California Broker February 2016

VOLUME 34, NUMBER 5

SERVING CALIFORNIA’S LIFE/HEALTH PROFESSIONALS & FINANCIAL PLANNERS

FEBRUARY 2016

Wellness Workout for Brokers Shaping up Your Sales

Also Inside:

Large Group Health • Disability • Sales & Marketing • Wellness • 401(k) GA View from the Top • Private Exchanges • Life Settlements • Life Insurance

introduCing

Group Voluntary ChiropraCtiC Benefits from landmark healthplan

participating employees can save over $1,000, or more than 60% off retail, when using a landmark chiropractic plan versus paying typical retail charges for the same services.

Plan Benefits: 20 Office visit co-payment 20 annual visits

$

$

20 Emergency co-payment $ 65 x-ray co-payment

NO prior authorization NO medical management

Employers enjoy measurable value and cost savings with chiropractic benefits: Lower overall medical care costs. Landmark replaces high cost procedures with lower cost, natural alternatives.

Lower the cost of Workers Compensation insurance. As an alternative to more medically aggressive treatments, Landmark will enhance a company’s underwriting profile.

Speedy return to work. With less aggressive natural treatment alternatives, employees can return to work sooner while continuing treatment.

Consider theses additional advantages that Landmark offers your employers: No premium cost to offer our plan, benefits are 100% employee paid.

Premiums are P.o.P. Plan compatible, which reduces the employers total taxable payroll and share of FiCA contributions. increased employee satisfaction.

Landmark also offers fully-insured group sponsored plans, ASO self-funded services and Individual and Family chiropractic plans.

Alternative care benefit plans tailored to the needs of your clients. Contact Landmark today for rates and plan details.

Find out more today!

(800) 298-4875, Option 5 Š 2016 Landmark Healthplan Inc., All Rights Reserved

sales@LHP-CA.com

www.LHP-CA.com

Celebrating

20 years of Choice.

A health care partner for California brokers and businesses for two decades.

800.542.4218

calchoice.com

TABLE OF CONTENTS 10

PUBLISHER Ric Madden email: publisher@calbrokermag.com EDITOR-IN-CHIEF Kate Kinkade, CLU, ChFC email: editor@calbrokermag.com

14

ART DIRECTOR/PRODUCTION MANAGER Steve Zdroik ADVERTISING Scott Halversen, V.P. Mktg. email: scotthalversen@calbrokermag.com CIRCULATION email: calbrokermag@calbrokermag.com

16

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

by Dinesh Sheth How employers can increase the ROI from their wellness investments.

31

PRIVATE EXCHANGES

An Option for the Future

by Dorothy Miraglia King Is a private exchange part of your client’s benefit strategy? If not, you may want to consider it.

GA VIEW FROM THE TOP

by Leila Morris General agency executives give their take on challenges and opportunities in today’s market.

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.

©2016 by McGee Publishers, Inc. All rights reserved. No part of this publication should be reproduced without consent of the publisher.

Helping Employers Maximize the

29 Return on Investment in Wellness

Win Today or Relevance Tomorrow How the Power of Consultative SellThe Next Health Exchanges ing Can Help You Grow Your Business 33 Have Already Been Built

by Jim McCabe

by Joel White Helpful tips for weaving consultative Congress has an opselling into your daily conversations to portunity to modify the become more valued among clients. exchange system to engage consumers.

LEGAL EDITOR Paul Glad

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.

Opportunities Abound for Agents in the New Large Group Market

by Neil Crosby The year 2016 will truly be a year of growth for agents and brokers with limitless opportunity.

WELLNESS

Finding a Workplace Wellness Program Fit for Every Client

by Heidi Bowman More employers understand the benefits of moving to a holistic wellness strategy.

15 SALES & MARKETING

BUSINESS MANAGER Lexena Kool email: lex@calbrokermag.com

EDITORIAL AND PRODUCTION: McGee Publishers 217 E. Alameda Ave. #207 Burbank, CA 91502 Phone No.: 818-848-2957 email: calbrokermag@calbrokermag.com.

26

Navigating the 101 and Beyond

by Michael Wolff Brokers who are not selling in the largegroup space may want to think again.

Agents are finding many large groups with no prior coverage.

FEBRUARY 2016

SENIOR EDITOR Leila Morris email: editor@calbrokermag.com

LARGE GROUP HEALTH

24

DISABILITY

36

LIFE SETTLEMENTS

A Primer for Healthy Insureds

by Robert Stark Why a life settlement (traditional or no LE) can be a great option in certain circumstances.

38

LIFE INSURANCE

Trends That Are Shaping Today’s Wealth Transfer Policies

by Palmer Williams Clients who’ve been hesitant to use life insurance for wealth transfer can now enjoy the benefits and maintain control of the policy.

Why Millennials Make Attractive Disability Insurance Prospects

by Jim Farden Don’t miss out on the 401(K) opportu40 nity to target New Regulations for Employers Millennials

by Ellen Bartholemy for income Brokers need to understand the latest reguprotection lations and guidelines when selling 401(k)s solutions. and other qualified retirement plans.

ALSO IN THIS ISSUE:

- CalBrokerMag.com -

Guest Editorial..........................6 Annuity Sampler......................8 New Products....................... 35

News........................................ 42 Classified Advertising........ 46 Ad Index.................................. 46

FEBRUARY 2016

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GUEST EDITORIAL

H

DEMOCRATIC CANDIDATES DEBATE “SINGLE-PAYER,” BUT WHAT DOES THAT MEAN?

By JULIE ROVNER for KHN.ORG

ealth care has emerged as one of the flash points in the Democratic presidential race.

Vermont Sen. Bernie Sanders has been a longtime supporter of a concept he calls “Medicare for All,” a health system that falls under the heading of “single-payer.”

Sanders released more details about his proposal shortly be­fore the Democratic debate in South Carolina. “What a Medicare-forAll program does is finally provide in this country health care for every man, woman and child as a right,” he said in Charleston.

Sanders’ main rival for the nomination, former Secretary of State Hillary Clinton, has criticized the plan for raising taxes on the middle class and said it is politically unattainable. “I don’t want to see us start over again with a contentious debate” about health care, she said.

Some of the details of Sanders’ plan are still to be released.

But his proposal has renewed questions about what a singlepayer health care system is and how it works. Here are some quick answers.

WHAT IS SINGLE-PAYER? Single-payer is not the same thing as socialized medicine. In a truly socialized medicine system, the government not only pays the bills, but also owns the health care facilities and employs the professionals who work there.

The Veterans Health Administration (VA) is an example of a socialized health system run by the government. It owns the hospitals and clinics and pays the doctors, nurses and other health providers.

Medicare, on the other hand, is a single-payer system in which the federal government pays the bills for those who qualify, but hospitals and other providers remain private.

WHICH COUNTRIES HAVE SINGLE-PAYER HEALTH SYSTEMS? Fewer than many people think. Most European countries never had or no longer have single-payer systems. “Most are basically what we call social insurance systems,” said Gerard Anderson, a professor at Johns Hopkins Bloomberg School of Public Health, who has studied international health systems. Social insurance programs ensure that almost everyone is covered. They are taxpayer-funded but are not necessarily run by the government.

Germany, for example, has 135 “sickness funds,” which are essentially private, nonprofit insurance plans that negotiate prices with health care providers. “So you have 135 funds to choose from,” Anderson said.

Nearby, Switzerland and the Netherlands require their residents to have private insurance (just like the Affordable Care Act does), with subsidies to help those who cannot otherwise afford coverage.

And while conservatives in the United States often use Great Britain’s National Health Service as the poster child for a socialized system, there are many private insurance options available to residents there, too.

6 | CALIFORNIA BROKER

Among the countries that have true single-payer systems, Anderson lists only two — Canada and Taiwan.

ARE SINGLE-PAYER PLANS LESS EXPENSIVE THAN OTHER HEALTH COVERAGE SYSTEMS? Not necessarily. True, eliminating the profits and duplicative administrative costs associated with hundreds of different private insurance plans would reduce spending, perhaps as much as 10% of the nation’s $3 trillion annual health care bill, Anderson said. But, he noted, once that savings is achieved, there won’t be further reductions in following years.

More important, as many analysts have noted, is how much health services cost and how those prices are determined. In most other developed countries, even those with private insurance, writes Princeton Health Economist Uwe Reinhardt, prices “either are set by government or negotiated between associations of insurers and providers of care on a regional, state or national basis.” By contrast, in the U.S., “The payment side of the health care market in the private sector is fragmented, weakening the bargaining power of individual insurers.”

WOULD MEDICARE FOR ALL BE JUST LIKE THE EXISTING MEDICARE PROGRAM? No, at least not as Sanders envisions it. Medicare is not nearly as generous as many people think. Between premiums (for doctor and drug coverage), cost-sharing (deductibles and coinsurance) and items Medicare does not cover at all (most dental, hearing and eye care), the average Medicare beneficiary still devotes an estimated 14% of all household spending to health care.

Sanders’ plan would be far more generous, including dental, vision, hearing, mental health and long-term care, all without copays or deductibles (which has given rise to a lively debate about how to pay for it and whether middle-class families will save money or pay more).

WOULD PRIVATE INSURANCE COMPANIES REALLY DISAPPEAR UNDER SANDERS’ PLAN? Probably not. Private insurers are fully integrated into Medicare, handling most of the claims processing and providing supplemental coverage through “Medigap” plans. In addition, nearly a third of Medicare beneficiaries are enrolled in private managed care plans as part of the Medicare Advantage program.

Creating an entirely new federal claims processing structure would in all likelihood be more expensive than continuing to contract with private insurance companies. However, Sanders makes it clear insurers in the future would no longer be the riskbearing entities they are today, but more like regulated utilities. H Julie Rovner, the Robin Toner Distinguished Fellow, joined Kaiser Health Network after 16 years as health policy correspondent for NPR, where she helped lead the network’s coverage of the passage and implementation of the Affordable Care Act. A noted expert on health policy issues, Rovner is the author of a critically-praised reference book Health Care Politics and Policy A-Z, now in its third edition.

- CalBrokerMag.com -

FEBRUARY 2016

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ANNUITY SAMPLER

JANUARY 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- BBB+ A- ICC13 MYGA (Guarantee 5) (Q/NQ) S 2.70%* 5 yr.

None 9%, 8, 7, 6, 5, 0 Yes

ICC13 MYGA (Guarantee 6) (Q/NQ) S 2.90%* 6 yr.

None 9%, 8, 7, 6, 5, 4, 0 Yes

ICC13 MYGA (Guarantee 7) (Q/NQ) S 3.15*% 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 1/4/16. 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 2.50%*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 2.65%*b .75% age 76-85

*CA Rates Effective 11/2/15. 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 1.60%*a 5 yr.

None 9%, 8%, 7%, 6%, 5%, 0% No $5,000 (NQ) 2.00% age 0-85 Insurance Companies Fixed 5 Annuity 1.80%*b $2,000 (Q) 1.00% age 86-90 (*Guarantee Return of Premium) (Q/NQ) *CA Rates Effective 11/2/15. Includes 2.00% 1st year bonus, 1.00% base rate subsequent years. a (less than $100K) b(100K or more) American General Life A A+ A+ American Pathway Insurance Companies Fixed 7 Annuity

S

2.00%*a 5 yrs.

2.20%*b

None

9%, 8%, 7%, 6%, 5%, 4%, 2%, 0% No

$5,000 (NQ) 3.00% age 0-85

1.50% age 86-90 *CA Rates Effective 11/2/15. First year rate includes 4.0% bonus 1st year. a (less than $100K) b(100K or more)

American General Life A A+ A+ American Pathway F 4.15%* 1 yr.

None 8%, 8%, 8%, 7%, 6%, 5%, 3%, 1% 0% No Insurance Companies Flex Fixed 8 Annuity (Q/NQ) *(includes a 2% interest rate bonus for first year)

$5,000 (NQ) 2.20% age 0-75 $2,000 (Q) 1.70% age 76-80 1.20% age 81-85

*CA Rates Effective 11/2/15

Genworth Life & A A- A- SecureLiving Rate Saver S Annuity Insurance Co.

2.80%* 7 yrs.

2.65% 5 yrs.

None None

9%, 8, 7, 6, 5, 4, 3 Yes $25,000 (NQ) Varies 0-85 9%, 8, 7, 6, 5, ,0 *Effective 8/19/15. Based on $250K or more.

Great American Life A A+ A+ SecureGain 5 (Q/NQ) S 2.40% 5 yrs.

N/A 9%, 8, 7, 6, 5 Yes $10,000

Effective 6/8/15. Includes .25% first-year bonus and is for purchase payments over $100,000. Escalating five-year yield is 2.40%. For under $100,000 first-year rate is 2.25%. Escalating rate five-year yield 2.25%.

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 2.65% 7 yrs.

N/A 9%, 8, 7, 6, 5, 4, 3 Yes $10,000

Effective 6/8/15.. Includes 1.00% first-year bonus and is for purchase payments over $100,000. Escalating seven-year yield is 2.54%. For under $100,000 first-year rate is 2.55%. Escalating rate seven-year yield 2.44%.

Great American Life A A+ A+ Secure American (Q/NQ) S 1.75%* 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 6/8/15.. Eff. yield is 2.77% based on 1.75% 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 1.75%.

Surrender value interest rate 1.75%. Accepts additional purchase payments in first three contract years. COM12255

The Lincoln Insurance Company

A+ AA AA MYGuarantee Plus 5

S

The Lincoln Insurance Company

A+ AA AA MYGuarantee Plus 7

S

1.55%* 5 yr.

None

7%, 7, 6, 5, 4, 0

Yes

5.75% 0-70 4.65% 71-80 4.40% 81-89

$10,000 (Q/NQ)

**Rates Effective 2/1/16 for premium less than $100,000 and are subject to change

2.00%* 7 yr.

None

7%, 7, 6, 5, 4, 3, 2, 0

Yes

$10,000 (Q/NQ)

**Rates Effective 2/1/16 for premium less than $100,000 and are subject to change.

North American Co. A+ AA- A+ Gaurantee Choice (Q/NQ) S for Life and Health

2.60%*a 5 yr.

None 10, 10, 9, 9, 8 Yes $2,000 (Q) 2.50% (0-80) 2.85*b $10,000 (NQ) 1.875% (81-85) *CA rates effective 1/5/16 – a (less than $200K) b(200K or more) 1.25 (86-90)

Reliance Standard

3.50%* 1 yr.

A+

A Eleos-MVA

S

None

8%, 7, 6, 5, 4

Yes

$10,000

3.25%**

*Effective 7/28/15. 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

4.45%* 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 7/28/15

Symetra Life, Inc.

A A

A Custom 7 (Q/NQ)

S

3.05%* 7 yrs.

N/A

8%, 8, 7, 7, 6, 5, 4, 0

No

$10,000

Varies

*Effective 11/17/15. 2.55% base rate with no guaranteed return of purchase payments. Plus 0.50% bonus for $250,000 and above.

8 | CALIFORNIA BROKER

- CalBrokerMag.com -

FEBRUARY 2016

Orange County Association of Health Underwriters

Business Development Summit 2016

When: 16 Feb, 2016 • 7:00 AM - 3:30 PM Location: Hilton Costa Mesa • Investment $30

OCAHU Vision 20/16: Looking Ahead

(20/16 is like seeing 20/20) How clear is the health care industry picture in 2016?

You need to see what’s coming in advance so you can present a clear vision and strategy for your clients. Get your C.E credits.

Keynote Speakers:

Morning Speaker Diane Laird, MPH Chief Strategy Officer MemorialCare

“Impact of Insurer & Hospital Consolidation on Pricing”

Afternoon Speaker John Nelson Chief Executive Officer Warner Pacific “Vision 20/16: Looking Ahead”

Breakout “Group” Sessions

HIPPA Privacy & Security: Business Associates Responsibilities & Liabilities Part II Dorothy Cociu (1-Hour CE | Course: 331833) HITECH & Cybersecurity: What to Look For & How to Protect Your Agency Frans Trisnadi (1-Hour CE | Course pending approval w/CDI) “Senior” Sessions (1-Hour CE | Course pending approval w/CDI) Technology “Shark Tank” Marketing Sessions World Class Selling - Centrac OCAHU is proud to host its annual trade show and education day. The 2015 OCAHU event drew more than 475 industry professionals. Currently OCAHU’s membership, attendance at monthly meetings, and overall chapter activity continues to grow thanks to all of your collective efforts. We look forward to\seeing you again for a day that will bring into focus successes from the past and a truly positive vision for the future!

Great C.E. Topics! Great Information! Great Prizes! Great Opportunities!

Register online at www.ocahu.org

HEALTHCARE

Navigating the 101 and Beyond

BY MICHAEL WOLFF

N

o, this is not a travel log recanting my last vacation along the beautiful California coast. Instead, it’s a basic guide to selling in the large group (101 and over) market along with some reflections on recent trends.

Brokers who are not selling in this space may want to think again. Agents are finding that there are more large groups with no prior coverage than they may have thought. The Employer Shared Responsibility rules within the ACA have brought these groups out of hiding as they face penalties for not offering coverage that is affordable and of minimum value.

Although the small group market continues to experience many chang10 | CALIFORNIA BROKER

es that require a broker’s guidance, there is more opportunity than ever to help large employers make sound decisions for their companies and employees. There are several differences between marketing a small and a large group. Brokers should keep these in mind as they equip themselves to bring the right solutions to the table.

DO YOUR HOMEWORK A broker who is developing a large group request for proposal (RFP) for a prospect is a bit like an attorney who is preparing for a trial. The research, attention to detail, and time spent developing your case have a direct effect on the outcome. So, not only do your homework, but also you need to start - CalBrokerMag.com -

A BASIC GUIDE TO SELLING IN THE LARGE GROUP (101 & OVER) MARKET early – not days or weeks, but months ahead of the requested effective date.

Depending on the size of the group, 90 to 100 days is a good benchmark.

The process of formulating a largegroup quote is quite different from that in the small-group market. Most notably, the underwriting of a large group is done up front before a quote is released by a carrier. This means that the time spent gathering an accurate census and the required information/ documentation happens before you even see a rate. (Yes, health conditions play a large part in determining rates as do current and anticipated participation, age, gender, home zip code, and industry). In general, the more information that is gathered, including claims and rate history, the greater the chance there is of getting the best possible rates.

Successful brokers know that the key to a large-group strategy that meets budgetary and coverage needs is asking the right questions of their prospects and listening carefully to the answers before they develop a proposal. The ACA has created a whole new set of questions that need to be answered to determine who is eligible for coverage and whether an employer is part of a larger population by virtue of common ownership and/ or tax law. Many times, the composition of a group may not be what you or even the owner thinks. At this stage, a large group qualifying questionnaire or checklist can be your greatest asset.

CHECK YOUR FACTS Once you have a complete census for your prospect and have gathered information about current coverage FEBRUARY 2016

The Highway Has Changed, What Road Are You On?

2016–25th ANNUAL IEAHU SALES SYMPOSIUM

March 10, 2016–Ontario Convention Center Fantastic Speaker Line-up!!!!

Date: Time: Where:

Cost:

Thursday, March 10, 2016 7:00am to 3:30pm Ontario Convention Center 2000 Convention Center Way, Ontario, CA If Purchased by 03/03/16: Member–$45, Non-Member–$75 Purchased day of Symposium: Member–$75, Non-Member–$100

Price Includes: Continental Breakfast & Lunch and earn CE Credits for attending

Phone: 866-922-8387

Email: IEAHU.administration@gmail.com

Register On-Line Today: http://guestli.st/400125

HEALTHCARE for groups who have a plan in place (renewal, benefit summaries, etc.), put on your underwriter hat and look for details that don’t add up or simply don’t make sense. These include discrepancies between the renewal and the census, invalid dates of birth and/ or home zip codes, and the absence of any large claims data. It is best that you find them before you submit your RFP to the carrier rather than waiting until later in the game when they are requested of you. This also may help your chances of getting a quote when more than one broker presents the group to the carrier – a.k.a. “duplicate activity.” Carriers will be more willing to release a quote when the facts are clear and complete.

PREPARE YOUR STRATEGY A very successful large group agent in the Inland Empire once told me that an RFP without a sound strategy is tantamount to throwing spaghetti against the wall to see whether it will stick.

And any of the best large group carrier reps will always ask for the story of why the group is shopping (better benefits, lower rates, ACA compliance) and what you believe to be the best combination of products to meet their needs. Be prepared to answer these all-important questions by using what you learned during your initial prospect meetings, including any special circumstances surrounding the group (e.g. controlled group status, large variances in employee wages).

There are a lot of good options out there for large groups. Your prospect may want to consider a fully insured program, partial or full self-insurance and/or a minimum essential coverage (MEC) plan combined with critical illness and hospital indemnity plans.

Self-insurance is on the rise, as Employer Shared Responsibility rules leave companies in search of an affordable option to increase participation in the plan. With this option, remember to always do your due diligence before you select a claims payer or third-party administrator (TPA).

Groups looking for a bundling of employee benefits and additional services such as HR, compliance, workers’ compensation or payroll alongside employee benefits may want to consider 12 | CALIFORNIA BROKER

PEOs or private exchanges. Many of these services can also be added to core medical offerings through a bundled technology solution.

The service and account management strategy is of equal importance when marketing large groups. Who is the point person? Who is the service person? Where does the buck stop?

These important staffing decisions cannot be overlooked when managing the expectations of a large employer.

Finally, be prepared with a plan of how you are going to generate revenue. Will you adopt a fee-based model or ask that commissions be built into the rates?

You are ready to submit your RFP to the carriers of your choosing when you have examined all of the angles and anticipated most of the questions you may be asked during the underwriting process.

BE READY WITH PLAN B What if, despite your best efforts as outlined above, the quote comes back and you find that your prospect is not a good fit for your proposed strategy?

If your prospect has not had prior coverage and, like many, is striving for ACA compliance, perhaps a two-year strategy is in order. Employers that have never paid a portion of their employees’ benefit premium are suffering from sticker shock even when presented with very competitive rates. Similarly, employees who are contemplating the purchase of medical insurance for the first time have a very different understanding of affordability than that which is derived from the calculators.

As agents try to balance all of the moving pieces to keep their prospects away from penalties, provide employees with meaningful benefits and not break the budget, many find themselves putting one solution in place for year one, with an end goal of achieving a different solution in year two.

Remember, too, that in addition to having a second strategy, coverage option, or funding mechanism in mind, there may be room for negotiation with carriers when it comes to holding rates for the next effective date, reducing commission in order to lower rates, or writing a short or long contract to achieve the group’s ideal effective date during year two.

- CalBrokerMag.com -

EXPLAIN THE OPTIONS THOROUGHLY Business owners and their staffs know their industries, for certain, but often they neither speak the language of employee benefits nor have a realistic idea of what benefits cost. Because carriers can and do re-rate groups if assumptions regarding the census, participation or the health of the group are different than the actual enrollment, your thorough review with the prospect must include the what-ifs.

You know your prospect better than anyone does. If you know that the decision-maker may take a while mulling over the options, don’t expect to be able to close the deal in a couple of weeks. Avoid putting the group through a rushed enrollment only to find out that you cannot meet participation or have missed the cutoff date to submit your case.

READY, SET, GO New to selling in the large group market? General agencies employ specialists who are skilled at guiding you through each of the steps above in order to help you complete the sale and provide your clients with the best products and services for their particular needs and budgets.

When you have done an outstanding job for your prospects, remember to be actively involved throughout the year with any and all that turn into clients and revisit next year those you were not able to convert. Remember, too, that business owners know other business owners and decision-makers, so don’t forget to ask for referrals to keep your large group pipeline full. H Michael Wolff is president of Dickerson Employee Benefits, a general agency serving brokers and their clients for the past 50 years. A graduate of Germany’s Albert Ludwig University of Freiburg, Wolff holds a law degree with qualification as a superior court judge in Stuttgart. Before joining Dickerson in 2005, he was recruited into the German Diplomatic Service where he headed the legal, press and cultural divisions in several countries, ending with a post that brought him to California with the Los Angeles German Consulate.

Dickerson Employee Benefits is headquartered near Dodger Stadium in Los Angeles and offers employee benefits and worker’s compensation products, concierge service and technology tools. Wolff can be reached at michael@dickerson-group.com.

FEBRUARY 2016

Bet On Yourself Don’t gamble with your career.

We’re making your success a sure thing.

LAAHU University Day

April 13, 2016 Los Angeles Convention Center

• Hear what’s next for Covered California • Learn how to measure the value of your agency • Improve your social media presence … guaranteed • Prepare for the future with insights from carrier executives • Dive deep into latest trends, technology and gossip from peers and vendors • Bank Continuing Education credits It’s all at LAAHU’s University Day with dozens of booths, powerful and entertaining speakers, and a lot more We’re betting you’ll even have fun!

Register Online! http://www.laahu.org

HEALTHCARE

OPPORTUNITIES ABOUND FOR AGENTS IN THE NEW LARGE GROUP MARKET

BY NEIL CROSBY

T

he year 2016 is a year of change for California’s smaller largegroup employers. As you know, the ACA has changed everything in the minds of many employers that fall into the 51+ size margins. Employers with 51 to 100 employees had been in the midmarket, large-group segment.

But they are preparing for the fact that they are now small-group employers.

Or they kicked the can down the road one last time and will have to deal with the new provisions at the end of 2016.

Meanwhile, large-group employers are still trying to determine what the ACA provisions mean to them.

They are looking at having to comply with the pay-orplay employer mandate that requires them to provide minimumessential coverage to employees, comply with new IRS tax reporting documents, and comply with many other ACA provisions. What is certain is that large employers, throughout California, are searching for meaningful, relevant information to determine what they need to do moving forward.

They need their agent/broker to provide information and direct them down the path of health care reform, such as giving verbal advice, providing articles 14 | CALIFORNIA BROKER

and publications, and providing links to valuable resources. Agents and brokers also offer professional relationships that come from their experience and connections.

All of the ACA provisions suggest that agents and brokers have new opportunities to retain and grow their large-group business, including the IRS requirements as well as the new size guidelines for large employers.

The fact that large groups can no longer be declined for pre-existing health conditions is a huge plus, which opens many doors. Another opportunity is that carriers are allowing lower participation, so employers who have not been able to meet normal participation requirements may now be able

to qualify for a large-group plan.

As you are aware, the ACA’s Cadillac Tax has been delayed another two years, which will push it away another four years from now. There is a good chance that it will be repealed completely. Employers who were worried about having more expensive plan designs needn’t worry about that for the time being. That’s great news for - CalBrokerMag.com -

agents and brokers. They no longer have to help clients select reduced benefit plans for employees and their dependents in order to stay under the allowed premium maximums and avoid the 40% excise tax on premium amounts over the allowed thresholds.

There is another provision that affects large-group verses small-group premiums. Large group claims experience is subject to an 85% MLR, verses the 80% MLR for small group and individual. Of course, all of this is borne by the carriers, not the employers, but it leaves carriers a lower margin for error with many large-group employers. It will give carriers more flexibility with rates in the expanding small-group market.

Overall, it’s increasingly clear to all employers, whether small group or large group, that they need help. They need their professional agent/broker. They are keenly aware that they need assistance from a professional – someone who deals with the ACA on a daily basis, can guide them without crossing the line of providing legal advice, and help them go back to running their business when they have the confidence that their benefit needs are in order. Many employers have told me that their confidence rises tremendously if their advisor is a member of a professional association, such as the California Association of Health Underwriters (CAHU) or the National Association of Insurance and Financial Advisors (NAIFA). Employers have found that agents and brokers who are members of these great organizations are more prepared, receive more information, and can offer more pertinent advice than can most of those who are not members.

The year 2016 will truly be a year of growth for agents and brokers with limitless opportunity. Keep reading, learning, and investing in yourself for your future; it will pay off big time for you in this ever-changing marketplace. H Neil Crosby is director of Sales for Warner Pacific General Agency.

FEBRUARY 2016

SALES & MARKETING

Win Today or Relevance Tomorrow

HOW THE POWER OF CONSULTATIVE SELLING CAN HELP YOU GROW YOUR BUSINESS

M

any brokers and agents in California are meeting with their sales managers to kick off a whole new year of big, intimidating goals. We all have different goals, whether it’s achieving a giant sales number, learning a new product, or adding a new territory. This article will give you tips for weaving consultative selling into your daily conversations to become more valued among clients and prospects to meet your 2016 goals.

WHAT CLIENTS WANT It’s pretty simple why our clients chose us as their agent or broker.

They want our expert help. They are too busy to do the research, compare pricing, and stay on top of legislation; they expect their agent or broker to do it for them.

Our clients also expect us to understand their business. We need to know their operations, their competitors, their pain points, and their successes. As their agent or broker, it’s up to us to know their financial and business structure, their challenges, their competitors, and their goals.

Consider helping your clients from a holistic business perspective. For example, are they trying to fill a specific position? Help them network. Are they running into a contractual challenge?

Recommend legal counsel. A little effort will create trust, and enhance the business relationship, which will pay off for everyone in the long run.

ASK QUESTIONS How do you become more consultative? Ask questions beyond what you need to get your job done. Find out what problems your client is trying to solve today and in the next three to five years. What pain points are the client’s problems creating? Do the problems span multiple departments or locations? Are the problems increasing?

Are there competing issues?

FEBRUARY 2016

BY JIM MCCABE

HOW DOES YOUR CLIENT OR PROSPECT MAKE DECISIONS Who is the decision-maker? Your contact may be in human resources or finance, but are there other stakeholders in the mix? Since every company is different, make sure that your sales presentations speak to the full audience ahead of time. It is 100% acceptable to ask who will be reviewing your proposals. It is 100% acceptable to ask if there are questions or areas you should cover in order to satisfy all parties, even those who won’t be present at your meeting.

Know your client or prospect’s culture. When you present a solution, illustrate how it ties into their culture.

Doing so will strengthen your offering, and show that you not only understand their culture, but also that you care about why it is critical to their success.

That’s the sign of a true business partner, not just a transactional vendor.

COST VERSUS VALUE In any industry, most buyers fall into two categories: those who value cost and those who value quality and service. The problem with buyers who value cost is that there is always a lower cost option. Always. Clients who only value cost will leave you at renewal if a cheaper option comes along.

Be respectful of your own time, and seek clients who are looking for a long-term business partner. How? When you present your solution, show that you’ve done your research. Show them the math, not only for the sale, but also to show how it could save money in the long run or for employees. Show the additional benefits of your solution. Maybe it’s a tax benefit, increased employee communication and engagement, or something that could help human resources improve morale. If possible, offer evidence in favor of your solution. If you are offering something that will save employees money, demonstrate it with a graph or calculator.

- CalBrokerMag.com -

RESEARCH IS CRITICAL TO UNDERSTANDING Adjust your message to your client’s needs. Ask what is possible before engaging. For example, if they say the budget is $30,000, don’t present something that is $60,000. If your client needs bilingual service, deliver that option. Show that you are listening.

Secondly, use language that’s consistent with your client’s style. If they refer to employees at teammates, you should too. If they refer to locations as storefronts, you should too. Make it easy for them to translate your proposal into their terminology to share within their organization.

VALIDATE BEFORE OFFERING YOUR SOLUTION Do your fact-checking. Ten minutes of your time could make a huge difference in your presentation. Also, investigate any internal politics. Is the issue the same in everyone’s eyes? Since your proposal may be shared across departments, make sure that you are sensitive to the whole organization.

KNOW YOUR STRENGTHS Don’t try to be all things to all people.

When you need help, find partners who provide that expertise. Don’t try to fake it; it will just backfire. Maybe that partner will remember you next time and give you an opportunity.

GROW WITH YOUR CLIENTS Keep up on industry trends and forward meaningful information to your clients, whether it’s a news article about them or a competitor or about legislation. Join LinkedIn groups to get relevant news that helps you and your clients. Once you create value, you will be valued, and your clients will be more likely to stay with you and refer you to their peers. H Jim McCabe is a vice president of Sales Strategy for Sterling Administration. For more information, visit Jim.mccabe@sterlingadministration.com.

CALIFORNIA BROKER | 15

GENERAL AGENCY

General Agency View From the Top

By LEILA MORRIS

In this article, executives from California’s leading general agencies give their take on critical trends in the health and employee benefit marketplace.

HOW HAVE GAs CHANGED OVER THE PAST FEW YEARS? David L. Fear, Sr., president and CEO of Shepler & Fear General Agency: The GA market in California is different. In California, GAs have had a strong role in delivering competing health care products for many years.

However, like other industries, there have been acquisitions and mergers, which will continue as you see fewer GAs in the California marketplace.

Some larger GAs have expanded with a multi-state presence while others remain as strictly regional. The biggest changes I see are that GAs are not just product wholesalers anymore, but have taken on more of a consultative role with their clients being agents and brokers who no longer get the support from the carriers that was provided in the past. GAs have expanded their services into areas where carriers have retreated due to cost constraints.

California is fortunate to have multiple, competing GAs in this market, which bodes well for their agent clients.

Dennis Fallon, senior vice president, Insurance Field Sales and Services for BenefitMall: To meet the changing needs of their brokers, general agencies have broadened their capabilities 16 | CALIFORNIA BROKER

through diversified product and service offerings. These additional offerings are designed to increase agent revenue streams, compete in the marketplace, and address employee and employer benefit needs to protect health benefit books of business.

Many general agencies are building proprietary tools and services for their brokers and employer groups while others are partnering to create bestin-class offerings to meet the needs of brokers and employers. As today’s business environment continues to evolve, general agencies are expanding their geographic footprint. The ability to provide not only a diversified product and service offering, but also multi-state support, is now a base requirement to provide the support that brokers and their clients expect.

Jessica Word, president of the Word & Brown General Agency: The Affordable Care Act (ACA) has undeniably shaped our service model, putting an increased emphasis on ACA compliance.

The transition of 51- to 100-employee groups to the small-group market has increased demands for products and services that have been traditionally reserved for the mid-sized market: composite (tier) rating, rich coverage options, customized benefit solutions, integrated billing, and list enrollments.

That has led to these becoming requirements across our customer base and, like our brokers, GAs have become part insurance sales and support and part technology developer.

Jim McCabe, vice president of Sales Strategy for Sterling Administration (McCabe is providing answers as they relate to a TPA, not a GA): Over the past few years, consumers across all types of businesses are doing business via mobile. We’ve seen a big increase in our mobile customers. We’ve seen an uptick in our Spanish-speaking - CalBrokerMag.com -

customers. We are also increasingly being asked to provide more backshop support in compliance, technology, and client communication to the brokerage community.

Ken Doyle, executive director Sales for LISI: Despite minor idiosyncrasies here and there, the value proposition of a GA basically remains the same.

The bigger question is how will they be changing in the upcoming years, and what will they choose to implement?

Colleen M. Gimbel, vice president of Marketing/Recruitment/Compliance for Berwick Insurance Group: One of the biggest changes, over the past few years, is the amount of compliance information that agents are required to understand. Agents want to know what they can and cannot do, which increases the need for compliance staff and training programs.

Jennifer Lisanti, director of Sales with beere&purves: While general agents continue to be actively involved in marketing and sales of employee benefits, their role in providing ongoing, day-to-day service for existing business has increased considerably.

Compliance has become more complex and burdensome for employers as a result of the ACA, along with the constant introduction of state and federal regulations. General agents are providing agents and agencies with the resources and contacts to ensure that they are informed on these matters. Employers are also looking for ways to simplify benefits and HR administration through technology. With the proliferation of online HRIS options, general agents have responded by researching these systems so agents can recommend viable solutions to their clients. General agents have introduced their own technology solutions on behalf of agents for onFEBRUARY 2016

ben e fit bro ker •

•

•

\ ben- -fit bro-k r\ noun

A person who advises businesses on employee benefit solutions.

Including, but not limited to: medical, ancillary, benefits administration, payroll, HR, tax/ACA compliance.

The definition has changed.

How will you respond?

Concord (800) 354-6926 | Orange (800) 966-3791 | Woodland Hills (800) 877-0101 | www.benefitmall.com

GENERAL AGENCY line enrollment, census collection, and more, which improves data quality and expedites group enrollments.

Michael Wolff, president of Dickerson Employee Ben­ efits: During the past few years, and particularly since the signing into law of the ACA, GAs have become centers of education for agents who pass the information along to their clients. This is particularly true with compliance and legislation. GAs, like their agent customers, are taking a more consultative approach to working with employers and individual clients. This often takes the form of a total-solution proposal that includes traditional and expanded product and service offerings.

Jeff Papenfus, senior vice president, Sales of Warner Pacific Insurance Services: Over the past several years, GAs have been doing more administrative tasks for carrier partners.

With the implementation of healthcare reform, broker education has become critical. Vetting and partnering with outside vendors for online enrollment, HRIS, ACA, and ERISA compliance, COBRA, travel insurance, and so on, has taken that burden off the brokers and their clients.

WHAT ARE THE MOST IMPORTANT MARKET TRENDS THAT AGENTS NEED TO BE AWARE OF THIS YEAR? Dennis Fallon of BenefitMall: We see three primary trends that are affecting agents most heavily in 2016.

The benefit arena now reaches well beyond the traditional broker market with employee workforce services and technology companies vying for a piece of market. These competitors are luring clients away through the promise of free technology and other value-added services. ACA compliance is confusing consumers who are often not savvy enough to be aware when a broker-of-record is occurring.

Many employers will seek various online workforce solutions and end up with a new broker-of-record without even being fully aware it. When this 18 | CALIFORNIA BROKER

happens, employers lose the valuable expertise of their local broker. The consolidation of health benefit carriers has expanded and can be seen in banking, payroll services, and human-resource management. With these consolidations, we see diversification in product portfolios, larger marketing spending, and more growth in retail sales, which often competes directly with the broker channel. Finally, for group agents, there is a change in the small-group definition in California to two to 100.

The continued creativity around multicarrier and multi-product offerings will be a battle on the small-group front as brokers strive to provide a comprehensive solution at an affordable price with the service that clients are accustomed to receiving.

Jennifer Lisanti of beere&purves: Transitioning 51 to 100 groups into small group products will be an important focus in 2016. The small-group market presents entirely new rates, rules, and product offerings to agents who have not focused in the under-50 market.

Working with a knowledgeable general agent will provide a considerable advantage in getting up to speed quickly. Employers want to minimize their management systems and points of contact through an online HR system.

To remain competitive, agents are offering their own value-added services or at least, they are becoming knowledgeable enough to direct clients to the most viable options. Employers are turning to their insurance agents for help with HRrelated issues that are outside their traditional scope of business. General agents provide much needed help with these client demands, but agents also need to stay up to date on their clients’ issues and challenges, including vendors and secondary resources to provide further guidance.

David L. Fear, Sr., of Shepler & Fear: The number one issue, this year, is the full implementation of the ACA’s Employer Shared Responsibility mandate. The government has not done a very good job of communicating - CalBrokerMag.com -

things to employers, which will show up as large employers struggle to file their 1094/1095-C reports this spring.

They’ll soon face the IRS and have to provide proof that they have been offering affordable coverage to their eligible employees that meets a minimum-value standard. Agents need to be at the front of this new and confusing process.

The second issue is how agents will provide solutions to reduce the cost of their clients’ health insurance benefits.

Obviously, the cost of insurance coverage has not come down. Many employers are getting closer to throwing in the towel and dropping their group health plan. It’s become unaffordable.

Employees are not happy about their high out-of-pocket costs under the new ACA pricing and benefit requirements.

Agents need to provide solutions now.

Jeff Papenfus of Warner Pacific: Since we just got through moving the one to 50 groups into ACA-compliant plans, the next focus should be on the 51 to 100 groups. Many of these groups took renewals in December to delay moving to ACA-compliant plans. Does that sound familiar? The biggest challenge is that most of these groups will have to go to an age-rated plan from a composite-rated plan. However, a fair percentage will actually save premium dollars by moving into the new plan designs and rating structure. While premiums may be significantly higher or lower under the new ACA rating, there will be employees in each group who are winners and losers in regards to their personal premiums. The other trend we are likely to see, this year, is that carriers and brokers are working together to move groups from the 12/1 renewal date. I think all of us would agree that renewing 80% of all business in a twomonth period is not good for GAs, carriers, brokers, or their clients.

Jessica Word of Word & Brown: Brokers would do well to get very creative this year. The old standard of selling an out-of-the-box solution is gone, or will be soon. Multi-carrier packages with unique funding options are winning the marketplace as they offer the most diverse coverage, providers, and prescription benefits for a large organization to meet the needs of its FEBRUARY 2016

GENERAL AGENCY many constituents. Offering combined solutions will keep insurance rates low for customers while quality and satisfaction remain high. Brokers can deliver customized solutions to meet each employee’s medical and financial needs by allowing them to choose their own options within a set of carriers, plans, and coverage. The demand for technology is growing, too.

If brokers don’t have a solution and are speaking to clients about it, they need to find one (or more) to meet their clients’ needs. Or, they can partner with a GA that is offering support in implementing and running cases through an online solution.

Jim McCabe, Sterling: The changing legislative landscape is one of the most im­ portant things to watch this year. The Cadillac tax was de­ layed, and more changes are on the way. A majority of employees may have less disposable income to handle larger deductibles and out-of-pocket costs with narrow networks and less choice, and high deductible plans.

Ken Doyle of LISI: It will be another interesting year with the second half of the small-group market (51 to 100) having to move. Being a highly politicized year, more legislation will be introduced in hopes of easing some of the ACA pain. I also think that we will see a movement to get viable software technologies in place before the fourth quarter.

With this shift in technology, it would behoove you to assess whether you have the aptitude, the resources, and the agility to keep up with all the trends. If you can’t respond with a vehement “yes” to these concerns, consider hiring someone or partnering with a resource to help you take it to the next level. Re-evaluate your workforce. Agents need a service team that can keep up with today’s pace with tomorrow’s forward thinking mentality. Agents should be looking at the concept of all-in-one-place platforms, such as concierge services.

Michael Wolff of Dickerson: Agents continue to look for ways to differentiFEBRUARY 2016

ate themselves. In 2016, it will be key to access integrated technology and compliance tools while keeping an eye on products and services beyond the traditional. For example, don’t overlook including voluntary benefits for small and large employers. Agents don’t have to know all the answers. They just need to know where to go for information and creative alternatives.

DO YOU SEE ANY SPECIFIC TRENDS RELATED TO THE SMALL GROUP VERSUS THE BIG GROUP MARKET? Michael Wolff of Dickerson: It will be important to be sensitive to the changes affecting mid-size groups that are becoming small groups. These changes include the move to small group rating and underwriting guidelines, as well as the employer shared responsibility requirements that are new to groups of 50 to 99. These groups will look to agents to educate them on the differences between large and small group plan designs. They will seek the account management-level service to which they have become accustomed.

Jessica Word of Word & Brown: With mid-sized employers (with 51 to 100 employees) moving into the small-group marketplace, we are witnessing a blending of requirements in our small group product portfolio.

Benefit-administration systems have typically been reserved for larger clients who could afford higher-priced, integrated functionality involving payroll, benefits, and billing. But costeffective solutions are emerging to simplify the administrative burden of tiny groups. We saw significant diversification of our broker-customers in 2015 into new products and additional marketplaces to make up for the recent cuts in carrier commissions.

Brokers who have been the servicing agent on a single in-force policy are looking to increase their reach into a client’s coverage portfolio to enhance and further bind the relationship.

We’ve seen brokers exit the marketplace – some leaving the industry and some selling their books of business to rivals and larger agencies. That consolidation has reduced our active broker population by roughly 5%, a trend we anticipate will continue.

- CalBrokerMag.com -

Jim McCabe, Sterling: The need for education in all things benefit-related has to be more focused. All of the voluntary products, retirement, and tax efficient savings accounts require more information about individual risk tolerance as well as short- and longterm goals. Companies have to provide more insight, and address employees’ financial goals based on their life events.

David L. Fear, Sr. of Shepler & Fear: Smaller employers are looking into alternative funding, such as HRAs, HSAs, and FSAs to help curb the cost of health care and health insurance.

Many large employers have done it successfully. Now it’s time for small employers to implement some of these ideas.

Even though small employers are not subject to the ACA employer mandate, they still have to deal with other things out of their control. Small employers are struggling to deal with health insurance, which is one of the most regulated products in the United State. They are going to look to their trusted advisor for solutions on how to comply with the law and how to reduce costs while still attracting and retaining good workers.

If the employer-based system remains, it’s up to agents to help clients work through these challenges.

Jennifer Lisanti of beere&purves: The biggest trend we see is the movement to private exchanges in the small-group market. The private exchange model allows small groups to implement cost controls through defined contribution and offer multiple carriers, which provides access to a significantly larger pool of providers.

This simply does not exist in the midmarket segment (100+). Another trend is the onslaught of fourth-quarter renewals. This year, it will affect an even larger number of renewals due to the 51 to 100 groups taking advantage of early renewal opportunities in 2015.

This trend will continue to create quoting, enrollment, and approval challenges for agents and agencies servicing these groups.

CALIFORNIA BROKER | 19

GENERAL AGENCY Dennis Fallon of BenefitMall: Small groups are weighing the value of continuing to offer benefits versus the cost and compliance burden. Large groups face the heavy costs of having to offer benefits to everyone when they may have only covered a portion of their population. The compliance burden may be heavier on the small group sector since they don’t often have HR departments to take on the burden. It falls on owners and managers who can become overwhelmed by the task.

WHAT THINGS HAVE YOU NOTICED THAT SET APART SUCCESSFUL AGENTS? Jeff Papenfus of Warner Pacific: Our broker partners have a passion for what they do. They are adapting to a new marketplace and becoming more knowledgeable. They are evaluating what they offer and looking to technology tools with personalized service to grow their business.

Michael Wolff of Dickerson: Agents need sensitivity to the changes affecting mid-size groups that become small groups. These include the move to small group rating and underwriting guidelines, as well as the employer shared responsibility requirements that are new to groups of 50 to 99.

These groups also will look to agents to educate them on the differences between large and small group plans designs and will seek the account management-level service to which they have become accustomed.

Dennis Fallon of BenefitMall: Agents who are evolving with the trends are the most successful. To compete in our changing industry, agents must be confident, committed, and passionate about providing the best benefit coverage possible, and stay relevant to employers and the management of health benefits.

Agents also need to provide a com20 | CALIFORNIA BROKER

plete human capital management offering that ensures that competitors do not compromise their health benefit book of business. No matter how valuable the benefit consultation may be, an employer group can be easily stolen in 80% of scenarios when another provider offers a comprehensive workforce solution. Successful agents are constantly bringing new solutions to their clients, educating themselves on market trends and new products, embracing technology solutions, and maintaining a level of service to be responsive to the needs of new and existing clients.

Jennifer Lisanti of beere&purves: Agents who are open to change in our increasingly complex industry will have an advantage over those who do business as usual. Agents who avoid technology trends and compliance issues expose themselves to competition and their clients to unnecessary risk. Successful agents stay informed of carrier product offerings and rules, as well as state and federal legislative issues. They are prepared to inform their clients of any positive or negative issues. Successful agents continually prospect for sales opportunities, add new lines of coverage to existing clients, introduce product lines, and demonstrate the value they bring to the agent-client relationship to ensure client retention.

Jessica Word, Word & Brown: The best brokers – like the best and most successful businesses in any maturing industry – are adaptable and flexible. They meet new strains on their resources, client requirements, and government regulation without resistance, always looking for and vetting solutions that deliver meaningful results. They are innovative, looking for gaps in the solutions their competitors provide, and delivering meaningful ways that attract customers and generate referrals. Finally, successful brokers form deep partnerships with organizations that fulfill these needs, adapt to changes, and are responsive - CalBrokerMag.com -

to requests for support. They pass the labor onto service partnerships while maintaining their focus on their own business and on the growth of their sales opportunities.

Ken Doyle of LISI: How do you become scalable? Utilize partners through this transformation and build your sales/service model to meet the new consumers’ needs through technology, and create an experience that provides value. Cutting-edge agencies understand analytics and how the information can help provide financial solutions. These agencies are moving from descriptive (what happened) to diagnostic analysis (why it happened), to predictive (what is likely to happen), and to prescriptive (determining the right outcome). This is where you will see movement in the types of products offered in the market. A sharper customer targeting approach and a variety of wellness strategies will shift the discussion for the agent in becoming a preventative risk advisor.

Jim McCabe, Sterling: Successful agents have a personal touch and attention to detail. They also understand where our client brokers are in their life-cycle. Not every firm wants the same things.

Colleen M. Gimbel of Berwick Insurance Group: It’s knowledge, training and confidence. An agent who is confident with the material they represent will be much more successful.

It goes without saying that an agent needs to know the material in order to sell a plan. Many agents have the knowledge, but they don’t feel confident with the information. Every agent needs a different amount or type of training to feel comfortable enough to sell a Medicare plan.

David L. Fear, Sr., of Shepler & Fear: We see a group of younger agents who approach this business in a very smart way – using tools that make them more efficient with their time. We see a lot of younger agents going out and sharing ideas that employers have not heard before. They are demanding that our industry respond better to the needs of their clients through online FEBRUARY 2016

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GENERAL AGENCY capability, simplification of processes, and ease of communication. Successful agents think out-of-the-box and communicate more effectively with their clients. Many GAs can assist in providing these value-added services.

WHAT KINDS OF GA SERVICES ARE MOST VITAL TO TODAY’S AGENTS? Jessica Word, Word & Brown: Two key areas affect our brokers today: compliance and technology. ACA compliance is a maze. Each scenario creates a different compliance requirement. Mandates are repeatedly revised, shuffled, and updated. Brokers have to align themselves, very quickly, with emerging technology, find the solutions that meet their clients’ diverse needs, and learn to operate and implement these solutions for their groups.

Ken Doyle of LISI: To understand what is vital to the agent, you need to look at the end-user (consumer). What are they demanding in the way of customer experience and medium of information?

You are now hearing that we are experiencing disruption in our industry. This is true, but most people think that disruption is in the software being introduced that provides benefit administration or HRIS linked to payroll, time and attendance, and/or compliance, etc. Well, it’s much more than that. Think about customer experience. How do they interact with technology and the information they can get at their fingertips? You will see the adoption of the “Internet of things” and other new technologies. But this followthe-leader paradigm of the industry will mean that any edge that a GA has will disappear quickly. Sure these technologies are impressive, even evolutionary, and long over-due in our industry. Still, they are not disruptive, nor are they revolutionary. Revolution comes from products and services that do something with technology to create a better experience through personalization. We have a whole new generation of consumers moving into the workforce who will not accept how we have always done things. This generation was immersed 22 | CALIFORNIA BROKER

in technology, and embraced it — seemingly before they were even wheeled out of the maternity ward. So it will be vital to help the agent comprehend and deliver to this new and rising population of consumers while keeping in touch and relevant to existing clientele.

Jim McCabe, Sterling: Agents want personal customer service for their clients, as well as easy online access to check balances and plan renewals.

Knowledge-based support, original content to share, sales education, and channel support are among the top requests.

Colleen M. Gimbel, Berwick Insurance Group: Agents want compliance information that is digestible and implementable in their day-to-day activities.

They also need access to sales support staff. It is vital for an agent to be able to contact the FMO whenever they have questions.

Jeff Papenfus, Warner Pacific: The most common need is probably quick access to information. Because of frequent changes to carriers’ products, plan designs, networks, and compliance requirements, agents need to find the most up-to-date information quickly and preferably in one place to be efficient.

With new technology-centered brokers, agencies and brokers are asking us how they can compete. When it comes to online enrollment and HR systems, one size definitely does not fit all.

Michael Wolff of Dickerson: Next to product and price consultation, ACA-related education and resources top the list of GA services most often requested by our agents. And in a blending of areas, agents are looking for the most cost-effective employee benefit solutions to help ensure ACA compliance for their clients. In addition to core medical and ancillary plans, products that were once considered to be voluntary are increasingly offered as employersponsored coverages. Technology tools are critical to the extent that they can integrate enrollment, pay- CalBrokerMag.com -

roll, benefit, and HR data. A GA that can provide these tools and the technical support to use them will help the agent enhance retention as well as create employer efficiencies and mandated reporting capabilities.

Dennis Fallon of BenefitMall: Brokers need solid general agency, backoffice support more than ever. The basics of being accessible, providing a timely response, providing insight and guidance are still important. But offering access to tools being requested by employer groups is probably the most significant area of GA services. General agencies should provide a wide array of services beyond health and ancillary including benefit administration tools, ACA compliance, payroll services, tax compliance, and supplemental products, such as workers’ comp and 401K. A combined product offering is where the marketplace has moved.

A strong GA partner will provide safe access to these tools and services through a channel that will not compete with or steal your business. If a general agency is not helping agents compete with product and technology companies that are calling on their employer groups, the agent should move to a general agency that is committed to their success.

Jennifer Lisanti of beere&purves: One would not necessarily consider knowledge a service, but ensuring that your general agent trains and educates their staff so they know their products and resources inside and out is critical to an agent’s success.

General agents offer a wide variety of services and technology tools, but they are only as good as the expertise of the people filling the service roles.

As employers face extensive compliance requirements, they are asking their agent to help simplify these daunting obligations with the aid of educational resources, access to online HR and compliance systems, and/ or vendor relationships with preferred pricing. Working with a general agent that understands an employer’s compliance and technology needs not only provides tremendous relief to an employer, but it also helps to strengthen the agent/client relationship.

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GENERAL AGENCY WHAT IS THE MOST IMPORTANT THING TO KEEP IN MIND WHEN CHOOSING A GA? Jessica Word, Word & Brown: It is definitely the people; I encourage brokers to vet a general agency by engaging its people because service depends a great deal on those who deliver it.

Each GA offers what appears to be the same or similar services, at least on paper. They all have products for their marketplaces. They all have a solution for quoting, whether it’s proprietary or purchased. They all have a sales team. Longevity of service is important. Is the general agency staffed by experts who have worked in our industry for a long time? That can be a differentiator. And offering guaranteed accuracy of quotes is critical for brokers and clients. Being adaptive to what’s happened in our industry in the past five years is also important.

Jim McCabe of Sterling: When you are choosing GA or administrator, know what is most important to your employer population. Do they need bilingual access, mobile access, or educational materials? Can the general agency or administrator enhance your client relationships? Can this relationship assist in growing and retaining profitable revenue? Can the GA reduce your cost of business by supplying support so that you don’t have to invest in it on your own?

David L. Fear, Sr., of Shepler & Fear: Who owns and operates the GA? Are they aligned with agents and their role in delivering insurance benefits? Does the GA have a track record of supporting agents and brokers? Are they focused on meeting the needs of agents or are they focused on profits? What do they do differently than their competitors and why are they different?

Are they a supporter of the industry?

Will the GA provide personal service and attention to the agent and their clients? Will they go out with the agent and meet with their clients personally and act in a consultative role or are they just trying to push products?

Colleen M. Gimbel of Berwick Insurance Group: Work with people you like and who are easily accessible. Many FEBRUARY 2016

times we hear about agents who are contracted with an FMO/GA that never returns their calls. That’s a huge problem because the whole purpose of the FMO/GA is to support its down line.

Too many times agents just look for an FMO/GA who will give them leads; they don’t think about any of the other services they might need. In my experience, agents who choose an FMO/GA based solely on the amount of leads the FMO/GA said they would provide is often disappointed and disgruntled.

This is a crazy industry, and no company is perfect. But if you have a good working relationship with your FMO/ GA it makes everything go much more smoothly, and it’s more enjoyable.

Ken Doyle of LISI: Work with a thought leader who understands insurance 2020. The central message or strategy needs to be looking at how they will keep pace with social media, technology, economic, and political developments. Digitization will be key for the GA, carrier, agent, and group client. Previously everyone talked about big data. Well, we have more data in our industry than we know what to do with, and therein lies the issue. As we move toward digitization of information, it will depend on algorithms and analytical techniques that will reshape customer targeting, financial advice, and individual customization. With that said, choose a GA whose approach to the new market will complement you, your agency, and your business philosophies through transformation. Not everyone is created equal, so it cannot be a one-size-fits-all approach.

Jennifer Lisanti of beere&purves: Agents should consider the total value the general agent will deliver through the entire sales cycle. General agents provide value beyond quoting and enrollment form collection. Don’t just fall for the sales pitch. Make sure that you work with a general agent who actually services your business so you have more time to focus on sales. Ask to see samples of their agent communications. Find out if they provide deductible credit services or if they get involved in claim and billing issues. Find out if they offer online enrollment and who does the setup. Ask to see their - CalBrokerMag.com -

average group approval turnaround times. Ask enough questions to make sure they will deliver value to your agency and your clients. Also make sure the general agent is knowledgeable and exhibits expertise about the products they sell and the rules that must be followed in order to sell those products. When a general agent has educated and informed employees, miscommunications and oversights are minimized, allowing everyone to work more effectively and efficiently.

Jeff Papenfus of Warner Pacific: When evaluating a GA relationship, brokers and agencies should ask what are the most important aspects of that relationship, the technology, the accessibility, the responsiveness, and the personal touch. The answers will point them to the right GA for their needs.

Dennis Fallon of BenefitMall: When selecting a general agency, you want to select a partner whom you can see yourself working with on a daily basis.

You need a partner who is not only able to meet your needs today, but also anticipate your needs. Most importantly, you need a long-term partner who is invested in your business and is a mutually beneficial partner. As you build a successful brokerage, you need a partner who can provide a local view of what is occurring in the employee benefit industry. More importantly, this partner needs to be able to help identify the carriers, partners, trends, and services on a national scope, when your business needs demand it.

Michael Wolff of Dickerson: Because one solution does not fit all employers, it is important to work with a GA that offers in-depth consultative services and provides access to unique employee benefit solutions. Whether you have a 10-life group of high wage earners or a 125-life group with a wide range of budgets and family needs, a GA needs to respond with a strategy that includes a few well-thought-out options from which agents and their clients can choose. H Leila Morris is senior editor of California Broker Magazine.

CALIFORNIA BROKER | 23

DISABILITY

WHY MILLENNIALS MAKE ATTRACTIVE

Disability Insurance Prospects

BY JIM FARDEN

T

here three reasons why Millennials (born in 1980 to 2000) make up an attractive group to target for income protection solutions: 1. They know how to track expenses and stick to a budget better than do former generations.

2. They have witnessed the effect of a financial crisis on retirement plans.

3. They are concerned about their financial future, but they need education to make investment decisions.

MILLENNIALS CAN MANAGE A BUDGET A recent study from T. Rowe Price proves that Millennials, now in their 20s and 30s, are better at managing a budget, tracking expenses, and preparing for their financial future than are former generations. Additionally online budgeting tools and mobile apps make it easier than ever for Millennials to keep track of their expenses.

You can help them understand how income protection solutions can fit into their budget. Because this generation relies on their smartphone to help manage finances, consider offering digital tools, like income-protection calculators to help them understand the cost and value of income protection on their budget and financial future.

24 | CALIFORNIA BROKER

MILLENNIALS HAVE BEEN JADED

BY THE FINANCIAL CRISIS Many Millennials were just beginning their careers during the financial crisis of 2008. Jobs were hard to come by; promotions were few and far between; and pay raises were not a guarantee from year to year. Millennials faced unparalleled college debt while struggling to find and hold jobs to pay back student loans and pay rent and car payments. They witnessed their parents’ and grandparents’ retirement dreams get shattered.

Millennials are realistic about their financial future. They know that they need to be prepared. While studies show that they are ready to save, your job is to help them understand how to create a comprehensive plan to help protect their financial future, including solutions to help protect them from unexpected illnesses and injuries. Millennials are still a bit jaded from the financial crisis, so present them with a strategy that considers all aspects their financial future.

MILLENNIALS LACK EDUCATION TO INVEST IN FINANCIAL FUTURE Sixty-four percent of Millennials would rather save than spend, which is a promising statistic for this target audi- CalBrokerMag.com -

ence, according to a study by Northwestern Mutual. But, while they are concerned about saving for their future, they often lack knowledge and confidence in investing strategies.

That’s where you can offer your value to this audience.

Fifty-three percent of Millennials have set financial goals, compared to only 38% of Americans age 35 and older, according to Northwestern Mutual. That’s a promising trend among this group. Capitalize on their desire to set financial strategies by helping them see the bigger picture. Many may believe that they are prepared for their future because they invest in a 401(k) plan. But retirement savings is only a piece of the financial security puzzle. Help them understand that other options, like income protection, can help prepare them for unexpected roadblocks in their financial planning.

You can help them fill the gaps in their financial strategy. Don’t miss out on the opportunity to target Millennials for income protection solutions. You can offer a lot of value to a target audience that is ready to start preparing for their financial future today. H Jim Garden is disability income regional vice president at Principal Financial.

FEBRUARY 2016

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WELLNESS

Wellness Workout for Brokers Shaping up Your Sales

by Heidi Bowman

FINDING A WORKPLACE WELLNESS PROGRAM FIT FOR EVERY CLIENT M

ore employers understand the benefits of moving from a fragmented wellness strategy to a more holistic one. So there’s a fresh responsibility for brokers to guide clients toward the most efficient and effective course. By deftly navigating the evolving terrain, the best brokers 26 | CALIFORNIA BROKER

are able to choose from the burgeoning wellness options and incentives to build upon the trust they have established with their clients.

Over the past two years, we have seen a shift among employers from simply policing employee health to really focusing on employee quality of

- CalBrokerMag.com -

FEBRUARY FEBRUARY 2016 2016

WELLNESS life. It’s a response to a greater understanding of the association between weight loss and disease. For example, diseases such as depression and obesity can be treated before they become expensive.

A closer look also unearths some significant factors in the success of a wellness plan. First, incentives are integral to getting employees on board and keeping them engaged. Second, the trend toward holistic employee wellness encompasses not only physical health, but also mental and emotional well-being. Brokers who have the most success in this area build upon a client’s comprehensive wellness program strategy.

Leading wellness plan brokers know that escalating health care costs mean that companies need to implement holistic programs that target problem areas. Pinpointing the financial drains and building a strategy to minimize them is the calling card of an advisor who provides solutions instead of just reacting to the client’s fire of the day.

It’s also important to remember that companies are rolling out wellness programs with their employees, rather than the more passive strategies of decades past. Ten years ago, a company might have tackled a type-2 diabetes issue strictly by encouraging the employee to take their medication. Today, that same company understands that it makes a bigger difference to go beyond simply managing insulin shots to helping an employee lose 50 pounds, for example. As a result, we are seeing an increasing number of companies implement personalized wellness programs backed by leadership support.

PROVEN INCENTIVES Offering incentives paves a proven path to wellness success by keeping employees engaged. Social programs, such as health competitions, are effective in engaging employees in a group. The latest health technologies can also delight participants and keep them involved. Encouraging wellness programs that entail such incentives can lay the groundwork for strong employee involvement, solidifying client trust in your abilities as their solution advisor and not just another vendor.

In the age of information, access, 28 | CALIFORNIA BROKER

and technology, it is important for brokers to provide trusted wellness program recommendations or risk losing client trust. With wellness tools tied to new technologies, companies can

Companies are beginning to realize that employees want new ways to nurture and nourish themselves that go beyond food and fitness. offer a myriad of options that would have been too expensive in the past.

Brokers who are leveraging these new technologies tell us that they are seeing an increase in utilization in wellness programs as well as a longer engagement time line for employees who use the tools. Great brokers have their fingers on the pulse of new wellness programs, technology, and incentives. At the same time, they remain cautious before jumping on a bandwagon so they are not just promoting the flavor

The wellness focus of many companies is evolving from strictly physical improvements to mental and emotional enhancement as well. of the day. It is difficult for companies to sort through the myriad options so it’s up to brokers to cut through the clutter.

One proven incentive involves companies covering half the cost of a wellness program, such as a weight management meeting. Even better, there is a correlation between higher employee engagement and a greater subsidy.

Some companies cover up to 100% of the cost. Companies have seen higher engagement with these incentives because wellness programs are available - CalBrokerMag.com -

year-round, and employees can sign up for a fixed-price program. Often, success is seen when employers integrate programs with incentives, such as providing company incentive points for attending a wellness program.

MIND, BODY, SPIRIT The wellness focus of many companies is evolving from strictly physical improvements to mental and emotional enhancement as well. Companies are beginning to realize that employees want new ways to nurture and nourish themselves that go beyond food and fitness. Behavioral science has shown that people have a better chance at successful weight-management when they find ways to take care of themselves and put themselves first. In other words, they are finding and fueling their inner strength. Brokers need to take note of this shift to well-being when proposing programs, making sure to advocate for programs that make the necessary adjustments to keep up with this trend. This involves moving away from just losing pounds to adopting a multi-faceted focus on weight loss and healthy living that encompasses the evolving needs, attitudes, and science around weight management.

The quickly evolving wellness realm poses fresh challenges for brokers who want to keep their clients ahead of the curve. With the proper knowledge, brokers can offer their clients new opportunities for a happier, healthier company. H Heidi Bowman is senior vice president and general manager of Weight Watchers Health Solutions.

Weight Watchers Health Solutions is a sub-division of Weight Watchers International, Inc. Driven by experience in the consumer and corporate markets, Weight Watchers connects its platform to organizations with a range of services including: promotion and engagement, benefit offerings, member data and reporting, and account management and implementation. Weight Watchers also offers a variety of packages that are adaptable to various organizations, such as convenient meetings; online and digital tools; and weight watchers for diabetes, tailored to type 2 diabetes needs, featuring all the benefits of weight watchers plus unlimited access to a certified diabetes educator. For more information, contact Will.Harbour@ weightwatchers.com or 212-817-4442.

FEBRUARY 2016

WELLNESS

Wellness Workout for Brokers

Shaping up Your Sales

HOWTOHELP EMPLOYERS MAXIMIZE THEIR WELLNESS PLAN ROI

BY DINESH SHETH

W

orkplace wellness programs exist for two key reasons: to save employers money while keeping employees and their families healthy. Employers are always seeking to realize the return-on-investment of their wellness programs – from human resources directors up to C-level leadership. Yet it continues to be a challenge. This is because employers

FEBRUARY 2016

often implement a program without a strategy to drive engagement. Also, spending happens now while benefits come later. By shifting how companies implement their wellness programs, employers could multiply the ROI, which hovers from $1 to $3 for every dollar invested in wellness.

The wellness model must be transformed from an open-ended system - CalBrokerMag.com -

with occasional contact with a wellness coordinator and enrollment in some fitness programs or life-style coaching. It must become a closedloop feedback system that hinges on consistent, collaborative feedback and ongoing monitoring and coaching among employees, their families, and wellness coaches.

For starters, employers should CALIFORNIA BROKER | 29

WELLNESS

“More than 70% of employers offer some type of wellness program, but without the correct approach.” stop focusing on just the number of employees participating in wellness programs and begin examining the needs of various sub-groups. Throwing a generalized wellness program at all employees is not very effective. A non-tailored program usually attracts the healthiest people who are already highly motivated and are not driven by incentives from their employers and insurers. While this group enjoys the benefits, the rewards are not the reason for their healthy lifestyle. This is the caveat behind most wellness programs; the healthy people continue their healthy habits while those who need the support usually abandon the wellness programs in a few weeks or months. Employers must be aware of health trends that affect their workforce. Soon, 50% of the population will have at least one chronic condition, according to the American Nursing Assn. Chronic diseases are responsible for seven of 10 deaths each year, and treatment for chronic diseases accounts for 86% of the nation’s health care costs, according to the Centers for Disease Control and Prevention.

Employers can observe data in their 30 | CALIFORNIA BROKER

employee pool on epidemics like high blood pressure, diabetes, and obesity.

They can offer programs for the employees with the most critical needs, and help them change unhealthy habits. To achieve behavioral changes in targeted employees, the wellness program should function as a closed-loop system that generates constant feedback. With this model, the program collects physiological data from employees and their families like weight, blood sugar, and blood pressure as well as behavioral data like activity levels and caloric or fluid intake. After processing this information, participating employees get practical guidance on how to tackle their health conditions.

Consistent communication and monitoring are fundamental features of a successful wellness program. Studies suggest that having readily available guidance helps people achieve behavioral changes much faster. It also provides the ROI that is noticeably absent from most wellness programs.

An engaging guided wellness program is an effective model. But, for

“Employers can increase their compliance and commitment to healthcare protocols, and reduce healthcare costs by leveraging tools that support engagement, guidance, and feedback throughout wellness and chronic conditions care programs.” employers, this approach raises concerns over the expenses of providing a dietician and a day-to-day coach for each worker. However, newer technology like remote monitoring, wearable devices, and self-service care plans are the answers to that issue. These systems enable cost-effective monitoring and coaching of employees on a large scale, allowing employers to easily help workers who have the highest need for active participation with - CalBrokerMag.com -

healthcare providers. Through this method, each employee can get assistance from a coach on a daily basis, along with referrals for physicians as needed, maximizing the wellness and care coordination programs and resulting in a quantifiable ROI with reduced medical costs.

More than 70% of employers offer some type of wellness program, but without the correct approach. Their efforts are often wasted because they lack accountability through collaboration and communication, according to a report by the Society for Human Resource Management. Without engagement, guidance, and feedback, employees and their families are left unsupported in their quest for a healthy lifestyle.

Even though employees and their families have good intentions to manage their health, many fail to keep up with their care plans. Even if they see their doctor several times a year, they don’t always heed suggestions that could have a significant effect on their health. Also, the time between appointments leaves time for minor health issues to exacerbate and require more extensive and costly treatment. The chances of staying on track with a care and wellness plan increases greatly when someone is there to coach people daily along the way.

Therefore, employers must leverage the tools and technology that leading advocates of healthy life style changes have begun to accept for ongoing collaboration and monitoring.

Employers can increase their compliance and commitment to healthcare protocols, and reduce healthcare costs by leveraging tools that support engagement, guidance, and feedback throughout wellness and chronic conditions care programs. As the wellness program evolution continues, the return-on-investment from such engagement will be a higher quality of physical, mental, and financial health of the workforce. H Dinesh Sheth is founder and CEO of Green Circle Health, a medical services technology platform provider that leverages advances in information, communication, and sensor technologies to enhance the quality of healthcare services and improve population health. For more information, visit www.greencirclehealth.com.

FEBRUARY 2016

PRIVATE EXCHANGES

Private ExchangesAn Option for the Future I

by Dorothy Miraglia King

s a private exchange part of your client’s benefit strategy? If not, you may want to consider it. Having the right benefit strategy is critical to your client’s business success. Depending on their company size, culture, and business needs, a private exchange may be able to help control health care costs, offer employees more consumer-driven options, and reduce the administrative burden of providing an employee benefit program.

Private exchanges are online marketplaces for health insurance and related products. In addition to comprehensive medical plans, private exchanges also commonly include voluntary benefits, such as dental, vision, life, disability, accident, and critical illness. Private exchanges should not be confused with the public exchange or Marketplace for individuals with potential subsidies, or the SHOP exchange for small groups offered through the Affordable Care Act (ACA).

Private exchanges are completely separate, and can be established by employers, insurance companies, benefit consulting/brokerage firms, and technology platforms. A private exchange can be a more consumer oriented delivery alternative for employees.

Private exchanges can be flexible to address the needs of the employer group unlike public exchanges, which are targeted to individuals and small groups. Private exchanges can focus on communication strategies and decision-support tools to address the needs of the employee population.

Secondly, private exchanges facilitate moving to a defined contribution model for health care costs while allowing FEBRUARY 2016

- CalBrokerMag.com -

CALIFORNIA BROKER | 31

PRIVATE EXCHANGES employers to retain some involvement in their employees’ healthcare offering. And finally, moving to an exchange reduces the employer’s administrative burden.

Private exchanges offer the following through a technology based platform: • Access to a portfolio of benefits: The exchange contracts with or creates its own set of health plans. Exchanges have varying levels of involvement in health plan standardization and design.

• An ACA-compliant environment: The exchange provides tools for the employer to meet its employer shared responsibility requirements for employer-sponsored coverage.

• The ability for employers to convert to a defined-contribution arrangement: The exchange allows a fixed-dollar amount to be spent on health benefits.

• Decision-support tools and guidance: Communication strategies and resources to educate plan participants about the choices available for themselves and their families.

• Simplified benefit administration: Single-source administration for eligibility, enrollment, billing, and reconciliation.

For the past 20 years or more, companies that offered health care benefits to employees have done so on a defined-benefit basis by offering a standard set of health benefits and taking on most of the financial burden and risk of healthcare costs. This model has become unsustainable over the past decade as healthcare costs have more than doubled, creating an affordability crisis for employers. Health care reform is also affecting the employersponsored insurance landscape, particularly the individual mandate, employer-shared responsibility, and public health insurance exchanges. The goal of healthcare reform was to make health insurance more affordable for individuals and employers. The individual mandate and employer shared responsibility provisions have changed the way health benefits are offered to employees, now offering multiple channels to access benefits.

So what do we expect to see in terms of the growth of private ex32 | CALIFORNIA BROKER

changes? About 6 million employees selected health plans through private exchanges for 2015, which is double the amount from 2014, according to a recent survey from Accenture. But it is still a very small amount of the employer market. Accenture predicts that 40 million of the 150 million people with employer based health insurance will choose plans through private exchanges by 2018.

Options do vary for employers adopting a private exchange depending on the size of their workforce, according to a 2014 survey by the Kaiser Family Foundation.

Employers with fewer than 50 employees are served primarily by single carrier and broker-supported exchanges with a technology platform. These groups are not subject to the employer shared responsibility requirement under that ACA. Their interest in private exchanges is significantly less than it is with their larger counterparts since they have an alternative in the public health insurance exchange. Some small employers have even dropped group health coverage, but use a private exchange to supplement access to the individual public marketplaces.

Employers with 50 to 2,000 employees are mid-size employer groups.

They have been targeted by single carrier and broker supported exchanges as well as some direct-to-employer models. Much of this enrollment is driven by brokers and insurance companies attempting to move their existing book of business to this new approach.

Employers with more than 2,000 employees are large employers. They are served primarily by the exchanges created by the large broker consulting firms. Many large employers already use benefit consultants in the design, execution, and evaluation of their benefit plans so there is a synergy in transitioning to a private exchange. Given these dynamics, there is a strong potential for private exchanges to grow in the medium to long term.

Here are a few considerations when evaluating whether a private exchange solution may be viable for your client: • The private exchange has to be a full-service solution to be successful. This includes educating employ- CalBrokerMag.com -

ees to make the best choices, and offering them options to purchase products that fit that choice — from understanding how cost sharing works through the value of wellness programs. Medical bills are the leading cause of bankruptcy in the United States, so getting their benefit planning right is critical. Purchasing health care is a challenge for most employees; that’s why decision-support tools and resources are vital to making this solution work.

• Employers need to learn about the value that defined-contribution arrangements bring, and how they differ from a defined-benefit plan. This is part of a compelling business case for employers to switch to definedcontribution plans. Employers need to be aware of tax and reform implications of switching to a defined contribution plan.

• Exchanges need to be on a flexible platform. This allows them to contract with several insurance carriers, and offer a wide range of products.

These products need to be simple and clear for employees to navigate.

The platform needs to deliver a robust online enrollment portal, and deliver unbiased decision support through a variety of channels including a call center, the Web, live-enrollment sessions, and health advocates.

• Private exchanges need to be managed efficiently. Administrative capabilities must include all aspects of benefit administration, reporting and account management. They must also include seamless interaction and exchange of information among carriers and plans offered, consolidated billing of all products purchased through the exchanges, and integration and facilitation of employee payroll deductions. H Dorothy Miraglia King is executive vice president of Engage, a HR outsourcing organization that provides HR and benefits to businesses nationwide.

The Engage PEO exchange allows employees to choose from a suite of health plans from a single insurer, as well as a variety of voluntary benefits, including dental, vision, life, and disability insurance as well as several non-insurance benefits.

Most of the benefits are offered with no minimum participation requirements. For more information, visit www.engagepeo.com.

FEBRUARY 2016

PRIVATE EXCHANGES

The Next Health Exchanges Have Already Been Built

by Joel White

P

ublic health insurance exchanges have cost American taxpayers more than $5 billion in establishment grants to the 17 states that received funding. Four of these state exchanges have failed, so 38 states or territories use the federal exchange, HealthCare.gov.

Although Obamacare required state exchanges to be self-sustaining by January 1, 2015, states have been allowed to continue spending federal grants under “no-cost extensions” for funding that was already awarded. Far from being self-sustaining, there appears to be a growing need for additional lines of credit for operational expenses. What’s even more concerning is that it appears that lack of oversight and serious operating deficiencies in the four failed states have meant that consumers and taxpayers paid for poor management, and will continue to pay in higher premiums and cost sharing as a result.

To address this issue, Congress included a provision in the report language of the Omnibus funding bill that requires states to notify the feds of any illegal use of grants for the operation of state exchanges. This notice must also include a detailed report on how states intend to recoup those funds.

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At the end of 2015, Rep. Rick Allen (R-GA) introduced legislation that would require states who shutter

their exchanges, such as the ones in Nevada and Hawaii, to report on how their funds were used, and return any - CalBrokerMag.com -

unspent funds to the federal government, which would be applied to deficit reduction. The bill also places enforcement in the hands of the feds.

This means that states that have mismanaged funds cannot also enforce the laws they may have skirted.

Instead of becoming more efficient and lowering costs, most state exchanges have simply raised fees on insurers. According to the Commonwealth Fund, assessments on insurance plans sold through state exchanges ranged from 1% to 3.5% of monthly premiums in 2015. The federal exchange, Healthcare.gov, charges its plan issuers a user fee to fund its operations equal to 3.5% of premium revenue. So what’s the problem?

These fees are then passed on to hardworking consumers in the form of higher insurance premiums.

Simply put, when costs go up, coverage goes down.

Moreover, taxpayers have footed the bill for exchange websites and still-evolving functionalities that have been available in the private sector for decades. Consumers have experienced difficulties getting accurate estimates of total out-of-pocket costs and confirming whether their preferred providers and prescribed medications CALIFORNIA BROKER | 33

PRIVATE EXCHANGES are covered across plan options.

It is clear that public exchanges have few incentives to control costs or provide user-friendly interfaces or the latest technology that has already been deployed in the private sector.

In contrast, private exchanges have to be efficient and keep costs low, or they will go out of business. Also, private exchanges cannot keep increasing prices or they will lose customers, so they tend to offer health insurance plans in a consumer-friendly manner and often at a lower price. These private companies are key to fixing the public health insurance exchanges.

Private exchanges with effective consumer-facing features exist today.

For example, online health insurance exchanges allow individuals, families, and small businesses to compare health insurance products from leading insurers side-by-side and purchase and enroll in coverage online.

Although private exchanges can sell insurance to individuals and employer groups, subsidies are only available on public exchanges. You may wonder why this is so. Private exchanges are not part of Obamacare. Accordingly, the federal government essentially has a monopoly on exchanges.

It doesn’t have to be this way. The private sector should be able to compete with government-based exchanges on a level playing field. This would encourage the private and public sectors to make needed improvements and other enhancements in order to keep current consumers and garner new ones.

NEXT GENERATION EXCHANGE PROPOSAL Congress has an incredible opportunity to modify the current construct of the exchange system to engage consumers, increase enrollment growth, and ensure financial sustainability by creating the next generation of health insurance exchanges. This would ease the sustainability challenge faced by states and the federal government while lowering premium costs to consumers.

Under the Next Generation Exchange proposal, the private sector would take on more responsibility for exchange functions that are exclusive34 | CALIFORNIA BROKER

ly provided by federal and state governments. The model would consist of four parts: PRIVATE SHOPPING WEBSITES We should allow private websites to compete directly with public websites, and reserve the functions of government, such as verifying subsidy eligibility and making payments to health plans, to the states and the feds. Since private shopping websites

“Private exchanges with effective consumer-facing features exist today… online health insurance exchanges allow individuals, families, and small businesses to compare health insurance products…” are likely to list the same health insurance products, they should compete for consumers based on these user experience and key-decision support tools: • Out-of-pocket cost calculators • Smart plan finder tools that allow consumers to prioritize and highlight best-fit options.

• Integrated and searchable provider networks and drug directories.

• Easy-to-understand cost information for common services and procedures.

A MODERN ELIGIBILITY PROCESS Shopping for health insurance should be akin to shopping via innovative web-based companies, like Kayak. com and Amazon.com. Many of these consumer-friendly websites offer multiple payment options, including credit cards, gift cards, and PayPal. To facilitate competition and allow for next generation private shopping websites, the federal government should contract with vendors to create a modern eligibility system that resembles the PayPal system. This would allow - CalBrokerMag.com -

subsidies to become portable so that low-income consumers could purchase coverage from any insurance or exchange website, public or private.

SIMPLIFIED SMALL EMPLOYER SHOPPING Private shopping websites should also provide a simplified health insurance shopping experience for small employers. These websites should allow small employers to use their tax credits to purchase traditional small group coverage. There should also be time-saving features, such as the ability to upload demographic files so employers can input data once and get health insurance pricing across multiple insurers.

A REVAMPED STATE CERTIFICATION PROCESS Each state should certify that there is at least one website that allows for the purchase of health insurance, shows the pricing of all insurers that offer individual market and small group coverage in the state, and offers a PayPal-like system for subsidies. States should also document and certify exchange expenditures and be held accountable for unauthorized uses of funds. Unused funds should be returned to taxpayers. This is essentially the Allen bill.

American consumers would benefit from a simplified health insurance shopping experience that is more responsive to their wants and needs.

The public sector’s strength is in regulation and enforcement of the rules of the road. Undoubtedly, that role should continue.

However, the private sector’s strength is in enhancing the consumer shopping experience. We should leverage the decades of expertise.

Faced with the potential financial collapse of some state exchanges, Congress should consider this commonsense Next Generation Exchange proposal to help consumers purchase health insurance that best fits their medical needs. We don’t need to rebuild the wheel that’s already been built in the private sector. H Joel White is president of the Council for Affordable Health Coverage. For more information, visit http://cahc.net.

FEBRUARY 2016

NEW PRODUCTS Recruiting Software. Hrsoft releases version 9.2 of its applicant-tracking software.

The cloud-based recruiting software is designed to improve the recruiter and hiring manager experience. In addition, the software continues to be refined to be completely responsive (mobile friendly) on a wide range of internet browsers used by clients. For more information, visit https:// hrsoft.com PBA. RxBenefits has received a significant investment from Great Hill Partners. RxBenefits provides pharmacy benefits administration to small to mid-sized, self-insured employers. The recapitalization, will allow the company to expand its sales and marketing, and product development. The company will also continue to evaluate partnership and acquisition opportunities, with additional equity capital available from Great Hill Partners. For more information, visit www.rxbenefits.com.

Aflac Contact Service Center Operations Achieves J.D. Power Certification. Aflac’s contact center operations has achieved J.D. Power certification for providing outstanding customer service for its live phone channel.

For more information, visit www.jdpower. com/about/index.htm.

Exchange-Traded Funds. Charles Schwab is offering John Hancock Investments’ suite of six strategic beta exchange-traded funds (ETFs). It offers investors and financial advisors access to commission-free ETFs. For more information, visit schwab.com/SchwabETFs. Marketing Book. Expressing gratitude and appreciation to clients makes a huge difference for your business, according to Michael F. Sciortino, Sr., author of the book “Gratitude Marketing.” Gratitude Marketing is a movement away from pushy sales tactics and toward engaging and connecting with people in a personal, authentic, human-tohuman manner,” he said. The goal of the approach is to increase client retention, referrals, and revenue. For more information, visit GratitudeMarketingBook.com.

Annuity. Vantis Life Insurance Company relaunched its multi-year guarantee annuity, Freedom I, with special features for retirees.

A version of the product was a best seller for the company in 2010. Freedom I features a return-of-deposit guarantee during the initial five years of the annuity. The minimum investment for the annuity is $5,000 and FEBRUARY 2016

the maximum is $500,000. Other features include the following: • A surrender-charge period that matches the guarantee period – five years.

• A terminal illness surrender-charge waiver.

•A nursing care facility surrender charge waiver.

• After the initial five-year 2% guarantee, the rate can never be lower than 1%.

• 10% free withdrawals after first contract year.

•A .M. Best Rating: A- Excellent.

For more information, visit http://www.vantislife.com/able.

Book on ObamaCare: Promises vs. Reality. Copernicus Healthcare released the book, “The Human Face of Obamacare: Promises vs. Reality and What Comes Next.” The book takes a comprehensive, non-partisan look at the ACA almost six years after its passage. Stories of patients illustrate continuing problems of the health care system. Underinsurance is the new norm. Narrowed networks, high deductibles, and increasing cost-sharing are forcing many people to forgo necessary care, according to the book. The book assesses three major alternatives for further health care reform. For more information, visit www.copernicushealthcare.org.

Online Medicare Drug Dashboard. CMS is releasing an online dashboard of Medicare prescription drugs for Part B and Part D. The tool displays spending, utilization, and trend data. It also includes descriptions of drugs, manufacturers, and uses. CMS is prohibited from publicly disclosing information on manufacturer rebates so the data used to select Part D drugs does not reflect manufacturers’ rebates or other price concessions. For more information, visit https:// www.cms.gov/Research-Statistics-Dataand-Systems/Statistics-Trends-and-Reports/Dashboard/Medicare-Drug-Spending/ Drug_Spending_Dashboard.html.

Great American Launches Accident and Health Insurance Programs. Great American Insurance Group launched its special risk accident and health insurance programs.

The company is offering an array of coverages designed to meet the needs of a variety of organizations, such as schools, day care centers, churches, civic groups, boys and girls clubs, camps, recreational organizations, and volunteer groups, among others. The coverage helps offset the cost of - CalBrokerMag.com -

accidental injuries that occur during an organization’s sponsored activities and events and supplements general liability coverage.

For more information, visit GAIG.com/AccidentandHealth.com.

Private Exchange. WebInsure Benefits marketplace has added several health and ancillary insurance carriers and benefit administrators. WebInsure Benefits is a single cloud-based platform for brokers to manage their employer group and individual business and simplify administration. New insurance carriers and benefit administrators include the following: • Assurant: Individual dental plans.

• Chard Snyder: FSA, HSA, HRA, transportation & parking reimbursement, COBRA, billing, and FMLA. • Guardian: Dental, vision, STD, LTD, Life, and AD&D. • HIC Group: Short-term medical; dental and vision; prescription discount plan; accident, sickness and hospital plans; critical illness; telemedicine; and life insurance.

• HSA Bank: HSA, FSA, HRA, premium reimbursement account, defined contribution plans, and transit and commuter benefits.

• The IHC Group: Health, life, disability, dental, vision, limited benefit, hospital indemnity and medical stop-loss insurance solutions to individuals and groups.

• Renaissance Dental.

For more information, visit www.hcentive.com ACA Management Software. Passport is offering ACA management software with simple employee data entry screens for easy setup. Users can anticipate ACA-related obligations to avoid penalties. Employers can track offers of insurance, calculate safe-harbor options, and monitor employee hours. It includes 1094-C and 1095-C reporting with electronic filing as required. For more information, visit http://www.pass-port.com/ aca-management-software.

ACA Compliance Navigator. Businesses that are required to deliver the new Affordable Care Act (ACA) 1094 and 1095 forms may be worried if they don’t have a plan for filing. PrimePay’s new ACA Compliance Navigator is open for enrollment until Dec. 31. Primepay says that it is the only platform that gives businesses time to meet the 2016 deadlines for 2015 calendar-year returns. For more information, visit http://primepay.com/ aca-compliance-reporting. H CALIFORNIA BROKER | 35

LIFE SETTLEMENTS

A Primer on Life Settlements For Healthy Insureds

by Robert Stark

A

life settlement is the sale of a life insurance policy for more than its cash-surrender value. For a policy owner, a life settlement is not an investment to buy existing life insurance policies, not a loan to finance existing life insurance policies, not a strategy to get new life insurance coverage for any means, and not a trick to take policies from senior citizens. It is one of several options for a policy owner to consider in the final disposition of a life insurance policy including lapsing the policy, surrender it, or allow it to run its course.

Over the years, we have heard a lot of rhetoric that life settlements are evil. They are going to be the next subprime crises or perhaps the life settlement business will take down one of the major carriers. None of that is true.

Not only is a life settlement transaction legal and heavily regulated, but it’s 36 | CALIFORNIA BROKER

also quite consumer friendly.

We know life insurance companies are opposed to them for obvious reasons. Employees of certain companies are actually forbidden to disclose to their clients the existence of the life settlement market.

A California policy owner is suing Lincoln National because an agent failed to disclose the existence of the life settlement market. It will be interesting to see how the court rules in the case of Larry Grill, et al. v. Lincoln National Life Ins. Co., 5:14-cv-00051JGB-SP, C.D. Cal. But the point is clear; if you have clients who fit the life settlement profile (65 or older and $500,000 in a death benefit), at the very least, they should be made aware of the existence of the option, regardless of whether an advisor or firm can participate or profit in the transaction.

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A MARKET OPPORTUNITY Approximately $57 billion is surrendered or lapsed annually in universal and variable universal policies insuring the life of a senior, according to the Life Insurance Settlement Assn. This number balloons to over $110 billion when you consider term and whole life policies. Nine policies are surrendered or lapsed for each life insurance policy traded through a life settlement.

Our collective clients lapse a saleable policy every two minutes.

Ninety percent of seniors who surrendered or allowed a policy to lapse would have considered a life settlement if they were aware of the option, according to the Insurance Studies Institute. Clients are unknowingly abandoning billions of dollars in value when you look at the growing demographic and the general lack of FEBRUARY 2016

LIFE SETTLEMENTS awareness of the life settlement option. They are likely missing out while assuming that their trusted advisors have informed them of all options. If these abandoned polices got an offer of just 5% of the face amount, policy owners left about $3 billion in settlement value on the table last year, mostly unknowingly.

Without a doubt, the life settlement market has experienced a significant rebound. The competition for policies is at a post-2009 high and with continued institutional interest, there is no reason to think this will slow. That said, volume for the life settlement market is still somewhat limited, due partly, to a lack of awareness, and in some cases, concealment.

EVOLUTION: NO MEDICAL UNDERWRITING In today’s market, buyers are getting more creative in order to deploy more capital. One example is the no life expectancy (no LE) program. Here, a buyer forgoes medically underwriting the insured. The life settlement value is determined by coupling the policy purchase with a single premium annuity (SPIA). Income from the annuity is used to pay future premiums.

CASE EXAMPLE: Insured Male 75 Policy Size

$4 million

Policy Type

Survivorship universal life with the female deceased

Cash Value $200,000 Life Expectancies AVS 176 months (110%) /21st 189 months (1.24) This trust-owned policy was set up to benefit the insured’s children, but the trust minimally funded the policy.

As a result, significant catch-up premiums are due, which no one involved wants to pay.

Based on the insured’s good health, there was little opportunity to sell this policy in the traditional life settlement market. However, a no LE buyer made this case work when it would have otherwise been a decline and disappointment for the insured, trustee, and the referring life insurance agent.

Gross Life Settlement Offer $425,000 FEBRUARY 2016

WHAT’S IN IT FOR THE BUYER: SYNTHETIC BOND CREATION? It makes sense to view this from a buyer’s perspective to understand why an opportunity exists when medical underwriting is irrelevant. First, let us look at this strategy as if it were a bond. A bond investor lends money to earn a rate-of-return for a period of time, called a “coupon.” At the end of the investment period, the investor experiences a return of their principal investment.

In our scenario, while the annuitant is living, the buyer collects the annuity payments. These payments are used to pay premiums on the policy that was purchased as a life settlement with the overage cash flow being the buyer’s return-on-investment, or in bond terms, their coupon. Upon maturity of the annuity (death of the annuitant/ insured), annuity cash flow ceases, and the buyer gets a lumpsum payout from the life settlement policy, which is equal to their initial investment. While the buyer’s investment is in place, their principal is protected by the insurance hedge. The annuity cash flow is backed by a highly rated insurance carrier.

Let’s look at the Case Example again. [Estimates are used here because we do have final information relating to the SPIA (final investment and final yield)].

Buyer’s Investment

Life Settlement

$425,000

$3,575,000

Annuity (SPIA)

Total Investment $4 million

Annual Cash flow

Annuity $327,316

ed insurers. In the future, when you think of buyers purchasing policies without medical underwriting you might no longer think of these buyers as crazy or reckless. These buyers are seeking healthy insureds because their continued returns depend on life and not death.

WHO QUALIFIES The no LE sale is a perfect life settlement when the insured is generally healthy. Buyers seek insureds who are male 75 or older or female 77 or older and when universal life policies were issued at preferred rates. This program does not work well with term conversions or survivorship policies when both insureds are living.

EASE OF PRICING INDICATION Pricing cases for the no LE market is relatively simple. An offer is generally available within 24 hours with an appropriate illustration and relevant application and state disclosures for compliance reasons. This is much different and considerably faster than the several week long process of a traditional life settlement.

A life settlement (traditional or no LE) is a great option in certain circumstances. Its availability must be part of all life insurance policy final disposition discussions. When an insured is thought to be relatively healthy, a no LE evaluation is a fantastic non-invasive way to test the market to establish or reaffirm expectations. Regardless of the option chosen, it is important to educate policy owners of the alternatives to lapsing and surrendering their valuable life insurance assets. H

Robert Stark is the president of Melville Capital, LLC when he oversees the implementation of

Life Insurance ($39,708) operational strategies including asset valuation, Premium transaction marketing and closing and compliance. Robert has worked in finance, lending, Overage $287,608 structured assets or life insurance for over 22

Rate of return 7.2% years. He has directly been involved in over $3.5

billion of life-contingent structured finance transUpon Maturity actions. Robert holds his series 7 and 63 licenses

Cash flow $0 as well as is a licensed life insurance agent and

Death Benefit $4 million life settlement broker in numerous states. Robert earned a B.S. in Finance from the University of

The buyer has created a fixed and Maryland at College Park, and his Master of Busihedged return that is uncorrelated to ness Administration from New York University’s the markets and backed by highly rat- Stern School of Business.

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CALIFORNIA BROKER | 37

LIFE INSURANCE

The Trends That Are Shaping

Today’s Wealth Transfer Policies

A

variety of economic, demographic, and market factors bring an unprecedented opportunity for wealth-transfer planning.

First and foremost, we are arguably in the friendliest federal estate tax environment ever. Under current law, individuals can pass on up to $5.43 million estate tax free to their heirs. Married couples can leave double that amount – nearly $11 million. Some clients have been hesitant to use life insurance for wealth transfer because it has involved creating trusts and relinquishing access to their money. They can now enjoy all the benefits of life insurance and maintain control of the policy.

Favorable market returns are also creating new wealth-transfer opportunities. With the stock market achieving strong growth since the 2008 market crash, many clients have restored their retirement nest eggs and are better positioned to leave a legacy to their family or favorite cause. But they are understandably concerned that their gains could be erased by the next inevitable market correction, and leave a diminished estate for their heirs. Life insurance is an appealing solution. A client can reposition earnings and gain leverage with a non-correlated asset that is earmarked for their heirs. This way, the increased life insurance benefit can be a hedge against market volatility and secure the legacy the client wants to pass on.

With the Baby Boomers aging, more clients than ever are in their retirement years. Most often, the client’s primary goal, after providing a secure and comfortable retirement, is wealth 38 | CALIFORNIA BROKER

transfer. Clients recognize that many of the financial opportunities available to them, such as an affordable education, employer-provided pensions, and Social Security, may not be available for younger generations. They want to provide enough assistance for their loved ones to live full and comfortable lives. At the same time, many families’ inheritance disappears once it is transferred to the second and the third generations. Seventy percent of wealthy families lose their wealth by the second generation, and a staggering 90% lose it by the third generation, according to a recent study by the Williams Group Wealth Consultancy. Only one in five of high-net worth parents agrees strongly that their children will be well prepared to handle family wealth they are likely to inherit, according a study by US Trust. The good news is that life insurance and a properly designed trust can be powerful wealth-transfer tools to help clients’ ensure their legacy while controlling the amount and time frame in which beneficiaries receive their inheritance.

1. HOW ARE CONSUMERS USING WEALTH TRANSFER POLICIES IN LIGHT OF THESE TRENDS? First and foremost, appropriate candidates for wealth transfer policies are 65 to 80, and are comfortably secure in their retirement. These consumers want to leave a legacy. We often recommend using life insurance because it offers a liquid, predictable, and defined death benefit. Also, the internal rate-ofreturn on the death benefit at life expectancy is generally 6% to 7.5%, and - CalBrokerMag.com -

the proceeds from life insurance generally pass to heirs income tax-free. Life insurance offers a competitive rate-ofreturn on their premiums, especially for Baby Boomers and older retirees whose risk tolerance is lower.

Clients are also utilizing many features of life insurance that are useful during one’s lifetime. Life insurance cash values grow on a tax-deferred basis, and can be accessed through loans and withdrawals, allowing clients to put wealth-transfer plans in place while maintaining financial flexibility. If the client’s needs change, the cash value can be a source of funds to reduce premiums, adjust coverage, or simply help pay for college tuition, a wedding, or emergencies. Living-benefit riders are frequently included or purchased with policies to help prepare for potential long-term care needs.

FEBRUARY 2016

LIFE INSURANCE values and goals.

Second, advisors should consider which policy options their client will need. For example, suppose a married couple doesn’t need the life insurance individually, but purely as a vehicle to transfer wealth to heirs. A survivorship policy that pays the benefit upon the second death of the couple would be an appropriate choice. Purchasing a survivorship policy rather than two individual policies will increase leverage versus premium paid. Other policy features to consider are important riders, such as chronic illness or long-term care, which is often critical as clients age.

Finally, advisors should make sure that the policy offers the flexibility of a cash-value design, so the policyholder can access the premiums accrued if a financial or health crisis arises later in life. With this type of policy, clients may have the flexibility to unwind premiums they paid into the policy, use the cash value to pay premiums rather than pay out-of-pocket, or reduce the death benefit so they have lower premiums.

1. WHAT SHOULD CONSUMERS CONSIDER WHEN THEY ARE THINKING OF USING LIFE INSURANCE FOR WEALTH TRANSFER? Clients must have a desire to leave a legacy to loved ones, a charitable organization, or educational institution.

They should have liquid assets that are not earmarked or needed for their retirement income or potential risks, such as a major health crisis. To put it into numbers, a good guideline for this strategy is to consider it for clients with $500,000 or more in investable assets.

The other key consideration is that clients need to be healthy enough to qualify for the life insurance at premium rates that make sense. If they are reasonably healthy with no serious chronic health conditions or risk facFEBRUARY 2016

tors, the policy should offer affordable premiums and leverage to help make life insurance an attractive wealth trans­fer strategy.

Lastly, it is crucial to plan 10 to 15 years down the road and design a flexible plan since a client’s financial situation and goals will surely change.

Advisors should make sure that clients have options if they need to modify or exit a policy.

1. HOW SHOULD AN ADVISOR RECOMMEND WEALTH TRANSFER AS PART OF THE RETIREMENT PLANNING PROCESS? Advisors should take the time to learn about a client’s life, family, and interests. A client’s legacy is very personal, so the advisor should make sure that the proposed strategy reflects their - CalBrokerMag.com -

1.WHAT ARE THE BIGGEST WEALTH TRANSFER TRENDS FOR 2016?

With the upcoming election, we’re keeping an eye out for what could happen to estate-tax laws since it will directly affect wealth transfer. Estate-tax laws seem to ebb and flow in terms of thresholds and rates, and are likely to continue to change. This will be especially important to pay attention to for clients with assets totaling $1 million and above.

On the product front, we expect to see continued innovations with more survivorship policy options and more cash-value products. Living benefits are becoming much more prevalent, increasing competition among carriers. We expect to see an expansion in the qualifying events that trigger the claims process as well as entirely new features associated with these LTC and chronic-illness riders. Life insurance policies have been a great value proposition for the beneficiaries; these enhancements bring significant value for the insured as well. H Palmer Williams is national sales director of Saybrus Partners.

CALIFORNIA BROKER | 39

401(k)

New 401(k) Regulations for Employers

by Ellen Bartholemy

W

hen selling 401(k)s and other qualified retirement plans, it’s important for insurance and financial brokers to be educated in the latest regulations and guidelines. Especially when it comes to fees, employers are looking to their brokers to outline their fiduciary responsibilities and help them choose the plan that is appropriate for their business structure and is in their employees’ best interest.

The recent Supreme Court ruling (Tibble v. Edison International) makes this responsibility even more apparent. The lawsuit focused on whether financial professionals on Edison’s investment committee violated their fiduciary duty by making a selection that led to higher fees. They selected retail-share classes instead of individual mutual fund shares. The court ruled against Edison and decided that employers are responsible for continually monitoring the 401(k) fees charged to plan participants and ensuring that the plan continues to be in the best interest of employees.

Under the Employee Retirement Income Security Act (ERISA), employers have been responsible for initial plan and investment selections. ERISA sets minimum standards for the administration of employee benefit plans and 40 | CALIFORNIA BROKER

provides regulations for fiduciary duty as well as plan funding, participation, vesting, and accrual.

The new Supreme Court ruling protects employees even further; it’s prompting many employers to re-evaluate their 401(k) investment options and potentially change providers. For those who are offering a 401(k) plan for the first time, it will be even more important to evaluate each plan with a critical eye. This is where insurance and investment brokers are more valuable than ever. Employers need extra help selecting an appropriate plan as well as continual support to ensure that they don’t breach fiduciary duty each year their plan is in place.

According to the Dept. of Labor (DOL), fiduciary responsibilities include the following: • Acting in the sole interest of plan participants and their beneficiaries.

• Carrying out their duties prudently.

• Following the plan documents (unless inconsistent with ERISA).

• Diversifying plan investments.

• Paying only reasonable expenses.

Insurance brokers, financial advisors, attorneys, and CPAs are not fiduciaries; they have no legal responsibility for a plan’s administration. They serve as advisors and are there to pro- CalBrokerMag.com -

tect the business itself. For example, a broker who sold a plan that became subject of a lawsuit would not typically be held responsible for reimbursing employers or employees for any penalties, fees, or other resulting damages.

However, in April 2015 the DOL proposed redefining a fiduciary as anyone who provides fee-based investment advice to the following entities: • ERISA–covered employee benefit plans FEBRUARY 2016

401(k)

• Plan fiduciaries • Plan participants • Plan beneficiaries • IRA plans or IRA owners If approved, the proposed rule would hold financial advisers, planners, brokers, investment managers, and others to ERISA’s fiduciary standards as well as prohibited transaction requirements and required disclosures. Existing rules only hold non-fiduciary advisers to a suitability standard, meaning FEBRUARY 2016

that they can sell products that generally fit an investor’s needs and risk tolerance without disclosing conflicts of interest.

Of course, clients can take legal action for negligence and other issues, so brokers still need to to communicate regulations to clients and, when appropriate, refer them to a CPA or attorney for further counsel. Choosing a CPA firm that specializes in ERISA audits will help protect the assets of - CalBrokerMag.com -

the employee benefit plan and ensure that the funds are available to pay the promised benefits to employees. An incomplete or late filed report can result in significant penalties for the plan administrator, so choosing an experienced auditor is very important.

ERISA audits are generally required for companies with more than 100 employees, and include the following areas: • Valuation of plan assets and plan obligations.

• Timeliness of contributions.

• Evaluation of whether benefit payments were made in accordance with plan terms.

• Determination if participant accounts are fairly stated.

• Determination if any transactions prohibited by ERISA. • Review of annual 5500 form.

In addition to audits, CPA firms that specialize in employee-benefit plans will also report on any significant problems encountered, and can suggest how the employer can improve their internal control and plan operations.

A CPA firm with experience in auditing ERISA plans can help employers document their thought processes behind benefit plan decisions, providing a rationale that could protect them in a lawsuit.

In the end, retirement plan benefits are wonderful recruiting and retention tools for employers. They can have significant tax benefits, but they also open businesses up to potential litigation. To reduce the risk, make sure that your clients are informed of their responsibilities from the start, and that you are in touch after you make the initial sale so they can continue to offer the best plan possible. With the new proposed fiduciary regulations, this could become more important than ever. H Ellen Bartholemy is the director of Accounting Services at Hall & Company CPAs, an independently owned accounting firm in Irvine, Calif. She has more than 25 years of experience in public accounting. Bartholemy has extensive experience with financial audits, reviews and compilations of closely held companies. For more information about Hall & Company, visit www.hallcpas.com or call 949-910-4255. Ellen can be contacted at eb@ hallcpas.com.

CALIFORNIA BROKER | 41

NEWS

NEWS HEALTHCARE IRS Extends ACA Reporting Deadlines The IRS issued a two-month extension for employers and issuers to report on offers of health coverage and coverage provided. The deadlines for reporting to the IRS by paper have been extended to May 31 or June 30 for electronic submissions. Greatland Corp. advises employers to continue with preparations as if the deadlines had not been pushed back. Bob Nault, Greatland’s CEO said that waiting until the last minute can lead to failure to file 1095 forms for the 2015 tax year, which could bring penalties of up to $1 million on small businesses. Maximum penalties to payers for failure to file correct information returns, including furnishing an incorrect name/TIN to IRS are $3 million/year ($1 million for small businesses).

Janice Kreuger, ACA subject matter expert for Greatland said, “We are hearing from a lot of businesses that think the IRS will not enforce fines for the 2015 reporting year.

This is simply not the case. The IRS will not fine employers and insurers for mistakes. However, they still need to file and file on time, even with the extended deadlines.”

The IRS imposes the following fines for returns filed beginning January 1, 2016: • $50 per information return if you file correctly within 30 days of the due date.

• $100 per information return if you file correctly more than 30 days after the due date, but by August 1.

• $250 per information return if you file after August 1 or you do not file required information returns.

• $500 for a return for intentional disregard with no maximum penalty.

For more information, visit www.greatland.com.

A Snapshot of Consumer-Driven Health Plans A recent survey by EBRI and Greenwald & Associates finds the following about consumer driven health plans (CDHPs): • 13% of the privately insured population are enrolled in a CDHP; 11% are enrolled in a high-deductible health plan (HDHP); and 76% are enrolled in more traditional coverage.

42 | CALIFORNIA BROKER

• 26 million people with private insurance are enrolled in a CDHP—a health plan associated with a health savings account (HSA) or health reimbursement arrangement (HRA), or an HSA-eligible health plan.

• 6 3% of people in CDHPs have opened an HSA, 13% are in an HRA, and 24% are in an HSA-eligible health plan, but have not opened an HSA. • People in a CDHP or an HDHP are more likely to have cost-conscious behaviors compared to those in traditional plans. They are more likely to have checked whether the plan would cover care; asked for a generic drug; talked to their doctors about prescription options and costs; asked a doctor to recommend a less costly drug; talked to their doctors about other treatment options and costs; developed a budget to manage health care expenses; and used an online cost-tracking tool provided by the health plan.

• People in a CDHP are more likely to have talked to friends, family, or colleagues about the plans; attended a meeting where health plan choices were explained; and consulted with their employer’s HR staff about health plan choices.

• People in an HDHP are more likely to have visited the health plan’s website to learn about their plans; talked to friends, family, or colleagues about the plans; used other websites to learn about their choices; and consulted with an insurance broker to understand their plan choices.

• CDHP enrollees are more likely to take advantage of wellness programs, such as health-risk assessments, and health-promotion programs, and biometric screenings.

• Financial incentives mattered more to CDHP enrollees than to traditional-plan enrollees.

For more information, visit ebri.org.

Many Insured Patients Still Face Crushing Medical Debt A recent Kaiser Family Foundation/New York Times study reveals that one-in-five working-age Americans have run into serious financial difficulties trying to pay medical bills despite being insured. In the survey, 62% of those with

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FEBRUARY 2016

NEWS • Those in higher deductible private plans are more likely to report medical bill problems than those in private plans with lower deductibles (26% versus 15%).

• Sixty-one percent of those with medical bill problems say they’ve had difficulty paying other bills as a result of their medical debt, and 35% say they were unable to pay for basic necessities like food, heat, or housing.

Read the Kaiser Family Foundation/New York Times survey here: http://kff.org/health-costs/press-release/newkaisernew-york-times-survey-finds-one-in-five-workingage-americans-with-health-insurance-report-problemspaying-medical-bills/.

medical bill problems say the bills were incurred by someone who was insured, with 75% saying that the amount they had to pay for their insurance copays, deductibles, or coinsurance was more than they could afford. They reported skipping or putting off other health care in the past year because of the cost, such as postponing dental care, skipping doctor-recommended tests or treatments, or not filling a prescription. For out-of-network charges, 69% said they were unaware that the provider was not in their plan’s network when they received the care.

Consumer Watchdog says that PPO health insurance policies with very narrow provider networks and extremely limited out-of-network coverage are a new form of “junk insurance.” The group says that many patients cannot find competent in-network doctors, and then face huge medical bills due to extraordinarily limited coverage for out-ofnetwork services.

Jamie Court, president of Consumer Watchdog said, “New PPO policies with very limited providers in-network and extraordinarily low benefits out-of-network are creating new express lanes to bankruptcy for families. Until insurance companies are forced to justify that their premiums, co-pays, and policy benefits are reasonable, too many families will be forced to choose between medical bills and other necessities of life, like paying their mortgage. These findings should shake up the statehouse and revive the regulation debate.”

In 2014, Consumer Watchdog sponsored Proposition 45, which would have allowed the insurance commissioner to make health insurance companies justify their rate hikes under penalty of perjury, and to reject excessive rate increases.

Other findings in the Kaiser/New York Times survey include the following: • 26% of insureds with problems paying medical bills say they received unexpected claim denials; and 32% say they received care from an out-of-network provider that their insurance wouldn’t cover.

FEBRUARY 2016

EMPLOYEE BENEFITS 2015 Study Reveals Gaps in Wellness Programs Fifty-three percent of about 6,000 consumers who were enrolled in health plans in 2015 say it’s not easy to understand their health information or how to maintain or improve their health, according to HealthMine’s research. Forty-six percent of consumers with a chronic condition discovered their illness through a wellness program. The study also revealed the following about consumers: • Less than one third know their key health metrics including their blood pressure, cholesterol, BMI, and blood sugar.

• 5 3% can’t access all of their clinical health data from a computer. Another 39% can’t access all of their clinical and behavioral (collected by apps/trackers) health data from a single source.

• 5 3% say it’s not easy to understand their health information or how to maintain or improve their health.

• 55% want help from their healthcare plan in setting personal health goals. Another 65% want reminders about critical health actions, such as prescription refills and annual health exams.

• 4 4% stay engaged in their wellness program throughout the year while 27% say that lack of time keeps them from engaging.

• 55% say that wellness incentives have not been not meaningful, and little more than half actually earn all of their available incentives each year.

• 38% say their wellness program helps them manage their costs.

• 81% of wellness programs do not include a price comparison tool.

For more information, visit www.healthmine.com.

IN CALIFORNIA Major Health Insurance Changes For The New Year Covered California is reminding consumers and small businesses about important changes in 2016. Starting January 1, Covered California increased access to plans and providers and offered more health plans, and increased the number of benefits that are not subject to a deductible. Here is a run-down of the changes:

Most California Consumers Get New Forms for the 2015 Tax Year This year, consumers who are insured through their employer or a government program, like Medi-Cal, will get Form

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CALIFORNIA BROKER | 43

NEWS 1095-B or Form 1095-C. The forms show who maintained minimum essential coverage and is not liable for the tax penalty. Consumers under Covered California will continue to get a Form 1095-A. For more information, visit https://www. irs.gov/Affordable-Care-Act/Questions-and-Answers-aboutHealth-Care-Information-Forms-for-Individuals.

The Penalty for Not Buying Affordable Insurance Is Going Up — A Lot The IRS penalty applies to people who go without insurance when they can afford to buy it. It will increase for 2016 to at least $695 per adult and $347.50 per child under 18 or 2.5% of household income, whichever is greater. A recent study by the Henry J. Kaiser Family Foundation estimates that the average household penalty in 2016 will be $969, which is a 47% increase from 2015. For more information, visit www.taxpayeradvocate.irs.gov/estimator/isrp.

New Requirements and New Options for Many of California’s Small Businesses Employers with more than 50 full-time-equivalent (FTE) employees must offer health insurance to employees or pay a penalty. Through 2015, this requirement applied only to businesses with more than 100 employees. Any of these employers with an employee who does not take their offer of coverage will have to pay a penalty if the employee goes on to get financial assistance to purchase coverage through Covered California. For more information, visit https://www.irs.gov/Affordable-Care-Act/Employers/ACAInformation-Center-for-Applicable-Large-Employers-ALEs. Covered California for Small Business will expand beyond the ceiling of 50 employees to serve companies employing 100 or fewer FTE employees. For more information, visit www.CoveredCA.com/ForSmallBusiness.

Major Improvements in Choice, Access and Benefits Covered California used its power as an active purchaser to hold down rate changes for a second year. Before the Affordable Care Act, consumers regularly experienced double-digit premium increases. For 2016, Covered California negotiated a weighted average change of 4%, which is lower than last year’s change of 4.2%. In addition, nearly 90% of Covered California enrollees get some financial assistance to help pay premiums. On average, those subsidies resulted in more than $5,200 for each household in 2014. Benefit Changes for the 2016 coverage year: • The majority of Bronze plan consumers now get three office visits a year to a primary care provider or specialist with no deductible. Other needed services, such as lab tests and rehabilitation, will not be subject to a deductible.

• Covered California’s Silver plan will combine copay and coinsurance into a single product. Every doctor visit, lab test, and prescription will not be subject to a deductible in this single product. Consumers with chronic conditions will be protected by a cap on specialty drugs. The vast majority of consumers will see their specialty drugs capped at $250 per month, per prescription. Plus, because of Covered California’s standard benefit design, the caps must be offered by every health insurance plan in the individual 44 | CALIFORNIA BROKER

market and by all plans offered by the exchange.

For more information, visit http://news.CoveredCA. com/2015/05/covered-california-board-protects.html.

Adult dental coverage is now offered as an add-on.

6% of Covered California consumers will be able to choose from at least three health insurance companies thanks to the addition of two new health insurance companies — UnitedHealthcare Benefits Plan of California and Oscar Health Plan of California as well as the expansion of Blue Shield of California and Health Net. More than 90% of hospitals (general acute centers as designated by the California Office of Statewide Health Planning and Development) in California will be available through at least one health insurance company, and 74% will be available through three or more companies.

Medi-Cal Coverage for Undocumented Children Medi-Cal will be expanded to all children regardless of their immigration status. The new law goes into effect in May 2016.

Health Care Improvements for All Californians Starting July 1, health plans must publish and maintain printed and online provider directories. Health plans must maintain accurate provider directories, including routine updates. For more information, visit http://leginfo.legislature. ca.gov/faces/billNavClient.xhtml?bill_id=201520160SB137.

A new state law will require health plans and insurers to implement formula-tier requirements and cost-sharing caps similar to products offered through Covered California. Assembly Bill 339 requires plans and insurers to have formularies that do not discourage the enrollment of people with certain health conditions. It also sets requirements regarding access to in-network retail pharmacies, standardized formularies, and coverage for certain single-tablet HIV and AIDS treatments. For more information, visit http:// leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_ id=201520160AB339.

The Fight to Slash Drug Prices Headed for 2016 California Ballot The AIDs Healthcare Foundation has collected enough California voter signatures to qualify for the November 2016 ballot. If the ballot initiative passes, state programs cannot pay more for prescription medications than the prices negotiated by the Dept. of Veterans Affairs. The Foundation has a similar ballot drive in Ohio.

“VA pricing is, by far, the lowest pricing available to any government agency for the purchase of prescription drugs for use in state programs…If California and Ohio are able to pay the same prices for prescription drugs as the amounts paid by the Dept. of Veterans Affairs, it would result in significant savings to taxpayers. These ballot initiatives are necessary and appropriate to address public concern about runaway drug pricing,” said Michael Weinstein, president of AIDS Healthcare Foundation.

“Nationally, prescription drug spending increased more than 800% between 1990 and 2013, making this one of the fastest-growing segments of health care. Spending

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FEBRUARY 2016

NEWS on specialty medications, such as those used to treat HIV/ AIDS, Hepatitis C, and cancers, are rising faster than other types of medications. Total spending on specialty medications increased more than 23% in 2014 alone,” said Tracy Jones, executive director of the AIDS Taskforce of Greater Cleveland.

Pharmaceutical Research and Manufacturers of America (PhRMA) has established a fund of more than $10 million to fight the California Drug Price Relief Act. Johnson & Johnson is the largest contributor, with $5.86 million donated to date. These drug makers also contributed millions of dollars to oppose the measure: Amgen ($4.265 million), AstraZeneca Pharmaceuticals LP ($4.15 million), AbbVie Inc. ($4.15 million), (Novartis ($2.88 million), Eli Lily ($2.88 million), Bristol-Myers Squibb Co. ($2.88 million), Otsuka America ($1.075 million), and Purdue Pharma LP ($1.105 million) The Foundation is fighting back at the Johnson & Johnson’s headquarters starting his week in New Brunswick, N..J. by driving trucks near the headquarters with mobile billboards that say, “No More Tears for Greed.” The Foundation resorted to using trucks when an outdoor advertising company refused to run paid billboards from the Foundation. The ads will also appear in nearby transit stations. In addition, street teams have begun distributing palm cards near the Johnson & Johnson campus. For more information, visit www.aidshealth.org.

RISING INTEREST RATES ARE GOOD FOR THE LTC INDUSTRY

The decision by the Federal Reserve to raise short-term interest rates will spell good news for the long-term care insurance industry, states Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI). Higher interest rates will enable insurers to avoid increasing premium rates with new policy offerings. According to AALTCI data, a 1% increase in long-term interest rates can translate into a 10% to 15% decline in policy premiums. Companies offering LTC insurance policies will earn FEBRUARY 2016

more money on the reserves they set aside to pay future claims. Slome says that the rise in interest rates may also encourage insurers to re-enter the marketplace. Slome said that higher interest rates will benefit safe investments and insurance products like long-term care insurance.

One-year CD rates were roughly 5% in 2000 and in the 4% range before the Great Recession in 2007. Interest rates have been at historic lows since then, which has affected savings accounts, CDs, annuities, life insurance, and long-term care insurance products, he explained. For more information, visit Walpurgisnacht.

LIFE INSURERS TO BENEFIT FROM RATE HIKES Gradually rising interest rates provide significant benefits for all major life insurance and annuity products, improving reinvestment rates, interest margins and reserve adequacy, says Fitch Ratings. Life insurers would benefit if a rise in short-term rates leads to a rise in long-term rates over the coming year. But they must manage certain risk factors.

Rising interest rates could increase liquidity stresses. There could also be an uncertain statutory capital effect associated with variable annuities. (Statutory capital is the amount of capital and/or surplus that an insurance company must have to be licensed to do business).

Also, if interest rates rise too fast, policyholders may surrender policies faster than expected, which could lead to cash flow obligations that exceed investment returns. Fitch expects the life insurance industry outlook to shift to negative if longer term rates decline to levels seen in late 2012 (i.e.

10-year Treasury below 1.75%) and stay low beyond 2016.

LIFE INSURANCE & LONG-TERM CARE Interest Rates, Economy Are Still Concerns in 2016 Insurance executives surveyed by LOMA expect modest growth due to interest rates and the economy. Neil Sprackling, president of Swiss Re Life & Health America said, “The life industry is in transitional recovery mode. We’re still suffering from the hangover of the financial crisis and what now looks like long-term low interest rates. So, do I predict rocketing sales and significantly higher profits in 2016? No, however, my optimistic nature tells me that we’ve turned a corner.” Most executives agree with the following: • Technology will continue to have a profound effect; digitization may change how products are developed. Predictive analytics, automated underwriting, and smart phones are all mentioned as important. But the industry is also looking at emerging technologies, such as wearables and gamification, which may bring even more dramatic changes.

• Quality service will be a key to retaining customers. Power has shifted from companies to consumers. Consumer expectations are increasingly based on experiences with other companies that use leading-edge technology.

• Human capital is a big concern. Millennials coming into the industry are looking for the opportunity to work for the greater good and to make a difference. Some say that companies that have a strong digital strategy stand the best chance of recruiting the best talent.

For more information, visit www.loma.org. H

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Word & Brown saythewordbroker.com 800-255-9673 (Northern CA) 800-560-5614 (Los Angeles) 877-225-0988 (Inland Empire) 800-869-6989 (Orange) 800-397-3381 (San Diego)

FEBRUARY 2016

Amazing mysteries of our universe revealed!

Our universe is health insurance. And unless you’ve been asleep at the wheel you’ve probably noticed that some mighty strange things have been happening around these parts.

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Welcome to Broker’s Paradise™

San Jose: 877-724-4671 • Sacramento: 866-405-2790 • San Diego: 800-872-0459 • Los Angeles: 877-654-3050 ©2011 Rogers Benefit Group

Please Circle #47 on the Free Information on Page 46 Please Circle #47 on the Free Information Form on Page 46

Meet Jenny.

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