New Autism Report

A new study estimates that 1/88 births is on the autism spectrum, even more pervasive than previously reported. April is National Autism Awareness Month but since my daughter is a Speech Pathologist and my adult nephew is autistic I am acutely aware of this condition and its ramifications all of the time. These new numbers are alarming but I am equally alarmed by another question--what will happen to all of these children when their parents die? Who will care for 30 and 40 year old adults with autism who cannot take care of themselves?

As an insurance broker and advocate of utilizing life insurance to create an inheritance for your children, I can't imagine a group where this need is more prevalent. Large amounts of funds will be needed to provide ongoing food, shelter, and custodial care for these adults with autism. And since the numbers are increasing, this will be a public health issue that may place a crushing burden on our federal and state governments. So, although ultimately this care may fall on the shoulders of the government, my life experiences tell me that the quality of care will be better for those that have their own money rather than those that will have to rely on institutionalization.

Since autism has not been shown to decrease life expectancy, funding will be needed for 30-40 years of care and only the very wealthy will be able to leave their children enough money to meet this need. Even if extended family is willing and able to care for these adults with autism it would place an incredible financial burden on those family members if there is not enough money left for their care.

So how can a parent bequeath a million dollars to take care of their child with autism after their death if they're not a millionaire? Life insurance provides a unique solution to this problem. Because these are large policies the premiums will be higher depending on the age and health of the parents when the policy is issued so it is imperative that parents discuss this option with an insurance agent sooner rather than later. But I can't think of another way to be assured that your autistic child will receive the same level of care and love after your death than to invest in a large life insurance policy now.

Potential Employees Prefer Benefits Over Pay

A recent survey indicates that potential employees seek a company with better benefits and fulfilling work over salary! The survey pointed to a strong connection for companies that care for the welfare of employees and financial security beyond the paycheck.

When asked what's most important to job seekers: 84% prefer a fulfilling and challenging position; 82% cited job security; 74% said an attractive benefits package; and only 66% indicated a high base salary. Potential employees felt that being offered financial protection benefits showed that an employer cares about the well being of their employees.

This survey shows the increasing need for employers who provide benefits to effectively communicate the value of those perks to employees. Annual benefit statements are an excellent means of communicating to employees that "hidden paycheck" that is, apparently, very important to them by making the connection and quantifying the benefits package.

Health Insurance Premiums May Push Past $10K Mark in 2012

An aging workforce, poor employee health, and costly chronic medical conditions are predicted to push health insurance premiums to more than $10,000/employee/year for large employers in 2012. Effective employee benefits communication pieces are definitely necessary in this economic environment when raises and bonuses may not be possible but health insurance premiums continue to soar.

Subsequently, the average amount of employee contributions toward their health insurance will be about $2,306.

The American work force is increasingly in poor health, with pricey chronic health conditions like diabetes, obesity, and heart conditions. Employers have been utilizing a combination of increased out of pocket costs and payroll contributions and will, undoubtedly, continue to shift the cost to employees to keep their costs to a manageable level.

Many employers are adopting incentives for employees to participate in prevention and wellness plans to better manage chronic conditions. Although healthcare reform addressed many of the ills with plan designs and access to care, no provisions addressed the need to curtail the spiraling premiums.

WHERE DOES HEALTHCARE REFORM GO FROM HERE?

It looks like Healthcare Reform is heading for the Supreme Court as the most controversial component of the law, the individual mandate, has been deemed unconstitutional by the lower courts. From the moment the law was enacted I've wondered how an individual can be forced to buy health insurance. However, this mandate is absolutely necessary in order for reform to work to prevent adverse selection. Without the inclusion of healthy people in the pool of insureds the insurers will assuredly get an influx of unhealthy people and will, therefore, be in a tenuous financial situation. Now that insurers cannot deny people health insurance because of pre-existing medical conditions (for children since 10/1/10 and for all others beginning 1/1/14), sick people have access to coverage and will take the opportunity at any cost. But insurance companies must get an equal number of healthy people to balance out the number of sick people or they will be out of business, and no one wins! But can the government force an individual to buy something they do not want?

Without healthcare reform the most advantageous prohibitions will be lost such as the prohibition of pre-existing conditions exclusion; the prohibition of lifetime maximums; the elimination of annual limits for essential health benefits; the continued eligibility of children to age 26; the requirement to cover preventive services with no co-payments or co-insurance; and the requirement to treat birth control for women as preventive care with no co-payments. But, since there was no discussion about controlling the premiums the question remains--How can you force someone to buy a very expensive commodity that they do not want?

Paying it forward

If I died today my daughter would be a millionaire! Not because I have amassed this giant empire, but simply because I have purchased that much life insurance. We cannot continue to allow our children, nieces and nephews, and grandchildren to start out with nothing. The American economy is no longer the behemoth vehicle that can provide unlimited opportunities to anyone who gets a good education and is willing to work hard. Now, more than ever, we must learn to pass on wealth.

There are two ways even those with modest incomes can pass on wealth to the next generation: real estate and life insurance. Buying a house may still be the best way to build wealth in America in the long term. If we have, indeed, paid off the mortgage in thirty years (or by the time we die, whichever comes first) the next generation will inherit a valuable asset. No matter where you live, real estate is an asset that your children can utilize to get started in life. They will then have a down payment on their own home or the seed money to start a business or to start investing. Real estate that is encumbered is not as attractive an inheritance so it is necessary to have enough life insurance to pay off the mortgage in the event of your death if your home is not paid off. So, besides having the obvious life insurance policy to bury yourself, you definitely need enough life insurance to pay off the mortgage.

So after purchasing these two basic policies we all need at least one permanent life insurance policy which never expires and pays us by building cash value. The cash value is an asset which you can withdraw or borrow against or use as collateral for a loan or even use for your own retirement while not affecting the death benefit which is there to leave for the beneficiaries to pass on wealth. The beauty of life insurance is that it is the most cost effective way to fund an inheritance for the next generation for people of modest means since you never actually invest the amount of money that you are able to pass on.

We cannot continue to live by that old mantra of "I got mine now you get yours". The amount of money needed for a minimum 20% down payment of a median priced house today is out of the reach of most young people. And if they are also repaying college loans, which may be as much as the price of a house, home ownership, and, consequently wealth building will be almost impossible for them to attain.

The color of one's skin is less of a discriminating factor than the size of one's bank account in America today. So, whereas we cannot change the color of our skin, we can impact the size of our children's bank account by committing to passing on wealth to the next generation.

April is National Autism Awareness Month

April is National Autism Awareness Month. Since my daughter is a Speech Pathologist, I am acutely aware of this condition and its ramifications. The numbers are alarming! This condition occurred in 1/10,000 births but now occurs in 1/110 births! As I watch the care and dedication of these parents of autistic children I am struck by another alarming question--what will happen to their children when they die? Who will care for 30 and 40 year old autistic adults who cannot take care of themselves? As an insurance broker and advocate of utilizing life insurance to create an inheritance for your children, I can't imagine a group where this need is more prevalent. Large amounts of funds will be needed to provide ongoing food, shelter, and custodial care for the autistic adults. And since the numbers are so pervasive, this will be a public health issue that may place a crushing burden on our federal and state governments. So, although ultimately this care will fall on the shoulders of the government, my life experiences tell me that the quality of care will be better for those that have their own money. Since autistic people are able to live to normal life expectancy that may mean that funding will be needed to care for them for 30-40 years. Only the very wealthy will be able to leave their children enough money to satisfy this need. And how will the diminished quality of care in institutions affect their life expectancy? If extended family is willing and able to care for them this would place an incredible financial burden on those family members if there is not enough money left for their care. So how can a parent bequeath a million dollars to take care of their autistic child after their death if they're not a millionaire? Life insurance provides a unique solution to this problem. Because these are large policies, the premiums will be higher, depending on the age and health of the parents when the policy is issued. But I can't think of another way to be assured that your autistic child will receive the same level of care and love after your death than to invest in a large life insurance policy now. In the end, there are two kinds of pain--the pain of sacrifice or the pain of regret.

Health Insurance Reform Update

Besides the benefits that debuted in 2010, such as allowing parents to keep their adult children on their health insurance until age 26, and requiring insurers to accept children under the age of 19 with all of their pre-existing conditions, and prohibiting insurers from cancelling coverage when people get sick (except in cases of fraud), there are nine ways the healthcare reform law may affect you in 2011.

1. Starting this year, health insurers are required to spend at least 80% of their premium dollars on medical care or give rebates to consumers. The goal is to restrain executive salaries, administrative and marketing costs, and overall profits of insurers. Also, regulators have proposed that beginning July 1 premium increases of 10% or more be subject to review by state and federal government. Although the Insurance Commissioner in California has the authority to question rate increases, this additional oversight would be helpful in states where there is no such authority.
2. In 2011 the law begins to close the notorious doughnut hole gap in prescription drug coverage for Medicare recipients. Starting in January, drug companies will give seniors 50% off brand drugs while in the doughnut hole.
3. Chain restaurants and vending machine operators will now have to display calorie content on menus and drive-thru signs, as well as provide diners with a brochure detailing nutritional information and fat content of their dishes.
4. Wealthier Medicare beneficiaries will pay higher Part B premiums in 2011 but the income threshold was adjusted to prevent more people from inclusion into this affected group. The law freezes the threshold at the current level of incomes of $85,000 or above for individuals or $170,000 for couples.
5. Over the counter drugs can no longer qualify for Flexible Spending Accounts (FSA), Health Reimbursement Arrangements (HRA), Health Savings Accounts (HSA), or Medical Savings Accounts (MSA) unless there is a doctor's prescription.
6. Medicare is increasing payments by 10% to primary care physicians as an incentive to address the shortage of primary care providers. The bonus will run from January 1 until the end of 2015.
7. Medicare beneficiaries will be able to get free preventive services, eliminating any cost sharing such as copays or deductibles, beginning in January. They can also get a free annual wellness exam from their doctor who will give them a personalized prevention screening schedule for the next decade. The law also eliminates any cost sharing for the Welcome to Medicare physical exam that previously was subject to a 20% copay. For small employers with fewer than 100 employees the law authorizes the federal government to issue grants to companies that establish wellness programs focused on nutrition, smoking cessation, physical fitness, and stress management.
8. Payments for Medicare Advantage Plans (HMOs) are being restructured. Rates will be frozen at 2010 levels with lower rates phased in beginning in 2012. Some plans may respond by eliminating ancillary benefits like dental and vision.
9. Starting in July, Medicaid will stop paying claims for treatment of some hospital acquired infections, following the ban of payments by Medicare and private insurers. It is estimated that about 1.7 million patients pick up life threatening but preventable infections while hospitalized.

Health Insurance Reform Update

There are two new employer responsibilites with healthcare reform. One upcoming responsibility requires that employers must report to their employees the actual dollar value of their health insurance coverage under the group plan. However, the IRS and the Treasury Department have decided to make this requirement optional for 2011 to give employers additional time to adjust their payroll systems and prepare for this W-2 mandate.

Another new responsibility requires eligible employers to submit written confirmation regarding their contribution levels to their carriers in order to maintain grandfathered status. During the healthcare reform debate the Obama Administration promised that people who liked their current coverage would be able to keep it. That's called grandfathering and groups loose their grandfathered status if: (1) a group chooses a new carrier after March 23, 2010; (2) a group chooses any benefit changes after March 23, 2010; (3) an employer changes contribution levels after March 23, 2010; (4) a group does not maintain at least 1 employee at all times in all grandfathered plans. Employer groups with grandfathered plans must provide their carriers written confirmation at each renewal stating that their contribution levels have not been reduced by more than 5% since March 23, 2010. Carriers will send employers attestation letters that they will need to complete and fax back and contracts will be modified stating that employers must notify the carrier if they reduce contribution levels.

Employers should contact their tax or payroll professionals regarding implementation of the W-2 mandate.

Health Insurance Reform Update

September 23 has passed and ushered in a period of uncertainty for the health care industry with 3 more years of changes, ending with the individual mandates of 2014 and forcing insurers to do business within state based health insurance exchanges. Insurers are already adapting but the Republicans are now promising a vigorous campaign to chip away at the reforms with their new Pledge to America. Although health care reform is now law they could impact the funding if they regain control of Congress and President Obama's 2012 re-election occurs before the final reforms are scheduled to be implemented in 2014.

During the health care reform debate President Obama promised that people who liked their current coverage would be allowed to keep it. That's called grandfathering and employer group plans will only lose their grandfathered status if:

• The group chooses a new carrier after 3/23/10
• The group chooses any benefit changes after 3/23/10
• The employer changes contribution levels after 3/23/10
• The group does not maintain 1 enrollee at all times in all grandfathered plans

As the premiums continue to rise substantially employers may find it difficult, if not impossible, to maintain their grandfathered status. Changing carriers, making benefit changes to lower premiums, and cost shifting are almost a necessity for employers to continue to offer health insurance to employees amid the double digit rate increases this year. In fact, since 1999 the share of premiums paid by employees has increased 159%. But while employee contributions have grown significantly, the coverage has eroded substantially. This trend will probably only continue as the costs of health care reform are absorbed.

Health Insurance Reform Update

Well the day has finally arrived! Starting today, September 23, the health insurance reform mandates become applicable to all health insurance plans except those that are grandfathered.

The law requires that all plans include free preventive care with no co-pays, coinsurance, or deductibles applicable; no additional charges for emergencies outside the plan's network; a pediatrician or OB/GYN can be chosen as a Primary Care Physician; no lifetime limits or annual dollar limits on essential health benefits; parents can keep adult children on their health insurance until age 26; insurers must accept children under 19 with any pre-existing conditions; and insurers cannot rescind coverage when an insured gets ill and has expensive costs but can only rescind due to fraud and intentional misrepresentation.

From a humanitarian point of view these are all applaudable reforms and once the requirement to also accept adults with pre-existing conditions and the donut hole in Medicare prescription drug plans is closed in 2014 the social inequities of our healthcare system will have been corrected. However, the inevitable cost to insurers, the federal government, employers, and consumers has yet to be revealed and I suspect that cost will be high. Insurance premiums are continuing their upward spiral this year in the midst of healthcare reform and some insurers are opting out of certain markets that requires them to take possibly unprofitable business as evidenced by some insurance companies in Florida, Oklahoma, and now California suspending the sale of Children Only policies.

Many Americans are confused as to how healthcare reform will effect them. The benefit reforms are all positive and provide health insurance for those that were previously denied coverage. This would reduce the ranks of the uninsured if the premiums were affordable but the premiums for the gap coverage for adults with pre-existing conditions that most states have rolled out recently are exorbitant. And since Individual and Group plans have continued to renew with double digit rate increases it seems that unless and until the premium costs are reformed the goal of healthcare reform cannot be met. We'll see if the proposed exchanges to be implemented in 2014 will, indeed, drive down rates.

Health Insurance Reform Update

Until 2014 purchasing health insurance is voluntary (except in the state of Massachusetts) and insurance companies can charge higher risk individuals higher premiums. But in 2014 the rules change and everyone is required to have health insurance and insurers must accept those with pre-existing conditions at the same premium as those without. There will be government subsidies and state exchanges to assist those who need help with the premiums. And until then people who can't get coverage because of pre-existing conditions can buy insurance from new government insurance programs run by their individual states. These bridge programs are aimed at those who have been uninsured for at least 6 months who have health conditions that prevent them from getting coverage with private insurers.

During the transition I predict higher premiums due to the additional benefits and protections required of all health plans this year such as the prohibition of lifetime limits, the requirement to cover preventive services without co-pays, and allowing parents to keep their children on their plans until age 26. Another, often overlooked consequence of healthcare reform, has been the ability of consumers to appeal health plan decisions and proposed rate increases. Most notably was Blue Cross of California's proposed 39% rate increase on Individual & Family Plans in March of this year. Consumer outrage and adverse publicity caused the Dept. of Insurance to investigate and, although a more modest increase of 14% was approved and becomes effective on October 1, insurers have been put on notice that they will have to cost justify any rate increases moving forward. Also, a pattern of excessive and unjustifiable rate increases could cause an insurer to be excluded from the state exchanges. The new healthcare law requires insurance companies to spend at least 80 cents of every premium dollar on medical care or activities to improve quality.

Health Insurance Reform Update

Starting September 23, 2010 health insurance companies must remove lifetime limits and annual dollar limits on essential health benefits. The health care reform law allows a phased in implementation. The Dept of Health and Human Services will give a final definition of essential health benefits but the list is expected to include the following services:

• Alcoholism treatment services
• Asthma education
• Bariatric surgery
• Chiropractic
• Diabetic supplies
• Durable medical equipment
• Hearing aids
• Home health care
• Hospice
• Infusion therapy
• Kidney disease treatment
• Mental health/substance abuse
• Outpatient occupational, physical, and speech therapy
• Prescriptions
• Preventive care
• Prosthetic devices/limbs
• Skilled nursing services
• Transplants
• Treatment for TMJ

Although most of these benefits are already available on California health plans, benefits vary from state to state depending on state laws.

Health Insurance Reform Update

BREAKING NEWS! As a result of the new mandate prohibiting the exclusion or denial of health insurance for children under the age of 19 due to pre-existing medical conditions, some big insurers have decided to stop writing new coverage on kids. Employer sponsored plans are not affected but Blue Cross, Blue Shield, Aetna, and Golden Rule (United Healthcare) in Florida and some local insurers in Oklahoma have already notified their insurance commissioners that they will stop issuing individual policies for children. It should be noted that they will not cancel policies already issued but will not write new policies.

This is definitely an unintended consequence of the healthcare reform law but raises plausible concerns with the law. If insurers are required to accept all children, even those with serious medical issues, what would prevent parents from waiting until a child gets sick to enroll them, creating adverse selection, long a bane of insurance companies. Some insurers are proposing an open enrollment period for the guaranteed children's coverage where parents could only get guaranteed coverage during a designated time each year.

In my opinion, this seems like a fairly reasonable approach and would limit misuse of the healthcare system. Further discussion of this matter will be necessary as the guaranteed coverage is extended to adults in 2014. Although the federal law proposes a fine or penalty for individuals who do not purchase health insurance either privately or through the exchanges to be established, the same misuse could occur whereby an individual chooses to pay the fine until he/she becomes ill and needs health insurance. As long as the fine is less than the insurance premiums this will be yet another unintended consequence of healthcare reform that could threaten the solvency of big and small insurers and cause many to exit the market.

Health Insurance Reform Update

Interim final rules have been published regarding pre-existing conditions, limits, rescissions and other patient protections mandated by the new federal healthcare reform.

Pre-existing conditions: No longer allowed for children up to age 19 beginning with plan years/policy anniversaries after September 23, 2010. The prohibition of pre-existing condition exclusions and denial of health insurance due to pre-existing conditions begins for all others January 2014. Grandfathered individual plans are exempt from this provision, but not grandfathered group health plans or newly issued individual plans.

Rescissions: Rescissions must be based on fraud or intentional misrepresentation of material fact and a health plan can only be terminated prospectively, not retroactively. In the event of a valid rescission, a 30 day advance notification is required.

Lifetime and annual limits: Health insurance plans can no longer include annual or lifetime dollar limits. Individuals who have previously reached their annual or lifetime maximums must be given a special enrollment period to reinstate their benefits.

Patient protections: Health plans that require primary care physicians must allow members to choose any available in network doctor including a pediatrician for children. Plans must also allow members to receive OB/GYN care without a referral. Members needing emergency room services cannot be required to get preauthorization and insurers must cover out of network emergency room care at the same level as in network services.

As these were, perhaps, the most egregious issues with individual health insurance plans, these provisions should protect consumers against insurer abuses highlighted in recent years as stories of members being cancelled in the midst of expensive and life threatening illnesses have been reported.

Health Insurance Reform Update

The new healthcare reform is proving most advantageous for Small Employer groups and Individuals. Small business owners, those with 2-50 employees, have a new tax credit available starting this year that is rather significant. And, it applies to dental, vision, and a few other limited scope coverages as well as traditional health insurance.

The tax credit is available to small employers that pay at least 50% of the premiums for employee coverage; have less than 25 employees; and pay average annual wages of less than $50,000. This includes for-profit businesses and tax-exempt nonprofit organizations. For tax years 2010 to 2013 the maximum credit is 35% of premiums paid by for-profit employers and 25% for nonprofits. In 2014 the credit will increase to 50% and 35% for nonprofits.

The IRS is informing potentially eligible small business groups about this new federal tax credit. Business owners should consult their tax advisor and can also go to the IRS website for additional information, a 3-step worksheet to see if they qualify, and an informational video with frequently asked questions.

Health Insurance Reform Update

Starting today, July 1, individuals with pre-existing conditions can start applying for the new federal health coverage in most states except Michigan, Illinois, and California, to name a few of the states that will miss the deadline. One of the major components of the federal healthcare reform law was to provide for health insurance coverage for those individuals denied coverage due to serious medical conditions, such as cancer or diabetes, through high risk insurance pools. The Department of Health and Human Services decided the program would launch July 1 to coincide with the start of states' fiscal years, although the law required the program to be in place 90 days after its enactment.

Applications will be ready today for residents of about 20 states who opted to let HHS run the program. About 30 states chose to run the program themselves, of which about 20 will be operational by mid-July. Another 10 states are still working through legislative issues, among those is California which needs its legislature to pass 2 bills to allow it to run the program. If passed, California could begin taking applications in August and be fully up and running in September.

In addition to the premiums consumers will pay, the healthcare reform law allocates $5 billion for states to help run the program until 2014 when the pools are scheduled to be replaced by health insurance exchanges where everyone can buy insurance that cannot discriminate against those with medical conditions.

To qualify for the temporary insurance pool an individual must not have had health insurance for the past 6 months. Funds are limited so enrollment may be capped in some states.

Health Insurance Reform Update

The first round of $250 rebate checks were mailed to senior citizens who have reached the doughnut hole in Medicare RX. It is estimated that 80,000 seniors will get checks as they're already in the doughnut hole, which is reached when prescription costs exceed $2,830 but are less than $4,550. These rebate checks will go out monthly and represent a one time rebate payment. The good news is that seniors don't have to do anything to receive a rebate! The checks are automatically issued based on a Medicare beneficiary's billing history.

Future provisions of the healthcare reform law provide a 50% reduction in the cost of brand drugs when the doughnut is reached starting in 2011 and a 75% reduction in 2020.

This represents the healthcare reform law's first monetary benefit.