Category Archives: Investing and fiduciary requirements

An update on why Medical Loss Ratios are important

The Health Care Reform act includes the limitation of how much a plan must pay out in claims.  The unintended impact of this is the reduction in service (already) by most broker.  For insurers, cutting commissions was the easiest way to meet the requirements.  More than half of brokers have seen cuts of 25% and some have seen cuts of 50%.  To put this into perspective, a typical small group with 5 employees, pays about $3600 a month in premiums, of which $144 is commissions to the agent (some is also kept by some carriers or general agents).  On average, I found that a 5 person group average 15 issues a year, averaging about 20 minutes per call to discuss, resolve, and report back.  Thats 5 hours.  Negotiating the renewal, setting up the paperwork, drafting the employee memos, holding the educational meetings, handling the phone calls and getting everything processed takes about another 5 hours. 

Calculating in staff salaries, copy cost, technology and other overhead (phones, rent, etc) that leaves about $250 profit before taxes. 

Now lets cut that by 25-50% and any small business owner can see the problem.  The broker is left no choice but to cut back somewhere.  A recent study shows that 13% have laid off staff, 30% have cut services already, and another 30% plan to by year end.   Nearly 40% have stopped selling policies for individuals (they pay less)

Brokers do much more than sell insurance – They serve their clients (not the insurance companies), helping peol;le when they have trouble getting procedures done, guiding them through the system, handling questions and concerns.  The provide clients with advice and guidance on the ridiculous amount of regulations that impact every decsion that an employer makes.  They provide individual enrollment guidance for each and every employee.


Just thought you should know.

Determining Exempt vs. Non-Exempt Employees

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Determining Exempt vs. Non-Exempt Employees

The Fair Labor Standards Act (FLSA) is a federal law which requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 in a workweek. The FLSA exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. As a result, it is very important to properly classify your employees as exempt or non-exempt.

Job Title Alone Not Sufficient to Determine Status
According to the U.S. Department of Labor (DOL), neither job titles nor job descriptions determine the exempt or non-exempt status of an employee. Rather, whether any particular employee is exempt (not entitled to the minimum wage and overtime pay protections of the FLSA) is based on whether the employee’s compensation and specific job duties meet all the requirements of the regulations for the particular exemption claimed.

Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees
One of the more commonly used exemptions under the FLSA exempts from both minimum wage and overtime pay protections bona fide executive, administrative, professional and outside sales employees, as well as certain employees in computer-related occupations. To qualify for exemption, an employee generally must be paid on a salary basis of no less than $455 per week and perform certain types of work that:

  • Is directly related to the management of his or her employer’s business, or
  • Is directly related to the general business operations of his or her employer or the employer’s clients, or
  • Requires specialized academic training for entry into a professional field, or
  • Is in the computer field, or
  • Is making sales away from his or her employer’s place of business, or
  • Is in a recognized field of artistic or creative endeavor.

Hourly paid employees who perform certain types of work in the computer field may qualify for exemption if they are paid at a rate of not less than $27.63 per hour.

FLSA Overtime Security Advisor
To help employers identify those workers who are entitled to the minimum wage and overtime pay protections of the FLSA, the DOL maintains an interactive, web-based tool called the FLSA Overtime Security Advisor. Based on the information you supply in response to various questions, the Overtime Security Advisor provides general guidance on the executive, administrative, professional, computer or outside sales exemption that may apply to a particular employee.

Note that the FLSA contains several other exemptions from the minimum wage and/or overtime pay protections which are not covered in this Advisor.

Various minimum wage exceptions may also apply under specific circumstances to workers with disabilitiesfull-time studentsyouth under age 20 in their first 90 consecutive calendar days of employment, tipped employees and student-learners.

The DOL has set new records for aggressive Wage and Hour enforcement. As an employer, if you need help to ensure that your workers are properly classified, please call the Wage and Hour Division at 1-866-487-9243.

New “I-9 Central” Online Resource Helps Employers Understand Form I-9 Requirements for Verifying Employment Eligibility

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New “I-9 Central” Online Resource Helps Employers Understand Form I-9 Requirements for Verifying Employment Eligibility

U.S. Citizenship and Immigration Services (USCIS) has launched I-9 Central, a new online resource center dedicated to Form I-9,Employment Eligibility Verification. This free, easy-to-use website builds on recent employment-related enhancements by providing employers and employees simple one-click access to resources, tips and guidance to properly complete Form I-9 and better understand the Form I-9 process.
Completing the Form I-9
By law, all U.S. employers must verify the identity and employment eligibility of every employee they hire to work in the United States, regardless of the employee’s immigration status. To comply with the law, employers are required to complete Form I-9Employment Eligibility Verification, for all employees, including U.S. citizens. Employers must keep these forms for three years after the date of the hire or one year after the date the individual’s employment is terminated, whichever is later.
Employers who fail to properly complete, retain, or make available for inspection Forms I-9 as required by law may face costly financial penalties. Companies that hire or continue to employ individuals knowing they are not authorized to be employed in the United States are also subject to civil and criminal penalties.

New I-9 Central Can Help
The I-9 Central online resource provides employers with enhanced, easy-to-access guidance for understanding and complying with the Form I-9 process, including sections regarding:

  • Employer and employee rights and responsibilities;
  • Step-by-step instructions for completing the form; and
  • Information on acceptable documents for establishing identity and employment authorization.

I-9 Central also includes a discussion of common mistakes to avoid when completing the form, guidance on how to correct errors, and answers to employers’ recent questions about the Form I-9 process.

Additional Form I-9 Resources Available
The launch of I-9 Central follows the introduction by USCIS of other important employment-related resources, including:

USCIS also offers free webinars on completing Form I-9.

For more information related to verifying employment eligibility, please see the HR360 page covering the Immigration Reform and Control Act.

Provider Changes at Carolina Care – Important

Pitts Radiology Associates Rejoins Network 


Medical Mutual and its Family of Companies have reached an agreement with Pitts Radiology Associates— a radiology services provider at several hospitals in South Carolina, including Kershaw County Medical Center, Newberry County Memorial Hospital, Palmetto Health and Providence—to provide in-network services to our members.


The Company had previously been unable to come to an agreement with this radiology provider, which went non-contracting beginning September 30, 2009.  Services received on or after May 15, 2010, were charged at non-contracted rates.


Claims for services received on or after June 1, 2011, will be paid according to the terms of the new agreement.


If you shared information about the network termination with your clients, please update them on the positive outcome of this situation.



Columbia Skin Clinic Goes Non-Contracting 


CCP’ agreement with Columbia Skin Clinic will terminate effective July 15, 2011.  This dermatology group includes 11 providers that provide services in Kershaw, Lexington and Richland counties in South Carolina.

Services received from Columbia Skin Clinic on or after July 15, 2011, will be considered out-of-network.  Please encourage your groups to remind their employees to use in-network facilities whenever possible to receive the highest level of benefits and avoid higher out-of-pocket costs. A complete list of network providers is available on using the Provider Search tool.

Members who have received services from Columbia Skin Clinic in the past 12 months will receive a letter notifying them of this change.  Group officials with affected employees will also receive a notification.

AHIP: Exchange Makers Should Mind Enrollment Periods

Published 6/14/2011 

Drafters of a National Association of Insurance Commissioners (NAIC) health insurance exchange white paper should give an example of what can go wrong when states adopt guaranteed issue laws without establishing open enrollment periods.

C.M. Gallaher, a vice president at America’s Health Insurance Plans (AHIP), Washington, makes that suggestion in a comment letter submitted to the National Association of Insurance Commissioners (NAIC), Kansas City, Mo.

The Exchanges Subgroup at the NAIC has been developing white papers that would give state insurance regulators’ regulators views on implementation of the section of the federal Patient Protection and Affordable Care Act of 2010 (PPACA) that call for the creation of a new system of health insurance exchanges.


Starting in 2014, the exchanges are supposed to distribute subsidized health coverage to individuals and small groups.

That same year, PPACA is supposed to require all major medical insurers to sell PPACA compasscoverage on a guaranteed-issue, mostly community-rated basis.

One of the NAIC Exchanges Subgroup white papers deals with “adverse selection,” or the risk that some insurers will end up assuming more than their fair share of risk, in a way that will end up destabilizing local markets, state markets or the national market.

Timing Matters

Exchanges Subgroup drafters already have acknowledged in the adverse selection white paper that pre-set enrollment periods – or, “open enrollment periods” — are important in a market in which insurers must sell coverage to sick people at standard prices.

Otherwise “individuals can purchase coverage when they it and drop it when they do not,” Gallaher says.

The Exchanges Subgroup could strengthen a short, general section about that problem by noting that Massachusetts recently experienced this problem when the “universal health care access” program it established in 2006 required carriers to sell coverage on guaranteed issue, community-rated basis year-round, Gallaher says.

AHIP is recommending that the white paper drafters remind readers of Massachusetts’ experience by including the following passage:

“As a result, Massachusetts has implemented stricter rules regarding enrollment periods. In 2011, individuals are able to enroll during two open enrollment periods. In 2012, this will be reduced to one open enrollment period. Furthermore, individuals in Massachusetts are not eligible to enroll in the nongroup market if they are eligible for employer sponsored coverage that is at least actuarially equivalent to minimum creditable coverage, as defined by the Commonwealth Health Insurance Connector.”

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck