Category Large Group Health Insurance

When it comes to health care and group health insurance, Hoosiers have always preferred PPO networks which allow the member to choose which medical provider they want to receive treatment from.  With any group health plan, Indiana employees have demanded that they could choose their medical providers.  This is starting to change because the cost of care in Indiana is one of the highest in the country.

Insurance companies, medical providers and TPA have started to develop their narrow health care networks all so known as skinny networks.   

Medical providers have introduced their own health insurance plans in an attempt to attract employers that want to control costs.  These networks come in the form of Health Maintenance Organization (HMO) and Employer Preferred Organization (EPO).

IU Health Plans has its own hybrid HMO plan that has slowly gained membership. They offer a hybrid HMO that also provide a traditional PPO network.  These options can be competitive but the real cost savings comes from their tier 1 network which is a true HMO.  This HMO can deliver a 25% reduction in the premium vs. a traditional PPO plan.  IU Health plans promote an integrated care experience for members, where are the medical providers are in communication with one another.  The integrated model is supposed to deliver better treatment outcomes and a better overall experience for the patient.

St. Vincent’s recently launched their own health plan called Advantus which utilizes a skinny network of St. Vincent’s and affiliated medical providers.  AdvantUs is offering a self-funded/level funded health plans in the small and mid-size markets. These plans are potentially reduced costs by 10% vs other level funded products.  IF compared to a traditional fully insured PPO plan, the initial saving is more like 30%.

Anthem recently launched their own skinny network called health sync which is an HMO that currently utilizes the Franciscan network.  The product is for both small and large group. There is upfront savings vs. Anthem PPO network along with innovative programs to control future medical costs.

Employer Direct Contracting with the health provider.  Large employers can contract directly with the medical provider, which could exclude the traditional insurance company.  Negotiating directly with the medical provider for an exclusive contract can lead to a significant reduction in the cost of claims.  In some of Indiana’s communities, this approach could reduce medical costs by as much as 50%.

In the past Indiana, employees have been reluctant to accept narrow networks, with the skyrocketing medical cost now being revealed to the general public, employers are starting to entertain these cost controlling techniques.  The younger millennial generation is open to using skinny networks, which may lead to employers implementing these plans.

If you are interested in learning more about these options, contact us.

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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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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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The Affordable Care Act (ACA) is close to full implementations for employer-sponsored group health plans.

The ACA has had mostly negative impacts on the small group market for Indiana and the rest of the country.  Any group under 50 lives, now has no underwriting for fully insured coverage. This has created large rate increases for small groups. Most small groups that had coverage in place prior to 2014, chose to “grandmother” the policy.  This is where the group can keep the plan, without the plan meeting all the requirements of the ACA.

Grandmothering/transitional policy is a good option to try to control group health insurance premiums. Anthem is moving all of the renewal dates on this block of business to 10-1.  Make sure you accept that renewal date or you will lose the plan.

Last year this block of business renewed at very low rate increases, this year we have seen that rate increase spike up to double digits.  This is still a better option than taking a 50% rate increase under an ACA group plan.

Groups 50-99 employees

This size business has been up in the air under the ACA. Originally, the ACA was going to move this segment into the small group division.  This would have led to no underwritten group health plans or pooled rating. There is a lot of fear from business owners and carriers on what pooled rates are going to look like.  Recently, there were legislations passed that will allow the state to determine the definition of small group.

Insurance Options

As we enter 2016, there are a couple of carriers participating in the Indiana small and mid-size group market. Anthem and UnitedHealthcare are the main 2 carriers offering fully insured plans. There are few other companies but there is a huge lack of competition in this market.  The lack of carrier choices has a lot to do with the passing of the ACA. We were losing carriers before the passing of the ACA, but that was because they could not compete.

Plan designs

The industry is starting to offer different insurance vehicles for group coverage. These options revert back to underwriting the case. This allows for more competitive pricing for lower risk groups. There is now Associations plans, PEO options and the Self-funded options.

There are few associations out there and most of the health insurance is through Anthem. If you are already insured with Anthem, I would not expect them to give a large amount of savings through the association. It can happen, especially if Nefouse & Associates is representing you.

PEO option is a professional employer organization

In this arrangement, a company will lease their employees to the PEO to receive a decrease in pricing on financial services. Health Insurance, Property & Casualty Insurance, Pay role, Worker comp and shift ACA reporting liabilities onto the PEO. This is a serious option if the company can afford the admin fee of the PEO.  Anthem & UHC have PEO arrangements in place along with regional PEO’s self-funding the plan.

Self-Funded Option

There are now a handful of carriers that will offer groups a self-funded or partially self-funded plan. UHC has a division called Allsavers that has this option.  Other companies like Trustmark and Cigna also have similar arrangements.  The companies are designing these plans where a portion of the premium is going into a “claims bucket”. If the group does use the entire claims bucket then they may be entitled to a refund or credit.  These plans have now been around for a couple of years, they are changing quickly.   This arrangement is not offering a large upfront savings vs a fully insured product.  The savings is about 10%-12%.

Large group

Large group has the same options as they had before the ACA. Now there are more fees on the insurance and additional admin that has to be done.  Large Self-Funded groups still come down to fixed costs and claims.

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Under the Affordable Care Act reporting obligations for large employers, is about to get complex. There are 2 new sections of the IRS code that every controller, accountant, broker, & insurance company are trying to understand.

6055 & 6056

In my own words, I will try to explain what the codes are and why they are important.

Under the ACA, it was decided the only way to track if an individual or company has or offers health insurance, is by using the IRS. Do to this, the IRS created these reporting requirement to do the following:

1. Confirm you have health insurance.

2. Confirm that your health insurance meets the standards set by the ACA.

What is 6055?

6055 is a form submitted to the IRS to confirm that health insurance is being offered by an employer. This will allow the IRS to confirm that the group coverage offers the minimum essential coverage under the ACA. IRS will then verify that the employee covered by the plan does meet the Individual mandate.

The good news on this reporting is the insurance company should handle this filing on behalf of the large group employer. If you are on a self-funded plan, this responsibility may fall on to the employer.

What is 6056?

6056 is the responsibility of the employer to file with the IRS and then provide each full time employee a copy 1095-C. Following this, the information provided will be used to confirm coverage.

This is an extremely complicated issue and a company would be wise to look at a third party to help with the admin.

 

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A topic that will likely be addressed at your next next health insurance renewal meeting is likely going to be: Who will pay the Affordable Care Act related fees?

Will it be the employees, employers… or both?

Let’s find out more about what each of these ACA fees are and how much they will cost you:

 

Insurer Fee or Health Insurance Industry Tax:

This tax is funding people who purchase health insurance on the marketplace and qualify for tax credits.

  1. This fee is permanent and is paid on an annual basis.
  2. This fee is about 2.5% of the total health premium.

If your group plan is running at $500,000 a year, then that is about $12,500 in additional costs. Some of the carriers will show this fee as a part of your premium statement, while others will embed it in the total cost.

The Risk Adjustment Fee:

This tax is on small group health plans and individual health plans to redistribute premiums from low-risk to high-risk policyholders.

  1. This is a permanent tax and is about $66 per subscriber.
  2. This tax is also either embedded or a line item on your premium statement. Anthem shows the line item while UnitedHealthcare (UHC) embeds it.

This tax is to be used to help carriers offset claims in high risk areas. For example, Lake County may have higher premiums than Hamilton County. These funds would then be distributed to carriers that continue to insure Lake County despite losses.

Transitional Reinsurance Fee:

The transitional reinsurance fee impacts both fully insured and self-funded group health plans.

  1. This fee is collected for the years of 2014-2016.
  2. Estimated at $5 a month per member.

This fee is to help Individual carriers offset claims both on and off the exchange.

Patient-Centered Outcomes Research Institute (PCORI) Fee:

This fee impacts both fully insured and self-funded groups.

  1. This fee runs about $1 -$2 per member.
  2. This fee started in 2012 and will go until 2019.

The fee funds research that evaluates and compares health outcomes, clinical effectiveness, and risks and benefits of medical treatments and services.

Note: Per member means total number of people on the plan.

Who Covers the New Costs?

So now the big question is: Who is going to pay these new costs? Should it be passed to the employee, absorbed by the owner, or split up into current contribution levels? When we look at UHC’s billing, all of the fees for the fully insured groups are being embedded. For them, it is most likely to go into the contribution split.

In Anthem’s case, it is showing as a line item. The cost could be passed onto the employee or be covered in full by the company.

On self-funded plans, the situation is very different. Some of the carriers and third-party administrators are not collecting the fees. Instead, they are passing that responsibility on to the client. They are stating that because the group knows the accurate information on employee count, they would be best at determining the correct amount.

In 2018, the excise tax, or Cadillac Tax on high-value health plans, will be in effect. If your health plans cost more than a certain threshold, then a tax of 40% is applied. We are still waiting to find out what that threshold will be. Originally, the government set it at $10,200 for single coverage and $27,500 for family. If I understand correctly, if you had a group policy where the family cost was $35,000, then the issuer could be taxed an additional $3,200. This tax will have a huge impact on what kind of plans are offered by employers.

If you have any questions regarding the new fees please contact me, Tony Nefouse, at (800) 846-8615 and we can discuss them further.

 

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Is it legal to move an employee from my group health plan to the a guaranteed issue individual plan?

This is a big question with a lot of money on the line for employers and insurers.

During open enrollment (October 1, 2013–March 31, 2014), anyone could have purchased a health plan either on or off of the exchange. Keep in mind that if an employee has access to a group health plan, it might disqualify them from receiving tax credits on the exchange, but not on the actual health plan.

A University of Minnesota’s law professor had a paper published back in 2010 that predicted this exact situation. If you read the paper, you will see it was predicted that employers would redesign their health plans to intentionally try to move high-utilization employees off of the group plan. I, on the other hand, would disagree that a plan would be designed with that being the primary intention.

This issue opens up a very interesting discussion for large self-funded groups. This issue would not impact small companies that have fully-insured premiums. On large self-funded plans, the employers pay the initial claims up to a certain point. That certain point is called “stop loss” insurance. It is exactly what it sounds like, stop the losses.

Under these arrangements, the reinsurance contract to initiate a term is called lasers. Lasers (excluding individuals or setting a unique, higher pooling level for individuals who are expected to have large claims, increase customer liability) are optional, depending on risk tolerance .

An example would be a group that has a stop loss limit of $125,000 per person on the plan. This means the company is going to pay the 1st $125,000. There is a high claimant that is projected to have $700,000 in claims. The reinsurance contract has the ability to laser and moves the $125,000 stop loss to $400,000. Now, the employer is responsible for that $400,000.

At this point, options may be entertained on controlling cost. With the new Affordable Care Act, an option that might be discussed is moving the high claimant to an Individual health policy during open enrollment.

To learn more about how we can help your business, give us a call at (800) 846-8615 and we will be glad to sit down with you and answer any questions you may have.

 

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