Column 17 Q and A

We have been receiving some questions that I believe are of general enough interest to share this week.

Q. My insurer is cancelling my individual health plan effective 1/1/2014.  Why?  What do I do now?

There are a number of reasons the carriers are cancelling individual plans.  Some like Aetna, simply are not going to provide individual insurance any more.  They will continue to market in the group market.  Others, like Blue Shield of CA are cancelling plans in Trinity and parts of Tehama County because of the new plan designs and access to care.

There are two regulating authorities in California for insurers:  The Department of Insurance (DOI) and Department of Managed Health Care. (DMHC).  Most states only have one.  Blue Shield filed its new individual plans under the Department of Managed Health Care.  The plans are an EPO (Exclusive Provider Organization) plan.  This means that if you receive care outside of the network you receive no benefits.  Let me repeat, NO benefits. 

The DMHC requires that the plan have a hospital within 15 miles of the individual.  Because the zip code area covers so much territory that some people in the zip code are not within 15miles of a hospital, the insurer is not allowed to offer the plan anywhere in that zip code area.  IF the plan were a PPO and they at least had access to out of network care, then it might be another story.

So now you have to go shopping.  As brokers we are getting closer to being able to provide you with a complete menu of choices in our area.  The good news is that the new plans will be guaranteed issue, so you cannot be turned down or rated up for your coverage. In addition, you may qualify for subsidized premiums depending on your income.

Q. I don't qualify for a subsidy.  Why should I buy insurance on the Exchange at Covered California?

Frankly, I am not sure why anyone would want to do so if they don't qualify for a subsidy.  The application is much longer and requires a great deal of financial information.  Since the insurers are required to offer "mirrored" plans with the same rates and benefits off the exchange.  Those applications will be very simple with a few questions.  Note that the rates are the same whether or not you use an agent, so feel free to work with your local agent and not worry about paying more that you have to. 

 

Q: What is the medical device tax? Why the big fight about it right now?

A: Since the beginning of this year, medical device manufacturers and importers have paid a 2.3% tax on the sale of any taxable medical device. The tax applies to devices like artificial hips or pacemakers, not to devices sold over-the-the counter, like eyeglasses or contact lenses.

The device industry argues that this tax is an additional expense that will likely not be offset by increased revenue or sales.  They say that their customers are mostly people that already have insurance so they won't be getting new market share.

The Affordable Care Act is designed to be funded by a myriad of additional taxes and this is one.  Opponents of repealing this tax argue that once you start to give special concessions, you risk the piece meal elimination of all of the funding and then the program will fail.  It can be argued that the additional tax on capital gains will not provide additional revenue for the investor, so we should repeal that as well. But then the benefits will not be funded.  So it will be interesting to see how this is resolved.

Finally, I am happy to report that there are 5 local agents that have received their final approval and are listed on the Covered California website.  I was told by Covered California that they expected only 4000 agents to sign up to sell the products in California and yet there were over 10,000 that registered for classes and actually completed them. So it will be some time before they all are processed into the system. 

We are still waiting for final approval on some commercial plans so it is making our job a little tough for those that want to know all the options for 1/1/2014.  I confess that I am looking forward to summer of next year when we will all be saying "Remember when it was such a mess, but at least now it is all worked out!".