Trump Administration Proposes Rule for Short-Term Health Plans

Under a proposed rule by the Trump administration released on Tuesday, insurers will again be able to sell short-term health insurance good for up to 12 months. This rule would allow short-term plans to add more choices to the market at a lower cost and could offer broader provider networks than ACA plans in rural areas.

Health and Human Services Secretary Alex Azar said, “We want to open up affordable alternatives to unaffordable Affordable Care Act policies.”

Here are some talking points regarding the rule:

  • 60 days to comment on the proposed rule before changes are made to the current rules
  • If approved, insurers may be able to sell short-term health insurance for up to 12 months
  • Comments also being sought to extend beyond 12 months and if there are ways to guarantee renewability of the plans
  • No changes to requirements for STM plans – subject to pre-ex and not held to ACA requirements/not ACA compliant, med questionnaire required, etc.

 

RESOURCES

Trump Administration Proposes Rule to Loosen Curbs on Short-Term Health Plans

Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule

Click here to review the proposed rule

Proposed rule would loosen restrictions on short-term health plans

Narrowing Medicare “Doughnut Hole” Will Close In 2019

For Medicare Part D beneficiaries with high prescription drug expenses, the “Doughnut Hole” means they pay more for their medicine once costs reach a certain threshold. Narrowing each year since the Affordable Care Act was passed in 2010, the gap was scheduled to close in 2020. With the 2/16 budget deal, the doughnut hole will now close in 2019.

Read the full story here.

More Than 3 Million More Uninsured At The End of 2017 Than 2016

According to the Gallup-Sharecare Well-Being Index, 3.2 million more people are uninsured in 2017 relative to the end of 2016. The percentage of uninsured U.S. adults ended in 2017 at 12.2 percent, a 1.3 percent increase from the record low of 10.9 percent in fourth quarter 2016. Data from the index suggests that this percentage reached its peak in December of 2017 when the GOP tax bill passed with a repeal of certain parts of the individual mandate effective 2019.

There are several factors that may have contributed to this increase:

  • Lack of competition drove up costs. Some insurance companies stopped offering insurance through the exchanges, which caused costs to rise due to lack of competition.
  • Repeal of the penalty in the individual mandate. Section 5000A of the individual mandate provides the legal requirement for individuals to purchase minimum essential coverage even though the penalty for not doing so has been repealed.

The Gallup-Sharecare Well-Being Index suggests that the uninsured rate will likely increase in the years ahead because of the penalty repeal.

 

RESOURCES

U.S. Uninsured Rate Steady at 12.2% in Fourth Quarter of 2017

3.2 million more people were uninsured at the end of 2017 than at the end of 2016

Talking Points for Addressing the Tax Bill and the Individual Mandate

Senate Republicans recently approved the repeal of Obamacare’s individual shared responsibility penalty as part of the 2017 reconciliation act. While the tax cut does not repeal the individual mandate itself, it zeros out both the dollar amount and percentage of income penalties imposed by the mandate.

The details of the repeal may be confusing for your clients, so we have put together a resource of talking points to simplify the repeal and what it means, sourced from a recent article from Health Affairs:

  • Both houses of Congress have now voted to repeal the Affordable Care Act’s (ACA) individual shared responsibility penalty, effective for 2019, as part of the 2017 tax reconciliation act.
  • Individuals remain responsible for having insurance or paying the penalty for the 2017 filing season and for 2018.
  • The IRS announced it will reject electronic filings of 2017 tax returns that do not claim coverage or an exemption or include payment of the penalty.
  • Important:  the individual mandate was not repealed.  Section 5000A of the individual mandate provides the legal requirement for individuals to purchase minimum essential coverage even though the penalty for not doing so has been repealed.
  • Employers providing “minimum essential coverage” must still report info to the IRS for the covered individuals and provide evidence of coverage to the individual or be subject to penalties if they fail to report.
  • Provisions for individuals to apply for exemptions from the mandate (to exchanges or the IRS) are still in place but it’s unlikely that individuals will apply for exemptions after the penalty is repealed in 2019.
  • There are two employer mandate penalties that remain in place:
    • a penalty imposed on employers who fail to offer minimum essential coverage to full-time employees if any employee receives premium tax credits to enroll in coverage through an exchange, calculated on a per-employee basis for all full-time employees; and
    • a larger penalty imposed on employers who offer minimum essential coverage but fail to offer “minimum value” coverage, which applies to each full-time employee who in fact receives premium tax credits for exchange coverage.
  • Premium tax credits will continue to keep coverage affordable for consumers with incomes below 400 percent of the poverty level.
  • Coverage will continue to be available to all consumers regardless of preexisting conditions.
  • Premiums will not depend on health status, and a risk adjustment system will penalize insurers who attract primarily healthy enrollees.
  • The remaining eight titles of the ACA remain operative, including provisions closing the Medicare donut hole.

 

Read the full article from Health Affairs here.

Premiums Hike For Children Under 2018 ACA Policies

Premiums increased across the board this year and not insignificantly. Fourth quarter hit harder than ever, a telling glimpse into next year if nothing changes in our legislature. One major change that didn’t get much press was the change in factors for children age 15 to 20 on group and individual plans. You may have seen it on ACA quotes without giving it a second thought.

But as December 2nd article from the LA Times explains, this is a “complicated new rule, approved last year by the Obama administration, that allows insurance companies to assign more of a family’s overall premium cost to children in individual and small group policies, starting in 2018.” It goes on to say, “It also allows insurers to charge higher rates for teens than for younger children beginning at age 15, because teenagers typically rack up bigger medical bills. Up until now, the ACA has not allowed any difference in the amount charged for children from birth to age 20.”

Click here for the full article.

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.

 

RESOURCES

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.

RESOURCES

Premier Health Plans Exit the Off-Exchange Marketplace