NAIFA Blog: November 2013

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November 2013

November 27, 2013

HHS Further Delays Online Purchases of Small Business Health Insurance, Directs Small Businesses to Agents/Brokers

The Department of Health and Human Services announced today that it is further delaying—for one year—the ability of small businesses to go online through the federal exchange to purchase health insurance through the Affordable Care Act’s Small Business Health Insurance Options Program (SHOP). Instead, until November 2014, small businesses will have to rely on alternative buying procedures, including purchasing coverage directly through an insurer, and/or via paper applications.

Agents and brokers are likely to remain small business’ preferred method for obtaining health insurance.

The delay applies to federally facilitated exchange SHOP purchasing only. Online access through state-run exchanges is not affected by this announcement.

Agents and brokers will enroll small employers under the usual process, HHS said. However, if small employers want to claim the Small Business Tax Credit, they will have to choose a Qualified Health Plan (QHP) listed on the carrier’s website, the agency explained.

“Agents and brokers remain a valuable resource for small businesses in need of health insurance,” said NAIFA President John Nichols. “As the implementation of the health care law remains in flux, advisors are more important than ever and stand ready to help consumers understand and adjust to the changes.”

Posted at 01:59 PM in Health Care Reform, Health Insurance | Permalink | Comments (0) | TrackBack (0)

November 25, 2013

Sen. Shaheen: Health insurance agents and brokers are 'critically important' to ensuring robust enrollment in healthcare.gov

Sen. Jeanne Shaheen (D-NH) is urging the Obama administration to make it easier for brokers and insurance agents to enroll consumers in healthcare from HealthCare.gov.

In a letterto HHS Secretary Kathleen Sebelius, Sen. Shaheen said it is unfortunate that insurance agents and brokers are experiencing barriers that prohibit them from successfully helping consumers enroll. Sen. Shaheen identified three issues facing agents and brokers:

1) Contact information for local agent and broker resources should be easily accessible on the web site.

2) Both consumers and issuers need a user-friendly way to edit application records and designate that the consumer is working with a broker during the enrollment process.

3) The Administration should establish a clear path for brokers to submit applications beyond the website, such as through a dedicated call-center line or a mailing location for paper applications.

“Health insurance brokers and agents are assisting consumers and working toward our shared goal of enrolling people in health insurance. We must ensure they are able to effectively bring new people to the health insurance marketplace, which will help the Affordable Care Act work as intended,” wrote Sen. Shaheen.

Posted at 04:25 PM in Advocacy, Consumer Information, Health Insurance, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

November 20, 2013

Administration to Allow Health Care Subsidies for Off-Marketplace Consumers

The Obama Administration said yesterday that consumers eligible for health care subsidies under the Affordable Care Act may soon be able to apply for the subsidies without obtaining coverage through www.HealthCare.gov.

NAIFA has long argued that people eligible for health care subsidies should not be restricted to the government marketplaces.

“NAIFA is pleased that the Centers for Medicare and Medicaid Services is open to allowing consumers to apply for subsidies even if they obtain coverage outside of the government marketplaces,” said NAIFA President John Nichols. “This is an important fix that will allow consumers greater flexibility and more options for obtaining health care coverage.”

The decision comes as many Americans continue to have trouble using the www.HealthCare.gov portal. However, regardless of the ACA site’s technical glitches, it is important for consumers to have the freedom to use their subsidies on plans purchased outside the exchanges.

“If the goal is to provide Americans with affordable health care coverage, rather than simply bolster the marketplace numbers, then it only makes sense for those who are eligible for subsidies to be able to use the subsidies no matter where they obtain coverage,” NAIFA President John Nichols added. “In some cases, people may find that plans offered off of the government marketplaces are a better fit for themselves or their families, or may be cheaper. Why should they be stuck with a less suitable option simply because they qualify for a subsidy?”

Posted at 09:18 AM in Health Care Reform, Health Insurance | Permalink | Comments (1) | TrackBack (0)

November 19, 2013

Loosening Use-or-Lose Rule on FSAs Is a Good Move

The Treasury Department recently changed the rules for health care flexible spending accounts (FSAs) offered by many employers so that participants may be able to carry over up to $500 from one year to the next starting in 2014.

Under current rules participants must use-or-lose their FSA balances at the end of each year or within a brief grace period.

FSAs allow participants to set aside up to $2,500 each year in pre-tax income to pay for medical expenses. Some 33 million Americans take advantage of FSAs, but many younger and healthier workers have shied away from them because of concerns about losing unused balances. Changing the use-it-or-lose-it rules could encourage broader use of FSAs.

The rule is not mandatory: employers who sponsor FSAs will have the option of allowing participants to carry over up to $500.

FSAs are an important tool for advisors and their clients and could take on added significance for consumers in 2014. Analysts have projected that many people could see higher co-pays for medical services as provisions of the Affordable Care Act go into effect. Others may find a greater number of health expenses deemed “non-essential” under the ACA, resulting in higher out-of-pocket costs.

Allowing taxpayers to carry over $500 in FSA balances is a positive step, though NAIFA has advocated allowing consumers to preserve up to $2,500 per year.

Posted at 04:31 PM in Advocacy, Flexible Spending Arrangements, Health Care Reform | Permalink | Comments (0) | TrackBack (0)

November 14, 2013

NAIFA Day on the Hill - 125 Advisors Visit Congress

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Rep. David Scott (D-Ga.) addresses NAIFA members before their congressional office visits.

More than 125 NAIFA members took their advocacy message directly to Congress, yesterday. The advisors, who were in town for NAIFA’s annual political involvement and political action training session, visited more than 175 congressional offices.

They told members of Congress and their staffs that agents and advisors play a vital role in ensuring the financial security of more than 75 million American families.

The issues NAIFA members discussed with their Senators and Representatives include:

Tax Reform – The current tax rules for insurance and annuity products; pension plan contributions; and employer-provided health, disability and long-term care insurance benefit all of society as well as the people for whom they provide a financial safety net.
The Department of Labor and expansion of fiduciary duty – A pending proposal by the DOL that would place a legal fiduciary duty on all advisors could threaten the business model many NAIFA members have used to help clients and could limit consumers’ access to advice on retirement investments.
The Affordable Care Act – NAIFA supports a number of revisions to the law, including removing agent compensation from the medical loss ratio calculation, reversing the 3.8 percent tax on annuities and other unearned income, and expanding the 3:1 age rating restriction.
NARAB II – NAIFA urges Congress to pass the legislation that would ease licensing burdens that make it difficult and costly for agents to operate in multiple states.

Before the Day on the Hill, participants heard remarks from NAIFA CEO Dr. Susan Waters, NAIFA President John Nichols, the NAIFA Government Relations Team, and Rep. David Scott (D-Ga.).

Rep. Scott told NAIFA members that Congress needs to hear their stories, and only they can tell legislators how laws and regulations affect their businesses and their clients.

Posted at 10:58 AM in Advocacy, Health Care Reform, IFAPAC, Life Insurance, Tax Issues, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

November 13, 2013

Rep. Scott to NAIFA members: 'You have the nobility of purpose and trust'

Rep. David Scott

As NAIFA members convene in Washington this week for APIC/IFAPAC training and a “Day on the Hill” event, Rep. David Scott (D-GA) offered practical advice for those meeting with Congress on important industry issues: “Say the right thing” and “speak with clarity.”

Rep. Scott told NAIFA members that Congress needs information from agents and advisors “to help us make sense” of complex issues including health care and tax reform, NARAB II, and standard of care.

When discussing NARAB II, Rep. Scott advised members to tell Congress that NAIFA members have “an essential need to function in an efficient way across the states.” Reps. Scott and Randy Neugebauer (R-Texas) are sponsors of NARAB II (H.R. 1155), which would create a national clearinghouse for insurance agents and brokers to obtain approval to operate on a multi-state basis.

“You need to get (Congress) to see that if you are not able to move as your customers move, then this will impact both of you significantly,” Rep. Scott said of NARAB II. “You should not have to give up your clients.”

Rep. Scott also is a cosponsor of H.R. 2328, a bill that would remove health insurance agent compensation out of medical loss ratio calculations. Consumers need health insurance agents now more than ever, at a time of “mass confusion, mass political intrigue and lack of acceptance” regarding the Affordable Care Act, Rep. Scott said.

“All of what (NAIFA members) do affects the lives of so many, and we need that shining light of information that you folks can provide to us,” Rep. Scott said. “One of the reasons I have such great affection for your association is because…you are there at a time when (consumers) need not just insurance, but reassurance that somewhere in their lives, they will be covered when the storm hits. You have the nobility of purpose and trust.”

NAIFA CEO Dr. Susan Waters and NAIFA President John Nichols also addressed the audience, thanking them for their participation and ability to take the time away from their businesses to represent the industry.

The ability to meet with Congress provides the greatest opportunity to raise awareness of the important role our members play in securing Americans’ financial futures, Dr. Waters said. Dr. Waters also encouraged members to join NAIFA for the May 21-22 Congressional Conference, because “our message resonates with Congress.”

John Nichols, MSM, CLU, reminded NAIFA members that NAIFA “is not a leadership of one.”

Said Nichols: “We are all united together as leaders through this great federation, joined together for this common cause called NAIFA.”

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Rep. David Scott with NAIFA's Executive Committee

Posted at 10:42 AM in Advocacy, Fiduciary Standard, Health Care Reform, Health Insurance, IFAPAC, NAIFA 2013 Congressional Conference, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

November 08, 2013

Continuing Tech Glitches Prompt Some Advisors to Turn to Paper Apps

As technical problems continue to hinder consumers trying to enroll for health insurance plans through the www.healthcare.gov portal, some agents and brokers have decided to take low-tech approaches instead.

NAIFA member Ed Anderson of Edina, Missouri, reports:

We have concluded that there is not sufficient time to wait for the federally facilitated marketplace (FFM) to get their online application functional for many clients needing coverage January 1, 2014. We have begun providing clients and prospects with a hard copy of the application, and completing Appendix C so we will receive compensation on the case. For those NAIFA members stuck with clients unable to complete the online process, it is at least moving in the right direction.

There has been some confusion about whether brokers and agents would receive compensation for clients who enrolled in plans using the federal exchange paper application or the FFM call center. The Center for Consumer Information and Insurance Oversight (CCIIO) has confirmed that call center operators have been trained to accept the agent’s national producer number (NPN), and Appendix C on the paper application is used to obtain this information.

The Obama administration says that the most serious problems with the ACA website will be fixed by the end of November. Filling out the paper application or trying to get someone at the call center can be time consuming and frustrating, but for advisors with clients or prospects frustrated by the online lapses, they present options.

Posted at 02:30 PM in Health Care Reform, Health Insurance, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

November 06, 2013

Miami Herald Profiles NAIFA Member Carving a Niche With ACA Advisory Firm

A recent Miami Herald article profiles NAIFA member Mercy Cabrera and her business partner Odalys Arevalo, who have opened a health insurance agency in South Florida catering to working-class Hispanic communities.

The company provides advice and services to help clients understand their options and get coverage under the Affordable Care Act. Cabrera and Arevalo opened a kiosk in a Miami mall to connect with consumers and are engaged in a number of other community outreach efforts.

“We decided to focus on people who don’t have the means of traditional health insurance clients,” Cabrera told the Herald. “We could have gone another route, but chose to focus on the ACA.”

You can read their story on the Miami Herald web site.

The article gives a fine example of advisors making the most of the ACA and providing much needed assistance to individuals and small businesses. NAIFA has reports from members around the country who have devised a variety of strategies to help their clients and who are dealing with some of the new system’s problems.

A couple of notes on the Miami Herald article: The article says that NAIFA “opposed much of the ACA and hoped the 2012 presidential election would change or repeal it.”

NAIFA has had, and continues to have, concerns about a number of ACA provisions and how the administration is implementing them. We have been instrumental in getting some of these changed. We continue to work with Congress and regulators to address others. However, an equally important goal of NAIFA is to ensure that our members have the information and resources they need to comply with the law and adjust to the changes it is bringing.

Finally, NAIFA does not endorse presidential candidates or make contributions to their campaigns.

Posted at 04:40 PM in Health Care Reform, Health Insurance, The Role of the Agent | Permalink | Comments (0) | TrackBack (0)

November 05, 2013

Registered Reps Are Already Heavily Regulated

A New York Times personal finance column on potential regulations by the Department of Labor and Securities and Exchange Commission that would require registered representatives to provide a fiduciary standard of care to their clients claims that “it’s all too easy for stock and insurance brokers to avoid rules that require them to put their customers first….”

It seems the columnist may not have a clear understanding of how NAIFA members and other insurance advisors operate. First, they are among the most tightly regulated financial professionals on the planet. They are bound by so many rules that it would make your head spin (see more on that below).

Second, insurance advisors rely on their good reputations to ensure that they get referrals and repeat clients. Those who do not have their clients’ interests at heart are not successful in the business for long.

A regulator-imposed fiduciary duty would entail far more than simply “acting in the best interests of clients.” It is a legal requirement with potential liability costs. It could threaten business models that advisors have used to successfully serve tens of millions of clients.

The real questions are whether insurance and financial advisors should be subject to more extensive federal regulation, whether additional regulations would address real problems and whether those regulations could harm the consumers they would aim to protect.

A Common Misperception

According to the Times column, “Brokers are currently required only to recommend ‘suitable’ investments, while investment advisers must act in their clients’ best interest. The S.E.C. rule would generally put them on even footing.”

We don’t think so.

Rules and regulations imposed on registered representatives of broker-dealers go far beyond those requiring them to recommend suitable products. Registered reps must comply with dozens of rules covering nearly every aspect of their businesses, from how they communicate with clients to how they interact with senior citizens, from how they advertise to how they keep and maintain records.

The much maligned suitability standard is governed by no fewer than six Financial Industry Regulatory Authority (FINRA) rules and more than a dozen Regulatory Notices and Notices to Members. It requires registered reps to compile and regularly update detailed investor profiles for each client. Registered reps must get to know their clients and have a strong understand of their clients' interests.

Unlike a fiduciary standard, under which claims of a breach are investigated only after the fact, the suitability standard is rules-based and forward-looking. Registered reps face near constant scrutiny and annual compliance reviews by their broker-dealers. The broker-dealers, in turn, are subject to detailed FINRA examinations approximately once every two years.

For the sake of comparison, the SEC has said that it examines fewer than 9 percent of investment advisers each year, and more than a third of investment advisory firms have never undergone SEC examination.

Meanwhile, no studies convincingly show that the advice given by investment advisers is “superior” to that given by registered reps. It is unclear what problems a DOL- or SEC-imposed fiduciary regulation would address.

Furthermore, the claim that heaping additional regulatory burdens on registered reps and their clients would put them “on even footing” with investment advisers is simply not true. FINRA is not going away. Registered reps would still have to comply with FINRA rules in addition to whatever new regulations the DOL and SEC might impose.

Some in the investment adviser crowd have pushed for additional regulation of registered reps (they seem to believe having stricter regulations for those they perceive as competitors would be in their best interests), but very few have volunteered to subject themselves to the FINRA rules currently applying to broker-dealers and registered reps.

There is plenty of room for different business models and different regulatory regimes in the financial services universe. Contrary to the Times column’s claim that the industry and others are “waging a campaign against any proposed new rules,” NAIFA is not opposed to regulation. Good regulations are crucial for protecting consumers and ensuring the integrity of our members’ industry.

We simply hope that the DOL and SEC ensure that any new regulations address clear problems and do nothing to hurt middle-market investors who are largely served by NAIFA members.

Posted at 11:50 AM in Compliance, Fiduciary Standard, Regulation, Securities | Permalink | Comments (0) | TrackBack (0)

November 01, 2013

NAIFA President: Income Protection Caucus 'long over due'

NAIFA applauds the launch of the Congressional Income Protection Caucus that will focus on raising awareness about the risk of disability and encourage preparedness among all Americans.

“Many workers underestimate the risk of losing the ability to work due to illness or injury, despite the fact that fully one-third of Americans will become disabled for six months or more during their working lives,” the caucus leaders said in a letter. The Social Security Disability program often serves as the primary backstop for disabled workers, but such safety net is often “inadequate.” With the Social Security Disability Support payments averaging only $1,130 a month, Americans with disabilities are forced to rely on other public programs for assistance.

Private disability insurance will help. An economic analysis by Charles River Associates showed employer sponsored benefits such as disability insurance save the government up to $4.5 billion per year by reducing pressure on the public safety net.

“NAIFA appreciates the work of Sens. Hagan and Kirk and Reps. Fincher and McCarthy for putting the spotlight on this critical issue through their founding of the Congressional Income Protection Caucus,” said NAIFA President John Nichols, MSM, CLU, an expert and authority in disability insurance.

“With 56 million millennials entering the workforce by the end of 2014, the next tidal wave of workers need to recognize that there is a 30 percent chance of them suffering a disability to an accident or illness which could prevent them from earning an income," Nichols said. "Disability insurance needs to become a must have to help protect their capability to earn a living.”

“The Congressional Income Protection Caucusis is long overdue. Disability insurance protection is an important element that is overlooked by many. Having protection at the time of a disability provides many benefits and impacts the individual, their support system, the community and even our economy."

Posted at 01:33 PM | Permalink | Comments (0) | TrackBack (0)

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