california broker july 2016

VOLUME 34, NUMBER 10 SERVING CALIFORNIA’S LIFE/HEALTH PROFESSIONALS & FINANCIAL PLANNERS JULY 2016

Toothy ToonsOur Annual Dental Survey

Also Inside:Covered California • ACA

Annuities • ACA Flex CreditsCOBRA • Medicare

Telehealth • Self-FundingCritical Illness

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ALSO IN THIS ISSUE:Guest Editorial .........................6Annuity Sampler .....................8New Products ...................... 42

News ....................................... 43Classified Advertising ....... 46Ad Index ................................. 46

PUBLISHERRic Madden

email: [email protected]

EDITOR-IN-CHIEFKate Kinkade, CLU, ChFC


SENIOR EDITORLeila Morris


ART DIRECTOR/PRODUCTION MANAGERSteve Zdroik

ADVERTISINGScott Halversen, V.P. Mktg.


CIRCULATIONemail: [email protected]

BUSINESS MANAGERLexena Kool


LEGAL EDITORPaul Glad

EDITORIAL AND PRODUCTION:McGee Publishers

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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.

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JULY 2016

TABLE OF CONTENTS

- CalBrokerMag.com -4 | CALIFORNIA BROKER JULY 2016

HEALTHCARE

Covered California – Keeping Your Small Group Out of the Penalty Box

by Chris PattonThe recent

expansion of the small group definition has led to new requirements, new definitions, new access to health benefit offerings, and newly improved products.

ACA Flex Credits for Section 125 PlansHow Flex Credits and Opt Out Cash Affect Health Plan Affordability Standards

by Toney ChimientiOn December 17,

2015, the IRS issued notice Notice 2015-87. Among other things, it lays out which em-ployer contributions can be counted toward the ACA’s minimum affordability standards for employer sponsored coverage.

COBRA

Complexity ofCOBRA Holds Truefor Three Decadesby Lisa A. Turner

How to stay current and diligent with your COBRA processes and procedures.

Five Common COBRAMistakes to Avoid

by Dan TaylorMaking a COBRA mistake

with one employee could lead to serious financial distress or even bankruptcy..

MEDICARE

How to Gain a Competitive Edge in the Medicare Market Place

by Seth PaulThe Medicare sales in-

dustry is highly competitive, here are five ways to gain a competitive advantage as a Medicare sales broker.

DENTAL

Toothy Toons: Our Annual Dental Survey An Animated Look at How to Find the Fittest Dental Plans for your Clients!

by Leila MorrisThe states top dental providers answer

questions concerning plan coverages.

ANNUITIES

Selling the Flexible Benefitsof a Fixed Deferred Annuity

by Rich LaneA fixed deferred annuity is an attractive op-tion for clients who want to make the most of their investment while supporting various financials goals.

TELEHEALTH

How to Build a Telehealth Strategythat is Loved and Renewed

by Scott SanfordThe benefits of offering a stand-alone

telehealth plan.

ACA

The End Of The Affordable Care Act?by John SarichNo matter how noble, altruistic, and

politically correct a government program can be in addressing some problems, the solution usually lies somewhere other than in another bureaucratic fix

SELF-FUNDING

Self-Funding Is Here.Are You Ready?

by Chris MoyerMore and more groups

are asking about self-funding their health plans. This could be music to your ears,or it could be your worst nightmare.

CRITICAL ILLNESS

Why More Companies are Offering Critical Illness Protection Plans

by Gary HargerA newer voluntary benefit that many

employers are now offering is critical illness protection.

















GUEST EDITORIAL


Our California Broker team lost Dave

Leveque on May 28th. Dave had been pitching the maga-zine for the past 25 years. Dave was the ace righty in our sales and marketing rotation.

Dave was a pro in every sense of the word. He was all about faith, family, hard work and baseball. Dave was a won-derful person to know – he had a great sense of humor, cared about you and your family, and was extremely honest.

Dave was a star pitcher at Ca-noga Park High School. He was a Don Drysdale type hurler who liked to keep hitters from crowding the plate. His biggest victory was win-ning the heart of Becky Lohnes, one of the high school drill team members, and Dave's biggest cheer-leader. They were teammates for 46 years.

Dave was a pitcher on the Valley State Baseball team (later to become California State University Northridge) that won the NCAA College World Series in 1970. All the team stayed very close over the years.

You could say Dave spent some time in the instructional league. He

taught in junior high school for five years.Later on he was involved in ad

sales for Weider Publishing and Cre-ative Age Publications.

Dave learned the insurance game with RGV insurance. He went on to start his own agency, Dave Leveque Insurance Services.

We picked up Dave in the 1991 expansion draft when he responded

to a classified ad in the maga-zine. Every day was a double-header for Dave. Each morn-ing he came in and pitched the magazine, then made a road trip to his office to pitch his insurance business. We often teased Dave about be-ing a double agent.

Dave and Becky were blessed to have three great boys: Chris, Tim and Mi-chael. He coached them from Northridge Little League through the Se-nior Majors. He touched a lot of lives over his 25-year coaching career.

Dave was a great team-mate for Becky as she worked

to support the Devonshire police and many community causes.

It seems only fitting that Dave and Becky's son, Tim Leveque, is the Minor League Pitching Coordinator for the St. Louis Cardinals' Major League Baseball Team. Dave's pitches made it to the Major Leagues. We know that Dave is pitching for the angels now. H

Scott Halversen is VP of Marketing at California Broker Magazine..

by Scott Halversen

THE LAST INNING FOR OUR FAVORITE RIGHT-HANDER

EDITORIAL

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Where-does-YOUR-company-fit-PRINT.pdf 1 5/17/2016 8:28:26 AM

- CalBrokerMag.com -8 | CALIFORNIA BROKER

ANNUITY SAMPLER

JULY 2016

Type Mkt. Comm. Ratings Product SPDA Initial Guar. Bailout Val. Min. StreetCompany Name Bests Fitch S&P (Qual./Non-Qual.) FPDA Interest Period Rate Surrender Charges (y/N) Contrib. (May Vary)

American Equity A- A- ICC13 MYGA (Guarantee 5) (Q/NQ) S 2.25%* 5 yr. None 9%, 8, 7, 6, 5, 0 Yes $10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10%, age 76-80** ICC13 MYGA (Guarantee 6) (Q/NQ) S 2.45%* 6 yr. None 9%, 8, 7, 6, 5, 4, 0 Yes $10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10% age 76-80** ICC13 MYGA (Guarantee 7) (Q/NQ) S 2.70*% 7 yr. None 9%, 8, 7, 6, 5, 4, 3, 0 Yes $10,000 (Q) & 3.00%, age 0-75 & $10,000 (NQ) 2.10%, age 76-80** *Effective 6/7/16. 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 2.05%*a 5 yr. None 8%, 8, 8, 7, 6, 5, 4, 3, 2, 1, 0 Yes $10,000 (Q &NQ) 1.5% age 0-75Insurance Companies Solutions MYG 2.25%*b .75% age 76-85 *CA Rates Effective4/05/16. First year rate includes 1.50% interest bonus. a (less than $100K ; b (100K or more)

American General Life A A+ A+ American Pathway S 1.20%*a 5 yr. None 9%, 8%, 7%, 6%, 5%, 0% No $5,000 (NQ) 2.00% age 0-85Insurance Companies Fixed 5 Annuity 1.40%*b $2,000 (Q) 1.00% age 86-90 *CA Rates Effective 3/14/16. 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 S 1.85%*a 5 yrs. None 9%, 8%, 7%, 6%, 5%, 4%, 2%, 0% No $5,000 (NQ) 3.00% age 0-85Insurance Companies Fixed 7 Annuity 2.05%*b 1.50% age 86-90 *CA Rates Effective 3/14/16. First year rate includes 4.0% bonus 1st year. a (less than $100K) b(100K or more)

Great American Life A A+ A+ SecureGain 5 (Q/NQ) S 2.10% 5 yrs. N/A 9%, 8, 7, 6, 5 Yes $10,000 2.50% 18-80 (Q), 0-80 (NQ) Effective 2/15/16. Includes .25% first-year bonus and is for purchase payments over $100,000. Escalating five-year yield is 2.10%. For under $100,000 first-year rate is 1.95%. Escalating rate five-year yield 1.95%. 1.50% 81-89 (Q&NQ)

Great American Life A A+ A+ SecureGain 7 (Q/NQ) S 2.40% 7 yrs. N/A 9%, 8, 7, 6, 5, 4, 3 Yes $10,000 3.50% 18-80 (Q), 0-80 (NQ) Effective 2/15/16. Includes 1.00% first-year bonus and is for purchase payments over $100,000. Escalating seven-year yield is 2.29%. For under $100,000 first-year rate is 2.30%. Escalating rate seven-year yield 2.19%. 1.50% 81-85 (Q&NQ) Great American Life A A+ A+ Secure American (Q/NQ) S 1.50%* 1 yr. N/A 9%, 8, 7, 6, 5, 4, 3 No $10,000 5.75% 0-70 4.65% 71-80 *Effective 2/15/16. Eff. yield is 2.52% based on 1.50% 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 1.50%. 4.40% 81-89 Surrender value interest rate 1.50%. Accepts additional purchase payments in first three contract years. COM12255

The Lincoln A+ AA AA MYGuarantee Plus 5 S 1.00%* 5 yr. None 7%, 7, 6, 5, 4, 0 Yes $10,000 (Q/NQ)Insurance Company **Rates Effective 5/1/16 for premium less than $100,000 and are subject to change

The Lincoln A+ AA AA MYGuarantee Plus 6 S 1.25%* 6 yr. None 7%, 7, 6, 5, 4, 0 Yes $10,000 (Q/NQ)Insurance Company *Rates Effective 5/1/16 for premium less than $100,000, 1.40% for premiums greater than $100,000. . Both rates are subject to change

The Lincoln A+ AA AA MYGuarantee Plus 7 S 1.40%* 7 yr. None 7%, 7, 6, 5, 4, 3, 2, 0 Yes $10,000 (Q/NQ)Insurance Company **Rates Effective 5/1/16 for premium less than $100,000 and are subject to change

The Lincoln A+ AA AA MYGuarantee Plus 8 S 1.40%* 8 yr. None 7%, 7, 6, 5, 4, 0 Yes $10,000 (Q/NQ)Insurance Company *Rates Effective 5/1/16 for premium less than $100,000, 1.55% for premiums greater than $100,000. Both rates are subject to change

North American Co. A+ AA- A+ Gaurantee Choice (Q/NQ) S 2.50%*a 5 yr. None 10, 10, 9, 9, 8 Yes $2,000 (Q) 2.50% (0-80)for Life and Health 2.75*b $10,000 (NQ) 1.875% (81-85) *CA rates effective 6/2/16 – a (less than $200K) b(200K or more) 1.25 (86-90)

Reliance Standard A+ A Eleos-MVA S 3.25%* 1 yr. None 8%, 7, 6, 5, 4 Yes $10,000 3.25%***Effective 6/2/16. Includes 1.50% 1st yr. bonus. Min. guarantee is 1.00%. **Reduced 20% ages 76-80, and 40% ages 81-85

Reliance Standard A+ A Apollo MVA (Q/NQ) S 4.20%* 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 2/13/16

Symetra Life, Inc. A A A Custom 7 (Q/NQ) S 2.65%* 7 yrs. N/A 8%, 8, 7, 7, 6, 5, 4, 0 No $10,000 Varies*Effective 5/17/16. 2.15% base rate with no guaranteed return of purchase payments. Plus 0.50% bonus for $250,000 and above.

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HEALTHCARE


Keeping Your Small Group Out of the Penalty BoxThe recent expansion of the

small group definition has led to new requirements, new defini-

tions, new access to health benefit of-ferings, and newly improved products. Those of us who have been in the in-dustry long enough have learned that change is inevitable. We have also learned how to thrive on change. As with any change, the passage of SB-125 is not without challenges. It is crucial to under-stand your cli-ents’ business structure and benefit goals to navigate the gray areas of group insur-ance requirements, avoid significant pen-alties, and find optimal solutions. Shifts in re-quirements, such as the new definition of small group, can leave a rip-ple of startled clients in their wake – along with a hefty penalty for not knowing the rules.

California’s group insur-ance requirements are largely different than in the early 1990s when As-sembly Bill 1672 first defined small group protections and eligibility for health benefits. Eligible employees were considered those with full-time, permanent status. Companies with 50 or fewer eligible employees were considered small group. They bene-fited from guaranteed issue, meaning that qualified small employers could not be denied coverage regardless of their claims experience. Small groups

also had the ad-vantage of a premium cap that could not fluctuate more than 10% from the rates that health insur-ance carriers were required to file with state regulators. Employers with over 50 eligible employees were subject to terms dictated by the large group market. These terms were often un-favorable to companies with adverse claims experience.

FULL-TIME EMPLOYEE VS. FULL-TIME EQUIVALENT EMPLOYEE For years, we looked at full-time sta-tus employees as the benchmark for determining group size, eligibility, and participation. But the definition of small group changed in January 2016 under the Affordable Care Act (ACA)

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HEALTHCARE


and implemented in California with the passage of Senate Bill 125. In the ACA world, employers must now count the number of full-time employees and full-time equivalent (FTE) employees, meaning that part-time and seasonal workers must be included to deter-mine group size. Small group param-eters were expanded in California to include companies with 100 or fewer full-time equivalent employees, ex-tending some of the perks that small groups had before the ACA’s imple-mentation.

So how do you calculate group size to determine whether a firm is consid-ered a small employer or an applicable large employer? A full-time employee works an average of 30 hours a week for any calendar month (or at least 130 hours of service). A full-time equivalent employee is a combination of employ-ees, each of whom is not a full-time employee, but who, in combination, are equivalent to a full-time employee. Some considerations add complexity to this calculation. For example, there are specific guidelines for businesses that employ seasonal workers, have employees with military coverage, or have common ownership.

It is important to understand these rules in formulating accurate FTE em-ployee counts to avoid ACA penalties and determine where group size puts your clients on the eligibility scale. To add to the confusion, an employer with 50 to 100 FTE employees can be a small employer with respect to health coverage and a large employer with re-spect to ACA penalties. This brings us to the important distinction between small group employers. If your client has fewer than 50 FTE employees, there are no ACA mandates or penal-ties for not offering health benefits. But offering these benefits can boost retention and attract talent. However, companies with 50 or more FTE em-ployees are considered applicable large employers and are subject to ACA man-dates and the associated penalties. And these penalties are steep.

An applicable large employer faces a penalty if it does not offer minimum essential coverage to at least 95% of its full-time employees and their de-pendents. Suppose that an applicable large employer fails to offer this cover-

age and a full-time employee goes to a health insurance exchange and gets a premium tax credit. The employer would be required to pay a $2,000 penalty per full-time employee annu-ally (excluding the first 30 full-time em-ployees). What if an applicable large employer offers minimum essential health coverage that is not compliant with ACA guidelines for plan design and affordability? The employer would

owe $3,000 for each full-time employ-ee who gets a premium tax credit at a health insurance exchange. The ap-plicable large employer can only be responsible for the lesser of the two types of penalties, not both.

DOES THE NEW GRAYAREA HAVE A SILVER LINING? There is a new gray area with groups that have more than 100 FTE employ-ees. In the pre-ACA environment, groups with 50 or more employees often fell into a gray area of product availability and eligibility rules. Today’s groups are required to provide health coverage to employees, but some have far fewer or no eligible, full-time status employees who can enroll. Suppose that a company has 105 FTE employ-ees, but only 30 full-time status, eligible employees. The employer would not be eligible for small group health cover-age or be a suitable candidate for large group products. In many cases, this situation would yield a highly unfavor-able price for health coverage since the group would not be a viable candidate

for a non-guaranteed issue product. Another notable example would be

a group that qualifies as an applicable large employer due to FTE employee count, but does not have any full-time status employees who are eligible for coverage. The employer would be sub-ject to the ACA mandate, but would not have to offer coverage to part-time employees if this coverage had not already been established as a benefit guideline for the company. This exam-ple comes with a word of caution. Re-ducing hours just to eliminate benefits can be problematic. A recent class ac-tion lawsuit cited an employer’s strat-egy to decrease hours to avoid provid-ing benefits or paying a penalty.

These examples illustrate real chal-lenges for employer groups. As agents, we need cross disciplinary expertise in insurance regulations and IRS guide-lines. Despite the muddy situation for some unique large group cases, the ACA expansion brings a silver lining. Cue a sigh of relief. The flexibility of the exchange world, which was once reserved for the small and very large groups, is now available to employers with 50 to 100 FTE employees. Al-though access to an exchange is not new in the pre-ACA small group mar-ket in California, choice of product of-ferings has been greatly enhanced with the recent change in the small group definition. Eligible groups will find ACA compliant benefits from popular health insurance companies, employer con-trol over benefit budgets, and multiple coverage choices for employees. This is a win-win for everyone. A combined portfolio of public exchange options with group and individual offerings al-lows companies to provide a complete package, covering full-time status eli-gible employees and dependents as well as part-time workers with options from the individual marketplace. H

Chris Patton has over 15 years of industry experi-ence in the California market with knowledge of the retail and wholesale distribution of group health insurance products. As the vice president of Sales for Covered California for Small Business, Chris and his team are staffed statewide to support the role of Covered California’s certified insurance agent community and to ensure the successful and ongoing distribution of California’s small business public exchange program.

"A combined portfolio of public exchange options with group and individual offerings allows companies to provide a complete package, covering full-time status eligible employees and dependents as well as part-time workers with options from the individual marketplace."

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August 8, Monday(Night Before Reception)

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HEALTHCARE


On December 17, 2015, the IRS issued notice Notice 2015-87. Among other things, it lays out

which employer contributions can be counted toward the ACA’s minimum affordability standards for employer sponsored coverage. The guidance has been much anticipated by employ-ers that offer flex contributions to a Section 125 plan and employers that offer opt-out payments to employees who decline major medical coverage. The ACA’s Employer Shared Respon-sibility provision penalizes employers that offer no coverage or coverage that does not meet minimum value and affordability standards. Penalties apply to firms with 50 or more full-time equivalent employees. An employer would face penalties under these cir-cumstances:• The full-time employee qualifies for

and receives financial assistance to purchase coverage in an ACA mar-ketplace plan, and

• The employer-sponsored health cov-erage is not affordable for the full-time employee. Coverage is not deemed affordable if the employee must contribute more than 9.5% of their household income (adjusted yearly for inflation).

Employer health flex contributions do count toward affordability under these circumstances:• The employee is able to use the con-

tribution to purchase ACA qualifying

medical coverage. • The employee can only use the con-

tribution to purchase medical care (including qualifying dental and vi-sion) as defined by Internal Revenue Code section 213. The employee does not have the option to use the contribution to pay for non-health care benefits, such as dependent care or life insurance.

• The employee does not have the op-tion to receive the contribution as a taxable benefit (cash).

IS THERE TRANSITION RELIEF FOR THE 2015 AND 2016 PLAN YEARS?The good news is that the IRS also announced transition relief to delay enforcement of the new rules for em-ployer contribution plans that were in place before the regulations were an-nounced. For plan years beginning be-fore January 1, 2017, the flex contribu-tion is available for employees to pay for health coverage. If the employer qualifies for transition relief, the con-tribution will reduce the employee’s

Health PlanAffordabilityStandards

by Toney Chimienti

HOW FLEX CREDITS AND

OPT-OUT CASH WILL AFFECT

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HEALTHCARE


required contribution. The contribu-tion arrangement must have been in place before the notice was released. In other words, if a health flex contribu-tion arrangement, offering non-health benefits, was adopted after December 16, 2015, there is no transition relief. Employers that want transition relief should not substantially increase the flex credit contributions they offer to employees. A substantial increase that occurred after December 16, 2015 will make the employer ineligible for relief.

WHEN WILL OPT-OUT PAYMENTS INCREASE THE EMPLOYEE’S REQUIRED CONTRIBUTION?The new guidance also addresses cash payments that are only available to employees if they decline medical coverage. These payments are often referred to as “opt-out cash” or “cash-in-lieu.” What if an employee has to give up a cash payment to enroll in employer sponsored coverage? Ac-cording to the IRS, that amount must be added to calculate the employee’s required contribution. The opt-out payment increases the employee’s required contribution. It penalizes em-ployers for having an opt-out payment policy. For example, an employee with a $200 a month premium payment who gives up the chance to receive a $50 a month opt-out payment actually has a required contribution of $250 a month. When calculating the employ-ee’s required contribution, the follow-ing types of opt-out payments must be added to the employee’s paid contribu-tion:• Payments that cannot be used to pay

for coverage under the employer’s plan.

• Payments that are only available if the employee declines coverage.

WHAT IF AN EMPLOYER ATTACHES CONDITIONS TOTHE OPT-OUT PAYMENT?Some employers require employees to meet certain conditions to get opt-out payments, such as requiring employ-ees to demonstrate coverage under their spouse’s plan. The guidance indi-cates that the IRS may treat such con-ditions differently in future guidance. The notice states that the IRS intends to propose additional regulations.

IS TRANSITION RELIEFAVAILABLE FOR THE 2015AND 2016 PLAN YEARS?Yes, until future guidance is released, the following holds true for plan years beginning before January 1, 2017: An opt-out payment will not be treated as increasing an employee’s required contribution for purposes of penalties under the Employer Mandate. But the opt-out arrangement must have been adopted by December 16, 2015. Opt-out arrangements adopted after De-cember 16, 2015 are not eligible for transition relief.

WHAT DOES THIS MEAN FOR 2015 EMPLOYERS REPORTING UNDER IRC SECTION 6056?Most employers with flex contribu-

tions or opt-out payment arrange-ments that were adopted for plan years prior to January 1, 2017, can rely on transitional relief in preparing their 2015 IRS reports. Employers are advised to review the require-ments for the transition relief with tax or legal counsel to confirm their eligibility.

Some employers took advantage of the transition relief to report a lower amount as the employee’s required contribution on the 2015 IRS reports (Form 1095-C), which were issued to employees and filed with the IRS in

early 2016. They have been encour-aged to notify employees that their required contribution may be higher if calculated without relying on the transitional guidance. What if the employee’s modified required con-tribution is higher without transition relief? The employee may still be eli-gible for a premium tax credit regard-less of the required contribution or qualifying offer information reported on the employee’s Form 1095-C. H

Chimienti & Associates Insurance Services pro-vides a variety of services designed to assist employers in understanding the changing ACA rules and developing compliance strategies. Learn more at www.chimienti.net. Call 559-733-1670 or 877-733-1670.

Most employers with flex contributions or opt-out payment arrangements that were adopted for plan years prior to January 1, 2017, can rely on transitional relief in preparing their 2015 IRS reports.

Business Development ExpoJune 16, 2016 • Registration at 8:00 am • Starts at 8:30 am

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COBRA

by Lisa A. Turner

The year was 1988. I was inter-viewing for my first big job as a benefit specialist for a For-

tune 200 company. I sat across from the hard-nosed labor relations direc-tor as he grilled me about my educa-tion and experience. In his dealings with contract negotiations, he had grown comfortable catching people off guard, so he barked out, “What do you know about COBRA?” I thought I knew everything there was to know about COBRA after working for a year as a benefit administrator for a small firm. Remember, COBRA guidance was only finalized the prior year, even though President Reagan signed it into law in 1985. Really, how hard could this reply be? In a manner much more con-fident than I actually felt, I described what the acronym stood for, and what the law was about: continuation cov-erage, time frames, notices – you get the picture. Today, my answer would not be so confident even though I have dealt with this law for all these years. My mind would be reeling with how much I need to know in my role as a benefit specialist and how much I still learn every day about this multi-layered law.

The idea for continued health cov-erage, which later became known as COBRA, was born from a concern to provide continued coverage for women who lost their health insur-ance through the death of a spouse or divorce. The Older Women’s League (OWL) in Oakland, Calif. and St. Louis, Mo. petitioned their Representatives, Pete Stark and Bill Clay, to sponsor the bill that became law under the massive Consolidated Omni-bus Budget Reconciliation Act. COBRA made it possible for

employees, separated from their em-ployment, to maintain group coverage for themselves and dependents for an extended period, at their cost. At a recent anniversary of its inception, former Dept. of Labor Secretary Hilda Solis noted that COBRA had helped 50 million workers. While employers must offer this continued coverage as a stop-gap for former employees, this positive and compassionate law can actually damage a company and bring financial penalties if handled in-correctly.

The employer will assume fi-nancial responsibility for errors or omissions whether a company self-administers or outsources COBRA. What’s worse? Those errors may not be covered through business liability insur-ance. The complicated nature

of maintaining compliance has not di-minished as COBRA enters its fourth decade. Many employers have turned to professional or legal advice to un-derstand and implement the changes in the laws or see how subsequent laws that work in tandem with COBRA should be applied. To avoid clerical and administrative errors, a benefit spe-cialist must thoroughly understand an alphabet soup including HIPAA, CHIP-RA, HCTC, and USERRA. What has

Complexity of COBRA Holds True for Three Decades


COBRA

been written about these laws can fill a library. This list is not exhaustive, and does not include the iterations that ap-peared during the The American Re-covery and Reinvestment Act of 2009 (ARRA) era.

How can a typical small business handle the deadlines and keep up with the changes to the law? Many compa-nies outsource this task to a third-par-ty administrator that works exclusively with COBRA. The typical small busi-ness may not have the budget for a legal retainer, but may be able to man-age an annual or monthly TPA charge to steer clear of excise taxes or ERISA penalties.

Keep in mind that substantial penal-ties can be brought on simply by failing to send an election notice in a timely manner. An ERISA penalty for non-governmental plans of $110 a day can be assessed against the plan admin-istrator. The ERISA plan administrator is the entity designated by the terms of the plan. An excise tax of $200 a

day applies to COBRA failures under Code Section 4980B(f). Other mon-etary damages may occur as well. An employer in Alabama got hit with an $83,000 penalty including legal fees.

ERISA attorney, Robert Lee says that employers can’t be too diligent since the potential cost of a single compli-ance failure is so great.

With so much at stake it’s prudent to allow an expert to handle this very complicated law from tracking the ev-

eryday changes to model language, monitoring election time frames, coor-dinating coverage with Medicare, and reviewing Social Security determina-tions to the more involved issues sur-rounding a bankruptcy or merger and acquisition.

In 2016, as I research the latest COBRA and ERISA pronouncements, I've come to realize that, 28 years later, ignorance is not bliss when it comes to COBRA. It is vital to stay current and diligent with your COBRA processes and procedures or work with a quali-fied TPA to keep your organization fis-cally healthy and risk averse. H

Lisa Turner is client relations manager for the P&A Group, a multi-service third party administrator of welfare plans, retirement plans and COBRA admin-istration. Founded in 1975, P&A Group is headquar-tered in Buffalo, NY, with sales offices in the City of Newport Beach, Calif., Raleigh, N.C., Pittsburgh, Penn., and New York City, N.Y. For more informa-tion, visit padmin.com.

Employee Benefit Administration - helping you stand out since 1975.FSA • HRA • Commuter • COBRA • Retiree Billing

Contact your dedicated California National Broker Coordinator.Rick Neward: (949) 202-8266 | [email protected] | www.padmin.com

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- CalBrokerMag.com -JULY 2016 CALIFORNIA BROKER | 19

"It is vital to stay current and diligent with your COBRA processes and procedures or work with a qualified TPA will keep your organization fiscally healthy and risk averse. "

COBRA


Although the 30th anniversary of COBRA being signed into law is upon us, it is still one

of the most confusing requirements for employers throughout the country. Compliance with COBRA regulations isn’t easy, but the penalties for mak-ing mistakes are very stiff. When it comes to COBRA, even an acciden-tal error can result in ERISA statutory fines, IRS excise taxes, legal fees, and more. For small companies, making a mistake with one employee could lead to serious financial distress or even bankruptcy. Prevent this problem from hitting your organization by avoiding these common mistakes.

1 NOT UNDERSTANDING WHO IS ELIGIBLE FOR COBRAIf a covered em-

ployee or family mem-ber has a qualifying event, the company must send out a notice inform-ing them of the right to elect

COBRA benefits. The Qualifying Event Election

notice is then sent, which provides detailed informa-tion about the COBRA of-fering and how to sign up, along with deadlines and requirements. A qualified beneficiary is someone who is enrolled on the company health plan and loses that coverage due to a qualifying event. If an employee experi-

ences a qualifying event, but is not enrolled on the company

health plan, the organization is not required to offer COBRA. Certain

events qualify specific participants while others do not. For example, a di-vorce or legal separation of a covered

employee qualifies the spouse and/or any dependents losing coverage for COBRA, but the covered em-ployee would remain on the plan

as normal.

Five Common COBRAMistakesto Avoid

by Dan Taylor

COBRA


2 NOT SENDING APPROPRIATE NOTICESThere are a number of notices

that must be mailed to participants un-der the COBRA law. These notices help keep participants informed of require-ments, dates, benefits, and deadlines. Because many COBRA participants are no longer employed with the organiza-tion, mailed notices are often the only forms of communication between the company and the former employee and/or qualified dependents. When these notices are mailed, it is also im-portant to maintain documentation us-ing United States Postal Service (USPS) Certificate of Mailing, since this could be needed during a legal proceeding.

Other notices that are required under COBRA include:• General notice• Notice of unavailability• Qualified event election notice• Extension notice (recommended by

DOL)• Notice of open enrollment rights

(ERISA required)• Notice of plan change (ERISA re-

quired)• Notice of early termination• Conversion notice• Notice of insignificant premium un-

derpayment (if applicable)

3 THINKING THAT YOUR ORGANIZATION IS EXEMPT FROM COBRA LAWS

Unless your company has fewer than 20 employees, is a church plan, or is the federal government, you are not ex-empt from offering COBRA to employ-ees and dependents that experience qualifying events. However, even the 20-employee quota isn’t as cut and dry as it may sound. The law states that employers who have 20 or more em-ployees on at least half of its business days during the previous calendar year must comply with COBRA. All employ-ees, including part-time and seasonal

employees, count toward the number of employees; calculate how each em-ployee fits into the equation by divid-ing the number of hours worked by the number of hours required to be classi-fied as full-time.

4 ONLY OFFERING MEDICAL COVERAGEWhile medical coverage is typi-

cally one of the first benefits that peo-ple think of when discussing COBRA, it is certainly not the only offering that your organization is required to provide. In addition to continuation on the medi-cal plan, qualified participants may be offered any of these benefits provided by the company in which they were enrolled at the time of the qualifying event:• Dental plan• Vision plan• Prescription drug plan• Flexible Spending Account (FSA)

(under certain circumstances)

• Health Reimbursement Arrange-ment (HRA)

• On-site health care• Wellness plan• Employee assistance plan• Alcohol and/or drug treatment pro-

gram

5 CANCELING COBRA DUE TO CANCELLATION OF A HEALTH PLAN

If your organization decides to change health plans for employee participa-tion, be sure you understand what this means for any COBRA qualified ben-eficiaries on the previous plan. Quali-fied beneficiaries have specific rights under COBRA. For example, they must be treated the same as similarly situated active employees. So, if your active employees are offered a new or different plan, you must offer the same benefits to a COBRA qualified beneficiary. Changing carriers or plans does not take away the employer’s re-sponsibility to allow a qualified benefi-ciary to stay on the employer’s group health plan.

As a broker, your clients will be turn-ing to you with questions about COBRA that they can’t answer themselves. The rules are complex, and with penalties that can send shock waves through-out an organization, they shouldn’t be ignored. Advise your clients carefully when it comes to COBRA. H

Dan Taylor is VP of Relationship Management for Infinisource. For more information, call 800-300-3838 or email [email protected].

COBRA

"Your clients will be turning to you with questions about COBRA that they can’t answer themselves. The rules are complex, and with penalties that can send shock waves throughout an organization, they shouldn’t be ignored. Advise your clients carefully when it comes to COBRA."

MEDICARE


The Medicare sales industry is highly competitive, highly regu-lated, and highly challenging.

It’s not easy to build a solid, profitable customer base when there are so many agents out there. Why should the se-nior market choose you over the com-petition? If you’re not sure, see these five ways to gain a competitive advan-tage as a Medicare sales broker.

PLACEMENTAligning yourself with the right agency is critical for an independent agent’s ca-reer. Numerous agencies claim to do a lot for the broker, but not many follow through. Look for a full-service field-marketing organization that offers more than just a location to submit business. Make that sure you own that business and are being paid the highest allow-able by CMS for it. The more contracts and products that a field-marketing or-ganization offers, the better it is since a complete product offering is valuable to your prospective clients. Look for an agency that has departments that spe-cialize in serving you. From contracting to business development, an ideal mar-keting organization provides opportuni-ties for you to grow your business. A primary advantage of partnering with a field-marketing organization is the edu-cational support. The better the field-marketing organization is, the greater variety of training and higher quality support and tools you’ll get. Also, make sure the organization you choose has an outstanding compliance department that has your back.

KNOWLEDGEYou have to know your products and services inside and out. An uneducated Medicare broker is useless to the con-sumer. In the ever-changing Medicare world, stay up to date with Medicare rules and regulations, as well as the an-

nual health plan benefit changes. If you don’t know something, at least know how to find it. Medicare.gov is a very useful tool. You should also be able to get answers from that sales support team at your field-marketing organization (assum-ing that you chose a good one).

POSITIONING VERSUSPROSPECTINGProspecting clients is a never-ending cy-cle. And compliance is a must in the ex-tremely regulated Medicare space. Be-cause of these prospecting challenges, the best approach is to position yourself as a leading authority in the Medicare world. When you’re perceived as the expert, you won’t have to chase clients down; they will approach you.

Look for opportunities to showcase your knowledge and value as the local Medicare expert. Put yourself where the Medicare consumer already is instead of trying to make them come to you. Whether it’s a doctor’s office, hospital, medical clinic, community event booth, or senior center, make yourself available to be the educational resource that the Medicare community needs. This prop-er positioning of your business will give you the advantage over a broker who is chasing down prospects and leads.

CONSISTENCYConsistency is the key to success. Be consistent in everything you do. This includes the look of your marketing materials, your message, the level of

customer service, and the quality of service you provide to every customer. Your marketing organization can deliver consistency with uniform marketing materials, but it’s up to you to be con-sistent with the rest. From doing direct mail campaigns to visiting your doctor office partners, your ongoing efforts will set you apart from the competition. A single community event or one visit to a physician’s office might produce some business for you, but it’s your continued participation and effort that will build credibility. Establishing your-self as a credible resource in the Medi-care market will absolutely give you an advantage over the competition.

CREATE ADVOCATESThe best business practices revolve around what you promise your customer, and how often you follow through on those promises, so that you don’t just satisfy your customer’s wants and needs – exceed them. You create advocates for your brand when you exceed customer expectations. The goal is to create a pool of fans and advocates who go out of their way to promote what you do. A satisfied client will get you referral business by endors-ing you, not because you asked them to, but because they want to. This busi-ness is all about creating fans, whether it’s your Medicare clients promoting you and referring friends and family or physicians referring other physicians to use your services.

To gain a competitive advantage, and thrive as a Medicare sales broker, part-ner with the right field-marketing orga-nization, contribute valuable knowledge to the Medicare population, position yourself as an expert, and consistently provide unparalleled service. H

Seth Paul is Regional Sales manager for AGA Inc. For more information, call 800-699-8294.

HOW TO GAIN A COMPETITIVE EDGE IN THE Medicare Market Place

by Seth Paul

At AGA, we pledge to propel your career forward. That’s why we offer unparalleled marketing resources to help you grow your customer base—and we pay half the bill.

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At AGA, we pledge to propel your career forward. That’s why we offer unparalleled marketing resources to help you grow your customer base—and we pay half the bill.

Would having 50% of your marketing budget paid for bring a smile to your face?

Start doubling your marketing efforts. CALL US TODAY: 1-800-699-8294

Our extensive package of personalized selling tools gives you a competitive edge at an unmatched low cost with no cap. We're pretty sure that's something to smile about.

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DENTAL


AN ANIMATED LOOK AT HOW TO FIND THEFITTEST DENTAL PLANS FOR YOUR CLIENTS!

OUR ANNUAL SURVEY

Toothy ToonsOur Annual Dental Survey

1. What types of plans do you offer?

Ameritas: Ameritas has the following types of dental plans available nationwide: PPO, indemnity, voluntary, non-volun-tary, groups from two lives and up, individual, consumer driven and cost containment plans.

BEN-E-LECT: BEN-E-LECT offers fully insured PPO, EPO, pre-paid and self-insured dental plans for the group market. Employer-paid and voluntary plans with multiple network and out-of-network options down to the employee level are available to groups with as few as two lives.

BEST Life: In California, we offer employer-sponsored PPO, and indemnity dental plans to groups with two or more employees enrolling. Voluntary PPO/indemnity dental plans are available to groups with five or more employees enrolling. Custom dental plans can be offered for groups with 100 or more employees enrolling. We also offer group vision and term life coverage.Cigna: We offer a full spectrum of dental solutions, includ-ing the Cigna Dental Care® (DHMO) plan, Cigna DPPO plan, Cigna Traditional indemnity plan, and Cigna Dental Shared Administration. We also offer additional product

features that enhance our plans. Individual, small group and large group plans are available on a stand-alone basis. Cigna Dental Plans are also available alongside medical and/or vi-sion plans.

In California, Cigna DHMO plans are insured by Cigna Dental Health of California, Inc. Cigna DPPO and Traditional indemnity plans are insured or administered by Cigna Health and Life Insurance Company, with DPPO network manage-ment services provided by Cigna Dental Health, Inc. and certain of its subsidiaries. All dental insurance policies and dental benefit plans contain exclusions and limitations. All Cigna products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation.

Delta Dental: Managed fee-for-service, PPO, and DHMO group dental plans; individual DHMO dental plans and group HMO vision plans. We also offer ACA-compliant small group and individual dental benefits in 43 state and federally administered exchanges. In 2016 we are covering nearly 300,000 lives in these exchanges as a stand-alone dental plan, and just over 500,000 enrollees as the den-tal partner for about 15 health plans around the country.

DENTAL


This required us to design pediatric and family dental plans based on different sets of rules for the federal and state exchanges, for stand-alone versus bundled scenarios, and for differing market conditions.

Dental Health Services: Dental Health Services offers high-quality, affordable prepaid (DHMO) dental benefit so-lutions for large & small employer groups and individuals. Other plans are also available, including PPO, EPO, indem-nity (reimbursement) products for groups of all sizes, and ASO services for self-funded groups.

Guardian: Guardian offers an array of plan options to meet the needs of employers and their employees. Dental PPO, Prepaid/DHMO, and Indemnity plans are available on a voluntary or employer-sponsored basis. Dual and Triple Choice, Monthly Switch (between a DHMO and PPO), and Administrative Services Only plans are also available. Guardian specializes in customized plans based on the needs and price points of the employers and employees. We also offer dental plans for individuals/families, both on and off Covered California, the state’s insurance exchange. Consumers can purchase Guardian’s dental plans directly from www.mydental.guardianlife.com

Humana: In California, Humana offers PPO, prepaid/DHMO, traditional preferred, and preventive plus plans. These plans are available on a voluntary or employer-sponsored basis.

Principal Financial Group: We offer both employer paid and voluntary plans, including PPO, EPO and POS. We also offer a choice between our plans and dental HMO plans through marketing alliances.

2. How do plans you offer for the individual and/or small group compare in rates and benefits to the large-group plans?

Ameritas: Ameritas’ small group and one-life group plans are rated by industry and are pooled in full or in part. Large groups’ experience is rated and includes lower rates in most cases. Ameritas offers a wide variety of plan designs, re-gardless of group size, to meet customer needs. Non-group individual plan pricing is higher than group individual pricing due to the nature of the risk.

BEN-E-LECT: The majority of BEN-E-LECT’s plans com-pete very well in the large group market. The benefit design and structure of these plans remain consistent across the small and large group markets.

BEST Life: Rates vary by plan design, group size and em-ployer contribution. However, we offer a lot of plan design flexibility for groups with 10 or more enrolling. Waiting peri-ods for major and ortho services are waived for groups with 10 or more employees enrolling. Some benefits are stan-dard regardless of size. We offer a separate accident bene-fit on all of our dental plans which provides up to $1,000 for accidents to sound and natural teeth. There is no maximum on number of occurrences and the amount is not counted toward the calendar year maximum. A child vision benefit is also standard on plans with orthodontic coverage.

Cigna: Dental plan designs and rates for small groups are similar to those of large groups. There are a series of stan-dard DHMO plan designs and DPPO/indemnity plan de-signs. Cigna offers individual plans in the state of California, available stand-alone or as a buy-up option to our medical plan offering. The plans are DPPO and very similar to our group plans aimed at businesses trying to control costs while offering a large network. Larger groups generally want more robust and flexible plans, while smaller groups and individual plans include more standard offerings. We can custom-fit DPPO plans to offer a variety of cost-savings options for employers, such as missing tooth limitations, class shifting, and varying deductibles, coinsurance, waiting periods, and annual benefit maximums. Our DHMO plans start with basic coverage, specialty discount, split copays, and other cost savings mechanisms and go up to very rich, lower copay plans at the higher end of the cost spectrum, including plans with coverage for surgical implants and re-lated procedures. Cigna can also deliver solutions for the smaller employer segment through the Cigna Voluntary lim-ited benefit dental plan.

Delta Dental: While benefits offered to smaller groups are comparable to those offered to larger groups, larger groups have more options in terms of plan designs. Rates can be slightly higher for smaller clients and individuals, but Delta Dental strives to be competitive while balancing our financial risk. With individual DHMO plan benefits, we offer three dif-ferent plan options — two for individuals and families and one customized for seniors. The individual and family plans offer a wide range of covered services. The senior plan is designed to offer services most utilized by this particular population.

Dental Health Services: Dental Health Services works with its group clients on customizing dental benefit solu-tions that meet their needs. All individual plans offer the same high-quality benefits and services at competitive rates.

Guardian: Guardian offers nearly the same plan options to small group employers as to large employers, plus an ar-ray of cost-reducing options. We also offer dental benefits through the California state exchange (through Premier Ac-cess) and through our direct-to-consumer website www.mydental.guardianlife.com.

Humana: We offer flexible plan designs with a range of de-ductibles, co-payments, and out-of-pocket expense limits to meet the needs of small to large groups. We also offer large groups the additional flexibility to customize plan op-tions. All our dental plans provide employees with incen-tives for preventive dental care, which promotes their over-all health. Customers who see dentists participating in our dental PPO network receive deep discounts. Humana does not offer individual dental plans in California.

Principal Financial Group: The only significant rating dif-ference between our small and large group rates pertains to experience rating which is used on groups with 200+ employees. The benefits offered are the same for small and large groups. We do not offer individual dental plans.

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3. What have been the most recent changes in your plan(s)?

Ameritas: With Ameritas Rewards, employers can offer a dental plan and add benefits like vision, LASIK, orthodontia and hearing for more comprehensive coverage. By visit-ing the dentist and keeping paid benefits under a specified amount each year, employees can earn rewards to carry over to the following year. After the dental benefit maxi-mum is used, rewards can be applied to dental. And speci-fied portions of rewards can be applied to other types of coverage once their maximums are met.

BEN-E-LECT: BEN-E-LECT has evaluated its Freedom PPO benefits portfolio and narrowed it down to four plans that have proven to be most beneficial to its members. By fo-cusing on development of those four plans, BEN-E-LECT is now more able to create sustainable rates for its groups taking into account size and location. BEN-E-LECT has also eliminated the waiting period for groups and new hires on its employer-paid plans for added convenience. We have also added an EPO option to our portfolio which allows for even more cost savings and offers one of the strongest net-works available.

BEST Life: We’ve increased broker service fees throughout California and have numerous promotions and incentives throughout the year, including a 2 year rate guarantee. Our plans are customizable to meet the needs of any group and we have some of the largest regional and national networks available. Our dental plans cover implants and also include a separate dental accident benefit that covers up to $1,000 for accidents to sound and natural teeth that is not counted toward the calendar year maximum.

Cigna: We developed the Cigna Dental Oral Health Inte-gration Program® years ago to reinforce the importance of good oral health in relation to overall health. We continue to stress the importance of associations between oral health and certain medical conditions and enhance the program to reflect the latest medical and dental research. Currently the program includes the following list of clinical conditions: cardiovascular disease, cerebrovascular (stroke), maternity, diabetes, chronic kidney disease, head and neck cancer ra-diation, and organ transplants. The program also provides 100 percent reimbursement of copays and coinsurance on certain dental procedures associated with treating gum disease. We continue to enhance the customer experi-ence with this program. Previously, customers submitted a reimbursement form each time an eligible service was performed. Now, customers can register once (for each eligible condition) and their coinsurance/copays for qualify-ing procedures will automatically be reimbursed within 2-3 weeks from when we receive the claim from their dentist (for DPPO plans, reimbursements apply to and are subject to the plan annual benefit maximum). We have also made several enhancements to our DPPO products to provide ad-ditional benefit flexibility including cost saving capabilities with our dental code classification process thru improved class shifting functionality.

Delta Dental: Delta Dental enrollees benefit from cost es-

timating tools now available to them:• Fee Finder – With Delta Dental’s Fee Finder tool, PPO

and Premier enrollees can access the average fees for 35 commonly used procedures by entering their ZIP codes and a procedure by either entering a procedure code or by selecting a procedure using a drop-down list. The Fee Finder tool provides the average submitted fee for all den-tists in the specified ZIP code.

• Cost Estimator — Developed by the Delta Dental Plans Association (DDPA), Delta Dental offers a Cost Estimator feature available for our enrollees via the deltadental.com web portal and the Delta Dental Apple iOS and Android App. This tool uses a 3-digit ZIP code, NPF fee data, and the enrollee’s plan design to provide an estimated cost. The tool also allows the enrollee to select a specific pro-vider to see actual dentist fees.

Dental Health Services: Dental Health Services now offers dental implants as a covered benefit. Specialized crowns and upgrades are also now available. The company also covers all the most recent ADA Code changes to keep the plans current to offer extensive coverage on each of its plans.

Guardian: Guardian constantly develops new, innovative ideas in order to meet our customers’ needs by helping keep their teeth healthy and saving them money. Guardian recently introduced the College Tuition Benefit®, a value-added benefit that helps Guardian dental members pay for college. Employees covered by a Guardian dental plan that includes the College Tuition Benefit® earn Tuition Re-wards® that can be used to pay up to one year’s tuition at one of over 340 private colleges and universities across the nation. Guardian is the only dental carrier to offer the Col-lege Tuition Benefit®. In addition, this year we are introduc-ing enhanced PPO plan designs that offer employers and employees more flexibility and control over savings.

Humana: Humana is the only dental PPO plan in the mar-ket to offer a plan with an unlimited annual maximum. For the first time, employers can provide a true dental insur-ance plan for their employees. Plans in our new genera-tion of products are available as voluntary plans, and to groups with as few as two employees. All our plans offer an extended maximum benefit where members receive 30 percent coinsurance on services rendered after they reach their annual maximum (implants and orthodontia excluded). It’s important to note that because benefits never reach a maximum, network providers must continue to honor the network discounts, which are among the deepest in the market. This results in members paying as little as 30 per-cent of retail, depending upon the area of the state where they reside. In addition, we offer open enrollment assis-tance, orthodontia benefits, and no waiting periods for ma-jor services for voluntary groups with 10 or more enrolled. Additional deductible choices, implant coverage, and acrylic filling coverage are also offered. Due to the connection be-tween oral health and overall health, we have added (at no additional cost) oral cancer screenings to all of our products, excluding DHMO/prepaid plans, as well as four periodontal cleanings per year in addition to the two regular cleanings.

DENTAL

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DENTAL


Principal Financial Group: Our current plan offers sig-nificant flexibility in plan design, optional coverage for cosmetic services, TMJ treatment, dental implant cov-erage, accident coverage, employee choice options and multiple price points. Employers can design any combina-tion of plan options to meet their needs. In addition to our Maximum Accumulation feature which allows members to carry over a portion of their unused annual maximum for use in future years, we also have a Preventive Passport feature.

4. Can an insured use their own dentist even if they are not on your participation list?

Ameritas: Members can use any provider, but they may incur additional out-of-pocket expenses when visiting a pro-vider not in the Ameritas network.

BEN-E-LECT: Yes, BEN-E-LECT’s plans offer in and out-of-network coverage with multiple options for coverage and benefits. The members maintain complete control over the dentist they choose to utilize.

BEST Life: Yes, group and individual products allow mem-bers to visit any dentist of their choice and receive coverage for services.

Cigna: Insureds can use their own dentist in the DPPO and dental indemnity plans. However, in California there are no out-of-network benefits with DHMO (except for emergen-cy coverage). Individuals can nominate their dentist to join our plan and if the dentist wants to participate and meets our criteria, he/she will be credentialed and added to the network. We are continuously expanding our network to meet the needs of our members, and current and potential clients.

Delta Dental: Delta Dental Premier enrollees can visit any licensed dentist for care, although there are advantages to visiting one of more than 56,000 dentist locations for Delta Dental Premier dentists in California. Enrollees can go to any dentist, but they are only guaranteed to get in-network benefits and avoid balance billing when visiting a Delta Den-tal dentist. Delta Dental PPO enrollees also have freedom of choice, but can benefit from the protections associated with selecting one of more than 45,000 dentist locations for Delta Dental PPO dentists in California. PPO enrollees have access to Delta Dental PPO and Premier dentist networks with different levels of savings. DHMO enrollees must use a participating general dentist or approved specialist, ex-cept for emergency care. There are more than 5,900 den-tist facilities for DeltaCare USA in California.

Dental Health Services: Members of the Dental Health Services’ prepaid (DHMO) and EPO plans choose their den-tist from the company’s exclusive Quality Assured network. Participating dentists on all prepaid (DHMO) plan networks are subjected to credentialing, background checks and a 107-point quality checklist. They are also regularly moni-tored by the company’s Professional Services staff, and plan benefits are only available at these Quality Assured dentists. The company’s PPO and reimbursement plans al-

low members to receive treatment from any dentist.

Guardian: Members covered under our PPO plans can visit any dentist; however, benefits may be paid at a lower co-insurance rate for non-participating dentists. DHMO mem-bers must choose a participating primary care dentist.Humana: PPO members can visit the dentists of their choice. Out-of-pocket savings are greater when members visit participating network dentists. DHMO members must select a participating dentist.

Principal Financial Group: Yes, our members can see any dentist even if the dentist is not on the “participation” list if they are enrolled in either our PPO or POS design. If a member is enrolled in our EPO design, network dentists must be seen for services in order to receive benefits under the plan.

5. How many provider locations do you have?

Ameritas: California only – Ameritas/FDH Network: 95,354 California provider access points, (67,384 Ameritas; 27,970 FDH); 20,777 California locations, (13,298 Ameritas; 7,479 FDH) Nationwide – total provider access points = 419,913.

BEN-E-LECT: BEN-E-LECT’s dental plans utilize the First Dental Health, Dentemax, and Western Dental networks, which contain thousands of offices statewide.

BEST Life: We offer access to regional and national PPO networks — First Dental Health (FDH) and DenteMax. Our California network has over 68,672 access points and an additional 9,593 provider locations throughout the state. Our national network has over 285,000 provider locations, which offers our members network access when they are outside of California.

Cigna: As of May 2016, across all specialties, Cigna has over 140,930 unique DPPO network dentists nationally and over 21,484 in California. For DHMO, Cigna offers access to 22,655 network dentists across the country, with 6,715 DHMO network dentists in California.

Delta Dental: Our networks offer access to more than 56,000 dentist locations for Delta Dental Premier, more than 45,000 dentist locations for Delta Dental PPO and more than 5,900 dentist facilities for DeltaCare USA in Cali-fornia.

Dental Health Services: Dental Health Services’ exclusive Quality Assured dental network consists of 950 general practice offices with 4,500 participating dentists and an ad-ditional 2,000 specialists.

Guardian: There are over 325,282 PPO access points across the country and more than 43,704 in California. We are one of the largest PPO networks in the state based on dentists. The DentalGuard Alliance network tier, a smaller group of dentists offering greater discounts, has over 6,970 dentist access points in California. For the DHMO, there are 51,027 dentist access points across the country and 16,335 in California. Guardian’s PPO network also includes den-tal offices in Mexico. International Assist, a value-added


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service available, provides dental members with access to dental care if needed while traveling outside of the U.S. In addition, a supplemental listing of out-of-network dentists, Out-of-Network Plus, provides Guardian members greater selection in finding an affordable dentist.

Humana: Nationally, Humana has more than 275,000 pro-vider locations. In California, we have approximately 34,000 provider locations.Principal Financial Group: We have approximately 69,500 PPO provider locations and 25,900 EPO provider locations in the state of CA.

6. What percentage of your network is closed to new enrollment? How many offices does this represent?

Ameritas: PPO: California only – Only 419 Ameritas Offic-es and 37 FDH Offices are closed to new enrollment. This represents approximately 0.73%.Nationwide – 5,380 offices are closed to new enrollment, which represents approximately 1.45%.

BEST Life: All participating PPO dentists are accepting new patients.

Cigna: DHMO — We look at data on dentist capacity and current and projected Cigna Dental Care member loads. Network managers regularly monitor capacity and project-ed growth. They contact dentists as necessary to discuss capacity expansion through staff increases or office hour changes. If these actions are not feasible, we will consider adding more dental offices. Nationwide, as of May 2016, approximately 9 percent of the Cigna Dental Care network dental offices are closed or capped to new members. DPPO Network dentists do not cap or close their offices to new members, and DPPO members are not required to select a primary network dental office. BEN-E-LECT: All of BEN-E-LECT’s dental PPO providers are accepting new patients. For the DHMO product, less than 3% of the offices are closed to new enrollment repre-senting approximately 60 offices.

Delta Dental: 0%. Under the PPO/Premier plans, enroll-ees are free to see any licensed dentist. Contracted den-tists can close their practices to new patients but cannot close their practice exclusively to new Delta Dental pa-tients; 3.64% DHMO dental facilities are closed to new enrollment.

Dental Health Services: Although roughly five percent of participating dentists have been lost over the past 12 months, our overall network size has increased by five percent over the previous year. By focusing on seeking out only the most qualified dentists, the company im-proves accessibility and availability for members. The names and phone numbers of all offices are available upon request.

Guardian: In California, only 0.03% of our PPO network and 3.2% of our DHMO network is closed to new patients.

Humana: Under Humana’s provider contract, participat-

ing dentists must schedule and treat members without discrimination, including benefit or payer differentials. Be-cause this is a fee-for-service reimbursement program, closed practices are not common.

Principal Financial Group: Less than 5%.

7. What is the time frame for processing a referral in terms of member notification and payment to the specialist?

Ameritas: Since this is a self-referring process, this ques-tion is not applicable.

BEST Life: No referrals are required. Members may self-refer to any specialist they choose.

BEN-E-LECT: A referral is not necessary. Members may call and schedule the appointment as desired.

Cigna: DHMONetwork general dentists initiate patient referrals for end-odontic, oral surgery, and periodontal treatment. Referrals are confirmed for 90 days from the approval date. Specialty referrals are not required for orthodontic treatment or pe-diatric care for children up to seven years old, as long as members visit network specialists. The network dentist may submit a request for preauthorization to Cigna for oral surgery, endodontic and periodontal services. Members are responsible for the applicable patient charges listed on the patient charge schedule (PCS) for covered procedures. After specialty treatment is finished, the member should return to the network general dentist for care. If a network specialist is not available, the general dentist will refer the member to an out-of-network specialist, and the member will be responsible for charges listed on the PCS; however, Cigna Dental Care (DHMO) network general dentists render the range of services that are required for graduation from dental school, including diagnostic treat-ment, preventive treatment, operative dentistry, crown and bridge, partial and complete dentures, root canal therapy, minor oral surgery, preliminary periodontal therapy, and pe-diatric dentistry.DPPOThere is no need for a referral by a primary care dentist to obtain services from a specialist with the Cigna DPPO plan. Members may choose to seek service from any in- or out-of-network specialist or general dentist in the U.S. Of course, network dentists have agreed to our reduced fee schedules, which helps lower our members’ out-of-pocket expenses.IndemnityCigna Traditional indemnity members can seek care from any licensed dentist in the U.S.

Delta Dental: For PPO and Premier patients, specialty care referrals are not required, and payments to specialists are processed the same as for general dentists. For DHMO enrollees, preauthorizations for specialty care processed within five business days.

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Dental Health Services: Emergency referrals are pro-cessed immediately. In a non-emergency situation, refer-rals are processed within one to two weeks. Claims are paid within three weeks.

Guardian: Referrals are not required under our PPO plans. For our DHMO plans, payment to the specialist is within 30 days of receipt of the claim.

Humana: Humana’s dental plans do not require a referral from a general dentist to a specialist. The member gets a higher benefit when seeing a participating dentist and spe-cialist. In 2015, 98% of claims were processed within 14 calendar days.

Principal Financial Group: Not applicable to our plans.

8. How do you handle early termination of coverage when a member is still in the middle of orthodontic treatment?

Ameritas PPO: PPO provider discounts are determined us-ing the treatment start date. Ameritas PPO providers are contractually obligated to honor those discounts for any on-going covered treatment under their plan.

BEST Life: Coverage terminates at the end of the month in which a member is no longer eligible.

BEN-E-LECT: Payment for benefits will cease at the end of the month for which the termination became effective.

Cigna: Coverage for orthodontic treatment which was started before disenrollment from the dental plan will be extended to for 60 days after disenrollment, unless it was due to nonpayment of premiums.

Delta Dental: Delta Dental’s obligation to pay toward orthodontic treatment terminates following the date the enrollee loses eligibility or upon termination of the client’s contract.

Guardian: When an orthodontic appliance is inserted prior to the PPO member’s effective date, we will cover a portion of treatment. Based on the original treatment plan, we determine the portion of charges incurred by the member prior to being covered by our plan and deduct them from the total charges. Our payment is based on the remaining charges. We limit what we consider of the proposed treatment plan to the shorter of the proposed length of treatment, or two years from the date the orth-odontic treatment started. Also, we enforce the plan’s orthodontic benefit maximum by reducing the total benefit that Guardian would pay by the amount paid by the prior carrier, if applicable. If a member is undergoing orthodon-tic treatment and his or her Guardian coverage terminates, we pro-rate the benefit to cover only the time period dur-ing which coverage was in force. We do not extend ben-efits. Our DHMO agreement provides for the Contracted Orthodontist to complete treatment at the contracted pa-tient charge on a number of our plans. As an additional contract rider we can allow for supplemental transfer cov-erage for Orthodontia under our DHMO.

Humana: Humana will prorate to provide the appropriate amount given during the time the member was in the plan.Principal Financial Group: On individual terminations, most of our plans allow for extended benefits that provide one month of additional coverage. 9. Does your plan have annual and

lifetime maximums on dental coverage? If so, what are they?

Ameritas: Ameritas is known for plan flexibility and meet-ing employer needs rather than offering set plans to choose from. Annual maximums for dental procedures range from $400 to $3,000. Lifetime maximums for orthodontia range from $500 to $2,500. Ameritas will accommodate employ-er requests on plan maximums.

BEN-E-LECT: Each of BEN-E-LECT’s PPO/EPO plans have an annual maximum; PPO/EPO $1,000 = $1,000 maximum; PPO/EPO $1,500 = $1,500 maximum; PPO/EPO $2,000 = $2,000 maximum; PPO/EPO $2,500 = $2,500 maximum. BEN-E-LECT’s Pre-Paid DHMO has no maximums.

BEST Life: We offer calendar year maximum options of $500; $1,000; $1,500; $2,000 and $2,500; depend-ing on plan design for dental services. We offer $1,000 lifetime and $500 calendar year maximum for adult orth-odontia benefit options. We offer $1,000 lifetime and $500 calendar year maximum or $1,500 lifetime and $750 calendar year maximum for child orthodontia ben-efit options.

Cigna: Cigna DHMO plans do not have any annual or life-time maximums. Cigna DPPO plans have variable annual and lifetime maximums options. Delta Dental: Annual maximums for our Premier and PPO plans vary and, for group plans, are determined by the group purchaser; life-time maximums apply only to certain procedures such as orthodontia (if covered by the plan). Under our DeltaCare USA DHMO, there are no annual maximums; lifetime maxi-mum applies to orthodontia.

Dental Health Services: On Dental Health Services’ Pre-paid (DHMO) plans there is no annual maximum. The com-pany’s PPO/EPO plans feature annual maximums and life-time orthodontic coverage.

Guardian: Annual and lifetime maximums vary by plan. Annual maximums can range from $500-$5,000 for all services combined or can exclude Preventive services. Lifetimemaximums on Orthodontia services can range from $500-$2,500. The Maximum Rollover benefit allows members to roll over funds for future use if the member visits the dentist each year and uses only a specified portion of the annual maximum benefit.

Humana: We offer flexible plan designs with a range of annual maximums to meet the needs of small to large groups. We do not have lifetime maximums. We are the only dental plan in the market to offer an Unlimited Annual Maximum.

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10. Does your plan have a deductible. If so, what is it?

Ameritas: An Ameritas dental plan may or may not have a deductible. Plans are customized to meet employer and employee needs. Deductibles are typically waived on pre-ventive procedures and vary based on procedure type. Ameritas offers calendar year or plan year, lifetime and per-visit deductibles, and also a family maximum deductible to cap the number of family members who must satisfy the deductible.

BEN-E-LECT: BEN-E-LECT’s plans have the following de-ductibles: PPO/EPO $1,000 = $0 Deductible; PPO/EPO $1,500 = $100 Deductible; PPO/EPO $2,000 = $100 De-ductible; PPO/EPO $2,500 = $100 Deductible. Pre-Paid DHMO has no deductible.

BEST Life: We offer several calendar year deductible op-tions: $0, $25, $50, $75 or $100. There is a 3 per family maximum on the calendar year deductible.

Cigna: Cigna DHMO plans do not have any deductibles. Cigna DPPO plans have variable deductible options.

Delta Dental: Deductibles for our Premier and PPO plans vary and, for group plans, are determined by the group pur-chaser. Deductibles do not apply under our DeltaCare USA DHMO plans.

Dental Health Services: Dental Health Services Prepaid (DHMO) plans have no deductibles. The company’s PPO/EPO plans have deductibles.

Guardian: Deductibles vary by plan and can range from $0-$300.

Humana: We offer flexible plan designs with a range of deductibles to meet the needs of small to large groups. The deductible is always waived for preventive care. We want to ensure there are no barriers to members receiving the necessary preventive care.

Principal Financial Group: We have a wide range of de-ductibles available to fit the employer’s needs.

11. What percentage of preventive costs does your plan cover?

Ameritas: Ameritas plans typically cover preventive proce-dures at 80% or 100% to encourage members to maintain good dental health and avoid costly treatments in the fu-ture. Ameritas will also accommodate most other coinsur-ance requests.

BEN-E-LECT: All of BEN-E-LECT’s PPO/EPO and Pre-Paid DHMO plans cover 100% preventative care.

BEST Life: Our plans pay 100% for in-network preventive services and Indemnity plans and 100% or 80% for out-of-network preventive services on our PPO plans, depending on the plan design.

Cigna: All Cigna DHMO and DPPO individual plans cover preventive care at either no additional cost or for a minimal

cost. Cigna DPPO group plans have variable coinsurance options for Class I services, typically set by the employer. Cigna also offers group customers Cigna Dental Waiver Saver, where customers’ Class 1 (preventive) services can be waived for maximums and deductibles, providing an in-centive for customers to seek preventive care.

Delta Dental: Percentages vary according to the plan.

Dental Health Services: Dental Health Services values preventive services. Most of the company’s plans feature no cost for preventive services.

Guardian: Preventive services are typically covered at 100%, but this varies by plan and canrange from 0-100%.

Humana: Preventive care is always covered at 100 percent, unless a large group designs a custom plan. We encourage all employers to cover preventive care at 100 percent. We want to ensure there are no barriers to members receiving the necessary preventive care.

Principal Financial Group: We have a range of preventive care coinsurance options available to best fit the employer’s needs.

12. What percentage of root canal costs does your plan cover?

Ameritas: A root canal is generally covered as a Type 2 (Basic) procedure, but can be moved to Type 3 (Major) at the employer’s request. The plan benefit (percentage of the procedure that’s covered by Ameritas) varies based on pro-cedure type. Ameritas sets the plan benefit for each proce-dure type based on employer request. But the most com-mon plan benefits for Type 2 and Type 3 are 80% and 50% respectively. With an Ameritas incentive plan, a root canal covered under Type 2 could be covered at 100% during the employee’s third year on the plan.

BEN-E-LECT: All of BEN-E-LECT’s PPO/EPO plans cover root canals at 50%, Pre-Paid DHMO is covered by a co-pay.

BEST Life: Our plans offer the option to cover endodontics with periodontics in either basic or major services. If endodontics are covered as a basic service:• Indemnity High: 90%• Indemnity Mid: 80%• Indemnity Value: 50%• PPO High: 90% in-network / 80% out-of-network• PPO Mid: 80% in-network / 50-80% out-of-network, de-

pending on plan design.• PPO Value: 50% in-network / 20% out-of-network. If end-

odontics are covered as a major service.• Indemnity High: 60%• Indemnity Mid: 50% or not covered, depending on plan

design.• Indemnity Value: not covered• PPO High: 60% in-network / 50% out-of-network• PPO Mid: 50% in-network / 50% out-of-network or not

covered, depending on plan design.• PPO Value: not covered.

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Cigna: For Cigna DHMO plans this varies by the plan type selected. Cigna DPPO plans have variable coinsurance options for endodontic services.


Dental Health Services: Dental Health Services offers many variations to plan designs and varies the cost shar-ing for members on procedures. The company offers plans with very low cost sharing on root canals.

Guardian: Preventive services are typically covered at 100%, but this varies by plan and can range from 0-100%.

Humana: We offer flexible plan designs with a range of co-insurance percentages to meet the needs of small to large groups. A group can elect to have endodontic cover-age in Basic or Major.

Principal Financial Group: We have a range of coinsur-ance options for root canals available to best fit the em-ployer’s needs.

13. What percentage of crown costs does your plan cover?

Ameritas: Ameritas plans usually cover a crown as a Type 3 (Major) procedure. The plan benefit for Type 3 proce-dures varies from 40% to 60%, or employer request.

BEN-E-LECT: BEN-E-LECT provides benefit plans includ-ing dentist’s costs for all PPO/EPO and DHMO plans, as well as copay amounts, if necessary. More information regarding plan details is provided on our website at www.benelect.com/dental

BEST Life: Crowns are covered as a major service:Indemnity High: 60%Indemnity Mid: 50% or not covered, depending on plan design.

Cigna: For Cigna DHMO plans this varies by the plan type selected. Cigna DPPO plans have variable coinsurance options for prosthodontic services.

Indemnity Value: not coveredPPO High: 60% in-network / 50% out-of-networkPPO Mid: 50% in-network / 50% out-of-network or not covered, depending on plan design.

PPO Value: not covered.


Dental Health Services: Dental Health Services offers many variations to plan designs and varies the cost shar-ing for members on procedures. The company offers plans with very low cost sharing on crowns.

Guardian: This varies by plan and can range from 0-100%.

Humana: We offer flexible plan designs with a range of co-insurance percentages to meet the needs of small to large groups. Fillings are typically covered as part of Basic services.

Principal Financial Group: We have a range of coinsur-ance options for crowns available to best fit the employ-er’s needs.

14. Do you provide dentist cost and quality transparency tools?

Ameritas: Ameritas provides an online dental cost esti-mator tool members can use to access cost estimates for out-of-network dentists by area. Ameritas also provides an online directory of network dentists along with contracted dentist fees by area. All network dentists must complete a strict credentialing process and office evaluation to be included in the network directory. Members can contact Ameritas Customer Connections for assistance Monday-Thursday, 7:00 a.m. to midnight CST and 7:00 a.m. to 6:30 p.m. CST on Friday.

BEST Life: We offer predetermination to members that provide them with an estimate of how their benefits will be processed.

Cigna: Cigna makes selecting a dentist and budgeting for dental expenses easier. Most DPPO customers have ac-cess to personalized out-of-pocket cost estimates by ser-vice and by dental office as well as detailed profiles about each dentist, often including photos and videos. The tools are available on myCigna.com, Cigna’s personalized cus-tomer website, and the myCigna mobile app.

Delta Dental: Yes. A variety of tools are available to Delta Dental enrollees. On our website at deltadentalins.com, we offer a fee finder tool, which shows enrollees the aver-age submitted fees of Delta Dental contracted dentists, and, for specific clients, we have a cost estimator tool that can estimate an enrollee’s approximate fee based on their eligibility, benefits, dentist and location information. At deltadental.com or via an app for Android and iOs, en-rollees can access a cost estimator tool, which shows es-timated costs as well as actual fees charged by a specific dentist(s).

Dental Health Services: Dental Health Services Prepaid (DHMO) plans offer a flat member copayment for all pro-cedures. Regardless of what a dentist may charge in their practice, plan members only pay the set dollar amount listed in their schedule of covered benefits.

Guardian: Guardian’s web site, Guardian Anytime (www.guardiananytime.com), includes a dental cost estimator tool for greater cost transparency. The tools allows mem-bers tobetter plan for care and see the cost difference between in- and out-of-network care.

Humana: At this time, Humana’s website does not pro-vide cost information for our dental products.

Principal Financial Group: We provide an online re-source that members can use to access a variety of oral health information including a procedure cost estimator. H

ANNUITIES


It’s an uneasy time for investors. In-stability in the stock market has cre-ated anxiety for investors who have

experienced vulnerability in the value of their investment portfolios. It may be an especially sensitive time for your more conservative clients who want to know that their hard-earned dollars are protected for retirement.

A fixed deferred annuity is an attrac-tive option that can help a client make the most of their investment while still supporting various financials goals. Fixed-deferred annuities offer investors tremendous flexibility while providing the peace-of-mind that their principal investment will always be protected.

TARGET CLIENTS FOR FIXED DEFERRED ANNUITIESFixed deferred annuities are a good fit for these types of investors: • Buyers who want to protect and build

their money before it’s transferred to designated beneficiaries.

• Conservative investors who value guarantees and don’t want to lose their principal investment.

• Middle-of-the-road clients who want to use a fixed annuity for safe dol-lars in their asset allocation. This can lower the volatility in their portfolio.Typically, a fixed deferred annuity is

a good fit for clients with a conserva-tive investment mindset and a more hands-off approach to investing. A cli-ent whose funds are truly safe with a fixed deferred annuity has the flexibil-ity to take more risks in other aspects of their investment portfolio.

STRONG GUARANTEESSeveral important attributes of a fixed deferred annuity make it an ideal in-vestment for a client who wants to di-versify their investment portfolio with a flexible and sound option. One of the key aspects of a fixed deferred annu-ity is having strong guarantees. A fixed

deferred annuity provides minimum guarantees that offer the peace-of-mind that the client will never earn less than the stated minimum.

Additionally, some fixed annuities provide a guaranteed return-of-premi-um, even during the surrender-charge period. After the surrender-charge pe-riod, the client is always guaranteed to receive the principal, minus any previ-ous withdrawals. Most investments or insurance products have flexible with-drawal options for how a client can ac-cess a portion of the investment with-out incurring a surrender charge.

PROTECT A NEST EGGFor clients who have an investment nest egg to protect, a single-premium fixed deferred annuity serves as a low-risk investment that is guaranteed to grow. That’s because it allows for triple compounding to begin immediately upon purchase. An investor can reap the benefits of gaining on the principal amount, interest on the interest, and interest on the money that would oth-erwise have been lost to taxes.

Creating a nest egg takes time and discipline. A flexible premium deferred annuity offers an investor triple com-pounding while allowing for flexible de-posit options — both of which are im-portant components to creating a nest egg. Fixed deferred annuities, either single or flexible premium, help your cli-ents accumulate funds for retirement or for wealth transfer in the future.

A FLEXIBILITY FILLED FUTUREOne of the biggest advantages of in-vesting in a fixed-deferred annuity is the flexibility that it offers the investor. Income options from a fixed deferred annuity are numerous, and can be tai-lored to a client’s situation. A buyer can choose lifetime income or income for a certain period. Or a buyer can build in survivor income access so their

spouse or b e n ef i c i a -ries are pro-vided for after they pass away.

Your client can flip the switch to convert a fixed deferred annuity from an accumulation vehi-cle to an income stream at any time. Perhaps your client needs income to supplement Social Security or another source of retirement income, such as a 401(k) or pension. This means your client has control over when or if they turn on an income stream.

For investors who need early access to funds, a fixed deferred annuity has built-in provisions that allow for access to money without incurring a surrender charge. A fixed deferred annuity also is a great option for a client to transfer their assets to beneficiaries since the pro-ceeds are not taxed until a distribution is made. Many annuities allow the client to select a payment option for their heirs.

Whether a client is conservative, financially aggressive, young, or in a post-retirement phase of life, a fixed deferred annuity can help make sure they meet their financial goals and have a sustainable aspect to their fi-nancial portfolio. H

Rich Lane is the senior director of individual an-nuity sales and marketing for Standard Insurance Company. He has been in the fixed annuities in-dustry for almost 20 years, with an emphasis on product and distribution development for broker-ages, banks and broker/dealers. Rich was recently elected to the National Association for Fixed An-nuities (NAFA) board of directors for 2015. The Standard is a leading provider of financial products and services, including group and individual dis-ability insurance, group life and accidental death and dismemberment insurance, group dental and vision insurance, absence management services, retirement plans products and services, individual annuities, and investment advice. For more infor-mation on The Standard, visit www.standard.com.

SELLING THE FLEXIBLE BENEFITS OFA FIXED DEFERRED ANNUITY

by Rich Lane

HEALTHCARE


Building aSuccessfulTelehealth Strategy

LOVED THIS YEAR AND RENEWED THE NEXT!Even when a carrier includes a tele-

health plan, there’s still value and opportunity in providing a stand-

alone plan that embraces the other "e" word – “engagement.” It seems like a good idea to have an embedded tele-health plan as part of a comprehensive employee benefit program – as op-posed to having a stand-alone program. After all, the more solutions that can be packaged neatly inside a benefit plan the better – right? Many employers are finding that the answer is not so crys-tal clear. The problem is that many em-ployees don’t know what benefits they have, don’t understand their benefits, or forget to use them. So embedding re-

ally means hiding, and hiding means not using. A study by ADP reveals that 40% of employees don't understand their benefits. Also, nearly 85% of HR profes-sionals say employees don't understand how healthcare costs are affected by

their use of benefits and their behaviors. Many employers have found that

an embedded telehealth benefit only works when there is a concerted effort to market it. Unfortunately, that usually doesn’t happen from the employer or from the telehealth plan administrator. When you consider how utilization of a telehealth plan can reduce health care costs, it’s clear that the focus must shift to employee engagement.

A BROKER’S ROLE IN EMPLOYEE ENGAGEMENT: BREAKING UNHEALTHY HEALTH CARE HABITSCommunication is key to affecting your client’s bottom line. For brokers,

by Scott Sanford

"When you consider how utilization of a telehealth plan can reduce health care costs, it’s clear that the focus must shift to employee engagement."

HEALTHCARE

HEALTHCARE


it means offering benefits with a full suite of marketing and promotional tools to engage employers and em-

ployees. It may be the biggest oppor-tunity that brokers have to show that they can provide value in helping shape employee be-havior.

Behavior is a tough thing to change. We’ve all heard that habits take 21 days to break. If we get a sore throat on Sunday morning, we are likely to wait until Monday to call a doctor for an appoint-ment, even if we have a telehealth plan – just be-cause it is something that we have always done. If the baby’s fever spikes in the middle of the weekend, we are also likely to forget about our telehealth plan and rush the nearest urgent care center even if though is a costly option. Old habits take charge when panic sets in. A plan that isn’t talked about very much is easily forgotten.

THE REAL ISSUE IS THE E WORDEmbedded plans often lack a real en-gagement strategy. Telehealth without engagement is like a beautiful, high-performance sports car without gaso-line. It won’t go anywhere without a full-blown promotional strategy to improve utilization. The word “embedded” im-plies included. Like those department-store gift-with-purchase offers, includ-ed extras aren’t often not seen as very valuable. That’s doubly true when there are no physical reminders – like a mem-bership card. Since we’ve all been con-ditioned that our insurance card is the

holy grail when it comes to benefits, the lack of a card is enough for many of us to claim amnesia.

The real problem with an embed-ded plan is that it is often considered a check-box benefit with utilization at typically less than 2%. There may be attempts to inform members by mail-ing them brochures about telehealth benefits. But, more often than not, employees toss them out as junk mail when there has been no personal at-tempt at engagement, and when no one has informed them that they have

a telehealth plan in the first place. The key is to find a plan that has a

comprehensive marketing effort be-hind it – one that is based on relation-ship building with the employer to help

employees use it. That way, you’ll dis-cover a way to help clients make a real dent in health care costs. Even bet-ter, find a plan that offers return-on-investment reporting on information such as the number of visits avoided to primary care physicians, to the ER, and to urgent care centers, as well as claim savings from avoided in-person visits. That way, you’ll see that the full-engagement telehealth plan you recommend will be considered invalu-able. Value is what it is all about when enrollment time rolls around next year

and the key phrase you want to hear from clients is, “Let’s renew.”

H

Scott Sanford is co-founder and chief growth of-ficer at Scottsdale, Arizona-based HealthiestYou, a telehealth and wellness delivery innovator that was named one of the fastest growing companies in America by Inc. Magazine for 2015. HealthiestY-ou provides immediate access to quality medical care serving over 10,000 employer groups through-out the nation, HealthiestYou reports a consumer satisfaction rating of over 97%, compared with a national average rate of 68% for traditional doc-tor’s office visits. Last fall the company received a $30 million round of funding and today is on a path of vigorous growth. For more information, call 480-779-4360 or visit healthiestyou.com.

The key is to find a plan that has a comprehensive marketing effort behind it – one that is based on relationship building with the employer to help employees use it.

The key is to find a plan that has a comprehensive marketing effort behind it – one that is based on relationship building with the employer to help employees use it.

HEALTHCARE


I guess you could say it is the logical end to an illogical program. Chick-ens really do come home to roost.

Health insurers that were either silent on the ACA or went along with it will-ingly are now looking for the inevitable handout. They to were called “Risk Corridors” that were supposed to pick up the underwriting losses that would be inevitable with the ACA. Keep in mind that there has never been an insurance program run by the govern-ment that you could call successful. I can go back to the days of the JUAs—joint underwriting authorities—that were set up by states to handle the uninsurable driver. Then there are the CHIP plans, health insurance plans, again run by states, to handle the problem of uninsured children. In each and every case the actuarial sound-ness of the program was ignored, and all of these programs circled the drain. When actuarial experience, the absolute quantified numbers, say you need to increase rates, the politicians in charge deny reality and let the pro-gram slide—with no rate increases that would be required to keep the pro-gram viable. Do that a few times, and the program in question is asking for money from whatever level of govern-ment created the mess, and the politi-cians can’t come up with the money. So, the claim checks start to bounce and no one gives a hoot because the whole program was designed to make politicians feel good.

It doesn’t have to be this way. For better or worse, there is a role for government to play in certain areas of insurance. But the government (or

more accurately, “We the People”) must understand how market distor-tions occur when government be-comes involved in a heretofore private commercial transaction. If there are any lessons to be learned from 40 years of the Medicare program, the major one is that millions of people relying on government for their health care at below-market prices is not sustainable. A few tricky things get in the way—demographics, individual behavior, provider capabilities, and an overall attempt to control the senior health care market. Of course those millions of people dependent on the government for health care represent millions of votes—and those millions of voters want broader insurance cov-erage at the same cost.

Hard-to-insure and uninsurable peo-ple will always exist in any insurance market. Whether it is homeowners, automobile, life, health, or disability in-surance, there are some people who simply do not qualify. The guy with 6 DUIs in last 3 years isn’t insurable in the standard market where most peo-ple fit. But there are insurance com-panies that will offer insurance to the “uninsurable”—with the caveat that it will be expensive and will not af-ford high-dollar coverage. If there are enough people with DUIs, they can create enough noise to get a politician to claim they are victims of greedy in-surance companies who have raised premiums to unaffordable levels. It doesn’t take long before the politician comes up with a scheme to insure these uninsurable drivers at a lower cost. And as life imitates art, these

folks will get more DUIs and cause more accidents, and politicians will be forced to fund their novel solutions with more and more tax dollars.

All of these government insurance programs began the same way—with realistic funding and the potential to accomplish their intended purpose. But once the actuaries say, “We need a rate increase of 20 percent.” The politicians immediately go to work to win budget approval. The reality is that governmental budgets are based on give and take, and this insurance pro-gram is just one of dozens of worthy budget items. So they compromise on something less than 20 percent. And so begins the death spiral.

Chief among the lessons to be learned from the ACA experiment is that no matter how noble, altruistic, and politically correct a government program can be in addressing some problems, the solution usually lies somewhere other than in another bu-reaucratic fix whose overriding philos-ophy is “the end justifies the means.” The history of the ACA, while for now incomplete, will show that top-down, “my way or the highway” approaches lead to animosity, failure, and ultimate-ly back to square one. In point of fact, the number of uninsured—allegedly the problem that was to be solved—has yet to change with the ACA. H

John Sarich is an industry analyst and VP of Strat-egy at VUE Software. He is a senior solutions ar-chitect, strategic consultant and business advisor with over 25 years of insurance industry experi-ence. He can be reached at John.Sarich@VUE Software.com.

The End OfThe Affordable

Care Act?by John Sarich

SELF-FUNDING


The role of a broker isn’t easy. You have to balance the needs and re-quirements of many business part-

ners while you generate solutions that will deliver quality and affordable health care to your clients. If you don’t offer the right solutions, you risk losing valuable clients. The broker business is extremely dynamic. What we do is important and continued education is essential.

The Affordable Care Act continues to create opportunities. More and more groups are asking about self-funding their health plans. From a broker per-spective, this could be music to your ears or it could be your worst night-mare. Regardless of where you fall, here are some important points about self-funding that you should know in order to best advise your clients:1. By self-funding, your client is essen-

tially deciding to be the insurance company and assume fiduciary re-sponsibility. Because the client be-comes the fiduciary, the employer takes on the financial risk of funding their health plan from their assets. They become responsible for man-aging and administering the ben-efit plan. Self-funded plans are gov-erned by the Employer Retirement Income Security Act (ERISA). They are appealing to employers because of the greater level of flexibility that comes with being able to tailor the plan to their needs with fewer state-mandated features.

2. Self-funding generates improved cash flow for clients. They have ability to pay claims as they are incurred rather than paying premiums in advance. It is important to note that there can be ebbs and flows in utilization and therefore claims funding. For that rea-son, a self-insured solution should be a long-term strategy. However, over the course of several years, almost all

clients that have the risk tolerance to self-fund will save money.

3. Size does not necessarily matter. While the law of large numbers sug-gests that the bigger the employer, the more likely they are to be a viable candidate for self-funding, that is cer-tainly not always the case. If a large employer does not have enough cash flow to pay claims and wait for reimbursement from stop loss carri-ers, then self-insuring their plan may not be the best option. Conversely, a smaller employer may have more liquidity and be more risk tolerant making self-insuring a good choice.

4. Self-funding offers significant flex-ibility in plan design, as well as mul-tiple options for stop-loss protection. Stop-loss protection, or reinsurance, is a separate policy that clients can purchase that provides protection for large claimants. Generally, the more risk the client is willing to take on, the lower the premium the client will pay to the stop-loss carrier. That’s why it’s important for brokers to have a consulting relationship with their clients. Brokers need to know what is most important for their clients in terms of benefit design versus what the cost impact will be to the plan. You should be asking, “Is it more im-portant for you to have lower fixed cost in exchange for taking on more risk, or are you more risk adverse and willing to pay higher premiums?” You should also engage your clients in strategies to control their health care spending. However, client’s who do not have the desire or time to invest in monitoring their plan, engaging their employees, and creating a cul-ture of accountability may lose out on important opportunities to control costs. But this is no different from the insured counterpart. For example, if

you recommend a comprehensive wellness plan to a client who is not engaged in the plan, they are likely to see disappointing results. Having a strong consulting relationship with your clients and understanding their culture is the key to building a long-term winning strategy.

5. Self-insured plans provide a tremen-dous level of transparency. These plans provide clients with monthly, quarterly, and annual recaps of all costs associated with their plans, including administration, savings from cost management programs, and premium and commission costs. This information enables clients to be able to customize their plans for maximum effectiveness. From a broker perspective, this information gives you valuable insight into plan cost-drivers and offers a platform for you to determine appropriate strate-gies to help your client achieve their health care goals. Providing this infor-mation is critical and will help solidify your relationships with your clients.One last bit of advice: Partner with

companies that have a good reputation and want to grow their business in tan-dem with you. It is in their best inter-est to assist you in understanding self-funding and help navigate you though the pitfalls to success. Staying abreast of options that your clients may see as valuable to help them reign in the cost of this benefit will put you in a position to grow and retain your business. H

Chris Moyer is vice president of HealthNow Adminis-trative Services. HealthNow is a third-party benefits administrator. The company was founded more than 30 years ago as a privately owned and independent company. In 2006, HNAS was acquired by Health-Now New York Inc., a $2.5 billion company based in Buffalo, NY. For more information, call 610-491-4824, email [email protected], or visit HNAS.com.

Self-Funding Is Here. Are You Ready? by Chris Moyer

CRTICIAL ILLNESS


Companies that are looking to reduce health care costs often consider eliminating supple-

mental, or voluntary, benefits such as vision, dental, disability, accident and critical illness. However, there are compelling reasons why employ-

ers should continue to offer or even add these benefits to their offerings in 2016 – either paid for partly by the employer or as voluntary benefits with premiums paid by employees.

Surveys show that voluntary ben-efits can help attract and retain em-

ployees. According to a recent report from LIMRA International, 71% of em-ployers believe that voluntary benefits improve worker morale and satisfac-tion. Adding supplemental benefits to a core benefit offering can improve companies’ bottom lines by increasing

WHY ARE MORE COMPANIES OFFERING

Critical IllnessProtection Plans?

by Gary Harger

CRTICIAL ILLNESS

CRTICIAL ILLNESS


productivity and employee engage-ment. Additional tools and information can improve employees’ health, help-ing companies manage medical costs more effectively.

A newer voluntary benefit that many employers are now offering is critical illness protection. These plans add financial certainty for employees – especially those enrolled in high-de-ductible health plans – by providing a cash benefit to help fund employees’ out-of-pocket expenses after a major illness such as heart attack, stroke or cancer. More than one in four private employers with at least 10 employees offers a critical illness benefit to their non-union workforce, according to a LIMRA study, and this rate has more than doubled since 2002.

Major illnesses are expensive. The reality can be devastating for employ-ees facing high deductibles or coinsur-ance payments and potential lost in-come. Critical illness protection plans are designed to supplement medical benefits and enable employees to focus on healing from their illness in-stead of their bills.

For example, after a diagnosis of a major illness, those with critical ill-ness protection could receive a pay-ment ranging from $5,000 to $40,000, which can be used to pay medical bills or cover normal living expenses. Buy-ing trends show that critical illness plans are especially popular among employees in their late 30s and older while younger employees are more likely to purchase accident insurance. Many employers offer both types of coverage to provide financial protec-tion options for all of their employees.

Employers that combine voluntary and medical benefits may also be able to improve health outcomes and manage costs more effectively. For instance, health plans that combine medical and voluntary benefits can re-duce the duration of disability claims. Upon filing a critical illness or disability claim, plan participants with a chronic condition, such as cardiovascular dis-ease, can get additional support and information. It includes a case man-ager and advice on exercise and nutri-tion. These resources help employees get back to health and work faster.

Other integrated programs encourage preventive dental and vision care, help-ing to stop diseases before they start.

Offering voluntary benefits as part of an employee’s menu of options can maximize the effectiveness of a company’s health care dollars. When offered alongside medical insurance, it offers families added peace-of-mind for their health and financial protec-tion. Employers that combine volun-tary and medical benefits may be able to reduce turnover, increase productiv-ity, and build a culture of health.

Here are some tips to help employ-ers recognize the value of critical ill-ness plans and make the most of this coverage option for employees:

1. Focus on consumer-driven health plans: Identify employ-ers that offer a consumer-driven health plan. These plans often have increased deductibles and the potential for higher out-of-pocket costs. By offering critical illness coverage, these plans can fill po-tential financial gaps for employees and their dependents, and help pay for non-medical expenses such as child care or lost wages.

2. Access to group rates: Buy-ing a critical illness plan through an employer can provide access to group rates, which generally cost less than purchasing insur-ance independently. In regard to premiums, people can purchase a baseline critical illness protec-tion plan with a $5,000 payout for about $60 per year, depending on factors such as age, location, and industry. The cost for the employee would be about $240 per year for a larger payout, such as $20,000.

3. The benefits of add-ons: Some health insurers offer benefit packages that enable employ-ees to select from several plans, with the company paying a set amount and employees having the option to pay the difference to enhance or expand coverage. This approach offers companies a predictable and manageable cost while giving employees the opportunity to purchase added benefits that can protect them from unexpected health events.

4. Make sure employees un-derstand their options: It is important to develop a plan to help employees understand their coverage options and ease the en-rollment process. Pre-enrollment communications help employees learn about different plans in a relaxed setting before the enroll-ment period begins. This allows for at-home discussions with family members about coverage options and needs.

5. You can take it with you: Critical illness plans can be por-table, which enables employees to take the coverage with them if they change jobs.

Employers are in a unique position to help employees maintain and im-prove their health, with supplemental benefits playing an important role. By helping employees access vision, den-tal, and financial protection coverage, employers can help create healthier and more productive workforces. H

Gary Harger is vice president of Voluntary Products, UnitedHealthcare

"By helping employees access vision, dental, and financial protection coverage, employers can help create healthier and more productive workforces."

NEW PRODUCTS


GROUP VOLUNTARY CHIROPRACTIC PLANLandmark launched a voluntary chi-ropractic plan for groups with two or more enrolled subscribers/employees. Premiums can be paid with pre-tax dollars. The plan includes a $20 office visit co-payment, 20 annual visits, no prior authorization, and no medical management. Participating employ-ees can save more than 60% off retail when using a Landmark Voluntary Chi-ropractic Plan. Brokers can download ads about the plan to their website at www.lhp-ca.com/CABrokers/Sacra-mentoAdCampaign.

NEW BENEFIT EXCHANGE FOR MID-SIZE COMPANIESThe Namely Exchange has teamed up with Cigna. The new employee benefit exchange will enable companies to offer a menu of benefit plans in an online marketplace. The Namely Exchange will launch with 12 health insurance plans from Cigna, from which HR admins se-lect up to five plan options to offer their employees. The exchange will also con-tain plan options for dental, vision, dis-ability, and life insurance. Employees choose plans in the online marketplace. Elections and changes transmit to Cigna automatically, so enrollment is seam-less and coverage is always up-to-date. Benefit deductions feed into Namely au-tomatically, so payroll can be processed accurately and easily. For more informa-tion, visit www.namely.com.

LIFE INSURANCE PRICE COMPARISON SERVICE FOR SCUBA DIVERSLifeQuotes.com offers a service that allows scuba divers to find life insur-ance at the best possible rates. Found-er and CEO, Robert Bland said, “Life insurance shoppers who indicate that they intend to scuba dive only answer four short questions about the type and frequency of diving. In seconds, they can view the best rates for their profile, whether they are recreational or professional divers. For more infor-mation, visit LifeQuotes.com.

MEDICARE SET ASIDE ESTIMATOR AND MEDICAL RESERVE CALCULATORCare Bridge International launched a Medicare set aside estimator and Medical reserve calculator. An exten-sive medical claims database is used to forecast future medical costs. It in-cludes prescription drug costs, which can average 40% or more of the total claim exposure for medical care and treatment. For more information, visit carebridgeinc.com/Demo.

CONSUMER GUIDE TO SHORT-TERM CARE INSURANCEThe National Advisory Center for Short-Term Care Information released a guide to short-term insurance. Di-rector Jesse Slome said, “Insurance agents have a very viable and sell-able solution…for the large number of

people who seek an LTC solution but where the cost of traditional long-term care insurance or their existing health is an issue.” To get the guide, visit www.shorttermcareinsurance.org.

ONLINE CLAIMS FORANCILLARY BENEFITSColonial Life now allows customers to file disability, accident, cancer, critical illness, hospital confinement and vision claims online. The process guides them through questions that are personalized for their type of cov-erage. Customers can easily upload supporting claim documentation from their computer or mobile device. The program won’t send the claim un-til all required questions have been answered. Once the claim is filed, customers get electronic confirma-tion the claim has been forwarded to Colonial Life. To use the online claims service, customers can log onto colo-niallife.com and click on Individuals & Policyholders.

CLOUD-BASED BENEFIT ENROLLMENTEaseCentral has streamlined the ad-ministration of HR enrollment and quoting processes for insurance bro-kers. A process that used to take weeks to complete can be finished in minutes. Brokers can pull quotes and compare information from multiple carriers instantly from any desktop or mobile device. For more information, visit www.easecentral.com.

CRITICAL ILLNESSBankers Life is offering a new critical illness product, “Critical Benefit PLU.S (sic).” The plan covers cancer, heart attack, stroke, end-stage renal failure, coronary artery bypass graft and an-gioplasty. Critical Benefit PLU.S. cov-ers these additional critical conditions:• Alzheimer’s• Permanent blindness• Permanent paralysis• Permanent deafness• Coma• Major organ transplant—surgery• Major organ transplant—active wait-

ing list• Diabetic amputation

If you would like more information, visit BankersLife.com. H

NEW PRODUCTS

NEWS


HEALTHCAREMEDICARE ADVANTAGE2016 SPOTLIGHTThe number of Medicare beneficiaries enrolled in Medicare Advantage has climbed steadily over the past decade; this trend in enrollment growth contin-ues in 2016. The enrollment growth has occurred despite provisions un-der the ACA that reduce payments to plans. As of 2016, the payment re-ductions have been phased in fully in 78% of counties, accounting for 70% of beneficiaries and 68% of Medicare Advantage enrollees, according to a study by the Kaiser Family Foundation. The following are study highlights:• Medicare Advantage enrollment has

increased in virtually all states over the past year. Almost one in three people on Medicare (31% or 17.6 million beneficiaries) is enrolled in a Medicare Advantage plan in 2016. The penetration rate exceeds 40% in five states.

• 18% of enrollees are in a group plan. Employers and their retirees still favor local PPOs over HMOs.

• Enrollment is still highly concentrat-ed. If Aetna acquired Humana with no divestitures in 2016, the com-bined firm would account for 25% of Medicare Advantage enrollees nationwide. UnitedHealthcare and Humana account for 39% of enroll-ment in 2016.

• Premiums were relatively constant from 2015 to 2016 ($37 a month in 2016 versus $38 a month in 2015), although premiums vary widely across states, counties, and plan types.

• In 2016, the average enrollee had an out-of-pocket limit of $5,223, which is nearly $1,000 higher than in 2011.

• 31% of the Medicare population is enrolled in a Medicare Advantage plan. Total Medicare Advantage enrollment grew 5%, from 2015 to 2016. This reflects the influence of seniors aging on to Medicare and beneficiaries shifting from traditional Medicare to Medicare Advantage.

• 64% of Medicare Advantage enroll-ees are in HMOs; 23% are in local PPOs; 7% are in regional PPOs; 1% are in private fee-for-service plans; and 4% are in other types of plans including cost plans and Medicare

medical savings accounts.• Enrollment in private fee-for-service

plans has declined slowly since the Medicare Improvements for Patients & Providers Act (MIPPA) of 2008. Under the law, in most parts of the country, private fee-for-service plans must have a provider network. About 1% of Medicare Advantage enrollees are in these plans. 26% of enrollees in private fee-for-service plans are in coun-ties in which private fee-for-service plans are exempt from network requirements.

• Medicare Advantage enrollment in California grew 6% from 2015 to 2016.

• 44% of beneficiaries in Los Angeles County, California are enrolled in Medicare Advantage plans com-pared to only 11% of beneficiaries in Santa Cruz County, California.

• The average MA prescription drug enrollee pays a monthly premium of about $37, which is 1% less than in 2015. Actual premiums are $28 a month for HMOs, $63 a month for local PPOs, and $76 a month for private fee-for-service plans. Aver-age Medicare Advantage premiums for HMOs and local PPOs have decreased since the ACA was en-acted while average premiums have increased for regional PPOs and private fee-for-service plans.

• In 2016, 81% of Medicare benefi-ciaries had a choice of at least one zero premium MA prescription drug plan. From 2015 to 2016, the share of enrollees in zero premium MA prescription drug benefits remained relatively unchanged (48% in 2015 versus 49% in 2016). Fifty-nine per-cent of HMO enrollees are in zero premium plans; 38% are in regional PPOs; and 22% are in local PPOs. No zero premium private fee-for-service plans plans were offered in 2015 or 2016.

• The average out-of-pocket limit for a MA prescription drug enrollee is $5,223, up from $5,041 in 2015 and $4,313 in 2011. The share of enroll-ees in plans with limits above $5,000 has greatly increased across all plan types. Fifty-two percent of enrollees are in plans with limits above $5,000 in 2016 compared to 46% in 2015.

Thirty-seven percent of enrollees in 2016 are in plans with limits at the $6,700 maximum, compared to 32% in 2015 and 17% in 2011. Ninety-nine percent of regional PPO enrollees and 62% of local PPO enrollees are in plans with limits above $5,000 in 2016. In comparison, 45% of HMO enrollees are in plans with limits above $5,000 in 2016.

• The standard Medicare Part D plan has a $360 drug deductible and 25% coinsurance up to an initial coverage limit of $3,310. That is followed by a coverage gap (the doughnut hole) in which beneficia-ries pay a larger share until their total out-of-pocket Part D spending reaches $4,850. After exceeding this catastrophic threshold, benefi-ciaries pay 5% of the cost of drugs.

• 95% of Kaiser Permanente’s en-rollees are in HMOs. In contrast, enrollment in UnitedHealthcare and Humana plans is mostly in HMOs, but includes significant shares in local and regional PPOs. Humana’s distribution continues the shift from earlier years when a much larger share of Humana’s enrollees was in private fee-for-service plans. Enrollment in BCBS plans is split between HMOs (46%) and local PPOs (41%), with the remainder in regional PPOs and other plan types including private fee-for-service plans.

• Kaiser Permanente’s presence is more geographically focused than other major national employ-ers, with a heavy concentration in California, Colorado, the District of Columbia and Maryland.

• Medicare Advantage enrollment could become more concentrated if Aetna’s acquisition of Humana and Anthem’s acquisition of Cigna are approved, particularly if few divesti-tures are required. If no divestitures are required in Aetna’s acquisition of Humana, the combined company would account for 25% of Medicare Advantage enrollment nationwide. UnitedHealthcare accounts for 21% of enrollment this year.

• The Anthem’s acquisition of Cigna would have a less visible affect on the national Medicare Advantage market. Nationwide, Anthem ac-

NEWS


counts for 3% of Medicare Advan-tage enrollment and Cigna accounts for another 3%.

• For many years, CMS has posted quality ratings for Medicare Advan-tage plans. In 2016, 68% of plans had four or more stars. In focus groups, seniors have said that they don’t use the star ratings to select a plan. Nonetheless, the star ratings may be correlated with factors that seniors do use to select their plan, including provider networks, and plan benefits and costs, and thus may be correlated with enrollment.

• The Congressional Budget Office projects that about 41% of Medi-care beneficiaries will be enrolled in Medicare Advantage in 2026. This growth may prompt some to question what it will mean if the preponderance of beneficiaries are in Medicare Advantage plans.

STUDY SHOWS THAT PRIVATE EXCHANGES HELP RETAIN EM-PLOYEESSeventy-two percent of employees using a private exchange say they are more likely to remain with their employer because of their benefit program, according to a new Liazon survey. The survey findings suggest that retention can get a boost from in-creased engagement and awareness of benefits, including a better under-standing of their value in total compen-sation package. Ashok Subramanian of Liazon said, “The retention case is incredibly strong for private exchang-es. The data show us that employees appreciate their benefits more when they are engaged in the process of se-lection and view the full cost of their plans. As private exchanges become a more popular form of benefit delivery, employers are beginning to recognize the model as a way to communicate the value of the benefits they are offer-ing to their workforce.”

When asked to compare their ex-perience using an exchange to the traditional method of benefit distribu-tion, 83% of employees said they are more engaged in their health care de-cisions and 77% said they value their benefits more. Further, by increasing transparency into employer contribu-tions and the full cost of benefits, pri-

vate exchanges help employees better understand and appreciate their ben-efits as part of their compensation. In fact, 85% of respondents using an exchange, for the first time, said that they are more aware of their compa-ny’s contribution to their benefit costs and 81% said they value their compa-ny’s contribution more. For more infor-mation, visit www.liazon.com.

HOW THE ACA IS CHANGING HEALTH INSURANCE MARKETSThe Affordable Care Act has brought significant changes to the health in-surance market, according to a study by Conning. The objective of reducing the number of uninsured was accom-plished at least in part, which is creat-ing growth opportunities for insurers. However, many insurers are reporting significant losses in the new individual exchange market, which is prompting rate increases and causing insurers to question their participation in se-lected state markets. Many insurers spent significant resources preparing for the launch of the individual market exchanges. The ACA is spurring large scale acquisitions. The industry focus has turned to scale, leading to the mega-merger announcements of last year. Insurers will refine their strate-gies as the dust settles from the ACA implementation. Medicaid specialist firms will ride the growth and positive performance of their new enrollees. For more information, visit www.con-ning.com.

DATA INSIGHTS FROM THE 2016 ACA MARKETPLACERobert Wood Johnson offers the fol-lowing observations about the Afford-able Care Act Marketplace:• Carriers made adjustments in 2016

to reduce their exposure to high costs: In 2016, carriers attempted to minimize their exposure to high costs by reducing the number of plan offerings with out-of-network benefits, among other strategies. This change occurred at all metal levels and in all regions. The num-ber of Silver plans that are HMOs or exclusive provider organizations (EPOs) increased from 61% in 2015 to 69% in 2016. The number of Gold plans declined compared to other

metal levels. While the number of Silver plans increased 2.9%, the Gold plans declined by 8.7%. The number of Gold plans declined in most regions.

• Regional price variation narrowed: There was a geographic conver-gence in premium prices in 2016, as premiums rose far more in regions that had lower prices the prior year. Nationally, the distribution of aver-age premium prices tightened in all rating areas. This pattern was less straightforward for deductibles, as many combinations of cost-sharing options are on the market.

• Price variation increased within markets: Despite the reduced varia-tion across markets, differences in premium prices increased within markets. The average premium price range increased from 2015 to 2016 in a rating area. This is true for all metal levels and all regions. The dis-tribution has become more skewed, as maximum prices increased more than minimum prices. In 2016, a Blue or a national carrier offered the highest priced plan in a rating area about 75% of the time.

• There are still large regional differ-ences in plan design: Plans in the Northeast and West have a much broader range in premium prices and less variation in deductibles. Plans in the Midwest and South have a smaller range in premium prices and a far greater range in de-ductibles. There were some chang-es in these patterns from 2015 to 2016, but there are still important regional differences in plan design.

• More regulated markets have higher premiums and lower deductibles: Federally facilitated marketplaces with the most plan regulation—CA, CT, DC, MA, NY, RI, VT—had the highest premiums and lowest de-ductibles.More product changes are likely in

2017. There is room for further reduc-tion in broad network plans. Most en-trants in 2016 primarily offer narrow network products. This will probably continue to vary regionally. We may also see further reduction in Gold plans, although carriers must sell Gold and Silver. There are indications that some carriers may reduce their Bronze

NEWS


offerings. The number of Bronze plans increased very little in 2016. There may be reductions in some markets in 2017. The actuarial value of Bronze and Silver plans seems to have grown closer in 2016, and average prices are quite close in many regions. While car-riers have resisted government calls for standardization and simplification of plan offerings, the industry seems to be standardizing itself through po-tential reductions in product offerings.

Premium prices will converge fur-ther. While premium increases are expected, some regions are relatively under priced. A further reduction in regional differences will probably take place. Prices may converge at the levels seen in more regulated state-based marketplaces, which may be more appropriately priced.

The weaker markets are smaller, largely rural, have less carrier partici-pation in 2016, fewer plans, and lower premiums. These markets may expe-rience higher premium increases and continued low carrier participation, which will inhibit enrollment gains

UnitedHealth Group announced that it will exit 26 markets and participate in three. The company has not announced a decision about five others. In states where UnitedHealth Group is exiting, the insurer was priced relatively lower than others, and there tended to be a higher-priced Blue plan in the market-place. Exit states weak markets with fewer plans, less growth in the number of plans, a smaller range in premium prices, and below average premiums—despite average or above average pre-mium increases from 2015 to 2016.

UnitedHealth Group may have con-cluded that, due to the small size and low level of activity in certain markets, there would not be enough additional enrollment to offset negative claims experiences, and that it would be hard to raise premiums enough to stop los-ing money with enrollees. If other car-riers follow suit, weak markets may become weaker as they lose carriers and/or experience above average price increases. Humana seems to have po-sitions in weak markets and is priced relatively low in many of them. Huma-na’s decisions about exiting markets suggests that it may be seeking to reduce its presence in weak markets.

THE COST IMPLICATIONS OF PRI-VATE EXCHANGESPrivate exchanges could encourage employees to select less-generous plans, according to a report by Rand. This could expose employees to higher out-of-pocket costs, but premium con-tributions would drop substantially, so net spending would decrease. On the other hand, employee spending may increase if employers decrease their health insurance contributions when moving to private exchanges. Most employers can avoid the ACA’s Cadil-lac tax by reducing the generosity of their plans, regardless of whether they move to a private exchange. There is not enough evidence yet to deter-mine whether private exchanges will become prominent and how they will affect employers and their employees.Workers who choose less-generous plans could risk higher out-of-pocket costs. But their net spending would drop because premiums would drop substantially. Average employee spending could increase if employers lower their health insurance contribu-tions when moving to private exchang-es. Private exchanges are unlikely to significantly affect the ACA’s Small Business Health Options Program (SHOP) Marketplaces. For more infor-mation, visit rand.org.

STATES ARE IGNORING ACA RE-QUIREMENTS TO COVER ADDIC-TION TREATMENTAddictionInsurance plans are not cov-ering the necessary addiction ser-vices, according to a report by The National Center on Addiction and Substance Abuse. None of the 2017

Essential Health Benefit benchmark plans have adequate addiction cover-age; and more than two-thirds violate the affordable Care Act (ACA). There is no penalty for states or insurance plans that don’t comply with the law. “People with addiction may not be re-ceiving effective treatment because insurance plans aren’t covering the full range of evidence-based care. Our review did not find a single state that covers all of the approved medica-tions used to treat opioid addiction,” said Lindsey Vuolo, JD, MPH, of The National Center on Addiction and Sub-stance Abuse.

The ACA requires plans to cover substance use disorder services, which are under essential-health ben-efits. The ACA also requires these ser-vices to be provided at parity, meaning that they are comparable to medical and surgical benefits. But the ACA does not identify which specific ser-vices should be covered. Each state chooses an essential health benefit benchmark plan to determine which addiction benefits must be covered by the ACA plans sold in that state. “The absence of sufficient coverage for medication-assisted treatment for opioid addiction is particularly alarm-ing given the number of people dying or suffering on a daily basis. This kind of health care discrimination would never be tolerated during an epidemic for any other life-threatening disease,” said Samuel Ball, PhD, President and CEO at The National Center on Addic-tion and Substance Abuse. The report calls on states and insurers to comply with the law and cover the full range of effective addiction treatments. The fol-lowing are key findings of the report:• Over two-thirds of plans contain

language that violates ACA require-ments for addiction benefits.

• 18% of plans don’t comply with par-ity requirements.

• No plans cover the full array of criti-cal benefits without harmful treat-ment limitations.

• 88% of the plan documents are not detailed enough to evaluate parity compliance and the adequacy of addiction benefits.

For more information, visit centero-naddiction.org/addiction-research/re-ports. H

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