• Exchange Agents Struggle with Application Deadlines
• Exchange Enrollment Picks Up
• 401(k) Participants to Slow Down Retirement Savings
• More Employees Own a Voluntary Product
• Half of Americans Want Congress to Repeal or Scale Back Obamacare
• Employers Fail to Educate Workers About the ACA
• Many Americans Would Rather Pay the Fine Than Get Coverage
• HSA Enrollees Manage Their Health Better
• Carriers Grapple With Uncertainty Over the Future of Healthcare
• Employees Downgrade Their Plans on Private Exchanges
• Health Execs Have High Expectations for Big Data
• UL with Living Benefits
• Long-Term Care
• Indexed Annuities Set Sales Records
Exchange Agents Struggle with Application Deadlines
The online application process was discovered to have glitches when the Exchange opened for enrollment in October 1, 2013 so the exchange requested paper application forms as a short-term solution. Since October, agents have filled out the 32-page paper form for thousands of new health care consumers and submitted them to Covered California by fax and by mail.
Covered California is asking certified agents for help in entering the application data into to their online system. Until the data is entered online, health insurers are not able to notify new enrollments and provide a premium notice of payment due. For coverage to be effective as of January 1, 2014, consumers must send payments to their health insurers postmarked no later than December 31, 2013,
Agents throughout California are voicing serious concerns that there may not be enough hours in the day to enter the data in time to meet the December 23rd application deadline. “It takes over 90 minutes to enter the information from the application due to the slow exchange system,” said Bruce Benton of Genesis Financial & Insurance Services in Sherman Oaks, Calif. “To have to go back, at this late date, and key in the data from paper applications I have already submitted to Covered California is extremely challenging and will take several days to process. This is additional work on top of the Medi-Care open enrollment that is also happening right now along with the employer group plan renewals. I am working to midnight most every night right now just to keep up. This is a major issue,” he added.
“For most licensed agents, it is not an option to add to their overhead,” said Sam Smith, president of California Association of Health Underwriters (CAHU). Smith has asked Covered California to offer relief from the legally mandated application cut-off date by insurers for the thousands of individuals who submitted paper applications. Patrick Burns, CEO of Burns Employee Benefits Insurance Services, LLC in Oakland said, “This is going to push agents to the wall, but we are all in this together and we want to find the best possible solutions to work it through to best serve our clients.”
Exchange Enrollment Picks Up
completed for Covered California is getting more than 10,000 applications a day. As of November 19, Californians had completed 360,464 health coverage applications and had their eligibility determined for premium assistance or no-cost or low-cost Medi-Cal.
The rate of enrollment in Covered California health plans has also increased. As of November 19, 79,891 Californians had selected a health plan. During the first week of October, only about 700 people a day selected a health plan. The enrollment rate nearly quadrupled by the second week of November, to about 2,700 plan selections per day.
The increase is mirrored by Medi-Cal, through Covered California and by applications processed by county health agencies. In October, county human services agencies processed 270,670 applications, a 30% increase over the previous month. In October, Los Angeles County had the largest number of enrollments, totaling 6,978, including subsidy-eligible and nonsubsidized consumers. San Diego County, Orange County and San Bernardino/Riverside counties followed closely. Young people, 18- to 34-year-olds, are applying in direct proportion to California’s population.
The following results reveal that most applicants are choosing major carriers:
• 32.7% Anthem Blue Cross of California
• 32% Blue Shield of California
• 17.6% Kaiser Permanente
• 13.7% Health Net
• 1.6% L.A. Care Health Plan
• 0.9% Sharp Health Plan
• 0.5% Molina Healthcare
• 0.3% Western Health Advantage
• 0.2% Contra Costa Health Plan
• 0.1% Valley Health Plan
• 0.1% Chinese Community Health Plan
401(k) Participants Expect to Slow Retirement Savings
A Mercer survey reveals that 401(k) plan members don’t plan to save more for retirement over the next year compared to last year. In fact, those closest to retirement are actually decreasing their planned savings for the future. While participants, in general, are more optimistic about the economy, they are planning to save slightly less over the next 12 months, and those over the age of 50 have lowered their expected savings amounts by about 18%.
“Retirement plan participants are not feeling the rewards of an improving economy…and therefore seem hesitant or feel unable to give up access to immediate cash in order to save for the future. Savings rates obviously tie to, and build, participants’ expectations for retirement; and right now, those expectations aren’t great. Participants are worried about paying their future bills and are planning on working longer,” said Dave Tolve of Mercer.
Participants clearly see trouble ahead in achieving a comfortable retirement. Nothing exemplifies this better than a retirement concern that was barely on the map a few years ago: paying for health care in retirement. Since 2007, saving for health care expenses in retirement has doubled as a major savings goal (up from 17% to 34%), yet only 35% believe they’ll have enough money to pay for it. This issue is now the number one concern and the biggest financial worry amongst those 50 years and older.
Amy Reynolds of Mercer said that these diverging participant attitudes should be of grave concern to employers that are facing career path choke points, an aging workforce, and low employee engagement. It is important for sponsors to realize that it is just not enough to institute plan features, such as automatic enrollment. Sponsors should be frequently assessing how their participants’ behavior affects their ability to retire. They should make program changes before workforce management issues arise.
Mercer is encouraging plan sponsors to do the following:
• Educate participants through various media about the value of tax-advantaged retirement savings versus other savings vehicles.
• Demonstrate how saving a bit more can have an enormous effect in meeting anticipated costs of tomorrow, even for those over age 50.
• Provide easy-to-use online tools and resources to influence participants in a way that is meaningful and relevant to them.
For more information, visit http://www.mercer.com/workplace-survey.
More Employees Own a Voluntary Product
Thirty-two percent of employees in businesses with 10 or more employees own at least one voluntary, employee-paid product compared to 32% in a previous survey by Eastbridge. But the ownership percentage varies by employer size. Those in businesses with 50 to 500 employees had the highest ownership rate, and those in business with 10 to 25 employees had the lowest. Over half of all employees now own two or three products. Only 15% of employees who have a voluntary product own just one. This is down from 21% in 2010 and 31% in 2006. For more information, visit www.eastbridge.com.
Half of Americans Want Congress to Repeal or Scale Back Obamacare
After two months of glitches with the new federal healthcare website, there has been little change in the percentage of Americans who want Congress to scale back or repeal the Affordable Care Act (ACA). Fifty-two percent favor scaling back (20%) or repealing (32%) the law, similar to the 50% from mid-October.
At least half of Americans said they would want to repeal or scale back the law each time Gallup asked this question since January 2011. The latest results are from a Gallup poll conducted December 3 to 4. Despite HHS’s announcement on Dec. 1 that the technical issues have been mostly fixed and reports of 29,000 new enrollees in the days thereafter, Americans are no less likely to say Congress should repeal the law or scale it back. Twenty percent want Congress to expand the law, up from 14% in October, while 17% want the law to be kept as is, down from 24%.
Thirty-seven percent of Americans want the law expanded or kept as is while 52% want it repealed or scaled back. The fact that 32% want an outright repeal, compared to 54% who disapprove of the law, suggests that some of those who disapprove still do not want to do away with the law altogether.
While 90% of Republicans want Congress to repeal or scale back the law, 65% of Democrats want to expand the law or keep it as is. Independents almost exactly mirror the national averages, with 50% wanting to repeal or scale back the law, and 37% wanting to expand or keep it as is.
Employers Fail to Educate Workers about the ACA
Fifty-one percent of workers say their employer has not given them information about the ACA (34%) or they do not know if their employer has done so (17%), according to a survey Harris Interactive and released by the Transamerica Center for Health Studies. Majorities of those insured plan to continue receiving coverage through their employer or keep the same insurance they have.
Eighty-one percent of those insured under an employer say they plan to keep the same coverage compared to 53% of those with an individual plan. Only 10% of the uninsured plan to purchase health insurance through the new exchange. Only 35% say they are very or somewhat prepared for the ACA, up slightly from 30% in July. Thirty-one percent haven’t even heard of the new health insurance exchanges compared to 15% of the general population.
But, the general population is significantly more informed of (60%) and prepared for (72%) the ACA than in July (48% and 63% respectively), but that has not resulted in action since 59% say they have done nothing in the past 12 months to prepare for the ACA. “More Americans are informed and prepared for the March 31, 2014 mandatory health coverage date, but a significant number have yet to actually sign up for health insurance in the exchanges or in the traditional insurance market,” said Hector De La Torre, executive director of the Transamerica Center for Health Studies.
Fifty-one percent of working Americans say that their employer has not given them information about the ACA or they do not recall whether their employer has done so. As of 2013, most employers must notify their employees about specific health coverage information, including the health exchange in their state
One of the most positive reactions to the new health care law comes from those with pre-existing medical conditions; 35% of those who were unable to access or afford health insurance due to a pre-existing medical condition say they can now get health coverage as a result of the ACA. For more information, visit https://www.transamericacenterforhealthstudies.org.
Many Americans Would Rather Pay the Fine Than Get Coverage
Thirty-eight percent of Americans would rather pay a fine than buy health insurance, according to a survey by insuranceQuotes.com. The survey reveals the following:
• 65% of Americans from 18 to 29 would buy health insurance versus 57% of Americans 30 and older.
• 78% of African Americans would buy health insurance versus 61% of Hispanics and 56% of Caucasians.
• 74% of Democrats would buy health insurance versus 40% of Republicans and 56% of independents.
The results reflect Americans’ responses to a hypothetical scenario (a 45-year-old who earns $50,000 a year). A typical health plan would cost this person $3,000 a year. If this person did not buy health insurance, the fine would be $400.
Laura Adams, insuranceQuotes.com’s senior analyst said, “One of the key questions surrounding the Affordable Care Act is whether young Americans — especially healthy young Americans — will sign up for health insurance. This research sheds a positive light on that segment of the population, but it’s concerning that about three in 10 Americans still don’t know about the possible fines.”
Most Americans are confused about the penalty amounts. The penalty would be $200 for a person who earns $30,000 a year. Only 21% of Americans who know that uninsured people will be fined correctly pegged the amount at $100 to$250 (38% overestimated and 36% underestimated). The penalty would be $650 for a person who earns $75,000 a year. Only 21% of Americans who know about fines correctly pegged the amount at $500 to $1,000 (46% underestimated and 29% overestimated).
Almost eight in 10 Americans who know about fines incorrectly think that children under the age of 18 are exempt from fines. Six in 10 falsely believe that senior citizens over the age of 65 are exempt. Only 64% correctly said the fine would come from their federal income tax refund. For more information, visit http://www.insurancequotes.com/health/obamacare-penalty
HSA Enrollees Manage Their Health Better
Employees who contribute to health savings accounts (HSAs) generally become more engaged in managing their health after enrolling, according to a survey by Buck Consultants, A Xerox Company. In fact, respondents had greater engagement with each of 11 health management activities measured. For example, 51% of respondents set aside more money for potential medical costs than what they had set aside before they had an HSA. Twenty-nine percent have more discussions with their doctors about the cost of care and 13% are more active in managing their chronic disease.
In fact, respondents had greater engagement with each of 11 health management activities measured. Travis Klavohn of BenefitWallet said, “Remarkably, these results are consistent across our three surveys conducted over a five-year period. The researches polled more than 23,000 members of BenefitWallet.
Ninety percent of HSA members get medical coverage through their employer. More employers are contributing to HSAs (75%) than not (25%). When ranking important HSA product features, 44% of respondents ranked the ability to view claims as most important. They ranked paying medical claims on the HSA member portal second at 35%
Klavohn said, “HSA members are making wiser health care decisions. They are evaluating costs more closely before receiving care, shopping for lower priced drugs, and choosing less costly services. They attribute their changed behavior to owning an HSA.” Forty-two percent are undecided about whether they will get health insurance through exchanges while 35% are unlikely to do so, and 23% are likely to do so. Forty-six percent expect the ACA to increase the cost of medical insurance; 14% say it will decrease costs; and 12% say it will have no effect.
Forty-six percent of respondents say that the ACA will increase their out-of-pocket medical costs; 13% say it will decrease their costs; and 13% say it will have no effect. “HSA members’ concern about ACA-driven cost increases aligns with their heightened consumerism since the top eight out of 11 actions that occurred after enrolling in an HSA involved saving, monitoring costs and shopping wisely,” said Ruth Hunt, a principal and health engagement leader for Buck Consultants. For more information, visit http://www.buckconsultants.com.
Carriers Grapple with Uncertainty Over the Future of Healthcare
Three-fourths of the 30 worksite executives said that their company’s first, second, or third most formidable obstacle involves uncertainty over the future of healthcare. This factor replaced dealing with product competition and attracting quality brokers as the number one obstacle in the past two studies, according to a recent Eastbridge survey.
In spite of all the issues surrounding health care reform, the executives remain extremely optimistic about the worksite/voluntary industry’s potential for new sales growth over the next five years. The average expected growth rate was around 9% for the industry and just under 15% for their own companies.
Employees Downgrade Their Plans on Private Exchanges
One-in-four people who enrolled online through a private insurance exchange selected lower coverage levels than what their previous plan offered in order to reduce premiums. Fifty-seven percent of those who choose lower-priced health plans will buy ancillary benefits, such as vision coverage or even pet insurance, using their allocated leftover funds.
Rich Birhanzel, managing director, Accenture Health Administrative Services said, “To make more informed decisions, consumers need a better understanding of the complex tradeoff decisions that are part of the enrollment process, such as weighing individual medical risks against personal financial circumstances. Without that knowledge, consumers will be more likely to face higher costs that could potentially arise from unexpected incidents and treatment needs.”
While employees are willing to make some tradeoffs in return for lower premiums, it depends on the availability of other options. For example, 81% of employees are willing to increase their deductible to save $50 a month on their premiums. But, only 25% are willing to accept more than a $600 deductible increase to save $600 in annual premiums, according to an Accenture survey of more than 2,000 consumers.
The rapid emergence of private insurance exchanges will expand benefit choices and fuel the purchasing of ancillary benefits through a new pool of discretionary premium dollars. Accenture expects these private exchanges to grow to 40 million enrollees by 2018. The new pool of discretionary premium dollars is expected to grow to $4 billion by 2018. For more information, visit www.accenture.com
Health Execs Have High Expectations for Big Data
Health care executives have high expectations about the benefits that big data will bring to the healthcare industry. But most are having a hard time finding the right talent to do the job, according to a survey by the Society of Actuaries. Sixty-six percent of the 258 decision makers at health insurance companies, hospitals, and health systems say they are excited about the potential of big data. Eighty-seven percent say that big data is an important development that will have at least some affect on their business in the future. But 49% said big data provides little to no business benefit now. For more information, visit www.SOA.org.
UL with Living Benefits
Universal life insurance policyholders who are diagnosed with a chronic illness can now access their policy’s death benefits, income tax free (based on current tax laws), through a rider offered by American General Life Companies. When the health impairment criteria for the rider are met, the funds from the rider can be used to help pay for assisted living, nursing home care, adult daycare, and more — virtually any expense, even if not directly related to the illness. The Accelerated Access Solution features flexible benefit payment options, including a unique payout methodology to help protect against inflation. The Accelerated Access Solution also offers affordable premiums that are fully guaranteed for life. A policy holder can qualify for the accelerated access to benefits if a licensed health care practitioner certifies that for at least 90 days, the insured has been unable to perform, without substantial assistance from another person, at least two of the six activities of daily living (bathing, continence, dressing, eating, toileting, transferring) or has suffered from a severe cognitive impairment (measured by clinical evidence and cognitive tests). For more information, visit www.americangeneral.com/securelifetime.
Nationwide Financial introduced Nationwide YourLife CareMatters. With the indemnity style of CareMatters, policy owners can use the benefits for a wider variety of long-term care options including paying a family member to care for them. If care is needed, a pool of long-term care coverage will be provided and paid out indemnity style, along with a guaranteed minimum death benefit. If care is not needed, the premium can be recovered through a death benefit or through our return of premium option, which includes any growth. For more information, visit www.nationwide.com
Indexed Annuities Set Sales Records
The fixed annuity industry experienced one of its strongest periods of sales growth during third quarter 2013, according to Beacon Research. Jeremy Alexander, CEO of Beacon Research said, “At the pace seen in the past two quarters, we expect total fixed annuity sales for 2013 to exceed last year’s numbers for the first year-over-year increase since 2008, The outlook for indexed and deferred income annuities remains strong, in particular, and we expect to see increases in fixed-rate annuities, as well, should interest rate trends continue.”
Indexed and deferred income annuities results hit record highs. Sales of market-value-adjusted (MVA) annuities for the first three quarters of 2013 matched the total for all of 2012. Increases in credit spreads and long-term Treasury rates during the quarter helped to propel sales.
Quarter-over-quarter sales were up among all fixed annuity product types. For the first time since 2008, in all major distribution sales of indexed annuities surpassed $10 billion for the first time, and nearly two thirds of carriers experienced an increase in MVA annuity sales during the quarter. For more information, visit www.annuitymarketstudy.com.