Category: health insurance

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Status quo is good news for big insurance

The largest companies skimming $Billions every year from the huge pool of money we pay for year health care saw their stocks skyrocket more than 10% in a single day yesterday on the belief that they will not be held accountable by the next president. Yes

, status quo is good for them.

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Freedom Benefits wants you to know that you do not need to be at the mercy of profit hungry insurance companies. You can design your health benefits to serve YOU

, not THEM.

Send a message to discuss your options with a professional with more than 30 years saving small businesses money with their employee benefit plans.

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Good news for small business HRAs

Recently released industry data shows that qualified small employer HRAs fared well in their first year of operation under liberalized tax laws. The new plans are called “Qualified Small Employer Health Reimbursement Arrangements” or “QSEHRAs”. It appears that HRAs enable small businesses to effectively compete with larger businesses offering group health insurance. Additionally, it appears that smallest firms with 1 to 4 employees have used HRAs most effectively to complete favorably with larger firms that offer group health insurance.

  1. The maximum legal allowance increased slightly for HRAs for 2020 to $5,250 for individuals, $10,600 for families. One of the primary benefits of HRAs is that they allow employers to control their costs. Most employers that offer HRAs, especially those with more than 4 employees, offer benefits less than this amount in their HRAs (see #3 below).
  2. Less than 1 in 5 employees eligible for HRA benefits use their annual total maximum allowance. This is important because it shows that for most employees, the HRA offers full coverage despite its limits on maximum benefits.
  3. In 2019, the average maximum allowance for benefits is amounts for single employees was $280/month (81% of the legally allowable maximum benefit) and $514/month for employees with a family (59% of the legally allowable maximum benefit).
  4. Despite insurance costs increasing, claims to HRAs decreased over the past year. Since there is some evidence that
  5. Employees participating in a HRA submit an average of 12 claims per year.
  6. The six most common non-premium reimbursements employees submitted include: insurance premiums (typically either 100% or 0% of employees depending on plan design), prescription drugs (55% of employees), medical office visits (45% of employees), chiropractic care, dental care and mental health counseling.
  7. The smaller the company, the higher the average monthly allowance. This may reflect nepotism is small firms. For example, some HRAs are set up to cover the spouse as the only employee.
  8. HRA allowances mirror the cost of health insurance. The states with the highest average health insurance premiums typically have higher HRA plan allowances to cover the higher premiums. Examples are Connecticut

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    , Rhode Island, and North Dakota. Conversely, the states with lover average insurance premiums tend to have lower HRA allowances. Examples are Nebraska, Arkansas and New Hampshire. Increases in HRA allowances correlate with increases in health insurance premiums.

Taken collectively this dats provides evidence that HRAs are working for small businesses

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, are saving money, . I offer several types of HRA plans at no additional charge to small business accounting clients. For more information, see www.FreedomBenefits.org.

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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.

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, 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

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, 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.

 

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EZ Short Term Medical Insurance ends

The health insurance market continues to evolve at a rapid pace. Insurance plans that have been popular in the past are being replaced with new insurance and non-insurance products. A range of the latest products are listed for each state at Freedom Benefits.

The Trump administration proposes expanding these limited benefit insurance plans so we expect that a range of new products will be available soon.

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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.

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Short term medical insurance covers unexpected medical costs

This users question and the response highlights the use of short term medical insurance and the potential for consumer misunderstanding.

Q:  I am looking for a basic insurance. I am a healthy 64 yrs. and usually go to the Doctor for an annual check up. Pap

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, Mam., and blood-work. I take five prescriptions, which are not expensive as generics and the use of prescription cards. I will be getting Medicare in about two months. I don’t want to spend over $170.00 a month. Can you advise me on which plan would work best for me?

A: It seems like you are looking for short term medical insurance that covers expected medical costs. Commercial short term medical insurance works exactly the opposite way. It covers unexpected medical costs but excludes expected medical costs. So we would be unable to recommend an insurance that does what you suggest. Coverage for short term expected medical costs is best approached through uninsured benefit programs.

If it would be useful to discuss the longer term expenses that will be covered and not covered under Medicare then this might be a more productive use of your time and budget.

More information about short term medical insurance is available at the Smart Insurance Marketplace.

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Insurance for small businesses

Q: Do you offer plans for small business? We are a small business of 3 people. Or can they purchase health insurance through you individually?

A: All of these plans shown in links related to Freedom Benefits are available to small businesses on a list bill basis. The easiest thing is to allow individuals to enroll without entering payment data and then ask us to set up the list bill.

If the business plans to pay for Obamacare-type individual insurance then an additional step is required to set up a Qualified Small Employer Health Reimbursement Arrangement.

Small group major medical coverage may also be available however these are traditionally not purchased through online enrollment services. A local representative may be the best bet.

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“One-employee QSEHRA”: a contradiction in terms

Note: More recent guidance issued in 2018 and 2019 supersedes this blog post.

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

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, 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, in 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

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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

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, 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

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, I am pleased to assist with all aspects of health plan design

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, selection and enrollment.

 

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Q&A about immediate outpatient costs

Many people think they can buy insurance for immediate medical expenses. It doesn’t work that way. But there are still other things to consider. Insurance is mandatory (even if it excludes pre-existing conditions) to gain entry into some treatment programs. It isn’t mentioned in this post but in severe cases Medicaid issues need to be discussed.

Q: Hi, I’m looking for a plan that will help cover some of the cost for an Intensive Outpatient Program at xxxxxxxxx

, I start the program on Monday January 8 and I’m looking for an insurance plan that will help with some of the coverage because since I don’t have insurance the program is 125 per day and that’s expensive. Is there any way you could point me to the right direction for a plan to help?

A: Hi xxxxxxxxxx. Sorry you are facing this situation. There is no U.S. insurance available right now that pays for what you are asking so I suggest two things:

1) Be careful of advertising or sales agents who say this is covered

2) Consider whether it is better to have some other insurance rather than none at all. Some facilities will treat patients where the specific procedure is not covered but won’t treat them if they have no insurance at all.

Then next time you have access to open enrollment

, you can get covered for these types of expenses. Meanwhile the available insurance plans you are considering do not cover this immediate planned medical expense.

Tony Novak

www.freedombenefits.org