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... an Employee Benefits, Health Care/Insurance/Funding, Consumer Driven Healthcare -  Trusted Advisor - helping organizations of all types and size reduce human capital related costs, improve morale, and maximize organizational objectives relative to wellness and health care. 

Wednesday, August 2, 2017

Individual Health Ins. When's Who's and What's

This particular blog post is primarily directed to residents of my adopted home state of Nebraska. However it may shed light on some of the "when's, who's and what's" that health care/insurance stakeholders may be facing in other parts of the country next year.

As we inch closer to the 2018 individual health insurance open enrollment season (WHEN - November 1, 2017 - December 15, 2017), we're beginning to see WHO is going to be selling individual health insurance throughout the country (in NE - Medica Health only).  Unfortunately, there are a number of counties throughout the country that will not have a health insurance seller.  Hopefully, some regulatory changes that have been implemented at the federal level...
(see - http://sstevenshealthcare.blogspot.com/2017/07/stabilizing-individual-health-ins-market.html) ...may encourage more insurers to re-enter those and other counties.

In a clear sign of the times, there are three (3) separate and distinct factors that could significantly impact health insurance cost and coverage in 2018.  Interestingly, some insurers are even resorting to filing separate sets of premium rates with the departments of insurance, that vary based on "scenario". These three (3) factors are based on whether or not the federal government...
  1. continues to collect tax penalties associated with non-compliance of the so called individual mandate (i.e., non-exempt folks that don't purchase health insurance); 
  2. continues paying insurers subsidies to offset plan related out of pocket costs such as copays, deductibles and coinsurance, for those that are eligible for such subsidies (based on income); and
  3. implements a reinsurance program to offset some of the higher costs associated with treating the chronically ill.
The impact of the rate increases filed by Medica Health in NE (and around the country by other insurers) is largely dependent on whether insured individuals are eligible for, and receive premium subsidies.  For example in NE, increases filed by Medica Health (if approved) could reach as high as 60+% (WHAT?) for those that are not currently eligible for premium subsidies (estimated at 20% of the ACA compliant insured population in NE).  Those who qualify for subsidies, which vary based on income, could see little or in some cases, no effect of the rate increases, because the subsidies increase commensurately with premium hikes.  Here are some examples:


Omaha, NE20172018
For a 25-year-old making $30,000
Premium$289.42$454.96
Subsidy$86.22$251.76
Monthly cost to member$203.20$203.20
For a 40-year-old (no subsidy)
Premium$368.40$579.12
Subsidy$0$0
Monthly cost to member$368.40$579.12
For a 60-year-old making $36,000
Premium$782.73$1,229.83
Subsidy$494.55$942.04
Monthly cost to member$287.79$287.79
Source: Omaha World Herald, Steve Jordon

At the time of this writing (August 2, 2017) these rates are merely "filed", and not yet "approved" by the Nebraska Department of Insurance.  However, recent history tells us (notwithstanding the aforementioned 3 factors) insurance department's have been approving health insurance premium rate filings.  In addition, these renewal rates provide a glimpse of WHAT new business rates might look like for those newly entering the individual health insurance market next year, and those moving from insurers like Aetna and Blue Cross Blue Shield of Nebraska who have exited both the exchange and non-exchange markets for 2018.

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Thursday, July 13, 2017

Stabilizing the Individual Health Ins. Market

Those of you who read my previously released - "7-Point Health Care/Insurance Reform Plan" - may recall point no. 2, which was to entice and encourage insurers to come back to the markets and resume offering affordable coverage to willing, able, and ready buyers. 
Several folks that read the blog outlining my reform plan posed this question - "If there are no insurers offering individual health insurance in my county (or state) in 2018 (and beyond), will the federal government still enforce the Affordable Care Act's (ACA) individual mandate; even if its impossible to secure coverage and meet the requirement"? Absent a change in law or regulations relaxing the mandate; or the return of health insurer(s) to the markets that lack any, the answer would be "yes"! This situation presents a formidable conundrum.  But...help may be on the way!

The Department of Health and Human Services (HHS) recently issued FINAL regulations (on 4/13/17, taking effect 6/19/17) designed to "stabilize the individual health insurance markets".  These regulations are primarily aimed at reducing (if not preventing) the instances of people gaming the system and waiting to purchase health insurance until healthcare is needed, and subsequently dropping coverage after treatment and charges are complete. Such manipulation of health insurance markets by some consumers has reportedly resulted in a large percentage of health insurance industry losses, compelling many insurers to "cut and run".  The old analogy of "waiting until the house is on fire before purchasing coverage" comes to mind!

Here's a summary of the new regulations, again, designed to entice insurers back to the markets:

  1.  The annual open enrollment period (AEP) for individual coverage in 2018 is changed to 11/01/17 - 12/15/17, which is shorter than previous AEP's.  This time frame aligns better with many employer plans, and Medicare/Medicare Advantage enrollment periods.
  2.  New rules apply to special enrollment periods (SEP), which are generally created upon experiencing a qualifying event, such as acquiring a dependent, a permanent move, or losing coverage.  The new rules:
    • allow insurers to require additional, expanded verification of their SEP eligibility;
    • limit enrollees ability to change metal coverage levels (i.e., increase coverage midstream) during a coverage year; and
    • adjust requirements for SEP's associated with marriage.
  3. Allows insurers to collect past due premiums for coverage that was inforce on an applicant within the past year before re-enrolling the applicant. (Note: This regulation encourages continuous coverage.)
  4. Creates more flexibility for insurers to meet ACA actuarial value minimums allowing for lower premiums and (hopefully) more coverage choices.
  5. Defers oversight of preferred provider network adequacy from the federal government to states that have the ability/means to conduct such review processes.
Those seeking the actual regulations can click here - https://s3.amazonaws.com/public-inspection.federalregister.gov/2017-07712.pdf

Many health insurance companies have already announced their intention to cease selling individual health insurance to new customers, and to terminate inforce coverage, in 2018.  Hopefully these regulations will deter further market withdrawals, and perhaps entice new entrants for 2018, 2019, and beyond!

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Monday, June 26, 2017

My 7-Point Health Care/Insurance Reform Plan

Ordinarily, this Blog site is used to provide information, ideas, strategies, explanations; in short - clarity - for health care/insurance stakeholders.  Today I'm departing from the usual fact based format to provide my thoughts and opinions on what would be a good way forward with respect to REAL healthcare/health insurance reform. These ideas are based on my 30-plus year career in healthcare financing and insurance, and are absent any political bent or particular bias.  Both the current House (passed) and Senate (proposed) bills are "patchwork efforts" designed in my opinion, to address some of the many critical issues facing healthcare delivery and healthcare financing, such as the crumbling individual health insurance markets.  But both bills, and most of what I've seen and read over the last seven years, fall perilously short of actually achieving the ambitious goals of:

1. Insuring more people
2. Lowering premiums making health insurance affordable
3. Maintaining and continuously improving quality of, and access to care 

Before I lay out my seven-point reform plan, it's important to review a very important reality.  The United States has chosen a for-profit, largely private sector, government regulated (as opposed to government controlled) healthcare system. (Note: Medicare, Medicaid, and Tricare are variations from this system, and in fact, resemble many socialized healthcare systems that exist throughout the world.)  Such a "free markets based" system differs greatly from the government run, single payer style systems implemented by our Canadian neighbors to the north, and most of Europe.  As such, we rely on, and very much need insurance companies to offer affordable coverage to the masses, in order to provide citizens with the ability to pay for their healthcare.  One of the unintended consequences of the Affordable Care Act (ACA) has been the mass departure of insurance companies from the individual market.  So priority one at this time, is to get the insurers back into the marketplaces.

Interestingly, there are discussions taking place to move our healthcare system away from its current format, to more of a "Canadian style", single payer; government-controlled system.  Such a system has numerous trade-offs associated with implementation and use.  Perhaps I will address these in a future blog post!

So here is my seven-point reform plan, for what it's worth...

1. Repeal of the more onerous provisions of the Affordable Care Act (ACA)...particularly those causing the collapse of health insurance markets (e.g. community rating, pre-existing condition ban, minimum essential health benefits mandate, standardized/metallic plans, taxes/fees, etc.)

2. Entice/encourage insurers to come back and offer affordable coverage to potential customers (Note: no.1 above will help accomplish this objective.).  One of the more urgent and important ways to do this, is to allow insurance companies to penalize, if not avoid the occurrence of individuals gaming the system and waiting to purchase coverage at the precise time they need it, only to drop coverage after all claims are paid.

3. Create separate insurance risk pools for the chronically ill and the rest of the insurance buying public. (Note: The top 1% of healthcare spenders consumes more resources collectively than the bottom 75%.)  Separating risk pools, along with no.1 above, will attract insurers back to the markets, and allow for more affordable priced coverage, and competitive insurance markets.  Appropriate funds for the creation of risk pools, reinsurance programs, and innovation of ideas to address the insuring and treatment of the chronically ill, high-risk population.

4. Reform Medicaid. Consider moving to a "block grant" funding mechanism at the federal level; and give states more autonomy and flexibility with respect to administration, innovation, and funding.  Under a block grant format, states would be given a fixed amount of funding based on spending levels, with associated annual increases tied to inflation, and the ability to determine things like covered services, eligibility for coverage, etc.

5. Continue implementing the ACA's healthcare delivery reforms, which seek to move reimbursements away from fee for service, to fee for value.  The so called Accountable Care Organizations (ACOs) created by the ACA seek to reimburse providers based on standards such as quality of care, outcomes, and patient satisfaction, instead of the sheer volume and amount of care provided.  As healthcare costs decline, health insurance premiums will follow suit.


6. Place a federal limit on medical malpractice punitive awards, and allow states the flexibility to have even lower ceilings based on merit and circumstances.  The mere threat of unreasonable medical malpractice litigation results in a chain of events which cause health care and in turn, health insurance costs to spiral.  In addition, healthcare providers are sometimes compelled to order/perform procedures they might not necessarily conduct, just to build a preemptive litigation defense. Part of this particular reform effort could include the creation of medical standards of care, which if followed, would remove any liability.

7. Expand upon the "consumer driven health" initiative, including the expansion and relaxing of the use of Health Savings Accounts (HSAs).  It's extraordinarily important for healthcare patients to act more like customers; and consider cost, quality, and outcomes in reaching important healthcare related decisions.  Also, creating multiple funding sources for both lower cost/predictable and higher cost/catastrophic healthcare expenses makes more sense for everyone.  For example, it makes absolutely no sense to "insure" and rely upon insurance, for a $4 prescription drug, a $125 physician consult, or a $50 chiropractic care visit.

Some of the aforementioned points are included, and/or addressed in the current House (American Health Care Act), and Senate (Better Care Reconciliation Act) bills.  For example, each of the bills addresses Medicaid and repealing most of the ACA's fees/taxes.  But in my opinion, these bills fall woefully short of achieving the comprehensive overhaul of our healthcare system that is so desperately needed.  Stay tuned!

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Thursday, May 25, 2017

IRS Announces 2018 HSA Adjustments


Recently the IRS issued it's anticipated Health Savings Account (HSA) guidance for calendar year 2018.  Listed below are the changes to current IRS rules affecting HSAs, and qualified high deductible health insurance plans, effective in 2018:

  • HSA Contribution Maximum (Individual/Self Only Coverage): $3,450 ($3,400 in '17).
  • HSA Contribution Maximum (Family Coverage): $6,900 ($6,750 in '17).
  • HSA Annual "catch up" contribution amount for eligible individuals 55 years of age and older remains $1,000.

HSA Qualified High Deductible Insurance coverage changes:

- Minimum deductible/Self Only Coverage/Non-Embedded Deductible*: $1,350 ($1,300 in '17)
- Minimum deductible/Self Only Coverage/Embedded Deductible*: $2,700 ($2,600 in '17)
- Minimum deductible/Family Coverage/Embedded and Non-Embedded Deductible*: $2,700 ($2,600 in '17)

- Out of Pocket Maximum/Self Only Coverage: $6,650 ($6,550 in '17).
- Out of Pocket Maximum/Family Coverage: $13,300 ($13,100 in '17).

Note: The Affordable Care Act's (ACA) out of pocket limits placed on non-grandfathered health insurance plans impacts an HSA qualified plans family out of pocket maximum as follows:
  • For self-only and families with an embedded out-of-pocket maximum, the maximum amounts are: $6,650 individual and $13,300 family.
  • For self-only and family with a non-embedded deductible, the maximum amounts are: $6,650 individual and $7,350 family.
  • Note: the ACA's 2018 maximum out of pocket limits applicable to non-grandfathered plans increases to $7,350 for self only coverage (from $7,150 in '17); and $14,700 for family coverage (from $14,300 in '17).
* Plans with Embedded family deductibles only require a single covered family member to meet the individual deductible amount before coverage begins.  Non-embedded (sometimes called aggregate deductible) plans require one or more family members to meet the entire family deductible amount before coverage applies.

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Thursday, May 11, 2017

PCORI Fee/CERF - payment schedule


Patient Centered Outcomes Research Institute (PCORI) Fee, also known as 
the Comparative Effectiveness Research Fee (CERF)
Fee periods and payment schedule


For CERF payments, ERISA plan year is important, and determines both the timing and amount of payment to the IRS. If your ERISA plan year and renewal date differ, the ERISA plan year should be used to calculate an employer's fee per covered life, and payment due date.  Absent an ERISA plan year, an employer should use the affected plan's renewal date.

·         Fee due July 31, 2017
PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE
Feb. 1, 2015–Oct. 1, 2015 $2.17
Nov. 1, 2015–Jan. 1, 2016 $2.26  

·         Fee due July 31, 2018
PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE
Feb. 1, 2016–Oct. 1, 2016 $2.26
Nov. 1, 2016–Jan. 1, 2017 To Be Determined (TBD) (Note: Amount increases by rate of medical inflation.)

·         Fee due July 31, 2019
PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE
Feb. 1, 2017–Oct. 1, 2017 TBD
Nov. 1, 2017–Jan. 1, 2018 TBD

·         Fee due July 31, 2020
PLAN YEAR START DATE FEE PER AVERAGE COVERED LIFE
Feb. 1, 2018–Oct. 1, 2018 TBD
Nov. 1, 2018–Future renewals Fee expires. No further payments required.

The CERF is self-reported on Excise Tax Form 720; and applies to:

Fully insured medical plans, including minimum premium plans; Self-insured group medical plans; Individual/family plans; Stand-alone behavioral health plans; Limited medical plans (also known as Voluntary or mini-med plans); Individuals on a temporary U.S. Visa who live in the U.S.; Medicare Surround and Medicare Expand policies; Retiree-only plans; Health Reimbursement Accounts (HRAs); and Flexible Spending Accounts (FSAs) if the employer contribution is greater than $500 and it is more than the employee contribution.

IMPORTANT:  Insurance companies remit CERF on behalf of fully insured group and individual plans.  Employers must calculate and remit CERF for self-funded plans and Health Reimbursement Arrangements (HRAs).

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Thursday, May 4, 2017

ACA Update - Phase 1 of 3 Toward Change




Today (May 4, 2017), the U.S. House of Representatives passed an amended version of the "American Health Care Act" or AHCA, on a 217-213 vote tally.  In and of itself, this vote DOES NOT ALTER THE HEALTHCARE/HEALTH INSURANCE LANDSCAPE!  There are a number of phases (at least 3, but likely several more procedural steps) that must be completed in order for the Affordable Care Act (ACA) to be partially repealed.  And to be clear, the AHCA would represent a partial, piecemeal repeal of the ACA, and would in fact, retain much of the ACA.  So here's where we are and what we know, as of today...

First and foremost, the AHCA is most definitely NOT a full repeal and replacement of the ACA.  If it (or a replacement/amended version) passes in the Senate, and is signed by the President, it would make fundamental changes to the ACA, but also retain a fair amount of the insurance and healthcare delivery reforms that have been implemented over the last seven years.  Here are the highlights of what the House passed today, and what the AHCA seeks to accomplish.  Note: items in red are amendments to the original version of the AHCA that never made it to a floor vote:
  •   Eliminates the EMPLOYER and INDIVIDUAL coverage mandates.
  •   Ends Medicaid expansion funding. 
  •   Changes Medicaid from an open-ended program to one that gives states fixed amounts of money per person.
  •   Replaces the ACA's cost sharing and premium cost subsidies based mostly on consumers' incomes, with tax credits that are age based.
  •   Repeals many of the ACA taxes including the medical device tax, the health insurance sector tax, and the increased Medicare payroll withholding amount affecting high wage earners. (Note: the controversial "Cadillac tax" remains in the AHCA, but is deferred to 2026.)
  •   Consumers who let their coverage lapse for more than 63 days in a year would be charged 30% surcharges to regain insurance. This would include people with pre-existing medical conditions.
  •   State waivers would allow insurers to alter ACA provisions such as essential health benefits, community rating, and benefit limitations, if approved.
  •    $8 billion allocated to States, over five years, to finance high-risk pools that cover those with pre-existing conditions.
  •   $130 billion allocated to States, over a decade, to help those that can't afford coverage.
The House of Representatives has chosen the strategy of what is known as "budget reconciliation" to accomplish the objective of a partial repeal of the ACA.  In short, this means the provisions (see above) included in the AHCA are limited only to items that are deemed to have a "direct impact on spending".  As such, the ACA's "market reforms" are not affected by the AHCA.  Using this tactic, the AHCA only requires a simple majority vote from the Senate to make it to the President's desk for signature.

Stay tuned as there is much more to come in the days, weeks, months that follow.  In the meantime, the ACA is the law of the land, and must be complied with in every respect!

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Thursday, April 6, 2017

Health Insurance Mandate(s) Still in Effect!


The Affordable Care Act's (ACA) “health insurance mandates” are still in effect, and have most definitely not been abolished.   Had the Republican party’s – The American Health Care Act (AHCA) – passed, it would have, among other things, retroactively eliminated both the Individual and Employer mandates.  As such, it did not go to a vote, and thus we still have the ACA, and its associated fees, taxes, mandates, regulations, etc.

The ACA requires taxpayers to show that they have minimum essential coverage, which includes but is not limited to Medicare, Medicaid, TRICARE, CHIP, and private health insurance obtained through an employer or the individual market. And, the individual mandate fee still applies to individuals who do not qualify for an exemption (e.g. certain hardships, some life events, health coverage or financial status, and membership in some groups). 

For both 2016 and 2017, the individual mandate penalty, if triggered, is calculated two (2) different ways, and affected individuals pay the HIGHER of :
A.      Percentage of income
·         2.5% of household income
·         Maximum: Total yearly premium for the national average price of a Bronze plan sold through the Marketplace; or
B.      Per person
·         $695 per adult
·         $347.50 per child under 18
·         Maximum: $2,085
The federal government (in this case, the IRS) has “relaxed” some of the enforcement of the individual mandate, and associated penalties.  Specifically, in February of this year (2017) the IRS stated that, starting this tax season, it will no longer systematically reject returns on which the taxpayer doesn’t indicate their coverage status. However, the agency may still follow up with questions directed to filers.

So unless and until there is a change in regulations, policy, and/or law, the individual mandate is the law of the land, and affected individuals are encouraged to comply.

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