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What to Expect for 2016 Open Enrollment Plans

Posted Friday, July 24, 2015
News Alert – July 23, 2015

Individual/Consumer Markets

What to Expect for 2016 Open Enrollment Plans

On Monday, the Texas Department of Insurance gave Blue Cross and Blue Shield of Texas (BCBSTX) the clearance to announce a change in retail product offerings for 2016. We wanted to share this information with you first.

The retail market has evolved significantly since the opening of the Health Insurance Marketplace in 2014. These changes require BCBSTX to make adjustments that will allow us to continue offering sustainable health insurance options.

There are some changes in the plans we intend to offer in 2016. Most significantly, we won’t be offering our Blue Choice PPO insurance plans for our under 65 block of business going forward.

We intend to offer other products, on and off the Marketplace. A new product has been filed that we believe will give you a flexible choice for your clients. We will be able to share information about that product if and when it is approved by the Centers for Medicare & Medicaid Services (CMS) closer to open enrollment.

We are committed to offering competitively priced individual insurance options in every county in the state, both on and off the Marketplace.

During the months leading up to the beginning of open enrollment, we will talk publicly about the plan transition, and make information available to members and key stakeholders. Below are some details you can use when reaching out to your PPO customers. We recommend that you start having these conversations soon since our proactive outreach could lead to media attention.

We stand ready to assist you and your clients through this transition.

Details for You

  • Currently, we have about 367,000 individual Texas members who will have their PPO plan discontinued in 2016. This number fluctuates monthly.
  • Around 148,000 Texas members are in grandfathered PPO plans that will not be discontinued. Our Blue Choice PPO network will continue to serve these members.
  • This change does not affect our product offerings for our employer group customers or Medicare members.
  • Our Blue Advantage® HMO network will remain. We are working to expand the numbers and reach of providers participating in that network.
  • We only had the first full year of ACA claims data for analysis this year, for 2014 claims. In the individual market segment in 2014, BCBSTX paid out more than $400 million more in claims than it collected in premiums. Losses that high are unsustainable, and we have adjusted our offerings – as many insurers have – to be sustainable in the new market reality.
  • Not all hospital systems or large physician networks will be participating in our network options for individual members. While this was true in previous years, the number of providers not in network due to the discontinuance may be greater in 2016. We have ensured that we have an adequate network to provide the physicians and hospitals needed to serve our retail members in each market, and we continue to have discussions with additional providers.

Talking Points for Discussing the Changes with Your Clients

Why is BCBSTX discontinuing the Blue Choice PPO?
For the past two years, BCBSTX has been the only health insurer offering an individual PPO plan in all Texas markets. BCBSTX found that the PPO is not sustainable at an affordable price due to anti-selection. BCBSTX will continue to offer other plan options in all 254 counties, on and off the Marketplace.

What will this mean for individual members who currently have the PPO plan?
BCBSTX will be transitioning affected individual members to another plan, so you will not experience a gap in coverage. You will also have the option of choosing a different plan during 2016 open enrollment.

Are there providers who were available under the PPO who will no longer be in network for BCBSTX members on any plan?
There are some providers who were in BCBSTX’s individual PPO plans networks who will no longer be an in-network option for individual members, except those in grandfathered plans. These providers declined to participate in the Blue Advantage network.

If you are seeing a provider who will no longer be available to you through the new plan’s network, BCBSTX will work with you to find a new provider. If you are currently undergoing a course of treatment, BCBSTX will work with you and your providers to minimize the impact to your care, just as if you changed plans for any other reason.

BCBSTX continually seeks opportunities to work with providers to offer the best solutions for our members.

Will there be a rate increase for HMO for 2016?
BCBSTX’s rate filings are currently under review by CMS, so that information won’t be available until rates are finalized and approved. BCBSTX pricing is designed to allow the insurer to offer sustainable products and services to its customers for years to come. A medical loss ratio (MLR) requirement is in place to protect consumers by requiring a high percentage of premiums to go to medical costs. If that requirement is not met, customers may be eligible for a premium rebate.

What would have been the rate increase for PPO for 2016 if it was still available?
A plan’s success requires the right ratios of enrollees to providers, and of the amount of premiums paid in to amounts paid out for care provided. In the 2014 individual business, BCBSTX paid out millions more in claims than it collected in premiums. Losses that high are not sustainable. Like any business, BCBSTX must make necessary adjustments. There were no options that kept the PPO sustainable and still allowed for other plans to be offered across the state.

Why couldn’t you just continue offering the PPO and increase the rate for it?
Under ACA, individual business is rated using a single risk pool, meaning all individual plans had to be looked at together. This means BCBSTX couldn’t just look at the pricing of the PPO separately. If BCBSTX had kept both the PPO and HMO, it would have added dramatic costs for every member with an individual plan.

Is group subsidizing individual business?
The group line of business operates separately from the individual line of business. BCBSTX’s group rates are based on expected cost of doing business for 2016 for group business.

What can I do now?
This announcement does not affect your coverage through the end of the year. There is no need to do anything right now.

Shopping for 2016 plans is expected to open Oct. 10, when insurers are allowed to publicly release the full range of plan offerings for the coming year. You will receive a formal notice from BCBSTX by Oct. 1 that will give you the details of your plan changes.

We encourage you to learn more about how an HMO works. BCBSTX has information about HMOs in the “insurance basics” section of their website at bcbstx.com.

If you have more questions now, you can call BCBSTX at the toll-free Customer Service number listed on the back of your ID card.

Ten Things You Need to Know about the PPACA Ruling-Part Two

Posted Monday, October 22, 2012

The majority opinion written by Chief Justice John Roberts further states that just because a type of inactivity is taxed does not make it illegal. Although the goal of the mandate to purchase insurance is to increase the number of U.S. citizens who have healthcare insurance, failure to purchase the insurance is not illegal. There are no stated or implied adverse legal consequences to not having health insurance. The only requirement if an individual does not buy it, that person must pay a fee to the Internal Revenue Service. If a person decides to pay the tax rather than buy insurance, the requirements of the Act have been met and the person has followed the law.

Roberts said that it is expected that some 4 million people annually would choose to not buy insurance and pay the fee to the IRS. Congress did not expect that those 4 million people would be treated as outlaws.

Roberts further wrote that Congress can give the states money under the Affordable Care Act to increase the availability of healthcare, but it cannot change the laws regarding the use of any Medicare funds. However, those states that accept the money would have to comply with pre-set conditions on how to use the funds. Congress may not take back Medicare money if certain states choose to not participate in the Act.

Restrictions placed on the PPACA Medicaid provisions did not kill the entire Act because the court believes that unless Congress obviously worded the Act so that if one part was killed that the entire law would die with it. How many states will accept the PPACA’s Medicaid funding expansion is unknown, but the court did not think that Congress wanted the whole Act to fail because some states refuse to participate. The rest of the reforms will remain “fully operative as a law” and will still work in a manner consistent with the basic goals Congress had when it enacted the law.

The Supreme Court did not express an opinion as to whether the PPACA was a wise Act. The Supreme Court is meant to enforce the federal government’s limits set forth by the nation’s founding fathers. However, the Supreme Court is not supposed to opine on the wisdom of any particular Act based on the Constitution. That is the privilege of the citizens of the United States.

The dissenting opinion says the PPACA is an example of “vast judicial overreaching.” The dissenters further stated that the statute’s requirement to buy insurance or face a penalty is really a voluntary option that is subject to taxation. As they see it, the Act changes the coercive penalty of a total cut-off of Medicaid funding to an allegedly non-coercive removal of only the extra funds made available by the Act. The Act also forces states and the public to spend large amounts of money on requisites that might not survive any revisions by Congress.

On a lighter note, the majority, concurring and dissenting Supreme Court Justices refer to broccoli 12 times in their opinions.

Ten Things You Need to Know about the PPACA Ruling

Posted Wednesday, October 10, 2012

The United States Supreme Court ruled on the Patient Protection and Affordable Care Act (PPACA) on June 28, 2012. Most of the provisions of the PPACA were upheld. The Act was signed into law on March 23, 2010. You’ve probably heard it referred to as the federal healthcare law or Obamacare. It is the most significant revamping of the U.S. healthcare system since Medicare and Medicaid were passed in 1965. The focus of PPACA is to lower the number of Americans who don’t carry health insurance.

PPACA will reduce Medicare spending and future deficits, according to the Congressional Budget Office. There are tax credits, mandates and subsidies that are meant to provide healthcare to those who cannot afford it. It also requires insurance providers to accept all applicants and give them the same rates with pre-existing conditions or gender having no bearing on the price.

When deciding on NFIB VS. Sebelius, Chief Justice John Roberts wrote the majority opinion in which the court ruled the Anti-Injunction Act, which restricts lawsuits over taxes, doesn’t prohibit the Court from considering a major lawsuit that challenges the Act’s constitutionality. Roberts further wrote that the imposition of a mandate for individual health insurance does not violate the Commerce Clause or the Necessary and Proper Clause of the U.S. Constitution. He also wrote that the individual mandate is a tax, not a mandate, which is permitted by the Taxing Clause of the Constitution. The Constitution authorizes Congress to “lay and collect taxes” against people who do not purchase certain commercial products. However, it cannot force people to purchase products.

The Supreme Court regards the “shared responsibility payment” as a tax. Roberts wrote that considerable revenue could be raised via the payment, but the main purpose is to increase the number of people with healthcare coverage. He also said that taxes to influence the conduct of the public have been around since the United States became united. The early growth of America’s domestic industry was aided by federal taxes. Taxes on retail sales of cigarettes are meant to motivate people to quit smoking. There are also taxes meant to dissuade individuals from selling sawed-off shotguns and marijuana.


Should you buy health insurance to cover normal, inexpensive medical expenses?

Posted Friday, April 20, 2012
Given the cost of health insurance, it seems foolish to purchase a policy if you can afford to pay for these costs on your own. If you look at the price of standard insurance policies in your neck of the woods, you’ll see that you’d be wasting your money. It’s almost a certainty that a policy with no deductible or a low deductible is not a smart plan.

There are two manners of insuring yourself for medical costs. You can buy a third-party insurance policy, or you can self-insure. You can hedge your bets by getting an insurance policy that has a higher deductible and setting up a savings account meant to cover your routine medical expenses yourself. How high you set your deductible and how much you save depends on the market price for your insurance.

Consider these figures from UnitedHealthcare. They’re based on the premium a family of four living in Dallas would pay for health insurance coverage. In the first case, each visit to the doctor would require a $35 copay. With a $1,000 deductible per person (or $2,000 per family), the yearly premium would be $17,400, or $1,450 per month. Raising the deductible provides some relief. If the deductible is changed to $2,500 per family member, the family is vulnerable to an extra $1,500 financial risk, up to a $3,000 per family maximum. The higher deductible will save nearly $5,000 per year with lower premiums. If the deductible is raised higher, the savings are even greater. While the family does assume an extra $4,000 in risk per family member (or $8,000) for the family), $8,000 would be saved on yearly premiums.

With an across the board deductible plan, a low deductible of $1,500 would require a $1,067 monthly premium. Raising the deductible to $2,500 would result in yearly savings of $3,528. Increasing the deductible to $5,000 would realize $4,344 in annual premium savings.

The numbers are convincing. It would make no sense to buy a health insurance plan with a $1,000 or $1,500 deductible. Since Dallas is a high-cost city, the savings realized from a higher deductible would be larger in another area. Those with group insurance would receive less in savings.

It seems that large insurers receive greater price discounts than uninsured people who pay for their own healthcare. However, those uninsured individuals are not taking advantage of market opportunities for better bargains. By paying cash for your healthcare, you can get services for roughly 50 percent of the price paid by Blue Cross, especially if you’re willing to drive a little further for service. Those people with high deductible policies usually pay the going rate that was negotiated by the insurer, regardless of who pays the bill.

Few Employers Plan to Drop Employee Healthcare Coverage

Posted Friday, April 06, 2012
Are you ready for a little good news on U.S. jobs and employers? With the abysmal economic climate, any good news is to be treasured. According to a new survey by GfK Custom Research North America, most American employers report that they will continue to provide employer-sponsored health insurance once the Patient Protection and Affordable Care Act (PPACA) kicks in during 2014. Of those employers surveyed, 56 percent said they will still donate to their employees’ healthcare plans. Another 12 percent of those who make such decisions said they were probably going to drop the coverage completely. Of the 502 private-sector companies included in the survey, 32 percent are unsure what they will do when the time comes. A mere 4 percent of surveyed employers said they would definitely drop coverage completely. Those companies were large corporations.

It seems that those corporate decision-makers who are the most familiar with the upcoming healthcare reform are not as likely to drop coverage as their counterparts. Only 7 percent of those with a good understanding of the changes said they could envision dropping coverage for their employees. Fifteen percent of the executives who were less familiar with the legislation said they would likely discontinue their employer-sponsored coverage. While most companies share a commitment to continuing their plans, many of them are fearful that the PPACA rules will not slow the increasing costs of healthcare and could actually make the rising cost trend worsen.

Only 11 percent of the respondents think the cost of healthcare benefits will increase more slowly than if the reforms did not go into effect in 2014. A total of 51 percent believe their expenses will increase more quickly. A large percentage of those surveyed are unsure of the effect the PPACA will have on their expenses.

Preventing Healthcare Identity Theft

Posted Friday, March 23, 2012

Healthcare identity theft is a rapidly growing problem. Unscrupulous scoundrels not only steal personal financial information, they can also use the identity of unsuspecting individuals to see a doctor, order fraudulent prescriptions or file claims through the victim’s health insurance plan.  Proactive prevention is the best way to guard against identity theft. Here are a few things everyone needs to know to protect their identity and safeguard their personal healthcare information.

1. Request a copy of all medical records held by your doctor’s office and health insurance providers. By law, insurers and healthcare organizations are required to share these documents within 30 days after a request is received. It’s imperative to contact all providers individually. Organizations from which to request documents include doctors, clinics, labs, pharmacies, hospitals and insurers.  Providers that are unable or unwilling to grant access to personal medical records must grant the individual a written explanation. In the event that a request is denied, patients should contact a patient representative, ombudsman or the individual listed in the organization’s Notice of Privacy Practices to appeal the decision.

2. Secure a copy of account disclosures from providers and insurers. This information can help patients pinpoint informational issues and locate providers that have erroneous information.  Healthcare laws give patients the ability to request a copy of a provider’s accounting information free of charge once in ever 12 month period.

3. Reviewing annual credit reports is one way to detect financial or healthcare identity theft. National laws require the three major credit bureaus and credit reporting agencies to provide individuals with a free copy of their credit report each year, if they are so requested. Patients can also visit annualcreditreport.com or call 1-877-322-8228. Individuals can also mail in their request by completing the Annual Credit Report Request form, which can be downloaded at FTC.gov/freereports. This form should be sent to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

4. Last, but not least, patients should carefully read all Explanation of Benefits statements or EOB paperwork. Healthcare plans send this information to policy holders following treatment. Information included in the EOB statement should detail all paid claims for medical care that the policy holder received. The EOB statement should detail the provider’s name, the date of service and the services that were provided. If there’s a discrepancy, the policy provider should be contacted to report the problem as soon as possible.

For more information about HIPAA patient rights, contact the Department of Health and Human Services through the Office for Civil Rights. Their website can be found at HHS.gov/ocr.

Cobra Facts for Employers

Posted Friday, March 09, 2012
COBRA (Consolidated Omnibus Budget Reconciliation Act of 1986) gives some former employees, retirees, spouses, previous spouses and dependent children the option to have continuing health care coverage at group rates. It is only applicable when the coverage was lost for certain reasons. While the coverage continues, the group rates may increase because the employer no longer pays a portion of the premium for the ex-employee. COBRA participants must pay the entire fee on their own.

Here are some facts regarding COBRA you’ll need to know if you’re an employer.

As the Employer, you have the ultimate responsibility for COBRA compliance. Audits by the DOL or IRS are at your office.

You must comply with COBRA if you have more than 20 full time employees. Not all of your employees have to be on benefits.

Part time employees count as a percentage toward the 20. If you consider a 40 hour employee to be eligible for benefits, then a part time employee who works 20 hours per week would be considered as one half of an employee toward the 20 full-time employees. When an Insurance Broker looks at the Employee Commission Quarterly report, you must alert the Broker to the total full time and part time employee count.

Brokers should be aware of employer ownership. If your company is owned by a larger company, your smaller company must be COBRA compliant even if you have less than 20 employees.

All COBRA participants and any pending participants have the same rights as your active employees. If an active employee can change or add benefits, add or remove dependents, the COBRA participant has the same rights. Plan changes require that the COBRA participant or pending participant be provided new rates, an application and plan summaries. A rate change does not deny the COBRA eligible individual to make plan changes and add or drop dependents.

If you employ 50 or more employees, you must comply with FMLA. Your employees may take FMLA leave in one lump sum or a few days at a time. If an employee ends his or her eligibility for FMLA and is not returning to work, that person becomes COBRA eligible. You must provide the ex-employee with COBRA election information.

Recently, an employer with a self insured health plan used STD (Short Term Disability) after FMLA. They did not send out the COBRA Election letter nor did they notify the Self Insured administrator. When claims were refused by the claims administrator, the courts ruled the employer was responsible for the ex-employees claims. The claims administrator did not consider STD to be employment. The employer had not looked at the agreement with the Self Insured Administrator. The employer lost over $400,000.

Federal Judges tend to get very angry regarding USERRA compliance. (Uniformed Services Employment and Reemployment Rights Act “USERRA"). USERRA provides that an employee returning from military duty must be given his old job back or one commensurate with his previous job in pay and skill requirements.

In Fryer v. A.S.A.P. Fire and Safety Corporation, a recent Federal case, the employer lost over $700,000. The employee returned from IRAQ and was told that his position had been filled and no position was available. After the DOL got involved, the employee was offered a lower level job and was terminated shortly thereafter. The DOL took the employer to Federal Court.

Federal Courts are the last resort in COBRA problems. Unless you are well trained in COBRA regulations, no advice regarding COBRA should be given to an employee or ex-employee. What HR tells an ex-employee can be brought up in a court case. A referral to a qualified COBRA administrator is very important. If the information from HR is incorrect, the employer loses.

COBRA Facts for Employees

Posted Friday, February 24, 2012
COBRA gives some former employees, retirees, spouses, previous spouses and dependent children the option to have continuing health care coverage at group rates. It is only applicable when the coverage was lost for certain reasons. While the coverage continues, the group rates may increase because the employer no longer pays a portion of the premium for the ex-employee. COBRA participants must pay the entire fee on their own.

Here are some facts regarding COBRA you’ll need to know if you’re an ex-employee.

In Texas, your benefits end on the last day of the month for fully insured plans. Coverage expires on the first day of the following month. If you have a self-insured plan, your benefits may end either at the end of the month or the last date you were employed.

COBRA may last for a period of 18, 29 or 36 months, depending on the manner of your separation. Coverage will expire if you don’t pay the premium, become eligible for Medicare or acquire other health coverage.

Correspondence regarding COBRA is mailed to your last known address. The address will be determined during your exit interview. Your W-2 forms will also be mailed to that address.

If you were terminated for “Gross Misconduct,” your employer does not have to contact you regarding COBRA election information. Your dependents will not be eligible for COBRA either. Although the IRS has not established a legal definition for “Gross Misconduct”. Federal Courts make the decision on a case by case basis.

Termination for “Cause,” is not necessarily “Gross Misconduct.” Your employer will require legal advice in that case. Your employer must fully document any termination for “Gross Misconduct.”

Republicans Rejoice

Posted Friday, December 16, 2011

Republicans Rejoice

President Obama abandons the long-term health insurance portion of Obamacare.

The GOP has won its first battle in their war to overturn the Obama administration’s overhaul of the nation’s health insurance. Since its inception, the long-term health insurance plan has been criticized for lacking financial solvency. The plan is scheduled to be implemented in 2012. Included in the legislation were nursing homes and features like home health aides for the disabled. Republicans hailed Obama’s decision as a victory for current and future taxpayers. They claim the long-term plan shouldn’t be implemented because it is unsustainable.

The late Sen. Edward M. Kennedy, D-Mass., spearheaded the original program, known as CLASS, Community Living Assistance Services and Supports program. After Kennedy’s death, Obamacare realized Kennedy’s long held dream of universal health insurance. The CLASS portion, however, will likely not survive, even though some believe the program can still be implemented.

The original intention was for the program to operate as a voluntary, self-perpetuating insurance plan for working adults, despite their health or age. By paying into the fund monthly, the worker accrued a nest egg that could provide as much as $50 in cash per day should the participant become disabled at some point in their life. The individual could choose to spend the money on nursing home fees or for other home health services.

From its inception, CLASS was hounded by one main problem. A large percentage of working adults would need to contribute to the fund prior to their retirement. Otherwise, the requirements of the disabled beneficiaries would destabilize the fund due to the rapidly increasing premiums. That could precipitate a taxpayer bailout of the fund down the road.

Despite spending months defending the program, President Obama has finally relented, admitting the plan had no easy fix. Prior to being implemented, the law requires 75 years of financial solvency. However, officials now believe CLASS cannot be both financially solvent and affordable if it is voluntary and open to every working adult.

Contact us for more information.

Bob Clark

Clark Insurance Advisors

Changes on the Horizon for Mental Health Coverage

Posted Friday, December 02, 2011

Changes on the Horizon for Mental Health Coverage

If you ever tried to use your health insurance for mental health issues, you probably discovered you were out of luck. Most policies refuse to pay for the services of a psychiatrist, psychologist, counselor or nutritionist. But a new development out of California could alter the landscape for those suffering from mental health issues like depression, drug addiction, eating disorders, schizophrenia or alcoholism. Insurers now have to adhere to California’s Mental Health Parity Act that demands insurers cover both physical and mental health problems.

The ultimate decision came from a lawsuit over whether an insurance company could refuse treatment for a woman who suffered from anorexia. This patient required intravenous feeding tubes during a ten-month in-patient stay. The patient was 36 percent below her ideal body weight. Her battle with body dysmorphic disorder made her believe she looked fatter than she was. Her attempts to look thin led to acute weight loss that came from a psychological disorder, not a physical one.

While some policies offer behavioral health treatment, they usually have limitations that make the coverage practically worthless. Some have an unrealistic limit on the number of visits you can make to a psychiatrist in one calendar year. Some have a limit on the amount they’ll pay for in-patient drug rehabilitation.

If you need extra behavioral health coverage, look into a supplemental plan for behavioral health. You can purchase plans for teens, children and adults. Secondary policies add the robust coverage needed to fully treat mental health problems like anxiety, panic disorders, obsessive-compulsive disorder, severe depression, speech therapy and eating disorders.

It’s possible to structure a personalized plan for you or your family, depending on your needs. We can add extra coverage to your existing policy or add a supplemental policy that will include any sort of therapy, rehabilitation, medication or devices.

With mental illness touching 25 percent of the population, it makes sense to prepare for any eventuality. Make sure your health insurance will actually insure you if you need help dealing with a mental illness. If your policy is inadequate, add some supplemental behavioral health insurance.

Contact us for more information.

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