Archive for May, 2017

Insurance Commissioner Okays Benchmark Rate Decrease for California Employers

Stock market background design

California’s insurance commissioner has approved a recommendation to reduce average baseline rates on workers’ compensation policies by 7.8% at the mid-year mark.

The mid-year reduction to the baseline rate is largely the result of reforms that were introduced in 2013 that have sped up the settlement process for claims (including many long-term claims), in addition to reducing medical costs.

Also, because of these reforms the cost of adjusting workers’ comp claims in California has dropped over the past few years.

Insurance carriers use the benchmark rate – also known as the pure premium rate – as a starting point for pricing their policies.

The benchmark rate is an average across all industries and employers may or may not see decreases in their workers’ comp premium come renewal as many other factors are at play, not the least of which is the employer’s own safety history.

Insurers are free to price their policies as they wish under California insurance law.

Region is also important and insurers are pricing policies for Southern California employers higher than for the rest of the state due to the continuing problem of cumulative trauma claims being filed by workers post-termination, mostly in the greater Los Angeles area.

“Cumulative injury claims often involve multiple injuries [that have developed over time], are very frequently litigated, are filed disproportionately in the Los Angeles Basin and often are filed on a post-termination basis,” the Workers’ Compensation Insurance Rating Bureau stated in a report on the state of the market as of Dec. 31, 2016.

Indeed, while cumulative trauma claims accounted for just 8% of all claims in 2005, in 2015 they comprised 18% of all claims, according to the Bureau.

The state insurance commissioner sets the benchmark rate with guidance from the Rating Bureau, which recommended a 7.8% rise to him in April.

The approved rate is 7.8% less than the pure premium rate for policies incepting on or after Jan. 1, 2017. The average advisory pure premium rate starting July 1 will be $2.02 per $100 of payroll. That’s compared with $2.19 per $100 of payroll as of Jan. 1.

The pure premium rate is a reflection of an overall decline in the total cost of claims thanks to SB 869, the legislation that was signed into law in 2013.

By addressing numerous cost drivers it has helped reduce medical costs, expedite claims settlements, and reduced the frequency of workers’ compensation claims. The legislation also increased benefits for some injured workers.

As a result, the average projected ultimate cost of a claim increased to $82,234 at the end of 2016, compared to $74,699 in 2013.

OSHA Pulls the Plug on Electronic Reporting Rules

Concept of electricity. Man is pulling a large power plug with a cable though some green hills.

Federal OSHA has suspended its much anticipated and dreaded electronic filing rules for workplace injury and illness records.
The rules, put in place during the Obama Administration, would have required organizations with 250 or more employees to submit electronically information from OSHA Forms 300 (Log of Work-Related Injuries and Illnesses), 300A (Summary of Work-Related Injuries and Illnesses), and 301 (Injury and Illness Incident Report).

The same rules would also apply to employers with between 20 and 249 employees in certain industries, including agriculture, construction, manufacturing, retail and transportation.

A major thrust of the rules was to name and shame employers with poor workplace safety histories, and the latest move will essentially keep these records from being published.

The requirement was to be phased in over two years. This year, all covered establishments had until July 1 to turn in their 2016 forms in electronically, but OSHA never launched the website for companies to submit the information.

The employer community, particularly the construction industry, had heavily lobbied the Trump Administration to jettison the new rules, saying that if injury records were publicized they could unfairly hurt the reputation of employers.

The new rules were supposed to be an extension of an OSHA requirement between 1995 and 2012 that required some 180,000 establishments in high-hazard industries to submit their 300A forms by mail. The program lapsed in anticipation of the now extinguished new rules.

Then in May, OSHA wrote on its website that it “is not accepting electronic submissions of injury and illness logs at this time, and intends to propose extending the July 1, 2017 date by which certain employers are required to submit the information.”

As a result, the existing rules for the forms remain in place – and particularly that employers post Form 300A in a conspicuous place in the workplace every year starting Feb. 1 for two months.

While employers are not required to send their completed forms to OSHA, they must retain the forms at their establishments for five years after the reference year of the records.

 

Compliance with existing rules

Even if you are not focused on qualifying for either of these exemptions, there are still other important things to remember about posting your 300A.

  • If you are required to post a 300A, you need to do so whether or not you had any injuries in the past year. It is completely appropriate – and required for covered businesses – to post a 300A saying that you had no injuries or illnesses.
  • Sign the 300A when you post it. That is required, and something businesses often forget to do.
  • Post the 300A in an accessible location where employees can easily see it, and keep it posted until April 30.
  • Be sure to post the 300A, and not the 300. Not only is this problematic because it is the incorrect form, but the 300 contains employee names, so making it public can result in privacy violations.
  • You do not need to post the official 300A form from OSHA’s website; it is acceptable to post your own, homemade form containing equivalent information if you would prefer to do so.

Drug Use Skyrockets among American Workers

Tableau of drugs- pills, coke, marijuana, and alcohol.

Drug use is rapidly increasing among American workers, as more states liberalize marijuana laws, cocaine makes a resurgence and more people abuse amphetamines and heroin.

A new study by Quest Diagnostics Inc., a workplace drug-testing lab, found that the number of workers testing positive for illicit drugs is higher than at any time in the last 12 years.

That puts employers in a tricky predicament, particularly if employees are using at work, which could reduce productivity and also make them more susceptible to workplace injuries since they may not be as focused as they should be on their work.

In 2016, 4.2% of the 8.9 million urine drug tests that Quest conducted for employers turned up positive, compared to 4% in 2015 and 3.5% in 2011. The rate was the highest since 2004, when 4.5% of tests showed evidence of potentially illicit drug use.

While there were marked increases in positive tests for most illicit drugs, the surprising excption was prescription opioids like hydrocodone and oxycodone, thanks o stricter enforcement in many jurisdictions around the country.

Marijuana is the most commonly used drug among U.S. workers and was identified in 2.5% of all urine tests for the general workforce in 2016, up from 2.4% a year earlier. In oral fluid testing, which detects recent drug use, marijuana positivity increased nearly 75%, from 5.1% in 2013 to 8.9% in 2016.

The highest increases for marijuana usage among workers seemed to be in states that have recently legalized the recreational use of marijuana.

The number of workers testing positive in Colorado rose 11%, while in Washington there was a 9% increase. The rates of increase were more than double the increase nationwide in 2016.

 

Changes in test-positives by drug:

  • Amphetamine: Up 8%
  • Marijuana: Up 4.2%
  • Heroin: Zero (after 146% increase in four years prior)
  • Oxycodone: Down 4%
  • Cocaine: Up 12%

 

 

Implications for businesses

About 12% of workers who die on the job test positive for drugs or alcohol in their system at the time of the incident. And incidentally, one OSHA study found that the most dangerous occupations, like construction and mining, also have the highest drug use rates among workers.

Employers suffer from hiring substance abusers in many ways. Not only do they run the risk of having deadly or dangerous accidents occur, but substance abusers also cost employers money in other ways, including poor productivity and decision-making.

Substance abusers may:

  • Have poor work performance.
  • Frequently call in sick or arrive late.
  • Frequently change workplaces.
  • Struggle with productivity.
  • Injure themselves or others at work.

 

The takeaway

If you’re concerned, you can initiate an effective workplace drug program that includes drug testing before hiring and during employment – and the consequences for violating the rules.

You should have in place rules for working while under the influence and the ramifications for doing so.

You may also want to consider an employee assistance program for employees who feel they may have a problem, as well as for those who feel they’re developing a problem. A quality assistance program will offer services such as counseling to deal with substance abuse problems.

You may also want to consider holding meetings about health and safety and drug use. Provide education about what addiction looks like and why people begin to abuse drugs/alcohol. Education can help employees understand how to support those that are struggling, as well as remove negative stereotypes often associated with addiction.

Provide health benefits that offer a more “comprehensive coverage” for addiction. This includes addiction assessment (screening), treatment, aftercare and counseling.

 

IRS Adjusts Out-of-Pocket Maximums for HSAs, HDHPs for 2018

Torn dollar with HSA ( Health Savings Account ) paper message

This month, the Internal Revenue Service released the 2018 inflation-adjusted amounts for health savings accounts and high-deductible health plans.

The two types of account are related, as all HDHP participants must also have an accompanying HSA. But HSAs are also available to participants in more traditional health plans that do not have high deductibles.

If you have HDHPs for your employees or are considering offering one for 2018, you’ll want to pay attention to the changes for that year:

  • The HSA maximum calendar-year contribution will be raised to $3,450 in 2018 from the current $3,400 for self-only coverage, and to $6,900 for other than self-only coverage from the current $6,750.
  • The HDHP minimum annual deductible will rise to $1,350 for self-only coverage from the current $1,300. The HDHP minimum annual deductible will rise to $2,700 for other than self-only coverage from the current $2,600.
  • The HDHP maximum out-of-pocket expense for self-only coverage will increase to $6,650 from the current $6,550. And the HDHP maximum out-of-pocket expense for other than self-only coverage will rise to $13,300 from $13,100.

 

Please note that if you have a grandfathered plan, the Affordable Care Act limits the out-of-pocket maximum. For 2014, the limit was equal to the out-of-pocket maximum for HSAs.

So, the maximum out-of-pocket that may be used under a non-grandfathered health plan in 2018 will be $7,350 for self-only coverage and $14,700 for other than self-only coverage.

Insurance Investigators Mine Social Media to Ferret out Fraud

İstanbul, Turkey - January 17, 2017: Hands holding a Rubik's Cube covered by social media icons on a wooden desk. Paper cubes also with Popular social media services icons, including Facebook, Instagram, Youtube, Twitter.

Insurers are increasingly using social media to track down workers who are perpetrating workers’ comp and other liability fraud by faking injuries or staying on the dole after they have healed.

Investigators are increasingly making use of Facebook, Instagram, LinkedIn and other online social media sites to nab claimants who are fraudulently trying to collect payments. But while social media can be a goldmine of information on claimants, investigators have to act ethically and should do so quickly, experts say.

If an injured worker posts pics of themselves being active on Facebook, it gives investigators quick, actionable evidence for their probes. But that’s only if the images are shared publicly and not just with their friends.

Workers claiming disability payments gift investigators evidence when they post photos of themselves being fit and active on Facebook, for example, but only if the images are shared publicly, experts say.

While insurers are doing their part, employers are also getting in on the action. According to a report in the trade publication Business Insurance, one large grocery chain conducts social media research for auto and general liability claims and other employers research the social media profiles of all injured workers who have workers’ comp lost-time claims.

Many firms have started using social media investigation software that can quickly help them find an individual’s address, phone number and their relatives or associates by indexing sites such as Facebook, Twitter, Instagram and YouTube.

And while many people share their personal information and posts with friends, some post everything publicly. But, by researching the profiles of a claimant’s family and friends, investigators usually can find pictures and other information that has been publicly shared about the claimant on other people’s pages.

While this takes some time, they can usually find recent pictures or videos of anyone using this method, investigators say.

Investigators are also using something called “geofencing.” The practice involves using GPS or radio frequency identification to search for public social media posts that were uploaded within a certain distance of an incident, like a car accident.

Sometimes they are able to locate photos of videos taken by bystanders who have

publicly shared posts. And since most posts on Facebook, for example, use GPS to show location, this can be extremely useful to investigators.

Often, they can even find potential witnesses to an incident.

 

Use with caution

While social media can provide valuable information to prove insurance fraud or abuse, the key is to use this technique ethically. For example, investigators should not dupe someone into accepting them as a “friend” so they can then start rooting through their social media posts.

At the same time, investigators should not try the same tactic with the individual’s friends or family members to gain insight.

That said, if you are looking to control workers’ comp and litigation claim costs, you should add social media investigation into your tool kit if you suspect fraud.

Experts advise employers to index information on claimants’ social media profiles as soon as possible after a claim is filed – and before they can edit their profile.

Also, be aware that many applicant attorneys are warning their injured worker clients to not post on Facebook during their claims.

Thomas Domer of the Domer Law firm in Wisconsin writes: “Use of a Facebook page poses real dangers for injured workers pursuing workers’ compensation benefits.

“Since Facebook is a public site, anything posted can be used by respondent insurance companies in claims denial. Even the most benign postings (birthday parties, family gatherings, etc.) can pose problems. For example, a grandparent lifting a 30 pound grandchild when doctors have imposed a 10 pound lifting limit could damage a claim.”

 

Social media busts
Here are two examples of social media investigations bearing fruit in regard to uncovering workers’ comp claims fraud.

 

The wayward nurse

A nurse in Ohio had filed for workers’ compensation after injuring herself on the job as an in-home care provider. But her employer smelled something fishy and did some research on her LinkedIn page, which showed she was performing the same kind of duties at three other employers as those that had caused her injury.
So, while she was collecting workers’ comp benefits from one employer, she was still actively employed with others. After pleading guilty, she was ordered to pay back the $12,938 that had been paid to her in indemnity benefits – and was also sentenced to a year in jail.
‘Disabled’ worker back on the job

A worker who was collecting workers’ comp benefits from an injury sustained on the job in Ohio was found to be working as a rescue technician for a company in Arizona, thanks to the pictures he had posted of himself on Facebook doing rapelling work.
He pleaded guilty to fraud.

Court Decision Shows Extent of Employer Liability for Traveling Employees

Frying Egg Roll

The employer of a worker who causes damage during their off hours on a business trip may be held liable for them acting “in the scope of their employment,” according to a federal court decision.

The ruling will allow the case to go forward after the court declined to uphold the employer’s motion to dismiss it as a defendant in the lawsuit after its employee had caused $147,000 in damage to a hotel room while on a business trip. The employee fell asleep while frying egg rolls on the stovetop in his room, after which a fire broke out.

The case illustrates the importance of having policies in place for traveling workers in order to reduce your company’s liability when they are on a trip on your behalf.

Lloyd’s of London paid for the original damage but later sued the worker and his employer, FlightSafety International Inc., to collect the damages. Lloyd’s says that by virtue of the fact that he was on a business trip, the man was acting within the scope of his employment when he started the fire.

Hence, FlightSafety is also liable for the damages to the Residence Inn in Wichita, Kansas.

In making its case, Lloyd’s said that FlightSafety had a contract for its employees to stay with the hotel chain. “The entire purpose of defendant Foster’s trip was business on behalf of defendant FlightSafety,” Lloyd’s wrote in its complaint.

The court said that it was not yet clear if the worker was acting outside the scope of his employment and that that fact needs to be tried at the trial court level.

The decision sends the case back to the trial court for hearing.

 

<B>The takeaway</b>

It’s quite common for employees to engage in risky behavior when on business trips. On Call International in a 2015 survey of 1,000 business travelers found that:

  • 27% of respondents admitted to binge drinking while on work-related trips, and
  • 11% said they had picked up a stranger at a bar while traveling for their jobs.

 

With these findings in mind and in light of this decision, employers should keep in mind that other courts have also found them liable when their workers are driving during their off hours while on a business trip, say going out to dinner on their own.

While responsibility ultimately falls on the business traveler to act in a responsible and safe manner, employers should establish appropriate parameters and rules and be clear about the expectations it has of its employees while they are out representing the organization.

What the Latest Version of the AHCA Would Mean for Employers

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The American Health Care Act that was passed by the House of Representatives by a small margin would repeal the employer mandate and the reporting requirements that the Affordable Care Act ushered in.

While Senate Republicans are likely to start from scratch and hammer out their own ACA replacement, for now, the only legislation in play is the controversial AHCA.

So, what’s in it for employers?

 

Eliminates the employer mandate – The ACA mandate requires that employers with 50 or more full-time or full-time-equivalent workers provide health insurance for their staff. The AHCA eliminates this requirement. This will likely not have a significant impact on a large number of organizations since they offer benefits to better compete for talent.

 

Delays the “Cadillac tax” again – Congress has already voted once to delay the implementation of an annual 40% excise tax on plans with annual premiums exceeding $10,800 for individuals or $29,500 for a family. The tax is slated to take effect in 2020, but the AHCA delays that to 2026. While the tax is supposed to be paid by insurers, it’s anticipated that they would pass it on to employers.

 

Changes tack on essential benefits – The ACA also requires that all health plans provide 10 essential benefits, including doctors’ services, inpatient and outpatient hospital care, and prescription drug coverage. The AHCA would allow states to have the final say in what health insurance plans should include.

That said, the bill would seem to allow national employers to opt out of essential benefits and offer stripped down plans that would likely be less expensive for employers and their covered workers, but also offer fewer benefits.

 

Expands health savings accounts

The measure would also greatly increase the amount of cash an individual can set aside pre-tax into their HSA. The current maximum an individual can put into an HSA is $3,400, but under the AHCA that would be increased to $6,550. For families, the HSA maximum would jump to $13,100 from the current $6,550.

The AHCA removes the cap on flexible savings accounts as well, which was set at $2,600 under the ACA.

These two changes would benefit employees who take advantage of these health care savings vehicles.

 

The takeaway
The AHCA does much more than the above, but most of the rest of the legislation is really geared toward the individual market and also tries to deal with the issue of pre-existing conditions.

The AHCA would also:

  • Eliminate the tax penalty for individuals who fail to secure coverage.
  • End funding for Medicaid expansion.
  • Replace the ACA’s cost-sharing subsidies, which are based mostly on consumers’ incomes and premium costs, with tax credits that increase for older individuals.
  • Repeal taxes on the wealthy, insurers, and drug and medical device makers.

 

To be clear, this legislation is not the end game. House Republicans were able to pass the legislation by a razor-thin margin after much wrangling, a feat that will be difficult to repeat in the Senate.

Also, it seems likely that Senate Republicans will start from scratch with their own legislation and that the AHCA may never see the light of day in the Senate.

Political stakes are also higher for senators and the GOP holds a slight 52-48 majority in the upper house. It would only take a few defectors to sink any attempt at repealing the ACA.

 

Legislation Would Let Employees Trade O.T. for Vacation Time

Romantic couple on the beach at colorful sunset on background

A newly proposed bill would change the Fair Labor Standards Act’s overtime mandate to allow workers to trade overtime pay for compensatory time off.

Introduced by Martha Roby, a Republican from Alabama, the Working Families Flexibility Act of 2017 would:

  • Cap the amount of paid time off that workers can accrue each year at 160 hours.
  • Require employers to pay out annually any unused comp time.
  • Give employers 30 days to pay out any unused comp time beyond 80 hours.
  • Require employers to pay out any unused comp time accrued upon termination for any reason.

 

Under current FLSA rules, employers must pay nonexempt workers overtime at a rate of 1.5 times their wage for every hour worked beyond in a 40-hour week.

The bill, if passed, would allow nonexempt workers to earn compensatory time off at a rate of no less than 1.5 times every hour for which they would have otherwise earned overtime pay.

This bill is a novel approach that gives both employers and employees an option of more time off every year, which in turn can help staff better achieve a work-life balance that the standard arrangement of two weeks’ vacation every year may not provide.

Some workers may prefer more time off over additional funds and would be happy to take a longer vacation instead of more money.

The legislation would allow employees to choose which option they would prefer, and the employer must honor their choice.

By virtue of the fact that the legislation was floated by a Republican and that the Trump administration has expressed an interest in laws that would give employees time off, such as after the birth of a baby, there is a chance the bill can advance in the House.