HEALTHCARE
Brokers Report Steady Revenue from Individual Policies
Sixty percent of brokers say they are selling more non-group coverage today than they did before 2014, according to a study by the Kaiser Family Foundation (KFF). Most say it takes more time to sell a policy, and the revenue they earn per-policy is less, but 40% earn more income overall from non-group commissions than they did before implementation of the ACA marketplaces. Twenty percent say their non-group commission income is about the same.
Brokers have continued their traditional role of helping consumers in the non-group market. They are an important source of assistance for consumers seeking marketplace coverage, according to KFF. Most in this space sold non-group coverage before the ACA. Brokers also continue to help consumers buy coverage outside of the marketplace. On average, brokers sell one policy outside for every two marketplace policies they sell in the marketplace.
The second open-enrollment period went better than the first, according to 82% of assister programs and 79% of brokers. Both brokers and assisters help consumers complete marketplace applications, compare plan choices, and answer tax-related questions. Both also help consumers with post-enrollment problems. However, brokers often engage in less public outreach and educational activities. Brokers also provide less help to consumers applying for Medicaid and more help to small businesses seeking small-group coverage.
Brokers are less likely than are assister programs to serve Latinos, consumers who need language translation, consumers who don’t Internet access at home or consumers who are eligible for Medicaid. Brokers are also less likely to say that most of their clients were uninsured at the time they sought help.
However, returning brokers reported more client continuity compared to assister programs, indicating that they may be establishing more ongoing relationships with their clients than assister programs have been able to do so far. The implication for marketplaces would seem to be that brokers and assister programs are not interchangeable. To ensure that all consumers who need help get it, both types of professionals will need to continue their key roles, according to the report. For more information, visit kff.org.
Why Private Exchanges Don’t Threaten the ACA
A report by the Robert Wood Johnson Foundation failed to uncover any substantial evidence that private exchanges pose any serious threats to public policy. It is important to note that the Foundation is not a conservative think tank. In fact, it has been bashed in the conservative media for being left wing. The following is a summary of the report. Private exchanges don’t appear to threaten the ACA’s regulatory structure. Private exchanges are not a pathway for employers to drop or radically reduce coverage. They are not being offered as a way to circumvent or exploit other federal or state regulatory standards. Private exchanges, so far, have not degraded employer sponsorship of health benefits, and experts believe this is not likely to happen.
Instead, there is good reason to believe that private exchanges might enhance employers’ willingness to continue offering health benefits.
They don’t pose a threat to the public exchanges. For the most part, they are not in direct competition with the small-employer component of the public exchanges, the Small Business Health Options Program (SHOP). Instead, private exchanges appear to hold real promise for improving choice and competition in the group insurance markets.
Seldom in the history of health care public policy has a major development in health care finance failed to prompt a major regulatory response. The initial growth of health insurance prompted state regulation of covered benefits. The spread of employer-sponsored health insurance yielded ERISA. The managed care revolution sparked a regulatory backlash against restrictive coverage. And the ACA’s creation of public health insurance exchanges carried with it a host of regulatory requirements for qualified health plans that participate in public exchanges.
Private insurance exchanges have not yet achieved the same level of significance, but some analysts predict they will. If so, it would be surprising if private exchanges did not merit some attention from regulators.
Private exchanges appear to be an exceptional case in which regulatory restraint is the wisest course of action. None of the potential concerns that one might conjure for private exchanges appears to have materialized or to be a real threat. Views were more divided on enacting laws and regulations to facilitate or promote private exchanges. The dominant view is that private exchanges face no substantial regulatory barriers or uncertainties, and thus they are able to succeed in the market if they demonstrate their inherent economic value. Others say that adoption of private exchanges would accelerate if laws were enacted to give employers safe harbor from certain regulatory requirements. The strongest accelerant would be if tax law changed to allow workers to use pre-tax employer contributions to purchase individual insurance.
The promise is sufficiently attractive that lawmakers might consider measures that facilitate changes to ERISA and to the tax treatment of individual insurance. The government has reason to prevent double dipping by using pre-tax dollars to purchase subsidized insurance. The best course of action, at the moment, appears to be simply standing back to monitor how private exchanges develop within existing market conditions and regulatory pathways. For more information, visit hcfo.org/files/hcfo/HCFOReportHall2015.pdf.
The Challenges Faced by Self-Employed Baby Boomers
Twenty-six percent of self-insured Baby Boomers say that rising healthcare costs have reduced their ability to save, and 35% say that the rising cost of health insurance has hurt their business, according to a survey by Ameritrade. The study also reveals the following about self-employed Baby Boomers:
- 63% don’t have the benefits of traditional employment (paid vacation, a better health benefit package, better insurance, professional support).
- 51% want the next president to reduce healthcare costs, 64% don’t expect their needs to be among the president’s top five priorities.
- 52% work long hours; 41% are never able to completely turn off work; 40% cope with constant financial pressure; 39% have had to prioritize their business over their personal life; and 30% have had to spend less time with their family.
- 76% were traditionally employed before they set up their own businesses.
- 77% say they could still be traditionally employed if they wanted.
- 57% say that political and economic changes over the past three to five years are affecting their business.
- 40% don’t support a $15 minimum wage hike. Thirty percent say it could hurt their business.
- 20% say that the effects of government regulations have worsened compared to three to five years ago.
- 61% are more anxious about saving money for retirement now; 59% are more anxious about earning a steady income from their business; and 53% are more anxious about expanding their business.
- 57% say that political and economic changes, over the past three to five years, are affecting their business.
For more information, visit TD Ameritrade.com.
How States Can Expand Volunteer Health Care
Millions of poor Americans are still uninsured or lack access to affordable health care options, but a simple local reform is already changing thousands of lives, and if enacted across the country, could help millions, says a report by the Foundation for Government Accountability (FGA). The report shows how every state can offer legal protections for health care professionals, like doctors, nurses, dentists, pharmacists, surgeons, and more, who provide free health care to low-income patients and their families.
Using Florida’s Volunteer Health Services program as a case study, the report shows how low-income residents in the Sunshine State benefitted from $1.3 billion in donated medical goods and services from 2010 to 2014. In 2014 the state netted a $614 to $1 return on its investment, spending just under $500,000 to administer the program, leading volunteers to provide nearly $300 million worth of care.
“There are so many charitable, caring people working in our health care system who want to help those in need, but feel constrained by frivolous liability concerns, which keeps them from donating valuable care to the poor,” said Tarren Bragdon, FGA CEO.
Volunteer care reforms are incredibly popular with the public, with 84% of voters supporting incentivizing and protecting health care professionals who provide free treatment. If volunteer care reforms are widely adopted, almost 4 million Americans could benefit from greater access to health care services each year. “We’ve already seen how transformative this program can be for people’s lives,” said Andrew Brown, a senior fellow with FGA. A Florida truck driver, who lost his job because of severe diabetes, got free treatment under the program, which helped him get back on the road. He now has a steady income and is able to provide stability for his family, and health insurance. See the possible impact volunteer care reforms could have in your state here thefga.org/solutions/health-care-reform/volunteer-care.
FAQs on the ACA and Employee Benefits
The Departments of Labor, Treasury, and Health and Human Services issued FAQs on the Affordable Care Act, wellness plans, and mental health parity. The following is a summary. (The actual document is much more detailed):
- Do plans have to provide a list of the lactation-counseling providers within the network? Yes.
- My group health plan does not include lactation counseling providers. Can they impose cost sharing for services outside the network? No.
- My state does not license lactation counseling providers and my plan will only cover services from licensed providers. Does that mean that I can’t get coverage for lactation counseling without cost sharing? No.
- Can the plan impose cost sharing for outpatient lactation counseling? No.
- Can plans require women to get breastfeeding equipment within a period in order to cover it without cost sharing (for example, within six months of delivery)? No.
- Can my non-grandfathered group health plan exclude weight management services for adult obesity? No. They must cover obesity screening for adults without cost sharing. In addition to such screening, the USPSTF recommends intensive, multi-component behavioral weight management interventions for adult patients with a body mass index (BMI) of 30 kg/m2 or higher.
- If a colonoscopy is scheduled and performed pursuant to USPSTF recommendation, can a plan impose cost sharing for the required specialist consultation before the screening procedure? No.
- After a colonoscopy is scheduled and performed pursuant to the USPSTF recommendation, does plan have to cover any pathology exam on a polyp biopsy without cost sharing? Yes.
- I am a qualifying non-profit or closely held for-profit employer who sponsors an ERISA-covered self-insured plan. I object to providing coverage of contraceptive services. How do I avoid any obligation to contract, arrange, pay, or refer for that coverage? There are two methods: Complete the EBSA Form 700 (accessible at www.dol.gov/ebsa/pdf/preventiveserviceseligibleorganizationcertificationform.pdf) and provide it to the plan’s third party administrator(s); or Provide appropriate notice of the objection to the Department of HHS. A model notice is available at www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Model-Notice-8-22-14.pdf.
- Which women must be provided coverage, without cost sharing, for genetic counseling, and if indicated, testing for harmful BRCA mutations? Women found to be at increased risk using a screening tool designed to identify a family history must get coverage without cost sharing for genetic counseling, and, if indicated, testing for harmful BRCA mutations.
- My group health plan gives rewards, such as gift cards, thermoses, and sports gear to participants who adhere to a wellness program. Are these non-financial incentives subject to the wellness program regulations issued by the Departments? Yes. The wellness program is subject to the Department’s wellness regulations if a group health plan provides a reward when a participant meets a standard that is related to a health factor.
- My group health plan provides treatment for anorexia as a mental health benefit. My provider’s request was denied for prior authorization for a 30-day inpatient stay. My plan said that it is not medically necessary under the plan terms. I asked the plan administrator for a copy of its medical necessity criteria for medical/surgical and MH/SUD benefits (including anorexia), and any information about the processes, strategies, evidentiary standards, or other factors used in developing the medical necessity criteria and in applying them. Can the plan administrator deny me this information? No.
For more information, visit dol.gov/ebsa/faqs/faq-aca29.html.
LONG TERM CARE INSURANCE
The IRS Increases Deduction Limits for Long Term Care Insurance
A couple with tax-qualified long-term care insurance coverage could enjoy a maximum $9,500 tax deduction in 2015. The potential tax deduction increases to $9,740 in 2016 according to a just-released IRS revenue procedure. “The potential tax deductibility of tax-qualified long-term care insurance costs is one of the most overlooked benefits, especially for older retired Americans,” states Jesse Slome, director of the American Association for Long-Term Care Insurance (AALTCI).
The IRS permits deductions for long-term care insurance policies that meet certain eligibility standards. Life insurance policies that offer a long-term care benefit are generally not eligible for a tax deduction. The allowable maximum deduction is based on the policyholder’s age before the end of the taxable year. A couple ages 64 and 66 could be eligible to deduct $3,800 each from their 2015 taxes. The deduction may be possible even if they paid for the policy now before the end of the year.
For 2016, the IRS approved a 2.5% increase. “This is a positive indication of the government’s commitment to encourage more individuals to do some planning. The government recently announced that 60 million people on Social Security will not receive any cost-of-living increase in their 2016 benefits,” he said. Tax-deductible limits for long term care insurance premiums vary by age. The 2015 limit for someone age 55 is $1,430 in 2015 (increasing to $1,460 in 2016).
Slome notes, “You likely will not qualify for a tax deduction while you are still working but you could benefit when you are retired. After retirement, your income is low; the age-based tax deductible maximum limit for long term care insurance is high; and your ability to deduct costs is more likely and much more valuable.”
Slome contends that few individuals are aware of the tax deductibility of long-term care insurance premiums, “We find most people are completely unaware of the opportunity and rules that apply for individuals and self-employed individuals.”
Certain owners of businesses are able to take advantage of special rules that apply to tax qualified long-term care insurance. A small business, established as a C-corporation may be able to deduct the full cost of long term care insurance premiums, even if the cost is above the stated yearly tax limits. Plus, the company can designate who is covered even when the employer pays the full cost.
While deductions may not apply for individuals who are still working, they often can be taken during retirement when income stops and medical expenses often occur. The 2015 and 2016 deductible limits under Section 213(d)(10) for eligible long-term care premiums includable in the term ‘medical care’ are as follows: For more information, visit aaltci.org.
EMPLOYEE BENEFITS
Voluntary Long-Term Disability Plans Are Getting More Popular
As employers move away from fully funding products, they are becoming more interested in voluntary long-term disability (VLTD) solutions to fill benefit gaps. In fact, the number of employers that fully fund LTD benefits has decreased from 51% in 2009 to only 24% in 2014, according to a 2014 Eastbridge study.
With this increased interest comes the demand for more flexible and innovative VLTD plans. Some innovations include higher maximums, new benefit options, more hybrid products, and plans that can meet the needs of not only the middle and large-employer market, but also smaller employers. In 2011, carriers added survivor benefits and cost-of-living adjustments. Since that time, carriers have also added optional benefits, such as employee-assistance programs, ADL increases, and financial counseling.
Although the majority of benefit options are chosen at the employer level, carriers are also looking at ways to offer more options at the employee level. These include more choices of benefit amounts, varying benefit durations, and the ability to buy less than the amount for which the employee is eligible.
More features and benefits offered by carriers, both at the employer and employee levels, have helped meet much of the increased demand for voluntary long-term disability coverage. Carriers should continue to look for ways to truly differentiate their product from others on the market, according to the report. For more information, visit eastbridge.com.
Employers Take a Wait and See Approach to Minimum Wages
Some employers have gotten positive press for raising the salaries of their minimum wage employees. But 72% of employers with minimum wage workers have no plans to boost their wages unless mandated to do so, according to a survey by Aon Hewitt. They plan to adjust wages, as needed, through current salary review cycles.
“The majority of employers…do not plan to make any changes until new regulations are issued and they assess the actions of their competitors. Organizations are very sensitive about increasing one of their largest fixed costs and overall expense categories, and many of them simply don’t see any advantage to increasing their labor costs at this time,” said Ken Abosch, broad-based compensation practice leader for Aon Hewitt.
The remaining 28% of employers that are voluntarily boosting the minimum wage say that doing so will give them a competitive advantage in attracting new workers (77%) and lower turnover (76%).
Just 33% of employers say that, if they were required to raise the minimum wage, they would also raise the pay of higher wage workers to maintain the same difference in wages. If forced to raise minimum wages, 36% of employers say they will reduce or eliminate overtime, and 30% percent say they will increase prices for consumers. For more information, visit aon.com.
IN CALIFORNIA
Healthcare Company CEO Arrested For Insurance Fraud
Peter Lira, 53, CEO of Am-Pro Prosthetics & Orthotics in Whittier, was arrested on three felony counts of insurance fraud for allegedly billing Anthem Blue Cross for a $170,000 prosthetic arm after Lira was notified the patient had died. Suspecting fraud, Anthem referred the claim to the Dept. of Insurance for investigation. Detectives found evidence that Lira allegedly submitted fraudulent invoices and forged the deceased patient’s signature on the delivery receipt to collect payment for manufacturing a prosthetic arm.
Commissioner Dave Jones said, “Losses from health insurance fraud are larger than all other types of insurance fraud. Fraud committed by healthcare providers is particularly egregious and contributes to increased health insurance costs when insurers pass their losses along to consumers through higher premiums.” Lira was arrested on Friday and booked into Men’s Central Jail in Los Angeles. He faces five years in prison, if convicted on all counts. This case is being prosecuted by the Los Angeles County District Attorney’s Office.
LIFE INSURANCE
Life Insurance Industry Continues To Struggle with Low Interest Rates
The life insurance industry’s investment decisions continued to focus on yield in 2014 and into 2015, according to a study by Conning. “The quest for yield has been the key focus for the life industry investment portfolio for years now,” said Mary Pat Campbell, Vice President, Insurance Research at Conning. In response to the continued low interest rate environment, insurers have been adjusting allocations in the investment portfolio to provide the much-needed extra yield. From 2010 to 2014, insurers have shifted away from stocks to reduce exposure to volatility, and have increased their allocation in yield-boosting investments such as Schedule BA assets and lower-rated bonds. For more information, visit conningresearch.com.
NEW PRODUCTS
Prescription Savings App
ScriptSave has launched ScriptSave WellRx, mobile app at http://goo.gl/sx6v4w. It allows consumers compare prescription drug prices, locate pharmacies, and get immediate savings at the register on generic and brand prescription medications. The ScriptSave WellRx prescription savings card and tools are available at wellrx.com, and the mobile app is available as a free download on the Apple App Store and on the Android Google Play Store.
Secure Document Storage
LifeSite Vault is a new, secure web-based solution for storing vital information and documents. Also introduced is the LifeSite Vault companion mobile app, which provides safe access to users’ information from any mobile device. LifeSite Vault guides users with easy prompts for entering and encrypting information in different categories such as personal, medical, people, pets, online accounts, career, finances, property, insurance and legal. It provides convenient features to share information and documents. The companion LifeSite Vault mobile app is now available for download on all popular mobile operating systems, including Apple iOS, and Android.
Worker’s Comp Claims Processing
Acrometis and Willis have launched Willis’ Advanced Technology Strategic Risk Planning process. The claims-processing platform incorporates over 10,000 business rules to process all incoming documents to ensure appropriateness, relatedness and eligibility in every jurisdiction. willis.com.
Individual Dental PPO and HMO
The Guardian is offering individual dental coverage at https://mydental.guardianlife.com. Consumers can save up to 30% off standard dental fees with Guardian dental insurance. Depending on the plan, check-ups and cleanings may have little or no out-of-pocket expenses and participants can expect cost-reductions for more advanced procedures like root canals or crowns. Consumers can choose from a dental PPO or DHMO. For more information, visit mydental.guardianlife.com.
Disability Insurance Tool
The Guardian launched an online disability income (DI) insurance tool to help consumers build their own insurance package online. Guardian’s online DI insurance quoting tool provides consumers with transparency into pricing and allows them to personalize their level of coverage. The tool can be accessed at www.Guardianlife.com/disability-income-insurance- calculator.
Retirement Offering for Smaller Companies
Transamerica Retirement Solutions launched a 401(k) retirement plan that offers large-plan features to smaller businesses and their employees. With the Transamerica FastTrack Retirement Plan, participants can enjoy clear savings strategies and personalized online progress reports. Employers can take advantage of the new retirement plan starting with a commitment of $50,000 in first-year deposits or plan assets. The plan offers a menu of diversified, quality investment choices, a service model that includes third party administrators for efficient and expert compliance support, along with the fiduciary protection offered by the ERISA section 3(21) fiduciary service from Mesirow Financial Investment Management, Inc. For more information, visit transamerica.com.