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Monthly Archives

January 2008


By Employment Resources | No Comments

Benefits administrators are all too familiar with the amount of work associated with open enrollment season. You can make it less labor intensive if you assess the effectiveness of your company’s enrollment processes before open enrollment begins.

This list of best practices can help you determine where adjustments are needed to make the process more efficient:

Take advantage of the pre-planning phase – The first step is to clarify your company’s objectives. As you are evaluating benefit plan designs, whether it’s consumer-directed health plans, health savings accounts or reimbursement accounts, decide which options are in sync with your employee population and the company’s overall goals. Also consider how technology will be used to ensure the efficiency of the enrollment process. Other factors to consider include whether benefits administration will be provided in-house or outsourced, and your organization’s budget constraints for benefit-related costs.

Define your project plan – An effective project plan should stipulate:

  • Enrollment period dates
  • Necessary tasks, including duration and resources required from other departments
  • Availability of resources and how they will be allocated
  • The amount of lead-time required for adding new populations or changing carriers/vendors
  • A training schedule for benefits staff and customer service representatives

When developing a project plan, it’s essential to manage the process at every stage. In addition, you should have a contingency plan to help minimize risks.

Educate your employees about maximizing their benefits – According to MetLife’s 2005 Employee Benefits Trend Study, more than 80% of employees among certain life stages, such as singles, believe their employers need to provide more benefits education to enable workers to select the best benefits options. Clearly, communication has risen in importance as a crucial piece of the enrollment puzzle.

Employees should be provided with tools to help them navigate the health care system along with education on making smart health care decisions. This can be accomplished through direct mail benefits information, health and wellness fairs, employee meetings and online decision-making tools, such as benefits calculators.

It’s also important to inform employees about benefit trends in the industry, how much the employer is contributing for benefits, and when the employer adds more value to the health care plan. This will help employees understand the overall value of the benefit plan.

Anticipate post enrollment activity – The tasks performed in the post enrollment period are just as important to the process as those performed during open enrollment. These include:

  • Timing the distribution of ID cards
  • Preparing a schedule for payroll feeds
  • Timing the last payroll period
  • Automating payroll deductions
  • Following up on carrier inaccuracies
  • Conducting quarterly audits with carriers
  • Preparing for the new plan year


By Your Employee Matters | No Comments

This case focused on employers trying to reduce healthcare expenses. The plaintiff alleged that an employee was terminated because the employer no longer wanted to cover a child’s medical expenses. Since the defendant had more than 15 employees, it was subject to the requirements of the ADA. Disability discrimination includes “excluding or otherwise denying equal jobs or benefits to a qualified individual because of the known disability of an individual with whom the qualified individual is known to have a relationship or association.” The courts have categorized three types of ADA “association discrimination” cases:

“[The categories] can be illustrated as follows: an employee is fired (or suffers some other adverse personnel action) because (1) (‘expense’) his spouse has a disability that is costly to the employer because the spouse is covered by the company’s health plan; (2a) (‘disability by association’) the employee’s homosexual companion is infected with HIV and the employer fears that the employee might also have become infected, through sexual contact with the companion; (2b) (another example of disability by association) one of the employee’s blood relatives has a disabling ailment that has a genetic component and the employee is likely to develop the disability as well (maybe the relative is an identical twin); (3) (‘distraction’) the employee is somewhat inattentive at work because his spouse or child has a disability that requires his attention, yet not so inattentive that to perform to his employer’s satisfaction he would need an accommodation, perhaps by being allowed to work shorter hours.”

In the Trujillo case, managers knew about the cost of the child’s health care and health care expenses were included within departmental budgets. Although the defendant argued that both Mr. & Mrs. Trujillo were fired due to tardiness, the temporal proximity to the child’s illness contributed to an inference of discrimination.

Employer Lesson: Although ERISA and the ADA allow you to discriminate in levels of health care coverage based on an employee’s position, it does not allow you to discriminate against an employee because a sick relative might be covered by the policy.


By Construction Insurance Bulletin | No Comments

Tempted to hire a private investigator to spy on employees claiming Workers Compensation? You’re not alone. Luckily, covert operations can be avoided by taking a proactive approach to preventing Workers Compensation fraud.

Here are some effective tips for shielding your business.

Watch for red flags
Knowing common signals of Workers Compensation fraud is an important step in protecting your business.

Some red flags to watch out for are:

  • There are no witnesses of the accident (or the only witnesses are friends/family members of the injured employee).
  • It is difficult or impossible to reach the employee.
  • The employee changes his or her story about the accident.
  • The accident happened on a Friday afternoon but wasn’t reported until the following week.
  • The accident happened outside of the employee’s normal working hours.

Not all claims that occur under these circumstances are fraudulent, but it may be worth it to take a second look.

Make safety a priority at your business
Creating a safer work environment not only lowers the chance of accidents, it also reduces the opportunity for employees to fake an injury. Your business should frequently conduct safety inspections of all work areas and any equipment. Remove hazards immediately, and be sure to document the repairs you make.

Thoroughly investigate workplace injuries
Take the time to review any surveillance videos of the area where the incident allegedly took place. Also, be sure to interview all witnesses shortly after the accident happens — and take any rumors of dishonesty or fraud seriously.

Hire wisely
People who lie on résumés are more likely to lie about workplace injuries. Make it a routine part of your hiring process to conduct background checks on all applicants. And don’t neglect to verify their references and any other information included on their applications and résumés.

Clearly communicate your Workers Compensation policies
It’s important to discuss your Workers Compensation policies with all employees. Tell them what to do when an injury occurs, and explain that insurance costs affect the amount of money available for raises and bonuses. Also, make sure you tell your employees that Workers Compensation fraud is a serious crime that will lead to termination and prosecution. Post fraud awareness posters in conspicuous locations explaining what fraud is and what its consequences are.

Implement a return-to-work program
Workers Compensation fraud is less inviting when employers have transitional duty for injured employees. Make sure your employees know that if they get injured on the job, your business will work with the doctor to help them return to work as soon as possible.

Stay in touch
Don’t lose contact with employees who are off work because of an on-the-job injury. Injured workers who are hard to get a hold of might be committing Workers Compensation fraud. Contact them periodically, and document each contact (whether you were able to reach them or not).

Get signed statements when employees leave
In your exit interviews, obtain signed statements from exiting employees stating that they have or have not had any unreported injuries at work. This will go a long way in discouraging post-termination claims.
Workers Compensation is a major expense for most businesses, and Workers Compensation fraud makes it more costly for everyone. It pays to take a proactive stance to reduce Workers Compensation fraud at your company.


By Construction Insurance Bulletin | No Comments

A survey about worksite accidents and injuries conducted by the Bureau of Labor Statistics (BLS) revealed that 84% of all workers who suffered head injuries were not wearing head protection. The majority of these workers were injured while performing their normal jobs at their usual worksites. The researchers reported that more than 50% of the injured workers were struck in the head while they were looking down and about three-tenths were hurt while looking straight ahead. A third were injured as a result of bumping into stationary objects.

With statistics like these, why are employees still so careless about wearing head protection? The answer to that question is a combination of three factors:

Discomfort while wearing hard hats – Too heavy and lack of ventilation are two reasons employees give for not wearing head protection. The problem with heaviness stems from the fact that older style hard hats didn’t have enough surface to evenly distribute the helmet weight. To alleviate this problem, newer styles have four point and six point suspensions. In the four-point suspension model, there are two straps that attach to four places on the suspension. The six-point suspension has three straps that attach to six places. Having more straps means that the weight is distributed over more surface area, which keeps the wearer comfortable even during long periods of use. When the temperature is high, workers often take off their hard hats to cool off. This is an extremely dangerous practice, because it leaves them vulnerable to injury from overhead falling material. Many manufacturers now offer vented hard hats that permit air to circulate. Head protection also comes with options such as full brims for protection from the direct rays of the sun.

Disassociation with the safety issues – Many employees fail to report that their hard hats don’t fit properly. They feel that as long as there is something covering their head, there isn’t a cause for concern. Likewise, many employees feel that not wearing their head protection for a few hours won’t have any negative consequences. Employers should not only educate workers about the importance of wearing properly fitting head protection at all times, but should also train employees in the maintenance of the equipment.

Lack of enforcement – The BLS survey showed that in most instances where head injuries occurred, employers had not required their employees to wear head protection.

Of those workers wearing hard hats, all but five percent said they were required by their employers to wear them. According to the survey, in almost half of the accidents involving head injuries, employees knew of no actions taken by employers to prevent such injuries from recurring.


By Construction Insurance Bulletin | No Comments

The Department of Labor’s BLS National Census of Fatal Occupational Injuries for 2006 showed that highway incidents were still the primary cause of on-the-job deaths, accounting for almost one out of four fatal work injuries. Although they remained the most frequent type of work-related fatality, the number of highway incidents fell 8% in 2006, the lowest level since 1993.

Falls were the second leading cause of workplace death. The number of on-the-job falls increased 5% in 2006, with 809 employees dying in this manner. This was the third highest total since the census began in 1992. Fatal falls from roofs rose from 160 fatalities in 2005 to 184 in 2006, an increase of 15%.

Being struck by objects ranked third, with 583 fatalities. The number of employees who were fatally injured from being struck by objects not only represented a 4% decline from 2005, but also marked a reversal in the upward trend of the previous three years.

On-the-job homicides ranked fourth, claiming the lives of 516 workers. More than 80% of those workers were victims of a shooting. However, the number of workplace homicides in 2006 declined over 50% from the high reported in 1994.

Deaths from fires and explosions increased from 159 in 2005 to 201 in 2006, representing a 26% increase. Fatalities caused by exposure to harmful substances or environments were also higher in 2006. The sub-category within this type of fatality that showed the largest increase was exposure to caustic, noxious, or allergenic substances. The death toll from this cause rose from 136 in 2005 to 153 in 2006, or 12%.

The data also revealed some other key findings:

  • Coal mining industry fatalities more than doubled in 2006, due to the Sago Mine disaster and other multiple-fatality coal mining incidents.
  • Fatalities among workers under 25 years of age fell 9%, and the rate of fatal injury among these workers was down significantly.
  • Fatalities among self-employed workers declined 11% and reached a series low in 2006.
  • Aircraft-related fatalities were up 44%, led by a number of multiple-fatality events including the August 2006 Comair crash.

Twenty-seven states reported a higher number of fatalities in 2006, while 23 states and Washington, D.C. reported lower totals. Texas had the highest number of worker fatalities with 486, followed by California with 448 and Florida with 355. The 12 states that showed a 20% or more increase in fatalities were Alaska, Delaware, Hawaii, Kentucky, Maine, Michigan, Nebraska, New Mexico, North Dakota, Rhode Island, Vermont and West Virginia.


By Personal Perspective | No Comments

Do you have enough Liability insurance? If there were a vehicle accident for which you were at fault, and a child were permanently disabled, would your Auto Liability policy offer enough coverage to pay for the skilled care the child would need for years to come? If a young parent were killed in a freak fall on your property, would your insurance cover the support he would have provided his children as they grow up? We’d all like to believe that such catastrophic losses would happen only to other people. But there is nothing we can do to totally eliminate the risk of this type of event in our own lives.

Consider what would happen if there were a settlement (or judgment, if it goes to court) of $800,000 as a result of an auto accident for which you were liable. Let’s say you have insurance with a limit of $300,000 per accident. What would happen? The auto insurer would pay its $300,000. Then virtually everything you own would be fair game for seizure to pay off the additional $500,000, except for assets that might be protected in some states, such as your home. Furthermore, your earnings could be garnished for years to come. With stakes this high, and considering the relatively modest cost of additional liability coverage, it just makes sense for many people to purchase the added protection of an Umbrella policy.

An Umbrella policy is insurance that provides additional coverage once the liability limits on your Homeowners or Auto insurance policy are exhausted. Umbrella policies are typically sold with limits of $1 million to $10 million. In the example above, if you had a $1 million Umbrella policy, once you satisfied the deductible, the auto insurer would pay the auto policy limit of $300,000, and your Umbrella insurance would pay the other $500,000 of the $800,000 settlement or verdict. Your assets would not be at risk.

One myth about an Umbrella policy is that it’s only needed by the wealthy. These days the cumulative value of homes, vacation homes, rental property, cars, boats, savings, investments, and so on, owned by many people, who don’t consider themselves wealthy, make them vulnerable to liability beyond their Auto or Homeowners insurance limits. A good question to ask yourself is whether you have assets that you don’t want to put at risk in the event of a catastrophic liability.

Lifestyle also plays a role in determining liability risk. Do you have a swimming pool, trampoline, swing set, or other recreational equipment that can lead to accidents? Are there frequent guests on your property? Do you engage in sports that could injure others? Do you live in a wealthy town where you might be more of a target for a liability lawsuit?

How Much Do You Need?

People often reason that the amount of umbrella coverage they need should be the value of their assets, but this might not be adequate. If, for example, you have assets of $1 million and buy $1 million of coverage, what happens if you’re found liable for a $2 million judgment? Insurance would pay the first $1 million, plus the limit of the underlying Homeowners or Auto policy, but you could lose a significant amount of your assets for the second million. If you were found liable for $3 million, you could lose not only a significant portion of your assets, but you’d still owe $1 million. Both your future income and any inheritance you might receive would be jeopardized. Just how much coverage you need depends on all your risk factors, your own financial planning, and your tolerance for risk.

There is usually a substantial premium discount if you buy your Auto, Homeowners, and Umbrella policy all from the same company. Additionally, if you have a claim, you eliminate the potential problems of dealing with different insurance companies where each might be trying to shift payment responsibility to the other, leaving you caught in the middle.

The cost of an Umbrella policy depends on such criteria as the amount of coverage, the insurance company issuing the policy, and your own “personal risk factors” (such as the number of traffic tickets you’ve gotten in the past few years, and possibly your credit report). A $1 million policy often costs less than a dollar a day.

For some people another attractive feature of an Umbrella policy is that it provides coverages not found in their Homeowners or Auto policies. You are covered if you cause bodily injury, property damage, or personal injury. Generally, the types of personal injury covered include false arrest, false imprisonment, malicious prosecution, defamation, invasion of privacy, wrongful entry, or eviction. Some Umbrella policies also provide coverage if you face liability arising from your service on the board of a civic, charitable, or religious organization.

Your insurance agent can help you decide whether an Umbrella policy makes sense for your life style and financial needs.


By Personal Perspective | No Comments

Trees are a wonderful addition to your home’s landscape, but they can also cause real problems if a heavy wind topples one, and it lands on your neighbor’s property and damages their home. Who is legally responsible for paying to repair that damage?

If you answered, “I am,” you would be wrong.

Your neighbor would have to submit a claim to their Homeowners policy insurer to pay for any necessary repairs. Wind and lightning are generally covered perils in a standard HO3 Homeowners policy, or they are included in a Homeowners All-Risk policy.

Since your carrier doesn’t have to pay, your policy won’t be impacted, which means your insurance premiums won’t increase. However, you still might not be off the hook for liability, because your neighbor might decide to sue you to cover their deductible.

Negligence Hurts
The only instance in which you would be required to pay for the damage to your neighbor’s property caused by your fallen tree is when the damage resulted from your negligence. You could be held liable if your tree was dying or already dead before it fell on your neighbor’s property, and you did nothing to prevent property damage.

In this case, your insurance carrier would have to cover the repairs. In addition, if your neighbor files a lawsuit against you alleging negligence, your insurer would be required to defend you and investigate the claim.

If you are found to be legally responsible for the damage to your neighbor’s house, your carrier will pay up to your policy limits. Your neighbor can also submit a liability claim against your Homeowners insurance policy.

Prevention Is Key
Of course, the best way to avoid a situation like this is to prevent it from happening. If you have a tree on your property that looks unhealthy, consider having it checked by an arborist and, if necessary, removed before it falls. It might seem like a large expense, but it could actually save you money in the long run by helping you avoid increased insurance premiums.

Equally as important, removing the possible risk of damage will help you maintain a good relationship with your neighbors. And as any homeowner knows, that is worth its weight in gold, especially if you plan to stay in your home for a while.


By Personal Perspective | No Comments

If you’re the parent of a teenager, you might have very mixed feelings about the day your teen gets a driver’s license. On the one hand, you’re proud that your teen has reached this milestone, but on the other hand, you’re worried about reckless driving and safety issues.

You have good reason to be concerned. Motor vehicle crashes are the leading cause of death among teens, according to the Centers for Disease Control, accounting for 36% of all deaths in this age group. In 2004, 4,767 teens ages 16 to 19 died due to motor vehicle crashes and during 2005, nearly 400,000 teens sustained nonfatal injuries serious enough to land them in the emergency room. According to the Insurance Institute for Highway Safety (IIHS), per mile driven, teens are four times more likely than older drivers to crash. The Insurance Information Institute (I.I.I.), together with the IIHS, advises parents of teenage drivers to do more than worry. They should take a proactive role in protecting their teens. This starts with selecting a safe vehicle:

  • Avoid vehicles that encourage reckless driving. Teen drivers not only lack experience, they also lack maturity. As a result, speeding and reckless driving are common. Sports cars and other vehicles with high performance features, such as turbo charging, can encourage speeding. Choosing a vehicle with a more sedate image will reduce the chances your teen will be in a speed-related crash.
  • Don’t let your teen drive an unstable vehicle. Sport utility vehicles are inherently less stable than cars because of their higher centers of gravity. Abrupt steering maneuvers — the kind that can occur when teens are fooling around or over-correcting a driver error — can cause rollovers where a more stable car would, at worst, skid or spin out.
  • Pick a vehicle that offers good crash protection. Teenagers should drive vehicles that offer state-of-the-art protection in case they do crash. Review the IIHS and National Highway Traffic Safety Administration test results when selecting a vehicle.
  • Don’t let your teen drive a small vehicle. Small vehicles offer much less protection in crashes than larger ones. However, this doesn’t mean you should put your child in the largest vehicle you can find. Many mid- and full-size cars offer more than adequate crash protection. Check out the safety ratings for cars in this group.
  • Avoid older vehicles. Most of today’s cars have better-designed crash protection than cars of six to 10 years ago. For example, a newer, mid-size car with airbags would be a better choice than an older, larger car without airbags. Again, before you make a final choice on the car your teenager will drive, consult crash test results and safety ratings.

With time and experience, your teen will become a seasoned driver and move out of the highest-risk category. Incorporating these suggestions into your car selection will help him or her to get there, safely.


By Your Employee Matters | No Comments

An employee is entitled to long-term disability benefits when she’s afflicted with “sick building syndrome” and can’t work in the large office building required by her job, according to a recent federal appeals court ruling. The National Safety Council defines sick building syndrome as occurring when occupants of a building complain of health problems seemingly linked to time spent in a building, but no specific illness or cause can be identified. Symptoms include headaches; eye, nose, and throat irritation; a dry cough; dry or itchy skin; dizziness and nausea; difficulty in concentrating; as well as fatigue and sensitivity to odors. Those who suffer from this syndrome often feel relief soon after leaving the building.

In the case before the federal court, a partner at a large law firm developed severe headaches, fatigue, and respiratory problems that improved when she left the high-rise office building where she worked. She tried working from home, but her employer told her that doing so on a permanent basis didn’t mesh with the nature of her work. The attorney then sought long-term disability benefits from the law firm. The firm’s Workers Comp carrier denied her claim, arguing she could work from home or find work at a smaller firm, which would likely be located in a smaller building, as she had earlier in her legal career.

However, a federal appeals court disagreed, holding that large employers must be located in spaces large enough to accommodate all their employees. Even if the plaintiff could find equivalent employment, it would probably be with an employer located in a large office building environment.

According to the court, the insurance carrier ignored evidence that the woman could not work from home or at a smaller firm. Instead, insisting that she should work from home. The court also said that because of the woman’s area of expertise — commercial real estate law — working at a smaller law firm wasn’t a viable alternative. To read the case, click here.

Ray v. UNUM Life Insurance Co., 10th Cir. No. 05-1284