• Exchanges Bring Narrow Networks and High Cost-Sharing for Cancer Patients
• Exchange Enrollment Jumps in December
• California Children Lack Vital Dental Care
• Blue Shield to acquire GEMCare
• Alliant Goes on the Hunt for Acquisitions
• Private Health Insurance Exchange
• ING U.S. to Become Voya Financial in 2014
• Life Insurers Face Major Financial, Regulatory Reporting Changes
• Life Insurers Expect Modest Growth in 2014
EMPLOYEE RELATIONS & BENEFITS
• Bosses Are Happier Than Their Workers
• An Alternative to Retirement Plan Loans
• Habits of Highly Effective Advisors
• Variable Annuity With Living Benefit Riders
• Payment Processing Services
• ACA Compliance Tools
• Online Investing Course from LOMA
LONG TERM CARE INSURANCE
• Long Term Care Insurance Prices Drop For Men, Rise Slightly For Couples
Exchanges Bring Narrow Networks and High Cost-Sharing for Cancer Patients
Many exchange health plans have limited access to National Cancer Institute (NCI) designated cancer centers or transplant centers. They also impose high out-of-pocket costs for patients with silver and bronze level plans, according to a report commissioned by The Leukemia & Lymphoma Society (LLS).
The report, prepared by Milliman, provides an early look at the 2014 individual benefit designs, coverage benefits, and premiums for policies sold on four state health insurance exchanges in California, New York, Florida, and Texas.
The report reveals the following areas of concern:
• Narrow networks: Many specialty providers and hospitals that cancer patients rely upon are largely left out of the new health insurance exchange plans. Cancer patients could rack up thousands of dollars of medical expenses without reaching their out-of-pocket maximum since it is unlikely that any out-of-network expenses will count toward a patient’s out-of-pocket maximum. This it more important than ever to have adequate networks covering specialty care.
• High cost sharing: The lower tier bronze and silver plans require significant cost-sharing from patients. Qualified health plans come with high deductibles — sometimes nearly as high as the out-of-pocket ceiling. The maximum out-of-pocket limits set for 2014 are $6,350 for an individual policy and $12,799 for a family policy. Some insurers offer plans with lower out-of-pocket limits in some states. However, the out-of-pocket limit does not apply to non-covered drugs or treatment centers.
• Challenges with transparency: Given the difficulty in navigating the health insurance system and the number of choices for consumers, providing thorough and accurate information is critical to ensuring consumers have the right kind of health insurance.
For more information, visit www.LLS.org
Exchange Enrollment Jumps in December
There was a more than three-fold increase in plan selections in state and federal health exchanges in December compared to October and November, according to a report by the Dept. of Health and Human Services. At nearly 500,000, California has the highest number of people who have selected an exchange plan. The following are some additional enrollment figures about enrollees nationwide:
• 54% are female.
• 24% are 18 to 34.
• 30% are birth to 34.
• 20% selected a Bronze plan.
• 60% selected a Silver plan.
• 13% selected a Gold plan.
• 7% selected a Platinum plan.
• 1% selected a catastrophic plan.
• 79% selected a plan with financial assistance
For more information, visit http://aspe.hhs.gov/health/reports/2014/MarketPlaceEnrollment/Jan2014/ib_2014jan_enrollment.pdf
California Children Lack Vital Dental Care
The American Academy of Pediatric Dentistry says that children should have a dental visit no later than their first birthday. But 37% of two- and three-year-olds in California have never been to the dentist, according to a report by Children Now. The rates are even lower for California’s poorest young children, as only one in three, ages birth-to-three, enrolled in Denti-Cal have seen a dentist.
By kindergarten, over 50% of children in California have experienced dental decay and 28% have untreated decay. California students miss 874,000 days of school each year due to dental problems, costing schools over $29 million each year. Children who reported recent tooth pain were four times more likely to have a low grade point average. Approximately 3.6 million children are enrolled in Denti-Cal with nearly half of all California children expected to be enrolled by 2014.
Most dentists see a low volume of children on Denti-Cal. Dentists often cite low reimbursement rates as the reason for not accepting Denti-Cal patients. In addition, 22 California counties have no pediatric dentists who accept Denti-Cal.
The 2013 to 2014 state budget includes a 10% reimbursement rate reduction to most Medi-Cal providers. The only pediatric service affected by the cut is dentistry, despite the fact that California already ranks among the lowest nationally in reimbursing dental providers in Medicaid.
The Dept. of Health Care Services worked to recruit more dental providers in 2013, during the state-mandated transition of children from Healthy Families to Medi-Cal. However, the Medi-Cal payment rate cuts are likely to reduce the number of providers.
The California Dept. of Health Care Services is creating a statewide pediatric oral health action plan to increase the number of children (ages one to 20) who get preventive dental services and children (ages six to nine) who get a dental sealant. These strategies will help increase dental utilization for children enrolled in Medi-Cal.
The report offers the following recommendations for the state:
• Increase Medi-Cal dentist reimbursement rates.
• Provide incentives for pediatricians to explain the importance of routine dental care to parents.
• Expand the use of tele-dentistry (the delivery of dental-related services and information via telecommunications technologies) to reach under served child populations.
• Expand the oral health care workforce so more children can access needed services.
For more information, visit http://www.childrennow.org.
Blue Shield to acquire GEMCare
Blue Shield of California will acquire Bakersfield-based GEMCare Health Plan. GEMCare is active in the commercial and Medicare markets in Kern County and the Central Coast. With the planned acquisition, Blue Shield will broaden total membership and provider networks and add Medicare members in Kern, San Luis Obispo, and Santa Barbara counties for the first time. The acquisition agreement also facilitates new patient-centered medical homes and accountable care organizations.
GEMCare members will experience minimal changes. All GEMCare Medicare business will remain with current contracts. Commercial members will retain coverage at current premiums until their next renewal date. GEMCare Health Plan employees will continue to provide services on behalf of the GEMCare Health Plan and will be employed through Managed Care Systems, a third party administrator, during the transition period. The agreement is subject to the approval of the California Department of Managed Health Care.
Alliant Goes on the Hunt for Acquisitions
Alliant Insurance Services has launched Alliant Americas, signifying an aggressive growth strategy for its commercial business. The new organization will expand Alliant’s middle market presence through strategic acquisitions and investments.
Headquartered in Newport Beach, Calif, Alliant Insurance Services is one of the largest insurance brokerages in the United States with a history dating back to 1925. Alliant provides property and casualty, workers’ compensation, employee benefits, surety, and financial products and services to more than 26,000 clients nationwide, including public entities, tribal nations, healthcare, energy, law firms, real estate, construction, and other industry groups.
Sean McConlogue, president of Alliant Americas, said that there are opportunities for mid-sized agencies to partner with the firm to gain access to additional capital, sophistication, program relationships, and resources. For more information, visit www.alliant.com.
Private Health Insurance Exchange
Beginning in February, CaliforniaChoice is offering employers the ability to provide their employees with two metal tiers. The tiered-choice option offers employees greater access to health plans, benefits, doctors, specialists and hospitals. Available tiered-choice options include platinum and gold, gold and silver, or silver and bronze metal tiers. Each metal tier available through CaliforniaChoice also offers employees access to both full and limited provider networks. For more information, visit www.calchoice.com.
ING U.S. to Become Voya Financial in 2014
ING U.S. will begin using the name, “Voya Financial” during the second quarter of the year. The various ING U.S. businesses and legal entities plan to complete their transition to Voya throughout the year. Ann Glover, chief marketing officer of ING U.S. said Voya is an abstract name coined from the word “voyage.” It reflects momentum and optimism, and a view towards the future. For more information, visit www.voya.com.
Life Insurers Face Major Financial, Regulatory Reporting Changes
In response to new regulations, half of life insurance company chief financial officers (CFOs) expect to see major changes in product design and pricing of their universal life product with secondary guarantees. Seventeen percent say that their companies will stop selling universal life altogether or significantly curtail sales while 33% will make changes to product design and/or pricing, according to a survey by Towers Watson.
Fifteen percent will implement major changes to their annuity products. Fifty-five percent are considering design changes to their pension plans and 64% are considering changes to their retiree medical and life plans.
The survey addresses requirements for the International Financial Reporting Standards (IFRS) 4 Phase 2; National Association of Insurance Commissioners (NAIC) Own Risk and Solvency Assessment (ORSA); NAIC Valuation Manual (VM) 20; Actuarial Guideline (AG) 38, revisions for 8D and 8E; and Statement of Statutory Accounting Principles (SSAP) 102/92.
“By far, the greatest impact of these new regulations will be felt by companies that write universal life with secondary guarantees. NAIC regulators have maintained that the design for many of these products does not sufficiently reflect the reserves they warrant,” said Jack Gibson, managing director, life insurance consulting, Towers Watson.
“The complexity of these new life insurance regulatory requirements makes it imperative that insurers understand exactly how these changes will alter everything in their business – from supplementary reporting to capital financing for products such as universal life with secondary guarantees and term insurance,” said Gibson.
“Even if CFOs have people who know the intricate details of these regulations and are able to focus on near-and long-term planning for financial functions, that planning will be easier if CFOs are well-informed on the life insurance regulatory changes. But according to our results, the majority understand just the basics, or have a low level knowledge-base on most of the reporting requirements,” said Gibson. Despite this, CFOs expect to make only moderate staffing changes. Eighty percent will draw on a combination of expertise in-house with some outsourcing to comply with the IFRS 4 Phase 2 framework.
Most insurers expect to make at least moderate changes to their governance, process, and controls in response to all five regulations. All insurers will make changes precipitated by IFRS 4 Phase 2, and 92% will make changes to meet the ORSA regulation. Remarkably, many insurers don’t have significant controls and governance in place to meet these new requirements. They are best prepared for the NAIC’s ORSA (50%) and least prepared for the SSAP 102/92 (9%).
All the new regulations are likely to cause changes to insurers’ software models or modeling tools. In fact, 71% or more said changes to modeling software or tools will be needed for all new regulations except SSAP 102/92. The most significant changes will be needed for IFRS 4 Phase 2, where nearly half (44%) expect to make significant changes, with slightly over half (56%) expecting to make moderate changes to their modeling. “Insurers that can create systems flexible enough to incorporate these new changes and to adapt to future changes will be best positioned to manage software-related costs and to leverage the usefulness of what could be a major investment. Some insurers might be able to use legacy systems, but for others, that will be a challenge,” said Gibson.
Eighty percent expect it to take two years to implement new IFRS standards, and more than 60% anticipate significant or moderate challenges in implementing ORSA. “The looming challenges are evident. Preparing for them provides insurers with a great opportunity to assess reserving and capital, reporting functions and enterprise risk management. They can also use it to reevaluate whether new talent is needed, or existing talent can be further challenged with new responsibilities,” said Gibson. For more information, visit towerswatson.com.
Life Insurers Expect Modest Growth in 2014
Life insurance executives surveyed by LOMA expect only modest growth this year due to interest rates, the economy, and uncertain equity markets. “There will be a modest increase in sales and profits for our industry as the industry tailors products to fill specific market gaps and continues to focus on low-cost niche market opportunities and/or alternative distribution channels,” said Doug French of LOMA. Most executives agreed with the following:
• Technology will be more important than ever, particularly analytics, social media and mobile. The use of big data can help insurers better understand policyholders and build better relationships with them, several executives said.
• Quality service will key to retaining customers. Over the past decade, customer expectations have changed dramatically and are being set by companies in other industries, executives said.
• Major merger/acquisition activity is unlikely in 2014, but companies will enter new product lines to meet consumer demand and spur growth.
For more information, visit http://www.loma.org.
Bosses Are Happier Than Their Workers
Bosses not only get bigger paychecks, but they are also more satisfied with their family life, their jobs, and their financial situation compared to their workers, according to a recent Pew Research Center survey. Top managers with children are less likely than other working parents to say that parenthood has been an obstacle to job advancement (33% versus 17%) and more likely to say their current position is a career rather than a just a job. The survey also reveals the following:
• Eighty-three percent of bosses are very satisfied with their family situation compared to 74% of workers.
• Sixty nine percent of bosses are very satisfied with their job compared to 48% of workers.
• Forty percent of bosses are very satisfied with their financial situation compared to 28% of workers. Fifty-four percent of bosses have household incomes of $75,000 or more, compared to only 32% of workers.
• Seventy-three percent of bosses say that they have gotten the education and training to succeed compared to 57% or workers.
• Sixty-two percent of bosses say they are paid fairly for their work compared to 54% of workers. So it may not be surprising that bosses are only about half as likely as workers to be looking for another job (12% versus 23%).
Bosses and workers said that the following aspects of a job are extremely important:
• Doing a job that they enjoy: 39% of bosses and 44% of workers
• Having job security: 32% of bosses and 36% of workers.
• Being able to take time off for child or family care needs: 32% of bosses and 35% of workers.
• Having a job that helps society: 19% of bosses and 23% of workers.
• Having opportunities for advancement: 25% of bosses and 24% of workers.
• Having a big salary: 20% of bosses and 18% of workers.
• Having good benefits: 26% of bosses and 35% of workers.
Fifty-three percent of bosses are Republican or lean to the GOP compared to 37% of workers. Forty-three percent of bosses and 37% of workers describe themselves as conservatives while about a third of bosses and workers describe themselves as moderates. Only 17% of bosses and 21% of workers describe themselves as liberals.
Bosses and workers share strikingly similar views on key gender issues. About half of top managers (52%) and employees (48%) say it’s easier for a man than a woman to get a top job in government or business. And exactly the same proportion say that men generally earn more for doing the same work (54% for both sexes). But both labor and management offer a more positive view when asked to focus on how men and women fare at their workplaces. Seventy percent of bosses and 75% of workers say that men and women are paid the same for doing the same job where they work. Equally large majorities agree that women and men have the same opportunities to advance.
However, men are more likely than women to be the boss (16% versus 10%). Whites still dominate in the corporate suite: 16% of all whites are bosses, compared to 6% of blacks, and 4% of Hispanics. For more information, visit www.pewresearch.org.
An Alternative to Retirement Plan Loans
A white paper by Purchasing Power reveals that employee-purchase programs can help employees fund some unexpected expenses and reduce their reliance on student loans instead of taking loans against their 401(k)s. Those who borrowed or took early distribution from their 401(k)s, 403s, or Roth plans, in the past three years, used the money for the following:
• 37% general household expenses (mortgage/rent, utilities)
• 24% medical expenses
• 22% college tuition/expenses
• 22% credit card payments.
• 18/5 big ticket items (appliances, electronics, computers)
• 14% new cars
• 7% major car expenses
• 16% other
Fifty-five percent said that they would be at least somewhat likely to use an employee-purchase program for appliances, furniture, computers, electronics, and educational services, etc. To get the full white paper, visit www.PurchasingPower.com.
Habits of Highly Effective Advisors
The most prosperous advisors are largely independent and work in ensemble practices and in larger agencies, according to a study by the Million Dollar Round Table (MDRT) and LIMRA. The survey was conducted among 400 U.S. members of MDRT, representing a variety of ages, backgrounds and work settings. Forty percent of the most profitable advisors are independents. Fifty-seven percent of the most profitable and 60% of the most productive advisors work in ensemble practices. Large agency size also plays a role with 60% of the most profitable and 82% of the most productive respondents being supported by staff.
Ninety-seven percent of advisors say that keeping up with industry regulations is the most pressing challenge, followed by improving efficiency with 92%, and enhancing client base with 88%. For more information, visit mdrt.org.
Variable Annuity With Living Benefit Riders
Nationwide Financial introduced the Nationwide Living Benefit Suite of Riders for Nationwide Destination Series 2.0 variable annuities. The suite offers new options to help advisors recommend the best fit for clients based on age, risk tolerance and their potential guaranteed income needs at retirement. The suite of riders includes the following:
The Nationwide Lifetime Income Rider for investors at or near retirement who are seeking a secure, guaranteed level of income. Nationwide Lifetime Income Capture is for investors who are further from retirement. It offers the potential for guaranteed lifetime income with the possibility to increase their income potential. The Nationwide Lifetime Income Track offers fee-conscious investors increased equity exposure and the possibility of guaranteed income in retirement at a low cost. For more information, visit www.nationwidefinancial.com/livingbenefits or call 1-800-321-6064.
Payment Processing Services
Paychex introduced Paychex Payment Processing Service. The full suite of payment processing solutions includes credit and debit card processing, mobile and online payment services, and point-of-sale solutions. It makes it easier for business owners to accept credit and debit cards. It also allows business owners to deposit checks, offer gift cards, and earn electronically revenue through dynamic currency conversion.
For more information, visit http://www.paychex.com/payment-processing.
ACA Compliance Tools
ADP introduced additional tools and resources to its human resource and payroll platform. It now offers an ACA full-time equivalent calculator and tax credit assistance tools. For more information, visit www.adp.com/runpayroll.
Online Investing Course from LOMA
LOMA launched an online educational course, “Institutional Investing: Principles and Practices.” It is tailored to life insurance, financial services, and retirement professionals. For more information, visit www.loma.org.
Long Term Care Insurance Prices Drop for Men, Rise Slightly for Couples
A healthy 55-year-old man can expect to pay 15% less for long-term care insurance coverage compared to last year. A married couple, both age-60, faces a 7% increase according to a report by the American Association for Long-Term Care Insurance (AALTCI). The average cost for a 55-year-old male purchasing $164,000 of long-term care insurance protection is $925 a year. Equal coverage for a single woman costs $1,225. Leading insurers began charging women higher premiums in 2013. “Women account for two-thirds of the $6.6 billion in claims paid by insurers last year.
The study looks at a 60-year old couple each purchasing $164,000 of current protection that will grow to $730,000 combined when both reach age 80. It will pay an average of $3,840 yearly, a 3% increase over the prior year’s average. Adding an inflation growth option builds your benefits over time, but it can double the base cost of coverage.
“Insurers offer a variety of discounts and options that can enable an individual to reduce the cost of protection. Today there are more choices available for consumers to protect against the very real risk of needing care explains Tracy Russo, Partner at The National LTC Education Center. Russo notes that it’s best to plan in your mid-40s to mid-60s.
Costs for policy coverage vary significantly from one insurer to the next. The typical difference is around 80%, but, in certain cases, one insurer charged 109% more than another industry leader. For more information, visit www.aaltci.org