Subscribe to Insurance Insider News
by Leila Morris
• Individual Rates to Soar in California
• Employer Coverage Rises After Massachusetts Health Reform
• Healthcare Spending Growth Expected to Remain Low
• Medicare Hospital Price Data Reveals Wide Variations
• Employee Nabbed for Cheating a Wellness Plan
CRITICAL ILLNESS & DISABILITY
• Consumers Are Not Prepared for A Critical Illness
MOVERS & SHAKERS
• Life Insurance Vision Award
• Life Insurance Data Storage
• Vision Website
• IRA Decision APP
• Health Care Reform Guides
• Variable Annuities
Individual Rates to Soar In California
Expanded enrollment of a sicker population will drive up rates for individual health plans in 2014, according to a study by Milliman for Covered California, the state’s health exchange. The average premium increase will be an astounding 30.1% for people who make too much to receive the subsidy (more than $93,700 for a family of four or $45,960 for an individual).
However, Californians who will qualify for the highest premium tax credits, due to their income, will see an average drop of 85% in what they pay for health coverage. Depending on the individual’s choice of health plan, this premium tax credit could cover a higher percentage of the premium. There are 1 .6 million people uninsured and eligible for subsidies. Many of them could have 100% of their premiums covered through the Affordable Care Act. Those who make less money will be eligible for larger federal tax credits to make their health care more affordable. Households earning from 138% to 250% of the federal poverty level will likely see an average drop of 85% in what they pay for health coverage. Households earning 250% to 400% of federal poverty level will pay on average 45% less, for more coverage with lower copay and deductibles, than what they would have paid for an individual plan in 2013. The hope is that, in future years, Californians will see decreases in their health care costs as they no longer pay for the burden of the millions of uninsured and benefit from improvements in how care is delivered, according to Covered California.
Autistic Kids Being Denied Critical Care
A coalition of children’s health and autism support organizations says that hundreds of California’s children are suffering from disruptions in critical health care services as the state transitions from the Healthy Families Program to Medi-Cal. In particular, children in Healthy Families who had been receiving standard therapy for Autism Spectrum Disorders (ASD) are being denied these services in Medi-Cal, often with less than a week’s notice.
Governor Brown’s Administration has continually promised that no children would lose access to services during the multi-tiered transition of over 900,000 children from Healthy Families to Medi-Cal. California Health and Human Services Agency Secretary Diana Dooley was quoted as saying that officials would not shift children from Healthy Families to Medi-Cal unless they were sure the children would receive adequate health care: “We will delay the transition’ for certain children if they are unlikely to receive adequate care under Medi-Cal.” She said, “At this point, everything is on track.”
Now, after the transition of over 600,000 children to Medi-Cal, children’s health advocates say it is clear that everything is not on track. “These problems represent a shameful failure to provide for children who the state has known for at least six months were at risk of losing services,” said Ted Lempert, president of Children Now.
Advocates worry interruptions in autism services may foretell broader challenges. “We know that only a small percentage of affected families ever file a complaint, and since the state’s monitoring of the Healthy Families transition has been woefully inadequate, other continuity of care issues may take a while to surface,” added Karen Fessel, executive director and founder of the Autism Health Insurance Project.
Rate of Employer Coverage Rises After Massachusetts Health Reform
In the seven years since Massachusetts enacted its universal healthcare law, the number of people covered by insurance through the workplace increased, running counter to nationwide trends. Employer-sponsored insurance rose about 1% in Massachusetts while the national rate fell 5.7%. The Massachusetts growth occurred in the midst of the recession and at a time when health insurance premiums in the state rose to the highest levels in the nation, according to a study by PwC’s Health Research Institute.
Michael Thompson of PwC said, “Health insurance benefits are a significant part of the total compensation package for a workforce, and that’s not likely to go away when the Affordable Care Act goes into full effect. Employer-sponsored coverage will continue to be a critical pillar of the U.S. health system. It has been an important part of employer strategy to attract and retain talent, and promote improved health and productivity. Most employers see this return on investment, alone, as a compelling reason to continue offering coverage.”
A combination of salary and health benefits through an employer is likely to be more efficient way to be compensated for Americans earning more than 400% of the federal poverty level or about $45,960, according to researchers. Due to federal tax exclusions, businesses can save thousands of dollars per-employee by using that compensation strategy. The second report on the Massachusetts Experience, to be later this month, will take a closer look at the implications for the state’s hospitals, physicians and insurers. To download the report, visit: http://www.pwc.com/us/Massachusettshealthreform.
Healthcare Spending Growth Expected to Remain Low
The growth in healthcare spending will continue to be held down by the sluggish economy, the continued shift of healthcare costs from the employer to the employee, and the movement towards value-based reimbursement models, according to a report by Fitch Ratings. The rate of increase in U.S. healthcare spending is likely to remain low even as the end of the tepid economic recovery gives way to more robust growth.
Health spending grew 3.9% annually from 2009 to 2011, compared to an annual growth rate of 4.7% to 6.6% the prior three years, according to data from Centers for Medicare and Medicaid Services. Two recent studies were published in Health Affairs that provide some insight into the causes.
One found the weaker economy accountable for 37% of the lower spending trajectory and attributed an additional 8% to cuts in Medicare reimbursement and decline in commercial insurance coverage. The study leaves 55% of the reduction unexplained. The other study indicated that benefit design changes (including higher deductibles and out of pocket costs) contributed to 20% of the lower increase in spending. For more information, visit www.fitchratings.com.
Medicare Hospital Price Data Reveals Wide Variations
For the first time HHS is giving consumers information on what hospitals charge for Medicare services. HHS Secretary Kathleen Sebelius said the new data reveals significant variation in what hospitals charge for common inpatient services across the country and within communities.
The CMS website compares charges for services associated with the 100 most common Medicare inpatient stays. These amounts can vary widely. For example, average inpatient charges for hospital services in connection with a joint replacement range from $5,300 at a hospital in Ada, Okla., to $223,000 at a hospital in Monterey Park, Calif.
Hospital charges for similar services can vary significantly, even within the same geographic area. For example, average inpatient hospital charges for services to treat heart failure range from $21,000 to $46,000 in Denver and from $9,000 to $51,000 in Jackson, Miss. For more information, visit
Employee Nabbed for Cheating a Wellness Plan
A Kansas City, Mo., employee pleaded guilty in federal court to his role in a scheme in which hundreds of public employees defrauded their health insurance program of more than $300,000 by falsely claiming to have run marathons and competed in triathlons for cash incentives. Matt Tholen, 29, of Kansas City, Mo., pleaded guilty before U.S. District Judge Gary A. Fenner to one count of wire fraud. Tholen, who was an emergency medical technician for the city, received health insurance coverage from Blue Cross/Blue Shield of Kansas City. As an insured, Tholen was eligible to participate in a wellness program offered by Blue Cross called “Points to Blue.” The program offered gift cards to insureds based on entries made to the Points to Blue Web site, logging various exercise programs and diet programs completed by the insureds. Every 1,000 points translated to one dollar towards a gift card, up to a maximum of $250 annually for each insured. The more strenuous exercises earned more points.
To make even more money in this scheme, Tholen admitted that he and others submitted false entries for other employees and their eligible dependents in exchange for a portion of the gift card proceeds. Tholen made fraudulent submissions on behalf of 62 employees, resulting in 144 gift cards worth a total of $17,600. Possibly not the sharpest tool in the shed, Tholen claimed that a 5-year-old had completed two marathons and two triathlons.
Under federal statutes, Tholen is subject to up to 20 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of an investigation by the United States Probation Office.
Consumers Are Not Prepared for a Critical Illness
Ninety percent of middle-income Americans say they are not financially prepared for a critical illness diagnosis, according to a study by the Washington National Institute for Wellness Solutions. The study surveyed 1,001 Americans ages 30 to 66 with annual household incomes of $35,000 to $99,999. The following statistics reveal that many have little, if any, savings to fall back on in the event of a critical illness:
• 75% have less than $20,000.
• 50% have less than $2,000.
• 25% have no savings.
To pay for out-of-pocket critical illness costs, middle-income Americans say they would need to use credit cards (28%) or loans from family/friends (23%) or financial institutions (19%). Another 23% don’t know what resources they could use to pay their expenses. Millennials and Gen Xers anticipate greater reliance on credit cards and loans to pay for critical illness expenses. Thirty-eight percent say they might never recover financially from a battle with cancer and 45% believe they would never recover financially from an Alzheimer’s/dementia diagnosis.
Eighty-eight percent of middle-income Americans have had no conversations with loved ones or advisers about potential care-giving options and 60% have not discussed financial planning for critical illness. Only 12% have explored care-giving options. To learn more, visit WNInstituteforWellness.com.
Manufacturing, Health Care, and Education Workers Lack Disability Coverage
Workers in manufacturing, health care, and education have a significant gap in the level of disability insurance they purchase compared to what is typically recommended, according to a survey by Colonial. Manufacturing workers who purchase Colonial Life disability policies buy roughly half the amount of disability coverage they need. They only purchase enough coverage to protect 33% of their income instead of the recommended 60%. Employees who work in the education industry purchase only enough disability coverage to protect just 37% of their income. Health care workers buy only enough disability insurance to protect 36% of their income. Two-thirds of private sector American workers have no employer-sponsored disability insurance, according to the Bureau of Labor Statistics. For more information, visit www.coloniallife.
Life Insurance Vision Award
The Life Insurance Direct Marketing Assn. (LIDMA) has awarded the 2013 LIDMA Vision Award to Kris Tomasini, development manager of Term Sales for Transamerica. The LIDMA Vision Award recognizes people and organizations that make substantial contributions to the advancement of the direct response segment of the life insurance industry. It is the highest honor that LIDMA can bestow on an individual or organization. “Kris has…worked tirelessly to improve the customer experience and expand the availability of life insurance to underserved Middle Americans. Her unique ability to utilize the customer perspective as a compass in solving complex business problems is a core principal of LIDMA’s Process Improvement initiatives,” said Andy Meehan, president of LIDMA.”
Life Insurance Data Storage
Scott Price of Pass My Assets is hosting a webinar on the use of personal data management, storage and delivery to ensure that life insurance beneficiaries get their benefits. For more information, visit https://www1.gotomeeting.com/register/952036697.
MetLife’s new Income Guard Disability Insurance allows consumers to customize their coverage. It is designed to meet the demands of a variety of specialized occupations, including most medical and dental professionals, pharmacists, attorneys, accountants, and white-collar executives. For more information, visit www.metlife.com/incomeguard.
MESVision launched www.MESVisionOptics.com where members can order their contact lenses online. The website allows members to have little to no out-of-pocket cost at the time of checkout and seamlessly apply their eligible contact lens benefits.
IRA Decision APP
A Smartphone and tablet friendly app helps users determine which IRA is appropriate for them based on their age, tax filing status, and estimated income. For more information, visit http://www.wealthmsi.com or call 203-245-4254.
Health Care Reform Guides
Unum is offering guides to help employers understand and prepare for health reform. The guides offer expert advice on a total benefit strategy, including financial protection benefits and a strong communication plan.
For more information, visit Unum.com/HealthCareReform.
For cost-conscious advisors and clients, Nationwide Financial introduced Nationwide Destination Architect 2.0, a low-cost, advisory based variable annuity. The company also introduced Nationwide Lifetime Income, an optional
Guaranteed Lifetime Withdrawal Benefit (GLWB) rider available for an additional cost with Nationwide Destination Architect for clients who want guaranteed lifetime withdrawals in retirement. For more information, visit www.nationwide.com.