July2013CoverDental Judgement Day – Get Help with the Tall Order of Deciding on Dental Plans with our Annual Survey!
We’ve asked the top dental providers in California to answer 28 crucial questions to better help you, the agent, understand their benefits, features, and services.
Long Term Care – LTCi Simplified: An Uncomplicated Approach Can Produce Bigger Business
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Medical Tourism: An Alternative Course in Unsettled Times
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Dental Judgement Day – Get Help with the Tall Order of Deciding  on Dental Plans with our Annual Survey!

Welcome to Part I of California Broker’s 2013 Dental Survey. We’ve asked the top dental providers in California to answer 28 crucial questions to better help you, the agent, understand their benefits, features, and services. Look for Part II in the August issue. Read the responses and sell accordingly.

1. What types of plans do you offer?

Aetna: We offer the following dental plans:
• Aetna Dental Maintenance DMO plan, PPO, PPO Max.
• Freedom-of-Choice Plan Design (offering members their choice of two dental plans).
• Aetna Dental Preventive Care, Aetna DMO Access, Aetna Dental Care Reward, Aetna
• DentalFund (our consumer-directed dental plan), indemnity, Vital Savings by Aetna, a dental discount program.
• Aetna ValuePass Card.

Aflac: Aflac Dental — voluntary insurance policy — has the simplicity of a voluntary individual table of Allowances plan that pays a fixed benefit amount for each procedure, regardless of what the dentist charges.

Anthem Blue Cross: Anthem Blue Cross and Anthem Blue Cross Life and Health Insurance Company offer a comprehensive line-up of dental plans and products that include: PPOs and DHMOs for individuals, small groups, large groups and national accounts. We offer voluntary dental plans for small and large groups.

BEN-E-LECT: BEN-E-LECT offers fully insured PPO, high deductible, pre-paid and self-insured dental plans for the group market. Employer-paid and voluntary plans with multiple network and out-of-network options down to the employee level are available to groups with as few as two lives.

BEST Life: In California, we offer employer-contributory PPO, and indemnity dental plans to groups with two or more employees enrolling. Voluntary PPO/indemnity dental plans are available to groups with five or more employees enrolling. Custom dental plans can be offered for groups with 100 or more employees enrolling. Group term life and vision coverage, as well as personal dental plans are also available.

Blue Shield: Blue Shield provides a wide range of affordable and comprehensive dental products to meet our clients’ needs. From dental PPOs, to in-network only (INO) and HMO plans, our plans offer members a wide variety of plan designs and networks that fit their budget.
For individuals/families, we offer a unique dental PPO plan that provides member copayments instead of the usual coinsurance percentages. Our dental HMO plan offers comprehensive benefits with pre-determined member copayments. Finally, our Duo plan offers members dental and vision coverage at a single price. Our plans can be sold with medical plans or on a standalone basis..
For senior members, we offer two comprehensive dental PPO plans for Medicare supplement plan members. There is also a dental plus vision plan package option for Medicare supplement plan members. For groups, our dental PPO, INO and HMO plans are available on a contributory or voluntary basis, can be sold with or without Blue Shield medical plans and are  UCR- or MAC-based.

Cigna: DHMO, DPPO, DEPO (ASO/self-insured only), and indemnity.

Delta Dental: Managed fee-for-service, PPO, and DHMO group dental plans; individual DHMO dental plans and group HMO vision plans.

Dental Health Services: Dental Health Services provides prepaid dental benefit solutions for groups and individuals. We also offer PPO, EPO, and indemnity (reimbursement) products for groups of all sizes and ASO services for self-funded groups.

Guardian: Dental PPO (active or passive), prepaid/DHMO, and indemnity plans are available on a voluntary or employer-sponsored basis. Dual and triple choice, monthly switch (between a DHMO and PPO), and administrative services only plans are also available. Guardian specializes in customized plans based on the needs and price points of the employers and employees.

Health Net Dental: Health Net Dental HMO (DHMO) plans and dental PPO plans offer robust benefits covering most dental procedures. Dental plans may be purchased with a Health Net medical plan or on a stand-alone basis. In addition, the dental plans may be purchased as dual choice. Contributory and voluntary plans are also available.

HumanaDental: PPO, prepaid/DHMO, traditional preferred, and preventive plus plans are available on a voluntary or employer-sponsored basis. Humana also has a robust ASO dental plan available in California.

MetLife: Dental PPO, managed dental plans and indemnity plans, with flexible designs and funding arrangements available to accommodate employer plan requirements – single or multi options, fully insured or self-funded as well as a full range of contribution options.

Principal Financial Group: We offer employer paid and voluntary plans, including PPO, EPO and POS. We also offer a choice between our plans and dental HMO plans through marketing alliances.

Securian Dental: Group Dental PPO and indemnity

United Concordia: United Concordia offers flexible fully insured preferred provider organizations (PPOs) and dental health maintenance organizations (DHMOs) plans, as well as an individual product, iDental. ASO funding arrangements are available based on client size. Most plans are offered on an employer-sponsored or voluntary basis.

Western Dental: Western Dental offers DHMO mixed-model provider panel comprised of (a) contracted independent, general dentist and specialists, along with (b) Western Dental employee dentist and specialists, who work in the company-owned Western Dental Centers. Western Dental currently operates general dentistry and orthodontic offices throughout Calif., Ariz., and Nevada.

2. How do plans you offer for the individual and/or small group compare in rates and benefits to the large-group plans?

Aetna: The key difference between Aetna small group plans and larger group plans is that small group plans are pre-packaged plan designs. While larger groups can select from an array of benefits, the packaged small group plans are comprehensive, yet price sensitive and make it easy for our customers to choose from plans that are competitive in the market.

Aflac: Aflac dental rates and benefits do not vary based on the size of the account. However, when replacing existing dental coverage in larger accounts, waiting periods may be significantly reduced.

Anthem Blue Cross: There are different underwriting considerations for each business segment depending on the product offered. With our Dental Prime and Dental Complete plans,  small and large groups can customize benefits to fit their employees’ needs.

BEN-E-LECT: The majority of BEN-E-LECT’s plans compete very well in the large group market. The benefit design and structure of these plans remain consistent across the small and large group markets.

BEST Life: Rates vary by plan design, group size and employer contribution. Typically the larger the group, the lower the rates. However, we offer a lot of plan design flexibility for groups with 10 or more enrolling. Waiting periods for major and ortho services are waived for groups with 10 or more employees enrolling — regardless of employer contribution. Some benefits are standard regardless of size. We offer a dental supplemental accident benefit on all our dental plans, regardless of size. A children’s vision benefit is also standard on plans with orthodontic coverage. Other benefits vary by group size: Adult orthodontic benefits are available to employer-contributory plans with 25 or more enrolling. Groups with 100 or more enrolling can customize benefits. Discounts for bundling higher participation, and new voluntary cases for groups of 10 or more enrolling are also available.

Blue Shield: There are different underwriting considerations for each business segment.
Our ability to customize offerings for groups with more than 300 employees typically results in lower rates and more choices to meet the employer’s needs. Group plans come in a range of deductibles and annual benefit maximums.
Our individual, family and Medicare Supplement dental plans may vary in waiting periods, deductibles, and annual benefit maximums based on the plan selection.
All dental plans include generous benefits, competitive premiums, and strong California and national provider networks that are available to all members; we don’t differentiate our provider network for small groups or individual or family markets.

Cigna: There are a series of standard DHMO plan designs and DPPO/indemnity plan designs. Cigna offers an individual plan in the state of California, available as a buy-up option to our medical plan offering. That plan is a DPPO offering, very similar to our group plans aimed at businesses trying to control costs while offering a broad network. Larger groups generally want more robust and flexible plans, while smaller groups gravitate toward standard offerings.

Delta Dental: While benefits offered to smaller groups are comparable to those offered to larger groups, larger groups have more options in terms of plan designs. Rates can be slightly higher for smaller clients and individuals, but Delta Dental strives to be competitive while balancing our financial risk. With individual DHMO plan benefits, we offer three different plan options — two for individuals and families and one customized for seniors. The individual and family plans offer a wide range of covered services. The senior plan is designed to offer services most utilized by this particular population.

Dental Health Services:Dental Health Services works with its group clients on customizing dental benefit solutions that meet their needs. All individual plans offer the same high-quality benefits and services at competitive rates.

Guardian: Guardian offers nearly the same plan options to small group employers as to large employers. We offer an array of cost-reducing options, such as waiting periods, deferral of services, and tie-ins to Guardian vision products. In preparation for Affordable Care Act requirements beginning January 1, 2014, we are developing new options for employers with under 50 lives to ensure they have quality benefits that are compliant with state requirements. We will also be offering dental benefits through the California state exchange.

Health Net Dental: DHMO plans offered to individuals provide a comprehensive schedule of benefits at a monthly fee that is slightly higher than rates quoted for groups. Small groups (two to 50 employees) have two comprehensive Health Net Plus DHMO and 13 DPPO plans from which to choose. Mid-market groups (51 to 250 employees) may choose from five DHMO plans and 15 new DPPO plans. Mid-market rates are based on location, benefit plan chosen, employer contributions, and participation. Individual and small group rates are based on book rates. Risk evaluation is taken into consideration when underwriting larger groups (over 250 eligible employees).

HumanaDental: We offer flexible plan designs with a range of deductibles, co-payments, and out-of-pocket expense limits to meet the needs of small to large groups. We also offer large groups the additional flexibility to customize plan options. All our dental plans provide employees with incentives for preventive dental care, which promotes their overall health. Customers who see dentists participating in the HumanaDental PPO Network receive deep discounts. A vision discount program is included with all HumanaDental plans.

MetLife: MetLife offers individual plans in Calif., Fla., and Texas though SafeGuard, a MetLife company. Dental HMO plans offered to individuals provide a mid-range level of benefits at a monthly fee that is slightly higher than rates quoted for groups. Small groups have a broad range of options within the Dental PPO and Dental HMO/Managed Care benefit plans. Rates are based on location, plan chosen and participation. Risk evaluation is taken into consideration when underwriting larger groups; individual plans are quoted using shelf rates.

Principal Financial Group: We do not have individual dental plans. The only significant rating difference between our small and large group rates pertains to experience rating which is used on groups with 150+ employees. The benefits are the same for small and large groups.

Securian Dental: Small group rates are developed on a pooled basis. Large group rates are developed on a custom basis.

United Concordia: While larger clients have more flexibility in customizing benefit options than smaller clients, United Concordia offers an array of standard client products and options that provide small businesses and individual consumers with cost-effective, quality choices. To control the risk associated with individual insurance, we utilize waiting periods for selected types of procedures. To keep the small client premiums comparable to those found in larger clients, slightly higher deductibles, lower coinsurance percentages and lower maximums are more commonplace within this market segment.
Western Dental: Our individual and small group rates are a little higher for standard benefit plans. Customized benefits plans are available for large groups.

3. Is your plan(s) better than previous incarnations? If so, how?

Aetna: We continuously review which services should be covered based on major dental studies, new clinical advances, recommendations from the leading health and dental organizations, consultations with academic leaders on the latest technology and techniques now taught in dental schools. We offer the following:
• Freedom-of-Choice Plan Design – packages our DMO plan with one of our indemnity or PPO plan options. Members pay one rate and can switch between the plans as often as monthly. It can be a lower cost alternative to a PPO plan.
• Aetna Dental Preventive Care – a low-cost PPO or indemnity plan covers preventive and diagnostic procedures from 70% to 100%. Members may also get reduced fees from dentists who participate in Aetna’s PPO network for non-covered services like fillings, adult orthodontia, and cosmetic tooth whitening.
• Aetna DMO Access – a fixed-co-pay DMO plan offers broader network access at a lower cost. There are no out-of-pocket deductibles for the member to pay and no claim forms to file. It also includes the Aetna Dental Access discount network, which gives members access to more dentists and discounts of 15% to 50% for non-covered services like bleaching.
• Aetna Dental Care Reward – By going to the dentist for preventive services in one plan year, Aetna will cover a greater percentage of coinsurance and/or annual maximum next plan year.

Aflac: Employers are seeking ways to shift costs and employees are looking for more value. The Aflac Dental plan is designed to increase the policy year maximum, which will satisfy  employers and employees.

Anthem Blue Cross: Yes, our plans are significantly better than previous incarnations. Our Dental Prime and Dental Complete plans are open-access models that include the freedom to see any dentist – with lower out-of-pocket costs at in-network dentists. These plans are better than previous incarnations because they (a) incorporate evidence-based benefit designs and claims processing guidelines, for greater savings and consistency with clinical oral health science, (b) include a more robust California provider network and (c) automatically include access to the national Dental GRID, one of the nation’s leading dentist networks, with dentists in all 50 states. The GRID is exclusively for customers of participating Blue Cross and Blue Shield plans. In short: our new plans have better benefit designs and a larger network locally and nationwide.

BEN-E-LECT: BEN-E-LECT plans offer more employer and employee options than any other dental plan in the market. They can be written stand-alone or the employer may combine various BEN-E-LECT plans for a complete package offering PPO, DHMO and fully self-funded options

BEST Life: Our current dental plans offer a lot more options compared to the dental plans we’ve offered in the past. We’ve also recently added a MAC reimbursement option. All of our dental plans can be tailored to offer rich or lean benefits, depending on a company’s needs. We continually evaluate our dental plans to ensure the competitiveness of the benefits, and our underwriting guidelines.

Blue Shield: Yes, we are always looking to enhance our plans and provide richer benefits. For 2014, we are introducing four new group dental HMO plans and four new dental INO plans with a $1,500 calendar year maximum. Compared to our existing dental HMO plans, our new dental HMO plans offer lower copayments to deliver a richer benefit to our members. The new dental INO plans offer a lower price alternative to our INO plans with $2,500 calendar year maximums.
In addition to new plan designs, all BSC plans include oral cancer screening coverage as a value-added benefit, which comes at no out-of-pocket cost to the member.
We also offer enhanced dental services for pregnant women to all dental PPO plans. Pregnant women receive one additional routine adult prophylaxis, and/or one course (up to four quadrants) of periodontal scaling and root planing, and/or periodontal maintenance if warranted by a history of periodontal treatment. Treatment is payable at 100% of the allowable amount for  in and out of network.

Cigna: With the additional value added features and expanded offering of covered clinical procedures, our new DHMO plans provide employers with more options than were previously available. Employers now have 100 types of plan coverage to choose from, with a spectrum of preventive coverage only plans to richer plans with surgical implant coverage, providing many choices to meet their needs.

Dental Health Services: Yes. Dental Health Services frequently evaluates its monthly premium rates and copayments for services to ensure that they are appropriate and competitive.

Guardian: The key is flexibility, especially in today’s market as employers and employees are trying to balance costs with benefits. Guardian offers customized options to fit each employer’s needs and budget. Our recent focus has been on innovative plan designs with flexible solutions, things like Guardian Freedom, which is a new lower cost dental option that gives members a choice of networks with access to providers in Guardian’s premier PPO network, DentalGuard Preferred, or in Guardian’s DentalGuard Alliance PPO, which offers even greater claims savings through a select pool of dentists. We also are focusing heavily on developing more voluntary options, a market we see poised for tremendous growth particularly with the legislative changes on the horizon.

Health Net Dental: Health Net offers DPPO plans for small and mid-market groups. All of our DPPO plans include extra services for pregnant women in their second and third trimesters, including extra cleanings, scaling and debridement covered at 100% in and out of network and not subject to the plan’s deductible. Our Classic Plus DPPO Plans include MaxAdvantage, our rewards program that allows members to carry over a portion of their calendar year maximum into the next calendar year. Our Basic DPPO is a unique plan offering in- and out-of-network coverage for preventive, diagnostic and restorative procedures (oral surgery, endodontics, periodontics, major services and orthodontia not covered).

HumanaDental: Yes, we continually explore ways to offer more choices and flexibility for our customers. Please see next response.

MetLife: We are continually improving our program contracts, plan-design flexibility, claims-processing guidelines, customer service, and quality programs based upon clinical research, consumer-value approaches, and dental industry trends. MetLife continues to expand our product offerings and plan design flexibility in the small (<1,000 employees) market by providing customers with more choices to help them meet cost objectives without sacrificing quality.

Principal Financial Group: Our current plan offers significant flexibility in plan design, optional coverage for cosmetic services, TMJ treatment, dental implant coverage, accident coverage, employee choice options and multiple price points. Employers can design any combination of plan options to meet their needs. In addition to our Maximum Accumulation feature, which allows members to carry over a portion of their unused annual maximum for use in future years, we also rolled out a new Preventive Passport feature. This allows for preventive charges to not count/reduce the annual maximum.

Securian Dental: Yes, we have added greater flexibility.

United Concordia: In recent years we have done the following:
• Introduced more voluntary plan options and added optional coverage for posterior composite restorations and implants to clients with 10 or more enrollees.
• We launched Preventive Incentive, which covers diagnostic and preventive services without counting them toward the member’s annual maximum.
• Enhanced our employee oral health educational offerings.
• Launched a series of plan designs through iDental, our dental product for individuals and families without coverage elsewhere.
• New for 2014, we are introducing a value suite of products to include lower premium options, greater discounts on non-covered services and a lean product option.
• Launched a dental discount program for Individuals through DentalPlans.com.
• Introduced the UCWellness Oral Health Rider in 2012, which offers enhanced coverage for members with diabetes and other diseases to clear away concerns they may have on the cost of treatment. UCWellness also provides oral health education and program details for all members and targeted messaging to motivate those eligible for UCWellness benefits.

Western Dental: Western Dental Benefits Division recently launched the DHMO Series 7 dental plans. Our new plans offer an increase of covered procedures to include the availability of cosmetic alternatives and more orthodontic options for children and adults

4. What have been the most recent changes in your plan(s)?

Aetna: New DMO fixed co-pay plans that cover Implants were added. Aetna also added a new plan option to exclude preventive services from the calendar year maximum.

Aflac: Along with an increased policy year maximum, Aflac Dental continues to provide a simple, no direct-cost option for employers to enhance employee benefits offerings. The Aflac Dental plan provides the ease of administration without the hassle of network restrictions, deductibles, precertification for treatment, or annual premium reviews.

Anthem Blue Cross: We revised our Dental Net DHMO. Our new Dental Net DHMO plans cover approximately 300 procedures – approximately 62 percent more procedures than our existing Dental Net plans. In addition, our Dental Net network includes more than 8,000 general dentist and specialist access points in California.
And, we still have our Dental Prime and Dental Complete products, which include modernized benefit designs, lower premiums, and a more robust dentist network locally and nationally.These plans include benefits, such as dental implants, annual maximum carryover and composite fillings on all teeth. Plus, there are more options for out-of-network reimbursement, including the 90th percentile of FAIR Health. Voluntary plans are available with a minimum of five enrolled employees.

BEN-E-LECT: BEN-E-LECT has evaluated its Freedom PPO benefits portfolio and narrowed it down to four plans that have proven to be most beneficial to its members. By focusing on development of those four plans, BEN-E-LECT is now more able to create sustainable rates for its groups taking into account size and location. BEN-E-LECT has also eliminated the waiting period for groups and new hires on its employer-paid plans for added convenience.

BEST Life:  Our current dental plans offer a lot more options compared to the dental plans we’ve offered in the past.  We’ve also recently added a MAC reimbursement option. All of our dental plans can be tailored to offer rich or lean benefits, depending on an employer’s needs.  We continually evaluate our dental plans to ensure the competitiveness of the benefits and our underwriting guidelines.

Blue Shield: For 2014, we are introducing two new dental PPO plans in our small group portfolio designed to fill a gap in the upper end of the benefit spectrum.
We are also introducing eight new plans for the 51 to 99 segment patterned after the eight supplemental group dental PPO plans designed by Covered California, California’s state Exchange.

Cigna: The DHMO has had several enhancements including value added features for customers, additional coverage options for employers and new types of patient charge schedules. To complement the Cigna Healthy Rewards Program, customer value added offerings include identity theft protection services and a 24/7 dental information line, staffed by health professionals to assist customers with questions relating to clinical care. In addition, the number of covered procedures available has increased and schedules can now include coverage for TMJ, prosthesis over implant procedures, teeth whitening, and athletic mouthguards. The new schedules also give employers the option to offer employees coverage for additional applications of topical fluoride and topical fluoride varnish at minimal copays, and for same-day, in-office crowns, inlays, onlays and veneers.
The DHMO Patient Charge Schedule choice has also expanded to now include over 100 different plans to choose from. New plan types include plans with lab charges listed separately from base copays, plans with customer copayments expressed as coinsurance (as compared to fixed copays), and plans with coverage for surgical implant and related procedures such as bone grafting, sinus augmentation and cone beam CT X-Rays for diagnostic procedures.
Some of the updates made to our DPPO suite of products and features include enhancing our Cigna Dental WellnessPlus features that provides incentives for our members to get regular preventive care treatment, improving our dental classification shifting process to ensure our clients have access to our unique and cost effective features to offer their employees.

Delta Dental: Delta Dental’s mobile web functionality makes it easy for enrollees to access dental information from a smartphone. The online tools used most often have been streamlined so enrollees can get the information they need faster and easier. Enrollees can log on to:
• Check benefits, eligibility, deductibles and maximums
• Search for benefits by keyword or procedure code
• Check claims status and claims history
• View ID card (pull it up at dentist’s office)
• Go paperless by opting to “Receive Statements Online” under “My Account”
• Eligibility and plan information for enrollees in DeltaCare USA can still be accessed from a smartphone, in a full site view. Our enhanced online dentist directory makes it even easier for enrollees to find a conveniently located dentist.
The Find a Dentist feature at www.deltadentalins.com now offers:
• Easier navigation and a cleaner display.
• The ability to conduct a search using key words, such as the name of a practice (as well as by the dentist’s name).
• Faster narrowing of search results by specialty, language and gender.
• Improved toggling between Delta Dental PPO, Delta Dental Premier and DeltaCare USA network results.
We continue to promote our dental wellness program for our enrollees, the SmileWay Wellness Program. SmileWay provides an array of wellness resources, including plan designs that emphasize preventive care, enhanced oral health communications and promotion of oral health through social media channels such as Facebook and Twitter. Our SmileWay Wellness Program is self-managed, enabling enrollees to determine their level of participation.It encourages users to review their habits and take our free cavity and periodontal risk quizzes, which will indicate their risk level based on oral health habits and lifestyle choices. In the risk assessment results, we encourage users to stay connected with us by signing up for customized communications based on their results. Our extensive dental health article and video library contains more than 100 articles and videos.

Dental Health Services: Dental Health Services now offers dental implants as a covered benefit. Specialized crowns and upgrades are also now available.

Guardian: Guardian constantly develops new, innovative ideas in order to meet our customers’ needs by helping keep their teeth healthy and saving them money. Guardian Freedom allows members to choose between networks. Members are still free to see out-of-network dentists. Members can easily find a dentist near them at www.GuardianAnytime.com or on their smart phones with GuardianAnytime Mobile
Health Net Dental: All of our Classic Plus, Classic, Essential and Basic DPPO plans include extra benefits for pregnant members in their second and third trimesters.

HumanaDental: Plans in our new generation of products are available as voluntary plans, and to groups with as few as two employees. Our new plans offer an extended maximum benefit, in which members get 30% coinsurance on services rendered after they reach their annual maximum (implants and orthodontia excluded). In addition, no waiting periods for major services for voluntary groups with 10 or more enrolled, open enrollment options, and orthodontia benefits. Updates include reimbursement options for out-of- network reimbursement: maximum allowable fee, or based on in-network fee schedules. Additional deductible choices, implant coverage, and acrylic filling coverage have also been added. Due to the connection between oral health and overall health, we have added, free of charge, oral cancer screenings to all of our products, excluding DHMO/prepaid plans.

Principal Financial Group: Our newest feature to our dental plans is the option of Preventive Passport. This feature excludes preventive services/charges from counting towards the annual maximum.

Securian Dental: Enhanced benefit plans. Escalating Annual Maximum and Lifetime Deductible options where available.

United Concordia: Along with our parent company and the University of Pennsylvania, United Concordia recently completed a study that showed treating gum disease can help reduce the cost of medical care in patients who have certain diseases or conditions.
As a result, we now offer our UCWellness Oral Health Rider, delivering enhanced coverage for members with diabetes and other diseases. By providing greater benefits for the full coverage of services, such as surgery, that eligible members may need to treat and control their gum disease, UCWellness clears away any concerns members may have on the cost of getting treatment.
UCWellness makes it easy for employees to start saving employers money. An integrated communication and registration process is easily implemented. UCWellness – My Oral Health delivers:
• Oral health education and program details for all employees
• Targeted messaging to motivate those eligible for UCWellness benefits

Western Dental: Our Series 7 plans cover more procedures and now include Implants, veneers and external bleaching.

5. Can an insured use their own dentist even if they are not on your participation list?

Aetna: PPO — We offer a national network of dentists. Each covered family member can visit any licensed dentist for covered services. When members visit dentists who participate in our network, their out-of-pocket costs are generally lower. Indemnity – Members can visit any licensed dentist.

Aetna: DMO — Members must seek care from a participating DMO provider unless a state allows a member to seek out of network care. We make this easy by consistently offering the largest DMO network in the industry.

Anthem Blue Cross: Members of our Dental PPO plans, including Dental Prime and Dental Complete, can see any dentist they want. However, members who choose a network provider generally experience lower out-of-pocket costs. Plus, members never need to file a claim when they see one of our in-network providers – the dentist files the claim for them. The DHMO plans are in-network only.

Aflac: Policyholders may use any dentist they choose since Aflac Dental does not have network requirements.

Anthem Blue Cross: Yes, they can with all of our PPO plans. Members who choose a provider, within the Dental Blue network, get the most savings in their dental costs. However, members can choose a non-Dental Blue dentist, but their out-of-pocket costs may be higher. The same is true for our traditional Prudent Buyer PPO dental plans. The DHMO plans are in-network only.

BEN-E-LECT: Yes, BEN-E-LECT’s plans offer  in and out-of-network coverage with multiple options for coverage and benefits. The members maintain complete control over the dentist they choose to utilize.

BEST Life: Yes, group and individual products allow members to visit any dentist of their choice and receive coverage for services.

Blue Shield: Yes, both dental PPO plan members can choose to go to any dentist, although their benefits will be covered at a higher percentage when choosing a network dentist, with less out-of-pocket expense.

Cigna: DHMO — For DHMO, customers generally must use a dentist that participates in the plan’s network to receive coverage, except in emergencies. Once an employee is enrolled in a Cigna DHMO plan, he or she needs to select a participating general dentist. We are continuously adding more dentists to the network, so a network dentist may be available.  If a network dentist is not available in a member’s area, a customer service representative will suggest the member select a participating general network dentist near his or her work. If no office is available, the customer service representative will inform the member to contact his or her plan administrator to select another dental plan option.
DPPO — There are no restrictions within the Cigna DPPO plan about the use of non-contracted dentists. Cigna DPPO members always have the choice to receive care from a network dentist at in-network levels and discounts, or from a non-network dentist at out-of-network levels.
DEPO — With the Cigna DEPO plan, members must seek care from network general dentists and specialists. Services provided by non-network dentists are not covered.
Indemnity — The Cigna Traditional indemnity plan is not a network-based plan; members may visit any licensed dentist for care at any time.

Delta Dental: Delta Dental Premier enrollees can visit any licensed dentist for care, although there are advantages to visiting one of more than 48,000 dentist locations for Delta Dental Premier dentists in California. Enrollees can go to any dentist, but they are only guaranteed to get in-network benefits and avoid balance billing when visiting a Delta Dental dentist. Delta Dental PPO enrollees also have freedom of choice, but can benefit from the protections associated with selecting one of more than 31,000 dentist locations for Delta Dental PPO dentists in California. PPO enrollees have access to  Delta Dental PPO and Premier dentist networks with different levels of savings. DHMO enrollees must use a participating general dentist or approved specialist, except for emergency care. There are more than 5,100 dentist facilities for DeltaCare USA in California.

Dental Health Services: Members of Dental Health Services’ prepaid and EPO plans choose their dentist from our select, Quality-Assured network. Our PPO and reimbursement plans allow members to receive treatment from any dentist.

Guardian: Members covered under our PPO plans can visit any dentist; however, benefits may be paid at a lower coinsurance rate for non-participating dentists. DHMO members must choose a participating primary care dentist.

Health Net Dental: Our dental PPO plans offer members freedom of choice; members may receive services from any licensed dentist, but we will reduce their out-of-pocket costs by receiving services from a participating PPO dentist. Under Health Net Dental DHMO plan, members must use a participating dentist to receive benefits.

HumanaDental: PPO members can visit the dentists of their choice. Out-of-pocket savings are greater when members visit participating network dentists.

MetLife: For Dental PPO plans, plan participants can visit any dentist and receive benefits. Participants may realize additional expense savings by receiving services from a participating dentist. For Dental HMO/Managed Care plans, members must use a participating dentist to utilize their benefits.

Principal Financial Group: Yes, our members can see any dentist even if the dentist is not on the “participation” list if they are enrolled in  our PPO or POS design. If a member is enrolled in our EPO design, however, network dentists must be seen for services in order to receive coverage.

Securian Dental: Yes.

United Concordia: Our FFS and PPO plans allow members to visit any dentist. However, out-of-pocket costs are lower when visiting a participating network provider. DHMO members must use network dentists.
Western Dental: Through the DMO plans, the member must use a dentist who participates in our network in order to have coverage.

6. If the dentist bill exceeds UCR, can the dentist bill the patient for the difference?

Aetna: For covered services, network dentists are contractually prevented from balance billing above the negotiated rate. Non-covered services are also available for a discount in some states. Dentists who are not in our networks may balance bill members.

Aflac: Aflac Dental pays benefits based on a Table of Allowances and not on UCR. If the dentist’s charge exceeds the benefit amount paid, the dentist may bill the patient for the remaining balance.

Anthem Blue Cross: No, not when visiting an in-network dentist with our PPO plans, including Dental Prime and Dental Complete. Anthem Blue Cross participating provider contracts include negotiated fee agreements that prohibit balance billing. A participating dentist may not balance-bill members for amounts that exceed the negotiated and contractually agreed on fee. Members are not responsible for amounts in excess of negotiated rates. However, if a member visits an out-of-network provider, there is no contract and the provider can bill the patient for the difference. With our DHMO plans, the patient is only responsible for co-payments and non-covered services when accessing services through their participating dental provider.

BEN-E-LECT: The member does have the option to choose this method upon enrollment.

BEST Life: Members will not be balanced billed if they receive treatment from a contracted PPO provider. All our dental PPO plans offer a regional and national PPO network. Members can access their in-network benefits anywhere in the country and will not be balance billed.

Blue Shield: No, in-network providers cannot bill members for fees that exceed the negotiated rate. Non-network providers, however, may bill for charges that exceed the plan’s allowed amount.

Cigna: When an out-of-network dentist’s charge substantially exceeds our maximum reimbursable charge (MRC) determination, the claim is paid/processed based upon U&C charges, following appropriate guidelines. The claim would be denied if it does not meet required criteria for the procedure; the claim processors review and deny, or provide an alternative covered service, or the procedure is not covered under the plan. If an appeal is filed, we contact the dentist during the appeal process to determine whether unusual circumstances might support the additional amount. Disputes will occur because the work was more extensive than it appears on the submitted claim. In that case, we request a written description detailing the extent of the procedure and reasons why the work involved superseded average charges. Typically, a dispute is resolved within 10 working days. The member is responsible for any charges in excess of MRC for out-of-network DPPO and indemnity claims.

Delta Dental: Contracted dentists agree not to balance bill patients for services covered under the program for which the dentist has contracted service fees. Delta Dental holds its Delta Dental PPO and Premier dentists to their contracted fees when providing services to eligible enrollees. DHMO enrollees do not pay more than their set copayment for covered benefits under the DeltaCare USA plan. Specialists are paid the difference for charges exceeding the enrollee’s copayment for all preauthorized services. When an enrollee chooses a more costly procedure not covered under the plan, the enrollee is responsible for the difference in cost between the network dentist’s usual fees for the covered procedure and the optional treatment, plus applicable copayment for the covered procedure.

Dental Health Services: No. Dental Health Services guards against balance billing for specialty claims and also has separate safeguards in place to protect members from other types of overcharging.
Dental Health Services contracts with participating specialists who specifically prohibit balance billing. The specialist can only charge the agreed-upon fee for a particular service. A member is sent an Explanation of Benefits booklet (EOB) that provides details about charges, contracted rates, and the portion of charges that are the patient’s responsibility. If a plan member is authorized to go to a non-contracted specialist, the company pays the entire billed fee for the specialty service less the member copayment. This ensures that the plan member is only charged for what the plan has specified as their portion. Patients are also encouraged, via member communications materials, to contact Dental Health Services if they suspect any billing irregularities.

Guardian: Guardian’s PPO dentists are prohibited from billing members for any difference between the billed fee and the contracted fee schedule amount, less applicable deductibles and coinsurance.

Health Net Dental: When receiving services from a participating PPO dentist, members cannot be billed any charge in excess of the maximum allowable charge established by the plan. If the member goes to a non-participating dentist, the dentist can bill the patient for the difference between the allowed amount for the plan benefit and the dentist’s submitted charge.

HumanaDental: Members are responsible for any charges that exceed the maximum amount that Humana will reimburse for a specific service. Members are encouraged to visit in-network providers to experience lower out-of-pocket costs.

MetLife: When receiving services from a participating Dental PPO dentist, eligible employees and dependents cannot be billed any charge in excess of our maximum allowable fee (minus any plan benefits). If the patient goes to a non-network dentist, the dentist can bill the patient for the difference between the plan benefit and the dentist’s submitted charge.
When receiving services from a participating Dental HMO/Managed Care dentist, members cannot be billed any charge in excess of the specified plan co-payments listed in the Schedule of Benefits for their plan.*
* Members are responsible for the participating dentistÌs full fee for procedures specifically excluded from coverage.

Principal Financial Group: Dentists cannot bill over the UCR/fee schedule allowance amount if they are part of our PPO or EPO networks. If the dentist is not a part of one of our networks, he/she can bill the amount over UCR.

Securian Dental: If the dentist is part of our network – no. If the dentist is not part of our network – yes.

United Concordia: Contractually, United Concordia participating dentists agree to accept our allowances as payment in full for covered services (less any deductibles and coinsurances or co-payments).

Western Dental: Since this is a managed care plan, members pay only the applicable co-payment listed on their benefit schedule. Members are financially responsible for non-covered procedures at a discount.

7. How does the dental plan protect against over billing or waiver of co-payments?

Aetna: Our explanation of benefits shows the member’s out of-pocket responsibility. A copy is sent to  member and provider. If necessary, the provider relations area helps resolve any issues whether related to over billing, waiver of co-payments, or other issues.

Aflac: Aflac Dental does not have network requirements. If the dentist’s charge exceeds the benefit amount paid, the dentist may bill the patient for the remaining balance.

Anthem Blue Cross: With our Dental Prime and Dental Complete plans, we protect members against inappropriate billing through our provider contracts, claim review, and our continuous analytic monitoring of the treatment and claim submission patterns of each dentist that submits claims to us. For our DHMO programs, our quality assurance teams assess claims and providers regularly to ensure our DHMO members are getting the highest level of service and satisfaction.

BENELECT: Provider network discounts are applied automatically when a claim is submitted. We also make pre-determination services available to inform members what their charges will be prior to receiving service. The members also receive an explanation of benefits which clearly illustrates network savings and patient responsibility.

BEST Life: We do this in several ways: 1) Provider network discounts are applied at the time a claim is processed; 2) Predetermination services are available to inform members what their charges will be prior to receiving service, 3) We provide easy-to-understand EOBs that clearly illustrate network savings. 4) We have educational flyers that inform members on how their dental plan works and why they should go to a network provider.

Blue Shield: We prohibit network dentists from balance billing a member for the difference between billed amount and the amount received. Members are only charged the applicable copayment or coinsurance. We monitor and address any network dentist who attempts to bill for this difference.

Cigna: Network dentists sign an agreement to provide covered services at agreed upon fees. If a misunderstanding should occur, the member is encouraged to call our toll-free number for assistance from a customer service representative. We will initiate an investigation and resolve the issue as quickly as possible.
DHMO — Network general dentist and specialist contracts contain clauses that prohibit dentists from charging members any additional fee, surcharge, or other cost for services, other than applicable patient charges as defined in the patient charge schedule (PCS) or contract payment schedule for covered procedures. A network dentist will be counseled if they balance bill a member. Failure to comply with corrective action may result in the network dentist’s file being referred to our credentialing committee for review of future participation in the network.
DEPO/DPPO — Balance billing by network dentists beyond the contract fee is not permitted for any service provided to the member.
Indemnity — We do not prohibit balance billing for our traditional indemnity plan coverage; dentists may balance bill the difference between the plan’s payment and their usual charges. Members pay dentists at the time services are rendered and then submit claim forms to us, or dentists submit the claim forms directly to us for payment.

Delta Dental: Delta Dental Premier and PPO dentists contract with us to establish acceptable fees as well as formally agree to certain protections for Delta Dental enrollees. Protections include no balance billing — contracted dentists cannot charge enrollees for the difference between their contracted Delta Dental fee and their submitted charge for a service, and they may only collect the patient portion (copayment plus any deductible and/or amount over the annual maximum) at the time of service. Delta Dental dentists also agree not to unbundle a procedure that is on file with Delta Dental as one procedure.
Waiver of plan copayments and deductibles is considered fraudulent and is handled by notifying the dentist of the violation and possible network termination.
DHMO network dentists agree to be paid by Delta Dental on a guaranteed capitation basis. They also contractually agree to accept enrollee copayments as payment in full for covered dental procedures and not to seek additional fees. If a dentist consistently demonstrates a disregard for their contractual obligations with Delta Dental their participation may be restricted or terminated.

Dental Health Services: Participating dentists’ charts are audited on-site on an ongoing basis to ensure treatment is rendered in accordance with Dental Health Services’ policies. In addition, plan members receive extensive patient education and tools to help them understand their plan benefits so they can question charges that may not be in compliance with plan benefits. Members are encouraged to contact the plan for assistance if they feel they are being overcharged.

Guardian: Guardian’s PPO dentists may only charge members for any covered charges other than the deductible or coinsurance that may apply to the discounted fee schedule amount. Explanation of benefits statements sent to members specifically identify the discounts taken and the member’s responsibility.

Health Net Dental: Under our DPPO and DHMO plans, participating dentists are contractually prohibited from balance billing a member more than the maximum allowable charge or the contracted copayment amount. Practices are in place to discipline network dentists who attempt to bill members more than these contracted amounts.
If it is determined that a participating dentist has overcharged a member, our Customer Service team will contact the provider on behalf of the member to confirm benefits and re-educate the office about proper plan collection from a member. If the provider refuses to comply with the plan design, the issue is escalated to the Professional Relations Department for follow-up with the provider. Depending on the circumstances, the issue could be escalated to our Quality Management Team, which follows state mandates for a full investigation, including the request for patient records from the office and a review by a dental professional. These investigations must be completed within 30 days and written communications are sent to  the member and provider. If the provider still refuses to comply, our Legal Department would be contacted and steps may be taken to terminate our relationship with the provider. In these rare instances, it might become necessary for the plan to reimburse the member or provider depending on the circumstances and to ensure a positive member experience.

HumanaDental: The dentist and the patient get an explanation of benefits to ensure that the dentist does not overcharge or omit fees. The claims processing systems adjudicates the claim based on the contracted fee schedule. Waiving co-payments does not apply under a PPO.

MetLife: For Dental PPO, our first protection for the patient against over-billing is our explanation-of-benefits, which clearly identifies the charges for services that the patient has a responsibility to pay. In addition, our customer service area is responsive to patient inquiries about questionable billing items. This area gathers information from the patient and investigates the issue fully. A response with our findings is provided to the patient. Waiver of co-payments can also be identified from calls to our customer service center and our auditing unit, which looks for atypical billing patterns.
For Dental HMO/Managed Care, the dentist’s agreement prohibits billing a member above the specified co-payment. The plan conducts a thorough orientation with each dental office. The Quality Management department reviews member complaints that relate to charges. The Office Quality Assessment reviewer notes any apparent overcharges during the patient-record audit and works with the dentist’s office to correct the issues.

Principal Financial Group: Provider utilization patterns are studied and issues are addressed as uncovered.

Securian Dental: We systematically check every submitted claim.

United Concordia: United Concordia participating dentists contractually agree to only bill members for applicable deductibles, coinsurance, or amounts exceeding the plan maximums. In addition, members receive explanations of benefits that clearly describe the services received and their financial responsibility.
Members can also access the My Dental Benefits tool on our website (UnitedConcordia.com) to view their benefits and eligibility information, claim details, procedure history, maximum and deductible accumulations and more. Plus, United Concordia’s responsive customer service representatives are available to assist members with questions regarding their benefits. Our Utilization Review area also analyzes thousands of claims each year to ensure the acceptability of treatment and quality of services. Our dental advisors and consultants also continuously review dentists’ fees and practice patterns for statistical variation from their peers. Dentists who fall outside of the norm are targeted for education and additional monitoring.

Western Dental: Providers are bound by contract to accept the member’s schedule of benefits. Members can also access the My Dental Benefits tool on our website (www.UnitedConcordia.com) to view their benefits and eligibility information, claim details, procedure history, maximum and deductible accumulations, and more. Plus, United Concordia’s responsive customer service representatives are available to assist members with questions regarding their benefits. Our Utilization Review area also analyzes thousands of claims each year to ensure the acceptability of treatment and quality of services. Our Dental Advisors and consultants also continuously review dentists’ fees and practice patterns for statistical variation from their peers. Dentists who fall outside of the norm are targeted for education and additional monitoring.

8. How many provider locations do you have?

Aetna: As of 6/1/13: DMO over 74,000 dentist locations nationally and 98,000 in California, PPO: over 203,000 dentist locations nationally and 26,000 in California.

Aflac: Aflac Dental does not have network requirements. Policyholders may visit any provider they choose.
Our Dental Complete network includes 16,230 unique dentists and 35,570 access points in California alone. Our Dental Prime and Dental Complete members also have seamless access to the national Dental GRID, administered by GRID Dental Corporation. One of the nation’s leading dentist networks, the Dental GRID has providers in all 50 states – with 87,000 unique dentists and 185,355 access points
Additionally, Dental Prime and Dental Complete members have access to our international emergency dentist network, with 24/7 assistance with locating an English-speaking provider for dental emergencies in approximately 100 countries worldwide.
Our Dental Net DHMO network includes more than 7,300 provider locations in California to choose from.

BEN-E-LECT: BEN-E-LECT’s dental plans utilize the Health Smart (Interplan), First Dental Health, Dentemax, PPO USA and Western Dental networks which contain thousands of offices statewide.

BEST Life:  We offer access to a regional and a national PPO networks – First Dental Health (FDH) and DenteMax. Our California network has over 58,402 access points and an additional 9,277 provider locations throughout the state of California.  Our national network has over 163,000 provider locations, which offers our members network access when they are outside of California. 

Blue Shield: Members have network access to over 16,000 dental HMO and 25,000 dental PPO providers in California, and more than 218,000 providers nationwide. These are two of the largest statewide provider networks in the industry.

Cigna: Not Available.

Dental Health Services: As a prepaid dental plan, Dental Health Services currently has 927 general practice offices with 4,354 participating dentists and an additional 1,924 specialists.

Delta Dental: Our networks offer access to more than 48,000 dentist locations for Delta Dental Premier, more than 31,000 dentist locations for Delta Dental PPO and more than 5,100 dentist facilities for DeltaCare USA in California.

Guardian: There are over 215,846 PPO dentist-locations across the country and more than 31,959 in California. We are one of the largest PPO networks in the state based on unique dentists. The DentalGuard Alliance PPO network has over 8,094 dentist-locations in Southern California. For the DHMO, there are 13,992 locations across the country and 6,914 in California. Guardian’s PPO network now includes more than 30 dental offices in Mexico. International Assist, a value-added service available, provides dental members with access to dental care if needed while traveling outside of the U.S. Also, a supplemental listing of out-of-network dentists, Out-of-Network Plus, provides Guardian members greater selection in finding an affordable dentist.

Health Net Dental: As of April 2013, our California PPO network includes 36,483 access points in 10,962 locations. Our California DHMO network includes 2,020 locations.

HUMANA Dental: Nationally, Humana has more than 200,000 provider locations. In California, we have approximately 29,000 provider locations.

Principal Financial Group: We have approximately 41,400 PPO provider locations and 24,000 EPO provider locations.

Securian Dental: 163,000 dentist access points.

United Concordia: To support our diverse product portfolio consisting of fee-for-service, DHMOs and PPOs, we maintain some of the largest dentist networks in the nation. Our largest network provides access to 92,500 dentists at almost 235,000 access points. In California alone, we have 15,800 providers at 37,833 access points. Our DHMO network includes more than 2,600 primary dental offices and almost 1,700 specialists nationwide, with over 1,657 primary dental offices and 776 specialists in California.

9. Can Insureds change providers easily if they are unhappy?

Aetna: Yes, members in our PPO/indemnity plan can change any time and do not need to notify us. Members in our DMO plan can choose a new provider as often as once per month through Navigator, our online web tool for members, or by calling the toll-free telephone number on the back of their ID card.

Aflac: Yes. Policyholders can change providers at any time.

Anthem Blue Cross: Yes. Our PPO networks, including Dental Prime and Dental Complete, are open-access models: The member does not have to pre-select a dentist and can always see the dentist of his/her choice. DHMO members can change providers once a month.

BEN-E-LECT: Yes. Members may change providers at any time by selecting to use another provider. No further documentation or process is necessary. Freedom Pre-Paid Dental is the only plan in which a member must select a specific provider.

BEST Life: Members may choose any dentist they desire without calling BEST Life to switch providers. We also provide immediate access to Customer Service, who can assist members with selecting a provider.

Blue Shield: Yes. Dental PPO plan members have the flexibility to see in-network or non-network providers while dental INO members can only see network providers. However,  dental PPO and dental INO plan members may change providers at any time without notice; Dental HMO plan members may change their primary care dentist as needed; changes will be effective the first of the following month.

Cigna: DHMO — Members may transfer to a new dental office once a month and for any reason, as long as accounts with the current office are paid in full.
DEPO — Cigna DEPO members may seek care from any network dentist; however, we do recommend that any treatment-in-progress be completed and outstanding balances paid in full before changing dentists.
DPPO — Cigna DPPO members have the freedom to visit  a network dentist or any licensed dentist at any time. However, we do recommend that any treatment-in-progress be completed and outstanding balances paid in full before changing dentists.
Indemnity — Cigna Traditional indemnity members have the freedom to visit any licensed dentist at any time.

Delta Dental: Fee-for-service enrollees can change dentists any time without notifying us. DHMO enrollees can change their contract dentist by contacting customer service or online at www.deltadentalins.com. Requests submitted prior to the 21st of each month are effective the first of the following month.

Dental Health Services: Yes. Members can change their dentist at any time by contacting their Member Service Specialist. Changes made before the end of the current month take effect the 1st of the following month. Members who have selected a Western Dental dentist can change providers on a monthly basis by phone or in writing.

Guardian: Members covered under Guardian’s PPO plans can change dentists at will, regardless of whether the dentists are participating or non-participating. Members covered under our DHMO plan may change dentists by using our on-line web tool, GuardianAnytime.com, or by calling our toll-fee number. Requests made by the 20th of the month are effective the first of the following month. We also offer a dual choice monthly switch plan which enables members to switch between the DHMO and PPO as often as desired on a monthly basis.

Health Net Dental: With our PPO plan design, there is no need to select a primary care dentist or to obtain referrals for specialty care. Under our DHMO plans, members may change their primary care dentists once a month by calling Health Net Dental Member Services or via our on-line Web portal. The change is effective the first of the month, provided that the request is made by the 20th of the previous month.

HumanaDental: With the PPO plan design, the member can change dentists without notifying the dental plan.

MetLife: With our Dental PPO benefit plans, there is no need to select a primary care dentist or get referrals for specialty care. For the Dental HMO/Managed Care, a member can easily change their selected dentist online or by calling customer service.

Principal Financial Group: Yes

Securian Dental: Yes.

United Concordia: Yes, members can change PPO providers at any time without notice. DHMO participants may change dentists by writing or calling our customer service department and requesting a new DHMO provider, as long as there is no existing balance due to the current dentist or treatment in progress. Western Dental: Our membership can change providers, on a monthly basis, by phone or in writing.

10. How do you ensure that your dentists are aware of the benefits of your plan(s)? Do you have a way of knowing if the dentists are soliciting or recommending services that are not compensated for by your plan?

Aetna: Participating dental offices receive our helpful Dental Office Guide, which provides clear information about plan designs, policies, and procedures. We also offer a website specifically designed for dentists. The site includes real-time eligibility and benefits information, a 24/7speech recognition system called “Aetna Voice Advantage.” Also, our dental solutions team is trained to know what is important for provider service. Unusual treatment patterns may be discovered during our review of utilization reports. This usually results in an office audit that includes a review of patient files and general office practices. We talk with the dentist about the findings and develop recommendations for improvement where needed.

Aflac: Aflac has materials that may be provided to dentists with information on how to file claims and access online materials. A dedicated section on aflac.com provides dentists with claim forms and instructions as well as online access to verify policy benefit amounts. A dentist who has any additional questions may call Aflac’s Customer Service Center toll-free at 800-99-AFLAC.

Anthem Blue Cross: We inform participating dentists of plan benefits through a variety of communication vehicles. Dentists can access updated information on our Website, through our interactive voice response system, directly from our provider relations and customer service representatives, and through our provider mailings. Practice patterns of participating providers are monitored continuously and reported through monthly utilization reports and claims experience. We involve our dental director when we suspect over- or under-utilization patterns. In such cases, our dental director contacts the dentist to discuss findings along with a plan of action to help bring the practice within the standard.

BEN-E-LECT: The members are given material specific to the dentist to ensure benefits are understood. BEN-E-LECT also offers extended customer service hours with a department dedicated to assisting dentists with benefits information. BEN-E-LECT also has regular outside auditors review claims for this information in addition to scrub during time of payment.

BEST Life: Dentists may contact BEST Life for information about member benefits by calling 800-433-0088. All calls are answered by a live person, every time, no exception. We also have a fax back line dentists can use to obtain benefit information.

Blue Shield: We strive to make it easier for dentists to participate in our network by automating as many administrative processes as possible. Because administrative capabilities vary among dental offices, multiple approaches exist to facilitate dentist communication-from web-based applications to direct telephone contact-to ensure that all offices have access to critical dentist information and support.
Communication channels available 24 hours a day, seven days a week, include:
• The Interactive Voice Response (IVR system offers real-time eligibility verification and claims status inquiry. The IVR also provides fax-back capability for hard copy eligibility verification.
• A website enables eligibility verification, benefit confirmation and claims status inquiry.
• Electronic Claims Filing — we contract with a number of clearinghouses or trading partners to receive electronic claims submissions.
• Electronic Claims Payment — The capability exists to pay our providers electronically if they so choose. Claims are paid on a daily basis (Sunday-Friday).
Network dentists can control costs and increase efficiency by submitting data electronically, using our website and interactive voice response (IVR) system.

Cigna: Our Internet-based platform allows contracted dentists the ability to conduct transactions over a secure website directly linked to Cigna. This website provides one-stop online access to information that the dental offices will find helpful to manage day-to-day operations and increase operational efficiency. Our website at www.Cigna.com also provides an easy way for dental offices to access information about participating in the Cigna Dental Care or Cigna DEPO/DPPO network.

Delta Dental: Detailed program information for all enrollees, including maximums, deductible and benefit levels, is available through a secure area of our website and through a toll-free telephone number. Additionally, Delta Dental issues a bimonthly newsletter to network dental offices, which covers Delta Dental policy, industry news, seminars, new Delta Dental clients, tips on submitting claims and other useful information. We issue a quarterly quality-related newsletter to participating dentists that provides useful information to help improve the quality and efficiency of the care they provide. In addition, Delta Dental holds regular seminars to keep dentists up to date. Regular enrollee surveys seek information on various quality issues, such as services rendered that are not covered by the program; services delivered as claimed; office cleanliness and appearance; and customer service.

Dental Health Services: We regularly provide on-site training, auditing, and service visits for our participating prepaid dentists. Additionally, each office gets a comprehensive manual and we monitor all services and treatments received by our members through monthly utilization reports.

Guardian: Dentists can access plan benefits online at www.GuardianAnytime.com or through their practice management system. All PPO dentists receive information about Guardian’s plans through local network recruiters as well as email newsletters or mailings of pertinent information. Our claim system tracks and monitors each dentist’s practice patterns for bundling, over-utilization, etc. We consult with dentists who are not meeting our expectations, and if they are unable to do so, we may discontinue their network participation. We recommend that members obtain a voluntary pre-determination of benefits before proceeding with any treatment that will cost $300 or more, but we do not reduce or deny benefits if the member does not submit the treatment plan for predetermination. The member will be advised if the treatment plan includes services that are not covered under his or her plan. All offices that join our DHMO network receive an orientation that fully explains the plan. Additionally, our DHMO Regional Network Managers periodically visit the offices to review the plan. Dental Offices submit encounter data of services provided to DHMO members which is reviewed quarterly by our Quality Assurance Committee.

HumanaDental: HumanaDental notifies dentists, according to their contract, of any new product 45-days in advance of introduction. Providers are encouraged to check eligibility and benefits prior to treatment. Through monitoring of member communications and through utilization review, we would become aware of any situation where a dentist may be recommending non-covered procedures on a routine basis.

MetLife: For our dental PPO, MetLife has developed a multi-channel technology platform for employers, participants, and dental offices, providing access to information via Internet, fax, or phone. At the time of service, dental offices can access eligibility, plan and other information through dedicated real-time channels. Once selected to participate in MetLife’s Dental PPO network, dentists’ treatment patterns are monitored to help ensure maintenance of appropriate practice patterns and not plan design since they may not address the unique needs of individuals. If a dentist’s treatment patterns become unacceptable, the dentist is educated and monitored via MetLife claim review processes, and, if warranted, removed from the network.
If a participant should have a complaint regarding charges for services, covered or not covered by a MetLife plan, our trained customer service representatives will review the issue with the participant and generate a response and follow-up investigation, if necessary.
For the Dental HMO/Managed Care, each dental office gets a facility reference guide with a section on the plans. A provider relations representative initially conducts a thorough on-site orientation with the dental office staff to help them fully understand the plans. The representative also conducts periodic on-site visits to reinforce understanding of the plans and policies. Quality Management reviews member concerns and conducts regular chart audits. The network specialist is also required to review all member concerns and address these concerns directly with the provider, this will allow the office to be counseled on these specific issues to help prevent any future member concerns and the potential risk of the office being closed to new member enrollment.

Principal Financial Group: We provide on-line, telephone and fax service options for providers to verify benefits and eligibility. We encourage pre-determination to be performed for inlays, onlays, single crowns, prosthetics, periodontics and oral surgery.

Securian Dental: Dentists can verify benefits by calling our toll-free customer service phone number or via our Web site.

United Concordia: Dental offices can confirm benefit coverage information on our website via “My Patients’ Benefits,” through our telephone interactive voice response (IVR) system, or by speaking to a customer service representative. In some instances, we also inform dentists of important benefit changes through written communications, via our quarterly newsletter, through a stuffer included with dentist checks and/or with an automated telephone call. Dentists can also reference benefit information using our Dentist Reference Guide, available on our website. Professional relations representatives are also available to provide assistance when necessary. We identify abnormal practice patterns through a comprehensive quality assurance process. United Concordia reviews thousands of claims each year to ensure the acceptability of treatment and quality of services. Advisors and consultants also review dentists’ fees and practice patterns. Dentists who fall outside of the norm are targeted for education and additional monitoring.

Western Dental: Each provider is trained and given training materials to ensure that they are knowledgeable about Western Dental programs. Western Dental Services also monitors customer service inquiries and grievances in addition to reviewing utilization data supplied by each provider.

Long Term Care – LTCi: A Simpler Approach Can Produce Bigger Business

by Douglas Hamm

You’re discussing retirement planning and how to extend retirement savings when the conversation turns to long-term care insurance (LTCi). You address the risks and potential costs of going without coverage. But your potential client seems confused and overwhelmed as you review benefit amounts, premiums, inflation protection, and elimination periods.

Financial planning can be a difficult topic for consumers. In fact, more than one-third of Americans failed LIMRA’s recent 10-question financial literacy quiz, answering no more than half the questions correctly. Only one in eight answered at least nine questions correctly; one in five displayed a low level of financial literacy; and more than half demonstrated a mid-level range of financial literacy.

Financial literacy can be a major roadblock no matter which product you’re selling. Also, LTCi planning is often an emotional discussion that clients prefer to avoid. In my 20 years of experience, I have learned a few techniques to keep this process as simple as possible; the difference is in the approach.

First, focus on offering your client a valuable experience; keep it simple, and help them understand LTCi as an uncomplicated, valuable solution. Then focus on the sale. Whether you’re selling LTCi or considering adding it to your book of business, these simple approaches can help you better protect your clients, stand out from your competition, and uncover an untapped revenue stream.

Know Your Audience

Knowing your audience gives you direction and helps you make the sale. It involves doing fact-finding, understanding your client concerns, and strengthening the advisor-client relationship.

The value of LTCi means different things to different people. For example, women have more financial control than ever before and with that, comes growing interest in retirement planning. However, women and men are very different when it comes to their financial priorities, worries, and understanding of financial products. A recent study by the Pew Research Center reveals that working mothers are now the primary breadwinners in a record 40% of households with children. As a family’s primary breadwinner, this position shapes their financial priorities.

They may be drawn to LTCi for its value in protecting household budgets and extending their retirement savings in case they outlive their spouse, especially since the cost of long-term care services is rising faster than inflation. (Women typically outlive men by an average of five years). Due to their traditional role as primary caregivers, women may see LTCi as a way to ensure that they don’t become a burden to their loved ones. Taking time to understand your client’s perspectives allows you to present LTCi as a meaningful, easy-to-understand product that is a necessary part of retirement planning.

Share a Story

Statistics and data have their place in every sale, but they can also complicate a pitch. So avoid information overload. Simply telling a relatable story can help illustrate the value of LTCi and convey the fact that the coverage works. Again, it’s about connecting with your client’s needs. Telling a story is often a better way to illustrate how LTCi can preserve a person’s lifestyle during retirement and how planning ahead can save a family from financial stress and additional pressures during a caregiving crisis.

Storytelling personalizes the product and highlights its value. Recalling the experience of caring for an adult friend or loved one, can help your client see how LTCi could have eased the stress and demands of their caregiving role. Storytelling will bring out your passion for LTCi; command a client’s attention and understanding; and help you sell. You could offer an LTCi experience from your own family or explain how a policy you sold helped a client.

A Worry-Free Future

Americans are taking more responsibility for their retirement savings, which can be daunting due to the obstacles to financial literacy. With so much on their planning plate, LTCi often falls to the wayside, even though it’s a necessary piece of the retirement puzzle. It is helpful to position LTCi as a lifestyle protection that supports a worry-free retirement. Consider the views of adults who are nearing retirement:

• Fewer are expecting to enjoy the same lifestyle in their later years or afford to do the things they want to do during retirement.
• More have lost confidence in their ability to save for retirement.
• More are expecting to scale back their lifestyle or work part-time during retirement in order to make ends meet.

LTCi can help settle these anxieties by giving families a reason to feel secure about the future. With the cost of unforeseen care needs covered, LTCi can extend retirement savings and ensure that it will be there to support the lifestyle your clients spent years preparing for. If they need it, LTCi will also provide them with the care they need in the setting they prefer.

Education is the Key

Like any insurance product, LTCi can be a tough sell if your client doesn’t realize its value. That’s why understanding your client’s priorities and taking a simple approach can make you stand out as a trusted financial advisor. You can ensure that LTCi is a part of your client’s retirement checklist by emphasizing simplified LTCi, providing a valuable client experience, and ensuring that LTCi gets more than a cursory mention during a retirement discussion. Doing so can help you discover areas of untapped business, generate referrals, and increase your earning potential.


Douglas Hamm, MBA, CLF, is VP of Sales for LifeSecure Insurance Company, www.YourLifeSecure.com. LifeSecure is dedicated to providing uncomplicated insurance and non-insurance solutions to help people protect themselves from unforeseen health-related risks and expenses. The company’s insurance products are sold through a network of independent marketing organizations, brokers and agents. To reach him, e-mail, dhamm@yourlifesecure.com.

Long Term Care–Why LTC Planning is Crucial for Retirement Plans

by Steve Cain
Since long-term care insurance emerged on the financial services market about 30 years ago, the available products have evolved significantly. With all the changes in products, advisors and brokers may be wondering if this is still something worth discussing with their clients. As the Baby Boomer generation continues to age and our life span continues to increase, we know that people are living longer and the risk of needing long-term care is rampant. Long-term care planning continues to be a crucial element to anyone’s retirement planning.

Experiencing a long-term care event could result in severe financial strain on an individual or a whole family. Many people purchase life insurance because, while the likelihood of premature death is low, the reality of premature death could be catastrophic for a family. After reaching age 65, seven of 10 people will need long-term care services – a 70% chance. With the cost of care in California averaging at $6,000 per month for a semi-private nursing home, clearly, this expense is something that many families would be challenged to finance if proper planning is not put in place. Not only is the financial element of a long-term care event stressful, but the emotional and vulnerable journey for any family is also extremely challenging. Long-term care insurance can also provide guidance and support for any family going through this experience.

The long-term care insurance industry has seen many changes, especially recently. The reasons are explained below, but it has meant that some products from leading LTC carriers have temporarily been pulled from California until the newer products are approved. These absences are typically due to various factors; some include the stale product options approved by the state department of insurance, new actuarial data, and the economic environment.

Many brokers and consumers have heard news about in-force rate increases and higher pricing for new products. In addition, popular product features, such as unlimited benefits, are typically no longer available. These changes can bring a lot of doubt to both consumers and advisors when considering if LTCI is a logical component to their retirement planning. Many LTCI policies sold from the early 1980s until just a few years ago were sold with a 5% compound rate increase rider. This popular option is very expensive for a carrier to offer in a lower interest rate environment. Any of your current clients who have LTCI and may have experienced a rate got their policy on sale when they initially bought it.

While the economic environment is the largest factor in these recent changes, actuaries also continue to improve pricing accuracy based on historical actuarial data. For example, since lapse rates are continuing to be less than 1%, pricing reflects that. Underwriting is also evolving as more claims data becomes available.

LTC insurance sales include at least three parties: the manufacturer, the distributor and the consumer. For the product to be successful and sustainable, all three parties must have positive outcomes from the transaction. The LTC industry is still trying to perfect the balance among common positive outcomes for every party involved. Clearly, with older policies, the benefit was in favor of the insured, as we are now realizing from claims data and lapse rates. As premiums continue to increase on new products, consumers are concerned that the benefit is shifting too strongly to the insurer. However, when analyzing the leverage possible with LTCI compared to self-insuring, LTCI is still a great product to add to anyone’s retirement plan.

When discussing LTCI with your clients, your perspective must change from the sales method used 10 years ago. No longer is the historic favorite 5% compound inflation rider the only choice. Carriers are developing new products and policy components. It may be the best option for younger clients who may not be going on claim for 20 or 30 years. We don’t know where inflation will go in the future; the 5% compound rider may not be strong enough to keep up with rising cost of care should inflation increase strongly, not to mention the basic premise of supply and demand. As the Baby Boomer generation increases, the need for LTC services will also increase. The CPI rider is not capped; it will reflect the consumer price index increases each year.

An even better opportunity is with guaranteed purchase options. With these riders, buyers can purchase substantially more coverage initially and have the flexibility to buy more coverage with no underwriting in the future. Some carriers offer a step-rate option that gives buyers the chance to take advantages of buy-up opportunities. Plus, they can choose to start and stop the option as well.

Long-term care planning doesn’t always involve purchasing traditional long-term care insurance. If your clients could possibly self-insure, a hybrid life/LTC product may be suited for them. This product features a universal life with a LTC rider product and is great for the client who has the assets capable for the typical $50,000 or $100,000 single premium. With these products, your client has the ability to get their initial premium back at any time, and they have the life insurance if they die without needing LTC services. If they do need LTC, they have the LTC rider to cover their expenses. No matter which planning approach is used, it’s a topic that can’t be ignored. Have an open mind and assist your clients with the peace of mind and control that LTC insurance gives you.
Steve Cain is national sales leader and Celia Alfirevic is a sales consultant at LTCI Partners (www.ltcipartners.com), a brokerage general agency specializing in long-term care insurance. Cain can be reached at steve.cain@ltcipartners.com and Alfirevic at celia.alfirevic@ltcipartners.com, or call (877) 949-4582.

Medical Tourism: An Alternative Course in Unsettled Times

by Jonathan Edelheit, J.D.

Millions of Americans who are sick and tired of healthcare are giving up on solutions to cure the nation’s ill-reputed system. Even as Obamacare inches toward full implementation at the start of the year, patients still can’t afford to visit a doctor; physicians are burning out as they watch their revenues go up in flames; and insurance providers are far from eager to open their doors to enroll millions of Americans who have not been able to purchase coverage on their own — three years after the new healthcare reform legislation was passed.

As the Supreme Court pondered the fate of the Affordable Care Act almost a year ago, one-in-four Americans — or 26% — were without health insurance, a statistic from The Commonwealth Fund that jumped from 16.3% in 2010. Without insurance, disconnected Americans are avoiding basic medical services, such as routine doctor trips and screenings for cancer, cholesterol, and high blood pressure.

The Congressional Budget Office predicts that only 20% of the 55 million uninsured nonelderly people will obtain insurance during 2014, meaning that the number of uninsured will fall to a disturbing 44 million next year. In fact, CBO projects that the number of uninsured will never fall below 30 million under Obamacare across the next decade. In the meantime, insurance brokers nationwide struggle to adjust.

A Second Wind for Travel Abroad

With the winds of change in their face, cash-strapped employers and patients are bracing for even higher healthcare and insurance costs despite the Affordable Care Act’s best intentions to make healthcare affordable. Amidst these insecurities and uncertainties swirling around the healthcare landscape, medical tourism is gaining a second wind even after some, on both sides of the reform debate, consider Obamcare to be yet another in a series of last-gasp exercises aimed at solving the nation’s healthcare afflictions.

The nation’s $2.6 trillion healthcare system is 10 times the $256 billion spent in 1980, the Kaiser Family Foundation reports. The unsettling view of the health care system comes on the backs of families, which have seen premiums grow by 97% in their employer-sponsored coverage programs, and at the expense of Medicare, which has watched enrollment from an aging population swell, thereby, draining federal and state budgets.

Addressing this escalating burden has become a priority for all stakeholders, especially insurance companies looking to attract customers to their dwindling bases. Many coverage entities that once put medical tourism on the backburner are taking a cue from employers. In an attempt to lure business and keep their companies solvent, they are giving a serious second look both domestic and international travel for treatments and procedures.

The business community knows better than anyone else that there are few free rides, no matter what might have been previously expected under the new healthcare legislation. Only employers living under a rock would not have heard that Obamacare will require them to offer employee benefits or suffer a $2,000 penalty per worker.

When key provisions of the Affordable Care Act kick in 2014, employers will begin to question whether to grant health insurance to their employees or pay the penalty instead. If a McKinsey survey is any indication, some 30% of employers would definitely or probably stop offering employee health insurance after 2014. However, half of the employers with the strongest understanding of healthcare reform’s changes said they will drop coverage, and 60% say they will look for alternatives to traditional employer-provided health insurance.

Tickets to Fly

Given the choices, more companies may look to punch their tickets by sending employees to undergo treatment beyond state or national borders at a fraction of the costs they would pay once healthcare reform hits full throttle.

But, before employers get their feet wet across the pond, where travel to a foreign country for medical treatment might be out of the comfort zone for some patients, they might find a little secret in their own backyard. Some companies already have told a Kaiser Family Foundation survey that they can reduce their costs by 20% to 40% — more than enough to cover travel expenses — by persuading their employees to consider high-quality care and lower prices in locations that may be no more than a five-hour drive away.

Lowe’s Companies, with locations in the United States, Canada, and Mexico, was one of the first to take advantage of domestic medical tourism. The mainstream home improvement retailer, with 114,000 employees enrolled in a health insurance plan, partnered with the Cleveland Clinic, to provide a coverage option that would shift complicated cardiac surgeries from a community facility to a hospital renowned for its quality care. The strategy paid off in fewer complications and increased successful outcomes, employees returning to work sooner, and overall lower costs for patients and employers alike.

Other large self-funding companies including Wal-Mart, The Boeing Co., PepsiCo, and HCR ManorCare have followed suit. Although these and other outfits are just getting the gist of domestic medical tourism, they believe the programs save, in part, by negotiating a single rate up front, which includes a fee for surgeons, anesthesiologists, and all medical care up until hospital discharge.
Domestic tourism is also moving beyond complex procedures and organ transplants to offer relatively minor treatments, such as repair to knee and hip cartilage — all in the name of targeting the best bang for the buck.

Savvy Shoppers

That same idea of scrutinizing hospital prices and having the savvy shopper select premium care could help shake up the hospital industry and foster competition not only across regions, but also across foreign borders. Hospitals probably won’ be flashing their prices on roadside billboards anytime soon. But the recent public release of Medicare charges is a step toward exposing the secretive nature of costs. It may provoke employers to see beyond borders to reduce their healthcare costs.

Employers that are considering sending employees overseas to cut into the cost of their medical offerings should look no further than their lunchrooms for confirmation. In case they did not know, they already have an employee base from which to work from.

In fact, minority and ethnic populations are growing at such a rate that they will soon become a majority designation. From Asians and Latin Americans to Pacific Islanders and natives of the Middle East, diverse groups of people and their descendants not only live in the United States, but work here as well.

Immigrants account for more than 35% of workers in the farming and custodial/building maintenance industries, the Center for Immigration Studies reports. Nearly 30% are construction workers. The manufacturing and food service industries combine to fill more than 20% of their workforce with foreign-born employees.

But, don’t get the wrong idea. Not all foreign-born workers are employed in low-paying, low-skilled occupations. The Migration Policy Institute study found that 19% of immigrant workers are employed in high-paying industries including professional services, education and healthcare.
More than half of the growth in the total population of the United States between 2000 and 2010 was due to an increase in the Hispanic population. In 2010, there were 50.5 million Hispanics in the United States – or 16% of the population – rising from 30.5 million at the turn of the millennium when this group made up 13% of the total population. The growth of some 15.2 million during this period accounted for, in the latest U.S. Census, more than half of the 27.3% increase in the total population in the United States.

America’s Changing Face

Nowhere is the changing face of -America clearer than in California, where, by last count, 37.3 million Hispanics called the left coast home. The U.S. Census reports that same community also rubs elbows at work and at home with almost 4.5 million Asian Americans or 13.6% of the Golden State population.

For that reason, President Barack Obama made a recent personal plea to Californians — primarily Hispanics — to sign up for coverage through the healthcare exchanges that are being created to help millions of uninsured consumers afford coverage under the Affordable Care Act. His worry is that as insurers prepare to submit premium rates to state regulators, effective 2014, the law could drive up the cost of coverage so much that many consumers may opt to pay a penalty for failing to get insurance.

From 2002 to 2012, the California Healthcare Foundation found the proportion of employers offering any coverage declined from 71% to 60%. Meanwhile, the costs of health care insurance rose by just under 170% since 2002, more than five times the overall inflation rate.

California has the country’s biggest insurance market, and with 6 million uninsured residents, it’s another major part of the effort to get consumers to sign up for coverage. Getting young people to enroll also is critical; they cost insurers less money because they generally have better health and don’t require much costly medical care.

Insurance companies and the employers they service would be foolish to ignore the potential of the newly insured in the emerging immigrant markets, many of whom would need little more than a nudge to travel abroad for quality medical care they could afford. After all, immigrant Americans have a history of traveling back to their country of origin for less expensive healthcare and of which they are accustomed and familiar with.

Those new Americans who haven’t tasted overseas medical care have also testified in a survey reported in Medical Tourism Magazine that they would be more than willing to when asked. Hispanics, by a 54.1% margin, and 56.8% of Asian Americans have already said they would consider medical care abroad where there are no cultural differences to untwine, and be afforded a chance to spend some time with extended family members is an added bonus.

Longer life spans and a greater prevalence of chronic illness have, no doubt, placed a tremendous demand on the healthcare system and immigrant communities as well as Americans — even those in California — who do not have living ties to family relatives overseas. Even these adults who have work-based coverage find themselves shelling out more for deductibles and co-payments. The share of Americans with deductibles greater than $1,000 more than tripled between 2003 and 2012, reaching 25%, according to The Commonwealth Fund findings.

Wellness: Emerging Trend

The cost of healthcare has gone up faster than wages, giving impetus to insurance companies and employers to shine the spotlight of medical tourism on a national market that has a market renewed interest in the role of prevention to curb spiraling costs.

Healthcare costs for chronic disease treatments account for 75% of the nation’s medical bills, the Kaiser Family Foundation estimates. For example, the expenditures have put a tremendous focus on the rise of overweight and obese employees and their contributions not only to healthcare spending, but also workforce productivity.

Out from throes of a changing nature of illness and the resulting burdens placed on both the nation and business owners, another medical tourism trend has emerged that can hardly be considered a passing fad or niche. Wellness travel is one of the fastest growing trends in medical tourism today, and worth more than US $106 billion, according to a recent estimate by the SRI Group.
Fed by an aging world population; the failure of conventional medical systems to address cost-effective, prevention-focused alternatives to existing Western models; and the increased globalization of healthcare, wellness consumers across the United States are filling their plates from an assortment of spa treatments around the world. Insurance companies and brokers would be wise to take these demands seriously as an attractive alternative to reduce the costs of healthcare and the productivity of the employees over the long-term when packaging coverage plans for employers.

Dollars and Sense

For the short-term, insurance companies are guessing what to charge when the exchanges open without the luxury of knowing what their costs will be under Obamacare in 2014. If they charge too much, they’ll lose customers. If they charge too little, they’ll lose money. Once they settle in on a price, it can’t be changed until the following year.

Instead of waiting around for 2015, insurance companies are challenged to take some risk now. The good news is that they do not have to take this road alone. There are nonprofit trade resources like the Medical Tourism Association, which works with employers, insurers and agents, along with other supportive governing bodies, to walk any novice through the process.

In the face of evaporating commissions, attracting new clients through innovative channels like medical tourism should make dollars and sense to any insurance broker who feels the winds from the unsettling disorder that is healthcare today.

Medical tourism and its extended offerings should not be perceived as a tough a sell for brokers and the insurance companies they represent, but rather an avenue for taking the confusion out of healthcare and putting affordability and quality back in.
Jonathan Edelheit is president of the Healthcare Reform Center & Policy Institute, editor-in-chief of the Healthcare Reform Magazine and CEO of the Medical Tourism Association. Mr. Edelheit has been featured in hundreds of media publications and consults employers, insurers and agencies on implementing innovation and a new direction in their benefits programs and practices. For more information, e-mail jon@employerhealthcarecongress.com or call 561-204-3676 x 815.>

How A Critical Illness Approach Can Expand the Long-Term Care Insurance Marketplace

by Jesse Slome
While the prospect for traditional long-term care insurance remains strong in California, agents are clearly experiencing tougher underwriting standards, longer underwriting turnaround times, and rising premiums.

Insurance professionals are seeing a growing number of consumers who want to protect themselves with long-term care insurance, but are unable to health qualify for coverage or afford the premiums.

Fewer traditional long-term care insurance options are available, but we do see increased areas of opportunity. The first is with hybrid products, including life insurance policies that offer long-term care benefits. The second is with annuities that offer LTC benefits though these will not become popular again until interest rates rise and yields return to more normal levels.

Critical illness insurance is a third option that is gaining acceptance. Critical illness insurance is beginning to evolve to cover this space with affordable, agent friendly products that could play a role in expanding the long-term care insurance marketplace.

Traditional critical illness insurance sales continue to grow slowly though. With little consumer awareness of the product, interest and demand remains low. For example, while 50,000 to 70,000 consumers visit the American Association for Long-Term Care Insurance website monthly, traffic to our critical illness insurance website has yet to reach 10,000 per-month.

The opportunity, therefore, exists for insurance professionals to capitalize on the consumer’s awareness and interest in long-term care planning while offering an alternative option.
“When thinking about long-term care insurance, critical illness insurance rarely comes to mind, however, times are changing and they’re changing fast,” shares Larry Moore, senior marketer, with American Independent Marketing. A new kind of critical illness product in California offers an affordable alternative with a strong resemblance to traditional long-term care insurance. These forms of critical illness insurance policies often appear similar to long-term care insurance, which is important in the eyes of prospective consumers. “For example, in this situation, at claim time, the product pays a monthly cash benefit out of a benefit pool with increased benefits paid out for care received in a long-term care facility,” explains Moore.

Agents need to resist the temptation to draw direct comparisons between traditional LTC insurance and critical illness insurance that appears to be similar to it because the products are fundamentally different.

“The first primary difference is in how benefits are triggered,” Moore notes. Benefit access with a critical care policy is based on the diagnosis of a specific medical condition, not activities of daily living (ADL) deficits, or cognitive impairment.

“Policyholders, therefore, could potentially trigger benefits sooner with a critical care offering than with traditional long-term care insurance,” Moore shares. He notes that a significant percentage of long-term care insurance claims are paid out for stroke, cancer, heart attack, and Alzheimer’s – all of which may be covered by one of the newer critical illness insurance policies.
Another significant difference between this kind of critical illness product and traditional long-term care insurance has to do with underwriting. “With the frustrations agents have these days with the complexity, intrusion, and overall length of time with underwriting traditional long term care insurance, the underwriting process with a CI product is a welcome departure,” Moore adds.

An added benefit that insurance agents often point to is the fact that critical illness insurance underwriting tends to be far less intrusive that most traditional long-term care insurance underwriting. “We see acceptance rates that are notably higher than with traditional LTC insurance. As a result, we see many agents successfully place much of their declined LTCi cases with the Critical Care product,” Moore concludes.

Whether the future of helping Californians solve their long term care planning issues will involve increased acceptance of critical illness options remains to be seen. However, products like these can give consumers greater opportunity to obtain protection, especially when coverage with traditional long-term care insurance is out of the question.
Jesse Slome is director of the American Association for Long-Term Care Insurance (www.aaltci.org) and the American Association for Critical Illness Insurance (www.aacii.org).

LAAHU University Offers An Education on the New Marketplace

by Leila Morris
LAAHU’s annual conference, on May 22, was the most well attended in six years. Five hundred and fifty brokers attended sessions lead by experts from the state exchange, the carriers, and general agencies.

Herb Schultz, HHS Region IX director, assured brokers that they are here to stay since they are essential to the implementation of the Affordable Care Act (ACA). He stressed that health reform is not static, but will be shaped by regulatory changes over the next few years. “You can affect what that marketplace will look like in 2016, he said.” Demonstrating his commitment to stay in contact with brokers, he provided his contact information (415-437-8500. Herb.Shultz@hhs.gov.)
Renee Casserly, RHU, of Blue Shield told brokers to “Focus on your book of business like your hair is on fire…As a broker, you should maintain contact with your clients and let them know that you are able to help them purchase plans under the exchange.” She noted that carriers will begin sending out information about the exchange to individual policyholders in September.

Michael Ginsberg, sales director for Individual and Family Plans at Cigna says that the ACA-compliant plans will be easier to understand, which consumers will see as a great benefit. There won’t be any great difference in plan options. He assured brokers that, “Your customer stays your customer even if you did not assign them with a new plan.”
To Grandfather or Not

Casserly said that many employers will see advantages in staying grandfathered for plans that existed before March of 2010. A white paper by the HPM Institute offers the same opinion. It may be short sighted to prematurely abandon the idea of grandfathering an existing health plan. Perhaps the most significant advantage for grandfathered plans is their immunity from the essential benefit provisions under the ACA. Remaining grandfathered allows companies to keep their existing plans and offers the flexibility for companies to self-insure. The ACA rules eliminate the flexibility of self-insured plans to tailor and customize their benefit plans, undermining the agility that accounts for their popularity, according to the white paper.

The State Exchange

Michael Lujan, director of Sales & Marketing for Covered California, provided an update on California’s health benefit exchange. As a former agent, who is still licensed in California, he brings an agent’s perspective to his role in the state exchange. “I am coming from the perspective of the value that an agent brings. Agents are the trusted and licensed advisors that individual and group customers rely on. Agents provide more than just sales assistance. It is ongoing troubleshooting for the client. Agents know how to be effective in reaching customers.”

He recommends that agents who focus on the group market consider new opportunities in the individual market. “We have 2.6 million people who are now eligible for subsidies. There are 2.7 million who are not eligible for subsidies, but have faced another barrier, like a pre-existing condition.” Some can afford coverage, but they have put it off. Since the open enrollment window closes at the end of March, there is a sense of urgency for individuals to get coverage. Brokers may want to consider diversity in their marketing strategies, if not linguistically, at least culturally. Forty-six percent of subsidy-eligible population is Latino, noted Lujan.

Unlike some other states, California will allow insurance agents to sell through the exchange. Lujan said that, “2014 will be an important year to show that we can use licensed agents successfully. It looks like the onus is all on us, but we both (the exchange and brokers) share that one. We are looking for your support to make it a success.”

Misconceptions About the Exchanges

Lujan offered the following facts about the exchange to clear up some common misconceptions:
Every participant in the exchange is a private health plan.
There is no public option.
There is no government run health plan.
There are no death panels.
It is not government insurance.
The exchange does not raise the cost of everyone’s health insurance. In fact, many people are pleasantly surprised that the increase in rates will be very moderate. To be accepted into the exchange, carriers had to demonstrate that they would provide reasonable rates and comprehensive provider networks.
Unlike some other states, California is on track to have its exchange open on time.

New Plans to Work With

When selling through the exchange, brokers may be working with companies that they have never worked with before. Some of these plans have limited to no experience in the commercial marketplace and some are exclusively MediCal. “Through their relationship with Covered California, we can effectively become their commercial interface. We will be working with them to help agents get appointed and to help them understand how they can serve the agent marketplace,” he said.

Training and Certification

Agents will need to get at least eight hours of training and pass a test to get certified to sell plans through the exchange. The classes may be online or in person, but the exam will be in person. If Covered California decides to charge a fee for the classes and certification, it will be a small fee. Agents will be getting trained and certified in August to begin selling plans in October for coverage that will be available in January. To get registered and find out about training and certification, visit www.coveredca.com.

Lujan reminded agents to, “Wait to get certified before you start calling yourself an ‘exchange-certified agent’…You will not be authorized to sell through us until you have a signed agreement with us.” Getting registered and certified doesn’t mean that agents can automatically sell all health plans offered through the exchange. Its up to the agent to get appointed with the health plans.

Thirteen health insurance plans will offer health care coverage through the Covered California health exchange in 2014. The plans are a mix of large non-profit and commercial plan leaders, along with well-known MediCal and regional plans.

Rates and Plans in the Individual Exchange

The rates for individual plans through the exchange vary from 2% above average 2013 premiums for small employer plans in California’s most populous regions to 29% below average. Additionally, exchange plans limit annual out-of-pocket costs to $6,350.
Covered California plans include the largest health insurers in the individual market as well as new entrants, regional plans, and local MediCal plans. The following health plans will participate in the exchange:
Health Net
Anthem Blue Cross
Blue Shield
Alameda Alliance for Health
Chinese Community Health Plan
LA Care Health Plan
Molina Healthcare
Sharp Health Plan
Valley Health Plan
Ventura County Health Care Plan
Western Health Advantage
Three of the nation’s largest players in the employer-sponsored insurance market – UnitedHealthCare, Cigna, and Aetna – will not be selling plans through the California exchange.
Consumers will have a choice of HMOs, PPOs, and exclusive provider organizations (EPOs). Plans that were chosen for the exchange agreed to reduce profit margins down to 2% and 3% and embrace ACOs and medical homes.

Premiums vary depending on the geographic region, the consumer’s age, and the richness of benefits. For example, a 25-year-old in Los Angeles could choose a Health Net catastrophic plan for $117 a month or choose a Bronze plan for $147 a month from L.A. Care, the nation’s largest public health plan. If the 25-year old earns less than about $45,600 per year, they would qualify for a subsidy to bring the cost of the premium down further.

More than half of Californians will be eligible for federal income tax credits for exchange plans. A 40-year-old in Los Angeles who earns $1,915 a month, or 200% of the federal poverty level, would pay a monthly premium of $90 for a Health Net HMO Silver plan in 2014.

The monthly premium would be $332 to $476 for a Silver plan for a 40-year-old individual in Sacramento. That includes federal subsidies, on a sliding scale, for a man or woman with income up to $45,960. Individuals who are eligible for the highest subsidy ($276 per month) would have out-of-pocket premium costs as low as $56 per month. Californians would receive federal subsidies on a sliding scale, extending to a family of four earning up to $94,200.

Individual Commissions

Commissions will be comparable for individual plans sold inside and outside of the exchange. Agents will be paid directly by the carriers for plans sold through the exchange. “We will work with the carriers, like Molina, that don’t have a commission structure to figure out how that will work,” Lujan said.

The SHOP Exchange for Small Groups

The Small Business Health Options Program (SHOP) will offer plans to groups from one to 50 employees. Lujan said that the SHOP will offer the advantages of tax credits and employee choice. An employer must choose coverage in the same metal tier for all employees. If a business owner wants a higher tier plan, there is the option of getting off the group plan and buying individual coverage.

The SHOP will contract with general agencies for their support in helping retail agents sign up small employer clients. Lujan said, “We are in a negotiation with all of the general agents and expect to offer an opportunity to each willing general agent that is qualified.” At press time, Covered California was slated to announce the general agencies that will be contracted with the SHOP exchange and the health plans in the exchange.

Small group commissions under the SHOP will be paid by Covered California. Lujan stressed that commissions will be competitive. “Wherever the small group market is we will be competitive with that.” Lujan said that the SHOP has every intention of including language about vesting in broker contracts – meaning that the business that a broker sells this year will be under the same commission and contracts in the future. “Contract language would be familiar to what you are used to today,” he added.

Lujan assured brokers that California will not repeat the mistake it made with the failed Health Insurance Plan of California (HIPC) exchange, which was created in 1993. HIPC charged customers higher rates when they worked with agents. There will be no difference in rates whether a consumer works with an agent or a navigator.

Legislative and Regulatory Issues

California Insurance Commissioner Dave Jones called out Athem Blue Cross for what he said were excessive fees. Following his appearance at the conference, he said that Covered California should exclude Anthem Blue Cross and its sister company, Blue Cross of California, from participating in the SHOP exchange. Jones notes that Anthem recently issued a 7.2% rate increase on small employers. The 12-month cumulative increase for these Anthem customers is 17.6%.

Julianne Broyles, a CAHU lobbyist, noted that there are 40 new faces in Sacramento as a result of the recent election, and she encouraged brokers to run for office. She outlined CAHU’s position on the following state bills:
CAHU opposes SB 189, which would prohibit health plans from offering reduced premiums or lower out-of-pocket expenses to consumers who participate in wellness programs.
CAHU opposes SB 161, which would severely restrict the ability of small employers to self-insure.
Another major concern for CAHU is SB 639, which would enact deductible limits for all size non-grandfathered and individual plans. The bill would standardize all outside exchange plans to mirror what is offered in the exchanges. This kind of standardization eliminates choice and competition, according to CAHU.
The speakers certainly gave -attendees a lot to chew on. Brokers in today’s market must not only keep up with all of the plan changes and sales opportunities, but they also must keep up with legislation that affects their livelihood. Fortunately, CAHU, Covered California, HHS, the carriers, and the general agencies have come forward to smooth the way with training or educational materials.
Leila Morris is senior editor with California Broker Magazine.

Self Funding – Broker Alert: Self-Insurance Minimizes Impact of Health Insurance Tax and Other Reform Mandates

by Joseph Berardo Jr.
The Affordable Care Act’s (ACA) health insurance tax of 2014 is expected to increase the cost of healthcare coverage for employers that rely on insured products to cover their workforce. The tax will be particularly onerous for the fully insured market, exceeding $100 billion over the next 10 years. The tax will be largely passed through to consumers in the form of higher premiums.
The numbers are staggering: $8 billion in 2014 will increase to $14.3 billion in 2018, increasing thereafter based on premium trend. Premiums in the insured market will increase, on average, by 1.9% to 2.3% in 2014, and 2.8% to 3.7% by 2023, according to America’s Health Insurance Plans (AHIP).

Savvy brokers are examining new approaches to help clients minimize the impact of the tax and other ACA mandates. The new tax leaves traditional self-insured plans exempt from the fee on health insurance carriers. As the majority of large businesses, labor unions, and governments self-insure, the new health insurance tax will result in smaller increases in average health insurance premiums for large firms while causing greater increases for small firms that rely on insured coverage, as well as non-group health insurance coverage.

The Benefits of Self-Insurance

Astute brokers are urging employers, of every size, to self-insure. According to a recent article in the New York Times:
To cope with the uncertainties created by the new law, Autonomous Solutions, a developer of robotic equipment, began a self-insured health plan for its mostly young and healthy 44 employees.
This year, Label Solutions, an industrial label-printing company with 42 employees, switched to a self-insurance plan to hold down costs that were going up in response to government regulation.
The Township of Freehold, N.J., wanted to gain more control over benefits and costs for its 260 employees. The township, which spends more than $5 million a year on employee health benefits, had been seeing premiums rise 10% to 20% a year. With self-insurance, the township expects to stabilize rates and keep its savings, rather than giving it to health insurance companies as profit.
About 59% of private sector workers with health coverage were in self-insured plans in 2011, up from 41% in 1998, according to a study by the Employee Benefit Research Institute. The number is even higher among large employers, with 82% of companies with more than 200 employees choosing to self-insure.
Self-insurance offers employers more flexibility than does commercial insurance while providing these kinds of practical and economic advantages to curb costs:
Helping employers tailor plans to the health needs of a workforce, especially if guided by the right healthcare management firm.
Maximizing cash flow since claims are funded as they are paid, rather than functioning based on prepayment.
Generating as much as 3% in immediate savings because state taxes are eliminated on most self-insured plans.
Eliminating carrier profit margins and risk charges.

What’s more, the ACA does not subject self-insured health plans to state jurisdiction while insurance-based plans must comply with the varying coverage mandates, insurance statutes, and regulations of the 50 states. In addition, self-insured are exempt from state mandates and regulation by virtue of ERISA’s preemption of state action in connection with self-insured health and welfare benefit plans. For the most part, self-insured plans are not subject to litigation in state courts or the appeal and complaint procedures of the insurance departments of each of the states.

Furthermore, with a self-insured health plan, employers pay for individual employee health claims out of cash flow rather than as a monthly fixed premium to a health insurance carrier. While employers assume the direct risk for payment of claims, costs are based on actual plan member healthcare use and catastrophic claims are covered by stop-loss coverage. This makes self-insuring cost-efficient and more effective than the one-size-fits-all model of the fully insured plan. To maximize these benefits, self-insured plans often contract with a healthcare services company.
When companies are self-insured, they assume a portion of the financial risk of providing health benefits to employees. Instead of paying premiums to insurers, they pay claims filed by employees and healthcare providers. To avoid huge losses, they often purchase stop-loss insurance to protect against unexpected or catastrophic claims.

Self-insurance with stop-loss is also exempt from the fee on health insurance providers. It serves as a financial buffer for the employer if an employee is found to have cancer or needs an organ transplant, for example. Employers can begin to control healthcare costs by fully understanding the benefits of self-insured health plans, including a the scope of financial obligations, opportunities to safeguard against catastrophic health events, and other techniques to lower healthcare costs. The first step is to understand these two types of stop-loss insurance:

Specific Stop-Loss Insurance

Specific stop-loss insurance protects against a catastrophic loss incurred by any individual covered by the plan, with the deductible set at a level that’s appropriate for the size and financial strength of the company or organization. The employer pays a fixed premium to the stop-loss carrier. Some stop-loss contracts don’t require the employer to fund the claim and wait for reimbursement. Rather, the administrator pays the claim directly from the carrier’s account.
In a real-life example, a 32-year-old woman delivered a pre-term baby boy at seventh months. The baby, who had health issues, had to be treated in the neonatal intensive care unit for 60 days. The claims total was $285,000. The employer’s self-insured specific stop-loss insurance had an $80,000 deductible. The amount reimbursed by the stop-loss carrier was $205,000.

Aggregate Stop-Loss Insurance

Aggregate stop-loss insurance protects against excessive claim expenditures for the entire plan. Through actuarial studies, stop-loss underwriters can estimate smaller, predictable claims, although these projections are based on large, industry-wide samples and are, therefore, subject to variations and fluctuations. To better understand the advantages of self-insurance with stop-loss insurance protection, consider these examples:
Company A is insured with a fully insured carrier and pays $1.5 million annually for its health insurance plan. At the end of the year, the company shows only $1 million in claims and administration costs. Their carrier keeps $500,000 in profits.
Company B is self-insured with a health plan management company managing its stop-loss insurance. This firm’s potential worst-case scenario for the year is $1.6 million annually. The company pays $20,000 a month in projected costs and reserves $1.36 million for potential claims, which the company can invest, segregate, or use for day-to-day business until a claim occurs. At the end of the year, Company B’s claims are $1 million. It keeps the $360,000 remaining in the reserve, and sees a $260,000 savings.

Health Insurance Tax: A Closer Look

The health insurance tax is a fixed-dollar amount distributed across health insurance carriers: $8 billion in 2014, $11.3 billion in 2015 to 2016, $13.9 billion in 2017, and $14.3 billion in 2018. After 2018, the tax rises according to an index based on net premium growth.

Over the first decade, the tax imposes an estimated $87.4 billion, but that number profoundly understates the long-run financial impact. The tax will not be fully implemented until 2018, so its full magnitude will only be realized in the second decade (2021-2030), with 10 full years of a premium-indexed, fully implemented tax. Some industry experts put this figure at $200 billion to $300 billion.
Clearly, the looming health insurance tax burden imposes additional pressure on employers and on brokers who must also find business solutions that curb costs. These solutions must address the effect of the ACA’s other key burdens aimed at insurance-based plans, including the following:
Essential health benefit requirements.
Comprehensive coverage for health benefit package.
Jurisdiction of state ombudsmen.
The assurance that consumers get value for their dollars.
Administrative simplification.
Confronted with tax increases and mandates to offer richer benefits with less cost sharing, more employers are considering switching from fully insured plans to self-insurance. Brokers are well advised to provide the information and tools they need to make a successful transition.
Furthermore, understanding the full implications of the health insurance tax and other ACA mandates will help brokers leverage opportunities for their clients and create differentiation in a tight marketplace. The bottom line is that self-insuring enables companies to offer quality, cost-effective healthcare when many employers are forced to cut costs, often at the expense of their workforce.
Joseph Berardo Jr. is president and chief executive officer of MagnaCare.

Self Funding – An Attractive Alternative For Employers Seeking More Control

by Sharon Aquino and Stephen Miller
Self funding could be the right solution for you and for clients who are making benefit decisions amidst health care reform. But it can be a challenge to present self-funding to employers who are not familiar with this approach. It is important to demonstrate how self-insurance can help the employer control the plan design and the financial impact of providing health coverage.

With a self-funded plan, an employer group assumes the financial risk of providing health care benefits. The group, and not the carrier, is responsible for claims. Unlike with a fully insured plan, a self-funded plan requires the employer to pay claims as they are presented. This may seem like a big financial risk. However, employers can purchase stop-loss insurance. As a type of reinsurance, it’s used to minimize financial risks by protecting against the high costs associated with catastrophic health events among members, as well as a general higher utilization of benefits.
When adding stop-loss coverage, as an additional protection for the group, the following factors can influence associated rates: the cost of the PPO/HMO network (the discount level will vary), the plan design, the level of stop-loss protection, and cost containment programs.

Self-funding is a new concept for many groups, particularly those that are accustomed to HMO coverage, which is common in California. But interest in self-insurance is growing. Groups are attracted to cost savings, the added flexibility in plan design, exemptions from state-mandates, and the increased control that comes with owning all claims data and reporting.

The number of private sector employees in self-funded plans has increased nearly 20% over the past decade, according to a recent study by the Employee Benefit Research Institute. In 2011, self-funded plans covered 58.5% of private sector employees. Self-funding has become even more attractive due to Affordable Care Act (ACA) regulations, which could increase costs for fully insured plans with increased fees and additional assessments.

Which Groups Should Consider Self-Funding?

Since not all groups are good candidates for self-funding, it’s important to recognize the appropriate attributes. The group should have a steady employee population, more than 100 employees, and stable claim experience. If little or no claim data is available, another good indicator would be consistently low renewal increases or increases below 10% year-over-year.
Fully insured coverage remains the best option for smaller groups with a known large-claim participant (more than $500,000 in claims per year) unless that risk improves. Many stop-loss carriers will laser (set a higher coverage level) for a known large claimant in the first year of coverage and then provide non-laser renewals, which is important information to determine upfront.
Self-funding can be a solid alternative when a group wants one health plan for its multi-state locations. But, in order to self-fund properly, the group must be able to handle the cash flow fluctuations that come with paying its own claims. And the group needs to be willing to commit to self-funding long enough to see its positive effects, which is about three years.

There are some important considerations when transitioning to self-funding. The group must not only select a plan design or designs, but also the network and claim administrator as well as cost containment and wellness programs.

The Added Protection of Stop-Loss Coverage

As reinsurance for self-funding, stop-loss insurance is designed to pay for catastrophic claims that exceed the employer’s pre-determined level of risk tolerance. Stop-loss insurance can help address the employer’s concern about the financial exposure of the self-funded plan. Coverage is always tied to an individual’s medical claims (known as “specific coverage”). High-dollar claims from individual employees drive the majority of a group’s claims variation. Employers use stop loss to protect against large, unforeseen claims.

The employer’s stop-loss contract identifies the level of claims spending that will occur before stop-loss coverage begins to reimburse claims (known as the “attachment point.”) Aggregate stop-loss coverage can be added to protect the employer from large claims. This coverage pays claims, in aggregate, once a specified level has been reached. Specific and aggregate coverage can be implemented together for broad coverage.

Various riders and options can further protect the employer, including advance funding, gapless or bridge renewals, and two-year rate caps. These programs allow you to tailor coverage to the employer’s risk tolerance. To help protect the employer, brokers should look for a stop-loss carrier that has an unlimited maximum and coverage that mirrors the underlying plan of insurance.

The Impact of Health Care Reform

Beginning in 2014, health care reform mandates will assess the following fees affecting fully insured groups, self-funded groups, and individuals in the exchange: a Patient Centered Outcomes Research Institute fee, a reinsurance fee, a health insurance tax, and an exchange fee. Self-funded plans are expected to experience the least impact. The assessable taxes vary by coverage type, by year, and by other factors, creating new complexities for plan advisors, group decision-makers, administrators, and brokers.

As your groups turn to you for guidance in this new world of health benefit coverage, help them understand their options. Self-insurance can be an excellent solution for a variety of employers, especially those that want to gain more control of their benefit program in times of uncertainty and change. As you work to determine the best solution for each client, know the group’s options, conditions, and suitability because being informed is the most important part of the decision-making process for brokers and their groups.
Each with more than 25 years of industry experience, Sharon Aquino and Stephen Miller are Regional sales directors with HM Insurance Group, serving the Southern California and San Francisco markets respectively. HM Insurance Group has been providing stop-loss coverage to self-insured clients for more than 30 years. Learn more at hmig.com.

Self Funding – Growth And Opportunity Are on the Horizon for Self Funded Plans

by Margaret Anderson
Given all the news and awareness of healthcare reform, employers and employees are more open to changing their health benefit offerings. One area of opportunity is the self-funded health plan, particularly given the taxes employers will pay with fully insured health products.

Early adopters of self-funded plans have been in the East while the West has shown slower migration to self-funding due to the prevalence of HMO-style medical plans. But employers and consultants are beginning to understand that a self-funded arrangement involves more than just paying your employee’s medical claims. Employer groups have become more involved in managing the health and wellness of their employees. They understand that it is more cost effective for clients to take an active role in paying for wellness rather than simply paying to treat illnesses.

Employers are seeking more outcomes-based/incentive driven plans. They often ask us, “How can a self-funded plan be designed to reward great health?” Third party administrators have products that reward positive behaviors, such as smoking cessation. Conversely, there may be higher out-of-pocket cost sharing in the health reimbursement account or limited funding for employees who do not participate in a health risk assessment. This carrot and stick approach has demonstrated positive return on investment for employers with a sustainable medical claims trend.

Employers that have a lump sum for employee’s health care ask us, “How can I manage to that number?” With a self-funded plan, fixed costs represent 10% of health insurance benefit spending. The key to is to have variable cost saving initiatives for utilization, quality of care, network discounts, and accessibility is.

Employer groups are looking for very robust claims data and analytics that illustrate where their health dollars are going – for what care and services. Predictive modeling has become critical to self-funded clients. Current data, technology, and expert analysis are used to predict where the claims’ spending will trend in the months ahead. Reporting is provided in the aggregate and the confidentiality of claims is ensured with an off-site, third party administrator.

Traditionally, self-funded health insurance was restrictive for employers with fewer than 500 employees. But industry trends are moving down market. Some firms, with as few as 100 employees, are strongly considering or are already establishing self-funded plans. The health insurance tax is driving the smaller employer groups to look to more affordable funding arrangements, which is creating significant market demand for administrative services and aggregate insurance products. The tax, which is slated to begin in 2014, is estimated to add hundreds of dollars annually to premiums for individuals, families and business owners.

There is tremendous market opportunity and growth potential for self-funded arrangements in the West. Consultants who can provide valuable solutions will be positioned for incremental growth and success in the competitive health benefit industry. Providing a comprehensive approach that addresses all health benefit needs with a single source solution will position employers for the changes on the horizon in 2014 and the years to come with a strong health plan solution.
Margaret Anderson is executive vice president, Business Development for HealthNow Administrative Services (HNAS). HNAS has offices in Sacramento, Calif. and serves 60,000 members. For more information, visit www.hnas.com.

Annuities–With Guarantees And Flexibility, New Type Of Fixed Annuity May Provide Viable Lifetime Income Option For Clients

by Ken Brown
Retirement was front-page news in California throughout 2012. On one front, the state sought to preserve its ability to fund public pensions by enacting new eligibility rules and benefit caps. On another front, lawmakers began pushing to create mandatory retirement savings programs for workers who can’t get them through work. These efforts, combined with Social Security reform rumblings in Washington, reinforce a theme echoing across America: The burden of retirement security is shifting even more rapidly to the individual.

For financial professionals, this trend often manifests in a common client question, “How can I make sure that I have enough income to live on during my retirement years?” In fact, 86% of consumers say they need help determining how long their savings will last in retirement, according to a 2011 study by the ING Retirement Research Institute.

Financial professionals must sort through a range of strategies to answer this daunting question. Their challenge is to find a product solution that could meet the client’s wish for income security and growth potential while providing a degree of flexibility so the client can seek the appropriate benefits without completely locking up their money.

Various forms of annuities have long been used to meet such retirement income requirements. About 84% of financial professionals are having more conversations with clients about retirement income than they were five years ago, according to a fall 2012 survey by the Insured Retirement Institute (IRI) and Cogent Research. In the same study, more than 70% of financial professionals who use annuities said that their clients had asked to purchase an annuity.

Income or Flexibility?

Those who buy traditional immediate annuities have typically been willing to forego some access or complete access to their money in return for various income guarantees. This approach has been fine for those near retirement who generally have a clearer sense of their retirement income needs and how much their Social Security or pension checks will provide.
Unfortunately, younger annuity buyers often know little about what to expect from their non-annuity income streams. As a result, many have turned to deferred income annuities, which let them delay their income start date to take advantage of higher monthly income payments when they need the income. However, these types of annuities have the drawback of limited to no flexibility in terms of access to their principal.

A Balanced Solution.

A new option is coming to the market for clients who want an annuity with a more balanced approach — that is, providing greater flexibility as well as guaranteed lifetime income. A new type of fixed annuity melds the features of a deferred income annuity, a traditional fixed annuity, and a fixed index annuity to provide income, access to funds, and potential income base growth through index credits.

The idea is to give buyers incentives to keep their money in the annuity for longer periods while still providing flexibility if the buyer needs to access their funds. The incentives take two forms. The first is a guaranteed step up in benefit value for clients who defer income payments. For example, if a client defers income payments for five years, the benefit value base might get a boost equal to, say, 150% of the annuity’s premium, minus withdrawals. The longer the client delays the income starting date, the greater the benefit value base (that is to say 225% of premium after 10 years minus withdrawals).

Linking to an Index

Complementing this step-up is a second incentive that allows the buyer to capture potential income growth based on changes to an index (such as Standard & Poor’s 500 Index) during each contract year. This potential growth through income credits (subject to an index cap), combined with the step up benefit mentioned above, may give the buyer a higher benefit value base, which is used to determine the amount of income payments.

These new income fixed annuity products can help address the uncertainty buyers may have over typical annuity contracts. Suppose that, after 10 years, a client decides that other income sources provide enough security or an inflationary period makes the annuity seem less desirable. Instead of taking advantage of the step ups and index-linked income credits, the client takes out the annuity’s principal. This kind of flexibility may reassure the buyer at the time of sale and throughout the life of the contract. Surrender charges will apply if the contract is surrendered within the first nine years. Early withdrawals and other distributions of taxable amounts may be subject to ordinary income tax. If taken before 59 1/2, an IRS 10% premature distribution penalty tax applies unless there is an exception.

The Power of Clarity

Due to their complexity, annuities have traditionally been a difficult product for a potential buyer to fully understand. In fact, only 5% of non-annuity owners say they are very or extremely knowledgeable about annuity products, according to the IRI/Cogent survey.
Many financial professionals take this knowledge gap as a personal challenge: to educate the client on how annuities can address issues related to retirement, lifetime income, and principal protection; and provide a hedge against inflation. By focusing on these topics, financial professionals can serve existing, older clients and open up new markets by attracting younger investors to the product. What’s more, they’re helping to tackle an issue that Californians and all Americans are facing: the need to ensure that an aging population takes informed, proactive steps toward a financially secure retirement.
Kenneth L. Brown is the VP of sales development for ING U.S. annuity and asset sales, overseeing marketing, product development, regional wholesaling, sales training and develop-ment and wholesale operations.

Fixed Annuities – Meeting the Needs of Security-Minded Baby Boomers

by Rich Lane
The retirement landscape is changing as the Baby Boomer generation reaches retirement age. Its members are considering the right time to transition out of the workforce and are thinking about how they will stay afloat during their retirement years.

Although the stock market has recently rebounded, the financial industry is seeing a more conservative shift in the way Baby Boomers invest in their retirement portfolios. The 2008 market downturn took a toll on many nest eggs, creating uncertainty about where and how to invest retirement dollars.

Because of this aversion to risk, the annuity marketplace is seeing strong growth in fixed annuity sales. Brokers can sell a fixed annuity by focusing on protecting the purchaser’s money and funding the purchaser for the rest of their retirement years – the two aspects that purchasers want to ensure for their investments.

Aging Boomers

The Baby Boomer generation accounts for more than one-fourth of the total U.S. population. According to the Pew Research Center, 21% of Boomers feel their standard of living is lower than their parents’ was at the age they are now, according to a 2010 report from Pew Research Center.

Boomers are the most likely age group to say they have lost money on investments, and 57% say their household finances have worsened. In fact, among Baby Boomers age 50 to 61, six in 10 say they might have to postpone retirement. Life expectancies are higher than ever, so Boomers are living longer and will rely on retirement income for longer than any other generation in history.

Annuities offer a practical option for Baby Boomers who don’t want to take a lot of chances with the money they’ve worked so hard to put away for retirement. Fixed annuities, in particular, are ideal for purchasers who are looking for a conservative investment that will provide guaranteed retirement income.

Alleviating concerns

Conservative Baby Boomers have creating and protecting a retirement nest egg first and foremost in their minds. Planning ideally begins before a retirement date is even set. The average annuity purchaser is getting younger, often investing in an annuity before retirement, according to internal data from The Standard. For example, fixed annuities can be purchased and timed to begin distributions on or around the purchaser’s retirement date. Consider this example:
Brian and Jennifer have been saving money for their retirement for years. Their savings were hit hard by the market downturns in the past few years, and they are trying to rebuild what they lost. As they near retirement age, Brian and Jennifer would like to grow their savings and protect their nest egg at the same time.

Annuities are designed to maximize earnings while minimizing risk. Recommending a fixed annuity purchase can calm Brian’s and Jennifer’s fears of losing money and help accrue additional earnings.
For example, if Brian and Jennifer purchased a fixed index annuity, they would see returns linked to the upside performance of the S&P 500 (subject to rate caps). But they’d also benefit from built-in safeguards, such as a guaranteed minimum interest rate. The interest rate is locked into the account value, ensuring the purchaser won’t experience any losses after investing or during a year when the index may end up lower than it started.

The Cost of Waiting

Even with today’s low interest-rate environment, a fixed annuity’s compound growth and tax-deferral status can grow a purchaser’s savings faster than they may think possible. If Brian and Jennifer were to put $50,000 into a five-year guaranteed annuity paying 2%, they would be guaranteed $55,204 at the end of five years, provided they don’t make any withdrawals.

Some purchasers may be waiting to see if interest rates go up. If Brian and Jennifer were to wait to invest $50,000 in a fixed annuity, the following results are surprising:
By purchasing an annuity one year from today, their $50,000 would have to earn 2.51% annually for four years to catch up with the original accumulation of $55,204.
If they wait two years to buy the annuity, that $50,000 would have to earn 3.36% annually for three years to achieve the same earnings they would have been guaranteed had they owned the annuity all along.

It’s There When It’s Needed, As Long As It’s Needed

In addition, a fixed annuity can provide a guaranteed income stream when it’s most needed. A recent study by The Society of Actuaries found that retirees are expected to live another 20.5 years after retirement. For women, that number jumps to 22.7 years. That’s a substantial amount of time in which retirement income is needed.

Immediate annuity payments start right away and can be structured to last for a set period or the purchaser’s lifetime. These periodic payouts can be level or increase over time, and be designated for a fixed term or until death. For a younger purchaser interested in waiting a few years before securing an income stream, a deferred annuity can still help accumulate earnings to generate income in the future and assure longevity.

Positioning With Purchasers

In today’s market, many clients are cashing out their 401(k) plans at retirement and taking them elsewhere. Savvy brokers know that an ideal purchase opportunity can often include funds from a previous pension or 401(k). Keep these clients by recommending an annuity as part of a smart financial plan instead of – or in addition to — a certificate of deposit, mutual fund or bond.
To do this, it’s key to educate the potential purchaser about all of their annuity options. Brokers can connect with a client who is going through a job change or planning for retirement to see if an annuity makes sense. By outlining the available options, brokers can help clients decide whether to invest further down the road or navigate postretirement income.

For the majority of us, risk tolerance diminishes as we age and move closer to retirement. Brokers should recommend a fixed annuity purchase to clients who are interested in a low-risk investment. Not only will it provide new options to set up Baby Boomer clients for retirement, but it will also keep sales in the brokerage or firm instead of with a different broker or financial advisor.
Rich Lane is the director of individual annuity sales and marketing for Standard Insurance Company. He has been in the fixed annuities industry for more than 17 years, with an emphasis on product and distribution development for brokerages, banks and broker/dealers.
The Standard is a leading provider of financial products and services, including group and individual disability insurance, group life and accidental death and dismemberment insurance, group dental and vision insurance, absence management services, retirement plans products and services, individual annuities and investment advice. For more information on The Standard, visit www.standard.com.