Do You Want a Skinny Network with that Health Plan?

I know what you are thinking…is this the latest specialty coffee at your local Starbuck’s?  Well, it is not.  It is actually what will be happening to a large number of unsuspecting health insurance consumers as early as January 1, 2014.  As we continue to roll into the Affordable Care Act implementation, consumers will be going online to purchase health plans that they do not understand, may or may not be able to afford, and may ultimately lead to disappointment or even worse, catastrophic coverage gaps that were unintended, but clearly stated in the confusing paperwork.

Here in Kentucky, one such example is Anthem’s network for individual coverage.  Many people are accustomed to Anthem having the largest most comprehensive network of hospitals and physicians accept their coverage.  This has been a differentiator for them for many years in our market.  With the launch of their new ACA compliant individual plans, they will have a substantially scaled back network.  Anthem has made a strategic decision to center their health care offerings on two hospital systems, KY One and Baptist Health. 

What does that mean for John Q Public?  Well, in the Louisville area, that means that the 5 Norton Healthcare Hospitals are out of network and will not be available for use by these individual purchasers of Anthem ACA policies.  It also means that if you have an elective procedure performed out of state that you will have no coverage at all!  Zero, Zip, Nada!!!

Humana will have a limited network offering as well.  However, from my understanding, YOU can make the choice if you want a limited network or not and the pricing is sensitive to your choice.  So, if you choose a skinny network, you pay less because you have fewer options for your care choices.  Sounds simple, but the reality is that most won’t pay attention until the bills are not being paid.  That is usually a little too late to work things out.

Looking at this from Anthem’s perspective, this may be the most brilliant strategic move that they could make in this “hostile” environment.  Think about it, Kentucky currently has a “high risk pool”.  All of those individuals have been declined coverage in the past due to a health condition.  They have all been notified that their coverage in the “high risk pool” will be ending on December 31, 2013 and that they would have to be covered through the Kentucky Health Care Exchange.  By limiting the hospitals and doctors that Anthem will allow in the network, they have made themselves the least attractive option to the least attractive risk!!  

In the end, your best bet is to contact an agency that is capable of taking care of you.  Logan Lavelle Hunt is ready to assist you for all of your insurance needs.  We have specialist on staff that can walk you through the most difficult of scenario’s and make sure that you have what you need at the time when you need it the most, at the time of a CLAIM.  Contact us today!  In Peace!

Guest Blogger! Scott Church gives some actionable advice!!

Today I am happy to pass along a very informative piece that my brother Scott Church has put together for our clients and prospective clients.  Scott is a technician when it comes to health plans.  He is a 16 year veteran of the health insurance industry and is also a certified insurance consultant.  Scott has the unique ability to dive deep into coverage and regulatory issues and find solutions to problems that most people give up on.  He is a tremendous agent and a great person to have on our team (and in the family)  I hope you find this information as useful as I have. To contact Scott directly with a question, please go to our web page at Logan Lavelle Hunt.

If you have 50 or fewer full-time employees, and you offer a group health plan to your employees, your rates will probably increase more than usual next year.

·         Starting in 2014, under the Healthcare Reform Law, insurance carriers are allowed to rate small groups only on age, tobacco use, and location. 

·         This will compress the rates in the small group market.  Groups rated the highest under the current system may get a decrease, but most groups will get increases.  Groups rated the lowest under the current system will see significant increases.

You should consider these alternatives:

·        Anthem Association Group Health Plans

o   The rest of the small business insurance market will change drastically, but Association Plans will not change nearly as much.  Association Plans have been restructured into large group plans.  This will allow small employers in an Association Plan to be rated as a large group and continue to use many of the rating factors not allowed for other small groups.  For most employers, this will be beneficial.

·        Partially Self-Insured Plans

o   Partially Self-Insured Plans will also not change very much.  Under a partially-self insured plan, you insure the employees, a re-insurance policy covers large claims, and a third-party administrator processes the claims and billings.  Your total cost = claims you pay + re-insurance premium + admin fees.

·        SHOP Healthcare Exchange

o    The SHOP Exchange is a program designed for small groups in a Healthcare Exchange.  These plans are subject to the new rating restrictions, but tax credits are available to help pay your share of the premium for the first two years.  To qualify, your company must have 25 or fewer employees with an average salary of $50,000 or less.  Owners and their family members are not counted, and part-time employees are prorated.

Regardless of how many employees you have, if you offer a group health insurance plan to your employees,  

·         That pays 60%+ of covered medical expenses on average (most plans do), and

·         The employee cost for single coverage is less than 9.5% of his/her W2 earnings, and
·         Family coverage is available through your group health plan, then

Your employees and their dependents will not be eligible for subsidies through a Healthcare Exchange they might get otherwise.

·         This will be true even if the employee cost for family coverage on your group plan is more than 9.5% of the your employee’s household income.

Some of your employees and/or their families may qualify for better, more affordable coverage through a Healthcare Exchange, depending on several factors:

·         The cost of your plan to your employees for single or family coverage

·         The age, tobacco use and health status of you and your family, and your employees’ and their families
·         The household incomes of your employees

This chart shows the maximum monthly premium on a Healthcare Exchange, after Premium Subsidies, with no tobacco use, for the second lowest cost Silver Plan.

·         A Silver plan pays 70% of covered medical expenses on average.

Persons in family / household	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)	Annual Income (% of FPL)	Maximum Monthly Premium (% of Income)
	134%	3.00%	150%	4.00%	200%	6.30%	250%	8.05%	300%	9.50%	400%	9.50%
1	15,397	38.49	17,235	57.45	22,980	120.65	28,725	192.70	34,470	272.89	45,960	363.85
2	20,783	51.96	23,265	77.55	31,020	162.86	38,775	260.12	46,530	368.36	62,040	491.15
3	26,170	65.43	29,295	97.65	39,060	205.07	48,825	327.53	58,590	463.84	78,120	618.45
4	31,557	78.89	35,325	117.75	47,100	247.28	58,875	394.95	70,650	559.31	94,200	745.75
5	36,944	92.36	41,355	137.85	55,140	289.49	68,925	462.37	82,710	654.79	110,280	873.05
6	42,331	105.83	47,385	157.95	63,180	331.70	78,975	529.79	94,770	750.26	126,360	1,000.35
% of covered medical expenses paid by plan on average with Cost Sharing Subsidies.
	94% with Subsidy		94% with Subsidy		87% with Subsidy		73% with Subsidy		70% (no subsidy)		70% (no subsidy)

 

·         The Healthcare Reform Law allows insurance carriers to charge 50% extra for tobacco use.  The extra premium for tobacco-use is not subsidized and is based on the full premium before any subsidy.

In some cases, it may be better to offer a group health plan to only some of your employees’ families, or none of your employees’ families, or not at all.

·         Not offering coverage to your employees or families will probably be better for those that qualify for a substantial subsidy, but it will probably be worse for employees or families who do not.

·         To offer family coverage to some of your employees and not others, you must offer the coverage by “classes” of employees.  Classes of employees are groups of “similarly situated” employees that already exist in your company and were not created just for insurance purposes.  Examples include: hourly and salary, management and non-management, years of service, etc.
 

·         Starting in 2015, companies with 50 or more full-time equivalent employees (part-time employees are prorated and seasonal employees are excluded) that offer no group health plan to their full-time employees will pay an annual penalty of $2000 X (number of full-time employees - 30).

In other situations, it may be best to only offer group health plans the Healthcare Reform Law considers “not affordable”.

·         The Healthcare Reform Law considers a plan “not affordable” if it pays less than 60% of covered medical expenses on average, or costs the employee more than 9.5% of his/her W2 earnings for single coverage.

·        This also would allow your employees to get the subsidies they qualify for through a Healthcare Exchange.

·        Starting in 2015, companies with 50 or more full-time equivalent employees offering a group health plan the Healthcare Reform Law considers “not affordable” will pay an annual penalty of $3000 X the number full-time employee that receive a subsidy on a Healthcare Exchange.

What is the best option for your company, your employees, and your employees’ families?  We are here to help.