IN CALIFORNIA
• New Exchange Website Helps Agents Stay Compliant
• Court Says Unum Unlawfully Denied Disability Benefits to Fibromyalgia Patient
• SeeChange Recognized for Innovation
HEALTHCARE
• Small Businesses Have Not Decided How to Respond to Health Reform
• Less than Half of Small Businesses Offer Benefits
• HSA Account Balances Are Rising
• Why CDHPS Are Flourishing
• Health Plans Fail To Meet ACA Standards For Out-Of-Pocket Spending
• ACO Association Is Launched
• CVS Caremark Extends Pharmacy Advisor Program
DISABILITY INSURANCE
• How Financial Strain Increases the Need for Disability Coverage
NEW PRODUCTS
• Retirement Preparedness Tool
• Health Plan App for Apple and Android Devices
• Retirement Plan With a Twist
MOVERS & SHAKERS
• Benefit Consultant Joins Epic
New Exchange Website Helps Agents Stay Compliant
The California Health Benefit Exchange website, www.CoveredCA.com, is now live. California Health Underwriters (CAHU) is urging agents to visit the site and review all the marketing materials to avoid violating AB 1761 rules. AB 1761, which took effect January 1, prohibits any individual or website from attempting to hold their selves, plans or websites out as officially authorized as “Covered California” certified or approved.
CAHU says that word has come down that the Exchange plans a hard crackdown on violators of AB 1761 provisions. AB 1761 was supported by all three-agent organizations as well as other consumer health advocates.
The Covered California website has been designed for ease of use by all stakeholders, including licensed agents and employers. In fact, the new website contains individual and small employer content on the Small Employer Health Options Program (SHOP) section. A newsletter about SHOP Exchange happenings is expected to launch sometime in the first quarter of 2013. The site, which is available in English and Spanish, also offers a variety of fact sheets in 11 additional languages. It provides basic information about the Exchange and a calculator to give Californians an estimate of how much help they can get to reduce their premium costs.
Court Says Unum Unlawfully Denied Disability Benefits to Fibromyalgia Patient
Kantor & Kantor LLP announced a victory on behalf of client Tanya Mondolo, who sued Unum Life Insurance Co. in U.S. District Court for the Central District of California for wrongfully denying her disability insurance benefits. The court ordered Unum to reinstate benefits, with interest, and that Kantor & Kantor could make a motion for attorneys’ fees and costs.
Mondolo suffers from fibromyalgia and avascular necrosis. She has difficulty walking, suffers from uncontrolled pain, and is too weak to tolerate prolonged sitting or typing. The court agreed that Unum failed to properly investigate Mondolo’s claim, neglecting to determine how much sitting she could tolerate without significant pain. Unum did not investigate whether the alternative jobs it claimed Mondolo could perform were appropriate for her limited ability. Unum and its reviewing physicians failed to consider psychological evidence, even though the policy expressly stated that such evidence must be considered.
In addition, attorneys Kassan and Brehm argued that Unum’s conclusions were unreasonable. For example, Unum insisted Mondolo could sit between one-third and two-thirds of a workday. The Kantor attorneys proved even if Unum’s supposition was accurate, Mondolo was still not able to meet the requirements of or perform the sedentary work Unum argued she was capable of.
SeeChange Recognized for Innovation
Fast Company magazine named SeeChange health as one of the most innovative companies of 2013. The following is an excerpt from the magazine about SeeChange,
The simplest way to lower health care costs is also the hardest: encourage healthy behavior. That’s the premise behind the insurance policies of SeeChange Health, which serves small employers and offers customers many discounts–depending on how healthy any one person works to be. “We know that can save a lot of money,” says CEO Martin Watson. Before selling its own policies in 2010, it managed plans for larger insurers (which it still does). In one case, it incentivized 45% of diabetics to drop an average of 9 pounds, which led to a 19% drop in costs over two years. The company is now adding 2,200 members per month. In 2012, it says revenue increased sevenfold, to $54.2 million. That’s healthy growth.
Small Businesses Have Not Decided How to Respond to Health Reform
Sixty-five percent of small business owners have not decided how they will manage their healthcare costs over the next 12 months. Of the remaining, 13% plan to rebid their policy; 8% plan to reduce benefits to employees; and 14% plan to ask employees to pay a greater share. Barry Sloane of The Small Business Authority said, “Small- and medium-sized business owners are delaying any response or reaction to ObamaCare, despite the fact that it might not be in their best interest to be paralyzed at the moment.” For more information, visit http://www.thesba.com.
Less than Half of Small Businesses Offer Benefits
Only 47% of small businesses (2-99 employees) in the United States offer benefits, the lowest level in two decades of LIMRA research. 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. Kim Landry, a research analyst with LIMRA said, “The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves.”
LIMRA’s study found that 78% of small businesses in the U.S. are family-owned. Family-owned firms experienced a sharper decline in benefit penetration between 2005 and 2012 than did non-family-owned firms, with only 40% offering insurance benefits in 2012 compared with 47% in 2005.
One quarter of small businesses are female-owned. These firms tend to be smaller, produce lower revenue than male-owned firms, and less likely to offer insurance benefits (37% versus 50% of male-owned small businesses).
Among small businesses that do offer insurance benefits to their employees, medical and prescription drug plans are by far the most popular, and tend to be the first benefits that companies bring on board, Landry noted, “These benefits provide an opportunity for small business owners to get coverage not only for their employees, but also for themselves and their families. We also found dental and vision coverage to be common offerings among small businesses, as these products tend to be very popular with employees.”
LIMRA found that life insurance is frequently offered by small firms, whose preference for this benefit is most likely associated with its low cost and ease of administration. However, products, such as long-term disability, short-term disability, and accident insurance have fairly low penetration rates among small businesses, leaving employees vulnerable to a variety of financial risks. For More information, visit www.limra.com.
HSA Account Balances Are Rising
Average account balances in HSAs increased in 2011 and 2012 after falling slightly in 2010. In 2012, there was $17.8 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 11.6 million accounts, according to the 2012 EBRI/MGA Consumer Engagement in Health Care Survey.
After declining to $1,029 in 2010, average rollover amounts increased to $1,206 in 2011 and remained there in 2012. Total assets being rolled over increased with $9.7 billion being rolled over into HSAs and HRAs in 2012, up from $6.8 billion in 2011. The percentage of people without a rollover was 11% in 2012.
Smokers have more money in their accounts than do nonsmokers. In contrast, obese people have less money in their account than do the non-obese. There was very little difference in account balances by level of exercise. There were very slight increases in account balances and rollover amounts for people who used cost or quality information. However, next to no relationship was found between account balance or rollover amounts and various cost-conscious behaviors.
The study also finds that men have higher account balances than do women, older people have higher account balances, account balances increase with household income, and education has a significant effect on account balances, independent of income and other variables.
Men rolled over more money than did women, and older people had higher rollover amounts than did younger people in 2012. Rollover amounts increased with household income and education, and people with single coverage rolled over a slightly higher amount than those with family coverage in 2012. For more information, visit www.ebri.org.
Why CDHPS Are Flourishing
In the face of another year of economic volatility and legislative and regulatory change, Cigna’s consumer-driven health plan (CDHP) participation grew by 26% during 2012, resulting in one-in-five customers now participating in a Health Savings Account (HSA) or Health Reimbursement Account (HRA). Cigna president and chief executive, David M. Cordani said, “The growth of consumer-driven health plans continues because they help customers reduce their health risks and improve the quality and efficiency of their care, which results in lowering their total medical costs.” When compared to customers in traditional PPO and HMO plans, those in a CDHP achieved the following:
• They Lowered their health risks: When employers transitioned to only offering a CDHP, people improved their health risk profile by 12% in the first year compared to customers in a traditional plan.
• They reduced total medical costs: Cigna’s CDHP medical cost trend was 13% lower than traditional plans during the first year: costs were 20% lower for HSA customers and 11% lower for HRA participants. Cost reductions were achieved without employers shifting out-of-pocket health expenses to their employees. Seventy-five percent of HSA customers contribute more to their accounts than they spend.
• They became more engaged in health improvement: CDHP customers are twice as likely to complete a health risk assessment and those with a chronic illness are up to 25% more likely to participate in a disease management program than those enrolled in a traditional plan.
• They were more likely to compare cost and quality: CDHP customers were 59% more likely to use the directory to access cost and procedure information to help them review potential medical costs.
• They became more savvy health care consumers: Customers with Cigna Choice Fund plans and Cigna pharmacy benefits were more likely to choose generic medications compared to those in a traditional plan. In addition, CDHP customers used the emergency room at a 6% less than did people enrolled in HMO and PPO plans.
• They Received higher levels of care: CDHP customers had consistent or higher compliance with over 300 evidenced-based medical best practices than did their counterparts in traditional plans. CDHP customers also sought preventive care more frequently than customers enrolled in a traditional plan.
Health Plans Fail to Meet ACA Standards for Out-Of-Pocket Spending
Thirty-six percent of health insurance plans would exceed even most permissive ACA plan limits on out-of-pocket expenses for consumers, according to an analysis from HealthPocket. In addition, 38% of plans did not disclose their deductible within its annual out-of-pocket limits, concealing the full amount a person could pay if the Summary of Benefits was not read carefully.
These plans will have to adopt more transparency by 2014 when the Affordable Care Act (ACA) provisions go into effect. Many will also need to reduce the out-of-pocket burden on their customers to meet even the most basic plan options under health reform. Beginning in 2014, insurers must offer plans that fit within four levels of coverage: Bronze, Silver, Gold, and Platinum. Most Americans will be required to purchase at least a Bronze-level plan, which has the highest out-of-pocket option for the consumer. The new ACA plans would cap current out-of-pocket costs to $6,250 per calendar year. When plan deductible amounts were taken into account, 36% of all health plans had higher out-of-pocket limits than what Bronze Plans will permit. There will be protections to limit how much consumers pay out-of-pocket, but many plans are clearly failing to meet these guidelines, and insurance coverage is inconsistent depending on where plans are sold.
Kev Coleman, head of research & data at HealthPocket said, “The Affordable Care Act’s limit on out-of-pocket costs will have a highly regional impact, with consumers in states, such as Vermont, Alabama, and Florida reaping the biggest benefits. While the average out-of-pocket costs limit nationwide falls within ACA guidelines, there are still thousands of plans that need to improve their out-of-pocket costs for 2014.”
The national average for out-of-pocket limits was $6,019 when the deductible was included in out-of-pocket costs for all plans. While the national average is below the Bronze Plan average, state averages varied from $3,192 to $10,013. Nationally, only 4% of plans examined had no limits on how much a consumer could pay annually in out-of-pocket spending for healthcare. When there is no annual out-of-pocket limit, a severe medical episode could result in catastrophic expenses even with health insurance coverage. Lab tests, hospitalization, surgery, could lead to expenses above $100,000 with out-of-pocket expenses on some plans representing 30% or more of these costs. Results of this study were based on an analysis of 9,752 health insurance plans for people and families under the age of 65. For more information, visit http://www.HealthPocket.com.
ACO Association Is Launched
Accountable Care Organizations (ACO) from more than 15 States have come together to form the National Association of ACOs. The Centers for Medicare and Medicaid (CMS) recognized 258 organizations as ACOs, and private insurance plans are working with numerous other ACOs in cities across the United States. “It is phenomenal that this many ACOs could come together in a matter of 8 weeks to form such an important organization,” said Clif Gaus, NAACOS President.
Membership is expected to exceed 100 ACOs by April, representing over 2 million Medicare assigned beneficiaries. NAACOS has the following mission:
• Foster growth of accountable care models of care.
• Promote industry-wide uniformity on quality and performance measures.
• Provide peer-to-peer learning experiences.
• Highlight clinical and operational best practices.
• Engage the vendor community.
• Educate the public about the value of accountable care.
The Association is sponsoring its first national conference and membership meeting in Baltimore, MD, March 19-21. For more information, visit www.NAACOS.com
CVS Caremark Extends Pharmacy Advisor Program
CVS Caremark has extended its Pharmacy Advisor program to cover five additional chronic conditions including asthma, breast cancer, chronic obstructive pulmonary disease, depression, and osteoporosis. The program alerts pharmacists when patients are not adherent to their medication regimens or have a gap in care, allowing them to intervene with patients and communicate with their physicians in real time. Before this program extension, the Pharmacy Advisor program had focused on patients with diabetes or cardiovascular conditions, with more than 3.8 million interventions conducted to date. Medication non-adherence is estimated to costs the U.S. economy nearly $300 billion annually. For more information, visit http://www.cvs.com.
How Financial Strain Increases the Need for Disability Coverage
The recession, along with higher health care costs and a multi-generational workforce, have created a unique situation for employers. Many Baby Boomers are working longer to recoup money lost during the Great Recession. Baby Boomers who are forced to delay retirement, are creating a workplace with higher likelihood of serious illness or injury, which can strain employer health care costs, according to an industry analysis by Standard Insurance Company.
Alex Dumont of The Standard said that it is increasingly important to offer Baby Boomers return-to-work, stay-at-work and wellness programs. But, younger age groups are also facing financial challenges including slowed upward movement and increased family responsibilities, such as caring for children and aging parents. Dumont said, “We’ve seen the cost of caring for children and aging parents rise over the last 10 years, placing a significant financial burden on Generation X and Millennials. These generations, sometimes referred to as the ‘sandwich generation’ are more likely to use family and medical leave benefits to care for family members. They are not afraid to use these benefits, especially since they can’t always afford to pay for family care services.”
To help employers manage costs associated with family medical leave, The Standard suggests giving workers more flexibility, including options for where and when they can work. A comprehensive absence management program should also be provided. For more information, visit www.workplacepossibilities.com.
Retirement Preparedness Tool
To get Americans thinking about their financial security and retirement, Northwestern Mutual introduced the 9-Hole Retirement Challenge. Through a series of nine golf-themed questions, participants can assess their knowledge of key risks and learn how certain financial decisions can affect their retirement income goals.
Health Plan App for Apple and Android Devices
Cigna is launching the myCigna Mobile App. It gives Cigna health plan customers instant access to their personalized health care information to find a doctor using Cigna’s award-winning physician directory; access ID cards; view and manage account balances and deductibles; look up medical, dental and pharmacy claims; and research and compare drug prices at 60,000 pharmacies.
Retirement Plan With a Twist
OneAmerica launched Index(k), a new approach to retirement plan construction focused on indexed investing. Index(k) was developed in response to the changing needs of the defined contribution retirement plan industry including an increased focus on management fees, total investment expenses, and transparency. Index(k) will offer plan sponsors a menu of 18 collective trust investment options offered through Wilmington Trust Retirement and Institutional Services Company and managed by BlackRock. jim.gavin@oneamerica.com.
Benefit Consultant Joins Epic
Edgewood Partners Insurance Center (EPIC) hired Jennifer Haley as an employee benefit consultant in its Northern California Employee Benefits Division. Haley brings 12 years of experience in employee benefits solutions, including fully insured and limited self-funding medical products. Haley’s responsibilities will include the acquisition of new clients as well as the design, placement and management of employee and executive benefit programs. She will be based in San Francisco and report to EPIC’s chief operating officer, Steve Vilas. Haley can be reached at 415-356-3976, by cell at 925-588-8618, or email at jhaley@edgewoodins.com.
