Paula L. Wilson, RHU, REBC
June 7, 2016
ObamaCare has fundamentally changed the health insurance market, and not for the better. Between the mandates to policy provisions and the ongoing way in which Americans use health care resources like an unending trough, insurers are having to take drastic measures to provide a product that is affordable to anyone.
Whether you are purchasing in the individual market or the small group insurance market, ObamaCare (ACA) has changed how you purchase health insurance. As time goes on, market changes spurred on by the legislation, make the process even more complex.
ACA desired to make things easier for the public. Categorizing individual and small group plans into 4 major categories, Platinum, Gold, Silver and Bronze. Each metallic level suggesting that plans found within a category could be considered to be of equal actuarial value. We are to believe that the benefits within a category are simply equal and that how benefits are paid is simply rearranging the deck chairs on the Titanic. But that is simply not true. There is more to health care than a percentage payable or the amount of your deductible.
How, when and where you purchase your coverage is now not so cut and dry. What will be covered and from whom you receive your care is of upmost importance.
Tax Treatment –
In the past, HSA qualified plans have stood out as a great option for many. The combination of the tax-free savings and lower priced high deductible plans were a win-win. Now that ACA plans have made $2,000 deductibles and $6,850 out of pocket maximum the norm, HSA Qualified plans with similar requirements and no upfront benefits, just don’t stand out from the crowd.
Of course, those who want to put away those tax-free savings for themselves or encourage it in their employees ($3,350 single/$6,750 family 2016) may find the HSA is still the best for their situation. Beware, that many of the reasons you purchased the HSA qualified plan pre ACA may no longer be of value.
A brief look a the current market will show the HSA plan options have dwindled as insurers have either reduced the number of qualified plans available or left that market completely. ACA was clearly not designed to embrace this market. As a matter of fact, I am sure it was designed to destroy personal choice and enhanced the idea of personal responsibility for your own wellness.
Provider Access –
In order to remain competitive, insurers must reduce payments to physicians. ACA may require that certain items must be covered and that everyone must be accepted, but the insurer can negotiate with physicians as to what they are willing to pay for each procedure. Large medical groups with thriving practices may be able to demand higher reimbursement while some must succumb to restricted contracts. This leveraging has spurred the expansion of “limited networks”. For example: Insurance Company A may have a single plan that is offered with several different levels of provider networks. The rate for the full network could be 50%* more than the rate for the exact plan with the smallest network. This is how you will pay your way into those best medical groups.
When you see advertisements or offers within your own insurance renewal offering savings, the network is going to be key. If you are lucky enough to find your physician inside one of these smaller networks don’t be so quick to jump on the offer. There is more to medical access than primary care physicians. Be sure to check ancillary carriers, urgent care centers and hospital access.
Most important, everyone should be asking his or her insurer if there is any change in the provider network or prescription formulary at the time of renewal.
Spending on prescription drugs rose 12.6 in 2014 and is expected to rise 7.3% a year through 2018. In order to combat the effect of this single cost item in your health plan, insurers develop formularies. Formularies are simply a list of the drugs covered under your plan. Most insurers have several regional and national formularies that could be attached to your particular insurance plan. It is important for you to gain access to that list and ask each year for the formulary to be used before accepting a new plan. It is the law that this be provided to you.
Many of my clients receive a single digit renewal with no obvious change in the benefit structure and proceed to jump on the easy option to renew. Not so fast. You must check for changes to your provider and prescription formularies.
When you buy insurance
ACA limits when you can buy insurance. If you are in the individual market, you can only purchase insurance during the annual open enrollment period. (November 1 to January 31) If you decide in July that you have made a mistake and that your physicians are not in your chosen plan, you have wait until the next open enrollment to choose the proper plan.
Small employers have far more leeway in their ability to change plans. Employers with 50-100 employees should note that they are considered small employers in 2016 and must purchase coverage within that market. Employers previously considered large group are in for some big changes.
Government Premium Assistance/Where you buy insurance
All of these buying decisions have to be made whether you are purchasing your coverage direct from an insurer or indirectly from the insurer via your state or federal health care exchange. In states with a private market still in tact, there is no reason to purchase through an exchange unless you are to receive premium assistance. To see if you qualify for premium assistance you can local your exchange at healthcare.gov.
Use a professional experience insurance agent whenever possible. Unlike exchange employees, they are small business owners that will provider personal ongoing service. Local professional agents can be found at nahu.org/consumer/findagent.cfm. Many are willing to help you even if you are applying for premium assistance.
A note to Employers
Small employers must now purchase their employee benefit plans through the small group market. ACA prohibits employers from purchasing or even reimbursing employees for individual (non-group) plans. Employers who reimburse employees for individual non-group health plans face a $100 a day or $36,500 per year, per employee excise tax. This rule applies to all employers. Creating anything that looks and smells like an employer sponsored plan is not only disallowed under ACA, but it also becomes subject to laws including ERISA. Individual policies just don’t fulfill the requirements.
Employers who are aware of employees or families with special concerns and needs should do their best to make sure important coverage is not interrupted. Loss of coverage to a specialist or lifesaving specialty drug will have far reaching affects. A problem that can be avoided with proper care.
Regardless of the avenue you choose to purchase insurance, how you make the decision requires far more planning than before ACA. Primary considerations must now include thoughtful planning and research on needs involving tax treatment, provider access and prescription needs.
Paula L. Wilson, RHU, REBC is an independent insurance agent in Southern California since 1985. She specializes in health insurance and benefit plans for employers as well as providing life, disability and long term care insurance to individuals. She can be contacted at 888-447-2852 or email@example.com.
June 9th, 2016 at 8:03 am
Great Article Paula – A point of clarification though on Carrier Formularies – and this should be of upmost concern.. When an Employer renews of contracts with a Carrier for a 12 month lock on Benefits and Rates, they are simply locking in the Co-pays and co-insurance levels. That does not lock in the RX Formulary…so while checking Formulary prior to contracting helps prevent insuring large out of pocket costs on high cost drugs, it does not insure against being hit with exporbitant out of pocket drug costs mid year. Carriers can change the Underlying RX Formulary mid year.
June 27th, 2016 at 10:23 pm
Anne, those are great cautionary words.