Exploring ACA Alternatives

Gregg Amato

Gregg Amato | Director of Employee Benefits (Cleveland)

Since the inception of the Affordable Care Act (ACA), many small group employers and brokers alike have experienced constant change and confusion. Premiums continue to rise and many feel there are limited options available to them. Small groups with fewer than 50 employers are not mandated to provide health insurance, but many would like to offer it as a way to fill full-time positions and attract talented employees. Before health care reform, health insurers were allowed to rate up or charge higher premiums to small groups based on their medical history, age, and gender. This made it difficult for unhealthy groups to find affordable coverage.

Healthcare.gov defines community rating as: “A rule that prevents health insurers from varying premiums without a geographic area based on age, gender, health status, or other factors.” Community rating means that all enrollees pay the same premium amount regardless of their health status. The cost is pooled or spread out over a large number of insured people. For groups with fewer than 50 employees, ACA community rating benefitted some and hurt others. Small groups with multiple health conditions or an aging population benefitted from lower rates, while younger healthier groups pay more.

Under ACA guidelines, the “Adjusted Community Rating” methodology is being used. Health insurers aren’t allowed to charge higher premiums based on health conditions, medical claims, or gender. However, they are allowed to charge higher premiums based on the number of employees enrolled in the plan and where the group is located within areas that have higher costs of care. Insurers can consider an employee’s age and whether they use tobacco products. The age ratio of 3:1 means that an older adult cannot be charged more than three times the rate of a younger adult. The tobacco ratio of 1.5:1 means that a person using tobacco cannot be charged more than 1.5 times the non-tobacco user rate.

The ACA’s Health Insurance Tax is due to return in 2018 and threatens to increase already high insurance premiums even more. According to America’s Health Insurance Plans (AHIP), “The health insurance tax (HIT) is a $100 billion+ tax on health coverage for individuals, small businesses, seniors, states, and tax payers. For example families in the small-employer market could see their premiums go up an additional $7,000 over the next 10 years because of this tax. AHIP will continue to push for a full repeal of the health insurance tax because it makes health care less affordable for the very people who need the most help affording health care.”

ACA-compliant plans are fully insured plans. All the risk is passed on to the insurance carrier. These small group plans offer a wide variety of plan designs that can benefit the small employer, however many factors continue to threaten additional premium hikes in the upcoming years. Small business owners are faced with controlling their costs. It’s not surprising that over half of small group employers do not offer health insurance coverage. As ACA premiums continue to rise, so does the need for ACA alternatives. When ACA plans arrived, small employers were allowed to keep their coverage with only minor changes to their plan or risked losing their transitional (grand-mothered status). Now, as these small group employers consider moving to ACA plans, some may see a premium reduction, while others will see significant increases. The employer groups that can’t find a reduction will stay on their transitional plans to avoid ACA as long as possible. However, with transitional plans soon to expire, employers need alternative options.

Level-Funding Options

Many of the health insurers have already provided alternatives to ACA plans and are currently available to small businesses. Historically, self-funding has been a viable option for large group employer with 100 or more employees. The introduction of level-funding has created an alternative for groups in the small group market. Level-funded plans are self-insured plans with predictable premiums and are available to groups down to 10 employees. These plans have a low specific attachment point. The healthier groups usually receive the more attractive rates since they are medically underwritten. Groups that select a level-funded product option will have level or fixed monthly premiums. To be considered for coverage, groups must be healthy and approved by the underwriters. Lower risk groups may pay premium rates lower than ACA rates, while higher risk groups will pay premium rates higher than ACA rates. Many of the small groups that qualify for level-funding options will not be familiar with the concept and will rely heavily on their broker for expertise.

Level-Funding Cost components:

  • Administrative Expenses
  • Stop loss (Specific and Aggregate)
  • Claims fund (paid by the level-funded entity). At the end of the coverage period, a shared savings opportunity exists for groups with claims surplus.

At renewal and if the group had a low claims year, there should be minimal rate increase. In a bad claims year, the employer never has to pay more than the level premium amount because the stop loss coverage protects them. However, they should expect to see a rate increase and now have the option of moving to a community-rated ACA plan if premium savings exists.

Multiple Employer Welfare Arrangements (MEWA)

A Multiple Employer Welfare Arrangement (MEWA) is another popular alternative to ACA plans. MEWAs were created several years ago and can benefit small groups down to two employees. They are a self-funded insurance plan where multiple employers pool their financial resources and share their risk. MEWAs are member-owned profits that stay within the group and can be dispersed among the member companies. Much like the level funding, employer groups must qualify medically.

Typically a board of trustees is formed to manage the MEWA, enabling greater flexibility in selecting plan designs and meeting the overall needs of the group. MEWAs can implement programs that promote wellness and can save overall claims costs of the group, which ultimately lower premiums. Since the group is in control within the MEWA, there is increased stability and lower tax rates for the member companies that don’t exist with fully insured plans.

Small group employers, along with their brokers, are facing a dilemma. Many employers want to offer coverage for their employees while attracting talented future employees. Premiums are on the rise and options were limited, but adversity breeds solutions. The insurance industry has answered and created alternatives for the small group market by providing level funding and MEWA plans.

Please contact your Cornerstone sales representative to learn more about our partner carriers that offer MEWA and level funded alternatives now available to your small group clients.

Federal Judge Rejects Democratic Bid to Block Ending CSRs

Recently, President Trump issued an executive order designed to draw people away from the ACA markets. That same day, the administration announced they would no longer make Cost-Sharing Reduction (CSR) payments to insurers.

On October 25, U.S. District Judge Vince Chhabria in San Francisco rejected a bid by Democratic state officials to temporarily block the White House from ending cost-sharing reduction payments to health insurers under the ACA. The goal of the coalition of 19 Democratic attorneys general was to force the federal government to make payments that would help insurance companies lower out-of-pocket costs for low-income policyholders.



Federal Judge Upholds Order to End Cost-Sharing Reduction Subsidies

CSR Funding Removal Talking Points

  1. How will this impact my current 2017 year plan?
    • The loss of CSR funding, as a result of the announcement from President Trump, will NOT impact the current 2017 benefits for any members. The members will still see the same plan designs, benefits, copays, and coinsurance as they have for the prior 10 plus months of 2017.
  2. How will this impact 2018 plans?
    • Many carriers were required to submit two sets of rates to their respective state departments of insurance—one WITH CSRs and one WITHOUT CSRs. The pricing WITHOUT CSRs may now be approved for 2018 coverage. This should not have any impact on plan designs, benefits, copays, and coinsurance for 2018.
  3. Is my plan being terminated by removal of the CSR payments?
    • No, your plan is not being terminated. See answers 1 and 2 for possible effects depending upon the year.
  4. I just received my renewal notice for 2018. Will I receive an additional increase for 2018?
    • Depending on the carrier, the state, and the plans the clients are enrolled in, clients may see another rate increase to adjust for the loss of CSR payments. Some increases could be significant and could exceed double digits. This will be over and above the normal rate increases for another year older, medical trend, carrier exits, and getting to an 85 percent Medical Loss Ratio.
  5. Will the loss of CSR funding affect all of my clients?
    • This depends again on the carrier, the state, and how they have set up the premium adjustments. Some carriers may spread the rate increase across all members on all plans, while other carriers may apply the rate increase to only silver-level plans. More to come on exactly how this will work and how each carrier will handle it.
  6. Is there anything else I need to do at this time?
    • The short answer is no, there is nothing else you need to do. Beginning outreach to your clients, if you haven’t done so already, could be a start. Let them know what to expect and understand exactly what is occurring. This remains a fluid situation and more will come in the following weeks as to the overall rate impact this will have on your clients.
  7. Will my clients lose their subsidies because of this announcement?
    • The CSRs are separate from subsidies qualified individuals receive to lower monthly premium costs.

Click here for an update on the most recent executive order and CSRs.

Presidential Executive Order Promoting Healthcare Choice and Competition Across the United States

Today, President Trump signed an executive order intended to improve access, increase choices, and lower costs for health care. The order begins with a statement that it is the policy of the executive branch to facilitate the purchase of insurance across state lines. The order contains three primary directives addressing Association Health Plans, Short-term Insurance Policies, and Health Reimbursement Arrangements:

  1. Directing the Secretary of Labor to consider proposing regulations or revising guidance to allow more employers to form association health plans (AHPs) within 60 days of the date of the order.
  2. Directing the Secretaries of the Treasury, Labor, and Health and Human Services to consider proposing regulations or revising guidance to expand the availability of short-term limited duration insurance within 60 days of the date of the order. Specifically, the Secretaries are directed to consider allowing such policies to cover longer periods and to be renewed by the consumer.
  3. Directing the Secretaries of the Treasury, Labor, and Health and Human Services to consider proposing regulations or revising guidance to increase the usability of Health Reimbursement Arrangements (HRAs) and to expand employers’ ability to offer HRAs to employees within 120 days of the date of the order.

The order also directs HHS, in consultation with the secretaries of the Treasury, Labor, and FTC, to report to the president on state and federal laws, regulations and policies that limit health competition and choice.

Cornerstone will continue to monitor any proposed changes in response to the President’s executive order. While this order may mark the beginning of significant changes to health insurance markets, it remains important for brokers to educate their clients on the current ACA regulations and potential penalties throughout this upcoming open enrollment.

Premier Health Plan Exits the Off-Exchange Marketplace

Due to uncertainty surrounding U.S. health care policy, Premier Health Plan will join numerous other carriers in retracting their Premier HealthOne Off-Exchange plans on December 31, 2017.

Affected members will receive notices prior to the open enrollment period for 2018, and will have the option to choose alternative coverage for 2018, including one option from Premier Health Plan: the Premier HealthOne Off-Exchange Bronze 5000 plan, which is only offered from January 1, 2018, through March 31, 2018. After that date, Premier Health Plan will no longer offer coverage on the individual market in Ohio.

Questions? Contact your Cornerstone representative for answers.


Premier Health Plans Exit the Off-Exchange Marketplace

Anthem Will Not Offer Coverage in Pike County

Anthem announced last week that they have chosen not to offer one Individual off-exchange catastrophic health plan in Pike County, Ohio. Impacted members have been notified.

The company hopes that changes in the market will allow them to have a more robust presence in the future.

Letter From Anthem: Individual ACA Open Enrollment Starts November 1

Anthem recently released a letter detailing plans for 2018. As previously mentioned, the company will not offer ACA Individual health plans through the Health Insurance Marketplace in Ohio for 2018 and will reduce their off-exchange plan offerings. Only one Individual off-exchange catastrophic medical plan will be available in Pike County.

Click here to read more.

Individual Carrier County Map

While Cornerstone continues to learn more about the changing Individual ACA market for 2018, we wanted to let our brokers know we are working diligently to provide you with paying carriers that will be in the state of Ohio for 2018.

We have created an Individual county map of Ohio to show where carriers will be located for this upcoming OEP. Please click here to request a copy of the map.


Please contact your Individual Service Rep today for any questions!


Individual Service Team Alpha Split (by BROKER’S last name):

A – K:  Geoff Beglen (513-629-9358, gbeglen@crnstone.com)

L – Z:  Colleen Glaser (513-629-9359; cglaser@crnstone.com)  

CBO Predicts Cheap ACA Subsidies Through 2026

Due to low enrollment in ACA exchange plans, the Congressional Budget Office (CBO) predicts that federal spending on subsidies for three major ACA individual health insurance subsidy programs could amount to just $729 billion from 2017 to 2026, which is 16 percent lower than the CBO estimate published in March 2016.

Looking ahead 10 years, analysts also made cuts to the ACA premium tax credit, the ACA cost-sharing reduction subsidy program, and the total for the tax revenue lost to the employer group health coverage cost tax exclusion.

The CBO also expects 18 million people to have individual coverage in 2026, lower than the total of 25 million predicted in March 2016.



ACA Subsidies Are Much Cheaper Than Expected: CBO

New ACA Carrier for 2018 Offered in Ohio! | Oscar + Cleveland Clinic

Cornerstone introduces a new partnership with Oscar for your Individual ACA business in 2018!

Oscar is collaborating with the world-renowned Cleveland Clinic to offer a unique health care experience that puts the insurance company on the same team as your client and their doctor giving them connected affordable care.

  • Every Cleveland Clinic + Oscar member will have access to the prestigious Cleveland Clinic
  • Access to Cleveland Clinic’s family health centers, and health and wellness centers in the five counties of service

To start your appointment process click here.

Click here for an appointment process guide.


Broker Launch Training Event

Attend an exclusive broker launch event hosted by Cleveland Clinic + Oscar to learn more about the exciting new joint venture and the individual health plans available this OEP.


DATE: Wednesday, September 27, 2017

TIME: 9:30 am

LOCATION: Intercontinental Hotel & Conference Center

9801 Carnegie Avenue | Cleveland, OH 44106

Click here to RSVP.


Remember to:

  • Select “Cornerstone” as your General Agency for Ohio
  • Once you have completed the appointment process please send an email to Sandy Weber to notify her of your appointment
  • Also appoint your agency if you prefer (you’ll need agency name, NPN, and license #)