Thursday, August 22, 2013

Approaching 2014 and ACA's Individual Mandate

Starting on January 1, 2014, the Affordable Care Act (ACA) will require nearly all United States citizens to have health insurance coverage or pay a penalty.  If you are purchasing insurance as an individual or small business owner, you must ensure that your new plan complies with the ACA by having the following ten essential health benefits:
1.      Ambulatory patient services
2.      Emergency services
3.      Hospitalization
4.      Maternity and newborn care
5.      Mental health and substance use disorder substances, including behavioral health treatment
6.      Prescription drugs
7.      Rehabilitative and habilitative services and devices
8.      Laboratory services
9.      Preventive and wellness services and chronic disease management
10.  Pediatric services, including oral and vision care
Health insurance plans may differ to the extent in which these ten essential health benefits are offered, but in all cases must have benefits that are “substantially equal” to the essential health benefits outlined above.
There are a number of different ways that the individual mandate may be satisfied:
·       Medicare meets the minimum essential coverage requirement.  Both Original Medicare (Parts A and B) and Medicare Advantage (Part C) plans qualify.

·       If you are covered by a grandfathered health plan (qualifying health insurance coverage in which an individual was enrolled on or before March 23, 2010), you can stay in your plan as long as you continue to pay premiums and do not make any changes that would defeat the plan’s grandfathered status.

·       If you are covered by a non-grandfathered individual health insurance plan, you will not have to pay a penalty provided that the plan complies with requirements set by the ACA (including the ten essential health benefits).

·       Employer plans (including retiree plans), with or without grandfathered status, are deemed sufficient coverage.  If the employer is a small business, and it does not provide a grandfathered health insurance plan, it must provide the ten essential health benefits.  Non-grandfathered large group plans are only expected to provide hospitalization, emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services in order to comply with the ACA.

·       Medicaid beneficiaries are also covered, and do not need to pay the penalty. This includes individuals and families up to 138% of the federal poverty level in states that have chosen to expand Medicaid (Florida not included).

·       The Children’s Health Insurance Program (CHIP).

·       TRICARE (for veterans and their families).

·       Other veterans health care programs.

·       Peace Corps Volunteer plans.

·       Any health insurance plan purchased on the new health insurance exchanges will be sufficient coverage.  The health insurance exchanges (HIXs) are scheduled to open on October 1, 2013 for purchase of health plans with an effective date on or after January 1, 2014.  Health insurance plans on the exchange will be rated by the “metal system”, based on their benefits:
o   Bronze Level – The plan must cover 60% of expected costs for the average individual
o   Silver Level – The plan must cover 70% of expected costs for the average individual
o   Gold Level – The plan must cover 80% of expected costs for the average individual
o   Platinum Level – The plan must cover 90% of expected costs for the average individual
It is important to look at your HIX (state or federal) to start researching plans as soon as possible, in particular if you may be eligible to receive a premium subsidy (available at 100% - 400% of the Federal Poverty Level) and/or a cost-sharing subsidy (available at 100% - 250% of the Federal Poverty Level).  While health insurance will continue to be sold off the exchanges in 2014, you must purchase coverage on the exchanges in order to receive any premium and cost-sharing subsidies.
The consequences for not purchasing health insurance in 2014 are modest; however, penalties will continue to rise until 2016.  In 2014, the penalty will be $95 or 1% of the family’s annual income- whichever is greater- per adult ($47.50 per child) or a maximum of $285 per family.  However, by 2016, this will have increased to $695 or 2.5% of the family’s annual income- again whichever is greater- per adult, or a maximum of $2,085 per family.
 There are a few groups who are exempted from the penalty, including those with income so low that coverage is considered unaffordable, those who qualify for expanded Medicaid but who live in a state that has chosen not to expand its Medicaid program, members of federally-recognized Indian tribes, and members of recognized religious sects with religious objections to health insurance.  For those who do not fit these exemptions and do not already have sufficient coverage, it is almost time to get the ball rolling if you wish to avoid paying the ACA’s financial penalty.
Until next time,
Andrew Herman

Tuesday, July 2, 2013

Employer Mandate Requirement Under ACA Delayed Until 2015


White House Delays Employer Mandate Requirement Under ACA 
The U.S. Department of the Treasury announced today that the Obama administration won't be penalizing businesses that do not provide health insurance to their workers in 2014.  Instead, enforcement of ACA's requirement that employers with more than 50 employees provide coverage to their workers will be delayed until 2015.

The Obama administration said the move recognizes that the reporting requirements -- the steps businesses must take to show compliance -- are complex and that the administration will try to streamline them over the next year.  So, there will be no penalties the first year on large employers.  Small businesses with fewer than 50 workers already were exempt.

This surprise announcement does not affect other central provisions of the health care reform law, including the establishment of health care marketplaces where Americans without employer-based health insurance can shop from a menu of insurance policies.  Under those provisions, federal subsidies will be available for lower-income individuals (under 400% of the Federal Poverty Limit, which translates to about $46,000 annual income for a single person or $94,000 for a family of four).

It’s unclear what impact today's announcement will have on ACA's goal of providing coverage to uninsured Americans.  Workers whose employers do not offer coverage, and now have one more year to do so, seemingly will need to shop the individual market to get coverage next year.  Anyone seeking a federal subsidy will need to shop on the state exchanges; but for those not seeking a federal subsidy in 2014, individual health insurance can be purchased on or off the exchanges.

Here is today's announcement from the Treasury Department, posted by Mark J. Mazur, Assistant Secretary for Tax Policy at the U.S. Department of the Treasury.

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

Monday, June 17, 2013

What Makes Health Care Costs So High?

Dear Readers,

While the jury is still out on whether "Obamacare" will increase or decrease per capita health care costs in the U.S., this post identifies two cost drivers that have absolutely nothing to do with the controversial 2010 health care reform legislation known as the Affordable Care Act (ACA).

First, let us observe the Hospital CEO Pay And Incentives as recently reported by Kaiser Health News and ABC.  Most of the information on salary and bonuses received by sample Hospital CEOs and Presidents was obtained from IRS filings, so it would seem that the data are accurate.

While I have general concerns that hospital executive pay shouldn't be tied to profit and unsustainable expansion, I have more specific concerns about the amounts being paid to CEOs and Presidents of U.S. Hospitals.  Here are some examples of a year's pay, courtesy of Kaiser Health News:

George Halvorson of Kaiser Permanente (CA) - $7,936,510
Dr. John Koster of Providence Health & Services (WA) - $6,379,455
Jeffrey Romoff of UPMC, Pittsburgh (PA) - $5,975,462
Lloyd Dean of Dignity Health (CA) - $5,136,883
Michael Tarwater of Carolinas HealthCare System (NC) - $4,760,026

The compensation for these executives far exceeds the two million and change earned by Dr. John Noseworthy of the Mayo Clinic, arguably one of the best performing medical facilities in the country as measured by patient outcomes (that would seem to be a better driver of medical incentive pay).  But in my own subjective view, I tend to feel that two million is a bit on the high side anyway.

Click here to view Kaiser Health News' CEO compensation tracking chart

Second, I am watching much less television these days due not only to the diminishing quality of the programming, but also to the pervasive "ask your doctor" advertisements.  Encouraging consumers to speak with their physician about every medicine that comes on the market has a direct impact of increasing doctor's office visit costs, not to mention lining the pockets of pharmaceutical company executives.  Furthermore, medicines that are new to the market and rife with adverse side-effects carry their own risk of increasing patient morbidity and ultimately U.S. health care costs as well.

So, short of not using health care services, is there anything Americans can do?  Here are a few suggestions that I feel could go a long way:

For Consumers
  • Shop for medicines & services like other consumer goods; i.e. compare quality, cost, outcome
  • Minimize use of medications by improving diet, exercising more and trying stress reduction techniques such as professional massage, tai chi or yoga
  • Turn the television off
For Doctors
  • Place your patients before your pocketbook
  • Reject incentives offered by the pharma companies, no matter how attractive
  • Resist any temptations to add-on unnecessary services, medical testing and/or expensive prescription medication due to presence of insurance benefits
For Hospital CEOs
  • To the hospital executives in the listing above, give some thought to the fact that you earn more than 100 times what your average patient makes in a year
  • Focus on quality of services rather than growth of your empire
  • Eliminate any bonus structure based on growth and profit; and instead follow the lead of your noteworthy peers such as Dr. John Noseworthy (Mayo Clinic) and Dr. Delos "Toby" Cosgrove (Cleveland Clinic) who reportedly do not receive any bonus compensation
Now that I've said my piece, I'm on my way to create a healthy concoction with my new juicer!

Until next time,

Andrew Herman, President
AH Insurance Services, Inc.

Sunday, May 12, 2013

CMS Publishes 2013 Choosing a Medigap Policy Guide

The official 2013 Guide to Health Insurance for People with Medicare has been published by the Centers for Medicare and Medicaid Services (CMS).  This important guide covers topics such as:

  • What is a Medicare Supplement Insurance (Medigap) policy
  • What Medigap policies cover
  • Your rights to buy a Medigap policy
  • How to buy a Medigap policy

A Medigap policy is private health insurance that wraps around the Original Medicare Program (Parts A and B) by filling in gaps to the extent provided by the specific Medigap plan purchased.  This means it helps pay some of the health care costs that Original Medicare doesn't cover, such as copayments, coinsurance and deductibles.

Medigap plans sold in the U.S. are known by their "plan letter name" such as Plan F or Plan N.  Consumers who buy a Medigap policy typically also purchase a Stand-alone Medicare Part D Prescription Drug Plan (PDP) since today's Medigap plans don't offer prescription drug coverage.

A Medigap policy is different from a Medicare Advantage Plan (like an HMO or PPO) because those plans deliver all of your Medicare benefits, while Medigap just supplements your Original Medicare benefits.  Under a Medicare Advantage Plan (also known as the Medicare Part C Program), you have the convenience of having coverage for doctors, hospitals and prescription drugs all under one roof.  Medicare Advantage plans utilize provider networks, however, which can be more restrictive compared to the simpler requirement under Medigap policies to visit Medicare-approved providers.

Click Here To Download the 2013 Choosing a Medigap Policy Guide

Until next time,

Andrew Herman
AH Insurance Services, Inc.

Monday, April 22, 2013

Feds Say Health Exchanges to Open on Time, but SHOP Program Hits a Snag

Last week, U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius assured yet another congressional panel that the Patient Protection and Affordable Care Act (PPACA) exchanges will be opening on schedule.
"We are moving ahead," Sebelius stated April 18th at a House Energy & Commerce health subcommittee hearing on the HHS fiscal year 2014 budget request.  "We are definitely going to be open for open enrollment starting Oct. 1 of 2013."

State Health Insurance Exchange (HIX) programs are mandated under PPACA to provide competitive marketplaces in which individuals and small businesses can choose among private insurance plans; it is meant to be a “one-stop shopping” experience.  The HIX programs also are designed to assess individual financial need and determine federal compensation.  Health insurance plans offered in the insurance exchanges must reach certain levels of coverage and include PPACA-mandated options that other private, grandfathered health plans may be exempt from.

HIX programs can be set up in a few different ways.  First, states can run their own HIX programs; if so, they are eligible to receive federal grants.  States had until December 14, 2012 to submit plans for state-run HIX programs to HHS for approval.  Second, states can run HIX programs in conjunction with the federal government; plans for such programs had to be submitted to HHS by February 15, 2013.  Third, all states who either chose not to submit plans for health insurance exchanges or whose plans were not approved will have programs set up and run by HHS.  All HIX programs are meant to be fully operational by January 1, 2014; states that have declined responsibility or partnership can still choose to implement state HIX programs past that date.

While implementation of the HIX programs may still be on schedule, exchanges will not be giving small businesses a full choice of plans in 2014.  At the April 18th subcommittee hearing, Sebelius explained that HHS has decided to let the Small Business Health Options Program (SHOP) small-group exchanges put off giving employers a chance to offer employees a multi-carrier coverage option.

Each SHOP exchange will still offer the employers themselves a chance to choose from a menu that includes plans from all of the carriers that have agreed to sell plans through that exchange, Sebelius said.

Will the new health exchanges open on time, as Ms. Sebelius assured us last week?  We’ll all know for sure later this year; and by this time next year we’ll have a better idea whether these exchanges ultimately will be a success or a failure.
Until next time,

Andrew Herman, President

AH Insurance Services, Inc.

Saturday, April 13, 2013

What Are the Obamacare "Essential Health Benefits"?

Essential Health Benefits

Section 1032 of the Affordable Care Act (ACA), also known as the "Obamacare" legislation, defines the following categories of benefits that individual and small business insurance plans must cover by January 1, 2014:
1.      Ambulatory patient services (these include outpatient services such as doctor office visits).
2.      Emergency services (these include care received in an Emergency Room).
3.      Hospitalization (these include medically-necessary surgeries and other inpatient procedures).
4.      Maternity and newborn care.
5.      Mental health services.
6.      Substance use disorder substances (these include behavioral health treatment).
7.      Prescription drugs.
8.      Rehabilitative and habilitative services and devices (rehabilitation covers services such as relearning how to walk after a stroke, while habilitative services involve learning a new skill such as speaking without a speech impediment).
9.      Laboratory tests and services.
10.  Preventive and wellness services and chronic disease management.
11.  Pediatric services, including oral and vision care.
Health plans are allowed to impose cost sharing obligations on plan members for most essential benefits, but those that qualify under a category of preventative health services will be provided without any cost sharing.
States are given the authority under ACA to specify details around these essential benefits.  Cost sharing for plan members will be limited by each plan’s need to cover sufficient benefit costs to qualify under the following four plan types:  Bronze plan, Silver plan, Gold plan and Platinum plan.  Surely, the writers of ACA like precious metals!
It is important to note that while these are categories of benefits that must be provided, health plans are not required to have unlimited coverage of all categories.  Rather, health plans must offer benefits that are “substantially equal” to the ten essential health benefits.  Plans will be able to adjust specific benefits, provided that all ten categories of essential benefits are still sufficiently covered.
More specific definition of the ten essential health benefits will be determined on a state-by-state basis. Each state may choose a benchmark from the following options:
·         One of the three largest small group plans in the state
·         One of the three largest state employee plans by enrolment
·         One of the three largest federal employee health plan options by enrolment
·         The largest HMO plan offered in the state’s commercial market by enrolment
If a state chooses not to make a selection, it will be held to the benchmark of the small group plan with the highest enrolment in the state.
The essential health benefits only apply to individual plans and small businesses.  Large group plans will be expected to provide hospitalization and emergency services, physician and midlevel practitioner care, pharmacy benefits, and laboratory and imaging services.
What do these essential health benefits mean for us?  First: a high probability of having more comprehensive coverage.  One study made by shows that less than 2% of existing plans meet the new ACA Essential Health Benefit Standards.  On average, existing health plans in the study provided 76% of the Essential Health Benefits, with the missing 24% generally concentrated around several categories:  pediatric dental and vision coverage, maternity, prenatal, delivery, postnatal, substance abuse and mental health coverage.
Of course, insurance premiums will likely increase due to the expansion of plan benefits.  A major factor even more likely to increase premiums starting next January 1st is the ACA's guaranteed issue requirement mandating that people with pre-existing health conditions can sign up for a health plan at any time.  Add to that the ACA's actuarial value requirements on the maximum out-of-pocket costs that can be charged, and we may be looking at some hefty premium increases for those who buy their insurance without a government subsidy!  That will be the subject of another post.
Until next time,
Andrew Herman, President
AH Insurance Services, Inc.

Tuesday, April 2, 2013

4/1 News Flash - CMS Reverses Course and Increases Medicare Advantage Payment Rate

4/1/13 - CMS Releases Final 2014 Medicare Advantage Payment Rates (Source - Reuters)

In a reversal that followed intense lobbying by the insurance industry and members of Congress, the U.S. government said it will increase the payment rate for health insurers that offer coverage through the Medicare Advantage (Part C) program that covers approximately 14 million Medicare beneficiaries.

The Centers for Medicare and Medicaid Services (CMS) announced yesterday that it will increase the payment rate by 3.3 percent in 2014, reversing a 2.3 percent cut announced in February.  CMS declared that the changes came "after careful consideration of public comments."

"The policies announced today further the agency's goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice," Jonathan Blum, acting principal deputy administrator for the CMS, said in a statement.

Some insurers had hinted they would drop their Medicare Advantage plan offerings if CMS followed through with its initial proposal; which would, combined with other aspects of the new health care reform legislation, increase MA plan premiums between $50 and $90 per month according to actuaries at Oliver Wyman.

Lawmakers on both sides of the aisle took those concerns on board.  More than 160 of them joined an effort to reverse the previously announced rate cut, according to America's Health Insurance Plans (AHIP).

"We have concerns that if CMS does not make this adjustment, many Medicare Advantage enrollees in Massachusetts, and across the country, will face higher premiums and fewer benefits," said the Massachusetts delegation's letter, which was addressed to Marilyn Tavenner, acting CMS administrator, and dated March 27.

Earlier in March, a large bipartisan group of senators highlighted the threat of plans potentially exiting the Medicare Advantage market altogether.  And in recent months, "The Coalition for Medicare Choice," which is funded by AHIP and other private insurers, lobbied hard against the proposed Medicare Advantage cuts through television advertising and social media.  The Coalition posted on its website the Oliver Wyman study warning of a "significant amount of upheaval" if the original 2014 rate plan went through.

For further information, click on these links:

4/1/2013 Reuters Article

The Coalition for Medicare Choices Website

Until next time,

Andrew Herman
AH Insurance Services, Inc.