With growing emphasis on improved experiences for cultural exchange participants on the U.S. State Department J1 Exchange Visitor Programs, we find it surprising that inadequate participant insurance coverage is still allowed and in place for a significant number of the eager young travelers who come to the U.S. each year. Each year during the renewal process, program sponsors have an opportunity to ensure their Plans provide accident and sickness insurance that not only meet program regulations but more importantly provides coverage adequate to meet the actual needs of their participants. The quality of participant insurance is a health and safety issue and directly impacts participant experience and public perception of the J1 program both in the US and abroad. In our opinion, it is only a matter of time before the issue of too lenient requirements or non-conforming coverage brings unwanted media attention or State Department sanction, or both. The question is, in drafting the new General Provisions (Sub-Part A) of the Exchange Visitor Program regulations, will the State Department sufficiently address and police insurance coverage requirements or will sponsors be allowed to continue to cut corners on an element of the program vital to the wellbeing of participants?
On September 22nd 2009, the US State Department published a proposed rule with request for comment regarding the proposed amendments to Sub-Part A of the Exchange Visitor Program regulations. Covering a wide range of topics, the proposed rule also included changes to the levels of insurance coverage that were originally put into effect back in 1993 and redesignated in October of 1999.
With these new insurance requirements looming, here are our health insurance best practices for the J1 Cultural Exchange world into the USA:
It’s very clear that the current levels of coverage aren’t enough. Having come into force over 20 years ago, what was once adequate coverage, is now in-adequate. To give you a better idea, here are some real-life examples of injuries and illnesses and their related costs over the past 12 months:
- Acute Appendicitis – $60,000
- Major Car Accident with ICU – $260,000
- Back Injury from Bicycle Accident – $85,000
Clearly with the rising costs of medical care and medical inflation over the last 20 years, the current levels are too low, and the introduction of Sub-Part A is very welcomed. Our guidance has always been that $50,000 is not sufficient, and that coverage should either be at $100,000, or better yet at $200,000. If Sub-Part A does come back again this year with $200,000 as the guide for the policy minimum, this will certainly bring the level of coverage to 2014 standards – it would be in very rare circumstances that $200,000 would be necessary but in the case of the care accident highlighted above, it can happen.
Your insurance carrier/underwriter is the financial backbone of your insurance plan, and for this reason you should be very mindful of all aspects about them, such as their reputation in the industry, experience in the market and of course their insurance rating. A few key areas that should be pinpointed:
There are both foreign and domestic insurance carriers/underwriters that offer great coverage for the cultural exchange market. Domestic carriers such as Aetna, UnitedHealthcare and AIG/Chartis tend to offer organizations a name they know and trust, along with usually a good reputation and a strong PPO network in the US. The issue to watch for is that a domestic carrier may lack the expertise to deal with the large number of foreign participants all descending into the USA at the same time. Issues such as accepting international names, where a participant might have the same first and last name or hyphenated names could create problems in systems not designed for these formats. Billing and admin processes that are setup for the US market, the sheer influx of participants over the summer months and the corresponding spike in claims and service needs can overload systems not programmed to manage such volume.
International carriers like Lloyds of London, InterHannover and ACE are typically more adept at handling international travelers, with technology and support systems in place around the globe and in the US. Foreign carriers also tend to be a little more flexible with benefits and pricing, as they have more experience with the global markets. The main point to look out for with a foreign carrier is to ensure they have a strong PPO network in the USA. The PPO network will be the primary point of access for your participants to seek treatment, and can also reduce your claims as strong PPO networks can negotiate good discounts. Without a strong PPO, claims can sometimes balloon out of control.
With that all said, there are good domestic and international carriers serving this market, so the choice will come down to the product, pricing, and reputation and experience in the market.
When reviewing insurers, their reputation in the marketplace can be one of the strongest guides to how well they are performing. Look for 2 or 3 clients who are similar to you that are using their services, and even try to find past clients (if they have any) and find out the reason they moved. References from past and existing clients will give you an excellent window into their world and how they operate.
There are new carriers/underwriters that enter the cultural exchange market every few years. With little experience they can often offer lower rates and it can be a tempting option. However, you see these carriers exit the market a few years later due to either large claims or through their lack of experience with dealing with international participants. The experience factor can be vital to a successful plan, so that they understand how the business works in terms of claim patterns, billing arrangements, working with a solid PPO provider to obtain good network discounts, etc… A good question to always ask is “How long has the carrier been working in the cultural exchange market?” For a truly stable insurance solution, you want to see 5+ years experience as that would give them the time to really understand the marketplace.
A requirement of regulations for the J1 visa is that the carrier/underwriter needs to possess one of the following ratings:
- an AM Best rating of “A-” or above
- an Insurance Solvency International, Ltd (ISI) rating of “A-I” or above
- a Standard and Poor’s Claims Paying Ability rating of “A-” or above
- or a Weiss Research, Inc. rating of “B+” or above
In practice, carriers seem to rely on their AM Best or S&P rating, as the ISI ratings are no longer relevant and Weiss is not often used. The insurance rating needs to be held by the exact same entity that is underwriting your business, and is easy to check. Look on your insurance certificate for the name of the insurance carrier. Then search for them on the Standard and Poors or AM Best website. Each of those sites require that you create a free account, but once you do searching is simple:
Ratings are a way to know how financially solid the insurance company is, and therefore how likely is it that the carrier will be able to pay claims as they come due. For a rating to be valid, it must be held by the same entity that appears on your certificate, not a parent company, subsidiary or member of a family of companies. Many insurance companies have complicated corporate structures, with many parent and subsidiary companies, often as a result of compliance requirements around the world or as liability protection. The rating of a parent company is no good if the subsidiary writes the business – that corporate structure protects the parent from the debts of the subsidiary. You cannot use one company’s rating to meet the requirements, while another company in the group writes the business.
Finally, you should check your carrier’s rating annually, as ratings change as the financial condition of the company and the risks it is exposed to change.
The service and support your participants receive is one of the most important aspects of your insurance plan. Knowing that claims are being paid efficiently and participants are being responded to in a timely and professional manner are key points. When looking at the service aspect of your plan, there are a few key points to remember:
Location. For the J1 market it is imperative that the administration of the plan is located within the US, for service, support and a good understanding of the US healthcare system.
Provider Network. A strong provider network (PPO Network) will help your participants with access to care and also provide important pricing discounts, as network providers have negotiated rates that will save your plan money in the long term.
Features. The extra features that your plan provides will make the administration easier for you and your participants. Do they offer online claims tracking? Access to documents online? Online enrollment?
Experience. The J1 market is very unique, and having an administrator that has experience in the market is vital. For example, with the summer work and travel program you have a huge number of participants entering the US, stay for a few short months, and then leave. Claims will all come in at one period, and your administrator will need to handle this large influx. Also dealing with international students should be taken into account as there may be a language barrier and claimants could be outside the USA when they follow up their claims.
With the increasing scrutiny on the J1 programs over the last few years, non-compliant or insufficient insurance coverage should not contribute to further issues. The changes due in Sub-Part A will address some of the concerns, but items like sufficient carrier ratings and industry experience are key areas that many can quickly check when looking at insurance providers. When participant health and safety is concerned, it should be a top priority.