Category Affordable Care Act

As President Biden becomes the next President of the United States, we are starting to get a glimpse of the agenda when it comes to health insurance.

President Biden has strong support for the Affordable Care Act, and every indication is that support will continue under his presidency. The recent proposal called the American Rescue Plan provides an outline to increasing access to health insurance and medical services.

The impacts of the COVID pandemic many Americans have lost access to employer-sponsored health insurance. President Biden is calling on Congress to subside COBRA premiums until the end of September 2021. The federal government would cover 100% of the cost for employees that lost employment but wish to continue their employer group health insurance.

This is not a new concept and was first used during the 2008 financial crisis. At that time, employers paid the Cobra premium and then deduct that cost from their federal tax liability.   Fast forward to 2021, and this prevents people from moving to the marketplace even if they qualified for assistance because the COBRA would have no monthly cost.

The American Rescue Plan also looks to expand and increase the premium tax credit on the health insurance marketplace.  Those who qualify for assistance would not pay more than 8.5% of their household income towards health insurance premiums.  Under the ACA, household income has to be below 400% of the federal poverty level to qualify for premium assistance. It’s not clear in the American Rescue Plan outline if that 400% FPL threshold would change.   If there are changes in the requirements to qualify for premium assistance, this could have a considerable impact on the health insurance markets.

When the Affordable Care Act was first launched, small companies had an enormous shift and how they offered insurance benefits.  Most companies with less than 20 employees dropped their group health plans and moved their employees to the individual marketplace.  When the individual marketplace collapsed from a network access standpoint and large increase, the small employer moved back to the group health plans. If more employees can qualify for premium assistance, we could see another shift away from employer-sponsored health plans.

We will not know the true impacts on health insurance until the details are released on the American Rescue Plan, but it is fair to say that we see more government support of the Affordable Care Act.



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One question we field almost on a weekly basis is: “What is health insurance going to cost if I retire before 65?” Under the Affordable Care Act, it is not an easy question to answer because everyone’s situation is different.

When trying to budget for individual health insurance it’s important what time of year you decide to retire. Other factors include both incomes, out of pocket expenses, and policy effective date.

medicine, age, health care and people concept - senior woman, man and doctor with tablet pc computer at hospital ward

For Indiana and the rest of the country, an early retiree will have access to the federally facilitated marketplace to purchase an individual insurance policy. One can qualify for premium assistance if their income is under 400% of the federal poverty level. If you retire in the middle of the year, your yearly income could be above that threshold. This would disqualify you for premium assistance. If you retire at the beginning of the year, your taxable income could drop, and you could qualify for assistance. Premium Assistance can be the difference of paying $400 or $1,400 a month per couple depending on when you retire.

The time of year in which you retire could also impact your out of pocket maximum. If you or your spouse have paid toward your deductible or out of pocket maximum. You will want to elect Cobra continuation for the rest of the year. An individual policy will not give you credit for having already paid into your deductible.

From a health insurance standpoint, an early retiree should consider retirement at the beginning of the calendar year.

In 2020, individual health insurance options for Indiana are from just two carriers CareSource & Ambetter. Both carriers only offer their plans through the federally facilitated marketplace. Click here to use our tool to review your options.

If your household income is above 400% of the federal poverty level you will not qualify for premium assistance. With an early retiree, your taxable income may drop below that 400%, which would make the monthly cost more affordable.

For a 60-year-old in Marion County, the lowest costing plan without assistance would cost $716 month. With a projected income of $40,000, your monthly cost drops to $105 for the same plan with assistance. That is a big difference especially if there are two members of the family to be insured.

When it comes to the plan designs, these Indiana health insurance plans have large deductibles and out of pocket maxes. The lowest deductible being offered is $950. This would cost a 60-year-old $1,273 a month without premium assistance. The lowest costing plan would have a $7,700 deductible. Most of the time electing Cobra for 18 months may provide a better plan at a lower cost.

Network access with individual plans may have limitations. It’s important to research each individual carriers’ network. Be sure to confirm you are searing the correct network with your provider. Even if a physician shows in your network, you may want to call their office to confirm. It’s not unusual to have a physician listed as in the network, but who has chosen not to participate anymore. When it comes to retirement, you want to save as much as you can where you can, so it’s important to check all of your options.

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The National Association of Manufacturers (NAM) has launched an association health plan (AHP) that is available in Indiana to start January 1st, 2020. Mercer developed the health plan through UnitedHealthcare.

An association health plan (AHP) is developed specifically for an association and its members. The NAM AHP is operating under the rules where each group/company must go through underwriting to obtain a final rate. This allows for small companies under 50 employees to have an option outside of the Affordable Care Act (ACA) small group market.  

A healthy group could experience a 30% decrease with the AHP vs. the ACA small group plans. The savings come from the underwriting process and how rates are calculated with age bands. The ACA has a restriction on what the scale can be between the youngest and oldest members.

How do I get a proposal on the National Association of Manufacturers (NAM) Association Health Plan here in Indiana?

  • 1st Your company’s nature of business needs to be manufacturing.
  • 2nd You will need an employee census.
  • 3rd Contact Nefouse & Associates, and we can deliver your proposal. 

 Requirements of the AHP

  1. 50% of your full-time employees must elect coverage.
  2. The employer must contribute at least 50% of the employee on premiums.

Do we have to complete applications?

  1. Groups with less than four employees will have to complete applications.
  2. If the group is over 5 employees electing coverage, you do not have to complete applications. UHC is using an underwriting technique to retrieve pharmacy history, which allows them to determine risk.

 The NAM AHP is another group health option for Indiana manufacturing employers with less than 100 employees.  


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Short term health insurance has gone through an exciting evolution since the passing of the Affordable Care Act.  Before the ACA going into place, the short term was a health insurance policy that you would use to ensure against major medical claims for a short period.  The most common use was coverage in between jobs.

Affordable Care Act Effect

With the passing of the Affordable Care Act, short term health insurance was becoming a product of the past.  The individual market quickly went to the exchanges, and many people were eligible for premium assistance.   This created very little demand for short term coverage.

By the second year of the ACA, people had real frustrations with the marketplaces, networks, & the skyrocketing premiums. Most people that were not receiving premium assistance started to look for options outside of the health insurance marketplace.

Suddenly, short term health insurance attracted a lot of membership because of costs, PPO network, and what appeared to be low out of pockets. This led to a lot of companies offering short term health insurance.

Short-Term Requirements

To be eligible for a short-term policy, one must go through medical underwriting, and these are where they can get denied for a preexisting condition. The medical underwriting is the reason the insurance coverage is a quarter of the price of ACA policies and why the insurance companies spend less than 50% of the premium collected on actual claims. Low consumer prices and high-profit margins created a short-term market.

In the last few years, there has been a lot of public confusion on short term coverage. This confusion was created by both agent distribution channels and people not willing to read the brochure much less the policy. Typically, the second to last page of the brochure will list most of the exclusions, but there have been additional coverages or situations where there was no coverage. The enrollment process has been a bit suspect where many completed an online enrollment with a couple of questions and a form of payment.

These enrollment procedures and the general public desperate for premium relief led to policyholders having significant issues when it came time to file claims. Post Underwriting became the primary technique of insurance companies to validate a claim. This is when the insurance companies look to deny a claim based on it being preexisting, they would order medical records from the last five to seven years. The medical records would take weeks to be released, which could lead to a disruption in care.

The Future of Short-Term

As we enter 2020, short term coverage has changed from both a coverage standpoint and length of the term. There has also been greater oversight by government bodies like the Indiana Department of Insurance.  The short-term plans must go through an approval process with the state like what permanent insurance plans are required to do.

The new policies have broader coverage and less a gray area exclusions.  In Indiana, you can now purchase a short-term plan that has a term of two years. This is a game-changer.

These policies are no longer just for healthy young people. We are seeing families of five purchase these policies.  The premium saving is enormous for those that do not qualify for premium assistance. A family of five may cost $1,800 a month on the exchange and still have a $6,000 deductible. That upper-middle-class family is spending $21,600 in premium and then potentially another $12,000 in out of the pocket expense. That’s $33K a year in health care! It’s challenging to stay in the middle class with that kind of expense. A short-term policy may cost $600 a month with similar deductibles and out of pockets. The family is taking on additional risk where coverage may be limited or not covered at all, but families have to look at the pros and cons.

The most important is you don’t omit any health conditions on the applications. If the condition is listed and they approve you, there is a much higher chance of getting a denied claim covered.  If you are buying a policy to cover your family, take the time to read the brochure. Purchase the policy from a reputable carrier and broker that is local and cares about their reputation.

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Open enrollment is right around the corner for most people that have health insurance. Most of the employers have a January 1st renewal with the open enrollment period a month prior. The Individual market open enrollment is Nov.1st -December 15th. 

Indiana has become one of the most expensive states for health care; this was revealed by the RAND Corporation study on Hospital Prices in Indiana. From a health insurance standpoint, we have seen the major carriers start to renegotiate their reimbursement prices to all medical providers. This created network disruptions in multiple Insurance carrier networks, and we believe this trend will continue into 2020.

The Affordable Care Act (ACA) small group market will experience a single-digit rate increase. Anthem is increasing 7%, UnitedHealthcare is 9%, and IU Health plan is about 8%. The small group ACA market is now unaffordable for most small employers and employees to carry to dependent coverage.

The level-funded or partially self-funded should stabilize in 2020. In the last couple of years, we have seen many carriers enter the Indiana market. Most of these plans came from smaller companies that did not have a lot of experience in Indiana. They were able to go in, and essential write low-risk groups and small Indiana employers have benefited from the lower rates. Now that these carriers have experience in Indiana, they are not as aggressive, and this has a lot to do with our cost of care.  

With the Introduction on Anthem’s Multiple Employer Welfare Arrangement (MEWA), this adds another option for Indiana small employers that have low risk. Another company called All Savers, which is owned by UnitedHealthcare, offers a small group plan that is also underwritten, which can be very competitive. It’s fair to say that there are multiple options for Indiana small group employers.

The individual market is more of the same under the Affordable Care Act. With just two carriers offering coverage in the Individual market both plans must be purchased through the exchange. CareSource premiums will increase as high as 25% and decrease as low as 15%. Ambetter premiums will have an increase of as high as 28% and a decrease as small at 3.5%. Depending on which county you live in and what plan designs you select will determine what kind of increase you will have for 2020.

One change to the individual market that is worth looking at is the short-term policies. Short term policies have been an option for Hoosiers that needed coverage for a short period, and that was healthy. For 2020, we are now going to have short term health insurance that is has a term of two years. These policies are subject to underwriting, but for Hoosiers that are healthy and not eligible for tax credits on the exchange, this is an option worth looking at.

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Anthem has developed a new Group Health Insurance plan for Indiana small group employers.  This is in direct response to the unintended consequences of the Affordable Care Act (ACA).  

Under the ACA, Indiana small group health insurance rates have doubled, and Anthem has been one of the last large to bring a solution to market. The solution they choose is called a Multiple Employer Welfare Arrangement (MEWA). 

A MEWA allows multiple employers to join for the sole purpose of obtaining health insurance at a more competitive cost. Anthem’s MEWA will offer a Group Health Insurance plan that is self-funded. This allows the plan to operate outside of all the rules and regulations of the ACA. This Chamber care Health Alliance will go back to underwriting for Indiana small group employers. Lower risk groups could see a 40%-50% reduction in health insurance premium vs. the ACA small group market.

MEWA’s are not a new concept and have a lot of history. MEWA’s have been useful tools for companies to reduce their health care costs. They have also gone insolvent due to mismanagement and are prone to adverse risk assessment.

The Indiana Department of Insurance overseas MEWA and has a specific requirement that must be met to prevent insolvency. A board or a trust governs the MEWA itself. Thus, the members of the MEWA are eligible to become board members.

Underwriting is where the ongoing medical history, age, gender, company location, SIC code, and benefit design will determine the rates.  These rating methodologies will deliver significant savings to healthy young groups. The savings could last for years if the Chamber Care keeps a relatively healthy block of business. For a company with less than 50 employees should look at the ChamberCare Health Alliance and Anthem for group health insurance.   

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Indiana was one of six states to file a lawsuit against the Affordable Care Act’s health insurance provider fee (HIPF) for State Medicaid plans.

The U.S. District Judge ruled in favor of the plaintiffs, Texas, Indiana, Kansas, Louisiana, Wisconsin & Nebraska’s that the government must pay back $840 Million in Obamacare fees.

What is the Health Insurance Provider Fee?

The HIPF is an annual fee charged to health insurance companies on health insurance premiums. The Patient Protection and Affordable Care Act of 2010 assesses fees on insurance companies that provide fully insured health insurance coverage. 

The fully insured tax/fee is 3% of the total health insurance premium.

Business affected:

  • Individual and small group health insurance plans.
  • Large Group Health plans.
  • Stand- alone, dental & vision plans.
  • Stand-alone, behavioral health, and pharmacy plans.
  • Medicare Advantage plans.
  • Retiree-only plans.
  • Medicare part D prescription plans
  • Taft-Hartley Plans
  • Medicaid and Children’s Health Insurance programs (CHIP). Until recent court ruling!

The purpose of the tax/fee is to help fund federal and start marketplaces/exchange.

The estimated cost is $14 billion a year.

The authors of the ACA & PRACA projected that there was going to be enormous profits for the insurance industry because of the Individual Mandate. Thus, they could tax the industry to fund the law. They also assumed that these profits would create carrier competition.

The reality is the insurance industry passed this cost on to the members, which has led to everyone paying about 3% more to fund health care reform.

The fact that Medicaid plan is now exempt from the ACA tax is a massive blow to the ACA and the funding mechanism.  Indiana alone has over 2 million people on Medicaid, and it’s not clear the government can make up for this loss of funding for the ACA.  $840 Million is a year is just a start, other states will follow and with an estimate of $5.5 billion attributed to the Medicaid tax. 

This is a massive blow to the ACA law, that is has gotten almost no attention!   The funding of Obamacare may have just lost 25% of its funding.  This estimated operating costs for the marketplace is $2.1 billion.

It will be interesting to see if the government adjusts the federally facilitated marketplace. There could be a decision to turn those operations over to a third party. 

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All the health insurance companies that want to participate in Indiana’s small group health insurance has submitted rates & plan designs to the Indiana Department of Insurance for review. These filling are for fully insured groups with less than 50 employees.

As always, it’s going to be an interesting year under the rules and regulations of the Affordable Care Act (ACA).

Under the ACA, small group health insurance plans are changing every year.  This has led to frustration with many Indiana small group employers.  Pre ACA, a company, would purchase a health plan, and that plan did not change until the company chooses to change it.  Now, a company could have a $2,500 deductible silver plan in place, but the renewal is mapping them over to a new Silver plan that has a $4,000 deductible.   It’s difficult for most people to see how a $2,500 deductible silver plan is the same as a $4,000.   

Under the ACA, the insurance company is forced to develop plans that meet an actuarial value that then indicates if they are Bronze, Silver, Gold or Platinum.  That actuarial value changes or is interpreted differently every year. Which leads to plan designs being a change in the small group health insurance.

We can’t put all the blame on the ACA with the forced plan changes in the small group.  I believe that if a carrier has higher claims utilization on certain plan design, they discontinue that plan.

As we review 2019 Indiana’s small group plan submissions, most of the cost information is listed in averages, which does not tell the full story.  If a carrier is introducing new plan designs, it’s difficult to determine what the cost increase or decrease as compared to their prior year’s plans.   When we look at the details, rates are determined by counties.  For example, Boone County could have a rate decrease on all of their Silver plans, while Marion County has a rate increase.   Then each plan design has a different cost, and some carriers will offer seven different silver plans.   The average price does not tell the full story.

2019 Small Group Submission

  • Anthem appears to have an average rate increase of 2.5%.
  • UnitedHealthcare appears to have an average rate increase of 8.14%
  • IU Health Plans seem to have an average rate increase of 7.21%

There are a handful of other companies that have filed, but their small group rates are so high that I don’t think they are worth mentioning. Those companies don’t want to compete in the small group market but submit plans, so should they wish to fight in future years there is less barrio of entry.

Anthem filing has decreased on specific plan designs as high as 9%.  In 2018, Anthem increased the cost of their small group on avg of 17%. That rate increase made them less competitive in the under 50 life market.   For 2019, Anthem is trying to get competitive based on the few small group carriers we have in Indiana.

UnitedHealthcare filling is difficult to read because it appears most of their 2018 small group plan designs will be discontinued.  New plan designs will be introduced, which could be a good thing. Last year, UHC offered plans that created many confusions.  They had Silver plans that 80% coinsurance but had different coinsurance levels for specific procedures like outpatient surgeries.  One had to dig deep into the summary of benefit chart to find these carve-outs.  As with Anthem, specific metallic level plans and counties have a different rate increase, so again the plans must analyze for costs and coverages. 2018 UHC was anywhere from 17%-8% cheaper than Anthem.  This led them to pick up a much more significant market share in Indiana small group.   UHC also offered a true multiple-choice option for the small group. This strategy appealed to a lot of small companies, where their employee had different health insurance needs.   With 8% average rate increase, Anthem & UHC should be comparable from a price standpoint.

IU health plans are the HMO which IU health has ownership in. With their average rate increase, they should be below both UHC & Anthem.  In 2018, IU health plans have cost about 7% less than the competition, but that is for a health plan with access to only IU providers.  Indiana small group employers have shown some reluctance to move to a true HMO. The 7% saving has not been enough.

Under the ACA, we see a reluctance from many carriers to compete for small group business. This lack of competition has led to just a few fully insured options. It’s not usually for a small group to switch back and forth between UHC and Anthem. With network access being similar along with plan designs, a small group should take advantage of saving 7%. This back and forth strategy are simplified by using benefit administration platform, which streamlines the enrollment process with the least amount of employee disruption. 

Indiana along with the rest of the country has seen a considerable influx of level-funded/partially self-funded plans enter the marketplace. These options have created substantial cost saving for small groups that are overall healthy.  Level funded allows a group to get lower health insurance costs by going through underwriting.  Groups with as few as five employees are eligible.  The level funded option on average saves a group around 20%. That savings can be even higher if the group has a high amount of dependent participation.   

2019 will be another challenging year for small group health insurance.  An owner will wont to be proactive with their insurance offering by starting their benefits review at 90 days before the renewal. 

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It was reported that the Trump administration has reinstated the risk adjustment program of the affordable care act.

The risk adjustment program redistributes funds from carriers with lower risk members to plan with higher risk member.  The reason this was witten in the ACA was to protect against adverse selection in the marketplace by spreading the financial risks across the markets.  Authors of the ACA through this program would prevent insurance companies trying to attract healthier members and compete based on the value of product offering. 

The risk adjustment program was a failure because more insurance companies were requesting payment, than paying into. This was the legal argument on why the current administration suspended payments based on the law being deficit neutral.

How this Impacts Indiana?

In the individual market, we only have the two insurance companies offering coverage. Both Ambetter and CareSource included receiving risk adjustment payments in their 2019 filings with the Indiana Department of Insurance.  Had the payments for Risk adjustment not been reinstated, then these two insurance companies would have had to raise their premiums.

Ambetter would have had to raise premiums by an average of $23.03 per member per month ($276.36 yr.)

CareSource would have had to increase premiums by an average $65.22 per member per month ($782.64yr.)

The administration had to reinstate the payment, even if they don’t believe in it. The few insurance companies still participating in the individual markets, were developing products based on the existing rules.  When reviewing the insurance company’s filings which justifies the premium they intend to charge, the risk adjustment receivables can determine if the company will be profitable.  The individual plans are operating on less than 5% profit margin, and if receivables represent more than 10% of the premium, without out it,  those companies could lose money and decide to withdraw altogether.

Contact Us if you are interested in learning more!

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The Department of Labor released their final rule on the creations of Association Health plans.

There has been a great deal of criticism and misinformation in the media.   

The DOL final rules provide the guideline for setting up association health plans.  These plans would be governed by both State and Federal guidelines.  The Employee Retirement Income Security Act of 1974 (ERISA) would be just one of the laws that the AHP’s would have to follow.

Small employers could join in an association to purchase a group health insurance plan under as a large group entity.  Previously small employers were unable to do this because they were governed under small group laws. This prevents small employers from being treated as a large employer from a health insurance standpoint.  Under a small group, a company must have at least two employees to be eligible for benefits.  This has created an obstacle for most owners who have no employees.  Under the new AHP guidelines, the working owner with no employees can now be eligible for a group health plan.

In Indiana, we saw a large number of business consultants leave employers and operate as a sole proprietor with no employees. At the beginning of the ACA, there were multiple individual health insurance companies that provided decent coverage at a somewhat fair cost.  This allowed these consultants to operate as self-employed.  We fast forward to 2018, the individual market has collapsed, and the policies left are very expensive with limited network access. Thus, most of the Indiana business consultants have rejoined corporation because of the health benefits.  With a properly formed AHP, Indiana consultants will have the option of returning to be self-employed without a lack of insurance options preventing them.

There has been much criticism about the AHP’s offering limited benefit or being subject to fraud.  The DOL’s final rule clearly states the guidelines the health plans must follow.  The plans will have the ability to limit coverage that has been required by the affordable care act, but it’s a very fine line.   The rule states if an AHP covers one of the essential benefits, it cannot limit that coverage.  The AHP could exclude coverage for one of the essential benefits.  There are still multiple safeguards that the plan must go through to be approved.  The AHP still must meet state guidelines to be approved, and the state is not going to approve a plan that may be questionable coverage.   What could be excluded is pediatric dental & vision which could reduce the cost by 3.5%.   The members of the associations must control the group health plan. This could lead to the members voting on what benefits to cover.  Even with membership control, the state Department of Insurance would still have to approve the plan.

An AHP that operates in multiple states is allowed but only if the association is in a tri-state type of situation. Realistically, let’s say we have an association of Light Bulb distributors located in Evansville Indiana, that association could have members in Missouri, Kentucky & Maybe Illinois or Ohio. In that situation, you could have AHP in multiple states.  If that were to happen, the AHP would have to be approved by multiple Departments of Insurance.   The DOL Final ruling appears to be more favorable to AHPs operating in single states and providing a health plan to certain industries. AHPs are prohibitive of offering blanket coverage to any industry.

The AHP must not be sponsored by an Insurance company.  This means that an insurance company can have little to do with the development of the AHP outside of providing coverage and administration services. This can create a barrier to starting a new AHP. It will take someone that has specific knowledge and experience to launch a new AHP. 

How much savings could an AHP deliver vs. the ACA Market?

This is the big question that as of now there is no answer.  Many variables would impact the cost of an AHP.  For an Indiana AHP to honestly be success full, I think the price should be that of pre-ACA, which would be about 50% less than the current small group and Individual plans. 

Here at Nefouse & Associates, we have decided to explore setting up an association plan for Indiana business consultants.

Contact Us if you are interested.

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