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Subsidy Calculations Not As Simple As They Seem

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If you’re confused about the subsidies for health insurance starting in the exchanges in 2014, you’re probably not alone.  Although the basic math is quite simple in terms of the maximum amount a family or individual will have to pay based on their income if they earn less than 400% of federal poverty level, it’s still tough to pin down specifics in terms of who will end up getting subsidies, especially for people who are right on the border of the income cut-off.

There have been subsidy calculators online for quite some time.  The first one we found was from the Kaiser Family Foundation, but numerous others have appeared recently.  Connect for Health Colorado, the Colorado exchange, has a calculator on its website, but their calculations aren’t calculatin subsidies for health insurance exchangebased on Colorado data yet.  On the contrary, the calculator includes language explaining that “The premiums in this calculator reflect national estimates from the Congressional Budget Office for silver plans, adjusted for premium inflation and age rating.”  So for the time being anyway, you can’t use the Connect for Health Colorado calculator to generate Colorado-specific subsidy numbers.

That might change after the Division of Insurance releases official rates at the end of July.  Part of the confusion around rates and subsidies stems from the fact that rates are not yet finalized.  There’s still a lot of number-crunching (and maybe some “do-overs” from carriers) going on, and July 31 has been set as the date for final numbers to be released in Colorado.

For now, it appears that most subsidy calculators are using generalized national average data, estimated by the CBO.  But the numbers turn out differently depending on what calculator you use.  Let’s consider a family of four, with an income right around the cut-off for subsidy qualification.  We’ll do a calculation based on an income of $94,000 and another using $94,500 (which puts them just above the subsidy qualification limit of 400% of FPL).  For two parents (age 37 and 35) and two young children with an annual household income of $94,000, the Kaiser Family Foundation calculator estimates a total subsidy of […]

Guaranteed Issue Health Insurance Increases Entrepreneurship

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Removing the pre-existing condition barrier to entry in the individual health insurance market is a good way to make people more likely to take the leap into self-employment instead of feeling tied to their guaranteed-issue group health insurance

[caption id="attachment_5992" align="alignleft" width="169"]Guaranteed Issue Health Insurance Increases Entrepreneurship A local Fort Collins business – New Belgium Brewing[/caption]

policy.  There’s definitely room to debate the issue on an individual basis.  Some people, especially younger, healthy people who have always qualified for underwritten health insurance and who earn enough money to be above the subsidy cutoff (about $46,000 for an individual and $94,000 for a family of four), might find themselves financially worse off under Obamacare (although they will likely have better quality health insurance going forward, which could improve their financial situation if they ever needed to use it).  But from the perspective of benefiting as many people as possible, the new rules regarding individual health insurance are good ones.  Most young people (the population hardest hit by rate hikes related to making individual policies guaranteed issue) will qualify for subsidies to lower their out-of-pocket spending on premiums.  And nobody will have to deal with the frustration of not being able to qualify for health insurance outside of an employer group plan.  A few years ago, in states that didn’t have high risk pools available, people who couldn’t qualify for […]

Clearing Up Confusion Around The Health Insurance Provider Fee

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One of the funding mechanisms for the health insurance exchanges is the implementation of the health insurer fee that will go into effect in 2014.  I’ve seen this referred to as a health insurance provider fee (a bit confusing as it might lead people to believe that the fee is imposed on medical providers rather than insurers), a health insurance industry fee, and an ACA health insurance carrier fee, among others.  But whatever you want to ACA health insurance provider or carrier fee to fund exchangescall it, the fee is an amount that will be collected from health insurance carriers starting next year, and the funds will be used to help pay for the state and federal health insurance exchanges.

The fee will generate $8 billion in 2014, and will increase each year up to $14.3 billion in 2018.  After that, it will increase annually in line with health insurance premiums.  Insurance carriers will be responsible for remitting their share of the fee, which is calculated based on the insurer’s total collected premiums from the prior year.

As is generally the case with any new fees or mandates that increase costs for insurance companies, this fee will be passed on to companies and individuals who purchase policies.  However, it won’t necessarily be easy to determine how much the fee is impacting your health insurance premiums, since many carriers are expected to just roll the fee into their total premiums.

In Colorado, Rocky Mountain Health Plans has stated that they will be adding the health insurance provider fee as a separate line item on their bills in an effort to be as transparent as possible.  They will begin collecting the fee next month (July 2013) in order to spread the fee over a longer time horizon and thus lessen the impact on next year’s premiums.  Carriers can choose to wait to begin collecting the fee, but the total amount collected will be the same regardless:  Roughly 2% – 2.5% of total premiums in 2014, and 3% – 4% of total premiums in future years.  In the individual market, RMHP will be Rocky Mountain Health Plans HMO Coloradocollecting $4.12 per member per month, for the rest of 2013.  If you have a SOLO plan with RMHP and notice a line item on your bill labeled “Health Insurance Providers Fee”, now you’ll know what it is (be aware that the total collected is per member per month, so if you have a family of five on a RMHP policy, your bill will reflect a charge of $20.60/month starting in July).  If you have coverage with another carrier, you’ll still be paying the fee (some carriers […]

Networks And Carriers Are Part Of The Big Picture With Exchanges

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[…] Aetna, United and Cigna are all absent from the CA exchange, and Dan looks into several reasons why some of the bigger carriers might have opted not to sell in the exchange on day one, and why some large provider networks are not going to be covered by plans sold in that state’s exchange.

Connect for Health Colorado Exchange Marketplace and networksHere in Colorado, Aetna stopped selling individual policies a couple years ago, so we weren’t expecting them to be in the state’s exchange, Connect for Health Colorado.  United Healthcare has been a mainstay in the Colorado individual market, and while they submitted numerous plans to the DOI for small group products, they are all to be sold outside of the exchange and there don’t appear to be any individual plans in their new lineup.  Cigna, however, will be selling individual plans both inside and outside of the exchange in Colorado.

We’ve heard from carrier representatives – who are familiar with multiple state exchanges – that Connect for Health Colorado has been particularly great to work with, and that is no doubt part of the reason Colorado will have a large number of carriers and policy options available within the exchange.  We’re happy to be in a state that has been actively working on healthcare reform for several years, and that moved quickly to begin building an exchange and implementing the ACA as soon as it was passed.

Comparing Individual Marketplace Premiums to Small Group is Disingenuous

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After a lot of confusion late last month regarding 2014 health insurance rates in Colorado and information about which carriers would be offering policies in the exchange (Connect for Health Colorado), off the exchange, or both, a lot of the dust started to settle late last week and more information has become available both in terms of rates (although they won’t be finalized for another couple months) and carriers.  The Colorado Division of Insurance has released a full list of the carriers that submitted rates for next year, including details regarding whether each plan will be for individual or small group, and sold on exchange, off exchange, or both.  Detailed rate information is available from some carriers on the Colorado Division of Insurance website, although there will likely be a lot of change between now and October.

As soon as rate data started becoming available in a few states, both supporters and opponents of the ACA jumped on the info and used it to paint two very different pictures.  HealthBeat’s Maggie Mahar (who has astutely and accurately rebuked a lot of political spin and fear-mongering from opponents of the ACA ever since it was signed into law) called out Avik Roy for his critical view of the new rates, noting that he was comparing “apples to rotten apples” in his Forbes article about rate shock.  But Roy did make a very good point is his article, which was based on the release of rates in CA.  He noted that

“The rates submitted to Covered California for the 2014 individual market,” the state said in a press release, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

That’s the sentence that led to all of the triumphant commentary from the left. “This is a home run for consumers in every region of California,” exulted Peter Lee.

Comparing Individual Marketplace Premiums to Small Group is DisingenuousRoy went on to point out the key words there, which might have gone unnoticed by people who aren’t in the health insurance industry or paying very close attention to the details:  The rates for the new individual market are being compared to the existing rates in the small group market.

It is not at all surprising that the new individual rates are looking similar to existing small group rates.  Earlier this year I wrote about how difficult it was going to be for the individual market to be priced significantly lower than the small group market once medical underwriting was no longer a factor.

But I’m not sure that most people (other than business owners) are completely aware of how high small group health insurance premiums are.  As we’ve noted many times, people who have employer-based health insurance are often insulated from the true cost of the coverage, thanks to the fact that at least a portion of the premium is paid by the employer.  Some people started […]

Doctors Moving Away From Independent Practice – What That Means For Patients

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A recent thought-provoking article in the Fort Collins Coloradoan delves into the future of independent medical practices and the pros and cons of hospital mergers and “closed” healthcare systems like Kaiser Permanente (Kaiser opened for business in northern Colorado last fall) moving into the area.  The article notes that the split between employed physicians and… Read more about Doctors Moving Away From Independent Practice – What That Means For Patients

No Colorado Health Insurance Rate Information Yet

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May 15th was the deadline for health insurance carriers in Colorado to submit rates for new plans that will be sold in the individual and small group markets in Colorado, both in and outside of the exchange/marketplace (Connect for Health Colorado).  Much has been said about today – May 22nd – being the date when those rates are available to the public, and there has been a lot of anticipation about getting to find out what health insurance premiums are going to look like next year in Colorado.  We know that in the Pacific Northwest, rates have come in lower than expected, attributed partially to the “heavy competition” in the WA and OR marketplaces (9 and 12 insurers, respectively).  Colorado has even more competition than that, with 19 different carriers submitting rates for plans to be sold through Connect for Health Colorado and on the open market (I’ve seen other reports that say 17 carriers, but either way, it will be a robustly competitive market – just as we’ve always had in Colorado).

No Colorado Health Insurance Rate Information YetThere has been much speculation about what the new rates will look like.  9News did a piece last week that highlighted the concerns that rates – particularly in the individual market – could be much higher next year.  Over the last year or so, in talking with knowledgeable representatives from the various health insurance carriers (who are themselves talking with knowledgeable actuaries), we’ve heard predictions that range from rate decreases for older policy-holders to rates more than doubling for younger insureds… and just about everything in between.  So we are very curious to see how things look once the DOI releases rates.

Today’s the day that those rates are scheduled to be made public, but I doubt that things will be particularly clear anytime soon […]

ACA – We Need Solutions Instead Of Repeal Votes

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By now it’s probably not surprising to anyone to hear that the House voted – yet again – to repeal the ACA yesterday.  This is the 37th time in the last three years that they’ve voted to repeal and/or defund all or part of the law.  They are fully aware of the fact that their vote will – as usual – end with them, as it’s highly unlikely to get through the Senate.  But they continue to focus a rather significant portion of their (taxpayer funded) time on this issue.

It’s understandable that there are objections to the ACA.  To say otherwise is to be blind to some of the obvious problems that are inherent in the law.  We’ve written numerous posts in support of the ACA over the past few years, but we’ve also noted several concerns that we have, and I think ACA - We Need Solutions Instead Of Repeal Votesthey’re valid ones.  Premiums in the individual market might end up being higher after full ACA implementation for a lot of people who receive little or no subsidies (we’re expecting to see rates published by the end of this month for policies that will be sold in the Colorado health insurance exchange.  The deadline for carriers to file them was Wednesday).  New restrictions on age-banded rate ratios might end up making younger, healthier people (the ones who are most needed in the health insurance pool in order to stabilize premiums for older, sicker insureds) less likely to obtain coverage.  This problem might be exacerbated by a less-than-robust individual mandate, at least for the next year or two.  We’ve also wondered whether the exchanges will be capable of providing a high level of customer service, given the complexity of the enrollment process (assuming an applicant qualifies for subsidies) and the fact that many of the applicants will be applying for health insurance for the first time.  Will the exchanges have enough staff to rise to the customer service level provided by private industry, or will contacting a knowledgeable representative during the open enrollment period be on a par with getting a hold of a knowledgeable representative at the IRS between January and April?

The concerns that we have about the ACA are outweighed by the positives though:  More people with health insurance, guaranteed issue individual plans, better preventive care, and numerous[…]

Freedom Of Religion And Workers’ Comp In The Cav

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I’m sure a lot of people would have an opinion on this based on religious and/or business beliefs. Jon’s take on this situation is probably far more informed than the average person’s would be, given his knowledge of the workers’ comp system. I cannot imagine going without health insurance, or employees going without workers’ comp, but I recognize that my viewpoint is based on my own experiences in the secular business world – where money (and expensive healthcare) is very much a necessity. It will be interesting to see how this plays out in a Supreme Court appeal. Jon mentioned that there’s a lot of legal precedent in favor of religious exemptions from workers’ comp coverage, so maybe the court will side with the Hutterites. In terms of the unfair competitive advantage that the Hutterite workers have over secular contractors who are paying workers’ comp premiums, I would say that the small number of Hutterite laborers (when compared with the number of non-Hutterite laborers) could possibly be a reason for ruling in favor of the Hutterites: can they really present that much of an unfair business advantage with such a relatively small number of workers?

Comparing CEO Compensation in Various Healthcare Industries

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Joe Paduda of Managed Care Matters did an excellent job with the most recent Health Wonk Review – be sure to stop by his blog and check it out.  I thought this article from Dr. Roy Poses was especially interesting.  Writing at Health Care Renewal, Dr. Poses shines the spotlight on UnitedHealth Group’s CEO Stephen Hemsley’s oversized compensation.  Roy notes that while the increase in CEO compensation does mirror the company’s overall financial success of late, it must also be considered in light of the fact that the company has made some missteps in terms of fulfilling its stated mission to provide health care “at an affordable price” and “expand access to quality health care.”  Roy’s article cites several examples of allegedly unethical behavior, and concludes by noting that “Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.”

Comparing CEO Compensation in Healthcare - Health Insurance vs Pharmaceutical CompaniesI definitely do not disagree with Dr. Poses, and we’ve noted in the past that UnitedHealth Group has had issues with large executive compensation and backdating stock options (that was with a previous CEO, however).  But I do want to use this as an opportunity to remind our readers and clients that most health insurance companies have CEO compensation packages that are far lower.  Forbes compiled a list of the 498 highest-paid CEOs in 2012, and I scrolled through the first 150 on the list.  UnitedHealth Group is there on the first page, ranked number 8 (they’re also ranked number 31 in Fortune 500 total profits, so as Roy said, the CEO salary is at least in the same ballpark with the company’s financial performance).

But you have to click through several pages of the CEO compensation list to get to the next health insurance carrier.  Humana was the next one I found, ranked at […]

Balance Billing From Non-Network Providers Who Work At In-Network Facilities

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We recently heard from one of our clients who is dealing with a balance billing issue resulting from a NICU stay.  For her baby’s birth, she chose a large hospital in Denver that was on her Humana health insurance network.  Her OB/GYN was also on the Humana plan, and she figured she had all of her ducks in a row.  But complications necessitated an emergency transfer to the NICU, where her new baby was cared for by doctors who are contracted with the hospital, but are not part of the Humana network.

When patients are treated by out-of network providers, there’s no contractual obligation between the doctors and the health insurance carrier.  The patient will usually be responsible for a higher deductible when using a non-network provider (although this is not typically enforced for Balance Billing From Non-Network Providers Who Work At In-Network Facilitiesemergency care), but even after the deductible is met, the provider is not obligated to accept the “reasonable and customary” payment from the health insurance carrier.  The provider can choose to bill the patient the shortfall between what was originally billed and what was paid by insurance.

Our client has been balance billed over $5,000 by the NICU doctors.  Humana paid the doctors their in-network amounts for the NICU stay and counted it as an in-network expense (ie, no additional out-of-network deductible was charged) because it was an emergency situation.  But the doctors refused to accept the insurance reimbursement as payment in full, and billed the family for an additional $5,000+.  I suppose it could be worse – this family ended up with a $50,000 balance bill from their baby’s NICU stay.

But it could also be better.  People who are recovering from an illness or injury don’t need to also be finding out that an in-network facility where they were treated also has providers who are not […]

Colorado Health Insurance Exchange Won’t Be A Train Wreck

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When Max Baucus predicted that the implementation of key aspects of the ACA could be a “huge train wreck coming down“, his comments were met with a lot of “see, I told you so!” comments from the right, and some surprise from the left, given how instrumental Baucus was in drafting the legislation.  Now Harry Reid has stated that he agrees with Baucus.  Reid noted that there is still much work to be done, and that significant Colorado Health Insurance Exchange Won't Be A Train Wreckadditional funding is needed in order to make the remaining implementation of the ACA successful.  HHS Secretary Kathleen Sebelius pointed out that her requests for additional funding were rejected in a recent short-term funding plan, but she’s optimistic about the ACA implementation, saying “…we are on track to fully implement marketplaces in January 2014 and to be open for open enrollment.”

I would say that the job Sebelius has in front of her is a monumental one, no doubt made harder by the propagation of misinformation and outright lies (there are no death panels!).  In addition, a majority of the states opted to either have the federal government run their exchanges (26 states) or partner with the state on a joint exchange (7 states).  Only 17 states plus the District of Columbia have taken sole responsibility for running their own health insurance exchanges (Colorado is in this category).  So although HHS will likely be able to implement very similar exchanges in the 26 states where they will be fully responsible for running the exchange, making economies of scale work in their favor, the fact remains that they face a significant task: getting exchanges going in more than half the states, often in places where resistance to the ACA […]

HWR – Private Public Health Insurance Conundrum, Sequestration Cuts and More

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The latest edition of the Health Wonk Review is over at InsureBlog – don’t miss it!  Two of my favorite posts in this edition come from Peggy Salvatore and Joe Paduda.  Peggy, writing at Healthcare Talent Transformation, brings us a trip down health insurance memory lane, comparing where we’ve been to where we’re headed.  She addresses the conundrum of maintaining private health insurance while also placing numerous government-style restrictions on the health insurance marketplace, both from a vendor and consumer standpoint.  Insurers will be Private Health Insurance with Government Regulationsrequired to accept all applicants and compress age-banded premiums into a 3:1 ratio, while consumers will have no choice but to purchase coverage.  There will be no more voluntary business arrangement on either side, and yet the plan is to continue to have health insurance be largely private.  Definitely some good food for thought in Peggy’s post.  I’m generally a fan of regulation, and especially when something as important as healthcare is on the line, I believe regulation is needed in order to advocate for the consumers.  But I’m as curious as everyone else to see how this health insurance experiment will look five years down the road.

Joe Paduda, from Managed Care Matters, wrote a piece about the real-life impacts of sequestration on healthcare.  Sequestration probably seems like an abstract concept to a lot of people, and appears to be used rather casually by politicians who aren’t likely to be directly impacted by many of the spending cuts.  But in case you were curious as to how healthcare sequestration spending cuts are stacking up, Joe’s article is an eye-opener.  One important thing to note is that government spending cuts disproportionately affect lower-income and older Americans.  People who rely on free and low-cost healthcare, Medicare and Medicaid beneficiaries, the uninsured, people who benefit from public health programs… these people – often the least able to withstand cuts – are the ones who feel the sequestration squeeze first.

Many thanks to Hank for hosting, and for all the excellent articles that were contributed.

The Impact Of the Colorado Sexual Orientation Non-Discrimination Regulation

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Last month, Colorado became the third state to prohibit health insurance carriers from denying claims based on sexual orientation and/or gender identity.  At first, we were puzzled when we saw the headlines in the news, since they mostly mentioned discrimination based on sexual orientation or discrimination directed at LGBT insureds.   We were thinking mainly in terms of gay, lesbian and bisexual clients, and we couldn’t remember ever dealing with a claims denial issue based on sexual orientation.  We also had never seen any questions on a health insurance application regarding sexual orientation.

The only issue we had ever come up against in terms of LGBT discrimination had to do with same-sex partners who wanted to apply together for family health insurance policies in the individual market.  Although individual health insurance for two people was the same total price regardless of whether they were on one policy or two, it was often inconvenient for families to have to have two separate policies, and in the case of HSA-qualified plans, it was also financially detrimental to have to split up the family for health insurance purposes.

But we never had any issues with applications being rejected or claims being denied based on sexual orientation.  I posted last month on Google+ that although I’m always in favor of expanding equality, I was a bit perplexed by this new regulation, given that we weren’t aware of any carriers using sexual orientation as an initial underwriting and/or claims issue.

Then I started discussing this issue with Dede de Percin, Executive Director of the Colorado Consumer Health Initiative, and Ashley Wheeland from One Colorado, and I’ve learned a lot more about it in the last few days.  As far as I’ve been able to tell, the DOI bulletin, titled “Insurance Unfair Practices Act Prohibitions on Discrimination Based Upon Sexual Orientation” is primarily a response to broad exclusionary language in health insurance policies that allowed for claims to be denied if the insured was transgender.  The claims Impact Of the Colorado Sexual Orientation Non-Discrimination Regulationexclusions could range from specific treatment related to gender transitioning, to onerous exclusions for just about any medical care at all: De Percin notes that one transgender person was denied coverage for a broken arm because the health insurance carrier determined that the hormones the person was taking weakened the bone and thus led to the break.  This is absurd, and it does sadden me to learn that such broad exclusions were being […]

Age-Banded Premiums And The ACA – Solving One Problem While Exacerbating Another?

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This Contingencies article about age band compression under the ACA is an interesting look at potential future premiums based on the ACA’s 3:1 age band ratio rule.  [Contingencies magazine is published by the American Academy of Actuaries – it’s not a special interest publication, so I tend to trust their articles more than something coming from… Read more about Age-Banded Premiums And The ACA – Solving One Problem While Exacerbating Another?

Health Wonks Tackle New Questions in Healthcare Reform

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Welcome to the Health Wonk Review!  It’s an honor to host the HWR, and the posts in this edition are excellent, as always.  We’ve got a wide range of topics today, but most of them are at least loosely associated with some aspect of health care reform, so here’s a brief visual summary for you.

Health Care Reform brings new questions in healthcare

Now that you know where we’re heading, here are the nitty gritty details.  There’s something for everyone in this edition of the HWR, so keep reading!

Roy Poses, writing at Healthcare Renewal, explains how doctors are pushing back against corporate bosses who put profits above all else.  His article describes two recent lawsuits filed by physician groups alleging that the hospital systems they worked for were sacrificing patient welfare in the name of profit.  The details are sickening to read:  One hospital group encouraged its docs to exaggerate the severity of patient conditions and needlessly admit patients from the ER to hospital beds in order to bill more for their treatment.  Another hospital group that owns three hospitals and also partially owns an ambulance company was making patient transfers (using their own ambulance company despite slower response times) a top priority – to the extent that a doctor’s transfer rate was a factor in bonuses and performance reviews.  An admin email stated that “the performance we are looking for are transfers.”  Wow.  Transfers just for the sake of racking up revenue – patient welfare had nothing to do with it, and was likely compromised when the slower ambulance company was used in cases where the transfer was actually warranted.  These lawsuits are in their early stages and nothing has been settled in court yet, but they hint at some very serious problems brewing in for-profit (and even some non-profit) hospital systems.

Duncan Cross brings us an emotionally compelling article about Arijit Guha that is a must-read for anyone interested in the problem of under-insurance.  Being under-insured might not be quite as bad as being uninsured, but while the uninsured know that they don’t have health insurance, people who are under-insured might not be aware of the specific short-comings of their coverage until they actually have a serious, ongoing medical condition.  Arijit was a grad student at ASU, and he recently passed away from colon cancer.  During his fight with cancer, he also had to battle his insurance carrier (Aetna) and raise money selling t-shirts in order to fund his treatment.  He had a student health insurance policy, and those have long been notorious for having low coverage limits.  Duncan has an insider view of some of the medical issues that Arijit had to face, and he, too, attended grad school for a while, Spring in Coloradoworking on campus at a job that afforded him faculty health insurance rather than student coverage.  He notes that a major problem that wasn’t often addressed in articles about Guha is that the university was the organization responsible for choosing a health insurance plan for its students – Aetna just provided the coverage that the school requested.

Maggie Mahar‘s article at Health Beats will be appreciated by NPs and PAs.  Her post A Doctor Confides: “My Primary Doc is a Nurse” is a great look at the increase in the number of PAs and NPs who are providing primary care, and the myriad issues that accompany this change.  Maggie delves into topics like turf war and resistance on the part of MDs to accept NPs as quality primary care providers.  She also addresses patient and provider satisfaction, patient safety, the cost of primary care, and the shortage of MDs who are choosing primary care versus the willingness of NPs to […]

The New Individual Health Insurance Application Questions

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For more than a decade now, we’ve been helping our clients complete individual health insurance applications.  Before online applications were common, we would drive to our clients’ homes and help them fill out paper applications.  These days, Jay spends many hours each week on the phone with clients who have questions at some point during… Read more about The New Individual Health Insurance Application Questions

Most Americans Might Not See Big Premium Hikes, But The Individual Market Is Different

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One of our all-time favorite bloggers, Julie Ferguson of Workers’ Comp Insider, hosted the most recent Health Wonk Review – the “why hasn’t spring sprung?” edition.   Maybe Julie just needs to move to Colorado… here on the Front Range, we’re definitely starting to see signs of spring – today was a beautiful sunny day,… Read more about Most Americans Might Not See Big Premium Hikes, But The Individual Market Is Different

You Have To Have An HSA Qualified Health Plan In Order To Set Up An HSA

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It’s tax season, and that always correlates with an increase in questions about HSAs.  We always get several calls at this time of year from people who want to set up just an HSA by itself and are wondering how to go about that, and we’ve even had people call and tell us that their accountant told them to go set up an HSA because it would be an excellent way to get an additional tax deduction.

HSAs (health savings accounts) are indeed a great way to get an above-the-line tax deduction.  They’re also a great way to save for future medical expenses and/or retirement.  But it’s not as simple as just setting one up and contributing money.  You have to have an HSA qualified high deductible health plan in place in order to be able to contribute money to an HSA.  Not all high deductible health insurance policies are HSA qualified.  The IRS has very specific guidelines in terms of how HSA qualified HDHPs have to be structured, and if a plan meets those guidelines, it will be labeled as such in the marketing materials.

Look at the picture below:

“PPO (0) – HMO (0)”  ??? That’s confusing too! PPO and HMO are network types and HSA qualified has nothing to do with networks. HSA qualified plans can be PPO or HMO. In Colorado, all individual health insurance is PPO, except for Kaiser Permanente. They’re the only individual/family HMO.

Only HSA Qualified Health Insurance Plans

To give an example, our family had an HSA qualified HDHP for several years, and we contributed to our HSA during those years.  But in 2011, we switched to a Core Share plan from Anthem Blue Cross and Blue Shield.  It’s less expensive than Anthem’s HSA qualified plans (and less expensive than most of the other plans we looked at as well), and even though it’s a high deductible plan, it doesn’t meet the requirements for being HSA qualified.  The maximum allowable out-of-pocket expense limit for a family on an HSA qualified plan is $12,500 in 2013, and our plan has a $15,000 maximum out-of-pocket exposure for a family.  So even though the policy has a high deductible, covers preventive care before the deductible, doesn’t have copays, and generally meets all of the other requirements, the higher out-of-pocket limit means that we cannot contribute money to our HSA unless we switch back to an HSA qualified health plan in the future.

That same IRS link also explains how you can switch to an HSA qualified health plan anytime up until […]

Cavalcade of Risk And Social Media Use In Healthcare

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The 179th edition of the Cavalcade of Risk is live now, over at My Personal Finance Journey, with posts from several notable bloggers.  I thought this post from David Williams was especially interesting, focusing on social media and healthcare providers: a topic about which basically all providers needs to educate themselves.  (And it ties in… Read more about Cavalcade of Risk And Social Media Use In Healthcare

Could Cash-Only Clinics Be A Viable Solution For The Uninsured?

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David Williams did an excellent job with the most recent Health Wonk Review, hosted at his Health Business Blog.  There are lots of great articles about a wide range of healthcare policy topics, so be sure to check it out.  One of my favorite posts in this edition comes from Wright on Health.  Brad Wright… Read more about Could Cash-Only Clinics Be A Viable Solution For The Uninsured?

Let Medicare Negotiate Drug Prices And The Government Can Afford Subsidies

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Medicare Negotiates Drug Prices And The Government Can Afford SubsidiesRight in the middle of the sequestration mess seems like a good time to discuss the subsidies that are going to be a major part of the ACA starting next year.  As of 2014, nearly everyone in the US will be required to have health insurance, and all individual health insurance will become guaranteed issue.  There are concerns that premiums in the individual market might increase significantly, but for many families the subsidies enacted by the ACA will help to make coverage more affordable.  The subsidies will be available to families earning up to 400% of the federal poverty level; the premium assistance will be awarded on a sliding scale, with the families on the upper edge of that income threshold receiving the smallest subsidies.

But how much will those subsidies cost the taxpayers?  How will a government that is so cash-strapped that it’s curbing spending on programs like Head Start and special education be able to fund the subsidies called for in the ACA?

Last summer, the CBO estimated that the exchange subsidies will cost $1,017 billion over the next ten years.  Undoubtedly a large sum, but probably necessary in order to make guaranteed issue health insurance affordable for low- and middle-income families.

That sum is partially offset by the CBO’s projections of $515 billion (over the next ten years) in revenue from individual mandate penalties (fines imposed on non-exempt people who opt to go without health insurance starting in 2014), excise tax on “Cadillac” group health insurance policies, and “other budgetary effects” enacted by the healthcare reform law.

That leaves us with $502 billion.  Not an insignificant sum of money even when […]

The Expansion Of Medicaid Primarily Targets The Uninsured Population

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[…] I would say that another possible explanation is that the population that is most likely to be impacted by Medicaid expansion is the population more likely to be uninsured prior to the Medicaid expansion. The bar graph on page 2 of this Kaiser Family Foundation document shows significantly higher numbers of uninsureds in the population that earns less than 200% of FPL, compared with the population that earns more than that amount. So it’s likely that Medicaid expansion is most likely to cover people who didn’t previously have insurance. For the reasons Jason detailed, I would agree that it’s unlikely that very many people who already have private health insurance would choose to drop their private coverage and enroll in Medicaid, unless Medicaid coverage were to become as good as private health insurance.

Will Marketplace Customer Service Be On A Par With Private Industry?

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One of our clients recently told us about a health insurance plan that was being marketed to him, and we were curious enough to want to look into the situation further.  In a nutshell, it’s not a discount plan, not a mini-med, and not a traditional limited-benefit indemnity plan.  All of those plans should be avoided in general, and the ACA has sort of skirted around them a bit:  numerous mini-meds have been granted temporary waivers in order to continue to operate, discount plans aren’t addressed by the ACA at all (and aren’t regulated by most state Division of Insurance departments either, since they aren’t actually insurance), and limited benefit indemnity plans are exempted from ACA rules (although people who have them will likely have to pay a penalty for not meeting minimum benefit requirements).

Anyway, the plan that was marketed to our client resembled traditional health insurance, but was very convoluted and sold with numerous riders to cover all sorts of different scenarios.  The brochure was 27 pages long and included numerous detailed examples showing how awesome the marketed coverage was when compared with “traditional major medical.”  It noted that the plan isn’t subject to ACA mandates, and the policy is still being marketed with a $5 million lifetime maximum.  When I spoke with an agent for the plan (a captive agent, of course – plans like that are never marketed by brokers who have access to other policies), he told me that the policy will not be guaranteed issue next year, and that they aren’t concerned about the potential penalties that their clients will have to pay starting in 2014 for not having ACA-compliant coverage.  His reasoning (and the marketing pitch that they’re making to their clients) is that their premiums will be so much lower than ACA-compliant plans that their clients will save enough money to more than make up for the penalty (currently their premiums were roughly the same as those of reputable health insurance policies).

In short, everything about this policy sounded sketchy.

health insurance marketplaces (aka exchanges) customer service vs private industryA rather lengthy Google search didn’t bring up much in the way of regulations pertaining to this sort of issue.  I remembered my efforts in the fall of 2011 to get specific details about regulations regarding mini-meds… and I wasn’t encouraged.  At the time, the Colorado Division of Insurance wasn’t aware of a solution to the problem our client was facing (although to give them credit, I was able to speak with someone as soon as I called them).  They referred me to HHS, where I had to leave a voice mail.  The outgoing message said that someone would get back to me within five business days, but that was a year and a half ago and I’m not holding my breath for a reply.  I also left a message for the National Association of Insurance Commissioners (NAIC) about the issue and never heard back from anyone there.  We ended up getting the client onto an Anthem Blue Cross Blue Shield plan, but we never heard back from any of the government agencies we contacted regarding his mini-med situation.

So back to our current questions about the sketchy-sounding health insurance being marketed to our client.  I contacted HealthCare.gov via Twitter but got no response.  I called the Colorado Division of Insurance and was told that I should send in an email with the specifics.  I did that on Wednesday and haven’t heard anything back from them yet.  I called them this morning to follow up, and they told me that they had received my email but didn’t know to whom it had been assigned yet – this is two days after I sent it, so I would assume that perhaps the employees there are overworked and understaffed.  I didn’t contact the national HHS office again, because I didn’t feel like wasting my time any further.  However, I did send an email on Friday morning to the regional HHS office in Denver, so hopefully I’ll hear back from them sometime soon.

I’m also hopeful that I’ll hear back from the Colorado DOI sometime next week.  They usually end up being a helpful – and local – resource, even if we have to wait a few days.  Once we get some more information, I’ll write a follow-up post about how an individual carrier is apparently able to operate entirely outside the regulations of the ACA.

But for now, I’m struck by how difficult it can be to obtain information from a government agency, or even speak with a real person as opposed to just leaving a message or sending an email that may or may not ever get read.  I know that private companies aren’t always shining examples of customer service, but I can’t imagine calling the claims or customer service number on the back of our Anthem Blue Cross Blue Shield card and being told […]