How Inflation Impacts Workers Compensation Insurance
The average change in expenses for consumer goods—also known as the consumer price index (CPI)—has reached 40-year highs over the past year, according to the Bureau of Labor Statistics (BLS). Although these CPI trends highlight the prevalence of inflation issues for individuals and certain industries, it’s important to note that such trends don’t directly impact workers’ compensation coverage.
Although medical inflation is the main factor impacting the workers’ compensation insurance segment, there are other elements currently influencing coverage costs. Specifically, the NCCI identified the following trends as key contributors to coverage expenses:
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Labor shifts - the "Great Reshuffle"
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Wage growth concerns - payroll is used to calculate work comp premiums
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Health care technology - increased treatment costs
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Rate adequacy challenges - reduced claim frequency but increased severity
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Prioritizing Mental Health Amid Inflation-related Anxiety
Financial stress can be a burden, but it can also negatively impact your mental health. During this period of increased inflation, it is especially important to understand the relationship between financial and mental wellness so you can apply strategies to help you improve both areas of your life.
According to results from the American Psychiatric Association’s Healthy Minds Monthly Poll, nearly 90% of residents in the United States report “feeling anxious” about inflation. The anxiety induced by financial stress can contribute to heart disease, high blood pressure, insomnia, more frequent colds and minor illnesses, and more. Further, many cope with financial stress in unhealthy ways, such as smoking, drinking and overeating, which can decrease overall health.
Financial distress and mental health challenges can be tough enough. But to make matters worse, when people’s anxiety takes a toll on their physical health, it can often lead to increased medical bills.
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CDC Ends COVID-19 Social Distancing and Quarantine Recommendations, Eases Testing Guidance
On Aug. 11, the Centers for Disease Control and Prevention (CDC) released new COVID-19 community guidance that ends or eases several key recommendations, including social distancing and quarantine. This change shows how much has changed since the pandemic began more than two years ago. The agency stated that nearly the entire U.S. population has some COVID-19 immunity through vaccination, previous infection or both.
What Changed?
The CDC updated its COVID-19 community guidance, changing some recommendations that have been in place since the early days of the pandemic:
• Social distancing—People no longer need to say at least 6 feet away from other people to reduce the risk of exposure to the virus.
• Quarantining—People exposed to the virus no longer need to quarantine at home, regardless of vaccination status. However, they should still wear a mask for 10 days and get tested on day five.
• Testing—Routine testing of people without symptoms is no longer recommended in most settings. Contact tracing and testing should be limited to hospitals and certain high-risk group-living situations (e.g., nursing homes and prisons).
The CDC continues to recommend wearing a mask indoors in areas where the COVID-19 community level is high. The agency also reiterated that regardless of vaccination status, people should isolate themselves from others when they have COVID-19, staying home for at least five days.
What Does It Mean?
These changes largely shift responsibility for COVID-19 risk reduction from institutions to individuals. To help reinforce the new guidance, the CDC provided information about understanding the risk of COVID-19 to help make decisions to stay healthy.
As history has shown, the pandemic could change at any time and employers should continue to monitor updates and stay agile. Ollis/Akers/Arney Human Resources Consulting will keep you apprised of notable changes.
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ACA Pay or Play Penalties Will Increase for 2023 |
On Aug. 16, 2022, the IRS updated its frequently asked questions (FAQs) on the employer shared responsibility (pay or play) rules under the Affordable Care Act (ACA) to include updated penalty amounts for 2023. For calendar year 2023, the adjusted $2,000 penalty amount is $2,880 and the adjusted $3,000 penalty amount is $4,320.
Pay or Play Penalty Calculations
Under the pay or play rules, an applicable large employer (ALE) is only liable for a penalty if at least one full-time employee receives a subsidy for Exchange coverage. Employees who are offered affordable, minimum value (MV) coverage are generally not eligible for these Exchange subsidies.
Depending on the circumstances, one of two penalties may apply under the pay or play rules—the 4980H(a) penalty or the 4980H(b) penalty.
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Proposed Overtime Rule Expected in October 2022
In its recent spring regulatory agenda, the U.S. Department of Labor (DOL) announced its plans to issue a proposed overtime rule in October 2022. According to the agency’s regulatory agenda, this proposed rule is expected to address how to implement the exemption of executive, administrative and professional employees from the Fair Labor Standards Act’s (FLSA) minimum wage and overtime requirements.
This proposed overtime rule could provide clarity for classifying exempt employees and increasing their salary levels under the FLSA. Some experts believe the DOL could even create automatic annual or periodic increases to exempt employees’ salary levels by linking them to the consumer price index, allowing exempt employees’ salary thresholds to adjust without formal rule-making. The current annual salary threshold for exempt employees is $35,568. There’s no firm date for when the agency will release the proposed overtime rule. Changes to minimum wage and overtime requirements under the FLSA could impact compliance costs and litigation risks for employers.
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Medicare Part D Notices - Due Before Oct. 15th
Each year, Medicare Part D requires group health plan sponsors to disclose to individuals who are eligible for Medicare Part D and to the Centers for Medicare and Medicaid Services (CMS) whether the health plan’s prescription drug coverage is creditable. Plan sponsors must provide the annual disclosure notice to Medicare-eligible individuals before Oct. 15, 2022—the start date of the annual enrollment period for Medicare Part D.
This notice is important because Medicare beneficiaries who are not covered by creditable prescription drug coverage and do not enroll in Medicare Part D when first eligible will likely pay higher premiums if they enroll at a later date. Although there are no specific penalties associated with this notice requirement, failing to provide the notice may be detrimental to employees.
Employers should confirm whether their health plans’ prescription drug coverage is creditable or non-creditable and prepare to send their Medicare Part D disclosure notices before Oct. 15, 2022.
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Health Plan Enrollment Rules
Employers that sponsor group health plans have some different options available to them for designing their plans’ enrollment process. When it comes to enrollment, health plan sponsors should have rules in place regarding:
- When employees can enroll in the health plan;
- When employees’ elections for group health plan coverage take effect; and
- What method is used for making elections.
There are some federal laws that impact how employers can design the enrollment process. For example, the Affordable Care Act (ACA) limits waiting periods for initial enrollment and requires applicable large employers (ALEs) to provide an annual opportunity for full-time employees to elect coverage. Also, the rules for Section 125 plans (or cafeteria plans) limit when employees can make changes to their pre-tax elections during a plan year.
Links and Resources
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Contact Us
HR Hotline
800-256-7310
Karen Shannon
Vice President Business Consulting/CHRO
417-881-8333, ext. 133
Carolyn O'Kelley
Human Resources Consultant
417-881-8333, ext. 126
Kenya Pearman
Human Resources Consultant
417-881-8333, ext. 125
Visit our Human Resources page at
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