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RBS (REGULATORY BUDGET SENTINEL)

HEALTH CARE SPENDING CAUSES AMERICANS TO DELAY RETIREMENT
By: Nicola Crean, CHS Marketing Coordinator

In the past, early retirement was looked at as a fortunate occurrence in someone’s life. After working majority of their adulthood, they had the benefit of leaving the workforce prior to the government’s typical age of retirement.

Recently, however, more Americans are considering staying at their jobs longer then they necessarily have to in order to better prepare financially for retirement. Although the rise in the cost of living plays a role in this decision, many employees are unable to cover their health care without help from their employee-sponsored plans or Medicare.  

The Employee Benefit Research Institute (EBRI) reports that over half of retirees surveyed do not believe that they have enough saved to cover their health expenses. Additionally, 53 percent of employees surveyed that are still employed report that they will continue working in order to remain on their company’s insurance plan.

Any individual that decides to retire prior to the age of 65 is not eligible for Medicare, and they can no longer receive any coverage through their old job. While there are options available, the cost can be extremely crippling to those who may not have enough money saved for retirement as it is.  

“People are forced to go out on to the open market and try to navigate an expensive, complicated landscape,” says AARP’s Nicole Duritz in a CNBC article. “And there is no guarantee right now that they will find coverage, affordable or at all.”

Katherine Dean, national director of wealth planning for Wells Fargo Private Bank, has seen retired individuals pay between $5,000 and $15,000 per month for healthcare. Financially affording this type of coverage, in addition to paying for basic living costs is unlikely if there was not any retirement planning in place.

“There needs to be a better acknowledgement that paying for health care in retirement is a pretty major issue and something they need to incorporate as part of their (financial) plan,” said Dean. “The next step is to do an estimate as to what these costs will be and incorporate it into the plan.”

Individual’s health can fluctuate almost as much as medical costs, but there are still some ways to estimate what needs to be saved prior to retirement.

According to the CNBC article, Americans are still required to cover 40 percent of the out-of-pocket cost even when Medicare kicks in. The EBRI says that the average, healthy 65-year old couple will pay approximately $163,000 in out-of-pocket expenses. With inflation costs, this number can increase.

Experts say the best way to prepare for retirement is being realistic of the expenses that lie ahead. Ignoring medical costs is not an option. Instead, it is essential to account for health care savings within every retirement plan.

The AARP Public Policy Institute and Georgetown University released a report forecasting what Americans need to prepare for in terms of health care coverage costs. The study looked at how medical expenses have increased over the last twenty years. The study found that between 2000 and 2010, spending grew approximately 6 percent annually, which was much high then the rate of inflation.

Experts believe that this trend will not slow down any time soon. Instead, the report estimates that individuals must expect that about 18 percent of their household income will have to be devoted to health care expenses. This is significantly higher than the 8 percent that current retirees have had to devote to medical.

The best way to minimize health care expenses later in life is by maintaining a healthy lifestyle. While Americans may not be able to control what insurance companies or the government is charging for coverage, they can help to avoid chronic illnesses and the additional cost that comes with them.

“Good health is like money in the bank” said Cara Sjodin, vice president of health wealth advisor services with OptumHealth Financial, in an article published on Fob Business’ website. “For most people, adopting a healthy lifestyle and taking care to manage any chronic conditions today can potentially lower future health care costs.”

PATIENT CARE AND REDUCING COSTS ARE FOCUS OF PALLIATIVE CARE PROGRAMS

By: Nicola Crean, CHS Marketing Coordinator

As the Baby Boomer generation ages, the U.S. is faced with the challenge of preparing for obstacles that come with an aging population. Covering healthcare spending is a major concern, and the government, along with the healthcare industry, has looked at how to improve the quality of care, while being cost efficient.

Palliative care, a newer medical field, looks to improve patients’ overall level of satisfaction and comfort. This is a growing area that finds ways to improve quality of life for those suffering from chronic illnesses. 

The biggest misconception about palliative care is that it is only offered to patients that are dying. Amy Abernathy, assistant professor of medicine at Duke University, stresses that this type of care can be introduced soon after a patient is diagnosed with a disease, before it ever becomes terminal.

“One of the really important characteristics of palliative care is that you don’t have to reject curative care,” said Abernathy in an article published in the NewsObserver. “It just puts a special focus on your health care to help fortify quality of life.”

Any American suffering from a chronic illness will undoubtedly face large medical bills. In some situations, the bills can carry on even after the person has died. Experts have long debated if these high costs are attributed to unnecessary procedures being performed even when the outcome may be inevitable.

Many factors can contribute to doctors continuing to take curative measures on very sick patients. However, there has been more discussion recently on ways to keep the patient comfortable, while avoiding costly, invasive procedures that may not be in the best interest of the individual.

“As a nation, we spend a disproportionate amount of health care money in the years preceding death, said Franklin Berkey, a family medicine physician at Penn State Hershey Medical Group who is board certified in hospice and palliative care medicine. “In fact, one out of every four Medicare dollars is spent for the 5 percent of beneficiaries in their last five years.”

A study released by Mount Sinai School of Medicine reports that patients with long-term illnesses will spend approximately $66,000 in out-of-pocket costs within the last five years of their life. Many individuals do not have the money to cover those expenses, which automatically puts the financial burden on others.

Berkley says that disease treatment does not necessary mean better care. Instead, hospitals are beginning to incorporate palliative care programs into their care management plan in order to focus on symptom control instead of primarily treating the disease.

This shift in thought process can ultimately lead to higher levels of patient satisfaction, while lowering costs on expensive procedures that do not affect the individual’s end result. An article published in HealthLeaders Media Online reports that incorporating palliative care programs can significantly lead to reduction in readmissions, ICU days and hospital length of stays.

“It may not immediately result in reduced costs to excite your CFO because everybody is looking for the kind of dollars that makes your eyes sparkle,” said Michael Nisco, MD, MBA, Saint Agnes Medical Center Hospital and Hospice and Palliative Care Services Medical Director, in the HealthLeaders Media Online article. “But a forward-thinking CFO is going to see this as an important thing to emphasize as the priorities of healthcare change.” 

Many hospitals are combining cure and care efforts to better treat their patients. When an individual’s outcome is inevitable, the strategy is to avoid costly procedures and work to maintain their level of comfort.  

There are many misconceptions to palliative care, but those that are in favor of this practice insist that the patient’s quality of life is the primary focus. Medical professionals agree that palliative care does not mean the patient has given up. Instead, this type of program allows them to take control of their care plan and dictate how their illness will be managed.

THERE ARE SOME BEHAVIORS YOU JUST CAN'T REGULATE.

By: Chacko Kurian

Regulations depend on carrots and sticks. If you don’t pay your taxes, there will be serious consequences – the stick. If you buy a home with a home loan, we’ll let you take the interest payment deduction on your taxes – the carrot. The HITECH Act has a number of sticks associated with the security of Protected Health Information (PHI). We at CHS will be addressing the issue of security of PHI in forthcoming articles. There is, under some circumstances, one link in the security chain that no regulation can affect -the uninformed behavior of the user. This article addresses one method where cyber criminals make unwitting users partners in a security breach.

Prior to founding Apple Computers, the Steves (Wozniak and Jobs) could be found ripping off Ma Bell using a blue box to make long distance phone calls (domestic and international) for free. The subculture that reveled in this activity called “phreaking” was probably the progenitor of the subculture of hackers who, today, like to hack computer systems just because they’re there. There is the story of Steve Woz(niak) actually making a “phreak” phone call to the Vatican and asking to speak to the Pope while pretending to be Henry Kissinger with a think German accent. These are the guys who later found legal ways to take your money.

Before the age of digital telephone switching systems, telephone switches reset trunk (long distance) lines with a tone at a specific frequency – 2600Hz. This meant that the trunk line was disconnected at one end and available for dialing at the other end. The dialing was also accomplished by tones at preset multiple frequencies. How did one get those frequencies? Legend has it that the 2600Hz frequency was discovered by accident by Joe Engressia, known among phreakers as ‘Joybubbles’, at the age of 7! He was apparently able to whistle at that frequency and so attach himself to the dialing end of an available long distance line.

But how does one progress from knowing that you could get a trunk line to using it to make free long distance calls. In 1954, the then undivided Bell System published an article in the Bell System Technical Journal about the basics of signaling using multi-frequency tones. This piece of information by itself was of little use. The second and final piece of the puzzle was published, again courtesy of Ma Bell, in the November 1960. Bell System Technical Journal in an article called “Signaling systems for control of telephone switching”. This article published the actual multi-frequency tones used to control the switches. From that information to the creation of the reputed “Blue Box” that became a clandestine product was a short step. With one of these boxes, anybody was able pick up a phone and make free long distance calls.

To be able to win this questionable prize, the phreaker required two pieces of information and they were found in two locations, but once they were combined, the information became quite powerful. Today – cybercriminals put two pieces of information discovered from different locations together to achieve their nefarious goals..

Spear Phishing is the technique by which pieces of information stolen from different locations are put together, by cybercriminals, to steal your identity, your money and anything of value. How does this work? Unlike the shot gun approach taken by those Nigerian scam artists who send out millions of emails, the Spear Phisher is looking for prey with a small email blast to very targeted prospects. All they need to start the process is one piece of information – your email address and sometimes your name. They don’t need anything like a credit card number, the password to your on-line bank account or your social security number– well, not yet. The attack is quick and over in less than a day, before security and software companies have an opportunity to react.

A typical Spear Phishing attack starts with an email that comes to you and looks something like this, courtesy of the Microsoft Safety and Security center

Remember they already have your email address and sometimes your name so the “Hello” salutation is not so innocuous. It looks very familiar but the highlighted items should make you suspicious. If you examine the links you will find that they link to unsecured and unfamiliar sites as shown below:

Once you click on the link and enter the information they’re asking for, they’ve got you.

Another variation of this technique is to send you an email making you an offer that sounds reasonable on the surface, but requires you to open an attachment with the details of the offer. Again, once you open that attachment, they’ve got you. What happens behind the scenes is that the attachment has a robot program that can do almost anything that they want it to do. It can install a keystroke logger and send your internet banking or credit card passwords to the cybercriminal. It can give control of your computer over to the cybercriminal and so enable more of these schemes to be run from your computer. The possibilities are endless.

Sometimes the Spear Phisher makes the email look like its coming from your boss – again remember he has email addresses and names. The email may require you to give up password and other authentication information in order to perform a “security audit” or an “account verification”.

Key to making this criminal endeavor work is that it requires your participation to either provide the missing information or open the attachment. So the best defense it to verify the email by contacting the sender by phone or alternate method if the email looks suspicious. A good antivirus program installed on your computer can help too.Remember for the scheme to work it requires your participation.

We might as well brace for a number of these email attacks. Recently Epsilon, a division of Alliance Data suffered an illegal entry on its client’s email databases. This is the company that processes marketing communications for loyalty programs like Marriott Rewards, Citibank Advantage and many other large organizations. Imagine the rich information for cybercriminals that email addresses, names and loyalty program associations can provide. If you belong to the Marriott Rewards program like I do, expect an incredibly valuable offer to come to you via email. Do not open the attachment even though the logo looks almost right and the text has only one or two spelling mistakes.

There’s lots of regulations coming from Washington DC these days, but I don’t think they can think one up for this.

CHS SOFTWARE UPDATE

CHS Software you may want to use

Often, we at CHS, are guilty of not informing you of products or features that we have implemented over the past year that you may want to use. This year we have rounded out our individual enrollment, billing and administration offering with a full cycle product. If you sell individual policies or sell voluntary products in addition to your regular employer sponsored group health offerings, this may interest you.

"Full Cycle" in this context means the following:
i) taking the application for enrollment of the individual/family on the web, after getting their responses to qualifying/underwriting questions,
ii) enrolling them in the plan of choice,,
iii) billing their credit card or bank account at the appropriate frequency, i.e. monthly, quarterly, semi-annually or annually,
iv) applying the payments received against the appropriate invoices
v) disbursing premium/commission and other payments to carriers, brokers/agents and other suppliers
vi) updates to Accounts Receivable, Accounts Payable and General Ledger without manual intervention after set-up.

We would like to say that all of the above happens "automatically" (a grossly over-used word) but it doesn't. It happens with minimal, but appropriate, human intervention. For example, there are checks and balances in place to make sure that premium billing adjustments owing to changes in family composition or product choices are made accurately. The web enrollment product, CHS iCoverNow, has to be customized with your logo, color palette, questions and response logic. Users of our product like it. It has allowed them to grow into areas where they couldn't before. We believe that this will interest administrators of individual health plans who sell to the public at large and may become a valuable tool in the context of health care reform.