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WASHINGTON (AP) — You might be pleased with the low monthly premium for one of the new health insurance plans under President Barack Obama’s overhaul, but the added expense of copayments and deductibles could burn a hole in your wallet.

An independent analysis released Wednesday, on the heels of an administration report emphasizing affordable premiums, is helping to fill out the bottom line for consumers.

The annual deductible for a mid-range “silver” plan averaged $2,550 in a sample of six states studied by Avalere Health, or more than twice the typical deductible in employer plans. A deductible is the amount consumers must pay each year before their plan starts picking up the bills.

Americans looking for a health plan in new state insurance markets that open next week will face a trade-off familiar to purchasers of automobile coverage: to keep your premiums manageable, you agree to pay a bigger chunk of the repair bill if you get in a crash. Except that unlike an auto accident, serious illness is often not a self-contained event.

Avalere also found that the new plans will require patients to pay a hefty share of the cost — 40 percent on average — for certain pricey drugs, like the newer specialty medications used to treat intractable chronic diseases such as rheumatoid arthritis and multiple sclerosis. On the other hand, preventive care will be free of charge to the patient.

“Consumers will need to balance lower monthly premiums against the potential for unpredictable, expensive out-of-pocket costs in plans with higher deductibles,” said Caroline Pearson, a vice president of the private market analysis firm. “There is a risk that patients could forgo needed care when faced with high up-front deductibles.”

Responding to the Avalere study, the Obama administration acknowledged the new plans aren’t as generous as employer coverage, but said they nonetheless represent a big improvement over currently available individual policies, which can have gaps in coverage and even larger out-of-pocket costs.

Also on Wednesday, the administration unveiled premiums and plan choices for 36 states where the federal government is taking the lead to cover uninsured residents. Insurance markets that go live Oct. 1 will offer subsidized private coverage to people who do not have health insurance on the job, including the uninsured and those who currently buy their own policies.

Before new tax credits that work like a discount for most consumers, premiums for a mid-range “silver” benchmark plan will average $328 a month nationally for an individual, the administration report found. Beneath that average are wide differences for individuals, depending on where they live, how much they make, and other factors.

Health and Human Services Secretary Kathleen Sebelius said the average consumer will be able to choose among more than 50 plan options.

“For millions of Americans, these new options will finally make health insurance work within their budgets,” Sebelius told reporters in a preview call Tuesday. The markets — called “exchanges” in some states — are the only place where consumers will be able to get a tax credit for health insurance.

HHS estimated that about 95 percent of consumers will have two or more insurers to choose from. And the administration says premiums will generally be lower than what congressional budget experts estimated when the legislation was being debated. About one-fourth of the insurers participating are new to the individual coverage market, a sign that could be good for competition.

But averages can be misleading. When it comes to the new health care law, individuals can get dramatically different results based on their particular circumstances.

Where you live, the plan you pick, family size, age, tax credits based on your income, and even tobacco use will all impact the bottom line. All those variables could make the system hard to navigate.

For example, the average individual premium for a benchmark policy known as the “second-lowest-cost silver plan” ranges from a low of $192 in Minnesota to a high of $516 in Wyoming. That’s the sticker price, before tax credits.

In the three states with the highest uninsured population, the benchmark plan will average $373 in California, $305 in Texas, and $328 in Florida. Differences between states can be due to the number of insurers competing and other factors.

“One surprise is Texas,” said Larry Levitt of the Kaiser Family Foundation. “That is a state that has put up roadblocks to implementation, but the premiums there are below average.”

The second-lowest-cost silver plan is important because tax credits are keyed to its cost in local areas.

But consumers don’t have to take silver. They can pick from four levels of coverage, from bronze to platinum. All the plans cover the same benefits and cap annual out-of-pocket expenses at $6,350 for an individual, $12,700 for families.

The big difference is cost sharing through annual deductibles and copayments. Bronze covers 60 percent of expected costs; silver, 70 percent, on up to platinum at 90 percent. Bronze plans have the lowest premiums and the highest cost sharing.

As the Avalere study showed, premiums aren’t the only factor consumers should weigh.

The flurry of new reports comes as the White House swings into full campaign mode to promote the benefits of the Affordable Care Act to a skeptical public. Congressional Republicans, meanwhile, refuse to abandon their quest to derail “Obamacare” and are flirting with a government shutdown to force the issue.

Starting Jan. 1, virtually all Americans will be required to carry health insurance or face fines. At the same time, the health care law will prohibit insurance companies from turning away people in poor health, or charging them more.

Many employers are reconsidering whether they will send the Exchange Notice because there are no penalties in connection with a failure or refusal to provide the notice.

In a brief Frequently Asked Question document (link provided below) issued on September 11, the Department of Labor formally clarified that an employer covered by the Fair Labor Standards Act will not be subject to a fine or penalty under the Patient Protection and Affordable Care Act if they fail to provide the Exchange Notification by October 1, 2013.

Health Reform amended the Fair Labor Standards Act to require employers to provide each employee with a written notice containing information about the exchange. The Federal Government has provided a model notice. This new guidance, however, makes clear that the requirement is not enforceable through a penalty or fine, although it suggests that employers “should” provide the written notice. Here is the actual guidance:

Question:
Can an employer be fined for failing to provide employees with notice about the Affordable Care Act’s new Health Insurance Marketplace?

Answer:
No. If your company is covered by the Fair Labor Standards Act, it should provide a written notice to its employees about the Health Insurance Marketplace by October 1, 2013, but there is no fine or penalty under the law for failing to provide the notice.

As a result a number of employers have already decided not to send the Exchange notice. We cannot provide you a legal opinion on this issue, but if you are considering not sending the Notice in light of this news, we would be happy to discuss the implications of this new guidance with you and legal counsel.

By SARAH E. NEEDLEMAN And ANGUS LOTEN CONNECT

Small businesses offering health insurance tend to require their employees to cover significantly more out-of-pocket than do big companies—and new limits imposed by the health-care law likely won’t ease the pain.

At businesses with fewer than 200 workers, for example, employees pay an average of $1,715 a year out-of-pocket to cover their deductibles—the amount the insured pays before coverage kicks in. That is almost double the average outlay by workers with individual coverage offered by larger employers, according to the Kaiser Family Foundation.

About 58% of insured workers at small firms have annual deductibles of $1,000 or more for employee-only plans, according to Kaiser data. For employees opting for family coverage, the typical deductible ranges from $3,000 to $5,000 on average, insurance brokers say.

Under the Affordable Care Act, new and nongrandfathered health plans for some small employers will be subject to an annual maximum deductible of $2,000 per individual, and $4,000 per family, though some insurers may seek waivers to allow for higher deductibles if they argue that their plans are otherwise unaffordable.

“Plans with four-figure deductibles are the new reality in health insurance,” says Josh Archambault, director of health-care policy at the Pioneer Institute of Public Policy Research in Boston. Large employers are moving to higher-deductible plans, too, though they are starting from a much lower base.

The rising annual employee-deductible pattern shows a central strategy small firms are using to cope with rising insurance premiums. On average, total annual premiums for coverage of a single worker are $5,884 a year, up 74% from a decade ago, Kaiser says. Employees typically cover about $1,000 of that premium cost, in the form of deductions from their paychecks.

Employers offering high-deductible plans point out that because such plans generally feature lower premiums, they are less costly to them—as well as to their healthy employees, because employees can make lower premium contributions. High deductibles “encourage people to use less health care,” adds Gary Claxton, vice president of Kaiser Family Foundation in Washington, D.C. “That’s part of the reason why they’re cheaper.”

Paine’s Inc., an East Granby, Conn., recycling business, offers its 75 employees a health plan with a $2,500 annual deductible for individual worker coverage, up from $1,500 in 2011. For the company’s family plan, the deductible also jumped last year to $5,000 from $3,000.

Mike Paine, the company’s president and the grandson of the founder, says health-insurance premiums have increased annually for the firm in recent years by as much as 13%, forcing him to find ways to trim costs. He says raising the deductible on his employees’ health plan is better than if he were to cut back on the 75% the company contributes toward premiums. Workers have to reach the deductible limit before they begin to get much benefit from their insurance coverage, but he estimates that just a handful of his covered workers end up paying the full deductible amount in a given year.

Some staffers who were recently hit with steep medical bills expressed to him that they were caught off guard, surprised and upset by their out-of-pocket costs before coverage kicked in, he says. Though Paine’s informs employees about deductible increases whenever these occur, in meetings and print materials, most healthy employees tend to not pay attention, he adds.

“The unknown cost” of out-of-pocket expenses for medical care “is less tangible than the amount you are taking out of their paycheck,” says Adam Okun, a New York-based employee-benefits broker. “These employers feel much better charging their employees $1,000 less in guaranteed premium contribution costs and exposing them to higher ‘potential’ costs of, say, a $2,000 deductible,” he says.

Mike Mitternight, the Metairie, La., owner of a commercial heating and air-conditioning company, pays 100% of the premiums for his seven covered employees but not their dependents. He raised the annual deductible on his employee health plan to $2,500 earlier this year from $2,000, in order to lower his premiums. His savings from the switch, he says, enables him to expand his business, Factory Service Agency Inc., and replace aging equipment. He also might use the savings to raise salaries or hire new employees.

Brokers say they have seen employee deductibles as high as $10,000 for individual and $20,000 family coverage at some small firms. However, they also note that with the money small firms are saving on premiums, some are setting up and contributing to health-savings or health-reimbursement accounts for their employees.

“It’s a smart strategy for a small employer,” says John Adair, an insurance broker in Greenville, S.C., because a high deductible is “only likely to affect a few of their employees”—assuming only a few get sick.

“For many small businesses, it’s a question of high-deductible health plans or no coverage at all, and no coverage is even more of a gamble,” says Alison Galbraith, a physician and researcher at Harvard Medical School in Boston.

Rick Snow, owner of Maine Indoor Karting, bumped up the annual employee deductible for his company’s health plan three times since its inception in 2003, to $9,000 for family coverage (selected by two of his 18 employees) and to $4,500 for individual worker coverage, which none of his employees selected.

He did so, he says, because premiums were rising and he thought it was important to keep his employees’ monthly contributions from reaching a level they couldn’t afford. He pays most employees less than $15 an hour and hasn’t been able to give many raises recently due to weak sales. He consulted with his workers before moving to a high deductible plan, he adds: “The general consensus was that it would be better to keep the premium amount lower because they didn’t think they would get sick enough to hit that deductible.”

Eventually, Mr. Snow concluded that the extremely high deductible plan was still too costly—and of little value to anyone except those who might suffer a catastrophic illness or injury. He decided to drop the company’s health plan last year and says the employees who were on it have been uninsured ever since.

While some employee deductibles are more complicated, with separate limits for office visits, hospitalization and diagnostics, the law puts an annual limit on all out-of-pocket costs at $6,350 for individuals and $12,700 for families under all plans, including deductibles and any other shared costs—though the limits have now been delayed until 2015. Under the law, preventive care, such as cancer screenings, must have no out-of-pocket costs.

“At a certain point under the new law, employers are going to have to get more creative about how to keep premiums down without simply raising deductibles,” Ms. Galbraith says.

BY JOYCE M. ROSENBERG

SEPTEMBER 20, 2013 

NEW YORK (AP) — Many small businesses hope to temporarily sidestep Patient Protection and Affordable Care Act (PPACA) by renewing their coverage early.

One of those businesses is Huber Capital Management. The asset management firm is renewing its health insurance policy this year, instead of next year. The early renewal will help the company avoid buying insurance that conforms to PPACA requirements, and also help it avoid any surge in rates resulting from PPACA.

“We can just push this whole thing off and defer it for essentially one year,” says Gary Thomas, chief operating officer of El Segundo, Calif.-based Huber Capital, which has nine employees covered by insurance.

The Obama administration says it won’t force employers with at least 50 workers to comply with the PPACA coverage reporting rules or the PPACA “play or pay” coverage mandate until 2015, but the law will still affect businesses.

Any company that offers health insurance, including very small businesses, will still have to contend with many other PPACA provisions starting Jan. 1.

Many insurance companies are raising their premiums sharply because they don’t know yet how many people will be covered by insurance. No one knows how quick young, healthy uninsured people will be to sign up. Supporters of PPACA are hoping a larger pool of insured people will bring down the average cost of claims per enrollee. If people forgo coverage, that may not happen.

Thomas got the idea to renew early from Huber Capital’s health insurance broker, who said the firm would likely have an 8 percent increase in premiums if it did renew in 2013, compared to an estimated 30 percent under a policy that complies with PPACA. The idea is also appealing to many companies because they can put off dealing with the law’s complex requirements. For example, companies with 50 or more workers must do calculations to determine whether they’re providing adequate insurance coverage. If they have employees who work less than 40 hours, owners need to determine whether those workers must be covered. By renewing in 2013, owners will get more time to educate themselves about the law.

“Some of the things that might be guesswork or estimates will be more of a known quantity than they are today,” Thomas says.

Quantum Networks, an online seller of high-tech items, is also renewing on Dec. 1. Its broker says its premiums may be unchanged from this year under a renewed policy.

“We want to drag this on as long as possible,” says Bita Goldman, vice president for operations. “For a small company like ours, every little bit helps.”

Quantum Networks, based in New York, has 24 staffers. Health insurance accounts for about 15 percent of its expenses. CEO Ari Zoldan wants extra time to understand the impact of the law on his company.

“With the health ecosystem as complicated as it is, even the brightest of the brightest don’t understand this,” he says. “Over the next year, we’re going to educate ourselves, we’re going to shop around, we’re going to speak to other business owners and ask, ‘what are you guys going to do?'”

Anthony Lopez, a small business specialist at online broker eHealthInsurance, says half the clients he’s spoken with are renewing early. He expects more after Oct. 1, when rates for 2014 are published.

But Lopez warns that insurance companies have different expiration dates for the option to renew their policies this year. While some allow small businesses to decide as late as December, others have earlier cutoff dates. But businesses that miss the deadline might still get insurance at 2013 rates if they switch to another carrier.

Higher Logic, a social media and mobile software company based in Arlington, Va., faced the specter of increasing insurance costs although it doesn’t have 50 workers yet. The company is growing rapidly, having hired 15 people this year. And its 45 staffers are scattered across 15 states, which makes buying health insurance complicated because states have different rules. President Andy Steggles has moved up the renewal date for the company’s insurance from Feb. 1.

“If we lock in now, we’ll know we have a 14 percent increase. If we hold off a renewal till Feb. 1, who knows what it’s going to be?” Steggles says. His broker said she can’t estimate the increase in his premiums under PPACA, but she gave him a range of 20 percent to 40 percent.

PURR-fect Solution’s insurance policy doesn’t expire until next May, but general manager Chett Boxley is renewing five months early, in December, because the premiums will stay the same. He hopes to set aside money to pay for future rate hikes for the four employees of his Salt Lake City-based company, which manufactures cat litter.

Boxley faced a 20 percent to 25 percent rate increase under the ACA.

“When I heard ‘no increase,’ I was pretty stoked to hear that. It was a no-brainer — we said OK.”

Managers of Covered California may require individual exchange plan issuers to accept cash payments through neighborhood utility offices or other brick-and-mortar offices.

The managers discuss payment options in a premium payment report in a packet for an upcoming board meeting.

All of the 12 sellers of individual “qualified health plans” (QHPs) will be taking personal checks, cashier’s checks, money orders, Visa, MasterCard, debit cards and electronic fund transfers.

Five issuers will take the Discover card, and two will take American Express payments.

Half will take cash.

In the dental plan market, all six carriers have agreed to take personal checks, cashier’s checks, money orders, Visa, MasterCard, debit card payments and electronic fund transfers, but only half will take Discover or American Express cards. None will take cash.

California exchange officials estimate that about 1 million state residents have no bank accounts.

Officials fear letting QHP issuers choose whether to take cash could lead to antiselection problems.

Eventually, “Covered California and the plans want to implement common payment processes that will foster the enrollment and retention of all individuals, with particular attention to those who are unbanked,” officials said.

Gina Binole
benefitspro

Two U.S. senators have introduced a bill to redefine what it means to be a full-time employee under the Patient Protection and Affordable Act.

The measure, if enacted, would protect a greater number of employers from fiscal penalties imposed by the law as now written.

The legislation, the Forty Hours is Full Time Act of 2013, was introduced by Sens. Joe Donnelly, D-Ind., and Susan Collins, R-Maine, and would change the PPACA’s definition of full-time employees to those working an average of 40 hours per week, or 174 hours per month.

As outlined in the PPACA, employers are required effective in 2014 to offer qualified coverage to full-time employees — defined as those working an average of 30 hours per week — or be liable for a $2,000 penalty per employee.

“Most Hoosiers I know think 40 hours is full time. We need to change the definition of a ‘full-time employee’ in the Affordable Care Act to bring it in line with what most Americans have traditionally recognized as full time,” Donnelly said in a statement introducing Senate Bill 1188. “We also need to provide clarity to employers so they have the information they need to run their businesses and plan for the future.

“Many employers have to make decisions because of this definition, and some have chosen to cut current part-time employees’ hours.”

Donnelly and Collins said they worry, though, that full-time as now defined will end up hurting workers because they’ll end up earning less.

“The new health care law creates a perverse incentive for businesses to cut their employees’ hours so they are no longer considered ‘full time,’” Collins said. “If its definition of a full-time worker as someone who works only 30 hours a week is allowed to go into effect, millions of American workers could find their hours, and their earnings, reduced. This simply doesn’t make sense.”

Sens. Collins and Donnelly urged President Obama to provide transition relief for employers. They co-authored a letter to the president urging the administration to work with the employer community to provide transition flexibility beyond Jan. 1, free from the threat of penalty.

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By Dan Cook
BenefitsPro

Research indicates that employees who invoke the Family Medical Leave Act are much more likely to request short-term disability within a year. Rather than just sit with that sound bite, Integrated Benefits Institute advises companies to do something about it.

“A worker’s request for leave under the FMLA may be a precursor to other, more costly leaves. Rather than view the FMLA as strictly a legal compliance requirement, employers should consider using FMLA as an early-warning system to detect potential costly health issues among their employees and their families,” said Thomas Parry, IBI president.

A panel of IBI experts has come out with six practical steps employers can take to address the impact on their business of such absences.

1. Connect employees with resources: When employers become aware of employees’ challenging personal situations through FMLA requests, they have the opportunity to direct workers to resources that can help minimize the risks of subsequent claims. Employers should take steps to connect employees requesting FMLA leaves with resources such as employee assistance programs, ergonomic interventions and disease management programs.

2. Explore work continuity options: Discussions with employees about job accommodation and stay-at-work options should commence at the earliest opportunity. Job accommodation and stay-at-work programs involve making changes to the duties of affected employees to enable them to continue working at a reduced level.

3. Expand training for supervisors: Employers and their benefits partners should expand FMLA training for supervisors on early warning signs and potential interventions. They should also conduct periodic “roundtables” with supervisors and human resources staff to review ongoing cases and provide appropriate coaching and support for supervisors.

4. Stay in touch with workers: Supervisors should remain in contact with employees during FMLA and STD leaves to keep them engaged and connected to work.

5. Better educate employees about FMLA: Training for employees about their FMLA rights and responsibilities should be improved and consistent. Employees generally receive information about FMLA from their human resource departments, but typically only at the time of requests. This increases the workload of personnel who must verify requests with no chance of approval. Workers should also be educated on the types of leaves FMLA does and does not cover.

6. Synchronize HR duties related to leaves: Employers should coordinate FMLA-related activities of human resources, benefits and occupational health departments so cases can more actively be monitored and managed.

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July 3, 2013

On July 2, 2013, the Department of Treasury announced that the employer mandate and its associated penalties have been delayed until 2015. The delay, according to the Department of Treasury, allows employers to prepare for the reporting requirements necessitated by federal health reform. In summary, the announcement states that employers with 50 or more full-time and full-time equivalent employees will not be penalized until 2015:

• For failing to offer coverage to 95% of eligible employees
• For failing to provide a health plan to employees that covers at least 60% of services
• For failing to provide a health plan that is affordable for eligible employees (defined as having an employee contribution of less than 9.5% of an employee’s wages)

This announcement allows large employers additional time to determine their full-time equivalent (FTE) calculations and the best coverage for their employees. No additional delays have been announced. At this time, the employer responsibility delay does not affect:

• Rules for small business and individual plans including the essential health benefits, rating requirements and plan design (metal tiers).
• The individual mandate, which requires most Americans to carry health insurance or pay a penalty for failing to do so.
• Taxes and fees on health plans, including the Patient-Centered Outcomes Research Institute fee, which some groups must pay by July 31, 2014 as well as four other taxes/fees effective January 1, 2014