Since
enactment of the Patient Protection and Affordable Care Act (ACA) in 2010,
there has been speculation that the law will result in an increasing number of
smaller employers offering self-insured plans.
So
far (up to 2013, the latest data available), there is no evidence that they are
doing so, according to new research by the Employee Benefit Research Institute
(EBRI).
The
EBRI analysis finds that the overall percentage of American workers in
self-insured plans has been rising in recent years, compared to pre-ACA.
Specifically, in 2013, 58.2% of workers with health coverage were in self-insured
plans, up from 40.9% in 1998. Large employers (with 1,000 or more workers) have
driven the upward trend in overall self-insurance.
However,
EBRI found there is no evidence that smaller firms were increasingly
self-insuring their health plans. The percentage of workers in self-insured
plans in firms with fewer than 50 employees has been close to 12% in most years
examined in the analysis going back to 1996.
The
percentage of American workers in self-insured plans in 2013 ranged by
state/federal district from a low of 35.5% to a high of 73.5%. Hawaii (at 35.5%)
was the only state with fewer than 40% of workers with health insurance in
self-insured plans. In four states and the District of Columbia (California,
New York, Rhode Island, D.C., and Massachusetts), between 40% and 50% of
workers with health insurance were in self-insured plans. Only two states
(Indiana and Nebraska) had more than 70% of workers with health insurance in
self-insured plans.
Some
employers think that components of the ACA, such as the strict grandfathering
requirements; the minimum-creditable-coverage requirement; the breadth of
essential-health benefits; the taxes on insurers, medical-device manufacturers,
and pharmaceutical companies; the affordability requirements; and the reinsurance
fees will all drive up the cost of health coverage. To the degree small
employers are concerned about the rising cost of providing health coverage, self-insurance
may become a more attractive means to mitigate any expected regulatory cost
increases.
The full report,
“Self-Insured Health Plans: State Variation and Recent Trends by Firm Size, 1996‒2013,”
is published in the June 2015 EBRI Notes, online at www.ebri.org.
The Financial Planning Coalition has endorsed the Department
of Labor’s proposed fiduciary rule. The coalition is comprised of the Certified
Financial Planner Board of Standards, the Financial Planning Association and
the National Association of Personal Financial Advisors.
“Secretary Perez and the Department of Labor have developed
a comprehensive, carefully constructed fiduciary rule that will secure critical
protections for American retirement savers and preserve financial advisers’
flexibility and adaptability, regardless of business model,” the coalition said
in a statement. “This proposal to update a 40-year-old rule is long overdue,
especially given significant, historical changes to retirement planning,
requiring Americans to be more responsible than ever for making complex
retirement saving and financial decisions.”
The coalition also said that Americans deserve to receive financial advice that
is in their best interests and that it hopes the rule is implemented soon.
However, the coalition plans to recommend some clarifications to the rule in a
comment letter.
Last year, the coalition issued a white paper, “Consumers
Are Confused and Harmed: The Case for Regulation of Financial Planners,” that
outlined many of the reasons why the group believes an updated fiduciary rule
is necessary. The report noted that “Americans receive financial advice from
advisers who use a wide range of titles and are subject to different, often
inconsistent, regulatory and ethical standards [resulting in] financial planner
professionals largely unregulated or under-regulated. As a result, many
consumers have great difficulty selecting a financial planner and are harmed when
they receive narrowly focused advice, single product solutions or advice that
is not in their best interest.”
The Financial Planning Coalition conducted research and
found that “over 100,000 financial service providers incorrectly self-identify
as members of the financial planning practice, but do not actually offer
comprehensive financial planning services. Lack of regulation of financial
planners allows significant numbers of advisers, spurred by economic
incentives, to hold themselves out to consumers as financial planners or
providing financial planning services without meeting basic competency and
ethical standards. Consumers are confused by the many titles that financial
services providers use, which in conjunction with industry misrepresentation, makes
it difficult for them to find competent and ethical financial planners.”
The white paper noted that there are three primary types of
financial planners, each of whom is subject to different regulations. The
financial planner who provides advice is regulated under the Investment
Advisers Act of 1940 and is subject to registration either by the Securities
and Exchange Commission (SEC) or the states, depending on the amount of assets
they manage. They are held up to a fiduciary standard of putting the interests
of their clients first.
Brokers are regulated under the Securities Exchange Act of 1934, must register
with the Securities and Exchange Commission (SEC) and become a Financial Industry Regulatory Authority (FINRA) member. FINRA only requires them to recommend
suitable securities to their clients. A financial planner who sells insurance
products must be licensed by a state insurance department as either an
insurance sales agent or an insurance consultant or adviser. “Unfortunately for
consumers, this lack of regulation leaves significant gaps in the oversight of
the delivery of financial planning services,” the Financial Planning Coalition
said. “The current regulatory scheme that allows for non-fiduciary advice,
dependent upon the services provided or the licenses or registrations held, is
not appropriate or sufficient to fully protect consumers.”
The coalition noted that the “CFP Board has been a leader in
protecting consumers and promoting excellence in the profession by establishing
competency and practice standards, as well as a code of professional conduct
through the Certified Financial Planner certification” and that today, there
are more than 70,000 CFPs throughout the U.S. The new fiduciary rule would hold
all financial planners up to this standard, the coalition said. “Establishing
clear qualifications and standards for financial planners—similar to the
standards established by the CFP Board—will enable consumers to distinguish
between financial planners who are able to provide competent, comprehensive and
ethical advice and those who offer limited product solutions without regard for
the client’s broader financial interests.”
Earlier this year, the coalition issued its interpretation of the fiduciary rule, noting that under DOL’s proposed definition, a fiduciary
adviser is “any individual receiving compensation for providing advice that is
individualized or specifically directed to a particular plan sponsor, plan
participant or IRA owner for consideration in making a retirement investment
decision. The fiduciary can be a broker, registered investment adviser,
insurance agent or other type of adviser. It is important to note that the DOL
will determine who is a fiduciary based not on the adviser’s title, but rather
on the advice provided to the client.”
The DOL, the coalition said, excludes some areas from the
fiduciary obligation, namely, “general education on retirement savings,
order-taking and brokers who pitch to large plans with a degree of
sophistication.”
The DOL’s rule, the coalition continued, also “includes new,
broad, principles-based prohibited transaction exemptions (PTEs) that can
accommodate a range of evolving business models,” such as the “best interest
contract exemption [in which] advisers and firms must enter into a contract
with their clients that: commits the firm to enter into a contract with their
clients that: commits the firm and adviser to providing advice in the client’s
best interest; warrants that the firm has adopted policies and procedures to
mitigate conflicts of interest; and clearly and prominently discloses any
conflicts of interest that may prevent the adviser from providing advice in the
client’s best interests.”
Comments received about the DOL’s proposed fiduciary rule can be found
here.