Can “Limited Funding” reduce your health insurance costs? 3-Apr-2019
Federal Court Unravels Association Health Plans 28-Feb-2019
Medicaid Expansion in TN?
With the ever-increasing cost of health insurance, carriers are offering new products to help lower the cost of healthcare for qualifying businesses. Most companies today use a fully insured medical plan with limited plan design choices. What that means is you pay a set premium each month and the insurance company takes the risk in high claims years or realizes the reward when claims are much less than the premiums paid. Because you have very limited access to actual claims data you never know if they are making or losing money on your group, you just know it’s expensive.
Carriers have offered “self-funded” insurance plans for larger companies for many years. With the ACA and all the rules and regulations that came with it the carriers realized that by using a self-insured plan they had plan design flexibility and a lower tax burden. The next step was to see if there was a way to make these plans work for smaller employers, especially those with healthy employees. The good news is, there is a way and today many carriers are offering limited funded medical plans to companies with as few as 10 enrolled employees.
These new plans offer a high level of protection from large claims and the employer is never asked to pay more than their regular premiums each month. In the event they have a bad claims year with one or more very large claims, the maximum risk the employer faces is the amount of their agreed upon premiums. The flip side of that is if claims come in less than expected the group can get part of that savings back. The other advantage for smaller companies (under 50 employees) is the plan design flexibility “limited funding” provides.
These plans don’t work for all companies, in fact we are only seeing success in about 20% of the groups we are quoting. Only those companies with lower medical risk are a good fit for these plans. There is an underwriting process to determine the health and possible future risk of each group. This can be as simple as using Milliman to get pharmacy data and then making a determination from that. The other way is getting each employee to complete a health statement listing their medical conditions and any prescriptions they are taking. This is of course much more accurate but also much more difficult for the employer and HR department.
An example of the savings looks like this. We have a medical practice with 31 employees who had a small group EHB plan with BlueCross BlueShield of TN. The employee rate for their lowest cost plan was $402 using the S Network, the P network cost $461. We went shopping carriers and looking at all the different options. The group moved to Humana with a “limited funding” plan that includes all the hospitals in network just like the P Network for a $307 employee premium. We also offer two other buy-up options each of which were much less expensive. This of course saved the company a lot of money, we were also able to decrease employee costs and were able to give them a wider variety of plan design options.
Will this work for your company? Good question, the only way to find out is to go shopping. You don’t need to wait for the renewal, especially if it’s January 1st. If you find a better program you can change at any time, the carriers lock your rates in for 12 months but you can leave sooner if that is best for your situation. You can reach us at 615-724-1701 or email@example.com
The Trump Administration has been proposing new ways to reduce group medical insurance and healthcare costs and the resistance continues to mount. Two of his lower cost models are short-term medical policies and Association Health Plans. Both are coming under much scrutiny and on March 28, 2019 a federal judge ruled that parts of the 2018 final rules on association health plans (AHP's) are invalid.
The court struck down two parts of the rule:
- The provision defining "employer" to include associations of disparate employers; and
- The provision expanding membership in these associations to include working owners without employees.
The fact that AHP's were intended to allow small businesses and individuals to avoid the requirements of ACA and allowing an individual to be considered an "employer" and an "employee" at the same time is just not viable. The court ruled that bona fie association and working owner provisions of the final rule were unreasonable interpretations of ERISA and must be vacated.
In Tennessee there are several groups working hard to design and implement AHP's. I expect we will see changes in the structure of Association Health Plans to exclude one person groups and require common industries to band together. We are far from done with the tinkering to healthcare while costs continue to rise.
Have you considered Local Funding for your group insurance plan? We have helped many TN companies reduce their costs by using non-traditional techniques and getting outside to box to build better plans for lower costs.
Great news for the nearly 167,000 Tennesseans who don't have access to health insurance. Tennessee Republican lawmakers advanced a plan on February 27th that would overall how TN provides health insurance to our low income and disabled residents.
Being in the health insurance industry I have long struggled with the ACA providing subsidies and low deductible health plans to many of our lower income residents but not those who are truly poor. You see, if you earn more than 138% of the Federal Poverty Level you do not qualify for any subsidies through the Affordable Care Act and are left on the sidelines because we do not have offer robust Medicaid coverage. For a single person this is $13,724 and $27,945 for a family of four.
Mark and I attended a meeting today from a healthcare leader who is trying to build an Association Health Plan (AHP) for Tennessee small businesses. It became clear very quickly this is not going to be an easy endeavor but it could be a game changer moving forward.
President Trump signed an executive order in 2018 allowing associations to offer heath insurance to its members. Associations cannot be formed just to provide health insurance but this will be a huge benefit if affordable coverage becomes available by grouping many small businesses together. The current rules would allow a sole proprietor to buy group insurance with what we hope will be large group pricing.
While it is a federal law that allows the formation of an Association Health Plan, TN will have its own laws that are overseen by the Tennessee State insurance commissioner. It is not likely we will see insurance sold across state lines because of this. The rules today allow Associations based on companies in related industries or in a common geographical region to offer health insurance on a group basis.
The health plans would not be able to discriminate based on individual health conditions or high claims. This is a really big deal but also makes implementing a plan very difficult because you won't know the risk of the enrollee's until claims start coming in. Health insurance works by the law of large numbers and for an association plan to be successful, they will need strong adoption from the first day.
While association plans are probably still a year or two away, companies with healthy employees are benefiting today with "level funded" health insurance plans. These plans avoid many of the ACA rules and community rates by using a "self insured" platform which allows them to ask health questions and rate groups based on their actual risk. This has saved several of our clients tens of thousands of dollars and given them much more flexibility in designing the health plan that works best for their employees. We would be happy to get pricing for your company if you think your employees are healthier than most.
The good news in all this is carriers, entrepreneurs and some government officials are looking for ways to lower healthcare costs. We will surely see successes and failures but at the end of the day choice and competition will keep rates as low as possible.
How about if your insurance company paid you $500 plus paid for a trip to Mexico? They will pay for lodging and transportation and even provide you with a driver. Sound too good to be true? If you are a Utah State employee or retiree it is part of your health plan. The reason, medical and pharmacy tourism saves enough money to pay for a free trip and still reduce healthcare costs.
When Michelle Fenner signed up to run this year's Los Angeles Marathon, it got her thinking: Tijuana, Mexico, is only a 2 1/2-hour drive from LA. Why not take a trip across the border and buy some insulin for her son?
"It's so easy to just go across the border," Fenner mused.
This idea had been in the back of Fenner's mind for a while. Her son was diagnosed with Type 1 diabetes nine years ago, meaning he needs daily injections of insulin to stay alive. The list price of the modern generation of insulin has skyrocketed since then. On one trip to the pharmacy last year, Fenner was told that a three-month supply of insulin would cost her $3,700.
That same supply would cost only about $600 in Mexico.
'Right to Shop' legislation
In Utah last year, the Public Employee Health Plan took this idea to a new level with its voluntary Pharmacy Tourism Program. For certain PEHP members who use any of 13 costly prescription medications — including the popular arthritis drug Humira — the insurer will foot the bill to fly the patient and a companion to San Diego, then drive them to a hospital in Tijuana, Mexico, to pick up a 90-day supply of medicine.
The program was part of a Right to Shop bill championed by health care economist and Utah state representative Norm Thurston in 2018. Thurston says there is not yet enough data to know how much in savings the program provides; the first patients traveled to Tijuana in December.
But, Thurston says, he expects that in the next six months, savings will likely be "in the ballpark of $1 million."
The price you pay at the pharmacy is going up — again. Prices increased on more than 250 drugs in the beginning of the year, with an average jump of 6.3 percent, according to data from Rx Saving Solutions, a consultant to health plans and employers. That's down from the 400 drugs that saw price jumps last year, but prescription drugs still remain one of the highest out-of-pocket medical costs for many consumers.
This in spite of several Trump administration initiatives over the past weeks designed to lower the cost of prescription drugs. In addition, House Democrats joined the fray last week with sweeping investigations of pharmaceutical drug-pricing practices.
As Washington continues to wrestle with the pharmaceutical industry, consumers may actually find the most relief from their own efforts. Understanding how drug pricing works and learning to navigate that maze can result in dramatic savings. Here's what you need to know.
Your insurance isn't always the best option
Sometimes you may be better off paying cash for a drug than using your insurance. That sounds counterintuitive, especially because so many consumers, especially Medicare Part D recipients, spend hours trying to find insurance plans the cover the drugs they use.
But often a pharmacy will offer a discount on a drug that makes the cash price cheaper than the co-pay your insurance company or pharmacy benefit manager (PBM) has negotiated for the same drug, be it brand name or generic. For example, a common generic for Lipitor, the cholesterol lowering medicine, comes with a standard $40 co-pay under many plans. But at some pharmacies offering discounts, the total cash price of the drug may be only $9.
What's more, until very recently, pharmacists were prohibited from telling you about these price differentials because they were under contract not to say so with various PBMs.
Last October, the Trump administration passed new rules barring these gag orders. Now pharmacists may tell you about cheaper alternatives, but — and this is the catch — they don't have to volunteer this information. Your pharmacist is only obligated to tell you if you ask.
So, every time you fill a prescription covered by your insurance be sure to ask your pharmacist what is your co-pay, and, importantly, what is the retail price of the drug. The answer will make it clear which way to go because now the pharmacist must offer you the best price.
Meanwhile, your prescription drug insurer may push you to go to a certain pharmacy, chain store or mail order service to fill your prescription because they have negotiated lower prices overall with a certain vendor. That makes sense. But again, it may not be the best deal when you consider other prices and discounts.
The recent rift between Walmart and CVS Caremark pharmacy benefit management, during which the two companies butted heads over drug pricing, is evidence of how volatile the prescription drug landscape can be. "Always compare the preferred pharmacy price with others in your area," said Dr. Nancy Simpkins, Rx Saver's medical expert. "Preferred can be a misnomer. It doesn't necessarily mean cheapest."
You might get a better deal across the street
Insurance aside, many times consumers simply don't realize just how much that the price of drugs can vary from one pharmacy to another, even in their own zip codes. That's because each pharmacy negotiates its own contracts with PBMs for multiple drugs.
Enter the new array of smartphone drug pricing apps, including GoodRx, OneRx, RetailMeNot Rx Saver, and ScriptSave. Plug in the drug you're looking for and you'll find a list of prices at pharmacies in your area. In some cases, you may find additional discounts generated by the apps themselves.
Bottom line, that's a lot of shopping. To find the absolute best deal, you need to compare not only among pharmacies in your area but also among the deals offered by each of the apps. That can get a bit time consuming, but in many cases the savings warrant it.
There are caveats. For one, apps are frequently updated and discounts change often. The deal you get this month on say, that Lipitor generic 'script, may not be available for the same price at the same pharmacy next month. In other words, you have to go hunting all over again.
Also, most doctors usually phone in prescriptions rather than write out an order on their pad. If the prescription is automatically sent to your regular pharmacy but you find a better deal elsewhere, you'll need to call your regular pharmacy and ask them to transfer the prescription. They will do it willingly, but it adds an extra step. Simpkins suggests going retro and always asking for a hard copy of your prescription so you can have more flexibility.
-- The Associated Press contributed to this article
Starting on January 1st small businesses may have another option when looking for affordable health insurance solutions. Association Health Plans allow unrelated companies to band together to purchase health insurance at hopefully lower rates.
AssociationHealthPlans.com has assembled the following information to help small businesses decide if this might be an option for their situation.
Here are five things to know:
1. These are not Affordable Care Act plans, and their benefits may differ.
While the regulation allows associations to design health plans around employee needs and employer budgets, association health plans do not have to offer all of the essential health benefits required by the Affordable Care Act. However, large group association plans are still subject to state benefit rules as well as numerous federal benefit requirements relating to issues such as maternity care, pre-existing condition coverage and preventive care. Association health plans must also provide a Summary of Benefits and Coverage that describes insurance features in "plain language."
2. New options are available Jan. 1.
The new association health plan regulation has an effective date that is staggered. Jan. 1 is the date that existing associations may launch self-funded health plans under the new regulations. These plans can have even lower costs than fully insured plans because an insurance company does not make a profit off their coverage, and the plan is not subject to normal health insurance taxation.
New fully insured (meaning they are insured by a third-party health insurer) plans became available Sept. 1, 2018. New self-insured association health plans will be available April 1, 2019.
3. Large group association health plans cover pre-existing conditions and cannot deny coverage or raise premiums based on an individual's health status.
Multiple federal regulations apply to association health plans. Among the rules governing these plans is the requirement to cover pre-existing conditions within any Essential Health Benefit category included within the insurance plan. Additionally, people eligible for association membership cannot be denied insurance based on health factors nor can their premiums be increased due to health factors.
4. Part of the gig economy? You can qualify, too.
One of the major changes to association health insurance under the new regulation is its ability to cover self-employed individuals who are not part of a business with other employees. And you don't have to be incorporated. Informal work — such as handyman work, tutoring, music lessons, etc. — would be just as legitimate as independent contracting for a company.
5. There are new provisions to discourage fraud and mismanagement.
Because the history of association health plans includes examples of mismanagement and fraud, the new regulation incorporated a series of measures to promote sound governance and solvency. These measures include the requirement that the association health plan be controlled by the employers making up the association. Insurance companies, medical providers and other entities with conflicts of interest are prohibited from controlling an association health plan. Vendors performing services on behalf of an association health plan (e.g. record keeping, compliance, marketing, etc.) are prohibited from receiving more than reasonable compensation for these services. There is also a class of prohibited transactions that prevent self-serving transactions that work in the interests of an association employer or affiliate rather than the plan and plan participants.
AssociationHealthPlans.com is the leading online resource supporting the emerging association health plans market. AssociationHealthPlans.com is headquartered in Nashville, Tennessee.
CONTACT: Amy Fletcher Faircloth
With all the talk about repealing the ACA and the "individual mandate" penalty going away next year, business owners might think they are off the hook to comply with all the ACA laws. This is not the case, nothing has really changed if you have more than 50 full time equilvalent employees.
The number one thing to be aware of is providing "qualified, affordable health insurance" is still the rule of the land and not complying can cost you dearly. The IRS is enforcing "employer shared responsibility payments" (ESRP) penalties against large employers who fail to meet the ACA requirements.
The IRS is assessing penalties using 226-J letters
This letter explains that the employer may be liable for the penalty, based on information obtained by the IRS from Forms 1095-C filed by the employer for that coverage year and the tax returns filed by the employers employees. If an employee indicates on their taxes that the coverage offered by their employer is not affordable it can trigger the penalty by the IRS. The employer has only 30 days to respond to the 226-J letter, using IRS form 14764, which is enclosed with the 226-J letter. Not responding to the letter in the 30 day limit will result in a final assessment of the proposed penalty.
The penalties of non-compliance can be severe. In the worst case, an employer with inadequate or unaffordable health insurance could pay for the cost of the coverage as well as penalties of $2,000/year for every full-time employees (less 30), even those who received health coverage from the employer.
The real key here is to reply in the 30 day limit and make sure the lowest cost plan does not charge employees more than 9.56% of an employees income.
We have a new group health insurance product in Middle TN beginning January 1, 2019. Oscar Health who last year partnered with Humana to give small employers a new "high tech" option for health insurance is now a stand alone carrier. While Oscar looks like a traditional health insurance company on the outside, they do everything possible to break the mold of the traditional carrier and hope technology and customer service will reduce costs and improve satisfaction.
Oscar's main interface is through their cell phone app. On the app you can look at claims and find a doctor but you can also make a doctors appointment and more importantly talk with your personal representative who can assist in finding the right doctor and appointment. Their "talk to a doctor" feature is easy, seamless and free on most plans.
Most middle TN hospitals are in the network and they are adding more doctors on a weekly basis. For a new carrier the local network is quite strong. Here again, the work somewhat differently in that you do not have benefits if you go out of network. That is something you should not take lightly and be sure to do your homework before seeing a new provider.
Premiums are regulated by the state and are community rated just like the other carriers in the under 50 employee small group market. You have many different benefit options and premiums are lower than many of the other carriers. There are no pre-existing conditions as these are ACA compliant plans.
Oscar Health is available in middle TN only. If you have employees who live outside of this area or are traveling out of state you can access the Humana CHC network which is a great national network of doctors and hospitals.
Want to see a quote for your company? We will be happy to show you options and prices. Call David at 615-724-1699 or email firstname.lastname@example.org
After four years of double digit increases for individual health insurance plans, BlueCross BlueShield of Tennessee is lower rates by an average 14.9% next year. Cigna is also reducing premiums by an average of 12.9%. What does this mean for consumers? Time will tell, 3.5% of Tennesseans get their health insurance through healthcare.gov and most of those receive substantial subsidies so they actually pay very low rates to start with.
Our hope is these reductions will also come to our small group clients who have Essential Heath Benefit "EHB" health plans with community rating. This would provide a huge financial relief to hundreds of thousands of working Tennesseans who get their insurance through their employers.
There are many new health insurance options available for small and mid sized employers who have a healthy workforce and good participation. We have helped many clients with "level funding" and "limited funding" options which blend fully-insured and self-insured health plans to reduce costs, provide plan design flexibility and have full claims transparency. If you have not seen a level-funded quote for your company we would much appreciate the opportunity to explain how these new policies work and the advantages in specific situations.
You can reach me at email@example.com for more information.