on behalf of the IRS has been improperly interpreted by the PE firms.

While the topic will be hotly debated and argued for the foreseeable future, an issue has arisen on the insurance front as to whether this type of investigation would be covered under a Directors’ Read more…

California passes workers compensation overhaul

By a wide margin, California legislators passed the workers’ compensation reform bill (SB863) on August 31st.

Proponents of the new legislation claim that the medical and legal cost cutting provisions of the bill will result in a reduction of workers’ compensation rates by as much as 7%. In addition to the expected reduction in lawsuits and medical costs, the bill will actually increase compensation to injured workers by $7,000,000 per year.

The bill is expected to be signed by Governor Brown who has praised the legislation, saying . . . “it helps injured workers and averts an imminent crisis of skyrocketing rates.”

In perhaps the best sign that the new legislation will have some desired effect on the California workers’ compensation system, the bill was formally opposed by the following three Read more…

Three steps for human resources when it comes to retirement medical guidance

September 6, 2012 Leave a comment

Retirement brings uncertainty. Most Americans, throughout their careers, have relied on their employers and specifically Human Resource professionals to provide guidance, advocacy and support in most of their benefits decisions. Employer sponsored benefits and retirement programs are the cornerstone of protecting our health and long-term financial security. But in retirement, choosing a medical plan, a pharmacy program, or a place to park your 401k dollars is a scary proposition for even the most informed consumer.

Although most companies have done away with group sponsored retiree medical plans, it does not preclude them from becoming an information center for prospective retirees. Employees (or parents of employees) approaching age 65 are often inundated with information on Medicare, Medicare Supplements, Part D Read more…

The obesity problem just keeps getting worse – some of us don’t want to face up to it

fatmanAs we discuss health engagement issues with our clients, there is general agreement that smoking and tobacco is bad.  But for some reason, talking about our collective, societal weight problem has been tricky at times.

Let’s elaborate this point with two examples. First, take a look at this photo. We’ve used this picture in presentations to make a quick point about how many Americans have a weight issue and the costs of obesity (more on that later).  In the presentation, you can’t see the man’s face.  Most of us see at least one, if not more, people who look like this every day.  Yet Read more…