Deerfield, IL (December 14, 2023) — Alera Group, a top independent national insurance and financial services firm, announced today the acquisition of Delaware-based CBM Insurance Agency (CBM).
Established in 2008, CBM offers comprehensive solutions, including commercial business insurance, personal insurance coverage, and individual life and health protection for residents of Delaware, Maryland, Pennsylvania and New Jersey.
"We are excited to join Alera Group for many reasons, but most importantly because of the way our cultures align,” said Brandon Baffone, President of CBM Insurance Agency. “At CBM, promoting a growth-oriented and team mindset has been integral to our success and shows up daily in the hands-on, personalized service we provide to our clients.”
CBM's diverse clientele spans a broad spectrum of industries, from restaurants to wholesalers, contractors to property managers and owners.
“We are excited to welcome the team at CBM Insurance Agency,” said Alan Levitz, CEO of Alera Group. “Their collaborative and relationship-first strategy is aligned with the Alera Group culture and we’re confident they will bring new perspectives that further fuel our growing company.”
The CBM Insurance Agency team will continue serving clients in their existing roles. Terms of the transaction were not announced.
About Alera Group
Alera Group is an independent, national insurance and financial services firm with more than $1.3 billion in annual revenue, offering comprehensive employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 4,000 professionals in more than 180 offices provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit aleragroup.com or follow us on LinkedIn.
Agencies Provide Updated County Data for Culturally and Linguistically Appropriate Services and Guidance
On November 28, 2023, the tri-agencies (DOL, IRS, and HHS) issued Part 63 of its FAQ series regarding implementation of the Affordable Care Act (ACA) and Consolidated Appropriations Act, 2021. The FAQs provide information regarding the most recent American Community Survey (“ACS”) data published by the U.S. Census Bureau which lists every county in the country (as well as any U.S. Territories) that require culturally and linguistically appropriate services/taglines in notices and the specific language that applies. The 2023 Culturally and Linguistically Appropriate Services County Data (or “CLAS”) Guidance includes sample taglines stating how to access language services which group health plans (“plans”) or health insurance issuers (“issuers”) may use in their applicable notices. The CLAS Guidance is effective for plan years beginning on or after January 1, 2025.
As a reminder, the ACA requires non-grandfathered plans and issuers providing non-grandfathered individual health insurance plans to provide, or make available, claims and appeals notices in a culturally and linguistically appropriate manner when 10% or more of the population residing in the applicable county to which the notice is sent is literate only in the same non-English language. Specifically, plans may need to provide oral language services (i.e., telephone hotline assistance related to claims and appeals, including external review), notices (upon request), and, in any notices written in English, include a “tagline,” which is essentially a statement prominently displayed in the applicable non-English language that indicates how a participant may access language services provided by the plan or issuer. Moreover, all plans and issuers, including grandfathered plans, must provide a summary of benefits and coverage (SBC) and uniform glossary in a culturally and linguistically appropriate manner.
In the FAQ, the tri-agencies indicate that they intend to update the SBC and uniform glossary templates (with updated taglines in applicable non-English languages), provide additional translated versions of the SBC and uniform glossary, and provide model notices for internal claims and appeals and external review which will include updated taglines in applicable non-English languages).
Another client alert will be issued once these items are available.
About the Author. This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2023 Barrow Weatherhead Lent LLP. All Rights Reserved.
Prominent industry leader George Fraser and team join Scottsdale, Arizona office
Deerfield, IL (December 12, 2023) — Alera Group, a top independent national insurance and financial services firm, announced today the acquisition of Fraser Group, a retirement plan consulting practice led by retirement industry leader George Fraser. Fraser and his Scottsdale, Arizona-based team will continue in their existing roles and combine operations with the retirement plan services division of Benefit Commerce Group, an Alera Group Company (BCG). Scottsdale-based BCG provides diversified services across employee benefits, commercial property and casualty insurance and retirement plan services.
“George Fraser is one of the leading lights in the retirement plan industry, and we’re thrilled to welcome him and his team to Alera Group Retirement Plan Services,” said Christian Mango, Executive Vice President and National Practice Leader, Retirement Plan Services.
Fraser is known nationwide for retirement plan innovations. In 2022, Fraser’s PENNIES ON THE DOLLAR® model was a centerpiece of research by behavioral economist Shlomo Benartzi and his team at UCLA, Carnegie Mellon and Cornell, which showed plan participants save about 20% more when presented with deferral rates in terms of pennies rather than percentages.
“The addition of Fraser Group and George’s outstanding stature within the industry are significant enhancements to BCG’s retirement plan services division,” said Scott Wood, Managing Partner and Principal of BCG. “We know that utilizing the concepts that George and his team have developed will provide the very best service and support to our existing clients and our prospective new clients. BCG’s retirement plan services division will now include both BCG 401(k) Advisors and Fraser Group as we address retirement plan needs of employers of all sizes.”
Fraser and his team will continue serving existing clients as well as growing their practice across a wide range of plan sizes. “My team and I have built our practice by focusing on trying to do the right thing to change the dynamic for retirement plan participants,” said Fraser. “That includes cutting the jargon and talking in ways people connect with. It also means helping plan sponsors craft exemplary plans they can be confident about.
“We looked at various scenarios for growing our practice’s reach, and Alera Group Retirement Plan Services was clearly the best fit,” Fraser added. “There aren’t many places where an advisor can walk into a firm of any size—from a small business to a global enterprise—and offer best-in-class solutions. Most importantly, we share a dedication to doing the right thing to help people.”
Terms of the transaction were not disclosed.
About Alera Group Retirement Plan Services
Alera Group Retirement Plan Services, a division of Alera Group, services a wide variety of plans including 401(k), profit sharing, defined benefit, cash balance, 403(b), 457, PEP and deferred compensation. Advisors work with plan sponsors on plan design, financial wellness, investment analysis, benchmarking and fiduciary plan governance. Learn more at https://retirementplanservices.aleragroup.com.
About Alera Group
Alera Group is a top independent, national insurance and financial services firm with more than $1.3 billion in annual revenue, offering comprehensive employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 4,000 professionals in offices nationwide provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit https://aleragroup.com or follow us on LinkedIn.
On July 25, 2023, the agencies released an extensive proposed rule related to the Mental Health Parity and Addiction Equity Act (the “Proposed Rule”) as well as a Technical Release requesting comments on certain proposed data requirements for nonquantitative treatment limitations (“NQTLs”) and the potential for an enforcement safe harbor if certain data requirements are met. The Proposed Rule clarifies and solidifies requirements for group health plans and health insurance issuers (“plans and issuers”) to perform comparative analyses of the NQTLs imposed under their plans. To do this, plans and issuers must collect and evaluate data to reasonably assess the impact of NQTLs on access to mental health and substance use disorder (“MH/SUD”) benefits and medical/surgical (“Med/Surg”) benefits and demonstrate compliance with the MHPAEA as written and in operation. The Proposed Rule focuses on the following, which will directly impact plan design and analyses of those designs:
The first significant change under the Proposed Rule is the application of the “substantially all” standard to NQTLS. Previously, this standard applied only to quantitative treatment limitations (QTLs). Specifically, group health plans that provide both Med/Surg and MH/SUD benefits may not apply any treatment limitation to MH/SUD benefits in any classification that is more restrictive (as written or in operation) than the predominant treatment limitation that applies to substantially all Med/Surg benefits in the same classification. The standard or test is determined separately for each type of treatment limitation. As a reminder, the six permitted classifications under the MHPAEA are: (1) inpatient, in-network; (2) inpatient, out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription drugs. Additionally, there is a special rule for outpatient sub-classifications. For purposes of determining parity for outpatient benefits (in-network and out-of-network), a plan or issuer may divide its benefits furnished on an outpatient basis into two sub-classifications: (1) office visits; and (2) all other outpatient items and services. Accordingly, separate sub-classifications for generalists and specialists are not permitted.
Thus, any NQTL that imposes conditions, terms, or requirements that limit access to benefits under the terms of the plan or coverage is considered restrictive, and an NQTL that applies to MH/SUD benefits can be no more restrictive than those that apply to Med/Surg benefits. The Proposed Rule provides an illustrative, non-exhaustive list of NQTLs, which includes medical management standards such as medical necessity or prior authorization, formulary design for prescription drugs (including multi-tier networks), network composition and standards, preferred provider networks, methodology for determining out-of-network rates, fail first or step-therapy requirements, and geographic location or provider type restrictions.
Moreover, an NQTL is considered to apply to substantially all Med/Surg benefits in a classification of benefits if it applies to at least two-thirds of all Med/Surg benefits in that classification (determined without regard to whether the nonquantitative treatment limitation was triggered based on a particular factor or evidentiary standard). If the NQTL does not apply to at least two-thirds of all Med/Surg benefits in a classification, then that type of NQTL cannot be applied to MH/SUD benefits in that classification.
When MH/SUD benefits are offered in any classification of benefits for that MH/SUD condition must be provided in every classification in which Med/Surg benefits are provided. Such benefits must be meaningful benefits for treatment of the condition or disorder in each such classification, as determined in comparison to the benefits provided for Med/Surg conditions in the classification. If the plan provides benefits in a classification and imposes any separate financial requirement or treatment limitation (or separate level of a financial requirement or treatment limitation) for benefits in the classification, then the rules apply separately with respect to the classification for all treatment limitations (or financial requirements).
The devil is in the details, and the Proposed Rule enhances the content requirements for the comparative analyses required under the CAA, 2021 and existing DOL guidance. Comparative analyses must include a high level of detail to demonstrate a plan’s compliance with the MHPAEA (as written and in operation). Some exceptions apply for independent professional medical or clinical standards and standards to prevent and prove fraud, waste, and abuse.
Generally, plans are required to:
The Proposed Rule expands upon each of the above categories to describe information the DOL expects to see demonstrated in the comparative analyses. Further, the Proposed Rule requires the use of outcomes data when NQTLs are designed so that plans can establish that relevant data was used in a manner reasonably designed to assess the impact of any NQTL on access to MH/SUD benefits and Med/Surg benefits and to determine whether the plan complies in operation. This includes analyses of claims denials, in-network and out-of-network utilization rates (including provider claim submissions), network adequacy (time and distance data, information on providers accepting new patients), and provider reimbursement rates relevant to any NQTLs. As the Proposed Rule suggests, any material difference in this data for Med/Surg and MH/SUD benefits would be a strong indicator of noncompliance and, therefore, plans would be required to both take reasonable action to address the material differences in access and document any such action that has been taken to mitigate these material differences in access to MH/SUD benefits.
Accordingly, the comparative analyses must:
The Technical Release addresses the requirements for completing comparative analyses, but seeks feedback on, among other things, the required data elements, the difficulty in providing data elements, information technology needed to collect the data elements (including cost), and whether plans have access to these data elements. Moreover, the Technical Release addresses the potential for an enforcement safe harbor if specific standards and data elements are met or exceeded by plans.
To better facilitate complete, clear comparative analyses and compliance generally, the Proposed Rule aims to define terms previously not defined under the law and regulations. Specifically, Proposed Rule newly defines certain terms to help guide plans and carriers to ensure parity in aggregate lifetime and annual dollar limits, financial requirements, and quantitative and nonquantitative treatment limitations between mental health and substance use disorder benefits and medical/surgical benefits. This includes definitions for “DSM”, “ICD”, “evidentiary standards,” “processes”, “strategies, and “factors” and modifies the definitions of other terms for clarity, including “mental health,” “medical/surgical benefits”, treatment limitations, and “substance use disorder benefits.”
The Proposed Rule solidifies the compliance deadlines for providing the comparative analyses to the DOL upon request. Specifically, they must be provided:
The Proposed Rule specifies that copies of the comparative analyses may be requested (and must be provided to) participants and beneficiaries (or their provider or authorized representatives) who have received an adverse benefit determination related to MH/SUD benefits and any state authorities.
Conclusion
Once finalized, these requirements will apply to plan years beginning on or after January 1, 2025. Until then, the proposed rules require plans to continue to comply with existing MHPAEA laws and regulations, including completing their comparative analyses.
At this point, it is not a question of “if” the agencies will finalize the Proposed Rule, it is “when” it will be finalized. While the Proposed Rule and Technical Guidance go a long way to advise plans, third-party administrators (TPAs) and pharmacy benefit managers (PBMs) of the goals of the agency, the Proposed Rules is unlikely to resolve many of the frustrations self-funded plan sponsors have dealt with since 2021 in either obtaining draft comparative analyses from their TPAs or PBMs or ensuring the comparative analyses meet the DOL’s expectations.
TPAs and PBMs hold virtually all of the information necessary to complete the analyses, but much of the details are kept as closely guarded secrets until the DOL requests the information. Accordingly, self-funded plan sponsors must be more assertive with their TPAs and PBMs to ensure (1) the analyses are completed, (2) the analyses are made available as required, and (3) that the analyses include all of the required detail, data, and elements in the CAA, 2021 and the Proposed Rule. One way to do this is by negotiating the plan’s ability to access or request all necessary data and documentation from the TPA or PBM during the contract negotiation process. Finally, as we wait release of the MHPAEA final rule plans are encouraged to ensure current MHPAEA comparative analyses are updated to meet the Proposed Rule requirements (even before it’s finalized) as it brings the plan one step closer to meeting the expectations of the DOL.
About the Author. This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers, or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2023 Barrow Weatherhead Lent LLP. All Rights Reserved.
On November 9, 2023, the Internal Revenue Service (IRS) released Revenue Procedure 2023-34, which increases the health flexible spending account (FSA) salary reduction contribution limit to $3,200 for plan years beginning in 2024, an increase of $150 from 2023. Thus, for health FSAs with a carryover feature, the maximum carryover amount is $640 (20% of the $3,200 salary reduction limit) for plan years beginning in 2024. Of course, when carrying over funds from 2023 to 2024, 20% of the $3,050 salary reduction limit for 2023 is $610.
The Revenue Procedure also contains the cost-of-living adjustments that apply to dollar limitations in certain other sections of the Internal Revenue Code.
Qualified Commuter Parking and Mass Transit Pass Monthly Limit
For 2024, the monthly limits for qualified parking and mass transit are increased to $315 each, an increase of $15 from 2023.
Adoption Assistance Tax Credit Increase
For 2024, the credit allowed for adoption of a child is $16,810 (up $860 from 2023). The credit begins to phase out for taxpayers with modified adjusted gross income in excess of $252,150 (up $12,920 from 2023) and is completely phased out for taxpayers with modified adjusted gross income of $292,150 or more (up $12,830 from 2023).
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) Increase
For 2024, reimbursements under a QSEHRA cannot exceed $6,150 (single) / $12,450 (family), an increase of $300 (single) / $650 (family) from 2023.
Reminder: 2024 HSA Contribution Limits and HDHP Deductible and Out-of-Pocket Limits
Earlier this year, in Rev. Proc. 2023-23, the IRS announced the inflation adjusted amounts for HSAs and high deductible health plans (HDHPs).
|
2024 (single/family) |
2023 (single/family) |
Annual HSA Contribution Limit |
$4,150 / $8,300 |
$3,850 / $7,750 |
Minimum Annual HDHP Deductible |
$1,600 / $3,200 |
$1,500 / $3,000 |
Maximum Out-of-Pocket for HDHP |
$8,050 / $16,100 |
$7,500 / $15,000 |
The ACA’s out-of-pocket limits for in-network essential health benefits have also been announced and have increased for 2024. Note that all non-grandfathered group health plans must contain an embedded individual out-of-pocket limit if the family out-of-pocket limit is above $9,450 (2024 plan years). Exceptions to the ACA’s out-of-pocket limit rule are available for certain small group plans eligible for transition relief (referred to as “Grandmothered” plans). While historically CMS has renewed the transition relief for Grandmothered plans each year, it announced in March 2022 that the transition relief will remain in effect until it announces that all such coverage must come into compliance with the specified requirements.
|
2024 (single/family) |
2023 (single/family) |
ACA Maximum Out-of-Pocket |
$9,450 / $18,900 |
$9,100 / $18,200 |
ACA Reporting Penalties (Forms 1094-B, 1095-B, 1094-C, 1095-C)
The table below describes late filing penalties for ACA reporting. The 2025 penalty is for returns filed in 2025 for calendar year 2024, and the 2024 penalty is for returns filed in 2024 for calendar year 2023. Note that failure to issue a Form 1095-C when required may result in two penalties, as the IRS and the employee are each entitled to receive a copy.
Penalty Description |
2025 Penalty |
2024 Penalty |
Failure to file an information return or provide a payee statement |
$330 for each return with respect to which a failure occurs |
$310 for each return with respect to which a failure occurs |
Annual penalty limit for non-willful failures |
$3,978,000 |
$3,783,000 |
Lower limit for entities with gross receipts not exceeding $5M |
$1,329,000 |
$1,261,000 |
Failures corrected within 30 days of required filing date |
$60 |
$60 |
Annual penalty limit when corrected within 30 days |
$664,500 |
$630,500 |
Lower limit for entities with gross receipts not exceeding $5M when corrected within 30 days |
$232,500 |
$220,500 |
Failures corrected by August 1 |
$130 |
$120 |
Annual penalty limit when corrected by August 1 |
$1,993,500 |
$1,891,500 |
Lower limit for entities with gross receipts not exceeding $5M when corrected by August 1 |
$664,500 |
$630,500 |
Failure to file an information return or provide a payee statement due to intentional disregard |
$660 for each return with respect to which a failure occurs (no cap) |
$630 for each return with respect to which a failure occurs (no cap) |
About the Author. This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2023 Barrow Weatherhead Lent LLP. All Rights Reserved.
This alert is of interest to all employers that sponsor self-insured group health plans, including Health Reimbursement Arrangements (HRAs). Note that the PCORI fee does not apply to most health FSAs.
The IRS has released Notice 2023-70, which sets the applicable PCORI fee for plan years ending between October 1, 2023 and September 30, 2024 at $3.22 per covered life.
As a reminder, the PCORI was established as part of the Affordable Care Act (ACA) to conduct research to evaluate the effectiveness of medical treatments, procedures and strategies that treat, manage, diagnose or prevent illness or injury. Under the ACA, most employer sponsors and insurers were required to pay PCORI fees until 2019 or 2020, as it only applied to plan years ending on or before September 30, 2019. However, the PCORI fee was extended to plan years ending on or before September 30, 2029 as part of the Further Consolidated Appropriations Act, 2020.
The amount of PCORI fees due by employer sponsors and insurers is based upon the number of covered lives under each “applicable self-insured health plan” and “specified health insurance policy” (as defined by regulations) and the plan or policy year end date. The fee must be paid on or before July 31st each year. The fees due by July 31, 2024 are for plan years ending in 2023 and are as follows:
Insurance carriers are responsible for calculating and paying the PCORI fee for fully insured plans. The employer is responsible for paying the fee on behalf of a self-insured plan, including an HRA. In general, health FSAs are not subject to the PCORI fee.
Employers that sponsor self-insured group health plans must report and pay PCORI fees using the second quarter IRS Form 720, Quarterly Federal Excise Tax Return. The second quarter form is generally not released by the IRS until the second quarter of the applicable filing year (usually in or around May of the applicable filing year). Therefore, the Form 720 used for the 2024 filing deadline will not likely be available until in or around May 2024, and employers who sponsor self-insured group health plans subject to the PCORI fee must wait to file until the correct Form 720 is available.
The average number of covered lives for the plan year is generally calculated using the snapshot, snapshot factor, actual count, or Form 5500 method. These counting methods will be described in more detail in a future alert as we approach the 2024 filing deadline.
Also note that because the PCORI fee is assessed on the plan sponsor of a self-insured plan, it generally should not be included in the premium equivalent rate that is developed for self-insured plans if the plan includes employee contributions. However, an employer’s payment of PCORI fees is tax deductible as an ordinary and necessary business expense.
About the Author. This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com.
The information provided in this alert is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the agency, our lawyers or our clients. This is not legal advice. No client-lawyer relationship between you and our lawyers is or may be created by your use of this information. Rather, the content is intended as a general overview of the subject matter covered. This agency and Barrow Weatherhead Lent LLP are not obligated to provide updates on the information presented herein. Those reading this alert are encouraged to seek direct counsel on legal questions.
© 2023 Barrow Weatherhead Lent LLP. All Rights Reserved.
Deerfield, IL (October 26, 2023) — Alera Group, a top independent national insurance and financial services firm, announced today the acquisition of Rick Young Insurance, an insurance agency offering employee benefits services including health insurance, life insurance, Medicare and Medicaid redetermination.
Rick Young Insurance offers personalized employee benefits services. This includes tailored health insurance coverage encompassing outpatient care, emergency, maternity care, prescriptions, and preventative services. The agency also provides complimentary Medicare consultations and assists customers in navigating their Medicare plans and determining if supplemental insurance is necessary. In 2022, the company was honored with the Marketplace Elite Plus Circle of Champions recognition from Centers for Medicare & Medicaid Services.
"For more than 30 years, our team of dedicated agents has been helping individuals, families, and small businesses find quality insurance plans,” said Rick Young, Founder of Rick Young Insurance. "As longtime members of the community, we believe in our ability to help those in need with more than just insurance and take pride in supporting many local organizations.”
"Rick Young Insurance is committed to providing trusted advice, delivering outstanding service for clients and giving back to the communities they serve throughout Michigan," said Alan Levitz, CEO of Alera Group. "We look forward to leveraging their expertise to bolster our existing employee benefits, individual and family health insurance solutions."
The Rick Young Insurance team will continue serving clients in their existing roles. Terms of the transaction were not announced.
About Alera Group
Alera Group is an independent, national insurance and financial services firm with more than $1.2 billion in annual revenue, offering comprehensive employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 4,000 professionals in more than 180 offices provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit aleragroup.com or follow us on LinkedIn.
Public sector organizations increasingly find themselves in an environment of shrinking budgets, staffing shortages, growing hostility and rising inflation. Educational institutions, law enforcement agencies and municipalities operate under a microscope different from those overseeing private companies. That means contending with intricate layers of administrative procedures ― particularly in matters related to financial decisions.
One significant expenditure that warrants careful consideration is insurance. Notably, public sector entities now confront the dual challenge of operating with reduced financial resources while grappling with escalating inflation and Property Insurance rates.
To navigate these complexities, adopt a proactive stance towards risk management and partner with a savvy broker.
Except for Property Insurance, the property and casualty market has stabilized for public sector accounts. Here are other notable trends, as discussed in Alera Group’s 2023 Property and Casualty Market Outlook:
Expect similar trends through the fourth quarter, with stabilized pricing for Cyber Liability and a deteriorated outlook for Property Insurance.
Pricing, capacity and underwriting have improved for Cyber Liability Insurance. Previously, public entities encountered substantial fluctuations in premium, often with double-digit increases and spikes as high as 35%. However, recent renewals mark a departure from the significant increases seen in past years, and new coverage pricing indicates a trend toward rate stability.
Public entities that proactively implemented cyber security measures and adopted multifactor authentication to safeguard sensitive and personally identifiable information (PII) are reaping the rewards of this positive shift. Conversely, those lagging in cybersecurity practices face challenges in obtaining coverage or adequate liability limits.
In a significant risk management development, the Biden administration recently held the federal government’s first-ever cybersecurity summit, focusing on the growing menace of ransomware attacks targeting public schools. This summit aimed to facilitate discussions on lessons learned from past incidents and examine best practices for safeguarding educational institutions. Findings revealed that numerous schools struggle with meager cybersecurity budgets and limited staffing resources, underscoring the urgency of bolstering digital defenses.
One of the most pressing issues faced by public sector entities is the significant increase in Property Insurance premiums. Some public entities have experienced double- and even triple-digit premium increases. While these surges can be attributed to various factors, including inflation and increased construction costs, they pose a significant financial burden on public entities. It’s crucial for insurance buyers to understand these dynamics and prepare for potentially higher Property Insurance premiums in the coming years.
Demand exceeds supply ― as Alera Group reported in our 2023 Property and Casualty Market Update ― and insurance carriers are hesitant to provide coverage at affordable rates for organizations with frequent or severe claims. This underscores the importance of effective risk management and loss prevention strategies, such as employee training, facility inspections, adherence to state-mandated regulations and property appraisals to verify insurance-to-value. Engaging in best practices can help mitigate risks, enhance safety and improve insurability.
The National Oceanic and Atmospheric Administration (NOAA) reports a staggering increase in billion-dollar-plus disasters, with 23 events occurring in the U.S. so far this year. The surge has set a record for weather and climate disasters, signifying a significant shift from the not-so-distant past, when catastrophic events such as wildfires and extreme weather were considered exceptions. In the previous five years, ALM PropertyCasualty360 reports, the national average for claims from catastrophic weather events was considerably lower, at $8.1 billion per year.
The shift has far-reaching consequences, particularly for insurance.
The exorbitant amount paid in climate-related claims affects insurer capacity and reinsurance markets. Ultimately, there’s a direct correlation between these disasters and every Property Insurance buyer, especially those in high-risk areas.
The cause of the Maui wildfires, estimated at $4 billion-$6 billion in economic losses, is still under investigation. Insurance Journal reported that the utility company identified Lahaina in the summer of 2022 “as one of the priority areas for prevention and mitigation” of fire but noted that the “request remains pending with the regulator.” Insurance Journal later reported, “The official investigations will aim to determine the cause of the fire and review how officials handled it.”
While official investigations to determine the cause of the fire and review how officials handled it are still underway, the county sued the for-profit utility, adding to a pile of lawsuits against the utility, the county and the state. The Maui disaster highlights the critical need for effective planning, collaboration and communication among public and private companies to protect communities.
Public sector entities face serious challenges beyond climactic events.
Take the case of Jackson, MS, which this year experienced a $2 million Property Insurance increase. This was the result of Liberty Mutual non-renewing the city’s policy due to a company-wide readjustment of municipal accounts and Jackson’s “failure to implement the risk control measures” recommended by the carrier. A new carrier offered coverage that exceeded the Jackson City Council’s budget by $2 million, putting additional financial strain on the city.
Funding has always been a challenge in the public sector, and rising inflation and insurance costs exacerbates the situation. With limited resources, tough decisions must be made.
As Dwight Eisenhower, Supreme Allied Commander of the Allied Expedition Force during World War II and a two-term U.S. president, was fond of saying, “Plans are nothing; planning is everything.”
When working with limited resources, start with these four steps:
For effective risk management, it’s advisable for public sector entities to engage in proactive short- and long-term planning.
To combat the increasing costs and challenges associated with traditional insurance, many public entities pursue alternative options such as captives and risk pooling programs, which can provide leverage to control insurance costs and coverage.
Some states and local public entities offer regulated pooling programs, with dedicated risk management departments and long-term loss control. This may include certified inspectors who visit onsite to review specific areas such as playgrounds, stadiums, laboratories and more. Members may receive compliance reports and SWOT (strengths, weaknesses, opportunities and threats) analysis from the risk pool managers. Insurance carriers may also offer additional risk management resources.
Public sector entities face many unique challenges, and the right insurance partner can make all the difference in managing risks effectively and ensuring financial stability. Consider these four factors when searching for an insurance broker:
It’s crucial for public sector entities to partner with brokers who can adapt to changing circumstances. By choosing a broker with a vested interest, keen assessment skills and a commitment to building a comprehensive insurance program, public sector entities can better face the challenges of limited resources while mitigating exposures.
For a broader look at navigating insurance market conditions, read Alera Group’s September 2023 Property and Casualty Market Update. The report provides valuable information on factors driving the current P&C market, with analysis categorized by lines of coverage, commercial as well as personal.
Rhonda Ross
Sales Executive
Propel Insurance, an Alera Group Company
Rhonda Ross has two decades of extensive expertise in insurance and risk management, with a focus on tailoring property and casualty programs for the unique needs of public sector clients. Rhonda collaborates with her clients to understand their exposures and operations, and guides them through a strategic decision-making process to prioritize coverage needs.
Contact information:
Deerfield, IL (October 17, 2023) — Alera Group, a top independent national insurance and financial services firm, announced today the acquisition of Brio Benefits (Brio), an employee benefits consulting company based in New York.
"At Brio, we've held true to our core values including creating individualized plans for each employer. These tailored solutions along with the strength of our team have enabled Brio to deliver a holistic benefits experience for our clients and their employees,” said Richard Kosinski, Co-Founder of Brio Benefit Consulting.
Co-founded in 2004 by Kosinski and Jason Pastrano, Brio specializes in employee benefits and retirement plan consulting, aiding companies in the attraction and retention of their industry’s top talent. Brio offers a unique multi-phase process to help enable employers to approach their benefit programs in a strategic manner.
“Partnering with Alera Group will strengthen Brio’s capabilities to serve our clients even better,” added Pastrano.
Brio was recently named one of the Best Companies to Work for In New York by The New York State Society for Human Resource Management (NYS-SHRM) for the fourth consecutive year and Crain’s Top 100 Employer’s in NYC. Other recent awards include Top Retirement Plan Advisers by planadviser and Top DC Advisor Teams by NAPA. This strategic acquisition is poised to strengthen Alera Group's capabilities and culture, providing clients with advanced resources to navigate the ever-evolving benefits landscape.
"Brio consistently delivers a top-tier employee benefits experience continually empowering both clients and their employees while guiding them to a more promising, informed and healthier future," said Alan Levitz, CEO of Alera Group. "This client-first focus and their enthusiasm for collaborating makes the agency a great addition to Alera Group."
The Brio Benefits team will continue serving clients in their existing roles. Terms of the transaction were not announced.
About Alera Group
Alera Group is an independent, national insurance and financial services firm with more than $1.2 billion in annual revenue, offering comprehensive employee benefits, property and casualty insurance, retirement plan services and wealth services solutions to clients nationwide. By working collaboratively across specialties and geographies, Alera Group’s team of more than 4,000 professionals in more than 180 offices provides creative, competitive services that help ensure a client’s business and personal success. For more information, visit aleragroup.com or follow us on LinkedIn.
On September 27, 2023, the DOL, IRS and HHS released FAQs About Affordable Care Act Implementation Part 61 (“FAQ Part 61”) which addresses lingering questions about enforcement of the Transparency in Coverage Final Rules (TiC Final Rules). More specifically, the provisions of the TiC Final Rules requiring plans and carriers to post machine-readable files for in-network negotiated rates and historical net prices for all covered prescription drugs by plan or issuer at the pharmacy location level (“Rx rates”), and the status of a previously announced enforcement safe harbor applicable to in-network (“INN”) provider rates for covered items and services which allowed plans with percentage-of-billed-amount contracts or other alternative reimbursement arrangements to report this information differently if the dollar amount could not be determined in advance.
If you recall, the TiC Final Rules required non-grandfathered group health plans – other than those consisting of excepted benefits or account-based plans – to make available to the public three separate machine readable files (“MRFs”). This includes detailed pricing information related to:
Beginning July 1, 2022, machine readable files for INN provider rates and OON allowed amounts were required to be posted by plans. However, in Q1 of FAQs About Affordable Care Act Implementation Part 49 released by the agencies in August of 2021 (“FAQ Part 49”), the agencies delayed the requirement to release Rx rates machine readable files as they evaluated whether the requirement would be duplicative of other transparency and reporting obligations related to prescription drugs, specifically the RxDC reporting required under the Consolidated Appropriations Act of 2021 (“CAA”). In FAQ Part 61, the agencies report that, after reviewing the Rx DC reporting results, they have determined “there is no meaningful conflict between the reporting requirements” under the RxDC reporting and the TiC Rx rates machine readable file requirement as the CAA requires disclosure of different and additional information than required in the TiC Final Rules.
Therefore, the agencies have rescinded Q1 of FAQ part 49 and intend to develop technical guidance and an implementation timeline for plans to post their Rx rates machine readable files. Thus, the machine-readable files for prescription drugs will be due once that technical guidance and timeline are released. This does not impact the requirement for plans to continually update (on a monthly basis) their machine-readable files for the OON allowed amounts and INN rates for covered items and services.
FAQ Part 61 also addresses another enforcement safe harbor, which was previously announced in FAQs About Affordable Care Act Implementation Part 53 (“FAQ Part 53”) released by the agencies in April 2022, which applied to INN provider rate MRFs for plans with alternative reimbursement arrangements (such as reference-based pricing) or percentage of billed charges contracts. Under FAQ Part 53, the agencies indicated that where contractual arrangements are for a percentage of the billed charge or use a different, alternative funding arrangement, then plans were to use the applicable percentage in the rate box or the open text box to describe the nature of the negotiated rate, respectively.
FAQ Part 61 clarifies that the agency did not intend to apply a “categorical exception” to this reporting requirement. Whether a plan can comply with the requirement to provide a specific dollar amount is a facts and circumstances test and a safe harbor only applies in circumstances where a plan can demonstrate it is extremely difficult or impossible for a plan or issuer to determine and report a rate for a specific item or service (for the reasons specified in FAQ Part 53). In these instances, plans may continue to follow the technical guidance on GitHub.
Conclusion
No action with regard to the prescription drug machine readable files is required right now. The FAQ was essentially a “heads up” from the agencies indicating that they will request this reporting be completed, but they intend to provide guidance and some lead time after the guidance is issued for plans to post the files. We will release another update once the technical guidance and timeline are released. In the meantime, plans must continue to update their INN rates and OON allowed amount machine readable files monthly.
Plans with percentage of billed charges contracts or other alternative reimbursement arrangements should consult with counsel to review the FAQ and TiC Final Rules in light of their funding arrangement to determine whether they may still be able to use the standard set forth in Q2 of FAQ Part 61 (i.e., that they can demonstrate it is extremely difficult or impossible to determine and report a rate for a specific item or service) for their INN rate machine readable files, and to ensure they understand whether there is any risk in doing so.
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About the Author. This alert was prepared for Alera Group by Barrow Weatherhead Lent LLP, a national law firm with recognized experts on the Affordable Care Act. Contact Stacy Barrow or Nicole Quinn-Gato at sbarrow@marbarlaw.com or nquinngato@marbarlaw.com. |
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