Getting on the Track to Financial Wellness

A study by Lincoln Financial finds that 55% of workers in the U.S. say they are on the right track to achieving financial well being. The study looked into the lives of the right-trackers, and found these five factors contribute to their feelings of financial security and financial success:

  1. 71% have created a financial plan.
  2. 98% are focused on the future.
  3. 78% exercise at least once a week.
  4. 63% feel good about themselves, which makes them more optimistic.
  5. 57% are enrolled in more than three non-medical benefits.

Employees define financial wellness in these terms:

  • 29% Being prepared for unforeseen events that could affect my
  • financial situation.
  • 27% Living comfortably and having control over day-to-day finances.
  • 25% Having financial freedom that allows me to enjoy my life.”
  • 19% Other.

Employees Worry About the Future of the Health Care System

Confidence about today’s health care system has remained fairly level among American workers in recent years, but they are worried about the future according to a survey by the Employee Benefits Research Institute (EBRI). The survey reveals the following:

  • 47% of workers are extremely or very confident about their ability to get the treatments they need today; 33% are confident when they look out over the next 10 years; and 26% are confident when they consider the Medicare years.
  • 42% are confident that they have enough choices about who provides their medical care today; 30% are confident when they look out over the next 10 years; and 25% are confident when they
  • consider the Medicare years.
  • 30% of workers are confident that they can afford health care without financial hardship today, 25% are confident when they look out over the next 10 years, and 24% are confident when they consider the Medicare years. For more information, visit EBRI.org.

How New Technologies are Reshaping the Future of Work

A low-skilled Uber-type job is unsustainable for many people. But the same type of contract job can work for professionals who have skills that are difficult to outsource and are resistant to automation, according to a report by www.thumbtack.com. Technology solutions and the Affordable Care Act have removed obstacles that prevented many people from starting their own businesses.

Skilled professionals without a college education report that gross revenues for their business that are up to $20,000 higher than the median income of other similarly educated workers. Because they are working full time,they tend to earn more than the part-time income of their low-skilled gig economy counterparts.

While the commodity-focused gig economy exists primarily in major metropolitan areas, skilled professional marketplaces are growing and thriving in every pocket of the country. Two-thirds of skilled professional respondents are using technology-powered marketplaces to build and grow their primary business (versus people who are doing this work to earn extra pocket money).

Marco Zappacosta, founder and CEO of Thumbtack said, “Popular discussions about the gig economy have focused on the proliferation of low-skilled jobs, such as Uber drivers, consisting mostly of people looking to earn extra income…But technology is also transforming work for individuals and small businesses, creating unprecedented opportunity for a growing class of skilled professionals.” The report draws on Thumbtack’s proprietary data from tens of thousands of small businesses, as well as the latest economic data, labor statistics and forecasts

The Future of Drug Therapies

When it comes to prescription drugs, patients will get more bang for their buck in 2020. They will have unprecedented treatment options, greater access to low-cost drugs, and better use of evidence to inform decision making, according to a study by the IMS Institute for Healthcare Informatics. More than half of the world’s population will live in countries where medicine use will exceed one dose per person per day by 2020, up from 31% in 2005. The medicine use gap between developed and emerging markets narrows. Total spending on medicines will reach $1.4 trillion by 2020 due to greater patient access to chronic disease treatments and breakthroughs in drug therapies. Global spending is forecast to grow at a 4% to 7% compound annual rate over the next five years.

Murray Aitken of IMS Health said, “During the next five years, we expect to see a surge of innovative medicines emerging from R&D pipelines and technology-enabled advances that will deliver measurable improvements to health outcomes. With unprecedented treatment options, greater availability of low-cost drugs, and better use of evidence to inform decision making, stakeholders around the world can expect to get more bang for their medicine buck in 2020 than ever before.

More than 90% of U.S. medicines will be generics by 2020. Spending on medicines in the U.S. will increase 34% over 2015. Prices for protected brands will remain constrained by payers and competition, resulting in 5% to 7% annual price increases. The Affordable Care Act (ACA) will continue affect drug spending during the next five years largely due to expanded insurance coverage. By 2020, there will be broad adoption of ACA provisions that encourage greater care coordination and movement of at least one-third of spending to an outcomes or performance basis.

More than 225 medicines will be introduced by 2020, with one-third focused on treating cancer. Disease treatments in 2020 will be transformed by the increased number and quality of new drugs in clusters of innovation around cancer, hepatitis C, autoimmune disorders, heart disease and an array of rare diseases. During the next five years, 75 new orphan drugs are expected to be available for dozens of therapeutic areas that have limited or no treatment options. By 2020, technology will enable more rapid changes to treatment protocols, increasing patient engagement and accountability, shifting patient-provider interaction, and accelerating behavior changes that improve patient adherence to treatments. Every patient with multiple chronic conditions will have the potential to use wearables, mobile apps, and other technologies to manage their health, interact with providers, fellow patients and family members. The universal use of personal devices, electronic medical records, and real-world data will offer providers and payers new ways to control costs

The Future of SHOP Plans

As of June 2014, all of the Small Business Health Options Programs (SHOPs) required by the ACA, were operational, but many features were not yet available, and enrollment was low, according to a report by the Government Accountability Office (GAO). According to CMS, all 33 of the federally facilitated SHOPs and 14 of the 18 state-run SHOPs were accepting enrollment applications as of the October 1, 2013, deadline. The remaining four state-based SHOPs became operational by the following May.

Websites, where employers could review premiums and benefits, were available on October 1, 2013 for all federally facilitated SHOPs and most state-based SHOPs. Other key features were delayed for all federally facilitated SHOPs, but available for most state-based SHOPs, such as online enrollment and the employees’ ability to choose among multiple plans.

CMS is gearing up for online enrollment for all federally facilitated SHOPs for 2015. Enrollment for the state-based SHOPs has been significantly lower than expected. As of June 1, 2014, the 18 state-based SHOPs had enrolled about 76,000 people including employees, their spouses, and dependent children in plans purchased through nearly 12,000 small employers. CMS is expected to have complete enrollment data for the federally facilitated SHOPs by early 2015. CMS officials don’t expect major differences in enrollment trends for 2014 among state-based and federally facilitated SHOPs. Most SHOPs had multiple plans  in each county, although a small number of states had counties with no plans available.

Premiums for SHOP plans are generally comparable to premiums for other non-SHOP small group plans. Many stakeholders say that getting the small business tax credit is the primary incentive for employers to use the SHOPs. However, many employers are not motivated to enroll because the credit is too small and too complex to administer. Also, employers can still renew plans that existed before the SHOPs until October 1, 2016, depending on state requirements. Also, employers have misconceptions about SHOP availability. Other factors that may hinder enrollment growth are the two-year limit on the small business tax credit and the likelihood that SHOP premiums will not be lower than non-SHOP premiums.

Factors that may stimulate enrollment growth include the phase-out of pre-SHOP plans, the implementation of employee choice with an increasing number of SHOPs, improved coordination with agents and brokers, and increased marketing to small employers. For more information, visit GAO

The Future of Employer Based Coverage

employer-based health coverageEmployers are likely to continue providing health coverage as long as they get a federal tax incentive. They will also provide coverage as long as it remains a competitive advantage to do so, since workers want group health coverage, said Chris Jennings, president of Jennings Policy Strategies. He addressed a recent a May forum in Washington, D.C., sponsored by the Employee Benefits Research Institute.

Noam Levey, who covers national healthcare policy for The Los Angeles Times said, “It is interesting to hear what people in Washington think is going to happen with employer-provided coverage, and then you talk to people in the benefits world, and you get a very different picture. The simple fact of the matter is that employer-provided health coverage clearly has a value for employers.” Levey said that employers are working to tier their benefits, at different levels for different workers. He said that he real wild card with health benefits is the federal tax treatment of health coverage and how Congress may change it. “The Cadillac tax obviously is going to be something that’s going to get a lot of debate here, and when it actually goes into effect, I’ll guarantee you we’re going to have some fireworks in Washington,” he said.

A recent EBRI survey reveals how much employees value health benefits. Seventy percent of workers rate health coverage as the most important benefit and another 10% rate it as second most important. Of the 60% of workers who report rising health care costs, one-third reduced their retirement plan contributions, which means trading off retirement benefits to maintain health benefits.

When considering a specific job, 77% of workers say health benefits are the most important benefit while only 11% say retirement savings plans are most important.

Ninety percent of workers are confident that their benefits are less expensive than what they could purchase on their own, and 80% are confident that their employer had picked the best plan for them. Ninety percent are satisfied with their health coverage, and 75% are satisfied with the mix of health coverage and wages. Ninety percent want in more choice in their health plans, which may explain the interest in health care exchanges. EBRI found that 45% of employees prefer something along the lines of a defined contribution health offering. Fronstin added, “It’s going to be interesting to see what happens down the road as workers understand more about the benefits of public exchanges and as employers introduce private exchanges. We’ll see what kind of shift there is and whether it’s employer-driven or worker-driven.”

Jennings predicts that many employers will go into private exchanges. The most likely candidates are small businesses, retailers, and employers with part-time, low-income work forces. While many employers are considering private health exchanges, Americans who work for larger employers will probably not see that change immediately, he said.

Jennings said, “It’s going to take a few years for all that to shake out. Employers are slow to react…They want to see how the exchanges are operating. They want to see satisfaction rates.” However, Jennings said that employers will have more incentive to look at alternatives if there is a major resurgence in healthcare-cost inflation. Jennings doesn’t anticipate an abrupt reduction in benefits among employers since larger employers are already preparing for the Cadillac tax and high-cost plan assessment.

George Washington University professor Joe Antos cited an Aon Hewitt study of workers in its own private exchange, which found that 58% selected a different level of coverage from one year to the next. “What that says is that having somebody else decide what your coverage should be probably isn’t going to suit a lot of people. A private exchange gives people more choices. It’s an opportunity to find out what people really want and not pour more money into something that may not be of such great value.”

Antos said that the Affordable Care Act’s (ACA) coverage mandate primarily affects lower-wage workers. Higher-income workers generally work for companies that already offer coverage. Antos said, “If you’re a part-time worker and you’re working 32 hours a week, you might drop to 29 hours because your employer doesn’t want to get caught in all of this. Are you going to be able to make up those hours? Are you going to be able to get another job?” He cited a recent study by the Urban Institute that calls for eliminating the employer mandate since relatively few people will not have insurance. Antos said that it’s highly unlikely that the federal government will enforce the unpopular employer mandate. He also said that a shift to defined contribution health plans is inevitable. For more information, visit http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5435

Carriers Grapple with Uncertainty Over the Future of Healthcare

Three-fourths of the 30 worksite executives said that their company’s first, second, or third most formidable obstacle involves uncertainty over the future of healthcare. This factor replaced dealing with product competition and attracting quality brokers as the number one obstacle in the past two studies, according to  a recent Eastbridge survey.

In spite of all the issues surrounding health care reform, the executives remain extremely optimistic about the worksite/voluntary industry’s potential for new sales growth over the next five years. The average expected growth rate was around 9% for the industry and just under 15% for their own companies.

LTC Riders May Be the Future of the Industry

Standalone long-term care insurance products have seen disappointing sales in recent years while combination products, or riders, have seen significant growth. These combination products may be the future of the industry, according to a study by Conning.

Conning analyst, Terence Martin said, “The need for long-term care Insurance is growing as the population ages, life spans lengthen, and the cost of skilled nursing and assisted living accelerates. However, standalone long-term care insurance products have not found acceptance with the consumer due to ongoing premium rate increases on new and existing policies and the uncertainty of ever receiving a benefit.” The low interest rate environment has hurt insurers’ investment returns and has accelerated exits from the market in recent years.

In contrast, long-term care riders on life insurance or annuity policies, have seen increased sales and may represent a more acceptable risk profile for insurers.

Stephan Christiansen, director of research at Conning said, “Insurers saw an opportunity in the long-term care market to meet a significant consumer need, but have largely been unable to sustain a viable business model in standalone products. Even though combination products have a higher premium than standalone products, the greater certainty of receiving a long-term care or life insurance benefit is resonating with consumers, and the product is beginning to break through in terms of sales success…They do represent a…more acceptable risk profile to insurers. The question remains…whether the many structural issues…that have plagued insurer’s standalone products will also affect growth and profitability of combination products.” For more information, visit www.conningresearch.com.

After the election, insurance industry insiders look to future

President Barack Obama’s re-election means current policies will remain, including the continued implementation of the Affordable Care Act. Key issues to be tackled in the coming weeks and months include the “fiscal cliff,” the proposal to establish a uniform fiduciary standard and the implementation of health insurance exchanges as part of the health care reform. AHIP’s president and CEO Karen Ignagni said the health insurance industry remains committed to providing affordable coverage and a strong safety net for those who need it most. “As the health care reform law is implemented, policymakers must prioritize affordability for consumers and employers.” National Underwriter Life & Health (11/7)

Last Updated 09/22/2021

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