• CFOs Expect a Shift Toward Part-Time & Temp Workers
• Exchanges to Offer Affordable Plans for Young Adults
• Consumers Mull Renewing Individual Plans
• Obamacare Could Reverse Long Trend of Uncompensated Care in ERs
• Only One in 10 Uninsured Americans Say Obamacare is Helping
• Medicare Preferred Pharmacy Networks Offer Big Savings
• Guardian Gets Customer Service Award
• California Agent Wins Woman of the Year Award
• Lincoln Gets Customer Service Award
• Covered California Stats
• ACA Implementation in California
• Settlement Reached with NY Life
LIFE INSURANCE AND FINANCIAL PLANNING
• 401(k) Balances Got a Lift
• Employers Boost Efforts to Help Workers Save for Retirement
• Americans Want to Know About Additional Life Insurance Benefits
CFOs Expect A Shift Toward Part-Time & Temp Workers
U.S. chief financial officers are concerned about a shift toward temporary and part-time workers driven by the Affordable Care Act (ACA) as well as overall economic uncertainty. In spite of all this, profits are expected to jump by more than 10%, full-time employment is expected to increase 2%, and capital spending could rise nearly 5%, according to a survey by Duke University and CFO Magazine.
Chief Financial Officers expect full-time domestic employment to rise nearly 2% in the U.S. This increase comes in spite of some reluctance to hire full-time employees due to the ACA. Fifty-nine percent of CFOs have increased the proportion of their workforce made up by temporary and part-time workers or shifted toward outside advisors and consultants. Among these firms shifting away from full-time employment, 38% say the shift has occurred, in part, due to implementation of the Affordable Care Act. Another 44% say they are hiring temporary workers in response to extreme economic uncertainty. For more information, visit http://www.cfo.com/magazine
Exchanges to Offer Affordable Plans for Young Adults
Forty-six percent of uninsured single young adults (ages 18 to 34) who are eligible for the health insurance marketplace could pay $50 or less per month for coverage in 2014, according to a statement by HHS. They can purchase a bronze plan for $50 per month or less after tax credits, based on an analysis of data in 34 states. In these states, 66% may be able to pay $100 or less for coverage in 2014. Under the Affordable Care Act, advanced payment of the premium tax credits will be available to help eligible individuals and families afford insurance coverage through the Health Insurance Marketplace. Young adults account for 41% of the uninsured population. An additional 1 million eligible uninsured single young adults may qualify for Medicaid in the states that have opted to expand the program in 2014. For more information, visit www.healthcaregov.com.
Consumers Mull Renewing Individual Plans
For consumers who are looking to avoid plan changes for a year, one strategy is to renew an individual health plan for 2014 before the end of 2013. The strategy is not available to everyone and comes with issues that need to be investigated, according to an analysis by HealthPocket.
Some say this strategy would be most desirable to healthy people who have been able to pass a health plan’s health underwriting screen. Giving people an option to enroll in the existing individual market will keep them out of the Obamacare risk pool for some or all of 2014. However, the renewal option will come to an end for plans by 2015, so people who choose this option will eventually become merged with the rest of the individual market enrollees.
California is requiring every carrier in itsexchange to have Obamacare compliant plans in 2014. Plans that will not be on the exchange may be renewed in 2013 and last until the renewed year expires.
New plans require coverage of essential health benefits. For many people, premiums for a 2013 plan will be less than the premium for 2014 plans with comparable deductibles, copayments, and out-of-pocket maximums. A plan that renews from December 1, 2013 to December 1, 2014 may have a one-month period next year in which deductibles that had been reached may be reinstated. For more information, visit www.healthpocket.com.
Obamacare Could Reverse Long Trend of Uncompensated Care in ERs
Emergency departments are likely to receive much higher reimbursements once the Affordable Care Act (ACA) is fully implemented, according to a study published in Annals of Emergency Medicine. Assuming typical reimbursement patterns continue, emergency department reimbursement may increase 17% for outpatient visits to the ER for uninsured people who go on Medicaid and 39% for uninsured people who move to the private insurance market.
Emergency departments have carried the bulk of theburden of uncompensated care, which has led to hundreds closing. Over the next few years, that picture could change substantially, said lead study author Jessica Galarraga, MD, MPH, of George Washington Univ.
About 7 million people are expected to enroll in Medicaid as a result of the Affordable Care Act and 23 million are expected to get private insurance through health insurance exchanges.
GW researcher Jesse Pines, MD, MBA says that one question is what happens in the 13 states whose governors have said they will not participate in Medicaid expansion, especially those with high rates of uninsurance? Another question is whether the reduction in disproportionate share of hospital payments will outweigh the new sources of reimbursement. For more information, visit www.annemergmed.com
Only One in 10 Uninsured Americans Say Obamacare Is Helping
Only one in 10 Americans (11% of the uninsured and 9% of the population) say their health insurance situation has improved over the past year, according to a new Bankrate.com survey. While the health insurance exchanges opened about a month ago, 47% of uninsured Americans still do not know where they can get information on how the Affordable Care Act will affect them.
Sixty-four percent have become more curious about the Affordable Care Act since the exchanges opened on October 1. Bankrate.com insurance analyst Doug Whiteman said, “The good news is that most Americans are showing interest in Obamacare. Whether or not that interest translates into sign-ups will go a long way toward determining the success or failure of Obamacare.”
Thirty-six percent of Americans say their health care costs have increased over the past 12 months. Only five percent say they have decreased. Thirty-eight percent of the uninsured are more negative about the Affordable Care Act than one year ago (versus 25% who are more positive). For more information, visit http://www.bankrate.com.
Medicare Preferred Pharmacy Networks Offer Big Savings
Preferred pharmacy networks will reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years, according to a study by Milliman for the Pharmaceutical Care Management Association (PCMA). “It was never in question that seniors love low-premium, low-copay Part D plans with preferred pharmacy networks. Now this game-changing study shows that preferred pharmacy networks save the federal government billions as well,” said PCMA President and CEO Mark Merritt.
The study includes these major findings:
* Preferred pharmacy network plans are expected to reduce federal Medicare spending by about $870 million in 2014.
* Over the next 10 years, preferred pharmacy network plans are expected to reduce federal Medicare spending by $7.9 to $9.3 billion.
* The largest two-year decrease in federal direct subsidies in the history of the Part D program coincides with the rapid adoption of preferred pharmacy network plans and the increased use of generic drugs.
* Post point-of-sale price concessions cause a greater reduction in federal Part D costs than equivalent drug discounts at the point-of-sale.
Separately, Part D seniors in plans with preferred pharmacy networks are overwhelmingly satisfied, citing lower costs, convenient access to pharmacies and other benefits, according to a survey from Hart Research Associates. The survey found that 85% of seniors surveyed are satisfied with their preferred network plan. In addition, the survey found that four in five seniors would be disappointed if their preferred network plan is eliminated.
According to a recent analysis of Part D data, more than 70% of Medicare Part D plans will feature a preferred pharmacy network in 2014. There are more drugstores in the U.S. than McDonald’s, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts combined, creating a highly competitive environment.
Guardian Gets Customer Service Award
J.D. Power recognized the Guardian Insurance & Annuity Company (GIAC) for the third consecutive year for outstanding customer service in its by Certified Call Center Program Guardian is committed to being the go-to 401(k) provider in the micro-small plan market, and the carrier of choice for our annuity business, said Kim Flemm, Vice President and Head of Operations, Guardian Retirement Solutions. For more information, visit www.GuardianLife.com.
Californian Wins Woman of the Year Award
Women in Insurance & Financial Services (WIFS) presented its 2013 Woman Of The Year Award to Daralee Barbera, managing principal at Waddell & Reed and incoming President for GAMA International. Daralee is a long-standing WIFS member, and a founding member of the WIFS Southern California Chapter, of which she remains an active participant. Daralee is an engaged participant and frequent conference speaker, and is involved in national initiatives. Daralee joined Waddell & Reed in 1982, and supervises fifty financial advisors in nine branch offices based out of Costa Mesa, CA.
Lincoln Gets Customer Service Award
Lincoln Financial’s Individual Annuity Customer Contact Center earned the designation of Certified Center of Excellence from BenchmarkPortal. Only the top 10% of contact centers that apply for certification earn the designation. For the certification program, experts measure operational metrics as well as customer and agent satisfaction. For more information, visit www.BenchmarkPortal.com.
Covered California Stats
Covered California reports nearly 500,000 visits to its website and more than 45,000 calls to its Service Center during the week ending October 19. Since open enrollment began Octobef 1, consumers have been shopping and comparing among 12 insurers offering health care coverage through Covered California where consumers also can determine if they are eligible to enroll for subsidies or Medi-Cal. For the first three weeks of open enrollment, more than 2.2 million visits were made to www.CoveredCA.com. The Service Center has handled more than 150,000 calls during the same period. From October 1 through October 19, about 125,929 applications were started. Total enrollment for October will be announced in November. Covered California reports that 3,143 agents are authorized to enroll and 15,907 are in the process of being authorized. For more information, visit www.CoveredCA.com.
ACA Implementation in California
The Affordable Care Act has already made a difference for millions of Californians who have new consumer protections — from removing lifetime limits and arbitrary caps on coverage to mandating coverage of preventative services without co-payments or cost sharing, according to Health Access. Hundreds of thousands of Californians have new financial help to afford care, including seniors on Medicare getting prescription drugs and small businesses getting tax credit s to continue to offer coverage to their workers.
The most recent 2013 estimates are that over one million Californians have been able to get coverage through new options provided under the Affordable Care Act. Over 21,000 Californians who were denied coverage by insurers due to their health status now have coverage through California’s ACA-funded Pre-existing Condition Insurance Program (PCIP). PCIP had 16,000 enrolled on July 31, 2012. Over 435,000 young California adults up to age 26 have coverage through their parent’s health plan under the ACA and state conforming legislation. Over 615,500 Californians in 53 counties have new coverage through Low-Income Health Programs (LIHPs) – the most expansive early expansion of coverage under the Affordable Care Act in the country.
Other provisions that have helped more people are the small employer tax credit, the early retiree reinsurance program, the financial relief and savings for the state budget, and the prevention of additional state cuts to eligibility and enrollment.
About 8,978,000 insured Californians gained new consumer protections. The over two million Californians who buy coverage as an individual now have the security that insurers are no longer permitted to rescind coverage, especially after the patient gets sick. Some ACA provisions provide direct financial assistance to allow patients and policyholders, seniors and small businesses, to get relief when paying premiums.
Health Access says the following efforts have helped consumers afford the cost of health care:
• No-Cost Preventative Care: 6,181,000 Californians now have preventative care without cost sharing, so there is no financial barrier between them are these screenings and services.
• Rebates: $73,905,280 in rebates were issued to the policyholders of 1,877,186 Californians because their insurance companies did not spend enough of their premium dollars on giving health care, under the ACA’s medical loss ratio provision.
• Rate Oversight: Over 1,507,532 Californians saved over $175.2 million as a result of the rate review process when Anthem, Blue Shield, and Aetna rate hikes that were retracted, rolled back, or withdrawn.
• Prescription Drug Help in Medicare: 319,429 California seniors and people with disabilities saved $453.8 million in prescription drug cost, under the ACA provision that begins the process to close the Medica re prescription drug donut hole.
• Small Business Tax Credit: In the 2011 tax year, over 375,000 California small businesses (70% of the total) were eligible for the tax credit to help pay for the cost of coverage of their 2,442,900 California workers. The average credit is $752 per worker. The average credit is $1,000 per worker for the 158,000 businesses that are eligible for the maximum assistance.
Other benefits include state budget savings yielded in the recent Medicaid waiver, which helped prevent further budget cuts. This list doesn’t include the millions of dollars in federal grants to enhance public health and prevention efforts, to build capacity in community clinics, to set up Covered California, and to improve consumer assistance programs — all of which have an economic impact as well.
Here are some specific examples of California’s leadership:
1. California was the first state to establish an insurance marketplace — Covered California. Covered California will also standardize benefit packages so consumers can make apples-to-apples comparisons.
2. The California Legislature passed laws requiring new essential benefits standards for coverage that will go into place in 2014. In addition, California mandated maternity coverage as a basic benefit 18 months early, in July 2012. It revived a benefit that most insurers were no longer giving in the individual insurance market.
3. With bipartisan authorship, California created the biggest pre-existing Condition Insurance Program in the country, a new option for over 16,000 Californians who were denied for private plans due to their health status. (The next highest state has around 10,000 enrollees.) PCIP became a victim of its own success, this month closing to new enrollees until 2014, when such denials will not be allowed. (MRMIP, the more limited state high-risk pool, will remain an option through 2013.)
4. California quickly implemented the ACA provision that banned denials for children with pre-existing conditions starting early in 2010. When insurers balked, state law made it clear that insurers who refused to offer policies to children would be barred from covering adults as well — bringing the major insurers back into the market. The state law also went further than federal law, to limit what children with pre-existing conditions can be charged to no more than twice any other child for the same policy.
5. California has been one of only five states to expand coverage early. The state has been the leader, using federal matching funds so that over 500,000 Californians are now getting coverage in county-run low-income health programs. (This total is more than 20 times the other states with early Medicaid expansions.) These enrollees will be shifted to full Medicaid coverage on January 2014.)
The major coverage expansions of the ACA will begin January 2014. California can cut the number of uninsured by half or even two-thirds, and provide more security for those with coverage. The Medicaid program will be expanded to cover virtually everyone around or below the poverty level, and affordable private coverage will be available for everyone who doesn’t get it through an employer. Models developed by the University of California project that, in five years, 1.2 million to 1.6 million Californians will enroll in Medi-Cal; and another 1.8 to 2.1 million will enroll in subsidized coverage in the Exchange. If done correctly, it will be the biggest expansion of coverage since the creation of Medicare and Medicaid in the 1960s. For more information, visit www.health-access.org
Settlement Reached with NY Life
Along with regulators from other states, the California Department of Insurance reached a settlement agreement with New York Life over the insurer’s use of the Social Security Administration’s Death Master File database. New York Life has agreed to a number of business practice reforms, including using the Death Master File database (DMF) to search its records for deceased life insurance policyholders so its beneficiaries will get paid. In addition, New York Life agreed to pay $15 million to insurance regulators. California the lead state in the investigation, with support from insurance regulators in Florida, Illinois, New Hampshire, North Dakota, and Pennsylvania.
401(k) Balances Got a Lift
Ongoing contributions and market gains lifted most 401(k) balances well above pre-crisis levels, according to a report by the Employee Benefit Research Institute (EBRI). Those who participated consistently in their 401(k) plans from 2007 to 2011 saw a 23.5% increase in their average balance. These participants generally stewarded their accounts through the financial crisis, accumulating account balances that were well above 2007 levels by year-end 2011. At year-end 2011, the average account balance among consistent participants was 60% higher than the average account balance among all participants in the EBRI/ICI 401(k) database, and the consistent group’s median balance was about two and a half times the median balance across all participants at year-end 2011. For more information, visit www.ebri.org.
Employers Boost Efforts to Help Workers Save for Retirement
Employers are taking bolder actions to help employees achieve financial security, according to a survey by Aon Hewitt. Employers are making significant changes in plan structure and investments while increasing guidance to participants.
A growing number of employers have increased their company match to the 401(k) plan. The most common match is now $1.00 per $1.00 on the first 6% of employee deferrals, with 19% of employers reporting this formula, up from 10% in 2011. Previously, a match of $0.50 per $1.00 on the first 6% was the most popular. Ninety-eights of employers surveyed provided some employer contribution to the plan.
Rob Austin, director of Retirement Research at Aon Hewitt said, “In the 20 years we’ve been doing this study, this is the first time we saw the most common match increase. Our experience shows that almost three-quarters of employees save at a level equal to or above the company match threshold. Increasing the amount employers are willing to contribute may help encourage those employees to save at more robust rates.”
Employers have drastically relaxed their eligibility requirements over the past decade. Seventy-six percent of plans now allow workers to begin making pre-tax contributions immediately upon hire, up from 71% in 2011. Just 45% of employers allowed for day-one contributions in 2001. In addition, 53% of plans have corresponding immediate eligibility for employer-matching contributions, while 50% of plans that offer a non-matching employer contribution allow immediate eligibility
Austin said, “People hop from job to job with increasing frequency, and many employers find it is important from an attraction perspective to have a retirement plan that is designed to give employees the best chance at achieving retirement readiness. Providing new hires with immediate eligibility helps ensure they don’t lose ground in terms of saving.”
Over the past six years, the percentage of employers that allow Roth contributions has increased from 11% to 50%. Where Roth is available, 27% of plans allow in-plan Roth rollovers/conversions. Another 16% of companies are planning to add the feature within the next 12 months.
“The Small Business Jobs and Credit Act of 2010 and the American Taxpayer Relief Act paved the way for an increasing number of employees to reap the benefits of a Roth account. Plan sponsors are enthusiastic about making the Roth provision available to their workforce and allowing them to benefit from any tax advantages,” said Austin. ”
Three out of four plan sponsors offer access to outside investment advisory services, with the most common being one-on-one financial counseling (59%), online guidance (55%), managed accounts (52%), and online advice (46%). The largest increase came in the number of employers offering managed accounts, which stood at just 29% in 2011. Target date funds, another popular form of investment advice, are now offered by 86% of plan sponsors.
Austin said, “Some prefer to simply hand over the keys to their retirement savings to someone else — hence the growing popularity of managed accounts. But a large percentage of employees prefer a more hands-on approach…Many employers are…offering a spectrum of support, which should ultimately provide the most participants with the expert resources they need to improve their retirement readiness.” For more information, visit aonhewitt.com.
Americans Want to Know About Additional Life Insurance Benefits
Only 4% of consumers say that a top reason for buying life insurance is to have access to money for expenses like supplementing college funding, healthcare, emergencies, or supplemental retirement income, according to a recent survey from Allianz Life. However, when asked more directly about these additional benefits, 64% of say they would make a sacrifice to have a life insurance policy with such benefits. The results indicate that a better explanation of these benefits would enhance interest in life insurance.
More than 80% of recognize the traditional death benefit as the primary purpose for purchasing life insurance. Top selections were replacing lost income when the insured dies (35%), paying for final funeral/probate expenses (28%), or paying off the mortgage/debt” (18%).
Sixty-four percent say they would reduce their daily spending to have a life insurance policy that has additional benefits to help fund college education, supplement retirement income, or have assistance if they became chronically ill.
“More education is necessary about the value and availability of additional benefits within some life insurance policies. Several options are available today beyond traditional term and permanent policies, so it’s important that the industry continues to spread the word about the versatility of modern life insurance,” said Allianz Life Vice President of Advanced Markets Deb Repya.
When presented with examples of additional benefits, “access to money if I become chronically ill” was the most popular option with 62% of respondents noting it as the most valuable benefit. Half of all respondents said having access to money to supplement retirement income was most valuable, followed by having access to money to help fund college education (22%) as their top selection. For more information, visit allianzlife.com.