Q1 When filing a worker's comp claim in California, when will the employer stop health coverage for an employee?
If the employee will not be actively at work or working full time, 30 hrs a week in general (please check your health insurance plan document), then the employer should put the employee on COBRA. Be aware that some workers comp insurers will advise you to keep the employee on health insurance for an indeterminate length of time. They advise this as a way to not anger the employee. This is very bad advice. If your health insurance states, which many plan descriptions do, that to be eligible for health insurance you have to be working a certain number of hours a week on a full time basis, it means it. Just because you choose to keep them on the plan and pay their premium does not mean they are covered.
Example: An employer kept an employee on the plan while an employee was out for 6 months due to a work related back injury. The employee had a heart attack, while on his WC leave, and needed open heart surgery. In the physician's notes, the patient told him he had been on WC leave. The health insurer denied the claim, since the employee was not eligible for health insurance. The employee sued the employer for the $150,000 hospital bill.
Q2 What is HMO reinsurance?
It is insurance that an HMO would purchase from an insurance company who agrees to share in a defined part of risk for a defined premium. One of the most common types of HMO reinsurance is stop loss reinsurance. An HMO might feel that it can pay all claims for the first $200,000 of medical expenses for any one member, but it does not want to absorb expenses beyond this level. The HMO agrees to pay an outside reinsurer who will reinsure the HMO, reimburse it for claims above $200,000. The HMO will pay that reinsurer a per member, per month premium (pmpm). The pm pm pricing is the basis for the premium. The other typical reinsurance option is quota share reinsurance.
Q3 What coverage do I need for my medical malpractice?
In California the norm for medical malpractice insurance is $1 million per occurrence and $3 million per policy aggregate. Other states have higher or lower limits depending on the rules and regulations within the state. If a doctor has privileges, his/her hospital will dictate the limits, and the hospital will know of any laws relating to these limits. If you do not have hospital privileges, ask your medical malpractice broker what is typical. There are 2 kinds of medical malpractice claims made: medical malpractice insurance and occurrence medical malpractice. Most doctors purchase claims made since it is more affordable.
Q4 Employee benefits rescinding broker of record, who gets commission?
Commissions are paid monthly by the insurance company as you pay your premiums. If you fire agent A on 2/28 and hire agent B, and 2 days later on 3/2, you rescind the broker of record on Agent B and rehire Agent A, odds are Agent A will not lose any money and Agent B gets paid nothing. The norm is that the insurer will give the current broker, in our example Agent A, 10 days to receive rescindment of the broker of record. After 10 days the commission for March will be paid to Agent B. After 10 days if you fire Agent B and rehire Agent A, then Agent B will have 10 days to rescind the broker of record.
Q5 How can public entities save money?
Competition is the key to saving money on insurance. You want a few insurance brokers working on your insurance. It is a lot of work, but the best way is to get multiple bids from 2 or 3 brokers including the incumbent. But you need to be available to give the non incumbent brokers the information they need to quote. Many public entity purchasing departments favor the incumbent broker since he/she has all the loss run information and applications necessary to shop the insurance. The outside broker has little chance of competing unless you have a very diligent purchasing department at the public entity, who gets you the necessary information and answers the questions in a timely fashion. There are very good purchasing departments and many who are unresponsive so the insurance stays with the same broker forever since you cannot get the necessary information to give a competitive quote and the public entity is then left paying more. Other ideas include hiring an insurance consultant to review your RFP to make sure that every item necessary to shop the insurance is included. This includes typical Q & A's, and have the brokers provide their #1 through #3 favorite insurers for your risk along with the premium that they have with those insurers. If more than one broker picks the same #1 insurance company, allow the broker with the most premium to have the #1 choice. The more premiums that a broker has with the insurance company, the better their relationship.
Q6 What is excess workers comp
This is for large to medium sized employers who want to self insure their workers compensation. They can purchase excess or stop loss reinsurance. This protects the employer from large claims.
Example: The employer has very predictable experience, but he/she wants to buy excess workers compensation insurance with a $100K deductible. So claims below $100K, the employer pays. Any claims that exceed $100,000, he/she submits for reimbursement to the excess workers comp carrier with whom he/she purchased the excess reinsurance policy.
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