Greenberg on Cuba
On a visit to Moscow in 1964, Hank Greenberg noticed a picture of a Havana office building on the desk of an official with the Soviet insurance company Ingosstrakh.
“That looks like the building where my company housed its insurance operations,” Greenberg — who was in Moscow seeking a travel risk reinsurance deal — told the official.
The C.V. Starr Companies had an office in Havana – pictured above – between 1943 and 1958.
“That may be,” the Soviet official replied. “Now it is the building where Ingosstrakh houses the Soviet Union’s Cuban operations,” he added.
“Please take care of that building,” Greenberg told the official. “We will get it back … soon.”
More than 50 years after Greenberg made that bold statement, as recounted in his 2013 book “The AIG Story,” the day that Starr Companies takes possession of its former property in Havana is not yet here.
“Change must come about, but how fast? I can’t answer that.” – Hank Greenberg, CEO and Chairman of the Starr Companies.
With the recent easing of travel restrictions to Cuba by the U.S. government, however, Starr Companies’ executives are checking on the condition and ownership of the building just the same.
Untangling the history of that Havana building is just one of the opportunities that are on the minds of business people in the United States since travel restrictions to Cuba were eased in January.
Greenberg expresses the hope that his company can one day re-open an insurance operation in Havana. At the same time, Greenberg said that there is much work yet to be done, on the part of both the public and the private sector, before anything like that can happen.
“Both governments have got to agree on the speed by which normalization would come into being,” Greenberg said.
Since the restrictions were eased, Greenberg reports that the Starr Companies’ travel services subsidiary Assist-Card International Holdings, which it acquired in 2011, is already seeing an uptick in inquiries from businesspeople interested in its travel protection services in Cuba.
“From what we can discern, there is a great deal of interest and a pent-up need to travel,” Greenberg said.
The hotel and restaurant business, agriculture and travel-related industries like cruise shipping and aviation are just a few of the industries that will see opportunities in nearby Cuba as relationships between that country and the United States open up.
There will also be an intense interest, Greenberg said, for people of Cuban descent who are United States citizens eager to visit their origin country.
However, more evolution in government relations must occur before many of those dreams can become a reality.
“Change must come about, but how fast? I can’t answer that,” Greenberg said.
One thing Greenberg is certain of. Free trade is the quickest route to building lasting bonds between the United States and Cuba.
“I think that where trade increases between countries generally you see change in attitudes and building better trust between countries. You learn from each other, it’s a faster way to normalize relations than anything I can think of,” Greenberg said.
Greenberg stressed that Assist-Card International isn’t the only U.S.-based insurance company or subsidiary in the travel risk business.
The Starr chairman indicated though that he expects his company to be a strong competitor.
“The challenges of doing business in Cuba are substantial,” Greenberg said.
“But Starr is well-positioned and prepared to leverage our relationships and global network to support our clients’ entry into this market.”
The ACA and International Assignees
The Affordable Care Act and its related implementation and reporting requirements make 2015 particularly challenging for employers with international assignees.
Employers are watching the Supreme Court case for its possible effects on employees and the employer penalties, but most are moving ahead with the reporting provisions, which are generally not directly affected by the provision being considered by the Supreme Court. This year may be particularly challenging for those with international assignees.
Some companies are still in the process of designing a health care plan that complies with the ACA; others are evaluating programs they already offer. Wherever your plan is along that continuum, large employers — with at least 50 full-time-equivalent employees as defined by the ACA — need to bear in mind the implications of international assignees and take steps to address compliance for their globally mobile employee base.
To start, note that the hours of service by employees performed within the United States determine whether an employer meets the 50 full-time-equivalent employee threshold.
A company that passes that threshold is a large employer that must offer the required health care coverage to actual full-time employees (those who work on average 30 or more hours a week, also within the United States) and their dependents in order to satisfy the law’s mandate.
The determination of a large employer must consider the employees of all the trades and businesses under common control — including foreign entities — under the U.S. controlled group rules of Internal Revenue Code section 414 (which apply to U.S. qualified plans and certain other benefits).
A foreign company with no U.S. entities or affiliates in its controlled group can still be considered a large employer based on the number of employees providing services within the United States.
Individual Mandate for International Assignees
The individual mandate under the ACA obliges individuals to obtain their own health insurance or incur their own penalties. Failure by an individual and members of the individual’s household to have health coverage — whether provided by an employer or obtained privately — may subject the individual taxpayer to penalties.
If any employer (large or not) pays for or reimburses employees for insurance purchased individually on a health exchange or from a private insurer, this coverage may satisfy the employee’s individual mandate requirement but may force the employer to pay a different IRS penalty.
Covering the employee’s cost for such coverage on a pre-tax basis may expose the employer to penalties of $100 per day per impacted employee.
Separate from this penalty, purchases of private coverage by employees on a health exchange or otherwise are not employer-sponsored coverage that satisfies the employer mandate.
Coverage That Satisfies the Employer Mandate
Eligible employer-sponsored coverage includes group health coverage under insured and self-insured employer plans typically offered by U.S. employers.
However, when an international assignee is covered under a non-U.S. plan, or a plan designated as an expatriate plan, only certain types of coverage qualify as minimum essential coverage (MEC) mandated by the ACA, including:
- Certain self-insured group health plans;
- Certain insured expatriate health plans (with plan years ending on or before Dec. 31, 2015); and
- Certain insured plans regulated by a foreign government.
Additionally, coverage offered for all full-time employees, including international assignees, must be minimum value and affordable to comply with the requirements of the employer mandate.
Failure to meet any of the above criteria may subject employers of international assignees to the employer shared responsibility penalty if any full-time employee obtains a credit or subsidy for coverage on a health care exchange.
Minimum value generally means the employer must pay at least 60 percent of the cost of the health coverage for the employee based on actuarial values — the equivalent of the “bronze” level of coverage available on health care exchanges.
To be affordable, the employee’s portion of the premium for single coverage generally must not cost more than 9.5 percent of the employee’s household income.
Because an employer cannot determine an employee’s household income, the regulations offer three methods to determine whether the cost is affordable for an employee.
Generally, the three safe harbors provide that the employee’s portion of the premium for single coverage cannot cost more than 9.5 percent (an indexed percentage) of:
- The employee’s Form W-2, box 1 wages;
- The Federal Poverty Limit based on the annual poverty rate for a family size of one; and
- 130 hours multiplied by the employee’s rate of pay at the beginning of the year.
Whichever method an employer chooses to use must be applied uniformly and consistently among a reasonable category of employees.
Understanding the Reporting Process
Effective Jan. 1, the IRS added new reporting responsibilities under the ACA and requires employers to submit new forms in early 2016. Company IT systems need to be in place to capture this information as required.
Draft versions of Form 1095-C, and the 1094-C Transmittal Form require large employers to demonstrate that the health care coverage they offer is MEC that meets the minimum value and affordability requirements.
This reporting is required of large employers, regardless of whether they offer health coverage or not, and is different than the requirement to report health care costs on employees’ Forms W-2 (which has been required since 2012).
The new forms require details of health coverage offered to each employee, including months of coverage offered, cost of coverage, whether coverage meets minimum-value rules and “affordability rules,” and whether the coverage was offered to almost all full-time employees and their dependents.
In addition, if any employer (large or not) self-insures health coverage, separate information is required on a separate part of Form 1095-C for large employers, and on Form 1095-B and the 1094-B Transmittal Form for non-large employers.
This information must include not just the employee, but all family members who are covered under the plan.
Foreign insurers and employers are also accountable for these reporting requirements; this may mean an employer identification number is required for a foreign entity (including those within a large employer’s controlled group).
Communication is Key
Organizations need to ensure that the lines of communications are open between HR, finance and IT, among other departments, to ensure that the right information is available to meet reporting requirements.
Employers should consider communicating with international assignees their obligations under the ACA, particularly if there are concerns that their foreign coverage does not meet the individual mandate and may subject the assignee to the individual penalty.
Employers may also want to consider whether the individual penalty should be part of their tax equalization policy.
Even if the foreign coverage is MEC for purposes of the individual requirement, employers need to consider whether it meets the employer shared responsibility requirements.
When evaluating or designing health care plans, organizations need to assess what systems are already in place that can be utilized for reporting purposes. Chances are large organizations are already collecting the information needed by the IRS.
As with other business challenges, globalization adds more pressure when it comes to efficient and accurate reporting.
This may mean communicating with foreign employers offering the coverage to the assignee, or foreign insurance companies if the plan is an insured plan.
Although these forms are not due until Jan. 31, 2016, they rely on data collected and compiled starting Jan. 1, 2015. If the information is not reported accurately or retained properly, even if the plan is compliant, the time spent resolving those gaps can translate into wasted resources and added expenses.
RIMS Recap: Tech Trends that Could Change Everything
Last month, Gordon Clemons, CEO and Chairman of CorVel Corporation, presented at the RIMS Conference in New Orleans, La. about emerging technology and how it is impacting risk management and workers’ compensation. The discussion served as a springboard for new insights on how technology will change the industry, and reaffirmed the need for integrated systems and human interaction for the best results.
The presentation noted the future is here – and technology is constantly evolving in hopes of outpacing tomorrow’s needs. As these technology platforms become more inherent in daily life, the gap in translating their utilization to workers’ compensation will begin to close.
Technology in Healthcare
While many consumer-based technology advancements exist in other industries, perhaps most notably in the retail space helping vendors to reduce various delays in the sales experience, people may forget that healthcare, too, is a consumer industry. And as such, healthcare also experiences workflow lags, which can be collapsed.
While patients and claims may not lend themselves as freely to mobile applications and technology that subscribes to the “Internet of Things” philosophy, the rapid rate of development foretells the not-too-far-off arrival of the “a-ha,” “wow factor”-type application that consumers are seeking in the healthcare industry.
Once we get there, we can only expect that the Pangea of resources will yield better outcomes. The potential impact to medical management includes more affordable/accessible healthcare, patient convenience, personal assistance, automatic inputs to claims systems and less administration from both patients and injured workers.
“Healthcare is stubborn about change. There are more data points in healthcare and there is a greater need for high quality and accuracy,” Clemons said.
Tech Trends for the Next Digital Decade
As an industry advocate in all things innovation, CorVel has been keeping tabs on emerging tech trends. As they begin to influence in other industries, it sparks the question – will they eventually change workers’ compensation?
Here are some of the trends on CorVel’s radar:
Smart phones and tablets were the first mobile devices to really start to gain traction across people’s personal lives. Since then, wearables (like Fitbits and smart watches) have been part of the next digital generation to be taken up by consumers.
As these personal devices quickly advance, wearables could offer payors and employers added insight into the wellness of claimants through the extent of their retrievable data.
Beacons are devices that use low-energy Bluetooth connections to communicate messages or triggers directly to a smart device (such as a phone or tablet). Retailers have started using this technology, sending offers to near-by consumers’ phones. Now the concepts of smart mirrors and smart walls offer a one-stop-shop with recommendations related to the preferences of the shopper – making a hyper-efficient business model. It is possible that we could see these devices adapted to being a catalyst for healthcare’s business model by reducing the delays of administrative work.
Formally known as unmanned aerial vehicles (UAV), drones can be remote-controlled or flown autonomously through pre-defined flight plans within their internal systems. Some carriers are testing the use of drones to potentially be used to evaluate property damage and responding to natural disasters.
As most injuries reported in workers’ compensation are musculoskeletal injuries, the industry lends itself well to the benefits of telecommunications and telemedicine. With the rise of electronic capabilities, telemedicine becomes another option to help guide an injured worker through their entire episode of care, reducing time delays.
In order to get to that point in time, implementing these trends (and those that are yet to be launched) will only be as successful as the population willing to accept them. Buy-in will require a commitment to the long-standing pillars of the industry. According to Clemons, “While technology can truly move the needle in workers’ compensation, it will take more than bells and whistles to maximize its impact.”
“People’s feelings are valid. The skepticism surrounding new technology is not misplaced, but neither is the enthusiasm,” Clemons said.
New Trends, Same Priorities
Beyond the buzzwords and hype surrounding the latest apps and devices, for new technology to succeed within the workers’ compensation realm, it boils down to the two primary concepts that drive the industry to begin with – effective infrastructure and a people-first philosophy.
The power of applicable resources and the actionable data that results from them is in the foundation of the systems themselves; that primarily being through the influence of integration. It is not a new concept; however, as technology advances and the reach of analytic capabilities broadens, it is important to find a provider that can harness this data and channel it into effective workflows to increase efficiencies and promote better outcomes.
CorVel’s proprietary claims management system has been developed and supported by an in-house, full-time information systems division to be intuitive and user-friendly. Complex, proprietary algorithms link codified data across the system, facilitating collaboration between services, workflows, customers, and technology and eliminating the risk that a crucial piece of information will be missed. The result is an active “ecosystem” providing customers with actionable data to provide the most accurate, comprehensive picture at any time, while also collapsing inherent delays.
For the injured worker, the critical human touch connection in the workers’ compensation process can never be minimized. By cutting lag time throughout the various inefficiencies underlying the industry’s workflows, CorVel can connect injured workers with quality care sooner. As systems advance, claims and managed care associates do not have to spend as much time on administrative work and will instead be able to devote more time to the injured workers, reviving the human touch aspect that is just as impactful within the industry.
Regardless of the technology that lies ahead, CorVel looks to the future with investments in innovation, while not losing sight of their role and responsibility to clients and patients. Dedicated to constant improvement for the services they provide injured workers and industry payors, CorVel is committed to improving industry services one app, click, drone (or whatever is yet to come) at a time – perhaps something to discuss in San Diego at next year’s RIMS conference.
For more information, visit corvel.com.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with CorVel Corporation. The editorial staff of Risk & Insurance had no role in its preparation.