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ISSUE || July/August 2013

Which Way From Here? With the Exchanges Almost Upon Us, Experts Weigh in on Key Issues The ACA Opens Up Opportunities Where Few Existed Before Small Employer Private Exchanges: Wherefore Art Thou? Two Private Exchange Profiles Inside

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INSIDE

FEATURE 11 Early Retirees and Their Employers: The ACA Opens Up Opportunities Where Few Existed Before As CEO of Extend Health — and now Managing Director, Towers Watson Exchange Solutions — Bryce Williams has nearly a decade of experience in defined contribution and exchange technology. Here, Bryce examines how the PPACA — through guaranteed issue, public exchanges and other key provisions — will change the health care market for early retirees. By Bryce Williams, Managing Director, Towers Watson’s Exchange Solutions

DEPARTMENTS 4

Publisher’s Letter

discuss how they’ve created the industry’s most complete and comprehensive one-stop solution.

CEO Doug Field covers the latest in the private exchange and defined contribution industry and what’s happening at the Institute around exchanges

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News Briefs & Innovations Keeping you up-to-date with the latest news, research and innovations in defined contribution and health insurance exchanges

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By Dr. John Reynolds, Chief Executive Officer, and Pierce A. McNally, Chief Strategy Officer, Cielostar

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In her second regulatory and compliance column, Elena Merino, a leading Atlanta-area benefits broker, discusses the state of public and private exchanges for small employers and the potential missed opportunities in this area.

Exchange Profile: The Cielostar Private Exchange Solution The Cielostar Private Exchange Solution represents the culmination of 25 years of work in the industry evolving toward technology-based solutions in the field of health care and benefits management, administration and payments platforms. The Minneapolis-based company’s leading executives

Regulatory & Compliance: Small Employer Private Exchanges: Wherefore Art Thou?

By Elena Merino, President/CEO, The Meridian Group

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Exchange Profile: The Solstice Marketplace

benefits brokers will play after the launch of public and private exchanges. With the launch of Solstice Marketplace, Florida’s Solstice Benefits has created a private exchange solution to help brokers succeed. By Carlos Ferrara, Chief Operating Officer, Solstice Benefits, Inc.

10 Supplemental Health: Why Voluntary Insurance Matters Health care reform, primarily through the creation of public and private exchanges, has created a larger, more important role for voluntary and supplemental products. Michael Zuna, EVP and CMO, Aflac, discusses why voluntary insurance matters more than ever in the health reform era. By Michael Zuna, Executive Vice President and Chief Marketing Officer, Aflac

Much discussion of the last year has focused on the role that

www.TheIHCC.com I HealthCare Exchange Solutions™ I July/August 2013 3


PUBLISHER

Exchange www.theihcc.com VOLUME 1 NO. 3 | JULY/AUGUST 2013

Exchanges. Here They Come. The buzz surrounding health insurance exchanges created by the Affordable Care Act

Published by FieldMedia LLC 292 South Main Street, Suite 400 Alpharetta, GA 30009 Fax: 770.663.4409 CEO

Doug Field @ theihcc.com

has been growing this the year in media and throughout the business world. With October 1 less than two months away, we’re very close to seeing how these exchanges will — or

MANAGING DIRECTOR

Brent Macy

won’t — work. MANAGING EDITOR

Considerable attention has been given to public exchanges and whether or not they will be operable in time. The White House and Department of Health and Human Services have repeatedly insisted they will be ready, but many have reasonable doubt. On the other hand,

Jonathan Field

ACCOUNT MANAGER

Joni Lipson

employers will see for themselves how effective the different private exchange solutions are at meeting their health and benefits needs. Coming in early December, the Institute for HealthCare Consumerism’s FORUM West event

MARKETING COMMUNICATIONS MANAGER

Lana Perry

ART DIRECTOR

Kellie Frissell

will be the industry’s first real-time event to look at the success of both public and private exchanges. The Las Vegas conference will feature a panel discussion with public and private exchange experts in addition to several workshops focused on defined contribution and exchanges.

ASSOCIATE DIRECTOR OF EDUCATION SERVICES AND PROGRAMS

Dusty Rhodes CHAIRMAN OF IHC ADVISORY BOARD

Ronald E. Bachman, CEO, Healthcare Visions

In this third issue of HealthCare Exchange Solutions, I am proud to feature many business and thought leaders on the upcoming exchanges and the issues surrounding their implemenation. Bryce Williams, Managing Director, Towers Watson’s Exchange Solutions, looks at how the ACA and public exchanges will affect early retirement options. Michael Zuna, Executive Vice President and Chief Marketing Officer, Aflac, delves into why voluntary products may become more important than ever in the era of the health insurance

EDITORIAL ADVISORY BOARD

Kim Adler, Allstate; Diana Andersen, Zions Bancorporation; Bill Bennett; Doug Bulleit, DCS Health; Jon Comola, Wye River Group; John Hickman, Alston+Bird LLP; Tony Holmes, Sanders McConnell, TSYS Healthcare; Roy Ramthun, HSA Consulting Services LLC; John Young, Consumerdriven LLC WEBMASTERS

Kevin Carnegie

exchange.

Tom Becher

In her regular column, Elena Merino examines small and mid-sized employers as they are both related to private and public exchanges. I am also excited to feature Exchange Profiles for both Solstice Marketplace and the Cielostar Private Exchange Solution, two unique products in the private exchange space. I hope you find this issue of Exchange Solutions of value as we move into a different era of employee benefits.

ASSOCIATE WEB ADMINISTRATOR

Tim Hemendinger

DIRECTOR OF CONFERENCE SPONSORSHIP/ CORPORATE MEMBERSHIP/REPRINTS

Rogers Beasley

BUSINESS MANAGER

Karen Raudabaugh

™ Volume 1 Issue 3 Copyright ©2013 by FieldMedia LLC. All rights reserved.

Sincerely,

™ is a trademark of FieldMedia LLC. ™ is published eight times yearly by FieldMedia LLC., 292 South Main Street, Suite 400, Alpharetta, GA 30009. Periodical postage

Doug Field CEO/Publisher dfield@fieldmedia.com

TO SUBSCRIBE: Make checks and money orders payable to ™ magazine 292 S. Main Street, Suite 400, Alpharetta, GA following rates: single copy $7.50; $75.00/yr in the U.S., $105/yr in Canada and $170/yr international. Please contact FieldMedia at 404.671.9551 or PRINTED IN THE U.S.A. ™ is designed to provide both accurate and authoritative information with regard to the understanding that the publisher

legal advice is required, the services of a professional adviser should be sought. The magazine is not responsible for unsolicited manuscripts or photographs. Send letters to the editor and editorial inquiries to the above address or to

4

July/August 2013 I HealthCare Exchange Solutions™ I www.TheIHCC.com


BRIEFS

NEWS BRIEFS Towers Watson Selects WageWorks to Administer Health Accounts on New Private Exchange Towers Watson, a global professional services company and WageWorks, Inc., a leading provider of consumer-directed benefits, have announced an agreement for WageWorks to administer health savings accounts (HSAs) and health reimbursement arrangements (HRAs) on OneExchange Active, Towers Watson’s new private health insurance exchange. Under the agreement, WageWorks will be the exclusive administrator of HSAs and HRAs for OneExchange Active — Towers Watson’s offering for active full-time employees.

Initial Group Of 5 Major Employers Sign On To Offer Benefits Through Mercer’s Private Exchange Five major US employers have signed on to offer their employees a range of medical, dental, life, disability, and voluntary benefit choices for 2014 through Mercer Marketplace, with additional employers in active discussion to move in this direction in 2014 and 2015. The employers, which cannot be named publicly until their employees are informed during the upcoming annual enrollment process, represent a range of sizes and industries. Some will offer self-funded medical and dental plans on the exchange while others will offer fully insured plans. The industries represented are retail, transportation, media, food and beverage, and professional services; the employers range in size from 800 to 25,000 employees.

Guardian Joins Liazon’s Bright Choices Exchange The Guardian Life Insurance Company of America (Guardian), one of the nation’s largest mutual life insurers and a leading provider of employee benefits, announced today that it will be offering its dental, vision, life, disability and accident products on Liazon’s Bright Choices Exchange. By providing its full suite of benefits through Bright Choices, Guardian is expanding access to these important benefit options for employers and employees through an increasingly popular distribution channel.

Digital Benefit Advisors of Vermont Launches Private Exchange, Signs Blue Cross Blue Shield Digital Benefit Advisors (DBA) of Vermont, a division of Digital Insurance, the nation’s largest and most technologically advanced employee benefits-only agency, is launching Digital Benefits Marketplace, a private exchange that helps businesses with 50 or more employees control rising benefits costs. The new Digital Benefits Marketplace enables employers to offer a comprehensive array of benefits — including health insurance plans from Blue Cross Blue Shield of Vermont — at a fixed cost. It also streamlines administrative processes and empowers individuals to spend their benefits dollars where they determine they’ll receive the greatest value.

PrimePay Extends its Relationship with Alegeus, Adopts Private Exchange Platform Alegeus Technologies, the market leader in health care and benefit payments, announced that PrimeFlex Administrative Services, LLC, a subsidiary of PrimePay and a leading provider of payroll, tax, HR and benefit services, has selected the Alegeus WealthCare

Marketplace platform to power its fully-branded private exchange solution, called The PrimePay Marketplace. Designed for broker partners and employer clients, The PrimePay Marketplace will complement existing offerings to support a wider array of employer funding strategies — such as defined contribution plans.

Benefitfocus Adds Virtual Assistants to Marketplace Solutions Through CodeBaby Partnership Benefitfocus and CodeBaby recently announced their strategic initiative to add virtual assistance to the benefits shopping experience. Through this partnership, Benefitfocus will provide insurance carriers and employers convenient, on-demand consumer support by incorporating CodeBaby’s Intelligent Virtual Assistants (IVAs) within its private exchange offerings, BENEFITFOCUS® Marketplace and BENEFITFOCUS HR INTOUCH MARKETPLACE® Edition. This strategic alliance creates a leading solution for the health care and benefits market.

PEOPLE ON THE MOVE Bloom Health Names Jim Priebe Chief Operating Officer Bloom Health is pleased to announce the hiring of Jim Priebe as its Chief Operating Officer. Priebe will lead corporate development, legal and compliance, service center operations and account management for Bloom Health. He brings a wealth of experience in operations, strategy and business development from previous executive leadership roles at leading health care companies including Acclaris Inc., OptumHealth and Mayo Clinic Health Solutions. Most recently, Priebe was Chief Growth Officer at Acclaris, an industry leader in consumer-driven health and reimbursement account administration. Priebe delivered consistent year-over-year growth and significantly increased revenue.

Digital Benefit Advisors Selects Bob Gaydos to Head New Private Exchange Digital Benefit Advisors is launching Digital Benefits Marketplace, a private exchange to help employers of all sizes control rising benefits costs through defined contributions and fostering consumer engagement. In conjunction, they have appointed DBA Managing Principal Bob Gaydos to spearhead this initiative and coordinate the roll out, naming him national director of private marketplaces. In his new role, Gaydos will work closely with Digital’s leadership, carriers and technology solutions to drive adoption.

Towers Watson Names Woody Sides Exchange Solutions Regional VP of Sales in the West Towers Watson has announced it has hired Woody Sides as regional vice president, responsible for sales and business development efforts in the West for its Exchange Solutions business segment. Sides brings more than 20 years of experience in the health care and benefits industry to his new role. He served for over a decade as vice president of national accounts and managed care sales for Medco Health Solutions in addition to having national employer responsibilities with Kaiser Permanente and PacifiCare Health Systems. www.TheIHCC.com I HealthCare Exchange Solutions™ I July/August 2013 5


TWO FREE LIVE WEBINARS Research Results Unveiled – Employer Perceptions Regarding Private

< John Park Chief Strategy Officer Alegeus Technologies

During the months of June and July 2013, Alegeus Technologies commissioned an independent research initiative, polling more than 500 US employers on the topics of defined contribution and private exchanges. Join us as we unveil the results of this ground-breaking research. t

Gauge employer understanding and perceptions regarding defined contribution and private exchanges concepts

t

Ascertain anticipated interest and adoption rates of defined contribution/private exchange programs (interest & timing)

t

t

5IVSTEBZt"VHVTU  1:00 PM EST

Terry McCorvie > President WealthCare Solution Alegeus Technologies t

Determine channel preferences for researching, identifying and purchasing defined contribution/private exchange solutions

Understand current benefit offerings, and determine whether there is any likely correlation between existing benefit packages and defined contribution/private exchange interest

t

Validate defined contribution/private exchange solution feature preferences & perceptions

Obtain background on how/when employers make benefit decisions

Register today: www.theihcc.com/webinars

10 Things You Need to Know When Selecting a CDH Platform

5IVSTEBZt4FQUFNCFS  1:00 PM EST

< Chris Rodkey For health plans, third party administrators and financial institutions Director Product Management engaged in offering tax-advantaged benefit accounts to employers — the Alegeus Technologies selection of an account administration platform (and the effort and investment required to convert your existing portfolio) is significant. From system architecture to plan setup and administrator controls to branding opportunities and participant/employer self-service capabilities — what are the best-in-class features available in the market today? Which features have the potential to transform your business operations and deliver competitive advantage in the marketplace? What is the business case for making a change, and what is the opportunity cost loss of status quo? Join us as we discuss 10 things you need to know when selecting a CDH administration platform. During the presentation, we will hear from other administrators who have recently gone through a selection/conversion process — and the criteria, priorities and imperatives that weighed into their decision-making.

Register today: www.theihcc.com/webinars

FREE LIVE WEBINARS AND AUDIO ARCHIVES

Access All Archives: www.theihcc.com/webinars

www.theihcc.com

To learn more, check out The Institute for HealthCare Consumerism’s website at www.theihcc.com


PRIVATE EXCHANGE PROFILE

The Most Complete and Comprehensive One-stop Solution: The Cielostar Private Exchange Solution

BY DR. JOHN REYNOLDS » CHIEF EXECUTIVE OFFICER » PIERCE A. McNALLY » CHIEF STRATEGY OFFICER » CIELOSTAR

The Cielostar Private Exchange Solution represents the culmination of 25 years of work in the industry evolving toward technology-based solutions in the field of health care and benefits management, administration and payments platforms. For 12 years, Cielostar, then known as OutsourceOne, Inc., pursued a broad-based business model focused on the outsourcing by corporations of their benefits management function. Virtually every aspect of the outsourcing function was handled by the company at one time or another, from claims administration to benefits management to billing to tax-advantaged accounts and COBRA. When it was decided to move into the technology of the administration and management process, it was done from a deep and thorough understanding of the practicalities necessary for a streamlined function in the real world. With the advent of Benefit Ready (version 1) in 2001, the company introduced the first and most important element of a fully integrated data base that by 2013 (version 7) established the first and industry-leading complete end-to-end solution on a single platform. This allows the company to offer seamless handling of eligibility, enrollment, decision support, carrier feeds, tax-advantaged accounts, voluntary benefits, COBRA, consolidated billing and EDI, all tied together with electronic cardbased financial interface. Far from being an enrollment software development project, it is the most complete and comprehensive one-stop solution available in the marketplace today. As a result of the changing marketplace and spurred by the passage of the Affordable Care Act, it became clear that more and more companies and individuals would be meeting their health care and benefit needs on web-based compare-and-shop platforms called private exchanges. A successful private exchange will need all the components just described to allow for an efficient comparative purchasing experience with a view in mind to

At Cielostar, we believe that the only way to pursue a winning strategy is to simplify and make it easy to perform a basic task: obtaining and deploying fundamental protection for employers, their employees and the employees’ families.

lowering costs. While private exchanges are particularly well suited to serve individuals shopping and buying in a defined contribution environment, they work equally well for employers who still seek the best value in the defined benefit environment. The private exchange is an open marketplace where consumers, be they individuals or corporations, can get information, research alternatives, choose plans, enroll in them and manage them on one environmentally cohesive platform without detours or cumbersome hand-offs. This is what the Cielostar Private Exchange Solution offers companies, their employees, affiliate groups, consortiums of commonly-owned enterprises and individuals in their search for affordable health care and benefits access. The current health care and benefits acquisition landscape has become ever more complex with the confusion and uncertainty injected by the passage and halting implementation of the Affordable Care Act, which will directly affect every person in the country. It may take years before the contours of the consequences of this legislation are in even fuzzy focus. Yet, the needs of corporations and individuals for health care and benefit deployment will continue apace and not abate just because there’s fog over the battlefield. At Cielostar, we believe that the only way to pursue a winning strategy is to simplify and make it easy to perform a basic task: obtaining and deploying fundamental protection for employers, their employees and the employees’ families. In short, complication is a disservice. It will lead to less protection and more anguish. So, at the heart of the Cielostar Private Exchange Solution is a simple and easy-to-navigate landing page that asks for identification by status (employer or individual) and if an employer, by size, and by clicking on one icon, the entire process is initiated. Behind that click resides 25 years of health and benefits experience coming from a deep understanding of the elements necessary to provide real customer service. From that one click, the customer can not only initiate the desired transaction, but complete the process in its entirety in one sitting if desired. Efficient, fast, simple, understandable, comprehensive: the Cielostar Private Exchange Solution.

www.TheIHCC.com I HealthCare Exchange Solutions™ I July/August 2013

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REGULATORY & COMPLIANCE

BY ELENA MERINO » PRESIDENT/CEO » THE MERIDIAN GROUP

Small Employer Private Exchanges: Wherefore Art Thou?

W

hile private exchanges for employer groups with 500 or more employees are springing up at national risk management firms throughout the country, small and medium-sized businesses are asking “What about us?” What about firms with less than 500 employees that make up 99.7 percent of U.S. employer firms?1 Don’t exchange providers know that these firms make up 82.8 percent of all employment and 85 percent of all new employment?2 Isn’t technology the mother of economies of scale? While Mercer, Aon and Willis are competing for the elephants and Web-based brokers like eHealthInsurance are competing with public exchanges for individual consumers, only a smattering of agents working with small to medium employer groups are even talking about private exchanges. In a technology session at the most recent conference of the National Association of Health Underwriters (NAHU), a half-dozen hands went up when asked if they are even providing a multi-carrier enrollment solution to their groups. Why haven’t enrollment technologies reached smaller employers or their brokers? Will defined contribution change that? We hope so. Even the federal government SHOP exchange employee option has been postponed. While some states’ SHOP exchanges have teamed up with software vendors, such as bswift, Liazon and others, no state has received final approval to operate its own exchange.3 BenefitMall, a general agent in 11 states which adopted multi-carrier quoting and decision-support tools for brokers early on, is naturally maturing into a private exchange. Meanwhile, general agents in various states are playing catch-up in providing technology solutions to their brokers hoping to quickly blossom into full exchanges. But, will small group insurance providers sign up for these smaller private exchanges? In an unofficial survey of Georgia carriers, mum was the word. “We don’t know yet,” they say. While firms with up to 100 employees will be subject to community rating after 2016, most states elected the option to define small groups as employers with up to 50 employees until 2016. Even though groups with less than 50 employees comprise 43.2 percent of all employment, private exchanges are unlikely to target this market, not only because are they are exempt from the employer mandate, but because they know that small employers that offer minimum value and affordable coverage will in essence disqualify their employees for federal subsidies. Groups with more than 50 employees but less than 500 employees (39.6 percent of total U.S. employment) are, however, prime customers for private exchanges in 2014.4 Because community ratings and 8

July/August 2013 I HealthCare Exchange Solutions™ I www.TheIHCC.com

standardized metal plans will not apply to employers with over 50 employees (100 employees in 2016) employers in the segment will not only have more plan and rating variation but will be subject to an increasingly number of regulations, mandates and reporting requirements. Further, mid-sized firms in laborintensive industries like hospitality and retail that may not have traditionally offered major medical to hourly employees will look to private exchanges as a viable alternative to the employer mandate. Because offering access to private exchanges, regardless of the level of contribution, would be considered offering Minimum Essential Coverage (MEC), these employers will be able to avoid the 4980(a) penalty per employee by participation in a private exchange. Integrating the defined contribution as part of the total compensation, employers will not only be able to present a true compensation package to employees but also be able to fine tune their compensation to avoid the 4980(b) penalty as well. While Aon, Mercer and Willis clients will surely have the benefit of specialized counsel and accountants, mid-size employers will struggle not only with meeting the reporting requirements under the ACA but with control group issues, managing employee counts, variable hour employees and varying contributions levels. HR and benefits administrators who are already overworked and often underpaid will likely be unwilling, or unable, to take on the responsibilities and increasing liabilities of plan administrators and fiduciaries post-ACA. Will private exchanges step up, not just to provide defined contribution technologies and decision tools, but as plan administrators and legal fiduciaries as it relates to ACA compliance? Will private exchanges that collect and disperse contributions from employers to employees under the defined contribution model be ready to take legal responsibility as trustees? Will they be ready to manage FSAs, HRAs and HSAs for multiple employers? Will they step up to serve as liaison to HHS, DOL and IRS as it’s related to reporting and compliance? No, small and medium-sized employers don’t expect exchanges to be all things to all people, but in view of the increased compliance and reporting requirements, they are more than ready to see the menu. ___________________________________________________________

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BLS…http://www.bls.gov/opub/mlr/2012/03/art4full.pdf


PRIVATE EXCHANGE PROFILE

Brokers, Enrollment Support, Data Security: Crucial to Private Exchange Success BY CARLOS FERRARA Âť CHIEF OPERATING OFFICER Âť 40-45*$&#&/&'*54 */$

The Patient Protection and Affordable Care Act. Itâ&#x20AC;&#x2122;s upon us â&#x20AC;&#x201D; as are the changes in the health care landscape. Employers with 50 or more employees are now required to offer employees group health insurance. All Americans will be required to purchase health insurance, either through employer-provided plans or privately. Health plans will be accessed through health care exchanges â&#x20AC;&#x201D; marketplaces where people can compare health plans and purchase policies independently. There will be public exchanges â&#x20AC;&#x201D; those run and funded by the federal government and states â&#x20AC;&#x201D; as well as private exchanges â&#x20AC;&#x201D; those run by non-government entities.

What does all this mean for brokers and their businesses? To survive in this ever-changing health care landscape, brokers will need to be tech savvy. Differentiating their services through benefits offered in exchanges like the Solstice Marketplace will keep them at the forefront with their clients â&#x20AC;&#x201D; as well as remaining a trusted adviser.

An Exchange to Help Brokers Succeed The Solstice Marketplace is an easy-to-use health care exchange platform that was designed to address the needs of brokers â&#x20AC;&#x201D; and HR professionals â&#x20AC;&#x201D; nationwide. Brokers can leverage the relationships they already have with multiple carriers and sell those services to their customers. We also offer standard plans to choose from. Brokers have unique business needs and this exchange allows them to create a personalized, branded landing page to drive more business their way. Plus, single source billing with the Solstice Marketplace alleviates the hassles of multiple bills and the issues that come with them. The safety and security of brokersâ&#x20AC;&#x2122; data and their customersâ&#x20AC;&#x2122; private information is a key feature of a health care exchange. The Solstice Marketplace has security measures that comply with â&#x20AC;&#x201C; and exceed â&#x20AC;&#x201C; current federal and state guidelines for protecting personal health information.

Enrollment Support: Supporting Employee Satisfaction The new exchange concept will already be confusing for enrollees, who likely are uncertain about choices. With an eye on health literacy, itâ&#x20AC;&#x2122;s important that employee enrollment is simple to understand through an easy-to-use enrollment system. Our goal is to reduce enrolleesâ&#x20AC;&#x2122; stress, making the entire process as user-friendly as possible.

Employees may need additional information about some of the terms or topics or help in choosing a plan. The Solstice Marketplace has a complete library of relatable and easy-tounderstand videos that are instantly available to viewers. For example, they can watch a video on the Solstice Marketplaceâ&#x20AC;&#x2122;s open enrollment, at a point when itâ&#x20AC;&#x2122;s the most helpful in their decision making process. Online tools can give employees peace of mind, knowing theyâ&#x20AC;&#x2122;re making a well-informed decision. The Solstice Marketplace offers helpful support such as: t Comprehensive enrollment video library t Articles written in plain language, passing a URACapproved health literacy policy t Exclusive online tools â&#x20AC;&#x201D; like our built-in calculator that shows how much the employer is contributing â&#x20AC;&#x201D; and how much the employee will pay

Manage and Grow your Business With Unique Broker Tools Brokers will need tools, too, to create their online presence. The broker-centric Solstice Marketplace allows brokers to custom-brand their own portal; add and administer the carriers with whom they have established relationships; create and manage medical, dental, vision and life plans they are licensed to sell; simplify their businesses; create and manage multiple groups all from one convenient dashboard; add plans to groups and set up and monitor enrollment for groups. As health reform continues to re-shape the health care landscape, employers will need reliable partners to help them navigate the changes. With the Solstice Marketplace, brokers can be just that.

www.TheIHCC.com I HealthCare Exchange Solutionsâ&#x201E;˘ I July/August 2013

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SUPPLEMENTAL HEALTH BY MICHAEL ZUNA EXECUTIVE VICE PRESIDENT AND CHIEF MARKETING OFFICER AFLAC

Why Voluntary Insurance Matters

H

ealth care reform has had an impact on practically every aspect of health services for individuals and businesses. While many are confused about what it means for them, in the months ahead key provisions will take effect that will require businesses and individuals to make key benefits decisions. Health care reform and increasing health care costs continue to drive demand for supplemental benefits. Voluntary insurance (also known as supplemental insurance) has long served as a way to protect the policyholder when they are sick or injured — regardless of their major medical insurance coverage. Voluntary insurance plans are even more relevant and have importance as a key piece of a worker’s overall financial plan.

Workers gain responsibility; but face risks With rising health care costs, employers have been shifting to more consumer driven health plan options. In many instances consumers are making more of their health care choices — including how much they spend on health care coverage and what type of coverage they have. However, research shows individuals are concerned they may not be prepared to handle the numerous and complex details of managing their health insurance benefits as they should. The majority do not understand consumer-driven health care options, are confused about how they will be impacted by health care reform, and they have unrealistic opinions about their own morbidity risks, or the risk posed to their finances. In fact, more than half of workers (53 percent) think that they may not adequately manage their health insurance coverage according to the 2013 Aflac WorkForces Report1 — leaving their family less protected than they currently are. A similar percent (54 percent) say they’d prefer not to have more control over their health insurance expenses and options because they will not have the time or knowledge to manage it effectively.

Voluntary insurance help fill the gaps For many organizations, voluntary benefits may help solve a number of concerns and challenges that have surfaced during this time of health care and financial insecurity. For small businesses, supplemental insurance is becoming a more important component of the overall employee benefit and compensation package.

Voluntary insurance helps to: t

10

Support the overall benefits plan: Workers with supplemental benefits are more likely to be extremely or very satisfied with their benefits than workers who do not have supplemental benefits (69 percent compared to 48 percent).

July/August 2013 I HealthCare Exchange Solutions™ I www.TheIHCC.com

t

Provide additional robust benefits options: Voluntary benefits offer a variety of levels and types of coverage to meet individual needs and life stages. Policies include accident, disability, cancer, hospital and many more. These policies can be offered, sold or provided with any type of major medical plan. t Provide workers cash benefits to help pay out-of-pocket medical costs: Most employees (43 percent) are not very or not at all prepared to pay for out-of-pocket expenses related to an unexpected illness or accident. Additionally, 25 percent are only prepared to pay less than $500 (46 percent have less than $1,000) for themselves or family members for out-of-pocket expenses. t Guard workers against financial stress and anxiety: Employees who are offered and enrolled in supplemental benefits options are significantly more likely to say they have peace of mind (52 percent compared to 42 percent), and have a financial plan (49 percent compared to 39 percent). Facing so much uncertainty, developing a plan to manage health care costs can be an overwhelming task. As decision-makers seek health care benefits options, voluntary insurance continue to help soften the impact of the inevitable cost-shifting and rising out-ofpocket costs on its valuable workforce. These solutions have no direct cost to the company, but offer workers choice in additional coverage that best suits their needs.

1 2013 Aflac WorkForces Report, a study conducted by Research Now on behalf of Aflac, January 7 – 24, 2013


Early Retirees and Their Employers:

The ACA Opens Up Opportunities Where Few Existed Before BY BRYCE WILLIAMS » MANAGING DIRECTOR » TOWERS WATSON’S EXCHANGE SOLUTIONS

www.TheIHCC.com I HealthCare Exchange Solutions™ I July/August 2013

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Healthcare Consumerism: Shifting to a Patient-Centered Organization FREE LIVE WEBINAR

5IVSTEBZt"VHVTU to1.&45

As expressed by the Deloitte Center for Health Solutions: â&#x20AC;&#x153;. . . health policy experts and economists have . . . reasoned that costs would be lower, services better and quality substantially improved if the industry repositioned itself as a consumer market.â&#x20AC;? As promoted by PricewaterhouseCoopers: â&#x20AC;&#x153;Seeing things from the customerâ&#x20AC;&#x2122;s perspective â&#x20AC;&#x201D; outside-in â&#x20AC;&#x201D; and making that view the core of your strategy may be the most important thing that sets you apart from competitors. Companies that design this kind of organization â&#x20AC;&#x201D; focusing on the right metrics, an integrated approach, a thorough understanding of the customer, and strategic investments â&#x20AC;&#x201D; can reap real dividends.â&#x20AC;? Webinar Attendees will: t

Learn about the five developing generations of consumerism.

t

Find out how to optimize your products and services by becoming a â&#x20AC;&#x153;Patient-Centeredâ&#x20AC;? Organization.

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Discover the realities of where the HealthCare Consumerism megatrend is today and where it is going.

t

Take away a better understanding of the benefits of HealthCare Consumerism (and of the next dimension of HealthCare Consumerism â&#x20AC;&#x201D; the patient-centered organization).

Who should attend: employer, consultant, broker, insurer, health provider, or administrator. Sign up for this FREE Live Webinar at www.theihcc.com/webinars/aflac

Ron Bachman

Chairman, Editorial Advisory Board The Institute for HealthCare Consumerism

Date: 5IVSTEBZt"VHVTU  Time: 2:00 - 3:00 p.m. EST Info: webinars@theihcc.com Live & On-Demand: www.theihcc.com/webinars/aflac

FREE WEBINAR ARCHIVES HealthCare Consumerism: Helping Employers Move from a Parenting Approach to a Partnering Approach On Demand

Access All Webinar Archives: www.theihcc.com/webinars Register today for the new Aflac webinar: www.theihcc.com/webinars/aflac

In the move towards a Partnering Approach vs. a Parenting Approach, employers partner with their employees and offer true choice rather than dictate plans and carriers in a limited fashion.

www.theihcc.com

To learn more, check out The Institute for HealthCare Consumerismâ&#x20AC;&#x2122;s website at www.theihcc.com


The problem is many people had to tap into their savings to get through the recession. Others are wary about taking the retirement plunge in the middle of such a modest pace of economic recovery. And let’s face it: even when the economy is booming, not everyone excels at retirement planning. And consider these findings from Towers Watson’s 2011 Retirement Attitudes Survey:  Survey respondents, especially older workers, most often blame the rising costs of necessities and health care for retirement delays. Of workers who plan to retire later, 64 percent of those aged 50 and older cite keeping their health care coverage as the reason.  Even more — 68 percent — cite higher prices for basic necessities. Of course, for Americans 65 years and older, retirement does not hinge on the availability of health insurance because they are eligible for Medicare. But for Americans 50 to 64 years old, the prospect of losing their health insurance if they leave their jobs can be a serious roadblock to retirement — no matter how much they might like to retire. There are lots of reasons why people want to retire before they turn 65. Workers of early retirement age are old enough to have grown children who have moved out of the house and are building their own lives and families. The chance to travel or pursue other interests might be especially be appealing for empty nesters. Americans in this age group also may have been in the workforce for 25 years or more and be ready for more freedom and flexibility in their daily lives. Or they might have health issues that, while not serious enough to make it impossible to work, might make being fully productive at work more challenging. But this age group is by far the most vulnerable when it comes to the availability and cost of health care. According to the AARP’s Public Policy Institute’s report on “Health Insurance Coverage for 50-64 Year Olds,” nearly one in three people between 50 and 64 are in families that spend 10 percent or more of their income on health care. This compares with just 18 percent of people between the ages of 18 and 49. Bottom line, for people in this age group, no matter how strong the desire to retire early, the risks of giving up their employer-sponsored health care may just be too high.

Workers delaying retirement also can make it harder for employers Older Americans delaying retirement because of health insurance can have a negative impact on employers, too. Because they are more likely to have health problems than younger workers, the costs of insuring them are greater — adding to the struggle to manage the high costs of health that many employers have been engaged in for decades. Even though health care costs in recent years have been rising less, health care is expensive and there is no end in sight to cost issues. These benefits are a crucial recruiting and retention tool for a highperforming workforce, and most employers want to stay in the game. For this reason, employers are trying just about everything they can to keep costs down. They have shifted some of the cost of health care coverage to their employees, trimmed benefits, outsourced benefits administration and initiated wellness programs to keep their employees healthier in hopes of cutting usage. All of these activities have worked to control costs somewhat, but not always in ways that are favorable to both employers and their employees: employees depend on affordable health insurance as much as employers depend on their employees.

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Beyond the cost of health care for older workers, there are other challenges Americans delaying retirement create for employers. For example, with fewer older workers retiring, there may be fewer jobs or promotions available for younger workers looking to enter or advance their careers. And while the vast majority of employers seek a balance in their workforce between experienced workers who drive businesses today and young workers who will grow with training and time and add greater value tomorrow, a sharp skew in either direction can make managing a workforce much more complex and challenging. For example, many older workers are energized by work and remain extremely engaged and productive at any age. On the other hand, someone who is working primarily for health insurance may just be going through the motions. At the same time, while some younger workers may gracefully bide their time, others may believe their advancement opportunities are blocked and decide that if they can’t move up quickly enough in their current company, they’ll move to another.

New options for early retirees and their employers coming soon The good news in all of this is that starting in 2014, the Patient Protection and Affordable Care Act (PPACA) creates new options for workers between the ages of 50 and 64 who would like to retire. Most important, PPACA provisions will make the market for individual insurance plans more like Medicare for Americans of all ages. Specifically, starting in 2014, PPACA brings to the individual health plan market guaranteed issue, standard plan designs, community ratings, greater availability of affordable plans and federal subsidies to increase affordability. PPACA also provides for public health insurance exchanges also known as marketplaces. These PPACA provisions will immediately create options for people under 65 looking to retire because so many barriers to obtaining individual health care coverage will be removed: t Guaranteed issue means that for the first time, Americans under the age of 65 cannot be denied coverage or have pre-existing medical conditions excluded from individual health insurance plans — a benefit that Medicare-eligible Americans have enjoyed since Medicare was enacted in 1965. Guaranteed issue will help three categories of people: t Those who would like to retire early, but haven’t because of health insurance t Early retirees who are still covered by their employersponsored group plan but must now pay the full cost of it t Early retirees who are uninsured because they are not covered by an employer-sponsored group plan and have been unable to qualify for individual insurance t Standard plan designs will make it easier to evaluate individual health plans being offered on public exchanges, which enable side-by-side comparisons, quickly and efficiently. t Community rating rules will help make insurance more affordable for early retirees by limiting the factors insurers can use to vary premium costs for individuals. Early retirees historically have had the least favorable underwriting conditions of any other employee or retiree population and very high insurance premiums. New PPACA regulations mandate a maximum three times 14

July/August 2013 I HealthCare Exchange Solutions™ I www.TheIHCC.com

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t

differential between premiums charged for the youngest and healthiest members of the risk pool and those in their 50s and early 60s. Federal subsidies will be available to any individual who makes less than 400 percent of the Federal Poverty Level (currently $44,680 for an individual and $92,500 for a family of four). Being able to leverage these federal subsidies can maximize the value of consumers’ health care spend. Public exchanges can add value by offering a wider choice of health plans, which means plans that better match an individual’s situation can be purchased. Exchanges can also off-load employer administrative burdens, further reducing costs and increasing efficiency.

Still, transitioning to individual health plans offered on public exchanges is a big change for people who are used to receiving their health insurance through employer group plans or having to evaluate and make choices about their own health care. Ensuring that early retirees fully understand how to get the most out of their new options is essential. Bottom line, in the fall of 2013 for coverage that will be effective on January 1, 2014, early retirees will have access to something Medicare-eligible Americans have enjoyed for 50 years — guaranteed access to quality health insurance at a reasonable price. Employers will see barriers to retirement fall, allowing employees who stay on only for benefits to move out of the workforce and giving younger employees more opportunity to advance. And the most powerful force in the American economy will be unleashed to tackle the problem of rising health care costs — knowledgeable consumers — consumers with the ability to buy their own health plans and switch plans should they get an unacceptable rate increase or receive poor service.


EXCHANGE SOLUTIONS SHOWCASE

HSA/HRA/FSA TECHNOLOGY: ADMINISTRATION & MANAGEMENT

TSYS HEALTHCARE TSYS HealthcareÂŽ provides end-toend strategic payment solutions for 706.649.5080 consumer directed healthcare. We www.tsys.com/healthcare partner with benefits administrators, healthcare@tsys.com financial institutions, health plans, and software providers to navigate all aspects of HSAs, HRAs, FSAs, transportation accounts, cash reimbursements, and lines of credit. TSYS Healthcare cards offer participants the security they expect along with the ability to conveniently access funds from multiple accounts and manage their benefits payments with simplified single-card access. Clients and partners benefit from simplified processes, reduced paperwork and cost savings that can contribute to improved return on investment. â&#x20AC;&#x153;We built the TSYS Healthcare platform to meet UIF NBSLFU EFNBOE GPS SFMJBCMF DPOmHVSBCMF BOE intelligent solutions. Understanding the dynamic 64 IFBMUIDBSF NBSLFU PVS DVTUPNFST SFMZ PO PVS option-driven system to prepare them for the future.â&#x20AC;? â&#x20AC;&#x201D; Trey Jinks, Group Executive, TSYS Healthcare HSA / HRA / FSA ADMINISTRATION AND FINANCE

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QSPHSBNT DPNNVUJOHBOE child and elder care. Wage Works also offers retiree health care and COBRA Services. More than 100 of Americaâ&#x20AC;&#x2122;s Fortune 500 employers and millions of their employees use WageWorks.

BENEFIT ADMINISTRATION/PRIVATE EXCHANGES

4JODF $JFMP4UBS GPSNFSMZ0VUTPVSDF0OF  CIELOSTAR IBTIFMQFECSPLFST FNQMPZFSTBOEFNQMPZFFT 530 U.S. Trust Building navigate the ever-changing world of benefits. 730 Second Avenue South Now, with the dawn of â&#x20AC;&#x153;Defined Contribution Minneapolis, MN 55402 Health Careâ&#x20AC;? we are again on the leading edge. With a team of industry thought leaders, CieloStar  makes navigating healthand benefits choices john.reynolds@cielostar.com easy for employers and employees by offering comprehensive benefits administration solutions with a high-touch, high technology modelâ&#x20AC;&#x201D;most recently launching a proprietary private health insurance exchange.

â&#x20AC;&#x153;Fueled by the far-reaching impact and complexities of health care reform UBLJOHFGGFDUJOBOE FNQMPZFSTBOEFNQMPZFFTJODSFBTJOHMZmOE themselves in a â&#x20AC;&#x2DC;farmerâ&#x20AC;&#x2122;s marketâ&#x20AC;&#x2122; of benefits choices. Cielostar is uniquely positioned with enabling technology that helps purchasers and consumers make the best possible decisions and create a best-in-class benefits administration process. Our unique comprehensive approach to benefits offers everything from back room UFDIOPMPHZGPSFOSPMMNFOU EBUB CJMMJOHBOEDBMMDFOUFSTUP DPNQMFUFTPMVUJPOTGPS$0#3" $%)1BOEIFBMUIJOTVSBODF exchanges.â&#x20AC;? â&#x20AC;&#x201D; John Reynolds, CEO, Cielostar HSA / HRA / FSA ADMINISTRATION AND FINANCE

Evolution1 and our Partners serve more &70-65*0/ */$ UIBONJMMJPODPOTVNFST NBLJOHVT  UIFOBUJPOTMBSHFTUFMFDUSPOJDQBZNFOU  www.evolution1.com on-premise and cloud computing sales@evolution1.com healthcare solution that administers SFJNCVSTFNFOUBDDPVOUT JODMVEJOH )4"T )3"T '4"T 7&#"T 8FMMOFTT and Transit Plans. It is the only solution that offers a single end-to-end user experience, provides innovative auto-substantiation technologies, and automates workflow for Partners, employers, and consumers. It does all this on one technology platform comprised of 1Cloudâ&#x201E;˘, 1Directâ&#x201E;˘, 1Payâ&#x201E;˘, 1Viewâ&#x201E;˘, 1Planâ&#x201E;˘, and 1Mobileâ&#x201E;˘. Evolution1 and our Partners are dedicated to delivering value, reducing costs and simplifying the business of healthcare.

â&#x20AC;&#x153;The combination of our innovative products will further our leadership position in a rapidly changing healthcare market. Together with our Partners we are committed to reducing costs and simplifying the business of healthcare.â&#x20AC;? â&#x20AC;&#x201D; Jeff Young Chairman and CEO, Evolution1

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ENGAGE AT EVERY STAGE

Ninety million consumers report having a hard time understanding their care choices, according to an Institute of Medicine study.* And as the healthcare landscape changes and insurance exchanges become available, consumers are likely to be more confused than ever. Though it remains to be seen what shape the new marketplace will take, it’s clear that consumers will require a range of tools to support their healthcare decision-making. From guiding individuals to their best-fit benefit plan to alerting them about gaps in care, Consumer Advantage from Truven Health Analytics™ provides a full array of solutions to engage consumers with personal, relevant, impactful information throughout the year. Consumer Engagement: The Key to a Successful Exchange Backed by more than 30 years of experience, our consumer experts, integrated platforms, and data management solutions have helped turn passive participants into active healthcare consumers. Recent successes include: Increasing adherence to colorectal cancer screenings by 22 percent Migrating 59 percent of employees from a PPO to a CDHP Reducing the number of “overinsured” employees by 14 percent Enrolling more than 1,000 new participants in a health savings account

Find the path to a healthier bottom line — visit booth #135 at AHIP Institute 2013 or go to truvenhealth.com/exchange

TRUSTED. PROVEN. ©2013 Truven Health Analytics Inc. All rights reserved.

Consumer confusion about their care choices is directly responsible for 3- to 6-percent higher healthcare expenditures.* * Source: Institute of Medicine Report Brief


HealthCare Exchange Solutions Jul/Aug '13