10 Critical Health Insurance Questions You Should Ask Right Now

Health insurance will undergo significant changes in 2014, and many American families are wondering how to plan for them. Whether you have health insurance through an employer or buy it on your own, here are ten questions you and your family should ask right now.

Did you know the answers for your family?  We invite you to share your thoughts and questions.

For more information on ways you can take advantage of ACA strategies, please contact us at Soter Healthcare.

What If American Medical Care Ran Air Travel

The American medical care system is often called one of the best in the world.  In some ways, it is a fair observation.  We have greater access to state of the art medical technology than almost any other nation.  Our doctors are skilled and well-trained.  Most communities have access to a hospital.  Major diseases and injuries are treated well, although sometimes we have to travel to get to a specialty hospital or physician.  Oh, and sure, there are some conditions that are better treated in international hospitals, but we don’t really worry about that unless we have one of them.

What about the process we go through to access medical care?  Unfortunately, it’s often not so easy.  We call for an appointment and wait anywhere from days to weeks.  Each time we visit a medical provider, we are asked to fill out forms with the same information as if we’ve never done it before.  When we do see the doctor, he asks a few questions, checks a few things and may refer us to another doctor for whom we have to another few weeks.  We are sent to yet another place for tests, imaging or other diagnostic work, even though we may have just had the same test done last week, then back to the specialist again.  We try to manage the costs of medical care and the impact on out-of-pocket expenses with health insurance by asking about the costs of a procedure only to be told we don’t know because of your insurance coverage.

Have you ever wondered what it would look like if that same system existed in another industry?  Recently, we came across this piece adapted from an article by Jonathan Rauch that shows what might happen if air travel worked like American medical care.

Have you had similar medical care experiences?  What do you think will happen with the millions of newly insured people from the Affordable Care Act? We’d love to hear from you.

Confused About the Affordable Care Act?

If you find the Affordable Care Act confusing, you aren’t alone. Thousands of business owners and executives are looking for answers.

Regulations are still being developed and published.  Information ranges from  helpful to inaccurate, and it is hard to know which is which.  Deadlines are delayed because information or infrastructure is not ready.  It is confusing.

There are some things that remain clear.  Government at the federal and state levels continue to forge ahead with development of the new health insurance exchanges.  The Employer Shared Responsibility (employer mandate) will become effective in 2014, and employers across the United States are looking for help in understanding how it will apply to them.

Here’s where some of the confusion enters.  The Affordable Care Act uses full-time employees in some of its provisions but full-time equivalent employees in another.  This is especially important when looking at whether a company exceeds the “50 employee” threshold.  Many authors refer to it as 50 full-time employers; however, this is not correct.  The requirement is actually based on full-time equivalent employees.  Consequently, a small business with 45 full-time employees might be subject to the employer mandate if it has enough part-timers to push it over the threshold.  Even then, however, the Affordable Care Act only requires that employers cover full-time employees.

Employers also ask about what the fines and penalties are and how they might apply.  What many people don’t know is there are actually two separate penalties.  One applies where an employer does not provide health insurance.  A separate penalty applies when offered coverage does not meet affordability or minimum value requirements.  In either case, penalties only apply if an employee purchases health insurance through a health insurance exchange.

To help you start cutting through the confusion, we designed some simple, FREE tools to help get you started in finding the answers you need.

For more information or help in assessing the ACA’s effects on your company, contact us at Soter Healthcare.

An Affordable Care Act Quiz for All of Us

The Affordable Care Act promised to deliver significant changes in health care and health insurance.  During the past two years, we’ve learned a great deal about what is included in this sweeping new law.  As with most wide-ranging laws, it can be hard to get the real facts and all too easy for misinformation about the law to spread.  Many people are surprised to find they don’t know this important new law as well as they thought.  Are you one of them?

Take our 20 question quiz to see how well you really know what’s in the Affordable Care Act.

5 Must-Fix Items in the Affordable Care Act: Higher Insurance Costs

Supporters of the Affordable Care Act told us the law would make medical care and health insurance less expensive.  Advocates said there were several reasons.  More people will have insurance, including a lot more healthy young people.  Competition created by health insurance exchanges will bring prices down.  More people would gain access to preventive care.    

However, other parts of the Affordable Care Act got less attention.  These include some on which we commented earlier.  The question is what these changes and others do to the affordability promise.  In this last part of our series, we’ll look an issue that is surprising even supporters of the law.

Required Fix #5 – The Affordable Care Act’s Higher Health Insurance Premiums

Despite its supporters’ promises, the Affordable Care Act will lead to increases in the health insurance premiums.  For some Americans, the increased costs will be hidden by government subsidies that limit a family’s health insurance to 9.5% of its income, as long as the family income is less than 400% of the poverty level.  People who do not qualify for premium subsidies are not as lucky.  

Insurance companies and consultants who have worked on health insurance reform agree rates are going up under the Affordable Care Act.  In a recent presentation to agents, United Healthcare estimated individual  rates would double.   Small group rates, they said, may increase 25% to 50%.  Other insurance carriers are talking about similar rate changes. In a report for the State of Oregon, Wakely Consulting Group, a Massachusetts firm associated with health reform there,  estimated individual premiums will increase between  24% and 38% due to the ACA changes, before premium tax credits. 

At Soter, we decided to put the premium ranges to a test.  Contact us to request a copy of the results.

Here are just a few of the reasons we believe Americans will see premium hikes.

1.  The ACA prohibits using health conditions for underwriting.

This one is nonsensical and one of the biggest failings of the Affordable Care Act.  Historically, health insurance has evaluated an applicant’s medical condition, much as auto insurance has considered someone’s driving record.  In auto insurance, a driver with an excellent record gets preferred rates over one with many tickets and several accidents.  In health insurance, a person with a history of chronic or major health conditions would pay a higher rate than a healthier person.  Jonathan Gruber, the MIT economist and chief architect of the Affordable Care Act, now concedes his economic formula did not adequately include this factor and admits the ACA will result in premium increases.

Effective in 2014, the Affordable Care Act prohibits medical history and current health as an underwriting criterion.  Insurance companies will only be permitted to consider age, family size, tobacco use and geographic area.  Consequently, two 30-year-old men will receive the same premium, even if one is in excellent health and the other has chronic liver disease and cancer.   For healthy people, especially healthy, young people, the effect of this community rating method will be significant.  Many expect insurance companies will drop preferred rates for healthy people and the associated premium increases will be between 35% and 66%.

2.  The ACA institutes more coverage mandates.

The Congressional Budget Office commented in 2010 that premiums for many people might go down by 7% to 10%, provided they had the same coverage [emphasis added].  The problem is that many people will not have the same coverage.

The Affordable Care Act defines ten categories of “essential benefits” insurance policies must cover.  These include items many health insurance policies offer as options, including substance abuse coverage, mental health benefits, behavioral health benefits, and pediatric dental and vision coverage.  In order to comply, millions of people will have to buy more coverage than they now have.  In some cases, it may also require them to buy more coverage than they may want or need.  In our tests, we found adding coverage to follow essential benefit requirements tacks on 4% to 26%, depending on the benefit or benefits added.

3.  The ACA imposes new taxes and fees.

Beginning in 2014, the ACA imposes a new sales tax on health insurance plans that sell policies to individuals, small businesses and beneficiaries enrolled in Medicare and Medicaid managed care.  While one of the goals of the ACA is to make coverage more affordable, the new tax on health insurance will have the opposite effect.

The Congressional Budget Office has said that this tax will be passed along to individuals and small businesses in the form of higher health insurance premiums. According to Doug Holtz-Eakin, former director of the Congressional Budget Office, this tax will add about 3% per year  to the average family premium.

4.  The ACA caps small business deductibles.

The Affordable Care Act caps deductibles for small businesses at $2,000 for individuals or $4,000 for families.  Rather than repeating it here, see our earlier post on the premium impact of this limitation.

5.  Subsidies don’t change the costs of products or services.

The Concise Encyclopedia of Economics describes a subsidy as “Financial assistance…to a person or group to promote a public objective…Although subsidies exist to promote the public welfare, they result in either higher taxes or higher prices for consumer goods.”

The Affordable Care Act relies on two government subsidies to make health insurance affordable: expanded Medicaid eligibility and premium assistance credits.  Neither changes the cost of health insurance.  They simply give financial assistance to promote the idea that government support is creating affordability.  In reality, the subsidies shift the financial burden to families that do not quality for assistance and to the government.

The Affordable Care Act needs attention before Americans are priced out of the health insurance that was supposed to become more affordable.

Will you going be able to afford the ACA’s premium increases?  We want to hear from you.