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by Leila Morris
HEALTH CARE
• ACA Not Expected to Cause a Widespread Increase in Individual Premiums
• Consumers Don’t Expect a Lot from the Exchanges
• Large U.S. Employers Expect Health Benefit Costs to Rise
• Census Bureau Offers Health Insurance Coverage Estimates
IN CALIFORNIA
• Great-West Appoints Sales Director
VISION PLAN NEWS
• ACA to Be a Boon to Vision Care Providers
• Consumers Can Win A Free Vision Plan
CLIENT RELATIONS
• What Small Businesses Value in Their Brokers
ANNUITIES
• Fixed Annuities Sales Jump
NEW PRODUCTS
• Deferred Income Annuity
HEALTH CARE
ACA Not Expected to Cause a Widespread Increase in Individual Premiums
A RAND analysis predicts that the ACA will not lead to a widespread premium increase in the individual health insurance market. However, researchers caution that the cost of policies in will vary among states and will be influenced by individual factors, such as an individual’s age, whether they smoke, and whether they qualify for federal tax credits to help cover the cost.
There is a considerable range among states in the number of people who will remain uninsured under the Affordable Care Act. For 2016, the study’s estimates range from a low of 5% in Minnesota to a high of 12% in Texas. States with larger immigrant populations, such as Texas and Florida, tend to have more uninsured people.
The number of people who buy individual policies under the Affordable Care Act will more than double. In 2016, enrollment in the individual market will rise from 4.3% of the nonelderly to 9.5% of the nonelderly. Small group premiums largely will be unchanged under the Affordable Care Act. For more information, visit www.rand.org.
Consumers Don’t Expect A Lot from the Exchanges
More than 50% of consumers surveyed by HealthPocket say that it will be a complicated process to shop for a health plan within a government exchange. Many customers will have the difficult task of verifying their financial information in order for the exchange to determine their eligibility for federal premium subsidies. Experts say that most of these consumers will have little or no experience with the individual health insurance market, yet they will have make a selection from the available options. Bruce Telkamp, CEO of HealthPocket said, “The very good news for the administration and state exchanges is that low expectations can be exceeded by a positive experience during this important introduction of the heart of Obamacare.” For more information, visit http://www.HealthPocket.com
Large U.S. Employers Expect Health Benefit Costs to Rise
Large employers expect their employee health care benefit costs to rise an average of 7% in 2014, according to a survey by the National Business Group on Health. Some employers see health insurance exchanges as a viable option for certain populations.
More companies plan to offer a consumer-directed health plan as their only health benefit option in 2014. That’s the same increase they budgeted this year and last. Helen Darling, president and CEO of the National Business Group on Health said, “Employers spent considerable time and energy this year designing health plans that comply with the various provisions of the Affordable Care Act that would have become effective next year. And while the decision to delay provisions related to the employer mandate has provided respite from some of these requirements, the pressure remains on employers to lower costs. Interestingly, many respondents indicated that a portion of their budgeted costs for 2014 was to implement changes mandated by the ACA. With the delay, it is unclear how employer costs will be affected.”
While large employers will not be eligible to participate in state health exchanges until 2017 at the earliest, employers expect that certain populations may find exchanges to be a viable option on an individual basis in 2014. Forty-one percent of employers say that COBRA plan participants might find public health exchanges to be the most cost effective option. Additionally, 26% say that some pre-65 retirees might join exchanges while 20% expect some part-time employees to do the same.
Using a private exchange is an option that some employers are considering. In the past year, there has been an increase in the number of private exchanges being launched. While some employers are considering private exchanges for active employees sometime in the future, only 3% are considering eliminating health care coverage entirely, said Darling.
Among employers surveyed, implementing a consumer-directed health plan (CDHP) is considered the most effective tactic to control rising costs, cited by 36% of respondents. In fact, 72% of employers offer at least one CDHP. This number has remained relatively steady over the past couple of years. However, the number of employers that are offering only a CDHP to employees continues to rise, with 22% planning to implement a total replacement CDHP next year, up from 19% this year.
Forty-four percent of employers have an on-site clinic in at least one location and 9% expect to build a clinic next year. Employers cover a variety of services/medications for obesity treatment. Sixty-six percent will cover surgical interventions for severe obesity in 2014. Thirty-six percent will cover FDA-approved medications and behavioral interventions for plan participants with a BMI of more than 30.
Eighty-nine percent of large employers offer a tobacco cessation program, and 77% offer phone or on-site health coaching. Fifty-five percent offer on-site weight management programs; 88% conduct health assessments; and 83% conduct biometric screenings.
Some employers are taking creative approaches to cost cutting, such as managing specialty and non-specialty pharmaceuticals, contracting directly with high quality providers, and offering wellness programs. For more information, visit www.businessgrouphealth.org.
Census Bureau Offers Health Insurance Coverage Estimates
The Census Bureau released its 2011 Small Area Health Insurance Estimates (SAHIE). The estimates show the number of people with and without health insurance for all states and each of the nation’s roughly 3,140 counties. The statistics are provided by broad age group, sex, race and Hispanic origin, and at income levels that reflect thresholds for state and federal assistance programs. The data can be used to assess annual changes in health insurance coverage from 2008 through 2011.
The release includes a 2011 highlights document that describes demographic and economic differences in health insurance status across states and counties, as well as geographic variation and time trends in health insurance status. For more information, visit www.census.gov/did/www/sahie.
IN CALIFORNIA
Great-West Appoints Sales Director
Great-West has appointed Andy Gorbenko as regional sales director for downtown Los Angeles and west Los Angeles County. Gorbenko will work with brokers, financial advisers, consultants, wire houses and third-party administrators to provide quality, cost-effective 401(k) and 403(b) products to small and mid-market businesses in the 213, 310, 323 and 424 area codes. He reports to Ken Munro, Pacific Region vice president. Before joining Great-West Financial, Gorbenko spent eight years with Transamerica Retirement Services, most recently as a wholesaler in San Diego and Arizona. Gorbenko, based in the Los Angeles area, has a bachelor’s degree in business economics from the University of California, Santa Barbara. He holds FINRA Series 6 and 63 licenses and a California life insurance license.
VISION PLAN NEWS
ACA to Be a Boon to Vision Care Providers
New eye health provisions under the Affordable Care Act (ACA) are scheduled to take effect January 1, 2014. Among other provisions, the new health care laws require that a yearly comprehensive eye exam be covered for individuals age 19 and under. “Optometrists and ophthalmologists should be prepared to employ the new laws and ensure that they are included in the various health care plans that will become available under the health insurance exchanges, even though the timetable for the implementation may have changed,” said Dr. Sandy T. Feldman of Clearview Eye & Laser Center in San Diego.
The American Optometric Association (AOA) outlines the following key vision care changes as a result of the ACA:
• Health insurance exchanges will create thousands of newly insured individuals.
• A pediatric vision care essential health benefit. All patients under 19 are entitled to a yearly eye exam, which could mean millions of newly insured patients.
• Expanding Medicaid to individuals who are 133% below the poverty line could mean a significant increase in Medicaid patients.
• Accountable care organizations and patient centered medical homes could provide savings for providers as a result of improved management of a patient’s care.
Consumers Can Win a Free Vision Plan
From now until September 30, consumers can enter the VSP Vision Care and Spry Living “See Well & Be Well” sweepstakes for a chance to win one of 10 free individual vision insurance plans for a year of coverage from VSP Direct. VSP Direct is VSP Vision Care’s individual insurance product, offering high-quality vision benefits directly to consumers. Learn more and enter the sweepstakes by visiting: www.spryliving.com/VSPDirect.
CLIENT RELATIONS
What Small Businesses Value in Their Brokers
Small businesses give the most value to agents and brokers who completely understand their business and help them assess and manage their risk. The highest-ranked insurers deliver on both of these metrics for 60% of their customers, compared to the lowest-ranked insurers at 33%, according to a study by J.D. Power.
Customer satisfaction among small business customers is 777 (on a 1,000-point scale). Satisfaction is significantly higher with agents or brokers who understands their customer’s business and provide guidance on risk (835) compared to those who do not (645).
Having the right policy offering – not price – is the primary reason small business customers choose an insurer. And the level of service is the primary reason they stay with their insurer more than two years.
Among the five factors affecting satisfaction, interaction has the highest importance at 29%, followed by policy offerings at 26%. Satisfaction with interactions is higher when customers interact with an agent or broker in person (854) compared to when customers interact via email (819). Customer satisfaction is higher among small businesses with 11 to 50 employees (790) compared to businesses with four or fewer employees (769).
Higher scores among larger businesses are influenced by agents and brokers spending more time with these key accounts. Agents and brokers interact with larger businesses more frequently, and the interactions are three times more likely to be in person outside of the agent’s office, compared to businesses with four or fewer employees (24% vs. 8%, respectively). Consultation via face-to-face interactions allows insurance agents to understand the customer’s needs, provide helpful information regarding risk and tailor insurance products to meet their needs.
Jeremy Bowler, senior director of the insurance practice at J.D. Power said, “Providing face-to-face consultation, from policy review to helping customers understand price adjustments initiated by the insurer, is crucial for customer retention and satisfaction. Those small business customers who have regular face-to-face contact with their insurance agents are more likely to understand their coverage, its value and the reason for a price adjustment should one occur. These customers are more likely to be satisfied and loyal to the insurance brand than those who don’t have regular in-person interactions.”
Bowler also noted that satisfaction is higher when insurers inform small business customers about price changes in person (823) than when they inform customers by phone (805) or email (783).
The higher the employee count, the more important the product selection becomes. Sixty-two percent of small businesses with 11 to 50 employees say having the right policy offerings is a leading reason for retaining business with their insurer, compared to 50% of businesses with fewer than five employees.
Small business owners place critical importance on having confidence that they’re properly insured, understanding coverage options, and knowing that the policy meets their needs. Among business customers who purchased their policy within the past two years, policy offerings, not price, is the most frequently cited reason for selecting their insurer.
Small business customers who are highly satisfied with their insurer are more likely to work with just one insurance provider for all their insurance needs and purchase more products. For example, highly satisfied customers average 5.4 products with their insurer, compared to 4.3 products for the least-satisfied customers.
Erie Insurance ranks highest among small business commercial insurers, with a score of 808. Erie Insurance performs particularly well in the interaction and policy offerings factors. American Family and Nationwide tie for second overall at 794 each. American Family performs particularly well in price, while Nationwide performs well in billing and payment. For more information, visit www.mhfi.com.
ANNUITIES
Fixed Annuities Sales Jump
For the first time in two years, all fixed annuity product types posted sequential sales gains in second quarter 2013, according to a study by Beacon Research. Indexed and deferred income annuities (DIAs) results hit record highs. The second quarter’s improved interest rate environment helped boost sales.
In addition to the quarter’s rising interest rates, the steepest yield curve in nearly two years enabled carriers to increase rates on fixed rate and indexed annuities. Credited rates on five-year CD-type fixed annuities rose an average of 35 basis points. DIA sales were up almost 40% from first quarter due to continued demand for retirement income, larger payouts, and new product introductions.
Total fixed annuity sales were up 14.6% in the second quarter and 0.2% from a year ago. Sales of indexed annuities increased 17% from the first quarter. Income annuity sales, which include DIAs, grew 16.9% sequentially. Sales of market-value-adjusted (MVA) annuities rose 34.9% from the prior quarter, largely due to big gains by two products. For more information, visit www.annuitymarketstudy.com.
NEW PRODUCTS
Deferred Income Annuity
Lincoln Financial Group launched a deferred income annuity (DIA). Lincoln Deferred Income Solutions offers a flexible source of future guaranteed lifetime income to bring predictability to a portion of a retirement portfolio or provide replacement income if retirement needs change. The DIA space is a rapidly emerging market. The second quarter of 2013 experienced an industry-wide sales increase of 155% compared to the same period in 2012, according to LIMRA. For more information, visit www.LincolnFinancial.com.
GUL
American General is offering individual joint and last survivor guaranteed universal life insurance. AG Secure Survivor GUL II offers highly flexible features and guarantees in a second-to-die policy. It is designed to give clients more control during uncertain economic times and provide more peace of mind for risk-averse clients. Key benefits include the following:
• Guaranteed death benefit and premiums.
• The ability to reduce the death benefit and premiums without losing guarantees.
• A surrender value rider, which allows a potential for a return of up to 100% of premiums paid.
• Guaranteed tabular cash values that provide attractive flexibility for customers
• The option to extend coverage beyond the original maturity date.
• One policy insures two people, so AG Secure Survivor GUL II is more affordable for spouses than buying two individual policies.
For more information, visit www.americangeneral.com.
Lump Sum Critical Illness Plan
Aflac enhanced its lump sum critical illness insurance policy to offer more options, such as guaranteed-issue, dependent child coverage, and an HSA-compatible policy. The new plan pays cash benefits to help employees with costs associated with an unexpected health event that might not be covered by major medical insurance. These cash benefits can be used for medical treatment, living expenses and other out-of-pocket expenses for a covered critical illness event including heart attack, stroke, paralysis, coma, major human organ transplant and end-stage renal failure. Guaranteed-issue is available for $10,000 of coverage including an optional lump sum cancer rider. An HSA-compatible (Health Savings Account) policy is available. Dependent children are covered at no additional cost. The plan offers up to $100,000 of coverage.
Easy Life Insurance Plan
Manulife Financial launched the latest in its suite of CoverMe life insurance products. The CoverMe Easy Issue Life insurance plan is simple, straightforward life insurance that can be purchased online or over the phone. The 10-year term life insurance plan offers two benefit amounts: 50,000 and 75,000. The application process is streamlined and quick: there are two health-related questions to answer when applying. For more information, visit manulife.com.
Voluntary Insurance APP
Benefitfocus and Trustmark launched the Trustmark App on BENEFITFOCUS HR INTOUCH. The cloud-based benefit solution is designed to bring simplicity and convenience to managing comprehensive benefit programs. Employers can offer voluntary benefit products to supplement core medical coverage from a single online portal. Decision support tools help employees evaluate their voluntary benefit options. For more information, visit www.trustmarksolutions.com.
Online ACA Resource Center
Infinisource launched a redesigned website that includes an Affordable Care Act (ACA) Resource Center. The website offers the latest information on workforce management, benefit administration and compliance issues facing today’s employers. For more information, visit www.infinisource.com.
Helping Businesses with Affordable Care Act Requirements
ADP is offering guidance to help small, midsized, and large businesses manage their compliance with the evolving requirements of the Affordable Care Act (ACA). ADP is offering a service that helps businesses communicate the Notice of Coverage Options, as well as functionality to support the employer “Shared Responsibility” mandate. In 2014, ADP will enhance its suite of ACA solutions designed to help businesses make critical decisions around applicability, employee eligibility, and public exchange communications. From 2015 to 2018, ADP will help companies manage requirements and communications around the employer mandate and possible penalties, automatic plan enrollment, expanded insurance exchange availability, excise tax on high-cost coverage and other critical milestones. In addition, ADP will help automate reporting with the Internal Revenue Service (IRS). In addition, ADP will continue to provide benchmarking, decision support tools, and dashboards covering ACA compliance and related activity. For more information, visit www.adp.com/health-care-reform.