Intelligence Report on the Affordable Care Act

Hello from the Visor Benefits “Accountable Care Act Frontlines,”

As you can imagine, the closer we get to January 1 the busier things get for us and for our clients, as employers try to figure out how to handle the inevitable rate increases.

We have developed clients all across the US and although dealing with multiple state regulations can be challenging, one of the advantages is that we have an early warning system that alerts us to activities in various states and allows us to anticipate trends that could affect consumers across the country. Carriers usually implement similar procedures nationwide to gain economic efficiencies and they are typically aided by the National Association of Insurance Commissioners (NAIC) who coordinate for their mutual benefit when implementing policy.

You can check out NAIC activities here. http://www.naic.org/

We’ve also gathered intelligence from several other sources. Read on!

Blue Cross Insurer in Washington Anticipates Rate Increases

Please read the attached article if you have time. It is a letter to customers from Lifewise, a Blue Cross plan in the state of Washington, announcing the coming changes. Here’s a summary of their letter:

Rate Impact – The Affordable Care Act introduces new requirements that will increase the cost of healthcare coverage, with many customers likely to see a higher cost for coverage in 2014.

Key factors driving up those costs, before considering the impact of federal subsidies, include:

  • More expensive benefits: the ACA requires health plans to sell coverage with more expensive benefits than most customers choose to purchase today.
  • Higher medical costs for new customers: an independent analysis shows new customers in the Exchange, including current enrollees in state high risk pools, have more medical needs – and higher claims costs – than today’s customers in the individual market.
  • Rating rules: new rules reduce the amount by which health plans can vary rates based on age. From 2014 onwards, older customers will not pay more than 3x the rate that is charged to younger customers. Today, in Washington, that difference is 3.75. Current older customers with comprehensive benefits may see a rate decrease. Current younger customers with high deductible plans are likely to see large rate increases.
  • New taxes and fees: the ACA adds new taxes and fees that will increase costs.”

Lifewise is one of the first companies to tell insured’s that their rates are going up. Lifewise has not published rates yet but Washington clients are not going to be happy about the increase to some of the highest rates in the country.

Illinois Insurance Commissioner Warns Insurers Against Delaying Compliance

The following is just in from the Insurance Commissioner of Illinois. Evidently he does not like the fact that an employer might try defer the medical premium increases that he knows are coming January 1. I am sure he realizes that without the increased premiums, the planned funding for the uninsured will not materialize until early 2015.

http://insurance.illinois.gov/cb/2013/CB2013-07.pdf

A client could easily avoid this Commissioner’s over reach of power by simply changing carriers. Employers have every right to determine their corporation’s plan year but don’t think that a carrier or broker will cross the Illinois Commissioner. Every licensed insurance entity in any State operates at the pleasure of the Commissioner. The Commissioner has the authority to terminate a license without any facts and can impose a “voluntary” fine that must be agreed upon before one can obtain a license.

Regulations and Deadlines, But Not Enough Specifics from the Feds

The last piece is from our friend Tyson Fuehrer at Polestar Benefits in Oregon. Tyson is a very sharp fellow and runs a great operation. Polestar manages most of Visor’s BetterFits cases and our experiences with his company have been very positive. I would love to introduce you to him if you are interested in a new TPA for your HRA or implementing a BetterFits program. Please read his email if you currently have an HRA so you can be prepared to report the fee.

“As your administrator of a plan that is affected by this ruling, we have done our due diligence in putting together the documentation for the reporting of the PCORI fee. In July, you are required to report on Form 720 that the number of lives for PCORI is XX (with regard to your Health Reimbursement Arrangement).

We do not have a current copy to illustrate the exact location of reporting the fee, but when one becomes available we will issue a copy to you and directions.”

As with many of ACA timelines, the Federal Government has fallen behind again and is not ready to give guidance to employers so they can be reasonably sure of compliance.

I have the good fortune of meeting new people every day and when I ask about their plans for handling the new requirements imposed by ACA, the most common comment I hear from prospective clients is, “My broker tells me no one really knows what is going to happen so we are going to wait and see.” This wait and see attitude is a sure fire way to incur a penalty. The penalties are written into the law. Determination of the penalties will happen on the corporate tax return and most employers will not even know they are in some violation until they are notified about the penalty or during an audit.

A Novel Approach to Insuring Your Employees

Why not dispense with most of ACA’s requirements and group health regulations in general? Implement a BetterFits program today and you too can read updates like this with a casual interest as you focus on your business.

Be prepared to defend your budget,

Bill Hill
President
Visor Benefits