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by Leila Morris
HEALTHCARE
CMS Plans Medicare Advantage Cuts
Study Questions the Effectiveness of Medical Homes
Americans Don’t Understand HSAs
Employers Will Change the Way They Deliver Health Benefits
California Must Make a Sustained Enrollment Effort
WELLNESS
Consumers’ Well-Being Is Improving
IN CALIFORNIA
Covered California Exceeds Enrollment Projections
FINANCIAL PLANNING
IRAs Make up Nearly Half of an Advisor’s Book of Business
EMPLOYEE BENEFITS
Employees Value Their Benefits More Than Ever
NEW PRODUCTS
Electronic Signature Capability for Life Insurance
ERISA Online Database
Financial Diversification Weimar Tomorrow
Direct Enrollment Capabilities for Individual Health Agents
Fixed Indexed Annuity
Accumulation IUL
Permanent Life Insurance Product Portfolio
HEALTHCARE
CMS Plans Medicare Advantage Cuts
The Centers for Medicare and Medicaid Services (CMS) is proposing a 3.55% cut in payment rates to Medicare Advantage insurers. A bipartisan group of 40 senators sent a letter to CMS protesting the cuts. A broad array of organizations also sent letters urging the agency to keep rates flat to protect seniors.
Medicare Advantage payments were cut 6% last year, which resulted in cost increases and benefit cuts of $30 to $70 per month for beneficiaries, according to an Oliver Wyman report. With another six percent cut in 2015, seniors would experience additional benefit reductions and premium increases of $35 to $75 per month, or $420 to $900 for the year, the report estimates. The Affordable Care Act already includes more than $200 billion in payment cuts — the vast majority of which have not gone into effect yet. The ACA also imposes a new health insurance tax, which begins this year.
Another round of payment cuts would mean seniors learning that out-of-pocket costs are higher, benefits have been cut, provider access is restricted, and choice of plans is more limited. These are real cuts in payments, not reductions in rates of projected growth, according to a statement by America’s Health Insurance Plans (AHIP). Seniors will see the effect of any new payment cuts in late October 2014 when they begin enrolling in their 2015 Medicare Advantage coverage.
As CMS prepares to set 2015 Medicare Advantage payment rates, AHIP is launching its largest-ever mobilization to remind Washington that seniors are following this issue closely and to urge the Medicare agency to protect them from further harm by maintaining payment levels.
Study Questions the Effectiveness of Medical Homes
The medical home has become a new model to produce better and lower-cost primary health care. But a Rand study found that medical homes yielded few improvements in the quality of care and no reductions in hospitalizations, emergency department visits, or total costs of care.
Medical homes are primary care practices that are designed to provide comprehensive, personalized, team-based care using patient registries, electronic health records, and other advanced capabilities. Recent medical home initiatives have encouraged primary care practices to invest in these new capabilities, participate in learning collaboratives, and achieve medical home recognition. Health plans offer to pay more to the practices that achieve recognition.
Researchers evaluated the Southeastern Pennsylvania Chronic Care Initiative. Thirty-two primary care practices and six health plans participated in the pilot from 2008 to 2011. Pilot practices adopted medical home capabilities, such as creating lists of patients who are overdue for the services they need. The medical homes did see improved rates for monitoring for kidney disease in diabetes patients, and there were signs that quality improved for some other aspects of diabetes care. However, there were no improvements in the quality measures for asthma care, cancer screening, and control of diabetes. Also, there was no reduction in the use of hospitals or emergency departments, or the total costs of medical care.
Researchers say there are several reasons that the medical home pilot did not show broader improvements in cost and quality. The pilot emphasized quality of care for diabetes and asthma. But practices did not have the financial incentives to contain costs. While most participating practices adopted new capabilities that targeted quality of care, fewer increased night and weekend hours, which could have reduced unnecessary visits to the emergency room. Because the pilot practices volunteered for the medical home experiment, they may have been more quality-conscious than other practices even before the pilot began, which would limit possible improvements. For more information, visit http://www.rand.org/newsletters.html.
Americans Don’t Understand HSAs
With the advent of Obamacare, more Americans are eligible for a health-savings account (HSA), but most don’t have the information they need to take advantage of them, according to a survey by insuranceQuotes.com. In fact, 86% say they don’t understand HSAs. Fifty percent of Americans say they are somewhat or very likely to use an HSA to cut their taxes. But only 8% have an HSA.
Many Americans are confused about eligibility and benefits. For example, only 14% know that an HSA has to be paired with a high-deductible health insurance plan. Many Americans are confused about which medical expenses HSAs can be used for; 52% think they can use HSAs to pay for over-the-counter medications, and 51% think they can use HSAs to pay health insurance premiums, both of which are untrue. Popular expenses that HSAs can be used for include prescription medications, doctor visits, dentist visits and eyeglasses.
People who buy coverage on the public health insurance exchanges are especially good candidates for HSAs, since most of the purchased plans under Obamacare are high-deductible plans including Silver and Bronze plans. For more information, visit http://www.insurancequotes.com/health/HSA-and-high-deductible-health-plans.
Employers Will Change the Way They Deliver Health Benefits
Ninety-five percent of employers that provide health care benefits to active employees and retirees plan to continue doing so for the next three-to-five years. But they will change the way the benefits are managed and delivered, according to a survey by Aon Hewitt,
Almost 40% of employers expect to require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs. Thirty-three percent say that the preferred approach in the next three-to-five years will be to offer group-based health benefits through a private health exchange.
The following is a breakout of employer strategies:
* Require employees to take a more active role in their health by offering them a few plan options, plus initiatives designed to improve health and reduce costs — 40% now and 36% in three to five years.
* Move to a private health exchange – 5% now and 33% in three to five years.
* Exit health care completely — 1% now and 5% in three to five years.
* Maintain traditional trend mitigation approaches — 52% now and 21% in three to five years.
Almost two-thirds of employers plan to continue offering the same level of benefits to part-time employees as they do to full-time employees, with or without an employer subsidy. Just 38% plan to offer no benefits to part-time workers in the next three-to-five years.
Twenty percent favor moving all or a portion of their pre-65 retiree population to the individual market/state exchanges in the next three-to-five years. Just 3% of employers do so today. Employers will be moving at least some portion of their pre-65 retiree populations to state and federal exchanges, but they are waiting for the marketplaces to become more competitive and mature. John Grosso of Aon Hewitt said, “This movement will be slow and methodical as the public marketplaces evolve and as employers understand the implications of the 2018 excise tax, which will only affect group-based health insurance plans.”
The number of employers offering subsidized retiree health benefits has declined over the past decade, with just 25% of large employers doing so today, compared to about 50% in 2004. A growing number of companies that offer health benefits to post-65 retirees are considering providing coverage through the individual Medicare plan market. In fact, 30% of companies have already sourced benefits through the individual market –most through a multi-carrier private health exchange. Two-thirds of employers that are considering changing their post-65 retiree strategies are considering this approach.
A growing number of employers are leveraging multi-carrier private exchanges for Medicare beneficiaries. They see the value in having the competitive mix of plans, the navigational tools, and the advocacy that these private exchanges offer. Winkler said, “As health insurers regain control for creating a competitive market that is accountable to the consumers within it, we expect to see similar cost moderation across the system, including the new competitive markets emerging for pre-65 retirees and active employees.” For more information, visit www.aon.com.
IN CALIFORNIA
Covered California Exceeds Enrollment Projections
Covered California has exceeded its projected base enrollment for the 2014 open-enrollment period. As of Jan. 31, 2014, more than 1.6 million Californians have signed up for Covered California health insurance plans or for low-cost or no-cost Medi-Cal. Nearly half selected a Covered California health insurance plan. In the first two weeks of February more than 100,000 people enrolled in Covered California, increasing total enrollment to 828,638.
Of those enrolled through Jan. 31, 626,210 are eligible for subsidies. Insurance companies report that 80% of enrollees have paid their first month’s premium. Additionally, 877,000 applicants have been determined to be likely eligible for Medi-Cal coverage. DHCS has transitioned 652,000 people into the Medi-Cal program from the state’s low-income health program. Automated enrollment has allowed county human services agencies to enroll 106,000 people into Medi-Cal coverage, and another 65,000 were enrolled through the Express Lane program.
January also saw a significant increase in the number of Latinos enrolled. For the month of January, Latino enrollment in Covered California reached 28%, compared to a about 18% for October through December. The enrollment rate of Spanish-speaking Californians increased, representing about 11.5% in January, compared to 5% during the first three months of open enrollment. DHCS also reported improved Latino participation among those likely to be eligible for Medi-Cal enrollment. The percentage of Latinos within the applicant pool increased from 32% as of Dec. 31 to 38% through Jan. 31.
Enrollment of young adults 18 to 34 years old is trending slightly upward, at 26% of the consumers who have selected a Covered California health insurance plan. This age group represents about 25% of the state’s population but about 36% of those who are eligible for subsidies. Most subsidy-eligible consumers who enrolled — 451,074, or about 62% – signed up for a Silver plan, the second-lowest-costing plan of the four plan tiers. About 86% of consumers across all tiers got some sort of financial assistance.
Anthem Blue Cross of California, Blue Shield of California, Kaiser Permanente and Health Net lead the way among plans chosen, collectively reflecting almost 92% of total enrollment. In Covered California’s Small Business Health Options Program (SHOP), 571 small businesses — representing nearly 5,000 employees and their dependents — have enrolled for coverage.
Consumer response to the application process for Covered California and Medi-Cal has been positive. In the first three months, at least 60% of those who completed enrollment said it was easy. About 82% of consumers said they found the information needed to choose the right health plan for them.
California Must Make a Sustained Enrollment Effort
Covered California is touting positive enrollment figures leading up to the enrollment deadline. But, the state needs to make a continuous effort to enroll people and keep people in coverage, according to a Kaiser Family Foundation report. People will continue to move around within the insurance system as their income or job situations change. With this challenge in mind, California has sought federal grants and other investments for ongoing outreach, enrollment, and education efforts.
Californians may face challenges in comparing costs, services, and provider networks, which have typically varied greatly across plans in the past. Insured adults in California say they did not have difficulty comparing their plan choices, but 38% found some aspect of plan choice to be difficult, such as comparing services, comparing costs, and comparing providers.
Eighty-five percent of insured adults in California rate their pre-ACA coverage as excellent or good. But 20% have needed a service that was not covered by their plan — typically ancillary services, such as dental, vision care, and chiropractor services. Twenty-four percent have been denied coverage for a service they thought was covered, and 35% say out-of-pocket costs were higher than expected.
The ACA requires exchange plans to provide detailed, standardized plan information so consumers can compare coverage options. As a result, uninsured Californians should have fewer challenges making plan choices. The state is also trying to improve the Medi-Cal enrollment process. It calls for reorienting Medicaid management, systems, and caseworker training away from having welfare-style gate keeping toward encouraging participation.
Given the health profile of California’s uninsured population, there is likely to be some pent-up demand for health care services. Some people who have relied on emergency rooms or urgent care centers may need help navigating the primary care system. But clinics and hospitals that already see a large share of uninsured adults may still play an important role in serving this population once they gain insurance. Newly insured Californians may be surprised to learn that some ancillary services, such as dental coverage, are not included in their plan.
While Covered California plans must accept various forms of payment, direct withdrawal from a checking account is a simple and reliable way to ensure that premiums are paid on time. However, 21% of uninsured adults in the income range for Covered California subsidies don’t have a bank account. For more information, visit http://kff.org.
WELLNESS
Consumers’ Well-Being Is Improving
When it comes to well-being, U.S. consumers are in a better position in 2014 than they were in the previous two years, according to the Temkin Group’s well-being index, which is based on surveys of 10,000 U.S. consumers. The index averages the percentage of consumers who agree with the following statements:
* I am typically happy.
* I am healthy.
* I am financially secure.
In 2014, 77% of consumers say that they are typically happy compared to 75% last year; 69% say that they are healthy compared to 68% last year; and 46% say that they are financially secure compared to 42% last year. For more information, visit http://www.temkingroup.com.
FINANCIAL PLANNING
IRAs Make up Nearly Half of an Advisor’s Book of Business
Retail individual retirement accounts (IRAs, SEP) make up nearly half of the average financial advisor’s book of business, according to research from Cerulli Associates. Even though rollover assets are key components of an asset manager’s retirement strategy, advisors view them as just another source of funds for their practice, instead of making up a key market to be cultivated.
Financial advisors capture larger rollovers than direct providers, with the largest balances going to existing advisory relationships. “Financial advisors play a key role in asset managers’ abilities to win flows from rollovers. However, these rollover assets are hard to acquire,” said Bing Waldert, director at Cerulli.
Cerulli expects advisors to continue to win rollovers. Although investors typically manage multiple advice relationships, financial advisors who deliver a holistic view of a client’s financial picture will benefit from integrating all assets into an overall financial plan. For more information, visit www.cerulli.com.
EMPLOYEE BENEFITS
Employees Value Their Benefits More Than Ever
On a scale of one to 10, employees give an average score of 7.1 on how much they value their workplace benefits. That compares to 6.8 in 2012, according to a Guardian study conducted in September 2013.
Eighty percent of employees surveyed get all health insurance, disability insurance, and retirement savings through their employer. Seventy-nine percent say that their benefits are crucial to staying with a job.
The study uncovers a growing disconnect between employers and their workers. Employers are seeking opportunities to shift more costs and responsibilities to employees at a time when these benefits are becoming more critical to their workers’ financial security and well-being. In fact, 47% of employers are planning to ask employees to bear more of their benefits cost in 2014 in anticipation of the enactment of the Affordable Care Act.
Just over half of employers surveyed say they’ve been successful in preparing for a post-health care reform era of benefits, but only 22% say they are well prepared to discuss these changes with employees.
While the responsibility of benefit costs may be shifting, it’s still essential for companies to make sure that employees have expert financial planning advice and a clear understanding of which workplace benefits are best for them. Increasingly employers are seeking assistance in these areas from experts outside the company. For more information, visit www.GuardianLife.com.
NEW PRODUCTS
Electronic Signature Capability for Life Insurance
John Hancock Insurance introduced electronic signatures, which eliminates the need for customers to print, sign and mail the most common life insurance forms. The electronic forms also guide the client to complete the form properly. For more information, visit wwwJHSalesNet.com.
ERISA Online Database
FreeERISA has redesigned its plan dashboard and research tools to make it easier to locate and understand plan data. FreeERISA now highlights the most important plan facts in a dashboard that’s easy to understand. For more information, visit www.benefitspro.com.
E-Signatures for New Business & Enrollment
Andesa Services and Silanis Technology introduced a cloud-based offering to help life insurance agents to process applications in real time rather than waiting days or weeks to get completed paperwork from the customer. Enforced data validation and workflow rules ensure that all signatures and data are captured correctly, greatly reducing the risk to the carrier. For more information, visit http://www.andesaservices.com.
Financial Diversification Weimar Tomorrow
The National Assn. for Fixed Annuities is sponsoring a webinar to help advisors find optimal financial diversification strategies for their clients. It will be held February 27 at 8:30 a.m. For more information, visit www.nafa.com.
Direct Enrollment Capabilities for Individual Health Agents
Individual licensed health insurance agents can now leverage Web-Broker Entity status through the GoHealth Marketplace. The platform helps agents manage customers, quote plans in 50 states, and enroll consumers in on-exchange plans in 36 states. With GoHealth’s Web-Broker Entity status, agents can instantly get subsidy-eligibility information and sell on-exchange plans to subsidy-eligible people. For more information, visit www.Norvax.com/Marketplace.
Fixed Indexed Annuity
Phoenix Companies introduced Personal Retirement Choice. The single premium fixed indexed annuity has an optional guaranteed lifetime income benefit rider. It is designed to address retirement risks with a variety of features and options for accumulation, protection, and income. It is primarily an accumulation annuity that provides an upfront premium bonus that vests over time. The bonus is eligible to earn interest credits, thereby increasing growth potential. The premium bonus available ranges from 8% to 15%, depending on whether an income rider is elected. For more information, visit www.phoenixwm.com.
Accumulation IUL
John Hancock redesigned its indexed universal life insurance product –Accumulation IUL. It provides strong death benefit protection and the potential for significant cash value accumulation. Accumulation IUL offers downside protection with the potential for growth through returns linked to the index. The product features a simple and straightforward design with the flexibility of three indexed allocation options.
For more information, visit http://www.jhancock.com.
Permanent Life Insurance Product Portfolio
Pruco Life Insurance Company, a subsidiary of Prudential Financial, introduced a tax-advantaged universal life insurance product. PruLife Founders Plus UL provides cost-effective death benefit protection with an extended no-lapse guarantee, and offers a choice between two interest crediting account options that can help build cash value in the policy. An optional BenefitAccess Rider, available for an additional cost, allows consumers to advance up to 100% of the death benefit should they become chronically or terminally ill. For more information, visit http://www.news.prudential.com.