Consumers Don’t Do a Great Job of Researching Health Care Benefits
Employers continue to load more health care expenses onto workers. But 53% of employees are still choosing a major medical plan based on factors that may have little to do with their total cost of health care. According to a survey conducted by Lightspeed for Aflac, 75% of workers agree, at least somewhat, that even with their health insurance coverage, their medical copays and other out-of-pocket costs are more than they can afford at times. In spite of this, many consumers don’t want to research their insurance benefits. Even though the terms of health insurance policies have likely changed, 56% spend less than 30 minutes researching their benefits, and 34% spend less than 15 minutes.
Thirty percent of workers say that the level of monthly premiums is the most important factor when selecting their major medical plan each year while 23% are most concerned about whether their doctors/health providers participate in the plan. Only 16% say that the percentage of coinsurance they’ll pay for health care services is the most important factor even though high costs of coinsurance and deductibles could present significant risk to personal and family finances. Just 14% say that the most important factor is the annual deductible.
Matthew Owenby of Aflac said, “In a perfect world, workers would weigh not only the monthly cost of an insurance plan, but also how much of the total cost of their health care they’ll be responsible for to cover any unexpected out-of-pocket costs. In a sense, they are rolling the dice with their financial future.”
Forty-six percent of employees selected a major medical/health insurance plan with a high deductible of $1,000 or more last year, up from 34% in 2014. The following statistics reveal that many who chose a high-deductible option were not satisfied:
- 52% agree, at least somewhat, that they regret choosing a high-deductible health plan (HDHP).
- 59% agree, at least somewhat, that their HDHP was financially detrimental for themselves and/or their family.
- 48% agree, at least somewhat, that they don’t understand how an HDHP really works.
- 39% say that their health insurance gives them some of the protection they need, but a serious illness or accident would still create a financial burden for them.
“By spending more time researching their options so they better understand what the insurance plan pays for and what they’re liable for, consumers can make better choices and be better prepared for a serious health event. Employers can help too by providing additional options like a health savings account and voluntary insurance to help employees pay for the deductibles and other out-of-pocket costs,” said Owenby. For more information, visit lightspeedgmi.com.
How States Might Use Obamacare Waivers
State leaders face the quandary of losing federal funding if they act to control health care spending, according to an analysis from the National Institute for Health Care Reform (NIHCR). Section 1332 of the Affordable Care Act (ACA) allows states to request federal waivers of many key ACA provisions. The catch is that alternate state reforms must achieve the same or better health coverage and affordability for state residents and be budget-neutral for the federal government. The study by the RAND Corp., explores two approaches. The first approach is to enroll almost all state residents automatically into a universal coverage plan. The plan would be financed by a federal lump-sum payment to the state and a new state payroll tax. A key stumbling block would be the high tax rate required to fund a single-payer plan, particularly if it offers coverage that is more comprehensive than today’s norms.
The second approach involves a coordinated-waiver that would replace marketplace subsidies and the Medicaid and Children’s Health Insurance Program (CHIP) for lower-income children and non-disabled adults. Instead, there would be a voucher to purchase private insurance—an individual plan in the marketplaces or tax-preferred coverage from an employer. In some states, projected funding levels for Medicaid and the marketplaces could support a broad-based voucher program. In other states, a voucher-based approach would face challenges in meeting the ACA Section 1332 coverage and affordability standards. States pursuing a voucher approach could tap into additional federal funding if they agreed to implement the ACA Medicaid expansion as a base for the waiver. In general, states that develop a single-payer approach or a voucher approach would face an easier path if their waiver plans included substantial and effective cost-control components.
The two state-based waiver options outlined in the analysis are likely to appeal to polar opposites of the political spectrum. Nevertheless, they share key features. State-based plans would convert open-ended federal payments under the financing system into a lump-sum federal contribution. Such an approach would better position a state and its residents to reap the rewards of system-wide cost-containment efforts, according to the report. For more information, visit nihcr.org/ACA-1332-Waivers.
CMS Launches Web Resource for Employers
The Centers for Medicare & Medicaid Services (CMS) launched a one-stop web resource for employers to help transition people nearing Medicare eligibility into Medicare. For more information, visit cms.gov.
A Look at HSA Investment Options
Investment options in health savings accounts (HSAs) are a fairly new and not widely used, but they tend to draw larger contributions, and have higher balances, according to an analysis by the Employee Benefits Research Institute (EBRI). In many cases, HSAs offer an investment-account option that allows account owners to invest in mutual funds and other options, much like a 401(k) plan. So how are they working? Data from the EBRI HSA Database reveals the following:
- In 2014, 6.4% of HSA owners used the investment option portion of the account.
- Individuals contributed $2,636 annually on average when they had investments and $1,224 when they did not have investments.
- Annual distributions for health care claims averaged $1,777 from HSAs with investments and $1,293 from HSAs without investments.
- End-of-year account balances averaged $10,261 among HSAs with investments and $1,709 in HSAs without them.
For more information, visit ebri.org.
The Medicare Advantage Market in 2016
A total of 2,174 Medicare Advantage (MA) plans are in the market lineup for 2016, an increase of 90 plans over 2015, according to a report by Mark Farrah Associates. Researchers looked at data from Centers for Medicare & Medicaid Services (CMS). The Medicare market continues to be a key target for health insurance business with more than 17.6 million beneficiaries enrolled in a Medicare Advantage plan and another 37 million eligible.
Many Medicare Advantage plans are designed to be marketed in targeted regions while others are approved to be offered nationwide. For 2016, HMOs continue to be the dominant plan type; comprising 67% of plan offerings. The number of distinct HMO plans will increase to 1,463 for 2016.
2016 Medicare Advantage Preview
|MA Plan Type
|2015 Plan Count
|2016 Plan Count
|Source: Mark Farrah Associates.
Open enrollment will begin on October 15, 2015, and competitors are gearing up to promote 2016 benefit plans. As Medicare companies finalize sales and marketing strategies, they look forward to the release of the Medicare Plan Finder data on or around October 1. The Plan Finder is an online tool that helps seniors shop select new Medicare plans. It is also a rich market analysis resource for the industry. Analysts within Medicare plans use the detailed benefit attributes including benefit copays and cost sharing, plan by plan, to assess competition and opportunity, county by county. For more information, visit medicare.gov, markfarrah.com, or call 724.338.4100 for more information.
Medicare Advantage and Part D Market to Remain Stable in 2016
The market for Medicare Advantage and Medicare prescription drug plans will remain stable in 2016, according to the Medicare Rights Center. Next year, consumers will continue to see a stable Part D plan market with average premiums at $32.50 per month. The coverage of generic drugs increases to 42% of the cost of the drug in the doughnut hole. Coverage of brand name drugs will remain at 55%. Millions of older adults and people with disabilities will see affordable premiums and similar access to plans as they have in years past. As the Affordable Care Act (ACA) strengthens Medicare Advantage and prescription drug plans, beneficiaries are protected from significant increases in plan costs, benefits remain stable, and access to higher-quality plans is strong.
Enrollment in Medicare Advantage is at an all-time high. Next year the average premium will be $32.60, down from $32.91 in 2015. Additionally, 99% of people with Medicare will have access to a plan in 2016. There are now more four to five star plans than ever based on Medicare’s Star Quality Rating. For more information, visit medicarerights.org.
2015 HealthCare Consumerism Superstars
The Institute for HealthCare Consumerism named the recipients of the organization’s 10th annual HealthCare Consumerism Superstars and Industry Innovators:
John J. Robbins Sr. Memorial
HealthCare Consumerism Leadership Award
Joe Jackson, CEO, WageWorks
CEO Leadership Award
Pat Board, President/CEO, Union Health System\Scott Wood, Principal, Benefit Commerce Group
Dan Raske, CEO, TASC
Dayne Williams, CEO, PlanSource
Most Innovative Benefit Plan Design & Implementation Award
Margie Rodino, Chief Talent Officer, Sloan Global Holdings, LLC
Kelly Korte, Director of Benefits Planning & Strategy, American Greetings
Angie Stroupe, Director of Benefits & Wellness, AFL Telecommunications
Most Effective Private Exchange Implementation Award
Doug Maher, Executive Director, Educational and Institutional Insurance Administrators
Most Effective Employee Health Management Award
Lynda Jeppesen, SVP, Human Resource, Larry H. Miller Group of Companies
Michael Koenig, Director of Finance/Treasurer, ALPLA
Nicole Wright, National Benefits Manager, United Natural Foods
Most Effective Employee Empowerment Award
Tina Foster, Director of Group Health & Welfare, Tyson Foods
Debbie Connely, VP, Human Resources, Hyland Software
Andreas Pyper, Employee Wellness & Benefits Manager, County of Santa Barbara
Health Plan Innovation Award
Chris Riedl, Executive Director of Product Strategy & Management, Commercial Business, Aetna
Most Innovative Broker/Advisor Award
Scott Riordan, director, Health & Welfare Services, Sentinel Benefits & Financial Group
Most Innovative Benefit Consultant Award
Sander Domaszewicz, principal, Mercer
Most Innovative Third Party Administrator Award
John Biwer, CEO, Discovery Benefits
Public Policy Leadership Award
John Hickman, partner, Alston + Bird
2015 Industry Innovators
Derek Newell, CEO, Jiff Cathy Kenworthy, CEO, Interactive Health
Steve Adams, President & CEO, Navera
Scott Decker, CEO, Healthsparq
David Hines, CEO, ConsumerMedical
Sharon Cunninghis, Senior Partner Global Marketplace Solutions, Mercer
Adam Jackson, CEO, Doctor on Demand
Marcee Chmait, president, SpendWell Health
Cédric Hutchings, CEO, Withings
Steve Auerbach, CEO, Alegeus Technologies
For more information, visit theihcc.com.
Sutter Health Expands
Sutter Health Plus, an HMO health plan that serves the greater Sacramento, Central Valley, and Sonoma County areas, now offers its competitively priced products to five new counties in the Bay Area. The announcement comes after receiving final approval from the Department of Managed Health Care. In January 2014, Sutter Health Plus initially launched in the Greater Sacramento and Central Valley. The HMO took its first step into the Bay Area when it added Sonoma County in March 2015. The latest expansion adds Alameda, Contra Costa, San Francisco, San Mateo, and Santa Clara counties to its service area. The Sutter Health Plus network in the Bay Area includes 16 hospitals and campuses, dozens of conveniently located care centers, and nearly 3,600 physicians. Physician organizations include the following:
- Brown & Toland Physicians
- Mills-Peninsula Medical Group
- Palo Alto Medical Foundation
- Sutter East Bay Medical Foundation
- Sutter Pacific Medical Foundation
For more information, visit: sutterhealthplus.org.
Maintaining Reliable Provider Directories for Health Plan Shoppers
A new report by the California HealthCare Foundation examines how Colorado, Maryland, New York, and Washington overcame obstacles to develop well-functioning provider directories. The goal of the report is to inform California policymakers and stakeholders as they seek to improve consumer access to accurate provider network information. The following are key findings:
- An environment for shared accountability can be fostered through incentives, policy alignment, and enforcement of regulatory and contractual requirements.
- Uniform data standards and accompanying guidance ensures that data are usable, especially when they come from disparate sources.
- Provider directories should engage and inform consumers with diverse language needs and educational levels as they enroll in coverage and seek care.
For more information, visit CHFC.org.
SALES & MARKETING
Studies Illustrates the Value of Client Reviews
How valuable are client reviews? New research from Clutch reveals that, by doubling the number of online reviews, the number of prospective buyers that want to learn more about a company could increase by up to 60%. Paco Darcey, Clutch data analyst said, “Not only are buyers searching for qualified information and reviews, but they are also more interested in vendors that have more client reviews.” The full research can be found at clutch.com.
Communication Is Key to Retaining Price-Sensitive Individual Life Customers
Communication plays a critical role in satisfaction with individual life insurance providers. But at least 17% of customers who purchased through an agent or financial advisor have never had another interaction with their insurer since the initial purchase, according to a recent J.D. Power study.
The study measured individual life insurance customer satisfaction with their insurer based on price, policy offerings, interaction, and billing and payment. Price is a primary reason consumers shop for individual life insurance products and providers. Price is also the main reason they let their policy lapse. However, when insurers communicate the value customers receive relative to what they pay, even customers who pay a higher premium are more satisfied and less likely to shop for a new policy with a competing insurer.
Further, 46% of individual life insurance customers don’t have a complete understanding of their policy. Customers who have an agent or financial advisor or company representative who has reached out to them in the past year tend to have a better understanding of their policy. They are more likely to say they will definitely purchase a policy with their insurer if they need additional life or financial products compared to those whose agent, financial advisor, or company rep hasn’t reached out to them.
Valerie Monet, director of the insurance practice at J.D. Power said, “Most of the insurers know that communication is important, but they just aren’t doing it. Customer interaction requires a financial commitment from insurers.”
The study finds that 37% of individual life insurance customers have evaluated their life insurance needs in the past two years, including the relevance of their product. Yet, nearly 25% of customers who purchase through an agent or financial advisor have never had another interaction with them since their initial policy purchase. Forty percent of customers who shopped for a new policy in the past two years upgraded or purchased a new policy from their insurer while 12% purchased a new policy with another company.
Monet said, “As insurance customers enter different stages of their life, the amount of coverage and the products best suited to meet their financial planning goals may also change. If insurers contact their customers even once a year, they can help them understand their policy and address their needs, and in doing so are more likely to retain them as a customer. If they aren’t talking to their customers, they are giving them a reason to shop around, and they’ll likely go to an insurer with a lower price. “For more information about J.D. Power insurance studies, visit jdpower.com.
Low Cost Variable Annuity
Nationwide launched Nationwide Destination Freedom, an investment-focused variable annuity for clients looking for a low-cost solution with the flexibility to choose from more than 130 funds. Higher annuity fees can drag down the potential performance of investments. Freedom+ offers a 1% base cost, helping to reduce the fee-drag on a portfolio’s performance. Freedom+ provides a tax-deferred investment option, potentially helping clients create more retirement income. It also offers more four-star and five-star Morningstar rated funds than does the leading competitor. For more information, visit nationwidefinancial.com/freedom or call 800-321-6064 for more information about Freedom+.
The Ultimate Obamacare Handbook
In The Ultimate Obamacare Handbook (2015—2016 edition) (Skyhorse Publishing, September 2015) you’ll find:
- A guide to buying low-cost health insurance.
- Step-by-step instructions to signing up for insurance.
- Directions to apply for Obamacare exemptions.
- Eligibility requirements for subsidies.
- Definitions of insurance, health care, and Obamacare terms.
- Real-life stories of people who have already been helped.
For more information, visit amazon.com.
Fixed Index Annuity
Voya Financial is offering a new index crediting strategy within the company’s Voya Secure Index series and Retirement Index Select fixed index annuity product lines. The Voya Point-to-Point Volatility Control Strategy features Deutsche Bank’s proprietary Cash Return on Capital Invested (CROCI) The US 5% Volatility Control Index aims to reduce volatility by allocating among select U.S. stocks and cash. Customers benefit from low spread rates with growth potential while receiving a level of protection from downturns in the market. For more information, visit voya.com.
Online Payroll Solution
BenefitMall is offering an online payroll and HR solution for small and mid-size businesses. PayFocus + HR is an enhanced version of BenefitMall’s PayFocus product that rolled out in early 2015. It allows employers to hire new employees, import time and labor data to avoid multiple entries, calculate gross-to-net payroll in real time, and review all standard reports in one streamlined location, all with just a few clicks. For more information, visit benefitmall.com.
Insurance Sector Struggles To Innovate
The need to innovate is already creating significant pressures on the insurance sector, according to a study by a KPMG International. Forty-eight percent of insurance executives say that their company is experiencing disruption from new, more nimble competitors. Respondents from North America are more likely to report disruption than are their European and Asian peers. Eighty-three percent of insurance executives see innovation as a significant opportunity, with 83% saying that their success is closely tied to their ability to innovate.
It’s not just up-starts that are creating innovation challenges for the insurance sector. Forty percent say that increased competition from their competitors would create significant challenges over the next two years. Seventy-nine percent say that they are already running just to keep up with their day-to-day requirements. Seventy-four percent say they lack the internal core skills needed to drive innovation.
Gary Reader of KPMG International said, “Insurers and intermediaries are increasingly finding that there is no silver bullet to create a more innovative organization. [There is] no off-the-shelf package that drives new ideas. Instead, organizations will need to…develop new business and operating models and new partnerships in order to out-compete and out-innovate their peers and bold new entrants.”
Two-thirds of survey respondents say they look to other industries for inspiration and innovation models. The KPMG International report also includes leading insights from fast-moving industries, such as automotive, retail, healthcare, and technology. For more information, visit kpmg.com.