How the ACA Has Affected Brokers

ACA

Benefitter recently asked 1,028 brokers how the Affordable Care Act (ACA) has affected them. Eighty percent had negative or critical feedback around the Affordable Care Act. The following are brokers’ top concerns:

  • 26% Rate increases
  • 22% Increased complexity
  • 21% Reduced role of broker
  • 11% Plan quality
  • 11% Other law nuances
  • 5% Employer dumping
  • 4% Compressed timeline

The most common complaint is that insurance premiums have increased significantly for their group clients. Many brokers are concerned that health insurance products now come with higher deductibles and narrower networks. Brokers are under increasing pressure to guide clients through a complex regulatory environment. Medical loss ratio (MLR) limits and other factors have reduced broker commissions while their workload has grown.

Several brokers have already seen many of their group clients drop health benefits and transition employees to the individual market. Many businesses now have a December renewal date due to last year’s transition relief, creating an onslaught of fourth quarter work for brokers. Brokers are also facing website malfunctions at the stat’s exchange, Medicaid’s uneven expansion, and confusion over grandmothering.

Here are some representative quotes:

  • “My clients saw much higher increases at renewal last year – double or triple what we normally see. The increases we’ve seen since the inception of the ACA have been catastrophic to some businesses.”
  • “I’m tired of hearing advertising about a 1% state wide average rate increase. Twenty percent to 40% of employers are already purchasing the highest deductible plans to get premiums down, so there is no where to go next year.”
  • “Brokers are spending two to three more times explaining and educating clients.”
  • “The constant changing and postponing of the original implementation schedule makes me look like I don’t know what I am talking about.”
  • “If I calculated what I get paid to help a client through the exchange and what the carriers are paying, I am making about $2.50 an hour.”
  • “Commissions have dropped 40%. I am working many more hours.”
  • “We should exempt brokers from MLR. Employers are being deprived of impartial advice because brokers can’t earn enough money to stay in the business.”
  • “It’s not always about the rate increases; it‘s also about rates staying the same and the plans turning to garbage — from a $2,500 family deductible to a $12,700 deductible.”
  • “My county has three carriers to choose from with a limited network. Members have lost their doctors with no indicator it will change.”
  • “About 75% of all small group renewals renew in December now. That, with open enrollment for individual plans and Medicare plans during the fourth quarter, it makes it almost impossible to service our clients. I am working 12- to 16-hour days just to tread water.”
  • “I have spent the majority of my time rewriting the existing book of business and assisting people who lost their group coverage. These groups will be forced to shut their plans down and tell their employees they are on their own. I wouldn’t be surprised to see 50% leave the employer sponsored market.”
  • “The state exchange website is down all the time; there is no workable electronic communication system; brokers have to wait on hold for up to an hour to get information.”
  • “All our work is jammed into this impossible time period.”
  • “It’s disheartening when you cannot help someone because their modified adjusted gross income does not reach 100% of the federal poverty level but they are not eligible for Medicaid.”

For more information, visit www.benefitter.com.

Broader Prescription Drug Coverage Improves Health Outcomes 

Enhanced prescription drug insurance can improve patient health outcomes and reduce the use of costly health care services, according to a study by Brigham and Women’s Hospital and CVS Health. When drug insurance programs are enhanced or expanded, more patients can afford important medications enabling them to adhere to prescription medicines for chronic conditions. As a result, they face fewer costly complications and lower health care use, including hospitalizations from unmanaged or under-managed conditions. In contrast, several studies also reveal that patient health outcomes decline when insurers place burdensome caps on drug benefits.

Troyen A. Brennan, M.D., Chief Medical Officer, CVS Health and a study author said, “Our analysis indicates that, while expanding insurance benefits may lead to initial cost increases, these costs should be offset by future reductions in spending associated with preventable patient morbidity and mortality.” She added, “Many public and private insurers are taking steps to control rising health care costs. For example, some state Medicaid programs…have placed…limits on the number of prescriptions a patient can fill each month…Restricting the availability of prescription drugs or prohibiting access could have negative effects on patients’ health and may not produce the expected cost-savings.” For more information, visit www.cvshealth.com.

NEW PRODUCTS

Affordable Care Act Tool

EBenefits Solutions is introducing ACA tools. The ACA Navigator guides employers through each aspect of the ACA’s employer coverage mandate. The ACA Compliance Module provides eligibility tracking for all employees, sends monthly notifications to employees and human resources staff, and monitors the latest changes to the ACA. For more information, visit http://www.ebenefits.com

Tax Credit Services 

State and Federal programs offer $2,400 to $9,000 in tax credits for each eligible new hire. The Tax Credit Professionals, have been assisting businesses nationwide with the extensive process of claiming these credits and refunds. TC Services USA offers three partnership options: 1) Integration Partnerships 2) Referral Partnerships, and 3) Private Label Partnerships. With either option, TC Services USA can integrate their Tax Credit Services with your own software, or client portal. For more information, visit http://www.TCservicesUSA.com.

Prescription Discount Card 

The free Watertree Health Prescription Discount Card helps people afford their medications. It complements plans obtained through the ACA as well as those provided by employers. For more information, visit www.watertreehealth.com.

Quoting App 

Limelight Health launched the QuotePad app, available now at the Apple iTunes Store. QuotePad provides a simple, interactive platform for health insurance professionals to quote and compare employee health benefit information. For more information, visit www.limelighthealth.com or call 1-877-897-5005.

IN CALIFORNIA

Settlement Ends Kaiser-RN Dispute 

The California Nurses Association/National Nurses United announced a major tentative contract agreement for 18,000 California RNs who work at Kaiser Permanente hospitals and clinics. It will give the RNs a stronger voice on patient care, and breakthrough improvements in workplace protections. The agreement affects registered nurses and nurse practitioners who work in 86 Kaiser Permanente hospitals and clinics in Northern and Central California, from Santa Rosa to Fresno.

The agreement also provides significant economic gains and additional retirement security. CNA is cancelling a strike that had been scheduled for January 21 and 22. A key to the settlement was the agreement by Kaiser to establish a new committee of direct care RNs and NPs who will work with management to address the concerns RNs have about care standards in Kaiser facilities.

LIFE INSURANCE

Life Insurance Executives See Opportunities in 2015

In 2015, life insurers will face pressure from low interest rates, but there are a number of market opportunities, according to to executives and industry analysts interviewed by LOMA. “Interest rates will remain low and will challenge insurers, particularly for annuity related products. However, improvements in the U.S. economy and employment as well as an orientation to conservative investment vehicles in younger generations will open up new or increased sales opportunities in 2015,” said Mark Breading, partner at analyst firm SMA-Strategy Meets Action.

Here are some additional survey highlights:

  • Millions of Americans are uninsured or underinsured, which this is an opportunity for the industry. Retiring Baby Boomers will shift their retirement accounts from accumulation to decumulation, spurring a demand for annuities that provide a steady income stream.
  • Millennials and Gen X markets have become increasingly important. These younger consumers want conservative savings vehicles, easy-to-understand propositions, and digital offerings.
  • Predictive analytics and data mining tools have captured a lot of attention on the technology side. Life/annuity insurers are especially interested in using analytics to gain insights on customers and markets. They want to develop more sophisticated market segmentation and innovative new products.
  • Online and mobile environments play a growing role in engaging and communicating with the consumer, especially social media.

For more information, visit www.loma.org

Life Industry Shows Gradual Improvement 

December’s individual life insurance application activity increased 2.6% year-over-year, according to the MIB Life Index. However, December’s activity declined 8.3% compared to November, the largest decrease on record for this time period. But, November’s activity was unusually strong, up 10.6% as compared to October. First quarter declines of 5.4% moderated over the second and third quarter, with the fourth quarter showing the most significant growth at 2.6%.

“The life insurance industry has recognized the need to develop…products and services that provide value to new and existing customers. After sluggish sales activity in the beginning of 2014, we saw increasing momentum for the majority of the year and we are hopeful these favorable trends continue into 2015, despite a less than inspiring economy,” said Lee Oliphant, MIB Group’s Chief Executive Officer. For more information, visit www.mibsolutions.com/regLIwww.mibsolutions.com/loginLI.

FINANCIAL PLANNING

Hispanics Less Likely to Leave Their Financial Future up to Chance

Compared to the rest of the population, Hispanics are working harder to secure their financial future, according to a survey from MassMutual. Sixty-five percent of the general population say they leave their financial well-being up to chance compared to 61% of U.S. Hispanics. Also, Hispanics are more likely to seek financial information (82% vs. 75% of the general population). They are also more likely to seek information from financial institutions (48% vs. 44% of the general population). Hispanics are more likely to seek information on personal finance and retirement planning from family (37% vs. 27% of the general population), friends (26% vs. 19% of the general population), and significant others (24% vs. 18% of the general population).

Hispanics take fewer risks in retirement, education, and emergency security. Hispanics are more likely to carefully research and plan every detail of their education (51% compared to 27% of the general population). They more likely to have sufficient rainy day funds (35% vs. 31% of the general population). Additionally, they are more likely to carefully research and plan every detail of their retirement (42% vs. 32% of the general population), and are more likely to work at their retirement plan until they believe it’s perfect (38% vs. 24% of the general population). For more information, visit massmutual.com/planningtools or in Spanish at massmutual.com/espanol.

EMPLOYEE BENEFITS

Workers See a Growing Need for Voluntary Benefits 

Sixty-three percent of workers see a growing need for voluntary benefits in 2014. Also, 48% of employees say they are more knowledgeable about voluntary benefits than they were last year, according to the 2014 Aflac WorkForces Report. Eighty-eight percent of agree, at least somewhat, that they consider voluntary insurance benefits to be a part of a comprehensive benefits program, With plans such as accident, critical illness and hospital confinement, employees view voluntary benefits as a way to fill in coverage gaps.

The demand for voluntary plans is on the rise thanks to increasing health care costs and an evolving health benefit landscape. According to a LIMRA survey, voluntary health product sales increased 13% in 2013.

The Aflac study notes that many workers would not be prepared to cope with a financial crisis in a health emergency. For example, 69% agree, at least somewhat, that they regularly underestimate the total costs of an illness or injury. Sixty-six percent say they wouldn’t be able to adjust to the large financial costs associated with a serious injury or illness.

Fifty-three percent say their benefit costs a higher than they were last year; 42% are not prepared to pay the out-of-pocket expenses for an unexpected serious illness or accident; and 24% say that high medical costs have hurt their credit scores or they’ve been contacted by collection agencies about medical bills.

More employers are offering voluntary benefits. Thirty-five percent of employers offered voluntary insurance to employees in 2014, a 9% increase from 2012. Employees who are enrolled in voluntary insurance are 18% more likely to be satisfied with their jobs and 38% more likely to be satisfied with their benefit package. They are 19% less likely to look for another job in the next 12 months. They are also 64% more likely to feel fully protected by their current insurance coverage. For more information, visit AflacWorkForcesReport.com

Employers Are Offering More Tools and Resources 

Employers are are offering more types of financial and retirement planning tools and resources to workers, according to a survey from Aon Hewitt. Employers are also taking advantage of the size and purchasing power of their defined contribution (DC) plans to reduce costs and improve returns for employees.

Ninety-three percent intend to focus on the financial well-being of their employees beyond retirement. Forty-six percent are likely to add plan features, mobile apps, or online tools to help employees understand financial concepts and financial planning, and another 47% are somewhat likely to do so. The survey also found the following about employers:

  • 69% offer online investment guidance, up from 56% in 2014; 18% of the remaining employers are very likely to add this feature in 2015.
  • 53% offer phone access to financial advisors in 2015, up from 35% in 2014.
  • 49% offer third-party investment advice, up from 44% in 2014.
  • 47% offer managed accounts, up 8% from 2014.

Rob Austin, director of Retirement Research at Aon Hewitt, said “Companies are offering features like basic budgeting help while others are providing assistance on how to save for life events like a home purchase or college.” Thirty-four percent of employers recently changed their fund line-ups to reduce plan costs, compared to 27% in 2014. Thirty-four percent of employers that have not made the change yet, say they are very likely to do so before the end of the 2015. Additionally, 30% of employers have recently moved from mutual funds to institutional funds or separately managed accounts compared to from 16% a year ago. For more information, visit http://www.aon.com.

LIFE SETTLEMENTS

Abacus Secures Funding

Abacus Life Settlements recently secured over $250 million to purchase policies for 2015. Samantha Butcher, Abacus’s chief operating officer said, “More money has entered the market from institutional investors due to the current valuations in the equity market and the non-correlated attractiveness of the asset class. In addition, the returns experienced by our capital partners are superior to what they can achieve in most fixed income investments. These changes have attracted a number of fixed income investment funds and pension funds to our market. Our capital partners have come to appreciate our origination efforts, current inventory on hand, and our high standards of due diligence.”

On the supply side, more seniors are learning how life settlements can be used to fund long-term care and supplement retirement, help pay debts, or allow them to retain a portion of their coverage while eliminating the burden of premiums. Butcher says that Abacus expects its policy acquisition numbers to rise significantly next year because more seniors are reaching the optimum age for a life settlement — 78. Abacus’s purchasing capabilities will also strengthen in the coming year allowing more flexibility in offer amounts made to sellers. Additional options for sellers will also continue to spur growth, including the ability to retain some death benefits after the policy sale, she said.

“We will continue our efforts to educate financial advisors and policy holders of the benefits…We stand ready to purchase policies with face values ranging from $100,000 to $50 million,” said Butcher. ” Visit https://abacuslifesettlements.com for more information.

AGING IN AMERICA

Actuaries Call for A Public Policy Focus on Aging 

The American Academy of Actuaries is calling on the President and the 114th Congress to focus on the needs of an aging America in the next two years. A concerted national strategy is long overdue on policies to support systems, such as retirement security and lifetime income, health care and long-term care for the elderly, and public programs such as Social Security and Medicare. “These programs arose out of the pressing needs of their time to forestall the circumstances that too often resulted in the elderly living in poverty or having no access to quality health care. Today’s needs in aging policy require no less of a commitment to action,” said Academy president Mary Miller.

According to the Census Bureau, the median age in 2015 will be 37.8, up from 28.1 in 1970. It will rise to 42 in 2045. The Academy is asking the federal government to do the following:

  • Take immediate steps to address solvency concerns of key public programs like Social Security and Medicare. The Academy also urges action to allow the disability trust fund to continue to pay full scheduled disability benefits during and beyond 2016.
  • Address the risk of retirement-income systems not providing expected income into old age, especially in light of increasing longevity. The Academy’s Retirement for the AGES initiative provides a framework for evaluating private and public retirement systems, as well as public policy proposals.
  • Encourage lifetime-income solutions for people living longer in retirement. The Academy’s Lifetime Income initiative supports more widespread use of lifetime-income options.
  • Improve the governance and disclosures of public-sector (state/municipal) employee pension plans. The Academy’s Public Pension Plans Actuarial E-Guide provides information on the nature of the risks and the complex issues surrounding these plans.
  • Evaluate the relative health level of older Americans and those with disabilities, and assess the ability of Medicare and other public and private programs to meet those needs. The Academy is conducting an examination of the drivers of health care costs; Medicare, Medicaid, and private sector payment and delivery system reform; quality of care metrics; and other issues through its Health Care Cost/Quality of Care initiative.
  • Explore solutions to provide for affordable long-term care financing, and address caregiver needs and concerns through public and/or private programs.
  • Address the effect of delayed retirement or future retirement age changes on benefit programs. Assess the potential for increased demand for early retirement hardship considerations and disability income programs.

Learn more by clicking on the “Public Policy” tab at www.actuary.org.

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