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by Leila Morris
CALIFORNIA
• Covered California Sticks to Plan Cancellations
• LTC Costs Expected to Soar in California
• Leavitt Group Consolidates Offices
• Former Life Agent Scams His Own Aunt
NEW PRODUCTS
• ACA Compliance Tool
• Hybrid HRA Plan
• Preventive Screenings
• Guide to Executive Compensation
• Tool Helps Employers Save Health Care Dollars
WELLNESS PLANS
• When Corporate Wellness Programs Discriminate
• Wellness Programs Can Reduce Workers’ Comp Claims
HEALTHCARE
• Highly Rated MA Plans Come with Higher Premiums
• Health Reform Not Expected to Dampen the Need for Advisors
ANNUITIES
• Fixed-Rate Deferred Annuities Soar
CALIFORNIA
Covered California Sticks to Plan Cancellations
The Covered California board ruled that insurers will not be allowed to continue selling policies in 2014 that don’t meet the Affordable Care Act’s minimum coverage requirements. Insurance Commissioner Jones called Covered California’s decision a disservice to policyholders. Jones made the following comments:
Over a million Californians have received cancellation notices from their health insurer. On behalf of these policyholders, I am disappointed in Covered California’s action, which denies people and families the opportunity to keep their existing health insurance as President Obama promised.
Covered California rejected what President Obama and I asked for-that individual policyholders be allowed to keep their existing health insurance through all of 2014. Covered California’s decision denies Californians the same opportunity health insurers are giving to its small business customers who are being allowed to renew current policies throughout 2014. Covered California could have honored President Obama’s request, without causing damage to the implementation of the Affordable Care Act or the Exchange.
The preferred and more equitable course of action for California consumers is for Covered California’s unnecessary cancellation to be rescinded. Allowing existing policyholders to keep their health insurance for the duration of 2014 will not undermine the implementation of the ACA, but rather will give consumers more time to figure out what makes sense for their families.
Jones also stressed that allowing existing policyholders to renew for a full year will not undermine the risk pool since the ACA has robust features which mitigate the risk of health insurers having a disproportionate share of sick people in their risk pool in 2014. Additionally, it is estimated that 400,000 existing policyholders are eligible for subsidies.
Jamie Court, president of Consumer Watchdog said, “It’s outrageous that this board would acknowledge that half the Californians facing cancellations will pay more money for the same or worse health coverage, then block them from continuing their existing policies for another year. Shame on Covered California for representing the insurance companies, not the policyholders, and standing in the way of President Obama’s call for relief. Covered California showed why we need elected officials, accountable directly to the public, to oversee how much health insurance companies charge.”
In a prepared statement, the Covered California board said that extending the deadline does not benefit consumers and may create confusion about accessing affordable health care coverage through Covered California. The board said that maintaining the original deadline confirms Covered California’s commitment to transitioning Californians into plans that are compliant with the reforms of the Patient Protection and Affordable Care Act, protecting consumers from double deductibles, and stabilizing the risk pool to control costs for consumers beginning in 2014.
Additionally, Covered California is implementing these strategies to boost enrollment:
• Extending the deadline for enrollment for coverage taking effect on Jan. 1, 2014, from Dec. 15, 2013, to Dec. 23, 2013, and extending the deadline for payments due from Dec. 26, 2013, to Jan. 5, 2014.
• Establishing a telephone hotline for consumers to resolve enrollment questions at 855-857-0445.
• Sending information directly to nearly 1.13 million affected people, which provides clear options for coverage. The information will be sent from Covered California and the individual’s current insurance provider.
• Regularly collecting and reporting data showing the affects of conversion for people.
• Engaging consumers in their communities through the thousands of Certified insurance agents, certified enrollment counselors and certified educators now deployed statewide.
LTC Costs Expected to Soar in California
California’s elderly population is expected to expand 44% by 2023, and the total cost of care is projected to increase 88% in the next decade, according to a study by the Univ. of California, Berkeley. Demand for long-term care services and support is expected to grow — particularly since those approaching retirement age report poorer health than those born before them. Projected increases in demand for long-term care suggest that
California seniors will not be able to get the care they need or will face delays in getting care. To get the study, visit http://www.rureadyca.org/sites/default/files/images/economic_study_11-7-2013_for_web.pdf.
Leavitt Group Consolidates Offices
The Leavitt Group consolidated three of its Southern California agencies. The Covina office (Valley Insurance Service – Dennis P. Monahan, AAI, Co-Owner) and the employee benefits agency (Leavitt Benefits Insurance Services of Southern California – Kevin Garrett, Co-Owner) will be rolled into the Santa Ana office (Pridemark-Everest Insurance Services – Angelo Maroutsos, Co-Owner). All three agencies will operate as Leavitt Insurance Services of Southern California. The merger will not affect current accounts, and clients will continue to work with the same personnel. Phone numbers will remain the same. As one of the nation’s largest privately held insurance brokerages, the Leavitt Group offers property and casualty insurance, risk management, and employee benefits. For more information, visit www.leavitt.com.
Former Life Agent Scams His Own Aunt
Myles Seishin Hanashiro, 47, was arrested and booked at Los Angeles County Jail on four felony counts of financial elder abuse. As a licensed life insurance agent in 2005, Hanashiro sold a $100,000 life insurance policy to his 78-year-old aunt. Hanashiro cost his aunt more than $110,000 in loses from her life insurance policy. Between April 2009 and April 2010, he allegedly submitted four withdrawal requests to the life insurance company by forging his aunt’s signature. All four checks were mailed to Hanashiro’s home address. He forged his aunt’s signature, cashed two checks, and deposited the other two into his personal account. He concealed his crimes by changing the address, phone number, and contact information from the victim’s to his own contact information. The crime remained undetected until March 2012 when his aunt contacted the insurance company to find out about the status of her policy.
If convicted on all charges, Hanashiro faces up to four years in state prison, fines and victim restitution. Hanashiro is being held on a $200,000 dollar bond with a bail hold contingency requiring proof that bail funds are from legitimate sources.
Canceled Insurance? Pre-ACA Plans Still Available, Could Save You Money
According to a report by KQED Radio, some Californians whose policies have been canceled are finding relief in a surprising place: from insurance companies that aren’t offering plans on the Covered California marketplace. For more information, visit http://blogs.kqed.org/stateofhealth/2013/11/22/canceled-insurance-some-pre-aca-plans-still-available-in-california-possibly-saving-you-money.
NEW PRODUCTS
ACA Compliance Tool
ADP enhanced its TotalSource solution to help small and midsized businesses manage compliance with the Affordable Care Act (ACA). It provides individual views of employees’ ACA benefit status and hours credited to determine full-time status. Visual alerts let employers know when they may be subject to penalties for non-compliance (and the potential cost of the total penalty). With the updated dashboard, employers can assess affordability of coverage through historical data or forecast affordability based on rate of pay to ensure the premium does not exceed 9.5% of the employee’s taxable income. For more information, call 800-447-3237 or visit www.adptotalsource.com.
Hybrid HRA Plan
Core Documents rolled out a new type of Health Reimbursement Arrangement (HRA) called the “Core Hybrid HRA.” Employers can reimburse individual and exchange health insurance premiums (post-tax) as well as out-of-pocket medical and Rx expenses (post-tax). They can do this while complying with Affordable Care Act (ACA) mandates, the recent IRS Notice 2013-54, and the nearly identical DOL Technical Release 2013-03. For more information, call 888-755-3373 or visit www.CoreDocuments.com.
Preventive Screenings
Benefitfocus has added a preventive screenings summary to its “BENEFITFOCUS” software. It was developed to help employers comply with the Affordable Care Act (ACA) provision that requires employer-sponsored health plans to cover the full cost of certain preventive screenings, with no co-pay or coinsurance. Employers and insurance carriers can monitor participation, track the financial effect of preventive screenings, and design health plans that meet ACA coverage requirements. For more information, visit www.benefitfocus.com.
Guide to Executive Compensation
“The Complete Guide to Executive Compensation” includes extensive coverage of how pay plans encourage executive performance as well as important changes in venture capitalism; boards of directors’ responsibilities; shifts in stakeholder power; and laws, such as the Dodd-Frank Wall Street Reform and Consumer Protection Act and healthcare reform. For more information, call 212-588-8788 or e-mail news@temin.com.
Tool Helps Employers Save Health Care Dollars
The National Business Coalition on Health has developed ValuePort. The online tool includes a calculator to prioritize improvements in employee health and save money on care for 12 of the most prevalent health risks and chronic conditions. It also includes an analysis of the employer’s progress in adopting strategies to improve employees’ health and reduce costs. For more information, visit www.nbch.org/valueport.
WELLNESS PLANS
When Corporate Wellness Programs Discriminate
Some employers may be creating wellness plans that discriminate against those with obesity in order to improve their bottom line, according to a study presented by ObesityWeek. Dr. Adam Tsai, MD of The Obesity Society said that, while wellness programs commonly set weight goals for employees, they are often paired with employer health plans that deny coverage for evidence-based obesity treatment. Dr. Tsai said, “Employers should avoid BMI targets as the basis for any financial penalty or incentive, and instead reward employees for engaging in specific behaviors. Corporations need to encourage employees to maintain healthy eating habits, increase exercise and participate in weight management programs.” The study was conducted by Ted Kyle, RPh, MBA, of ConscienHealth, and Joe Nadglowski of the Obesity Action Coalition (OAC).
Fifty-nine percent of corporate health plans don’t cover obesity treatment, even when these employers commonly set weight, diet, and exercise goals for employees. Kyle said, “A growing number of employers figured out that carefully crafted weight or body mass index (BMI) requirements can also be an effective way of making it harder for people with obesity to enjoy the full benefits of healthcare coverage, saving short-term costs while hurting employees. Our study shows how some programs can amount to a subterfuge for discrimination. All too often, a wellness plan that sets weight goals for employees is paired with a health plan that denies coverage for evidence-based obesity treatments. By doing this, an employer risks alienating more than a third of its employees.”
Robert Kushner, MD, director Northwestern’s Comprehensive Center on Obesity said, “Tackling obesity in the workplace requires a holistic approach. Doing it right includes offering well-designed workplaces that encourage activity, cafeterias that focus on healthy eating, leaders who model healthy behavior, and health plans covering a wide range of treatments.” Nadglowski said, “Without a genuine commitment to employee health, a wellness program is useless as evidenced in recent news reports about Penn State. Their faculty and staff forced the university to cancel plans for a wellness program that would have penalized employees who would not submit to being weighed for it.” For more information, visit: www.Obesity.org.
Wellness Programs Can Reduce Workers’ Comp Claims
Effective corporate wellness initiatives have shown to be successful in not only reducing the duration of lost-time workers’ compensation claims, but also in reducing a company’s workers’ compensation claims, according to a report by Lockton. The report, authored by Lockton’s Michal Gnatek, is titled “Wellness Programs: The Positive Affect on Workers’ Compensation Claims.” Gnatek says that promoting healthy behavior can inhibit unsafe or inattentive workplace behavior. “Risk managers and claims professionals should be adding employee wellness to the available arsenal of weapons to combat increasing claims,” he said. Lockton recommends that risk managers become well acquainted with their companies’ wellness program and find the data on comorbid factors captured by their insurer or third party administrator. Collaborating with internal safety, health, human resource, and environment professionals will help risk managers discover how to integrate employee wellness with workplace safety, he said. For more information, visit http://www.lockton.com.
HEALTHCARE
Highly Rated MA Plans Come with Higher Premiums
Highly rated Medicare Advantage plans (with four or more stars) come with an average monthly premium of $85 versus the average of $58 for all plans, according to a study by HealthPocket. Lower out-of-pocket caps are consistent across all-star ratings, with about 30% of plans offering annual limits of $3,400 or below.
The Medicare plan quality star rating system is a key factor in helping enrollees differentiate plans. It reflects scores for treatment, preventive care, and customer satisfaction. For 2014, highly rated four and above star MA plans are available to residents of over half of U.S. counties. Steve Zaleznick of HealthPocket said, “The good news for Medicare Advantage customers is that the overall quality of these plans is rising, and their limits on out-of-pocket expenses provide good insurance protection. But not all regions in the U.S. have access to four plus star plans, and some highly rated plans have higher premiums than lesser-rated plans. Therefore, consumers would be wise to do thorough research into how the quality and costs of their available options fit their personal situation.” For more information, visit www.HealthPocket.com.
Health Reform Not Expected to Dampen the Need for Advisors
Ninety-four percent of small businesses say their need for an outside advisor will increase or stay the same in the next two years, according to a recent LIMRA study. “While the new public and private exchanges will eliminate the need for many of the administrative functions that advisors perform, such as requests for proposals, helping both employers and employees understand the options available within and outside the exchanges will be a new way for advisors to grow their business,” said Mary Boyce of LIMRA.
Companies that are most likely to see a need for an advisor in the next two years are those with 10 to 24 employees, those that are still establishing themselves, and those that are looking to expand. According to the U.S. Census Bureau, 98% of businesses in the U.S. have fewer than 100 employees, accounting for approximately 35% of the U.S. workforce. Yet only half use an advisor for business or personal needs regardless of whether they offer benefits to employees. Mary Boyce of LIMRA said, “This presents a huge opportunity for advisors who are able to demonstrate their value.”
Half of the employers surveyed who use an advisor said they were satisfied with their advisor. But there is room for improvement, as 40% of small businesses are neutral with regards to satisfaction with their advisor. Cost was the top reason small business employers gave for eliminating their advisor. Employers rely on their advisors for a variety of services. The most important include reviewing their plans to make sure that the rates are competitive and services are current and reviewing the renewal rate adjustment to ensure that it is competitive. For more information, visit limra.com.
ANNUITIES
Fixed-Rate Deferred Annuities Soar
Fixed-rate deferred annuity sales increased 66% in the third quarter of 2013, compared to the third quarter 2012, according to LIMRA. Total annuity sales for the quarter increased 9%, which is the largest year-over-year growth since the second quarter of 2011. Joseph Montminy of LIMRA explained, “In addition to the substantial growth experienced by fixed-rate deferred annuities, indexed annuities grew 15% in the third quarter to hit a new peak of $10 billion. This growth was driven by improvements in the interest rate environment, increasing the demand for accumulation-type annuity products. We are seeing broader acceptance of indexed annuities across the different distribution channels.”
Total fixed annuity sales grew 31% in the third quarter over the prior year to reach $23.5 billion – a level they have not reached since the third quarter 2009. Year-to-date, fixed annuity sales rose 6%. Fixed-rate deferred annuity sales for book value annuities and MVAs were $9.5 billion, which is the highest quarterly total since the second quarter of 2011. Year-to-date, fixed-rate deferred annuities sales grew 5%. In the third quarter, market share for fixed-rate deferred annuities rose 10% to reach 40% of total fixed annuity sales.
For the first time, quarterly indexed annuities sales reached $10 billion – an increase of $1 billion from the prior quarter. Most of this increase came from accumulation-type products. Year-to-date, indexed annuities sales increased 6%. Bank sales of indexed annuities expanded from 9% market share one year ago to 15% market share this quarter while independent B-D market share grew from 3% to 5% year over year.
Variable annuity sales declined 2% in the third quarter. Year-to-date, variable annuity sales fell 2% from the prior year. Election rates for variable annuity guaranteed living benefit (GLB) riders were 81% (when available) in the third quarter, which is down 1% from the second quarter of 2013.
Sales of deferred income annuities (DIAs) grew 106% compared to the prior year. In the first nine months of 2013, DIA sales grew 132% and are on pace to surpass $2 billion by the end of the year, which would double 2012 results. Fixed immediate annuity sales were up 5% in the third quarter to reach $2.1 billion. Year-to-date, fixed immediate annuity sales totaled $5.7 billion, matching sales from one year ago. For more information, visit limra.com.