Targeting Your Market Reach: Boomers’ Health Needs
 By Karen Gustin, LLIF, Ameritas Group
Baby boomers are independent, sophisticated, 78 million strong, and expected to live seven years longer than the previous generation. Although boomers see themselves as self-sufficient, in reality they will face a variety of health issues in the upcoming years.
Are you taking advantage of sales opportunities to recommend insurance benefits that assist employers in addressing the special health needs of baby boomers?
According to the National Institute on Aging, boomers’ demand for health insurance coverage and medical services will significantly rise over the next 22 years. In 2006, 37 million Americans were 65 or older. By 2030, that number will nearly double to 71.5 million, or 20 percent of the population. The Institute projects that by 2030, eight out of 10 older Americans will be managing multiple health issues and chronic illnesses.
Boomers are not content to fade quietly into the sunset, however. As retirement is looming on the horizon – the first boomers will reach age 65 in 2011 – many are not interested in full-time retirement, but want some type of flexible work situation that allows them to continue professional and personal interests.
With boomers nearing retirement age, employers are facing a shrinking workforce and the potential loss of experienced workers. Offering attractive health benefits packages, including eye, hearing, and dental coverage, is an important component to attracting and retaining baby boomers.
Changing Eye Health Needs
As baby boomer workers age, reports of major eye health concerns will increase. The most prevalent causes of vision loss are eye injuries and diseases.
In a 2006 National Eye Institute Survey of Public Knowledge, Attitudes and Practices Related to Eye Health and Disease, 71 percent of adults stated that loss of their eyesight would rate as a 10 on a scale of 1 to 10, meaning that it would have the greatest impact on their day-to-day lives.
There are four primary eye diseases linked to vision loss or blindness: age-related macular degeneration (AMD), glaucoma, cataracts, and retinopathy. These diseases usually develop slowly and are known as silent stealers of health. According to the NEI, of the130 million Americans aged 40 and older, more than 30 million suffer from eye diseases.
The costs associated with adult eye care issues in the U.S. are more than $51 billion, according to research from Prevent Blindness America’s 2007 Economic Impact of
Vision Problems
The good news is that many new cases are curable or preventable by detection through a comprehensive wellness exam and proper treatment. Eye care insurance is an important benefit to older workers since they are more likely to get their eyes tested regularly if their employers offer options for eye care examinations and services.
Recognizing Hearing Issues
The EAR Foundation reports that at least 50 percent of boomers surveyed have difficulty hearing. Of this group, 75 percent said they find themselves in situations where people are not speaking loudly enough or clearly enough, or where the TV volume is too low.
Most boomers are reluctant to admit that they have problems with hearing and avoid exploring medical diagnosis or treatment options. Many do not want to take time for an examination and diagnosis. They are also concerned that if they do have a problem, the only corrective option is a hearing aid, which would serve as a visible indication that they are getting older. However, in addition to hearing aids, today there are other hearing improvement devices, including infrared listening systems or personal amplifiers similar in style to PDAs or iPods that magnify sound close to the listener’s ear.
Many employers are recognizing the importance of raising employee awareness about the potential of hearing loss and treatment options, especially for boomers. Some provide educational lunch-and-learn sessions; others offer hearing benefits and encourage employees to seek routine hearing examinations to establish a benchmark for their hearing or treatment of hearing loss.
Focusing on Oral Beauty and Health
Boomers understand the importance of taking good care of their teeth. They recognize the value of preventive dental care and quality dental benefits.
Most boomers want to preserve the beauty of their smiles and are interested in a variety of procedures to assist them in maintaining good oral health, including regular checkups, teeth whitening, and oral cosmetic surgery. However, just as boomers will face vision and hearing health concerns as they age, many will experience oral health issues, such as cancer or gum and periodontal disease.
Dental benefits will continue to rank very high on boomers’ priority lists.
Capitalizing on a Growing Market
The changing healthcare needs of boomer employees provide producers with new opportunities to market important benefits to employers. The key for producers is to thoroughly understand boomers’ preferences, expectations, and emerging healthcare challenges, as well as the valuable contributions these employees make to the success of the organization. This information will assist producers in working with employers and insurance carriers to design benefit solutions that best serve all workers, and especially address the health needs of boomers.
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Health on the Hill
 AHIA Offset Escape: The House passed a fully offset $57 billion tax extenders package. Among the provisions (in the three dozen or so it contained) that matter to AHIA is the reinstatement of the $100/day penalty for violation of mental health parity rules. Of perhaps even greater significance is the fact that the legislation does NOT contain the controversial health savings account (HSA) documentation/substantiation provision that was in the Taxpayers Assistance Act. The offsets in the package generally do not affect AHIA members or their clients, although insiders tell us the decision not to include revenue raisers that could hurt insurance “was close.”
Mental Health Parity: Congress (House and Senate) passed a military family tax benefits bill that contained within it reinstatement of last year’s mental health parity law. President Bush is expected to sign it into law. The reinstatement of last year’s mental health parity rules will last until the end of this year (2008). That gives House and Senate conferees another several months to hammer out an agreement on currently pending reformed mental health parity rules. Currently, the conferees are exchanging compromise offers. Among the indication of potential good news is the fact that it appears that the House conferees may be ready to give up on including any and all mental health conditions within the scope of the mental health parity rules (the Senate’s bill on the scope of coverage is considerably narrower). Resolution is not expected any time soon - the absence of critically ill Senator Ted Kennedy (D-MA) - will certainly affect the timing of these negotiations.
Reinstatement of mental health parity rules will provide some certainty to employers looking at new health plans. And the tax writers rejecting inclusion of the HSA documentation and substantiation rules among the tax extender package’s offsets is a tribute to the effective grassroots opposition mounted by AHIA and others opposed to gutting health savings accounts/high deductible health plans.
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HSA Guidance
 New guidance on the maximum contribution levels for Health Savings Accounts (HSAs) and out-of-pocket spending limits for High Deductible Health Plans (HDHPs) that must be used in conjunction with HSAs was recently issued by the Treasury Department and the Internal Revenue Service. These amounts have been indexed for cost-of-living adjustments for 2009.
2009 Contribution Levels for HSAs:
- The maximum annual HSA contribution for an eligible individual with self-only coverage is $3,000.
- For family coverage, the maximum annual HSA contribution is $5,950.
- Catch up contribution for individual who are 55 or older is increased by statute to $1,000 for 2009 and all years going forward.
- Individuals who are eligible individuals on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch up contribution, if 55 or older by year end), regardless of the number of months the individual was an eligible individual in the year. For individuals who are no longer eligible individuals on that date, both the HSA contribution and catch up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual.
2009 Amounts for Out-of-Pocket Spending on HSA-Compatible HDHPs:
- The maximum annual out-of-pocket amounts for HDHP self-coverage increase to $5,800.
- The maximum annual out-of-pocket amount for HDHP family coverage is $11,600.
2009 Minimum Deductible Amounts for HSA-Compatible HDHPs:
- The minimum deductible for HDHPs increases to $1,150 for self-only coverage.
- The minimum deductible for HDHPs increases to $2,300 for family coverage.
- In addition, a fiscal year plan that satisfies the requirements for an HDHP on the first day of the first month of its fiscal year may apply that deductible for the entire fiscal year.
On June 4, the IRS issued two HSA-related notices. Notice 2008-52 explains the full contribution rule including how to calculate the maximum annual HSA contribution and adverse tax consequences if the testing period is not satisfied. Beginning in 2007, the maximum annual HSA contribution no longer hinges on an individual's HDHP deductible. In addition, the "full contribution rule" allows individuals who are HSA-eligible on December 1 to make a full year's contribution (as if their December HDHP coverage had been in effect all year). Contributions made in reliance on this rule will result in adverse tax consequences for individuals who fail to remain HSA-eligible throughout a 13-month testing period.
Following are “Full Contribution Rule” guidance highlights:
Adverse Tax Consequences If Testing Period Not Satisfied - Individuals who make HSA contributions in reliance upon the full-contribution rule must remain HSA-eligible throughout a 13-month testing period (generally from December 1 of the year for which HSA contributions are being made (year 1) through December 31 of the following year) to avoid adverse tax consequences. Otherwise, the portion of their HSA contributions for year 1 that exceeds the sum of their monthly contribution limits for year 1 must be included in income for the year in which they lose their HSA eligibility. They also must pay an additional 10% tax on that amount. These adverse tax consequences, including the 10% additional tax, apply regardless of age (i.e., even after age 65). However, earnings on this taxable amount are not included in income or subject to the 10% tax. Amounts that are included in an individual's income because of a failure to remain HSA eligible throughout the testing period need not be withdrawn. In fact, they will be taxed on withdrawal unless used for qualified medical expenses, even though they have already been included in income and subject to the additional 10% tax.
Timing Issues for Contributions and HSA Establishment - Even though individuals who first become HSA eligible on December 1 may be treated under the full-contribution rule as if they were HSA eligible all year, they cannot establish an HSA until they are actually HSA-eligible.
Moreover, any expenses incurred before the HSA is established cannot be reimbursed on a tax-free basis by the HSA. An individual who becomes HSA-eligible on or after January 1 may contribute the maximum amount based on the individual's expected type of HDHP coverage for December of that year, without waiting until December 1. But the testing period will still run from December 1 of year 1 through December 31 of the following year.
The second notice, IRS Notice 2008-51 (hyper link to http://www.irs.gov/pub/irs-drop/n-08-51.pdf) provides guidance on qualified HSA funding distributions from a one-time transfer from an IRA to an HSA.
An HSA-eligible individual is allowed to make a once-in-a-lifetime direct transfer from his or her IRA to his or her HSA (a second transfer is allowed within the same year if the individual changes from self-only HDHP coverage to family HDHP coverage later during the year in which the first transfer was made). The amount of the transfer cannot exceed the individual's maximum annual HSA contribution limit based on the type of HDHP coverage he or she has at the time of the transfer and his or her age as of the end of the tax year. The transfer is generally excluded from income and not subject to the 10% additional tax that may otherwise apply to IRA distributions. But if the individual does not remain HSA eligible throughout the applicable 13-month testing period, the entire amount of the qualified HSA funding distribution is taxable and is generally subject to a 10% additional tax. The guidance clarifies that these testing period rules apply separately from the testing period rules for HSA contributions made under the full-contribution rule. The transfer may be made from a traditional IRA or Roth IRA, but not from an ongoing SIMPLE or SEP IRA. An individual wanting to transfer amounts held in more than one IRA must first consolidate funds into one IRA before making a transfer to his or her HSA. The amount of the qualified HSA funding distribution counts against the individual's maximum HSA contribution limit for the tax year in which the transfer is actually made (i.e., an individual does not have until April 15 of the following year).
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AHIA – NAIFA Health & Employee Benefits Kudos
There are a number of state and local NAIFA associations making a difference in the health and employee benefits arena. Following are a couple recent examples:
VA Standard and Essential plans do not have to be offered at renewal- Ron Jerro was recently able to get clarification on behalf of AHIA and NAIFA-DC that Standard and Essential plans in VA do not have to be offered at renewal. This simple clarification will greatly reduce unnecessary paper being distributed and save greatly on administrative expenses thus creating a positive effect on the cost of health insurance for the consumer.
The initiative began when VA Attorney General Robert F. McDonnell spoke of his desire to eliminate waste in government caused by legislation that never or no longer serves any useful purpose. Mr. Jerro referred to §38.2-3431 C3 as the basis for requiring insurance companies to offer VA Essential and Standard Plans even upon renewal every year. The section states “Every health insurance issuer offering group health insurance coverage shall, as a condition of transacting business in Virginia with small employers, offer and make available to small employers an essential and a standard health benefit plan, subject to the provisions of §38.2-3432.2.
Mr. Jerro argued the intent of this law was to guarantee that employers were able to obtain health insurance for their employees regardless of their health conditions. So if an employer did not meet underwriting requirements for an insurance company’s regular group plans, it had to offer the Essential and Standard plans which are typically more costly and not as good as the insurer’s regular plans. Once a company qualifies for an insurer’s regular group health insurance, and becomes a client of the insurance company, there is no longer a requirement for underwriting any health conditions for current or future employees. As an existing client, upon renewal, the company is no longer being “offered” group health insurance coverage, but is merely “renewing” coverage they already have, so there is no need for insurance companies to send proposals for VA Essential and Standard plans.
On May 27, Mr. Jerro received confirmation from the VA Department of Insurance that the department reviewed §38.2-3431 C3 and “agree with your opinion that the Standard and Essential plans do not have to be offered at renewal.”
Outstanding Missourian - Roy W. Kern, LUTCF, CLTC, CSA, CECA, RFC was awarded Outstanding Missourian by the Missouri House of Representatives. When presenting the award to Roy, Representative Charlie Denison concluded with “may we all strive for the excellence that he has achieved.” AHIA joins NAIFA- Missouri in congratulating Roy on this prestigious award.
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Mark Your Calendars
July 2nd – Online Forum Lessons Learned to Improve Profitability
No charge
July 8-9th - The Second Annual Partnership Summit: Charting the Future of Long-Term Care Insurance. Baltimore, Maryland
$100 for AHIA Members
August 4th – New York City Employee Benefit Summit
$100 Discount for AHIA Members
August 6 – Online Forum Critical Facts about Critical Illness
No charge
August 11th – Chicago Employee Benefit Summit
$100 Discount for AHIA Members
September 5-6th – San Diego 2008 Employee Benefits Educational Symposium
$25 AHIA Member Discount
September 8th – San Diego AHIA Annual Meeting
AHIA Member Discount
September 22nd – DC Employee Benefit Summit
$100 Discount for AHIA Members
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AHIA Presents:
2008 Employee Benefits Educational Symposium
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SEPTEMBER 5-6, 2008
Manchester Grand Hyatt • San Diego, California
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Choose from educational sessions in the following 10 tracks:
- CHDCs/HSAs
- HIPAA Privacy
- Self-Funding 101
- LTD Contracts
- COBRA
- Medical Plan Cost Realities
- Required Plan Disclosures and Operating Requirements
- Wellness
- FLEX Plans
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SAVE $50 by taking advantage of our early registration!
Go to http://www.naifa.org/convention and register before June 27th
to get our special reduced rate!
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Preliminary Schedule of Events
Friday, September 5
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Employee Benefits Symposium Breakout Sessions
Choose from a variety of workshop sessions focusing on employee benefit issues. Participants will attend three workshop sessions in the morning and two in the afternoon.
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Employee Benefits Symposium Luncheon Presentation:
When Everything Goes WRONG!
A dramatic presentation of an HR/Benefits department at it’s worst! Come to enjoy lunch, have a few laughs, and see what can go wrong in the world of employee benefits.
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Employee Benefits Symposium Wine and Cheese Reception
Join the speakers and panelists from the Employee Benefit Symposium as well as other attendees for networking and refreshments!
Saturday, September 6
Breakfast Presentation
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Tom Carter, Vice President, Sales and Broker Relations, Kaiser Permanente California
Tom Carter is Vice President of Sales and Broker Relations for Kaiser Permanente. In this role, Tom is able to utilize over 26 years of healthcare industry experience in the areas of sales, marketing, and account management. Tom leads the new group sales team statewide and co-leads the broker development strategy to enhance both the retention of existing business and the acquisition of new Kaiser Permanente customers.
Employee Benefits Symposium Expert Panels
Building Your Agency
Neil Simons, REBC, RHU, GBA, Founder and President, Independent Benefit Services
Simons will demonstrate how agents can successfully develop an employee benefits agency. Since it’s founding, Simons has grown Independent Benefit Services into one of the most respected benefit advisory firms in the region. Participants attending this panel aim to walk away with leadership strategies, directional approaches and other many valuable resources on how to run a prosperous employee benefits agency.
Emeric McCleary, CEO and Founder of Hispano Employee Benefits
With over 20 years of experience, McCleary is recognized for his valuable advice regarding Hispanic employee benefits and has advised numerous Fortune 500 companies in the employee benefits arena. McCleary intends to share his core principles of running a successful practice. Attendees can expect to gain valuable start up-strategies for their employee benefits agency, motivation, and retention strategies.
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Legislative Update
Join us for an informative legislative update and an engaging discussion on the status of health reform at both the state and federal level.
Meeting Expectations
Tom Carter, Vice President, Sales and Broker Relations, Kaiser Permanente California
With over 26 years of healthcare industry experience participants attending this panel will learn about the different expectations large carriers, employers and the public have of employee benefits agents.
Nick Bond, Vice President and General Manager of Russ Moore Transmission, Inc.
Mr. Bond knows well the expectations small carriers have of the employee benefits agent. Attendees will hear Bond’s key strategies to meet and exceed expectations of employee benefits agents.
Monday, September 8
AHIA Annual Meeting & Luncheon
Building a Million Dollar Practice
Roger Schultz, CLU
This presentation will address the critical steps necessary to a successful practice. Having already successfully established 250 direct reimbursement plans covering 200,000 participants in 21 states, it is evident Schultz knows the industry. Schultz has also proven his knowledge in the field by publishing over 50 articles on employee benefits. Through his expertise, Schultz will show agents how to develop innovative services, products and concepts. Schultz will also give agents advice on how to position their firm in the marketplace, adapt to the changing environment and differentiate their firm from competitors. By showing agents a few practical applications and techniques agents will be able to efficiently compete in the highly competitive field of employee benefits.
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eDocAmerica Saves You and Your Clients Money
Now you can be the champion to both your employees and your clients. eDocAmerica’s distinctive services allow agents, agencies, and client companies to keep track of enrolled employees and review costs per employee. Agents and agencies are also able to access employee records on their own personalized, user-friendly, secure webpage, while earning commissions at the same time.
eDocAmerica’s services also provide a valuable service to your employees. With this innovative and effective employee benefit your employees can take advantage of 24/7 online access to board certified physicians and licensed psychologists, a 24/7 Registered Nurse advice line, health/risk assessments, a searchable medical and video library, and weekly health tips all at no additional charge. eDocAmerica’s latest health tip on osteoporosis revealed the relationship between cola consumption and low bone density. With an abundance of health resources on their hands, your employees can stay healthy, avoid unnecessary doctor appointments, and decrease absenteeism. Healthy employees are not only happy; they are more productive, which ultimately saves you money.
Get started today by visiting http://www.edocamerica.com/portal/ahia/. AHIA members receive preferred pricing of $1.05 a month per employee with no minimum group size requirement. Signing up is easy and only requires following these simple steps:
- Set up a screen name and password. This will provide you with access to a host of resources to promote the eDocAmerica service.
- Purchase the service for your employees (you can’t sell what you don’t own).
- Upload or enter enrolled employees.
“eDocAmerica provides a valuable service I was not able to find anywhere else.”
-AHIA Member Fred Bean, CLU
For more information on eDocAmerica or other products and services AHIA offers visit www.ahia.net.
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2007-2008 AHIA Board of Directors
 PRESIDENT
Thomas J. Vander Wal
PRESIDENT-ELECT
Robelynn H. Abadie, LUTCF, CSA, RFC, RDA
SECRETARY
William J. Foudy, LUTCF
TREASURER
Sam J. Cunningham, CLU, ChFC, RHU
IMMEDIATE PAST PRESIDENT
Lawrence E. Lounds, CLU, ChFC, LUTCF
DIRECTORS
Christopher K. Schneeman, CLU, LUTCF
Ed Anderson, CLU, LUTCF
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