Health insurance for maternity care

Question received online this morning: “I want to know if someone without social security number can enrol for insurance and does it cover maternal care?”

OnlineAdviser response: “Yes. Anyone in the U.S., citizen or not, short-term or permanent resident, can enroll in health insurance without a social security number. A social security number is not required for any of the insurance plans listed or linked from Freedom Benefits. Some health insurance covers maternity expenses, others do not. Generally the plans offered through state insurance exchanges in the fall offer maternity coverage and cover this as a pre-existing medical condition (your question did not mention if this is the case). Meanwhile some other coverage else may be needed that does not offer maternity coverage for pre-existing conditions.”


I fear that sometimes people don’t phrase their questions in a useful way. For example, what if he had meant “Help! My girlfriend is pregnant and doesn’t have health insurance”. Then the response is completely different.

Also, despite popular misconception, a social security number is never required to obtain health insurance. The federal government has made this abundantly clear and I’ve covered this in several past blog posts. Still, the belief persists. Again, this might be a phrasing issue. perhaps they meant that a social security number is required for government-paid health benefits or to use the government’s online health insurance exchange.

 

Fixing the Affordable Care Act?

Yesterday Democrats in the US House of representatives introduced a bill to undue the changes that the current President made to the Affordable Care Act and attempt to fix many of the broken parts of the law. The bill is called “Undo Sabotage and Expand Affordability of Health Insurance Act of 2018“.

Since the Democrats are expected to take majority control of the House of Representatives this year it seems possible that this or similar bills could be approved. Even so, the bill is largely symbolic at this point, it is highly unlikely to become law under the current president,

In short, this bill is the exact opposite of what the Republican Party wants.  It would expand availability of qualified health insurance and undo the expansion of limited benefit insurance.

The focus of my attention and the purpose of this blog is to help clients prepare for and cope with whatever the health plans and laws are, and not to take a side or offer an opinion as to the merits of any plan.

Exploring the phenomenon of increased early insurance terminations

An increasing number of consumers are terminating health coverage within days, weeks or months of buying health insurance online.

I’ve noticed a trend in online health insurance enrollment that seems to be accelerating. I don’t understand it yet; this post is primary a basis to seek additional information.

The observation: The incidence of early termination of benefits is accelerating. In a growing number of cases, the benefits are canceled within days of online enrollment.

Background: I’ve been involved in online health insurance enrollment since the early 1990s an ran a national enrollment service for about a decade. In those early days online insurance enrollees typically relied on professional advice and assistance via telephone that, in my observation, contributed to increased suitability and satisfaction. Today’s health insurance exchange enrollees typically do not use available human advisory services so there is less data available on the motivations, psychology or emotional influences of enrollees on the insurance enrollment process.

Possible explanations:

Lack of consumer information – I’ve long been suspicious that online health insurance enrollees do not have sufficient information to make appropriate decisions. I’ve noticed, for example, confusion between primary coverage and supplemental health insurance.

Confusion with the Affordable Care Act – The Trump administration’s push to promote lower cost insurance with lower level of benefits may be misunderstood by consumers. Consumers may not understand for example, that they may enroll in expensive coverage that covers pre-existing medical conditions without limits OR low cost coverage that limits those benefits, but that they can not enroll in low cost insurance that covers pre-existing medical conditions in the entirety.

General distrust – Formerly an online consumer typically felt they could trust advice from a telephone support. I’m not sure that is true anymore. The wave of ‘fake news’ and propaganda about heat care this year is unprecedented.

Short term use – It is possible that consumers are enrolling for coverage immediately before a schedule doctor visit, for example, and cancelling coverage immediately afterward. I have only  few anecdotal comments to indicate this might be true. No reliable base of information is available. Some commenters speculate this will be accelerated by the cancellation of the health insurance requirement known as the ‘individual mandate’ under the Tax Cuts and Jobs Act.

Solutions: One possibility is to include health insurance advisory services as part of an employer-provided employee benefit plan. Not coincidentally, this is the approach that Freedom Benefits has adopted for 2018.

Another possibility is restoration and expansion of the health insurance navigator program that was established in 2010. This does not seem politically likely under the current political leadership.

A third possibility is to use improvements in technology to screen applicants and communicate on suitability and policyholder satisfaction issues. Our partners are working on these issues that require a greater investment in Artificial Intelligence and technology.

“One-employee QSEHRA”: a contradiction in terms

The issue of health benefit payments for small businesses became a lot more complicated after implementation of the Affordable Care Act. After all, the law was designed to enforce rigid compliance with health care policy and do away with the liberally designed health plans that varied from one small employer to the next. Since late 2016 we’ve had a range of legislative and administrative actions to undo the harsh effect of the original law. Now we are left with a complicated hodge-podge of rules that can confuse just about anyone.

QSEHRAs are a new type of HRA implemented in 2017 that are specifically designed for an employer with a health plan covering two or more employees since plans covering only one employee are not subject to the reforms and restrictions that the QSEHRA is designed to address. The QSEHRA adds an additional layer of regulation and restrictions to allow an employer to help pay for individual insurance, something that is already always allowed in a one employee health plan,  In short, employers with a one employee health plan have no need for a QSEHRA.

The issue came up today among accountants when the bookkeeper of a small business said that the employer could reimburse only $10,0001 of the health insurance cost of an employee. The bookkeeper was likely referring to the strict excise tax penalties imposed by 4980 of the Internal Revenue Code and the limits of the workaround. Notwithstanding the effect of any administrative action designed to weaken and diminish the impact of these employer penalties, The IRS has already determined that these restrictions and penalties do not apply to one employee health plans2. In this case the use of a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) 3 is completely unnecessary and only serves to complicate the discussion.

My point is simply this: the QSEHRA was designed to help small employers mitigate the impact of ACA market reforms on small group plans – specifically those related to an employer penalty for paying for individual insurance. Those restrictions do not exist for one employee health plans. So any attempt to use a tool (QSEHRA) to mitigate the effect of the ACA is simply not necessary and only serves to create unnecessary complications and confusion.

While there is no authority specifically prohibiting the use of a use of a QSEHRA in a one employee plan, its use could be viewed by the Service or the courts, if applicable, as an error, It the event that QSEHRA failed to meet the more strict requirements then it seems likely that the plan might still qualifiy as a tradidtional HRA. For example, an employer with a one employee health plan that provided dental benefits would fail to meet the QSEHRA requirements but would still meet the requirements for a traditional HRA.

The conclusion is simple: Don’t use a QSEHRA in one person health plans where a traditional HRA will suffice.


1 The QSEHRA maximum for family coverage is actually $10,250 for 2018.

2 IRS Notice 2015-17: Guidance on the Application of Code § 4980D to Certain Types of Health Coverage Reimbursement Arrangements

3 IRS Notice 2017-67: Qualified Small Employer Health Reimbursement Arrangements

How do Pennsylvanians get their health insurance?

Pennsylvanians get their health coverage one of six ways, according to the Pennsylvania Insurance Department.

  • 27% commercial self-insured
  • 23% Medicaid and CHIP
  • 20% Medicare
  • 14% group insurance
  • 5% small business insurance
  • 5% individual insurance
  • 5.6% are uninsured

Since news coverage focuses primarily on commercial insurance, people are often surprised that commercial insurance plays such a small role in the system, covering only one in four residents. I sometimes notice a sentiment that there is something ‘wrong’ if regular insurance is not an option. That is not the case, based on statewide trends. Commercial insurance does play a larger role in secondary and supplemental insurance.

If you need coverage, then it makes sense to consider both the short-term and permanent coverage options within our heath care system. I am pleased to discuss the options and strategy. For businesses, I am pleased to assist with all aspects of health plan design, selection and enrollment.

 

Interesting trends in individual health insurance

This past week the individual health insurance open enrollment period for 2018 closed in 39 states using the federally controlled insurance exchange called Healthcare.gov.  We think that the trends favor growth in services like Freedom Benefits. The U.S. Department of Health and Human Services is charged with reporting on the results of that enrollment period. Associated Press dug into the enrollment data further and published some surprise results. Taken together with other previously released information, these are the trends in individual health insurance:

Overall, enrollment was unexpectedly strong considering the actions that factions of the federal government took to sabotage its own program. Without enrollment support, without advertising and with a short enrollment period almost 9 million signed up for coverage.

This insurance exchange is exclusively for working people with a suitable income. In most states, those who do not meet minimum earnings levels are not allowed to enroll through Healthcare.gov but instead are referred to state Medicaid programs.

Most applicants (about 4 out of 5) qualify for a reduced premium based on their earnings that keeps their total expense at or below 16% of household income.

The total enrolled is far less than the projections made by the Department of Human Services before the Trump administration took actions to sabotage the insurance program.

The Trump administration shortened the enrollment period and cut off advertising funding so that fewer people would sign up for their benefits. The strategy worked to some extent. Fewer people enrolled for health insurance in 2018.

Most Healthcare.gov enrollees (about 7.3 million of the total 8.8 million enrolled) live in rural working class areas that voted for Trump and Republicans in 2016. Political observers predict that the government’s efforts to cut the health benefits of the working class will hurt their chances in future elections.

Yesterday President Trump said that he hopes and expects that his party’s success in eliminating the tax penalty known as the ‘individual mandate’ will ultimately result in a collapse of these federally funded health benefits for working-class Americans.

The number of people in the U.S. without health insurance is rising again. This was the impetus that pushed us into health care reform from the 1960s through 2010.  It’s difficult to believe that the problem will fester for another 50 years before the government takes action again.


The takeaways that are important for us at Freedom Benefits:

There is opportunity for year-round enrollment outside of the exchange open enrollment period.

The elimination of the individual mandate penalty means that it is no longer important that insurance meet federal legal requirements. Consumers are free to pick the insurance they want.

There will be demand for the lower priced insurance called skinny plans, short term medical, supplemental plans and limited benefit medical insurance.

The Trump executive order to promote the sale of insurance across state lines means that citizens in locations without low priced insurance may soon have other options.


I predict that most of the individual health insurance market will return to the private sector enrollment within a year.

Caution about ‘skinny’ health plans

NBC News published a detailed investigative report on “skinny health plans” this past week. Their conclusion is that consumers are confused about health insurance and that the Trump administration is adding to the confusion. As a guy who has handled more than 50,000 consumer communications about health insurance over many years, I agree with the published report’s analysis and conclusion. Yet this this consumer confusion existed back in the years before the Affordable Care Act so we can’t blame it all on Trump just because he has pushed the ‘skinny’ health insurance approach by executive order.

I tend to react furiously to false advertisement claims by health insurance marketers, often untrained telephone sales boiler rooms that notoriously mislead consumers. Recent claims that insurance plans are “ACA compliant” or “promoted by President Trump” are the most confusing to consumers lately.

Yet these alternate health plans do have their place in the market. Whether we call them “skinny health plans”, “short term medical insurance”, “limited benefit health insurance” or “core health insurance”, my position has always been that some coverage is better than none at all.

Most people who pay for their own insurance are not adequately covered by any single health insurance  plan, including the ACA health insurance policies. Whether an ACA plan or another plan works better for a normally healthy person is a function of the type of medical bills they will incur in the future; something we can seldom predict in advance.

In a perfect world, we would be covered by a government-influenced basic coverage and a supplemental policy through our employer or purchased individually. Although we are far from a perfect world, Freedom Benefits can help small business employers redesign their health plans to maximize the benefits to employees that are offered through a combination of public and private health plans.

Small business’ role in children’s health insurance

What role do small business owners have in providing health coverage for children of employees?

This question is increasingly significant as the federal government stalls and is apparently unwilling to issue funding for ‘CHIP’ programs that cover the children of nearly 9 million moderate income families that have historically been supported by the majority of lawmakers. Recent news reports indicate that the Senate is unlikely to approve the funding so states and employee benefits advisers like us are beginning to investigate alternatives. This article is meant to provide a preliminary checklist.

  1. Small businesses are not required to provide health insurance to employees.
  2. Businesses that do provide health insurance to employees are not required to provide it (or even make it available) to employees’ children.
  3. Businesses that do provide employee health coverage typically cover children on the same plan and under the same terms as the employees.
  4. CHIP often covers the children of parents who work in small businesses.
  5. Until 2010, the United States was making strong positive progress in providing health coverage to low income children. I covered this topic here in 2011. Most of these initiatives were replaced by the Affordable Care Act (ACA).
  6. The implementation of the ACA dominated coverage from 2012 until this year, 2017. This federal law treated all low income people equally (although coverage varied depending on state and local markets).
  7. The rollback of funding for ACA is the primary factor affecting children’s health insurance for lower income families in 2018.
  8. The cost of children’s health insurance is less than the cost of adult coverage
  9. In many cases small businesses are wise, considering all the options and current laws, to provide supplemental health coverage and avoid providing primary health coverage to employees and their dependents.
  10. Employee health plans can be modified to provide relief for employees’ children in the event of a cancellation of CHIP programs without disturbing other employer policies that are currently in force.

This blog post offers generalized comments for public presentation. Discussion is not customized for each state’s laws. Some of these points may not apply to your firm. Please seek individual guidance that applies to your firm and your state’s laws.

2018 health insurance: 4 simple priorities to consider now

Health care can be complicated. It helps to stay focused on the big decision issues and know that help is available if you need it. It may help to focus on these four simple priorities this month:

  1. PLAN AHEAD: The cost of health coverage can be up to almost 20% of total household income for middle class people in the $50,000 to $100,000 income range. This is a tremendous financial burden that needs to be part of your overall long term financial plan. No political solution will make this problem go away; it is up to you. Take control now by doing what is necessary to protect yourself.
  2. QUALIFY FOR A TAX CREDIT: Most people – about 4 out of 5 people – who need health insurance qualify for reduced-cost coverage made possible by income tax credits that are advanced through your insurance company. It is important to have your online application for 2018 at healthcare.gov* complete by December 15 so get an early start.
  3. OTHER TAX PLANNING: For the 1 in 5 applicants who do not qualify for a premium subsidy (mostly self-employed people or early retirees with income over $100,000)  it takes serious financial planning to cover this expense. Some relief may be available through smart tax planning to cover the expense on a tax exempt basis that saves thousands.
  4. FIND AN ALTERNATIVE: If you can’t afford this type of Obamacare coverage, there are two important next steps are: 1) qualify for a waiver of the tax penalty, and 2) enroll in an alternate less expensive health plan that might cover less but is better than being unprotected.

Freedom Benefits can offer free help with any of these four priorities.

Effects of federal government halt to health insurance subsidies

The federal government has announced that it will not pay scheduled benefits called Cost Sharing Reductions for lower income working class people who buy their own health insurance. It turns out that relatively few people are actually affected. Here are six things for consumers to know:

  1. In most cases the action does not directly affect the amount your pay for insurance. A ‘subsidy’ is not the same as a ‘premium tax credit.’ The amount of  premium tax credit is unaffected. In fact, the number of people who qualify for the credit may increase.
  2. Insurers will increase the premium rates for all policyholders. But most of this increase is paid by the federal government. The 15% of policyholders who pay the full premium will pay more unless the increase now qualified them for a premium subsidy.
  3. The amount of ‘out-of-pocket’ payment for lower income policyholders could increase. If so, in some cases it might be possible to adjust your HSA, FSA and payroll tax withholding to nullify the change by an insurer.
  4. Some insurance companies say they already anticipated Trump’s move when they set their 2018 premiums. States granted insurance companies an extra rate increases to make up for the lost federal funding.
  5. No insurance companies have announced their attention to withdraw from any market because of the federal government action.
  6. Employers that want to help employees make up the difference have a range of tax-free options that allow them to do so. Talk to us about the range of options,

Despite the strong public objection to this action, it might turn out to have minimal impact. The larger danger is that low-income individuals will become frustrated or confused about their health benefits and choose to not enroll in subsidized insurance coverage next year.