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 Trust Matters, August 2015 

Are you prepared for new 2016 IRS reporting requirements?

Ray Ledford retires after nearly 20 years with League

Anderson hired to enhance public safety risk management services

Predictive analytics help reduce claims and illness

Did you know?

From the Board Room

Workers’ Compensation audit process and necessary documents

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Are you prepared for new 2016 IRS reporting requirements?

Are you preparing now for the 2016 IRS Reporting Requirements that come with the Affordable Care Act? If you are not familiar with the IRS reporting under Sections 6055 and 6056, now is the time to begin!

The Act includes an individual mandate and an employer mandate: essentially requiring everyone to have health insurance and all employers with 50 or more full-time (or full-time equivalent employees) to provide coverage to their employees that is affordable and provides minimum essential coverage.  The Act requires employers to provide information to the IRS to validate those individuals covered by an employer plan and to assure employers are meeting their obligations to provide acceptable coverage.

We are working with MedCost to help our members understand that employers of all sizes are legally required to file forms with the IRS and provide coverage to individuals in early 2016.

The Municipal Insurance Trust provides employer-sponsored, self-insured coverage through a governmental plan maintained by a non-ERISA multiple employer welfare arrangement. Given our structure, the Act requires that each participating employer deliver the mandatory forms to required individuals by January 31, 2016, and file with the IRS by February 29, 2016 (March if filing electronically). There are four forms: two for small employers and two for large employers, which are described below:

Small employers, those with less than 50 employees, are required to complete Forms 1094-B and 1095-B. These are fairly straightforward forms, and employers should be able to complete them on their own.  

However, this is not necessarily the case for Applicable Large Employers, also referred to as ALEs, since they must report minimum essential coverage in Part III of the Form 1095-C. Forms 1094-C and 1095-C serve as a self-report for "Pay or Play Penalty" purposes, and 1095-C forms must be delivered to all full-time employees including those who are not enrolled. These employers may wish to contact their payroll system vendors to arrange for assistance with completing and filing of the required forms. We recommend that ALEs assess their need for outside assistance from their vendors as soon as practicable. 

While MedCost houses some of the data necessary to complete these forms; they do not have the information needed to complete 1094-C or Parts I and II of 1095-C. ALEs must review payroll and human resources records in order to complete these parts of the form. This information is very important and will be used to determine whether the participating employer will be required to pay penalties based on how it offered coverage in 2015. A participating employer may enter into a contract with a third party that will file the forms and mail the statements, but such a contract cannot transfer the legal obligation to the third party unless the third party is part of or related to the same governmental unit of the participating employer. That means, if the participating employer fails to file the forms or fails to file them correctly, the employer (not the third party) will be subject to any penalties associated with the filings. In addition, if the forms submitted demonstrate that "Pay or Play Penalties" are owed, the employer is responsible for paying the penalties – not the third party vendor hired to submit the forms. 

Neither MedCost nor Municipal Insurance Trust is able to fully complete the mandatory reporting requirements on behalf of participating employers. However, we are working with MedCost to provide educational materials for members of our Health Benefits Trust including written materials and webinar opportunities.

Necessary eligibility information contained in the MedCost system will be mailed to all groups from MedCost in early December 2015 with a memo explaining the purpose of the information and instructions for completing the forms and the reporting deadlines.

Additionally, Gallagher Benefit Services has developed a toolkit for Sections 6055 and 6056 reporting requirements. You can access the kit here. This site offers a multitude of resources to assist in your compliance efforts.

Anderson hired to enhance public safety risk management services

We are excited to announce the Board of Trustees for the insurance programs authorized a new position to expand the services we offer to public safety operations! Tom Anderson, former chief of police in Statesville, accepted the public safety risk management position. He has more than 20 years of experience in law enforcement, holds a Master of Science degree in criminal justice and is an adjunct criminal justice professor for Kaplan and Garner-Webb Universities. Additionally, he previously served as president for the North Carolina Police Executives’ Association.

Over the years we have recognized activities associated with law enforcement operations are a significant contributor to reduced claims each year in the workers’ compensation and property and liability insurance trusts administered by your League. The frequency and severity of many of these claims can be mitigated by addressing training, operating procedures and employment liability issues.

Prior to creating this position, we took many steps to help our law enforcement agencies create a safer environment for their officers. One example of this effort is the Police Chiefs’ Advisory Committee created to assist in reviewing accident and injury claims and developing services to reduce these claims. The committee includes 10 police chiefs from across the state. In addition, many resources for our law enforcement agencies are provided through the insurance trusts. Some of these include body armor grants, advanced Taser instructor training, online safety courses, police driver training, and risk management consulting services.

Tom will allow us to take these services to the next level and develop additional programs. Given the nature of law enforcement claims and their unique liability exposures, we realize that a dedicated resource is necessary to assist our members in developing programs that will help them mitigate exposures.

Tom started his new role with the League on August 3, 2015. He can be reached at tanderson@nclm.org or 919-715-2573.

Ray Ledford retires after nearly 20 years with League

On the Monday after Hurricane Fran, Sept. 6, 1996, Ray Ledford began working claims for the Property and Liability pool at the League. He’s provided superb service ever since and is now retiring to spend more time with his wife, Jo, his children and granddaughter.

Ray retired once before after 35 years with CIGNA but was bored at home. Initially, Ray worked almost full time due to the demands of the hurricane claims then back to part time as our need for his knowledge and skills demanded.

Many of you have had contact with Ray over the last 20 years. Initially, he worked almost exclusively handling claims involving damage to buildings from hurricanes, wind and fire, then transitioned to sewer back up claims because of the frequency of those occurrences. 

Ray still flies his own airplane as often as he can and recently flew to his boyhood home in Georgia. We wish Ray the very best and many more flights as he once again retires. We thank him for his faithful service to the League and our membership!

Predictive analytics help reduce claims and illness

Medical trend continues at a rate much higher than the consumer price index, which drives up premiums for group health insurance year after year. We continue to seek out strategies that will mitigate this trend by improving the health of our insurance pool, and we are learning that our group is not as healthy as it could be.

For example, our most recent utilization report indicates the following:

  • 396 members have more than 3 chronic conditions, and 94 members have more than 4 chronic conditions
  • 388 members have been diagnosed with diabetes and 414 members have chronic pulmonary disease
  • 681 of members are predicted to spend more than $10,000

Our statistics also show that we have not been as diligent as we could be in managing chronic conditions such as diabetes, chronic kidney disease, congestive heart failure, coronary artery disease and hypertension. We have a Care Gap Analysis report that compares our compliancy in these areas to industry benchmarks. Because members have improved greatly by staying on top of their wellness exams as per the wellness requirements instituted last year, we can now turn our attention to eliminating the care gaps as these are often the folks that are in most need of help.

Our strategy is to use predictive analytics to identify individuals who will incur the highest claims based on health conditions, predicted costs, or failure to manage conditions and then offer them health coaching and other resources through our Personal Care Management program, a nurse coaching program that has been in place since we hired MedCost as our administrator.

The use of predictive analytics to refine our Personal Care Management invitation process is a new initiative and ground breaking for a health plan. Since the implementation of the wellness requirements last year, we have seen participation in the program jump considerably. Just as importantly, the results for those who have participated are very positive, and we have seen many graduate armed with the necessary skills to manage their condition and on the road to better health.

The number of persons invited to participate in the program will jump considerably over the next several months. If you or one of your employees is invited, it's an opportunity to take the next step to better health!

Did you know?

As a member in one of our three insurance trusts, it’s easy to access claims data, coverage documents, free training and more online? Most recently, we’ve added information regarding your health plans to our online portal, which includes rates, benefit summaries, and the most current forms for all coverage available through the Health Benefits Trust. This is all found in the HBT folder!

Other items available to you include:

  • Workers’ Compensation coverage documents
  • Property and Liability declarations pages and coverage documents
  • Property and Liability underwriting changes and certificates of insurance requests
  • Cyber Risk information
  • Links to our online training through First Net Learning under the Learning Center tab
  • Claims data for Workers’ Compensation and Property and Liability

If you have not taken advantage of these resources, please visit the RMS website to establish your login credentials and get started. We encourage you to take advantage of this time-saving feature! Please email Julie Hall with any questions about the Health Benefits Trust folder.

From the Board Room

Your Risk Management Services Board of Trustees met on Aug. 20 and took significant steps in two critical areas: data system security and reduction of medical claims.

We all have a heightened awareness of data security and the risks of a cyber breach. We are certainly sensitive to this, particularly within our health pool where we store personal data. Earlier this year the Trustees authorized staff to conduct an assessment of compliance with the Health Insurance Portability and Accountability Act commonly referred to as HIPAA.

We received the report in late spring and have implemented several recommendations. Most notably, we are engaging Agio and VC3 to provide Security Event and Incident Management services. This service is similar to credit monitoring services where systems actively monitor for unusual activity and take corrective action before an event occurs, such as a data breach. This will address the most substantial action recommended: to have a system for formal logging, log monitoring, intrusion detection/prevention and remediation of the full network. Implementation of these services meets this need completely.

As one of our efforts to reduce medical claims, we will begin rolling out a pilot program of Naturally Slim. Naturally Slim is a behavior modification program designed to reduce metabolic syndrome risk through weight loss. Metabolic syndrome is a cluster of conditions -- increased blood pressure, high blood sugar levels, excess body fat around the waist and abnormal cholesterol levels – that increase your risk of heart disease, stroke and diabetes.

Individuals with metabolic syndrome accrue twice as many medical costs annually as those without metabolic syndrome. They are also seven times as likely to be a high-cost claimant, which drives up the health insurance rates for all pool members.

The good news is: statistics show that 43 percent of participants reversed their condition. In addition, nearly 30 percent of participants showed a reduction in pre-diabetic and diabetic prevalence, and the average participant lost 10 pounds in 10 weeks or 5 percent of their body weight at completion.

The program is free for those invited to participate. Please stay tuned for more news about this exciting program!

Workers’ Compensation audit process and necessary documents

The annual audit ensures that each member pays its fair share for their workers compensation coverage. Each classification carries a unique rate that has been determined based on actual claim costs and payroll audits from prior policy periods. The more accurate and complete your information is, the easier it is for our auditors Gary Burkhardt and Steve Hulme to produce accurate and timely audit results for the Workers' Compensation Trust. 

Here are the essential documents on-site and self audits:           

  1. A payroll summary by employee that shows true gross wages, overtime wages, allowances for car, cell phone, clothing, etc. More than one document is OK.
  2. A good description of duties of each employee to ensure correct classification. For those that work in multiple activities, the entire payroll is to be included in the classification that carries the highest rate. Hours and earnings can be split by activity and classification code, but separate records must be kept by the member. No splits are allowed between codes 8810 or 8742 and any other classification.                  
  3. A second, third and fourth set of documents is used to confirm that the payroll summaries are correct. The four corresponding period 941 and Employment Security Commission Reports are used along with all salary accounts from the fiscal year end trial balance.
  4. Remuneration or payroll includes all of the following: bonuses and longevity pay, vacation pay, sick pay, holiday pay, overtime pay (2/3 of time and a half), employee authorized payments or contributions to employee savings plans, retirement plans, IRS Section 125 Plans: cafeteria or flexible spending accounts (made through pre-tax deductions from gross pay).
  5. Types of pay that can be excluded from gross wages are Law Enforcement Officers Separation Pay, military pay, premium overtime (1/3 of time and a half or ½ of double time) and the allowances mentioned in #1 above) & imputed income derived from the IRS value of employer provided group term life insurance of more than $50,000.
  6. A recent copy of your roster from The North Carolina State Firemen’s Association that shows date of birth for all firefighters as well as paid, volunteer, retired or junior status.
  7. Payments made to and certificates of insurance or a completed checklist for all workers and contractors not on the member’s payroll.
  8. If your city, town or village uses inmate labor, a copy of your contract as well as all invoices paid during the policy period for labor are required.

Any records that can be downloaded into an excel spreadsheet are greatly appreciated. Typically, on-site visits are determined by premium size and number of employees. Please contact Gary Burkhardt or Steve Hulme with any questions.