Workers Are in the Dark About Upcoming Plan Changes

inthedarkThe October 1 deadline is looming for employers to notify workers of their coverage options under the Affordable Care Act (ACA). However, 69% of workers say their employers haven’t informed them of upcoming changes to their benefits. Michael Zuna, Aflac’s executive vice president said, “Many workers will be blindsided this open enrollment season because…they already struggle with understanding their insurance policies and covering the high out-of-pocket costs from gaps in their current coverage. Over the next few months, these challenges will be exacerbated as employees may be more confused by changes in their policies, and face greater gaps in their health insurance coverage leaving them at risk. With little notice, education, and coverage options to help guide and support them during this season, employers could face a highly dissatisfied workforce.”

Only 9% of employers say they are very prepared to implement required changes to their business based on the health care reform law. Forty-one percent of employers expect health reform to lead to more gaps in coverage and 69% say employees’ costs will increase as a result of health care reform.

Zuna said that employers should provide aggressive education and offer ancillary benefit options to close gaps in workers’ coverage. Zuna said that employers should take advantage of resources to help employees understand their coverage, including visits from an insurance agent or broker. In fact, employers named insurance companies as the most helpful source of information they have received on the health care law.

With many companies facing the decision to limit or decrease employer-paid benefits, providing voluntary benefits can help workers close the gaps in their coverage, at no additional cost to the company, said Zuna. He suggests that employers do the following:
• Mail benefit materials to employees’ homes so they can discuss their options with their family.
• Host a town hall meeting with a benefit advisor to discuss changes and answer questions that apply to the group. Encourage one-on-one meetings with employees who have more questions.
• Conduct webinars to reach all employees regardless of location.
• Post FAQs in high-traffic areas, such as employee break rooms, cafeterias, and bathrooms. Aflac is offering guidance at

ACA Expected to Deliver Lower Than Expected Premiums

Premiums in the health insurance marketplace will be nearly 20% lower in 2014 than previously expected, according a report released by  HHS Secretary Kathleen Sebelius. Proposed individual premium rates for 2014 are 18% lower than HHS’ previous estimates for the 10 states and the District of Columbia that HHS looked at.

In the six states that provided information in the small group market, proposed premiums are estimated to be 18% lower than for similar coverage without the Affordable Care Act.

Estimates are based on premium proposals for the lowest cost silver plan in the individual and small group markets. Actual 2014 premiums may be even lower when health plans are offered in the Marketplace this fall. Thanks to the rate review process and competition, a number of  states are reporting significantly lower rates than what was proposed earlier this Spring.

In 2014, the cheapest silver plan for a 25-year-old individual in Los Angeles County is $174 a month without a tax credit and $34 a month for an individual whose income is $17,235. Also, an individual can purchase a catastrophic plan for $117 per month.

Further, data from the Medical Expenditure Panel Survey reveals that the average premiums for employer sponsored insurance increased only 3% from 2011 to 2012, which the lowest increase since the data series started in 1996.

Since the health law’s rate review provisions were implemented, there has been a dramatic drop in the number of requests for insurance premium increases of 10% or more — from 75% to 14%. To date, the rate review program has helped save Americans an estimated $1 billion. For more information, visit

Will Health Reform Bankrupt the Carriers?

The Affordable Care Act will put health insurers out of business if it’s fully implemented in two to five years, warns Jeff Kubik, founder and CEO of Employee Benefit Risk Management (EBRM). Having guaranteed issue without the ability to differentiate risk will bankrupt health insurance carriers. A great example is the death spirals always found in association groups or the disaster of multiple employer trusts, explains Kubik.

He illustrates the holes in a theory that most non-risk managers promote: putting together 10,000 lives has the same credibility of putting together a 10,000-life employee group. The actively at-work component is just one factor that requires different pricing for a true 10,000-life employee group. Putting together 100,000 sick lives does not make a credible 100,000 life healthy group, he says.

He says that, if ACA drives the private market out of business, a huge wave of shifted costs will swamp Medicare and Medicaid because the hidden tax subsidy from the private sector has to come from somewhere. Kubik predicts that demographics and technology will guarantee rising healthcare costs and that the public sector has no ability to control these inevitable cost increases. A good example is with the substantial rate increases scheduled to take place under Obamacare. Politicians won’t reduce benefits or increase revenues because it affects their ability to be elected. Traditional governmental methods of inflating their way out of debt won’t work, since health care costs historically rise faster than other costs, he explains. A better solution is to return all health care to the private sector, which is constrained by economics and cannot over promise without going out of business, he said. For more information call Falk Associates at 773-883.2580.

Fewer Workers Expect Retiree Health Benefits

A growing number of workers realize that they will not get retiree health care from their employer, according to a report by the Employee Benefit Research Institute (EBRI). Workers are still more likely to expect retiree health benefits than they are to get these benefits, but the expectations gap is closing.

By 2010, 32% of workers expected retiree health benefits while only 25% of early retirees and 16% of Medicare-eligible retirees had them. Most employers that have continued to offer retiree health benefits have raised premiums that retirees are required to pay, tightened eligibility, limited or reduce benefits, or enacted some combination of these changes. Increasing retiree contributions tops the list of likely changes among employers that still offer the benefit: 43% of employers say they are very likely to increase the retirees’ portion of premiums next year while 35% are somewhat likely to do so. To get the full report, visit

Companies increasingly shift retirees to exchanges

A growing number of companies are contracting with health insurance exchanges for retiree health coverage, allowing retired workers to select the plan that works best for them. Most employers that have contracts with exchanges provide retirees with fixed monthly assistance to buy coverage or health reimbursement arrangements. The Washington Post/Kaiser Health News (10/15)

Governor Signs Bills Sponsored by the Commissioner

Governor Jerry Brown has signed seven bills that Commissioner Jones and the California Department of Insurance (CDI) sponsored this legislative year:

• Long-Term Care: Considered to be one of the strongest long-term care insurance consumer protection measures in the country, AB 999 would allow consumers to review policy language before a purchase in order to allow a consumer to make a more informed decision, provide more pooling of claims experience to spread cost more broadly, limit the inclusion of assets in investment yields in premium rates, provide more flexibility in the rate increase review process, and impose stricter loss ratio requirements to help prevent repeated LTC insurance rate hikes on consumers and seniors who need this product now more than ever.

• CO-Ops: AB 1846 establishes a regulatory licensing framework for Consumer Owned and Operated Plans (CO-OPs). CDI now has the oversight to regulate these new non-profit health insurer organizations. With CO-OPs, consumer-driven, nonprofit health insurance issuers would offer health products in the individual and small group markets. In order to encourage the creation of CO-OP health organizations, the federal government has been awarding low-interest start-up and solvency loans to qualified nonprofit entities; to date, more than 20 established CO-OPs located in more than 20 states have been granted more than $1.6 billion in low-interest loans out of a total of $3.8 billion available in federal loan funds. CO-Ops are intended to provide  insurance to nearly one million low-income Californians in need of affordable health care.

• Bounty Hunters: AB 2029, the Bail Fugitive Recovery Persons Act, reinstates education, training, documentation, notice, and conduct requirements for bounty hunters under the California Penal Code, an act that had sunset on January 1, 2010. With the sunset of the Act, CDI has seen a significant number of cases in which bounty hunters have overstepped appropriate, if not legal, boundaries in apprehending bail fugitives.

• Health And Disability Fraud: AB 2138 increases the funding to District Attorneys and to CDI to support to investigate and prosecute health and disability fraud.

• Insolvent Insurers: AB 2303 will allow the Insurance Commissioner to take over an insurer that the U.S. Treasury Secretary determines is insolvent or in danger of becoming insolvent. The Dodd-Frank Wall Street Reform Act of 2010 granted the U.S. Treasury Secretary with the authority to make insolvency-related determinations on specified insurers, but let the act of conserving and liquidating the insurers under the state’s jurisdiction. As one of the first pieces of state-level legislation in the Nation to address this procedural gap, AB 2303 ensures a timely process for initiating the conservation and liquidation process of insurers.

• Reinsurance: SB 1216 ensures that California aligns with federal law and is current with NAIC Model language. It also ensures that the Insurance Commissioner has the needed authority to carry out the new reinsurance regulatory activities.

Entrprise Risk: SB 1448 incorporates changes the NAIC made to its Insurance Holding Company System Model Law and Regulations. Controlling persons of a holding company system must disclose an enterprise risk. An enterprise risk is any situation that involves one or more affiliates of an insurer that, if not quickly corrected, would adversely affect the financial condition of the insurer.

Fully Insured Multi-Carrier Corporate Health Exchange

This fall, more than 100,000 U.S. employees will be enrolling in health benefits through Aon Hewitt’s, fully insured, multi-carrier corporate health care exchange. The Corporate Exchange includes consumer-based decision support tools that turn selecting health benefits into a retail shopping experience. Individuals in Aon Hewitt’s exchange will have access to a wide range of benefits experts and advisors to answer questions and provide guidance during enrollment and throughout the year. Benefits will be offered by nine national and regional carriers, including UnitedHealthcare, Cigna, and Health Care Service Corporation, which operates Blue Cross and Blue Shield plans for 14 million members, including 5 million national account members visit For more information, visit

Managing Benefits Online

BeneTrac has made it easier for brokers, human resource managers, and employees to manage health and other insurance plans online in the BeneTrac platform. BeneTrac updated its platform in response to information from customer surveys; feedback from employees, HR administrators, and brokers; and usage data. For more information, visit, call 619-788-5800 or

Consumer Reports Offers Guide to Healthcare Reform

As the calendar counts down to open enrollment season, consumers  wonder how the health reform law will affect them and their families. To help answer those questions, Consumer Reports is releasing a guide, “Health Reform: Seven Things You Need to Know. For more information, in English or in Spanish.

How Reform and Industry Trends Are Affecting Employer Healthcare Costs

With key provisions of the Patient Protection and Affordable Care Act (PPACA) now in effect for over a year, Truven Health Analytics has assembled data tracking how reform and other industry trends have affected employer healthcare costs. Researchers used claims data from 340 large U.S. employers representing 18.3 million covered lives. They tracked healthcare costs over the past five years and project costs for 2012 and 2013.

Medical and pharmacy costs for employees and their dependents increased 4.6% from 2010 to 2011, which is the smallest increase in annual employer healthcare costs over the past five years. The research also projects that allowed amounts will continue to grow at a moderate rate of 4% to 5% in 2012 and 2013. The relatively modest 2011 cost trend of 4.6% reflects the impact of PPACA and Mental Health Parity regulations that became effective in 2011. The following is an overview of the findings:

• Extension of Dependent Coverage: The extension of dependent coverage through age 26 for unmarried children accounted for 1.4% of the overall increase in health care costs and 4.6% of the employers’ increase in health care costs. The lower-than-average health care costs for individuals 19 to 26 beginning coverage in 2011 reduced average per member costs by 0.2%.
• Preventive Services Coverage: The PPACA requirement to cover more preventive services has resulted in a 3.8% increase in physician’s office visits for preventive care. This modest increase may reflect the generous preventive coverage offered by many large employers prior to PPACA.
• Mental Health Parity Regulations:†Roughly 0.4% of the 4.6% 2011 healthcare cost trend was driven by a 13.7% increase in Mental Health and Substance Abuse services due to the Mental Health Parity and Addiction Equity Act of 2008.

For information, visit

Health Exchange Lessons From Massachusetts

A report by the University of Massachusetts Medical School (UMMS) and the National Academy of Social Insurance (NASI) examines the work and lessons learned from “Early Innovator” and other advanced states as they gear up for the changes brought on by health care reform.

“There are huge opportunities but also technological challenges for states as they implement the requirements of health care reform, including many that take effect in 2014,” said Michael Tutty, director of the Office of Health Policy and Technology at UMMS, and co-author of the report. “We hope that by sharing the experiences of other states, particularly those that have been working on implementation the longest, we can bend the learning curve for policymakers and promote collaboration among those looking to prepare for and advance health care reform in their states.”

Five themes emerged from interviews with policy and technology leaders:

1) Agreeing on a common vision, strategy, and plan for IT development is essential for meeting fast-approaching ACA deadlines.
2) A careful assessment of a state’s internal and external IT resources is needed.
3) A complicated and pressing challenge is to integrate policy and technology between an Exchange and a state’s Medicaid program.
4) Leveraging federal resources, reusing technologies developed by other states and federal agencies, and participating in multi-state collaboratives may accelerate development and help minimize operational costs.
5) Despite federal and state policy, technology, and political uncertainties, proceeding with development is necessary in order to meet aggressive federal implementation deadlines.

For more information, visit

Last Updated 10/20/2021

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