Facts About Senior Americans | California Broker Magazine

SENIOR MARKET UPDATE

Facts About Senior Americans

In honor of Older Americans Month, the U.S. Census Bureau released the following statistics about people who are 65 and older:

Percentage of the Population

In 2014, 46.2 million people were 65 and older. This group accounted for 14.5% of the total population. The 65 and older population grew from 44.7 million in 2013.
The projected population of people 65 and older in 2060 is 98.2 million. People in this age group would comprise nearly one in four U.S. residents at that time. Of this number, 19.7 million would be 85 or older.
The projected number of Baby Boomers in 2060 is 2.4 million. The youngest Baby Boomers would be 96.
In 2033, the population 65 and older is expected to outnumber people younger than 18 in the U.S for the first time.

Income

The 2014 median income of households with householders 65 and older as $36,895.
10% were in poverty in 2014.
The median net worth for households age 65 and older in 2011 was $170,516.
4% is the supplemental poverty rate for those age 65 or older, equating to 6.6 million people. Excluding Social Security would leave about half of this population in poverty.

Veterans

4 million people 65 and older were veterans in 2014.

In the Workplace

22% of men 65 and older were working in 2014 compared to 13.7% of senior women.5.2 million.
16% of firms with and without paid employees in 2012 had business owners who were 65 and older.
2% of women business owners were 65 and older in 2012.

Education

In 2014, 82% had completed high school or higher education.
In 2014, 25% had a bachelor’s degree or higher.

Marital Status

58% were married in 2015.
24% were widowed.

Technology in the Home

71% lived in homes with computers in 2013, and 62% accessed the Internet through a high-speed Internet connection.

Voting

59% voted in the 2014 elections.

Home Ownership

In 2015, 79% owned their homes.

Retirement Homes

There were 4,815 continuing care retirement communities in 2012, employing 423,627 workers and generating $27.6 billion in revenue.

Elderly Services

In 2012, 25,964 business establishments provided services for the elderly and people with disabilities. They employed 901,359 workers and generated $34.1 billion in revenues.

Retirement Destinations

19% of Florida’s population was 65 and older in 2014, followed by Maine at 18%. Alaska had the lowest percentage (9%) followed by Utah (10%).
53% of the population in Sumter, Fla., was 65 and older in 2014, which led all of the nation’s counties. Chattahoochee County, Ga., had the lowest at 4%.
The Villages, near Orlando, Fla., was the nation’s fastest-growing metro area from July 1, 2014 to July 1, 2015, with its population increasing by 4.3%. The metro area is home to one of the world’s largest age-restricted retirement communities.

Over 100 years

53,364 people age 100 and older were counted by the 2010 Census.
There were 20.7 men for 100 centenarian women in 2010.
44% of centenarian men lived with others in a household, which is the most common living arrangement for this group.
2% of centenarians lived in a nursing home in 2010.
There were 3.29 centenarians per 10,000 people in North Dakota in 2010. North Dakota was the only state with more than three centenarians per 10,000 people.

For more information, visit census.gov

Facing Medicare’s Tax Burden
Medicare’s cost burden will crush taxpayers unless we change how it is financed, according to a study by the National Center for Policy Analysis (NCPA) senior fellows Thomas Saving and Andrew Rettenmaier. “Without significant changes in the program, it is not realistic to think that federal Medicare spending, per capita, can be constrained to grow at the same rate as per capita GDP. Over the next 75 years, from 2016 to 2089, Medicare is projected to grow from 3.53% to 62% of GDP.” The report recommends the following reforms to bring Medicare’s cost growth in line with the growth of GDP:

Raise Beneficiary Premiums.
Raise Deductibles and Copays to Limit Spending to the Baseline Forecast: Retirees would be responsible for rising cost-sharing. Means-tested contributions to health-savings accounts (HSAs) by the federal government could complement the reformed insurance.
Constrain the Federal Payment Rate by Procedure and Service: Rather than paying the CMS-determined reimbursement to each provider, Medicare would give those amounts to the participants. Over time, a real market would emerge for health care as seniors demand lower prices.
Premium Support Payments that Rise at the Same Rate as Per-capita GDP: This would offer a significant individual choice and individual payment responsibility while limiting the role of CMS in the Medicare market. It provides average premium support payments that follow the trustees’ baseline forecast.

For more information, visit ncpa.org.

LIFE INSURANCE, ANNUITIES, & FINANCIAL PLANNING

Annuity Webinar
BGA Insurance is sponsoring a webinar on fixed indexed annuities with tax-free benefits on Friday June 3 from 10:00 am to 10:30 am PST. For more information, visit www.BGAInsurance.com.

A Small Boost in Millennials’ Financial Health Has a Lifetime Impact
Improving financial wellness of younger employees from four to a five on a 10-point scale translates into a 12% improvement in projected retirement savings. The report by Financial Finesse is based on over 35,000 financial wellness assessments completed in 2014 and 2015. An improvement from four to six brings a 27% improvement in projected retirement savings. The report reveals that debt is a growing concern, with many employees at risk of becoming significantly over-leveraged. This could be a problem for older employees who may carry consumer debt into retirement. Baby Boomers had the biggest decrease in the percentage that have a plan to pay off their debt (64% to 58%) and the biggest increase in those that are experiencing late fees (11% to 15%). Fifty-five percent of Generation X participants said getting out of debt is a top-three priority. Fifty-three percent said that lacking emergency savings is a top-three vulnerability. Forty-three percent of Millennials have serious debt, making it a top-three vulnerability. A higher percentage of employees across all generations are running a retirement calculator, checking credit scores, and projecting college expenses. For more information, visit financialfinesse.com.

Millennials Will Change How Life Insurance Is Bought
A recent survey by Life Ant reveals that nearly 70% of participants from 18 to 39 would look for life insurance policies online before consulting a financial advisor. Sixty percent of those 40 and older are more likely to visit a financial advisor to purchase a policy instead of using an online source. The supply of clients for life insurance agents is expected to decline, and the supply of clients looking to buy life insurance online is expected to increase significantly. This could mean that the future of life insurance agents is not bright unless they change the way that they operate, especially because the old models will not last as technology advances. To provide better online life insurance services, Life Ant recommends that companies offer extensive educational materials, high quality needs calculators, and other informative resources. For more information, visit lifeant.com/millennials-will-change-life-insurance-bought.

No-Exam Life Insurance Policies Soar in Popularity as Prices Drop to All-Time Lows
LifeQuotes.com has good news for those who want to skip the traditional medical examination: An increasing number of highly-rated life insurers now offer no-exam underwriting up to $500,000, which dramatically simplifies and speeds up the purchase process for life insurance shoppers. Some no-exam plans offer instant-decision underwriting, depending upon the applicant’s age and state of residence. LifeQuotes.com founder and CEO, Robert Bland said, “A sea change of product improvement is under way in the U.S. life insurance market, and the news could not be better for middle market consumers. More and more life insurers are adding no-exam plans up to $500,000 that offer instant underwriting at unheard-of rates, which puts high quality life insurance within reach of every American adult who has dependents and a need for life insurance.” Rob Goss, executive vice president said, “The new generation of no-exam plans offer a full suite of initial rate guarantee periods, typically ranging from 10 years to lifetime and there is very competitive pricing available for individuals who have non-life threatening health conditions.” Underwriting for most no-exam plans involves e-signatures and/or recorded telephone interviews. The no-exam insurers typically require U.S. citizenship, a valid Social Security number, and a valid U.S. residence. In some cases, coverage may be available to U.S. residents who are temporarily living abroad. For more information, visit LifeQuotes.com

IN CALIFORNIA

Californians with Individual Health Coverage Spent Significantly Less on Healthcare
California residents who bought insurance through the individual market spent significantly less on health care in 2014 than they did the year before. The year, 2014 marks the first year of the Affordable Care Act (ACA). The report by the California HealthCare Foundation reveals that median out-of-pocket spending for families with individual coverage dropped from $7,345 in 2013 to $4,893 in 2014. Thirty-five percent of Californians with individual coverage said that health care costs ate up more than 10% of their household income compared to 43% in 2013. The reduced spending is likely due to premium tax credits and cost-sharing subsidies available for the first time in 2014 through Covered California. Spending declines were more pronounced in California than in the rest of the country. In fact, it’s likely California’s spending declines helped pull down the national averages. For more information, visit www.chcf.org.

Heffernan Insurance Brokers Hires Key Executive
Heffernan Insurance Brokers hired Paula Northington to join its Orange County office as assistant vice president of Employee Benefits. Northington began her career in the financial services industry with Private Ledger Financial Services in San Diego. She later moved into a leadership role at MCI/Verizon Telecommunications, followed by working at a start-up company that evolved into XO Communications. She has also started her own companies, from owning a restaurant in Oregon, to a notary loan document signing agency in Southern California. Northington is the co-founder of CellGenDx, a medical device company, headquartered in Irvine. She has used her skills in the insurance industry as a new-business coordinator with UnitedHealthcare. Heffernan Insurance Brokers, formed in 1988, is one of the largest independent insurance brokerage firms in the United States. Heffernan provides insurance and financial services products to a range of businesses and individuals. It is headquartered in Walnut Creek, and has offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Orange Counties, Portland St. Louis, Long Island, and New York, NY. For more information, visit www.heffins.com.

HEALTHCARE

Obamacare Significantly Reduces Cost of Mental Health Care for Young Adults
The Affordable Care Act (ACA) has significantly reduced out-of-pocket behavioral health care costs for adults 19 to 25, according to a study published in the Psychiatric Services Journal. Young Latinos, African Americans, and other racial and ethnic minorities saw the greatest reduction in out-of-pocket behavioral health expenses. This demographic often has higher unemployment and lower salaries, so they are less likely to seek behavioral health services. The ACA’s dependent coverage provision has reduced the number of uninsured young adults by at least three million. The ACA allows young adults to remain on their family’s health plans until they turn 26. Because of this, the expansion of health care access is also expected to increase the number of users of mental health and substance abuse treatment services. Behavioral health conditions often emerge during the 19 to 25 year age range. Also, this age group has a higher rate of serious mental illness than other adults. To view the full paper, visit: http://ps.psychiatryonline.org/doi/10.1176/appi.ps.201500346

How the ACA Is Changing Health Insurance Markets
The Affordable Care Act has brought significant changes to the health insurance market. Some of these changes were expected by insurers and some were not, according to a study by Conning. The objective of reducing the number of uninsured was accomplished at least in part, which is creating growth opportunities for insurers. However, many insurers are reporting significant losses in the new individual exchange market, which is prompting rate increases and causing insurers to question their participation in selected state markets. Many insurers spent significant resources preparing for the launch of the individual market exchanges. The ACA is spurring large scale acquisitions. The industry focus has turned to scale, leading to the mega-merger announcements of last year. Insurers will refine their strategies as the dust settles from the ACA implementation. Medicaid specialist firms will ride the growth and positive performance of their new enrollees. For more information, visit www.conning.com.

Group Calls on Congress to Reform Mental Health Care
The National Alliance on Mental Illness (NAMI) is calling on the Senate to vote on S. 2680, the Mental Health Reform Act of 2016. The bill, which was was introduced by Senators Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.), is on the Senate calendar, awaiting action. The group presented petitions with 200,000 signatures at a Senate Summit on Mental Health. The bill would do the following:

Require audits of health plans that have five or more parity violations and reports to Congress on the result of completed federal parity investigations.
Require additional federal guidance to help plans comply with the parity law.
Require a federal action plan to enhance parity enforcement and a GAO parity study.
Authorize suicide prevention programs.
Address shortages in the mental health workforce.
Invest in early intervention programs.
Promote integration of primary and mental health care.
Strengthen community crisis response systems.

NAMI Chief Executive Officer Mary Giliberti said, “We are showing that Americans all across the country are raising their voices and calling for urgent congressional action to begin to address America’s broken mental health system. Too often, calls for national action following tragic events fall to the back burner as urgency fades. Yet, every day, hundreds of thousands of people [who are] affected by mental illness struggle because they do not have the services and support needed to help them recover and live productive lives.” For more information, visit www.nami.org.

Healthcare costs for a Typical American Family Will Exceed $25,000 in 2016
In 2016, the cost of healthcare for a family of four with group PPO coverage will increase 4.7%. These costs have tripled since 2001 to exceed $25,000 in 2016, according to the Milliman Medical Index study. “It’s a significant and somewhat unsettling milestone,” said Chris Girod, co-author of the Milliman Medical Index. This year, the family’s share of healthcare costs reached $11,033 out of $25,826. In 2001, employers paid 61% of costs while employees paid 39%. In 2016, the split is 57% and 43%.

Though 2016, marks the lowest rate of increase in the history of the study, the total dollar increase is $1,155, marking the 11th consecutive year that the increase has exceeded $1,100. Healthcare has represented an increasing share of the national GDP. With an average of 7.8% in annual increases, the MMI has more than tripled in 15 years. The annual medical cost increase has ramped down from more than 9% in 2001 to less than 4% this year. But cost changes related to prescription drug coverage have been more volatile, with drugs becoming a larger portion of family healthcare expenditures—this year reaching 17%. (That number does not include prescription drug manufacturer rebates for specialty and other high-cost drugs). “The steady decline in annual cost trends over the 15 years…provides a ray of hope. Hopefully, future efforts to control costs will continue this trend,” said Scott Weltz, co-author of the MMI. To view the complete MMI, go to http://us.milliman.com/MMI/.

EMPLOYEE BENEFITS

Study Reveals Gaps in Disability Coverage
Seventy-two percent of American workers agree that something can be done to protect against an injury or illness that keeps them from working, but few consider ways to protect their financial health if they had to go without a paycheck, according to a survey by Cigna. The survey also reveals the following:

10% bought additional disability insurance or supplemental insurance products like critical illness, accidental injury or hospital indemnity insurance. (According to the Bureau of Labor Statistics, only 39% of private industry workers have short-term disability insurance and 33% have long-term disability coverage.).
When asked about benefits they would want if they faced a disabling injury or illness, only 47% said disability insurance, and 39%, said they would turn to sick time or Family & Medical Leave. However, the Family & Medical Leave Act doesn’t provide financial help.
44% worry about how they would pay for medical costs not covered by their medical plan. With two-thirds of Americans living paycheck-to-paycheck, hospital costs can be an unexpected financial challenge. For more information, visit cigna.com.

NEW PRODUCTS

Group Voluntary Chiropractic Plan
Landmark launched a voluntary chiropractic plan for groups with two or more enrolled subscribers/employees. Premiums can be paid with pre-tax dollars. The plan includes a $20 office visit co-payment, 20 annual visits, no prior authorization, and no medical management. Participating employees can save more than 60% off retail when using a Landmark Voluntary Chiropractic Plan. Brokers can download ads about the plan to their website at www.lhp-ca.com/CABrokers/SacramentoAdCampaign.

New Benefit Exchange for Mid-Size Companies
The Namely Exchange has teamed up with Cigna. The new employee benefit exchange will enable companies to offer a menu of benefit plans in an online marketplace. The Namely Exchange will launch with 12 health insurance plans from Cigna, from which HR admins select up to five plan options to offer their employees. The exchange will also contain plan options for dental, vision, disability, and life insurance. Employees choose plans in the online marketplace. Elections and changes transmit to Cigna automatically, so enrollment is seamless and coverage is always up-to-date. Benefit deductions feed into Namely automatically, so payroll can be processed accurately and easily. For more information, visit www.namely.com.