Thursday, January 24, 2013

An update on medical insurance plans coming to Connecticut next January.

The new plans:

● Will have four levels of coverage - Platinum, Gold, Silver, and Bronze and be available from private health insurance companies in the Individual and the Small group market. These plans can be purchased from a company, as today, or through an organization health reform created and called an Exchange. The Exchange is now called a Health Insurance Marketplace. Here in Connecticut the entity which was set up to perform this function is a quasi-public organization.

● Will include coverage for the 10 Essential Benefits (EB) outlined in the federal health reform legislation and needed to become what reform calls a qualified health plan. Two of the EBs, pediatric dental coverage and Habilitative coverage, which is an expansion of what is now included in Rehab coverage, are not now in medical insurance plans in Connecticut. Some actuaries have indicated adding the 10 EBs, which include maternity, to individual plans along with the elimination of today’s review of medical history means the premium will go up a significant amount! ! !

● Will have a required Actuarial Value (AV) for each of the four levels. This means when a person enrolls in a Platinum plan the coverage must be designed so 90% of the AV of all the 10 EBs and other treatments, tests, etc. will be paid Thus, if they encounter a major medical treatment situation their only expenses would be for co-pays, etc. up to 10% of the AV. Of course because a Platinum plan will have almost full coverage the premium will be very high. Gold level plans are required to have a 80% AV. Silver a 70% AV and Bronze a 60% AV.

● Cannot have a premium, which varies more than 3 to 1 from age 21 up to 64. In the current small group market it’s about five times higher. The proposed regulations to implement this indicate a person age 21, whether male or female, will have a factor of 1 and the factor will increase for each age up to 64, which will have a factor of 3. These new market requirements indicate a smoker can be charged 50% more! How this will relate to today’s rates is not known. Some actuaries project the premium for someone in their 60s will drop some but there will be a big increase for younger individuals.

● Will have the same premium whether a certain one is offered in or out of the Health Insurance Marketplace. Connecticut’s new quasi public organization and those in other states have to be self-supporting after one year of federal funding. Since the anticipated budget for Connecticut’s organization is about 30 million its Board is developing plans to raise the needed income by adding a FEE of around 3% on top of the premium for all plans purchased through the Exchange!

How will people enroll in these plans?

Lets look first at the Individual part of the Health Insurance Marketplace:

● A person will access these plans through an online portal and input personal and financial information. Coverage will not be available until January 1, 2014 but plans call for an open enrollment period starting this October.

● The system, while information is being entered, will access a federal hub and check with federal agencies such as Homeland Security to confirm citizenship and the IRS to check income.

● The enrollment system will notify the person in real time whether their income level means they qualify for Medicaid or can receive premium support.

● If eligible for Medicaid the system will handle their enrollment into Connecticut’s Husky program. Currently Husky covers adults up to about 70% of the federal poverty level (FPL). Health reform provides states with funding for a couple years, if the state approves, to cover what are called newly eligible adults. These are individuals whose income is up to 138% of FPL. It is not known today if automatic enrollment will be available initially.

● Individuals whose income is between 138% and 400% of FPL will be eligible for premium support, which will require they pay a certain percentage of their income toward the premium. It will range from around 3% for a low income up to 9.5% for a person who is just under 400% of FPL. BTW – that is around $44,000 today. They can select the plan and medical insurance company they are interested in and which meets their budget based on the amount of support they will receive. Their selected medical insurance company will receive the premium support directly from the federal government and then bill the person at home for the balance. This amount will be paid with after tax dollars.

The small employer part of the system:

● An employer can select certain plans to offer and then their employees can select one of the firm selected plans. It is anticipated the defined contribution approach will be common e.g. tell employees the firm will pay $xxx for medical insurance. The employees can then, if desired, pay any difference in what their plan costs through the firms payroll system. The monthly bill will come from the health insurance company to the employer.

● There will be no premium subsidies through the small group part of the Health Insurance Marketplace and it will be the only way, after Jan 1. 2014, a firm can apply for the small business medical insurance tax credit. Note: This tax credit currently provides the employer up to 35% of the premium, or of the state adjusted amount, for firms with 10 or fewer employees and whose average salary (not counting the owner) is 25 k or under. The amount will go up to 50% next January. The current credit falls off rapidly when a firm has more than 10 employees. This tax credit is not available to firms with 25 employees or if the firms average salary is 50 k or more.

More information about the impact of federal health reform on individuals and small employers will be shared as it becomes available.

Contact if anyone in Connecticut has questions - (860) 662-3000

John C Parker, RHU, LTCP

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