• The Costs of Remaining Uninsured: Navigating the Affordable Care Act
• Medical Identity Theft is On the Rise
• Confused Workers Face Crucial Decisions During Open Enrollment
• Many Americans Are Spending More on Health Care This Year
• An Early Look at Premiums and Insurer Participation in Exchanges
• Insurance Exchanges Are Losing Low-Cost Plans
• Most Employees Will See Changes Health Benefits During Open Enrollment
• Many Small Businesses Are Still Undecided About Health Benefits
• Covered California Exchange Meeting on Friday in Los Angeles
ANNUITIES & LIFE INSURANCE
• Indexed Annuities Set Record Sales
• Life Insurance Owners Feel More In Control
• Individual Life Premium Up 6% In 2013
• Young Adults View Life Stages as Triggers to Buy Life Insurance
• Life Insurance Program Developed For Men With Active Localized Prostate Cancer
• Snapshot of Voluntary Sales by Employer Size
• Voluntary Critical Illness Market Sees Healthy Growth
The Costs of Remaining Uninsured: Navigating the Affordable Care Act
Some consumers will pay the penalty instead of buying insurance through the exchange. But they should consider the long-term financial benefits of having health insurance, according a blog entry by Consumer Advocate Eleanor Blayney, CFP.
Facing the choice to get insurance or pay a penalty, they may resort to simple math and conclude that $95 is a lot more affordable than the $3,000 or $4,000 for the lowest level of insurance coverage available on the state exchanges. However, Blayney advises Americans to consider several factors before deciding to pay the federal penalty and forego health insurance:
• You Risk penalties for having no insurance: In 2014, uninsured Americans will have to get health insurance or pay a penalty of $95 per adult and $47.50 per child or 1% of family income, whichever is greater. In 2015, the penalty rises to $325 per adult (half as much for each child) or 2% of income, whichever is greater. The penalties rise even further in 2016 and beyond.
• You risk huge medical costs due to an accident: Being young and healthy does not vaccinate you from the kind of risk that can leave you and your family destitute.
You May have limited access to quality medical care when you do need it: Some providers may simply decline you as a patient when they find out that you are uninsured.
• You will be more likely to neglect the routine, preventative procedures: If you are unwilling to pay for insurance, you’ll probably skip the high cost of an annual check-up or routine procedures. It will cost more for the uninsured to get health care coverage under the Affordable Care Act.
Medical Identity Theft Is on the Rise
Medical identity theft and family fraud are on the rise. The number of victims affected by medical identity theft was up nearly 20% within the last year, according to a survey by Ponemon Institute. Medical identity theft affects an estimated 1.84 million people in the U.S., with victims forking out more than $12 billion in out-of-pocket costs as a result.
Half of the consumers surveyed are not aware that medical identity theft can create inaccuracies in their medical records, resulting in a misdiagnosis, mistreatment, or the wrong prescriptions. Yet, 50% of consumers surveyed don’t take steps to protect themselves, mostly because they don’t know how. The survey also finds that consumers often put themselves at risk by sharing their medical identification with family members or friends.
Medical identity theft getting bigger and more complex with the Affordable Care Act and the increased use of electronic health records. In 2013, the economic consequences of medical identity theft to victims was estimated at more than $12.3 billion in out-of-pocket expenses.
Medical identity theft victims surveyed experienced a misdiagnosis (15% of respondents), mistreatment (13% of respondents), delay in treatment (14% of respondents), or were prescribed the wrong pharmaceuticals (11% of respondents). Half of respondents have done nothing to resolve the incident. Fifty-four percent of consumers do not check their health records. Thirty percent of respondents allowed a family member to use their personal identification to get medical services.
Consumers are encouraged to take the following steps to prevent medical identity theft:
1. Review your explanation of benefits.
2. Obtain your benefits request annually.
3. Protect your medical insurance card.
4. Safeguard your insurance-related paperwork. Shred or file your Explanation of Benefits in a safe, and preferably locked location.
5. Report lost or stolen health insurance identification cards.
6. Use vigilance when providing your personal or insurance information. Be sure you’re dealing with a reputable healthcare provider. Be cautious when offered free medical services. Often fraudsters use this as a way to get your health information.
7. Review your credit reports annually. You have a right to request a free annual credit report from each of the three credit bureaus. Be sure your reports are free of any medical liens.
For more information, visit http://medidfraud.org/.
Confused Workers Face Crucial Decisions During Open Enrollment
While open enrollment season is closing in, the knowledge gap is widening among workers, which may result in inadequate or financially risky benefit choices, according to an Aflac survey Seventy-one percent of American workers only sometimes or rarely understand the changes to their policies each year, yet 90% choose the same coverage every year. Thirty-seven percent say it will be harder to understand everything in their policy this year.
Workers will contend with three major factors this enrollment period:
1. Employers’ increasing adoption of high-deductible health plans.
2. Scaled down benefit plans.
3. Increasing premiums.
The survey also reveals the following about employees:
• 50% say that $25 is the maximum monthly increase to their health insurance premium that they are able to cover.
• 83% are only willing to spend up to $1,000 for their health insurance deductible each year.
• 40% will have to cut expenses elsewhere to cover the difference if monthly premiums increase.
• 20% will trade down on their benefit package, accepting decreased coverage to get a lower premium.
• 46% have less than $1,000 in savings for medical expenses.
Sixty-eight percent of employees say they have made mistakes during open enrollment. Fifty-four percent of workers waste up to $750 because of benefit mistakes they have made during open enrollment. Additionally, 74% of workers only sometimes, rarely, or never understand everything covered by their health care policy.
In order to avoid mistakes, employees need to educate themselves about what their insurance plans actually cover and carefully review policy changes each year.
Aflac offers these tips:
• Prepare: Be aware of annual insurance policy changes and compare your new benefit package to your policy from the year before. Make sure that all of the health insurance costs you’re responsible for are within your budget. Also, review the deductibles and other out-of-pocket costs for health care services and pharmacy purchases you’ll be responsible for paying to ensure your plan offers the coverage you need.
• Don’t make assumptions: If your company hasn’t made any material changes to its health insurance plan since health care reform legislation was passed in 2010, it may be exempt, for now, from offering widely discussed essential health benefits, including free preventive services. Ask your HR manager if your policy options changed to include new benefits made available by health care reform.
Check your spouse’s benefit package: Your employer doesn’t have to offer insurance to your spouse and as costs increase, more companies are cutting this option. Even if your employer does offer your spouse insurance, the company is not obligated to pay anything toward the premium. If your spouse has access to employer-sponsored health insurance through his or her job, it may make the most financial sense to purchase two individual policies as opposed to one family policy.
Consider supplemental coverage, but don’t double up: Health care reform legislation requires plans in the individual and small group markets to offer essential health benefits like pediatric vision care and dental and chronic disease management services. Check all aspects of your major medical plan so you know what is covered and what isn’t. Consider supplemental insurance, such as accident, hospital or critical illness plans to help reduce rising health care expenses.
Examine premium costs carefully: Cheaper isn’t always better, since plans with the lowest monthly premiums likely mean you’ll pay more in co-insurance and get less coverage.
For more information, visit AflacWorkForcesReport.com.
Many Americans Are Spending More on Health Care This Year
Forty percent of Americans are spending more on health care than they were one year ago, and only 8% are spending less, according to a report by Bankrate.com. Twenty-eight percent of Americans are feeling more negative about the Affordable Care Act than they were 12 months ago — twice as many as the 14% who are feeling more positive. Bankrate.com insurance analyst Doug Whiteman said, “We’re just three weeks away from when the new health insurance exchanges will begin accepting applications, and we’re still observing a disturbing lack of consumer education. If this doesn’t change soon, millions of Americans could miss important deadlines or make uninformed decisions. For more information, visit http://www.bankrate.com/finance/insurance/health-insurance-charts-0913.aspx
An Early Look at Premiums and Insurer Participation in Exchanges
by Cynthia Cox, Gary Claxton, Larry Levitt, Hana Khosla
Reprinted, in part, with permission by the Kaiser Family Foundation
Exchange premiums are generally lower than expected. The latest projections from the Congressional Budget Office imply that the premium for a 40-year-old in the second lowest cost silver plan would average $320 per month nationally.
Using state exchange rate filings, we tracked insurer participation and plan offerings. We then calculated the unsubsidized premiums for enrollees of bronze and silver plans at various ages (25, 40, and 60 years old) in the rating area of the largest city in each of these 17 states and Washington, D.C. Fifteen of the eighteen rating areas we examined have premiums below this level, suggesting that the cost of coverage for consumers and the federal budgetary cost for tax credits will be lower than anticipated.
At least two insurers are participating in each of the exchanges in the rating areas that we analyzed, and three or more insurers participating in most of the areas.
Participating insurers generally offer a number of plans at various tiers of coverage (catastrophic, bronze, silver, gold, or platinum), and they typically offer more than one plan option within a given coverage tier. As a result, the number of plans available to consumers will be significantly greater than the number of insurers participating. Most exchanges offer variety of plan types (for example, HMOs or PPOs).
The individual insurance market is highly concentrated, with a single insurer dominating at least half the market in 30 states and the District of Columbia. That is not likely to change immediately, though the ease of purchasing through exchanges and guaranteed access to coverage regardless of health status should make it easier for consumers to switch plans. Here is a look at California:
Insurance Exchanges Are Losing Low-Cost Plans
Insurers that are not participating in exchanges have an average of 23% lower premium rates than the rest of their competition, according to HealthPocket, which analyzed the health insurance markets of 10 states. This trend was true for nine of the 10 states examined, raising questions about the level of competition within exchanges and potentially higher cost of the health plans on exchanges in these states.
The report reviewed premium prices for a 35-year-old male in 1,621 health plans in Calif., Colo., Conn., Ga., Md., N.C., Ore., S.C., S.D. and Wash. The study was based on 2013 data versus the plans sold in 2014. If a consumer is eligible for a subsidy under the exchanges, the difference in premium costs may be mitigated or even overcompensated for depending on the size of the subsidy. Yet if the report findings hold true in 2014, consumers who don’t get a subsidy must look at health plans available on and off exchange to make sure they get the best pricing.
Some of the best-known health insurance brands are absent from one or more state exchanges. The carriers include:
• United Healthcare (Ranked #1 by NAIC for market share)
• Humana (Ranking #4)
• Aetna (Ranking #5)
• Cigna (Ranking #8)
• Coventry (Ranking #9) (now owned by Aetna)
Most of these carriers will continue to participate in state markets by offering off exchange products to those not seeking government subsidies.
Kev Coleman, head of Research at HealthPocket said, “The individual health insurance market will change dramatically in 2014. Our research shows that the exchanges will be losing some health plans that had been offering among the lowest premiums in their markets. Consumers will need to do some additional digging to make sure they evaluate all their insurance options because those highly competitive choices may only show up outside an exchange in some states. For more information, visit HealthPocket.com.
Most Employees Will See Changes in Health Benefits During Open Enrollment
Employees can expect a number of changes to their health benefits driven by rising health costs and the Patient Protection and Affordable Care Act, according to a report by Aon Hewitt. The following are some of the most notable changes employees may see:
A more expensive price tag: Most employers plan to subsidize employees’ health coverage at the same percentage rate as last year. However, employees’ out-of-pocket costs continue to climb as health care costs increase. In addition, nearly 20% have increased surcharges for adult dependents with access to coverage elsewhere.
More options for coverage: Starting in 2014, all Americans must have health care coverage or risk paying a penalty. Some employees may want to purchase individual coverage through the new state and federal marketplaces, particularly those who are not offered health coverage through their employer.
A higher probability of being in a consumer-driven health plan: Consumer-driven health plans (CDHPs) continue have surpassed HMOs as the second most offered plans by employers. In fact, a growing number of employers are offering CDHPs as the only plan option. While just 10% of companies do so today, another 44% are considering it in the next three to five years.
Programs that promote health awareness and education: More employers will offer programs that encourage employees to take a more active role in managing their health. For example, 75% of employers offer health-risk questionnaires and 71% offer biometric screenings such as blood pressure and cholesterol.
More incentive opportunities for exhibiting healthy behaviors: More employers will providing a reward or a penalty for completing or failing to complete programs, such as health-risk questionnaires and biometric screenings. Eighty-three percent of employers have such an incentive in place now.
New eligibility rules: Employers may change the rules that determine which employees are eligible for health coverage, particularly as they evaluate requirements of the employer mandate provision the ACA, which was delayed until 2015. In addition, the recent Supreme Court decision that resulted in federal recognition of same-sex marriages may mean more dependents will now be eligible for benefit coverage.
Craig Rosenberg of Aon Hewitt said, “Employees typically spend very little time choosing their health benefits each year…In some cases, not making an active decision during enrollment means employees could get defaulted into a health care plan that doesn’t meet their needs or leaves them and their families with no coverage at all. It’s up to employees to read the fine print and take an active role in understanding if and how these changes may impact them.” Aon Offers the following open enrollment tips to employees:
• In most cases, if your employer offers coverage that meets certain minimum coverage and cost levels, you are not eligible for a subsidy in the exchange. Most employers subsidize the coverage they offer and allow you to pay for it on a pre-tax basis, which saves you money by lowering your taxable income. Coverage purchased through the exchange is not pre-tax. You can visit healthcare.gov to learn more about the exchanges.
• When evaluating CDHPs, figure out how much you are likely to spend in out-of-pocket costs. Also factor in how much your employer will put into your HRA or whether they will make contributions to your HSA. Forty-four percent of employers that offer CDHPs subsidize premiums at a higher rate than other plan options. Many employers also couple these plans with health reimbursement accounts (HRAs) or health savings accounts (HSAs), which you can use to help pay for eligible out-of-pocket health care costs.
• HSAs allow you to save money by contributing up to $3,300 for individual coverage in 2014 and $6,550 for family coverage on a pre-tax basis, with no use it or lose it rule.
• Before open enrollment, look back at how much you’ve spent out-of-pocket for deductibles, co-pays, and co-insurance. Also look at the number of doctor visits you typically make and the cost of regular prescription drugs. Most employers offer online tools and modelers to help you calculate your prior expenses and estimate your future health care needs.
• If you are participating in a health care flexible spending account (FSA), evaluate if your contribution is too little or too much, based on your actual and anticipated expenses. Remember that you must use any money in an FSA within the year or risk losing it. If you plan to enroll in a CDHP with an HSA, ensure that you understand how your health care FSA is impacted as special rules apply. For example, the health care FSA may be limited to covering dental and vision care expenses.
• Most employers offer tools, such as health risk questionnaires and biometric screenings, and some offer financial incentives for participating.
• Consider any supplemental benefits your employer may offer. Aon Hewitt’s research shows that 28% of employers include access to voluntary supplemental coverage, such as critical illness and hospital indemnity insurance, as part of their annual enrollment process. Often, this extra coverage is available at a lower cost through your employer than if you were to purchase it on your own.
• Look at your health and financial wellbeing, including health care, income protection (For example, life and disability insurance), and retirement planning. Does your spending reflect your needs and priorities? For example, if you aren’t contributing to your 401(k) plan, now may be the time to start. Beginning to save earlier in your career helps to ensure you’re on track to meet your long-term savings goals.
For more information, visit www.aonhewitt.com.
Many Small Businesses Are Still Undecided about Health Benefits
One in five small businesses is undecided about what healthcare benefits to offer in the next three years, according to a study by EMPLOYERS. “We were pleasantly surprised to see how many businesses that are not mandated to provide health insurance options under the Affordable Care Act still intend to provide this benefit to employees in the next three years,” said Stephen Festa, chief operating officer for EMPLOYERS. The study also reveals the following:
• 41% of small businesses provide health insurance for their employees.
• 20% plan to provide health insurance directly to employees within the next three years.
• 20% are not sure what they intend to do within the next three years.
• 14% expect to refer all or some employees to state-based health benefit exchanges within the next three years.
• 8% of small businesses with one to four employees expect to provide health insurance directly to their employees. That climbs to 43% for small businesses with 20 to 99 employees and 48% for businesses with 100 to 250 employees.
These intentions reflect small business decision-makers’ attitudes toward health care as a business priority.
• 33% of small businesses see health insurance as a strategic business necessity.
• 20% of small businesses believe health care insurance is a drain on cash flows.
• 14% of small businesses don’t think much about it.
• 4% say they provide health insurance but wish they didn’t have to
“While many of these signs are encouraging, the bottom line is that a lot of uncertainty about healthcare remains among small businesses,” Festa said. For more information, visit www.employers.com.
Covered California Exchange Meeting on Friday in Los Angeles
Covered California is hosting a town hall meeting on Friday, Sept. 20, from 2:30 p.m. to 4:00 p.m. (doors open at 2:00 p.m.) It will be held at the Valley Presbyterian Hospital Health Education Center Auditorium at 15107 Vanowen Street in Van Nuys.
Indexed Annuities Set Record Sales
Indexed annuity sales were up 17% compared to the previous quarter, and up more than 5.5% compared with the same period last year, according Wink’s Sales & Market Report Sheryl J. Moore, president and CEO of Moore Market Intelligence and Wink said, “This was a record-setting quarter for indexed annuity sales, beating the previous third quarter 2010 record by nearly 5%. Even year-to-date sales increased 1.5% over this same period, last year.”
She added, “This quarter marked a record for GLWB elections, with 67.3% of all indexed annuities sales opting to purchase the benefit (when available). The vast utilization of these benefits, and their income commencement, continue to show varied results that provide further insight into our nation’s needs for guaranteed lifetime income.”
Indexed life sales were up more than 1% compared to the previous quarter, and up more than 12% as compared to the same period last year. Moore said, “We have had yet another impressive quarter for indexed life sales. Plus, year-to-date sales of indexed life also skyrocketed nearly 20%. Last quarter, I anticipated that sales of IUL would increase exponentially once new companies’ distributions were comfortable with their product. It is nice to see that now our most recent entrants in the IUL market have gotten their toes wet and that their efforts are translating into to sales.” For more information, visit www.LookToWink.com
Life Insurance Owners Feel More in Control
Seventy-one percent of life insurance owners say they are in control of their lives and 87% say their life is heading in the right direction, according to a survey by Lincoln Financial Group. “People buy life insurance for a lot of different reasons, but regardless of what their motivation may be, it boils down to putting a measure in place that helps them face the future with confidence,” said Mark Konen, president, Insurance and Retirement Solutions.
Life insurance is among the top five most frequently owned financial products, ranking fifth behind other financial staples that include checking/savings accounts, car insurance, credit cards and home insurance. The survey also reveals the following:
• 74% of life insurance owners also own retirement products (For example, 401(k), 403(b), SEP, IRA, Roth IRA), compared to 44% of those who do not own life insurance.
• 52% of working life insurance owners have short-term disability or long-term disability insurance through an employer, compared to 23% of those working non-life insurance owners.
• 34% of life insurance owners also own mutual funds, compared to 16% of those who do not own life insurance.
Given these facts, it is not surprising that 68% of life insurance owners believe they are very or somewhat prepared for retirement, compared to 44% of non-owners.
Lincoln’s poll also found that people who place importance on protecting their wealth or assets are 39% more likely to own life insurance than those who do not consider it important. Similarly, people placing importance on the following financial priorities are also more likely to own life insurance:
• Putting money away for retirement
• Making investments work harder
• Minimizing the amount they pay in taxes
However, only 48% of those polled are actually policy owners. Of those respondents who own life insurance, the average age is 51 years. Life insurance owners are more likely to be married, have children, be employed, be more educated, and own their home. Life insurance owners also tend to have higher incomes and higher amounts of investable assets than non-owners. These findings reflect an opportunity for the insurance industry to help a broader demographic reach their financial goals with life insurance, and at different stages in life. For more information, visit www.lincolnforliving.com.
Individual Life Premium Up 6% in 2013
Individual life premium grew 4% in the second quarter, resulting in a 6% increase for the first half of 2013, according to a LIMRA survey. Policy count, which had been increasing slightly over the last two years, continued to decline in the second quarter, down 2% for the quarter and 3% for the first half of the year.
While every product line recorded positive growth in the second quarter and year-to-date, indexed universal life and whole life products were the biggest drivers of growth in the first half of 2013, said Ashley Durham, senior analyst, LIMRA Insurance Research. Both products are well matched for a low-interest and uncertain economic climate, offering the principle protection and growth opportunity that consumers are seeking.
Total universal life (UL) premium rose 1%, hampered by a 14% drop in lifetime guarantee UL and the virtual disappearance of term-UL. Year-to-date, UL premium increased 5%. UL policy count fell 14% in the second quarter and 16% in the first half of 2013.
Indexed universal life had another strong quarter. I universal life premium increased 22% in the second quarter and 23% for the first half of the year. The growth of indexed universal life was the biggest driver of sales growth this quarter and year-to-date.
Whole life sales remained steady and were the second biggest driver of growth in the quarter. Premium increased 5% in the quarter — the 16th consecutive quarter of positive growth. Year-to-date, Whole life premium grew six%, compared to prior year. Whole life policy count was down, declining 2% in the second quarter and 3% in the first six months of 2013.
Term premium jumped 6% in the second quarter, improving 5% in the first half of 2013. Most of this is due to companies discontinuing Term UL and reintroducing traditional term products. Policy count also improved, up 5% in the second quarter and 3% over the first six months of 2013. About half of the term writers increased their sales compared to the first half of 2012.
Variable universal life premium rose 9% in the second quarter, resulting in a 13% jump year-to-date. Policy count also improved, up 10% for the quarter and 5% in the first www.limra.com.
Young Adults View Life Stages as Triggers to Buy Life Insurance
Young adults tend to rely on traditional triggers to seek out coverage, such as marriage (40%) and dependents (44%). Thirty-one percent cited cost as a barrier to getting coverage.Today’s 20- and 30-somethings feel that life insurance is essential, just not necessarily for them, according to a survey by Guardian Life. Only 57% have some form of coverage and, 65%, of them the majority got it through their employer’s group plan rather than purchasing it on their own. “Young adults are acutely aware of the serious financial obligations they face and feel strongly about not burdening their parents, spouses or business partners with debt should anything happen to them,” said Michael Ferik, senior vice president for Individual Life at Guardian. For more information, visit www.GuardianLife.com.
Life Insurance Program Developed for Men with Active Localized Prostate Cancer
LifeAgain Insurance Solutions and AgencyONE will market and sell term life insurance issued by Symetra Life Insurance Company under LifeAgain’s BlueMetric Select term life insurance program for men with active localized prostate cancer. The BlueMetric Select program was developed based on LifeAgain’s Advanced Medical Data Analytics Platform Technology (ADAPT). This new life insurance program (www.lifeagain.com) is expected to be available in all 50 states. Men with elevated prostate-antigen (PSA) scores and active localized prostate cancer usually are considered uninsurable based on traditional underwriting standards. LifeAgain’s BlueMetric Select program was designed to assist life insurance companies to provide eligible men with term life insurance coverage following a cancer diagnosis or upon the completion of a prostate cancer surgery, without the traditional multi-year waiting periods and additional medical re-qualifications generally required by most life insurance companies. For more information, visit www.lifeagain.com
Snapshot of Voluntary Sales by Employer Size
The largest employers (over 2,500 employees) accounted for the largest volume of voluntary sales again this year, according to an Eastbridge study. This segment accounted for 33% of all voluntary sales.
The following are estimated voluntary sales by employer size in 2012:
• Less than 10 employees $263 million
• 10 to 25 employees $400 million
• 26 to 99 employees $863 million
• 100 to 499 employees $1,170 million
• 500 to 999 employees $571 million
• 1,000 to 2,500 employees $764 million
• More than 2,500 employees $1,999 million
Lowerre, Gil Lowerre, president of Eastbridge explained that sales numbers don’t tell the whole story. When you look at sales divided by employee population (ESI), you can tell which segments are well penetrated and which are not. Even though the very large market (2,500 plus employees) had the highest sales volume, it still had one of the lower ESI scores.
The most penetrated market segment for voluntary was the 500 to 999 segment. While sales were just $571 million, the segment had the highest ESI. The 1,000 to 2,500 segment also had a high ESI score.
The segments with fewer than 100 employees had the lowest penetration levels based on ESI. For more information, visit eastbrige.com
Voluntary Critical Illness Market Sees Healthy Growth
Critical illness insurance, accounts for just 5% of the voluntary industry sales, but it continues to show double-digit growth year after year. New voluntary/worksite critical illness sales for 2012 are estimated at $294 million. That’s a 17% increase in 2012 following a 20% increase in 2011. Critical illness is also in the top three of most frequently offered voluntary products. For more information, visit Eastbridge.com.