VOLUME 35, NUMBER 3
SERVING CALIFORNIA’S LIFE/HEALTH PROFESSIONALS & FINANCIAL PLANNERS
DECEMBER 2016
Preparing Wealthy Clients for
Life in the "Not So Fast" Lane Specialty Income Protection for California's Super Rich
Also Inside: HSAs •Life Insurance Medicare • Disability Self Funding Voluntary Benefits Survey Annuities • Dental Life Settlements
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TABLE OF CONTENTS 10
12
SENIOR EDITOR Leila Morris email: editor@calbrokermag.com
14
LIFE INSURANCE
CIRCULATION email: calbrokermag@calbrokermag.com
16
Specialty Income Protection in the Golden State by Joseph Russo California's most wealthy, influential, and creative people need disability insurance policies above and beyond what can be attained through traditional sources. Five Mistakes That Agents, Brokers, &
20 Financial Planners Make When Selling Disability Insurance by Art Fries It takes a bit longer to be careful, but in the long run, it can save you embarrassment and money. A real pro takes the time to learn and to educate their prospective clients and that’s where you should be.
California Broker (ISSN #0883-6159) is published monthly. Periodicals Postage Rates Paid at Burbank, CA and additional entry offices (USPS #744-450). POSTMASTER: Send address changes to California Broker, 217 E. Alameda Ave. #207, Burbank, CA 91502.
No responsibility will be assumed for unsolicited editorial contributions. Manuscripts or other material to be returned should be accompanied by a self-addressed stamped envelope adequate to return the material. The publishers of this magazine do not assume responsibility for statements made by their advertisers or contributors. Printed and mailed by Southwest Offset Printing, Gardena, CA.
4 | CALIFORNIA BROKER
22
ANNUITIES
Plan for a TwoStage Retirement To Avoid Running Out of Money by Jerry Golden One flaw with traditional retirement planning is the assumption that your expenses – the type and amount — will be the same (plus inflation) each year.
DISABILITY
Life in the "Not So Fast Lane."
EDITORIAL AND PRODUCTION: McGee Publishers 217 E. Alameda Ave. #207 Burbank, CA 91502 Phone No.: 818-848-2957 email: calbrokermag@calbrokermag.com.
©2016 by McGee Publishers, Inc. All rights reserved. No part of this publication should be reproduced without consent of the publisher.
38
MEDICARE
LEGAL EDITOR Paul Glad
Subscriptions and advertising rates, U.S. one year: $42. Send change of address notification at least 20 days prior to effective date; include old/new address to: McGee Publishers, 217 E. Alameda Ave. #207, Burbank, CA 91502. To subscribe online: calbrokermag.com or call (800) 675-7563.
by Leila Morris Welcome to our annual survey of voluntary benefits providers in the state of California. They provided answers to seventeen crucial questions about how their operations.
Navigating the Medical Insurance Gap by Joseph Sanginiti The unfortunate truth about the medical insurance gap is that anyone can fall into this gray area of coverage, or rather, lack of coverage.
ADVERTISING Scott Halversen, V.P. Mktg. email: scotthalversen@calbrokermag.com
BUSINESS MANAGER Lexena Kool email: lex@calbrokermag.com
VOLUNTARY BENEFITS
2016 VOLUNTARY BENEFITS SURVEY
Using Technology to Drive Shorter Turnaround Times and Improve The Applicant Experience by John Reynolds It has become increasingly important to narrow the time between getting an application filed and actually placing the policy with the client.
EDITOR-IN-CHIEF Kate Kinkade, CLU, ChFC email: editor@calbrokermag.com
ART DIRECTOR/PRODUCTION MANAGER Steve Zdroik
24
An update on HSA and enrollment and plan balances. by Leila Morris
DECEMBER 2016 PUBLISHER Ric Madden email: publisher@calbrokermag.com
HSA NEWS
39
DENTAL
Oral Health: Driving a Healthier, More Productive Workplace by Dean M. Fry, DDS As companies redesign their benefits around employee needs, employers are incorporating dental benefits into their wellness strategies. Don’t Read This if You Are Looking for
40 Reasons to Sell Dental
by Kellie Bernell To reduce deterioration and increase longevity, offer dental benefits. This could be a lucrative strategy, as supplemental commissions are attractive.
41
LIFE SETTLEMENTS
SELF FUNDING
Trend Alert: The Great Migration to Cost Effective Benefits In 2017 by Xavier Serrano Accountable Care Organizations, group captives, and trusts only scratch the surface in terms of what brokers can offer their clients.
ALSO IN THIS ISSUE:
- CalBrokerMag.com -
Guest Editorial..........................6 Annuity Sampler......................8 New Products........................13
Life Settlement Investing: Give Your Clients What They Want And What Need by Brian J. Clark, CRPC How life settlements can help your clients achieve their financial goals and reduce risk in their portfolio. News........................................ 43 Classified Advertising........ 46 Ad Index.................................. 46
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GUEST EDITORIAL
Be a Change Agent O
ur industry has changed. Products have changed. The buying process has changed. Your clients have changed. I am not telling you anything you don’t already know. We can all personally attest that, since 2010 and the roll out of the Affordable Care Act, there has been a lot of pounding in the heart. Step back even further and think about another disruptor that has grown more prominent during the past few years that we have all experienced – how much of a role technology plays with the selling and servicing of health insurance products. MORE POUNDING IN THE HEART. Right now most of you are knee deep in fourth quarter. So where am I going with all of this? My goal is to build awareness that agents who embrace the idea of adaptability and even encourage change are
by JOE NAVARRO achieving higher levels of success in our market today. These folks are looking at it from a marketing perspective and seeing opportunities that others
"...Think about another disruptor that has grown more prominent during the past few years…how much of a role technology plays with the selling and servicing of health insurance products." can’t see because they are too busy resisting change around them. So let’s first address the resistance to the word change. According to the Harvard Business Review, change can make people feel that they have lost
control over their territory. They reject it because of the uncertainty that comes with it. Finally, it can be seen as a lot more work that they don’t have the time or inclination to take on. Now here is another revelation. Whether you agree or not, if you are still in business after the roll out of the Affordable Care Act and you are actively selling today that would qualify you (in part) as an agent-of-change. Here’s something else you can aspire to be if you are not already there. HERE ARE SOME FEATURES OF AN AGENT-OF-CHANGE: • Is unequivocally the source of knowledge. • Looks at change as an opportunity to improve. • Has built relationships around mutual trust. • Demonstrates a clear and focused vision. • Shows a passion for putting the client first. • Is ethical and innovative at the same time. • Uses technology as part of the overall solution. • Leads with the client not from above. The differentiator is that you might be doing some of these well right now during fourth quarter versus your competition who is doing all or most of them well during this time of change. My take home is that one of your primary objectives should be the agentof-change person, be it now, or while planning for 2017. Change is the new normal for success in our industry. All those who want to market their business in the future must find a way to being defined as an agent-of-change. Everything is Marketing.
“I have accepted fear as part of life, specifically the fear of change. I have gone ahead despite the pounding in the heart that says: Turn back.” – Erica Jong
Joe Navarro is marketing director for Warner Pacific.
6 | CALIFORNIA BROKER
- CalBrokerMag.com -
DECEMBER 2016
ANNUITY SAMPLER
NOVEMBER 1, 2016 Ratings Product Company Name Bests Fitch S&P (Qual./Non-Qual.)
Type SPDA Initial Guar. Bailout FPDA Interest Period Rate Surrender Charges
Mkt. Val. Min. (y/N) Contrib.
American Equity A- A- ICC13 MYGA (Guarantee 5) (Q/NQ) S 2.15%* 5 yr. None 9%, 8, 7, 6, 5, 0 Yes ICC13 MYGA (Guarantee 6) (Q/NQ) S 2.35%* 6 yr. None 9%, 8, 7, 6, 5, 4, 0 Yes ICC13 MYGA (Guarantee 7) (Q/NQ) S 2.50*% 7 yr. None 9%, 8, 7, 6, 5, 4, 3, 0 Yes
Comm. Street (May Vary)
$10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10%, age 76-80** $10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10% age 76-80** $10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10%, age 76-80**
*Effective 8/5/16. Current interest rates are subject to change on new issues. **Commission may vary by issue age and state. See Commission Schedule for details
.
American General Life A A+ A+ American Pathway S 1.80%*a 5 yr. None 8%, 8, 8, 7, 6, 5, 4, 3, 2, 1, 0 Yes $10,000 (Q &NQ) 1.5% age 0-75 Insurance Companies Solutions MYG 2.00%*b .75% age 76-85 *CA Rates Effective 11/14/16. First year rate includes 1.50% interest bonus. a (less than $100K) ; b (100K or more) (*Guarantee Return of Premium) (Q/NQ) American General Life A A+ A+ American Pathway S Insurance Companies Fixed 5 Annuity
1.65%*a 5 yr. 2.00%*b
None
9%, 8%, 7%, 6%, 5%, 0% No $5,000 (NQ) 2.00% age 0-85 $2,000 (Q) 1.00% age 86-90
*CA Rates Effective 11/14/16. Includes 2.00% 1st year bonus, 1.00% base rate subsequent years. a (less than $100K) b (100K or more)
(*Guarantee Return of Premium) (Q/NQ) American General Life A A+ A+ American Pathway Insurance Companies Fixed 7 Annuity
S
1.90%*a 7 yrs. 2.15%*b
None
9%, 8%, 7%, 6%, 5%, 4%, 2%, 0% No
$5,000 (NQ) 3.00% age 0-85
1.50% age 86-90 *(Guarantee return of premium Q/NQ) *CA Rates Effective 11/14/16. First year rate includes 4.0% bonus 1st year. a (less than $100K) b (100K or more)
Great American Life A A+ A+ SecureGain 5 (Q/NQ) S 2.25% 5 yrs. N/A 9%, 8, 7, 6, 5 Yes $10,000 Effective 11/17/16. Includes .25% first-year bonus and is for purchase payments over $100,000. Escalating five-year yield is 2.25%. For under $100,000 first-year rate is 2.10%. Escalating rate five-year yield 2.10%.
2.50% 18-80 (Q), 0-80 (NQ) 1.50% 81-89 (Q&NQ)
Great American Life A A+ A+ SecureGain 7 (Q/NQ) S 2.55% 7 yrs. N/A 9%, 8, 7, 6, 5, 4, 3 Yes $10,000 Effective 11/17/16. Includes 1.00% first-year bonus and is for purchase payments over $100,000. Escalating seven-year yield is 2.44%. For under $100,000 first-year rate is 2.45%. Escalating rate seven-year yield 2.34%. Great American Life A A+ A+ Secure American (Q/NQ) S 1.65%* 1 yr. N/A 9%, 8, 7, 6, 5, 4, 3 No $10,000
3.50% 18-80 (Q), 0-80 (NQ) 1.50% 81-85 (Q&NQ)
*Effective 11/17/16. Eff. yield is 2.67% based on 1.65% first year rate, 1.00% available portion of 10% annuitization bonus (available starting in contract year two) and 0.02% interest on available portion of bonus at the rate of 1.65%. Surrender value interest rate 1.65%. Accepts additional purchase payments in first three contract years. COM12255
5.75% 0-70 4.65% 71-80 4.40% 81-89
The Lincoln Insurance Company
A+ AA AA MYGuarantee Plus 5 S 1.35%*a 5 yr. None 7%, 7, 6, 5, 4, 0 Yes $10,000 (Q/NQ) 1.50%*b *Rates Effective 11/1/16 (a–for premiums less than $100K, b–for premiums $100K or more), and are subject to change
The Lincoln Insurance Company
A+ AA AA MYGuarantee Plus 6 1.60%*b
S
The Lincoln Insurance Company
A+ AA AA MYGuarantee Plus 7 1.70%*b
S
1.45%*a 6 yr.
None
7%, 7, 6, 5, 4, 0
Yes
$10,000 (Q/NQ)
*Rates Effective 11/1/16 (a–for premiums less than $100K, b–for premiums $100K or more), and are subject to change
1.55%*a 7 yr.
None
7%, 7, 6, 5, 4, 3, 2, 0
Yes
$10,000 (Q/NQ)
*Rates Effective 11/1/16 (a–for premiums less than $100K, b–for premiums $100K or more), and are subject to change
The Lincoln A+ AA AA MYGuarantee Plus 8 S Insurance Company
1.65%*a 8 yr. 1.80%*b
North American Co. A+ AA- A+ Gaurantee Choice (Q/NQ) S for Life and Health
2.00%*a 5 yr. None 10, 10, 9, 9, 8 Yes $2,000 (Q) 2.00% (0-80) 2.25*b $10,000 (NQ) 1.50% (81-85) *CA rates effective 9/1/16 – a (less than $200K) b(200K or more) 1.00% (86-90)
Reliance Standard
3.25%* 1 yr.
A+
A Eleos-MVA
S
None
7%, 7, 6, 5, 4, 0
Yes
$10,000 (Q/NQ)
*Rates Effective 11/1/16 (a–for premiums less than $100K, b–for premiums $100K or more), and are subject to change
None
8%, 7, 6, 5, 4
Yes
$10,000
3.25%**
*Effective 2/13/16. Includes 1.50% 1st yr. bonus. Min. guarantee is 1.00%. **Reduced 20% ages 76-80, and 40% ages 81-85
Reliance Standard
A+
A Apollo MVA (Q/NQ)
S
4.05%* 1 yr.
None
9%, 8, 7, 6, 5, 4, 2
Yes
$5,000
4.00% to age 75**
Includes 2.00% 1st yr. bonus. Min. guarantee 1.00% **Reduced 20%, ages 76-80, and 40% ages 81-85. Effective 7/19/16
Symetra Life, Inc.
A A
A Custom 7 (Q/NQ)
S
2.80%* 7 yrs.
N/A
8%, 8, 7, 7, 6, 5, 4, 0
No
$10,000
Varies
*Effective 11/22/16. 2.30% base rate with no guaranteed return of purchase payments. Plus 0.50% bonus for $250,000 and above.
8 | CALIFORNIA BROKER
- CalBrokerMag.com -
DECEMBER 2016
Demanding clients? Demanding clients? Increasing competition? Increasing competition? Narrowing networks? Narrowing networks? Spilled your coffee? Spilled your coffee?
W We e cc a an n ss o o ll v ve e
all all (but (but one) one) of of these these problems! problems! If one of your client’s employees is diagnosed with a If one of your client’s employees is diagnosed with a serious illness, such as cancer or heart disease, they serious illness, such as cancer or heart disease, they will have lots of questions about how their life is about will have lots of questions about how their life is about to change. But there is one question they should never to change. But there is one question they should never have to ask: do I have access to the best possible have to ask: do I have access to the best possible medical advice? medical advice? In a world of narrowing networks they’ll have to worry In a world of narrowing networks they’ll have to worry about finding the right in-network specialist to get a about finding the right in-network specialist to get a second opinion before treatment and also deal with second opinion before treatment and also deal with scheduling appointments, travel, and the resulting, scheduling appointments, travel, and the resulting, potentially conflicting, diagnosis. potentially conflicting, diagnosis. Instead, if their employer offers MORE Benefits, Instead, if their employer offers MORE Benefits, one of our expert physicians will collaborate directly one of our expert physicians will collaborate directly with their treating doctor, using our secure, HIPAAwith their treating doctor, using our secure, HIPAAcompliant technology. Working together they’ll ensure compliant technology. Working together they’ll ensure an accurate diagnosis and the optimum treatment plan. an accurate diagnosis and the optimum treatment plan. Allow your clients to offer their employees the Allow your clients to offer their employees the peace of mind from having MORE Benefits. peace of mind from having MORE Benefits. Integrates into any health plan Integrates into any health plan Employer-paid or voluntary benefit Employer-paid or voluntary benefit Lets your clients attract and retain talent Lets your clients attract and retain talent Great pricing for your clients Great pricing for your clients Great commissions for you Great commissions for you Differentiates your portfolio Differentiates your portfolio Complements Critical Illness Insurance Complements Critical Illness Insurance Only available from MORE Health Only available from MORE Health
Please contact us for more information. Please contact us for more information. morehealth.com/coffee morehealth.com/coffee info@morehealth.com info@morehealth.com (650) 539-3568 (650) 539-3568
More Health, Inc. More Health, Inc. 950 Tower Lane, Suite 1200 950 Tower Lane, Suite 1200 Foster City, CA 94404 Foster City, CA 94404
HSA
HSA News by LEILA MORRIS
Enrollment in ConsumerDirected Health Plans Jumps Nearly 22%
Consumer-directed health plans (CDHPs) has increased in in all regions except the West, which saw the number of plans decrease by 7.2% from 2015. However, in the West, there was an 18.9% increase in the number of employees enrolled, indicating the continued attraction to their lower premiums, according to a survey from United Benefit Advisors (UBA). While most of the country is experiencing slightly increased premiums, California has enjoyed an 11.4% decrease in average single premiums. California employers are moving away from CDHPs and toward HMOs, which the survey shows are 9% less costly than the average plan.
Twenty-six percent of U.S. employees are enrolled in CDHP plans, an increase of 22% from last year and nearly 70% from five years ago. CDHP plan costs have risen 2% from last year. So while they are still 3.5% less costly than the average plan, they offered more savings in 2015 when they were 5.6% less than the average plan. “CDHP interest among employers isn’t surprising given these plans’ savings over the average plan. Employees typically pick up 32% of the cost, slightly below the 35% average employee contribution rate among all plans, making them an attractive choice for many employees as well. But like all cost benchmarks, plan design plays a major part in understanding value,” said Les McPhearson, CEO of UBA. Twenty-six percent of plans offered by employers are CDHPs, a 14.2% increase in the past five years. Regionally, there are major differences in CDHP popularity. CDHPs account for the following percentage of plans offered by employers: •Northeast 34% •North Central 33% •Southeast 26.6% •Central 21% •West 14% McPhearson said, “Cost-saving stra te gies, like cost shifting, should be taken with a grain of salt, given the increased burdens they place on em10 | CALIFORNIA BROKER
ployees. Given the higher than average out-of-pocket costs of CDHPs, this turbulence in the West, which typically leads the nation in health care trends, indicates that employers and employees are still determining the value and success of these plans, making it a cautious upward trend to watch.” For more information, visit www.UBAbenefits.com.
An Update on HSA Balances and Contributions
Based on an analysis of 2014, The Employee Benefit Research Institute (EBRI) offers these facts about HSAeligible health plans: • Starting from nothing about a decade ago, enrollment in HSA-eligible health plans was about 17 million policyholders and their dependents in 2014. • The average HSA balance at the end of 2014 was $1,933, up from $1,408 at the beginning of the year. • Average account balances increased with the age of the account owner. Account balances averaged $655 for owners under 25 and $5,016 for owners 65 and older. • About 6% of HSAs had an associated investment account. End-ofyear 2014 balances were higher in accounts with investment assets. Thirty-seven percent of HSAs with investment assets ended 2014 with a balance of $10,000 or more compared to 4% of HSAs without investment assets. • Among HSAs with investment assets, accounts opened in 2014 ended the year with an average balance of $6,544; whereas those opened in 2005 had an average balance of $19,269 at the end of 2014. HSAs - CalBrokerMag.com -
with individual or employer contributions accounted for 70% of all accounts and 86% of the assets in 2014. Four percent of these accounts ended the year with a zero balance • On a yearly average, individuals who made contributions deposited $2,096 to their account. HSAs receiving employer contributions got an average of $1,021 a year. • Four-fifths of HSAs with a contribution also had a distribution for a health care claim during 2014. The average amount distributed for health care claims was $1,951. • Distributions for health care claims increased with age, except among those 65 and older. Average annual distributions were $636 for account owners under 25, $2,373 for account owners 55 to 64, and $2,124 for account owners 65 and older. However, the likelihood of taking a distribution for health care claims was higher among accounts opened more recently. For more information, visit ebri.org.
Father of Health Savings Accounts Says They Should Be Used in Every Aspect of Medicine
Health Savings Accounts have enormous potential to control costs and increase the quality of care if only the government would allow it, according to the economist who is credited with being the father of the idea. "Right now HSAs are being used to pay small medical bills below the deductible because that is all the government allows, but they could and should be used in just about every aspect of medicine, including expensive surgery, chronic illness, custodial care and even emergency room visits," said Dr. John Goodman, president of the Goodman Institute, a Dallas based think tank. Goodman says there is mounting evidence that patients suffering from diabetes, heart disease, cancer and other chronic illnesses can (with training) manage a lot of their own care as well, or better than traditional doctor therapy. "If they are going to manage their own care, they will do an even better job if they are also managing the money that pays for that care," he said. Goodman says that patients should DECEMBER 2016
HSA be encouraged to manage almost all the money used for primary care, including routine doctor visits and most diagnostic tests – spending from an HSA that they own and control. "If patients are controlling the money, everything will cost less. They will substitute less expensive phone and email consultations for doctor office visits; they will shop for better options for everything from blood tests to mammograms; and they will opt for walk-on clinics and free standing emergency care instead of hospital emergency rooms when appropriate," he said. Goodman says that on the East Coast and the West Coast, Ubertype doctor visits at nights and on the weekends are an increasingly popular alternative to the emergency room. "A doctor house call costs about $100 and the doctor usually arrives within an hour. Emergency room charges average about five times that much. Give patients control of the money and you will see this service all over the country," he said. Goodman presented these ideas at a Cato Institute briefing on Capitol Hill with Sen. Jeff Flake (RAZ), Rep. Dave Brat (R-VA) and Cato
Institute Scholar Michael F. Cannon. To take advantage of the full potential of HSAs, Goodman says we need three policy changes: • HSAs need to be completely flexible, wrapping around any health insurance plan and paying for any services the plan does not pay for. • HSAs need to be encouraged by tax relief equal to the tax benefits of paying premiums to insurance companies. • Insurers should be able to deposit unrestricted amounts into a patient's HSA without any tax penalties. Here are some potential uses of HSAs Goodman favors that are not allowed under current law: • Patients should be able to shop in the marketplace for all forms of preventive care, paying from their HSA (not allowed under Obamacare, which mandates coverage with zero deductible). • Patients should be able to pay monthly fees to concierge doctors who provide primary care services (not allowed under current tax law). In addition, all of the following are not allowed or are penalized under cur-
rent tax law: • Employers and insurers should be able to deposit a fixed sum of money in an HSA for such expensive procedures as knee and hip replacements, letting patients gain financially if they secure the service for less money. • Employers and insurers should be able to deposit unrestricted funds for patients who agree to travel for their care, with the patients gaining financially from the lower cost of the surgery (medical tourism). • Employers and insurers should be able to deposit unrestricted sums in the HSAs of chronic patients, giving them financial control over the management of their care. • Employers and insurers should be able to deposit funds allowing the disabled to manage their own custodial care, much as is now done in Medicaid's highly successful Cash and Counseling program. • Private and public entities should be able to deposit funds so that patients can make their own decisions with respect to custodial care and palliative care, a practice that is widely followed in Europe. H HSA HSA FSA FSA HRA HRA VEBA VEBA WalletDoc WalletDoc
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- CalBrokerMag.com -
CALIFORNIA BROKER | 11
LIFE INSURANCE
TURNAROUND Technology's SHORTER TIMES AND IMPROVED Benefits APPLICANT EXPERIENCE
P
lacing a life insurance policy is a great opportunity to validate your client’s confidence in doing business with you and to gain referral sources. It has become increasingly important to narrow the time between getting an application filed and actually placing the policy with the client. Delays can exert demands on your time and serve as distractions, particularly when you get calls from the underwriting department that wants to tie up the loose ends to finish the underwriting process. This lost time slows policy placement, detracts from client satisfaction, and limits your referral potential—the lifeblood of the insurance business. Ideally, the back-office operations of getting a policy underwritten and placed remain where they belong, in the background, and the underwriting process progresses quickly and without incident. Thankfully, technology has an expanding role in simplifying this process. During the past 20 years, there has been a remarkable transformation as we move toward a paperless world. Electronic-based underwriting has led many applications to be 90% complete in five days, rather than weeks. Gone are the days of completing applications on paper and faxing orders to the home office. Now, paramedical exams can be ordered with just a few clicks, and case status can be confirmed with the touch of a screen. Applicant signatures are collected over the phone at the time of the interview or electronically by email. Technological innovation has allowed us to simplify processes, reduce errors, and shorten the turnaround time from application to policy issuance. Technology has sped up how the results are collected and has improved 12 | CALIFORNIA BROKER
by JOHN REYNOLDS
the quality of specimen collection. Samples are processed within 24 hours and the results are sent to underwriters electronically. The data can be managed through different risk matrices that give insurers the capability to assign personalized risk scores to applicants. By using certain scheduling approaches, the paramedical exam process can be accelerated. Industry averages show that blind preset appointments for paramedical exams are canceled more than a quarter of the time and nearly 11% of examiner-scheduled appointments. By giving insurance applicants the ability to schedule their own paramedical appointments at the time of application, you allow them to set an appointment that fits into their busy schedule, thus minimizing delays. Being able to schedule exams and receive e-mail and phone reminders has reduced the process time of getting an exam from 11.5 days to just six in 2015. Testing service centers provide a professional, clinical setting for rapid collection of test results. It can give underwriters the data they need within days after blood and/or urine are acquired, vital signs are taken, and other information is collected. Test results can add or subtract from the applicant’s total underwriting picture, with better profiles earning better premium offers. Some tests can lead to understandably lower ratings for certain health concerns, such as high blood pressure, diabetes, or poor liver function. Indeed, some applicants may be deemed uninsurable due to substance abuse, HIV, hepatitis, or other factors. These test results are becoming increasingly important to consumers as more and more people take control of their health. According to the 2016 In- CalBrokerMag.com -
surance Barometer study, 22% of consumers are using activity trackers to monitor their health. With a consumer’s growing desire to become more educated on their health, one of the biggest insights could come through access to laboratory results. This can be an enlightening experience, especially when applicants learn, for the first time, about latent chronic illnesses, such as high cholesterol, diabetes, and chronic kidney disease. It is important to identify these health risks early with more than 86 million pre-diabetics in the United States (of which 8.1 million are undiagnosed). Some applicants are getting laboratory test results for the first time in years as a result of the life insurance application. Applicants can get their results online and even print them for that doctor visit they have been putting off (subject to carrier participation). The underwriting side of the equation is most important when it comes to protecting the insurance company’s interests. New tools are being introduced to measure risk accurately. The need to be thorough is always balanced with the need to satisfy clients; technology can play an important part in both. But, technology can never replace understanding your clients, learning what they need, and providing products that ensure their financial security through life’s many paths. H John Reynolds is vice president of Strategic Solutions at ExamOne. ExamOne is committed to ensuring that the underwriting requirement process is quick and convenient for applicants, agents, and home-office personnel. Additional services include data gathering, paramedical examinations, laboratory testing, and consultative analytics, designed to assist life insurance companies in fair, objective evaluations on the mortality risk of applicants. DECEMBER 2016
NEW PRODUCTS TERM LIFE Haven Life is offering the first quality term life insurance policy that can be purchased entirely online. When applying for Haven Term, customers get an immediate decision and coverage can begin right away. Haven Term, is available to customers up to age 65. Previously, only adults aged 18 to 45 were eligible. For more information, visit havenlife.com. ENROLLMENT A new partnership between Colonial Life (http://www.coloniallife.com/) and EaseCentral (https://www.easecentral.com/) helps brokers deliver streamlined access to enrollment capabilities and services that can help their clients save time and money. EaseCentral is a cloud-based benefits enrollment software platform built for insurance brokers and employers. It makes it simple to set up and manage benefits, onboard new hires, stay compliant and offer employees one destination for all their human resources information. EaseCentral allows brokers to set up groups quickly using the platform’s plan and rate libraries, including state-specific age-banded rates for all major medical carriers. They’re also able to download census enrollment to speed up carrier underwriting. Both brokers and employers can quickly generate custom reports for initial binder check amounts, reconciled billing, payroll deductions, and more. VISION TRAVEL BENEFITS Anthem Blue Cross Blue View Vision members now have access to the International Travel Solution (ITS), a service that helps members in 20 international destinations. From quick fixes like temporary glasses or getting members in contact with an eye doctor, ITS provides support and resources abroad at no cost to the member for the service. The service is available in the following 20 international locaDECEMBER 2016
tions: Australia, Austria, Brazil, Canada, Chile, China, Columbia, Ecuador, England, France, Germany, Hong Kong SAR, Italy, Japan, Mexico, New Zealand, Peru, Puerto Rico US, Spain and Switzerland. Blue View Vision members can find additional instructions on how to access ITS by logging into their account at www. anthem.com/ca. VIRTUAL RETIREMENT COACH Principal Financial Group is offering My Virtual Coach, a web-based, interactive educational resource to help people plan and save for retirement. Nearly one-third of people who enroll through My Virtual Coach contribute 10% of their salary or more (only 7% of people contribute 10% or more using traditional enrollment methods). More than 30% elect automatic, annual contribution increases (compared to 5% when using traditional enrollment). Their deferrals average nearly 3% more than among those enrolling traditionally. To find out more, visit principal.com. PRESCRIPTION COVERAGE COMPARISON TOOL When comparing 2017 health insurance plans at eHealth, consumers can enter their prescription drug regimen into a comparison tool of insurance plans in their area. BENEFITS FOR SMALL BUSINESSES MetLife launched MetLife Simply Smart Bundles, which provide brokers and small business owners with employee benefits that enhance their ability to compete in their local markets. Designed for businesses with 10-99 employees, the Bundles product includes a combination of - CalBrokerMag.com -
dental and vision insurance. There is also the opportunity to add on an employee-paid group legal plan. It’s the first time MetLife is making this benefit available to small businesses. For more information, visit MetLife. com/SimplySmartBundles. HEALTH EXCHANGE In October, HealthSherpa opened a storefront in downtown Sacramento allowing people to meet with consumer advocates to enroll in health insurance. Agents also use HealthSherpa to enroll people in marketplace coverage. HealthSherpa’s agent base has grown 300%, increasing from 4,000 in 2015 to 13,000 in 2016.This allows even more channels for consumers to identify the best healthcare coverage that will fit their budgets and healthcare needs. For more information, visit www.HealthSherpa.com. PERMANENT LIFE INSURANCE Aflac expanded its group life portfolio to include a universal life plan with long-term care benefits and an enhanced group whole life plan. Brokers had asked Aflac for a full suite of permanent life products. The new insurance offerings help brokers serve as a one-stop resource for affordable voluntary benefits. Universal life is a comprehensive option with eight optional riders including living benefits for long-term care. For more information, visit aflac.com. LIFE INSURANCE AND ANNUITY PLATFORM Accenture updated the Accenture Life Insurance & Annuity Platform. It is designed to enhance productivity for underwriters and case managers through streamlined navigation and centralized information. The new workbench delivers one simple management tool and a view of policies for underwriters and case managers. For more information, visit w w w.accenture.com/lifeandannu itysoftware. H CALIFORNIA BROKER | 13
MEDICARE
NAVIGATING THE MEDICAL INSURANCE GAP T
he unfortunate truth about the medical insurance gap is that anyone can fall into this gray area of coverage, or rather, lack of coverage. As a medical insurance broker, it's important to recognize that a large portion of your client base may be affected. Medicaid is one of the major contributors to the medical insurance gap, particularly in states that didn't expand their programs. As of September 2016, 19 states had not expanded their Medicaid programs, leaving nearly 2.5 million people uninsured nationwide, according to the Kaiser Family Foundation. While California is not one of these states, it still has a growing population of adults who are under-insured, meaning that they have medical insurance, but their plans don't meet their medical needs. Throughout the years, more and more people have been falling into the medical insurance gap with varying levels of coverage. For example, many middle-aged adults have increasing medical needs due to their age, but they are leaving their health concerns untreated until they are eligible for Medicare at 65. Someone may also fall into the insurance gap if their coverage is limited by high deductibles or if the prescription medications they need are not covered. This leads to the obvious question, “What do all these people do when they are sick?” Even though many of these people don't have medical insurance, they still have access to medical care and prescription drugs. The difference is that they are responsible for these costs rather than the insurance company being responsible. Some of the most common out-of-pocket expenses that this population struggles to manage are basic medical procedures, such as a mammogram or colonoscopy, or medical equipment, such as wheelchairs. Another common burdensome cost is for their prescriptions, specifically high-cost medications for most chronic diseases. These can include Lisinopril (Prinivil) for high 14 | CALIFORNIA BROKER
BY JOSEPH SANGINITI
blood pressure, acetaminophen/hydrocodone pain medication (Vicodin), and depression and anxiety medications like sertraline (Zoloft). Medical adherence can become a major issue when under-insured people are responsible for these expenses. Patients may skip taking their prescribed medication to make it last longer, which could lead to a negative outcome. Many patients are not aware that medical discount programs and medical assistance programs can supplement their coverage to help close the coverage gap. Pharmaceutical manufacturers often offer these programs for the drugs they produce. However, eligibility varies by manufacturer. Another option is to use prescription assistance programs from third-party companies, some of which can save people an average of 43% on their prescriptions through a savings card or an app. There are many misconceptions about these programs. One is that the savings are limited or that it's difficult to qualify. Another misconception is that there are underlying scams or loopholes. How each company structures its prescription savings program varies, but these perceptions are generally false. The goal of these programs is to ensure that everyone has access to the medications they need without sacrificing their quality of life, financially and medically. Since we are in the midst of the 2017 open-enrollment season, one of the easiest ways to prevent someone from falling into the medical insurance gap is to make sure that they choose a plan that best suits their needs. This is when an insurance broker can provide the most value to their clients. When considering what type of coverage is best for your clients, here are three factors to take into account: 1. M ake sure that your client completely understands what their plan will and will not cover. Personalizing a medical insurance plan based on your client’s medical needs will help both of you determine what - CalBrokerMag.com -
the must haves are and what is extra. Asking the right questions, such as the type and the number of prescriptions they take, will ensure that they choose the right plan that covers this cost. This also helps prevent them from spending money for medical care they don't need. 2. R each a full understanding of what type of plan they are able to afford. Many people need coverage for specialty prescriptions and medical procedures, but their out-of-pocket costs are too expensive. Brokers should get in front of these changes and offer their clients the best options to help them manage costs. This could mean raising their premium to help them save money in the long run or helping them find ways to supplement their plan. If your client has a chronic medical condition, the best option could be to pay the higher premium to offset the outof-pocket costs. This could make the difference in your client spending a couple hundred dollars for their premium upfront or spending tens of thousands of dollars for the out-of-pocket costs they can accrue over the year. 3. Educate your clients on supplemental medical assistance and discount programs to further personalize their plans and help manage out-of-pocket costs. This is an ode to making sure that your clients are aware of all the options available to them. These programs offer a great way to supplement your client’s insurance without incurring additional costs and fees. These programs can also play a major role in helping all of your clients save money regardless of their coverage or lack of coverage. Joseph Sanginiti is CEO of FamilyWize, which offers a prescription assistance program through a free prescription savings card and app. Sanginiti has spent more than 25 years with several Fortune 500 organizations. As a senior executive in the pharmacy benefit management industry, he was responsible for the integration and management of pharmacy operations nationally. DECEMBER 2016
Quality and Affordability in a health plan? With Sutter Health Plus, the sky’s the limit! Scanning the horizon for the right health plan choice for your clients? “Qualifordability” by Sutter Health Plus offers health plans that provide both quality and affordability. Sutter Health Plus has created comprehensive health care coverage at competitive prices. Featuring dozens of affordable HMO options for groups of every size. Learn how Qualifordability works for your clients. Drop by sutterhealthplus.org or call Sutter Health Plus. Part of CaliforniaChoice
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855-325-5200 Serving Northern California sutterhealthplus.org
DISABILITY
Life in " the Not So " Fast Lane
Preparing Wealthy Clients for
16 | CALIFORNIA BROKER
- CalBrokerMag.com -
DECEMBER 2016
DISABILITY
Specialty Income Protection in the Golden State by JOSEPH RUSSO
D
isability insurance is the greatest resource Californians have in protecting personal income against the very real threat of unforeseen and debilitating illness or injury. A 2013 study by Cornell University found that 8.5% of working age, non-institutionalized Californians are disabled. A relatively small and recently shrinking collection of American insurers offers a wide range of income protection products that provide unique features and benefit schedules, depending on a client’s financial planning needs and the current market outlook. You are likely to find that most Californians making up today’s workforce are insufficiently, if at all, covered by some form of private income protection insurance. Many employers provide small layers of mandatory or voluntary guaranteed-issue group disability benefits. Since the carriers of such plans offer terms on a
DECEMBER 2016
guaranteed basis, underwriter guidelines commonly limit benefits to 60% of income with usual caps of $5,000 to $15,000 per month depending on the insured’s occupation, income level as well as employer generosity. For the majority of blue-collar, grey-collar, and governmental employees, employer-sponsored group disability insurance provides acceptable income replacement coverage. However, most California residents work for small business owners, are self-employed or are independent contractors. In these instances, group disability insurance is often times not available. Those without group DI can seek individual disability insurance from a handful of large U.S. carriers. These insurers employ individual underwriting and morbidity analysis to provide prospects with policies similar in comprehension to group disability certificates. Therefore, most
- CalBrokerMag.com -
CALIFORNIA BROKER | 17
DISABILITY Californians can find sufficient disability coverage from a combination of group and stand-alone individual benefit sources. However, not all occupations provide annual incomes in ranges that can be effectively covered by group or standard individual disability policies. Most Californians in the white-collar market and many in the rapidly-expanding grey-collar market make salaries that are hardly covered by combinations of group insurance and single, traditional disability income policies. This shortfall can be bridged by prescribing a multiple layering of qualified disability coverage with a tiered-benefit approach to income protection. Take an attorney for example, working long hours for a large Los Angeles law firm, making $750,000 per year. The partnership has agreed to provide group benefits capped at $15,000 per month. His steadfast insurance advisor suggests that he apply for an additional tier of individual coverage from a disability carrier who is willing to provide another $15,000 per month. $30,000 of monthly disability income benefits sounds like a lot of coverage to most, but we must consider the risk in its entirety including the attorney’s lifestyle and standard of living. He has a large home mortgage, luxury automobiles for him and his spouse, and two kids in private universities. He must have at least 65% of income replacement to financially survive and to maintain even a fraction of his current expenditures in case he becomes disabled and is unable to continue to practice law. His insurance agent would need to next look to the supplemental/excess disability markets where underwriters would be willing to offer Mr. Attorney a third tier of monthly benefits, participating up to 65%, sometimes 75% of the client’s earnings. The non-traditional, surplus lines DI market can provide a third and, in some instances, a fourth tier of income protection above usual disability income limitations. Additionally, excess disability policies are flexible, and can provide dovetailed “own occupation” benefits to age 70. For moderate to high net worth individuals, the risks of under-insurance 18 | CALIFORNIA BROKER
can prove to be severe and financially disastrous. Clients need to properly layer disability income benefits on top of existing group and/or individual policies. The tiered-benefit approach to disability insurance will fill the subtle and blatant gaps in the financial protection of personal income. In some cases, the tiered benefit approach isn’t applicable since there are high net worth individuals who are unable to get any traditional group or base disability coverage due to their occupations. These clients are commonly found in the entertainment industry. Hollywood has long provided California with a fantastic and glamor-
"California is an incredible place to live. It’s is home to some of the world’s most wealthy, influential, and creative people, and all of them need disability insurance policies above and beyond what can be attained through traditional sources." ous history, but the famous faces that make up Tinsel Town have never been embraced by the standard disability insurance market. Regardless of their usually highly-touted annual earnings, entertainers commonly find discriminating circumstances when they attempt to acquire insurance against disablement. The surplus lines DI market is considerably less rigid and has fully accepted and caters to the men and women that make a living in front of a camera or behind a microphone. Benefit platforms have been developed to comprehensively insure the varied earnings patterns commonly found in film, television, music and modeling. Furthermore, the secondary market has recently introduced a disfigurement benefit rider that provides compensation in case of irreparable - CalBrokerMag.com -
scarring or physical damage to one’s appearance even without the technical presence of a disabling event. Beyond the personal income protection needs of Californians, safeguarding corporate finances is extremely important. A business can quickly fall into economic peril if a business owner or marquee employee becomes even temporarily disabled, endangering the livelihoods of all employees as well as the very existence of the business. Key person disability insurance is a must for corporations and partnerships of any size. The financial indemnification of key persons to a business can be attained through an individual standalone or group key person disability insurance policy. Benefits are usually payable to the corporate entity in monthly installments or lump sums based upon a multiple of earnings and/or quantitative value of the key employee to the business in question. The financial underwriting of such policies can be quite subjective and at times a daunting task to the most capable of underwriters. How do you sufficiently and monetarily measure the value of a person to a business? Underwriters consider a number of factors including salary, the value of any ownership in the business, the company’s potential loss of future contracts and earnings, as well as replacement costs of the key person. California is an incredible place to live. It’s is home to some of the world’s most wealthy, influential, and creative people, and all of them need disability insurance policies above and beyond what can be attained through traditional sources. The specialty DI market is the best resource for supplemental insurances and coverage for hard-to-place cases. H Joseph Russo is an Underwriter and Account Executive at Petersen International Underwriters. With over 15 years in the financial services industry, Russo is a “specialty market” life and disability insurance expert. He is also the Editor-In-Chief of Petersen International’s weekly publication The Communicator. Russo can be reached at Petersen International Underwriters, 23929 Valencia Boulevard, 2nd Floor, Valencia, CA 91355. Telephone: 800-345-8816. Email: joe@piu.org. DECEMBER 2016
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DISABILITY
Five Mistakes That Agents, Brokers, & Financial Planners Make When Selling Disability
I
f you take the sale of disability insurance seriously, the most important thing you can do is to read completely any contract you plan to sell or are currently selling. Because of the many changes made over the years, it's important to be up-to-date on what carriers are offering and make sure that you don’t take contractual language for granted. Know what the market is offering and offer products that fit the profile of your typical client. Today, there is no perfectly worded contract. There are differences among companies. Some have restrictions and limitations that others do not have. In a selling interview, you can't possibly review every restriction/ limitation, but there are major areas that you must discuss with your prospective client so they have a proper understanding of what they are purchasing. This article will point out some areas that require a clear understanding from you and your prospective client.
1) THE DEFINITION OF TOTAL DISABILITY If you are dealing with professionals, secure the longest "your occupation" definition that is available since it’s one of the most important definitions in a disability policy. If the policy has a modified "your occupation" definition, it must be clearly explained to the prospective client. There several modified definitions, such as "your occupation" and “not working in any other gainful occupation.” In this case, it's the client’s choice to work at another job. If they have a partial (residual) benefit, the claim will become a partial claim with 20 | CALIFORNIA BROKER
by ART FRIES
the applicable formula applied. If the client makes too much money, it can blow them out of the claim or reduce their monthly benefit. Also, benefits will cease if "partial disability" is not included in the contract and they are working in another occupation. Some older policies that provide lifetime benefits have this kind of modified wording, which changes at age 65. If you have sold these policies, it's important to make your client
aware that they must stop working at their job before age 65 if they are on disability claim under a "your occupation" definition and they are now working at another job. Otherwise, their benefits will terminate at age 65. Also if "partial disability" wasn't included in the contract and they are working in another occupation, benefits will cease at age 65 since almost all disability contracts do not continue partial benefits on a lifetime basis. The definition of disability changes after two years from "your occupation" to "any occupation" related to education, training, or experience. For many policyholders, this can end their claim after two years unless they have applied for Social Security disability and are collecting under a more restrictive definition. Also, be careful how you discuss the "your occupation" definition, which pays for the length of the - CalBrokerMag.com -
contract. Don't just say, “Doc, if you can't work as an orthopedic surgeon you will be covered in "your occupation" and can work in any other occupation you choose. That’s an oversimplification since you must add in the comment that any other job they are working in must not be in conflict with their medical symptoms. In addition, you should be aware of the definition demanded by the California State Insurance commissioner for any disability contract written in California; it broadens the definition of "total disability" in the contract. A contract that states "total disability" as being unable to perform the substantial and material duties of "your occupation" is expanded to say “unable to perform with reasonable continuity the substantial and material acts necessary to pursue your usual occupation in the usual and customary way.” Here’s an example: You are a trial attorney with a bad low back. You have a five-day trial approaching; you ask judge to only have the courtroom open for you in the morning. By 1:00 PM, your low back will really be hurting and you'll be taking prescription drugs that will affect your focus. The judge would tell you to stick it in your ear. You'll be in the courtroom for the entire day or you'll get another attorney to handle the trial. The same could apply to a deposition that might run the entire day. Based on the California definition, not being able to work in the afternoon might smell like a "partial disability" claim, but could be considered a "total disability" claim since this attorney is not able to work with reasonable continuity in the usual and customary way. DECEMBER 2016
DISABILITY 2) PARTIAL (RESIDUAL) (PROPORTIONATE) DISABILITY This will pay a percentage of your monthly benefit related to "your occupation" or "any occupation." Usually, you must have a 15% loss of earnings, but 20% is more typical for most companies. Many companies pay a minimum of 50% of the monthly benefit for six months after the waiting period. Most companies also pay 100% of the monthly benefit if you suffer a loss of earnings of 75% or 80%. The insurance company will discuss how many months or years (or calendar years) they will go backward to determine your pre-disability monthly earnings figure and compare that to your post disability monthly earnings figure based on the contractual wording of the policy. A very restrictive wording, which I sometimes come across, indicates that “partial disability” must follow a certain number of days of "total disability" and "total disability" is approved. This kind of wording should be avoided, but when that’s not possible, you must at least explain this to the client so that they understand the restriction. Most of my clients whom I provide disability claim advice to rarely go from "total disability" to "partial disability." It's not a big issue, but could be for your client. In addition, there is usually additional wording, which says that you must also have a loss of time or one or more duties. Sometimes, it says at least a 20% loss of time or 20% loss of a duty. Or it may say that you can't work as effectively, which means that you have to spend more time doing the job/profession. Sometimes, there is no mention of time/ duties other than the loss of earnings. These must be pointed out to the prospective client in the initial interview. 3) MENTAL/DRUG/ ALCOHOL LIMITATION Some policies will limit benefits in this area to no more than one or two years (If not “hospital confined” as described in the policy). Sometimes the time limitation is an aggregate, meaning that once the limited benefit has been paid, no more claims of this kind will be paid again even for a future new claim. For some prospective DECEMBER 2016
clients, the concern is more related to physical medical symptoms and they can live with the restrictive wording. Others will not want this kind of wording if a contract is available with another insurance carrier without this restriction. Sometimes there are very specific medical conditions, such as Chronic-Fatigue Syndrome or Fibromyalgia, etc.) that have a limitation of one year or two-year benefit and may even have a policy aggregate. In this case, it's of utmost importance to point out these restrictions to your client. 4) TERRITORIAL RESTRICTIONS In more recent years, I have been seeing this in more disability contracts. There are various kinds of contractual language. Some say that, if you live outside of the U.S. for more than six months or one year, they will not pay you. Some refer to living out of the U.S. and Canada and some say the U.S., Canada, or Mexico. Some indicate that the amount is an aggregate, so if you come back to say the U.S. and live out of the country at future date, they won't continue the benefits again. Let's say that your prospective client is originally from the Middle East, went to medical school in the U.S., and is a practicing physician in the U.S. They now go on a disability claim. Because they still have family members living in the country where they were born, they want to move back to that country where living costs are much less. In that scenario, the territorial restriction could force the physician to remain in the U.S. and not have a choice because of economic reasons. 5) W HEN RECOMMENDING A GROUP LTD PLAN TO A PROSPECTIVE EMPLOYER IT'S IMPORTANT TO KNOW THE KIND OF FIRM YOU ARE DEALING WITH Many group disability contracts only consider base salary as earnings and bonuses or exclude other kinds of compensation. Suppose you are dealing with a law firm and the attorneys are paid salary and a bonus, or a partner is also entitled to profits from the firm. It would be important to cover these kinds of earnings. Otherwise, there could be a considerable shortfall in the amount of monthly benefit the - CalBrokerMag.com -
attorney would receive at claim time. For other employees of the firm, a different class could be set up with the more restrictive definition of earnings (salary only) applying. A lower premium for the firm might be your goal, but you must always point out this earnings kind of restriction. The insurance carrier that you are recommending might not allow you to provide coverage past the base salary. In that case, you must seek out a carrier that will provide the broader earnings definition even if the premiums are higher. Any omission on your part or failure to explain important wording in policy language or important restrictions/ limitations that could lead to a misunderstanding at claim time can be the basis of a lawsuit against you – the agent/broker who has recommended a particular kind of disability coverage. Suppose that you recommend only one kind of disability policy, as an agent, for that insurance company, but you also offer other companies as it relates to other kinds of insurance (life, annuities, etc.) You could be exposing yourself to liability by not being aware of other company disability contracts that could provide fewer restrictions/limitations and better policy definitions. As an independent broker, you have no giant insurance company to back up your mistakes/omissions. You'll have to rely on your malpractice carrier. As an agent with a company in which you recommend that insurance company’s product, you will not only have the support of your malpractice carrier, but you will also have the support of the monies of the insurance company. So good advice is to secure as large of an amount of malpractice liability insurance as you can if you sell disability insurance in a broker capacity. It takes a bit longer to be careful, but in the long run, it can save you embarrassment and money. A real pro takes the time to learn and to educate their prospective clients and that’s where you should be. H Art Fries is a disability claim consultant providing advice on a national basis in the U.S. He is located in Nipomo, Calif. He can be reached at 800-5671911 or email friesart@hotmail.com. The web address is www.afries.com. CALIFORNIA BROKER | 21
SELF FUNDING
Trend Alert:
I
n Southern California, it’s been a challenge for employers to get out of an HMO-focused mindset. As the Affordable Care Act remains top of mind and employers continue to witness incessantly increasing premiums over the years, brokers, employers and insurers alike are on edge. In fact, according to the 2016 Employer Health Benefits Survey by the Kaiser Family Foundation, annual premiums for employer-sponsored family health coverage is up 3 percent from 2015. At the end of the day, we know something’s got to give. This has left employers looking for less traditional, more transparent and more stable health plan options. But with the myriad of different choices on the market, it’s difficult to know where to turn. Some cost-effective benefits plans are more attractive to certain companies depending on cultural needs, and it’s important to find the right option. These trends have given way to a growing demand for innovative, cost effective solutions. Our job as brokers is to keep a finger on the pulse of the industry and know how we can better serve clients’ needs. Here are some of the ways I have found employers are moving from traditional, less transparent benefits plans to the new generation of stable employee benefit plans. And, these trends are only going to continue in years to come.
ACCOUNTABLE CARE RGANIZATIONS (ACOS) O As ever increasing health care costs continue to put a strain on businesses and their employees, many employers are utilizing Accountable Care Organizations (ACOs). An ACO is a group of doctors, hospitals and other health care providers that come together to serve patients with or without the insurance carrier intermediary. By contracting directly with a specific network of physicians, employers are able to eliminate a layer of insurance companies’ control, and in return they gain transparency and 22 | CALIFORNIA BROKER
THE GREAT MIGRATION TO COST EFFECTIVE BENEFITS IN 2017 by XAVIER SERRANO
accountability from medical providers. According to a Leavitt Partners report, “Projected Growth of Accountable Care Organizations,” the number of ACOs across the country has been steadily on the rise, jumping from 157 in March of 2012 to 782 in December of 2015. And, by 2020, the number of ACO-covered lives is projected to increase to 105 million. As opposed to the PPO and HMO traditional models, the ACO model is lauded as the best way to treat individuals’ health care needs. When it comes to reporting, treating episodes, eliminating gaps in care treatment and implementing wellness initiatives, the ACO can use the medical data of the most chronically ill accounting for 80% of the healthcare cost to significantly improve population health management and decrease cost. For doctors who do not want insurers tapping into their profit margins, the ACO model could be the solution. While it has yet to take off on a wide scale, its popularity could grow significantly as a viable solution for employers wanting to decrease costs for their employees. GROUP CAPTIVES Group captives are another type of selffunding plan that can decrease employees’ and employers’ healthcare spending. Simplistically, a group captive is an insurance company that is owned, operated and controlled by those it insures. – much like a mutual fund. While there are several variations of captives, group captives are similar to ACOs and other self-funded insurance means have, they come with the benefits of joining a larger pool of like companies eliminating insurance carriers 15%-25% profit margin network of health insurance players. Group captives provide more transparency and control. They provide brokers with valuable data to act as real consumers and provide employers alternative solutions to lower their costs. If we can manage this cost more effectively, renewals are going to be much - CalBrokerMag.com -
more predictable and fair in terms of where employers’ insurance premiums will go year after year. TRUSTS Employers are also using trusts to take a small step toward self-insurance and lowering health care costs. A trust is a group of companies that come together to contract with the insurance carriers directly to receive a discount on the same insurance programs offered on the open market. Many industries have gained bargaining power by forming trusts and staying within their particular industries. Trusts provide a better way to manage risk and have been growing rapidly as employers gravitate toward this option. While trusts still involve working with an insurance carrier and do not entirely rely on self-funding methods, this option is very transparent when it comes to rates, allowing groups of employers to essentially participate in the Costco of insurance. Though only certain industries are able to participate in a trust – including education, life science, and manufacturing, among others – we’re seeing interest in them meaningfully rise. CONCLUSION Accountable Care Organizations, group captives and trusts only begin to scratch the surface in terms of what brokers can offer their clients. There are numerous variations of each of these structures, and I think we will begin to see a wave of interest in these methods and the early adopters will become the big winners. As much about the future of health insurance and employee benefits trends remains to be seen, our job as brokers is to remain at the forefront of those trends, and offer clients innovative, outside-the-box solutions to the problem of ever-increasing health care costs. H Xavier Serrano is vice president, Southern California for CBIZ. For more information, email HYPERLINK "mailto:xserrano@cbiz.com" xserrano@cbiz. com or call 858-795-7465. DECEMBER 2016
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ANNUAL SURVEY OF VOLUNTARY BENEFITS INSURANCE CARRIERS IN C.A. 1. P lease list the voluntary/ employee-paid benefits that you offer along with the minimum group size for each offering: Aflac: Aflac’s voluntary plans complement any benefit package by offering an additional layer of financial protection if the unexpected happens. Aflac offers group and individual products ranging from accident and disability, to cancer and dental, to hospital and vision. In addition, the plans offer direct-to-the-insured cash benefits, unless otherwise assigned, to help cover the out-of-pocket expenses not covered by other insurance. Aflac pays cash benefits quickly. The following are individual policies available in California through Aflac: • Accident • Cancer •S pecified Health Event • Dental • Hospital • Life •L ump Sum Critical Illness •S hort-Term Disability • Vision The following are group plans available through Aflac: • Accident • Disability • Dental • Critical Illness • Hospital Indemnity While three separate W-2 employees must apply for a policy in order to set up a payroll account, there are generally no participation requirements for individual lines of business. The exceptions are life and certain lump-sum critical illness policies. Clients are requested 24 | CALIFORNIA BROKER
to establish an account by completing and signing a Payroll Account Acknowledgement form and must have three separate W-2 employees apply for at least one Aflac policy. Aflac Group requires a minimum of 25 payers to establish group billing. Chimienti & Associates: We offer a broad range of voluntary benefits down to a one life group for individual policies and as low as two lives for group policies on up to thousands of lives. The following is a list of voluntary benefits that we offer: •A ccident (5) •C ancer (5) • Critical Illness •D ental (5) •D isability – Short and Long Term (10) •G ap Plans 5) • Hospital Indemnity (including HAS compatible plan designs) (5) • Life Insurance – Term, UL, Whole Life (5) •L imited Medical (50) •L ong Term Care (5 Colonial Life: Colonial Life offers voluntary benefits to businesses with as few as three employees up to thousands of employees. Our product portfolio includes individual and group voluntary products for short-term disability, accident, hospital confinement, cancer, critical illness, and term, whole and universal life. Delta Dental: Delta Dental of California’s voluntary dental plans are for employers, associations, affinity groups, and other trust organizations that wish to offer employee-paid comprehensive dental coverage. Delta Dental offers a variety of features and benefit plan designs that allow employers to offer our - CalBrokerMag.com -
Delta Dental PPOs, Delta Dental Premier and/or DeltaCare USA products to meet their needs. These dental plans have the same quality standards, cost savings, and ease of administration as do our employer-financed products. Plans are available based on a variety of premium contribution levels from fully employee paid to some level of employer contribution. Voluntary plans require a minimum participation of five primary enrollees. EyeMed: We provide fully insured and self-insured vision benefits to groups with 10 or more eligible employees. Guardian: •V oluntary LTD–minimum group size: 3 (depends on state) • Voluntary STD–minimum group size: 3 •V oluntary AD&D–minimum group size: 3 •V oluntary Life–minimum group size: 3 (depends on state) •V oluntary Critical Illness–minimum group size: 2 •V oluntary Dental–minimum group size: 5 •V oluntary Vision—minimum group size: 50 •V oluntary Accident–minimum group size: 2 •V oluntary Cancer–minimum group size: 2 MetLife: MetLife offers a wide range of complementary employer- and employee-paid benefits. In addition to traditional voluntary, employee-paid options for life, dental, disability and vision insurance for employers with 10 or more employees, MetLife and its affiliates offer the following voluntary, employee-paid benefits to employers DECEMBER 2016
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VOLUNTARY BENEFITS with 200 or more employees: • Accident Insurance • Auto & Home Insurance • Cancer Insurance • Critical Illness Insurance • Hospital Indemnity Insurance • Legal Services (employers with approximately 10 or more employees) through Hyatt Legal Plans, Inc. • Pet Insurance, which is fulfilled by Nationwide Mutual Insurance Company Unum: We offer the following: •G roup Accident, 10+ •S pecified critical illness, 10+ •G roup critical illness, 10+ •G roup hospital indemnity, 10+ •T erm life, 10+ •W hole life, 10+ • Universal life, 10+ • Group voluntary short term disability, 10+ • Voluntary individual short term disability, 10+ • Group voluntary long term disability, 10+ • I ndividual disability, 3+ •A D&D, 25+ • Dental, 10+ VSP: With VSP Vision Care, employees will receive the highest quality vision coverage that also doubles as preventative health care. A comprehensive eye exam from a VSP network provider is often an early indicator of chronic conditions like diabetes, hypertension, and more. Voluntary and employee-paid vision benefits are available for medium (10-499) and large (500+) companies. Employer-paid plans are available to clients with at least two employees.
2. D o you have any benefit offerings for employees that work fewer than 40 hours a week? Aflac: Yes, all of Aflac’s individual and group plans are available to full-time employees, as defined by your client, who work less than 40 hours per week. Please note the following: • Individual short-term disability policies—employees must work a minimum of 19 hours per week. • Group plans—employees must work a minimum of 16 hours per week with the exception of group disability, which requires employees to work a minimum of 19 hours per week. Sea26 | CALIFORNIA BROKER
sonal and temporary employees are not eligible for coverage. Chimienti & Associates: Yes, we offer benefits to part time and seasonal employees as well as employees who work a minimum of 16hrs per week. Colonial Life: Yes, all of our products are available to employees who work a minimum of 20 hours a week. Employees must be actively at work and permanent employees of the employer group. Delta Dental: Yes, the client specifies eligibility rules. Our voluntary plans are a solution to the benefit needs of parttime employees, retirees, association members and cafeteria plan participants. EyeMed: Yes, our vision products are available for employees with parttime status. Guardian: Yes, Guardian benefits can be offered to employees that work less than 40 hours a week. MetLife: MetLife and its affiliates work with each employer to determine the eligibility requirements for its employee population. However, we also adhere to all applicable laws and regulations concerning eligibility, which, in some states, exclude those not working more than 24 or 30 hours a week. Launched in 2016, MetLife now offers an individual dental program employers can offer through the workplace, MetLife TakeAlong Dental. It’s the perfect complement to traditional group dental benefits, helping employers with 100 or more employees deliver the right mix of solutions for a growing mobile workforce of part-timers and consultants as well as retirees. For groups with less than 100 employees, MetLife TakeAlong Dental may be offered to retirees providing a lifelong solution as an alternative to COBRA. (MetLife TakeAlong Dental is not COBRA coverage and does not affect any employer obligation to provide COBRA coverage.) Unum: Yes, our offerings are available to employees who work 20 hours. VSP: Yes. VSP does not have minimum participation or enrollment requirements. We allow the employer to determine eligibility when it comes to hours worked per week and to determine waiting periods. For people who do not meet the eligibility requirements of their employers, we also offer individual and family vision plans that are available directly to the consumers through VSP Direct. - CalBrokerMag.com -
3. D o you offer flexible enrollment data, billing capabilities and processes that work with the employers’ systems instead of the other way around? Aflac: Yes, Aflac has the tools and flexibility to meet the unique needs of businesses of all sizes – from personalized benefit consultations with your employees, to benefit marketing and education, to enrollment solutions. We will work with you to design a seamless enrollment experience tailored to your business. These services are provided to your clients at no direct cost to them. Through Aflac’s SmartApp Next Generation software, we can process a large number of policies quickly and accurately. Business submitted through this software, which is located on Aflac agents’ laptop systems, can be issued without human intervention (resulting in a 24-hour turnaround time). These services apply to Aflac’s individual policies only. Aflac has the capability to transmit billing data to an account in a variety of ways. Aflac and Aflac Group also work with a wide range of third-party billing companies in order to make the billing process as easy as possible for our customers. Work with Aflac for: • Simple and quick enrollment process • Flexible enrollment solutions • Personal one-on-one, self-service Web or call center enrollment options • Single-source enrollment solutions • Support of multiple locations • Health care and benefits education • Aflac and co-branded marketing and communications materials • Integration capability with other enrollment partners and software Chimienti & Associates: Yes, we have access and use many of the top worksite carriers’ enrollment platforms including our proprietary admin direct HRIS benefit administration & enrollment system. We offer ACA 1094C & 1095C tracking and reporting, bill reconciliation, online administration, daily reporting, core and voluntary carrier EDI feeds, customer service and tech support. We also utilize these systems to conduct enrollment online, face to face with paper, laptops or IPads, or via our call center.
VOLUNTARY BENEFITS Colonial Life: Yes, Colonial Life’s Harmony enrollment system is built to accommodate the many specialized needs businesses have for enrollment and data reporting. We can provide face-to-face enrollment at any business location and during any work shift. We also can provide employers with daily enrollment reporting that show which employees have been seen and which coverages they’re selecting. This reporting capability allows employers to assess the enrollment’s progress daily and make any necessary adjustments. Colonial Life also has several convenient electronic services for businesses that allow them to receive their bills, make payments and adjust their bills,
as necessary, online. Colonial Life also offers additional flexible enrollment solutions, including the ability to integrate real time with other benefit administration and HRIS systems. This allows users to enroll in their core benefits on a vendor’s platform and seamlessly bridge to our Harmony enrollment system and elect their voluntary benefits. We also offer the option to build out our group products Delta Dental: Delta Dental can accept eligibility transmission in the following formats: • Web enrollment (directly online) • Secure File Transfer Protocol (SFTP) • FTP with PGP encryption • Email with PGP encryption • Secure email monitoring system • Secure website (Delta Dental pick up) • Enrollment cards If applicable, clients should confirm the electronic data transmission method with Delta Dental prior to implementation. Routine set up for new groups is 60 days. If a nonstandard format is DECEMBER 2016
used, Delta Dental requests a minimum of 90 days’ notice in advance of the effective date. Eligibility information can be submitted as frequently as the group requires (e.g., weekly, biweekly, monthly or quarterly.) If a client uses Delta Dental’s online eligibility maintenance system, updates can be made in real time.Clients may also benefit from the convenience of Delta Dental’s online billing and reconciliation system. EyeMed: Yes. We make it easy to send data by accepting multiple file formats like: 834x12 file format, password-protected .zip, PGP encrypted files, and most TPA and proprietary file formats. We also accept these formats through the following means of transmission: SFTP, email, and through our client web at eyemed.com. Guardian: Yes, Guardian offers a wide range of enrollment options including electronic eligibility files, online and paper enrollment, as well as different billing options including online, paper and electronic fund transfer to meet the varied needs of employers and ensure ease of administration. Users make all of their enrollment selections, access information, and update accounts all in one place. We offer access that gives employees the ability to do the following: • Access their portfolio of benefits online, regardless of carrier, from any location • Enroll in benefits and make life events changes online • Support employee decision-making with helpful tools (e.g., compare benefits, view plan summaries) • View detailed employee information and access a full record of employee changes • Provide electronic data feeds to carriers •V iew and edit bills • Export files in common formats for COBRA, FSA and payroll • Produce a current census and other useful reports Guardian’s online enrollment platform provides 24/7 online access, provider directories, a nationwide team of benefit counselors, a 24-hour employee benefits hotline, personalized enrollment kits and post enrollment support tools. MetLife: MetLife, for itself, and as the - CalBrokerMag.com -
billing service provider for its affiliates, is able to work with virtually all types of payroll systems. Unum: Yes. Unum has a breadth of solutions that can be delivered using our system or a client or broker’s system of choice. VSP: Yes. The preferred membership file format is ANSI 834 “changes only,” though there are many options available through VSP. We support a variety of electronic eligibility submissions, including File Transfer Protocol (FTP) and SFTP over SSH, with or without PGP encryption. Eligibility updates can also be made real-time on the Employers tab on vsp.com or by phone at 800.216.6248.
4. D o you offer the flexibility to conduct enrollment through one-on-one benefit sessions, group meetings, call centers and online self-enrollment? Aflac: Yes, Aflac has the flexibility to conduct enrollment through each of the methods listed – one-on-one benefit sessions, group meetings, call centers and online self-enrollment. However, the availability of each method is determined by the number of eligible employees. Chimienti & Associates: Yes, depending on the size and logistics of the group we can conduct enrollment viaface to face meetings, group meetings, Call Center, online with or without the assistance of a Benefit Counselor, or list bill enrollment. Colonial Life: Yes, Colonial Life offers a full spectrum of benefits communication and enrollment options, including group meetings, one-to-one meetings, call centers, co-browsing and online self-enrollment. Our national team of local, professional benefit counselors uses the Harmony enrollment system to educate and communicate benefits to employees face-to-face so they can make better benefits decisions. For hard-to-reach employees, we can offer the same benefit communication and education experience by co-browsing with employees on the Internet, meeting through a call center or setting up online self-enrollment. Delta Dental: Delta Dental provides CALIFORNIA BROKER | 27
VOLUNTARY BENEFITS support at open enrollment meetings at no additional cost. Delta Dental representatives are available to participate at open enrollment meetings for 100 employees or more. Delta Dental has an open enrollment management staff that works with our account management team to coordinate staffing and the distribution of materials during open enrollment meetings. We produce a variety of standard enrollment and communication materials at no additional cost that allow us to tailor a communication program to the client’s needs. To assist during open enrollment, Delta Dental offers the following enrollment materials: • Benefit-highlight sheets. Customized with the client’s name, group number and benefits summary, along with quick tips to getting the most from the dental plan. • Informational flyers. Provide information about a variety of topics including online services, an overview of preventive care, our SmileWay Wellness Program and other dental health care topics. Delta Dental also offers clients a customized video, at no additional cost, that explains the client’s specific benefits and can be played at open enrollment or new-hire orientations or posted on the client’s intranet. Customer service is available to support questions about a plan’s coverage (Please note: customer service does not accept enrollment). Enrollment is facilitated by the benefit administrator. Delta Dental provides benefit administrators with access to an application that allows enrollees to select a benefit package online during open enrollment and update their personal information online year-round. EyeMed: Yes, we provide support from the very beginning by attending open enrollment events to educate employees about their benefits and to drive enrollment. We also make sure that employees walk away with detailed benefit summary information, educational collateral and sample provider directories. Employees can call our Customer Care Center, with live-agent service seven days a week, to get help with the enrollment process. Our Member Web portal is also available during enrollment to guide employees through the process and explain their benefits. 28 | CALIFORNIA BROKER
Guardian: Guardian offers the flexibility for employers to deliver a range of enrollment options to employees, including online self-enrollment and paper enrollment kits that can be personalized to each employee (in English & Spanish). In addition, Guardian offers additional support services, such as group meetings conducted by a certified enrollment specialist, toll-free benefit hotline in over 50 languages and turnkey employee communications at no additional cost to ensure the enrollment process is simple and easy for employers and their employees. MetLife: MetLife and its affiliates conduct enrollments/application processes through one-on-one benefit sessions group meetings, our call center and online. MetLife’s customer-focused solutions, exceptional service, and proven expertise combined with the innovative capabilities of strategic third party communication and enrollment firms provides the flexibility and solutions employers are looking for. We work with brokers, employers, and third party entities to determine which enrollment/application channels will provide the best experience for employers and their employee populations. MetLife’s simplified approach to enrollment leverages streamlined processes and easy-to-use and understand materials that drive employee engagement and participation. Unum: Yes and enrollment may be conducted by a broker, Unum Enroll or a third party enrollment firm. VSP: Yes. There are many open enrollment tools and options available to assist administrators and employees during the enrollment period. A few options include: 1 Customized member benefit summary for employees that includes plan coverage and an explanation on how to use their benefit 2 Educational materials and activities to educate employees about eye health and protection, the importance of annual eye exams and how eye care can impact overall health 3 Robust social media customer support across numerous channels that allows for one-on-one assistance VSP can also help process eligibility information that is provided by clients. - CalBrokerMag.com -
5. Do you honor brokerof-record letters? Aflac: Yes. Chimienti & Associates: Yes Colonial Life: Yes. Delta Dental: Yes. EyeMed: Yes. Guardian: Yes, Guardian honors broker-of-record letters. MetLife: MetLife will honor any written request from an authorized officer of a policyholder to recognize a broker or other intermediary as ”broker-ofrecord” for purposes of providing such broker or other intermediary with information and/or paying commissions, provided of course that such request is not inconsistent with law or any inforce compensation agreement. Unum: Yes, Unum honors broker-ofrecord letters. Standard ve VSP: Yes. VSP honors broker-of-record letters from clients.
6. D o you offer simple and hassle-free account billing and payment processes? Aflac: Yes. Aflac’s goal is to make billing and payment of premiums simple and hassle-free for your client. Aflac’s systems are flexible to accommodate a variety of billing methods and handle almost any type of billing layout. Whether electronic or paper is preferred, your clients can register for Aflac Business Services to manage their accounts at their convenience. Receive push email notifications when your invoice is ready, make payments electronically, and enjoy faster processing and more accuracy of your Aflac account by signing up for Aflac Business Services. Chimienti & Associates: Yes, we offer online billing and payment services as well as bill reconciliation support. Colonial Life: Yes. Colonial Life offers many electronic services for businesses that allow them to conduct transactions online such as receiving their bills, making payments and making any necessary billing adjustments. Delta Dental: Yes. Delta Dental’s online billing and reconciliation system allows clients to: •A ccess current and historical invoices • Automatically compare Delta Dental’s invoice to the group’s eligibility roster, and view or download and save comDECEMBER 2016
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VOLUNTARY BENEFITS parison results • Based on comparison results, submit line item adjustments electronically. (Note: The online submission of line item adjustments does not automatically update Delta Dental’s eligibility system.) • View a summary of line item adjustments • Download a summary or detailed view of selected invoices in Excel or PDF • Pay invoices online (via ACH transfer and/or credit card) or print and mail the remittance section of a statement with a check •T rack payment history • Attach notes to invoices to submit to Delta Dental’s Eligibility and Billing department EyeMed: Yes. We send clients a monthly invoice based on all active members within our system at that time. We can accept checks, electronic funds transfers (EFT) and Automatic Clearing House payments. Also, clients can view up to one year’s worth of invoices through our Client Web on our website. Guardian: Yes. Guardian recognizes that as more of employers offer worksite products in their overall benefit package, the need for more flexible billing and payroll deduction statement capabilities is required. Guardian is a leading provider of both employer paid and worksite products, making it easier for your clients to reconcile their bills and process employee payroll deductions. Guardian offers a range of billing and payment options from online to paper to electronic fund transfer to help meet the varied needs of employers and ensure ease of administration. Billing capabilities also include: monthly variable billing, payroll frequency billing, seasonal billing, payroll slotting, and flexibly payroll deduction reports. MetLife: MetLife provides a single bill file platform that is available for all voluntary benefit group products, which allows a single customer payment on a per- pay period or monthly basis. Unlike the other group products, MetLife Auto & Home and TakeAlong Dental enroll employees individually. Unum: Yes, each client is assigned an Unum billing coordinator who handles all of their billing reconciliation. 30 | CALIFORNIA BROKER
VSP: Yes. Binder checks are not required. VSP makes benefit administration seamless with a variety of tools available on the Employers tab of vsp. com. Clients may receive monthly billing statements and can also make payments online.
7. D oes your billing system allow plan administrators to make online deletions and changes to their plan account? Aflac: Your clients are able to safely update, reconcile and pay their Aflac invoice electronically. This automated service enhances accuracy, speeds transactions and minimizes paperwork. Your client will save time and money as their electronically remitted payments and changes are processed faster. Chimienti & Associates: Yes, we can support multiple Carrier Voluntary and Core products. Colonial Life: Yes, Colonial Life offers online billing capabilities. A plan administrator also has the ability to make changes online, as well as update employees’ coverage and general information through our secure website. Delta Dental: Yes, Delta Dental’s online eligibility management system allows clients’ representatives to add or terminate enrollees and dependents, and modify enrollee information through a secure website. Enrollment changes made by the client using our online eligibility system are made to the system in real time. EyeMed: Yes, plan administrators can easily view, edit and update their enrollment data through our client Web – our online portal for managing your vision plan. This tool also allows clients to: • Print replacement ID cards for members • Download member rosters (active and termed) in a spreadsheet format • View individual plan benefits and service eligibility • Access EyeMed contact information including account management • Access client newsletters, forms, training and vision wellness information •V iew administrative fee invoices • Download utilization reports Guardian: Yes. Guardian’s benefit - CalBrokerMag.com -
Website offers a one-stop source for plan administrators to manage their account and request plan changes online, including submitting eligibility changes that affect their bill. Plan administrators have the flexibility to recalculate their bill online to take any eligibility changes into account so they can adjust payments accordingly. MetLife: MetLife can, through our online billing system, change per pay period deduction amounts in accordance with each payroll run. Unlike the other group products, MetLife Auto & Home and TakeAlong Dental enroll employees individually. Unum: Yes. VSP: Yes. On vsp.com, clients have access a variety of online eligibility tools that gives them control of the accuracy and timeliness of membership change, which also helps ensure the accuracy of billing statements.
8. D oes your billing/payroll deduction process make it easy for the employer to offer multiple products? Aflac: Employers are looking for voluntary benefits options that are easy to administer. Aflac offers many billing options designed to meet a variety of needs. Aflac provides invoices for payroll deductions after an employer makes them, which means they will never have to pay premiums out-of-pocket. Employers also have access to Aflac Benefit Services, which allows them to manage their billing information faster and easier. They can view and update information, reconcile invoices and submit service requests online, anytime. Aflac has also built flexibility into our systems to handle almost any type of DECEMBER 2016
VOLUNTARY BENEFITS billing layout and accommodate several billing methods. Aflac can bill an employer electronically or via paper. Payroll-deducted premiums will then be remitted to Aflac via check, wire transfer or through an Automated Clearing House. Chimienti & Associates: Yes, including payroll remittance history, and coverage details to include dependent coverages. Colonial Life: Yes, Colonial Life can enroll an employer’s core and voluntary benefits and provide the account with enrollment data on all employee elections in an easy-to-use spreadsheet. Employers can electronically submit this information through our secure website, and Colonial Life reconciles the bill to eliminate any additional work for the employer. Delta Dental: Yes, Delta Dental has several billing and payment formats available depending on the client’s plans and preference and will work with the client to determine the best process to meet their needs. The group sponsor is responsible for collecting the monthly premiums from enrollees and submitting eligibility data and payment to Delta Dental. EyeMed: Yes, we offer specialized plans to meet the needs of our clients - including multiple plan options such as our EyePrefer product. EyePrefer is a new vision benefit package that lets employees choose between different levels of plans that fit their specific household needs and budget. This product features multiple tiers that are unique plans covering a broad range of needs, from a traditional vision plan to a platinum-level enhanced plan with richer coverage. EyePrefer is designed based on real-life employer and member usage with lower out-of-pocket costs so employees can pay for the level of coverage they need as part of their premium, instead of at the point of purchase. We give employees a simple online tool to help them determine which level is the best fit. Guardian: Yes Guardian offers a single bill (online or in the mail) for all Guardian coverages a client has in order to ensure the payment process is easy to manage. MetLife: MetLife can allow for a single voluntary benefit deduction for numerous benefits or separate deductions DECEMBER 2016
for each benefit on one single bill. Unum: Yes. VSP: Yes. VSP offers a variety of customization options that make it easy for clients to tailor coverage options and payroll deductions based on their needs, all the while keeping benefit administration simple for employers.
9. D oes your system offer online searches for employee policy status, coverage effective dates and policy/coverage type? Aflac: Aflac offers online services for policyholders who have an individual insurance policy –the fastest, most convenient way to access and update their account information. Policyholders can log on to aflac.com 24/7 to: • Download claim forms and check claim status •A ccess policy information •U pdate personal profiles • Request forms or copies of their policies • Obtain contact information of their Aflac agent • File claims quickly using Aflac SmartClaim Chimienti & Associates: Yes, including payroll remittance history, and coverage details to include dependent coverages. Colonial Life: Yes, the plan administration section of our website offers online searches for employee policy status, coverage effective dates and policy/ coverage type. Delta Dental: Yes, Delta Dental’s online eligibility application allows benefit administrators to view and maintain coverage effective dates and coverage types, make real-time updates to eligibility data and improve the efficiency, accuracy and security of eligibility reporting. In addition, Delta Dental’s website, deltadentalins.com, provides useful features to registered enrollees behind a secure sign-on, including the ability to view benefits and eligibility information, print ID cards, verify plan deductible and maximum information, and view claims status and claims history. EyeMed: Yes, our Client Web is an easy-to-use tool for plan administrators to self-serve their EyeMed vision plan - CalBrokerMag.com -
information. It allows them to easily and quickly make plan updates and see all facets of the plan, including editing and updating member records, downloading member rosters and viewing individual plan benefits and service eligibility. Guardian: Yes, Guardian’s benefit Website offers a one-stop source for plan administrators to manage their account online, including look ups for an employee’s policy status, coverage effective date and policy/coverage type. MetLife: MetLife’s online billing system allows the employer to sort the bill by different criteria for group products. MetLife Auto & Home and TakeAlong Dental enroll employees individually. Unum: No VSP: Yes. Clients have access to many online tools on vsp.com. The resources available allow clients to: 4M ake updates online in real-time 5A dd or terminate members 6D ownload member lists 7C hange member data
10. D o you offer downloadable claim forms? Aflac: Yes, Aflac policyholders who have an individual insurance policy may download claim forms from aflac.com. They can also get tips on expediting forms as well as a direct link for sending a message to Aflac’s Claims Department on the website. Individual products offered by Aflac can also be filed via SmartClaim at aflac.com/claims. We proudly work to provide a one-day average turnaround for online claims.* For group plans, claim forms can be downloaded at aflacgroupinsurance.com. Chimienti & Associates: Yes. Colonial Life: Yes, policyholders and plan administrators can download and print Colonial Life claim forms on the company’s website at www.ColonialLife.com. Delta Dental: Yes, however, our network dentists agree to submit claims on behalf of the enrollee and to accept payment directly from Delta Dental. The only time enrollees may be responsible for submitting a claim form to Delta Dental is when non-network dentists do not submit on the patient’s behalf, including instances where the dental work is done out of country. In these CALIFORNIA BROKER | 31
VOLUNTARY VOLUNTARY BENEFITS BENEFITS instances, the enrollee may download and print a claim form from our website and submit directly to us. EyeMed: Yes, in-network claim forms aren’t necessary with us because our network of providers submit all of the claim information on the member’s behalf. But, if a member chooses to visit an out-of-network provider, we do offer downloadable out-of-network claim forms on our Website. Guardian: Yes, Guardian’s benefit Website offers a one-stop source for plan administrators to manage their account online, including the ability to download claim forms or e-mail a claim form directly to someone. MetLife: MetLife offers downloadable claim forms for product offerings that require claim forms. In addition, auto and home policyholders can submit claims online or through our mobile app. Unum: Yes and claims can be submitted online, by phone or mail. The Unum Customer app is also available to check claims status 24/7. VSP: Yes.
11. D o you require carrier reps. to have a comprehensive knowledge of all of the products they deal with? Aflac: Yes, Aflac agents go through a certification process to learn about products and processes particular to the company. In addition to the certification process, training for Aflac agents hits every facet of the company’s plans and sales cycle. Here are a few of the resources available to Aflac’s agents: • Aflac Sales Academy provides new associate sales school, sales methodology, product, leadership, and industry training. • Ongoing training on new plans, services and technology led by experienced trainers in a classroom setting • Coaching and mentoring from sales managers and veteran agents •C ontinuing education courses online • Specialized training •W ebinars and other online training Chimienti & Associates: Yes, our sales staff has extensive knowledge and training of multiple carriers and their products as well as underwriting guidelines. And if we don’t have an 32 | CALIFORNIA BROKER
immediate answer we have access to resources in order to help get a quick response. Colonial Life: Yes, Colonial Life has a 10,000-member national organization of benefits professionals. These individuals receive comprehensive product training through Colonial Life College on both voluntary products and the employer’s core benefits, at the employer’s discretion. One of our areas of expertise is helping employees better understand their benefits programs, uncover their unique insurance needs and select the coverage they need to protect themselves and their families from financial risk. Delta Dental: Yes, throughout the year, we provide support through continuing education for consultants and brokers, such as lunch-and-learn presentations, CE courses and personalized support from our sales staff. Classes are offered at the location requested by the broker. Classes are typically one to two hours in length and are offered at no additional cost. The broker or client decides on a date and which courses to be presented, and the account executive then informs the broker or client of which course offerings are available. EyeMed: Yes, vision is all we do, which makes our Sales and account managers vision care experts! EyeMed Sales and account managers receive on-going training and tools to help them stay on top of vision care trends. Guardian: Yes, Guardian sales representatives achieve a high level of comprehensive knowledge of the Guardian products they present through intensive and ongoing training. MetLife: MetLife’s licensed representatives specialize in voluntary benefits and have extensive experience in designing benefit programs. Unum: Yes, we have an extensive training process. Sales reps are expected to have an extensive and comprehensive knowledge of our group and VB products. Their first year is dedicated to development, with a nine-month self-directed process of activities and testing. VSP: Yes. Because vision is our sole focus, our sales and service reps are experts in vision care and our product offerings. They receive on-going training and support tools so that they’re well - CalBrokerMag.com -
suited to support our clients.
12. How does your company support good working relationships between brokers and carrier reps? Aflac: Aflac cares and is committed to partnering with brokers to help them meet their clients’ growing needs in the new health care market. The Aflac Broker Channel is an experienced team of dedicated employees who are assigned to particular brokers and serve as their dedicated point of contact, providing what they need, when they need it. Chimienti & Associates: Yes, we establish and promote regular planning and review sessions between brokers and carriers.
Colonial Life: Colonial Life places a high priority on working with brokers to help solve their clients’ benefit challenges. Colonial Life has regional broker marketing managers who are dedicated to strengthening broker relationships nationally and regionally, supporting national alliance partners and interacting with worksite specialist brokers. Delta Dental: Delta Dental focuses on providing brokers and consultants easy access to their client’s data during the RFP and renewal process. We believe that we provide more hands-on service than any other dental carrier—both before and after the sale. EyeMed: We want brokers to know that working with us will not feel like work. We understand their time is spread thin and vision is a smaller part of the conversation for brokers compared to benefits like medical and dental. As America’s fastest growing vision benefits company, we are solely focused on vision. Brokers can count on us for simple, fast and on-target tools DECEMBER 2016
VOLUNTARY VOLUNTARY BENEFITS BENEFITS to educate and market themselves, establish quotes effectively and ultimately deliver our long-running 100% client satisfaction rating in implementation. We also can offer brokers our industryleading, deep data insights into specific industries and help them seamlessly integrate our data into client wellness programs or healthcare analytics assessments. Guardian: With one of the longesttenured sales forces in the employee benefit industry, Guardian has a history of understanding the needs of growing businesses, which strengthens good working relationships. Guardian works to give brokers more ways to take good care of their clients. Our flexible and comprehensive product portfolio and responsive, personalized service give support to local relationships and help ensure client needs are met. MetLife: MetLife’s representatives work closely with brokers and consultants to help provide solutions that meet the needs of their clients. Unum: Yes, Unum has strong relationships with its sales partners throughout the United States, with 36 field offices that provide local sales and service support. Unum provides broker training opportunities throughout the year, including CE course offerings; publishes a quarterly newsletter for brokers; and welcomes brokerage firms to its home offices for information sessions and tours of its claims and service operations. VSP: Yes. VSP is dedicated to providing brokers with the tools they need to help clients get the most out of their VSP plan. From enrollment toolkits to video libraries, VSP offers a variety of resources for brokers so that they can focus on building their business. We also provide email newsletters to keep brokers informed about the latest VSP and industry news. VSP also has an account management team that is dedicated to maintaining relationships between brokers and reps.
13. D o you offer marketing materials that are easy to present and simple for clients to understand? Aflac: With more than 60 years of experience and a brand that 9 out of 10 DECEMBER 2016
people recognize today, Aflac’s worksite marketing materials are designed to create awareness, greater understanding and increase participation in benefit programs. Whether supporting a small business or large corporation with complex logistics, Aflac can help your clients reach employees through various channels, including the following: • Digital. Emails, web banners, educational account-specific websites, videos and calculators. • Print. Brochures, payroll stuffers, postcards, posters, flyers and pop-up displays. • Other support. Collateral pieces, employee benefit fair booth and Aflac merchandise. • Plus, all benefit education material is provided at no direct cost to your client. Chimienti & Associates: Yes, we offer custom marketing material in English and Spanish. Colonial Life: Yes, Colonial Life realizes benefits and insurance terms can be complicated. That’s why the company’s marketing materials are easy to understand. Simplified enrollment materials help employees better understand their insurance needs so they can make better decisions to meet their needs. Delta Dental: Yes, Delta Dental has a strong commitment to educate enrollees about how their dental plan works and about the importance of good dental health. We offer a broad array of wellness resources, including plan designs that emphasize preventive care. As experts in dental benefits, we recognize the ongoing need to promote these resources by making our content and tools visible and accessible. This initiative includes the SmileWay Wellness Program, a self-managed program that includes enhanced oral-health communications and features on our website. Employees who complete the cavity and periodontal risk assessment quizzes can opt in for targeted communications based on their results. Enrollees can subscribe to our free dental health e-magazine, Grin!, which provides fun, family-friendly oral health news and tips four times a year (ddins.grinmag.com). We also stream ongoing oral health tips and education through social media on Facebook.com/deltadentalins, Twitter. - CalBrokerMag.com -
com/deltadentalins and Google Plus (search for Delta Dental Ins). Delta Dental’s online dental health risk-assessment tool provides a structured set of questions that identifies specific issues related to the individual's oral health. After completing the questions, the patient can download and print a report of the results to take to his/her next dental appointment. This clinically validated tool can inform patients and their dentists of specific risk factors for oral disease and help guide preventive measures. The SmileWay Wellness Program features the SmileWay Challenge that encourages users to: • Review habits: Free interactive risk quizzes indicate low, medium or highrisk based on oral health habits and lifestyle choices. Users can sign up for customized educational content tailored to their risk level. • Get educated: We maintain an extensive oral health article and video library, as well as a children’s website (mysmilekids.com). • Stay informed: Enrollees can connect with us on Facebook, Twitter or Google Plus, and sign up for our free dental health e-magazine. Delta Dental also promotes Wellness campaigns throughout the year, including web content for all audiences and flyers and posters for benefit administrators to distribute locally. Visit deltadentalins.com/administrators/guidance/oral-health-wellness-materials. html to learn more. For brokers, consultants and benefit administrators, Delta Dental sends regular e-newsletters with dental benefit news and updates. Delta Dental also offers information online covering our products, dental benefit pricing and sales, an RFP submission checklist and a benefit administrator support guide. EyeMed: Yes, our sales managers meet with brokers around the country, educating them about EyeMed and giving brokers the information they need to help their clients clearly understand the benefits and advantages. It’s our mission to help members see life to the fullest, and our sales team is on the front line with brokers in realizing this mission. In addition to personal attention from our sales team, EyeMed provides brokers access to helpful tools CALIFORNIA BROKER | 33
VOLUNTARY BENEFITS and information through our broker portal. We provide them with ready-to-use custom presentation slides upon request. Once a client has selected us, we equip them with everything they need to talk to their employees about their benefit, including: • Benefit Summaries–sent directly to the member’s home along with the Welcome Packet; describes benefits, vision wellness, open enrollment and phone and web-support tools • Welcome Packets–sent directly to the member’s home; includes ID cards, a customized provider listing and an outline of benefit copays and allowances • EyeSiteOnWellness.com–one-stop resource providing a reference library, videos and downloadable educational materials on vision wellness and eye care • Open Enrollment Support–our local vision experts attend client events to talk to employees about their benefit and the importance of eye care • Members App–members can download a free mobile app on iPhone or Android that helps them access their EyeMed benefit details, their ID card and more, wherever they go, whenever they need it. Find details for downloading the app on eyemed.com. Guardian: Yes, from marketing materials shared with brokers to bound enrollment kits personalized to each employee and beyond, the foundation of Guardian’s communications are centered on being easy to present and simple for clients to understand. MetLife: Metlife offers a broad range of materials that are easy to understand and demonstrate the value of voluntary benefits to employees. MetLife will work closely with brokers and their clients to understand an employer’s workplace culture, communications style and preferences. This approach, coupled with our experience and knowledge of proven communications practices, will help to ensure that the simplest and most effective communications are implemented. Unum: Yes, in fact Unum has a consumerism organization dedicated to the ongoing enhancement of messages and tools to ease employee benefit understanding and decision making. VSP: VSP has been in the business for 34 | CALIFORNIA BROKER
more than 60 years. In order to maintain our position as the nation’s premier vision care provider, we’re continually improving our communications and marketing materials. We offer a variety of options and allow communications to be customized in a variety of languages. We also help keep members informed about eye health and eyewear trends through a variety of communications, such as our social media channels, our award-winning e-newsletter,
EnVision, and as well as the “VSP Vision Care on the Go” app that is available in the iTunes app store.
14. How do you track the quality of the customer service you provide to employers? For example, do you set annual service goals and measure and report results? Aflac: Aflac constantly measures our customer satisfaction level with policyholders and business accounts in a variety of ways, such as surveys and audits. We monitor satisfaction with the total Aflac experience as well as satisfaction with enrollment, claims and billing. Aflac’s customer service quality program is administered by the Administrative Best Practices Quality Department. Each major business function, (i.e., primary, claims and specialty) is sampled monthly. For quality scoring, Administrative Best Practices guarantees a minimum of five audits per month for each customer service center representative. All scoring and error trending are reported weekly, monthly and quarterly to management. Aflac’s Internal Audit Department also conducts audits by line of business in addition to their annual assessment of - CalBrokerMag.com -
internal claims controls. Chimienti & Associates: Yes, we log and track and review each year our customer service activities before and after each annual open enrollment period. Large case market reviews are also established on quarterly or semiannual basis. Colonial Life: Colonial Life provides superior customer service to all of its customer groups: brokers, employers and policyholders. The company sets internal annual customer service goals and results are measured quarterly. Colonial Life also works with independent research firms to conduct ongoing surveys of plan administrators and policyholders and reports those results externally through news releases. In addition, all employees who meet with a Colonial Life benefits counselor are asked to rate their one-to-one benefit counseling experience following their enrollment. Every account participating in the post-enrollment survey receives a report card with the survey results. Delta Dental: Delta Dental strives to provide excellent customer service. Delta Dental has established service goals in place. Performance results are monitored closely with results reported through our company’s annual report. Delta Dental’s call-tracking systems create both summary and detailed reporting on a global and client-specific basis. These reports show Delta Dental’s response performance as well as the type of inquiries our customer service department(s) receives from enrollees, allowing Delta Dental and the client to determine how well the needs of our enrollees are being met. Delta Dental can provide customer service reports that include: • Call volume • Call volume by type • Average speed to answer • Calls answered in 30 seconds • Call resolution rate • Call abandonment rate EyeMed: Yes, we set annual goals, measure and track results to ensure satisfaction and drive continual improvements on the client, member, provider and broker level. We work with independent research firms to monitor client and member satisfaction. Measured results include: • Customer service: our award-winDECEMBER 2016
VOLUNTARY BENEFITS ning customer care center was certified in 2015 as a Center of Excellence by BenchmarkPortal for a rarely-achieved sixth consecutive year. • Client implementation: our most recent annual client survey on implementation (2014) revealed 100% overall client satisfaction for the eighth year in a row. • Member satisfaction: • 99% are satisfied with their EyeMed doctor • 98% are satisfied with their dispensing staff • 98% are satisfied with the products they receive • 95% are satisfied with the quality of their plan • 95% are satisfied with our awardwinning customer care center • 96% feel completely satisfied • Guardian: Guardian sets service goals, and tracks and reports the results each year. MetLife: MetLife provides utilization and participation reports to employers at their request. We also monitor our customer satisfaction levels through our call center on an ongoing basis. Unum: We have high goals for responsiveness and accuracy of service. We also have a quality assurance program that checks to see if we delivered our services in a timely and accurate manner as well. Additionally, we survey customers several times each year to better understand how they view their Unum experience. VSP: VSP is leading the industry in customer service with an award-winning team that is focused on simplifying clients’ administrative work and helping members understand and use their benefits. Every year since 2002, VSP Vision Care Customer Service has received a wide range of customer service awards from Service Quality Measurement (SQM) Group, a specialist firm with the most prestigious and sought-after awards program for contact centers. This year, VSP Vision Care Customer Service received the following awards for 2015: •C ontact Center of the Year • Contact Center World Class Certification • Highest Customer Service – Insurance Industry • Highest Customer Service – Business DECEMBER 2016
to Business Sector • Most Improved Employee Satisfaction • World Class Employee Satisfaction • CSR Training Program Contact Center Best Practice • Highest IVR Customer Service Award Best Practice
15. D o you have an established local sales and service team that can provide critical service in the same cities that the broker’s clients are in? Aflac: Yes. Aflac is represented by more than 70,000 licensed independent sales agents throughout the United States. Aflac’s certified enrollers are available to service multi-location accounts and we have a national sales coordinator team to manage these relationships. In addition to Aflac’s sales agents, the company also offers a team of dedicated broker sales professionals in every major metropolitan area to support and service Aflac’s brokers and their clients. Aflac’s agent distribution model and broker channel can help you manage your clients’ open enrollment needs no matter the size or location. Chimienti & Associates: Yes, with the help of our Career sales reps and nationwide benefit counselor team, we are able to service brokers and clients throughout the country. Colonial Life: Yes, Colonial Life has a national team of 10,000 sales professionals who provide local enrollment support and service for its broker partners’ clients. Many of the company’s accounts have thousands of employees in dozens or even hundreds of different locations across the country. Colonial Life’s sales representatives provide employers with valuable services at no direct cost, such as free dependent verification, WellCard discount program, wellness benefits communication, and more. Colonial Life benefit counselors can meet with employees at each location and conduct individual counseling sessions with them. Because the benefit counselors are local, they can be on hand to help out with next year’s enrollment and any ongoing service needs. The - CalBrokerMag.com -
goal is for the company’s benefit counselors to build strong relationships with employees in the account. Delta Dental: Yes, every client is assigned a designated account manager who is responsible for overseeing program implementation, participating in information meetings with benefit managers and enrollees as needed, day-to-day issues resolution and subsequent renewal activities. Delta Dental of California has sales offices in San Francisco, Sacramento, Cerritos, San Diego and Fresno. EyeMed: Yes, we place sales and account managers throughout the country in order to provide regional support. For example, you’ll also find a local EyeMed presence in California, ready to help our West Coast broker partners and clients. We also have a strong cross-functional team based in our Mason, Ohio headquarters supporting our nationwide Sales and Account Management team in meeting client needs. Guardian: Guardian has local and regional sales offices nationwide to support the needs of brokers and their clients. MetLife: MetLife has representatives that specialize in voluntary benefits located in major cities throughout the U.S. Unum: Yes, Unum has 36 local sales and service offices located throughout the U.S. with four locations in California. Unum’s local team partner with our home office team of more than 600 employees dedicated to voluntary benefits service to provide the best service in the industry. VSP: Yes, We’re headquartered in California and have an Eastern Operations Center in Ohio. In addition, we have 22 regional sales offices across the country to provide local service.
16. D o you have both a sales rep and a service rep? (The sales rep helps the broker market and position products, manage blocks of business, and develop target markets. The service rep helps implement and fulfill account enrollment.) Aflac: Yes. Aflac’s sales professionals support the company’s broker channel. Aflac offers Broker Account and Service representatives to assist with CALIFORNIA BROKER | 35
VOLUNTARY BENEFITS implementation and ongoing account service needs. Chimienti & Associates: Yes, Chimienti & Associates has more than 35 years of experience specializing in volun¬tary benefits. Colonial Life: Yes, Colonial Life’s national team of sales professionals has specialized roles they perform during the enrollment process. Sales professionals work with brokers and their clients to help develop voluntary benefit strategies that will help clients’ solve their benefit challenges. Account coordinators help manage the enrollment logistics and report. And benefit counselors meet individually with all employees to educate them on their benefits, help uncover any unmet needs and select insurance plans to meet those needs. Delta Dental: Yes, to ensure clients receive a high level of service, Delta Dental uses an account management team approach to provide rapid response and resolution to client inquiries. This team includes the account manager and the sales account executive. The account manager in the field serves as the client’s primary contact with overall responsibility for servicing the account. The account manager is dedicated to the client’s account for as much time as required. The sales account executive is the key contact during the proposal process and participates in service support after the sale. The account manager is supported internally by the account management associate to coordinate responses and/ or involvement of other key Delta Dental personnel in such areas as eligibility, claims processing and customer service as needed. The account management associate also serves as an additional point of contact for the client. The account manager is a one-stop shop for the client, available by telephone, email or standard mail to address any and all inquiries concerning the account, including eligibility, billing, benefits and participant communications. All inquiries receive responses within 24 hours. The Account Management team for the client is assisted by a support team of internal staff to provide information and solutions to client inquiries. The account manager serves as the liaison between the client and all units of Delta Dental’s operations. EyeMed: Yes, we have both sales and service reps. 36 | CALIFORNIA BROKER
Guardian: Yes, Guardian has local sales representatives to help brokers with their marketing efforts, expert teams dedicated to supporting enrollment and administration programs, and customer services representatives available to serve the distinct needs of brokers and their clients. MetLife: MetLife’s sales and service teams work closely together to meet the needs of our brokers and customers. Unum: Yes, Unum has more than 300 sales professionals across the country, backed by over 100 local client managers for ongoing client management. VSP: Yes, we do have both sales and service reps.
17. D o you specialize in voluntary benefits? Aflac: Yes, Aflac offers both individual and group voluntary products that allow the company to focus on creating bestin-class solutions. Aflac is a leader in guaranteed-renewable insurance policies sold on a voluntary basis that pay cash benefits directly to insureds, unless otherwise assigned. With a broad range of policies and value-added services, Aflac’s offerings suit virtually every business size and type. From three employees to 320,000, Aflac fits easily within any benefit package. Many times in the voluntary insurance business, companies tend to use the same approach to market similar benefits. Aflac is different. We back our unique plans up with the following: • I nnovative marketing campaigns. •S trong financial stability. •B rand recognition. •A solid company reputation. • Industry recognized and rewarded claims and customer service. One Day Pay available for most properly documented, individual claims submitted online through Aflac SmartClaim by 3:00 PM ET. Aflac SmartClaim not available on the following: short term disability (excluding accident and sickness riders), life, vision, dental, Medicare Supplement, long term care/home health care, Aflac plus rider and group policies. Processing time is based on business days after all required documentation needed to render a decision is received & no further validation and/ or research is required. - CalBrokerMag.com -
Chimienti & Associates: Yes, Chimienti & Associates has more than 35 years of experience specializing in voluntary benefits. Colonial Life: Yes, when Colonial Life was founded in 1939, it sold accidental death coverage to individuals. In fact, the company pioneered the concept of offering voluntary benefits at the worksite in the 1950s. Colonial Life has always marketed only voluntary benefits, and during the 76 years it has been in business, the company has developed strong expertise and experience in the voluntary benefits industry. Delta Dental: Yes, Delta Dental has 60 years’ experience providing nonvoluntary, partially voluntary, and totally voluntary dental benefits. EyeMed: Yes, the majority of our membership is under a voluntary vision plan. Guardian: Voluntary benefits are an incredibly important part of our group business. Our insurance products include dental, vision, life, disability, accident, cancer and critical illness that can be funded on a voluntary or employer paid/contributed basis. MetLife: MetLife and its affiliates make it simple, cost-effective and hassle-free to offer and administer voluntary benefit solutions that meet diverse employee needs and enhance benefits programs. MetLife’s responsive, experienced professionals care about our customers’ success and are committed to their future. Our experts collaborate with our customers and their brokers, taking the time to understand their unique needs and recommend the right benefits solutions. The more our customers understand today’s options, the better they can balance cost and employee needs. Working with us, customers can feel confident they’ve made the best decision. Unum: Yes, Unum is ranked third in in-force premium in the voluntary benefit market as reported by Eastbridge Consulting Group in 2015. Unum leads the voluntary market in sales of whole life insurance. We believe our singular focus on employee benefits and broad portfolio of group and voluntary solutions helps us respond to client needs. VSP: Yes. Voluntary plans make up a significant part of our membership. H DECEMBER 2016
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ANNUITIES
Plan for aTwo-Stage Retirement To Avoid Running Out of Money O
ne flaw with traditional retirement planning is the assumption that your expenses – the type and amount — will be the same (plus inflation) each year, from your final day at work to the end of your life, and that all you have to do is replace a percentage of your pre-retirement income to be comfortable in retirement. As people live longer, we have proof that isn’t true. Healthcare costs, especially, increase in our late retirement years and. If we don’t plan for them, we risk running out of money. The solution is to consider retirement as a two-stage process. In the first stage, you do want to cover a reasonable percentage of the final salary you earned before retiring, although the percentage may need to be more than 100%. Your Social Security payments, any pension, interest/dividends and payments from income annuities ideally will cover that. If you need to withdraw principal, make sure it’s for a temporary period and from a secure source. For the second stage, you will want to maintain those payments to meet your essential living expenses – and add another level of income to cover the gap for things like home healthcare and additional costs that occur as we age. THE BENEFITS OF GUARANTEED INCOME The income for the second stage of retirement can be provided by a deferred income annuity or a qualified annuity longevity contract (QLAC) as it’s called when purchased from a roll38 | CALIFORNIA BROKER
BY JERRY GOLDEN
over IRA. (It makes the most sense to purchase a tax-deferred savings vehicle like a deferred savings annuity or a rollover IRA.) You simply select the age you want it to begin paying out, typically 80 or 85 and the protection for beneficiaries if you don’t survive to the income start age. Then you shop the market to find the highest income and best financial rating for the annuity characteristics you selected. You can spend the income from the deferred-income annuity/QLAC on anything, of course, but later in retirement is when medical issues often occur. If you
stay healthy, those payments could provide gifts to your kids or an extra vacation for yourself. The reason to make such a purchase is to convert your savings into guaranteed lifetime income at a future date you select. Instead of taking the risk that you will deplete your money as you live longer, you spend a portion of your savings now to ensure payments later. Doing so helps maintain your independence and allows you to make decisions about how you want to spend your time and resources late in retirement. Let’s face it: for most people, a financial advisor isn’t going to be around to give you guidance. And retirees don’t want to become a burden for their children. - CalBrokerMag.com -
CRITICISMS REBUKED There are critics of deferred income annuities. Some say that you might not live long enough to collect your annuity payments. However, you can have the premium you paid go to a beneficiary if you die before the annuity starts. That option does reduce your payout, though — maybe as much as 25% or more. Others criticize deferred income annuities because of the potential to eat into the financial legacy you leave your children or grandchildren. Here’s another way to think about it: Ensuring that you have enough money to pay your own way in late retirement is a gift to your children. It’s a smart trade to give up some wealth when you are relatively young to avoid running out of money during the second stage of retirement. Gaining financial confidence through to the end of your lifetime will also allow you to invest your remaining assets more aggressively. When retirees explain their thinking to the kids, they will have every reason to be delighted with the decision. H Jerry Golden is a nationally recognized advocate for retirees (and for those planning their retirement). He is a sought-after speaker and industry panelist and has appeared on Bloomberg Radio, Fox News, and CNNfn. His research has been featured in leading financial publications including Bloomberg Online, Huffington Post, and Kiplinger’s Retirement Report. Today, Jerry is founder and CEO of Golden Retirement, LLC, where he is delivering his unique expertise to consumers by helping them create retirement plans that provide income that cannot be outlived. Find out more at Go2Income. DECEMBER 2016
Oral Health
M
DENTAL
DRIVING A HEALTHIER, MORE PRODUCTIVE WORKPLACE As companies redesign their benefits around employee needs, employers are incorporating dental benefits into their wellness strategies.
by DEAN M. FRY, DDS
ost people know that routine dental visits and preventive care can fend off more serious and costly problems. But oral health is about more than just the mouth; there is a connection between oral health and serious medical conditions. Preventive dental care is terribly important to overall health. Over the past few years, it has come to the forefront. The dental benefit is as much about total body health as it is about medical. In many cases, comprehensive and periodic dental exams can help detect the first signs of diabetes problems, eating disorders, high blood pressure, and cardiovascular disease. These conditions can be chronic and costly to an employee’s health and an employer’s bottom line. Research finds that employees with dental insurance are more than three times as likely to visit a dentist as those without it. Companies are considering the link between oral health and overall health as they look to redesign their voluntary benefit menus to reflect the needs of their workforce. Here are a few reasons why dental benefits are fast becoming part of many employers’ larger wellness strategies. DENTAL PAIN FELT BY EMPLOYEES AND EMPLOYERS As anyone who has experienced it knows, dental pain can be excruciating. Pain from a toothache can be intense enough to be incapacitating, especially when there’s an infection. Dental problems mean lost work time and can be a pain in the wallet too. One study found that losing a tooth results in an annual earnings loss of $720 a year. Another, from the Centers for Disease Control and Prevention, finds that oral health problems led to 164 million lost work hours a year. Employees could save money, lose less work time, and reduce suffering by getting timely care. A cavity can normally be treated on a lunch hour, but if you ignore it, it becomes a different story. If people don’t get to the dentist soon enough, an infection can set in, causing swelling, tissue damage, and can even lead to sepsis. DENTAL CARE HAS A POSITIVE EFFECT ON DISEASE MANAGEMENT AND HEALTHCARE COSTS Research has shown that people who have gum disease are almost twice as likely to have heart disease. The same bacteria that cause inflammation in periodontal disease cause inflammation in vessels where plaque gets trapped, increasDECEMBER 2016
ing the chances of cardiovascular disease and stroke. And while there is no cause/effect correlation, early detection of gum disease offers an opportunity for timely intervention and prevention of what possibly could be serious and costly heart problems. Gum disease is also a known complication of diabetes. If the diabetes is uncontrolled, patients will be at greater risk for severe periodontal disease. Conversely, treatment of gum disease may improve the control of diabetes and reduce the rate and severity of complications. In fact, studies show that diabetes and heart disease patients who treat their periodontal disease have lower medical costs and fewer hospitalizations. For cerebrovascular or cardiovascular disease, health care costs were 10% to 40% lower. OPTIONS THAT BENEFIT EVERYONE Oral health is an important part of maintaining good overall health. Integrating dental care into a company’s wellness strategy makes sense for the health of the workforce and the talent that the company is looking to attract. In fact, dental benefits that focus on prevention, early detection, and education are so highly desired by employees that they are the most requested voluntary benefit, even when employers do not contribute. Dental insurance also encourages preventive care visits, which helps reduce lost work time due to critical dental health issues. H Dean M. Fry, DDS is Humana’s Chief Dental Officer.
- CalBrokerMag.com -
CALIFORNIA BROKER | 39
DENTAL
DON’T READ THIS IF YOU ARE LOOKING FOR REASONS TO SELL DENTAL
by KELLIE BERNELL
D
o you remember when you lost your first tooth? The anticipation of putting it under a pillow and waiting for the Tooth Fairy to give you cash for a rotting incisor was awesome! However, in your adulthood, it’s another story. You most likely will be paying hundreds or thousands of dollars to recover or repair your cherished chops! BRUSH UP DAILY Dental hygiene is one of the first things we learn as a child. And it’s that daily ritual that has kept our teeth and our bodies healthy. As agents, we need to incorporate a ritual of including dental benefits into our discussions with our clients. And we need to treat dental benefits like a missed opportunity if they are not taken up. If you are a seasoned broker – whether you offer group or individual benefits – you most likely have formed your opinion about these benefits and/ or made a decision whether to present this as an option. It’s your choice. But if you don’t offer dental benefits, unfortunately, it is not your client’s choice. I don’t mean to sound harsh, but many agents say that when they offer supplemental, such as dental, it’s a “buy up.” Or their client can’t afford any “extras” in addition to their medical. Is this true? CHANGE YOUR ROUTINE Perhaps the dental plan was treated as an add-on at the point-of-sale. Maybe your client has the funds but doesn’t perceive these benefits as having value. If you decide to incorporate the dental discussion at the point-of-sale, it’s a solution. You are not selling anything. Consider the questions you ask: How you describe the benefits? How will you carry your message? There’s much we learn when we ask questions and position accordingly: 40 | CALIFORNIA BROKER
HOW COMPREHENSIVE IS YOUR MEDICAL PLAN? Dental benefits are part of a holistic approach to overall health and financial wellness. DO YOU OR ANY FAMILY EMBERS HAVE ANY HEREDIM TARY DENTAL ISSUES? Select a plan that offers services based on your needs. If you are more susceptible to dental problems, you may want to consider a plan that can help reduce costs when more treatments are needed. HOW IMPORTANT IS IT FOR YOU TO SELECT YOUR DENTIST? There are many types of dental plans to choose from, such as DHMO, DPPO, dental indemnity, and more. You may want to call your dentist directly and ask which insurance plans they accept. DO YOU NEED IMMEDIATE DENTAL TREATMENT? It is important to know this because certain treatments are subject to waiting periods. Waiting periods do restrict access to more advanced dental treatments. If you sign up now, it’s most likely that, by the time you need it, your waiting period will have already been met. KEEP IT CLEAN Describe how dental plans work to make sure that your customer knows how they can get the best value for their investment. Did you notice that I did not mention budget? By not focusing on limitations, you can offer a plan based on needs first. Waiting Periods: These are generally a pain point. So addressing this up front is important. - CalBrokerMag.com -
Annual Benefit Maximums: You might want to explain that while this is the total amount of benefit the dental insurance pays out toward services; your customer may still receive services, but will need to negotiate costs on their own with their dentist. Limitations and Exclusions: There’s always a page or two of limitations or exclusions; share these with your client. SMILE For many, insurance is not the most interesting conversation. So how can you elevate interest and keep your client engaged? Think about how you present yourself and the services you represent. Are you animated? What is your tone? Are you smiling or do you lack expression? Whether you are discussing benefits in person or over the phone, consider a few delivery options: Sit or stand up straight. Smile. Carry a positive tone in your voice. If in person, make eye contact. Think about the experiences you’ve had with phone sales or in person sales/or service representatives. Consider the impression or lack of impression they have left on you. DON’T LEAVE MONEY ON THE TABLE; PUT IT UNDER YOUR PILLOW Remember, as we age, so do our teeth. To reduce deterioration and increase longevity, offer dental benefits. This could be a lucrative strategy, as supplemental commissions are attractive. If you aren’t offering these valued benefits, someone else might be. Don’t leave money on the table; put it under your pillow. H Kellie Bernell is regional sales director for National General Insurance Company. She is a strong advocate of increasing overall financial wellness of brokers and providing solutions to customers through supplemental products. She can be reached at 805-341-7843 or Kellie.Bernell@NGIC.com. DECEMBER 2016
LIFE SETTLEMENTS
Life Settlement Investing
INVESTING IN SECONDARY LIFE INSURANCE POLICIES CAN GIVE YOUR CLIENTS WHAT THEY WANT – AND MORE IMPORTANTLY, WHAT THEY NEED! by BRIAN J. CLARK
"Are Life Settlements something my clients should be investing in to help them achieve their financial goals and reduce risk in their portfolio?"
I
n the August 2016 issue, the article on Life Settlements titled “Are Life Settlements Right for my Clients?” looked at the industry from the perspective of clients that owned life insurance that they no longer needed, wanted or could afford, and it made the point that selling (or settling) a policy might be right for them as compared to their other alternatives of lapsing or surrendering the policy. Today we examine the exact same question, but from the perspective of the other side of the transaction: Are life settlements something my clients should be investing into to help them achieve their financial goals and reduce risk in their portfolio? DECEMBER 2016
Investing in fractional life settlements has proven to be the answer to the question so many investors are asking this year: What to invest in to navigate this volatile and somewhat crazy world we find ourselves in? For much of this year, headlines were filled with events that increased volatility in the world’s economies. Twice in 2016 the market has plummeted. First, it was the price of oil that dragged down equities early in the year. Then it was the Brexit vote. Other events helped to create volatility, including civil unrest in the United States, arguably the craziest election season we have seen in modern times, along with terrorist attacks both domestically and abroad. - CalBrokerMag.com -
At the same time, interest rates are still so low that investing in fixed instruments almost seems akin to investing in a shovel and digging a hole to bury your money in the backyard. Additionally, the real estate market is beginning to show signs of possible weakness. So what is an investor to do? Just ride the roller coaster and hope that the markets don’t correct, even though we are now more than seven years deep into a bull market? And if (read: when) it does correct, how long will it take to recover? Three years? Five years? Seven or ten? Nobody knows. Do your clients have that kind of time or the stomach to see it through until it recovers yet again? CALIFORNIA BROKER | 41
LIFE SETTLEMENTS
If you are like most advisors, your clients look to you for solutions. Fortunately, you have them. In addition to providing life insurance and annuity guarantees, as a California life licensed agent, you can now also offer your qualified California clients and prospects the ability to invest in other people's life insurance via fractional life settlements. Many agents are familiar with the concept by now: a senior, typically not in great health, no longer wants, needs, or can afford their life insurance policy, so they sell it (or settle it, as it is called). This transaction provides great benefit to the seller over their alternatives of lapsing or surrendering their life insurance policy. Your clients and prospects can now invest in these types of policies as an alternative investment known as Fractional Life Settlements. Through their investment in the asset class, they can own pieces of multiple insurance policies which are purchased at a steep discount to the face value or maturity value they will receive. Because the returns are non-correlated, they don’t have to worry about stock market volatility, bond prices, real estate prices, news headlines, politics or anything that they normally worry about with most other investments. When the policies mature, your clients participate in the proceeds paid out by the insurance companies’ death benefits. It is really pretty simple. What seems to keep people out of this market is a lack of awareness and basic 42 | CALIFORNIA BROKER
education. Many people simply don’t know about this investment and if they hear about it, they think somehow it is a potentially morbid way to make money. If they simply understood the life insurance industry better, many would understand that is actually opposite of the reality. Seniors can benefit greatly from selling a policy that is no longer wanted, needed or affordable to them. In fact, studies have shown that they can often receive three to five times the cash surrender value that the insurance carrier might pay them. Let’s take a look at an example of an 80-year old with a $1 million face amount UL policy with a $50,000 cash surrender value who isn’t in great health. If there were no investor to offer them a life settlement, and they could no longer afford to keep the policy in force, or simply no longer need or want the policy, their only options are to let it lapse or cash it in for $50,000. But today we have smart investors who understand the benefits of noncorrelated yield and the benefits that an investment into secondary life insurance policies can provide. Therefore, we do have a secondary market for life insurance which might end up paying that insured 80-year old $200,000. Morbid? Tell that to the 80 year-old with the extra $150,000 in their pocket that allows him or her to afford inhome care and live with more dignity, or take that once-in-a-lifetime vacation, or maybe help the grandkids. Morbid to me is only having $50,000 the insurance carrier was willing to give them for - CalBrokerMag.com -
cashing the policy in, or maybe nothing if lapsed, instead of the $200,000 they would receive in our example. I am confident that if more people understood this, they would be quite interested to learn what fractional life settlements could do for their retirement portfolios. It’s plain to see why some of the largest and most successful institutions and hedge funds in the world have been using this asset class for decades to mitigate market risk in their investment portfolios while achieving yields most believe are unreachable. So that is the client’s view and perspective of the world at the moment, but what about your view as a California life agent? If you are like many agents you’ve got your eye on the potential effects of the new DOL Rule. Most advisors I’ve spoken with this year are quite concerned how this will all shake out, and what impact it will have on their businesses. If some version of the rule comes to pass that makes doing business more challenging, keep this in mind: They say that when one door closes, another one opens. Well, sometimes you have to find that door and kick it open yourself! If you are at all anxious about the potential that you could lose some revenue as a result of the new rule, or that business may be more challenging going forward (however the rule ends up being implemented) why not take a proactive approach to adding new revenue sources to your business right now? Do your due diligence and pick a trusted partner in fractional life settlements who has experience, and begin to offer your qualified clients and prospects an additional investment that has little to no correlation to other markets and an attractive risk-reward profile to boot. Do it today! H Brian J. Clark, CRPC® is Director of Business Development for Reliant Life Shares, LLC. Reliant is a leader in Fractional Life Settlement Investing and helps Qualified California investors reach their goals by providing them the ability to access an asset class formerly only available to institutions. Reliant empowers insurance agents to increase revenues and diversify their product offerings. Brian Clark may be reached at 15260 Ventura Blvd, Ste. 1420, Sherman Oaks, CA 91403. Telephone: 818-788-1904. Email: bclark@reliantlifeshares. com. Website: www.reliantlifeshares.com. DECEMBER 2016
NEWS Healthcare HOW TRUMP’S HEALTH REFORM IDEAS WOULD PLAY OUT Donald Trump proposes to repeal and replace the Affordable Care Act (ACA). Two new Commonwealth Fund reports find that some of Trump’s proposals would decrease the number of people with insurance by 15.6 to 25.1 million. Researchers used Rand’s Compare micro-simulation model to estimate how the candidates’ proposals would affect health insurance coverage, the federal deficit, and consumers’ out-ofpocket health care spending. Trump offers these proposals: • Repeal the ACA and replace the law with a tax deduction allowing people with individual market coverage to fully deduct health insurance premiums from their taxes: It would result in 19.7 million more uninsured in 2018, nearly all of whom would be low- and moderate-income. It would increase out-of-pocket costs to $4,700 a year, and increase the deficit by $33.1 billion. Repealing the law and adding an insurance tax deduction would result in 15.6 million uninsured because the tax deduction is less generous than the subsidies that help low- and moderate-income people buy health insurance through the marketplaces and Medicaid coverage. The health insurance tax deduction would increase the number of higher-income people with health coverage by 2.7 million (families of four making more than $60,750 a year). Repealing and replacing the law with a tax deduction would increase out-of-pocket costs to $3,500 and increase the deficit by $41 billion. Repealing the law and allowing sales of insurance across state lines would raise out-of-pocket costs to $5,700. Sales of insurance policies across states’ lines would increase the deficit by $33.7 billion. • Convert Medicaid and the Children’s Health Insurance Program (CHIP) to block grants. The federal government would pay states a fixed amount, rather than paying a percentage of each enrollee’s costs: It would result in 25.1 million more uninsured since the more-limited Medicaid funds available to states would require them to cap Medicaid enrollDECEMBER 2016
ment. Medicaid block grants would increase the deficit by $0.5 billion. • Allow the sale of health insurance across state lines: It would result in 17.5 million more uninsured since there would be no more subsidies for marketplace plans or expanded Medicaid and insurers would likely revert to their pre-ACA policies. Those policies denied coverage to people with preexisting conditions and charged older and sicker people substantially higher premiums than the young and healthy. It would increase the deficit by 1.4 million. For more information, visit the commonwealthfund.org.
IRS GUIDE TO HEALTH CARE INFORMATION REPORTING The IRS released the following Health Care Tax Tips on October 26. Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center. https://www. irs.gov/affordable-care-act/employers/ aca-information-center-for-applicablelarge-employers-ales. HOW THE MEDICARE ENROLLMENT MAZE PUTS SENIORS AT RISK Transitioning to Medicare is a big problem for seniors, according to a study by the American Institutes for Research. Researchers surveyed 17 health insurance counselors, brokers, insurers, large employers and consumer advocates who work with seniors. Since 2000, the age to collect full Social Security retirement benefits has risen from 65 to 67, and people are working longer, slowly fraying the decades-old enrollment link between Social Security and Medicare and confusing mil- CalBrokerMag.com -
lions of older Americans, according to the study. “Seniors who take a wrong turn through the Medicare enrollment maze can face coverage gaps, disrupted care, large out-of-pocket costs, and lifelong late-enrollment penalties,” said Kathryn Paez, a principal researcher at AIR and lead author of the study. Suppose that a person turns 65, and they or a spouse keeps working and maintains employer health coverage instead of retiring and enrolling in Social Security. They must sign up for Medicare, especially Part B, which covers physician and other outpatient care. Otherwise, they risk coverage gaps and expensive lifelong Part B late-enrollment penalties. People who delay Social Security retirement benefits until after 65 get no official government notice about how to avoid penalties or gaps in coverage, Paez said. This problem is likely to worsen as the full Social Security retirement age reaches 67 for those born in 1960 or later and more Americans work past 65. Since 2000, the proportion of Americans enrolling by age 65 has dropped by 20% to 61.5% in 2014. Avoiding penalties when people continue to work past age 65 depends largely on whether their employer coverage is primary or secondary to Medicare. That depends on whether coverage is based on employment and the number of people employed by employer. In some cases, an individual must enroll in Medicare during a special enrollment period or face lifelong Part B late-enrollment penalties and go up to 16 months without coverage. All Part B enrollment periods have different time frames for applying and schedules for when coverage takes effect. To confuse matters more, all Part B enrollment periods differ from the annual open enrollment period each fall when people can change their Medicare Part D, Medigap or Medicare Advantage coverage. People who miss the Part B enrollment window pay a lifetime late-enrollment penalty equal to 10% of the standard Part B premium for each full 12-month period they could have had Part B had they enrolled. The penalties can add up over a lifetime. For example, a woman who pays a 30% late fee would pay $9,769 extra for Part B CALIFORNIA BROKER | 43
NEWS coverage; men, whose life expectancy is shorter, can expect to pay $8,641. Even with extensive online and print resources, many beneficiaries need personalized counseling to make informed choices. The SHIP state-run programs get federal grants to train and manage a network of staff and volunteer Medicare counselors who provide free counseling to beneficiaries. Medicare beneficiaries are inundated with mail and ads about Medicare plans when they turn 65 and during the annual fall open enrollment period. Feeling overwhelmed and unsure of where to start, some beneficiaries seek out a SHIP or broker. Others may want a second opinion after doing their own research. Possible policy solutions include requiring the federal government to notify all people approaching age 65 of Medicare enrollment requirements, educating employers about transitioning older workers to Medicare coverage, streamlining and harmonizing Medicare enrollment periods, enhancing health insurance counseling services for older Americans, and strengthening appeal rights for beneficiaries facing late-enrollment penalties. For more information, visit www.air.org.
to a savings of $212 annually for a 27-year-old single individual, $339 for a 50-year-old, and $692 for a young family of four. The authors didn’t find a significant difference in premiums among x-small, small, and mediumsize networks, suggesting that very restrictive plans don’t tend to be cheaper than moderately restrictive plans. The finding of a 6.7% reduction may not seem substantial, but it is based on the full premium, rather than the premium consumers pay after subsidies. For example, the average net premium after subsidy for a 27-yearold was $984 in 2014. Based on that amount, a $212 annual reduction in premiums translates to a 22% reduction. Thus, subsidies are likely to magnify consumers sensitivity to premium differences between plans with different size networks. If consumers in the Marketplace are fully informed about the networks tied to the plans in the Marketplace, many would still prefer the restrictions of a narrow network plan for the premiums they would save, according to the study. For more information contact Janet Weiner at weinerja@mail.med.upenn.edu.
WHEN IT’S WORTH IT TO CHOOSE A NARROW MARKETPLACE PLAN A report published in Health Affairs finds that narrow network plans on the health insurance marketplaces allow consumers to trade-off lower premiums for a more restricted choice of providers. With all else being equal, a consumer saves 6.7% of premiums, or $212 to $339 a year on a typical plan. The authors categorized network size into five groups, based on the percentage of physicians in a service area participating in the network: x-small (less than 10%), small (10%-25%), medium (25%-40%), large (40%-60%), and xlarge (more than 60%). The average network included 30% of physicians in the service area. Slightly fewer than half of the plans had small or extrasmall networks while fewer than onethird had large or extra-large ones. A plan with an extra-small network had a monthly premium that was 6.7% less than a plan with a large network. These premium differences translate
WHAT WILL CONSUMERS PAY IN PREMIUMS FOR COVERED CALIFORNIA SILVER PLANS IN 2017? Covered California’s fourth annual open enrollment started November 1. CHCF’s ACA 411 data center provides the 2017 premiums for the secondlowest cost Silver plan in each of Covered California’s 19 pricing regions. While Covered California consumers can choose from a variety of plans, the second-lowest cost Silver plan is particularly important because it’s the benchmark by which federal premium subsidies are determined. It ranges from a low of $258 in Los Angeles to a high of $450 in Contra Costa in 2017. The example is based on a consumer earning 150% FPL or about $17,820, for a one-person household. (Premiums also vary based on age, although the Affordable Care Act limits the amount of variation. The premium figures used in ACA 411 are for a 40year-old.) However, most Covered California consumers pay less than
44 | CALIFORNIA BROKER
In California
- CalBrokerMag.com -
the total monthly premium. Almost 90% earn less than 400% of the federal poverty level (FPL), making them eligible for federal premium subsidies. The amount they are required to contribute toward premiums is capped at a percentage of income (individual share) with the premium subsidy (government share) covering the rest. There has already been intense scrutiny and discussion of the proposed 2017 Covered California premiums, which are set to rise an average of13.2%. Keep in mind the following: • The 13.2% average premium increase masks the wide variation in premium costs and in the rate of increase by region. • Premiums vary widely by insurer. Covered California’s plan book (http://www.coveredca.com/news/ pdfs/CoveredCA-2017-rate-booklet. pdf) shows how insurers compare. • The 13.2% average increase is before premium subsidies are taken into account. Federal premium subsidies can significantly lower what consumers have to actually pay toward premiums. The subsidies will play a crucial role in shielding most consumers from having to absorb the full brunt of premium increases in 2017. (Notice that the amount the individual pays is often rather flat while the government share and the total premium rise. For the full analysis, see http:// www.chcf.org/aca-411/insights/consumers-premiums-2017. SUIT SEEKS TO BLOCK ANTHEM FROM TERMINATING INDIVIDUAL PPO HEALTH PLANS A California class-action suit targets Anthem for characterizing and marketing its 2017 individual and family health plan contracts as a renewal of its 2016 plans despite changing the plans from PPO plans, which offer out-of-network benefits, into Exclusive Provider Organizations (EPOs), which provide no out-of-network benefits. The premiums for the new plans are also going up. The lawsuit was filed on behalf of Anthem enrollees by attorneys for Shernoff Bidart Echeverria LLP and Consumer Watchdog Anthem Blue Cross is claiming to DECEMBER 2016
NEWS renew coverage for 2017 when in fact it is not adequately informing consumers that the new plans provide no coverage if a physician is not participating in Anthem’s network, according to Consumer Watchdog. “Anthem is breaking the law and its promises to consumers by attempting to automatically renew its 2016 members for 2017 in coverage that actually provides no out-of-network care whatsoever. In an effort to retain its market share, Anthem is failing to adequately inform its members that they are losing out-of-network benefits for 2017,” said Laura Antonini, staff attorney for Consumer Watchdog. The group says that this change leaves customers potentially facing thousands of dollars or more in medical bills that their existing plan covered, without them knowing it. Many consumers likely face loss of access to their physicians altogether, a prospect particularly harmful for those in the midst of treatment, as paying full cost of out-of-network care is untenable for all but the wealthiest. (Click here to download the new class action lawsuit: http://tinyurl.com/hlsf4zk.) Consumers who renew their Anthem coverage by the December 15 deadline will be locked into those plans for all of 2017. The lawsuit announced today alleges that Anthem violated federal and state laws by doing the following: • Breaching its health plan contracts with its 2016 members by failing to provide guaranteed renewal of existing coverage as required under the contract. • Attempting to automatically renew members currently enrolled in PPO plans into EPO plans as of January 1, 2017, rather than correctly disclosing to consumers that Anthem is discontinuing their 2016 coverage. (The lawsuit alleges that the transformation of the plans into EPO plans renders the 2016 PPO plans discontinued.) • Sending out misleading renewal notices rather than discontinuation notices that would inform 2016 members of the loss of out-of-network benefits for 2017. “We believe that Anthem is trying to take advantage of consumers during the open enrollment period,” said Travis Corby of Shernoff Bidart EchDECEMBER 2016
everria LLP. “They are selling 2017 Affordable Care Act health plans as being the same as their 2016 products. But they are not adequately informing consumers that the new plans provide no coverage if a physician is not participating in Anthem’s network. Existing customers are being completely misled, and will potentially face thousands of dollars or more in medical bills that would have been covered under their existing plan. Many consumers likely face loss of access to their doctors altogether.” Leslie Burkes, an affected Anthem consumer said, “We are caught in a double bind. Many of my family member’s doctors are specialists that are out-of-network under our current Anthem PPO plan, which is
why we purchased a PPO in the first place. Under a PPO, Anthem pays for out-of-network doctors. If Anthem is allowed to convert these plans to EPO plans we will have no coverage for the doctors we need. Furthermore, we cannot switch to another health insurer because Anthem’s care management team has been managing my family members complicated health needs for the last year. Changing companies now would severely impact my family members health because a new team of staff would have to learn about my family members complex needs and history.”
EMPLOYEE BENEFITS THE ACA SPURS GROWTH OF DENTAL PLANS Dental benefit offerings have seen an uptick as the Affordable Care Act (ACA) has become more ingrained in the U.S. health care system, according to an A.M. Best report. Companies - CalBrokerMag.com -
that filed an annual health statement with the National Association of Insurance Commissioners increased their dental net premiums written by 77% over the past decade. The largest annual rate of growth came in 2014, when net premiums written increased 14% year-over-year. Similarly, enrollment grew 53% for the same period, with a 19% year-over-year increase in 2014. Despite geographic and provider network challenges, dental business has given health insurers steady net operating gain profitability over the past decade, with a fairly substantial improvement in results since 2009. The consistent operating profitability has been supported by a loss ratio from 60% in 2008 to 64% in 2013. Dental writers benefit from the mostly consistent utilization of policyholders. They usually don’t experience large one-time shock claims that may be associated with more typical health lines of business, which keeps the loss ratio fairly manageable and predictable. As companies expand into individual dental markets where adverse selection is a potential risk, the products are modified to include longer waiting periods for major dental services and lower annual maximums. The top 10 dental writers account for 62% of the market, with MetLife holding the dominant share at 17%. The individual dental market also is highly concentrated as the top 10 players account for 67% of the market, led by MCNA Insurance Company’s 30%. Individual dental benefits are relatively new, with interest emerging and premium growing rapidly over the past 10 years. Regardless of some provider network challenges and certain underserved geographic areas, the dental insurance industry is poised for growth as employees continue to value the benefit offering and more dental insurers participate in the ACA exchanges. Increasing competition, including numerous small carriers expanding their exchange offerings, may pressure operating results. But underwriting gains in each of the past five years are substantially higher than levels recorded in 2005-2009, according to A.M. Best. To get a copy of the report, visit www3. ambest.com/ bestweek /purchase. asp?record_code=254956. H CALIFORNIA BROKER | 45
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So nice to have so many helpers so devoted to your success. Ever wonder what it would be like to have help? These days, with health care reform and all of its unintended consequences it’s almost a given. Need a little help? Need a lot? The more the merrier! Rogers Benefit Group sales representatives and account managers are trouble-shooting specialists, health care reform experts, qualified consultants whose knowledge base is just north of incredible. Need someone to step up and explain it all? Someone to help demystify the current state of health care, recommend the right approach, properly place your client’s plan with the carrier and then troubleshoot all year long? RBG’s unique brand of Advanced Full Service is dedicated to helping you deliver better care for less money. Think of RBG as your helpers, devoted to your success, ready to do whatever needs to be done. Call or visit our website at www.rogersbenefit.com. It’s the first step toward finding the kind of support and service you’ve always imagined was out there. And one very good way of having a happy, healthy, and successful new year!
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Say the word. Northern California 800.255.9673 | Inland Empire 877.225.0988 | Los Angeles 800.560.5614 | Orange 800.869.6989 | San Diego 800.397.3381