Thursday, September 29, 2011

Job openings: Actuaries, actuarial analyst, market conduct examiner

  • Actuaries: Due to retirements, we have two openings for actuaries now, helping with financial examinations, analysis and licensing of life insurers or health insurers. Other typical duties include reviewing rates, equity-indexed annuities, etc. For details on these jobs, including salary and benefits, please see this job listing for both acturarial jobs.

  • Actuarial analyst: We're also looking for an actuarial analyst to fill a vacancy created when a staffer shifted over to a federally-funded project that we're working on (part of health care reform). Duties include reviewing actuarial calculations submitted by health insurance carriers to determine if rate requests are justified. For specifics, here's that job listing. The deadline for applying is 4:59 p.m. on Thursday, Oct. 6.

  • Market Conduct Examiner: We also have a vacancy in our Seattle office for a market conduct examiner. This job includes reviewing and analyzing company records and procedures. Here's a detailed job listing, including other duties, salary, etc. The deadline for applying is 5 p.m. on Friday, Oct. 7, 2011.

Home warranty company ordered to stop selling illegal coverage

A Florida company, its principals and subsidiaries have been ordered to stop selling unauthorized home warranties in Washington state.

Insurance Commissioner Mike Kreidler has ordered International Warranty Administration Services, Inc. and related entities to stop selling service contracts in Washington. The company and its subsidiaries are believed to have sold dozens of unauthorized service contracts in the state, but are not licensed to solicit insurance here.

Kreidler's order also includes The Metropolitan Benefit Group, Inc., doing business as HomeChoice Plans, HomeChoice Household Service Plans, Choice Plans LLC, and "ChoicePlans a division of the IWASI Group." Also named were International Warranty Administration Services' principals Kacey L. Crouch, also known as Kasey L. Crouch, and Mark Lowenstein.

See the link above for the full text of the order.

Insurance agents and brokers fined for violations

Insurance Commissioner Mike Kreidler has ordered fines and other disciplinary action for more than a dozen insurance agents and brokers.

Violations include failing to properly disclose fees, using a false Social Security number and wrongly disclosing a customer’s private health information.

“I should point out that these cases are only a tiny fraction of the more than 118,000 agents and brokers licensed to do business here in Washington,” said Kreidler.

Any Washingtonian with a complaint against an insurer, agent or broker can contact Kreidler’s office at 1-800-562-6900 or file a complaint online at

Any fines collected do not go to the agency. They are deposited in the state’s general fund to pay for other state services.

Fines and disciplinary actions from early June through early September include:

■HSBC Securities (USA) Inc., New York, NY: Fined $7,000 for violations including failing to report administrative actions taken against it.

■Conover Insurance Inc., Yakima, Wash.: Fined $6,000 for providing false information on 12 license renewal applications.

■Kimberly A. Kelly, doing business as Peoples Insurance Agency, Inc., Renton, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Kimberly D. Brookey, Kent, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Ryan J. Graczyk, Spokane Valley, Wash.: Fined $500 for incorrectly and incompletely answering questions on a disclosure form to a consumer.

■Warren M. King, doing business as Exact Financial Group, Inc., Renton, Wash.: Fined $500 for violations including submitting a life insurance application with inaccurate information.

■Swiss Valley Agency, Inc., doing business as North Town Insurance, Spokane, Wash.: Fined $250 for using a fee disclosure form that didn’t comply with state law.

■Rick L. Clatfelter, Chandler, Ariz.: License not renewed for making misleading statements on an insurance application.

■Lucky Bail Bonds, Inc. and Eric Arps, Bellingham, Wash.: Fined $5,500 for violations including misrepresenting to the court that he personally completed and signed certain documents.

■Robert J. Mills Jr., Wilton, CT: Fined $5,000 and ordered to stop selling insurance in Washington without a license.

■Colleen S. Schmertz, Bellingham, Wash.: Fined $500 for issuing bail bonds without a proper insurance license.

■Maria E. Bejines, Monroe, Wash.: License revoked for violations including using a false Social Security number on her insurance license application.

■Phyllis N. Golden, Seattle, Wash.: Fined $250 for providing false information about continuing education courses.

■Tiffany Lynn Lewis, Irving, Tx.: License revoked due to a felony conviction for stealing money from a client.

■Northpoint Escrow & Title, LLC, Bellevue, Wash: Fined $500 for improperly sponsoring a promotional event.

■James Timothy Shelnut, Augusta, Ga.: License revoked for failing to report administrative actions in other states, including violations of Georgia’s Ethics in Government Act.

■Ticor Title Co., Renton, Wash.: Fined $1,500 for improperly sponsoring a promotional event and offering to refund class tuition if attendees failed the quiz at the end of the class.

Orders and specific details about each of these cases are posted online at

Note: In some cases, the fines were larger, but a portion was suspended on the condition that the companies follow compliance plans to remedy the problems. The fines listed above are what’s actually being paid.

Wednesday, September 28, 2011

Insurers fined for violations

Insurance Commissioner Mike Kreidler has fined insurance companies nearly $1 million this year for violating Washington insurance laws. Violations included charging unapproved rates, improper advertising, and failing to offer health coverage to children.
The fines collected do not go to the agency. They are deposited in the state’s general fund to pay for other state services.
Any Washingtonian with a complaint against an insurer, agent or broker can contact the office at 1-800-562-6900 or file a complaint online at

Fines and other disciplinary actions against insurers from June to September include:
■UNUM Life Insurance Co., Portland, Me.: Fined $75,000 for selling long term care coverage using unapproved policies.

■Allstate Insurance Co., Northbrook, Ill: Fined $50,000 for issuing policies using unfiled and unapproved rates.

■UnitedHealthCare, Hartford, Conn.: Fined $26,000 for sending people wishing to appeal the insurer’s decisions to the wrong entity.

■Arch Insurance Co., Kansas City, Mo.: Fined $20,000 for violations including failing to keep adequate accounts and records.

■Chicago Title Insurance Co., Omaha, Neb.: Fined $10,000 for improperly advertising with producers of title insurance business.

■Lifewise Health Plan of Washington, Mountlake Terrace, Wash.: Fined $10,000 for failing to offer coverage to children in certain cases.

■Metropolitan Life Insurance, New York, NY: Fined $10,000 for failing to calculate benefit amounts in accordance with Washington law.

■Victoria Fire & Casualty Co., Cleveland, Ohio: Fined $5,000 for failing to adequately respond to inquiries.

■Fidelity National Title Insurance Co. (Santa Barbara, Calif.) Chicago Title Insurance Co. and Commonwealth Land Title Insurance Co. (both of Omaha, Neb.): Ordered to stop offering discounts to producers of title insurance business.

Orders and details about each of these cases are posted online at

Note: In some cases, the fines were larger, but a portion was suspended on the condition that the companies follow compliance plans to remedy the problems. The fines listed above are what’s actually being paid.

Information contained in written statement insured gave to insurer – is the insured required to provide this information at examination for discovery?

In Sangaralingam v. Sinnathurai, [2011] ONSC 1618, when examining the defendant for discovery, counsel for the plaintiff requested that the defendant provide information contained in the written statement he gave to his insurer following the motor vehicle accident. Defendant’s counsel refused to provide the statement or the contained information on the grounds that it was protected by litigation privilege.

A motion was made to a master who ruled that the defendant was not required to provide the information in the statement on the basis that the defendant had already been examined for discovery at length and the plaintiff also received a copy of the statement the defendant provided to the police following the accident. Therefore, such questioning would be solely with respect to the credibility of the defendant.

The master’s decision was appealed. The motions judge required the defendant to answer the question. The motions judge relied on the principle that questions on discovery seeking the facts of a party’s case do not offend privilege even though the source of the facts is a document over which privilege is being asserted.

There was a further appeal to the Divisional Court. Justice Herman referred to the test for when litigation privilege should be set aside as provided by Justice Ducharme in Kennedy v. McKenzie, [2005] O.J. No. 2060: where “the materials being sought are relevant to the proof of an issue important to the outcome of the case and [that] there is no reasonable alternative form of evidence that can serve the same purpose”.

Upon application of this test to the case at hand, Justice Herman concluded that in the course of the examination for discovery, counsel for the plaintiff had the opportunity to ask questions of the defendant that were relevant to the material issues. The defendant was co-operative and was not withholding information. Therefore, there was an alternative means available to obtain the relevant information and as a result litigation privilege should not be set aside.

Also, with respect to whether the request was directed solely to the credibility of the defendant, Justice Herman stated that it was his opinion that the sole purpose of the question being asked was to find out what the defendant told his insurer and therefore was asked for the sole purpose of credibility.

Tuesday, September 27, 2011

Two more health plans request rate changes

Kaiser Foundation Health Plan of the Northwest is requesting a 9% average rate increase for its individual health plans (health plan you buy yourself) and Regence BlueCross BlueShield of Oregon is asking to lower its small employer plan rates (health plans for employers with 1-50 employees) by an average of 1.6%.

See the all of the information submitted with the rate requests and a brief summary of both on our new health rate page. Both rates, if approved, take effect Jan. 1, 2012.

Bizarre insurance claims

Forbes has posted a list of bizarre insurance claims compiled by Chartis Insurance Co. Don't try these at home. Among them:

A man who set his Porsche on fire trying to dry out the floor mat with a leaf blower.

Someone who slowly melted an Andy Warhol painting by hanging it above a fireplace.

A man who managed to destroy his car engine -- and the car was a Bentley Continental -- by trying to charge it up by setting a brick on the accelerator, and then going to take a shower. The overheated engine seized.

Click on the link above for the rest.

Kreidler: Health insurer rate requests now public

For the first time, consumers can now see health insurers' complete rate requests, Washington State Insurance Commissioner Mike Kreidler recently told Comcast's Newsmakers program.

Kreidler pushed for a change in state law to allow the forms to be disclosed. Soon, consumers will not only be able to view the documents easily online, but comment on the requested rates.

Thursday, September 22, 2011

The Canadian Institute of Actuaries’ Recommendations to the Rules Committee on the Prescribed Discount Rate and Prejudgment Interest

On June 1, 2011 the Canadian Institute of Actuaries (CIA) submitted their observations and recommendations to the Civil Rules Committee with respect to the Committee’s review of rules 52.09 and 53.10 of the Rules of Civil Procedure (“the Rules”). The CIA reviewed these rules from the perspective of today’s economy − a low interest rate environment.

Rule 52.09(1) lays out how the discount rate is to be calculated for awards for future pecuniary damages in order to account for investment and price inflation rates. The CIA pointed out that the prescribed interest rate in Ontario for the first 15 years is lower than any other province or territory where discount rates are prescribed for this purpose. As a result, since interest rates are at historically low levels, a plaintiff will receive a higher settlement in Ontario than a plaintiff in another province or territory.

Rule 52.09(1) provides for a negative adjustment of 1%. This negative adjustment is a result of a belief in 2000 that rates of return for real return bonds were higher than the true underlying expected real rate of return. The CIA believes that this may not be a valid justification in today’s economic environment but noted that this negative adjustment could serve a valid public policy objective by providing a margin for adverse investment contingencies.

The CIA noted that there is a potential for misinterpretation of rule 53.09(1) and recommended that the wording be altered slightly to clarify that there is not only one discount rate to be applied to one particular loss under 53.09(1) and to make it clear that the rate prescribed by 53.09(1)(a) is to be used in discounting all losses.

Lastly with respect to rule 53.09(1), the CIA suggested that the Committee consider prescribing a nominal discount rate that could be used in situations when a real discount rate would be inappropriate.

Rule 53.10 sets the prejudgment interest rate for non-pecuniary damages at 5% per year. The CIA acknowledges that this rate is reasonable from a public policy perspective as it motivates settlement and compensates successful plaintiffs for delays in resolution. However, the CIA suggests that a floating rate based on yields on GICs with an adjustment may be a consideration. They recognize however that this would largely increase the complexity.

Wednesday, September 21, 2011

How to appeal when your insurer says no

We've updated our online guide showing how you can file an appeal when your health insurer denies a claim or turns down a medical procedure. We've added sample letters, tips, and updated it to reflect new regulations.

See "How to Appeal a Health Care Insurance Decision: A Guide for Consumers in Washington State."

Friday, September 16, 2011

Premera's rate increase disapproved

We've disapproved a request from Premera Blue Cross to increase its individual health plans by 3.1 percent. The company used a medical trend of 7.24 percent to calculate its increase. Medical trend is the change in claims costs over a specific period of time (usually one year) and is often based on both the company's past claims costs and what they expect to spend on claims in the future.

After a careful review of the company's supporting documentation, we don't believe it made its case - specifically, we believe the annual medical trend is likely to be 5.17 percent or less.

The rate was scheduled to take effect on Jan. 1, 2012 and would've impacted 4,039 people.

See if your health plan has filed rate change.

Parents: If you need individual coverage for your children, open enrollment is NOW

Open enrollment for individual health plans started Sept. 15 and runs through Oct. 31. (Individual health plans are those bought by individuals, as opposed to health plans offered by employers or groups.)

We can't say this enough: If you need health insurance for your child, make sure you enroll early. If you miss this open enrollment period, you'll have to wait until March 15, 2012, unless you meet certain qualifications. And if you wait until even the beginning of October, your coverage may not kick in until Nov. 1.

Federal health reform prevents health insurers from denying coverage to children because of a pre-existing health condition. However, just like employer-sponsored health plans, insurers can create open enrollment periods. During these open-enrollment times, children under age 19 do not have to complete a health questionnaire and cannot be denied health insurance.

We should note that there are some exceptions. You can apply for coverage for your child anytime, for example, after the birth or adoption of a child, or when the parent:

  • Is no longer eligible for a state program such as Medicaid.

  • Loses coverage due to a divorce.

  • Loses employer-sponsored coverage (including COBRA coverage).

  • Moves and their plan is not available where they live.

Wednesday, September 14, 2011

Alien abduction insurance? Really? Really.

Bloomberg Businessweek's Joel Stonington has put together an interesting slide show of "the oddest insured things", from Bruce Springsteen's voice ($5.7 million) to the hard-working tongue of a British coffee taster ($16 million).

Arguably the most interesting detail, though, is the fact that one insurer apparently offers insurance in case you are abducted by aliens. Stonington notes that the insurer "is currently paying out on a pair of claims deemed legitimate."

See the link above for the slideshow.

Group Health seeks rate hike

Group Health Options has requested a 11.6% rate increase for its small employer plans. The rate is currently under review and if approved, would take effect Jan. 1, 2012. Group Health Cooperative filed a 0% rate change for its small employer plans.

Summaries of all individual and small employer plan rate requests and memos detailing our decisions can be found on our new Web page

We're able to post these requests and the entire rate filings thanks to a bill passed last session (HB 1220). For years, we've heard from consumers upset with the rising costs of their health insurance - and rightly so. Health care costs are rising well above the rate of general inflation. Unfortunately, before this new law, all rate requests were considered proprietary.

If someone contacted us for information, we could only say "trust us, we carefully reviewed the rate change, and it's justified." Not a lot of comfort if you've experienced double-double digit increases year after year.

Now - thanks to this new law - you can see what we see: How your company spent your premium. and how much of it went to pay medical claims, cover administrative costs (including salaries) and how much was profit.

Our authority over these rates is still limited. If the company can justify the change and prove that the rate is reasonable in relation to the benefit the plan provides, then we must accept it. But at least now if you're paying more for your health plan, you know why.

Other insurers with pending rate requests for small or individual health plans include: Asuris Northwest Health, Kaiser Foundation Health Plan of the Northwest, Lifewise Health Plan of Washington, Premera Blue Cross, Providence Health Plan, and Regence BlueShield.

Monday, September 12, 2011

Tacoma insurance agent charged with theft

An insurance agent in Tacoma has been charged with theft for misppropriating checks from dozens of policyholders.

Michel Anthony James, an independent contractor working as an agent for State Farm, is believed to have deposited checks from more than 40 policyholders into his own business bank account. State Farm discovered the problems when it audited James' accounts.

Based on a subsequent iinvestigation by Insurance Commissioner Mike Kreidler's Special Investigations Unit, James:
  •  failed to apply premiums to policies,
  • wrongly withdrew cash from his premium fund account (which is where those policyholder checks were supposed to go),
  • failed to refund overpayments to policyholders,
  • and violated contractual agreements with State Farm.
He has been charged in Pierce County Superior Court with one count of first-degree theft.

Summary Judgment Rule

(Canada) Attorney General v. Ranger, 2011 ON SC 3196

While we wait for the Ontario Court of Appeal to clarify the scope of the new summary judgment rule, the Honourable Justice Power has recently shown a preference for the interpretation of the new Rule 20 that expands the power of the court in making findings of fact.

Various Superior Court of Justice judges have interpreted the changes to Rule 2o differently, some suggesting that it does not give a motions judge the power to make findings of fact for the purpose of deciding an action on the basis of evidence while others (now including Power, J.) suggest that it does allow a motions judge to make findings of fact.

The ultimate resolution of these diverging points of view by the Ontario Court of Appeal will have a significant impact on insurance defence litigation. Often defendants are faced with having to decide whether to go through an expensive trial or just make a "smaller payment" to settle a claim, even where a defendant is fairly sure that there should not be a finding of liability. Given the extraordinary cost of trials, defendants often unfortunately decide to settle even where they should not if they can settle for a small sum and avoid the cost and risk of trial.

The recent decision of Power, J. in (Canada) Attorney General v. Ranger, 2011 ON SC 3196, granted summary judgment to homeowners who were being sued under the Occupier's Liability Act for injuries sustained by a postal worker who had slipped and fallen on ice and snow while delivering mail to their home. The evidence of the homeowners at their examination for discovery was that they had a routine whereby they shoveled snow and salted icy areas when needed. Power, J. found that no further evidence could be put before a trial judge and therefore it was not necessary to proceed to trial. Power, J. then dismissed the action in its entirety.

Defence lawyers and insurers may yet find the new summary judgment rule to be a helpful tool in addressing claims without merit.

Saturday, September 10, 2011

NAIC Provides Forum for Ivory Tower Attack on Self-Insurance

The National Association of Insurance Commissioners (NAIC) has never been known as an organization where the self-insurance/alternative risk transfer industry is treated fairly, but its penchant for bias became even more visible this past week. Worse yet, this bias is now being fomented by an “ivory tower” expert.

Professor Timothy Stoltzfus Jost is the designated “consumer representative” on the NAIC’s ERISA (B) Subgroup , which is tasked with developing various policy recommendations related to how states should adapt their insurance regulations to better coordinate with PPACA implementation. The esteemed professor is not shy in sharing his opinion that smaller self-insured group health plans, facilitated by stop-loss insurance, should be made extinct.

During the Workgroup’s last conference call, Professor Jost presented a formal statement entitled The Affordable Care Act and Stop-Loss Insurance. This scholarly work was quite the hit piece on self-insurance disguised with big words, extensive footnoting and misleading legal references.

His central thesis is that smaller employers should not be allowed to self-insure because they do so primarily to escape state regulation, and going forward to sidestep new PPACA regulation. He also pushes the dubious argument that self-insured plans contribute to adverse selection (see my earlier blog post on this subject).

Virtually all of Professor Jost’s points can and will be rebutted privately and publicly as this NAIC policy development process moves forward, but first let’s take some time to consider the source.

He is currently a law professor at the Washington and Lee University of Law, with multiple other academic appointments dating back to 1979. Along the way, he has written several books and academic papers on the subject of health care with titles such as The Threats Facing our Public Health Care Programs and a Rights-Based Response; and Health Care at Risk: a Critique of the Consumer-Driven Movement.

And by the way, he is a graduate of the University of California at Santa Cruz. In case you are not familiar with this school, it makes U.C. Berkley look like a bastion of conservatism.

So what about private sector experience over his 35 year career? You guessed it, zero. How about past experience as a regulator who at least could interact with the private sector? No again. What we have here is the classic liberal elite academic who looks at the world through prisms of theory and ideology.

Professor Jost holds himself out to be a patient’s rights advocate and clearly views the NAIC as a forum to present his “ivory tower” perspective. OK fine, there’s certainly room for a diversity of qualified opinions as part of the policy development process.

The problem is that while Professor Jost may well have valid perspectives to contribute on true consumer (patient) protection issues, he’s out of his league in commenting on how health care delivery should be financed.

Moreover, if he was truly concerned about the ability of individuals to receive quality, affordable health care, Professor Jost should actually be a proponent of self-insured health plans (regardless of size) because these plans generally do a better job on both counts as compared to the fully-insured marketplace.

It appears the professor is in need of some timely continuing education.

Friday, September 9, 2011

RRG Legislation Snagged by Dodd-Frank Creation

After some initial good progress in moving federal legislation to modernize the Liability Risk Retention Act (LRRA), a new rhetorical roadblock has been raised.

The Risk Retention Modernization Act (H.R. 2126) includes a dispute resolution provision whereby RRGs who believe they are being illegally regulated in non-domiciliary states can access the equivalent of a federal arbitration process as an alternative to initiating costly legal action.

An earlier version of the legislation provided that this dispute resolution mechanism would be administered within the Treasury Department due to technical jurisdiction requirements, but left discretion Treasury to fit this function in as part their exiting organizational chart.

Fast forward to the recent passage of the Dodd-Frank financial reform legislation, which among other things created a new Federal Insurance Office (FIO) to be housed within the Treasury Department. As a result of this development, the current version of the legislation specifically designates FIO as the entity responsible to arbitrate RRG disputes with state regulators.

Supporters of the legislation have always known that there would be some push back in Congress from members concerned that such a dispute resolution would infringe on the authority of state insurance regulators. Of course, the opposite is actually true and this position has gained traction in recent months.

But just as the policy argument has largely been settled, at least one member of Congress key to the legislation’s eventual message has raised a new concern. In a meeting earlier this week to discuss the legislation, Rep. Judy Biggert (R-IL), chairwoman of the House Subcommittee of Capital Markets within the House Financial Services Committee, voiced strong concerns about this new responsibility assigned to the FIO.

Her objection was not really specific to RRG regulation, but rather reflects a broader view held by many Republicans that the FIO is being given too much authority. In hindsight, this objection was not particularly surprising.

While PPACA has garnered the lion share of public attention for those critical of government expanding its regulatory reach, the distaste for Dodd-Frank is significant among most Republican members of Congress. As a result, any manifestation of this law, such as the FIO, can spark a reflexive push back as demonstrated by Rep. Biggert’s comments.

It is important to note that this new wrinkle does not mean that H.R. 2126 cannot pass. The lobbying process on Capitol Hill is inherently complicated and this is just the latest example.

In the end, if the case can be made that the practical advantages this legislation offers to small and mid-sized companies trump more abstract political concerns, the LRRA will be successfully modernized.

Stay tuned for additional inside reports on how this legislation is progressing on Capitol Hill.

Regulatory Overreach Compromises Workplace Safety Initiatives

In case you had any doubt that the current public debate over the scope of federal regulation is more about political ideology rather than practical reality, look no further than OSHA’s ramped up oversight of workplace safety issues.

Now on the surface, this may sound like a laudable focus because almost everyone agrees that there is a role for government in making sure that sensible workplace safety standards are established and adhered to. But of course, in this current political climate Obama regulators just don’t know when to say when.

Specifically, OSHA has recently started to subpoena workplace safety audits prepared by workers’ compensation self-insurers and insurance carriers. Keep in mind that that these audits are prepared on voluntary basis so that employers/insurers are better able to proactively address any safety deficiencies that may exist. Such audits are particularly important tools for workers’ compensation self-insurers because they “own” every dollar saved on payments to injured workers.

Historically, OSHA has not attempted to access such audits because everyone understood that employers would likely stop preparing these risk management tools if they could be used against them in regulatory enforcement and/or legal proceedings.

This precedence has been overturned by a recent federal district court ruling stating that OSHA does have the right to subpoena safety audits and related documentation. Specifically, the ruling in the case of Solis v. Grinnell Mutual Reinsurance Company concluded that audit subpoena are generally enforceable if:

1) They reasonably relate to an investigation within OSHA’s authority;
2) The requested documents are relevant to OSHA’s investigation;
3) The request is not too vague
4) Proper administrative procedures have been followed; and
5) The subpoena does not demand information for an “illegitimate purpose”

According to OSHA’s internal policy regarding voluntary self-audits, the agency will not “routinely” request such audits at the beginning of an inspection, or use the audits to identify hazards to inspect.
But now with a favorable court ruling in their back pocket, it’s very reasonable to expect that OSHA regulators will, in fact, make safety audit subpoenas a routine part of their investigative process.

Of course, and ironically, the real victims are the workers as many employers are likely to curtail such formal audits in response to OSHA’s invasive zeal. Another classic example of “no good deed goes unpunished” apparently embraced by this administration.

Thursday, September 8, 2011

Small-business health insurance tax credits: key deadlines and tips

If you're a small business that provides health coverage for employees -- or wants to -- a couple of key deadlines for taking advantage of tax credits are coming up soon.

From the U.S. Department of Health and Human Services:
If you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of your insurance. This will bring down the cost of providing insurance.

In order to take advantage of these tax credits, you must file by a certain date. Here are two important tax filing deadlines in coming weeks that you should be aware of:
  • September 15. Corporations that file on a calendar year basis and requested an extension to file to September 15 can calculate the small employer health care credit on Form 8941 and claim it as part of the general business credit on Form 3800, which they would include with their corporate income tax return.
  • October 17. Sole proprietors who file Form 1040 and partners and S-corporation shareholders who report their income on Form 1040 have until October 17 to complete their returns. They would also use Form 8941 to calculate the small employer health care credit and claim it as a general business credit on Form 3800, reflected on line 53 of Form 1040.
Important tips:
  • Even if you've already filed your 2010 taxes, you can still claim the credit. Just file an amended 2010 return.
  • Even if you don't have tax liability this year, you can still benefit, since eligible small businesses can carry back the tax credit five years. (It used to be that you could carry back general business credits like this just one year.)
  • Businesses that couldn't use the credit in 2010 can claim it in future years. 
See the link above for more details and specifics.

Inside Politics in Michigan Demonstrate That Self-Insurance Priorities Are Too Easiliy Dealt Away

Michigan Governor Rick Snyder is poised to sign legislation that would impose a one percent tax on medical claims paid by health plans, including self-insured group health plans. This is big news and is certainly a disturbing development for those concerned about the erosion of ERISA preemption. But there is a more interesting story behind the headlines that is instructive for self-insured employers in other states as well.

In anticipation of this legislative development, I spoke with senior representatives from a leading Michigan employer organization to explore possible response options, including litigation coordination if necessary. When asked specifically what their appetite was for legal action assuming the legislation is signed into law, their answer was pretty clear – “zero.”

Given that this association represents many self-insured employers such strong push back was surprising to say the least. Then the “off the record” discussion began.

It turns out that there had been some significant wheeling and dealing between the Legislature, the governor and the business community in order to craft various budget reform initiatives designed to head off a projected deficit.

My contacts confided in me that their organization is privately opposed to the health plan tax proposal but will not go on record to say so, much less getting involved in possible litigation. They cite two reasons for this seemingly contradictory stance.

First, their membership includes health insurance companies in addition to self-insured employers and they believe an outspoken defense of self-insurers would alienate this other membership constituency. The other rationale is if the boat was rocked on this issue, then some of the other “deals” presumed to be favorable to the employer community could fall apart.

Of course, the big picture was not taken into account. They acknowledge that the immediate negative financial impact for self-insured employers is bad but manageable. Not considered was that if state efforts to tax and/or regulate self-insured health plans are left unchecked, self-insurance may cease to be an attractive option for employers in Michigan and elsewhere, which would effectively trap employers in the traditional health insurance marketplace – a much more ominous situation than being subject to a one percent tax as problematic as that may be.

My contacts appreciated this analysis and agreed that there are, in fact, bigger issues at play. That said, the bottom line is that many within the leadership of their very influential organization would likely applaud an effort to push back against the health plan tax, but this would be private support with no organizational fingerprints.

So there you have it. The very important fight over ERISA preemption has been dealt away in Michigan in favor of other business community priorities that likely are less important to employers from a P&L perspective. It’s uncertain how things will eventually play out in Michigan, but this look behind the curtain on the relationship between state employer organizations and government exemplifies why the self-insurance industry has an ongoing challenge at the state level.

While the ability of employers to self-insure is more significant than most tax and regulatory initiatives (again from a P&L perspective), self-insurance issues simply do not get much attention for state organizations, which tend to have more broad-based legislative agendas. To be fair, this is understandable because these groups generally have diverse membership constituencies and not have the resources to focus on issues that only a single constituency. Moreover, the member representatives do not generally insist that their organization put self-insurance issues front and center.

To the extent that employers can be mobilized to rattle the cages of state business associations to pay more attention to self-insurance issues we may be able to turn “private support” to visible public advocacy on the future threats that are almost certain to arise.

Let the cage rattling begin.

Wednesday, September 7, 2011

Kreidler orders Regence to fix health insurance problems

We just issued a press release about The Regence Group and its subsidiaries here, which have been having ongoing problems with billing and claims, including a computer system error that resulted in more than 6,000 incorrect transactions.

The same error apparently caused Regence to accidentally withdraw money from the bank accounts of people are not even Regence members. (Some of the withdrawals totaled thousands of dollars.) In the process, some Regence members' names and identification numbers were accidentally disclosed to strangers.

Last week, we and insurance regulators from three other states -- Oregon, Idaho and Utah -- met with Regence Group CEO Mark Ganz and other company officials in Salem, Ore. We provided the company with a list of the problems we've noted or that consumers have complained to us about.

For more details, please see the news release link above.

Friday, September 2, 2011

Need health insurance for your children?

Open enrollment for individual health plans starts Sept. 15 and runs through Oct. 31. If you need health insurance for your child, make sure you enroll early. If you miss this open enrollment period, you'll have to wait until March 15, 2012, unless you meet certain qualifications.

And if you wait until even the beginning of October, your coverage may not kick in until Nov. 1.

Federal health reform prevents health insurers from denying coverage to children because of a pre-existing health condition. However, just like employer-sponsored health plans, insurers can create open enrollment periods. During these times, children under age 19 do not have to complete a health questionnaire and cannot be denied health insurance.

These open enrollment periods apply to all individual health plans. People buying this type of coverage do not get health insurance from their employer or their employer doesn't cover dependents.

Exceptions where you can apply for coverage for your child anytime include after the birth or adoption of a child, or the parent:

Is no longer eligible for a state program such as Medicaid.
Loses coverage due to a divorce.
Loses employer-sponsored coverage (including COBRA coverage).
Moves and their plan is not available where they live.

Need more help understanding the open enrollment periods or think you're not being treated fairly? Send us an e-mail or file a complaint with us.

Thursday, September 1, 2011

September is National Preparedness Month

We know, we know. National designations like these often fade into the ether. But why not pay attention this time? Recent earthquakes - even if on the other coast - and hurricanes ripping up the eastern seaboard should make us pay attention. Let this be the call to see how prepared you are.

Do you have flood insurance? Should you have it? How about earthquake insurance? We can help you learn more about these types of coverage at

Why not take an part of an evening this month to look at your homeowner policy. And talk to your family about your emergency plan. Don't have one? Well, now's the time. What are you waiting for?

Here's some more help to get you started.