Benefits Industry News

Because women live longer, require more care and tend to be the primary caregivers in their families, long-term care falls disproportionately on their shoulders.

Yet according to a recent survey by Genworth Financial women face challenges talking to their families about putting together a financial strategy to deal with long-term care.

Genworth’s survey found that 72% of women said that the biggest barrier to starting this conversation is the concern about upsetting family members, compared with 57% of men that voiced the same worry.

Needless to say, seven out of 10 will need long-term care in their lifetime.

Despite the difficulty in having these tough conversations, long-term care is a hot button issue given that it is likely to be the greatest retirement expense facing Americans today. And as individuals continue to live longer the issue will only get worse.

The number of persons aged 65 or older is expected to double in the next 20 years; there will be 110% more people 80 or older, according to the U.S. Census Bureau.

The U.S. Department of Health and Human Services report that at least 70% of people over age 65 will require some long-term care services at some point and more than 40% will need care in a nursing home.

The truth is that the cost of long-term care has skyrocketed as well, increasing for the sixth consecutive year, with most of these increases outpacing inflation, according to Genworth Financial’s Cost of Care Survey conducted in April 2009. Genworth found that the national average median cost of one year in a private nursing home room is $74,208.

Yet families often think that health insurance and Medicare will cover these costs. But they cover almost none of the cost of nursing homes, assisted-living facilities or in-home care.

In fact, Olympic Gold Medalist Wendy Boglioli, who is now a spokeswoman for Genworth, said in a phone interview last week that not having long-term care insurance can be a real danger for women.

Women already take 11 years out of the workforce, she said, to take care of children and families, which means their retirement savings tends to be smaller, putting them at risk for outliving their retirement. And 90% of women will be solely responsible for their finances at some point in their life.

That is why it is important for advisers to talk to women about the options available to them to pay for long-term care costs. Boglioli said the options are: count on family, welfare (for the indigent and poor), self-insurance, and a long-term care policy.

“What I have seen in my experience in this industry is that families are either brought together or ripped apart by these decisions,” said Biglioli. “Having a long-term care strategy in place and having it in writing gives a family more resources. Without a strategy you are voluntarily putting your family at risk to make huge decisions financially, physically and emotionally.”

Source: Employee Benefits Article Used by Permission

By Kathleen Koster
August 1, 2010
It’s no accident that health care reform relies on a public health care exchange to save uninsured individuals and small businesses money on health care coverage.
But before 2014 (or 2017 in the case of large businesses) arrives, employers have private individual exchanges to help their retirees attain less costly and more comprehensive coverage.
One such retiree, George W. Farnall, 71, of Middlesex, N.C., had hoped for a worry-free retirement, but was winded by high premiums, deductibles and out-of-pocket costs until his former employer, Caterpillar, Inc., rerouted retiree health care coverage to a Medicare exchange-based system on Jan. 1.
“It’s something that I dreamed about when I was a young man, that whenever I got to be retirement age, I wouldn’t have to worry about where the money was going to come from for health care costs,” says the former assembly technician at Caterpillar’s Clayton, N.C. plant.
“I thought I’d died and gone to heaven [when I got on the new system]. It’s working so well, maybe I’ll get caught up on the other bills [I accrued] from the previous system this year,” he adds.
Caterpillar is one of many Fortune 500 clients of Extend Health, Inc., the country’s largest private Medicare insurance exchange.
Founded in 2004, Extend Health “operates a private Medicare exchange that helps employers or firms provide insurance choices to their retirees to buy their own individual plans using funds in a health reimbursement arrangement,” says Bryce Williams, CEO of Extend Health.
Companies like Extend Health are transitioning employers from the typical group insurance model to a more financially predictable exchange-based model, with lucrative results.
“We believe we’re saving our clients over $500 million each year while providing as good or better benefits for retirees. The group model is the evil here; it is a wildly inefficient way to deliver what is available via guaranteed issued coverage in the individual market,” advocates Williams.
Most employers, including Caterpillar, provide subsidized health care (which rolls over year to year) to cover premiums, what the Medicare plan does not and out-of-pocket costs for retirees.
Caterpillar puts money in an account yearly, which covers the Medicare deductible and the remainder that Medicare covers, says Farnall. When the premium is withdrawn from his bank account, his carrier notifies Extend Health and they electronically put money back into his checking account – it’s very convenient, he says.
But what Farnall appreciates most about the new system is that “I know exactly how much it’s going to cost me each month,” he explains – an advantage both he and Caterpillar can appreciate.
Another employer on the exchange-based system, Ford, saves $85 million each year, which is, in part, helping turn the company around. Concerning FAS 106, the exchange model can help affix what future exposure will be for companies.
In 2006, there were $850 million FAS savings to employers’ balance sheets. These numbers help explain why Extend Health calculates employer satisfaction at 94.5%.   For complete article,  click here.

Source:  Employee Benefit News article used by permission

According to a new survey by National Business Group on Health, more than half (53%) of large U.S. employers plan to revise their 2011 health care benefit programs in the wake of health care reform legislation and anticipated large benefit cost increases next year.

Also considering the provisions of the Patient Protection and Affordable Care Act, 19% of respondents are scaling back changes they planned to make while an equal number are making no changes.

The remaining respondents were still undecided pending further review of the final regulations.

Among employers who will be making specific changes to their health benefit plans to comply with the new law, 70% said they will remove lifetime dollar limits on overall benefits while 37% said they will make changes to annual or lifetime limits on specific benefits.

Approximately one-fourth will remove annual dollar limits on overall benefits while 13% reported they will remove pre-existing condition exclusions for children.

The survey, based on responses from 72 of the nation’s largest corporations representing more than 3.7 million employees, was conducted in May and June 2010.

“While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government,” says Helen Darling, president of the National Business Group on Health.

“In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year,” she adds.

Employers estimate their health care benefit costs will jump to an average of 8.9% next year, compared with an average increase of 7% this year. To help curb those increases employers plan to use a wider variety of cost-sharing strategies.

According to the survey, 63% of employers plan to increase the percentage employees contribute to the premium, up from 57% who did so this year, while 46% plan to raise out-of-pocket maximums next year compared with 36% this year.

In order to further mitigate costs, employers are shifting to consumer-directed health plans. In fact, 61% of plan sponsors will offer a CDHP in 2011.

While the most common type of plan employers will offer is a high-deductible plan combined with a health savings account (64%), the survey found a large spike in employers moving to a full replacement plan.

Among employers offering a CDHP, the number moving to a full replacement plan doubled from 10% this year to 20% in 2011.

“Consumer directed health plans are living up to their expectations as a way to help save employers money and put employees in greater control of their health care. In fact, offering these plans was the most often-cited tactic by employers to control costs. We fully expect that employer interest in CDHPs, and especially full-replacement plans, will continue to increase in the future,” says Darling.

As the health reform law makes Medicare Part D benefits richer as the “doughnut hole” closes between now and 2020, 5% of employers plan to drop retiree health coverage in 2011 while 60% are considering doing so in the future.

In attempt to cut costs with wellness initiatives, 41% of employers offered premium discounts for completing health assessments while 22% offered premium discounts for participating in tobacco cessation programs.

In addition, one in four (25%) of plan sponsors plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefitswhile 21% plan to do the same for mail-order pharmacy benefits.

Copies of the survey report can be found at www.businessgrouphealth.org.

Source: Employee Benefits News article used by permission

By Jenny Ivy

Published 8/11/2010

The nonpartisan Employee Benefit Research Institute sums up what is known about CDHPs and examines trends in offer rates and enrollment. It also looks at differences in premiums between CDHPs and other types of insurance, and discusses the drivers of the premium differences:

The report is in the August 2010 EBRI Issue Brief, available online at www.ebri.org.

Among the key points:

• Offer rates: Surveys show that employers offering a CDHP increased from less than 5 percent in 2005 to between 12 percent to 15 percent by 2009.

Growth in offer rates can be seen across all firm sizes. Recently, the percentage of small firms offering a CDHP has declined, while larger firms have continued to add a CDHP as an option.

• Enrollment: Overall, 19.1 million, or 11 percent of individuals with private health insurance, were enrolled in a CDHP in 2009.
• Premiums: Generally, premiums for CDHPs were lower than premiums for non-CDHPs. Growth in premiums varies both by type of plan and over time.
• Explaining differences in premiums: A number of studies have tried to explain the differences in premiums between CDHPs and non-CDHPs. One found savings ranged from a high of 15.5 percent to a low of –4.7 percent, with average savings of 4.8 percent.

However, the study found that most of the savings was due to younger, healthier workers choosing CDHPs and concluded that once typical risk- and benefit-adjustment factors were taken into account, CDHPs saved only 1.5 percent.

There is strong evidence that, initially, CDHP enrollees will be healthier than non-CDHP enrollees, but that over time the CDHP population has a significantly higher illness burden.

• Impact of CDHPs on preventive services: The studies agree that use of preventive services did not change (upward or downward) as a result of the CDHP.
• Impact of CDHPs on medication adherence: The studies found that overall use of brand name prescription drugs fell among CDHP enrollees, and, while there was some offset from increased use of generic drugs, some enrollees stopped their use of prescription drugs. CDHP enrollees increased their use of the mail-order pharmacy option. Overall use of prescription drugs among CDHP enrollees with certain chronic conditions fell, or did not increase when enrollees met their deductible. One study found that the financial incentives of the plan are not sufficient in driving behavior, and that educational outreach also matters.