Healthcare Reform School Lesson #17 - Options for individuals and Small Businesses

Welcome back this fine Thursday morning.  It is almost 1 month before October 1.  The big grand opening of the Health Insurance Marketplace for individuals and SHOP for small businesses.  However the insurance purchased through these marketplaces will not be effective until January 1.

By stockimages, published on 26 October 2012
Stock Photo - image ID: 100108542

Today I want to give a little advice on how middle class individuals and business owners can prepare for this by putting yourselves in good financial position and basically get a "Pass" on the first year of the high priced insurance in the Affordable Care Act.

The two biggest concerns with the law are the cost of subsides the federal government is providing to indivduals earning under 400% of the Federal Poverty Level and the cost of insurance for those earning over 400% of the federal poverty level.  This amounts to $45,000 for a single person household and $95,000 for a four person house hold.  So if you make more than that....LISTEN UP.

NOW is the time to prepare.  This is pretty simple really.  Some insurance companies are dealing with the Affordable Care Act (ACA) in hugely different ways for the first year.  There two very large insurance companies that will keep your policy the same from now until the end of 2014.  This means your policy will not change, and therefore the pricing will not be affected, by the ACA.  What a HUGE deal!  Everyone should 100% for sure try to take advantage of this by reviewing your policy with a broker to find out the real deal.  Talking directly with a captured agent will only get you the "Party Line" for his/her insurance employer.  Talking to a broker will give you a broader view of the marketplace because they know the plans for various companies and will have a much better chance of putting you in a good position for the entire year of 2014.

The smart option for Small Businesses with anywhere from 1 employee up to 49 Full Time Employees (FTE) or FTE equivalents is to move into and Health Reimbursement Arrangement (HRA).  Remember that these business owners are not legally obligated to provide insurance to employees.  However, health benefits are an effective recruiting and retention tool, so an employer that does provide benefits has advantages for employees.  In the past, a small group plan would guarantee acceptance for everyone.  In the new world of health insurance, small group plans are not necessary and will be cumbersome and expensive.

Drop your group plan, it is a Dinosaur.  Implement an HRA that allows your employees to use benefits to purchase health insurance on the public or private marketplace.  The HRA allows employers provide a specific benefits to each employer to buy health insurance and pay for health related items.  The dollar amount of the benefit amount is decided by the business owner and can be fixed.  Which means it will not be subject to changes in the premiums for health insurance.   The money paid into the HRA by the employer has 0% taxes paid on it and the employer spends it tax free as well.  The program is administered on-line and takes away the need for a large Human Relations involvement in health benefits.  Which is cost saving potential for businesses.

I am a Broker, so I can help get you a free pass on the first year of health care reform.  My hope is that during the first year of the law, our esteemed representatives figure out a way to reduce the high cost of insurance required through the ACA.  Then by 2015, you can turn in your free pass for some reasonably priced insurance.  That is a plan that kicks the can down the road...but is still the best option for many. 

And by the way, there are many simple ways to make the cost of this law lower, we just need some reasonable revisions in the insurance requirements.  So if the Federal Government would like some advice on how to do that...they should also talk to a broker!!

More to come on this world of change.  To review previous posts scroll through my past lessons below.

Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?
Lesson #10 - What Will Happen to Small Groups in 2014?
Lesson # 11 - Why Should I Buy Insurance Before the Deadline?
Lesson #12 - What does the Delay in the Employer Mandate Really Mean? 
Lesson #13 - Can I keep my Current Health Insurance Plan?
Lesson # 14 - Who is Providing Insurance During Open Enrollment?
Lesson #15 - Out of Pocket Spending Limits - Law Change
Lesson 16 - SHOP - Marketplaces for Small Businesses

Healthcare Reform School, Lesson 16 - SHOP Marketplace for Small Businesses

Hello everyone, and welcome back to school.  As our kids go back to the real deal school, many people are having more time to focus on other matters.  The fall is a busy season for health insurance and this fall will certainly be the busiest in history!

This morning I will write about the SHOP marketplace for small businesses.  SHOP stands for "Small Business Health Options Program".  This is the option that the Affordable Care Act (ACA) provides to employers to try to help them with small group insurance plans.

As part of the Affordable Care Act (ACA), small businesses will have the option to purchase a small group plan through the new small business SHOP marketplaces. The Small Business Health Options Program (SHOP) is a required program of each state's Health Insurance Marketplace. Small businesses with less than 100 employees or less than 50 employees are eligible, depending on the state. The small business SHOP marketplaces will open on October 1, 2013, with plan coverage starting January 1, 2014.

Small Business Health Care Tax Credits Through the SHOP

A key change is that the small business health care tax credits will only be available through the SHOP marketplace in 2014. Small businesses with 25 or fewer employees who receive less than $50,000 a year in wages may be eligible for tax credits if they purchase the plan through the SHOP marketplace. These credits will cover up to 50% of the employer’s cost (35% for non-profits) for the first two years of coverage.

Plan Coverage Options Through the SHOP

Depending on the state, plan coverage selection through SHOP marketplace will fall into one of three categories:

1. Employer choice: Employer selects one or more plans for employees
   
2. Hybrid choice: Employer selects metallic level, and employee selects plan from within that level
   
3. Employee choice: Employee can choose any plan that meets SHOP benefit plan requirements.
   

Starting in 2015, each state will be required to offer the "Employee Choice" option. Until that time it is an optional feature in the state marketplaces. To see if the "Employee Choice" will be offered in your state see 15 States to Offer 'Employee Choice' in Small Business SHOP Marketplace.  Illinois and Indiana are not on the list.

Source: Blue Cross Blue Shield of Illinois.

The cost of the plans available through the SHOP marketplaces will vary state to state.

This is the basic information,  I will expand on this next week and go over some options that small businesses have in addition to SHOP.

If you would like to review previous lessons.  They are listed below.  Your comments are welcome.

Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?
Lesson #10 - What Will Happen to Small Groups in 2014?
Lesson # 11 - Why Should I Buy Insurance Before the Deadline?
Lesson #12 - What does the Delay in the Employer Mandate Really Mean? 
Lesson #13 - Can I keep my Current Health Insurance Plan?
Lesson # 14 - Who is Providing Insurance During Open Enrollment?
Lesson #15 - Out of Pocket Spending Limits - Law Change

Healthcare Reform School, Lesson #15 - Out of Pocket Spending Limits - Law change

Hi students,
Welcome back to class.  Summer is nearly over and it really feels like fall here in Chicago.  The winds of change are also sweeping through the Patient Protection and Affordable Care Act (ACA)!

I had planned on writing about the Small Business Health Options Program (SHOP) part of the Marketplace this week, however I am going to delay that until next week.  If you were waiting on pins and needles to find out about it, then click on the acronym to go the their website.  The federal government dropped another bomb this week regarding the maximum out of pocket spending for qualified insurance plans and I want to explain that this week.

Built into the ACA are many form of patient protection.  One of which is a maximum limit on out of pocket spending that a patient must pay towards their overall medical care each year. This provision, originally to be implemented in 2014, specified there must be an overall limit on consumer's annual out-of-pocket costs for deductibles, co-payments, and co-insurance. The new out-of-pocket annual limits were set at $6,350/year for individuals and $12,700/year for families.  There will be some insurance plans that have lower limits on out of pocket spending, but to be a qualified plan under the ACA, this was a maximum.
But the Department of Health and Human Service (HHS) Has delayed the Out of Pocket Spending Limits.

Image courtesy of digitalphoto.net  Michelle Meiklejohn

 

Under this delay, employers and insurers with more than one benefits administrator do not have to combine their members’ out-of-pocket spending into one total until 2015.

1. The one-year postponement of the consumer out-of-pocket limits applies only to group health plans and only to plans which use multiple independent administrators to handle health insurance benefits.
   
2. Individual policies sold in the new marketplaces, or on the private individual market, still must comply by 2014 with the annual limits on out-of-pocket costs.
   

A little bit of explanation is in order. For SOME employer provided plans, this limit has been removed, but only for CERTAIN TYPES of LARGE employer sponsored plans.  This revision does not affect small groups or individuals purchasing their own insurance on the Individual Marketplace.  To re-iterate this very important point, for individuals and small groups, the limit on out of pocket spending on deductibles, co-payments and co-insurance is still $6,350/year for individuals and $12,700/year for families.

Who does this affect.  
 The group plans that are affected by this are only those plans that "offer separate policies, and use more than one benefits administrators to manage different parts of their coverage, such as medical care and pharmacy." This creates complexity in implementation, because current technology does not support benefits administrators to merge the out-of-pocket maximums across plans and management platforms.  And complexity in the reporting of this mandate is the reason for the 1 year delay.  Does that make sense?  Only a little, but complexity in reporting was also the reason given for delaying the mandate for large employers (with over 50 full time employees) to provide health insurance.

What are the new limits for this affected group?
There are not actually new limits set in place, the excerpt below is taken directly form the DOL FAQ the change in law states that as long a plan meets the following it is compliant.

1. The plan complies with the requirements with respect to its major medical coverage (excluding, for example, prescription drug coverage and pediatric dental coverage); and
   
2. To the extent the plan or any health insurance coverage includes an out-of-pocket maximum on coverage that does not consist solely of major medical coverage (for example, if a separate out-of-pocket maximum applies with respect to prescription drug coverage), such out-of-pocket maximum does not exceed the dollar amounts set forth in section 1302(c)(1).
    
   

This could be interpreted so that the out of pocket maximum is essentially doubled, because the medical portion will have that financial cap and the pharmacy or other benefit provider would also have the same financial cap.

The law it is a changing.  Stay tuned for the next change. Keep in mind that using an agent/broker right now will help put you in a good position for 2014.

Healthcare Reform School Lesson #14 - Who is providing insurance during open enrollment

Good day to you and happy Friday.  I got a day behind because I was busy helping people with their health insurance yesterday.  That is a good day, though.

Courtesy of basketman at freedigitalphotos.net

Today I wanted to explain a bit about open enrollment and who will be providing health insurance in 2014.  As with many about the Affordable Care Act, it has a mufti-faceted answer.  Nothing is really that easy to explain when discussing its implementation and the ramifications in the long term.  Hopefully in the short term and in the execution of the act it will be much simpler.  My answer to "who will be providing insurance" will focus on Illinois, since that is where I reside and where many of my clients reside.  I also have many clients in Indiana, Iowa, Wisconsin, Michigan, Minnesota, Texas, Colorado & Oregon, so if any of you are reading my blog and would like to get detailed information on what companies will be providing insurance in your state please respond and let me know.

Open enrollment will start run from October 1, 2013 and end on March 31, 2014.  This is six full months and this is a very long open enrollment period due to the number of people expected to enroll and due to the newness of th experience. Each subsequent year, the open enrollment period will be only about 8 weeks.  There will be three options open for business during open enrollment from October 1, 2013 to March 1, 2014.  The insurance can not be effective (or start) until January 1, 2014 on the public exchanges, but on the private exchanges that is not a stipulation, it can start whenever an applicant gets qualified.. 

No about how to buy insurance during open enrollment.   Illinois is setting up their own exchange, or Marketplace, as they are to become known, and all of the exchanges are scheduled to be open for business on October 1, 2014.  Just a few short weeks away.  There are three types of exchanges that will be open for business come October.  I will explain these briefly and then after that will tell what we know now about which insurance companies will be offering products on which exchange.

• The Marketplace for individuals
• Individuals can go here and purchase insurance
• If they are eligible for a tax credit/subsidy, this is where that will be arranged
• I will be certified to help clients sign up on the marketplace and get their tax credit /subsidy

• SHOP for small businesses
• This will be a place for small businesses to shop for options for small group plans
• I will be certified to help businesses sign up on the SHOP

• Private Exchanges
• This will be an options for individuals that do not qualify for a tax credit/subsidy because their income is more than the cut-off of 400% over poverty level.  It will also be an option for those who want to get insurance from a provider that is not on the Marketplace and utilize a wider doctors network.
• I am currently, and will continue to be, qualified to help people find insurance in the private exchanges.  This exchange will be the same as it is now, which means all of the insurance companies that currently sell insurance in Illinois will sell on private exchanges.

These are the three options and they will be open for business during open enrollment from October 1, 2013 to March 1 2014.  The insurance can not be effective (or start) until January 1, 2014 on the public exchanges, but on the private exchanges that is not a stipulation, it can start whenever an applicant gets qualified..  This first open enrollment period is 6 months, but each subsequent year after that it will be only around 6 weeks.

The following list of insurance companies just submitted their plans to the Department of Insurance (DOI)  August 8, 2013.  They submitted a combined 165 plans that will be offered on the Marketplace for Individuals and SHOP for Small Businesses. 

1. Blue Cross & Blue Shield of Illinois
   
2. Humana
   
3. Aetna
   
4. Carle Foundation
   
5. Coventry Health Care
   
6. Land of Lincoln Health Inc Co-op
   
    The exchange plans will be reviewed by the Illinois DOI to determine whether the plans meet required Essential Health Benefits, were underwritten under acceptable actuarial standards, and meet network sufficiency standards. Once the review is completed, the DOI will make recommendations to the federal Health and Human Services (HHS). HHS will make the final determinations by August 31, 2013. 
   
    While still a work in progress, the exchanges are coming together.  I did speak with a gentleman last night that is working extensively with dental insurance companies and they are working on a an exchange for dental insurance as well, but that is a deifferent subjext for a different blog.
   
   I hope this cleared up some questions about open enrollment.  Next week I will be talking about SHOP for Small Businesses.  If you would like to review any of my previous blog or learn more in depth about a particualr topic, they are all listed below.
   
   Lesson #1 - Introduction
   Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
   Lesson #3 - Public exchanges for Purchasing Insurance
   Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
   Lesson #5 - Tax Credits to Help Pay for Health Insurance
   Lesson #6 - Enforcement and Penalties in the Affordable Care Act
   Lesson #7 - Preparing for the Affordable Care Act
   Lesson #8 -  Options for Small Businesses
   Lesson # 9 - Will my Insurance Premiums change in 2014?
   Lesson #10 - What Will Happen to Small Groups in 2014?
   Lesson # 11 - Why Should I Buy Insurance Before the Deadline?
   Lesson #12 - What does the Delay in the Employer Mandate Really Mean? 
   Lessone #13 - Can I keep my Current Health Insurance Plan?
   
   
   
   

Healthcare Reform School, Lesson #13 - Can I keep my Current Health Insurance Plan?

Welcome back to class.  I will welcome myself back as well, since I was on vacation with the family last week and missed my normal Thursday blog post.  This morning I will write about what happens to group and individual plans starting January of 2014.  Next week I will write about open enrollment for the health exchanges and the week after that I will write about SHOP which is the exchanges for small businesses/groups.

So many people are wondering what will happen to their current health insurance plan when the Affordable Care Act goes into effect on January 1, 2014.  The answer depends on a few factors.  I will take a few scenarios and answer that question very directly.  Do you remember back before 2010 when President Obama was trying to get this bill passed and made a promise that went something like this "If you like your current health insurance plan you will be able to keep it", well do you remember?  So plans that were in place way back then, can be kept the same forever.   However plans that have changed since then or have been purchased since then, can not be kept.  Read on.

Courstesy of Victor Habbick http://www.freedigitalphotos.net

This paragraph is for people in the individual market, I will cover group plans next.  So the magic date on which the Patient Protection and Affordable Care Act (ACA) was passed is March 23, 2010.  Therefore a plan is "Grandfathered" if it is a Major Medical insurance plan that was purchased before that date and has not changed substantially.  That plan can be kept forever with one positive revision, there is no cap on medical benefits.  These are the "Grandfathered" plans for this bill and allow the president to keep his promise.  All plans that have been purchased since March 23, 2010 will need to meet the minimum requirements put in place under the ACA, and therefore are subject to change.  So how much will plans change and when will this change take affect?  This is where the answer gets complicated.  First I will cover how much they will change.  Essentially all plans that convert will have the "Essential Health Benefits" added into them (I also covered Essential Health Benefits in Lesson #4) and will ensure a maximum dollar exposure per person of $6,350 of medical expenses per year (double that for a family of two or more).  This exposure does not include premium costs.  How much will this affect a current plan depends on what that plan looks like now.  If it does not meet all of the essential health benefits or the financial exposure limits, then it will need to change.   The next part of the question is when will it change.  That answer depends on what company is providing the insurance and how that company is dealing with the ACA.  Some insurance companies are getting out of the individual market al together and dropping all of their clients. Some companies are converting plans on January 1, 2014.  Some companies are delaying the change to the plan renewal date in 2014 and some companies are delaying the conversion until December of 2014.  Some companies are even guaranteeing that their premiums will not increase all of the way through December of 2014.

So now on to the group plans.  The mandate for employers to provide qualified insurance was originally designed to affect only companies with more than 50 full time employees.  However, the requirements for group plans have been delayed until 2015.  So if a company currently provides a group plan, then it is that company's decision to keep that plan or drop it, AND it is their decision on what to offer in that group plan.  If the plan is dropped in 2014, then the individuals are still mandated to purchase qualified health insurance.  Most big corporations will keep their plans and many small companies will drop their plans because of the cost and because their employees will be able to get health insurance on the private market regardless of any pre-existing conditions.

This blog covers the question about "Can I keep my current health insurance plan?" on a relatively basic level.  There are many options available in the private market right now that will not be available in 2014.  I recommend putting yourself in a good position now to ride out the first bumpy years of the ACA.    

If this blog has done anything, it may have opened up more questions.  Learn everything I have written on the Patient Protection and Affordable Care Act by reading all my blogs lessons.  They are listed below.
Lesson #1 - Introduction
Lesson #2 - Basic Reason for creating the Patient Protection and Affordable Care Act
Lesson #3 - Public exchanges for Purchasing Insurance
Lesson #4 - Essential Health Benefits that will be added to all Health Insurance policies in 2014
Lesson #5 - Tax Credits to Help Pay for Health Insurance
Lesson #6 - Enforcement and Penalties in the Affordable Care Act
Lesson #7 - Preparing for the Affordable Care Act
Lesson #8 -  Options for Small Businesses
Lesson # 9 - Will my Insurance Premiums change in 2014?
Lesson #10 - What Will Happen to Small Groups in 2014?
Lesson # 11 - Why Should I Buy Insurance Before the Deadline?
Lesson #12 - What does the Delay in the Employer Mandate Really Mean?