The More You Know Series | Nelligan Associates

Category: The More You Know Series

October 4, 2018

✔︎ NJ TDB Changes for 2019 – IMPORTANT

Please see the recently announced NJ TDB plan changes for 2019 below. These updates apply to both state and private NJ TDB plans. We still have plenty of time to get groups in for 1/1, with customer decisions being made by mid-November. Thanks!

NJ TDB – 2019 Changes
	2018	2019
Employee Rate	0.19%	0.17%
Max Employee Contribution	$64.03	$58.48
Taxable Wage Limit	$33,700	$34,400
Weekly Benefit Max	$637	$650

The Employee Rate continues trending downward to a new historical low. The taxable wage limit and weekly benefit increased by 2% which has been about the norm to keep pace with inflation and salary increases. Employer Rates vary from .10% – .75% depending on claims incidence and get adjusted July 1st.

As you may have seen in previous notes from us, there are bills sitting with the state that will significantly impact NJ TDB plans if passed. The biggest being a change in the benefit percentage for maternity claims to 90%. The state has communicated a minimum of 12 months lead time is necessary for a change like this so it’s looking like 1/1/20 as a potential roll out date. More to follow as we get updates from the state.

July 12, 2018

✔︎ NJ TDB: Potential Plan Changes – IMPORTANT

With a new governor in Trenton, there are a few bills being proposed that significantly impact NJ Temporary Disability Benefits (TDB) and NJ Family Leave Insurance (FLI). Please see the below bills as well as our comments.

Assembly Bill No. 3975 – Still in Assembly being reviewed but was referred to Assembly Budget Committee.

Overview:

Bill expands maximum total benefits payable to any eligible individual for periods of family temporary disability, FLI and for periods covered under Temporary Disability Insurance related to pregnancy and recovery from childbirth.
Maximum duration of FLI benefits to increase from 6 weeks to 12 weeks; for intermittent leaves it will increase from 42 days to 85 days.
FLI and TDI weekly benefits will increase from 2/3 of claimant’s average weekly wage to 90% of that wage. The weekly maximum amount will increase from 53% of the State average weekly wage (SAWW) for all workers (currently $637) to 100% of the SAWW. The bill advises that the costs associated with the benefit increases will be supplemented by increases in the workers contributions, without increases in the employer contribution rates.
Bill expands the family members for whom individuals covered under FLI may receive benefits to include siblings, grandparents, grandchildren, parents-in-law and others related by or relationship equivalent to a family relationship and expands the Family Leave Act (FLA and NJ SAFE Act to include the same groups.
Bill also requires goals for timely determination and payment of TDI and FLI benefits; 40% within seven days, 75% within 14 days, 85% within 21 days, and 90% within 28 days.
Proposed Effective Date is January 1, 2019.

Comments/Impact:

This would result in the biggest change to NJ TDB perhaps in the existence of the policy. Increasing the benefit percentage from 66.67% to 90% and the maximum benefit from $637 to $1,204 for maternity claims obviously gives claimants a much higher benefit. However, this comes with a cost. The state estimates this would increase state fund claims by $200M annually (+40%). As a result, the employee contribution is sure to increase to fund these claims.
On the private plan side, this will most likely force some carriers out of the TDB market (like PFL did in New York). Probably carriers with small TDB block that didn’t want to be in the business anyway.
The bill will most likely get amended before passing as it’s somewhat discriminatory in nature. Why should a maternity claim be treated differently than a non-maternity claim?

Assembly Bill No. 2762 – Passed by both the Assembly and Senate 6/21/18.

Overview:

Bill proposes that the currently law be amended such that when a covered individual that applies for TDB benefits resulting from pregnancy or birth of child, the plan administering the benefits must automatically process an application for the that individual to its paid family leave benefit program, unless the individual affirmatively opts out of the program.
In case of pregnancy, worker is entitled to 4 weeks prior to birth and 6 weeks after. Committee deleted previous “up to” language
Provisions of the bill will apply to the State plan and a private plan which holds both the disability and family leave insurance
Private plans that offer the temporary disability benefits only will be required to provide its claimants written notice of the application process for family leave concurrently with issuing its written approval of the disability benefits.
Proposed Effective date of the bill will be 180 days after the date enactment.

Comments/Impact:

Not nearly as impactful as the previous bill. This is more of a procedural change. Private plans would require carriers to provide TDB Claimants written notice of the application process for family leave benefits through the State of NJ when issuing approval of TDB benefits for pregnancy claims. Many carriers do this already.
Pregnancy claims also get 4 weeks of benefits prior to birth instead of “up to” 4 weeks.

June 13, 2018

✔︎ NJ TDB: The Hard Facts on Claims Processing

We anecdotally talk about the state’s turnaround time, but what does the data say? The below info is direct from the NJ Department of Labor and Workforce Development’s statistical review. Their reports are lagged by a few years so this is for fiscal year 2015.

“Efficiency in processing TDI claims has declined in recent years. The most recent report from the DOLWD shows the average number of days to process a TDI rose from 14.5 days in 2011 to 22.9 days in 2015. In 2011, 30.5 percent of TDI eligibility determinations were made within 7 days. By 2015, that percentage had fallen to 2.9 percent.”

“The slowing of the processing of claims may be related to staff reductions. The number of personnel administering State TDI plan benefits (including family leave benefits) declined from 170 in FY 2008 to 125 in FY 2016, a decline of 26 percent. This is part of a longer-term decline since the personnel for the State plan peaked at 203 in 1990. Personnel for the regulation of private TDI plans also declined, from a peak strength of 99 in FY 1987 down to 43 in FY 2016.”

In summary, the above data reaffirms what we already know- that state claims processing is a significant pain point for NJ employers/employees and continues to deteriorate.

June 11, 2018

✔︎ NY Paid Family Leave – (Very) Early Observations

We are 11 days into the existence of New York Paid Family Leave (NY PFL) and there has been a lot of chatter to say the least. Here are some (very) early observations we’ve noticed that are hopefully helpful to you and your clients.

What are clients talking about?

Many expected billing to be problematic (more on that below) but most groups won’t get a bill until the end of the quarter so that is secondary for the moment. What has been going on is a raised awareness of the program at the employee level leading to Human Resources being bombarded with questions/confusion and a large amount of claim filings. In Western NY, the state has been running TV commercials and targeted Facebook ads to get the message out to the masses. With the minimal NY DBL benefit in existence ($170/week), this is big news to employees who can potentially collect on a much higher PFL benefit ($652.96/week). Very different than when NJ introduced Family Leave Insurance (NJ FLI) in 2009 because the benefit amount matched the already in place State Disability benefit. That program was implemented relatively low key.

One 120 life client in Albany has already received 12 PFL claims in 11 days! While employees are eager to use the benefit, there is a lot of confusion around what constitutes a claim, how long a claimant can go out for, etc. Some employees are viewing it as quasi vacation time which is not the case at all. Even if a claim is going to be ultimately denied, there is still a lot of work to be done by HR to complete and file said claim to the carrier.

Another challenge is that employees are able to take intermittent leave in daily increments to bond with a newborn. As another curveball, employees can have multiple intermittent claims at the same time! To track that at the employer level is a nightmare. The same Albany based HR Director from above says the company may have to create a position just to track PFL intermittent leave.

What other challenges are on the horizon?

Billing is going to be an issue as employers have to self-report PFL wages for the quarter or month depending on billing frequency. They are used to just reporting Male/Female count for NY DBL. We have seen the challenges of self-reporting wages on the NJ TDB side, to the point where we audit clients on an annual basis because of the discrepancy of reported vs. actual wages. There are examples of some carriers already outsourcing NY PFL billing to TPA’s because of the complexity and potential added overhead to track appropriately.

How can we help our clients?

While PFL has created a lot of headaches early on, this is a time to bring added value and deepen relationships with clients. “In the midst of chaos, there is also opportunity” (Sun-Tzu). HR is definitely being flooded with questions and probably overwhelmed. This is new for everyone so even the carriers are learning on the fly. Groups that are large enough should entertain implementing an Absence Management Solution with a carrier to outsource that responsibility and workload. If that’s not a solution, at least set up a call with the in-force carrier to help answer questions. We did a lot of those calls in the 4^th quarter and it went a long way.

June 10, 2018

✔︎ STD and the Importance of Offsets

We have come across recent examples of continuation pay offsets (or lack thereof) having big impacts on claims. It may seem like a small contractual feature, but it can mean a lot depending on the situation.

What constitutes continuation pay?

Employer payments after date of disability including but not limited to regular wages, sick pay, vacation pay, or pension payments.

Why is it important?

While it seems logical to have STD benefit payments integrated with or limited by continuation pay, several carriers do not build this in as a standard offset (and has to be proactively added as an optional offset). Therefore, claimants may be entitled to STD benefits plus continuation pay. This can create over insurance issues and discourage return to work.

How does this compare to state disability policy?

NJ TDB builds in a standard offset known as “Limitation H” that does not allow the combination of disability benefits and continuation pay to exceed 100% of pre-disability earnings. NJ employers with STD policies could have situations arise where the NJ TDB benefits and STD benefits are being paid out differently based on offset language. Most groups would prefer the offsets to be consistent.

Can you give an example of how continuation pay may create a problem?

Employee A files a claim and is entitled to a $1,500/week disability payment and also has a bank of sick days equating to $2,250/week. The STD policy does not include an offset for continuation pay so the employee collects $1,500/week plus $2,250/week for a grand total of $3,750/week- 167% of pre-disability earnings! The employer assumed an offset was built into the contract to limit payment but that was not the case. We worked with the in-force carrier to amend the contract to include an offset moving forward.

What is the solution?

Every group is going to have a different opinion. Some may have internal policies that require employees to exhaust sick pay before collecting disability payments. For those that don’t, it makes sense to review the offset language in the contract with the group. More often than not, employers do not want employees making more money on claim than at work.

May 23, 2017

✔︎ NJ TDB: Why Isn’t Every Group Private?

NJ Temporary Disability Benefits (NJ TDB) can be a confusing benefit given the complex nature of the law. At Nelligan Associates, we’ve pretty much seen it all – the good, the bad, and the ugly. We will periodically be sending out information on the most frequently asked NJ TDB questions/topics we come across. If you have any questions, please let us know. Enjoy!

Why doesn’t every group elect to be in a PRIVATE plan if the cost and experience is better than the STATE?

While most New Jersey employers are better off in a private plan, here are the top reasons why they remain in the state fund:

Client INERTIA

We all know those groups that view any change as negative even if that change has obvious benefits. The client who passes up a six-figure savings with enhanced hospitalization coverage on group health probably isn’t the best candidate.

Poor Claims Experience

The state caps the employer rate at .75/$100 so groups with very high claims, ie. hospital systems, may be better off with the state. Ironically, these are the same groups who would benefit the most from a private plan but it usually comes down to financials. Insurance carriers may not be able to offer a savings based on claims experience.

Small Group

As a general rule of thumb, groups with less than 20 employees tend to have minimal claims and could be at a low price point with the state. The potential savings of going private may not be worth making the switch. This is not to say we don’t see smaller groups switching- our book includes many clients with 2, 5, 10, etc. employees. All it takes it one bad claims experience with the state to motivate a group to move.

Employee Signatures

When moving to a private plan, the state requires 50% +1 employee signatures before approving. This can be difficult for groups with a large remote population or several locations.

The above challenges only apply to a small number of employers. Most groups are intrigued by the enhanced claims/service experience and/or cost savings.

January 23, 2017

NJ TDB: THE MORE YOU KNOW SERIES – When is the best time to move from the state?

When is the best time to move a TDB plan from the state?

Transitioning from the state fund to a private plan can occur on the quarter – January 1^st, April 1^st, July 1^st, and October 1^st. A common misconception is that the state only allows groups to move for January 1^st. While most of the activity does occur on 1/1 (mostly because other group benefits renew then and the new employer/employee TDB rates come out between July and November), the other three quarters are perfectly acceptable.

In some instances, it can be easier to work with an employer on TDB when they are not focused on medical, ancillary, etc. There is a level of decision fatigue when trying to decide on privitizing state disability while other benefits are renewing and/or changing.

How far ahead should I be discussing TDB with my clients?

It depends on the size and complexity of the company. A good rule of thumb is to initiate conversations at the beginning of the quarter. So, for a 4/1 effective date, contacting groups in January is a smart idea. This is not to say later in the quarter doesn’t work (in fact, we regularly have groups that are submitted right up to quarter end), but earlier on allows for the client to feel less rushed. We all know how hard it can be to book face time with some groups!

Is there any downside moving off 1/1?

Carriers that do not specialize in TDB may not allow/discourage this because of billing reasons. The nature of taxable wage billing (default TDB billing) is such that the largest premiums paid are in the 1^st quarter and decrease each quarter thereafter (think 40% 1Q, 30% 2Q, 20% 3Q, 10% 4Q). However, specialty carriers do not have an issue moving off 1/1 because over a 4 quarter period the premium will be the same. So, this is a non issue.

The other topic to discuss is payroll. In our experience, there is one payroll vendor in particular that may have system limitations with off cycle TDB plans- they will issue two W2’s at year end (one for the state plan and one for the private plan). It comes down to how much this bothers the client as it’s more of a nuisance than anything else.