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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. What’s an insurance broker look like?. - PowerPoint PPT Presentation
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Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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 289511North Coast AHU Annual SymposiumSeptember 10, 2014
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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What’s an insurance broker look like?
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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Today’s Agenda
The Historical Evolution of Broker Distribution Systems and Underwriting
Upcoming Pressures on the System
Articulating Broker’s Place in the System
What we will discuss today
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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An health insurance acturary, through data analysis, defines what a “good bet” looks like.
The underwriter is the person who decides if the “bettor” fits the actuary’s model for being good.
A broker is 1/3 of the underwriting system
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
Underwriting is a three part process . . .
A broker seeks out and brings in the “right” kind of “bettor”.
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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.
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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The Unique American Model 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 bi-costal financial system
WWII reshaped the American workforce and expanded medical care in the workplace
Post WWII veterans benefits, economic expansion and wage/price controls
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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
Carrier representative “Independent” broker General Agent Third Party Administrator
Roles of the broker Plan Design Field Underwriting Employment Strategies and Service Advocate and Defender
Certified Insurance Professional Program from Word & Brown
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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
Upcoming Pressures
Certified Insurance Professional Program from Word & Brown
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The Rules of The Game!
CALVINBALL
Certified Insurance Professional Program from Word & Brown
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CALVINBALL
First Rule - There Are No Rules!
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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Last Year Showed Us –The Game’s Easier Without Rules• 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
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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It’s Even Easier When Only Others Have To Follow The Rules
• 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!
CALVINBALLACA – SIZE!
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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The Rules of Employer Responsibility Reporting
• 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
Certified Insurance Professional Program from Word & Brown
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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
Certified Insurance Professional Program from Word & Brown
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Reporting Form 1095-C
Certified Insurance Professional Program from Word & Brown
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Reporting Form 1095-C Codes
Certified Insurance Professional Program from Word & Brown
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Transmittal Form 1094-C
• 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
Certified Insurance Professional Program from Word & Brown
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Transmittal Form 1094-C
Certified Insurance Professional Program from Word & Brown
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Transmittal Form 1094-C Monthly Breakdown
Certified Insurance Professional Program from Word & Brown
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Transmittal Form 1094-C Employee Names
Certified Insurance Professional Program from Word & Brown
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Transmittal Form 1094-C Codes
Certified Insurance Professional Program from Word & Brown
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2015-2016 penalties
Certified Insurance Professional Program from Word & Brown
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Background of PossiblePremium Tax Credits
• 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
Certified Insurance Professional Program from Word & Brown
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Incorrect IRS PremiumTax Credit Recovery
• 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
Certified Insurance Professional Program from Word & Brown
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IRS Premium TaxCredit Recovery Caps
• 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
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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”
Certified Insurance Professional Program from Word & Brown
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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
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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.
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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Handling employer group issues and strategies
HMO, PPO, EPO and the Alphabet Soup
ERISA/PPACA guidanceCarve Outs - Management Groups, Clerical Groups or Union Groups
Self-fund, partially fund, fully insure or release to the exchange
How to attract and keep the best employees at the most reasonable cost?
Consumer directed
Human Resource Regulatons
Legal Dangers
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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Different Roles
Protecting employer’sinterests
Service after the sale related to receivingmedical care or claims resolution
Educator of change
Protecting employee’s interest
Explaining a very difficultinsurance contract
Cost Management
Defender - Advocate
Helping an employer find ways of providing health carebenefits at work by financing it through insurance
Certified Insurance Professional Program from Word & Brown
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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 FMLA5. 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 options12. 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.
In addition to making a sale, below is a partial listing of some of the things we do for our clients:
Certified Insurance Professional Program from Word & Brown
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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
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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So, what will future brokers look like?
Certified Insurance Professional Program from Word & Brown
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Certified Insurance Professional Program from Word & Brown
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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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