May 2 – by Leila Morris
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• Mental Health Parity Won’t Boost Employers’ Costs
• Many Americans Have Pre-Existing Conditions
• CMS Proposes Medicare Payment Rules
• Singles Lack a Disability Safety Net
• Onsite Consultants Can Improve Disability Management
LONG TERM CARE
• Linked Life & LTC Attracts Younger Buyers
• Good Insurance Jobs Go Unfilled
• Disability Coaching
• Variable Life
• Variable Annuity
• Employer-Sponsored Retirement Plans
• Customer Service Training Course
• Women Are Less Prepared for Retirement
Mental Health Parity Law Not Expected to Boost Employers’ Costs
The Mental Health Parity and Addiction Equity Act (MHPAEA) is not likely to have a big effect on the growth rate of employer healthcare expenditures, according to two studies from researchers from Thomson Reuters working with the Substance Abuse and Mental Health Services Administration. “Employers need not be alarmed by the new coverage mandates of the MHPAEA…Given the relatively low spending on, and low intensity of use of, mental health and substance abuse services, that the additional cost incurred by employers because of the mandate is likely to be negligible,” according to Tami L. Mark, Ph.D., the paper’s lead author and senior director, Thomson Reuters.
The research shows that substance abuse spending has held steady as a low portion of all costs, comprising just 0.4% of all health spending in 2009. Also, mental health and substance abuse spending accounted for only 5.2% of all health expenditures from 2001 through 2009 (2.2% if psychiatric drug spending is excluded). That spending contributed just 0.3% to the growth in total health expenditures with prescription drugs included, and 0.1% when prescriptions are not included. To access a copy of Mental Health Spending by Private Insurance: Implications for the Mental Health Parity and Addiction Equity Act, visit http://www.sciencedirect.com/science/article/pii/S0376871612000658.
Many Americans Have Pre-Existing Conditions
Hypertension was the most commonly reported medical condition among adults that could result in a health insurer denying coverage, requiring higher-than-average premiums, or restricting coverage, according to a report by the Government Accountability Office (GAO).
Compared to others, adults with pre-existing conditions spend thousands of dollars more annually on health care, but pre-existing conditions are common across all family income levels. GAO’s analysis found that about 33.2 million adults age 19 to 64 years old or about 18%, reported hypertension in 2009. People with hypertension reported $650 in average annual expenditures related to treating the condition, but maximum reported expenditures were $61,540. Mental health disorders and diabetes were the second and third most commonly reported conditions among adults. Cancer was the condition with the highest average annual treatment expenditures – about $9,000.
Depending on the list of conditions used to define pre-existing conditions in each of the five estimates, GAO found that 36 million to 122 million adults reported medical conditions that could result in a health insurer restricting coverage. This is 20% to 66% of the adult population, with a midpoint estimate of about 32%. The differences among the estimates can be attributed to the number and type of conditions included in the different lists of pre-existing conditions. For more information, visit http://www.gao.gov/products/GAO-12-439
CMS Proposes Medicare Payment Rules
The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would update Medicare payment policies and rates. The rule covers inpatient stays to general acute care hospitals paid under the Inpatient Prospective Payment System (IPPS) as well as long-term care hospitals paid under the long term care hospitals Prospective Payment System (PPS).
CMS expects payment rates to general acute care hospitals to increase 2.3% in fiscal year 2013. Under the proposed rule, long term care hospital payments are expected to increase 1.9% in fiscal year 2013. CMS is proposing an annual update to long-term care hospitals payment rates of 2.1%. The 2.1% update will be reduced by about 1.3% to 0.8% for the one-time budget neutrality adjustment for discharges on or after December 29, 2012.
The proposed rule would strengthen the Hospital Value-Based Purchasing Program to further Medicare’s transformation from a system that rewards volume to one that rewards efficient, quality care. This program, which was required by the Affordable Care Act, will adjust hospital payments beginning in fiscal year 2013 and annually thereafter based on how well they perform or improve their performance on a set of quality measures.
CMS is proposing to add the Medicare spending per beneficiary measure to the Hospital value based purchasing program. It would affect payments beginning in fiscal year 2015. This measure would include all Part A and Part B payments from three days before an inpatient hospital admission to 30 days after discharge with certain exclusions (after removing differences attributable to geographic payment adjustments and other payment factors). The proposed measure would be risk-adjusted for the beneficiary’s age and severity of illness.
The Affordable Care Act requires CMS to implement a Hospital Readmissions Reduction Program. The program will reduce payments, beginning in fiscal year 2013, to certain hospitals that have excess readmissions for heart attack, heart failure, and pneumonia (for discharges on or after October 1, 2012). The proposed rule covers payment adjustment factors to account for excess readmissions.
The proposed rule includes measures used for long term care hospitals for fiscal year 2015 and fiscal year 2016 payment determinations. It establishes programs and quality measure reporting for psychiatric hospitals that are paid under the Inpatient Psychiatric Facility Prospective Payment System as well as PPS-exempt cancer hospitals. Additional reporting requirements are proposed for the ambulatory surgical center quality reporting program.
Under the Medicare, Medicaid, and SCHIP Extension Act of 2007, Congress imposed a three-year moratorium, which prevented CMS from implementing certain payment policies for long term care hospitals. The law imposed a moratorium on establishing new long term care hospitals and satellite facilities and on increasing the number of patient beds in existing long term care hospitals, unless an exception applied. The moratorium was extended for two years in the Affordable Care Act of 2010. The moratorium will, therefore, expire at various times in 2012.
CMS will accept comments on the proposed rule until June 25 and will respond to all comments in a final rule to be issued by August. The proposed rule can be downloaded from the Federal Register at: https://s3.amazonaws.com/public-inspection.federalregister.gov/2012-09985.pdf
Singles Lack a Disability Safety Net
A majority of single Americans lack a basic safety net even though they would be hard hit financially if they faced a disabling health issue, according to research from The Hartford. Eighty seven percent of singles would need to make lifestyle changes to meet expenses if they lost income for three to six months, yet only 44% have disability insurance. Singles who don’t have disability insurance said they would do the following if they could not work for six weeks or more due to a disability:
• 36% would live off of their savings.
• 23% would withdraw from the 401(k).
• 8% would use credit, cards, or bank loans.
• 5% would ask for a loan from a friend or family member.
• 4% would move back in with family, parents, brother or sister.
Only 28% of Americans completely understand disability insurance. Also, 45% overestimate the cost of short-term disability insurance by hundreds of dollars and another 45% say they had no idea how much the coverage costs. For more information, visit http://www.thehartford.com.
Onsite Consultants Improve Disability Management
Using an on-site consultant for absence and disability management can improve health and productivity, according to a white paper by The Standard. An on-site consultant can maximize the following practices:
1) Early disability reporting — This practice involves reporting an employee’s absence or disability claim as soon as possible. Early disability reporting can work together with a transitional return-to-work program to help shorten the duration of an absence or disability.
2) Disability duration guidelines — These guidelines help predict the duration of a disability and serve as a standardized method of assessing the effectiveness of a return-to-work program.
For more information, visit www.standard.com.
LONG TERM CARE
Linked Life & LTC Attracts Young Buyers
Benefits that combine life insurance and long-term care coverage are gaining favor with people in their 40s and 50s, according a study by the American Association for Long-Term Care Insurance. The policies can be used fund qualifying long-term care at home or in a skilled care facility. Some linked (hybrid) products allow unused benefits to pass to named beneficiaries income tax-free.
In 2011, 53% of buyers were under 65 icompared to only 48% in 2010. Some 42.5% of male and 38.5% of female buyers were 55 to 64 Nearly one in 10 buyers were 45 to 54.
“At a time when long-term care is increasingly top of mind, these life insurance-based solutions avoid the use it or lose it risk associated with traditional long term care insurance…In most cases, people make a single payment, effectively removing the risk of future premium increases,” says Chris Coudret, CLU, ChFC, vice president. Sales for the participating linked benefit insurers increased 14% in 2011 and the premium increased almost 20%. For more information, call 818-597-3227 or visit www.aaltci.org.
Good Insurance Jobs Go Unfilled
High-paying career-track jobs in the insurance industry are going unfilled in spite of record unemployment. Agency owners and industry executives are struggling to recruit and retain top-notch employees to fill risk management, insurance, employee benefits, actuarial, underwriting, and other positions – particularly highly prized Millennials under age 30.
Jim Hackbarth, CEO of Assurex Global said, “Whether you are a recent college grad embarking on your first job or an established employee looking to make a career change, the insurance industry presents a wealth of opportunities.” Forty-four percent of insurance industry professionals surveyed in 2011 anticipated adding staff in 2012. Based on income and employment outlook, actuarial science consistently ranks among the top-10 jobs for college grads. Underwriting also is ranked as a top-25 job, based on income, environment, and security.
Despite a phenomenal 100% placement rate for risk management and insurance majors, college graduates simply do not gravitate toward insurance careers. Thanks to negative perceptions about the profession, a lack of awareness about rewarding careers, and a limited pool of trained talent, graduating students fill no more than 15% of the industry’s hiring needs. The tendency to overlook insurance careers by the Millennial Generation and Gen-Xers between age 30 and 51, creates an enormous challenge for an industry that anticipates a 50% workforce turnover in the next 15 years, said Hackbarth.
To attract and retain quality employees, insurance brokers, agency owners, and other employers need to offer the following 20-somethings:
* A clear career ladder
* Short-term work goals
* Long-term professional development
* Regular performance evaluations
* Rewards for achieving job-related goals and services including education assistance
* Financial planning to help handle life’s challenges.
For more information, visit www.assurexglobal.com.
Insurance Executives Network to Find Business Partners
Seventy percent of executives look to their peers to find their next strategic alliance opportunity, according to a survey by Inter-Company Marketing Group (ICMG). Likewise, industry peers are the most-common sources for conducting due diligence about potential business partners. Nearly eight of 10 respondents look to peers when conducting due diligence; nearly seven of 10 look to the potential partner’s marketing or other materials; and six of 10 look at financial statements and annual reports.
Exporting products and services is the most common alliance strategy, with 32% of respondents saying that it has been their approach. The next most-common strategy is to import products to market through existing distribution channels. For more information, visit www.icmg.org/survey.asp.
Cigna’s long-term disability customers now have access to programs from Achilles International including individual coaching, personal training, and an opportunity to participate in fitness activities with other members. Initially, the program will target customers with mental disability, post-traumatic stress disorder, anxiety, depression, physical injury, loss of mobility, cancer, diabetes, and stroke. For more information, visit http://achillesinternational.org/programs/kids/overview.
Variable Life & Annuity Enhancements
Nationwide Financial is offering several enhancements to its investment lineup for variable annuity and variable life insurance products. Fifteen new fund options provide more options for advisors to select an asset class for clients. Nationwide will begin offering the following options from Dimensional Fund Advisors for its variable life products: VA Global Bond Portfolio, VA US Large Value Portfolio, VA US Targeted Value Portfolio, VA International Value Portfolio, VA International Small Portfolio and VA Short-Term Fixed Portfolio. For more information, visit http://www.nationwide.com.
Jackson National launched MarketGuard Stretch. With the guaranteed minimum withdrawal benefit (GMWB), beneficiaries can spread distribution payments over their lifetime, keeping more money in a tax-deferred account for continued growth potential. Policyholders can provide for potentially young and inexperienced beneficiaries by avoiding a lump sum death benefit in favor of longer-term distributions. The beneficiary’s required minimum distributions are determined annually based on the account value and life expectancy. For more information, call 800-711-JNLD (5653) or visit www.jackson.com.
Employer-Sponsored Retirement Plans
Lincoln Financial enhanced its LifeSpan customized model asset allocation program for employer-sponsored retirement plans. Plan sponsors have the option to engage with Ibbotson Associates. The registered investment advisor and wholly owned subsidiary of Morningsta provides discretionarily managed custom model portfolios with ERISA 3(38) coverage.
Under ERISA section 3(38) defined contribution plan sponsors can hire a registered investment manager and transfer investment-related liability to the investment manager for the oversight of plan investments. For more information, visit www.LincolnFinancial.com.
Customer Service Training Course
LOMA has launched Customer Service for Insurance Professionals (ACS 101). The course provides a comprehensive view of the customer service role, as well as insurance-specific information and skills-based training. The interactive environment allows learners to practice customer service skills. For more information, visit loma.org.
Women Are Less Prepared for Retirement
Women are significantly less prepared for retirement than men, according to a study by ING U.S. Among those with savings, men have an average of $149,000 in or outside of an employer-sponsored retirement plan compared to $108,000 for women. Women with children at home have an average of $88,000.
Forty-two percent of women contributed just 1% to 5% of their salary into their plans compared to 34% of men. Twenty-five percent of have a formal investment plan to reach their retirement goals compared to 33% of men. In addition, 56% of women say they are not financially prepared for retirement compared to only 42% of men.
While the income gap between men and women has narrowed in recent years, mothers tend to spend more time out of the workforce due to caregiver responsibilities. Sixty percent of mothers say they are not prepared for retirement and 46% don’t know how to achieve their retirement goals. Fifty-three percent of mothers have less than $25,000 saved in their employer-sponsored retirement plan.
Sixty-five percent of mothers are receiving their employer’s full company match compared to 76% of fathers. For financial guidance, 69% of single women rely on their own research or family and friends compared to 63% of married women. Twenty-one percent of single women work with a financial professional compared to 31% of married, divorced, or widowed women.
Gen Y (age 25-34) women are most likely to have barriers to saving (86%) compared to women 35 or older (74%). Fifty-six percent of Gen Y women have outstanding student loans. For more information, visit http://ing.us/rri/ing-studies/what-about-women.