Small Group Stays

[ABC]

I just learned some very interesting fact about the exchange.

Cost sharing subsidy is only available for people making 250% of poverty level. Can only elect the silver plan.

Tax credits are available for people over the 250% but below the 400% of FPL.

After learning this information, I feel the small group market stays.
There might be some groups that drop because of price but the exchange is not going to be the market but more of a high risk pool and plans for the working poor. I could rattle off the SIC codes that could drop but most of them have already dropped.

 

[Ann H]

I just learned some very interesting fact about the exchange.

Cost sharing subsidy is only available for people making 250% of poverty level. Can only elect the silver plan.

Tax credits are available for people over the 250% but below the 400% of FPL.

After learning this information, I feel the small group market stays.
There might be some groups that drop because of price but the exchange is not going to be the market but more of a high risk pool and plans for the working poor. I could rattle off the SIC codes that could drop but most of them have already dropped.

I agree with you that a lot of the small group market will stay. But I expect a good percentage of my small group block to drop the group plan because of subsidies that are available. For year 2013, 400% of FPL is $92,200 for a family of four and $44,680 for a single person.

The tax credits (premium subsidies) are available to those making 133% to 400% of FPL (under 133% goes to Medicare). If you are between 133% and 250% you get BOTH the premium subsidy and cost-sharing subsidy. The premium subsidy is based on the 2nd lowest cost Silver plan. Some states might say that the lowest income brackets can only elect the silver plan, but Dave020 reported that CA backed off from that decision and instead said they would just not encourage any of them to purchase a rich plan while on subsidies.

One of the main reasons the small group market may stay is because we expect the exchange to use very narrow networks and HMO-style restrictions like PCP gatekeeper, referrals to specialists, pre-certs for everything, and very restricted Rx formularies.

 

[Dave020]

According to CA HBEX, those 133%-250% can purchase any plan tier in the exchange that is available. They will receive subsidy based on the Silver tier but can apply that silver-level subsidy to any other tier level and pay the difference for say Gold or Platinum.

I would not expect to see a heavy dose of Gold or Platinum plans inside of the exchanges.

 

[Ann H]

You're right, Dave, about carriers not wanting to offer Gold or Platinum. On another thread, we were just talking about the fact that the exchange regs requires each carrier who wants to participate in the exchange to offer at least 1 Silver and 1 Gold plan. I would think they would match that Gold plan with the narrowest network that meets regulations, a restricted forumlary, and HMO-style restrictions. Otherwise, it's a smorgasborg for lower-income but unhealthy enrollees. They would get premium subsidies, cost sharing subsidies and rich benefits. Adverse selection.

 

[somarco]

it's a smorgasborg for lower-income but unhealthy enrollees. They would get premium subsidies, cost sharing subsidies and rich benefits. Adverse selection.

Well what could possibly go wrong with that formula?

 

[ABC]

The exchange market will be A market and not the market.

The people that will gravitate to the exchange market will be high risk or working poor.

If the subsides was available to a house hold making $92K, the small group market would be in serious trouble. With the new regs. those subsidies are available for a household income of 4 with up to $57K.

The tax credit will be available from 250% -400% of FPL. You still have to pay the premium and then get the credit when you file your taxes. This will not be that attractive to most people.

I originally thought the subsidies would for up to 400%. There is a huge difference in households that make $57K and $92 K.

I really think the Exchange is not going to be the market but a market. I still think it's supper important that we get a fair comp for selling that market.

 

[leevena]

Well what could possibly go wrong with that formula?

For all of you have never worked in CA, may I point our what our "dear comrades" developed and marketed, PacAdvantage. All carriers included in the mix would be required to follow the 4 benefit designs, differences would be price/netowrk/brand, carriers could lose money but if PacAdvantage felt that you made too much of a profit they had the contractual right to take it away.

 

[Ann H]

The exchange market will be A market and not the market.

The people that will gravitate to the exchange market will be high risk or working poor.

If the subsides was available to a house hold making $92K, the small group market would be in serious trouble. With the new regs. those subsidies are available for a household income of 4 with up to $57K.

The tax credit will be available from 250% -400% of FPL. You still have to pay the premium and then get the credit when you file your taxes. This will not be that attractive to most people.

I originally thought the subsidies would for up to 400%. There is a huge difference in households that make $57K and $92 K.

I really think the Exchange is not going to be the market but a market. I still think it's supper important that we get a fair comp for selling that market.

ABC, I don't know where you are getting that information, but I think you may be looking at some ideas that came from fiscal cliff negotiations where conservatives recommended cutting back the PPACA subsidies.

The premiums subsidy is called the tax credit. It is both refundable and advanceable. The refundable part means that even if you do not have a tax liability, you still get the credit. The advanceable part means that the govt pays the insurance company directly, and you do not need to wait until the end of the year to get your credit.

People making 133% or less of the FPL go on Medicaid.

The premium subsidy (tax credit) is available to individuals/families making 133% to 400% of FPL. The family pays the premium up to 9.5% of their AGI (that amount is graded from 3% to 9.5% depending on income), and the premium subsidy pays the rest. To qualify, they cannot have "affordable" and "adequate" employer-sponsored health insurance. "Affordable" means the employee cannot pay more than 9.5% of his family MAGI on self-only premium (that 9.5% is graded from 2% up to 9.5% depending on income). "Adequate" means it must have the Essential Health Benefits (EHB's).

The cost-sharing subsidies are available from 100% of FPL to 250%. They bring down the deductibles, co-insurance and copays so that the member's actuarial value is 94% if income is between 100% and 150% of FPL, actuarial value is 87% if income is between 150% and 200% of FPL, and actuarial value is 73% if income is between 200% and 250% of FPL.

A person can get both cost-sharing subsidies and premium subsidies.

 

[ABC]

Maybe I am confused on how Tax credits are applied.
Tax credit - Wikipedia, the free encyclopedia
Is the IRS/HHS using a different definition.

My view is that if you are over the 250% FPL you do not qualify for the premium subsidies. In my view the insured would have to pay the full premium and then wait to get the tax credit. Is this wrong?

The majority of people will not have the up front money to pay the premium. Thus people will continue to ask their employer to provide benefits.

I view a premium subsidy and tax credit as two very different assistance programs.

I was unaware that under the law the Fed. gov. is going to subsidize actual medical claims?

Please let me know where I am going wrong with my thinking.
Thanks

 

[Ann H]

Here is a great link from Kaiser explaining the two subsidies.

http://www.kff.org/healthreform/upload/7962-02.pdf

I was initially confused by the term "tax credit" likewise. My husband is an accountant, so I know that a refundable tax credit is rare, and an advanceable refundable tax credit is even rarer.

However, in this case, when PPACA says tax credit, it means refundable advanceable premium subsidy.

Yes, the cost-sharing subsidy has not been talked about much in the press. It's for low income 133% to 250% of FPL, and it does reduce their deductibles and co-insurance and copays. I think that it's between the govt and the insurance companies, and money does not flow to the client. The actuarial value of the benefit plan actually increases, depending on the client's % of FPL. Dave020 had posted a draft document from HBEX showing different benefit plans for people in those low-income categories, and this would be an example of the cost-sharing subsidies at work.