Even though it may feel like this is just the 27th week of March, autumn is finally upon us, and a fresh set of insurance questions are now coming front of mind.
Whether it is juggling back-to-school obligations, navigating the upcoming election, dodging potentially immanent flu outbreaks, or crossing fingers for a tame hurricane season, insurance questions abound.
This report aims to frame out some of those issues and attempt to find some clarity in this pandemic-tinted season of change.
Back to School
When the school bells ring again this fall, they will be ushering in several insurance issues along with throngs of students, teachers, and administrators.
School districts have spent a small fortune retooling their facilities to safely resume operations, partially in hopes of mitigating liability and potential claims against their insurance policies.
Estimates from the Learning Policy Institute show schools across the nation will need to invest $41 billion in the coming year to handle the new realities of education in a COVID-19 world. Those costs will be spent on remote learning, changing food service needs, as well as paying salaries to accommodate potentially extending a school year to make up for lost days.
All that is before the physical changes made to allow for safe in-person schooling with social distancing. While those changes should help reduce the districts’ risks, it won’t eliminate it.
So, if those schools are ultimately sued by students or employees who might be exposed to the virus, it is their public entity insurance policies, or other liability insurance policies, or just payments from the general fund that will pay out any damages for which they are found liable.
Some districts are trying to mitigate those suits by having employees and students sign waivers before they can return to campus, but many legal experts say those waivers are ultimately unenforceable. That’s because, since there is no choice but to sign them, they would likely be considered “contracts of adhesion” meaning there was no informed consent before signing any rights away.
But liability isn’t the only insurance concern. There is also health insurance for the teachers, administrators, and staff.
Group policies purchased by the districts will cover COVID-19 expenses because they are Affordable Care Act-compliant, meaning that illness, even if it is catastrophic or pre-existing, will be covered. But even if something is covered, that doesn’t mean it is going to be expense free. Copays add up fast if you are unfortunate enough to land in the intensive care unit.
For many employees, supplemental critical illness policies offered in some benefits packages may help out. These policies can kick in cash directly to the policyholder in case of hospitalization, short term disability, or to help cover the cost of critical care and recovery.
When it comes to college-age students, presuming their parents have an Affordable Care Act-compliant policy, they are eligible to stay insured by their parents’ policy until they are 26.
If their parents do not carry insurance, many colleges still require them to be insured, and many offer university-backed health policies that the students can sign on with.
Insurance and the Election
While insurance is not directly on the 2020 ballot, it is a simmering issue that may be decided in November. That is because 18 state attorneys general, along with the Trump Administration are suing to overturn the Affordable Care Act.
That lawsuit came after the so-called individual mandate, which penalized people if they didn’t purchase an ACA-compliant policy, was reduced to $0, effectively eliminating it.
Without that mandate, the states argue, the ACA loses its legal standing as a tax and thus should be declared unconstitutional.
The Supreme Court is scheduled to hear oral arguments in this case Nov. 10, so the election results should weigh heavily on who is arguing in favor, or against, the law, and how it will be looked at by the court. If the Affordable Care Act is overturned, as many as 20 million people face losing their insurance policies.
President Donald Trump has promised that if that happens, he will move to replace it either through Congressional action, or through an executive order, but has yet to issue a comprehensive plan for how that will happen. For his part, Joe Biden has said he will take the opposite tack from Trump and move to protect the Affordable Care Act from being overturned in the first place.
Health insurance is not the only politically colored insurance question during the run-up to the election. Unemployment insurance is also sitting in the partisan crossfire.
Under the Congressionally passed CARES Act, states added a $600 weekly federal supplement to unemployment checks back in March. That supplemental benefit has since run out, but President Trump signed an executive order extending a federal supplement, but at a smaller level.
He accomplished this by tapping into Federal Emergency Management Agency money. Through that fund, the federal government is adding $300 weekly to many individuals’ weekly checks, but that fund requires a 1/4 match by the state.
The Trump Administration ruled that each state can choose to either add another $100 to match it and bring the supplement up to $400, or to use their existing weekly contribution as their match and keep the federal supplement at $300. But even that extension will run out in a matter of weeks.
It remains to be seen if Congress will work together to come up with a bipartisan extension to get a more permanent fix.
Regardless of whether there will be a more permanent federal supplement, the other issue facing unemployment insurance is that state unemployment trust funds are running dangerously low. That might mean that contributions paid by employers that pay for those trust funds may be going up for years to come — essentially hiking taxes on all businesses with employees.
Senate Majority Leader Mitch McConnel has publicly said that any federal extension to the CARES act must also include liability protection for employers, churches, and schools. These protections would be designed to protect businesses who take actions that fall within public health guidelines so they would not be facing lawsuits, and potential claims against their liability policies if they were found liable in a negligence suit brought by an employee or a customer who said they contracted COVID-19 at the business.
Unfortunately, COVID-19 isn’t the only virus with humans on its hit list. Seasonal flu also comes around every autumn.
Thankfully, flu-related illness and its treatment are also covered by Affordable Care Act-compliant policies. But, unlike the Coronavirus, there is a safe, effective and readily available vaccine for flu. And, again thanks to the Affordable Care Act, the full cost of the vaccine is covered by compliant policies, meaning that policyholders can get the shot at no cost to them.
Now for the hopeful news about flu — early reports from some Southern Hemisphere nations, including Chile and Australia, have noted that the 2020 flu season was much milder than expected. Whether that was luck, or if it was because social distancing and mask mandates pushed down transmission will be for the epidemiologists to argue about.
Regardless of the reason, from an insurance standpoint, a mild flu season is unequivocally good news. With any luck, the United States will enjoy a similar trend.
Over the summer, insurers look at claims history from the previous year and file reports with their state regulators establishing justification for the next year’s rates.
But, because of the chaos brought by the Coronavirus, claims histories are all over the place. That is because many consumers put off preventative and elective procedures during quarantine in order to avoid being exposed to the virus, or because their states ordered non-emergency procedures halted.
Many in the insurance industry worry that with those lower number of claims, it will skew the costs artificially low just as patients begin flocking to back to the doctors’ offices. Plus, putting off preventative procedures may end up making the population less healthy, pushing up costs in the long run. That combination may mean that using 2020 as a model for future premiums may end up with numbers that are wildly off base.
According to an early analysis done by the Kaiser Family Foundation, many of the rate changes being proposed this summer so far appear to be moderate – ranging from a few percentage points decrease to a few percentage points increases. However, they note that it is still too soon to see how Affordable Care Act State Marketplace plans — sold to individual consumers — will change for the coming year.
For Marketplace plans, they warn that the rate changes could range from between a 12% decrease to a 32% increase — but with most falling between a 2% decrease and 6% increase.
Uncertainty in the health marketplace still rules, ranging from how many people will ultimately be relying on those plans as opposed to an employer plan, to how the mountain of deferred care appointments will ultimately influence costs. And because rates are based on projected costs, there is still a lot of uncertainty surrounding what the 2021 premiums will do, and what that will mean for insurers’ financial solvency.
Residents of the Gulf South and Atlantic Seaboard are acutely aware that fall is the peak of hurricane season.
When it comes to hurricanes, there are two key insurance policies that residents need — windstorm coverage and flood coverage.
While windstorm policies are often wrapped into homeowner’s policies, floods are almost never covered by homeowner’s policies. Rather they are underwritten separately by the federal government and sold as their own stand-alone policy.
If the home is situated in a flood zone, the mortgage holder will require that residents have both windstorm and flood coverage. But if the home is paid off, or if the home is outside an official flood zone, residents can opt out of flood coverage.
But history has shown that opting out can be a costly mistake. Just because a home is outside a flood zone doesn’t mean it is impervious to rising water. According to the Federal Emergency Management Agency, homes in moderate to low-risk zones file more than 20% of all flood claims each year.
And consumers need to realize that they can’t wait until a storm is brewing to apply for new coverage. That is because once you sign on the dotted line, flood policies typically have 30-day waiting periods before they start protecting your home. So, by the time your policy is formally in effect, the danger likely already blew through town.
The Coronavirus has also changed how people file claims after the storm. Because of social distancing requirements, many claims adjusters cannot just go home to home to assess damage. Instead, many are relying on technological solutions.
In some cases, adjusters are commissioning aerial photographs from low-flying aircraft to capture sweeping high-resolution images of the area. Then, together with policyholder-submitted photos and videos, the adjuster can get most of what they need without ever stepping foot in the devastated area.
The Road Ahead!
Fall brings many pleasant traditions, but it also brings insurance concerns.
From pandemics new and old, to politics and hurricanes, savvy consumers need to keep their eyes on the insurance industry in the fall.
But with luck, as the calendar begins to wind down, some certainty can return to the insurance world, and to our lives.