Age 65, shall I keep insured by my work’s group health insurance or opt for the Medicare if I am still working?
 
I am being asked by one of our clients and after diving to researching the answer from the related web sites of Center of Medicare and Medicaid and Social Security and referring to my own knowledge in group health insurance, I think I come into a conclusion.
 
The simple answer is it depends.
 
If you work for a company with 20 or more employees (full time or part-time), then you would be better off of keeping your work’s group health insurance.  Under the current rules, your employer’s group health plan would be the Primary Payer of medical needs and Medicare is only the Secondary Payer.  It means your group health insurer is responsible for paying most of your medical expenses before Medicare is needed to chip in.
 
But, if your employer employs less than 20 full time or part time employees, then the table is turned around.  Medicare would become the Primary Payer of your insurance needs and most of the time the coverage that provided by Medicare is more extensive than a run of the mill group health plan can provide.  99% of the hospitals in the States would accept Medicare patients and the network of doctors that accept Medicare is normally a much larger pool of the HMO plan network that normally bound within 20 to 30 miles radius where you live.
 
Then, if I am an employer, can I not provide the group health insurance to the employee that turn 65 and is eligible for Medicare.  Again, the short answer is number of employees you employ.  As stated in the Medicare Secondary Payer (MSP) Manual, (Rev.124, 03-22-19):
 
Only employers with 20 or more employees are required to offer the same (primary) coverage to their age 65 or over employees and the age 65 or over spouses of employees of any age that they offer to younger employees and spouses.
 
Of course, I have simplified the argument here and I would recommend whoever reading this blog and having great interest in this topic, visit the following links:
 
https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/Downloads/msp105c01.pdf
 
https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/Coordination-of-Benefits-and-Recovery-Overview/Medicare-Secondary-Payer/Medicare-Secondary-Payer
 
 
 

One of our friendly General Agents located in Northern California has just warned us about their new loss experience.

The General Agent is aware that apartment owners in his area are confronting a new loss experience. Few of the property owners have tenants who were elderly and living alone in his or her unit passed away without being noticed.Only after days or weeks when there are odd odors sipping out from the units or when the tenants’ distanced relatives came to visit them did the property owners aware something unusual had happened.

The property owners broke into the units and only then they found the tenants had passed away days or even weeks ago. The property owners do not have any liability exposure because mostly the cause of death is natural or sickness.

But the afterward cleanup cost and loss of rental income would not be compensated by the insurers of the properties because that kind of cause of losses are excluded from the coverage. The time elapsed before the units could be put back into the market can last for months and the rental income loss and clean up expenditure could be substantial. Besides, it is more desirable if the deceased tenants could be taken care earlier.

We want to share with you what is happening now in the property markets so that you could take precautions action to mitigate the negative effects of the unforeseen incidents.

In memory of Anthony Bourdain, I borrow the quote that written on my daughter's white board.

Wow Factors!

ACT
Chat box
 

Feb 28, 2018
 
My dear fellow insurance professionals:
You may be now busy in closing the deal of your life time but seems always out of your reach or licking your wounds of losing a major account to your competitor.  You may wonder what is missing that you just could not hang on to your clients?  Or what holds you back?  Actually, when I say you, I am referring to myself.  I am the one who experience all these anxieties.
When we first entered into the insurance sales arena, we are taught to sell by premium. Whoever gets the lowest premium would get the sale; but times move on and in today market environment: price and service are being taken for granted.  If we could not differentiate ourselves from the other agents, and continue to keep on selling price and service, we would be bound to be eaten up by our competitors.
Wow Factors! Are the catch words of today! What if we could give our prospective clients a “Wow” instead of the usual trust me, our price is the lowest and service is first rated cache. Your prospects would become your clients, and they would attach to you like being spread with a super glue; stick with you as long as you are selling because they trust you, believe in you, feel good dealing with you.
What are the “Wow Factors”?  It could be
Your persistence to help your clients to solve their problems
Your immediate response to their questions
Your thorough understanding of their needs
Knowledge of the coverage
Your empathy when they are in dire situation: facing a catastrophically claim
Your understanding or care when they just need somebody to hear them out
Or any acts that are genuine showing that you are their trust advisors instead of any of those fly by night agent.
If you feel that you are lacking of the “wow factors”, then build them up by searching your own strength and potential and zero in to develop them
Sell not the “Price and Service” but your own “Wow Factors”!
 
Where I get all these big ideas?  Not from my own reserve but from our dear SAFECO INSURANCE, whose success is relying on our success, the independent agents that feed them the business.  It is Safeco who wakes me up to open my eyes to what is really going on out there.

If you fall into any one of the above categories, then you should concern about SB 189 which would affect substantially your workers compensation insurance premium.  Governor Brown just signed SB 189 in October into a new law to redefine what is considered as an employee for the purpose of Workers Compensation Law. 
Before 1/1/2017, even if you only hold one percent of the outstanding shares of a corporation, or you are an ordinary partner of a partnership or an ordinary member of a LLC, you could be exempted from the compulsory workers compensation insurance.  It saves you a bundle in WC premium as you are rated not by how much you are compensated but by imposing a fix range of income which starts at $48,100 and tops at $122,200 in 2017.  If you are in certain industries or trades that accrue high rate, your premium could be substantial. 
But after 1/1/2017, only if you hold 15% of the issued and outstanding shares of a corporation or you are the general partner of a partnership or you are the managing member of a LLC; and your WC insurance policy carrier received your signed written waiver form before 1/1/2017, then you could be exempted from the WC insurance.  The law was passed in a hurry in 2016 and many people were caught off guard about submitting the written waiver form.  Some submitted the form but what submitted was not the correct one (corporation and partnership and LLC demand different forms) and their exemptions were voided.  Oh la! The Insurance Companies would send you to the collection companies if you do not pay for the extra premium accrued because of your request of exemption is voided.  The extra premium I have seen so far could go as high as $10,000.00 per account.
Probably, the confusion of such hurried passed law created big fuss among the insurance companies, the agents and insured with complaints, names callings flying all over the places.  Therefore, with little fanfare, SB 189, was signed by Governor and passed into new law in October 13, 2017.  What gives:
1.       Insured can now backdate the validity of the exemption to 12/31/2016 if they submit the written exemption form executed before 12/31/2016 and received by the insurance company before 12/31/2017.
2.       Effective from 7/1/2018, you only need to hold 10% of the outstanding shares of a corporation instead of 15%.  And catch this, if your parent, grandparent, sibling, spouse or child owns at least 10% of the issued or outstanding stock of that corporation and you are covered by a health care service plan, then you only need to own 1% of the issued or outstanding stock.
There are other revisions of the definition of “employees” and for those are really concerned about the new law implication, I would highly recommend them to visit the California Legislative Information site, checking out SB-189 Workers’ compensation: definition of employee (2017-2018). The link is listed below:
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB189
 
​

​

​AB 2883 becomes the newest law that changes the existing rules of Workers Compensation Insurance in California. Jan 1, 2017 is the effective day of AB 2883.
 
 
The new law, AB 2883, makes the following changes:

1. Any eligible individual (officer, director, general partner, managing member) electing exclusion from workers' compensation benefits must provide a signed waiver to the insurance carrier prior to January 1, 2017 
2. For corporations, officers and directors (i.e., members of the Board of Directors) must now also meet a 15% ownership threshold in order to be eligible for exclusion
3. For partnerships, only general partners are eligible for exclusion
4. For LLCs, only managing members are eligible for exclusion

Many business owners are utilizing the exclusion features of Workers Compensation Insurance:
 
If their companies are incorporated, shareholders with as low as 1% share could be excluded from the Workers Compensation Insurance Coverage. 
 
Partners of partnerships could generally be excluded.
 
Members of LLCs could generally be excluded.
 
Hence they can save big portion of the premium as normally they are highly compensated.  Also they would be working 24/7 and they would have their hands on all aspects of the operations even the highest risk exposure tasks.
 
This new law, AB 2883, would cut down the exclusion eligibility and drive up the Workers Compensation Insurance Premium.  Unfortunately this new law falls off the radars of the mass media and social networks that not many business owners are aware of its passing.  Talk to your agents now as it may cost you a bundle if you do not act before January 1, 2017.

$10.50 - New Minimum Wage – Effective 7/1/2016 in
Los Angeles City and LA County Unincorporated Areas

You may be aware of the newest minimum wage requirement set to be effective on 7/1 this year. But do you know who is affected? Which areas are being applied to? What does Unincorporated Areas mean and where are those areas?

I raised these questions here because one of my clients, a business owner, asked me anxiously because she is confused. Then I talked with my other clients and even my CPA, the common response is most people are confused.

Effective July 1, Los Angeles City would enforce the new minimum wage requirement: $10.50 per hour. This new requirement would apply to employers who employ 26 or more employees in 2015. For those who employ 25 or less employees in 2015 would receive a one year grace period to implement the new requirement. For details, please refer to the LA City Ordinance No. 184320 at the below link.
http://clkrep.lacity.org/onlinedocs/2014/14-1371_ORD_184320_6-2-16.pdf

L A County has adopted the same minimum wage change in the unincorporated areas of Los Angeles with the same effective date of July 1. Please copy the below web address to your favorite internet browser and find out more about the ordinance and the unincorporated areas of L A County.
http://www.lacounty.gov/minimum-wage



​

​First doctor, part of the carrier’s Medical Provider Network, said:”Back to work in no time after a small surgery.”
​
The other doctor, chosen by the injured worker’s lawyer,  opined that the worker cannot even seat more than 30 minutes as inscribed below:

​Workers Compensation Insurance law is set up to protect the well beings of injured workers and also to mitigate the liability exposure of the employers in case a worker is injured in the course of work.   After a worker got injured at the course of work, the worker is protected from being terminated from his or her position even he or she cannot perform the duty anymore.  Also the employer cannot force the injured to undergo treatment that is selected by the employer. 
The above scenario apparently brings forward a loss/loss situation to the employer.  What can the employer do then?

To answer the above question, let’s go back to 2004 when Governor Arnold signed the SB 899 into law that strongly suggested the WC carriers or employers to set up a Medical Provider Network after Jan 1, 2005.  If an employer or insurer uses an approved Medical Provider Network, covered employees would receive their medical carrier in this network, unless a predestined physician is chosen prior to an injury.

Then forward to Sept. 18, 2012 when Governor Brown signed SB 863 into law that took effective on Jan 1, 2013, another milestone Workers Compensation Law of California. Let’s get into the new regulations regarding Medical Provider Network:
 
Treatment obtained from a non-network provider, without either authorization from the employer or insurance carrier or a workers’ compensation judge’s order permitting outside of network treatment, will not have to be paid for by the employer or carrier. If unauthorized treatment is unsuccessful, and results in a worsening of the injured worker’s condition, or a need for additional treatment, the employer/carrier will have no obligation to pay for that, either.
 
Now back to the loss/loss scenario that the employer is confronting. 
​
The first doctor is belonging to the MPN (Medical Provider Network) chosen by the carrier/employer and the second doctor is referred by the lawyer that the injured worked sustained and he is a “non-network provider”. According to SB 863, the carrier would not validate the second diagnosis and either the employer or the carrier would be responsible for the treatment payment. Is the employer stuck in the Limbo?
 
Not quite, the WC carrier would be the party best suited to handle the case.  Just sit tight and let the carrier’s claim adjuster to deal with the conflicting diagnoses and the WC claim. The carrier understands the law, they have the expertise and that is what they deal with everyday.  This is probably the most important reason but always unaware by the insured why they should buy insurance: to transfer the litigation burden to the carrier who is obliged to defend the insured if the claim is falling under the covered causes of loss.  The litigation cost could easily be ballooned into hundreds of thousands of dollars even the claim may be proved to be baseless.
 
For those who are interested to know more about the newest WC law, click on the following link to review the overview of SB863 as prepared by the Department of Industrial Relations.

http://www.dir.ca.gov/dwc/Reports/SB863-Assessment-WC-Reforms-July-2015.pdf
​
For the employers, please post the poster that outlined the most updated labor law where your employees can easily see.  Posting the poster is required by law and would help you to mitigate the claim against you when there is a work related injury. Check out the MPN information; accident happens and it would save valuable time if you know where to send the injured worker when accident does happen.  For the employees, information on the poster is vital for you to know your rights and where to get help if you feel that your rights are violated.