The Barkley Buzz Newsletter December 2009 Issue

Risk Management News and Tips brought to you by Barkley Insurance & Risk Management

In this issue:

• Holiday Greetings!
• Did you know...?
• Making the Workplace Fatigue-Safe
• Business Survival in the Face of Disaster
• Extending the COBRA Subsidy in 2010?
• GINA Specifics
• 2010 Health Insurance Cost Predictions
• Open Enrollment Education Opportunities

~ Holiday Greetings!

As we find ourselves smack dab in the middle of the holiday season, and our stomachs brace for another festive onslaught, it can be a good time of year to pause and enjoy some perspective before jumping into 2010. Perhaps turn your thoughts to things other than work, such as friends and family, and Christmas giving.

When I think back to family in 2009 my focus has been learning and growing as a parent to our daughter Harper. It’s certainly been an enlightening adventure watching her develop from an infant to a toddler virtually overnight. Wow, these little creatures grow fast.

2009 has been an exciting and dynamic year for Barkley Insurance. Our outlook for 2010 promises to change the game for our partner-clients. Risk management will continue to play an important part of our philosophy and direction but our efforts will only grow stronger. We’ve heard nothing but positive feedback from our clients regarding our top to bottom risk management audits in Workers’ Compensation/OSHA and Employee Benefits. We are reinventing the way we tackle risk issues for the good of our clients.

Among many additions to our value assured services I am very excited to announce the 2010 Barkley Academy of Risk Management Speaker Series. Our educational seminar series are designed to help employers, HR directors, CFO’s, Risk Managers, and Controllers navigate through the many compliance issues and current hot topics facing their organizations today. Guest speakers include Employment Law specialists, Accounting professionals, OSHA representatives, Risk & Safety managers, and Leadership/Sales consultants. So keep your calendars ready for the schedule to be released just after the first of the year. What other topics of business would you appreciate hearing and learning about? We’d love to know.

We have made the decision to reinforce our focus and objectives. We, as a firm, continue to grow and learn from the strengths, opportunities and challenges our clients face on a daily basis. Our goal is to continue to be recognized as a leader in the industry as well as a partner and trusted advisor with our clients.

On behalf of everyone here at Barkley Insurance we’d like to send our warmest Holiday wishes.

Happy Holidays,
Griffin Barkley

“If there was ever a time to dare to make a difference, to embark upon something meaningful, it is now, not for any grand cause, necessarily, but for something that tugs at your heart, something that’s your aspiration, something that’s your purpose.”

Tony Williams, Starfinder Foundation

DID YOU KNOW...?

The Equal Employment Opportunity Commission (EEOC) has revised its “Equal Employment Opportunity is the Law” poster to reflect changes required by the employment provisions (Title II) of the Genetic Information Nondiscrimination Act (GINA), which became effective Nov. 21, 2009.

Federal law requires postings in workplaces informing individuals of their rights under federal employment discrimination laws. The new poster can be found at www.eeoc.gov/employers/poster.cfm

Risk Management

~ Making the Workplace Fatigue-Safe

According to Clockwork Consultants, a UK-based company that helps enterprises manage fatigue risk, fatigued employees are three times more likely to have an accident at work — not to mention make poor business decisions, the firm claims.

Those who work shifts also have long-term health consequences, including a 40 percent increased risk of heart disease, peptic ulcers and other gastrointestinal problems, said the firm.

The problem of fatigue might be more common than you think. A recent study in the Journal of Occupational and Environmental Medicine found that nearly 40 percent of U.S. workers experience fatigue — a problem that costs employers billions in lost productivity.

Led by Judith Ricci, Sc.D., M.S., of Caremark Rx Inc., the study said that of the nearly 29,000 employed adults interviewed, 38 percent said they had experienced “low levels of energy, poor sleep or a feeling of fatigue” during the previous two weeks. Total lost productive time averaged 5.6 hours per week for workers with fatigue, compared to 3.3 hours for their counterparts without fatigue. Even when they were working, workers with fatigue symptoms had much lower rates of productivity than their sprightly counterparts — mainly due to low concentration and increased time needed to accomplish tasks.

The study also found that fatigue was more common in women than men, in workers less than 50 years old and in white workers compared with African-Americans. Workers with “high-control” jobs — relatively well-paid jobs with decision-making responsibility — also reported higher rates of fatigue than their colleagues.

The study estimated that fatigue costs U.S. employers more than $136 billion per year in health-related lost productivity — $101 billion more than for workers without fatigue. Eighty-four percent of the costs were related to reduced performance while at work, rather than outright absences.

Fighting the fatigue factor

But well-managed workplace policies can drastically reduce the incidence and cost of employee fatigue risk, according to Peter Johansson, a risk engineer at Zurich Financial Services. Johansson notes that insurers increasingly grade organizations for fatigue factor during the underwriting process. He advocates the use of what he calls a ‘fatigue-risk triangle’ to mitigate the risk.

The triangle features three basic components, which can combine to create a potentially high-risk situation:

• the length and timing of hours worked
• inadequate sleep
• the presence of fatigue-related hazards

Any one of these is in itself a danger – but when two or more of these factors combine, the result can quickly become catastrophic, Johansson says. Organizations should adopt a variety of methods to make themselves “fatigue safe.” The most common include:

• Special training to help workers understand their own fatigue levels
• Committees to oversee fatigue management programs
• Use of models to investigate fatigue related accidents
• Development of “fatigue safe” work schedules
• Development of fatigue risk management policies and procedures
• Implementation of compliance systems

Johansson says adopting just one of these strategies will not prove effective in beating workplace fatigue. He says that for safety-critical systems in high-hazard industries such as transport, manufacturing, mining and healthcare, at least three levels of protection are required to give adequate protection. Other safety-critical systems, such as aircraft control systems, typically have a minimum of two levels of redundancy to protect against failure of the primary system.

Every business can also reduce the risk of fatigue by developing suitable workplace conditions. Certain conditions increase fatigue, including dim lighting or other limited visual conditions (e.g., due to weather), high temperatures, high noise, high comfort, tasks that must be sustained for long periods of time and monotonous work tasks. Eliminating such conditions and providing environments that have good lighting, comfortable temperatures and reasonable noise levels quickly pay for themselves in reduced risk, according to a study by the Canadian Centre of Occupational Health and Safety (COHS). If possible, work tasks should provide a variety of interest and tasks should change throughout the shift, the COHS recommends.

No less important are the hours your employees work. Many safety-critical occupations have strict rules about how long a worker can stay on the job and how long breaks must be. Productivity experts recommend similar guidelines for most jobs.

If extended hours/overtime are common, managers should calculate the time required for the commute home, meal preparation, eating and socializing with family when calculating employees’ work shifts. Workplaces may also provide on-site accommodations, prepared meals for workers and facilities where employees can take a nap when they are tired.

For more suggestions on reducing fatigue in the workplace, please call us.

~ Business Survival in the Face of Disaster

According to a recent disaster preparedness survey conducted for Home Depot, 71 percent of businesses do not have a disaster plan, and more than half of the small-business owners surveyed are not worried about the impact a disaster can have on their business.

Such nonchalance is even more surprising given the relatively simple steps that can help ensure a business’ survival. Of those businesses that experience a disaster, those that plan ahead have a better than 75 percent chance of survival, according to the Small Business Administration. Of those that don’t, only 43 percent survive.

“Companies that prepare for disaster have a tendency to survive them,” said Jon Toigo, chief executive of research firm Toigo Partners International and the author of several books on disaster recovery.

Getting your business up to speed doesn’t have to be expensive. “Most of the preparations are very simple and very affordable, so don’t let cost deter you,” Toigo said.

The top priority is ensuring the safety of employees, he says. Create a contact list and a telephone tree so you can easily communicate with staffers in the case of a natural or other disaster. Make sure your place of work is equipped with a first-aid kit, flashlights, batteries, bottled water and a battery powered radio. Generators only cost a few hundred dollars and at the least can give you the ability to charge laptops and cell phones if grid power is unavailable.

Environmental noise levels can be significantly reduced by using ear protection devices. Most manufacturers will give a noise reduction rating (NRR), or a measure of the reduction in noise, in decibels, the device achieves in a laboratory setting. Occupational health professionals use several different calculations to determine noise exposure, but generally speaking, you can estimate effective noise exposure levels by subtracting the NRR from the environmental noise level. You want a NRR high enough to block harmful noise, but not so high that the worker is unsafe.

Other action steps you can take to protect property and help get your business up and running again after a disaster include:

• Make another contact list with the details of key suppliers and vendors, and any other partners that are key to the future of the business.
• Protect data and store it in a safe and remote place. Toigo recommends backing up contracts, orders and inventories onto a flash drive and sticking it in your pocket at the end of each day or week. Even better is to develop an automatic back-up facility that stores the key information online.
• Make sure you have a full and detailed inventory of all your business’ physical and financial assets.
• Survey your premises for vulnerable points and secure them. This can be anything from loose roof tiles, to inventory lying around the yard.
• Review your insurance policy with your agent to determine whether you have adequate protection. What is your deductible? Are you covered for windstorm? And what about flooding and mold?
• Review your limits. Is your property coverage high enough to take into account the higher costs of raw materials that follow disasters? Do you have coverage for building upgrades and debris removal?
• Do you have business income coverage? This will help you replace income lost when your business is interrupted due to a loss covered by your property insurance policy. If you have this coverage, when will it kick in and how long will it last?

It may take a few hours to address these issues, but it will probably be the most valuable few hours you spend this year. For more disaster-preparedness suggestions, please contact us.

Group Employee Benefits

~ Extending the COBRA Subsidy in 2010?

The American Recovery and Reinvestment Act of 2009 (known as “ARRA”) provides a 65 percent COBRA premium subsidy for individuals who lose health coverage because of involuntary termination of employment anytime between Sept. 1, 2008, and Dec. 31, 2009.

Employers are required to update their COBRA election notices and election forms to contain information regarding the subsidy. Employers should continue to use these COBRA notices and election forms for individuals who experience qualifying events on or before Dec. 31, 2009, and for those whose COBRA coverage would begin by Dec. 31, 2009.

If Congress does not extend the COBRA premium subsidy program beyond Dec. 31, 2009, employers may resume back to using their pre-ARRA COBRA notices and election forms for 2010.

The Department of Labor has model COBRA notices available at www.dol.gov/cobra

~ GINA Specifics

The Genetic Information Nondiscrimination Act of 2008 (GINA) states that group health plans and insurance issuers may not:

• Adjust group premium or contribution amounts on the basis of genetic information;
• Request or require individuals to undergo a genetic test; and
• Request, require or purchase genetic information prior to or in connection with enrollment, or at any time for underwriting purposes.

GINA’s rules applicable to group health plans and health insurance issuers are effective for plan years beginning after May 21, 2009, or Jan. 1, 2010, for calendar year plans.

~ 2010 Health Insurance Cost Predictions

The predictions for health care trends are now being released for 2010 and the outlook continues to be grim. These trends are forecasts for projected changes in health plans’ per capita claims cost, as determined by insurance carriers, major insurance carriers (MCOs) and third-party administrators (TPAs).

The following factors can affect a trend: inflation, cost-shifting, fixed deductibles and copayments, utilization increases, use of more expensive treatment options, government-mandated benefits and technology changes. As a general rule, there is usually a high correlation between trend rates and actual cost increases as determined by carriers. Despite this, changes for plan sponsors may not be as similar compared to projected trends because of the uniqueness of the company.

Mercer Health & Benefits reports that employers are expecting nearly a nine percent increase in the cost of their group health care plans in 2010. Many survey respondents also stated that they are planning to cut their health care benefit budgets more than usual in 2010 due to the recession. Preliminary survey findings attributed the higher costs among recession-affected employers to an increase in stress-related illnesses among employees and layoffs.

PricewaterhouseCoopers (PwC) reported similar findings: that costs will rise in part because many are worried about losing their jobs, and because of this, are using their health care more frequently while they still have it. Not only are workers seeking medical care that they might have otherwise put off, but PwC also reports an increase in stress-related illness.

According to the Segal Group, Inc., medical plan projections for the majority of managed care plans are similar to those found in 2009 – ranging from 10.2 to 10.8 percent. Quite the opposite, high-deductible health plans (HDHPs) are projected to increase by just over one percentage point to 11.9 percent in 2010.

Segal also reported that medical plan cost trends this year will be more than four times greater than the annual increase in average hourly earnings. With obvious pressure on plan sponsors, most are not waiting for federal health care reform and are accelerating their efforts to control health costs on their own. Attempting to curtail this increase, many plans have eliminated or greatly reduced coverage for brand-name drug classes while reducing copayments for primary care visits and increasing copayments for visits to specialists. An increasing number of plan sponsors are also monitoring wellness and disease management programs through incentive-based initiatives.

~ Open Enrollment Education Opportunities

Open enrollment is a period of time each year when employers permit new employees to enroll in a health plan and allow current employees to make changes to their existing medical coverage. During open enrollment employees may decide to change plans, add or drop a dependent, or add an optional program such as a dental plan.

Employers can assist employees during open enrollment by distributing materials that explain new health options and changes to existing benefits. To facilitate employees selecting the plan option that best meets their family’s needs, employers should provide information about the following:

• A general summary of what benefits are covered by the plan
• Limits on coverage, as well as limits on coverage for certain disorders
• Preexisting condition clauses that restrict coverage for a specific period of time
• Coverage for preventive services, procedures and medications
• Extent of medication coverage, particularly for new drugs
• Cost-sharing (i.e., premium contribution, deductible, copayment or coinsurance requirements)
• Consumer-directed health plans (high-deductible health plans) or other non-traditional plan types

Nine methods that employers can use to improve their open enrollment communication strategies are:

1. Communicate frequently with employees regarding their health coverage options, but avoid overwhelming them with information. Give them ample time to absorb new information, ask questions and express concerns.
2. Use simple terms to explain any changes.
3. Thoroughly explain the goals and rationale of health care benefits to managers and business leaders so they can effectively explain health plans to employees.
4. Be ready to answer questions and face challenges from management and employees regarding changes.
5. Be honest and direct when discussing health benefits, especially if employees are facing cost increases for their coverage.
6. Discuss the “5 Cs” of enrollment with employees: Cost, Coverage information, Changes to plans, Comparison’s to last year’s plans and options, and Current options.
7. Provide information to employees about the health care providers that will be available to them in new or revised plan options.
8. Provide testimonials from other employees about their experiences with changes in health care coverage.
9. Use a variety of methods to communicate with employees; for example, use the Web, printed materials and face-to-face discussions.