• Guide to Tracking ACA Implementation in California
• California Broker Magazine Seeks Authors For the February Issue
• Employees Are Relying More on Voluntary Benefits
• Employees Prefer Benefits that Offer Immediate Gratification
• The Decline Reverses in Retirement Plan Participation
• Inflation for Popular Brand Name Drugs Far Outpaces General Inflation
• Health Plans Fail To Comply With The ACA In Tobacco Cessation Coverage
• Regulations Aim to Protect Consumers from Unfair Wellness Programs
• Medicaid Expansion Is Not Expected to Burden States
• States Are Expanding Medicaid Care Coordination
• Long Term Care Insurance Conference
• Indexed UL
• Indexed UL Sales Tool
• Fitness Reimbursement Program
• Financial Planning Selling System
• Fast Online Tool to Find Benefit Gaps
• Benefit Gap Assessment
Guide to Tracking ACA Implementation in California
The California HealthCare Foundation has created a guide to track progress toward the January 2014 launch of the central provisions of the Act. “With California hard at work creating new private and public insurance options, among other ACA requirements, this guide will help the public, members of the media, and stakeholders keep a close eye on implementation activities,” said Marian Mulkey, director of CHCF’s Health Reform and Public Programs Initiative. To get the guide, visit chfc.org.
California Broker Magazine Seeks Authors For the February Issue
California Broker Magazine is seeking bylined articles for the February issue. The deadline is December 28. We are looking for articles on the following topics:
Employees Are Relying More on Voluntary Benefits
Nearly nine in 10 employees say that voluntary benefits add value to their benefit package and more than half have at least one voluntary benefit, according to a survey by Guardian Life. The study outlines the importance that employees place on having voluntary benefits to cover financial gaps in their benefit packages.
Sixty percent of employees say the workplace is their primary source for financial services and health protection products. Employees have a more positive view of their employer and their benefit package when the employer offers a wider range of voluntary benefit options, according to Elena Wu, vice president, Group Marketing and Learning Services at Guardian.
Nearly half of employees say that the workplace plays a more important role in their personal finances than it did five years ago. Sixty-four percent of workers say they value the research and shopping that employers do on their behalf for voluntary benefits.
The following factors are fundamental to the growth of voluntary benefits: cost advantages, payment options, easier access, and convenience. Sixty-two percent of those who would like their employer to offer more voluntary benefits are interested in critical illness insurance, such as accident and cancer products while half are interested in disability insurance.
Not surprisingly, medical insurance, dental insurance, and vision insurance are the most widely owned products at the workplace. Accident insurance is the only product that is more likely to be owned outside of the workplace. Nearly half of all companies offer voluntary benefits to fill unmet employee needs.
Interestingly, more than half of workers surveyed are highly confident in their ability to make the right benefit decisions. To get the Guardian Workplace Benefit Study, visit www.aboutemployeebenefits.com.
Employees Prefer Benefits that Offer Immediate Gratification
Employees tend to select benefits that offer immediate gratification rather than those that could deliver value over the long term, according to a Mercer survey of 10,400 workers in 10 key markets around the world. An extra week of paid time off was among the top-three employee choices in seven of the 10 markets surveyed. Employees selected a salary increase over all benefit offerings listed in the survey (except in Canada where paid time off edged out a salary increase.)
U.S. employees are most willing to pay for disability coverage, life insurance, and auto insurance. Accident and hospital indemnity insurance are relatively popular while legal assistance and identity theft insurance rank near the bottom. But when looking at the results more closely, it’s clear that different benefits appeal to different employee segments:
• Disability insurance appeals more to those aged 55 to 64 and transportation industry employees.
• Retail discounts appeal most to young singles who are living independently and households with children.
• Hospital indemnity insurance appeals most to those 65 and older and senior managers.
• Auto insurance appeals most to those who work more than 50 hours a week and those in the high-tech industry.
• Homeowner insurance appeals most those with household incomes between $50,000 and $60,000.
• Pet insurance appeals most to those in professional services.
For more information, visit www.mercer.com/benefit-choice-research.
The Decline Reverses in Retirement Plan Participation
As the economy slowly recovers from the recession, there has been a very slight increase in the number of workers who participate in employment-based retirement plans, according to a report by the Employee Benefit Research Institute (EBRI).
In 2011, 39.7% of workers participated in an employment-based retirement plan compared to 39.8% and 39.6% in 2009. These figures apply to all workers including part-year, part-time, and self-employed workers.
The type of employment has a major effect on participation rates. As many as 53.7% of full-time, full-year wage and salary workers ages 21 to 64 participated. These workers have the strongest connection to the work force.
The following factors are associated with less retirement plan participation:
• Being nonwhite, younger, female, never married.
• Having less education, lower earnings, poorer health, not having employer-sponsored health insurance.
• Not working full time and full year.
• Working in service occupations, farming, fisheries, and forestry.
Also, workers in the South and West are less likely to participate in a plan. The percentage of women participating in a plan was lower than that of men, but women’s participation level actually surpasses that of men when controlling for work status or earnings.
Hispanics born outside the United States had substantially less participation than did native-born Hispanics, even when controlling for age and earnings. For more information, visit www.ebri.org.
Inflation for Popular Brand Name Drugs Far Outpaces General Inflation
Since September 2011, price inflation for the most highly utilized brand-name medications was more than six times greater than overall economic price inflation for consumer goods, according to the ExpressScripts Prescription Price Index. Prices for these medications increased 13.3% from September 2011 to September 2012 while overall economic inflation was only 2%. Meanwhile, prices of generic medications declined 21.9%. This is the largest widening of brand and generic prices since Express Scripts began calculating its Prescription Price Index in 2008.
Steve Miller, M.D., chief medical officer at Express Scripts said, “The patent cliff has fueled a growing price disparity between brand-name and generic medications. The trend emphasizes the nation’s continued need for the tools we employ to help patients make better decisions, including generic use when appropriate.”
During the first three quarters of 2012, spending on traditional medications decreased 0.6% over the same period in 2011, primarily because of lower prices brought on by a growing use of generic medications. The top traditional therapy class is for mental and neurological disorders (including antidepressants), which consumes 24.7% of all traditional drug spending. Total spending in this class is down 1.9% due to newly available generic antidepressants and antipsychotics.
Total spending on medications to treat high blood pressure and high cholesterol decreased 7.7%, primarily driven by patent expirations on blockbuster drugs.
During the first three quarters of 2012, spending on specialty medications increased 22.6%. In the first nine months of 2012, specialty drug costs consumed 20.8% of total pharmacy spending. Dr. Miller said, “The continued rise in spending on specialty medications underscores the nation’s need to accelerate the pathway for biosimilars. Additional competition within these therapy classes would provide a necessary market control against price inflation.” The three therapy classes with the highest specialty drug spending are rheumatoid arthritis/autoimmune conditions, multiple sclerosis, and cancer.
Medications commonly used to treat hepatitis C had the largest specialty spending increase of 117.3%. Increased utilization is driving this trend as new patients are treated with one of two new medications. Eight of the nine notable new medications approved in the third quarter are specialty medications. Many are second-line and third-line drugs used to treat advanced cancers. The complete Drug Trend Quarterly is available at DrugTrendReport.com.
Health Plans Fail To Comply With The ACA In Tobacco Cessation Coverage
Many health insurance plans don’t provide the tobacco cessation coverage that’s mandated by the health care reform law, according to a study of insurance contracts. The Georgetown University Health Policy Institute analyzed 39 health insurance plans sold in six states, including individual, small group, federal employee, and state employee plans. The study was commissioned by the Campaign for Tobacco-Free Kids with funding from Pfizer Inc.
Researchers found many policies rife with confusing and conflicting language that could discourage consumers from seeking treatment. Many policies also have gaps in coverage for cessation counseling and medication as well as cost-sharing requirements that appear to conflict with the law.
Under the ACA, all new private health insurance plans must cover preventive health services recommended with an A or B grade by the U.S. Preventive Services Task Force (USPSTF). The coverage must be provided without cost sharing, such as co-pays.
The following are key findings of the study:
• Thirty-six contracts said that they cover tobacco cessation or that they are providing coverage that’s consistent with the USPSTF recommendations, but 26 of these contracts include language that entirely or partially excludes tobacco cessation from coverage. For example, one contract states that preventive adult wellness services are covered. But, in another section, the contract includes smoking cessation on a list programs that are not covered.
• Only four of the 39 plans stated they covered individual, group and phone counseling and prescription and over-the-counter (OTC) medications.
• Many policies excluded certain types of counseling and provided no coverage of prescription and OTC medications for tobacco cessation.
• In apparent conflict with the law, some policies included cost-sharing requirements. Seven of 36 contracts that clearly covered counseling required cost sharing for counseling by in-network providers and six of 24 contracts that covered prescription drugs required cost-sharing.
Matthew L. Myers, president of the Campaign for Tobacco-Free Kids said, “It is shocking to see the huge variation in what appears to be a straight forward inexpensive benefit that has significant medical evidence on treatment that works.”
The report makes the following recommendations to federal and state regulators:
• Regulators should require health insurance policies to include a clear statement that tobacco cessation treatment is a covered benefit. Policies should state which treatments are covered and state that cost sharing does not apply.
• Regulators should provide guidance on permissible and prohibited limitations to coverage under the ACA.
• Federal regulators should provide model contract language for this benefit to help address ambiguities over what benefits are available to consumers and how to access them.
Guidance issued by the U.S. Office of Personnel Management (OPM) for the Federal Employees Health Benefit Program is an excellent model to help define the scope of coverage required by the ACA, say researchers. OPM instructs insurers to cover tobacco cessation treatments without cost sharing. Insurers must cover at least two quit attempts per year with up to four cessation-counseling sessions of at least 30 minutes each (including individual, group and phone counseling). They must also cover OTC and prescription medications. For more information, visit http://tfk.org/coveragereport.
Regulations Aim to Protect Consumers from Unfair Wellness Programs
The Departments of Health and Human Services (HHS), Labor and the Treasury released proposed rules to prohibit unfair practices in wellness programs under group health coverage. The proposed rules would be effective for plan years starting January 1, 2014.
The rules cover “health-contingent wellness programs.” These programs require people to meet a health standard to get a reward. Examples include rewarding people who don’t use tobacco or those who decrease their use; rewarding people who reach a certain cholesterol level or weight; or rewarding people who fail to meet that biometric target, but take certain additional required actions.
Health-contingent wellness programs would have to follow these rules:
• Anyone who does not meet the standard based on the measurement, test, or screening must be offered a reasonable means of qualifying for the reward. Programs must have a reasonable chance of improving health or preventing disease and not be overly burdensome for people.
• There would have to be reasonable alternative ways to qualify for the reward for people whose medical conditions make it unreasonably difficult to meet the standard or for those whom it would not be medically inadvisable to meet the standard.
• People must be notified of the opportunity to qualify for the same reward through other means. The proposed rules provide new sample language that is intended to be simpler for people to understand, which would increase the likelihood that those who qualify for a different means of getting a reward will contact the plan or issuer to request it.
• The maximum permissible reward under a health-contingent wellness program would increase from 20% to 30% of the cost of health coverage. The maximum reward would increase to as much as 50% for programs designed to prevent or reduce tobacco use.
The proposed rules would not specify the types of wellness programs that employers can offer.
For more information, visit http://www.ofr.gov/inspection.aspx.
Medicaid Expansion Is Not Expected to Burden States
States would only see modest costs for implementing the Medicaid expansion under the Affordable Care Act compared to significant increases in federal funds, according to a report by the Kaiser Family Foundation. Some states may see net budget savings even as millions of low-income uninsured Americans gain health coverage.
If all states expanded their programs, state Medicaid spending would increase less than 3% while federal Medicaid spending would increase 26%. An additional 21.3 million people could gain Medicaid coverage by 2022. With other coverage provisions of the ACA, that would cut the uninsured by 48%.
Diane Rowland, executive vice president of the Foundation said, “While some states will see net savings, others will need to weigh the trade-offs between small increases in state spending in return for large gains in coverage supported by mostly federal dollars.”
The ACA set a national floor for Medicaid eligibility for adults with annual incomes at or below 138% of the federal poverty level, which is $15,415 for an individual in 2012. For more information, visit www.kff.org.
States Are Expanding Medicaid Care Coordination
Growth in total Medicaid spending and enrollment slowed substantially in fiscal year 2012 as the economy began to improve and states worked to control costs. Relatively slow growth in spending and enrollment is expected to continue in fiscal year 2013, according to a Medicaid budget survey by the Kaiser Family Foundation. Total Medicaid spending increased 2% in fiscal year 2012, down from 9.7% in fiscal year 2011. It’s among the lowest rates of spending growth ever recorded. A slowly improving economy helped moderate growth in Medicaid enrollment, which grew at an average 3.2% rate across states, down from 4.4% a year earlier.
For fiscal year 2013, states expect Medicaid enrollment to grow at an even slower rate at 2.7%. Legislatures have authorized total Medicaid spending growth including state and federal shares of 3.8% fiscal year 2013. State-only Medicaid spending is expected to grow 2.3% in fiscal year 2013, slower than total Medicaid spending growth and much slower than in fiscal year 2012 when states confronted the end of the enhanced federal funds under ARRA.
Curbing costs remains a strong focus. In fiscal year 2012, 48 states implemented at least one new policy to control Medicaid costs, and 47 planned to do so in fiscal year 2013. The most common cost containment strategy is to restrict provider rates. However, with some improvement in the economy, some states have been able to reverse cuts or work toward boosting provider rates and benefits in fiscal year 2013. States are expanding community-based long-term care through traditional programs and through new options in the Affordable Care Act (ACA). For more information, visit www.kff.org.
Long Term Care Insurance Conference
The ILTCI conference will be held from March 3 to 6 in Dallas. For more information, visit
Lincoln Financial Group enhanced the Lincoln LifeReserve Indexed UL (IUL) Accumulator. It’s designed to provide the protection of life insurance with the opportunity to build cash value that can be used as income. Enhancements include a new fixed loan alternative, which expands clients’ accumulation and distribution options to fit varying or changing risk profiles. Lincoln LifeReserve IUL Accumulator is now also available with Lincoln’s recently introduced Lincoln LifeEnhance Accelerated Benefit Rider for clients concerned about unexpected permanent chronic or terminal illness expenses. For more information, visit www.lfg.com.
Indexed UL Sales Tool
John Hancock Life developed an online tool that simplifies the sales process for producers and helps clients understand the value of Indexed UL. The Indexed UL Rate Translator translates a client’s long-term equity market expectations into an indexed UL illustrated rate. Producers can adjust the cap, floor, and participation rate for a given index strategy, thus making it easier for them to compare the risk-and-return profiles of different products. For more information, visit johnhancock.com.
Fitness Reimbursement Program
The new Aetna Fitness Reimbursement Program allows members to get money back for a wide range of healthy activities, including the following:
• Gym membership and group exercise classes
• Personal training
• Fitness equipment purchases
• Weight management and nutrition counseling services
The program was designed with GlobalFit, which provides physical activity programs for businesses around the world. Members are reimbursed for health and fitness purchases. Members can also save more money through a separate Aetna Fitness discount program.
Employers can customize parts of the program to fit their wellness strategy. For example, employers can choose the following:
• The annual reimbursement amount.
• Whether to make their employees’ spouses and dependents (age 16 and older) eligible for the program.
• Whether to offer the program to employees who are not enrolled in an Aetna benefit plan.
GlobalFit handles all of the administrative tasks associated with reimbursing participants. For more information, see www.aetna.com.
Financial Planning Selling System
MetLife launched a selling system to help agents and brokers market financial solutions. Business Owner Strategic Solutions Known (BOSS) allows financial professionals to identify potential solutions for the business market while providing tailored, client-friendly financial reports.
Available to agents and brokers who offer MetLife products, the new tool gives producers instant access to a time-tested sales process, fact finders, and a wide variety of client and producer sales materials. Once logged on, producers can search for an appropriate strategy tailored to important consumer needs in the business planning market, including such areas as retirement income, estate planning, business succession planning, key employee information, disability protection, and executive benefit. For more information, visit www.metlife.com.
Fast Online Tool to Find Benefit Gaps
Aflac introduced two ionline tools that help businesses assess their current benefit programs and help consumers identify gaps in their insurance coverage. The Aflac Wellbeing Assessment Tool allows consumers to determine whether their insurance coverage provides adequate financial protection. The Aflac Benefits Assessment Tool helps decision-makers compare their benefit programs with national best-in-class offerings.