Life Insurers Want to Make It Harder to Collect on Policies

Life Insurers Want to Make It Harder to Collect on PoliciesLIFE INSURANCE
Life Insurers Want to Make It Harder to Collect on Policies
Life insurance companies and other corporate interests are pushing for a change to the Uniform Unclaimed Property Act that would make it harder for people to collect on life insurance policies, according to a report from Allied Progress.

They are pushing to allow corporations to limit the time in which property must be claimed. They also want to make it harder for states to use non-governmental professional auditors to enforce existing unclaimed property laws and ensure such property is reported by large multi-state corporations.

In addition to pressure from these corporate interests, the report details how a longtime ULC commissioner responsible for co-chairing the drafting committee has worked to undermine state unclaimed property laws and is a partner in a law firm whose clients would benefit greatly if the Act were gutted.

In addition to life insurance, efforts are also being made to change provisions of the Act as it relates to forgotten bank accounts, unused gift cards, and other unclaimed property. Among those leading the charge for changes are the U.S. Chamber of Commerce and the American Council of Life Insurers.

Allied Progress executive director Karl Frisch said, “You’re talking about people who don’t even know they are entitled to a life insurance claim. To make it easier for a corporation to hold onto these benefits and keep them from the rightful owners…is unconscionable. Members of the Uniform Law Commission need to stand strong in the face of these powerful corporate interests.”

The report, “Death Trap: How Powerful Special Interests Are Looking to Cash in on the Bereaved and Unsuspecting,” comes as a drafting committee of the Uniform Law Commission (ULC) meets in Washington, D.C.  to discuss possible changes to the longstanding Uniform Unclaimed Property Act. These changes could be recommended to state legislatures. To date, around 40 states have adopted some version of the Act over the years.

The ULC most recently made changes to the Uniform Unclaimed Property Act almost 20 years ago, stating that the measure was aimed at preventing “ordinary people for the most part, from losing their rights to property that is justifiably theirs. It is theirs because they earned it, inherited it, or were given it.” For more information, visit alliedprogress.org.

Genworth to Sell Blocks of Term Life Policies
Genworth has entered into an agreement to sell, via reinsurance, certain blocks of term life insurance to Protective Life. Genworth will continue to administer and service the policies, which represent approximately $108.7 billion of term life insurance in force backed by approximately $2.3 billion of statutory reserves as of June 30, 2015.

The transaction is expected to close during the first quarter of 2016 and is subject to regulatory approvals. For more information, visit genworth.com.

HEALTHCARE
How the FDA Is Driving Drug Price Hikes
The FDA’s backlog of 4,000 generic drug applications is hindering competitors who could hold prices down, according to a study by the National Center for Policy Analysis (NCPA). Also, older generic drugs are often made on aging production lines, which are sometimes shut down for maintenance. Lines can be stopped after the manufacturer is warned by the FDA that the facility is out of compliance with good manufacturing practices. The resulting shortage often drives prices higher.

Thousands of drugs predate the FDA’s approval process required under the 1938 Food Author and Drug & Cosmetics Act; many were grandfathered, but never officially approved.  NCPA senior fellow Devon Herrick says, “The FDA wants these cheap drugs off the market and replaced with more costly approved versions from any drug makers willing to conduct clinical studies on them.”

State regulations also bite consumers in the wallet. Generic substitution laws in some states make it harder for consumers to save. In the face of rising drug prices, many states have passed laws that worsen the situation, such as banning efficient pharmacy networks, restricting mail-order pharmacies, and restricting maximum allowable cost lists.

The NCPA study highlights several ways to lower America’s drug bills, including the following:

  • Clear the FDA’s backlog of applications to manufacture generic drugs.
  • Resist passing perverse regulations designed to protect local business.
  • Promote competition in the production of generic medications.

“Much of the recent rise in the price of generic drugs can be directly linked to regulatory and legal causes,” says Herrick. This study is Part II of Herrick’s in-depth examination of the rising costs of generic drugs. For more information, visit ncpa.org.

LONG TERM CARE INSURANCE
How LTC Agents Can Use Social Media
Social media sites, especially Facebook, LinkedIn, and Twitter, make it easy for LTC agents to reach out to clients and prospects in a low-key way, says Denise Gott, CEO of ACSIA Partners. But long-term care insurance agents often resist reaching out to friends who could use their help. And consumers who are looking for LTC insurance information also resist reaching out to friends who may be in the business. But there’s much to gain from overcoming this reluctance, Gott said.

Agents who get lots of inquiries from friends tend to post on social media regularly, maintaining an ongoing presence and dialog. Gott gives these two examples:

  • LTC agent Gabrielle Gelo said, “Facebook allows me to reach out to childhood acquaintances that I might not have maintained contact with otherwise, through the high school Facebook page. They need help with long-term care planning, and the trust is already there. For me, social media works. It costs nothing, and takes minimal time.”
  • Another agent, Kim Beckham said, “Last year, about three fourths of my business was Facebook-related. And it was mostly with friends and family and referrals from friends and family.” Beckham, like Gelo, stresses the importance of keeping things low-key and friendly. For example, “On Facebook I don’t use a business page. I just use my personal page, because I feel I am my brand, and people are looking to me as a person, not an agent.”

Gott said, “Our people avoid the hard sell. Mostly, they just make clear that they’re in the business. And they post useful information that friends appreciate. For example, a reminder of LTC deductions available at tax time, or facts on who needs protection, or available policy types,”

“If you’re an agent, you may recoil at the idea of selling to your friends. And if you’re on the buying end, you may feel you’re imposing if you approach a friend in the business. But you really should connect. In our experience, agents and buyers who are friends are getting together with good results on both sides.” Gott said. For more information, visit acsiapartners.com.

Why People Lapse Their Long-Term Care Insurance
More than one third of people with long-term care insurance at age 65 will lapse their policies before death, according to a study by the Center for Retirement Research at Boston College. Men, this age, have a 32% chance of lapsing before death while women have 38% chance. Low-wealth and low-income people are more likely to lapse their insurance policies.

There is no evidence that people are lapsing because they believe they have a low probability of needing care. Lapses are common among the cognitively impaired, perhaps reflecting poor financial decision-making. Those who lapse are more likely to end up needing long-term care. Many lapsers, not only forfeit policy benefits, but may also adopt an aggressive path for drawing down their wealth in retirement based on the false premise that they will retain coverage.

One way of eliminating lapses would be to pay premiums in a lump sum. Most likely candidates for long-term care insurance have accumulated significant financial wealth by retirement. From the insurance company’s perspective, the problem with this approach is that, in contrast to policies with monthly premiums, it would be difficult to increase premiums should claims be higher than expected. For more information, visit crr.bc.edu.

Caregivers Face A Career Crisis
Providing care for loved ones has taken a toll on the careers of half of caregivers with 11% losing their jobs and another 10% having to change careers.  That’s in addition to the other financial, physical, and emotional effects of caregiving according to a Genworth study.

Fifty-one percent of caregivers say that that caregiving responsibilities impeded their ability to perform their jobs. The survey also reveals the following:

  • 77% missed some work during the past year, up 19% in 2010.
  • Caregivers missed an average of seven hours of work per week.
  • 19% missed 10 or more hours of work per week.

As a result of their caregiving responsibilities:

  • 11% lost their jobs.
  • 10% had to change careers.
  • 12% had to change positions.

Approximately one-third of caregivers provided 30 hours or more of care a week.  On average, caregivers lost one-third of their income. The study also highlights several factors that contribute to respondents’ reluctance to plan early. Thirty percent didn’t want to admit that long-term care may be needed and 25% didn’t want to talk about the issue.

Caregivers who had long term care insurance were reimbursed for 23% of their qualified out-of-pocket expenses. Forty-eight% of care recipients had considered the possibility needing long-term care, but only 26% made a plan to cover their potential needs. Even planners felt they could have been better prepared; 63% said they should have taken steps sooner, which would have led to reduced stress. For more information, visit genworth.com.

IN CALIFORNIA
Governor Signs Health Bills

As featured in the CAHU president’s blog from Michael Lujan, Governor Brown signed the following bills into law:

  • Co-pay Drug Caps: AB 339 caps prescription drug costs. It was authored by Assemblyman Rich Gordon (D-Menlo Park), and is effective January 1, 2017. It applies caps to copays and coinsurance for a single 30-day prescription at $250 to $500, depending on the insurance plan type.  For high-deductible health plans, the caps will take effect only when the consumer reaches the deductible. It provides relief to people with chronic conditions, such as cancer, HIV/AIDS, hepatitis, and multiple sclerosis. These patients can reach their annual out-of-pocket limit, which can be as high as $6,600, with just one 30-day prescription.
  • Provider Directories: S.B. 137, authored by Sen. Ed Hernandez (D-West Covina), is effective July 1, 2016: It will require health plans to update their provider directories weekly. The updates will include office location, whether the provider is accepting new patients, and which languages, other than English, are spoken by the provider and staff.  It also requires the Department of Managed Health Care and the Department of Insurance to develop a standard template for these directories. It helps protect Californians from higher-than-expected bills from out-of-network doctors and other providers due to inaccurate or outdated directories.
  • Cost-sharing limits on family plans: AB 1305 limits cost-sharing on family plans. It was authored by Assemblyman Rob Bonta (D-Oakland) and is effective January 1, 2017:  It closes a loophole in some plans that requires individuals, who are part of a family health insurance policy, to meet the much larger family deductible before their insurance coverage kicks in. It requires family policies to include both an individual deductible and a per-individual out-of-pocket limit.

Lujan also reports that several agents and CAHU board members attended a recent Covered California board meeting to testify on behalf of agents enrolling in Medi-Cal. Funding for Medi-Cal enrollment ended this summer, yet the current agent agreement still requires agents to enroll people in Medi-Cal. CAHU says that the policy creates an undue burden on agents who want to help, but simply need help when they reach their capacity or have complex eligibility issues. “To make sure our position was heard, CAHU initiated a VoterVoice campaign that sent more than 600 emails to Peter Lee, CA HHS Secretary Diana Dooley, and members of the Covered California Board of Directors. Over the past months, CAHU met with leaders from Covered California, the Department of Healthcare Services and County Offices to discuss the agent’s role in enrolling consumers in Medi-Cal,” he added.

“CAHU’s legislative advocate Julianne Broyles, several CAHU board members, and I testified and shared real examples of the great work being done by agents and need for compensation. After much discussion, Peter Lee assured us that the current agent agreement language will provide the flexibility agents need to continue with partnerships and/or work with County offices and seek their help when needed. We will hold him to his word. To address the Medi-Cal service issues, CAHU offered to help the county offices better support agents when inquiring about application status or related work on behalf of clients. CAHU also helped develop an agent toolkit and will provide additional training for agents. And lastly, we will continue our work to identify ongoing funding for compensating agents for Medi-Cal enrollment, similar to the grant provided by The California Endowment,” Lujan added. For more information, visit cahupresident.blogspot.com.

Governor Signs Disability Policy Bill
Governor Brown signed Assembly Bill 387 into law. It will improve the department’s ability to review and approve disability policy filings more effectively and completely in the specified timeframe. The law extends the period from 30 to 120 calendar days for the department to review and approve policy forms and any associated risks and premium rates. The bill was authored by Assembly Member Kevin McCarty and co-sponsored by Insurance Commissioner Dave Jones. The new law authorizes the Commissioner to develop and publish new guidelines on the department’s public website to expedite the department’s file review process for life and disability insurance forms. It will provide clear guidelines for insurers to follow when submitting policies for approval. AB 387 reflects an agreement between the California Department of Insurance and the Association of California Life and Health Insurance Companies.

Seniors Gain Greater Consumer LTCI Protections
Governor Brown signed Senate Bill 575 into law. It requires long-term care insurers to provide annual notifications of the availability of non-forfeiture benefits and contingent benefits to the insured and the insured’s designated backup contact. The bill was authored by Senator Carol Liu and sponsored by Insurance Commissioner Dave Jones. “Without notification, individuals and their families can easily lose track of…benefits and may end up paying for care or missing out on benefits that are available to them,” Jones said. Consumers may stop making premium payments because they can no longer afford them. Although the long-term care benefits may still be available to the consumer even after they stop making payments, the benefits may not be utilized by the consumer until years after the policy has lapsed, which is why consumers may forget the benefits are available.

DMHC Approves Blue Shield’s Acquisition of Care 1st
The California Department of Managed Health Care (DMHC) approved Blue Shield of California’s acquisition of Care1st Health Plan. Blue Shield agreed to the following:

  • Invest $50 million to strengthen the Medi-Cal delivery system through programs that make finding information simpler for consumers and the public. These projects will help streamline information for plans, providers, consumers and the public.
  • Propose an industry approach to standardize encounter data submissions. Invite all California health plans to participate by December 15, 2016. The project will initially focus on Medi-Cal plans and providers.
  • Propose an approach to develop a statewide centralized provider directory. It would have a single portal for consumers to access information, for providers to access and update data, and for health plans to meet legal obligations regarding provider directories. Blue Shield will invite all California health plans to participate, including Medi-Cal managed care plans.
  • Give $140 million to the Blue Shield Foundation or other charitable organizations approved by the DMHC.
  • Give $10 million to local consumer assistance programs.
  • Improve its quality of care performance as measured by the Right Care Initiative and the Office of Patient Advocate Quality Report Card. Likewise, Care 1st agrees to improve its quality of care as measured by the Medi-Cal Managed Care Health Care Options Consumer Guide.
  • Improve the Care 1st network of contracted specialty providers and Care 1st’s enrollees’ access to specialty care. Blue Shield will also help Care 1st develop and maintain the Care 1st Medi-Cal network.

Care 1st agrees to ensure that Medi-Cal encounter data is submitted accurately and in a timely basis. Blue Shield and Care 1st agree to promote health literacy education and will file a plan with the Department specifying the programs for the Department to evaluate and approve prior to the plans initiating their participation.

Blue Shield announced in January 2015 that it had reached a $1.2 billion agreement to purchase Care 1st, a privately-held, for-profit health plan operating mostly Medi-Cal and Medicare business in Los Angeles and San Diego counties. Following the closing, Blue Shield will convert Care1st to a non-profit corporation. “This order brings Blue Shield into the Medi-Cal program and requires the plan to improve quality and access for Medi-Cal beneficiaries,” said DMHC director Shelley Rouillard.

“The Department’s approval includes commitments by Blue Shield that will improve the state’s health care delivery system, benefit consumers, and improve access in the Medi-Cal program. This includes $200 million in investments to strengthen the health care delivery system, particularly in Medi-Cal, and support consumer assistance programs. Blue Shield must also make improvements in the areas of health care quality and access.

“This agreement will provide important tools to standardize information about managed care and improve oversight of managed care services, for Medi-Cal members and all Californians,” said Jennifer Kent, Director of the California Department of Health Care Services (DHCS). DHCS administers the Medi-Cal program, which provides coverage to 12.5 million Californians, largely through managed care plans.

New Law Allows Consumers To Transact More Insurance Via E-Commerce
Assembly Bill 1131, authored by Assembly member Matt Dababneh (D–Woodland Hills), has been signed into law by Governor Jerry Brown. This bill will allow for broader use of voluntary e-delivery and e-signature of life insurance documents, if the consumer chooses to opt in. Dababneh said, “Consumers can opt out of e-delivery and request paper documents at any time. Furthermore, all existing consumer protections and free look provisions under current law will remain intact, and new heightened delivery requirements for certain documents will be established.”

Cigna and St. Joseph Hoag Team up In Orange County
St. Joseph Hoag Health and Cigna will jointly offer employers HMO health plans branded as St. Joseph Hoag Health Select, and exclusive provider organization (EPO) plans branded as St. Joseph Hoag Health Flex. The agreement includes pay-for-value incentives that encourage quality and appropriate use of resources.
Gene Rapisardi, president and general manager for Cigna’s Southern California and Nevada markets said, “Our product is not focused simply on unit cost and volume of service. Together, we’re building a new health care delivery ecosystem dedicated to improved performance, sustained affordability and enhanced customer experience.”

Care coordination and health improvement programs are key components of the new model. The model includes streamlined processes for health care and coverage, easier navigation when care is needed, new tools for health and wellness, better access to clinicians, and greater use of technology, such as telemedicine and medical device monitoring. Additionally, employers may choose service to help people manage chronic health conditions, such as health coaching and nurse case management, workplace wellness programs, and other programs. The aim is to realize long-term, sustainable savings while helping individuals achieve better health and greater satisfaction with their health care services.

In the fall of 2014, Cigna and St. Joseph Hoag Health launched Select Network, which provides medical insurance through a network comprising St. Joseph Hoag Health hospitals and physicians and Children’s Hospital of Orange County.

Several employer groups, including the employees of St. Joseph Hoag Health, began using Select Network as an option for their employees in January 2015, with more than 20,000 individuals enrolled. Those customers will be enrolled in the new plans offered through the joint venture.

The new products will offer access to the flagship hospitals of St. Joseph Hoag Health: Hoag Newport Beach; Hoag Irvine; Hoag Orthopedic Institute Irvine; Mission Hospital, Mission Viejo; Mission Hospital, Laguna Beach; St. Joseph Hospital, Orange; and St. Jude Medical Center, Fullerton; along with eight medical groups and physician networks with approximately 1,700 physicians, and numerous outpatient and urgent care facilities in Orange County. The plans will also provide access to Children’s Hospital of Orange County (CHOC) and CHOC Children’s at Mission Hospital. Both are affiliates of St. Joseph Hoag Health. For more information, visit stjosephhoaghealth.org.

EMPLOYEE BENEFITS
American Workers Don’t Understand Their Benefits

While most Americans understand the importance of their personal finances and employee benefits, 40% say they know little or nothing about these benefits, according to a study from MassMutual. Most people seemingly have their financial house in order, saying they prioritize understanding their personal finances (77%), having enough medical insurance (74%) and being on track to retire comfortably (65%). Yet 38% say they know little or nothing about their employer-provided benefits, such as healthcare, life insurance, 401(k) retirement plans, and other benefits. Forty-two percent say they are clueless about whether or not they are on track to retire comfortably.

While many people say they do just fine managing their finances, 37% find doing so somewhat or very difficult and 40% say personal financial problems are a distraction at work, according to the study. Some groups find personal finance more difficult than others, including Millennials (58%), parents (50%), Generation X (47%), women (44%) and those with annual incomes of $50,000 or less (44%). Baby Boomers were the least likely to encounter difficulty in managing their finances (28%) or being distracted at work by financial issues (24%).
Eighty percent do not use an online financial tool to manage their retirement, healthcare and other forms of insurance. However, 73% say they would be likely to use such a tool if it were available free, especially if it were provided by a trusted and respected financial services company.

Millennials (82%), parents (80%) and Gen Xers (78%) are especially interested in using an online financial tool. Thirty-two percent said they would be more likely to enroll in their employee benefits if they could use an online tool to help them figure out their needs. Earlier this year, MassMutual launched MapMyBenefits, a free, online tool that enables employees to prioritize their benefit choices. For more information, visit massmutual.com.

NEW PRODUCTS
Independent Health Insurance Marketplace
HealthNetwork.com is a new independent health insurance marketplace that aims to provide a trusted resource for health insurance shoppers. HealthNetwork.com provides unbiased access to a majority of available health insurance plans available from HealthCare.gov, state exchanges, as well as private marketplace exchanges. The company acts as a consumer watchdog by monitoring its agent and broker partners and insisting on best practices, including, no reselling of consumers’ private health-related information. The marketplace is launching ahead of Open Enrollment 2016, when 24 million people are anticipated to enroll or change coverage, as predicted by The Congressional Budget Office.

EVENTS
Join Americans For Annuity Protection on October 16th at 9:00 Am Pacific for a virtual town hall with, Erik Rust, senior legislative assistant with Congresswoman Ann Wagner.  Rust will provide an update on legislative activity and information vital for you to consider as you plan for business in 2016. For more information, visit aapnow.com.