Employer Sponsored Insurance Rate Remains Stable

Since 2009, employer-sponsored insurance has been on the decline in California. A key question around the Affordable Care Act (ACA) was whether the reforms would further erode employer-sponsored insurance coverage. A recent survey by the California HealthCare Foundation finds that employer-sponsored insurance in the state has remained stable from 2013 to 2015. Worker eligibility for employer-sponsored insurance also remained stable, and even increased among some groups. However, the percentage of eligible workers who chose to enroll in employer-sponsored insurance declined from 86.4% in 2013 to 80.2% in 2015, bringing California closer to the national average take-up rate of 79%. This decline could be caused by the availability of alternative coverage options through Medi-Cal and Covered California.

When Long-Term Care Insurance Benefits Run Out

A relatively new type of long-term care policy, “Partnership Plans” could be a good option for many consumers, says Denise Gott, CEO of ACSIA Partners. The Partnership Long-Term Care Insurance Plans emerged over two decades with little fanfare. These plans are now available in a majority of states, but most consumers don’t know about them.

Partnership Plans are private long-term care insurance policies that let people keep some or all of their assets if they exhaust their policy’s benefits and then apply for Medicaid. With a Partnership Plan, you can maintain a higher level of wealth and still qualify for Medicaid.

The American Assn. For Long Term Care insurance explains that the Long Term Care Partnership Program is a joint federal-state policy initiative to promote the purchase of private long term care insurance. There is an important benefit to purchasing a Partnership-qualified long term care insurance policy. Policyholders earn one dollar of Medicaid asset disregard for every dollar of insurance coverage paid on their behalf. Here’s an example. Stephanie has a Partnership-qualifed policy, which has paid out $150,000 of insurance claim benefits. She earns a Medicaid asset disregard that allows her to keep an additional $150,000 over the asset level she would have had to meet to be eligible for Medicaid. The Partnership Program also protects those assets from Medicaid estate recovery after death.

Gott explains, “This can make a huge difference. You no longer have to impoverish yourself to get public assistance. Middle-class families can keep solvent and keep productive longer as a result. Knowing you’ve got this backup can give you an extra incentive to protect yourself with LTC insurance in the first place. That’s why Uncle Sam and the states set it up. Some people may choose a less expensive policy with more limited benefits, knowing the public backup is there.”

Gott said, “To get a state-approved Partnership Plan, you need to take care, Not all of today’s long-term care policies fit the category. You need to seek out one of the relatively few approved policies now available.” For more information, visit acsiapartners.com or aaltci.org.

The Growing Global Travel Insurance Market

Regulatory authorities and governments of several countries have made travel insurance mandatory. This trend is likely to increase the uptake of these products, expand business, and increase profitability of travel insurance providers from 2016 to 2020, according to a report by Technavio. A growing market and evolving demand have pushed insurance companies to develop and customize products, making it a highly competitive market for local and international private travel insurance companies that offer competitive pricing for their products.

Travel insurance covers expenses, such as trip cancellation due to a medical emergency during domestic and international travel. Some policies also pay for damage to rented equipment, such as car, or for ransom in case of kidnapping. Many online companies that sell flight tickets or tour packages offer travel insurance at an additional cost.

Employees Appreciate Voluntary Insurance Benefits

Seventy-nine percent of employees see a growing need for voluntary insurance compared to last year. And of those, 60% say the need is driven by the rising cost of medical services, according to an Aflac survey. Employees who are offered voluntary benefits report higher satisfaction with their jobs and their benefits. Employees whose work site offers voluntary benefits are more likely to say the following:

  • They are prepared to pay for out-of-pocket expenses not covered by major medical/health insurance related to an unexpected serious illness or accident (73% versus 56%).
  • They are extremely or very satisfied with their jobs (73% versus 57%).

Americans Greatly Underestimate the Cost of Homecare

The average American underestimates the cost of in-home care by almost 50%, according to a Genworth study. Thirty percent say that home care costs less than $417 a month when the national median rate is $3,861 a month for an in-home aide or $3,813 a month for homemaker care. Homemaker costs are up 2.6% from 2015, marking the highest year-over-year increase across all care categories. In comparison, home care aide services rose modestly at 1.25% since 2015. Over the past five years, home maker costs have risen 11% and 6.6% for health aides.

Interestingly, people who stand to be affected most by long term care events are more likely to underestimate the cost of care. This includes women (who are more likely to enter caregiving roles), single adults (who may not have a partner to rely on for caregiving needs), and younger adults (aged 25 to 45), who are more likely to deal with the reality of a parent needing care).

The national median cost of care rose across all care settings, except adult day care, which decreased slightly. The monthly cost of a private nursing home room is $7,698, up 1.24% from 2015. The cost of a semi-private room is up 2.27% to $6,844 a month. Assisted living communities saw a slight increase in costs of .8% to $3,628 a month. Adult day care costs fell 1.25%.

Many Lose Sleep Over Healthcare/Insurance Bills

Healthcare or insurance bills are making 29% of Americans lose sleep, according to a CreditCards.com report. That’s down 6% from 2009. Paying for healthcare or insurance is the second-biggest financial fear among women. Healthcare or insurance bills keep 33% of women and 24% of men awake at night, at least occasionally. Sixty-eight percent of women and 56% of men lose sleep over at least one money problem. The survey reveals the following:

  • Saving for retirement keeps 39% of Americans awake at least occasionally (44% of women and 35% of men). Saving for retirement is the most common worry among people 30 and older, college graduates, and those with annual household incomes of a least $75,000.
  • Thirty percent of Americans lose sleep over educational expenses for themselves or a family member. Affording educational expenses is the number one concern among Millennials and non-whites. Worries over educational expenses ranks second among men.
  • 22% lose sleep over paying the mortgage or rent.
  • 22% lose sleep over credit-card debt. The fact that credit card debt is the least of people’s worries seems to indicate that most Americans have their card debt well under control.
  • Money anxiety peaks from 50 to 64 and drops sharply after 65.
  • Households making $50,000 to $74,999 a year are 14% less likely to lose sleep over financial matters than they were in 2015.

Employees Want Financial Guidance and Benefits

Forty-six percent of employees expect their financial situation to get better in the next year, and they’re turning to the workplace for financial education, according to a recent MetLife study. These financial concerns may be making employees more loyal, with 45% of employees planning to work for their current employer 12 months from now, compared to 41% last year. The study finds the following:

  • 47% of employees say that non-medical benefits can help limit their out-of-pocket medical expenses.
  • 52% of Millennials understand life insurance compared to 69% of Baby Boomers.
  • 38% of Millennials understand long term disability insurance compared to 57% of Baby Boomers.
  • 68% of Millennials prefer one-on-one consultations with a benefit expert, compared to 62% of Gen Xrs and 57% of Baby Boomers.
  • 44% of Millennials want their employer to help them solve their financial concerns compared to 20% of Baby Boomers
  • 75% of Millennials say employers have a responsibility for the financial well-being of employees.
  • 62% of employees are looking to their employer for more help in achieving financial security through employee benefits, compared to 49% in 2011.
  • 44% of employees feel in control of their finances.
  • 65% of Millennial employees don’t have a savings cushion of three months of salary.

The study finds that strong communication is a key driver of employee confidence when selecting benefits. The most effective resources are one-on-one consultation. Todd Katz, executive vice president, Group, Voluntary & Worksite Benefits, at MetLife said, “Employers looking to harness the power of one-on-one consultations can turn to outside experts such as brokers, consultants, and enrollment communications firms. For employers, this is an opportunity to evolve into a more consultative role and provide meaningful education and training for employees, while engendering loyalty. Helping employees understand the value of their benefits through engaging communications is critical for employee and for the workplace. If employees fully understand their benefit options, they’ll make better purchasing decisions and decrease their financial stress. To alleviate confusion about benefits, it’s critical that employers…enable their employees to make informed decisions about which benefits best suit their needs. This includes providing a variety of decision-support resources and offerings to help them make educated benefit decisions.”

Insurance Consolidation Continues

The insurance industry saw significant increases in mergers and acquisitions globally in 2015, according to a study by Conning. Jerry Theodorou, vice president, Insurance Research at Conning said, “The distribution sector remains in a state of consolidation, with the number of global mergers and acquisitions increasing for a third consecutive year…Deal volume…reached a new high in 2015 at nearly $20 billion, albeit driven by one significant transaction.”

The Conning study analyzes U.S. and non-U.S. insurance industry mergers and acquisitions across distribution and services sectors. Specific transactions are detailed, and trends are analyzed across sectors. Steve Webersen, head of Insurance Research at Conning said that insurance services sector transactions increased more than 25%, driven by acquisitions of claims adjusters/TPAs, health services firms, and insurance technology providers. He added that buyers are interested in big data and predictive analytic technologies as well as greater capabilities to meet the demands of a changing health care environment, such the Affordable Care Act.

Medigap Continues to Provide Critical Financial Protection

Medicare supplement (Medigap) insurance remains a critical source of health coverage for low-income beneficiaries, particularly those living in rural areas, according to a  report from America’s Health Insurance Plans (AHIP). Enrollment has continued to grow over the past several years with more than 11 million Medicare beneficiaries enrolled in 2014. Medigap coverage helps cover significant out-of-pocket costs that are not covered by Medicare, such as deductibles, coinsurance, and copayments. As a result, Medigap beneficiaries are overwhelmingly satisfied with their coverage, and more than 9 in 10 would recommend Medigap to a friend or relative. The follow are key findings:

  • 48% of Medicare beneficiaries without any additional insurance coverage had Medigap policies in 2013.
  • 58% of Medigap policyholders in 2013 were women, and 42% were men.
  • 45% of Medigap policyholders were 75 years or older compared to only 38% of all Medicare beneficiaries.
  • 46% of rural Medigap policyholders and 39% of all Medigap enrollees had annual incomes below $30,000 in 2013.

The Dept. of Insurance Year in Review

The California Dept. of Insurance lists the following actions it took last year related to life insurance, health insurance, and workers comp:

  • Issued emergency regulations on the adequacy of health insurance medical provider networks.
  • Created a healthcare price and quality ratings comparison tool (California Healthcare Compare at consumerreports.org).
  • Issued emergency regulations strengthening requirements for health insurers to have enough doctors, hospitals, and clinics in their networks to ensure that consumers have timely access to health care. The regulations were approved on February 2, 2015.
  • In a major fraud case, pharmaceutical company Warner Chilcott agreed to pay $23.2 million for defrauding California insurers through drug marketing fraud. Jones insisted that Warner Chilcott agree to discontinue the unlawful promotion of pharmaceutical products identified in the whistle blower complaint and sold in California. Additionally, the Commissioner settled another insurer fraud case brought against Daiichi-Sanyo for $950,000 for making illegal kickbacks to healthcare providers.
  • Concluded a 15-year-old case involving Executive Life Insurance Company, which was placed into liquidation over 25 years ago by the department. French company Artemis S.A. agreed to pay $200 million for allegedly defrauding Executive Life in addition to $110 million it paid previously bringing the total recovery against all defendants to over $930 million.
  • In 2015, there were five national settlements with insurers as a result of investigations of their failure to use the Death Master File database to pay life insurance benefits. Insurers representing over 73% of the life insurance market have agreed to reform their practices and use the Death Master File database to identify deceased policyholders in order to pay benefits to their beneficiaries. Combined settlements have resulted in life insurers returning more than $1 billion in life insurance benefits to beneficiaries nationwide.
  • For fiscal year 2015/2016, the Department awarded $34.95 million in grants to district attorneys to combat workers compensation fraud and more than $21.95 million in grant funding to fight auto and organized auto fraud. As of November 30, Dept. of Insurance detectives arrested 745 people for insurance fraud this year.

Last Updated 05/25/2022

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