California Workers’ Compensation Rates About to Drop in July

Last Thursday, the Workers’ Compensation Insurance Rating Bureau of California (“WCIRB”) testified before the California Department of Insurance that a 16.5% rate reduction was appropriate for the businesses of California effective 7/1/17.  California is a state where rates do not follow anniversary rating dates (“ARD’s) and therefore the impact of this reduction will be immediate for those that shop.

“WCIRB Executive Vice President and Chief Actuary Dave Bellusci and with President and CEO Bill Mudge presented the actuarial basis for the WCIRB’s average proposed July 1 advisory pure premium rate of $2.02, which is 16.5 percent lower than the corresponding industry average filed pure premium rate of $2.42 as of Jan. 1 2017 and 7.8 percent less than the insurance commissioner’s approved average Jan. 1 advisory pure premium rate of $2.19.”

A fertile market for aggressive carriers.

The California Department still has to approve, but that is anticipated in the next 30 days with the effective date of the proposed reduction less than 60 days from today.

While this is a sharp reduction, California still has and will have the highest workers’ compensation rates in the country by far and the State represents approximately 1/3 ‘rd of all workers’ compensation insurance premiums countrywide.  A fertile market for aggressive carriers.  For more info on national State rates and how they compare before credits/dividends and deductibles, review the following link…

-Paul R. Hughes

Can Wearable Fitness Devices Lower Healthcare Costs?

Businesses have been trying to crack the corporate wellness code for years to no avail.  The below article published on speaks to what possibly could be a positive trend for wellness and healthcare costs.

 A study by a healthcare analytics firm that tracks corporate wellness efforts found that employees using wearable fitness monitoring devices had lower healthcare costs over a two-year period.

Indianapolis-based Springbuk Inc. evaluated medical-related claims of those using the devices at a healthcare company with 20,000 employees. The study comes at a time when most of the nation’s large health insurers have or are about to offer discounts to employees and employers using such devices. From an employer’s perspective, they may be most valuable in motivating healthy lifestyles among employees who are at higher risk of incurring substantial medical claims.

“The analysis shows that after two years, employees who opt-in to the wearable program cost on average $1,292 less than employees in the control group,” said Phil Daniels, co-founder and vice president of Springbuk.

That amounted to a 46 percent cost reduction for those using wearable devices at the company. Springbuk did not identify the employer but said it is in the healthcare industry and has an active wellness program that includes the option to use Fitbit devices.

Such wearable devices, from an increasing number of manufacturers, monitor activity such as heart rates and the number of steps walked.

ABI Research in late 2013 estimated that more than 13 million wearable devices with embedded wireless connectivity could be integrated into employer wellness plans by 2018.

Lots of devices, lots of questions

Use of such devices – including those from Apple, Google and Samsung – is still small relative to the overall population. Just 1 to 2 percent of individuals in the U.S. have used them, but annual sales could hit $50 billion in 2018, according to data cited in a study last year by physicians at the Philadelphia VA Medical Center at the University of Pennsylvania.

Currently, those who wear them tend to be young, early adopter-types and not necessarily those who need them most: older, less-healthy populations. The study suggests that affordability of such devices – some starting at around $100 – will be a determinant in usage, though increasingly insurers or employers are picking up part or all of the cost.

Wearables have the potential to engage “less motivated” individuals, according to the study.

“Some of these devices may justify that promise, but less because of their technology and more because of the behavioral change strategies that can be designed around them,” the study reported.

Data from wearables has become an exciting new stream of information for companies like Springbuk, which helps some of the nation’s largest employers find ways to reduce healthcare costs through efforts such as wellness programs.

About 500 companies use Springbuk’s health analytics platform, which assembles and analyzes disparate sources of data. Grouping employees’ medical claims and pharmacy and lab records into a dashboard for employers to view helps model and predict future healthcare costs and take steps to reduce them.

There’s still more that can be learned from data captured from wearable devices, Daniels said.

“Does taking, say, 10,000 steps a day actually matter? Does it lower obesity rates?” he asked.

Answering such questions is key in helping employers justify expenses for wellness programs, let alone help them get a grip on ever-rising healthcare costs.

So far, “We really view wearable devices as just one more piece of the wellness concept,” Daniels said. “For us, this wearable piece is one more data stream.”

Insurer, employer rollout

Insurers and employers have been slowly gaining experience with the devices.

Last March, Minnetonka, Minn.-based UnitedHealthcare and San Diego-basedQualcomm Life rolled out the “Motion” wearable device. It’s now used in UnitedHealthcare wellness programs offered to about 120,000 people in over 40 states.

Workers and spouses covered under the plans can earn up to $1,460 per year toward their health savings accounts if they reach certain fitness goals. They may earn a smaller amount, however, if they hit some of the goals. That’s important, as some research has shown employees doubtful about fulfilling a heath goal may simply give up entirely.

UnitedHealthcare also caps the amount at which an employer’s health insurance premiums rise each year if employees achieve certain goals.

Craig Hankins, vice president of digital products at UnitedHealthcare, said the insurer applied a great deal of clinical analysis in developing those targets, looking at factors such “frequency, intensity and tenacity” of fitness exercises.

That means participating employees not only had to take so many steps per day – say 10,000 – but also keep heart rates up throughout the day to produce meaningful health benefits.

The Qualcomm device was designed to provide “nudges” throughout the day, in some cases buzzing to remind folks to get moving.

“People need that nudge. They get busy,” said Hankins, who himself wears one. “This was a program that was developed over a couple of years, with a lot of thought.”

Most all other major health insurers have devices as well. One of the earliest efforts was that of Indianapolis-based Anthem Inc., which began wearable device implementation four years ago. It has relationships with several wearable device companies and offers discounts to health plan members for wearables from Fitbit and Garmin.

Anthem piloted fitness tracker engagement with its own employees in 2012.

“We found that our own associates who had a chronic disease or were at risk of a chronic disease and used the Fitbit tracker for a period of six months experienced increased activity levels and weight loss,” said Anthem spokeswoman Geraldine Rodriguez.

The devices by themselves, however, weren’t the only component in positive health results.

“We did learn that coaching support and incorporating reinforcement strategies was instrumental in its success,” Rodriguez added.

“As a result, we determined it would be best offered through our disease management programs.”

Devices alone not the answer

Anthem may be on to something.

A University of Pittsburgh study published last month involving more than 400 people over a two-year period found that while those using a wearable device lost 7.7 pounds, those who received traditional counseling lost 13 pounds.

“Devices that monitor and provide feedback on physical activity may not offer an advantage over standard behavioral weight loss approaches,” authors stated in the study published in The Journal of the American Medical Association.

Both test groups had “significant” improvements in fitness, physical activity, body composition and diet, however.

UnitedHealthcare said it still needs more time to study patient experiences with the wearable devices. So far, about 60 percent of individuals at employers offering the devices have at least registered them, the company said.

“It’s about getting to: ‘How does it work and what do we need to understand about how people interact with it?’” Hankins said. “The early indications are promising.”

Chris O’Malley

Workers’ Compensation for PEOs and Their Employees

A very good article on the history of the PEO industry and its ability to provide workers’ compensation to American small business and their employees through the legal doctrine of co-employment.  Really nails it.

By Christopher Boggs of the Insurance Journal

One of the more important take-aways from this article is it provides further clarity to the process of staffing/leasing, which involves a transfer of labor by a staffing company to a client employer; where the employee is placed without any employer-employee relationship.  Coemployment on the other hand, helps the employer by sharing many of the non-occupational segments of being an employer; such as payroll, reg compliance, HR, major medical and of course workers’ compensation.  It allows “Joe the Plumber” to focus on plumbing and not the procurement of insurance as well as the menagerie of federal regulations business must follow such as the Affordable Care Act, FMLA, COBRA, Fair Labor Standards and over fifty others overseen by the Department of Labor.

“PEO contracts are co-employment arrangements whereby the professional employer organization and the client with whom it contracts both retain some right of control over the individual worker or workers collectively. Such relationship is wholly different than a leased employee or the use of a borrowed servant. Leased employees and borrowed servants are under the absolute control of the special employer. “Co-employment vests responsibility and control with both parties to the contract.”

Unfortunately, the issue or staffing versus leasing versus coemployment is confused in states like Florida where PEO statutes have not been properly updated to recognize the differences in these vls.  nice work on reinforcing these differences.ery different business mode

For further information on staffing versus coemployment, provides some excellent educational resources on the PEO industry and the nuances of its unique business model.

—  PRH


Libertate Creates Claimant-Driven Pharmacy Cost Management Model (PCMM) for PEO Large Group Medical and Workers’ Compensation that Guarantees Minimum Savings of Up to 15%


ORLANDO, September 26, 2016 / PRNewswire / — In an effort to vigilantly drive the occupational and non-occupational medical spends of our clients downward, we are proud to announce an exclusive partnership with Pharma Strategies to distribute and white label their product to the Professional Employer Organization (“PEO”) industry.  Pharma Strategies is a progressive pharmaceutical management company that has created heavily discounted prescription managed care networks for both workers’ compensation and health insurance.  This claimant-driven model aligns by state for workers’ compensation and utilizes the statutes in effect that allow direction of medical care.  On the major medical front, the Pharma Strategies platform provides incentives to the employee to go to in-network facilities by fully or partially-funding the employee prescription co-pay with the savings derived from the program.  In essence, go to the right pharmacy and the savings is at minimum 15% less than traditional major medical or workers’ compensation fee schedule.  It should also be noted that 99% of the drugs prescribed are eligible for the program.

According to Libertate CEO Paul Hughes, “the prescription drug increase in the workers’ compensation system was +11% overall just last year, and controlled substances such as opioids were up +16% just in the 2014 year.[1]  According to our friends at Milliman, prescription drug costs spiked significantly (on major medical), growing by 13.6% from 2014 to 2015.[2]  Furthermore, the pharma spend as a percentage of overall spend Prescription drug costs now comprise “15.9% of total healthcare spending for a family of four, up from 13.2% in 2001.”[3]

The PCMM is claimant-focused and not triggered by a specific line of insurance as pharmaceutical costs are equally impactful to major medical health insurance and workers’ compensation.  Mr. Hughes added, “Needless to say, the ability to save on the pharmaceutical spends of our clients is paramount in controlling their cost of both occupational and non-occupational health care.  Daily news events such as the recent +500% increase in the cost of the lifesaving allergic treatment EpiPen has illuminated the need to help our clients hedge against the drug makers in order to contain the overall health insurance spend.”

For more information, contact James Hughes at 813.335.1588 /

[1] “Workers Compensation and Prescription Drugs:  2016 Update”, National Council of Compensation Insurance (“NCCI”), May 5, 2016.

[2] Milliman Research Report, 2015 Milliman Medical Index “Will the typical American family of four be driving a “Cadillac plan” by 2018?”

[3] Ibid

Small businesses turning to PEOs for benefits, HR

An excellent article out of Benefits Pro on PEO that came out the last day of NAPEO… Trying to catch up after Austin!

“…which found that between 14 percent and 16 percent of those small businesses are reaching out to PEOs that provide payroll, benefits, regulatory compliance assistance and other HR services, rather than dealing with HR and benefits issues themselves.”

The statistics cited for the article provided by our friends at NAPEO in their fourth white paper that empirically backs up the value of the PEO model in growing your business, retaining your employees and offering a better employment experience to the American worker.

“…last year’s report figures indicating that PEOs generated between $136 and $156 billion in gross revenues, provided services to between 2.7 and 3.4 million workers, and offered HR, benefits and compliance assistance to between 156,000 and 180,000 small- to mid-size businesses.”

Wow, means ADP who payrolls 1 in 7  American workers now payrolls almost 1 in 5 coemployed workers.

As evidenced by the highly attended annual conference in Austin, with many newcomers in attendance, there is another surge of momentum going into the all-important 1/1 selling season where anywhere from 30-50% of new business for a growth PEO is attained.

The industry becomes more and more compelling as time goes by.  Really nice to see.

It was great to see and meet new faces, but always epic to see old friends of many years. Thanks for your friendship, love and loyalty.

NAPEO is in our fair town of Orlando next year… see you there!


Engage PEO Hits INC 500/5000

It is with great pride that I announce that our friends at Engage have hit the INC 500/5000 for 2016!  Hitting the 5000 is a big enough deal but in the top 500 growth companies in the United States is a very special accomplishment.  Congratulations Jay, Midge and the rest of the Engage team!

“Inc. ranked Engage as the 127th fastest-growing private company in the country. The report notes that Engage’s three-year revenue growth exceeded 2,700 percent. Engage ranked as the fastest growing professional employment organization, second among all human resource companies, and 12th of all companies in Florida.”

Having started operations less then five years ago, Engage has grown its coemployee base to almost 25,000 employees at present.  With a focus on healthcare and human resources, the firm’s average client size is arguably almost triple the industry norm at over 60 employees.  With recent hirings of industry stalwarts Steve Scott and Craig Hill, it is my opinion that this is just the opening chapter for Engage.

Congratulations !



What does $1 Billion Mean to the Florida Workers’ Compensation Insurance Marketplace?

 Gulp.  Potentially, a great deal if one is on, or has been on, a large deductible or other type of loss sensitive program at present.


Of note is that Florida’s private workers’ compensation system was about $2.6B as of year end 2014 in total and we are looking to add a billion onto that… just in retrospective loss exposure.  Last year’s report on the Florida Workers’ Compensation System done each year by the Florida Senate.


“This cost will be borne by insurance companies, individual self-insured employers, and employers with deductible policies (due to growth in out-of-pocket costs, or in other words, the amount that the employer agreed to pay on losses up to the deductible threshold).”


This announcement does nothing to impact the go-forward rate need still set at an aggregate 19.6% which is yet to be decided upon.  While some rate increase is anticipated to go into effect for all Florida policyholders regardless of their Anniversary Rating Date on 10.1.16, the exact amount is still not known   This analysis only looks at the impact of pre 10.1.16 losses.

It is good time to make sure you have your loss data in place and claims closed.


Broker Role Grows With the Adoption of Private Exchanges…

if your broker does not do this — Why pay them?  Do it on your own and roll the dice.  Same bet.


“Brokers are an integral part of helping clients determine the most appropriate employer contribution strategy. By taking into consideration a client’s budget, long-term objectives and benefits philosophy, brokers can make recommendations on the contribution designs that meet client goals. Brokers help clients decide whether to use a self-insured or fully-insured strategy, identify how much defined contribution to provide each employee and determine variances by tier of coverage or employee group, as well as figure out whether to offer waiver credits and wellness funding.”

Full Article –

Brokers, initially worried that private exchanges would squeeze them out, are finding a place helping companies.

Adoption of private exchanges is on the rise, and that’s good news for brokers. From 2014 to 2015, the number of members enrolled in private exchanges more than doubled, to 6 million, according to Accenture. We anticipate this growth will continue over the next few years.

Private exchanges predated the Affordable Care Act but were not widely used before the ACA was enacted. Now employers are seeking more benefits choices for their employees, more employee engagement in benefits and a shift to a defined contribution strategy. As a result, they are seeing private exchanges as an attractive option.

As private exchanges began to take off, some brokers feared that their role would be diminished. In fact, the opposite has happened. With the growing complexity of the benefits marketplace and a shifting regulatory environment, employers are increasing their reliance on knowledgeable advisors.

Employers need brokers to do a number of things, from explaining how a private exchange could meet their specific needs to talking about how other companies have navigated the marketplace and implemented the new model.

Fortunately, this is much easier now than it was just five years ago, when the first wave of early adopters chose private exchanges. Now those early adopters can share their experiences of how private exchanges work in practice and what others can expect as they make the move.

LightSail Energy, a California-based company that develops innovative energy storage systems, was an early adopter, having moved to a private exchange in 2011. The company was grappling with common issues; health care costs were rising at the same time that LightSail wanted to rethink its benefits package and enhance it to attract and retain top talent. At the time it began evaluating new benefits offerings, LightSail had only one carrier offering only one health insurance plan.

Although a private exchange was a fairly new concept, the idea made sense. LightSail wanted to make its costs more predictable with a defined contribution funding rather than a defined benefit strategy. LightSail also was interested in making its benefits package as robust as possible by offering a wide range of health insurance and ancillary choices so employees could customize their benefit portfolio to meet their individual needs. Finally, LightSail was attracted to the online, guided shopping experience that some private exchanges offered.

LightSail didn’t use a broker because brokers played a far less visible role in the sale of exchanges at the time. But this has changed significantly in the past few years. Brokers now play an important role in this process. This is because they not only are a company’s trusted advisor, but they also have the insight to match the company’s needs with the offerings of a complementary exchange. In LightSail’s case, major stops on the journey where the broker could provide significant impact included becoming educated about private exchanges, choosing an exchange, selecting benefits, determining a funding strategy, internal change management, making adjustments to the offering over time and providing performance data.

Education first: The first task for LightSail was to obtain a thorough education about private exchanges. Although the number of enrollees in private exchanges is growing quickly, it still makes up only a small piece of the overall market. Employer-sponsored insurance covers about 147 million nonelderly people, according to the Kaiser Family Foundation, compared to only 6 million who are currently enrolled in private exchanges. For brokers, that means most clients and prospects will know little about private exchanges.

The switch to a private exchange allowed LightSail to rethink and redesign its entire benefit package, given that it had only one carrier at the time. So the company also needed to explore what benefits it wanted to offer beyond health insurance and how those benefits would be valued by its employees.

Choosing an exchange: As LightSail worked through its needs, it became clear that the company needed an exchange that had broad capabilities. This is a common situation, as reinforced in a 2015 employer survey conducted by the Private Exchange Evaluation Collaborative. The study found that employers are looking for private exchanges with comprehensive capabilities and services such as guidance, ease-of-use, communication and support.

At this stage, brokers can play a critical role in helping clients find the best exchange for them. Given the fast pace of change and the many new entrants in the field, brokers may want to consider exchanges with a broad base of existing customers and a proven track record of success. Brokers also will want to help their clients navigate the variety of offerings that are called private exchanges, as there are important differences between full-service private exchanges and benefits-administration-only systems.

Selecting plans: LightSail chose an exchange offered through Liazon, which gave the employees the opportunity to select from more than 20 product lines. This includes ancillary benefits ranging from dental, life and vision insurance to legal plans, identity theft protection and more.

For employers, having all their benefits on one centralized system frees them from administrative complexity. For LightSail, ensuring that all the plans and benefits were consolidated on the exchange was key, as having to research and choose multiple carriers and administer the plans would have been incredibly difficult otherwise.

The exchange model also makes it easier for brokers to sell ancillary products, since employers often wish to include diversified offerings to their workers.

And a recent study by Liazon found that each employee who purchases health insurance also buys an average of five ancillary benefits.

Determining an employer contribution funding strategy: One of the most important parts of launching an exchange is determining the most appropriate employer contribution. In the case of LightSail, funding was based on each employee’s marital/dependent status and age, resulting in eight different contribution levels. This was designed to cover health insurance premiums plus a small amount left over for a flexible spending account.

It was similar to the company’s previous system of covering 100 percent of health insurance premiums for single health plans plus a $1,000-per-year FSA contribution. By moving to defined contribution levels instead of paying premiums, LightSail was able to stop paying the most costly premiums and better manage costs year to year.

Brokers are an integral part of helping clients determine the most appropriate employer contribution strategy. By taking into consideration a client’s budget, long-term objectives and benefits philosophy, brokers can make recommendations on the contribution designs that meet client goals. Brokers help clients decide whether to use a self-insured or fully-insured strategy, identify how much defined contribution to provide each employee and determine variances by tier of coverage or employee group, as well as figure out whether to offer waiver credits and wellness funding.

Internal change management: To ensure all employee questions were appropriately answered, LightSail coupled pre-enrollment offline communications with the customer support that was part of the Liazon offering.  By leveraging the exchange’s decision support feature, including tailored recommendations and plan comparisons, employees became adept at selecting their own benefits. Ongoing support is a key desire for many employers. Brokers should be ready to give advice on the types of support each exchange offers during open enrollment and throughout the longer term.

Making adjustments over time:  Between years two and three on the private exchange, LightSail moved from small- group to large-group plans. Among other benefits, the shift changed the premium structure and made it possible to stop grouping employees by age. LightSail was able to take advantage of the new products that were added to the exchange and offer new benefits such as legal plans and identity theft protection to employees.

Providing performance data and metrics: Brokers should provide their clients with data on the performance of their exchange in meeting their goals. Were costs controlled? What plans are workers choosing? Are employees satisfied with their current benefits and engaged in their health care decisions?

Brokers who are helping clients navigate the private-exchange landscape are likely to field questions about many of the same issues LightSail faced. Given the relatively low levels of awareness and knowledge about private exchanges — and the fast-growing interest in them — current clients who are satisfied with a broker’s services are a great source of referrals. In addition, brokers who truly understand their client’s mentality and consider their long-term needs will be the most sought-after resource to help navigate the journey.

Rebecca Motola-Barnes is director of people operations at LightSail Energy. Rebecca may be contacted at

Beth Raskin is vice president of operations at Liazon. Beth may be contacted at