In this issue:
Americans taking advantage of generic drugs
Americans are taking advantage of incentives to use generic drugs, according to an analysis of Express Scripts’ 2007 drug trend experience.
The average total cost of a prescription rose to $55.93, from $55.01, but the average patient co-payment fell to $13.20, from $13.35, researchers with Express Scripts report.
The average co-payment fell because patients were more likely to try to hold down out-of-pocket costs by buying generic drugs rather than higher cost name-brand drugs, according to reports.
Generics accounted for 67 percent of Express Scripts prescriptions filled in 2007, up from 42 percent in 2002.
Although insurers, employers and other plan payers paid a higher share of prescription costs, the shift to generics helped cut the increase in the cost of the average prescription to 1.6 percent in 2007, according to estimates.
Source: ProducersWeb.com, April 16, 2008
Fixed Annuity Contract Can Pay Extra For Long Term Care
United of Omaha Life Insurance Company has built long term care support into a retirement savings product.
United of Omaha, a unit of Mutual of Omaha Insurance Company, Omaha, Neb., says its new Living Care Annuity contract is a deferred fixed-rate annuity that automatically comes with LTC benefits.
The purchaser puts in a premium to establish the annuity value.
United of Omaha then will credit the annuity with a guaranteed rate of interest over a period of at least 2 years, the company says.
Clients can use the LTC benefits starting in the third contract year.
If a client needs long term care, the client can receive up to 3 times the annuity value in the form of LTC benefits, United of Omaha says.
If the client does not need long term care, the client will still own a fixed annuity, and the beneficiaries will receive a death benefit equal to the annuity value, the company says.
Source: Online News Service, April 15, 2008
Study: Boomers to Flood Medical System
Millions of baby boomers are about to enter a health care system for seniors that not only isn't ready for them, but may even discourage them from getting quality care.
"We face an impending crisis as the growing number of older patients, who are living longer with more complex health needs, increasingly outpaces the number of health care providers with the knowledge and skills to care for them capably," said John W. Rowe, professor of health policy and management at Columbia University.
Rowe headed an Institute of Medicine committee that released a report Monday on the health care outlook for the 78 million baby boomers about to begin turning 65.
The report from the institute, an arm of the National Academy of Sciences, said:
- There aren't enough specialists in geriatric medicine.
- Insufficient training is available.
- The specialists that do exist are underpaid.
- Medicare fails to provide for team care that many elderly patients need.
The study said Medicare may even hinder seniors from getting the best care because of its low reimbursement rates, a focus on treating short-term health problems rather than managing chronic conditions and lack of coverage for preventive services or for health care providers' time spent collaborating with a patient's other providers.
The American Medical Association responded that seniors' access to Medicare in coming years "is threatened by looming Medicare physician payment cuts."
"This July, the government will begin steep cuts in Medicare physician payments, and 60 percent of physicians say this cut will force them to limit the number of new Medicare patients they can treat," the AMA said in a statement.
The report found there are about 7,100 doctors certified in geriatrics in the United States, one per every 2,500 older Americans.
Turnover among nurse aides averages 71 percent annually, and up to 90 percent of home health aides leave their jobs within the first two years, the report said.
But while today's elderly tend to be healthier and live longer than previous generations, people over 65 to have more complex conditions and health care needs than younger folks.
The report urged that all health care workers be trained in basic geriatric care and that schools increase training in the treatment of older patients.
The federally required minimum number of hours of training for direct-care workers should be raised from 75 to at least 120, the report said, noting that more training is required for dog groomers and manicurists than direct-care workers in many parts of the country.
And it said pay for geriatric specialists, doctors, nurses and care workers needs to be increased.
A doctor specializing in elderly care earned $163,000 on average in 2005 compared with $175,000 for a general internist, even though the geriatric specialist required more training.
The report also urged training for family members and other informal caregivers who assist the elderly.
Source: Associated Press, April 14, 2008
Autism Awareness — Some really long term care
What if you lived in a country where one child in every 150 was kidnapped? There would be national outrage on all fronts and we would see unprecedented action. In America, one in every 150 children is diagnosed with autism, and the dreams that came into the world along with the birth of these children are kidnapped from their parents — and for many parents, these dreams never return.
Sadly, even though autism impacts so many children and there is no national outrage, consider that this lifelong neurological disorder is 20 times more prevalent than polio was when it was at its peak in the middle of the 20th century. In fact, autism has gone from a rare condition impacting one in 10,000 children to an epidemic that traps children in their own worlds in less than 20 years. As of now, there is no “smoking gun,” but there are many suspected culprits ranging from genetics and childhood vaccines to exposure to mercury and heavy metals. I suspect there are different types of autism with different causes or combinations of causes, but I only play doctor at home — and my chosen vocation is as a financial professional.
The lack of national outrage stems from a number of factors. First, our children who are impacted by this challenge look no different from other children; they do not have leg braces or spend their time in hospitals on an iron lung. If you took 20 children, including one with autism, and lined them up against the wall, it might be hard to identify the child with autism just by looking at them. It is in social situations where these children’s differences are most obvious as they flap their hands, run on their toes, or chirp and screech in unintelligible babble. Because of the dramatic rise in the incidence of autism, you might know someone impacted by this challenge.
If not, you have probably seen a child “misbehaving” at the grocery store or elsewhere in public and thought disparaging remarks about parents needing to control their children to yourself. Looking back, I can remember a trip to the grocery store with my youngest son, who later fell apart in the checkout line. For him things were going too slow, and he melted down, falling to the ground shrieking and screaming at the top of his lungs. Looking around, I noticed the growing wall of disapproving looks from other patrons. So I loudly cleared my throat and said to my son for everyone to hear, “I agree with you completely, and I am not happy about our foreign policy decisions either.” Sadly, people sometimes don’t get my humor, but that’s another matter.
What does this have to do with financial planning?
Anyway, you’re probably asking, what in the vanilla fudge does this have to do with me as a financial professional? Well, according to a little school (I don’t attend this institution, by the way) by the name of Harvard, the lifetime costs of caring for a child with autism can exceed three million dollars; so if you do the math, we have a multi-trillion-dollar challenge in this country.
Autism has no impact on a person’s life expectancy. So, in looking out at you with my third eye as you read this, I can see the light bulb going off over some of your heads. Simply put, this is a monumental financial planning challenge.
This article will attempt to give a very broad overview of some of these challenges. I have been fortunate in being able to share this message with a number of groups over the years in the Pacific Northwest. It is my hope that this column will help you to help families who are struggling just to get through the day due to the challenges of living with autism or some other disability.
Planning for a family impacted by autism or some other disability involves four key areas. For regular readers of my columns, this won’t surprise you since you know I can only keep track of four things at a time. These areas are: legal planning for the child, financial planning for the child, quality of life planning for the child, and finally, planning for the caregivers.
Now, we’ve already established that I am not a doctor, nor am I an attorney, but let me share some very general legal information here. Most of you know that Medicaid eligibility, and SSI, for that matter, are means based. This means if you have too much in the way of income or assets you don’t qualify. Because of this, many families adopt supplemental or special needs trusts; which can either be testamentary or inter vivos in nature. Additionally, there are court-appointed trusts and pooled trusts. There are advantages to each strategy, and you really should have your clients consult with an attorney who specializes in this type of planning. (And, if your feedback warrants it, I may elaborate on these differences in a future column.)
The purpose of a supplemental needs trust is to hold assets for the enrichment of the beneficiary beyond the basic necessities of life. Examples of this may include travel, magazine subscriptions, a computer, or better health or dental care than what is provided by Medicaid. Now, the trust cannot and should not be used for basic needs — food, clothing, shelter and so forth — as these are to be provided by Social Security and SSI. If the trust were to meet these basic needs, the beneficiary may be disqualified from SSI and Medicaid.
Be careful how the supplemental needs trust is funded, as in the year 2000 a payback provision was adopted that allows the federal government to seek reimbursement from the trust at the death of the disabled beneficiary. This, however, might be avoided with what I call a conduit trust, but again, that may be another subject for another time.
In addition to trusts, legal planning must include selecting a guardian to help be responsible for the beneficiary, and it may also be prudent in some jurisdictions to include an investment policy statement in the trust specifying how the trustee is to manage trust assets. Having an investment policy statement to guide the trustee can help keep the court from getting involved in making investment decisions. Finally, it is important that your clients communicate their plans with other family members once they are completed. This way, there are no surprises or unintended inheritances left to the beneficiary, which might disqualify them from the services they depend on.
Source: ProducersWeb.com, April 11, 2008
Senior health care system unprepared for boomers
Approximately 78 million baby boomers are preparing to turn 65 years old and surprising findings from a report released today by the Institute of Medicine indicate that the health care system is not ready for the upcoming flood of seniors, which may hinder access to quality care.
A division of the National Academy of Sciences, the Institute’s report suggests that geriatric medicine is lacking specialists and those that do exist are underpaid and insufficiently trained.
Findings also indicate that access to quality care is negatively affected by Medicare’s low reimbursement rates and lack of coverage for preventive services.
The report also suggests that Medicare’s focus on treating short-term health problems, rather than managing chronic conditions, will impact access to quality team care for boomers.
Source: ProducersWeb.com, April 14, 2008
Safety errors cost Medicare $ 8.8 billion
Patient safety errors that occurred between 2004 and 2006 resulted in more than 238,000 potentially preventable deaths of Medicare patients — costing the U.S. Medicare program a whopping $8.8 billion, according to the fifth annual Patient Safety in American Hospitals Study.
Findings from an analysis of 41 million Medicare patient records indicate that, on average, beneficiaries who were treated at top performing hospitals were 43 percent less likely to experience one or more medical errors than patients at poor performing hospitals.
Finally, researchers with the HealthGrade released study conclude that the overall medical error rate was about 3 percent for all Medicare patients, or approximately 1.1 million patient safety errors during the three years examined.
Source: ProducersWeb.com, April 8, 2008
Are employers over-insuring their employees?
Are employers over-insuring their employees? The surprising answer may be “Yes.”
Michael McCallister, President and CEO of Humana Insurance made a startling comment that nearly knocked my off my chair. He was speaking on the benefits of health savings accounts at the Consumer Directed Health Care Expo in Las Vegas, May 2007. After his talk he was asked by a member of the audience what employers could do? He said: "Employers, you are over-insuring your employees. You are buying plans they would not buy for themselves."
That’s fairly controversial for an insurance company president to imply that business owners, HR professionals and insurance agents are choosing plans employees wouldn’t buy for themselves. That comment warranted some research.
Based upon my experience as an agent, I had some reasons to suspect this was true. For starters, the large majority of individual health insurance sales at our agency are for affordable HSA-compatible health plans. And, when individuals come to our offices trying to duplicate their former employer’s plan, they usually gasp at the cost, say they had no idea the plan was so expensive, and buy a much lower cost plan.
I talked with a respected HR Director in my community, and asked her if she would be willing to do a quick experiment. I gave her an insurance company brochure for small group insurance plans (2-50 employees). This company offered 21 different health plan options including HMOs, PPOs and HSA-Compatible Health Plans. I also gave her rate sheet so she could see the published premiums for each of the plans. Then I asked, “If you had to pay the entire premium yourself, which plan would you choose?”
She looked them all over very carefully, and then chose an HSA-compatible plan with a $3000 deductible. With this plan, she pays all costs up to $3000 and the insurance company pays all costs over the $3000 deductible. I asked why she didn’t choose a more expensive traditional PPO or HMO and her rationale was simple. “I’m reasonably healthy and the premiums for this plan are much less than the traditional plans. Since it’s my money, I would rather put that premium saving into a health savings account than pre-pay for low office visit and prescription copays I rarely use.”
A problem: employees misunderstand funding of health insurance
So why is it that employees choose one plan at work, and a totally different plan when buying their own coverage? We can gain insight from Devon Herrick, a health economist and senior fellow at the National Center of Policy Analysis. In a May 5th, 2005 article in the Heartland Institute titled “Health Insurance: Why Rent When You Can Own?” he stated clearly and succinctly what all employees need to understand:
"Employer-sponsored health coverage is popular because workers mistakenly assume their employers pay part of the premiums. Economists know otherwise. Workers bear the total cost of their health plans through direct contribution and indirect wage reductions."
This leads to an interesting question: if employees really understood that they bear the total cost of their health plans, would they choose different health plans than the employer offers?
The experiment
I was recently teaching my 8-hour HSA continuing education workshop to a group of 35 CPAs and decided to conduct a preliminary experiment before starting the class. Here’s the set up. I told them I was their employer and that I prided myself in offering excellent benefits. I then presented three scenarios.
Scenario one: I gave them a menu of plans—a variety of low, medium and high cost HMOs, PPOs and HSA-compatible plans. I then told them I would pay all the costs for their health insurance; they could choose any plan they desired. After they made their choices, I asked them which plans they chose, and virtually all took either the most expensive HMO or PPO. I expected that. It’s like my taking you to an expensive restaurant and saying, I will pay all the costs. Immediately disappearing from your mind is the inexpensive pasta dish, and you order the Filet Mignon with the expensive bottle of Merlot.
Scenario two: I told them I would still pay for the plan they had chosen. But as an option they could choose a less expensive plan and keep any premium savings as payroll. No surprise here. Virtually all—except for two people—chose less expensive plans and pocketed the difference. That’s like going out to a restaurant and giving everyone a $100 bill and saying, “You can buy what ever you want. What you don’t use you can keep. The special pasta and the house white wine suddenly are the popular choices.
Scenario three: The last scenario occurred after the completion of the 8-hour program on health savings accounts. Like scenario two I told them they could keep the expensive plan, or use the money to buy any plan they desired. This time these financial professionals were thoroughly educated on the benefits of HSA-compatible health plans. Virtually everyone chose an HSA-compatible health plan, used the premium savings to fund the HSA to the maximum, and some still had money left over for payroll.
It appears that Michael McCallister, President and CEO of Humana Insurance may be correct in asserting that employers are offering plan employees wouldn’t buy for themselves. If that is true, would companies be smarter—and employees happier—if employers gave employees the opportunity to buy plans they would buy for themselves? It’s easy to accomplish.
Employers could give each employee the “benefits” portion of their compensation in the form of a budget to buy health insurance. The budget is made up of two components:
- A dollar amount sufficient to pay the major medical plan, e.g., a high deductible health plan. Since employee sees a dollar amount, the employee knows the real cost of the insurance. Since employer still pays the premium, it is fully tax-deductible. The employer also makes sure employees have affordable coverage for large and unexpected medical bills—the original purpose for health insurance.
- An additional dollar amount that employees can use in several different ways:
Put cash into employee’s health savings account to pay for routine and expected healthcare expenses, as well as save for future deductibles.
- Use to pay dependent premiums.
- Upgrade to a more expensive health plan.
- Take cash as additional payroll (pay taxes).
- This fourth option is critical; when the employee has the option of taking this as payroll, then the individual understands that money is really his or hers.
In summary, when employees know their budget and have the “feeling” they are spending their own money, each person can choose between the pasta (e.g., the HDHP + HSA) and the Filet Mignon (e.g., the traditional health plan)? If human nature is true to form, my vote is that most people will choose the “pasta,” and keep the change.
The larger picture: greater transparency
Every employee needs to know the real costs of their health insurance. This idea is already taken shape at the Federal level. The need for transparency of insurance premiums took a big leap forward, according to a Business Insurance article, February 18th, 2008. Employers may be required to report the cost of health insurance coverage they provide to employees on annual W-2 wage and income statements under a recommendation by the Bush administration. This recommendation was included in the administration’s fiscal 2009 budgetary proposal. According to the report, such disclosure is necessary because many employees ‘are unaware' of the value of coverage. The current lack of transparency may result in 'inefficient choices of health coverage, including over-consumption of health coverages by employees.'
Source: ProducersWeb.com, April 4, 2008
Employers vow to become more involved with employee health
While companies plan to become more directly involved in the health of their individual employees, many employees remain skeptical, according to a recent survey.
New research by global human resource services company, Hewitt Associates, shows the number of employers who say they will become more involved in the health of their workforce rose by 25 percentage points over 2007. These statistics reflect a shift in how top companies view health care.
Of the more than 500 U.S. companies surveyed, 88 percent plan on investing in longer-term solutions for improving the health and productivity of their employees over the next three to five years, significantly up from 63 percent last year.
However, a survey of 30,000 employees showed that while 74 percent believe their employers are responsible for helping them understand their health plan, only 12 percent believe companies should be involved in helping them understand how to stay healthy.
Source: ProducersWeb.com, April 3, 2008
CDA: Fewer Young Workers Prepare For Disability
Only about 43% of workers in their 20s and 30s say they know how they would pay living expenses if they suffered an income-limiting disability.
Researchers at the Council for Disability Awareness, Portland, Maine, have published that finding in a summary of results from a Web-based survey of 1,448 working adults ages 21 to 65.
About 59% of the older workers surveyed said they know how they would pay for living expenses if they became disabled, the CDA researchers write.
Only 28% of workers at employers that offer disability benefits say they understand the benefits well, and 91% say they do not understand the Social Security Disability Insurance program very well, the researchers write.
Source: NU Online News Service, April 2, 2008
GAO: Some Colleges Put Tight Limits on Health Benefits
About 57% of U.S. colleges offer student insurance plans.
Researchers at the U.S. Government Accountability Office have published that figure in a review of the state of college health insurance plans.
About 20% of college students are uninsured, 6% have Medicaid coverage or other public coverage, and 67% are members of employer-sponsored group plans, John Dicken, a GAO director, writes in a letter describing the GAO’s findings.
About 7% of college students have student insurance coverage or other private, non-group coverage, Dicken writes.
Annual premiums for the college plans range from $30 to $2,400, and maximum benefits range from $2,500 for each illness or injury to unlimited coverage, Dicken writes.
Typical student plans cost about $500 to $999 per year, and 60% limited coverage to a maximum of $2,500 to $50,000 per condition per lifetime.
Many of the plans also imposed tight “internal benefit limits,” such as a limit of $150 per condition per lifetime on use of ambulance services, or a $1,200 per condition per lifetime limit on outpatient services, Dicken writes.
“Low internal benefit limits can make it highly unlikely for enrollees’ coverage to meet the plan’s maximum benefit amount,” Dicken writes.
One plan reviewed had a maximum benefit of $50,000 per condition per lifetime and an internal benefit limit of $1,200 per condition per lifetime for all outpatient benefits, including coverage for emergency services and diagnostic services, Dicken writes.
“Under this plan, students who require extensive outpatient services to treat one condition (such as a chronic condition or serious illness like cancer) would be unlikely to ever meet the $50,000 per condition per lifetime maximum benefit amount,” Dicken writes.
Source: NU Online News Service, March 28, 2008
Time to buff up for beach season
Many of us are starting to feel the heat from the sun, giving us an early tease of summer coming around the corner. Yes, it’s time to put away those winter coats and start pulling out the beach gear. But wait, you’re thinking, I am not beach-body-ready yet!
Well then it’s time to get moving. Any form of exercise will help -- just get the ball rolling and go, go, go!
Once you feel committed to general conditioning, and the soda pop and chips make way for grilled veggies and fish, it’s time to get beach-body specific. This means really working those trouble spots, which usually vary for women and men.
Here are some exercises that can help shape you up for your fun in the sun.
For the gals:
*Triceps. Tone up those triceps with some rear dips. Start by standing in front of a weight bench or sturdy chair and then grab the bench or seat behind you. Lower your body slowly, for 5 seconds, until your upper arms are parallel to the floor, then lift slowly back up. Do as many reps as you can. Aim for 4 sets.
*Buttocks. Tighten that tush with wall squats. Stand with your back to the wall and then lower yourself, using the wall for support, until your thighs are parallel to the floor. Again, down slowly for 5 seconds and then back up for a 5 count. Do as many reps as you can. Aim for 4 sets.
*Lower stomach. Firm up your bikini belly with these ab exercises. Starting by lying down on your back on the floor. Place your hands under your buttocks for support. Slowly lift and curl your legs toward you until your butt lifts slightly off the floor. Stop and squeeze! Remember to go slowly and do as many reps as you can. Aim for 4 sets.
For the guys:
*Shoulders. Buff up those shoulders with 4 triple sets consisting of the military press (10 reps), the lateral fly (15 reps) and controlled punching with dumbbells (use a weight you can hold for 100 reps).
*Obliques. Tighten the love-handle area with some side bridges. Start on the floor on your right side, leaning on your right elbow and forearm for support. Then lift your hips off the ground so your body is straight. Pull in your stomach and squeeze your buttocks. Hold for one minute and then switch sides.
*Calves. Bulk up your lower legs with calf raises. At the gym, you can add weights on the machine for extra resistance. Do 12 slow reps at a heavy weight, and then drop the weight in half and repeat.
And remember, when it comes to being beach-body-ready, attitude counts. So carry yourself with confidence and shine from within. It's always the distinct extra something in a person's spirit that makes the rest of us really take notice.
Source: The Fit List, May 4, 2008
Recipe Corner: Grilled Chicken Tostadas
Grilled corn tortillas, shredded lettuce, and cheese provide a tasty bed for this chicken, but it's the Tex-Mex marinade with lots of lime juice that really completes the dish.
INGREDIENTS:
MARINADE:
1/2 cup fresh lime juice (about 3-4 limes)
1/4 cup soy sauce
1/4 cup vegetable oil (plus more for brushing the tortillas)
1 tablespoon honey
2 teaspoons minced garlic
1 ½ teaspoons chili powder
TOSTADAS:
6 boneless, skinless chicken thighs (about 4 ounces each)
8 small corn tortillas (5 to 6 inches in diameter)
1 ½ cups (6 ounces) shredded Monterey Jack or more if desired
1 ½ cups shredded lettuce
Optional toppings: salsa, guacamole, sour cream, cilantro, green onions
1. Place the chicken thighs in a gallon-size zip-lock bag and add all the marinade ingredients. Press the air out of the bag and seal it. Turn the bag to thoroughly coat the chicken, place it in a bowl, and refrigerate it for at least 4 hours (preferably overnight), turning the bag occasionally. Remove the meat from the refrigerator 20 minutes before you want to start grilling.
2. Prepare a charcoal fire or set a gas grill to medium-high, close the lid, and heat until hot -- about 10 to 15 minutes.
3. Remove the thighs from the bag and discard the marinade. Grill the chicken until it's no longer pink inside, about 4 to 5 minutes per side on a gas grill. Transfer the chicken to a cutting board and let it rest for about 5 minutes before cutting it into 1/2-inch strips.
4. Lightly brush both sides of the tortillas with vegetable oil. Grill them on each side until they turn slightly brown, about 1 minute on a gas grill. Before removing the tortillas from the grill, sprinkle each one with 1 tablespoon of cheese.
5. To serve, layer the tortillas with shredded lettuce, the chicken strips, the remaining cheese, and any additional toppings. Serves 6 to 8.
Source: FamilyFun.com