Healthcare in America 16-Apr-2019
Can “Limited Funding” reduce your health insurance costs? 3-Apr-2019
Federal Court Unravels Association Health Plans
After a confusing series of IRS actions, they have decided to increase the family HSA contribution limit to the original $6,900 for 2018. In March 2018, the IRS announced that a change in the inflation adjustment calculators for 2018 lowered the maximum deductible HSA contributions by $50 to $6,850. This is after they had announced in 2017 the limits would be $6,900.
Now, the IRS has granted relief or affected taxpayers by allowing the originally announced $6,900 family HSA limit to remain in effect. The IRS cited "numerous unanticipated administrative and financial burdens" in response to the $50 reduction.
A recent article in Newsweek "Medication keeps getting more expensive - and big pharma won't explain why" shows the continuing problem of prescription pricing. Between 2012 and 2017, prices for the top 20 drugs prescribed to older Americans increased by an average of 12% per year. Seven of the top drugs more than doubled in price, and it's legal.
New prescriptions entering the market are generally priced higher then their competitors. What's strange is when a new drug hits the market, companies with similar medications reprice their similar approved drugs to match the higher price, even if the drug has been on the market for years.
The maker of Restasis which cost $167 in 2012 and $321 in 2017 vowed to avoid predatory pricing practices. "We will take price increases no more than one per year," Brent Saunders the CEO of Allergan said.
Because Medicare is unable to negotiate with drug manufactures over their pricing practices there is little we can do to stop this. Political pressure to change this has been weak (Rx has the largest lobbying in Washington). All politicians rally around lower drug costs but the reality is nothing is happening.
With all the new high tech, high cost medications about to hit the market it's time our leaders in Washington find a way to bring costs under control before we are all priced out of owning health insurance.
In early December, we were notified that the special agreement regarding out of network emergency visits between BCBST and Tri-Star Health System would expire on December 31, 2017. Previously, this agreement ensured BCBST members, with the S Network, would not be balance billed when using Tri-Star facilities in true emergency situations. The expiration of this agreement brings some uncertainty.
This is a legal battle, which puts patients squarely in the crosshairs of a fight between two large corporations. With an out of network claim, the medical provider charges whatever price they want for the services and then expects the insurance company to pay the inflated cost. This does not go over very well on the payer side and so we end up with financial battles like this.
We have dealt with this for years and can generally help our clients resolve their balance billing issues but it's never easy or guaranteed. This morning we came in to our first BCBST vs. Tri-Star balance billing issue of 2018. One of our longtime clients has an employee who was having a heart attack and was transported to the nearest hospital, Summit Hospital which is the Tri-Star facility in Hermitage. Rather than stabilize the patient and move him to an in network facility like Vanderbilt or St. Thomas, they did the heart surgery knowing it would be treated out of network. When the first bills started coming in, the hospital charges were approximately $109,000 for the surgery.
Generally, a claim like this has all the charges worked out ahead of time through the PPO network contract. When a claim is out of network, there are no set prices so the insurance company generally pays what they consider "reasonable and customary charges". In this case, BCBST paid Summit Hospital a little over $40,000 for the procedure. This amount seems reasonable to me but apparently not to Summit or Tri-Star.
This weekend the patient received a letter from Summit Medical Center requesting that he make arrangements for nearly $70,000. Needless to say, he did not have a good weekend.
What happens next? This is where two large corporations use normal working people as pawns in their multi-million dollar game of chess. They want the patient to ask BCBST to fix the problem by paying the remaining balance. Amazing for sure.
What should you do as a BCBST member when facing a similar situation? If you are having a life or limb threatening emergency, you should always go to the nearest Emergency Room to seek treatment. If you have the flu, or some other non-life threatening situation we recommend driving a little further to an in network provider to avoid this type of situation.
We expect BCBST and Tri-Star will work all this out over time. By that, we mean a number of years in which this could drag out. In the end, we really don't expect our clients to have to pay these exorbitant claims, but it will be hanging over their heads until the two companies come to a resolution. No he won't have to pay during their negotiations but it's still stressful and after dealing with a heart attack that is the last thing he needs.
It's all part of trying to keep healthcare costs as low as possible but that is never easy.
Health sharing ministries are not actual health insurance. But for many individuals and families in Tennessee, the plans are more affordable than an ACA compliant plan and they are growing fast. No, this is not your typical BlueCross BlueShield health plan but for many who cannot afford that, it could be a very good option.
As individual health insurance premiums rise along with the deductibles more people are looking for affordable options. One that is seeing more traction are the numerous religious health plans available nationwide. These plans are exempt from the Individual Mandate Penalty because Senate Democrats did not want the fight with Christian conservatives. What started as a small number of people covered has grown to more than a million.
These plans are not right for everyone. For starters, they do not cover pre-existing conditions and most have exclusions for treatments and prescriptions that do not fall into the companies religious beliefs. For those who are healthy and agree with many of the rules there are many different plans that can provide comprehensive coverage at affordable costs. For those with access to group insurance and employer sponsored benefits these can be an affordable way to cover dependents.
Some of the most popular plans are: Medi-Share, Christian Healthcare Ministries, Samaritan Ministries International, Altrua HealthShare, Aliera Healthcare and several others. While we do not sell individual policies we thought it prudent to make this information available for those looking for affordable options.
Here is a great article with additional information.
While this does not affect any of our Tennessee clients, it appears many companies with more than 50 employees have been hoping to not get noticed for not offering qualified, affordable health insurance and employee benefits to their employees. As the time nears to prepare 1094 and 1095 reporting to show which of your employees were offered and covered by group health insurance, this also lets the IRS know which companies are participating (or not).
This also creates the opportunity for the IRS to send out letters in error to businesses who are actually complying or have fewer than 50 "full time equilivent" employees. These IRS letters are time sensitive and it can be very complicated to dispute so better to address the problem early than put it on the back burner.
There are many significant changes in the new tax code for 2018. My CPA put together many of things to consider for year end tax planning. No, not much to do with your employee benefits and health insurance but very important none the less.
Have a Merry Christmas, Happy Holidays and may 2018 be your best year yet.
Benefit Brokers, LLC
Aetna’s Outgoing CEO Set to Reap About $500 Million if CVS Deal Closes
Mark Bertolini to benefit from up to $85 million of exit pay plus existing rights and stock that are worth more because of the deal see more
To me, this is not right. Maybe he could give some back to the premium payers.
While President Trump continues to try and unwind parts of the Affordable Care Act, the IRS is starting to chase down companies failing to offer affordable coverage to their employees. Beginning with companies over 100 employees the IRS is asking for proof these companies are providing qualified and affordable insurance or they will be forced to pay up.
The IRS has had multiple problems enforcing the mandate due to lack of funding and computer problems. In the tests they have run, most reports are inaccurate and are expected to create much back and forth discussion with companies who are in full compliance of the ACA rules. The Kaiser Family Foundation estimates 8% of small employers (50 - 100 employees) are not in compliance. This first wave of enforcement and letters is targeting companies with more than 100 employees.
As a group insurance consultant, one of the biggest challenges we see is the 30 hour mandate for full time eligibility and the fact that "affordable" premiums are based on a 30 hour workweek. This is one rule we hope the current administration will correct. There are many problems but this seems an easy fix thought it will open up millions of additional part-time employees to Obamacare subsidies.
President Trump signed an executive order today to trying to change the way health insurance is regulated, designed, governed and purchased. His plan covers three main areas hoping to spur competition, reduce regulations and lower health insurance costs for millions of Americans.
Selling Health Insurance Across State Lines
Trumps first act will allow insurance companies to sell health insurance policies across state lines. This has been attempted for years and will be the first true test if insurance companies are willing to try. Until now, each state has their own insurance department that makes specific rules to govern their state. This will presumably allow a carrier to set up a policy in one state and sell it across the country using the home states rules and regulations. It also allows the carriers to exclude some of the ACA protections that have increased costs for the healthier population while benefiting those with pre-existing conditions. Will it work, see the attached article from Milliman discussing the intended and untended consequences. There are many things that can go wrong but hopefully it will create options and more competition. This will be a challenge for regional carriers like BlueCross Blue Shield of Tennessee as they don't have national PPO networks like Cigna, Aetna or United HealthCare.
Association Health Plans
This is another program that has been discussed for more than 20 years. There have been several examples during my career but each time they crash and burn as those who can get coverage cheaper leave the association plan to set up their own. This creates a less and less healthy group increasing premiums and ultimately failing. I do believe this will result in numerous options for small business owners and now it appears individuals will be able to sign up as well. More options, which is something thing we have not had for many years. My fingers are crossed because we need help to create competition and bring down costs. Again, because they will not have to comply with many of the rigorous ACA laws of community rating, no pre-existing conditions and other mandates, there will be winners and losers.
The ACA strictly limited how long an individual could keep a short term health insurance policy and what they were required to cover. These were affordable options for those in between jobs, just out of school or looking for an affordable health care option. That all went away and it would be nice to see “good” short term coverage return as an option for those in specific circumstances. Not intended to replace a normal individual or group policy they do serve a purpose in keeping people insured.
Level Funded health insurance for the small and mid-sized group market.
As rates, requirements and ACA taxes continue, the insurance carriers have created health plans to help employers find affordable options for their employees. One that has proven most successful is a level funding strategy blends the simplicity and protection of a fully insured plan with the flexibility, ACA avoidance and opportunity to share in claims experience gains of a self-insured health plan.
The success of a plan like this for your company begins with underwriting, if you are a healthy group with good claims experience you may be able to save a lot of money. For groups with under 50 employees you are subject to community rating and ACAs limited plan designs. Community rating means everyone pays the same rates regardless of your group’s health, male/female ratios and type of industry. For larger groups, while you are underwritten on these factors, you are still pooled with many other groups and if you have a good claims year there are no refunds for overpaying for your coverage.
Level Funded health plans give you the protection of a fully insured premium meaning that is the most you can pay regardless of your claims experience. The big difference is premiums are broken into fixed costs (administration and reinsurance) and claims costs (money to pay your claims). The claims funding is where you can receive money back if your claims come in less than expected. In the event of a bad claims year you can expect an increase in rates just like you would in the fully insured world. The difference is, most of that increase will be going into the claims funding bucket and in the next year if claims return to normal, you will get some of that increase in premiums back.
Another big difference is the ability for small groups (under 50 employees) to have flexibility to build plan designs to meet their needs rather than to meet the ACAs rigid bronze, silver, gold & platinum requirements.
Sound too good to be true? For many it will be because you have to go through underwriting to qualify. If the carrier is going to give you money back in good claims years and eat the losses in bad years they want to make sure and work with healthy groups. Fortunately, it has gotten easier to get your employees through underwriting with the simplified Milliman Rx reporting. Carriers can now order data about your employee’s prescription usage and are making underwriting decisions based on that rather than having all your employees fill out health statements.
Who are these new plans designed for? We can now get quotes down to 10 enrolled employees. Not all carriers are going this low and most want 25 enrolled. Regardless, there are new options for you to consider and we would like to show you how it works and if this is a good fit for your company.
Please call David Moore at 615-724-1699 or email firstname.lastname@example.org for more information and to get pricing options for your company.