Self-Insurer July 2015

July 2015

www.sipconline.net

South of the Border

DISCOVERING AMERICA ...

Central and Latin America Offer Promising Self-Insurance Opportunities on the World Stage

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July 2015 | The Self-Insurer 3

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July 2015 Volume 81

8 INside the Beltway SIIA: Politically Engaged, Policy Oriented

12 OUTside the Beltway New York Stop-Loss Bills Come Down to the Wire, Maryland Self-Insurance Study Seen as Opportunity

14 Ready or Not, Here it Comes! The Employer Mandate is Finally Applicable

18 PPACA, HIPAA and Federal Health Benefit Mandates IRS Notice 2015-17: Window has Closed on Pre-Tax Funding for Individual Major Medical Policies for Employees

28 Perspectives on ACA Implementation

34 5 Fast Facts About Captives for Brokers

40 Health Plan Certification

46 SIIA Endeavors SIEF’s 2015 Self-Insurance Executive Summit in London

Bruce Shutan

24

Karrie Hyatt

The Self-Insurer (ISSN 10913815) is published monthly by Self-Insurers’ Publishing Corp. (SIPC)

Postmaster : Send address changes to The Self-Insurer P.O. Box 1237 Simpsonville, SC 29681

Editorial StaffPUBLISHING DIRECTORErica Massey

SENIOR EDITORGretchen Grote

CONTRIBUTING EDITORMike Ferguson

DIRECTOR OF OPERATIONSJustin Miller

DIRECTOR OF ADVERTISINGShane Byars

EDITORIAL ADVISORSBruce ShutanKarrie Hyatt

Editorial and Advertising Offi ceP.O. 1237, Simpsonville, SC 29681(888) 394-5688

2015 Self-Insurers’ Publishing Corp. Offi cers

James A. Kinder, CEO/Chairman

Erica M. Massey, President

Lynne Bolduc, Esq. Secretary

South of the Border


Central and Latin America Offer Promising

Self-Insurance Opportunities on the World Stage

Keeping Up with the Neighbors:

HOWare

Staying Competitive

U.S. Captive Domiciles

When the Panama Canal opened more than a century ago, the 50 mile passage

was hailed as an important shortcut for ships that could cut nearly 8,000 miles from a voyage between New York and California.

Since that time, there have been many other compelling reasons to keep a close watch on this historic gateway between oceans and hemispheres. Just ask Bob Repke, president of a medical-travel company named Passport for Health and chairman of SIIA’s International Committee.


Central and Latin America Offer Promising Self-Insurance Opportunities on the World Stage

Written by Bruce Shutan

SoOffer Promising

BoBooSouth of the

Border


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SOUTH OF THE BORDER | FEATURE

He has attended most of SIIA’s international events, including ones held in far-flung cities such as Shanghai, Beijing and Bangkok, where he cautions

that business relationships cannot be built in just one visit. That’s one major reason why he’s so bullish about Central and Latin America, whose close proximity and political stability makes perfect business sense for U.S. companies.

“For most of our members, it’s probably a maximum four or five hour trip to Panama City,” he says, noting a better-than-expected turnout at SIIA’s recent International Conference in Panama City that included local walk-ins. “It becomes a great area for SIIA to build new relationships outside the U.S. It’s almost like a natural extension for us.”

Panama has certainly grown in the 20 years since it was last visited by Greg Arms, a seasoned insurance executive who has worked for Chubb, Marsh and AIG and member of SIIA’s International Committee. “I was interested to see the changes and recent developments, which are really impressive, especially the rehabilitation of the old city and the tremendous canal expansion project,” he says.

“Latin America is a booming part of the insurance world and continues to expand and develop in different, really positive ways,” adds Arms, who has done business in Central and Latin America for more than 30 years. “The very interesting and various cultures and local business practices in each country across the region make it all the more challenging and fascinating at the same time.”

His earliest visits to the region included Trinidad, which is off the northern edge of South America, Mexico, Brazil, Panama and Chile. At the time, he worked in the life and group insurance area at AIG.

“Latin America then was mainly about new market entries, launching new products and finding effective distribution platforms,” he explains. “I have continued my involvement with several visits every year since, especially to Sao Palo and Rio in Brazil.”

Opening Up BarriersBacho Vega, a Puerto Rico native and regulatory

manager for Artex Risk Solutions, has learned at several industry conferences that Central and Latin America is fertile ground for insurance captives. However, he says one barrier is a lack of understanding about how to open up the market. “The future for growth in captive insurance companies appears to be in areas of Latin America that are not very well developed,” says Vega, who does not have significant experience in the region.

“We believe Latin America and especially countries like Costa Rica, can offer to self-funded employers an interesting option to direct contracting quality health care services at lower prices than in the U.S.,” observes Massimo Manzi, executive director of the Council for the International Promotion of Costa Rica Medicine (PROMED), a nonprofit association for the medical tourism, health care, wellness and retirement living industries of Costa Rica.

These are interesting prospects for Dani Kimlinger, Ph.D., human resources and organizational psychology leader with MINES and Associates, who attended SIIA’s International Conference without a grasp of how self-insurance or health care in general necessarily worked in Central and Latin America. “We’ve explored working with captives and work comp, so we just really went kind of with an open mind,” she reports. “Sometimes that’s just how we fall into business.”

Booming EconomyCentral and Latin America is ripe for U.S. business partnerships in an

increasingly dangerous world that has been overrun by terrorism. “Costa Rica and Panama are stable nations where more and more U.S. multinationals have decided to establish their foreign operations,” Manzi explains.

Indeed, countries across Central and Latin America, with a few exceptions, are much less threatening and more open than they have been in the past, according to Repke. Standouts include Mexico, Panama, Costa Rica, Columbia, Chile, Brazil and Argentina, though he describes Ecuador and Venezuela as questionable and lacking opportunities at the moment.

Panama, long known as a U.S. territory in the Panama Canal Zone, is considered a business gateway of sorts to Central and Latin America to the extent that the U.S. dollar is being used, the canal continues to fuel the country’s booming economy and the region is just a year away from completing an expansion project that will double the canal’s shipping capacity, Repke explains.

6 The Self-Insurer | www.sipconline.net

Mindful of socialized medicine’s limitations, he says U.S. and local corporations alike fund supplemental medical plans for their more technical and management level employees who work throughout this region. As a result, private hospitals have sprung up, offering a secondary coverage tier that has sparked discussion about self-funding that coverage and rounding it out with voluntary benefits such as dental and vision plans.

The region is an ideal strategic partner for U.S. employers looking hoping to contain their health care costs not only because of its relatively close location, but also its internationally accredited hospitals and costs that are on average 50% to 70% less than in the U.S., Manzi notes.

He views international medical travel as a key component in cost-containment strategies of U.S. employers, noting that many of them are already saving millions of dollars by contracting certain types of surgeries to hospitals overseas.

In fact, a million U.S. employees are paid to go on a “surgical vacation,” according to a recent ABC News report, which noted that HSM Solutions saved nearly $10 million over the past five years by sending close to 250 employees abroad for medical procedures. Perhaps most surprisingly is that each of HSM’s employees receives at least $2,500 as an incentive for their trip – an amount based on a percentage of corporate savings and health insurance costs.

The medical tourism trend follows a push to globalize many other industries, according to Manzi, who predicts health care will be increasingly outsourced “and Latin America is in the best position to be the hub of this new industry.” He notes that renowned U.S. hospitals, such as the Cleveland Clinic, are opening overseas operations in Abu

Dhabi and other hot spots as patients and corporations alike “have realized that good health care can be founded also outside their boundaries.”

Kimlinger’s most promising foray into Central and Latin America involves the employee assistance program space, which she describes as “a cost-containment strategy in many ways” wherein about 80% of issues can be resolved. Her firm’s chief challenge, however, will be establishing a strong provider network.

Borderless Business Central and Latin America

represents a virtually borderless business opportunity, Repke enthuses. “The only thing that stands between us and Mexico is a flight and an imaginary border because the people there are so much like us,” he says. Repke points out that California’s population is 35% Hispanic descent – a demographic trend that also has taken hold in Texas, Florida, New York and New Jersey, as well as cities along the entire U.S. and Mexico border.

The insurance industry has responded by opening key outposts in the region. For example, Repke says New Orleans-based Pan American Life has its Latin American headquarters in Panama and Chubb has regional offices throughout Central and Latin America. Others include MAPFRE Insurance and Allianz. Moreover, he says large brokers are establishing or buying regional players in those countries and the captive business has an active interest throughout the region.

Networking Opportunities

SIIA’s recent International Conference in Panama proved to be the perfect place for Vega to bone up on opportunities in Central and Latin America. “When I learned about SIIA’s

conference I thought this could be

a place where practical information

could be shared and contacts made,”

he says. “I was not disappointed. I was

able to make some great contacts,

learn about the culture and the way

some in Latin America see insurance

and specialty captives.”

Vega is in the process of finishing a

short video presentation for captives

in Spanish and hopes to have formed

at least one captive in the coming next

year in a few Central and Latin America

countries his firm has identified.

Arms also sought networking

opportunities at SIIA’ International

Conference, as well as some face time

with the local Panamanian team from

Pan-American Life Insurance Group

and others with whom he worked.

Going forward, he expects

business opportunities to expand

across the region, “albeit with

occasional bumps in the road that

make it more difficult and yet also

more rewarding as the everyday

obstacles and sometimes macro

problems are navigated.” ■

Bruce Shutan is a Los Angeles freelance

writer who has closely covered the

employee benefi ts industry for more

than 25 years.

SOUTH OF THE BORDER | FEATURE


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SIIA: Politically Engaged, Policy Oriented

INSIDE the BeltwayWritten by Ryan Work

One thing that’s clear for success on any key policy issue is this – engagement and

relationships are critical. On the state

and federal level, policy makers and

regulators are looking at you and your

customers. They are looking at how

you do business, what services you

sell, what type of advice you are giving

and what your revenue stream looks

like. Whether it be healthcare or tax

reform, they are also looking for new

revenue streams themselves.

As SIIA and its members look at

these challenges, it is more important

than ever to get engaged. One of

the most frequent questions I get is,

“How can I engage in Washington?”

My answer is that you don’t always

have to engage Washington. While

meeting in Washington is an important

part of the process, you can engage

Washington on your own turf and in

your own way.

Policy EngagementWhile SIIA is always happy to

schedule meetings with Members of

Congress and their staff whenever you

may be in D.C. we also want to talk to

them where it matters most – at home.

Many Congressmen and Senators will

be spending more and more time in

their home districts and states as we

get into the summer months. This is a great opportunity for you to talk to them about the issues that are critical to our industry and to you.

As we face more regulatory and legislative activities than ever before in the self-insurance and risk management industry, meeting with Members of Congress back home is a great way to tell your story. Beyond just protecting our industry, these meetings help promote it on the local level where most policy makers create their positions and listen to feedback. With so many things going on in Congress, now is the time to talk to

them, tell them about your business,

your employees and your work to

help the community.

Meeting with Members and staff is

also an ongoing policy activity for SIIA’s

D.C. legislative office. If you find yourself

in D.C. for meetings, conferences, or

simply a visit, let us know. We will be

happy to coordinate meetings.

Political EngagementPolitical engagement combines

policy and relationships, and for

members of SIIA, it includes the Self-

Insurance Political Action Committee,


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or SIPAC. For years, SIPAC has been building connections with SIIA members and their representatives in Washington, both Congressmen and Senators. As an additional tool for SIIA and its members to engage with policy makers and impact legislation, SIPAC forges strategic partnerships that align with the association’s principles, and allows it to contribute to the political process on a bipartisan basis. While this is certainly not a new endeavor for SIIA, the renewed focus is a key element within the overall political and policy strategy aimed at building and strengthening key relationships. SIPAC is another great avenue for SIIA members to become involved and directly support our political and legislative activities.

Coalition EngagementAnother way SIIA seeks to engage with policy makers and regulators on

behalf of our members is through the creation of the Self-Insurance Defense Coalition (SIDC), a leading national policy coalition that seeks to defend, support and grow the self-insurance industry. Through a diverse range of participants, the SIDC is both a policy forum and legislative action network to discuss and activate supports on self-insurance and related benefit issues.

With so many issues facing self-insurance, the SIDC is larger and more diverse than ever before. In addition to SIIA, the SIDC membership includes health and underwriting industry groups, labor and trade organizations, and large business, retail and manufacturer associations. This unique combination of organizations coming together around the self-insurance marketplace is critical to our future success in a challenging policy and regulatory environment.

Formed about two years ago by SIIA, SIDC organizations came together to support the Self-Insurance Protection Act (SIPA) introduced in the House and Senate. The SIDC is also focused on critical state and legal issues surrounding the self-insurance marketplace, as well as regulatory issues such as the ongoing implementation of the Cadillac Tax.

Politically and legislatively SIIA continues to advance issues that are important to you. Your continued help and support is critical to making this happen. Let us know if you are interested in becoming engaged – in D.C. or at home.

To learn more, please email Ryan Work at [email protected]. ■


New York Stop-Loss Bills Come Down to the Wire, Maryland Self-Insurance Study Seen as Opportunity

OUTSIDE the BeltwayWritten by Dave Kirby

NEW YORK

Editors Note: Due to The Self-Insurer production schedule, certain information contained in this article may be superseded by more recent developments and as reported by SIIA in real time.

SIIA’s campaign to protect the benefi ts

programs of many

small businesses in New York State

was in high gear right up to the

deadline for this issue. By then the

Senate bill (S.2366) prompted by SIIA

had been passed to allow continued

availability of stop-loss insurance to

51-100 employee groups beyond the

2016 cutoff that the state established

earlier as part of its ACA compliance.

After opposition to the SIIA-

supported bill (A.1154) became

apparent in the Assembly, a new bill

(A.8134) was introduced to maintain

the cutoff of new stop-loss policies for

groups of 51-100 next January 1 but

to allow existing stop-loss coverage to

be maintained into the future. This bill

appeared as a compromise between

the Senate’s position and opposition

by Assembly leaders, the Department

of Financial Services (DFS), the

governor’s office and elements of the

fully-insured health market.

SIIA representatives were scheduled to attend an exploratory meeting with DFS but that meeting was canceled by the regulatory office just 30 minutes before its scheduled time, after the compromise legislation was introduced. SIIA continued to work directly with the chairmen of both the Senate and Assembly Insurance Committees on amendments that would assure that grandfathered stop-loss plans would maintain the ability to change stop-loss carriers in the future. As the legislature approached its summer recess last month the fate of the legislation was unknown.

The visibility of the association’s advocacy campaign was heightened this spring when 26 members and staff convened in Albany and received encouragement from the chairmen of both the Senate and Assembly Insurance Committees before visiting the offices of many legislators.

Dan Carlton, regional sales vice president of SIIA member HM Insurance Group, believes that implications of the New York legislative campaign could affect self-insurance nationally. “A ruling in New York helps to set the groundwork for the next line to be drawn in the sand,” he said. “If states restrict the permissible group size for self-funding, there could be a domino effect that rattles the self-funded market nationwide and limits employers’ options to determine the best benefits programs for their employees.”

SIIA member Mike Kemp, president of IHC Risk Solutions of Enfield, Connecticut, which provides stop-loss insurance to many New York employers, believes that educating legislators and regulators about self-insured benefits plans is a long-term challenge. His company encouraged its New York clients to support the stop-loss bills.

“I hope we were able to give them a sense of urgency to contact their representatives,” he said.

“This all comes down to whether small businesses can continue to provide benefits.

The cost effectiveness of benefits depends on the availability of stop-loss policies.”

He said that New York is among several states that are currently taking a critical look at stop-loss insurance but that industry communications programs


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can be effective in defending the self-insurance vehicle. “Once members of state governments come to better understand our industry some back off of aggressive positions completely or come to compromises that don’t disrupt the market.”

Kemp cited recent examples of Utah and New Mexico where views of stop-loss insurance became more positive after intervention by the self-insurance industry. “This could mean that our industry can effectively meet the kinds of challenges we’re now dealing with in New York,” he said.

SIIA member Robert Madden, benefits consultant with broker Lawley Service Inc. of Buffalo, New York, reported that his company worked to rally support for the New York stop-loss bills among its business network.

“We had very favorable responses among our clients including one accounting and consulting firm that mobilized their clients to relay the message out to their own networks – this firm proved to be a significant center of influence in our industry,” he said. “That’s the kind of leveraged communications we intend in the future.”

Maryland Stop-Loss Law

The new stop-loss insurance law became effective June 1, 2015, with a sunset provision in June of 2018 that was planned to prompt new legislation in 2017 or 2018 based on a stop-loss study by the Maryland Insurance Administration (MIA). The agency says it will issue sequential reports in December 2015, and October 2016.

The law requires a new minimum individual stop-loss attachment point of $22,500 and minimum aggregate of 120 percent of expected claims. Both figures were adjusted down through

SIIA’s lobbying and educational efforts

during the spring legislative session.

Importantly, employers with stop-loss

insurance may renew their contracts

under the current minimums of $10,000

and 115 percent. Other elements of the

new law were reported in the June 1,

2015, issue of the SIIA State Legislative/

Regulatory News.

SIIA member Chip Sernyak,

Regional President, Northeast, of

CoreSource, believes the MIA study

provides an opportunity for the self-

insurance industry to more effectively

communicate its value to Maryland

regulators and lawmakers.

“It is imperative that the MIA

study of the employer-based market

be informed by all stakeholders

including employers, TPAs, insurers,

agents and brokers,” Sernyak said. “Any

further legislative initiatives should be

guided solely on the basis of market

analysis and employer demand. To

further disrupt the market based on

presumptions and speculation is a

disservice to employers working to

continue to provide affordable benefits.”

Sernyak added, “Unfortunately, the

new Maryland regulation will exclude

some employers from the full set of

valuable options available to them

through self-funding.”

SIIA intends to mount a broad

educational and lobbying campaign

in Maryland to push back against

even more restrictive future stop-loss

legislation. For more information on

how employers and SIIA members

can participate in the campaign and

provide information to inform the MIA

studies, contact Adam Brackemyre in

SIIA’s Washington D.C. office at (800)

851-7789 or [email protected]. ■

MARYLAND

Do you aspireto be a published author? Do you have any stories or opinions on the self-insurance and alternative risk transfer industry that you would like to share with your peers?

We would like to invite you to share your insight and submit an article to The Self-Insurer! SIIA’s o� cial magazine is distributed in a digital and print format to reach over 10,000 readers around the world. The Self-Insurer has been delivering information to the self-insurance/alternative risk transfer community since 1984 to self-funded employers, TPAs, MGUs, reinsurers, stop-loss carriers, PBMs and other service providers.

Articles or guideline inquiries can be submitted to Editor Gretchen Grote at [email protected]

The Self-Insurer also has advertising opportunities available. Please contact Shane Byars at [email protected] for advertising information.


Ready or Not, Here it Comes! The Employer Mandate is Finally Applicable

The Employer Shared Responsibility provision of the Patient Protection and Affordable Care Act (“ACA”) went into effect for certain applicable large employers on January 1, 2015.1 The Employer Shared Responsibility provision is often referred to as Pay or Play, the Employer

Mandate, or 4980H subsections (a) and (b). The applicability date of the Employer

Shared Responsibility provision (“Employer Mandate”) depends on an employer’s

size, as well as, whether or not the plan is a non-calendar year plan and meets the

non-calendar year plan transition relief (provided by the fi nal regulations issue on

February 12, 2014).2 As of January 1, 2015, the Employer Mandate is applicable

to employers with one hundred or more full-time employees including full-time

equivalents. Transition relief for certain smaller employers expires for 2016.

Therefore, as of January 1, 2016, the Employer Mandate is applicable to employers

with 50 or more-full time employees including full-time equivalents. It’s important

to note that the size of the employer is based on actual employees and not based

on the number of employees enrolled in the employer’s health plan. The Employer

Mandate is in effect for applicable large employers regardless of whether or not

the employer’s plan is grandfathered or non-grandfathered.

In the context of the regulations, the Employer Mandate is not a plan

requirement and the regulations do not specifically demand modifications to plan Written by Kelly E. Dempsey


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language. The Employer Mandate is an employer requirement and employers must carefully contemplate their decision to “pay or play” as penalties are not automatic. The imposition of penalties occurs when an employee goes to the Exchange and receives a subsidy. Employers that are subject to the Employer Mandate and wish to comply (and avoid penalties) are required to measure employees either via the look-back measurement method or the monthly measurement method and subsequently offer coverage which is affordable and meets minimum value to all full-time employees, as defined by the ACA and their dependent children.

While employers often rely on Third Party Administrators (TPAs) to assist with ACA related issues, ultimately employers are responsible for the determination of whether or not the Employer Mandate is applicable (i.e., the employer is an applicable large employer) and TPAs generally cannot assist with this determination. Certain payroll companies have developed products to assist employers with Employer Mandate associated determinations, so employers may wish to speak with their payroll company as a starting place for assistance with counting to determine if the employer is an applicable large employer and subsequently measuring employees to determine employee full-time status should the employer be subject to the Employer Mandate.

Employers subject to the Employer Mandate should have a detailed policy that captures the measurement method (or methods) selected for each class of employees (as permitted by the ACA) and provides details of the employer’s process. As this policy is associated with eligibility for plan coverage, the eligibility provisions,

including termination and rehire and any applicable definitions, of the plan document may be affected depending on the measurement method selected and plan language may need to be modified to align with the employer’s process. As plan documents are necessarily a unique reflection of a plan sponsor’s underlying coverage, the ongoing implementation of the ACA, including the Employer Mandate, has forced many plan sponsors to take a look at their plan document and consider what amendments may be required. Plans that do not currently address rehires or an annual open enrollment period should review and revise their plans accordingly. The extent of changes to the definitions, eligibility, termination and rehire provisions will depend on the language that is currently contained in the plan document.

With the monthly measurement method, the changes to the plan document are generally minimal. The plan language, however, should be reviewed to ensure that employee is defined appropriately and that rehire provisions are compliant.

Employers utilizing the look-back measurement method may need to consider additional changes to the plan document to ensure the plan language aligns with the process the employer has selected. The look-back measurement method creates a unique issue for employers who need to ensure their plan language adequately addresses when coverage is available for employees determined to be full-time – coverage must generally be offered throughout the stability period provided an employee continues to be employed. Absent an exception, once an employee is determined to be full-time, they are locked in as full-time employees until the end of the stability period, even

if their hours of service drop below the 30 hours. This creates a potential gap in coverage with respect to stop loss policies and plan document language. A gap could be found if the eligibility provision provides only that employees must average 30 hours of work per week to be eligible, but employees who are locked in reduce hours in service below the 30 hours per week threshold. Will the stop loss policy cover these employees who aren’t technically meeting the eligibility requirements? In order to close this gap, plans may need to modify their eligibility language and/or definitions of full-time employee and possibly add other definitions associated with the employer’s process into the plan document. While the Employer Mandate does not require modifications to plan document language, this potential gap is another reason why employers should analyze their processes and plan documents. The level of detail the employer includes in the plan document is at the discretion of the employer, but the employer may also consider discussing the Employer Mandate with their stop loss carrier.

If the Employer Mandate is applicable to an individual employer, plan documents should be reviewed and modified on a case by case basis as there are many variables in these counting methods and the appropriate changes that need to be made to ensure compliance and eliminate the potential for gaps in coverage. Employers should provide timely notification to stop loss carriers regarding any changes made to plan language (as required by the stop loss policy, if applicable). Communication between all entities, including the plan, the employer and the stop loss carrier, is critical to ensure all parties are on the same page – especially as additional challenges continue to arise.


The ACA has undergone many challenges since it was signed into law on

March 23, 2010. Among the challenges include the case of King v. Burwell3 which

challenges the usage of subsides for coverage obtained on a federally facilitated

exchange. The Plaintiffs in this case argue that the ACA, as written, only allows

subsidies to be utilized for state-run exchanges. The ACA generally intended

to have each state run its own exchange; however, at this time there are more

federally-run exchanges than state-run exchanges. According to data collected by

The Henry J. Kaiser Family Foundation, there are only 14 state-run exchanges -

the remainder of the exchanges are structured as follows: 3 federally-supported

exchanges, 7 state-partnership exchanges and 27 federally-run exchanges.4 The

Supreme Court of the United States heard oral arguments on March 5, 2015 and

a decision is expected in June 2015. Should the decision be rendered in favor of

the Plaintiffs, the impact will be felt by millions of individuals who have received

subsidies and obtained coverage through a federally-run exchange. Additionally, a

decision indicating that subsidies cannot be utilized on a federally-run exchange

would take the teeth out of the Employer Mandate. If individuals cannot obtain

subsidies for federally-run exchange, employers subsequently won’t be issued

penalties in these states because Employer Mandate penalties are contingent on

individuals obtaining subsidies in addition to exchange coverage.

Regardless of the Supreme Court decision in King v. Burwell, the Employer

Mandate will continue to be applicable absent additional regulations or guidance

and it’s likely that regulators will implement additional modifications to ensure

the Employer Mandate penalties will continue to be in play. Subsidy “fixes” are

already in the works should the decision by the Supreme Court determine

that individuals cannot utilize subsidies with coverage obtain on a federally-run

exchange. Employers should continue to proceed with determining Employer

Mandate applicability and implementing a process to measure employees, along

with modifying plan language as necessary.

In summary, the selection of measurement methods is highly dependent on each employer’s employee population (i.e., does the employer have hourly employees, salaried employees, collectively bargained employees, part-time employees, variable hour employees, seasonal or temporary employees, etc.). As such, there is no one size fits all solution for the Employer Mandate compliance as the regulations provide employers flexibility to create a process the meets their needs and intent. Vendors, including TPAs, that choose to assist with Employer Mandate related inquiries should proceed with caution and be certain to ensure employers understand that ultimately compliance with the Employer Mandate rests with the employer. ■

Kelly E. Dempsey is an attorney with

The Phia Group. She is one of The Phia

Group’s consulting attorneys, specializing

in plan document drafting and review, as

well as a myriad of compliance matters,

notably including those related to the

Affordable Care Act. Kelly is admitted

to the Bar of the State of Ohio and the

United States District Court, Northern

District of Ohio.

References126 U.S. Code § 4980H

2Shared Responsibility for Employers Regarding Health Coverage, 26 CFR Parts 1, 54, and 301, 79 Fed. Reg. 8543, 8551 (Feb. 12, 2014).

3759 F.3d 358 (4th Cir. 2014), cert. granted, 83 U.S.L.W. 3102 (U.S. Nov. 7, 2014) (No. 14-114).

4See State Health Insurance Marketplace Types, 2015, http://kff.org/health-reform/state-indicator/state-health-insurance-marketplace-types/ (as visited on June 5, 2015).


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Creative ID: Stop Loss 2015

Client: Sun Life

Printed: 1-29-2015 2:28 PMPrinted Scale: NoneSaved: 1-29-2015 2:28 PMOperator: Piet Halberstadt

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*#1 independent direct writer stop-loss carrier based on the 2013 year-end Sun Life Stop-Loss premium of $915.2M and our analysis of marketshare data from various third parties. Group stop-loss insurance policies are underwritten by Sun Life Assurance Company of Canada (Wellesley Hills, MA) in all states, except New York, under Policy Form Series 07-SL. In New York, group stop-loss insurance policies are underwritten by Sun Life and Health Insurance Company (U.S.) (Windsor, CT) under Policy Form Series 07-NYSL REV 7-12. Product o� erings may not be available in all states and may vary depending on state laws and regulations. © 2015 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.

PRODUCER USE ONLY. SLPC 26354 01/15 (exp. 01/17)

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PPACA, HIPAA and Federal Health Benefi t Mandates:

PracticalQ&AIRS Notice 2015-17: Window has Closed on Pre-Tax Funding for Individual Major Medical Policies for Employees1

In Notice 2015-17, the IRS granted limited transition relief for certain employer sponsored arrangements involving individual major medical health coverage that might otherwise violate the Affordable Care Act (ACA). More specifi cally, Notice 2015-17 provides relief from excise taxes under Code section 4980D for

violations of the health insurance reforms and the corresponding obligation to report violations on IRS Form 8928, for the following types of “employer payment plans”:

• Employer payment plans maintained by employers that were too small to be considered an applicable large employer under the Code Section 4980H “employer responsibility” provisions for 2014 and 2015. There is no relief for employers with 50 or more full time employees (including full time equivalents). This relief was temporary, ending on June 30, 2015; and


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• Certain employer payment plans that cover only more-than-2% shareholders of a Subchapter S corporation.

Practice Pointer: An employer payment plan is any arrangement through which an employer pays, directly or indirectly (e.g. including direct or indirect payments with after-tax dollars), an employee’s premiums for major medical coverage purchased in the individual market (inside or outside the exchange) and/or Medicare Part B or D premiums. Employer payment plans will violate one or more of the health insurance reforms added by the ACA (including the prohibition on annual dollar limits on essential health benefits and the requirement to provide preventive care without cost sharing) and as such, excise taxes of up to $100 per day per employee would apply under Code Section 4980D. See IRS Notice 2013-54 and Agency ACA FAQs XXII.

The Notice also describes and clarifies the types of permissible arrangements that can be used for employers to reimburse Medicare Part B or D premiums or Tricare expenses without running afoul of the health insurance reforms. Finally, the IRS clarified the application of Notice 2013-54 to certain after-tax arrangements that directly or indirectly reimburse employees for individual market premiums.

Practice Pointer: Notice 2015-17 does NOT change the conclusions reached in Notice 2013-54 regarding employer payment plans and HRAs. Arrangements that pay or reimburse an employee’s premiums for major medical coverage purchased in the individual market still violate the health insurance reforms added by the ACA. Rather, Notice 2015-17 provides limited relief from the excise taxes that would otherwise be imposed under Code Section 4980D on such arrangements.

This relief is discussed more fully below.

Temporary Transition Relief for Small EmployersEmployers that maintained an employer payment plan will not be subject

to 4980D excise taxes (and will not be required to file a Form 8928 for 2014) because they maintain such a plan, if they were NOT an applicable large employer in 2014 (as that term is defined in Code section 4980H). Likewise, the relief will continue through June 30, 2015 if the employer was NOT an applicable large employer in 2015. An employer is not an applicable large employer for a year if they employed on average less than 50 “full-time equivalents” in the prior calendar year.

This relief does NOT apply to stand alone HRAs or HRAs that reimburse medical expenses other than insurance premiums.

Practice Pointer: This Notice clarifies several aspects concerning the scope of IRS Notice 2013-54. First, the IRS makes clear in this guidance that an employer’s payment of Medicare Part B and/or D premiums is an impermissible employer payment plan except as provided in the Notice (see the discussion below). Second, by excluding more traditional HRAs (i.e., HRAs that reimburse expenses other than premiums) from the transition relief, the IRS makes it clear that the Notice 2013-54 prohibitions

applies to all arrangements that pay for or reimburse individual market health premiums. Many had previously taken an erroneous position that HRAs that reimburse solely individual market premiums were allowable under the prior Notice. Presumably the limited transition relief is an acknowledgement of the confusion on this issue.

Subchapter S Arrangements

IRS Notice 2008-1, 2008-2 I.R.B. 1,provides that if an S corporation pays for or reimburses premiums for individual health insurance coverage covering a 2% shareholder (as defined in Code § 1372(b)(2)), the payment or reimbursement is included in income but the 2% shareholder-employee may deduct the amount of the premiums under Code Section 162(l). Separately and at least until the end of 2015, transition relief is provided for certain arrangements whereby Subchapter S Corporation 2% shareholders took a Section 162(l) deduction for individual market coverage. The fact that transition relief is needed for such arrangements is surprising for many. This is because plans that cover fewer than two active “employees” on the first day of the plan year are generally not subject to the ACA health insurance reforms. Since 2% Subchapter S shareholders are considered self-employed it would seem that the ACA provisions would not apply. However, this Notice clarifies that, absent the transition relief, health insurance reforms apply to arrangements maintained by Subchapter S corporations that cover two or more employees without regard to whether the employees are 2% shareholders. No relief would apply if any employees (other than the 2% shareholder) were covered under the arrangement.


Practice Pointer: The Notice indicates that the agencies expect to issue additional guidance in the future regarding the application of the health insurance reforms to 2% shareholder arrangements. Although not addressed in the Notice, it would seem that similar relief may be necessary for other self-employed individuals who are allowed to take a 162(l) deduction for individual market health insurance such as partners in a partnership.

The Notice also indicates that the IRS and Treasury are considering whether additional guidance is needed regarding the federal tax treatment of health coverage provided to 2% shareholder employees. Until then, Subchapter S corporations and 2% shareholders may continue to rely on Notice 2008-1. However, steps must

be taken to ensure that any deduction under Section 162(l) is coordinated with premium tax subsidies that might otherwise be available as addressed in Revenue Procedure 2014-41.

After-tax ArrangementsNotice 2013-54 left the door

open for certain employer after-tax arrangements that do not rise to the level of an ERISA sponsored plan. One of the most misunderstood aspects of the 2013 guidance is what level of employer involvement may be necessary for an employer after-tax arrangement to be considered an ERISA plan.

This notice clarifies the outer parameters of Notice 2013-54 by addressing the following types of after-tax arrangements:

• Mere pay increase that is not restricted is OK. If an employer increases compensation to assist employees with payments

for individual market coverage, the arrangement is NOT an employer payment plan as long as the increased compensation is not conditioned on the employee’s purchase of individual market coverage.

• Including premium reimbursements (conditioned on purchase of coverage) in income still results in an employer payment plan. If an employer pays an individual market premium directly or reimburses an employee upon proof of premium payment the arrangement would be an employer payment plan subject to Notice 2013-54 regardless of whether the employer includes the amount in taxable income.

Notices 2015-27 and 2013-54 clarify that an employer payment plan includes the employer’s payment of individual premiums with after-tax

Don’t let overwhelming health care insurance claims swamp your business. Invest in stop loss insurance with Indigo Insurance Services. To gain more control over your health care expenses, please visit www.indigo-insurance.com/stop-loss for more information.

Indigo Stop Loss Insurance: Minimize Your Financial Risk

© 2015 Indigo Insurance Services, LLC is a subsidiary of Blue Cross Blue Shield of Massachusetts, Inc.


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Stop Loss insurance products are underwritten by ReliaStar Life Insurance Company (Minneapolis, MN) and ReliaStar Life Insurance Company of New York(Woodbury, NY). Within the state of New York, only ReliaStar Life Insurance Company of New York is admitted, and its products issued. Both are members of the Voya®family of companies. Product availability and specifi c provisions may vary by state. © 2015 Voya Services Company. All rights reserved. LG12231 12/08/2014 164932

22 The Self-Insurer | www.sipconline.net22 The Self-Insurer | www.sipconline.net


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dollars. But how much is too much for employer involvement? Would it be too much to provide employees a “warm handoff ” to a site that makes individual coverage available? What if the employer co-sponsors a web site where individual market plans are sold? Is a clear disclaimer adequate to remove the “taint” of employer involvement? Only time will tell as literally hundreds of cases outline the parameters of ERISA coverage (under the so-called voluntary group plan exception). ■

The Affordable Care Act (ACA), the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal health benefi t 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 ACA, HIPAA and other federal benefi t mandates.

Attorneys John R. Hickman, Ashley Gillihan, Johann Lee, Carolyn Smith and Dan Taylor provide the answers in this column. Mr. Hickman is partner in charge of the Health Benefi ts Practice with Alston & Bird, LLP, an Atlanta, New York, Los Angeles, Charlotte and Washington, D.C. law fi rm. Ashley Gillihan, Carolyn Smith and Johann Lee are members of the Health Benefi ts 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 email to Mr. Hickman at [email protected].

References1Portions of this article have been adapted from a similar article by the authors with permission from Pension and Benefi ts Daily, The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com

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• Assist America pays for emergency travel services that would typically not be covered by the group’s medical plan. This responsibility for payment would still be drawn from the employer’s fund because they still have a liability for traveling employees.

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In the fi rst half of 2015, six states have already passed legislation that updates their captive law.

U.S. captive domiciles are working behind the scenes to

stay competitive in the current captive insurance marketplace. So

far this year, the state legislatures for six domiciles have updated

captive laws and three additional state legislatures are working to introduce new captive legislation. With more than thirty fi ve states that have enacted captive law, U.S. captive domiciles have to keep their laws up-to-date to stay competitive in the onshore market.

What’s Old is New AgainU.S. States began passing captive

law as early as 1978 when Tennessee became the first state to do so. During the 1980s, especially towards the


Written by Karrie Hyatt


HOWare

Staying Competitive

HOWare

StayingCompetitiveStayingCompetitiveStaying

U.S. Captive Domiciles


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end of the decade, approximately 13 states passed law to become captive domiciles. Some of those states, such as Vermont and Hawaii, became well-known, established captive domiciles, other captive domiciles were not so active in the industry, such as Florida and Virginia.

States enacting captive law slowed during the 1990s, with less than a handful passing legislation. By the end of the decade there were 18 states with captive legislation on the books.

Beginning in 2000, as the captive marketplace heated up, more and more states passed laws allowing for captive insurers. New captive domiciles exploded onto the scene – between 2000 and 2010, fourteen states became captive domiciles. In the early part of the 2000s, many states passed captive legislation in response to the hard market affecting the insurance industry. However, the current extended soft market has not hindered new states from wanting to become captive domiciles. Since 2011, five more states have enacted captive legislation. The most recent state to enter the captive marketplace as a domicile was Ohio just last year.

In addition to new states becoming captive domiciles, many states that had enacted captive law in the 1980s and 1990s began updating their existing laws to become more competitive in the captive marketplace and to be attractive to new and redomiciling captives. Tennessee, which in the 1980s was a very active captive domicile, wound up letting its captive interests slide during the 1990s and 2000s. In 2011, the state revised its captive law and established a captive insurance department. Since then the domicile has added more than 30 captives to its roster. It’s this kind of success that many states would like to emulate by updating their old captive laws.

To be competitive, domiciles amend their captive laws in a number of ways.

Some new laws have been enacted to reduce premium taxes. Often captive law is changed to make it less onerous for captives to be set up or to expand the types of captives allowed to form. Another reason legislatures change captive laws is to correct oversights and loopholes inadvertently placed in previous iterations, as well as to modernize laws that have been on the books for a long period. This is especially true for domiciles that have had captive law for a few decades or more and are looking to gain a foothold in the market.

Domiciles Making Changes

Georgia updated its captive law in May when Governor Nathan Deal signed legislation that reduces premium taxes for captives. Georgia first passed captive law in 1989. While the state initially pursued captives, since the late 1990s the state had not been particularly active in the captive arena. With HB 552, Georgia is looking to reactivate its captive program. The new law, set to go into effect on July 1st, will drastically reduce premium taxes for a captive from 4.75% to 0.4% on the first $20 million in premiums and then 0.3% for premiums over $20 million. The new law also lowers the aggregate maximum premium tax.

Since Montana first enacted captive legislation in 2001, it has been an active player in the captive industry. This past April, the state legislature passed two laws, subsequently signed by Governor Steve Bullock, which helps to clarify its existing captive law. This is not the first time that the domicile has updated its captive law. This legislative sessions’ changes were made due to conflicting state statutes. The impetus for the first law, HB 536, came when a public entity applying for a group captive was denied due to an existing state law. This new law amends those statutes to allow for

public entity captives. HB 537 amends a loophole in the state’s corporate laws to allow for captive limited liability companies (LLCs).

In the last three years South Dakota has been quietly working to make its captive law more competitive. The state has been a domicile for captives since the 1990s, but had only a handful of operating captives. In 2013, the state amended its law to expand the types of captives allowed in the state, including sponsored and cell captives. In 2014, the law was adjusted to update the incorporation procedures. This year the state’s legislature once again amended the law to define and include agency captives. The latest update was signed by the governor in February.

Texas has only recently enacted a captive insurance program. Their law was passed in 2013 and the domicile accepted its first captive in March 2014. By the end of last year, Texas had eleven captives on its roster. This year the state legislature has passed legislation that will allow for captive risk pools to be formed. In addition, the law clarifies how dividends are to be paid to captive owners. As of early June, the law was waiting for a signature from the governor. In addition, the Texas House of Representatives introduced HB 2557. This law would allow for hospital districts to form captive insurance companies. It has passed both legislative houses and is also waiting for the governor to sign.

Since Utah jumped into the captive marketplace in 2003, it has made a name for itself by rapidly expanding its roster of captives, primarily with the smaller enterprise risk captives (or 831(b)s). The changes made this year to the domicile’s law are technical updates – the inclusion of LLCs and a provision regarding required minimum capital. The amendment increases the captive exam cycle from every three years to


every five years. The new legislation also clarifies provisions regarding cell captives. The capitalization requirements a cell captive sponsor remains at $1 million, but the sponsor is only required to pay a minimum of $350,000 with the balanced paid by the cell companies. Within the sponsor of a cell captive risk pooling will now be an option and cell captives are required to pay an annual license fee of $1,000. The new provisions go into effect on July 1, 2015.

Vermont is the top captive domicile in the United States. Almost every year the state passes legislation to improve its captive law and 2015 is no different. In May, Governor Peter Shumlin signed into law updated this year’s new provisions. One of the main provisions will reduce the minimum capital requirement for cell captives from $500,000 to $250,000. The new law also allows for “marketable securities” to be used to meet minimum capital requirements, in

addition to cash, trust and letters of credit. To be consistent with other provisions of Vermont law, the number of incorporators was reduced from three to one. There are technical provisions regarding protected cell and incorporated cell captives. Finally, the new legislation adopts several guidelines recommended by the NAIC as regards captives and risk retention groups.

Additionally, Oklahoma, Illinois and North Carolina are states that are looking to update their captive law in 2015. Oklahoma originally passed its captive legislation in 2004, but it wasn’t until the law was revised in 2013 that the state really began entertaining potential captives. At the same time the Oklahoma Captive Insurance Association was formed to help foster captive growth in the state. At the end of 2014, the new domicile already had 47 captives on its roster. North Carolina just enacted captive law in 2013 and already has more than 50 captives domiciled in the state. Illinois has been a captive domicile since 1989 and is looking to reduce taxes for captives with legislation that has already passed in the state senate.

As the domicile options for captives increase – both onshore and offshore – captive domiciles will have to continue to work to make themselves more competitive. There is a good reason that Vermont is the top captive domicile in the U.S. – the state has always stayed on top of changes in the marketplace. Captive numbers keep growing and in order to get a piece of that growing business, captive domiciles will have to work hard to stay competitive through sound regulation and up-to-date captive law. ■

Karrie Hyatt is a freelance writer who has been involved in the captive industry for more than ten years. More information about her work can be found at www.karriehyatt.com.

For more information, visit us online at hcc.com/life.A subsidiary of HCC Insurance Holdings, Inc. msl2212 - 05/15

Mind over risk.Staying confident in a world where change is constant.

HCC Life has stood on a strong foundation of solid business practices and a firm

commitment to our clients for over 35 years. We’ve used that groundwork to

drive us into group life and disability products while maintaining our position as

a leader in the medical stop loss market. Our ability to understand trends that

shape the markets and intelligently manage data to properly asses risks gives

clients the confidence to take on challenges and turn them into opportunities.

We call it Mind over risk.

HCC Life Insurance Company

hcc.com/life


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Perspectives on ACA Implementation

Editor’s Note: The author of this article is a summer intern for the Self-Insurance

Educational Foundation (SIEF). The Foundation periodically arranges internship

opportunities for students who are interested in the self-insurance industry.

On March 23, 2010 President Obama signed into law the Affordable Care Act. The run up to the passage of the ACA was shrouded in mystery as was evidenced by Representative and Houses Speaker, Nancy Pelosi’s infamous comment that, “... we have to pass the

bill so that you can fi nd out what is in it.” After its passage the ACA suffered a

number of setbacks including enrollment problems with the website, a close call at

the United States Supreme Court on the issue of the constitutionality of the law,

a religious liberty challenge by Hobby Lobby et al, skyrocketing premiums, missed

enrollment targets, deteriorating public favorability and a series of damaging

statements by ACA architect Jonathan Gruber.

Going forward, the ACA faces significant challenges including the upcoming

United States Supreme Court decision on the issue of whether the law allows the

government to provide subsidies to individuals who live in states that chose to

not set up an exchange. Other major issues include rising deductibles and copay

obligations causing individuals to defer care1 and double digit percentage premium

increases in many markets.2 Written by Rick Davenport


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Despite all of these challenges, the ACA is now slightly more than five years old and continues its pathway to implementation. Five years into the ACA, self-insured medical benefit plans continue to provide health benefits for approximately 59% of workers with health coverage.3 The number of self insured plans is actually increasing in the post ACA environment despite predictions by individuals like former ACA health advisor Ezekiel Emmanuel, MD, PhD that there will be significant shrinkage in the employer based health insurance system in the post ACA era.4

This article looks at the concerns of certain segments of the self-insurance industry in the run up to the ACA, the impact of the ACA on particular segments of the self-insurance industry, the view of whether self-insuring health benefits remains an attractive option in the ACA environment and the challenges that the industry faces in the coming years.

In preparation for this article, four individuals who represent different entities in the self-insurance world were asked a series of questions. The entities were a medical stop-loss insurance carrier, a managing general underwriter, a third party administrator and a company that provides services to self-insured plans. These individuals were asked to respond from an industry specific perspective not a company specific perspective. They were asked to reflect as industry experts and to give their opinions based upon what they perceived to be industry wide perceptions and experiences.

The individual experts who were interviewed for this article were as follows:

• Jay Ritchie, Sr. Vice President, Regulatory and Compliance, with HCC Life Insurance Company, a major stop-loss carrier

• Bob Baisden, President of International Assurance of Tennessee, a managing general underwriter.

• Ernie Clevenger, President and Chief Executive Office of CareHere, a company that specializes in providing on-site health and wellness centers

• Anne Gustafson, the Compliance Officer for Pro Claims Plus, a third party administrator based in Fort Wayne, Indiana

The questions that were asked were as follows:

• When the ACA was passed, what did you perceive to be the problems that your industry would face going forward?

• What impact has the ACA had on your industry?

• Has the ACA improved business opportunities and how has it done so?

• From your perspective, do you believe that it remains attractive to self-insure employer based benefits in the post ACA environment and why?

• Lastly, as the ACA continues to be implemented what are the biggest challenges that you see for your Industry?

Q :When the ACA was passed, what did you perceive

to be the problems that your industry was going to face?

In response to that question, Mr. Clevenger was particularly concerned that the regulations would skew the law in such a fashion to favor a single-payer system. Mr. Clevenger also acknowledged that as the law developed, he believes that it actually came to favor self-funding and to make self-funding of benefits more attractive.

Mr. Ritchie echoed and expanded on the concerns about the impact of the regulators on self-insurance. He noted that the regulators did not have a sufficient understanding of self-insurance and the ACA did not deal with self-insurance. Mr. Ritchie felt there would be three major problems. The first problem would be whether the core operating model for self-insurance could be preserved once regulations were released. The second issue was if Treasury, HHS and the DOL could agree with each other on the approach to self-insuring. The third issue was the possibility of redefining medical stop loss coverage as health insurance.

Mr. Baisden noted that he was concerned that certain provisions, like the expansion of coverage to dependent children up to the age of 26 would drive costs. He also was concerned that the law would drive people out of the self-insurance market place. Both of these concerns have turned out to not happen. The additional concern of Mr. Baisden and others, that has happened, is that the unlimited lifetime maximums are presenting significant challenges to the stop-loss carriers. Mr. Baisden said the overall cost of reinsuring is skyrocketing and that the unlimited lifetime maximums under the ACA have “opened the vault.’ In reality the problem of the unlimited lifetime maximum may be more related to the billing practices of providers that have come about since the unlimited lifetime maximum, more than the unlimited lifetime maximum itself.

Ms. Gustafson indicated that there was concern with how mandates and increased compliance costs would impact the self-insured marketplace. Overall, the consensus is that the major perceived problems related to increased costs, greater administrative burdens and regulatory mischief.


Q :What impact has the ACA had on your industry?

Mr. Clevenger noted that the demand for onsite medical centers has increased substantially due to the increase in number of employers who are self-insuring as well as the additional emphasis on cost containment. Mr. Baisden noted that for stop loss carriers the incidence of million dollar plus claims has substantially increased and the incidence of record-breaking claims is increasing substantially.

Mr. Ritchie noted that the market for self-insurance has grown considerably because the ACA forces employers to think about benefit issues. Mr. Clevenger also noted that there have been changes in the brokerage community. Specifically, smaller brokers have decreased in number due to lower commissions and a more sophisticated brokerage has developed when it comes to self-funding. The responses reflected that the administrative costs associated with the operation of benefits plans have increased under the ACA.

Q :Has the ACA actually improved business opportunities and how has the ACA done so?

Mr. Ritchie, Mr. Clevenger, Mr. Baisden and Ms. Gustafson all agreed that the ACA has improved business opportunities for the self-insurance industry. They stated that self-insured plans enjoy greater flexibility than fully insured plans and that the self-insured plans still enjoy the advantage of avoiding state based regulation. The ACA forces employers to consider how they fund benefits and that forced examination has led additional employers to conclude that self-insuring benefits is a viable and attractive alternative.

Additionally smaller groups are starting to use self-insurance to provide benefits. This has to be a breath of fresh air for the self-insurance community as in the run up to the passage of the ACA there was significant discussion that the ACA would cause employers to cease providing benefits and simply pay the requisite penalties.

Q :From your perspective do you believe that

it is attractive to self-insure employer based benefits in the post ACA environment and why?

The responses were universally positive. Self-insuring benefits, according to the respondents, provides greater flexibility in plan design and use of plan assets. Some burdens of the


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Guardian Stop Loss InsuranceMitigate the risk of your self-funded medical plan with Guardian. Employers have counted on us to protect their employees with products like Life and Disability insurance for over 50 years – now we can protect their companies too.

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ACA are better managed in a self-insured environment. Additionally, as the promises of cost savings under the ACA are fading, self-insuring benefits becomes more attractive way to manage costs. Mr. Ritchie, Mr. Baisden, Mr. Clevenger and Ms. Gustafson all noted that self-insuring benefits appears to be the most cost efficient and transparent way to provide benefits.

Q :As the ACA continues to be implemented

what are the biggest challenges that you see for your industry?

Avoiding the negative potential of the upcoming Cadillac tax was the most common concern relative to future challenges. While the Cadillac tax is not implemented until 2018, with penalties showing up in 2019, it is clear that it is a present concern for the self-insured marketplace. As is often the case with legislation the devil is in the details and the details are in the regulations which are still being developed. Employers, TPAs consultants and others are facing the challenge of designing plans that will meet the requirements of the ACA without triggering the excise tax. The second most prevalent challenge noted concerned medical stop loss insurance.

Two related themes were noted. First, the continuing battle by states to raise the minimum attachment points for medical stop-loss insurance. If attachment points are raised, smaller employers may be priced out of the self-insurance market place. The second theme was the attempt to redefine medical stop loss coverage as health insurance. This could open the door to increased state based regulation and it could negatively impact the protection provided by pre-emption of state law.

The unlimited lifetime maximum continues to pose a significant challenge to the future of self-insurance. One additional challenge was noted. That challenge was that with all of the growth in self-insurance there is the need to manage that growth without compromising the quality of the products being delivered to the employer who chooses to self-insure.

Slightly more than five years have elapsed since the passage of the Affordable Care Act. When passed, there were significant fears about the ongoing viability of employer sponsored self-insured health benefits. Was the ACA an incremental and inevitable step towards a single payer government run system? Would employers cease providing benefits and leave employees to find benefits on the exchanges? Would the expansion of benefits and the unlimited lifetime maximum drive costs so high that employers would cease to provide benefits? Would regulations become so burdensome and complicated that compliance requirements became too burdensome and costly to continue the provision of employer sponsored benefits? All of these represented legitimate questions relative to the sustainability of self- funded benefits.

In light of all of these potentially serious threats to the self-insurance industry, one could be reminded of a scene from the 1993 movie Jurassic Park. In this scene, the scientists are discussing how the dinosaurs in the theme park cannot breed because they have been engineered to be sterile. Professor Ian Malcom, played by Jeff Goldblum, contests the proposition that the operators of the park can actually frustrate the breeding process. He ends the debate by saying, “Life finds a way.”

Once again, the self-insurance industry has “found a way” in spite of the significant challenges of the ACA. In fact it appears that the industry is not only surviving, but it is actually experiencing, as Mr. Clevenger said, “a fresh interest in self-funding” in spite of the predictions that the ACA would spell the end of employer provide health care benefits.

The major take away from the questions that were asked and answered is that even though the ACA presents great challenges to the continuation of employer based self-insured health benefits; self-insuring health benefits may very well be even more attractive now than it has been at any time in the past. Self-insurance of health benefits is a proven successful method that has withstood many obstacles and challenges and by all indications it will continue to stand the test of time and remain a viable vibrant method for employers to provide excellent benefits for their workforce. ■

Rick Davenport is a senior at Biola University in Los Angeles, California where he is majoring in Public Relations.

References1www.usatoday.com/story/news/nation/2015/01/01/middle-class-workers-struggle-to-pay-for-care-despite-insurance/19841235/

2http://ushealthpolicygateway.com/vii-key-policy-issues-regulation-and-reform/patient-protection-and-affordable-care-act-ppaca/

3www.ebri.org/pdf/notespdf/ebri_notes_11-12.slf-insrd1.pdf

4www.brookings.edu/research/opinions/2014/08/15/bye-employer-sponsored-healthcare


5 Fast Facts About Captives for Brokers

Editor’s Note: This is the fi rst of a three-part monthly series leading up to SIIA’s

national conference in October that is geared toward educating brokers and advisers

on alternative risk transfers involving captive insurance solutions. The aim is to address

any concerns and misperceptions, as well as better prepare them to answer client

inquiries about these arrangements, particularly in small and middle markets.

There’s no denying that brokers have tremendous depth of knowledge about a myriad of issues affecting their employer clients, but captive insurance solutions may not necessarily be one of them. The topic is not easily understood and can be prone to misconception. Here

are fi ve fast facts about captives for the broker community to consider, with

key assists from Jerry Messick, CEO of Elevate Captives and Martin Eveleigh,

chairman of Atlas Insurance Management, both of whom are members of SIIA’s

Alternative Risk Transfer Committee.

1.What They DoThe common denominator between captives and self-insurance is

a quest for greater cost control beyond traditional insurance vehicles or fully

insured arrangements and in most cases, the aim is to supplement coverages and

increase deductibles. Written by Bruce Shutan


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Captive insurance companies, also known as special purpose insurance companies, are privately owned, legally formed entities that insure the risks of one or more companies owned by the captive’s founders. Off-shore jurisdictions, many of which are in the Caribbean, represent one of three key worldwide markets alongside Europe and the U.S.

According to the Marsh Survey Group, U.S. companies own 57% of the world’s captives, which comprise more than 20% of worldwide corporate P&C coverage and captives represent between $55 billion and $60 billion in annual premiums. More than 90% of Fortune 500 companies use captive insurance companies and all 30 companies listed in the Dow Jones Industrial Average index have captives, though there’s growing interest among small and midsize employers to duplicate what their larger counterparts have done in this area.

There are many types of captives:

• Single-parent captives that underwrite only risks of related group companies.

• Diversified captives that underwrite unrelated risks in addition to group business.

• Association captives that underwrite the risks of members belonging to an industry or trade association as the name suggests.

• Group captives that underwrite the risks of a homogenous

group of businesses that are otherwise unrelated.

• Agency captives that, also as the name suggests, insurance brokers or agents form and control so that members can participate in high-quality risks.

• Rent-a-captives that provide access to captive facilities with the help of insurance companies without members needing to capitalize the arrangement.

• Special purpose vehicles that reinsurance companies use to issue reinsurance contracts to their parent and a bond issue to cede risks to capital markets.

• Risk retention groups involving a “liability” only insurance company owned by its policyholders.

• Protected cell captives that separate assets and liabilities from a company’s main or “core” assets.

• Enterprise risk captives that individuals form to provide insurance coverage for often unrecognized exposures that otherwise would reside on a corporate balance sheet.

2. Ideal CandidatesCaptives aren’t for everyone,

but they do appeal to profitable companies that fit certain criteria and have proven to be an enormously powerful financial planning tool among small and midsize firms, which account for the fastest-growing segment of businesses using these programs.

For a deeper dive into the nuts and bolts of captives, employee benefit brokers and advisers have an opportunity to attend several targeted workshops at SIIA’s 35th Annual National Educational Conference & Expo on October 18-20th in Washington, D.C.

The world’s largest event focused exclusively on the self-insurance/alternative risk transfer marketplace will feature an entire educational track on captives included among 40 sessions.

Three of the eight sessions on captives will be devoted exclusively to the broker community.

They include the following topics:

• What Brokers Need to Know About Stop-Loss Captive Programs

• What Brokers Need to Know About Property and Casualty Group Captive Programs

• What Brokers and Financial Advisors Need to Know About Enterprise Risk Captives

In addition, there will be a workshop explaining SIIA’s more proactive approach on reacting to legislative or regulatory threats to captives that periodically surface, as well as highlight what has been done over the past year, what to expect in the years ahead and what role brokers can play in terms of wielding political influence.

CAPTIVE WORKSHOPS TARGET BROKERS at SIIA CONFERENCE


Ideal candidates include those with real risks or a need for risk management

and commercial insurance, low-to-moderate frequency of risks with high severity,

lines of coverage that are difficult to place in the commercial market and

coverages that force high retentions (i.e., hedge fund errors and omissions).

Other candidates who stand to benefit include companies that have the need

for “customized” policy language, $1 million or more in operating profits, a desire

for asset protection, wealth accumulation and preservation in conjunction with

a solid captive platform and businesses with multiple entities or ones that can

create several operating subsidiaries.

In addition, captives will make sense for companies that would rather use

their own risk capital than the price they would otherwise pay with commercial

insurance carriers as a strategy to combat excessive prices, expenses or limited

capacity associated with the traditional market. They also recognize that as these

programs mature and more capital is accumulated, risk retention will improve

along with the stability of prices and available coverages.

3.The Process Captives involve a combination of risk assessments and planning. The

first steps to forming a captive require that a risk review or feasibility study, along

with an actuarial study, be conducted to assess whether the program will be a good fit for employer clients. It’s also critical to formulate a business plan, as well as submit an application, formation and licensing to a state insurance commissioner. Another key component is to engage the administrative services of a third-party, while a qualified underwriter would identify suitable risks for which a captive can provide coverage.

When done properly, all of this legwork has the potential to pay considerable dividends down the road. It’s important to remember that captives become profitable when legitimate risks that have a low probability of occurring are identified and insured, whereas insuring risks that

Why Brokers Should CARE About CAPTIVESIn the film “Field of Dreams,” Iowa farmer Ray Kinsella, portrayed by Kevin Costner, heard a voice that whispered, “If you

build it, he will come.” That line essentially sums up a key message to benefit brokers and advisers about the use of insurance captives for their employer clients.

Jerry Messick, CEO of Elevate Captives and a member of SIIA’s Alternative Risk Transfer (ART) Committee, says if brokers do not bring captives to their clients as a value-added service, then it’s highly likely someone else will.

Captives can provide them with “a dependable, consistent and low-friction, high-margin source of revenue” that doesn’t require marketing to multiple carriers every year in continuously soft market or tremendous account management resources, he explains.

Indeed, these arrangements offer brokers a chance to “separate themselves in increasingly commoditized brokerage space,” observes Jeffrey Fitzgerald, Vice President, employee benefits for Innovative Capital Strategies and ART committee member. He says captives also lead to “greater persistency and stability in renewal” and “create a safe space” for employer clients to share ideas and best practice with other owners.

With regard to renewal retention, brokers have an opportunity to grow their book of business by connecting clients with a program they feel invested in and “most employers who participate in captive programs stay for multiple years,” adds Michael Madden, division Senior Vice President for Artex Risk Solutions, Inc. and ART committee member.


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have a high probability of occurring would undermine the captive’s financial performance and goals.

Here’s an example of how a captive actually works. Let’s say seven restaurant owners pay varying levels of premium as part of a homogeneous group captive retaining $250,000 of risk with a frequency fund covering all losses up to $100,000 per claim and severity fund handling losses of more than $100,000 up to $300,000.

One member with two claims of $62,500 each can expect a potential return of $65,000 since the claims are less than $100,000 and also less than the premiums allocated to the frequency fund. Another member with two claims at $150,000, which exceed the frequency fund limits and a third claim of $15,000 requires additional calculations. Frequency losses would total $215,000 (i.e., $15,000 + $100,000 + $100,000) while severity layer losses would equal $100,000 (i.e., $150,000 - $100,000 for each claim) – meaning total claims exceed the member’s frequency fund premiums by $95,000.

The captive would pay the excess amount, but bill this member a loss experience charge at the end of the year. And while severity fund losses exceed the member’s premium allocation, they would be shared among captive members within the severity layer in proportion to the member’s allocation of the premiums within the fund, thereby ensuring that each member assumes proportional risk in the pooled layer.

4.Red FlagsBy helping employer clients assess their need for a captive, brokers can

ensure that red flags will be raised before any long-term commitment is made in error. Problems likely will arise, for instance, if the captive is only interested in tax benefits, there’s no true meaningful risk to substantiate a captive and no independent development of premium charged, it makes immediate investments in life insurance and there’s a captive domicile with little credibility.

5.Exit Strategy It’s critical for brokers to initiate discussions of an exit strategy up front

and not in five years because the captive, as previously suggested, requires a long-term commitment from each of its members. Other steps related to an exit strategy include the need to establish an objective and model of perpetuity for partnerships (i.e., captive ownership mirrors firm ownership), agree to include the captive with the sale of a business, maintain the generational asset transfer via trust ownership and include “soft landing” depletion of assets with large claims payouts. ■

Bruce Shutan is a Los Angeles freelance writer who has closely covered the employee benefi ts industry for more than 25 years.

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Health Plan Certifi cation

The Department of Health and Human Services (HHS) issued

proposed rules under section 1104 of the Affordable Care Act (ACA)

related to health plan compliance, titled: “Administrative Simplifi cation:

Health Plan Certifi cation of Compliance.” Final rules regarding the fi rst

of two certifi cations of compliance for health plans are expected next month,

implementing yet another signifi cant piece of administrative simplifi cation.

Health plan certification is resultant of the ACA requirement that health

insurers and other health plans covered by the Health Insurance Portability

and Accountability Act (HIPAA) certify their compliance with the standards

and operating rules for HIPAA-standardized transactions. The final rules are

expected to require Controlling Health Plans (CHPs) to submit information

and documentation that demonstrate compliance regarding their electronic

transactions involving 1) eligibility for a health plan; 2) health care claim status; and

3) health care electronic funds transfers and remittance advice.

Controlling Health Plans are health plans that control their own business activities,

actions or policies, or are controlled by an entity that is not a health plan. Subhealth

Plans (SHPs) are plans in which a CHP exercises sufficient control over the SHP

to direct their business activities, actions or policies (45 C.F.R. §162.103). As HIPAA

Covered Entities, self-insured group health plans are included in these definitions.

The Council for Affordable Quality Healthcare (CAQH) Committee on Written by Cori M. Cook, J.D.CMC Consulting, LLC


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Operation Rules for Information Exchange (CORE) has developed operating rules based on HIPAA transaction requirements. Transactions regarding eligibility for a health plan and health care claim status are known as Phase I and Phase II CAQH CORE operating rules (respectively). CAQH CORE then worked with NACHA-The Electronic Payments Association developing operating rules for health care electronic funds transfers and remittance advice, known as Phase III. The proposed rules require CHPs to submit documentation and information regarding their compliance, as well as their SHPs compliance, with these specified operating rules.

Options for Certifying ComplianceThe proposed rules give CHPs two options for submitting documentation of

compliance with this first certification of compliance. They can obtain either the HIPAA Credential or the Phase III CORE Seal. A CHP will find that one or the other will likely better align with the implementation process it uses to implement the operating rules.

HIPAA CredentialThe HIPAA Credential encompasses only HIPAA mandated standards and

operating rules, and is available only to health plans. The HIPAA Credential requires the CHP to successfully test the operating rules for each transaction with Trading Partners. For each transaction, the tests must account for at least 30% of the total number of transactions conducted with providers, and must be tested with a minimum of three (3) Trading Partners. If the number of transactions with these three (3) Trading Partners does not equal 30%, the CHP can confirm testing with up to twenty-five (25) Trading Partners. These Trading Partners can be transaction specific, where the same can be used for each transaction, or the CHP can use different Trading Partners for each transaction. While the HIPAA Credential does require internal and external testing, there is no “specific approach.” Rather, the proposed rules state that this is an initial step toward a consistent testing framework for CHPs who chose not to obtain Phase III CORE Seal.

Draft documents of the HIPAA Credential were issued in September of 2014, with final documents expected to be issued next month with the final rules. To obtain the HIPAA Credential, the CHP will have to submit the following:

• HIPAA Credential Application. This includes CHP applicant information, and lists the required documents for submission, terms, conditions, and fees. It also requires an Authorized Representative’s information and signature.

• Attestation of Trading Partner Testing. This includes CHP applicant information and Trading Partner information, and is signed by an Authorized Representative indicating successful testing with Trading Partners for each transaction.

• HIPAA Credential Attestation of HIPAA Compliance. This indicates

compliance with the applicable provisions of the HIPAA, HITECH, and the ACA.

• Payment of Fees. As of now, the application fee is set on a sliding scale according to net annual revenue (Not including any additional fees associated with testing). See chart below

Phase III CORE SealThe Phase III CORE Seal is another

option for certification of compliance with these transactions, and is much more intensive. To obtain the Phase III CORE Seal, a CHP will have to engage in separate testing and certification for Phases I and II either consecutively or concurrently and each Phase includes the following steps:

• Obtain a Gap Analysis: CAQH CORE provides an analysis and planning guide as a tool for the CHP to determine what system and business process changes may be necessary to ensure their data and information systems are remediated to address any gaps between existing system requirements and CORE operating rule requirements.

• Sign and Submit the “CORE Pledge.” This pledge is signed by an Authorized Representative of the CHP, and acknowledges that it will comply with the CORE operating rules and will have system testing done within 180 days of signing with a “CORE-authorized Testing Vendor.”

• Certification testing by a “CORE-authorized Testing Vendor.” The CHP is required to upload transaction files to the Vendor, which are then tested virtually against the CORE operating rule and documentation requirements. The CHP accesses the Vendor’s testing portal

ANNUAL NET REVENUE HIPAA CREDENTIAL FEE

Federal/State CHP or CAQH Member No Charge

Less than $5 million $100

From $5 million to less than $25 million $1,000



More than $75 million $18,000


online, uploading the transaction information online to the Vendor. If the files

conform to the requirements, the CHP is given a “pass.”

• Application for Phase III CORE Seal. The CHP submits an application

package similar to the HIPAA Credential documents, which are reviewed

prior to granting the Seal.

• Payment of Fees. Like the HIPAA Credential, the CORE Seals are set on a

sliding scale according to net annual revenue (Not including any additional

fees associated with testing)

Business AssociatesThe proposed rules address Business Associates (BAs), reiterating the requirement

of the Social Security Act (as amended by the ACA) Section 1173(h)(3) that health

plans ensure services provided by BAs comply with the applicable certification and

ANNUAL NET REVENUE FEE FOR PHASE III CORE SEAL (Including Phase I and II Seals)

Federal/State CHP or CAQH Member No Charge

Less than $5 million $12,000 ($4,000 for each Phase)

From $5 million to less than $25 million



More than $75 million $18,000 ($6,000 for each Phase)

compliance requirements. The proposed rules do not mandate that CHPs require their BAs to comply directly with the requirements, but instead assume that when the CHP submits required documentation, it is confirming that it is requiring BAs to comply with Part 162 C.F.R., and certifies that its SHPs and BAs are compliant with the HIPAA standards and operating rules. The proposed rules do not place any new burdens on CHPs with regard to their SHPs and Bas. However, it’s expected that final rules will address this issue further.

That being said, the Phase III CORE Seal does place additional burdens on CHPs with BAs that conduct all or part of a transaction related to a CAQH CORE Phase. Any CHP wishing to obtain a Phase III CORE Seal that is dependent on a BA for one or more of the CORE operating rule requirements must have that BA achieve CORE certification separately.

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Would you navigateuncharted waterswithout a compass?

As a leader in Group Captives, Berkley Accident and Health can steer you in the right direction.

With EmCapSM, our innovative Group Captive solution, we can help guide midsize employers to greater stability, transparency, and control with their employee benefits.

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Deadline for SubmissionThe proposed rules state that submission of documentation of compliance for

CHPs is based on when the CHP obtained its Health Plan Identifier (HPID). Final rules regarding HPIDs mandated that CHPs obtain a HPID by November 5, 2014, unless their annual claims were less than $5 million, in which case the plan had until November 5, 2015, to obtain an HPID. However, as you will recall, due to a last minute delay by the regulators, the HPID requirement has been postposed for the time being.

The proposed rules state that a CHP that obtains a HPID before January 1, 2015, would be required to submit documentation of compliance with the operating rules concerning these transactions to HHS on or before December 31, 2015. A CHP that obtains a HPID on or after January 1, 2015 (and on or before December 31, 2016), would have 365 days to submit documentation to certify compliance. Again, we’ll wait to see if these deadlines are extended by final rules.

Penalties for Non-CompliancePenalties for failure to submit certification of compliance are based on the CHPs

number of covered lives, including its SHPs covered lives, under its major medical policy. The proposed rules indicate these covered lives are defined as persons who are actually enrolled in the plan, and do not include those who were eligible but chose not to obtain coverage. It does include all spouses, partners, and dependents covered under the plan. CHPs will be assessed a $1 per covered life per day penalty (capped at $20 per covered life) for non-compliance. CHPs that have actual knowledge of the inaccuracy or incompleteness, or those who boldly ignore the compliance requirements will be assessed a flat $40 per covered life penalty.

What’s NextYet another opportunity for TPAs and other business partners to educate

employers and provide some manageable solutions for the task that lies ahead.

Although we are still waiting for final rules, it is important that employers administering group health plans understand what is going to be required. CHPs will need to determine which method of obtaining certification will best suit their needs, and what steps they need to take with regard to testing their systems. Discussing the requirement now, and working towards a plan to ensure compliance with these rules will save the CHP time and money and will allow them to be prepared for the next round of compliance certifications. ■

This article is intended for general informational purposes only. It is not intended as professional counsel and should not be used as such. This article is a high-level overview of regulations applicable to certain health plans. Please seek appropriate legal and/or professional counsel to obtain specifi c advice with respect to the subject matter contained herein.

Cori M. Cook, J.D., is the founder of CMC Consulting, LLC, a boutique consulting and legal practice focused on providing specialized advisory and legal services to TPAs, employers, carriers, brokers, attorneys, associations, and providers, specializing in health care, PPACA, HIPAA, ERISA, employment and regulatory matters. Cori may be reached at (406) 647-3715, via email at [email protected] or at www.corimcook.com.


SIEF’s 2015 Self-Insurance Executive Summit in London

SIIA Endeavors

The Self-Insurance Educational Foundation, Inc. (SIEF) is a 501(c)(3) non-profi t

organization affi liated with the Self-Insurance Institute of America, Inc. The mission of the

foundation is to create and underwrite educational initiatives that serve to promote a

greater awareness and understanding of self-insurance/alternative risk transfer.

London has long been the center of the global insurance marketplace. SIEF is pleased to use this location for a special educational and networking event designed to help attendees better understand how self-insurance strategies continue to be shaped by trends and developments on a

worldwide basis. Join senior industry executives from the United States, the

United Kingdom and other major insurance marketplaces September 14-16th at

the Apex City of London Hotel as we share knowledge and facilitate important

professional connections in this historic city.

“The SIEF Board of Directors consists of several SIIA past-Presidents, including

Freda Bacon, Alex Giordano, Les Boughner and myself and our resident UK Board

member Heidi Svendsen. Over the years we have seen firsthand the successes of

the small SIIA exploration tours in Asia and Central America. We knew the next natural step was to organize a trip to London through the Foundation,” explains SIEF Chairman Nigel Wallbank.

The summit’s educational sessions begin with “The State of the London Market,” presented by Colin Bird, Chairman and CEO of Besso Insurance Group Limited. Mr. Bird will provide an overview on the consolidation both within the underwriting and brokering sector. Hear about Lloyd’s, its relationship to the rest of the insurance community, both in London and the rest of the world and the relevance the Lloyd’s broker has as it pertains to bringing business into London.

The past five years has been a tumultuous time period for health care policy in the United States and there continues to be uncertain times ahead. Michael Ferguson, President and CEO of SIIA, will give the presentation “The Future of Health Care Reform in the United States,” discussing the current political marketplace environment and preview what may happen in the months and years ahead. Particular emphasis will be focused on the self-insurance market segment and its related stakeholders.

“Captives and Their Growth in the Work Comp and Health Care Market”


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• Supplemental Medical Solutions for more complete health coverage

• Protection Solutions including life, accident, and disability plans

• Employer Risk Solutions including stop-loss, organ transplant, and captive arrangements

• Multi-Product Solutions like ProtectPakSM to simplify benefit offerings

Visit aig.com/us/benefits to learn more about what AIG Benefit Solutions can do for your business.

AIG Benefit Solutions

Bring on experienceThe benefits landscape is constantly changing. For generations, AIG Benefit Solutions has offered innovative solutionsto help our clients meet their challenges and prepare for tomorrow.


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will be a panel of experts, including Gary Osborne, President, USA Risk Group, sharing their vast knowledge and experience in the Captive world, explaining the growth in this arena, much of it fuelled by PPACA. This session will also highlight why so many employers and agencies see this route as key to a successful future!

Tony Plampton, President of Re-Solutions, LLC, will provide insight on the various opportunities that exist for insurers and reinsurers following the passing of Obamacare in the session “PPACA/US Health Market – Opportunities for Risk Takers.” He will also discuss the impact on existing products and markets and the development of new markets.

In “Going Globally Medical” Jason Woods, Business Development Manager of International Accident & Health at Advent Underwriting Limited – Syndicate 780 will focus

on the opportunities and obstacles of global accident and health. The discussion will include the evolving distribution and importance of education in this arena.

The sessions will conclude with “Solvency II – What it Is and Why it Matters to Companies on Both Sides of the Atlantic.” The Solvency II insurance regulatory initiative is already changing the risk management landscape throughout the European Union, but its impact is not limited to this continent. This session, presented by Ciarán Healy, ACCA ARM, Willis Captive Practice of Willis Ireland will provide a brief overview of key Solvency II provisions and explain why it matters to certain companies on both sides of the Atlantic, including U.S. subsidiaries of EU companies and EU subsidiaries of U.S. companies.

There will also be an exclusive opportunity for attendees to take a

tour of Lloyd’s of London. “We are thrilled to offer this opportunity to everyone and would like to thank Dominic Hagger of Oxford Insurance Brokers for making the arrangements on our behalf. This is a brilliant opportunity to experience and understand the Lloyd’s and European market plus, have a jolly good time!” said Wallbank.

Please visit www.siia.org for more information and to register. See you in London! ■

What do Workers’ Compensation and Employee Health Benefits have to do with each other? Everything.What do Workers’ Compensation and Employee Health

Change The GameWhat if these two programs worked as one?

Are you ready to change the game with In-Sight?(888) 377-5845

IPMG.com/Change-The-Game

IPMG’s new platform, In-Sight, merges the Workers’ Compensation and Employee Health Benefits systems into one efficient and effective platform; a single dedicated team of professionals focused on producing the best possible outcome for both your employee and your organization.

Administered By:St. Charles Office: 225 Smith Rd. | St. Charles, IL 60174 | 888.377.5845

St. Louis Office: 6685 Telegraph Rd. | St. Louis, MO 63129 | 888.978.4764


SIIA would like to recognize our leadership and welcome new members Full SIIA Committee listings can be found at www.siia.org

SIIA New Members

Regular MembersCompany Name/Voting Representative

David StairDir. Insurance Payment SolutionsDataPath Inc. Little Rock, AR

Andrew Rhea Managing Director Iroquois Captive Services LLC Nashville, TN

Heidi Herlihy Managing Director Rockport Benefi ts LLC Beverly, MA

Silver MembersJohn Louis Director of Marketing BioRx Cincinnati, OH

Jarid Beck Vice President Risk Management Advisors Inc. Long Beach, CA

2015 Board of Directors

CHAIRMAN OF THE BOARD*Donald K. DrelichChairman & CEOD.W. Van Dyke & Co.Wilton, CT

CHAIRMAN ELECT*Steven J. LinkExecutive Vice PresidentMidwest Employers Casualty Co.Chesterfi eld, MO

PRESIDENT*Mike FergusonSIIASimpsonville, SC

TREASURER & CORPORATE SECRETARY*Ronald K. DewsnupPresident & General ManagerAllegiance Benefi t Plan Management, Inc.Missoula, MT

Directors

Andrew CavenaghPresidentPareto Captive Services, LLCPhiladelphia, PA

Robert A. ClementeCEOSpecialty Care Management, LLCBridgewater, NJ

Duke NiedringhausVice PresidentJ.W. Terrill, Inc.Chesterfi eld, MO

Jay RitchieSenior Vice PresidentHCC Life Insurance CompanyKennesaw, GA

Adam RussoChief Executive Offi cerThe Phia Group, LLCBraintree, MA

Committee Chairs

ART COMMITTEEJeffrey K. SimpsonAttorneyGordon, Fournaris & Mammarella, PAWilmington, DE

GOVERNMENT RELATIONS COMMITTEEJerry CastelloeCastelloe Partners, LLCCharlotte, NC

HEALTH CARE COMMITTEERobert J. Melillo2nd VP & Head of Stop LossGuardian Life Insurance CompanyMeriden, CT

INTERNATIONAL COMMITTEERobert RepkePresidentGlobal Medical Conexions, Inc.Novato, CA

WORKERS’ COMP COMMITTEEStu ThompsonFund ManagerThe Builders GroupEagan, MN

*Also serves as Director


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CAQH CORE®, the CORE-certification/Endorser Seals and logo are registered trademarks of CAQH® Copyright 2010-2014, Council For Affordable Quality Healthcare®. All rights reserved.


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Copyright 2014 Premier Healthcare Exchange, Inc. All Rights Reserved.

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