Here’s Why a Group Health Captive Is Worth Considering

For the purposes of this article, we’ll assume two things are true:

Your organization invests significant time and money into offering employees a high-quality health insurance program in order to attract and retain top talent.
Managing the cost of this investment is incredibly challenging.

If you are fed up with the huge increases in premiums that have become so common in today’s insurance market, you are far from alone. Another common frustration is the lack of insight you likely receive into claims data on your plan. Or maybe this better describes your situation: you currently self-fund your health plan and are overwhelmed by the stress of managing volatile, high-cost claimants?

If you answered yes to any of these questions, a group health captive arrangement is an alternative risk model worth your consideration.

Captives are growing in popularity, and it’s easy to see why. This strategy gives employers a better chance to manage the volatility that can occur with a group health plan, with the end result being a more competitive health insurance plan to offer current and prospective employees.

While the sweet spot has historically been in the 50-250 employee range, larger employers are finding success with group health captives because of the unique contractual financial protections built into the solution.

How It Works

The key: keep things simple. Group health captives come in all shapes and sizes, but they all operate in a similar manner. Members of a captive use their shared size and scale to pool risk in the stop-loss market in an effort to improve pricing terms and add contractual protections such as a competitive annual rate cap and can even offer a provision to help you avoid a new laser at renewal.

In most cases you’ll keep your key partners in place, including your medical TPA, your health plan network and your pharmacy benefit manager. Captive members also benefit from having access to national best-in-class cost containment partners which can lead to lower healthcare costs. Finally, captive members have opportunities to network at annual member meetings, where they can learn best practices to implement with their own organization.

Here are a couple more things to consider:

Say your organization fully-insures its health plan and you are interested in looking at self-funding with a captive arrangement. In that case, it is recommended to complete a feasibility study to understand if self-funding makes financial sense at this time. Your employee benefits consultant can assist with that analysis.
If you are already self-funding and have historically purchased stop-loss insurance, the contractual provisions built into a group captive’s stop-loss contracts are often superior to what you can purchase on your own. The rate cap, in combination with a no new laser at renewal provision, can buy you enough time to plan ahead for a known, recurring high-risk claimant.

Curious if a group health captive is feasible for your organization?

Get in Touch

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

5 Steps to Save Your Organization Money, Reduce Your Risks & Retain Your People

It can often feel like storm clouds are gathering, and we’re being squeezed between increasing risks and rising costs. There are a few advanced tactics that can help save you money while increasing your organization’s sustainability. We gathered a solid panel of advisors who shared their tips on how you can leverage communication, safety and risk management to lower insurance premiums while engaging your workforce.

Here’s a recap of their best advice:

Expand your hiring pool. Instead of paying expensive staffing fees, try building talent pipelines with local schools, churches and other community agencies to recruit untapped talent. Make connections with community organizers and continue to nurture these relationships.
Be present & lend a hand when times get tough. Servant leadership is contagious, and organizations with active leaders (who are not afraid of rolling up their sleeves when duty calls) see higher levels of morale and productivity.
Leverage safety to help reduce turnover. People want to feel valued and protected. High performers will seek out organizations with a safety-focused culture and environment. An effective safety program can also make current employees feel more connected to the organization and less likely to leave.
Establish (or revive) your return-to-work policy. Allowing injured employees to return to work sooner with proper modifications can not only lower your workers’ compensation costs but help support your staff with a full salary rather than a percentage for disability. It’s a win-win!
Insured costs are just the tip of the iceberg. The real costs of accidents stem from property damage and a combination of investigation time, legal fees, training replacements, overtime and more – all of which can be monitored and controlled with proper risk management.

We understand that these suggestions are not “one size fits all”. For specific details on how to implement them in your organization, reach out to your G&A service team – we’re always here to help!

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

How Reinsurance Rates Are Affecting Your Property Premiums

Most business leaders are likely already aware of the roles U.S. inflation and the increase in global catastrophes play in insurance premiums, but now there’s another factor at work: reinsurance.

Treaties on reinsurance for property coverages (which is a mechanism the insurance carriers use to offset the risk of the policies they write) were finalized in early January 2023, and it was the highest YoY increase that we’ve seen since 1992, averaging 37% globally. Higher reinsurance rates for carriers typically means higher commercial property premiums for the average business are on their way – beginning as early as your next renewal.

Why is this an issue now?

Insurance companies negotiate annual treaties with reinsurers, and nearly 40% of all treaties take place in January. These treaties are structured to provide insurance companies with the guidance and authority needed to operate throughout the year without having to submit every policy to the reinsurer for review.

Based on initial reports, negotiations for the 2023 January treaties increased global reinsurance rates by 37-40%. Due to the increased occurrence of wildfires, hurricanes and flooding in America, treaty renewals for the U.S. went up between 45-100% on average. In addition to higher premiums, the reinsurers have also placed more stringent restrictions on the types of coverage available.

What does this mean for an insurance buyer?

While not every penny of the premium paid by the client goes to pay for reinsurance, insurance companies do have a significant cost to offset their increased reinsurance rates. In addition to higher reinsurance premiums, insurance companies may now have to bear more of the severe claims, which will likely be funded through increased rates to the average insurance buyer.

The next major treaty negotiation will occur on April 1, so more information is soon to come – but the horizon looks dark for property insurance premiums. Be sure to give yourself and your team ample time to prepare for the possibility of a 20-35+% property premium increase before your next renewal discussion.

Staying in the Know: OSHA Recordkeeping

With OSHA’s recent fining of Amazon and Tesla, we wanted to provide recordkeeping best practices and incident-reporting regulations to help keep your organization compliant. We recently hosted a live event with a panel of safety and risk management professionals – check out the highlights below.

Upcoming deadlines: Most employers with 10+ employees are required by OSHA to complete Form 300A and post in the worksite from February 1-April 30. Employers aren’t required to post the entire log but are required to display a summary of all 2022 work-related injuries until April 30. Copies of the form should be provided to any employees who may not see the posted summary because they do not regularly work onsite.

Reporting timelines: Employers must record on-the-job injuries and illnesses within 7 calendar days of receiving notice of the injury or illness. All employers are required to notify OSHA when an employee is killed on the job or suffers a work-related hospitalization, amputation or loss of an eye. A fatality must be reported within 8 hours, and any in-patient hospitalization, amputation or eye loss must be reported within 24 hours.

Tracking incidents:Tracking “near-misses” and not just accidents and injuries can be a great way to address problematic areas or procedures and help prevent accidents & injuries before they happen. Using tracking software like our KPA Risk Management Center software takes out the guesswork and ensures you’re recording the appropriate information for the situation.

Contracts: Having a contract and exchanging proof of insurance is key to maintaining relationships with third-party administrators and staffing agencies. These partners should have their own general liability and workers’ compensation, as well as auto if they are driving for you. Remember, insurance follows the vehicle, not the driver.

Reach out to your G&A Service Team for more information about OSHA regulations and upcoming deadlines or for a trial of our KPA reporting software.

4 Steps to Set Your Organization up for a Successful Insurance Renewal

For many business leaders, the end of the year also means it’s time to renew your insurance policies. With continued inflation and the possibility of an upcoming recession, it’s no secret that many organizations are starting to tighten budgets and cut costs wherever possible.

We want to share the following four tips to help you prepare for upcoming renewals and make the most appropriate decisions for you and your team.

Prepare yourself (and your team) for the possibility of higher costs. The reality of the property & casualty market is that there are no magic levers. A decrease in premiums often means higher retentions or more restrictive policy language for the insured. Also, keep in mind insurance claim payments go towards the same things that are being hit by inflation – medical bills, automobiles, construction supplies, etc. These are all more expensive because of inflation, and insurance companies are paying for the same goods as everyone else.
Start conversations with your insurance advisor ASAP. We begin working on renewals halfway through the policy period. This may seem excessive, but it allows everyone involved the opportunity to discuss foreseen challenges due to losses, changes in the market or new underwriting trends. Proper planning and communication help prevent any shocks and provides you with enough time both to build out and consider additional options.
Gather the necessary data. Our advisors ask for lots of information throughout the renewal process because we believe the most effective way to represent any client is to fundamentally understand their business, their risk profile and their risk appetite. Having accurate data is essential to this philosophy, so it’s good practice to start collecting changes to inventories, property/assets, payroll, etc. so that your broker can update your records and relay any significant shifts to the underwriters.
Complete any needed repairs and property maintenance. Performing regular maintenance of your facilities and equipment can help set you up for a successful renewal by showing the insurers that you’re mitigating risk to the best of your ability.

The most important role your insurance advisor plays is in being able to paint an accurate picture of your operations and risk to the insurance carrier(s) so they have a true understanding of your assets, as well as your proven risk management strategies. If they don’t understand what you have, you’ll likely suffer a higher insurance cost by means of either higher premiums or lower coverage limits.

This is why preparation and communication are so critical to the renewal process. We understand that insurance is almost the last thing anyone wants to talk about but given the current financial climate, it’s unwise to avoid it. So our advice is to start the conversation early – reach out to your broker and gather as much information about your assets, risks, etc. so you can start the next cycle with a robust (and affordable) insurance program.

How to Take Care of Your People AND Lower Your Work Comp Costs

Hear from a curated panel of business leaders and risk management professionals who share how they’re successfully taking on safety and risk management to bring down workers’ compensation costs.

Check out our top four highlights:

The most important part of any safety culture is leadership commitment. Create your company culture with safety as the foundation and hold management accountable for ongoing discussions and committee meetings.
Determine exposures beforehand. You should be examining each job function in an attempt to predict and prevent injuries before they happen. Make adjustments to your safety procedures as needed and be sure to communicate them!
Over one-third of employee injuries occur within the first 6-12 months.Prioritize safety procedures during onboarding and provide continuous training to new hires throughout their first year.
Be sure to stay on top of your eMod worksheet. By filing claims ASAP and keeping them up to date throughout their cycle, you can help lower your eMod score.

Watch the full webinar below for more details!

How to Take Care of Your People AND Lower Your Work Comp Costs

How a Flexible Benefits Program Can Supercharge Your Retention Efforts

When it comes to employee benefits, flexibility may not be as easily achieved for every industry. For those in service, healthcare, manufacturing and other industries – it takes more than an internet connection and a good IT department to run your business.

The common theme we have heard from our clients and survey results is that employees (now more than ever) are wanting flexibility in their schedules and fulfillment in their jobs and that many are already struggling with burnout. While some companies have adopted a work-from-home or hybrid office experience to accommodate their workforce, there are plenty of other ways to meet the ever-changing needs of your workforce without overspending.

If you’re unsure of where to start, consider these trending benefits to help secure those impressive candidates you’re competing for:

PTO Exchange
A 2021 study of 1,000 full-time employees found that 60 percent of the individuals had trouble using all of their PTO. There are now programs available that allow employees to convert their unused PTO for cash, emergency funds, retirement contributions, HSA contributions, student loans or tuition payments and even charitable contributions.

Two weeks’ time off is no longer the standard and even generous programs like unlimited PTO may not be as accommodating as you’d think. It’s time to revamp this traditional benefit with flexible ways for your employees to cash in their earned time how they see fit.

Student Loan Assistance
It’s no secret that student loan debt is becoming a huge concern for many households. The debt is growing at an alarming rate – currently over $1.6 trillion. This doesn’t just impact former students, but also family members who have taken on student loans for their loved ones – meaning you most likely have employees (across all generations) burdened with student loan debt.

Several pieces of recent federal legislation have been issued to help reduce student loan debt, including pausing payments and expanding forgiveness programs. Organizations like Savi are offering programs to help more people take advantage of this legislation and making it easier to understand – increasing the level of forgiveness substantially. The best part? Partnering with programs that assist with forgiveness applications typically involves very little administration and cost.

Professional Development & Mentorship
What some see as freedom and flexibility has left others feeling disconnected from the camaraderie of the workplace. Has it become less clear for your employees what their career path forward should look like? Just as you would intentionally create a business development plan, many employers are now realizing that it is just as important to create a professional development strategy for their team members.

One way you can do this is by providing opportunities to mentor and be mentored. Coaching and development programs can help create excitement and drive engagement. Supporting community involvement is another win-win because it not only benefits the community you serve (potential partners and clients, included), but it also empowers your employees to lead fulfilling lives. Even when these things are peripheral to your core business practices, they can benefit you by bolstering morale and culture.

Grief Support
One America reported a 40% increase in the death rate among working-age people. Sure, COVID-19 has played a large part in this unfortunate rise but we’ve also seen an increase in heart attacks, cancer, depression and even a record number of overdoses.

This has raised the question of whether three-five days for bereavement and a basic Employee Assistance Program (EAP) are sufficient for employees who have lost a loved one. And the answer is clear – it’s not. Offering flexible PTO in the following six months to a year can be very helpful to individuals still healing from great loss. We all grieve in different ways and allowing your employees to take the time they need (when they need it) not only contributes to their overall wellbeing but can also help prevent burnout and unnecessary turnover.

Fertility & Adoption Services
One of the personal issues that you often won’t hear about is the loss felt by those struggling with fertility. Because it is deeply personal, these situations often go on without the employer ever becoming aware. The March of Dimes says that 10-15 percent of known pregnancies end in miscarriage, which can certainly take a toll on the individual’s mental health. Potential new hires who have experienced this loss are more likely to evaluate benefit plan information to choose an employer who does cover some sort of fertility or adoption benefit.

If you have considered the cost of assisting your employees with family planning, fertility and adoption services, there are more resources than ever before. If new benefit programs are not feasible right now for whatever reason, there’s still an opportunity to broaden your current coverage to be more inclusive.

Remember, there’s no one-size-fits-all benefits plan. The workforce is more diverse than ever and companies that want to stay ahead in their recruiting efforts need to meet people where they are in life. So whether it’s enhancements to your current plan, a more robust total rewards program or additional lifestyle benefits, make sure to consider all of the available options for your people before your next open enrollment.

3 Areas of Property Insurance Limits That Need Your Serious Attention

We’ve all seen news reports about the increased costs of, well, everything. With building materials and labor costs rapidly on the rise, you might find yourself in a lurch if your insurance limits (the most that will be paid by the insurance company) haven’t been adjusted.

It’s important to make sure your commercial property insurance policy is up to snuff with today’s sudden shift in inflation and the supply chain. So, we’re breaking down the areas that need your attention sooner, rather than later.

What’s the big deal with insurance limits?

Most commercial insurance policies are written on a “replacement cost” basis. This requires you to carry a limit of insurance that would be adequate to reconstruct or replace damaged property with the same kind and quality. Meaning it would be enough funds to repair or rebuild the same building, in the same location, of the same size and quality.

In the event of a covered property loss (whether it’s a partial or total loss), if the building limit in your coverage is too low to cover the total costs, you may be assessed a penalty. In other words, if your insurance limit is insufficient to cover the expenses of rebuilding, you will personally have to pay the difference in price.

When the coverage limit and actual damages don’t match, then a settlement claim will need to be determined by the insurance company. Typically, the claim settlement amount is a ratio of the amount of coverage you had compared to the amount of coverage you should’ve had.

Which insurance limits should I review?

Now that we’ve addressed what’s at stake with insufficient insurance limits, let’s share some steps you can take immediately. While we always recommend a full annual review of your insurance program, there are a few areas of your property coverage that you should soon take a look at:

1. Building Reconstruction Limits: Some insurance companies are recommending that building insurance limits be increased 15-30 percent to cover the costs of rising inflation – but, that’s assuming your limit was adequate to begin with. This is why it’s important to frequently check your insurance coverage to ensure it’s staying up to date with current trends and prices. If not, you might find yourself with a significant out-of-pocket loss.

Most insurance organizations have tools available to determine the estimated reconstruction costs of a building. However, these tools are limited as there is only so much information they can access. Additionally, most insurance agents aren’t trained in building appraisal or construction. Your best bet to determine a reasonable and accurate estimate of costs is to have an official appraisal company perform a reconstruction evaluation.

While a professional appraisal will be the most accurate way to determine your replacement cost, it’s important to remember that they’re just estimates. Many times, they can’t keep up with the pace of rapid inflation rates and can still fall short of the true costs.

2. Building Contents Limits: Similarly, you should also check your insurance limits on building contents. Supply chain and inflation issues are making it difficult to find and purchase business materials and property, especially in a timely manner. Moreover, the costs of supplies from office furniture to specialized equipment have significantly increased.

The stress of waiting for the materials and equipment you need to continue your operations is more than enough – don’t add to it by being on the hook for a higher replacement cost than expected in the event of a claim.

3. Limits on Lost Revenues: Speaking of labor and supply delays, it’s also important to check your Business Income and Extra Expense (BIEE) coverage. BIEE coverage is utilized when a covered property loss causes operations of a business to temporarily shut down. For example, if you’re a manufacturer that uses specialized equipment or machinery, it could take months for replacement equipment to arrive, shutting down your operations as you wait for what could be years. BIEE would pay for this loss of business income and the extra expenses you may incur to keep your operations going.

In the past, you might’ve been able to reconstruct and repair your building and replace your equipment within a matter of months. Now, it may take up to 18 months or even longer. BIEE coverage is written with either a dollar limit or a time limit. Both the dollar limit and time limit on your BIEE need to be substantial enough to sustain your business until you are back in operation.

What does this mean for you?

Now is not the time to fall asleep on these critical areas of your insurance coverage. Property insurance can be written to accommodate a number of different circumstances. Once again, if your limits are currently set too low, costs will not be completely covered. Work with your insurance advisor to make sure you aren’t woefully underinsured in our new inflated economy.

Inflation Is Affecting Your Insurance Premiums – Here’s What You Can Do About It

If you’ve recently tried purchasing a car, renovating or constructing a home or business property, you’ve probably been faced with frustrating supply shortages and enormous price hikes. It’s a shocking reality that seems to be seeping into every aspect of business and life.

Today, it takes significantly longer to repair damaged homes and automobiles because of material and skilled labor shortages. Because of this scarcity, the parts and the work cost more than they used to. Some may say that these inflated prices are the result of a hard insurance market, which is when rates start increasing and underwriting becomes more difficult, resulting in smaller coverage limits and higher premiums for businesses – but in many cases, we’re just seeing higher premiums because your stuff costs more to replace. Therefore it costs more to insure.

The cost to replace something today isn’t a dollar-for-dollar match like it’s been in the past. This applies to homes, factories, vehicles – anything property-related. So customers now have two main options to consider when it’s time for policy renewal.

You can either:

Pay more in premiums, with the confidence that your insurance limits cover the total value of your assets.
Lower coverage limits but run the risk of terms & conditions restrictions and/or paying for additional costs in the event of property damage.

But be careful with terms & conditions restrictions because they can be tricky. If you insure your property at a lower value than the building can be replaced and you have a claim, the carrier can restrict or limit their payment for the claim based on the difference between the appraised value at the time of the loss and the amount you insured. Most commercial policies also include a “coinsurance” penalty. Coinsurance is a condition of the policy that attempts to restrict policyholders if they don’t insure their property to adequate limits.

Standard coinsurance is 80 percent for commercial clients, but we’re seeing carriers raise this as high as 90-100 percent in some cases. Meaning that if your coverage limits are not within 80-100 percent of your evaluated property value, they can limit the payment of a claim by the percentage you were underinsured.

You’ll also want to check with your agent on lower-cost replacement options like “functional replacement cost.” These coverage options can help lower your premiums but then allows the insurance carrier to reimburse you for lower cost (and likely lower quality) replacement items.

Not to fear! There are also a few things you can do throughout the year to help keep your rates down.

Whether you’re insuring a home, car, commercial building or an entire auto fleet – make sure to keep your property in good working order and stay up-to-date with regular maintenance. Getting an annual appraisal (if possible) can help ensure you receive fair premiums and save you the headache of going toe-to-toe with underwriters on estimated values. Lastly, increasing your deductible lets you handle more minor issues yourself and can help offset costs.

Be sure to discuss all of these options with your insurance broker or agent. Together, you can decide the best risk management strategy for your specific needs.

This content is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. Gregory & Appel is neither a law firm nor a tax advisor; information in all Gregory & Appel materials is meant to be informational and does not constitute legal or tax advice.

Combatting the “The Great Resignation” with Creative Employee Benefits

Traditional benefit plans are a thing of the past. People are leaving the workforce in record numbers, and many assume that Baby Boomers deciding to retire early is to blame. However, employees ages 30-45 years old have had the most significant increase in resignation rates, with an average increase of more than 20% between 2020 and 2021. Whether they’re becoming freelancers, starting their own businesses or simply taking a temporary break, this age group has severely impacted organizations’ staffing rates across every industry. Now more than ever, companies have to compete for top talent, meaning employers will have to be more open-minded when designing their benefit plans.

There are so many options available to employers today that it has become a task to familiarize yourself with each one and identify which are right for your organization and your people. Checking the pulse of your organization with communication strategies like employee surveys or listening sessions is the first step to identifying what you need in your benefits program. Once you know what would interest and best serve your people, you can begin to build a tailored and inclusive benefits plan.

Here are some emerging trends that are changing the landscape of benefit packages:

Flexible Payment and PTO
Many companies are now offering on-demand pay instead of the standard one or two-week increments. This empowers employees to manage their finances based on a pay cycle that works for their lives – not the company’s payroll schedule.

Another way to get creative with your payment options is to provide flexible PTO. Unlimited or generous PTO benefits have been around for a few years now, but we’ve noticed a significant shift towards PTO transfer programs. These allow the employees to transfer a limited amount of banked PTO hours to help pay off student loans, invest in 401K options or even donate to charity. The key is to put the decision-making power in their hands to support what best serves their lifestyle.

More Inclusive Benefits
Don’t let FMLA set the precedence for your parental leave options. Employees are now looking for generous programs that provide all parents with the time and space necessary to settle into their new families.

We’re also seeing a higher demand for fertility support and more leave time for adoptive parents. Providing additional resources like these shows that you care about your people and their families and (as a bonus) sets you apart from other employers.

And more inclusive benefits are on the horizon. For example, some of our clients have started researching the process of covering gender transitions and reassignment surgeries. Your benefits broker should be able to provide guidance on which non-traditional benefits would be successful within your organization.

Preventative Care
It never hurts to go back to the basics and amp up your primary health care program. We’ve found that offering incentives for preventative visits and screenings can improve your employees’ health and help lower medical costs. Not to mention that identifying catastrophic diagnoses early and starting any necessary treatments can be the difference between life and death.

Blood markers and genetic screenings can also be great resources for your employees – arming them with the knowledge needed to make appropriate decisions about their health care. These costs can be split between the employer and employee or be offered exclusively as voluntary benefits with little to no cost to the employer.

Advocacy Solutions
Cancer and other rare diseases require an enormous amount of time and resources. By partnering with a care coordination team, you can provide your employees with consistent and dedicated support during the most challenging time of their lives. Specialty pharmacies like Rx Help Centers or Payd Health can ensure that your people and their families can access the medicine they need at lower costs without disrupting their quality of care.

Legal Support & Planning
Estate planning is critical for financial and family well-being but can often be intimidating due to legal jargon and costs. Show your employee’s that you care about their family’s future by providing them with support for wills, trusts and other standard legal documents.

We also recommend offering identity theft solutions to your employees at the very least. This strengthens your recruiting efforts and helps protect your business by creating a culture of cybersecurity.

The sky really is the limit when it comes to getting creative with your benefits plan, but remember, not every option is suitable for your industry or organization. You need to consider your people and their distinctive needs to decide if it would work for your company. Lean on your benefits advisor or connect with someone from the G&A team to help build an inclusive benefits plan that empowers your employees to live their healthiest and best lives.