Table of Contents

COBRA News Update
A close-up look at the latest news in COBRA.

Looking at Whole Life Insurance As an Alternative to Secondary Guarantees
by Dennis Lawton, CLU
Whole life products with term riders can serve as alternative to the shrinking world of secondary guaranteed universal life products.

Wellness Conferences Highlight Healthcare Alternatives
by Leila Morris
Read about the the latest developments from conferences featuring wellness plans, voluntary benefits and medical tourism.

California’s Failed Exchange – When the Silver Bullet Turned to Lead
by Frank Loughry
How California’s A.B. 1672 failed to generate more competition in the small group market and eventually failed.

Curbing Costs and Creating Value With Vision Plans
by Steven H. Johnson
Now is the time to show your clients how offering workplace health management and wellness solutions, combined with an underutilized low-cost benefit – vision healthcare – can curb costs and create value for employees.

Constricting Healthcare Costs with HSAs–Part I of Our Annual Survey
Find Out Which HSAs Will Work Best–  For You With Our Annual Survey

Taking a Fresh Look at Benefit Enrollment
by Jay Hutchins
The holistic approach maximizes enrollment process for employers and employees.

The Popularity of Voluntary Dental Grows As
Employers Focus on Excellent Communication

by Karen Gustin, LLIF
A growing interest in voluntary plans gives producers an excellent opportunity to enhance relationships with employers by recommending dental insurance coverage that meets the needs of their employees.

Attracting a Diverse Health Plan Membership Through
Culturally and Linguistically Appropriate Care

by Patricia Marine Barrett
California is among the nation’s most diverse states. Latinos comprise over 36% of the population and Asians comprise 12.5%.

Medicare, Medicaid, and Now Medi-Chaos?
by George V. Duczak
The health-reform debate is not really about any type of healthcare cost controls, but rather a long pent up belief, within the Democratic Party, that healthcare is a right of every person in America.

Medical Travel and Surgery Management:
The Consumer-Driven Product That Sells Itself

by Victor Lazzaro, Jr.
Employers can reap significant savings with a medical travel health benefit while giving their employees greater choice.

What to Look For in a Worker’s Comp Carrier
by Jennifer Vargen
As an agent you need to know that workers’ compensation insurance can extend the range of solutions that you offer.

Motivating the Business Owner to do Succession Planning
by David K. Smucker, CPA, CLU, ChFC
The biggest challenge can be getting the business owner to start the planning process.


People Will Lose Coverage as COBRA Subsidies Expire

Many laid-off workers and dependents have lost their federal COBRA subsidies and may join the ranks of the uninsured, according to Families USA. The subsidies, which were started last March by the American Recovery and Reinvestment Act (ARRA), were available for only nine months. Under the ARRA, the federal subsidies pay 65% of the cost of COBRA premiums. Nationwide, the federal subsidies for COBRA family coverage average $722 per month.

Without subsidies, COBRA premiums for family coverage would cost laid-off workers an average of $1,111 per month, which is 83.4% of the average monthly Unemployment Insurance check. For the first recipients, who began receiving subsidies in March, the subsidies expired on November 30. For those who started receiving subsidies after March, the expiration would be nine months after their start-up date.

“For millions of laid-off workers, the federal COBRA subsidies have been a health-coverage lifeline. It is essential that new jobs legislation extends those subsidies,” said Ron Pollack, Executive Director of Families USA.

Pollack noted that pending health reform legislation would provide a permanent source of help to laid off workers, enabling them and their families to get health coverage through a newly created marketplace, called an exchange, and families with low incomes would get tax-credit subsidies to help pay the premiums.

“As this report clearly indicates, middle-income families are hurting and there is a pressing need to extend COBRA before the end of the year,” said House Speaker Nancy Pelosi (D-CA).

Any extension of the COBRA subsidy program would also likely make the subsidies available to newly unemployed people. Under the program, people who lose their jobs after December 31, 2009 would not qualify for the subsidy. For more information, visit


Similarly Priced Alternatives to Subsidized COBRA Available

The national average for individually purchased family health insurance premiums was $383. That’s $6 less than the average subsidized COBRA premium of $389 and $728 less than the average unsubsidized COBRA premium of $1,111, according to eHealth Inc. The website,, based its data on 84,000 individual major medical family health insurance policies that were active in February of 2009.

Maternity benefits were covered in 22.1% of policies surveyed, with 47% of primary policyholders being women.


Democrats Seek Extension to COBRA Benefits

At press time, 22 Democrats were urging the Senate to pass an extension of unemployment and COBRA benefits before the end of the year, citing the 10% unemployment rate and the annual rise in heating bills coming this winter. Bills still in committee would extend the COBRA subsidy until June and increase the subsidy to 75% of premiums from 65%. Pending legislation would also extend the $25-a-week unemployment benefit increase and suspend income tax on the first $2,400 of any unemployment benefits received. The full text of the letter is below:

Dear Majority Leader Reid,

We are writing to ask for your continued support to make sure that the extension of unemployment benefits and eligibility for the COBRA subsidy is given high priority and passed before December 31, 2009. In the face of a 10 percent national unemployment rate, it is imperative that we act quickly.

We appreciate your leadership in November, when Congress expanded unemployment benefits by up to 20 weeks through the end of this year. However, as you know, our work is not complete. Nationally, one million workers could lose jobless benefits in January if we fail to extend this program before the end of the year. By March, three million unemployed individuals would lose federal jobless benefits.

These families cannot afford to wait. They need help now to put food on the table and to pay their rent. In many states the weather is getting cold and families need assistance to pay their heating bills.

Additionally, delays extending expiring ARRA provisions that help unemployed workers will have major administrative consequences. In a few weeks, state agencies that administer unemployment benefits will be forced to notify workers that the program will be shut down by the end of the year. This will create added workload for state agencies already pushed to the brink by the high number of unemployed Americans seeking help.

We request action on a legislative package that includes an extension of the unemployment insurance provisions in the American Recovery and Reinvestment Act, including the Emergency Unemployment Compensation Program, full federal funding of the Extended Benefit program, an increase of $25 per week in state and federal benefits, and the suspension of the federal income tax on an individual’s first $2,400 of unemployment benefits. We must also extend the COBRA subsidy to ensure health benefits are available for those who’ve lost their job. Legislation has been introduced on both unemployment insurance and COBRA and we continue to hear from constituents on these important matters. We urge you to act now.

Quick action in extending these benefits is not only imperative for those who’ve lost their jobs, but it is also good for the economy. Economists routinely rate increased unemployment benefits as among the most stimulative tools available to government. In fact, estimates show that every dollar spent on increased unemployment benefits increases economic activity by $1.63. Families who receive these benefits are likely to spend additional money quickly, helping to move our economy out of a recession.

We thank you for your consideration of our request. Our offices are committed to working with you to ensure swift passage of legislation to help unemployed workers across the nation.


Debbie Stabenow

Bob Casey, Jr.

Tom Harkin

Amy Klobuchar

Al Franken

Ben Cardin

Robert Menendez

Herb Kohl

Ron Wyden

Daniel K. Akaka

Jack Reed

Sherrod Brown

Arlen Specter

Sheldon Whitehouse

Jeanne Shaheen

Frank R. Lautenberg

Barbara Boxer

Carl Levin

Roland W. Burris

Kirsten E. Gillibrand

Jeffrey A. Merkley

Ted Kaufman

Christopher Dodd

Dianne Feinstein

Life Insurance
Looking at Whole Life Insurance As An Alternative To Secondary Guarantees

by Dennis Lawton, CLU

Whole life products with term -riders can serve as an alternative to the shrinking world of secondary guaranteed universal life products. Lately I have heard more and more people talk about life insurance as an asset, not a commodity.

I have been in the life insurance business nearly 35 years, primarily single company brokerage. I was there before universal life became popular. We had to learn not only how to spell “disintermediation,” but also what the heck it meant. Agents and brokers have moved tons of cash value from whole life insurance to universal life. We were living in a 10% world. High crediting rates were expected to continue. For the same cost, we sold more death benefit, greater accumulation, short pays, and paid up policies by accumulation, not by contract or guarantees. We were all shocked when interest crediting rates went down along with policy performance. We could not recapture the guarantees of whole life insurance; policies lapsed; and outlays increased. In some cases, clients who did not understand what they had purchased sued agents for misrepresentation. By the way, the world of life insurance has not been the same since universal life insurance became en vogue.

Throughout my career, I have seen some of the most innovative and perhaps strange devices, products, and methods of selling life insurance including the following:

• Non-par whole life.

• Interest sensitive whole life.

• Section 79.

• Retired Lives Reserve.

• All forms and manner of welfare benefit plans.

• VEBAs.

• 419(i).

• 412 plans.

• Reverse split dollar.

• Split dollar with so many permutations and private letter rulings that I never could figure out what was what.

• Emphasis on the word “may.”

• PPVUL, VUL, and the list can go on and on.

Life insurance agents became knowledgeable about disability insurance, critical illness insurance, catastrophic coverage, employee benefits, non-qualified deferred compensation, and long-term care coverage. I thought it very interesting how these products were packaged to be sold to clients. Disability insurance was sold to doctors, in addition to a qualified plan, to provide benefits during periods of disability before and during retirement.

I remember reading a book about the Prudential and the debit agents. They would work their debit; sell insurance policies; and collect the premiums weekly in the community in which they lived and worked. Here in Los Angeles, our clients live and work in zip codes and area codes separated by tens and sometimes hundreds of miles. We have clients throughout the nation and clients living in foreign countries as well. Death claims are provided to beneficiaries with a credit card or with blank checks. An agent rarely delivers a check to the beneficiary. The way we do business has changed. We once worked hard to get and maintain relationships, provide a lifetime of service, and earn referrals. Now we look for the plan, the concept, or the scheme to sell insurance. We have made insurance a commodity, just like gasoline at the pump or buying a refrigerator. Cost is the measure, value is not.

We need to address the following items in order to evaluate whole life insurance as an alternative to universal life insurance with secondary guarantees:

1. What is our relationship to the prospect or client? Are we selling the client a death benefit for present needs (a commodity), are we providing flexibility to address future concerns, or are we trying to develop a relationship to address client’s future needs as well as anchor the issues of today?

2. Is what the client needs predicated by a spreadsheet? This only reflects a product’s position in the marketplace today, not what will happen in the future. A whole life policy purchased 20 years ago is probably providing more bang for the buck than a universal life policy purchased at the same time. How do we evaluate this? How do we help our clients look at today’s projections beyond the guarantees?3.

What was good is probably great today. I don’t necessarily believe this. But I can remember rate books and I remember doing illustration with a calculator, a pad, and a pencil (that’s how ledger illustrations got named) to understand the relationship among premium, cash values, and dividends. We used cash values and dividends to fill a variety of needs for clients – for retirement, to buy a home, to help with bills, to even purchase more insurance (piggy back).

I had planned on comparing cost and benefits among two or three life insurance products. (I will do that in a future article). But after writing a bit and looking at the numbers and the charts, it became apparent to me, that we agents and brokers, need not only understand what we sell, but more importantly what we also need to provide our clients with: cost or value.

Dennis Lawton, CLU is brokerage director at PRB Financial Group. He is responsible for developing and maintaining relationships with brokers locally and nationally. He provides case consultation, marketing support, underwriting, and advanced underwriting support to brokers and their clients. Dennis is a native Southern Californian and can be reached at his Century City office at 310-551-6029 or


Wellness Plans

Conferences Highlight Healthcare Alternatives

by Leila Morris

In late Fall, the staff of California Broker Magazine practically camped out in Century City for three major conferences. Sponsor, Voluntary Benefits Magazine, reported attendance of over 375 for its Limited Medical & Voluntary Benefits Conference, but the exhibit hall seemed sparse at times. It could have been that attendees were also visiting two other conferences held at the same time. One exhibitor told us that limited medical plans could be made obsolete if Congress passes mandates for people to get full medical coverage, but he added that companies would adapt their products.

The exhibit hall for the Medical Tourism Conference was a huge draw with booths representing hospitals and medical centers from 60 countries and giving away things like handmade chocolate from Central America and baklava from Jordan. The conference, sponsored by the Medical Tourism Assn, drew more than 1,500 attendees.

Many of the hospital reps we talked to said the conference was their first foray into marketing their services in the United States. In fact, one session was devoted to marketing to insurance agents. “Countries engaged in medical tourism are at various stages of development and there is a need to initiate healthy dialogue among the industry leaders from around the world,” said Renee-Marie Stephano, Esquire, President of the Medical Tourism Association.

“We are looking at a lot of collaboration. We are here to assess Dubai as a medical tourism destination,” said Laila Al Jasmi, CEO of the Clinical Support Services Sector for the Dubai Health Authority. Cynthia Carrion of the Department of Tourism in the Philippines said, “We as a nation aspire to be a world class destination hub for medical travel, health & wellness by 2015.”

Hospitals from around the world promoted a dizzying array of services including dental care, cosmetic surgery, bariatric surgery, orthopedic surgery, and -practically any other medical service that a patient would be willing to hop on a plane to get for much less than they would pay in the United States. The medical centers, displayed in glossy brochures that looked at lot more like the Hotel del Coronado than Northridge hospital.

Wellness Plans

The first annual national employer Corporate Wellness Conference, sponsored by the Health and Wellness Association, drew over 300 attendees. Steven F. Cyboran, ASA, MAAA, FCA of the Segal Group Inc. said that wellness plans are often viewed as discretionary and subject to budget cuts even though they save money for employers. But wellness plans are even more important in a challenging economy when stressed out workers experience worse health and less productivity. He described a wellness program that saved North Carolina’s Duke University $18 million in avoided healthcare and absence costs.

To make a wellness plan indispensable, it is important to determine how to allocate finite company resources, measure the effectiveness of the plan, and adjust the plan as appropriate. He suggests the following steps:

• Make a business case for the wellness plan.

• Establish a mission.

• Inventory wellness issues.

• Solicit input on the plan.

• Develop a program that includes incentives for behavior change.

• Identify hurdles.

• Promote the plan and educate employees.

• Measure the impact of the plan.

• Identify missed opportunities.

• Assess vendors.

• Evaluate employee satisfaction with the plan.

• Fine-tune the strategy.

• Adjust the program.

• Refine communications.

The usual approach to wellness is to simply blame employees for their health problems, said Wendy D. Lynch Ph.D. vice president, Strategic Development at HCMS. But employers need to be involved in changing employee behavior through shared rewards and responsibilities. When a wellness plan comes together, employees become better stewards of resources and consumerism matters more.

Employers can offer a variety of creative incentives for employees to improve their health, such as pay-for-performance bonuses, profit sharing, cash back for unused sick leave, HSA contributions, training and tuition, and 401K matching.

Just providing richer benefits with no incentives is not the answer. She described an employee benefit example in Belgium, which included unlimited sick leave at full pay. This only encouraged lots of employees to become “depressed” and stay home from work. In another example, most of the employees who took advantage of full medical coverage of bariatic surgery with short-term disability coverage, ended up quitting after 18 months.

A free resource for employers is The Network for a Healthy California Worksite Program. Coordinator, Marc Saenz, said the program helps California employers improve employees’ access to healthy foods and physical activity and encourage healthy lifestyle choices. The Fit Business Kit is online at It covers everything from creating a worksite farmer’s market to establishing a worksite walking clubs.

Healthcare Reform
California’s Failed Exchange – When the Silver Bullet Turned to Lead

by Frank Loughry

At the heart of every healthcare reform pro posal is the purchasing exchange con cept. It sounds good on paper, but it cannot work in the real world. It appears that none of the pundits or politicians or even the insurance carriers pushing the exchange have a clue how a real exchange really worked – make that failed.

The California exchange was born as a small part of major legislation, known as A.B. 1672, which passed in 1992. It completely restructured the California health insurance market for employer groups with two to 50 employees. The idea behind the exchange was to generate more competition in the California health insurance market. The old saying that you cannot get blood out of a turnip was never more appropriate. The problem of adverse selection gradually drove even the most committed carriers from the exchange in California until its final closure a few years ago when it ran out of carriers.

Here is how it worked. California employers could purchase coverage through the exchange instead of directly from an insurance company. The exchange offered a low option benefit plan and a high option benefit plan. All 23 carriers offered both low- and high-option plans at an appropriate price determined by their actuaries. Employers were encouraged to peg their contribution level to the lowest cost plan. Employees who chose the lowest cost plan would have little or no premium deducted from their paychecks. Employees could buy up by paying the difference to enroll in a higher cost plan.

It made perfect sense on paper. The exchange was supposed to engender competition by forcing carriers to compete for every employee who enrolled. But, this is where adverse selection comes in, which is the bane of health insurers. A very small percentage of people with severe health problems incur the vast bulk of claims. A carrier that gets stuck with a higher proportion of these people cannot survive in a competitive environment.

Contrary to common wisdom, the health makeup of a given pool has a much larger bearing on the cost per-person than the size of the pool. For example, pool A has 10,000 insureds with one insured having a $1 million claim. Pool B has one million insureds with 1,000 insured having $1 million claims. Pool A is much more profitable even though it is a lot smaller than Pool B. It can charge lower premiums and still be much more profitable.

An exchange causes adverse selection against the more responsible carriers by its very design. People who never go to the doctor enroll in the cheapest plan, paying no attention to the quality of providers; people who actually use the plan enroll in plans that at least contract with their own doctors; and people with severe health conditions enroll in plans with the highest quality providers.

Instead of the risk being spread in one pool among healthy and unhealthy people, high-risk patients get concentrated with the higher quality carriers while a disproportionate share of the healthy population gets concentrated with the lower quality carriers, which tend to be cheaper. A race to the bottom ensues since that is the way for a carrier to compete in a mandatory exchange.

One example from California’s exchange is Prudential’s withdrawal from the pool after only a couple years. Prudential always positioned itself as an elite carrier in the health insurance market. In that tradition, the Prudential HMO contracted with top-notch providers, even making elite healthcare providers known as “Centers of Excellence” available to any subscriber who contracted a severe illness — a noble but expensive practice.

At the other end of the spectrum, several carriers in the exchange were low-budget operations that specialized in treating county-funded patients. They focused strictly on price and contracted mainly with second-tier hospitals. A large proportion of their contracted physicians specialized in welfare contracts. The obvious happened. Employees who never went to the doctor chose the low cost plans. Employees who had cancer chose Prudential or a similar plan because they wanted to go to the City of Hope.

Even though these low budget plans charged less, the entrepreneurs who ran them profited because they got all the healthy people. The responsible carriers that offered quality healthcare were forced to withdraw because of adverse selection.

The California government bureau that ran the California exchange, The California Major Risk Medical Bureau (MRMIB) tried to alleviate adverse selection by extracting part of the premium paid to the low-cost plans to subsidize the losses of carriers that were getting hammered by high claims. Small carriers, whose business was built around a low cost model, were charging the same rates as they charged to their direct customers (Medi-Cal rates), which only supported the low cost model.

Under the purchasing exchanges in today’s health reform proposals, carriers would not have the option of withdrawing to avoid adverse selection. All carriers would need to contract with the fewest and cheapest providers to be competitive. Carriers that cover such niceties, such as centers of excellence, could not compete in such exchanges because they get would get stuck with all the sick people. Will our centers of excellence starve under an exchange-type system? Will quality of care hit the lowest common denominator? Why aren’t we having that discussion?

Frank Loughry is president of ZapQuotes, a provider online quote engines for California brokers who sell individual and small group health insurance. He can be reached at

Vision Insurance
How Vision Can Curb Costs and Create Value for Employees

by Steven H. Johnson

Have you been hearing your clients’ cries for relief? You’re not alone; brokers across the country are hearing the wails, too. The elephant in the room – rising healthcare costs – is bellowing for attention. Industries too numerous to name are bracing for the impact of healthcare reform with traditional tactics: benefit reductions, mandatory furlough days coupled with layoffs, and product/service price increases. But our clients need 2010 to reveal a clean canvas of new benefit plans and strong-performing options to improve their bottom line. They are looking to you for the answer.

Smart brokers see the opportunity to send the elephant packing by using the healthcare crisis to leverage their experience and offer creative solutions. Now is the time to show your clients how offering workplace health management and wellness solutions, combined with an underutilized low-cost benefit – vision healthcare – can curb costs and create value for employees.

Decrease diabetes, increase bottom line

What contributes to serious health complications, including heart disease, stroke and kidney failure, and can even make employees more susceptible to diseases like the flu? Diabetes is one of the biggest health concerns among today’s employers. Costly to manage, diabetes accounts for over $100 billion in healthcare costs annually; that’s 20% of healthcare dollars and has a direct impact on employee productivity and absenteeism. Fifteen percent of the costs of treating diabetes is related to eyes, so it’s easy to see why vision healthcare plays a critical role in diabetes management. Diabetic retinopathy, glaucoma, cataract – any of these serious and costly eye diseases associated with diabetes – can cause vision loss or blindness if untreated by a professional. Diabet-ics are also more prone to eye damage from ultraviolet (UV) light and tend to be more light-sensitive, which is where UV- and glare-blocking eyewear available through a vision plan, such as photochromic lenses, can help.

As for the 57 million Americans with pre-diabetes, the costs associated with diabetic care may be avoidable. Since blurred vision is often one of the first signs of diabetes, pre-diabetic employees may head to their eyecare professional before a general practitioner, making the eyecare professional often the first health practitioner to diagnose the disease. And pre-diabetes can often be reversed.

Forty percent of diabetics and over 50% of non-diabetics who could be at risk fail to get an annual eye exam. Worse yet, half of people with Type 2 diabetes are unaware they are Type 2-positive. Show your clients how a low-cost, comprehensive vision healthcare program, paired with education can, play a critical role in early detection), the employee’s health, and subsequently, their bottom line.

High Costs of Hypertension

Hypertension is one of employers’ top three healthcare concerns–resulting in $250 billion in medical expenses and $247 annually per employee. One in four Americans has hypertension, commonly known as high blood pressure. Earning its label as “the silent killer,” hypertension is undiscovered in one in three Americans until bigger health problems arise. Without treatment, hypertension can lead to heart disease, kidney failure, strokes, and heart attacks. African Americans, women, and the elderly are at higher risk and the problem is compounded when diabetes is present. Regular eye exams play an important role in prevention and detection. During a routine eye exam, eye care professionals can see signs of hypertension, such as blurred vision, eye damage, and vision loss. Since certain medications, used to treat hypertension, can increase light sensitivity, employ-ees can get the vision wear they need to help them see comfortably and perform their best.

As with diabetes management, early detection can prompt lifestyle changes. Just how much is this benefit worth? Plenty; on average, employers can gain a half-day’s worth of productivity every month for each employee who properly manages their hypertension.

Up in Smoke

Fortunately, the health repercussions a smok-er faces are not hereditary, ethnic, or unavoidable. In fact, health risks attributable to smoking are entirely avoidable with prevention. Recently, smoking cessation programs have been added to workplace wellness programs. Even so, although smoking rates have declined over the past few decades, declines have stalled over the past five years and rates have slowly risen since 2007. Many employers realize that smoking will inevitably increase health claims, lower productivity, and increase absenteeism among employees. By offering incentives through wellness programs and corporate culture, employers can help persuade employees to kick the habit that harms nearly every organ in the body and contributes to cancer, heart disease, strokes, and is responsible for one in five deaths in the U.S. However, many people don’t realize that eye health is equally affected by smoking, with smokers at higher risk for developing eye diseases, such as cataract, age-related macular degeneration and diabetic retinopathy. It is critical to use regular eye exams to address any existing or emerging vision issues that may have developed over the course of the habit. Educate your clients on how comprehensive vision healthcare and wellness programs can make the difference in their employee’s health and help keep profits from going up in smoke.

An Apple a Day

Nutrition: it’s one of the most basic wellness concerns. Four of the top 10 causes of death in the U.S. – cancer, heart disease, diabetes and stroke – are associated with diets high in “bad” fats and sodium and low in calcium and fiber. The USDA estimates healthier diets could lead to a savings of $71 billion each year in reduced medical costs, decreased productivity loss, and the prevention of premature deaths.

Stemming from poor nutrition and low physical activity, the increasing national obesity rate is a bigger problem than ever. California’s obesity rate was just under 24% in 2005, well above the previously set Healthy People 2010 goal of 15%. It makes sense that a diet high in saturated fat and sugar is also bad for your eyes, increasing the risk of eye disease. For instance, a diet rich in refined carbs, like white flour, may increase risk for age-related macular generation.

A healthy diet also leads to better eye health. Antioxidants reduce the risk of developing cataracts and macular degeneration; vitamin A protects against blindness; and vitamin C plays a role in the prevention and management of glaucoma. Zinc has been shown to protect against macular degeneration and night blindness. And essential fatty acids can help with eye health issues, such as age-related macular degeneration and dry eye.

Regular eye care goes hand in hand with good nutrition to identify nutritional deficien-cies and monitor eye health; it keeps employees seeing and performing their best. It’s just one more way a vision benefit can be a strong performer in wellness and health management programs that are popular among employees.

Redirect Your Clients’ Focus With Vision Healthcare

Employers spend just $70 to $80 a year on premium vision benefit compared to $4,246 for medical premiums. Eight out of 10 employees say a vision benefit is important to them (according to a survey by Transitions Optical), can employers really afford not to take advantage of a vision healthcare plan as an effective wellness tool? To help you share some of these insights with your clients, organizations like Transitions Optical (, are offering content on the value of a vision benefit for employers.

Smart brokers are emphasizing the value of creative, long-term solutions through comprehensive vision healthcare, coupled with wellness programs and education. Send the elephant packing, you’ve got the solution your clients need in 2010.

Steven H. Johnson is president of Campus Benefits, a division of World Insurance Association, Inc. Group of Companies that provides benefits for public schools and is located in Atlanta, GA. Johnson, an insurance-brokerage veteran, recently participated in a broker panel at Transitions Academy to discuss the importance of communicating the value of vision healthcare in comprehensive healthcare to employers. He can be reached at

HSA Survey

Constricting Healthcare Costs with HSAs

Find Out Which HSAs Will Work Best

For You With Our Annual Survey

1. What are the primary services you offer as part of your HSA product?

Aetna: Compatible high deductible medical plan, HSA administration, HSA investment services.

Anthem Blue Cross: We offer medical HSA health plans and an option to join an integrated banking system through our contracted partners; BNY/Mellon.

Blue Shield: Blue Shield of California has had a relationship with Wells Fargo since 2004 to administer HSAs for Blue Shield members in HSA-compatible plans. Wells Fargo provides services such as an HSA debit card, dedicated customer service for Blue Shield members with HSAs, online account management for HSAs, and an array of institutional mutual funds for investment of HSA funds. We recently entered into a joint marketing agreement with eflexgroup, Inc, for the administration of HRAs and other consumer directed products, including HSAs. Also, eflexgroup offers a full spectrum of programs and services to members. Blue Shield clients can take advantage of our relationships with both Wells Fargo and eflexgroup, or work with a vendor of their own choosing.

CIGNA: CIGNA Choice Fund HSA, with accounts managed by JPMorgan Chase, is an integrated HSA, combining the plan’s entire healthcare and financial management features into one easy-to-use healthcare product. It includes several features, such as health coaching, integrated medical and HSA claim capabilities, a diverse range of mutual fund choices, employee education, and medical and pharmacy cost transparency tools, hospital quality comparison tools, and online health risk assessments.
First Horizon Msaver: We offer an FDIC insured health savings account that may be matched with any carrier’s qualified high-deductible health plan. Account holders receive a specially branded VISA debit card, tiered interest rates, three investment options, an award-winning CD welcome kit, no-fee ATM transactions, free bill pay online, free banking online, and a healthy lifestyles portal to help save money on prescription drugs and medical services. First Horizon Msaver also offers a dedicated HSA customer call center.
HSA California: HSA California® is the only small-group, fully-integrated HSA program with multiple carriers. Each employee can choose from a menu of HSA-qualified benefits from Health Net, Kaiser Permanente and Western Health Advantage..HSA banking and savings programs are offered through The Bancorp Bank, with accounts FDIC-insured to at least $250,000. Accounts include a free debit card, access to hundreds of investment options, personalized checks, and 24/7 secured online banking access. There are no application or set-up fees to open an HSA with The Bancorp Bank.
HSA California also offers wellness services through wellness360® and prescription discounts through The California Rx Card® Program.
Kaiser Permanente: Kaiser Permanente (KP) offers HSA-qualified deductible HMO plans (available to the individual and family market, small, mid and large employer groups), PPO plans (available to small business, with two to 50 subscribers), EPO plans for individuals and Self Funded EPO plans. We have selected Wells Fargo as our preferred financial administrator to provide HSAs in connection with our HSA-qualified health plans. Wells Fargo offers to all KP customers a competitively discounted monthly administrative fee, an FDIC-insured tiered interest rate account, HSA Visa debit cards, investment options, online account management, and dedicated customer service.
Sterling HSA: Sterling offers education, implementation and account management services through personal sales and service teams, as well as online for brokers, employers, and accountholders. Among our primary services are HSA education, enrollment assistance, a review of the explanation-of-benefits, bill paying, record keeping, scanning and archiving of bills, receipts, and other critical information in case of an IRS audit. We also offer options for self-directing investments and flagging expenses submitted as qualified and non-qualified for HSA distribution. Our online services include online enrollment, banking, account transaction information and the ability to make changes to the HSA account. Our new website with expanded features and functionality launches in Q1 2010.
UnitedHealth Group: UnitedHealthcare is the largest provider of consumer-driven health plans in the country with nearly 3 million members enrolled in consumer-driven health plans that incorporate a health savings account or health reimbursement. Additionally, UnitedHealth Group uses its own financial corporation, OptumHealthBank, for its HSA program administration. OptumHealthBank, an FDIC-insured financial institution focused solely on health care banking, is the nation’s largest HSA administrator. Account holders receive market competitive interest rates on their deposits, online bill payment options, and direct debit card access to their accounts. Additionally, once they get a qualifying account balance, they also can invest in a range of highly regarded no-fee, non-proprietary investment options.

2. Do you offer an HSA-qualifying high deductible health insurance plan?

Aetna: Yes.
Anthem Blue Cross: Yes
Blue Shield: Yes, Blue Shield offers HSA-compatible high deductible health plans in the Individual and Family Plans (IFP) and employer group markets.
CIGNA: Yes, CIGNA offers a full suite of account-based medical plan designs that meet the definition of a qualified high deductible plan.
First Horizon Msaver: We do not offer an HSA-qualifying high deductible insurance plan, but our health savings account may be paired with any carrier’s qualified health plan, which allows for greater portability.
HSA California: Yes. HSA California only offers HSA-qualified health plans; our portfolio includes seven different HSA-compatible plan designs.
Kaiser Permanente: Yes, Kaiser Permanente offers an array of HSA–qualified deductible HMO plans for the Individual, Family and Employer group markets, PPO plans for Small business groups with 2-50 subscribers, EPO plans for individuals and Self Funded EPO plans.
Sterling HSA: As an independent HSA administrator, Sterling can work with all HSA compatible plans — fully insured and self-insured.
UnitedHealth Group: Yes, UnitedHealthcare offers several HSA-qualified HDHPs. In addition to administering the medical plan, UnitedHealthcare offers a wide variety of health care services, tools, and tips for its HSA customers.

3. Are you providing a health spending arrangement or a savings vehicle?

Aetna: Yes.
Anthem Blue Cross: We have partnered with BNY/Mellon and their support staff – ASC/Mellon to provide banking and investment options for the financial piece of our HSAs. Our integration allows members to login to and be linked to their BNY/Mellon account.
Blue Shield: Blue Shield offers high deductible health plans that are HSA-compatible. Members have the flexibility to choose an HSA trustee or custodian that offers the type of health savings account that best meets their needs.
CIGNA: CIGNA has an extensive offering of consumer funds that include an HSA, HRA, healthcare flexible spending account, dependent care flexible spending account, and incentive health reimbursement accounts (Healthy Awards).
First Horizon Msaver: We provide an FDIC insured savings account with tiered interest rates that can be linked to one of three investment options. More accounts features can be seen at
HSA California: HSA California and The Bancorp Bank have partnered to create a seamless, online approach for employers and employees to fund an HSA with a wide array of savings and investment options.
Kaiser Permanente: Members who enroll in one of our HSA-qualified deductible HMO plans can open a health savings account through our preferred financial administrator, Wells Fargo. However, members are also free to open a health savings account with a financial institution of their choice. Our HSA-qualified deductible HMO plans are designed to work with HSA administration from any financial institution. In terms of other spending arrangements, Kaiser Permanente also offers different deductible HMO plans paired with health reimbursement arrangements (HRA).
Sterling HSA: Sterling now offers HRAs and POPs, in addition to HSAs.
UnitedHealth Group: Yes, UnitedHealthcare has partnered with OptumHealthBank for HSA administration, savings and investment opportunities.

4. What size employee group is the HSA available for?

Aetna: All sizes of groups.
Anthem Blue Cross: All employee groups are eligible.
Blue Shield: We offer HSA-compatible plans for all markets, including individual and family, small groups (from two to 50 employees), midsize groups (51 to 299 employees), and large groups (300+ employees).
CIGNA: Our HSA product is available for employers with 200 or more eligible employees. We also offer qualified high deductible health plans to groups with 50 or more eligible employees.
First Horizon Msaver: We provide HSA administration for individuals as well as groups of all sizes.
HSA California: HSA California is available for employers with 2-50 employees.
Kaiser Permanente: Kaiser Permanente (KP) offers HSA-qualified deductible HMO plans to any group size. PPO plans are available to groups with 2-50 subscribers, and Self Funded EPO plans are available to groups with 500 subscribers.
Sterling HSA: We work with individuals and groups from small to large group.
UnitedHealth Group: Our consumer-driven health plans are available to individuals and groups of all sizes.

5. Is your management team experienced in health insurance, financial services, or both?

Aetna: Health insurance.
Anthem Blue Cross: Anthem has subject matter experts in health insurance and the financial services for our HSA plans. These associates can work with the client and agent/broker to explain all processes.
Blue Shield: Blue Shield is experienced in offering and managing HSA eligible high deductible health plans and other health insurance products
CIGNA: Our HSA product is available for employers with 200 or more eligible employees. We also offer qualified high deductible health plans to groups with 50 or more eligible employees.
First Horizon Msaver: Our management team is experienced in both health insurance and financial services.
HSA California: The HSA California team is comprised of health insurance specialists with extensive experience with both HDHPs and HSAs. Our banking partner, The Bancorp Bank, provides expert financial services support via a team that shares 140-plus years in banking and technology experience.
Kaiser Permanente: Kaiser Permanente’s management team is experienced in health insurance and HMO plans. Our preferred HSA administrator, Wells Fargo, brings the appropriate financial services expertise.
Sterling HSA: Sterling HSA’s executive team has extensive experience in healthcare and insurance management. We have complemented those skills with staff and advisory board members who have experience in financial services to optimize support of our clients during enrollment and to manage their accounts with us long-term.
UnitedHealth Group: Both.

6. Do you provide training for brokers about HSAs?

Anthem Blue Cross: We provide on-going broker communications, newsletters, and product demos as new products are introduced.
Blue Shield: Blue Shield provides a continuing education seminar on HSAs to our IFP brokers periodically. Brokers also have access to educational programs and tutorials through Wells Fargo and eflexgroup,
CIGNA: CIGNA provides consumerism education on products including the HSA to brokers via forums and through highly skilled sales managers.
First Horizon Msaver: We provide CE certified training programs on the subject of HSAs in over 20 states. In addition, First Horizon Msaver regional representatives and the Broker Support Team (1-866-889-8583, Option 3) are available to assist brokers in the field with education as well as the installation and enrollment of the HSA.
HSA California: Yes. HSA California has dedicated HSA experts ready to provide personalized training and HSA education to brokers. We can be reached between 8 a.m. and 5 p.m. Monday-Friday at or toll-free at 866.251.4625. HSA California also provides ongoing seminars to provide brokers with the information and tools they need to explain HSAs to clients.
Kaiser Permanente: Yes, we provide training to our brokers. In addition, our preferred financial administrator for HSAs, Wells Fargo, has a dedicated support line to assist our brokers with questions. Wells Fargo also has an online flash educational presentation for our customers about HSAs online at:
Sterling HSA: Yes, Sterling offers a variety of training options, including CE courses across the nation, lunch and learn meetings for large regional brokerage groups, and individual sessions pairing Sterling account executives with brokers and consultants.
UnitedHealth Group: Yes, we routinely provide training to brokers on all of our products and services, including print materials, online education, and regular webcasts to inform brokers about the HSA.

7. What commissions are paid to brokers and when?

Aetna: Standard commission levels, monthly.
Anthem Blue Cross: Brokers are paid the standard medical commission for the HSA compatible medical plan.
Blue Shield: Blue Shield of California pays commissions to brokers on health plans. Referral fees for HSAs vary by financial institution.
CIGNA: CIGNA pays its standard commissions for HSA sales.
First Horizon Msaver: We pay brokers $.50 per account referred for the life of the account. Referral fees are paid via direct deposit on a quarterly basis. More information about how First Horizon Msaver works with brokers may be found at
Kaiser Permanente: Brokers are paid the standard medical commissions for all of our HSA-qualified health plans.
Sterling HSA: Commissions for our HSA business are paid quarterly on all new and renewing business.
UnitedHealth Group: UnitedHealthcare’s standard commission schedules and payment processes apply to the CDH products.

8. Are electronic enrollment forms accessible through your Website?

Aetna: Yes.
Anthem Blue Cross: Enrollment processes are the same for HSAs as for any other product Anthem offers.
Blue Shield: Members enrolling in HSAs must enroll directly with the HSA trustee or custodian. Many HSA trustees are offering electronic enrollment for group set-up and individual enrollments, but this will vary by institution.
CIGNA: CIGNA provides an online and paper version of the HSA bank enrollment application. Employers can provide online or paper enrollment options for their employees.
First Horizon Msaver: We were first to market with a completely paperless online enrollment form. Brokers and employers are encouraged to call the Broker /Employer Support Center (1-866-889-8583, Option 3) to obtain an enrollment form URL that is exclusive to the group and the broker. Other electronic enrollment methods are available for large groups. A generic online enrollment form may be found at
HSA California: PDF enrollment forms are available on our Web site at Employers and employees can open and fund an HSA on our Web site through a simple process driven by our partner, The Bancorp Bank. Employers can even maintain employees’ membership information online.
Kaiser Permanente: Individuals and families can apply for Kaiser Permanente health plans online by logging on to: Employer and Individual applications can be downloaded at
Sterling HSA: Yes. We provide online enrollment for individuals who are part of employer groups, individuals seeking a HSA administrator on their own, and for employer groups to manage the HSA enrollment of employees. Sterling account enrollment and management forms are also available on our website at to download, print, and email or mail to us.
UnitedHealth Group: Yes, electronic enrollment forms are available through our Website.

9. How do you assist account holders with paying medical bills?

Aetna: We provide cost estimator and quality assessment tools.
Anthem Blue Cross: High deductible health plans engage the members to be knowledgeable about their healthcare treatment and management of funds. Members manage their own bank accounts, pay for their medical and Rx needs with their H.SA account. Members can view online their banking balances and their claim activity.
Blue Shield: As a health plan, Blue Shield determines plan eligibility and payment for services incurred, such as determining plan and member responsibility based on plan agreements. In terms of paying for medical bills from the HSA, the member is responsible for determining what qualified medical expenses they choose to pay out of the HSA. Any HSA financial transactions (movement of money in and out of the HSA regardless of qualified medical expenses status) are managed by the HSA trustee or custodian.
CIGNA: CIGNA helps account holders manage their healthcare expenses with information decision support tools and ready access to HSA funds. CIGNA provides cost and quality information according to the individuals’ plan for more than 200 procedures performed by specialists, in hospitals and in outpatient facilities. The pharmacy price quote tool compares actual real time out-of-pocket costs for brand name, generic and over the counter medications at 57,000 pharmacies nationwide.
First Horizon Msaver: We offer free Online Bill Pay for the convenient electronic payment of medical bills. Tools such as a free medical cost estimator and a patient bill evaluation and negotiation service are also available in the Healthy Lifestyles Portal at
HSA California: Our carrier partners – Kaiser Permanente, Health Net, and Western Health Advantage – have created special units within their organizations to help members enrolled in HSA California.
Kaiser Permanente: Money in the HSA can be used to pay for a variety of healthcare related expenses ranging from routine physicals to prescription drugs. To pay for expenses, the member can simply present their HSA debit card to the provider, and money will be deducted directly from their HSA. However, if the member wants to pay for services out of pocket and submit an HSA reimbursement claim manually, they can. Kaiser Permanente’s Member Service Unit can support our members with any medical bill question or concern.
Sterling HSA: Sterling reviews the explanation of benefits and medical bills for discounts to insure that our accountholders do not spend more for a healthcare service or product than the insurance company would pay. We also alert accountholders when we spot disbursements that do not appear to comply with IRS rules. We help our clients with payment plans to their providers in the event there are insufficient funds to pay a bill.
UnitedHealth Group: Participants can use checks or a debit card to access funds in their HSA to pay providers directly for outstanding expenses or reimburse themselves for out-of-pocket expenses paid to a provider. UnitedHealthcare then gives members monthly health statements that provide personalized cost-saving and health improvement tips, as well as simple charts showing individuals’ claims experience and health care account balances – all in an easy, concise, plain-English sort of way.

10. How does the administrator help the accountholder with insurance-related questions?

Aetna: Customer service representatives are available by phone and through our website at

Anthem Blue Cross: Anthem provides online resources as well as a customer service support line for all members. Support numbers are listed on the member’s health insurance card.
Blue Shield of California: All insurance-related questions are referred back to Blue Shield.
CIGNA: CIGNA offers integrated customer service via our Website and 24/7/365 toll-free telephone service to respond to questions about the member’s health insurance and the HSA.
First Horizon Msaver: We work with a large number of health plans and will refer the account holder to the health plan for questions related to insurance. However, general HSA questions can be answered by the dedicated HSA call center staff.
HSA California: Both HSA California and The Bancorp Bank have customer support teams with expert knowledge available by phone or e-mail from 8 a.m. to 5 p.m. Monday-Friday.
Kaiser Permanente: Our preferred financial administrator for HSAs, Wells Fargo, refers insurance-related calls back to Kaiser Permanente (KP). KP member service representatives are trained to answer any insurance related questions our members may have. At, we also have a website for deductible plan members to educate themselves about what to expect pre/during/post visits with our providers, including decision support tools (e.g., preventive services list, sample fee list, interactive treatment fee tool) that may facilitate better understanding of their insurance coverage and optimize the wide range of health related services offered by KP. Visit to find out more.
Sterling HSA: Our customer service representatives are available Monday – Friday from 8 am to 6 pm Pacific time. Clients and brokers can reach us toll-free at 800-617-4729 and via e-mail at
UnitedHealth Group: UnitedHealthcare’s Customer Care Professionals are available by phone to respond to all insurance and account-related questions; a number of resources, including calculators and FAQs are also available online at

11. Is the administrator integrated with the health plan?

Aetna: Yes
Anthem Blue Cross: Yes, BNY/ Mellon provides consumers with the following:
• Interest-bearing checking account
• Anthem-branded MasterCard debit card
• Checkbook
• Consumer receives the HSA debit card, checkbook, etc. after completing the activation process
• Monthly HSA Statements (bank statement)
• Annual Tax forms: 1099s (January), 5498s (May)
• Investment opportunities through its subsidiary Dreyfus
Blue Shield: Not at this time.
CIGNA: Yes, the high deductible health plan is fully integrated with the HSA.
First Horizon Msaver: We currently are not integrated with a health plan allowing account holders to move between health plans without the need to disrupt the HSA portion of the program.
HSA California: HSA California is completely integrated with The Bancorp Bank. Eligibility is automatically transferred to The Bancorp Bank so that account set-up is simplified; employers can set-up employee HSAs, fund employee HSAs, and complete other administrative capabilities – all online.
Kaiser Permanente: No, Kaiser Permanente provides the health plan services and Wells Fargo, our preferred financial administrator for HSAs, provides the financial account.
Sterling HSA: We are an independent administrator available to work with all health plans across the nation.
UnitedHealth Group: Yes, in 2002, UnitedHealth Group chartered OptumHealthBank to help advance the growing convergence of healthcare and financial services and to give consumers a more integrated experience.

12. Are investment choices limited by the administrator?

Aetna: The administrator provides a diverse fund selection by asset classes supporting a range of investment objectives.
Anthem Blue Cross: There are over 20 investment opportunities Through BNY/Mellon’s subsidiary Dreyfus.
Blue Shield: Yes.
CIGNA: CIGNA offers a customized slate of diversified HSA investment options through JP Morgan Chase as part of our CIGNA Choice Fund HSA.
First Horizon Msaver: We offer three investment options. Two of the options, self-directed online brokerage and self-directed telephonic brokerage, do not limit the investments that are available. A third option, mutual fund sweep, does limit investment to a set of no-load mutual funds. More details on these investment options can be found at
HSA California: The Bancorp Bank offers an extensive investment portfolio, from FDIC-insured savings accounts to more than 6,500 investment options. There are no application or set-up fees required to open an HSA with The Bancorp Bank.
Kaiser Permanente: The Wells Fargo HSA offers both an FDIC-insured interest bearing deposit account plus the option to direct funds into pre-selected investments and mutual funds. For more information on Wells Fargo Advantage Funds, visit or call (800) 222-8222.
Sterling HSA: Not at all. Our account holders can choose any IRS qualified investment for their funds, including stocks, bonds, mutual funds, and CDs.
UnitedHealth Group: Optum Health-Bank offers a range of highly regarded no-fee, non-proprietary investment options to HSA accountholders.

13. What forms are needed to submit an HSA case?

Aetna: Aetna’s standard enrollment processes are used. There are separate medical and HSA elections. Eligibility/enrollment options are electronic batch enrollment, paper enrollment, and Web enrollment.
Anthem Blue Cross: An HSA Addendum and Agreement need to be completed. The HSA Addendum captures how the Employer wants to fund their employees’ accounts. The HSA Agreement is stating you will or will not use our integrated banking option.
Blue Shield: Forms (online or paper) vary by HSA custodian or trustee.
CIGNA: CIGNA’s standard processes and forms are used for all CIGNA products including the HSA.
First Horizon Msaver: We recommend that new employer groups complete an Employer Registration Form. These may be obtained at or by contacting the Broker/Employer Support Team at 1-866-889-8583, Option 3. Individuals may enroll online at
HSA California: Standard application forms are needed to submit an HSA California case. These forms are available at
Kaiser Permanente: We require our standard application and enrollment process plus additional information if Wells Fargo is utilized. Wells Fargo: A broker must complete the “HSA Broker Supplement – Application for Services” form and an “HSA Employer Application.” You can find copies of the applications at
Sterling HSA: All that is required is a completed employer group application (for groups) and an individual accountholder application kit for each accountholder, along with a list bill and employer preferred form of contribution. All forms are available at
UnitedHealth Group: Employers contributing to the HSA account are required to to complete an employer discovery document. Individuals establishing an HSA account.

14. Do you plan to offer an HSA-eligible plan to your own employees?

Aetna: Aetna Inc. offers several HSA-eligible plans to our employees.
Anthem Blue Cross: All Anthem Blue Cross and WellPoint eligible employees have the option
to choose a Lumenos HSA plan.
Blue Shield: Yes, we started offering an HSA-compatible plan to our own employees effective
January 1, 2007.
CIGNA: Yes, CIGNA has offered employees HRA and HSA plan options since January 2005.
First Horizon Msaver: Yes, we have offered an HSA-eligible plan to our employees since 2005.
HSA California: CHOICE Administrators®, the company behind HSA California, CaliforniChoice®, CaliforniaChoice 51+, Kaiser Permanente Choice Solution, Contractor’s Choice®, and Choice Builder, currently offers its employees access to HSA-compatible plans.
Kaiser Permanente: We consider our entire portfolio of health plans for our own employees.
Sterling HSA: We have offered our employees a HSA since Sterling was founded in 2004.
UnitedHealth Group: All UnitedHealth Group employees have the option of enrolling in all an HSA
or HRA.

15. Are you using a trustee? If so, how long have you been with the trustee?

Aetna: Yes, since May 2004
Anthem Blue Cross: Anthem has partnered with BNY/Mellon FDIC to offer all of your banking
needs for your HSA account.
Blue Shield: Blue Shield has had a relationship in place with Wells Fargo since October 2004,
and recently entered into a joint marketing agreement with eflexgroup, Inc. Members are free to choose Wells Fargo, eflexgroups, or any other qualified trustee or custodian to administer health savings accounts.
CIGNA: JP Morgan Chase has been the trustee for our CIGNA Choice Fund HSA product since January 1, 2005.
Fist Horizon Msaver: First Horizon Bank, a division of First Tennessee Bank National Association, member FDIC, serves as the custodian for our HSAs. This relationship has been in place since 2005.
HSA California: The Bancorp Bank handles the HSAs directly. The HDHP insurance plans are fully-insured products from Health Net, Kaiser Permanente and Western Health Advantage
Kaiser Permanente: We first began selling HSA-qualified deductible HMO plans with an optional HSA through Wells Fargo in our Colorado, Georgia and Northwest regions in 2005, Mid-Atlantic States in 2006, and California and Ohio in 2007.
Sterling HSA: Sterling HSA uses Mechanics Bank as our Trustee and we have been with them since 2005.
UnitedHealth Group: Yes, UnitedHealthcare partners with Optum HealthBank for trustee services. UnitedHealthcare’s parent company, UnitedHealth Group, chartered OptumHealthBank in 2002 to help advance the growing convergence of health care and financial services.

16. What service guarantees do you offer?

Aetna: We do not offer HSA service guarantees.
Anthem Blue Cross: We do not offer performance guarantees in the Small Group market or Individual market.
Blue Shield of California: Our relationship with Wells Fargo provides for a number of service level agreements. One example of a typical service guarantee would be telephone average speed of response.
CIGNA: The standard performance guarantees apply.
First Horizon Msaver: Service-level guarantees vary based on the scope of the relationship with the customer, but generally include commitments around the delivery of debit cards and Welcome Kits as well as Customer Call Center metrics.
HSA California: HSA California guarantees outstanding service. Our customer service team has expert knowledge of the insurance industry and is available between 8:00 a.m. and 5:00 p.m. Monday-Friday for personal assistance.
Kaiser Permanente: We do not offer service guarantees to the Individual, Family or Small group markets.
Sterling HSA: Sterling HSA offers a full money back guarantee for up to 12 months of paid monthly maintenance fees if our accountholders are unhappy with our service for any reason. Sterling was the first HSA administrator to offer such a guarantee and made this commitment when the company was founded in 2004.
UnitedHealth Group: Service guarantees will vary based on the scope of the relationship with the customer, but are typically available with respect to administrative service delivered under the plan.

17. What kinds of depositories are desired?

Aetna: Not applicable.
Anthem Blue Cross: There is no minimum balance requirement.
Blue Shield of California: Guidelines will vary by financial institution.
Our relationship with Wells Fargo provides for the following:
• For IFP members, the minimum HSA deposit is $100
• For employer groups, there is no minimum deposit
• Any deposits after the initial $100 may be directed into investment accounts dictated by the member.
CIGNA: There are no minimum deposit or balance requirements. Contributions to the HSA can be funded through employer facilitated pre-tax payroll contributions (EFT/ACH transactions) or through unscheduled deposits in which participants arrange from an EFT from their personal bank account or send a check and deposit slip to a lockbox for contribution to their HSA.
First Horizon Msaver: No minimum balance requirement and no minimum initial deposit requirement for employer groups.
HSA California provides the following: No minimum balance requirement to open an HSA and no minimum deposit requirement for employer groups
Kaiser Permanente: Our preferred financial administrator for HSAs, Wells Fargo, does not require minimum deposits for employer groups with payroll deduction. The minimum deposit of $100 is required for individual and family plan members not enrolling through an employer group.
Sterling HSA: Sterling accepts cash checks, and electronic fund trans-
fers through in a secure, password protected environment. We recommend an initial deposit of $100 and require a minimum balance of $20.

Benefit Enrollment

Holistic Approach Maximizes Enrollment Process for Employers and Employees

by Jay Hutchins

When it comes to benefit enrollment, it’s all about the big picture – not just a once-a-year requirement. Smart brokers know that a successful benefit enrollment requires taking a long-term view and a holistic, rather than piecemeal, approach.

Conducting benefit enrollment used to be a way to get just employees signed up for their health benefits every year. But enrollments have become increasingly important now that employers offer more choice in their benefit packages and share more of the cost with employees. Employees need help understanding their insurance plans, sorting through technical jargon, and choosing among the various products, options, and features. And with a tightened economy, workers are more conscious about spending their dollars wisely and making the best choices for themselves and their families. Benefit education is now an integral part of the enrollment process.

In today’s competitive environment, employers stand to gain from a quality enrollment process, as well. Employers need the best benefit packages to attract and retain a quality workforce. They want to make sure that workers understand the value since benefits are costly, accounting for nearly 40% of payroll among U.S. employers, according to a 2008 study by Society of Human Resource Management (SHRM).

Benefit Education Is Critical to the Enrollment Process

There’s still a lot of work to be done around benefit education. Ninety-three percent of employers think it’s important for employees to understand and appreciate their benefits, but only 19% believe their employees actually do and 5% say their employees don’t understand their benefits at all, according to a 2009 Colonial Life survey. Clearly, the enrollment process offers the best opportunity for employers to educate their employees about the benefit package.

This sort of education can pay big dividends. Employees who believe their benefits are communicated effectively are more likely to say the employer values their work and cares about their well being, according to a recent Unum survey. Among employees who said their company provided excellent or very good benefit education:

• 70% said their employer valued their work.

• 69% said they were satisfied with their job.

• 63% said their employer cared about their well-being.

• 62% said they would stay with their employer if they were offered the same pay and benefits elsewhere

Employers place a high value on consistency and communication during the enrollment process. To ensure successful enrollments, it’s important to emphasize the need for year-round communication, not a check-the-box approach that leads to uninformed decision-making. It’s easiest to look at the enrollment process in three stages, with each stage associated with specific activities.

Stage One—Pre-Enrollment

Planning is critical to the pre-enrollment phase. Use this opportunity to review your client’s short-term- and long-term needs. Ideally, you should help your clients develop a three- to five-year enrollment plan, outlining product offerings, plan design, and issues regarding business needs, communication, employee concerns, etc. This is the time to get employees excited about the upcoming enrollment so they want to learn more about the benefits being offered. A number of different tools can help, such as benchmark surveys, e-mails, accessible insurance education, rich media, and printed materials.

Stage Two—Enrollment

Brokers rely heavily on group meetings as a primary method of enrolling groups. Group meetings can give employees a high-level overview of their benefit package, including any changes or additions they should expect. Benefit counselors can play a critical role during the enrollment by conducting the group meetings, establishing an initial relationship with employees, and setting up expectations for the enrollment process.

However, the value of these counselors really comes into play during one-to-one meetings with employees. Counselors can personalize the decision-making experience when they meet with each employee individually. They can ask questions to learn about the employee’s needs, identify any gaps in coverage, and answer questions about the benefit package. They can also provide personal salary illustrations so employees can see how their purchases will affect their take-home pay. Enrolling employees in their core benefits, as well as any voluntary products offered, can make the process seamless for the employer. This big-picture approach helps employees learn how their insurance plans complement each other so they can create an entire benefit package that works best for themselves and their families.

Employers believe that individual sessions with benefit counselors significantly improve how well employees understand their benefits. Your clients should get daily updates on the enrollment’s progress — who has been seen, what products employees are choosing, and any areas of the company where participation is proceeding slower than planned.

Stage Three—Post-Enrollment

After the enrollment, your clients will need ongoing education, reporting, and planning. The HR staff will want to know what worked well and what needs adjusting. Reporting should include participation rates, products purchased, and an employee survey on the enrollment experience. This post-enrollment information can be incorporated into planning future enrollments.

Not all HR departments are staffed to provide this type of enrollment experience; most agencies are not staffed or equipped to deal with such a labor-intensive process; and very few major medical carriers are willing to address this need.

The voluntary insurance industry has responded with innovative core and voluntary benefit enrollments. A top carrier can bring in benefit professionals to provide personal assistance to each employee. Some firms charge for these services while others offer them at no direct cost to the business or employee. Each company is different, so, when evaluating carriers, be sure to ask about the carrier’s enrollment and benefit communication services and any costs.

Approaching benefit enrollment from a holistic perspective instead of a once-a-year activity can pay off for you and your clients. By building a process that focuses on year-round dialogue, you’ll create a partnership that has lasting value for your clients and their employees.

Jay Hutchins is vice president for Broker Marketing for Colonial Life & Accident Insurance Company. Colonial provides insurance benefits for employees and their families through their workplace, along with individual benefit education, enrollment technology, and personal service. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group. Download a free copy of Colonial Life’s newest white paper, Reinvent the Enrollment Experience: How to Drive Value for Your benefits package, by visiting Learn more about Colonial Life at


Voluntary Dental

Voluntary Dental Gains Popularity as Businesses Tighten Budgets

by Karen Gustin, LLIF, Ameritas Group

Continuing economic challenges are forcing businesses to find new ways to tighten budgets and reduce expenses. As they consider the costs of medical insurance, voluntary dental has become a popular option for businesses to provide employees with access to a highly valued benefit. This growing interest in voluntary plans gives producers an excellent opportunity to enhance relationships with employers by recommending dental insurance coverage that meets the needs of their employees.

Four Guidelines for Success with Voluntary Dental

Employee participation is critical to the long-term success of a voluntary dental plan. The plan design must address the needs of the employee group. Regular communication is important to remind employees of the services and features of their dental benefits.

Consider the following guidelines for designing and selling voluntary plans:

1. Understand Employees’ Dental Health Needs

A thorough understanding of the demographics and dental needs of the employee group is essential to designing and recommending the right plan:

Examine the utilization trends of existing dental benefits.

• Which features are used most and by which age groups?

• How many employees exceed their annual maximums?

• How many employees and their dependents use the plan?

• What is the employee turnover percentage?

• Review oral health history.

• Do employees generally take good care of their teeth, with one or two dental visits each year for checkups and restorations?

• How much do employees spend for basic or major dental services?

• Tabulate employee demographics.

• What is the average age of the employee population?

• What is the percentage of employees selecting single vs. family coverage?

• What are the primary dental needs of employees and their dependents? For example, you may want to include an ortho option in the plan if many employees have dependents with orthodontia needs during the next year.

2. Identify the Best Insurance Partner for the Group

Insurance carriers may offer voluntary dental products, but few have the extensive experience to support these plans. Due to the complexity of voluntary plans, it is critical to select a carrier that has an excellent reputation for voluntary dental coverage.

Evaluate each carrier’s claims processing and customer service, flexibility in plan design, reputation

with other employers, size of provider network, business phil-osophy, spectrum of plans that can be customized to employers’ changing needs, and experience in working with employer groups of similar size to that of your clients.

Compare persistency and pricing. Carriers that are successful with voluntary plans are experienced in pricing plans, so premium costs remain consistent. Employees will quickly become disenchanted with their voluntary benefits and switch to alternate coverage options if plans are not priced correctly and premiums have to be adjusted significantly each year.

3. Connect Dental Care to Wellness Programs

In response to the economic slowdown, many businesses have enhanced employee wellness programs to curb healthcare costs. And they have adopted new strategies for increased participation of team members across the company.

In addition to promoting medical screen-ings to identify healthcare concerns, employers have reinforced the importance of regular oral health examinations as an excellent disease management tool since many medical concerns and diseases can be detected in the early stages during regular dental checkups.

According to the United States Surgeon General, oral care plays an important role in overall wellness. When employees are not healthy, employers may experience increased health costs and lost employee productivity and performance due to absenteeism. Here are some other facts to note:

• Bleeding gums, etched enamel, and other tissue changes in the mouth are often the first clues to serious health problems.

• Approximately 80% of Americans have some type of periodontal disease. A study from the U.S. Health and Human Services Department shows that people with periodontal disease may be at higher risk for heart disease and stroke as bacteria from gum tissues enter the blood stream and contribute to clogged arteries.

• Medical studies have also revealed that pregnant women with gum disease are seven times more likely to have premature babies.

4. Incorporate Different Communication

Tools to Connect with Employees

Employees want detailed information on their benefits so they can select the plan that is the best fit for their family’s needs. Employers should be proactive in educating employees about their benefits throughout the year.

With employees taking more responsibility for their health insurance, extensive communication is required so they can be informed participants in their healthcare decisions. Here are 10 suggestions producers can offer employers to enhance communication efforts:

• Initiate employee benefits communication programs four to six months before the enrollment period.

• Target messages to reach different groups of employees.

• Use different methods to communicate benefits information to employees. For some employees, face-to-face meetings and newsletters are best while others prefer electronic options, such as email messages or information on company Facebook or Twitter pages.

• Keep messages simple. Provide information that is clear and easy to understand and avoid insurance jargon or acronyms. Create charts and other visual ads showing costs spread out over the year, annual savings, and the value of employees investing in their own health.

• Develop a regular communication schedule, in different formats and locations, in order to break through the communication clutter and reach employees with key messages.

• Dedicate staff time to answer questions, especially in the initial phases.

• Offer 24-hour access to comprehensive plan information on the company website. Make sure that information is easy to find and understand.

• Provide reliable lists of resources for employees to research information online.

• Remind employees about major life events, such as a marriage or the addition of a child, when they need to re-evaluate their benefit choices.

• Regularly evaluate employees’ understanding of the benefits information and messages and adjust content to eliminate confusion.

Voluntary Plans Offer Increased Opportunities

Voluntary dental benefits are in high demand among employers and employees. Producers have an excellent opportunity to grow their businesses, especially by focusing on the wellness and financial value of dental benefits. Communicate how these plans enhance employee performance, productivity, recruitment, and retention. Take the time to understand employees’ dental needs and help employers educate the group about dental benefits. Not all plans and insurance carriers are the same, so work with the right partner to provide benefits that will match expectations.

Karen M. Gustin, LLIF, is senior vice president – Group Marketing, Managed Care And National Accounts for Ameritas Group, a division of Ameritas Life Insurance Corp. (a UNIFI Company), with headquarters in Lincoln, Neb. A leading provider of dental and eye care products and services, Ameritas Group added hearing care to its product portfolio in 2008. Gustin joined Ameritas Group in 1983. She is vice chair of the National Association of Dental Plans’ board of directors and its statistical task force, and also serves on NADP’s executive committee.


Ethnic Marketing

Attracting a Diverse Health Plan Membership Through Culturally and Linguistically Appropriate Care

by Patricia Marine Barrett

In California, health plans are discovering that they can satisfy members and attract new clients by offering culturally and linguistically appropriate services. It’s clear that, in order to grow their market share, health plans must attract racial and ethnic minorities and the businesses that employ them. California is among the nation’s most diverse states. Latinos comprise over 36% of the population and Asians comprise 12.5%. According to the UCLA Center for Health Policy Research, 3.4 million of California’s adult HMO enrollees speak a language other than English at home.

There are approximately 50,000 Latino-owned businesses with paid employees in California, most of which do not offer health insurance, according to a study funded by the California HealthCare Foundation. Many of these employers would consider offering insurance if they had information presented simply, concisely, and bilingually. The study also found that Latino employers do not interact frequently with brokers and don’t think of brokers as good sources of information. They are concerned about whether buying through a broker costs more, whether brokers provide unbiased information, and whether they can establish trust with a broker.

As the U.S. population becomes more diverse, medical providers and others in healthcare delivery are interacting with patients from many cultural and linguistic backgrounds. Providing culturally and linguistically appropriate services (CLAS) can improve access to care; improve the quality of care; and improve health outcomes since culture and language are vital factors in how healthcare services are delivered and received. The Office of Minority Health (OMH) has developed national standards to provide a much-needed alternative to the patchwork of independently developed definitions, practices, and requirements concerning CLAS.

Going Beyond State-Mandated Requirements

As of January 1, 2009, health plans must comply with Senate Bill 853, the California Language Assistance Program (CALAP). The bill requires plans to assess the language needs of its members; arrange for language assistance services; train staff; and monitor compliance with the legislation. Cindy Ehnes, director of the Department of Managed Health Care said the bill will ensure that California health plan members get healthcare services in a language that they can speak and understand.

Several health plans have gained national recognition through the National Committee for Quality Assurance’s (NCQA) annual award program, “Innovations in Multi-Cultural Healthcare,” sponsored by The California Endowment. But, as the NCQA awards underscore, some health plans are going well beyond minimum mandated requirements in an effort to dramatically improve access to care and reduce health disparities among health plan members.

California health plans are developing innovative programs to serve Latino, Asian, and African-American members. Since 2007, Kaiser Permanente, United Healthcare, Aetna, Wellpoint, L.A. Care Health Plan, and Chinese Community Health Plan have been among the dozens of plans from around the nation recognized for efforts ranging from reducing disparities in cancer screening and diabetes care, to providing in-language physician directories and improved service through cultural competency language certification. Here is a highlight of some of the efforts:

• In 2008, Kaiser Permanente was recognized for its Primary Care Language Concordance Program, which matches patients with physicians who are fluent in a patient’s preferred language. The program improved language matching and helped foster a culture that encourages multilingual skills. In 2008, the program resulted in approximately 93,000 more linguistically matched appointments.

• L.A. Care Health Plan serves nearly 800,000 county residents through free or low-cost programs. It sought to work with community resources to improve women’s health services among ethnic and racial minorities. The program is paying off with improvement in women’s health measures, such as the HEDIS breast cancer screening measure. More than 90% of health plans use HEDIS (developed by NCQA) to measure performance on important dimensions of care and service.

• United Healthcare’s Latino Solutions program tackles the challenge of ensuring that 2 million Hispanic members, nationwide, have effective interactions with the plan. United has used customer service professionals who are trained and certified to communicate with Spanish-speaking members and found that satisfaction among members increased from 65% to 90%.

• Blue Cross of California sought to reduce disparities in asthma management through long-term controller medications among low-income families. These families have a higher prevalence of asthma. The initiative focused on assistance from local pharmacists who were encouraged to provide consultations when qualifying members filled asthma prescriptions.

As these efforts improve satisfaction among members, health plans have a growing potential for increased membership and recognition in targeted ethnic markets, creating a platform on which to grow new business. These and other innovative programs addressing cultural and language issues are featured in detailed reports available from NCQA (

Earning Distinction in the Marketplace

California health plans will soon have the opportunity to differentiate themselves even further in targeted ethnic markets if they apply for the NCQA “Distinction,” which launches in 2010. Plans have to meet several requirements to earn “Distinction” for their cultural and linguistic efforts including the following:

• Having voluntary data collection that enables health plans to understand the language and cultural diversity of its members.

• Providing materials and services in the members’ languages, particularly in critical patient and member service departments, such as claims, case management, complaints, etc.

• Offering interpretation services for anyone who needs these services and supporting practitioners to offer these services during healthcare delivery.

• Maintaining a practitioner network that meets members’ cultural and linguistic needs.

• Integrating improvements in cultural and linguistic responsiveness and improvements in reducing disparities among members into ongoing quality improvement processes.

• Using information to focus quality improvement efforts on decreasing healthcare disparities for conditions such as asthma, diabetes, heart disease, hypertension, prenatal care, immunization, and cancer screening.

Jessica Briefer French, NCQA senior consultant says, “Earning the mark of ‘Distinction for Multicultural Health Care’ will be a logical next step for many plans that already comply with S.B 853 and want to take serious efforts to provide culturally and linguistically sensitive care. Applying for Distinction makes sense for plans that want to appeal to a wide demographic, not only for marketing, but also for improving patient safety and quality of care.”

Reducing healthcare disparities is an issue that gained wider understanding and attention following the 2003 release of the Institute of Medicine report, “Unequal Treatment: Confronting Racial and Ethnic Disparities in Health Care.” Reducing disparities is a top policy goal for the Dept. of Health and Human Services (HHS). This goal is also included in national health reform proposals. For health plans and brokers, excelling at culturally and linguistically effective services is a straight path to differentiation in the marketplace and enhanced marketing efforts to ethnic minorities.

Patricia Marine Barrett is NCQA vice president of Product Development. She is responsible for exploring new product concepts and evolving existing products to meet the needs of a changing healthcare environment. Previously, she was Health Alliance Plan Associate vice president and program director for the HAP/GM Managed Care Consulting Team. During her 14 years with HAP she served in a variety of roles including manager of Research, Analysis and Program Development, Acting Director of Managed Care Information and director of Quality Management. Ms. Barrett attended the University of Michigan receiving her Bachelors degree in Sociology and a Masters Degree in Health Services Administration from the School of Public Health. For more information, visit


Medicare Confusion

Medicare, Medicaid, and Now Medi-Chaos?

by George V. Duczak

The health-reform debate has become increasingly delusional or is it devious? The premise is that we will give 48 million people enhanced health coverage for free, which typically costs an employer close to $10,000 annually and it will not increase the deficit. It will all come from internal savings and taxing the rich!

We now have 38 million senior citizens and that number will grow to over 80 million with extended life spans. It costs the government close to $30,000 annually per retiree for Medicare and Social Security benefits; what will the costs be in 2020 — $60,000 or $75,000 annually?

Also, we are not competing well in a world economy. We are suffering with double-digit job loss; bailout deficits are skyrocketing; Medicaid is breaking state budgets and Medicare is in serious danger and we face a national obesity crisis. Despite all this, Congress proposes to mandate higher medical benefit levels and eliminate pre-existing condition restrictions and medical underwriting. While laudable, it will drive up insurance costs.

The health-reform debate is not really about any type of healthcare cost controls, but rather a long pent up belief, within the Democratic Party, that healthcare is a right of every person in America. Let’s cut through the nonsense and put it up for a national referendum about whether America wants to embrace a single payer system. So what happens if it’s voted up or down?

If Americans vote for a single-payer system as a human right and national obligation, we should create a straight-line supplemental tax on all Americans to cover this cost. By this, I mean a flat percentage of the anticipated additional costs should be charged against all income levels. It will obviously be much smaller at lower income levels and will be higher at upper levels. The benefit and cost-sharing model should be that of Medicare, which does require individuals to purchase supplemental benefit coverage.

If America votes down a public plan, we face continuing cost escalation and the realities have to be addressed. First of all, let’s revisit what insurance is supposed to be versus what it has become. Insurance is a product under which we pool risk. People take a small loss to cover unexpected catastrophic expenses in the form of a premium. This works in the property/casualty market with automobile- and homeowners-insurance that have higher deductibles, but it’s not acceptable in health insurance. We’ve converted health coverage to a first dollar benefit entitlement. Since employers pay 75% of the cost of healthcare, many people are insulated from the costs and overutilize the benefits.

We need to change the perception of health insurance from the obligation of the employer into a partnership with the employer, which would be required or incentivized to provide coverage for catastrophic expenses, but with substantially higher deductibles. The employees would be offered, for individual purchase, a range of indemnity benefits on a fully insured basis to cover out-of-pocket expenses in front of these higher deductibles on a tax-deductible basis. Under this partnership, employers would be willing to continue to provide large claim protection, but at manageable cost levels. In turn, employees would get freedom of choice. They could acquire first-dollar medical protection options, as well as a full venue of ancillary benefits such as dental, vision, critical illness, and disability coverage.

America has to go on a health insurance diet! First dollar benefits, low co-pays, and unlimited benefits are the disease. Even organized labor has to realize that rich benefits are siphoning money from things like take-home pay and retirement savings. This is especially important with the extended life expectancy Americans should enjoy in the future, which means that they may run out of money before they run out of time.

Being in the employee health business for more than 35 years, I have seen convoluted efforts to control cost that have failed at both state and federal levels. I see today’s reform efforts having little chance of being effective. The time has come for common sense alternatives, not 1,990 pages of legislation that few can understand or embrace.

George V. Duczak is president of The American Worker Plans, Inc. which was created to develop alternative health and employee benefit plans with an exclusive focus on working Americans. Previously, George was a principal at National Hospital and Healthcare Services and before that he was chief marketing officer of United Chambers Insurance Plans from 1985 to 1989. From 1979 to 1985 he was Vice President of Marketing at Dunn & Bradstreet Plan. He lives in Barrington Hills, Illinois. For more information, visit


Medical Tourism

Medical Travel & Surgery Management: The Consumer-Driven Product That Sells Itself

by Victor Lazzaro, Jr.

Employers can reap significant savings with a medical travel health benefit while giving their employees greater choice. And brokers who introduce a proven medical travel health benefit are seen as innovators in lowering healthcare costs.

The American healthcare system has become so expensive that companies are dropping coverage while healthcare is virtually unaffordable for those without insurance. Overwhelming healthcare costs and declining world economies have exerted massive pressure on the U.S. healthcare system and on employers. HR executives need all the help they can get when it comes to managing health benefits.

Surgery costs are the largest untapped source of health savings. Consider this: Surgery costs represent one-third of the total annual medical spending of $2.3 trillion. But, surgery expenditures are almost completely unmanaged, unlike pharmacy benefits or disease benefits. Thirty percent of patients, who went through a shared decision-making process about surgery, opted out of surgery altogether, according to a study by the Dartmouth Institute for Health Policy and Clinical Practice.

Now consider the latest innovation in healthcare: improved surgical cost management through medical travel. It provides access to high-quality, value-driven domestic and international centers of excellence — literally, the best of all worlds. With access to multiple networks, employees can easily make surgery cost and quality comparison among domestic center of excellence, international center of excellence, and local surgery choices.

Coupling Surgery Education and Access to Center of Excellence

Coupling a medical travel alternative with surgery education can provide enormous savings to employers. Surgery expenditures can be reduced dramatically when patients get information about their surgical and non-surgical options. A study by the Dartmouth Institute for Health Policy and Clinical Practice reveals that 30% of patients who went through a shared decision-making process opted out of surgery.

Surgery education teaches employees to make informed decisions based on surgical risks and less invasive alternatives. It teaches patients to be better-informed advocates for their own care. By reducing unnecessary surgeries and educating patients, the medical travel option is a truly consumer-directed option. This approach lowers costs, provides higher-quality alternatives, and allows employees to make choices from a wider field of options.

Now is the time to get in on this creative opportunity. The Deloitte Center for Health Solutions predicts a 35% annual growth rate for the medical tourism industry over the next few years.

This option makes sense for employers in terms of cost control, quality improvement, and employee satisfaction. It gives the employer a chance to be the good guy by adding rather than cutting options. Medical travel adds value for employees by giving them more choices in higher-quality healthcare. The result is lower costs and higher satisfaction for every stakeholder.

Choosing the Best Service Provider to Optimize Stakeholder Benefit

A surgery management and medical travel service should only include domestic and international physician networks, hospitals, and clinics that operate as true centers of excellences where customer service is a priority, not just a slogan. Center of excellence generate significant savings on high-value medical procedures and help curb the defensive medicine trend. They offer a clear fixed price by using case-rate diagnosis-related group pricing. They track service and quality outcomes rigorously based on measurement systems.

A premier medical travel service provider will incorporate patient surgery education from initial contact through recovery. It will also provide transparent costs and simplified billing as well as the choice of paying a per-case fee or per-employee-per-month fee.

What to Look for In a Medical Travel Provider

It is critical to distinguish qualified service providers from those that act as little more than glorified travel agents. HR executives, who are scrambling to rein in healthcare costs, have a best case scenario when they work with a medical travel provider that offers surgery education, turnkey member care, concierge services, and full data reporting (outcomes, savings, claims). It’s equally important to align with a provider that can demonstrate genuine healthcare experience and leadership, HIPAA-compliant operating systems, an emerging suite of vendors, and in-depth understanding of the healthcare continuum.

Here’s a quick run-down of what to look for in a medical travel service provider:

• Is HIPAA compliant.

• Coordinates the pre-travel communications for the client to the hospital and physician.

• Arranges after-care needs and tracks satisfaction and medical outcomes.

• Includes surgery/procedure costs, airfare, lodging, and transfers 24/7.

• Offers a concierge service, savings potential, and accredited hospitals

Brokers who have a clear understanding of the medical travel advantage and a check list for finding the right medical travel coordinator, can differentiate themselves and demonstrate to clients that they are thinking several steps ahead. They demonstrate that they are finding the best and most innovative products on the market for reducing corporate and employee costs, improving quality, and sustaining or increasing benefits. An added bonus is that medical travel can be added off cycle. As the healthcare reform debate rages on, it’s a perfect time to be the bearer of good news.

Victor Lazzaro, Jr., is CEO of BridgeHealth Medical. With over 20 years of senior management experience in the health and managed care fields, he has held positions responsible for marketing, finance, administration and healthcare delivery. He is also the managing director of Volante Capital. He was CEO of UHC — Mountain States and has served on the advisory board of MediExpress, a UHC affiliate, in Kuala Lumpur. He is also a guest lecturer at the University of Colorado at Denver MBA in Health Administration program. For more information, visit, e-mail:, or call 303-457-5725.


Worker’s Comp

What to Look For in a Worker’s Comp Carrier

by Jennifer Vargen

Did you know that approximately 4 million nonfatal injuries occur on the job in a given year? That’s why U.S. employers are required to carry workers’ compensation insurance. As an independent life and health insurance broker, you understand the importance of service, solutions, and value for your clients. Workers’ compensation insurance can extend the range of solutions that you offer.


Workers injured on the job deal with many concerns, from fears about how they will pay bills to concerns about when and if they’ll be able to return to work. A workers compensation carrier should offer solutions that help employers explain workers’ compensation and reassure injured employees. This can be critical in easing employees’ concerns and getting them back to work as quickly as possible.


Employers are often overwhelmed by issues that arise when a worker is injured. A Workers Compensation carrier should offer front-end as well as back-end solutions to support clients’ businesses. It is important for a worker’s comp provider to have local relationships and expertise in specialties, such as safety and accident prevention, ergonomics, and industrial hygiene. It is also helpful to have expert guidance and support to ensure a successful claims process. Policyholders should have 24/7 access to claims history, premium payment options, and available safety materials.


Look for a carrier that offers everything from local knowledge and expertise to safety seminars to a great fraud prevention and investigation unit.


Tips to Evaluate a Carrier

• Caseload: When considering workers’ comp carriers, ask about caseload per adjuster.

• Claims expertise: Choose a carrier that has claims expertise in your client’s industry.

• Payroll reporting: Some carriers base premiums on payroll estimates and adjust them only periodically, such as every six months. A carrier should base premiums on actual payroll and make adjustments monthly. This can be particularly critical for employers during a time of economic change when payrolls are likely to fluctuate. When choosing a workers’ compensation carrier, ask how their payroll reporting works.

• Claims liaison: Look for a company with representatives who have worked in claims, but now serve as liaisons for brokers to provide policyholders with information about their claims. They often conduct claim reviews with policyholders and compile claims resumes.

• Injury and illness prevention program (IIPP): Every California employer is required to have an IIPP in writing. A key element of the IIPP is record keeping. In the eyes of Cal/OSHA, if it isn’t written down it didn’t happen. When choosing a workers’ compensation carrier, ask whether they will help you develop and implement an IIPP as part of the service they offer.

• Medical Provider Network (MPN): Using an MPN ensures that employees will be connected to a qualified treating physician with expertise and experience in occupational issues. q

Jennifer Vargen is communications manager for State Compensation Insurance Fund. More than 4,000 brokerage firms conduct business with State Fund. Extensive online broker resources include everything from quarterly newsletters, tips for proactively serving your clients’ businesses, and audit preparations to feature articles written specifically for brokers. Visit


Estate Planning

Motivating the Business Owner

to do Succession Planning

by David K. Smucker, CPA, CLU, ChFC

This article will give you several provocative and sometimes disturbing questions to ask your clients about the pitfalls they would encounter if they didn’t have a succession plan. The mechanics of business succession planning are relatively simple – not simple, but relatively simple. The biggest challenge can be getting the business owner to start the planning process.

The goal of succession planning is the orderly succession of ownership and management of a business. It’s always necessary to discuss financial products during the succession-planning process. For example, life insurance is needed to fund buy/sell agreements and provide additional capital transition to new ownership. Life insurance, annuities, and other financial products can be used to fund qualified retirement plans and personally owned savings and accumulation programs. Here are some important questions to ask your clients:

Have you set your retirement date?

This provocative question could get any number of answers, but the goal is to start the thinking process. It can involve succession planning, qualified plans, life insurance as a cash value accumulator, annuities, etc.

Have you begun saving for retirement? How much money have you put aside for retirement? What would you use to generate income in retirement?

The business represents a substantial portion of most business owners’ net worth; it could account for most of the business owner’s net worth. It’s quite possible that they would have to sell the business to pay for their retirement. It becomes a double problem when the business owners have to finance the sale. A buyer who can’t pay the entire purchase price would have to pay the owner in installments over a period of years. Having to bear that risk would jeopardize the owner’s retirement. If the business falls on hard times, owner may have to repossess the business and try to get it back on its feet.

One answer is a buy/sell agreement. Another is the establishment of a qualified retirement plan, life insurance as a source of cash to supplement retirement income, or the purchase of annuities or other investment products. It’s also possible that the answer could encompass all of these.

How would you transfer the business to a child who is active in the business and wants to take it over?

There could be a gift or estate tax liability with a transfer that is done by gift or inheritance. If the transfer is by inheritance, the business may have to be sold to pay the estate tax. Careful planning with an irrevocable life insurance trust could provide the liquidity to pay the estate taxes and preserve the business for the next generation.

One of more of your children is active in the business and wants to take it over. But what about the ones who aren’t involved? How would you provide for them?

If you gave the business only to the children who are active in it, you might be starting a family fight that would last far into the future. A buy/sell agreement could be used to sell the business to the active child. It could be funded with life insurance on the owner.

This often requires an installment sale to sell the business to a child upon the owner’s retirement. Few businesses generate enough cash for a lump sum purchase. The sale could also lead to the purchase of life insurance on the child who is buying the business with a collateral assignment in favor of the selling parent. This would secure the installment sale obligation. It could also lead to an estate equalization sale with life insurance on the parents so the inactive children inherit the cash from the policy benefit while the active child inherits the business.

Do you want to go into business with your partner’s spouse? Do you want to force your spouse to go into business with your partners and vice versa?

The answer to these questions is frequently “No.” That leads to additional questions about life insurance funding for of a buy/sell agreement. Even if the answer was yes, you could ask whether a buy/sell agreement is in place.

If you were to die, would your partners be fair to your spouse? Would they try to buy your share of the business at a discounted price?

It would be most appropriate to ask this difficult when there are several co-owners. The point is that a buy/sell agreement with an accurate valuation and adequate insurance coverage, protect each owner’s surviving spouse, making sure a fair price is paid for the business upon death or retirement.

How is your estate plan set up? Are you leaving the business to your spouse? Does that make sense?

Many spouses do not take an active role in the business. Leaving the business to the surviving spouse, who is unable to run it, could cause the business to fail. The couple could plan for the business to close. A simple personally owned life insurance policy on the business owner would give the surviving spouse the capital to support themselves in retirement.

Are there unstable marriages among partners, children who are active in the business, or key employees to whom you might want to sell the business?

This difficult question needs to be asked. A divorce could put the business in jeopardy. The buy/sell agreement may need to be modified to allow for these potential challenges.

How long has it been since your buy/sell agreement was reviewed?

Buy/Sell agreements need to be reviewed and updated as necessary; an annual review is an excellent idea. Buy/sell agreements are sometimes negotiated and forgotten. A Buy/sell agreement is designed to take care of the situation, as it exists today. That means it’s almost certain that provisions would become outdated in relatively few years.

Is your buy/sell agreement funded with life insurance? Has the insurance been reviewed recently?

The CSO 2001 mortality tables were recently incorporated in all life insurance products. The policies should be reviewed to see if the coverage is adequate. Life insurance needs may have changed. Term coverage may have been adequate in the past, but permanent coverage could be called for now.

Is the business valuation in your buy/sell agreement up to date?

The value of the business becomes outdated as it grows or contracts. If the business valuation is not up-to-date, the surviving spouse could be forced to take a low value when a much higher value one is appropriate. On the other hand, if the business has slowed and the stated value is too high, the business could end due to an unrealistically high price. The valuation needs to be reviewed annually. Formula valuations are often incorporated, so the valuation is self-adjusting. But even the formulas need to be reviewed to make sure they would still produce an accurate valuation.

Many of your customers depend on you. If something happened to you, would the business continue to serve them?

Succession planning can give customers some assurance that, in the event of the owner’s death or retirement, the business would continue to provide value, products, and services to its customers.

Do your lender bonding company, employees, and suppliers know you gave a succession plan?

Everybody who does business with your client needs to know if there’s a succession plan in place. Closely held businesses (not publicly traded on the stock exchanges) are inherently risky because they are so dependent on their owners’ participation. So, anyone who does business with them needs to know that. In case something happens to the current owners, provisions are in place for an orderly transition of ownership and management. Knowing this reduces the risk of doing business with the closely held business. It also could reduce the interest rate on a loan and help the business get a better bonding capacity and better payment terms from a supplier. It could encourage certain customers to stay customers.

Your employees depend on you for their income and they may want to make your business their career. Would the business continue to provide those incomes and careers if something happened to you?

This appeals to the business owner’s sense of stewardship and their obligation to provide continuing employment to the employees if the owner were to die or retire.

Someday you’re going to be out of the picture, one way or another. Have you made provisions for that change of ownership?

You should do it now while you’re in a good position to see to the arrangements. This simply points out that the owner is in the best position to arrange for the succession of ownership and management. Tomorrow could bring injury, disability, or death. Don’t put off to tomorrow what you can do today.

Your business has become a major presence in the community and a lot would be lost if its doors were closed. Have you taken steps to make sure the business would continue after your retirement or death?

This question appeals to the owner’s sense of stewardship as well as their ego. Many business owners see their businesses as a monument to their efforts, an expression of their personality and values, and a culmination of a lifetime of work. It’s shocking for them to think that the business would close in the event of their disability or death. A succession plan can give them some assurance that the business would have a chance to survive into the next generation.

Would any key employees be interested in buying the business in the event of your death or retirement?

Answers to this question could offer a solution to the business owner and a way to retain key employees. Key employees may see themselves as future owners of the business or future competitors with the knowledge and experience they’ve gained while working for the business. An owner’s willingness to consider selling to them can keep that expertise in-house, help the business grow, and provide the team that would buy the business when the owner retires. That educated and experienced team of key employees could be the ideal group to take over. The buy/sell agreement is the tangible proof that they are next in line for ownership and they would have their chance to take the business to the next level.

Is the business worth enough for a aale to finance your retirement?

For some businesses the answer would be “No, it isn’t valuable enough” That’s bad news, but it could be good news, too. Realizing its truth could prompt the owner to redouble efforts to save for retirement, which life insurance products can facilitate. It could also prompt the owner to work harder at making the business more profitable and more saleable.

You say you’re going to hold onto the business until you die and then leave it to someone. Have you made provisions for that in your wills and trusts? Who is going to get the business? Would there be estate tax? Would the recipient have the capital to see the business through the transition? Would your surviving spouse have enough to live on without the income that you bring home from the business?

These cautionary questions should prompt a re-examination of the owner’s succession planning, saving strategy, and life insurance policies.

What is your plan for the business? Do you see it continuing after your death or retirement or do you see it closing?

A succession plan would need to be in place, funded with life insurance, to provide the cash to the buyer if it is to be sold or possibly to provide liquidity for estate taxes if it’s bequeathed to someone other than the surviving spouse.

In Conclusion

These are only some of the questions that will motivate clients to do succession planning.

What is critical is for you to be genuinely interested in your client’s well being.

One final note; never, never, never leave it to the business owner to complete a business succession planning fact finder. Help the business owner complete the form. Without your involvement, sincerity, and empathy, the fact finder is nothing more than another form that needs to be completed when there’s enough time and we all know there would never be enough time.

David K. Smucker, CPA, CFP®, CLU, ChFC, is a Director in Advanced Sales for Nationwide Financial Services, Inc. in Columbus, OH. He can be reached at Federal tax laws are complex and subject to change. Neither Nationwide nor its representatives give legal or tax advice. It would be important to talk with an attorney or tax advisor for answers to specific questions.