Archive for Personal Insurance

Companies Prepare to Pass More Health Costs to Workers

The Wall Street Journal  by Theo Francis

Companies are bracing for an influx of participants in their insurance plans due to the health-care overhaul, adding to pressure to shift more of the cost of coverage to employees.

Many employers are betting that the Affordable Care Act’s requirement that all Americans have health insurance starting in 2014 will bring more people into their plans who have previously opted out. That, along with other rising expenses, is prompting companies to raise workers’ premium contributions, steer them toward high-deductible plans and charge them more to cover family members.

The changes as companies roll out their health plans for 2014 aren’t solely the result of the ACA. Employers have been pushing more of the cost of providing health insurance on to their workers for years, and firms that aren’t booking much sales growth due to the sluggish economy are under heavy pressure to keep expenses down.

Some are dealing with rising expenses by making employees pick up a bigger share of the premiums for coverage of family members. Employees this year are responsible for an average 18% of the cost of individual coverage, but 29% of the cost of family coverage, according to a survey of employee health plans by the Kaiser Family Foundation and the Health Research & Educational Trust.

“We have seen employers do more cost-shifting, if you will, for an employee to pay a higher portion of the cost of dependent and spouse coverage,” said Tracy Watts, U.S. health-care reform leader at Mercer, a benefits consulting unit of Marsh & McLennan Cos.

Between 15% and 20% of eligible workers nationwide tend to skip insurance, benefits consultants say.

Towers Watson & Co., a benefits consulting firm, figures that about half of the usual opt-outs will sign up for next year—meaning an enrollment increase of about 7% or 8%, and a corresponding increase in costs of about 5%.

Haverty Furniture, an Atlanta-based retail furniture chain with stores in 17 Southern and Midwestern states, expects health-care costs to rise by about $2 million, or 20%, next year.

The company expects the bulk of that to come from enrollment increases, and it is raising premiums, deductibles and copayments in response, Chief Financial Officer Dennis Fink said.

“We do think our per-capita cost is going up, but the bigger piece is just people who’ve chosen not to have coverage,” he said.

A quirk of the Affordable Care Act could make it more appealing for companies to raise rates for family coverage than for individuals, said Vivian Ho, a Rice University health-care economist.

Starting in 2015, companies employing 50 or more people must offer affordable health-care coverage to anyone working 30 hours a week or more.

But affordability is measured using the cost of individual coverage, capping the cost at 9.5% of income, Ms. Ho said.

Raising family rates could help companies recoup costs without running afoul of that limit, she said. Starting now, instead of next year, would allow a more gradual change.

U.S. Department of Health and Human Services spokeswoman Joanne Peters said that the health-reform law is keeping a lid on health-care costs overall, and makes it easier for employers to offer coverage. “Since the Affordable Care Act became law, health-care costs have been slowing and premiums are increasing by the lowest rates in years,” she said.

Gannett Co., which owns more than 80 newspapers and 23 television stations, expects one factor in its increased health costs to be the addition of more employees to its insurance plans due to the ACA rules, according to a person familiar with the company’s projections.

To address an overall increase in costs, Gannett has replaced the two plans for families it used to offer its workers with a single high-deductible plan that requires employees to pay the first $3,000 of medical costs each year, according to workers at the Indianapolis Star, one of the company’s papers. For those with individual coverage, who make up a little over half of Gannett’s insurance pool, the figure is $1,500.

The company also scrapped a sliding scale that let lower-income workers pay lower premiums. For some employees, the result was a 60% jump in monthly premiums for family coverage, to $575 from about $360.

Gannett said more than half of its employees will see premiums fall by 12%.

United Parcel Service Inc. made headlines in August when it said that it would bar spouses from its nonunion health plan if they could get coverage at their own jobs. The company said it expected to see an increase in its health-care costs in part from adding employees to its plan who currently opt out.

About 6% of employers ban coverage for spouses who can get it elsewhere, and another 6% impose an explicit surcharge for covering a spouse, according to Mercer. American Electric Power Co., for example, began imposing a $50 monthly surcharge this year to cover spouses with access to insurance at their own workplace. AEP said 92% of its employees usually sign up for coverage, so it doesn’t expect a surge of new enrollment.

In another shift this year, companies have become increasingly aggressive about steering employees toward plans in which they pay more of the initial costs for their care in exchange for lower premiums.

Trucking and logistics company Ryder System Inc. has replaced one of its two insurance options with one such high-deductible plan. Ryder is encouraging employees to choose the new option in part by raising the cost of more traditional coverage.

These changes are expected to keep Ryder’s total premium cost lower even as it keeps the share of employee premiums that it pays steady at about 70%, executives said. They accompany earlier decisions to close Ryder’s plan to spouses who can get insurance elsewhere.

“In some ways, the low-hanging fruit has been plucked,” said Boon Ooi, Ryder’s vice president of compensation and benefits. In response, he said, “what organizations frequently do is to look at trying to encourage employees to move into the more efficient plan.”

Health-care cost growth has slowed in recent years, and benefits consultants expect an increase of about 5% for 2014, below recent averages. The ACA isn’t expected to raise health-care costs significantly for most companies in 2014 either.

The employer mandate was postponed until 2015, and other major provisions have already largely kicked in, including a requirement to cover children as old as 26, ending lifetime limits on coverage, and covering preventive care without out-of-pocket charges.

But for industries dependent on hourly workers, including retailers and hospitality companies whose young and low-wage workers more often opt out of coverage, the individual mandate may have an effect.

The problem isn’t per-person costs—indeed, companies’ average costs could fall with an influx of the younger, generally healthier workers who had previously tended to opt out. But adding more enrollees will nonetheless raise a company’s total costs.

—Joann S. Lublin contributed to this article.

Posted in: Business Insurance, Health Care Reform (ACA), Personal Insurance

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Covered California Upholds Original Deadline – Press Release

Dear Colleagues and Interested Parties:


FOR IMMEDIATE RELEASE Media Line: (916) 205-8403
Nov. 21, 2013  


Strong Enrollment in New Health Insurance Marketplace a Factor in Decision

SACRAMENTO, Calif. — As consumer enrollment continues to grow, the Covered California™ Board unanimously voted today to uphold its Dec. 31, 2013, deadline for health insurance companies to discontinue plans that don’t meet basic standards. The board cited that extending the deadline offers no benefit to the consumer and may create confusion about accessing affordable health care coverage through Covered California. 

The board, consistent with President Barack Obama’s recommendations, also urged Covered California staff to implement helpful tools for consumers currently enrolled in affected plans, to better understand their options.

The decision to maintain the original deadline also confirms the state exchange’s commitment to transitioning Californians into plans that are compliant with the reforms of the Patient Protection and Affordable Care Act, protecting consumers from double deductibles and stabilizing the risk pool to control costs for consumers beginning in 2014.

Additionally, Covered California is implementing five key strategies to sustain, if not increase, its enrollment momentum and help affected consumers:

  • Extending the deadline for enrollment for coverage taking effect on Jan. 1, 2014, from Dec. 15, 2013, to Dec. 23, 2013, and extending the deadline for payments due from Dec. 26, 2013, to Jan. 5, 2014. 
  • Establishing a telephone hotline for consumers to resolve enrollment questions. The hotline, (855) 857-0445, will be available beginning Monday, Nov. 25.
  • Sending information directly to nearly 1.13 million affected individuals that provides clear options for coverage. The information will be sent from Covered California and the individual’s current insurance provider.
  • Collecting and reporting data, on a regular basis, showing the impacts of conversion for individuals.
  • Engaging consumers in their communities through the thousands of Certified Insurance Agents, Certified Enrollment Counselors and Certified Educators now deployed statewide.

“The consumer is front and foremost in Covered California’s policy decision process. These new strategies will provide consumers a better enrollment experience, more flexibility in the selection of a plan and, most importantly, increased knowledge with which to make the best health coverage choice possible,” said Covered California Executive Director Peter V. Lee. 

The board and Covered California staff discussed options for maintaining or extending the deadline after President Obama last week gave state insurance exchanges flexibility on when policies that were not grandfathered and are not compliant with the Affordable Care Act could be ended.

About Covered California

Covered California is the state’s marketplace for the federal Patient Protection and Affordable Care Act. Covered California, in partnership with the California Department of Health Care Services, was charged with creating a new health insurance marketplace in which individuals and small businesses can get access to affordable health insurance plans. With coverage starting in 2014, Covered California helps individuals determine whether they are eligible for premium assistance that is available on a sliding-scale basis to reduce insurance costs or whether they are eligible for low-cost or no-cost Medi-Cal. Consumers can then compare health insurance plans and choose the plan that works best for their health needs and budget. Small businesses can purchase competitively priced health insurance plans and offer their employees the ability to choose from an array of plans and may qualify for federal tax credits.

Covered California is an independent part of the state government whose job is to make the new market work for California’s consumers. It is overseen by a five-member board appointed by the Governor and the Legislature. For more information on Covered California, please visit


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PPACA penalty deadline could move

By ,


The Obama administration might consider adjusting at least one Patient Protection and Affordable Care Act exchange application deadline.

Jay Carney, the White House press secretary, said today during a press briefing aired live on C-SPAN that the U.S. Department of Health and Human Services might be working on a fix for the conflict between the PPACA individual health insurance mandate penalty and the end of the open enrollment period..

Under current PPACA public exchange program rules, to get 2014 exchange health coverage in place by Jan. 1, consumers must sign up for coverage by Dec. 15.

But PPACA lets consumers buy exchange coverage on a true guaranteed-issue basis until March 31. After March 31, consumers with health problems might have to wait until the next open enrollment period to buy coverage.

PPACA also requires many consumers to have a minimum level of health coverage in place by March 31.

The law includes many “individual responsibility” mandate exceptions. But consumers who are subject to the mandate and fail to have a minimum amount of health coverage after March 31 may have to pay a $95 penalty or 1 percent of income, whichever is greater.

Some tax experts have said consumers would actually have to apply for coverage by mid-February to have the kind of coverage required by the mandate rules in place by March 31.

Carney said HHS officials want to do something about the conflict between the open enrollment deadline and the tax mandate deadline.

“They are working to align the policies — the disconnect — between the open-enrollment period and the individual responsibility timeframe,” Carney said.

In response to questions about problems with the federal exchange enrollment system, Carney said the administration is focusing on helping consumers get coverage rather than on determining who’s to blame for the problems.

When reporters asked about whether the administration would postpone general exchange application deadlines because of the problems, Carney said the country is just three weeks into a six-month enrollment period.

“We’re still early in the process,” and about 500,000 people already have submitted coverage applications through state and federal enrollment systems, Carney said.

“I’m not going to speculate about where we’re going to be in a few months,” Carney said. “We’re focusing on fixing problems now.”

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CA Maximum eligibility waiting period is 60 days


California AB 1083,(Chaptered Sept. 30, 2013)  enacts various provisions of the federal Affordable Care Act (ACA) into California state law and applies these provisions to insured health plans and HMO contracts in California, effective for plan years beginning on or after January 1, 2014. Most of the provisions in AB 1083 mirror those in the ACA, but one very important difference is that California’s maximum eligibility waiting period is 60 days after date of hire rather than 90 days.

Maximum 60-day Waiting Period Applies to both Small and Large Insured Plans

Initially it was widely believed that California’s maximum 60-day waiting period applied only to “small group” health insurance coverage, because AB 1083 primarily amends only the “small group” provisions in the California Insurance Code and the Health & Safety (H&S) Code. In recent months, however, California regulators (the California Department of Insurance and the Department of Managed Health Care) have confirmed that the maximum 60-day waiting period applies to large insured plans as well as to small insured plans. The AB 1083 provisions that limit the waiting period to 60 days are included not only in sections of the bill that amend California small group law, but also in sections that amend and replace California law that applies to all size health insurance and managed health care products (Health & Safety Code section 1357.51(c) and Insurance Code section 10198.7(c)).

Note that the requirements apply to insurers and HMOs, rather than to employers, so insurance contracts issued for 2014 should include the 60-day waiting period limit.

What Plans are Not Subject to the 60-day Waiting Period Limit?

California’s 60-day waiting period limit does not apply to self-insured plans nor to insured plans issued, renewed or delivered in other states. Such plans must comply with the ACA’s 90-day maximum waiting period, and insured plans in other states must comply with any state law limits in the applicable states. California’s 60-day limit also does not apply to insured dental or vision plans issued in California, although employers may elect to use the same waiting period for dental and vision as for medical plans.

Can a Plan Use “First of the Month after 60 days” rather than just 60 Days?

No, under both the California and federal waiting period limitations, the waiting period maximum requires coverage to be available as of the specified day (60th or 90th), not as of the first of the month following that day. Additionally, both the California and federal rules take all calendar days into account, not only business days. Since carriers generally allow enrollment only as of the first of the month, California employers may be required to offer coverage as of the first of the month following 30 days of employment, in order to meet the 60-day limit. At least one carrier has said informally that it is working on changing its enrollment systems to allow enrollment as of the 60th day after date of hire, but it remains to be seen whether this will be implemented and whether most carriers will take this approach.

The waiting period limitation does not include periods during which an individual could have been enrolled, but was not due to the individual’s failure to take the appropriate actions. For example, a plan or policy will be compliant if it allows an individual to enroll by the 60th day following date of hire if the individual submits a completed enrollment form, but an individual does not actually enroll until a later date because the individual fails to submit the completed enrollment form.

When in 2014 does the New 60-Day Limit Apply?

The new 60-day waiting period limit (and the federal 90-day waiting period limit) apply as of the first day of the “plan year” beginning on or after January 1, 2014. Thus, a calendar-year plan must comply as of January 1, 2014, and a July 1 plan year must comply as of July 1, 2014.

Small employers who are not required to file Form 5500s often do not specify their plan year. An issue may arise as to whether the plan year is the calendar year or the contract/policy year, especially if a small employer renews early (most carriers are offering “early renewal” as of December 1, 2013 to delay the effective date of certain ACA provisions). California AB 1083 refers to the federal definition at 45 CFR 144.103, which says “plan year” is:

  • The plan year specified in the plan document, or
  • If no plan year is specified in documents or there is no plan document, the plan year is the deductible or limit year used under the plan ( which is likely to be the calendar year for many health insurance contracts), or
  • If the plan does not impose deductibles on a yearly basis, the plan year is the policy year, or
  • In any other case, the plan year is the calendar year.

We conducted an informal poll of five health insurers that cover most of the small group market in California. They all said that any group renewing early will not be subject to the shorter waiting period limit until their 2014 renewal. So, a group that renews early December 1, 2013 will not have to comply with the 60-day waiting period limit until December 1, 2014. As of the date of this article, we have not heard otherwise from the California regulators. A word of caution: it appears—from the definition above—that if no plan year is specified and the deductible year is the calendar year, the regulators might be able to require compliance with the new 60-day limit as of January 1, 2014, even if the contract renewal date was December 1, 2013. We will keep you informed if we get additional information on this.

What is the Penalty for Non-Compliance? 

The penalties can be steep for carriers and others engaged in the business of insurance.  These penalties do not apply to employers.  Per Insurance Code section 10753.18, a  carrier who fails to comply with the 60-day limit on waiting periods could be subject to a fine of $2,500 for the first violation and $5,000 for each subsequent violation.  The penalty increases to $15,000 -$100,000 per violation, if the carrier repeatedly violates these requirements “with a frequency that indicates a general business practice or commits a knowing violation.”  Additionally, individuals or entities who are not carriers but who are  “engaged in the business of insurance” may be fined not more than $250 for the first violation, and $1,000-$2,000 for each subsequent violation or for a knowing violation.

Posted in: Business Insurance, Health Care Reform (ACA), Personal Insurance

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Affordable Care Act – Unsure of Personal Impact

The majority of Americans are still unsure how the Affordable Care Act (ACA) will impact them. These are the findings from Kaiser Family Foundation’s March 2013 Health Tracking Poll. Here are the highlights of the March poll.

Affordable Care Act – Unsure of Personal Impact

According to the poll, two-thirds of the uninsured and a majority (57%) of Americans overall say they have too little information to know how the Affordable Care Act will impact them.

How ACA Will Impact Americans

Affordable Care Act – Unaware of Medicaid Expansion & Insurance Marketplaces

Generally, the public is not aware or knowledgable on the decisions states are making about ACA Medicaid expansion and establishing state insurance marketplaces. The poll found 78% did not know enough about their state’s decision to participate in Medicaid expansion, and 48% knew nothing about their state’s decision for the health insurance marketplace.

ACA Exchange Information

 Affordable Care Act – Favorable/Unfavorable

According to the poll, the country remains fairly evenly divided on the ACA, with 40% holding an unfavorable view of the law and 37% holding a favorable one.

How ACA will impact americans

Affordable Care Act – Future Personal Impact

Looking ahead, the public’s expectations about ACA’s likely impact on their own families tends to be more negative than positive, with 29% saying the ACA will make them worse off, 21% saying it will make them better off, and four in ten saying it won’t make much difference.

ACA Impact on Americans

Affordable Care Act – Most Popular Provisions

The most popular provisions of the ACA, including tax credits to small businesses and the closure of the Medicare drug coverage gap known as the “doughnut hole,” remain among its least widely recognized, while the law’s least popular provision, the individual mandate requiring most people to obtain health coverage, is its most widely recognized.

ACA Impact on Americans

Read the full Kaiser Family Foundation Health Tracking Poll here.

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Family health care premiums exceed 20% of income

Family health insurance premiums in California went up 52 percent between 2003 and 2010 and now exceed 20 percent of income, according to a study released today.

A state-by-state analysis by the Commonwealth Fund, a philanthropic research group, found the average annual family health premium in California in 2003 was $9,091, which was slightly lower than the national average of $9,249.

By 2010, those premiums jumped to $13,819 in California, on par with the national average. Premiums for families nationwide rose an average of 50 percent during that same time period to $13,871.

The report examines the period of time leading to the passage of the federal health overhaul law in March 2010. The authors say if insurance keeps rising at the current rate, the cumulative impact will result in a 72 percent increase in premiums and push the average family premium to almost $24,000 by 2020.

“Costs vary by state, but no matter where you live – whether it’s Wyoming, Texas, West Virginia, California, New York – health insurance is expensive,” said Cathy Schoen, senior vice president of the Commonwealth Fund and lead author of the report.

In a growing number of states, including California, premiums already equal or exceed 20 percent of the median income, the study found.
Outpacing income

In 2003, health premiums in California amounted to 14.9 percent of income but jumped to consume 21.5 percent in 2010. Twenty-three states shared that distinction last year, while just seven years earlier, West Virginia was the only state to top that 20 percent threshold.

Premiums outpace income in virtually every state, but Schoen said they take a bigger bite out of overall income in states that have lower median incomes.

In California, the study reported, the median family income in 2009-10 was $61,162, which is lower than the average national median income of $67,357 for families.

The report also found that the annual amount employees pay toward their health insurance policies increased nationally an average of 68 percent for individuals and 63 percent for families between 2003 and 2010. In California, the amount increased by 121 percent for individuals and 68 percent for families.

Anthony Wright, executive director of the consumer advocacy coalition Health Access California, said it’s hard to say why employer-backed individual policies jumped so much. Family coverage has long been hit with increases, so employers may have turned toward increasing the share individuals pay in recent years, he said.

The liberal-leaning Commonwealth Fund notes that the federal health law has the potential and opportunity to lower premium growth.
Effects of law

Wright, a backer of the federal law, said some provisions – such as subsidies provided to lower- and middle-income people to buy health insurance – will by definition curb the percentage of income people have to devote to health insurance. It’s unclear whether many of the elements will lower costs, he said.

The health law “almost certainly doesn’t do everything we need it to do to bring down the cost of health,” he said. “At the same time, it’s the most any Congress has ever done to try.”
Commonwealth Fund’s findings

See the report at

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