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Wednesday April 23rd 2014



California Grapples With the Prospect of Not Cancelling Policies After All

• California Grapples With the Prospect of Not Cancelling Policies After all
• Covered California To Hold Important Board Meeting
• DMHC Stops Carriers From Denying Speech & Occupational Therapy
• Covered California To Offer Agent Quoting
• Attorney General Shuts Down Phony Covered California Sites
• Conservative Physician Group Warns Against Exchanges
• The Downside of Private Exchanges
• Nearly Half Of Small Businesses Lack Benefits
• How Employee Happiness Leads to Business Success
• Variable Annuity
• Prescription Discount Card For the Uninsured
• Indexed Universal Life Insurance
• Guidance On Legal Issues of High Deductible Health Plans
• Succession Planning Podcast
• Private Exchange Guide and Directory
• Private Exchanges


California Grapples with the Prospect of Not Cancelling Policies

notcancelledPresident Obama announced that the administration will allow states to reverse health insurance cancellations that were set to go into effect December 31. Insurance Commissioner Dave Jones is asking California health insurers and HMOs to allow customers to renew non-grandfathered policies for 2014. Jones said, “The President’s action makes it crystal clear that health insurers and HMOs are not required by federal law to cancel existing policies. California has more than 1 million people with non-grandfathered policies facing cancellation; they should be given the opportunity to keep their existing coverage next year. I am calling on all health insurers in California to let their policyholders keep their existing coverage for an additional year if they want it.”

At a press conference in San Francisco, Jones said that health insurers in California had decided to cancel individual plans, but not group plans. They are allowing small businesses to renew their existing policies for another year although those policies don’t comply with the new 2014 requirement.

Commissioner Jones also called on Covered California to release health insurers from a contract provision that requires them to cancel plans for individual policyholders on December 31. Jones said, “Over my objections, Covered California required health insurers participating in the Exchange to cancel all non-grandfathered individual policies on December 31.” Recently Jones persuaded Anthem Blue Cross and Blue Shield to delay the December 31 policy cancellations for individual and family (non-grandfathered) policies.

The American Academy of Actuaries’ warns that allowing states to reverse health insurance cancellations could lead to higher average medical spending among those purchasing new coverage, additional program costs for the federal government, and higher health insurance premiums in 2015. Cori Uccello, the Academy’s senior health fellow says that changing the ACA provisions could alter the dynamics of the insurance market, creating two parallel markets operating under different rules.

He said that allowing consumers to retain cancelled plans could affect the composition of health insurance risk pools. In particular, if lower-cost individuals keep their coverage, and higher-cost individuals move to new coverage, the medical spending for those purchasing new coverage could be higher than expected. He added that premiums approved for 2014 may not cover the cost of providing benefits for an enrollee population that has higher claims than anticipated in the premium calculations. Insurers cannot increase premiums in future years to make up for prior losses. However, assumptions about the composition of the risk pool would reflect plan experience in 2014.

Covered California to Hold Important Board Meeting

The Covered California Board is scheduled to hold its next meeting tomorrow from 10:00 a.m. to 4:00 p.m. in Sacramento. You can catch the meeting via webcast at Executive director Peter V. Lee will provide the monthly executive director’s report, covering updates on legislative matters and federal rules. The board will also discuss pediatric dental policy issues, navigator program regulations and the following reports: Covered California Health Plans, Small Business Health Options Program (SHOP), marketing and outreach, eligibility and enrollment operations and financial.

The board may also take action on the identity proofing policy and the following regulations: SHOP appeals, fingerprinting and criminal background checks, the Covered California incompatible activities policy, and the quality rating system. The call-in number for teleconference comments is (800) 288-8975.

DMHC Stops Carriers from Denying Speech and Occupational Therapy

The California Department of Managed Health Care (DMHC) ordered Health Net, Anthem Blue Cross, and Blue Shield of California to cease and desist from denying their members access to medically necessary speech therapy and/or occupational therapy. DMHC said the plans denied coverage without determining whether the services were medically necessary. DMHC issued a $300,000 fine against Health Net for repeatedly mischaracterizing requests for services as coverage issues rather than medical necessity issues.

DMHC Director Brent Barnhart said, “Today’s actions will ensure that members get the care required by law. Additionally, the plans will be required to identify and reimburse members who paid out-of-pocket for medically necessary therapy after those services were inappropriately denied.”

Covered California to Offer Agent Quoting

Covered California is preparing for the first major upgrade to its website on Nov. 22. The new site will have online enrollment pages for the exchange’s Small Business Health Options Program (SHOP), designed for employers with 50 or fewer eligible employees. Those businesses can register online, check for eligibility and work with licensed certified insurance agents to get quotes. The upgraded site will allow self-service online quoting and enrollment for small employers, aligning SHOP with industry standards for the small-group market enrollments in November and December. Business owners can also continue to sign up for SHOP through certified insurance agents, or by using paper applications.

The upgrades will be in place by Monday, Nov. 25. The enrollment portal will go offline for two days while the improvements are installed, from late Friday, Nov. 22, to the early morning hours of Nov. 25. The information pages of, including the Shop and Compare Tool for individuals, will remain up and running during that time. Covered California promises faster page-loading speeds, smoother navigation paths, and changes in text to make questions easier to understand. Covered California used feedback from individuals, assisters and Service Center representatives to make the improvements, including an optional post-enrollment survey of consumers. Staff also zeroed in on areas in the website where consumers seemed to take longer or abandon the enrollment process.
For more information, visit

Attorney General Shuts Down Phony Covered California Sites

Attorney General Kamala Harris announced the removal of 10 private health insurance websites that imitated Covered California. These websites were operated by private health insurance brokers or companies that were not affiliated with Covered California. Harris said, “My office will continue to investigate and shut down these kinds of sites.” Multiple website operators got cease and desist letters informing them that their websites violate state law and demanding the immediate removal of the website or transfer of the domain name to the state’s official exchange.

The websites have domain names similar to the state’s official healthcare exchange and contain unauthorized references to the official exchange’s trademarked logo and name. In several cases, websites used the phrases “Get Covered,” “Covered California,” and  “California Health Benefit Advisers.” The following websites have been deactivated or redirected to the official exchange website:


Conservative Physician Group Warns Against Exchanges

The Association of American Physicians and Surgeons (AAPS) issued the following warnings about enrolling in health plans on the exchanges set up under the ACA:
• The Exchanges destroy privacy – Once entered, your information becomes available to a myriad of government agencies. Moreover, the Exchanges are susceptible to hacking by identity thieves and other criminals. Some sites posing as Exchange sites may not be ACA sites at all, just fronts for criminal operations.

• Navigators and assisters are not necessarily trustworthy – They have minimal training and do not need to undergo a criminal background check. (Editor’s note: Covered California Requires Navigators to agree to a criminal background check.) Agencies that employ them may previously have been found guilty of fraud.

• If the Exchange miscalculated your subsidy, you could get a demand from the IRS to pay it back even though the insurer got it and you didn’t.

• The doctor or hospital of your choice may not be available under the plan; Networks may be very narrow.

• Even though premiums may be much higher than what you have been paying, deductibles may also be much higher –The copayment may be even higher than stated; a 20% copay may be an average, and the copay for a particular service could be much greater. Many people may decide that the cost is so high that they would be better off putting the premium in the bank and paying out of pocket if and when they need care. Sometimes the cash price without insurance may be less than a person would pay with insurance. Some hospitals will quote a package price paid in advance for elective procedures.

• Members of Christian health-sharing ministries are exempt from the Obama penalty/tax. But for those subject to the tax, the liability can be imposed by the IRS by withholding refunds. Some have suggested that people avoid over-withholding and that they designate the purpose of estimated tax payments to be clear that they should not be re-allocated by the IRS towards any ObamaCare liability.

The Downside of Private Exchanges

Employers that pursue a private exchange/defined contribution strategy without managing healthcare costs could be engaging in elaborate cost-shifting, says Jim Blaney, CEO of Willis North America’s Human Capital Practice. In a recent blog post, he explains that the majority of private exchanges focus on aggregating volume to drive cost down, which is not a sustainable cost containment measure. Once the employer’s defined contribution is exhausted, the employee bears the entire cost. Failing to bring down health care cost inflation could lead to a situation in which employees can’t afford health care in the exchange environment, he said.

“The way to make this model sustainable is to integrate wellness programs and other health management initiatives into the exchange strategy to reduce consumption of medical resources. Employers who have invested in worksite wellness and total population health management have seen increased productivity, reduced absenteeism, and lower health care costs,” he said

According to Blaney, the private exchange model is particularly appealing to employers with seasonal workforces and those in the retail and hospitality sectors. Also interested in private exchanges are employers that will be subject to mandates to provide coverage under the Affordable Care Act. For more information, visit


Nearly Half of Small Businesses Lack Benefits

Forty-two percent of small business owners with full-time employees do not offer any benefits and 36% share some benefit costs with their employees, according to The Hartford’s 2013 Small Business Success Study. “We see this gap in coverage as a big opportunity for brokers and agents to discuss voluntary, or employee-paid, benefits with their small business clients. Voluntary benefits are no longer only for large companies. They can help small business owners protect their employees without added expense,” said Donato Monaco, with The Hartford’s Group Benefits.

Forty-one percent of business owners pay for life insurance completely; 36% share the costs with employees; and 23% have employees pay for it completely. Thirty-eight percent of business owners pay for short-term disability insurance completely; 47% share the costs with employees; and 14% have employees pay for it completely. For more information, visit

How Employee Happiness Leads to Business Success

Companies that put employee happiness first will see higher profits, according to a whitepaper released by Lincoln Financial Group titled, “Happiness and the Bottom Line: The Happy Worker Prescription.”
Employees who are unhappy at work are seven times as likely to be absent from work, twice as likely to give themselves low performance ratings, and seven times as likely to look for a new job, according to recent findings by Healthways-Gallup. Only one in five Americans say they feel happy at work.
The whitepaper offers these tips for creating a positive workplace:
1. Make sure managers understand that employee happiness affects productivity and helps keep your workforce fully engaged and productive.
2. Hire happy people.
3. Invest in managers’ emotional intelligence.
4. Provide recognition in the way the employee values most.
5. Provide opportunities to socialize, and encourage it.
6. Provide benefits that are important to your employees and enhance their financial security–and emphasize the value of those benefits.
7. If there are issues with performance, address them directly.
8. If an employee or team shows signs of stress, listen without judgment.
9. If you have done something wrong, apologize.
10. Express interest in staff well being, including when an employee is out of work.


Variable Annuity

AXA Equitable Life launched a variable annuity offering long-term investing that’s focused on diversification, deferral, and distribution. It includes over 120 investment options, offers tax-deferred asset growth potential, and features the flexibility to access distributions in multiple ways, including taking payments that are only partially taxed. For more information, visit

Long-Term Care Coordination Tool

Lincoln Financial launched “Lincoln Concierge Care Coordination” for policyholders of a Lincoln life and long-term care combination product. It provides care coordination before and during a long-term care event. For more information, visit

Prescription Discount Card For the Uninsured is offering prescription discounts with no eligibility requirements. Users will see discounts of up to 75% on a laundry list of medications — brand name and generic. The prescription discount cards are accepted at all major, national pharmacies, including Wal-Mart, Walgreens, CVS, and Rite Aid.

Indexed Universal Life Insurance

Principal Financial Group is offering Principal Indexed Universal Life Flex, which is designed to offer affordable protection, flexibility and consumer-friendly features. It goes beyond the traditional universal life insurance design by coupling upside accumulation potential with downside interest rate protection. It is designed to offer long-term death benefit guarantees, strong cash value accumulation potential and interest rate protection during economic downturns. For more information, visit

Guidance On Legal Issues of High Deductible Health Plans

Health Partners America released a white paper titled, “Defined Contribution: What’s Legal, What’s Not?” This 15-page document answers some questions about a popular health insurance funding strategy, explains some long-awaited federal guidance on this topic, and provides some alternative ideas for employers and insurance advisors. For more information, visit

Succession Planning Podcast

The Million Dollar Round Table (MDRT) is making its succession planning podcast available to all advisors at this link:

Private Exchange Guide and Directory

The Institute for HealthCare Consumerism launched the private exchange guide and directory at, a new website that’s designed to help the industry navigate this emerging, innovative technology.

Private Exchanges

BB&T Insurance Holdings launched two private insurance exchanges. The CarePlus Benefits Exchanges are designed to ease employers’ transition to a fixed-budget approach to group health plans while employees gain access to more benefit options than they would under traditional arrangements. The CarePlus Benefits Exchanges – available in Standard and Custom options – let employees select their own health, dental, vision, life and disability coverage, among other benefits, from various national and regional insurance providers in an online marketplace. For more information, visit