Covered California’s premiums jumped 13.2% for 2017, up from about a 4% increase in each of the past two years. However, most consumers will see a much smaller increase or pay less next year if they switch to another plan. California executive director Peter Lee said, “Shopping will be more important this year…Almost 80% of our consumers will be able to pay less than they are paying now, or see their rates go up by no more than 5% if they shop and buy the lowest-cost plan at their same benefit level.”
While premiums will rise, the subsidies will rise as well. About 90% of Covered California enrollees get help to pay for their premiums. The average subsidy covers roughly 77% of the consumer’s monthly premium. “Even though the average rate increase is larger this year than the Past two years, the three-year average increase is 7% – substantially better than rate trends before the Affordable Care Act was enacted,” Lee said.
| Covered California Premium increases | 2014-2015 | 2015-2016 | 2016-2017 | 3-year average |
| Average weighted increase | 4.2% | 4% | 13.2% | 7% |
| Lowest price Bronze plan | 4.4% | 3.3% | 3.9% | 3.9% |
| Lowest priced Silver plan | 4.8% | 1.5% | 8.1% | 4.8% |
| Second lowest priced Silver plan | 2.6% | 1.8% | 8.1% | 4.1% |
| If a consumer switches to the lowest priced plan in the same tier | – | -4.5% | -1.2% | – |
Lee said the average rate increase reflects the following factors:
- A one-year adjustment due to the end of the reinsurance funding mechanism in the Affordable Care Act. The provision was designed to moderate rate increases during the first three years when exchanges were being established. The American Academy of Actuaries estimates that this will add 4% to 7% to premiums for 2017.
- Special enrollment by some consumers who sign up only after they become sick or need care, which has had a significant effect on rates for two insurance plans.
- The rising cost of health care, especially for specialty drugs.
- Pent-up demand for health care among those who were uninsured before the Affordable Care Act.
Lee said, “Covered California is working to address some of these issues on multiple fronts. The exchange is aggressively marketing to attract healthy consumers year-round, and is working to ensure special enrollment is available only to those who meet qualifying circumstances. It is also sampling the special enrollment population to better understand how to make any further improvements needed.”
Covered California is reducing the number of services that are subject to a consumer’s deductible. Starting in 2017, consumers in Silver 70 plans will save as much as $55 on an urgent care visit and $10 on a primary care visit. Consumers in Silver, Gold, and Platinum plans will pay a flat copay for emergency room visits without having to satisfy a deductible, which could save them thousands of dollars.
These improvements build on features already in place that ensure most outpatient services in Silver, Gold and Platinum plans are not subject to a deductible, including primary care visits, specialist visits, lab tests, X-rays and imaging. Some Enhanced Silver plans have little or no deductible and very low copays, such as $3 for an office visit. Consumers in Covered California’s most affordable Bronze plans can see their doctor or a specialist three times before the visits are subject to the deductible.
The contract with health insurers for 2017 ensures that consumers select or are provisionally assigned a primary care physician. Below are the companies selected for the 2017 exchange:
- Anthem Blue Cross of California
- Molina Healthcare
- Blue Shield of California
- Oscar Health Plan of California
- Chinese Community Health Plan
- Sharp Health Plan
- Health Net
- Valley Health Plan
- Kaiser Permanente
- Western Health Advantage
- A. Care Health Plan
The following carriers are increasing their coverage areas in 2017:
- Oscar will be entering the market in San Francisco, Santa Clara, and San Mateo counties.
- Molina will expand into Orange County.
- Kaiser will be available in Santa Cruz County.
With the expansion of carriers, 93% of consumers will be able to choose from three or more carriers, and all will have at least two to select from. In addition, more than 93% of hospitals in California will be available through at least one Covered California health insurance company in 2017, and 74% will be available in three or more plans. Rate details by pricing regions can be found in Covered California’s Health Insurance Companies and Plan Rates for 2017, posted online at: http://coveredca.com/news/pdfs/CoveredCA-2017-rate-booklet.pdf.
Sovereign Health Sues Health Net Over Rehabilitation Providers
On June 30, 2016, behavioral service provider, Sovereign Health, filed a lawsuit against Health Net for refusing to reimburse about $55 million in services to Health Net insureds. While Health Net had always failed to reimburse Sovereign Health in full, it paid only 36% of Sovereign Health’s claims in 2015 and only 3% in 2016, resulting in a massive $55 million receivable for the provider, according to the lawsuit. Sovereign says that the insurer has also refused to pay scores of other rehabilitation treatment centers throughout California, prompting the DMHC to open an investigation into Health Net The case is pending in Los Angeles Superior Court.
Blue Shield of California Sues CenCal for Allegedly Dumping Medi-Cal Patients
Blue Shield of California filed a lawsuit against Santa Barbara/San Luis Obispo Regional Health Authority, CenCal Health. Blue Shield alleges that CenCal avoided paying millions of dollars in medical care claims by signing up about 40 of its very ill members into Blue Shield’s individual health plans and paying the premiums on their behalf. The California Dept. of Health Care Services took action in December to prohibit CenCal from signing up new members under this scheme, but 21 members remain on Blue Shield’s rolls. The suit alleges that CenCal Health collected Medi-Cal payments from the state for these members while shifting the medical costs to Blue Shield.
Blue Shield of California said, “If these members no longer have Blue Shield coverage, they will still get all their medical services with much lower cost-sharing through their CenCal Medi-Cal coverage, largely from the same medical providers…These types of financially self-interested third-party payment schemes are spreading across the nation, resulting in higher individual market rates that threaten the viability of the Affordable Care Act and Covered California.”
Whistle blower Lawsuit Results In $30 Million Settlement With Bristol-Myers
Insurance Commissioner Dave Jones reached a $30 million settlement with pharmaceutical giant Bristol-Myers Squibb over allegations of drug marketing fraud and physician kickbacks. The settlement stems from charges in a whistle blower lawsuit filed by three former Bristol-Myers Squibb sales reps.
The lawsuit alleged that sales representatives defrauded private commercial health insurers by using kickbacks to procure patients or clients. The kickbacks were designed to increase physician prescriptions of several drugs produced by Bristol-Myers Squibb. Bristol-Myers Squibb gave physicians and their families gifts and cash to induce them to increase prescriptions. Enticements included the following:
- Box suites at sporting events.
- Enrollment in a Lakers basketball camp for doctors and their children.
- Pre-paid golf outings at luxurious golf courses.
- Tickets for physicians and their families to see Broadway plays.
- Monetary incentives for doctors responsible for prescription-drug decisions in formularies.
- Lavish dinners, resort hotel trips, and concert tickets for large-volume prescribers.
Consumer-Driven Health Plans Gain Ground
Thirteen percent of the privately insured U.S. population was enrolled in a consumer-driven health plan (CDHP) in 2015, according to a report by the Employee Benefits Research Institute. Sixty-three percent of those enrolled in CDHPs had an HSA; 13% had an HRA, and 24% had the option of an HSA-eligible health plan, but had not opened an HSA. For more information, visit ebri.org.
70% of House Supports Repealing the Cadillac Tax
Three hundred members of the House of Representatives signed on to legislation to repeal the Cadillac tax. Rep. Frank Guinta (R-NH) introduced H.R. 879, and Rep. Joe Courtney (D-CT) introduced H.R. 2050. The number of cosponsors signifies that nearly 70% of members in the House support the effort to repeal the Cadillac Tax. Congressman Frank Guinta (R-NH) said, “One way or another, the Cadillac Tax will meet its end. Three hundred cosponsors of legislation to permanently ax the tax is a milestone.”
The Cadillac Tax is a 40% tax on the cost of employer-sponsored health coverage that exceeds certain benefit thresholds – initially, $10,800 for self-only coverage and $29,100 for family coverage in 2020. More than just premiums are counted when determining the cost of the plan. The cost of wellness programs, on-site clinics and other plan features designed to reduce plan expenses are also included, so virtually everyone in an employer-sponsored plan would be affected. James Klein, president of the American Benefits Council, said “This tax does not just affect high value plans. It will hit workers, retirees, and families with ordinary coverage who have the misfortune to suffer catastrophic health events or have chronic conditions that are expensive to treat.” For more information, visit fightthe40.com.
Dental Coverage Legislation
Senators Pat Roberts (R-KS) and Michael Bennet (D-CO) introduced bipartisan legislation to clarify that people outside the public exchanges can have the same choices for dental coverage as people inside the public exchanges. The Aligning Children’s Dental Coverage Act (S. 3244) is a companion to HR 3463, sponsored by Representatives Morgan Griffith (R-VA) and Diana DeGette (D-CO).
Inside the exchanges, parents can pick stand-alone dental benefits for their children as an option. About 99% of Americans select dental coverage separately from their medical coverage. But, outside the public exchanges, the Affordable Care Act isn’t clear on whether families can purchase stand-alone dental plans as part of the required pediatric dental care benefit. As a result, individuals, employers, and carriers are confused about what coverage options are available.
Jason Daughn, vice president of government relations for Delta Dental Plans Assn. said, “The Senate and House legislation offers a simple, but crucial solution to ensure that families across the nation continue to have the access they need and the choices they deserve in obtaining dental benefits. This is a common sense solution to an issue that could pose big problems to families and children across the nation.”
What Employers Need to Know about Transgender Rights
Forty-eight percent of employers showed bias against hiring a transgender person even when the applicant was more qualified than others. Also, nearly 90% of transgender people report workplace harassment, according to a recent survey led by the D.C. Office of Human Rights. Rob Wilson of Employco USA, says that the case of Macy vs. the Dept. of Justice sets a legal precedent that prevents employers from refusing or rescinding job offers when finding out that a person is transgender. Wilson said that employers should also consider the following:
- Legal documents may not match the applicant’s or employee’s preferred name/pronoun.
- On official legal forms, you must use the name and gender on the identification the employee gives you, regardless of how they present themselves in person. However, just because you must do so on the legal forms, it does not mean you must do so on the company website or the person’s business cards, etc. Instead, use their preferred name.
- Ask what pronoun they prefer.
- Ask if they want the other staff to know any details about their gender identity, and respect their choice.
- Allow them to use the bathroom of their choice. OSHA recommends that employers permit employees to use the bathroom of their choice, meaning that a transgender female should be allowed to use the female bathroom, or a transgender male should be allowed to use the male bathroom.
- Have an office-wide meeting to let all managing personnel know about how these issues will be handled.
- Update employee handbooks to reflect that discrimination against transgender employees will not be tolerated.
- Update the office dress code policy. Instead of saying, “Men must wear slacks,” or “Women must wear skirts,” say “Business casual is required,” or “No ripped clothing, or logos, etc. are allowed.”
For more information, visit employco.com.
Harris Poll’s Top Brands
The Harris Poll released its annal list of top ranked brands among consumers. The following are the top health insurance brands of the year:
- Blue Cross and Blue Shield
- UnitedHealthcare
- Kaiser Permanente
- WellPoint
The following are the top life insurance brands of the year:
- State Farm
- American Family
- AAA Life
- Transamerica
For more information, visit theharrispoll.com/equitrend-rankings/2016.
When Long-Term Care Insurance Benefits Run Out
A relatively new type of long-term care policy, “Partnership Plans” could be a good option for many consumers, says Denise Gott, CEO of ACSIA Partners. The Partnership Long-Term Care Insurance Plans emerged over two decades with little fanfare. These plans are now available in a majority of states, but most consumers don’t know about them.
Partnership Plans are private long-term care insurance policies that let people keep some or all of their assets if they exhaust their policy’s benefits and then apply for Medicaid. With a Partnership Plan, you can maintain a higher level of wealth and still qualify for Medicaid.
The American Assn. For Long Term Care insurance explains that the Long Term Care Partnership Program is a joint federal-state policy initiative to promote the purchase of private long term care insurance. There is an important benefit to purchasing a Partnership-qualified long term care insurance policy. Policyholders earn one dollar of Medicaid asset disregard for every dollar of insurance coverage paid on their behalf. Here’s an example. Stephanie has a Partnership-qualifed policy, which has paid out $150,000 of insurance claim benefits. She earns a Medicaid asset disregard that allows her to keep an additional $150,000 over the asset level she would have had to meet to be eligible for Medicaid. The Partnership Program also protects those assets from Medicaid estate recovery after death.
Gott explains, “This can make a huge difference. You no longer have to impoverish yourself to get public assistance. Middle-class families can keep solvent and keep productive longer as a result. Knowing you’ve got this backup can give you an extra incentive to protect yourself with LTC insurance in the first place. That’s why Uncle Sam and the states set it up. Some people may choose a less expensive policy with more limited benefits, knowing the public backup is there.”
Gott said, “To get a state-approved Partnership Plan, you need to take care, Not all of today’s long-term care policies fit the category. You need to seek out one of the relatively few approved policies now available.” For more information, visit acsiapartners.com or aaltci.org.
Younger Consumers Favor Income Stream Life Insurance Benefits
Forty percent of consumers under 40 prefer a monthly life insurance income benefit while about 30% favor a lump-sum payment, according to a LIMRA survey. Scott Kallenbach of LIMRA noted that life insurance is most often paid as a lump sum. But the study reveals that products offering monthly income would have strong appeal among younger and middle class consumers. Offering these products could be a way to reach these consumers more effectively. Sixty-one percent of all consumers own life insurance to replace lost income, and 44% own life insurance to supplement retirement income. When consumers were asked about a policy that could change with their needs, 70% expressed interest with one third being very or extremely interested in these flexible products.
Legal Services
Epoq North America launched LawAssure as an employee benefit. LawAssure is available to qualified group benefit brokers and advisors and to insurance carriers, third party administrators, and others that support broker networks. LawAssure says that its low price point can help brokers and advisors take advantage of the popularity of this type of benefit. Those who qualify for the LawAssure program can price it to meet their client’s needs or wrap it into their own solutions at no charge to the client. For more information, call 323-974-3838 or email clifford@epoqlegal.com.
Videos on Selling Individual Disability Insurance
MetLife’s departure from fully underwritten individual disability insurance (IDI) sales has many insurance producers wondering what’s next for their clients, longtime IDI carriers are continuing to make investments in the category to support producers in their sales. Standard Insurance Company has released a series of videos that producers can use to help aid in awareness of IDI and highlight the importance of income protection. To learn how IDI can help protect a client’s paycheck, visit:
https://www.standard.com/individual/insurance/individual-disability/help-protect-your-paycheck
To learn how IDI can help protect a client’s lifestyle, visit:
https://www.standard.com/individual/insurance/individual-disability/help-protect-your-lifestyle
To learn how IDI can help protect a client’s business,
visit: https://www.standard.com/individual/insurance/individual-disability/protect-your-business
Guaranteed Lifetime Income Annuity
Bankers Life and Casualty Company introduced a guaranteed lifetime income annuity (GLIA). The single-premium fixed indexed annuity can help consumers accumulate savings with the opportunity to select a guaranteed income stream. Customers can choose a guaranteed, predictable income stream for life without having to annuitize their policy. For more information, visit bankerslife.com.
Integrated Employee Benefits
The Hartford has integrated dental and vision coverage with group disability and life insurance. Brokers can now create comprehensive benefit packages for small businesses with fewer than 50 employees. The dental and vision coverage has been added to The Hartford’s online benefit quoting platform. Using the secure platform, brokers can get a quote and proposal for disability, life, accidental death & dismemberment, dental, and vision coverage for companies with four to 49 employees. The web-based resource allows brokers to use real-time data and e-signatures. Dental and vision policies are underwritten by United Concordia Dental carriers and administered partly by The Hartford’s third-party administrator. For more information, visit thehartford.com.
Online Hospital-Shopping
DoctorGlobe is a new hospital-shopping platform that helps self-funded companies and their employees find better care for less. A proprietary algorithm ranks more than 120 surgery procedures among 2,800 hospitals, ensuring that every plan participant can seamlessly find, compare, and reserve their care. For more information, visit doctorglobe.com.