IRS Extends ACA Reporting Deadlines
The IRS issued a two-month extension for employers and issuers to report on offers of health coverage and coverage provided. The deadlines for reporting to the IRS by paper have been extended to May 31 or June 30 for electronic submissions. Greatland Corp. advises employers to continue with preparations as if the deadlines had not been pushed back. Bob Nault, Greatland’s CEO said that waiting until the last minute can lead to failure to file 1095 forms for the 2015 tax year, which could bring penalties of up to $1 million on small businesses. Maximum penalties to payers for failure to file correct information returns, including furnishing an incorrect name/TIN to IRS are $3 million/year ($1 million for small businesses).
Janice Kreuger, ACA subject matter expert for Greatland said, “We are hearing from a lot of businesses that think the IRS will not enforce fines for the 2015 reporting year. This is simply not the case. The IRS will not fine employers and insurers for mistakes. However, they still need to file and file on time, even with the extended deadlines.
The IRS imposes the following fines for returns filed beginning January 1, 2016:
- $50 per information return if you file correctly within 30 days of the due date.
- $100 per information return if you file correctly more than 30 days after the due date, but by August 1.
- $250 per information return if you file after August 1 or you do not file required information returns.
- $500 for a return for intentional disregard with no maximum penalty.
For more information, visit www.greatland.com.
Consumer Choices in the Affordable Care Act Marketplace
Under the ACA marketplaces, consumers in most regions of the country have multiple options from which to select a health plan, according to a study by the Blue Cross Blue Shield Assn. (BCBSA). However, the types of health plans are changing to meet the needs of customers and to manage risk for health insurers. For example, the share of HMO and exclusive provider organization (EPO) products increased from 41% in 2015 to 52% in 2016. HMO products were the lowest cost Silver Plans in 57% of counties in 2016 compared to 46% in 2015.
Price differentials are narrowing. In 2014, more than 29% of counties had the lowest cost Silver Plans. These plans cost more than 10% less than the next lowest competitor’s option. In 2015, that number dropped to less than 5%. In 2016, only 1% of counties had this large of a price differential between the two most affordable Silver Plans.
Maureen Sullivan of BCBSA said, “Insurance carriers are applying more data including the actual health care costs of newly enrolled members to design offerings that more accurately meet the needs of consumers in this new market.” For more information, visit www.bcbs.com/healthofamerica.
A Snapshot of Consumer-Driven Health Plans
A recent survey by EBRI and Greenwald & Associates finds the following about consumer driven health plans (CDHPs):
- 13% of the privately insured population are enrolled in a CDHP; 11% are enrolled in a high-deductible health plan (HDHP); and 76% are enrolled in more traditional coverage.
- 26 million people with private insurance are enrolled in a CDHP—a health plan associated with a health savings account (HSA) or health reimbursement arrangement (HRA), or an HSA-eligible health plan.
- 63% of people in CDHPs have opened an HSA, 13% are in an HRA, and 24% are in an HSA-eligible health plan, but have not opened an HSA.
- People in a CDHP or an HDHP are more likely to have cost-conscious behaviors compared to those in traditional plans. They are more likely to have checked whether the plan would cover care; asked for a generic drug; talked to their doctors about prescription options and costs; asked a doctor to recommend a less costly drug; talked to their doctors about other treatment options and costs; developed a budget to manage health care expenses; and used an online cost-tracking tool provided by the health plan.
- People in a CDHP are more likely to have talked to friends, family, or colleagues about the plans; attended a meeting where health plan choices were explained; and consulted with their employer’s HR staff about health plan choices.
- People in an HDHP are more likely to have visited the health plan’s website to learn about their plans; talked to friends, family, or colleagues about the plans; used other websites to learn about their choices; and consulted with an insurance broker to understand their plan choices.
- CDHP enrollees are more likely to take advantage of wellness programs, such as health-risk assessments, and health-promotion programs, and biometric screenings.
- Financial incentives mattered more to CDHP enrollees than to traditional-plan enrollees.
For more information, visit ebri.org.
What Employers Want from a Financial Plan Advisor
Plan sponsors prefer financial advisors who emphasize employee education, good customer service, and reduced plan costs, according to a study by MassMutual. Employers want advisors to do a better job of educating employees in group meetings, explaining how to lower plan costs, and explaining new developments for retirement plans. Smaller employers with plans of less than $1 million in assets need help keeping up with new developments. The study also finds the following:
- Employee education and advice is universally valued by employers, with many wanting more frequent educational sessions. However, advisors say employers are not always willing to make time for their employees to participate in educational meetings.
- Plan review is especially important as a service to employers that rely on advisors.
- Employers want advisors to help them lower the costs of the retirement plan including negotiating with providers, reducing investment fees, and attracting more assets to the plan to keep costs low.
Sponsors with $25 million to $75 million in assets are more likely to want help from advisors with plan design, investment selection, fiduciary support, and help with other benefits. Ninety-three percent of employers say their retirement plan advisor is valuable, especially when it comes to customer service, advice on investments, and problem solving. Employers that rely on an advisor are more likely to be:
- Engaged in promoting retirement plan participation and employee financial well being.
- Confident that their employees are saving enough for retirement.
- Active in reviewing their retirement plan, including investment performance and education effectiveness.
For more information visit www.massmutual.com.
Final Expense Industry Experience Study
Mortality and rescission rates vary considerably from company to company, according to a study by Milliman. This is due, in large part, to company management of the business, claims philosophies, and the target market. Companies say that the top challenges in the final expense business are profitability, quality of production, mortality, and speed-of-sale. For more information, visit www.milliman.com.
Interest Rates, Economy Are Still Concerns in 2016
Insurance executives surveyed by LOMA expect modest growth due to interest rates and the economy. Neil Sprackling, president of Swiss Re Life & Health America said, “The life industry is in transitional recovery mode. We’re still suffering from the hangover of the financial crisis and what now looks like long-term low interest rates. So, do I predict rocketing sales and significantly higher profits in 2016? No, however, my optimistic nature tells me that we’ve turned a corner.” Most executives agree with the following:
- Technology will continue to have a profound effect; digitization may change how products are developed. Predictive analytics, automated underwriting, and smart phones are all mentioned as important. But the industry is also looking at emerging technologies, such as wearables and gamification, which may bring even more dramatic changes.
- Quality service will be a key to retaining customers. Power has shifted from companies to consumers. Consumer expectations are increasingly based on experiences with other companies that use leading-edge technology.
- Human capital is a big concern. Millennials coming into the industry are looking for the opportunity work for the greater good and to make a difference. Some say that companies that have a strong digital strategy stand the best chance of recruiting the best talent.
For more information, visit www.loma.org.
Governor Brown’s Budget Addresses Healthcare
Governor Jerry Brown proposed a $122.6 billion General Fund budget plan for 2016 to 2017. It makes significant increases in funding for education, health care, and state infrastructure while bolstering the state’s Rainy Day Fund and paying down state debts and liabilities. The managed care tax is set to expire at the end of the year. It is a critical component of the state’s financing for health care. The budget proposes a tax-reform package that includes a replacement managed care organization tax for three years. The package provides a net reduction in taxes paid by the private health care industry, secures funding for General Fund Medi-Cal expenses, and provides an opportunity for targeted rate increases for developmental disability services. Under the federal health care reform optional expansion, 3.4 million additional residents now get health coverage. The budget allocates $740 million in the General Fund for the state’s share of costs. These costs will grow to $1.8 billion in the General Fund by 2020 to 2021. The full summary of the Governor’s budget proposal can be found at www.ebudget.ca.gov.
Hrsoft releases version 9.2 of its applicant-tracking software. The cloud-based recruiting software is designed to improve the recruiter and hiring manager experience. In addition, the software continues to be refined to be completely responsive (mobile friendly) on a wide range of internet browsers used by clients. For more information, visit https://hrsoft.com
RxBenefits has received a significant investment from Great Hill Partners. RxBenefits provides pharmacy benefits administration to small to mid-sized, self-insured employers. The recapitalization, will allow the company to expand its sales and marketing, and product development. The company will also continue to evaluate partnership and acquisition opportunities, with additional equity capital available from Great Hill Partners. For more information, visit www.rxbenefits.com.
Aflac Contact Service Center Operations Achieves J.D. Power Certification
Aflac’s contact center operations has achieved J.D. Power certification for providing outstanding customer service for its live phone channel. For more information, visit www.jdpower.com/about/index.htm.
Charles Schwab is offering John Hancock Investments’ suite of six strategic beta exchange-traded funds (ETFs). It offers investors and financial advisors access to commission-free ETFs. For more information, visit schwab.com/SchwabETFs.
Expressing gratitude and appreciation to clients makes a huge difference for your business, according to Michael F. Sciortino, Sr., author of the book “Gratitude Marketing.” Gratitude Marketing is a movement away from pushy sales tactics and toward engaging and connecting with people in a personal, authentic, human-to-human manner,” he said. The goal of the approach is to increase client retention, referrals, and revenue. For more information, visit GratitudeMarketingBook.com.
Vantis Life Insurance Company re-launched its multi-year guarantee annuity, Freedom I, with special features for retirees. A version of the product was a best seller for the company in 2010. Freedom I features a return-of-deposit guarantee during the initial five years of the annuity. The minimum investment for the annuity is $5,000 and the maximum is $500,000. Other features include the following:
- A surrender-charge period that matches the guarantee period – five years.
- A terminal illness surrender-charge waiver.
- A nursing care facility surrender charge waiver.
- After the initial five-year 2% guarantee, the rate can never be lower than 1%.
- 10% free withdrawals after first contract year.
- A.M. Best Rating: A- Excellent.
For more information, visit http://www.vantislife.com/able.
Book on ObamaCare: Promises vs. Reality
Copernicus Healthcare released the book, “The Human Face of Obamacare: Promises vs. Reality and What Comes Next.” The book takes a comprehensive, non-partisan look at the ACA almost six years after its passage. Stories of patients illustrate continuing problems of the health care system. Underinsurance is the new norm. Narrowed networks, high deductibles, and increasing cost-sharing are forcing many people to forgo necessary care, according to the book. The book assesses three major alternatives for further health care reform. For more information, visit www.copernicus-healthcare.org.
Premium Financing Webinar
Succession Capital Alliance is sponsoring a premium-financing webinar Wednesday, February 10th at 11:00 am (Pacific Time). It will cover how to capitalize on unprecedented opportunities using IUL, whole life, and premium financing as interest rates rise. For more information, visit www.successioncapital.com.