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by Leila Morris
HEALTHCARE
• Employers Need to Know How the ACA Will Affect Disability Management
• Employees Likely to See Changes in Health Benefits
• Delaying the Individual Mandate Would Reduce the Deficit
• Price Variations Underscore Hospital Market Power
NEW PRODUCTS
• Senior Fitness
IN CALIFORNIA
• Covered California Hosts Forum In San Bernardino on Friday
• Court of Appeal Rules HMO Regulator Cannot Discriminate Against Autistic Children
• American Specialty Moves Headquarters Out of State
• Blue Shield Offers Guide to Covered California Plans
• Commissioner Reaches Death Master settlement with Aegon
• SeeChange Health Solutions Platform Shown to Increase Healthy Behavior
FINANCIAL PLANNING
• Study Taps Americans, Financial Literacy
• The Secrets People Keep From their Financial Advisors
• Retirement Plan Sponsorship, Participation Grows
EMPLOYEE BENEFITS
• The Benefits of Outsourcing HR
HEALTHCARE
Employers Need to Know How the ACA Will Affect Disability Management
Most employers haven’t given much thought to how the Affordable Care Act (ACA) will affect disability and absence management, according to study by the Disability Management Employer Coalition (DMEC) and Pacific Resources. But disability and absence management needs to be considered in the context of health care reform, said Pat Purdy, vice president of Core Benefits Solutions at Pacific Resources.
Forty-eight percent of employers and 72% of disability insurance carriers expect employee disability and absence to have a bigger financial impact over the next five years. They cite key cost drivers, such as more disability claims, longer absences, increased use of Family Medical Leave Act (FMLA) benefits; and rising healthcare costs.
There is more uncertainty about how ACA will affect the number of disability claims, although those who feel knowledgeable on the subject are more likely to say there will be more claims as employees no longer fear losing healthcare coverage from a long-term absence. More say it will be more difficult to get access to routine care under ACA. Forty-two percent say it will get harder to see a physician for routine care in a timely manner while only 21% say it will get easier.
Employers handle their leave management Administration in a variety of ways including insourcing, outsourcing and a mix of the two. While the majority of respondents don’t expect to change their method of leave management administration over the next few years, there was some concern that FMLA activity will increase as a result of ACA and that more employers will look to outsource leave management.
Many employers are expanding programs to reduce absences and promote wellbeing, but few credit ACA as motivating these decisions – perhaps because many of their wellness initiatives were underway before the ACA was enacted. For more information, visit http://dmec.org.
Employees Likely to See Changes in Health Benefits
Employees can expect a number of changes to their health benefits due to rising health costs and the Patient Protection and Affordable Care Act (ACA) according to Aon Hewitt. The following are some of the most notable changes employees may see include:
A higher price tag – Aon Hewitt’s research shows that most employers plan to subsidize employees’ health coverage at the same percentage rate as last year. However, as health care costs increase, the amount of money employees will need to contribute more. In addition, almost one in five employers has increased surcharges for adult dependents with access to coverage elsewhere.
More options for coverage – Some employees — particularly those who are not offered health coverage through their employer — may wish to purchase individual coverage through the new state and federal marketplaces.
A higher probability of being in a consumer-driven health plan – Consumer-driven health plans (CDHPs) have surpassed HMOs as the second most offered plans. In fact, a growing number of employers are offering CDHPs as the only plan option. While just 10% of companies do so today, another 44% are considering it in the next three to five years.
Programs that promote health awareness and education – With employers facing the rising health care costs and declining health of the population, employees can expect to see more programs that encourage them to take a more active role in managing their health. For example, 75% of employers offer health risk questionnaires and 71% offer biometric screenings such as blood pressure and cholesterol.
More incentive opportunities for exhibiting healthy behavior – Workers can also expect to see an more employers providing incentived through a reward or a penalty — related to completion of programs, such as HRQs and biometric screenings. Eighty-three percent of employers have such an incentive in place now.
New eligibility rules – Employers may be making changes to rules that determine which employees are eligible for health coverage, particularly as they evaluate requirements of the employer mandate provision of the ACA, which was delayed until 2015. In addition, the recent Supreme Court decision that resulted in federal recognition of same-sex marriages may mean more dependents will now be eligible for benefits coverage.
For more information, visit www.aonhewitt.com.
Delaying the Individual Mandate Would Reduce the Deficit
A House bill to delay Obamacare’s individual mandate would save $35 billion dollars, according to the Congressional Office. In July, the House passed H.R. 2668, which would delay the application of the individual health insurance mandate and the employer health insurance mandate for one year. The Congressional Budget Office (CBO) and the Joint Committee on Taxation estimate that enacting H.R. 2668 would reduce federal deficits by roughly $36 billion from 2014 to 2018 and by roughly $35 billion from 2014 to 2023. For more information, visit http://www.cbo.gov/publication/44551
Price Variations Underscore the Market Power of Hospitals
In 13 selected U.S. metropolitan areas, hospital prices for privately insured patients are much higher than Medicare, especially for outpatient care, according to a study by the Center for Studying Health System Change (HSC) for the National Institute for Health Care Reform.
Average hospital prices for privately insured patients in the 13 communities with large concentrations of autoworkers are about one-and-a-half times Medicare rates for inpatient care and two times what Medicare pays for outpatient services.
Prices vary widely within individual communities, even when accounting for differences in the services provided. The highest-priced hospital gets paid 60% more for the same inpatient services compared to the lowest-priced hospital. Also, the highest-priced hospital gets paid nearly double that of the lowest-priced hospital for hospital outpatient services.
The dramatic price variation points to the significant market power of certain hospitals, even in markets with a dominant insurer, said Chapin White, Ph.D., an HSC senior researcher.
In contrast, prices for primary care physician services are generally close to Medicare rates, and prices vary little within markets. However, prices for specialist physician services are higher relative to Medicare and they vary more within and across markets.
While the findings suggest some opportunities for savings, even capping hospital and physician prices at the median within each market would only reduce spending by 5.5%. Achieving significant savings requires bringing high-priced providers closer to the average as well as bringing down the average. This would require fundamental changes to providers’ cost structures. For more information, visit www.hschange.org.
NEW PRODUCTS
Senior Fitness
The Silver&Fit Exercise and Healthy Aging Program for Medicare Advantage members has expanded its range no-cost or low-cost class offerings to include the popular WATERinMOTION fitness classes. The low-impact aqua exercise workout is for all fitness levels and is choreographed to an upbeat, inter-generational music selection. For more information, visit www.facebook.com/SilverandFit
IN CALIFORNIA
Covered California Hosts Forum in San Bernardino on Friday
Covered California is sponsoring a forum on Friday, Sept. 13 from 2:30 p.m. to 4:00 p.m. (doors open at 2:00 p.m.). It will be held at Cal State University San Bernardino, College of Education Auditorium, Room 105, 5500 University Parkway, San Bernardino, CA 92407
Appeals Court Says HMO Regulator Cannot Discriminate Against Autistic Children
In a complex opinion issued yesterday, the California Court of Appeal ended the Department of Managed Health Care’s (DMHC) discriminatory practice of allowing HMOs to deny treatment for autistic children of state employees and low-income families enrolled in the Healthy Families program on the basis that such treatment can only be administered through state-licensed providers.
The case was brought by the non-profit Consumer Watchdog and Strumwasser & Woocher LLP. The treatment at issue, known as Applied Behavioral Analysis (ABA), has been found to be the most effective treatment for autistic children. After the lawsuit was filed, the California Legislature agreed with Consumer Watchdog by passing a law in 2011 clarifying that HMOs and health insurers must provide coverage for ABA for children enrolled in private health insurance plans and that such treatment could be provided through providers who are certified by a national board, but not state-licensed. However, the Legislature did not include public employees and Healthy Families enrollees.
The remaining issue to be decided by the Court of Appeal was whether the DMHC could allow HMOs to deny ABA for children enrolled in public health plans if an ABA provider does not hold a state license. As Consumer Watchdog and Strumwasser & Woocher LLP pointed out in the lawsuit, no state licensing currently exists for ABA therapists. For more information, visit http://www.strumwooch.com
American Specialty Moves Headquarters Out of State
American Specialty Health is moving its headquarters to Carmel, Indiana by the second quarter of 2014. The $240+ million health services company was launched in California more than 25 years ago and employs over 1,000 people. The company opened an office in Dallas in July 2012, where it employs 150 people. ASH will maintain its office in San Diego, which had been its corporate office location for more than 25 years.
ASH co-founder, Chairman and CEO George DeVries, said, “Although ASH was conceived in California, has always been a California company, and will continue to have one foot planted in the Golden State, we had a lot of good reasons for bringing an office and our corporate headquarters to the Indianapolis region. First, ASH has grown from a regional company into a national company, and Carmel provides a central location with good proximity to our clients across the nation. Additionally, the cost of doing business is significantly lower in Indiana than in many other states. Also, the state of Indiana is strongly pro-business…And finally, the low cost of housing and living, as well as a family-oriented environment in Carmel and Indianapolis offer our employees a great place to live and work.”
While ASH will be investing $10 million in its relocation to Carmel, the Indiana Economic Development Corporation has offered ASH up to $11.5 million in conditional tax credits and up to $250,000 in training grants based on the company’s job creation plans. These tax credits are performance-based, meaning until the employees are actually hired, the company is not eligible to claim incentives.
DeVries anticipates that at least 50 jobs at the new Carmel office will be filled by employees from the San Diego and Dallas centers. The remainder of jobs in operations, customer service, health coaching, client services, claims, IT and program solutions will be filled through recruitment in the Indianapolis region over the next year. For more information, visit www.ashcompanies.com.
Blue Shield Offers Guide to Covered California Plans
Covered California just rolled out an online calculator that allows people to compare the cost of health plan options sold on the exchange. Anticipating questions and comments from customers, brokers, and the media, Blue Shield has prepared an infographic that walks the reader through the changes. A static version is attached and an interactive version is available on our web site at the following link: https://www.blueshieldca.com/aca-rates/learn.html
Commissioner Reaches Death Master Settlement with Aegon
The California Dept. of Insurance has reached a settlement agreement with Aegon over the insurer’s use of the Social Security Administration’s Death Master File database. Aegon is the parent of Transamerica Insurance Company.
Aegon agreed to a number of reforms, including using the Death Master File database to search its records for deceased life insurance policyholders so beneficiaries can be paid. Aegon also agreed to pay $11.2 million to insurance regulators. The principal lead state in this investigation was Illinois with support from insurance regulators from Florida, California, Connecticut, New Hampshire, Pennsylvania, and North Dakota. Iowa and Vermont contributed to the investigation as states where Aegon is domiciled.A number of other large life insurers, including life insurance giant New York Life, continue to be the subject of investigation by state insurance regulators.
SeeChange Health Solutions Platform Shown to Increase Healthy Behavior
A three-year study by SeeChange Health Solutions (www.SeeChangeHealth.com) demonstrates an increase in healthy behaviors and a reduction in medical spending. The study tracked over 120,000 employees and their dependents participating in health incentive programs offered by their employers and powered by SeeChange Health Solution’s proprietary Engagement Platform.
The health actions, which varied by employer, included annual preventive exams, age appropriate cancer screenings, and biometric testing for chronic conditions such as diabetes, pre-diabetes, hyperlipidemia, and hypertension. By the end of 2012, the third year of each employer’s incentive program, nearly 80% completed at least one health action. During the same period, employers saw a 10% to 20% reduction in hospital admissions, bed days, and ER visits and a more than 50% reduction in costly and largely preventable hospital readmissions. For more information, visit www.seechangehealth.com/SitePages/news.aspx.
FINANCIAL PLANNING
Study Taps Americans’ Financial Literacy
Americans have a bit of a superiority complex when it comes to grading their financial prowess. A Genworth study reveals that 52% of Americans give themselves an A or B on their saving and investing knowledge while giving the average American a D.
Only 40% of women give themselves an A or B on their knowledge of saving, preparing for the future, and investment options compared to 66% of men. Furthermore, women (21%) appear to be more driven by fear than men (14%) when it comes to seeking more financial education.
For men, making money is often tied to how they feel about themselves, including their positive self- identity, and how their success is measured, which motivates them to become financially literate. Women are more socialized to focus on financial and family security, such as budgeting, easy access savings, debt-reduction and lower-risk investing, rather than the accumulation strategies often taught in financial education, explains Dr. Barbara Nusbaum, a New York-based psychologist and money coach.
Ensuring a stable financial future is the number one motivation (67%) for consumers to seek more financial education, far exceeding fear of running out of money (18%) and envy of other’s financial success (2%). Wendy Boglioli, national spokesperson for Genworth said, “People get so busy living day-to-day that their long-term financial goals get put on the sidelines. The great value in working with a financial professional is that they can help keep you on task in meeting your goals and provide important financial knowledge.”Genworth’s Let’s Talk website offers tips for initiating conversations. Visit https://www.genworth.com/lets-talk.html?
The Secrets People Keep from Their Financial Advisors
A survey by Securian reveals that 29% of consumers haven’t told their advisors everything in their lives that could affect their finances. Health and marital difficulties rank high among the critical subjects clients avoid discussing with their advisors.
Twenty-five percent carry debt their advisors do not know about. Many of those who withhold critical financial information from their advisors appear to fall in many advisors’ target markets. Nearly one-third are pre-retirees and retirees. Two-thirds are 40 and older. One-fifth are affluent, with $150,000 or more in annual household income, or mass affluent, with $100,000 to $149,000 income. Among those who are employed, two-thirds are in professional or managerial careers.
Fifty-two percent of those with secrets say the information is too personal to share; and 45% say their secrets are outside of their financial strategies and don’t need to be shared. One fifth say their secrets are too embarrassing to reveal.
Some people may hold back because they don’t want to hear what their advisors would say if they had the full picture. Fifty percent say their advisors would recommend increased savings or reduced spending. Twenty-five percent say their advisors would want to create new financial plans. Only 11% of those who withhold critical information say it’s because of a lack of trust.
Rich Preuss with The Healy Group in South Bend, Ind. says “I make sure, up front, that they know I can only help them as much as they reveal to me.” Joel Twedt, of Twedt Financial Services said, “Some people are embarrassed to provide information, so I don’t ask. Once they get comfortable, it’s amazing what they reveal. It’s not just about the clients’ money. It’s about their dreams, their fears, their families.” For more information, visit Securian.com.
Retirement Plan Sponsorship, Participation Grows
Since the end of the economic recession, a higher percentage of workers are with employers that offer retirement plans and more are participating in the plans, according to a report by the Employee Benefit Research Institute (EBRI).
In 2012, 61% of workers age 16 or older worked for an employer or union that sponsored a pension or retirement plan in 2012 — up from 59% in 2009. In addition, 46% of workers participated in a retirement plan in 2012 compared to 45% in 2009 and 48% in 2003.
The vesting rate stood at 43% in 2012, up from 24% in 1979 (The vesting rate is percentage of workers who say they are entitled to some pension benefit or lump-sum distribution once they leave their job).
More workers participating in defined contribution retirement plans (such as 401(k) plans), in which employee contributions are vested immediately. Defined contribution (401(k)-type) plans were considered the primary plan by 78% of workers with a plan. Defined benefit (pension) plans were the primary plan for 21% of workers. While the worker participation rates in salary reduction plans, such as 401ks, has been going up, the average employee contribution to those plans dropped in 2012 at 6.7% of salary compared to 7.4% i 2009. At least partially driving the trend is the growth of automatic enrollment in 401(k) plans, which tend to bring in more first-time, lower-income participants but often at lower contribution rates. For more information, visit www.ebri.org
EMPLOYEE BENEFITS
The Benefits of Outsourcing HR
Small businesses that use professional employer organizations (PEOs) have a a near 10% higher employment growth rate than small businesses that don’t use PEOs, according to a study by the National Association of Professional Employer Organizations (NAPEO). “PEOs help small business by allowing them to focus on the business of their businesses instead of HR administration, employment regulations, and benefits,” said Pat Cleary, NAPEO’s president and CEO.
PEOs provide payroll, benefits, tax compliance, and other HR services to small and mid-sized companies. Approximately 250,000 businesses use PEOs, and PEOs provide access to healthcare coverage for as many as 6 million people. Through a PEO, the employees gain access to employee benefits such as 401(k) plans; health, dental, life, and other insurance; dependent care; and other benefits typically provided by large companies.
Another key finding of the study is that PEOs offer retirement plans to small businesses that may not otherwise sponsor them, and these employees participate at much higher rates. Ninety-eight percent of PEOs offer some type of retirement plan to their small business clients. In contrast, in 2011, only 16% of all employees of the smallest companies (those employing fewer than 10 workers), and 30% of those at companies with 10 to 49 employees, were offered any type of retirement plan, according to the Employee Benefit Research Institute (EBRI). “PEOs are not only good for small business, but also for small business employees,” said Cleary.” For more information, visit http://www.napeo.org.