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 Trust Matters, May 2015 

2016 Affordable Care Act reporting requirements

Affordable Care Act and the Excise Tax dilemma

Get to know your League staff!

Teladoc -- a doctor is just a phone call away!

Did you Know?

From the Board Room

NCIRMA audit reminder

Proposed EEOC Wellness Regulations issued

Calendar

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2016 Affordable Care Act reporting requirements

As we know, the Affordable Care Act includes both an individual mandate and an employer mandate essentially requiring that almost everyone have health insurance and all employers with 50 or more full-time equivalents (FTEs) provide affordable, minimum essential coverage to their employees. Two reports (referred to as 6055 and 6056) will be due in early 2016 to validate those individuals covered by an employer plan as well as to assure employers are meeting their obligations to provide acceptable coverage under the Act.

Small employers (<50 FTEs) only have to satisfy the 6055 reporting requirement since they are not required to provide an employer plan. For those with true insurance coverage, the 6055 form will be filed by the insurance carrier.  For small employers who are self-insured (including by participation in a shared risk pool), the form will be filed by the employer (6055 only).

For larger employers (>50FTEs), those required by ACA to provide coverage to their employees, both the 6055 and 6056 are required. For those who have true insurance coverage, the insurance carrier will file a form to meet the 6055 obligation, and the employer is responsible for filing a form to meet the 6056 obligation. For large employers who are self-insured (including by participation in a shared risk pool), the form will be filed by the employer (both 6055 and 6065 information covered in a single combined form).

While these reports are not due for another 9-10 months; now is the time to begin tracking the required data and making preparations. Examples of data that must be provided under Section 6055 include: identifiable information on the employer, employees, non-employees-such as retirees or COBRA beneficiaries, covered dependents or spouse; months on the plan for each covered individual, etc.

We are currently working with MedCost to provide educational materials for members of our Health Benefits Trust. This will include written materials and webinar opportunities.  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.

Affordable Care Act and the Excise Tax dilemma

In 2018 the Excise Tax, also known as the Cadillac Tax, will take effect. Cadillac Tax is a misnomer because the tax is assessed based on the premium not the plan design. Premium is driven by both plan design and, more importantly, claims. So, you may have a plan design that is anything but a Cadillac, but because of high claims, your premiums will ultimately exceed the threshold and trigger the tax.

How much is the tax you may ask? 40 percent of the amount exceeding the threshold of $850 per employee per month in 2018. This could be a hefty load for many. If medical trend runs at 7 percent, then anyone now paying $650 on July 1 will trigger the tax in 2018. The threshold does go up after 2018 based on the Consumer Price Index instead of medical trend.

We point this out now because we believe the best way to avoid the tax is to get control of claims. Getting control of medical claims is not often accomplished easily or quickly. Why? Because you are influencing your employees to change their behaviors from unhealthy habits to healthy habits. We hear quite a bit about worksite wellness programs and their importance. Developing and implementing a strong wellness program is more important now than ever. A strong program targets nutrition, physical activity, tobacco use and development of a culture of health. A robust wellness program coupled with individual employee coaching for those who need it most can, and does, drive down claims, but it doesn’t happen overnight. Change takes time, particularly behavioral change by your employees, so best to begin a program now than later.

We have for many years offered members of our health pool wellness program assistance, grants to either begin or sustain your program and advice to build a solid program. Please contact Lisa Ervin on our staff if you’d like to learn more and develop your plans. Given the continued increase in medical costs and the looming excise tax, now is the time to begin a program or enhance what you already have in place.

With regard to the other component that drives cost, i.e. plan design. We are currently assessing our portfolio of plan designs with an eye to what we will need to have in place by 2018. We are looking at designs that will both incent health choices by members and cut costs. Stay tuned as we continue to work on this issue on your behalf!

Get to know your League staff!

As a member of the League, you have access to staff members who are experts in all areas of local government – here are just a few who are ready and available to help you!

Hartwell Wright – Human Resources Consultant

One of the many services provided by the North Carolina League of Municipalities is human resources consulting. Our human resources consultant, Hartwell Wright, helps guide our members through difficult employment issues that can often develop into liability claims if not handled properly.  Hartwell has more than 30 years of experience managing complex human resource issues.

The League offers a number of human resource consulting  services. These services range from contractual services  to assist members with large, complicated  projects, such as job classification and pay studies, to guiding a member through a single human resource related issue. 

While most of these consulting services are provided to the member’s administrative staff, we also offer a number of services to elected officials. We are frequently asked to assist elected officials with developing a process for finding a new manager or administrator. We work directly with the member’s board in open work sessions to determine their needs in recruiting applicants, evaluating candidates, and performing background investigations. Sample contracts can also be provided once a successful candidate is identified. Additionally,  we assist members with finding an interim manager to maintain operating activities until a full-time manager can be hired.

Some topics are complex in nature and require significant research to ensure we are providing the correct response, while others may be answered with a phone call. If not handled properly, personnel matters have a potential for developing into costly legal problems, regardless of their complexity.  By providing this resource, we strive to help our members minimize their risks while assisting them in providing excellent services to their citizens.

“The advice and consulting we have received from the League Staff for personnel law and human resources practices has been invaluable to the Town of Louisburg. We have always received sound advice and tremendous service.” -- Mayor Karl T. Pernell, Louisburg

Hartwell can be reached at hwright@nclm.org or 919-715-0352.

Michael Young – Central North Carolina Risk Management Field Consultant

The League welcomed Michael Young as our newest risk management consultant in June 2014.  Following his move from Kentucky, his first assignment with the League was interim risk manager for the Town of Chapel Hill. Upon Ron Tilton’s retirement in March, Michael assumed responsibilities as the risk management field consultant for the central North Carolina territory.

Michael has more than 20 years in the insurance and risk management profession. This includes 10 years working for self insurance pools (TN School Board Association, Kentucky League of Cities and Kentucky Association of Counties) and 10 years in commercial insurance. He holds a Certified Insurance Counselor (CIC) designation as well as a certification in Risk Management for Public Entities (ARM-P).  He is currently working on his Charter Property Casualty Underwriter (CPCU) certification.

Michael enjoys reading and spending time with his 16-year-old daughter Ellie and 13-year-old son Hayden. They enjoy outdoor activities including swimming, camping, hiking, and biking.  He and his family also attend music and theater events and are active members at their church.

As much as Michael and his family love living in North Carolina, he remains a University of Kentucky Wildcat fan. He looks forward to many more years of service in North Carolina.

Michael is available to assist our members with risk management and safety concerns at myoung@nclm.org or 919-715-3913.

Joel Livengood – Property and Liability Field Adjuster

We are excited to announce the addition of Joel Livengood to our Property & Liability claim staff.  Joel has an impressive background which includes serving in the US Air Force as well as the Illinois Air National Guard.  He obtained a BS from Southern Illinois University and after obtaining his BLET from the Police Training Institute at the University of Illinois-Urbana, IL., he served various roles in the Police Department of the City of Bloomington, IL.  Upon leaving the Police Department, Joel joined State Farm Insurance where he was trained as a property adjuster.  He has also worked with Travelers Insurance and Reid, Jones, McRorie, and Williams as an independent insurance adjuster where he was certified to handle claims for USAA, Metlife and Liberty Mutual.  Joel has completed numerous industry educational courses and embraces the customer service aspect of his position. Joel will handle property related claims in the middle to eastern portion of the state. You can reach Joel at jlivengood@nclm.org or 919-715-2298.

Teladoc – a doctor is just a phone call away!

We are very excited to announce that the MIT medical plan will be offering Teladoc to its members July 1, 2015. This is a benefit that will give the membership the opportunity to have 24/7/365 access to U.S. board certified North Carolina doctors who can resolve many of the patient’s medical issues via phone or online video in the comfort of their homes. Doctors can actually prescribe medications that are not DEA controlled substances, calling it in to the members preferred pharmacy for their convenience. This program is free for the member that is under a traditional copay-based medical plan and only cost the MIT Health Benefit Trust $40 per claim.

This, of course, is not meant to replace the primary care physician, but rather to keep members out of the emergency room for nonemergency visits. They can use this program for cold and flu symptoms, bronchitis, respiratory infections, sinus problems, allergies, urinary tract infection, pink eye or ear infections. There is no limit on consultations, so members can take their time and for those that have children covered under their medical plan, the doctors are able to treat children of any age.  This program is available to our members that who traveling or living out of NC as well. No matter what state they are calling from, they will receive a call back from a doctor within that state within 22 minutes.

Did you Know?

The 2014 Ponemon Institute study revealed the following about cyber risks:

  • The per capita cost of a data breach to the public sector is $172 per record
  • Public sector organizations have the highest estimated probability of having a data breach, possibly due to the amount of confidential information they store. (Note that federal agencies were included in the public sector figures for purposes of this study.)

We want our members to be safe, so Property and Liability pool members have free access to the Cyber Liability E-Risk Hub! Through the Hub on the RMS website, members will have access to a wealth of tools and information to navigate through the cyber security maze. The League also provides cyber liability insurance through Willis, a third-party insurance provider. Please contact Ryan Ezzell at rezzell@nclm.org with questions about cyber liability services.

From the Board Room:

Your Board of Trustees met on May 28 to cover a number of important issues:

Approval of preliminary program budgets for each of the three pools: Workers’ Compensation, Health Benefits and Property/Liability. These budgets are finalized after we complete the renewal and know with certainty the premiums that will be collected as they will drive losses.

Approval of a new financial auditor: The Board of Trustees requested the staff to receive proposals for the 2014-15 audit. The board approved KPMG as the new financial auditor. We are pleased that these services will continue to be provided by a firm well qualified in insurance accounting.

Approval of reinsurance and excess of loss contracts for each of the programs: Each pool purchases catastrophe insurance to protect against shock losses. We enjoy long standing relationships with several reinsurance and stop-loss markets. All have submitted renewal proposals at competitive rates.

Receive a report on the renewal of each pool: As we know, this is the time of year that everyone is trying to balance a budget and insurance is an expense that must be included. We updated the Trustees on our efforts to renew our members in each pool and report on new members joining our programs.

If you ever have any questions or want additional information regarding the work of the Trustees, please don’t hesitate to ask. This is a hard-working group of municipal officials who take seriously their responsibilities to represent the membership well.

NCIRMA audit reminder

We want to remind our NCIRMA members that by the middle of July we will be emailing the WC Self Audits to members. The members with larger payrolls will get an on-site audit by Gary Burkhardt or Steve Hulme.

Please remember to run your WC Audit Reports and Gross Wage Reports for your fiscal year 7/1/14-7/1/15 (paid dates). Whether you have an on-site or a self audit, we need you to run your year end reports for the fiscal year.

The report structure will vary according to which software you use. The reports you provide should show gross wages, overtime, job title and workers’ compensation code. The more detailed it is the better. Some reports break down the different pay types. If you have LEO Separation Allowance Pay, car, cell phone, clothing allowances, jury duty pay, military pay or any other type of allowance, please make sure your report reflects these pay types or a document that does.

If you have different types of overtime, we need to be able to differentiate if it is ½ time, 1 ½ or double-time. Please print out the appropriate reports.

We will also need copies of your ESC Reports, 941’s and your summary trial balance (listing your salary accounts) for the fiscal year.

Some members use inmates from the State of NC to help with various jobs around town. Be sure to have a printout or 12 months of invoices that reflect your payment to the NC Department of Corrections. Please provide a copy of your contract as well.

If you have a municipal fire department, please provide a copy of an updated fire roster from the NCSFA. This is needed for the audit and assists our Claims Dept. in the event you have a wc claim for a firefighter.

If you have an on-site audit, we will be reviewing your WC and G/L certificates of insurance. It is important that each member maintain a program of obtaining certificates of insurance for all contractors prior to the job commencing.

If you use a temporary agency for day labor, please look for both WC and G/L  coverage on the certificate.

Making sure that your contractors have both types of insurance better protects you against any potential claims. If you use a contractor that does not have Workers’ Compensation insurance, please have them fill out the Independent Contractor Checklist. This will be utilized to determine if your contractor is truly independent or if they should be considered your employee for insurance purposes. A contractor is required by law to carry Workers’ Compensation insurance if they have 3 or more employees.

Proposed EEOC Wellness Regulations issued

The Equal Employment Opportunity Commission (EEOC) had not previously gone on record to allow within the Americans with Disabilities Act (ADA) incentives to encourage employees to participate in a corporate wellness program or whether offering incentives/penalties would make the program involuntary. The Affordable Care Act included provisions for employers to offer incentives (penalties are included within the definition of incentives) for employees to participate in a wellness program. Thus these provisions help employers understand how to properly include incentives within their plan.

The proposed regulations clarify that the ADA allows employers to offer incentives/penalties up to 30 percent of the cost of employee-only coverage to employees who participate in a wellness program and/or for achieving health outcomes. If the incentive exceeds 30 percent, then the wellness program is considered involuntary by virtue of making the wellness program too expensive to forgo. Additionally, for the wellness program to be considered voluntary, the employer must not require that employees participate, deny or limit participation in health plans for non-participation, or take any other adverse actions or retaliation against employees who do not participate.

Under the proposed regulations a wellness program is considered an employee health program when it is reasonably designed to promote health or prevent disease.  For example, asking employees to complete a biometric screening for the purpose of alerting them to health risks (such as having high cholesterol or elevated blood pressure) is reasonably designed to promote health or prevent disease. However, asking employees to provide medical information with out providing any feedback about risk factors would not be reasonably designed to promote health.

Information for this article was taken from the Labor Employment Law Blog.