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If you work or own a small business, you may be familiar with using HRA’s to help reimburse employees for individual health insurance. This strategy has been around for over a decade and has always been controversial under the tax code.

Small businesses that have struggled with group health insurance costs and participation requirements have utilized the HRA approach to offer employee benefits. Many of these small businesses are in industries or locations with lower compensated employees who qualify for Medicaid or under the Affordable Care Act qualify for subsidized health insurance (premium tax credits).  This has created a tax advantage for both the employer and individual regarding individual health insurance.

The Government has now changed the regulations for HRA’s in conjunction with Individual health insurance reimbursements. If an employee participates in a company-sponsored HRA, they can no longer receive premium tax credits.  This will negatively impact a lot of Hoosier that are not aware of these new regulations resulting in the paying back of all the premium tax credit one receives.

Here is an example of what is going to happen.  An employee of Company X works for a company that provides $400 a month in an HRA benefit. The employee has a family of 5 with a household income of $80,000, which qualifies them for a tax credit/premiums assistance of $1,053 a month.  The plan they choose on the marketplace costs $1,549 a month. Subtract the $1,053 tax credit, $400 HRA benefit- Now, the employee’s health plan for their entire family costs $96 a month.  Great deal!

Now when that employee goes to filer their taxes, they will be required to pay the tax credit back. $12,636 This will create severe hardships for families that will not be aware of the new rules.  Most employers offering the HRA do not have time to stay compliant on new rules and regulations, so they will not know, which leads to a massive surprise to the employees and employers.

For 2021, employers may want to reconsider offering an HRA if they suspect their employees will qualify for subsidized premiums on the exchanges.

Here is a link to that provides more details.


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Indiana residents seeking COVID-testing can find testing locations by visiting  The Indiana State Dept of Health has partnered with OptumServ to provide testing to anyone seeking a test across Indiana. You will need to register before testing at or call 888-634-1116.

How much will the test cost?  


What if I receive a bill?  

If you received COVID-19 related services after March 18, 2020, you should not receive a bill thanks to the Families First Coronavirus Response Act, which requires Medicare, Medicaid, and private insurance plans to cover the cost of services entirely.

Be sure your medical provider sends correct billing codes to your insurance carrier.  Incorrect billing codes can result in billing errors.

Reach out to your insurance company.  New procedures are in place, and mistakes happen.  Call member services on your insurance ID card to find out more.

Call your insurance broker for assistance.

File an appeal with the insurance company.  You have six months to appeal an adverse benefit determination.

What if I choose a non-network facility for testing?

Most insurance companies cover the cost of services in full, even if you choose to go outside of the network.

What if my doctor did not order a COVID-19 test?

Your doctor will bill for services conducted.  If there are no COVID-19 related charges, the services will be billed according to your benefit plan.

What if I need more than one COVID-19 test?

Insurance companies will pay multiple tests at zero cost-share.

What about at-home COVID-19 testing?

The FDA has not authorized any test available for in-home use.

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Congress has bipartisan support on stopping or limiting surprise medical billing if a patient receives care from a non-network provider that provider will “balance bill” the patient which create surprise medical billing. 

Balance billing is happening all over the country, including Indiana.  The patient usually in an emergency receive medical services from a provider that is not participating in their insurance network. A common situation is central Indiana is that the emergency room doctors are not participating in the network, but the facility is.  About 30 days after services have been received, the patient may receive a bill from a medical provider they don’t recognize. Then after some frustrating research, they learn those doctors are not in network and can charge whatever they feel is reasonable.

With Health Maintenance organization (HMO) & Employers provided organization (EPO) we are seeing more and more plan that offers no coverage for out of network claims.   Even PPO’s are starting to have gaps in coverage where the medical provider and the insurance company cannot agree on medical reimbursement rates. 

The stakeholders in this debate are the medical community and health insurance carriers. Each side is point fingers to blame the other.


The No Surprise Act would set medical rates at 100% of the current median in-network reimbursement rates.  Which would still lead to patients having surprise medical bills but would give a patient a level of protection on what the medical provider could charge. 

If each community starts using an average cost for all medical services, we could see the insurance companies’ proprietary networks become less valuable.  This would have a significant impact on the health insurance industry.  If the medical community is held to a fixed priced for the procedure they perform, this could impact the large medical groups. 

It will be fascinating to see the final bill’s impact on both stakeholders.

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There was a study conducted by the Rand Corp that examined payments rates by private health insurers in 25 states and Indiana was one of them.  The purpose of the study was exposing what health care providers charge compared to Medicare.

The study determined the dramatic difference in the cost of health care cost across the country.  This information could show lawmakers the severe challenge they face with regulating healthcare. It is hospitals that are charging the highest rates should have more government and industry attention.

The study proved that Indiana health insurance plans paid on average more than three times what Medicare did.  In Michigan, those medical providers charged closer to 1.5 times Medicare.

Indiana medical providers have been able to charge a great deal more than other states.  This could be a direct result of Hoosiers preferring a PPO network where different states have embraced narrow managed care networks.   Indiana hospitals systems have grown more and more powerful through mergers and acquisitions which may give them more negotiating power to receive higher reimbursement rates.  The medical community lobbying power may also have had something to do with it.

With this RAND study gaining more attention, Indiana businesses are starting to realize how much more we are paying for health care vs. employers in other states.  

What could employers do with this information?

One option would contract directly with medical providers. An employer would contact the hospital group directly and negotiate the reimbursement rates of healthcare for all their members.  This could result in employees using a limited network for care, which Hoosier have notoriously disliked but with this found cost information, Indiana employers may have no choice.

The direct contracting is now available for even small groups though Franciscan, IU or St. Vincent’s.

There is also the option of a group health plan that uses reference-based pricing to reimburse medical expenses. This is where medical costs are paid based off a multiple of the Medicare rate. The medical community in central Indiana has fought this type of reimbursed. Why should they make less than their 3x Medicare rate?

If Indiana medical providers refuse to discount their rates, then maybe a market correction is in order. With the Rand study showing Michigan with one of the lowest medical costs, maybe employers start sending all acute cases to Michigan for treatment.  If the company is self-funded, meaning they are paying the claims up to $500K, and there is member’s that need care that cost’s $400K in Indiana but the same level & quality of care in Michigan cost $200K, that is an easy decision to make.

That employer could charter a private jet for the member and family and still save a significant amount of money.

The Indiana medical community will eventually be held accountable for what they charge by either the government or by a free market.

Kaiser Health News – Market Muscle: Study Uncovers Differences Between Medicare And Private Insurers

Rand Corporation – Prices Paid to Hospitals by Private Health Plans Are High Relative to Medicare and Vary Widely

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All the Jan 1st Small Group Health Insurance Indiana and mid-market renewals have been released by the insurance carriers.  

Small Group Health Insurance Indiana with less than 50 Employees:

The two main carriers for central Indiana and the surrounding area are UnitedHealthcare and Anthem. There are few areas that have other carrier presences in the small Group Health Insurance Indianagroup market. In Southern Indiana, Humana has a large market share and in Fort Wayne PHP is the dominant carrier. IU Health plans show in areas where there are IU Hospitals.

Anthem small Group Health Insurance Indiana renewals are flat this year, after double-digit rate increase in 2018. UnitedHealthcare is averaging about a 7% increase. These rates increases are somewhat under control, but the small group ACA premiums have started to move to the unaffordability route. This may be due to community rating and how rigid the rules are with age bands.

Plan design is changing under the rules of the ACA. The plans are designed by actuarial values and each carrier is offering different options. Anthem is offering richer plan designs on their silver and gold plans. What make’s there plan richer is the coinsurance levels, where they have options with 100% coinsurance after the deductible is met. At 100% coinsurance, this is limiting the out of pocket for inpatient and outpatient procedures. UnitedHealthcare’s coinsurance is shifting more expense to the members with more plans having a 50% coinsurance. Without of pocket maximum increasing to over $7,000, this is already unaffordable for most Hoosiers.

2019 Small Group Health Insurance Indiana Options:

There has been a steady movement of small employers to use age-based premium, where the cost is determined by the member’s age. Yes, this can be an administrative headache if the group is not using a benefit admin system. The positive with age-based to help attract new employees with their health insurance cost is less.

UnitedHealthcare has been successful with their multi choice plans. This has allowed small employers to offer plans designs that fit their employee’s needs. Another technique that has controlled cost is the use of a gatekeeper who is the primary care physician that oversees all of the member’s health care services. UHC calls this network Navigate. At first, employees have had resistance to this approach, but with UHC vast network of doctors, it’s slowly becoming more accepted. Essentially, the Navigate plan forces the member to form a relationship with their doctor. This leads better treatment outcomes and a better overall experience for the member. This is not a new concept, it goes back to the days of managed care. Now, a Navigate plan can reduced health insurance premiums by a double-digit percentage.

IU Health offers a traditional “old school” Health maintenance organization (HMO). They are pushing an integrated care model where all the physicians are in communication with one another. This can have a positive impact on acute care cases. They seem to be competitive in areas where there is a high density of IU medical providers, which makes sense. The question many owners, CFO’s, & HR are faced with when entertaining the IU health plans, is 7% saving enough vs a PPO/EPO option.  Surprisingly most say NO. With IU owning the medical providers and the insurance plan you would think they could get more competitive on premiums. They can’t, and it’s doubtful they will. It’s about network discounts, why would they discount a procedure under the IU health plan when they can get the full amount from an Anthem, Cigna, or UHC plan. Hospitals also have revenues goals they must meet.

Self-Funded Solutions

There are now more and more options from carriers with partially/fully funded Self-Funded plans. There are a couple of large name brand companies that are offering these solutions, but Anthem of Indiana is not one of them. UHC has a division called All savers that is now providing a level-funded a plan to groups with just five employees.

Self-funded plans are not required to follow all the same rules of the ACA, which allows them to underwrite. The underwriting can create a 30% savings. If your company is currently insured in the ACA community rated market, it’s worth your time to look at level funded. In, 2019 the partial self-funded insurance vehicle is the go-to solution for the small group.  


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Small Group Rates Delayed 

Every year the health insurance companies of Indiana have to submit their rates and plan designs for approval through the Indiana Department of Insurance. In the past, this filing would be submitted for review and approval in the month of May.  The filing for 2019 small group fully insured policies was extended to the end of June. This extension has also extended when the department of insurance would approve the 2019 rates. 

The main Indiana insurance companies like Anthem and UnitedHealthcare are not sure when rates will be approved. It could be October 15th, or we could end up in the month of November before we have approved rates.

This delay is having large unintended consequences for Jan 1st small group both under the affordable care act and legacy groups!

80%+ of small groups renew Jan 1st.  Under the ACA fully insured market, these plan designs change every year. The plan changes are not just minor, we have seen deductible, co-pays, co-insurance have huge changes that create more cost sharing to the insured. A perfect example was UHC 2018 introduction of a plan that had 50% co-insurance for outpatient services. The plan was advertised as an 80% co-insurance plan but in the details (small print) it was determined outpatient was 50%. This creates a large cost sharing when the out of pocket max is $7,000+.

In a perfect world, a small group should make renewal decision at least 60 days prior to the actual renewal date. Under the ACA, by law small group fully insured renewal rates must be released 90 days in advanced. 

If 2019 rates are not approved until November, Indiana small companies will not have much time to make decisions or even review alternate options. 

Every Insurance agency/broker active in a small group (there is not a lot of us) is going to be overwhelmed with request for proposals and learning the new group insurance policies being offered. 

group insuranceNefouse & Associates Solution for Small Group:

Our solution to the 2019 small group rate delay is both being proactive and utilization of technology. First, it must be determined if the fully insured market is the best option for your company.  If your small group company is relatively young and healthy, then reviewing partially self-funded options may be in your company’s best interest. 

With the bulk businesses renewing for Jan. 1st, technology is becoming the quickest option for enrolling and employee education for small Indiana groups. We offer a benefit admin platform delivers on both the education, installation and new employee on-boarding. We can build out a client’s enrollment platform in less than three hours, with employees reviewing and enrolling in company benefits in less than 24 hours. The platform is customized to the clients’ company with logos and dedicated domain name. This is one of the added services we provide our clients at no additional costs.

Our proactive broker approach is all about dedicating the time to reviewing the plan contracts to advise our clients of the best option. Contract review is difficult during normal business hours and really has to be done after hours, this way there are no distractions. Once reviewed, we ask the carriers for an explanation of the area of uncertainty. The response time to these questions can be long, the carrier rep normally will not answer them as they don’t know or want to take on the liability. If the insurance companies legal must give the answer, it can take over a month. If the summary of the benefit chart does not match up with the plan quote, it may be better to disqualify that plan design as an option. If we (as your broker) do not have access to a certificate of coverage (COC), which we won’t until after the plan is issued, you have to be very cautious on plan election.

For Indiana small group health plans, using a broker like Nefouse & Associates that actually cares is the first decision that has to be made.  If you are a small Indiana business will no employees or less than five, you may be a good candidate. Contact us, and we can provide information on the Jan. 1st 2019 Small Group Rates.


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Starting in the 4th quarter of 2018, we could see the release of association health plans in Indiana and the rest of the country. Under the final rules from the Department of Labor, a small business can join to form association health plan (AHPs), this would give the small employers access to large group health insurance coverage.

One aspect of the final ruling that has received no attention is old association health plans (AHPs) can continue to operate under pre-Affordable Care Act rules. The old rules allow an insurance company to underwrite the small group and assign a risk factor, which then determines the cost. The small group must have at least two full-time employees, but they can be husband and wife. Currently, Indiana has active associations that are offering access to health benefit under the old rules. American Society of Civil Engineers, Indiana Dental Associations, Indiana Manufacturers Association Group Insurance Trust, National Funeral Directors Association, Banking, Faith-Based, Social Services, and Transportation and others.
These association health plans can be viable solutions for small group vs community rates under the ACA. If a group received the best-case scenario after underwriting, a group could save over 20% vs full insured rates. The association should also have an additional premium discount on the 20% maybe another 5%.

Most associations with 500+ members can investigate setting up associations that are operating under the pre-ACA rules of underwriting each case. The insurance company is limiting their risk with the per case underwriting practices but if your small company can reduce their health insurance premium, why not look at this option.

The new rules for creating AHPs is not attracting much competition. First, the insurance companies are not allowed to develop the health plan. They can administer it, but the associations must put it together. Most associations may not have much experience in developing health insurance vehicles. The insurance companies are hesitant about any insurance products that are guaranteed issue. The ACA has proven the guaranteed issue market can create substantial financial losses for carriers. Any association health plan that is self-funded will governed under the multiple Employer welfare arrangements (MEWA) at a state level, which prevents them from being a multi-state.

The fourth quarter of 2018, we should see a push from AHPs operating under the old rules of underwriting.
Here at Nefouse & Associates, we are looking to develop an AHP for Indiana that will take effect in 2020. If you are a small Indiana business will no employees or less than five, you may be a good candidate. Contact us, and we can provide information on the AHP development.

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Short Term Health Insurance Final Rule 36 months of coverage

Short-term health insurance is a policy that is very similar to pre-affordable care act coverage.  The plan does not cover preexisting conditions and requires underwriting.  If your accepted, the cost is 50%-60% less than an ACA product. These plans are also using traditional PPO networks, which gives greater access to medical providers.

The final rule allows for short-term coverage to be extended up to 36 months. Currently, coverage can be offered up to 90 days.  This could be a game changer in the current individual health insurance markets.  Even though the final rule states a plan can be offered for 36 months, does not mean that all insurance companies will embrace this. We could see contracts that are guaranteed renewable for 36 months.

There is much criticism that these short-term plans will negatively impact the ACA marketplace. That criticism is valid because if someone is healthy and can obtain a 36-month policy for 50% less, that will be very attractive. Then the ACA pools will lose a portion of the healthy members that help to offset higher utilizers. Thus ACA rates will increase.

Why did the Administration Extend Short Term Plans?

Currently in Indiana and the rest of the country, if you are not eligible for tax credits/subsidies on the marketplace, the premiums are astronomically for most middle-class families.  Then add in the limited network access with huge out of pocket maxes, it’s not uncommon for a family to have $17,000 in premium with potentially another $14,000 in out of pocket, that could cost a family $30K a year.

That same family looks at the short term for $7,000 a year with the same out of pocket, given the short term does not provide the same level of coverage or covers pre-existing conditions. If a family is healthy, it’s hard not to entertain the short-term option.   That is why the administration extended short-term plans.

Short-term plans are underwritten which is where you have to answer medical questions and can be denied the plan.  Most of these policies are now enrolled through web-based applications, which makes for easy enrollment. The insurance companies use a technique called Post Claim Underwriting when you have a claim.  This where the insurance reviews your past medical history to determine if the claim was preexisting. If it is a prior condition, the insurance company can and will deny the claim.  One of the real problems with Post-claim underwriting is the delay of payment to the medical provider.  The insurance company may request all your medical records for the past five years.  Even if you are persistent most medical provider will take at least a month to release records.  If you get diagnosed with the condition that needs immediate treatment, the delay in payment could prevent an obstacle to continuing treatment.

In 2018, short-term insurance sales exploded in Indiana and the rest of the country. Smaller insurance companies got creative with their product offering. To be compliant with the rules set by the Obama administration, short-term was only good for 90 days, and companies created 3×4 policies that included 4 short-term policies with one application.  These created a huge saving for health Indiana families.  Now with the new ruling, I would predict that UnitedHealthcare & Humana launch new short policies.

When you start looking to purchase a short-term policy, buyer beware. You need to make sure you know what you are buying. Always look at the last page of the brochure that lists exclusions.  With these plans, you may want to consider buying them from a name brand carrier.

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The remaining two individual health insurance companies participating in the Indiana market have filed their rate for 2019. We now have two insurance companies offering personal health in 2019.

CareSource and Celtic Insurance Company aka AM Better

The good news is these two companies have decided to continue to offer individual health insurance coverage to Hoosiers.  There was the real concern with the amount of risk that these carriers will pick up with Anthem exiting the individual market in 2018.

The average rate increase for CareSource is 10.2% 

The average rate increase for Celtic aka AM Better is a decrease of 0.50 %

These are the averages; each county is assessed with a different rate.

CareSource has a minimum rate change -7.7% with a Maximum rate increase of 33.6%.

Celtic has a minimum of -15.2% with a Maximum rate increase of 5.4%.

CareSource is going to be available in 79 counties and offering 3 bronze, 6 silvers, & 2 gold plans.

Celtic is going to be available in all 92 Indiana counties offering 1 bronze, 9 silvers, & 1 gold plans.

If you are interested in crunching the details of their filings continue reading.

2017 Ambetter insured 49,522 members on the exchange in Indiana. They collected $210,687,579 in premium and pay out $191,692,232 in claims.

2019 Ambetter project they will cover 39,574 members with projected premiums of $214,239,747 and projected claims $172,934,517, but they anticipate a risk adjustment payment of almost $11 million. After taxes and operating costs, they estimate a 3.89% profit margin.

2017 CareSource insured 34,722 members on the exchange in Indiana.  $167,483,560 in premiums with $163,169,826 in allowed claims.

2019 CareSource is estimating to insure 75,194 members collecting $397,028,890 in premiums with $367,341,867 in projected claims, they estimate $58,850,419 in risk adjustment payment. Operating on a profit margin of 5.38%.

For 2019 both Insurance companies are banking on the risk adjustment payment to be profitable in Indiana.  If there are only two companies left in the individual market for Indiana and both anticipate risk adjustment receivables, who pay these funds?

Rates Per County:

Ambetter is decreasing rates on most of their plan designs except silver in Rating Area 10 which includes Boone, Hamilton, Hendrix, Marion, Morgan, & Shelby County.  Area 10 receiving a 3%-5% rate increase on the one silver plan offerings.

CareSource is rating up almost every county. They are increasing their gold plans costs by 15%-29%, which indicates those plans were underpriced from the start.  With the rest of the counties having an increased, their premiums will be higher than Ambetter.  Which could create a situation that this carrier is not used too?

If they have based their distribution model on being the lowest costing, can they continue to attract preferred risk?  Will they even come close to the estimated 75K members they anticipate insuring?

The fact that both carriers filed rates for 2019 is a positive because there was uncertainty if the companies would continue to participate.  When the ACA was originally launched the CBO predicted that by 2019 Indiana would have almost 1 million members receiving coverage from the marketplace.  It’s fair to say that projection was way off as the two insurance companies left are projecting combined just over 100,000 members.

CareSource and Ambetter are primary Medicaid providers, and they have extended those networks to the individual exchange plans.  It appears that this strategy has the highest chance of success in the individual market.  Other Insurance company’s like Anthem, Humana, UHC, Assurant, IU Health, MDwise etc. left the Indiana individual market because they could not be profitable. 

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A federal appeals court ruled that the federal government is not obligated to make risk corridor payments.

Risk Corridors has become one of the major flaws with the Affordable Care Act law.

Risk Corridor:

Risk Corridor is to limits health insurance companies on profits and losses. By redistributing dollars from insurance companies with lower risk members to companies that have higher risk members.

Within the ACA risk corridors were supposed to stabilizes premiums and stop carriers from charging high premiums. It was believed by the ACA authors that this rule would stabilize the market in the first few years.

Individual health insurance companies participating in the individual markets, were supposed to have protections from significant loses, this was written into the law under section 1342 that the government would pay insurance companies the full amount of what is owed.

The Risk Corridor was a failure because insurance companies all incurred higher losses than expected by the authors of the ACA.  If a carrier had success in another state, those profits were then “tax” to help fund losses by other carriers.

Multiple Insurers sued the government for unpaid risk corridor payments. Humana who had a strong Indiana presence in the individual market, claims they are owed $611 million.

Risk Corridor was flawed from the start because more carriers applied for payment than paid into the system.  This is an example of a colossal mistake on underestimating the cost of health care. The authors did not just make this mistake but all  the insurance industry.  Actuaries did not know how to assess the risk in certain markets, because most of the people had a little history with private insurance.

The first two years of the ACA, we saw multiple Insurance companies get wiped out. The CO-OP health plans were the first casualties of the ACA.  In 2015, 9 out of 10 CO-OPS were owed payment under the risk adjustment. They completely underestimated the individual market’s risk. Quickly the federal government started questioning the long-term stability of co-ops. In 2018, only just four CO-OP’s remained offering plan in five states. Initially, there was 24 CO-OP’s established under the ACA at an estimated cost of $2.2 billion of taxpayers money.  The CO-OP’s were doomed from the start, one of the requirement was they could not use any insurance people to lead them.

The insurance industry did not do much better. In Indiana, we saw multiple carriers fail. Assurant Health was one of them. They had a presence in the individual market before the ACA but did not adjust their strategy to the new market. They were selling health plans that were designed before the ACA, and they quickly had huge losses not just in Indiana but in every state they were active in.  Once losses started piling up, they could not adjust quick enough to save the company.  Other insurance companies experienced similar situations but were able to limit their exposure by exiting the individual markets.

Now the Insurance industry had enough experience in the individual health insurance markets to determine the risk.  I doubt the non-Medicaid insurance companies will re-enter the ACA individual markets with Risk Corridor payment not being guaranteed by the federal government.

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