Archive for March, 2016

Exclusions: What Your Cyber Policy Does Not Cover

cyber security

As the threat of hacking and cyber attacks on the databases of all organizations grows, so has the uptake of cyber insurance policies. But when buying a policy and anticipating a claim, it’s important to know exactly what’s covered.

All insurance policies have exclusions for what’s not covered but, since cyber insurance is new to most companies, you may not know what isn’t covered by them.

This article will look at the most common exclusions of these policies, which –because they are still in their infancy – will vary from insurer to insurer. But for the most part, these are the typical exclusions that cut across all insurance companies.

The International Risk Management Institute in a recent blog post noted that cyber insurance buyers should be aware of the following exclusions:


Bodily injury and property damage – This coverage, standard under a commercial general liability policy, is excluded in cyber insurance as a person cannot be physically injured by having their data exposed when your business’s database is infiltrated.

However, the gray area is if someone whose data has been exposed sues you for a claim of mental anguish or emotional distress, which are often claimed by plaintiffs in data breach lawsuits. Some policies will cover this and others won’t.


Employment-related claimsThese are mostly covered by an employment practices liability insurance policy, and are thus excluded from a cyber liability policy. However, if your employees’ personal information was compromised, your policy would likely cover employment-related privacy violations.


War, invasion and insurrection – Most commercial property and liability policies exclude damage resulting from these events, as well as terrorism. But, as the IRMI points out, many cyber attacks could be construed as an act of terrorism.

Talk to us about working with the insurer to include coverage for “electronic terrorism,” so that this area is a little less questionable. “Wording of this kind would preserve coverage for hacking/intrusion-driven losses,” the IRMI wrote recently.


Patent, software and copyright infringement – This is typically covered by intellectual property insurance forms, and not by a cyber policy.

However, some broadly written cyber policies will cover defense costs associated with copyright infringement claims if they are the result of actions by a non-management employee or an outside third party.


Failure to take required security measures – When applying for a cyber policy, the application will include a number of questions regarding the steps you’ve taken to safeguard your data. If an insurer can later show that you failed to implement these security measures, a claim may be denied.

If you have a policy that has this type of exclusion, you need to be vigilant about keeping up your security measures. Not all policies have this exclusion, so if you are in the market for a cyber policy, we may be able to help you find one that doesn’t have it.


Loss of electronic devices – This is sometimes referred to as the “laptop exclusion.” Some insurers exclude coverage for data breaches that were the result of an employee losing a company-issued portable electronic device. A study by the Ponemon Institute in 2015 found that nearly 30% of all data breaches were the result of a laptop or smart phone loss.

The above are the main exclusions that a typical policy will include, but because these policies are relatively new, there is often room for negotiation with the insurance company about them.

Regardless, if you think any of these areas could create a liability for your company, talk to us and we may be able to find a policy that best suits your needs.


Telemedicine Can Reduce Premium Costs, Save Time

tele medicine

MORE AND more health plans and employers are embracing telemedicine as part of their health insurance offerings, in order to help enrollees who may live far from their doctor – and to save money.

A 2014 study by the consulting firm Deloitte calculated that there would be 75 million virtual doctor visits in Northern America that year, and another survey by Towers Watson in the same year found that 37% of employers planned to offer their workers telemedicine consultations in 2015 – with another 34% planning to do so by 2017.

More private insurers are paying for telehealth services, a trend experts say will grow as more people become accustomed to it.

Studies have found telemedicine can reduce the cost of delivering health care, particularly for routine office visits. After all, a $50 telemedicine visit to diagnose a sinus infection is much cheaper than a $500 trip to an emergency department.

This is also important when waiting times to see your doctor can be more than a week, by which time the infection may have worsened.


Fitting the digital lifestyle

One of the main benefits of telemedicine is that it can help rural health plan enrollees more easily access health services without driving some distance to the doctor’s office.

Also, telemedicine fits well into the digital lifestyle for Generation Y and others who prefer shopping online and ordering movies via Netflix.

Employers who have been surveyed about telemedicine say they want to offer modern conveniences to these connected employees, who expect on-demand services.

Insurers and employers alike are also hoping telemedicine will live up to its hype by keeping people out of more expensive health care settings.

Many large national insurers have been experimenting with telemedicine in various states to suss out potential cost savings.

The two issues they’ve been dealing with are what to pay doctors who are helping patients by live video chat, and what types of services can benefit from telemedicine and which ones should not be included.

And telemedicine is no panacea. Michael Radeschi, director of product management at HIghmark, a Blue Cross and Blue Shield affiliate in Pittsburgh, told the trade publication Modern Healthcare that technology can’t replace all of the nuances of in-person clinical care.

“If we found ourselves at 40% to 50% of professional services that were telehealth, we’d be a little nervous,” he said.


What can telemedicine cover?

Telemedicine includes everything from telephone consultations and live video feeds via Skype to digital CT scans and remote monitoring of intensive-care units. Here are some examples:

  • It can involve a primary care or allied health professional providing a consultation with a patient. This may involve the use of live interactive video or the use of store and forward transmission of diagnostic images, vital signs and/or video clips along with patient data for later review.
  • Remote patient monitoring, which uses devices to remotely collect and send data to a home health agency or a remote diagnostic testing facility for interpretation. Such applications might include specific vital sign data, such as blood glucose or heart ECG, or a variety of indicators for homebound patients. Such services can be used to supplement the use of visiting nurses.
  • Consumer medical and health information includes the use of the Internet and wireless devices for consumers to obtain specialized health information and online discussion groups to provide peer-to-peer support.


Telemedicine benefits

  • Improved access – It improves access to doctors and allows physicians and health facilities to expand their reach, beyond their own offices.
  • Cost efficiencies – Telemedicine has been shown to reduce the cost of health care and increase efficiency through better management of chronic diseases, shared health professional staffing, reduced travel times, and fewer or shorter hospital stays.
  • Quality – Studies have shown that the quality of health care services delivered via telemedicine is as good as that given in traditional in-person consultations.
  • Patient demand – The greatest impact of telemedicine is on the patient and their family. Using telemedicine technologies reduces travel time and related stresses for the patient.

Workplace Bullying Can Cost Your Company


WORKPLACE BULLYING poses a major risk to companies that fail to take action against a problem employee who is pushing others around at work.

You can be sued and be facing a hefty damages tab like the $2 million that Microsoft Corp was ordered by a court to pay out after it allowed bully managers and supervisors to create a hostile environment for a salesperson by undermining his work, making false accusations against him, blocking him from promotions, and otherwise marginalizing him.

With so much at stake for your business, you need to put policies in place to reduce the chances of bullying in the workplace, including procedures for reporting, investigating, identifying and responding to bullying – as well as preventing it in the first place.


Steps for your business

In order to a have workplace that can prevent it and deal with it f it occurs, you need to have in place a complete anti-bullying policy with reporting and response procedures. Here are the basics from WorkSafe British Columbia:

  • Develop a zero-tolerence policy on bullying.
  • Develop procedures for reporting incidents.
  • Develop procedures for responding to incidents.
  • Develop disciplinary policies.
  • Train your workers and supervisors on the policies.


Investigating a complaint

Typically, the best source of information that an employee is being bullied is a co-worker who has witnessed the behavior or been the confidant of the target.

You’ll want to interview everyone who works with the alleged bully and find out as much as you can about any incidents of bullying they may have witnessed or been subject to themselves.

Document everything: Dates, times, places, what was said, what was the exact behaviour, whether physical threats were made, if they touched the worker, and any witnesses.

This may require some patience. Some workers may be afraid to spill the beans, but you should assure them of the confidentiality of the process and that they won’t suffer any repercussions.


Respond quickly

When management learns of or witnesses bullying behavior, an immediate response is necessary.

You should prepare in advance the disciplinary procedures you will implement if you have an employee who is harassing others. In addition, supervisors need to be trained in how to identify and address the issue if confronted with a complaint.

Stick to those procedures when disciplining an offender you’ve identified.

The costs to a company that tolerates bullying can be significant: low morale, absenteeism, high turnover, difficulty recruiting and retaining talented staff, or litigation against the company.

Litigation can become a reality if you ignore the signs or complaints of bullying.

And if the bullying appears to target a particular race or gender, disabled individuals or anyone similarly protected by anti-discrimination laws, the legal stakes become even greater.

Watch Out for the Newest Cyber Threat: Ransomware


The cyber-security stakes have gotten higher for enterprises with the recent news that a hospital in Los Angeles had to fork out $17,000 to pay cyber criminals after they crippled its network.

The ransomware that infected Hollywood Presbyterian Medical Center and the ransom they had to pay the hackers to unlock their system reflect the newest danger facing any organization that has a computer network.

The hospital’s case is not an isolated one, and experts are warning that cyber criminals have increasingly switched their targets from big companies to small and mid-sized businesses as their networks are easier to infiltrate, largely because they cannot afford the same sophisticated network security as large companies can.

The “Symantec 2015 Internet Security Threat Report” found that more than half of all cyber attacks were directed at small and mid-sized business, with hackers using an array of attack methods.

The “2015 U.K. Government Security Breaches Survey” found that 74% of small organizations had reported a security breach in the last year.

According to the Symantec report, 52% of spear phishing attacks – which are carried out using fake e-mails that contain links to malicious code – were targeted against SMEs.

The issue of cyber security for small businesses is made even more pressing by state laws that can result in fines for organizations that fail to notify authorities and anybody whose personal data or credit card information may have been breached in an attack.

The most common types of attacks on SMEs include:

  • Ransomware – This is a piece of malicious software, typically received via a phishing e-mail, that encrypts all of the data on a company’s network, with the perpetrators requesting a ransom (typically $1,000 to $2,000) in order to provide the decryption key.
  • Hack attack – A hacker manages to gain access to a company’s network, typically by exploiting an unpatched vulnerability within the software, allowing them access to the company data. The target will generally be personally identifiable information on a company’s customers, especially credit card information, or employees whose Social Security numbers and other identifiable information may be exposed for the purposes of identity theft.
  • Denial of Service attack – This is when a company’s website is overwhelmed by a volume of data pushed to its servers in a malicious manner. These attacks are increasingly easy and cheap to carry out, with some online tools costing as little as $30 per hour.
  • Human error – People are generally the weakest link in any security chain, and many breaches are the result of information being lost, or distributed to the wrong person. Even the seemingly mundane can have far-reaching consequences, particularly where sensitive personally identifiable information is involved.
  • CEO fraud – This is where a criminal poses as a senior person within a firm, either by hacking or “spoofing” their e-mail account, and convinces someone with financial authority to make a payment.


What you can do

There are several simple steps you can take to reduce your chances of being attacked:

  • Use secure passwords that contain a combination of lower- and upper-case letters, digits and other symbols.
  • Install antivirus and malware software on all company devices, including any mobile devices. You should also install such apps on any of your employees’ mobile devices if they are using them for company business, particularly if they connect to your VPN or access your network.
  • Conduct regular software updates that contain vital security upgrades and educating staff on cyber risks. If you have software and are notified that it needs to be updated, don’t hesitate to do so.
  • Develop and implement e-mail, Internet and social media policies for your employees to follow. The policy should include the requirement that your employees don’t click on suspicious links and that they report any suspicious e-mails.



Protect Your Workers’ Eyesight with Proper Design, Vision Benefits


One of the by-products of the digital revolution – with most people staring many hours each day at tablets, smart phones and computers – is eye strain.

According to The Vision Council, the average U.S. adult spends more than two hours a day looking at electronic screens. Looking at such screens for too long can result in dry and irritated eyes, blurred vision and eye fatigue, as well as headaches.

Besides the trouble for eyes, using these devices can also result in back and neck pain from that hunched-over position that many people use when on these devices.

Prolonged use can cause “computer vision syndrome,” which manifests itself in a number of symptoms like eye strain, dry eyes, blurred vision, red or pink eyes, burning, light sensitivity, headaches and pain in the shoulders, neck and back.

To help prevent digital eye strain, you should ensure that:

  • Your employees sit with their eyes about 30 inches from their computer screen,
  • Your employees rest their eyes every 15 minutes, and blink frequently, which helps keep the eyes moist. It’s been found that when people work on computers they blink about one-third as much as they typically would.
  • You have proper lighting in the office. Eye strain often is caused by excessively bright light, either from outdoor sunlight coming in through a window or from harsh interior lighting. When you use a computer, ambient lighting should be about half as bright as that typically found in most offices.
    If possible, turn off the overhead fluorescent lights in your office and use floor lamps that provide indirect incandescent or halogen lighting instead.
  • Upgrade your displays. If you have not already done so, replace your old tube-style monitor (called a cathode ray tube, or CRT) with a flat-panel liquid crystal display (LCD), like those on laptop computers. LCD screens are easier on the eyes and usually have an anti-reflective surface.
  • Adjust computer display settings, which can help reduce eye strain and fatigue. Ask your employees to adjust the brightness of their display so it’s approximately the same as the brightness of the surrounding workstation. They can also adjust text size and contrast.


Consider vision benefits

If you don’t already do so, consider offering your workers vision benefits.

First off, your employees would be more apt to get a much-needed pair of glasses that have anti-glare attributes for when they work on computers.

Computer glasses are specially designed for optimizing vision when viewing content on screens, and they can be provided with or without a prescription.

Wearing computer glasses can help users experience more relaxation, sharper focus and reduced blurriness and pixilation, which can cause discomfort unless corrected. The lens designs allow the eyes to relax, adjusting to intermediate-distance objects and reducing glare during prolonged use of digital devices.

Also, workers with vision benefits tend to get regular eye exams, which can identify serious chronic conditions, including diabetes, high cholesterol, hypertension, multiple sclerosis and some tumors.

Detecting these symptoms can lead to early diagnosis and better treatment of the conditions.


Covering Your Domestic Workers


If you are planning on hiring a nanny, housekeeper or gardener for your home, you need to make sure that you have the proper insurance in place.

If you are hiring someone on a permanent basis, whether they are working full-time or part-time, it’s quite likely that you would be required to secure workers’ compensation coverage for them.

But that will depend on the amount of work they perform, how often they work at your residence – and the nature of that work.

In some cases, a homeowner’s policy would cover them for any accidents they may have at your home. But it all depends.

There are actually two main risks that you are assuming when you hire a domestic worker:

  • The risk to them sustaining an injury while working for you.
  • The risk of them causing injury to a third party or the property of a third party.


Before you engage a nanny or housekeeper, you should review your homeowner’s insurance policy to understand what coverage is available in case the worker is injured while working for you.

Some injuries might be covered under your homeowner’s insurance. But you will probably have to pay a deductible, and your policy limits might not be sufficient to pay all damages.

All California personal property insurance policies are required to include automatic coverage for “occasional” employees. In such cases, the personal liability and medical expense portion of your homeowner’s policy can be extended to cover injuries to residence employees.

But beware, as some policies have exclusions for injuries sustained by domestic employees or independent contractors performing work at your residence. Read your homeowner’s policy to see what it says about such situations.

In some states, such as California, certain domestic workers are considered employees who are eligible to receive workers’ compensation benefits in accordance with state law.

But, if they are working regularly for you on a full-time basis, you would be required under state law to secure workers’ comp coverage for the employee.


General guidelines

Insurance companies typically use the following to describe a “full-time” employee:

  • An inside employee (nanny, housekeeper, etc.) working over 20 hours per week.
  • An outside employee (gardener, pool cleaner, etc.) working more than 10 hours per week.


Note: Under 10 hours per week is typically considered an “occasional” employee.


Also, under California insurance code, in order for coverage to apply to a residential employee, the following must apply:

  • Within the 90 days immediately prior to the date of injury, the employee must have been engaged in employment by you for no less than 52 hours.
  • The employee must have earned no less than $100 in wages.

Getting covered

Purchasing a stand-alone workers’ comp policy for just one domestic employee is difficult at best. Fortunately, most insurers will sell you a workers’ compensation endorsement to your homeowner’s policy.

If you don’t purchase this endorsement – known as the HO-90 form – you would be opening yourself up to significant liability should the worker be injured while working for you.

The HO-90 form provides coverage on a very limited and specific basis for residence employees. You must inform us or your insurer about the extent to which you have employees working in your home, so it can be priced into the endorsement properly.



Risk of not securing coverage

If you do have someone working for you on more or less a permanent basis, they would be eligible for workers’ compensation benefits if they were injured while doing so.

In that case, if you didn’t secure a workers’ comp endorsement, you’d be facing significant liability, since your homeowner’s policy would exclude the claim.

Besides being liable for the cost of the medical care, if the employee missed work for any amount of time, you’d also be liable for the workers’ comp wage-replacement benefits they are entitled to receive under state law.

Furthermore, you would likely be subject to fines by the state for not covering your worker.

If you have any questions about domestic workers, don’t hesitate to call us! We can answer any queries you may have.



Strong Return-to-work Program Key to Keeping Claim Costs Down

return to work

One of the proven ways to reduce the cost of a workers’ comp claim is to get the injured worker back on the job whenever it is safe to do so.

Preferably, employers should offer some type of modified work duty if they are still recovering from their injury and if that injury impedes them from performing the work they did before the accident.

If workers wait until they are completely healed before returning to work, the cost of a claim with, say, $7,000 in medical expenses can quickly balloon to tens of thousands of dollars as they draw temporary disability benefits, often equal to about two-thirds of their salary.

Not only that, but an extended absence can lead to a disability mindset and the employee, having not worked for some time, may feel disaffected from the workplace and unmotivated to return.

Fortunately, a strong return-to-work program offers a path back into the workforce through light duty and transitional work. To keep costs in check, no workers’ comp program should be without an RTW program.

If you have an RTW program or are considering starting one, here are the top 12 things you should consider, courtesy of the Institute of WorkComp Professionals:

  • Understand your state laws about returning an injured worker back to the job and the benefits they are entitled to after taking on transitional or light duty.
  • Create an RTW program that outlines the steps the company will take to help a worker get back on the job as soon as it’s feasible after a workplace injury. Discuss transitional duty and light duty in the program documents and distribute copies of it to your staff.
  • Be creative in identifying temporary alternative jobs. Appoint an employee-management committee to create temporary alternative jobs. Injured employee jobs should be meaningful, not demeaning or demoralizing – and for sure should not be punitive.
  • If you have an injured worker, visit various worksites or departments of you company to identify tasks that are similar to the employee’s existing job.
  • Provide the treating physician with job descriptions for any temporary transitional duty and the employee’s regular work.
  • Obtain medical restrictions from the medical provider and a release so that you can put them in a job that will not strain them or risk reinjuring them. Be proactive and prepared for the release. Don’t wait to have the release in hand before you begin your process – a delay of even a few days costs you money.
  • Encourage treating medical providers to approve temporary alternative duty for injured employees.
  • Communicate regularly (at least once a week) with injured employees returning to work for a temporary alternative duty position. (During this time, therapy and treatment may still continue.)
  • Inform the worker’s supervisors about the injured individual’s physical limitations from the injury and make sure they don’t push them too hard. Closely follow the restrictions outlined by the doctor, or you risk upsetting the worker, or worse, reinjuring them.
  • Continue to pay the injured employee at their regular rate of pay. Consider doing so even if the employee is working partial hours. This will help you avoid paying lost wage benefits and, in many states, reduce future settlements.
  • Keep the employee engaged by asking them on a weekly basis about the transitional duty, to identify obstacles or ascertain if they feel they can do more.
  • Provide feedback to the physician regarding the progress the injured employee is making at the temporary alternative duty position, to make sure the physician is getting both sides of the ‘story.’ It also conveys the concern you have for your injured employees.


If done correctly, an RTW program can help your worker get back on the job faster, help them feel like they are still part of the ‘team,’ improve morale and reduce your workers’ comp premiums.





California Wage & Hour Violations Can Create Personal Liability

A new California law gives the state labor commissioner expansive new powers to go after employers that have judgments against them for non-payment of wages, including issuing stop-work orders and holding officers personally liable.

The Fair Day’s Pay Act, which took effect Jan. 1, adds a whole new section to the state Labor Code aimed at reducing wage theft and making employers pay for skirting wage and hour laws. Specifically, those violations include:

  • Final payment of wages at termination.
  • Issuing wage statements.
  • Meal and rest break laws.
  • Expense reimbursement.
  • Payment of minimum wage.
  • Attorney’s fees for complainants.
  • Waiting time.


The new law has the potential to increase litigation against employers and it comes at a time when overall wage and hour cases have ballooned 58% between 2013 and 2015. Just between 2014 and 2015, there was a 28% increase in cases, according to Advisen.

The average value for these types of claims in California is $6 million.

While all of these laws are already on the books, the new law gives the labor commissioner new tools to enforce collection of judgments in wage and hour law cases. It adds a whole new level of liability to companies, but equally importantly to the men and women who run these enterprises as they can be held personally liable for judgments.

Some of the new tools at the labor commissioner’s disposal when trying to collect on judgments for non-payment of wages are:

  • Issuing stop orders against employers.
  • Issuing levies against employers’ bank accounts and accounts receivables.
  • Placing liens against an employer’s real and personal property.



The steps for collection under the new law are as follows:

  • Twenty days after a judgment is entered by a court in favor of the labor commissioner, or in favor of any employee, the commissioner can move to collect by issuing a notice of levy on a company’s funds, property and accounts receivable.
  • If a final judgment against an employer remains unsatisfied after a specified period of time, after the time to appeal has expired and no appeal is pending, the bill would prohibit an employer from continuing to conduct business in this state, unless the employer has secured a bond.
  • If an employer is found conducting business in violation of the bond requirement, the commissioner could issue a stop order prohibiting the use of employee labor by the employer until the employer complies with the bond requirement. The law would make the failure by an employer, owner, director, officer, or managing agent of the employer to observe a stop order a misdemeanor.


Officers in the crosshairs

The law also imposes criminal and personal liability against individuals who act for the employer, such as owners, officers, directors and managing agents. Because of this new law, those individuals have potential personal liability for a liability that didn’t exist before.

With this new area of liability opening up, and in light of the boom in wage and hour litigation anyway, it’s important for all employers to consider director’s and officer’s liability insurance and employment practices liability insurance.

Typically, EPLI policies have excluded coverage for unpaid wages and associated fines and penalties. Some insurance companies, though, will carve back a sublimit of coverage for wage and hour claims, but that is usually only for related defense costs.

There are also some novel options available from Bermuda and London insurers that blend a wage and hour policy with an existing EPLI policy. These policies vary in price and are still evolving.

Unfortunately, your typical D&O policy includes an exclusion for wage and hour claims.

But there is an option in specialty products called Side A “Differences in Condition” policies that can be attached to a D&O policy. Differences in condition policies generally don’t include an exclusion for wage and hour claims.

Depending on how the terms of these policies are written, they could include coverage for defense costs and possibly for settlements and judgments in suits that name directors and officers.

As the highly litigious area of wage and hour law evolves, please talk to us to evaluate your coverage and minimize your exposure.

Also, now is the time to revisit all of your wage and hour policies, including breaks and waiting time, to make sure they comply with state law. Don’t get left blindsided by a lawsuit that can bankrupt your company.

Trimming Hours to Avoid Employer Mandate Can Land You in Hot Water


Ever since the Affordable Care Act was enacted, critics of the law have said that employers would cut staff or reduce workers’ hours to avoid coming under the employer mandate requiring them to provide coverage for their staff.

But a decision by a federal judge not to dismiss a lawsuit against an employer for doing just that highlights the legal rat-trap that employers may open if they go that route.

Workers at Dave & Buster’s, a restaurant chain, in July 2015 filed a lawsuit in the Southern District of New York alleging that the national restaurant chain reduced their hours to keep them from attaining full-time status for the purpose of avoiding the requirement to offer them health coverage under the ACA’s employer mandate.

In February 2016, the federal judge in the case, in declining the employer’s motion to dismiss the case, cited its likely breach of the Employee Retirement Income Security Act (ERISA), which prohibits employers from interfering with a worker’s right to benefits.

This case is significant because many other employers have implemented similar strategies striving to limit work hours for certain groups of employees for the purpose of avoiding penalties under the ACA.


Some background

The ACA’s employer mandate generally requires large employers (those with 50 or more full-time workers or full-time equivalent employees) to offer affordable and minimum value health coverage to their full-time employees (employees who regularly work an average at least 30 hours per week).

Employers are not generally required to offer coverage to employees working less than 30 hours per week on average.

Since the employer mandate took effect, many employers have been moving employees to part-time status to avoid triggering penalties under the employer mandate.


Why the case is important

The Dave & Buster’s employees alleged that the company violated ERISA by cutting their hours. They cited Section 510 of ERISA, which prohibits employers from discriminating against any participant or beneficiary for exercising a right under ERISA or an ERISA benefit plan.

The workers alleged that by reducing employees’ hours to keep them below the 30-hour weekly average to qualify as a full-time employee, Dave & Buster’s interfered with the attainment of the affected employees’ right to be eligible for company health benefits.

Dave & Buster’s in October 2015 filed a motion to dismiss the case, but the Southern District of New York federal judge denied the motion in February 2016.

The law firm of McDermott Will & Emery in its blog highlighted the importance of the decision, stating, “The opinion focuses on ERISA Section 510 and holds that the plaintiff has a viable claim that reducing her work hours was done for the purpose of interfering with her right to benefits under the company health plan.

“Second, the opinion finds that the complaint successfully alleged the employer’s ‘unlawful purpose’ and intention to interfere with benefits, pointing to allegations that company representatives publicly stated that they were reducing the number of full-time employees to avoid ACA costs.”

The law firm noted that the decision has given plaintiff’s attorneys a model for filing similar complaints when employers reduce hours to avoid their obligations under the ACA.

It also noted that if judges in other cases deny employers’ motions to dismiss cases, it will put the employer in a more difficult position because the employees’ attorneys will be able to take discovery and depositions, and to compel document production.

Any signs or proof of reducing hours to avoid their obligations under the ACA will make defending the case even more difficult, McDermott Will & Emery wrote.

If you have trimmed hours to avoid the employer mandate, or if you are contemplating doing so, it’s best that you first discuss these plans with your company lawyer.

Metal Spectrum Plans Expected to Become the Norm


One of the positive aspects of the Affordable Care Act is that it gives employers the chance to offer a wide range of plans that let workers pick the coverage that’s right for them.

You can do this by offering “metallic spectrum plans,” each of which has different values and costs. Bronze, silver, gold and platinum plans are a way of serving a wide range of employee needs, budgets and concerns and reducing the potential of your healthiest employees buying more insurance than they may actually need.

While these plans are staples in the public exchanges, they are also available as group plans.

Metallic spectrum plans allow employers to stay compliant with the ACA by offering affordable coverage that covers the 10 essential benefits that are required by the health care law.

It would be wise for you to bone up on these plans as they will be the most common types available in group plan offerings in the future, experts predict.

The good thing about offering your employees choices of different metal plans is that not all of your workers have the same health care needs. If you only offer a few plans, some of your employees may be overinsured, while others may be underinsured.

For example, the most basic plans – bronze plans – have lower upfront costs in terms of premiums, but copays, co-insurance and deductibles are typically higher, compared to the top-tier plans. And the top plans, platinum, have higher upfront premiums, but lower copays, co-insurance and deductibles.

Typically, co-insurance is figured as a fixed percentage of the total charge for a service, such as 15% or 30%. Co-insurance kicks in after an enrollee has met his or her deductible. For example, assume they have already met their $2,000 deductible and the plan’s coinsurance is 15%. If the enrollee has a hospital charge of $1,000, their share of the costs would be $150.

Metal spectrum plans were spawned by the ACA, which requires that:

  • Bronze plans cover 60% of an enrollee’s medical costs during the year.
  • Silver plans cover 70%.
  • Gold plans cover 80%.
  • Platinum plans cover 90%.


Metal plans usually feature a member in-network cost-sharing maximum that is the same (currently $6,850 for individual plans), after which the insurance covers 100% of medical costs.

Deductibles and all maximums including cost sharing are calculated on a calendar-year basis.

Platinum and gold plans will often be more attractive to older workers, who may need more health care services and have a greater chance of having health problems than your younger employees.

Younger workers, if they are healthy, would likely be more interested in a bronze or silver plan, since they tend to visit the doctor less often and are less likely to get sick.

If you have questions about the different metal plans, or your employees want to know more, feel free to contact us.