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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Today’s Agenda
 The Historical Evolution of Broker
Distribution Systems and Underwriting
 Upcoming Pressures on the System
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 Articulating Broker’s Place in the 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
 An health insurance acturary, through data analysis, defines what a “good bet” looks like.
 A broker seeks out and brings in the “right” kind of “bettor”.
 The underwriter is the person who decides if the
“bettor” fits the actuary’s model for being good.
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 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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 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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 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

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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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• 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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• 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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• 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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• 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
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1095-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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• 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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• 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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• 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
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• Thereafter – 100
% of unearned credit

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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• 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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 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
Carve Outs -
Management Groups,
Clerical Groups or
Union Groups
Consumer directed
HMO, PPO, EPO and the
Alphabet Soup
ERISA/PPACA guidance
Legal Dangers
Human Resource
Regulatons Self-fund, partially fund, fully insure or release to the exchange
Page  30 How to attract and keep the best employees at the most reasonable cost?

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
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Cost Management
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
14. Assist with the research and resolution of claim conflicts.
Page  32 material and the running of employees meetings.

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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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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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