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Navigating Health Insurance in the Health Care Reform Era


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A presentation for large employers, small employers and individuals without employer-based insurance. The slides present the current state of health insurance for each group and the impending changes of Health Care Reform and their potential effects.

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Navigating Health Insurance in the Health Care Reform Era

  1. 1. Navigating Health Insurance in the Health Care Reform Era Liz Kennon Kennon Insurance 412-586-5966
  2. 2. Current Sources of Health Insurance • According to a 2012 Gallup poll, – 44.5% have employer-based coverage – 25.6% have government based insurance (Medicaid, Medicare, military or veteran benefits) – 16.9% are uninsured – 11.1% have “something else” – probably private individual insurance • Even with employer-based insurance, employers are often paying a smaller share of the premium or only offering lower cost plans with higher cost-sharing (deductibles, copays) by the employee.
  3. 3. Current State – Employer Based Insurance • Large companies: – Often “self-insure” or have a large group plan with an insurance carrier, where the risk is spread over so many employees, that any one person’s health costs will not affect overall premiums. – All eligible full-time employees are guaranteed acceptance by the insurer and will all have the same premium cost (which may be shared between the employer and employee) – There are usually multiple plan options available to employees - this allows them some control in the level of coverage and the cost to themselves for their health insurance – By far, the most stable and affordable insurance market to both employer and employee.
  4. 4. Current State – Employer Based Insurance • Small Businesses: – Small Employers get insurance through one of the regional insurance carriers (UPMC, Highmark, HealthAmerica, etc) – Groups must initially submit medical questionnaires to the insurer to determine their premium rates. Each year, rates are then reevaluated based on the claims history of the group – All eligible employees must be accepted and offer the same premium, like in large group. – However, with a small pool, one or two employees or dependents with major medical costs can lead to huge rate increases and very high premiums
  5. 5. Current State – Employer Based Insurance • Small Business (continued) - Small employers can only offer one or two plan types and there are participation requirements that must be met. - Often, family and dependent coverage is not offered or funded by the employer - Premiums can become unaffordable to both employer and employee - However, health insurance benefits often necessary to attract and retain talent and could be most affordable option to employees with pre-existing conditions.
  6. 6. Current State: Individual/Family Insurance • Individual/family plans offered locally by Highmark, UPMC, HealthAmerica/Aetna • Requires medical underwriting!! If there are pre-existing conditions, you may have trouble qualifying for one of these policies or you may get charged a higher rate because of your medical history. • Most plans have a 12 month pre-existing condition clause, where (if you are accepted), any pre-existing conditions are not covered for the first year of the policy
  7. 7. Current State: Individual/Family Insurance • Situations where you may need this kind of insurance: – Between jobs and without employer benefits (there is also short-term insurance for periods <180 days) – Starting own business/work as an entrepreneur – No employer benefits available – Child/self turning 26 and leaving parent’s plan – Getting divorced and losing spousal benefits – For dependents if employer does not cover employee’s family – Healthy and paying a lot for employer-based coverage – Healthy and paying high COBRA premiums
  8. 8. 235% 185% 61% 37% 0% Children Pregnant Women Working Parents Jobless Parents Childless Adults SOURCE: Based on the results of a national survey conducted by the Kaiser Commission on Medicaid and the Uninsured and the Georgetown University Center for Children and Families, 2013. Median Medicaid/CHIP Eligibility Thresholds, January 2013 Minimum Medicaid Eligibility under Health Reform - 138% FPL ($24,344 for a family of 3 in 2012)
  9. 9. Current State: Individual/Family Insurance • What if you do not qualify for medically underwritten insurance because of your health history and are ineligible for a federal program like Medicaid? – Use COBRA if available. Available for 18 months after leaving job (9 months if employed by a small business, 36 months if you are getting divorced and losing spousal benefits). – If you are coming off a group plan, get their conversion policy. It will cover pre-existing conditions from day 1 and cost $500-$600 per month. – If you are not coming off an employer plan, your best bet might be the Highmark HIPAA policy. You are guaranteed acceptance and pre- existing conditions are covered from day 1, but will cost about $900 per month. – Check out This is a great resource and listing of free and low cost clinics in Pittsburgh.
  10. 10. Health Savings Accounts (HSA’s) • Only available with qualified plans that have a minimum $1250 individual deductible or $2500 family deductible. • Tax benefits: Deposits can be made pre-tax, or in most cases where an employer is not involved, deposits are made post- tax and then deducted when you file your taxes. • Deposits into the HSA carry over from year to year – it is NOT “use it or lose it”, so it is a great way to slowly build savings in a tax-free accounts for future medical costs. • Withdrawals from the account are also tax-free as long as they are used on qualified medical expenses. If a withdrawal is made for a unqualified expense, there will be a 20% penalty fee and the withdrawal will be taxed.
  11. 11. Health Savings Accounts (HSA’s) • Eligible expense: – Copays for doctor visits, Rx drugs, urgent care, ER visits, etc – Any payments made towards your deductible or coinsurance. – Dental and vision expenses, including orthodontics and glasses/contacts – Long Term Care premiums, COBRA premiums, Medicare premiums – Medical premiums if you are receiving unemployment benefits – LASIK surgery – Acupuncture – Potentially lodging and travel costs related to medical care • Contribution limits: For 2013, $3,250 per individual, $6,450 for families. $1,000 catch-up contributions for those 55+.
  12. 12. What About Health Care Reform/Obamacare/PPACA??
  13. 13. Reform Measures Already in Place • Tax credits available to some small businesses with < 25 employees who provide health insurance to workers • Preventive medicine covered at 100% with no cost sharing • Children can stay on parent’s plan until age 26 • Children under 19 cannot be denied insurance because of pre- existing conditions • There are no longer lifetime limits on insurance coverage. In 2014, annual limits will be prohibited (most insurers have already done away with them). • Closing the donut hole for Medicare recipients. Right now, 50% of brand name drugs are covered during the donut hole period (it used to be 0%). This coverage will increase until the gap is completely closed in 2020.
  14. 14. Reform Measures In the Works for 2014 • The Individual Mandate kicks in – most individuals will have to get at least basic health insurance or pay a fee. • Prohibiting discrimination due to pre-existing conditions or gender • Establishment of affordable insurance exchanges for individuals and small groups to use to buy affordable and qualified plans that meet certain benefits and cost standards. • The Employer Mandate – employers with more than 50 employees are required to offer affordable health insurance benefits or be taxed on a per employee basis. • Tax credits will be available for people between 100% and 400% of the poverty line to help pay for the mandatory health insurance.
  15. 15. What Are Exchanges? • The government is establishing health insurance exchanges where individuals and small businesses can go and easily shop for and compare health insurance plans. • Pennsylvania will not be setting up its own exchange and will be using the federal exchange instead. • All plans on the exchanges must meet certain “essential health benefits” including mental health benefits, maternity care, and pediatric vision and dental care (often not included in today’s individual plans). • There will be four cost structures for plans on the exchanges with varying levels of cost sharing (platinum, gold, silver and bronze)
  16. 16. What Are Exchanges? • Tax credits will be available for people between 100% and 400% of the poverty line to help pay for the mandatory health insurance for the silver level of plans. – Right now, Governor Corbett is not expanding Medicaid to include all people under 133% of the Federal Poverty Limit (FPL). This leaves many low income adults in the situation of not qualifying for Medicaid, yet also not qualifying for tax subsidies on the Federal Exchange if they do not make at least 100% of the FPL. – You can calculate an estimate of your tax subsidy at
  17. 17. What Are Exchanges? • Small businesses (up to 100 employees) will also be able to get small group insurance on the exchange through the SHOP program. – This allows small employers to get the same guaranteed benefits and cost structures as with the individual exchanges. – Ideally, allowing small businesses to pool together on the SHOP exchange would control/decrease premiums and lessen the volatility of year to year rate changes in this market. • Private insurance companies will be offering products on the exchange. • Private insurance companies will also continue to offer options (both individual and group) “off exchange.” People in these plans would not be eligible for tax credits and the plans would not have to meet all of the benefit & cost requirements of those on the exchange.
  18. 18. What Do I Need to Know as an Employer? • There will be no fines/taxes for employers with less than 50 FTE’s (FTE = 30 hrs or more). (And now no fines for larger companies until 2015). • It may be in the best interest of the employer to NOT offer coverage and have employees get individual coverage on the new exchanges • Employers of small businesses will be able to get group coverage on the new exchanges through the SHOP program
  19. 19. What Do I Need to Know as an Employer? • We don’t yet know how employers would get plans on the SHOP exchange – who has the choice on plan options? • How much will private insurance “off exchange” cost? It may still be best to go through the traditional private insurance companies. • How many of your employees would qualify for tax subsidies by getting insurance themselves on the individual exchange?
  20. 20. What Do I Need to Know as an Individual? • Everyone will be able to obtain individual health insurance effective 1/1/2014, no matter what their state of the health or pre-existing conditions. • Those households with an income below 400% of the Federal Poverty Level could receive subsidies to help pay for their coverage. (A household size of 4 could qualify for a subsidy if its income was less than $92,000.) • There will be a penalty for those people that choose to go uncovered. It is only $92/$285 (indiv/family) or 1% of income in 2014, but grows to $695/$2,085 in 2016 and beyond
  21. 21. What Do I Need to Know as an Individual? • If you are currently on an individual medically underwritten plan, you will have the option of keeping your current plan until its anniversary date or switch to a new policy on the exchange effective 1/1/2014, with no medical underwriting and no pre-existing condition clause • There are still MANY outstanding questions: – How will the exchanges look online and how will the application process work? – How much will coverage on the exchanges cost? – Will the exchange even be ready by 1/1/14? – What types of benefit plans will be available? – How will the exchanges affect the coverage available off the exchange through private insurers?