Choppy Waters Remain for the Health Insurance Marketplace

Now that the nation has settled into the reality that the Affordable Care Act (ACA) is not going away, at least anytime soon, the challenge of providing affordable health insurance options through Healthcare.gov and some of the state marketplaces remains apparent.  Of course, if you qualify for a premium subsidy or cost sharing subsidy, the costs are much more tolerable, however, you must be able to substantiate your income, or lack thereof, through your federal tax return.  As of the end of the summer, it was projected that as many as 1.5 million persons who had received a premium subsidy in 2014 had not filed tax returns.

The challenge is complex, as the cost of sending young adults to medical school, the cost of medical equipment, drugs, research and development and administration associated with all of the required protections and technology are not cheap.  They will undoubtedly continue to rise.  Here are some hard and fast stats on what’s happening in some of the states regarding projected premiums for 2016:

·       Florida has approved an average 9.5% increase in its individual marketplace plans.  While some have actually decreased, Aetna requested a 20.9% increase and was approved by state regulators for a 13.9% increase.  The ACA marketplace plan offerings range from a 9.7% decrease by Florida Health Care Plan to a 16.4% increase by United Healthcare of Florida.  (Florida Office of Insurance Regulation via The Wall Street Journal and the Orlando (FL) Sentinel)

·       Iowa’s largest insurer, Coventry Health Care, was approved for a 19.8% increase.  Wellmark Blue Cross and Blue Shield was also granted an increase. It is projected that the rate increase will affect 35,000-47,000 policyholders.  (Iowa Insurance Division via The Des Moines Register and The Quad-City Times)

·       The average increase in Idaho is approx. 23% across the Blue Cross of Idaho Health Service plan offerings.  The increases were deemed reasonable after review by the Idaho Director of insurance.   (Idaho Officials via the AP)

·       Increases up to 25.4% have been approved in the state of Kansas. (AP)

·       Blue Cross and Blue Shield of N. Mexico has pulled out of the N. Mexico ACA Marketplace after not being able to reach an agreement on rate increases with state regulators.  BCBS of N. Mexico lost $19.2 million on 35,000 individuals covered during the last year. (Albequerque (NM) Journal)

·       The Nevada Health Plan COOP, one of the state based non-profit entities that was authorized to use federal funds to start up a health plan under the ACA, has decided to close.  Co-op CEO Pam Egan “said in a statement that a second year of high claims costs and limited growth projections for enrollment made it ‘clear’ that the insurer would have a hard time providing ‘quality care at reasonable rates’ in 2016.” Nevada Health CO-OP reported a $19.3 million operating loss last year and a $3.5 million loss in the first quarter of 2015, according to documents filed with the Centers for Medicare and Medicaid Services. (Las Vegas Review-Journal)

Not mentioned often enough is that the trend for more affordable health insurance options is through the utilization of narrow networks.  In a nut-shell, a narrow network is simply a limited choice of providers for your medical needs.  As an example, 5 out of 6 Georgia ACA Marketplace plans in the “Silver” category provide networks with a limited choice of doctors when compared to the larger networks available through plans offered outside of the Marketplace. (Atlanta Journal-Constitution)  While Georgia’s limited network situation seems to lead the nation, most states have similar circumstances in the most affordable premium categories.

The Affordable Care Act certainly has expanded the availability of health care options to many.  Like any other entitlement, it comes with a cost and sacrifices.  Taxes and fees associated with the ACA are abundant and add to the cost of providing insurance.  Additionally, the infamous “Cadillac Tax,” planned to take effect in 2018, will impose an excise tax on companies that provide a plan deemed  “To rich” based on annual premiums.  This tax is receiving much attention in the coffers of the House and Senate as it is projected to affect 1 in 4 employers.  The tax is 40% on amounts over the threshold.

Therefore, be prepared to continue to navigate through the rough waters of reality as you analyze your health insurance options.  There is plenty more to discuss, however, that is enough for now.  There will certainly be some squalls in the seas of change as we continue through the many challenges that lie within the act.

Reporting Requirements Revisited

Despite delays in the implementation of the Affordable Care Act’s (ACA) reporting requirements, 2016 is the year where the rubber hits the highway.  IRS Code section 6055 (Minimum essential coverage) and 6056 (Large employer reporting) are both required for the 2015 plan year.  What that means is that if you are a large employer (More than 50 Full-Time Employees-including Full-Time Equivalents (FTE)), section 6056 requires that you submit form 1094-C (Transmittal form) and 1095-C (Individual coverage summary), providing information necessary for the IRS to confirm coverage offered by the company is in compliance with the ACA requirements and properly identifies employees who are covered by the plan.  Section 6055 covers Self-Insured employers and Health Insurers.  For fully insured groups, the Health Insurer has the responsibility to report on behalf of the plan and to provide notice to each covered employee on form 1094-C (1095-C for Applicable Large Employers).  For large employers, the employer remains responsible for reporting the transmittal form, notwithstanding the fact that the health plan is “Fully Insured.”

Confused yet?  Well, the regulations are not easy to understand and implement, therefore, the purpose of this communication is to make you aware and to encourage you to ask questions regarding compliance.  This communication only scratches the surface of what you need to know.  Keep in mind, measuring your full-time employees is required on a monthly basis. Now is the time to be curious.

Why?  Penalties for non-compliance are stiff!  Employers that do not submit an annual return or provide individual statements to all full-time employees may be subject to a penalty up to $250 per return (Employee), with a maximum annual penalty of $3 million.

There are companies providing assistance for this reporting requirement and even they are just starting to figure out how to appropriately assist, based on final regulations that have only been available for a relatively short period of time. 

Like all other aspects when it comes to the government collecting data, it’s not simple and penalties for non-compliance are stiff, therefore, start your preparation process now.

About Hipskind Seyfarth Risk Solutions

Hipskind Seyfarth Risk Solutions offers a wide-range of insurance products for individuals and businesses of all sizes. HS Risk Solutions, located in Chicago, provides expertise in the area of health and ancillary benefits and property and casualty insurance for businesses and individuals. For more information, visit HS Risk Solutions website at www.hsrisksolutions.com or on Facebook atwww.facebook.com/HSRiskSolutions.

DISCLAIMER: Hipskind Seyfarth Risk Solutions is not providing tax advice in the above post and therefore should not be deemed as such.