Avoiding 2014's Outrageous Premiums with New-Old Plans?

[AllenChicago]

Hmmmm.... This is very interesting. If I understand Allen from Chicago correctly, the main point is that insurers who are not interested in Exchange business (medium-sized insurers) are finding loopholes to have their products categorized as NON major medical, thereby not subject to most of PPACA's provisions.


That's where it falls apart according to what I THINK I know about PPACA. I was under the impression that any kind of fee-for-service plan would be considered major medical and therefore prohibited if it didn't meet the minimum benefits outlined in PPACA. I thought that's why limited benefit plans were running into trouble. I also thought that's why indemnity (or scheduled benefit) plans that weren't "fee-for-service" were able to continue after 1/1/2014.

Correct Ann..you're first paragraph summarizes perfectly what we were told by a carrier's marketing executive this past Friday. He said that moving a policy out of compliance with the Affordable Care Act removes it from being classified as Major Medical...which in turns frees the company from having to make this policy comply with the myriad of new mandates that kick in for all major medical plans in 2014. Reinstating a LifeTime Maximum would get the job done and be the least likely to reduce the policy's appeal. The only changes needed to the brochures would be to change any where it says "Major Medical" to "Health Insurance". Most Americans who won't be eligible for hefty subsidies would rather pay $300 a month to obtain an "old school" pre-2014 policy, instead of a +$700 per month Bronze, Silver, Gold, etc..

Ann, THANK-YOU for alerting me to the possibility that simply removing the Unlimited Lifetime benefit on these Fee-For-Service policies might not be adequate. I'll see what I can learn tomorrow. The ACA is so complicated, it's possible that the attorneys at this insurance company overlooked something. Thanks again Ann. You're a jewel!
-Allen

 

[HealthGuy]

Allen and Ann...great thread...but if its thos easy to get around this law I would be shocked !

 

[Ann H]

Ann, I thought this was the theory behind Assurant's Health Access plans? (what you stated above)

Oab1kanobee, I'm not very familiar with Assurant's Health Access, but I've heard other agents support it. Perhaps you can share how it's being marketed and if it will avoid PPACA's requirements after 1/1/2014.

Somarco, I knew you would have some valuable input. I agree with you about the small number of players in the exchanges, and about the new supplemental business. Canada has a vibrant supplement market for its nationalized health care system. The classical meaning of the word "indemnity" is turning grey, and there's a blending of other terms like mini-med, limited benefit, discount plans, etc. But these distinctions are important now, because some will be subject to PPACA and some will not.

It drove me crazy to not know if my "assumptions" about PPACA were correct, so I did a little bit of research. I learned that mini-meds are actually health insurance if they are reimbursement plans for services rendered (fee for service). They often have copays, co-insurance or deductibles, with benefits that are based on actual charges. Their payment may be pitiful, mind you, but they are classified as health insurance for PPACA because they are reimbursement based. Plans that may not be subject to PPACA include plans that pay a fixed amount, including fixed indemnity and scheduled benefit types of plans. They weren't creditable coverage for HIPAA either. I was a little embarrassed at not knowing the distinction between these plans. In my view, if the list of covered services isn't comprehensive, if the allowable charges aren't fair, and if the benefit isn't substantial enough to help the member avoid financial ruin, then I'm not interested in selling it. Therefore I didn't care if it's called mini-med, limited benefit, discount plan, or actual health insurance. Until now, that is.

From http://www.naic.org/documents/commi...docs_public_hearing_limited_med_ben_plans.pdf
I read:

Congress specifically listed the types of health plan arrangements that do not provide comprehensive medical coverage. These "excepted benefit" plans include the following insurance coverage: accident-only; disability income; liability supplement; general liability; automobile liability; workers' compensation; automobile medical payment; credit-only; on-site medical clinics; dental or vision; long-term care; nursing home care; specified disease or illness; hospital indemnity or other fixed indemnity insurance; Medicare supplement, Tricare supplement, and similar group supplemental coverage.
​

I heard somewhere that foreign insurers (like perhaps Fortis) were not subject to PPACA...

If Obama wins, I expect some of these loopholes to be difficult to jump through. I would expect HHS to issue their opinion that efforts to slightly modify a contract to avoid a law is not allowable. However, there seems to be some valid loopholes, and there certainly is a market for it.

 

[SportsNut]

Most Americans who won't be eligible for hefty subsidies would rather pay $300 a month to obtain an "old school" pre-2014 policy, instead of a +$700 per month Bronze, Silver, Gold, etc..

Even though the person is insured as we know it, the fact that the policy is not qualify 'major med' under PPACA and hence 'health insurance'... wouldn't this subject the person to paying the fine-penalty-tax for not having 'major med' ins...as defined under PPACA...? If so, wouldn't that negate, or nearly so, the savings between the 'health insurance' and the exchanges' 'major medical' policy...?

 

[Ann H]

Even though the person is insured as we know it, the fact that the policy is not qualify 'major med' under PPACA and hence 'health insurance'... wouldn't this subject the person to paying the fine-penalty-tax for not having 'major med' ins...as defined under PPACA...? If so, wouldn't that negate, or nearly so, the savings between the 'health insurance' and the exchanges' 'major medical' policy...?

The tax-penalty is graded from 2014 to 2016. As shown below, it has a minimum fixed dollar amount, and a maximum amount shown as a percentage of income. The fixed dollar amount is capped at 3 per family, and children are calculated at half the adult rate.

• 2014- $95 per adult and $47.50 per child, (up to $285 for a family), or 1.0% of family income, whichever is greater
• 2015 - $325 per adult and $162.50 per child (up to $975 for a family) or 2.0% of family income, whichever is greater
• 2016 - $695 per adult and $347.50 per child (up to $2,085 for a family) or 2.5% of family income, whichever is greater
• The penalty cannot be greater than the national average premium for a Bronze level coverage in an Exchange.
• After 2015, the penalty increases by the cost of living.

It's amazing that the media always quotes $695 as the penalty, and doesn't mention the rest. The percentage of income is significant, especially since that percentage isn't graded according to the number of people in your family. I have a family of 6 for instance, and earn more than allowable to get a subsidy. It's the middle to upper middle class that gets hit the hardest. They won't get a subsidy, will have high premiums, and the penalty calculated at a percentage of their income might be expensive.

First, here is the 400% of Federal Poverty Level, the point at which a person won't get a subsidy based on the income test alone

• Family of 1 - $44,680
• Family of 2 - $60,520
• Family of 3 - $76,360
• Family of 4 - $92,200
• Family of 5 - $108,040
• Family of 6 - $123,880
• Family of 7 - $139,720

Take an income of $100,00 as an example - the penalty/tax is $1,000 in year 2014, and $2,500 in year 2016. They might take a bronze plan or might pay the penalty and get an alternative plan depending on their situation. The same family making $250,000 would pay $2500 penalty/tax in 2014 and $6,250 (more than $500 a month) penalty/tax in 2016, so they might take a Bronze plan instead. Remember they can buy that bronze plan outside the exchange since they are not dependent upon a subsidy.

 

[SportsNut]

Thanks for the clarity on the subject Ann H. It seems that you have kept yourself very well informed on the changes as they have evolved, while I have taken the approach to not clutter the grey matter closet with the details until more is known... although health ins is not my business.

As I read through all this I can't help but wonder how many folks, the typical American lower to lower-middle class... you know the ones that live on the edge continually, will be pushed over the edge by the forced penalty-tax-ins prems...? It seems that it will become a factor for some. Then what about the other unintended consequences... the families that are making just fine but will be forced to spend more oop for health ins and health care with higher oop expenditures than previously... and those dollars now going to health care and ins costs are not being spent elsewhere. Who takes up the slack in keeping the economic engine moving when these dollars are sucked from other commodities...? I guess we will see the effect in due time. I fear the picture will be about 80-90% of the population less than satisfied with the 'new program' being forced down their throats. Gag!

 

[somarco]

Fixed-Benefit Insurance - Overview | Assurant Health Insurance

http://www.assuranthealth.com/AssurantHealth/pdf/PlansChartBC.pdf

I heard somewhere that foreign insurers (like perhaps Fortis) were not subject to PPACA...

Can't say, but I do know Fortis does not issue policies any more and haven't in a while. Assurant plans are issued by Time or John Alden, not Assurant (or Fortis).

Policies from non-admitted carriers such as Lloyds would normally be excluded. Not saying we will see a rash of plans from folks like Lloyds, Tokio Fire and Marine, Nippon, etc but you never know.

If Obama wins, I expect some of these loopholes to be difficult to jump through. I would expect HHS to issue their opinion that efforts to slightly modify a contract to avoid a law is not allowable. However, there seems to be some valid loopholes, and there certainly is a market for it.

And if Obama loses the new HHS Sec. will have his/her hands full. That should be real interesting.