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by Leila Morris
HEALTHCARE
• The Next ACA Deadline Is Just Two Months Away
• Majority of Employers Haven’t Addressed Health Reform
• House Votes to Repeal Health Reform Law
• How Insurance Employers Are Responding to Rising Premiums
• Limiting Non-Urgent Visits to ERs Won’t Save Money
• Website Bashes Pharmacy Benefit Managers
• Employees Who Take Their Meds Are More Productive
• Many Health Plans Consider Adopting ACOs
IN CALIFORNIA
• Cigna’s Kicks Off Its First Accountable Care Program in California
EMPLOYEE BENEFITS
• Life is Most Profitable Voluntary Product Line
• Face-to-Face Education Drives Better Retirement Savings Behavior
• Transamerica Reports Brisk Growth Rate in Employee Benefits
LIFE INSURANCE
• The National Assn. of Independent Life Brokerage Agencies
NEW PRODUCTS
• Gifting Guidance
• Wellness Site
HEALTHCARE
The Next ACA Deadline Is Just Two Months Away
After the Supreme Court’s historic ruling to uphold the Affordable Care Act (ACA), employers are looking at the next set of milestone regulations. A major requirement that’s just several months away is the summary of benefits coverage. It is required to be in effect for open enrollment periods beginning on or after September 23, 2012. Employers must have summaries in place not only for the plan an employee is enrolled in, but also for all plans for which that employee is eligible.
These benefit summaries are designed to give employees straightforward information on what health plans will cover, what limitations or conditions will apply, and what they will pay for, according to HHS. Under the regulations, employees are entitled to a summary of benefits coverage for their enrolled plan. They also have to be able to view the summary of benefits for any plan for which they are eligible. “This is an enormous challenge for corporations with multiple plans and many employees,” said Kim Buckey, principal, of the Compliance Communications Practice for HighRoads.
Tom Barker, partner in Foley Hoag said, “Employers have a tough road ahead, as public opinion polls continue to show a widespread lack of understanding over what the law means for most people. This means that employers will need to continue to communicate aggressively and clearly with employees over their options in the coming months.”
When it comes to summary of benefits, HighRoads recommends that employers focus on four key tasks in the next few weeks:
1. Evaluate what plans you have and where you can consolidate summary of benefits coverage.
2. Decide who will handle your summaries of benefits coverage and the provide the data needed to complete them.
3. Create your communication plan. Employees will have many questions about the landmark Supreme Court case. So, it is essential to provide clear, informed communication to employees. Be sure to provide some context; explain what the employee should do with the summary of benefits coverage and why it’s important now and in the future.
4. Maximize your distribution methods: You will need to distribute and track these documents. If employees do not have regular access to a computer at work, you must get their consent to offer the materials electronically. Using an automated delivery and tracking method is the optimal way to meet compliance regulations and to ensure that your employees are receiving the needed information. To see how well a client’s company is prepared, visit the HighRoads Compliance Assessment tool at http://www.highroads.com/compliance-assessment/index.html.
Majorities of Employers Haven’t Addressed Health Reform
Mercer polled more than 4,000 employers immediately after the US Supreme Court’s landmark decision upholding the health care reform law. The majority was waiting for the Court’s decision before developing a strategy to respond to requirements slated to go into effect in 2014 and beyond. While 40% said they will begin taking action now that the court has ruled, another 16% will wait until after the November elections.
The law still faces a contentious political outlook, but employers should stay on track to comply with the law as enacted or else they may face penalties, advises Mercer, a global human resources consultancy.
David Rahill, President of Mercer’s Health and Benefits business said, “We’ve been seeing a lot more interest in cost-saving measures [among employers], such as consumer-directed health plans and employee health management, since the tax was proposed.”
Employers must also act quickly to implement new requirements for 2012 and 2013, such as providing benefit summary disclosures, complying with new dollar limits on health care flexible spending arrangements, and increasing Medicare withholding for high earners. But the rules that go into effect in 2014 will have broader implications for many employers since they are aimed at expanding access
Twenty-eight percent of employers said it will be a significant challenge for them to comply with the new requirement that employees who work an average of 30 or more hours per week must be eligible for coverage.
Rayhill said that, with the average cost of health coverage now exceeding $10,000 per employee, a big jump in enrollment is not economically feasible for many employers. Those with large part-time populations face a difficult choice of increasing the number of employees who are eligible for coverage or having employees work fewer hours.
The requirement to auto-enroll newly eligible employees in a health plan means that employees will be covered automatically unless they take action to opt-out. This is also expected to increase the number of the insured for many employers. Twenty-nine percent of respondents said that this requirement will be a significant challenge, especially because other provisions of the law will limit the amount of health plan costs that employers can pass along to employees through higher premiums or deductibles.
Still, the provision that has the most employers worried (47%) is the excise tax on high-cost plans, which is expected to go into effect in 2018.
Sharon Cunninghis, US leader of Mercer’s Health and Benefits business said, “Employers are already struggling with annual health care cost increases of double or triple general inflation are determined to avoid this tax. We’ve been seeing a lot more interest in cost-saving measures, such as consumer-directed health plans and employee health management, since the tax was proposed.”
Fifty-two percent of employers agree that the reform law has given them the impetus to pursue more aggressive health benefit cost-management strategies. Employer actions were one factor that helped to slow health benefit cost growth in 2011 compared to 2010. Fifty-four percent plan to be more aggressive about managing plan costs. While 41% do not plan to be more aggressive, it’s only because they have already been taking aggressive action to manage expenses. For more information, visit http://www.mercer.com.
House Votes to Repeal Health Reform Law
The House of Representatives voted to repeal President Barack Obama’s health care reform law. The 244 to 185 vote comes just two weeks after the Supreme Court upheld the constitutionality of the law. The following are reactions to the vote:
• Leo W. Gerard, president of the United Steelworkers (USW): The USW continues to vigorously oppose Republican-led efforts against the Affordable Care Act. It is the 33rd time in the past two years the Republicans have sought to repeal a system supported by president Obama that already benefits millions of Americans. It is reprehensible Speaker Boehner would demand a repeal of ACA, once again without any credible proposal for a replacement plan. According to government reports, healthcare costs have dropped in the past two years since ACA was passed, while the annual average increase of insurance premiums is slowing to provide a savings to families. The ACA will provide health care coverage to about 33 million previously uninsured Americans through access to subsidized, private insurance and expanded Medicaid eligibility.
• Steve Ferguson, chairman of Cook Medical: The U.S. House of Representatives has passed, in a bi-partisan vote, legislation to repeal this job-killing tax that puts the health of the American public at risk. Companies like Cook have to pay this tax instead of investing in new medical technologies that can save lives. Repealing the tax, which is on top line revenues of all companies that sell medical devices in the U.S., is a critical imperative that saves jobs and drives continued medical treatment innovation here at home. The threat of the imminent tax has already led companies to move manufacturing jobs offshore and plan for growth outside the U.S. This misguided tax will have a drastic ripple effect on patients who will be deprived of breakthroughs, research, and development, suppliers and local businesses in thousands of communities. We strongly encourage the Senate to repeal the excise tax, Ferguson said.
• House Speaker John Boehner (R-OH): The president’s health care law is hurting our economy by driving up health costs and making it harder for small businesses to hire. Today’s ruling underscores the urgency of repealing this harmful law in its entirety. What Americans want is a common sense, step-by-step approach to health care reform that will protect Americans’ access to the care they need, from the doctor they choose, at a lower cost. Republicans stand ready to work with a president who will listen to the people and will not repeat the mistakes that gave our country ObamaCare.
How Insurance Employers Are Responding to Rising Premiums
In 2012, nearly two-thirds of insurance employers experienced increases to their medical insurance premiums, according to the 2012 Compensation Data Insurance survey. The average increase was 8%, down from 9.7% reported in 2011 and 9.6% in 2010. Despite the drop in the average premium increase, insurance organizations still contribute 10.2% of their total payroll costs toward providing medical insurance to their employees.
Employers everywhere are looking for ways to curtail rising healthcare costs and many are turning to wellness programs. In 2009, biometric screenings were offered at only 20% of insurance organizations surveyed, compared to 49% in 2012. Physical fitness facility access, onsite health clinics, as well as rewards and incentives have also increased over the past few years. Insurance employers are also using these methods to reduce and contain costs:
• 83% are using a network of healthcare professionals.
• 63% are increasing the employee portion of the premium.
• 69% are offering disease management.
• 11% have a surcharge for enrolling an employee’s spouse on the medical plan if the spouse is eligible for benefits under their employer’s own plan.
For more information about the compensation and benefit surveys, contact Michelle Willis at 800-300-9570.
Limiting Non-Urgent Visits to ERs Won’t Save Money
Reducing non-urgent visits to emergency departments is a growing focus of private and public insurance plans. But it will yield little to no savings for the health care system, according to a paper published online in Annals of Emergency Medicine (http://bit.ly/LSncb9).
For minor injuries and illnesses, the potential cost savings are .25% to .8% of health care costs. Part of those savings would be offset by the additional cost of establishing new urgent care centers or adding after-hours or weekend primary care resources.
For intermediate/complex conditions, the potential savings amounted to a maximum of 2.5% of all health care spending, which is attributed mostly to reduced hospital admissions. Expanding the use of observation units in emergency departments is one way to reduce costs by reducing hospital admissions. Collaboration among emergency physicians, case managers, and community based services could allow for patients to be cared for at home or in short-term facilities rather than being hospitalized.
“True payment reform would be most effective if it allowed for reimbursement adequate to fund the emergency medical care system so it is ready for anything at any time, which is surely for the public good,” said lead study author Peter Smulowitz, MD,
Website Bashes Pharmacy Benefit Managers
At www.whorunsmydrugplan.com, visitors can learn about common practices of the giant pharmacy benefit managers (PBMs) that are hired to administer drug plans and negotiate prices for payors. The website claims that the PBMs drive up health insurance costs and restrict patient choice. The site features, “The Third Wheel,” a video that takes a humorous look at how prescription middlemen insert themselves into the relationship among patients, doctors, and pharmacists.
B. Douglas Hoey of the National Community Parmacists Assn. said, “For too long, the PBM industry has benefitted from a lack of oversight and regulation, which has eroded the value of the prescription drug benefit to consumers.” He noted that prescription drug costs have rise along with insurance premiums and patient copayments. While PBM profits have increased, payment choice has diminished along reimbursement rates to pharmacy small business owners.
Employees Who Take Their Meds Are More Productive
Employees with chronic conditions who take their prescribed medications lose up to seven fewer days of work a year compared to those who are not adherent. This includes absenteeism and short-term disability days. It has translated into estimated annual savings of up to nearly $1,700 per adherent employee, according to research conducted by CVS Caremark and Truven Health Analytics, which was published in the Journal of Occupational and Environmental Medicine.
Researchers examined data on prescription drug usage, absenteeism, and short-term disability for more than 100,000 employees at more than 16 medium to large-sized employers. Employees in the study were diagnosed with diabetes, high blood pressure, congestive heart failure (CHF), high cholesterol, or asthma/chronic obstructive pulmonary disease (COPD). When comparing adherent and non-adherent employees, researchers found significant differences in the number of short-term disability days taken for all conditions. Researchers also found differences in the number of absenteeism days for those with diabetes, high blood pressure, high cholesterol, and asthma/COPD. For more information, visit http://info.cvscaremark.com.
Many Health Plans Consider Adopting ACOs
Seventy-six percent of health plans are considering adopting an accountable care organization (ACO) model, according to a survey by HealthEdge. Eighty percent are evaluating emerging individual exchange opportunities. Only 61% of payors believe they will be ready to meet the new ICD-10 compliance deadline, but 52% say that any ICD-10 delay will have a limited financial effect on their businesses. For more information, visit www.healthedge.com.
IN CALIFORNIA
Cigna’s Kicks Off Its First Accountable Care Organizatiom (ACO) in California
Cigna and the not-for-profit Palo Alto Medical Foundation launched a collaborative accountable care initiative. Cigna’s first ACO in California links doctors, hospitals, and a single health plan to reduce health care costs. The goal is to expand patient access to health care; improve care coordination; achieve higher quality care; lower total medical costs; and increase patient satisfaction. Palo Alto Medical Foundation is part of the Sutter Health family of not-for-profit hospitals and physician organizations.
Under the program, registered nurses reach out to patients who are overdue for important health screenings or who may have skipped a prescription refill. Patients who may be at increased risk of developing health problems will be offered preventive services, such as disease management programs for diabetes, heart disease, and other conditions; and lifestyle management programs, such as programs for tobacco cessation, weight loss, and stress management.
EMPLOYEE BENEFITS
Life is Most Profitable Voluntary Product Line
A group of leading carriers rated their voluntary products in terms of profitability. Forty-one percent of carriers ranked universal life/whole life as a very profitable product line and 26% ranked term life as very profitable. Forty-three percent ranked voluntary AD&D coverage as a very profitable product line, according to an Eastbridge survey.
Eastbridge vice president, Bonnie Brazzell said, “This is somewhat surprising considering that critical illness was ranked first…in terms of growth products in the next two to three years. This year saw major swings in several lines…Fewer companies chose long-term disability, cancer, and hospital indemnity as very profitable causing them to fall out of the list of very profitable products,” said Gil Lowerre, Eastbridge president.
Dental, vision, and critical illness insurance were the voluntary products that were rated most frequently as unprofitable. Surprisingly, dental at 22% and critical illness at 20%, had the highest growth rate this past year. For more information, visit www.eastbridge.com.
Face-to-Face Education Drives Better Retirement Savings Behavior
When it comes to boosting retirement savings, face-to-face education makes a significant difference, according to an analysis of participants of Principal Financial Group’s retirement plans. Ninety-two percent of those who attended a one-on-one meeting in 2011 agreed to take a positive action and 80% completed the action.
Deferral rates were 9% higher among one-on-one participants compared to those who attended a group educational meeting. Nearly ten times as many one-on-one participants (19%) chose to increase their retirement plan contribution automatically compared to only 2% of participants who participated in a group educational meeting.
On average, one-on-one participants chose to increase their contributions by 1% each year for an average of five years. Over time, the higher deferral rate combined with the commitment to increase savings among those who attended one-on-one meetings could mean an additional $242,000 at retirement. This is based solely on employee deferrals. That could translate into an extra $905 more a month in retirement income, which is 69% higher than participants who didn’t have one-on-one education.
Barrie Christman, vice president, individual investor services at The Principal said, “We know from face-to-face educational meetings that retirement savers benefit from hearing a person explain how the retirement plan works rather than having to shuffle through documents by themselves. Take it a step further with personalized one-on-one meetings on company time and significantly higher numbers of participants are taking actions that can help get them to the 11% to 15% contribution range including employer match, which we believe is needed, over the course of a career, to have sufficient retirement income. For more information, visit www.principal.com.
Transamerica Reports Brisk Growth Rate in Employee Benefits
The Employee Benefits’ marketing unit of Transamerica Life recently recorded the fastest rate of growth for any top 10 voluntary benefits carrier. Transamerica says that it is expanding its sales team to meet the demand for its supplemental health benefits and voluntary life insurance products. Transamerica Employee Benefits (TEB), which has five new regional vice presidents and area sales managers, and expects to announce up to seven more new employees by the end of 2012.
Randy Clarkson, president of the Transamerica Employee Benefits’ marketing unit said, “The appeal of voluntary benefits is significantly rising, particularly supplemental health, life and accident insurance products, as individuals look for ways to fill the gap when employer-sponsored benefits fall short.” For more information, visit www.transamericaemployeebenefits.com.
LIFE INSURANCE
The National Assn. of Independent Life Brokerage Agencies
(NAILBA) has named Jack Chiasson, CAE as chief executive officer. He joined the staff in 2004 and has served as NAILBA’s executive director since August, 2007.
NEW PRODUCTS
Gifting Guidance
American General is offering a Web-based, 2012 gifting brochure and a reader-friendly printed brochure. The comprehensive producer materials include an online playbook and a detailed white paper. They been created to inform high-net-worth individuals and families how much they can save in gift and estate taxes by giving large gifts this year. For more information, call 800-677-3311.
Wellness Site
Humana Inc. launched MyWell-being.com, which offers comprehensive information, tools, and expert advice to help members take positive steps to lifelong well being. Membership on MyWell-being.com is free and includes the following:
• A complimentary 72-page Well-being for Dummies book.
• Original and third party content including expert articles, videos, and daily well-being tips.
• The ability to save content and share it easily with others, follow favorite authors, and suggest topics for future discussion through new social media pages.
• Interactive online games designed to challenge and increase mental strength.
• Access to content across devices (computer, tablet and Smartphone).