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Sunday April 20th 2014



Law Limited Self-Insured Plans for Small Employers

• Law Limits Self-Insured Plans for Small Employers
• Covered California Enrollment Numbers
• A Californian’s Guide to Obamacare
• CaliforniaChoice Offers 2014 Private Health Insurance Exchange
• MassMutual Expands Recruiting In State Capital
• Annuity Agent’s Conviction Overturned
• Americans Divided Over Repealing Obamacare
• Factors That Drive ACOs
• Medicare Advantage Plans to Offer Much Lower Out-of-Pocket Caps
• Will Medicare Cuts Reduce the Quality of Hospital Care?
• Study Looks At WellPoint’s Post-ACA Strategies
• Absence Management
• ACA Compliant Dental Plans
• Cancer Policy
• Patient Hospital Ratings
• View Financial Planning Conference Online


Law Limits Self-Insured Plans for Small Employers

legal settlementA new law in California, CA SB 161, limits the ability of small employers (under 100 employees) to self-insure their health benefits. Beginning January 1, 2014, insurers cannot issue stop loss insurance with deductibles below $35,000 to groups with one to 100 employees.

The attachment point increases to $40,000 in 2016. (The attachment point is the amount of claim dollars a company will be responsible for paying before the stop loss carrier reimburses any payouts). Also under the law, stop-loss policy cannot exclude any employee or dependent who is eligible for coverage under the employer’s self-funded group health plan.

These restrictions do not apply to stop-loss policies that were in effect for small employers before September 1, 2013. These policies may be renewed or reissued, or a stop-loss policy may be issued by another stop-loss insurer to maintain continuity of stop loss coverage. Also, SB 161 does not affect the ongoing operations of certain multiple employer welfare arrangements if they comply with small group health reforms.

Covered California Enrollment Numbers

During its first week Covered California got 16,311 completed enrollment applications and 27,300 partially completed applications. Here are the stats for October 1 to October 5:

• Call volume 59,003
• Average wait time 15:08. (The average wait time was reduced to less than
four minutes by Friday, 10/4.)
• Average handling time 16:48
• Applications 43,616
• Partially completed 27,305
• Applications completed with household eligibility determined 16,311
• Number of Californians determined eligible for coverage 28,699
• Small Business Health Options Program businesses registered as of
10/8/2013 430
• Covered California’s website,, had 987,440 unique visits.

A Californian’s Guide to Obamacare

KQED is offering its popular guide Obamacare Explained: A Guide for Californians. The non-partisan and unbiased guide is available free of charge at

CaliforniaChoice Offers 2014 Private Health Insurance Exchange

CaliforniaChoice’s 2014 carrier network will include Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage. Ron Goldstein, president and CEO of CHOICE Administrators, which operates CaliforniaChoice said, “We’ve assembled a network of exceptional carriers with benefit models and price points that are consistent within the market and that make healthcare accessible and affordable for all Californians.

In 2014, CaliforniaChoice will offer 34 HMOs, two EPOs, and 13 PPOs and will continue to offer dental, vision, chiropractic and life options. CaliforniaChoise is also unveiling its Business Solutions Suite, which provides no-cost products and services to all employers, such as discount dental, voluntary vision, online human resource support, and an employee discount program. Goldstein says that CaliforniaChoices’ commitment to brokers will continue in 2014. He stressed that changes driven by the Affordable Care Act and other market forces have made the health insurance broker’s role more important than ever in helping to provide the information and unbiased recommendations that purchasers need. For more information, visit

MassMutual Expands Recruiting in State Capital

Douglas W. Van Order will lead the management team at MassMutual Northern California in Sacramento. Van Order plans to recruit 24 financial professionals to MassMutual Northern California to help the public with their investment, insurance, and retirement needs. For more information, visit

Annuity Agent’s Conviction Overturned

The California court of appeals overturned the conviction of insurance agent, Glenn Andrew Neasham. He had been convicted of committing theft from an elder and dependent adult. The prosecution charged that Neasham sold an annuity that was unsuitable for the age of his 83-year client, Fran Schuber. However, the California Department of Insurance approved the sale of the annuity for people up to 85.

It all started when Schuber and her 82-year-old boyfriend, Louis Jochim, visited the Neasham’s office to talk about purchasing an annuity.  Jochim had been a client of Neasham for 10 years and had purchased an annuity from him, which he considered to be a good investment.

Schuber purchased an Allianz Life “MasterDex 10 Annuity.” She signed a form acknowledging that she had read the information setting out the values and factors that affect the value of the annuity, that Neasham explained the information to her, and that she understood the values shown. Neasham’s former assistant testified that Schuber, “Seemed like a very competent woman.”

Schuber and her boyfriend went to the Savings Bank of Mendocino County to withdraw the money to purchase the annuity. Bank employee, Susie Robinson, testified that she was concerned about Schuber’s competency since she observed memory problems in past dealings with the elderly bank customer. Neasham had called the bank to say Schuber was on her way. He warned that he would report the matter to the district attorney if the bank caused any delay in the withdrawal.

When Schuber and her boyfriend arrived, Robinson became concerned that Schuber was confused and was being influenced by her boyfriend. Robinson called Neasham and told him that Schuber did not understand the transaction. Nevertheless, Robinson issued a check for $175,000 payable to Allianz. Robinson then called a social worker at the Department of Social Services to report that Schuber had withdrawn $175,000 and that the bank felt that her boyfriend was exerting undue influence on her.

The appeals court found that, although there is conflicting evidence about Schuber’s ability to understand the transaction, there was no evidence that Neasham took her funds for his own use or for the benefit of anyone other than Schuber herself. Also, there was no evidence that Neasham made any misrepresentations in the sale. The appeals court also found that the jury was incorrectly instructed to convict it found that the purchase of the annuity deprived the Schuber of a major portion of the value or enjoyment of her property.


Americans Divided Over Repealing Obamacare

Americans are evenly divided about whether the Affordable Care Act should be repealed, according to a report. This deadlock among Americans (46% on both sides of the issue) mirrors the divisions in Congress. Americans’ opinions of Obamacare differ greatly with age. Americans 18 to 29 are most likely to be uninsured (22%). They also respond most favorably to Obamacare, with 51% against repealing it. Americans 65 and older are the least likely to be uninsured (3%) and the most likely to object to Obamacare, with only 32% against repeal.

Sixty-four percent of rural residents would vote to repeal Obamacare versus 31% of urban residents and 48% of suburban residents. The Midwest is most in favor of repealing Obamacare (55%) while the Northeast is most in favor of keeping it (just 38% would vote to repeal). Not surprisingly, 74% of Democrats would vote to keep Obamacare and 79% of Republicans would vote to repeal. Independents sided with repealing, 49% to 41%.

Thirty-one percent of Americans say they are more negative about the Affordable Care Act compared to 12 months ago while 11% say they are feeling more positive. Upper-middle-income households (annual income $75,000 and up) are the most likely to feel worse about their health insurance situation compared to  year ago. Twenty-five percent say it’s harder to handle medical expenses while 75% say it is easier). For more information, visit

Factors That Drive ACOs

Accountable Care Organizations (ACOs) are more likely to spring up in regions of the country where doctors and hospitals are consolidated into large networks and there are medical practice structures intended to improve medical care and cut costs, according to RAND study. Accountable care organizations are networks of doctors, hospitals, and other health professions that get financial rewards for cutting costs while maintaining or improving the quality of care. The findings may help policymakers create new policies to accelerate growth of accountable care organizations, a key cost control strategy promoted under the federal Affordable Care Act.

While the Northwest is essentially empty of ACOs, the Northeast and the Midwest are dense with the groups. Factors associated with formation of accountable care organizations include a greater occurrence of payment risk sharing at hospitals, larger integrated hospital systems, and primary care physicians that practice in large groups. Factors that are not associated with the formation of ACOs are average household income, per capita Medicare spending, enrollment in Medicare Advantage Plans, and physician density. For more information, visit

Medicare Advantage Plans to Offer Much Lower Out-of-Pocket Caps

In 2014, many Medicare Advantage plans will have much lower maximum out-of-pocket caps than the $6,700 limit. Some have a $3,400 or lower out-of-pocket cap and a zero premium, which ia very attractive to low-income seniors, according to a study by HealthPocket. HealthPocket looked at data from the Centers for Medicare and Medicaid Services on Medicare Advantage plans with a bundled prescription drug benefit (MAPD).

During annual enrollment, from October 15 to December 7, comsumers must chose a traditional Medicare plan augmented with a supplemental plan and Part D prescription plan or choose a Medicare Advantage plan with prescription drug coverage through a private insurance company.

MAPD plans are getting more popular. In 2014, these plans offer no premium or low premiums and a low out-of-pocket maximum. “Consumers looking to save on their direct costs under Medicare are going to have some good options heading into 2014. But Medicare enrollees need to factor in other criteria like whether their doctors and hospitals are in a plan’s network, whether their medications are covered, and the amount charged for the medical services that they may need in the coming year. Quality scores should inform a final decision, too, and as with any big purchase, it pays to do your research,” said Steve Zaleznick of Consumers can compare traditional Medicare, Medicare Advantage, and prescription drug plans with HealthPocket’s free Medicare comparison tool at

Will Medicare Cuts Reduce the Quality of Hospital Care?

The Affordable Care Act (ACA) permanently slows the growth of Medicare payment rates for inpatient hospital care, raising concerns that hospitals will raise prices for private payers in order to offset lower Medicare revenue. But if history holds true, nonprofit hospitals will reduce operating expenses instead, according to a study by the Center for Studying Health System Change (HSC).

The claim that the ACA will drive large numbers of hospitals to insolvency appears to only hold true with for-profit hospitals. For-profit hospitals, which tend to have lower operating costs, will see profits decline.

But not-for-profit hospitals will adjust their operating expenses to match lower revenues. Hospitals will offset about 90% of lost revenues by through savings on personnel and non-personnel costs. Hospitals will also delay or forgo capital improvements. According to researchers, “Newhouse (1970) describes the hospital industry as aspiring to a Cadillac level of quality. Our results suggest that hospitals, if forced to, will instead turn out Buicks.” If hospitals can maintain or improve their quality of care, the result will be improved efficiency. For more information, visit

Study Looks At WellPoint’s Post-ACA Strategies

The nation’s largest commercial insurer, WellPoint Inc., is transforming its products-and its provider relationships to prepare for the new healthcare market in 2014, according to an analysis by HealthLeaders-InterStudy. WellPoint has narrow provider networks in all 14 Blue Cross Blue/Shield affiliate states. This strategy supports narrow-network plans in the healthcare exchanges, which opened for enrollment October 1, 2013.

WellPoint’s previous model was based on broad networks that included almost every local provider. Because of the changes in healthcare reform, the company is offering smaller, cost-effective network options, said HealthLeaders-InterStudy Principal Analyst Paula Wade. Depending on how the larger commercial market responds to the narrow-network designs,hospitals outside of the narrow networks could face some real strain.

These narrow-network plans offer lower premiums for individuals and groups by excluding high-cost providers. The strategy allows these low-cost networks to be offered in its other commercial products. WellPoint is already offering narrow-network products and tiered-network products in its largest market, California.

WellPoint also rewards providers for managing the healthcare of patients with chronic conditions and keeping patients compliant with their medications.  For more information, visit


Absence Management

The Hartford’s Workforce Safety & Absence Management Service features consultants and web-based resources to support groups with four to 49 employees. The Hartford team that will provide educational information on these topics:
• Protocols and practices on how to improve safety of employees.
• 2009 Americans with Disability Act Amendment Act (ADAAA).
• Return-to-work programs to help employees get back to work after a
• Ergonomic evaluations to make workstations safer.

In addition, small business owners will find a variety of digital resources that can help identify and address risks at their worksite, such as slips and falls. For more information, visit

ACA Compliant Dental Plans

MetLife will be updating its affected dental plans to comply with the requirements of the Patient Protection & Affordable Care Act (ACA). MetLife will be adding pediatric dental benefits that meet essential health benefit requirements to existing dental benefit plans, in the states where MetLife is targeting on or off marketplace participation. These changes will be effective January 1, 2014 for groups with 50 or fewer employees. MetLife also plans to offer these essential health benefits to small groups in about 20 states via the public marketplaces. For those target states, businesses that purchase their dental coverage from a standalone carrier will not need to change the way they purchase coverage, as the law also allows for the pediatric dental essential health benefits to be provided by a standalone dental plan. For more information, visit

Network Hospital Ratings

Cigna is adding Patient Experience ratings for hospitals across the country to its online physician and hospital directory. The information is provided by Consumer Reports and includes results from millions of patient surveys. The new patient experience ratings are available on

Cancer Policy

Sun Life’s new Stop-Loss Cancer rider offers qualifying employers a stop-loss deductible reduction up to $10,000 for a catastrophic claims associated with cancer. Sun Life’s Critical Illness policies provide a lump sum payment from $5,000 to $50,000 to employees. For more information, visit

Patient Hospital Ratings

Cigna’s online directory of doctors and hospitals now includes patient-experience ratings for hospitals across the country.  Provided by the leading source of consumer information and recommendations, the information includes results from millions of patient surveys. For more information, visit


View Financial Planning Conference Online

The Financial Planning Association  (FPA) launched the FPA Virtual Experience, an online version of FPA’s national conference in Orlando, October 19 to 21. FPA Virtual Experience will begin on Sunday, Oct. 20 and will offer access to most sessions, speakers and continuing education (CE) for three months after FPA Experience 2013 concludes. For more information, visit