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Health Insurance News

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2017 Covered California Rates Surge
2017 Covered California rates surge 13.2%. The health insurance marketplace, where California residents can go to shop for coverage and possibly receive premium assistance, will end it’s two year run sans a double digit rate increase. Furthermore, the sharp increase will likely play a significant role during this year’s upcoming presidential election.

The Reason

The spike in Covered California rates was driven by its two largest insurers, Blue Shield of California & Anthem Blue Cross. Blue Shield of California said its average hike was 19.9%, the biggest statewide increase. Meanwhile, Anthem Blue Cross averaged an increase of 17.2%. Together, the insurance carriers account for roughly half of Covered California’s enrollment. Peter Lee, Covered California’s executive director, said prices for 2017 reflect the rising cost of care, not efforts by insurers to increase their profits. Furthermore, proponents of Obamacare will argue that federal subsidies spare most consumers from the full impact of the premium increases.

Additionally, lenient rules for special enrollments are partially responsible for the leap in rates. The designated signup period outside of open enrollment have allowed some people to enroll only until they needed care. Insurers complain these people tend to generate more claims and higher costs.

The Silver Lining

Premium increases in California will vary widely by region and by insurance company. It could, however, force cost-conscious consumers to move to lower metal-tier plans.

Minus One

Lastly, Covered California announced United Health Group would be leaving the exchange after just one year. The nation’s largest health insurer posted significant losses in the individual market.

Below is the tentative list of insurance carriers selected for the 2017 exchange:

  • Anthem Blue Cross
  • Blue Shield of CA
  • Chinese Community Health Plan
  • Health Net
  • Kaiser Permanente
  • L.A. Care Health Plan
  • Molina Healthcare
  • Sharp Health Plan
  • Oscar Health Plan of California
  • Valley Health Plan
  • Western Health Advantage

Source: Kaiser Health News

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HHS Alters Short-Term Health Plans Regulations
Short-Term health plans are designed to fill brief gaps in health coverage. Generally, they are often used by people who are between jobs or need a temporary solution until they can get a standard health plan. However, these plans have recently come under scrutiny. The Department of Human & Health Services (HHS) published a proposal to alter specific regulations on short-term health plans which focus on improving the risk pools.

Currently, short-term plans (STP) are not subject to any of the rules enforced by the ACA. For example, STPs can be priced based on an individual's health status. Carriers can deny coverage for pre-existing conditions. In addition, STPs do not have to cover 'Essential Health Benefits', such as maternity and prescription drug coverage. Lastly, insurers have the ability to limit the maximum amount the plan will pay. All of these practices are illegal under the Patient Protection & Affordability Care Act (PPACA).

Short-term plans are generally purchased by young, healthy people because the plans are less expensive than ACA compliant plans. Additionally, plans are currently available with coverage terms up to 12 months. So even though short-term plans offer less comprehensive coverage than ACA plans, it is still a way for individuals to cover an unforeseen medical need at a cheaper price. Furthermore, people can renew these plans at the end of the term removing any concern of having a lapse in coverage.

What Regulations Does HHS Want To Alter?

The Department of Labor, Department of Treasury, and Department of Health and Human Services (HHS) issued a proposed rule to revise the definition of short-term coverage. Under the new regulations, short-term health plans:

  • may only be offered for three months or less,
  • cannot be renewed at the end of the three month period, and
  • insurers must provide notice to consumers that short-term coverage is not minimum essential coverage, therefore, the consumer will still owe a tax penalty.

Stability of the Risk Pool

Short-term health plans appeal to mainly young and healthy individuals. HHS' proposal to integrate these regulations could be key in limiting the use of short-term plans and attracting this demographic to insurance marketplaces. With affordability a top priority for consumers, the influx of these healthy consumers may help offset the risk added by the sick and elderly. The result can potentially mean lower premiums for everyone on the exchanges.

Other HHS Focus Areas

Maturing the Risk Adjustment Program

The objective is to reduce incentives for insurers to design products that attract a disproportionately healthy risk pool. Risk adjustment allows them to design products that meet the needs of all consumers.

Transitioning Consumers to Medicare

The objective is to enhance senior programs to ensure consumers understand the steps required to transition to Medicare.

Implementing the Special Enrollment Confirmation Process

In order to get coverage outside of open enrollment, consumers will need to have experienced a 'Qualifying Life Event (QLE)', such as the birth of a child. In order to be eligible for a 'Special Enrollment Period', consumers will be asked to provide significant documentation to prove eligibility, such as a birth certificate in the example above.

Reducing the Impact of Data Matching Issues

To ensure access to coverage and financial assistance are limited to individuals who are indeed eligible. Additionally, prevent the loss of coverage or financial assistance through the Marketplace due to difficulty navigating the data matching process.

Source: CMS.gov

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Affordable Care Act Open Enrollment
With the Affordable Care Act open enrollment currently underway, there seems to be a lot of confusion as to when individuals can apply for health insurance (via an exchange), and when their coverage will actually be effective. People assume they can apply anytime throughout the year, and their coverage will be effective on the first of the following month. This is completely inaccurate, and you could be hit with the new tax penalty for not having adequate health coverage, which is why it is important you understand when the open enrollment window opens and closes each year.

First, let me start by saying when I talk about “open enrollment”, I am referring to the Affordable Care Act open enrollment only. I am not referring to Medicare open enrollment or small group open enrollment. Individuals can still call their insurance broker and get health insurance coverage through the private insurance market, as they did pre-Obamacare. The open enrollment I will be talking about is for obtaining health insurance coverage via the newly created, state-run health insurance exchanges, ie. CoveredCA in California.

Open Enrollment & Effective Dates

For people who apply for health insurance through a health insurance exchange, they would do so during open enrollment. Open Enrollment will occur once a year. The “Initial” Annual Enrollment Period is longer than it will be in subsequent years to allow people more time to learn the exchange’s system, health plans and how to enroll. The table below illustrates the open enrollment dates as well as the effective dates of coverage depending on when you apply.

The Affordable Care Act Key Enrollment Dates

  TIME FRAME IF YOU ENROLL… YOUR EFFECTIVE DATE IS…
“Initial” Annual Enrollment Period October 1st, 2013 to March 31st, 2014 On or Before December 15th, 2013 January 1st, 2014
    Between the 1st and 15th of the month The first day of the following month
EXAMPLE: A person who enrolls on January 3rd will have an effective date of February 1st.
    Between the 16th and the last day of the month The first day of the second following month
EXAMPLE: A person who enrolls on January 23rd will have an effective date of March 1st.
Annual Enrollment Period October 15th, 2014 to December 7th, 2014 AND every year thereafter January 1st of the following year
*The information in this table has been compiled from different sources such as Coveredca.com, California’s health insurance exchange. You should always confirm your state’s open enrollment dates as they may be different from the dates above.

Special Enrollment Periods

There are certain situations when you will be eligible to enroll in a plan on an exchange outside of open enrollment. You may be eligible if any of the following events occur:

  • An individual or dependent loses Minimum Essential Coverage (MEC)
  • An individual gains a dependent or becomes a dependent through marriage, birth, adoption or placement for adoption
  • An individual who was not previously a citizen, a national or a lawfully present individual gains such status which makes them newly eligible for coverage
  • An individual’s enrollment or non-enrollment in a Health Insurance Exchange Plan is unintentional, inadvertent or erroneous and is the result of the error, misrepresentation or inaction of anyone involved with the exchange or the Department of Health and Human Services
  • An individual is determined newly eligible or newly ineligible for premium assistance or has a change in eligibility for cost-sharing reductions, regardless of whether the individual is already enrolled in an exchange Health Plan
  • An individual whose existing coverage through an eligible employer-sponsored plan will no longer be affordable or provide minimum value
  • A qualified individual or enrollee gains access to “Exchange” Health Plans as a result of a permanent move
ENROLLMENT DATE BASED ON SPECIAL QUALIFYING EVENT COVERAGE EFFECTIVE DATE
Between 1st and 15th of the month First day of the following month
Between 16th and last day of the month First day of the second following month

What’s The Penalty For Not Having Health Insurance?

The tax penalties will begin in 2014. If you’re uninsured for more than three months in 2014, you could incur the tax penalty, which would be applied when you file your 2014 income tax return.

The penalty is phased-in over a three year period.

  • In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
  • In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
  • In 2016, the penalty will be at the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $$2,085 per family).

After 2016, the penalty will be increased annually by the increase to the cost-of-living. People may qualify for an exemption to the Affordable Care Act’s mandate to purchase qualifying health coverage, in which case they would not be subject to a tax penalty. People can apply for exemptions if:

  • they have financial hardships,
  • if they’re uninsured for less than three months,
  • religious objections,
  • if they’re an American Indian,
  • if they’re an undocumented immigrant,
  • if they’re incarcerated.

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Health Care Reform FAQs
If you have questions about what the Affordable Care Act means to you, you are not alone. There are new tax penalties, government subsidies and health insurance plans will be different starting in 2014. With “open enrollment” around the corner, I have compiled a list of “Health Care Reform FAQs” to help guide you.

What is Health Care Reform?

The Affordable Care Act is a federal statute signed into law by President Barack Obama on March 23, 2010. It aims to increase the quality and affordability of health insurance coverage for Americans, and reduce the costs of health care for individuals and the government. Other names heath care reform is commonly called: ACA, PPACA, Obamacare, Affordable Care Act.

Do I Have To Get Health Insurance Next Year?

Most people will be required to obtain basic health insurance coverage beginning in 2014, or pay a penalty until they do. The tax penalties start in 2014 and increase over time. However, individuals may be eligible for an exemption if affordable coverage is not available. Learn more about penalties

What are Health Insurance Exchanges?

Health Insurance Exchanges are new marketplaces where individuals and small businesses* can shop for health coverage starting in 2014. They will consist of a set of state-regulated and standardized health care plans from which individuals and small businesses can purchase coverage and potneitally be eligible for federal subsidies.
(The exchange for small businesses, called the “Small Business Health Options Program” or SHOP, will be available in 2015

Can I Keep My Current Health Plan?

Figuring out whether you need to reapply for a different health plan in 2014 will depend on whether your current plan meets the ACA’s requirements and if your health plan is “grandfathered”. The transition process will vary from insurer to insurer, but it could happen in one of three ways:

  • 1) Inform Only: the insurer will notify you that your current plan does not meet the ACA’s essential health benefit requirement, and you may not qualify to avoid the tax penalty next year. They may offer different options so you are compliant, but they may elect to allow you to stay on your current plan.
  • 2) Re-Enroll: your insurer carrier will contact you to help you enroll in a new metallic benefit plan that is ACA compliant.
  • 3) Auto-Enroll: your insurance carrier will notify you that they’re moving you to a metallic benefit plan automatically and will require no action on your part.

The bottom line is, there are no standard guidelines, and how each carrier handles the transition will be different. Be proactive and contact your insurance carrier to see how they will process your specific health plan.

Will Health Insurance Cost More in 2014?

Possibly. For some individuals, costs may go up, while for others, costs may go down or stay the same. It is important to understand that you can still purchase health insurance as you do now through an insurance agent or directly from the insurance carrier. However, if you qualify for federal subsidies, the health plan must be purchased through the state’s health insurance exchange.

Can I Be Declined For Pre-Existing Medical Conditions?

Beginning January 1, 2014, insurance companies will not be able to decline your application for health insurance because you have a pre-existing medical condition, or for any other health-related reason. If you have been declined and are looking for health insurance coverage prior to January 1, 2014, we encourage you to contact us to discuss your options, and to see if we can get you coverage elsewhere.

Will The Affordable Care Act Affect My HSA?

Some changes were made to Health Savings Accounts (HSAs) and how they work as a result of the Affordable Care Act. First, people will no longer be able to use money in their HSA account to buy over-the-counter drugs. Also, if you withdraw funds from your HSA for something other than a “qualified medical expense”, the early withdrawal penalty increases from 10% to 20%.

What’s The Penalty For Not Having Health Insurance?

The tax penalties will begin in 2014. If you’re uninsured for more than three months in 2014, you could incur the tax penalty, which would be applied when you file your 2014 income tax return.

The penalty is phased-in over a three year period.

  • In 2014, the penalty will be the greater of 1.0% of taxable income or $95 per adult and $47.50 per child (up to $285 per family).
  • In 2015, the penalty will be the greater of 2.0% of taxable income or $325 per adult and $162.50 per child (up to $975 per family).
  • In 2016, the penalty will be at the greater of 2.5% of taxable income or $695 per adult and $347.50 per child (up to $$2,085 per family).

After 2016, the penalty will be increased annually by the increase to the cost-of-living. People may qualify for an exemption to the Affordable Care Act’s mandate to purchase qualifying health coverage, in which case they would not be subject to a tax penalty. People can apply for exemptions if:

  • they have financial hardships,
  • if they’re uninsured for less than three months,
  • religious objections,
  • if they’re an American Indian,
  • if they’re an undocumented immigrant,
  • if they’re incarcerated.

When Is Open Enrollment?

Open enrollment for purchasing coverage through the exchange begins on October 1, 2013. The new plans will be effective January 1st, 2014. Open enrollment ends on March 31st. If you miss open enrollment, your ability to enroll in health insurance may vary from state to state. It may be limited to the occurrence of a “qualifying event,” such as the loss of a job, a marriage or divorce, a move, or the birth of a child.

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What businesses need to know about ACA
The Affordable Care Act includes new health care reform that will affect small businesses. Understanding the mandates can help both self-employed individuals and small employers better navigate the law and help ensure compliance moving forward. The list below provides a snapshot of some of the important mandates that may impact your small business in 2014.

1) Health Insurance Exchanges For Small Businesses (SHOP)

Health insurance exchanges are new marketplaces where small businesses can shop for health coverage starting in 2014. The marketplace within the exchange for small businesses is called the “Small Business Health Options Program” or SHOP. States will have different names for their respective exchange. For example, California’s health insurance exchange is named “Covered California”, however, each exchange will have a SHOP within it for small businesses to purchase coverage.

2) Open Enrollment

Open enrollment for purchasing coverage on the SHOP begins on October 1, 2013. Small businesses can purchase plans through the SHOP or the traditional market at any time of the year.

3) Essential Health Benefits

All health plans in the small group market, both inside and outside of the exchanges, must offer the 10 “essential health benefits” categories that include services, emergency services, hospitalization, maternity and newborn care, and preventive and wellness services.

4) Standardized Levels of Coverage

Beginning 2014, all small group health plans will fall into four levels of coverage: bronze, silver, gold and platinum. These levels represent the “actuarial values” the plans must meet, 60%, 70%, 80% and 90% repectively. The acturial value represents the anticipated share of costs a plan will cover. The overall intention of grouping plans by these levels is to allow people to more easily compare plans with similar levels of coverage.

5) Employer “Pay or Play” Rule

Most small businesses will be exempt from the “Pay or Play” rule, which requires businesses with 50 or more employees to offer health care coverage to their employees or pay a penalty tax. For guidance on determining your employee total for the purposes of this rule, you can call us at 888.430.7510

6) Tax Credits

Employers with 25 or fewer full-time equivalent employees who are paid an average annual salary of less than $50,000 may be eligible for a tax credit covering up to 50% of the cost of premiums. Starting in 2014, health coverage must be purchased inside the SHOP in order to receive the credit.

7) ACA Taxes

While the ACA provides tax credits for qualifying small businesses, it also taxes plans to pay for subsidies and finance high risk individuals. The 2 new taxes beginning in 2014 are:

a) Health Insurer Tax: This tax will be approximately 2.3% of premiums.

b) Transitional Re-Insurance Tax: From 2014 to 2016, this tax funds programs to finance the cost of high risk individuals and is expected to represent 1.5% of premiums.

8) Small Group Redefined

The Affordable Care Act changes how small groups are defined. Starting in 2014, 1 to 50 employees will constitute a small group in California. In 2016, this number will expand to 1 to 100 employees.

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