Terms you should know

9/9/2013 Column: Terms you should know

We are a few short weeks away from Open Enrollment.  You are going to start seeing lots of ads and promotion about the new Exchange or Marketplace.  It's important that you understand a few basic insurance terms as you are looking at coverage. The final rates are now available at www.CoveredCA.com.  It will help If you know line 38 of your 2012 tax return for the premium quote.

I am headed to Fresno on Saturday for training and I am excited to get more specific information to share.

Deductible - the dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.

Co-pay/co-payment - the amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $25 co-pay for each doctor's office visit.  This may or may not apply to the deductible.  Read the fine print!

Co-insurance - the percentage of covered expenses an insured individual shares with the carrier. (i.e., for an 80/20 plan, the health plan member's co-insurance is 20%.) If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan's stop loss amount.

Stop-loss - the dollar amount of claims filed for eligible expenses at which the insurance begins to pay at 100% per insured individual. Stop-loss is reached when an insured individual has paid the deductible and reached the out-of-pocket maximum amount of co-insurance.


I keep hearing about this notice that I have to provide for my employees.  I am a really small business with only myself and one employee.  Do I really have to do this?

Fact Sheet 14 from the U.S. Department of Labor tells us that businesses covered by the FLSA must have at least two employees, and are those that have an annual dollar volume of sales or business revenue of at least $500,000 or are hospitals, businesses providing medical or nursing care for residents, schools and preschools or government agencies.

So, if your business is subject to the FLSA, you have to give the notice to employees of coverage options to existing employees by Oct. 1, and to all new hires within 14 days. It does not matter if you have 2 or 100 employees. If you are subject to the FLSA, you have to provide the notice.

There are two notices, one if your firm offers coverage and one if it doesn't.  The website has them in a fillable pdf as well as an editable Word document.  Even if you aren't required to do so, it is probably a good idea to look at the notice and distribute it, especially if you aren't providing insurance.  This will direct them to the site where they can get some information or may prompt them to call a professional insurance broker.  The notices are due no later than 10/1/2013. http://www.dol.gov/ebsa/

My parents are legal immigrants over 65 but not yet eligible to buy into Medicare because they haven't lived in the United States for five years. Will they be able to buy health insurance on the federal exchange?

Yes, legal immigrants will be able to shop for coverage on the exchanges,. Immigrants living in the United States without legal permission, on the other hand, are not permitted to buy coverage on the exchanges even if they wish to pay the entire premium out of pocket



What is community rating and how will it affect rates?

Along with guaranteed issue, health care reform requires health insurance companies to move to modified community rating for individuals and small businesses. By pooling a group of people together, healthy people help balance health care costs for people who aren't healthy. The risk and cost is shared among everyone in the pool.

Health care reform has introduced new rules for community rating, which is why it's called modified community rating. Insurance companies can't base rates on any person's health history. Instead, rates can be based on age, tobacco use (but not in California), family size and location. The law limits how much coverage can cost. The highest rate can't be more than three times the lowest rate.  

All individual customers in a state will be in one risk pool and all small business customers will be in another risk pool. In addition: These laws prevent insurance companies from creating separate risk pools that charge higher or lower rates.

Unfortunately this new 3:1 ratio is going to raise rates for younger people.  It will also reduce rates for older, but not all that much from what I have seen.  That is why it's important that young people with a grandfathered plan must be cautious.  In 2014 new or Non-Grandfathered plans will likely have much higher rates for folks under 35.

Note: All information in this column is provided" to the best of my knowledge" subject to final regulation by the respective agencies.