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Daily Insurance Report  

Walt Bernard Podgurski,  Editor,  440-773-1108, 
Walt@DailyInsuranceReport.com

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Editorial Mission Statement: The goal of this publication is to provide readers a broad selection of what is being written about the insurance industry and related issues. Some articles may have a “tilt” towards a particular perspective one way or another. Inclusion in this newsletter is not an endorsement of any views or content; but report the various and differing views appearing in media.
  Wednesday, 09/18/19 - https://DailyInsuranceReport.com 

The "Daily Insurance Report" is now subscribed to by 25,000 elite insurance industry influencers who receive it Monday - Friday and have a quick overview of what is appearing in the media regarding the insurance industry; with an emphasis on life, health, and employee benefits.

The "Daily Insurance Report" publishes the life insurance, health insurance, and employee benefits news that matters.



$35M vanishes as payroll company abruptly closes
Daniella Genovese / Fox Business / YAHOO FINANCE

A cloud-based payroll processing firm abruptly shut down operations this week, leaving hundreds of thousands of employees without paychecks, according to a report from KrebsOnSecurity.

New York-based MyPayrollHR allegedly vanished with nearly $35 million in payroll funds from customer firms, directly impacting employees who had been receiving direct deposits from the firm on a bi-weekly basis. Not only did money from payroll funds disappear, but so did money belonging to employees, according to the report.

In some cases, employees were missing funds from two payroll periods.

Now, as the FBI asks for information, companies are left grappling to find the resources to cover them.

In a message sent to roughly 4,000 clients, MyPayrollHR said it would be closing its virtual doors. Companies who relied on the firm to process payroll payments were instructed to find another means to provide such services.

Cachet Financial Services, which facilitated payments to employee accounts for MyPayrollHR for the last 12 years, said it is owed $26 million by MyPayrollHR.



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TrueConnect awarded Sourcewell contract for Government Employers
 

St. Paul, MN – Sunrise Banks of St. Paul, MN, today announced that TrueConnect, a benefit program offered in partnership with Employee Loan Solutions,LLC, was selected by Sourcewell as an employee benefit program available to its more than 50,000 public sector and non-profit members. Sourcewell, formerly known as NJPA, conducts national competitive bid processes on behalf of their membership, so they can procure the best products and services at the best prices – saving local cities, counties and school districts the time and expense of managing their own local RFP processes.
 
TrueConnect is a patented employee financial wellness program, available to over 1000 employers across the United States. When employees are facing an unexpected expense – like a medical deductible or car repair – they can use TrueConnect to access a small loan online that is repaid through automated payroll deductions over a one-year term. No credit score or credit report is used, so even employees with no credit scores or poor credit can qualify.

Employee Loan Solutions, Inc. developed the patented TrueConnect Loan program as a voluntary employee benefit to help employees access safe and affordable credit. The TrueConnect Loan is free for employers to offer and requires very little administration. Qualified employees get access to small dollar loans (from $1000 - $3000) that are repaid through automatic payroll deductions. Employees do not need a credit history, but can only borrow what they can pay back with 8% of their paycheck to help insure a successful loan repayment. On-time payments are reported to credit bureaus so borrowers can build up their credit scores.  All TrueConnect Loan borrowers get 6 free credit counseling services from LSS Financial Choice, a federally accredited credit counseling program.





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Safeway, Aon Hewitt settle excessive fee lawsuit for $8.5 million
BRIAN CROCE Pensions&Investments

Safeway and Aon Hewitt reached an agreement to settle a class-action lawsuit claiming 401(k) participants were charged excessive fees.

Safeway Inc., Pleasanton, Calif., and Aon Hewitt Investment Consulting Inc. have reached an agreement to settle a class-action lawsuit claiming participants in Safeway's 401(k) plan were charged excessive fees.

Safeway and Aon Hewitt will pay a combined $8.5 million to settle the lawsuit, according to court documents filed Sept. 13 in U.S. District Court in Oakland, Calif. The lawsuit was first filed in 2016. Originally, the plan's record keeper, Empower Retirement, was a defendant in the case, but a judge dismissed claims against it in 2017. Aon Hewitt, the plan's former independent investment adviser, was added as a defendant in 2017.

The lawsuit claimed that Safeway breached its fiduciary duties by selecting a target-date fund lineup that "charged excessive fees as compared to readily available alternatives," the original filing said.




 
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The people who attend the NXT Employee Benefits Investor Forums include:
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  • Private Equity Firms,
  • Angel Investors,
  • Representatives from Insurance Carriers / Banks Who Have an Internal Venture Fund and/or Seeking Strategic Relationships,
  • Product and Distribution Heads at Insurance Companies, and
  • IMO’s.

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Millions of Americans Are About to Get a Check From Their Health Insurer
by Nancy LeTourneau / Washington Monthly

One of the most important and least-known provisions of Obamacare was actually the brainchild of former Senator Al Franken. When health care reform was being debated in the Senate, he offered an amendment to include something called a medical loss ratio (MLR). It requires insurance companies that cover individuals and small businesses to spend at least 80 percent of the premiums they charge on patient care. For companies that cover large groups, the MLR is raised to 85 percent.

That limits private insurers to spending 15-20 percent of premium dollars on everything else, including administration, marketing, and profits. They are further required to report annually on how their premium dollars were spent, and if they exceeded those limits, pay a rebate to their customers.

Beginning in September, those rebates are about to be issued. Reporting for the Kaiser Family Foundation, Rachel Fehr and Cynthia Cox note that, for 2019, insurers will be issuing a total of at least $1.3 billion in rebates, exceeding the previous record high of $1.1 billion in 2012. The specific amount of each rebate will vary depending on both the market and the provider. Here is what MLR rebates have looked like over time.



Avoid Pitfalls to Properly Replacing DC Plan Investments
An analysis found monitoring DC plan investment menus and making necessary changes results in better performance, and researchers have followed up with four pitfalls to avoid when making investment changes.
By Rebecca Moore / PLANSPONSOR

“Improving a 401(k)-investment menu by changing out investments isn’t as simple as replacing it with a better-performing fund. 401(k) plan sponsors and advisers should take care to document their justification for changing an investment and conduct a thorough, holistic search for a replacement,” say David Blanchett, head of Retirement Research at Morningstar Investment Management LLC, and Jim Licato, vice president of product management at Morningstar.

A prior analysis by the two of a sample of 3,478 fund replacements across 678 defined contribution (DC) plans found that the future performance of the replacement fund is better than the fund being replaced at both the future one-year and three-year time periods, and that these differences are statistically significant. The outperformance persists even after controlling for expense ratios, momentum, style exposures, and other metrics commonly used by plan sponsors to evaluate funds such as the star rating and quantitative rating.

Licato previously told PLANSPONSOR, “We have found, and believe it is very important, for someone to be keeping an eye on retirement plan investments—whether an investment committee or investment adviser—and make necessary changes. We found not doing so is a disservice to participants.”



IRS Announces Global Settlement Of Abusive 831(b) Captive Insurance Tax Shelters
Jay Adkisson / Forbes

The IRS has announced a global settlement of cases involving abusive 831(b) captive insurance schemes, which announcement (IR-2019-157) is hyperlinked here and at the bottom of this article and is well worth reading in full, down to the last period in the Appendix.

According to the announcement, "The settlement requires substantial concession of the income tax benefits claimed by the taxpayer together with appropriate penalties (unless the taxpayer can demonstrate good faith, reasonable reliance)."

What this means is found in Attachment 1 to the announcement, which is entitled "Micro-Captive Insurance Resolution Terms". Among other terms, 90% of the deductions taken for payments to the captive will be disallowed, which means that a captive owner can only take a 10% deduction. Then, taxpayers (usually the captive owners) who have not previously participated in another tax shelter (a/k/a "reportable transaction") will pay a 5% accuracy-related penalty, and captive owners who have previously participated in a tax shelter will pay a 10% accuracy-related penalty.



Hub International Buys 401k Firm Washington Financial Group
by John Sullivan, Editor-In-Chief / 401kSpecialist

Insurance brokerage and financial services megafirm Hub International Limited (HUB) announced Monday that has acquired the assets of Washington Financial Group (WFG).

Terms of the transaction were not disclosed.

Headquartered in McLean, Virginia, and led by CEO Joe DeNoyior and President Jeff Hamblen, WFG is a “nationally recognized, award-winning leader providing innovative employer plan and wealth management services.”

Most recently named one of 401(k) Specialist’s Top Advisor By Participant Outcomes (TAPO) for 2018, WFG “demonstrates a commitment to excellence for their plan sponsor clients and their employees.”



American Benefits Consulting’s Jay Koppisety Named Technology Adviser of the Year by Employee Benefit Adviser
Business Wire / YAHOO FINANCE

Koppisety recognized for innovation in platform development, system efficiencies, analytics, and client communication

Jay Koppisety of Alliant’s American Benefits Consulting (ABC) division has received one of the benefits world’s most prestigious awards from Employee Benefit Adviser: Technology Adviser of the Year. As ABC’s Chief Information Officer and Director of Technology for Alliant Employee Benefits’ Voluntary Benefits Practice, Koppisety has unleashed a wave of innovations that have moved the organization forward in the areas of platform development, system efficiencies, analytics, and client communications.







  Archives

Monday, 09/16/19 -Healthcare funding saves township $1.1 million

Tuesday, 09/17/19 - Lawsuits Exploding Against Insurance and Healthcare Providers Because Websites Are Not Accessible to People with Disabilities

Wednesday, 09/11/19 - Telemedicine CEO pleads guilty in $424M Medicare kickback scheme

Thursday, 09/12/19 - OneDigital Partners With Worldwide Broker Network

Friday, 09/13/19 - Health Insurance Coverage in the United States: 2018 - U.S. Census Bureau


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Walt Bernard Podgurski - - Editor
440-773-1108
Walt@DailyInsuranceReport.com