Most people who enroll in an exchange/Marketplace health plan are eligible for an advance premium tax credit (APTC). But it’s important to understand how this is reconciled with the IRS after the year is over.
Policy
States seeking to reduce their uninsured populations must beware a Catch-22
By David M. Anderson, Charles Gaba, Louise Norris and Andrew Sprung State policymakers have been prolific and creative in putting forward measures to strengthen their ACA marketplaces. Measures enacted since 2017 or in progress now include reinsurance programs, which reduced base premiums by an average of 20% in their first year in the first seven… Read more about States seeking to reduce their uninsured populations must beware a Catch-22
The Neverending Summer of Healthcare Legislation Edition of the Health Wonk Review
Throughout 2017, nearly every week has seemed like a very big deal for health care reform. But this week is especially noteworthy, with bipartisan efforts to stabilize the individual insurance markets (cough… fund CSRs… cough), along with not one, but two major pieces of legislation unveiled on Wednesday: Senator Sanders’ single-payer bill (which garnered 16… Read more about The Neverending Summer of Healthcare Legislation Edition of the Health Wonk Review
Don’t Get Caught By The ACA Individual Mandate Penalty – It’s much higher than it used to be
This post was originally written in March 2014, but was updated in November 2015 to reflect the changes in the penalty calculation for 2016, and again in November 2016 to address the penalty for 2017. The penalty in 2017 will remain unchanged from 2016, but it’s considerably higher than it was in 2014 or 2015,… Read more about Don’t Get Caught By The ACA Individual Mandate Penalty – It’s much higher than it used to be
HR 5447 – Should employers be allowed to reimburse individual health insurance premiums?
HR 5447 is the Small Business Health Care Relief Act of 2016. It passed the House earlier this month, and is with the Senate now. This bill would allow employers to contribute to their employees’ individual health insurance premiums, up to a maximum of $5,130 for a single employee, or $10,260 if the reimbursement also includes… Read more about HR 5447 – Should employers be allowed to reimburse individual health insurance premiums?
Standardized plans don’t signal the death of HSAs
Is the HSA (health savings account) an endangered species? Yes, if you believe this National Review article. But at InsureBlog, Hank Stern explains why a lot of the National Review’s points are essentially conjecture. I agree with Hank on this one, and there’s more to the story if you read the details in the 2017 Benefit… Read more about Standardized plans don’t signal the death of HSAs
We should eliminate balance billing at in-network hospitals
Earlier this month, lawmakers in Florida passed House Bill 221 in an effort to prevent surprise balance billing when patients are treated by out-of-network providers at in-network facilities. Governor Scott hasn’t yet signed HB221 into law, but details about how the law would work are outlined here. HB221 is being called a model for other states… Read more about We should eliminate balance billing at in-network hospitals
Commission cuts aren’t the same in states with state-run exchanges
EDIT, March 29, 2016: In addition to having state-run exchanges, there’s another factor involved here, which is much more likely to be the correct explanation. California, Colorado, Connecticut, and Kentucky are the four states that have taken regulatory action to prevent health insurance carriers from cutting commissions. Although my initial hypothesis wasn’t bad, direct action… Read more about Commission cuts aren’t the same in states with state-run exchanges
Healthcare Reform: The Path Forward
Welcome to the Health Wonk Review! It’s been nearly six years since the ACA was signed into law. And although most aspects of the law have now been implemented, the debate over its merits have not let up. In this election year, healthcare reform continues to be a hot topic, even dividing Democrats in terms… Read more about Healthcare Reform: The Path Forward
Should we eliminate the penalty exemption for a short gap in coverage?
Over the last several weeks, much has been said about the need to tighten up enforcement of the ACA’s special enrollment period eligibility. And CMS has said they will conduct audits this year to ensure that people enrolling through Healthcare.gov for the remainder of this year have a valid qualifying event. There is concern that people… Read more about Should we eliminate the penalty exemption for a short gap in coverage?
Senate Bill 2 and Connect for Health Colorado’s Administrative Fee
Last month, Colorado Senator Kevin Lundberg (R, Berthoud) introduced Senate Bill 2. In a nutshell, the bill calls out Connect for Health Colorado’s administrative fee as a violation of TABOR, since the fee is technically paid by people who aren’t enrolled through the exchange, could be considered a tax, and wasn’t voted upon by Colorado residents. Connect… Read more about Senate Bill 2 and Connect for Health Colorado’s Administrative Fee
Would ColoradoCare be an adverse selection magnet for people moving to Colorado?
Colorado will certainly be a state to watch in 2016. Not only is Colorado up for grabs in the presidential election, it’s also the only state in the country – so far – where voters will be asked to decide whether the state should switch to a single payer healthcare system, dubbed ColoradoCare. I explained… Read more about Would ColoradoCare be an adverse selection magnet for people moving to Colorado?
Connect for Health Colorado and non-resident brokers
At today’s Connect for Health Colorado board meeting, there was some discussion over the issue of whether or not Colorado’s exchange should work with out-of-state web brokers. Here’s the background on the issue, and I want to clarify my position in case there was any confusion. I’ve been a local broker in Colorado for 14… Read more about Connect for Health Colorado and non-resident brokers
Understanding Drug Formularies On New Individual Health Insurance Plans In Colorado
Colorado residents only: Compare how each health insurance company covers your medication with our exclusive Colorado prescription drug formulary transparency tool. Opponents of the ACA have raised the issue of drug formularies as a negative aspect of the new ACA-compliant plans, complaining that the new plans won’t cover all of the medications people need. Just like many of their… Read more about Understanding Drug Formularies On New Individual Health Insurance Plans In Colorado
It’s Not Just About Supply And Demand For Labor – The ACA Makes Life Better, Increases Choices
Last week, the CBO released a report that sent the internet into paroxysms of spin. Initially – and much to the delight of ACA opponents – numerous media outlets reported that the CBO was predicting a loss of more than 2 million jobs over the next decade as a result of the ACA. Then they… Read more about It’s Not Just About Supply And Demand For Labor – The ACA Makes Life Better, Increases Choices
Pediatric Dental on 2014 Individual Health Insurance Policies in Colorado
If you’re confused by the new pediatric dental requirements, you’re not alone. Here’s a rundown of how the ACA and HHS regulations impact pediatric dental coverage, with Colorado-specific details: The ACA defines pediatric dental coverage as one of the ten essential health benefits (EHBs) that must be covered on all new individual and small group… Read more about Pediatric Dental on 2014 Individual Health Insurance Policies in Colorado
Government Shutdown: Is The Republican “Plan” Actuarially Feasible?
Although I’ve seen a lot of media references placing blame for the government shutdown squarely at the feet of House Republicans, I’ve also heard people saying that both sides are to blame and that the Democrats could have “compromised.” I’ve just finished reading the text of the House amendment to H.J. Res. 59. This is the amendment that would have “delayed Obamacare” by a year.
There are a couple specific aspects of the ACA that House Republicans were trying to delay or delete. The most significant is the individual mandate (keep in mind that this has been challenged all the way to the Supreme Court and found to be Constitutional), which the amendment would postpone until 2015. [The amendment also contains some other provisions regarding health insurance for Congress and the President, which I’ll address tomorrow.]
The initial provisions of the ACA started to take effect in 2010. January 1, 2014 is about 3.5 years after that, so the individual mandate had a significant built-in delay. But let’s assume for a moment that the Democrats wanted to accept this “compromise” and allow the individual mandate to be delayed until 2015. What would that have involved from a practical standpoint?
An actuarial nightmare
Back in the spring of this year, health insurance carriers all across the country were scrambling to submit rates and plan designs for review. There were some delays, and some carriers ended up having to redo their rates and submit them again, but by the middle of August we had a pretty good idea of what plans were going to be available in the Colorado marketplace (exchange) – and news was also coming in from lots of other states. This was six weeks before the marketplaces opened, and a full 4.5 months before the new policies were going to be effective. Once the rates were finalized, they had to be loaded into each marketplace’s online quoting software so that they would be available to navigators, brokers and applicants once the marketplace opened for business.
This whole process took many months. Creating the ACA-compliant plan designs and doing the actuarial work to price them was not something that happened overnight. Carriers were working on this early in the year, getting their plan design and rate info ready to submit in the spring. And then the rate reviews, final approval, and user interface updates added to the time frame.
So let’s go back and look at the Republican “compromise” of delaying the individual mandate for a year. All of the new plans and rates that actuaries, marketplaces and Divisions of Insurance have been working with this year are designed around the basic concepts of the ACA: Policies 
must be guaranteed issue (a huge change from the way policies have historically been issued in the individual market, where underwriting has been part of the process in all but five states), they can only be issued during open enrollment or following a qualifying event (loss of other coverage, birth, adoption, marriage, divorce), and the individual mandate is expected to generally increase enrollment.
Removing any of these elements would drastically change the pricing of the policies and basically mean that the actuaries would have to start over. Incidentally, the House Amendment does not mention delaying the requirement that individual health insurance be guaranteed issue starting in 2014. To roll out guaranteed issue coverage without the individual mandate would mean that rates would be significantly higher for the people who do opt to purchase a plan. But regardless, removing one of the primary elements upon which the 2014 rates have been based would mean a complete do-over of the actuarial process of pricing the new policies.
But what about just keeping things the way they are? Can’t we just keep our 2013 plans and roll them into 2014 with no changes?
No. Remember, the House Amendment to “delay Obamacare” (that’s the language most often used in the media and by lawmakers themselves) would actually just delay the individual mandate. It doesn’t delay the other crucial aspects of the ACA that guided plan design for 2014. So policies would still have to provide essential health benefits. They would have to be guaranteed issue and priced the same regardless of gender (in Colorado, this has been the rule for almost three years now, but the ACA bans it everywhere).
So current 2013 policies could not continue to be issued in 2014. They’re not compliant in terms of plan design, even if actuaries were able to perform a miracle and redo all of the pricing in the next few weeks.
That puts us back to starting over with the new ACA-compliant plans that carriers created months ago, and trying to reprice them for 2014 to reflect a delay in the individual mandate. Remember that the actuaries have to come up with the pricing (not a quick process), DOIs and marketplaces have to review the pricing, and then the final rates have to be uploaded to quoting systems (both marketplace systems and private “off-exchange” quoting systems) and added to printed sales materials in time for consumers to be able to use them. For 2014 plans, this process started early in 2013. Starting over at the beginning of October would have been mission impossible.
Consumers have generally always been able to submit applications one to two months prior to the effective date they want. A lot of people wait until the last minute, but quotes are available several weeks out. That means that if actuaries were to start over at the beginning of October and redo everything, the entire process would have to be completed by mid November at the latest in order for accurate pricing information to be available for consumers looking for a January 1 effective date. The House Amendment did not mention delaying the opening of the marketplaces, so it’s unclear what lawmakers wanted the marketplaces to do. Would plan information still be available in early October, but with no rate data?
To say that this was a poorly planned amendment is an understatement. It was political posturing designed to appeal only to people who “hate Obamacare” (and unfortunately, some of those people are woefully uninformed about the law). It had no basis in actuarial reality, and would have thrown […]
Getting ACA Information and Ignoring “Obamacare” Misinformation
One of the major hurdles for the ACA has long been a lack of public understanding about the basics of the law. This is significantly exacerbated by the blatantly false information that has been circulated by many “Obamacare” opponents over the last few years. That’s not to say that the ACA is perfect – it definitely has its flaws. But public understanding of the law has been greatly hampered by people whose sole purpose is to defeat it. If you’re trying to learn about the ACA and how it will impact you and your family, you’re probably better off getting your information from a source that isn’t hell-bent on doing away with the law (and if that’s their intent, they probably have zero interest in your family’s access to healthcare, which is one more reason to ignore them).
In addition to a widespread lack of understanding about the law, there’s also a significant gap between how people expect to learn about the law and how they probably actually will learn about it. A recent AFLAC survey found that 75% of employees think that their employer is going to educate them about changes to their health insurance as a result of the ACA, but only 13% of employers indicated that was a priority for their company (more info from the AFLAC study available here).
This comes in conjunction with the announcement that employers should communicate with their employees about the health insurance marketplace (exchange) by October 1, 2013, but there is no fine or penalty for employer who don’t. Of course some employers will provide information and support to their employees. But some will not. In the latter group, you’ll have a combination of employers who lack understanding themselves about the ACA and the marketplace, and those who simply forget or are too busy to deal with it. But there will also be employers who are actively opposed to the ACA and choose not to inform their employees about the marketplace or changes to health insurance as a result of the ACA.
Ultimately, a lot of people, including the self-employed as well as employees who don’t have access to employer-sponsored health insurance (keep in mind that the employer mandate that requires employers to offer health insurance only applies […]
Roadtrip HWR And Good Info About The Government Shutdown
Peggy Salvatore of Healthcare Talent Transformation did an excellent job with the Health Wonk Review this week, taking us on a legislative and healthcare policy roadtrip with lots of interesting stops along the way. She starts things off with Brad Wright’s concise summary of why a government shutdown on October 1 won’t do much to… Read more about Roadtrip HWR And Good Info About The Government Shutdown
Healthcare Data, Privacy And Flip-Flopping Health Wonks… Don’t Miss The HWR!
David Williams: What would happen if health insurance companies tracked our health-related habits the way Progressive tracks driving patterns for insureds to opt to let them do so? This is similar to the concerns that many people had (and still have) about the results of genetic testing being available to employers and insurers… what can be done with that data? Of course, the key is that Progressive only puts the tracking device in cars if their insureds give them the go-ahead. If my car insurance company offered that, I’d be happy to let them put one in my car. And I think I’d also be willing to let my health insurance carrier track various data about me from a health standpoint.
The ACA has built-in limitations on using medical data to set rates or make eligibility determinations, but I can see real-time health tracking data being used for all sorts of purposes a decade from now. Heading out to the porch for an after dinner cigarette? You could get a text from your insurance company advising you to take a nicotine-free walk instead (or by then, maybe texting will be old-school and our phones will just be able to send messages straight into our thoughts). Who knows, but David makes a good point: the technology for […]
Skinny Health Insurance In The Large Group Market
We’ve railed against “mini-med” health plans many times here on our blog, and have spoken with lots of people over the years who have found themselves stuck with medical bills because their mini-med had such low benefit limits. We’ve even had one client who found himself stuck paying for a mini-med until the following open-enrollment period, even after his plan had reached its very low benefit maximum.
We are not fans of mini-meds, and were glad that one of the provisions of the ACA was to do away with lifetime and annual benefit maximums on essential health benefits. For the past couple of years, most sources that report on healthcare reform (including us) have been explaining that mini-meds are going away in 2014. Not everyone was in agreement that this was a good thing – some people expressed the view that businesses that hire large numbers of minimum wage workers would be switching to more part-time employees or suffering dire financial consequences. But the general consensus was the mini-meds would be a thing of the past once all of the benefit maximum waivers that HHS had granted ran out.
Alas, that doesn’t appear to be the case. Over the last few weeks, I’ve seen several articles explaining how a new type of “skinny” health insurance policy might take the place of mini-meds in the large group market for employers in the retail and food industries who typically hire minimum wage employees. The most thorough article I’ve seen is on Forbes, written by Avik Roy, and it’s worth a read.
To summarize, the ACA focused almost entirely on reforms in the small group and individual market. We’ve been talking about those reforms for three years now, and for the most part, they’re working well to improve the safety net that health insurance should provide. The primary reform in the large group market was the employer mandate, which requires employers with more than 50 full time-equivalent employees to offer health insurance or pay a penalty. This provision of the law has been delayed until 2015, so it’s even more of a back-burner issue right now as we head into open enrollment in the individual market and the opening of the exchanges for individual and small business coverage.
But although the idea was to make sure that large employers offered good qualify coverage in order to avoid paying a fine, it appears that some large employers will opt for the fine instead. The penalty is steep if a large employer doesn’t offer any coverage at all: if even one employee (of a business with at least 50 employees) seeks coverage in an exchange and gets a subsidy, the employer has to pay a penalty of $2000 per employee (the first 30 employees are waived). So if a company has 90 employees, doesn’t offer any coverage […]
Renewal Options for Each Individual Health Insurance Carrier in Colorado
Last week I explained how early renewal at the end of 2013 might be a good option for some people who have individual health insurance. If you’re happy with your coverage and aren’t going to qualify for a subsidy in the Colorado exchange, keeping your existing plan for most of 2014 might be a good way to save some money on premiums. This is especially true for people who prefer very high deductibles, as those plans are generally not ACA compliant and thus will not be available for purchase after the end of 2013. But if your carrier allows it, you can keep your current policy until it renews in 2014, and switch to an ACA compliant plan at that time. For people with plans that renew late in the year, this could mean keeping a lower-cost, higher deductible policy for most of 2014. If you’ll be eligible for a premium subsidy, it’s definitely worth your time to compare a subsidized exchange plan with what you have now. But if you’re happy with your coverage and you’re going to be paying full price for an ACA compliant plan, check with your carrier to see about keeping your current plan in 2014.
Keep in mind that each Colorado health insurance carrier is doing things a little differently in terms of 2013 renewals heading into 2014. It’s important to check with your carrier to make sure you’re aware of what steps you need to take – don’t assume that your plan will automatically renew – or automatically not renew. The Colorado Division of Insurance has left a lot of leeway for carriers to determine their own protocol for renewals going into 2014. There is no state requirement that existing policies be cancelled as of the end of 2013, although some carriers have opted for that as a default. All plans must be ACA-compliant by January 1, 2015. So when your policy renews in 2014, you will have to transition to an ACA compliant plan. But the date of that renewal can be anytime from January to December.
Here’s a brief summary of what we have heard so far from some of the main carriers in Colorado. This is subject to change, so check with us or your carrier before you make a decision.
Anthem Blue Cross Blue Shield: The default is for your plan to just keep its current renewal date and continue unchanged until that date in 2014. But Anthem is also offering insureds an option […]
HSA Contribution Limits For 2014
After the PPACA was signed into law, questions started to come up regarding the impact of the law on HDHPs and HSAs. People wondered if HSA-qualified plans would still be available within the confines of being ACA-compliant, and there was plenty of confusion as far as how high deductible plans would fare. Now that we’re just a month away from the opening of the exchanges and four months away from ACA-compliant plans being effective, it’s clear that HDHPs and HSAs will continue to be available in 2014.
They may even become more popular than they currently are, as they will likely attract people who would otherwise buy plans with out-of-pocket limits too high to be HSA-qualified. The out-of-pocket limits on individual plans starting in 2014 will be equal to the out-of-pocket limits on HSA-qualified plans, so there will likely be HSA-qualified plans available in all of the state exchanges. Out-of-pocket limits that exceed that amount – for example, $10,000 individual deductibles – will no longer be allowed on any policies, which will make HSA-qualified plans a popular choice for people who want to keep their premiums as low as possible.
The IRS has set the HSA contribution limits for 2014:
Individual = $3300 and Family = $6550
These limits reflect a small increase ($50 and $100, respectively) over the 2013 limits.
The IRS kept minimum deductible amounts for HSA-qualified health insurance plans the same ($1250 for individual coverage, and $2500 for family coverage), but the maximum allowable out-of-pocket on HSA-qualified health insurance plans in 2014 will increase slightly, to $6350 for an individual and $12,700 for a family (up $100 and $200 respectively from 2013).
Your Health Insurance Will Probably Change in 2014
I frequently come across FAQs on various websites with a question along the lines of: “Do I have to switch to a new health insurance plan if I like my existing one?” And almost always, the answer is something like this: “No. The ACA allows grandfathered health insurance plans to continue unchanged, so if your plan was in effect when the ACA was signed into law on March 23, 2010 and has not been significantly changed since then, it will be considered “qualified coverage” and you can keep it”.
This is frustrating to read, because I’m sure that people who aren’t familiar with the details of health care reform might just see that first word – no – and not pay attention to the significant caveat that follows it. Adding to the confusion is the partially true statement President Obama made in 2009, saying “If you like your health care plan, you will be able to keep your health care plan. Period. No one will take it away. No matter what.”
The problem is that people who currently have health insurance might think that they can keep their plan – even if they’re not on a grandfathered plan – because there’s a lot of confusion about what exactly a grandfathered plan is. In 2012, just under half of people who get their health insurance from an employer were on a grandfathered plan, but that number is dropping and will continue to do so as plans change. There’s no way to know whether your health plan is grandfathered without calling your carrier and asking. A plan that was grandfathered as of 2011 might not be so today, since changes to the plan can happen at any time and can cause a plan to lose its grandfathered status.
The really bad health insurance plan that I wrote about earlier this year might be a grandfathered plan that was in effect when the ACA was signed into law. Insureds may have joined after that date and still be on a grandfathered plan. (although that still doesn’t explain the $5 million lifetime max that was being marketed on that plan as of this year – even grandfathered plans are not allowed to have lifetime maximums).
But especially in the individual market, health plans are constantly being redesigned. The way the process works in Colorado – and in many other states – is that existing plans are retired, or “sunset” and new ones are introduced. In most cases, insureds are allowed to remain on the sunset plan. If the carrier does away with the plan completely, they have to offer the plan’s insureds the option to purchase any of the other plans the company offers, guaranteed issue. So most carriers have traditionally let insureds remain on sunset plans, but the plan becomes a closed block, which means that no new insureds are being added to the pool. The result is usually that over time, premiums within a closed block start to rise faster than premiums in other plans that are enrolling new members (keep in mind that in the individual market, medical underwriting has long been used to make sure that new members are relatively healthy. So for individual plans, members who have been on the plan the longest tend to have higher claims expenses than new members). This leads healthy insureds who are on sunset plans to seek coverage in another plan in order to lower their rates.
There are lots of reasons for new plan designs: It’s a way for carriers to create product differentiation (especially true in robust markets like we have in Colorado). New plan designs also allow carriers to create products with lower premiums, as they’re well aware that price is one of the most important factors when consumers are shopping for coverage (a good example is the trend over the past decade towards health plans with separate prescription deductibles instead of integrated Rx deductibles or Rx coverage with traditional copays). New plan designs also […]
Exchange Subsidy Eligibility Impeded By High-Priced Group Health Insurance Access
We were talking with a client last week about her health insurance situation, and it inspired me to do a little more digging around to see how eligibility for subsidies could be impacted by the availability of employer-sponsored health insurance. In our client’s situation, she’s a homemaker and her husband makes about $20,000 per year, working for a small business. They also have a child, who is currently covered by Medicaid. Her husband can get health insurance from his employer for $75/month. But if he adds his wife, the cost goes up to $500/month. $6,000 per year for health insurance when you earn $20,000 isn’t really a viable option. Fortunately, as of January 2014, Medicaid will be available in Colorado to families with household incomes up to 133% of FPL (in 2013, that’s almost $26,000 for a family of three).
But let’s consider a hypothetical family that makes a little more – say $28,000/year – and has the same option for employer-sponsored health insurance. They would be above the cutoff for family Medicaid, but well below the 400% of poverty level that determines eligibility for premium assistance tax credits (subsidies) in the exchange (400% of FPL for a family of three is a little over $78,000 in 2013). And I think we can probably all agree that spending $6000 a year on health insurance would be a significant burden for a family that earns $28,000 a year.
We’ve all heard lots of talk about how subsidies are available in the exchanges for people who don’t have access to “affordable” employer-sponsored health insurance. I think most of us take that to mean that for families who earn less than 400% of FPL, subsidies are available both to those without an option to purchase employer-sponsored health insurance, and for families that have the option to do so but at a prohibitively high premium. You’ve probably also heard that the cutoff for determining whether employer-sponsored health insurance is “affordable” is 9.5% of the employee’s wages.
Unfortunately, it’s not as simple as it might sound, and the official rules might leave some families without a lot of practical options. I discussed this scenario last week with the Colorado Coalition for the Medially Underserved (CCMU). Gretchen Hammer is the Executive Director of CCMU, and she’s also the Board Chair of Connect for Health Colorado (the state’s exchange), so there’s a good flow of information between the two organizations. CCMU (and Connect for Health Colorado, via CCMU) responded to my questions quickly and thoroughly, and I highly recommend both sources if you’re in Colorado and curious to see how your specific situation will be impacted as the ACA is implemented further (here’s contact info for CCMU and Connect for Health Colorado).
My concern in the case of our hypothetical family was that the employee’s contribution for his own health insurance is $75/month, which works out to only 3.2% of his income – well under the threshold for “affordable,” based on the 9.5% rule. And as […]