Agents and The Future - North Coast Association of Health

Report
Certified Insurance Professional
Program from Word & Brown
AGENTS AND THE
FUTURE
Presented by Don Goldmann
President-Elect of the National
Association of Health Underwriters
Vice President of Word & Brown
University
CAHU CE Course 289511
North Coast AHU Annual Symposium
September 10, 2014
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What’s an insurance broker look like?
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What we will discuss today
Today’s Agenda
 The Historical Evolution of Broker
Distribution Systems and Underwriting
 Upcoming Pressures on the System
 Articulating Broker’s Place in the System
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A broker is 1/3 of the underwriting system
Underwriting is a three part process . . .
that a financial service provider uses to decide if a
customer is a good risk for their product.
 Bank underwriters decide on mortgage or
credit loans.
 Investment underwriters decide whether to
invest capital.
 Insurance underwriters decide on
insurance policies
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An health insurance acturary, through data
analysis, defines what a “good bet” looks like.
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A broker seeks out and brings in the “right” kind
of “bettor”.
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The underwriter is the person who decides if the
“bettor” fits the actuary’s model for being good.
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Earliest Underwriting
 The earliest professional and
organized underwriting systems were
created for two things - stocks and
insurance.
 Primarily property such as ships
 1694 – Hugh the Elder Chamberlen
 Edward Lloyds’ coffee house,
catered to the shipping industry
which drew into the facility the
earliest insurance underwriters who
backed shipping traffic.
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The Unique American Model
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Earliest American distribution was by
“field underwriters” who did risk
analysis and selling
Civil War “Death and
Dismemberment” policies started the
splitting of various underwriting tasks
A bi-costal American required a bicostal financial system
WWII reshaped the American
workforce and expanded medical care
in the workplace
Post WWII veterans benefits,
economic expansion and wage/price
controls
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Modern Brokerage Operation in California
 State’s view of “health insurance”
• Disability
• Worker’s Compensation
• Life & Disability or P&C/Disability
 HMO versus Indemnity
 Agent versus broker
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Carrier representative
“Independent” broker
General Agent
Third Party Administrator
 Roles of the broker
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Plan Design
Field Underwriting
Employment Strategies and Service
Advocate and Defender
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Upcoming Pressures
•
•
•
•
•
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Latest On Employer Reporting and IRS Forms
Incorrect IRS Premium Tax Credit Recovery
Update on Discrimination Testing
California Employer New Hire Waiting Period
California Rate Regulation Initiative
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Page  9
The Rules of The Game!
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First Rule - There Are No Rules!
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Last Year Showed Us –
The Game’s Easier Without Rules
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• The goal will be achieved by
12/31/2013
• The goal will be achieved by
2/15/2013
• The goal will be achieved by
3/31/2013
• The goal will be achieved by
4/15/2013
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It’s Even Easier When Only Others
Have To Follow The Rules
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• The goal is xxx
members by
12/31/2013
• Xxx by 1/1/5/2013
• Xxx by 2/15/2013
• Xxx by 3/31/2013
• Xxx by 4/15/2013
• WE WIN!
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The Rules of Employer
Responsibility Reporting
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• Goals
– Verify employers and individuals meet mandates
– Verify that individuals receiving premium tax credits deserve
them
• Precisely who files currently unclear
– Penalties start for employers with 100 or more FTE 2015
– Penalties start for employers with 50 or more FTE 2016
– Forms verify individual employee claims to tax credit and
therefore, employer penalty phase may be irrelevant
• Carrier reports fully insured individual policies
and sub-50 employer enrollment; but not who
was offered
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Reporting Form 1095-C
• Filed for every employee “eligible” for coverage
• Who was “eligible” will be critical as 1095-C will
be used to determine if penalty A or B applies
• “Safe Harbor” rules of 70% for 2015 and “5 OR
5%” for 2016 will apply and be subject to audit
• Several codes will be used to identify:
–
–
–
–
If coverage was offered during a given month
Extent of coverage
Employee share of cost
Part III filed by self funded employer and fully funded carrier
• Like a W-2, employees will get a 1095-B and/or a
1095-C
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Reporting Form 1095-C
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Reporting Form 1095-C Codes
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Page  17
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Transmittal Form 1094-C
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• Summarizes all of the 1095-C
• A copy of each 1095-C sent to the
employees gets sent with it
• Electronic transmission expected
• While the forms are not final and there are
obvious textual errors in the draft, the draft
formats provide a guide as to what will
likely be required
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Transmittal Form 1094-C
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Transmittal Form 1094-C
Monthly Breakdown
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Page  20
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Transmittal Form 1094-C
Employee Names
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Page  21
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Transmittal Form 1094-C Codes
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2015-2016 penalties
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23
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Background of Possible
Premium Tax Credits
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• Estimated 1.7 million possible inaccurate
premium tax credit calculations
• IRS could verify 2013 filings
• If the 2014 estimate claimed was 10% different,
reviews were to be done, but none were done
until summer of 2014
• Zero verifications of a lack of employer-coverage
for MEC, minimal value or affordability
• ACA penalties and tax credits are not handled the
same
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Incorrect IRS Premium
Tax Credit Recovery
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• Jackson Hewitt Tax Service estimates that a third
of filers with premium tax credits will owe the IRS
• Average national tax credit is estimated to be
$3,168
• Average tax refund is $2,690
• 1040EZ Form cannot be used for such tax credits
• Individual mandate exempt from liens or levies
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IRS Premium Tax
Credit Recovery Caps
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• Tax credits are subject to all forms of recovery
• Reduction of tax refund is the first resort
• Collections are capped for some –
•
•
•
•
Individuals less $22,980 - $300 in repayments
$22,980 to $34,470 - $750 in repayments
$34,470 to $45,960 - $1,250
Above $45,960 – 100% of unearned credit
• Family collection is double up to certain limits –
• A family of three up to $78,120, capped at double
• A family of four up to $94,200, capped at double
• Thereafter – 100% of unearned credit
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Potential discrimination testing regulations –
not until after election if at all
• Highly compensated employees
(HCEs)
• Formerly exclusively tested for health
insurance issues in self-funded plans
• IRS code Section 105h mandated
that employers could not have a plan
for HCEs with higher level of benefits
(no deductible or copayments, 100%
coverage, etc.) or a plan with
employee contributions that were
different from non-HCEs
• Likely to be left as “still working on it”
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Waiting Periods for New Hires
•
•
•
•
SB 1034 Senate Bill Monning and CAHU
Signed August 14, 2014
90 day period in California starts 1/1/2015
Federal ACA IRS
– Allows firms with “bona fide orientation period that
occurs before the 90 waiting period begins”
– Up to an additional month
– Subject to audit that the orientation was not designed
to avoid compliance with the 90 day rule
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Why Brokers Belong In The System
 Self interest promotes honest brokerage
 Brokers are used for data gathering and self interest promotes the
proper application of rules.
 Fact checking for accuracy and completeness is done usually with a
higher level of intensity.
 Analysis of data gathered is compared against the rules to determine
the likely judgment of the final premium rate.
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Handling employer group issues and strategies
Consumer directed
Carve Outs Management Groups,
Clerical Groups or
Union Groups
Self-fund, partially fund,
fully insure or release to
the exchange
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HMO, PPO, EPO and the
Alphabet Soup
ERISA/PPACA guidance
Legal Dangers
Human Resource
Regulatons
How to attract and keep the best employees at the most reasonable cost?
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Different Roles
Explaining a very difficult
insurance contract
Protecting employer’s
interests
Service after the sale related to receiving
medical care or claims resolution
Defender - Advocate
Protecting
employee’s interest
Educator of change
Cost Management
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Helping an employer find ways of providing health care
benefits at work by financing it through insurance
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In addition to making a sale, below is a partial listing of some of the things we do for our clients:
1. Present renewals with appropriate historical data and
options to meet the employer and employee objectives.
2. Provide model notices and assistance with COBRA & ACA.
3. Make sure client is aware of FMLA and ADA
responsibilities.
4. Find compliance partners for COBRA, HIPAA, Section 125
and FMLA
5. Design employee contribution strategies.
6. Interact with the insured or employer to help resolve issues
with providers, as well as federal and state government.
7. Assist terminated employees with their options.
8. Assist employees with Medicare issues.
9. Integrate with other employee benefits plans.
10. Give advice on all issues surrounding their plan including
governmental requirements.
11. Interface actions with exchange options
12. Present wellness initiatives to help improve the health of
employees.
13. Assist with employee communications, including printing of
material and the running of employees meetings.
14. Assist with the research and resolution of claim conflicts.
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Conclusions
• Prepare clients now for 2015 reporting
• Notify individual clients getting premium
tax credits to adjust their credits now
• Alter employer waiting periods to conform
to new rules
• New discrimination rules are on delay
• Prop 45 – join the fight against it
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So, what will future brokers look like?
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Like we did the day we got into this business.
We’ll adapt
… offer new solutions
… continue the fight
… with your help and
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