California Broker March 2018

Page 1



MARCH 2018


How Renovations in Response to Large Group Trends Could Impact Brokers and the Industry Also Inside: Dental • Medicare • Disability LTC • Employee Benefits • Wellness Annuities • Financial Planning

We We Are Are


BRAND NEW DAY had a record-setting AEP and it doesn’t stop there. With our C-SNP, D-SNP and Medi-Medi lookalike plans, you can enroll eligible Medicare beneficiaries year-round.

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March 12, 2018 | 2:00 PM Physicians Medical Group of San Jose, Excel MSO Corporate Office 75 E. Santa Clara St., Ste. 1050 San Jose, CA 95113

March 14, 2018 | 2:00 PM March 15, 2018 | 10:00 AM Location TBD

March 12, 2018 | 10:00 AM Parkview Community Hospital, Founders Center 3865 Jackson St. Riverside, CA 92503

March 16, 2018 | 11:00 AM Brand New Day 1405 N. Imperial Ave., Ste. C El Centro, CA 92243

March 12, 2018 | 3:30 PM Physicians Medical Group of San Jose, Excel MSO Corporate Office 75 E. Santa Clara St., Ste. 1050 San Jose, CA 95113

March 16, 2018 | 10:00 AM QualCare IPA Corporate Office 5080 California Ave., Ste. 420 Bakersfield, CA 93309

March 13, 2018 | 10:30 AM Physicians Medical Group of San Jose, Excel MSO Corporate Office 75 E. Santa Clara St., Ste. 1050 San Jose, CA 95113


ORANGE COUNTY March 13, 2018 | 10:00 AM Brand New Day Corporate Office 5455 Garden Grove Blvd., Ste. 600 Westminster, CA 92683

March 16, 2018 | 2:00 PM Brand New Day 1405 N. Imperial Ave., Ste. C El Centro, CA 92243

March 14, 2018 | 10:00 AM Brand New Day Corporate Office 5455 Garden Grove Blvd., Ste. 600 Westminster, CA 92683

Register for an upcoming certification training in your area today: Call Broker Support at 1-866-255-4795 or visit for more information.

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MARCH 2018


VOL. 36 NO. 6

LARGE GROUP Service Trends 20 Cinustomer the Marketplace

By Rob Carnaroli The current health care environment is in a constant state of change–continually serving up challenging yet exciting opportunities for everyone in the industry. Find out what the most successful brokers and producers do.

Dilemma 23 Insurance Sparks Creative


DENTAL s Less More? The Pros 12 Iand the Cons of Narrow


By James C. Shade Recent trends have shown that employers are becoming more creative with how they approach purchasing dental insurance. While some are driven by the bottom line, taking a “less is best” approach with dental insurance plans, others believe in getting “the best bang for their buck,” trying to balance lower costs with higher quality.

DISABILITY reparing for the 16 PUnexpected

By Stephanie Shields Accidents are unpredictable, and the onset of serious sicknesses like cancer or heart disease can also take one by surprise. Worst yet, both have the potential to lead to an income-halting disability.


MEDICARE Two Cal Broker regulars weigh in on new Medicare cards…

New Medicare Cards 18 On the Way!

A Q&A with Denny Weinberg Southern California-based Hixme aims to be a large group insurance disrupter. But CEO Denny Weinberg says brokers will be critical to a transformation and modernization of the industry. Weinberg shares insight about what he believes is wrong with the current large group scene and how he sees a brighter future.

By Harry P. Thal Personal identity theft affects a large and growing number of seniors. People age 65 or older are increasingly the victims of this type of crime. This is why the Centers for Medicare & Medicaid Services (CMS) is readying a fraud prevention initiative that removes Social Security numbers from Medicare cards.

Ready for the New 19 Get Medicare Cards

By Susan Hatch Get ready…the New Medicare Cards will be sent out to California Medicare Beneficiaries starting in April and hopefully all will be out by July!

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MARCH 2018

REAL PEOPLE Sarah, a member of our Online Enrollment Support team, is just one of the many Warner Pacific employees dedicated to supporting our broker partners. Likes: Puppies, volunteering, Mediterranean food. Favorite Quote: “Dreams don’t work unless you do” - John C. Maxwell Passion: Teaching brokers how to use PRO Apply

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MARCH 2018


PUBLISHER Ric Madden email:

Look at Employer 37 AProvided, Web-Based

EDITOR-IN-CHIEF Kate Kinkade, CLU, ChFC email:

Health & Wellness Content

SENIOR EDITOR Victoria Alexander email:

By Andrea Bloom and John Swartzberg In order to make good health decisions for themselves and their family members, employees need access to in-depth and wide-ranging health and wellness information they can trust.



CIRCULATION email: BUSINESS MANAGER Lexena Kool email: LEGAL EDITOR Paul Glad EDITORIAL AND PRODUCTION: McGee Publishers, Inc. 3727 W. Magnolia Blvd.,#828 Burbank, CA 91505 Phone No.: 818-848-2957 email: 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: or call (800) 675-7563.

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A Call for More 39 Holistic Retirement

LONG-TERM CARE rogress for the 32 PCalifornia Partnership

For Long-Term Care

By Louis Brownstone There's been progress in reviving the California Partnership for Long-Term Care. The Partnership is still in an intensive care mode, its sales are non-existent, and it’s barely on life support. But changes are likely to occur which could bring the plan back.

EMPLOYEE BENEFITS eneration X and 34 GBenefits: What Brokers

Need to Know

By Lisa Lampron While millennials have been the generation garnering the most buzz in the last few years, what about Generation X? Although Gen X is now the second largest generation in the workforce today, this group of “latchkey children” and “slacker” young adults can be viewed as America’s neglected middle child. But neglect doesn’t cut it for savvy brokers.

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Prep and Effective DC Plan Design

By Victoria Alexander TIAA recently released a white paper titled “Closing the guarantee gap: How policymakers can restore the role of lifetime income in workplace retirement plans.” Cal Broker asked TIAA’s Tim Walsh to fill us in on key takeaways…

FINANCIAL PLANNING hat Clients Really 41 WWant: An infographic

By MDRT Get a visual on what clients want in an adviser and more.



Guest Editorial...........................8 Annuity Sampler.....................10 News Etc................................. 42 Classified Advertising.......... 46 Ad Index................................... 46 MARCH 2018




More than 200,000 small to medium-sized businesses depend on Benefitmall’s expertise and leadership – and for a good reason. We’re dedicated to leading our industry by constantly learning, growing and looking forward. And we’ve kept personal customer service at the heart of everything we do for 35 years and counting.

Northern California (800) 354-6926 Southern California (800) 877-0101 Visit our web site @ ©2017 BenefitMall. All rights reserved.


From ACA To ACOs: Starting With Tax Reform




hile the administration hit some well documented road bumps in its efforts to replace Obamacare, one thing is clear. If not by design, then by creative destruction and new thinking, several streams are joining to create a significant wave in healthcare reform. The contributing factors include tax reform, the CVS/Aetna deal which promises to be transformative in the way healthcare is delivered, the DOL’s proposed rule on association health plans (AHPs), and most recently, the announcement by Amazon, Berkshire Hathaway and JPMorgan Chase to form such an association, with the idea of lowering employee healthcare costs and improving outcomes. LET’S LOOK AT THESE, FACTOR BY FACTOR. With tax reform, the biggest change results from doing away with the mandate to buy health insurance. What this leads to most notably is the return to, and expansion of health savings accounts (HSAs) and health maintenance organizations (HMOs). People will be getting back to health savings accounts and health maintenance organizations. My analysis is that the proposed changes, particularly around abolishing the mandate, will encourage HSAs and HMOs—there will be more of them, and more ways for insurance companies to get in and manage that money. From a tax standpoint, if a person has an HSA, he or she can invest it. Managing your HSA money, in the same way as managing your retirement accounts, becomes a service that newly sprung insurance-financial services entities will be able to provide. Therefore, you’ll see HSAs becoming a permanent part of the healthcare structure. Along with this, there’ll be a rise


of patient-centered care through accountable care organizations (ACOs) that emphasize patient outcomes. Patient services will be decentralized from regional hospitals to small local outlets. And the market will open up to association health plans, as well as the selling of health insurance across state lines. The second area where we’re seeing tectonic shifts is exemplified by the CVS/Aetna model. This is an entirely different kind of merger. Typical synergies that occur with horizontal mergers are about taking out duplicate costs in accounting, finance, HR, IT, sales and the like. You’ll see little of that in the CVS/Aetna deal. But there are new synergies to be found in the patients themselves: knowledge of them through vertically integrated data and a more transparent view across their treatment. The acquisition of Aetna by CVS is the first large-scale example of a movement within healthcare over the past decade to embrace patient-centered healthcare. Taking a closer look at this, patientcentered healthcare has not been the way healthcare has traditionally been managed and delivered. But the concept behind it has given rise to accountable care organizations (ACOs), which have been experimenting with ways to improve the delivery of health- -

care that the fee-for-service model was never able to do—notably by fixing the lack of incentives for providers to offer successful outcomes. While the old fee-for-service model was designed around managing the patient, it wasn’t necessarily about managing the patient’s outcome. Rather, it was a top down tactic. ACOs, on the other hand, take a bottom-up approach, wherein a successful patient outcome is the mandate. It does so by developing the team of providers that deliver the best outcome for the patient. What ACOs have found is that the location of the service is one of the most important aspects of delivering healthcare. The current centralized model has the hospital as the main management point for the patient. It doesn’t matter if the hospital is 40 miles from the patient’s home. To this end, what the CVS/Aetna deal recognizes is that a distributed business model allows a better focus on patient outcomes. And the first step in this process is to better locate where the services are to be provided. Association health plans, for all the talk of the risk they entail, can certainly play a role in opening the market to more choice and more competition, and on a larger scale, in decentralizing health insurance. To mention one exMARCH 2018

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GUEST EDITORIAL ample of a viable AHP, MediShare, an individual health plan that targets the Christian community—its “association”—is financially sound and adheres to state and federal regulations. Keeping the proposed CVS-Aetna merger in mind, plans like this MediShare concept might be developed into largescale national programs that incorporate features of Accountable Care and can serve a diverse group of individuals and businesses under one banner. One major example of an association health plan is the recent news that Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. will join forces to address healthcare for their employees. This is another “Back to the Future” approach that falls into a similar

ANNUITY SAMPLER Ratings Product Company Name Bests Fitch S&P (Qual./Non-Qual.)

line of thinking that drove the CVS/ Aetna deal. What the typical employer is looking for is an employee benefit program that is customizable for the average employer. The initial focus is expected to be on technology solutions that will provide their employees and their families with simplified, highquality and transparent healthcare at a reasonable cost. However, the approach Amazon has taken to reinvent retail and everything else it touches, suggests that they’ll find highly creative, previously unthought of strategies to address the road bumps that have stymied health insurance and caused costs to skyrocket annually. And while ultimately I think that the employer eventually has to get out of

health insurance equation, anything that breaks up the single payer model is a step in the right direction. In short, the new tax code should help reform healthcare, rather than create more bureaucracy. It will incentivize industry behavior toward new models and fostering more combinations and innovations, many yet to be articulated. Ultimately, all this creative destruction should lead to a decentralization of healthcare services and, ultimately, we hope, to better patient outcomes. H John Sarich is an insurance industry analyst and VP of Strategy at VUE Software. He is a senior solutions architect, strategic consultant and business advisor with over 25 years of insurance industry experience.. Email him at

FEBRUARY 1, 2018 Type SPDA Initial Guar. Bailout FPDA Interest Period Rate Surrender Charges

Mkt. Val. Min. (y/N) Contrib.

Comm. Street (May Vary)

American Equity A- A- ICC13 MYGA (Guarantee 5) (Q/NQ) S 2.30%* 5 yr. None 9%, 8, 7, 6, 5, 0 Yes $10,000 (Q) & 3.00%, age 18-75 & $10,000 (NQ) 2.10%, age 76-80** 1.50% age 81-85** 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** 1.50% age 81-85** ICC13 MYGA (Guarantee 7) (Q/NQ) S 2.60*% 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** 1.50% age 81-85** *Effective 11/9/17. 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 2.70%*a 5 yr. None 8%, 8, 8, 7, 6, 5, 4, 3, 2, 1, 0 Yes $10,000 (Q &NQ) 1.5% age 0-75 Insurance Companies Solutions MYG 3.00%*b .75% age 76-85 (*Guarantee Return of Premium) (Q/NQ) *CA Rates Effective 6/2/17. 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 Insurance Companies Fixed 5 Annuity

2.00%*a 5 yr. 3.00%*b

None 9%, 8%, 7%, 6%, 5%, 0% No

$5,000 (NQ) 2.00% age 0-85 $2,000 (Q) 1.00% age 86-90

*CA Rates Effective 8/7/17 Includes 1.15% 1st year bonus, 1.00% base rate subsequent years. a (less than $100K) b (100K or more)

(*Guarantee Return of Premium) (Q/NQ)

American General Life A A+ A+ American Pathway S 3.00%*a 7 yrs. None 9%, 8%, 7%, 6%, 5%, 4%, 2%, 0% No $5,000 (NQ) 3.00% age 0-85 Insurance Companies Fixed 7 Annuity 4.00%*b 1.50% age 86-90 *(Guarantee return of premium Q/NQ) *CA Rates Effective 6/2/17. 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 2.90% 5 yrs. N/A 9%, 8, 7, 6, 5 Yes $10,000 Effective 2/5/18. Includes .25% first-year bonus and is for purchase payments over $100,000. Escalating five-year yield is 2.90%. For under $100,000 first-year rate is 2.75%. Escalating rate five-year yield 2.40%.

2.50% 18-80 (Q), 0-80 (NQ) 1.50% 81-89 (Q&NQ)

Great American Life A A+ A+ SecureGain 7 (Q/NQ) S 3.10% 7 yrs. N/A 9%, 8, 7, 6, 5, 4, 3 Yes $10,000 Effective 2/5/18. Includes 1.00% first-year bonus and is for purchase payments over $100,000. Escalating seven-year yield is 2.99%. For under $100,000 first-year rate is 3.00%. Escalating rate seven-year yield 2.89%. North American Co. A+ A+ A+ Guarantee Choice II (Q/NQ) S 2.45%*a 5 yr. None 10, 10, 9, 9, 8 Yes $2,000 (Q) for Life and Health 2.70%*b $10,000 (NQ) *CA rates effective 2/6/18– a (less than $200K) b(200K or more)

3.50% 18-80 (Q), 0-80 (NQ) 1.50% 81-85 (Q&NQ) 2.00% (0-80) 1.50% (81-85) 1.00% (86-90)

Reliance Standard



A Eleos-MVA


3.00%* 5 yrs.


8%, 7, 6, 5, 4



*Effective 2/2/18. Includes 1.50% 1st yr. bonus. Min. guarantee is 1.00%. **Reduced 20% ages 76-80, and 40% ages 81-85

Reliance Standard


A Apollo MVA (Q/NQ)


4.70%* 1 yr.


9%, 8, 7, 6, 5, 4, 2



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 2/2/18

Symetra Life, Inc.


A Custom 7 (Q/NQ)


3.55%* 7 yrs.


8%, 8, 7, 7, 6, 5, 4, 0




*Effective 2/8/18. 3.05% base rate with no guaranteed return of purchase payments. Plus 0.50% bonus for $250,000 and above.


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MARCH 2018

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ecent trends have shown that employers are becoming more creative with how they approach purchasing dental insurance. While some are driven by the bottom line, taking a “less is best” approach with dental insurance plans, others believe in getting “the best bang for their buck,” trying to balance lower costs with higher quality. Many dental insurers have heard consumers’ requests and have started offering dental insurance options with lower premiums, but these more affordable insurance plans often come with a narrow network. 12 | CALIFORNIA BROKER

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WHAT’S A NARROW NETWORK? Narrow networks come in several forms, including managed care models and exclusive provider organization, to name a few. All of these options are built and maintained under the balance of network size and cost of care management. According to the National Association of Dental Plans (NADP), a narrow network provides employers with “the flexibility to offer the right combination of access and choice with their dental insurance plan.” Premium costs in narrow networks tend to be lower than in broad networks; however, not all dentists elect to participate in narrow networks, meaning consumers could have less choice when selecting dentists. CALIFORNIA EMBRACES NARROW NETWORKS Although California has embraced narMARCH 2018





Humana’s exclusive unlimited annual maximum option helps employees get oral healthcare when and where they need it. When employees have access to the preventive, basic and major care in their plan, without worrying about going over their annual maximum, they don’t need to put off their dental care. For more information, visit


DENTAL row networks, this concept has been DEMAND VERSUS CAPACITY alized greater cost of care efficiencies slow in spreading across the country. There is an old saying: “It is like putting and are able to treat larger numbers of For more than a decade, the NADP 10 pounds of potatoes in a 5 pound patients in a shorter amount of time, has tracked the distribution of ben- bag.” That phrase can certainly be for sole practitioners managing inefit dollars, documenting that narrow applied to the demand versus capacity creased volume might be more chaldental networks represent just a small concept of narrow networks. Paying lenging. sliver of dental plans purchased. The less on premiums equates to fewer Finally, due to time constraints, parnumber of narrow network plan partici- dentists from which to choose. ticipating dentists might have to pripants has remained relatively stagnant Although some consumers are not oritize more time-sensitive treatments through the years. particular about who provides their over routine preventive maintenance Narrow networks are more suc- dental services, others prefer staying appointments. Because of less availcessful in areas where there are with their existing dentists. What if able appointments, a routine check-up plenty of dentists, such as in Califor- “your” dentist does not participate in every six months might turn into one nia. With so many dentists available, a narrow network? Would those con- every seven or eight months. dental insurers in California can eas- sumers be willing to switch dentists ily identify dentists who have better if it means paying smaller premiums? A DELICATE BALANCE practice cost management and lower Or, if they decide to retain their non- Understanding the challenges of narfees. Also, in highly row networks, some populated areas of progressive dental inPROS CONS the state that have surers are getting creLower premiums (for consumers) Higher deductibles/copays large numbers of ative in how they can (for consumers) dentists, the law offer lower premiums Patient volume increase Less choice in dentists of supply and dewithout sacrificing (for dentists) (for consumers) mand drives down quality and dentist acboth costs and cess. Possible lags in routine care rates. Even before Network sizing and (for consumers) networks are narcost of care is a delirowed by choice, cate balancing act. consumers living in California already It takes a little bit of doing, but it can have the flexibility of access and be done. Dental insurers who learn to choice of dentists; unlike consumers balance the better coverage of broad living in less populated states, such as networks with the lower premiums of Kansas, where networks are naturally narrow networks will appeal to more narrow due to the availability of fewer employers who want to save money dentists. For areas like these, there is without sacrificing quality. H less correlation between competition and rates/costs. James C. Shade is senior vice president of professional affairs and MAKE INFORMED CHOICES dental network operations, diversified Consumers are often swayed in purbusinesses, at United Concordia chasing narrow network dental insurDental, a dental solutions company ance plans because of lower premithat administers benefits for nearly ums. But just because they look good 8.8 million people nationwide. In this on the surface does not mean that role, he oversees provider network narrow network plans will work for evoperations and services, credentialing eryone. and network partnerships. Since Although consumers will not pay participating dentists, would they be joining United Concordia in 1995, as much on the front end with narrow willing to pay more for out-of-network Shade has served in many areas of network plans, they might pay more on services? network development and has helped the back end. Typically, plans using a Dentist availability must also be con- the company develop a national narrow network charge higher deduct- sidered. In a narrow network, there are dental network for government and ibles and/or higher coinsurance than only so many participating dentists. commercial business. He has more plans using broader dental networks. What happens if participating dentists than 40 years of experience in the health In addition, these plans typically do not are not taking new patients? For those care industry, including administration cover dental services obtained out- participating dentists who are accept- with the Harrisburg Hospital, financial of-network, although some plans will ing new clients, problems can occur consultant for a comprehensive make exceptions for emergency dental when dealing with the volume of new outpatient rehab facility and assistant services performed by out-of-network patients waiting at the door. Although executive director for the Pennsylvania dentists. some larger dental practices have re- Dental Association.

" In a narrow network, there are only so many participating dentists. What happens if participating dentists are not taking new patients? For those participating dentists who are accepting new clients, problems can occur ..."


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MARCH 2018




OCTOBER 28-30, 2018


w w w. H E A LT H C A R E R E VO L U T I O N . c o m




Disability: Preparing for the Unexpected By STEPHANIE SHIELDS


he adage known as Murphy’s Law states that “If something can go wrong, it will … and usually at the worst time.” By their very name, accidents are unpredictable, and the onset of serious sicknesses like cancer or heart disease can also take one by surprise. Worst yet, both have the potential to lead to an income-halting disability. Even though we may not be able to pre­ dict when illnesses and injuries will happen, or the effects they might have on one’s budget, we can still do our best to prepare for them. One of the best ways to do just that is through disability insurance. DISABILITY INSURANCE AWARENESS MONTH May – Disability Insurance Awareness Month – is just around the corner. That makes now a good time to strategize with clients about helping employees face facts about disability and the impact it can have on savings and the ability to earn a living. There are important reasons an entire month is devoted to increasing awareness about disability insurance: • The Social Security Administration estimates that slightly more than 25 percent of today’s 20-year-olds will become disabled before reaching age 67. • Sixty-three percent of Americans agree that most people need disability insurance, but just 29 percent say they own it. The need for disability insurance protection is evident, particularly among primary wage-earners. Because disabling injuries or illnesses often lead to significant medical bills, anyone who works – whether they are single, married, with children or without – should consider coverage. Disability insurance can help protect them from financial ruin with: • Benefits that are paid for both total and partial disability. • Coverage that is available either individually or through an employers’ group plan. •A vailable guaranteed-issue options. 16 | CALIFORNIA BROKER

BENEFITS FOR EMPLOYERS The good news for employers is that companies can help protect workers’ finances by providing access to disability insurance. Furthermore, they can enhance employee satisfaction and productivity by working with an insurer that provides value-added services. A few examples include: • Financial and legal advice, including online assistance preparing wills and other documents. • Student loan-assistance programs that allow employers to contribute directly to an employee’s student loan, much like they contribute to a 401(k). • Web-based resources that help employees and their families lower the cost of college and navigate the application and admission process. • Help navigating the health care system, resolving billing issues and negotiating with providers to potentially lower existing medical bills. • Access to licensed professional coun­ selors who offer confidential assistance and resource support for a full range of personal, family and work-life problems. THE VALUE OF VALUE-ADDED SERVICES These days, many employees have multiple jobs – and even multiple careers – during the course of their working lifetimes. Some leave jobs because they’re uninspired or have new and different employment dreams. But they often leave for another reason: disenchantment with their benefits, especially their health care benefits. As the competition for top employees intensifies, wise employers are looking for ways to increase their desirability among workers. Disability insurance and value-added services are a one-two punch that can be critical to establishing a productive, engaged workforce. Plus, the combination can deliver a knockout blow to rivals in the competition for the most talented workers. There is yet another reason to tout group disability insurance during Dis- -

ability Insurance Awareness Month: the growing focus on corporate social responsibility. Companies today are increasingly judged by their impact on the environment, on the communities in which they do business, on their civic and social contributions and, last but never least, on the way they treat the employees who depend upon them for financial security. By providing clients with access to group disability insurance and the value-added services that go along with it – in other words, by showing they genuinely care about employees both on the job and after business hours – they can better demonstrate the compassion that separates great companies from the merely good. EXPECTING THE UNEXPECTED Brokers do not have to know the future to help clients be prepared financially in the event of a disabling illness or injury. By giving clients the real numbers, showing how costly disabilities can be, and providing real benefits solutions, brokers have a great opportunity to grow their disability book of business. H Stephanie Shields is vice president of national broker relations for Aflac.

Want to know more about the info mentioned in this article? Start here… Social Security Administration. “Fact sheet: Social Security.” LIMRA. “Lack of knowledge hinders disability insurance ownership.” Industry_Trends_Blog/ Lack_of_Knowledge_Hinders_ Disability_Insurance_Ownership.aspx.

MARCH 2018

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Disability • Life • Medical • Contingency


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New Medicare Cards On The Way... By HARRY P THAL


ersonal identity theft affects a large and growing number of seniors. People age 65 or older are increasingly the victims of this type of crime. This is why the Centers for Medicare & Medicaid Services (CMS) is readying a fraud prevention initiative that removes Social Security numbers from Medicare cards. Their aim is to help combat identity theft and safeguard taxpayer dollars in an effort to reduce fraud. The Medicare Access and CHIP Reauthorization Act (MACRA) of 2015, requires the government to remove Social Security Numbers (SSNs) from all Medicare cards by April 2019. A new Medicare Beneficiary Identifier (MBI) will replace the SSNbased Health Insurance Claim Number (HICN) on the new Medicare cards for Medicare transactions like billing, eligibility status, and claim status. CMS will begin mailing new cards in April 2018 and will meet the congressional deadline for replacing all Medicare cards by April 2019. California will be in the first group to get the new cards, 18 | CALIFORNIA BROKER

April through June 2018. “We’re taking this step to protect our seniors from fraudulent use of Social Security numbers which can lead to identity theft and illegal use of Medicare benefits,” said CMS Administrator Seema Verma. “We want to be sure that Medicare beneficiaries and healthcare providers know about these changes well in advance and have the information they need to make a seamless transition.” CMS will assign all Medicare beneficiaries a new, unique MBI number which will contain a combination of numbers and uppercase letters. Beneficiaries will be instructed to safely and securely destroy their current Medicare cards and keep the new MBI confidential. Issuance of the new MBI will not change the benefits a Medicare beneficiary receives. The new system will have 11 digits. They will use numbers 1 thru 9 and capital letters A thru Z apart from the letters S, L, O, I, B and Z. From what I understand, these new - -

cards will be printed on similar card stock like our current cards. If your agency has the ability to laminate, this will be a great marketing opportunity to offer this free service. We will be. We buy lamination pouches from the I will wait until I can get the actual size measurements before ordering, just in case the new cards are a different size from the present. H Harry P Thal has been specializing in Medicare sales for the past 35 years. He teaches Medicare CE classes on "outside of the box" marketing for NAHU, both for local chapters and national conventions. He is a Golden Eagle Lifetime qualifier based only on his Medicare sales. He lives in rural Kern Valley, California, yet is a top producer for several companies. Harry pens a weekly newspaper column for his local newspaper for the past 14 years, as well as a regional monthly paper. He may be reached at

MARCH 2018


When Will They Be Mailed Out?

MAILING #1 APRIL – JUNE 2018 Delaware, District of Columbia, Maryland, Pennsylvania, Virginia and West Virginia. MAILING #2 APRIL – JUNE 2018 Alaska, American Samoa, California, Guam, Hawaii, Northern Mariana Islands and Oregon. MAILING #3 AFTER JUNE 2018 Arkansas, Illinois, Indiana, Iowa, Kansas, Minnesota, Nebraska, North Dakota, Oklahoma, South Dakota and Wisconsin. MAILING #4 AFTER JUNE 2018 Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont.


MAILING #5 AFTER JUNE 2018 Alabama, Florida, Georgia, North Carolina and South Carolina. MAILING #6 AFTER JUNE 2018 Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Texas, Utah, Washington and Wyoming.


he New Medicare Cards will be sent out to California Medicare Beneficiaries starting in April and hopefully all will be out by July. There are many different mail out dates for other states. Tell everyone on Medicare not worry if their neighbor or spouse gets their card weeks before they do. It will not be so easy for Medicare to send out 59 million cards. In fact, it will take a year to do it. We can expect a few hiccups. The new red, white and blue card can be laminated. It will be smaller than the original card…the size of a credit card. No signature space, or "male" or "female" is necessary any longer. This is all due to Identity theft problems. By law, The Centers for Medicare & Medicaid Services (CMS) is required to remove Social Security Numbers (SSNs) from all Medicare cards by April 2019. The SSNs will be replaced with random numbers and letters. There will be two different billing systems until 2020, so people should not throw away their current Medicare card just yet. MARCH 2018

Anyone on a Medicare Advantage Plan needs to understand that the new original Medicare card will not work for much of anything. The Medicare Advantage Plan Card is their Insurance, not original Medicare. They will however, need the new card number if the want to enroll in a different Medicare Advantage plan, when eligible. If a person is on a Medicare Supplement -Medigap plan, they will need the new Medicare Card for most everything. Everyone who is on Medicare needs to make sure their address is current with the Social Security Administration, so their card can get to them in a timely manner. Scam artists are out in full force and loving this change! Criminals are calling Medicare beneficiaries and claming they are from "Medicare" and they are making their new Medicare card for them. They ask for their current Medicare number (Social Security number) to supposedly check off that they have everything in order. The word needs to get out - -

to everyone that Medicare does not and will not call anyone...unless a person has requested a call back from Medicare. The mailings will follow the sequence outlined above. Additional details on timing will be available as the mailings progress. Starting in April 2018, people with Medicare will be able to check the status of card mailings in their area on Many agents represent other states, so see all states listed above. H Susan Hatch is an objective advocate, analyst, speaker and talk radio guest about Medicare Supplements. She has received the NAHU Soaring Eagle Award and the NAIFA Quality Award. A licensed, independent insurance agent awarded the #1 Medicare Supplement agent in California, Hatch has worked with AGA as her general agency for many years. Find her at or email her at CaMedicarePlans@ CALIFORNIA BROKER | 19



CUSTOMER SERVICE TRENDS IN THE MARKETPLACE T he current health care environment is in a constant state of change, continually serving up challenging yet exciting opportunities for everyone in the industry. The most successful brokers and producers today partner with health plans that can quickly identify and adapt to ever-changing trends in the marketplace while still managing to deliver optimal client satisfaction. From best in class metrics to digital innovation, all eyes are focused on creating an ideal customer experience. A FOCUS ON CUSTOMER SATISFACTION For several years the entire health care industry has remained focused on raising the bar on quality, rooting out waste and reducing the overall


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HEALTHCARE cost of care. It wasn’t until recently that the industry began an equally concerted effort to focus on enhancing the customer experience. Today more payers are beginning to track Net Promoter Scores (NPS), a nationally recognized client loyalty metric. An NPS can range from a low of negative 100 to a high of positive 100. A score above zero is considered favorable and a score above 50 is outstanding. Many Fortune 100 companies—including Amazon, Apple and Verizon—use NPS to track customer satisfaction and benchmark year-overyear progress. In addition to member surveys, payers use NPS surveys to gain valuable insights from their large group employer clients on what they’re doing right and identify areas to improve. This allows them to pivot quicker than ever before when course correction is necessary, based on real-time customer data. Some health plans take a more personalized approach to gathering feedback from their clients through focus groups and special committees. These types of forums allow for honest, candid feedback on how key audiences perceive value and convenience, as well as provide an insider view of the client experience. Brokers should ask payers if they track NPS and learn more about what they are doing to listen to the voice of their large group clients. THE INTEGRATION OF CARE AND COVERAGE The industry continues to see more health plans and providers partnering together to integrate important aspects of care and coverage. In particular, providers see the value of owning and operating their own provider-sponsored health plans. These value-based payment models put health care decision making with providers and their patients—not the payers. This model encourages the provider system to invest in new care processes and access models tailored to meet the unique needs of each individual. This level of accountability encourages collaboration, coordination and innovation across the provider system. These models may also directly benefit the member. When the administra22 | CALIFORNIA BROKER

tive functions of a health plan are combined with the care delivery of a health care system, members are likely to get a more seamless approach to care. Many times, they can even contact a single member services center to get help with everything from scheduling provider appointments to understanding benefit plans to paying bills. Brokers are continually tasked by large group employers to find new ways to deliver more value to their employees. Adding a provider-sponsored health plan to their large group offerings can serve this purpose well. DIGITAL ADVANCES IN CUSTOMER SERVICE Consumers today want digital connectivity and convenience in health care— just as they have come to expect it in travel, retail and entertainment. Many payers offer large group employers online self-service portals to view and export employee rosters, plan documents, correspondence and premium bills. Members typically have access to online portals to view health plan accumulators, print ID cards, pay bills and view benefit documents and correspondence. Many providers also offer patient portals to email care teams, schedule appointments, request prescription renewals and see test results. When providers and payers make it easier to access and manage health care, patients may be more likely to take advantage of preventive and routine care, and proactively manage their health. We are also seeing providers use digital apps to take customer service to the next level and differentiate themselves in the marketplace. For example, Sutter Health is piloting a transportation program in select areas with rideshare companies such as Lyft to assist patients in traveling home from their appointments. The integration of a digital platform supporting the very real human need of accessing care is costeffective and helps alleviate patients’ health concerns that may be amplified by delayed or missed appointments. A CHANGING WORKFORCE Millennials remain the largest generation segment in the workplace. Employers have to change the traditional way they attract and retain quality tal- -

ent from this pool—even in how they communicate with employees. More employers are embracing social media and text messaging as effective communications vehicles. Many millennials are drawn to the lower monthly premiums available with high-deductible health plans (HDHPs) that are compatible with health savings accounts (HSAs). And with HSAs, individuals “own” the account so if they end up changing jobs (which millennials often do) in many instances they can take the account with them. IMPROVING ACCESS TO CARE Another trend in the marketplace is the focus on the retail clinic model— not all health care needs to take place in a physician’s office or during regular business hours. As an alternative to the traditional provider office, retail clinics offer a convenient access point for consumers who need care that can be managed by a nurse practitioner or physician assistant. This may include seeking treatment for common illnesses such as the flu or ear infections. Retail clinics may offer extended hours and shorter wait times in modern, comfortable settings. And retail clinics may provide a more cost-effective setting than emergency rooms or urgent care centers, which may help lower the overall cost of care for the employee. Large group employers continue to expect their brokers to quickly understand and explain any changes on the horizon that will affect their business. They need timely, relevant information to navigate the ever-changing health care industry and marketplace. Brokers who keep these sophisticated buyers up-to-date on emerging—and sustaining—trends and offer practical solutions will stand out above the competition. H Rob Carnaroli is VP of sales, Sutter Health Plus. His work with a wide range of employers includes Fortune 500 companies, school districts, municipalities, retirees, unions and private health care exchanges. His most recent experience includes building and growing Sutter Health Plus from a start-up organization to a successful health plan in Northern California. MARCH 2018





outhern California-based Hixme aims to be a large group insurance disrupter. But CEO Denny Weinberg says brokers will be critical to this transformation and modernization of the industry. Here Weinberg shares more insight about what he believes is wrong with the current large group scene and how he sees a brighter future.



:L arge employer health insurance benefits are being impacted by the current economic transition from a long-standing recession into a growth period. This is complicated by dramatic changes in public policy, regulation and new compliance issues. Add the dynamic of people who delayed a lot of health care because of the sluggish economy of the last 10 years. Top this off with rising interMARCH 2018

est rates and inflation in the general marketplace coupled with rising health care costs. The resulting increased demand for higher cost care will hit today’s higher deductibles and greater out-of-pocket costs head-on. Consider also the thriving economy that is producing record low unemployment, putting pressure on wages and benefits. Employers are not well equipped to confront all these forces. The result: employers are struggling heroically to get control of increasingly out-of-control costs in a system that is inherently inflationary. How can they afford to respond

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HEALTHCARE effectively and efficiently? Actions taken to push increasing costs onto workers exacerbates the problem business owners are trying to avoid, becoming less competitive in attracting and keeping workers.




: No - today’s 70-year-old rigid traditional group model seems out of step with current worker demands for one very important reason: it can’t effectively respond to individual consumer demands, a dynamic that is part of every other part of modern consumer behavior. On the contrary, employers are forced to limit benefit choices due to underwriting restrictions inherent in the “group pooling” characteristic of large employer coverages. We’ve been through economic cycles before that affected health care costs, coverage and benefits. Similar environmental factors triggered the HMO and managed care movement in the 1980s. Later, the adoption of taxadvantaged savings accounts like MSAs, HSAs and FSAs evolved to help create a soft landing for high deductible health plans. Unfortunately, managed care values created back then are largely impotent in current plans and no longer able to add new economic value. And while there is new flexibility in the use of tax-advantaged savings accounts, they appeal to fewer workers due to recent tax changes, and because few working Americans can afford to defer their own money (even pre-tax) to potentially use later for health care. So while these movements were and are important, they don’t solve today’s continuing cost trends and worker demands for value.




: HR and benefits executives, who have historically been able to control benefit decisions, now face growing pressure from their CFOs and CEOs who today require coverage decisions to be made as a team. And these executives are learning that a small segment of workers inform the historic perspective on benefit design needs. Why? It's the small vocal percentage of workers who use massive amounts of health care that complain to HR and benefits leaders about their care needs and the limitations of an employer program. That minority conveys a distorted impression of the general workforce’s needs. HR rarely hears from the healthy people who, according to all studies of workplace health, represent the majority of their workforce. So when structuring coverage, employers are exaggeratedly influenced by the most needy and demanding 24 | CALIFORNIA BROKER

workers. Consequently they always “over-structure” and inadvertently commit an enormous amount of benefit dollars to health care needs that will only be relevant to a small percent of workers. The missed “benefit opportunity” is that money could be repurposed for all kinds of other benefits that would be more widely appreciated.





: Yes – and it occurs at the point of worker health benefit selections. Current underwriting for eployer group coverage requires each worker to select the same coverage for each member of their family. That decision maker will always buy to cover the dependent with the greatest need, just like their employers did. The result is: more coverage is purchased than is necessary for the majority of family members that will likely be pretty healthy. So, even more resources are committed that could be directed to other more personally relevant benefits. So you see, this is a two-level problem. The employer, by virtue of their vantage point, designs coverages for a small but visible portion of workers with the greatest health care needs. And then each head of household bases coverage choices on the family member with the most needs. The whole thing gets inflated upwards. There’s a lot of money on the table that could have been better allocated.




: T he old reliable solution was to shift the problem of the rising cost of health care onto workers through a higher share of premiums or lower levels of coverage. That’s tough at a time when workers have greater choices about where to work in a strong economy. And yet still today, large employers and their advisors, almost instinctively continue pursuing the same, somewhat desperate approaches, like: 1. Limiting their workers’ access to health care with narrower networks and more restrictive plan coverage 3. Contributing less to health care pushing more of the premium price onto workers 4. Covering less so more health care costs are shifted to workers 5. Limiting who is covered to full-time workers, spouses and dependent 6. Keeping part-time workers and contractors outside the system The Health Care Cost Institute study of 2012 to 2016

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shows that higher prices—not the use of more healthcare services—drove increased healthcare spending in 2016 among patients covered by employer-sponsored plans. We know these trends accelerated into 2017 and 2018 as well. (You can access an article about the study here: NEWS/180129975/price-spikes-drove-employer-basedhealthcare-spending-in-2016)





: Who really has leverage? Everyone thinks the cost crisis only affects populations that don’t have negotiating clout such as small businesses, seniors and individual purchasers. For large employers there’s a similar MARCH 2018

challenge. Unless a company has 20,000-30,000 workers living close to a single medical system, they don’t have the clout to negotiate special rates with that medical system. And that’s what it would take to actually impact the cost of care.




: The predicament for employers is they really need to broaden their base of funding to millions of people to have real leverage, but they have no way to do so in traditional group coverage. An employer-by-employer based pooling system is inadequate. Workers want variety and choice. But even for an employer with a thousand workers, it’s hard to create much variety to accommodate needs or preferences through a single employer arrangement. The obstacles include the small volume, complexity for insurers and the risks associated with a small number of workers subsidizing those few with high health care needs. And in this low unemployment

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Utilization Data Study Monthly worker benefits consumption based on a sampling of 200,000 group workers: • 46% consumed on average $43 in services • 26% consumed on average $190 in services • 16% consumed on average $570 in services • 12% consumed on average $3,143 in services economy, talented workers expect more of their personal preferences to be met. It’s a quandary because employers are used to providing choice on everything else–from retirement investing to paid time off. True flexibility and personal choice remain elusive for healthcare benefits.




: Companies like Hixme were created to answer that question. For us, it is a solution built from the perspective of meeting the vastly different needs and preferences of each worker and family member associated with a larger employer. We started there, rather than the traditional employer-centric design. We free each employer from being forced to guess what each worker needs based on a narrow perspective. Next we focused on improving employer-funding mechanisms – how and what they contribute. Finally, we created access through our first of its kind WorkPlace Market™ platform to the broad marketplace spanning the entire U.S., eliminating the need for employer-by-employer design of coverage itself. The result is fantastic: predictable for employers, and ultimately flexible for workers and each of their dependents. We believe this represents the model of the future for larger employers. We’re betting this is what the marketplace is calling for.

+3,143 12% $43

$570 16%

46% (12% at $0) $190 26%



: This is not the first time consumer demands have changed an entire industry. It’s exactly what hapened with employer-based retirement income. Thirty years ago, companies designed pension plans they thought were secure but ended up with rigid, regulated and limited investments with lousy returns. Today, that’s not true. Enter the 401(k), which clearly worked. The entire marketplace transitioned in just a few years from employers deciding what your investment future should look like to letting you take the reins, and matching your money. Similarly, and much more recently, retiree health has been transformed to a consumer model. Historically, retirees remained in their traditional active employee plan (with all its problems). Businesses realized this made no sense. And in a handful of years, the entire industry shifted to a model where employers contribute a cash allowance and let retirees purchase their health benefits from the retail market. Instant consumerization. So, why should we expect anything less would happen with traditional group health coverage for active workers?


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: Yes – technology access is one of two reasons this inevitable transition wasn’t made long ago. • First, the personalized technology access we have today to help people understand and exercise their options was not available to make that kind of detailed, personal, broad selection possible. • Second, personal health plans with coverages more like employer-sponsored coverages only became accessible on Jan. 1, 2014, through the recent federal healthcare reform that standardized the entire retail market and required guaranteed issue to anyone who wanted to purchase. Both of those things changed at almost exactly the same time – synchronizing two megatrends. Hixme and others have taken advantage of these megatrends, creating a new direct-to-consumer movement for employers. Hixme’s technology platform enables large employers to allow each worker and each family member to select a personalized solution based on location and preferences. It opens up an entire marketplace of hundreds of providers with thousands of plan choices. Under the Hixme model, employers still subsidize coverage, but workers are free to select plans that actually fit their needs. Then we take it a step further by offering additional safety net on-demand elements that are only paid for and used when needed. We are finding much more alignment with actual health care needs, much better cost control and much happier employers and workers.

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: Just like consumers demonstrated sophistication in retirement planning, data shows that in retail makets, when workers are empowered to make their own choices, they tend to pick better fitting coverage. Hixme takes advantage of this tendency. In contrast, with the traditional model, high incidences of over-insurance absorb resources that could be better used, and add to increasing costs. It is common if not universal that traditional coverages are designed to meet the health care needs of a fraction of workers. The chart on page 26 shows how few working people and their dependents are “significant” users of healthcare services.




: With these new platforms, employers can offer a full array of customized coverages without ever having to design a package. It’s the best of all worlds. And they are able to set a budget and keep to it far more effectively than in the past. When you provide an entire marketplace, and that kind of set budget, now you’ve got a whole continuum that people can move along and find choices that work for them. It does mean people have to be informed to shop and compare. They have to think more carefully. That’s where

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HEALTHCARE brokers come in. But it’s not as rigid as choice A, B or C in the traditional employer-by-employer pooled markets of today.




: Yes, after years of competition across models, consumer choice is revealing that in the long term what will prevail are the most efficient, controlled and informed systems of care - closed systems characterized by specialized or limited access to narrow networks. I predict these will be much like the first generation HMOs but with much more effective use of newer technology and greater safety nets to deal with outlier needs. Expect also an increase in hospital systems all over the country with their own health plans built around their own closed systems, aligning with the generally emerging models.




: The retail market, where consumers drive their own decisions. Increasingly, where employers want to hold onto old models, they’ll be forced to wrestle with outof-control costs. So it’s a trade off.




: Yes - we see this daily, as services that provide home doctor visits and telemedicine become more mainstream. The trend toward the emergence of retail clinics is also evidence of this, as detailed in this article:





: Traditionally, employers have been forced to define benefits around full time workers, even as this is becoming a less dependable part of the workforce. The


new model allows employers to keep people inside the benefit program but in a controlled way so they can adjust their financial support in many more flexible ways. Because the employer can structure contributions separately, full time, part time, contractors, spouses and children can have equal access to the same open market with unrestricted options not possible with traditional coverage.





: More and more people simply don’t have the cash to deal with their share of any of this. One of the problems is that our health care expenses tend to be sporadic. Suddenly a patient may have to come up with substantial cash even if insured. Most are not willing or able to negotiate to pay over time or to just try to get a discount. Yet we know these are all possible. Why doesn’t employer coverage do all of that as part of its function? Help not only with what is covered, but also help find ways to finance what’s not covered in a better way? Theoretically, those things should all be part of the modern health care system. At Hixme, they are. Hixme’s product incorporates insurance as well as a unique financing feature that includes settlement, lending and saving mechanisms. It’s part of the solution as well as a way to meet individual preferences.




: We will see more of these programs packaged and made available in product form for brokers to deliver to their clients. Brokers are critical to this transformation and modernization of the industry. They know their clients well – arguably better than anyone else. They are able to explain deeply how these new programs will work. We know this will only be successful to the extent that we can harness brokers’ expertise to best serve their clients. H Hixme CEO Denny Weinberg is a 25-year veteran executive in healthcare financing and operations. His broad background includes a 20-year tenure as co-founder and executive vice president of WellPoint and CEO of a number of WellPoint’s largest and more unique operating companies. Denny also manages a portfolio of early stage companies in the health and medical arena as well as other industries. He’s served as board member, advisor and consultant to both private equity-backed and publicly traded Blue Chip companies.

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here has been significant progress in reviving the California Partnership for Long-Term Care. The Partnership is still in an intensive care mode, its sales are non-existent, and it’s barely on life support. But changes are likely to occur which could bring the plan out of intensive care and into a period of increasing rehabilitation. As you may recall, SB 1384 was passed in September 2016. It allowed for inflation options in Partnership policies besides 5 percent compound. It also required the formation of a task force of interested stakeholders to advise and assist in implementing reforms to the Partnership. The task force is composed of some 15 members of various state depart-


ments and a dozen outside consultants. This group has now met five times. Its purpose is to mitigate the coming future tsunami to Medi-Cal long-term care expenses when the baby boomers reach their eighties and need long-term care. Its main objective is to create new and innovative Partnership policies that would be affordable to the middle class. This meant coming up with a structure of a policy which would meet this objective. A subgroup was formed to recommend a structure which would be presented to the task force, and this was done at its last meeting on February 6. There are two major impediments to creating an affordable Partnership policy: - -

1. The heretofore compulsory 5 percent compound inflation rider; 2. The requirement that the minimum facility benefit be 70 percent of the average nursing home cost in California, now $ 310/day (70 percent of which is $ 217/day). A subgroup of the task force came up with a recommendation which addresses these two impediments. First, it recommended a 3 percent compound inflation rider, in compliance with SB 1384, which all by itself cuts the premium by about half. Second, it recommended that the 70 percent of the average nursing home cost factor be removed entirely. The subgroup recognized that future nursing home claims will probably be less than 10 percent of all long-term MARCH 2018

LONG-TERM CARE care claims. Therefore, it believed that basing future requirements on nursing home costs would be an outdated guideline, and that it was far more pertinent to base future protection on far less expensive residential care facility and home care costs where the vast majority of care would be received. Next, the question became what structure would both be affordable to the middle class but also would be meaningful protection. There was serious debate on what would be the answer to this question, but in the end, the subgroup came to an agreement and was able to recommend the following: 1. That the minimum benefit would be $100/day, or $3,000/month, in all settings; 2. That the minimum lifetime benefit would be $73,000. 3. That required elimination periods would be up to 30 calendar days for one and two-year benefit limits and up to 90 calendar days for benefit limits of three years or more. The subgroup decided that these would be its only requirements in a policy, giving the insurance carriers maximum flexibility in their policy design. Carriers would be encouraged to file structures currently in their nonPartnership policies in order to ease their filing process and obtain speedy approval. For example, they could file either a lifetime benefit of $75,000 over two plus years with a daily benefit of $100 or a lifetime benefit of $73,000 with a daily benefit of $100. Or they could file a lifetime benefit of $73,000 over one year with a daily benefit of $200, or a two-year plan with a lifetime benefit of $109,500 and a daily benefit of $150. Industry studies have concluded that the market for long term care insurance would be substantially larger if premiums would be at or under $100/month. This was the premium goal of the task force. The subgroup anticipated that a two-year plan at $100/day with a lifetime benefit of $73,000 with 3 percent compound inflation would create premiums at or under $100/month for males and for each individual of a married couple. Premiums would be somewhat higher for unmarried females, but still under MARCH 2018

$150/month. Of course, a $100/day benefit with a $ 73,000 lifetime benefit would only constitute partial coverage in many scenarios. But these benefits could be a big help to claimants, and could be coupled with social security income and other income to fully cover costs in many cases. The assumption here was that the market for Partnership policies was not appropriate for the lower 50 to 60 percent of the population, which would have to rely solely on their own resources and on MediCal. But the top 40 to 50 percent of the population would have other income and assets they could utilize to cover the balance of the costs of care. Long term care insurance is currently primarily being sold to the top 10 percent of the population in income and assets, and it would be a major step forward to increase the marketability of the product to the top 40 or 50 percent of the population. For citizens with moderate income and assets, such plans could in effect offer lifetime protection. For example, if a person had $73,000 in assets, he or she could purchase a Partnership plan with a benefit limit of $73,000. Once that person became sick, he or she could use up the benefits in the policy, apply for Medi-Cal, protect the $73,000 in assets, and be covered for the rest or his or her life. With MediCal waivers, he or she may be able to stay at home for at least most of the period of care. That’s what we all want in a long-term care insurance policy…lifetime protection, preservation of assets, and possible home care. Perfect! This structure was not endorsed by the task force, but was only accepted as a structure which would be consistent with the overall objectives of the Partnership. It was accepted as an available alternative. Why? Because this position would give the regulators and/or the legislature the ability to make some alterations without a revised structure having to be reconsidered and having to start the process all over again from ground zero. The task force then considered whether to wait for revised regulations from the Department of Health Care Services or attempt to pass an ur- -

gency statute through the Legislature. The process of approval of DHCS revised regulations was deemed to be too slow, and the legislative approach was endorsed. Whew! Sacramento works in strange ways. I have a political science degree from Stanford, but I was never taught the intricate machinations that occur inside our State government. I don’t pretend to understand what goes on. The good news is that I probably don’t need to, and that some folks in the task force are passionate and want to push this process on to a conclusion. Five meetings got the task force this far. But this would only begin the process. As its immediate goals, the task force also needs to: 1. Find a way either through changes in law and/or through changes in regulations to legalize this or a similar structure; 2. Facilitate these legal changes in a timely manner; 3. Convince the insurance carriers that such Partnership policies could be filed expeditiously and with minimum expense; 4. Convince the insurance carriers that such policies could be saleable in volume and be flexible enough to ensure future profitability; 5. Educate the public with a major campaign on the need for long term care protection in order to stimulate sales. 6. Educate agents and get them excited enough to sell Partnership policies again. H Louis H. Brownstone, a Cal Broker regular contributor who writes about long-term care, is Chairman of California Long Term Care Insurance Services, Inc. located in Burlingame, California. California Long Term Care is the largest independent specialist long term care insurance agency in California, and is broker for a group of high-producing long term care specialist agents. Brownstone is also very active in NAIFA, the National Association of Insurance and Financial Advisors. One of his goals is to revive the California Partnership for Long Term Care in order to insure more Californians and save the State of California billions of dollars in future Medi-Cal expense. CALIFORNIA BROKER | 33





hile millennials have been the generation garnering the most buzz in the last few years, what about Generation X? Although Gen X is now the second largest generation in the workforce today, this group of “latchkey children” and “slacker” young adults can be viewed as America’s neglected middle child. What do employers, and the brokers and agents that advise them, need to know about Gen X? What benefits do Gen Xers (born between 1965 and 1979) want most and what’s the best method to engage them? Bookended by two much writtenabout generations – the Baby Boomers ahead and the millennials behind – this driving force behind today’s companies is easily overlooked despite the fact that they are the most committed and engaged at work. Truly, Gen Xers are the source of power that keeps a business together. GEN X’S FINANCIAL STRESS, FINANCIAL WELLNESS AND RETIREMENT Members of Generation X were dubbed the "latchkey generation" because they were home alone after school. As adolescents and young adults, they were called the "MTV Generation," characterized as slackers and as cynical and dis34 | CALIFORNIA BROKER

affected. Many Gen Xers lived through tough economic times in the 1980s and saw their workaholic parents lose hard-earned positions. As a result, they tend to be less committed to a single employer. Taking a closer look, Gen X is more willing to change jobs to get ahead than previous generations. They adapt well to change, are ambitious and eager to learn new skills, but they like to accomplish things on their own terms. They’re fiercely independent, entrepreneurial, well-educated and highly technically literate. Now at midlife, research describes Gen X adults as active, happy and achieving a work–life balance. ON FINANCIAL STRESS AND THEIR JOB There are a number of reasons Generation X reports having financial stress issues: • 51 percent of Gen Xers don’t have - -

enough emergency savings for unexpected expenses. (source: PwC, 2017 Employee Financial Wellness Survey, April 2017) • 50 percent of Gen Xers find it difficult to meet household expenses on time each month. (source: PwC, 2017 Employee Financial Wellness Survey, April 2017) • Although they likely graduated decades ago, 31 percent of Generation Xers are still paying off student loans. And to make matters worse, according to Wealth Management. com, they may have a still-upsidedown home mortgage on top of it. Like employees of other generations, Gen X brings their financial stress to work with them. Of the 34 percent of Generation X who say their finances have been a distraction at work, nearly half (46 percent) spend three hours or more at work each week dealing with personal finance issues. MARCH 2018



WHAT BROKERS NEED TO KNOW ON FINANCIAL WELLNESS For Gen Xers, much of their financial wellness state is due to the sandwich syndrome. This generation is supporting and educating children while also providing care for aging parents. In these circumstances, the potential for financial duress can be substantial, but steps can be taken to reduce stress, balance budgets and mitigate the effects of unplanned life events. ON RETIREMENT Generation X expects to retire early, at age 63 on average. To make that happen, 81 percent of Gen Xers are already saving for retirement and 72 percent say they are planning to cut their expenses so they can save more. Despite these efforts, as a group Gen X is on track to become the first generation to be worse off in terms of being prepared for retirement than their parents. SPEAKING OF BENEFITS Gen Xers have a world of responsibilities on their shoulders. More than anyone else in the workforce, they’re likely to be juggling child or elder care with the pressures of a progressing career. Providing the right benefits can MARCH 2018


help ensure their years of experience and expertise aren’t lost. Pay/bonuses are the benefit that matters most to Gen X, followed by paid time off and retirement plans. In addition, about one-fourth (24 percent) say the desire for financial stability motivates Gen X to stay in a job. Their years of work are likely reflected in their career path. Gen X is highly experienced and hard to replace, but businesses often forget about their ‘engine room’ and concentrate employee benefits around the new starters. Benefits are more engaging and appreciated when tailor-made to each generation’s needs and Generation X has some key priorities: 1. Childcare 2. Flexibility (in working location and hours due to child/elder care issues) 3. F inancial protection and education 4. W ellbeing support Trying to balance children, elderly parents, work aspirations and their own health and wellbeing is demanding. Anything employers can do to ease those stresses are valued by Generation X. 5. Dental insurance Children’s health is always a parent’s concern and with all the sugar in their - -

diets these days, visiting the dentist regularly is a priority. Dental insurance covering routine care and contributing to the cost of orthodontics is highly welcomed. Additionally, Gen Xers value salary level, a 401(k) plan with matching benefits, job security, advancement within the company, and opportunities for work-life balance. TRADITIONAL BENEFITS The “standard” traditional benefits such as medical, vision and dental coverage are important to this generation. Their keen interest in financial security dictates income protection (disability insurance) should be on the list as well. They also expect a broader range of healthcare services than they are currently offered. Today’s Gen Xers, and particularly those who struggle with chronic disease (such as heart disease and diabetes), are far more willing to pay for innovative healthcare services than older generations. The highest rated item on Generation X’s healthcare wish list – many of whom have very young children – is same-day appointments with a family doctor. In fact, 43 percent of Gen Xers are willing to pay for this offering. CALIFORNIA BROKER | 35

EMPLOYEE BENEFITS A VARIETY OF OPTIONS Gen X might be the generation needing the most variety of benefit options – they not only have children but are also very likely taking care of their parents as well. Their benefit needs include everything from income protection, financial wellness and retirement education, to family support, child care and elder care. By offering a variety of voluntary benefits, employers can provide Gen Xers the opportunity to customize their benefits package to meet their individual needs, even though they may need to pay the premium. CHILD CARE Gen Xers with children are interested in worksite child care and back-up child care benefits. FINANCIAL WELLNESS With half of Gen Xers not able to make their monthly expenses on time and not having enough in savings for emergencies, financial wellness is a real concern for this generation. This presents an opportunity for employers. While financial wellness programs have not yet reached the level of penetration of other longstanding benefit offerings, 52 percent of employers have implemented or are considering implementing a financial wellness program; and 44 percent believe that a financial wellness program is a “must-have” benefit in order to be competitive. The good news is that Generation X is very interested in improving their financial acumen. In fact, if offered financial education programs at work, 89 percent of Generation Xers would participate in them. In addition to financial education programs on budgeting, debt management and retirement planning, benefits such as employee purchase programs and employee discount programs help Gen Xers access products and services they need and want in a more financially-disciplined manner. BENEFITS COMMUNICATION As with any generation, it’s not only about the benefits themselves. Benefits communication tailored to each generation is vital to providing value. Gen Xers want upfront and transpar36 | CALIFORNIA BROKER

ent communication and prefer short, informal, regular sound bites. WHAT DO GEN XERS NEED? • Reach them with interactive online communications, YouTube and email; • Retirement readiness websites that allow them to input other investment information; • User-friendly online resources that can be accessed on demand to fit their busy schedules, as well as the ability to do their own research and receive feedback on their progress;

"It’s Gen X that is a company’s source of power and that’s what keeps a business together. Understanding what is important to them, what motivates them and how they want to work will allow employers, brokers and agents to structure benefits and develop programs that attract Gen Xers and keep them at the heart of the company."

• Access to on-demand, one-on-one professional assistance used in conjunction with web-based tools; • Education on the time value of money and the importance of rollovers when changing jobs. Make sure to leverage their communication strengths. There are advantages in the way Gen Xers blend the approaches of the Baby Boomers ahead of them and the millennials behind them. Baby Boomers drill deep and millennials take in a lot of information over a broad range and skim. Gen X, on the other hand, takes in less information, but still drills deep. While Gen X isn’t perhaps the most visible generation, they’re also not as eccentric – they kind of fly low on the radar. However, it’s Gen X that is a company’s source of power and that’s what keeps a business together. - -

Understanding what is important to them, what motivates them and how they want to work will allow employers, brokers and agents to structure benefits and develop programs that attract Gen Xers and keep them at the heart of the company. H Lisa Lampron is West Coast regional sales director for Purchasing Power, a voluntary benefit provider of an employee purchase program. She has 20 years of sales and account management experience. Prior to Purchasing Power, she worked in various employee benefit sales roles for life, dental, disability and worksite products with Unum, MetLife, The Standard and Aflac. WANT TO KNOW MORE? Cal Broker doesn’t footnote, but we want readers to have access to more info. These are some of the works Lampron used to inform her article: 1. The, “Generation X,” Sally Kane, February 2, 2017. 2. P wC, 2017 Employee Financial Wellness Survey, April 2017. 3. Wealth, “The Forgotten Generation X,” April Rudin, July 11, 2017. 4. HSBC, “The Future of Retirement – Shifting Sands,” USA Report, 2017. 5. Small Biz Trends, “How to Retain Generation X Employees and Why You Want To,” Rieva Lesonsky, May 16, 2016. 6. Unum, “Five Employee Benefits Generation X Require,” April 8, 2017. 7., “Employee Benefits: What Each Generation Wants,” Oct. 25, 2016. 8. Oliver Wyman in collaboration with Fortune Knowledge Group, “Complexity and Opportunity: Survey of U.S. Health Consumers Worries and Wants,” 2017. 9. Charles Schwab, “Workplace Financial Wellness,” June 2017. 10. Bank of America Merrill Lynch, 2017 Workplace Benefits Report. 11., “How to Communicate with All Five Generations in the Workplace,” Marianne Marvez, January 30, 2017. MARCH 2018



mployees use web-based tools to on-board, select benefits, search for healthcare providers, access EAPs, log vacation time, and utilize most employer benefits. Accessing health and wellness content is no different. But even if employers provide integrated, web-based health and wellness content, there is still the question of quality.



In order to make good health decisions for themselves and their family members, employees need access to in-depth and wide-ranging health and wellness information they can trust. This requires curating sciencebased content from an editorial board made up of physicians and university researchers on the leading edge of health care. When employees don’t have access to robust, high quality, web-based health and wellness content as part of their overall benefits, they are left to search outside the company “safety zone” and go to the Internet to find answers. CYBERCHONDRIA: JUST A CLICK AWAY The Internet is a magnificent tool, a vast, open, multinational, and multilingual electronic library that’s available for people to explore who are seeking health information. It’s also an endless mine of medical information where people can happen to stumble upon gold, or more often be directed to misleading, and even dangerous health advice. In fact, there’s a digital-age term for one of these pitfalls: cyberchondria (hypochondria in cyberspace). Cyberchondria is defined as searching the Internet for a diagnosis of your symptoms—and confirming your own worst fears. MARCH 2018

SCENARIO OF EMPLOYEE ACCESSING INTERNET TO SELF-DIAGNOSE This scenario demonstrates how a fictitious employee, Sam Marks, becomes a cyberchondriac after researching symp­toms on the Internet. Sam is not sleeping well and his head hurts. Pain relievers don’t help. Sam’s employer does not provide an integrated web-based health and wellness library as a benefit, so Sam opens his favorite search engine and begins clicking around. Half an hour later Sam is hot on the trail, and the news is ominous. It could be a brain tumor. Sam visits a site where people diagnosed with brain tumors talk about their prediagnosis symptoms—these match his own. After two or three days of nonstop worry, Sam sees his primary care doctor. He happens to mention in the course of the discussion that in hopes of curing his insomnia, he gave up coffee. Caffeine withdrawal, of course, is one logical explanation for his headaches and his anxiety is certainly not helping his insomnia. The odds of persistent headaches being caused by a brain tumor are about 1 in 10,000—a fact that Sam might never have unearthed on the Internet. This is because more Internet content is indexed to serious disorders than to simpler explanations of symp- -

toms. The abundant content on rare diseases leads many people astray. It’s much easier to find bad news than good news on the Internet. If Sam’s employer provided a science-based health and wellness library as an employee benefit, Sam would have been able to safely search for information about ‘Sleep Problems’ and learn about the variety of possibilities that could be impacting his sleep. With an extensive health and wellness library, Sam could learn about healthy behaviors to improve his sleep, and health conditions that might be impacting his sleep. Instead of being anxious about his condition as in the Internet scenario, he would be empowered to sort through the options and eliminate possibilities. He can attempt to improve his sleep on his own or seek medical attention from the appropriate provider. This not only would improve his well-being and productivity at work but would also be more cost-effective for Sam and his employer as he seeks targeted medical care when needed. THE INTERNET CAN BE A ­DANGEROUS PLACE FOR HEALTH SEEKERS Studies show that:

• 8 in 10 American adults look for medical information on the Internet. CALIFORNIA BROKER | 37

WELLNESS • The great majority of searchers do not know how to evaluate the quality and validity of the source. • People with no medical training exposed to complex medical terminology may be harmed by self-diagnosis and self-treatment. • Misinformation can affect whether people decide to see a doctor, and which one they see, as well as everything else they do to protect their health. People wrongly convinced they have a serious disorder may turn to quackery, most of which is richly promoted on the Internet, often on the same page with the scary information. Health quackery on the Internet can be misleading in any number of the following ways: • Words such as "miraculous," "instant," "secret," or "amazing" • Vague claims such as "purifies your body," "raises your energy level," or "boosts immune system" • Testimonials and anecdotes that are the sole or primary support for the claims • Advertisements that try to diagnose health problems: for example, an ad that leads you to believe you have vitamin deficiencies, and then offers to sell you a cure • Diet plans "guaranteed" to take off a pound a day—a diet that rigorous would be dangerous • Health-related products sold via network marketing, which turns customers into salespeople • Claims about curing arthritis, cancer or AIDS • Claims that a product will cure a wide variety of illnesses—cure-alls seldom cure anything WHAT TO LOOK FOR IN A WEBBASED HEALTH AND WELLNESS CONTENT PROVIDER Health and wellness content must be science-based, current, expertly vetted, and provided at an appropriate reading level, with medical terms clearly explained. Content needs to be tagged so people can easily access information based on their needs. Finally, the content must be broad and deep, thoroughly covering a wide range of health conditions so people can gain a full understanding of their health condition or a health practice they aim to adopt to improve their well-being. Providers of credible health 38 | CALIFORNIA BROKER

and wellness content use reliable sources in the development of their content drawing from science-based health information provided by the government, universities and nonprofits. Good sources for cancer information are the National Cancer Institute and reputable research centers such as M. D. Anderson. Leading schools of public health, such as the UC Berkeley School of Public Health, provide in-depth information on a broad range of health conditions and wellness practices. Good conditionspecific info comes from scientificbased organizations such as the American Heart Association and the American College of Gastroenterology.

"…it is essential to have wellness information on healthy sleep practices and health conditions that can disrupt sleep."

TOPICS TO INCLUDE IN AN EMPLOYER PROVIDED WEB-BASED HEALTH AND WELLNESS LIBRARY Healthy Eating: Since 70 percent of American adults are overweight or obese, information on nutrition, healthy food and beverage consumption, and recipes that support overall health are a must have. Avoid any weight loss or diet programs as these are not effective since diets don’t get at the core of focusing on healthy eating. Diets don’t work because when an individual is done with their “diet”, they revert back to their old eating habits. Employees need to understand the fundamentals of updated nutrition science so that they can become informed consumers of food at grocery stores, when purchasing snacks, and when eating out. When people consume healthy foods and beverages in right-sized portions, their health improves and they can more easily manage their weight. Sleep: Because 60 percent of adults report sleep problems several nights a week, it is essential to have wellness information on healthy sleep practices, including sleep hygiene and foods, beverages and health conditions that can disrupt sleep. In 2011 there were 60 million prescriptions for sleeping pills, and a large percentage of people currently report taking over-the- -

counter sleeping aids—both of which have side effects and can lead to addiction. Physical Activity: Because the American lifestyle has become increasingly sedentary, 80 percent of Americans are not meeting the weekly guidelines for physical activity. A web-based wellness library needs to include a wide variety of information on physical activities that employees can easily do on their own including ergonomics and musculoskeletal health topics to reduce and prevent injuries. Stress: Americans are experiencing chronic stress at unprecedented levels due to the demands and stressors that are part of daily living. Seventy to 90 percent of medical visits are associated with stress-related health issues. Offering in-depth information on how to manage stress and how to respond to stress is essential to keep employees and their families productive, balanced and happy. Chronic Disease and Health Changes: Almost half of American adults are living with a chronic illness and nearly one-third are living with multiple chronic conditions. Providing employees with an extensive library of health condition content empowers them to tap a vetted and safe resource to manage their health conditions and refer to it when they are experiencing health changes. H Andrea Bloom is Founder and CEO of ConnectWell and has over 20 years in the healthcare industry. Andrea directs ConnectWell’s partnership with the School of Public Health at UC Berkeley. This partnership merges the ConnectWell Wellness Initiative offering with the content of the School of Public Health. Go to www. to learn about ConnectWell and its partnership with the school. John Swartzberg, MD, FACP is a specialist in internal medicine and infectious disease and Clinical Professor Emeritus of Medicine at the UC Berkeley School of Public Health and at the University of California, San Francisco, School of Medicine. He has directed coverage of the UC Berkeley Wellness Letter since 2001, is chair of the editorial board of health & wellness publications, and manages the ConnectWell partnership for the UC Berkeley School of Public Health. MARCH 2018






IAA recently released a white paper titled “Closing the guarantee gap: How policymakers can restore the role of lifetime income in workplace retirement plans.” The paper highlights common-sense, bipartisan solutions for legislators and regulators to help advance the role of lifetime income in retirement savings plans. Cal Broker asked TIAA’s Tim Walsh to fill us in on key takeaways…


TIAA - and likely others - has identified a problem in retirement planning. The problem is that most people don't know how to plan so that they have an income stream

MARCH 2018

that they won't outlive. Can you explain this more and give us some history on the issue? We believe the primary objective


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of a retirement plan is offering a secure and steady stream of retirement income. With people living 20, 30 or even 40 years in retirement, having a guaranteed source of retirement inCALIFORNIA BROKER | 39

ANNUITIES come is critical. In the past, Americans counted on defined-benefit (DB) retirement plans, such as pensions, to provide income for life. However, while some workers—especially in the public sector— may have DB plans today, most don’t. There’s been a major shift to definedcontribution (DC) plans, like the 401(k), which was designed as a supplemental account to be used in conjunction with guaranteed retirement income from a DB plan and Social Security payments—not as a primary source of income. In addition, with this shift from DB to DC, employees have taken on more of the responsibility of preparing themselves for a successful retirement. Today, people are living longer, meaning they may need to stretch a lump sum of savings over a decadeslong retirement. This is known as longevity risk. In addition, there is market risk, where market crashes or recessions may cause retirees to experience significant income declines. Also, when interest rates rise, fixed income values fall, so interest rate risk is of particular concern to people in retirement who typically shift assets toward fixed income investments. Interest rate risk can also be an issue for Target Date Fund Investors, given these solutions automatically shift to 40-60 percent of assets to bond funds. Lastly, aging may impact the ability to make sound financial and other key decisions, this is known as cognitive risk. These risks have heightened the need for more holistic retirement preparation and effective DC plan design. The not-for-profit sector may have lessons to share with the broader industry to improve outcomes in this regard. Rather than serve as a supplemental retirement savings plan, 403(b) plans were designed as a core retirement plan, with the goal of helping participants generate income for life. For decades, the higher education sector and others in the nonprofit world have offered plans that provide guaranteed income in retirement that continues to grow when employees change jobs. We work with both our plan sponsors and, in turn, our participants to create a tailored income strategy that fits their needs. 40 | CALIFORNIA BROKER

We’ve seen how our systematic focus on lifetime income has led to much healthier and sustainable outcomes than strategies that focus on accumulation alone. Annuitizing is now a force for innovation and a much-needed, potential solution to the growing retirement deficit. What are some of the reasons why employers haven't actively addressed this issue to ensure their employees don't outlive their retirement plans? Over the past 25 years there have been significant policy changes in tax law and pension policy that have discouraged employers from providing workers with access to retirement plan investments that would offer guaranteed lifetime income. In addition, access is further limited by regulatory changes, which have made the legal climate for employers whose plans offer annuities more complex. Specifically, many plan fiduciaries do not feel comfortable relying on the current safe harbor because they feel it lacks clear measurements that could be relied on for assessing an insurer’s



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financial stability. Consequently, many legal advisors advise plan sponsors to “play it safe” and not use the safe harbor – and thus shy away from annuities. That said, the Increasing Access to a Secure Retirement Act of 2017 takes a significant step in addressing this issue by establishing clear guidelines that can help plan fiduciaries choose an annuity provider for their plan. This enhanced safe harbor will help ensure that current and future generations of retirees will be able to use their retirement savings for their intended purpose – retirement income. What do you believe needs to change so that more employees are adequately protected in retirement? Drawing upon 100 years of experience as a leading provider of in-plan lifetime income solutions, TIAA has identified six common-sense, bipartisan solutions for legislators and regulators to advance the role of lifetime income in retirement savings plans. 1. S implify the safe harbor for employers selecting an annuity provider. 2. Increase the portability of annuity



MARCH 2018

FINANCIAL PLANNING contracts 3. B roaden the qualified default investment alternative (QDIA) regulations so that annuities can become default investments 4. P rovide retirement savings plan participants with an annual lifetime income disclosure statement 5. Give participants more access to flexible income distribution options 6. P rovide favorable tax treatment for annuity income in retirement How can the people who sell/service/advise on employee benefits, insurance and retirement plans help employers address this problem? There is a “Retirement Income Deficit”—the difference between what retirees ought to have saved and what they actually have saved—of trillions of dollars. Consultants and advisors can play an influential role in helping plan sponsors and participants understand the value of annuities and how the prudent use of annuities could help fill retirement income gaps. Plan sponsors are looking for help in understanding crediting rates, payout features and the differences between retail priced annuities and institutionally priced in-plan annuities. From an assessment and monitoring perspective, the process to provide due diligence on insurance products isn’t inherently any different than the process of assessing mutual funds, however the metrics and features are different, so knowledgeable consultants can provide a valuable service to plan sponsors and participants. H



Timothy G. Walsh is senior managing director, institutional investment & endowment distribution. He leads the Institutional Investment Products Distribution team, working with TIAA Institutional Relationship Management, Retirement Plan Sales teams, Field Consulting Group and Individual Advisory Services. Tim holds a B.S. from the University of Massachusetts at Dartmouth and a M.S. from the University of New Haven. Tim has his FINRA Series 7 & 24 licenses. MARCH 2018

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NATIONWIDE COVERED BUT ACA PLANS DOWN CALIFORNIA UP ... SLIGHTLY More than 423,450 Californians are now with Covered California, a 50,000 increase in new customers from last year, according to new enrollment numbers released by Covered California. Peter V. Lee, executive director of Covered California, said that a key factor was that those getting subsidies actually had more money to shop with due to the work-around implemented to make sure the cost-sharing reduction benefit was funded. With this increased support, Covered California even saw more new and renewing consumers opt for Gold-tier plans this year compared to last. Among those who receive financial assistance, 15 percent of new consumers selected a Gold plan during open enrollment, over three times as many as the 4 percent that selected a Gold plan last year. Covered California’s Gold plans generally have higher premiums, but pay 80 percent of consumers’ health care costs when they access care. Gold plans were a better value for consumers this year because the premium was lower due to the cost-sharing reduction surcharge that was added only to Silver plans. The Washington Examiner Daily On Healthcare noted, however, that California spent $110 million on customer outreach, far more than even the federal government. The National Academy for State Health Policy (NASHP) also released new plan selection data. With the final enrollment figures, the national total of consumers who selected a plan for 2018 comes to 11.8 million, which is about 3.7 percent less than the 12.2 million consumers who selected a plan in 2017. States that operate an SBM (state-based marketplace) or SBM-FP (state-based marketplaces that use the federal platform) show an aggregate increase of .2 percent over last year; states that use the FFM (federally facilitated marketplace) show an aggregate decrease of 5.3 percent, according to NASHP’s data.

LAAHU Paladin Award – Nominate Now!


he Paladin is LAAHU’s most prestigious award. Each year a sixmember committee comprised of four Paladin recipients, the immediate past president and the president-elect meet to discuss and select the LAAHU member who best meets the established criteria for this award. If you'd like to nominate a LAAHU member who demonstrates the achievements below, please send in the name of the nominee and how they qualify for each of the criteria listed to: The Paladin is the member who most: • Contributed “directly” to the Association • Provided service or assistance to others within the Association and or industry • Acted as a leader or coach who challenged others to aspire to a greater goal or understanding • Provided leadership, coaching or assistance in more than one discipline (education, legislation, marketing, sales, etc.) • Provided leadership over a period of time indicating a long term commitment The award will be presented at the LAAHU Annual Conference in April!


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Crypto Watch

Wholesale Direct Metals is offering Grow Your Retirement With a Bitcoin IRA, a guide that promises to teach readers how to open a Bitcoin IRA and help “transform the global economy.” The guide is free and available at

MARCH 2018


The State of Employee Benefits

U.S. Life/Health Sector Credit Rating Upgrades Outpace Downgrades in 2017 here’s reason to celebrate, according to A.M. Best’s

Special Report:


Best. The number of Long-Term Issuer Credit Rating (Long-Term ICR) upgrades for the U.S. life/health industry outpaced downgrades in 2017, a turnaround from the previous two years when downgrades eclipsed upgrades. The Best’s Special Report, titled, “Life/Health Sector Rating Upgrades Outpace Downgrades in 2017,” states that the change in direction was primarily driven by improving levels of risk-adjusted capitalization, particularly among life/annuity (L/A) carriers, owing partly to benign credit market conditions and favorable equity markets, which buoyed earnings. Likewise, health insurers reported improved riskadjusted capitalization, due to better operating results in the individual health care exchange business and, to a lesser extent, overall slower premium growth. Improved operating results were driven partly by consecutive years of high rate increases and a narrowing of provider networks. A.M. Best reported 31 upgrades and 15 downgrades for life/health carriers in 2017, compared with 16 upgrades and 23 downgrades in 2016. Overall, Best took action on the Long-Term ICRs of 380 rating units. A unit describes either an individual insurer or a consolidation of companies and is the financial basis on which Best performs its rating evaluations. The vast majority of rating actions in 2017 were affirmations (77 percent).

Here are a few more highlights from the report.

• In 2017, 32 rating units were assigned the under review modifier, an increase from 22 in 2016. The higher number of rating units under review in 2017 largely was due to a number of rating units being placed under review following the release of the updated Best’s Credit Rating Methodology in October 2017; • There were 19 Long-Term ICR upgrades and seven downgrades in the life/annuity segment, compared with four upgrades and 12 downgrades in 2016. The health segment experienced nine Long-Term ICR upgrades and seven downgrades in 2017, compared with 12 upgrades and 11 downgrades in the previous year; and • In 2017, 86.1 percent of the life/annuity segment’s outlooks were stable, while 82.9 percent of the health segment’s outlooks were stable. The percentage of stable outlooks in the overall life/health industry experienced a slight uptick in 2017 to 84.7 percent. MARCH 2018

Benefitfocus a cloud-based benefits management plat­ form and services provider, recently published its third annual "State of Employee Benefits" report, which analyzed the anonymous employee benefit election data of more than 1.3 million consumers from 540 large employers. The data shows a continued shift toward consumer-directed health care, with the rate of employers offering at least one high-deductible health plan (HDHP) increasing more than 20 percent since 2016. This growth primarily stems from employers offering HDHPs alongside traditional health plans, reflecting the increased commitment among employers to offer more choice to employees. With respect to enrollment, the data indicates that employees' health plan preference and benefits needs differ by demographic criteria, making plan diversity critical. The report identifies other key trends for the 2018 benefit plan year, including: 1. E mployees are embracing health savings accounts. Participation in HSAs among eligible employees – those in HDHPs – grew by more than 60 percent, from roughly 50 percent in 2017 to 81 percent in 2018. Millennials were especially eager to adopt these accounts, nearly doubling their HSA participation from 2017. 2. H igher earners don't mind higher deductibles. The report points to mounting evidence that HDHPs are more appealing to employees with higher incomes. On average, employees enrolled in HDHPs for 2018 earn 7 percent more than employees enrolled in PPOs—a percentage difference more than twice what it was last year. This trend is consistent across all age groups. 3. Reduced out-of-pocket risk offsets rising premiums. As employers continue to fine-tune plan design, most employees will again see their medical premiums increase, but will also enjoy lower deductibles in 2018. Notably, PPO subscribers will see a nine percent decrease for family-coverage plans and a seven percent decrease for single-coverage plans. 4. Voluntary benefits address a diverse set of employee needs, from critical illness to pets. In addition to options like hospital indemnity, critical illness and accident insurance, employers are increasingly offering products like legal insurance, identity theft protection and pet insurance to round out their voluntary benefit offerings. Over the past two years, the share of large employers offering identity theft protection rose 56 percent, with the share offering pet insurance up 80 percent.

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AALTCI Tallies 2017 LTC Payout

Will Retirement Fee Arrangements Be the New Normal?

The nation’s long term care insurance companies paid $9.2 billion in claim benefits to some 295,000 individuals in 2017, according to the American Association for Long-Term Care Insurance. According to California-based AALTCI, in 2016 total claims amounted to $8.65 billion paid to some 280,000 individuals. AATLCI conducts an annual study of claims paid to policyholders who have a traditional, health-based long-term care insurance policy. Because the number of individuals on claim can vary on a daily basis, the Association measures based on a fixed date each year. Find out more at

The Standard Recognizes San Diego-based Steenerson with Top DI Leadership Award



Incorporated continues to make headlines. The company’s board of directors recently announced a two-for-one stock split of the company's common stock in the form of a 100 percent stock dividend payable on March 16, 2018, to shareholders of record as of the close of business on March 2, 2018. This is what Investopedia has to say about stock splits: "A stock split is used primarily by companies that have seen their share prices increase substantially and although the number of outstanding shares increases and price per share decreases, the market capitalization (and the value of the company) does not change. As a result, stock splits help make shares more affordable to small investors and provides greater marketability and liquidity in the market." Marketability may, indeed, be the impetus of the split. Aflac has recently weathered allegations of fraud and employee misconduct. Yet, the company has also been lauded as a great place to work. In February, Forbes named Aflac one of its 100 Best Companies to Work For. Aflac has received a place on this prestigious list every year since 1999.


Fidelity is raising eyebrows with the 401(k) folks. Fidelity’s move to charge new 401(k) plan clients (with $20 million or less in assets) a 0.05 percent fee on any Vanguard funds held in their retirement plans has raised concerns in the industry that retirement fee arrangements might become the new norm. Jim Keenehan, senior consultant for AFS 401(k) Retirement Services, told Employee Benefit News that the concern is due largely because it isn’t “normal to have one single fund manager singled out like this.” Fidelity spokespeople have said that the company requires all fund families to compensate them for the shareholder and administrative services which they provide. The pricing change, they say, is designed to address a disparity because some funds were not compensating the company fairly. Many in the industry, however, don’t buy the explanation. Furthermore, many plan sponsors worry that other record keepers will follow suit, limiting the investment options employers are able to offer employees through their 401(k) plans.

Standard Insurance Company honored Daniel C. Steenerson, CLU, ChFC, RHU, and his agency, Disability Insurance Services, Inc., with its top National Disability Insurance Leadership Award. The award is presented to the office producing the highest sales of individual disability insurance for The Standard. It is the 20th consecutive year that Steenerson and his staff have been honored!

MassMutual App Allows iPHONE® X Owners to Use Facial Recognition

Cumbersome passwords may be a thing of the past for some MassMutual customers. The company announced it's now allowing Apple® iPhone® X users to employ facial recognition as a secure password to information about their 401(k)s and other defined contribution savings plans. Facial recognition is available to iPhone X users who download MassMutual’s RetireSMARTSM mobile app for retirement savings from the Apple App Store®. With Face ID®, iPhone X unlocks only when the user is looking at it, according to Apple. Face ID is designed to protect against trickery by photos and masks. Each user’s Face ID information is encrypted and protected by Secure Enclave, so the data doesn’t leave the mobile device and is never backed up to iCloud or anywhere else, according to Apple.

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MARCH 2018


Broker Mindfulness L.A. broker Naama O. Pozniak,

2016/2017 EBA Most Influential Woman in Employee Benefits and CEO of Valley Village-based Paz Holding, Inc. (A+ Insurance Services), launched a mindfulness meditation for insurance pros who need a boost. Pozniak, a long-time yoga and meditation practitioner, developed a five-day meditation for open enrollment, yet the meditation can be used at any time. It's free too! Find the meditation at Pozniak also tells Cal Broker that Saul David Raye, a yoga and meditation instructor in Southern California, will help kick off the upcoming LAAHU “Field Day” April 11 and 12. Raye will lead the conference with a few minutes of intention and meditation for a successful conference. Way to get mindful insurance producers!

CB Expert Mike Ehrle Weighs In on AmazonBerkshire-JP Morgan Collab We asked Cal Broker regular contributor Mike Ehrle, SVP of Strategic Partnerships, Hodges-Mace, to tell us what he thinks about the Amazon-Berkshire-JP Morgan initiative. Here's what Ehrle had to say... “I respect these three power players, who are enormous employers, are teaming up publicly to address the major issue of skyrocketing healthcare costs. This is a huge initiative that will force positive change. Frankly, however, even with their 1.5 million lives domestically they are small and will not drive initial change without the involvement of a major carrier or two, which these three will quickly discover as they roll this out. Carriers have two major legacy components of their value proposition: • The strength of their provider networks…which is all derived by the number of lives that they can drive through hospitals and specialists offices…and therefore better per unit costs • Administrative efficiencies What carriers are learning is that these two aforementioned items are not enough – they must push beyond. The big takeaway from this announcement is not that these three major companies have decided to join forces to make change, but that they are doing so publicly. The core message here is all around technology and leveraging efficiencies in a new way to drive down costs. This announcement is a clear sign that positive transformation in healthcare is underway.”


economics and customer experience, will be featured at the conference, which is jointly hosted by LIMRA, LOMA, the Society of Actuaries (SOA) and the American Council of Life Insurers (ACLI). Info at

LIMRA 2018 DISTRIBUTION CONFERENCE Feb 28-March 2, Sawgrass Marriott Golf Resort & Spa, Ponte Vedra, FL Sessions about agent retention, InsurTech, consumer engagement and more. Info and registration at

LAAHU ANNUAL CONFERENCE April 11-12, LA Convention Center This year’s theme is Field Day. Registration and sponsorship info at

IICF HORIZON AWARD GALA March 15, The Globe Theatre, Los Angeles More info at NAC3, THE NORTH AMERICAN CRYPTO CURRENCY CONFERENCE March 24-25, Playa Studios, Los Angeles Event appropriate for seasoned crypto currency pros and those merely curious about Bitcoin, Ethereum, Blockchain etc. Tickets and info available at LIMRA LIFE INSURANCE CONFERENCE April 9-11, Marriott Downtown Magnificent Mile, Chicago, IL Using predictive modeling, data scientists at LIMRA’s new Center of Excellence for Data Analytics have identified factors that influence individual life insurance buying behavior and have built profiles of types of customers who are likely to buy. This analysis, along with experts of social MARCH 2018

IICF CASINO NIGHT May 17, The Rotunda, San Francisco Join the Insurance Industry Charitable Foundation for a fun night of gambling and insurance industry networking while also raising money for community grants. The event takes place at The Rotunda, Union Square, San Francisco. Registration and sponsorship info available at NAILBA 37 November 1-3, Gaylord Palms Resortand Convention Center, Orlando, Florida Detailed information about NAILBA 37 will be available soon. Exhibit hall and sponsorship opportunities available at

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ALIFORNIA REGULATORS SAY THEY'LL C INVESTIGATE AETNA PRACTICES The Aetna-CVS deal has dawn much attention lately to the insurer, but now California’s health insurance regulators are shining a light on Aetna for very different reasons. The state's insurance regulators have said they will investigate how Aetna makes coverage decisions, as the lawsuit of a California man who is suing the nation’s thirdlargest insurer for improper denial of care heads for opening arguments. From Kaiser Health News: "The Department of Managed Health Care,

which regulates the vast majority of health plans in California, said Monday it will investigate Hartford, Ct.-based Aetna.” This happened after CNN first reported that one of the company’s medical directors had testified in a deposition related to the lawsuit that he did not examine patients’ records before deciding whether to deny or approve care. The doctor said that, instead, he relied on information provided by nurses who reviewed the records — and that was how he was trained by the company.


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MARCH 2018

Hmmm...maybe we should define “partner.” We’re not talkin’ about a tip of the hat here. We’re talking about a professional commitment hitherto unheard of in these parts. It’s a partnership that’s custom-made, strictly broker-friendly. You call the shots. Need someone to help demystify the current state of healthcare, recommend the right approach, properly place your client’s plan with the carrier and then troubleshoot all year long? We are expert troubleshooters, consultants, and healthcare reform specialists. This isn’t our first rodeo. We’ll help you round up new business, prepare quotes, help employees understand their plan, and tie up all those loose ends at renewal. A working relationship with Rogers works because you set the ground rules, you establish the objectives according to your needs. Rogers Benefit Group’s unique brand of Advanced Full Service is dedicated to helping you deliver better care for less money. Well all right now, that’s enough talk. Let’s get a move on here. Time to call or visit our website at It’s the first step toward finding the kind of support and service you’ve always imagined was out there.

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San Jose: 877-724-4671 • Sacramento: 866-405-2790 • San Diego: 800-872-0459 • Los Angeles: 877-654-3050 © 2014 Rogers Benefit Group

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