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ING_19064_06177With the new laws governing business under the Affordable Care Act, a company must determine how they are viewed under the ACA. There is small group and large group categories. Companies with less than 49 employees are considered small, companies with more than 50 employees are determined large.

To determine which category your company falls into, is not an easy determination. In fact it can be extremely complicated. The complications comes from the part time employees that have a full time equivalent value. The ACA is using a 30 hour work week to define a full time employee. For part time employees, you would add all of the part time hours up and then divide it by 120. 120 hours is the figure that is used for determining your size group.

Here is an easy example: a company with 30 full time employees and then 30 part time employees working an average of 80 hours a month.  30 x 80 = 2,400 hours, this is then divided by 120 hours = 20 full time equivalents. 30 Ft +20 FTE= 50 which leads to the large group classification. Now this employer would have to comply with the employer mandate or pay a penalty. Lucky for this Indiana company, there is a 30 employee deduction before the $2,000 penalty is accessed. This example could make the company decide not to offer group health plans and also avoid any penalties.

The Indiana restaurant and hospitality industry is faced with serious issues under the ACA classification system. It’s better to start addressing this issue on a proactive basis than waiting to be reactive.

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Racing flags, vectorHow could we related health insurance to the Month of May in Indiana?

The Indianapolis 500 brings in spring, with the open wheel cars whistling around the track. There is new grass on the little league field. How could we relate health insurance to the Month of May in Indiana?

After open enrollment, most people have obtained their health insurance plans. Coverage through an employer, individual plan, exchange plan, HIP 2.0, Hoosier Health Wise or even a short term. You would not have to think about health insurance unless you have had a life changing event.

Deep in the bellies of the insurance companies, there are actuaries working long hours trying to finalize next years health insurance plans. These wizards of math are crunching numbers, in complicated equations that the Affordable Care Act has created. An endless cycle of regulation and algorithms, if they make the wrong decision, it could cost their company millions of dollars and 100’s of jobs.

The Month of May is when all health insurance companies must submit their plans to the state and the federal government for approval. The insurance companies will then start the clarifications with both state and federal actuaries on each layer of coverage. The plans will have to meet the actuarial value set by the ACA.

This is a very serious month for the health insurance industry. This is first step in preparation for the launching of next year’s health plans.

As usually, I will retrieve all the health insurance filing for the state of Indiana. Then I watch as the actuaries communicate back and forth. Last year the government would not allow the carrier to issue the rate increases they wanted. The government forced the carriers to pull back. Now we see one carrier exiting the Indiana market, which is Assurant Health.

While the rest of us enjoy the beginning of Spring, the actuaries are setting the pace for next years health insurance plans and rates.

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On April 28th, Assurant Health issued a statement that they will be either selling the company or shutting down. This comes as no surprise to us. Assurant Health has been a smaller health insurance company in the Indiana market.

Prior to the Affordable Care Act(ACA), they were really active in rural communities. They had creative small group products which did control premiums. They were the first insurance company to offer a 50% co insurance plan. At the time, those creative features created some savings for Hoosiers.

Post Affordable Care Act

In 2013, Assurant had gone through restructuring. Which may have been indications the company was already struggling prior to the ACA going live.

Assurant developed an Individual portfolio of products for off the exchange in 2014. This portfolio of Individual plans, looked like pre ACA plans designs, which included underwriting. At this time, only Humana and Assurant had true PPO networks for Indiana. This gave them a lot of new membership. The membership they were receiving was from the Hoosiers that wanted and could afford a PPO health plan. The reason these members wanted that coverage is because they were high claimants. Essentially, Assurant created adverse selection because of the plan design.

Anyone that was not utilizing benefits, choose a lower premium plan on or off the exchange. Northern Indiana had a huge amount of Assurant membership, because the plan gave them access to the Chicago health care system. They elected Assurant because they knew they had surgeries in the near future.

In 2015, Assurant led the insurance community in Indiana with the biggest premium rate increase in the state. This was in the ballpark of 30%. They had no choice because for every dollar they brought in on premium, they were losing .11. This created more adverse selection. Any healthy members, immediately looked for lower premiums, except those that were incurring claims. One thing about Assurant is they do pay claims, at least at that time.

Assurant then made a strategic move to enter the Federal Faceilted Market (FFM) place. After losing $90 million in 2014, this was a huge gamble. I call it a gamble because they had not addressed the real reason they were losing money. I don’t know how many states were in for the FFM but one of those states was Florida. Florida has always been a high risk state for health insurance companies. Now they are the only true PPO in Florida, and they have the highest premium. Who is going to elect that coverage?

Back to Indiana,

Assurant entered the FFM and now their plans are eligible for tax credits. They enter the Indiana market with the assumption they are the only carrier that will have true network access. Then UnitedHealthcare (UHC) also enters the exchange market with almost the same network access and their premiums are 20% lower. UHC then picks up the exchange members that would have gone with Assurant, for the exception of one area, Northern Indiana.

For some reason, Assurant’s rates actually went down in Northern Indiana, when the rest of the state was hit with 30%. This is an interesting decision by Assurant because these were the members that were crossing into Chicago for health care. Illinois healthcare cost are more than Indiana’s.

Why was Assurant not successful in the ACA market?

  1. Plan design

Assurant was offering Pre ACA plan in Post ACA market. Without underwriting there was no way for Assurant to control risk.

  1. Network PPO

Assurant contracted with the Aetna Signature Network. Assurant is one of the few carriers that was renting a network. Other carriers had developed their own networks. This created additional cost for Assurant.   The PPO network also gave no control to Assurant to try to control cost by reducing reimbursement rates to medical providers.

  1. Prescription drug coverage

Assurant had the biggest drug list which is great for members but does not promote members to look at generic alternatives.

We were one of Assurant’s top producers for Indiana in 2014. We knew right away that they were attracting the members with the highest claims potential. We tried to address this issue with Assurant’s leadership. Assurant believed that they had to offer the very best option to their members, which attracted members with highest claims potential.

It is a huge loss to Indiana to lose any more insurance companies. Come 2016, Assurant will either be sold or shut down. Most likely shut down, because what company would want to take $90 million a year in losses.

The ACA, has changed health care and health insurance dramatically. No longer can a carrier offer the best health insurance option without risking/guaranteeing incurring huge losses.

Assurant did not adapt to the new ACA environment and they may be the 1st of many to drop out.

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The first tax season is behind us and no one knew what was going to happen with tax credits. The Federal Marketplace compared what was reported on the tax credit application and what the individual filed on their tax returns.

It was estimated that 45% of the people that purchased health insurance with tax credits, would have to pay a portion of the credit back. The average repayment is around $800 for the country.

A lot of people that had to repay a portion of the tax credit fell into a couple of different situations. Commission Sales people seem to be in a situation where they had to repay. Unemployed Hoosiers, that found employment, forgot to notify the exchange about a change in circumstance. There has also been a lot of confusion over Social Security benefits.


The problem with the new tax credit system, is there is nowhere to get answers for complicated situations. The IRS, will refer you to different sections of the IRS code. The health insurance market place employees, have very little to no training on tax issues. If you have a complicated situation there is very little help.

For 2015 enrollments, we were able to recognize some of these situations in advance. We advised our clients not to take the entire tax credit up front. This is a very difficult decision for some people to make. Premiums are extremely high, so without taking that full tax credit, it can be affordable. For some Hoosiers, that knew they were going to have income changes, they did go with this option. Some even choose not to take any tax credit until they file their 2015 taxes.


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HealthInsurancePlansAs a broker that specializes in the ACA health plans, I am still amazed that new information continues to flow out about the Affordable Care Act. This information on Section 1332 has gotten almost zero attention until recently.

Section 1332 of the ACA, allow states like Indiana to request waivers from HHS and the treasury department on certain aspects of the ACA. January 1st, 2017 is when 1332 can take effect.

From different interpretations of this section, any waiver must still preserve coverage and financial parameters of the ACA. This could be referring to maintaining the essential benefits set by the ACA. These benefits were actually benched marked on a state by state basis. The financial aspect, could be a lot of different things. Premium reductions at certain household income limits, or premium vs household income.

Indiana and other states would still be entitled to the subsidies their residents would have received if a state chose to waive subsidies and use the funds for other purposes.

There are 4 areas of the ACA that a state could modify or waive.
1. Removing the penalty for the individual mandate.
2. Removing the penalty or requirements of the employer mandate.
3. Modifying the rules of benefits and subsidies.
4. Modify or even eliminate health insurance company’s certification process to participate on the exchange.

The waiver requests must satisfy certain aspects of the ACA.

1. The waiver must still provide health coverage that the ACA insured.
2. The health insurance coverage must be as comprehensive as the coverage that is offered through the federal exchange and be certified by the CMS chief actuary.
3. The state option must provide similar cost sharing reductions and meet the definition of affordability.
4. The waiver must not increase the federal deficit.

The section 1332 of the ACA, could be the avenue that states use to improve aspects of the health care law. We hope that each state would include leaders in health care & health Insurance when they propose to make changes. It’s essential to have all the aspects of the health care equation involved.

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WideModern_healthinsurance_130703620x413UnitedHealthcare (UHC) is one of the biggest health insurance companies in the country. For 2015, they re-entered the Indiana market, offering individual and family health plans.

This was a welcome addition to the Indiana health insurance market. What set UHC apart from the other individual carriers, was the network. UnitedHealthcare Choice Plus (PPO), gives Hoosiers access to almost all of the medical providers in the state.

Having this type of access was key for families when they made their health insurance selection. To have all of the families doctors in network, was a huge relief.

There has been some issues with claims, not because of the network but because of the medical providers.

On the UHC ID Cards, there is an ID number and a group number. This has caused great confusion with medical providers because they continue to file claims to the group division instead of the individual division. If the medical providers would look at the back of the card, they would realize they need to file the claims with the individual division. This has caused confusion with many UHC policy holders because they are stilling getting Explanation Of Benefits (EOB) on the claims.

The EOB comes back and shows the UHC policy as not being enforced. This is because the group claims department is not integrated with the individual department. In fact they are two separate companies but owned under the same umbrella.

This is actually an easy fix, you just need to let the medical provider know, then they need to refile the claim under the individual policy number.

With any new health insurance offering, we see a learning period for the medical providers. This has a lot to do with communication from the carriers to the medical community. It’s a slow process because medical providers are concentrating on treating medical conditions and not claims administration.

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healthRecently we were featured in an article found in the Indianapolis Business Journal.  The article mentions the migration of small group health insurance to the individual market, which really just scratches the surface of what small employers in Indiana are faced with when it comes to the group health under the ACA. Small Indiana employers have always felt an obligation to provide health insurance to their employees. With the ACA and tax credits, employers are starting to look at group health insurance differently.Under the ACA, guaranteed issue has changed the value of a group health plan. In the past a group health plan offered guaranteed issue. With the passing of the ACA, now individual health plans offer that huge benefit.

Tax credits are playing a huge factor for employers. If the employees qualify for tax credits on the marketplace, these tax credits could be higher than what the employer can afford to give. If you have a company where half of the employees qualify for tax credits, the employees can end up with a health plan that cost far less vs the group premium.

The other benefit for employees, is they can choose the health plan that best fits their families needs. This way, the family is in complete control of their health insurance.

We are starting to see the health insurance companies develop new small group health options. Most of these options are for companies over 10 employees. There has been an emergence of self funded plans for small groups. These look and feel like a fully insured option.

Association plans may be making a come back and PEO plans may get a second look.

These new group options all include one very important feature: UNDERWRITING

With the ACA, fully insured small group plans cannot be underwritten. Underwriting has been a key component for getting lower rates.

If you take a healthy group of 25 employees, these options could potentially work.

Tony Nefouse

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equalityHere at Nefouse and Associates we believe in helping everyone. It does not matter what your beliefs are or who you are married to, our services are open to everyone.

There’s a lot of confusion on health insurance coverage for same-sex couples in Indiana.  Under the Affordable Care Act, in order to apply for coverage under one policy, same-sex marriage has to be legal in the state.

We have been instrumental in helping couples receive equal rights when it comes to health insurance. With the legalization of the same sex marriage in Indiana, this has allowed us to insure same couples under the same policy. We believe that we were the first insurance agency to do this in Indiana.

What We Did

  • When we filled out the application, we listed the couple as married and filed joint taxes, which led them to qualify for tax credits.
  • We able to get tax credits for the couple but we were able to cover them under one plan

Our original strategy was to place coverage under two different policies while taking advantage of the tax credit. When we came to the end of the federal application, we were able to place the couple under one policy. This was a great moment!

The couple was able to get a policy with a $750 deductible with a total monthly cost of $123.

I feel that we were part of the equation that is Equal Rights for everyone here in Indiana.

Whatever your beliefs or religious view are, we will help you with your health insurance or your employee benefit package. We believe we have an obligation to help everyone to make our community a better place. If we can accomplish this by educating people on health insurance and health care options, then we have fulfilled our obligation.

Tony Nefouse

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Doctor Tablet Computer Affordable Care ActIt has been 5 years since the Affordable Care Act (ACA) was passed into law. This law has had a dramatic change on health insurance markets here in Indiana and the rest of the country.

Now that most of the law has been read and interrupted by the government agencies and health insurance companies, we now see impact of the law.

The creation of the Health Insurance Marketplace through the Federal Faciltated Exchange and the tax credits. This was one of the true focal points of the ACA. The exchange and tax credit have made health insurance premiums affordable to people that are low income. With income under 400% of federal poverty, now are eligible for reduced premiums. In the laws eyes, everyone can afford a health insurance policy now.

For families that do not qualify for tax credits on the exchange, the ACA has had a negative impact from a cost standpoint. Premiums have increased 30%-50% for some of these families. It is forcing families to make tough decisions on household budgets.

Guaranteed Issue was another power aspect of the law. No one can be turned down for pre-existing conditions. This opened the door for coverage for anyone that was being treated for a condition that was otherwise uninsurable. This also has led to premium increase of over 50%.

In response to the guaranteed issue, insurance companies have tried to control cost through narrow networks. Once again we see the emergence of the HMO as a primary tool to do that.

Essential Health Benefits was the ACA answer to streamline coverage for all health insurance. This made it mandatory that all plans cover the essential benefits. This was very similar to the Medicare supplement policies. For Indiana, the essential benefits were benched marked by the carrier that had the biggest population of small group health plan. This was Anthem, and it was quickly determined some aspects of the Essential Benefits were going to make health insurance plans even more expensive than what they are now. That is how here in Indiana we have higher deductibles than what the authors of the ACA intended. The Anthem bench mark plan also put limitations on Therapies which was not what the Authors of the ACA wanted. The reason there is such disparity from state to state on the Essential Benefits, it took years for the government to determine what the essential benefits were. Then they had to determine what the cost of the mandated coverage was going to do to premiums.

The Employer Mandate has been a topic of great debate. If an Indiana employer has more than 50 full time employees (or the equivalent) they have to provide group health insurance or pay a $2,000 penalty per full time employee. This has been a huge issue with the government providing guidance on the Employee Mandate. At this time, the government still has 2 methods on determining if you are eligible for the Employer Mandate. Certain industries have made it very clear that they will not be able to afford to offer a group health insurance or afford to pay the penalty. The outcry from the business community has been so great that the government has delayed the employer mandate twice.

Group health insurance has had a negative impact to the ACA in most situations. Some Indiana companies have benefited from the ACA. These companies have very high utilization employees of health care benefits. The ACA made small group health insurance guaranteed issue. This led to what is called “pool ratings”. Which mean the health insurance carriers would take all of the small groups and create one risk factor. The healthy small groups then offset the risk of the high utilization, thus lead to rate decreases for the sick groups. The unintended consequences to the pooled rating is the healthy groups premiums increase anywhere from 40%-100%. These led to an erosion of small group health insurance. The impact is so severe that the government allowed companies to keep their current group health insurance as a transitional policy to the ACA.

In Indiana, next year small groups will be companies with less than 100 employees. The pooled ratings may have similar impacts, which may lead to transitional policies.

Large Indiana Employers have been taxed by the ACA. On large group health plans this tax has been significant. Every policy in the country is being taxed to fund the affordable care act.

Right now the ACA, has 3 major aspects that impact rates.These are called the three R’s

  1. Reinsurance
  2. Risk Factor
  3. Risk Corridor

Reinsurance is for all the individual insurance companies. This is where the government will pay after a claim hits a certain number. Right now that number is $45,000. Once a claim has hit $45k the government is supposed to pay up $250,000. This was put into the law to keep the insurance companies from exiting the individual market and attract new carriers. This reinsurance will go away in 2017, and could lead to an exodus of smaller individual carriers in the Indiana market.

Risk Factor and Risk Corridor are permanent. This is where health insurance companies determine a risk factor for the policies they plan. Then the amount claims determines what the actual risk factor is. If the carrier performs 3% better managing their risk, then they have to pay that saving back to the companies that did not manage their risk as expected. This is one of the provisions of the law that gives no incentives for a carrier to lower their premiums. We may not see a reduction in premium until 2017, when there are less carriers in the marketplace.

Five years later has revealed a lot about the ACA, and how it works in actual market conditions. It really depends on your personal situation if you are happy with the ACA. Americans that were priced out of the individual health insurance markets and can benefit from the tax credits are thrilled. People that were denied coverage from carriers because of pre-existing conditions are happy. Middle class people are upset because their premiums have gone up and so has their out of pocket costs. Large Companies have had a huge increase in administration costs and additional taxes. Large Hospital groups are thrilled to see their uninsured claims shrink. Small medical practices cannot keep up with all the different carriers and networks. Many people fear the overall cost of the ACA will be unaffordable to the country without raising additional taxes.

Where do you stand?

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Medicare and Medicaid Services (CMS) announced a Special Enrollment Period (SEP) for people that did not have health insurance coverage in 2014 and were penalized. Then penalty came when you filed your taxes.

CMS has decided to make those who were unaware of the new law an opportunity to get coverage.

To be eligible for the SEP

  1. Can’t be currently enrolled in coverage through the health insurance marketplace or any other health plan.
  2. One will have to have paid the penalty for not being insured.
  3. One must state they were unaware of the individual mandate.

If you do not have coverage this is your last opportunity to get coverage for the year without a qualifying event.

For off the exchange plans, some carriers are allowing enrollments that meet these guidelines and other are not. Anthem will accept enrollment while UnitedHealthcare will not.

Here in Indiana and the rest of the country, trying to comply with CMS releases is always a challenging situation. At Nefouse & Associates we are able to digest these updates quickly, so we can help people.

Give us a call to discuss how we can help you at (800) 846-8615.

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