Employers Expect 6% Hike in Health Costs for 2019

The IRS has released the inflation-adjusted amounts for 2019 used to determine whether employer-sponsored coverage is “affordable” for purposes of the Affordable Care Act’s employer shared responsibility provisions.

For plan years beginning in 2019, the affordability percentage has increased to 9.86% (from 9.56% in 2018) of an employee’s household income or wages stated on their W-2 form. The higher rate is indicative of the anticipated small group plan inflation that continues hitting premiums.

If you are an applicable large employer under the ACA (with 50 or more full-time staff), you should examine the affordability percentages for your lower-waged employees so you don’t run afoul of the law. Fortunately, as the percentage has increased, you’ll have more flexibility when setting your employees’ contribution rates.

A recent study by PricewaterhouseCooper’s Health Research Institute found that employers and insurers are expecting a 6% increase in health care costs in 2019. While that rate is just slightly above the average 5.6% increases since the ACA took effect, many employers have increasingly been passing the inflationary costs on to their covered employees.

The report by PwC noted three trends that are having the largest effect on health care costs.


Abundance of treatment options – With covered individuals demanding more convenience in their treatment options, employers and health plans have responded by giving them more ways to obtain care, like retail clinics, urgent care clinics and electronic physician consultations. While the long-term goal is to reduce health care spending on services, currently the increased offerings have resulted in higher utilization.


Mergers by providers – Hospitals and other health care providers have been consolidating for the better part of a decade, and that trend is expected to continue in light of several recently announced mega-deals. Prices tend to rise when two health systems merge and the consolidated entity gains market share and negotiating power.


Physician consolidation and employment – Hospitals, health systems and medical groups are hiring more and more doctors out of private practice. And when that happens, costs tend to go up since these organizations tend to charge higher prices than independent practitioners.

In 2016, 42% of physicians were employed by hospitals, compared to just 25% in 2012, according to the PwC report. Hospitals and medical groups tend to charge between 14% and 30% more than physicians in private practice.


Restraining factors

At the same time, there are some factors that are dampening overall cost increases:

  • Expectations that next year’s flu will be milder than this year’s main virus.
  • More employers are offering care advocates who help covered individuals navigate the insurance system to find the best quality care at the best price. According to the survey, 72% of employers offered health-advocacy services to their employees in 2018.
  • More employers are using “high-performance networks,” also known as “narrow networks.” In essence, a plan will use a narrow network of doctors who care for the bulk of covered individuals. Not contracting with as many doctors means lower overall outlays for medical services.
    While the doctors in these networks are not always the least expensive providers, they typically are ones who have proven over time to yield the best results.


The takeaway

We are here to help you get the most value for your and your employees’ health care spend. Talk to us about any of the tools mentioned above to see if we have a program that might work for your organization.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Even Small, Mid-sized Firms Need a Crisis Management Plan

With risks to companies and employees growing, sometimes the unthinkable happens and a business has a real crisis on its hands.

While large companies are usually well-prepared for a crisis should one occur, most small and mid-sized firms don’t have the resources or have not put much thought into how they would handle a crisis.

One of the most difficult parts of crisis planning is that you will often not know what you are planning for as a crisis could be a number of different events, like:

  • The sudden death of a key member of your team could lead to operational issues.
  • A defective product leads to an injury, illness – or worse.
  • An accident severely maims or kills a number of your workers.


To get started, assemble a team that includes key members from your organization who will be responsible for creating your crisis-response plan. Inc. Magazine recommends the following for your team:


Make a plan – You cannot start planning without first identifying your objectives. Once you identify them, you can make response plans for each type of event. Typically, that includes:

  • Safeguarding any person (employee, vendor, customer and/or the public) who may be affected by the crisis. Your plan would include how to respond to the crisis if people’s health and wellness at stake.
  • Making sure the organization survives. This would include steps you would take to ensure the company can continue as a going concern after a significant disruption.
  • Keeping stakeholders (employees, vendors, clients, the public and government) informed on developments.


The plan should take into account how a crisis would affect your main stakeholders:

  • Your employees
  • Your customers
  • Your vendors
  • The public
  • Your company’s value and reputation.


Create a succession plan – You should clearly outline the necessary steps to follow if you or one of your key managers suddenly became unable to perform their duties. This plan may include selling the company, or transferring ownership to family members or key employees.


Seek advice from the experts – This includes your leadership team, employees, customers, communications experts, investment bankers, exit planners, lawyers and financial managers. Each of these individuals has unique insights that can be invaluable for how to tackle a crisis.


Name a spokesperson – This is important if you have a crisis that spreads beyond your organization and affects the health and safety of a member of the general public, your staff or customers. This kind of crisis could attract media coverage and your organization needs to be ready to respond if that happens.
Funneling all media communications through a spokesperson can help you deliver a clear and consistent message to media, as well as to the public at large.


Honesty is the best policy – Lie or hide details at your own risk. A lack of honesty and transparency can lead to rumors, as well as a general distrust of your organization if the truth is exposed. The best approach is to be transparent and truthful about what happened and what you are doing to resolve the crisis.


Keep your staff up to speed – Besides transparency with outside people, it’s crucial that you don’t keep your employees in the dark after a crisis has hit. Again, to stop the rumor mill and also keep employees from becoming worried amidst the uncertainty, keep your workers abreast of developments – and what the crisis means for the organization, and what you are doing about it. Put together a plan for keeping staff up to date.


Keep customers and suppliers informed – If you have an event that’s causing some disruptions, you also owe it to your clients and vendors to let them know what’s happening. Don’t let them find out from the media. Like your employees, keep them regularly updated on events and the steps you are taking to address the crisis. Put together a plan for how you would keep them posted.


Act fast and update regularly – Keeping the communications alive is important and once you grasp the situation and its effects, you can issue summary statements of the crisis and what’s happened. Then you can follow up with regular updates on your action plans, on people affected, any hotline you may set up, and more.
These days news travels fast and like wildfire on social media. You need to move at the same pace.


Social media is vital – More and more people get their news from social media and the discussions that ensue on posts, so you need to make sure that your company stays on top of the flow. You may want to assign a person or two to monitor social media and post and react to posts on social media. That way, your team can tell the company’s side of the story and put to rest unfounded rumors.
Make a plan for what a social media contact’s responsibilities would be during a crisis.

Get an early start

Your plan won’t be effective if you create it during a crisis. Plan in advance, so everyone can approach the strategizing unrushed and with a clear head.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Finding Coverage for the Latest Computer Fraud Scams

As cyber scams and hacker attacks grow, the insurance industry has been frantically trying to keep up in providing appropriate coverage for these events.

Hacks, viruses, ransomware and exposure of sensitive personal information of your customers or employees, and any resulting regulatory implications, are often covered by cyber liability insurance. But what about the recent trend of criminals spoofing a company executive’s e-mail address, posing as them and ordering accounts payable to cut a check and send it to the fraudsters?

Well, two companies suffered similar incidents, but two different federal appeals courts came out with opposite opinions, with one saying that a company’s crime insurance policy covered the event, while the other court said it didn’t in its case.

The fact that two courts came out with two different rulings illustrates how many traditional and even cyber policies are slow to keep up with evolving hi-tech threats to businesses. The devil is always in the details, so you should always read your policy and discuss your concerns and potential risks with us.

This is all important because this kind of crime is growing quickly. Business e-mail compromise scams quadrupled in 2017, and losses ranged from a few thousand dollars up to $3 million, according to an analysis of insurer Beazley’s clients. The average claim amount they received from this type of scam in 2017 was $352,000.

The FBI has cited business e-mail compromise schemes used to intercept and hijack wire transfers as one of the fastest-growing cyber crimes.


Court case one: Covered

In this case employees of Medidata, a clinical-trial software firm, wired $4.7 million to an account they were led to believe was for an acquisition by their employer via a series of fraudulent e-mails that they thought were from their company’s president and the firm’s outside legal counsel.

As part of the scam, a third party was able to send multiple Medidata employees e-mails that looked like they came from the company president, even including his picture in the “from” field. 

The company didn’t have a cyber insurance policy, but it had a Federal Insurance Co. executive protection policy, which included a crime section that included coverage for computer fraud, funds-transfer fraud and forgery. The insurer rejected Medidata’s claim and the company sued in federal court. The lower court ruled in favor of the insurer, but upon appeal the federal appeals court ruled that the policy did in fact cover the loss.

The insurer argued the policy applies to only hacking-type intrusions. The appeals court found that while no hacking occurred, the fraudsters did insert the spoofing code into Medidata’s e-mail system, which the court said is part of the computer system, and they sent messages that were made to look like they were from high officials at Medidata in order to trick the employees.

The court held that the insurer must pay under the computer fraud portion of its policy.


Court case two: Not covered

In the second case, a federal district court found no crime policy coverage where a Michigan tool and die firm wired $800,000 in funds to a fraudster’s account in the belief the account belonged to one of its vendors.

The insurer faulted the company for not verifying the bank account with the vendor. The district court agreed with the insurer that the loss was not a “direct loss” caused by the “use of a computer,” and thus the crime policy did not apply.


The takeaway

Computer fraud is evolving rapidly, so it’s important that you talk to us about the types of fraud that appear in the news.

We will work with you to ensure that your coverage is forward-looking and covering more than just threats from last year. We can also discuss with you how computer fraud coverage interacts with other types of cyber crime policies.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Adult Children and Your Liability if They’re Negligent

If you have an adult child who you are still paying some expenses for, or they are studying in college (living either away from you or at home), you could still be held liable for any damage they cause through their own negligence.

They may even have their own car insurance, in their own name, but if your child ends up injuring someone severely and is sued and the policy limits on their car insurance are not enough to cover the judgment, you could still be held liable for damages that the policy didn’t cover, depending on the circumstances.

And your car insurance or homeowner’s insurance won’t cover it, meaning you’d have to pay out of pocket if your child cannot.

That said, aside from car accidents, negligent and/or intentional acts that damage someone else’s property or injure a third party could be covered under your homeowner’s policy and an umbrella policy.

For the purposes of this article, we are talking about mostly an adult child under the age of 25 living at home or away at college. The key factors that would possibly trigger homeowner’s or umbrella coverage in terms of parents having some liability for their adult child’s actions are:

  1. Their continued financial support of the child, and/or
  2. That the child lives under their roof.


The car insurance issue

There may be occasions when parents of a 20-year-old reckless driver who is either still living at home or away at college may want to take steps to separate his liability from their own, like:

  • Putting the car he drives in his name.
  • Removing him from their auto insurance policy.
  • Requiring him to buy his own insurance (they may figure also that if they make their child pay the premium, the financial pain will reform his driving habits).

When you remove a young adult driver from the family policy, you reduce the probability of a claim for property damage, first party and third party injuries, and other liabilities that may result from an accident.

It would reduce the parents’ auto insurance premiums and push the liability to the child’s insurance. However, if they are sued for extreme negligence and the award exceeds the policy’s liability maximum, the additional award could be on your shoulders if your child doesn’t have the personal resources to pay.

Your own car insurance would not cover it and, since it’s auto-related, the homeowner’s policy wouldn’t cover it either.


Coverage explanation

The scope of coverage for minor and adult children under their parents’ homeowner’s policies, with respect to personal property coverage and personal liability coverage, rests on the policy definition of “insured” in the typical policy.

The definition, in pertinent part, includes relatives who are residents of the named insured’s household. Children, brothers and sisters, parents and grandparents are examples.

This doesn’t mean that your 40-year-old daughter who is over for dinner is covered, though, since a visitor is not a resident.

Also, the policy will cover persons under the age of 21 in the care of the named insured (such as a foster child), as well.

The next time your homeowner’s or renter’s policy is up for renewal, please call us and let us know if you have any grown children and what their status is in terms of living arrangements, and any financial support that you may provide them. It will help in determining who is and who is not covered in your family and household.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Wellness Plans Can’t Offer Discounts for Medical Questionnaires, Exams Starting in 2019

Regulations governing how wellness plans offer discounts on health premiums are set to sunset in January 2019, and with no prospects of replacement regulations in sight at the Equal Employment Opportunity Commission, this means that the shackles will be lifted on the plans.

The rules which allow an employer to grant up to a 30% discount on health insurance premiums to employees that fill out health questionnaires or take various health evaluation tests, were found to be “arbitrary” by an appellate court judge about a year ago. But, to avoid disruption in the marketplace and for employers who had already set their wellness plans in motion, the judge ordered the regulations to sunset on Jan. 1, 2019.

The judge agreed to delay the sunsetting to that date to allow the EEOC to write up new proposed regulations for wellness plans.

In making his order, he instructed the agency to write new regulations by August 2018. However, in March, the EEOC announced that it had no immediate plans to issue new wellness regulations regarding the definition of “voluntary.”


Why are the regulations sunsetting?

In July 2016, the EEOC issued rules under the Americans with Disabilities Act (ADA) and the Genetic Information Non-discrimination Act (GINA) stating that, in connection with such plans, employers could implement penalties or incentives of up to 30% of the cost of self-only coverage to encourage employees to disclose ADA-protected information, without causing the disclosure to be involuntary.

The disclosures in question would be part of wellness program questionnaires and exams designed to help employees improve their health and fitness.

The American Association of Retired Persons filed suit challenging the regulations and a federal district court in Washington, D.C. nullified the EEOC’s rules for how employer wellness programs could be offered in compliance with the ADA and GINA.

Beginning Jan. 1, 2019, companies may no longer assess penalties (some of which triple what an employee pays for health insurance) to workers who decline to participate in wellness questionnaires and exams.

With no guidance forthcoming from the EEOC, affected employers will need to make a decision. Should they continue with current programs, considering the risk of EEOC enforcement or private legal action, or should they come up with a plan B?

While it may be tempting to expect the EEOC to come up with regulations that are similar to the current ones but in compliance with the court’s decision, that could come back and haunt you.

Pundits suggest creating a path for employees this year that allows them to achieve their full points total without medical exams or inquiries. You can put together a plan that focuses on other wellness issues that they can instead participate in.

Some alternatives to medical questions and exams that employers may want to consider are:

  • Healthy lifestyle training.
  • Distributing Fitbits or similar fitness trackers.
  • Allowing employees to participate in online health education games.

What’s next?

Considering the Trump administration’s history on regulatory matters, it’s likely things will revert to the old guidance for wellness plans: that employers could neither require participation nor penalize employees who do not participate.

But for now, employers need to tread carefully and should consider changing their wellness plan rules if they include incentives for medical questionnaires and exams.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

How Your Business Can Survive a Hurricane

A hurricane can grind a business’s operations to a halt, possibly for a long period of time. But if weather forecasts warn that a hurricane is approaching, there are steps you can take to prepare and recover.

These measures can help minimize losses, soften the financial impact, and enable operations to resume quickly.

  • Make sure employees are safe. If a hurricane is imminent, workers belong with their families, either at home or evacuated to a safe location. Showing genuine concern for employee safety is the right thing to do, promotes good workplace morale, and helps ensure that your workforce will be available when you resume operations.
    Collect employees’ cell phone numbers and personal e-mail addresses so you can keep each other informed.
  • Know your insurance coverage. The business may need to make claims against its property and auto insurance after a hurricane. It is important to review policies to make sure the business has bought enough coverage to replace buildings, furniture and equipment. Increases should be requested, if necessary.  Be aware that flood insurance policies typically have a 30-day waiting period before they provide coverage, so this coverage will not help if it is purchased the day before a hurricane arrives. Keep contact information for insurance agents and companies handy in case you have to submit claims.
  • Protect property and vehicles. To the extent feasible, cover windows and move vulnerable property and vehicles to safe locations. Back up electronic data and ensure that the copies are stored offsite in servers far from the hurricane zone.  Unplug electronic equipment if possible to avoid damaging power surges. Test emergency backup power generators to protect temperature-sensitive stock such as food and medicine. Keep emergency first responder phone numbers handy.
  • Monitor the storm’s progress. The media will cover the storm non-stop, so stay informed. Do not attempt to travel to the business location until local authorities announce that it is safe to do so.
  • Protect property from further damage after the storm. If safe to do so, cover broken windows and damaged roofs; pump out standing water; use fans to start drying out water-damaged flooring; remove perishable stock to alternate locations; and protect or move electronic equipment.  Many business property insurance policies will pay to offset some of the cost of protective measures.
  • Communicate with employees. It is important that they know about when work will resume.
  • Contact insurance providers immediately to report damage. Cooperate with them fully during the claim process.
  • Document losses. Take photos or videos of the damage. If available, use drones to record videos of roof damage. Create written descriptions of damaged property. Gather receipts and other documents to establish the age and replacement cost of property.  Collect information to support business-income insurance claims, including past and projected sales records, payroll records, invoices for necessary continuing services such as fuel supplies, and business expense records. Obtain repair estimates on damaged vehicles.

Hurricanes are devastating events for businesses. Around 75% of organizations that lack a continuity plan will fail within three years of a natural disaster. But it does not have to be that way. With advance planning and thoughtful action afterward, a business can survive a hurricane.

If you have any questions or would like to speak to a professional advisor, please contact ACBI Insurance at 203-259-7580.

Fifteen Warning Signs of Workers’ Comp Fraud

Workers’ compensation fraud costs the insurance industry roughly $5 billion each year, according to estimates by the National Insurance Crime Bureau. And depending on whom you ask, fraud accounts for as much as 10% of the costs of all workers’ comp claims.

This type of fraud is typically associated with malingering employees who fake injuries in order to collect compensation and some paid vacation time.

In tougher economic times, particularly as lay-offs mount, some experts think there is an increased exposure for employees to claim a work-related injury for a variety of manufactured reasons, such as for an injury that occurred on personal time.

Anytime you feel you have a suspicious claim on your hands, look for these tell-tale signs of potentially fraudulent claims. Usually one of these items alone is not enough to point to fraud, but if you have two or more of them, it could suggest a problem.


  1. Late reporting. If you have an employee who suffers a legitimate on-the-job injury, they will generally report it right away. Late reporting may not always be indicative of a fraudulent claim, though, because sometimes the true effects of an injury may not be known until the following day.
  2. The Monday morning claim. If the injury allegedly occurred on Friday, usually late in the day, but did not get reported until Monday, there is reason to suspect there might be a little more going on than meets the eye. The logic is that the employee likely suffered an injury over the weekend and does not want to pay for it themselves if they lack health coverage, or if they don’t want to foot the bill even for their coverage deductible.
  3. Lack of witnesses. Often your employees won’t be working in a solitary environment and there ought to be somebody on your staff who witnessed the accident. Still, not every claim has a witness and this should not be used solely to determine fraud.
  4. Sketchy details or conflicting descriptions. Most claimants can recall the details of their injury. If the claimant seems to be fuzzy on the details and gives vague responses to questions, it could be a warning sign.
    Also, if the employee’s description of the accident conflicts with the medical history or First Report of Injury, there may be a problem. This could arise if, upon further investigation, the employee keeps changing the story and adding or removing pertinent information – a good reason to suspect it to be a fraudulent workers’ compensation claim.
  5. Disgruntled employee. A disgruntled employee is more likely to place fraudulent claims than an employee with high job satisfaction.
  6. Financial hardship at home. Workers’ compensation benefits are sometimes seen as a way out of a tight financial situation at home. Although temporary disability benefits are lower than normal working wages, the worker could use the time to “double dip,” that is, take on extra work when they are supposed to be at home recovering from the alleged injury.
  7. Hard to reach. This ties in with number 6. If this occurs every time the claimant is called, there is a possibility of fraud.
  8. Misses medical appointments. If an employee is truly injured, they want to get better and will make sure to go to all medical appointments. Missing appointments is another reason to suspect fraud.
  9. Engaged in activities not consistent with the injury. If your employee reported a back injury and other employees find that he is playing softball on the weekends or renovating his yard, there is good reason to suspect fraud.
  10. Employment change. The employee reports the injury right before or after being laid off, near the end of a contract job or near the end of seasonal work.
  11. Post-termination claims. If an employee files a claim after being laid off or fired, red flags should pop up.
  12. Frequent moves and changes. The claimant has a history of frequently changing physicians, addresses and places of employment.
  13. History of claims. If the claimant has filed suspicious or litigated claims in the past, they could be a person who feeds off the system.
  14. Employee refuses treatment. There should be no reason that a legitimately injured worker refuses a diagnostic procedure to confirm the nature or extent of an injury.
  15. Rigorous hobby. If the injured worker has a pastime that could cause an injury similar to the alleged work injury, the claim could warrant further investigation.

Remember, if you suspect fraud, you should talk to your broker or the insurance company claims representative to alert them. All insurance companies are required to have special investigation units that look into claims fraud. It benefits both you the employer and the insurer if the insurance company investigates and ferrets out a fraudulent claim.

If the insurer suspects fraud, they can reject the claim and report their suspicions to the local district attorney’s office and the Department of Insurance.

If you have any questions or would like to speak to an advisor, please call ACBI Insurance at 2030-259-7580.