Jan2013CoverVoluntary Benefits –  A Year Ahead: Lessons Learned in 2012
by Adam Michaels • This is a good time to take stock of lessons learned in 2012 and assess potential challenges and opportunities that await brokers in 2013.
Voluntary Benefits –  Partnering With Your Clients to Improve Employee Engagement
by Elena C. Wu • Benefit brokers have a key opportunity to provide guidance, support, and helpful resources to their clients.
Voluntary Benefits Boost Your Commissions with Non-traditional Voluntary Benefits
by Elizabeth Halkos • Non-traditional voluntary benefits are becoming staples in brokers’ product portfolios as employers struggle to manage costs while providing competitive benefits.
Common COBRA Questions
by James E Deyo III, MBA • Every day, I receive phone calls from brokers, clients, insurance carriers, and COBRA participants with complex questions regarding administration of COBRA.
Fast Tracking Your HSA Sales: Our Annual HSA Survey – Part I
by Leila Morris  •  We asked the top companies in the state essential questions about coverage and services that affect you, the broker. Read on to find out what plans will work best for you and your clients.
Creating a Social Security Legacy Plan with Annuities and Life Insurance
by John A. Davidson, LUTCF, FSS  • With permanent life insurance, you can explore new possibilities for your clients and create a more stable future for their family and future generations.
Workers Comp–Uprooting California’s Underground Economy
by Len Welsh • California’s underground economy is wreaking havoc on the state. It’s an issue for more than just the state coffers; it affects every business, worker, and consumer in the state.
Dental –  Are You A Great Partner? 
Tips for Selling Benefit Plans to Employers
by Karen M. Gustin, LLIF • Across the country, employers are struggling with the overwhelming job of administering employee benefit programs. Although costs continue to rise, employers want to provide benefits that help keep their employees healthy, both physically and financially.
Why Your Clients Should Provide Hearing Care Coverage to Employees
by Amber Lund • Offering a benefit package that only includes coverage for medical, vision, and dental leaves out a significant area of care – one that is vastly overlooked by the insurance community, but affects millions of working Americans.
Voluntary Legal Plans–Without Affordable Access to Legal Benefits, Working Americans Have to Face Legal Issues On Their Own
Many Americans aren’t prepared to deal with significant legal challenges. Americans need to become more aware of options such as legal protection plans, that offer the legal protection they need.
Wellness–When it Comes to Wellness Benefits, What Employees Don’t Know Can Hurt Them
by Joe Willingham • Employers can offer the best wellness programs around. But their workers can’t take advantage of the offerings if they don’t know about them, which means that employees miss out on the opportunity to improve their health and productivity.
Annuity Trend Watch
by Leila Morris • The picture is definitely mixed for today’s annuity market. Low-interest rates have affected all lines of the annuity business, and manufacturers are reassessing the exposure of various product lines.

Voluntary Benefits – A Year Ahead: Lessons Learned in 2012

by Adam Michaels

Many California producers have faced a strenuous road helping clients navigate benefit changes as a result of new health care law. This is a good time to take stock of lessons learned in 2012 and assess potential challenges and opportunities that await brokers in 2013.

By arming themselves with keen benefit insights, brokers can take a consultative approach when advising clients in the year ahead. They can boost their clients’ bottom lines as well as their own. Americans need to a better understanding of their benefit options, and they need to be more financially prepared in the event of an accident or illness, according to the 2012 Aflac WorkForces Report. Below are key insights from the survey as well as smart solutions to consider for 2013.

What We Learned in 2012 

While facing tough economic conditions, Americans are unaware of how important benefits can be to their financial plans. Many workers are in the dark about benefit options. They often consider themselves healthy and protected even through most would not be able to protect their finances from unexpected costs related to accidents and illnesses. For example, the study showed that only 30% of U.S. workers fully understand their insurance options, and more than half say they waste up to $750 a year because of open enrollment mistakes. Another disturbing statistic is that 62% of Americans are in denial about the likelihood of an accident or serious illness happening to them or a family member.

In addition to believing that they won’t get sick or hurt, many Americans aren’t financially prepared for the cost of illnesses; 58% say they don’t have a financial plan to handle the unexpected. And medical costs continue to rise. For instance, the average cost of coronary artery disease is $75,000 per year, per person, according to the Milliman Research Report. When asked how they would pay for out-of-pocket expenses to treat an unexpected illness, 57% of workers would have to tap into savings, 30% would use a credit card, and 19% would have to withdraw funds from their 401(k) plans, according to the Aflac Workforces Report.

Economic uncertainty and a changing health care landscape are key pain points that affect employees today. It is critical for Americans to be aware that there are affordable options available to help protect them from financial distress related to health care costs. Benefit coverage and proper financial preparation are becoming increasingly important to workers. In fact, most employees surveyed say they would consider leaving their current job for a position with lower pay, but better benefits.

Statistics like these present an opportunity for savvy brokers to educate their clients on how they can help employees stop wasting money while protecting them against the increasing costs of an unanticipated illness or injury. Employees will have more appreciation for their insurance plans when they have accessible educational tools and a better understanding of their benefits. They will also be able to assess gaps in their insurance coverage and choose benefits that provide peace of mind with added financial protection when they need it most.

Producers should advise clients to emphasize education about benefit offerings and the changing market due to the Patient Protection and Affordable Care Act (PPACA). Employees will have a better understanding of their benefits and utilization will be higher. This strategy will help businesses contain rising medical costs and improve employee loyalty. It will also help brokers and consultants justify their value — as well as their client’s benefit spending — as clients consider shifting from defined benefits to defined contribution.

Dive Deep In the New Year

When anticipating changes in the health benefit industry, clients and their employees will have questions about how they’ll be affected and what they can do to maximize their benefits without breaking the bank. The following are tips to deliver the best benefit solutions in the coming year.

Tip 1 – Use Knowledge to Differentiate

Brokers who have the expertise and insight to help clients navigate health care reform changes can differentiate themselves from the competition and benefit from delivering smart solutions. HR decision-makers are trying to understand the best benefit strategies and options for their business. Brokers are in a prime position to serve as the go-to resource to help sustain or increase their revenue growth. It’s critical to understand how health care reform may affect clients and to offer sound advice on all fronts, whether it’s answering questions about the PPACA or explaining how clients can offer robust benefit offerings that include voluntary insurance plans. That’s where agents and brokers can provide the most value.

Also, many businesses are at a standstill when it comes to making any changes to benefit plans, so brokers need to be knowledgeable about why certain benefits are better for a client’s business, why they make sense for employees, and how to best educate the workforce on the range of products. Today, benefits really do matter to employees. For example, 38% of workers who don’t feel their employer takes care of employees are likely to leave in the next year. In contrast, 76% of those who feel that their employer takes care of employees are not likely to look for another job.

What does caring mean to employees? Thirty-eight percent of workers who are likely to look for a new job say that a comprehensive benefit package demonstrates that their employer cares about them. Further, 57% say that having a comprehensive benefit package will be an important factor in deciding whether to leave a current employer. Companies with poor benefit programs may be in danger of losing important members of their workforce.

Tip 2 – Design Benefit Packages to Address Health Care Inflation and the Shift of Risk to Employees

Health care costs are likely to continue to increase in the foreseeable future with the added mandates under PPACA and ongoing improvements in medical technology. Employees who are dealing with an unexpected illness or injury will face rising out-of-pocket costs, even with the best major medical plans. Brokers and consultants need to go beyond the norm and take a holistic approach, understanding that the risk that’s being transferred goes beyond co-pays and deductibles. Building benefit packages that help address all of these shortfalls must include insurance to cover what happens financially when a disruption of income occurs as a result of a health event.

Critical illness, accident, and hospital indemnity plans should no longer rest in the appendix as add-ons but must be highlighted as keys to comprehensive plan design. When brokers assess their clients’ major medical benefit offerings and identify gaps in insurance coverage, they can offer a product mix that provides added protection to help employees fill those gaps without adding benefit costs to the company.

Tip 3 – Implement Wellness Programs to Curb Costs

As Americans kick-off the New Year with resolutions to get in shape, brokers can advise clients to develop effective wellness programs that promote a healthy lifestyle, encourage employees to take advantage of preventive care, and help lower insurance costs.

In fact, there has been an increase in employer interest in wellness programs as a solution to reducing expenses while maximizing benefit offerings. For many companies, medical costs consume 50% of corporate profits, according to “Worksite Wellness,” an April 2007 report by the Vermont Department of Health. With a wellness program in place, companies are finding that encouraging their workforce to be healthier helps the bottom line. The Aflac study found that 44% of businesses with a wellness program are able to offer lower premiums as a result the program.

Wellness programs result in an average reduction of 28% in sick days, an average reduction of 26% in health costs, and an average reduction of 30% in workers’ compensation, according to the Worksite Wellness report. These findings support predictions that, over the next 10 years, the country will transition the health care system from one that simply fixes people who get sick to one that focuses on preventing and diagnosing diseases. As producers and advisors, brokers can help improve employee understanding of the benefits, appreciation, and ultimately utilization, which would lead to improved moral and cost containment within a company. Employers will appreciate the improvements seen with increased education and use them as proof points for the ROI of a wellness program.

Opportunities Ahead

The past year has taught many lessons about the health care industry and what American employees want and expect from their employers. This insight is key for brokers to take advantage and capitalize on this opportunity. Those who’ll come out ahead in 2013 will be the ones who do their homework; offer customized programs that include both core and voluntary products to their clients based on employees’ needs; and encourage wellness. Health care reform will present challenges over the next few years, but brokers can turn these challenges into opportunities by executing creative and educational plans to find the right mix of benefit solutions — translating into the best year yet for all involved. q


Adam Michaels is the California-Los Angeles state sales coordinator for Aflac. He is responsible for creating and implementing the state’s strategic market development plan as well as acquiring and training new talent for the sales force. For more information about Aflac, visit aflac.com or email CAL@aflac.com.


Voluntary Benefits – Partnering With Clients to Improve Employee Engagement

by Elena C. Wu

It is often difficult for the average working American to understand their benefits and choose the right coverage. As the landscape for employee benefits changes and more types of coverage emerge, some employees become so overwhelmed and frustrated that they chose benefits based on whatever is easiest and takes the least amount of time, leaving them and their families at risk and walking away with a dissatisfied experience.

Benefit brokers have a key opportunity to provide guidance, support, and helpful resources to their clients. They can help answer important questions, such as, “How do I help my employees understand their benefits?” and “Which plan designs should I offer?”

Determining the Value Employees Place on Benefits

It is important to know what employees are thinking in order to engage them throughout the benefit process. Do they value their coverage? Have they become complacent, enrolling in the same coverage year after year? How do they want their benefits to be communicated? What kind of information and tools do they need to make the right decision?

Today’s American workers do value their benefits, but there is significant room for improvement. In 2012, the Guardian Life Insurance Company of America set out to find answers through the Guardian Workplace Benefits Study. Employees rated satisfaction with their benefit plans at a decidedly moderate 6.8 on a 10-point scale (with one the lowest and 10 the highest). The study is based on a nationwide sample of 1,667 employees at companies of all sizes across every industry. Only one in five workers are highly satisfied with their benefit plan.

The Biggest Opportunity: Benefit Communications

Nearly two-thirds of employers say they need better solutions to communicate the benefit message to workers. Only 37% of employers say that the benefit communications they have provided to employees have been effective while 34% of the employees say the same of their employer’s efforts.

Employees clearly look to their employers for benefit information in multiple forums and channels. As a result, a majority of employees are looking for a combination of low-touch (e-mail, direct mail, and literature) as well as high-touch (benefit meetings and one-on-one support) communication efforts. Similarly, employees say that it’s beneficial to have communications sent to both work and their homes.

A Year-Round Effort

When it comes to benefit communications, there is the issue of substance and delivery, but also the very important matter of timing. With many new products crowding the market, employers cannot afford to wait until the last minute to bring their workers up to speed on benefit offerings. This is especially important when an employer offers a new and relatively unknown benefit to employees. An example is new financial protection coverage, such as voluntary accident, cancer, and critical illness benefits that help employees fill financial gaps. Employees generally have limited awareness of these types of coverage. So employers that communicate the need and benefit of these plans well before open enrollment will improve their chances of having higher participation rates, as opposed to an employer who waits to communicate everything during the initial period of open enrollment.

There is no doubt that benefit communication is now a year-round process, not a task that is limited to a two to 10-week window during open enrollment. Having an ongoing approach to benefit communications with touch points throughout the year could result in a better-informed employee population that has improved perceptions of the benefit plan. As employees see increased value in their benefits, they’ll be more likely remain engaged, dedicated, and satisfied with their coverage.

A Balancing Act: Budget and Resource Strapped Clients Versus Enhanced Benefits Communications

Most benefit managers say they understand how benefits can boost employee loyalty, lift morale, and increase productivity. At the same time, businesses large and small have become more acutely aware of the cost of what they offer. Let’s not ignore the fact that the cost of carrying benefits—healthcare, in particular—has been steadily rising. Those increases have driven some companies to consider more choices while others have scaled back or implemented radically altered plan designs. To get workers to carry a larger share of the burden, a number of companies have turned to voluntary benefits.

Offering voluntary benefits opens up more benefit choices for employees, but it can make an employer’s job of educating employees more complicated than ever.

Employers need help to improve benefit communications and better educate and engage employees. Many firms find it difficult to give employees enough time and attention to guide them through the process of selecting benefits. Also, human resource departments have frequently taken the biggest hit when it comes to downsizing.

Solutions Start With Partnership

The good news is that there are solutions—ones that are readily available. It is possible to improve benefit communications in light of dwindling budgets and resources. The key is to help employers fill some of the gaps left by shrinking HR departments and develop a sound, effective communication plan. This is where the partnership comes into play. More than ever, brokers can bring ideas and solutions to help employers finally crack the age-old problem of benefit communications. In order to help, brokers don’t need to have marketing or communications degrees; they simply need to have a more active and targeted conversation with their carriers on the subject of communications.

Carriers can offer great guidance and resources to brokers and their clients on developing a successful communications strategy. More importantly, carriers have communication resources at their disposal to share—whether it is ongoing benefit content for employees or an online resource to help decide the right benefits to select during open enrollment.

Together, by placing a collective focus on the employee—who ultimately is the end customer for all of us—we will be able to improve benefit communications and help employees see that navigating benefits is not a lost cause. It is one of the most important decisions that today’s employees can make, so let’s all work to make it an easier process for employees.


Elena C. Wu is vice president and Group Marketing Officer for Guardian’s Group Insurance division. In this role, she is responsible for leading all aspects of marketing Guardian’s employee benefit solutions to brokers, employers and their employees. In addition, Elena is responsible for Internal Communications and the learning and development of Guardian’s 2,300 employees in the Group Insurance division.

Voluntary Benefits – Boost Commissions with Non-Traditional Voluntary Benefits

by Elizabeth Halkos

As employees continue to struggle financially, many are unprepared to make necessary or unexpected major purchases, whether to buy a computer for a child who is going off to college, purchase bedroom furniture for a growing family, or replace a refrigerator that can no longer be repaired. Employees can get these needed items through an employer-sponsored payroll deduction program.

With employee purchase programs, workers can purchase needed or life-enhancing household items, such as computers, software, home appliances, electronics and furniture, from recognized brands and manufacturers. Some programs even offer nursery and child-focused items as well as educational products, such as SAT/ACT prep, online college courses, and professional certifications.

Employee purchase programs have proven to offer a viable, cost-effective alternative to employer discounts, layaway plans, rent-to-own plans, and credit cards. Purchase programs involve easy qualification; the employee must simply must be at least 18 and meet minimum salary and tenure requirements. Most employee purchase programs have no finance fee or ballooning interest. Unlike a credit card, the payment term in a payroll deduction program is fixed over the course of 12 months. Many employees who have participated in such programs say they don’t even miss the money because it’s taken directly from their paychecks. The process is pain free. The tangible benefit is almost immediate; it’s felt as soon the employee orders and receives the product.

What Employers Say About Employee Purchase Programs

Seventeen percent of employers offer employee purchase programs, according to an Employee Benefit News (EBN) survey last December. Another 30% that do not offer this benefit say their employees would have financial difficulty making major purchases.

Employee purchase programs allow employers to offer a benefit that’s low-cost, easy-to-administer, and that helps make their benefit packages unique and competitive. HR professionals like employee purchase programs because they enhance their benefit packages (67%) and there are minimal administration costs and no employer liability (44%), according to the survey.

Which Employees Use Employee Purchase Programs

Employee purchase programs appeal to very distinct groups in the workforce. Thirty-seven percent of full time workers, surveyed by Purchasing Power and Harris Interactive, said they would be “at least somewhat likely” to use employee purchase programs for major purchases.

Younger workers are most likely to use employee purchase programs.

Forty-four percent of employees age 18 to 34 say are at least somewhat likely to use purchase programs, as are 38% of employees 35 to 44. With technology ingrained in their DNA, Gen X and Gen Y workers are big purchasers of computers and electronics. And, since many are striking out on their own for the first time or starting a family, they tend to purchase more appliances and furniture than do their older colleagues.

Those who have never been married are most likely to use employee purchase programs. While they tend to spend their purchase dollars on electronic gadgets, computers, or fitness and recreation equipment, their married counterparts are more likely to purchase furniture and appliances.

Forty-two percent of women say they are likely to use purchase program versus 38% of men.  Although men are more apt to purchase items, such as computers, electronics, furniture, and appliances in the next 12 months, a woman is likely to be the driving force behind those purchase decisions.

Workers who earn less than $35,000 are most likely to use employee purchase programs. However, once a company begins offering this benefit, 65% of those with incomes from $35,000 to $49,900 become the real power users. Electronics, computers, and furniture are the top-three items these power users are most likely to purchase.

The likelihood of workers using employee purchase programs goes up with the size of their household; this is especially true for families with children age 6 to 12. Having children drives up the need for electronics to keep them entertained; computers to give them a resource for school work; and appliances, such as washers and dryers, to keep the household operating efficiently.

Employee Purchase Power-Users

Although employee purchase programs are designed to meet the needs of a diverse workforce, it is important to understand the make-up of the power user to determine whether employees will value and use this benefit. Below is a demographic snapshot of who that employee might be:

• 35 to 44
• Married
• Female
• Mid-income
• At least one child in the household

Sixty percent of workers used purchasing programs one to three times during the course of two years, according to Purchasing Power’s 2011 Customer Data. In 2012, the hottest products for Californians were the Apple iPad 3rd generation, the Apple iPad 2, and Apple MacBook Pro laptop.

Although an employee purchase program is a year-round benefit, there are very distinct buying seasons for certain products. For Californians, the biggest months for purchases are the holiday season and during August when people purchase back to school items.

The Benefit of Employee Purchase Programs to Brokers

Employee purchase programs are great products for brokers to offer to new or existing accounts because they help create goodwill between the company and employees.  Employers can meet their HR objectives of increasing employee engagement and retention by including an employee purchase program in their benefit package as a voluntary benefit.

By adding the fastest growing voluntary employee benefit to their product portfolio, California brokers can offer a winning solution to their clients while providing a recurring revenue stream for themselves.


Elizabeth Halkos is Chief Marketing Officer for Purchasing Power. For more information, visit www.purchasingpower.com.


Common COBRA Questions

by James E Deyo III, MBA

Every day, I receive phone calls from brokers, clients, insurance carriers, and COBRA participants with complex questions regarding administration of COBRA that can result in confusion, and some cases, costly consequences. As we enter this New Year and begin our approach towards health care reform, I want to highlight some of these questions to minimize compliance issues.

The first question that I commonly receive is whether a plan is subject COBRA or Cal-COBRA. It is not as simple as just an employee count of 20 or more. To start off with, you always look back to the previous calendar year to determine the employee count and assess whether they are under the federal or state program. Because of this, no company in their first year of existence is subject to federal COBRA until after the first calendar year.

Each December 31 you count the employees to determine if there were 20 or more full-time or full-time equivalent employees on more than 50% of the business days of the year. If so, they are commonly covered under federal COBRA, but this is not always the case. If an employer is part of a controlled group of companies, they may be subject to federal COBRA even if they have only 10 employees working within the United States.

We often find situations in which an employer is owned by a foreign corporation. While the foreign-owned corporation employees are not eligible for COBRA, they are included in the count when determining if an employer has met the 20-employee count for Federal COBRA. We must also look at how many part-time employees an employer may have. Each of their part-time employees is counted as a fractional employee.

The biggest mistakes that I see are employers switching their employees from Federal COBRA to Cal-COBRA or vice versa mid-year. As I stated previously, you determine whether somebody is subject to Federal COBRA or Cal-COBRA at the end of each year. In fact, even if the employer reverts back to Cal COBRA because of the small employer exemption, any employees receiving benefits under Federal COBRA continue to receive benefits under Federal COBRA.

Similarly, if an employer switches from Cal-COBRA to Federal COBRA at year-end, the employees who were on Cal-COBRA remain on Cal COBRA during the remainder of their eligibility. An associated question is about the Cal-COBRA extension under AB 1401. The extension is provided to any employee covered under a California issued plan up to the 36-month point if they received coverage for any period of time less than that under Federal COBRA. The participant must exhaust their Federal COBRA first. We generally see those extensions from 18 or 29 months to the 36-month point.

It is important to note that Cal-COBRA only applies to fully insured plans issued in California. It covers both residents and non-residents, but is limited to the medical plan. Dental and vision plans are considered to be specialized health plans that are non-core and therefore not covered under the Cal-COBRA extension.

Next let’s look at the plans that are covered by Federal COBRA. Certainly, we all know that medical, dental, and vision plans are covered by COBRA. Let’s not forget that several other plans are covered under the regulations as well. These include plans such as health reimbursement arrangements (HRA), unreimbursed medical FSAs, medical expense reimbursement plans (MERPs), pharmacy plans, chiropractic plans, and often EAPs. Health savings accounts are not subject to COBRA. Check with your administrator to determine if one of your plans is subject to COBRA and make sure it’s included in the COBRA election notice.

If you add a new plan during the plan year you must also offer it to current COBRA continuants. Don’t forget that, in all matters COBRA, the participant must be treated the same as similarly situated active employees and thus have the same rights.

With respect to HRA plans or MERPs, employers are often confused about what to charge the COBRA participant for these benefits. The Internal Revenue Code states that a COBRA applicable premium must be determined. This is easier said than done because the IRS has not clearly established how to accomplish this. One thing is clear; the applicable premium is not the maximum annual benefit divided by 12. With HRAs and MERPs or both self-funded plans, we can look to the general rules of self-funding to establish our methodology. Ideally, the first year premium should be actuarially determined and following years.

We can use a past-cost method to determine the premium by category and use the medical multiplier found in the gross national product to create a final premium. This can be a difficult and costly approach to determining the appropriate premium.

We have seen other approaches including doing a comparison between a low deductible option and a high deductible option using the differential as the premium. This makes some sense because those premiums were actuarially determined. Other employers use a percentage of the claims cost. But there is no absolute answer. The IRS has indicated that it plans to issue rules in calculating HR premiums sometime in the near future. In the meantime, just make sure that you apply a consistent approach for all other similarly situated participants.

While COBRA provides the minimum standards for proper administration, employers are allowed to provide benefits that are greater than established under COBRA law. As a cautionary note, however, be careful not to violate your insurance contract. Always read it to ensure that you are not offering benefits that are outside the scope of your current contract. Violations can result in the insurance company denying payments or establishing liability under the Medicare secondary payer role. We’ve seen this happen, and in one particular case, the employer may be responsible for payment of nearly $500,000 in claims. All of this was to provide a favor to the former employee. If you plan to do anything outside the norm, get it approved by the carrier first.

The final question that I’m going to address relates to Medicare entitlement. There is a lot of confusion out there about when COBRA terminates as a result of Medicare entitlement and for how long continuation extends for dependents. The IRS issued a Revenue Ruling that clarifies how Medicare entitlement should be handled.

First of all, we need to understand the difference between Medicare entitlements and Medicare eligibility. Eligibility, by itself, does not affect COBRA at all. Only when the individual signs up for Medicare are they entitled and they may be subject to COBRA termination based upon the timing of the event. The bottom line is that, if an employee or participant enrolls in Medicare Part A or Part B prior to their COBRA election, they are eligible for both benefits. It is only when they enroll in Medicare after they signed their COBRA enrollment that they lose coverage. They lose not only the medical portion of COBRA but any other COBRA benefit as well.

There has been a long held belief that the termination of COBRA due to Medicare entitlement allowed the spouse and children 36 months of coverage. The IRS clarification indicated that the spouse and child could only extend under the secondary event rules to 36 months if that event would have caused them to lose coverage as an initial qualifying event.

Because of the Medicare Secondary Payer Rule, employers cannot terminate an employee’s coverage due to Medicare entitlement while that person is an active employee. As a result, this cannot be an initial qualifying event. In these cases, the spouse and children would only be entitled to the original 18 months coverage. The only time that the spouse and child may extend up to 36 months is when the COBRA participant lost coverage under a retiree program due to entitlement. Another exception applies if the employee was covered by Part A or Part B before the qualifying event. In this case, the employee would be eligible for 18 months coverage and the spouse and children would be eligible for the longer of 18 months or 36 months measured from the date the employee became entitled to Medicare.


James E Deyo III, MBA, is the president and CEO of COBRA Plus Administrators Inc., a Sacramento-based COBRA TPA. He’s also a principal with Pacific Benefit Consultants IFlex Inc, a Cafeteria plan, HRA and HSA administrator. He has over 30 years’ experience in the employee benefits field ranging from claims administration, benefits manager for a major hospitality corporation, analyst for a national benefits consulting firm, and instructor of the Certified Employee Benefits Specialist Program. In addition, he is a retired Air Force Reserve Instructor Navigator and Plans Officer. 


Fast Tracking Your HSA Sales–Part I of Our Annual Survey

By Leila Morris

Welcome to our annual HSA Survey. We asked the top companies in the state essential questions about coverage and services that affect you, the broker. Read on to find out which plans will work best for you and your clients. Look For Part II of Our Annual HSA Survey in the February 2013 Edition.

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 in an integrated Banking system through our contracted partners; NY/Mellon.

Blue Shield: Blue Shield offers an integrated eligibility and claims experience for clients that choose an account based health plan (i.e., Health plans wrapped with an HSA,

HRA or FSA account). 2013 will be a year of choice. Members can choose a HDHP PPO and couple it with a health savings account or choose a regular PPO or HMO plan and wrap a health reimbursement account around the product. In either case the member will be empowered to manage their health and wealth.

Cigna: Cigna Choice Fund health savings account (HSA) 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, 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.

HSA Bank: HSA Bank provides HSA administration. Complimentary business support is offered to employers and brokers including implementation planning, enrollment meeting support, remote Webinars, and communication planning. Through free online banking, accountholders can view and download real-time transactions and year-to-date account information, transfer HSA funds to an investment account or other accounts, and more. HSA Bank also funds each new HSA with a penny to meet IRS establishment, enabling accountholders to be reimbursed for qualified medical expenses on day one.

HSA California: The HSA California Exchange is the only small-group, fully integrated HSA program with multiple carriers. Each employee can choose from a menu of HSA- qualified high deductible health plan benefits from Health Net, Kaiser Permanente, and Western Health Advantage with no minimum participation requirements.

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 is no application or fee to open an HSA with The Bancorp Bank.

HSA California also offers dental, vision, hearing, HR support, life, and Section 125 POP plans, as well as prescription discounts of up to 75% through the California Rx Card Program, and amusement park, movie ticket, and other discounts through the Cal Perks Employee Discount Program (offered at no cost to enrolling groups).

Kaiser Permanente: Kaiser Permanente 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, and large groups), 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 Kaiser Permanente 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.

SeeChange Health: SeeChange Health Insurance offers high-deductible health plans compatible with HSAs that financially reward members for taking actions to manage their health.

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 EOB, 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 most recent satisfaction survey found that among the Sterling services valued most by our HSA accountholders, online services are at the top of the list with 91% of Sterling accountholders responding favorably. We offer educational materials and services in English and Spanish. Our trans- created Spanish Website includes HSA online enrollment for individuals and employer groups. Our forms and collateral have also been trans-created for clients who prefer Spanish and we have many Spanish bi-lingual customer service representatives to help them.

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 predictable qualified High Deductible Health Plans that can be wrapped with a health savings account.

Cigna: Yes, Cigna offers a full suite of account-based medical plan designs that meet the definition of a qualified high deductible plan.

HSA Bank: No, HSA Bank offers direct health savings administration. HSA Bank is an independent bank and can administer HSAs for any qualified high deductible health plan offered by any regional or national carrier. If the employer decides to switch carriers, they can keep their HSA with HSA Bank. There’s no need to transfer accounts.

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 and large business groups, EPO plans for Individuals and Self Funded EPO plans.

SeeChange Health: Yes, to the best of our knowledge we offered the nation’s first value-based benefit HSA-compatible plans in the country.

Sterling HSA: As an independent HSA administrator, Sterling can work with all HSA compatible plans — fully insured and self-insured. In mid-2011, we launched Sterling level funding and traditional self-insurance products that do include HSA-qualifying high deductible health plans as an employer option.

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 www.Anthem.com/ca and be linked to their BNY/Mellon account.

Blue Shield: Blue Shield offers choice. Our clients and members can choose to have an integrated HSA model or a stand-alone HSA bank account. Both options promote pre-tax deposits and after-tax deposits; when the member reaches a certain dollar amount, he/she can choose to invest the savings in mutual funds. Cigna: Cigna has an extensive offering of consumer products that include an HSA, HRA, healthcare flexible spending account, dependent care flexible spending account, and incentive health reimbursement accounts (Healthy Awards).

HSA Bank: For spenders, the health savings account is an easy and tax-advantaged way to save and pay for healthcare costs before and after the deductible is met. For savers, an HSA is a great way to build savings for retirement.

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 (HRAs)

SeeChange Health: No. Members have the flexibility to use the HSA administrator, which delivers the most value.

Sterling HSA: Yes, in addition to HSAs, Sterling also provides administration services for HRAs, FSAs, POPs and COBRA.

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.

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 qualified HDHP to be used with an HSA for all markets, including individual and family, small groups (from 2 to 50 employees), midsize groups (51 to 299 employees), and large groups (300+ employees).

Cigna: Our HSA product is available for employers with 50or more eligible employees.

HSA Bank: An HSA at HSA Bank is available to employee groups of all sizes with no minimum or maximum number of participants. Our HSA is also available to individuals not connected to an employer group.

HSA California: HSA California is available for employers with 2-50 employees.

Kaiser Permanente: Kaiser Permanente offers HSA-qualified deductible HMO plans to any group size. PPO plans are available to any group size, and Self Funded EPO plans are available to groups with 500 subscribers.

SeeChange Health: Our fully insured plans are available to groups of 2-to-200 or more employees. Our sister company, SeeChange Health Solutions offers value-based benefit ASO services that support HSAs.

Sterling HSA: We work with groups of all sizes, including large, medium and small companies. We also work with individuals, many of whom sign up for our HSA online.

UnitedHealth Group: Yes, UnitedHealthcare has partnered with OptumHealthBank for HSA administration, savings and investment opportunities.

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 HSAs plans. These associates can work with the client and agent/broker to explain all processes.

Blue Shield: Blue Shield’s management team is experienced in healthcare services, but works closely with our preferred vendors-Health Equity, which provides the integrated model; and Wells Fargo, for stand-alone accounts.

HSA Bank: HSA Bank’s leadership and national sales force is highly experienced and trained in both health insurance and financial services. David Drzymkowski, the Regional Vice President – California & Hawaii, has held his insurance license since 1988.

HSA California: Both.

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.

SeeChange Health: Our leadership has extensive experience in health insurance and financial services as well as with value-based benefit plan designs.

Sterling HSA: Sterling HSA’s executive team has extensive experience in healthcare, insurance, and consumer directed account 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 ongoing broker communications, newsletters, and product demonstrations as new products are introduced.

Blue Shield: Yes, Blue Shield provides a continuing education seminar on HSAs to our IFP brokers periodically. Brokers also have access to educational programs and tutorials through Health Equity and Wells Fargo Websites: www.healthequity.com/BSCemployeeEd

Cigna: Cigna provides consumerism education on products including the HSA to brokers via forums and through highly skilled sales managers.

HSA Bank: Yes, Our Business Relations department serves as a valuable resource for HSA-related questions by phone and email. Our team is also pleased to schedule training Webinars for brokers. Plus, your regional vice president David Drzymkowski is happy to visit your office and host a Lunch and Learn on a variety of HSA topics.

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., Pacific Time, Monday-Friday at sales@hsacalifornia.com or toll-free at (866) 251-4625. HSA California also provides ongoing seminars to provide brokers with the necessary information and tools to explain High Deductible Health Plans and 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: wellsfargo.com/investing/hsa/demo

SeeChange Health. Yes. We provide extensive training on our products, including HSA-compatible plans. We also work with the state’s major general agencies to help educate brokers.

Sterling HSA: Yes, Sterling offers a variety of training options, including CE courses, Webinars, “lunch and learn” meetings for large regional brokerage groups, and individual sessions pairing Sterling account representatives with brokers and consultants.

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 does not pay commissions for HSAs because we administer the HDHP.

Blue Shield: Enrolling online eliminates the need to complete and mail in paper enrollment forms, provides an efficient enrollment process that is accurate and secure, and delivers immediate enrollment confirmation to employees. During the Blue Shield group installation for our integrated program, the client will be seamlessly set up with HealthEquity. Blue Shield will pass employee eligibility information to HealthEquity, which will automatically set up bank accounts. The client will be able to fund its employees’ HSA through payroll deduction. Employees enrolling in a Wells Fargo health savings account (HSA) through their employer are able to conveniently enroll online directly with Wells Fargo.

Cigna: Cigna pays its standard commissions for HSA sales.

HSA Bank: We recognize the important role you play in our success. To show our appreciation, we created a producer recognition program that rewards brokers on three levels. For more info, visit hsabank.com/hsabank/AgentsBrokers.

HSA California: HSA California pays standard commissions monthly.

Kaiser Permanente: Brokers are paid the standard medical commissions on all of our HSA-qualified health plans.

SeeChange Health: We pay 7% level commissions for groups of 2-to-50 employees and 5% level for groups of 51 or more employees.

Sterling HSA: Commissions for our HSA business are 10% of the fees for all new and renewing groups and are paid quarterly. We also pay commissions on HRA, TSA, FSA, POP, and self-insurance business.

8. Are electronic enrollment forms accessible through your Website?

Aetna: Yes.

Anthem Blue Cross: Yes.

Blue Shield: Enrolling online eliminates the need to complete and mail in paper enrollment forms, provides an efficient enrollment process that is accurate and secure, and delivers immediate enrollment confirmation to employees.

During the Blue Shield group installation for our integrated program, the client will be seamlessly set up with HealthEquity. Blue Shield will pass employee eligibility information to HealthEquity, which will automatically set up bank accounts. The client will be able to fund its employees’ HSA through payroll deduction on the HealthEquity Employer Portal. Training Webinars occur every Wednesday; to sign up, clients go to: http://www.healthequity.net/BSCsales, and click the link under LAUNCH AND BEYOND titled HSA Employer Portal Webinars.

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.

HSA Bank: Yes. HSA Bank offers a variety of online enrollment options for the employer. With our Auto Enrollment File process, employers can easily enroll all HSA-qualified employees in an HSA by uploading a Microsoft Excel file. With HSA Bank’s Group Online Enrollment system, the employer can easily facilitate the HSA-enrollment process by providing their employees with a custom enrollment link to an online application

HSA California: PDF enrollment forms are available on our Website at www.hsacalifornia.com. Employers and employees can open and fund an HSA on our Website 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: kaiser.healthinsurance-asp.com. HSA Employer and Individual applications can be downloaded at wellsfargo.com/hsa. Kaiser Permanente health plan enrollees from companies whose employer is not sponsoring an HSA, and individuals enrolled in Kaiser Permanente’s individual and families health plans, can open and fund an HSA account online at: wellsfargo.com/investing/hsa/enroll.

SeeChange Health: We expect to add this functionality in 2013.

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 www.sterlinghsa.com in a fill-able PDF format to download, complete, and email, mail or fax to Sterling. Our online enrollment and paper forms are available in English and Spanish.

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 HSA account. Members can view online their banking balances and their claim activity.

Account status and explanation of benefits documents are available through our Website. Members can use their debit card or Mellon checks to pay for their out of pocket responsibility. The customer service advocates are available to help members understand their financial responsibility.

Blue Shield: With our new account based platform with Health Equity, there are just five simple steps from visit to reimbursement:

1. Member visit to healthcare provider
2. Claims sent to HealthEquity by Blue Shield
3. Automatic notification of responsibility
4. Claim and account information on the same screen
5. Provider paid directly or reimbursement from CDH account

When employees are notified of a claim with member responsibility, they just access the Website to process payment and reimbursement. After viewing the claim detail, members can choose the action to be taken: pay provider, reimburse themselves, or close expense. The medical expense payment process is easy and flexible. Members can directly pay a provider from their HSA pre-tax account or add an additional external bank account; both pre- and post-tax distributions are tracked and housed on the member portal for tax reporting purposes.

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 individual’s 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.

HSA California: Our carrier partners – Kaiser Permanente, Health Net, and Western Health Advantage – have created special units within their organizations to help members enroll in HSA California.

Kaiser Permanente: Money in the HSA can be used to pay for a variety of qualified medical 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. A member can also write their HSA debit card number on their Kaiser Permanente bill and remit for payment.

SeeChange Health: We help our members understand their share of medical treatment and how they can offset those costs by completing health actions designed to help them manage their health. Expenditures from their HSA are handled directly between the member and their account administrator.

Sterling HSA: Sterling reviews the EOB and medical bills for health plan 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. A number of our clients come to us for help with payment plans in the event there are insufficient funds to pay a medical bill. This service is especially valuable in this difficult economy. We also partner with Medical Cost Advocate to help our accountholders negotiate medical costs before and after they are incurred.

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

Aetna: Customer service representatives are available by phone and through our Website.

Cigna: Cigna offers integrated customer service via our myCigna.com Website and 24/ 7/365 toll-free telephone service to respond to questions about the member’s health insurance and the HSA. 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: All HDHP-related questions are referred back to Blue Shield.

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., Eastern Time, Monday-Friday. (866) 271-2649 or HSAInvestments@TheBancorp.com.

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 kp.org, 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 kp.org/deductibleplans to find out more.

SeeChange Health: Questions related to plan coverage are handled by SeeChange Health.

Sterling HSA: Our customer service representatives are available Monday – Friday from 7 am to 6 pm Pacific. Clients and brokers can reach us toll-free at 800-617- 4729 and via e-mail at customer.service@sterlinghsa.com.

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 www.myuhc.com.

11. Is the administrator integrated with the health plan?

Aetna: Yes

Anthem Blue Cross: Yes, BNY/ Mellon provides consumers with:

Online Checking Activation Services through Anthem.com/ca

Interest-bearing checking account Anthem-branded MasterCard debit card Checkbook (Consumer receives the HSA debit card, checkbook, etc. after completing the activation process.)

Online Monthly HSA Statements (bank statement)

Annual Tax forms: 1099s (January), 5498s (May)

Online Investment opportunities through its subsidiary Dreyfus

Online Bill Pay for the member’s medical fees

Blue Shield: Blue Shield offers a fully integrated experience through our partnership with Health Equity. Our new Account Based platform offers a completely integrated healthcare experience for both members and clients. All accounts are on one platform with integrated enrollment and claims information, and flexible contribution models. We will also provide clients with an Employer Portal with access in real time to eligibility information, contributions, fee payments, and more. Clients will also be able to run reports for easy reconciliation. .

Cigna: Yes, the HSA is fully integrated with the high deductible health plan.

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.

SeeChange Health: No as members are free to select any HSA administrator they choose.

Sterling HSA: We are an independent administrator available to work with all health plans across the nation. We have the ability to pull EOB information from the carrier for payment on behalf of our accountholders.

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: Under the Health Equity program, employees can invest their HSA dollars directly from the Website after reaching the $2,000 minimum balance; investments are on the same, single platform. There are no fees to invest and members can access up to 12 different mutual funds and each fund prospectus. Tax statements are also available on the Website. Wells Fargo has 13 mutual fund options available for investment options

Cigna: Cigna offers a customized slate of diversified HSA investment options through JP Morgan Chase as part of our Cigna Choice Fund HSA.

HSA Bank: Accountholders can select from two self-directed investment platforms based on their unique approach to investing. The Mutual Fund selection offers a professionally, pre-selected group of no-load mutual funds covering a range of fund families and asset classes. The Direct Brokerage option offers stocks, bonds and thousands of mutual funds. There’s no minimum HSA balance to begin investing. And, there’s no default or proprietary investment based on account balance.

HSA California: The Bancorp Bank offers an extensive investment portfolio, from FDIC-insured savings accounts to more than 7,000 investment options.

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(r), visit wellsfargo.com/advantagefunds or call (800) 222-8222.

SeeChange Health: That will vary based on the HSA administrator chosen by the member.

Sterling HSA: Not at all. Our accountholders can choose any IRS qualified investment for their HSA funds, including stocks, bonds, mutual funds, and CDs. We made arrangements with Partnervest Securities LLC to offer investment services at a discounted fee for Sterling accountholders. Partnervest also provides Sterling with monthly account balance information to ensure the outside investment information contained in Sterling HSA account records is current. Partnervest contact information is available on our Website at http://www.sterlinghsa.com/products/hsa/ investmentservices/

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 Addendum is stating you will or will not use our integrated banking option.

HSA Agreement must be signed if the Employer chooses our integrated partner BNY/Mellon.

Blue Shield: There are no extra forms needed; all questions are included in your Blue Shield group installation paperwork.

Cigna: Cigna’s standard processes and forms are used for all Cigna products including the HSA.

HSA Bank: To make enrolling in an HSA convenient for employers and their employees, HSA Bank offers several enrollment options including electronic file format, online enrollment and paper application. Each enrollment option provides unique capabilities and is designed to work best for different types of groups.

HSA California: Standard application forms are needed to submit an HSA California case. These forms are available at http://www.hsacalifornia.com.

Kaiser Permanente: We require our standard application and enrollment process plus necessary forms to set up the Wells Fargo HSA. 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 wellsfargo.com/hsa

SeeChange Health: No special forms are required when applying for an HSA-compatible plan.

Sterling HSA: It’s very simple. Just a completed employer group application (for groups) and an individual accountholder application for each accountholder, along with a list bill and employer preferred form of contribution. Online enrollment and forms are available at www.sterlinghsa.com.

UnitedHealth Group: Employers contributing to the HSA account are required 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: Blue Shield employees have been offered a High Deductible Health Plan and HSA since January 1, 2007.

Cigna: Yes, Cigna has offered employees HRA and HSA plan options since January 2005.

HSA Bank: Absolutely.

HSA California: CHOICE Administrators, the company behind HSA California, CaliforniaChoice, 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.

SeeChange Health: Members are free to choose their own HSA administrators and, consequently, their own trustees.

Sterling HSA: We have offered our employees an HSA plan 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 vendor relationships in place today with Wells Fargo (since 2004) and, for our integrated model, Health Equity (new for 2011). Both vendors are qualified trustee and custodians that administer health savings accounts.

Cigna: JP Morgan Chase has been the trustee for our Cigna Choice Fund HSA product since January 1, 2005.

HSA Bank: Webster Bank, N.A. provides trust services and serves in a capacity as the custodian. HSA bank has been a division of Webster Bank, N.A. since 2005.

HSA California: Yes, the Bancorp Bank handles HSAs directly; HSA California’s relationship with Bancorp dates back to the start of HSA California, but the bank has been offering services to customers since 2000. 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.

SeeChange Health: We strive to provide excellent service on all of our health plans.

Sterling HSA: Sterling does not use a trustee. BNY Mellon Corporation is the custodian of assets of accountholders of health savings accounts administered by Sterling Health Services Inc. and is investment manager of assets in accordance with the Sterling Health Services Inc. Administrative Services Agreement.

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.

Life Insurance–Creating a Social Security Legacy Plan

by John A. Davidson, LUTCF, FSS

Whether you are planning to retire soon or you are several years away from retirement, you have probably have seen the latest headlines about Social Security. Unless Congress acts soon, Social Security and the fund that helps finance benefits for 44 million senior citizens and survivors of deceased workers is projected to run out of money by 2035.

That’s three years sooner than anticipated, according to the Social Security Administration’s (SSA) trustees’ annual report. So we don’t have a moment to lose to enact some important changes that will affect millions of Americans.

This very serious topic of discussion opens up some great selling opportunities for making permanent life insurance and annuity sales to clients who are not likely to rely solely on Social Security to retire.

How can your clients plan for a secure income for their families amidst the uncertainty about the level of Social Security benefits that will be available in the future? They can leverage life insurance that is paid for with a portion of Social Security benefits. As politicians continue to discuss means tested benefits, this issue has become more important for clients who don’t rely solely on Social Security, but have it as additional income. As the federal safety net comes under increased strain, your clients may need additional dollars for spouses, children, and grandchildren to continue in the lifestyle to which they’ve become accustomed.

Suppose your prospect is a 66-year-old man who doesn’t need the full monthly amount of his Social Security to live on. He may still be working. We fund a permanent life insurance policy using $1,000 per month of his Social Security benefit. Upon his death (provided sufficient premiums were paid), his beneficiary would get the full death benefit.

The surviving spouse has some great options to use money from the death benefit: invest it into an immediate annuity to provide income; put it into a trust to help ensure that adult children have retirement income in case the federal safety net fails; use it to pay off a mortgage; or use it for any other purpose the policy owner may have foreseen.

Also, because this is life insurance, policy proceeds are tax-free income. A tax-deferred cash-value accumulation can be accessed on a tax-preferred basis if needed. The client has flexibility to adjust planning needs moving forward.

In the scenario described above, the $1,000 monthly premium could provide more than a $500,000 death benefit and an internal rate of return of 5.24% on an after-tax basis (using a universal life insurance policy). This competes very favorably with other fixed income alternatives. However, keep in mind that, with universal life insurance, the premium amount that’s needed to keep the policy in force may fluctuate more or less than $1,000 per month depending on future interest rates and other factors. Whole life premiums are higher, but they do offer fixed premiums and stronger guarantees.

Simply repositioning some of the monthly Social Security benefit into the life insurance policy is a great way to create a safety net for your Social Security benefits.

Many seniors who remain employed after 65 find an alternative source of funds in the savings they get from purchasing a Medicare Supplement plan versus the high cost traditional health insurance coverage. The premium difference may be as much as $500 per month, per person. Of course, premium dollars could be found from ongoing wages, or other retirement assets.

Regardless of how the client funds the new life insurance policy, as long as sufficient policy premiums are paid, the benefit can provide guaranteed income for his family without them being entirely dependent on the unstable Social Security system.

If the client’s wife uses the death benefit to get an immediate annuity, she could receive an additional $3,209 per month for the rest of her life (assuming age 80 and installment refund). This ensures that she will not outlive her assets and that the full purchase payment is made to an heir if she dies before it is paid out completely.  This amount is greater than the original planned $1,000 monthly premium. It could easily be used to supplement existing federal benefits, offset reductions, or make up for a complete cessation of those benefits.

This permanent life insurance sales plan can be tailored to a variety of needs. In addition to being set up for a surviving spouse and children, it can be used to create a legacy trust for grandchildren to fund college tuition or other future needs.

Another great option is to use the life insurance to fund a charitable planning program for a favorite charity. Check with a tax advisor about the tax benefits of gifting this policy and funding the program for seven or 10 years.

A recent Gallup poll reveals that 57% of retirees say Social Security is their major source of income. With permanent life insurance, you can explore new possibilities for your clients and create a more stable future for their family and future generations.


John A. Davidson, LUTCF, FSS, has been associated with Ohio National since October of 2008 and is based in Thousand Oaks, Calif. John is past president of the San Fernando Valley Association of Insurance & Financial Advisors, past president of the California Association of Insurance & Financial Advisors and past president of the National Association of Insurance & Financial Advisors. He is also a member of the Society of Financial Service Professionals and a member of the Association for Advanced Life Underwriters. John is a 27-year Qualifying & Life and Court of the Table member of the Million Dollar Round Table. Davidson Insurance & Financial Services, Inc. can be reached at 805-495-6434.

Workers’ Comp–Uprooting California’s Underground Economy

by Len Welsh 

“Under the table,” “off the books,” “cash economy,” or “tax evasion” — call it what you will; California’s underground economy is wreaking havoc on the state’s already fragile economy. The “underground economy” refers to businesses and individuals that pay workers in cash and use other schemes to reduce their tax liability by avoiding payroll taxes, workers’ compensation insurance, and other expenses mandated by state and federal regulations.

California’s Board of Equalization estimates that the underground economy robs the state of about $8 billion annually while the California Franchise Tax Board pegs that number even higher at $10 billion. Either way, it’s a lot of money for a state that’s facing significant budget issues.

The underground economy is an issue for more than just the state coffers; it affects every business, worker, and consumer in the state. Companies that cut corners on their tax obligations undercut law-abiding businesses and drive up costs for everyone. Employees of companies that operate illegally may be underpaid; deprived of social security and unemployment insurance benefits; and exposed to unsafe work conditions, while consumers may be purchasing services from unqualified suppliers.

In the workers’ compensation industry, the underground economy often manifests itself in the underreporting or misreporting of payroll — one of the most common types of fraud committed by employers to save money on premiums. This results in increased premiums for everyone.

In 2011, the Dept. of Industrial Relations reviewed records from 1,500 companies and found that nearly one-third lacked the legally required workers’ compensation insurance coverage. The burden on the workers’ compensation industry is two-fold. First, employers that cut corners often ignore Cal/OSHA workplace safety and health regulations, putting workers in harm’s way. Second, these same employers may not carry the required level of workers’ compensation insurance, and in some cases, may not provide coverage at all. When an employee is injured on the job, the workers’ compensation provider (or the state, if there is no coverage at all) must still cover the cost of the claim despite the fact that the employer has not paid the appropriate premiums. Also, the worker may well find it more difficult to receive full or timely compensation.

All policyholders foot the bill for claims for under-insured companies in the form of higher premiums. They also foot the bill in the form of special assessments on workers’ compensation premiums that the state requires in order to fund claims having no coverage. The issue has become so prevalent that the state created the Labor Enforcement Task Force (LETF) in 2011 to safeguard workers against improper wages and a dangerous work environment. The goal is to ensure that the state receives employment taxes, fees, and penalties from employers and to create a level playing field for all California businesses.

The task force is comprised of the Department of Industrial Relations, Contractor’s State Licensing Board (CSLB), the Economic Development Department (EDD), the Division of Labor Standards Enforcement, and California’s State Compensation Insurance Fund (State Fund), among others.

The board uses data to identify patterns that indicate potential violations. The LETF initiates inspections based on complaints or red flags, such as an employer reporting low payroll for a large construction project that could only be carried out with a large crew. In the first half of 2012, LETF conducted nearly 1,700 inspections, primarily in the agriculture, automotive, construction, garment production, and restaurant industries; and assessed fines totaling $3.3 million and almost $500,000 in returned wages.

Failure to carry the required workers’ compensation insurance resulted in more than $1 million in fines and 147 stop-work orders. Enforcement can result in fines and even incarceration, but it’s only a tool for the behavior change that’s needed to achieve compliance.

When business owners operate under the spirit and substance of the law, their workers benefit from safer work environments and fewer injuries. They also receive the compensation and social insurance benefits for which they are entitled under the law.

The rewards of compliance are substantial. Businesses can expect lower claims costs and increased productivity that come with fewer accidents and less missed work. Policyholders will see lower premiums as more businesses pay the proper premiums into the coverage pool. This means a healthier, more robust economy that benefits workers and law-abiding businesses.

Recent legislation will help to increase coordination and data sharing among state agencies. In October, Governor Jerry Brown signed AB 1794 into law. It authorizes EDD to share payroll information with CSLB and State Fund for workers’ comp payroll reporting. This new legislation will help carriers collect premiums for all workers covered for workers’ comp benefits; help manage costs for all policyholders; and help the state collect underreported payroll taxes.

Participation in the LETF and improved coordination among agencies will result in increased premiums collected for workers’ compensation insurance carriers. But the real focus belongs on the risk of injury that the insurance industry has a unique ability to reduce. It’s about improving workplace safety and health. A concerted focus on eliminating serious workplace hazards will result in significant improvements in workplace safety, which ultimately affects the bottom line for every business owner in the state.

In the coming year, new legislation and the sharing of information and ideas among business, labor, and community-based workers’ rights advocates are expected to result in ongoing refinements in LETF strategies as well as increasing effectiveness in getting at the roots of the underground economy.


As chief of Workplace Safety for State Compensation Insurance Fund, Len Welsh is responsible for directing strategies to advance occupational safety and health in California’s workplaces, with a focus on developing methods for improving safety and health practices, and reducing the rates of workplace fatalities, injuries and illnesses. Before State Fund, Len spent more than 20 years with Cal-OSHA and the Department of Industrial Relations, where he partnered with industry and labor organizations to make workplaces safer. Under his leadership, California pioneered adoption of the nation’s first heat illness prevention standard in 2005, implementing a multi-faceted program that included a mix of concentrated enforcement and partnering with major industry organizations to train and educate workers and supervisors and comprehensive outreach strategies to educate the public.


Dental/Employee Benefits–Are You a Great Planner?
Tips for Selling Benefit Plans to Employers

by Karen M. Gustin, LLIF

Across the country, employers are struggling with the overwhelming job of administering employee benefit programs. Although costs continue to rise, employers want to provide benefits that help keep their employees healthy, both physically and financially.

There are many choices for insurance benefits, and often it is not easy to find the right mix for employees because of varying demographics. Producers have an opportunity to simplify the complex issues for businesses by serving as a trustworthy and knowledgeable partner. Consider these guidelines for developing great partnerships.

Understand Benefits From the Employer’s Viewpoint

A great partnership should be a win-win-win experience. Employers want to be confident that their producer understands their benefit needs and preferences. The relationship should not be focused on selling a product or service but on knowing the dynamics of the employer’s organization and then determining how best to meet their needs. Producers should understand changes in the benefit marketplace and the impact on the employer’s benefit strategy and goals. And producers should be accountable to pre-established standards for successful benefit plan implementation.

Anticipate Questions

Employers realize that there are many producers and insurance carriers, but they may think they are all the same. Help employers recognize the different services and plan options that each carrier brings to the table by providing information in advance of the questions that probably are on their minds.

Here are several common questions employers have about insurance carriers:

• What is the carriers’ tradition and reputation in the marketplace?
• What products do they offer? Which ones would add value to the employers’ overall benefit program?
•  As a producer, what is your evaluation of the carriers under consideration?
• How will their account be supported? Is there a dedicated account representative for their business? For some employers, this is an important requirement to ensure timely, effective support and understanding of their needs.

Review Proposals; Recommend the Best Options

When evaluating potential partners for employers, consider these qualifications:

• Research—Has the carrier representative researched their business? Are they offering solutions to help employers compete in the marketplace for talent?
• Solutions—Is the carrier offering new ideas and solutions that best address the employer’s benefit needs, both current and future, rather than merely focusing on features and benefits already offered?
• Knowledge—Do the carriers understand the benefit metrics and regulatory issues? What new insights are they offering to enhance education and understanding, such as wellness and health education programs?
• Network—What is the network size or penetration in the employer’s work locations? Is it large enough to meet their needs but still provide appropriate discounts? What is the carrier’s persistency with network providers?
• Reputation—What is the level of satisfaction of individuals currently served by the carrier, especially in the areas of claims processing and customer service?
• Pricing—Are the prices quoted almost too good to be true? Be cautious when benefit proposals feature a great rate. At renewal time that price can increase, sometimes significantly.

Analyze the Options

When reviewing proposals from insurance carriers, it is tempting to quickly scan the features and go straight to the price. While cost is important, benefits are more about the quality of the plan and service provided than just the price. Evaluate the proposal details by listing the key components important to your clients in a spreadsheet format and rank each. This process makes it easy to visualize the plans that will meet needs of the employee group.

Evaluate Whether Changes Are Worth Disruption

The effect of plan disruption on participants is one of the key factors to keep in mind when making any changes in employee benefits. When employers switch health carriers and/or benefit plans, they may be changing networks, prescription drug vendors, drug formularies and mail order prescription processes.

If benefit plans will be introduced, work with employers to provide information that is transparent and thoroughly explains the changes. Provide the rationale for the changes and new opportunities with any enhancements. Use several communication options to reach employees and their family members.

Keep Wellness In Focus

With the implementation of the Affordable Care Act, employers are looking for ways to enhance their wellness programs continually throughout the year. Many companies are shifting from rewarding employees for participation to encouraging positive health or behavior changes. Make recommendations of wellness opportunities that will support the employer’s needs, including benchmark information on trends, data analytics and reporting, education opportunities, including website or mobile applications, disease management and related health and wellness programs.

Embrace Partnership Opportunities

Employers face many complex benefit challenges, but producers can lighten the load by serving as a partner they can trust to help them sort through the options. Continually look for ways to provide insightful ideas, solutions and comparative analysis on benefit programs, and perspectives on industry and national trends, as well as a thoughtful review of carriers that will provide the benefit plans and services that best meet employers’ needs and those of their employees.


Karen M. Gustin, LLIF, is senior vice president – group field sales, national accounts and broker blocks for Ameritas Group. She joined Ameritas Group in 1983. Gustin is past chair of the National Association of Dental Plans board of directors and serves on the board of the National Association of Vision Care Plans. She can be reached at kgustin@ameritas.com or 800-543-7784 ext 82507 or 402-309-2507. For updates on health care reform, visit http://www.ameritasgroup.com/about/4859.asp.

Hearing – Why Your Clients Should Provide Hearing Care Coverage to Employees

by Amber Lund

Offering a benefit package that only includes coverage for medical, vision, and dental leaves out a significant area of care — one that is vastly overlooked by the insurance community, but affects millions of working Americans. Hearing problems affect people of all ages. In fact, 52% of those with hearing loss are 18 to 64, according to a Georgetown University study. Considering how hearing loss can affect a person’s quality of life, it’s surprising that so many people suffer in silence.

Nineteen states require hearing care as part of their mandates for medical coverage, according to the American Speech-Language Hearing Assn. That means that people in 31 states are not guaranteed to get hearing care coverage. Whom does that affect? Consider the following facts:

• 37 million Americans suffer from hearing loss.
• Of those 37 million, 27 million would benefit by using a hearing aid.
• Of those 27 million, approximately 20 million do not purchase a hearing aid.
• Most insurance plans do not cover these types of devices because they’re deemed as an elective treatment.

When 75% of people forego the purchase of a hearing aid, it says quite a bit about the cost of hearing care. It’s something that can immediately affect their quality of life, in addition to their efficiency and productivity at home and at the office.

Digital hearing aids cost $500 to several thousand dollars, according to the National Institutes of Health. Even when insurance plans offer some form of coverage, it’s usually only up to a certain amount. There is a discrepancy when hearing aids are considered elective treatments while glasses are not.

Glasses come with a baseline prescription, and many insurance plans provide coverage for annual check-ups and annual or bi-annual new frames up to a certain amount. The bulk of the cost for premium glasses lies with things like scratch-resistant lenses, high-index lenses, and fashionable frames. In terms of purely functional baseline glasses, the cost can usually be covered within a standard benefit package.

Now, let’s be clear, many of the features in high-end hearing aids fall into the same category. Having Bluetooth connectivity in your hearing aid is not a requirement for basic hearing needs. However, the further that technology has refined hearing care, the more audiologists and hearing-aid engineers can define just why the intricacies of hearing care go far beyond the notion of simply turning the sound up.

When patients visit the optometrist, they’re checked for their far/near prescription and for other things like astigmatism and presbyopia (reading glasses). Hearing tests are similar in that they cover a range of issues beyond just volume. Frequency, tone, and intensity combine for a moving target. A person’s hearing aid prescription is just as customized as their prescription for glasses or contact lenses except that, with modern devices, hearing aid customization comes in the form of programming the digital processor to meet specific needs.

There’s no one-size-fits-all solution for hearing aids. In a poll from the

Deaf And Hard Of Hearing -Alliance, hearing aids with programmable technology and other modern features received satisfaction ratings of 81% while lower-end non-programmable hearing aids only rated at 58%. This customization is a big part of why hearing aids cost what they do; and this cost is the leading reason why so many people decide not to purchase a hearing aid.

Quality Of Life

In recent years, there has been a subtle but noticeable shift to move toward some measure of coverage. Knowles Electronics, a hearing aid manufacturer, released a survey in 2008 noting that nearly 40% of purchasers received some assistance from their insurance provider. These are small but necessary steps towards the goal of having hearing care recognized as a true quality-of-life need.

A common stereotype is that most hearing-care patients are senior citizens. There’s no doubt that seniors generally do require some form of hearing aids, just like they usually need at least reading glasses, if not more. However, hearing problems don’t discriminate by age, gender, or ethnicity. The following statistics from earinfo.com provide a closer look at those who are affected by some form of hearing loss:

• One out of every 12 people under 30
• One out of every eight people under 50
• 1.4 million children are born with it or develop it at a young age
• 10 million adults from 45 to 64

With numbers like that, it’s quite clear that employer-provided hearing care would improve the quality of life for many employees, their partners, and their children. Those are the numbers, but how do hearing issues affect day-to-day life for people?

The following are 1999 finding from the National Council on the Aging (NCOA) and the Hearing Industries Association:

• Many people overcompensate for hearing loss by acting defensive, pretending they heard things, and taking other negative actions.

• Respondents say the lack of proper hearing affects their safety. Related friends and family describe frustration and difficulty with social interactions during these moments.

Conversely, the same study group demonstrated marked emotional improvements upon using a hearing device, including significantly lower depressive symptoms, tension, insecurity, and angry outbursts.

In short, devices that restore hearing create an abundance of positive emotions that can affect everything from communication to productivity to family and work life. It’s clear that providing proper hearing care is a critical part of the greater health care package. So how can employers best provide hearing care coverage?

The Options

Without a coverage plan, general hearing care options remain limited for most people. In many cases, it’s as simple as an out-of-pocket payment, which can be extremely difficult to financially absorb. Some coverage options are usually available, but they all come with various limitations, particularly for adults. Some coverage is available under the following:

• Medicaid: Evaluation and device coverage is available for children under 21. For adults over 21, Medicaid coverage depends on individual state regulation.

• Medicare: For seniors on Medicare, only a hearing exam is covered if you have Plan B and the exam is ordered by a doctor. Similarly, diagnostic hearing exams are covered if prescribed by a doctor. In most cases, hearing aids and other devices are not covered by Medicare.

• The Affordable Care Act: When implemented, the Affordable Care Act will guarantee annual hearing tests for children under 21. However, it won’t provide additional coverage for hearing aids.

• Flexible Spending: Flexible spending plans change by provider, but one of the upcoming caveats of the Affordable Care Act is the new lower limit of $2,500 per contributor (down from $5,000). Regardless, items that are flex-spending approved vary greatly by provider guidelines, and there’s no guarantee that hearing devices will be covered.

Given the alternatives, the idea of offering hearing care coverage to employees is a sensible path to explore. A number of options exist to provide private coverage.

Regardless of which private provider you consider, the decision to offer hearing care coverage for employees is the right one. Diminished hearing affects quality of life in many different ways. From a direct perspective, studies prove that most hearing-impaired people struggle with communication and self-esteem, all of which can immediately affect a worker’s performance and indirectly affect a spouse or child who is struggling with hearing problems. Also, the financial affect of treatment can create a mountain of stress that distracts an employee.

By going with private hearing care coverage, the high costs and emotional challenges are alleviated, helping employees and their families focus on what matters most: getting the job done while living a happy, fulfilled life. With each passing year, more and more organizations recognize the importance of hearing properly. Should your client join them, the numbers don’t lie; you’ll be making a significantly positive affect on many lives with that one simple choice.


Amber Lund joined Amplifon in May 2007. She has a Master’s degree in Organizational Leadership and undergraduate degree in Communication Disorders. For more than 10 years, Amber has worked in areas such as health care policies, billing systems, contract management, credentialing and business administration. As Director of HearPO Amber’s team is negotiating contracts on both a national and local level for hearing healthcare. HearPO, a division of Amplifon USA, is the largest provider of hearing health care coverage in the United States. It was founded by audiologists with the goal of making hearing care thorough and affordable for both individual consumers and human resources departments. For more information, visit www.hearpo.com.

Voluntary Legal Plans–Without Affordable Access to Legal Benefits, Working Americans Have To Face Legal Issues on Their Own

by Rip Mason

When reviewing the headlines over the past few years, it should come as no surprise that our world is getting more complicated. The decisions that working Americans must make for themselves and their families are becoming more complex and confusing. On almost a daily basis, American workers are confronted with events that come with legal issues, such as getting married, starting a family, buying a home, managing investments, making critical health care decisions, and planning for retirement.

Unfortunately, many Americans aren’t prepared to deal with these significant legal challenges. A study released by LegalShield reveals that 57 million full-time working Americans experienced at least one significant legal event in the past 12 months, and nearly half of them had no professional legal help.

The study reveals that many Americans do not seek professional legal advise or counsel even for serious issues, such as an IRS audit, an arrest for drunk driving, identity theft, or a home purchase.

The research confirms what we’ve known for a long time — many Americans don’t believe that they can get the legal help they need to protect themselves and their families. Too many people think they have to go it alone and hope for the best when it comes to dealing with all but the most serious legal issues. Fortunately, that’s not the case. Americans just need to become more aware of the options, such as legal protection plans, that offer the legal protection they need no matter how serious or trivial.

Barriers to Legal Help

Americans often forgo legal help because of cost, the difficulty in finding a qualified attorney, as well as responsiveness and trust issues. Ninety-three percent of respondents say that lawyers charge too much for their services. Respondents reported paying an average hourly rate of $284, with nearly 25% paying more than $400 per hour. Additionally, nearly 20% do not know their attorney’s hourly rate.

Seventy-two percent of respondents say that most lawyers are difficult to reach by phone and 63% say that most lawyers are unresponsive. An overwhelming 76% have been hesitant to call a lawyer; 74% dread the thought of talking to a lawyer; and 72% say that most lawyers try to take advantage of people.

Sixty-seven percent say they did not know a lawyer to call before needing one. Ninety-two percent of those who found an attorney selected one through an online search, the Yellow Pages, or some other sort of advertising. These figures point to a growing need among working Americans for easier access to trusted, affordable, and qualified legal help. If legal assistance was affordable and easy to obtain, more Americans would seek help when they needed it.

The Benefits of Legal Benefits

Nine in 10 respondents say that, if cost were not an issue, they would seek legal advice for even trivial issues, such as a traffic ticket or the review of a rental agreement. Americans want legal help; they’re just not sure that the benefit outweighs the cost or the hassle. This is why legal benefits plans are so important; they remove the cost/benefit issue from the equation.

Unfortunately nearly 90% of working Americans don’t have legal insurance or a legal protection plan that could make getting qualified legal help easy and affordable. Even more troubling is the fact that two-thirds of Americans have never heard of any such plans or services.

The demand for legal benefit plans is high, however, and helping working Americans deal with their legal issues represents a significant opportunity in the voluntary benefits market segment.

More than 60% of respondents would be willing to pay $20 per month to have unlimited access to qualified attorneys at an accomplished law firm for advice and counsel on legal issues – no matter how serious or trivial. This number increased to 70% when factoring in a 50/50 split in cost with their employer.

Offering legal plans to workers also benefits employers by improving absenteeism, productivity, and employee attitude. In the past year, 60% of respondents have had to take at least one day off from work to deal with one or more legal issues. But employees with legal benefit plans missed less work, were less distracted at work, and had better peace of mind with a legal protection plan in place. Ninety-three percent are more satisfied with their jobs when this benefit is offered. Three quarters of employees who have legal benefits are very satisfied with the coverage and 70% use the services provided through their plans more than three times a year.

Given the study’s results, it’s easy to see why more and more companies are providing legal protections plans as part of a voluntary benefit package. These plans empower working Americans to deal with legal issues efficiently and affordably and make better decisions for themselves and their families. In return, employers get happier and more productive employees who can make a larger contribution to the business’ success. q


Rip Mason is CEO of LegalShield. LegalShield is a leading national legal plan that provides legal services to more than 1.4 million families covering 3.5 million lives across North America. More than 34,000 companies offer the LegalShield plan to their employees as a voluntary benefit. For less than $20 per month, LegalShield members get access to specialized attorneys. Decision Analyst, which conducted the Legal Needs Study, is one of the largest marketing research and analytical consulting firms in North America, and serves an array of Fortune 500 companies around the world. 

Wellness – When it Comes to Wellness Benefits, What Employees Don’t Know Can Hurt Them

by Joe Willingham

Employers can offer the best wellness programs around. But workers can’t take advantage of the offerings if they don’t know about them. This means that employees miss out on the opportunity to improve their health and productivity. And employers don’t reap the cost savings they’re banking on.

Employers are increasingly looking to wellness programs to deal with the rising costs of employee benefits. Wellness-related initiatives are among employers’ top cost-control strategies, according to a recent survey of government financial officers by the Government Finance Officers Assn. Nearly 80% have added wellness initiatives to their benefit programs; and 90% of them would recommend this strategy to others. More than 32% of employers plan to increase their investment in health and wellness from 1% to 10% in 2013, according to the 2012 National Employee Wellness Month Employer/Employee Survey.

Employers have good reason to look to wellness programs to save money. The return on investment speaks loudly, regardless of company size. For every dollar invested in wellness programs, companies can save as much as $6 on health insurance costs, according to a study by the Univ. of Michigan Health Management Research Center.

Wellness initiatives also help employers increase productivity, morale, and retention, which supports the bottom line. More than 89% of employees say the range of a company’s health and wellness benefits is important in their choice of an employer, according to a survey by Virgin HealthMiles. And 43% of employees of small and mid-sized businesses say wellness benefits encourage them to work harder and perform better, according to the 2010 Principal Financial Well-Being Index.

Who’s Offering Wellness Programs?

A majority of companies offer some type of wellness program or wellness-related initiative. In fact, 77% of employers offer wellness resources and information and 61% offer wellness programs, according to a 2012 survey of employee benefits by the Society for Human Resource Management. Employers are offering a wide range of preventive and health benefits, from on-site flu vaccines and CPR training to 24-hour nurse lines and on-site fitness centers. Regardless of the number and type of wellness benefits offered, employees must choose to participate in them or they won’t be effective. And that’s where the rub comes in for employers; 58% report low engagement as the greatest obstacle to the success of their wellness initiatives, according to a recent Towers Watson study.

Lack of Awareness Affects Participation

More than 57% of employers believe their employees have a good understanding of the health and wellness programs they offer and how they can participate. Yet only 41% of employees say their employer does a good job of keeping them informed about available health and wellness services, according to a survey by Colonial Life. To combat this awareness problem, employers need to take a closer look at their benefit communication efforts.

A Personal Approach to Benefit Communication Can Improve Participation

Improving benefit communications can stimulate employee engagement and participation in wellness programs. Communication activities can take many forms. Some companies adopt wellness champions or ambassadors who help spread enthusiasm about the program throughout the organization. Others include regular articles in company newsletters or distribute personal benefit statements that highlight the company’s total compensation package. Some companies turn to outside resources for communications support.

Partnering with a reliable benefit carrier that offers a full slate of enrollment services, as well as one-to-one benefit counseling, can help your clients achieve the desired results. Individual, personalized benefit education and consistent wellness messaging go a long way in helping employees understand the importance of wellness and how it can improve their lives. Some companies offer these services at no charge as part of their enrollment process.

Surveys of employees who meet with benefit counselors individually during enrollment prove the effectiveness of the one-to-one method. Ninety-six percent of employees surveyed say that personal benefit counseling improved their understanding of their benefits and 98% say that this type of communication is important, according to a survey by Colonial Life. In addition, employee morale can improve as workers begin to feel better about themselves and their employers.

Since benefit budgets are tight, your clients place even higher hopes on getting a good return on their employee wellness investment. Don’t let them throw good money out the window because of poor benefit communication. Partner with a carrier that specializes in one-to-one benefit counseling and drive the participation that will help your clients maximize their wellness dollars.


Joe Willingham is vice president of sales for the West region of Colonial Life & Accident Insurance Company which provides benefits for employees and their families through the workplace, along with individual benefit education, advanced yet simple-to-use enrollment technology and quality personal service. They offer disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Colonial life is based in Columbia, S.C., and is a subsidiary of Unum Group. 

For more information, call 803-798-7000 or visit www.ColonialLife.com.


Annuity Market – Annuity Trend Watch

by Leila Morris

The picture is definitely mixed for today’s annuity market. For the first nine months of 2012, total annuity sales fell 8% from the previous year. Joe Montminy, assistant vice president and director of LIMRA explains that low-interest rates have affected all lines of the annuity business, and manufacturers are reassessing the exposure of various product lines. Many companies are implementing conservative risk management strategies in response to the uncertain economy, he added.

Despite bumpy sales, 83% of indexed annuity buyers and 86% of traditional fixed annuity buyers are satisfied with their deferred annuity purchase, according to a recent LIMRA study. The top reason consumers give for buying their fixed annuity is to supplement their Social Security or pension income. Having guaranteed lifetime income is also a concern, especially for buyers aged 60 and older. Annuity buyers say that their most important financial objective is to have enough money to last their and their spouse’s lifetime. This is not surprising given that only about one in four annuity buyers is very confident that their assets will last throughout their retirement.

“Guaranteed lifetime withdrawal benefits on many fixed indexed annuities provide an especially attractive benefit to consumers looking for guaranteed retirement savings options,” according to a statement by NAFA.

Jeremy Alexander, president of Beacon research said, “We’re encouraged to hear that a number of carriers are developing new indexed and income annuity products and investing in technology to support their fixed annuity business. But we don’t expect much sales growth until the interest rate environment improves.”

Despite consumer satisfaction, LIMRA calls total fixed annuity sales “bleak.” Fixed annuity sales fell 13% in the third quarter year-over-year, plunging to levels not seen since early 2007.

Fixed-rate deferred annuities (book value and market value adjusted) plunged 26% in the third quarter compared to the third quarter of 2011; book value sales sank 28% in the third quarter; and market-value adjusted (MVA) sales fell 17%.

LIMRA reports that book value sales declined 31% for the year and variable annuity sales declined 13%.  Single premium immediate annuities (SPIAs) fell 8% compared to one year ago, but sales were up slightly from the second quarter of 2012. In the first nine months of 2012, SPIA sales declined 8% compared to prior year, according to LIMRA.

A Mixed Bag for Variable Annuities

Variable annuity sales declined 8% in the third quarter. Leading variable annuity writers have been adjusting their books of business, but LIMRA believes the total effect of these decisions has not fully reached the market.

Morningstar reports that third quarter variable annuity total sales dipped 4.9%. However, the overall picture is more positive than it first appears. Variable annuity net sales had leaped 44.3% during the second quarter. Total net assets reached a new all-time high in the third quarter of 2012, up about 4% from the second quarter. Frank O’Connor, product manager of Morningstar Annuity Research Center, said that the drop in gross sales during the third quarter may be due more to a slower rate of new investment than to exchange activity. “The lion’s share of positive cash flow is concentrated in variable annuities that offer income guarantees, which reflects continued demand for these types of products among investors in or near retirement,” he said.

LIMRA reports that variable annuity guaranteed living benefit riders (GLB) are popular with consumers. Eighty-one percent of consumers chose variable annuity GLB riders when available. Guaranteed lifetime withdraw benefit (GLWB) riders are propelling indexed annuity sales. Seventy-one percent of consumers chose a GLWB rider, when available. LIMRA estimates that 88% of indexed annuities that are sold offer a GLWB.

The third quarter was the strongest ever for income annuities, according to a report by The Insured Retirement Institute (IRI). Income annuity sales were up 3.8% compared to the second quarter and up 6.7% compared to the third quarter of 2011. Cathy Weatherford, IRI president and CEO explains that, “Consumer demand for income annuities has grown steadily during the past two years as consumers seek to generate a guaranteed stream of retirement income.”

Beacon Research president Jeremy Alexander says that income annuity sales are growing while indexed annuities are holding their own. Income annuity payouts look more attractive than the conservative alternatives. This is especially true for deferred income annuities, which provided most of the increased sales of income annuities. Indexed annuity premium bonuses and guaranteed lifetime withdrawal benefits also look good in the current low rate environment, he explains.

The deferred income annuity is an emerging market with sales rising from $160 million in the first quarter, to $210 million in the second quarter, to $270 million in the third quarter of 2012.

Sales of Indexed Annuities Climb

LIMRA expects indexed annuities to have a record-breaking year in 2012. LIMRA reports that indexed annuity sales were strong in the third quarter primarily because new companies have been performing well in the market. Year-to-date, indexed annuity sales grew 6%. A study by AnnuitySpecs.com indicates that second quarter sales of indexed annuities were up more than 6% compared to the same period one year ago.

On a year-to-date basis, indexed and income annuities had record-high results, with indexed sales up 4.5% through three-quarters and income sales up 9%. Jeremy Alexander, CEO of Beacon Research, explains that market shares for indexed and income annuity grew in the third-quarter with a low interest rate and uncertain economy.

These products offer attractive benefits compared to conservative alternatives, he explains. They have become more dominant as fixed rate annuity sales have declined significantly.

Beacon reports that indexed annuities accounted for 53% of fixed annuity sales in the third quarter while income annuities grabbed a 14% share. Both stats represent a record-high market share. Indexed annuities had their third-best quarter ever. Sales were up 0.5% year over year, though down 1% from the previous quarter. Income annuities also posted their strongest quarter ever, with deferred income annuities generating 77% of the $87 million quarter-to-quarter increase. Many carriers have focused on the profitability of their fixed rate annuity product lines at the expense of sales, he added.

“This quarter’s sales were only half of one percent lower than third quarter 2010’s record-setting indexed annuity sales levels, and this is the lowest that indexed annuity caps and rates have ever been. What an amazing phenomenon,” said Sheryl Moore, president and CEO of Moore Market Intelligence, the firm that owns AnnuitySpecs.com.


Leila Morris is senior editor of California Broker Magazine.