 |
HEALTHCARE
Healthcare Consumers Get Added Appeal Rights
The Departments of Health and Human Services (HHS), Labor, and the Treasury issued regulations giving consumers in new health plans the right to appeal claims denials and rescissions. For the first time, consumers will have the right to appeal decisions made by a health plan to an outside, independent decision-maker, no matter what state a patient lives in or what type of health coverage they have.
Grant applications from the $30 million Consumer Assistance Program are now available to help states and territories establish consumer assistance offices or strengthen existing ones. The funds will be used to give consumers the information they need to choose from coverage options, appeal coverage denials, and choose a primary care provider.
“The Affordable Care Act provisions we’re announcing today will ensure that consumers have access to a fair, thorough and uniform appeals process if their claim is denied. With these new patient protections, we’re providing consumers with another strong defense against insurance company abuses,” said Michael Mundaca, assistant treasury secretary for tax policy. To get the free guide, visit http://forms.unum.com/StreamPDF.aspx?strURL=/FMS_108023-2.pdf&strAudience=StreamByNumber http://www.healthcare.gov/news/factsheets.
Health Reform May Put Some Smaller Insurers Out of Business
The Patient Protection and Affordable Care Act is expected to squeeze the profits and finances of the nation's smaller health insurers, forcing many to withdraw from the market, be acquired, or fail, according to a study by Weiss Ratings. The Weiss Ratings study covers 585 health insurers. Sixteen percent got a Weiss Rating of D+ (weak) or lower, putting them at risk of future financial difficulties caused by higher medical costs, a weaker economy, or other pressures. Another 32% are rated C+, C, or C- (fair), many of which could also have some difficulty absorbing the additional costs mandated by healthcare reform.
Martin D. Weiss, president of Weiss Ratings, said that sweeping changes, such as removing certain limits and mandating coverage for pre-existing conditions would force health insurers to spend more on medical care. Smaller insurers with less capital and fewer efficiencies of scale are more likely to suffer difficulties or even go out of business due to healthcare reform. He noted that 174 health insurers reported losses last year even before any additional expenses became mandated by healthcare reform. “Most large health insurers will be able to handle it. But we are concerned that weaker, less profitable insurers will be forced out of the market, reducing competition and leading to fewer choices and higher premiums for consumers,” he said.
“The largest, most efficient insurers with abundant capital and solid profits are not only in a position to absorb the higher expenses mandated by reform, but could also expand their market share by buying up the weaker companies,” he added. The nation's 16 largest health insurers control 46% of the industry's assets. The largest health insurer, Kaiser Foundation Health Plan Inc., merited a Weiss rating of A- (excellent) while the second largest, Healthcare Service Corp., was rated A+. Also receiving excellent grades was Blue Cross of California (A+). For more information, visit www.weissratings.com/healthlists.
Some Insurers Stop Writing Individual Coverage for Kids
The Associated Press reports that some major health insurance companies will no longer issue certain types of policies for children, an unintended consequence of President Barack Obama's healthcare overhaul law. Florida Insurance Commissioner Kevin McCarty said several big insurers in his state will stop issuing new policies that cover children individually. Oklahoma Insurance Commissioner Kim Holland said a couple of local insurers in her state are doing likewise. In Florida, Blue Cross and Blue Shield, Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.
Starting later this year, the healthcare overhaul law requires insurers to accept children regardless of medical problems. Insurance companies and state insurance commissioners are pressing the federal government to require an open enrollment period for the guaranteed children's coverage. Final regulations for the new children's coverage are due before Sept. 23. The requirement to cover kids with pre-existing medical problems will apply to new plans starting after that date.
Improving Medicare Efficiency
A report by the Conservative think tank, American Enterprise Institute (AEI), suggests that private insurers have tighter management of utilization compared to Medicare. Due to its market share, Medicare has more leverage to dictate prices. However, there are smaller variations in regional service with private sector insurance. AEI says that Medicare should consider implementing private sector’s utilization-management techniques to reduce spending and limit the geographic variation in utilization among Medicare beneficiaries.
According to AEI, efficiency in healthcare can have less to do with geographic location and more to do with the health insurers that oversee the delivery of this care. The findings also call into question the prevalent view that private health insurance is less efficient due to its higher administrative costs. If administrative costs are higher because of more aggressive utilization review, this can be evidence of greater, not less, efficiency in the private sector, says AEI. For more information, visit http://www.aei.org/outlook/100975.
EMPLOYEE BENEFITS
People Who Buy Disability Insurance
Surprisingly, a person’s experiences with a major illness does not seem to affect their interest in purchasing voluntary disability, life, or critical illness insurance, according to a Guardian survey. More than 41% of full-time employees would consider paying in full to get certain voluntary benefits. When asked which benefit they would consider on a voluntary basis, employees chose the following (ranked in order of preference):
58% Disability
56% Critical Illness
55% Dental
52% Life
48% Vision
The following statistics reveal that many employees don't understand differences among insurance products:
• 38% don't know the difference between critical illness and disability insurance.
• 38% don't know the difference between critical illness and medical insurance.
• 43% don't know the difference between critical illness and long-term care insurance.
• 57% don't know the difference between critical illness insurance and accelerated death benefits on life insurance.
For more information, visit www.aboutemployeebenefits.com.
Retirement Benefits Declined 19% between 1998 and 2008
An analysis by Towers Watson reveals that the value of employer-sponsored retirement benefits saw double-digit declines from 1998 to 2008, as measured by percentage of pay. Fueling the decline was a decrease in the value of defined benefit plans. At the same time, an increase in the value of defined contribution plans offset the total decline somewhat.
The value of total retirement benefits provided to new, salaried employees declined by 19% in the eight industries studied – from 7.88% to 6.36% of pay. Total retirement benefits include defined benefit and defined contribution plans, retiree medical, and retiree life insurance plans. The decline in total retirement benefits was due mostly to a 53% drop in the value of defined benefits, from 4.19% of pay in 1998 to 1.99% in 2008. Meanwhile, defined contribution benefits increased by 38%, from 2.89% of pay in 1998 to 3.99% in 2008.
The largest decline in total retirement benefits occurred in the retail and wholesale industry – a drop of 33% from 5.72% of pay to 3.82%. Among the eight industries analyzed, only service industry workers saw the value of their retirement benefits increase – from 4.16% of pay to 4.30% of pay, an increase of 3%.
There has been a significant shift in retirement plans as many companies replaced their traditional defined benefit plans with defined contribution and other account-based retirement plans for new workers. Employers have been examining their retirement plan strategies carefully due to the financial crisis and the passage of the Pension Protection Action of 2006. The financial crisis has also been a wake-up call for employers to reevaluate their 401(k) plans as their employees’ balances plummeted. For more information, visit www.towerswatson.com.
IN CALIFORNIA
Anthem Blue Cross of California Gets New President
As of August 30, Pam Kehaly will be the new president and general manager of Anthem Blue Cross of California. Former president Leslie Margolin resigned after intense criticism when Anthem submitted to the state a proposed 39% premium increases for individual health plans.
Kehaly will be responsible for the management of all local group health insurance business in California including sales, account service, marketing, underwriting, and product delivery as well as customer relationships. She is also responsible for the development of the company’s long-term strategic direction and collaboration with local and state elected officials. Kehaly’s nearly 25 years of health insurance industry experience includes senior leadership sales and operational roles at Aetna and WellPoint. Most recently, Kehaly served as president of national accounts at Aetna. Before that, she led Aetna's West Region National Accounts division. Before joining Aetna, Kehaly worked in a variety of sales and operations leadership positions in WellPoint's California market.
Kaiser Permanente, Anthem Blue Spurn High-Risk Pool
The Sacramento Business Journal reports that California is moving ahead with plans for a federally sponsored health insurance program for people with pre-existing health conditions. But state officials were surprised to learn the two statewide plans in the existing high-risk pool -- Kaiser Permanente and Anthem Blue Cross -- aren’t interested in participating in the new pool, which is far better funded than the longtime state program and expected to serve at least three times as many people. The temporary program is a stopgap measure to provide insurance to this group until broader measures in the federal healthcare overhaul take effect in 2014.
The state plans to run the federal program alongside the existing high-risk state program. On July 7, the state issued a request for proposals for an administrative vendor to handle eligibility, enrollment, billing, outreach and other services, and a third-party administrator to arrange the provider network, claims, pharmacy benefit management and other tasks.
New HSAs in California
SeeChange Health Insurance Company will offer a variety of health savings account (HSA) products in parts of California beginning August 1. SeeChange Health will be the first insurance company to offer value-based HSA products to California employers.
With SeeChange Health’s HSA accounts, employees can continue to contribute pre-tax dollars into their existing health savings account. There are no use it or lose it annual requirements. Contribution limits are $3,050 for individuals, $6,150 for families, and $7,150 for individuals who are 55 or older and signing up for a family plan. Money contributed to the account is tax deductible; earnings on the invested funds are tax deferred; and withdrawals are tax-free if used for qualified medical expenses.
As with the SeeChange Health plan, the value-based HSA products are designed to reward patients for managing their health. Members can get richer healthcare benefits, at no additional cost, by making an annual visit to their doctor, completing a simple health questionnaire, and getting a biometric screening consisting of basic lab tests. SeeChange members who select the HSA product and complete their personalized Health Actions get 100% coverage for their eligible medical expenses after the annual deductible is satisfied.
The SeeChange HSA products will be available first in the Monterey and Fresno areas before expanding to the Los Angeles area later this year. For more information, call Janice Rahm, 763-582-1262, e-mail JRahm@seechangehealth.com, or visit www.seechangehealth.com.
LIFE INSURANCE
How Refinancing a Mortgage Can Compromise Life Insurance Protection
Millions of homeowners have refinanced to take advantage of historically low mortgage interest rates. But Gary Lardy, CEO of IntelliQuote Insurance Services, warns that it’s easy to overlook unintended consequences when mortgage payments get extended into retirement.
For example, if a $250,000 mortgage is refinanced for 30 years at age 45, another 10 years of payments will remain at 65. Even though two-thirds of a mortgage term has passed, more than half of the principal debt will remain. Often, people discover the problem when they reach 65 and get a letter from their life insurance company notifying them that their coverage is about to expire. When they request a quote for an additional 10 years of coverage, they find that premiums have quadrupled for half the amount of coverage – that is if they can even medically qualify without ratings and exclusions.
A retired couple may be able to handle the extended mortgage payments comfortably, but when one spouse dies, a significant portion of the household income can die with them, or be significantly reduced in the form of Social Security, pensions, or annuities, for example. Furthermore, because of the outstanding debt, the surviving spouse has dramatically less potential to generate replacement retirement income by getting a reverse-mortgage or buying a less expensive house.
Lardy advises consumers to check their coverage and look into the cost of recalibrating the duration of their life insurance policies if they have refinanced their mortgage. He says that couples should consider getting mortgage life insurance independent of the bank where they got their mortgage because bank life insurance is generally pricey and non-transferable. For more information, visit www.intelliquote.com.
INDUSTRY NEWS
Hyatt Legal Plans, Acquires Allstate’s Group Legal Plans Business
Hyatt Legal Plans, a MetLife Company, has acquired Allstate’s group legal plan business, known as Signature LegalCare. Financial terms were not disclosed. “We will be working over the next several weeks to make the administrative transitions as seamless as possible,” said Bill Brooks, CEO of Hyatt Legal Plans. For more information visit www.legalplans.com.
NEW PRODUCTS
Social Media Marketing Guide
The National Association of Professional Insurance Agents (PIA National) unveiled The 2010 PIA National Agency Marketing Guide. It explains how independent agents can use social media to support their sales strategy. All PIA members get a print edition along with the June/July issue of PIA Connection magazine. Agents who join PIA in 2010 will also get a copy. For more information, visit www.pianet.com/Members.
Hospital Indemnity Product
Transamerica is guaranteeing premium rates, through 2013, on its TransChoice Plus hospital indemnity product. TransChoice Plus features a daily in-hospital benefit and can be customized with 14 optional benefits including prescription drug benefits. It is sold along with a group term life benefit, optional short-term disability, and dental coverage. It is available for full-time, part-time, and seasonal employees. The available rate guarantee is good for qualifying TransChoice Plus groups until December 31, 2013. For more information, visit www.transamericaworksite.com.
Guide to Healthcare Reform
Unum is offering a guide to healthcare reform. It includes explanations of financial changes that will roll out over the next several years, such as:
• A 40% excise tax that will apply to some health-related coverage.
• The exemption from this tax of non-medical benefits including life, disability, vision, dental, long-term care, and accident coverages.
• New limits on how much employees can put into flexible spending accounts and what they can use those tax-exempt funds to purchase.
• Tax credits for small businesses designed to make coverage more affordable.
• Penalties for employers that do not offer coverage.
The guide offers a clear timeline of when changes will take effect and outlines their effects on employers and individuals. For more information, visit www.unum.com.
LIFE SETTLEMENTS
GAO Says Life Settlements Need Consistent Oversight
The current regulatory structure of the life settlement market offers inconsistent financial oversight as well as consumer and investor protection, according to a report by the Government Accountability office (GAO). Twelve states and the District of Columbia have no laws governing life settlements and disclosure requirements can differ among the other states.
Policy owners may complete life settlements without knowing how much they paid brokers or whether they got a fair price unless such information is provided voluntarily. Some investors can have a hard time getting adequate information about life settlement investments. People in different states with the same investments get different regulatory protections because of conflicting court decisions and differences in state laws. Some life settlement brokers and providers can have a hard time because of inconsistencies in laws across states.
As of February 2010, 38 states had insurance laws to regulate life settlements. State insurance regulators impose licensing, disclosure, and other requirements on brokers and providers. The Securities and Exchange Commission (SEC) and state securities regulators regulate investments in life settlements to protect investors. Since variable life is considered a security, settlements involving these policies are under SEC jurisdiction. SEC also asserted jurisdiction over certain investments in life settlements involving non-variable, or traditional, life insurance policies, but their status as securities is unclear because of conflicting circuit court decisions. GAO says that Congress may wish to consider taking steps to help ensure that policy owners involved in life settlements get a consistent and minimum level of protection.
DISABILITY NEWS
High Unemployment Continues for People with Disabilities
During the second quarter of 2010, unemployment rates for people with disabilities continued to outpace the unemployment rate for other workers, according to a quarterly study by Allsup. Some disabled workers are never able to return to work. Others are reluctant to try because they fear they’ll be discriminated against or they fear losing their disability benefits, including healthcare coverage.
For the second quarter of 2010, the unemployment rate for people with disabilities was 59% higher than for people with no disabilities. The unemployment rate for the second quarter averaged 14.8% for people with disabilities compared to 9.3% for people with no disabilities, according to non-seasonally adjusted data from the U.S. Bureau of Labor Statistics (BLS).
During the second quarter of 2010, the number of people with disabilities who are unable to work and are applying for SSDI climbed increased 5% over the first quarter of 2010. Alsip’s analysis of the Social Security disability backlog reveals that more than 1.7 million SSDI claims are pending with an average cumulative wait time of more than 850 days. For more information, visit http://www.allsup.com/Portals/4/allsup-study-income-at-risk-q2-10.pdf.
