subscribe ad

Sunday April 20th 2014



Brokers Are Failing to Meet Employers’ Expectations

• Brokers Fail to Meet Employers’ Expectations
• Employees Like Wellness Incentives
• More Networks Exclude Pricey Hospitals
• DMHC Says Covered California’s Rates Are Reasonable
• Healthcare Costs Expected to Rise in California
• Briefing on the Affordable Care Act
• Urban Institute Says Health Reform Is Still On Track
• More People Will Get Drug Coverage, But at Higher Costs
• Webinar to Reveal Which Health Reform Changes Really Matter
• A Reason For Hope About Healthcare Spending
• Unions Say the ACA Hurts Workers
• HHS Scales Back ACA’s Health Insurance Income Verification Process
• A “Huge Opportunity” for Financial Advisors
• Hospital Indemnity Coverage
• Insurance CISR Designation


Brokers Fail to Meet Employers’ Expectations

8.3.1Employers are demanding extra services from their insurance brokers, but many brokers are failing to deliver, according to a survey by Zywave. Employers want services relating to workplace wellness, legislative compliance, employee communications, and much more. Dave O’Brien of Zywave said, “Many brokers are already aware of the need to provide clients with more than just an insurance policy, particularly in light of health care reform. What we found most startling is that employers are actually less satisfied with their current broker on the same services that they cited as being more important than ever. In other words, employers are speaking, but the brokers aren’t listening.” Here are a few examples from the survey:
• 86% of employers expect their broker to provide employee safety and health information, but 75% say their broker is not doing a satisfactory job.
• 75% want their broker to assist in creating or maintaining a safety program, yet 68% of employers are not satisfied with their broker’s current support.
• 85% of employers want help with their workplace wellness program, but 66% say their broker is not delivering to their expectations.
• 85% expect an annual stewardship report from their broker, but 58% say their broker is not providing this service.

“While it is unfortunate that so many clients are unsatisfied with their current brokers’ services, it does present a huge opportunity for brokers who do offer a comprehensive package of services and solutions to support their clients’ business needs,” he said.

Employers listed these top three risk management challenges:
• Keeping up to date on regulatory changes.
• Controlling workers’ compensation costs.
• Managing exposures.

They listed these top three employee benefit challenges:
• Managing health care costs.
• Keeping in compliance and up to date on changing legislation, including health care reform.
• Managing benefit administration and employee benefit education.

O’Brien said that brokers can support their current clients and win new business by meeting these challenges. For more information, visit

Employees Like Wellness Incentives

A recent survey by Aflac reveals that employees are willing to participate in wellness programs if their employer offers financial incentives to offset healthcare costs. The survey reveals the following:
• 88% of workers agree, at least somewhat, that it’s fair for employees to get reduced premiums or incentives to become healthier.
• 78% of workers would be at least somewhat willing to change their lifestyle to get lower insurance premiums.
• 61% of workers whose employers offer wellness programs participate in them.
• 30% of workers agree, at least somewhat, they would only change their lifestyle habits if their employer penalized them with increased insurance premiums.

For more information visit


More Networks Exclude Pricey Hospitals

Employers are increasingly willing to choose networks that exclude prestigious high-priced research institutions, according to a report by HealthLeaders-InterStudy. The state’s health insurance exchange, Covered California, will only intensify the trend toward narrow networks since most health plans have excluded these research institutions from their exchange networks.

Los Angeles is already is preparing for models that benefit large delivery networks. The City of Los Angeles’ decision to choose an Anthem Blue Cross HMO illustrates this trend. The arrangement excludes physicians from Cedars-Sinai Medical Center and UCLA Health System in order to eliminate referrals to those more expensive hospitals.

Jenny Kerr, market analyst at HealthLeaders-InterStudy said, “We expect pressure on the high-priced, academic hospitals in the market to reconsider pricing. Employers are sending a message that they are no longer willing to pay for hospitals that charge higher rates for routine services to cover costs of their teaching and research missions.”

The growth in accountable care organizations (ACOs) is another key driver in this trend. Los Angeles has 23 ACOs, which is the most in the state and the second most in the nation. Kerr said, “The rapid creation of ACOs, which are primarily physician-led in this market, means that physicians will be incentivized to prescribe the most effective medication rather than the least expensive to ensure quality outcomes.” For more information, visit

DMHC Says that Covered California’s Rates Are Reasonable

The California Department of Managed Health Care (DMHC) finds that the proposed rates for individual health plans through Covered California are reasonable. The DMHC reviewed proposed premiums for the following individual Covered California Qualified Health Plans: Alameda Alliance for Health, Valley Health Plan, L.A. Care Health Plan, Contra Costa Health Services, Anthem Blue Cross of California, Ventura County Health Care Plan, Molina Healthcare, Health Net, Blue Shield of California, Western Health Advantage, Sharp HealthCare, Kaiser Permanente, and Chinese Community Health Plan. For more information, visit

Healthcare Costs Expected to Rise in California

The Affordable Care Act will expand coverage to millions of Californians next year. But health care costs are expected to grow 7.4% next year, which will drive up insurance premiums, according to the California Association of Health Plans (CAHP).

Obesity, chronic disease, and rising prescription drug prices are major contributors to the growing health care expenditures in California and across the United States. Patrick Johnston, CAHP president and CEO said, “Next year, many Californians will be eligible for new government subsidies to help pay for health coverage. While subsidies will help make coverage more affordable, the underlying cost of health care continues to grow, and that will drive up insurance costs because 88 cents out of every $1 spent on health plan premiums goes to medical care.”

Two in five California adults have a chronic disease. Chronic diseases account for $3 out of every $4 spent on health care, or an extra $6,100 per person per year. One out of every three children in California is obese or overweight, and 61% of California adults are overweight or obese. Health care costs associated with obesity amount to $12.8 billion per year in California.

Prescription drug spending in California nearly doubled from 1991 to 2009, reaching $24.4 billion, accounting for more than 10% of all health care expenditures in the state. Johnston noted that one-third of U.S. health expenditures are for unnecessary tests, treatments, hospitalizations, and drugs. CAHP’s Choosing Wisely campaign has identified more than 130 tests and procedures that may not only be unnecessary, but could also cause harm in some instances. According to CAHP, some expensive new technologies, such as robotic-assisted hysterectomies, don’t improve medical outcomes and drive up costs. For more information, visit

Briefing on the Affordable Care Act

The Hollywood Chamber of Commerce is holding a seminar on how the Affordable Care Act will affect business owners. It will be held Wednesday, September 4th from 3:00 p.m. to 5:30 p.m. at the Children’s Hospital in Los Angeles. Leading the briefing will be Michael Lujan RHU, director of Sales and Marketing for Covered California, the California health benefit exchange. For more information, contact Nicole Shahenian, at


Urban Institute Says Health Reform Is Still On Track

Some members of Congress and policy analysts say that the one-year delay in the employer mandate proves that the Affordable Care Act (ACA) is unworkable. They also say it’s unfair to delay the penalty on employers while leaving the penalty on individuals in place. An analysis by the Urban Institute finds that the ACA can achieve its major objectives even without the employer responsibility provisions.

The one-year delay in implementing the employer mandate will not have a discernible effect on coverage or government spending on insurance. But delaying the individual mandate would undermine a critical component of the coverage expansion in the ACA. The individual responsibility requirement provides stability to insurance pools and gives a broad swath of the population financial access to adequate coverage. This population also benefits from Medicaid expansion, insurance market reforms, and subsidies to purchase private insurance through the health insurance exchanges. These findings are consistent with the evidence in Massachusetts where coverage reforms were implemented beginning in 2006. For more information, visit,

More People Will Get Drug Coverage, But at Higher Costs

Based on early health insurance rate filings, consumers who choose the lower cost Bronze and Silver plans are likely to pay more for prescription drugs. If trends continue, consumers with prescription drug coverage can expect to pay an average of 34% more out-of-pocket for their prescriptions, according to a report by HealthPocket.

The good news is that drug coverage will be considered an essential health benefit in all health plans. The bad news is that out-of-pocket prescription costs are likely to rise substantially from the average annual per capita expenditure of $758.

“Americans are going to need to pay very, very close attention to what plans offer to minimize out-of-pocket increases for medications. When it comes to drug costs and changes in our newly reformed health care system, the fine print really matters,” said Kev Coleman, head of Research & Data at HealthPocket.

The analysis also finds that, in most cases, the higher-end Gold and Platinum plans have lower drug cost sharing. However, experts expect the less expensive Bronze and Silver plans with higher out-of- pocket drug costs to be the most popular for cost-conscious consumers. Coinsurance rates for higher cost medications, which are typically injected, will vary widely under each metal plan. For more information, visit

Webinar to Reveal Which Health Reform Changes Really Matter

It’s easy to get wrapped up in the excitement of Healthcare Reform, but it’s still just a small portion of the larger health insurance market, said Rebecca Waller, a principal Analyst at HealthLeaders-InterStudy. A new webinar takes a look at what matters: state exchanges and the players involved in them, mergers, market shares, Medicaid expansion, and commercial growth on a national and regional scale.  It will be held August 8, 9:00 am Pacific Time. For more information, visit

A Reason for Hope about Healthcare Spending

Health care spending growth has slowed in the past four years thanks to slower development of imaging technology and new pharmaceuticals, higher patient cost sharing, and more efficient providers, according to a study by Health Affairs. The 2007 to 2009 recession accounted for 37% of the slowdown from 2003 to 2012. A decline in private insurance coverage and cuts to some Medicare payment rates accounted for another 8% of the slowdown, leaving 55% of the spending slowdown unexplained. If these trends continue to 2022, public sector health care spending will be as much as $770 billion less than predicted. For More Information, visit

Unions Say the ACA Hurts Workers

Three major U.S. unions sent a scathing letter to Democratic leaders in Congress, warning that unless changes are made, President Obama’s health care reform plan will destroy the foundation of the 40 hour work week for the American middle class. According to union leaders, without an equitable fix, the ACA will shatter hard-earned health benefits and destroy the foundation of the 40-hour workweek that is the backbone of the American middle class.

The unions complain that the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have already started cutting workers’ hours to avoid this obligation; and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing health benefits.

Second, millions of Americans are covered by non-profit health insurance plans like the ones in which most union members participate. Under the ACA, our employees will not be eligible for subsidies afforded other citizens. But these plans will be taxed to pay for those subsidies. These restrictions will make non-profit plans unsustainable; and will undermine the health-care market of viable alternatives to the big health insurance companies, according to the letter.

Union leaders say that common-sense corrections to ACA implementation would allow union members to keep their health plans and benefits just as the President has pledged.

HHS Scales Back ACA’s Health Insurance Income Verification Process

A final rule by HHS reduces the requirements for state and federal health insurance exchanges to verify the income and insurance status of people applying for coverage, Reuters reports. Before the final rule, exchanges were expected to verify applicants’ income status and conduct random checks to determine their access to employer-sponsored coverage.

Under the final rule, states that operate their own exchanges can wait until 2015 to verify income. In addition, exchanges will only have to audit a statistically significant sample of applicants whose self-reported income differs from federal records instead of reviewing all such cases. Applicants who are not included in the sample can attest to projected annual household income without more verification.


A “Huge Opportunity” for Financial Advisors

There is a huge opportunity for retirement plan advisors in today’s market, according to a study by MassMutual. MassMutual surveyed workers who are eligible to participate in an employer-sponsored defined contribution retirement plan. Professional advisors have displaced plan sponsors as the second most important source of investment information. Satisfaction with professional advisors is up sharply while satisfaction with information from plan sponsors is down sharply.

Merl Baker, principal, Brightwork Partners said, ”The evidence that retirement is on the minds of virtually every American worker is encouraging. I’m also pleased to see that participants consider financial professionals an important source of investment information and that satisfaction is up among those who use an advisor.” Seventy-seven percent of those with a financial advisor say retirement is a major savings objective compared to 57% of those without an advisor.

Only 28% of those surveyed have had a relationship with a personal financial advisor in the past five years. Thirty-one percent of men have a financial advisor compared to 24% of women. The gender difference has increased since 2011 when 30% of men had an advisor versus 27% of women. Men are also much likelier to have a professional advisor and are more confident than women in virtually every aspect of retirement planning and decisions about defined contribution investments. Men may be more likely to go to a financial advisor because they pay much more attention to fund performance, income in retirement, and asset allocation.

The survey also reveals the following:
• 34% of workers expect the United States to be in a recession in the next 12 months, surprisingly higher than the 31% in 2011.
• 4% more workers are very concerned about losing their jobs. Conversely, 9% more  workers are not at all  concerned about losing their jobs.
• 9% more people see health care expense as a savings objective.
• Saving enough for retirement has surpassed keeping up with monthly expenses as the biggest financial worry, up significantly to 24% from 18% in 2011. It was also cited as a major savings objective by 63% of participants, 21 points higher than the second most-cited worry of paying down debt.
• The average retirement savings rate is 10.5%, up from 9% two years ago.
• Workers age 50+ are more likely to expect higher health care costs, unemployment, and inflation.
• 37% of respondents have considered delaying retirement beyond their original target date. That figure jumps to almost 50% for people age 50 or older. In addition, 63% of people expect to work at least part-time in retirement and 54% expect they will need to reduce their standard of living. While women still expect to work to a somewhat older age, their average expected retirement age has come down slightly to age 66.4 from 66.9 in 2011. The average expected retirement age for men has gone up to 66 compared to 65.6 two years ago. For more information, visit


Hospital Indemnity Coverage

ING U.S. launched its Compass Hospital Confinement indemnity insurance plan, which is available through  workplace benefits. The limited benefit policy provides fixed payments when a patient is admitted to a hospital. The insurance provides a fixed dollar benefit to help pay for costs associated with a hospital stay, including co-pays, coinsurance and deductibles, meals, parking for visiting family members, lost time from work, mortgage and utility payments, or anything else the employee chooses. In addition, the coverage is portable in most states. Additional options include a wellness benefit and a critical illness rider. For more information, call ING U.S. Employee Benefits at 866-566-2316.


Insurance CISR Designation

Certified Insurance Service Representatives (CISRs) can now get the CISR Elite designation through the National Alliance.  In addition to the Personal Auto, Personal Residential, Commercial Property, Commercial Casualty, and Agency Operations courses, the following new CISR course are offered:

• Commercial Casualty II – BAP, WC, Excess Liability
• Personal Lines – Miscellaneous
• Life & Health Essentials
• Elements of Risk Management

For more information, visit