The United States Department of Labor (DOL) has tentatively authorized an Employee Retirement Income Security Act (ERISA) exemption regarding pension plan risk transfer to a captive. This healthcare network is the first organization in history to receive ERISA approval to transfer pension risk in a captive. This is groundbreaking news, as it opens the doors for plan sponsors to better manage their risk related to defined benefit pension plans programs. In short, using captive insurance companies rather than traditional insurers alone gives plan sponsors the opportunity to fund their pension risk more cost effectively.

Their employees engage in groundbreaking cancer research and provide lifesaving care for patients. The employer engaged with Spring, to help design and implement this unique program for its retirement benefits. This included conducting actuarial analyses, navigating vendor and partner avenues, structuring transaction and direct contact with the DOL to work through the exemption process. Once approved, the employer is anticipated to receive $126.4 million in financial benefits from the DOL. As part of the terms of the exemption, the employer will be providing a one-time cost of living increase to the monthly retirement benefit to all plan participants and beneficiaries.

This is a groundbreaking next step in the evolution of risk management programs and set the stage for many other employers who are trying to structure a better program for their employees.

Every industry has its own challenges and nuances. Since our client base is widely varied, we routinely partner with our clients to tackle unique, industry specific obstacles as they build out customized employee benefit programs and strategies. When it comes to the airline sector, a specific pain point relates to adequate long term disability coverage for their licensed pilot employees.

Background

Pilot union contracts typically require airlines (the employer) to provide long term disability (LTD) insurance to their pilots, but this coverage has become nearly impossible to procure in the traditional LTD market, for a range of risk reasons:

Pilots are humans like the rest of us, but given the stressful nature of their job and the consequences of their environment, they might be in greater need of LTD coverage than the average worker. For example, the FAA estimates the prevalence of substance misuse is 8.5% among pilots, with other sources placing that rate as high as over 15%1.

Sensibly, the FAA’s regulations around pilot licensing are very stringent, so there is a large risk that a pilot will lose their license over a medical condition, including the substance issues referenced above. As a result, the gap in the market for conventional LTD coverage has yielded a specialty market specific for pilots, which is based on the loss of a pilot’s license instead of the traditional definitions of disability, which are based on the ability to perform either the material and substantial duties of one’s own occupation or any occupation which could be reasonably expected to perform in light of their background. Since these loss of license plans are generally structured either as a monthly benefit while a pilot is grounded or as a lump sum, pilots who do not lose their license essentially have no product option available that provides income replacement as a traditional LTD plan would. In addition, even when the specialty coverage would provide a benefit, it is limited in availability and, with very little competition, premiums are high and there is minimal, if any, room for customization.

Potential Solution

At Spring, we often say that captives are the whiteboard of insurance, meaning that they can be leveraged and crafted in a diverse range of ways to solve for unique and evolving challenges. LTD coverage for pilots can be added to that whiteboard.

Most airlines currently have a captive insurance company, which they may only be utilizing for property and casualty (P&C) lines of coverage. Even when an airline does have employee benefits in their captive, they are typically not leveraging the captive for long term disability insurance or other voluntary benefits.

Long tail risks such as disability are particularly beneficial for captives. Traditionally, when premiums are paid to carriers they hold and maintain any investment income earned on reserves. When funding these long-term liabilities through a captive, the investment income earned is held until the time of loss and stays within the captive.  These investment returns are substantial and serve as yet another benefit for placing disability coverages into the captive.

Having employee benefits (including LTD) in a captive provides the following advantages:

The biggest benefits for airlines placing LTD through their captive program is creating greater control of customization of coverage and are less susceptible to market volatility and pricing by moving away from the commercial market.

Having a combined P&C and employee benefits captive program, which incorporates LTD, would further strengthen the airline’s overall captive and risk management strategy by offering risk diversification, since LTD risks are unrelated to the existing P&C risks underwritten in the captive. Along with projected increased profits of the LTD line of coverage, this approach increases the number of statistically independent exposures, which improves the stability of the overall program. In addition to LTD, medical stop loss could also be added to the captive to protect against catastrophic claims and create more predictability.

Action Plan

LTD insurance for pilots has been an issue for years in the airline industry, and no optimal commercially available solution has come forth. Captive insurance has long been a strategic approach to niche or especially challenging insurance obstacles and essentially how and why captives were born. The LTD commercial market is prime for disruption, and for those willing to move towards a more flexible and beneficial program, a captive insurance company can provide an answer.

1 https://thehill.com/opinion/healthcare/4336555-the-faa-must-prioritize-pilot-well-being-to-improve-flight-safety/#:~:text=The%20FAA%20estimates%20the%20prevalence,identify%20these%20grave%20health%20concerns

The absence management conversation is a critical component of every employer’s broader employee benefit strategy discussion these days, especially given the competitive talent market and the rapidly evolving regulatory landscape surrounding leave of all types and at all levels (federal, state, local). Now, more than ever, employers and employees need to understand how all available benefits, including supplemental health plans, such as Accident, Critical Illness, and Hospital Indemnity, work together. Compliance isn’t the only consideration, though. Employers need to be sure not to duplicate processes which can increase costs as well as to ensure a smooth and positive employee experience.

Understanding supplemental health products and the benefits provided by them ensures that those paying for the coverage will fully utilize the benefits available. Since Accident, Critical Illness, and Hospital Indemnity benefits are paid when an accident occurs, a critical illness is diagnosed, or a hospital stay is required due to injury or illness, they offer a way to fill in the financial gaps left by traditional health insurance, disability coverage, and paid leave benefits. The lump sum benefits paid by the supplemental health plans can be used to cover out-of-pocket expenses like medical copays and deductibles, as well as to supplement the income replacement benefits provided by paid leave and/or disability plans.

The good news is that insurance carriers have made significant progress over the last few years toward the integration of absence and supplemental health products.1 Many are, now, not only bundling supplemental health products with their core disability and absence products and offering a package discount to the core products when quoting, but also tackling the more complex issue of how to ensure that employees enrolled in supplemental health plans are receiving the financial benefit of the products they pay for with payroll deductions.

To ensure that supplemental health plan participants receive the benefits they are entitled to under their policies, most carriers are digging into questions like:

Carriers are also reviewing their processes to find efficiencies and create a better claimant experience. This internal retrospection has led to things like coordinated leave, disability, and supplemental health claim intake and the sharing of medical information across all claims. Many carriers are not only building out coordinated claim paths and workflows for leave, disability, and supplemental health claims, but they are also having their leave and disability claim specialists conduct routine analysis of current leave and disability claim files to see what other coverages an insured is eligible for and whether the medical information on file could be used to adjudicate the corresponding supplemental health benefit claims. Some carriers who have access to medical claim files offer auto-generated notifications, which are sent to supplemental health plan participants, reminding them of their supplemental health benefits based on the medical claim data. Software and technology companies as well as third-party administrators (TPAs) who often handle leave benefit administration are also focused on product improvements in the areas of artificial intelligence (AI), automations, self-service portals, communications, intake, and reporting. All these claim process adaptations alleviate steps for the insured and make it easier, overall, for them to know what benefits are available and be able to utilize them. They also help claimants to maximize the value of the benefits for which they are paying and enhance the customer experience that is top of mind for employers of all types, sizes, and industries.

1 Spring Consulting Group.  2022-2023 Integrated Disability, Absence, and Health and Productivity Vendor Benchmarking Survey.

In a recent podcast from Global Captive Podcast, president and CEO of edRISK, Tracy Hassett, and our SVP, Prabal Lakhanpal, dive into the history of edRISK and how educational institutions have been able to leverage a captive to reduce health insurance costs and reduce liability. You can find the full podcast episode here.

Every year, the Risk Management Society (RIMS) hosts its annual RISKWORLD conference, serving as an opportunity for 10,000+ risk professionals to convene and discuss the industry’s future. Against the backdrop of San Diego, this year’s conference was a testament to the ever-evolving landscape of risk management and insurance. As industries grapple with unprecedented challenges, the conference emerged as a beacon of insight, fostering discussions on cutting-edge practices, emerging trends, and innovative strategies. Here are some of the most popular topics discussed during this year’s conference.

The insurance industry is constantly evolving, presenting both opportunities and obstacles for risk management professionals. These sessions explored the latest trends, regulatory changes, and strategic approaches to navigating the dynamic landscape of risk management.

2. Forward-Thinking Approaches and Strategies

Innovation lies at the heart of effective risk management, and RISKWORLD 2024 showcased forward-thinking tactics for staying ahead. From optimizing risk transfer and resilience planning to exploring new methodologies for risk assessment and mitigation, attendees gained valuable insights into cutting-edge techniques and innovative strategies that are reshaping the landscape of risk management, ensuring they are well-equipped to tackle the challenges of tomorrow.

3. Diversity, Equity, and Inclusion (DEI)

Promoting diversity, equity, and inclusion has become a strategic imperative for organizations across industries. These sessions highlighted the importance of fostering inclusive workplaces, advancing DEI initiatives, and leveraging diverse perspectives for business success.

4. AI, Technology, and Innovation

Innovation in technology is transforming the insurance landscape. These sessions delved into the role of artificial intelligence, cybersecurity, and data analytics in shaping the future of risk management.


As the curtains draw on another successful RISKWORLD conference, the Spring team and I had a great time tuning into some insightful sessions and reconnecting with industry leaders. The spirit of collaboration and innovation was lively this year, and I’m excited to see what next year’s conference has in store for us.

The world of employee benefits is ever-changing. What’s hot one year may not be the next, and we are constantly seeing new products and vendors enter the market. The ebb and flow of employee benefits are typically driven by factors like workforce demands and demographics, the landscape for retention and recruitment, the economy, trends in the healthcare industry, and technological advancements. Sometimes, though, the most prominent trends stem from employers wanting to go back to the basics to understand what will drive value for employees and yield results.  This doesn’t always mean selecting the “big shiny object” of the moment.

Right now, we’re in a post-pandemic world, with an economy that seems to be recovering but still has many weary, and healthcare costs that just won’t quit. Given these factors and what we are hearing from clients and colleagues, we’ve put together this list of benefits areas you should be paying attention to in 2024.

1. Healthcare Affordability

Healthcare cost trend for 2024 is projected to be around 7%. Prescription drug costs are a large factor within this bucket, but so are inflation, healthcare worker shortages, and other causes. As a result, many organizations are strategizing around how they can offer benefits that are more affordable not just for them but for their employees. Some tactics include taking a fresh look at your plan design, cost-sharing model, and pharmacy benefit program. We are also seeing a big push toward alternative funding like captive insurance or other self-insured models. Employers may also want to take more simple actions like reprioritizing preventive care and wellness to lessen the prevalence of chronic conditions and avoid high claims costs.

Another big trend is the coverage of GLP-1 drugs for weight loss, such as Ozempic and Wegovy, a decision over which many employers are weighing the pros and cons.

2. Financial Wellness

Related to affordability, there has been a resurgence of interest in programs like 401(k)s, pension plans, student debt repayment benefits, tuition reimbursement, financial literacy and coaching, and the like. In fact, Wellable reports that 30% of companies have increased their budgets related to financial wellness in 2024. Last year, IBM announced they were bringing back their pension plan in place of their previous 401(k) match program. Regardless of your priorities, there is a large market of solutions available. We recommend doing a deep dive into your population’s needs and assessing current options (e.g., 401(k) company match), to better understand how you can strategically enhance financially focused benefits.

3. Family-Forward Benefits

Benefits with families in mind include programs around parental leave, family and medical leave, caregiver leave or assistance, women’s health and reproductive benefits, bereavement leave, childcare assistance, flexible work schedules, and more. A dependent care flexible spending account (DCFSA) is a specific solution that can offset the costs of daycare or other needs. If you’re looking to make your programs more family-friendly, check out this checklist.

4. Customization

Offering tailored benefits that are personalized for an employee will continue to be a leading objective. This might include benefits like Lifestyle Spending Accounts, flexible time off or hybrid work models, voluntary benefits like pet insurance or identity theft, commuter benefits, Flexible Spending Accounts (FSAs), and more. This approach means ensuring your program is inclusive of all employees regardless of geography, gender, age, race, sexual orientation, etc., and allows for choice between the options available. It also means meeting employees where they are and ensuring you are covering your bases when it comes to telehealth and mental health services.

5. Upskilling & Professional Development

Employers increasingly understand that it is often worth the investment to upskill current talent rather than to continuously hire out for certain roles. This is not only good for business but goes a long way in the realms of employee morale, engagement, and productivity. In fact, a 2022 Conference Board report found that 58% of those surveyed would be more likely to leave if not provided professional development skills and opportunities. As such, we have seen an uptick in programs surrounding mentorship, education and training, including learning management systems, peer coaching, job rotations, and well-defined career paths based on certain milestones.

We’re excited to see these trends take shape and the impacts they’ll have on the benefits sphere! If you could use help evaluating or implementing any facet of your benefits program, please get in touch with the Spring team.

Preventive care is a critical component to wellness. Often people without known health issues overlook their preventive care, but it is critical to prevent illness as well as identify conditions or diseases early on. Healthcare has historically focused on treatment of disease, but prevention is just as important, and employers are focused on prevention in order to manage cost, productivity and overall employee wellbeing. 

Defining Preventive Care

Preventive care begins with an annual visit to your primary care provider, which may be a physician assistant, nurse practitioner, or medical doctor.  These providers practice general medicine and can be your gateway to additional providers as necessary.  In some instances, OBGYNs may also be deemed primary care providers. 

Since the Affordable Care Act (ACA) was passed, true preventive care has been available at no out-of-pocket costs for individuals enrolled in health insurance through their employer or the marketplace, assuming they seek care in-network. Additionally, utilization of preventative services can lead to decreased medical care costs due to decreased inpatient care and higher prioritization of a healthy lifestyle. In fact, the National Center for Biotechnology Information reported that a 90% delivery rate of primary preventive services could reduce healthcare expenditures by $53.9 billion.

While the minimal cost of these services for individuals should encourage high utilization, very few people access all the recommended preventive services, and this has declined over the past decade. For instance, in 2015, 8.5% of adults aged 35 and above received appropriate recommended clinical preventative services. This decreased to 6.9% in 2018 and 5.3% in 2020.1 While the use of preventive services in 2020 took a hit largely due to the COVID-19 pandemic, the negative trend in general is cause for concern. The cause for this decline is unknown but could be due to overall confusion and exhaustion among healthcare consumers in trying to navigate the landscape.

Preventive Care vs. Office Visits

Some patients are frustrated and confused when they seek preventive care (i.e., annual visit to a provider) but are billed and charged for an office visit.  This is a challenge, partially due to billing codes, and one that the state and federal governments may address in the future. 

To clarify, a preventive visit is to review your overall health, identify risks, and talk about staying healthy.  An office visit is time to discuss a specific health concern or condition.  Unfortunately, if a patient has a health issue, it’s nearly impossible to have a preventive visit without that conversation expanding into an office visit.  If this is a concern, patients should talk to their provider in advance to avoid confusion or unexpected charges.  

Defining Prevention

Preventive care is used to refer to routine screenings, tests, checkups, patient counseling and vaccines, which vary based on an individual’s risk factors and phase in life. Preventative screenings include2:

In addition to the list above from healthcare.gov discussion around family history, personal risks, physical assessment (weight, height, blood pressure, pulse, assessment of heart and lungs, visual assessment of ears, eyes, throat, skin, and abdomen), and routine screenings for cancer (breast, cervical and prostate) are typically included in your annual exam.3

These tests and general preventative services can help identify specific risk factors in an individual’s life that may lead to possible disease. Early identification and treatment can increase longevity or quality of life and avoid more costly procedures down the road.

Employer Focus on Prevention

Employers typically view preventative care as an opportunity to both reduce their medical costs as well as support employee wellness and productivity and should find ways to encourage the use of these services by their employees. Some simple campaigns that focus on educating their employee population about available in-network services and the importance of care when they are healthy can support this goal. Employers have also looked to develop wellness programs for the workplace to incent employees to make healthy lifestyle decisions as well as make those lifestyle choices more accessible. Some health plans also have incentives built in for activities like making your annual physical appointment or joining a gym.

The benefits to preventative care exist for everyone – employers will benefit from a healthier and more engaged workforce that leads to lesser claims costs, and employees can reduce health risks by acting before illness or disease can cause a significant impact on their lives.

As an employer, you should work with your third party administrator or carrier to understand how your population is doing against screening targets.  If you are falling short, or having returned to pre-pandemic levels it may be in the best interest of your employees to educate them on preventive care, share targets with them and perhaps build incentives for prevention.  This should go beyond medical to also look at dental and vision screenings, which are often a solid predictor of overall preventive health. Some of our clients, like the edHEALTH consortium, offer additional reporting, insights, and resources to support their educational institutions when it comes to promoting preventive care.

If you could use guidance around how to drive participation in preventive care within your population, the Spring team would be happy to help.

1 Healthy People 2030, Adults receiving recommended clinical preventive services, 2015-2020
2 https://www.healthcare.gov/preventive-care-adults/
3 Institutions who are self-insured have flexibility in offering benefits; however, the coverage provided in the Affordable Care Act provides a solid baseline.

We have all greeted our alarm clocks with disgust at times or been a bit overzealous with the snooze button, but what if your sleep pattern was so strained that every morning you and your alarm had a passive-aggressive standoff?  How long could you tolerate that lack of sleep before your work or personal life was negatively impacted, and what, if anything, could help you find more rest to be the best version of yourself? 

The National Safety Council (NSC) estimates that approximately 43% of workers are sleep-deprived, and that an overtired population is less productive, less present, and a potential safety risk. Organizations with safety sensitive positions or third shift workers have a greater risk, but all fatigued employees pose a greater risk to themselves and their employer than those that are well-rested. 

Similar statistics from The Centers for Disease Control and Prevention indicate that many American adults (35%) get inadequate sleep (defined as under seven hours); and they indicate that lack of sleep is associated with increased risks for cardiovascular disease, obesity, diabetes, hypertension, depression, and all-cause mortality. Employee burnout is another phenomenon that is exacerbated if sleep issues exist.  

As employers embrace the expansion of benefit offerings, sleep has entered the scene as a potential issue that needs addressing. Organizations are assessing how they can implement sleep education, tracking, and resolution for their employees with the goal of arriving at a more productive and healthier workforce.  Employee benefit offerings surrounding sleep include some or all of the following features:

Selecting the optimal solution for employees can be challenging, especially given that price points vary considerably, and employees are fatigued by all the available solutions.  The best place to start is by examining the data available to you and try to assess if undiagnosed sleep disorders are a pain point within your organization.  From there, consider how sleep support aligns with your overall wellness and well-being offering.  Education around sleep is a strong entry point to talk about self-care and mindfulness without the stigma that surrounds conversations around behavioral health and substance abuse.  Every one of us wants a better relationship with our alarm clock. Conveniently, many of the remedies for better sleep habits support better physical, emotional and psychological health as well.  Given this, sleep tracking might just be the next big employee perk.  Set your alarm, or you just might miss the trend.

Over the past five years, the outsourced vendor landscape has evolved related to the administration of the Americans with Disabilities Act (ADA).  Carriers and third-party administrators (TPA) who previously supported employers with leave compliance at the federal and state levels (i.e. FMLA, MA PFML, CT PFL, etc.) are now proficient in ADA and will support employers with their compliance requirements. 

Product offerings vary in the market, with some including support for leave as an accommodation exclusively and others providing support with all accommodations including leave.  The assistance available from vendor partners also differs, with some supporting the entire process end-to-end, including coordination of the interactive process with supervisors and employees, while others support data collection but leave the interactive process to supervisors, employees, and HR.  At this point, all carriers and TPAs agree that the ultimate decision on the accommodation rests exclusively with the employer, including evaluation of the potential hardship. 

Employers with minimal accommodation requests likely do not need support from an external partner.  For those employers, it is usually optimal to build some subject matter expertise internally within HR and funnel requests through that resource.  At a high level that process should include the following steps:

Although the supervisor is a critical part of the process, we typically recommend that supervisors do not independently manage the ADA process – especially if the volume of requests is small – as they may not understand the compliance requirements.  In addition, they often only have a view into their business unit or team, making it impossible for them to understand how the broader organization would define a hardship under the ADA as compared to their team or business unit. 

If the volume of accommodation requests is high or subject matter expertise does not exist in-house, leveraging your external provider may be a strong option.  By co-sourcing the ADA solution, you can leverage the expertise of the external vendor but leave decision-making to your team, including HR, supervisor and employee.  Key assessment of an ADA offering includes the following:

Regardless of the partner selected, employers can never fully outsource the accommodation process.  Although it often feels like a burden, returning accommodated employees to the workplace is in the best interest of everyone.  The ADA does not require that employers remove essential job functions, but it does ensure that disabled employees who are able to perform the essential functions of their job with an accommodation receive those legally required accommodations. 

If you need support with your accommodation process and compliance with ADA, free resources are available through the Job Accommodation Network (askjan.org) or feel free to reach out to our team for guidance.