Insurance Insider News (Jan 27,2010)
NEW PRODUCTS l IN CALIFORNIA l HEALTHCARE l EMPLOYEE BENEFITS l FINANCIAL PLANNING
NEW PRODUCTS
New Twist on Life Settlements
AGAP of Texas introduced the AGAP Life Offering, which it calls, a life settlement with a twist. A surety bond is purchased from Gresham Insurance Brokers inc., an authorized Lloyd’s of London broker, committing them to paying the face value of the life insurance policy if the insured lives beyond a pre-determined date. Investors know exactly when their life offering will mature and the rate of return. With each Life Offering investors’ money remains secure until it is returned to them. For more information, call 972-447-0010.
Pet Health Insurance
PurinaCare now has a group plan that offers a discount on premiums to employees and affiliate groups. The minimum group has 100 employees or members. PurinaCare Pet Health Insurance has been offered at a discount to employees at parent companies Nestlé Purina PetCare Company and Nestlé USA and underwriter Central States Indemnity Co. of Omaha. During this testing phase, the company got several requests from large corporations to offer PurinaCare as an employee benefit. William Gorman, CLU, PurinaCare’s National Director of Group Sales, will lead the nationwide effort to inform employee groups and associates about the benefits. For more information, call 877-8PURINA x0483, e-mail William.gorman@purinacare.com, or visit www.purinacare.com.
Salary Shield
Heritage Union Life Insurance Company has partnered with Parsonex
Capital Management to provide Heritage Union’s SalaryShield income protection life insurance product to families across the country. SalaryShield plans are designed to protect the income an American family relies on -- up to $200,000 a year. If a breadwinner dies, insured families get a check each month, much like a paycheck, until the breadwinner would have been 65. For more information, visit www.salaryshield.com.
Enhanced Disability Offerings
Guardian Life is offering an upgraded suite of business disability products. Overhead expense insurance covers typical business expenses, such as rent, utilities, phone, staff salaries, and other fixed costs. An accelerated benefits feature advances benefits to help cover immediate needs. A supplemental overhead expense benefit rider creates a pool of funds that provide an additional month’s worth of benefits to be used whenever expenses exceed the monthly benefit amount, even from day one of the claim. For more information, visit www.GuardianLife.com/service_center/find_a_local_office.html.
Online Financial Planning Materials
New York Life launched www.GuaranteesMatter.com, a site that offers consumers educational and planning materials to help them navigate the changing financial landscape.
IN CALIFORNIA
Clinic Offers Refunds for Taking Vitamins
US Tele-Medicine (UTSM) in Beverly Hills is now paying back the money that consumers spend on natural remedies. USTM reimburses patients for nutritional blends, homeopathy, vitamins, minerals, botanicals, herbs, and more. USTM is a structured Tele-Medicine group with a primary specialty in Integrated Medicine and Pain Management. The clinic offers physician consultations by phone and over the Internet. For more information, visit: www.epatienthealthcare.com.
Senator Introduces Universal Healthcare Bill
An editorial in the Oakland Tribune doesn’t hold out much hope for the state passing the latest universal healthcare bill. Under Senate Bill 810, by Mark Leno (D-San Francisco), private insurance companies that provide the same benefits as the state agency would be banned from offering direct coverage in California. The California Health Agency would negotiate with healthcare providers, set fees, and pay claims.
The following is a summary of the editorial:
[The bill] is virtually the same as a failed measure former Sen. Sheila Keuhl tried to foist on Californians. A premium commission would recommend how to pay for the agency and send the financing plan to voters for ratification.
Most likely, the funding would come from higher taxes and contributions from individuals and businesses. Just how it would affect nonprofit HMOs like Kaiser, which owns hospitals, clinics, and employs medical professionals, is anyone's guess. It also is far from clear how much businesses and individuals would have to contribute to the agency or what the economic impact would be on large and small firms.
The bill would add a huge public cost and create considerable uncertainty at a time when the state government and the private sector are struggling for survival.
This is the worst possible time to introduce such a massive increase in state government operations, especially in California, whose lawmakers have demonstrated a lack of leadership and competency even in the best of times.
Fortunately, Gov. Arnold Schwarzenegger strongly opposes the legislation and would veto it should it come to his desk. Everyone in the Legislature knows this even if they don't understand how threatening such a sweeping measure could be to economic recovery. S.B. 810 has received more attention than it deserves and any further legislative action would be a waste of time.
HEALTHCARE
Only one in Four Americans Favor Healthcare Reform Legislation
Only 25% of Americans, who were surveyed by LIMRA, favor the healthcare reform legislation proposed by Congress. Scott Kallenbach, associate research director, LIMRA strategic research said, “These results are not surprising given election results in the Massachusetts' senatorial race where the winning candidate ran on a platform against the healthcare reform legislation. With 86% of those surveyed saying they had healthcare coverage, we believe that many people are leery that the proposed legislation could affect their coverage.”
Seventy-five percent of Americans who have healthcare are happy with the quality of the care relative to the premiums they pay. While one in four Americans surveyed support the healthcare reform legislation, 40% are opposed to it and 35% say they don’t know enough to form an opinion. For more information, visit www.limra.com/newscenter/NewsArchive/ArchiveDetails.aspx?prid=111.
Loosening Benefit Mandates Could Reduce the Uninsured Rate
Establishing a federally chartered entrepreneurs’ health insurance policy that’s free of mandated requirements, would provide real cost savings for the nation, according to a study by the Pacific Research Institute, a free-market think tank. Under a so called “entrepreneur’s policy,” individuals, families, and smaller groups could purchase a policy free of the benefit mandates imposed by state laws.
According to the study, enrollment would be about 8% or 16.8 million individuals. At the state level, projected enrollment would range from 1.6% to 11.9% of those insured privately or uninsured in Idaho or in Rhode Island.
According to the study, entrepreneurs’ coverage could also improve healthcare by engendering competition in the market for health insurance, thus decentralizing decision-making and offering patients greater choice. This form of coverage could be an important step toward restoring health insurance as protection against catastrophic events, rather than as prepayment for medical services. It would also improve incentives to economize on the consumption of medical services. For more information, visit www.pacificresearch.org.
Mass. Health Underwriters Group Responds to Election
The election of Republican Scott Brown to fill the late Senator Ten Kennedy's Massachusetts Senate seat reflects how people feel about sweeping health reform in their state, according to a statement by the Massachusetts Association of Health Underwriters (MASSAHU). The following is a summary of a statement by MASSAHU: People of Massachusetts understand the federal healthcare reform bill will cover more people but, not lower costs, The bill is largely modeled after Massachusetts state's programs.
Massachusetts implemented sweeping healthcare reform in 2006 and the law was passed with bipartisan support. While Massachusetts ranks first in the country with 97% of its residents insured, the state’s healthcare budget is exploding and citizens have longer wait times to see doctors, yet healthcare costs are still rising at a double digit pace and placing a significant strain on employer’s budgets all across the state.
According to MASSAHU, “We want to start over and create a bill that will lower costs and improve the quality of the healthcare we get, according to the (MASSAHU) statement.” For more information, visit www.massahu.org.
Membership Continues to Fall for Top Health Plans
The nation’s leading health insurers saw membership declines through the third quarter of 2009. Top plans saw an aggregate decline of 1.7 million members from September 2008 to September 2009. Fully insured and administrative services only (ASO) segments continue to experience losses, according to a report by Mark Farrah Associates.
The recession and high unemployment are driving down membership for most plans. Total membership for the eight leading plans decreased by over 1.7 million members. Membership declined 1.3% -- from 133.2 million in the third quarter of 2008 to 131.5 million for the third quarter of 2009. ASO enrollment decreased 1.1% and risk enrollment decreased 1.6% for these plans from the third quarter of 2008 to the third quarter of 2009.
The eight leading companies [Aetna, CIGNA, Healthcare Service Corporation (HCSC), Health Net, Humana, Kaiser Permanente, UnitedHealth Group, and WellPoint] reported a combined loss of 860,000 members from second quarter of 2009 to the third quarter of 2009. ASO enrollment declined 0.4% and risk enrollment declining 0.9% for the period. For more information, visit www.markfarrah.com.
EMPLOYEE BENEFITS
HR Departments Are Ready to Buy in 2010
HR buyers plan to increase their budgets by 25% this year. They are looking to boost the following programs: corporate social networking tools, employee wellness programs, management and leadership development initiatives, and performance management systems, according to a report by HRmarketer.com. The following are some key trends according to HR professionals surveyed by the website:
- Key challenges for HR in 2010 include assessments and selection, talent management systems, coaching and mentoring, corporate social networking, I-9 compliance, employee self-service, and work-life programs.
- HR executives first turn to the Internet to identify vendors for HR products and services they are interested in purchasing.
- HR executives value industry content, such as white papers and other online sources of information on products and services, over print or online advertising.
- 31% say their company will hire 10% to 20% more staff in 2010.
- 45% are somewhat optimistic about the economy and think that business is starting to improve in 2010.
Kevin W. Grossman, president of HRmarketer.com said, “Following an economic year as dismal as 2009, it’s hopeful to hear that HR buyers are more optimistic about 2010. Having an online presence and participating in social media is more important than ever for HR suppliers, because that’s where more buyers are participating.” To download the report, visit http://hrmarketer.com/content.
U.S. Businesses Consider Health & Productivity Programs Critical
Employers say that health and productivity programs are critical to controlling healthcare costs, according to a survey sponsored by Integrated Benefits Institute and conducted with Harris Interactive. Most employers have some health and productivity initiatives in place. Two-thirds expect to increase the resources they commit to health and productivity programs over the next two years.
Ninety-eight percent offer some form of health promotion initiative; 91% offer a disease management program; and 85% offer disability return-to-work. Employers consider disease management initiatives most important to their efforts to manage health and productivity.
Michael L. Taylor, MD, Medical Director for Health Promotion, Caterpillar Inc. said, “We’ve found that it’s critical to integrate health promotion, employee assistance programs, disability management, occupational medical services, and disease management programs.” For more information, visit ibiweb.org.
FINANCIAL PLANNING
Getting 401(k) Help at Work Leads to Higher Returns
The 401(k) plan participants who get professional investment help at work end up getting better returns on their retirement investments than those who do not, according to a study by Hewitt Associates and Financial Engines. This help can be in the form of target date funds, managed accounts, and online advice.
The study also found that a participant’s age is the key predictor of the type of help they get. Younger, less tenured participants are more likely to use target date funds while older, more-tenured participants more likely to use managed accounts.
The median annual return for participants using investment help was almost 2% higher than those who did not. For example, a 45-year old who uses professional investment help will have saved 47% more by age 65 than one who had not used help. (This assumes that the almost 2% higher median annual return is maintained over the 20-year period.) The difference is even more dramatic if the initial investment is made at a younger age. A 25-year-old who uses professional investment help when investing $10,000 could have $105,800 by age 65 compared to just $52,100 without the help. That’s a 103% increase.
Christopher Jones, chief investment officer, said “When left to their own devices participants are making mistakes that harm their prospects for a secure retirement. Participants can’t be expected to go it alone. For the 401(k) to succeed as an adequate retirement savings vehicle, different kinds of help need to be available to every participant in the plan.”
Participants who use professional investment help follow a more appropriate glide path in which the risk starts out higher early in their careers and glides downward as they approach retirement. Also, their portfolio allocations are invested efficiently. Those not using help have higher risk levels and a minimal reduction in risk as they approach retirement. This was most apparent in near-retirees’ and retirees’ portfolio performance who are taking on more risk as they approach retirement.
Pam Hess, director of retirement research at Hewitt said, “Employers offer workers investment help like target date funds, online advice, and managed accounts because they help participants make smart investment decisions with minimal effort or expertise. Our research shows that these features can really pay off for participants.” For more information, visit www.hewitt.com or www.financialengines.com.
Research Quantifies the Value of Financial Advisors
Households that regularly get advice before making major financial decisions do better financially than those that get advice rarely or never, according to a report by the Retirement Income Industry Association (RIIA).
There are striking differences in the asset holdings of the regularly advised and less regularly advised households. From 1994 to 2004, the inflation-adjusted difference in financial assets for regularly advised households was $106,000 compared to $29,000 for households that never got advice.
The always-advised households are more likely to use independent financial planners and certified public accountants. The sometimes-advised households are more likely to use mutual fund advisors, independent insurance agents, and discount brokers. For more information, visit www.riia-usa.org.
