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 Trust Matters, November 2013 

Determining full-time equivalents and complying with the employer mandate

How to avoid an uninsured loss

Regina retires after 31 years

Is your financed property covered?

Did you know?

Upcoming events

New pharmacy vendor transition goes smoothly

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Determining full-time equivalents and complying with the employer mandate

As noted in the last issue of Trust Matters, implementation of the shared responsibility, or employer mandate, provisions of the law have been delayed until 2015. This not only gives the government more time to prepare, but it gives employers more time as well. We know that employers with 50 or more full time employees are required to offer medical insurance that provides minimum essential coverage and value at an affordable rate. Any employee working 30 or more hours per week, on average, is considered full time and should be offered coverage.

Determining full-time status could be tricky for seasonal or variable hour employees. The law states that employers should establish a standard measurement period, stability period and administrative period. New employees that you are not certain will work more than 30 hours per week should be monitored during an initial measurement period. The initial measurement and stability periods can last up to one year and most local governments are choosing that option. The stability period is the period in which the employees can either participate or be ineligible for coverage based on the findings during the measurement period. The administrative period is the time between the measurement period and the stability period and cannot be more than 90 days. Most employers are establishing 1-year measurement periods and timing the standard measurement period to end just before open enrollment in order to provide certainty about who must be offered coverage during the open enrollment.

Related to this is the calculation of full-time equivalents. While you may have fewer than 50 full time employees, the hours of part-time workers may add full-time equivalents that push you over the 50 full-time employees’ threshold and thus making you subject to the employer mandate.  Steps to determine your full-time equivalents are as follows:

  1. Determine the number of employees who were full time by calendar month of the previous year.
  2.  
  3. Convert hours of service in each calendar month of the prior year for employees who worked less than an average of 30 hours per week into full-time equivalent numbers. Total the first 120 hours of service for each employee who was not full time in that month and divide that total number by 120. Repeat the process to determine the full-time equivalents for each month.
  4.  
  5. Add the total number of full-time employees for each calendar month and the total number of full-time equivalents for each calendar month in the preceding calendar year and divide by 12 to get the average for the year. Round down to the next whole number.
  6.  
  7. If the resulting number is less than 50, you are not subject to the employer mandate.

Seasonal worker exceptions: If the total number of employees calculated above is greater than 50 for 120 days or less during the preceding calendar year, and the employees in excess of 50 who were employed during that period of no more than 120 days are seasonal workers, the employer is not subject to the shared responsibility provisions. Four calendar months may be treated as the equivalent of 120 days and this time period is not required to be consecutive.

How to avoid an uninsured loss

Occasionally a member will discover that they have failed to insure something.  Sadly this discovery is after a loss has occurred. The failure is usually due to a lack of communication – either between the employee who purchases the item and the employee who secures insurance, or a simple misunderstanding about what items need to be insured. 

To help you take inventory before it’s too late, we’ve prepared the following checklist for you:

Property: The IRFFNC Real and Personal Property coverage is written on a blanket basis only for items listed on your schedule. It is important to notify us within 30 days when new structures are acquired or being built. The Real and Personal Property has a 30 day grace period for reporting new acquisitions for a maximum value of $500,000. New property should be added immediately or you could forget! Also keep in mind that when renovations or additions increase the replacement cost of the structure, the insurance values need to be increased.

Examples of structures commonly insured:  Buildings and contents of facilities such as the town hall, police department, water and wastewater treatment plants, public works buildings, lift stations, water wells and pumps, electrical substations, water towers, storage buildings or equipment sheds, stationary generators, and parks and recreation structures.

Commonly forgotten structures: 

  • Lift stations or wells: How many do you own?  How many are on your schedule?
  • Park Structures: gazebos, playground equipment, park lights, dugouts, scoreboards, picnic shelters, concession stands, restrooms, storage buildings, ball park fencing.
  • Water and wastewater treatment plants: You must itemize every structure you want insured – not just the main structures. Don’t forget about generators, sheds and tanks. Are any pumps or structures outside the fence?
  • Water towers and tanks:  Check your schedule to make sure all are listed. Note who owns it and is responsible for insuring it.
  • Public Works: Main building as well as all the equipment sheds and storage buildings.
  • Miscellaneous: Do you lease property from someone and have agreed by contract to insure it? Be sure to add the location and structures to your schedule.

Equipment: Inland marine coverage has a 30-day grace period for reporting new acquisitions up to $50,000 and only for items similar to those you currently have insured.  

Examples of commonly ensured mobile equipment:  Backhoes, trackhoes, tractors, boats, mobile generators,  sewer jet or camera, excavator, motor grader, Ditch Witch, fork lift, bulldozer, Bush Hog, speed detection trailer, leaf vacuum, mower, Bobcat, ATV, golf cart, wood chipper, police bicycle, Jaws of Life, air compressor, mosquito sprayer, wacker packer, guns, radios, cameras, defibrillators, walkie-talkies, air packs, and radar guns.

Vehicles:  Go over your schedules with your department heads at least once a year. It may be helpful for you to distribute your property, equipment and auto schedules to department heads for verification. Your department heads should date, sign and return to you so you can update your renewal schedules. Renewal applications will be mailed the last week of March.

Rented Equipment: Occasionally the town needs to rent or borrow a piece of equipment (backhoe, trencher, etc.) or a vehicle (undercover police car, cherry picker, garbage truck, or summer camp bus or van).  If the rental agreement says the town is responsible for damage to the item during the rental term, send a change request.  We can insure the item and issue a certificate to the owner  It is important that you indicate the dates of the rental on the change request.

Regina retires after 31 years

In 1981, the membership of the North Carolina League of Municipalities decided to form a pool to provide workers’ compensation benefits to member municipalities. Hewitt Coleman and Associates was hired as the third-party administrator to get this program off the ground. In 1982, Carol Regina joined the staff of Hewitt Coleman as a field auditor, and eleven years later, she joined the staff of the League as we began to move services in-house. After 31 years of faithful service to the members of our workers’ compensation pool, Carol has decided it is time for retirement, effective December 31. Carol has been instrumental in the success of our program for many, many years from its inception in the early eighties to the insourcing of underwriting and payroll audits in the early nineties and even today as she continues to work with our membership in her role as our senior workers’ compensation underwriter and auditor. Her integrity, work ethic and, of course, knowledge and expertise will be sorely missed. Nevertheless, we are thankful to have been able to call Carol a friend and co-worker for these many years. We wish only the best for her well-earned retirement!

Is your financed property covered?

When a member decides to finance a purchase or project, the main concern is usually the terms of repayment and interest rate. The insurance requirements are typically an afterthought. Many times, the underwriting department finds terms in the financing agreement that the insurance policy cannot meet. For instance, the following cannot be insured for property coverage by the IRFFNC property policy:

  • Underground water or sewer lines
  • Underground utility or fiber optic cables
  • Overhead transmissions lines and transformers on power poles
  • Buildings or structures under construction (Builder’s Risk)
  • Unimproved vacant land
  • Dams, vehicular bridges and retaining walls
  • Driveways, roadways, and other paved surfaces

Sometimes we find the financing agreement uses items listed above as collateral for the loan. In those instances, the bank wants to see proof of property coverage in the form of a certificate listing the bank as additional insured and loss payee. This presents a problem since we cannot add these types of property to the property insurance listing. In some cases, the bank will waive the loss payee requirement. In other cases, the member is required to go to another agent or broker to obtain a scarce and expensive policy to meet the conditions of the loan. In some rare cases, coverage cannot be obtained in any market.

We have also seen cases of a member entering a finance agreement where the collateral consists of many low-value items that the member would not typically insure or are lower than their deductible. Some examples of these items are:

  • Turn-out Gear
  • Hoses and nozzles
  • Radios
  • Firearms or tasers
  • Traffic cones and soft body armor
  • Low-value landscaping equipment

Having to insure these types of items can add logistical and additional premium hardship for our members. Feel free to contact the underwriting department when considering a finance agreement with insurance requirements. We will be happy to review the insurance section to help our members recognize the requirements of these agreements.

Did you know?

In our efforts to minimize claims, reduce cost and help our members create a safer work environment, Risk Management Services identified a significant loss exposure during our analysis of workers’ compensation claims. Averaging nearly 300 claims and more than $2 million annually, injuries associated with muscle/skeletal claims, including lifting, lowering, bending and overexertion, are some of the most frequent and expensive types of workers’ compensation claims reported to Risk Management Services.  Many of these claims are associated with back injuries and occur primarily in police, fire and public works departments. 

While there is no simple solution to preventing these injuries, Risk Management Services is currently looking at a physical fitness program that addresses some underlying causes of these injuries.  We will evaluate this program with a few of our members to determine if the techniques provided will produce positive results for our members. Provided the program does produce the results we anticipate, Risk Management Services will determine the best method to make it available to other members in our workers’ compensation pool. 

In addition to addressing the physical conditions that often contribute to these injuries, employers can take the following steps to help control injuries:

  • Investigate each injury to determine the primary cause, and put controls in place to prevent similar injuries.
  • Injury prevention begins before a job offer is made.  Job descriptions should accurately reflect the physical requirements for the position. While complying with ADA requirements, evaluate an employee’s ability to perform the physical requirements of a position. This evaluation should be in place for new hires and for those who are returning to work from an injury. 
  • Foster an environment where management demonstrates the importance of an employee safety program. 

Please contact your risk management field consultant for any of your loss control/safety needs.

Upcoming events

The Risk Management Services Board of Trustees meeting will take place in Raleigh on Dec. 4-5.

New pharmacy vendor transition goes smoothly

Our new pharmacy vendor, Catamaran RX, went live effective November 1, 2013, for the MIT Health Benefits Trust medical participants. This transition went very smoothly thanks to the wonderful teamwork of Catamaran and Medcost. On the go live date, our contact at Catamaran gave us continuous updates on the number of claims paid and any rejections or problems. It was a very uneventful day, which indicates a job well done. We are continuing our implementation conference calls every Friday morning through November and December to make certain benefits are paying correctly and problems are addressed immediately. This change has improved service to our membership already and will lower our pharmacy cost for the program to keep the MIT Health Benefits Trust an affordable option for the future.