Table of Contents

Medicare Advantage Update
by Leila Morris
A look at quality ratings and out-of-pocket spending trends in Medicare in the coming year.

Post-Enrollment HSA Education Keeps Client Relationships Strong
by Kristin Komen
As with the introduction of any new concept, the best approach it to take small steps when rolling out a consumer directed health plan with an HSA.

Optimizing Cash Reserves with Combination UL/LTC Insurance
by Michael Burns and Michael Hamilton
Hybrid products, such as a universal life/long-term care insurance, offer otherwise self-insuring clients greater protection of personal assets.

Get It Together: A New Approach to Employee Benefits
by Tom O’Keefe
A new approach to employee benefits integrates products, simplifies administration, and offers flexible funding options

Today’s Economy Creates an Opportune Time for Voluntary Benefits
by Murray Todd
Show your clients how voluntary benefits can help ease their financial strain and allow their employees to fill some of the critical gaps in coverage created by today’s economy.

A New Link: Insurance Improves Oral Cancer Survivorship
by Patrice P. Bergman, CEBS
Given the positive impact the new technology may have in raising cancer survival rates and reducing cost of health care, producers seeking to add value to their clients’ benefits package should include oral cancer screening as a benefit differentiator.

Fun In the Rain At Vision Benefits Event in Orlando
by Leila Morris
Nearly 170 vision-plan reps and brokers gathered for the annual Transitions Academy at the Disney resort Orlando for few a rainy days from Jan. 31 to Feb. 2

Long Term Care Update
by Leila Morris
Industry trends and the latest resources for LTC worksite sales.

A Medical Masterpiece: Brushing Up on PPOs with Our Annual Survey
For this survey, eight PPOs in California diligently answered direct questions about their plans. Our readers, who are savvy health brokers, suggested many of the questions. We hope this information will help the professional agent or broker better serve sophisticated healthcare clients.

A New Wave In Disability Insurance Claims
by Gerald “Gerry” Katz, MSPA, RHU, ALHC, DABDA, FACFE
For an insurance company to claim that “appropriate care” mandates surgery is not only absurd, but is also an invasion of the most cherished of all our rights.

How Life Producers Can Benefit From Cross-Selling
By Justin M. Jurs
Like salespeople in other industries, life insurance producers tend to sell products they know, understand and are comfortable with. What happens, of course, is that they leave other opportunities on the table.

California and Pennsylvania Lead the Pack in Ratings
Quality Ratings of Medicare Advantage Plans

by Leila Morris
When it comes to quality Medicare Advantage plans, California, along with Pennsylvania, leads the pack. The Kaiser Family Foundation (KFF) examined quality ratings on Medicare Advantage Plans prepared by the Centers for Medicare and Medicaid Services (CMS). California and Pennsylvania account for 49% of all enrollees in plans with four or more quality stars.

But these two states account for only 27 % of all Medicare Advantage enrollees nationwide. In the majority of states, fewer than 2% of Medicare Advantage enrollees are in plans with four stars or more of out five.

On average, Medicare Advantage plans received 3.27 stars out of five. One in five Medicare Advantage enrollees is in a plan with fewer than three stars. Quality ratings are tied closely to plan type, plan experience, and the governance structure of the plan (tax status).

Not-for-profit Medicare Advantage plans have significantly higher ratings than for-profits. More experienced rated plans (with contracts beginning before 2004) have higher ratings than plans first offered on or after January 2004.

Private fee-for-service (PFFS) plans and regional PPOs have below average ratings — significantly lower than HMOs and local PPOs. However, 55% of PFFS enrollees are in plans that did not receive quality ratings for 2010.

Average quality ratings range from an average of 4.07 stars among rated Kaiser Permanente plans to an average of 2.76 stars among rated Humana plans. However, for Coventry and Aetna, more than half of all Medicare Advantage enrollees are in plans without quality ratings for 2010.

Conversely, just 3% of Humana enrollees and no Kaiser Permanente enrollees are in unrated plans.
When just looking at HMOs, average quality ratings ranged from 4.07 among Kaiser Permanente plans to 3.02 among rated UnitedHealth Group plans. Other types of plans cannot be compared directly across the largest organizations because many non-HMO plans were not rated due to missing data. For more information, visit

Out-of-Pocket Spending is a Mixed Picture in 2010

The percentage of Medicare Advantage plans with limits on out-of-pocket spending has increased in 2010. At the same time, cost sharing for visits to primary care doctors and specialists has remained virtually unchanged.

But the news isn’t all good for patients. Average cost sharing for hospital stays and skilled nursing facility stays has increased since 2008 with greater costs being shifted to beneficiaries with the greatest medical needs, according to a report by The Kaiser Family Foundation.

Seventy-nine percent of Medicare Advantage plans limit out-of-pocket spending in 2010 compared to 66% in 2008. However, more plans now have higher out-of-pocket limits. Ten percent of plans have out-of-pocked limits of $10,000 or more compared to only 2% in 2008. The trend is more pronounced among regional PPOs. In 2010, 61% of regional Medicare Advantage PPOs had out-of-pocket limits of $5,000 or higher compared to 28% in 2008.

Also, while limits on out-of-pocket spending could provide significant protection to enrollees, only about half of Medicare Advantage plans have a limit at or below the level suggested by CMS. Beneficiaries should look carefully at premiums, benefits and cost-sharing requirements (and provider networks), when choosing between traditional Medicare and Medicare Advantage plans, or among various Medicare Advantage plans offered in their area.

However, lack of transparency about benefits and restrictions makes it difficult for beneficiaries to understand what is and is not covered by their plan. Greater transparency would help beneficiaries understand key differences across plans and critical tradeoffs, rather than just the most visible elements of the plan: monthly premiums. Trends since 2008 present a mixed picture.

In the past, at least some of the plans with out-of-pocket spending limits have excluded selected Medicare-covered benefits from the limit. For 2010, CMS encouraged firms to include all cost sharing for Medicare-covered benefits in calculating their limits. Cost-sharing for Medicare-covered services varies widely across Medicare Advantage plans, but generally differs from the benefit structure in traditional Medicare. The report includes the -following data about cost sharing:

• In 2010, 79% of Medicare Advantage plans have a limit on out-of-pocket spending for Part A and Part B services, whereas traditional Medicare does not. Regional PPOs are required to have a limit on out-of-pocket spending, although the level of that limit is not prescribed.
• Forty-seven percent of all Medicare Advantage plans have a limit on out-of-pocket spending of $3,400 or less in 2010; 32% have a limit that exceeds the $3,400 threshold, and 21% have no limit. Sixty-one percent of regional PPOs have a limit that exceeds $5,000.
• Relatively high out-of-pocket limits are less common among other plan types with limits (4% of HMOs, 10% of PFFS plans, and 21% of local PPO plans). Out-of-pocket limits are less common among HMOs (66%) than among other plan types. However, HMOs tend to use lower limits than most other plan types when they use them.
• In 2010, 14% of plans with limits appear to exclude some Medicare covered benefits from the limit. Twelve percent of the plans with out-of-pocket limits do not count cost-sharing for physician office visits toward the limit; 10% do not count cost-sharing for mental health services.
• Ninety-three percent of Medicare Advantage plans provide unlimited days of hospital care, in contrast to traditional Medicare, which has annual limits and “life-time reserve” days. Ninety-four percent require enrollees to share in the costs of inpatient care: All plans provide some vision benefit, particularly glasses and contacts.
• Eighty-six percent cover vision exams (typically one per year) and all plans cover eyeglasses. Sixty-five percent cover hearing tests. Thirty-seven percent of plans cover hearing aids. The average value of the hearing test benefit offered by plans is $299 in 2010. Fifty-one percent of HMOs, 27% of local PPOs, 15% of regional PPOs, and 7% of PFFS plans provide a hearing aid benefit. In a July 2009 study, Consumer Reports found that hearing aid prices in New York City varied from $1,800 to $6,800 per pair, including fitting and follow-up services — far less than the amount covered by plans.
• Forty-seven percent cover more expansive podiatry than Medicare, 34% cover more expansive chiropractic services than Medicare, and 62% provide a worldwide travel benefit not provided by traditional Medicare.

Medicare Advantage benefits may be in transition if Congress reduces overpayments to plans. Other changes under discussion could expand prescription drug coverage in the so-called doughnut hole, and enhance benefits by prohibiting plans from charging more than traditional Medicare for certain services. These reforms would likely limit the discretion firms have in shaping benefits, but could also make it easier for beneficiaries to choose between Medicare Advantage and traditional Medicare, and choose among Medicare Advantage plans.

Because Medicare Advantage plans can reconfigure the design of Medicare cost-sharing, some beneficiaries, (particularly those with significant medical problems), could face higher out-of-pocket costs in some Medicare Advantage plans than in traditional Medicare.
For more information, visit

SCAN Health Reports High Enrollment in Northern California

SCAN Health Plan says that Northern California membership enrollment in its Medicare Advantage Plan has exceeded company projections with more than 3,100 people joining the not-for-profit plan’s recent launch in four local counties. Eligible individuals may continue to join SCAN until March 31. Serving more than 110,000 Medicare members in Southern California and Arizona, SCAN is now available to Medicare-eligible individuals in San Francisco, Contra Costa, Santa Clara and San Joaquin counties.

Unlike most Medicare Advantage plans, SCAN has no commercial members For more information, visit

HSA Education
Post-Enrollment HSA Education
Keeping Client Relationships Strong

by Kristin Komen

A mid-sized manufacturer decided to replace its medical coverage with a consumer-directed health plan with health savings accounts (HSAs). The company educated its workforce extensively during open enrollment, contributed generously to employees’ HSAs, and followed up with employees early in the plan year.

Every division reported high satisfaction with the new plan and the HSA – but for one. What was different about that outlier? It had rolled out the plan without following the communication strategy from headquarters, giving workers just one opportunity — at the open enrollment meeting — to learn how to get the most for their health care dollars. Absent any follow-up, employee buy-in at that division fell well behind the rest of the workforce and continued to lag for several years.

The clear lesson is that ongoing engagement of employees is key to the success of health plans accompanied by HSAs. Brokers can play a key role in this, from helping employers address early-year questions to reinforcing basic education with some simple yet effective techniques that help ease the transition for employees new to HSAs.

In the HSA market, brokers who provide strong service seldom lose clients and often gain referrals, says Tom Lindberg, BenefitMall’s market director for Northern California.

Be Prepared for a Satisfaction Dip

In my experience (and backed up by customer interviews conducted by our company), HSA owners sometimes suffer a dip in satisfaction with their accounts three to six months after account opening. The downturn may be because it usually takes a few months before employees start incurring medical expenses and building up their HSA balances. Some, no doubt, get frustrated because it’s a new routine and a new way of paying for health care.

That’s the time when brokers should be prepared to act and many do. Brokers can provide well-timed educational opportunities to move employees over the bumps by using tools and information provided by HSA custodians combined with their own personal service and strong client relationships. And action yields results: most HSA owners are satisfied or very satisfied with their accounts by the one-year anniversary, according to OptumHealth customer data.

Lindberg notes that the top brokers he works with typically meet with their clients during the first month of the plan year and then hold quarterly meetings thereafter, particularly with groups over 50 lives.

“Brokers with the happiest clients regularly check in with their clients to ask, ‘How can I help?’ send emails to employees to see if they have questions, and post simple explanations of HSAs on their Web sites,” says Lindberg. “HR departments particularly love online chat rooms provided by some large agencies in which employees can submit questions and get a swift reply.”

“You absolutely have to come back at least by mid-year,” agrees Paula Wilson, an employee benefits agent at Paula Wilson Inc. in Temecula, Calif. She recalls the high degree of confusion among employees at a client of 50 lives during a follow-up meeting halfway into the plan year.

“Even though I had spoken to the workers and flooded them with materials and Web links back at open enrollment, they clearly needed a refresher course,” she says. She ran the meeting – mandatory for all employees for an hour and then spent nearly another two hours answering questions. “By the time I was done, the HSA naysayers had largely been converted to enthusiasts,” says Wilson.

Jeff Fallick, principal of Fallick Insurance Services Inc. of Mountain View, Calif., holds brown-bag lunches two months into the plan year at his small and mid-sized clients’ offices and hosts webinars to address employees’ health savings account (HSA) questions.

The lunches often provide eureka moments. “Sometimes an employee who took the HMO instead of HSA hears that a co-worker has $600 in his HSA and says, ‘That’s kind of cool, I didn’t really think about that’ when he made his plan choice,” says Fallick.

Remind Employees to Open Accounts

To start saving in an HSA, of course, employees must open the account at a qualified financial institution. Yet, when the employees elect a consumer-directed health plan many mistakenly believe their employer automatically opens accounts for them. Months later, they still haven’t opened a bank account.

“This is a huge problem,” notes Lindberg, who estimates that well over one-half of eligible employees neglect to open HSAs. Brokers can encourage employers to continually educate employees that it is employees’ responsibility to open an account and that the account can be opened at any time during the plan year.

They can and should also tap the HSA custodian to help. An HSA custodian can work with brokers and employers to make account-opening as simple as possible so employees who want accounts are set up to begin saving as soon as their HSA-qualified health plan takes effect. HSA custodians can also help brokers compare the number of opened accounts with the number of employees with HSA-eligible health plans to identify any gap in the numbers that may prompt the broker to follow up.

Clarify FSA and HSA Differences

Another common source of confusion, early in the plan year, concerns HSA withdrawals. Many employees are accustomed to flexible spending accounts (FSAs), which entitle them to spend whatever amounts they have elected (even if all payroll deductions haven’t occurred) over the period outlined in their benefit plan.

HSAs, on the other hand, are bank accounts. Employees may have to be reminded that they can only use funds actually deposited into the HSA to pay for eligible expenses. Providing a side-by-side comparison chart of FSAs and HSAs can help clarify the differences for employees.

Some brokers, like Paula Wilson, go the extra mile. Employees at a small group client were disgruntled about being ineligible to sign up for the company’s newly installed HSA since they were enrolled in their spouses’ FSAs. So Wilson took matters into her own hands by setting up a schedule to track the expiration date of those FSA plans. A month before the FSA plans expired, she called the employees to remind them not to re-enroll in the FSA so that they could open HSAs.

Anticipate and Answer Commonly Asked Questions

It’s not surprising that employees may be initially confused about how HSAs, paired with a qualified high-deductible health plan, can help them plan, save, and pay for healthcare. Many have spent years making co-payments at the doctor’s office or pharmacy without exposure to their total medical costs.
In many cases, human resources experts are also learning about the new plans and HSAs right along with the employees they serve. Even after open-enrollment meetings are over, I am frequently asked questions like:
• What medical expenses are covered by the deductible?
• How do I pay for doctor visits and medications with HSA funds?
• How do I use my HSA debit card?
• How can I find out how much money is in my account?
• What should I do with the tax forms I get from the bank where I have my HSA?
Working with the right partners and with effective educational materials can make these questions easier to handle, such as an HSA user guide and hand-outs explaining how an employee, who has yet to meet the plan deductible, can pay for medical expenses.

Follow These Steps to Boost Engagement

Research shows that employees become more active, satisfied healthcare consumers when they have access to tools and educational resources. To help their clients achieve high satisfaction levels, brokers can also do the following:
• Ask your HSA custodian for a checklist to make sure that employees have taken all necessary steps to open and fund their HSAs.•
Emphasize time-tested savings principles: start early, make regular deposits and set yearly savings goals.
• Remind employees to keep their receipts for all HSA-eligible medical expenses. They’ll need them if they want to reimburse themselves later from their HSA or if they are audited by the IRS.
As with any new concept, the best approach it to take small steps when rolling out a consumer directed health plan with an HSA. Delivering materials gradually, starting with the big picture, moving to smaller details, and then reinforcing the fundamentals through on-going education is a winning formula.
Kristin Komen is the regional sales director in California for OptumHealth Financial Services. She can be reached by email at or by phone at 949-251-9540.
OptumHealth Financial Services helps individuals and employers plan, save and pay for health care with tax-advantaged health accounts, benefits and COBRA administration and retiree solutions. It is a division of Optum-Health, one of the nation’s leading health and wellness companies.

Optimizing Cash Reserves with
Combination Universal Life/LTC Insurance
More Flexibility to Address Multiple Needs

by Michael Burns and Michael Hamilton

The possibility of a long-term care need is one of the biggest risks to the security to a client’s entire portfolio – perhaps even more so than a prolonged market downturn or changes to Social Security. If you’re not prepared for it, the cost of a healthcare event could significantly affect even the best-laid financial plans.

At least 70% of people over 65 will need long-term care services, according to the Dept. of Health and Human Services. This fact underscores how financially vulnerable people are when they don’t have a carefully considered long-term care (LTC) plan. Longevity statistics continue to rise, which means that the chances of experiencing a healthcare event have increased. Many Americans over 50 are beginning to see this with their parents’ generation.

Hybrid products, such as a universal life/LTC insurance combination product, offer otherwise self-insuring clients greater optimization for multiple needs, including long-term care costs and protection of personal assets including cash as well as conservative fixed investments. Clients who expect their cash reserves to cover a long-term care event without having any additional insurance protection may be self-insuring without knowing it.

A universal life/LTC insurance combination product can help ensure that healthcare costs do not jeopardize retirement income security. The growing attraction of combination life/LTC insurance products is simple. Unlike traditional LTC insurance, the client or the beneficiaries always receives a benefit. These products have more flexibility to address multiple needs for a cost that is potentially lower than single-solution products stacked separately. The escalating costs of long-term care are also driving the demand for combination products.

As of January 1, the Pension Protection Act of 2006 has been helping make this type of combination product even more attractive since the legislation paves the way for more favorable tax treatment. The charges that have been used to fund an LTC insurance rider (taken from the cash value of a life insurance policy) are longer considered a taxable distribution.

Linking the benefits of life insurance and LTC insurance is emerging as the choice for thousands of clients who are looking for a more efficient and effective solution for financial protection. It allows the client to simply reallocate cash (or cash equivalents) and it provides a LTC insurance reserve. In addition, a policy with a lifetime return-of-premium feature allows clients to retain control of the asset because they can reclaim their full premium any time, unlike a traditional long-term care policy, which is a straight expense. (There may be tax implications.)

How It Works

A universal life/LTC insurance linked benefit combination product allows us to reposition an appropriate percentage of personal assets, such as those saved in a certificate of deposit, money-market, or savings account, bond mutual fund, cash, etc. It can help mitigate the financial hardship of long-term care while giving clients the control and tax benefits they want with the protection and asset leverage they need.

For example, let’s assume that a 65-year old female non-smoker uses $100,000 to purchase a universal life policy combined with an LTC insurance rider (universal life/LTC insurance). A $166,406 death benefit would increase her leverage of that asset significantly for legacy planning purposes. A long-term care rider could be extended to another four years of coverage. With the accelerated death benefit plus LTC insurance rider, the overall amount of LTC protection is equivalent to about five times the original asset. (At $83,203 a year, a four-year rider equals $332,812 and a six-year rider equals $499,218.)

In this scenario, the life insurance creates a $166,406 income tax-free death benefit legacy for the client to transfer to beneficiaries if it is unused for LTC insurance purposes. That’s an increase of approximately 1.5 times over what she would have left if the cash had remained in the certificate of deposit, money-market account, or savings account. (Keep in mind that exact amounts would vary by policy and by a client’s age, gender, and health status.)

To appreciate the full effect, you have to understand the real risks and costs involved. As mentioned previously, at least 70% of people over 65 will need long-term care services at some point. Some people may have enough assets to pay for long-term care, but using retirement income may not be the most efficient way to handle long-term care costs. Indeed, any well thought out retirement plan takes into account the costs of the long-term care contingency, including potential drain of retirement income by tapping into assets. A Lincoln Financial study reveals that, as of 2009, the following are average estimated national long-term care costs:

• Nursing home, semi-private room: $190 per day or $70,000 per year.
• Nursing home, private room: $211 per day, or $77,000 per year.
• Home health aide, $20 per hour.

However, long-term care doesn’t always mean a nursing home. Sometimes all that may be needed is assisted living — help with certain daily activities. But even that can cost more than a person’s expected retirement income. In fact, today’s average nationwide cost is $3,000 per month for a 1-bedroom assisted living apartment. We can only guess what will it cost in another 10 or 20 years.
It clearly makes sense to prepare for the potential need for long-term care, especially if that preparation can help protect existing assets at the same time. Even for someone who can afford it, does it really make sense to self-fund a private room in a nursing home at $77,000 per year or is it more sensible to leverage assets to pass to beneficiaries or to a favorite charity?

A combination universal life insurance policy with LTC benefits can help free up some of those reserves to seek additional growth while offering protection for potential LTC needs. By simply repositioning the cash reserves designated for long-term care into a combination universal life/LTC policy, it immediately leverages the dollars available, which helps preserve the rest of the portfolio.

Michael Burns is senior vice president, Individual Life Product Management, Insurance Solutions, and Michael Hamilton is Assistant Vice President, Linked Benefit Product Leader, at Lincoln Financial Group.


Voluntary Benefits
Get It Together:
A New Approach to Employee Benefits
Product Integration Simplifies Administration
and Offers Flexible Funding Options

by Tom O’Keefe

Some of the greatest challenges in the employee benefits industry are simplifying what may be complex, streamlining what may be unwieldy, and providing clear communication of what may be confusing.

In recent years, the need to do these things has accelerated as benefit trends put more responsibility on employees to choose their own coverage. At the same time, budget pressures have left employers seeking solutions that allow them to offer broad benefit choices without adding to their costs or administrative tasks.

The response to these challenges is the drive toward integrated benefit platforms. With integrated benefit platforms, multiple products and funding options are offered on a single administrative system. Effective benefit education is provided on a single path from quote to enrollment to ongoing administration.

Carriers that are developing integrated benefit offerings recognize that the market is evolving with the breadth of employee benefit choices and funding options as well as the complexity that can go along with them. To be successful, we have to make these benefits easier for employers to manage.

Why Integration?

Some pretty dramatic changes in how employers are offering benefits and how employees are choosing them is driving the integrated approach. The days are numbered for standard-issue benefit packages, regardless of the employee’s needs or situation in life and cost shifting is a major reason. As employers share some of the costs of their benefits with employees, their employees have choices to make: what kinds and how much coverage to choose or even whether to have any coverage at all.

Choice is generally a good thing. The modern workforce is tremendously diverse and employees value the opportunity to select the benefits that suit them best. And because they are footing some of the bill, employees rightly expect to have a voice in how their benefit dollars are spent.
But as good as it is, choice has a downside: complexity. In a company of hundreds of people, there may be hundreds of variations in the benefit plan. A 50-something Baby Boomer may choose long-term care coverage while the generation X 30-something may choose critical illness coverage, and the generation Y 20-something may choose accident insurance. These benefits may be paid for by the employer, the employee, or by a little bit of both.

Our industry has done a pretty good job of keeping up with all these shifts. We have offered innovative products to meet a variety of employee needs; we have put a strong emphasis on helping employees understand their growing list of benefit choices; and we’ve developed an array of funding options.

In short, we focused a lot on meeting the needs of employees whose characteristics are all over the map and who are making more benefit decisions and picking up more of the costs than ever before.
Now our industry is heading over the next hurdle: Deconstructing the increasingly complex benefit challenge for employers and building new ways to make a broad range of benefits easier to manage. At the same time, we’re creating ways to cut costs and make budgets more predictable – a critical need for employers that are on the front lines of the benefit balancing effort.

Defining the Benefits

There are a couple of ways our industry describes the concept of integrated benefits; one is to group several different benefits into a single streamlined platform that simplifies administration; another is to combine employer-paid and employee-paid coverage on a single platform. The best approaches to integrated benefits offer both and they do so in a way that can bring real advantages for brokers, employers, and employees.

The Benefits For Brokers

Integrated benefits give brokers a powerful differentiator in the market. As the benefit landscape has shifted, the broker’s role as an objective adviser to employers has become even more valuable. When employees are making their own benefit decisions, employers need more than just a list of product options. They need help identifying carriers with the right education, technology, and service infrastructure.

It’s relatively straightforward to present products — assemble a spreadsheet and bring it to a client. But integrated benefits allow brokers to present benefit package solutions with a single path for quoting, education, enrollment, and ongoing billing and administration. And the broker answers concerns about product choice, employee education, cost predictability, and funding options.

It also eliminates much of the back-and-forth paperwork, administration, and enrollment tasks that brokers so often get pulled into. Online administration allows employers to make changes and handle billing without tying up the broker’s time. Since a comprehensive employee education and enrollment process is part of the integrated benefit package, it’s no longer on the broker’s to do list.

The Benefits for Employers

There is no denying that employers are stretched by the normally demanding feat of juggling budgets and benefits. Putting a suite of products on a single platform simplifies benefits by combining common benefit enrollment, education, billing, and life changes across all products. It also provides a blend of funding options to give employers more flexibility in controlling and predicting costs.
Many employers have been discouraged from trying worksite products because of the perceived complexity. But the new integrated benefit approach is helping address that perception while offering broad benefit choices, funding flexibility, and simplicity. When it’s just as easy to administer employee-paid benefits as it is to administer employer-paid benefits, employers have funding options and product combinations they might not have been willing or able to consider otherwise.

The Benefit To Employees

One of the greatest advantages of the integrated approach is that the employees’ perception of a benefit package, as a single element, actually matches the reality of how their benefits are enrolled and managed. An integrated approach offers a seamless continuum of experiences in obtaining coverage, which includes education to help employees understand what their benefits do, how they work, and why they’re needed.

Employees need effective and clear benefit education as they make more decisions about their coverage and pick up more of the tab for their benefits. They need information to select the products that will make up their financial safety net.

Research clearly shows a direct connection between how well employees understand their benefits and their perception of — and loyalty to — their employer.

In a Unum survey of more than 1,100 workers, employees who said they got quality benefit education were nearly twice as likely to say their employers cared about their well-being and 70% said their employers valued their work. In contrast, just 41% of employees who listed their benefit education as fair or poor said they believe their work is valued.

What’s Next For Integrated Benefits?

For the moment, carriers are focused mainly on offering integrated approaches that simplify the enrollment, administration, and funding of their own products.

But as the trend picks up steam, employers will be looking for the same kind of support for all of the products they offer employees, regardless of the carrier. Once the integrated benefit approach is solidly established, look for more carriers to develop solutions that apply that integration to products beyond their own portfolios.

As the benefit landscape has shifted, the integrated benefit market has come a long way and the pace of change does not look likely to slow anytime soon.

Tom O’Keefe is senior market manager, Unum, San Francisco. Unum’s integrated benefits platform operates on a single, streamlined technology platform, Simply Unum, provides a base of group disability and life insurance coupled with voluntary benefits. And it offers online administration, so employers can manage benefits on their own time – even if that time is outside the confines of regular business hours. The national rollout of Simply Unum was completed in February. For more information, visit


Voluntary Benefits
Today’s Economy Creates
Opportunity for Voluntary Benefits
Help Clients Strengthen Their
Employee’s Financial Safety Nets

by Murray Todd

The economy has put us all in a tailspin. Our clients are looking for answers to the spiraling cost of benefits. They want to retain and recruit new talent, which requires a competitive benefit package. They also care about their employees and their employees’ frayed financial safety nets.
What’s a concerned broker to do? We’re afraid to act and we’re afraid not to. We fear doing something because we don’t want to lose the business we have, yet we fear we’re going to lose our clients anyway if we don’t do anything. Take action now. Show your clients how voluntary benefits can help ease their financial strain and allow their employees to fill some of the critical gaps in coverage created by today’s economy.

Our Clients And Their Employees Are Hurting

Employers have taken a big hit from the depressed economy. Unemployment rates in California were the fourth highest in the nation in August, reaching 12.2% (compared to 9.5% nationally). Employers are forced to cut costs wherever possible in order to avoid or minimize layoffs and they’re making tough decisions about their benefit plans. In fact, 82% of human resource executives have made changes to their employees’ coverage in the form of increased premiums, co-pays and deductibles, according to a May 2009 survey of HR executives by Colonial Life.

These benefit changes are reducing their financial security. A recent survey by Unum shows that most employees do not feel their workplace benefits provide a sufficient financial safety net. Only one in three believes their non-medical benefits will provide the resources needed if they became unable to work because of injury, illness, or maternity. Even employees with higher incomes ($100,000 or more) are unsure about their ability to withstand the loss of income, with 41% saying their benefits would not provide adequate protection.

Financial Safety Nets Are Fraying

Employers can no longer afford to -offer the rich benefit packages of years past. Even larger employers, known for their generous benefit plans, have been forced to make cuts. Left to deal with potential gaps in coverage, employees are feeling more vulnerable. And employees sense their financial security gradually eroding with more responsibility for benefit costs and decision-making shifting their way. But the effect of today’s recession extends beyond core medical benefits.

I often tell the story of a client I had nearly 20 years ago. The company’s controller was diagnosed with cancer and spent nearly six months out of work before eventually dying. During this time, the employer continued to pay her full salary and held two fundraisers to help with the family’s medical expenses. The whole company got involved.

It’s much less likely for something like this to happen today. Too many companies are on the edge financially and can’t afford to pay an employee who isn’t working. At the same time, employees are so consumed with paying their mortgages and other bills that they don’t have the resources to hold fundraisers or help out in the same ways they once could.

A safety net is much more important now because we’re not in flush times when people can easily step up to help others in trouble. Fortunately, there is a solution that can help your clients strengthen their employees’ financial safety nets — voluntary benefits.

Why Voluntary Benefits? Why Now?

Voluntary benefits, offered at the workplace and typically paid for by employees through payroll deduction, offer a viable solution to employers that want to help fill the financial gaps for their employees. They give employers a cost-effective way to expand the benefit package at little or no direct cost. Employees can choose the benefits that best meet their individual and family needs. And they can keep their coverage if they lose or change jobs because the products are owned individually.

Although many brokers are familiar with voluntary products, many haven’t stepped up to the plate and offered them to their clients. In California, voluntary benefits have become much more popular since larger employers began offering them, such as city governments and hospitals.

Use Voluntary Benefits to Close Financial Gaps

By integrating voluntary benefits with core group offerings, employers can help employees protect themselves against increased financial exposure. At the same time, voluntary benefits can alleviate some of the economic pressures employers face. They’re especially helpful in the following situations that employers deal with during poor economic times:
• Introduction of high deductible medical plans to save health premium costs.
• Reduction in benefits for executives or carve-outs for hourly and part-time workers.
• Corporate mandates to cut operational costs.
• Changes in management.
• Large numbers of financial or family changes (marriages, births, etc.) occurring in the workforce.

Will Employees Actually Buy? You Bet They Will!

Many employers find it a huge relief to know there’s an option that actually creates a win-win situation for them and their employees. Fifty-six percent of employers with 10 or more employees are considering introducing a new voluntary benefit in the near future, according to a 2007 LIMRA study. And employees are truly interested in purchasing additional insurance at the workplace, contrary to what many employers believe. The financial instability of today’s economy most likely fuels this interest, but 59% of employees say they would consider purchasing additional insurance to cover themselves financially.

My own experience has been that employees want to know they have the coverage to manage their risks. It doesn’t matter if they make $10 an hour or if they’re higher paid salaried employees. They’re willing to give up a $10 or $15 a paycheck to know that they’re going to be okay financially if something happens to them.

Another plus is that employees who are offered voluntary benefits in the workplace are more satisfied with their benefits than those who aren’t offered the coverage. A January 2009 Unum study reveals that employees’ satisfaction with their employers increased six percentage points when voluntary benefits were offered. And satisfaction with employee benefit packages increased from 34% to 53% when voluntary plans were available.

Choose the Right Benefit Partner

Finding the right voluntary benefit carrier is critical. Evaluate providers based on the following criteria:
1. Business understanding — Look for a partner with a versatile product portfolio, a proven history, and a foundation of best practices across a number of industries. This kind of partner brings knowledge based on thousands of customer engagements.
2. Product design — Voluntary products, such as critical illness, cancer, disability and life insurance can help employees get additional protection for their families. A single-source carrier for voluntary products and a limited benefit medical plan helps increase employee understanding of their plans and simplifies enrollment and administration for employers. (If the employer does not offer major medical coverage.)
3. Expertise in benefit communication and enrollment — A well-designed plan is simple to understand and use, but many carriers rely on self-enrollment for these plans. Self-educated delivery gets very low participation and sometimes leads to dissatisfaction from workers who don’t understand what their plans offer. A top voluntary benefit partner will meet one-to-one with each employee to explain the plans and help employees select the best coverage.
4. Group size — Many voluntary plans require 50 or more employees, but some cover groups as small as three. Be sure to engage a partner that gives you the flexibility to address positive and negative changes in your clients’ workforce numbers.

Act Now. The Time Is Right.

The economy has made us all more fearful, but don’t let fear immobilize you. Solidify your position with your clients by offering a proven solution. There’s never been a better time for voluntary benefits.

Murray Todd is territory sales manager for Orange, Riverside, and San Bernandino Counties, California. Colonial Life & Accident Insurance Company provides insurance benefits for employees and their families through their workplace. Colonial Life offers disability, life and supplemental accident and health insurance policies in 49 states and the District of Columbia. Similar policies, if approved, are underwritten in New York by a Colonial Life affiliate, The Paul Revere Life Insurance Company. Colonial Life is based in Columbia, S.C., and is a subsidiary of Unum Group. Learn more about Colonial Life at


Insurance and Oral Cancer Survivorship
New Research Provides Evidence of the Benefits of Screening Provided by Plans

by Patrice P. Bergman, CEBS

Group and individual dental insurance plans are increasingly including oral cancer screening benefits to aid in the early detection of the sixth most common cancer in the United States. And here’s an interesting fact worth noting: new research shows a link between survival rates and whether a patient has insurance.

Both of these developments give producers more opportunities to talk with clients about the added value that dental plans present in improving not just oral health, but also overall health.

Roughly 40,000 Americans are diagnosed with oral cancer every year and one dies of the disease every hour of every day, according to the American Dental Association. Yet, oral cancer can be cured if found early. If detected at the pre-cancerous stage, oral cancer can often be prevented altogether. The Oral Cancer Foundation reports that oral cancer is 90% curable when found in its early state. The survival rate drops to 57% when diagnosed in later stages.

Dental professionals are in a unique position to detect oral cancer in its early phases since many people visit their dentist more often than their primary care physician. During an annual oral exam, dentists routinely perform thorough examinations of the mouth. While about 50% of people see their dentist at least annually, people with dental benefits that cover two or more annual visits see their dentists even more frequently.

The way to stop oral cancer in its tracks is through early detection. Oral cancer screening is a small, but very important part of the dental oral exam and it’s crucial to preventing more costly medical procedures.

Tapping into Technology

Today, the advanced technology being used in annual dental exams is helping improve the oral cancer survival rate even more. New screening devices can detect the most commonly diagnosed forms of oral cancer and cancerous conditions before they are visible to the eye. Using dyes, rinses, and chemiluminescent and fluorescence light technology, dentists can pick up clues to symptoms of oral infections and markers of serious health issues, such as mucosal abnormalities as well as pre-malignant and malignant lesions.

There are many effective methods for early detection of oral cancer, but it’s worth noting that some carriers have only agreed to cover certain kinds of oral cancer screening methods. Brokers who are presenting dental plans with oral cancer screening benefits should consider the value of the plans including any coverage limitations on screening with a particular method or brand name.

Improving the Odds

Private insurance doesn’t just make it easier to visit the dentist more frequently; it also seems to actually improve the odds of surviving oral cancer, according to research published in the journal, Cancer.

Patients with private insurance had better survival rates than patients with no insurance, those on Medicaid, and those on Medicare disability, according to a study of more than 1,200 patients treated at the Pittsburgh Medical Center between 1998 and 2007 with cancers of the head or neck, including mouth and salivary glands.

The poorer survival seemed to be partly explained by later diagnosis. People without private insurance generally had more advanced cancer by the time they saw a doctor. -Researchers hypothesize that these patients are less likely to get screened for head and neck cancers or may have to delay treatment after a diagnosis.

Oral Cancers on the Rise

In addition to checking oral health, a dental exam is important to health management because of the evidence connecting periodontal disease to cardiovascular disease, stroke, and pre-term and low birth weight babies. Once a person is identified for being at risk, they can enroll in a disease management program to improve their health, which also helps the employers control healthcare costs.

As with most cancers, age is the primary risk factor for oral cancer. With the graying of the workforce and the increasing proportion of older workers, early detection and treatment may have a significant effect on employers’ cost of healthcare, since cancer treatment would be covered under the medical plan.

Over the past three years oral cancer diagnoses have increased. Although men face twice the risk as women, incidents have also increased among women, young people, and even non-smokers.

Treatment Costs Increase

An oral cancer-screening test using the latest technology can cost a patient $35 to $65 without the dental coverage. That may not seem like much, but it’s often a big enough financial impediment to discourage people from getting the test, particularly when other services aren’t covered by co-payments.

The cost of treatment is far higher, of course. Oral cancer is one of the most expensive cancers to treat; the cost of treating an advanced case averages about $200,000, according to Dr. David Wong, director of UCLA’s Dental Research Institute.

Cancer drug therapy costs continue to rise. Oncology drugs can cost $4,000 per patient per month. Emerging therapies, new treatment options, and an aging population are driving a projected 12% to 15% year-over-year growth in oncology drug costs through 2012, according to IMS Health Inc.
A combination of medical and dental insurance can have a big impact on an individual’s cost of healthcare.

Oral Health Pays Dividends

Many employers recognize that investing in oral health pays big dividends in overall health, well-being, productivity, and retention. Approximately 62% of employers view dental health coverage as essential to their benefit packages, according to a 2008 study by the National Association of Dental Plans. (NADP). The NADP reports growing awareness among employers about the connection between oral and overall health. Employers that have included dental coverage say that their workers’ attitudes and behaviors about their dental health and overall health have improved.
Since poor oral health can add to employees’ time away from work, the loss of productivity can affect the company’s bottom line. More than 164 million work hours are lost each year because of dental problems, according to the American Dental Education Association.
Producers can take advantage of this information by encouraging clients to polish up their employees’ understanding of their dental benefits through employee newsletters, intranet or bulletin board postings, benefit education sessions, and other communication vehicles. These outreach efforts can increase their appreciation of their employer’s commitment to providing a strong benefit package.

In Summary

Given how new technology can raise cancer survival rates and reduce healthcare costs, producers should include oral cancer screening as a benefit differentiator when evaluating and recommending group dental plans.

Patrice P. Bergman, CEBS, is the director of sales and product strategy for Specialty Benefits at Blue Shield of California, a non-profit health plan dedicated to providing Californians with access to high quality care at a reasonable cost . Blue Shield of California is one of the largest provider networks. Ms. Bergman can be contacted at For more information, visit


Vision Insurance
Vision Benefits Event in Orlando–Fun in the Rain

by Leila Morris

Nearly 170 vision-plan reps and brokers gathered for the annual Transitions Academy at the Disney resort Orlando for few a rainy days from Jan. 31 to Feb. 2. Brokers and plan reps are a small, but growing contingent of the annual event.
The Academy featured everything from educational sessions, roller coaster rides, team building exercises, and musical entertainment, to wisecracking moderators in bouffant hairdos. More than 1,400 attendees came from around the world — most from optical stores and vision labs. This is the third year that the Transitions Academy has hosted an annual managed vision care track.
Pat Huot, director, managed vision care, for Transitions Optical, focused on the glaring need for employers to provide better communications about their vision benefits. A recent survey by Transitions Optical revealed that employees are not as likely to enroll in vision benefits than they are to enroll in medical and dental benefits. “This is a serious lost opportunity for employers to help lower potential healthcare costs and boost productivity,” he said.
Huot noted the following statistics:
• 76% of employees are enrolled in a vision plan.
• 56% enrolled because of discounts on eye care and eyewear.
• More than 60% say they would be more likely to keep using their vision benefit or enroll in a vision plan if it covered premium lens options, such as photochromics.
• 20% cited diagnosing or managing chronic disease as a reason to enroll in a vision plan.
Employers Communications
• 66% say their employer only discusses vision benefits during annual enrollment.
• 25% say eye health information is included in the discussion.
• 30% say their employers do not take the appropriate steps to make sure their employees understand their vision benefit.
• 55% can’t identify lens options in their plan.
• 80% value their vision plan, but most aren’t aware of how to care for their sight.
• 30% of vision plan enrollees don’t use their plan to get a comprehensive vision exam.
• Nearly 50% did not use their vision benefit, in the past year, to buy eyeglasses for themselves.

Many employees simply don’t enroll because they think they don’t have any eye health problems and don’t need vision correction. This is where education comes in. The American Dental Assn. and the Medical Panel Expenditure Panel Survey offer some sobering statistics: 15% of all diabetes-related healthcare costs are associated with the eye and 33% of people with an eye disease don’t know they have it. However, 44% will change their behavior and be successful in turning their health around once they have this information. Approximately 60% of diabetes-related blindness can be prevented by early treatment.

But Diabetes is just one culprit among many that can rob a person of sight. Other problems include hypertension, autoimmune diseases, and even the side effects of chemotherapy. Dr. Vincent Young, MD, of the Albert Einstein Medical Center, stressed that everyone should get an annual comprehensive eye exam even if they don’t think they have a vision problem. An exam can detect hidden problems with eyes or overall health while it’s still early enough to do something about it.

Ethnic Groups at Risk

Dr. Young noted that when employers are just trying to survive in this economy, it’s tough to be concerned about vision problems among different ethnic groups. But, it can help for them to understand how addressing high-risk groups can help reduce overall healthcare costs. He explained how ethnic differences in the workplace can affect sales and utilization of vision plans:
Asian Americans are more likely to develop a specific type of glaucoma and are more likely to have myopia. Diabetes is the fifth leading cause of death among Asian Americans between ages 45 and 65. Tuberculosis is 13 times more common among Asian Americans and ocular tuberculosis is one form of the disease.

Diabetes is 70% higher among African Americans than among non-Hispanic Caucasians. African Americans are also more likely to suffer from hypertension, HIV/AIDS, Glaucoma, and Cataracts. African Americans are especially prone to sickle cell disease, which can lead to vision problems and even blindness. Tragically, young African Americans are also more prone to blindness as a result of various health conditions.

Hispanics are more likely to enroll in vision plans to provide eye care for the family.
The following are reasons people gave for not enrolling in a vision plan:

• I don’t like to go to the eye doctor — 9% of Asian Americans and 5% of Caucasians.
• My general physician can address any eye-health problems – 10% of African Americans, 8% of Asian Americans, and 1% of Caucasians.
• My employer did not explain the vision benefit well enough – 15% of African Americans, 8% of Asian Americans, and 2% of Caucasians.

To help brokers and employers get the word out, Transitions Optical launched a website with a range of educational materials including a Healthy Sight Calculator to determine return-on-investment of vision benefits. ( Brokers can download a free customizable vision benefits newsletter, drop in their own logo, and send it out to clients. The website also features videos, sales tips, and some pretty unsettling simulations of what your eyesight would be like with different types of vision problems and eye diseases.

Enrollment In Employer Benefits
Total Caucasians African Americans Hispanics Asian Americans
Medical 89% 89% 88% 90% 94%
Dental 85% 85% 84% 85% 92%
Vision 76% 73% 79% 77% 86%
Life 7% 67% 61% 71% 67%

Leila Morris is editor of California Broker Magazine. She also writes the weekly Insurance Insider News, available at She graduated with a B.A. in Political Science from St. Mary’s College of Md.


LTC Update

A Big Portion of Long-Term Care Insurance

Premiums May Be Tax Deductible

Those who have long-term care insurance may be able to deduct a big chunk of their 2009 premiums. “For the first time, the maximum deductible limit for an individual exceeds $4,000,” says Jesse Slome, executive director of the American Association for Long-Term Care Insurance.
“The federal government and an increasing number of states are sending a clear signal that people need to plan for long-term care and tax deductibility; tax credits certainly make long-term care insurance more attractive to millions. It is a positive sign to see limits for long-term care insurance deductibility increase especially when pension contribution limits for 2010 were not increased,” he added.

The end of the year provides a double tax-saving incentive for consumers. There is still time to take advantage of tax deductions in 2009 and also benefit from the increased deductible limits next year.
For the 2009 tax year, a person with a qualified policy may be able to deduct up to $3,980, depending on age. For a couple, the maximum amount doubles, to nearly $8,000. According to the Internal Revenue Service, the amounts of long-term care insurance premiums that are deductible as medical expenses for individuals in 2009 can be as high as the following:

• $3,980 if you’re 70 or over.
• $3,180 if you’re over 60 but not over 70.
• $1,190 if you’re over 50 but not over 60.
• $600 if you’re over 40 but not over 50.
• $320 if you’re 40 or under.

You can take these deductions every year that you pay premiums and the deductible limits have been increasing annually, noted Cameron Truesdell, CEO of LTC Financial Partners. Long-term care insurance also offers the following advantages:

• Any state tax deductions or rebates are on top of the federal deduction.
• When a policy pays on a per-diem basis, a limited portion of the benefits may be excluded from taxable income.
• There can be tax advantages when a policy is paid for out of a health savings account.
• There are especially attractive tax breaks for businesses. For example, some business owners can deduct premiums without having to satisfy the 7.5% medical expense threshold amount.

Costs For Long-Term Care Insurance Rise Slightly

Costs for long-term care insurance policies rose slightly according to a study by the American Association for Long-Term-Care Insurance (AALTCI). A 55-year-old married person can expect to pay $723 per year for a base level of LTC protection while a 55-year old single person can expect to pay $1,060. The study measured costs for top selling long-term care insurance policies that provided about $115,000 in current benefits, with protection increasing yearly as the individual ages.

A solid base plan of protection will grow in value to over $305,000 of protection 20 years from now. For some age bands the cost of long-term care insurance experienced a modest one percent decline compared to the prior year. Jesse Slome, executive director of AALTCI said, “What we did see is a far wider range of prices between insurers offering basically the same coverage. Costs can vary by as much as 60% from one insurer to the next.”

Slome explains, “The cost of long-term care insurance is directly related to how much protection you purchase, the age you first apply, your health at the time of application and assumptions that vary from one insurer to another.” More than half of all individual applicants are 55 to 64 and one-third purchase a daily benefit of $100 to $149. Most choose an optional inflation growth rider that increases the potential pool of available benefit dollars each year. For more information, visit
Long-Term Care Podcast
LivHOME released Episode 18 of its podcast series. Rob Pohls (, an attorney who works with long-term care insurance companies, explains the following:
• What age people might consider purchasing long-term care coverage,
• Types of coverage and which pay for at-home care.
• Advice for purchasing long-term care insurance. For more information, visit
LTC Worksite Conference
The Long-Term Care Insurance Worksite And Combo Products Conference will be held in Nashville May 24 to 26. For more information, visit or contact Bill Pomakoy, email:, or call 888-400-1118.

Annual PPO Survey
A Medical Masterpiece
Brushing Up on PPOs With Our Annual Survey

Welcome to Part I of our tenth annual PPO survey. For this survey, eight PPOs in California diligently answered direct questions about their plans. Our readers, who are savvy health brokers, suggested many of the questions. We hope this information will help the professional agent or broker better serve sophisticated healthcare clients. Look for Part II in our April issue. We will be posting the survey on our Website at

1. Is an Approval Procedure required for Getting a Specialist Referral or a Diagnostic Test or Treatment In-Network or Out-of-Network?

Aetna: There is a new high tech radiology pre-certification requirement for some customers.
Anthem Blue Cross: It is not required for PPO plans, but the member ends up paying more if they go out-of-network without getting an out-of-network approval.
Blue Shield of California: No, PPO plan members can generally self-refer to any doctor for care. They can choose to use in-network or out-of-network providers with claims reimbursement based on their benefit plan. Out-of-network services are usually subject to a higher deductible and co-payment amount.
Cigna: No referrals or approvals are required since the PPO benefit plan is an open-access program. Members are covered whether or not they get care from PPO network providers. Members who use services from an in-network provider may have reduced co-payments and lower out-of-pocket costs.
Guardian: No, Guardian has no required approval procedure required for getting a specialist referral or a Diagnostic test or treatment in-network or out-of-network.
Health Net: There are no approval procedure requirements for visits to in-network or out-of-network specialists. A prior authorization list for diagnostic tests or treatments is included in the member’s evidence of coverage (EOC).
Kaiser Permanente: No, the PPO plan does not require a referral to see a specialist. Diagnostic tests are covered provided they are ordered by an insured’s doctor, are a covered benefit, and are deemed medically necessary.
UnitedHealthcare: To strengthen the patient-physician relationship, primary physicians are not required to request an authorization when they refer a patient to a network specialist for an office visit. Primary physicians are very effective at ensuring that our enrolled individuals receive medically appropriate and necessary specialty care. In fact, practice pattern analysis shows that primary physician referrals to network specialists have been almost 100 percent effective and medically appropriate.

2. Are There any Restrictions on Getting Second Opinions From an In-Network Provider or an Out-Of-Network Provider?

Aetna: A member, who has the option of an out-of-network benefit, can arrange their own second surgical opinion with a non-participating provider.
Anthem Blue Cross: No, not for the PPO.
Blue Shield of California: No, a member can get a second opinion from any in network or out-of-network provider. When an out-of-network provider is used, the member is responsible for any difference between Blue Shield of California’s payment and the billed amount.
Cigna: There are no restrictions. The PPO is an open access plan, allowing members to seek care in-network and out-of-network at any time. When accessing medical services, members may decide whether to use a network provider. By using a network provider, members have a lower out-of-pocket cost for each service.
Guardian: No, there are no restrictions on getting second opinions from an in-network provider or an out-of-network provider.
Health Net: Health Net members may see any in-network or out-of
network provider for a second opinion without getting a referral. Members are encouraged to call the Customer Contact Center with any questions regarding their benefits.
Kaiser Permanente: Second medical opinions are covered. Coverage is limited to charges for physician consultation and any additional X-rays, laboratory tests, and other diagnostic studies. Benefits will not be payable for X-ray, laboratory tests, or diagnostic studies that are repetitive of those obtained as part of the original medical opinion and/or for which Kaiser Permanente Insurance Company (KPIC) has paid benefits. For benefits to be payable, the second medical opinion must be rendered by a physician who agrees not to treat the covered person’s diagnosed condition. The physician offering the second medical opinion may not be affiliated with the physician offering the original medical opinion.
UnitedHealthcare: A second opinion is not mandatory under our plans. Our UnitedHealthcare Options PPO product is open access. Members may seek second opinions from any participating or non-participating physician. The member’s benefit level will vary depending on the physician’s participation status.

3. Where are Decisions Made About -Specialist Referrals, Testing, Treatment, Surgery, and Hospitalization?

Aetna: Decisions regarding specialist referrals, testing, treatment, surgery, and hospitalization are made between the treating physician and the patient. Coverage determinations that require precertification are made by Aetna’s medical management teams, which are regionally located.
Anthem Blue Cross: Members may see specialists without referrals. Our Medical Management Department handles the review and approval for services that require pre-authorization.
Blue Shield of California: Treatment decisions, such as these, are made between the patients and their doctors. In the case of surgery, hospitalization, or major diagnostic tests, Blue Shield’s prior authorization review will review the proposed treatment for medical necessity.
Cigna: These decisions are made with a member’s physician in partnership with the member and the CIGNA nurse and physicians.
Guardian: Plan members and their providers make decisions about what tests, treatments or surgeries are performed. Guardian and our vendors make coverage decisions about whether the care or treatment is medically necessary and should be covered under our policy. We use a utilization management vendor for decisions related to surgeries and hospitalizations and other specialty vendors for prescriptions, behavior management, NICU admissions and transplants.
Health Net: Decisions regarding specialty referrals for testing, treatment, surgery, or hospitalization are made with the member, the member’s physician, Health Net’s Care Management team and, if the member chooses, Health Net’s Decision Power Health Coaches, who will provide additional information to help the member through the decision-making process.
Kaiser Permanente: In most cases, the insured does not need a referral to see a specialist. The insured and their physician make decisions regarding testing, treatment, surgery, and hospitalization. The insured is required to obtain pre-certification for any hospitalization or certain special procedures as defined in the insured’s Certificate of Insurance. Pre-certification to verify the medical necessity of a particular service or procedure ordered by a physician for an insured is performed by SHPS.
UnitedHealthcare: The treating healthcare professional and the patient make decisions about providing specialist referrals, testing, treatment, surgery, and hospitalization. We determine whether such services are covered by referencing the member’s summary plan description.

4. Which Complementary Medical Disciplines are Covered Under the PPO or Will be Covered Under the PPO?

Aetna: Members get special rates on visits to acupuncturists, chiropractors, massage therapists, and nutritional counselors, which they pay directly to the participating provider. Participating providers and vendors in the alternative healthcare programs are solely responsible for their products and services. We have not credentialed or reviewed them. Members can save on over-the-counter vitamins and supplements, aromatherapy, foot care, and natural body-care products.
Anthem Blue Cross: Physical therapy, occupational therapy, chiropractic care, speech therapy, DME, and acupressure/acupuncture.
Blue Shield of California: Disease and Case Management: All members
in our fully insured PPO groups are covered by our disease and case management programs, including Asthma, COPD, Diabetes, Heart Failure, CAD, and High Risk and Chronic-Complex Case Management. Blue Shield also offers the following:
• LifeMAP and Guided Imagery program
• CareTips for Physicians
• NurseHelp and LifeReferrals 24/7
• Behavioral Health program
• Online health library and decision making tools as well as messaging and appointment-scheduling.
• Discounts on acupuncture chiropractic massage therapy, health and wellness, and LASIK.
• Chiropractic Network
Guardian: Chiropractic, Physical therapy, Occupational therapy, Speech therapy and Acupuncture are covered when medically necessary.
Health Net: Complementary medical disciplines vary by each employer contract. If an employer chooses to offer complementary medicine, Health Net’s program offers direct referral to chiropractic and acupuncture care. All Health Net members, whether HMO or PPO, can access Health Net’s Decision Power Healthy Discounts at Healthy Discounts offers direct access to chiropractors, acupuncturists and massage therapists. Members get discounts of up to 50% on a vast selection of vitamins, supplements, and other health and wellness-related products. Members have direct access to products through for vitamins and minerals, herbal supplements, yoga, relaxation products, books and videos. The website also provides educational information on a wide range of complementary health care topics.
Kaiser Permanente: The PPO plan does not currently offer coverage for any complementary and alternative medicine (CAM) services. The insured can, however, choose to purchase the chiropractic/acupuncture rider. The rider offers a variety of plans with different benefit maximums or visit limits.
UnitedHealthcare: American Chiropractic Network, a business segment of UnitedHealth Group, provides chiropractic benefits as well as discounts for the following complementary alternative medicine services to our enrolled individuals.
• Acupuncture
• Massage therapy
• Nutritional counseling
• Naturopathic medicine services (in states where naturopathic physicians are licensed).
UnitedHealthcare also offers employers an optional acupuncture benefit. Finally, through UnitedHealth Wellness programs, we provide discounts on products and services for nutrition, weight-management, fitness, stress management, and other wellness products and services.

5. Describe Your Coverage For Mammograms.

Aetna: Aetna considers annual mammography screening a medically necessary preventive service for women aged 40 and older. Annual screening is also considered a medically necessary preventive service for younger women who are judged to be at high risk by their primary care physician.
Anthem Blue Cross: Once a year routine mammograms when ordered by a physician. No limit in frequency, meaning as medically necessary when ordered by a physician.
Blue Shield of California: One annual mammography test is covered for screening and diagnostic purposes without illness or injury being present.
Cigna: Mammograms are covered annually for women age 40 and over or more frequently and at younger ages when medically indicated.
Guardian: This is covered under the CA mandate: CA has mandated this benefit as follows:
• Baseline mammogram for women age 35 to 39
• Mammogram for women age 40 to 49 every two years or more frequently if recommended by a physician, nurse practitioners or certified nurse midwifes.
• Annual mammogram for women age 50 and older.
Health Net: The U.S. Preventive Services Task Force guidance announcement in November 2009 is to help practicing physicians take care of their patients. Health Net does not see this impacting any aspect of the way we offer products or manage our programs. Health Net’s PPO coverage for mammograms remains as follows: one baseline mammogram between the ages of 35 and 39; one mammogram every one to two calendar years for women between the ages of 40 and 49, and one mammogram every calendar year for women age 50 and older.
Kaiser Permanente: Mammograms are covered as part of the adult preventive screenings benefits as follows:
• For women age 35 to 39, one baseline mammogram.
• For women age 40 to 49, one mammogram every two years, or more frequently upon recommendation of a physician.
• For women age 50 and older, one yearly mammogram.
UnitedHealthcare: UnitedHealthcare Options PPO provides coverage for mammograms as part of our standard outpatient surgery, diagnostic, and therapeutic services benefit. It is covered both as a preventive and diagnostic service.

6. Do You Cover PSA Tests For Non-Symptomatic Men? If So, at What Age?

Aetna: Yes, if a state has specific legislation, we will pay it in accordance with the law. There is no age limit unless it’s being paid under a specific benefit, like the trust benefit, which has a contractual limit.
Anthem Blue Cross: Yes, at age 50 or when ordered by a physician.
Blue Shield of Califonia: Coverage includes, but is not limited to, prostate-specific antigen testing and digital rectal examinations, when medically necessary and consistent with good professional practice. There is no age limit for PSA testing when billed with a preventive-care diagnosis.
Cigna: It is covered based on the treating physician’s determination.
Guardian: If the preventive care rider is purchased, the age we start allowing is 50.
Health Net: Preventive care and diagnostic procedures for adults (age 17 and older) are covered at a physician’s direction. When medically indicated for men age 50 and above, test and procedures, including, but not limited to, prostate-specific antigen testing (PSA) and digital rectal examinations are covered.
Kaiser Permanente: The following prostate-specific antigen (PSA) tests are covered as part of the adult preventive screenings benefits, which are available at age 18: screening and diagnosis of prostate cancer, including but not limited to PSA testing and digital rectal examination when medically necessary and consistent with good professional practice. This coverage does not cover the surgical and other procedures known as radical prostatectomy, external beam radiation therapy, radiation seed implants, or combined hormonal therapy.
UnitedHealthcare: Network physicians are encouraged to follow the Guide to Clinical Preventive Services of the United States Preventive Services Task Force (USPSTF) as the basis for preventive care. We cover PSA tests regardless of age even though the USPSTF indicates this screening lacks clinical value.

7. Describe Your Drug Formulary. (Three Tier etc.) If it’s a Closed Formulary, What Happens if a Non-Formulary Drug is Needed?

Aetna: The formulary may be open or closed depending on the benefit plan. In plans with an open formulary, both formulary and non-formulary drugs are generally covered subject to applicable limitations and conditions. With a closed formulary, formulary and non-formulary drugs are generally covered except for drugs on the formulary exclusions list. Formulary exclusions provide less overall value than therapeutically equivalent formulary drugs. The member’s physician can request approval for coverage for a formulary exclusion.
Anthem Blue Cross: We offer both open formulary and closed formulary. Non-formulary or non-preferred drugs that have a formulary or non-prescription equivalent are not covered unless the prescribing doctor indicates that the drug should be dispensed as written on the prescription. We also have a closed formulary where non-formulary drugs are not covered but can be obtained at the negotiated fee rate.
Blue Shield of California: The Blue Shield three-tiered open formulary benefit allows members to get generic drugs at the lowest co-payment, brand-name drugs at a higher brand co-payment, and non-formulary drugs at the highest non-formulary co-payment. A drug prior authorization program is in place for selected drugs on the formulary and for non-formulary drugs to promote appropriate first-line therapy or to reserve use of certain medications with specialized uses or significant potential for misuse or overuse. The Pharmacy and Therapeutics Committee is responsible for establishing and oversight of the drug prior authorization policies and procedures and the maintenance of the Medication Policy Coverage Criteria. By encouraging the use of generic and brand formulary drugs, savings are realized by the employer, the member, and Blue Shield.
Cigna: We offer several kinds of formulary including open, closed, and tiered.
Guardian: The Guardian has contracted with Medco to manage the Formulary, which is approved by independent medical professionals on the Pharmacy and Therapeutics (P&T) Committee for safety and efficacy. Medco pioneered formulary management and continues to be a leader in the industry with innovative formulary compliance programs. The formulary consists of FDA-approved drugs that were selected based on their safety, efficacy, and cost. For three-tier plans, the plan may prefer some medications over others. These are called preferred drugs and their co-payment is lower. The amount of the member’s co-payment depends on which drug the doctor prescribes for the member.
A member may pay the following:
• The lowest co-payment for generic drugs.
• A higher co-payment for preferred, brand-name drugs.
• The highest co-payment for non-preferred, brand-name drugs.
Health Net: The most common pharmacy-benefit structure is a three-tier plan, although a small number of employers have selected a closed formulary. When members with access to a closed formulary get a prescription for a non-formulary drug, coverage for the drug is not typically available unless it meets medical necessity guidelines.
Kaiser Permanente: The PPO plan has an open formulary, which is all FDA-approved drugs, with the exception of those listed in the Optional Prescription Drug Exclusions and Limitations, are covered for the insured. The insured pays a copay based on whether the drug is generic or brand.
UnitedHealthcare: Unlike a formulary, the prescription drug list does not imply any drug therapy recommendations. Rather, we assign prescription medications a co-payment tier based on an evaluation of clinical, economic, and pharmacoeconomic evidence. Unlike our competitors, some brand drugs are placed in Tier 1 and some generic drugs are placed in Tier 2 or Tier 3 based on the overall value (for example, the lowest net cost that they offer our clients). UnitedHealth Pharmaceutical Solutions’ (UHPS) offers a three-tier plan and an open benefit design. Tier 1 drugs represent the lowest co-payment option and include many generic drugs. Tier 2 drugs represent a middle co-payment option and include many brand name drugs. Tier 3 drugs represent the most costly drugs, often with Tier 1 or Tier 2 alternatives and have the highest co-pay option. A drug’s tier placement is subject to change when its value changes as a result of a patent expiration, new product introduction, or other important clinical, safety, or economic information. When a generic drug is more costly than the brand drug during six-month exclusivity arrangement for this period, UHPS may place the generic in Tier 2 and move the generic to Tier 1 once the price decreases.


An Unfair Choice

Undergoing an Elective Surgery or Facing a Denial of Benefits

by Gerald “Gerry” Katz, MSPA, RHU, ALHC, DABDA, FACFE

If you were selling individual or group disability insurance coverage back in the 1980s and early 1990s, you might remember how competitive the disability marketplace was. Some insurance carriers wrote up to $30,000 per month in personal disability coverage; underwriting guarantees were generous for multi-life cases; and commissions were extremely high for major insurance producers.

Profit margins on blocks of in-force disability insurance coverage began to plummet around 1985 and for the next 10 years. Many disability carriers got out of the business. The remaining companies made significant changes in their product offerings, reduced issue limits, reduced many of the optional benefits, increased blood requirements for underwriting purposes, reduced issue percentages of income, and raised premium rates when possible. Many companies also changed their policy design and contractual language to further reduce potential liability while continuing to write coverage.

These companies also responded with greatly enhanced claim scrutiny. They attempted to manage the risks they had underwritten during the claim process by growing their claim departments with medical specialists, vocational rehabilitation specialists, and CPAs. Independent medical exams, telephone interviews, and field visits became more frequent. With these changes came some questionable claim practices. One major disability carrier’s debacle resulted in a Regulatory Settlement Agreement with the States’ Attorney General.

As part of the effort to limit risk, many companies tightened policy language concerning “care and attendance of physician” provisions. -Previous language required the insured to be “under the regular and personal care of a physician” in addition to suffering a disabling condition, Many companies changed their wording to require that the insured be “receiving care by a physician that is -appropriate for the condition causing the disability” or words to that effect.

Recently, there has been an effort to expand this provision to require an insured to undergo a surgical procedure if their physician recommends it even if it’s an elective surgery, such as carpal tunnel surgery, for example. At least one company has pushed this concept to the point of denying claims if an insured doesn’t go under the knife. What’s more disturbing is that some courts, particularly in California, are buying into the concept of forcing a claimant to undergo an elective surgery to recover benefits if the physician feels the surgery would be appropriate for the condition. This concept is ludicrous in light of the purpose of such a provision.

As someone who has spoken to many actuaries, product design, underwriting, and claims personnel in several insurance companies, the new policy provision requiring “appropriate care” never meant compelling an insured to choose between an elective surgical procedure and a denial of benefits. Instead, companies simply wanted to ensure that a psychiatrist, rather than a family practitioner, was treating a schizophrenic patient or an orthopedist, rather than a psychiatrist, was treating someone for a broken arm. Never was it contemplated that an insured would have to choose between their financial future and a surgery that might do more harm than good.

Anytime we subject ourselves to surgical procedures, there are no guarantees the surgery is going to improve or cure the problems that are causing disability. In addition, some surgical procedures do more damage or end in the death of the patient due to adverse effects of anesthesia or a breakdown of a major organ in our bodies. For an insurance company to claim that “appropriate care” mandates surgery is not only absurd, but it is also an invasion of the most cherished of all our rights — freedom itself. In fact, a doctor is never allowed to perform an invasive procedure without obtaining informed consent from a patient. The insurance industry now seeks to hold benefits hostage in order to compel that consent.

Gerald “Gerry” Katz, MSPA, RHU, ALHC, DABDA, FACFE is a disability claim consultant & expert witness. For more information, e-mail or 877-776-3948 toll-free, or contact Gregory L. Denes, Esq. At or 561-694-9199.


Life Problems Benefit from Cross Selling
Some Products Beneficial for Clients

by Justin M. Jurs

For many life insurance producers, “flat” in 2009 meant they were having quite a good year. The larger ticket premiums were not as plentiful as in the recent past, which is something -producers had become accustomed to in the past few years.
Certainly, the policy review concept continued to be successful for many producers, but with a twist. Many advisors say that they have used reviews with clients not to increase the current coverage, but to lower premiums going forward. Cash flow is a major concern for wealthy clients who have their investments tied up elsewhere.
So, if sales are trending downward and premiums are lower, what steps can producers take to make sure they won’t be flat in 2010? Like salespeople in other industries, life insurance producers tend to sell products they understand and are comfortable with. What happens, of course, is that they leave other opportunities on the table.
Many fail to realize that more products that satisfy several needs are coming into the market on a routine basis. The life insurance companies are recognizing that there is a significant marketing opportunity in these combination type products.
Here are some examples of how these newer products can help producers make it much easier to succeed at cross selling.

Long-Term Care Riders

Long-term care sales have felt the impact of the economic situation. As every producer knows, it’s been difficult making long-term care (LTC) sales. Clients say they want this product, but few buy. As a result, few producers are presenting the product. More and more carriers are finding ways to include long-term care in their permanent life plans. Adding a LTC rider to a guaranteed universal life plan can be a cost effective way to add LTC to your client’s portfolio. While most carriers underwrite separately for the life and LTC components of the plan, the savings can be significant if the application is approved. Needless to say, the addition of the LTC rider increases the target premium for the producer. As a sales concept, the LTC rider is an excellent example of enhancing value. In the client’s mind they are actually getting more for less.

Cash Enhancement Riders

There is little or no cash value in most guaranteed universal life contracts. Since the economic downturn has created cash emergencies for many clients, they are far more interested in liquidity. Responding to this lack of cash accumulation, the life insurance companies have changed course. They’re coming out with cash-enhancement riders that can significantly increase the cash surrender value in the plan. The additional cost of these riders is peanuts, as one producer noted, when compared to the price of a whole life plan. The low cost tends to mask the fact that a cash-enhancement rider can serve multiple needs down the road at a very low cost. There are also high early cash value plans that will spread the compensation payments out over a few years, but add significant growth down the road.

Finding More Missed Opportunities

A policy review can help find missed opportunities in other product lines. By taking the time to understand what a client’s plan looks like compared to their goals, you can recommend the use of use the surrender value in the life plan to serve other purposes.

If the client no longer needs the life insurance plan, for example, the cash value can be used for retirement income by purchasing a single premium immediate annuity. And it doesn’t need to stop here. A portion of the annuity income can be applied to pay the premiums for a traditional long-term care insurance plan.

We could also take that same policy and try to increase the payout to the client by shopping the life settlement market. There are also single premium products available that offer a death benefit, LTC coverage, and a return-of-premium option. This can be an effective way for clients to leverage their cash for future use should they ever need the LTC benefit.

Cross Selling Can Also Be Concept Driven

While it’s never good for producers to spread themselves too thin, why not integrate business planning and estate planning if you’re working in the estate-planning arena and vice versa?
As a brokerage manager working with many producers who don’t want to add new concepts to their practice, it’s painfully clear that they are missing out on opportunities for making sales that meet client needs.

If you’re a producer assisting small business owners with their business planning, why not cross sell into their personal and estate planning concerns? Why put your clients at risk by making it possible for them to speak with someone who is prepared to integrate all aspects of their insurance requirements? At a time when producers are looking for more business, it’s wise to make sure you are the single source provider.

Many life producers have long complained that life insurance companies’ products are lacking when it came to helping clients meet the challenges of lifestyle and economic changes. For the most part, the complaints were on target. But that has changed. Insurance companies are making cross selling easier than ever with products that satisfy several needs.

This is not to suggest that producers should abandon talking with their clients about the value of the traditional annuity, disability income or LTC plan. However, it is to point out that far too many producers are walking away from both serving their clients’ best interests and, at the same time, potential sales. Cross selling is really just another way to describe what producers do best. And that’s problem solving. Fortunately, there are products that make the task easier and more beneficial for our clients.

Justin M. Jurs is a Brokerage Manager with First American Insurance Underwriters, Inc., based in Needham, Mass. He has extensive experience in long-term care, annuity and life insurance product sales and with working with producers. He can be contacted at 800-444-8715 or