Because of inaction by Congress, the Affordable Care Act (ACA) is still the law of the land. This means the fines for not having coverage are still in place, and all of the other mandates and rules still apply. It would be extraordinary if anything changes before the end of the year, so we suggest you expect a continuation of the ACA without significant changes for the upcoming Open Enrollment.
5-Year Waiver Possibility
There is one possibility for change beginning this year: state officials could take advantage of ACA Section 1332, and apply to the Secretary of Health and Human Services for a five-year waiver from 11 statutory requirements of the law.
A waiver would allow a state to:
- Redefine a “qualified health plan” in the individual and small group markets.
- Get waivers from the 10 categories of federally mandated health benefits (known as “essential health benefits”)—one of the biggest drivers behind premium increases.
- Get waivers from the actuarial value mandate that specifies the levels of coverage health plans must offer.
Other waivers could affect the rules governing health insurance exchanges, risk pooling, and the administration and functions of the exchanges.
We’re not optimistic this will happen for 2018, because of the possible disruptions it would cause to the markets in the short term; but it is a possibility, if Congress doesn’t repeal or make any changes to the ACA.
The Open Enrollment Period for health plans offered under the Affordable Care Act begins Nov. 1, 2017; with a plan-effective date of Jan. 1, 2018.
If you have individual or small group coverage, there are more changes coming. We want to let you know about the proposed rate increases in the individual and small group markets, the changing dynamics of health insurance for 2018, and which carriers and plans will be available; so you can know your options and make the best decision for you and your practice.
Rate increases will be lower than last year. But there are fewer choices.
Blue Cross will be the only company offering individual plans in all counties in Texas. These will again be HMO plans only. Blue Cross has filed for an approximate 23% rate increase, which will not be finalized until after this article is published. There is some encouraging news, as there are more providers accepting the BCBS HMO—especially in smaller counties.
Scott & White’s filed increase is 23% for its EPO, and 36% for the one PPO plan.
There are also a few regional or local plans available in Texas that have filed for increases in the 5-53% range. These tend to be in limited areas of the State, where a hospital system has several facilities and offers a plan.
United Healthcare, Aetna, Humana, and tentatively CIGNA, will not offer individual plans in Texas for 2018.
These proposed filed rates increases are being reviewed to determine if they’re based on reasonable cost assumptions and solid evidence, and to give consumers the chance to comment on them. The final rates will probably not be available until Nov. 1, when Open Enrollment starts. You’ll have until Dec. 15 to pick or change new plans for a Jan. 1 effective date; or until Dec 31, if your plan terminates Dec. 31.
The small-group filed rates increases range from 6-36%, depending on the company. We anticipate Blue Cross again having the lowest rates; followed by United Healthcare, Humana, and Aetna. The small group option continues to be a more stable rate platform; and still offers true PPO plans, as well as HMO plan options. It appears for 2018, small group PPO rates will be lower than individual HMO rates and small group HMO rates will be 20-40% lower than individual plans.
It’s critical you check the network of the insurance company you select for 2018, to make sure your providers and hospitals are in-network. You need to know the company and network name; as some providers might, for instance, take a Blue Cross PPO, but not Blue Cross HMO.
Here are coverage options to consider.
Small Group Plans
If you have a practice with at least one other full or part-time employee, you should consider a small group plan. Depending on how your practice is structured, the other employee could be your spouse. You can contact TDA Financial Services Insurance Program for the details.
Why go through the additional paperwork and effort for a small group?
- Small group plans will be less expensive than individual plans—and you can still get a PPO.
- If you sign up during the Special Enrollment for new small groups (which begins Nov. 1), the mandatory employer contribution towards the employee’s premium, as well as other requirements, are waived.
- If you payroll deduct the employee’s premium, it saves the practice and the employee on taxes.
- Offering an employee PPO options, and lower prices than he or she could get with an individual plan, can be a good way to retain and attract high quality employees.
- Additionally, small group plans allow you a lot of flexibility on plan designs. You can offer more than one plan within your group: a base plan that’s less expensive for employees (perhaps an HMO with a RX and Office Copay), and a PPO plan for you and your family.
We can start comparing rates for small group plans beginning in October.
Another option, if your practice is interested in group coverage, is via the self-insured market. This is a group plan that’s underwritten based on health. These types of plans can be as much as 20% lower than regular ACA Small Group plans, but only 40% of groups will qualify based upon underwriting.
These types of plans don’t typically qualify for the Special Enrollment, so you would have to pay 50% of employee premium, and meet a participation requirement on the number of eligible employees that get the plan. There are other considerations; such as the size of PPO networks, stop loss coverage, and just understanding how the plans work and what is covered.
If a small group is not an option, what’s left is individual coverage. As mentioned, the individual options are very limited.
For individual coverage, know your risk exposure and what you’re responsible for before the insurance covers the rest. For 2018, the maximum out-of-pocket for an individual is $7,350; and $14,700 for a family. This is for in-network expenses. If you have out-of-network expenses, the out-of-pocket maximum can be double or more; or not even covered. The lowest-premium plans will have the highest out-of-pocket expenses.
Considerations to Make When Picking a Plan
If you’re concerned about having a high deductible, or limited or no out-of-network coverage, you might consider a supplemental product for accidents or hospital confinements. These types of plans pay directly to you, and in addition to your other coverage. They tend to be relatively less expensive, and are a good option if you don’t want to self insure the high-deductible and out-of-pocket expenses.
Having a prescription drug and office visit copays are convenient plan features. But you need to consider the cost of your plan (the premium) and your total out-of-pocket exposure.
If you haven’t looked at HSA plans, or didn’t think they made sense previously, you should revisit them. They offer the lowest premium, and with the tax deductibility of the contribution (as much as $7,900 for a family) this can be a great way to build up a self-funding account for current and future medical expenses. It can be especially important if you have to go out-of-network. Also remember, with an HSA, the earnings and interest accumulate tax-free, you own and control the funds, and it’s not a use-it or-lose-it type of vehicle.
Church/Religious Health Share Groups
These types of arrangements have been around for many years. Essentially, you join a group, and you pay or contribute a monthly amount. When your medical bills are submitted, they’re paid from the funds available, or by others making additional contributions to cover your bill.
These arrangements have stricter guidelines than traditional insurance companies on which procedures are eligible. There is normally a lifestyle guideline that a member agrees to follow, which could include abstaining from illegal drug consumption, sex outside of marriage, tobacco use, and abuse of alcohol or prescription drugs.
These types of plans are not insurance, and should not be considered a substitute for insurance. The payments of medical bills through these arrangements are not guaranteed in any way. Each member is solely responsible for the payment of his or her own medical bills at all times.
Short Term Health Insurance
We don’t recommend you go without insurance. However, short-term health insurance is better than having no coverage. These plans don’t typically pay for pre-existing conditions, and are designed to cover a new sickness or accident (no treatment in previous 5 years). One change from last year is, these plans are now limited to 3 months of coverage before they terminate, and usually don’t automatically renew. But you can reapply for new coverage.
Short term insurance and some health-share plans don’t meet the ACA’s Essential Health Benefits mandate, so you might be subject to the ACA penalty/fee/tax.
The fee is calculated in two ways: as a percentage of your household income, or per person. You’d pay whichever is higher. For 2017, it’s:
- 2.5% of household income, with the maximum equaling the total yearly premium for the national average price of a Bronze plan sold through the Marketplace, or
- $695 per adult, $347.50 per child under 18, with a maximum of $2,085.
Beginning in 2018, the penalty/fee/tax will rise in line with the official inflation rate, and increase in increments of $50.
These changes and other developments are certainly depressing if you pay for your own health insurance, especially against the backdrop of the continued political turmoil in Washington. The best option is to stay informed, get ready to review and compare your coverage and options, and be ready to make a decision as soon as possible.
For individual plans, this will be Nov. 1; and for small group plans, early October.