With the centerpiece of the Affordable Care Act now functioning, brokers may be more liable to errors and omissions detected in U.S. Department of Labor audits.
It is widely known that the DOL increased the number of auditors in recent years, but what's not clear yet is the how the ACA will be factored into their investigations going forward. One broker expert says you can never be too careful.
"My thought would be that E&O coverage would go up for employee benefit firms because of the increase in claims that would result if more employers are suing brokers for employers not complying with ACA," says Rob Lieblein, EBA Advisory Board member and executive vice president at insurance consultancy Marsh Berry. "The question is: Does E&O even cover these ACA things?"
Maybe, but it might be too early to make such a direct correlation says Jessica Waltman, senior vice president of government affairs at the National Association of Health Underwriters.
"The market reforms, these are the things that are the responsibility of the employer," she says. "I guess it's possible that there will be an increase in complaints [regarding brokers], but I don't think we know that yet."
Of course, many agents and brokers have already been advising employers on the potential for audits, as well as ACA compliance with the constant influx of information. Waltman acknowledges that many are doing this advising now more than ever before. "What we've been told about E&O, they're covered about advice on the ACA," she says.
Out to dry?
NAHU does recommend an errors and omissions insurance vendor, and provides a discounted rate to NAHU members who choose to purchase this option. In fact, brokers say this is a big reason they became or continue to be a member of the organization in the first place. That vendor is Marsh USA - no relation to the aforementioned Marsh Berry - and, as of press time, did not respond to numerous inquiries about how the coverage may or may not include ACA advice.
After EBA placed several calls to Marsh, their media relations department suggested the plan's underwriter, Travelers Bond & Financial Products, may be able to provide more information - Travelers also did not return a call for comment.
Meanwhile, "look at your E&O and see what it covers," recommends Waltman. She reminds brokers that the DOL audit project is not expected to necessarily ramp up due to the ACA, as it's been ongoing for several years now.
Also, "the DOL's main reason [to audit] is to take corrective action and if any employer made an honest mistake ... the focus isn't to throw people in jail or fine them, but to make sure health insurance plans are functioning smoothly and making sure consumers rights are being protected," she says.
But while Waltman contends advice might be covered by NAHU's vendor, one EBA digital reader thinks otherwise. "The NAHU- and NAIFA-endorsed E&O programs specifically exclude 'any services performed by the insured as an actuary, accountant, attorney or tax adviser,'" according to 'Dave P.' in a comment on EBA's website on this topic. "I have had many conversations with both of our professional organizations that their endorsed programs do not protect our members that may arise from these kind of ACA interactions with our clients," he continued. "Now what?"
The National Association of Insurance and Financial Advisors placed a call for EBA to the vendor of their E&O-endorsed program, but the vendor did not return the inquiries for comment on the matter.
Bob Christenson, partner at Fisher & Phillips LLP, says that brokers are right to be cautious. "I don't think policies are that specific," he says about whether E&O covers ACA advice. "The policies are not related to a specific law so I think circumstances will control the issue." He adds that a lot of these claims will "fall into that middle gray area ... it depends on how close to the edge of that gray area they are, but I think there is some leeway for them. It just depends on how close to the edge of legal advice they go."
Another industry insider has his own answer to the whole matter: stay out. "Beyond recommending that employers work with their attorney, I suggest that agents get out of the regulatory advice-giving business unless they are collecting a separate fee for such advice," says Mel Schlesinger, broker consultant at the Rainmakers Group in Winston-Salem, N.C. "Agents need to get back to helping employers use insurance products to achieve their benefit goals, which is fully covered by E&O."
But many brokers will say that Schlesinger's suggestion is not easy. "When the regulations being inquired about have to do with insurance benefits, employers expect their broker to be knowledgeable," said 'RAN' in another comment on EBA's website. "You won't have clients for very long if you can't answer regulatory benefits questions."
"A broker needs to advise their client to call their client's attorney if they're concerned," Christenson says. "Make sure the attorney also gets called on whatever the question is."
He continues: "I think brokers offer a tremendous service to their clients ... but they're in a little bit of a quandry because of what they do."
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