January2014CoverDental & Vision – Empowering Employees With Dental and Vision Benefits
by Michael Scheetz  •  The Affordable Care Act (ACA) is placing decisions about health care choices directly in employees’ hands. Employers have the opportunity to empower employees by helping them understand dental and vision benefits and select the plan options that will best meet their needs as well as those of their family members.
Vision Insurance in your Benefit Portfolio
by Tom Giddens  •  Now is a great time to encourage your customers to maintain their eye health when they’re off the job as well, since you’re likely to be met with receptive ears.
Consumer Engagement and Cost Transparency In Dental Care And Coverage
by Robin Gelburd  •  Brokers have a significant opportunity to help employer clients provide resources to help employees to become more active participants in their dental care decisions.
HSAs–Annual HSA Survey Part I
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 2014 edition.
California Insurance Regulators Will Kill Popularity Of Health Savings Account Plans In California
by Bob Hopper, Ph.DCalifornia insurance regulators are likely to destroy the popularity of the humble HSA.
If these regulators insist on removing embedded deductibles from HSA-bronze family plans, this will adversely affect multiple thousands of California families who have already purchased HSA plans with embedded deductibles prior to 2014.
Long Term Care/Life Insurance– LTC Alternative Designs and Traditional Plans Team Up to Boost Sales
by John Wane  •  These innovative products nicely complement traditional, stand-alone LTC insurance products, which remain a pillar of the market.
Life Insurance with LTC Riders and LTCI Policies with Life Insurance Benefits
by Dave Donchey and Cindy Eisenhower  •  With the still-dawning availability of life/LTC hybrids on the market, insurance buyers now have access to plans that address the long-term care need within packages that are not unattractive or burdensome.
Prepaid Legal–Are Legal Benefit Plans Right for Your Client’s Employees?
by Mary McDonald  •  An increasing number of U.S. employers are adding some type of legal benefits to their employee benefit package.
Legal Benefits Help Promote Employees’ Financial Wellness
Marcia L. Bowers   •  Employers have the opportunity to help their employees regain control of their finances by offering group legal benefits.
Voluntary Benefits– How The Latest Technology Can Boost Voluntary Benefit Sales
by Steve Adams  •  Despite powerful trends that are driving the popularity of voluntary benefits with employers and employees, some brokers are hesitant to sell them. The primary stumbling block is the effort it takes to achieve participation levels that make it profitable for the broker.
Conference Coverage–Experts Give Their Take On Navigating the Post-ACA World
by Leila Morris  •  Brokers from all over the country converged on the Employee Healthcare & Benefits Congress in Las Vegas November 3 to 6. 

Vision – Empowering Employees with Dental & Vision Benefits

by Michael Scheetz

Over the years, many businesses have invested significant time and effort in taking good care of their employees. They have researched health care plans and provided choices that fit the needs of employees and their family members.

In the past, employees only needed to review plan summaries and premium contributions and check boxes on their insurance enrollment forms.

Now the Affordable Care Act (ACA) is placing decisions about health care choices directly in employees’ hands. Employers can empower employees by helping them understand dental and vision benefits and select plan options that best meet their needs as well as those of their family members.

ACA Requirements

Under current ACA rules, medical insurers are required to offer Essential Health Benefit (EHB) packages to individuals and employers of fewer than 50 employees that choose to provide benefits. EHB packages include pediatric dental and vision coverage, typically up to age 19.

Small employers are not required to purchase such health coverage for employees and their dependents through a health insurance exchange. But whether they buy on the exchange or in the private market, they may be able to keep their medical, dental and vision benefits with the same insurance carriers they previously selected.

In the Covered California exchange, medical plans can exclude the pediatric dental, it can be purchased separately from a stand-alone dental plan. In the California private market, medical carriers must embed the pediatric dental and vision benefits. This does not mean that separate dental or vision plans do not add significant value.

Large employers offering benefits to employees have until 2015 to meet the ACA employer-mandate insurance obligation.

Individuals are not required to purchase any health coverage through a health insurance exchange. Plans may be purchased as stand-alone or in a private exchange through an employer, individual coverage or public exchange options. Individuals will be charged a penalty for not having health coverage, unless they have a specified exemption.

Adults Need Dental and Vision Coverage

With the inclusion of pediatric dental and vision for small employer markets, health professionals are concerned that parents will purchase vision and dental coverage for their children, but not for themselves.  Recent statistics from the American Dental Association indicate a decline in adults visiting the dentist (41% in 2003 to 37% in 2010), but hospital emergency rooms report more than 2 million visits for dental problems in 2010. Unfortunately, emergency treatment does not provide the preventive care and early detection afforded by regular dental checkups.

The National Association of Dental Plans states that 98% of Americans with dental coverage have a dental benefit policy that is separate from their medical policy. Dental and vision benefits sold in stand-alone policies are not subject to most ACA provisions.

Value of Stand-Alone Dental

Stand-alone dental plans are typically offered by carriers that are experts in dental, which means that the premium costs are accurate; benefits can be customized to employer needs; customer service and claims processing systems are designed specifically for dental; and some have a nationwide, credentialed provider network.

Understand Exchange Plans

Employers and individuals who are exploring benefit options through an exchange marketplace should review the plan design carefully to understand the coverage options. Plan choices will be limited, and employers will not be able to customize plans.

Plans in an exchange may not be cheaper than those offered by an insurance carrier in a private exchange market. Premiums will probably be based on limited criteria instead of utilization trends that are typically used from within an employer’s industry or claim experience. Since insurance carriers will be charged by state and federal administrators to participate in exchanges, these fees likely will be included in the premium costs.

Medical Plans Combined With Dental And Vision Benefits

Many medical carriers offer discounts for combining dental or vision benefits with the medical plan, but this option may not produce the expected results. While a combined plan may seem cheaper (one premium), it could lack important benefit components and anticipated cost savings.

Develop Effective Communication Strategies 

Employers may have varying benefit options or requirements based on their size. All employers need to develop communication strategies to help employees understand benefit decisions. The following summaries of the issues on employees’ minds may be helpful:

•  Single: Younger employees in good health may not see a need for medical insurance or dental and vision coverage. They want to delay these purchases until they are older when they’ve had a chance to work, pay off college debts, and start putting money away.  Conversely, older single people readily recognize the value of dental and vision coverage. But they are extremely concerned about costs and wonder how they can stretch their limited finances to cover the ACA insurance requirements and the higher premiums they’ve heard discussed by the news media.

Married: This group is also concerned about how to balance housing costs, car loans, student loans, and other expenses. If both spouses work, they need to decide whether to purchase insurance coverage as individuals through their employers or exchange marketplaces or whether one will purchase family coverage at work, if available. Depending on their ages and health status, some may be willing to forgo dental and vision coverage until finances are stable.

Single Parents With Children: Many may have concerns similar to single individuals, but with the added responsibility of meeting ACA obligations for their children. They may not understand pediatric EHB packages, including age requirements, covered services, and prices, but they recognize how it may affect their monthly budget. Single parents may feel they can afford only the required dental and vision coverage for their children, and delay investing in these plans for themselves. Instead they will handle any serious health problems through urgent or emergency care providers. 

Married With Children: Insurance costs weigh heavily on the minds of married people with children. Juggling daily family expenses is challenging, not to mention providing for their kids’ health care needs. Just like single parents, married parents may not understand pediatric EHB packages and how ACA insurance requirements will affect their budgets. Parents may consider providing dental and vision coverage for their children, but not for themselves. 

Empower Employees: Help Them Make the Right Choices

Over the past few decades, there have been many changes to dental coverage, but it is important to remember that the needs of Americans have not changed. Preventive dental care is essential for good oral and overall health.

Sometimes employees want to defer purchasing dental and vision coverage in order to save money on monthly premium expenses, but they may risk developing serious health concerns and incurring unexpected costs for medical services. Surveys show that people with dental and vision insurance tend to use their benefits, including scheduling regular checkups and exams when doctors can evaluate the healthiness of their teeth and eyes and develop a treatment plan to address concerns. The bottom line is that employers should help employees understand the value of dental and vision coverage and the wisdom of paying a small monthly fee for insurance to protect their health and that of their family members.

Producers also have an opportunity to help employers and employees identify the dental benefits that will meet their needs. Carefully evaluate the carrier choices, considering the plan designs, PPO network, customer service and emphasis on wellness education. Partnering with the right carrier will go a long way toward helping employers maintain a healthy and satisfied workforce.


Michael Scheetz is VP – group marketing for Ameritas, headquartered in Lincoln, Neb. Scheetz joined Ameritas in 2011 and has worked in the insurance industry for more than 15 years. Currently he serves on the education committee for the National Association of Dental Plans. For info contact Scheetz at mscheetz@ameritas.com.

Vision–Vision Insurance in Your Benefit Portfolio

by Tom Giddens

In 2011, 75.6% of households reported having a computer. But only 27% of individuals were connecting to the Internet from multiple devices, making them “highly connected,” according to the Census Bureau. As one of the states with a highly connected population, California is statistically above the national connectivity average, according to the Census Bureau. This likely means that residents spend more time online on a computer or smart device.

So how does this translate to employee eyesight? Assuming that the higher connectivity levels correspond to more time spent looking at a screen, employees could be putting strain on their eyes. Computer vision syndrome is a group of eye and vision-related problems that result from prolonged computer use. Symptoms include eyestrain, headaches, blurred vision, and dry eyes as well as neck and shoulder pain. Many of these symptoms have become exacerbated with the rise of smart devices, such as iPhones, Androids, and tablets. The smaller fonts and smaller screens prompt users to hold the devices closer to their eyes, adding further strain. And unlike computer screens, the compact size of smart devices does not allow the eyes to process the screens as if they were a newspaper, book, or magazine.

While many of these issues are relatively minor and only temporary, you can encourage workers to take various steps to minimize their eye discomfort and maximize their eye safety. Three simple strategies are:

1. Look away from the computer. Many employees spend long hours staring at computer screens. As a result, they sometimes suffer eye fatigue or dry eyes. These workers should follow the 20-20-20 rule to prevent eye strain: Every 20 minutes, should lift your eyes from the screen and look 20 feet in front of you for 20 seconds.

2. Eat healthy on breaks and at lunch: It’s easy to grab a snack from a workplace vending machine or head out for fast food at lunch, but making the effort to eat healthy during working hours benefits vision. Most people know that carrots are good for their eyes, but dark leafy greens, such as collard greens, kale, and spinach are beneficial too. Fish that’s high in omega-3 fatty acids, such as salmon, tuna and halibut, also promotes better eyesight. 

3. Wear protective eyewear: Employers are expected to provide safe work environments, which may mean requiring protective eyewear. Failure to comply can sometimes result in disciplinary action, including suspension or termination. When workplaces require or suggest the wearing of safety goggles or glasses, employees should routinely slip on the eyewear and encourage colleagues to do the same.

The Increase in Vision Insurance

Voluntary vision insurance has doubled in popularity since 2011, according to the 2013 Aflac WorkForces Report. Consider this: when employees were asked what their employer could do to keep them in their job, 46% said, “Improve my benefit package.” Since voluntary policies can be offered at no additional benefit cost to the business, vision insurance can help employers to continue to provide important benefit options while making changes to control their overall contribution to employee health care.

Now is a great time to encourage your customers to maintain their eye health when they’re off the job as well, since you’re likely to be met with receptive ears. The American Optometric Association recommends biannual eye exams for adults under 60. Adults 61 and older should get eye exams yearly. People who fall into the following categories are considered at risk and may have to get their eyes looked at more frequently:

Have diabetes, hypertension, or a family history of ocular disease.
Work in occupations that are visually highly demanding or hazardous to eyes.
Take prescription or non-prescription drugs that have ocular side effects.
Wear contact lenses.
Have had eye surgery.

Using Foresight and Planning 

When conducting financial planning, it is important to take regular eye exams into account. Early diagnosis and timely treatment of eye diseases, such as diabetic retinopathy, cataracts, and glaucoma, is necessary for a healthy wallet as well as healthy vision. In fact, according to the Aflac study, 58% of workers don’t have a financial plan to handle the unexpected. The same percentage don’t consider health insurance a part of their financial plan or consider it a minor part of their financial plan.

Vision insurance is necessary for employees to have access to regular eye exams as well as coverage for other eye-related issues. Good policies go a few steps further than just exams. For example, a well-rounded voluntary vision package may include an eye exam, but also cover vision correction materials, such as prescription glasses and contact lenses in addition to cash benefits for specific eye diseases, eye surgery, and even permanent visual impairment. Eye injuries can happen just as easily as can other injuries, so it is in your clients’ best interest to leave no stone unturned when it comes to insurance coverage.

The Gold Standard

While recent changes in health care laws have driven up the price of coverage, voluntary insurance is a cost-effective way for employers to offer their workers an extra layer of security. As brokers in the Golden State, offering your clients vision policies is a great way to maintain your gold standard of service.


Thomas R. Giddens is Aflac executive vice president, director of sales. He joined Aflac in 1983 as assistant vice president in the Marketing department before serving in the field for more than 20 years. In 2007, Giddens’ numerous achievements and contributions were recognized when he became the youngest member of the Aflac Sales Hall of Fame. Most recently he was appointed executive vice president, director of Sales.

For more information about Aflac, call 800-99-AFLAC (800-992-3522) or visit aflacforbusiness.com.

Dental – Consumer Engagement and Cost Transparency In Dental Care and Coverage

by Robin Gelburd

Healthcare reforms have sparked a national conversation about the need for more consumer engagement and cost transparency. Many of the resulting changes, such as high deductible health plans, narrower networks, and other plan design features, require consumers to assume more responsibility for the cost of the care that they receive.

Though less discussed, reforms that shift more responsibility for costs to patients have also affected the dental insurance market. Average annual out-of-pocket payments for dental services have increased by 21% from 1996 to 2010 for individuals with private dental insurance, according to the Government Accountability Office.

Given these trends, employers and the brokers who advise them will want to help employees use their benefits wisely. Brokers have a significant opportunity to help employer clients provide resources to help employees to become more active participants in their dental care decisions. With this education, employees will better understand the value of their employer-sponsored coverage and be more prepared to select plans; navigate their benefits; and make other key decisions based on their family’s needs, provider preferences, and finances.

To do this effectively, brokers must educate employers about the implications of their choices of alternative dental plan designs. To help guide employers in this decision-making process, brokers are well positioned to capitalize on the emerging availability of dental claims billing and utilization data. These data can be used to better evaluate alternative benefit designs and provide employees with coverage for the services they use most regularly.

Consumer Engagement

You can help employees understand the value of their dental coverage and empower them to make cost-effective treatment decisions by offering the appropriate educational tools and resources. Brokers should ensure that employers are equipped to educate employees about the cost-sharing arrangements in various dental plans and how these may affect out-of-pocket costs.

Decision Support for Plan Selection

For companies that offer employees a choice of dental plans, employees will have a better understanding of the coverage features of their dental plan if they get decision support tools that clearly demonstrate the differences among plan designs. Salient differences include how employees will be expected to participate in cost sharing, such as the co-payments that are common in DHMO plans and co-insurance in PPO plans.

Employees can better understand the differences in plans when they see side-by-side cost comparisons of common procedures under an employer’s offered plans. For example, employees can view the estimated cost of three common procedures, such as the application of a sealant, a filling, and a crown. They can then compare how each of the offered plans would cover those procedures and what their out-of-pocket costs would be. This education not only aids in the employee’s decision making, but also allows them to better forecast their future financial needs related to dental care.  Tools will be more effective if they enable employees to model real-life situations based on their specific needs.

For employers that don’t offer choices in dental plans, it is helpful to offer employees concrete examples of the out-of-pocket costs typical to that employer’s dental plan. This can help employees decide whether to opt into the plan and determine how much to contribute to a health savings account (HSA) to cover anticipated dental expenses. For employers that don’t offer dental coverage, sample dental cost profiles can help employees anticipate costs and better manage their HSAs and flexible spending accounts. Brokers can help employers develop tools that offer such cost profiles.

Understanding common insurance concepts and terms also plays a vital role in consumer engagement. The majority of Americans have difficulty understanding basic financial terms found in health plans such as “co-payment,” “co-insurance” and “premium,” according to poll by the American Institute of CPAs. Accordingly, brokers can serve their employer clients by encouraging them to offer education on insurance terms and various cost sharing features of dental plans to further support employees’ plan selection.

Ongoing Decision Support

The need for education does not stop once an employee selects a plan. Ongoing support in understanding the cost implications of care decisions is crucial for promoting employees’ satisfaction with the coverage their employer offers. This is particularly true for dental coverage where cost-sharing requirements can vary depending on the type of service that a patient is receiving (e.g., a cleaning is covered in full but only 50% of the cost of a crown may be reimbursable).  In addition, annual maximum benefits apply to many dental PPO plans, which can affect consumers who require major procedures, especially when incurred towards the end of the plan year. Brokers can help employers develop tools to help employees estimate out-of-pocket costs and provide educational materials that offer context for those cost estimates.  Such tools can be tailored to reflect an employee’s specific plan features and include data that are tailored to that individual’s geographic location. Throughout the year, employees can use this tool to determine their out-of-pocket costs and manage their benefits. Brokers can also direct employers to free consumer tools that provide employees with general education and cost estimation support, such as FAIR Health’s Dental Cost Look-Up and Reimbursement 101 educational series.

Preventing Unexpected Costs

Being hit with unexpected out-of-pocket costs is a major contributing factor to employee dissatisfaction with medical and dental coverage. While the decision support described above helps employees understand how plan offerings provide coverage, brokers can provide added value by helping educate plan members on how to make the most economical use of their medical and dental coverage, such as staying in-network. They can also advise employers on how to best communicate the plan elements that employees may be unaware of, such as common limits in dental plans.

Topics for Education 

Choosing an out-of-network dentist puts employees at risk for additional and often unexpected financial responsibility. Communicating the facts about going out-of-network, as well as how the employee’s plan reimburses out-of-network procedures, will help protect employees and employers alike.

Unlike medical coverage, dental plans typically include limits on the number of times a procedure is covered annually. For example, while there are exceptions for some high-risk patients, most plans limit members to two cleanings per year. While most people never exceed this limit, employees should be aware that additional cleanings are likely to go beyond the scope of standard dental coverage.

Coverage limits are also common in dental plans. Once an annual maximum is reached, the plan will not cover additional services until the start of the next plan year. Understanding the annual maximum can help employees space out dental procedures, when clinically appropriate, to get the most out of their plan benefits.

Coverage for certain services is tied to a patient’s age. For example, a common feature of many dental plans is that fluoride treatments are reimbursed for children, but not adults. Communicating which procedures have age limits attached to them can protect adults from unexpected bills for the dental services they receive.

Informed, Efficient Dental Plan Design

Determining the best dental plan design for an employee group goes beyond simply looking at premium costs. It requires an understanding where and how employees are accessing care and the associated dollars being spent as well as where financial risks lie for employers and employees. Having such an understanding enables brokers to help their employer clients identify the plan that best meets the needs of employees and their budgets.

By using market data to compare the costs and utilization profile of a particular employer group to regional trends, brokers can recommend plan designs that are tailored to an employee population. For example, market data can indicate whether an employee population uses particular services more or less than what is typical of a given region. These kinds of comparisons allow employers to tailor plan designs and minimize costs while maintaining employee satisfaction.

Market utilization rates can also indicate to employers which dental procedures should be covered and how this may change over time. For example, in the past few years, the utilization of bridges has decreased in many geographic areas while the utilazation of implants has increased. This trend is the same in both rural and urban areas. Brokers who understand this trend will be in a better position to counsel employer clients on their coverage of bridge and implant procedures accordingly.

By comparing the utilization experience of an employee population with the market average, brokers can help clients design a plan that better reflects employee needs. For example, if an employee group has lower than average utilization of bridges, coverage for implants may be more beneficial than would coverage for bridges.

New tools that support employee and employer decision-making could result in significant cost savings. As all stakeholders in the healthcare system try to control costs, brokers can enhance their value to their employer clients and to their clients’ employees by promoting the many new resources that support better decision-making across the care system.  q


Robin Gelburd is president of FAIR Health, Inc., a national independent, not-for-profit corporation whose mission is to bring transparency to healthcare costs and health insurance information through comprehensive data products, consumer resources and research tools, all powered by the nation’s largest collection of medical and dental claims data.

2014 HSA Survey Part I

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 2014 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.

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).

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.

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: Sterling Health Services Administration 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 are the only administrator to negotiate payment plans on behalf of our clients. 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. Sterling mobile web users can also check account status, make contributions and disbursements and submit photo receipts to substantiate a debit card purchase or for pending claim documentation. Among the Sterling services valued most by our HSA accountholders, online services are at the top of the list.

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.

UnitedHealthcare: United is the largest provider of consumer-driven health plans in the country with 5.7 million members enrolled in consumer-driven health plans that incorporate a health savings account or health reimbursement.

Additionally, UnitedHealth Group uses its own financial institution, Optum Bank, for its HSA program administration. Optum Bank, 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.

Blue Shield: Yes, Blue Shield offers predictable qualified high deductible health plans that can be wrapped with a health savings account. However, all plans offered on the Individual and family plan (IFP) and small group markerts are standardized according to the essential health benefits and tiered metallic levels outlined in the Affordable Care Act and Covered California.

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.

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: As an independent HSA administrator, Sterling can work with all HSA compatible plans — fully insured and self-insured

UnitedHealthcare: 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 Health customers.

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

 Aetna: Yes.

Blue Shield: 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.

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

Sterling: Yes. In addition to HSAs, Sterling also provides administration services for HRAs, FSAs, POPs and COBRA. All of our product offerings include the appropriate compliance services, such as ERISA Wrap, Form 5500 filing, and non-discrimination testing to ensure that clients are in compliance with regulations. We offer many compliance services required under PPACA as well. Members of our dedicated Compliance Department are credentialed through the Certified in Flexible Compensation Program sponsored by the Employer’s Council on Flexible Compensation. Our entire sales team completed the NAHU Healthcare Reform Certification Course and all members are Certified Professionals ready to help with compliance issues under PPACA.

UnitedHealthcare: Both UnitedHealthcare offers both HSA and HRA plans.  We also have a new product feature that takes an HRA from a spending arrangement to a savings vehicle by attaching a Retiree Reimbursement Account to the employer’s plan.

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

Aetna: All sizes of groups.

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). All plans on the IFP and small group market comply with ACA requirements.

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

SeeChange Health: Our fully insured plans are available to groups of 2-to-200 or more employees. We offer value-based benefit ASO services, as well.

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

UnitedHealthcare: We offer HSAs to employers with two or more employees.  We also have an individual policy with an HSA.

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

Aetna: Health insurance.

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.

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

Sterling: Yes. Our executive, sales, benefits and compliance teams have extensive experience in health insurance, healthcare financing and consumer directed account management to support our clients during benefit design, enrollment and long-term management of their accounts with us.

UnitedHealthcare: Both, UnitedHealth Group is unique in that we own our own bank, Optum Bank, so we have a very experienced management team in both health insurance and financial services

6. Do you provide training for brokers about HSAs?

Aetna: Our sales teams are knowledgeable on HSAs and can answer any questions that brokers/members may have.

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: http://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.

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: 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

UnitedHealthcare: Yes, we have an online broker portal that provides educational information about all of our products and services.  Optum Bank’s training materials are regarded throughout the industry as best in class.

7. What commissions are paid to brokers and when?

Aetna: Standard commission levels, monthly.

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

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.

SeeChange Health: We pay our regular commissions on HSA-compatible plans.

Sterling: We pay commissions quarterly for our HSA business for all new and renewing groups. The commissions are based on our fees. We also pay commissions on many other product lines offered by Sterling.

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 provides an online and paper version of the HSA bank enrollment application. Employers can provide online or paper enrollment options for their employees.

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 or mail to Sterling. Our online enrollment and paper forms are available in English and Spanish.

 UnitedHealthcare: United Healthcare’s standard commission schedules and payment processes apply to the CDH products.

8. Are electronic enrollment forms accessible through your Website?

Aetna: 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.

 SeeChange Health: We expect to add this functionality in 2014.

Sterling: 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.

UnitedHealthcare: HSA enrollment is available through our website.

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

Aetna: We provide cost estimator and quality assessment tools.

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, online comparison tools for researching quality and costs of care, decision support tools  and ready access to HSA funds. Cigna provides real-time cost and quality information specific to an individual’s own 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 medications at 57,000 pharmacies nationwide.  Cigna’s quality and cost comparison tools were recognized in 2012 by InformationWeek as being among the top ten technology innovations of the year.

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: 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 when our clients are faced with unexpected large bills.

UnitedHealthcare: Depending on the type of consumer-driven health plan, i.e. HSA or HRA, the options are different.  The HSA offers free bill pay through our website.

 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 from specially-trained customer service representatives who respond to questions about the customer’s health insurance and the HSA.

Blue Shield: All HDHP-related questions are referred back to Blue Shield.

SeeChange Health: Questions related to plan coverage are handled by SeeChange Health.  With select administrators we have warm transfers between our Member Services area.

 Sterling: Our multi-lingual customer service representatives are available Monday – Friday from 8 am to 6 pm Pacific. Clients and brokers can reach us at 800-617-4729 and via e-mail at customer.service@sterlinghsa.com.

UnitedHealthcare: 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

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.

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

Sterling: Yes. With Health Expense from Sterling, HSA accountholders can connect their health plan explanation of benefits (EOBs) with their HSA, HRA or FSA account for an online, carrier-integrated view of medical claims and to make payments or reimburse themselves using funds available in their Sterling account. This service is available for HSAs, HRAs and FSAs.

It’s also important to note that Sterling is an independent administrator available to work with all health plans across the nation.

UnitedHealthcare: 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.

 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.

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

Sterling: Sterling accountholders have significant latitude in managing funds in their HSA account. Our accountholders can choose any IRS qualified investment for their HSA funds, including stocks, bonds, mutual funds, and CDs. They can work with the financial planner or brokerage firm of their choice as long as HSA funds are accepted. Sterling has also made arrangements with TD Ameritrade to offer investment services at a discounted fee for Sterling accountholders. Through TD Ameritrade, Sterling accountholders have access to a wide range of investment options. In addition, Sterling accountholders are paid interest on the funds in their accounts at prevailing bank savings rates.

UnitedHealthcare: Yes, Optum Bank offers several investment options for employees that have qualifying bank balances.

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.

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.

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: 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, a very robust employer and employee portal.

UnitedHealthcare: Employers contributing to the HSA account are required to complete an employer discovery document.

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

Aetna: Aetna Inc. offers HSA plans to our employees.

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.

Kaiser Permanente: We consider our entire portfolio of health plans for our own employees.

SeeChange Health: Yes

Sterling: We have offered our employees an HSA plan since Sterling was founded in 2004.

UnitedHealthcare: All UnitedHealth Group employees have the option of enrolling in an HSA. Each year we see more and more of our employees electing the HSA eligible plan.

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

Aetna: Yes, since May 2004

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 custodain, HSA bank has been a division of Webster Bank, N.S. since 2005.

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

UnitedHealthcare: Yes, UnitedHealthcare partners with Optum Bank for HSA administrative services. UnitedHealthcare’s parent company, UnitedHealth Group, chartered Optum Bank in 2002 to help advance the growing convergence of health care and financial services.


HSAs – California Insurance Regulators Will Kill Popularity Of Health Savings Account Plans In California

by Bob Hopper, Ph.D.

All it took was deleting one little word and California insurance regulators are likely to destroy the popularity of the humble HSA, which is rapidly becoming the fastest growing health insurance product in California. The regulators simply eliminated one word in the insurance policy language right when deadlines for the new insurance exchange were approaching and when no one seemed to be paying attention.

Now a health plan that was formerly one of the most affordable and among the strongest in its ability to protect families and individuals will be over-the-moon expensive as soon as anyone needs to use it. The premiums will still be affordable, but the deductible and out-of-pocket maximum will become unreasonable, doubling the risk for families compared to all other health plans.

“Embedded” Remember This Word and Read On

By maintaining the word, “embedded” in the HSA-qualified insurance policy, a mother who must take her son to the hospital and incurs a $50,000 bill, would end up writing a check for $6,350 — the out-of-pocket maximum for the plan. However, with that one word, embedded, deleted from the insurance policy, this mom will have to write a check for $12,700 — twice the risk of any other Affordable Care Act (ACA) health plan!

The problem occurs with the rules for family coverage within the HSA plan and specifically, what happens if only one family member has large medical expenses.

A family plan is simply individual plans for each family member bundled together into a family plan. The premium for each family member is added together to create one premium for the family. If only one family member is hospitalized, that person meets the individual deductible and then the individual out-of-pocket maximum. For example, with a new bronze plan, and a $50,000 hospital bill, the person pays the $5,000 deductible, then pays 30% of remaining costs until they reach the out-of-pocket maximum of $6,350 That’s good protection from large, unexpected medical bills. In fact, with all health plans — gold, silver and bronze — the out of pocket maximum is $6,350 if only one member of the family has major medical bills. For the platinum plan the out-of-pocket maximum is just $4,000.

HSA Plans Are Different 

When health savings account qualified health plans were first introduced in 2004, the family plan had a new kind of deductible called an “aggregate deductible,” which means that there is one deductible for the entire family that is twice as large as the individual deductible. Each family member’s medical expenses contribute towards that one deductible.

Ten years later, with the new bronze HSA plan making its debut on January 1, 2014, an individual (self-only coverage) will have a $4,500 deductible. That means that the family deductible is $9,000 (2 x $4,500 = $9,000). If just one family member has large medical expenses, that person must pay the first $9,000 in medical bills, and the 40% of remaining bills up to an out-of-pocket maximum of $12,700! Most people, especially more moderate-income families, will not feel comfortable with such a large deductible and out-of-pocket maximum.

Current, pre-2014, HSA-qualified health plans remedy that discomfort by including an additional embedded deductible when only one person in the family has large, unexpected medical bills.

With the embedded deductible, if just one member of the family is hospitalized, instead of having to meet the $9,000 aggregate deductible and $12,700 out-of-pocket maximum, that person only needs to meet the individual deductible of $4,500 and then the individual out-of-pocket maximum of $6,350. When a family plan has an embedded deductible, it functions like each person having his or her own individual deductible and out of pocket maximum. This means the HSA with the embedded deductible will operate just like every other metal health plan on the market beginning in 2014.

If the regulators were to allow the word embedded to remain within the plan (as it has been since Healthcare Reform legislation was approved on March 23, 2010) and if a child were hospitalized, the parents would only need to pay the individual $4,500 deductible instead of the $9,000 deductible, and an out of pocket maximum of $6,350 instead of $12,700. This would continue what has been the norm for the past three years, in which family plans had embedded deductibles. The regulator’s removal of embedded deductibles from aggregate-based HSA plans will begin in 2014 and for no understandable reason.

HSA Plans Will No Longer Be Viable For Families 

After 2014, prudent insurance agents may not recommend these new HSA plans to their clients. While the premiums for a traditional bronze plan with copays and an HSA-bronze plan are nearly identical, the out-of-pocket risk with the HSA-bronze plan is twice as much as the gold, silver and bronze plans ($12,700 versus $6,350) and more than triple the risk compared to the platinum plans with a $4,000 out-of-pocket maximum. Will hard working California families really want to double or triple their risk in order to get a small tax savings on their HSA? And if one family member has major medical bills, that additional $6,350 will wipe the HSA savings for most people.

Savvy insurance agents will be able to get around this falsely high deductible by using the over-engineered Rube-Goldberg strategy to improve their client’s coverage and emulate the embedded deductible. Here’s how it works:

After the agent enroll the family in the HSA-bronze plan: 

Step 1: Call the insurance company and request the family plan be unbundled so that instead of one family plan there is an individual plan for each person.

Step 2: Request the insurance company provide one summary, list or combined bill for the family. The family gets one bill, identical to the original family premium. If insurance company refuses to combine the bill, then agents will use auto bank draft, and a premium will be deducted from the bank account for each person.

Net Result: if one family member has large medical expenses, that person will have an out-of-pocket maximum of $6,350-just like all the other new plans-instead of the $12,700 that the regulators think is best. 


Comparison between family HSA-bronze plan vs. an unbundled family plan with a combined bill:
Family Age HSA-bronze Plan Dad 43 $263 Mom 38 $241 Child 10 $123 Total $627
The family premium equals sum of individual premiums: $263 + 241 + $123 = $627
The cost of three individual plans with combined bill: $263 + 241 + $123 = $627 

The out-of-pocket risk if only one family member has large medical bills:
Family HSA plan:  $12,700
Unbundled plans: $6,350
All other family plans: $6,350  

Let common sense prevail. Wouldn’t it be easier just to keep the word embedded in the policy language? Change would be simple if the three largest insurance companies in California — Kaiser, Anthem Blue Cross and Blue Shield of California — would unite to make the case for common sense with the Department of Managed Health Care (DMHC) that the embedded deductible concept is the right choice for Californians. It is the right thing to do. By leaving the word embedded in the insurance policies families retain the coverage current HSA plans offer and the insurance companies don’t need to change premiums. Remember, the pricing structure for family HSA plans is identical to those used by the metal plans for families.

To learn even more reasons why this change should be made, read part two of this editorial on how insurance regulators violated the spirit of the Affordable Care Act.

Part 2: Violating The Spirit Of The Affordable Care Act

What is particularly confusing is that the regulators took a popular plan, ruined it, and justified their actions by using a safe-harbor provision in the Affordable Care Act. The Department of Health and Human Services (HHS) provided a loophole that allowed actuaries to bypass the new and important actuarial value standards for Affordable Care Act health plans.

The actuarial value — the term actuarial value describes the average percentage of bills that the insurance plan would pay if that plan were applied to a large population of 5 million people, such as Los Angeles or New York. The Affordable Care Act specifies that a new platinum plan would pay on average 90% of the medical bills for that population; likewise: gold 80%, silver 70%, and bronze 60%. The individual bronze-HSA plan meets that 60% requirement.

Here Is Where The Problems Begin

The computerized actuarial value tool created by HHS to compute actuarial values only works for single plans, or plans with one person, and not for family coverage. However, since a family plan is essentially individual plans for each family member bundled together, if each single plan meets the actuarial value, then the family plan meets the actuarial value requirement.

Confused? Here Is The Actual Technical Language

HHS has provided insurance companies with a safe harbor on actuarial value, which is stated in the final rule, Standards Related to Essential Health Benefits, actuarial value, and accreditation, and states:

Health plans with cost-sharing features that accrue across family members for non-self-only coverage may be treated as unique plan designs if the family plan design has a material effect on the plan’s actuarial value as a safe harbor, the actuarial value of a plan with a deductible and/or out-of-pocket maximum that accumulates at the family level will be considered the same actuarial value as calculated using the actuarial value Calculator for the corresponding individual plan. (reference: http://www.actuary.org/files/MVPN_exposure_draft_081213.pdf)

Still Confused? Here Is The Application In The Real World

For HSA plans that have aggregate deductibles, the safe harbor loophole allowed regulators to evaluate the actuarial value of the self-only or individual plan and then apply it to the family aggregate deductible. They determined that a bronze HSA plan with a $4,500 deductible has an actuarial value of 60%. The loophole allowed them to apply that same actuarial value to the family plan with a $9,000 deductible and a $12,700 out of pocket maximum. It is a bit difficult to envision how a plan with a $9,000 deductible will cover about 60% of the average family’s expenses. This safe harbor provision that eliminates embedded deductibles defies logic and common sense.

In effect, the elimination of the embedded deductible doubles risk unnecessarily. And it’s that excess risk that will be the poison pill that kills the popularity of HSA plans for families.  At least one insurance company tried to get it right. Blue Shield of California submitted its plans and rates assuming an embedded deductible. The company was later told by the Department of Managed Health Care (DMHC) that it could not offer an embedded plan and had to go with the aggregate deductible.

The Fix Is Simple!

Keep the word “embedded” in the policy language.  The current policy language that prescribes an aggregate deductible violates the spirit of the actuarial value. Keeping the word, embedded in the HSA-bronze plan will bring it into alignment with the required 60% actuarial value. And there is no need to change the premiums because the family plans are already priced like every other health plan; each family member’s individual premium is added together to create the family premium. The insurance companies are already used to the embedded deductible so paying claims would not be that different from what they currently do.

If these regulators insist on removing embedded deductibles from HSA-bronze family plans, this will adversely affect multiple thousands of California families who have already purchased HSA plans with embedded deductibles prior to 2014. These families will be forced to give up their old plans and will be migrated to the new HSA plans that now no longer have that embedded deductible. I am quite sure current HSA policyholders will not be happy when they learn that their out-of-pocket risk is doubled and their premiums are going up as well. I think they will be doubly unhappy when they realize their out-of-pocket risk more than doubles to $12,700 and will be twice the risk of all the other new policies.  Note: At end of document, read about how a family switched away from HSA plan because of this excessive risk.

Add The Word Embedded To Small Group Health Plans

The same problem of excessive out-of-pocket risk occurs in employer-sponsored plans. Instead of the term ‘actuarial value,’ groups must adhere to a similar standard called “minimum value.” According to one actuary, their insurance company considers the loophole for Actuarial Value to apply to Minimum Value as well. Simply adding the word embedded back into the HSA policy language will make these plans viable and popular. And those group family plans are already priced correctly since the premium is determined by adding up the individual plan premiums to create a family premium. If the regulators said that all group HSA-plans had embedded deductibles, the popularity of HSA plans would continue to skyrocket.

People In Leadership Positions Need To Take A Small Action

I hope the insurance commissioner, the insurance regulators, the leadership of Covered California, insurance company leaders, and maybe a few consumer groups will take a second look and revert back to keeping the embedded deductibles for both the individual and group market HSA-qualified plans. Then individuals will have the choice of securing a good HSA plan along with the other metal plan options.

Should the regulators elect not to put the word, “embedded” back into the HSA-bronze family plan, agents and insurance company personnel can look forward to unbundling the family plan which creates additional, unnecessary paperwork just so we can provide the best insurance plan for our family members. And isn’t that the purpose of healthcare reform – to provide the best coverage possible? On the other hand, just put embedded deductibles back into the policy language and all is solved simply and efficiently.

One Final Confusion

One wonders why the safe harbor was put into the legislation in the first place. My guess is politics. During the health care reform debate, Republicans have always listed health savings accounts as one of their main ideas. Somehow this safe-harbor loophole that kills HSAs makes me wonder if this poison pill was inserted at midnight, right before the legislation was voted on, to kill HSA popularity. I would love to know who inserted that poison pill, but that’s a political question and beyond the scope of this article. Still, I can’t help but wonder why state Republican leaders have not raised the issue that regulators are trying to kill HSAs.

Personal Experience That Occurred on 10-28-13

A client on a family HSA plan with a large California insurance company called to find out what she should do. Here is the situation:

•  Current HSA plan
• $7500 aggregate deductible, and $3,750 embedded deductible
•  Premium: $756/month
• Out-of-pocket risk if only one person has large bills: $3750
• New Bronze HSA plan (move to new plan on 1-1-14)
•  The insurance company was going to move her to a new bronze HSA plan.
• $9,000 aggregate deductible, NO embedded deductible
•  Premium: $1012
• Out-of-pocket risk if only one person has large bills: $12,700

Net Result
• 340% increase in out-of-pocket risk if one person has large medical bills: $3,750 to $12,700
• 30% increase in premium ($256/month or $3,072/year)
• Client is in process of deciding whether to unbundle or change from HSA plan to non-HSA plan due to high risk.


Bob Hopper is the founder of Hopper Insurance Services in Santa Barbara. Hopper is an expert in health savings accounts and their corresponding high deductible health plans. He has written several books including “The HSA Strategy: The Future of Health Insurance in America.” 

Hopper was a former world class swimmer, NCAA champion, at the Ohio State University. He served as professor of Exercise Physiology and head swimming and water polo coach at Occidental College in Los Angeles He was formerly a Jazz guitarist for the “Torchlighters.” He is a regular golfer, oil painter and lover of gourmet cooking and is Happily married for over 19 years to his artist wife in Santa Barbara, Calif. For more information, call 805-966 4900, visit www.BobHopperInsurance.com or e-mail Bob@BobHopperInsurance.com.


Life LTC Combo–LTC Alternative Designs and Traditional Plans Team Up to Boost Sales

by John Wane
We’re wired to perk up at the mention of phrases like “two-in-one” and “the best of both worlds.” This promised versatility is often the security blanket that consumers need to make a purchase.

With this in mind, it comes as no surprise that sales are steadily gaining momentum for linked-benefit insurance products that blend life insurance and long-term care (LTC) coverage. Sales have been enjoying double-digit growth the past four consecutive years, according to LIMRA’s 2012 Individual Life Combination Products Annual Review.

This spike in sales is reflected in the surge of carriers entering the market. The latest entrant in the LTC space is a carrier with plans to roll out yet another life/LTC linked-benefit product while most carriers in the traditional LTC market are industry veterans.

With millions of aging Baby Boomers who need long-term care funding solutions, we in the retirement protection business are pleased to see so many creative, new options emerge and gain traction. These innovative products nicely complement traditional, stand-alone LTC insurance products, which remain a pillar of the market.

Furthermore, the growing number of options in the LTC insurance market better enables agents to cater to each client’s objectives. The agent of yesteryear likely sold life insurance or LTC insurance and rarely crossed the line between the two categories. But today’s successful agent makes use of multiple options to offer prospective clients exactly what they need. Other options include annuity/LTC combo products, reverse mortgages, pre-paid home health care services, hybrid critical illness insurance, and life settlements. Depending on the situation, any one of these options might be the right one.

There are opportunities for agents who can embrace the newer linked-benefit products while keeping one arm around the proven LTC stand-alone products. LTC insurance is a product that’s needed by many and, so far, owned by few.

More than 70% of Americans 65 or older will need long-term care services at some point. They will need care for an average of three years, according to a study by the Dept. of Health and Human Services (HHS). HHS pegs the average cost of a private room in a nursing home at $79,935 per year.

Given the high cost of long-term care and the high likelihood of needing it, Americans are grossly under-prepared for this reality. The Census Bureau estimates that more than 40 million Americans were 65 and older in 2010. Yet, only about 7 million Americans have LTC insurance, according to LIMRA.

To gain ground in this relatively untapped market, we need to present consumers with product options that meet their objectives to get affordable and adequate protection. But we need to keep in mind that one solution does not fit all. That said, having both linked-benefit and stand-alone LTC products in your back pocket is a good start to a successful sale. But the other half of the equation is having a good understanding of the circumstances lend themselves to presenting one product over the other.

Life/LTC Linked-Benefit Products

First, let’s take a look at the basic mechanics of life/LTC linked-benefit products and the situations in which they make the most sense.  This class of products has several design variations, but essentially, a linked-benefit policy creates a pool of money that can be used to insure against two separate risks. If policyholders enter a long-term care situation, they can leverage the funds to pay for long-term care expenses. Benefits are typically paid monthly and are triggered by the inability to complete two of the six activities of daily living, just like under a traditional LTC insurance policy. But if policyholders die with unused benefits in a life/LTC linked-benefit plan, their beneficiaries receive an income-tax-free death benefit.

The design of linked-benefit products appeals to a wide audience of consumers, and can be used to overcome many of the objections to traditional LTC insurance. In general, linked-benefit products are most suitable for people in the following situations:

They are put off by the use-it-or-lose-it nature of traditional LTC insurance. Even those who are healthy and wealthy enough to get traditional LTC coverage are reluctant to purchase it. Their hesitance often stems from a fear of paying premiums year-after-year for benefits they may never use while receiving no value in return. A linked-benefit product can be a vehicle to fund long-term care, pass on assets to their beneficiaries, or both.

They have enough resources to invest. Usually funded with a single-premium payment, linked-benefit products tend to be a good fit for people who have sizeable investable assets. This could include savings that are set aside beyond those earmarked for retirement or cash values in an existing life policy or annuity. For perspective, data from the American Association for Long-Term Care Insurance (AALTCI) shows that the lion’s share of single-premium linked-benefit products sold in 2012 had a dollar value of more than $100,000. Specifically, 26.5% of the sales were $100,000 to $150,000. Another 11% were $150,000 to $175,000. And an impressive 26% of the sales were $175,000 to $200,000.

They plan to self-insure against potential long-term care expenses. Paying for long-term care out of your own pocket is a risky plan since a single catastrophic accident or illness can quickly wipe out your client’s life’s savings. As an alternative, you can suggest they reposition assets set aside for long-term care into a linked-benefit policy. By doing so, they will instantly multiply their one-time deposit in the form of LTC benefits if needed and guarantee a death benefit if LTC benefits are not used.

They want to avoid the risk of premium increases. A common concern about traditional LTC insurance is the possibility that the carrier will increase premiums after the policy is in effect. This risk can be avoided through most linked-benefit plans, which as single-premium products are not subject to rate increases. 

They are older than traditional LTC insurance buyers. Clients who purchase linked-benefit products are an average of 10 years older than those who purchase traditional LTC insurance. The greatest growth in the linked-benefit market took place in the 60- to 64-age band from 2011 to 2012, according to sales data from the AALTCI. Incidentally, females outnumbered males two to one in the purchase of linked-benefit products in 2012.

They may benefit from less restrictive underwriting. A linked-benefit product may be a good second -option for people who don’t qualify for stand-alone LTC insurance. Many applicants will find it easier to qualify for linked-benefit products because the underwriting is more relaxed, especially for plans built on an annuity chassis rather than a life chassis.

Stand-Alone LTC Insurance

Even with the growing popularity of linked-benefit products, traditional LTC insurance continues to earn its shelf space in the market, and deserves a place in your portfolio. Today’s plan designs are simpler, more efficient, and more flexible than those of the past. Policies typically cover a broad range of services including care in a nursing home or assisted living facility and at home. In many instances, traditional LTC plans remain the best option for the money.  Consider stand-alone LTC insurance your go-to product when presenting to prospective clients who are in the following situations:

They want the most comprehensive LTC benefits. Traditional LTC insurance is great for clients who want to cover all their bases in terms of care. Stand-alone LTC plans are generally more comprehensive and benefit-rich than linked-benefit products. Policies can even be built to pay a cash-benefit with no elimination period. Once benefit-eligible, clients can use the cash for anything, anytime, anywhere. 

They want the asset protection provided by a Partnership policy. With the Long-Term Care Partnership Program, consumers who have purchased a qualified LTC insurance policy and have exhausted the policy benefits can protect some of their assets from Medicaid spend-down requirements. Linked-benefit policies don’t qualify for Partnership. So don’t overlook this special provision when exploring solutions for your prospective clients.

They prefer premium payments to a lump sum. Budgeting for premium payments rather than paying a single premium (out of necessity or by choice) allows policyholders to maximize the leverage of their money by immediately gaining access to a large benefit pool. If a claim occurs in the early years of the policy, the carrier foots the bill even though the policyholder has paid little money into the plan.

They are applying as a couple. In addition to giving your coupled clients a discount, which can be as generous as 30% off each policy, many stand-alone LTC insurance plans now include a “shared care” option. The increasingly popular option creates a combined pool of benefits that can be used by either or both spouses. This can help overcome objections that one may never need the benefits, as well as ease concerns that benefits may run out. 

They are young and healthy. LTC premiums are based on several factors with age and health ranking high on the list. Applicants who are relatively young and in good health can take advantage of low LTC premium rates. Generally, insurers also offer a preferred health discount in the neighborhood of 10% to 15%.

They qualify for tax advantages. Business owners may benefit from the tax advantages of traditional LTC plans. 

The products in the LTC market are designed to meet the unique needs of today’s diverse consumers – whether stand-alone or linked-benefit policies. No single product is the right solution for everyone you meet. But equipped with multiple options, you can make the most of the enormous opportunity awaiting you in the LTC market.


John Wane is the president of American Independent Marketing (AIM). With a 35-year history of focusing on retirement protection solutions, AIM’s product portfolio has grown to become one of the most complete in the industry, providing its agents access to multiple markets from a single source. In addition to carefully selecting the finest mainstream carrier solutions, AIM also has a successful track record of developing its own products designed to meet evolving consumer needs, including a critical illness linked-benefit product that covers long-term care. Visit www.whyaim.com or call 800-672-7202.

LTC – Life Insurance with LTC Riders and LTCI Policies with Life Insurance Benefits

by Dave Donchey and Cindy Eisenhower

In 2011, Forbes published an article on America’s worst commutes. Three of the top 10 worst commuting times belong to towns in Southern California and four are in northern California.

News bulletin: Anyone who drives a car in San Francisco or Los Angeles knows exactly what they’re talking about! Is there a silver lining? Yes. All you need is a simple navigation system (such as Google Maps on your cell phone) and you can find alternative routes no matter what traffic snarl you happen to get stuck in.

The long-term care insurance industry has recently had its own version of a traffic SigAlert! With a number of insurance carriers withdrawing products or completely exiting the marketplace, it may take more than a GPS to figure out how to navigate the remaining options left to sell. But giving up on LTC insurance would be like selling your car if you get stuck in a traffic jam. Unless you have a better way to protect your client’s financial security, you need to consider alternate routes to get you and them where you want to go. Enter life insurance products that include LTC riders, and non-traditional LTC hybrid products that have ancillary life insurance benefits.

A compelling case for purchasing long-term care insurance can be made on several levels. First, more and more people have family members who need long-term care services. Second, the cost of this insurance is rising as insurers confront claims experiences. And third, many people are coming to realize the near-certain need for long-term care services at some point in their lives, given the longevity Americans now enjoy.

Despite all of the above, sales of traditional long-term care insurance continue to disappoint. This disappointing trend started in the mid-2000s. The U.S. government was therefore encouraged to make changes to the Internal Revenue Code, with the Pension Protection Act of 2006 (PPA). Changes made by the PPA were devised to affect tax years following 2009. These alterations were largely responsible for the creation of hybrid long-term care contracts, which combined deferred annuities and life insurance contracts with long-term care coverage. These policies are designed to be attractive to the buyer who doesn’t need long-term care or doesn’t need it for long, but might neede a residual benefit for their beneficiaries. In other words, the use it or lose it factor associated with traditional long-term care insurance was addressed.

The PPA’s objective was to broaden accessibility to LTC insurance. The PPA achieved this end by changing the tax rules to facilitate the use of deferred annuity contracts and life insurance policies to deliver LTC insurance benefits. Effective as of January 1, 2010, these relatively recent changes work to ensure two things:

1. Distributions from a deferred annuity or life insurance policy to pay for certain forms of long-term care insurance coverage are not includible in current gross income.

2. As a result of broadening of IRC Section 1035, it is now possible to have a tax-free exchange of a life insurance policy, an endowment or annuity contract, or an existing qualified LTC insurance contract for a qualified LTC insurance contract. 

Underlying a regular hybrid annuity/LTC product is an accumulation of funds for withdrawals, annuitization, or long-term care. By purchasing an annuity/LTC hybrid product, the buyer is guaranteed a product that will deliver long-term care benefits and tax-deferred accumulation of cash value for retirement income if long-term care is not needed.

The majority of these hybrid annuity/LTC products are deferred fixed annuities. Hybrid deferred annuities are usually funded with a single premium rather than flexible, periodic premiums because the value of the independent LTC insurance benefit is usually based on the annuity cash value. Per the terms of the contract, cash values accumulate tax deferred, and in the case of a fixed annuity, a minimum rate of return is guaranteed. On a regular basis — typically monthly — a charge is assessed against the annuity’s cash value to cover the LTC benefit’s cost. In general, when an annuity/LTC hybrid contract owner begins receiving LTC benefits, two notable events occur:

1. Further monthly LTC premium charges against the cash value cease.

2. Surrender charges that might ordinarily be levied against the annuity cash value distributions are waived.

In addition, the insurer continues to credit interest on the declining cash value balance at its declared interest rate. The contract owner may utilize the product’s values as though it were any other deferred annuity if they never need long-term care and end up making no claims for care.

With all that in mind, specific suitability concerns must be addressed before a producer recommends a deferred annuity. Most important are the client’s liquidity needs, investment horizon, and income tax liability.

An annuity/LTC hybrid product may be suitable for a prospect who meets one or more of the following criteria:

1. The prospect recognizes the significance of the LTC risk and wants to cover the possible need, but doesn’t fully believe that a long-term care need will arise.

2. The prospect is choosing to self-insure the risk for long-term care, and has the following financial vehicles not earmarked for other concerns: certificates of deposit, savings accounts, other annuities, and mutual funds.

The core objective of the life/LTC hybrid is to deliver LTC benefits through a combination of accelerated death benefits and a rider that extends benefits for covered long-term care. In other words, if the insured needs long-term care and meets the policy’s LTC benefit trigger, some of the policy’s death benefit is designed to be accelerated and payable to the insured. If long-term care is not needed, the product behaves like any standard life insurance product. Compared to traditional LTC policies, the cost of the LTC benefits is generally less in the case of hybrids. The lower costs stem from the cost-reducing effects of the following:

Accelerated death benefits, which are already included in the life insurance policy costs, to provide the initial LTC benefits.

An extension-of-benefits approach for continuing LTC benefits after accelerated death benefits have been exhausted.

Life/LTC hybrid products vary in design. Some are based on a universal-life chassis while others are based on a whole-life chassis. Some are single premium products; others have a flexible premium. When assesing whether a life insurance/LTC hybrid product is suitable for a client, take note of whether the following are true about the client:

Needs life insurance protection.

Does not need the premium funds to maintain their lifestyle or supplement their retirement income.

Does not expect to need long-term care, but recognizes the significance of the risk and wants to be covered just in case.

Is self-insuring and has sufficient liquid investments to pay the premium.

The value of long-term care insurance cannot be overstated. With the still-dawning availability of life/LTC hybrids on the market, insurance buyers now have access to plans that address the long-term care need within packages that are not unattractive or burdensome. It falls on insurance providers to introduce their clients to these products with great mindfulness as to the clients’ precise profiles and needs.

The long term care insurance industry will continue to evolve and pave new roads to solve the long-term care problem for millions of Americans. As interest rates rise, more carriers will innovate and grow their portfolios to include non-traditional ways of protecting your client’s financial security. But just as a simple GPS can route you around a bad traffic jam, a good resource on LTC insurance products can guide you through the various funding options that exist today. Just be sure to keep your mind open to these alternative routes! q


Dave Donchey is president Leisure Werden and Terry Agency. Cindy Eisenhower is director of Long Term Care Insurance at Leisure Werden and Terry Agency. They can be reached at 200 S. Los Robles Suite 200 Pasadena, CA 91101 or 626-394-1300.


Prepaid Legal – How To Keep Your Clients from Getting Hammered by Lawsuits

Are Legal Benefit Plans Right for Your Client’s Employees?

by Mary McDonald

An increasing number of U.S. employers are adding some type of legal benefits to their employee benefit package. This trend is generally attributed to the relatively low cost of legal benefit plans and the advantages they offer to employers. The growing popularity of legal plans has also led to an increase in the diversity of plans becoming available on the market, with a significantly wide range of coverage. Understanding the differences is the first step in determining, which, if any, legal benefit plans will truly benefit your employer clients.

Types Of Legal Services Plans

Plans that provide legal services are marketed under a number of names, including “legal benefit plans,” “prepaid legal services,” “legal insurance” and more. What they have in common, however, is that for a relatively low monthly fee, they offer access to some level of legal advice or support. The structure of the plans varies widely, from benefits offered to individuals through multi-level marketing networks to group plans offered by employers as part of their voluntary benefits portfolio.

There are even differences among the benefits offered by employers. On one end of the spectrum are services that are part of employee assistance programs (EAPs). In general, such legal benefits include basic or preliminary services, such as reviewing documents or making phone calls or referrals to legal service resources. EAP legal benefits may also include a discount (usually of around 25%) on attorneys’ hourly rates for any assistance that is outside of the basic services.

At the other end of the spectrum are comprehensive group legal plans that offer full coverage for most of the legal services that arise most frequently. In addition to the consultations that more basic plans offer, these services may include the following:

Real estate transactions
Civil actions for both plaintiffs and defendants
Divorce, adoptions and family law
Personal injury
Chapter 7 bankruptcy
Traffic violations
Criminal violations

These comprehensive plans may also offer discounts in the 30-plus percent range for services above and beyond the scope of the main plan.

Selecting A Legal Benefits Plan

Since a great number of plans can be offered at no cost to the employer, the choice of plan provider likely comes down to what level of legal service an employer would like to make available to employees. It’s important to make an apples-to-apples comparison on plan specifics, such as:

What portion of the total attorney fees are covered.
The level of access an individual has to an attorney and whether prior permission or approval from plan administrators is needed before using plan services.
Whether participating attorneys are in plan members’ local areas.
How attorneys are selected.

As with any addition to the employee benefit packages, you’ll need to research all of the available options independently. Having a full understanding of the differences among the various types of legal benefit plans will ensure that your employees will have access to comprehensive services.


Mary McDonald manages content strategy for U.S. Legal Services, a national provider of legal benefit plans that makes legal help accessible and affordable.

Prepaid Legal – Legal Benefits Help Promote Employees’ Financial Wellness 

by Marcia Bowers 

While not all debt is bad, recent research shows that significant, prolonged debt can have an acutely negative effect on a person’s mental health and wellbeing. Debt can lead to the breakup or weakening of relationships and the inability to support one’s family can destroy self-confidence, according to a 2013 study from StepChange Debt Charity. Additionally, many people are unwilling or hesitant to tackle their debt. More than one quarter of survey respondents did not confide in anyone about their debt issue while 40% waited a year before seeking help.

Individual bankruptcy filings in 2011 reached a historical high of 1.46 million. Although filings declined 8% to 10% in 2012, bankruptcy, along with foreclosures and debt matters, continue to affect hundreds of thousands of Americans at home and at work.

Attempting to navigate the legal system with very limited knowledge is a significant stress inducer while spending time dealing with issues at work hinders productivity and overall wellbeing. Employers can help their employees regain control of their finances by offering group legal benefits. The following are some examples of how a legal plan can come into play:


Jim is facing foreclosure. He has never been through this before, nor does he know anyone who has, and it’s dominating his every waking moment. If Jim were to involve an attorney early enough, before the situation spins out of control, the process could be slowed down, buying time to work out a solution. A lawyer’s expertise would be a source of comfort to Jim while potentially saving his home. Knowing the right questions to ask automatically gives the attorney an advantage in negotiating the best possible repayment plan for Jim. Without a legal plan, Jim would pay about $4350 for legal services. But with a plan, he would receive the same benefits and advantages at a significantly lower cost.

Debt Resolution

The Fair Debt Collection Practices Act (FDCPA) was designed to eliminate abusive, deceptive, and unfair debt collection practices. It also protects reputable debt collectors from unfair competition and encourages consistent state action to protect consumers from abuses in debt collection. Sheila cannot pay her bills and is unable to work out a solution with creditors who continue to call her trying to collect. A legal plan would allow Sheila to hire an attorney who could stop the harassment with a letter. Once the attorney sends the letter, all future communication must go through the attorney. Additionally, the attorney can negotiate with creditors on her behalf to accept a one-lump-sum payoff at a certain percentage of the loan balance. If Sheila were to take on the cost herself, out-of-pocket costs would be around $2,900 verses a nominal monthly fee for a legal plan.


Ron is thinking about filing for bankruptcy. He has read various articles online, but is overwhelmed by the complexity of bankruptcy laws. A bankruptcy attorney would determine whether Ron should declare and, if so, which kind. With a Chapter 7 bankruptcy, the person’s income is below the state median; the person has little or no property; and creditors are unlikely to allege fraud. In this type of bankruptcy, most debts are cancelled. With a Chapter 13 bankruptcy, the individual keeps property, but must repay all or a portion of debts over a three- to five-year period.

Even if Ron’s lawyer deems this a simple Chapter 7 case, extensive forms will need to be filed and local court rules and procedures followed. The attorney can navigate these far more easily. Additionally, during the process, the attorney can field calls from creditors and let them know that since Ron has filed for bankruptcy, continued collection attempts are in violation of the law. Ron’s out-of-pocket costs for a lawyer to handle his bankruptcy case could be as high as $72,501 vs. an average annual legal plan fee of around $200.

Employers Acknowledge The Benefits Of Group Legal Plans 

A growing number of organizations are leveraging such plans to help employees resolve their financial and legal problems according to a recent SourceMedia survey among human resources and benefit managers indicates. Minimizing employee stress from dealing with legal matters was the top employee benefit cited by 57% of employers. Minimizing the amount of time employees dealt with their legal issues at work was also identified as a top benefit (34%).

Forty-five percent of employers cited making legal services affordable for employees as another actual benefit of legal plans. Members typically pay a nominal monthly fee for unlimited consultations covering the most frequently needed, personal legal services without co-payments, claim forms or deductibles. The annual expenditure on a legal plan with unlimited consultations and services is often less than the average attorney’s fee for one hour.  However, coverage varies among the legal plans currently on the market, which is why employer due diligence in selecting a provider is critical.

Ninety-three percent of employers that provide legal benefits said they are likely to continue offering them. Reasons include ease of implementation and positive feedback from employees. Employers with group legal benefits recognize their value and ability to resolve employees’ personal financial and legal woes before they affect the workplace.

From the employee perspective, legal benefits have been shown to eliminate the stress and time required to locate and evaluate legal professionals because the provider has already done this. A Harris Interactive study found that 61% of employees who hired a legal plan attorney spent less time at work worrying about, and dealing with, their legal situation. They also took less time off from work to deal with their issue, in contrast with employees who dealt with the situation on their own.


Marcia L. Bowers, Group Sales director of Hyatt Legal Plans, joined Hyatt in 1991 and holds a Juris Doctorate. She has implemented hundreds of group legal plans for top organizations, including FedEx, Shell, Target and the University of Michigan. She earned a BA from Hiram College and an MA from Kent State University. 


Voluntary Benefits – How The Latest Technology Can Boost Voluntary Benefit Sales

by Steve Adams

Despite powerful trends that are driving the popularity of voluntary benefits with employers and employees, some brokers are hesitant to sell them. The primary stumbling block is the effort it takes to achieve participation levels that make it profitable for the broker.

When carriers can’t capture enough participants, they withdraw their offering terms, and there is no return on the investment of the broker’s time and energy. Brokers need a cost-effective way to provide high-quality benefit education and decision support that’s not invasive or pushy.

Health care reform and increasing health care costs are motivating employers to make significant changes to their benefit programs. With the availability of exchanges, some employers are planning to exit the core medical benefit business altogether. Those choosing to continue providing core medical benefits are increasingly moving to consumer-driven plans. Seventeen percent of employers offer high-deductible plans as their only option; this is a 31% increase over 2012, according to a 2013 PwC Touchstone survey. In addition, 44% of employers are considering offering high-deductible health plans as the only benefit option to their employees in 2014.

Health care reform is also putting additional pressure on carrier margins, which many say will reduce broker commissions. These trends are encouraging brokers to seek out alternate sources of revenue.

Employers are seeing voluntary benefits differently due to unprecedented demographic diversity in the workplace and increasing pressure to attract and retain high performers from across the globe. Fifty-eight percent of employers surveyed by MetLife recently say that offering voluntary benefits is a significant benefit strategy. Seventy-two percent of employers with more than 500 employees view voluntary benefits as important compared to 50% of employers with 500 or fewer employees.

However, voluntary offerings still present risks if programs are not executed carefully. Employers may not want employees to attend in-person meetings during work hours. And employees are often wary of dealing with a pushy salesperson or the invasion of their private lives during off-work hours.

Until recently, online enrollment systems have not been as effective for voluntary benefits as they have been for core benefits.

But new technology-enabled services provide seamless education and decision support during the enrollment process. These services make selecting voluntary benefits an engaging process for the employee, ensuring success for employers and brokers alike.

With new education and decision support technology, it’s easier for employees to make well-informed decisions about purchasing voluntary benefits. Interactive tools present information that’s personalized and relevant to them. These tools have been created to replicate the experience of human enrollers without the time, expense, and other restrictions of face-to-face meetings.

Since there are many decision support tools in the marketplace, brokers should perform due diligence to select products that will best serve their clients. Brokers should consider the following features:

The tool presents all the information needed for the employee to make a well-informed decision.
The information is easy to understand, compelling, easily accessible, available around the clock, and easy to navigate.
The employee’s experience is self-paced. It is driven by the employee’s previous experience or desire to learn more about specific products. The employee can choose what they want to learn and the order in which they want to learn it.
The experience is engaging. It inspires the employee to learn more.
The experience is personalized and relevant because it is driven by the profile of the employee and their family.
The experience is driven by unbiased, impartial information, which drives the best decision for the employee. The employee can model scenarios that are relevant to them and their family.
It integrates with an employer’s online enrollment system to create a seamless user experience.
It integrates with the enrollment system, requiring little or no IT support.
It requires no support from the broker to integrate with the enrollment system.
It can be configured easily for any carrier product in a short time.
It is easy to customize the user experience for a specific employer.
It is available to support employees during open enrollment and afterwards.
It is easy to maintain and modify with changing benefit programs and plans.
It will scale to support employer groups of all sizes.
It supports cloud-based computing.
It is priced commensurate with its value to a successful enrollment process.

Other than death and taxes, the only certainty is change. The changes precipitated by health care reform are game changers for employers and the brokers who serve them. With this magnitude of change roiling through their organizations, employers will need all the help brokers can provide. And being squarely in change mode, employers will likely be more receptive to new benefit offerings. As the MetLife study attests, employers think voluntary benefits are important; no doubt this is due to their perceived value by employees. Clearly, voluntary benefits are an idea whose time has come, especially as decision-support tools that solve for the hurdles to meaningful enrollment are now available. Carpe diem. Brokers can now embrace this just-in-time revenue source!


Steve Adams is CEO of Navera, a leading provider of cloud-based Education and Decision Support products that help employees and their families make well-informed choices about their health care benefits and insurance options.Steve can be reached directly at 408-887-1411 or steve.adams@navera.com.


Conference Coverage – Experts Give Their Take On Navigating the Post-ACA World

by Leila Morris

Brokers from all over the country converged on the Employee Healthcare & Benefits Congress in Las Vegas November 3 to 6. An encouraging message came from Ronnell Nolan HIA, CHRS president and CEO of Health Agents for America. She told brokers that, “You may look different, act different, and get paid different, but you can survive!” She urged brokers to get the Certified Healthcare Reform Specialist Certification (CHRS) designation and diversify their offerings.

Nolan said, “In order to continue earning what you were before ACA, it may be necessary to begin selling voluntary benefits. Plans like stand-alone vision and dental are not subject to ACA, and will not be sold through exchanges.”

Hector De La Torre, executive director of the Transamerica Center for Health Studies (TCHS), explained how to better serve clients. Employers’ primary concerns with the Affordable Care Act (ACA) are coping with higher costs and handling increased administrative burdens of today’s health benefits.

When it comes to getting educated about their health benefits, workers want one-on-one counseling and detailed comparisons about their options. But employers and workers see things differently when it comes to health insurance coverage. Employers prioritize lower costs over higher quality while workers prioritize higher quality over lower cost.

When it comes to learning about health plan options, 50% of workers want cost comparisons; 47% want to know what coverage is available in the various health insurance plans; and 40% want an unbiased resource.

Fifty-nine percent of employees cited online tools and resources as helpful in learning about health benefits while 47% cited employee benefit advisors as helpful. However, less than half of employers provide access to online tools or employee benefit advisors to give advice about health care benefits.

Self Funding

Ross Pendergraft of USI Insurance Services and Armando Polanco of Transnational Advisors explained why self-funded medical plans are becoming more attractive to employer groups, regional health plans, and large national carriers. Employees are looking into self-funded plans to address the added administrative burdens and higher health care costs that come with the ACA. A Kaiser Family Foundation study reveals that 61% of covered workers are in a self-funded medical plan.

A Dept. of Labor study confirmed the benefits of self-funding: From 2009 to 2010, the average premium for employers with more than 200 covered increased $248 for self-insured plans compared to $808 for fully insured plans.

Self-funding gives employers control over designing their benefit programs, especially since they can avoid state-mandated benefits, explained Pendergraft. Self-funded plans also come with lower administrative services costs. Easier access to utilization and claims data helps employers evaluate health benefit costs and implement cost containment measures. Employers also enjoy the improved cash flow that comes with keeping funds in-house until they’re needed to pay claims. Employers can avoid state insurance premium taxes ranging from 1% to 2.5% of paid premium. The ACA health insurance tax is not applicable to self-funded plans (estimated at 1.9% to 2.9%). In the past, self-funding was only for large employers, but smaller employers are beginning to explore this option.

However, a good self-funded plan doesn’t just happen. Peter Drucker explained how to address some of the pitfalls. When a self-funded plan runs into trouble, it’s usually because the broker didn’t prepare a multi-year strategy with a comprehensive risk management program that would protect the plan from unpredictable risks and financial exposure beyond the current plan year. The following are some of his tips to maximize the value of a self-funded plan:

Renew your stop-loss coverage with the next renewal in mind. Purchase a product with a premium cap at renewal. Stop-loss premiums make up approximately 10% of the plans total health care cost, but it protects the plans overall financial integrity.

Uncover gaps in coverage. Does the stop-loss contract mirror the underlying benefit plan? Are there differences in experimental and investigational definitions?

If you have a fair renewal, you should bind coverage before any risk issues arise. Make sure that you have a carrier that’s willing to bind at least 90 days before the effective date.

Determine the appropriate stop-loss deductible: If it is too high, the plan is over-exposed; if it is too low, they’re buying too much insurance. Cash flow and the plan’s risk tolerance level will also affect this decision. Some states even have a minimum deductible requirement.

Determine the appropriate stop-loss contract and product features. If cash flow is a concern, advanced funding of stop-loss claims is available. Other features include aggregation of specific deductibles and terminal liability coverage.

Determine an accurate claim projection for the aggregate stop-loss. The stop-loss carrier will prepare a claim projection for the upcoming policy period. The benefit advisor should also prepare a claim projection of their own to validate the carriers’ interpretation of the data.

Determine appropriate the aggregate stop-loss contract and product features: To help small to mid-sized plans better manage their cash flow, monthly aggregate accommodation can be made available.

A variety of stop-loss deductibles, products and features give self-funded benefit plans a vast array of risk transfer options. It gives you the ability design a program that’s suitable for any client’s risk tolerance or financing strategy.

Attempting to standardize a process comes with challenges. Determining an appropriate specific deductible for a self-funded client is significantly influenced by the group’s tolerance for risk and cash flow.

Private Exchanges

As employers struggle with health reform, the private exchange is yet another option that’s becoming popular. Eric Grossman a senior partner with Mercer explained that more employers are looking into private exchanges for the following reasons:

They offer one-stop shopping across core health, life, disability and voluntary benefits.
They facilitate the transition to defined contribution.
They offer technology to easy decision-making.
Collective buying power helps control costs.
They offer streamlined management and administration.

In the next two years, 37% of employers surveyed are considering moving to a defined contribution approach, and 32% are planning to provide benefits through a private benefits exchange. The reasons are to control costs (99%), offer a wider range of benefits (88%), and reduce the time spent on benefits administration (70%).

Voluntary Benefits

Executives from AmWINS, Humana, Lincoln Financial and Trustmark gave a snapshot of the booming market for voluntary benefits. According to the experts, employers are replacing some employer paid benefits with employee paid, voluntary benefits, such as disability, life vision, and dental coverage. Carriers are also doing more bundling of voluntary products to fill in gaps in coverage. For example, they are bundling life insurance with long-term care insurance and bundling critical illness insurance with high deductible health plans. Carrier executives expect the future to bring multiple voluntary benefit platforms, such as group, individual, and hybrid plans.

The takeaway is that there’s no shortage of opportunities or challenges for brokers in the post-ACA world.


Leila Morris is senior editor of California Broker Magazine.