Insurance Insider News
Brokers Are Failing Their Clients

by Leila Morris – 8/27/14

Fail

There is a disconnect between what brokers are providing clients and what clients want, according to a survey by Zywave. The survey reveals the following:
• 65% of employers want their broker to help create or maintain an employee handbook, but 85% say their broker is not doing a satisfactory job in this area.
• 92% want their broker to provide regulatory and legislative updates, yet 53% say their broker is not doing a satisfactory job in this area.
• 88% of employers want help with their workplace wellness program, but 56% say their broker is not doing a satisfactory job in this area.
• 92% want information on reducing the frequency and expense of claims, but 59% say their broker is not doing a satisfactory job in this area.
• 90% of employers expect brokers to help create benefit statements, yet 63% say their broker is not doing a satisfactory job in this area.
Dave O’Brien, CEO at Zywave said, “Clients are expecting services from their brokers beyond just the placement of insurance. Most of us will agree this is positive, as it moves the broker to more of an adviser role, supporting business issues, such as compliance, HR, risk management, wellness, etc. Agencies and brokers who excel at positioning themselves this way have enjoyed significant growth in recent years. In my eyes, it means opportunity for the brokers who are willing to fulfill these unmet client needs and differentiate themselves in their market.”

Employers say that their top three risk management challenges are keeping up to date on regulatory changes, controlling workers’ compensation costs, and educating employees on safety. Their top three employee benefit challenges are managing health care costs, keeping compliant, and performing benefit administration and employee benefit education. To view the white paper, visit www.zywave.com.

Insurance Companies Are Staffing Up

Fifty-eight percent of insurance companies plan to increase staff in 2014, according to a study by The Jacobson Group and Ward Group. This is the second highest rate in the history of the survey. In addition, the Bureau of Labor Statistics says that unemployment rate for the insurance industry is only 3.4%. Technology, underwriting, and claims positions are most in demand and are expected to grow the most in the next 12 months. Companies are having a hard time recruiting for most positions, but technology, actuarial, and analytics positions are the hardest to fill.

Gregory P. Jacobson, co-chief executive officer of Jacobson said, “The industry is settling into its return to pre-recession rates, resulting in growing confidence and the leveling-off of staffing and revenue forecasts. The market is stabilizing and organizational predictions are following suit.”  Nearly 85% of companies expect an increase in revenue throughout the upcoming year, the third highest level since the beginning of the survey. If the industry follows through on its plans, there will be a 1% increase in industry employment through the final half of 2014. For more information, visit wardinc.com

IN CALIFORNIA

Covered California Offers New Dental Plans

Covered California is offering new family dental plans to consumers who enroll in health insurance coverage in 2015. All individual health insurance plans sold through the Covered California exchange will include pediatric dental benefits for members younger than 19.

All children enrolled in Covered California will have dental coverage embedded in their comprehensive health plan, Covered California Executive Director Peter V. Lee said. They will be getting better coverage and more for their money. The family dental plan will offer adults the option of receiving dental coverage outside the general health plans at an additional cost. Some consumers also may be drawn to family dental plans if a provider they prefer for their child is not offered in their embedded coverage.

The optional stand-alone family dental plans, which offer coverage for adults will be added in early 2015. Covered California will offer dental health maintenance organization (DHMO) and dental preferred provider organization (DPPO) plans, giving consumers a choice in the type of plan that will work best for them.

There is no financial help available for the optional adult dental benefits. There is no requirement to enroll children in a family dental plan. The family dental plan, which is optional, is primarily for adults who did not have coverage in 2014. Families should keep in mind that adding their children to a family dental plan will be more expensive than the same dental services they already get in their standard health insurance plan. The most likely reason to enroll a child in the family dental plan is to use a dental provider who is not offered through their embedded coverage. For more information, visit www.CoveredCA.com/coverage-basics/plans/.

State Backs Reproductive Rights

California’s executive and legislative branches have thrown their support behind reproductive rights. First, the California Dept. of Managed Health care sent letters to carriers and colleges reminding them that insurance companies in the state can’t refuse to cover abortion. The announcement came after two Catholic institutions, Santa Clara University and Loyola Marymount University, decided to drop coverage for elective abortions for more than 2,000 employees.

Second, the California legislature passed the Contraceptive Coverage Equity Act, which strengthens the coverage for FDA-approved birth control methods under Obamacare. It now heads to the governor, who is expected to sign it. Senate Bill (SB) 1053 would expand access to the full range of FDA approved methods of birth control without restrictions or co-pays.  The measure was introduced by Senator Holly J. Mitchell (D-26) of Los Angeles and co-sponsored by California Family Health Council and the National Health Education Law Program.

California has had a law on the books since 1999 that requires health insurers to cover contraception along with other prescription drugs. The new measure goes even further to ensure that women can select their birth control method without being required to try other methods first. “We continue to see an alarming national trend of restricting access to women’s health care. In the aftermath of the disappointing Hobby Lobby decision, California, once again, has the opportunity to lead the nation with a legislative model to help women more effectively plan their families and futures with fair and consistent contraceptive coverage,” said Julie Rabinovitz, President and CEO of California Family Health Council.

HEALTHCARE

Tops Trends in Employer Based Plans

Employers expect a 4% increase in 2015 health care costs for active employees, according to Towers Watson. If no health plan adjustments are made, employers project a 5.2% growth rate, putting absolute cost per person for health care benefits at an all-time high. Despite this cost trend, 83% of employers plan to continue subsidizing and managing health benefits for full-time and part-time active employees, according to a Towers Watson Health survey. However, employers are rethinking company subsidies for spouses and dependents.

Seventy-three percent of employers are concerned about triggering the tax excise tax based on their plans. Forty-three percent say that avoiding the tax is their top priority health care strategy in 2015. CEOs and CFOs are more engaged in health plan strategy discussions as a result of the excise tax and other provisions of the health care reform law.

Randall Abbott, senior consultant at Towers Watson said, “CFOs are now focused on a new gold standard: managing health cost increases to the Consumer Price Index. This requires acute attention to improving program performance.”

Eighty-one percent of employers plan moderate to significant changes to their health care plans over the next three years, up from 72% a year ago. One tactic is specialty pharmacy management. Companies project that the pharmacy-only cost trend will be 5.3% after plan changes (6% before changes). Employers will also embrace telemedicine. Another key tactic is new payment approaches that hold providers accountable for the cost and outcomes of an episode of care.

For 2016 and 2017, 48% of employers are considering tying incentives to health outcomes, compared to just 10% in 2015; 37% are considering offering plans with a higher level of benefits based on the use of high-performance or narrow networks of medical providers, compared to just 7% in 2015. Thirty-four percent are considering telemedicine, compared to 15% in 2015.

Thirty-three percent of employers are considering significantly reducing company subsidies for spouses and dependents; 10% have already implemented such reductions, and 9% intend to do so in 2015. In addition, 26% are considering spouse exclusions or surcharges if coverage is available elsewhere; 30% have that tactic in place now, and another 7% expect to add it in 2015. Employers are also examining caps on health care coverage subsidies for active employees, using defined contribution approaches, with 30% of employers considering them for 2016 and 2017, 13% having them in place and another 3% planning them for 2015.

Twenty-eight percent of employers have extensively evaluated private exchanges. Twenty-four percent say private exchanges could provide a viable alternative for their active full-time employees in 2016. The following are the top three factors that would cause employers to consider a private exchange for full-time active employees: 64% — a private exchange can deliver greater value; 34% — other companies in their industry are adopting private exchanges; and 26% — the employer is unable  to stay below the excise tax ceiling as 2018 approaches. Nearly all employers say they have no plan to stop offering health benefits and direct active employees to public exchanges. Seventy-seven percent are confident that public exchanges offer a viable alternative for their active full-time employees in 2015 or 2016.

Abbot said that the most effective employers are continually evaluating new strategies to improve health plan performance. Examples include a steady migration to consumer driven health plans (CDHPs), action-based incentives, value-based payment methods with health plan partners, and plan designs that drive efficiencies. Other options are technology-based solutions, such as telemedicine, fitness devices or trackers, and social media. Sixty percent of employers plan to look at data to gauge the performance of their health plan. Seventy-six percent are looking at encouraging greater physical activity among their employees by using technologies, such as mobile health applications, fitness wearables, and social media.

Full-replacement CDHPS could be in place at 50% of companies by 2017: 17% offer only a CDHP; 4% intend to do so in 2015, and another 28% are considering it for 2016 or 2017. For more information, visit towerswatson.com.

Special Enrollment Period to Boost Insured Rate

Nationally, almost 7 million adults are likely to experience a qualifying event that triggers a special enrollment period, according to a report by www.ernollamerica.org. Those who missed the March 31 enrollment deadline and are not eligible for Medicaid or the Children’s Health Insurance Program (CHIP) can still enroll in health insurance if they experience a qualifying event that triggers a Special Enrollment Period (SEP). Examples of qualifying life events include permanently moving to an area where different plans are available on the marketplace, getting married, having or adopting a child, and becoming a citizen, national, or “lawfully present individual.”

Young Uninsureds — It Won’t Happen to Me

Twenty-four percent of Millennials (age 18 to 29) have no health insurance, according to a report by insuranceQuotes.com. That compares to 16% of all adults without health insurance. Millenials are not just ignoring health insurance. They are also less likely  to have auto, life, homeowner’s, renter’s, and disability insurance compared to all other age groups. Only 12% have renter’s insurance, which costs only around $10 per month, in many cases, while providing valuable protection. Sixty-four percent of 18- to 29 year-olds have no life insurance. The most common explanation was that it costs too much, but $500,000 of 20-year level term life insurance can cost less than $20 per month for a young adult. The second-most common response objection is, “I’m healthy and don’t need life insurance.” Even car insurance is not particularly popular among Millennials.

Even though car insurance is mandatory in all states except for New Hampshire, 36% of Millennials don’t have it. This might be because the number of young adult drivers has fallen in recent years. Despite evidence to the contrary, Millennials say they are prepared for the financial consequences of getting into car accidents, having their belongings stolen, incurring substantial medical bills, or becoming disabled. For more information, visit http://www.insurancequotes.com/health/Millennials-and-insurance

When a Platinum Plan Is a Better Buy

Platinum plans may have the highest premiums among the Obamacare health plans. But they may save money for people taking specialty drugs because of their reduced co-payments and lower caps on annual out-of-pocket costs, according to a study by HealthPocket. Platinum plans have the lowest average out-of-pocket costs for the five common specialty drugs. HealthPocket looked at 2015 Obamacare metal plans whose rate filings have been made public. The average out-of-pocket specialty drug costs for platinum plans were 64% lower than gold plans, 74% lower than silver plans, and 78% lower than bronze plans.

The difference in out-of-pocket costs is dramatic. For example, taking the specialty drug Humira (used to treat inflammation) could result in annual out-of-pocket costs of $6,381.38 for 2015 bronze plans compared to only $1,416.67 for 2015 platinum plans. However, not every Obamacare health plan covers the same drugs; and caps on annual out-of-pocket costs can vary within the same metal tier. Consumers who take expensive specialty drugs need to make sure that their drugs are included in the list of covered medications on the Obamacare plans they are comparing.

“Specialty drugs represent an increasing percentage of insurance spending for prescription medications. In coming years, they’ll become the largest single cost category despite the fact that specialty drugs serve a minority of the population,” said Kev Coleman, Head of Research & Data at HealthPocket. For those who depend on these drugs, comparing premiums and annual caps on out-of-pocket costs is often more important than comparing health plans’ copayments and co-insurance fees for drugs, he added. For more information, visit www.HealthPocket.com.

FINANCIAL PLANNING

One Size Does Not Fit All for the Middle Market

Segments of the middle market have very different attitudes about financial decisions, according to a LIMRA study.  For example, younger families with children under 18 say life insurance is important, and are likely to have incurred debt that affects their financial decisions.  The study says that that low-cost product like term life insurance would resonate best with this group.  In contrast, very young or older consumers who are risk takers and have little desire for insurance products.  Researchers say that investment products, such as mutual funds and annuities, would be better for these consumers. The factors that most influential to decision making are: 1. Risk tolerance 2. Current impact of debt on household 3. Financial situation/life stage 4. Household composition (since this drives values and lifestyle attitudes) 5. Attitudes toward spending/saving, importance of reputation/brand vs. price in purchase decisions in general For more information, visit LIMRA.com or www.epsilon.com.

NEW PRODUCTS

Private Healthcare Exchange

CieloStar has partnered with HCC Life Insurance to offer the private healthcare exchange concept to the self-funded market. The HCC self-funded private exchange will offer an exclusive pricing arrangement. The HCC Private Exchange offers employers and TPAs an integrated employer administration and reporting system as well as comprehensive administrative tools. For more information, visit www.cielostar.com.

Wellness Tracker

Insignia Health updated its Flourish e-health platform. Flourish offers personalized services and resources including articles, tip sheets, videos, quizzes, journaling opportunities, coaching, and health tracking activities. Flourish supports wellness and disease prevention, as well as select conditions including asthma, chronic pain, depression, diabetes/pre-diabetes, heart disease, high cholesterol, hypertension, and multiple sclerosis. For more information, visit www.insigniahealth.com

Health Insurance Guide for Veterans

The non-profit, Transamerica Center for Health Studies, has developed the “Veterans Health Coverage Guide,” which explains the types of insurance available and how they interact. Recent changes in healthcare legislation offer more overage options for veterans and their families. For more information, visit https://www.transamericacenterforhealthstudies.org/affordable-care-act/veterans.

Life Insurance

Colonial Life is offering a new employer-paid group term life plan and a long-term care benefit rider on whole life insurance policies. The employer-paid option uses a composite rate structure, which means the same rate applies to all employees, regardless of age or tobacco use. Group term life insurance coverage, which can be offered on an employee-paid basis, provides options tailored for large and small accounts. For small accounts, program administration is simple. For larger accounts, employers can customize additional options to fit the needs of their employees. Colonial Life’s new long-term care rider option on a whole life policy offers a living benefit if long-term care becomes a necessity. For more information visit www.coloniallife.com.

Ancillary Benefit Exchange

Choice Builder is offering an exchange with dental, vision, chiropractic, and life insurance coverage to businesses with two to 199 employees. The expansion from the group size limit of 99 employees to 199 employees is available for coverage effective October 1, 2014 or later. Choice Builder offers coverage to small and mid-sized companies, including dental insurance from Delta Dental, Ameritas Group, and Madison National Life; vision benefits from VSP and EyeMed; chiropractic and acupuncture benefits from Landmark Healthcare; and life insurance protection from Assurity Life. Coverage is available to employers on a voluntary basis (with employees paying all of the cost) or as employer-sponsored benefits (with the employer and employees sharing the cost). For more information, visit www.wordandbrowncompanies.com.

Life Insurance Video Series

Guardian  Life is launching an online video series on YouTube depicting actual customers whose life insurance policies have had a powerful effect on their financial well-being. The three-minute videos provide real-life examples of financial professionals using various life insurance strategies to meet their clients’ goals.

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