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Wednesday April 23rd 2014



Real Life Experiences in Covered California

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by Leila Morris

• Real Life Experiences in Covered California
• CAHU’s Capitol Summit
• New Regulations Ensure Appropriate Autism Treatment
• Insurance Agent Preyed on Latinos Seniors
• Arthritis Foundation Urges Support for Legislation
• Proposed CMS Rule Says Navigators Don’t Need E&O
• Customers Can Now Pay Their Plan Premiums at the CVS/pharmacy
• ACA Creates Dangers for Some Medicare Patients
• Medicare Advantage Plans Offer Broader Coverage
• Defined Benefit Plans to Embrace Alternative Investments
• Employees Favor Companies that Offer Voluntary Benefits
• Opportunities Expand for Voluntary Benefits
• Explanation of Benefits Concierge Service
• Guardian Enhances Online Capabilities for Spanish-Speaking Market


Real Life Experiences in Covered California

CoveredCAAnnouncementConsumers, agents, and certified enrollment counselors are reporting various challenges with Covered California health plan enrollment. CECs and agents want Covered California to offer a refresher-training course to address real-life scenarios and complex cases. Agents also want their own dedicated help line as the CECs have, according a report by the California HealthCare Foundation. For the report, PerryUndem conducted interviews with a diverse group of users.

Consumers want Covered California to reduce call center wait times, let Californians know that in-person enrollment help is available, and translate the Covered California online application into other languages. They also want the Medi-Cal processing time to be shortened, clearer guidance on what enrollment documentation is required, and a clear explanation of the Medi-Cal enrollment process. Consumers also want Covered California to improve the online chat function, update the provider search function, and offer clearer guidance on how to calculate their incomes.

Those applying online through Covered California were surprised they could not complete the application online. Many were unsure of their next steps or how they would be contacted about their eligibility. Most had long waits to hear back from Medi-Cal — some more than four weeks. Most did not know how to track the progress of their application and did not know whom to call.

Some consumers say that the process did not fully prepare them to make a coverage choice. The physician search tool did not work well for some and others felt overwhelmed by too many plan choices.

Faced with the enormous task of  implementing a new system, California has made significant improvements to the enrollment process. However, broader issues remain significant, according to the report.

Even after completing the process, many participants are not clear about the relationship among Obamacare, Covered California, and Medi-Cal. Many did not know that they could get in-person assistance to enroll. Many did not know Medi-Cal had been expanded and that they may be eligible. Some did not know about the premium tax credits; and most are unaware they might have to pay back some of the financial assistance if they inaccurately reported their income or if their income changed. Some are not familiar with how insurance works. The enrollment process did not answer many of these questions for consumers.

Those with fluctuating income and those who are paid in cash had a hard time figuring out future earnings or averaging their incomes. Some just guessed when applying.
Language and cultural barriers were an issue for many consumers. Latinos want Covered California to address their specific enrollment concerns. Some Latino consumers heard rumors that Medi-Cal could take their home if they enrolled in the program. The detailed questions about family members — even those not applying for coverage — unsettled some Latino consumers.
Many Vietnamese- and Mandarin-speaking consumers could not enroll online in their primary language. They had to rely instead on English-proficient family members or apply in-person with a CEC or agent who spoke their language. Mandarin-speaking and Vietnamese-speaking consumers suggested that Covered California go deeper into their communities with outreach.

CECs did not feel well trained, saying they had limited ability to help Medi-Cal applicants. Many were on their own to figure out complex enrollment problems. Many also said that, with had limited experience with Medi-Cal, they could do little to help clients apply for that program. However, a new phone line for CECs is helping.

The most challenging task for consumers weighing premiums, deductibles, copays, and total out-of-pocket costs. Many chose a plan based primarily on the premium. The amount of documentation required to enroll surprised consumers who thought it would be an entirely electronic process. Medi-Cal applicants had the heaviest burden; they are often instructed to supply proof of income, proof of residence, immigration information, and more. Consumers who called Covered California’s call center complained of long waits and not being able to get through to a person. Many waited 45 minutes or longer for help. Most had to call multiple times. However, once they got through, many said the customer service representative was helpful.

Many who have been identified as likely to be eligible for Medi-Cal through Covered California had not yet received a final eligibility determination from county social services at the time of the study. In fact, many of these consumers did not set out to apply for Medi-Cal. Rather, it is through the Covered California enrollment process that they discovered they are likely to be Medi- Cal-eligible. For more information, visit

CAHU’s Capitol Summit

The CAHU Capitol Summit will be held May 20th and 21st in Sacramento. Attendees will be privy to a special invitation only briefing on the rate regulation ballot measure — that, if passed, will hurt agents and consumers. The summit will also cover CAHU’s 2014 legislative priorities and the strategies. For more information, visit

New Regulations Ensure Appropriate Autism Treatment

California’s Office of Administrative Law approved mental health parity regulations that require insurance companies to cover medically necessary treatment for people with autism. Insurance Commissioner Dave Jones said, “Before these new regulations, insurers were able to delay or deny medically necessary treatment for individuals with autism. The regulations further define the circumstances in which insurers must cover behavioral health treatments for autism. The regulations interpret and make specific the Mental Health Parity Act and gives more detailed guidance regarding the scope of the Act’s provisions as they relate to autism treatment.”

Insurance Agent Preyed on Latinos Seniors

Michael Zuno Zuniga, 43, of Fullerton, was sentenced to five years in Los Angeles County Jail and ordered to pay $1.2 million in restitution for his participation in a Ponzi scheme targeting LA area seniors. Zuniga was arrested in June of 2012, after the Attorney General’s office filed a criminal complaint alleging 57 felony counts against Zuniga. The complaint alleged that Michael Zuniga and his accomplices defrauded several senior citizens, many from the Latino community, of approximately$1.5 million in a highly organized and sophisticated Ponzi scheme.

Zuniga allegedly owned the Omega Investment Group, an unlicensed entity in Downey, Calif. The investigation revealed a Ponzi scheme in which Zuniga issued more than $1.3 million in fraudulent securities. The 57-count complaint includes securities fraud, grand theft, elder abuse, burglary, and conspiracy. The joint investigation identified 18 victims throughout Los Angeles County.

Zuniga “helped” many of his victims refinance their homes in order to invest in his scheme. He fraudulently represented that Omega is a profitable business bought and sold real estate  in foreclosure. Omega guaranteed a 15% secured interest annually to those who invested. However, Omega was never a profitable business and did not secure investments with property or any other assets as promised. Omega’s owners diverted $663,000, from the $1.5 million collected to purchase real estate for an undisclosed entity known as “Homes Brought Current,” and then used the fraudulently diverted funds for personal benefit. In true Ponzi fashion, payments Omega made to newer investors are from prior investor funds, rather than business profit.

Arthritis Foundation Urges Support for Legislation

During the California Arthritis Foundation Council’s summit on April 22 to 23, arthritis advocates urged California lawmakers to support AB 889, which would ensure that consumers have timely access to arthritis medications. They also urge support for SB 1052, which would ensure that Arthritis patients have the information they need to make more informed decisions on Covered California health plan options.

Wesley Mizutani, MD of the California Arthritis Foundation said, “Californians living with arthritis and other rheumatic conditions need to know if their prescription drugs are covered by insurance and how much they will cost. For example, a constituent with Ankylosing Spondylitis, a type of systemic arthritis, switched to a Covered California plan that offered her medication. She later discovered that her prescription co-pay increased from $5 a month to $2,000 a month. Without this medication, her condition will likely regress and could result in spinal fusion with total spinal immobility, fusion of shoulders and hips, as well as difficulty in breathing.” For more information, visit


Proposed CMS Rule Says Navigators Don’t Need E&O

The Centers for Medicare & Medicaid Services (CMS) released proposed rules on March 14 covering many topics related to the Affordable Care Act (ACA). One provision is that a state or an exchange cannot require all navigators, agents, or brokers or carry errors and omissions coverage. Further, the rule says that if navigators were required to carry E&O insurance, they would no longer be considered community and consumer-focused nonprofit groups. Federal law requires that at least one such group be listed as a navigator. The proposed rule is largely a directive to states, so they do not begin any sort of E&O requirement, explains the National Assn. of Professional Insurance Agents. The association plans to file comments that disagree with some of these provisions.

The regulations also include a formal directive that prevents states from passing any laws requiring a navigator to refer a consumer to an agent or broker for any reason. The language says, “Non-federal laws or regulations that require referrals to sources that are not required to provide impartial advice would, on their face, make it impossible for these assisters to comply with existing federal statutory and regulatory duties and standards.” For more information, visit

Customers Can Now Pay Their Plan Premiums at the CVS/pharmacy

Members of participating health plans can bring their insurance bills to any one of CVS/pharmacy’s 7,600 stores to pay their premiums at no additional cost. CVS/pharmacy is the first national retail pharmacy to offer this service. CVS will simply scan the barcode and collect the member’s desired payment, which may be made using cash, credit card or debit card. Bill Pay at CVS/pharmacy will launch later this spring. CVS/pharmacy also accepts insurance bill payments from members of health plans that are enrolled in MoneyGram’s bill payment service. Most CVS/pharmacy locations are equipped with MoneyGram phones or kiosks to facilitate a cash-only bill payment at a store’s front checkout. For more information, visit

ACA Creates Dangers for Some Medicare Patients

Before passage of the Affordable Care Act, the Centers for Medicare and Medicaid Services already required face-to-face exams for certain products, but these requirements have been expanded in the new law. As a result vulnerable disabled people are put at risk when they are forced to leave their homes to visit doctors’ offices, according to the American Association for Homecare. As of April 1, a face-to-face exam must be performed within six months of a prescription for the following:
• All claims for purchases or initial rentals.
• When there is a change in the prescription for the accessory, supply, drug, etc.
• If a local coverage determination requires periodic prescription renewal (i.e., policy requires a new prescription on a scheduled or periodic basis) when an item is replaced, when there is a change in the supplier, and when it is required by state law.

For more information, visit

Medicare Advantage Plans Offer Broader Coverage

Medicare Advantage plans contain many benefits that are not covered by original Medicare, according to a study by HealthPocket. The percentage of Medicare Advantage plans with at least one vision, dental, or hearing benefit that’s not included in original Medicare did not change between 2013 and 2014.
“While most Medicare Advantage plans included extra insurance benefits not in original Medicare Parts A & B, there is considerable variation for cost-sharing among these benefits as well as the extent of coverage. Consumers should review coverage details carefully before enrolling,” said Jesse Geneson of HealthPocket. From 2013 to 2014, the government reduced its benchmark payments to Medicare Advantage plans by 4%.
When reviewing data on 2014 Medicare Advantage plans, HealthPocket found the following:
• 94% of Medicare Advantage plans provide  vision coverage.
• 71% of Medicare Advantage plans provide dental coverage.
• 59% of Medicare Advantage plans provide hearing coverage.
• 97% of Medicare Advantage plans provide at least one extra insurance benefit (vision, dental, or hearing) that is not covered by original Medicare insurance.
42% of Medicare Advantage plans offer extra insurance coverage for vision, dental, and hearing together in the same plan.

For more information, visit


Defined Benefit Plans to Embrace Alternative Investments

Defined benefit plans are expected to increase their proportion of alternative investments during the next year, according to a report by Cerulli Associates. Non-profits will increase their proportion of alternative investments during the next 12 months, specifically allocations to real estate and other real assets.
Michele Giuditta, associate director at Cerulli said, “The 2008 financial crisis left institutions in search of more consistent portfolio returns across different economic environments. There is new thinking around portfolio construction, leading institutions to reevaluate their models for governance, asset allocation, and implementation.”
Institutional investors have increased their exposure to alternative assets since 2007. Hedging and risk management allocations will become more popular strategies. For more information, visit

Employees Favor Companies that Offer Voluntary Benefits

Sixty-five percent of employees say it’s important for employers to offer voluntary products. However, 47% have not been offered an additional voluntary product since health care reform is implemented in 2010, according to a survey by Harris Interactive on behalf of Transamerica. The survey also reveals the following about employees:
* 62% are at least somewhat likely to purchase voluntary products in order to make sure they and their family have the right choices for their health care situation.
* 64% say their knowledge of voluntary products is about the same as it is three years ago.
* Employees consider price, need and fear of inadequate coverage as most important when purchasing voluntary products.
* 46% say that it is likely or very likely that they would remain at their current employer primarily due to the voluntary products package offered.
* When asked how they would like to get information about their benefits 54% said email; 29% said employer internet/intranet site, and 27% said one-on-one meetings.
A free copy of the white paper is available for download at

Opportunities Expand for Voluntary Benefits

Full implementation of the Affordable Care Act by 2015 is prompting employers to rethink their benefits, with many eyeing a transition to defined contribution (DC) benefit models, according to a study by Prudential. Forty-seven percent of employers say they are moving or have moved to a DC model. Brokers say that the increased number of choices under DC plans will be the biggest boost to voluntary sales in the next five years. Brokers say the biggest detriment to voluntary sales will be employees who do not fully recognize their financial needs.

Employers say the top two reasons for contemplating a switch are to lower health care costs (59%) and offer their employees more choice in the allocation of their benefit dollars (40%). Employees say they would allot 75% of their benefit dollars to health, dental, and vision coverage, leaving 25% for other coverages, such as voluntary life, disability, accident, and critical illness insurance. Even with this allocation by employees, 42% of brokers expect the shift to DC plans to increase voluntary product sales.
For more information, visit


Explanation of Benefits Concierge Service

Five years ago, BEN-E-LECT released the industry’s first on-line explanation of benefits (EOB) retrieval system and included the service for free on all of its HRA programs. The software system requires no human intervention to search and retrieve member’s EOBs and with its introduction, members are no longer required to physically submit their carrier EOBs for processing.

BEN-E-LECT has just released its 2014 version, upgraded with more powerful servers, and broader search criteria that provides for faster more accurate EOB retrieval. The latest version can be attached to any health plan that offers a web portal. For more information, visit or call 888-886-7973.

Guardian Enhances Online Capabilities for Spanish-Speaking Market

With Guardian Life’s new “Find-a-Provider” web tool, customers can find in-network dental and vision providers in Spanish or English. For more information, visit


ACA to Cost Government Less Than Expected

• ACA to Cost Government Less Than Expected
• More Employers Eye Defined Contribution
• Employers Discuss Their Biggest Challenges
• Young Adults Have High Interest in Obamacare
• Premium Increases Are Decelerating
• Exchange Enrollees Have Higher Use of Specialty Meds
• Spending Growth Returns For U.S. Medicines
• Diversifying Your Portfolio Through Individual Disability Sales
• NAFA Webcast
• Pacific Life Diversifies Sales Focus
• Rising Costs Should Prompt LTC Conversations
• Market Forces Boost LTC Coverage
• Voluntary Retiree Life Insurance
• Dental Plans
• Provider Directory


ACA to Cost Government Less Than Expected

ACAThe Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that the Affordable Care Act (ACA) will result in lower than expected net costs to the federal government. In July 2012, CBO and JCT estimated that the ACA’s effect would be to reduce federal deficits. The agencies now project a net cost of $36 billion for 2014, which is $5 billion less than the previous projection for the year; and $1,383 billion for the 2015 to 2024 period, which is $104 billion less than the previous projection.

The estimated net costs for 2014 stem almost entirely from spending for subsidies that are to be provided through insurance exchanges and from an increase in Medicaid spending. The following are projected net costs for the 2015 to 2024 period:
• Gross costs of $1,839 billion for subsidies and related spending for insurance through the exchanges, Medicaid, the Children’s Health Insurance Program (CHIP), and tax credits its for small employers.
• A partial offset of $456 billion in receipts from penalty payments, additional revenues resulting from the excise tax on high-premium insurance plans, and the effects on income and payroll tax revenues and associated outlays arising from projected changes in employer coverage.

Those estimates only address the insurance coverage provisions of the ACA, which do not generate all of the act’s budgetary effects. Many other provisions are expected to reduce budget deficits. For more information, visit

More Employers Eye Defined Contribution

With the full implementation of the Affordable Care Act coming 2015, many employers are looking into defined contribution health plan models, according to a report by Prudential. Forty-seven percent of employers say they are moving or have moved to a defined contribution model. The top two reasons are to lower health care costs and offer employees more choice (59% and 40%, respectively). Employees say they would allot 75% of benefit dollars to health, dental, and vision coverage, leaving 25% for other coverage, such as voluntary life, disability, accident, and critical illness insurance. Forty-two percent of brokers say that the shift to defined contribution plans will lead to an increase in voluntary sales. Brokers say that increased choice will be the biggest boost to voluntary sales in the next five years while the biggest detriment will be employees not fully recognizing their financial needs. “While employers struggle to fund increasing health care costs and more look to shift to defined contribution plans, employees will realize a higher level of choice…Carriers and brokers have an opportunity to ramp up employee awareness and educational efforts in order to help ensure employees fully appreciate the value of the voluntary benefits available to them,” said Jim Gemus, senior vice president of Products for Prudential Group Insurance. For more information, visit

Employers Discuss Their Biggest Challenges

Texas employers say their biggest challenges in 2014 include encouraging employees to make better decisions about their health and their health care, evaluating health exchanges, and dealing with the lack of health care price transparency, according to a survey of employers by the Texas Business Group on Health. Employers mentioned the following challenges:
• 51% Creating incentives to reward measurable health improvements rather than participation in wellness activities.
• 42% Improving employee engagement in their health and well-being.
• 42% Contending with a lack of health care price transparency.
• 40% Evaluating the effect and opportunities of private exchanges.
• 38% Helping employees become well-informed health care consumers.

For more information, visit:

Young Adults Have High Interest in Obamacare

In the past nine months, nearly 60% of the individual health insurance inquiries generated by Verticalize have come from 18-year old to 34-year old consumers. When the age segment was expanded to the 18 to 44 year-old range, the number of health plan inquiries from this group represented 80% of total volume. As much as 45% of Verticalize’s recent sales have come from the 18 to 34 demographic. “We’re finding a much greater interest level from young adults in Obamacare insurance than on-exchange enrollment numbers reflect. Part of our success may be due to our avoidance of the political dimensions of health insurance. We call it the, ‘saying yes to healthcare moment.’ You aren’t saying yes to Obamacare, the president, or supporting one political party. What we try to reinforce is that you are simply saying yes to a better quality of life through sound insurance coverage,” said Sean Sullivan, CEO of Verticalize. According to RAND research, the majority of exchange enrollees were previously insured, but only 9.75% of 40,000 of Verticalize’s recent health plan inquiries were from people who have health insurance or had it. Of those with past or present insurance coverage, the insurance companies that had most frequently provided the coverage were Aetna, Blue Cross Blue Shield, and United Healthcare. For more information, visit

Premium Increases Are Decelerating

Since 2010, average monthly health plan premiums have increased 15% to $870. However, the rate of increase has decelerated after a sharp increase of 6.9% from 2010 to 2011, according to a report by ADP. Premiums rose just 1.7% from 2013 to 2014. Health plan premiums rose for employees of all ages over the period 2010 to 2014. “It’s no secret that employers are looking for ways to reduce health benefit costs while still offering effective coverage options,” said David Marini of ADP. To reduce costs, employers may change the health plan premium tiers or levels of coverage, or they may reduce their contribution to the coverage of dependents.”
The employers’ share of contributions to health premiums declined slightly for all groups from 2010 to 2014, regardless of age or number of dependents. The largest decrease was 1.5% for those with dependents. For those with no dependents, the decrease was 1%. Employer contributions decreased across all age groups. The study also finds the following from 2010 to 2014:
• Overall participation is steady, but varies with age. The percentage of full-time employees who were eligible for employer-provided health benefits remained relatively steady at 90%. The percentage of those participating in health benefits also remained relatively constant at 68%. However, the averages do not reflect the marked variances among specific age groups. Participation rose among Baby Boomers as they continue to work into their later years, and participation declined among younger employees.
• Employees 50 to 59 participated in the largest percentage, with 73% of those eligible participating. In all groups 40 and older, participation was over 70% in 2014. In comparison, among employees under age 30, just over half participated in their employer’s health benefits program in 2014. In this group the take rate declined 7.6% between 2010 and 2014.
For more information, visit

Exchange Enrollees Have Higher Use of Specialty Meds

In January and February, the use of specialty medications was greater among exchange enrollees than commercial health plan enrollees, according to an analysis by Express Scripts. About 1.1% of total prescriptions in exchange plans were for specialty medications, compared to 0.75% in commercial health plans — a 47% difference. Increased volume for higher cost specialty drugs can have a significant effect on the cost burden for plan sponsors and patients. More than six of every 1,000 prescriptions in the exchange plans was for a medication to treat HIV, which is nearly four times higher in exchange plans than in commercial health plans. About 43% of Exchange enrollees were previously enrolled in a plan with Express Scripts in 2013. The remaining 57% could have been uninsured or previously enrolled in a plan with pharmacy coverage administered by another organization.
Patients in exchange plans paid a greater percentage of their pharmacy costs in the first two months of their plan, compared to those in commercial plans. As a result, health insurers’ per-member pharmacy costs are nearly 35% higher for their commercial plans versus their Exchange plans. For more information, visit

Spending Growth Returns For U.S. Medicines

Total spending on U.S. medicines increased 1% in 2013 while the use of healthcare services rose for the first time in three years, according to a report by the IMS Institute for Healthcare Informatics. “Following several years of decline, 2013 was striking for the increased use by patients of all parts of the U.S. healthcare system even in advance of full implementation of the Affordable Care Act. Growth in medicine spending remains at historically low levels despite a significant uptick last year, and continues to contribute to the bending of the healthcare cost curve,” said Murray Aitken of IMS.

Growth in medicine spending remains at historically low levels despite a significant increase last year, and continues to contribute to the bending of the healthcare cost curve. Total dollars spent on medications in the U.S. reached $329.2 billion last year, up 3.2% and a rebound from the 1% decline in 2012. Primary drivers include the reduced effect of patent expirations, price increases, higher spending on innovative new medicines, and greater use by patients of the healthcare system. Patent expirations contributed $19 billion to lower medicine spending, compared with $29 billion the previous year. At the same time, 36 molecular entities were launched in 2013, the largest number in a decade. They focused on disease areas that include oncology, hepatitis C, and HIV. Utilization of healthcare services grew slightly as consumers returned to the healthcare system after several years of self-rationing, primarily through more office visits to specialist physicians and outpatient treatments. In addition, patients with insurance paid higher deductibles and co-insurance last year, even as prescription co-payments declined and are now less than $5 for more than half of all prescriptions filled. For more information, visit


Diversifying Your Portfolio Through Individual Disability Sales

A white paper from The Standard advises brokers to diversify their sales with individual disability income insurance. “Individual disability income sales can help replace the revenue stream for brokers impacted by the enactment of certain provisions of the ACA. For brokers, it is an ideal opportunity to connect with a new client base and secure additional business,” said Doug Waters, of The Standard. Clients with annual incomes of $100,000 or more can benefit from the guaranteed income protection. These earners may not realize that the maximum monthly benefit of their employer’s group long-term disability (LTD) insurance does not fully cover their salaries. The maximum monthly benefit under LTD typically does not cover bonus or incentive pay, which can result in an even lower rate of income replacement. The white paper suggests exposing an earner’s potential for lost income and identifying how individual disability income coverage can provide this protection.
To download the white paper, visit


NAFA Webcast

Fresh off her week on Capitol Hill in support of National Retirement Planning week, NAFA’s Kim O’Brien will share important industry updates during the April 24th webcast. It will be held 8:30 a.m. PT. For more information, visit


Pacific Life Diversifies Sales Focus

Pacific Life recently realigned sales operations in its Retirement Solutions Division. The division had been focused almost entirely on variable annuities, but now also offers fixed annuities and retail mutual funds. George Paulik is now national sales manager for the Independent Planners Channel. For more information, visit


Rising Costs Should Prompt LTC Conversations

The cost of long term care, which is is outpacing inflation, it creating significant financial planning challenges for the nearly 12 million Americans who need long-term care services. The cost of in-home care continues to rise, though at a more moderate rate of growth. This is good news for consumers as almost three quarters of people who need long term care prefer receiving it in their homes, according to the Genworth 2014 Cost of Care Survey. Nationally, the 2014 median hourly cost for the services of a homemaker is $19 and $19.75 for home health aide hired from a home care agency. Homemaker costs have risen 1.2% a year over the past five years. Home health aide services have risen 1.32% a year. The costs of assisted living facilities are rising much faster. The median annual cost for care in an assisted living facility is $42,000, which is an increase of 4.29% annually over the past five years. The comparable cost for a private nursing home room is $87,600, which has increased 4.19% annually over the past five years. For more information, visit

Market Forces Boost LTC Coverage

A consumer who purchases long-term care insurance today faces a significantly lower risk of future premium rate increases, according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance. The following is a summary of his remarks in a recent public statement: As carriers are hit with plummeting interest rates, they need higher premiums to pay future claims. Today, long-term care insurers assume a conservative 3% to 5% long-term investment return for new policies. Ten-year U.S. Treasuries yield 2.8% compared to 4.4% in 2004.

Policies that were priced in the year 2000 generally anticipated a yearly lapse rate of 3% to 5% of policyholders. But actual lapse rates are only about 1%. So an insurer that had anticipated paying $100 million in claims could face $150 million in claims. Considering that insurers paid $7.5 billion in claims last year, a 50% increase in claims costs would be significant. Today’s policies use very conservative lapse rate assumptions, typically as low as 1%. “That’s another reason we are optimistic about the future,” said Slome.

However, regulators now require insurers to factor moderately adverse conditions into their pricing. Since there’s quite a bit more scrutiny, an insurer that’s seeking a rate increase has to provide significant detail about why their original projections were wrong. Today’s hurdles are much higher. Some states are outright declining requests. No one can predict what the next 10, 20, or 30 years will bring, but the conditions that created a need for rate increases on older policies just don’t exist. For more information, visit


Voluntary Retiree Life Insurance

MetLife introduced voluntary retiree life insurance. Retirees and their spouses will have access to three plan options. The initial amounts for plan coverage options include up to $25,000 offered as guaranteed issue and up to $75,000 or $150,000 in coverage. The coverage also offers face-to-face will preparation and estate resolution services provided by Hyatt Legal Plans as well as a safe and convenient life insurance settlement option. For more information, visit

Dental Plans

BEN-E-LECT is offering a new series of its fully insured Freedom Dental Plans. These new plans provide PPO and EPO options as employer paid or voluntary for as few as two employees. Brokers can quote the new Freedom Dental Plans online for groups with two employees up to 99 employees. Groups of 100+ must be quoted by BEN-E-LECT’s Marketing Analysis Team. The EPO plan provides rates 25% lower than most PPO plans in the market. For more information, visit or call 888-886-7973

Provider Directory

CaliforniaChoice is offering an easy-to-use online provider directory to help consumers enrolled in the private health insurance exchange find and select a primary care physician or specialist who meets their needs. To access the provider directory, consumers visit and click on provider search in the top navigation. From there, users can filter down available physicians based on targeted cities or zip codes, giving them access to all of the physicians included in the CaliforniaChoice exchange arranged by carrier. Consumers and health insurance brokers can quickly and easily see which primary care doctors or specialists are part of which plan design (HMO, PPO, EPO), who is participating in each metal tier, who is accepting new patients and other important information a member may be seeking.


Many to Transition In and Out of Covered California

• Many to Transition in and Out of Covered California
• Guardian Acquires Premier Access Dental Plan
• Bill Would Redefine FTEs
• Service Helps Doctors With Cash Business
• Transitioning Specially Meds to the Pharmacy Benefit
• Weekly Health Reform Update
• Employers’ Biggest Health Benefit Challenges
• Disability Plans Can Reduce Worker’s Comp Claims
• Reducing Work-Related Stress is a Popular Wellness Goal
• Certification in HealthCare Consumerism (CHC)
• Private Exchange Webinar
• Online Access to LTC Conference
• Voluntary Retiree Life Insurance
• Colonial Life Names Senior Vice President
• Humana Announces New Broker Liaisons


Many to Transition In and Out of Covered California

CoveredCalifornia1Recent media reports about  have focused on the crush of people trying to sign up for Covered California, but analysts at UC Berkeley say not to overlook the many people who will join or leave the program after that deadline. “For many people, Covered California is a place where they will access coverage for a short time during a life transition, such as job-loss or divorce. People will enter and leave coverage on a regular basis,” said Ken Jacobs, who co-authored the report. Forty-three percent to 47% of those who are enrolled in a Covered California plan and are receiving federal tax subsidies to finance their coverage will leave that plan within 12 months. Twenty-one percent of those will move to Medi-Cal due to changing income and 19% will move to job-based coverage.

Sixteen percent of non-elderly people who signed up for Medi-Cal are expected to become eligible for plans offered through Covered California within 12 months, due to their crossing over the Medi-Cal income eligibility threshold. An additional 9.1% of this group will move into job-based coverage.

Some will enter the Covered California marketplace outside the open enrollment period when they experience a life transition that triggers a special enrollment period. These transitions include losing job-based coverage, gaining or becoming a dependent through marriage, having a new child through birth or adoption, becoming a citizen or lawfully present immigrant, and moving into a new service area.

Making sure that people transition successfully will depend partly on how much Medi-Cal and Covered California get the word out to eligible populations through the unemployment office, the DMV, and the food stamp program. “For health insurance reform to be successful in reducing the numbers of uninsured, Medi-Cal and Covered California will need to be prepared for not just long-term enrollees, but also for enrollees who…are enrolled for less than a year,” the authors conclude. For more information, visit

Guardian Acquires Premier Access Dental Plan

Guardian will acquire Premier Access Insurance Company, which provides dental coverage and care to employers. Premier Access has more than 634,000 members. As part of Guardian, Premier Access customers will gain access to Guardian’s nationwide dental network. Premier’s exchange and government-funded program businesses will expand nationally. The company was founded in 1989 and is based in Sacramento, Calif. The acquisition strengthens Guardian’s dental PPO and DHMO network in several states including California, Utah, Nevada and Arizona.  Guardian’s is also expanding through the state-run Medicaid and Children’s Health Insurance Program (CHIP) markets, which are expected to grow significantly due to expanded eligibility under the Affordable Care Act (ACA). Guardian will also gain a presence on six individual state exchanges, complementing its existing offering on 48 of the small business health (SHOP) exchanges. For more information, visit


Bill Would Redefine FTEs

The National Association of Health Underwriters (NAHU) applauds Congress for passing legislation that would define full-time employees from 30 hours to 40 hours (or 174 hours a month for full-time equivalents under the Affordable Care Act’s (ACA) employer shared responsibility provisions. Janet Trautwein, CEO of NAHU, made the following statement in support of the Save American Workers Act (H.R. 2575):

This bill encourages businesses to continue offering health insurance to employees who are truly full time. Thirty hours of service per week does not reflect most employers’ full-time workforce needs nor employees’ desire for flexible hours. Changing the definition of a full-time employee from 30 hours to the traditional 40 hours will help discourage business owners from reducing employee hours and provides the greatest flexibility for employers with variable workforce needs. Under the current law, employers with 50 or more full-time equivalent employees must provide all employees who work an average of 30 hours or more a week with health coverage or face a financial penalty. Health and Human Services (HHS) regulations have also applied the 30-hours as the full-time definition to the SHOP exchange. Both small and large businesses are finding it difficult to comply with this change to the traditional definition of a full-time employee. H.R. 2575 will not only help employers run their businesses, but it ultimately encourages the economic growth this country so desperately needs. NAHU recognizes the House’s efforts to make health insurance more affordable, especially for those not eligible for the federal individual tax credit, and we look forward to the Senate’s companion bill, the Forty Hours Is Full Time Act (S. 1188), that will fully resolve this critical issue.

Service Helps Doctors Create A Cash Business

The new web site allows physicians who have become frustrated with surging insurance costs and dwindling payouts to shift to a cash-based has been designed for physicians who want to change their business model in the face of healthcare reform. Many of those in good health may choose a high deductible insurance plan that keeps them from being penalized while allowing them the freedom to operate on a cash basis with their doctor. It offers customizable profile listings including a breakdown of cash prices for procedures. For more information, visit

Transitioning Specially Meds to the Pharmacy Benefit

Transitioning specialty medications from the medical benefit to the pharmacy benefit can save payers an average of 19% across 14 classes of self- or provider-administered injectable specialty drugs, according to a CVS Caremark survey. They drugs are used to treat conditions, such as multiple sclerosis and autoimmune disorders. Moving coverage to the pharmacy benefit allows payers to implement formulary design, utilization management, and preferred or exclusive networks.  Fifty-three percent of specialty medication spending occurs under the medical benefit. Specialty patients are more likely to have multiple diagnoses, see more specialists, and fill more prescriptions. They are also likely have more lab tests, ER visits, and hospitalizations. All of these factors result in health care costs that are as much as 8.5% higher than costs for non-specialty patients. For more information, visit

Weekly Health Reform Update

The following is a statement by Mark Hobraczk on behalf of Patient Services:
In the Health Reform Update for the past week, the health insurance Marketplaces created by the Affordable Care Act (ACA) surpass the initial goal of seven million signing-up for private plans during the inaugural open enrollment period.  Another 12 million have gained Medicaid or CHIP coverage since October 1st. The final Marketplace tally will rise further once in-process applications are included after April 15th and outstanding state-based Marketplaces (SBMs) figures are counted.  California leads all Marketplaces with more than 1.22 million enrolled.  Five SBMs continue to struggle with limited online functionality but only Hawaii will seek additional federal funding. President Obama signs the latest temporary delay in Medicare physician payment cuts while House Republicans push their renewed budget plan to privatize Medicare, block grant Medicaid, and repeal the entire ACA. For more information, visit

Employers’ Biggest Health Benefit Challenges

Texas employers say their biggest challenges in 2014 are getting employees to make better health care decisions, evaluating health exchanges, and dealing with the lack of health care price transparency, according to a recent survey of 73 large- and mid-size Texas employers by the Texas Business Group on Health. More than half of employers want to reward measurable health improvements rather than participation in wellness activities. About 42% want to improve employee engagement in their health and well-being. Also, 42% say there is a lack of health care price transparency. Forty percent face challenges in evaluating the impact and opportunities afforded by private exchanges. About 38% face challenges in educating employees to become well-informed health care consumers. For more information, visit


Disability Plans Can Reduce Worker’s Comp Claims

Forty-two percent of companies that offer voluntary accident and disability insurance saw reduced workers’ compensation claims, according to an Aflac survey. Fifty-five percent of large companies that provide accident insurance had fewer workers’ comp claims as did 34% of small- and medium companies. The survey reveals the following:

• 14% of employers reported declines of 50% or more while 17% reported declines of 25% to 49%.
• 12% of large businesses reported reductions of 50% or more while 29% reported declines of 25% to 49%.
• 13% of medium businesses reported reductions of 50% or more while 14% reported declines of 25% to 49%.
• 15% of small businesses reported reductions of 50% or more while 9% reported declines of 25% to 49%.

Forty-seven percent of large employers reported decreases in workers’ compensation claims after providing voluntary disability insurance, as did 43% of small companies and 33% of medium companies. Respondents were also asked to gauge the significance of the declines:
• 15% of employers reported declines of 50% or more while 15% reported declines of 25% to 49%.
• 11% of large employers reported declines of 50% or more while 20% reported declines of 25% to 49%.
• 18% of medium employers reported declines of 50% or more while 7% reported declines of 25% to 49%.
• 18% of small employers reported declines of 50% or more while 17% reported declines of 25% to 49%.

For more information, visit

Reducing Work-Related Stress is a Popular Wellness Goal

Helping employees cope with work-related stress is the most popular option for employers to create a healthier, better-performing workplace, according to a survey of attendees at the 2014 IBI Annual Forum. Attendees said that the following actions are most effective in creating a healthier and more productive workplace:
• 67% Help workers cope with work-related stress.
• 64% Get senior leadership to support the wellness plan.
• 52% Make sure that workloads don’t undermine employees’ health and well-being.
• 47% Help workers manage demands on their time.
• 43% Better track lost work time.
• 40% Provide healthier food and beverage choices.
• 40% Make sure that the workload does not undermine employees’ ability to take advantage of wellness programs.
• 21% Monitor employees’ workloads more closely.

For more information, visit

Certification in HealthCare Consumerism (CHC)

All preparations for becoming Certified in HealthCare Consumerism (CHC) will take place at the 5th Annual 2014 IHC FORUM & Expo conference on May 7 to 9 in Atlanta. For more information, visit


Private Exchange Webinar

Sun Life Financial is holding a private exchange webinar on Wednesday, April 16 from 10:00 a.m. to 1:00 p.m. Authors of best-selling books, Freakonomics and Super Freakonomics, will deliver the keynote address and apply their Freakonomics theories to the health benefit system. “The Sun Life Wake Up Summit is doing something no one has done before by allowing private exchanges to debate the merits of their respective models and to discuss the future of how employee benefits are delivered,” said Dan Fishbein, President of Sun Life Financial U.S. Moderated by Fox News’ Juan Williams, Summit will feature two panel discussions. The first, which will focus on the different private exchange models, will have panelists debating the pros and cons of each program. The second will feature healthcare experts discussing the growth of private exchanges and how they could potentially change the benefits landscape. For more information, visit

Online Access to LTC Conference

The American Association for Long-Term Care Insurance will be streaming selected sessions live from the 2014 Long Term Care Solutions Sales Summit in Kansas City next month. The CEO panel takes place Monday, May 19 at 9:00 a.m. For more information, visit


Voluntary Retiree Life Insurance

MetLife is now offering voluntary retiree life insurance. This new group term life insurance provides retiree-paid life insurance for when employees are entering retirement and throughout their retirement years. The initial amounts for plan coverage options include up to $25,000 as guaranteed issue and up to $75,000 or $150,000 in coverage, both of which require medical evidence. It includes face-to-face will preparation and face-to-face estate resolution services provided by Hyatt Legal Plans and the Total Control Account. MetLife will also provide full plan administration. For more information, visit


Colonial Life Names Senior Vice President

Rich Williams has been named senior vice president, Growth Markets, at Colonial Life. He will lead the company’s brokerage, direct, large account, and public sector marketing programs and services. Williams joined Colonial Life as an actuarial assistant in 1999 leading product development and pricing. He also has held positions in the finance, operations, national accounts and broker marketing areas. He previously served as chief operating officer and chief financial officer of Strategic Resource Company, an Aetna subsidiary, and managed a retirement consulting actuarial practice for Mercer.

Humana Announces New Broker Liaisons

Humana has promoted Steve Macias as the Northern California Market vice president for Humana’s Employer Group segment. Macias will lead the Northern California sales team and will focus exclusively on partnering with agents and employers delivering ongoing support, data-driven insights and coordinated service. Macias has been with Humana for five years and most recently served as the Northern California Market President. Macias holds a bachelor’s degree from Grand Canyon University and a Masters of Business Administration in health care management from the University of Phoenix. Macias will be based in Humana’s Walnut Creek office.

The company also appointed Brian Sullivan as the Southern California Market vice president for Humana’s Employer Group segment. Sullivan will lead the Southern California sales team and will focus exclusively on partnering with agents and employers delivering ongoing support, data-driven insights and coordinated service. Sullivan is a senior sales executive with more than 30 years of experience. He most recently served as the President, Employee Benefits with Martin J. Wolff & Company, Inc. Sullivan holds a bachelor’s degree in Political Science from Bridgewater State University located in Bridgewater, Mass. He will be based in Humana’s Woodland Hills office.


California Fails in Price Transparency

• California Fails in Price Transparency
• Bills to Watch in California
• Covered California Offers Extension
• Defrauded Seniors Get Restitution
• San Francisco Health Plan Reaches 100,000 Member Milestone
• Navera Teams Up With Benefits Coordinators Corporation
• Americans Expect Obamacare Fixes, Not Repeal
• Medicare Legislation Would Prevent Drastic Payment Cuts
• Bill Would Increase Access to Agents, Brokers
• Moving Toward A 21st Century Health Care System
• Health Exchange Webinar Tomorrow
• Out-of-Pocket Costs Affect Adherence to Specialty Meds
• Target-Date Strategies to Dominates 401(k)s
• The Barriers to Financial Literacy
• A Transformative Period for the Insurance Industry
• Accelerated Death Benefits


California Fails in Price Transparency

FailingGradeCalifornia gets an F when it comes to consumer’s ability to find information on health care costs. In fact, this information is almost completely unattainable to consumers, according to a report by the Catalyst for Payment Reform and the Health Care Incentives Improvement Institute. Yet recent studies suggest consumers are asking for this information. The five main groups of consumers with a significant interest in price information are those with high-deductible plans, those in plans that promote participants to choose cost-conscious providers, those who are shopping for elective or non-emergency procedures and surgery or shoppable conditions, those who are seeking maternity care and/or routine procedures such as screenings, and those who are under 44.
For more information, visit

Bills to Watch in California

California Health Underwriters outlines several bills to watch in the state legislature. CAHU supports the following bills:

AB 369 would require a health plan to arrange for a nonparticipating provider to complete covered services. This applies to newly covered enrollees and insureds under an individual plan contract or policy whose prior coverage was withdrawn from the market from December 1, 2013 to March 31, 2014. Policyholders with certain conditions, such as such as cancer or pregnancy, could ask the new plan or policy to cover services from their existing provider.

AB 1507 applies to individual or small employer health benefit plans that don’t qualify as grandfathered health plans. Plans that were in effect on October 1, 2013 could be renewed until October 1, 2014 and continue to be in force until December 31, 2014.

AB 1829 would prohibit the California Health Benefit Exchange from hiring or contracting with or employing a person who has been convicted of specified crimes. It would apply if the person is involved in facilitating enrollment in qualified health plans or has access to the financial or medical information of Exchange enrollees or applicants.

AB 1830 would require exchange contractors, subcontractors, vendors, volunteers, and employees to follow the ACA’s privacy requirements. Any individual or entity that knowingly and willfully misuses personal information would be hit with a $25,000 fine.

• AB 1831 applies to taxable years beginning January 1, 2014. It would allow a deduction for medical insurance and transportation for essential medical care from gross income under the Personal Income Tax Law.

AB 2433 would extend access to catastrophic plans to anyone whose plan was cancelled from December 1, 2013 to March 1, 2014.

SB 972 would add two members to the California Health Benefit exchange Board who have expertise in health insurance products, information technology systems, and consumer service.

SB 1034 would require that new hire waiting periods contain a reference to the 90-day waiting period provision in the federal ACA. CAHU supports this bill if amended.

SB 1052 would require the California Health Benefit exchange’s annual report to include the number of uninsured Californians as a percentage of the state population as well as an independent evaluation of the Exchange’s marketing and outreach and enrollment activities.

SB 1100 would require a health care service plan to include a notice of the process to obtain continuity of care in every evidence of coverage issued after January 1, 2015. A plan would have to provide a written copy of this information to contracting providers and provider groups. I would also have to provide a written copy of this information to enrollees upon request.

SB 1124 would permit the group contract holder to promptly e-mail to each subscriber a copy of any notice of plan cancellation.

CAHU opposes the following bills:

AB 1877 proposes to a Vision Care Council exchange marketplace within the California Health Benefit exchange. CAHU says that no additional structures should be added until the existing exchange works as planned and promised.

AB 1917 would prohibit insurers from charging prescription co-pays that are higher than 1/24th of the annual out-of-pocket maximum for enrollees in a silver level plan who do not make more than 400% of the poverty level. CAHU is concerned that this mandate would shift costs to other health care consumers.
AB 2347 applies to disability and life insurance policies. Under current law, people 65 and older have a 30-day period to return a disability or life insurance policy contract and get a refund on all premiums and membership fees. This bill would specify that those requirements apply to individual and group disability and group life insurance policies and certificates. The bill would require the notice to be in 12-point bold type. CAHU opposes the bill unless amended.

Covered California Offers Extension

At times, Covered California’s website has buckled under the pressure of the number of people trying to enroll at the last minute. So Covered California is allowing them to work with a certified delegate to finish their application by April 15. Consumers who were unable to create an online account or start their online application because of technical difficulties can contact Covered California Service Center representatives, Covered California Certified enrollment counselors, Covered California certified insurance agents, certified plan-based enrollers, and county eligibility workers to explain that they attempted to get through on March 31 and experienced difficulties. Those consumers will have until 11:59 p.m., April 15 to work with the assister to complete their application and choose a plan. Covered California executive director Peter V. Lee said, “We have always said that if high website traffic impedes the ability of consumers to apply online for coverage by the deadline, we will help those people cross the finish line, “We were prepared for a last-minute surge of people coming to our website, but sometimes there’s only so much you can do operationally. While we had hoped people would start the enrollment process earlier, we can’t in good conscience turn people away who simply couldn’t get onto the website on the last day.” Enrollment has surged passed 1.2 million.

Defrauded Seniors Get Restitution

Michael Woodward’s property and other assets were seized and sold to provide at least partial restitution to the seniors and families he ripped off, according to the California Dept. of Insurance. For nearly a decade, Michael and Melissa Woodward sold phony insurance premiums to the elderly for a prepaid annual fee. They promised a services agreement that supposedly included unlimited non-medical services, such as cooking, cleaning, bathing, dressing, laundry and shopping. Despite the Woodwards’ attempts to get more and more money from the seniors they preyed on, these services were not delivered. Michael Woodward, 50, plead guilty to multiple felony counts including residential burglary, theft from an elder, and other charges for their roles in scamming more than 230 San Diego area senior citizens out of $1.9 million. He also got an 11-year sentence in state prison. Melissa Woodward, 47, pled guilty to failure to file a tax return. Assets have been liquidated and the funds are in the process of being distributed to victims.

San Francisco Health Plan Reaches 100,000 Member Milestone

San Francisco Health Plan (SFHP) has surpassed 100,000 members. SFHP provides health coverage in the Medi-Cal, Healthy Workers, and Healthy Kids programs. Combined with individuals served in Healthy San Francisco, the plan provides services to over 140,000 residents of San Francisco. That’s over 17% of the entire population of San Francisco, which is one out of every six residents. SFHP has received the California Department of Health Care Services Gold Award each of the last six years. For more information, visit,

Navera Teams up with Benefits Coordinators Corporation

Navera has finalized a re-seller agreement with Benefit Coordinators Corporation (BCC). Navera provides cloud-based education and decision support products to help people make well-informed decisions about their benefits and insurance options. BCC will incorporate Navera’s interactive animated education and decision support into its BenXcel benefit administration system. BCC has nearly 1,000 employer clients across the U.S. For more information, visit


Americans Expect Obamacare Fixes, Not Repeal

An Associated Press-GfK survey finds that only 26% of Americans support the Affordable Care Act. But only 13% expect it be repealed. Fifty-nine percent of those who said they or someone in their household tried signing up for coverage said there were problems. Seventy percent of Americans believe the law will be implemented with changes. Forty-two percent think those changes will be minor, and 30% say they think major changes are in store. Combining the 42% who see minor changes coming and 12% who say they think the law will be implemented as passed, a narrow majority of 54% see tweaks in store, or no changes at all. Soon after the law passed in April of 2010, 50% of Americans were opposed to it while 39% were in favor. Ten percent were on the fence. Now, just 26% are in favor, a drop of 13%. Forty-three percent say they are opposed, a 7% drop compared to four years ago. But the number who neither support nor oppose the law has tripled to 30%.

Medicare Legislation Would Prevent Drastic Payment Cuts

President Barack Obama signed into law the Protecting Access to Medicare Act (H.R. 4302). The bill will halt a 24% reimbursement cut to Medicare providers. It will also eliminate the $2,000 deductible cap on small group health plans. Janet Trautwein, CEO of NAHU explains that many carriers have pulled out of Medicare, leaving thousands of beneficiaries in limbo. Addressing the physician payment will avert a similar crisis by ensuring continued access to physician services. The bill also includes bipartisan legislation to repeal the Affordable Care Act’s statutory cap on deductibles for health plans in the small group market; a provision that Trautwein says the ACA’s inflexible deductible caps would force a majority of small group plans to put employees through significant and often higher premium plan re-design, including raising premiums, increasing copays, or stripping benefits to comply with the cap. She said that H.R. 4302 ensures stable and affordable private insurance coverage options and generates significant taxpayer savings.

Bill Would Increase Access to Agents, Brokers

The National Association of Health Underwriters (NAHU) applauds Senator Mary Landrieu (D-LA) for introducing two bipartisan proposals calling on HHS to increase consumers’ access to professionally licensed insurance agents and brokers through the federal exchange. The following is a summary of a statement by Janet Trautwein, CEO of NAHU:
The Enhancing Access for Agents and Brokers Act calls for a dedicated hotline for broker enrollment and policy questions, a listing of all certified agents on and a fix to the agent identification issue that has plagued the system since day-one of open enrollment. The bill would also require HHS to inform the agent community of all policy changes relative to qualified health plans and exchange enrollment within five business days, including specific information about how agents can best help their clients take advantage of any policy or regulatory changes in a timely manner. The CHOICE Act will make improvements to the direct enrollment process for independent agents, including making improvements that will allow independent agents better access to web-based entities.

Moving Toward a 21st Century Health Care System

Speaking to at the Care Innovation Summit on February 27, HHS secretary Kathleen Sebelius highlighted significant progress toward a 21st century health care system while acknowledging that there is much more to be done. Archived video of Sebelius’s presentation and other key sessions from the Summit are newly available at “We have moved an entire health system into a technological age,” she noted, referring to the fact that over 50% of U.S. hospitals have electronic health records. She also stressed that recent HHS initiatives have shown that “when you remove the barriers to innovation, you can actually hold down costs while lifting entrepreneurs up and getting better health results.” Patrick Conway, MD, director of the Center for Medicare and Medicaid Innovation said that one program to reduce hospital readmissions helped decrease Medicare readmission rates from 20% in January 2012 to 17.5% in January 2013. That translates to more than 130,000 avoided readmissions. Dr. Conway said, “We are on the right path but need to increase the pace.” Peter Orszag, vice chairman of Corporate and Investment Banking at Citigroup, says that health care spending is slowing because providers are projecting a significant change in how they are paid. Half of facility revenue is projected to be value-based in the next three to five years. Chet Burrell, CEO of CareFirst BlueCross BlueShield cited his company’s success in establishing patient-centered medical homes with providers. Dr. Conway compared it to Bellin-Thedacare Healthcare Partners’s ACO, which lost money because other payers were not willing to align payment models. Dr. Conway said, “We need to align incentives so that … this becomes financially sustainable because we’ve aligned the private payer, the Medicaid, and the Medicare market.” Visit to see a summary of several summit sessions.

Health Exchange Webinar Tomorrow

Connecture is hosting an interactive webinar on private exchanges on April 3 at 10:00 a.m. To register, visit

Out-of-Pocket Costs Affect Adherence to Specialty Meds

Pharmacy plan members who face specialty drug out-of-pocket costs of less than $250 are more likely to take their medication, according to a study by Prime Therapeutics. Eleven percent of members with MS therapy had more than $1,000 in out-of-pocket costs for their first prescription. The same was true with and 10% of members prescribed new biologic anti-inflammatory therapy. Only about two thirds had less than $100 in out-of-pocket costs. As costs rise, members are more likely to abandon their new prescriptions. Abandonment rates were significantly higher when out-of-pocket reached $250. Additionally, when out-of-pocket reached $2,000 or more, the number of members abandoning their new MS prescription was nearly 24 times higher compared to members with less than $100 in out-of-pocket costs. Similarly, the number abandoning a biologic anti-inflammatory prescription was more than 19 times higher. For more information, visit


Target-Date Strategies to Dominates 401(k)s

Cerulli Associates predicts that target-date strategies will capture 63% of 401(k) contributions in 2018. Plan sponsors, consultants, and advisors have increased focus on target-date decisions along with an increase in plan assets allocated to target-date funds, says Bing Waldert, director at Cerulli. The leaders among target-date providers have not changed during the past three years, but below the top tier, some asset managers have demonstrated the ability to grow their target-date assets.

Target-date managers that remain in the market must demonstrate risk management expertise, Waldert explains. The majority of target-date managers believe that asset allocation and risk management capability will be the primary drivers of growth over the next three years. Managers should consider tying the assumptions underlying asset allocations to the needs of a given situation, Waldert continues. Cerulli warns that asset managers must have a strategy to grow market share of target-date assets; otherwise they risk irrelevance in the defined contribution space.

The Barriers to Financial Literacy

Three out of five adults see a correlation between financial literacy and retirement readiness, so why do only 46% of Americans seek financial knowledge? The answer lies in the complexity of financial products, according to 45% of adults surveyed by Genworth. Other roadblocks include a lack of time (37%) and uncertainty about how to get started (18%).
Psychologist and money coach, Dr. Barbara Nusbaum explains that Americans are overwhelmed by the complexity of financial products, the time it takes to improve their financial knowledge, and a disconnect between financial needs and personal needs. Women are much less likely to seek financial knowledge. Sixty-one percent of men and 34% of women say they seek to deepen their understanding of financial matters. Forty-eight percent of women and 39% of men say that the complexity of financial products is the biggest roadblock to learning more about financial matters. Men and women say that having a one-on-one meeting with a financial advisor is the way they would most like learn about financial matters and products. Forty-three percent of those surveyed would turn to an advisor first for financial education.   Suly Salazar-Layton, Genworth’s director of Practice Management said, “It’s a good idea to look for a financial professional who starts by asking questions and really listens. Instead of starting by discussing products, it’s important that they ask consumers about their needs and concerns. Once the consumer’s priorities are clearly understood, together, they can identify appropriate solutions.”

Dr. Nusbaum also offers a few easy tips to become more financially prepared:

  • Make financial literacy personal. List the now, later, and much-later hopes for yourself and your family.
  • Speak to a financial professional to help you attain these goals. Find a financial professional through friends, colleagues, and family.
  • When speaking to your financial professional, focus on the financial services and products that can help you reach your specific goals.
  • If you don’t understand a financial service or product, ask your financial professional to explain it until you do. Don’t be embarrassed. They want to help.
  • If it’s hard to find time, start with small, easy steps like educating yourself through financial websites.

Genworth offers the following resources:


A Transformative Period for the Insurance Industry

The insurance industry is facing rapid demographic and technological change, according to a report by PwC US. Insurers can adapt and thrive, especially if they take advantage of emerging technologies to improve their operations and serve customers, according to Jamie Yoder, insurance advisory practice leader for PwC US. Insurers will need more sophisticated financial reporting, risk management, and analysis to address complex measurement and disclosures, regulatory requirements, and market expectations.

Over the past few decades, the life market share has significantly declined even though there is still a clear need for protection in a time of economic uncertainty. At the same time, many property and casualty insurers have struggled to overcome the commoditization of much of their product lines. Improvements in customer and market data have created new distribution and communication channels, which are changing business and relationship management. Successful carriers will address a household’s holistic long-term and even multi-generational needs.

Anand Rao, insurance advisory practice principal, PwC US said, “It’s crucial for insurers to address generations X and Y and other typically underserved groups…Younger customers demand simplicity, transparency, and the ability to engage with insurers when and where they prefer. Insurance providers who don’t recognize and address these changes will miss an opportunity with people they must successfully target in order to grow and survive.” The insurance industry is entering an era in which carriers can change their policy administration, claims and billing systems with less risk and more control as a result of aging legacy platforms, complicated market demands, and maturing vendor landscape. Focusing on speed to market, operational efficiency, and IT improvements will help some insurers beat out competitors. An overarching goal for insurers in 2014 should be to create a system that provides a consistent customer experience and gives agents the most vital information. Also key is to improve data analytics and meet goals for  IT spending and underwriting. For more information, visit


Accelerated Death Benefits

AIG launched Elite Index II. The cost-effective universal life insurance policy comes with simplified guarantees, an optional chronic illness accelerated benefit rider, and increased cap rates (now at 13%). Higher participation rates (now at 70%) provide more opportunity for growth in a well-performing market. Elite Index II is offered with the Accelerated Access Solution. In the event of a chronic illness, policyholders have the option to accelerate the death benefit, income-tax free (based on current tax laws). For more information, visit


Medicare Advantage is Cheapest for New Medicare Enrollees

• Medicare Advantage is Cheapest for New Medicare Enrollees
• RNC Chairman Accuses Actuaries of Fiendish Plot
• It May Be Harder to Get Your Meds in the Exchange Plans
• Health Insurance Coverage Increased ER Use in Massachusetts
• Cancer Presents Complex Workplace Challenges
• Millions Are Denied Mental Health Treatment
• Governors Signs Continuity of Care Bill
• Millennials Need to Be Educated About Voluntary Benefits
• How Treating Gum Disease Saves on Medical Costs
• Companies Are Really Cranking out Mutual Fund Products
• Confidence Rebounds for Those in Retirement Plans
• Obamacare Calculators
• E&O for Agents and Brokers
• Universal Life
• Women in Insurance Conference Series


Medicare Advantage Is Cheapest for New Medicare Enrollees

MedicareAdvantageUsing government data on healthcare and medication use among Medicare-aged individuals, HealthPocket compared the premium and out-of-pocket expenses for each of the three Medicare insurance options. Medicare Advantage proved to be the lowest cost option. Its annualized cost estimate was 19% less than Original Medicare Parts A & B combined with a Medicare drug plan and it was 45% less than Medigap Plan F combined with Medicare Parts A & B and a Medicare drug plan. While the Plan F option left the Medicare enrollee with no medical out-of-pocket costs, this option still had out-of-pocket costs associated with drug coverage. Additionally, the Plan F option’s lower out-of-pocket costs did not compensate for its higher overall premium expenses.

Many Medicare Advantage plans do not charge a monthly premium. These plans also include an annual limit on out-of-pocket costs. Original Medicare has no such limit on out-of-pocket costs. Changes in government funding could affect premiums and out-of-pocket costs for Medicare Advantage plans, but these changes are difficult to predict. Medicare Advantage plans have been at the center of highly politicized debates over the program since the government often spends more for medical services delivered by Medicare Advantage plans compared to the same services received in Original Medicare. To get the full report, visit

RNC Chairman Accuses Actuaries of Fiendish Plot

The Academy of Actuaries fired back against Republican National Committee Chairman Reince Priebus who accused them of plotting against young Americans. At a March 18 breakfast with reporters, Priebus said, “Obamacare was intentionally designed to screw young people over. I mean actuaries sat down in a room and figured out how they were going to pay for this monstrosity of a program, and they decided ‘let’s just screw over everyone 35 and younger.’”

The Academy’s response was, “Priebus characterizes actuaries’ work related to the Affordable Care Act (ACA) in political rhetoric meant to elicit attention…The actuarial profession produces objective analysis of risks and costs based on actuarial principles, and actuaries are bound by a code of professional conduct…Academy members…serve as the objective, non-partisan voice of the U.S. actuarial professional in matters of public policy and actuarial professionalism. Many, including the Academy itself, were called upon during the congressional deliberations on the ACA to provide actuarial expertise to lawmakers on actuarial aspects of the legislation’s effect. This involved analysis of the consequences of the legislation, as far as they could be predicted given the many, complicated interactions of its various measures. The affects of changing age rating rules were widely discussed, publicly deliberated upon and considered by lawmakers, with actuarial analysis as well as much input by others.”
For more information, visit

It May Be Harder to Get Your Meds in the Exchange Plans

On the exchange plans, branded mental health and oncology medications are extremely likely to be subject to step therapy or prior authorization. In fact, more than 70% of covered drugs require utilization management in exchange plans. HIV/AIDS drugs have the lowest incidence of utilization management, with more than half of exchange plans providing open access to these medications, according to a report by Avalere Health. Caroline Pearson vice president at Avalere says that consumers shopping on the exchange need to look beyond premiums. Patients may be better off with a plan that provides open access to drugs they use regularly. They will need to work closely with their physicians to fulfill utilization management requirements where they exist, she added.

Health plans rely on utilization management to encourage patients to choose lower cost drugs and use the drugs that are most appropriate to their medical condition. However, these tools may block access to needed medications, particularly for vulnerable populations like severely mentally ill patients. Utilization management for mental health drugs is more than four times more common for exchanges compared to employer coverage. Matt Eyles, executive vice president at Avalere said, “The utilization management tools we profiled are not as widely used in commercial insurance settings, so they need to be closely monitored for their effects on consumers and on the clinicians responsible for their administration.” For more information, visit

Health Insurance Coverage Increased ER Use in Massachusetts

Health reform in Massachusetts led to a small, but consistent increase in emergency department use, according a study to be published online in Annals of Emergency Medicine. “This obviously has implications about what we can expect to see nationally as the roll-out of the Affordable Care Act continues. We cannot say, for sure, why more people came to the ER – whether it’s a lack of access to primary care or the result of pent-up demand, but we need to be ready. Other states should be prepared for equal or greater influxes of patients into the ER after reform is fully implemented,” said Peter Smulowitz MD, FACEP, of Beth Israel Deaconess Medical Center in Boston, Mass.

“Our study should further weaken the long-held notion that high use of the emergency department is driven mainly by the uninsured, said Dr. Smulowitz. Barriers to primary care are serious and persistent across the country. It appears that when people have health insurance, they will seek medical care wherever they can get it, which is sometimes only the ER,” he added. Emergency department visits increased by as much as 1.2% from October 1, 2006 to September 30, 2007 after Massachusetts implemented its first-in-the-nation law to increase health care insurance coverage. That rose to a 2.2% increase in ER visits for the period ending September 30, 2009. Emergency visits by under 65 uninsured people decreased from 9.5% of visits before health reform to 5.7%  after health reform. Emergency department visits from those 65 and older remained steady at about 1%. For more information, visit

Cancer Presents Complex Workplace Challenges

Cancer in the workforce presents complex challenges to balance workplace privacy and accommodations, according to the Integrated Benefits
Institute (IBI). Each year, cancer typically costs employers about $19,000 in lost work time and medical treatments per 100 employees. Cancer related lost work time and under-performance costs employers $10,000 per 100 workers. Medical and pharmacy treatments cost about $9,100. Employees with cancer are absent 3.8 more days per year than workers without cancer. They also lose the equivalent of 1.8 more days per year to under-performance at work.

At any given time, about one fourth of employees with a history of cancer are in treatment. Employees with cancer have an average of four other conditions that complicate care. The most serious co-morbid conditions are: depression (16%), chronic fatigue (22%), obesity (19%), anxiety (14%), chronic back or neck pain (23%), high cholesterol (30%), and hypertension (24%).
The research also finds the following:
• Compliance rates with cancer screening guidelines are highest when there is access through insurance plan coverage.
• Workplace educational programs raise the rate of screenings for colorectal cancer.
• Workplace screening for breast cancer reduces lost productivity. Employees whose breast cancer was detected early through on-site mammography had half as many lost workdays for treatment as employees whose cancer was detected later.
• Providing job accommodations or other workplace stay-at-work or return-to-work opportunities helps employees remain on the job.
For more information, visit

Millions Are Denied Mental Health Treatment

Not only can mental illness can lead to death, but it is also the leading cause of disability. Millions of Americans face discrimination when they need help the most, according to the National Association of Psychiatric Health Systems (NAPHS). NAPHS president and CEO Mark Covall detailed the challenges in a letter submitted for a House of Representatives’ Energy and Commerce Oversight Committee hearing. According to Covall, a little-known provision in the law — Medicaid Institution for Mental Diseases (IMD) exclusion — prevents adult Medicaid enrollees (ages 21 to 64) from getting short-term, acute care in psychiatric hospitals. The exclusion penalizes the disabled and the poor. He stressed that people are not getting the psychiatric hospital treatment they need, putting families and communities at risk.  NAPHS is calling on Congress to modify the IMD exclusion. For more information, visit


Governors Signs Continuity of Care Bill

Governor Jerry Brown signed a continuity of care bill (AB 369) to protect California residents whose individual health policies have been withdrawn to comply with the Affordable Care Act. It applies to a newly covered insured under an individual health care service plan contract or policy whose prior coverage was withdrawn from the market between December 1, 2013, and March 31, 2014. It allows patients with certain medical conditions, such as pregnancy or a terminal illness, to remain under treatment with their existing provider until the treatment is completed. The health care service plan and health insurer must arrange for the covered services to be completed by a nonparticipating provider.


Millennials Need to Be Educated about Voluntary Benefits

The Standard released a white paper encouraging brokers and employers to prioritize benefit education and enrollment among millennial employees. Feeling invincible, millennial employees may not understand the need for disability coverage, especially coverage they need to pay for out of pocket. Recent data from The Standard reveals that that these invincibles are prone to the same types of serious injuries and illnesses as their Generation X and Baby Boomer colleagues. Some of the top claims among this group include mental health diagnoses, cancer, and musculoskeletal disorders. Lost productivity and increased health care costs can result when employees without coverage have to work through a disabling illness or injury. The strongest campaigns include the following:
• Online educational modules that emphasize the need for coverage and encourage enrollment, including tools to help employees understand the financial effects of a disabling illness or injury.
• Paperless enrollment using customized modules that serve as an ongoing benefit resource.
For more information, visit

How Treating Gum Disease Saves on Medical Costs

New research from United Concordia Dental reveals that significant medical cost savings and reduced hospitalizations are possible when people get treatment for gum disease. Periodontal treatment was associated with a 40% decrease in medical costs for patients with diabetes ($2,840 per year); a 41% decrease for those with cerebral vascular disease ($5,681) ; a 11% decrease for those with coronary artery disease ($1,090); and a 74% decrease for those who became pregnant ($2,433 ). Also, hospital admissions decreased by 39% in patients with type 2 diabetes, 21% in stroke patients, and 29%, in heart-disease patients. For more information, visit


Companies Are Really Cranking out Mutual Fund Products

U.S. Mutual Fund product launches tripled in second half of 2013 compared to the first half of 2013, according to research by Cerulli Associates. “We have seen an increase in development, across stock, bond, and international asset classes…There was an increase in the number of launches in international strategies, including global equity, emerging markets equity, and bond strategies, as well as U.S. equities including large blend and large value,” said Pamela DeBolt, associate director at Cerulli. The demand for income is the main driver of innovation in retail products. Managers that provide innovative income-oriented solutions will be well positioned in the retail and institutional marketplaces. Product developers have expressed the desire to focus on selling their existing product repertoire, rather than putting more resources toward new products. However, pressure from sales makes it challenging to slow product development, she added. For more information, visit

Confidence Rebounds for Those in Retirement Plans

Americans’ confidence in their ability to afford a comfortable retirement has recovered slightly from the record lows of the past five years — primarily among those participating in retirement plans. But, actual preparations for retirement haven’t improved, according to a survey by the Employee Benefit Research Institute (EBRI) and co-sponsored by the Principal Financial Group. The increase in confidence was almost exclusively among those with higher household income and those participating in a retirement plan — defined contribution, defined benefit, or individual retirement account (IRA). The percentage of workers in a plan who are very confident increased from 14% in 2013 to 24% in 2014. Only nine percent of those not in a plan were very confident, essentially unchanged from 10% in 2013.

Savings remain low with only a minority taking basic steps to prepare for retirement. Managing daily expenses and the cost of living are the number one reasons workers give for not saving more. Debt is a problem for 58% of workers. The exception is among those who have taken some kind of action to plan and save. Twenty-two percent of workers say they need to save 20% to 29% of their income. Another 22% say they need to save 30% or more. Those without a retirement plan are more likely to set the target at 50% of income or say they don’t know how much they need to save. For more information, visit


Obamacare Calculators

AmaboCare is offering ACA subsidy and tax-penalty calculators. It also offers advanced health insurance plan browsing. Web developers can embed the calculators directly on any web page. For more information, visit

E&O for Agents and Brokers

Business Risk Partners introduced an insurance agents and brokers professional liability form through Liberty International Underwriters (LIU). It’s the first major policy upgrade since 2008, when BRP and LIU first teamed up to offer E&O to a wide range of insurance agents and brokers, including agents for life/health, property and casualty, wholesalers, consultants, and MGA/program administrators. The policy offers a broad definition of professional services. The new form includes built-in defense coverage for administrative proceedings and investigations along with often-requested coverage enhancements that include privacy & data breach and insolvency protections in the event a client’s carrier is not financially viable. For more information, visit

Universal Life

John Hancock Insurance retooled its flagship assumption universal life product, Protection UL. It now offers more competitive premiums on all lump-sum and single-pay scenarios. For more information, visit


Women in Insurance Conference Series

The Insurance Industry Charitable Foundation is holding its Women in Insurance regional forums June 3 in Chicago, June 12 in Los Angeles, June 17 in New York, and June 19 in Dallas. For more information, visit


CA Exchange Plans Fall Short of Essential Benefits

• California Exchange Plans Fall Short of Essential Health Benefits
• California’s Exchange Offers a Competitive Marketplace
• Covered California Reaches One Million Enrollment Milestone
• CAHU Capitol Summit
• New ACO in San Joaquin County
• CMS Backs Down on Medicare Advantage Drug Overhaul
• Health Reform Update
• The Majority of Employers Violate ERISA
• Uninsured Rate Declines for Children and Rises for Working-Age Adults
• Exchange Enrollment Expected to Fall Short of CBO Estimates
• Criminals Find A Juicy Target in Patient Records
• Young Adults Can Face 41% Narrower Income Range Subsidies
• Employers Out of Touch With Employee’s Benefit Needs
• Mergers & Acquisitions Declined in 2013
• Term Life
• Investable Private Equity Index


California Exchange Plans Fall Short of Essential Health Benefits

FallShortThose grandfathered health care plans aren’t the only ones that don’t meet the minimum standard for essential-health benefits under the Affordable Care Act, according to a study published in the February 2014 issue of The American Journal of Managed Care.

The study, led by Joshua P. Cohen, PhD, finds that health plan drug benefits in Massachusetts and California don’t meet state and federal requirements for essential health benefits, even though the plans in question were approved. These two states are of special interest to researchers, with Massachusetts being the incubator of this type of reform and California running the largest state-based exchange.

When researchers evaluated the plans against benchmark plans, they found that that health plans in both states are not fully compliant with state and federal rules. Cohen’s group found major plan differences in cost sharing, reimbursement criteria, prior authorization, and quantity limits.

Both states would need to adjust their formularies, with state policymakers taking another try at balancing competing aims of comprehensiveness of coverage and drug affordability. This gets to the heart of the balancing act involved in regulating healthcare. Mandates can drive up costs, but they also ensure that patients get the care they need. The key question for policy makers is how well an essential health benefit approach balances consumers’ desire for an affordable and comprehensive benefit package, while offering flexibility with respect to formulary benefit design and hence leverage for competitive pricing, according to the authors. For more information, visit

California’s Exchange Offers A Competitive Marketplace

The California exchange market is shaping up to be more competitive than its 2012 individual market, according to a report by the Kaiser Family Foundation. All three indicators point to increased competition (the Herfindahl–Hirschman Index, market share of largest insurer, and number of insurers with more than 5% of market share).

California’s individual market was highly concentrated in 2012, but the exchange market has only moderate concentration. Eleven insurers are participating in California’s exchange throughout the state, including eight plans that previously made up 90% of the 2012 individual market.  Four new plans (L.A. Care Health Plan, Molina Healthcare, Western Health Advantage, and Valley Health Plan) are also being offered, but together only make up 5% of the exchange’s market.

Not all plans are available in all areas of the state. WellPoint, the parent company of Anthem Blue Cross of California and the state’s largest individual market insurer, has significantly less market share in the exchange than it did in the 2012 individual market (30% versus 47%).  Blue Shield of California picked up substantial market share, most likely because it was able to offer the lowest premiums in several parts of the state.

Over time, the availability of premium tax credits, which are only available inside exchanges, should greatly increase the number of participants.  If these new avenues for enrollment are more or less competitive, the markets are likely to be as well, according to researchers. For more information, visit .

Covered California Reaches One Million Enrollment Milestone

One million people have enrolled in health care coverage in Covered California during the exchange’s first open-enrollment period, which ends March 31. Insurance plans are reporting that nearly 85% of enrollees have paid their premiums. The enrollment figures are well above the exchange’s highest projections last fall of 696,000 in the first six-month enrollment period. For more information, visit

CAHU Capitol Summit

The CAHU Capitol Summit will be held in Sacramento May 20 to 21. For more information, visit

New ACO in San Joaquin County

Blue Shield of California, Hill Physicians Medical Group, and Dignity Health launched a three-year accountable care initiative to provide integrated, cost-efficient care to about 14,600 Blue Shield HMO members in San Joaquin County. About 10,300 of these enrollees are members of CalPERS. For more information, visit


CMS Backs Down on Medicare Advantage Drug Overhaul

Responding to a storm of complaints from patient groups and a letter from 30 bipartisan Congressional representatives, the Centers for Medicare and Medicaid Services (CMS) backed down on a plan to overhaul drug coverage under the Medicare Advantage (Part C) and Part D prescription drug program.  The CMS’ proposed rule would have ended the protected status of antidepressants and immunosuppressant drugs (transplant drugs) starting in 2015 and anti-psychotic drugs potentially in 2016.

In a letter to Congress, CMS Administrator Marilyn Tavenner says that CMS now plans to only finalize proposals related to consumer protections (ensuring access to care during natural disasters), anti-fraud provisions that have bipartisan support (strengthening standards for prescribers of prescription drugs), and transparency (broadening the release of privacy-protected Part D data) after taking into consideration the comments received during the public comment period. Pharmaceutical Care Management Association (PCMA) president and CEO Mark Merritt said, “CMS was wise to reconsider its proposed Part D rule that would have destabilized the program, increased costs, and disrupted coverage for millions of seniors.”

Health Reform Update

The following is a health reform update written by Mark Hobraczk on behalf of
Patient Services Inc: A bipartisan deal to permanently fix Medicare physician payments appears to have unraveled after House Republicans insist on paying for it with a five-year delay in the individual mandate under the Affordable Care Act (ACA).

CMS extends the temporary pre-existing condition insurance plans created by the ACA for a third time, but insists it has no authority to delay the March 31 marketplace deadline or individual mandate enforcement.  Marketplace enrollment continues to accelerate but is not likely to meet initial projections, even with an expected late surge of enrollees.  Bipartisan opposition to proposed Medicare Part D changes forces CMS to withdraw the most controversial parts of the rule. For more information, visit

The Majority of Employers Violate ERISA

Seventy one percent of brokers surveyed by say that their business clients don’t provide summary-plan documents or maintain plan documents, which are two major requirements of the Employee Retirement Income Security Act (ERISA). The following are top reasons brokers cited for employers not adhering to these two basic ERISA requirements:

  • They thought they were compliant by distributing benefit booklets/summaries.
  • They were not aware of the ERISA requirements.
  • It was too expensive, difficult, and time consuming to develop the documents.

Many companies assume that insurance contracts, certificates of insurance, and benefit summaries fulfill the ERISA requirements for a summary-plan document and plan document, but they don’t include the required or recommended provisions that protect the plan and the employer. Employers/plan administrators may be subject to the following serious penalties:

  • Failure to provide a summary-plan document or plan document within 30 days of receiving a request from a plan participant or beneficiary can result in a penalty of up to $110/day per participant or beneficiary for each violation.
  • Lack of a summary-plan document could trigger a plan audit by the U.S. Dept. of Labor (DOL).

As DOL has increased its audit staff, more small and large companies are being audited. For more information, visit

Uninsured Rate Declines for Children and Rises for Working-Age Adults

From 2008 to 2012, the percentage of children under 19 without health insurance declined from 9.7% in 2008 to 7.5% in 2012, while the percent age for working-age adults rose from 19.4%  to 20.8%. The health insurance statistics include two income categories that are relevant to recent changes in federal law. One category is families with incomes less than or equal to 138% of the poverty threshold. Eligibility for Medicaid was expanded earlier this year up to this threshold in participating states, i.e., those that allow Medicaid expansion. The second income category is new to the health insurance estimates this year: families with incomes from 138% to 400% of the poverty threshold. Under the law, these families can receive tax credits that will help them pay for health coverage contracted through the new health insurance exchanges.

“These new statistics on health coverage by income can be used as a baseline for policymakers and researchers studying the impacts of health care policy changes at state and local levels in the future,” said Lucinda Dalzell, chief of the Census Bureau’s Small Area Estimates Branch.
The study also includes these highlights:
• 68% of counties in the Northeast have an uninsured rate below 13% compared to only 2.5% of counties in the West.
• In every county, the uninsured rate for children under age 19 was lower than working-age adults, ages 18 to 64, except for four counties in Nevada, which saw no statistical difference.
• For the population younger than 65 living at or below 138% of poverty, non-Hispanic blacks had a lower uninsured rate than non-Hispanic whites in 34 states. Hispanics had a higher uninsured rate than non-Hispanic whites for every state but Hawaii, which was not statistically different.

Exchange Enrollment Expected to Fall Short of CBO Estimates

An analysis by Avalere finds that exchange enrollment is on track to reach 5.4 million by the end of March when open enrollment is set to end. That number falls short of Congressional Budget Office (CBO) estimates that six million people will enroll in exchanges in 2014. “The Administration is conducting aggressive outreach in March in an effort to boost enrollment.  However, success of exchanges in 2014 will depend less on the size of the market and more on the risk profile of enrollees,” said Caroline Pearson, vice president at Avalere Health.

As many as 4.2 million individuals had enrolled in exchanges through February. In comparison, when the Medicare Part D program began in 2006, 22% of voluntary enrollees signed-up in the final month of coverage. If exchanges follow the same pattern,  1.2 million people are expected to enroll in March.

In January and February, enrollment in federally run exchanges increased faster than enrollment in state-based exchanges, as federal exchanges recovered from early setbacks caused by California, Florida, Idaho, North Carolina, and Washington lead the states in terms of enrollment. Meanwhile, the exchanges of Hawaii, D.C., and Massachusetts, which have struggled with website IT problems, trail the nation in enrollment. “In recent months, enrollment in federally run exchanges has caught-up to the initial enrollment surge in many state-based exchanges. The federal marketplaces have been fixed and now surpass some states in terms of ease of consumer access, eligibility, and functionality,” said Dan Mendelson, CEO of Avalere Health. For more information, visit

Criminals Find a Juicy Target in Patient Records

Patient records have become a smorgasbord for criminals as millions of new patients enter the healthcare system, according to a study by Ponemon Institute. A key threat lies in the unproven security of the Affordable Care Act’s (ACA) health insurance marketplaces. Other top threats include criminal attacks, employee negligence, unsecured mobile devices (smartphones, laptops, and tablets), and third parties.

Patient records contain personally identifiable information and protected health information, which is controlled by federal laws, including HIPAA and GLBA, as well as numerous state breach notification laws.

Dr. Larry Ponemon, chairman and founder, Ponemon Institute said, “Employee negligence, such as a lost laptop, continues to be at the root of most data breaches in this study. However, the latest trend we are seeing is the uptick in criminal attacks on hospitals, which have increased a staggering 100% since the first study four years ago. The combination of insider-outsider threats presents a multi-level challenge, and healthcare organizations are lacking the resources to address this reality.”

Data breaches cost healthcare organizations $5.6 billion annually, slightly lower than past years. Ninety percent of respondents had at least one data breach over the past two years while 38% have had more than five data breaches in the same time period. The total number of data breaches in healthcare has declined slightly, indicating that healthcare organizations are making some progress, but the threats to patient data remain high. Many organizations are overwhelmed  with managing incidents and complying with multiple regulations.

Nearly 70% of respondents say the Affordable Care Act has increased the risk to millions of patients. The concerns include insecure exchanges between healthcare providers and government (75%), insecure databases (65%), and insecure websites for patient registration (63%). One-third of organizations surveyed say they do not plan to become a member of a Health Information Exchange (HIE); 72% are not confident or only somewhat confident in the security and privacy of patient data shared on HIEs.

Seventy-five percent of organizations say employee negligence is their biggest security worry. Eighty-eight percent of organizations allow employees and medical staff to use their own mobile devices to connect to networks or enterprise systems with access to patient information. Similar to last year’s study, more than half of organizations are not confident that employees’ mobile devices are secure. Yet, 38% of organizations don’t take steps to ensure these devices are secure or prevent them from accessing sensitive information.

Seventy-three percent of organizations are not confident or are only slightly confident that their business associates can detect a security incident, perform an incident risk assessment, or notify them in the event of a data breach. Only 30% are confident that their business associates are safeguarding patient information as required by the federal HIPAA final rule. Business associates that present the greatest risks to patient information are IT service providers, claims processors, and benefit management firms. Rick Kam of ID Experts said, “It’s like a bucket filled with water, with holes in it. The water keeps spurting out, and every time you patch one hole, a new hole forms. The process of patching old and new holes is overwhelming, and this new data validates that issue.” For more information, visit

Young Adults Can Face 41% Narrower Income Range Subsidies

An analysis by HealthPocket reveals that the ACA’s premium subsidy design may be contributing to the under-enrollment of young adults in the exchanges. Affordable Care Act subsidies are designed to lower premiums for people with incomes of 100% to 400% of the federal poverty level. However, the average maximum income at which young adults qualified for a premium subsidy was $31,744, which is less than 277% of the federal poverty level. Exchange benchmark premiums for younger people can fall short of the percentage of income necessary to trigger a subsidy. Also, the maximum income that qualified for a premium subsidy varied by $7,709 among the eight cities examined. The table below ranks the cities by the highest income where 18 to 34 year-olds were eligible for a subsidy.
Rank City
1 Philadelphia, Pennsylvania ($36,013)
2 Miami, Florida ($33,323)
3 Los Angeles, California ($32,858)
4 Atlanta, Georgia ($32,085)
5 Houston, Texas ($31,732)
6 Detroit, Michigan ($30,266)
7 Chicago, Illinois ($29,374)
8 Phoenix, Arizona ($28,304)

For more information, visit


Employers Out of Touch With Employee’s Benefit Needs

Employee satisfaction with benefits reached 50% in 2013 – the highest level since the MetLife’s study began over a decade ago. Employees who are very satisfied with their benefits are more than twice as likely to be satisfied with their jobs. Forty-four percent say that having customized benefits would increase their loyalty. Surprisingly, only 50% of employers cited voluntary benefits as a significant part of their benefit strategy in 2103 compared to 58% in 2012. The study also reveals the following:
• 78% of employees want more benefits to choose from and 80% want benefits customized to an employee’s circumstances and age.
• 60% are willing to bear more of the cost to have a choice of benefits.
• 40% are looking to their employer for more help in achieving financial security through employee benefits. This is up from 29% last year and illustrates the important role voluntary benefits can play in a benefit strategy

Todd Katz of MetLife said, “The employee satisfaction numbers make it clear that voluntary benefit strategies are paying off for employers and that attention should not be shifted from existing plans. Changing course now may have negative effects on loyalty and productivity.”
Employers report the following priorities in offering benefits:
• 87% say that employee retention is a very important benefit objective.
• 88% say cost control is a very important benefit objective, and 80% say that optimizing benefit plans to reduce costs is a most important strategy.
• 74% say cost is an important consideration when making benefit decisions.

Fifty-four percent of employers plan on maintaining the same benefit budget.
For more information, visit


Mergers & Acquisitions Declined in 2013

When it came to mergers and acquisitions, 2013 proved to be a weak year for the insurance industry, according to a study by Conning. Jerry Theodorou, an analyst at Conning said, “Mergers and acquisitions activity lagged in 2013 in all insurance sectors except distribution…The life-annuity industry aggregate deal value was off by almost half, due mainly to the slowdown in financial buyer acquisitions of annuity businesses. Health insurance transactions and deal values took a nosedive in 2013, as carriers turned from preparation for the Affordable Care Act to implementation activities in the year.”

Steve Webersen, director of research at Conning said, “Private equity investors were again attracted to insurance technology and claims services businesses due to the high reported margins. Meanwhile, in the insurance distribution sector, 2013 insurance broker/agent transactions declined slightly from prior year, but aggregate deal value rose, again driven in large part by private equity participation.” For more information, visit


Term Life

AIG re-priced AG Select-a-Term, the highly customizable term life insurance issued by American General Life Insurance Company. Competitive improvements include up to 10% in premium reductions in popular durations and risk classes, and sometimes-higher reductions, and a market-leading position in 15-, 20-, 25- and 30-year term non-tobacco classes. For more information, visit

Investable Private Equity Index

Thomson Reuters launched two new indices focused on the U.S. private equity buyout industry: The Thomson Reuters Private Equity Buyout Research Index and the Thomson Reuters Private Equity Buyout Index. For more information, visit


Obamacare Could Hurt Democratic Candidates

• Obamacare Could Hurt Democratic Candidates
• Consumers Say Their Health Plans Fall Short on Coverage
• Consumers Are in the Dark About Health Care Options
• Proposed Medicare Part D Rule Would Increase Medicare Costs
• Majority of Uninsured Plan to Get Insurance
• Health Care Reform Is Triggering Benefit Changes
• NAHU Wants the Federal Exchange to be More Broker Friendly
• NAHU Member Testifies on the Health Insurance Tax
• Health Reform Update Summary – Week of March 3, 2014
• Los Angeles Health Underwriters Gets Recognition
• Obamacare Investment Fund
• Blue Shield Teams Up On ACA
• Hybrid Life/LTC Policy
• Group Life Coverage
• Ameritas Partners with Women in Insurance & Financial Services


Obamacare Could Hurt Democratic Candidates

falloutobamacareNagging concerns over the Affordable Care Act appear likely to cost the Democratic Party during the 2014 congressional elections, according to the latest survey by Robert Morris University. Forty percent of Americans surveyed said they are somewhat or much less likely to support a candidate that supported or voted for Obamacare than those (32.5%) indicating they would be somewhat or much more likely to support a candidate who supported or voted for the Act.

RMU political scientist Philip Harold said, “What really jumps out here is gender and marital status. Among likely voters in this poll, women are driving the opposition to Obamacare. Male likely voters are actually in favor of Obamacare.”

Forty-four percent of likely male voters said they would be more likely to vote for a member of Congress who voted for The Affordable Care Act, versus 39.2% who would be less likely. Forty-five percent of likely female voters said they are more likely to vote against a pro-Obamacare candidate versus 29.1% who would vote for an Obamacare supporter. Married women have the strongest antipathy to the Affordable Care Act, opposing it 50.3% to 24.2%.
The poll of 1,006 American adults also found that former Florida Gov. Jeb Bush and former Secretary of State Hillary Clinton are the early favorites for their party’s presidential nominations in 2016.

Among likely voters who are Republicans, the leading contenders for the Republican nomination for president are former Florida Governor Jeb Bush, Florida Senator Marco Rubio, Wisconsin Congressman Paul Ryan, Kentucky Senator Rand Paul, Texas Senator Ted Cruz and New Jersey Governor Chris Christie (in declining order). Among likely voters who are Democrats, the leading contenders for the Democratic nomination for president are former Secretary of State Hillary Clinton, Vice President Joe Biden, New York Governor Andrew Cuomo, and Massachusetts Senator Elizabeth Warren (in declining order). For more information, visit

Consumers Say Their Health Plans Fall Short on Coverage

Forty-one percent of consumers say that their health plan does not offer enough coverage for routine visits, serious illness or injury, health and wellness programs, routine diagnostics, or drug coverage. Concerns over not having enough health coverage reduces satisfaction by 133 points, more than any other coverage-related issue, according to the J.D. Power 2014 Member Health Plan Study. The study also reveals the following:
• 55% have experienced a cost increase in 2013, which has reduced cost satisfaction.
• 35% received a notice of changes in their coverage, networks, or rates from their health plan in the past 12 months.
• 74% maintained their preferred physician, and 83% retained their same hospital network.
• 75% submitted a claim in the past 12 months.
• The average monthly premium in 2013 was $285.
• 49% say their plan does not offer the most common types of health and wellness discount/incentive programs.

“On average, members wait eight days for communication from their provider after a pre-approval request has been submitted. Health plans must look for ways to promptly communicate pre-approvals and cost in order to minimize member anxiety and mitigate concerns about access to care, ultimately increasing customer satisfaction,” said Rick Johnson, senior director of the healthcare practice at J.D. Power.

Satisfaction is highest among health plan members in California and Michigan. Kaiser Foundation Health Plan ranks highest among health plan members in the California region for a seventh consecutive year, with a score of 756. No other plans in this region perform above the region average. For more information, visit

Consumers Are in the Dark about Health Care Options

With the March 31s open enrollment deadline looming for the exchanges, many consumers still don’t have basic knowledge of insurance costs, services (including prescription coverage), and penalties for remaining uninsured, according to a study by Phoenix Healthcare. Steve Wakefield, president of Phoenix Healthcare said that consumers’ lack of awareness gives pharmaceutical companies and insurers the opportunity to market and educate the uninsured and newly insured so that they become more informed and healthier consumers. “One thing is clear; the organization that properly educates the consumer has the best chance at winning their business,” he said. The study reveals the following:

• 50% of the uninsured have not looked into what it would cost to get health insurance.
• Most of the uninsured are not aware of the free services they would get with new insurance; only half are aware that some prescription medications are free under the ACA.
• When informed about coverage options and the tax penalty, 67% of the uninsured say they are more likely to purchase health insurance this year than pay the penalty.
• While about 35% of the U.S. population suffers from diabetes or pre-diabetes, only 7% of the uninsured surveyed are treated for this potentially life-threatening condition.

For more information, visit

Proposed Medicare Part D Rule Would Increase Medicare Costs

Eliminating preferred pharmacy networks in Medicare Part D would increase premiums by about $63 annually for over 75% of Part D enrollees. It would also raise program costs by $24 billion over the next 10  years, according an actuarial study by The Pharmaceutical Care Management Association (PCMA). “CMS’ proposal to eliminate preferred pharmacy networks will make it harder and more expensive for seniors to access prescription drugs,” said PCMA president and CEO Mark Merritt.

The study examines the sections of CMS’ proposed rule on preferred pharmacy networks. More than 75% of Part D beneficiaries are enrolled in plans that feature preferred pharmacy networks.
Key findings from the study include the following:

• As of February 2014, more than 75% of prescription drug plans (PDP) enrollees are in plans with preferred pharmacy networks; these enrollees could be adversely affected by the elimination of plans utilizing preferred pharmacy networks.
• The preferred pharmacy networks provision would increase premiums for the affected population by an average of about $63 per year for the 2015 plan year.
• The rule could increase cost sharing among PDP enrollees by an average of $80 to $100 per year.
• Since the rule would inflate the national average benchmark for Part D plans, CMS would pay an additional $64 in direct subsidies per beneficiary, per year in 2015, for a total increased payment of nearly $1.5 billion in 2015 across all PDP enrollees (based on Part D enrollment of about 23 million beneficiaries).
• Over a 10-year period, the increased cost of eliminating preferred pharmacy networks is estimated to be about $990 per affected enrollee, and the cost would be about $24 billion to CMS in the form of higher direct subsidy payments.

In addition, a recent poll found that seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs and convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates. The survey found that 85% of seniors surveyed are satisfied with their preferred network plan. In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.

Majority of Uninsured Plan to Get Insurance

Fifty-five percent of uninsured Americans would buy insurance rather than pay a fine, according to a Gallup poll in February. That’s similar to January’s results, but down from as high as 63% last Fall. As some previously uninsured Americans move into the insured pool, the remaining uninsured have shown the most reluctance to get insurance. This helps explain why the percentage of uninsured Americans who say they intend to buy insurance has dropped in the most recent months.

At the same time, American attitudes toward the ACA remain negative, which may suggest that some uninsured Americans’ reluctance to get insurance reflects their dislike of the ACA and the law’s requirements. Other uninsured Americans may simply have become more hardened over time in their negative attitudes toward the prospect of getting insurance.

Still, the possibility that more than half of Americans who remain uninsured say they will purchase health insurance offers some positive news for supporters of Obamacare. It also suggests that the number of uninsured Americans may continue to decline as the March 31 deadline approaches, after which they will have to pay a fine if they don’t have insurance.

More than half of the uninsured who plan to get insurance say they will get it from an exchange, a percentage that has been higher this year than in the last three months of 2013. Still, the news on the exchange front is not all positive. Uninsured Americans who have visited an exchange are about twice as likely to rate their experience negatively as positively, similar to their ratings last fall. Some people who had positive experiences with the exchanges in past months likely got insurance, and therefore are no longer included in the uninsured pool in Gallup’s ongoing tracking. Still, the fact that only a third of the uninsured in February who visited the exchanges had a positive experience suggests that significant problems remain despite the Obama administration’s massive effort to fix issues with the federal exchange website.

The majority of those who plan to get insurance say they will do it through a state or federal health insurance exchange, although to date, the uninsured evaluate the experiences they have had with the exchanges quite negatively. Exchange activity may pick up in the coming weeks as the government’s March 31 deadline for having insurance approaches. Once that deadline passes, it may be clearer how much progress the Obama administration’s efforts to expand health insurance have made. For more information visit

Health Care Reform Is Triggering Benefit Changes

With Affordable Care Act deadlines imminent in 2014 and 2015, employers are saying the increased effect of health care reform on various aspects of employee benefits, according to a Prudential survey. Vishal Jain of Prudential said, “The Affordable Care Act could…usher in a new …emphasis on voluntary benefits. More employers are utilizing them for recruiting and retaining talent and employees increasingly view them as a cost-effective way to protect their family’s financial future.” With a shifting benefit landscape, carriers are now focused on being a trusted resource for employers while offering a full spectrum of services such as enrollment communications, benefit education, record keeping, and administrative services,” Jain said.

The survey reveals the following about employers:
• 49% say they are extremely or very likely to make a high-deductible health plan their only health insurance option.
• 73% say the law is having an effect on benefit service and support and 69% say there is an effect on benefit communications.

The survey reveals the following about employees:
• They are increasingly confident that more Americans will be covered under the Affordable Care Act (43%, up 7% from 2012).
• An expanding number say fewer employers will offer health insurance (44%, a 13% increase from 2012), and 38% of those employees believe their employer will drop coverage.
• About one-third have heard of but know little about public or private exchanges.

For more information, visit

NAHU Wants the Federal Exchange to be More Broker Friendly

Representatives John Carney (D-DE) and Charlie Dent (R-PA), along with 73 more members of Congress, sent a letter to the Department of Health and Human Services Secretary Kathleen Sebelius, calling for several improvements to the Federal Healthcare Exchange website. Janet Trautwein, CEO of the National Association of Health Underwriters, said, “The letter asks the administration to set up a hotline for agents and brokers with problem cases, implement an application edit function, and allow brokers and agents to enter their national producer number so all applications they administer can be tracked. These three simple fixes would make a world of difference for the nation’s agents, brokers and consumers. While the administration has taken steps to resolve the obvious consumer issues with, the backend issues that are meant to protect people and families seeking coverage and give them access to licensed, experienced insurance agents continue to be riddled with problems. Marketplace-certified health insurance agents and brokers act as consumer advocates and educational resources for people and small businesses enrolling in marketplace-based coverage, and being able to do their job means the millions of Americans they represent can be assured their healthcare coverage will be what they need, when they need it most. Fortunately, there’s a free new tool that empowers consumers and businesses to find an agent in their area and thereby take advantage of their cost-saving expertise:” For more information, visit

NAHU Member Testifies on the Health Insurance Tax

Alan Schulman, a Maryland-based health insurance agent member of NAHU, presented testimony to the House Committee on Small Business Subcommittee on Contracting and Workforce at a hearing on the effect of the Affordable Care Act on the self-employed.

A big and unexpected change for small employers is the cost of modified community rating and the new national health insurance premium tax, or the HIT, stated Schulman. There are some bipartisan bills to fix these cost-drivers, including H.R. 763 to repeal the HIT and H.R. 544 to fix the law’s very narrow age bands. However, the way HHS has implemented the age bands is causing a separate big problem for very small employers too, he said.
Before health reform, rates did reflect the ages of all the employees in a group, but employers and employees never felt the breakdown because they always got a ‘composite rate,’ so all employees were charged the same average price. Composite rates were an administrative convenience and an important protection against age discrimination. Now, due to the way the age band rules were written by HHS, it’s virtually impossible for a carrier to give an employer a composite rate.

Last month, I shopped for a group plan by looking at all of the health plan options available in the state. The best scenario for fully insured group coverage had a rate of about $325 a month for the youngest employee and over $900 a month for the oldest. Naturally the employer was extremely distressed, and not just about the increased costs. The idea of explaining to the older employees how much more they will have to pay is unsettling, and my client was worried about legal costs should an employee file a complaint. For more information, visit

Health Reform Update Summary – Week of March 3, 2014

In this week’s Patient Services, Inc. (PSI) Health Reform Update, the Obama Administration further delays key Affordable Care Act (ACA) provisions. States can now extend ACA-deficient individual health plans until 2017 and the employee choice option under small business Marketplaces until 2016.

The Senate Finance Committee has upped the pressure on the Centers for Medicare and Medicaid Services (CMS) not to finalize controversial Medicare Part D changes. CMS did finalize rules this week for the ACA’s delayed Basic Health Plan option, though most states remain uninterested.

Conservatives in the Arkansas House formally renewed that state’s private sector alternative to the ACA’s Medicaid expansion, after holding out for concessions. New Hampshire Senate conservatives dropped their opposition this week to a comparable alternative. For the second time, CMS rejected a partial expansion alternative sought by South Dakota. For more informtormation, visit


Los Angeles Health Underwriters Gets Recognition

Los Angeles Health Underwriters received Gold Certification from NAHU’s Chapter Certification Program, which is an ongoing program that recognizes excelling chapters throughout the calendar year. “We are grateful for LAAHU’s hard work with chapter development and recognize them for their efforts with this well-deserved award,” said NAHU CEO Janet Trautwein.

LAAHU president, Dede Kennedy-Simington said, “LAAHU exemplifies the dedication to providing the best opportunities for our members through their dedication to chapter development. This year, LAAHU organized multiple events in our local community. As many members are Certified Insurance Agents for Covered California we continue to reach out by hosting a variety of community events to assist consumers in the purchase of health insurance. LAAHU is one of the largest chapters in NAHU. These projects and many others have set a standard of excellence in the health insurance industry that we are proud to represent.”

Obamacare Investment Fund

Los Angeles-based fund manager Osprey Real Estate Capital is offering The Doctors Funds, which will invest directly into retail and hospitality properties and have been developed in response to The Affordable Care Act. For more information, visit or call 310-274-6726.

Blue Shield Teams up on ACA

Blue Shield of California and EPIC Health Plan announced a two-year accountable care initiative to provide integrated, cost-efficient care to Blue Shield HMO members in the Inland Empire. The accountable care organization (ACO) will include six medical groups managed by EPIC Management, L.P., and will provide coordinated care for about 27,300 members. Approximately 7,000 of these enrollees are members of the California Public Employees’ Retirement System (CalPERS), while an additional 7,500 are employees of the County of San Bernardino. The organizations expect this collaboration to result in decreased healthcare cost trends for these members during the two years of the collaboration. For more information, visit


Hybrid Life/LTC Policy

Lincoln Financial Group launched Lincoln MoneyGuard II, the next-generation of its hybrid life-long term care (LTC) funding solution. It provides income-tax–free reimbursements for qualified long-term care expenses, an income-tax-free death benefit if care is not needed, or return of premium options. For more information, visit

Group Life Coverage

OneAmerica is offering its flagship individual whole life coverage to employees at the worksite issued by American United Life Insurance Company (AUL), a OneAmerica company. With guaranteed issue underwriting and a competitive group rate, Legacy offers permanent life protection with features that employees would not be able to get on their own. In addition to providing a guaranteed death benefit, premiums that never increase and cash value growth, employees can potentially earn dividends with Legacy. For more information, visit


Ameritas Partners with Women in Insurance & Financial Services

Ameritas has partnered with Women in Insurance & Financial Services as an Ambassador-level Partner for Excellence. In addition to Ameritas, 2014 Partners for Excellence include New York Life as a Leadership Partner; Guardian, MetLife and Prudential as Executive Partners as well as Ambassador Partners Lincoln Financial Group, Penn Mutual and Mutual of Omaha. The relationship these organizations have with WIFS speaks to a dedication and commitment toward promoting the career success of women. For more information, visit


Private Health Exchange Survey in the Works

• Private Health Exchange Survey in the Works
• Initiative Brings Specialty Care to Rural Markets
• Employers Hit With More Cost Sharing For Expensive Drugs
• Study Reveals Medical Value of Eye Exams
• Exchange Customers Favor Narrow Networks
• Health Reform Update
• African American Health Alliance Promotes ACA
• Benefitfocus Is Now A Web-Based Entity
• ERISA Database
• Long-Term Care Rider
• Health Reform in Translation
• A Clear Explanation of LTC and Retirement Issues
• Tool Reduces 401(k) Risks
• Premium Financing Webinar
• Agents Overlook LTC Tax Advantages
• The Most Overlooked Benefits of Travel Insurance


Private Health Exchange Survey in the Works

SurveyIn the May issue, California Broker Magazine will feature the first annual private health exchange survey. Please email if you want your company to be included.

Initiative Brings Specialty Care to Rural Markets

Blue Shield of California and Adventist Health launched a telehealth initiative to increase access to specialty care in rural areas. Blue Shield members can be diagnosed and treated by specialists from across the state through interactive video technology available at a local Adventist Health site. Blue Shield individual and family plan customers, can seek specialty care that’s not available in their areas through the telehealth network — including those who purchased coverage through Covered California. Specialties include cardiology, dermatology, endocrinology (diabetes), pulmonology, rheumatology (arthritis), orthopedics, infectious disease, nephrology, gastroenterology, general surgery and spine surgery. The specialists are Adventist Health physicians who are contracted in the Blue Shield network. Patients can be referred by their local primary physician or can self-refer, make an appointment through a centralized care coordination call center, and go to their local Adventist Health location for their office visit.The Adventist Health sites are in the following cities in Covered California regions one and two: Paradise, Clearlake, Ukiah, Willits, Fort Bragg, St. Helena, Napa, and Sonora. For more information, visit


Employers Hit With More Cost Sharing for Expensive Drugs

Twenty-eight percent of employees now offer four-tier drug plans compared to only 12% that had these plans in 2012, according to a survey by United Benefit Advisors. With a four-tier plan design, employers can put the most expensive drugs in a category with significantly higher copays — thus passing along the costs to employees.  The fourth tier pays for biotech or the highest cost drugs. Median pharmacy retail copays for fourth-tier drugs increased 25% from $80 in 2012 to $100 in 2013, and many are charging 10% to 30% of the cost of tier four drugs.

Carol Taylor, an employee benefit advisor with a UBA partner Firm said, “We are seeing more and more employers, small and large, raising copays substantially on fourth-tier drugs. With some of these drugs, the cost ranges from $1,200 to $20,000 per month (the cost of some cancer drugs). It is very costly for the plans, which in turn affects their premium rates. We’ve seen this for quite some time with self-funded plans, but we expect it will become more popular among small and large employers with group health insurance.”

The average tier-four median copay was $52 for small employers (less than 100 employees), from $45 to $60 for mid-size employers (100-499), and $80 to $100 for large employers (500+).

Larger groups are rated more independently, so they have a much bigger incentive to raise copays, especially for items that will cause rate increases. This might shift some as employers are forced to come into compliance with health care reform in 2015 since the prescription copays/deductibles, etc. must all track to the out-of-pocket maximum, said Rob Calise, UBA Board chairman noted that, he said.

Seventy-three percent of prescription plans had a copay and/or coinsurance after the major medical deductible compared to 68% in 2012. “It used to be that all drugs were applied to the deductible, then coinsurance on major medical. Now, quite a few carriers require deductible and then copays, particularly on high-deductible health plans. We’re also seeing small group and mid-market employers place generic brands before the deductible, but brand names after. The ultimate goal of shifting more cost to employees is to drive behavior to create better health care consumers. It is very possible we could see copays disappear completely, with everything falling under the major medical deductible,” he added. For more information, visit

Study Reveals Medical Value of Eye Exams

Eye care professionals can play a key role in identifying diseases and working with primary care physicians to deliver care, according to a study by UnitedHealthcare. The company looked at claims for plan participants with medical and vision benefits. Eye care professionals identified nearly 6% of the chronic conditions diagnosed among the study population. Also, eye care professionals identified 15% of certain diseases, such as multiple sclerosis and diabetes. They also found common conditions, such as high cholesterol and hypertension, rheumatoid arthritis, juvenile rheumatoid arthritis, Crohn’s disease, and Graves disease. Linda Chous, O.D., chief eye care officer, UnitedHealthcare Vision, said, “When eye care professionals share information about diseases with patients and other care providers, it can lead to better information, better decisions and better health outcomes.” For more information, visit

Exchange Customers Favor Narrow Networks

Fifty-four percent of those who are most likely to purchase an exchange plan (the uninsured and individuals) prefer less costly plans with narrow networks. Those who said they wanted a more expensive plan with a broader network were told that they could save up to 25% on health care costs with a narrow network plan. The share continuing to prefer the more expensive option dropped from 51% to 37% among the public, and from 35% to 22% among the uninsured and individuals. For more information, visit

Health Reform Update

The following is a recent health reform update from Mark Hobraczk on behalf of Patient Services Inc.:
Conservative groups lose their second court battle seeking to block Affordable Care Act premium subsidies for consumers in federally facilitated Marketplaces while several Republican lawmakers seek probes into how three state-based Marketplaces continue to have little or no online enrollment capability.

The Centers for Medicare and Medicaid Services may have to scale back controversial new limits on Medicare Part D drug plans after Republicans and Democrats fret over having to explain them to constituents during an election year.

An Avalere Health study confirms that despite new out-of-pocket limits under the ACA, specialty tier coinsurance remains a barrier to access for Marketplace consumers relying on high-cost prescription drugs. Several state lawmakers propose even lower drug cost-sharing limits.

The novel Medicaid expansion alternative in Arkansas barely survives a repeal effort, while Mississippi, Pennsylvania, Utah, and Virginia struggle to find consensus on any expansion alternative. For more information, visit

African American Health Alliance Promotes ACA

On March 3, the African American Health Alliance released a public-service announcement to promote prevention and care benefits of the Affordable Care Act. The PSA highlights screening and preventions services and how to sign up by the March 31st deadline for the health insurance marketplaces. The effort responds also to the ongoing needs of the approximately 1.1 million people living with HIV, including the one in six who don’t know they are infected.  “The…law that will go a long way toward furthering the elimination of racial and ethnic health disparities,” said Fredette West director of the Alliance. West participated in President Obama’s 2009 White House summit on Health Care and Health Reform. To view the video, visit


Benefitfocus Is Now A Web-Based Entity

BenefitStore is now a Web-Based Entity (WBE) with the Centers for Medicare & Medicaid Services. Benefitfocus offers a channel for employers to facilitate enrollment in Qualified Health Plans (QHPs) for employees who are eligible for an advanced premium tax credit For more information, visit

ERISA Database

The FreeERISA database has redesigned its plan dashboard and research tools. It now highlights the most important plan facts in a graphical and easily understood dashboard. It calculates critical plan figures and points out red flags. For more information, visit

Long-Term Care Rider

John Hancock launched an improved long-term care (LTC) rider on many of its life insurance products. The rider now provides greater design flexibility when insuring against rising costs of long-term care. It offers more coverage for retirement planning with an increasing death benefit option and more flexibility to specify the LTC coverage needed, helping balance LTC and estate planning needs. For more information, visit

Health Reform in Translation

The California Healthcare Foundation is offering a series of fact sheets and infographics demystify technical topics that are central to understanding the implementation of health reform in California. They explain the following:
* What is actuarial value?
* What is the premium tax credit?
* Individual coverage before and after ACA
* Small group coverage before and after ACA
* What is Modified Adjusted Gross Income?

For more information, visit

A Clear Explanation of LTC and Retirement Issues

The American Academy of Actuaries launched its Essential Elements series of papers. The first two are “Long-Term Care Financing” and “Raising Social Security’s Retirement Age.” The series is designed to boil down complex content for a broader audience. For more information, visit

Tool Reduces 401(k) Risks

OTB Strategic Consulting launched an online 401(k) self-assessment tool for plan fiduciaries. It helps them find areas of non-compliance and provides solutions to correct them. For more information, visit


Premium Financing Webinar

Succession Capital Alliance is sponsoring a premium-financing webninar March 18, at 11:00 am PST. It will focus on how consumers can use intelligent leverage to purchase an indexed universal life policy that provides a future tax-free supplemental retirement income. Space is limited to the first 100 people who register. For more information, visit


Agents Overlook LTC Tax Advantages

Many agents overlook the tax advantages of long-term care insurance premiums for their Baby Boomer clients, says Jesse Slome, director of the American Association for Long-term care Insurance (AALTCI).

An individual can deduct as much as $4,660 for long-term care insurance premiums paid in 2014. The maximum amount for 2013 is $4,550. People rarely qualify for the long-term care insurance tax deduction During their working years, but it typically gets easier after retirement, says Slome.

The IRS considers tax-qualified long-term care insurance premiums a medical expense. The yearly maximum amount depends on the insured’s attained age at the close of the taxable year. Someone older than 50 but younger than 60 can deduct up to $1,400 ($2,800 for a same-age couple), Slome notes. An individual age 70 or older can include up to $4,660 ($9,320 for a same-age couple). The amounts are indexed for inflation and increase each year.

After retirement owning long-term care insurance can help lower your tax bill. But, it’s best to get this coverage before retirement because the costs are lower and you are more likely to meet health qualification requirements. The future tax deduction is an extra benefit for your post-retirement years, he adds. For more information, visit


The Most Overlooked Benefits of Travel Insurance

One of the most overlooked travel insurance benefits is primary versus secondary coverage, explains Frank Trigo, general manager of InsureandGo. The vast majority of travel insurance policies offer secondary medical coverage, which is coverage in excess of all other valid and collectible insurance.

If you already have a private or group health plan, the travel insurance medical policy with secondary medical will only pay the expenses in excess or over the amount covered by the other primary health insurance policy that you have at home. “With primary coverage, you won’t have to jump through hoops to find out if your private or group health care plan will cover you when travelling internationally, you won’t have to incur out of pocket expenses and you won’t risk being denied medical care in a foreign country due to payment. Some cheaper policies may have higher medical coverage limits but if the coverage is secondary, that high limit might not be as valuable as a primary policy with a lower limit,” he adds.

Many policies cover your personal property regardless of where the loss occurs: be it in a cafe, on a tour, or from your hotel room. But many policies don’t cover electronics, such as tablets, phones, or computers so it’s important to check each policy carefully under the baggage and personal property section.

Since the cost of getting airlifted from a cruise ship or flown to a hospital in air ambulance for care is astronomical, travelers should look for policies that have a minimum of $100,000 in medical evacuation. “Also, the travel insurance company will make all the arrangements with the provider which is a tremendous benefit in itself,” says Trigo.

Transportation of beside support person in case you are hospitalized is another overlooked benefit. “Imagine you are hospitalized and alone in a foreign country. A good travel insurance policy will cover the costs to bring a person selected by you to your bedside if you are hospitalized for seven consecutive days,” he adds.

Trigo says that 24-hour emergency travel assistance is one of the most valuable, but under-marketed benefits of a travel insurance policy. The company can coordinate all aspects of your emergency, such as directing you to a proper medical facility, guarantying your admittance, coordinating care, monitoring your condition, and keeping loved ones back home apprised. For more information, visit


CMS Plans Medicare Advantage Cuts

CMS Plans Medicare Advantage Cuts
Study Questions the Effectiveness of Medical Homes
Americans Don’t Understand HSAs
Employers Will Change the Way They Deliver Health Benefits
California Must Make a Sustained Enrollment Effort

Consumers’ Well-Being Is Improving
Covered California Exceeds Enrollment Projections
IRAs Make up Nearly Half of an Advisor’s Book of Business
Employees Value Their Benefits More Than Ever
Electronic Signature Capability for Life Insurance
ERISA Online Database
Financial Diversification Weimar Tomorrow
Direct Enrollment Capabilities for Individual Health Agents
Fixed Indexed Annuity
Accumulation IUL
Permanent Life Insurance Product Portfolio

CMS Plans Medicare Advantage Cuts

medicaidThe Centers for Medicare and Medicaid Services (CMS) is proposing a 3.55% cut in payment rates to Medicare Advantage insurers. A bipartisan group of 40 senators sent a letter to CMS protesting the cuts. A broad array of organizations also sent letters urging the agency to keep rates flat to protect seniors.

Medicare Advantage payments were cut 6% last year, which resulted in cost increases and benefit cuts of $30 to $70 per month for beneficiaries, according to an Oliver Wyman report. With another six percent cut in 2015, seniors would experience additional benefit reductions and premium increases of $35 to $75 per month, or $420 to $900 for the year, the report estimates. The Affordable Care Act already includes more than $200 billion in payment cuts — the vast majority of which have not gone into effect yet. The ACA also imposes a new health insurance tax, which begins this year.

Another round of payment cuts would mean seniors learning that out-of-pocket costs are higher, benefits have been cut, provider access is restricted, and choice of plans is more limited. These are real cuts in payments, not reductions in rates of projected growth, according to a statement by America’s Health Insurance Plans (AHIP). Seniors will see the effect of any new payment cuts in late October 2014 when they begin enrolling in their 2015 Medicare Advantage coverage.

As CMS prepares to set 2015 Medicare Advantage payment rates, AHIP is launching its largest-ever mobilization to remind Washington that seniors are following this issue closely and to urge the Medicare agency to protect them from further harm by maintaining payment levels.

Study Questions the Effectiveness of Medical Homes

The medical home has become a new model to produce better and lower-cost primary health care. But a Rand study found that medical homes yielded few improvements in the quality of care and no reductions in hospitalizations, emergency department visits, or total costs of care.

Medical homes are primary care practices that are designed to provide comprehensive, personalized, team-based care using patient registries, electronic health records, and other advanced capabilities. Recent medical home initiatives have encouraged primary care practices to invest in these new capabilities, participate in learning collaboratives, and achieve medical home recognition. Health plans offer to pay more to the practices that achieve recognition.

Researchers evaluated the Southeastern Pennsylvania Chronic Care Initiative. Thirty-two primary care practices and six health plans participated in the pilot from 2008 to 2011. Pilot practices adopted medical home capabilities, such as creating lists of patients who are overdue for the services they need. The medical homes did see improved rates for monitoring for kidney disease in diabetes patients, and there were signs that quality improved for some other aspects of diabetes care.  However, there were no improvements in the quality measures for asthma care, cancer screening, and control of diabetes. Also, there was no reduction in the use of hospitals or emergency departments, or the total costs of medical care.

Researchers say there are several reasons that the medical home pilot did not show broader improvements in cost and quality. The pilot emphasized quality of care for diabetes and asthma. But practices did not have the financial incentives to contain costs. While most participating practices adopted new capabilities that targeted quality of care, fewer increased night and weekend hours, which could have reduced unnecessary visits to the emergency room. Because the pilot practices volunteered for the medical home experiment, they may have been more quality-conscious than other practices even before the pilot began, which would limit possible improvements. For more information, visit


Americans Don’t Understand HSAs

With the advent of Obamacare, more Americans are eligible for a health-savings account (HSA), but most don’t have the information they need to take advantage of them, according to a survey by In fact, 86% say they don’t understand HSAs. Fifty percent of Americans say they are somewhat or very likely to use an HSA to cut their taxes. But only 8% have an HSA.

Many Americans are confused about eligibility and benefits. For example, only 14% know that an HSA has to be paired with a high-deductible health insurance plan. Many Americans are confused about which medical expenses HSAs can be used for; 52% think they can use HSAs to pay for over-the-counter medications, and 51% think they can use HSAs to pay health insurance premiums, both of which are untrue. Popular expenses that HSAs can be used for include prescription medications, doctor visits, dentist visits and eyeglasses.

People who buy coverage on the public health insurance exchanges are especially good candidates for HSAs, since most of the purchased plans under Obamacare are high-deductible plans including Silver and Bronze plans.  For more information, visit


Employers Will Change the Way They Deliver Health Benefits

Ninety-five percent of employers that provide health care benefits to active employees and retirees plan to continue doing so for the next three-to-five years. But they will change the way the benefits are managed and delivered, according to a survey by Aon Hewitt,

Almost 40% of employers expect to require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs. Thirty-three percent say that the preferred approach in the next three-to-five years will be to offer group-based health benefits through a private health exchange.

The following is a breakout of employer strategies:

* Require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs — 40% now and 36% in three to five years.

* Move to a private health exchange – 5% now and 33% in three to five years.

* Exit health care completely — 1% now and 5% in three to five years.

* Maintain traditional trend mitigation approaches — 52% now and 21% in three to five years.

Almost two-thirds of employers plan to continue offering the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38% plan to offer no benefits to part-time workers in the next three-to-five years.

Twenty percent favor moving all or a portion of their pre-65 retiree population to the individual market/state exchanges in the next three-to-five years. Just 3% of employers do so today.  Employers will be moving at least some portion of their pre-65 retiree populations to state and federal exchanges, but they are waiting for the marketplaces to become more competitive and mature. John Grosso of Aon Hewitt said, “This movement will be slow and methodical as the public marketplaces evolve and as employers understand the implications of the 2018 excise tax, which will only affect group-based health insurance plans.”

The number of employers offering subsidized retiree health benefits has declined over the past decade, with just 25% of large employers doing so today, compared to about 50% in 2004.  A growing number of companies that offer health benefits to post-65 retirees are considering providing coverage through the individual Medicare plan market. In fact, 30% of companies have already sourced benefits through the individual market –most through a multi-carrier private health exchange. Two-thirds of employers that are considering changing their post-65 retiree strategies are considering this approach.

A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries. They see the value in having the competitive mix of plans, the navigational tools, and the advocacy that these private exchanges offer. Winkler said, “As health insurers regain control for creating a competitive market that is accountable to the consumers within it, we expect to see similar cost moderation across the system, including the new competitive markets emerging for pre-65 retirees and active employees.” For more information, visit



Covered California Exceeds Enrollment Projections

Covered California has exceeded its projected base enrollment for the 2014 open-enrollment period. As of Jan. 31, 2014, more than 1.6 million Californians have signed up for Covered California health insurance plans or for low-cost or no-cost Medi-Cal.  Nearly half selected a Covered California health insurance plan. In the first two weeks of February more than 100,000 people enrolled in Covered California, increasing total enrollment to 828,638.

Of those enrolled through Jan. 31, 626,210 are eligible for subsidies. Insurance companies report that 80% of enrollees have paid their first month’s premium.  Additionally, 877,000 applicants have been determined to be likely eligible for Medi-Cal coverage. DHCS has transitioned 652,000 people into the Medi-Cal program from the state’s low-income health program. Automated enrollment has allowed county human services agencies to enroll 106,000 people into Medi-Cal coverage, and another 65,000 were enrolled through the Express Lane program.

January also saw a significant increase in the number of Latinos enrolled. For the month of January, Latino enrollment in Covered California reached 28%, compared to a about 18% for October through December. The enrollment rate of Spanish-speaking Californians increased, representing about 11.5% in January, compared to 5% during the first three months of open enrollment. DHCS also reported improved Latino participation among those likely to be eligible for Medi-Cal enrollment. The percentage of Latinos within the applicant pool increased from 32% as of Dec. 31 to 38% through Jan. 31.

Enrollment of young adults 18 to 34 years old is trending slightly upward, at 26% of the consumers who have selected a Covered California health insurance plan. This age group represents about 25% of the state’s population but about 36% of those who are eligible for subsidies.  Most subsidy-eligible consumers who enrolled — 451,074, or about 62% – signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86% of consumers across all tiers got some sort of financial assistance.

Anthem Blue Cross of California, Blue Shield of California, Kaiser Permanente and Health Net lead the way among plans chosen, collectively reflecting almost 92% of total enrollment. In Covered California’s Small Business Health Options Program (SHOP), 571 small businesses — representing nearly 5,000 employees and their dependents — have enrolled for coverage.

Consumer response to the application process for Covered California and Medi-Cal has been positive. In the first three months, at least 60% of those who completed enrollment said it was easy. About 82% of consumers said they found the information needed to choose the right health plan for them.


California Must Make a Sustained Enrollment Effort

Covered California is touting positive enrollment figures leading up to the enrollment deadline. But, the state needs to make a continuous effort to enroll people and keep people in coverage, according to a Kaiser Family Foundation report. People will continue to move around within the insurance system as their income or job situations change. With this challenge in mind, California has sought federal grants and other investments for ongoing outreach, enrollment, and education efforts.

Californians may face challenges in comparing costs, services, and provider networks, which have typically varied greatly across plans in the past. Insured adults in California say they did not have difficulty comparing their plan choices, but 38% found some aspect of plan choice to be difficult, such as comparing services, comparing costs, and comparing providers.

Eighty-five percent of insured adults in California rate their pre-ACA coverage as excellent or good. But 20% have needed a service that was not covered by their plan — typically ancillary services, such as dental, vision care, and chiropractor services. Twenty-four percent have been denied coverage for a service they thought was covered, and 35% say out-of-pocket costs were higher than expected.

The ACA requires exchange plans to provide detailed, standardized plan information so consumers can compare coverage options. As a result, uninsured Californians should have fewer challenges making plan choices. The state is also trying to improve the Medi-Cal enrollment process. It calls for reorienting Medicaid management, systems, and caseworker training away from having welfare-style gate keeping toward encouraging participation.

Given the health profile of California’s uninsured population, there is likely to be some pent-up demand for health care services. Some people who have relied on emergency rooms or urgent care centers may need help navigating the primary care system. But clinics and hospitals that already see a large share of uninsured adults may still play an important role in serving this population once they gain insurance. Newly insured Californians may be surprised to learn that some ancillary services, such as dental coverage, are not included in their plan.

While Covered California plans must accept various forms of payment, direct withdrawal from a checking account is a simple and reliable way to ensure that premiums are paid on time. However, 21% of uninsured adults in the income range for Covered California subsidies don’t have a bank account. For more information, visit



Consumers’ Well-Being Is Improving

When it comes to well-being, U.S. consumers are in a better position in 2014 than they were in the previous two years, according to the Temkin Group’s well-being index, which is based on surveys of 10,000 U.S. consumers. The index averages the percentage of consumers who agree with the following statements:

* I am typically happy.

* I am healthy.

* I am financially secure.


In 2014, 77% of consumers say that they are typically happy compared to 75% last year; 69% say that they are healthy compared to 68% last year; and 46% say that they are financially secure compared to 42% last year.  For more information, visit



IRAs Make up Nearly Half of an Advisor’s Book of Business

Retail individual retirement accounts (IRAs, SEP) make up nearly half of the average financial advisor’s book of business, according to research from Cerulli Associates. Even though rollover assets are key components of an asset manager’s retirement strategy, advisors view them as just another source of funds for their practice, instead of making up a key market to be cultivated.

Financial advisors capture larger rollovers than direct providers, with the largest balances going to existing advisory relationships. “Financial advisors play a key role in asset managers’ abilities to win flows from rollovers. However, these rollover assets are hard to acquire,” said Bing Waldert, director at Cerulli.

Cerulli expects advisors to continue to win rollovers. Although investors typically manage multiple advice relationships, financial advisors who deliver a holistic view of a client’s financial picture will benefit from integrating all assets into an overall financial plan. For more information, visit



Employees Value Their Benefits More Than Ever

On a scale of one to 10, employees give an average score of 7.1 on how much they value their workplace benefits. That compares to 6.8 in 2012, according to a Guardian study conducted in September 2013.

Eighty percent of employees surveyed get all health insurance, disability insurance, and retirement savings through their employer. Seventy-nine percent say that their benefits are crucial to staying with a job.

The study uncovers a growing disconnect between employers and their workers. Employers are seeking opportunities to shift more costs and responsibilities to employees at a time when these benefits are becoming more critical to their workers’ financial security and well-being. In fact, 47% of employers are planning to ask employees to bear more of their benefits cost in 2014 in anticipation of the enactment of the Affordable Care Act.

Just over half of employers surveyed say they’ve been successful in preparing for a post-health care reform era of benefits, but only 22% say they are well prepared to discuss these changes with employees.

While the responsibility of benefit costs may be shifting, it’s still essential for companies to make sure that employees have expert financial planning advice and a clear understanding of which workplace benefits are best for them. Increasingly employers are seeking assistance in these areas from experts outside the company. For more information, visit



Electronic Signature Capability for Life Insurance

John Hancock Insurance introduced electronic signatures, which eliminates the need for customers to print, sign and mail the most common life insurance forms. The electronic forms also guide the client to complete the form properly. For more information, visit

ERISA Online Database

FreeERISA has redesigned its plan dashboard and research tools to make it easier to locate and understand plan data. FreeERISA now highlights the most important plan facts in a dashboard that’s easy to understand. For more information, visit

E-Signatures for New Business & Enrollment

Andesa Services and Silanis Technology introduced a cloud-based offering to help life insurance agents to process applications in real time rather than waiting days or weeks to get completed paperwork from the customer. Enforced data validation and workflow rules ensure that all signatures and data are captured correctly, greatly reducing the risk to the carrier. For more information, visit

Financial Diversification Weimar Tomorrow

The National Assn. for Fixed Annuities is sponsoring a webinar to help advisors find optimal financial diversification strategies for their clients. It will be held February 27 at 8:30 a.m. For more information, visit

Direct Enrollment Capabilities for Individual Health Agents

Individual licensed health insurance agents can now leverage Web-Broker Entity status through the GoHealth Marketplace. The platform helps agents manage customers, quote plans in 50 states, and enroll consumers in on-exchange plans in 36 states. With GoHealth’s Web-Broker Entity status, agents can instantly get subsidy-eligibility information and sell on-exchange plans to subsidy-eligible people. For more information, visit

Fixed Indexed Annuity

Phoenix Companies introduced Personal Retirement Choice. The single premium fixed indexed annuity has an optional guaranteed lifetime income benefit rider. It is designed to address retirement risks with a variety of features and options for accumulation, protection, and income. It is primarily an accumulation annuity that provides an upfront premium bonus that vests over time. The bonus is eligible to earn interest credits, thereby increasing growth potential. The premium bonus available ranges from 8% to 15%, depending on whether an income rider is elected. For more information, visit

Accumulation IUL

John Hancock redesigned its indexed universal life insurance product –Accumulation IUL. It provides strong death benefit protection and the potential for significant cash value accumulation. Accumulation IUL offers downside protection with the potential for growth through returns linked to the index. The product features a simple and straightforward design with the flexibility of three indexed allocation options.

For more information, visit

Permanent Life Insurance Product Portfolio

Pruco Life Insurance Company, a subsidiary of Prudential Financial, introduced a tax-advantaged universal life insurance product. PruLife Founders Plus UL provides cost-effective death benefit protection with an extended no-lapse guarantee, and offers a choice between two interest crediting account options that can help build cash value in the policy. An optional BenefitAccess Rider, available for an additional cost, allows consumers to advance up to 100% of the death benefit should they become chronically or terminally ill.  For more information, visit



Copayments and Coinsurance Rise Under The ACA

• Copayments and Coinsurance Rise Under The ACA
• Most Providers Like the ACA
• Americans Lack Faith in Primary Care
• Group Wants Extension for Open Enrollment for Individuals
• Overcoming Coverage Denials for Weight Loss Surgery
• Young Adults Lead Exchange Enrollment Trends
• Patients Are in Denial About Diabetes Risks
• Value Based Design the Right Way
• Bill Would Extend Coverage to the Undocumented
• Pressing Issues For HR Professionals
• Medicare Smartphone Quoting
• Term Life Insurance
• Growing Interest For Fiduciary Services
• Many Older Workers Have No Plan for Their DC Plan Assets
• DC Plan Sponsors Are Adding Alternatives


Copayments and Coinsurance Rise Under the ACA

Medical Records & StethoscopeCopayments and co-insurance fees for drugs in the individual insurance market increased 34% compared to before the Affordable Care Act (ACA). All of the four metal health plan categories under the ACA had drug cost-sharing increases. Bronze health insurance plans had the highest increase at 58% while Platinum health insurance plans had the lowest increase at 15%.

Plan enrollees who use brand name drugs and specialty drugs face the greatest burden from the increases in copayments and co-insurance fees while enrollees who use medications infrequently are not likely to notice the cost-sharing increases.

The 34% increase in copayments and co-insurance fees does not mean that consumers will spend 34% more on drugs. Drug spending is also affected by deductible amounts, out-of-pocket caps, and what drugs are included within a health plan’s list of covered medications.

Before the Affordable Care Act, nearly one-out-of-five private individual health insurance plans had no prescription drug coverage while all new health plans in the individual market include a drug benefit. In addition, patients can get over-the-counter drugs, such as aspirin, folic acid, and iron supplements, with no out-of-pocket cost when used as preventive medicine.

“With copayments and co-insurance fees rising, consumers must shop health plans more carefully. Copayments, deductible amounts, and limits on annual drug spending should not be ignored. Consumers can also discuss with their doctors whether there are alternative drugs that have lower costs but equivalent therapeutic results,” said Kev Coleman, Head of Research & Data at HealthPocket. For more information, visit

Most Providers Like the ACA

Nine out of 10 healthcare providers say that,  once it is fully established, the Affordable Care Act (ACA) will be a step forward in addressing long-term health issues, and 83% say it is good for Americans, according to a survey by Mortenson Construction. However, 86% say the ACA needs major revisions.

Seventy-nine percent of providers say health reform creates significant uncertainty for the healthcare industry. Seventy-four percent predict that it will challenge their organization’s financial condition, and 72% say it already has. The survey also reveals the following:
• In 2013 60% of healthcare providers were optimistic about the future of U.S. health care compared to 85% in 2012.
• Four out of five say the ACA will shift reimbursements to pay for the quality of outcomes.
• 71% say the ACA will improve quality and outcomes, and 65% say it will lower the cost of care
• 95% say that specialized facilities, such as MRI centers, cancer centers, and urgent care centers, will grow in prominence in the next three years.

For more information, visit

Americans Lack Faith in Primary Care

Americans are deeply skeptical about the viability of the primary-care physician model, which is the predominant health care delivery system in the United States, according to survey commissioned by PartnerMD. Sixty-nine percent are worried about the future of the traditional primary-care model. They are also worried that the Affordable Care Act (ACA) will severely limit their contact with doctors.

Fifty-one percent are worried about rising health care costs and 23% are worried about new health care regulations. Only 10% of expect the ACA to improve their care while one-third are concerned about its negative effects on care. PartnerMD CEO Linda Nash said, “I am a strong supporter of implementing an affordable national health care system, but as millions of new patients are entering the system, increased workloads and shrinking reimbursements are driving physicians out of it. The result is a care model that’s falling short.”

The following survey data confirms the bleak state of the traditional primary-care model:
• More than one-third of patients have to wait four or more days to see their doctor, and nearly one-quarter have to wait longer than a week.
• 93% of Americans spend less than 30 minutes with their doctor at appointments, and nearly one-third see them for less than 10 minutes.

“The traditional model puts doctors under tremendous pressure to treat huge numbers of patients at light speed. And full appointment schedules leave those with acute care needs without many options. It’s understandable that many patients and physicians are looking for a better care model,” said Dr. Jim Mumper, a PartnerMD physician and the company’s chief medical officer.

One such model that has seen tremendous growth is concierge medicine. PartnerMD’s survey found that 13% of Americans are willing to pay an annual fee for increased access to their physician, which could represent more than 31 million more patients in the concierge model. “While we have seen tremendous expansion, there’s still a huge opportunity for growth in the membership-based model,” said Nash. For more information, visit

Group Wants Extension for Open Enrollment for Individuals

Chairman of Communicating for America, Jeff Smedsrud is calling on President Obama to extend the health exchange open enrollment period for individuals, which is set to end on March 31. Individuals who miss the deadline generally can’t enroll until the next open enrollment period, which begins November 15, 2014.

Smedsrud wants the open enrollment period to be extended until May 15, 2014. Individuals who don’t find suitable coverage by then should be encouraged to enroll in a short-term medical plan. Although there are some coverage limitations with short-term medical plans, they are available from a variety of companies in every state for at least a six-month duration, he said.

Smedsrud added that the Administration has given businesses more time by delaying certain mandates, and has given insurers more time by letting companies change certain policy cancellations. “It’s not the fault of consumers that state and federal exchanges had technical problems upon the roll-out, nor are they to blame for ongoing problems with billing, collection and verification, making it difficult to know… if they have coverage. And it is not the consumer’s fault that millions of health policies were cancelled…Don’t make individuals suffer for mistakes made by institutions.”

Smedsrud is calling the Administration to take three actions:
1. Extend the open enrollment period until May 15.
2. Delay the start date for the individual mandate penalty until May 15.
3. Allow short-term medical plans purchased in 2014 to meet the definition of credible coverage, thus allowing those enrolled in such plans to switch at any time during 2014 to a more comprehensive plan under Special Enrollment rules.

For more information, visit

Overcoming Coverage Denials for Weight Loss Surgery

Despite the medical need for weight loss surgery, Beverly Hills Physicians issued a statement that it has seen its fair share of insurance claims rejections. So the medical group rounded up advice from around the Internet for those hoping that their insurance will cover weight loss surgery. A recent article published on CNNMoney suggests a three steps those who have been denied by their insurer:
1. Look for errors in the request for surgery.
2. Get your doctor to provide a written note in order to make a stronger case for an appeal.
3. Ask again if you are rejected. You have the right to request a review by an independent panel after your second denial.  .

Providers, such Beverly Hills Physicians, are willing to help patients with these steps. For more information, visit

Young Adults Lead Exchange Enrollment Trends

Enrollment in the Health Insurance Marketplace continued to rise in January, with a 53% increase in enrollment over the previous three-month reporting period, with young adult enrollment outpacing all other age groups combined, announced HHS Secretary Kathleen Sebelius.

Nearly 3.3 million people enrolled in the Health Insurance Marketplace plans by Feb. 1, 2014 (the end of the fourth reporting period for open enrollment). January accounting for 1.1 million plan selections in state and federal marketplaces.  In January, 27% of those who selected plans in the federally facilitated marketplace are 18 to 34, a three percentage point increase over the figure said for the previous three month period. Young adult enrollment grew 65% in January, from 489,460 at the end of December to 807,515 as of February 1st. All other age groups combined grew by 55%. Eighty-one percent of young adults (18 to 34) selected plans at the Silver metal level or higher (Silver, Gold and Platinum plans).

Nearly 3.3 million people selected Marketplace plans from Oct. 1, 2013, through Feb. 1, 2014, including 1.4 million in the State-based marketplaces and 1.9 million in the federally facilitated marketplace.

• Of the almost 3.3 million:
• 55% are female and 45% are male.
• 31% are age 34 and under.
• 25% are between the ages of 18 and 34.
• 62% selected a Silver plan while 19% selected a Bronze plan.
• 82% selected a plan and are eligible to receive Financial Assistance, up from 79% during the Oct. 1 through Dec. 28, 2013 reporting period.

To read the report visit:

Patients Are in Denial About Diabetes Risks

Nearly 80% of patients who are at elevated risk for Type 2 Diabetes seem to be deluding themselves by assuming that they are in excellent or very good health, according to a survey from the American Diabetes Association (ADA). “These findings suggest it is critical for providers to connect the dots with patients between risk factors and disease development,” said Virginia Peragallo-Dittko, R.N., C.D.E., incoming chair of the ADA’s Prevention Committee. For more information, visit

Value Based Design the Right Way

A survey by CVS Caremark finds that value based insurance design plans are more successful in increasing patients’ medication adherence when they have these features:
* Plans with no cost sharing for generic drugs and low monthly copayments of $10 or less and co-insurance rates of $15 or less for brand-name medications.
* Plans that target high-risk patients.
* Plans with wellness programs.
* Plans that offer the benefit only by mail order and offer 90-day prescriptions.

William H. Shrank, MD, MSHS of CVS Caremark said, “These findings encourage more generous coverage for generics, greater use of 90-day prescriptions, more careful intervention targeting, and expansion of wellness programs.” For more information, visit


Bill Would Extend Coverage to the Undocumented

Senator Ricardo Lara (D-Huntington Park/Long Beach) introduced Senate Bill 1005, the Health For All Act. The bill would give undocumented residents access to the Covered California exchange and Medi-Cal. The Affordable Care Act (ACA) excludes undocumented immigrants from the Covered California exchange. An estimated three to four million people in the state will remain uninsured in spite of ACA, and almost a million of those will be undocumented residents ineligible for coverage. “Excluding people from access to care hurts the health of our communities, and does not reflect California values,” said Lara. The estimated annual tax contribution of undocumented immigrants in California is $2.7 billion and 92% of this population live in working families. For more information, visit

Covered California Attempts to Boost Latino Enrollment

With six weeks to the end of open enrollment on March 31, Covered California has a grassroots outreach campaign in major Latino communities. Since December, the exchange has nearly doubled its advertising campaign targeting Spanish- and English-speaking Latinos; improved its Spanish-language website and informational materials; and increased the number of bilingual certified enrollment counselors and service center representatives. The grassroots outreach campaign targets Los Angeles (the San Gabriel Valley, the San Fernando Valley and South Los Angeles), the Inland Empire (San Bernardino and Riverside counties), and the Central
Valley and the San Joaquin Valley (Stockton/Modesto and Fresno/Bakersfield).

This approach will coordinate outreach and education grantees, certified enrollment entities and certified enrollment counselors, certified insurance agents, county human services offices, elected officials, health care providers, nonprofit organizations and health insurance companies to jointly meet the health coverage needs of the local community.

Messages will encourage people to seek help through thousands of local enrollment counselors and agents who can help them confidentially and at no cost. To date, there are 4,180 Spanish-speaking certified enrollment counselors and certified insurance agents available throughout California. Partnerships are also being developed with Southern California Latino supermarkets to host enrollment events in stores and to include Covered California information in their weekly advertising circulars.

Covered California will  spend $8.2 million in Spanish-language media from January to March 2014, an increase of 73% from the October-December 2013 media spend. A new advertising campaign highlights Covered California Latino enrollees who describe how getting coverage through Covered California has affected them.

Covered California has been airing radio advertisements offering consumers no-cost, private, one-on-one consultations with qualified representatives who will answer questions from consumers and help them enroll in quality, affordable health insurance.
For more information, visit


Pressing Issues For HR Professionals

Mary Tavarozzi, a practice leader for Absence and Disability Management at Towers Watson offers her take on important issues for HR professionals. In the summary below, she also covers some of what she’ll be presenting on at the 2014 IBI Annual Forum March 3 to 5 in San Francisco):
ACA benefits and challenges for employers – The upcoming excise tax on Cadillac health plans forces employers to question the design of their programs as they fight to attract and retain employees. They have to weigh having the most competitive and attractive program against reducing the tax consequences.
Wellness programs – The challenge is whether employers can offer the financial incentives that are needed to produce outcomes.
• Consumer driven health plans – All of the preventive health care that is part of the ACA encourages healthy consumer behavior. Employers are facing the decision to build or buy a platform for delivering employee choice and engagement. With private exchanges, employees can choose among different levels of coverage and different health plans. Increased transparency means that employees can make good choices based on information about cost and quality. This is all very beneficial in moving the needle toward consumer-driven health care.
Large Employers — Large employers will always have some financial responsibility for employees’ health benefits. If employers send workers to a public exchange, they can still promote health by sponsoring health risk assessments for employees and their families; making health concierge services available; joining with other companies in their area to sponsor urgent center clinics; offering healthy food in the cafeteria and vending machines; hosting health screening trucks; and encouraging employees to get preventive care. For more information, visit


Medicare Smartphone Quoting

Cigna introduced a texting and smartphone quoting process along with other mobile enhancements for agents selling its Cigna Medicare Supplement Solutions and Cigna Supplemental Solutions insurance products. When agents can send a text message with a customer’s zip code, age, and gender, they immediately receive premium rates for available Medigap insurance plans as well as a quote for final expense whole life insurance. Agents can also get alerts to follow the status of the applications they have submitted. For more information, email or visit

Term Life Insurance

MetLife launched simplified issue term life insurance for anyone from 18 to 70. It can be purchased over the phone with same-day approval. The product is offered in face amounts from $10,000 to $100,000. It renews automatically each year, up to age 90 and renews without additional underwriting as long as premiums are paid. For more information, visit


Growing Interest For Fiduciary Services

Nationwide Financial reports growing interest in third-party fiduciary services. Since introducing its 3(38) investment fiduciary service from IRON Financial, approximately 400 plans with more than $600 million in assets have opted to outsource the investment selection and monitoring process. Changing market dynamics and evolving regulations around the role and definition of a fiduciary has led many plan sponsors to seek help from outside professionals to ensure they are meeting their fiduciary obligations. Under section 3(38) of the Employee Retirement Income Security Act of 1974 (ERISA), an investment manager is defined as one who has full discretion for selecting, monitoring and replacing plan investments. This type of fiduciary assumes the legal responsibility and liability for the investment decisions it makes, which enables the plan sponsor to better manage and mitigate its fiduciary risk.

Joe Frustaglio for Nationwide Financial said, “Investment selection and ongoing due diligence are important and often intimidating fiduciary responsibilities for a plan sponsor. Plan sponsors, especially America’s small businesses, have many time constraints. Working with an expert not only reduces risk, but also gives them more time to focus on running their business.

While there is growing demand for outside fiduciary support, ERISA has always permitted plan sponsors to delegate some fiduciary responsibilities and liabilities. Nationwide provides its clients a full array of fiduciary education and support services. For more information, visit

Many Older Workers Have No Plan for Their DC Plan Assets

A LIMRA study reveals that 27% of workers, age 55 to 64 don’t know how they will use their defined contribution (DC) plan savings after they retire. Women are much more likely than men not to have planned how they will use their DC assets (38% versus 19%).

Matthew Drinkwater of LIMRA SRI Research said, “Many believe that they can delay retirement indefinitely, or work in retirement, so it’s possible they feel that there’s no near-term need to engage in this kind of planning. But that belief is risky. People often retire earlier than anticipated. It makes sense to give thought to how you will use your DC plan balances sooner rather than later.”

Two-thirds of workers ages 55 to 64 plan to make withdrawals directly from their DC accounts or make withdrawals after rolling over the assets into an IRA. Only one in six plans to convert some or all of their balance into a guaranteed lifetime income.

Twenty-four percent of workers age 55 to 64 who have income-generation strategies plan to take systematic withdraws from their retirement savings. Sixty-five percent plan to withdraw money on an occasional basis or when needed. Simple procrastination is the top reason given for people to have no income strategy. For more information, visit

DC Plan Sponsors Are Adding Alternatives

John Hancock Investments’ defined contribution (DC) clients are adding alternative mutual funds to their menu of plan options at a rapid pace. Since the end of 2012, more than 400 plans have added John Hancocks’ alternative strategies including John Hancock Global Absolute Return Strategies Fund and John Hancock Alternative Asset Allocation Fund.

Andrew Arnott, president and CEO of John Hancock Investments explained, “After the heightened volatility of the past few years, plan sponsors and record-keepers are starting to embrace investments and strategies that are less correlated with traditional stock and bond markets.” These strategies offer the potential for deeper diversification and a way to manage volatility. At the same time, the mutual fund structure offers lower fees, daily liquidity, and stringent oversight that investors don’t typically get through hedge funds, he added.

Respondents in a January Ignites reader poll predicted that liquid alternatives would be the top asset-gathering category in 2014, due to their potential to generate returns and to the lukewarm outlook for traditional equity and fixed-income products.

Todd Cassler, president of Institutional Distribution for John Hancock Investments said “Retirement plan sponsors and participants are finding multiple benefits in this all-in-one approach. Participants don’t need to worry about being conversant with all the details of all the strategies because the assets are professionally allocated among multiple alternative strategies and managers. At the same time, plan sponsors are able to add this varied alternative asset category in a single, diversified option.” For more information, visit