More and More Employers Are Offering EAPs

employeeassistanceOver the past 20 years, the number of businesses with employee assistance programs (EAPs) has more than doubled, according to a report from the Society for Human Resource Management (SHRM). Seventy-four percent of businesses offer EAP services. Many have rapidly adopted EAP services to help lower costs. Employees with untreated mental health issues and substance abuse problems can lead to absenteeism, limited productivity, high turnover, and more disability claims — all of which adds costs to employers.

There is a $3 and $10 return on every dollar spent on EAPs, according to data from Employee Assistance Trade Association (EASNA). IBIS World Industry Analyst Sarah Turk said, “As healthcare reform has required many businesses to offer employer-mandated health insurance, many businesses have looked toward cost effective employee benefits, including industry services, thus causing revenue for the Employee Assistance Program Services industry to rise 9.5% in 2014.” During the five years to 2014, industry revenue is expected to rise 5.6% a year to $4.5 billion. “Over the next five years, many EAP providers will focus on bolstering employee utilization rates,” says Turk. A study by Towers Watson reveals that while 85% of employers offer stress management services, only 5% of employees use these services. As a result, EAPS will focus on communicating the availability of services and overcoming employees’ reluctance to seek help for mental health disorders. For more information, visit http://www.facebook.com/pages/IBISWorld/121347533189

Exercise Lowers Health Care Costs

Annual healthcare costs are almost 20% lower for moderate exercisers compared to non-exercisers, according to a survey by Onlife Health. The company provided thousands of wearable fitness devices to a large client as part of its wellness program. Onlife Health compared thousands of employees’ claims costs against their biometric and fitness activity over three years. Emergency-room visits and inpatient stays  were almost 50% lower for moderate exercisers compared to those who did not exercise at all. For more information, visit www.OnlifeHealth.com.

ANNUITIES 

FIA Webcast 

NAFA is holding a webcast on what the future may look like for index designs for FIAs. It will be held January 22, 2015 8:30 a.m. PT. For more information, visit www.nafa.org.

IN CALIFORNIA

Covered California Reports Strong Enrollment Numbers

More than 592,000 people sought coverage and were determined eligible for private health insurance and eligible or likely eligible for Medi-Cal in the first month of open enrollment. Thirty-one percent of new enrollees signed up through self-service for a Covered California plan, with the others having their application completed with the help of in-person assistance or with the help of the Covered California Service Center. About 41% of consumers enrolled on their own during the first open-enrollment period.

Since open enrollment began, there were 157,361 eligibility determinations, 144,178 plan selections for private coverage, 216,423 enrollments into Medi-Cal coverage, and 74,965 who are likely eligible for Medi-Cal. So far in 2014, Medi-Cal has enrolled more than 2.2 million consumers. Although private insurance sold through Covered California is only available during open enrollment for most consumers, Medi-Cal enrollment is year-round. In just one month this year, more Californians selected a Covered California plan than in the first two months of last year’s open enrollment — with 144,178 plan selections this year, compared with 109,296 plan selections in the period from Oct. 1 to Nov. 30, 2013.  For more information, visit www.CoveredCA.com.

Health Net and John Muir Health Form ACO

Health Net of California and John Muir Health formed an Accountable Care Organization (ACO) for Contra Costa, Solano, and Alameda counties. Chris Ellertson, regional health plan officer for Health Net said, “Through the arrangement, Health Net and John Muir Health will work collaboratively to build new efficiencies aimed at reducing the cost of care while maintaining access to quality care and decreasing the upward pressure on insurance premiums.” For more information, visit www.johnmuirhealth.com.

FINANCIAL PLANNING

Pre-Retirees Are “Terrified” About Health Care Costs 

More than 62% of pre-retirees say they are terrified of what health care costs may do to their retirement plans, according to a survey by Nationwide’s Retirement Institute. The survey was conducted by Harris Poll of 801 Americans age 50 or older with at least $150,000 in household income. As health care costs in retirement continue to worry pre-retirees, about 26% of employed affluent boomers now believe they will never retire. Seventy-seven percent have not discussed their retirement health care costs with a financial advisor. For more information, visit www.nationwide.com.

HEALTHCARE 

Employers Are Looking At Private Exchanges for Pre-65 Retirees

Large employers are looking at private exchange solutions for their pre-65 retirees, according to a survey by Towers Watson. Over the next two years, more than half of the employers that provide health care to pre-65 retirees are planning significant changes to their medical benefits.  Many employers have concluded that their costly pre-65 retiree medical benefit programs fail to meet their benefit or workforce management objectives.

Trevis Parson, chief health actuary of Towers Watson said “Pre-65 retiree medical plan sponsors have been eagerly awaiting options to deliver improved value to their early retirees. For too long, limited options and high costs have burdened employers and retirees alike. In part, these barriers have been addressed and now private exchanges can help retirees find coverage that best suits them.”

Cost trends for Medicare-eligible retirees after plan changes (3.9%) are similar to trends for active employees (4%). However, trends for pre-65 retirees after plan changes are much higher (5.5%), highlighting the total cost of providing medical coverage to these younger retirees without the benefit of Medicare. In addition, 73% of employers offering medical benefits to retirees under 65 said their 2015 plan costs already exceed the cap for the plan.

In the absence of better solutions, most employers have fallen back on traditional methods to control the costs of pre-65 retiree medical plans. For 2015, 61% of employers that provide pre-65 health coverage changed plan design. Forty-two percent offer account-based health plans (ABHPs) with high deductibles connected to tax-advantaged health savings accounts for the plan year 2015. Another 8% are considering ABHPs for 2016 or 2017. Also, many plan sponsors rely on cost shifting to retirees, using cap arrangements. Forty-five percent cap the company subsidy for pre-65 retirees. As a result, subsidy caps may divert employers’ attention away from actively managing the plans more effectively on behalf of retirees.

Increasingly, employers are interested in public exchanges as an alternative to providing pre-65 medical benefits. However, just 4% of employers have considered ending coverage and subsidies since retirees often have access to federally subsidized plans on public exchanges. Seventy percent would end coverage, but provide a private exchange solution that connects retirees to plans on the public exchanges. Confidence is growing that public exchanges will be a viable alternative for employer-sponsored coverage for pre-Medicare retirees: While only 8% are confident for 2015, confidence rises sharply to 35% for 2017.

Joe Murad, managing director for Towers Watson’s Exchange Solutions said, “Pre-65 retiree medical benefits are complex. Companies have to consider the excise tax, new benefit options, provider networks, and subsidies along with the retirement needs of their workforce. Fortunately, with guaranteed issue, the ACA created a viable individual market for health insurance. Public exchanges simplify access to individual plans, and private exchange solutions help ease the experience of purchasing plans on public exchanges or directly from carriers. For the first time, employers can develop a pre-65 retiree medical strategy that meets the needs of retirees and helps them manage costs.” For more information, visit www.towerswatson.com.

Walgreens to Provide Med Assistance to the Newly Insured

As newly insured Americans begin using their 2015 benefits under the Affordable Care Act, Walgreens will provide medication assistance to patients who may have difficulty using their new insurance coverage. Through the end of January, patients who haven’t yet received a plan identification number from their insurer or are otherwise having difficulty can bring confirmation of their Marketplace enrollment to a Walgreens pharmacy. Walgreens will provide up to one month of a traditional, brand, or generic medication at no upfront cost. Walgreens offered a similar assistance last year. Walgreens is reaching out to insurance companies to request nightly eligibility file updates on health insurance marketplace plan enrollees to get the most up-to-date coverage information. Walgreens is also encouraging patients who enrolled through the public marketplace to confirm coverage with their insurance company and bring their benefit information to the pharmacy. With that plan information, Walgreens pharmacy staff can review patient benefits and work with the patient’s insurance company directly to confirm benefit eligibility. To help newly insured patients, Walgreens is working with HHS, CMS, the National Association of Chain Drug Stores (NACDS) and the White House. For more information, visit www.walgreens.com

MOVERS & SHAKERS

BenefitMall Appoints New President 

BenefitMall has promoted its chief financial officer, T. Scott Kirksey, as president. The company’s current president and CEO, Bernard DiFiore, will remain chairman and CEO of BenefitMall. Stephanie Bowman, formerly with the Tuesday Morning Corp., is the new CFO. For more information, visit www.benefitmall.com.

LIFE INSURANCE & ANNUITIES

U.S. Life/Annuity, Health Rating Outlooks Remains Stable 

A.M. Best has maintained its stable outlook for the U.S. life/annuity and health sectors, although the sectors continue to face challenges, such as low interest rates, increased regulation, and the Affordable Care Act (ACA). Life insurance and annuity companies have responded to low interest rates with careful management of crediting rates. However, the asset/liability matching process has been somewhat harder to manage, as many carriers went short on the asset side in anticipation of rising rates in 2014. A.M. Best is concerned that the easy fixes have been exhausted and that further reductions may cut expenses too deeply in areas that are needed to develop and sustain growth. Despite some adverse trends, A.M. Best’s stable rating outlook reflects the life/annuity industry’s history of resilience in the face of such factors.

Health insurers have generally succeeded in managing the various issues in 2014, including the roll-out of health insurance exchanges with guaranteed issue coverage; the expansion of Medicaid; payment of the ACA health insurer fees; and changes to Medicare Advantage funding.

Even with the rapid premium growth resulting from the exchanges and Medicaid expansion, earnings for most health insurers continued to be favorable for 2014, with many companies reporting strong operating results. Profit margins have compressed over the past few years and declined further in 2014. They could also decrease slightly in 2015, as the ACA fee increases and there is a continued shift to products with lower margins. A.M. Best views this lower level of margins for health insurers as a reset for the industry and the new norm. Therefore, A.M. Best expects health insurers to remain profitable – just at a slightly lower level.

AM Best also finds the following:

  • A benign credit environment with very low levels of impairments across all asset classes.
  • A boost from higher equity markets resulting in increased assets under management (and the resulting fee income), lower hedging costs with generally reduced volatility, and reserve releases as net amount at risk declines on legacy variable annuity products.
  • High levels of reported risk-adjusted capitalization.
  • Stable trends in both statutory and GAAP earnings.
  • Continued product de-risking.
  • Improving economic conditions domestically.
  • Ongoing refinement of risk management with respect to model validation, risk appetite and risk tolerances.
  • Low cost refinancing opportunities with demonstrated demand in the capital markets.

As portfolio yields continue to decline slowly, companies have continued to search for yield, somewhat at the expense of lower liquidity (as opposed to higher credit risk). Life and annuity writers also continue to seek growth both organically and through acquisitions, especially abroad.

To access the full, complimentary copy of these briefings, visit:

NEW PRODUCTS 

Nationwide Expands 3(38) Fiduciary Service 

Nationwide has expanded the company’s 3(38) investment fiduciary service from IRON Financial, LLC. The service will now include fiduciary monitoring of Nationwide’s managed account service (at the plan level) for no additional cost. When a plan sponsor elects the 3(38) service, IRON Financial assumes the responsibility and legal liabilities associated with selecting, monitoring and replacing plan investments under section 3(38) of ERISA. For more information, visit www.nationwide.com.

Prenatal Care App 

UnitedHealthcare is offering a well-baby app with its employer-sponsored plans. Women who enroll in Baby Blocks can earn rewards for completing appointments for prenatal, postpartum, and healthy-baby care. Users access interactive baby blocks via the free mobile web app on their iPhone and Android smartphones. It shows their prenatal visits and notifies them of opportunities to earn rewards for following a prenatal and postnatal visit schedule. Users can receive email appointment alerts and wellness-related text messages, connect directly with maternity nurses, and earn rewards for keeping the appointments. Rewards include gift cards to retail outlets, and maternity-related items such as teething rings, diaper bags, thermometers, and other items. For more information, visit www.uhc.com.

Chronic Illness Rider 

Voya Financial (formerly ING) has launched a chronic illness rider on its indexed universal life insurance products. The Chronic Illness Rider can be added to one of Voya’s cash accumulation life insurance products, which include Voya Indexed Universal Life (IUL) – Global Choice, Voya IUL Global or Voya IUL Protector (except Orange Pass). Examples of chronic illnesses include heart disease, Alzheimer’s or severe dementia, stroke, arthritis, cancer, diabetes or kidney disease. These products offer death benefit protection along with the opportunity to build money inside the policy, based in part on the increases of market indexes. Policyholders still receive a guaranteed minimum interest rate if indexes dip.  For more information, visit http://voya.com.

Wellness Intelligence 

Tanner Labs is offering Welbe, a corporate wellness platform. Welbe leverages wearable devices, mobile apps and employee submitted data to track company-wide and individual worker wellbeing, and rewards employees for achieving goals. Biometrics, financial, social, nutrition and sleep data can be gathered and analyzed, with challenge activities and incentives to meet goals set by employers. The data that Welbe provides to program administrators is voluntary, private, and HIPAA compliant. For more information, visit https://www.welbe.com.

ACA Compliance

iSolved, Infinisource’s cloud-based Human Capital Management technology solution, helps employers manage the employer mandate and other provisions of the ACA. iSolved tracks and stores vital data and produces detailed reports. Infinisource experts have kept up with every detail of ACA compliance. For more information, visit www.infinisource.com.

Online Pharmacy

HealthWarehouse.com relaunched its website to serve consumers who pay out-of-pocket for prescriptions. The new website, which employs responsive design for usability on tablets and mobile devices, enables consumers to quickly find the price of their prescribed medication, place an order, and have it delivered to their home. For more information, visit www.HealthWarehouse.com.