Archive | Insurance Company News – California

Health Insurers Seek Hefty Rate Boosts

Major insurers in some states are proposing hefty rate boosts for plans sold under the federal health law, setting the stage for an intense debate this summer over the law’s impact.

One state, New Mexico is asking for an average jump of 51.6% in premiums for 2016. Insurance carriers in several states have proposed 36.3%, 30.4%, and 25% rate increases. In dozens of other larger states carriers have applied for increases averaging 10%.

  • Insurers in California have not announced the percentage increase in their rates; however they have begun the process of filing their rates with state insurance regulators.

All insurance carriers cite high medical costs incurred by people newly enrolled under the Affordable Care Act.

Under that law, insurers file proposed rates to their local regulator and, in most cases, to the federal government. Some states have begun making the filings public, as they prepare to review the requests in coming weeks.

  • Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Health-cost growth has slowed to historic lows in recent years, a fact consumer groups are expected to bring up during rate-review debates. Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs.

  • “This year, health plans have a full year of claims data to understand the health needs showing enrollees are generally older and often managing multiple chronic conditions,” said a spokeswoman for America’s Health Insurance Plans, an industry group. “Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

The federal government subsidizes premiums for some consumers, based on income, and the validity of those subsidies in most of the country is the subject of a lawsuit the Supreme Court is expected to decide in late June.

  • The filings from insurers are based on the assumption that those subsidies remain in place.

Obama administration officials weathered a storm as some younger, healthier consumers saw their premiums jump when the law rolled out, but were also able to point to modest premiums overall as insurers focused on other ways to keep costs down, such as narrow provider networks.

For 2015 insurance plans, when insurers had only a little information about the health of their new customers, big insurers tended to make increases of less than 10%, while smaller insurers tried offering lower rates to build market share.

Modified from a WSJ.com article

 

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44% of Covered California customers report difficulty paying premiums

A new survey shows that 44% of Covered California policyholders find it difficult to pay their monthly premiums for Obamacare coverage. And a similar percentage of uninsured Californians say the high cost of coverage is the main reason they go without health insurance.

The issue of just how much people can afford will loom large as the state exchange prepares to negotiate with health insurers over next year’s rates.

  • Many analysts are predicting bigger premium increases for 2016 in California and across the country. Insurers have more details on the medical costs of enrollees, and some federal programs that help protect health plans from unpredictable claims will be winding down.

This latest pulse on consumer attitudes is drawn from a Kaiser Family Foundation survey of 4,555 Californians from September to December 2014. It examined the experiences of people in Covered California, Medi-Cal, other private coverage and the uninsured.

  • Forty-four percent of exchange policyholders surveyed said it’s somewhat or very difficult to afford their premiums. That’s compared with 25% of adults who had employer-based or other private health insurance.

Peter Lee, executive director of Covered California, acknowledged that many Californians find it hard to fit health insurance premiums into their household budget, even when they qualify for generous federal subsidies.

“If you are making $25,000 a year that $70 premium is still a struggle,” Lee said. “The Affordable Care Act is providing nobody with a free lunch. This issue of making healthcare affordable is not easy.”

  • Anthem Blue Cross, Kaiser Permanente and other health insurers have submitted their proposed 2016 rates for individual policies to Covered California, and negotiations are expected to begin next month.

The final statewide rates should be announced in July, Lee said. For 2015, the average rate increase was 4.2%.

Modified from a LATimes.com article.

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After Expanding Under Obamacare, This 123-Year-Old Insurance Company (Assurant) Is Closing Its Doors

After expanding to do business on the Affordable Care Act’s exchanges last year, a Wisconsin-based health insurance company founded in 1892 has announced it will close its doors.

Assurant Inc. announced last week one of its subsidiaries, Assurant Health, an insurance company, will either be sold or shuttered after losing tens of millions of dollars this year. The decision comes 18 months after the implementation of the Affordable Care Act (ACA), and industry watchers argue Assurant Health’s end can be attributed to the new health care law.

  • In California, Assurant’s Time Insurance Company subsidiary began writing policies under ACA rules in January of 2014. Individuals enrolled in these medical plans were able to use the Aetna nationwide provider network. The carrier began the process of withdrawing from California in late December of 2014.   

“The health and employee benefits business segments possess differentiated capabilities in their respective markets, but we do not believe they can meet our return targets at the pace we require,” Alan Colberg, president of Assurant Inc., said in a statement. “While this is a difficult decision, we believe they would be strong assets for new owners that are focused more exclusively on health care and employee benefits.”

In a letter to its shareholders, Assurant Health said it lost money because of a reduction in recoveries under Obamacare’s risk mitigation programs and increased claims on the health care law’s 2015 policies.

Before Obamacare’s implementation, Assurant Health would underwrite its customer’s policies, which gave the company a competitive edge. The process involves adjusting the cost of a consumer’s premium based on factors such as medical history and age.

The Affordable Care Act, though, prohibited medical underwriting, and advocates touted the law as easing access to health insurance for people with pre-existing conditions.

In addition to offering insurance on exchanges in more than a dozen states, Assurant Health also sold plans to individuals in 41 states and small businesses in 34 states, insuring close to 1 million people.

Despite the company’s efforts to reach more consumers, Assurant Health saw a $64 million loss in 2014. During the first three months of 2015, the company reported operating losses of $80 million to $90 million.

*Modified from The Daily Signal article, and Assurant press release.

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Many Uninsured Choose Penalty Over Enrollment Offer Under Health Law

Tax preparers, and several surveys find tepid response to the Obama administration’s effort to boost sign-ups. A special enrollment period to obtain health insurance for millions of uninsured people who owe a tax penalty under the Affordable Care Act is off to a slow start.

About 11.7 million people have already signed up on state and federal exchanges this year, though not all of them have yet paid premiums.

The health law requires most Americans to have insurance or pay a fine at tax time. The open enrollment period under the health law ended Feb. 15, but the Obama administration said it would allow people who discover they owe a fine to sign up for coverage through April, at the end of the tax season.

The special enrollment period applies to people who have to pay a penalty for going without coverage in 2014, and also face a penalty in 2015. They must pay any penalty they owe for not having coverage but can use the special enrollment period to obtain coverage and not generate any more fines.

  • It is still early, since the special enrollment period launched Sunday, but research also suggests that many people who lack health insurance will pay the penalty and not get covered this year.
  • Only 12% of uninsured people would buy policies if informed of the penalty, according to a survey of 3,000 adults polled through Feb. 24 by McKinsey & Co.’s Center for U.S. Health System Reform.
  • At H&R Block Inc., “our analysis indicates that a significant percentage of taxpayers whose household members were not covered for at least a portion of 2014 are opting” to pay the penalty, said a vice president of health-care enrollment services at the tax-preparation firm.
  • “It was a good PR move and aligns enrollment with tax season, but we’re not seeing a massive rush,” said a spokesman with Jackson Hewitt Tax Service Inc. “It’s been pretty unremarkable.”

A retired employee of United Parcel Service, Inc. found out he will pay a $250 penalty for going without insurance. He said won’t take advantage of the special enrollment period because it is cheaper for him to pay out-of-pocket for health care than to buy insurance on the exchange.

He said he shopped on the exchange but would have to pay $400 a month for a plan with a $6,000 deductible.

“I think it’s wrong I have to pay the penalty… “But it beats paying more than $10,000 a year.”

Modified from a wsj.com article, and other online sources

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How Obamacare Will Impact Your 2014 Taxes

The Affordable Care Act is supposed to make health care coverage universal and more affordable to millions of Americans, but it might also make filing your 2014 taxes more cumbersome and more expensive.

“This tax season is the first time people will experience the financial consequence of the individual mandate, and it will bring additional paperwork and some surprises for taxpayers,” remarked Michael Mahoney, healthcare expert and senior vice present of consumer marketing for GoHealth, a health insurance technology platform.

  • For the vast majority of tax filers, the changes will only mean checking a box to indicate that they had health coverage during 2014. But some of those who signed up for Obamacare will need to take additional steps when filing their taxes this year.
  •  Consumers who signed up for health care through a marketplace will receive a new form this month, called 1095-A, which they’ll have to fill out and will be needed for filing Federal taxes.
  •  On form 1095-A, you’ll be asked to figure out whether you received the correct amount of financial assistance, whether you are subject to a penalty and whether you can claim an exemption among other things.

Advance Premium Tax Credit

The government has been providing financial assistance to some Americans to lower the monthly cost of health insurance on an advanced basis. These credits have been applied directly to monthly health insurance premiums.

  • The tax credit is determined based on your estimate of your household income. It needs to be reconciled taking into account your actual household income when you file your tax return.
  • You may owe money if you’ve underestimated your income, reducing your refund, while it could increase your refund if you’ve overestimated it.

Penalty

  • If you don’t have health insurance and don’t qualify for an exemption, you’ll have to pay the higher amount between a flat fee penalty and a percentage penalty.
  • The penalty will be $96 for an adult and $47 for a child for 2014, up to $285 per household, or 1 percent of your annual household income. The 2015 penalty for lacking insurance is $325 or 2 percent of household income.

This could mean a smaller refund or you might owe more in taxes. “This will be an unpleasant surprise to people who are still unaware that virtually everyone is now required by law to have health insurance,” said Mahoney.

Exemptions

You could lower this penalty or eliminate it if you qualify for one of the exemptions based on financial hardships, religious affiliations and gaps in coverage among others. Just remember that you may need to apply for some exemptions and receive approval.

Modified from an article in The Fiscal Times, and other online sources.

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How ObamaCare Harms Low-Income Workers

The primary purpose of the Affordable Care Act was to make health insurance affordable for people with modest incomes. Yet as the employer mandate begins to kick in for 2015, the law is already hurting some of the people it was intended to help. 

  • Full-timers become part-timers, losing wages and the opportunity to buy the health coverage they most prefer. By this time next year, we may find that many workers who earn within a few dollars of the minimum wage have less income and less insurance coverage (as a group) than they did before the mandate began to take effect.

This is the conclusion from survey conducted by John Goodwin Senior Fellow at the Independent Institute in December of 136 fast-food restaurants (franchisees) that employed close to 3,500 workers.

Before 2014 about half the employees were “full time” as defined by ObamaCare; that is, they worked 30 hours or more a week. The potential cost to the employers of providing mandated health insurance to their full-time staff would have been about $7 million a year.

But by the time the employers took advantage of all their legal options they were able to reduce their cost to less than 1% of that amount.

  • The first step was to make all hourly workers part time. That may seem easy to do, but in the fast-food business it’s not uncommon that employees fail to show up for work.

Other employees are asked to work additional hours to prevent the restaurant from shutting down. By the end of 2014, 58 employees had crossed the line to full-time status and were eligible for mandated health insurance in 2015.

  • The companies offered these employees ObamaCare-compliant health insurance—bronze plans—but asked them to pay the maximum premium the law allows: 9.5% of their annual wage.
  • For a $9-an-hour employee working 30 hours a week, the maximum monthly premium was $111. The total premium was $367, and the law requires the employer to pay the difference.

The bronze plan has very large deductibles and copayments—up to $6,600 or $13,200 for a family, depending on the family’s income. But the designers of the Affordable Care Act apparently did not understand that high deductible health insurance with no Health Savings Account is not attractive to young, healthy, low-income workers.

  • These workers are far more likely to prefer mini-med plans that pay for generic drugs and doctor visits but not catastrophic care.

Before ObamaCare, these companies offered all full-time, hourly employees a standard Blue Cross health plan as well as a mini-med plan for a much lower premium.

  • No one signed up for the Blue Cross plan. About 200 signed up for mini-med insurance.

The companies in the survey offered to pay the full premium for the mini-med plans, in order to make that alternative more attractive. If employees choose the bronze plan it costs the employers about six times as much.

  • The result: Only one of the 58 remaining full-time employees enrolled in a bronze plan; the rest will likely be in MEC plans.
  • What about the families of these workers? Employers don’t have to pay the premiums for coverage of dependents.

To cover a family of three, the employee in one of these restaurants can face a premium of $805 a month for a bronze plan, almost 70% of his monthly wage.

  • Since ObamaCare considers this offer “affordable,” any family member who turns it down is ineligible for premium subsidies on an insurance exchange.
  • What about the mini-med plans? Although these plans are offered free to the employees, dependent coverage is not free.
  • An employee has to pay about 25% of his income to cover a spouse and kid. If he doesn’t, the family faces a fine next April 15.
  • Workers in the survey whose hours were reduced to part time can get subsidized insurance through an exchange, but they will be asked to pay up to 9.5% of their income for what is unattractive coverage. 

To recap: Almost half the workforce of these restaurants was involuntarily reduced to part time and has less income as a result.

  • These employees have also lost the opportunity to have the coverage they most prefer: mini-med plans that pay for medical care they are most likely to need.
  • Those few remaining full-time employees will get mini-med insurance for themselves, but they are unlikely to be able to afford coverage for any dependents they have.
  • They will not get an ObamaCare bronze plan unless they fork over about one-tenth of their take-home pay, and they won’t be able to get bronze coverage for other family members unless they forfeit more than half their income.

*Modified from an article by Mr. Goodman, senior fellow at the Independent Institute, and other online sources.

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From the E.R. to the Courtroom: How Hospitals Are Seizing Patients’ Wages & Other Assets

One important reason to obtain health insurance is not to go to a doctor but to protect wages and other assets. When patients receive care at a growing number of hospitals, and don’t or can’t pay, their bills often end up at collection service companies.

And if those patients don’t meet collection demands, their debts can make another, final stop: the County Courthouse.

A majority of U.S. hospitals, have a history of aggressive debt collection. From 2009 through 2013, one hospital in the Midwest filed more than 11,000 lawsuits.  When it secured a judgment, as it typically did, the hospital was entitled to seize a hefty portion of a debtor’s paycheck. During those years, the company garnished the pay of about 6,000 people and seized at least $12 million—an average of about $2,000 each, according to an analysis of state court data.

No one tracks how many hospitals sue their patients and how frequently, but one source found hospitals that routinely did so in various parts of the Country. The number of suits is clearly in the tens of thousands annually.

In one Midwest state, hospitals and debt collection firms working for them filed more than 15,000 suits in 2013. But if patients don’t obtain health insurance or enroll in MediCal or Medicaid, hospitals must take action.

As one spokesman for a hospital stated, “the services were rendered, and the hospitals have to figure out how to get them paid for”.

 

*Article modified, and data obtained from Propublicia.org, NPR, and other sources.

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Small Firms Start to Drop Health Plans

In 2015, if you work for a small company with less than 50 employees, be prepared to obtain your own individual health insurance.  Small companies are starting to turn away from offering health plans as they seek to reduce costs and increasingly view that individual coverage is an inviting and affordable option for workers.

The health law doesn’t penalize companies with fewer than 50 workers that don’t offer coverage, and those with fewer than 100 employees won’t face fines until 2016.

  •  Anthem Blue Cross recently stated that its small-business-plan membership is shrinking faster than expected. It has lost about 300,000 people since the start of the year, leaving a total of 1.56 million in small-group coverage.
  • Anthem said it had projected that it would take about five-years to significantly reduce small-employer membership, but it now thinks the drop-off will be compressed into two years.
  • Some other insurers have seen a similar trend. Aetna said the company was seeing erosion at the bottom of the market among employers with two to 10 workers. Kaiser Permanente said that it is seeing some contraction in the small-group market, particularly in places where insurers are offering cheap individual plans.
  •  A number of small California companies with less than 50 full-time employees have discontinued their health plans during 2014. This trend will continue next year as companies direct their workers to individual plans issued either through Covered California or directly by an insurance company.  
  • Insurers, for their part, are moving to recapture the lost business by signing up employees to their individual plans. As an example, one carrier said it is seeing the strongest shift away from offering health benefits among the smallest employers with just two to four workers, and is working to ease the transition for companies that want to move from a group plan to individual coverage.

Workers with pre-existing health conditions can now buy coverage on their own, and insurers can’t charge them more based on their health history, as they could before the law took effect.

  •  For many small companies, the increasing paperwork to administer small group plans has become a burden. In addition, the increase in premiums has forced companies to either require an employee pay for a greater percentage of coverage or drop the group coverage altogether.
  •  Many employers are changing how much they will contribute to the premium for employee coverage. A number of companies have begun paying a larger percentage of the employee’s portion but are requiring the employee to pay up to 100% of dependent’s coverage.

Some employers are facing premium increases to keep offering coverage as they shift to plans that meet the law’s requirements—though this impact has been delayed for many because the Obama administration has allowed states and insurers to keep older plans in effect.

*Data obtained from the WSJ online, and other online sources.

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DOCTOR NETWORKS TO STAY LIMITED IN 2015 UNDER OBAMACARE

If you are having difficulty finding doctors willing to accept your new Obamacare plans in 2014, finding a doctor who takes Obamacare coverage could be just as difficult in 2015.

Even as California’s enrollment grows, many patients continue to complain about being offered fewer choices of doctors, and having no easy way to find the ones that are available.

Based upon information provided by Covered California, and the carrier’s recent information provided to insurance brokers the general consensus is:

  • The state’s largest health insurers are sticking with their narrow networks of doctors, and in some cases they are cutting the number of physicians even more, according to an analysis of company data.
  • Insurers say they can pass along savings by paying doctors less, and rewarding the limited network of doctors with higher patient volume.
  •  Covered California, still has no comprehensive directory to help consumers match doctors with health plans. There’s no timetable for a state provider directory after the exchange scrapped an initial version that was riddled with errors. Instead, Covered California refers people to insurance company websites that vary in usefulness.
  • In addition to shedding doctors, Anthem Blue Cross and Blue Shield of California, the state’s biggest insurers have promoted more restrictive policies known as EPO, or exclusive-provider organization. Unlike a more generous PPO, an EPO typically does not provide any coverage for out-of-network providers. Consumers would be responsible for the full charges if they left their network.
  • Health Net has proposed the most dramatic change for 2015, the data show. It’s dumping the current PPO network, and switching to a plan with 54% fewer doctors and no out-of-network coverage, state data show.
  • For 2015, Blue Shield has proposed two health plans with up to 4% fewer physicians in the areas where they’re sold. Blue Shield includes about two-thirds of its regular PPO doctors in its broadest exchange network.
  •  Anthem, which has added nearly 7,000 doctors since January, intends to maintain the current size of its networks; however the carrier is maintaining its EPO structure in parts of California.

 

*Modified from an LA Times article, Insurance Company information, and various online articles.

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2015 Penalty for Not Having Health Coverage Can Be Thousands of Dollars

If you’re opting out of the health-care coverage required by the Affordable Care Act, make sure you understand how much you’ll owe Uncle Sam as a result. For those who are thinking of opting out, here’s what you need to know.

  • For 2014, the penalty is either a flat amount or 1% of your income, whichever is greater. The flat amount is $95 per adult and half that for children under 18, with a cap of $285 per family.
  • As with the flat penalty, there is also a cap on the maximum payment. It rises no higher than the average cost for a family of five under a bronze-level Affordable Care Act-approved plan. The maximum penalty if calculated as a percentage of income is $12,240.
  • For 2015, the percentage-of-income penalty rises to 2%. The flat amount increases to $325 per adult, and $162.50 per child up to a maximum of $975. The maximum percentage penalty would be approximately $13,400.
  • For 2016, the percentage of income increases to 2.50%. The flat amount rises to $695, and $347.50 per child up to a maximum of $2,085. The maximum penalty could be as high as $14,800.

REMEMBER YOUR MAXIMUM PENALTY IS THE FLAT PENALTY OR YOUR PERCENTAGE OF INCOME, WHICHEVER IS GREATER.

CALCULATING HOUSEHOLD INCOME TO DETERMINE THE PENALTY

  • “Household income” is defined differently from other tax thresholds. It begins with adjusted gross income, or AGI, the number at the bottom of the first page of the 1040 form. (This number includes reductions for 401(k) contributions and other items, but not for itemized deductions such as mortgage interest.) AGI earned by children counts as well.
  • To this total the taxpayer adds back any foreign-earned income and municipal-bond income that has been exempted, and then subtracts the filing threshold—the amount below which a taxpayer needn’t file a return.
  •  In 2014, that’s $10,150 for most singles and $20,300 for most joint filers. The result is household income, the base for figuring the penalty.
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