TASNews. Over six months ago the Patient Protection. Medicare Supplement customers now. Health Care Reform FAQs

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1 Delivering The Human Side of Insurance TASNews Oct / Nov 2010 volume 10 number 3 A Publication of Transamerica Affinity Services, Inc., an AEGON company Health Care Reform FAQs Over six months ago the Patient Protection and Affordable Care Act (PPACA) and the companion package of fixes known as the Health Care and Education Affordability Reconciliation Act (HCERA) of 2010 were signed into law. In our last issue, we provided some interpretations of the new law with respect to their impact on our product lines and customers. Here is a list of frequently asked questions to help answer some of the questions that may arise. Q1 Are there any changes in the law affecting the Medicare supplement market or current customers? A1 The Original Medicare program and Medicare Supplement remain largely intact. The law requires that the National Association of Insurance Commissioners (NAIC) modify the Medicare Supplement model regulations by adding nominal cost sharing for benefit packages C and F. The new models C and F will be available January 1, Most likely this will not affect existing customers. We would expect existing Medicare supplement plans will be grandfathered as this has occurred in the past with similar changes. Changes in Medicare Advantage (MA) plans may also affect the Medicare supplement market. The MA program will experience changes in payment rates and structures. In 2011, payment rates are frozen at the 2010 levels. In subsequent years, payment reforms continue to phase in, which will reduce Continued on page 4 In This Issue Health Care Reform FAQs p. 1, 4, 5 New Online Services For Medicare Supplement Customers p. 1, 5 Executive Medical p. 2 New York s Disclosure Rule p. 2 Breast Cancer Awareness Month p. 3 Where We ll Be - Latest Events p. 6 New! New Online Services for Medicare Supplement Customers Medicare Supplement customers now have a convenient way to review and track their supplement benefits online. Once registered, customers can... view their individual claim history, check premium payment/paid-to-date status, Continued on page 5 1

2 Executive Medical An Often Overlooked Executive Benefit Given the economic and political landscape, a top issue when it comes to executive benefits professionals in the coming year will be value and getting a high perceived value benefit for a relatively low cost. With the current tightening of salaries and bonuses, highly compensated executives should show far more interest in understanding the details of all of their benefits. Combining this landscape with the trend of employee health care cost increases and cost-shifting to employees and you have an outstanding but often overlooked benefit opportunity. Once the economy improves, companies and executives are sure to ramp up their job search. Make sure your clients are prepared to head off this trend by shoring up their retention benefits now. With expanded health care coverage tailored for executives, you can help companies attract and retain their key talent by delivering a fully insured medical reimbursement solution. The Executive Medical program is perfect for key employees, owners or partners in virtually all types of public and private businesses: Corporations Corporations Sole Proprietorships Partnerships LLCs LLPs Our Executive Medical Reimbursement insurance will continue to be a viable option post Healthcare Reform given our plan design. The plan wraps around virtually any underlying plan without limitations or restrictions on design and provides up to $100,000 in annual benefits. Pricing is individually quoted for each company and is based on parameters of the company s underlying health plan, demographic and location information. Now more than ever, your clients are looking to you for executive benefit strategies why not add our Executive Medical to your portfolio of health care solutions? If you are interested in learning more, we encourage you to talk to your New Business Development representative. Plans are underwritten by Monumental Life Insurance Company and Transamerica Financial Life Insurance Company in New York. New York s Disclosure Rule In early 2010, the New York State Insurance Department adopted a new regulation,11nycrr30, requiring producers operating in New York state to disclose to their clients, among other requirements, their role in the insurance transaction and whether they will receive compensation from an insurer based on the sale. The regulations are effective January 1, 2011 and apply to both life and health insurance on all new business. If this rule applies to your business you will begin to see disclosure language on your advertising material reviews with us to comply with compensation disclosure requirements. The disclosure does not apply to certificate holders under a group or blanket insurance contract where the producer has no direct sales or solicitation contact with the certificate holder and the policy holder pays all of the premium. If you are interested in learning more, we encourage you to talk to your New Business Development representative. 2

3 Breast Cancer Awareness Month Celebrating 25 Years! National Breast Cancer Awareness Month began in 1985 making this the 25 year anniversary of the organizations efforts to raise awareness of breast cancer issues. You ve probably heard the statistics: A woman s chances of getting breast cancer over her entire lifetime are one in seven. From birth to age 39, a 1 in 231 chance; ages 40 59, a 1 in 25 chance, and a 1 in 15 chance between the ages of And while breast cancer deaths have declined; it remains the second leading cause of cancer death in women (second to skin cancer). In the spirit of Breast Cancer Awareness Month, here are seven potential warning signs of breast cancer (from cancer.org): 1. The most common sign of breast cancer is a new lump or mass. A lump that is painless, hard, and has uneven edges is more likely to be cancer. But some cancers are tender, soft, and rounded. So it s important to have anything unusual checked by a doctor. 2. Swelling of all or part of the breast 3. Skin irritation or dimpling 4. Breast pain 5. Nipple pain or the nipple turning inward 6. Redness, scaliness, or thickening of the nipple or breast skin 7. A nipple discharge other than breast milk Providing Cancer Insurance Protection Cancer insurance is designed as a safety-net to help supplement health insurance coverage and to pay for uncovered medical treatments and non-medical costs associated with this serious illness which can be quite costly. Considering today s economic times and the growing importance of an extra financial safety-net for Baby Boomers as they press into their retirement years, this product continues to be popular. One thing s for sure: Not all cancer insurance plans are created equal. If you are not already providing some sort of cancer product to clients or even if you are, you may want to consider adding our cancer insurance to your portfolio of products. Product designs can vary by length of policy (termination clauses), benefits, payment triggers and schedules to name a few. Our most popular plan designs include benefits for wellness preventive screenings, heart/stroke benefits, and first diagnosis to name a few and are available at an affordable price for the consumer. Group Cancer Insurance for members, spouses and families features daily hospitalization benefits with policy lifetime coverage up to $250,000. Also plans can include multiple riders such as death benefit, home care, or return of premium riders to name a few. Transamerica is a trusted source for cancer insurance. If you are interested in cancer insurance, we encourage you to talk to your New Business Development representative. All plans and riders are not available in all states and some state variations may exist. All information is subject to the terms and conditions of the particular policy, including any exclusions or limitations. 3

4 Continued from Health Care Reform FAQs government subsidies to insurance companies. Beginning in 2014, organizations in the MA program with a medical loss ratio below 85 percent will be subject to penalties. The CMS Office of the Actuary predicts MA enrollments by 2017 will decrease by an estimated 50 percent (from a projected level of 14.8 million under prior law to 7.4 million under the new law) as a result of the payment reforms in the final bill. Beginning in 2011, Medicare will provide coverage of an annual wellness visit and personalized prevention plan to enrollees at no charge. The June 26 rule by CMS (related to PPACA) requires that an HRA (health risk assessment) be included in the annual wellness visits beginning on Jan. 1, CMS is working closely with the Centers of Disease Control and Prevention, which will probably take the lead role in creating the standardized health risk assessment required by health reform law. Medicare Advantage, Medicare Advantage with Prescription Drugs (MA-PD) and stand-alone Prescription Drug Plans (PDP) will have a single Annual Enrollment Period (AEP) for drug and health plan changes which begins on October 15, 2011 and ends on December 7, 2011 for the 2012 plan year. This is a change from the current Part D AEP schedule of November 15 to December 31. Q2 How and when will the doughnut hole for Medicare s Prescription Drug benefit be closed? A2 The Medicare Part D coverage gap, known as the doughnut hole, will gradually close from Already this year, Part D enrollees have received a $250 bonus upon entering the doughnut hole. In 2011, drug makers are required to give enrollees a 50% discount on brand name drugs and a 7% discount on generic drug purchases in the coverage gap. This coverage by the drug makers in conjunction with yearly changes to coverage for drugs under the Part D benefit will lead to the gap closing entirely by 2020 (entire coverage is equal to 25% paid by the enrollee this 25%/75% split is the current cost sharing for prescription drugs before an enrollee goes into the doughnut hole coverage gap). See the year-by-year schedule in the charts on the right column. Brand-name Drugs In The Gap Paid by Enrollee Paid by Plan Manufacturer Discount % - $250 REBATE % 50% % 50% % -2.5% 50% % -2.5% 50% % -5% 50% % -5% 50% % 10% 50% % 15% 50% % 20% 50% % 25% 50% Generic Drugs In The Gap Paid by Enrollee Paid by Plan % % 7% % 14% % 21% % 28% % 35% % 42% % 49% % 56% % 63% % 75% Source: InsuranceNewsNet Magazine, August 2010 Q3 What other changes affect Part D customers? A3 The Centers for Medicare and Medicaid Services (CMS) estimates that the average monthly premium that beneficiaries will pay for standard Part D coverage will be $30 for a $1 increase from the current year (2010) average premium of $29. Medicare recipients with an annual income higher than $85,000 for an individual and $170,000 for a married couple will pay more for their Part D premium as the premium subsidy is reduced in Q4 What s happening now with the elimination of the tax deductibility of the Part D subsidy for employers? A4 Employers who receive a Medicare Part D subsidy for providing qualifying prescription drug coverage for retirees will no longer have a tax exemption. Affected employers have to account for the future loss of the deductibility Continued on page 5 4

5 Continued from Health Care Reform FAQs of this subsidy in 2013 on their liability and income statements. While the elimination of the deductibility does not take effect until 2013, there could be an immediate accounting impact (FAS 109 requires employers to immediately take a charge against current earnings to reflect the higher anticipated tax costs and higher FAS 106 liability). As a result, some large corporations such as AT&T, Verizon, Deere & Co. and Caterpillar Inc. have indicated the impact to earnings is in the millions of dollars. Q5 Are supplemental health plans as they exist today covered under the new law? A5 Supplemental health plans do not fall under the health plan definition and are interpreted not to be subject to the health care reform provisions including: accident only; dental only; specified disease; hospital indemnity; other fixed/limited benefit indemnity; Medicare supplement; TRICARE supplement; long-term care; disability income. Q6 Are group retiree plans considered by the law to be Medicare supplements? A6 Group retiree health plans (such as our Retiree Medical) are thought to continue to exist as they do today under the law. Group retiree plans are exempt from the Medicare supplement laws today (although some states do not recognize this exemption). Medicare supplements are specifically excluded from the qualified health plan requirements as well as specific mention of hospital indemnity and other fixed indemnity. Retiree health plans that supplement Medicare are similar type products so are thought to also fall outside of the health care reform provisions applying to health plans. Q7 Are you writing any new limited medical benefits (mini-medical) plans? A7 Yes. While the future is uncertain for these plans given the changes ahead in 2014, we are writing new limited medical benefits (mini-medical) plans with a fixed-indemnity plan design. Our interpretation of the law is that these plans are excluded from the health plan definition. We are not writing any new limited medical benefits (mini-medical) plans with an expense-incurred plan design. Continued from New Online Services view and print a temporary ID card or order a replacement card, and view their personal record information such as address and billing method. A flyer is being sent to customers administered by Transamerica for more details on this valuable new service. Transamerica offers a group sponsored Medicare Supplement program. Medicare Supplement insurance plans are underwritten by Transamerica Life Insurance Company (Cedar Rapids, Iowa) and Transamerica Financial Life Insurance Company (Harrison, New York for New York residents). Transamerica offers the new Modernized Medicare Supplement plans A, B, C, D, F, G, K, L, M and N in most states and D.C. Providing Medigap (Medicare Supplement) Protection Members of participating groups can purchase Medicare Supplement plans via direct mail, over the phone and online. Our Part D cross-sell program is available for participating groups. We also have group retiree medical and prescription drug plans available for employers. If you are interested in obtaining additional information regarding our sponsored programs, please contact your New Business Development representative. 5

6 Calendar of Events November Closed for Thanksgiving December 24 Closed for Christmas December 31 Closed for New Year Transamerica Affinity Services Offices: Sales and Marketing 520 Park Avenue, M.S. A577 Baltimore, MD Phone: (800) Fax: (410) Where We ll Be Latest Events We are attending the World Research Group s National Retiree Healthcare Forum. The Forum will tackle the pertinent challenges impacting employers with regard to retiree healthcare coverage and answer the burning questions and unknowns surrounding Healthcare Reform. Dec 8 Annual National Retiree Healthcare Forum December 8 10, 2010 The Westin Tyson Corner Washington, D.C. We are members and are attending the Professional Insurance Marketing Associationís (PIMA) Annual Meeting (Product & Marketing Showcase). Jan 27 Dec 10 Jan 30 PIMA s Annual Meeting January 27 30, 2011 The Fairmont - Turnberry Isle Miami, Florida We will attend the Inter-Company Marketing Group (ICMG) Annual Meeting. Customer Service Phone: (800) Feb 2 Feb 4 ICMG Annual Meeting February 2 4, 2011 Doral Golf Resort & Spa Miami, Florida Claims P.O. Box 97 Scranton, PA Phone: (800) Transamerica Affinity Services, Inc. All rights reserved. Reproduction in any form, in part or in whole, is prohibited without written permission. This newsletter is for information only and is not intended as an offer or contract. Comments on this newsletter: c/o Marcia Moore, 520 Park Avenue, Baltimore, MD If you are interested in meeting up with us at any upcoming event, please contact your New Business Development representative. Quick Takes The most valuable of all talents is that of never using two words when one will do. - Thomas Jefferson, U.S. President A.M. Best Standard & Poor s Monumental Life Insurance Company A+ AA- Stonebridge Life Insurance Company A+ AA- Transamerica Financial Life Insurance Company A+ AA- Transamerica Life Insurance Company A+ AA- 6