2021 Insurance Game Plan

Author, Dave Garcia, President, Rancho Mesa Insurance Services, Inc.

As we come to the end of 2020, the most challenging year most of us have ever experienced, where COVID-19, wild fires and other natural disasters took their toll emotionally, physically, mentally and financially on all of us, we can only hope for a brighter 2021.

The insurance industry did not escape the impact of COVID-19 and the natural disasters, either. Insurance companies, along with their reinsurance companies, suffered catastrophic losses as a result. As with many industries, there will be lagging actions that will take place in 2021 to help these companies in their efforts to recover.

While there really isn’t a line of insurance that wasn’t impacted, the lines of insurance that suffered the greatest losses and impacts include:

• Property

• General Liability

• Excess/Umbrella

• Workers’ Compensation

• EPLI

• Cyber Liability

• Surety

• Employee Benefits

For this article, I will limit my discussion to the property and casualty lines and leave surety and employee benefits to another day.

To offset these losses, I anticipate any number of steps insurance companies will take as we move into 2021. But, let me just touch on those that I think will have the greatest impact and need for attention to business owners in 2021. 

Let’s review these and I will try and give you a small sampling of the implications for each action.

• Non-renewing policies

  • Carriers in many cases will not offer renewal terms.

• Reducing coverage limits and terms

  • Increasing deductibles, lowering aggregate limits particularly in the excess/umbrella marketplace.

• Add new exclusions

  • Businesses will start to see “communicable disease” exclusions added to various lines of insurance.

• Increase underwriting information needed

  • A higher emphasis on information particularly as it relates to a business’s policies and procedures to mitigate COVID-19.

• Raise premiums

  • This is the ultimate consequence and one we are all anticipating to see beginning in early 2021.

To many businesses, this will seem daunting and hopeless - one more hurdle to overcome to keep their businesses going. However, there are proactive steps you can take to mitigate these circumstances and have a strong year despite the adversity.

I’m a firm believer in being pro-active and not re-active. Following are steps you can take to meet this challenge head on:

• Meet with your insurance advisor 90-120 days from your renewal date.

• Understand the specific challenges you will be facing.

• Create a strategy on how to approach the insurance marketplace to ensure the most cost effective and comprehensive risk management program.

• Review and enhance your existing safety program. Rancho Mesa offers our RM365 Advantage Safety Star™ certification program. This is a comprehensive web-enabled training course designed to enable your employees from supervisory to front-line workers to be trained and certified in safety best practices. The insurance marketplace already places a high value on these types of safety trainings and certifications, so this will help your company’s productivity through fewer claims but also position you in a more favorable position in the marketplace.

• Benchmark your company’s safety performance to your industry and see which areas you are outperforming your peers and areas that need your attention. Rancho Mesa offers a benchmarking report we call StatTrac™ to our clients or to other companies who want to see where they stack up.

To close, let me reassure you there is light at the end of the tunnel for 2021. Be proactive; start 90-120 day out from your renewal; don’t let insurance issues sneak up on you; attack them head on and I believe you can make 2021 a great year for you and your company.

If you have any questions or want any help in devising a plan and you are a construction company, please reach out to Sam Clayton, our Construction Group Leader at sclayton@ranchomesa.com. If you are in the human services industry, schools, non-profit, healthcare, assisted living, etc., please reach out to Sam Brown, our Human Services Group Leader. And finally, we can be reached at (619) 937-0164 or at our website, www.ranchomesa.com.

I really believe there is no limit to what you can do – best of luck in 2021.

Healthcare Insurance Carriers Respond to COVID-19 Threat

Author, Alyssa Burley, Media Communications and Client Services Manager, Rancho Mesa Insurance Services, Inc.

As Rancho Mesa continues building resources for our clients and their employees across all sectors, we have compiled a list of healthcare insurance providers and their enhanced benefits designed to respond to the COVID-19 virus. Listed below is information related to COVID-19 testing when ordered by a physician.

Health insurers are responding to the Coronavirus threat by offering members no-cost screening and diagnostic testing.

Carrier	Enhanced Benefits1
Aetna	Screening/diagnostic testing provided at no cost. $0 copay telemedicine (for next 90 days2). Members diagnosed with COVID-19 will receive a care package with over-the-counter medications and cleaning supplies. CVS Health will help Aetna members that may be experiencing anxiety related to COVID-19 by: • opening Crisis Response Lines • providing plan sponsors with a Resources for Living toolkit • expanding 24/7 access to the Aetna Nurse Medical Line
Anthem Blue Cross	Screening/diagnostic testing provided at no cost.
Blue Shield of California	Screening/diagnostic testing provided at no cost.
Health Net	Screening/diagnostic testing provided at no cost.
Kaiser Permanente	Screening/diagnostic testing provided at no cost.
MediExcel Health Plan	Screening/diagnostic testing provided at no cost.
Oscar Health	Screening/diagnostic testing provided at no cost. Continuing to offer $0 telemedicine through Doctor on Call for most members.
Sharp Health Plan	Screening/diagnostic testing will be covered under the member's standard plan benefits.
Sutter Health Plan	Screening/diagnostic testing provided at no cost.
United Healthcare	Screening/diagnostic testing provided at no cost. Free Emotional-Support Help Line available for members suffering from fear or stress due to COVID-19, open 24/7.
Western Health Advantage	Screening/diagnostic testing provided at no cost.

¹ Screening/diagnostic testing when ordered by the physician.
² Aetna’s website states a 90-day window as of March 2020, but the page is posted without a start/end date. Check with Aetna before receiving services

View full table here.

For additional resources and telemedicine information for each carrier, download the full PDF document.

Independent Contractor Classification Changes Expected to Impact Construction Industry

Author, David J. Garcia, AAI, CRIS, President, Rancho Mesa Insurance Services, Inc.

With the recent ruling by the California Supreme Court concerning how 1099 employees (independent contractors) are defined, the construction industry's approach to utilizing these workers has changed significantly. The Court adopted a new test to determine whether the worker should be classified as an employee or independent contractor. The previous test to determine if a worker was an employee or independent contractor was whether the employer had the right to direct the manner and means by which the worker performed the services. Under the new test, a worker is considered to be an independent contractor only if all three of the following factors are present:

1. The worker must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact; 
2. The worker must perform work that is outside the usual course of the hiring entities business;
3. The worker must be customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

These new factors have major implications for contractors, or any business for that matter, where previously they had classified a worker as an independent contractor and now have to classify them as an employee. This will impact several lines of insurance, but most critically workers' compensation, general liability and employee benefits.

Workers' Compensation

Currently, if an employee is classified as an independent contractor, they would not be subject to any workers' compensation premium nor workers' compensation benefits. If their status should change to employee, they now would be entitled to workers' compensation benefits and would have their payroll accounted for in the employer’s premium. In addition, based on the work being performed, this may change the employer’s risk profile, creating negative underwriting consequences in the workers' compensation carrier marketplace, resulting in coverage not being offered or higher premiums.

General Liability

The impact to general liability insurance is very similar to that of workers' compensation. Additional payroll or sales will need to be accounted for as the employer will become directly responsible for the work being performed without the benefit of any hold harmless agreement or other risk transfer methods. This could potentially change the risk profile of the employer’s operations, which could result in the employer needing to provide additional underwriting information.

Employee Benefits

Since 1099 contract workers are not employees and are considered self-employed, they do not show on the Quarterly Wage and Withholding Report (DE9 and DE9C) to the State of California. Because of this status, they typically cannot enroll in a group health insurance plan. Many workers who are now classified as independent contractors will be considered employees in the eyes of the state and will be eligible for group benefit offerings from their employer.

Employers may need to reevaluate their group size to ensure that they remain compliant with the Affordable Care Act (ACA). Employers with 50 or more full-time employees working a minimum of 30 hours per week, and/or full-time equivalents (FTEs) must offer health insurance that is affordable and provides minimum value to 95% of their full-time employees and their children up to age 26, or be subject to penalties.

While these changes are new and just beginning to take affect, we believe your best strategy moving forward is to consult with your trusted advisors in legal, accounting and risk management. This will have a significant impact to the construction industry throughout California and we intend to take a leadership role in helping those companies with concerns and questions. So, please reach out to our Rancho Mesa Team to help you navigate these changes. Contact Alyssa Burley at aburley@ranchomesa.com for assistance.

Assembly Bill 72 Passes to Limit Unexpected Medical Costs to Californians

Effective July 1, 2017, Assembly Bill 72 (Bonta) went into effect by protecting Californians from unexpected medical bills when visiting in-network facilities (i.e., hospitals, labs, and imaging centers).  No longer can providers who aren’t contracted with a patient’s health plan step into the operating room, for instance, and charge the patient more than the patient would have expected to pay an in-network provider. Furthermore, the patient can only be billed for his or her in-network cost-share, meaning in-network benefits apply to all providers seen, and services rendered, in an in-network facility.

Over the course of my career, I’ve had to help many clients understand and appeal surprise charges from out-of-network doctors, anesthesiologists, etc., who’ve charged patients separately from the in-network facility, and I have experienced this myself when receiving care.  With many/most Preferred Provider Organization (PPO) plans, there is a separate deductible that a member has to satisfy for care received from out-of-network providers, after which, there is less coverage than in-network providers, and the member can be “balance-billed” between what the insurance company pays and what out-of-network providers charge.  AB 72 goes a long way toward eliminating such surprise charges.

As always, it’s important to review the Explanations Of Benefits (EOB’s) you receive from your insurance company, to make sure that your benefits have been applied correctly, according to your plan.  This is a smart piece of legislation that will help prevent unsuspecting patients in California from getting charged more from out-of-network providers, at least not without prior written consent.

For more information, contact Rancho Mesa at (619) 937-0164.

What is SB 562 all about?

It may be of interest, if not importance, for all Californians to know about current proposed legislation, sponsored by Senator Ricardo Lara of Bell Gardens and Senator Toni Atkins of San Diego.  The proposed bill would significantly expand the role of the state government within the healthcare system, by essentially establishing a single-payer system.

Under Senate Bill 562 (SB 562), the State would cover all medical services for every resident regardless of income or immigration status, including inpatient, outpatient, emergency, dental, vision, mental health, and nursing home care.  Furthermore, insurers would be prohibited from offering benefits that cover the same services, potentially resulting in their choice to exit the marketplace.  While the proposed bill touts that the program would eliminate co-pays and deductibles, and the need to obtain referrals, there is no mention of how it would be funded, except through “broad-based revenue.”

Obviously, many people ask me about the direction healthcare is headed in California and the Country; to which, I do my best to eliminate my interest in the subject since I make my living guiding companies through the insurance process.  But, I do offer up some food-for- thought in terms of evaluating such a proposal, including citing the increasing shortfall of funding for Medicare, and the VA as examples of government-run healthcare, as it seems to me the former is going to require an eventual increase in payroll taxes, which effects everyone, employers and employees alike, and the latter is a good example of inefficiency and lack of innovation when there is no competition.  

Personally, I believe that healthcare is both a right and a responsibility.  As out-of-whack as the current system seems, or let’s face it, is, I just don’t know how we go about funding such a proposal without breaking the proverbial bank. The financial and economic realities have to be weighed with the politics, which is why it’s a bit of a relief that Governor Jerry Brown has asked the question in return, “Where do you get the extra money?  This is the whole question?”

Whatever my thoughts, it is certainly a complex and vexing economic, social, and political issue for our times, one that will continue to be hotly debated and legislated, so there is much more to come.