Transitioning from the political to the public arena, thehealthcare restructuring and other legislative changes will have asubstantial impact on the insurance industry and the consumer in2011, with a different landscape for both individuals andbrokers.

2011 will bring some big changes,both internally at companiesand for the consumer as well. Although many components of the lawwon't come into play until 2014, significant portions of thehealthcare reform law took effect on Jan. 1. Every demographic willbe affected and needs to be informed about the new insurancelandscape for 2011.

Here's what lies ahead:

1. Insurance company financial accountability.Stringent regulations have been placed on insurance companies.Under the new laws, carriers that provide individual and smallgroup policies will be required to spend 80 percent of theirpremium dollars on medical services. Previously, insurancecompanies could pocket high profits without being accountable forthe level of services provided to their customers. In 2011,insurance companies will be forced to cut administrative costs andlimit corporate profits to meet the new 80 percent premium level.If they fail to do so, they are now required by law to providerebates to consumers.
2. Wellness check-ups. Specifically, co-paymentsand deductibles can no longer be charged for preventive caremedical services. This will enable all Americans to get regularcheck-ups to help detect potential health problems. When peoplewith heart disease, cancer and diabetes are diagnosed earlier,faster treatment can aid in the prevention of long-termcomplications of treatable diseases, which not only cost more inconsumer dollars, but cost people their lives,
3. Medicare Part D “donut hole.” In 2010,Medicare recipients only received a $250 reimbursement forprescription drugs. Now, seniors on Medicare will get a 50 percentdiscount on brand-name drugs while in the “donut hole,” a gap inthe Medicare Part D prescription drug coverage plan, according toYvette Bickcom, account executive at Alper Services. Medicare PartD currently covers up to $2,700 per year in prescription drugpayments, then stops paying for medications until costs exceed$6,100. This means Medicare Part D coverage recipients areresponsible for paying all their own drug costs between $2,700 and$6,100. This gap in coverage will be eliminated completely by2020.
4. Underwriting procedures will change for groupand individual employee benefits. In many states, theunderwriting form has been switched to a universal document. Inprevious years, the forms only went to one potentialcompany but now, underwriting requests will be sentto several different companies, which will create long delays.Consumers will now face a longer “limbo” time where theirapplications are being reviewed, with little to no informationabout the status. Insurance companies will have a large volume ofapplicants with little to no additional staff to support the largeinflux of applicants.
5. State unemployment tax will increase. At least46 states struggled to close shortfalls when adopting budgets forthe current fiscal year. These deficits came on top of the largeshortfalls that 48 states faced in fiscal years 2009 and 2010 sounemployment insurance (UI) funds in many states are at criticallylow levels due to the large numbers of people out of work forextended periods. Many employers will see a trend that promises tosend state employer UI contribution rates higher in 2011 toreplenish depleted UI trust funds and repay federal loans taken toallow states to continue to pay benefits. In Illinois, the UIemployer contribution and tax will increase by a factor of 5 in2011. This increase will be particularly hard on nonprofit and501(c)(3) organizations.

We look for the impact of the substantive changes to theinsurance industry to continue well past the new year as subsequentphases of the legislation and regulation continue to beenacted.

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Helen Clary is director of employee benefits at Alper ServicesLLC. Established in 1966 and headquartered in Chicago, Alper is aninsurance brokerage specializing in property-casualty, employeebenefits, personal insurance and life/financial. For moreinformation, visit www.alperservices.com.