HMO Survey Part III – This Won’t Hurt A Bit:
Injecting Insight Into HMOs
Each year California Broker surveys health maintenance organizations (HMOs) in the state with direct questions about their plans. We hope that this valuable information will help you serve your savvy healthcare clients better.
Medical Tourism — Can It Work For You?
by Ross Pendergraft • First came the PPOs and then the HMOs. Not so long ago, we were introduced to consumer directed health plans tied to an HSA. All of these, as you are aware, are very much a part of our medical plans. There is now another option that some of us might want to use — medical tourism.
401(k) – How A Turnkey Approach Creates Opportunities for Advisors
by Kevin Watt, AIF • A successful 401(k) practice presents tremendous business value. In addition to helping plan participants achieve a successful retirement, California’s financial advisors can build their client base and increase assets under management since 401(k) clients typically offer a dependable line of business.
Disability –Weathering The ACA Storm With Long-Term Disability Sales
by Alison Daily • Employers are looking for guidance from their brokers, particularly regarding ancillary benefits. Brokers are in a unique position to educate clients on the benefits of offering voluntary LTD coverage. PPACA is transforming the industry, and producers can weather the changes by expanding their sales of disability products.
The Growing Importance of Disability Insurance
by Tye Elliott • Brokers can communicate the value of voluntary disability insurance as a way for workers to help ensure financial protection and businesses to maintain a reputation as employers of choice.
Voluntary Benefits – Worksite Wingmen for Brokers
High Flying Tactics from our “View from the Top” Voluntary Benefit Aces
by Leila Morris • Nearly all voluntary insurance products have become more popular over the past three years. Executives give their take on this dynamic market.
Prescription Drug News
Latest news on the prescription drug market including: prescription drug savings, transitioning specialty meds to the pharmacy benefit, out-of-pocket costs, and Medicare Advantage update
Private Health Exchanges
Private Health Exchange Survey 2014
by Leila Morris • Welcome to our first annual private exchange health care survey. Private exchanges gave detailed information about their plans. We hope that this valuable information will help you better serve your health care clients.
Same Sex Retirement
The LGBT Retirement Opportunity
by Stephen E. Terrell • By striking down certain provisions of the Defense of Marriage Act the Supreme Court not only created an opportunity for many same sex couples to realize the economic benefits of marriage, but also provided an opportunity for agents and financial planners to offer valuable and ongoing advice to the LGBT community.
This Won’t Hurt A Bit: Injecting Insight Into HMOs with Part III
of Our Annual HMO Survey
Note: The PPO survey will be featured in the October issue.
Welcome to the 18th annual agents’ guide to managed care.
Each year California Broker surveys health maintenance organizations (HMOs) in the state with direct questions about their plans. We then present the answers to such questions here for you — the professional agent or broker. We hope that this valuable information will help you serve your savvy healthcare clients better.
31. Can the PCP participate in profits or losses in any way at the plan level or the participating medical group/IPA level?
Aetna: In California, Aetna participates in the IHA/7 health plan program of pay-for-performance. PCPs can participate in that IPA pay-for-performance bonus.
Blue Shield of California: For our HMO physicians and medical groups, our Pay for Performance program recognizes and rewards physician organizations for effectively managing utilization of services provided to members for inpatient utilization and readmissions, emergency room utilization, outpatient surgeries, and generic drug prescribing.
Cigna: The primary care physician does not participate in plan profits or losses in any way. The relationship between the PMG/IPA and the PCP is based on the contract between the two parties.
Health Net of CA: In 1993, Health Net of California introduced the Quality Care Improvement Program (QCIP). At the time, it based medical group compensation on member satisfaction scores. This program was enhanced in 1998 by incorporating quality-of-care outcomes into the compensation formula. In addition to contracted compensation, QCIP evaluates medical groups based on member satisfaction rates, quality-of-care outcomes, and collaboration. Additionally, Health Net evaluates medical groups’ cost performance measures. Similar to most health plans, shared-risk pools are incorporated with the compensation details for each Participating Physician Group (PPG). When the budget is established for the PPG’s medical services and hospital care, the PPG shares in the savings if costs do not consume the budget. Conversely, the group shares in paying for additional costs if the cost of care exceeds the budgeted amount. However, at no time does Health Net favor cost performance over quality. Recently, other California health plans have added programs similar to Health Net’s QCIP.
Kaiser Permanente: The primary compensation method used by all the PMGs is salary. Small amounts of additional compensation may be provided for things such as achievements in quality or member satisfaction. Our physicians are incentivized to make patient care decisions based on medical needs because our capitated model is based on collective performance, rather than individual physician performance, and our physicians are compensated primarily by salary. The medical group uses that money to pay its doctors and other personnel, and to meet its other expenses. The primary compensation method used by all of the Medical Groups is salary. Salary generally varies with medical specialty and tenure.
PacifiCare: We use a Quality Incentive Program (QIP) through which medical groups and IPAs can earn additional revenue by improving and maintaining patient safety, patient satisfaction, and quality of care. The QIP measures key indicators of quality in hospitals and medical groups based on the groups’ service and clinical quality. The QIP rewards medical groups and IPAs for attaining the required performance. The better a provider group performs in these categories the more QIP dollars they can earn. In 2003 the QIP was funded with $14 million and rewarded seventy-fifth percentile performers in 16 measures. Over 140 medical groups received rewards in 2003 and we achieved average mean score improvements in 12 of the 16 measures. In turn, average improvement for these measures increased 30 percent, a remarkable achievement. In 2004 our QIP expanded to include 20 measures, of which 17 improved an average of 20 percent. The incentive pool was $18 million in 2004 and is $65 million in 2005. In 2006, we paid out more than $96 million.
32. How are premiums and risk shared among the plan, MG/IPA?
Aetna: The premium is not shared with providers. In California, we have some IPA risk share arrangements and an IPA or medical group share in savings if a target budget is not exceeded.
Blue Shield of California: The majority of the contractual arrangements between Blue Shield and the IPA/medical group do not have a shared risk component; instead, the IPA/medical group is capitated for the professional services and is responsible for its own risk, and Blue Shield is at risk for the institutional component of the relationship.
Cigna: Most medical group and IPA arrangements are capitated. Capitation does not contain provisions for withhold payments. For example, a lump sum is withheld and distributed later if the provider meets certain utilization targets. The standard contract is shared risk with Cigna retaining risk for inpatient facility charges.
Health Net of CA: The majority of HMO physician services are paid under a pre-paid capitation payment to the contracted participating physician group (PPG). The PPG, in turn, reimburses the physician directly for services.
Kaiser Permanente: Kaiser Foundation Health Plan (KFHP) exclusively contracts with the Permanente Medical Group (TPMG) in Northern California, and the Southern California Permanente Medical Group (SCPMG) to provide comprehensive medical services to KFHP members. Each year at Kaiser Permanente, the Health Plan and the Medical Group in each region negotiate and agree on the total amount of money that is estimated will enable our physicians and other clinicians to provide the amount of professional medical care that our members are expected to need in the upcoming year. This estimate is based on the previous year’s performance (and the years prior to that), and also includes administrative and other expenses associated with operating the Medical Group.
PacifiCare: Currently all of our contracted medical groups and independent physician associations (IPA) participate in a risk-sharing arrangement. In addition, we contract with several networks of individual physicians in rural areas that do not participate in risk sharing. We contract with multi-specialty medical groups and independent physician associations (IPA) primarily through split or professional capitation contracts. Both contracts provide a monthly age, gender and benefit adjusted capitation.
33. What happens when a member provider bills a participant for services? How do you deal with the fact that the participant is at financial or credit risk when the dispute is between the provider and the plan?
Aetna: Participating providers are required to accept payment (plus member’s co-payment) as payment in full. Balance billing is not permitted.
Blue Shield of California: Our member service representatives typically resolve these cases by contacting the provider’s office to clarify the correct member liability. Our providers are contractually prohibited from holding members responsible for any charges other than deductibles, co-payments, or non-covered services.
Cigna: First, it’s important for customers to know that using hospitals and doctors who are a part of the network protects them from balance billing because in-network health care professionals agree as part of their contracts not to bill individuals for amounts beyond what their plan pays. If Cigna receives a complaint from a customer who has received such a bill, we work with the contracted health care professional to educate him/her on the terms of the contract. We also require that the health care professional stop billing the customer. Our customer service representatives are available by phone 24 hours a day, seven days a week to assist our customers with any questions about a claim or bill they have received. We also work with our health care professional partners to make the claim payment process as efficient and accurate as possible.
Health Net of CA: Health Net’s HMO contracts have a hold-harmless clause that prohibits medical groups from billing or collecting from members, except for standard co-payments and non-covered services. In the event a provider balance bills a member, Health Net removes the member from the situation and resolves the matter directly with the provider.
Kaiser Permanente: As a precipitated group practice HMO, we do not bill members for individual services. Kaiser Foundation Health Plan (KFHP) contracts with The Permanente Medical Group (TPMG) in Northern California and the Southern California Permanente Medical Group (SCPMG) to provide comprehensive medical services exclusively to KFHP members. Our providers are reimbursed at negotiated capitation rates so no disputes between the providers and the health plan would put members at financial or credit risk.
34. Do you have a nurse or RN on call 24 hours for questions at the plan level? At the PMG/IPA level?
Aetna: Yes, the Informed Health nurse-line is available to members. Network doctors are required to be available 24 hours a day.
Blue Shield of California: Yes, as part of Blue Shield’s NurseHelp 24/7 program, members can get around-the-clock online and telephone access to a registered nurse for confidential advice and information about minor illnesses and injuries, chronic conditions, fitness, nutrition, and health related topics.
Cigna: At the plan level, Cigna offers a 24-hour health information line staffed with nurses.
Health Net of CA: Health Net’s Nurse 24 line offers support for both members and physicians. Members can obtain support on a 24/7 basis from experienced clinicians. The clinicians are nurses licensed in the member’s state and are ready to provide support for members for health and wellness concerns, decisions, and questions. Physicians can make referrals on a 24/7 basis via Health Net’s provider portal. Physicians can also receive support, make referrals, and get information during business hours by calling 800-893-5597 and pressing option #2.
Kaiser Permanente: Yes. Members can easily reach our specially trained advice nurses by telephone 24 hours a day, seven days a week. Using approved protocols, our advice nurses perform comprehensive triage to help members assess their symptoms and determine the level of care they need, such as self-care, an appointment with their PCP, a visit to urgent care or emergency department, or a call to 911. When certain criteria are met, our advice nurses can also arrange for “telephone treatment” where members can get needed prescriptions for certain common conditions, including urinary tract infections, conjunctivitis, and sinusitis without having to make an unnecessary visit to urgent care or their doctor’s office. Our nurse advice service is fully integrated into our system of care, not a separate carved-out service. This integration gives our advice nurses instant access to information in our members’ electronic medical records, which enables them to provide more individualized assistance to our members. It also makes it easy for an advice nurse to send a message to the member’s personal physician about the call and its outcome and, when appropriate, facilitate continuity of care and the provision of any needed follow-up services.
PacifiCare: Yes, at the plan level there is a 24-hour nurse line and medical audio library. Members can listen to pre-recorded health topics or speak with a licensed registered nurse. The nurse line staff can provide general counseling and triage recommendations. At the PMG/IPA level, PCPs are contractually required to provide after hours call coverage.
35. Do you include treatment by a physician’s assistant (PA) or nurse practitioner (NP), rather than by a physician? Do you guarantee a physician exam for adults when requested by the patient?
Aetna: Yes, but physicians using PAs or NPs are required to oversee services. Members have a right to request a PCP.
Blue Shield of California: Yes, Blue Shield members can elect to be treated by the NP or PA practicing in their PCP’s office; however, the physician partners are responsible for managing treatment decisions. We also guarantee a physician exam for adults.
Cigna: Yes, when appropriate, physician’s assistants or nurse practitioners can work together with a physician. Yes, customers can request an annual physical examination.
Health Net of CA: As long as a physician’s assistant or nurse practitioner is under the physician’s guidance and providing treatments under the scope of his or her license, treatment is covered. Members have the right to have exams conducted by physicians rather than by physician assistants or nurse practitioners.
Kaiser Permanente: Yes, members have the option to request treatment by a PCP, physician’s assistant (PA), or nurse practitioner (NP) when they are available and when medically appropriate. PAs and NPs are licensed health care practitioners who work in a variety of specialties, including pediatrics, obstetrics/gynecology, cardiology, pulmonary medicine, and gastroenterology.
PacifiCare: Yes, treatments by physician’s assistant (PA) and nurse practitioner are included. However, the member has the right to request a physician examination.
36. Can doctors be terminated for over utilizing services?
Aetna: When inappropriate use of services, under/overutilization or quality issues are identified, the provider is counseled; an action plan for improvement is developed; and service activity is monitored. The provider could be terminated if performance does not improve.
Blue Shield of California: Typically, Blue Shield providers are not terminated based on utilization issues. However, regional medical directors issue quarterly HMO profile reports evaluating performance to IPAs and medical groups. These medical directors meet regularly with IPAs and medical groups to discuss quality and utilization data. Quality improvement and utilization review plans are reviewed and corrective action plans are developed as necessary. Blue Shield monitors effectiveness and provides counseling, education, and sanctions.
Cigna: Cigna has never terminated a physician’s contract for over utilizing services unless there was evidence that it was hurting the quality of care or was fraudulent.
Health Net of CA: A Health Net peer review team measures and rates adverse action material submitted by providers and various primary source agencies, including the Medical Board of California, the National Practitioner Data Bank, the Healthcare Integrity and Protection Data Bank, Medicare/Medicaid Sanctions, Office of Inspector General, opt-out Medicare reporting, and the claims history for credentialing and re-credentialing. Health Net also investigates allegations made in the community and by the media. The provider has a right to appeal the decision through a fair hearing. Health Net uses quality data in physician management and evaluation to help identify potential provider issues.
Kaiser Permanente: Our integrated health care system ensures that not only our doctors, but also our entire network functions at optimal efficiency to manage utilization by implementing best practices. Outcomes from HEDIS and internal utilization reports are available online to doctors and administrators to help them assess appropriate care and access levels, capture long-term performance trends, and identify areas of potential over utilization and underutilization. Utilization reports are also used to drive improvements in quality, access, and member services that result in improved outcomes, increased member satisfaction, and lower costs. Exceptions to best practice guidelines are identified, investigated, and corrected as needed.
PacifiCare: Yes. We have terminated a small number of contracts with participating practitioners as well as delegated providers for failing to adhere to quality standards, typically less than one percent annually. The precipitating events included behavior presenting a potential risk of imminent harm to PacifiCare members and behavior contrary to the requirements of state and federal law. Our termination procedures adhere to contractual and regulatory requirements, and include informing the provider with required appeal rights and description of the appeal process.
37. How do you determine with which providers to contract? Do providers get incentives for refusing to contract with other plans (for example, to maintain a semi-exclusive relationship with a managed care plan)?
Aetna: It is monitored based on geographic access with the necessary mix of physician specialties and hospital services. An annual study determines the availability of PCPs relative to residence of member population. Providers don’t get incentives for refusing to contract with other plans.
Blue Shield of California: Blue Shield provider contracting uses criteria based on national guidelines, which address credentialing, licensure, accreditation, affiliations, disciplinary actions, access, cost effectiveness, and quality of care. Blue Shield does not give providers incentives to limit contracting with other managed care plans.
Cigna: Contracting is based on geographic, business, and customer needs. Health care professionals must meet credentialing criteria including verification of education and license status. There are no exclusive or semi-exclusive relationships.
Health Net of CA: To ensure the quality of the Health Net network, all potential Participating Physician Groups (PPGs) are subjected to intensive reviews to ensure they meet or exceed Health Net’s guidelines in the areas of medical management, financial viability and stability, and network accessibility. No incentives are given for refusing to contract with other plans.
Kaiser Permanente: Kaiser Foundation Health Plan (KFHP) contracts exclusively with the Permanente Medical Groups in Northern and Southern California to provide comprehensive medical services to members including primary care, specialty care, laboratory, and imaging services. Our doctors do not contract with other plans. On occasion we will contract health care services from doctors, usually specialists, who are required by their contracts to provide the same high-level of medical and personal service as that from our own internal doctors.
PacifiCare: Once we determine that network expansion is necessary, we research available providers in that area. We contact prospective providers for detailed assessments on their credentialing, quality assurance, and administrative capabilities. Before contracting, we assess area needs and hold initial discussions to gauge mutual interest. If this initial assessment is satisfactory, a provider delivery systems team begins contract negotiations. The length of the process varies depending on the urgency of need for additional providers and the availability of these providers during the auditing and contracting process. The process usually takes from two to six months. We do not offer anti-competitive incentives to any physician.
38. How can a member get information about a doctor’s schooling and malpractice suits?
Aetna: Plan service professionals have access to the plan’s national provider database, which generally includes the medical school of graduation; also members can view DocFind, our online provider directory at www.aetna.com. Malpractice information is not available.
Blue Shield of California: Members can access information about a provider’s education on our award-winning website, www.blueshieldca.com. To get information about malpractice suits, members can contact (for a fee) the National Practitioner Databank in Washington, D.C.
Cigna: Customers can call our customer service department or look up the information on myCigna.com. Malpractice information is available to the public through the state medical board website. A peer review committee, staffed by Cigna-employed doctors and non-employed doctors, reviews individual physicians’ histories before credentialing and re-credentialing the physician into the Cigna network
Health Net of CA: Members may contact Health Net’s Customer Contact Center to get information about a participating physician’s schooling. Members may also access Provider Search at www.healthnet.com for physician languages, board certification information, provider-specific information, and weekly or daily provider updates. Members may contact the Medical Board of California, the American Medical Association, or the applicable specialty board for information about a doctor’s malpractice suits.
Kaiser Permanente: Each medical center maintains physician information, which members can access to verify licensure, medical school graduation, residency, and fellowship training, and board certification. Members can also find physician bios and background information at kp.org and can also contact the California Medical Association for malpractice information on any doctor.
PacifiCare: The member can call customer service for educational history, licensing information and board certification. The member can call the Medical Board of California for malpractice information.
39. What are your grievance procedures?
Aetna: Our customer service professionals can respond to most issues by phone. If the issue cannot be resolved during the call, the customer service professional researches the inquiry and then responds to the member. Our goal is to respond to all inquiries in 15 business days. Members who are not satisfied with the response can file an oral or written grievance. We will forward a written notice stating the result of the review to the member in 30 business days of receiving the grievance. The decision is final and binding unless, in 30 days, the member submits a written request of the notice of the grievance decision for a hearing by the hearing panel/grievance committee. The member’s next course of action is to request an external review. The external reviewer decides in 30 days of the request. Expedited reviews are available when a member’s physician certifies that a delay in service would jeopardize the member’s health. Once the review is complete, we abide by the decision of the external reviewer. The Complaints and Appeals Tracking System was developed to support our national grievances and appeals process.
Blue Shield of California: A member, member’s provider, an attorney, or a representative on behalf of the member, may file a grievance by:
• Calling the member services department’s toll-free number
• Writing to the member services department
• Submitting a completed Grievance Form
Expedited appeals are resolved as soon as possible to accommodate the patient’s condition and no longer than 72 hours from receipt. (Note: for further details, contact Blue Shield.)
Cigna: Customers can call our customer service department or file a written complaint appeal. The complaint is investigated and reviewed in 30 days (when appropriate) and the customer is notified of the decision. An expedited appeal can be filed when the individual or health care professional is concerned with potential loss of life or health or the ability to gain maximum function. When necessary, procedures are modified to meet or exceed applicable regulatory and accreditation guidelines.
Health Net of CA: When members complain about the quality of service provided by the plan or its participating practitioner, the grievance is documented and researched and an acknowledgement letter to the member is sent within five days. The hospital/ PPG/practitioner has seven days to respond to the grievance. The final resolution letter will be sent to the hospital/PPG/practitioner. If it takes longer than 30 days to resolve, a letter of explanation will be sent to the member. The grievance is documented when members complain about the direct provision of care or the quality of care by a participating practitioner. If the matter is urgent, it will be forwarded to a clinical specialist for immediate attention and resolution (if required, care will be provided to the member). An acknowledgement letter and medical records release form will be sent to the member within five days. The hospital/PPG/practitioner has seven days to respond to the grievance. Health Net will determine if the grievance can be resolved with the records at hand if the member does not provide out-of-plan records or if the medical record release form is not signed. If it can’t, the case is closed until all necessary information is provided. After review, a letter to the member will communicate the disposition. The final resolution letter will be sent to the hospital/PPG/practitioner. If the matter takes longer than 30 days to resolve, a letter will be sent to the member to explain the delay and provide an estimated resolution date.
Kaiser Permanente: Our members can submit complaints to the member service representative at each medical facility and through the Member Services Call Center. Complaints are acknowledged within seven calendar days and a response made within 30 days. Our goal is for a complaint or grievance to be resolved within 60 days from the date it was received. An external, independent, third party review process is available to non-Medicare members who have completed the internal grievance/appeals process.
United Healthcare: Our top priority is for members to receive the services they need. If a problem occurs we encourage members to contact our Customer Service department as their first source for resolution. This team will make every effort to find a solution to the member’s situation. If the situation requires additional action, the member may submit a formal complaint requesting an appeal or quality review. The following is a summary of our formal process for appealing a health care decision. The member must submit a grievance in writing within 180 days of the initial decision to: PacifiCare of California Appeals and Grievance Department. Additionally, members in California may file an appeal using the online grievance form available at www.pacificare.com.
40. What systems are in place for assessing participant satisfaction?
Aetna: Member satisfaction is measured yearly at the network level using CAHPS 2.0H survey. The plan administers the most recent survey required by HEDIS to assess satisfaction. We also participate in the Consumer Assessment Survey to evaluate member satisfaction with IPA and Medical Groups.
Blue Shield of California: Our Quality Management and Improvement Program is designed to comply with recognized industry requirements and standards established by the National Committee on Quality Assurance, Knox-Keene regulation, Department of Managed Healthcare, and the Center for Medicare & Medicaid Services. Our Quality Management Committee and the Board Quality Improvement Committee review and amend the program annually. We use HEDIS measures to monitor member satisfaction surveys, member inquiry analysis, disenrollment, member appeals, access to care and quality of service, and medical record audits and office site reviews.
Cigna: Cigna uses the Consumer Assessment of Healthcare Providers and Systems (CAHPS) customer satisfaction survey, which asks consumers and patients to report on and evaluate their experiences with health care. It includes measuring satisfaction with medical groups and addresses utilization management, appointment wait times, office staff, etc. We continually monitor and work to improve customer satisfaction.
Health Net of CA: Health Net offers customer support and satisfaction surveys for members, providers, employer clients, and brokers. Health Net also participates in the annual National Committee of Quality Assurance (NCQA) HEDIS – CAHPS Surveys and the Decision Power (disease management program) Satisfaction Survey. These reports are available to employer groups upon request. Additionally, Health Net conducts satisfaction surveys within our consultant and broker networks to ensure that we are meeting the needs of our clients.
Health Net’s Customer Contact Center has implemented a post-call survey for all callers (members, providers, employers, and brokers) across all lines of business (Commercial, Medicare, and Medicaid). Health Net publishes an online Medical Group Comparison Report on www.healthnet.com that allows members to compare medical groups within the HMO network. Health Net provides members with a Hospital Comparison Report on www.healthnet.com.
Kaiser Permanente: We conduct ongoing surveys to evaluate member and patient satisfaction with doctors, access to services, and quality of care. Survey feedback is disseminated throughout the organization to target areas for improvement.
United Healthcare: PacifiCare uses the NCQA CAHPS annually to assess patient satisfaction with their care. Our satisfaction results are reported in our annual HEDIS results. CAHPS is a mail survey, which fulfills a component of the NCQA accreditation process. A telephone follow-up and interview occurs among non-responders per NCQA specifications.
41. Do you participate in outcomes research? Do you provide physician performance review data to the public?
Aetna: Yes, HEDIS is available for public review through the California Cooperative HEDIS Reporting Initiative.
Blue Shield of California: Yes, Blue Shield conducts outcomes research for disease management programs and participates in broader research efforts. Blue Shield is a sponsor/participant in IHA’s Pay for Performance project. Collaborative studies may be published. For example, the California Cooperative Healthcare Reporting Initiative and California’s Office of the Patient Advocate provides public reports of medical group performance and information technology measures.
Cigna: Cigna is accredited by NCQA and participates in reporting HEDIS clinical outcome data, which is available for public review. Cigna also participates in the Integrated HealthCare Association’s Pay for Performance program. It provides data at the medical group level, which is reported to the public annually through the state’s Office of the Patient Advocate. Cigna also participates in the California HealthCare Foundation’s CHART hospital quality initiative. Through myCigna.com, the company offers an array of information to customers about the quality of health care professionals and facilities.
Health Net of CA: Medical groups are rated on wide-ranging, quality-of-service and quality-of-care measurements. Health Net publishes an online Medical Group Comparison Report on www.healthnet.com that allows members to compare medical groups within the HMO network. Health Net also provides members with a Hospital Comparison Report on www.healthnet.com. (Please check with Health Net for the full response.)
Kaiser Permanente: The most recent developments in medical outcomes research are incorporated into our evidence-based Clinical Practice Guideline program, assessed by our New Technologies Committee, and incorporated into our extensive library system with online capabilities. In addition, our clinicians are involved in a broad scope of clinical, epidemiological, and health services research projects. We earned ratings of “Excellent” in the latest review by the National Committee for Quality Assurance and routinely earn high scores in outcomes based surveys, such as HEDIS, Leapfrog, and METEOR, which measure our member satisfaction.
United Healthcare: Yes. Outcome results are incorporated into our provider group profile, which compares each provider group with network averages. We release these performance results to the public through our quality index profiles. The reports look at clinical, service and administrative quality measures. PacifiCare motivates provider compliance by intervening aggressively when deficiencies are found and by sharing best practices when excellence is identified.
42. Do you notify members when their PCP is no longer a member of the plan? How?
Aetna: Yes, members are notified by letter. They are apprised of transition of care issues and instructed on how to select a new PCP.
Blue Shield of California: Yes, Blue Shield provides written member communication of any network changes 60 days before the effective date of the change, as per Department of Managed Healthcare regulations.
Cigna: If a PCP is no longer a network physician in our plan, customers are notified by mail about 60 days before the effective date of the change and are encouraged to choose a new PCP.
Health Net of CA: Health Net Participating Physician Groups and individually contracted physicians are required, by contract, to notify us of any changes to the provider network including new physicians joining the PPG, address and telephone number changes, and physician terminations. Health Net notifies members when their PCP leaves the network or becomes affiliated with a different contracting PPG. Members can follow their PCP to a new contracting PPG. Members can choose a new PCP within the network or remain with their PPG if their PCP is no longer available in our network. When possible, members will receive a written notice within 30 to 60 days of the provider’s decision to leave the network. Provider listings are available at www.healthnet.com and are updated daily.
Kaiser Permanente: Yes, each medical center has developed general protocols to facilitate the transition of care to another doctor. Members assigned to a PCP are provided notice of the PCP’s departure 60 days in advance when possible. Members who are scheduled to see the physician for outpatient care are contacted to reschedule with another plan doctor if prior notice to a member is not able to be provided due to timing of the physician’s departure.
United Healthcare: Yes, PacifiCare sends a notification letter to all affected members 30 days prior to the termination date of a physician or medical group. The member selects a new PCP or medical group. If the member does not select a PCP or medical group within 30 days, we automatically assign a PCP or medical group that is geographically closest to their residence. If the member is unhappy with the assigned provider, he or she may request a change at any time by calling customer service.
43. What action is the plan or the IPA/MG taking to have online eligibility, administrative changes, referrals, etc?
Aetna: We participate in the Work Group for Electronic Data Inter-change, the Computerized Patient Record Institute, and the American National Standards Institute. A monthly eligibility file is provided to IPAs and Medical Groups.
Blue Shield of California: Our website has a password-protected section with personalized member health plan account information. Members can view detailed benefit information and find customer service phone numbers and addresses. Via e-mail, they can reach customer service, submit changes to account information, request new member ID cards, download claim forms, and request a new personal physician. Blue Shield can offer online enrollment to all our employer groups through our partnership with leading online vendors. This partnership gives benefit administrators direct access to the eligibility system as set up by the vendor allowing for functions such as employee eligibility tracking, plan enrollment, open enrollment, and life event enrollment transactions. Additionally, the use of an outside vendor allows for incorporation of benefit design from more than one carrier, providing employer groups with a single online enrollment service
Cigna: Cigna has enhanced our website for health care professionals, offering easy access to online eligibility, detailed benefit information, claims tracking, and a new claim coding disclosure tool, which offers an immediate response to inquiries. For customers, myCigna.com offers online eligibility tools, claims support, and other tools that allow people to select or change their PCP, get a copy of their ID card, and get personalized medical information and quality data about health care professionals. In addition, CignaAccess.com provides a single point of access to online tools and services to help make benefits administration easier. CignaAccess.com is a resource for employers in employee support, benefits administration, and security administration.
Health Net of CA: At www.healthnet.com, providers, members, employers, and brokers can perform wide-ranging administrative functions, including eligibility verification. Health Net has online bill payment available through its web-based employer portal. Employers can verify employee eligibility and benefit information, manage enrollment and billing transactions, and print and pay bills online. For brokers, Health Net’s broker site provides online applications, product and rate information, provider directories, email access, and more. Providers can view member eligibility, copays, medical policies, claim status, authorization status, and more. Members can access secure information about their coverage, correspond with Member Services, order ID cards and forms, file grievances, change addresses, check eligibility/benefits, change PCPs/ PPGs, view a pharmacy drug list, search for providers, look up information for their specific needs, get pharmacy refills, and more. Members can also connect to their www.healthnet.com online account via Health Net Mobile, which is available for iOS and Android platforms, as well as a mobile-based version of the application.
Kaiser Permanente: Eligibility files are processed by our extensive online system maintained by our California Service Center in San Diego. Account representatives update membership online via electronic media files from purchasers. Nightly bulk transmissions from all claims and membership systems supply membership eligibility information to other clinical systems as needed.
United Healthcare: PacifiCare providers can check eligibility and claim status; print common forms; and view the specialty referral list at www.pacificare.com. We offer a paper and electronic referral process. In California, providers can access iExchange via the Web for electronic preauthorization requests and hospital admission notifications. The process varies for networks that are delegated and managed by contracted providers. Some providers have electronic referral systems in their own specialist network and others use paper submission. We do not track electronic referrals for these providers since they track these statistics internally.
44. How has your plan changed from last year?
Aetna: Our CA HMO plan now reflects all PPACA/HCR requirements.
Blue Shield of California: Blue Shield’s mission of ensuring quality, affordable care for all Californians has driven us to the forefront of the industry in developing and implementing value-based programs that improve cost and healthcare quality. Building upon the success of our innovative Accountable Care Organizations (ACO) in Sacramento, we have developed 7 additional ACOs throughout the state (now covering more than 140,000 members) and continue to expand the program. Additionally, in line with our mission and our early advocacy of health reform, Blue Shield is proud to announce that we have been approved as a participant in Covered California and are preparing for its implementation.
Cigna: As provisions of the Affordable Care Act go into effect for non-grandfathered plans, we make changes to be in compliance with the new law. More information is available on our “Informed on Reform” website on Cigna.com, including FAQs for brokers, employers and customers.
In addition, Cigna has been very active and a leader nationally since 2008 in working with health care professionals to establish collaborative accountable care programs that seek to expand patient access to health care and improve care coordination to achieve better health, affordability and experience. We have arrangements that are showing very positive results. We currently have four of these programs in California.
Including our California programs, Cigna has 86 collaborative accountable care initiatives in 27 states, encompassing more than 880,000 commercial customers and more than 35,000 doctors, including more than 16,000 primary care physicians and more than 19,000 specialists. Cigna launched its first collaborative accountable care program in 2008 and will reach its goal to have 100 of them in place with one million customers in 2014.
Collaborative accountable care is one component of the company’s approach to physician engagement for health improvement, which also includes the innovative Cigna-HealthSpringSM care model for Medicare customers. Today, well over one million Cigna and Cigna-HealthSpring customers benefit from more than 250 engaged physician relationships across 31 states, with more than 62,000 doctors participating, including more than 22,000 primary care physicians and more than 40,000 specialists.
Cigna is also helping transform health and health care with a growing set of digital health-management tools, including the company’s physician directory that was named by InformationWeek as one of the top 10 technology innovations of 2012. Using it, Cigna members can access quality and cost information on doctors and hospitals for more than 200 common medical procedures. Selected other initiatives include:
• Improving access via telehealth: In 2014, Cigna will offer online, telephone and email consultations through a partnership with MDLive. Members can access this service directly through MyCigna.com and Cigna’s mobile app.
• On-the-go health tools: Cigna members can find a doctor, access ID cards, manage balances, look up benefits, and research and compare drug prices – all on one integrated app.
Health Net of CA: Health Net made a decision to invest in the modernization of a new Customer Contact Center Desktop Application. The new application delivers the ultimate customer experience by providing a single integrated desktop and a consistent workflow across all lines of business. Health Net analyzes the A&G experience of its each of its PPGs, evaluates it against network benchmarks, identifies actionable trends, and educates and works collaboratively with outlier PPGs to reduce A&G along with associated denials and denial overturns. Health Net entered into an expanded partnership with Alere Health and launched a suite of integrated health and wellness programs designed to impact the primary drivers of cost: fragmented care, waste, and individual disengagement in personal health.
Kaiser Permanente: Kaiser Permanente, as of 1/1/2014, is participating in Covered California, the marketplace exchange for individual and small group purchasers.
• We made several preventive services for women available without the need for a copay, including annual well-woman exam, family planning counseling, breastfeeding support, supplies, and counseling, gestational diabetes screening, domestic violence screening and counseling, human papillomavirus (HPV) testing, sexually transmitted disease counseling, and HIV screening and counseling (certain religious groups may be exempt from covering contraceptive methods and counseling)
• Medically necessary behavioral health treatment for autism spectrum disorders (ASD, including autistic disorder, Asperger’s syndrome, and pervasive developmental disorder-not otherwise specified) are covered. We are expanding our contracted network to include qualified autism service providers, so we can offer members the newly required behavioral health treatment
United Healthcare: There are no significant changes to the general plan structure from last year; however, there is flexibility on how plans are quoted. Clients requesting customization work closely with their broker to determine the best possible options for their company.
Medical Tourism — Can It Work For You?
by Ross Pendergraft
First came the PPOs and then the HMOs. Not so long ago, we were introduced to consumer directed health plans tied to an HSA. All of these, as you are aware, are very much a part of our medical plans. There is now another option that some of us might want to use – medical tourism.
The definition of medical tourism is simple: It is when someone voluntarily receives medical, dental, or cosmetic care in another country. Basically, you choose a doctor and/or hospital in another country to have a medical procedure or surgery performed.
Medical tourism is not for everyone, nor is it expected to be. Just like it is with choosing a surgeon, choosing medical tourism will require fortitude and due diligence. How do you know if medical tourism is right for you? Let us look at some of the facts before we answer that question.
Many international hospitals have Joint Commission International (JCI) accreditation. The JCI is a non-government agency that certifies U.S. hospitals. In addition to JCI accreditation, many of them have established even higher standards of excellence through other accreditation programs.
Numerous international hospitals that don’t face the same U.S. monetary challenges have some of the most advanced technology. Also, international hospitals may offer procedures that are not covered in the U.S., such as stem-cell transplants or procedures not yet approved by the FDA. Also, international hospitals are accustomed to communicating in English
In a number of cases, you would be dealing with international physicians who completed their education and trained at some of the best schools and hospitals right here in the U.S.
Great international physicians provide superlative medical care to their patients. Most of the highly experienced physicians are English speaking
So often, we hear about how insurance carriers won’t cover a procedure or that someone is uninsured. This is where medical tourism can play a vital role in someone’s health and can even mean the difference between life and death. Listed below are some cost comparisons of procedures performed in different countries:
• U.S. $39,000
• Costa Rica $9,900
• Singapore $15,000
• U.S. $144,000
• Costa Rica $25,000
• Singapore $20,000
Heart valve replacement
• U.S. $170,000
• Costa Rica $18,000
• Singapore $13,500
• U.S. $50,000
• Cost Rica $6,500
• Singapore $12,000
• U.S. $50,000
• Cost Rica $6,500
• Singapore $12,000
As you can see from the prices above, you would have plenty of savings to cover the cost of travel and accommodations for yourself and a spouse or close friend. Obviously, it probably wouldn’t be prudent to travel half way around the world if your out-of-pocket cost were under $1,000 here in the U.S., but everyone has their own break point.
If your medical situation requires surgery and it’s not affordable in the U.S., wouldn’t it make sense to look at medical tourism, especially if your international doctor were as well qualified, if not even more qualified than your U.S. doctor? As for the hospital, many like staying at what amounts to a five-star resort hotel. Not only that, you get to stay there as long as you need to recuperate. You do not get the, “your insurance company only approved three days” notice.
If medical tourism is a possibility for you or a loved one, where do you go from here? First let me tell you that I would never try to advise you about any medical condition. That is strictly between you and your doctor. And furthermore, you should only accept the medical advice from a qualified and licensed medical doctor who is here or in another country.
You should find a U.S. doctor who is willing to work with you toward utilizing medical tourism. Preparation before the surgery and follow-up afterwards can be crucial, so you should have a U.S. doctor whom you can count on.
A new term you are going to be hearing is “medical tourism facilitator.” It will be crucial for you to work with a facilitator in seeking medical tourism. Here are just a few of things that a good facilitator will do:
• Refer you to the best international hospitals and doctors and educate you on their history, accreditations, and ratings.
• Help you weigh the cost as it pertains to location and overall quality.
• Coordinate travel to and from the host country and make all your travel arrangements.
• Arrange transportation to and from the airport to the hospital.
• Transfer your medical records to and from the international doctor and hospital.
• Arrange pre- and post-operative medical consultations.
• Coordinate care among your U.S. doctor and international doctors and hospitals.
• Arrange any needed medical support such as physical therapists, occupational therapists, personal nurses, durable medical equipment and convalescence care
• Provide a 24-hour concierge service.
• Arrange any pre and post-operative hotel accommodations when needed.
• Assist with any international related issues.
• Ensure that you receive aftercare when you return to the U.S.
• Arrange contingency insurance to cover the small risk of an adverse situation.
Insurance carriers are just beginning to analyze the values of medical tourism and how they might incorporate it into their plans. Extremely large employers (5,000+ employees) that are self-insured are already making this part of their benefit package. For example, the plan might allow the employee and/or dependent to have a surgery performed in another country, waive any deductibles/co-insurance, and pay for travel and accommodation to and from the country.
Ross Pendergraft is executive vice president, U.S.I. Insurance Services Inc. and a member of the Los Angeles Association of Health Underwriters. For more information on this growing industry, email email@example.com or visit www.medicaltourismassociation.com
401(k) – How A Turnkey Approach Creates Opportunities for Advisors
by Kevin Watt, AIF
A successful 401(k) practice presents tremendous business value. In addition to helping plan participants achieve a successful retirement, California’s financial advisors can build their client base and increase assets under management since 401(k) clients typically offer a dependable line of business.
However, many advisors are acutely aware of the stigmas attached to 401(k) plans — they’re laborious; the administrative duties are never-ending; and advisors may find themselves in the role of fiduciary to the plan, which is something few want. Some advisors find theses hurdles too overwhelming to ever grow beyond one or two plan clients, and some even overlook the lucrative space all together.
But there is an opportunity for advisors who are willing to reexamine how they have handled their 401(k) business. Turnkey 401(k) solutions are becoming more popular among advisors who seek relief from the time-consuming aspects of a 401(k) plan.
These turnkey solutions free up advisors to have more direct interaction with plan participants and increase business-building activities.
As interest in these solutions grows, it’s important to determine what type of 401(k) practice can benefit most from a turnkey solution. With high levels of specialization already in place, firms that focus on large plans typically do not achieve significant increases in efficiency or time savings from turnkey options. Advisors who focus on large and mega plans (those with more than $200 million in assets) often have entire departments for services like regulatory updates or benchmarking.
However, advisors who service smaller plans (those beginning at $5 million in assets) stand to benefit greatly from increased efficiency and time savings. These advisors wear many hats and take on many plan-related responsibilities including selecting and managing investment line-ups, benchmarking, working with plan sponsors, conducting enrollment meetings, and more. They also have to keep up with changes to ERISA law, as well as the potential for bearing fiduciary risk. An advisor could be liable for problems with the plan or errors, particularly during an audit conducted by the Dept. of Labor.
California presents unique challenges for advisors who are servicing small plans. How much a person pays in taxes partly affects how much they save, and participants count on advisors to help navigate the tax impact on retirement savings. Although many California residents enjoy high incomes, they also have appreciably higher taxes than many other Americans. California’s top marginal capital gains tax rate is 33%, which is the third highest rate in the industrialized world, according to the Tax Foundation.
Advisors work with plan participants to make sure they put enough money away to fund their dream retirements. But this one-on-one work can only occur if advisors have enough time to work directly with participants. This is a challenge for advisors who face a mountain of obligations that come with servicing these small plans. For these advisors, a turnkey 401(k) solution is an appealing option.
Key Considerations of a Turnkey Solution
Turnkey solutions streamline activities so advisors can focus on their business, but not all offerings are created equal. When evaluating the products offered by different providers, advisors must keep in mind things like fiduciary service; benchmarking and analytic offerings; and necessary administrative activities, such as enrollment meetings and regulatory filings. When considering a turnkey 401(k) solution, advisors should perform a comparative analysis on these three key components offered in most products:
• Third-Party Investment Management — Selecting and monitoring an investment line-up usually places the advisor in a fiduciary role. It’s a very time-consuming, labor-intensive activity since advisors must establish review criteria and document a regular review process. Many turnkey solutions do offer some fiduciary services for advisors who want to offload fiduciary commitment, but products may include varying fiduciary services. With some solutions, the third-party manager assumes a significant portion, if not all, of the investment fiduciary responsibility and accepts liability for investment option decisions. Other solutions may offer only the bare minimum or nothing at all. For the advisor who doesn’t want to serve as an investment option fiduciary, it is critical to have a complete understanding of the level of services that are offered before committing to a product or provider.
• Benchmarking and Analytics — Benchmarking is another necessity that can take time away from working with plan participants. A turnkey program may offer advisors benchmarking services to help ensure that their clients are being offered high-quality funds and services at a reasonable cost. Benchmarking is a value-added service that can be passed along to clients to help reinforce that the advisor has the participants’ best interests in mind.
• Administrative Support – Many advisors enjoy working with 401(k) plans because they help participants prepare for a dream retirement scenario. For advisors who service smaller plans, this enjoyable aspect is limited by the hours upon hours of time spent managing administrative and regulatory requirements. While it’s impossible for advisors to completely avoid paperwork, various turnkey solutions can make the administrative process more efficient. Most solutions offer a single point of contact for advisors to expedite questions, a simple enrollment process, or a variety of other back office activities. Streamlining the administrative and support process can provide another benefit to advisors – increased time to prospect for new clients. This one-two punch can turn a 401(k) plan from a questionable value proposition into an opportunity to increase participant interaction and grow a practice.
More Time, More Opportunities Plan advisors who can streamline these activities have more time to meet with prospective clients, work with business owners, and help participants navigate plan options – all of which can lead to increased business and referrals. Lessening the administrative burden frees up time for advisors to return to their primary purpose — helping plan participants succeed in a retirement environment that demands a personalized approach. Everyone benefits when advisors have more time to spend with their clients.
Kevin Watt, AIF and vice-president of Defined Contribution Markets for Security Benefit, has more than 20 years of experience in business development, product design, marketing and sales of 401(k) plans. In California, Security Benefit and its subsidiaries work only through local, independent advisors. Security Benefit, through its subsidiaries, partners with local TPAs that help connect providers and advisors and offers flexibility to accommodate advisors who are seeking either a commission- or fee-based compensation model. Security Benefit Corporation (Security Benefit) is an intermediate holding company. The information contained herein is not intended as and should not be construed as tax advice. For more information on this topic, call Security Benefit at 800-747-5164, Option 6.
Disability – Weathering the ACA Storm with Long-Term Disability Sales
by Alison Daily
Medical insurance has been one of the most secure benefit sales in a broker’s product portfolio, accounting for a significant portion of revenue. But the Affordable Care Act (ACA) has taken away some of these sales, challenging brokers to diversify their product portfolios and secure a new or expanded client base. Brokers can recover lost revenue by focusing on other important employee benefits — specifically, disability products. Selling long-term disability (LTD) insurance can be challenging for even veteran producers who are now ramping up focus on ancillary benefits.
Offer A Benefit Safety Net
Many brokers are finding that their clients are looking for ways to restructure costs while attracting and retaining the best employees. If LTD is on the employer-paid benefit chopping block, encourage clients to consider shifting those benefits to employees as a voluntary offering rather than nixing an important offering that can help attract and retain employees and help protect the business.
Voluntary coverage is playing a larger role in employers’ benefit offerings, but enrollment is critical to success. High enrollment increases employee productivity, decreases health care costs, and allows employers to offer employees coverage at little or no cost.
Brokers can be a resource to help clients engage their employees in learning about the safety net that LTD coverage provides. This starts by stressing to employers the importance of educating employees on the need for coverage, particularly Millennials, who may not understand this need. This lack of understanding can result in lower enrollment, which can hurt employers financially. Younger employees may feel invincible and think their chances of become disabled are low. The reality is that one in four of today’s 20-year-olds will become disabled before they retire.
Disabled employees without LTD coverage usually follow one of two paths — one is time-consuming, both are painful. The disabled employee could take a leave of absence and apply for Social Security Disability Insurance (SSDI). But the chances of receiving SSDI benefits immediately are low. In 2012, nearly 60% of Social Security recipients were 18 to 64, and 65% of initial claims were denied.
The second option is for the disabled employee to continue working through the illness or injury as long as possible. Employees whose initial SSDI is denied and who don’t have an income safety net, usually take this second option. These employees contribute to health-related lost productivity, which can cost your clients up to 6.1% of their payroll.
Meet the Millennials
To help clients educate younger employees on the benefits of voluntary LTD coverage, it’s important to understand more about this groundbreaking generation. Tech-savvy Millennials have been the first to have social media and the Internet as an everyday part of their lives. Although technology comes easy to them, they have experienced the challenges of an uninspiring economy. This group is vulnerable to the risks that disability insurance protects against. Millennials have more student loan debt and less wealth and personal income than did Generation X or Baby Boomers at the same stage of life. Two-thirds of recent bachelor’s degree recipients have an average of $27,000 in student loan debt. Only half of college graduates 20 years ago had student loan debt — an average of $15,000. This decline in income and rise in debt make it seem unlikely that Millennials will have a nest egg to help them weather income interruptions.
Connecting the Dots
Reaching Millennials requires a fresh and engaging approach to enrollment and education. Help your clients take advantage of this age group’s demand for instant access to information by developing a robust enrollment strategy to increase participation and decrease clients’ health care costs. Two types of communications initiatives can encourage enrollment and assist HR managers: online education and paperless enrollment.
Employers with young employee populations need to find new ways to engage employees about benefit needs. Tools such as the Council for Disability Awareness’ (CDA) Personal Disability Quotient and Earnable Income Quotient calculators can help clients demonstrate the need for coverage to employees and encourage enrollment.
Employees can use online modules to understand what benefits are available to them and enroll online. Investigate modules can be customized to each employer. Encouraging online enrollment can also benefit your clients’ HR departments since paperwork is streamlined. Also, employees can make beneficiary and life updates themselves.
Employers are looking for guidance from their brokers, particularly about ancillary benefits. Brokers are in a unique position to educate clients on the benefits of offering voluntary LTD coverage. As the ACA transforms the industry, producers can weather the changes by expanding their sales of disability products.
Alison Daily, second vice president of clinical and vocational services, oversees the clinical and return-to-work staff and works closely with Standard Insurance Company’s medical director, physician staff and consultants. Alison earned a Bachelor of Science degree in nursing from Oregon Health & Science University in Portland. She also holds a Bachelor of Arts in psychology and management from Sonoma State University in Rohnert Park, Calif.
Disability – The Growing Importance of Disability Insurance
by Tye Elliott
Many workers have assumed that they have disability coverage through their employer, but a growing number of companies are including disability in their cutbacks as they grapple with rising health care costs. While disability insurance has traditionally been a staple of workplace benefit packages, changes in health care could make many companies consider scaling back coverage or eliminating it altogether.
With confusion saturating the marketplace, it is easy to overlook the potential that a product like disability insurance provides brokers. Disability income insurance can become a steady and lucrative source of income for California brokers.
With employers strategizing to control costs while still offering insurance benefits that satisfy employees, the key to selling disability insurance is to focus your messages around the most important benefits for your audience.
Benefits for Employees
As employees assume more responsibility for their health care choices, they are quickly realizing the need for a secure safety net to help protect their finances. With deafening levels of noise in the marketplace about 401K fallouts, unemployment numbers, and health care costs, workers have little time to think about the ramifications of a disability, both financially and emotionally. Findings from the 2014 Aflac WorkForces Report show that many Americans underestimate their risk of experiencing a disabling illness or injury and overestimate the resources available to them in such an eventuality. In 2003, 2.6 million Americans applied for disability from the Social Security Administration; fewer than 1 million received government assistance.
Further, the long-term effect that having inadequate coverage has on workers’ nest eggs rarely enters the decision-making process for many workers. Brokers can offer a full education of what disability insurance can truly protect. Brokers should remind workers that loss of income makes it difficult to build retirement savings. Without enough income, workers may be forced to withdraw from retirement accounts to pay for current expenses.
Even beyond income protection, concerns over whether their employer-sponsored insurance will be reduced spurs questions that many people have never given much thought to in the past: How will they manage rising health care costs? How will they afford to pay more for less coverage? And what if an accident happens? What if they can no longer work? How will they foot the bill for the many costs not covered by major medical insurance? They are stressed out because they simply won’t have the extra cash to pay for emergencies.
These concerns open the door to conversations about how disability insurance pays cash benefits for out-of-pocket medical expenses and covers costs that major medical insurance won’t that could result in unexpected debt. Also, with a guaranteed-issue option, which doesn’t require a complete medical questionnaire, people will seriously consider the need for disability insurance – many for the first time.
With consumers more concerned than ever about their ability to pay for health care, disability insurance provides peace of mind if unforeseen tragedies ever occur.
Benefits for Employers
Employers can also benefit from offering disability insurance. Providing a full benefit package can be critical to attracting and retaining the most sought-after talent.
According to the Aflac WorkForces Report, employees are 38% more likely to be satisfied with their benefit package if enrolled in voluntary insurance benefits, compared to workers who aren’t enrolled. They are also 37% more likely to say their benefit package meets the needs of their family extremely or very well if enrolled in voluntary insurance benefits, compared to workers not enrolled in voluntary plans. On the other side of the coin, 55% of workers are somewhat likely to look for another job if their employers stop offering comprehensive benefits.
The statistics show that a full benefits package is one of the key elements that employees consider when deciding to stay with or move to another employer.
Some employers believe that offering disability insurance is too expensive for the business, a common misconception. In fact, disability insurance policies can be offered with little or no direct effect on a company’s bottom line. In addition, brokers can help customize the policies to fit a particular employer’s needs — be it a global corporation or small business.
Will employers realize the benefits and take them seriously? Seven in 10 employers that offer voluntary disability have a stronger commitment to improving employee health while 71% have a stronger commitment to work with health care providers and suppliers to improve health care delivery and quality, according to a survey of midsize and large companies by Towers Watson.
Armed with this knowledge, brokers have the opportunity to demonstrate the benefits of offering disability insurance.
Positive Change for Brokers
The future of the health care industry is tough to predict, but it does not have to be hard to prepare for. The bottom line is that many changes in the health care landscape and the economy have opened people’s eyes to the value of disability insurance. Americans are recognizing the financial vulnerability that comes from being under protected and underinsured. Neglecting to secure disability insurance is a prime example of how saving a few dollars in the short term can cost thousands in the long term. This same theory applies to today’s employers. Short-term cost savings from disability cutbacks can be eradicated quickly as a result of long-term retention and recruitment challenges.
Americans are rebuilding their portfolios and rethinking what investments are necessary. Meanwhile companies are implementing new strategies for their benefit programs. Brokers can communicate the value of voluntary disability insurance as a way for workers to help ensure financial protection and for businesses to maintain a reputation as an employer of choice. By revisiting the products they will promote moving forward, brokers will find the health care insurance industry climate isn’t cooling off, but rather heating up, presenting untapped potential on the horizon.
Tye Elliott, a 20-year insurance industry veteran, is Aflac’s Vice President of Core Broker Sales. He is responsible for managing and implementing strategic sales initiatives for the Core broker sales division across the United States.
Visit aflac.com/brokers, call 888-861-0251 or send an email to firstname.lastname@example.org to learn more. This article is for informational purposes only and is not intended to be a solicitation.
Worksite Wingmen for Brokers – High Flying Tactics from our “View from the Top” Voluntary Benefit Aces
by Leila Morris
Nearly all voluntary insurance products have become more popular over the past three years, according to a recent LIMRA study. In fact, 400,000 businesses are considering adding a new voluntary plan and another 120,000 are very much interested. Executives in who contributed to this year’s view from the top report are finding a strong demand for supplemental health voluntary benefits like hospital indemnity, critical illness, and accident insurance, which help lessen the financial impact of out-of-pocket medical costs. Hearing and vision benefits have also become more popular in today’s multi-generational workforce. Below, executives give their take on this dynamic market.
1. What is a compelling argument for employees to have extra money taken out of their paychecks for voluntary benefits when they are cutting back on all kinds of small expenditures in a tough economy?
Karen Gustin, LLIF, Ameritas, senior vice president, Group Field Sales, National Accounts & Broker Blocks: When times are good, it’s easy to justify getting what we want when we want it. During tough economic times, much deeper evaluations of needs versus wants must take place. This may be something new in people’s lives. Small expenditures don’t always equate to small health needs. The descriptor “ancillary” in ancillary benefits may be appropriate when comparing to medical insurance, but ancillary benefits are very important to people’s overall health. The long-term effect resulting from de-escalating the importance of dental, vision and other types of ancillary benefits may result in major medical issues down the road. Maintaining your health and the health of your family should always be priority number one.
Chris Hill, CEO of Spotlite: Voluntary benefits provide the additional insurance that many employees want and need in today’s benefit environment. A relatively small contribution to one or more voluntary insurance plans can help employees fight off the potential of financial ruin in the event of an unforeseen medical illness or injury. A 2012 FINRA study showed that nearly 40% of Americans said it is unlikely they would be able to come up with $2,000 if an unexpected need arose. When you couple this with average annual deductibles of $1,135 in 2013, it is easy to see why some employees need these additional coverages. Supplemental health insurance products, such as critical illness, accident and hospital indemnity provide cash payments in the event of specific occurrences. These payments can be used to cover anything from deductibles to copays, to other personal expenses.
Bill Deehan, senior vice president, Sales Colonial Life & Accident Insurance Company: Although the economy is slowly improving, many of America’s workers are cutting back just to pay their everyday bills and expenses. Most are still unable to set aside much, if any, money into savings to fall back on in case of an unexpected event, such as an illness or injury. Voluntary benefits offered at the worksite provide significant financial protection, and since premiums are typically deducted from an employee’s paycheck, often on a pretax basis, they’re very affordable. Many types of voluntary coverage can be purchased for as little as 1.5 hours of an employee’s pay. Unlike major medical insurance benefits, voluntary benefits are paid directly to policyholders so they can use the money where it’s most needed — whether it’s for out-of-pocket medical costs or to make a car payment or pay the mortgage. It’s also obvious that America’s workers are seeing the value in voluntary benefits. The number of customers who are keeping their coverage for multiple years is at an all-time high. This tells me that many employees see greater risk in not having financial protection in such a tough economy, and they’re willing to have a few dollars deducted from their paychecks to get financial protection.
Steve L. Adams, CEO of Navera: The tough economy is perhaps the best argument for adding voluntary benefits. In a healthy economy — where jobs are more plentiful and income is increasing (even if only gradually) — employees may have emergency funds or nest eggs to draw upon for additional medical expenses. In a tough economy, emergency funds and nest eggs often have been exhausted and more people are living paycheck to paycheck. The exposure to uncovered medical expenses is even greater and the risk of bankruptcy due to medical expenses even higher. Offering voluntary benefits can be the most cost-efficient and thoughtful way to have a portfolio of benefits that provide more complete coverage and to fill the gaps in a medical plan, regardless of plan type. Also, with an increase in HDHPs, it is even more important to take a portfolio approach to healthcare management.
Patrick McClelland, oversees VSP’s Commercial Account Division: The great thing about voluntary benefits is that they are low cost and paid for with pre-tax dollars. Plus, with 80% of the population needing some form of vision correction, vision benefits are a tremendous value with significant cost savings.
Tom O’Keefe is a voluntary benefits regional practice leader for Unum: I firmly believe that it is more important for employees to have solid financial protection in a challenging economy. Forty-four percent of Americans live paycheck to paycheck. One trip to the hospital for an accident or something much more serious like cancer, a heart attack, or a stroke can send them underwater financially. Even with a good medical plan, many employees cannot afford a medical event that will affect their pocket books. Premiums for voluntary benefits are very affordable and given the potential risks, a sound investment.
Shaun Walti, regional director, California Sales Allstate Benefits: With the direction the economy has gone over the last several years, we all know how tight our belts have gotten (some more than others), but imagine how tough it is to pay your bills if your paycheck stops coming in. Unfortunately, that’s not the only thing that can happen should you be struck with an unforeseen injury or illness. Along with your monthly bills, additional costs can begin adding up if you need medical treatment or even need to be hospitalized. For as little as what it cost for a caffeinated treat at your favorite coffee house each week, you can begin to protect you and your family from some significant financial woes. If you find that you do need to cut back on some of those small expenditures, cut down on the daily coffee or maybe something else of similar value, but don’t cut out protections for you and your family.
Dan Lebish, executive vice president, Aflac Group Insurance: This is a great question, and one that all of us in the industry have been concerned about, particularly around 2009, when there were so many unanswered questions surrounding the viability and the affordability of these products. Brokers tend to see a very high adoption rate of these products when properly positioned into the overall benefits strategy. Compared to those without voluntary insurance benefits, 60% more workers with voluntary insurance benefits agree they are prepared to pay out-of-pocket expenses related to a serious accident or injury, according to the 2014 Aflac WorkForces Report. This seems to suggest that, even in tightest of family budgets, these products hold an important place in the financial security for much of the U.S. workforce.
2. Considering that brokers generally make less commission on voluntary benefits, how can they offer these benefits to clients in an efficient way that provides a good return-on-investment for the broker’s efforts?
Steve L. Adams, Navera: Brokers can implement a multi-channel communications strategy that includes more effective, but lower cost alternatives for employee engagement, education and decision support.
There are low-cost, low-touch alternatives such as brochures and FAQs (which do not work well for some employees) and high-cost, high touch channels, such as enrollment firms and call center specialists, which are very expensive. These can be supplemented with self-service engagement, education, and decision support software, which can be offered at a fraction of the cost of channels employing human assistants. High-touch, interactive engagement software provides personalized support 24/7 and is often the preferred user experience for many employees. With this communication alternative, brokers will enjoy a more cost-effective way to engage employees and to drive well-informed decisions. Well-informed decisions routinely lead to an increase in participation rates for voluntary products and, as a result, higher commissions. The bottom line is that a multi-channel communication strategy that includes high-touch, online support drives efficiencies and produces higher commissions.
Dan Lebish, Aflac Group Insurance: Until recently, there seemed to be two distinct camps when it came to consultants and the implementation of voluntary insurance. There were the consultants who reacted to voluntary insurance as their clients asked about them. And then there were those who had an established strategy to implement voluntary plans. Meaning, as a rule, they would present voluntary plans as part of their proposed benefits strategies, usually during pre-renewal planning sessions. Today’s successful brokers have come to realize the importance of taking a holistic approach in offering core products as well as voluntary plans. Voluntary benefit options can be an important and predictable source of revenue within their practice.
Shaun Walti, Allstate Benefits: The important thing is to work with a carrier partner you trust. Some carriers have good packaged solutions where the broker does minimal heavy lifting or none at all with regard to program implementation, enrollment, and on-going service. There are different commission arrangements available. I have seen the broker net first year commissions anywhere from 12% up to 45% on annualized premium enrolled. Brokers can avoid sharing commissions if they or their teams do all the work themselves. While some carriers require agent-assisted enrollment with some if not all of their products, other carriers have additional product lines that can be enrolled by way of group meetings via paper enrollment forms just as the group already enrolls their other coverages such as Medical, Dental, Vision, etc. If the group has a benefit administration platform, some products can be enrolled here via employee self-service. One-on-one enrollment (with worksite agents and enrollers) continues to yield higher participation and premiums versus group meetings or self-service. That said, as a broker, I would ask myself, do I want to do all the work and get paid 70% commission on 10% to 15% participation, or would I rather do less work and make 35% on 30% to 40% participation? My answer depends on how much I trust my carrier partners to do a good job and how confident I am in taking on the additional responsibilities that come with implementing a voluntary program.
Chris Hill, Spotlite: Offering voluntary benefits can be a great way for brokers to earn additional revenue while giving clients a cost-effective way to expand their benefit offering. But in order to realize a positive ROI on voluntary benefits, brokers must be careful to avoid many common pitfalls. Voluntary benefits are typically complex products that are not easily understood by employees. Without an engaging communications campaign that is tightly integrated with a simple enrollment process, brokers will go through a lot of work to offer the products with very little new revenue to show for it.
Voluntary insurance products are typically filed with each individual state, which results in a significant number of variations in the rates, rules, riders, etc. for each product. Most benefit administration systems are unable to handle these variations, which will have an adverse impact on the employee enrollment experience and the employerís administrative experience.
Tom O’Keefe, Unum: Actually, voluntary benefit’s commissions can be highly attractive. Generally speaking, that revenue does not exist now and would be in addition to the broker’s group commission. More importantly 77% of employers with 10 or more employees are offering at least one voluntary benefit. If you aren’t offering voluntary benefits to your clients’ chances are that another broker is.
Bill Deehan, Colonial Life: The most important aspect of a solid return on investment when offering voluntary benefits is to ensure that there are strong one-to-one enrollment conditions. Voluntary benefits aren’t as well known by employees as are other products, such as health insurance. The benefit of having an experienced and trained benefits counselor communicate the need for a critical illness, cancer or accident policy goes a long way in educating employees about their financial protection. We’ve been in this industry for 75 years and the typical self-enroll voluntary participation is in the single digits. The main reason for this low participation is again that the average employee doesn’t understand these types of benefits. These products are needed in the marketplace and without a solid enrollment strategy the results won’t meet the broker’s expectations. Partnering with a trustworthy carrier that has the experience, infrastructure and capabilities to handle all the work and overhead will help ensure a quality ROI. We know this type of partnership requires a considerable amount of trust, and we make it a priority for our brokers to always maintain control of their client relationships. We simply want to serve as an extension of their team. When a broker selects the right partner, the financial risk is virtually eliminated.
Patrick McClelland, VSP: It all comes down to offering solutions that best meet the client’s needs. Most clients, particularly those that are self-funded, would see a noticeable cost savings by offering a vision benefit. At the same time, the great thing about vision care is that employers can offer it with little to no company cost. The group rates that a company would get, even if employees pay the full premium, still offer a tremendous value for employees.
Karen Gustin, LLIF, Ameritas: Voluntary benefits are where the market is going. We make sure that our brokers earn the same commission levels on voluntary business as on employer-paid. We promote all levels of employer contribution and we know that brokers must have a voluntary option to stay in the game. To help them on their return-on-investment, many electronic interfaces can be put in place to reduce costly employee enrollments and communications. Another key to increasing ROI is greater numbers of participants in the programs. When working with an ancillary expert, brokers gain the expertise needed for the most appropriate plan designs and messaging necessary to enroll the maximum number of insureds possible.
3. How can you tell whether a particular voluntary benefit product will provide real value to your clients?
Tom O’Keefe, Unum: I think about the employees first because if the employees like and purchase the benefits, there is immediate direct value to the employer, by validating their decision to offer voluntary benefits. Voluntary products are a needed complement to the employer’s core benefit offering to their employees. These benefits also offer the flexibility for the employees to port their coverage if they leave employment. The key to success is sitting down with the client to discuss what worksite benefits fit best with their employee population.
Chris Hill, Spotlite: The value of a voluntary product is truly seen when it is put into action or utilized. In the case of high deductible health plans, it makes more sense to have voluntary benefit products alongside to balance potential costs down the road, but the real value is felt when the insured or someone in their family is diagnosed with a medical condition or injury, and a large medical bill arrives for them to pay.
Patrick McClelland, VSP: It’s important to choose benefits that can provide a return on investment. A recent study by the HCMS Group found that companies with a stand-alone vision plan saw a 145% return through reduced healthcare costs, avoided productivity losses, and lower turnover rates.
Karen Gustin, LLIF, Ameritas: In order to provide real value to their clients, brokers must fully understand the group’s needs. Experienced brokers can quickly ascertain which benefits make sense for an employer group. Experienced carriers also understand these needs. When producers work with ancillary experts, we can help with understanding employer industry trends and needs. We can then tailor the offerings, simplify the process and assist the HR department in its ultimate goal of attracting and retaining high-quality employees.
Dan Lebish, Aflac Group Insurance: Over the years, I’ve had many brokers and consultants express frustration over using the dartboard approach to product selection. Even greater numbers of brokers are frustrated when they acquire an account that has not implemented a benefit strategy in their product offering. For the most part, product selection has become much easier these days, in that the holes to plug in the benefits plan designs have become easy to spot. In short, taking a holistic, consultative approach can help brokers prepare for the next phase of the benefits season.
Shaun Walti, Allstate Benefits: For me, the idea is not to throw everything in and see what sticks. Instead, it is to place the products to fill apparent needs. With every case, I am interested in understanding what type of medical out-of-pocket exposures exist, the average age and income, as well as percentages of age groups and income ranges. I also want to know if there is ample life insurance or disability coverage in place. From there, I will offer product options and plan designs and price-points that appear to fit best. For example, it makes no sense to offer critical illness as opposed to accident insurance to a group whose average age is 28, nor is it a good plan to load that coverage with a bunch of extra benefits and riders (loading the rates) when the average salary of the group is $25,000.
Steve L. Adams, Navera: The best way to tell if a particular voluntary benefit will provide real value to a client is to capture the profile of an employee and match that profile to the features of the voluntary product that’s being offered. If the employee purchases the voluntary product based on an understanding of the product’s value, you know you’ve provided real value to the employee and the employer.
To do this matching of employee profile to a specific product, you can use simple queries and employee responses in decision support software. If the employee understands why the voluntary benefit is relevant to their circumstances, the result is an informed buying decision. The buying experience that leads to a well-informed decision results in higher product participation and increases the employee’s satisfaction with the enrollment process.
If employees are happier with their benefits and the enrollment process itself, they are more likely to see the value of their benefit program. You know that you’ve created value for the employer when you have driven higher employee satisfaction and, by extension, employee retention and you’ve offloaded communications costs and enabled HR to allocate precious time to other strategic initiatives.
4. Are there certain types of voluntary benefits that go well with different types of employer groups, such as blue collar vs. white collar?
Patrick McClelland, VSP: About 80% of the population needs vision correction, regardless of the type of employer group. However, plan designs should be tailored to the needs of the employer group. For example, a manufacturing company may want to provide safety eyewear benefits while a company with an office environment may want to provide coverage for computer lenses. The important thing is to select a benefits partner that can provide these customized solutions.
Dan Lebish, Aflac Group Insurance: Critical illness, accident, and short-term disability plans tend to be appealing among blue-collar jobs. And our critical illness, accident, and hospital indemnity plans are in great demand among white and gray-collar employer groups.
Chris Hill, Spotlite: There is definitely a correlation between the type of voluntary benefit and the employee group that utilizes each benefit most, but the need for voluntary benefits in both groups is undeniable. Today, voluntary benefits are needed by all in order to balance high deductible medical plans.
Bill Deehan, Colonial Life: We don’t find significant differences across income levels in the overarching need for financial protection, although there is some variation in coverage levels for different types of employer groups. Everyone, regardless of their income or assets, has something worth protecting. The opportunity for companies is to understand employees’ needs and help them select the right voluntary benefits and coverage levels that will help protect what’s most important in their particular situation.
Shaun Walti, Allstate Benefits: We continue to find that disability, accident, and critical illness products tend to sell more with blue collar and manufacturing types of groups, while white collar segments gravitate more towards permanent life Insurance solutions.
Steve L. Adams, Navera: The fit between voluntary benefit and employer group has less to do with blue collar versus white collar, and more to do with the individual employee’s understanding of the value of each voluntary benefit, how it fits into their benefit portfolio, and the premium cost versus the financial risk they face without it. High quality education and decision support enables employees to make informed decisions, which should result in the occupation having less influence in the decision-making process.
Karen Gustin, LLIF, Ameritas: To the extent that white-collar workers might have more discretionary income than would blue-collar workers, perhaps there is a difference in the two groups, but from a needs standpoint, all employees are looking to protect their health and financial welfare. As a result, brokers will tailor voluntary plans based on the employees’ specific needs and ability to afford the premiums.
Tom O’Keefe, Unum: It always depends on the employer, but generally all voluntary products appeal to blue-collar workers. For white-collar workers, I would lead with supplemental health (accident, critical illness, and hospital indemnity) offerings because they tend to understand the need. Many white collar workers already have sizable life insurance policies and employer-paid short term disability, so unless I learn something about an employer that makes me believe otherwise, I would not commonly offer whole life or voluntary individual short term disability insurance. Many blue-collar groups’ employer sponsored plans are not as robust, so a wide variety of worksite products are needed. The most popular are accident, critical illness, whole life, and individual short-term disability insurance.
5. Which voluntary benefits are becoming more or less popular?
Chris Hill, Spotlite: As healthcare plan deductibles rise, so does the popularity of supplemental health benefits. Lump sum benefit products help many people avoid financial uncertainty when large unexpected medical bills arrive. Voluntary benefits like critical illness, accident, and other lump sum benefit products offer financial protection and cash benefits as assistance to high deductible plans.
Tom O’Keefe, Unum: There is tremendous energy around supplemental health voluntary benefits like hospital indemnity, critical illness, and accident insurance, which help lessen the financial impact of out-of-pocket medical costs. These products complement an employer-funded health plan to help cover deductibles, co-pays and co-insurance. They feature an indemnity based lump sum benefit so employees can use the benefit as needed. Plus the wellness benefits that are often available with these types of plans can align nicely with an employer’s wellness efforts, promoting employee preventative care to improve productivity and have a positive impact on overall health care costs down the road.
Patrick McClelland, VSP: Studies show that vision care is becoming more popular. It’s one of those unique benefits that, in addition to serving a preventive mechanism for early disease detection, it includes a fashion component.
Karen Gustin, LLIF, Ameritas: Dental and vision remain at the top as highly requested benefits. Hearing benefits are an area where there seems to be a need, both from an industry and societal view. Historically, new voluntary benefits stem from areas of life where there is hesitancy in providing the benefit to the masses within a group. When taking the long view, we know that the world is becoming louder. Thanks to earphones, cell phones, lawnmowers and concerts, we are losing our ability to hear daily. Hearing insurance will be a large need in the future. Today, it is a real preventive need.
Dan Lebish, Aflac Group Insurance: According to the Aflac study, nearly all voluntary insurance products on the market have grown in popularity over the past three years. Several have doubled in popularity from 2011 to 2013. Findings from the Life Insurance and Market Research Association (LIMRA) show that nearly 750,000 of the 1.3 million private U.S. employers offer voluntary options, making them available to more than 90 million full-time workers. The LIMRA study also reveals that approximately 400,000 businesses are considering adding a new voluntary plan and another 120,000 are very much interested. Finally, 30% of employers say they are considering voluntary insurance as a replacement to employer-paid and contributory benefits within the next two years. As deductibles and out-of-pocket costs are on the rise, any voluntary plan that integrates well with major medical plans is increasing in popularity. For instance, accident, critical illness and hospital indemnity are especially helpful in adding that extra protection when certificate holders need it most.
Shaun Walti, Allstate Benefits: Over the past few years, we’ve seen accident and critical illness products become the most dynamic and fastest growing segment. These are the easiest to communicate and appear to resonate well with the rank and file. Placing the two in tandem offers a solution that appeals to both the younger and older workers. They are also a natural fit to cover major medical out-of-pocket expense gaps that have been increasing over the years. These days, since critical illness coverage can be used to cover a larger spectrum of illnesses to include heart attack, stroke, renal failure, Alzheimer’s and Parkinson’s disease, and even occupational HIV to name some, we are selling less Specified Illness types of coverages like cancer and heart & stroke.
Bill Deehan, Colonial Life: There’s a need for all types of voluntary benefits, depending on an employee’s family health history and individual situation. Life and short-term disability insurance are standard, more traditional voluntary benefits. They’ve been around a long time, and they help establish a financial foundation so America’s workers have support to protect their income and lifestyles. The more recent voluntary products, such as accident, cancer, critical illness, and hospital confinement, emerged to help fill gaps not covered by major medical insurance. With health care costs increasing, many employers are moving to plans with higher deductibles and co-pays, leaving employees with greater financial exposure. We’ve seen an increase in group voluntary products during the last few years, for several reasons. They’re typically simpler to enroll and administer, and they can sometimes be more affordable because of the group rate. Insurers can also make more underwriting concessions for group products, such as guaranteed issue, so all employees, regardless of their health condition, can take advantage of the offering. Colonial Life offers a full portfolio of group and individual voluntary products to meet the needs of any employer and their employees.
Steve L. Adams, Navera: Critical illness and accident plans are becoming more popular with the increase in HDHPs and the need to fill gaps in coverage.
6. How do you choose a carrier?
Shaun Walti, Allstate Benefits: There are many more carriers in this space today than there were even three years ago. All the more important to be selective with whom you partner. I would focus on selecting a partner that is broker-centric. Look for the carrier that emulates its distribution much like that of a group medical or life/LTD carrier. Such a partner has sales and support infrastructures geared for strong partnerships with benefits brokers and consultants. These carriers also veer away from marketing directly to employer groups and leave those efforts to the broker. With regards to operations, I would ensure that my partner has solid experience in payroll-deduction-premium-administration. Carriers with such experience will likely have the right PA systems that can properly apply premiums to each policy within each group ensuring policies will not inadvertently lapse, etc. And, of course, arguably the most important consideration, I would want a partner that has a track record of solid claims administration: How easy is it to submit a claim and how long does it take to pay that claim?
Karen Gustin, LLIF, Ameritas: Every producer needs to understand the type of relationship they are looking for with their carrier representative. It’s about knowledge and trust with the rep as well as the carrier. Selecting a carrier strictly on price alone is a dangerous proposition. You wouldn’t select your hospital or doctor on their low price, but instead on their education, experience, track record, and reputation. All carriers are not created equal. Some have customer service calls answered in foreign countries to hold down costs, and some may pay claims in months instead of days. Look for reputation, administrative support, ratings, and experience.
Tom O’Keefe, Unum: The old adage, “you get what you pay for,” really applies in voluntary benefits. Some of the products are pretty similar, but in my experience, the real differences lie in administration. Voluntary benefits require a different level of planning and implementation than do medical or traditional group benefits. Experienced carriers have the expertise and resources to make things run smoothly. Without that expertise, the train can leave the rails. With the advent of the Affordable Care Act, many carriers are entering the voluntary marketplace. It would be prudent as a broker, to do research on the extent of the carrier’s administration or service support before making a recommendation to their valued client.
Chris Hill, Spotlite: When deciding between carriers, it is important to look beyond comparing insurance plans to consider a carrier’s back office. Can the carrier bill correctly and pay claims effectively? Does it have a track record of accuracy? Quality insurance is quality insurance, but it is important to determine if going with a particular carrier will end up causing more work and headache for the employer. Select carriers have the added value of electronic enrollment, which makes the decision-making process easier for employees and assists employers by simplifying monthly processing. Be sure to fully understand what added value the carrier is able to provide in addition to quality insurance plans.
Bill Deehan, Colonial Life: There are a few key things to consider when choosing a voluntary benefits carrier:
• First, there’s experience. Look for a company with history and a proven track record of success in the voluntary benefits industry. Many new players are entering the market because they see the growth potential of voluntary benefits. However, very few of them can offer proven end-to-end benefit services.
• Next, there are products and capabilities. Seek product options that meet the diverse needs of your clients. Consider the services and strategies the carrier can provide to enhance the service you give your clients. What does the carrier offer that can help differentiate you from your competition? What can they offer you and your clients that can make a considerable positive impact on your business and your clients’ bottom line?
• Finally, there’s an ongoing quality check. Look for a carrier that measures its effectiveness and customer service, internally and through external, unbiased research. Companies that continually scrutinize themselves are the ones that continually improve. Companies that are continually improving are the ones that want to be with you for the long haul and not just for a single enrollment.
Dan Lebish, Aflac Group Insurance: Brokers seek carriers and representatives they believe can get it right and/or fix it when things go wrong. Brokers have expectations of insurance companies and their representatives, including sales support, administrative support and claims resolutions. An A+ carrier rating should be a key consideration as well. Finally, an easily recognizable brand that brokers and clients can trust is very important. This is especially true in self-service environments, where employees have much less support available to them come decision time. Here are several points to consider in helping your search and streamlining your selection process of your voluntary insurance provider:
• Three most important attributes when choosing your carrier partner: brand recognition, good reputation, and financial strength.
• The carrier offers a full range of group voluntary products with guaranteed issue.
• There is a single point of contact available to address your needs — from establishing your business to enrolling a client with or without core benefits.
• Flexible and multiple options are available to select the enrollment method that best fits your clients’ needs.
• The carrier provides value-added services and choices to meet your HR and benefit challenges from education to administrative solutions.
• The carrier processes claims quickly so employees can focus on getting well and returning to work.
7. When you are presenting voluntary products, do some types of coverages just naturally sell well together?
Tom O’Keefe, Unum: All of the supplemental health offerings complement each other well. Beyond that, for me, it is more about understanding the client, their existing benefits, and their needs. I like to look at what products other clients in that industry have offered and what employees purchased, to design a plan that will be attractive to employees.
Dan Lebish, Aflac Group Insurance: More than ever, employees can be faced with high medical expenses if they don’t have a financial plan in place. Adding voluntary insurance to workers’ benefit packages helps provide added protection and peace of mind when they need it most. In the 2014 Aflac WorkForces Report, 63% of employees said they see a growing need for voluntary plan versus previous years.
Voluntary products dovetail nicely with one another, creating a more robust safety net. Bundling products and educating clients is especially enticing to accounts that are looking to expand their benefit offerings. For example, critical illness and accident insurance plans are two of the most popular voluntary products offerings for employee benefits packages according to the 2012 SHRM Benefits Survey. Together they help address the financial challenges that can follow a covered accident or illness. An integrated voluntary benefit strategy should match clients’ and brokers’ plan-design goals.
Steve L. Adams, Navera: Voluntary products sell well together when they are presented as part of an overall benefit portfolio strategy. To do this, the broker must be in a position to engage and educate employees about gaps in their medical coverage that can be filled by voluntary products. For example, an HDHP can be supplemented by critical illness and/or accident policies. The pressing need is to educate employees to take a portfolio view of their benefits versus making independent decisions for each benefit.
Chris Hill, Spotlite: Critical Illness, accident, and hospital indemnity are great supplements to high deductible medical plans. These lump sum benefit plans offer financial protection and cash benefits that can help cover large medical bills not covered by high deductible medical plans.
Karen Gustin, LLIF, Ameritas: This is highly driven by what the producer is comfortable explaining, as well as the needs of the group. A producer should analyze the current benefit offering and look for holes in coverage or caps in programs that can be filled with a strong offering of voluntary benefits.
Bill Deehan, Colonial Life: There are some coverage types that pair well together to build employees’ safety nets. For example, the combination of life and short-term disability insurance, as a financial package, is a simple, effective way for employees to protect their income and their families’ well being. The combination of accident and critical illness insurance can serve as a health-foundation package. These products can help employees prepare for unforeseen medical expenses, particularly those not fully covered by major medical insurance.
8. How do you present voluntary benefits in a way that doesn’t overwhelm employees with confusing options?
Karen Gustin, LLIF, Ameritas: Employees must be able to relate confusing benefits to their lives and needs. Even though it’s a lot more work upfront, taking the time to tailor the communication to the actual group is critical. Communication needs to be easy to understand and straightforward. If the producer can have it reviewed by the HR department and/or a few employees for readability, it may eliminate many problems in the future and increase enrollment.
Tom O’Keefe, Unum: Good communication to employees before and during the enrollment period is number one in helping employees understand their options and make good benefits decisions.
Chris Hill, Spotlite: Self-service enrollment tools present benefit options in an educational environment that’s not intimidating and helps employees make benefit decisions easily.
Patrick McClelland, VSP: It all comes down to offering solutions that best meet the client’s needs. Most clients, particularly those that are self-funded, would see a noticeable cost savings by offering a vision benefit. At the same time, the great thing about vision care is that employers can offer it with little to no company cost — something many companies don’t realize.
Bill Deehan, Colonial Life: It’s important for employees to understand the value of the benefits their employer provides. Pre-enrollment communications, group meetings, and particularly one-to-one benefit counseling sessions are effective in helping employees fully understand their benefit options as well as where they’re covered and where they may have some financial risk.
Dan Lebish, Aflac Group Insurance: As much as we’ve tried to bring a best practices approach to this important need, we still find ourselves in a best-fit environment when it comes to communication. Meaning, this is best accomplished by asking a lot of questions, and then crafting a solution that often includes many forms of media and technology platforms.
Also, tapping the resources of a top-notch benefits communication firm has remained very popular. Helping support this trend is that more sophisticated medical plan designs are starting to appear in California. I’ve had a number of consultants convey that this trend seems to be less about rate-slope, and more about employers wishing to have their employees more engaged in making wiser healthcare choices. Thus, using an enrollment firm to communicate how the voluntary plans fit is a great way to help employees make the switch away from a more expensive, traditional PPO option.
Steve L. Adams, Navera: An animated and interactive guide can act as both an educator and consultant as employees make their benefit selections. Once employees select their benefits, those choices can be passed directly to the enrollment system to ensure a seamless experience during the enrollment process.
9. Do you see more unbundling of voluntary benefit options?
Karen Gustin, LLIF, Ameritas: The unbundling of ancillary from medical has always been the norm, and we are seeing this even more since the introduction of the Affordable Care Act. Minimum loss ratios are increasing producers’ need for ancillary benefits, and mandated community rating can be a negative to many groups. The producer should be able to select and build a voluntary product that exactly meets the needs of the employer, and is selected from the best carrier for that specific coverage.
Tom O’Keefe, Unum: It has created high visibility for certain voluntary benefits. Many clients are asking their brokers for voluntary offerings. And beyond strong client engagement, the distribution channel for voluntary has been blown wide open. In the past, worksite benefit specialists were the only ones marketing voluntary, but with heath care reform, traditional group brokers and consultants have entered the voluntary market in a big way.
10. How has health reform affected the market for voluntary benefits?
Steve L. Adams, Navera: With ACA, consumer-driven healthcare that accelerated with public exchanges was even more broadly accelerated by the introduction of defined contribution plans and private healthcare exchanges. With defined contribution plans and private exchanges, many of the traditional communication and education vehicles (group meetings, worksite agents, HR Q&A) disappeared entirely, leaving individual employees without the education and decision support they need across their entire portfolio of benefits. As a result, the ACA has driven, indirectly, a need to provide more comprehensive, more effective, and more cost-effective self-service benefit engagement, education and decision support so that employees can make well-informed decisions that meet their financial and wellness goals. In addition, limited medical plans are driving a need for products that cover the gaps in coverage left by these plans.
Bill Deehan, Colonial Life: Although most voluntary products aren’t directly affected by health care reform, it’s more important than ever for employers and employees to have help navigating the requirements, responsibilities, and options of health care reform. Many of America’s workers are taking on greater responsibility for making decisions about and paying for their health care coverage and other types of benefits. They’ll need to be more knowledgeable about what they need. With any type of health care plan, there will still be out-of-pocket costs related to coverage and treatment. Employees will still need a way to pay the bills if they’re recovering from an illness or injury. We’re also seeing more brokers enter the voluntary benefit market to diversify their offerings and supplement income they may be losing as a result of health care reform mandates. This is a great time for brokers to explore voluntary benefits.
Karen Gustin, LLIF, Ameritas: Changes in regulations are making it impossible to predict exact changes in the voluntary market. What we do know is that Americans are not going to settle for anything less than they had prior to health reform. This drive for the best will keep voluntary benefits a viable option for many years to come.
Leila Morris is senior editor of California Broker Magazine.
Prescription Drug News
HHS Touts Prescription Drug Savings
Millions of seniors and people with disabilities with Medicare continue to enjoy lower costs on prescription drugs and improved benefits in 2013 thanks to Affordable Care Act, according to a statement by the Dept. of Health and Human Services (HHS). Since the Affordable Care Act was enacted, 7.9 million seniors and people with disabilities have saved $9.9 billion on prescription drugs, or an average of $1,265 per beneficiary .
In 2013 4.3 million seniors and people with disabilities saved $3.9 billion, or an average of $911 per beneficiary. These figures are higher than in 2012, when 3.5 million beneficiaries saved $2.5 billion, for an average of $706 per beneficiary.
Use of preventive services also expanded among people with Medicare. In 2013, 37.2 million people with Medicare took advantage of at least one preventive service with no cost sharing, including 26.5 million people with traditional Medicare, and more than 4 million who took advantage of the annual wellness visit. This exceeds the comparable figure from 2012, when an estimated 34.1 million people with Medicare, including 26.1 million with traditional Medicare, received one or more preventive benefits with no out of pocket costs.
Thanks to the health care law, in 2010, anyone with a Medicare prescription drug plan who reached the prescription drug donut hole got a $250 rebate. In 2011, beneficiaries in the donut hole began receiving discounts on covered brand-name drugs and savings on generic drugs. In California, the average discount per beneficiary was $931. People with Medicare Part D who fall into the donut hole this year will receive discounts and savings of about 53 percent on the cost of brand name drugs and about 28 percent on the cost of generic drugs. These savings and Medicare coverage will gradually increase until 2020, when the donut hole will be closed. For more information, visit: http://downloads.cms.gov/files/Donut-Hole-by-State-2013.pdf.
Transitioning Specialty Meds to the Pharmacy Benefit
Transitioning specialty medications from the medical benefit to the pharmacy benefit can save payers an average of 19% across 14 classes of self- or provider-administered injectable specialty drugs, according to a CVS Caremark survey. The drugs are used to treat conditions, such as multiple sclerosis and autoimmune disorders. Moving coverage to the pharmacy benefit allows payers to implement formulary design, utilization management, and preferred or exclusive networks. Fifty-three percent of specialty medication spending occurs under the medical benefit. Specialty patients are more likely to have multiple diagnoses, see more specialists, and fill more prescriptions. They also likely have more lab tests, ER visits, and hospitalizations. All of these factors result in health care costs that are as much as 8.5% higher than costs for non-specialty patients. For more information, visit http://info.cvscaremark.com/insights2014/Singh06-Medical-Specialty-Utilization-and-Management-Opportunities.pdf.
Out-of-Pocket Costs Affect Adherence to Specialty Meds
Pharmacy plan members who face specialty drug out-of-pocket costs of less than $250 are more likely to take their medication, according to a study by Prime Therapeutics. Eleven percent of members with MS therapy had more than $1,000 in out-of-pocket costs for their first prescription. The same was true with 10% of members who were prescribed new biologic anti-inflammatory therapy. Only about two thirds had less than $100 in out-of-pocket costs. As costs rise, members are more likely to abandon their new prescriptions. Abandonment rates were significantly higher when out-of-pocket reached $250. Additionally, when out-of-pocket reached $2,000 or more, the number of members abandoning their new MS prescription was nearly 24 times higher compared to members with less than $100 in out-of-pocket costs. Similarly, the number abandoning a biologic anti-inflammatory prescription was more than 19 times higher. For more information, visit www.primetherapeutics.com.
Medicare Advantage Is Cheapest for New Medicare Enrollees
Using government data on healthcare and medication use among Medicare-aged individuals, HealthPocket compared the premium and out-of-pocket expenses for each of the three Medicare insurance options. Medicare Advantage proved to be the lowest cost option. Its annualized cost estimate was 19% less than Original Medicare Parts A & B combined with a Medicare drug plan and it was 45% less than Medigap Plan F combined with Medicare Parts A & B and a Medicare drug plan. While the Plan F option left the Medicare enrollee with no medical out-of-pocket costs, this option still had out-of-pocket costs associated with drug coverage. Additionally, the Plan F option’s lower out-of-pocket costs did not compensate for its higher overall premium expenses.
Many Medicare Advantage plans do not charge a monthly premium. These plans also include an annual limit on out-of-pocket costs. Original Medicare has no such limit on out-of-pocket costs. Changes in government funding could affect premiums and out-of-pocket costs for Medicare Advantage plans, but these changes are difficult to predict. Medicare Advantage plans have been at the center of highly politicized debates over the program since the government often spends more for medical services delivered by Medicare Advantage plans compared to the same services received in Original Medicare. To get the full report, visit HealthPocket.com.
Private Health Exchange Survey 2014
Welcome to our first annual private exchange health care survey. Private exchanges gave detailed information about their plans. We hope that this valuable information will help you better serve your health care clients.
1. How much experience does your company have in the private exchange market?
Benefitfocus: Benefitfocus, Inc. was founded in 2000 and is a leading provider of cloud-based benefits software solutions for consumers, employers, insurance carriers and brokers. We have 13 years of domain expertise in the benefits market tailoring our solutions to the complexities of this fast evolving market. Benefitfocus has served more than 20 million consumers on its platform, that consists of an integrated portfolio of products and services enabling clients to more efficiently shop, enroll, manage and exchange benefits information. With a user-friendly interface and consumer-centric design, the Benefitfocus platform provides one place for consumers to access all their benefits. Benefitfocus solutions support the administration of all types of benefits including core medical, dental and other voluntary benefits plans as well as wellness programs.
CaliforniaChoice: 18 years. CaliforniaChoice, the small group private exchange for California employers with one to 50 employees, was launched in 1996.
Mercer Marketplace: Mercer Marketplace was launched in the forth quarter of 2013, with clients going live on January 1.
2. Where is your company located?
Benefitfocus: Benefitfocus is headquartered in Charleston, S.C. with additional offices in Greenville, S.C., Tulsa, Okla and San Francisco.
CaliforniaChoice: CaliforniaChoice, the small group private exchange for California employers with one to 50 employees, is offered by CHOICE Administrators headquartered in Orange, Calif.
Mercer Marketplace: Mercer, a subsidiary of Marsh & McLennan Companies, is headquartered in New York City, with locations nationally and globally.
3. Does the exchange offer a guided shopping experience to help people choose a plan based on their circumstances, such as the doctors they use, the medications they take and what they value in a plan?
Benefitfocus: Benefitfocus provides a guided shopping experience consisting of a series of questions to identify a set of products that meet the needs of the employee. This interview approach is designed to capture details about employee preference and priorities to deliver a set of best-matched plans and benefit packages. This interview approach allows employees to focus on the plans that are best suited to their needs. In addition, employees are able to filter and sort plans based on specific attributes.
CaliforniaChoice: Yes, the CaliforniaChoice small group private exchange website helps employees look up current or prospective physicians or other healthcare providers to determine what health plans each is associated with. We also provide information about what’s covered by each plan, so employees can determine if the plan is a good fit for their healthcare needs and their budget. Our employee worksheet also aids in the decision-making process.
Mercer Marketplace: Yes, we believe personalizing the decision process for the consumer is key in driving the consumer to the plan that best meets their needs. That guided shopping experience is available online or through phone discussion with a benefits counselor.
4. Is the exchange integrated with federally facilitated marketplace and state-based exchanges?
Benefitfocus: Benefitfocus technology is designed to allow for integration with the Federally Facilitated Marketplace (FFM) and state-based exchanges. Benefitfocus has designed a dynamic, blended workflow that exchanges eligibility information directly with the FFM in real-time, offering consumers a streamlined enrollment experience. A comprehensive rules-based engine collects data from consumers to then route shoppers to the subsidy eligibility application within the FFM. Once the FFM determines an individual’s subsidy, the consumer is sent back to the insurance carrier-sponsored marketplace to apply the given subsidy and purchase qualified products.
CaliforniaChoice: No, CaliforniaChoice. is a small group private exchange.
Mercer Marketplace: Planned for this year.
5. Is the exchange easily configurable?
Benefitfocus: Benefitfocus Marketplace is easily configurable to present employees with only the benefits options for which they are eligible within an engaging enrollment workflow.
CaliforniaChoice: Yes, CaliforniaChoice offers small businesses access to six of California’s leading health plans (Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage), including multiple HMO, EPO, PPO, and HSA-compatible plans. Based on the metal tier or tiers selected by the employer, employees have the option to choose the health plan and benefit that best fit their needs. We also include value-added benefits and services in our Business Solutions Suite, which is provided at no additional cost. It includes employer benefits like a premium only plan, COBRA services, FSAs, online HR services, payroll services, employee discounts through Cal Perks, and discount Dental, Vision, and Hearing.
Mercer Marketplace: Yes, Mercer Marketplace allows employers to select the carriers, plan designs, funding, and contribution strategy they want to put in place through a configurable (i.e., no custom coding) technology platform.
6. Can it support multiple contribution methods and employees?
Benefitfocus: Offering a full-service private exchange platform, the Benefitfocus Marketplace platform supports traditional, employer-sponsored enrollment, as well as defined contribution models.
CaliforniaChoice: Yes, with CaliforniaChoice employers can choose a fixed percentage contribution toward employee coverage or a fixed dollar amount contribution toward coverage.
Mercer Marketplace: Yes, we handle a wide variety of contribution methods (including but not requiring defined contribution), which can vary by different employee classifications.
7. Does it allow for flexible employee contributions?
CaliforniaChoice: Yes, defined contribution gives each employee a fixed dollar amount or percentage to spend on healthcare, similar to a healthcare allowance. Employees use their employer’s contribution and apply it to the health plan and benefit plan they like best. They have complete flexibility if an employee wants an option that is more costly than the employer contribution, the employee simply pays the difference.
Mercer Marketplace: Yes,
8. Does it offer easy renewal processing?
Benefitfocus: The Benefitfocus platform supports renewal processing by allowing administrators to do the following:
• Configure the time frame for initiating the renewal process.
• Easily identify groups and members approaching renewal dates.
• Easily search for and identify different plans that best meet their business needs.
• Receive automatic email notifications when employers are ready for renewal processing.
• Eliminate paper reports and keep all processes in one place.
CaliforniaChoice: Absolutely, CaliforniaChoice makes renewals easy for the broker and the employer. We have bilingual renewal specialists to help brokers with groups that want to renew their coverage. We make it easy by using just one form for employers to confirm or alter their contribution amounts, and employees can switch health plans and benefit levels based on their individual needs without leaving the CaliforniaChoice program.
Mercer Marketplace: Yes.
9. Does it have a broker portal that allows authorized agents to assist prospects and customers?
Benefitfocus: Yes, Benefitfocus eEnrollment, eSales, and the Benefitfocus Marketplace enable brokers to provide administrative support for employers, employees and consumers. Brokers can facilitate the new sales and renewal sales processes on behalf of employers and consumers as well as manage the benefit enrollment and application processes throughout the year. When a broker has access to a group or consumer, the broker will be able to fully support the ongoing benefits administration for that group or consumer.
Mercer Marketplace: Not at this time.
10. Does it offer prospect/client management tools for brokers?
Benefitfocus: Brokers are provided a home page with an activity tracker that summarizes the number of prospects and groups in specific statuses in various sales workflows. Brokers can quickly select a given status to see the specific groups and begin working with those groups. In addition, from the home page, the broker can initiate key activities such as adding a new prospect or tracking all groups that are in open enrollment. When a broker accesses a specific prospect or group, the broker will also have access to to-do lists, actionable messages as well as workflow, event, and status tracking on the summary tab for the given group. This allows the broker to track exactly what actions are needed at that point in time. Tasks can include key actions necessary for the group as part of a group sales workflow and employee-level tasks that may require attention.
CaliforniaChoice: Yes, CaliforniaChoice provides a variety of broker tools, including online quotes (initial and enrollment), new hire worksheets, and the ability to schedule meetings. We also offer email notifications for terminations, late pays, and renewals, as well as 24/7 online access to group account information
Mercer Marketplace: Not at this time.
11. Does is offer predictable employer costs?
CaliforniaChoice: Yes, CaliforniaChoice is built on a defined contribution platform, so an employer can choose a fixed percentage contribution toward employee coverage or a fixed dollar amount contribution to coverage. Through defined contribution, small businesses are also able to achieve a higher level of employee retention because employees are empowered to make their own healthcare decisions, and both the employer and employee know what they’re going to pay to each month.
Mercer Marketplace: Yes, through use of a defined
12. Does it offer a broad array of plan choices?
Benefitfocus: With more than 900 established data exchange connections, the Benefitfocus Platform offers clients the ability to support more than 100 types of benefits including health, life, voluntary and financial benefits.
CaliforniaChoice: CaliforniaChoice offers dozens of plan designs (including HMO, PPO, EPO, and HSA-compatible coverage) from Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage, and there are no participation restrictions between health plans.
Mercer Marketplace: Yes, for example, Mercer Marketplace currently offers five different standard medical plans from 14 different regional and national carriers (and growing). We also offer a broad array of choices in over 20 lines of coverage (dental, vision, life, disability, and a variety of voluntary products).
13. Does it offer a single preferred carrier in each geographic area and offer plans just from that carrier?
Benefitfocus: Our platform supports all types of plan and can be configured to enforce business rules at all levels including rates, eligibility, etc
CaliforniaChoice: No, CaliforniaChoice offers dozens of HMO, EPO, PPO, and HSA-compatible plan designs (and 14 health plan networks, including full and limited networks) from Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage. We also offer a choice of a single metal tier or tiered choice, which gives employees access to the health plans and benefits available in two neighboring metal tiers.
Mercer Marketplace: No, we have significant flexibility in carrier offerings, including multi-carrier by market.
14. Does it offer plans with narrow provider networks and strong managed care?
Benefitfocus: Our platform supports all types of plan and can be configured to enforce business rules at all levels including rates, eligibility, etc
CaliforniaChoice: Yes, CaliforniaChoice offers 14 health plan networks, including full and limited networks, from Aetna, Anthem Blue Cross, Health Net, Kaiser Permanente, Sharp Health Plan, and Western Health Advantage.
Mercer Marketplace: Yes, subject to the employer’s discretion.
15. Does it offer regional rates or composite rates across the population?
Benefitfocus: Our platform supports all types of plans and can be configured to enforce business rules at all levels including rates, eligibility, etc.
CaliforniaChoice: CaliforniaChoice is a small group private exchange (for groups with one to 50 employees); rates are guaranteed and are based on group size and ZIP code.
Mercer Marketplace: Mercer Marketplace has the flexibility to support either approach, subject to consultation with each individual employer.
16. Can the exchange handle other benefit programs beyond health coverage?
Benefitfocus: Yes, third party apps are a cornerstone of the Benefitfocus system, allowing employers to enhance their traditional employee benefit offering with voluntary benefits, health and wellness programs, financial tools and additional decision support.
CaliforniaChoice: Yes, in addition to the health coverage offered by CaliforniaChoice, employers have access to premium only plans, online HR services, payroll services, COBRA billing, FSAs, Cal Perks employee discounts, and a prescription drug discount card — some available at no additional cost.
Mercer Marketplace: Yes, Mercer Marketplace offers over 20 types of products, from supplemental medical products to disability products to pet insurance and more.
17. Do you require the employer to move other benefit programs to the exchange as a condition of doing business?
Mercer Marketplace: No, retirement and other programs not on Mercer Marketplace do not need to move.
18. Does the exchange offer implementation assistance?
CaliforniaChoice: Yes, we work with brokers and their clients to make offering the CaliforniaChoice small group private exchange a positive experience including onsite enrollment assistance (with a bilingual enroller). We also offer the simplicity of one enrollment form for all coverage, one contact number for questions, one website to manage benefits, and one streamlined monthly bill for all lines of coverage.
Mercer Marketplace: Yes.
19. What kind of data and reports are provided?
Benefitfocus: HR administrators, brokers and insurance carrier representatives have access to a suite of tools to help them support employees and manage the enrollment process. Tools include tasks lists to help HR administrators and brokers manage their employee-initiated updates and a series of reports that provide visibility into an employer group’s activity and current state. Some of these reports include employee detail and change history reports, as well as valuable employer reports, such as the employee census, relationship change and participation reports.
CaliforniaChoice: CaliforniaChoice offers brokers online reports regarding commissions, sales history, and quote history.
Mercer Marketplace: Mercer Marketplace provides a comprehensive reporting suite, including employee detail reports, employee/dependent census information, benefit enrollment summaries, open enrollment participation, premium reporting, COBRA participation, HSA administration, payroll reporting, and more.
20. Is their transparency of fees?
Mercer Marketplace: Yes,
21. Does it offer a call center and/or instant chat?
Benefitfocus: The Benefitfocus HR Support Center (HRSC) provides clients with navigational and technical assistance. In addition, clients have the option to contract with Benefitfocus to support telephonic enrollment and manage administrative tasks through HRSC.
CaliforniaChoice: Yes, CaliforniaChoice understands the unique needs of small businesses, and we are committed to providing our customers and members with the assistance they need. Our customer care center has earned a 96% service level rating from our members. Our sales staff is also always here to help brokers, and we can often provide answers more quickly than calling the carriers directly.
Mercer Marketplace: Yes, we offer a telephonic call center.
22. Please provide contact information for brokers who want to find out more
CaliforniaChoice: For sales, call 800-542-4218 or email email@example.com. For public relations or partnership opportunities, call Polly Neves at 714-567-4592 or email firstname.lastname@example.org. Our website is www.calchoice.com.
Mercer Marketplace: Jim Zedella partner,
The LGBT Retirement Opportunity
by Stephen E. Terrell
By striking down certain provisions of the Defense of Marriage Act (known as DOMA), the Supreme Court not only created an opportunity for many same sex couples to realize the economic benefits of marriage, but also provided an opportunity for agents and financial planners to offer valuable and ongoing advice to the LGBT community. And while the new benefits afforded to same-sex couples are numerous, there is a still a lot that needs to be done — specifically in the area of preparing LGBT community for retirement.
An estate tax issue was actually at the heart of DOMA controversy: Edith Windsor and Thea Spyer, a same-sex couple residing in New York, were lawfully married in Canada in 2007. Spyer died in 2009, leaving her entire estate to Windsor, who tried to claim the federal estate tax exemption for surviving spouses but was prevented from doing so by Section 3 of DOMA, which stated that the term “spouse” only applied to marriages between a man and woman. The IRS denied Windsor’s claim and compelled her to pay $363,053 in estate taxes. Windsor challenged it all the way to the Supreme Court, which ruled last year that Section 3 was unconstitutional – and gay marriage changed forever. Later, Attorney General Eric Holder expanded recognition of same-sex marriages in federal legal matters, including bankruptcies, prison visits and survivor benefits.
Striking down Section 3 offers a number of tangible benefits:
Same-sex married couples will be able to inherit their spouse’s estate without tax penalties. However, gay couples should be specific in will or trust arrangements, particularly if they live in a state that does not recognize same sex marriages and even in some states that have domestic partner laws.
• Gay couples will now be able to claim spousal-related Social Security benefits. Married couples in states where marriage is legal will be entitled to spousal benefits during marriage and survivor benefits upon the death of one spouse.
• Medicare benefits equal out. Legally married same-sex seniors on Medicare are now eligible for equal benefits and joint placement in nursing homes.
• Life insurance for estate taxes may no longer be needed. Same-sex couples may not need life insurance for federal tax reasons anymore, but they may still need it for state-specific situations. Life insurance can provide financial protection for couples, as well as any children they may have. Couples that purchased life insurance specifically to counter-balance shortfalls in Social Security may no longer need it.
The LGBT Challenge
In the next 20 years, the number of LGBT adults age 65 and older is expected to double, reaching more than three million by 2030. With gay marriage comes new challenges and responsibilities in retirement.
A recent survey by Spectrum found, among other interesting statistics, that LGBT investors feel their legal and advising needs are not well understood. Only about a third believe their advisor understands the unique situations of the LGBT community, and only 21% said financial firms are doing a good job of meeting LGBT needs.
Gay men and women are living longer (due to healthy lifestyles and medical advances related to HIV and non-HIV ailments alike) and this creates new questions about aging and retirement. In a community that tends to not live on a timeline, couples now need to look at their retirement as inevitable and in a whole new light.
Agents and planners need to be knowledgeable about the unique needs of the LGBT community. As illustrated by the changes to DOMA, it’s important to stay up-to-date with the changing state and federal laws. Gay couples with children have specific concerns, and gay divorces (a bridge not yet considered by many) will bring a whole new set of challenges. Some specifics to think about:
• All states are not created equal. Because some states don’t recognize gay marriage, some state-run programs (Medicaid as a prime example) may continue to treat all LGBT applicants as individuals instead of married couples.
• Just because you are married doesn’t mean you are better prepared for retirement. Americans remain woefully ill prepared for retirement. A recent Wells Fargo study grabbed national attention, reporting that 37% of Americans don’t ever expect to retire but instead will have to work until they are too sick or pass away. Survey respondents said paying monthly bills is their highest priority, and saving for retirement is a distant second. Among other statistics, 48% are not confident they will be able to save enough for a comfortable retirement. Clearly, we are a country in retirement crisis and gay couples are not immune.
• Gay couples need to think long-term. With marriage comes the responsibility to look long term and plan for retirement with another person in the financial picture. Expenses in post-retirement, long-term healthcare costs and joint plans for nursing home care are now the responsibility of two individuals – in it for the long haul.
• Traditional savings methods may not be enough. The cold reality is that traditional retirement savings methods (401ks, IRAs and other retirement plans) have not done the job for most seniors and boomers on the verge of retirement. Gay couples must join the ranks of the “traditional” masses and start looking for other means to fund retirement. Assets, such as homes and property, and even life insurance policies can be leverage to help fund retirement. Reverse mortgages and life insurance settlements are among the non-traditional financing options which may help married gay couples retire in style.
Paying for retirement isn’t typically on the gay couple’s radar. Gays approaching their Golden Years represent a unique segment of the financial marketplace. They are part of the first wave of an openly gay generation to retire, but also one that has seen its ranks ravaged by HIV and AIDS. Many are confronting retirement on different economic and emotional terms than our straight counterparts. Educating and assisting presents a tremendous opportunity for agents and planners.
Stephen E. Terrell is Senior Vice President of Market Development and Branding of The Lifeline Program, a life settlement provider based in Atlanta, Ga. Terrell oversees all aspects of marketing including advertising, public relations and social media to educate and build a new market for financial professionals with life settlements, broadening revenue and increasing commissions. For more information, call 770-724-7300 or visit www.thelifeline.com or follow him on Twitter@LifelineProgram.