Subscribe to Insurance Insider News
by Leila Morris
LIFE INSURANCE & ANNUITIES
• Life Combo Products See Double-Digit Growth
• Income Annuity Companies Add Features to Attract Consumers
• What Clients Need to Know About ACA Changes
• LTC Partners Teams Up With the California Bankers Assn.
• Employers Are Planning for ACA Changes
• Small Businesses Hold Off On Hiring Due to the ACA
• Subcommittee Examines Health Insurance Tax
• Funds Available to Help Uninsured Enroll in ACA Coverage
• ER Docs are Key to Reducing Health Care Costs
• LTC Planning Guide
• Accident Insurance
• Variable Annuities
LIFE INSURANCE & ANNUITIES
Life Combo Products See Double-Digit Growth
More than 86,000 life combination policies were sold in 2012, an increase of 19% over 2011, according to a LIMRA report. Consumers under 59 held more than half of in-force polices in 2012. Sixty percent of life combination policies are insuring women. Life combination products accounted for 11% of new premium for individual life insurance.
Sales of life combination products continue to grow at a remarkable rate as new carriers enter the market and existing players refine products to remain competitive, said Catherine Ho, LIMRA product actuary. “This segment of the market weathered the storm pretty well during the recession when individual life sales declined significantly. Now that sales growth has returned for individual life, we anticipate life combination products to continue their steady growth,” she said.
All life combination product lines experienced growth in 2012, with whole life (WL) and universal life (UL) combination premium each growing 10% and variable combination premium growing 3%. Whole life combination policy count rose 23%; UL policy count rose 19%; and variable policy count rose 4%.All but one distribution channel experienced double-digit growth in 2012 (independent RIA). Banks and savings institutions posted the largest premium growth, rising 21%; affiliated agents recorded 30% growth in policy count.
Linked benefit products dropped 1% in policy count and held only 24% of the market in 2012. These products are mostly single premium and are packaged all-in-one. Acceleration policies grew 27%, capturing 76% of the market share. These products provide long-term care benefits up to the amount of the life death benefit. For more information, visit www.limra.com.
Income Annuity Companies Add Features to Attract Consumers
A majority of the companies that offer income annuities have added features to address consumer concerns and attract sales, according to a recent joint LIMRA/CANNEX study. Income annuities provide a guaranteed stream of income for as long as the owner or annuitant lives and can ensure that the income covers the lives of a couple.
Many income annuities now offer retirees increased access to cash or liquidity in case of an unforeseen need. Other features include death benefits to address a premature death and flexible income options to keep up with inflation.
Lowell Aronoff, CEO at CANNEX said, “There is a disconnect between the need and the amount of sales. Retirement income research universally suggests that income annuities should be a core product for nearly all retirees. Yet sales of these products are still fairly modest.”
Loss of liquidity is one objection that advisors have had to recommending income annuities. However, nine of the top 10 income annuity companies offer access to cash outside of their scheduled payments in case of emergency or other needs. Liquidity may come in several forms, such as access to the guaranteed payments, access to the life contingent payments, or an acceleration of several months of scheduled payments in advance.
All carriers surveyed offer the simplest form of death benefit: If the annuitant dies, payments continue to their estate for a specified number of years. Most companies offer at least one death benefit that provides additional money, as a payout option, upon the annuitant’s death .
All of the top 10 companies offer a cost of living adjustment (COLA) option that allows retirees to get increasing income and address one of their chief concerns, inflation. Retirees can choose various COLA rates, such as a 6% six percent increase or more. Other companies offer payments that are pegged to the Consumer Price Index.
Advisors who are engaged in retirement income planning are taking a second look at income annuities, said Mark Paracer, LIMRA research project director. LIMRA research indicates that there will be as many as 64 million retirees by 2025.
Having a deferred or immediate income annuity can help retirees ensure that their essential expenses in retirement are covered, allowing an advisor to invest the remaining portion of their portfolio with a goal of acheiveing higher returns, he said. For more information, visit www.limra.com.
What Clients Need to Know About ACA Changes
Susan Polk, a health insurance agent in San Luis Obispo, issued an advisory to help her clients sort out the Affordable Care Act (ACA), “Some people think that, come January 2014, a new insurance card will magically appear in their mailbox. This is most certainly not true. Enrollment will not be automatic, except in certain circumstances when you participate in an employer group plan of more than 200 employees, and you must make choices among various options, choose a plan, and enroll yourself and family members,” Polk says. She outlines the following key points:
• Individual health insurance – All insurance is guaranteed issue, meaning you are guaranteed to get coverage. There are no waiting periods for pre-existing conditions. Higher premiums cannot be charged for any health conditions, although an individual can be charged up to 50% more for smoking. California has decided not to implement this option.
• Free or low-cost health insurance – Individuals and families making less than 138% of the Federal Poverty Level (also known as the Federal Income Guidelines) will be eligible for MediCal in California (133% will be eligible for Medicaid in most other states). There is no longer an asset test, so people can now hold onto their retirement plans and other property and still qualify for free or greatly reduced medical care.
• Health Plans Offered – Insurance companies can offer four plans of insurance. Bronze plans must provide at least 60% coverage. Silver plans must provide at least 70% of coverage. Gold plans must provide at least 80% of coverage, and Platinum plans must provide at least 90% coverage. Deductibles and co-pays may vary from company to company. The only requirement is that they can prove that the actuarial value of the coverage meets the minimum percentages.
• Premium subsidies – Individuals and families making between 138% and 400% of the Federal Poverty Level will be eligible for premium subsidies. Your eligibility in 2014 will depend on your income in 2012. Each subsequent year, the eligibility will be based on your income in the calendar year two years prior, for example, in 2015 your subsidy would be based on your 2013 income. By purchasing insurance through the Health Benefit Exchange, they will be subsidized for the difference between the second lowest cost Silver Plan and the amount they are expected to pay, which varies from 2% to 9.5% of the Modified Adjusted Gross Income. For those who make over 400% of the Federal Poverty Level, there is no subsidy. However, they will be able to purchase any of the same products outside of the Exchange with no underwriting.
• Individual Mandate – Individuals will be required to purchase medical insurance starting in January 1, 2014. This is called the ìIndividual Mandate. Those not enrolling will pay a penalty along with their income taxes annually to the Internal Revenue Service, beginning in 2015. The penalty for not participating in 2014 will be the greater of 1% of Modified Adjusted Gross Income or $95, whichever is greater. This will increase each year, until it is the greater of 2% or $295.
• When to Enroll – The first open enrollment will start on October 1, 2013, and will continue until March 31, 2014. After that, open enrollments will occur each fall between October 15th and December 7th. There will be no enrollment into individual insurance outside of open enrollment except for certain qualifying events, including losing other coverage, birth, divorce, death, and a few other life events.
• Grandfathered Plans – If you have present individual insurance, you may be able to keep it, if your original effective date was before March 23, 2010, and you have not made substantial changes to your policy. In this case, your plan is said to be grandfathered and you can keep the plan even after ObamaCare is fully implemented. President Obamaís message to Americans in January of 2010 was that if we liked our health plans, that we would be able to keep it. He makes good on that promise if your plan is grandfathered. If your plan is not grandfathered, it will go away on December 31, 2013. You will then have a choice of any health plan offered by any health insurer in your county.
• Why enroll through a broker? – Private insurance brokers will go through a formal training process to be eligible to enroll folks in the Health Insurance Exchange (in California, this is known as Covered California). Health insurance brokers are qualified to assist people. Their training and experience with health insurers will make them the optimal choice for your enrollment needs. They can help you choose the best plan for your circumstances and help you with the tools youíll need to find a doctor and access care.
Polk offers the following advice for 2013:
• Know your income and optimize the results. Falling above the 400% threshold will mean paying 100% of the cost of your health insurance with no subsidy. Some individuals may not want to fall below the 138% (in California, 133% in other States), as that would mean eligibility in MediCal or Medcaid and could restrict access to personal physicians.
• If your plan is grandfathered, don’t make any changes until after the summer or fall. A synopsis of plans will be available later in 2013. At that time, you will be able to preview plans and see how the premiums compare to your present plan. It is expected that once the Affordable Care Act is fully implemented, grandfathered plans will see much lower premium increases.
• Make your appointment early. We will begin making appointments in August for the October enrollment.
• Keep your records handy. You may be asked to bring your 2012 tax return to your appointment, and other important records. This information will help insurance agents quickly determine your eligibility for subsidies and help you get the best result. All personal information is kept strictly confidential.
LTC Partners Teams Up With the California Bankers Assn.
LTC Partners & Insurance Services, LLC, will be providing long-term care education to member banks of the California Bankers Association (CBA), one of America’s largest state banking trade organizations. A long-term care benefit will be available to employees of member banks throughout California, with education and policy options provided through a partnership between CBA and LTC Partners & Insurance Services.
“We think the CBA initiative is important because banks are prime sources of financial advice; and their middle-aged and older clients sorely need such advice to protect themselves from the financial drain of uninsured long-term care expenses. As California bank employees learn about long-term care protection for themselves, we think they will be better able to guide their customers. Now banks can become more solid sources of the necessary education. Already many financial advisors, based in banks, act as bridges to long-term care policy options,” says Cameron Truesdell, LTCFP’s CEO. For more information, visit www.ltcfp.com.
Employers Are Planning for ACA Changes
Ninety percent of employers are developing tactics and taking steps to deal with the Affordable Care Act (ACA). Many are planning to modify their plans due to the ACA. Sixty-nine of employers say they will definitely continue providing employer-sponsored health care when health exchanges come online in 2014 compared to 46% who said they would in 2012, according to a survey by the International Foundation of Employee Benefit Plans. Twenty-five percent say they are very likely to continue their employer-sponsored health care offering.
In response the ACA, 18% of employers have already increased participants’ share of plan premiums and 25% plan to do so over the next year. Twenty-five percent of employers that are planning to make changes are increasing their emphasis on high-deductible health plans (HDHPs) with health savings accounts (HSAs) while an additional 14% are assessing the feasibility of adding doing so.
Employers are also encouraging healthy behavior in employees, with 19% developing or expanding organized wellness programs within the past year. Additionally, 14% of employers adopted or expanded the use of financial incentives to encourage healthier lifestyles within the past year, with another 25% planning to do so in the next year.
Julie Stich, research director for the International Foundation of Employee Benefit Plans said, “More and more organizations are losing their grandfathered status, dropping from 45% in 2011 to 27% in 2013. Also many organizations are redesigning their plans to avoid the 2018 excise tax on high-cost or so called ‘Cadillac plans.’ In 2011, only one in 10 said they were redesigning their plan to avoid the additional tax, but we’ve seen a steady increase over the past two years that shows the number will soon double.” For more information, visit www.ifebp.org/ACA2013.
Small Businesses Hold Off On Hiring Due to the ACA
Forty-one percent of small business owners say they are holding off on hiring because of the Affordable Care Act, according to a Gallup poll. Thirty-eight percent have pulled back on plans to grow their business; 19% have reduced their number of employees; 18% have cut employee hours; and 24% have thought about eliminating healthcare coverage for employees.
Forty-eight percent say the ACA will be bad for their business, compared to 9% who say it will be good, and 39% who expect no impact. Fifty-two percent say the ACA will lower the quality of healthcare; 13% say it will improve care; and 30% say it will have no impact.
Fifty-five percent of small business owners expect to pay more for healthcare as a result of the ACA. Five percent expect their healthcare costs to decline while 37% say the health law will have no effect on what they pay for healthcare. For more information, visit www.gallup.com.
Subcommittee Examines Health Insurance Tax
The House Small Business Subcommittee on Health and Technology Chairman Chris Collins (NY-27) led a hearing to examine the economic effects of the upcoming health care law’s insurance tax on small businesses. Beginning in 2014, the health care law imposes a new tax on the health insurance policies that most small businesses purchase. The tax will be $8 billion in 2014, will increase to $14.3 billion in 2018, and increase based on premium trends after that.
Dean Norton, president of New York Farm Bureau in Elba, NY said, “Health insurance costs for small businesses are already rapidly trending higher, increasing 103% since 2000. According to the Joint Committee on Taxation, the health insurance tax will further increase family premiums by $400 or 2.5% in the year 2016, making it even harder for farmers to purchase coverage for themselves, their families and their employees.”
Funds Available to Help Uninsured Enroll in ACA Coverage
Health and Human Services Secretary Kathleen Sebelius announced new funds to help uninsured Americans enroll in affordable health insurance coverage under the Affordable Care Act. In California, an estimated $22,029,348 is available to support 129 health centers’ enrollment efforts.
Nationwide, approximately $150 million in funding will enable community health centers to provide in-person assistance to help enroll uninsured individuals into affordable health insurance coverage. Sebelius said, “Community health center staff will provide unbiased information to consumers about health insurance, the new Health Insurance Marketplace, qualified health plans, and Medicaid and the Childrenís Health Insurance Program.”
ER Docs are Key to Reducing Health Care Costs
Emergency physicians are key decision makers for nearly half of all hospital admissions, highlighting a critical role they can play in reducing health care costs, according to a report from the RAND Corporation. Lack of access to follow-up care is a top concern that influences the decision of emergency physicians to admit particularly fragile patients to the hospital, rather than take a chance that they will fall through the cracks and suffer harm.
Efforts to reduce non-urgent and non-emergency use of emergency departments oversimplify a complex problem, and should instead focus on increasing access to affordable options outside the emergency room. Efforts to shift care into other facilities, such as retail clinics, have not always been successful because of the limitations of these facilities. For example, retail clinics lack diagnostic testing, are unable to admit patients to the hospital, and won’t see uninsured patients who can’t pay cash. For full copy of the report, go to www.rand.org
LTC Planning Guide
Kiplinger’s Personal Finance recently published its annual 2013 retirement guide, which outlines programs and services that should be considered in long-term care planning. The issue also features three steps to living safely and independently as you age in your home. For more information, visit http://www.truefreedomhomecare.com.
American General Life introduced AG Accident Choice Plus. It provides benefits for a wide range of emergency medical costs from emergency room visits to physical therapy to diagnostic exams, even surgery related to accidental injuries. Available riders offer coverage in the event of critical illness, accidental death and dismemberment, and inability to work due to an accidental injury. For more information, visit http://www.americangeneral.com/accident.
Lincoln Financial Group’s new American Legacy funds allow advisors and their clients to build their own portfolio with Lincoln’s primary living benefit riders. These selections can be combined with a fixed income option to create a diversified portfolio. For more information, visit www.LincolnFinancial.com.
Subscribe to Insurance Insider News
by Leila Morris
• Individual Rates to Soar in California
• Employer Coverage Rises After Massachusetts Health Reform
• Healthcare Spending Growth Expected to Remain Low
• Medicare Hospital Price Data Reveals Wide Variations
• Employee Nabbed for Cheating a Wellness Plan
CRITICAL ILLNESS & DISABILITY
• Consumers Are Not Prepared for A Critical Illness
MOVERS & SHAKERS
• Life Insurance Vision Award
• Life Insurance Data Storage
• Vision Website
• IRA Decision APP
• Health Care Reform Guides
• Variable Annuities
Individual Rates to Soar In California
Expanded enrollment of a sicker population will drive up rates for individual health plans in 2014, according to a study by Milliman for Covered California, the state’s health exchange. The average premium increase will be an astounding 30.1% for people who make too much to receive the subsidy (more than $93,700 for a family of four or $45,960 for an individual).
However, Californians who will qualify for the highest premium tax credits, due to their income, will see an average drop of 85% in what they pay for health coverage. Depending on the individual’s choice of health plan, this premium tax credit could cover a higher percentage of the premium. There are 1 .6 million people uninsured and eligible for subsidies. Many of them could have 100% of their premiums covered through the Affordable Care Act. Those who make less money will be eligible for larger federal tax credits to make their health care more affordable. Households earning from 138% to 250% of the federal poverty level will likely see an average drop of 85% in what they pay for health coverage. Households earning 250% to 400% of federal poverty level will pay on average 45% less, for more coverage with lower copay and deductibles, than what they would have paid for an individual plan in 2013. The hope is that, in future years, Californians will see decreases in their health care costs as they no longer pay for the burden of the millions of uninsured and benefit from improvements in how care is delivered, according to Covered California.
Autistic Kids Being Denied Critical Care
A coalition of children’s health and autism support organizations says that hundreds of California’s children are suffering from disruptions in critical health care services as the state transitions from the Healthy Families Program to Medi-Cal. In particular, children in Healthy Families who had been receiving standard therapy for Autism Spectrum Disorders (ASD) are being denied these services in Medi-Cal, often with less than a week’s notice.
Governor Brown’s Administration has continually promised that no children would lose access to services during the multi-tiered transition of over 900,000 children from Healthy Families to Medi-Cal. California Health and Human Services Agency Secretary Diana Dooley was quoted as saying that officials would not shift children from Healthy Families to Medi-Cal unless they were sure the children would receive adequate health care: “We will delay the transition’ for certain children if they are unlikely to receive adequate care under Medi-Cal.” She said, “At this point, everything is on track.”
Now, after the transition of over 600,000 children to Medi-Cal, children’s health advocates say it is clear that everything is not on track. “These problems represent a shameful failure to provide for children who the state has known for at least six months were at risk of losing services,” said Ted Lempert, president of Children Now.
Advocates worry interruptions in autism services may foretell broader challenges. “We know that only a small percentage of affected families ever file a complaint, and since the state’s monitoring of the Healthy Families transition has been woefully inadequate, other continuity of care issues may take a while to surface,” added Karen Fessel, executive director and founder of the Autism Health Insurance Project.
Rate of Employer Coverage Rises After Massachusetts Health Reform
In the seven years since Massachusetts enacted its universal healthcare law, the number of people covered by insurance through the workplace increased, running counter to nationwide trends. Employer-sponsored insurance rose about 1% in Massachusetts while the national rate fell 5.7%. The Massachusetts growth occurred in the midst of the recession and at a time when health insurance premiums in the state rose to the highest levels in the nation, according to a study by PwC’s Health Research Institute.
Michael Thompson of PwC said, “Health insurance benefits are a significant part of the total compensation package for a workforce, and that’s not likely to go away when the Affordable Care Act goes into full effect. Employer-sponsored coverage will continue to be a critical pillar of the U.S. health system. It has been an important part of employer strategy to attract and retain talent, and promote improved health and productivity. Most employers see this return on investment, alone, as a compelling reason to continue offering coverage.”
A combination of salary and health benefits through an employer is likely to be more efficient way to be compensated for Americans earning more than 400% of the federal poverty level or about $45,960, according to researchers. Due to federal tax exclusions, businesses can save thousands of dollars per-employee by using that compensation strategy. The second report on the Massachusetts Experience, to be later this month, will take a closer look at the implications for the state’s hospitals, physicians and insurers. To download the report, visit: http://www.pwc.com/us/Massachusettshealthreform.
Healthcare Spending Growth Expected to Remain Low
The growth in healthcare spending will continue to be held down by the sluggish economy, the continued shift of healthcare costs from the employer to the employee, and the movement towards value-based reimbursement models, according to a report by Fitch Ratings. The rate of increase in U.S. healthcare spending is likely to remain low even as the end of the tepid economic recovery gives way to more robust growth.
Health spending grew 3.9% annually from 2009 to 2011, compared to an annual growth rate of 4.7% to 6.6% the prior three years, according to data from Centers for Medicare and Medicaid Services. Two recent studies were published in Health Affairs that provide some insight into the causes.
One found the weaker economy accountable for 37% of the lower spending trajectory and attributed an additional 8% to cuts in Medicare reimbursement and decline in commercial insurance coverage. The study leaves 55% of the reduction unexplained. The other study indicated that benefit design changes (including higher deductibles and out of pocket costs) contributed to 20% of the lower increase in spending. For more information, visit www.fitchratings.com.
Medicare Hospital Price Data Reveals Wide Variations
For the first time HHS is giving consumers information on what hospitals charge for Medicare services. HHS Secretary Kathleen Sebelius said the new data reveals significant variation in what hospitals charge for common inpatient services across the country and within communities.
The CMS website compares charges for services associated with the 100 most common Medicare inpatient stays. These amounts can vary widely. For example, average inpatient charges for hospital services in connection with a joint replacement range from $5,300 at a hospital in Ada, Okla., to $223,000 at a hospital in Monterey Park, Calif.
Hospital charges for similar services can vary significantly, even within the same geographic area. For example, average inpatient hospital charges for services to treat heart failure range from $21,000 to $46,000 in Denver and from $9,000 to $51,000 in Jackson, Miss. For more information, visit
Employee Nabbed for Cheating a Wellness Plan
A Kansas City, Mo., employee pleaded guilty in federal court to his role in a scheme in which hundreds of public employees defrauded their health insurance program of more than $300,000 by falsely claiming to have run marathons and competed in triathlons for cash incentives. Matt Tholen, 29, of Kansas City, Mo., pleaded guilty before U.S. District Judge Gary A. Fenner to one count of wire fraud. Tholen, who was an emergency medical technician for the city, received health insurance coverage from Blue Cross/Blue Shield of Kansas City. As an insured, Tholen was eligible to participate in a wellness program offered by Blue Cross called “Points to Blue.” The program offered gift cards to insureds based on entries made to the Points to Blue Web site, logging various exercise programs and diet programs completed by the insureds. Every 1,000 points translated to one dollar towards a gift card, up to a maximum of $250 annually for each insured. The more strenuous exercises earned more points.
To make even more money in this scheme, Tholen admitted that he and others submitted false entries for other employees and their eligible dependents in exchange for a portion of the gift card proceeds. Tholen made fraudulent submissions on behalf of 62 employees, resulting in 144 gift cards worth a total of $17,600. Possibly not the sharpest tool in the shed, Tholen claimed that a 5-year-old had completed two marathons and two triathlons.
Under federal statutes, Tholen is subject to up to 20 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of an investigation by the United States Probation Office.
CRITICAL ILLNESS & DISABILITY
Consumers Are Not Prepared for a Critical Illness
Ninety percent of middle-income Americans say they are not financially prepared for a critical illness diagnosis, according to a study by the Washington National Institute for Wellness Solutions. The study surveyed 1,001 Americans ages 30 to 66 with annual household incomes of $35,000 to $99,999. The following statistics reveal that many have little, if any, savings to fall back on in the event of a critical illness:
• 75% have less than $20,000.
• 50% have less than $2,000.
• 25% have no savings.
To pay for out-of-pocket critical illness costs, middle-income Americans say they would need to use credit cards (28%) or loans from family/friends (23%) or financial institutions (19%). Another 23% don’t know what resources they could use to pay their expenses. Millennials and Gen Xers anticipate greater reliance on credit cards and loans to pay for critical illness expenses. Thirty-eight percent say they might never recover financially from a battle with cancer and 45% believe they would never recover financially from an Alzheimer’s/dementia diagnosis.
Eighty-eight percent of middle-income Americans have had no conversations with loved ones or advisers about potential care-giving options and 60% have not discussed financial planning for critical illness. Only 12% have explored care-giving options. To learn more, visit WNInstituteforWellness.com.
Manufacturing, Health Care, and Education Workers Lack Disability Coverage
Workers in manufacturing, health care, and education have a significant gap in the level of disability insurance they purchase compared to what is typically recommended, according to a survey by Colonial. Manufacturing workers who purchase Colonial Life disability policies buy roughly half the amount of disability coverage they need. They only purchase enough coverage to protect 33% of their income instead of the recommended 60%. Employees who work in the education industry purchase only enough disability coverage to protect just 37% of their income. Health care workers buy only enough disability insurance to protect 36% of their income. Two-thirds of private sector American workers have no employer-sponsored disability insurance, according to the Bureau of Labor Statistics. For more information, visit www.coloniallife.
MOVERS & SHAKERS
Life Insurance Vision Award
The Life Insurance Direct Marketing Assn. (LIDMA) has awarded the 2013 LIDMA Vision Award to Kris Tomasini, development manager of Term Sales for Transamerica. The LIDMA Vision Award recognizes people and organizations that make substantial contributions to the advancement of the direct response segment of the life insurance industry. It is the highest honor that LIDMA can bestow on an individual or organization. “Kris has…worked tirelessly to improve the customer experience and expand the availability of life insurance to underserved Middle Americans. Her unique ability to utilize the customer perspective as a compass in solving complex business problems is a core principal of LIDMA’s Process Improvement initiatives,” said Andy Meehan, president of LIDMA.”
Life Insurance Data Storage
Scott Price of Pass My Assets is hosting a webinar on the use of personal data management, storage and delivery to ensure that life insurance beneficiaries get their benefits. For more information, visit https://www1.gotomeeting.com/register/952036697.
MetLife’s new Income Guard Disability Insurance allows consumers to customize their coverage. It is designed to meet the demands of a variety of specialized occupations, including most medical and dental professionals, pharmacists, attorneys, accountants, and white-collar executives. For more information, visit www.metlife.com/incomeguard.
MESVision launched www.MESVisionOptics.com where members can order their contact lenses online. The website allows members to have little to no out-of-pocket cost at the time of checkout and seamlessly apply their eligible contact lens benefits.
IRA Decision APP
A Smartphone and tablet friendly app helps users determine which IRA is appropriate for them based on their age, tax filing status, and estimated income. For more information, visit http://www.wealthmsi.com or call 203-245-4254.
Health Care Reform Guides
Unum is offering guides to help employers understand and prepare for health reform. The guides offer expert advice on a total benefit strategy, including financial protection benefits and a strong communication plan.
For more information, visit Unum.com/HealthCareReform.
For cost-conscious advisors and clients, Nationwide Financial introduced Nationwide Destination Architect 2.0, a low-cost, advisory based variable annuity. The company also introduced Nationwide Lifetime Income, an optional
Guaranteed Lifetime Withdrawal Benefit (GLWB) rider available for an additional cost with Nationwide Destination Architect for clients who want guaranteed lifetime withdrawals in retirement. For more information, visit www.nationwide.com.
• Dept. of Insurance Calls United’s Rate Increase Unreasonable
• Anthem Must Pay Providers More
• Video Offers Covered California FAQs
• Health Benefit Exchange Town Hall
• SeeChange Warns Against Anti-Wellness Bill
• People with More Than One Retirement Plan
• Making Sense of Hospital Quality Measures
• Medicaid Expansion Has Mixed Results on Health
• Americans Remain Confused About Health Reform
LONG TERM CARE INSURANCE
• Genworth to Cease New Sales of AARP LTC Products
• Sales Take off for Life Policies With LTC Benefits
NEW PRODUCTS & SERVICES
• Disability Marketing App
• Variable Annuity
• Financial Planning Website
• Health Reform Tax Credit Calculator
• Health Reform Website for Employers
Dept. of Insurance Calls United’s Rate Increase Unreasonable
California Insurance Commissioner Dave Jones
The California Department of Insurance calls it excessive and unreasonable for United Healthcare to issue a 4.9% quarterly average rate increase on small business policyholders. The increase, which became effective May 1, affects about 12,000 employees and their dependents this quarter and will affect more than 45,000 when their policies renew later in the year. Key findings include the following:
• Department actuaries determined that the actual 12-month average increase on these small businesses is 7.7% when you include benefit reductions.
• Department actuaries say United did not provide substantive evidence to support its rate increase. They say United Healthcare overestimated its trends for costs and numbers of claims.
• United’s percentage of premium attributable to covering administrative expenses is significantly higher than the market average in California.
• United’s Healthcare’s company-wide return on equity for 2011 was 55%, and 53.7% for 2012.
• The margin on revenue for the company’s California business exceeds other carriers as well.
For more information, visit www.insurance.ca.gov.
Anthem Must Pay Providers More
The California Department of Managed Health Care (DMHC) is requiring Anthem Blue Cross to pay health care providers money owed to them for the underpayment of interest on late paid claims for services dating back to 2007. Anthem must pay claims submitted to the company for services provided July 1, 2007 to April 30, 2011. Anthem must also make changes to its claims payment and provider dispute processes, including improved training and auditing policies and procedures to ensure the appropriate payment of claims. The full settlement agreement can be found here: http://healthhelp.ca.gov/library/reports/news/abcagree.pdf
Video Offers Covered California FAQs
CalChamberNews released a video with FAQs about Covered California. Peter Lee, executive director of Covered California clarifies what small businesses (two to 50 employees) need to know about the state’s new insurance marketplace. This is the third of a four part video series produced in partnership with Health Law Guide for Business. To view the video, visit www.calchamber.com/calchambernews.
Health Benefit Exchange Town Hall
Michael Lujan, director of Sales & Marketing for Covered California and the California Health Benefit Exchange, will be doing a special Town Hall as part of CAHU’s “Day” at the Capitol, which will be held Tuesday, May 14 to 16 in Sacramento. There will be professional development sessions with the opportunity to earn CEUs. Topics include how agents can get ready for California’s new health insurance marketplace. For more information, e-mail firstname.lastname@example.org or Mike Belote email@example.com.
SeeChange Warns Against Anti-Wellness Bill
Dr. Sean Penwell, chief medical officer of SeeChange Health warns that California Senate Bill 189 would hamstring wellness and prevention efforts in the state. The bill, introduced by State Senator Bill Monning (D-Carmel), passed the Senate Health Committee. Under the legislation, health insurance plans could not offer consumers lower premiums or lower out-of-pocket expenses for participating in wellness programs.
Proponents of the bill claim that financial rewards offered by some wellness and preventive programs discriminate against the poor and shift costs from healthy to less healthy insureds. In his testimony before the Senate Health Committee, Dr. Penwell disputed this conclusion citing a RAND Corporation study, sponsored by the Obama Administration, which found no evidence of such discrimination. “What that study did find is that for every dollar spent on a wellness program, $30 in savings was generated for direct medical costs and productivity. Even more important, these wellness programs improve the quality of life enjoyed by participants and save lives,” Dr. Penwell said.
Penwell sited the experience of one San Diego man, “a body builder and the picture of perfect health” who participated in a wellness program included in his SeeChange Health Insurance policy. The screening discovered a previously undiagnosed cancer. The early detection allowed for less intrusive treatment, and he is doing well. “If Senate Bill 189 had been law last year, this individual would likely be dead,” he said.
Describing the legislation as not only misguided, but also unnecessary, Dr. Penwell reminded Health Committee members that the Obama Administration was putting forward regulations addressing the same concerns underlying SB 189, “but they’re doing so in a responsible, effective way by implementing well thought-out safeguards.” He urged the lawmakers to study the federal regulations before going beyond them and forcing the withdrawal of meaningful preventive care programs. Dr. Penwell stated that wellness programs that provide financial rewards are beneficial and popular. For more information, visit www.SeeChangeHealth.com.
People with More Than One Retirement Plan
People who own more than one type of retirement plan tend to invest more in stocks, according to a study by the Employee Benefit Research Institute (EBRI). Having a higher income and net worth is also correlated with more stock investment.Those who own an IRA and a 401(k) are more likely to be invested entirely in stocks. Those who participate in a defined benefit pension plan and a 401(k) are less likely to allocate the 401(k) entirely to interest-earning assets, such as bonds. This means that they will invest more in stocks.
However, the likelihood of being invested entirely in stocks goes down for older heads of families who own IRAs. Also, those with more education are less likely to be invested entirely in interest-earning assets. In 2010, 22% of family heads working for small employers participated in a retirement plan, compared to 67% of family heads working for large employers. In 2010, 19% of family heads with an employment-based retirement plan had a defined benefit plan; 65% had a defined contribution plan; and 16% had a defined benefit plan along with a defined contribution plan. This is a significant change from 1992 when 42% only had a defined benefit plan and 41% only had a defined contribution plan. For more information, visit www.ebri.org.
Making Sense of Hospital Quality Measures
Purchasers often find it difficult to determine which hospital quality measures are important, how to use quality information in a meaningful way, and how to present useful information to consumers. Researchers at the Center for Studying Health System Change (HSC) are providing an overview of how hospital quality indicators may help shape contracting and benefit design decisions. The report is available at www.nihcr.org/Hospital-Quality-Reporting.
Medicaid Expansion Has Mixed Results on Health
A study published in the New England Journal of Medicine found that expanding Medicaid coverage in Oregon generated no significant improvements in measured physical health outcomes in the first two years, but did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain on patients. For more information, visit NEJM.org.
Americans Remain Confused about Health Reform
Much of the public is confused about the Affordable Care Act (ACA), according to the Kaiser Family Foundation’s April 2013 Health Tracking Poll. Forty-two percent of Americans are not aware that the ACA is still the law of the land; 12% say Congress has repealed the law; 7% say the Supreme Court has overturned it; and 23% say they don’t know the status of the law.
Forty-nine percent don’t know how the law will affect their family. Fifty-eight percent of the uninsured and 56% of low-income households say they don’t have enough information to determine how it will affect their family.
The following is where Americans say they get their information about health reform:
• 40% friends and family.
• 36% newspapers, radio news. or other online news sources.
• 30% cable news.
• 10% health insurer, a doctor, an employer, or a non-profit organization.
• 9% federal agencies such as the Department of Health and Human Service.
• 8% state agencies, such the state Medicaid office or health department.
The poll provides a rough baseline before more intensive public information and consumer help begins.
What about people who don’t approve of the Affordable Care Act? Where are they getting their information? They are somewhat more likely to report getting information from friends and family (50% compared to 40%) and from cable news (37% compared to 29%). They are also nearly three times as likely to report getting information from an employer. Seventeen percent of ACA opponents have gotten ACA information from an employer, compared to 6% of supporters. For more information, visit http://www.kff.org.
LONG TERM CARE INSURANCE
Genworth to Cease New Sales of AARP LTC Products
Genworth will discontinue sales of AARP-branded products on June 1st. “Since 2007, Genworth has offered certain AARP branded long-term care insurance products to AARP members. In commenting on the move, Pat Foley, president of Distribution and Marketing for Genworth simply said, “Genworth remains committed to providing exceptional service to AARP members who purchased these long term care insurance products from Genworth. Existing insureds’ coverage will not be affected by this change.”
Sales Take Off for Life Policies With LTC Benefits
The State Life Insurance Company, a OneAmerica company, says 2012 was its best ever year for sales of “Asset-Care,” a life insurance product with long-term care benefits. State Life achieved growth of 28% over its previous record set in 2011. State Life sold more policies in 2012 than it did in any other year. Chris Coudret, executive vice president of State Life said, “More and more consumers are looking to guarantee their long-term care protection and are turning to asset-based long-term care products. With these ‘hybrid’ or ‘combo’ products, consumers can access their life insurance death benefit income tax-free to pay for qualifying expenses. Coudret says that the popularity of Asset-Care is also being driven by a patented joint care option, in which a single policy provides long-term care funding for a couple.
According to LIMRA, half of the top 20 companies that offered individual health-based long-term care insurance in 2005 have exited the market. Also, a majority of companies have had to request rate increases for stand-alone LTC insurance. For more information, visit www.oneamerica.com.
NEW PRODUCTS & SERVICES
Disability Marketing App
As part of the 7th Annual Disability Insurance Awareness Month this May, LIFE is offering a kit to help agents and benefit specialists with marketing and communications. The kit (www.producers.lifehappens.org/#!diam/clzm) includes videos, flyers, and online and social-media content focusing on disability insurance. It includes ideas for posting on Facebook and Twitter, personal blogs and other online channels. LIFE has also developed disability insurance statistics. Also, a new Disability Insurance Quiz App allows consumer to test their knowledge about disability insurance. The App can be accessed at www.lifehappens.org/disabilityquiz.
Nationwide Financial added four managed volatility fund options for its variable annuity line-up. Nationwide Variable Insurance Trust Managed Funds are designed to capture growth when the stock market rises and help buffer against major losses when it falls. The new funds invest in a traditional asset allocation portfolio of underlying stock and bond funds, managing investment risk through diversification. An additional layer of risk management comes from an overlay of stock index futures to adjust equity exposure in response to market volatility. For more information, visit http://www.nationwide.com.
Financial Planning Website
Lincoln Financial Group launched a financial planning website for consumers. Visitors can discover their needs and benefit options based on their life stage. Digital tools cover product- and work/life topics. There are also videos and calculator tools. For more information, visit http://LincolnforLiving.com.
Health Reform Tax Credit Calculator
The majority of Americans who are required to purchase health insurance under the Affordable Care Act (ACA) will be eligible for premium tax subsidies. GoHealthInsurance has created an online calculator that estimates 2014 individual tax subsidies and health insurance premiums for people in all 50 states. For more information, visit http://www.gohealthinsurance.com/subsidy/.
Health Reform Website for Employers
ADP launched a Health Care Reform section on its website, http://www.ADP.com. It is designed to help employers plan for and comply with the Affordable Care Act (ACA).
• How the Adult Mandate Affects Healthcare Spending
• Trends in Health Coverage
• Will the ACA Increase Underinsuance?
• Workers Expect Employers to Educate Them on Health Reform
• Republicans Withdraw bill on High Risk Pool
• How Pharmacy Benefits May Evolve
DISABILITY & ABSENCE MANAGEMENT
• Employers Miss the Mark in Absence Management
• Cancer Leads Long-Term Disability Claims
• Matrix Names COO
• Pair Charged with Scamming Seniors with Phony Home Care Plan
• LAAHU University Day May 22
• Guide To LTC Benefits
• Critical Illness Guide
• Hospital Advantage Policy
• Expatriate Wellness Tools
How the Adult Mandate Affects Healthcare Spending
Total health care spending increased 0.2% for large employers that offered dependent coverage to children up to age 26. Workers paid for some of that spending through cost sharing and their share of the premium while employers paid for the remainder, according to a report by the Employee Benefits Research Institute (EBRI).
The Affordable Care Act (ACA) requires plans and issuers that offer dependent coverage to make it available until a child reaches the age of 26. While employers are not allowed to directly charge higher premiums for the cost of adult-dependent coverage, employers and workers will share the higher cost of health care services through claims payments, cost sharing, and worker premiums.
EBRI found that these newly covered dependents were more likely to incur claims related to mental health, substance abuse, and pregnancy. It has been estimated that 3.1 million young adults have acquired health coverage under the provision. For more information, visit www.ebri.org.
Trends in Health Coverage
Researchers at the Commonwealth Fund reveal why they feel that it is critical for ACA implementation to continue on schedule. Forty-six percent of adults 19 to 64 did not have insurance for the full year in 2012 or were underinsured and unprotected from high out-of-pocket costs; 41% had problems paying medical bills or were paying off medical debt; and 43% had cost-related problems getting needed health care.
The major health coverage provisions of the Affordable Care Act go into effect in January 2014. The Congressional Budget Office projects that the combination of new subsidies for health insurance and consumer protections will enable 14 million uninsured people to gain coverage in 2014, and 27 million by 2021. Seventy-nine percent of young adults were insured in 2012, up from 69% in 2010. This trend reverses a decade-long upward climb in the number of uninsured young adults.
In 2012, 46% of U.S. adults 19 to 64 did not have insurance for the full year or had inadequate protection from health care costs. Thirty percent were uninsured at the time of the survey or had spent some time uninsured in the past year. An additional 16% were underinsured due high out-of-pocket medical costs in relation to their income.
Many Americans with low or moderate incomes are uninsured or have coverage with high cost-sharing requirements, whether copayments or coinsurance. People with incomes under 250% of poverty comprised 72% of the total number of Americans who were uninsured or poorly insured in 2012. Three-quarters of working-age adults with incomes under 133% of the federal poverty level were uninsured for a period in 2012 or were underinsured. The same is true for 59% of adults earning 133% to 249% of the federal poverty level.
Gaps in health insurance, inadequate coverage, and large medical bills leave millions of U.S. adults burdened with debt. In 2012, 41% of adults 19 to 64 had problems paying medical bills or were paying off medical debt. Forty-two percent of those who said they had difficulties paying medical bills or paying off medical debt also said they got a lower credit rating as result of unpaid medical bills.
In 2012, 43% of adults faced financial barriers to getting needed health care – up from 37% in 2003. That includes 67% of those who were uninsured at any time and more than 51% of those who were underinsured. People who were uninsured were significantly less likely to have a regular source of care or to be up-to-date on recommended cholesterol, blood pressure, and colon cancer screenings, and mammograms.
Eighty-seven percent of those who had a gap in coverage in 2012 would be eligible for subsidized health insurance under the ACA. In addition, 85% of underinsured adults in 2012 would be eligible for Medicaid or subsidized health plans, with reduced out-of-pocket spending.
Jonathan Gruber, an economist at the Massachusetts Institute of Technology, has estimated that about 5 million undocumented immigrants will remain uninsured in 2016. Gruber also predicts that many Americans will not be insured, even though they are eligible for the new coverage options because they are not aware of their eligibility; they are unable to find an affordable premium; or they chose not to enroll. For more information, visit www.commonwealthfund.org.
Will the ACA Increase Underinsuance?
The Affordable Care Act (ACA) may actually increase the number of underinsured according to an editorial by Drs. Steffie Woolhandler and David Himmelste in the April Journal of General Internal Medicine. About 40% of those gaining coverage will get Medicaid. However, many current Medicaid enrollees are woefully underinsured. Disturbingly, CMS will probably allow state Medicaid programs to demand copayments and deductibles, even from the poorest of the poor.
Underinsurance among Medicaid recipients will probably increase since several states have already reduced benefits, cut provider payments, and narrowed provider networks. More ominously, the White House is encouraging state officials to use federal Medicaid expansion funds to purchase private insurance, a shift that’s likely to raise both taxpayers’ costs and poor patients’ copayments.
Insurance exchanges offered to near poor and middle income individuals will also leave many underinsured. Bronze plans (the minimum coverage mandated by the ACA) will only cover 60 % of average medical expenses. Silver plans will cover 70 %. That’s far worse than the roughly 80% coverage under today’s average job-based policy equivalent to the ACA’s Gold plans.
In concrete terms, a 56-year-old making $45,900 will pay $4,361 in premiums for individual Bronze coverage, and up to $4,167 in additional deductibles and copayments for covered services. Subsidies disappear at 401% of poverty ($46,100). The mandatory premium would be $10,585,with out-of-pocket costs for covered services capped at $6,250. In effect, the federal government is endorsing skimpy plans that offer scant protection from impoverishment, according to the authors.
They say that Massachusetts’s health reform has not reduced the number of medical bankruptcies. Researchers say that both Massachusetts and the ACA have avoided the social insurance approach, which makes care health free at the time of use; puts the burden of health costs on those most able to pay (the healthy and wealthy); and relies on readily enforced global budgets for cost control. Instead, they embraced market-based policies that demand more (percentage wise) from the middle class than the rich and compound the misfortune of illness with financial penalties.
International evidence indicates that cost sharing is neither necessary nor particularly effective for cost control. The U.S. has high cost sharing and the highest costs. Canada, which outlawed copayments and deductibles in 1981, has seen faster health improvement and slower cost growth. Canadian provinces control costs by tax-based funding, global hospital budgeting, binding, negotiated physician fee schedules, and a simple unified single- payer structure that minimizes administrative burdens and costs. Scotland, which has avoided market-based policies and patient payments, has health care costs that are about half of those in the U.S. For more information, visit http://org.salsalabs.com/o/307/images/JGIM%20Underinsurance%20Proofs%20Un-Corrected(1).pdf.
Workers Expect Employers to Educate Them on Health Reform
Seventy-five percent of workers expect their employers to educate them about health care reform and explain how it will affect their coverage. However, only 13% of employers say that educating employees on health care reform is important for their organization, according to a study by Aflac.
Fifty-four percent of workers say they would not want greater control over their insurance options because they don’t have the time or knowledge to manage it. Fifty-three percent fear they would not manage their coverage adequately, leaving their families less protected. Seventy-six percent say they are not very knowledgeable or not at all knowledgeable about federal and state health insurance exchanges.
Fifty-eight percent of employers that said they are extremely knowledgeable about health care reform also say that their employees are extremely knowledgeable about their benefits. However, only 27% of employers say they understand healthcare legislation extremely or very well. Seventy-four percent of workers who are extremely satisfied with their job are also satisfied with their benefits, compared to only 30% of workers who are not satisfied with benefits.
More employees are using voluntary insurance products to cover costs not covered in their high deductible insurance plans. In 2013, 43% of workers were enrolled in voluntary products, compared to 31% in 2012.
The survey also reveals the following about employees:
• 32% are not knowledgeable about health savings accounts (HSAs)
• 6% are not knowledgeable about federal and state health care exchanges
• 49% are not knowledgeable about health reimbursement accounts
• 25% are not knowledgeable about flex spending accounts (FSAs).
• 23% are saving more in anticipation of potential increases in medical costs,
• 46% have less than $1,000 in savings to use for out-of-pocket expenses associated with an unexpected serious illness or accident, and 25% of employees have less than $500.
The survey reveals the following about employers:
• 53% have implemented a high-deductible health plan (HDHP) over the past three years — a trend that shows no sign of slowing.
• 55% have done nothing to prepare for possible changes to the health care system.
Aflac has created the booklet, “An Employer’s Guide to Health Care Reform.” For more information, visit AflacWorkForcesReport.com.
ACA Will Test Consumers’ Loyalty to Their Doctors
Half of consumers would switch their doctor if they could save a certain amount in annual health care costs, according to a survey by HealthPocket. Thirty-four percent would switch if they could save $500 to $1,000; eight percent would switch if they could save $1,000 to $2,000; and 8% would switch if they could save $3,000 or more.
Consumers and small employers will face an array of new health plan choices in 2014. Other than cost, one of the key factors in consumers’ selection process is whether their doctor participates in a plan’s provider network. Cost pressures are moving insurers to limit their provider networks. They are seeking to negotiate lower rates to healthcare providers in exchange for a larger volume of patients.
HealthPocket is offering a physician search component on its site at http://www.healthpocket.com/doctor-finder. It allows consumers to compare all commercial health plans, Medicare plans and Medicaid programs that their doctor may accept.
Republicans Withdraw bill on High Risk Pool
House Republican leaders withdrew a bill, (HR 1549), when it became clear that it would not get enough votes for passage. The bill would have shifted funds under the Affordable Care Act to sustain the ACA’s temporary high-risk insurance pool program The program, called the “Pre-Existing Condition Insurance Plan,” was designed to help sick U.S. residents gain coverage ahead of January 2014, when the ACA’s ban on denying individuals coverage because of pre-existing conditions is set to take effect.
How Pharmacy Benefits May Evolve
Pharmacy benefit programs are evolving from simply using cost shifting to providing more complex offerings and adopting new management tools, according to a report by the Pharmacy Benefit Management Institute. The report reveals the following trends:
More Cost-Sharing Among Tiers – The use of four-tier, copay designs continues to grow, fueled by the addition of a separate tier for specialty drugs. Innovative cost-share structures with five or more tiers are emerging, but it is unclear whether they will become mainstream. Tier categories include preferred and non-preferred generics as well as a split by clinically and cost-effective therapies. In addition, the copay differential continues to widen. The average difference between generic and preferred brand copays is $19 compared to $7 about 10 years ago. The average difference between preferred and non-preferred brand copays is $23, compared to $13 a decade ago. As benefit designs move towards more tiers, the use of coinsurance designs are declining. This may be due to concerns over the members’ out-of-pocket costs.
Alternative Incentives for Behavioral Change – Several studies have challenged the assumption that copay waivers increase medication adherence or help to contain overall health care costs. However, when alternative incentives are provided, most employers still focus the incentives on participation.
Management of Purchasing Channels– Benefit programs often vary the cost share by the type of pharmacy in order to encourage members to use certain channels. Copays are less for a 90-day supply filled once in a mail pharmacy than for a 30-day supply filled three times at a retail pharmacy. A new trend is to provide incentives to use certain retail pharmacies. This allows plan sponsors to keep the broad network while managing costs since the preferred retailers typically offer better pricing.
Limited Networks– Limited pharmacy networks were not talked of much before 2012. But they have become more of a consideration after the contract dispute between Walgreens and Express Scripts. Providing the broadest access to providers may no longer trump the more favorable pricing of a narrowed network.
Trend Management– Drug benefit plans often exclude medications deemed nonessential. Even when medications are covered, employers use coverage limitations to promote appropriate use, such as prior authorization, quantity limits, refill-too-soon limits, and step therapy. The vast majority of plan sponsors already use prior authorization, refill-too-soon, and quantity limits. Sixty-five percent of plans use step therapy. The one exception is pill splitting, which has never experienced widespread adoption. PBMs generally do not promote these programs due to safety concerns.
Specialty Drugs– Traditional pharmacy benefit management strategies are now used widely for specialty drugs. The strategies include the use of pharmacy networks, formulary management, prior authorization, and step therapy programs. Quantity limits are also common, in which specialty products are limited to a 30-day supply. Another strategy is to limit the first fill to one or two weeks to ensure the patient tolerates the medication.
Site-of-Care and White Bagging– White bagging is a fairly new strategy, which has gained ground recently. It’s the practice of having medications or supplies delivered directly to the practice setting (outpatient infusion center, physician office, hospital) for use by a specific patient. The idea is to allow the payer to purchase the drugs for less from a specialty pharmacy. Also coverage of drugs can be shifted from the medical benefit to the pharmacy benefit. There are potential drawbacks, such as patient safety, wasted medication, and operational headaches for the provider. Once a drug is received, providers have the burden of storing it separately from their regular inventory. If there is a last-minute change to a treatment plan, a new or additional drug may need to be ordered, resulting in delays in care.
Copay Assistance– Specialty drug manufacturers frequently offer copay assistance programs that cover the member’s share of the cost. Many programs will cover the member’s cost share up to $500 a month, and very few have a maximum income requirement. This may be an effective strategy to maintain patient adherence. However, many employers say the programs only add more complexity.
Over the past few years, there has been a significant increase in the number of copay programs for non-specialty medications, mainly because many brand drugs have come off patent. Plan sponsors say these programs undermine copay tier structures, which provide incentives for patients to use lower-cost alternatives, such as generics. Some advocate the use of coupons to make drugs more affordable, thereby increasing adherence. The authors say that plan sponsors would be prudent to develop a strategy for drug coupons on the traditional pharmacy side. For more information, visit http://www.theihcc.com/en/communities/pharmacy_benefit_management/8-ways-pharmacy-benefit-design-may-evolve-in-2013_hfpq9mpi.html
DISABILITY & ABSENCE MANAGEMENT
Employers Miss the Mark in Absence Management
While 84% of employers are making some effort to manage absences only 45% have been successful. On average, employers scored a 3.7 out of 10 in how well they manage absences, according to a report by The Guardian. The report suggests the following strategies:
- A full return-to-work program, starting with a written return-to-work policy.
- Detailed reporting of disability and Family and Medical Leave Act (FMLA) usage patterns, costs, and more.
- A process that gives employees referrals to health management programs.
- A central leave-reporting portal for short-term disability (STD) and FMLA.
- The same resource for STD, FMLA and other benefit programs.
For more information about Guardian, please visit: www.GuardianLife.com.
Cancer Leads Long-Term Disability Claims
For the 12th year, cancer is the top reason for long-term disability, followed closely by back disorders, according to Unum’s 2012 claims data. Cancer claims were nearly 16% of the company’s long-term disability claims. “Although cancer remains a significant area of focus for our disability claims professionals, we are seeing some dramatic trends in recovery and return to work,” said Kristin Tugman, senior director of Health and Productivity at Unum.
Cancer patients have a wide range of side effects from treatment, including fatigue and cognitive issues, Tugman said. Possible workplace accommodations could include the following:
• Clearly defining work expectations and limitations.
• Creating a flexible or reduced work schedule.
• Modifying work stations to avoid having to stand or sit for too long.
• Allowing extra time for breaks to combat fatigue.
• Coaching and providing feedback on performance.
Other leading causes of long-term disability claims for Unum in 2012 include the following:
• 15% Back disorders excluding injury.
• 10% Injuries.
• 10% Behavioral health issues.
• 9% Circulatory system disorders.
• 8% Joint disorders.
Leading causes of short-term disability claims were the following:
• 19% Normal pregnancy.
• 11% Injuries.
• 8% Complications from pregnancy.
• 8% Digestive disorders.
• 7% Back disorders.
• 7% Cancer
For more information, visit www.unum.com
Matrix Names COO
Matrix Absence Management has named William Schutz chief operating officer (COO), replacing Ken Cope who has been named president. Matrix is a San Jose-based firm that integrates workers’ compensation, short and long term disability, return-to-work services, and personal/family and medical leave (FMLA) programs. For more information, visit www.matrixcos.com.
Pair Charged with Scamming Seniors with Phony Home Care Plan
Michael Woodward, 50, and his wife Melissa Woodward, 47, were arraigned in a San Diego courtroom and charged with 11 felony counts for scamming more than 230 San Diego area senior citizens out of $1.9 million.
Investigators say the Woodwards sold fraudulent in-home non-medical senior service contracts. Services were to include cooking, cleaning, bathing, dressing, laundry, and shopping. They promised seniors unlimited non-medical services for a pre-paid annual fee. But the Woodwards allegedly failed to provide the services they promised. Inexpensive claims, such as requests for housecleaning, were often paid while more expensive claims were often rejected. They also allegedly returned to victim’s homes to collect additional premiums that went well beyond the original cost of the plan.
For more than a decade the Woodwards allegedly ran a $6 million scam bilking hundreds of seniors across 10 states while operating under numerous aliases and bogus businesses, such as Secure Care, All Secure Care, Home Health America, Americare, American Home Health, and US Home Care. The Better Business Bureau gives Home Health Care an A minus rating.
Insurance Commissioner Dave Jones said the pair’s alleged actions have resulted in the loss of nearly $2 million. The Woodwards were arrested at their Las Vegas home on April 10, 2013 by investigators with the Nevada Attorney General’s Office.Based on records seized by investigators, officials believe there are additional victims in Riverside and Orange counties and possibly more victims throughout the state. Officials are asking anyone who suspect they or someone they know have been victimized, to call the Department of Insurance at 800-927-4357.
LAAHU University Day May 22
The Los Angeles Association of Health Underwriters (LAAHU) is holding University Day May 22 at the Los Angeles Convention Center. The conference will highlight the implementation of the Patient Protection and Affordable Care Act (ACA). It will offer insurance processionals the training and tools they need to assist California consumers and employers with the new benefits.
Keynote presenters include the following:
• Dave Jones, California Insurance Commissioner.
• Michael Lujan, Covered California, director of the SHOP Exchange
• Herb Shultz, Health & Human Services, Region IX director
• Julianne Broyles, CalAdvocates, CAHU lobbyist
For more information, visit www.laahu.org.
Guide to LTC Benefits
LTC Financial Partners is offering an updated workplace guide to the tax advantages to offering long-term care insurance. For more information, visit: http://www.ltcfp.com.
Critical Illness Guide
American Independent Marketing is offering a free downloadable eGuide to critical illness insurance for individuals and employers. For more information, visit www.aimforltc.com.
Hospital Advantage Policy
Aflac’s new hospital plan is designed to help employees pay for expenses not covered by major medical insurance. It includes the following:
• Lump sum payment for a hospital confinement and daily benefits for treatment at a medical facility.
• Options to add additional coverage to help cover out-of-pocket expenses associated with doctor visits, medical diagnostic and imaging, and transportation
For more information, visit www.aflac.com.
Expatriate Wellness Tools
MetLife is offering support tools help enhance the value of our expatriate benefit programs. The site, www.metlifeexpat.com, allows customers to do the following:
• Enter their health records to create a personal health profile.
• Complete a health risk assessment and get a personalized plan of activities for improving their health.
• Track over 20 wellness metrics as they adopt healthy activities into their daily living, Learn more about hundreds of health topics and conditions.
For more information, visit www.metlife.com.
• The Tax Penalty Won’t Push People to Buy Health Insurance
• The Economy Is the Major Driver Health Care Spending
• Employers Need Your Guidance on the Exchanges
• CMS Offers Navigator Grants
• Psych Patients Face Pre-authorization Hurdles
• Bill Would Limit Deductibles
• Fewer Employers Offer Health Coverage
• San Francisco Health Plan Has Been Honored Again
• The Financial Industry Is Not Meeting Women’s Needs
• Americans Prefer Long-Term Financial Planning
• Americans Are Still Wary of the Stock Market
NEW PRODUCTS & SERVICES
• Guide to Critical Illness Coverage
• Fixed Income Annuity
• Retirement Strategy Resource
• Absence Management
• Health Care Reform Calculators
The Tax Penalty Won’t Push People to Buy Health Insurance
Two-thirds of people surveyed by HealthPocket say a $95 IRS penalty for being uninsured won’t motivate them to buy insurance. Nearly 30% are not sure whether the penalty will motivate them to buy insurance, and only 8% say it would.
Beginning in 2014, the Affordable Care Act requires consumers to buy health insurance or face a tax penalty, with some exceptions for people with financial hardships or religious beliefs that preclude them from purchasing health insurance, among others.
The tax penalty starts at $95 per individual or 1% of household income, whichever is greater. By 2016, the penalty rises to 2.5% of annual household income or a minimum of $695 per person, whichever is greater. Bruce Telkamp, CEO of HealthPocket said, “The law will be most effective if consumers see real value in obtaining the insurance coverage. Only insurers that offer high quality and affordable health plans should expect to see significant new enrollments this fall.”
The tax penalty is not the only strategy that Obamacare will use to promote enrollment. Some premium and out-of-pocket assistance is available for individuals making less than 400% of the federal poverty level or $45,960. However, 63% of consumers who fall in this income band say a tax penalty will not motivate them, indicating that that they need more outreach. For more information, visit www.HealthPocket.com
The Economy Is the Major Driver Health Care Spending
National health spending grew 3.9% each year from 2009 to 2011. That’s s the lowest rate of growth since the government began keeping track in 1960. A bad economy is credited with much of the decline in health spending, according to researchers at the Kaiser Family Foundation and the Altarum Institute’s Center for Sustainable Health Spending. Structural changes in the health system may play a modest role as well. In recent years, spending growth has fallen to levels similar to what was seen in the mid to late 1990s when managed care spread rapidly. Changes in health care delivery and rising cost sharing with insurance plans could be discouraging the use of health services.
Health spending is expected to increase the economy recovers, though growth rates are not likely to return to double-digit levels. Health spending increases will also depend on whether excess health costs remain at a relatively modest level or return to the historical norm. History suggests that previous efforts to control health care costs have only had a temporary effect, and there are initial signs that the recent slow down is beginning to wane.
Changes under the ACA could affect these trends significantly. Researchers expect a one-time spending bump by a couple of percentage points as the uninsured gain coverage and get better access to health services. Researchers also expect an economic recovery to lead to higher growth rates in health spending. They caution that the increase should not be attributed to the ACA simply because of the coincidental timing.
The bulk of the Medicare savings included in the ACA will lower the future growth in spending — primarily through smaller increases in payments to providers. Accountable care organizations (ACOs) and bundled provider payments may help keep costs down for public programs and private insurance. In addition, the ACA’s tax on high cost, Cadillac employer-sponsored health plans, which is scheduled to take effect in 2018, is expected to trim the cost of benefits and lead to lower health spending. For more information, visit www.kff.org.
Employers Need Your Guidance on the Exchanges
Less than a one-third of employers surveyed by InsureXSolutions have a good understanding of the health exchanges. Nearly 50% say that exchanges will be useful to their organizations. Two-thirds of health insurance producers and consultants say they have a good understanding of exchanges. Nearly 100% of producers plan to integrate the exchanges into their sales portfolio. “There is a tremendous opportunity for producers in the benefits marketplace. Embracing and providing guidance on Exchange options for their clients will be key to their success in 2014 and beyond,” says John DiVito, president of Flexible Benefit Service Corp. InsureXSolutions is a private exchange available in select markets. For more information, visit www.insurexsolutions.com or call 855-563-6993.
CMS Offers Navigator Grants
The Centers for Medicare & Medicaid Services (CMS) is offering new funding to support Navigators in Federally facilitated and State Partnership Marketplaces. Navigators are individuals and entities that will provide unbiased information to consumers about health insurance, the new Health Insurance Marketplace, qualified health plans, and public programs including Medicaid and the Children’s Health Insurance Program. To access the funding opportunity announcement, visit:
http://www.grants.gov, and search for CFDA # 93.750. To access the proposed rule on Navigator guidelines, visit:
Psych Patients Face Pre-authorization Hurdles
Psychiatric patients have to endure long waits for their insurance company to authorize admission from the emergency room to the hospital. This wastes thousands of hours of physician time since most authorization requests are granted anyway, according to a letter published in the May issue of Annals of Emergency Medicine.
Lead author Amy Funkenstein, MD, of Brown University said, “Psychiatric care is really the poor stepchild in the world of insurance coverage. Insurance carriers reimburse poorly and as a consequence, hospitals often have inadequate resources for patients who urgently need this care. The situation is so dire that ERs are now being designed and configured to house psychiatric patients awaiting placement as inpatients. These patients deserve better.”
Senior author J. Wesley Boyd, MD, PhD of Cambridge Health said, “An emergency department is just about the worst place for a psychiatric patient to wait for an inpatient bed, and yet that is exactly what the pre-authorization process forces on millions of these vulnerable people. The thousands upon thousands of hours emergency physicians spend obtaining prior authorization for admission to the hospital are hours we are not spending on direct patient care. Only Medicare does not require prior authorization for us to admit psychiatric patients to the hospital; maybe they are onto something.”
Researchers recorded data on 53 patients, most of whom were in the emergency department because of suicidal thoughts. Half of the authorization requests took less than 20 minutes to be approved, but 10% took an hour or more. Only one of the 53 patients was denied pre-authorization. For more information, visit www.annemergmed.com.
Bill Would Limit Deductibles
California Ass. of Health Underwriters (CAHU) is alerting agents and brokers to state Senate Bill 639, which would limit deductibles for non-grandfathered and individual plans. CAHU says there is no federal mandate to set deductible limits in state law. As the Exchange moves forward in 2014 and beyond, these deductibles may need to be updated to ensure the deductible limits are actuarially sound. Not setting these in statute will permit easy updating as federal guidelines change and to meet actuarial standards. The bill also proposes to limit or standardize all outside exchange plans to those that only mirror what is offered in California’s two government-run exchanges. CAHU says that would eliminate choice and competition.
Fewer Employers Offer Health Coverage
Only 60% of California employers offered health insurance in 2012 compared to 71% in 2002, according to a survey by the California HealthCare Foundation. More than one-third of those offering coverage plan to increase employees’ premium costs in the coming year and almost one-fourth plan to increase employees’ deductibles.
Since 2002, premiums in California rose a whopping 169.7%. That’s more than five times the 31.5% increase in the state’s inflation rate. The survey also found the following trends in 2012:
• Average monthly premiums for single coverage were $545 in California and $468 nationally.
• Monthly premiums for family coverage were $1,386 in California and $1,312 nationally.
• More than one-quarter of workers in small firms had a deductible of $1,000 or more for single coverage in 2012, up from just 7% in 2006. Only 8% of workers in large firms had a deductible of $1,000 or more.
• 21% of California firms increased the workers’ share of premiums in the preceding year while 17% reduced benefits or increased cost-sharing.
For more information, visit http://www.chcf.org.
San Francisco Health Plan Has Been Honored Again
For the sixth year in a row, the California Department of Health Care Services (DHCS) awarded San Francisco Health Plan (SFHP) the Gold Award for Excellence in Quality Care. The community health plan serves more than 80,000 San Francisco residents. SFHP was the only health plan out of 21 Medi-Cal managed care health plans statewide that achieved HEDIS scores at or above the high performance levels and did not report any scores at the minimum performance level. John F. Grgurina, Jr. , CEO of SFHP said, “I am certain that San Francisco Health Plan will be well prepared for the exciting opportunity to provide insurance coverage to the uninsured through the upcoming healthcare reform in 2014.” For more information, visit www.sfhp.org.
The Financial Industry Is Not Meeting Women’s Needs
Sixty-two percent of women are interested in financial planning, retirement planning, and investing compared to only 35% in 2006. However, 70% of all women say financial information is hard to understand, up significantly from the 44% in 2006, according to a survey by Allianz Life
Only 38% of women surveyed work with financial professionals. Thirty-eight percent of those who have a financial professional say their financial professional is not very responsive, and 40% say the professional doesn’t seem to be interested in their personal situation. However, most women who see a financial professional say that the professional helps them earn better returns on their money and become more self-sufficient.
More than 90% of women say they need to get much more involved in financial planning. Fifty seven percent say there are equally responsible for major investment decisions and retirement planning in their household.
Women also say it’s important to feel engaged and to learn in a non-intimidating environment with other women. Despite a desire to connect, the Internet is the most popular source for financial information (54%), with financial professionals coming in at 39%.
The top subject that women want to learn most about is attaining a retirement lifestyle. Women are also asking for simple-to-understand financial information over the Internet. For more information, visit www.allianzlife.com.
Americans Prefer Long-Term Financial Planning
Get-rich-quick strategies don’t appeal to the large majority of Americans, according to a study by Northwestern Mutual. Three quarters of Americans say that long-term planning is more important than short-term performance. One-third say that their approach to future financial goals can be best described as “slow and steady wins the race.”
Greg Oberland, Northwestern Mutual executive vice president said, “On one hand, we’re seeing strong evidence that people are saving more. On the other, we know that half of all Americans have no long-term plan in place, and nearly a quarter are taking on more risk than they would prefer because they feel the need to play catch-up.”
People aged 55+ list the following as the best financial decisions they ever made:
• 40% Saved early.
• 40% Paid off a mortgage.
• 29% Bought real estate at a good price.
• 27% Invested heavily in my 401k.
• 22% Made sure their family would be protected.
People aged 25 to 54 say the following would be the best decisions they could make in the coming years:
• 53% Start to save early
• 52% Make sure the family is protected.
• 25% Rely heavily on the 401k.
• 20% Buy real estate at a good price.
For more information, visit http://www.northwesternmutual.com.
Americans Are Still Wary of the Stock Market
Despite recent stock market highs, 76% of Americans are no more inclined to invest in the stock market than they were a year ago. This is despite the fact that interest rates are at record lows on savings accounts and CDs, according to a study by Bankrate.com. Greg McBride, CFA, Bankrate.com’s senior financial analyst said, “Although the Fed is trying to push investors into riskier assets in pursuit of better returns, individual investors aren’t biting.”
Americans feel less secure than last year in only one of the Financial Security Index’s five components: savings. Consumers feel they have progressed over the past year in each of the other four components: job security, debt, net worth, and overall financial situation. For more information, visit http://www.bankrate.com.
NEW PRODUCTS & SERVICES
Guide to Critical Illness Coverage
American Independent Marketing is offering a free downloadable guide to critical illness insurance. To view TV segments on critical illness insurance, read an article from Kiplinger’s, and download the free guide, “Surviving Critical Illness Financially,” visit http://www.criticalillnesseducation.org.
Fixed Income Annuity
Nationwide Financial has adopted the TS&W Fixed Income Portfolio. Shareholders of the TS&W Fixed Income Portfolio voted to approve the merger and reorganization of the fund into the Nationwide Core Plus Bond Fund. It gives Nationwide Funds about $71 million in new assets under management and further expands the company’s product lineup. For more information, call 1-800-848-0920.
Retirement Strategy Resource
MassMutual’s retirement plan participants, age 50 or older, now have access to the Retirement Income Strategy module at www.retiresmart.com. It combines participant preferences and objectives with proven financial solutions to help pre-retirees forecast and create an optimal retirement income plan.
The Hartford expanded its absence management suite of products and services. It includes a new Web reporting tool, a series of Webinars, a digital educational resource, and a service to help employers track and manage employee requests for reasonable accommodations as afforded under the Americans With Disabilities Act Amendments Act of 2008 (ADAAA). For more information, visit thehartford.com.
Health Care Reform Calculators
Vista Health Solutions is offering free online health care reform calculators. They help individuals, small businesses, and large groups understand their options and responsibilities under the Affordable Care Act. For more information, visit
• Age Ratings Not Expected to Drive Up Costs for Younger Consumers
• Health Insurers Anticipate an Increase in Self-Funding
•Medicare Advantage Deductibles Fall for Plans
• CMS Boosts Medicare Advantage Reimbursement Rates
• CMS Offers Navigator Grants
• Republicans Introduce Pre-Existing Plan Bill
• Older People Are Most Likely to Take 401(k) Loans
• Absence Management App
• ACA Decision Support Tool
• Deferred Income Annuity
• ACA Resource Center
LIFE INSURANCE AND FINANCIAL PLANNING
• Consumers Procrastinate Buying Life Insurance
• Buying Life Insurance Retail
• Relationships Key to Success in the Rollover Market
• ING U.S. To Rebrand As Voya Financial
Age Ratings Not Expected to Drive Up Costs for Younger Consumers
In 2014, the oldest health plan enrollees will not pay more than three times the premium of the youngest enrollees in the same region and with the same smoking status. Some industry analysts have warned that, as a result of this requirement under the Affordable Care Act (ACA), premiums for enrollees in their 20s will go up to subsidize the premiums of enrollees in their 50s and 60s. But a study by HealthPocket reveals that these fears are unfounded.
HealthPocket looked at premium data for individual and family health plans across the United States for nonsmoking men and women ages 23, 30, and 63. Premiums increased 260% for 63 year-olds versus 23 year-olds, which is well under the 300% limit imposed by the Affordable Care Act. The new age related premium limit is not likely to cause significant premium increases in most states. Two factors are more likely to raise monthly health insurance premiums than are age-based premium increase limits:
- Plans will need to offer more benefits to enrollees under the Affordable Care Act.
- Enrollees will include individuals with health conditions who previously could not get affordable coverage in the commercial market.
The prohibition of gender-based premium differences in 2014 may benefit elderly men. Premiums for 63-year-old nonsmoking men were 317% higher than for 23 year-old nonsmoking men. Premiums for 63 year-old nonsmoking women were only 203% higher than for 23 year-old nonsmoking women. However, the 23 year-old women started with higher premiums. This curious switch in the gender gap may be due to insurers associating higher healthcare costs to women between ages 19 and age 56. For more information, visit www.HealthPocket.com.
Health Insurers Anticipate an Increase in Self-Funding
Health insurance executives expect more U.S. employers to self-fund their group health insurance plans as a result of the Affordable Care Act, according to a survey by Munich Health North America. Eighty-two percent of executives say that employers are showing growing interest in self-funding. Thirty-two percent say that employer interest has increased significantly.
Richard Phillips, president of Munich Health North America’s Reinsurance Division said, “The trend towards self-funding stems from employers’ desire to maintain…flexibility and control in the design and financing of their employees’ health benefits. A properly designed self-funded health plan can allow a company to directly reap the benefits of their cost containment and wellness activities as opposed to having to pay a monthly premium based on an arbitrary set of rating restrictions. As companies struggle with the growing cost of providing quality benefits, we expect self-funding to continue to grow in popularity.”
Health insurance organizations expect to see growth in their self-funded or administrative services only (ASO) portfolios as a result of this trend. Sixty-nine percent of those surveyed plan on growing their self-funding or ASO portfolios over the next year. For more information, visit www.munichhealthna.com
Medicare Advantage Deductibles Fall
For the first time since inception of the Part D program, the deductible for the defined standard plan will be lower in 2014 than in previous years. Since enactment of the Affordable Care Act, Medicare Advantage enrollment is up by 25% while premiums have fallen. “Medicare Advantage will remain a strong option for beneficiaries under the policies,” said Jonathan Blum, CMS acting principal deputy administrator.” CMS announces the following:
• Lower Out-of-Pocket Drug Spending: The deductible and out-of-pocket limits for Part D will be lower in 2014. Beneficiary costs will be further reduced for Medicare enrollees who have reached the prescription drug coverage gap, or “donut hole.” In 2014, enrollees in the donut hole will get coverage and discounts of 52.5% on covered brand name drugs and coverage of 28% on covered generic drugs. To date, 6.3 million beneficiaries have saved $6.1 billion on prescription drugs.
• Greater Protection for Beneficiaries: Total beneficiary cost increases are limited to $34 per member, per month for 2014 (down from $36 per member per month in previous years). Part D plans will require their network pharmacies to get enrollee consent before each delivery, unless the enrollee personally requests the refill. CMS strongly encourages Part D plans to implement this consent requirement for the remainder of this year.
• Payments to Plans: The final estimate of the combined effect of the Medicare Advantage Growth percentage and the fee-for-service growth percentage is 3.3%. These growth rates assume a zero% change for the 2014 physician fee schedule by taking into account the likely Congressional override of the schedule physician payment reduction. Over the past year, the number of four and five star plans has increased significantly, with 127 such plans in Medicare Advantage in 2013, 21 more than the prior year. CMS is continuing to align Medicare Advantage benchmarks with Medicare fee-for-service costs and adjust for diagnostic coding differences among Medicare Advantage plans and Medicare fee-for-service providers.
• Improved Risk Adjustment Model: CMS will implement the proposed clinically revised risk adjustment model, which limits opportunities for Medicare Advantage plans to be paid more for better coding improvements. As a transitional step, the risk scores for 2014 will be a blend of those calculated under the 2014 and 2013 models.
• Improved Coordination of Care: In coordination with the Million Hearts initiative, plans are encouraged to improve access and adherence to anti-hypertensive medications by expanding their target enrollee populations for medication therapy management.
For more information, including the 2014 statutory updates to the annual parameters for the defined standard Part D prescription drug benefit, visit http://www.cms.gov/Medicare/Health-Plans/MedicareAdvtgSpecRateStats/index.html.
CMS Boosts Medicare Advantage Reimbursement Rates
CMS surprised insurers with a 3.4% increase in reimbursement rates instead of the 2.2% cut originally called for in February. The cuts would have left seniors and the disabled with far fewer coverage options to choose from, according to Stephen Pewter of www.Medicaresupplementalinsurancecomparison.net. Hesitant to provide lots of personal information on the existing sites he found, Pewter created his site, which requires just a zip code to deliver quotes from multiple providers.
CMS Offers Navigator Grants
CMS is offering grants to support navigators in Federally facilitated and State Partnership Marketplaces. The funding opportunity is open to eligible self-employed individuals and private and public entities applying to serve as navigators in states with a Federally facilitated or State Partnership Marketplace. The new funding opportunity provides up to $54 million in total funding and applications are due by June 7, 2013. To access the funding opportunity announcement, visit: http://www.grants.gov, and search for CFDA # 93.750.
Republicans Introduce Pre-Existing Plan Bill
House Republicans introduced a bill to shift additional funds into the Pre-Existing Conditions Insurance Plan to open it to new enrollees and extend funding through the end of the year. The Pre-Existing Conditions Insurance Plan was supposed to cover 375,000 enrollees. However, with only 110,000 enrolled, the administration was forced to close the program because of a lack of funds. The Helping Sick Americans Now Act would move funds from the Public Health and Prevention Fund into PCIP to keep the program open through the end of the calendar year.
H.R. 1549, The Helping Sick Americans Now Act, was introduced by Representatives Joe Pitts (PA) chairman of the Energy and Commerce Health Subcommittee, Michael Burgess, M.D. (TX), vice chair of the Health Subcommittee, and Ann Wagner (MO). Rep. Joe Pitts said, “Five weeks ago, House Republicans asked the President to move additional funds into the Pre-Existing Conditions Insurance Plan…Since the White House hasn’t answered our appeal, we’ve introduced legislation that would ensure that Americans with pre-existing conditions can once again have access to this program. “The Administration’s lack of a willingness to set sensible priorities has required us to introduce this legislation to provide immediate coverage for these individuals and ensure no American with a difficult medical diagnosis is told “tough luck” because the President failed to act,” said Rep. Burgess. “The legislation that will help dismantle the Public Health Slush Fund and help those with preexisting conditions get access to care through the high risk pools,” said Rep. Ann Wagner.
On April 3, the Health Subcommittee held a hearing to investigate the suspension of enrollment in PCIP. Susan Zurface, a 42-year old mother of two, testified about her struggle with leukemia and how being barred from the program has made it virtually impossible to get affordable health coverage. Testimony and video of this hearing is available here: http://energycommerce.house.gov/hearing/protecting-america%E2%80%99s-sick-and-chronically-ill
Older People Are Most Likely to Take 401(k) Loans
In the fourth quarter of 2012, 34% of participants who took out loans against a 401(k) were in 50s, 29% were in their 60s, and 27% were in their 40s, according to a Wells-Fargo study. Overall, there was a 28% increase in the number of people taking loans out from their 401(k)s. Average new loan balances increased 7% to $7,126 compared to 2011.
The increase among participants in their 50s was nearly double the increase among those under 30. “The increased loan activity, particularly among older participants, is concerning…The sandwich generation is caught between paying for their kids’ education and supporting elderly parents, which makes saving for retirement even more challenging,” said Laurie Nordquist, director of Wells Fargo Retirement.
In addition to the 2012 new loan activity, 19% of people with money in a 401(k) plan had at least one outstanding loan with an average balance of $7,764. For those under 30, the outstanding loan balance is 38% of their remaining untouched balance compared to 21% for those over 60. However, only about 9% of all participants under 30 have an outstanding loan, compared to almost 25% of participants in their 40s.
However, loans are not the biggest driver of leakage from retirement savings. A greater concern is that employees are cashing out their 401(k) when they leave an employer. Those dollars are often spent whereas with loans the funds are often repaid and stay in the retirement nest egg, said Nordquist.
Although loan activity is on the rise, people are contributing more to their 401(k) plans. In the fourth quarter, there was a slight decrease (1.8%) in participants deferring 3% or less and an increase in those contributing 10% or more (1.3%). Additional trends include the following:
• Significant numbers of participants who increased their deferral rates from 3% to 4% to 6%, were in their 20s and 30s.
• Most participants who increased rates from the 4% to 6% range to the 7% to 9% range were in their 30s.
• Participants over 50 increased rates from the 7% to 9% range to 10% or more.
• 25% of all 401(k) plan assets are now in managed investment options, up 4% from a year ago
• Despite this progress, almost 20% of those 65 and older have their entire balance in a single investment. More than 70% of those (or 14% of all participants over 65) have all their money in fixed-income investments.
For more information, visit https://www.wellsfargo.com
Absence Management App
Matrix Absence Management is offering an absence-management mobile app. Benefit administrators can view, manage, and analyze employee absence data from their Smartphone or tablet. A secure online portal features communication, reporting, and analysis capabilities for employees and administrators. For more information, visit www.matrixcos.com.
ACA Decision Support Tool
National Association of Health Underwriters (NAHU) has teamed up with Associated Benefits Consulting to offer members the ACA Decision Support Tool software. The goal is to help agents and brokers analyze how healthcare reform affects their clients. It allows gents and brokers to provide a customized analysis of the ACA’s impact on their client’s business, as well as a variety of scenarios and corresponding strategies. The application will be updated as regulations evolve. For more information, call 877- 291-9256.
Deferred Income Annuity
Principal Financial is offering a deferred income annuity for retirees who want to lock in a guaranteed income stream, but don’t need to start receiving it until later. It offers a flexible premium and the option to delay the start of income payments from 13 months to 30 years. Depending on the deferral period, the income payments could factor in a higher rate of return than what other fixed interest rate products offer. For more information, visit www.principal.com.
ACA Resource Center
United Benefit Advisors launched compliance solutions aimed at helping employers understand their obligations and opportunities under the Patient Protection and Affordable Care Act (PPACA). The PPACA Resource Center includes up-to-date information on the following:
- Counting of Employees
- Exchange eligibility/IRS Non-calendar-year plan
- Wellness Proposed Rules
- FSA and SBC Highlights
- W-2 Reporting Requirements
- Medicare Withholding Summary
- Essential Benefits/Actuarial Value
For more information, visit http://www.ubabenefits.com.
LIFE INSURANCE AND FINANCIAL PLANNING
Consumers Procrastinate Buying Life Insurance
Eighty-five percent of consumers, surveyed by LIMRA, understand the need for life insurance, yet just 62% have life insurance coverage. Eighty-five percent agree that most people need life insurance and 65 percent say they personally need it. “Life insurance has never been as inexpensive or easy to buy, especially with the anticipated growth of online and nontraditional purchasing channels, yet millions of consumers continue to put off the decision. Forty-five percent express some likelihood of purchasing life insurance in the next year. Insurance professionals and our industry play a critical role in helping to educate the public on the wide range of options available and should continue to work together to help people get the life insurance coverage they know they need,” said Marvin H. Feldman, CLU, ChFC, RFC, president and CEO of the LIFE Foundation. However, 33% of all consumers believe they do not have enough life insurance, including one quarter who currently owns a policy. For more information, visit www.limra.com.
Buying Life Insurance Retail
Seventeen percent of consumers are willing to purchase life insurance at a retail outlet, according to a study by LIMRA and the LIFE Foundation. Seven percent of consumers are willing to purchase at a superstore. Sixty-three percent of them expect costs to be reasonable, 44% expect the purchasing process to be simple; 43% expect convenience, 42% expect a no-pressure sales process. Todd A. Silverhart, Ph.D. of LIMRA said, “While the number of consumers willing to purchase a life product through a retail outlet is not overwhelming, it certainly is worthy of note. In light of the novelty of the concept and that few people have actually shopped for life insurance through a retail outlet, there is likely to be considerable confusion in the eyes of the consumer as to what such a purchasing experience might entail. For carriers seeking a niche market, retail ventures could be a worthy approach.”
Relationships Key to Success in the Rollover Market
Retirees who have a positive relationship with their plan provider are more likely to keep their assets with that provider, according to a LIMRA report. Matthew Drinkwater of LIMRA said, “Nearly 40% of participants…stay with their current plan provider…It’s important for plan service providers to proactively reach out to participants. Those who have strong relationships and satisfaction levels with their plan provider are more likely to stay with them.”
People are much more likely to stay with their plan provider after leaving their employer the provider contacts them. “An in-person visit or a phone call is more personal than an e-mail or direct mail and works better in building a positive relationship,” said Drinkwater. On the other hand, just because retirees keep assets in their plan doesn’t mean they’ll stay. Nearly half of retirees and pre-retirees have not decided whether to keep their money in their current plan. Many roll over assets with another company in order to consolidate all of their assets. For more information, visit www.limra.com.
ING U.S. To Rebrand As Voya Financial
ING U.S. has announced plans to rebrand as “Voya Financial.” Rodney O. Martin Jr., CEO of ING U.S. said, “Our vision is to help working Americans prepare for the important financial journey they face. We want to be known as the company that understands and supports their diverse needs as they seek to advance their retirement readiness…We intend for the Voya Financial brand to become synonymous with this goal as we provide the distinctive value, guidance, products and services our clients and partners have come to expect from ING U.S.”
Amsterdam-based parent, ING Group, has previously announced its base case plan to divest ING U.S. through an initial public offering (IPO). ING U.S. will start operational rebranding following the proposed IPO. The operational rebranding process is expected to take approximately 24 months once it is started, and ING U.S. would not use its new name and logo commercially until the operational rebranding process has been completed. The Voya Financial identity will be reflected in the company’s new ticker symbol (NYSE: VOYA) upon completion of the IPO. Until the rebranding is complete, ING U.S. will operate with its current “ING U.S.” name and brand assets.
• Bill Would Limit Financial Incentives In Wellness Plans
• Health Reform Summit for Brokers
• HHS Delays SHOP Exchange, But Not California
• Health Reform Leads Small Employers to Reduce Hiring
• Are Smarter CDHP Consumers a Myth?
• 90% Don’t Know When the Exchanges Will Be Open
• Individual Vision Plan Options
• Whole Life Policy with Living Benefits
• Group Accident Insurance
• What are the True Costs of Dementia in the United States?
• Avoiding Dangerous Waters With Fixed Annuities
• It Pays to Get a Professional Designation
• Hartford Enhances Voluntary Benefit Capabilities
Bill Would Limit Financial Incentives in Wellness Plans
California Health Underwriters is alerting members to Senate Bill 189 (Monning).It would ban all wellness programs until 2020 unless they meet a number of restrictive conditions. A health plan could not offer an incentive or reward under a group health care service plan contract or group health insurance policy unless it met these requirements:
Incentives can only include rewards for participation that are not linked to premiums, deductibles, copayments, or coinsurance.
A program must have a reasonable chance of improving the health of, or preventing disease. It cannot be overly burdensome, cannot be a subterfuge for discriminating based on a health status factor, cannot lead to cost shifting, and cannot use a highly suspect method to promote health or prevent disease.
Participation must be voluntary.
An individual cannot be offered an incentive or reward for participating the program based on satisfying a standard that is related to a health status factor. The following would be acceptable:
- A program that reimburses all or part of the cost for memberships in a fitness center.
- A diagnostic testing program that provides a reward for participation, but does not base any part of the reward on outcomes.
- A program rewards people for attending a health education seminar as long as participation is not related to a particular health condition or any other health status factor.
Participation in the program must be offered to all similarly situated individuals.
People with disabilities must be offered reasonable accommodations to participate.
There must be a reasonably available and equivalent alternative for those who are unable to participate due to occupational requirements, a medical condition, or other hardship.
All materials related to the program must disclose the availability of these accommodations.
The program must assesses the cultural competency needs of the health plan’s population.
The program must provide language assistance for those who speak limited English.
The program cannot not result in any decrease in benefits coverage.
The program cannot not result in an increase in premium for the product as demonstrated through rate review consistent with Article 6.2 (commencing with Section 1385.01).
The incentive or reward cannot not exceed the amounts determined to be unreasonable by regulation by the director in consultation with the Insurance Commissioner
The incentive or reward can not exceed the percentage of the cost of coverage under the plan contract identified in Section 2705(j)(3)(A) of the federal Public Health Service Act (42 U.S.C. Sec. 300gg-4) or regulations adopted thereunder.
The state notes that PPACA prohibits a carrier from requiring a person to pay a greater premium or contribution based on a health status-related factor. Senator Bill Monning said, “There is growing concern among consumer advocates that wellness programs could become a subterfuge for discrimination against those with pre-existing conditions…Wellness incentives should be about making people healthier, not pricing insurance premiums based on pre-existing conditions…” The intent of SB 189 is supported by AARP, American Cancer Society Action Network, American Heart Association, California Black Health Network, California Pan-Ethnic Health Network, Consumers Union, Health Access, Greenlining Institute, and Prevention Institute.
According to a CAHU statement, “As health care coverage specialists, you know the value of wellness programs and positive impact they have on the lives and affordability. CAHU is asking you to join with other licensed insurance agents and their clients in letting your state Senator know you oppose SB 189.” Click here to oppose SB 189.
Health Reform Summit for Brokers
Health insurance leaders and brokers throughout California will gather for a special Health Reform Summit on April 23 in Los Angeles and Orange counties. Featured speakers will include Paul Markovich, chief executive officer of Blue Shield of California, as well as John Word and Rusty Brown, co-founders of The Word & Brown Companies. Other speakers include Michael Lujan, director of sales and marketing for Covered California; Ron Goldstein, president and CEO of CHOICE Administrators; and Don Goldmann, vice president of Word & Brown University. The event is being sponsored by Word & Brown General Agency.
As keynote speaker, Markovich will address the changing California healthcare landscape from the perspective of the carriers and will discuss how health reform will affect small groups, individuals and mid-market groups. Blue Shield of California provides health, life, dental, vision, and Medicare insurance and healthcare service plans to more than 3.3 million members in California.
In representing the state’s public exchange scheduled to launch January 1, Lujan will discuss the status of Covered California, including a look at broker training and certification, carrier selection and more. Goldstein, a pioneer in the development of private exchanges, will give an update on how CaliforniaChoice will continue to be a viable option in the market and what changes may lie ahead. CaliforniaChoice is the nation’s most mature small-group private exchange with more than 150,000 members and 10,000 employer groups. For more information, visit http://events.wordandbrown.com/healthreformsummit.
HHS May Delay SHOP Exchange, But Not California
The Department of Health and Human Services (HHS) issued a proposed rule delaying implementation of the Small Business Health Options Program (SHOP) for small businesses under the Protection and Affordability Act (PPACA). HHS said that “Implementation challenges” led to the proposed one-year delay to January 1, 2015. Despite the delay in the federally operated exchanges, several states, including California, intend to move forward with the choice option for their state-operated exchanges.The choice option allows small employers to select a level of coverage (known as the bronze, silver, gold, and platinum coverage tier) from which their employees can choose any qualified health plan within the exchange, according to Intercare, a HUB International company.
Covered California exchange spokesperson, Dana Howard, told Intercare that exchanges are “not new territory for California. We are confident that Covered California will be ready for enrollment and implementation for a January 1, 2014 effective date.”
Small employers will still be able to purchase coverage though the federal exchange, but in 2014 that coverage is limited to the single health plan selected by the employer. A single health plan is another exchange option, which allows employers to select a single qualified health plan to offer employees. Beginning in 2014, those small employers that are eligible for the employer tax credit must purchase their plan through a state or federal exchange to qualify.
This delay does not affect individual coverage under the exchange. With 2014 right around the corner, the activity level for exchanges will increase rapidly.
Health Reform Leads Small Employers to Reduce Hiring
Thirty-two percent of small businesses plan to reduce hiring as a result of the employer mandate under the Patient Protections and Affordable Care Act (ACA). Thirty-one percent plan to cut back hours to reduce the number of full time employees, according to a study by the U.S. Chamber of Commerce. Seventy-seven percent say the health care law will make coverage for their employees more expensive; and 71% say the law makes it harder for them to hire more employees. Requirements of the health care law are now the biggest concern for small businesses, having bumped economic uncertainty from the top spot, which it has held for the last two years. For more information, click here.
Are Smarter CDHP Consumers a Myth?
Consumer Driven Health Plans CDHPs do not stimulate price shopping for most common outpatient services, according to a survey by the independent Berlin-based publishing group, De Gruyter. For eight out of nine services analyzed, prices paid by CDHP and traditional plan enrollees did not differ significantly. The only exception is that CDHP enrollees paid 2.3% less for office visits.
There was no evidence that consumers with CDHP plans who had lower than expected medical expenses did more price shopping or that consumers did more price shopping before reaching the deductible. Patients may be returning to the same providers they used before meeting their deductible or they are not sensitive to this within-year change in the price. Consumers may not have been able to shop for some diagnostic services if the service was bundled with a physician visit. Also, a patient’s physician may always use a particular facility for such services. There may be a limited scope of low-cost providers. Other studies have shown that the price transparency of health services is low; and early state-level efforts to improve price transparency have shown little effect so far .
The authors say that the findings should be viewed in light of the study’s limitations. For example, traditional plans may be able to negotiate a lower price point for a larger share of their providers. Also, a traditional plan may have larger networks with many providers offering the same relativly low price point. This would make low price providers the default option for many traditional plan enrollees, whereas CDHP enrollees may have a harder time finding prices at the lower end of the distribution. Second, the study only looks at price outcomes, but not quality. So CDHP enrollees may make value-based decisions using quality outcomes that researchers did not observe.
Price shopping may not be an immediate response to enrolling in a CDHP plan, perhaps because patients don’t perceive the degree of price variation. A key to encourage price shopping may be the availability of clear signals of price, such as generic drugs, or out-of-network providers. Another important determinant of price shopping may be repeated use of a service. The researchers say that giving enrollees more education about benefit designs and launching carrier specific, price and quality transparency initiatives may be the next steps for employers, health plans, and policy makers to increase consumerism in health care decision-making. For more information, click here.
90% Don’t Know When the Exchanges Will Be Open
Ninety percent of Americans don’t know that the new health insurance exchanges will open in October, according to a survey by InsuranceQuotes.com. Laura Adams, senior insurance analyst, InsuranceQuotes.com said, “We found a very inconsistent understanding of the Affordable Care Act, and we fear that many people will miss key deadlines and benefits because they don’t adequately understand the new law.”
A majority did answer correctly that health plans cannot deny coverage based on preexisting health conditions and must extend coverage to dependent children up to age 26. Just under half of Americans know that health plans must limit the money that patients have to pay out of pocket each year and that health plans cannot place limits on the total dollar value of benefits that patients receive. Thirty-nine percent of Americans surveyed say they are somewhat knowledgeable about the Affordable Care Act, 28% are not very knowledgeable; and 21% are not at all knowledgeable. Only 10% are very knowledgeable. Forty percent 40% expect health care reform to have a major effect on their lives; 39% expect a minor effect; and 19% expect no effect. For more information, visit http://www.InsuranceQuotes.com.
Uninsured May Have Better Access to Care than Medicaid Patients
About 47% of providers surveyed by the American Physicians and Surgeons (AAPS) said say that it is harder to get an appointment with a primary-care physician if you are a Medicaid patient than if you are an uninsured patient. For specialist appointments, 44% say uninsured patients were better off; and 32% say Medicaid patients were better off. Only 2% say that Medicaid patients have no problem getting an appointment with a specialist.
Forty-eight percent say it can be extremely difficult for a Medicaid beneficiary to get drugs, medical equipment, or diagnostic tests; 27% say it can be moderately difficult at times; and only 13% say it’s no problem.
Providers’ comments were overwhelmingly negative about Medicaid. Rural patients who can’t drive or travel may have no access to care except through charity. Some areas have no hand surgeons, endocrinologists, dentists, or rheumatologists who accept Medicaid. Many cardiology tests are questioned or denied, even echocardiograms for inpatients. Many drugs, even common generics, are not available without jumping through bureaucratic hoops. Treatment for chronic pain is especially difficult. It may be very challenging to get non-emergency surgery approved, no matter how necessary.
One physician writes called Medicaid simply a jobs program for administrators and quasi-medical professionals with little money going to the health care part of the equation. Another said that t poor customer service and excessive paperwork a commonplace with Medicaid. It can cost more to file a Medicaid claim than a physician can ever hope to collect. In fact, a physician may lose less money by just seeing the patient for free. One physician said that, since denials for appropriate treatment are much more common than approvals, it is insane to expand “such a horrendous program.” For more information, visit www.aaps.org.
Expanding Individual Vision Plan Options
VSP Vision Care is offering individual plans with a monthly pay option in nearly every state. Consumers can pay as little as $13 a month, depending on the state in which they live. Coverage includes an eye exam with a low co-payment, allowance for glasses or contacts, fully covered lens options with 20% to 25% off any non-covered options, and access to a large doctor network all backed by a 100% satisfaction guarantee. VSP is hosting an Eye Got You Covered sweepstakes on Facebook (www.Facebook.com/VSPVisionCare). From now until May 1, 2013, consumers can enter for a chance to win a VSP Individual Plan, providing a year’s worth of free vision insurance coverage that winners can keep or give as a gift.
Whole Life Policy with Living Benefit
OneAmerica introduced a living benefit for whole life policies. Chronic and terminal illness riders allow a policyholder to accelerate the death benefit in the event of a qualifying illness and access the cash value of the policy to cover medical expenses; receive in-home care; make needed modifications to a home; or use the money for any other purpose. For more information, visit www.oneamerica.com.
Group Accident Insurance
MetLife added Group Accident Insurance to its portfolio of supplemental health insurance products. It provides the following:
• Over 150 different events that pay a benefit.
• Coverage for active employees of any age, their spouses, and their children (up to age 26) without a medical exam.
• No minimum employee participation requirements.
• No waiting period.
• No limitations on the number of accidents covered.
• Premiums paid through payroll deduction.
For more information visit www.metlife.com/accident.
What Are the True Costs of Dementia in the United States?
In the United States, 14.7% of people older than 70 had dementia in 2010. Researchers predict that an aging population will result in an increase of nearly 80% in total societal costs per adult by 2040, according to a study published in the New England Journal of Medicine. Dementia leads to total annual societal costs of $41,000 to $56,000 per case.
The total monetary cost of dementia in 2010 was $157 billion to $215 billion. Medicare paid about $11 billion of this cost. The cost for dementia care purchased in the marketplace ($109 billion) was similar to direct health care expenditures for heart disease ($102 billion) and significantly higher than the direct health care expenditures for cancer ($77 billion). In addition, the costs of informal care are likely to be larger for dementia than for heart disease or cancer. Costs for nursing home care as well as formal and informal home care represent 75% to 84% of attributable costs.
As alarming as these statistics are, the cost estimates are considerably smaller than those reported by the Alzheimer’s Association. The Association estimated that monetary costs, alone, were $172 billion in 2010. Estimates by the Alzheimer’s Association were based on a sample from a more severely impaired population (people identified in the Medicare Beneficiary Survey as having dementia). The higher cost is also based on a significantly larger estimate of the prevalence of dementia. In the Alzheimer Assn. study, the diagnostic criteria for dementia did not require the presence of a limitation in ADLs or IADLs, probably led to a substantially higher estimate of the prevalence of dementia. Finally, the cost estimate was not adjusted for the costs of coexisting conditions. For more information, visit http://www.nejm.org.
Avoiding Dangerous Waters With Fixed Annuities
The National Assn for Fixed Annuities is holding a webcast that will help viewers avoid “suitability tempests, transfer treacheries, and dangerous designations.” It will be held Thursday, April 25 at 8:30 a.m. Pacific. For more information, visit https://www1.gotomeeting.com/register/629285337
It Pays to Get a Professional Designation
It can be a big challenge to take time from your busy day to study for a professional designation, but it pays off according to a study by The American College. The survey reveals the following:
• Financial advisors with a CLU earn 22% more than their peers without the designation, and advisors with a ChFC earn 51% more.
• By year nine in the business – moving into mid-career – 13.8% of the advisors in the study hold a CLU, a ChFC or both. These advisors have 40% higher aggregate productivity than those with no designation.
• Advisors who complete one of The College’s skills-training designation programs (such as the LUTCF or FSS) within their first four years in the business are more likely to survive in the profession; their average tenure is 90% longer than those without a designation. These programs are designed to give advisors the skills required to better understand products, how to ethically service clients, and how to meet customer needs.
• Those earning the LUTCF or FSS within their first four years have earnings that average 72% more than those with no designation.
• Career-long learning is critical. Advisors who earn an LUTCF or FSS early in their careers, but don’t continue their education with advanced designations will see their earnings advantage erode to just 7% by their ninth year.
• Financial advisors who hold a CLU or a ChFC have 13% longer average tenure at their companies over their entire careers compared to those without these designations.
• Field leaders are 59% more likely to hold a CLU or a ChFC compared to their peers.
• Advisors who do not hold the CLU and ChFC designations are responsible for 81.4% of compliance issues.
For more information, visit: http://www.TheAmericanCollege.edu/Designation Study
Hartford Enhances Voluntary Benefit Capabilities
The Hartford is boosting its voluntary benefit business with a new partnership for advanced enrollment capabilities, an expanded sales and service team, and increased availability of its new voluntary disability product. Mike Concannon, executive vice president of The Hartford’s Group Benefits The Hartford said, “We are committed to…expanding our voluntary benefits capabilities to respond to the needs of benefits brokers, employers, and employees.”
The Hartford teamed up with Selerix Systems to provide an expanded enrollment platform, which launches this fall. The new platform will integrate with The Hartford’s existing digital tools to support self-service enrollment for companies with 50 or more employees. The Hartford’s service teams will support enrollment and medical underwriting, but employers and brokers can also work directly with Selerix to support non-Hartford core benefits enrollment.
A voluntary sales manager and regional sales executives will support field sales and account management teams in delivering expert consultation to brokers and employers. The Hartford also created national practice leads to provide case-level consulting for complex cases while supporting strategic voluntary initiatives, such as DisabilityFLEX. The Hartford is also expanding its product availability, making DisabilityFLEX available to employers with more than 1,000 employees. For more information, visit www.thehartford.com.
LONG TERM CARE INSURANCE
• Insurers Report a Big Jump In LTC Insurance Sales
• Ancillary Benefits to Be a Greater Differentiator in 2013
• 401(k) Participants Appreciate In-Plan Advice
• Individual Premiums Expected to Rise 14%
• Commissioner Criticizes Anthem’s Rate Increases
• Health Plans Get Mixed Grades
• Cora Tellez Receives Living Example Award
• Society of Actuaries Predicts Premium Increases
• Premiums Could Rise Under Healthcare Law, Sebelius Concedes
• CMS Reverses Proposed Cuts to Medicare Advantage
• Pay for Performance Is Still Rare
• Indexed and Income Annuities Set Sales Records
• Health Care Quality Report Card App
• Annuity With LTC Benefits
• Disability Policy for Small Business Owners
• Breaking into the Advice Business
LONG TERM CARE INSURANCE
Insurers Report A Big Jump In LTC Insurance Sales
A number of leading long-term care insurance companies received significant increases in applications during the first two months of 2013 compared to the same time period last year, according a study by the American Association for Long-Term Care Insurance. Several of the nation’s leading insurers saw a 30% to 55% increase in the number of applications submitted during January and February.
“Starting the year with significant sales growth is a welcome and very positive sign for the industry. Despite the negative talk about premium increases and insurer departures, consumer interest has never been greater. Based on producer feedback many agents and insurers are having an outstanding start to the new year,” said Jesse Slome, executive director of the national trade group.
Slome said, “Not everyone saw submission increases compared to the previous year, but everyone still had very strong sales activity. This is a great start to the year and the continued outlook is excellent.” Leading insurance companies marketing long-term care insurance policies include Genworth Financial, John Hancock, Transamerica, Med America, Life Secure and New York Life. For more information, visit www.aaltci.org.
Ancillary Benefits to Be a Greater Differentiator in 2013
A study by United Benefits Advisors (UBA) reveals that ancillary benefits will be a greater differentiator in 2013 than ever before. Thom Mangan, UBA CEO said, “As health care exchanges go online as a result of health care reform and fewer businesses are burdened with a full health care plan, we anticipate that interest in ancillary products will continue to grow. With more flexibility to offer attractive benefits like dental, life, long-term disability, and paid-time off, employers are increasingly adding these product lines, at little or no cost, to attract and retain top talent.”
Preliminary results from a study of nearly 12,000 employers reveal vast differences in ancillary benefits offered by employer size, region, and industry, highlighting the importance of using local benchmarking data in benefit planning. For example, only 0.5% of the employers, overall, offer on-site clinics compared to 7.4% of employers with more than 500 employees. Eight percent of employers with 1,000 or more employees offer pet insurance compared to .5% of those with less than 200 employees.
The survey also reveals the following:
• Nearly three quarters of employers offer dental coverage, with almost all large employers providing the benefit.
• Membership discounts are most popular in the Northeast where more than 5% of employers offer the benefit compared to less than 2% in the central part of the country.
• 95% of businesses with more than 500 employees offer group-term life insurance, yet only 56% with less than 50 employees offer this benefit. Thirty-seven percent of employers in all major industries offer the coverage.
• Construction, agriculture, and mining industries offer long-term disability insurance much less often (31%) than the national average (45.9%).
• 7.9% offer critical illness coverage and 3% offer long-term care insurance.
For more information, visit www.UBAbenefits.com.
401(k) Participants Appreciate In-Plan Advice
Employees who use the advisory services offered in their 401(k) plan have a more positive outlook about their future retirement, according to a survey by Mercer. Eighteen percent use online or in-person advisory services. These participants are much more likely to feel that they will have enough money for retirement, can live as well or better than when working, and will not have to delay retirement. Seventy-nine percent of participants say their plan offers some type of advice (online, in-person, or over the phone,) up from 72% in 2011.
Typical in-plan advice users are younger; better educated, and have higher incomes, balances, and deferral rates compared to those who don’t use the advice services. Suzanne Nolan, Administration Marketing and Communications leader for Mercer said, “The true challenge for a plan sponsor offering in-plan advice is to reach those on the lower end of the income spectrum where every dollar counts and who may also have a shorter time frame in which to accomplish their retirement savings goals.” For more information, visit http://www.mercer.com/2012-mws-summary.
Individual Premiums Expected to Rise 14%
Californians who buy individual health plans will see their premiums increase an average of 14% next year under the Affordable Care Act, but payments will depend largely on income, age, and where they live, according to a report by California’s health care exchange.
The study, conducted by Milliman, finds that premiums could rise for some individuals who purchase coverage through Covered California, but don’t qualify for federal subsidies. In contrast, those who are eligible for subsidies are likely to pay significantly lower monthly premiums.
The factors that are driving up premiums include the requirements for richer benefits for individual plans, the increasing number of older and less healthy people who will get coverage, and several other changes mandated by the ACA.
The most significant change will be a re-balancing of health insurance premiums, so that the consumer pays less out of pocket in co-pays and deductibles, and the premiums absorb more of the cost of care. This shift could save money for Californians who use medical services more often, but initially will result in higher premiums.
Patrick Johnston president and CEO of California Heath Plans (CAHP) said, “A small percentage of Californians will purchase their insurance through the exchange. Most will have the benefit of more predictable and comprehensive coverage and subsidies to help pay for that coverage. But lower cost sharing, richer benefits, and more predictable coverage will come at a cost for some.”
Individuals and some small businesses will be able to comparison shop for coverage and take advantage of subsidies for families earning up to $94,200 who purchase coverage through Covered California.
Johnston explains that the following ACA changes may affect premium prices for certain Californians:
• Richer benefits for individuals and reduced out-of-pocket costs: The ACA’s requirement for richer benefits for individual insurance will make these offerings more like employer-provided plans with expanded coverage and lower deductibles and co-pays. With richer benefits, Californians in the individual market may be required to purchase more costly coverage with additional benefits they may never use, such as pediatric dental care for beneficiaries who have no children. They may also have higher premiums because deductibles and co-insurance amounts will be limited. However, their health care costs could be lower because they will pay less out-of-pocket for doctors’ appointments, prescription drugs and other medical expenses.
• Younger beneficiaries lose some of their advantage: The ACA will change the way health plans calculate benefits, causing significantly higher premiums for younger beneficiaries. Because they were expected to be healthier, younger Californians previously paid about $1 for every $5 in premiums from older Californians. The ACA limits the difference to three to one, which will bring significant increases for younger people and lower premiums for older people.
• New taxes are imposed: The ACA will impose a sales tax that will average $10 billion a year to help pay for expanding coverage — adding nearly $5,000 to an average California family’s premiums over a 10-year period.
Johnston said, “All these expansions add to the already increasing cost of care — costs that have outpaced inflation as obesity, chronic conditions and many other factors have driven up medical expenditures. Health plans’ narrow profit margins and rising medical expenses leave no room for premiums to absorb the increasing costs of care, so we must all work together to lower these costs to ensure coverage is affordable. Affordability is a challenging issue, and we look forward to working with the state and Covered California in the months ahead.” For more information, visit http://www.coveredca.com.
Commissioner Criticizes Anthem’s Rate Increases
Insurance Commissioner Dave Jones calls the latest rate increase by Anthem Blue Cross “excessive and unreasonable.” Anthem Blue Cross is increasing rates on its small group health insurance policyholders while posting a return on equity of 25.2% as noted in the company’s 2012 financial statements. The average 12-month increase for the policyholders affected by this rate filing is 10.5%. For some Anthem small business customers, this translates to a 12-month increase of 22.9%. Anthem’s April 1st small group rate increases affect more than a quarter of a million healthcare consumers. “These ongoing and excessive rate increases are simply unsustainable, as many small businesses struggle simply to survive,” said Jones.
Department actuaries says that Anthem’s rate filing includes Over estimated future claims and utilization and excessive return on equity. It also charges policyholders in 2013 for healthcare reform fees and taxes that are not even being collected by the federal government until 2014. In fact, the federal government has yet to even determine the amount of some of those fees and taxes.
The April 1 rate increase will affect about 45,000 healthcare consumers within 7,000 small business employer groups whose policies are up for renewal between now and June and is also imposed on the rest of the small business policyholders as their polices renew throughout the rest of the year — affecting as many as a quarter of a million healthcare consumers.
Jones notes that this is the second time this year Anthem has imposed a rate increase on its small business customers. Jones is asking Anthem to reduce the average rate by 2.5% for these small businesses, which is an average reduction of 7.3% from the filed rates.
Health Plans Get Mixed Grades
Under California’s health plans and medical groups more children are getting immunized, getting checked for excess body fat, and being treated appropriately for throat infections. However, treatment varies widely for adults with chronic conditions, such as diabetes or heart disease depending on where they live or which HMO, PPO, or medical group provides their care, according to a report by The Office of the Patient Advocate (OPA).
HMOs and medical groups dramatically improved (14%) the number of adolescents receiving immunizations (measles, tetanus, hepatitis B, meningitis). Medical groups increased childhood immunization rates by 4%. PPOs are not rated for this measure.
Seven percent more adolescents and children covered by HMOs were checked children for body mass index. (PPOs are not evaluated on this measure.)
Seven percent more children in HMOs were treated appropriately for throat infections by not prescribing antibiotics unnecessarily. Five percent more were treated appropriately under PPOs and 6% more were treated appropriately under medial groups.
Among HMOs, care for lung disease, diabetes, and heart disease ranged from a score of two to four stars with one star representing poor care and four stars representing excellent care. HMOs significantly improved how often they determine body mass index for adults. Among PPOs, care for diabetes and heart disease ranged from one to three stars. PPOs improved by 10% in their rate of treating patients after a heart attack by ensuring that they get beta blocker drugs for at least six months after hospitalization for a heart attack. For more information, visit www.opa.ca.gov, or call (866) 466-8900.
Cora Tellez Receives Living Example Award
The Bay Area Tumor Institute has named Cora M. Tellez as this year’s recipient of its Living Example award. Tellez, who is president & CEO of Sterling HSA, was recognized for her contributions to the civic, philanthropic, and economic development of the San Francisco Bay Area. In 2012, Tellez led the development and launch of the Gift of Learning and Gift of Health program. Intended to encourage donors in the U.S. to send money to needy relatives in the Philippines, the program offers a secure vehicle to ensure that the donor’s funds are spent for their intended purpose.
She helped found Asian Community Mental Health and Filipinos for Social Justice. She has been recognized for her professional and community endeavors by such organizations as Women Healthcare Executives, the Asian Pacific Fund, and the Anti Defamation League. She also serves on the boards of several nonprofit organization such as the Institute for Medical Quality and UC San Diego’s Center for Integrative Medicine.
She is a former board member of Crescent Healthcare, Bank of Hawaii, Glendale Federal Bank, Cal Fed Bank, Catellus Development Company and First Consulting Group. She has served on numerous non-profit boards, including The Cowell Foundation, Mills College, Holy Names University, and The Institute for the Future and Philippine International Aid.
Society of Actuaries Predicts Premium Increases
A report by the Society of Actuaries illustrates several factors that will affect premium rates when the exchanges kick in under the Affordable Care Act (ACA). How the ACA affects average cost in the individual market will vary significantly across states. States that will have lower average costs under the ACA use community rating in the individual market. The reduction reflects the younger and healthier individuals who will enroll due to the reduced cost from the premium subsidies.
After three years of exchanges and insurer restrictions, the percentage of uninsured will decrease from 16.6% to between 6.8% and 6.6%. The effect of the ACA in reducing the number of uninsured will vary substantially across states depending on proportion of population that is uninsured before the ACA, the portion of the uninsured below 400% of FPL, and average individual costs.
Under the ACA, the individual market will grow 115%, from 11.9 million to 25 .6 million lives; 80% of that enrollment will be in the exchanges. Much of the increase in coverage will be due to premium and benefit subsidies for lower income individuals, many of whom will select the silver benefit tier since that is the tier for which benefit subsidies are tied.
Individual costs per-member/per-month will increase 32% under ACA. These costs reflect the underwritten risk in most states. While high-risk pools generally have few enrollees, the cost per individual is very high. Moving high-risk pool individuals into the individual exchange generally creates a significant increase in cost. However, it can be argued that proportionately more uninsured individuals will have similar risks in states that had relatively small high-risk pools. For more information, visit soa.org.
Premiums Could Rise Under Healthcare Law, Sebelius Concedes
The Obama administration acknowledged that some people could see their premiums rise under the healthcare reform law, according to articles in The Wall Street Journal and The Hill. HHS Secretary Kathleen Sebelius told reporters that those who are moving into a fully insured product for the first time may face higher costs. Sebelius said that transparency and market strategies will ease potential rate shock for consumers. “This is the first time…that insurance companies have to file their rates; it has to be very transparent; they have to offer the same kind of coverage without 5,000 tiny little lines and internal caps; and they have to compete for customers. And I am a believer in the market strategies that in and of itself will minimize the rate affect,” Sebelius said. The secretary’s concession on premiums put the White House on the defensive. When asked about Sebelius’s remarks, a spokesman for president Obama said healthcare costs are falling thanks to the reform law.
CMS Reverses Proposed Cuts to Medicare Advantage
The Centers for Medicare & Medicaid Services (CMS) reversed its position on taking a deep new cut to Medicare Advantage. CMS had proposed a 2.2% reduction in Medicare Advantage payments for 2014, at a time when medical costs are projected to increase by 3%. The new proposed payment cut would have compounded the hundreds of billions of dollars in Medicare Advantage cuts and new health insurance tax on Medicare Advantage policies included in the Affordable Care Act (ACA).
America’s Health Insurance Plans’ (AHIP) Coalition for Medicare Choices (CMC) launched a highly successful TV ad campaign featuring Medicare Advantage beneficiaries explaining what the cuts would mean to them. (The ad can be viewed at www.MedicareChoices.org.) In just four weeks, more than 40,000 Medicare Advantage beneficiaries contacted Congress and 46,000 seniors liked CMC on Facebook. More than 130 members of Congress from both parties sent letters to CMS sharing their concerns about the affect the new cut will have on seniors.
AHIP president and CEO Karen Ignagni said, “CMS has taken an important step to help stabilize Medicare Advantage at a time when the program is facing significant challenges. We are currently reviewing the final rate announcement and will continue to work with policymakers in both parties to strengthen this critically important part of Medicare that provides high-quality, affordable coverage to more than 14 million seniors and people with disabilities.”
Pay for Performance Is Still Rare
Only about 11% of the health care dollars paid to doctors and hospitals are tied to how well they deliver care or whether they create incentives to improve quality and reduce waste, according to a report by Catalyst for Payment Reform. Most payments are fee-for-service. Under this traditional model, providers are paid for every test and procedure they perform regardless of the necessity or outcome. Payments are also bundled, capitated, or partially capitated without quality incentives.
Forty-three percent of value-oriented payments offer bonuses or added payments for higher quality care. An example is fee-for-service with shared savings. Fifty-seven percent of value-oriented payments put providers at financial risk if they do not meet certain quality and cost goals. For more information, visit www.catalyzepaymentreform.org.
Indexed and Income Annuities Set Sales Records
Indexed and income annuity sales reached record highs in 2012, according to a Beacon Research study. Indexed annuity sales went up 3.7% while income annuity sales went up 8.5%. In the fourth quarter, income annuity sales were up 7.2% from a year ago and 0.3% from the previous quarter. It was the third consecutive quarterly improvement. Indexed annuity sales were up 1.2% over a year ago, but were down 3.2% from the previous quarter.
Deferred income annuity sales topped $1 billion for the first time in 2012. Sales climbed nearly 150% from the first to the fourth quarter. These products often generate more retirement income than do other annuity alternatives and are easy to understand. “It’s not surprising that growth was so rapid. The need for retirement income was also an important driver of the annual increase in indexed annuity sales,” said Jeremy Alexander, CEO of Beacon Research.
Total fixed annuity results were up 6.5% in the fourth quarter. Annual sales fell 11.6%. Large losses in fixed rate annuity sales were responsible for the annual decrease. Most carriers chose to maximize margins at the expense of sales. For more information, visit www.annuitymarketstudy.com.
Health Care Quality Report Card App
The Office of the Patient Advocate (OPA) is offering the 2013 health plan report cards on a redesigned, consumer-friendly Website, www.opa.ca.gov and as a mobile app for iPhone and iPad. The Website and app make it easy for consumers to review quality ratings on more than 40 clinical care measures for the state’s 10 largest commercial Health Maintenance Organizations (HMO), six largest commercial PPOs and 209 medical groups. For more information, visit www.opa.ca.gov.
Annuity with LTC Benefits
The State Life Insurance Company, a OneAmerica company, is offering an updated version of its popular asset-based long-term care annuity product, Annuity Care II. The product has been redesigned to perform well in a sustained low interest rate environment. Annuity Care II is designed as a single-premium annuity offering long-term care benefits. When LTC expenses are incurred, the consumer uses annuity value money first. When that value is exhausted, a special continuation of benefits fund is available. The recent enhancement ensures clients can carry a long-term care benefit that will never decrease due to interest rates and/or insurance charges and is guaranteed to provide at least five years of LTC protection. For more information, visit www.oneamerica.com.
Disability Policy for Small Business Owners
MetLife introduced a Business Overhead Expense (BOE) policy to help small business owners keep their business up and running despite a disabling illness or injury. Covered expenses may include office rent, utilities, employee wages, maintenance services, or other fixed overhead expenses. The policy is only available through professional associations who offer members the opportunity to obtain MetLife’s Group Long-Term Disability Insurance. For more information, visit www.metlife.com.
Breaking into the Advice Business
InvestmentNews is sponsoring a Webcast on April 16 from 1:00 to 2:00 pm PT. Panelists will explain how to get a foot in the door in the financial advice industry. InvestmentNews is holding a webinar on Attracting high-net-worth clients April 23 from 1:00 pm to 2:00 pm PT. For more information, visit www.investmentnews.com.
• Employers Top Strategies for Controlling Costs
• Health Incentives Gain Popularity
• Agent MLR Bill is Reintroduced
• Legislation to Eliminate the Health Insurance Tax is Reintroduced
• Consumer Driven Plans Gain Popularity In Private Exchanges
• Health Plans Pair High Coinsurance With Big Out-of-Pocket Costs
• Americans Are Still in the Dark About Health Reform
• Hospital Prices Drive Health Care Costs
• MassMutual Reports Strong Retirement Plan Sales
• One America Sets Sales Records
• Pension Plans Faced Record Deficit in 2012
• Covered California Faces Criticism Over Plan To Partner With Wal-Mart
• CAHU Sponsors Day at the Capitol in Sacramento
LIFE INSURANCE & ANNUITIES
• Life and Annuity Need to Adapt to a Changing Market
• Dental and Vision Plan App
• Universal Life
Employers Top Strategies for Controlling Healthcare Costs
A report by Zywave’s revealed the top strategies that employers used to manage health benefit costs in 2012:
• While PPO remains the most prevalent plan type (43% of all known plans), there was a 5% increase in HSA plan types – from 16% to 21% of plans. This represents a common cost-control strategy as more employers shift to a consumer-driven model.
• The highest individual deductible option ($2,500) saw a significant increase over the past year, rising 7% in popularity. This supports the growth in HSA plan types, as HSAs must be accompanied by a high-deductible health plan. It also illustrates another employer cost-shifting strategy.
• The most common range for out-of-pocket costs stayed the same from 2011 to 2012, in the $2,500-$3,499 category. However, there was a noticeable shift toward higher out-of-pocket maximums across the board.
• Another cost-cutting strategy was to increase the prescription drug deductible.
• Though Rx deductibles under $50 remained the most common, the Rx deductibles over $250 now represent 25% of all plans – up 5% from 2011.
For more information, visit www.zywave.com.
Health Incentives Gain Popularity
Incentives are playing an increasingly important role in encouraging employees to improve their health, according to survey by Aon Hewitt of nearly 800 large and mid-size U.S. employers. Eighty-three percent offer incentives to employees for participating in programs that help them become more aware of their health status. These may include taking a health risk questionnaire or participating in biometric screenings. The following is a breakdown of the incentives that these employees offer:
• 79% offer a reward.
• 64% offer monetary incentives of $50 to $500, and 18% offer monetary incentives of more than $500.
• 16% offer a mix of rewards and consequences.
• 5% have a consequence.
Jim Winkler, chief innovation officer for Health & Benefits at Aon Hewitt said, “Health-risk questionnaires and biometric screenings are the key tools in providing that important information…that links behaviors to action.” Incentives will continue to be a critical part of employers’ health care strategies in the future,” he added.
Aon Hewitt did a separate survey with the National Business Group on Health and The Futures Company. Eighty-six percent of the workers took some action after completing health-risk questionnaire getting suggestions based on their results. Sixty-five percent made at least one lifestyle improvement as a result.
More than half of employers have seen improved health behaviors and/or an increase in employee engagement. Almost half saw an increase in employee morale, satisfaction and/or attitudes, and 44% saw changes in health risks.
The following is true of companies that offer incentives:
• 56% require employees to participate in health programs, comply with medications, or participate in activities like health coaching.
• 24% offer incentives for making progress toward or attaining acceptable ranges for biometric measures such as blood pressure, body mass index, blood sugar and cholesterol. More than two-thirds are considering this approach in the next three to five years.
In the next few years, 58% of employers plan to impose consequences on participants who do not take appropriate actions to improve their health. Thirty-four percent are interested in tying incentives to program designs that require a focus on health 365 days a year. For example, they may offer incentives for completing a progressive physical activity program that increases minutes each quarter, achieving the recommended cardiovascular physical activity of 150 minutes per week.
Stephanie Pronk of Aon Hewitt said, “Employers mainly rely on financial incentives to drive desired activities and behaviors, ranging from building awareness to achieving health outcomes. However, in the near future, these designs will be most successful…when they are linked to an organizational culture that makes it easier for employees to make healthier personal decisions.” For more information, visit www.aonhewitt.com.
Agent MLR Bill is Reintroduced
U.S. Senator Mary L. Landrieu, D-La., chair of the Senate Committee on Small Business and Entrepreneurship, and Sen. Johnny Isakson, R-Ga., have introduced S.650, the Access to Independent Health Insurance Advisors Act. This legislation addresses a provision of the Affordable Care Act known as the “medical loss ratio” (MLR), which has had dramatic, unintended consequences for nearly a half million licensed independent agents and brokers, and their employees.
Due to the Department of Health and Human Services’ (HHS) interpretation of the MLR provisions in the health reform law, health insurance carriers are required to treat agent and broker commissions as part of their administrative costs. This threatens the ability of independent agents and brokers to stay in business and serve the public. The Access to Independent Health Insurance Advisors Act excludes from the MLR compensation earned by independent agents and brokers that serve the individual and small group markets.
This legislation is designed to ensure that health insurance agents and brokers can continue providing essential counseling and advocacy services to consumers looking for the right health insurance coverage. Sens. Lisa Murkowski, R-Alaska, and Mark Begich, D-Alaska, are also original cosponsors of the legislation.
“This bipartisan legislation will ensure that our independent insurance agents and brokers can continue providing essential services to consumers who depend on them to assist with coverage or claims problems. Due to HHS’ interpretation of the health care law many agents and brokers — many of whom are one- or two-person small businesses — have had to reduce client hours or close up shop altogether because of these unintended consequences. This legislation will strengthen the Affordable Care Act, keep these small firms in businesses and protect this important service for consumers,” Sen. Landrieu said.
Sen. Isakson said. “This legislation will ensure that shortsighted regulations do not stand in the way of health insurance agents and brokers who want to continue assisting consumers so that they can find the best health coverage to meet their needs.”
The legislation is supported by the National Association of Health Underwriters (NAHU), the Independent Insurance Agents & Brokers of America (IIABA) and the National Association of Insurance, Financial Advisors (NAIFA) and the Council of Insurance Agents and Brokers (CIAB).
Janet Trautwein, CEO of NAHU said, “MLR requirements…continue to have a devastating financial affect on the country’s about half-million licensed professional health insurance agents and brokers, and on all of their employees and their millions of employer and individual clients. While we agree with the goal of providing consumers with more value for healthcare dollars spent, the MLR requirements significantly and negatively affect access to health insurance agents and brokers at the very time our economy is the weakest and healthcare consumers need the most help.”
Trautwein noted that millions of individuals and small businesses depend on licensed agents and brokers to help them navigate the healthcare market and find health plans that suit their needs and budgets. In fact, as the Congressional Budget Office said, agents and brokers often serve as de facto human resources departments for many small firms-negotiating premiums, processing claims and enrolling employees. Without agents’ expert advice, many individuals and businesses will end up spending more for health insurance and get less care.
“We soon hope to see a similar bill introduced in the House as we are confident that all parties will be able to work together to resolve the issue during this congressional session. We look forward to working with members of Congress and the Administration on this critical issue and other needed improvements to the healthcare reform law,” she said.
Legislation to Eliminate the Health Insurance Tax is Reintroduced
U.S. Senators John Barrasso (R-WY) and Orrin Hatch (R-UT) reintroduced the Jobs and Premium Protection Act (S.603), which would eliminate the health insurance tax included in the president’s health care law. Senator Barrasso said, “Over the last three years, Americans and small businesses have watched their health premiums increase under the president’s health care law. Now, they’re set to get hit again unless Congress repeals the costly health insurance tax. Small businesses and their employees are the ones who are going to end up paying this unfair tax.”
Senator Hatch said, “American families and job creators can’t afford the cost or consequences of this ObamaCare health insurance tax. Higher insurance costs, fewer jobs and smaller paychecks is not what president Obama promised when he signed the largest expansion of government into law nearly three years ago, but that’s exactly what’s already happening in no small part because of this tax, said. Raising taxes on health insurance can only ever lead to higher health care costs, because the price of the tax will be passed onto consumers. In this economy and with families and businesses struggling to succeed, it’s time we repeal this egregious tax once and for all.” Senators Richard Burr (R-NC), Dan Coats (R-IN), Mike Crapo (R-ID), Jim Inhofe (R-OK), Johnny Isakson (R-GA) and Mike Johanns (R-NE) are original cosponsors of the Jobs and Premium Protection Act.
Consumer Driven Plans Gain Popularity In Private Exchanges
During the 2013 annual enrollment period, 39% of those who enrolled in Aon Hewitt’s multi-carrier private health care exchange chose a consumer-driven health plan (CDHP), up from 12% in 2012. Conversely, the number of employees who enrolled in a PPO-type plan decreased from 70% in 2012 to 47% in 2013. For 2013, 32% of employees chose a similar type of plan their existing coverage such as a PPO for example. Twenty-six percent chose richer coverage. Forty-two percent reduced their payroll contributions and selected a less rich form of coverage.
Sixty-eight percent 68% of exchange enrollees used a health plan comparison tool compared to just 48% of employees who completed a traditional enrollment with Aon Hewitt. In addition 57% of exchange enrollees used the provider search tool compared to only 14% of traditional-plan enrollees. For more information, visit www.aonhewitt.com.
Health Plans Pair High Coinsurance With Big Out-of-Pocket Costs
Health plans with the highest average coinsurance rate (above 40%) also have the highest average annual limit on out-of-pocket expenses for enrollees. The coinsurance rate did not track predictably with the average deductibles that consumers pay.
Coinsurance is a common term in the individual and family market as a method of cost sharing for more expensive services, including hospitalization, surgery, child birth, and emergency care. Out of the 9,711 plans examined, a quarter of plans with coinsurance rates were higher than the national average. The lowest range of up to a 10% coinsurance rate corresponded to an average out-of-pocket limit of $4,286 while the highest range of above 40% corresponded to an average limit of $8,825.
The Affordable Care Act (ACA) will prevent companies from offering plans with some of the outer limits of these costs, but in some instances, consumers may face even higher deductibles and out-of-pocket costs than the average plan.
Kev Coleman, head of Research & Data at HealthPocket said, “This is definitely a situation of buyer beware, particularly if people assume that a plan with a low premium but high coinsurance translates into less money out of their pockets in a given year. A serious medical episode could completely change the financial affect of the health plan.”
Starting in 2014, cost transparency will be even more critical since health plans will be designed around the percentage of medical costs the consumer is expected to pay. Consumers will need to understand how much of their costs their health plan covers and what their healthcare providers charge for services.
Using figures from a study by the Kaiser Family Foundation, the analysis compared average costs for individual and family plans with some potential designs for the upcoming Bronze and Silver plans offered under the ACA. A Bronze Plan with the same coinsurance rate as the national average was found to have a higher deductible and out-of-pocket limit than the average plan. A Silver Plan using the same coinsurance rate as the national average had a higher out-of-pocket limit but significantly lower deductible.
All plans under the ACA will include their deductibles as part of the out-of-pocket limits, making it easier for consumers to better estimate their costs, and more services will be covered under these plans than the comparison plans. For more information, visit http://www.healthpocket.com.
Americans Are Still in the Dark About Health Reform
Americans are not sure how the health reform law will affect them and few are paying attention to state-level decisions about implementation, according to the latest Kaiser Health Tracking Poll.
Though opinion on the law remains nearly evenly divided, opponents’ attacks seem to have taken a toll on the public’s expectations. Americans are now more likely to say the law will make things worse rather than better for their families. While most of the law’s individual provisions remain popular, many of the most well-liked elements are the least well-known among the public. Public knowledge of the ACA’s provisions has not increased since 2010. In fact, awareness of some key provisions has declined since the law’s passage when media attention was at its height.
The public hasn’t been paying much attention to the decisions of state and federal policymakers about Medicaid expansion and health insurance exchanges. Forty-eight percent have hear nothing about their state’s decision on whether to create a state run exchange; 15% have heard some; and 7% have heard a lot about it.
While health care cost growth has slowed in recent years, a majority of the public perceives that the country’s health costs have been going up faster than usual. While health care cost growth continues to outpace inflation, the rate of growth in national health expenditures has slowed markedly in recent years. The public’s perception is quite different, however. Fifty-eight percent say that, the cost of health care for the nation has been going up faster than usual over the past few years.
Thirty-four percent say that their own family’s health care costs have been going up faster than usual while 24% say the costs been going up about the same amount as usual, and 32% say their costs have held steady in recent years. Only 2% say their costs have been going up more slowly than usual or have come down. For more information, visit www.kff.org.
Hospital Prices Drive Health Care Costs
Inpatient Hospital prices increased 8.2% per year from 2008 to 2010 with wide variation in price levels and growth rates across states and localities. The study published in the March issue of the American Journal of Managed Care (AJMC) was conducted by researchers at America’s Health Insurance Plans (AHIP).
Taking into account the complexity of treatment and the number of procedures performed, the authors estimate that 1.3% to 1.9% of this increase could be attributed to increased intensity per admission. Thus intensity-adjusted price increases ranged from 6.2% to 6.8% annually during this period.
The price for a spinal fusion increased the most (15.2% per year) from 2008 to 2010. That was followed by bronchitis and asthma treatment (10.3% per year) and uterine laparoscopic procedure for non-malignancy (9.8% per year).
A recent report from the Health Care Cost Institute found that despite some increases in utilization, spending growth was driven primarily by increases in the prices paid. Last year, the S&P Healthcare Economic Composite Index showed the average per capita cost of hospital services in the commercial market had increased by nearly 8%.
Data show that increasing provider consolidation is one contributor to rising hospital prices. When hospitals consolidate, merging with other hospitals or buying up physician practices, they have greater negotiating strength and competition is limited. The result is higher prices for services, higher costs for patients, and often no improvement in the quality of care delivered. AHIP recently filed an amicus brief on the affect of hospital consolidation in the Court of Appeals for the Sixth Circuit in support of the Federal Trade Commission (FTC). For more information, visit www.ahip.org.
MassMutual Reports Strong Retirement Plan Sales
MassMutual is enjoying a strong start to 2013 following the company’s recent acquisition of The Hartford’s retirement plans business. Through February, MassMutual’s retirement plan sales results are ahead of plan by 25%.
While 71% of the sales pipeline is with large broker-dealer firms, independent firms are gaining share quickly. MassMutual’s proposal activity in the emerging markets (under $5 million in assets under management) is its strongest ever, with 80% of new plans coming through third-party administrators (TPAs). Month-over-month proposal activity in February increased over January, with March off to an even better start. For more information, visit massmutual.com.
One America Sets Sales Records
The OneAmerica companies set a new sales record in 2012 for employer-sponsored retirement plan sales. Sales were up 22% over 2011’s previous record. It’s the third straight year company broke its record for new retirement plan sales.
The company’s tax-exempt unit saw a 57% increase in sales of employer-sponsored 403(b) plans. Total assets and participant counts also set records. OneAmerica also set a record with 9% growth in renewal contributions – a measure of the growth of assets within retirement plans already with the companies.
Bill Yoerger, president of retirement business for the OneAmerica companies said, “We continue to execute on our sustainable, multi-year growth plan to be highly competitive in the multiple markets we serve in the 401(k) and not-for-profit markets. We’re particularly excited that we continue along an growth plane, but also that we grew in all of our markets from small to very large plans.”
Sales were up 140% over 2011 through OneAmerica’s actuarial and consulting company, McCready and Keene, which administers retirement plans through its open-architecture trust solution. OneAmerica ended the year with a 96% retention rate on existing business. For more information, visit www.oneamerica.com.
Pension Plans Faced Record Deficit in 2012
Record-low discount rates among the 100 largest US corporate pension plans led to record-high pension obligations and a $388.8 billion pension-funding deficit. That’s a $61.1 billion deficit increase in 2012, according to a study by Milliman. Since the end of 2010, declining interest rates have widened the pension funding deficit by more than $150 billion, driving record deficits in each of the last two years. The pension-funding ratio stood at 77.2% at year’s end, down from 79.2% at the end of 2011. The deficit increase and reduced funding ratio in 2012 happened in spite of efforts by certain plan sponsors to de-risk their pension plans.
With the Federal Reserve Board indicating its intention to keep interest rates low through 2014, pension obligations will remain high. The year is off to a strong start from an equity perspective, and de-risking may continue in 2013. But until interest rates move favorably, the pension-funding deficit is likely to continue.
Many pension plan sponsors made significant efforts to reduce risks in 2012, even as record-low interest rates made it an expensive time to pursue these kinds of risk management efforts, says John Ehrhardt, consulting actuary and co-author of the Pension Funding Study. “But there was no fighting the inevitable gravity of these low interest rates, as the 100 pension plans in our study saw a cumulative deficit increase in excess of $60 billion. All this in spite of strong asset performance that exceeded the expectations of most plan sponsors. People are probably getting tired of hearing me say this, but pension funding status will continue to be tied to interest rates. If rates stay low — and all indications are that they will through 2014 — these pension plans will struggle to fill their funding gap.
With an 11.7% investment return in 2012, the Milliman 100 pension plans performed better than they expected—but it wasn’t enough to offset the ballooning deficit. Nor were contributions in excess of $60 billion.
While the $61.5 billion in contributions during 2012 was significantly greater than most prior years, it exceeded the 2011 total by only $6.3 billion and the 2010 total by only $1.8 billion. The lower-than-expected contributions were likely due to plan sponsors electing to change their contribution strategy following the passage of the MAP-21 interest rate stabilization legislation.
Following a $38.5 billion charge to earnings in 2011, the Milliman 100 pension plans again set a new record for total pension expense, with a $55.8 billion charge to earnings. The $17.3 billion increase in pension expense is consistent with the prediction of $16 billion said by last year’s study. This year’s study predicts a $7.6 billion increase in pension expense in 2013.
In 2011, plan sponsors decreased the percentage of assets invested in equities by more than 5%. In 2012, the percentage of assets allocated to equities remained relatively stable (from 38.2% to 38.0%), as the move toward liability-driven investments (LDI) slowed. Because of the strong performance of equities in 2012, plans with higher equity allocations had better investment returns than those with higher allocations to fixed-income investments. For more information, visit milliman.com.
Covered California Faces Criticism Over Plan To Partner With Wal-Mart
Covered California — the state’s health insurance exchange — is facing criticism over a plan to allow Wal-Mart to enroll individuals in the health plans offered through the new insurance market, the Los Angeles Times reports Covered California officials want employees at Wal-Mart and other retailers to help individuals learn about and purchase health plans offered through the state health insurance exchange.
However, labor unions and consumer advocates oppose the idea, arguing that Wal-Mart and similar retailers should not advise others on health coverage when many of their workers do not qualify for employer-sponsored health insurance and instead get benefits through Medi-Cal, California’s Medicaid program.
James Araby — executive director of the United Food & Commercial Workers Union’s Western States Council told the LA Times, “We are appalled and offended that the exchange would contemplate partnering with Wal-Mart and other retailers notorious for failing to provide health benefits to many of their workers and providing substandard benefits to the workers who do qualify.” Wal-Mart defended its employee health benefits and said that they exceed what many retailers typically offer their workers. A spokesperson for Wal-Mart said that it is too early to discuss a partnership with the exchange.
Labor leaders met with Covered California officials with a goal of developing requirements for retailers that partner with the exchange to ensure they are providing comprehensive health benefits for workers. Union leaders said they will pursue legislation if they cannot reach an agreement with exchange officials.
Peter Lee — executive director of Covered California – told the LA Times, We are not changing our retail strategy, and it would be a distraction to have legislation about setting different standards for who the exchange can work with.”
CAHU Sponsors Day at the Capitol in Sacramento
CAHU’s Day at the Capitol will be held May 14 and 15 in Sacramento. It will include professional development sessions with the opportunity to earn CEUs, a legislative update. Sessions will cover how agents can get ready for California’s new health insurance market and the health benefit exchange. The will also be an opportunity to meet your legislator for more information, visit http://www.cahu.org/meetings/day-at-capitol.
LIFE INSURANCE & ANNUITIES
Life and Annuity Need to Adapt to a Changing Market
The consumer market for life and annuities is stressed by demographic, lifestyle and preference changes, according to a study by Conning. Mary Pat Campbell, analyst at Conning, said “Our analysis of the consumer market for life insurance and annuities identified eight key areas of change that insurers must manage. Some of the most pressing right now are the changing age profile and socioeconomic shifts, as they have more immediate affect on life events that typically drive life insurance sales.”
Stephan Christiansen said, “Consumers’ life insurance protection gap actually doubled from 2006 to 2012 due to the affect of consumer changes.” That analysis identifies a growing need for coverage that forward-thinking companies are looking to target with new distribution and product design solutions. At the same time, the market is becoming more diverse, with individual consumer segments developing at different paces. Those insurers that are most agile will create opportunities in this time of change. For more information, visit www.conningresearch.com.
Dental and Vision Plan App
Guardian Life enhanced the Guardian Anytime Mobile App.
Members can now view, e-mail, or print dental and vision member identification cards directly from their iPhone and Android smart phones – another way Guardian is making it easier and more accessible for customers to use benefits. The recent upgrade makes it more convenient for members to view an image of their ID card and share the card with their provider via email or print to a wireless printer. For more information, visit www.guardiananytime.com/mobile, for more information.
American General introduced Elite Global Plus II. The fixed index universal life insurance (IUL) product provides death benefit protection as well as the strongest accumulation potential of the carrier’s UL products. American General says that these features make it perfect for supplemental retirement funding and other future income stream needs. For more information call 800-677-3311 or visit
• Employees Will Continue to See Higher Cost Sharing
• Are Patients with True Emergencies Being Discharged from the ER?
• The Keys to Controlling Specialty Drug Costs
• Hospital Inspection Reports Are Now Public
• Americans Are Confident about Choosing Health Coverage
• More Americans Are Getting Preventive Care
• Kaiser and TriCare Get Highest Marks in Customer Satisfaction
• Ascension Benefits Gains Recognition
• Closing the Gender Gap in Retirement Savings
• Mergers & Acquisitions Activity Falls Sharply
NEW PRODUCTS & SERVICES
• National Prescription Discount Card Program
• Web-based Annuity Management
• Guaranteed Issue Disability
• Whitepaper On Life Settlements
• Key Tax Issues for Annuities
• Webinar on Exchanges
• Congress Considers Licensing Reform
Employees Will Continue to See Higher Cost Sharing
Employees contribute 42% more for health care than they did five years ago, compared to a 32% increase for employers. In the coming years, more than 80% of employers that responded to a Towers Watson survey plan to raise the share of premiums paid by employees. That includes rethinking their subsidy strategy for dependents. Employers expect average total health care costs for active employees to reach $12,136 in 2013, up 5.1% from in 2012. That’s the lowest cost increase in 15 years, according to a Towers Watson survey. The total employee cost share, including premiums and out-of-pocket costs, has climbed from 34% in 2011 to 37% in 2013. Subsidies for retiree medical coverage have declined, too, with only 15% of companies offering them to newly hired employees.
Ron Fontanetta of Towers Watson said, “Employers are redefining their financial commitment to health care, in part, to avoid the potential payment of an excise tax in 2018. Yet they are also mindful of a growing affordability gap for employees as health care costs take their toll on take-home pay. To combat these challenges, we expect employers to take more aggressive action, using emerging strategies to improve delivery, cost management and employee accountability.”
Employers are looking at new options, such as exchanges for active employee and retiree populations. Nearly 30% of employers are already facilitating access to an exchange-based solution for retirees in 2013, with another 36% planning to do so over the next three years.
Eighty-two percent say that they are not likely to direct active employees to an exchange without a subsidy in the next five years. Sixty percent say the same, even with a subsidy. The survey also reveals the following:
• 66% offer an account-based health plan (ABHP); that number is expected to increase to 79% in 2014.
• Nearly 15% of those with an ABHP now use a total-replacement ABHP, up from 7.6% in 2010.
• Median enrollment in ABHPs nearly doubled, surging from 15% in 2010 to nearly 30% in 2013.
These enrollment patterns underlie a fundamental evolution in ABHPs as employers use them increasingly to offer incentives and align with post-retirement strategies. Nearly two-thirds of respondents offer financial rewards to encourage employee participation in health programs, but tougher requirements are on the way. Sixteen percent align their rewards and penalties to biometric targets (other than tobacco use), and another 31% are considering this strategy for 2014. There is growing interest in expanding financial incentives to include spouses: 59% anticipate doing so by 2014, up from 23% in 2012.
The study looked at why certain employers have seen much lower cost increases over the past four years. Fr the best performers, average health care cost increases only 1.7% in 2012, which is less than half the median increase and roughly in line with the general inflation trend. In 2013, best performers took the following steps:
• Consolidated vendors.
• Gave incentives to providers to invest in new technologies to improve care coordination.
• Helped employees make smarter health care decisions using popular communication methods such as social media.
• Put more emphasis on transparency of provider prices and quality.
• Invested in case management for high-cost cases.
• Tied financial incentives to measurable improvements in employees’ health, and extended incentives to spouses.
• Began implementing new payment methods to providers, giving them more responsibility for delivering high-quality, efficient care.
For more information, visit businessgrouphealth.org.
Are Patients with True Emergencies Being Discharged from the ER?
The American College of Emergency Physicians (ACEP) points to a growing practice of insurance carriers (including Medicaid) denying payment for so-called “non-emergency” visits to the ER. ACEP says that this practice is likely to discourage patients from seeking the appropriate care for true emergencies.
The small numbers of emergency patients who are discharged from the ER with “primary care treatable” diagnoses have the same symptoms as patients who have been determined to need immediate or emergency care, hospital admission, or surgery, according to a study to be published in the Journal of the American Medical Association (JAMA).
Lead study author Maria Raven, MD, MPH, FACEP said, “Two patients could come to the emergency department with the same symptoms; one could be diagnosed with a condition that is not that serious while another could be diagnosed with a life-threatening condition…There is no possible way to determine the outcome of the visit in advance, and our study has shown that it’s not good policy to do so after the fact. Insurance companies should not treat these two patients differently. Patients should never be burdened with the task of diagnosing themselves out of fear that their potential emergency isn’t covered by insurance.”
Although only 6.3% of emergency department visits were determined to have “primary care treatable” discharge diagnoses, the chief complaints for these visits were the same as those reported for 88.7% of all other emergency visits. A substantial portion of these visits required immediate emergency care or hospital admission. These findings suggest that these “primary care treatable” discharge diagnoses are unable to accurately identify non-emergency ER visits.
Dr. Raven said, “If a triage nurse were to redirect patients away from the ER based on non-emergency complaints, 93% of the redirected ER visits would not have had primary care-treatable diagnoses. The results call into question reimbursement policies that deny or limit payment based on discharge diagnosis. The majority of Medicaid patients, who stand to be disproportionately affected by such policies, visit the emergency department for urgent or more serious problems.” For more information, visit http://www.acep.org
The Keys to Controlling Specialty Drug Costs
Employers that use multiple cost management programs have a 50% lower specialty drug cost trend, according to a study by Express Scripts. “Specialty drug costs and use have escalated without sufficient oversight to manage waste or misuse of these expensive medications. Add in the impact of bad health decisions and you get poor financial and clinical outcomes, said Glen Stettin, MD, of Express Scripts.” Specialty medications are expected to account for $1 out of every $4 spent on prescription medications by 2014.
The following are some major factors that contribute to the rising costs of specialty medications for complex diseases such as cancer, hepatitis C and multiple sclerosis:
• Price inflation
• Increased utilization
• The introduction of new drugs
Employers that did not manage prescription costs saw a 28% annual average increase in specialty drug spending per member. In contrast, employers that had tight management of prescription drug costs only saw a 14% an annual increase. Tightly managed programs also saw higher adherence rates in top therapy classes, such as multiple sclerosis and oncology.
There was an 18% increase in spending on specialty drugs in 2012 compared to 17% in 2011. Unit costs are driving the specialty medication trend in the top 10 therapy classes. Specialty medications for inflammatory conditions, multiple sclerosis, cancer and HIV accounted for nearly 70% of annual spending on specialty drugs. The hepatitis C virus has a relatively low per-member-per-year cost of $7.82, but it’s the highest trending therapeutic category at 29%. It is expected to increase rapidly with the advent of new therapy regimens and screening guidelines.
Nearly 50% of specialty drug costs are billed on the medical side of the plan benefit, where it is difficult to apply the various pharmacy benefit solutions that can drive down costs. Spending on traditional medications decreased 1.5%, predominantly due to generics. For more information, visit https://www.express-scripts.com.
Hospital Inspection Reports Are Now Public
The Association of Health Care Journalists launched www.hospitalinspections.org. The site compiles hospital inspection reports dating back to January 2011. The website features government inspections of acute-care hospitals and critical-access (rural) hospitals resulting from complaints. Until now, reporters and the public had to file Freedom of Information Act (FOIA) requests to the Centers for Medicare and Medicaid Services (CMS) to get the documents, a process fraught with delays that can stymie timely public knowledge of problems at hospitals. For year, AHCJ has urged the government to release the deficiency reports in an electronic format. The inspection reports are easily searchable by keyword, city, state, and hospital name.
However, it does not include reports of deficiencies at psychiatric hospitals or long-term care hospitals, nor does it include the routine hospital inspections. Thousands of hospital inspection reports are still under wraps. AHCJ sent a letter urging the largest private a creditor of hospitals to make its hospital inspections public. As a private agency, the Joint Commission is not subject to FOIA. It does complaint and routine inspections separately from CMS. The commission has rejected two previous AHCJ requests for this information, saying disclosure would compromise its efforts to improve hospital quality. AHCJ president Charles Ornstein, a senior reporter at ProPublica in New York said, “The AHCJ board cannot accept the notion that patients are best protected by keeping hospital problems secret. Such reasoning also flies in the face of growing consensus among health care leaders and policy makers about the importance of transparency to improve medical care quality.”
Americans Are Confident about Choosing Health Coverage
A majority of Americans (including the uninsured) are confident in their ability to choose health coverage, according to a survey by Express Scripts. More than half of those who are most likely to enroll in the exchanges say they’re prepared for the challenge. Fifty-three percent of the uninsured are confident that they will be able to select the best health plan for themselves and their family. Sixty percent of those with individual coverage say they’re ready to make the right choice. However, the survey shows that nearly half are not as prepared for this opportunity and will need education and support. For more information, visit https://www.express-scripts.com.
More Americans Are Getting Preventive Care
Seventy-one million more Americans are getting preventive services coverage without cost-sharing under the Affordable Care Act, according to the Dept of Health and Human Services (HHS). This includes colonoscopies, pap smears, mammograms, well-child visits, flu shots, and many more services. Millions of Americans were in health plans that did not cover these services. Based on the Kaiser Family Foundation’s Employer Health Benefits Survey and Census Bureau data, HHS estimates that about 71 million Americans are now getting expanded coverage of preventive services due to the Affordable Care Act. Kaiser Family Foundation’s Employer Health Benefits Survey in 2012 found that 41% of all workers were covered by employer-sponsored group health plans that expanded their list of covered preventive services due to the Affordable Care Act.
Kaiser and TriCare Get Highest Marks in Customer Satisfaction
TriCare and Kaiser Permanente earned the top customer experience ratings in the health insurance sector based on a study of 10,000 U.S consumers. At the other end of the spectrum, Empire (BCBS), Medicaid, and Highmark (BCBS) were the lowest rated health plans. Bruce Temkin, managing partner of Temkin Group said, “While health plans continue to deliver terrible customer experience, there’s some glimmer of hope. The industry’s ratings have consistently improved over the last three years.” The average rating for health plans has improved steadily from 50.3% in 2011 to 54.8% in 2013. TriCare’s rating of 71% is 6% ahead of the second-highest-ranked health plan, Kaiser Permanente. TriCare earned top marks for functional and emotional experience while Kaiser Permanente earned the top accessible rating. To get the free report, visit www.temkingroup.com.
Ascension Benefits Gains Recognition
The San Francisco Business Times named Ascension Benefits & Insurance Solutions as one of the largest insurance brokerages in the East Bay. Ascension, which focuses on employee benefits, is part of Ascension Insurance, a national consulting and brokerage firm founded in 2008. Business Insurance recently named Ascension Insurance as one of the fastest-growing firms in the U.S. In 2012, the firm posted 49% revenue growth over 2011. Ascension Insurance is ranked within the top 30 largest agencies by revenue size, with nearly 450 employees and 35 locations nationwide. For more information, visit http://www.ascensionbenefitsins.com.
Closing the Gender Gap in Retirement Savings
Women are closing the gap in retirement plan account balances and savings rates, according to fourth quarter data from defined contribution plans administered by MassMutual. The average deferral rate for female participants was 5.38%, an increase of 1.6% for the quarter. Men are saving at an average rate of 5.81%, an increase of 1.2% from the third quarter of 2012.
In the third quarter of 2010, women’s average account balances trailed that of men by 40.49%. But the gap has been closing gradually over the past 10 quarters. In the fourth quarter of 2012, women’s average account balance was 38.25% behind that of men. That’s an improvement of 5.6%. Elaine Sarsynski, CEO of MassMutual International LLC said, “We have customized our participant education offering on a number of fronts to drive action among segments such as women…The progress we are seeing indicates that participants are responding favorably.”
Seventy-three percent of asset allocation investments for women are in age-based strategies while men are almost evenly divided between age-based and risk-based strategies. The percentage of participants taking any kind of loan or withdrawal is the lowest of any fourth quarter in the past five years.
Average balances and average deferral rates are highest for the Silent Generation (born 1945 and earlier) and Baby Boomers (born 1946 to 1964). Combined, Generation Y and Generation X participants (born 1965 to 1995) represent 56% of total participants and 32% of defined contribution assets. While GenX/Gen Y participant numbers are higher, Boomers still have a greater share of the assets at 61%, but that gap is also closing. For more information, visit massmutual.com/retire.
Mergers & Acquisitions Activity Falls Sharply
The number of insurance mergers and acquisitions fell sharply in 2012, according to Conning’s annual study. Mergers and acquisition activity in the U.S. insurance market dropped in 2012, with transactions off 19% and aggregate deal volume off 21%. Conning analyst, Jerry Theodorou said that 2012 was expected to be a very active year due to high levels of industry capital and limited opportunity for organic growth.
Stephan Christiansen, Conning’s director of research said that M&A activity started strong in the first quarter of 2012. But the following two quarters were very slow due to the chilling effects of concerns about the economy. In the fourth quarter, there was a substantial uptick in activity in most sectors, which may set the stage for a strong 2013. Outside the U.S., the pace of insurance M&A declined less, buoyed by financial institutions selling their insurance operations to raise assets to repay government loans or meet regulatory requirements.” For more information, visit www.conning.com.
NEW PRODUCTS & SERVICES
National Prescription Discount Card Program
Watertree Health launched its free prescription discount card program. The card has been introduced across the country over the past year using a network of local representatives. For more information, visit www.WatertreeHealth.com.
Web-based Annuity Management
Andesa Services launched the Policy Self-Service Portal. Customers can access policy information and manage routine policy maintenance easily and securely online, which reduces customer service costs for the carriers. For more information, visit www.andesaservices.com.
Guaranteed Issue Disability
California Guardian Brokerage/Pacific Advisors introduced the Income ProVider disability income insurance in California, providing access to guaranteed standard issue (GSI) programs in the state. The Income ProVider Policy Form 1200 features the following:
• Increased options after leaving the employer.
• A new suite of discounts for maximum savings.
• The presumptive disability benefit is included in the base policy.
• The six-month limit on recurring disability provision has changed to 12 months.
• More liberal language on working outside of U.S. language
• The rehabilitation and workplace modification provision has been removed.
For more information, customs quotes, or to meet with a disability product specialist, call Ani Manukyan of California Guardian Brokerage/Pacific Advisors at 800-775-1970 ext. 6 or e-mail firstname.lastname@example.org.
Whitepaper On Life Settlements
The Lifeline Program published a whitepaper for financial advisors, estate planners, and attorneys titled, “How to Offer Life Settlements to Your Clients.” The free guide is available at www.thelifeline.com/WhitePaper/2.
Key Tax Issues for Annuities
The National Assn. for Annuities (NAFA) offers a Webinar feature some of the most highly sought after experts on annuities and taxes. It will be held Thursday, March 28, 2013 8:30 a.m. Pacific Time. For more information, visit https://www1.gotomeeting.com/register/326887600
Webinar on Exchanges
DST Health Solutions is hosting a Webinar series on health insurance marketplaces. The four-part series, “Health Insurance Marketplaces-What You Need to Know, NOW” began March 20. (We were not able to announce this morning’s seminar in time because we did not receive the announcement until March 18.) The next seminar will be held March 27, 2013 at 10:00 a.m. Pacific Time. For more information, visit www.dsthealthsolutions.com.
Congress Considers Licensing Reform
The Senate Committee on Banking Subcommittee on Securities, Insurance, and Investments held a hearing on a bill that would streamline insurance agent licensing. The National Association of Registered Agents and Brokers Reform Act of 2013 (S.534) is also pending in the House (H.R. 1155).
NARAB II is designed to create a non-profit entity governed by a board of state insurance commissioners and industry representatives. They would apply licensing, continuing education, and nonresident insurance producer standards on a multi-state basis while preserving the laws of individual states. Identical bills were introduced by Senators Jon Tester (D-Montana) and Mike Johanns (R-Nebraska) in the Senate and by Representatives Randy Neugebauer (R-Texas) and David Scott (D-Georgia) in the House. Both bills were introduced on the same day in a powerful show of support, receiving 41 sponsors in the House and 14 sponsors in the Senate and drawing Members from both sides of the aisle. NAPSLO applauds the leadership of these Congressional leaders for the work they have done thus far, and looks forward to working with them to see this legislation become law.
State regulators would continue to be the primary regulators of insurance producers and enforcers of consumer protection laws. NARAB would not report to the federal government nor possess any federal regulatory power. Membership would be voluntary with those that join enjoying the benefits of multi-state licensing. NARAB membership is contingent on meeting rigorous standards and ethical requirements.
“NARAB II has been a major legislative priority for NAPSLO members for some time. We are very excited to see it receive such powerful, bipartisan support in its introduction, and look forward to working with members of Congress to see it passed into law,” said David Leonard of the National Assn. of Professional Surplus Lines Offices.