Key Trends in Personal Accident and Health Insurance 


The U.S. insurance segment for personal accident and health accounted for 35% of the industry’s gross written premium in 2013. The segment recorded a compound annual growth rate of 3.5% during the review from 2009 to 2013. That’s the highest growth of all the industry’s segments. This growth can be attributed to rising per capita healthcare expenditure, a rapidly growing aging population, and growing domestic demand for healthcare products. Also boosting growth are the country’s insufficient public healthcare programs, including Medicare and Medicaid. These factors, along with new healthcare reforms, are projected to bring a record a compound annual growth rate of 2.3% over the forecast period (2013 to 2018). The following are key highlights:

  • The U.S. personal accident and health segment registered the industry’s highest review-period compound annual growth rate of 3.5% in terms of gross written premiums.
  • Health insurance dominated the segment in 2013, with 98% of the gross written premium. Healthcare expenditures accounted for around 17% of the country’s GDP in 2012.
  • The growth in the personal accident and health insurance segment can be attributed to rising healthcare expenditures, decreasing unemployment, the growing aging population, and implementation of ObamaCare reforms. An ACA amendment came into force in January 2014 – The Healthcare and Education Reconciliation Act of 2010.

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Bill Seeks to Change the Definition of a Full Time Employee

The House of Representatives passed the Save American Workers Act (H.R. 2575), which would change the definition of “full-time” work under the Affordable Care Act’s employer mandate from 30 to 40 hours per week. However, the White House has promised to veto it. The bill would raise the threshold for full-time status to 40 hours per week, decreasing the number of employees to whom employers are required to provide insurance.

Medicare to Pay Providers for Value, Not Volume

The Dept. of Health and Human Services announced plans to accelerate alternative payment models in Medicare. Secretary Sylvia Mathews Burwell set a goal of moving 30% of traditional Medicare spending into alternative payment models by the end of 2016 and up to 50% by the end of 2018. This plan represents a transformation from payment for volume to population-based or capitated payment.

Don Crane, President and CEO of Colloquium on Physician Groups in Medicare Advantage, said, “This model brings together caregivers…to address a patient’s total health needs, including behavioral, mental, and social factors. Seniors across the country have seen the benefits of this model.” Robert M. Wah, M.D., president of the American Medical Association said, “We strongly support reform of the Medicare payment system, including elimination of Medicare’s flawed sustainable growth rate formula.”

Preferred Pharmacy Plans at the Foundation of Medicare Part D

Eighty-one percent of seniors in 2015 Medicare Part D plans chose lower-cost preferred pharmacy plans. These plans offer convenient access and extra discounts at certain pharmacies, according to an analysis by Drug Channels. “Preferred pharmacy plans are now the foundation of Medicare Part D. Last year CMS defused a bipartisan uproar by withdrawing its proposal to overhaul Part D and promising Congress to end its pursuit of ‘controversial’ requirements that put preferred pharmacy plans and other benefits at risk,” said Pharmaceutical Care Management Association President and CEO Mark Merritt.

Through December 4, 2014, 15.4 million beneficiaries enrolled in preferred pharmacy Part D plans. A survey by Hart Research reveals that nine out of 10 seniors have convenient access to these discounted pharmacies in Part D. An actuarial study finds that preferred pharmacy plans would reduce federal Medicare Part D costs up to $9.3 billion during the next 10 years. Another actuarial study finds that eliminating preferred pharmacy plans in Part D would increase premiums by about $63 annually for over 75% of Part D enrollees and raise program costs by an estimated $24 billion over the next 10 years.

Most national Part D pharmacy networks include nearly all drugstores — almost 67,000 nationwide — giving beneficiaries access to more pharmacy locations than the combined number of McDonald’s, Burger Kings, Pizza Huts, Wendy’s, Taco Bells, Kentucky Fried Chickens, Domino’s Pizzas, and Dunkin’ Donuts across the country.

A Record-Breaking Year for Mergers and Acquisitions

Health care merger and acquisition activity exploded in the fourth quarter of 2014, and set new records for fourth quarter deal volume and spending. At least 345 transactions were announced in the fourth quarter, up 1% from the previous quarter. Spending hit $138.3 billion, up from 119% from the third quarter, according to Health Care M&A News. Lisa E. Phillips, editor of Health Care M&A News said, “Uncertainty over the effects of the Affordable Care Act has been replaced by exuberance. The cost of debt remained cheap and equity was easy to raise. As growth slowed in other countries, health care became an attractive target for U.S. investors.”

Americans continue to enroll in healthcare plans through the exchanges, which is good news for providers and payers. Also, 2014 was the year of the drug deal, as the pharmaceutical sector accounted for 55% of the year’s total spending ($213 billion) and 14% of the deal volume (188 transactions).

Long-term care also broke records, with about 290 transactions and $25.7 billion in spending. This sector has been on a hot streak since late in 2013 when 225 deals were announced. Last year’s combined total for spending easily surpassed the $22.6 billion record set in 2006.

Phillips said, “M&A activity is likely to keep booming in the first half of 2015. Americans continue to enroll in healthcare plans through the exchanges, which is good news for providers and payers. We see some uncertainty over when the Federal Reserve will raise interest rates, not if. And the U.S. Supreme Court will release its decision in King v. Burwell by the end of June, which could disrupt enrollments through” for more information, visit

ACA Open Enrollment Tips

Steve Dorfman, CEO of Health Benefits Center, a nationwide insurance provider based in Hollywood, Fla. says that, compared to last year his office has noticed a strong, steady gain in consumers seeking ACA plans. One reason is that second-year enrollees are noticing premium jumps in their renewals and are looking for a better deal.  He said that the ACA website has vastly improved since the 2013 rollout, but it still suffers glitches and shutdowns from time to time. He ansers these FAQs:

  • What happens if I don’t enroll? – You face a higher penalty this year. It’s 2% of your income or $325 per adult and $162.50 per child – whichever is more. That’s more than triple the penalty for 2014. There is a penalty of 1% of your income or $95. Translation, if you are an individual or family of four making $50,000 a year, your penalty is $1,000. If you are making $100,000, your penalty is $2,000.
  • Do I pay a penalty if I am insured through my employer or through a plan off the exchange? – Not if it is a regular PPO or HMO.
  • If I am unhappy with my insurance plan, can I change it over the next year? – Not unless you can prove a life-changing event – such as loss of a job, a drastic pay cut, or a move to another state. Then, you can go back on the exchange. Otherwise, you are locked into your policy. To change it, you must wait until the next open enrollment period begins in November 2015. Also, you will  be re-enrolled in your policy automatically when the next open enrollment period comes. The premium could well change, too. Therefore, it is important to stay on top of your insurer and the website.
  • What happens if an automatic deduction bounces and I lose my policy? – You can seek another insurance policy in the open market, but not through the exchange.
  • Other than avoiding penalties, what are the advantages for signing onto Obamacare? — One big advantage is that any pre-existing conditions are included in your coverage. Even people with routine medical issues have been denied insurance, and Obamacare helps that. You will pay higher premiums as you get older, or if you smoke. Aside from that, a healthy 45-year-old nonsmoker pays the same premium as an ailing 45-year-old nonsmoker, but a smoker pays more, whether healthy or sick. Perhaps the great advantage is that an Obamacare plan covers your annual exam and such vital preventive procedures as pap smears, breast exams, and colonoscopies.
  • I am a single man. Does my insurance policy still need to cover maternity costs? — Yes, maternity has to be included under the Affordable Care Act even if you have no reason to pay maternity costs. Hence, your insurance rate is higher than it might be otherwise.
  • My employer is charging me a very high rate. Should I try Obamacare? — You should certainly consider it. With your insurance plan, you can qualify for a subsidy if your annual health care premium is more than 9.5% of your household income. So, if you make $50,000 a year, your insurance rate needs to exceed $4,750 a year or about $396 a month.
  • What is my income limit to qualify for a subsidy? – A family of four making $95,400 or less can get a tax subsidy under the program. The lower the income, the bigger the subsidy. A family making $50,000 can get a rate break approaching 70%. The uninsured in particular stand to benefit, especially if they qualify for Medicaid.
  • My child is on a university insurance plan. Can I keep that plan and still have Obamacare for the family? – Not if you want a subsidy. For your children, it must be one policy or the other, as many college parents are discovering to their surprise. One option is to keep your children on their individual plans through their colleges or universities while insuring the parents as an individual or couple. The rates are structured to encourage full family participation.
  • Are costs higher this year? – Generally, premiums are averaging about 7% to 9% more than last year. Catastrophic policies are as much as 18% higher. However, there is wide variation. Certain policies have remained static or even dropped slightly in price. Check your premium if you have an existing policy that rolled over automatically on January 1.
  • Where can I go for more information? – Before you connect with a well-informed agent, it’s best to be armed with information. Two good places to start are the federal government’s healthcare website at To calculate your subsidy, the Kaiser Family Foundation offers an excellent interactive website at: If not, call a trusted insurance broker, who can tailor a plan to your budget and your needs.

For more information, call 800-492-1834 or visit

Healthcare Industry Is Optimistic Despite Challenges

U.S. healthcare executives are less concerned about healthcare reform and regulatory oversight than they were a year ago, according to a survey by GE Capital’s Healthcare Financial Services business. These optimistic executives are relying on a combination of mergers and acquisitions as well as organic growth to expand. GE Capital conducted the survey with healthcare professionals attending J.P. Morgan’s Annual Healthcare Conference in San Francisco January 12 to 15.

Forty-three percent of respondents said that the healthcare industry’s greatest challenge in 2015 is implementing the Affordable Care Act (ACA), 30% it’s regulatory oversight, and 17% said it’s the economy. Last year, 57% of respondents said that ACA implementation was their greatest challenge, followed by regulatory oversight (20%) and the economy (13%). The survey also reveals the following:

  • Sixty-eight percent of respondents expect their business to perform stronger in 2015 than in 2014; 29% said their business would perform the same; and only 3% said their business would perform weaker.
  • The two most popular growth strategies cited are revitalizing and upgrading offerings (38%), and buying or merging with existing businesses (37%). Only 25% are planning to launch new segments or lines of business in 2015.
  • Sixty-seven percent expect capital needs to remain about the same while 27% said they will significantly higher.
  • Forty-three expect moderate changes to the ACA and 41% expect insignificant changes.
  • Sixty-four percent said their own employee healthcare costs would be slightly higher in 2015 while 22% said they’d be significantly higher.

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Californians Received an Average of $5,200 Per Household Through Covered California 

About 800,000 California households got federal subsidies to make health care more affordable in 2014. The average amount received was more than $5,200 per household per year, or about $436 per month, according to Covered California executive director peter V. Lee. He said, “It’s important for uninsured Californians to know that many people like them received more than $5,200 last year to help them purchase health coverage, and that support is available to many others eligible to sign up before February 15.”

The total amount of premium help  — known as the federal Advanced Premium Tax Credit (APTC) — was $3.2 billion paid to health insurance companies on behalf of those who enrolled in private coverage through Covered California in 2014. The consumers themselves paid $1.1 billion toward those policies in 2014, meaning that for every dollar a subsidized consumer spent on premiums, the federal government paid another $3.

The data released Monday are reflected on new Health Insurance Marketplace Statements being mailed this week by Covered California. Known as Internal Revenue Service (IRS) Form 1095-A, the two-page statement ( will show the amount of Advanced Premium Tax Credit each household received on a month-by-month basis in 2014. Similar to other tax documents, like a W-2 or 1099, the 1095-A will be used by consumers when they file their federal tax returns this year to ensure the subsidy they received is appropriate.

Consumers need to use this information when they file their taxes for 2014, Lee said. For many consumers, their tax credit will need to be adjusted, because their income is different than what they estimated it would be for 2014. As a result, consumers will see their tax credit adjusted upward or downward in their tax return based on their actual income as reported to the IRS for 2014.

Under the Affordable Care Act, the amount of tax credit reducing the consumer’s monthly health insurance premium payment is based on an estimate of their income made when they purchase their insurance. Consumers pay their share of the premium to the insurance company, and the federal government pays a portion on their behalf, based on their estimated income in the year ahead. The amount paid by the government is called the Advanced Premium Tax Credit, because it is paid in advance but reconciled as a tax credit at tax time based on the consumer’s official income as reported to the IRS. Consumers can elect to wait to get the entire tax credit at the end of the year, but almost all consumers took their premium tax credit in advance.

Many tax preparers and commercial tax software products are ready to accept information from Form 1095-A. Consumers may be able to get free software or in-person help filing their taxes and can learn more at or

The period to sign up for coverage for 2015 continues for the next three weeks until February 15.  In addition to premium help, many consumers also benefited from cost-sharing reductions that lowered their out-of-pocket costs when they visited the doctor, Lee said.

In 2014, more than 60% of consumers who received subsidized coverage through Covered California qualified for cost-sharing reductions, which reduced their out-of-pocket health care expenses. Lee said that in 2014, the value of the out-of-pocket discounts per household amounted to about $1,200 per year. for more information, visit

Legislation Would End Misleading Health Provider Directories

Senator Ed Hernandez, O.D. (D-West Covina) introduced SB 137 to require health plans and insurers to post accurate health care provider directories on their Websites. During last year’s open enrollment, many people had a hard time determining which plans their providers were in and some felt misled by the plans they chose. While this problem is not a new issue, it has garnered significant attention in the media with the implementation of the Affordable Care Act (ACA). The problem was so bad that Covered California had to take its provider search tool off-line and it is not known when it will be reinstated. Many people complained that they were misled about which plans had contracted with their providers. Due to consumer complaints, DMHC surveyed two large California health plans and issued four deficiencies for each plan because providers were listed in error or not available at the listed addresses. The carriers are disputing some of DMHC’s findings.

“In a world where we compel people to purchase health insurance, we must empower consumers to make accurate and informed decisions about the plans and policies they are choosing,” said Hernandez.

Existing California law only requires health plans to provide a list of providers, upon request, that includes which providers have notified the plan that they have closed practices or are otherwise not accepting new patients. The law requires plans to indicate that the list is subject to change without notice. “The California law on the books for provider directories was written in the dark ages of paper directories,” said Betsy Imholz, special projects director for Consumers Union, a division of nonprofit Consumer Reports.

The bill would require the provider directories to indicate if the provider or staff speaks any non-English language. California consumers come from diverse backgrounds and speak multiple languages, said Sarah de Guia, executive director of the California Pan-Ethnic Health Network. This bill will help meet the needs of our diverse communities by helping them identify providers that speak their language. “We don’t allow other products to be sold with an inaccurate listing of ingredients. We can’t have consumers spending significant dollars on premiums for plans with inaccurate listings of their providers. The bill would make sure provider directors are accurate and standardized, so consumers can know what they are buying and make the right decisions,” said Anthony Wright, executive director of Health Access California. The bill is sponsored by California Pan-Ethnic Health Network, Consumers Union, and Health Access California and will be heard in the Senate Health Committee in April.

Insurance Agent Brothers Con Seniors 

Brothers, Ronnie Carter, 68, and Jimmie Carter, 69, were arrested on 13 felony counts including theft from an elder, burglary, omission of material fact, and fraud. The California Dept. of Insurance alleges that the brothers sold fraudulent investments to fellow senior citizens.

The investigation began in 2011 after the department got a complaint involving an investment scheme. CDI investigators discovered that over a year and a half period, the Carter brothers defrauded at least three senior victims out of a total of $552,000. Ronnie Carter was the long-standing insurance agent for two of the victims. His brother was licensed to sell investments. They were able to conceal their scheme by hiding where the money was invested, giving their victims phony investment contracts and notes, and issuing minimum investment payments.

This case is being prosecuted by the Fresno County District Attorney’s Office. If you believe that you or a family member may have been a victim of Ronnie Carter, Jimmie Carter, or State Wide Financial & Insurance, contact the CDI Fresno regional office at 559-440-5900.


Help with ACA Tax Credits 

Jackson Hewitt Tax Service and GetInsured are joining forces for a second year to help people access tax credits and sign up for health insurance. By answering a few simple questions during the tax interview, clients will know whether they qualify for money-saving tax credits and can enroll in a health insurance plan. This help is available by phone at 866-652-6321 or online at


Premium Financing Webinar

The next Advanced Premium Financing webinar will be held Wednesday, February 4, at 11:00 am PST. For more information, visit


Most Companies Are Improving Automatic 401(k) Features 

The majority of employers offer automatic features in their 401(k) plans to ensure that workers save enough to get full company matching contributions, according to a report by Aon Hewitt. Researchers surveyed about 100 employers with defined contribution plans. Twenty-nine percent enroll participants in the plan automatically at a savings rate that is at or above the company match threshold. Another 27% automatically enroll people below the full match rate, but automatically escalate contributions over time so that workers are eventually saving enough to get the full company match.

In the past, employers enrolled workers into 401(k) plans automatically at low rates. Often, workers wouldn’t increase their contributions enough to reach the full company match — to the detriment of their retirement savings, explained Rob Austin, director of Retirement Research at Aon Hewitt. Because many employers gauge the success of their plan by the number of workers saving enough to get the full match, they understand that they need to give workers an added boost by starting them off at a more robust savings rate or automatically escalating contributions over time up to, or beyond the match threshold. That extra savings can have a remarkable affect on workers’ long-term savings outlook.

The survey also found the following:

  • 8% of employers enroll participants automatically below the full match threshold and have contribution escalation as an opt-in feature.
  • 70% of employers have automatic enrollment.
  • Among plans with automatic enrollment: 7% default above the full company match level; 34% have default rates at the full company match level; and 59% default below the full company match level.
  • Of employers that have not implemented automatic enrollment: 67% cite the increased cost of the match as the biggest barrier; 37% are concerned about the reaction from employees; and 30% don’t want small account balances in the plan

Top Five Workplace Trends in 2015

The Workforce Institute at Kronos Inc. says that these top issues will affect workforce management in 2015.

  • Regulations will shake up the workplace: Minimum wage law changes and Affordable Care Act deadlines dominated 2014 headlines, but 2015 is when employers will feel the effects of these and many other regulations. With continued public discourse on non-exempt workers and topics surrounding a living wage, new legislation is expected to arise in this final term of the Obama Administration. Today’s regulations are administered not only at the national and state levels, but also down to the city, municipal, and union levels. New compliance requirements will shake up processes for employers while adding another layer of complexity for national and multinational employers.
  • Employees are Assets: Despite increasing healthcare and labor costs expected through 2015 and beyond, profitable employers have learned that excellent financial returns don’t have to come at the expense of employees. As competition tightens, successful employers will invest more in their workforces to increase employee engagement and create a virtuous cycle that leads to happy customers.
  • Seismic Shift in Generational Workforce Dynamics: Baby Boomers – the largest generation to ever hit the workforce – will begin retiring in droves as their children take on more workplace responsibility. As Baby Boomers exit the workplace, many Generation Xers could see increased opportunity, including long-awaited pay raises. Millennials will take on management positions for the first time. Talent retention and career development will be key in 2015 as employers train new managers while working to simultaneously shrink the skills gap and hold onto the knowledge assets of a retiring workforce.
  • Analytics for Evidence-based Decision Making: Workforce management tools will deliver analytics for evidence-based decision-making in 2015.
  • Consumer Technology Infiltrates Workforce Management: Human resources, operations, and management professionals should keep an eye on news from the 2015 Consumer Electronics Show, as consumer technologies are poised to dramatically affect workforce management. Mobile devices and social media have transformed the way employees and employers communicate. Gamification and wearable technologies are expected to win in the workplace. Workforce management software suites and mobile platforms will continue to evolve with consumer software design concepts, including increased focus on the user experience (UX), responsive design, flat OS functionality, and drag-and-drop needs of employers.

For more information, visit


Average Costs for Long Term Care Insurance Rise 8.6%

Costs for new long-term care insurance coverage increased 8.6% compared to one year ago, according to the 2015 Long Term Care Insurance Price Index, published by the American Association for Long-Term Care Insurance (AALTCI). A healthy 55-year old man can expect to pay $1,060 a year for $164,000 of potential benefits compared to $925 last year. The average cost for a 55-year-old single woman is $1,390 compared to $1,225a year in 2014.

Rate increases can be blamed on higher claim costs and the historic period of low interest rates. Last year, long-term care insurers paid out a record $7.5 billion in claim benefits. The industry is expected to pay some $34 billion in annual claim benefits by 2032.

A married couple, age 60, would pay $2,170 a year for a total of $328,000 of long-term care insurance coverage compared to $1,980 in 2014. Adding an inflation growth option that builds their benefit pool to $730,000 at age 85 will increases the couple’s yearly cost by $1,760.

The average 55-year old woman could pay as little as $890-a-year or as much as $1,829 based on which insurer she buys from. Insurers continue to charge single women more due to their increased likelihood of needing long-term care. AALTCI reported a larger spread in costs than in prior years. In some situations, the difference between the lowest-and highest-cost policy was 34%, but it could be as high as 119% for virtually identical coverage. For more information, visit

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