No longer a federal penalty, but some states impose a penalty on residents who are uninsured
Although there is no longer an individual mandate penalty – or “Obamacare penalty” – at the federal level, some states have implemented their own individual mandates and associated penalties:
Massachusetts implemented an individual mandate in 2006, and it’s remained in effect ever since. The state has not double-penalized people while the federal mandate penalty was in effect, but starting in 2019, the state once again began assessing penalties on people who are uninsured and not exempt. The penalty in Massachusetts is calculated as 50 percent of the cost of the lowest-cost plan that the person could have purchased. There’s no penalty if your income is up to 150 percent of the poverty level. If your income is between 150.1 and 300 percent of the poverty level, your penalty is 50 percent of the premium for the lowest-cost ConnectorCare plan, and if your income is over 300 percent of the poverty level, your penalty is 50 percent of the cost of the lowest-cost bronze plan available through the Massachusetts Health Connector. Revenue generated from the penalty is used to help cover the cost of ConnectorCare coverage for people with income under 300 percent of the poverty level.
New Jersey has implemented an individual mandate, effective in 2019, with a penalty modeled on the ACA’s penalty. The maximum penalty is based on the average cost of a bronze plan in New Jersey. Revenue generated from the penalty is used to fund the state’s new reinsurance program.
The City Council in the District of Columbia approved an individual mandate, with a penalty modeled on the ACA’s penalty. The measure was signed into law by Mayor Muriel Bowser in September 2018, and took effect in January 2019. The maximum penalty is based on the average cost of a bronze plan in DC. Revenue from the penalty is used for outreach and enrollment assistance, as well as programs that improve the availability and affordability of coverage in the District.
Californiahas an individual mandate as of 2020, with a penalty modeled on the ACA’s penalty. Revenue from the state’s individual mandate is used to help cover the cost of the state’s new premium subsidies, which extend to higher income levels than the ACA’s premium subsidies.
Rhode Island has an individual mandate as of 2020, with a penalty modeled on the ACA’s penalty. Revenue collected via the penalty is used to fund the state’s new reinsurance program.
Vermont enacted legislation to create an individual mandate as of 2020, but lawmakers failed to agree on a penalty for non-compliance, so although the mandate took effect in 2020, it has thus far been essentially toothless (the same as the federal individual mandate, which remains in effect but has no penalty for non-compliance). Vermont could impose a penalty during a future legislative session, but the most recent legislation the state has enacted (H.524/Act63, in June 2019) calls for the state to use the individual mandate information that tax filers report on their tax returns to identify uninsured residents and “provide targeted outreach” to help them obtain affordable health coverage.
2014-2018: Everything you need to know about the federal individual mandate penalty
Although the ACA included provisions to make it easier to buy health insurance – including Medicaid expansion, premium subsidies, and guaranteed-issue coverage – it also included an individual mandate that requires Americans to purchase health coverage or face a tax penalty, unless they were eligible for an exemption).
But the GOP tax bill that was signed into law in late 2017 repealed the individual mandate penalty, starting in 2019(See Part VIII, Section 11081 of the text of the Tax Cuts and Jobs Act). Although the law was enacted in 2017, there was a delay of more than a year before the Obamacare penalty repeal took effect, and people who were uninsured in 2018—after the law was enacted—still had to pay the individual mandate penalty when they filed their tax returns in 2019.
The individual mandate penalty helped to keep premiums lower than they would otherwise have been. There was no Obamacare penalty back when insurers were allowed to reject applicants with pre-existing conditions, but with coverage now guaranteed-issue, it was important to have a mechanism to ensure that healthy people would remain in the pool of insureds. The individual mandate was part of that, but the ACA’s premium subsidies are likely playing an even larger role, as they keep coverage affordable for most middle-class enrollees, regardless of whether they’re healthy or not.
The Congressional Budget Office has estimated that premiums in the individual market will generally trend 10 percent higher without the individual mandate penalty than they would have been with the penalty. Unsurprisingly, most of the rate filings for 2019 included a rate increase related to the elimination of the penalty. That is now baked into the standard premiums going forward, so the higher rates apply in future years as well.
The individual mandate has long been the least-popular consumer-facing provision of the ACA, although most Americans already had health insurance before the ACA, and didn’t need to worry about the penalty for being uninsured.
It’s worth noting that the elimination of the individual mandate penalty is the crux of the Texas v. US (California v. Texas) lawsuit, which seeks to overturn the entire ACA. The case was heard by the Supreme Court in November 2020, and a ruling is expected in the spring or early summer of 2021.
Uninsured tax filers were more likely to get an exemption than a penalty
Although there were still 33 million uninsured people in the US in 2014, the IRS reported that just 7.9 million tax filers were subject to the penalty in 2014 (out of more than 138 million returns). According to IRS data, 12 million filers qualified for an exemption.
The number of filers subject to the ACA’s penalty was lower for 2015 (on returns that were filed in 2016), as overall enrollment in health insurance plans had continued to grow. The IRS reported in January 2017 that 6.5 million 2015 tax returns had included individual shared responsibility payments. But far more people—12.7 million tax filers—claimed an exemption for the 2015 tax year. For 2016, the IRS reported that 10.7 tax filers had claimed exemptions by April 27, 2017, and that only 4 million 2016 tax returns had included a penalty at that point.
As noted above, only 4 million tax returns for 2016 included the ACA’s individual mandate penalty (as of late April, 2017; people who got a tax filing extension hadn’t yet filed by that point, so the total number of filers who owed a penalty likely ended up higher than 4 million). The vast majority of tax filers had health insurance, and even among those who didn’t, penalty exemptions were more common than penalty assessments.
Most Americans already get health insurance either from an employer or from the government (Medicaid, Medicare, VA); they didn’t need to worry about the penalty because employer-sponsored and government-sponsored health insurance count as minimum essential coverage.
The IRS reported that for tax filers subject to the penalty in 2014, the average penalty amount was around $210. That increased substantially for 2015, when the average penalty was around $470. The IRS published preliminary data showing penalty amounts on 2016 tax returns filed by March 2, 2017. At that point, 1.8 million returns had been filed that included a penalty, and the total penalty amount was $1.2 billion — an average of about $667 per filer who owed a penalty.
Although the average penalties are in the hundreds of dollars, the ACA’s individual mandate penalty is a progressive tax: if a family earning $500,000 decided not to join the rest of us in the insurance pool, they would have owed a penalty of more than $16,000 for 2018. But to be clear, the vast majority of very high-income families do have health insurance.
Today, the median net family income in the United States is roughly $56,500 (half of U.S. families earn less; half earn more.) For 2018, the penalty for a middle-income family of four earning $60,000 was $2,085 (the flat-rate penalty would have been used, because it was larger than the percentage of income penalty; see details below, under “how the penalty works”). This is far less than the penalty a more affluent family would have paid based on a percentage of their income.
The penalty could never exceed the national average cost for a bronze plan, though. The penalty caps are readjusted annually to reflect changes in the average cost of a bronze plan:
The IRS announced in Revenue Procedure 2015-15 that the maximum 2015 penalty was $2,484 for a single individual and $12,420 for a family of five or more (both slightly higher than the maximum penalty amounts for 2014).
For 2016, Revenue Procedure 2016-43 increased the maximum penalty to $2,676 for a single individual, and $13,380 for a family of five or more, if they were uninsured in 2016.
For 2017, Revenue Procedure 2017-48 increased the maximum penalty to $3,264 for a single individual, and $16,320 for a family of five or more. The significant rate increases that we saw for 2017 (roughly 25 percent) mean that the average bronze plan was quite a bit more expensive in 2017 than it was in 2016. And that means that the maximum penalty was also quite a bit higher.
Rates increased considerably again for 2018, although the bulk of the rate increase was on silver plans (due to the elimination of federal reimbursement for cost-sharing reductions). According to Revenue Procedure 2018-43, the national average cost of a bronze plan increased to $3,396 in 2018 for a single individual and $16,980 for a family of five or more. This is the last year that the IRS had to calculate the national average cost of a bronze plan, since the federal individual mandate penalty no longer applies as of 2019. But as noted above, several states have or are implementing individual mandates with maximum penalties based on the average local cost of a bronze plan.
The maximum penalties rarely applied to very many people, since most wealthy households were already insured.
No longer a question on federal tax return about health coverage (but it’s still on some state returns, and Form 8962 is still applicable if you get a premium subsidy)
But since 2019, Form 1040 has no longer included that question, as there’s no longer a penalty for being without coverage.
But state tax returns for DC, Massachusetts, New Jersey, California, and Rhode Island do include a question about health coverage. Maryland’s tax return also asks about health insurance coverage, in order to try to connect uninsured residents with affordable coverage. Colorado’s tax return will have a similar feature as of early 2022 (but Maryland and Colorado do not penalize residents who don’t have health insurance).
In addition, nothing has changed about premium subsidy reconciliation on the federal tax return. People who receive a premium subsidy (or those who enroll through the exchange in a full-price plan but want to claim the subsidy at tax time) will continue to use Form 8962 to reconcile their subsidy. Exchanges, insurers, and employers will continue to use Forms 1095-A, B, and C to report coverage details to enrollees and the IRS.
How the penalty worked
[Note that in most cases, the states that are implementing their own individual mandates are following this same basic outline in terms of how the penalty works, with the details based on the federal penalty levels that applied in 2018.] Your individual mandate tax is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income (up to the national average cost of a Bronze plan , as determined by the IRS and adjusted annually to reflect changes in premiums).
This means wealthier households will wind up using the second formula, and may be impacted by the upper cap on the penalty. For example: for 2017, an individual earning less than $37,000 would pay just $695 (flat-dollar calculation) while an individual earning $200,000 would pay a penalty equal to the national average cost of a bronze plan ($3,396 for 2018). This is because 2.5% of his income above the tax filing threshold would work out to about $4,740, which is higher than the national average cost of a bronze plan. The IRS publishes the national average cost of a bronze plan in August each year; that amount is used to calculate penalty amounts when returns are filed the following year.
1) Flat-dollar amount
In 2014, the flat-dollar penalty was $95 per uncovered adult (it climbed to $325 in 2015, and $695 in 2016) plus half that amount for each uninsured child under age 18. Your total household penalty is capped at three times the adult rate, no matter how many children you have.
In 2014, that was $285 ($975 in 2015, and $2085 in 2016). Starting in 2017, the flat-rate penalty is subject to annual adjustment for inflation. But for 2017, the IRS confirmed that there was no inflation adjustment, so the flat-rate penalty continued to be $695 per adult in 2017, with a maximum of $2,085 per family. And for 2018, that was once again the case, as the IRS confirmed that the flat rate penalty would remain unchanged in 2018. After 2018, there is no longer be a penalty imposed by the IRS, although New Jersey, Massachusetts, and DC now impose their own penalties; California and Rhode Island will join them in 2020.
2) Percentage of income
In 2014, the penalty was 1 percent. It rose to 2 percent in 2015, and to 2.5 percent for 2016 and beyond.
The penalty is capped at the average cost of a Bronze plan, which for 2018 was $3,396 for an individual and $16,980 for a family of five or more (those maximum amounts are prorated monthly for tax filers who were uninsured for only part of the year). The percentage of income penalty is calculated based on the household’s income above the tax filing threshold.
For most people, “household income” is simply adjusted gross income from Form 1040. But if you have non-taxable Social Security benefits, tax-exempt interest, or foreign earned income and housing expenses for Americans living abroad, you’ll need to add those amount to your AGI from your 1040. Be sure to include income from any dependents who are required to file a tax return.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/health-reform-penalty.jpg212252wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-14 02:31:072021-01-24 00:52:08Will you owe a penalty under Obamacare?
Open enrollment for 2021 health plans will end in five states on Friday
Open enrollment for individual/family health plans ended a month ago in most of the country, but it’s still underway in ten states and Washington, DC. In five of those states, there are only a few days left. Open enrollment ends this Friday, January 15, in five states:
Residents in those states can currently enroll in a plan with a February 1 start date. But after Friday, enrollment in those states will only be possible for people who experience a qualifying event (and most qualifying events require that the person already had minimum essential coverage within the prior 60 days).
Exchange enrollment has already surpassed last year’s total
As of January 12, confirmed enrollment in individual market plans via the exchanges stood at 11.5 million, according to Charles Gaba of ACA Signups. And open enrollment is still ongoing in ten states and Washington, DC (plus a special enrollment period for uninsured Maryland residents). What’s more, four states – Idaho, New York, Rhode Island, and Vermont – haven’t yet reported any of their enrollment data for 2021 plans.
Last year, when all was said and done, enrollment reached 11.4 million, so it’s already surpassed the 2020 total – the first time since 2016 that year-over-year enrollment has grown during the open enrollment period. Once open enrollment closes in all states and final data are reported, Gaba projects that this year’s enrollment will exceed 12 million.
HHS extends COVID public health emergency through mid-April
Last week, HHS Secretary Alex Azar announced that the COVID-19 public health emergency was being extended for another 90 days, through April 21, 2021. The ongoing public health emergency – which was first declared in January 2020 and extended several times since then – plays a key role in various rules related to health insurance coverage.
In November 2019, Tennessee submitted a waiver proposal to CMS, seeking approval to transition to a block grant funding approach for the state’s Medicaid program. Last week the Trump administration announced that the state’s proposal had been approved for 10 years, with the extended timeframe intended to “reduce administrative burden and allow the state sufficient time to evaluate its innovative approach.” Instead of the open-ended matching system that the federal government uses with the rest of the states, Tennessee will have an annual spending cap, which can grow if enrollment grows, but which will not adjust to keep up with increasing healthcare spending.
In its approval letter, the Trump administration repeatedly touts the flexibility that the block grant waiver will provide for Tennessee. But block grants for Medicaid funding have been widelypanned by public health experts, and are strongly opposed by leading patient advocacy groups due to the potential for reduced benefits, increased costs for enrollees, reductions in payments to providers, and state budget shortfalls.
Although the incoming Biden administration can make changes to 1115 waivers via a review process, Margo Sanger-Katz reported last week that CMS has sent letters to all 45 states that have active waivers, asking them to sign contracts that would make it harder for a new administration to terminate waivers “on a political whim.”
CMS auditing hospitals for compliance with new price transparency requirements
The hospital price transparency rule that CMS finalized in late 2019 took effect on January 1. It requires hospitals to “provide clear, accessible pricing information online” for 300 “shoppable” services, in both machine-readable and consumer-friendly formats. And the pricing information has to include payer-specific negotiated rates, which is much more useful than hospital “chargemaster” rates that don’t really reflect the amounts that payers and consumers actually pay.
Legislation in Minnesota would expand MinnesotaCare, create a public option
HF11, sponsored by Rep. Jennifer Shultz (DFL, District 7A), was introduced in Minnesota last week, calling for various changes to the MinnesotaCare program that would allow more people to enroll. MinnesotaCare is a Basic Health Program, which provides coverage to people who aren’t eligible for Medicaid and who have household incomes of up to 200 percent of the poverty level.
HF11 would extend MinnesotaCare eligibility to undocumented immigrants, and would also eliminate the “family glitch” for MinnesotaCare eligibility. HF11 would also create a public option, via MinnesotaCare buy-in, for people with income above 200 percent of the poverty level, with a sliding fee scale for premiums. The legislation would also allow small employers to buy into the MinnesotaCare program as a means of providing coverage for their employees.
Rep. Shultz published an op-ed in the Minnesota Reformer last week, outlining her goals for health care reform and the incremental steps that Minnesota could take to make coverage and care more accessible and affordable in the state.
Utah Insurance Department proposes new minimum standards for short-term health plans
The Utah Insurance Department has proposed new minimum standards for short-term health insurance coverage, including a benefit cap of at least $1 million, copayments/coinsurance that can’t exceed 50 percent of covered charges, and various inpatient and outpatient services that would have to be covered. But the three benefit categories that are most commonly excluded on short-term plans – outpatient prescription drugs, mental health care, and maternity care – are not among the mandated benefits that the Department has proposed. The Department is accepting public comments on the proposal until March 3.
BCBS Association suspends contributions to members of Congress who voted to reject electoral college results
Last Friday, the Blue Cross Blue Shield Association announced that it was suspending political contributions “to lawmakers who voted to undermine our democracy,” referring to the members who challenged the electoral college results from the November presidential election. Numerous other companies have followed suit, including Disney and Wal-Mart, but the Blue Cross Blue Shield Association was the first major healthcare group to take this step. Others have since announced similar decisions, including PhRMA, and to a lesser degree, Cigna. The Blue Cross Blue Shield Association represents the 36 independent Blue Cross Blue Shield insurers that operate across the country, insuring more than 107 million Americans.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Tennessee has not expanded Medicaid coverage (which is called TennCare) as allowed under the Affordable Care Act, which means that there are an estimated 117,000 residents in the coverage gap — ineligible for Medicaid and also ineligible for premium subsidies in the exchange. This group is comprised of non-disabled adults with income below the poverty level and without minor children.
If the state were to expand Medicaid, at least 250,000 people (some studies have put this number quite a bit higher) would gain access to coverage, including nearly 100,000 who currently have access to premium subsidies and cost-sharing reductions in the exchange, but who would have access to much lower out-of-pocket costs under Medicaid.
But Medicaid expansion in Tennessee has been a non-starter for most Republican lawmakers, and the GOP holds a strong majority in both chambers of the state’s legislature. Instead, GOP lawmakers voted in 2018 to impose a work requirement on low-income parents who are currently eligible for Tennessee Medicaid. They propose using TANF funding to cover the cost of implementing the work requirement.
Tennessee also enacted legislation in 2019 to seek federal permission for a block grant funding model for Medicaid — an approach that Congress rejected in 2017, but that Republican lawmakers have long supported. The state’s block grant funding proposal was approved by the Trump administration in its waning days, although changes might be made under the Biden administration.
Tennessee receives CMS approval for block grant Medicaid funding
In January 2021, just days before the end of President Trump’s presidency, CMS announced that Tennessee’s Medicaid block grant waiver proposal had been approved. The waiver approval, which is valid for ten years (much longer than typical 1115 waiver approval periods), will allow Tennessee to be the first state in the nation that utilizes a block grant approach to federal Medicaid funding, although Puerto Rico has long used a block grant funding model for Medicaid, which has led to significant funding shortfalls in the territory’s Medicaid program.
The incoming Biden administration may make changes to the approved waiver, but they would have to go through a review process. It’s noteworthy that law professor Nicholas Bagley pointed out in 2019 that Tennessee’s proposal was likely not legal under the existing rules for Medicaid and the constraints of what can and can’t be changed with 1115 waivers.
In May 2019, Tennessee Governor Bill Lee signed H.B.1280 into law. The legislation directed the state to seek federal permission to convert the state’s current federal Medicaid matching funds into a block grant, indexed for inflation and population growth. The Trump administration had expressed willingness to consider such proposals, but Tennessee was the first state in the nation to enact legislation to get the ball rolling on it (and in November 2019, the White House Office of Management and Budget removed the administration’s guidance on block grant waivers).
In September 2019, Tennessee officials published the state’s block grant proposal (along with a summary and FAQ page), opening up a 30-day public comment period that ran through mid-October. During the comment period, advocates expressed concerns that Tennessee might use the waiver authority to reduce benefits for the state’s most vulnerable residents (Tennessee has not expanded Medicaid, so enrollees are all low-income and also either pregnant, elderly, disabled, children, or very low-income parents of minor children).
But the final version of the proposal, which was submitted to the Trump administration for review in November, was modified (changes noted in red font), in part to clarify that the state wouldn’t use their waiver authority to make benefit reductions, and that any benefit changes would be “additive in nature” (i.e., the revised proposal states that Tennessee can add benefits to the TennCare program without seeking additional CMS authority, but cannot use the block grant waiver authority to reduce the existing benefits package; the approval that CMS granted in January 2021 states that “Any coverage or benefit changes to existing populations covered are limited to those that are additive in nature, and the state is not authorized to make reductions to its current approved coverage or benefits package without approval of an amendment.“) Even so, a group of 21 prominent patient advocacy groups expressed strong opposition to Tennessee’s block grant waiver, noting that “It is irresponsible to approve this waiver during this public health crisis, and especially to do so for an unprecedented 10-year period. This waiver agreement, if implemented, will limit Tennessee’s flexibility in responding to recessions, pandemics, new treatments and natural disasters – and as a consequence moves in the opposite direction of the lessons learned from 2020.”
Tennessee’s proposal included a provision that would allow the state to share in any savings that the program generates, and was clear in noting that the state is proposing a modified block grant approach that would boost federal funding if enrollment in the program was to increase (as opposed to a traditional block grant model, which could result in a funding shortage for a state in the event of a recession or other incident that causes a sharp increase in the number of people eligible for Medicaid).
Tennessee expects the block grant approach to result in “significant additional federal funding,” and hopes to use the money to provide additional services, such as nutritional assistance, housing support, and dental care.
The state’s proposal calls for calculating the block grant based on “core medical services and related expenditures” for Tennessee’s Medicaid population, although some costs — such as prescription drugs, payments to hospitals for uncompensated care, and costs for Medicare-Medicaid dual-eligible enrollees — will not be included.
The idea of switching to a block grant model for federal Medicaid funding is not new. In 2017, the American Health Care Act (which passed in the House) and the Graham-Cassidy bill (which was introduced in the Senate but did not pass) both called for a block grant approach, and Republican lawmakers have long advocated this change. But for now, federal Medicaid funding continues to be an open-ended commitment from the federal government, with states receiving varying matching percentages to fund their Medicaid programs (in Tennessee, for every dollar the state spends on Medicaid, the federal government sends them $1.87. So federal funding covers about two-thirds of the cost of Tennessee’s Medicaid program).
Tennessee seeks CMS approval for a Medicaid work requirement, despite rejecting Medicaid expansion
Tennessee is also one of several states with Medicaid work requirement proposals that are currently pending CMS approval. Tennessee’s 1115 waiver proposal was submitted in December 2018, under the terms of H.B.1551, which was signed by Governor Bill Haslam in May 2018. In the waiver proposal that was submitted to CMS, the state notes that they received “a number of comments in opposition” to the work requirement proposal, but pointed out that state law (H.B.1551) requires the state to seek federal permission to implement a Medicaid work requirement (regardless of public opinion or comments).
The Trump administration approved Medicaid work requirement waivers for several states, but a federal judge has blocked implementation of the work requirements in some states, and the others have been paused either in response to pending lawsuits or in response to the COVID pandemic (during the COVID public health emergency period, states are receiving additional federal Medicaid funding, but are not allowed to disenroll people from Medicaid, thus effectively preventing a work requirement from being implemented). Tennessee’s work requirement is still pending CMS approval as of January 2021, and the Biden administration is unlikely to approve any Medicaid work requirements.
But under the proposed waiver, Tennessee Medicaid enrollees subject to the work requirement would have to work or participate in various community engagement activities for at least 20 hours per week in order to retain their Medicaid eligibility. The legislation also calls for the state to seek federal permission to use TANF funding to implement the work requirement, which is noted in the state’s 1115 waiver proposal.
The terms of H.B.1551 call for a work requirement for TennCare enrollees who are “able-bodied working-age adult enrollees without dependent children under the age of six.” No other exemptions were specified in the text of the bill. But the proposal that was submitted to CMS in late 2018 includes various other exempt populations, including people age 65 and older (most other states with proposed or approved work requirements have opted to exempt people at a younger age, usually closer to 55), people who are medically frail, people who are mentally or physically unable to work (as certified by a medical professional), and people who are caring for a disabled individual over the age of six (in addition to one caretaker per household who is caring for any children under the age of six). A full list of exemptions is on page 3 of the work requirement proposal, and the state also notes that they would reserve the right to temporarily waive the work requirement in counties that are economically distressed.
Since Tennessee has not expanded Medicaid, the only population that would be subject to the work requirement would be parent and caretaker relatives — a population that qualifies for Medicaid in Tennessee with income up to 101 percent of the poverty level (96 percent plus a 5 percent income disregard).
The state is proposing a monthly reporting requirement for members subject to the work requirement, but compliance would only be checked once every six months, and members would need to have been compliant for at least four months out of the six-month period in order to retain Tennessee Medicaid eligibility. Those who hadn’t complied with the work requirement (and successfully reported their compliance) for at least four months would lose access to TennCare until if and when they demonstrate one month of compliance.
Who would be subject to the proposed work requirement?
There are about 1.5 million people enrolled in TennCare, but the work requirement would not apply to the vast majority of them, including children, the elderly, and disabled enrollees. According to the fiscal note for H.B.1551, there are about 300,000 TennCare enrollees in the parent and caretaker relatives eligibility category at any given time. Roughly half of them already meet, or are exempt from, the existing TANF/SNAP work requirements in Tennessee, so they would automatically be deemed compliant with a Medicaid work requirement.
Nearly 49,000 of the remaining 150,000 enrollees are assumed to be the primary caregiver for a child under the age of six, and would thus be exempt from the work requirement. According to the fiscal note, additional exemptions, for people who are elderly, disabled, or in drug addiction treatment, bring the estimated number of people who would be subject to the work requirement down to 86,439. Assumptions about exemptions are in the accompanying fiscal note (it’s important to note that the legislation itself did not include any exemption details other than the exemption for a primary caretaker of a child under six years old — unlike otherbills that were introduced with exemption language included in the text — but the final waiver proposal did include a variety of exemptions).
Interestingly, the fiscal note stated that an estimated 1.22 percent of the parent and caretaker TennCare population would be exempt from the work requirement due to being in treatment for drug addiction, but a proposed amendment to the bill, which would have explicitly exempted people going through substance abuse treatment, was tabled in a 68-22 vote in the House. The proposed waiver, however, does include an exemption for people undergoing “inpatient or residential treatment or an Intensive Outpatient Program (IOP) for a substance use disorder.”
The fiscal note includes an estimate (based on Kaiser Family Foundation data) that 57 percent of the people subject to the work requirement are already working, leaving roughly 37,000 people who are not currently working, but who would be subject to the work requirement if it’s enacted. The state’s expectation is that about 10 percent of those people would lose their Medicaid coverage due to failure to comply with the work requirement.
It’s noteworthy that Arkansas did expand Medicaid, and thus allows able-bodied adults to be covered by the program even if they don’t have children (and the Arkansas work requirement includes an exemption for parents with children under the age of 18, while Tennessee’s proposal only exempts one parent per household if they are taking care of a child under age six). In Tennessee, the only able-bodied, non-elderly adults enrolled in Medicaid are those who have dependent children and income that doesn’t exceed 101 percent of the poverty level, since the state has steadfastly rejected federal funding to expand its Medicaid program to cover more low-income adults.
GOP lawmakers want to use TANF money to impose work requirement
H.B.1551 was amended by the House in March 2018, adding a section to the bill to require the state to also seek federal approval to use TANF (Temporary Assistance for Needy Families) funding or other federal funding to implement the work requirement. The state initially estimated that implementing the work requirement would cost more than $18 million per year in state funds, and Republican lawmakers want to use TANF money — designated to provide assistance to very low-income families — to cover the cost of imposing a work requirement that is expected to strip health coverage away from several thousand impoverished Tennessee residents (the waiver language states that Tennessee is requesting federal approval to use TANF funding to implement the work requirement “and to provide additional supports to individuals subject to the work requirement.”
Lawmakers noted in 2018 that TANF had $400 million in reserves in Tennessee, but one analysis clarifies that the surplus is due to the paltry level of support that TANF provides in Tennessee: a maximum of $185/month in benefits for a family of three.
Proponents of the work requirement and the proposed TANF funding note that one of TANF’s stated goals is to get people into the workforce and encourage self-sufficiency. But stripping low-income parents of their health insurance is not likely to prove beneficial in the quest to help people get back on their feet. And the “supports” that the state has proposed include providing Medicaid enrollees with “access to information and services designed to prepare and support persons in obtaining and maintaining employment.” And people who need to complete secondary education, “will be connected to adult education opportunities sponsored by the Tennessee Department of Labor & Workforce Development.” More robust supports, including state-sponsored childcare, transportation, Internet access, etc. are not included in the proposed waiver.
H.B.1551 passed in the Tennessee House in March, on a 72-23 party-line vote. The text of the amended legislation that passed in the House clarifies that if the federal government does not approve the use of TANF funding (or other federal funding) to implement the work requirement, the state won’t move forward with seeking a waiver to impose a Medicaid work requirement.
House Democrats tried in vain to add several other amendments to the bill, including:
An amendment to ensure that if parents of minor children were subjected to the work requirement, the state would seek to use TANF funds to pay senior citizens to provide childcare while the parents were working.
An amendment that would require the state to seek approval to use TANF funding to provide jobs, paying at least $15/hour, to people subject to the work requirement.
An amendment to exempt parents from the work requirement if they have children under the age of 12 (the bill calls for exempting parents if they have children under the age of 6).
An identical bill, S.B.1728, was introduced in the Senate in January 2018, but the Senate opted to substitute the amended version of H.B.1551 (with the requirement that the state must obtain TANF funding or other federal funding to implement the work requirement), voting on it in mid-April, and passing it overwhelmingly (23-2). In the Senate, several amendments were also rejected, including:
An amendment to add Medicaid expansion to the legislation.
An amendment to create an exemption from the work requirement for people experiencing domestic violence or acting as caregivers for other people, as well as an amendment to exempt people with bleeding disorders.
An amendment that would call for the work requirement program to end after one year if the state’s costs associated with implementing the work requirement exceeded the state’s savings from the work requirement.
Although the Senate passed the measure in April, Tennessee officials had already posted a job opening for a “Policy Analyst to implement a new Medicaid work requirements program,” before the bill was even scheduled for a vote in the Senate. Critics of the proposed work requirement have denounced the state’s decision to post the job opening before the bill has been voted on in the Senate. But Tennessee’s Medicaid program defended the job listing, noting that if the bill did not pass, the state simply wouldn’t fill the position.
Former Governor Haslam pursued modified expansion
In March 2013, Tennessee’s then-Governor, Bill Haslam unveiled his “Tennessee Plan” for Medicaid expansion. His proposal involved using federal Medicaid funding to purchase private coverage for up to 175,000 to 200,000 low-income Tennessee residents. It also called for copays for some enrollees, payment systems for providers that are based on outcomes rather than fee-for-service, and a clause that requires future renewal of Medicaid expansion to be approved by the legislature.
In November 2014, Haslam announced that his negotiations with the federal government were ongoing, and this was still the case in December, although Haslam stated he had “verbal” approval from the federal government for his plan. In January 2015, Governor Haslam called for a special session of the Tennessee legislature to address his Insure Tennessee plan.
But Senate committees shut it down
But the following month, the Senate Health and Welfare Committee voted 7-4 against Haslam’s Medicaid expansion proposal, blocking it from going any further in the legislative process during the 2015 session. Although representatives from the Tennessee Hospital Association, the Tennessee Medical Association, and the Tennessee Business Roundtable all provided support for the Medicaid expansion proposal, it was not enough to sway the conservative lawmakers who were concerned about the long-term costs to the state or the difficulty the state would face if it were to try to repeal Medicaid expansion a few years down the road.
For the record, the federal government paid 100 percent of the cost of covering newly-eligible Medicaid enrollees through 2016, and the state’s share will gradually rise to 10 percent by 2020 — but will never exceed 10 percent.
The Insure Tennessee legislation was considered again by another Senate Committee in March 2015, but it too was ultimately rejected. That version called for the state to wait until the Supreme Court ruled on King v. Burwell before proceeding with Medicaid expansion (in June 2015, the Court ruled that premium subsidies are legal in every state, thus preventing destabilization in the individual insurance market in Tennessee). It also called for a six-month waiting period before Medicaid coverage could be reinstated if it were terminated because an enrollee didn’t pay premiums, and it required the state to obtain a letter from HHS stating that Medicaid expansion could be terminated at any time, at the state’s discretion.
A variety of bills, including SJR0103, HB1324, and HB1271, were introduced to expand Medicaid during the 2015 legislative session, but none of them advanced to a full vote.
Haslam had considered calling lawmakers back for another special session to address Medicaid expansion again, but said in April 2015 that he wouldn’t do so until it appeared that legislators had softened to the idea of Medicaid expansion, or were at least beginning to agree on modifications to the current proposal. Tennessee relies heavily on uncompensated care funding from the federal government, and by the fall of 2015, it was clear that the funding was in peril. Expanding Medicaid would eliminate much of the need for ongoing uncompensated care funding.
3-Star Healthy Task Force
In April 2016, Tennessee House Speaker Beth Harwell detailed the creation of a legislative task force to address access to healthcare in the state. Democrats roundly criticized the task force, calling it a joke and noting that there were no Democrats on the task force. Governor Haslam stopped short of saying that the 3-Star Healthy Project’s formation indicated that Insure Tennessee was dead, but acknowledged that Insure Tennessee hasn’t been able to get traction with the legislature, and noted that the plan that would work best would be one that could garner support from Tennessee lawmakers.
The “3-Star Healthy Project” task force began meeting to come up with proposals that could be sent to the federal government, and by September, they had a TennCare expansion proposal ready to send to CMS, although by early November, the schedule was that it would be submitted to CMS by the end of 2016. While it was better than nothing, it was a far cry from Haslam’s Insure Tennessee proposal.
In its initial phase, the pilot program was slated to expand TennCare eligibility only to people with mental health and substance abuse disorders, and to veterans. These groups would have been eligible for TennCare with income up to 138 percent of the poverty level, under the terms of the expansion pilot.
But when Donald Trump won the presidential election in November 2016, and the TennCare expansion proposal was put on hold while the state waited to see what would happen with healthcare reform at the federal level under the new Administration. Ultimately, the ACA was not repealed (as some had expected after Trump’s victory), but the Trump Administration has opened the door for Medicaid waivers with provisions that the Obama Administration never allowed, including work requirements and block grants.
In 2018, Tennessee submitted a waiver proposal seeking permission to implement a Medicaid work requirement (aimed at the parent/caretaker population, as non-disabled, non-elderly adults in Tennessee are already ineligible for Medicaid since the state has refused to expand coverage). If approved and enacted, the work requirement would essentially be the opposite of Medicaid expansion, as it would serve to reduce the number of people with Medicaid coverage in Tennessee. Tennessee has also enacted legislation in 2019 that directs the state to seek federal permission to switch to a block grant funding model, instead of the current open-ended federal match.
Republican lawmakers introduced legislation (S.B.118 and H.B.69) in 2017, based in part on the work done by the 3-Star Healthy Task Force, calling for the state to propose a federal waiver to expand Medicaidusing a block grant. Both bills were tabled in 2017, but reconsidered in 2018. Ultimately, H.B.69 was tabled again in 2018, and S.B.118 failed in committee. Ultimately, the state has enacted legislation that simply calls for the state to seek a transition to a block grant, but without expanding Medicaid.
Medicaid expansion via Insure Tennessee was also introduced again in the Tennessee House in 2018, but did not advance. A bipartisan proposal to allow people age 55 or older to purchase TennCare (i.e., a Medicaid buy-in program) also did not advance.
Who is eligible for Tennessee Medicaid?
Because Tennessee has not yet expanded Medicaid under the ACA, eligibility guidelines are unchanged from 2013, and non-disabled, non-pregnant adults without dependent children are ineligible for Medicaid, regardless of their income. TennCare is available to the following legally-present Tennessee residents, contingent on immigration guidelines:
Adults with dependent children, if their household income doesn’t exceed 103 percent of poverty. This is one of the highest thresholds in the country among states that have not expanded Medicaid.
Pregnant women and infants under one, with household income up to 195 percent of poverty.
Children age 1 – 5 with household income up to 142 percent of poverty, and children 6 – 18 with household income up to 133 percent of poverty.
CHIP (Cover Kids) is available to children with household incomes too high for Medicaid, up to 250 percent of poverty.
How does Medicaid provide financial assistance to Medicare beneficiaries in Tennessee?
Many Medicare beneficiaries receive Medicaid’s help with paying for Medicare premiums, affording prescription drug costs, and covering expenses not reimbursed by Medicare – such as long-term care.
Enrollment in TennCare is year-round; you do not need to wait for an open enrollment period if you’re eligible for Medicaid
Tennessee uses the federally-run insurance marketplace, so you can enroll through HealthCare.gov or use their call center at 1-800-318-2596. (Use this option if you are under 65 and don’t have Medicare.)
You can go to any of the state’s 95 Department of Human Services’ offices to apply in-person. You can also use the “find local help” link on HealthCare.gov to find someone in your community who can help you enroll.
You can print a paper application (Spanish version here, and pages for additional family members are available here) and submit it to your local Department of Human Services office (click here for contact information).
Prior to 2019, the only way to enroll online was through HealthCare.gov. But after five years of delays, Tennessee debuted their TennCare Connect system in March 2019. The new program allows applicants to determine eligibility, enroll, and manage benefits online.
TennCare had initially planned to build a new system that would be functional by October 1, 2013. But that didn’t work out, and the old system didn’t have the functionality to be upgraded properly. So the state spent several years building the new system.
Tennessee Medicaid enrollment numbers
During the first open enrollment period (October 2013 through April 2014) 83,591 people in Tennessee enrolled in Medicaid or CHIP through HealthCare.gov. TennCare requested an additional $180 million from the state in late 2013 because of the rapidly increasing enrollment they were seeing soon after open enrollment began on the exchange.
As of August 2016, TennCare was covering 1.55 million people in Tennessee. A total of 1,628,196 people had coverage through Tennessee’s Medicaid and CHIP programs as of July 2016. That was a 31 percent increase since the end of 2013, despite the fact that the state had not expanded Medicaid. This is known as the “woodwork effect,” as people who were already eligible for Medicaid under the existing guidelines “come out of the woodwork” thanks to the outreach and enrollment efforts under the ACA.
Enrollment in Tennessee’s Medicaid/CHIP coverage fell sharply since 2016 amid the state’s efforts to purge children from the coverage rolls (due in some cases to paperwork falling through the cracks, and in others to families’ eligibility status changing). As of February 2019, total enrollment stood at just over 1.3 million people enrolled as of February 2019.
As of June 2020, Tennessee Medicaid and CHIP enrollment was 1,489,536.
Tennessee Medicaid history
Tennessee was among the last states to implement Medicaid, with their program taking effect in January 1969, three years after Medicaid was enacted.
TennCare was created in 1994 under a federal waiver that allowed for some deviations from the standard Medicaid program. TennCare was the first Medicaid program to utilize private sector managed care for all of its members. Initially, TennCare was available at no-cost for Medicaid-eligible residents, and also on a sliding-fee scale (premiums were subsidized) for Tennessee residents who were not able to obtain other private insurance, particularly those who couldn’t get other coverage because of pre-existing conditions.
By 1995, amid soaring enrollment, TennCare stopped accepting applications from non-Medicaid eligible adults unless they were unable to get other coverage because of pre-existing conditions. And later the “uninsurable” population eligible for TennCare was reduced by implementing income caps for their eligibility.
TennCare’s financial viability continued to be in question, and in 2005 the state removed about 190,000 beneficiaries from the program, implemented benefit reductions, and put caps on the number of prescriptions a TennCare member could get.
Eventually, Tennessee created CoverTN and AccessTN to provide coverage for certain small business groups, the self-employed, and people who were otherwise uninsurable. Following the reforms and the shift to only insuring the Medicaid-eligible population through TennCare, the program’s budget seemed to be getting back on track by the late 00’s.
When the ACA was created, it was intended that Medicaid expansion would be nationwide, so subsidies in the exchange were not designed to apply to people living below the poverty level, since they were expected to have access to Medicaid. But in 2012, the Supreme Court ruled that states could opt out of Medicaid expansion, and Tennessee is one of 19 states that have not yet expanded their programs.
Because the state has rejected Medicaid expansion under the ACA, Tennessee is missing out on $22.5 billion in federal funding from 2013 to 2022. In addition, Tennessee residents will pay $7.8 billion in federal taxes that will be used to fund Medicaid expansion in states that are expanding coverage — while getting no Medicaid expansion funds for their own state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-13 09:44:392021-01-15 14:21:15Tennessee and the ACA’s Medicaid expansion
Utah Insurance Code 31A-1-301(172) defines a short-term health insurance plan as having an initial term of less than 12 months, and a total duration of no more than 36 months, including renewals or extensions. This lines up with the federal limits that apply to short-term health plans, under a rule change that was made by the Trump administration in late 2018.
It’s noteworthy, however, that Utah’s code has changed on this matter. As of late 2018, when the new federal rules were taking effect, Utah insurance code 31A-30-103(19) — which now refers to small employer carriers and no longer defines short-term health insurance — stated that a short-term plan was a nonrenewable policy with a duration of “less than 364 days.” As long as a plan met those standards, it was not subject to the “health benefit plan” rules in Utah.
The current statute also confirms that short-term plans are not considered health benefit plans (and are thus not subject to the rules that apply to such plans), but the definition has been expanded to allow Utah’s short-term health plans to be renewable and last up to three years if the insurer chooses to offer renewability.
There are state-based filing requirements for short-term health insurance in Utah, which are outlined here.
Proposed minimum standards for short-term health plans
In January 2021, the Utah Insurance Department proposed new minimum standards for short-term health insurance plans. The Department is accepting public comments until March 3, 2021, and the earliest possible effective date for the proposed changes is March 10, 2021.
The proposed rule change calls for several minimum coverage requirements on short-term plans, including a benefit cap of at least $1,000,000, and coinsurance/copayments that cannot exceed 50 percent of the covered charges. Most of the currently available short-term health plans in Utah already have benefit caps of at least $1 million, but there are some plans with benefit caps of $500,000.
Various inpatient services would have to be covered under the proposed minimum standards, including anesthesia, prescription drugs, imaging and lab services, etc. And various outpatient services would also have to be covered, including dialysis, office visits, physical/speech/occupational therapy, and diagnostic and lab services—but notably, not prescription drugs, unless it’s related to a surgical procedure.
And mental/behavioral health services would not have to be covered, nor would maternity care. These three benefit categories (outpatient prescriptions, mental health care, and maternity care) are often excluded on short-term health plans, and Utah’s proposed minimum standards would allow them to continue to be excluded.
Which companies offer short-term health insurance plans in Utah?
Several health insurance companies offer short-term medical insurance in Utah. Early in the COVID pandemic, the Utah Insurance Department asked all healthcare insurers in the state, including those offering short-term health plans, to complete a survey indicating how their plans would cover various scenarios related to COVID-19 costs. The survey responses are linked for each of the state’s short-term insurance companies:
SelectHealth also offers ACA-compliant major medical plans in Utah. In some states, there is no overlap between the insurance companies that offer short-term policies and those that offer ACA-compliant policies.
Who can get short-term health insurance in Utah?
Short-term health insurance in Utah can be purchased by residents who qualify under the underwriting guidelines of insurers. In general, this means being under 65 years old and in fairly good health.
Folks in Utah should consider that short-term health medical insurance plans typically include exclusions for all pre-existing conditions (typically a blanket exclusion for any pre-existing condition, rather than specific exclusion riders for each condition) so these types of plans are not adequate for someone who needs medical care for ongoing or pre-existing conditions.
It’s also important to understand that although short-term plans are often more affordable than regular major medical coverage (unless the person is eligible for a premium subsidy, in which case the major medical coverage might be less expensive), they have shortcomings that can result in much higher out-of-pocket medical costs if a serious health condition arises, even if it’s not related to a pre-existing condition.
Short-term healthcare plans do not have to cover the essential health benefits, and often exclude coverage for at least some of them (maternity care, prescription drugs, and mental health care are the most commonly excluded). In addition, short-term plans generally impose benefit caps on the total amount they’ll pay for your care.
If you’re in Utah and need health insurance, check to see if you’re eligible for a special enrollment period that would allow you to enroll in an ACA-compliant major medical plan (ie, an Obamacare plan). There are several qualifying life events that will trigger a special enrollment period and allow you to buy a plan through the health insurance exchange in Utah, and these plans will offer better coverage than a short-term health insurance policy.
ACA-compliant individual major medical plans (obtained through the exchange or directly from an insurance company) are purchased on a month-to-month basis, so you can enroll in a plan even if you only need coverage for a few months before another policy takes effect. And if your annual household income makes you eligible for a premium subsidy, you can receive the subsidy for the months you have coverage, even if it’s only a few months.
Should I consider short-term health insurance in Utah?
Although short-term health plans do not provide the level of protection that an ACA-compliant plan will provide, they’re better than having no coverage at all. And there are some scenarios in which they might be your only option or your only realistic option:
If you’re newly employed and you’ve got a waiting period before your employer’s health plan takes effect (if you also have a qualifying event, you may be able to enroll in an ACA-compliant plan to cover you until your employer’s plan starts).
If you’re losing coverage under another plan mid-month and enrolling in a new ACA-compliant plan using a special enrollment period, the new coverage typically cannot start sooner than the first of the following month. So you would have a gap in coverage from the day your plan ends until the start of the next month. A short-term health plan might be the only available option to fill that window, although if COBRA or state continuation coverage is available to you, you could use that option as your fall-back instead.
If you’re not eligible for Medicaid or a premium subsidy in the exchange, the monthly premium costs for an ACA-compliant plan might be unaffordable. People ineligible for premium subsidies include:
Anyone earning over 400% of the poverty level. (For 2021 coverage, that amounts to $51,040 for a single person. If your ACA-specific modified adjusted gross income is just a little above the subsidy-eligible threshold, there are steps you can take to reduce it).
People in the ACA’s family glitch. This happens when people are employed by businesses that provide affordable health coverage to employees, but require the cost of health benefits for family members to be fully or mostly payroll deducted, resulting in unaffordable total family premiums — and yet, the family members are also not eligible for premium subsidies to offset the cost of coverage purchased in the exchange.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-13 01:01:102021-01-24 00:52:02Short-term health insurance in Utah
Since individual market coverage is regulated and marketed at the state level, a new plan is needed when you move from one state to another. But prior to 2014, health insurance was often an obstacle for people who wanted to move to a new state. In all but five states, individual market coverage was medically underwritten, so people with pre-existing conditions often found it difficult, expensive, or impossible to enroll in new coverage if they were going to need to purchase their own plan (as opposed to getting coverage from an employer, Medicare, or Medicaid).
That’s all a thing of the past, thanks to the Affordable Care Act. In every state, health insurance is guaranteed-issue for all applicants during open enrollment and special enrollment periods — and moving to a new state will trigger a special enrollment period as long as you already had coverage before your move. And the price is the same regardless of whether you have pre-existing conditions. Premiums can vary based on age, zip code, and tobacco use, so you might find that coverage in your new area is priced differently. But if you’re eligible for premium subsidies, the subsidy amount will adjust to reflect the cost of the benchmark plan in your new area.
How do I get new health insurance coverage when I move to a different state?
If you work for a large employer that has business locations throughout the country, you may find that your coverage remains unchanged with your move. But if you buy your health insurance in the individual market, you’ll have to purchase a new plan.
Individual market coverage is guaranteed-issue thanks to Obamacare, but it’s only available for purchase during open enrollment, and during special enrollment periods triggered by qualifying events. Moving to an area where different health plans are available (which includes moving to a new state) is a qualifying event, as long as you already had coverage in your prior location. (This prior coverage requirement took effect in July 2016.)
So you cannot move to a new state in order to take advantage of a special enrollment period if you were uninsured prior to the move. But as long as you had coverage before the move, you’ll have a 60-day enrollment window during which you can pick a new plan – in the exchange or off-exchange – in your new state.
It’s optional for exchanges to allow access to special enrollment periods in advance of a move (as opposed to only after the move has occurred), but there’s no requirement that exchanges offer this feature. So your enrollment period likely won’t begin until the day you move, and the earliest effective date you’ll be eligible for will be the first of the following month. (Normal effective date rules are followed in this case, which means that in most states, you need to enroll by the 15th of the month in order to have coverage effective the first of the following month; this requirement will no longer be used by HealthCare.gov as of 2022, when they will simply allow coverage to be effective the first of the month after you enroll, regardless of the date you enroll.)
That means you may end up having a gap in coverage, depending on the date you move and how far into your 60-day enrollment period you are when you select a new plan in your new state. You’ll want to find out how your current health insurance plan works in your new state; you may only have coverage for emergencies once you leave the state in which your policy was issued.
If you’re concerned about the possibility of having a gap in coverage, you could enroll in a short-term plan to cover you until your new plan takes effect. Short-term plans are not regulated by the ACA, and they don’t count as minimum essential coverage. But they’re specifically designed to cover short gaps in coverage, and they’re perfect for a situation in which your new plan will be taking effect within a few weeks and you only need “just in case” coverage in the meantime.
A short-term plan can have an effective date as early as the day after you apply, and short-term plans are available in nearly every state. Be aware, however, that they generally don’t cover any pre-existing conditions, and they can also reject your application if you have significant pre-existing medical conditions.
How will my health insurance provider network change when I move to a new state?
Particularly in the individual market, health insurers have been moving towards HMOs and narrower networks. So it’s becoming rare for plans to offer network coverage in multiple states. Be prepared for the fact that you will almost certainly have a new provider network with your new plan.
It’s also important to note that even if your health insurer is a big-name carrier that offers plans throughout the country, it will have different individual market plans in each state. So although you might have a Cigna plan already, and Cigna might also be available in the individual market in the state where you’re moving, you’ll need to re-enroll in the new plan once you move.
And although Blue Cross Blue Shield is a household name in the health insurance market, their coverage varies from state to state. The Blue Cross Blue Shield name is licensed by 36 different health insurance carriers across the country; a Blue Cross Blue Shield plan in one state is not the same as a Blue Cross Blue Shield plan in another state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/short-term-health-insurance-state-map.jpg6301200wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-11 07:52:452021-01-12 14:02:22How to keep your health insurance when you move to another state
Open enrollment for 2021 health plans in the Minnesota health insurance marketplace (MNsure) ended December 22, 2020, so a qualifying event is now necessary to enroll or make plan changes for 2021.
Six carriers offer medical insurance in Minnesota’s individual market; five of them offer plans in the Minnesota health insurance marketplace. For 2021, overall average premiums increased modestly.
This page is dedicated to helping consumers quickly find health insurance resources in the state of Minnesota. Here, you’ll find information about the many types of health insurance coverage available. You can find the basics of the Minnesota health insurance marketplace and how open enrollment and special enrollment periods work; a brief overview of Medicaid expansion in Minnesota; a quick look at short-term health insurance rules in the state; statistics about state-specific Medicare rules; as well as a collection of Minnesota health insurance resources for residents.
Minnesota’s health insurance marketplace
Minnesota’s marketplace enrollment uses a state-run exchange: MNsure. In 2017, state lawmakers voted to convert MNSure to a federally run marketplace, but the legislation was vetoed by then-Governor Mark Dayton.
MNsure is a place where people can purchase individual/family health insurance. This is a valuable service for people who are not eligible for Medicare or employed by a company that provides group health insurance. Medicaid enrollment can also be done through MNsure, although enrollment in some types of Medicaid (for the elderly, disabled, etc.) is done through the state’s Medicaid office.
For 2021 coverage, open enrollment ran from November 1 to December 22, 2020. This was one week longer than open enrollment in states that use HealthCare.gov. Enrollment is still possible for people experiencing a qualifying event, including loss of other coverage, but the application will require proof of the qualifying event.
In response to the Covid-19 pandemic, MNSure created a month-long emergency Special Enrollment Period in the spring of 2020. During that period, anyone who was uninsured could enroll without certifying the kind of “life change,” such as loss of job-based insurance, normally required for enrollment outside of the annual open enrollment period. Partly as a result of the SEP, nearly 100,000 Minnesotans enrolled in private or public medical insurance plans from March 1 through June 21.
Six insurers – Blue Plus, Group Health, Medica, UCare, Quartz, and PreferredOne – offer individual market coverage in Minnesota (Quartz is new for 2021). PreferredOne offers only off-exchange coverage, while the other five all make their plans available through MNsure. For 2021, they have implemented overall average rate increases that range from about 1 percent to about 4 percent. The insurers have varying service areas, so more plans are available in some areas than in others.
Minnesota’s enrollment dropped for the first time in 2019, when 113,552 people enrolled in individual market plans through MNsure. But it climbed again, to 117,520, during the open enrollment period for 2020 coverage, and to 122,269 people who enrolled during the open enrollment period for 2021 coverage.
Medicaid expansion and Basic Health Program in Minnesota
In February 2013, Governor Mark Dayton signed HF9, a bill that expanded access to Minnesota’s Medicaid program under the ACA. From late 2013 to August 2020, enrollment in Minnesota Medicaid plans (Medical Assistance) and CHIP plans increased by 28 percent. During the Covid-19 pandemic, enrollment in Minnesota’s managed Medicaid plans surged nearly 17% from February through October 2020.
Minnesota also established a Basic Health Program (BHP) under the ACA, and is one of only two states to do so (New York is the other). Basic Health Programs provide robust, low-premium coverage to people with income between the Medicaid eligibility threshold and 200 percent of the poverty level, as well as to legally present non-citizens with incomes below 138 percent FPL who are time-barred from enrolling in Medicaid. In Minnesota, the Basic Health Program is known as MinnesotaCare, a program that predates the ACA but was revamped to serve as a BHP as of January 2015.
Premiums and out-of-pocket costs in MinnesotaCare are lower than in plans offered at low incomes in other ACA marketplaces. At various points Minnesota lawmakers have considered extending access to MinnesotaCare to higher income levels or even all income levels, but such plans have not been enacted.
Short-term health insurance plans in Minnesota cannot last more than 185 days unless the insured is in the hospital on the day that the plan would have terminated and the insurer extends the coverage until the end of the hospital stay.
Short-term plans are nonrenewable in Minnesota, but a person can buy additional plans as long as their total time with short-term coverage doesn’t exceed 365 days out of any 555-day period – plus any days that a plan is extended to cover an insured who is in the hospital on the day the plan would have ended. Buying a new plan entails starting over with a new deductible.
In the 2010 passage of the Affordable Care Act, Minnesota’s two Democratic senators – Amy Klobuchar and Al Franken – both voted in support of health reform. Franken is credited for the inclusion of a medical loss ratio (MLR) requirement in the reform bill, which has resulted in marketplace insurers sending rebates — often substantial ones — to enrollees when the percentage of collected premiums spent on enrollees’ medical bills is below the allowable minimum.
One of the early, popular provisions of the ACA, MLR requires insurance companies to issue refunds if they spend more than 20 percent of premiums on administrative items (15 percent for large-group plans). The MLR rule resulted in $1.1 billion in refunds in 2012, and by the end of 2019, total cumulative refunds had reached more than $5 billion.
Franken resigned in 2017, and Minnesota’s Lieutenant Governor, Tina Smith, was appointed to fill his spot in the Senate. Smith then won the special election for the seat in 2018. Klobuchar also won her re-election bid in 2018, so both of Minnesota’s Senators continue to be Democrats.
Minnesota’s eight representatives split their votes on the ACA in 2009/2010, with Democrat Collin Peterson joining three Republicans in voting no. Peterson did not support 2017 House Republicans in their efforts to pass the American Health Care Act, a partial ACA repeal bill, but his votes on health care reform have been a mixed bag over the years, and he continues to represent the rural, fairly conservative 7th District, winning his 15th term in 2018.
Minnesota’s House delegation consists of three Republicans and five Democrats in 2020. Four districts (1st, 2nd, 3rd, and 8th) flipped in the 2018 election, but two flipped to the Democrats and two flipped to the Republicans.
Minnesota’s former governor, Mark Dayton, had long been a proponent of Obamacare. Dayton chose not to run for a third term in 2018, but Tim Walz, the DFL (Democratic-Farmer-Labor) candidate, won the election, so the governor’s seat continues to be occupied by a Democrat.
After Democrats gained control of Minnesota’s House and Senate in the 2012 election, legislation was passed to implement a state-run health insurance exchange. Minnesota also expanded Medicaid, which it calls Medical Assistance, to residents with household incomes up to 138 percent of the federal poverty level. Medicaid expansion was a key ACA strategy to reduce the uninsured rate. And as noted above, Minnesota also created a Basic Health Program under the Affordable Care Act, further protecting residents with income a little above the Medicaid eligibility cut-off.
Has Obamacare helped Minnesotans?
Minnesota has enjoyed a low uninsured rate for years due to generous Medicaid eligibility standards and MinnesotaCare, a health insurance program for uninsured, working residents. Under the Affordable Care Act, Minnesota not only expanded Medicaid, it also created a state-based health insurance exchange called MNsure.
As of the first half of 2020, there were nearly 107,000 people with private individual market coverage through MNsure. All of them have coverage for the ACA’s essential health benefits with no lifetime or annual caps on the benefits. And more than 59,000 of them were receiving premium subsidies that make health insurance more affordable.
According to U.S. Census data, Minnesota’s uninsured rate fell from 8.2 percent in 2013 to 4.1 percent in 2016. But it increased slightly, to 4.4 percent as of 2018, and increased again, to 4.9 percent, as of 2019. That uptick in the uninsured rate was common across the country after the Trump administration took office. It was due in part to new federal policies that undercut the ACA, but also to rising health insurance premiums — themselves due in part to Trump administration and GOP congressional actions — that made coverage less affordable for people who don’t qualify for premium subsidies.
Does Minnesota have a high-risk pool?
Before the ACA reformed the individual health insurance market, coverage was underwritten in nearly every state, including Minnesota. As a result, people with pre-existing conditions were often unable to purchase coverage in the private market, or if coverage was available it came with a higher premium or with pre-existing condition exclusion riders.
The Minnesota Comprehensive Health Association (MCHA) was created in 1976 to give people an alternative if they were ineligible to purchase individual health insurance because of their medical history. (Only Connecticut has a risk pool as old as Minnesota.)
Under the ACA, all new health insurance policies became guaranteed-issue starting on January 1, 2014. This change largely eliminated the need for high-risk pools and MCHA stopped enrolling new members as of December 31, 2013. It remained operational for existing members until the end of 2014.
Minnesotans can choose Medicare Advantage plans instead of Original Medicare if they wish to obtain additional benefits and don’t mind the restrictions (including network restrictions) that go along with having a private plan. Nearly half of all Medicare beneficiaries in Minnesota are enrolled in private plans — mostly Medicare Advantage, but also Medicare Cost plans, a form of commercial Medicare coverage that pre-dates Medicare Advantage. Minnesota has long had the nation’s highest enrollment in Medicare Cost plans, but about 300,000 enrollees had to switch to different coverage (Original Medicare or Medicare Advantage) when their Cost plans were phased out in 2019.
MNsure — the state’s health insurance marketplace, and the only place Minnesota residents can obtain financial assistance with the cost of their individual health insurance premiums.
Scroll to the bottom of this page to see a summary of recent Minnesota health reform legislation.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-10 04:26:412021-01-24 00:51:50Minnesota health insurance
Minnesota’s state-run exchange, MNsure, has five participating insurers for 2021, up from four in 2020. The exchange enrolled more than 122,000 people in individual market coverage for 2021.
As a result of the COVID-19 pandemic, MNsure joined most of the other state-run exchanges in offering a special enrollment period during which people who were uninsured could enroll in a health plan during the spring of 2020. Nearly 9,500 Minnesota residents enrolled in private plans through MNsure during this window, as well as another 13,700 who enrolled in MinnesotaCare or Medicaid (enrollment in those programs is open year-round for eligible residents).
Throughout 2017, Minnesotans who bought their own health insurance (on or off-exchange) and weren’t eligible for ACA subsidies were provided with 25 percent premium rebates from the state as a result of S.F.1, signed into law by Governor Dayton in early 2017. The subsidies helped to offset the large premium increases that applied in Minnesota in 2017, and helped to stabilize the individual health insurance market in 2017. But the premium rebate program expired at the end of 2017.
Thanks in large part to the new reinsurance program that Minnesota created (details below), premiums decreased in Minnesota’s individual market in 2018, 2019, and again in 2020, although rates increased modestly for 2021. In May 2019, Minnesota leaders reached an agreement on a budget that included an extension of the reinsurance program through 2020 and 2021 (it has already been granted federal approval through the end of 2022, but the state has to continue to cover its share of the cost; Minnesota Governor Tim Walz had hoped to implement a premium subsidy program and a new tax credit in Minnesota starting in 2020. But a compromise in the budget ended up with the state opting to continue the existing reinsurance program for two more years instead.).
Compare plans and rates in Minnesota
Open enrollment for 2021 health plans extended through December 22, 2020; Insurers implemented modest rate increases for 2021, after three years of overall rate decreases
MNsure enabled window shopping for 2021 health plans as of October 12, 2020. This gave residents a few weeks to browse the available plans before open enrollment started on November 1, 2020. And MNsure announced that open enrollment would continue through December 22, 2020, which was a week longer than the open enrollment period that applied in states that use the federally-run exchange; the flexibility to extend open enrollment is often cited as one of the benefits of having a fully state-run exchange. (MNsure had a similar extension in December 2019, for 2020 health plans).
Blue Plus: 4.21 percent increase (down from an initially proposed 7.12 percent increase)
Group Health/Health Partners (GHI): 0.67 percent increase (down from an initially proposed 4.15 percent increase)
Medica: 2.42 percent increase (down from an initially proposed 7.06 percent increase)
UCare: 1.6 percent increase (up from an initially proposed 1.39 percent decrease)
Quartz: New for 2021, so no applicable rate change
PreferredOne Insurance Company, which offers plans outside the exchange, increased premiums by 1.05 percent (down from an initially proposed average increase of 5.09 percent).
Rate changes in previous years
2015: Average increase of 4.5 percent. MNsure critics characterized the official announcement as misleading as it failed to take into account low-cost 2014 plans from PreferredOne. Consumers who bought a PreferredOne plan through MNsure for 2014 could only renew their policies for 2015 by working directly with the insurer, since PreferredOne stopped offering plans in the exchange at the end of 2014. However, PreferredOne rates went up an average of 63 percent, and consumers didn’t qualify for subsidies if they shopped outside the exchange.
2016: Average increase of 41.4 percent for the individual market, and about 38.5 for plans sold in MNsure (ie, not counting PreferredOne). Rates increased significantly in 2016 across the entire individual market in Minnesota — including plans sold through MNsure, the state-run exchange.
Approved rates for 2016 were announced on October 1, 2015, ranging from about 15 percent for Medica to 49 percent for Blue Cross Blue Shield of Minnesota. In general, the carriers cited higher-than-expected claims costs over the past year, along with the impending phase-out of the ACA’s reinsurance program as justification for their 2016 rate requests. But Governor Mark Dayton called some of the higher proposed increases “outrageous,” and promised a rigorous review of the filed rate changes and justifications. Ultimately, regulators were able to limit the highest rate increases to 49 percent — as opposed to the 54 percent that had been requested by Blue Plus and BCBS of MN — but the final weighted average rate increase in the individual market in Minnesota still ended up being the highest in the nation. But Minnesota still had the lowest overall premiums in the upper midwest (although Minnesota had the highest average rate increase in the country for 2016, they had the lowest overall rates in the country in 2014 and 2015).
Minnesota Commerce Commissioner Mike Rothman called the rate increases “unacceptably high,” and Gov. Dayton noted that he was “extremely unhappy” with the rate changes. But Rothman noted that his office “objected to all of the rates across the board,” and “squeezed out everything we could that was not actuarial justified.” In other words, the final rates, although much higher than officials and policyholders would have liked, were justified based on medical claims costs — the population enrolled in individual health plans in Minnesota was sicker than expected, and drug costs had been particularly onerous.
Only about 55 percent of people who had 2015 coverage through MNsure received premium subsidies. But due to the sharp premium increases, that had increased to about 63 percent for the people who had purchased or renewed coverage as of June 2016.
2017: When the Minnesota Department of Commerce announced health insurance rates for 2017 for the individual and small group markets, the rate hikes were somewhat reasonable in the small group market (ranging from a decrease of 1 percent to an increase of 17.8 percent), but the individual market was “experiencing serious disruptions in 2017” and “on the verge of collapse.” The four carriers that offered plans through MNsure had the following average rate increases in 2017:
Blue Plus = 55 percent
HealthPartners/Group Health (GHI) = 50 percent (HealthPartners is only offering plans in 10 of the 67 counties where they offered plans in 2016; their enrollment cap is 72,000 for 2017)
Medica = 57.5 percent (enrollment cap is 50,000 for 2017)
UCare = 66.8 percent (UCare capped enrollment at 30,000 for 2017, but only had 16,000 enrollees in 2016)
The enrollment caps that HealthPartners, Medica, and UCare employed for 2017 were approved as part of the rate review process, and are designed to protect carriers from further financial losses as they absorb BCBSMN’s enrollees who are shopping for new coverage during open enrollment.
In a news release relating to the rate announcement for 2017, the Minnesota Department of Commerce didn’t mince words. They noted that the individual market in the state was on the brink of collapse, and that they did everything in their power to save the market. While they succeeded in keeping the state’s individual market viable for 2017, with only one carrier exiting (BCBSMN, although their HMO affiliate, Blue Plus, remained in the exchange), they reiterated very clearly that substantial reforms would be needed to keep the market stable in future years, and highlighted the fact that rates would be sharply higher and that carriers would limit enrollment in 2017.
2018: Final rates for 2018 were approved in October 2017 (comprehensive information about the approved rates is here), based on the Minnesota Premium Security Plan (MSPS) being implemented but cost-sharing reductions (CSR) not being funded by the federal government (the cost of CSRs was added to on-exchange Silver plans). Average approved rate changes for MNsure insurers ranged from a 13.3 percent decrease for UCare to a 2.8 percent increase for Blue Plus. Three of the four MNsure insurers decreased their average premiums for 2018.
On September 21, MNsure had posted a notice indicating that if the reinsurance program were not approved, rates would be about 20 percent higher than they would otherwise be in 2018. Fortunately for Minnesota residents, the reinsurance program did receive federal approval, and average rates declined slightly for 2018.
But some enrollees who don’t get ACA premium subsidies still experienced a rate increase, due to the termination of the one-year, state-funded 25 percent premium rebates at the end of 2017.
PreferredOne, which exited MNsure at the end of 2014 and only offers coverage in the off-exchange market, proposed dramatically lower rates for 2018: a 38 percent average decrease if MSPS were to be approved, and a 23 percent average decrease if not. The 38 percent decrease was implemented, and no adjustments were necessary to account for CSR funding, since PreferredOne does not offer plans in the exchange, and CSRs are only available on silver exchange plans.
2019: Average premium decrease of 12.4 percent. Average premiums dropped for all five insurers in the individual market in 2019. This was the second year in a row of declining rates in Minnesota, but Blue Plus had a small rate increase for 2018, so 2019 was the first year that all five insurers decreased their average rates. Minnesota insurance regulators noted that rates in 2019 were about 20 percent lower than they would have been without the reinsurance program.
But most of Minnesota’s insurers charged higher rates in 2019 than they would have if the individual mandate penalty hadn’t been eliminated, and if access to short-term plans and association health plans hadn’t been expanded by the Trump administration. For example, UCare’s rate filing notes that while average rates were decreasing by about 10 percent, the rate decrease would have been nearly 15 percent if the individual mandate penalty had remained in place.
At ACA Signups, Charles Gaba calculated a weighted average rate decrease of 12.4 percent for 2019 in Minnesota, but noted that the average decrease would have been nearly 19 percent without those changes at the federal level.
Blue Plus: 1.5 percent decrease (Blue Plus had originally proposed a 4.8 percent increase)
Group Health/Health Partners (GHI): 1.26 percent decrease (GHI had originally proposed a 2.1 percent increase)
Medica: 1.01 percent decrease (Medica had originally proposed an average decrease of 1.4 percent)
UCare: 0.18 percent increase (UCare originally proposed a 0.3 percent increase)
PreferredOne, which only offers off-exchange coverage, reduced their rates by an average of 20 percent, on the heels of an 11 percent decrease in 2019.
MNsure enrollment reaches a record high for 2021
From 2014 through 2018, enrollment in MNsure’s individual market plans increased every year, reaching 116,358 people by 2018. Enrollment dropped for the first time in 2019, when 113,552 people enrolled in individual market plans through MNsure. In most states that use HealthCare.gov, enrollment peaked in 2016. But MNsure’s drop-off in 2019, which amounted to only a 2.4 percent reduction in enrollment, is the only time year-over-year enrollment has declined. Notably, the ACA’s individual mandate penalty was eliminated as of 2019, and regulations that the Trump administration implemented in late 2018 now make it more feasible for healthy people to use short-term plans instead of ACA-compliant plans (Minnesota has its own rules for short-term plans, but they’re more relaxed than the Obama-era federal rules that applied in 2017 and most of 2018).
For 2020, enrollment grew again, reaching a record high of 117,520 enrollees. And another record high was reached during the open enrollment period for 2021 coverage, when 122,269 people signed up for private coverage (in addition to 33,111 people who enrolled in Medicaid or MinnesotaCare, both of which have year-round enrollment).
Here’s a look at the number of people who have signed up for individual market plans through MNsure during each year’s open enrollment period:
These numbers all represent total enrollment at the end of open enrollment. Effectuated enrollment is always lower, and MNsure provides periodic effectuated enrollment data on their board meeting materials page. It’s also worth noting that the enrollment numbers reported by CMS are always lower than the numbers reported in MNsure’s press releases (for example, CMS reported an official enrollment total of 110,042 enrollees for 2020, whereas MNsure reported 117,520).
Insurer participation in MNsure: 2014-2021
2014: Five insurers offered individual policies through MNsure for 2014: Blue Cross Blue Shield of Minnesota, HealthPartners/Group Health, Medica, PreferredOne, and UCare. Kaiser Health News reported that Minnesota offered some of the lowest premiums for silver (mid-level) plans in the U.S. Four of Minnesota’s nine regions made Kaiser’s list of the 10 least expensive places to buy health insurance.
2015: But PreferredOne, which offered the lowest rates in the nation in 2014 and captured a large portion of 2014 enrollees, withdrew from MNsure for 2015. PreferredOne said remaining on the exchange was “not administratively and financially sustainable.” A Star Tribune business writer attributed PreferredOne’s departure as a market dynamics issue rather than a problem with MNsure.
However, Blue Plus (an affiliate of Blue Cross Blue Shield of MN, offering HMO plans) joined the exchange for 2015, so there were still five insurers offering plans for 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners/Group Health, Medica, and UCare. MNsure offered 84 plans statewide, up from 78 for 2014.
2016: BCBSMN, Blue Plus, Health Partners/Group Health, Medica, and UCare offered individual market plans through MNsure for 2016.
2017: In an effort to recruit more carriers to offer plans through MNsure for 2017 — particularly outside the Twin Cities metro area — state regulators sent out a request for proposals from health insurers on August 15, 2016. Regulators noted that insurers could propose waivers of regulations in order to make it feasible for them to offer coverage through MNsure, although any such waiver requests would have to be approved by regulators.
Steven Parente, a health insurance expert at the University of Minnesota, called the state’s effort to recruit insurers to MNsure a “distress call” and noted that August 15 is awfully late in the year to be putting out a request for insurer participation, given that open enrollment begins November 1. And ultimately, no new insurers opted to join MNsure for 2017.
Blue Cross Blue Shield of MN dropped their individual market PPO plans at the end of 2016 due to significant financial losses. That left Blue Plus (which offered HMOs and covered roughly 13,000 people in 2016 in the individual market) as the only BCBSMN affiliate in the exchange. Roughly 103,000 people had to select new plans during open enrollment.
Most of those BCBSMN enrollees had off-exchange coverage, though. There were only about 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who needed to switch to another plan during open enrollment. BCBSMN had individual PPO options available in all 87 counties in Minnesota through MNsure in 2016, while the Blue Plus coverage area — comprised of four separate HMO networks — was available in 77 of the state’s counties.
Nationwide, carriers have been shifting away from PPOs and towards HMOs and EPOs. In Colorado, Anthem Blue Cross Blue Shield also dropped their PPOs at the end of 2016. In Indiana, there were no PPOs available in the individual market by 2017. Blue Cross Blue Shield of New Mexico dropped all of their individual market plans at the end of 2015 except one off-exchange HMO. Blue Cross Blue Shield of Texas dropped their individual market PPO plans at the end of 2015.
Minnesota does still have PPO options available however. There are PPOs offered by Blue Cross Blue Shield of Minnesota and HealthPartners for 2021.
The broad network offered by PPOs tends to be attractive to enrollees who have health problems; they’re often willing to pay higher premiums in trade for access to broad network of hospitals and specialists. But PPOs are expensive for carriers, as enrollees don’t need primary care referrals to see specialists, and it’s more challenging for carriers to hold down costs when there are more providers in the network.
All of the MNsure carriers except Blue Plus are also limiting their total enrollment for 2017. By November 11, 2016, less than two weeks into open enrollment for 2017 coverage, Medica had hit their 50,000 member enrollment cap for 2017 (including on and off-exchange enrollments, and also accounting for expected renewals of 2016 Medica plans), and their policies were no longer available in the individual market in Minnesota, on or off-exchange. The only exception was five counties (Benton, Crow Wing, Mille Lacs, Morrison, and Stearns) where Medica agreed not to limit enrollment, as all of the other available carriers in those counties have imposed enrollment caps too. In those five counties, Medica plans continued to be available.
At that point, Medica’s market share in MNsure for 2017 stood at 34.2 percent. By December 14, Medica’s market share had dropped to 27.7 percent, as enrollments had continued to climb for the remaining carriers.
On January 31, Medica re-opened enrollment for 2017. This was because a smaller-than-expected number of 2016 Medica enrollees renewed their plans for 2017, meaning that the carrier still had some wiggle room under their 50,000 member cap; at that point, they had room for about 7,000 more enrollees. Medica plans were thus available throughout the duration of the special enrollment period that was added on at the end of open enrollment, and continue to be available for people with qualifying events.
2018: Plans continued to be available from Blue Plus, Health Partners/Group Health (GHI), Medica, UCare. In the months before a decision was reached regarding an extension of the open enrollment window for 2018 plans (the first year that the federal government imposed a shorter, month-and-a-half enrollment window), two of MNsure’s participating insurers had differing positions: UCare believed the exchange should add an additional two-week special enrollment period, while Medica did not want the exchange to have the option to extend the newly-scheduled six-week enrollment window. Notably, Medica capped their enrollment very early during the 2017 open enrollment period, and while UCare also had an enrollment cap, it was set with a target of nearly doubling their 2016 enrollment. But Medica is the only MNsure insurer that didn’t set an enrollment cap for 2018.
As was the case for 2017, enrollment caps were used in the individual market in Minnesota for 2018 by all insurers other than Medica (Medica did have an enrollment cap for 2017, which they hit very early in open enrollment; however, they resumed enrollments at the end of January 2017). Details about the insurers’ enrollment caps are in the plan binders in SERFF. For 2018, MNsure insurers implemented the following enrollment caps:
Blue Plus: 55,000 member cap (aiming for a target of 50,000 effectuated enrollees, but effectuated enrollment is always lower than the number of people who initially enroll)
Health Partners/Group Health (GHI): 73,400 member cap (aiming for a target of 70,000 effectuated enrollees)
Medica: no enrollment cap
UCare: 35,000 member cap (aiming for a target of 30,000 effectuated enrollees)
MNsure confirmed in May 2018 that none of their insurers had hit their enrollment caps for 2018.
Outside the exchange, PreferredOne had an enrollment cap of 3,000 members, although their 2017 membership was only about 300 people.
2019 and 2020: Blue Plus, Health Partners/Group Health, UCare, and Medica have continued to offer plans through MNsure, and all of them continued to participate in 2020 as well. Blue Plus expanded to once again offer statewide coverage in 2020, for the first time since 2016.
2021: Quartz joined the exchange for 2021, joining the four existing insurers. HealthPartners and UCare both expanded their coverage areas for 2021.
Minnesota Premium Security Plan: 1332 waiver proposal approved by CMS, but with a significant funding cut for MinnesotaCare
[For more than two decades, MinnesotaCare was a state program subsidizing health insurance for low-income residents. As of January 1, 2015, it transitioned to a Basic Health Program under the ACA, becoming the first BHP in the nation.]
H.F.5 created the Minnesota Premium Security Plan (MPSP), which is a state-based reinsurance program (similar to the one the ACA implemented on a temporary basis through 2016, and that Alaska created for 2017; several other states have since implemented reinsurance programs). The reinsurance program, which took effect in Minnesota in 2018, covers a portion of the claims that insurers face, resulting in lower total claims costs for the insurers, and thus lower premiums (average individual market premiums in Minnesota decreased from 2017 to 2018 as a result of the reinsurance program). The reinsurance kicks in once claims reach $50,000, and covers them at 80 percent up to $250,000 (this is similar to the coverage under the transitional reinsurance program that the ACA provided from 2014 through 2016).
H.F.5 was contingent upon approval of the 1332 waiver, because it relies partially on federal funding, in addition to state funding. Under the federal approval that was granted in September 2017, the federal government is giving Minnesota the money that they save on premium tax credits, and that money is combined with state funds to implement the reinsurance program (lower premiums — as a result of the reinsurance program — result in the federal government having to pay a smaller total amount of premium tax credits, since the tax credits are smaller when premiums are smaller).
It was expected that CMS would approve the state’s 1332 waiver proposal, and Governor Dayton requested that the approval process be swift so that the state could move forward with the implementation of the Minnesota Premium Security Plan in time for the 2018 plan year. Dayton indicated that his office had been told that approval would come in August 2017, but CMS didn’t approve the waiver until September 22. And the waiver approval letter noted that the federal savings for MinnesotaCare (the state’s Basic Health Program, or BHP) resulting from the reinsurance program would not be eligible to be passed along to the state — in other words, CMS would keep those savings instead.
[Federal BHP funding is equal to 95 percent of the amount that the federal government would have otherwise spent on premium subsidies and cost-sharing reductions for the population that ends up being eligible for the BHP. So lower premiums — as a result of reinsurance — for qualified health plans in the exchange means that the amount the federal government would have had to spend on premium subsidies for that population is lower. That translates into a smaller amount of funding for the state’s BHP, according to the approach that HHS took for Minnesota’s waiver approval.]
And based on the scathing letter that Dayton sent CMS a few days earlier, it appeared at that point that Minnesota could actually lose money on the deal — losing more in federal funding for MinnesotaCare than they gain in reinsurance funding. Dayton noted in his letter that the 1332 waiver approval process had been “nightmarish,” and that Minnesota went to great lengths to follow instructions from CMS at every turn, throughout the process of drafting H.F.5 and the 1332 waiver proposal. He explains that CMS provided Minnesota with explicit guidance in terms of how to draft the reinsurance program while maintaining full federal funding for MinnesotaCare, and highlighted the fact that the state never deviated from the instructions that were provided.
The StarTribune editorial board called out then-Secretary of HHS, Tom Price and the Trump Administration for their lack of clarity on the issue, for apparently misleading the state during the 1332 waiver drafting process, and for effectively punishing the state of Minnesota for taking an innovative approach to ensuring that as many people as possible have health insurance.
Insurers filed rates based on reinsurance being available. And by the time the waiver was approved, there was very little time to evaluate the potential impacts of the funding changes, as rates had to be finalized by October 2 in Minnesota. The finalized rates did incorporate the reinsurance program; the state has accepted the approved waiver, but Gov. Dayton sent a letter to HHS on October 3, asking them to reconsider the MinnesotaCare funding cuts, but the issue has remained unresolved.
Elimination of CSR funding results in additional funding cut for MinnesotaCare, but a lawsuit has partially restored that funding
Nationwide, 54 percent of exchange enrollees benefit from cost-sharing subsidies. But in Minnesota, only 13 percent of exchange enrollees are receiving cost-sharing subsidies. This is because of MinnesotaCare, which covers all enrollees with income up to 200 percent of the poverty level. That’s the same group that would otherwise benefit the most from cost-sharing subsidies, so the fact that MinnesotaCare is available means that most of the people who would otherwise be enrolled in cost-sharing subsidy plans are instead enrolled in MinnesotaCare.
At first glance, this would appear to have made the uncertainty surrounding cost-sharing subsidy funding in 2017 a little less of a pressing issue in Minnesota than it was in many other states, since private insurers weren’t facing the sort of losses that insurers in other states were facing without federal funding for CSR. But when the Trump Administration eliminated federal funding for CSR in October 2017, HHS took the position tha t since CSR funding had been eliminated, the CSR portion of the federal funding for the BHPs in New York and Minnesota would be reduced to $0. This was not a cut-and-dried conclusion, however, as explained earlier in 2017 by Michael Kalina.
In early 2019, the Trump administration proposed yet another funding cut (a third, after the cuts imposed by the reinsurance program and the elimination of CSR funding) as part of a new methodology for calculating BHP funding. This one was much smaller than the other two cuts, but taken together the funding reductions are pushing MinnesotaCare towards a looming budget shortfall.
SHOP exchange: down to one carrier as of 2016, zero by 2018 (and still zero in 2019)
In 2015, there were two carriers in MNsure’s SHOP exchange for small businesses: Blue Cross Blue Shield of Minnesota, and Medica. But Medica announced in 2015 that they would exit the SHOP exchange in Minnesota, North Dakota, and Wisconsin at the end of the year. That left BCBS as the only small group carrier available through MNsure in 2016, but it didn’t change much from a practical standpoint, since 83 percent of MNsure’s small groups were enrolled in plans through BCBS in 2015. Indeed, Medica’s reason for exiting the small business exchange was based on low enrollment in the first two years.
Blue Cross Blue Shield of Minnesota continued to be the only insurer offering SHOP coverage via MNsure in 2017, but announced in July 2017 that they would no longer offer SHOP coverage in 2018, and would instead transition their SHOP enrollees to small business coverage outside the exchange. At that point, there were only 3,287 people enrolled in SHOP coverage in Minnesota — far below the 155,000 people that were originally projected to have coverage through MNsure’s SHOP program by 2016 (this much lower-than-anticipated enrollment has been the case in nearly every state’s SHOP exchange; this situation is not unique to Minnesota).
State law provided 25% premium rebate in 2017; amendment to allow plans without essential benefits was cut from final legislation
Throughout 2016, then-Governor Dayton called for a state-funded premium rebate for people who buy their own insurance but aren’t eligible for the ACA’s premium subsidies (those are only available for people with income up to 400 percent of the poverty level, or $100,400 for a family of four in 2019).
Governor Dayton also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and by late November 2016, his patience with lawmakers was wearing thin. In a November 23 press conference, Dayton said that House Republicans needed to “stop dilly-dallying” and decide whether to move forward with Dayton’s rebate proposal.
Dayton had also indicated that he was considering calling a special session of the legislature after election day to address the situation, and that was being negotiated for December 20. But the talks fell through when Dayton and Republican House Speaker Kurt Daudt couldn’t agree on the three bills that would have been addressed in the special session; as a result, there was no special session.
Instead, the issue was taken up by lawmakers as soon as the 2017 legislative session began. On January 5, Minnesota Senators Michelle Benson (R, 31st District) and Gary Dahms (R, 16th District) introduced S.F.1. The bill called for using $300 million in state funding to provide a 25 percent rebate to roughly 125,000 people in Minnesota.
The amended bill was sent back to the Senate on January 23; differences between the bills that the two chambers passed had to be reconciled before being sent to Governor Dayton for his signature. By that point, the amendment to allow less-robust plans to be sold had garnered national attention, and public outrage helped to push lawmakers away from the provision. S.F.1 had also called for $150 million to be appropriated for fiscal year 2018 (through June 30, 2019) from the state general fund to a state-based reinsurance program to stabilize the individual market (Alaska did something similar in 2016, preventing a market collapse), but that provision was also removed in the final version (Minnesota did ultimately set up a reinsurance program, effective in 2018, which has served to stabilize the market and reduce premiums).
A Conference Committee in the Senate recommended that the House “recede from its amendments” and the Conference Committee report passed the Senate on a 47-19 vote. The House passed the bill a few hours later, 108-19. It was sent to Governor Dayton, who immediately signed it into law. DFLers did have to compromise on one issue during the process: S.F.1 allows for-profit HMOs to begin operating in Minnesota’s individual market, which had long been limited to non-profit HMOs.
Consumers were told to expect the premium rebates to show up by April 2017, but they were retroactively effective to January 2017. So a person who had been paying full price for a plan since January 2017 saw a substantial premium reduction on the April or May invoice. Going forward, for the remainder of the year, a 25 percent rebate applied each month.
Since S.F.1 was signed into law with only a few days remaining in open enrollment (it ended January 31 that year), Governor Dayton and exchange officials were worried that there wouldn’t be enough time for people to learn about the rebate and apply for coverage before January 31. In December, Dayton had asked HHS to allow MNsure to extend its enrollment deadline to February 28 (instead of January 31) in order to allow lawmakers more time to work out the details of a state-based premium rebate while still allowing people to enroll after the legislative process is complete.
The 25 percent premium rebate program in Minnesota was only authorized for one year, so the rebates did not continue into 2018. And although almost 100,000 people received premium relief through the program in 2017, it ended up costing less than the legislature had allocated, and about $100 million was returned to the state’s budget at the end of 2017.
Protecting Medicaid enrollees from estate liens
In every state, Medicaid is jointly funded by the state and the federal government. Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. This applies essentially to long-term care services, but states also have the option to go after the individual’s estate to recover costs for other care that was provided by Medicaid after age 55.
Prior to 2014, this wasn’t typically an issue, as Medicaid eligibility was generally restricted by asset tests or requirements that applicants be disabled or pregnant (although Minnesota did have much more generous Medicaid eligibility guidelines than most states prior to 2014). But as of 2014, in states that expanded Medicaid under the ACA, the only eligibility guideline is income. Applicants with income that doesn’t exceed 138 percent of the poverty level are directed to Medicaid, regardless of any assets they might have.
When applicants use the health insurance exchange — MNsure in Minnesota — they’re automatically funneled into Medical Assistance (Medicaid) if their income is under 138 percent of the poverty level. But what these enrollees didn’t know was that the state also had a program in place to put liens on estates for Medicaid-provided services for people age 55 and older.
The combination of these systems caught numerous residents off guard. They were enrolled in Medical Assistance through MNsure based on their income, but were not aware that liens were being placed on their homes so that the state could recoup the costs upon their deaths.
State Senator Tony Lourey (DFL, District 11) addressed the issue with language included in HF2749, the Omnibus supplemental budget bill, which was signed into law by Governor Dayton on June 1, 2016. The legislation limits estate recovery to just what’s required under federal Medicaid rules (ie, essentially, long-term care costs for people age 55 or older), and makes the provision retroactive to January 1, 2014.
Early tech struggles
MNsure opened for business in the fall of 2013, but technological issues persisted well into 2015, despite numerous improvements throughout 2014. Given MNsure’s difficult launch, the state conducted a series of audits and reviews. The first audit reviewed how MNsure spent state and federal money. Auditors concluded that the exchange has generally adequate internal controls and found no fraud or abuse. The review was conducted by the state Office of the Legislative Auditor, and the report was published in October 2014.
Another audit, also conducted by the Office of the Legislative Auditor and released in November 2014, found that the MNsure system in some cases incorrectly determined who qualified for public health benefits. The errors occurred during the first open enrollment period, before a series of system fixes were implemented. The audit did not quantify the total financial impact of the errors. The state Human Services commissioner said a consultant working on technical fixes to MNsure concluded that the eligibility functionality was working correctly as of June 2014.
A third audit, a performance evaluation report released in February 2015, said “MNsure’s failures outweighed its achievements.” Among other criticisms, auditors said MNsure staff withheld information from the board of directors and state officials, the enrollment website was seriously flawed and launched without adequate testing, and the first-year enrollment target was unrealistically low.
In April 2014, MNsure hired Deloitte Consulting to audit MNsure’s technology and improve the website to make enrolling in coverage and updating life events easier and more streamlined. Deloitte has been involved in successful state-run marketplaces for Connecticut, Kentucky, Rhode Island and Washington.
Software upgrades were installed in August 2014, and system testing continued right up until the start of open enrollment. To reduce wait times for consumers and insurance professionals, MNsure increased its call center and support staff and launched a dedicated service line for agents and brokers.
More in-person assisters were available in Minnesota for the 2015 open enrollment period. MNsure encourages residents to utilize the exchange’s assister directory to find local navigators and brokers who can help with the enrollment process.
Lawmakers approved switching to HealthCare.gov as of 2019, but governor vetoed
On May 9, 2017, lawmakers in Minnesota passed SF800, an omnibus health and human services bill. Among many other things, the legislation called for switching from MNsure to the federally-run marketplace (HealthCare.gov) starting in 2019 (see Section 5). But Governor Dayton vetoed it.
Gov. Dayton has long been supportive of MNsure, and had previously clarified that he would veto the bill. In noting his plans to veto the legislation, Dayton made no mention of the transition to HealthCare.gov that was included in the legislation, but focused instead on the sharp budget cuts in the bill. But his veto ensured that MNsure would remain in place, at least for the time being.
The Senate’s original version of SF800 did not call for scrapping MNsure, but the bill went through considerable back-and-forth between the two chambers, and the version that passed was the 4th engrossment of the bill.
In March 2015, Dayton had asked the legislature to create a Task Force on Health Care Financing that would study MNsure along with possible future alternatives. Dayton noted in his letter that he supported making MNsure “directly accountable to the governor and subject to the same legislative oversight as other state agencies” and his budget included half a million dollars devoted to the task force. The spending bill was approved by the legislature in May, and the 29-member task force was appointed in the summer.
One of the possibilities that the task force considered was the possibility of switching to Healthcare.gov, but it’s clear that there was no cut-and-dried answer to the question of whether Minnesota is better served by having a state-run exchange, switching to a federally-run exchange, or teaming up with the federal government on either a supported state-based marketplace or partnership exchange.
In a December 2015 meeting of the task force, the MN Department of Human Services presented a financial analysis of the alternatives available to MNsure. They determined that switching entirely to Healthcare.gov would cost the state an additional $5.1 million in one-time costs from June 2016 to June 2017. And switching to a supported state-based marketplace would cost an additional $6.6 million during that same time frame. If the state had opted to switch to Healthcare.gov, the soonest it could have happened was 2018, since HHS requires a year’s notice from states wishing to transition to Healthcare.gov, and Minnesota wouldn’t have been in a position to make a decision until sometime in 2016.
There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled in June 2015 that subsidies are legal in every state, including those that use Healthcare.gov. Prior to the decision, a switch to Healthcare.gov could have jeopardized subsidies for tens of thousands of Minnesota residents. But once it was clear that Healthcare.gov’s subsidies are safe, some stakeholders began calling for Minnesota to scrap its state-run exchange and use Healthcare.gov instead. Because the MNsure task force was included in the 2016 budget, no hasty decisions were made.
In January 2016, the task force submitted their recommendations to the legislature. They covered a broad range of issues, but did not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session.
The magnitude of the 2016 rate increases that were announced in October resulted in MNsure opponents renewing their calls to switch to Healthcare.gov. But it’s important to keep in mind that the 41 percent weighted average rate hike in Minnesota was market-wide, and did not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) had among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) was lower than the weighted average rate increase for the whole individual market (41 percent).
State Exchange Profile: Minnesota
The Henry J. Kaiser Family Foundation overview of Minnesota’s progress toward creating a state health insurance exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-10 01:01:422021-01-24 00:52:05Minnesota health insurance marketplace: history and news of the state’s exchange
It’s been more than seven years since the health insurance marketplaces (exchanges) first opened for business. Well over 11 million people have enrolled in plans through the exchanges for 2021, and some people also have ACA-compliant individual market coverage obtained outside the exchanges (directly from insurers). And thanks in large part to the ACA’s expansion of Medicaid, enrollment in Medicaid coverage has grown by nearly 20 million people since 2013 (there’s been a significant increase in Medicaid enrollment as a result of the COVID pandemic). And the uninsured rate is still in the single digits, despite the fact that it’s been rising during the Trump administration’s tenure, after dropping to a record low by 2016.
But while there’s plenty to celebrate, any major change like the ACA — especially with the subsequent decade of additional health care reform debate — comes with scammers who take advantage of the confusion that invariably surrounds a major policy shift. Here are some tips to keep in mind:
Scammers tap into confusion over ACA
The ACA was signed into law in 2010, and almost immediately, scammers began looking for ways to make a quick buck. Soon after the law passed, Jim Quiggle, spokesman for the Coalition Against Insurance Fraud, says he wasn’t surprised by the sudden influx of health insurance scams. “Crooks are exploiting the mass confusion over what the health reform means to the average consumer,” Quiggle said. “With each new aspect of reform, another opportunity for fraudulent marketing opens up.”
Quiggle explained that rip-off artists go door to door and use blast emails or pop-up ads to convince unsuspecting customers that they’re selling “ObamaCare.” And, to create a sense of urgency, the scammers tell potential scam victims that the law requires them to buy the insurance they’re selling and do it before an “enrollment period” closes.
It’s true that the ACA created an annual open enrollment period for individual market health insurance; outside of open enrollment, coverage can only be obtained if you have a qualifying event (prior to 2014, people could apply for individual health insurance whenever they liked, but the applications were then medically underwritten and could be rejected based on medical history). But again, buyer beware. If in doubt, double-check the facts with a third party to make sure you’re dealing with a legitimate source of coverage.
Marc Young, spokesman for Insurance Commissioner Kim Holland, co-chair of the National Association of Insurance Commissioners’ Anti-Fraud Task Force, explains that criminals sometimes cleverly mask themselves as insurance companies, selling plans that are completely fraudulent. “Unfortunately, the criminals provide all of the materials that legitimate companies provide,” Young says. “They’ll use the industry language to describe levels of coverage. They’ll issue authentic-looking insurance cards.”
Some companies will even set up storefronts in communities, selling policies and sticking around just long enough to file bogus claims – only to completely vanish into thin air overnight. These companies are “very deceptive, very misleading, with very professional looking materials,” Young says.
Again, it’s a good idea to double-check with your state’s department of insurance to make sure that the person and company you’re dealing with are both licensed to do business in your state.
Understand your state’s exchange
In addition to outright scams like identity theft, consumers need to be aware of the possibility that some agents might try to portray their agency as “the exchange” and attract customers who think they’re purchasing coverage through the official exchange. This is further complicated by the fact that licensed agents and brokers who are certified by their state’s exchange can help consumers enroll in exchange plans.
Individual policies can still be purchased outside of the exchanges. Like exchange plans, they are ACA-qualified which means they are guaranteed issue, cover the essential health benefits, and have the ACA’s limits on out-of-pocket maximums. Some are sold by carriers who also sell policies in the exchange, but some carriers only offer plans outside the exchange.
From a consumer perspective, the primary difference between exchange and non-exchange plans is the availability of subsidies. Premium subsidies and cost-sharing subsidies are only available on plans that are purchased through the exchange. Each state has just one official exchange where subsidies are available and in 36 states as of 2021, it’s Healthcare.gov.
If you’re in DC or one of the 14 states that run their own exchanges, you can still use Healthcare.gov to get to the exchange website in your state so that there’s no doubt you’re on the correct site. If a certified broker or agent assists you with your exchange plan application, you will still be submitting your application on the official exchange web site. If you’re submitting an application anywhere else, you’re applying for an off-exchange plan and subsidies will not be available.
It’s important to understand, however, that there are approved direct enrollment entities that are authorized to enroll people in on-exchange plans via their own websites, without having to use the actual exchange website. HealthSherpa is an example of this; they only enroll people in on-exchange plans, and enrolled 1.9 million of the 8.2 million people who signed up for plans through the federally-run marketplace (HealthCare.gov) for 2021. CMS has a list of entities that are approved to provide direct enrollment. But if you’re using one of them, you’ll still want to confirm that you’re enrolling in an on-exchange plan, if that’s your preference.
Know how the law affects you, or doesn’t
Another commonly misunderstood aspect of the ACA – and one that scammers have tried to target – is that the majority of Americans do not need to obtain health insurance through the exchanges.
Most Americans haven’t had to make any changes at all under the ACA. If you get your coverage through Medicare, Medicaid, or your employer, you do not need to worry about the exchanges at all.
[If you’re enrolling in Medicaid, you may be able to do so through the exchange, depending on why you’re eligible for Medicaid. For MAGI-based Medicaid (most enrollees under the age of 65), some states have switched their entire application system to run through the exchange, so check with your state Medicaid office if you have questions.]
In addition to being a portal for Medicaid enrollment, the exchanges were primarily designed to provide a shopping platform for people who purchase individual health insurance (and for small-business health plans if the employer chooses to obtain coverage through the SHOP exchange, which is still available in some states). This includes people who already had individual health insurance prior to 2014, as well as people who were previously uninsured and didn’t have access to a group plan through an employer. But nearly two-thirds of the population have either employer-sponsored coverage or Medicare — and can ignore the exchanges — while another 20 percent have Medicaid and may be able to ignore the exchange, depending on how their states have set up the enrollment and renewal process.
If you’re purchasing individual health insurance, the exchanges are likely the best option if you’re eligible for subsidies. If not, you can shop both in and out of the exchange to find the policy that best fits your needs and budget. Although the exchanges’ online comparison and enrollment features have been heavily publicized, applicants can also enroll by mail or in person. You can contact your state’s department of insurance to verify that the person, agency, or website you’re working with is certified with the state’s exchange.
If you’re shopping for an off-exchange plan, your state’s department of insurance can help you make sure you’re working with a properly licensed agent and buying a legitimate health insurance policy.
Watch out for fakes and frauds
Navigators and brokers will not charge you any sort of fee for their services (in a few states, brokers are allowed to charge fees if they’re not paid a commission by the insurer; but these fee-based brokers are rare and there are extensive rules regarding the disclosures they have to provide to their clients). The only money you need to pay is your first month’s premium, either when you enroll or once you get the invoice. If people are asking you for any additional fee, be wary of a scam.
Seniors who are enrolled in Medicare don’t need to do anything differently. They benefit from Obamacare, but don’t need to make any changes to their coverage and certainly don’t need to “enroll in Obamacare” or do anything with the exchanges.
If you enroll in a health plan, you’ll need to provide relatively extensive personal information, particularly if you’re applying for premium subsidies (and if you get a premium subsidy, you have to reconcile it on your tax return). There’s no legitimate way to enroll in just a minute or two with nothing more than a name and social security number, so be wary of potential scams in which the salesperson is attempting to gather some basic — but personal — information under the pretense of enrolling you in health coverage.
Discount card scams leave consumers holding the bag
Some salespeople offer discount medical cards or “buyers clubs” – some of which legitimately provide discounts on certain expenses such as prescription drug costs and dental services through a network of providers. In some cases, however, unscrupulous marketers are overstating the size of those networks, or offering unbelievable discounts – “sometimes up to 85 percent off,” Quiggle says.
And, in some cases, consumers are being drawn into those plans on the false promise that the discount card programs will pay for major medical expenses. “We see cases where people are showing up at hospitals presenting their discount card because they think they have health insurance, only to be told they’ll have to pay for services out of pocket,” Quiggle says.
In other cases, consumers incur large medical expenses, then find out that “pre-authorized surgeries” or other large expenses won’t be reimbursed.
Discount plans have existed since long before the ACA was written. But since they’re not considered insurance, they’re not regulated under the ACA, which means that unless a state takes steps to limit them, they can still legally be sold. They don’t provide much in the way of benefits though, particularly in the case of a large claim.
What has changed as a result of Obamacare is the affordability of real health insurance for people with low- and mid-range incomes. Discount plans stood out in the past because of their price, which was far cheaper than real health insurance. But because of the ACA’s premium tax credits (subsidies), the average after-subsidy premium for the 86 percent of exchange enrollees who got a subsidy in 2020 was just $84/month.
Ignore exchange naysayers
It’s inevitable that there have been some unscrupulous people who attempt to sell worthless “insurance” under the guise of Obamacare. If a policy seems too good to be true, it probably is. If in doubt, contact your state’s department of insurance before you submit an application.
Consumers should also be aware that some groups have a vested interest in fighting against Obamacare. They are often politically motivated, and aren’t above spreading outright lies about the ACA in order to turn people against it. Focus on what’s best for you and your family, and ignore people who tell you to avoid the exchanges without having any knowledge of your specific situation.
There is no one-size-fits-all when it comes to healthcare, which is why there are a variety of plans available in the individual market, both in and out of the exchanges. Open enrollment for 2021 individual market coverage ended in most states in December 2020, but opportunities to enroll in ACA-compliant coverage are available year-round if you experience a qualifying event. If you do, take your time, compare all of the available plans, seek help from a reputable source, and be sure that you read the fine print on the plans you’re considering before you enroll.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-09 16:26:362021-01-24 00:51:58Avoid scams while shopping for insurance
I’ve written a lot about why you might want to avoid letting your health insurance plan auto-renew – including the possibility that your premium costs could be significantly different in the new year. But if you choose to auto-renew your current plan, you could be in for another alarming surprise: an entirely new plan that was selected by your health insurance carrier on your behalf in a process called “mapping.”
And starting with the 2017 plan year, the exchange can also select a new plan for you, if your carrier is leaving the exchange altogether (details on the changes that took effect for 2017 — and later years — are in the Notice of Benefit and Payment Parameters for 2017). This has become fairly rare in recent years, although it does still happen — New Mexico’s CO-OP shut down at the end of 2020, for example.
When your plan is phased out
Prior to 2014, individual health insurance in almost every state was medically underwritten. When carriers made changes to a plan, they would typically “sunset” the old plan: existing enrollees could remain on it, but only the new version was available to new applicants. In this scenario, premiums for the sunset plan tended to increase significantly over time, as the risk pool would no longer be adding newly underwritten members.
Pre-2014, if carriers made changes to a plan and applied them to existing enrollees, state regulations could require the carrier to allow existing enrollees to transition to any of the carrier’s other plans, with no medical underwriting. Carriers tended to avoid that scenario in an effort to prevent adverse selection.
But that’s no longer an issue. Every policy is available to every applicant during open enrollment. Medical underwriting is no longer used, and people are no longer stuck with the plan they have because of their medical history. So it no longer makes sense for carriers to sunset products; instead, they make changes as necessary, applying them to existing policyholders as well as new applicants. And in turn, every policyholder has the option of switching to any other plan during open enrollment, regardless of pre-existing conditions.
Although new plan designs were rolled out on a regular basis prior to 2014, carriers are working in a significantly different landscape now. Nationwide, many individual market carriers struggled with financial losses in the first few years of ACA implementation. The adjustments they made in order to remain viable and competitive mean that plan changes became more common than they were prior to 2014.
When plan designs are phased out and replaced, carriers “map” insureds to different plans that are the “most similar” to what they currently have. It’s a better option than having policyholders lose their coverage altogether if they don’t return to their exchange to actively research and select a new plan.
Unfortunately, even if you’re mapped to the “most similar” plan, it could mean that the premium, provider network, and design of your mapped policy could all be different from what’s in your existing plan.
Mapping and the exchanges
In September 2014, HHS clarified that auto-renewal would be the default provision to avoid gaps in coverage for exchange enrollees who don’t return to actively select a new plan for the coming year during open enrollment. State-run exchanges are free to set their own guidelines, but all of the state-run exchanges have auto-renewal as the default, as long as the insurer is continuing to offer coverage in the exchange; for cases where the insurer is leaving the exchange, there’s a bit more variation among state-run exchanges in terms of how to handle it, but this has become a rare scenario now that the marketplaces have mostly stabilized and insurers are joining rather than exiting.
And as long as the same plan continues to be available for the coming year, enrollees who don’t return to the exchange to select a plan during open enrollment are simply auto-renewed in their current plan. But there can still be small changes to the plan, such as an increase in the deductible or maximum out-of-pocket limit.
So auto-renewal is available for most enrollees from one year to the next. But that does not mean they’ll all be renewed onto the same plan they had the year before, or that the provider network will still be the same. If a current plan will no longer be available, the carrier can “map” insureds to a new plan that they deem to be “most similar” to the current plan. And if the carrier is exiting the exchange, the enrollee can be automatically re-enrolled in the plan that the exchange deems the closest match, assuming that the enrollees don’t return to the exchange to pick their own new plans.
Mapping to the ‘most similar’ plan
For cases where an existing plan won’t be available in the coming year, HHS implemented a hierarchy in 2015 for determining what plan would be considered “most similar” to an enrollee’s current plan. HHS noted that the insurance carriers (as opposed to state regulators or the exchanges) are uniquely qualified to determine which plan is most similar to a plan that will no longer be available.
When a plan must be replaced, the carrier submits a “crosswalk” designation to the exchange, indicating which plan should be substituted during the auto-renewal process. The exchange uses that data to map current enrollees onto plans for the coming year, assuming the enrollees don’t return to the exchange to actively select their own plan.
Starting with 2016 coverage, it became increasingly popular for carriers to eliminate PPO plans in favor of HMOs, which allow carriers more control over costs. Illinois, Texas, and Arizona are examples of states where some enrollees were auto-renewed onto different plans with narrower networks in 2016 because their carriers stopped offering PPO networks and/or benefit designs (in all cases, insureds also have the option to return to the exchange and pick their own plan; auto-renewal only happens if you don’t pick a plan yourself).
Can you be mapped to a new carrier?
For 2017, and again for 2018, we saw a not-insignificant number of carriers leaving the exchanges altogether. Obviously, all of the impacted enrollees had the option to return to the exchange during open enrollment to pick a new plan. But not everyone in that situation will do so. How does auto-renewal work in that situation?
For 2015 and 2016 coverage, HHS guidelines prevented the exchange from mapping enrollees to a plan offered by a different carrier. So if your health insurance carrier was exiting the exchange or pulling out of the individual market altogether – as was the case with 12 CO-OPs at the end of 2015 – the exchange generally couldn’t automatically re-enroll you in a similar plan from a different carrier. (New York State of Health made an exception for CO-OP members who lost coverage at the end of November 2015.)
But for 2017, new rules were implemented, and they’re still in use (although the trend has reversed in recent years; insurers have joined or rejoined the exchanges in large numbers for 2019, 2020, and 2021, with very few exits, making the auto-renewal protocol much less needed than it was in 2017 and 2018). In the Benefit and Payment Parameters for 2017, HHS noted that
“whenever feasible, the Exchange should, and the FFE will attempt to, re-enroll enrollees in silver metal-level QHPs no longer available through the Exchange into the silver metal-level QHP offered by another issuer through the Exchanges of the same product network type with the lowest premium.
If the QHPs that have become unavailable are in metal levels other than silver, then whenever feasible, the Exchange should and the FFE will seek to re-enroll the affected enrollees in the QHP available on the Exchange of the same metal level of the same product network type with the lowest premium.
Exchanges should, and the FFEs will endeavor to, implement such a re-enrollment process for enrollees of QHPs whose issuers are discontinuing their coverage, for as many groups as is feasible given the short timelines and complex operations that could be required in these scenarios.”
Essentially, the exchange will — if possible — assign people to a new plan from a different carrier in the exchange, if the enrollee’s current carrier will no longer be offering plans in the exchange after the end of the year. Note that they use the words “the FFE will attempt to…” and “the FFE will endeavor to…”
State-based exchanges can use the federally exchange’s protocol for mapping enrollees to new plans when an insurer leaves the marketplace, but they are not required to do so. For example, Idaho’s exchange confirmed that they were mapping BridgeSpan members to new plans for 2018, and Washington’s exchange mapped Community Health Plan & Regence members to new plans. But Maryland’s exchange did not map Cigna members to new plans for 2018 (Cigna enrollees in Maryland’s exchange were uninsured as of January 1, 2018 if they didn’t pick a new plan by December 31, 2017, but they had a special enrollment period that continued for the first 60 days of 2018, during which they can pick a new plan)
Can you be mapped to an off-exchange plan?
The 2017 Benefit and Payment Parameters also address the scenario where a carrier exits the exchange but continues to offer off-exchange coverage for the coming year. HHS explains:
“we are finalizing a rule that would provide for auto-reenrollment through the Exchange, as opposed to permitting auto-reenrollment outside the Exchange. Under this rule, an enrollee could automatically be re-enrolled into a QHP from a different issuer through the Exchange.”
So if your health insurer is leaving the exchange but remaining in the off-exchange market, the exchange will be able to auto-re-enroll you in a plan from a different carrier (assuming you don’t return to the exchange to pick a new plan), but your carrier will not be able to auto-renew your coverage to an off-exchange version of your plan.
HHS notes that carriers can communicate with their insureds, letting them know that the off-exchange plans are available. But they cannot simply switch insureds to the off-exchange plans automatically. This is beneficial to consumers, since premium subsidies are only available in the exchange, and most enrollees do qualify for premium subsidies each year.
Could you be mapped to a higher premium?
It’s possible that the mapped plan could have a higher premium, despite the fact that it will be the plan deemed “most similar” to what you’ve got now. Overall average rate changes have been much smaller in the last few years than they were in 2017 and 2018, but the rate changes for specific plans vary quite a bit from one to another, and this could be the case for the plan that your insurer or the exchange maps for you.
If you want to have a hand in determining your new plan, you have to return to the exchange and actively select a plan for the coming year. In most states, the deadline to do that – and have the coverage effective in January – is December 15 (there are quite a few exceptions to this deadline, but December 15 is a good general rule of thumb, as none of the states have a deadline prior to that)
Pay attention to the notices you receive from your health insurer and your exchange in the early fall – they’ll tell you in advance if your current plan is being discontinued or modified.
And don’t rely on auto-renewal. Instead, log back into your exchange account and actively select a plan for the new year. That will give you a chance to compare all of the available plans, which may be very different from what was available when you shopped last year or the year before. It will also give you a chance to update your personal information with the exchange, including any recent changes in income (resulting in fewer surprises when you reconcile your subsidy on your tax return).
And in the event that your existing plan will no longer be available after the end of the year, selecting your own replacement plan gives you much more control over the situation than simply letting your health insurer or the exchange assign you to the plan they consider most similar to what you had this year.
If your plan is being terminated at year-end and you pick a new plan during your special enrollment period (triggered by loss of coverage) by December 31, the new plan will take effect on January 1. But if your plan is terminated and you use your special enrollment period after December 31, the earliest possible effective date you’ll have for your new plan will be February 1. In that case, the plan onto which you were mapped will be in force from January 1 until your new plan selection takes effect (or, if you’re in a state-run exchange that doesn’t map you to a new plan, you’ll be uninsured until your own plan selection takes effect).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-09 08:46:402021-01-11 14:13:45How to avoid the surprise of health plan ‘mapping’
If you’re losing your existing health coverage (or if you have another qualifying event or are Native American), you can buy ACA-compliant coverage today, but probably will have to wait until the start of next month before the coverage is in force.
Consumers in most states can buy short-term coverage at any time during the year and coverage can be effective within days – often by the next business day (but COVID coverage requirements don’t apply to short-term plans in most states).
The COVID-19 pandemic has caused millions of Americans to lose their jobs, and in many cases, that means losing health insurance as well. About half of all Americans get their health insurance from an employer’s plan, and it’s a cruel irony that so many people have lost their jobs in the midst of a time when we need health coverage more than ever. A Commonwealth Fund analysis found that by June 2020, nearly 15 million Americans had lost their employer-sponsored health insurance. And about 5.4 million of them became uninsured (as opposed to switching to another form of health coverage), resulting in the largest-ever increase in the uninsured rate.
Loss of a job does not, in and of itself, trigger a special enrollment period. The special enrollment period only applies if you’re losing health coverage (the plan you had must have been minimum essential coverage – which all employer-sponsored plans are – and you can’t have voluntarily canceled the plan or lost it due to non-payment of premiums).
If you’re uninsured, whether it’s a recent development or a long-term situation, you may still be able to obtain coverage for 2021. Here’s a summary of your options:
1. ACA-compliant coverage via extended open enrollment or a COVID-19 special enrollment period
In most states, open enrollment for 2021 health plans ran from November 1 to December 15, 2020. This gave people an opportunity to sign up for new individual/family health coverage if they needed it. And in 10 states and DC, open enrollment is still underway as of early January 2021.
In addition, Maryland has opened another COVID-related special enrollment period for uninsured residents (people who don’t currently have minimum essential coverage), which will continue through March 15, 2021. Unlike normal enrollment period rules, Maryland is allowing retroactive coverage in some cases, and effective dates that are never more than two weeks after the enrollment is submitted.
Maryland previously offered a COVID special enrollment period that ran from March to December in 2020. Most of the other fully state-run exchanges also offered special enrollment periods in 2020 to address the COVID pandemic, allowing people without health coverage a chance to sign up without having to wait for open enrollment or experience a specific qualifying event. But with the exception of Maryland, those windows are no longer ongoing.
The takeaway point here is that if you’re uninsured, you’ll want to check to see if open enrollment is ongoing in your state (it continues through the end of January in a few states), and keep an eye out to see if a COVID-related special enrollment period becomes available via HealthCare.gov. If you’re eligible to enroll — either because the exchange is offering an extended enrollment period or a special enrollment period, or because you’ve experienced a qualifying event — it’s in your best interest to enroll in an ACA-compliant plan as quickly as possible.
2. Loss-of-coverage special enrollment period (and other SEPs that might apply to your situation)
If you’re in a state where open enrollment has ended, you’ll need to have a qualifying event in order to enroll in coverage. Our guide to qualifying events and special enrollment periods covers all of the details about how these work, including rules for effective dates and prior coverage requirements.
For most qualifying events, your coverage will take effect either the first of the next month, or the first of the month after that, depending on how late in the month you enroll. Typically, if you enroll during the first 15 days of the month, your coverage will take effect on the first day of the next month. Enroll after the 15th and coverage won’t kick in until the first of the following month.
But the effective date rules are different if your qualifying event is the loss of your existing health coverage. If you’re losing your coverage,you can enroll up until the last day you have coverage and your new plan will take effect the first of the following month. Since health plans usually terminate on the last day of a month, this means you can have seamless coverage in most cases, as long as you enroll by the day that your old plan ends, and assuming your old plan is ending on the last day of the month (if your plan is ending on a day other than the last day of the month, it will likely not be possible to have seamless coverage unless you’re able to qualify for Medicaid). So for example, if you’re getting laid off and your employer-sponsored coverage is going to end on January 31, you have until January 31 to enroll in a new plan (on- or off-exchange) and your coverage will take effect August 1.
It’s important to understand that in many cases, you’re only eligible for a special enrollment period if you already had some sort of minimum essential coverage in place before the qualifying event – this is obviously true if your qualifying event is loss of coverage, but it’s also true for several other qualifying events. You can read more about the rules for each type of qualifying event here.
Native Americans can enroll in plans through the exchange year-round, although the coverage doesn’t take effect until the first of the next month or the first of the month after that, depending on the enrollment date. As is the case with special enrollment periods, Native Americans must enroll by the 15th to have coverage effective the first of the next month.
Not eligible for a SEP or Medicaid (or CHIP, a Basic Health Program, Medicare, etc.)? Unless a blanket COVID special enrollment period is opened via HealthCare.gov (and other state-run exchanges follow suit), you’ll have to wait until next fall’s open enrollment to buy coverage, and the plan won’t take effect until next January. But as described below, a short-term health insurance plan might still be an option, and it would allow you to have coverage this year.
3. Losing your income? Apply for Medicaid.
Federal poverty level calculator
Gross income
Weekly Annually
Members in household
123456789101112
What state do you live in?
Alaska Hawaii All other
0.0%
of Federal Poverty Level
Millions of Americans have faced a sudden drop in income as a result of the COVID-19 pandemic. But the majority of the states have expanded Medicaid under the Affordable Care Act, which allows residents with low income (up to 138 percent of the poverty level) to enroll in Medicaid.
Medicaid coverage can also be immediate, or backdated to the first of the month or even a previous month, depending on the state and the circumstances. (States can seek federal approval to eliminate prior month retroactive coverage availability, and some have done so under the Trump administration). So you won’t have to wait for your Medicaid coverage to take effect.
In states that have not expanded Medicaid, coverage is not available based solely on income; low-income residents have to also meet other criteria, such as being pregnant, caring for minor children, being elderly, or being disabled. But if you’re facing a loss of income, you’ll want to check with your state’s Medicaid program to see if you might be eligible for coverage.
When your income picks back up in the future and makes you ineligible for Medicaid, that will trigger a loss-of-coverage special enrollment period during which you can enroll in a private individual market plan or an employer-sponsored plan if one is available to you. Note that in order to qualify for the additional federal Medicaid funding that’s being provided to states to address the COVID-19 pandemic, states cannot take action to terminate Medicaid coverage until after the COVID-19 emergency ends. Your Medicaid coverage can be terminated if you request it — perhaps because you become eligible for a new employer’s plan, or your income increases enough to make you eligible for premium subsidies in the exchange — or if you move out of state. But otherwise, your Medicaid coverage should continue until the end of the COVID-19 emergency period. If you request a termination or move out of state, however, your Medicaid coverage will end and that will trigger a special enrollment period during which you can sign up for a private plan.
This federal poverty level calculator will help you determine whether you meet the Medicaid eligibility level for your state. Your eligibility for ACA subsidies also depends on your income and percentage of the federal poverty level (FPL).
For millions of Americans who aren’t eligible for a SEP or Medicaid, buying a short-term medical plan offers the fastest way to get some level of coverage in place. Short-term plans aren’t ACA-compliant, but can still provide protection from catastrophic medical expenses – and you can purchase the plans at any time during the year.
That means you could buy a short-term plan today and – if you’re approved through the underwriting process – you could have coverage in force as soon as tomorrow.
Many short-term health plans have voluntarily agreed to waive cost-sharing for COVID-19 testing. But the general rules that the federal government imposed to require insurers to fully pay for COVID-19 testing and COVID-19 vaccinesdo not apply to short-term plans, so their actions on this are voluntary rather than mandated (unless a state takes action to further regulate short-term plans). And although many ACA-compliant health plans agreed to temporarily waive cost-sharing for COVID-19 treatment in 2020 (as opposed to just testing, as required by law), very few short-term plans agreed to take this step.
And the basic rules of thumb for short-term plans still apply: Pre-existing conditions are generally not covered at all, and insurers will tend to look back at your medical records if and when you have a claim, to make sure that the claim isn’t related to any condition you might have had before enrolling. Short-term plans are also not required to cover the ACA’s essential health benefits, which means that some of the treatment you might need for COVID-19 (or other conditions) might not be covered at all by the plan. Many short-term plans do not, for example, cover outpatient prescription drugs. Others place limits on how much they’ll pay for inpatient hospital care.
If you’re in one of these states and have an eligible income, you may still be able to sign up for coverage regardless of what time of year it is.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/exceptional-circumstances-special-enrollment-period.jpg6701280wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-07 18:13:372021-01-08 14:30:47How to buy health insurance during the COVID-19 crisis
Q. If an individual pays for an exchange plan, how do they pay for the premium pre-tax, the way they would if they had an employer-sponsored plan? This can be a substantial cost impact for the middle-class taxpayer who doesn’t qualify for the tax credit/subsidy. If you itemize, you do not get the full benefit that other taxpayers get. Am I missing something?
But if you’re not self-employed, the only way to deduct your health insurance premiums is to itemize your deductions. You can only deduct your total medical expenses that exceed 7.5 percent of your AGI, although health insurance premiums count towards your total medical expenses. So as an example, if your AGI is $60,000 and your total medical expenses are $8,000 for the year (including health insurance premiums), you’d be allowed to deduct $3,500 in medical expenses as part of your itemized deductions on schedule A. (7.5 percent of $60,000 is $4,500, so you’re allowed to deduct the portion of your total medical expenses that exceeds $4,500).
Note that the medical expense deduction threshold used to be 7.5 percent of income; the ACA changed it to 10 percent, but it soon reverted to 7.5 percent and has remained at that level.
The deductibility of health insurance premiums is an issue that has come up in health reform discussions many times over the years, and it’s undeniable that employees who must purchase their own health insurance are at a disadvantage tax-wise. Future legislation could change this, but for now, individual health insurance premiums are generally not deductible without itemizing unless you’re self-employed.
But if you qualify for a premium tax credit (the vast majority of exchange enrollees do), it will offset some or even all of the monthly premium you have to pay, putting you on much more equal footing with people who get employer-sponsored health coverage.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/2-a.jpg6301200wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-07 10:39:102021-01-08 14:30:49If an individual pays for an exchange plan, how do they pay for the premium pre-tax as would someone with an employer plan?
Q. I’ve always had employer-sponsored health insurance, and the premiums were paid pre-tax. But I left that job last year, and have now purchased individual health insurance in the exchange. Do I get to deduct the premiums I’ve paid when I file my taxes?
Our 2021 Open Enrollment Guide: Everything you need to know to enroll in an affordable individual-market health plan.
A. If you’re self-employed, yes. If not, it will depend on how much you spend on medical expenses during the year.
When you had employer-sponsored health insurance, your share of the premium was likely payroll deducted on a pre-tax basis, and thus your W2 reflected that fact. You did not have to deduct the premiums when you filed your taxes, because they were not included in the taxable income reported to you on your W2.
Now that you’re buying your own health insurance, there are several things to keep in mind:
If you buy your own health insurance but you’re not self-employed, your premiums are only deductible as part of your overall medical expenses. The IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income, but you have to itemize your deductions to do so (the ACA had changed the threshold to 10 percent, but the GOP tax bill — H.R.1 — that was enacted in December 2017 returned the threshold to 7.5 percent for 2017 and 2018, the Further Consolidated Appropriations Act that was enacted in late 2019 extended that lower threshold through 2019 and 2020, and the Consolidated Appropriations Act, 2021 (a major COVID relief package) permanently set the threshold at 7.5 percent of income).Keep track of all your medical expenses throughout the year, as they can add up quickly. But if your total medical expenses don’t reach 7.5 percent of your income, you can’t take a deduction — and even if they do, you can only deduct the portion of the total medical expenses that exceeds the limit. Unfortunately, this puts non-self-employed people who buy their own health insurance at a distinct disadvantage compared with people who have employer-sponsored health insurance or who are self-employed. The ACA’s employer mandate only applies to businesses with 50 or more employees, so people who work for small businesses often find themselves having to purchase individual market health insurance. The same is true for seasonal employees and part-time employees who aren’t eligible for their employers’ health plans. Although individual market coverage is their only option, they have to pay their premiums with after-tax dollars (in many cases, however, they may be eligible for premium subsidies — ie, premium tax credits — to lessen the burden).
If you qualify for an income-based premium tax credit to lower your premiums, make sure that you continue to obtain your coverage through the exchange in your state. If you switch to an off-exchange plan, you wouldn’t be eligible for a subsidy to offset the cost of your coverage. If you buy your plan on-exchange and you’re eligible for a premium tax credit, you can either take it up-front, paid directly to your insurer each month (this is what most people do), or you can pay full price for your coverage each month and claim the full premium tax credit when you file your taxes (if you take the tax credit up-front, you’ll reconcile it on your tax return, and the total amount will be adjusted if necessary).
If you receive a subsidy to offset the cost of your health insurance premiums in the exchange, you cannot “double-dip” at tax time. In that case, if you’re self-employed or if your total medical expenses are high enough to allow for a deduction, you can only deduct the actual portion you paid, not the portion that was paid with the premium tax credit. Note that it can get a bit complicated if your premium deduction reduces your modified adjusted gross income and thus increases the amount of your subsidy … which in turn decreases the amount of your total premiums that you can deduct. The IRS has addressed this circular problem, and the details are here.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/open-enrollment-2021-400x203-1.jpg203400wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-07 09:49:072021-01-09 14:15:29Can I deduct my exchange premiums when I file taxes?
Under the ACA, most states have expanded Medicaid to people with income up to 138 percent of the poverty level. But people with incomes very close to the Medicaid eligibility cutoff frequently experience changes in income that result in switching from Medicaid to ACA’s qualified health plans (QHPs) and back. This “churning” creates fluctuating healthcare costs and premiums, and increased administrative work for the insureds, the QHP carriers and Medicaid programs.
The out-of-pocket differences between Medicaid and QHPs are significant, even for people with incomes just above the Medicaid eligibility threshold who qualify for cost-sharing subsidies.
The Basic Health Program (BHP) – section 1331 of the ACA — was envisioned as a solution, although most states did not establish a BHP. Under the ACA (aka Obamacare), states have the option to create a Basic Health Program for people with incomes a little above the upper limit for Medicaid eligibility, and for legal immigrants who aren’t eligible for Medicaid because of the five-year waiting period.
The Basic Health Program was originally scheduled to begin January 1, 2014, but was postponed until 2015. And even then, only two states chose to implement a BHP: Minnesota‘s BHP was effective in January 2015 (see Minnesota’s BHP blueprint), and New York‘s took effect in January 2016 (see New York’s BHP blueprint).
Why Minnesota and New York?
For several reasons, it made sense for Minnesota and New York to establish BHPs. With a BHP, the federal government pays the state 95 percent of what they would have paid in cost-sharing subsidies and premium subsidies if the BHP enrollees had instead enrolled in the second-lowest-cost Silver health insurance plan in the exchange. The state contributes additional funding as needed, and directs all the money to the managed care organizations that provide benefits under the BHP.
Coverage under the BHP is available to people who aren’t eligible for Medicaid, don’t have access to an affordable employer-sponsored plan, and whose household income doesn’t exceed 200 percent of the poverty level (a little more than $43,000 for a family of three). And it’s also available to legal immigrants with income up to 138 percent of the poverty level who aren’t eligible for Medicaid because of the five-year waiting period.
Under the ACA, legal immigrants who are ineligible for Medicaid (because of the five-year waiting period) are eligible for premium subsidies in the exchange with income as low as $0. But starting in 2001, New York allowed low-income legal immigrants to enroll in state-funded (no federal matching funds) Medicaid. Since a BHP receives significant federal funding, switching to a BHP allowed New York to save money on the state-funded Medicaid they provide for low-income immigrants.
New York’s BHP (aka The Essential Plan) also presents a better deal for enrollees. NY Department of Financial Services noted that a person earning about $20,000/year would spend less than half as much in total healthcare costs on the BHP in 2016 (the first year the state’s BHP was available) than they would have on a subsidized private health plan in 2015. As of 2021, the state’s fact sheet about the Essential Plan indicated that premiums have remained at $20/month (or zero dollars, depending on income), although there is an extra fee to add dental and vision coverage if you’re on the higher end of the eligible income range for BHP coverage. Total enrollment in the Essential Plan stood at nearly 800,000 people as of 2020.
In Minnesota, the state has operated MinnesotaCare since 1992. The state-funded program offered health coverage to residents who weren’t eligible for Medicaid, and the eligibility threshold extended as high as 275 percent of the poverty level for families with children, and 175 percent of the poverty level for adults without children. By converting MinnesotaCare to a BHP as of January 2015 (it’s still called MinnesotaCare), the state was able to take advantage of the much more generous federal funding that goes with a BHP.
Enrollees in MinnesotaCare also have far lower out-of-pocket exposure and premiums than they’d pay if they were enrolled in a private, subsidized plan through the exchange. MinnesotaCare’s copay for an inpatient hospitalization is $250 in 2021, and copays for prescriptions are $7 or $25, depending on the drug, up to a maximum of $70 per month. MinnesotaCare had 94,953 enrollees as of January 2021.
So by implementing BHPs, New York and Minnesota are able to utilize federal funding to provide coverage that they were previously offering under state-funded programs. And their residents are able to obtain coverage with lower premiums and lower cost-sharing than they’d get if they had to enroll in private health plans instead.
Massachusetts has a program called ConnectorCare that supplements exchange subsidies for enrollees with incomes up to 300 percent of the poverty level. It’s not a BHP though — ConnectorCare was created as part of an 1115 Medicaid waiver and uses Medicaid funds to supplement the subsidies.
Millions could benefit, but most states keep status quo
Prior to 2014, a Kaiser Family Foundation analysis projected that nationwide, approximately 34 percent of total projected exchange enrollment would be people with incomes between 138 percent and 200 percent of the poverty level.
Among people who purchased private plans through Healthcare.gov for 2021, about 57 percent — more than 4.7 million people — had income between 100 percent and 200 percent of the poverty level, but the enrollment report didn’t distinguish between people with income from 100 – 138 percent of the poverty level and those with income from 139 – 200 percent (instead, it broke it down to about 3 million with income between 100 – 150 percent, and about 1.7 million with income between 150 – 200 percent). For 2021 coverage, there are 14 states on the Healthcare.gov platform that have not expanded Medicaid, which means they had a much higher percentage of enrollees with incomes from 100 – 150 percent of the poverty level (in Medicaid expansion states, Medicaid covers the majority of people in that category, since eligibility extends up to 138 percent of the poverty level; in non-expansion states, subsidy eligibility begins at 100 percent of the poverty level).
A 2012 Health Affairs study found that if all states were to implement BHPs, 1.8 million fewer adults would churn between Medicaid and QHPs each year. To address the problem of churn, New York’s BHP eligibility is determined annually. That means BHP enrollees aren’t subject to churning between Medicaid, the BHP, and private health plans based on income fluctuations during the year.
At least eight states were considering implementing a BHP in 2015, although Minnesota was the only state that moved ahead with their plans. New York joined Minnesota in offering a BHP starting in 2016, but no other states have followed suit.
The ACA requires states that operate a BHP to coordinate BHP eligibility and enrollment with Medicaid, CHIP (Children’s Health Insurance Plan), and QHPs in the exchange, but states are given plenty of leeway in designing their BHPs within the basic guidelines established by HHS. States can create BHPs that contract with Medicaid managed care organizations and jointly administer BHPs with Medicaid, effectively creating seamless coverage for everyone under 200 percent of poverty level, with continuity of benefits and providers. States also have the option of combining BHP risk pools with exchange risk pools in order to avoid destabilization of the private market that might occur if too many people were shifted to a separate BHP risk pool.
Both New York and Minnesota have made their BHPs available through their state-run exchanges, and both have opted to have BHP enrollment run year-round, like Medicaid, rather than having defined open enrollment periods like QHPs.
Lower costs for enrollees
A BHP must limit premiums and cost-sharing to no more than the amounts that insureds would otherwise have paid in the exchanges with the regular premium and cost-sharing subsidies. But in reality, they’re likely to be far lower since BHPs are generally modeled on Medicaid and CHIP. This is certainly the case in New York and Minnesota, where BHP enrollees face far less in out-of-pocket spending and premiums than they would if they had to purchase even heavily-subsidized QHP coverage in the exchange.
Lower premiums and out of pocket costs in BHPs will likely lead to higher enrollment and coverage retention among the population with incomes under 200 percent of poverty level.
Funding for BHPs comes from a combination of state and federal money, as well as some cost-sharing for enrollees.
In New York, there’s no Essential Plan premium for enrollees with income below 138 percent of the poverty level who are eligible for the BHP because they’re in the five-year waiting period for Medicaid. Enrollees with income between 139 percent and 150 percent of poverty only pay a premium if they want dental and vision coverage in addition to the health plan, and enrollees with income between 150 percent and 200 percent of the poverty level pay $20/month — directly to the managed care organization providing the coverage — for Essential Plan coverage.
In Minnesota, some groups don’t pay premiums for MinnesotaCare. But most pay premiums on a sliding scale, ranging as high as $80/month but averaging about $16/month.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-07 09:04:352021-01-08 14:30:49Affordable Care Act’s Basic Health Program
Self-employment and entrepreneurship are a dream for many people, and Obamacare has made that option easier to pursue, thanks to guaranteed-issue coverage, premium subsidies, and Medicaid expansion. For entrepreneurs who don’t have access to a spouse’s group health insurance plan, being self-employed usually means purchasing a policy in the individual health insurance market.
Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.
And for those who are used to having an employer cover all or most of the premiums on a group plan, paying for an individual policy can induce a bit of sticker shock. This was particularly true prior to 2014, when the self-employed had to pay the full premium for an individual policy. But thanks to the ACA’s premium tax credits, many self-employed Americans are now getting help paying for their coverage.
In addition to the premium tax credits, there are other ways that the self-employed can use the tax code to save a few dollars when it comes to healthcare. There are several deductions and tax credits that self-employed people can utilize:
Is there a health insurance deduction for the self-employed?
If you buy your own health insurance, you should definitely know about the long-standing health insurance premium deduction for the self-employed.
Congress implemented a 25% deduction for self-employed health insurance premiums in 1987 and made it permanent in 1994. The self-employed received even better news in 2003 when premiums became 100 percent deductible.
The deduction – which you’ll find on Line 16 of Schedule 1 (attached to your Form 1040) – allows self-employed people to reduce their adjusted gross income by the amount they pay in health insurance premiums during a given year. You’ll find the deduction on your personal income tax form, and you can file for it if you were self-employed and showed a profit for the year.
If you’re also eligible for a premium tax credit (premium subsidy), you can only deduct the part of the premiums you pay yourself. That can get into some circular math, but there are two methods that the IRS will let you use to determine your deduction and your tax credit.
Since 2008, more-than-2% shareholders of an S-corp have been allowed to buy individual health insurance in their own name, and then get reimbursed by the S-corp. The premiums were included on the shareholder’s W2, and then the shareholder was allowed to deduct the premiums on the first page of Form 1040, resulting in a lower AGI (see example 4 on page 4 of the IRS regulation from 2008).
But the ACA’s ban on employers reimbursing employees for individual health insurance premiums seemed to run counter to this provision, depending on how many S-corp shareholders were involved. This explanation from the IRS (updated December 2014) explains that a shareholder who is the sole corporate employee in an S-corp may continue to be reimbursed from the S-corp for individual health insurance (and this is clarified in Notice 2015-17, described in more detail below).
But until February 2015, the IRS had not directly addressed the issue of multiple more-than-2% shareholders, and the concern was that if there was more than one 2% shareholder, the corporation could run afoul of the market reforms in the ACA and be subject to significant penalties ($100 per day, per reimbursed employee).
At the time, most accountants—and the IRS attorney I spoke with in January 2015—agreed that if there were multiple shareholders or employees (including spouses), it was best to err on the side of caution and not get reimbursed by the S-corp if the shareholders were covered by individual (ie, non-group) health insurance.
In February 2015 however, the IRS released Notice 2015-17, and it was very good news for more-than-2% S-corp shareholders, as well as any other small business subject to the market reforms that prohibit the reimbursement of individual insurance premiums. Several provisions in Notice 2015-17 are applicable if you’re self-employed:
S-corps can continue to reimburse individual market premiums for their more-than-2% shareholders, until if and when the IRS releases further guidance on this issue (under the terms of Notice 2015-17, however, if an S-corp has employees who are not more-than-2% shareholders, those employees cannot be reimbursed for individual health insurance). As of early 2021, the IRS website confirms that Notice 2008-1 was still applicable as far as the tax treatment of health insurance for more-than-2% shareholders. The page notes that the IRS is still “contemplating publication of additional guidance on the application of the market reforms to a 2-percent shareholder-employee healthcare arrangement,” but clarifies that no additional guidance has yet been published.
If a shareholder has an individual plan that covers a spouse and the spouse is also employed by the corporation, the reimbursement arrangement is treated as if there is just one covered employee — thus the market reforms that would have prohibited reimbursement of premiums do not apply. This is particularly good news for mom-and-pop shops that have two shareholders who are married to each other; if they have a single individual health insurance policy, they can continue to have the corporation reimburse their premiums, and then deduct them on their 1040 per Notice 2008-1. This is particularly beneficial given that the ACA generally prevents a business with only two employees who are married to each other from obtaining a group health insurance plan. States have some flexibility on this, but if you’re in a state where your only option is an individual market plan, the IRS rule allowing spouses to be considered one covered employee allows the self-employed couple (with an S-Corp) the option to deduct their premiums.
In the years since 2015, there have been some rule changes regarding employers reimbursing employees for individual market premiums. When the ACA was first implemented, the federal government took a hard-line approach (as noted above) and prohibited any form of employer reimbursements for individual market insurance premiums. But the 21st Century Cures Act brought QSEHRAs into being, allowing small employers to reimburse employees for individual health insurance premiums starting in 2017. And then the Trump administration further expanded the rules, allowing ICHRAs to exist as of 2020.
But the rules described above for more-than-2% shareholders of an S-corp are even easier. The S-corp isn’t required to establish a QSEHRA or ICHRA. It can simply reimburse the shareholder for some or all of the cost of the individual market health plan, and then include the reimbursement amount in the shareholder’s W2 income (so if the shareholder earns a W2 wage of $50,000 and also receives $5,000 in health insurance premium reimbursements, their income reported in W2 Box 1 would be $55,000).
The shareholder can then deduct that amount using the self-employed health insurance deduction when they file their 1040 (so in the example above, they’d receive $55,000 in compensation from the S-corp, but they would only pay federal income tax on $50,000 of it). The self-employed health insurance deduction is taken “above the line,” which means it’s deducted before AGI is calculated, resulting in a lower AGI (in contrast, itemized deductions are taken after AGI is calculated), and thus also a lower ACA-specific MAGI.
HSAs allow insureds to pay for medical expenses with pre-tax dollars
Although being self-employed means that there’s no employer footing the bill for health insurance, it also gives entrepreneurs a lot of flexibility in terms of what type of health insurance they purchase. One popular option is an HSA-qualified high deductible health plan (HDHP).
Although some people have expressed concerns that market reforms under the ACA would be incompatible with HSAs, that has not proved to be the case, and HSA-qualified plans are still a popular choice in the individual market.
Coverage under an HDHP makes the insured eligible to open an HSA and make pre-tax contributions that can be used later to pay for medical expenses. In 2021, the contribution limit is $3,600 for people who have individual coverage under an HDHP, and $7,200 for those who have family coverage (two or more people) under an HDHP.
As is the case with the self-employed health insurance deduction, HSA contributions are deducted “above the line” on the 1040, which means the deduction is available to filers regardless of whether they itemize deductions. And there are no income limits in terms of who can contribute to an HSA — anyone who has an HSA-qualified HDHP (and meets the rest of the eligibility requirements set by the IRS) can contribute to an HSA with pre-tax money. You have until the tax filing deadline (around April 15 of the following year) to make some or all of your HSA contributions.
Although the money in an HSA can be withdrawn without penalties or taxes to pay for qualified medical expenses, some insureds choose to treat their HSAs as secondary retirement accounts, with tax implications similar to traditional IRAs: contributions are tax-deductible and distributions during retirement are taxed as income, assuming you’re using the money for something other than qualified medical expenses.
Do ACA tax credits make health insurance more affordable for the self-employed?
Thanks to the ACA, federal tax credits (subsidies) – obtained via the exchanges – are helping many families subsidize the purchase of individual health insurance. The tax credits are great for the self-employed, who had to foot the entire bill for their health insurance prior to 2014. Employees who get employer-sponsored health insurance typically enjoy a substantial subsidy in the form of pre-tax premiums and employer contributions to the premium. The ACA makes similar subsidies available for many self-employed people.
The tax credits are available to households with incomes of at least 100% of the federal poverty level (FPL) but not more than 400 percent of FPL, as long as the enrollees do not have access to Medicaid or employer-sponsored health insurance that is considered affordable (and as long as the unsubsidized cost of coverage is above the level that the IRS considers affordable). For coverage effective in 2021, the 2019 poverty level is used, and the upper annual income threshold for subsidy eligibility is $51,040 for a single individual and $122,720 for a family of five (in the continental US; Alaska and Hawaii have higher poverty level guidelines).
The relatively high income limits mean that premium tax credits are widely available: of the more than 10.5 million people who had effectuated coverage with private health plans through the exchanges as of 2020, about 86 percent qualified for premium tax credits. Nationwide, the average premium subsidy in 2020 was $491 per month (versus average full-price health insurance premiums of about $575 per month; premium subsidies cover most of the premium for most enrollees).
The tax credits can be paid directly to health insurance carriers on a monthly basis to reduce the amount that insureds have to pay for their coverage, which is the most popular option. But it’s not the only choice: people can opt to pay full price for a plan purchased through the exchange, and then claim the tax credit in full on their tax returns.
For eligible self-employed people, the tax credits make individual health insurance significantly more affordable than it would otherwise be. And since the ACA also did away with medical underwriting in the individual health insurance market, people who avoided entrepreneurship in the past because of pre-existing health conditions can now become self-employed without having to worry about being ineligible to purchase health insurance.
Can the self-employed deduct medical expenses?
If you face high medical bills and itemize your deductions, you might be able to deduct some of your medical expenses. The deduction – found on Schedule A of your income tax return — covers a wide range of medical expenses, and also includes premiums you pay for health insurance (including Medicare) or qualified long-term care. You can’t double deduct, though — if you deduct your health insurance premiums under the self-employed health insurance deduction explained above, you can’t include them in your itemized medical expenses.
And you can only deduct expenses in excess of 7.5 percent of your adjusted gross. This is the threshold that was in effect through 2012, but the ACA increased the threshold to 10 percent, meaning that people could only deduct medical expenses that exceeded 10 percent of their income. However, the Tax Cuts and Jobs Act that was enacted in December 2017 contained a provision that temporarily reset the threshold to 7.5 percent, for 2017 and 2018. And Section 103 of the Further Consolidated Appropriations Act, 2020, enacted in December 2019, keeps that lower threshold in place for tax years 2019 and 2020. Then the Consolidated Appropriations Act, 2021 (Title I, Section 101) permanently reset the threshold at 7.5 percent, making it easier for tax filers to continue to qualify for this deduction.
Spending 7.5 percent of your income on medical costs can be a hard target to hit unless you’re dealing with a significant illness or injury (and keep in mind that you can only deduct the portion of your expenses that exceed that threshold). Still, it’s one more good reason to keep track of your medical bills and health insurance premiums – just in case.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
High-risk pools were, in many cases, the only coverage available pre-2014 for people with serious pre-existing conditions who didn’t have access to health insurance from an employer or the government (Medicare, Medicaid, CHIP, etc.). But they were often underfunded, the coverage was expensive, and plan choices were limited. People who used to have high-risk pool coverage are now eligible for coverage in the exchanges (or off-exchange, without subsidies), with access to the same plans that that healthy people can buy.
A brief history of high-risk pools
One of the goals of the Affordable Care Act was to make health insurance available to nearly all Americans, including those with pre-existing conditions. Although group health insurance has long been guaranteed-issue for eligible employees, people who purchased their own health insurance prior to 2014 had to go through a medical underwriting process that historically resulted in roughly 20 percent of individual health insurance applications being denied.
In order to offer a viable alternative for these applicants, 35 states established their own high-risk pools (mostly in the 1990s), generally supported by a combination of state funds, enrollee premiums, and fees assessed on private health insurance carriers.
In addition to those plans, the ACA included a provision for the Pre-Existing Condition Insurance Plan (PCIP), which created a new state or federally run high-risk pool in every state to make a bridge to 2014 and guaranteed issue health insurance. The ACA was signed into law in March of 2010, and at that point, the requirement – starting January 2014 – that all policies be guaranteed issue was still nearly four years in the future.
Now that the consumer protections in the ACA have been fully implemented, risk pools are no longer necessary the way they were in the past. Health insurance applications are no longer denied because of medical history, and people are no longer offered policies with increased premiums or exclusions based on pre-existing conditions.
HHS announced in March 2014 that PCIP insureds could keep their coverage until April 30,2014 if they had not yet enrolled in an exchange plan. (Total PCIP enrollment had dropped to around 30,000 people by January 2014, down from about 85,000 three months earlier. The majority of PCIP insureds had already transitioned to a new plan).
All PCIP coverage ended on April 30, 2014. Enrollees in those plans were able to transition to exchange plans during open enrollment, and they also had another 60-day special enrollment period that began on May 1 if they were still insured by a PCIP policy that terminated at the end of April (involuntary loss of coverage is a qualifying event that triggers a special enrollment period). By the end of June 2014, that special enrollment period had closed, although it’s highly likely that almost all of the remaining PCIP members were able to transition to a new ACA-compliant plan by that point.
But what about the 35 state-run risk pools that pre-dated the ACA? Many of them have also ceased operations or closed their pools to new applicants, but it varies from one state to another. This chart shows the 17 plans that ended coverage in the first half of 2014, along with the 18 state risk pools that were still operational for at least some existing enrollees as of mid-2014 — and some of them were still accepting new members as well.
Which states still have operational high-risk pools?
The following states have risk pools that remain operational as of 2021. Some of them are still accepting new members, although enrollees would have to meet the existing eligibility guidelines (note that some of these high-risk pools are still operational in order to provide supplemental coverage to disabled Medicare beneficiaries under the age of 65 in states where they do not have access to Medigap plans):
New Mexico (2021 rates; membership had dropped to under 3,000 by 2020, from a high of more than 10,000, although NMMIP continues to offer coverage, they are working towards a “depopulation” goal, and encouraging members to seek coverage under Centennial Care or a QHP in the exchange)
Washington (non-Medicare coverage will terminate at the end of 2021; as of January 2014, new enrollments in non-Medicare coverage are only permitted if there is no ACA-compliant individual market plan available in the applicant’s county, and that is not the case anywhere in Washington)
Wyoming (the pool is currently only providing supplemental coverage for Medicare enrollees who are under age 65).
Bridging the gap
The ACA’s temporary Pre-Existing Condition Insurance Plans (PCIP) were initially run by state governments in 27 states and by the federal government in 23 states and the District of Columbia. By July 2013, 17 states that had been operating their own PCIP had turned their plans over to the federal government. New-member enrollment ceased in early 2013, and all PCIP coverage ended on April 30, 2014.
The PCIP program was well-intentioned but struggled financially from the outset, with lower enrollment and higher costs than originally projected. In order to help keep the program afloat as long as possible, HHS made some changes along the way.
In 2011, eligibility requirements were eased in order to increase enrollment. Premiums were also lowered by up to 40 percent in 18 states where the PCIP is administered by the federal government, to bring the premiums closer to the rates in each state’s individual health insurance market.
In the face of higher-than-expected costs, however, the government increased enrollees’ maximum out-of-pocket annual expenses for 2013 from $4,000 to $6,250. The rate increase took effect on January 1, and applied to plans administered by the federal government, which impacted enrollees in 40 states and the District of Columbia.
Risk pools by the numbers
Roughly 135,000 people enrolled in PCIP plans nationwide between 2010 and 2013. To qualify, people had to have been without health insurance for at least six months and must have a pre-existing health condition or have been denied coverage as a result of a health condition.
The PCIP program’s high cost was attributed in part to the fact that the population served is disproportionately older. More than seven in 10 people enrolled were age 45 and above.
Nearly four in ten claims paid in 2012 were for one of four diagnoses: cancers, ischemic heart disease, degenerative bone diseases, and the follow-up medical care required after major surgery or cancer treatments. In 2012, the average cost per person was $32,108. However, just 4.4 percent of enrollees averaged costs of $225,000 accounting for more than half of all claims paid.
Now that PCIP enrollees have transitioned to the private marketplace (either on or off-exchange) or to Medicaid, their medical expenses are being pooled with a much larger group of people, including healthy insureds. This helps to spread the costs over a larger population and better manage the health care costs of the sicker individuals who were covered by PCIP policies between 2010 and 2014.
High-risk pools are still favored in GOP health care reform proposals
House Republicans published a health care reform proposal in June 2016 that outlined their vision of the path forward, and it included a return to high-risk pools. Their plan called for $25 billion in federal funding for high-risk pools. States would partner with the federal government to run the pools; premiums would be capped, and enrollment waiting lists would not be allowed. (Pre-ACA, some states had high-risk pools that were no longer accepting applicants, due to enrollment caps.)
Although the GOP plan called for significant federal funding for the risk pools, it’s worth noting that the ACA-created CO-OPs were originally supposed to be established via $10 billion in federal grants. But the CO-OPs ended up receiving a quarter of that amount, and as short-term loans, rather than grants. Lawmakers also changed the rules at the end of 2014 to retroactively make the ACA’s risk corridors program budget-neutral, which meant that health insurers only received about $362 million out of the $2.87 billion they were supposed to receive for the 2014 risk corridors program (2015 funding also fell far short). As a result of the risk corridor shortfalls, numerous health insurers – mostly smaller carriers, like the CO-OPs – ended up closing at the end of 2015.
So while $25 billion in federal funding would help with the sustainability of high-risk pools, there are certainly questions in terms of why high-risk pools were so underfunded in the ’90s and ’00s, where the money would come from if it wasn’t available for the CO-OPs and risk corridors programs, and whether it would actually be $25 billion in reality by the time all was said and done.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Democrats win both Georgia Senate races, paving way for federal health policy reforms
The biggest health policy news this week is the victory of both Rev. Raphael Warnock and Jon Ossoff in Georgia’s runoff Senate races. Their wins bring the Senate to a 50-50 split, with Vice President-elect Kamala Harris casting tie-breaking votes as necessary. There is a wide range of administrative health policy actions that the Biden administration will be able to implement without involving Congress, but the shift in power in the Senate opens the door for a variety of changes that require legislation but that can be accomplished with just 51 votes in the Senate – including making the California v. Texas lawsuit moot before the Supreme Court issues its ruling later this year.
Maryland opens new COVID-related special enrollment period
Maryland was one of just two state-run exchanges that opted to not extend open enrollment for 2021 coverage. But Maryland announced this week a new COVID-related special enrollment period for uninsured residents, which will continue through March 15. Maryland previously offered one of the nation’s longest COVID-related special enrollment periods, which began last March and continued through December 15, 2020. The new special enrollment period offers the same generous effective date rules that the state was using in 2020, allowing uninsured residents to sign up for coverage with an effective date that’s either retroactive or no more than two weeks after the date they enroll. Uninsured Maryland residents who enroll by January 15 will have coverage backdated to January 1.
Open enrollment ends in five states on January 15
Open enrollment for individual/family health plans is still ongoing in ten states and DC. But it ends next Friday, January 15, in five of those states:
Residents in those states can still enroll in a plan with a February 1 effective date. But after January 15, a qualifying event will be necessary in order to enroll.
Legislation introduced in New York to create a health insurance guaranty fund
Legislation has been introduced in New York that would create a health insurance guaranty fund that would step in to cover unpaid claims if a health insurance company becomes insolvent. Most states already have health insurance guaranty funds, but New York’s existing guaranty fund covers life insurance companies but not health insurance companies.
North Dakota legislation calls for longer but more robust short-term health insurance plans
Legislation (SB2073) has been introduced in North Dakota, at the request of Insurance Commissioner Jon Godfread, that would allow for short-term health insurance plans with longer durations but also stronger consumer protections. Under North Dakota’s current rules, short-term health insurance plans can have terms of no more than 185 days. One renewal is permitted, but the total duration of these plans cannot exceed one year, including the renewal period.
The newly introduced legislation calls for the state to allow association short-term limited duration health plans to follow current federal rules, which means they could have total durations of up to 36 months. But while federal rules allow short-term plans to be renewable (for up to 36 months in total), North Dakota’s SB2073 would require association short-term plans to be renewable at the option of the insured.
SB2073 would also require association short-term health plans to cover all of the ACA’s essential health benefits, with the exception of pediatric dental and vision services. This would be a significant change, as short-term health plans are not currently required to cover essential health benefits, and most tend to lack coverage in at least a few of the essential health benefit categories.
Haven closing three years after beginning joint venture to improve healthcare quality and affordability
Three years ago, Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. announced a new partnership to “address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” Their new joint venture, named Haven, was an independent entity, “free from profit-making incentives and constraints,” which set out to shake up the conventional health insurance model and provide “simplified, high-quality and transparent healthcare at a reasonable cost.”
But as David Anderson noted at the time, this was never going to be an easy road. And Haven announced this week that it will no longer exist as an independent entity as of the end of February. Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. plan to “continue to collaborate informally” as they work on health care solutions for their own employees, but they’re winding down their joint venture.
Appeals court panel allows Trump administration to deny visas to immigrants without health insurance, but Biden expected to reverse this rule
More than a year ago, the Trump administration issued a proclamation that requires immigrants to have health insurance – or proof that they would have coverage within 30 days of entering the country – in order to obtain a visa. The rule was blocked by a judge before it could take effect, but a three-judge panel for the U.S. Court of Appeals for the Ninth Circuit overturned that injunction last week in a 2-1 ruling. The court’s ruling does not take effect immediately, however, and the Biden administration is expected to overturn the rule soon after taking office, making it unlikely that the health insurance requirements for immigrants will be implemented.
California prohibits insurers from denying gender-affirming medical care based on age
Last week, the California Department of Insurance notified health insurers in the state that they cannot deny coverage solely based on age when an insured is undergoing a gender-affirming female-to-male transition and seeking male chest reconstruction surgery. The Department was made aware of several insurers that had denied these claims solely due to the patient being under the age of 18, and took action to address the issue. The state’s letter to insurers clarifies that mastectomy and male chest reconstruction can be carried out while the person is still a minor, and that any claims decisions should be made on a case-by-case basis and cannot discriminate based on age.
New prior authorization consumer protections in Minnesota
A new law took effect on January 1 in Minnesota, expanding consumer protections with regards to prior authorization in health insurance. When a consumer switches from one health plan to another, the state now requires the person’s new insurer to honor, for at least the first 60 days, any prior authorizations that had been granted by the prior insurer. The new law also prohibits insurers from revoking already-approved prior authorizations unless the authorization was based on fraud or misinformation or was in conflict with state or federal law. And insurers are required to publicize a wide range of data pertaining to prior authorizations, making it easier for consumers to see how frequently these requests are approved or denied, and the reasons that prior authorization requests are rejected.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Once open enrollment ends, ACA-compliant plans are only available to people who experience a qualifying event. The plans available outside of open enrollment without a qualifying event are not regulated by the ACA, and most are not a good choice to serve as stand-alone coverage (short-term health insurance is intended to serve as stand-alone coverage for a short period of time, but it’s much less robust than ACA-compliant coverage).
Qualifying events
Outside of open enrollment, you can still enroll in a new plan if you have a qualifying event that triggers your own special open enrollment (SEP) window.
People with employer-sponsored health insurance are used to both open enrollment windows and qualifying events. In the employer group market, plans have annual open enrollment times when members can make changes to their plans and eligible employees can enroll. Outside of that time frame, however, a qualifying event is required in order to enroll or change coverage.
In the individual market, this was never part of the equation prior to 2014 — people could apply for coverage anytime they wanted. But policies were not guaranteed issue, so pre-existing conditions meant that some people couldn’t get coverage or had to pay more for their policies.
All of that changed thanks to the ACA. Individual coverage is now quite similar to group coverage. As a result, the individual market now utilizes annual open enrollment windows and allows for special enrollment windows triggered by qualifying events.
So you could still have an opportunity to enroll in ACA-compliant coverage outside of the open enrollment window if you experience a qualifying event. Depending on the circumstances, you may have a special open enrollment period – generally 60 days but sometimes there’s an additional 60-day window before the event as well – during which you can enroll or switch to a different plan.
Got a qualifying event? You’ll need proof
It’s important to note that HHS began ramping up enforcement of special enrollment period eligibility in 2016, amid concerns that enforcement had previously been too lax.
In February 2016, HHS confirmed that they would begin requiring proof of eligibility in order to grant special enrollment periods triggered by birth/adoption/placement for adoption, a permanent move, loss of other coverage, and marriage (together, these account for three-quarters of all qualifying events in Healthcare.gov states).
The new SEP eligibility verification process was implemented in June 2016. In September 2016, HHS answered several frequently asked questions regarding the verification process for qualifying events, and noted that SEP enrollments since June were down about 15 percent below where they had been during the same time period in 2015 (after staying roughly even with 2015 numbers in the months prior to the implementation of the new eligibility verification process).
But HHS stopped short of issuing an explanation for the decline: it could be that people were previously enrolling who didn’t actually have a qualifying event, but it could also be that the process for enrolling had become more cumbersome due to the added verification step, deterring healthy enrollees from signing up. The vast majority of people who are eligible for SEPs do not enroll in coverage during the SEP, and this could simply have been heightened by the new eligibility verification process.
Starting in June 2017, HHS was planning to implement a pilot program to further enhance SEP eligibility verification (this plan was created by HHS under the Obama Administration). Fifty percent of SEP enrollees were to be randomly selected for the pilot program, and their enrollments would be pended until their verification documents were submitted. They’d have 30 days to submit their proof of SEP eligibility, and as long as they did so, their policy would be effective as of the date determined by the date of their application/plan selection (so for example, a person could enroll on July 10 for an August 1 effective date, but the enrollment would then be pended. If the applicant submitted proof of SEP eligibility on August 5, the enrollment would be completed, with coverage effective August 1).
Under the new rules finalized in April 2017, however, that SEP eligibility verification process began to apply to 100 percent of SEP applications, starting in June 2017. So if you’re planning to enroll in a HealthCare.gov plan outside of open enrollment, be prepared to provide proof of your qualifying event when you apply. Most of the state-run exchanges have followed suit, and HHS has proposed a requirement that state-run exchanges conduct SEP eligibility verification for at least 75 percent of all SEP applications by 2022.
The SEP verification program has generated controversy, with some consumer advocates noting that it could further deter healthy people from enrolling when they’re eligible for a SEP. At Health Affairs, Tim Jost suggested some alternative solutions, including a requirement that insurance carriers pay broker commissions for SEP enrollments in order to incentivize brokers to help more people enroll (at that point, insurers were increasingly paying no commissions for SEP enrollments, although many have started doing so in more recent years), and a requirement that group health plans provide certificates of creditable coverage to people losing their group coverage (this used to be required, but isn’t any longer; reinstating a requirement that the certificates be issued would make it easier for people to easily prove that they had lost coverage and had thus become eligible for a SEP).
But as a general rule, be prepared to provide proof of your qualifying event when you enroll.
Off-exchange special enrollment periods
Note that most qualifying events apply both inside and outside the exchanges. There are a few exceptions, however. For policies sold outside the exchanges, there are a few qualifying events that HHS does not require carriers to accept as triggers for special enrollment periods (however, the carriers can accept them if they wish). These include gaining citizenship or a lawful presence in the US or being a Native American (within the exchanges, Native Americans can make plan changes as often as once per month, and enrollment runs year-round).
In addition, when exchanges grant special enrollment periods based on “exceptional circumstances” those special enrollment periods apply within the exchanges; off-exchange, it’s up to the carriers as to whether or not they want to implement similar special enrollment periods.
And carriers tend to have fairly strict rules regarding proof of SEP eligibility. If you’re enrolling directly with an insurer, outside of open enrollment, you will need to provide proof of your qualifying event (the insurer will let you know what will count as acceptable documentation; these same documentation requirements are generally enforced for on-exchange enrollments as well).
What counts as a qualifying event?
Although special enrollment period windows are generally longer in the individual market, many of the same life events count as a qualifying event for employer-based plans and individual market plans. But some are specific to the individual market under Obamacare. [For reference, special enrollment period rules for employer-sponsored plans are detailed here; for individual market plans, they’re detailed here and described in more detail below and in our guide to special enrollment periods.]
When will coverage take effect if I enroll during a special enrollment period?
For most qualifying events, in states using HealthCare.gov and some of the state-run exchanges, applications completed by the 15th of the month will be given a first-of-the-following-month effective date.
Massachusetts and Rhode Island both allow enrollees to sign up as late as the 23rd of the month and have coverage effective the first of the following month.
Applications received from the 16th (or the 24th if you’re in MA or RI) to the end of the month will have an effective date of the first of the second following month. (Marriage, loss of other coverage, and birth/adoption have special effective date rules, described below.)
Starting in 2022, the federally-run marketplace (HealthCare.gov, which is used in 36 states as of 2021) will eliminate the requirement that applications be submitted by the 15th of the month in order to get coverage the first of the following month. For all special enrollment periods, coverage will simply take effect the first of the month after the application is submitted. States will have the option to require this of off-exchange insurers, and fully state-run exchanges will also have the option to switch all of their special enrollment periods to first-of-the-following-month effective dates, regardless of when the application is submitted.
Note that in early 2016, HHS eliminated some little-used special enrollment periods that were no longer necessary. For example, the special enrollment period that had previously been available for people whose Pre-Existing Conditions Health Insurance Program (PCIP) had ended; coverage under those plans ended in 2014; but there’s still a special enrollment period for anyone whose minimum essential coverage ends involuntarily).
The coverage you’re losing has to be minimum essential coverage, and the loss has to be involuntary. Cancelling the plan or failing to pay the premiums does not count as involuntary loss, but voluntarily leaving a job and thus losing employer-sponsored health coverage does count as an involuntary loss of coverage. In most cases, loss of coverage that isn’t minimum essential coverage does not trigger a special open enrollment.
[There is an exception for pregnancy Medicaid, CHIP unborn child, and Medically Needy Medicaid: These types of coverage are not minimum essential coverage, but people who lose coverage under these plans do qualify for a special enrollment period (this includes a woman who has CHIP unborn child coverage for her baby during pregnancy, but no additional coverage for herself; she will qualify for a loss of coverage SEP for herself when the unborn child CHIP coverage ends). And although they are not technically considered minimum essential coverage, they do count as minimum essential prior coverage in the case of special enrollment periods that require a person to have previously had coverage (this is a requirement for most special enrollment periods).]
Your special open enrollment begins 60 days before the termination date, so it’s possible to get a new ACA-compliant plan with no gap in coverage, as long as your prior plan doesn’t end mid-month. (See details in Section (d)(6)(iii) the code of federal regulations 155.420, and the updated regulation that makes advance open enrollment possible for people with individual coverage as well as employer-sponsored coverage.) You also have 60 days after your plan ends during which you can select a new ACA-compliant plan.
If you enroll prior to the loss of coverage, the effective date is the first of the month following the loss of coverage, regardless of the date you enroll (ie, if your plan is ending June 30, you can enroll anytime in May or June and your new plan will be effective July 1). But if you enroll in the 60 days after your plan ends, the exchange can either allow a first-of-the-following-month effective date regardless of the date you enroll, or they can use their normal deadline, which is typically the 15th of the month in order to get a plan effective the first of the following month.
As noted above, starting in 2022, the federally-run marketplace (HealthCare.gov) will eliminate the requirement that enrollments be submitted by the 15th of the month to have coverage effective the first of the following month. So as of 2022, a person who loses coverage and enrolls in a new plan after the coverage loss will simply have coverage effective the first of the month after the enrollment is submitted.
Individual plan renewing outside of the regular open enrollment
HHS issued a regulation in late May 2014 that included a provision to allow a special open enrollment for people whose health plan is renewing — but not terminating — outside of regular open enrollment. Although ACA-compliant plans run on a calendar-year schedule, that is not always the case for grandmothered and grandfathered plans, nor is it always the case for employer-sponsored plans.
Insureds with these plans may accept the renewal but are not obligated to do so. Instead, they can select a new ACA-compliant plan during the 60 days prior to the renewal date and 60 days following the renewal date. Initially, this special enrollment period was intended to be used only in 2014, but in February 2015 HHS issued a final regulation that confirms this special enrollment period would be on-going. So it continues to apply to people who have grandfathered or grandmothered plans that renew outside of open enrollment each year. And HHS also confirmed that this SEP applies to people who have a non-calendar year group plan that’s renewing; they can keep that plan or switch to an individual market plan using an SEP. [Note that if the employer-sponsored plan is considered affordable and provides minimum value, the applicant is not eligible for premium subsidies in the exchange.]
Becoming a dependent or gaining a dependent
Becoming or gaining a dependent (as a result or birth, adoption, or placement in foster care) is a qualifying event. Coverage is back-dated to the date of birth, adoption, or placement in foster care (subsequent regulations also allow parents the option to select a later effective date). Because of the special rules regarding effective dates, it’s wise to use a special enrollment period in this case, even if the child is born or adopted during the general open enrollment period.
The current regulation states that anyone who “gains a dependent or becomes a dependent” is eligible for a special open enrollment window, which obviously includes both the parents and the new baby or newly adopted or fostered child. But HealthCare.gov accepts applications for the entire family (including siblings) during the special open enrollment window.
The market stabilization rule that HHS finalized in April 2017 added some new restrictions to this SEP: If a new parent is already enrolled in a QHP, he or she can add the baby/adopted child to the plan (or enroll with the new dependent in a plan at the same metal level, if for some reason the child cannot be added to the plan). Alternatively, the child can be enrolled on its own into any available plan. But the SEP cannot be used as an opportunity for the parent to switch plans and enroll in a new plan with the child. New rules issued in 2018 clarify that existing dependents do not have an independent SEP to enroll in new coverage separately from the person gaining a dependent or becoming a dependent. But they do state that an individual who gains a dependent “may enroll in or change coverage along with his or her dependents, including the newly-gained dependent(s) and any existing dependents.” That would seem to indicate that a new parent who already has individual market coverage does have the option to switch to a different plan using the SEP. As is the case with other SEPs, if you live in a state that is running its own exchange, check with your exchange to see how they have interpreted the regulations.
Marriage
If you get married, you have a 60-day open enrollment window that begins on your wedding day. However, rules issued in 2017 limit this special enrollment period somewhat. At least one partner must have had minimum essential coverage (or lived outside the U.S. or in a U.S. Territory) for at least one of the 60 days prior to the marriage. In other words, you cannot use marriage to gain coverage if neither of you had coverage before getting married.
Assuming you’re eligible for a special enrollment period (which includes providing proof of marriage), your policy will be effective the first of the month following your application, regardless of what date you complete your enrollment. Since marriage triggers a special effective date rule, it might make sense to use your special enrollment period if you get married during the general open enrollment period. For example, if you get married on November 27, you can select a new plan that day (or up until the 30th) and have coverage effective December 1 if you use your special enrollment period triggered by your marriage. But if you enroll under the general open enrollment period, your new coverage won’t be effective until January 1.
Divorce
If you lose your existing health insurance because of a divorce, you qualify for a special open enrollment based on the loss of coverage rule discussed above.
If a court orders a parent to obtain health insurance as part of a custody agreement, the exchange must allow the parent the option to backdate the coverage to the date the court order was issued, although the parent can also opt for the normal effective dates described above.
Exchanges also have the option of granting a special enrollment period for people who lose a dependent or lose dependent status as a result of a divorce or death, even if coverage is not lost as a result. This special enrollment period was due to become mandatory in all exchanges as of January 2017, but HHS removed that requirement in May 2016, so it’s still optional for the exchanges. In most states, including the 36 states that use HealthCare.gov, divorce without an accompanying loss of coverage generally does not trigger a special enrollment period.
Becoming a United States citizen or lawfully present resident
This qualifying event only applies within the exchanges — carriers selling coverage off-exchange are not required to offer a special enrollment period for people who gain citizenship or lawful presence in the US.
This special enrollment period applies as long as you move to an area where different qualified health plans (QHPs) are available. This special enrollment period is only available to applicants who already had minimum essential coverage in force for at least one of the 60 days prior to the move (with exceptions for people moving back to the US from abroad, newly released from incarceration, or previously in the coverage gap in a state that did not expand Medicaid; there’s also an exemption for people who move from an area where there were no plans available in the exchange, although there have never been any areas without exchange plans).
For people who meet the prior coverage requirement, a permanent move to a new state will always trigger a special open enrollment period, because each state has its own health plans. But even a move within a state can be a qualifying event, as some states have QHPs that are only offered in certain regions of the state. So if you move to a part of the state that has plans that were not available in your old area, or if the plan you had before is not available in your new area, you’ll qualify for a special open enrollment period, assuming you had coverage prior to your move.
HHS finalized a provision in February 2015 that allows people advance access to a special enrollment period starting 60 days prior to a move, but this is optional for the exchanges. It was originally scheduled to be mandatory starting in January 2017 (ie, that exchanges would have to offer a special enrollment period in advance of a move), but HHS removed that deadline in May 2016, making it permanently optional for exchanges to allow people to report an impending move and enroll in a new health plan. If the exchange in your state offers that option, you can enroll in a new health plan on or before the date of your move and the new plan will be effective the first of the following month. If you enroll during the 60 days following the move, the effective date will follow the normal rules outlined above (ie, in most states, enrollments submitted by the 15th of the month will have first of the following month effective dates, although HealthCare.gov will remove this deadline as of 2022).
In early 2016, HHS clarified that moving to a hospital in another area for medical treatment does not constitute a permanent move, and would not make a person eligible for a special enrollment period. And a temporary move to a new location also does not trigger a special enrollment period. However, a person who has homes in more than one state (for example, a “snowbird” early retiree) can establish residency in both states, and can switch policies to coincide with a move between homes (HHS has noted that this person might be better served by a plan with a nationwide network in order to avoid resetting deductibles mid-year, but such plans are not available in many areas).
An error or problem with enrollment
If the enrollment error (or lack of enrollment, as the case may be) was the fault of the exchange, HHS, or an enrollment assister, a special enrollment period can be granted. In this case, the exchange can properly enroll the person (or allow them to change plans) outside of open enrollment in order to remedy the problem.
Employer-sponsored plan becomes unaffordable or stops providing minimum value
An employer-sponsored plan is considered affordable in 2021 as long the employee isn’t required to pay more than 9.83 percent of household income for just the employee’s portion of the coverage. And a plan provides minimum value as long as it covers at least 60 percent of expected costs for a standard population and also provides substantial coverage for inpatient and physician services.
A plan design change could result in a plan no longer providing minimum value. And there are a variety of situations that could result in a plan no longer being affordable, including a reduction in work hours (with the resulting pay cut meaning that the employee’s insurance takes up a larger share of their household income) or an increase in the premiums that the employee has to pay for their coverage.
In either scenario, a special enrollment period is available, during which the person can switch to an individual market plan instead. And premium subsidies are available in the exchange if the person’s employer-sponsored coverage doesn’t provide minimum value and/or isn’t affordable.
An income increase that moves you out of the coverage gap
There are 13 states where there is still a Medicaid coverage gap, and an estimated 2.3 million people are unable to access affordable health coverage as a result. (Wisconsin has not expanded Medicaid under the ACA, but does not have a coverage gap; Oklahoma and Missouri will expand Medicaid in mid-2021 and will no longer have coverage gaps at that point).
For people in the coverage gap, enrollment in full-price coverage is generally an unrealistic option. HHS recognized that, and allows a special enrollment period for these individuals if their income increases during the year to a level that makes them eligible for premium subsidies (ie, to at least the poverty level).
As mentioned above, the new market stabilization rules only allow a special enrollment period triggered by marriage if at least one partner already had minimum essential coverage before getting married. However, if two people in the coverage gap get married, their combined income may put their household above the poverty level, making them eligible for premium subsidies. In that case, they would have access to a special enrollment period despite the fact that neither of them had coverage prior to getting married.
Gaining access to a QSEHRA or Individual Coverage HRA
This is a new special enrollment period that became available in 2020, under the terms of the Trump Administrations’s new rules for health reimbursement arrangements that reimburse employees for individual market coverage. QSEHRAs became available in 2017 (as part of the 21st Century Cures Act) and allow small employers to reimburse employees for the cost of individual market coverage (up to limits imposed by the IRS). But prior to 2020, there was no special enrollment period for people who gained access to a QSEHRA.
As of 2020, the Trump administration’s new guidelines allow employers of any size to reimburse employees for the cost of individual market coverage. And the new rules also add a special enrollment period — listed at 45 CFR 155.420(d)(14) — for people who become eligible for a QSEHRA benefit or an Individual Coverage HRA benefit.
This includes people who are newly eligible for the benefit, as well as people who were offered the option in prior years but either didn’t take it or took it temporarily. In other words, anyone who is transitioning to QSEHRA or Individual Coverage HRA benefits — regardless of their prior coverage — has access to a special enrollment period during which they can select an individual market plan (or switch from their existing individual market plan to a different one), on-exchange or outside the exchange.
This special enrollment period is available starting 60 days before the QSEHRA or Individual Coverage HRA benefit takes effect, in order to allow people time to enroll in an individual market plan that will be effective on the day that the QSEHRA or Individual Coverage HRA takes effect.
An income or circumstance change that makes you newly eligible (or ineligible) for subsidies or CSR
But in the 2020 Benefit and Payment Parameters, HHS finalized a proposal to expand this special enrollment period to include people who are enrolled in off-exchange coverage (ie, without any subsidies, since subsidies aren’t available off-exchange), and who experience an income change that makes them newly-eligible for premium subsidies or cost-sharing subsidies.
This special enrollment period was added at 45 CFR 155.420(d)(6)(v), although it is optional for state-run exchanges. HealthCare.gov planned to make it available as of 2020, although there have been numerous reports from enrollment assisters indicating that it’s still difficult to access as of mid-2020. This is an important addition to the special enrollment period rules, particularly given the “silver switch” approach that many states have taken with regards to the loss of federal funding for cost-sharing reductions (CSR). In 2018 and 2019, people who opted for lower-cost off-exchange silver plans (that didn’t include the cost of CSR in their premiums) were stuck with those plans throughout the year, even if their income changed mid-year to a level that would have been subsidy-eligible. That’s because an income change was not a qualifying event unless you were already enrolled in a plan through the exchange (or moving out of the Medicaid coverage gap). But that will change in 2020 in states that use HealthCare.gov, and in states with state-run exchanges that opt to implement this special enrollment period.
[It’s important to keep in mind, however, that a mid-year plan change will result in deductibles and out-of-pocket maximums resetting to $0, so this may or may not be a worthwhile change, depending on the circumstances.]
As of 2022, there will also be a special enrollment period for exchange enrollees with silver plans who have cost-sharing reductions and then experience a change in income or circumstances that make them newly ineligible for cost-sharing subsidies. This will allow people in this situation to switch to a plan at a different metal level, as the current rules limit them to picking only from among the other available silver plans.
For people already enrolled in the exchange, SEP applies if the plan substantially violates its contract
A special enrollment period is available in the exchange (only for people who are already enrolled through the exchange) if the insured is enrolled in a QHP that “substantially violated a material provision of its contract in relation to the enrollee.” This does not mean that enrollees can switch to a new plan simply because their existing carrier has done something they didn’t like – it has to be a “substantial violation” and there’s an official channel through which such claims need to proceed. It’s noteworthy that a mid-year change in the provider network or drug formulary (covered drug list) does not constitute a material violation of the contract, so enrollees are not afforded a SEP if that happens.
Who doesn’t need a qualifying event?
In some circumstances, enrollment is available year-round, without a need for a qualifying event:
Native Americans/Alaska Natives – as defined by the Indian Health Care Improvement Act – can enroll anytime during the year. Enrollment by the 15th of the month (or a later date set by a state-run exchange) will result in an effective date of the first of the following month. Native Americans/Alaska Natives may also switch from one QHP to another up to once per month (the special enrollment periods for Native Americans/Alaska Natives only apply within the exchanges – carriers selling off-exchange plans do not have to offer a monthly special enrollment period for American Indians).
Medicaid and CHIP enrollment are also year-round. For people who are near the threshold where Medicaid eligibility ends and exchange subsidy eligibility begins, there may be some “churning” during the year, when slight income fluctuations result in a change in eligibility.
If income increases above the Medicaid eligibility threshold, there’s a special open enrollment window triggered by loss of other coverage. Unfortunately, in states that have not expanded Medicaid, the transition between Medicaid and QHPs in the exchange is nowhere near as seamless as lawmakers intended it to be.
Employers can select SHOP plans (or small group plans sold outside the exchange) year-round. But employees on those plans will have the same sort of annual open enrollment windows that applies to any employer group plans.
Need coverage at the end of the year?
If you find yourself without health insurance towards the end of the year, you might want to consider a short-term policy instead of an ACA-compliant policy. There are pros and cons to short-term insurance, and it’s not the right choice for everyone. But for some, it’s an affordable solution to a temporary problem.
Short-term insurance doesn’t cover pre-existing conditions, so it’s really only an appropriate solution for healthy applicants. And for applicants who qualify for premium subsidies in the exchange, an ACA-compliant plan is also likely to be the best value, since there are no subsidies available to offset the cost of short-term insurance.
But if you’re healthy, don’t qualify for premium subsidies, and you find yourself without coverage for a month or two at the end of the year, a short-term plan is worth considering. You can enroll in a short-term plan for the remainder of the year, and sign up for ACA-compliant coverage during open enrollment with an effective date of January 1. The temporary health plan would certainly be better than going without coverage for the last several weeks of the year, and it would be considerably less expensive than an ACA-compliant plan for people who don’t get premium subsidies.
So for example, if your employer-sponsored coverage ends in October and you want to use a short-term plan to bridge the gap to January, that may be a good option. Be aware, however, that it may not be a good idea to drop your ACA-compliant plan and switch to a short-term plan at the end of the year, particularly if you’re in an area with limited availability of ACA-compliant plans. The market stabilization rules allow insurers to require applicants to pay any past-due premiums from the previous 12 months before being allowed to enroll in new coverage. If you receive premium subsidies and you stop paying your premiums, your insurer will ultimately terminate your plan, but the termination date will be a month after you stopped paying premiums (if you don’t get premium subsidies, your plan will terminate to the date you stopped paying for your coverage). In that case, you essentially got a month of free coverage, and the insurer is allowed to require you to pay that month’s premiums before allowing you to sign up for any of their plans during open enrollment.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-06 01:46:262021-01-07 15:01:28Qualifying events that can get you coverage
A. When the Affordable Care Act was written, lawmakers knew that it would be essential to get healthy people enrolled in coverage, since insurance only works if there are enough low-cost enrollees to balance out the sicker, higher-cost enrollees. So the law included an individual mandate, otherwise known as the shared responsibility provision.
But that tax penalty was eliminated after the end of 2018, under the terms of the Tax Cuts and Jobs Act of 2017. Technically, the individual mandate itself is still in effect, but there’s no longer a penalty to enforce it.
(The continued existence of the mandate – but without the penalty – is the crux of the California v. Texas lawsuit, in which 18 states are challenging the constitutionality of the mandate without the penalty, and arguing that the entire ACA should be overturned if the mandate is unconstitutional. A judge ruled in December 2018 that the ACA should indeed be overturned, and Trump Administration agrees. The case was appealed to the Fifth Circuit and oral arguments were heard in July 2019. The ruling was issued in late 2019, essentially just kicking the can down the road: The appeal court panel agreed with the lower court that the individual mandate is unconstitutional but remanded the case back to the lower court to determine which aspects of the ACA should be overturned. The case was then heard by the Supreme Court in the fall of 2020, with a ruling expected in the spring of 2021. But with the Biden administration and a very slim Democratic majority in Congress, it may be possible to make the case moot before the ruling is issued.)
DC, Massachusetts, New Jersey, California, and Rhode Island have penalties for being uninsured
Although the IRS is not penalizing people who are uninsured in 2019 and beyond, states still have the option to do so. A handful of states have their own individual mandates and penalties for non-compliance:
Massachusetts implemented an individual mandate and penalty in 2006, and it continues to be in effect (people who were uninsured in Massachusetts between 2014 and 2018 didn’t have to pay both the state and federal penalties, but now that there’s no federal penalty, the state’s penalty applies just like it did prior to 2014). The Massachusetts penalty only applies to adults, and the amount of the penalty is based on the person’s income and the cost of health plans available via the Massachusetts health insurance exchange (here are the details for penalty amounts in Massachusetts in 2020).
The District of Columbiaimplemented an individual mandate and penalty that took effect in January 2019. The penalty amounts are based on the amounts that applied under the federal penalty in 2018 (a flat $695 per adult — half that for a child — or 2.5 percent of income, whichever is higher), although the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in DC, as opposed to the average nationwide cost of a bronze plan.
New Jersey also implemented an individual mandate and penalty that took effect in January 2019. The penalty amounts also mirror the previous federal penalty, but the maximum penalty under the percentage of income calculation is based on the average cost of a bronze plan in New Jersey. The state is using penalty revenue to help fund its new reinsurance program.
California enacted legislation in 2019 that created an individual mandate starting in 2020, with a penalty for non-compliance. California also created a new state-based premium subsidy to help make coverage more affordable.
Rhode Island also implemented an individual mandate effective in 2020, with a penalty for non-compliance. The revenue generated from the penalty is used to help fund the state’s new reinsurance program. Both the individual mandate and the reinsurance program will have a stabilizing effect on Rhode Island’s individual market.
Vermont enacted a mandate but opted not to impose any penalty for non-compliance
Vermont enacted legislation in 2018 to create a state-based individual mandate, but they scheduled it to take effect in 2020, instead of 2019, as the penalty details weren’t included in the 2018 legislation and were left instead for lawmakers to work out during the 2019 session. But the penalty language was ultimately stripped out of the 2019 legislation (H.524) and the version that passed did not include any penalty. So although Vermont does technically have an individual mandate as of 2020, there will not be a penalty associated with non-compliance (ie, essentially the same thing that applies at the federal level).
Maryland also removed penalty language from 2019 legislation
Maryland enacted HB814/SB802 in 2019. The legislation initially included an individual mandate and penalty that would have taken effect in 2021. But that portion of the bill was removed before passage, despite support from insurers and the Maryland Hospital Association, and the final version did not include any of the original mandate penalty language. Instead, the new law creates an “easy enrollment health insurance program” that will use tax return data to identify people who are uninsured and interested in obtaining health coverage, and then connect them with the Maryland health insurance exchange (more details here, in the fiscal note).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-05 02:23:582021-01-06 18:22:30Is there still a penalty for being uninsured?
Health plans (and subsidies) are available in the individual market for recent immigrants age 65+.
Undocumented immigrants cannot buy plans in the exchange, but some states provide coverage for some undocumented immigrant children and pregnant women.
Short-term health plans are an alternative for recent immigrants who can’t afford an ACA-compliant plan.
California abandoned its efforts to allow undocumented immigrants to buy full-price plans in the exchange, and New York legislation did not advance.
Trump administration’s “public charge” rule and immigrant visa insurance requirements: Both rules have been blocked by the courts, but an appeals court has stayed the vacating of the public charge rule, so it can still be implemented in some states, and an appeals court has vacated the injunction that had blocked the health coverage requirements for immigrants.
Did the ACA improve access to health coverage for immigrants?
For more than a decade, roughly one million people per year have been granted lawful permanent residence in the United States. In addition, there are about 11 million undocumented immigrants in the U.S, although that number has fallen from a high of more than 12 million in 2005.
New immigrants can obtain health insurance from a variety of sources, including employer-sponsored plans, the individual market, and health plans that are marketed specifically for immigrants.
The Affordable Care Act has made numerous changes to our health insurance system over the last several years. But recent immigrants are often confused in terms of what health insurance options are available to them. And persistent myths about the ACA have made it hard to discern what’s true and what’s not in terms of how the ACA applies to immigrants.
So let’s take a look at the health insurance options for immigrants, and how they’ve changed – or haven’t changed – under the ACA.
Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.
Can any immigrant select from available health plans during open enrollment?
Open enrollment for individual-market health insurance coverage runs from November 1 to December 15 in most states.
During this window, any non-incarcerated, lawfully present U.S. resident can enroll in a health plan through the exchange in their state – or outside the exchange, if that’s their preference, although financial assistance is not available outside the exchange.
Are immigrants eligible for health insurance premium subsidies?
You do not have to be a U.S. citizen to benefit from the ACA. If you’re in the U.S. legally – regardless of how long you’ve been here – you’re eligible for subsidies in the exchange if your income is in the subsidy-eligible range and you don’t have access to an affordable, minimum value plan from an employer. Premium subsidies are available to exchange enrollees if their income is between 100 percent and 400 percent of the federal poverty level (FPL), but subsidies also extend below the poverty level for recent immigrants, as described below.
(A new rule issued by the Trump administration in 2019 expanded on the long-standing “public charge” rule. This rule took effect in early 2020. It was vacated by a federal judge as of November 2020, but that order was stayed by an appeals court just two days later, meaning that the Trump administration’s public charge rule can still be implemented while litigation continues on this case. Under the public charge rule, receiving premium subsidies in the exchange does not make a person a public charge under the new rule, but not receiving premium subsidies is considered a “heavily weighted positive factor” in the overall determination of whether a person is likely to be a public charge. This is discussed in more detail below.)
When you become a new U.S. citizen or gain lawfully present status, you’re entitled to a special enrollment period in your state’s exchange. You’ll have 60 days from the date you became a citizen or a lawfully present resident to enroll in a plan through the exchange, with subsidies if you’re eligible for them.
There are a variety of other special enrollment periods that apply to people experiencing various qualifying life events. These special enrollment periods are available to immigrants and non-immigrants alike.
Are recent immigrants eligible for ACA subsidies?
The ACA called for expansion of Medicaid to all adults with income up to 138 percent of the poverty level, and no exchange subsidies for enrollees with income below the poverty level, since they’re supposed to have Medicaid instead. But Medicaid isn’t available in most states to recent immigrants until they’ve been lawfully present in the U.S. for five years. To get around this problem, Congress included a provision in the ACA to allow recent immigrants to get subsidies in the exchange regardless of how low their income is.
Low-income, lawfully present immigrants – who would be eligible for Medicaid based on income, but are barred from Medicaid because of their immigration status – are eligible to enroll in plans through the exchange with full subsidies during the five years when Medicaid is not available. Their premiums for the second-lowest-cost Silver plan are capped at 2.07 percent of income in 2021 (this number changes slightly each year).
In early 2015, Andrew Sprung explained that this provision of the ACA wasn’t well understood during the first open enrollment period, even by call center staff. So there may well have been low-income immigrants who didn’t end up enrolling due to miscommunication. But this issue is now likely to be much better understood by exchange staff, brokers, and enrollment assisters. If you’re in this situation and are told that you can’t get subsidies, don’t give up — ask to speak with a supervisor who can help you (for reference, this issue is detailed in ACA Section 1401(c)(1)(B), and it appears on page 113 of the text of the ACA).
Lawmakers included subsidies for low-income immigrants who weren’t eligible for Medicaid specifically to avoid a coverage gap. Ironically, there are currently about 2.3 million people in 13 states who are in a coverage gap that exists because those states have refused to expand Medicaid (two of those states — Missouri and Oklahoma — will expand Medicaid as of mid-2021, and Georgia will partially expand Medicaid, eliminating the coverage gap; at that point, there will only be 10 states with coverage gaps). Congress went out of their way to ensure that there would be no coverage gap for recent immigrants, but they couldn’t anticipate that the Supreme Court would make Medicaid optional for the states and that numerous states would block expansion, leading to a coverage gap for millions of U.S. citizens.
Can recent immigrants 65 and older buy exchange health plans?
The ACA also limits premiums for older enrollees to three times the premiums charged for younger enrollees. So there are essentially caps on the premiums that apply to elderly recent immigrants who are using the individual market in place of Medicare, even if their income is too high to qualify for subsidies.
Are undocumented immigrants eligible for ACA coverage?
Although the ACA provides benefits to U.S. citizens and lawfully present immigrants alike, it does not directly provide any benefits for undocumented immigrants.
The ACA specifically prevents non-lawfully present immigrants from enrolling in coverage through the exchanges [section 1312(f)(3)]. And they are also not eligible for Medicaid under federal guidelines. So the two major cornerstones of coverage expansion under the ACA are not available to undocumented immigrants.
Some states have implemented programs to cover undocumented immigrants, particularly children and/or pregnant women. For example, Oregon’s Cover All Kids program provides coverage to kids in households with income up to 305 percent of the poverty level, regardless of immigration status. California has had a similar program for children since 2016, and as of 2020, it also applied to young adults through the age of 25. New York covers kids and pregnant women in its Medicaid program regardless of income, and covers emergency care for other undocumented immigrants in certain circumstances.
It’s important to understand that if you’re lawfully present, you can enroll in a plan through the exchange even if some members of your family are not lawfully present. Family members who aren’t applying for coverage are not asked for details about their immigration status. And HealthCare.gov clarifies that immigration details you provide to the exchange during your enrollment and verification process are not shared with any immigration authorities.
How many undocumented immigrants are uninsured?
In terms of the insurance status of undocumented immigrants, the numbers tend to be rough estimates, since exact data regarding undocumented immigrants can be difficult to pin down. But according to Pew Research data, there were 11 million undocumented immigrants in the U.S. as of 2014.
According to a recent Kaiser Family Foundation analysis, undocumented immigrants are significantly more likely to be uninsured than U.S. citizens: 45 percent of undocumented immigrants are uninsured, versus about 8 percent of citizens.
So more than half of the undocumented immigrant population has some form of health insurance coverage. Kaiser Family Foundation’s Larry Levitt noted via Twitter that “some are buying non-group, but I’d agree that it’s primarily employer coverage.” And in 2014, Los Angeles Times writer Lisa Zamosky explained the various options that undocumented immigrants in California were using to obtain coverage, including student health plans, employer-sponsored coverage, and individual (i.e., non-group) plans purchased off-exchange (on-exchange, enrollees are required to provide proof of legal immigration status).
Uninsured undocumented immigrants do have access to some healthcare services, regardless of their ability to pay. Federal law (EMTALA) requires Medicare-participating hospitals to provide screening and stabilization services for anyone who enters their emergency rooms, without regard for insurance or residency status.
Since emergency rooms are the most expensive setting for healthcare, local officials in many areas have opted for less expensive alternatives. Of the 25 U.S counties with the largest number of undocumented immigrants, the Wall Street Journal reports that 20 have programs in place to fund primary and surgical care for low-income uninsured county residents, typically regardless of their immigration status.
Do ACA exchanges check the status of immigrants who want to buy coverage?
As part of the enrollment process, the exchanges are required to verify lawfully present status. In 2014, enrollments were terminated for approximately 109,000 people who had initially enrolled through HealthCare.gov, but who were unable to provide the necessary proof of legal residency (enrollees generally have 95 days to provide documentation to resolve data matching issues for immigration status).
By the end of June 2015, coverage in the federally facilitated exchange had been terminated for roughly 306,000 people who had enrolled in coverage for 2015 but had not provided adequate documentation to prove their lawfully-present status. In the first three months of 2016, coverage in the federally facilitated exchange was terminated for roughly 17,000 people who had unresolved immigration data matching issues, and coverage was terminated for the same reason for another 113,000 enrollees during the second quarter of 2016.
There’s concern among consumer advocates that some lawfully present residents have encountered barriers to enrollment – or canceled coverage – due to data-matching issues. If you’re lawfully present in the U.S (which includes a wide range of immigration statuses), you can legally use the exchange, and qualify for subsidies if you’re otherwise eligible. Be prepared, however, for the possibility that you might have to prove your lawfully present status.
There are enrollment assisters in your community who can help you with this process if necessary. But if you’re not lawfully present, you cannot enroll through the exchange, even if you’re willing to pay full price for your coverage. You can, however, apply for an ACA-compliant plan outside the exchange, as there’s no federal restriction on that.
Should immigrants consider short-term health insurance?
Immigrants who are unable to afford ACA-compliant coverage might find that a short-term health insurance plan will fit their needs, and it’s far better than being uninsured. Short-term plans are not sold through the health insurance exchanges, so the exchange requirement that enrollees provide proof of legal residency does not apply with short-term plans.
Recent immigrants who are eligible for premium subsidies in the exchange will likely be best served by enrolling in a plan through the exchange — the coverage will be comprehensive, with no limits on annual or lifetime benefits and no exclusions for pre-existing conditions. But healthy applicants who aren’t eligible for subsidies (including those affected by the family glitch, and those with income just a little above 400 percent of the poverty level), as well as those who might find it difficult to prove their immigration status to the exchange, may find that a short-term policy is their best option.
With any insurance plan, it’s important to read the fine print and understand the ins and outs of the coverage. But that’s particularly important with short-term plans, as they’re not regulated by federal law (other than the rules that limit their terms to no more than 364 days, and total duration to no more than 36 months including renewals). Some states have extensive rules for short-term plans, so availability varies considerably from one state to another (you can click on a state on this map to see how the state regulates short-term plans).
Travel insurance plans are another option, particularly for people who will be in the U.S. temporarily and who don’t qualify for premium subsidies in the exchange. Just like short-term plans, travel insurance policies are not compliant with the ACA, so they generally won’t cover pre-existing conditions, tend to have gaps in their coverage (since they don’t have to cover all of the essential health benefits) and will come with limits on how much they’ll pay for an enrollee’s medical care. But if the other alternative is to go uninsured, a travel insurance plan is far better than no coverage at all.
How are states making efforts to insure undocumented immigrants?
California wanted to open up its state-run exchange to undocumented immigrants who can pay full price for their coverage. The state already changed the rules to allow for the provision of Medicaid (Medi-Cal) to undocumented immigrant children, starting in 2016 (and expanded this to young adults as of 2020). As a result, about 170,000 children in California gained access to coverage.
And in June 2016, California Governor Jerry Brown signed SB10 into law, setting the stage for the state to eventually allow undocumented immigrants to enroll in coverage (without subsidies) through Covered California, the state-run exchange.
New York lawmakers considered legislation in 2019 that would have allowed undocumented immigrants to purchase full-price coverage in NY’s state-based exchange, but it did not progress in the legislature. As noted in the text of the legislation, New York would have needed to obtain federal permission to implement this law if the state had enacted it.
Trump administration’s public charge rule and immigrant health insurance rule: Both have been blocked by the courts, but the public charge rule can still be implemented in many states and an appeals court has vacated the injunction that had blocked the immigrant health insurance rule
In August 2019, the Trump administration finalized rule changes for the government’s existing “public charge” policy, after proposing changes nearly a year earlier. And in October 2019, President Trump issued a proclamation to suspend new immigrant visas for people who are unable to prove that they’ll be able to purchase (non-taxpayer funded) health insurance within 30 days of entering the US “unless the alien possesses the financial resources to pay for reasonably foreseeable medical costs.” But both of these rules have since been blocked by federal judges, but subsequent court rulings have relaxed or overturned those earlier actions. The Biden administration is expected to reverse the rule changes in the fairly near future.
The public charge rule was slated to take effect October 15, 2019, but federal judges blocked it on October 11, temporarily delaying implementation. In January 2020, the Supreme Court ruled (in a 5-4 vote) that the public charge rule could take effect while an appeal was pending, and it took effect in February 2020. The Supreme Court declined to temporarily pause the rule amid the COVID pandemic. But U.S. District Judge Gary Feinerman, in Chicago, vacated the rule in its entirety, nationwide, as of November 2020. Just two days later, however, the Seventh Circuit Court of Appeals stayed Judge Feinerman’s order, allowing the Trump administration’s version of the public charge rule to continue to be implemented while litigation on this case continues. On December 2, however, the Ninth Circuit Court of Appeals blocked the rule from being applied in 18 states and DC. So as of December 2020, the public charge rule can be used by immigration officials in some states but not in others.
A 2019 Kaiser Family Foundation analysis of the rule indicated that millions of people might disenroll from Medicaid and CHIP (even though CHIP enrollment is not a negatively weighted factor under the new rule) over concerns about the public charge rule, and that “coverage losses also will likely decrease revenues and increase uncompensated care for providers and have spillover effects within communities.”
In addition to the public charge rule being vacated (albeit very temporarily, as the order was soon stayed and the rule is allowed to continue to be implemented for the time being, although not in the states where the Ninth Circuit Court of Appeals has blocked it), the health insurance rules for immigrants were also initially blocked by the courts.
In November 2019, the day before the proclamation regarding health coverage for immigrants was to take effect, a 28-day restraining order was issued by District Judge Michael H. Simon. Judge Simon subsequently issued a preliminary injunction, blocking the rule from taking effect. And an appeals court panel upheld the ruling in May 2020. But in December 2020, a three-judge panel from the U.S. Court of Appeals for the Ninth Circuit vacated the preliminary injunction, issuing a 2-1 ruling in favor of allowing the Trump administration’s immigrant health insurance requirements to be implemented.
The ruling is not immediately binding, however, and the challengers to the immigrant health insurance rule have 45 days to petition for a rehearing with the full Ninth Circuit. By that point, the Biden administration will be in place, and is expected to reverse the rule, making it unlikely that it will actually be implemented.
Even before they were initially blocked by the courts, the new public charge rule and the new immigrant health insurance requirement did not change anything about eligibility for premium subsidies in the exchange — subsidies continued to be available to legally-present residents who meet the guidelines for subsidy eligibility. But these new rules were designed to make it harder for people to enter the US in the first place, and had the effect of deterring otherwise eligible people from applying for financial assistance with their health coverage, including assistance via Medicaid or CHIP for their US-born children.
And advocates note that the rule, which was proposed in 2018, began to lead to coverage losses immediately, even though it didn’t take effect until 2020. The rule has to numerous immigrants forgoing the benefits for which they and their children are eligible, out of fear of being labeled a public charge. Georgetown University’s Health Policy Institute, Center for Children and Families noted this fall that the public charge rule change was one of the factors linked to the sharp increase in the uninsured rate among children in the U.S.
The longstanding public charge rule states that if the government determines that an immigrant is “likely to become a public charge,” that can be a factor in denying the person legal permanent resident (LPR) status and/or entry into the U.S.
For two decades, the rules have excluded Medicaid (except when used to fund long-term care in an institution) from the services that are considered when determining if a person is likely to become a public charge. The new rule changed that: Medicaid, along with Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and several low-income housing programs were added to the list of services that would push a person into the “public charge” category. The National Immigration Law Center notes that the public charge assessment does not apply to lawful permanent residents who are renewing their green cards.
Critically, CHIP and ACA premium subsidies are not included among the new additions to the public charge determination, although the final rule does incorporate a “heavily weighted positive factor” that essentially gives the person credit for having private health insurance without using the ACA’s premium subsidies. (In other words, a person’s likelihood of being labeled a public charge will decrease if they have health insurance without premium subsidies, but enrolling in a subsidized plan through the exchange will not count as a negative factor in determining whether the person is likely to become a public charge.)
Very few new immigrants are eligible for Medicaid, due to the five-year waiting period that applies in most cases. But immigrants who have been in the U.S. for more than five years can enroll in Medicaid, and more recent immigrants can enroll their U.S.-born children in Medicaid; these are perfectly legal uses of the Medicaid system. But even before the new rule was scheduled to take effect, it was making immigrants fearful about applying for subsidies, CHIP, or health coverage in general — for themselves as well as for their family members who are U.S. citizens and thus entitled to the same benefits as any other citizen.
Health insurance proclamation for new immigrants
The restraining order for the health insurance proclamation, the subsequent preliminary injunction, and the appeals court panel’s ruling were in response to a lawsuit filed in October 2019, in which plaintiffs argued that the new health insurance rules for immigrants are arbitrary and simply wouldn’t work, given the actual health insurance options available for people who haven’t yet arrived in the US. The court system has, for the time being, blocked the proclamation from taking effect nationwide. And although the Ninth Circuit Court of Appeals has vacated the injunction that had been blocking the rule, the Biden administration is expected to overturn the immigrant proclamation soon after taking office.
This Q&A with Immigration attorney William Stock provides some very useful insight into the implications of the health insurance proclamation for new immigrants, if it had been allowed to take effect. The new rules wouldn’t have applied to immigrant visas issued prior to November 3, 2019 (the date the rules were slated to take effect), but people applying to enter the US on an immigrant visa after that date would have had to prove that they have or will imminently obtain health insurance, or that they have the financial means to pay for “reasonably foreseeable medical costs” — which is certainly a very grey area and very much open to interpretation (these rules could take effect at a later date, if and when the proclamation is allowed to take effect).
The rule would not have allowed new immigrants to plan to enroll in a subsidized health insurance plan in the exchange. Premium subsidies would have continued to be available to legally present immigrants, but new immigrants entering the US on an immigrant visa would have had to show that their plan for obtaining health insurance did not involve premium subsidies in the exchange. And applicants cannot enroll in an ACA-compliant plan unless they’re already living in the US, so people trying to move to the US would not have been able to enroll until after they arrive.
There are also concerns about the logistics of getting a plan in place if a person wanted to sign up for a full-price ACA-compliant plan: Gaining lawfully-present immigration status is a qualifying event that allows a person to enroll in a plan through the exchange (but not outside the exchange), but the special enrollment period is not available in advance; it starts when the person gains their immigration status. At that point, the person has 60 days to enroll. If they sign up by the 15th of the month, coverage starts the following month. But if they sign up after the 15th of the month, coverage starts the first of the second following month, which might be more than 30 days after the person arrives in the country. In short, the requirements of the proclamation don’t necessarily match up with the logistics of how enrollment works in the ACA-compliant market.
Under the terms of the proclamation, short-term health insurance plans would have been considered an acceptable alternative for new immigrants. But short-term plans often have a requirement that non-US-citizens have resided in the US for a certain amount of time prior to enrolling, which would make them unavailable for people living outside the US who are applying for an immigrant visa. A travel/expat policy (which has a limited duration, just like short-term coverage) would be available in these scenarios, however, and can be readily obtained by healthy people who are going to be living or traveling outside of their country of citizenship.
Under a Democratic administration, would health insurance assistance for immigrants expand?
The Medicare for All bills introduced by Senator Bernie Sanders and by Representative Pramila Jayapal would expand coverage to virtually everyone in the U.S., including undocumented immigrants. Some leading Democrats prefer a more measured approach, similar to Hillary Clinton’s 2016 healthcare reform proposal, which included a provision similar to California’s subsequently withdrawn 1332 waiver proposal. (It would have allowed undocumented immigrants to buy coverage in the exchanges, although without subsidies.) Joe Biden’s health care plan includes a similar proposal, which would allow undocumented immigrants to buy into a new public option program, albeit without any government subsidies.
But over the first seven years of exchange operation, roughly 85 percent of exchange enrollees have been eligible for subsidies, and only 15 percent have paid full price for their coverage. So although public option plans are expected to be a little less expensive than private plans, it’s unclear how many undocumented immigrants would or could actually enroll in public option without financial assistance.
Harold Pollack has noted that our current policy of entirely excluding undocumented immigrants from the exchanges is “morally unacceptable.” As Pollack explains, Clinton’s plan (and now Biden’s plan) to extend coverage to undocumented immigrants by allowing them to buy unsubsidized coverage in the exchange is a good first step, but it must be followed with comprehensive immigration reform to “bring de facto Americans out of the shadows into full citizenship.”
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2021/01/obamacare-subsidy-calculator-400x400-1.jpg400400wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-05 02:00:312021-01-06 18:22:31How immigrants can obtain health coverage
Only three CO-OPs are operational as of 2021, but one has expanded into a new state
When the first ACA open enrollment period got underway in the fall of 2013, there were 23 Consumer Operated and Oriented Plans (CO-OPs). But within a few years, just four CO-OPs were still operational, offering health insurance plans in five states. That was the case from 2018 through 2020, but one of the four remaining CO-OPs, — New Mexico Health Connections — closed at the end of 2020, leaving only three CO-OPs operational as of 2021. However, Mountain Health CO-OP expanded into Wyoming for 2021, and is now offering coverage in three states. Here’s how the CO-OP landscape looks for 2021 coverage:
Community Health Options in Maine
Mountain Health CO-OP (Montana Health CO-OP) in Montana,Idaho, and Wyoming (expansion into WY new for 2021)
Common Ground Healthcare Cooperative in Wisconsin
For 2021 individual market plans, the CO-OPs mostly decreased premiums or increased them only slightly:
CHO in Maine decreased premiums by an average of 13.7 percent.
Mountain Health CO-OP increased premiums by an average of 2.68 percent in Montana and an average of 2 percent in Idaho.
In 2019/2020, there were only a little more than 135,000 people enrolled in four CO-OPs. That’s down from more than a million enrollees in 2015, when the CO-OPs were at their peak and most were still operational.
Community Health Options had about 37,000 enrollees (including individual and small group plans; individual market enrollees totaled about 28,000 in 2020).
Mountain Health CO-OP had about 18,200 enrollees in Montana in 2020, and 14,000 in Idaho as of 2019 (plus a low number of small-group enrollees, per SERFF filings MHEC-131927403 and MHEC-131962194).
New Mexico Health Connections had about 19,000 members (all in the individual market) as of 2019. This had dropped to about 14,000 by mid-2020; declining enrollment amid the COVID-19 pandemic is one of the reasons NM Health Connections closed at the end of 2020.
Common Ground had about 52,000 members in 2019 (about 51,000 in the individual market, plus about 950 in the small group market, according to SERFF filing CGHC-131973379)
What are CO-OPs and how are they different?
CO-OPs were created under a provision of the Affordable Care Act (aka Obamacare). The idea for CO-OPs was proposed by Senator Kent Conrad (D-ND) when the original public plan option was jettisoned during the health care reform debate. Lawmakers added the CO-OP provision to the Affordable Care Act to placate Democrats who had pushed for a government-run, Medicare-for-all type of health insurance program.
At the time, progressives who preferred a public option derided CO-OPs as a poor alternative because they can’t utilize the efficiencies of scale that would come with Medicare For All, nor do they have the market clout that a single payer system would have when negotiating reimbursement rates with providers.
But supporters noted that because CO-OPs are neither government agencies nor commercial insurers, they could put patients first, without having to focus on investors or Congressional politics.
Instead of paying shareholders, CO-OP profits are reinvested in the plan to lower premiums or improve benefits (since most of the CO-OPs were not financially sustainable and ended up closing, profits have been few and far between). And customers’ health insurance needs and concerns become a top priority because the CO-OP’s customers/members elect their own board of directors. And a majority of these directors must themselves be members of the CO-OP.
CO-OPs are private, nonprofit, state-licensed health insurance carriers. Their plans can be sold both inside and outside the health insurance exchanges, depending on the state, and can offer individual, small group, and large group plans. But they’re limited to having no more than a third of their policies in the large group market (a more lucrative market than individual or small group). Most of the CO-OPs’ membership has been concentrated in the individual market. New Mexico Health Connections was an exception, as they had more enrollees in their employer-sponsored plans (including large group plans) than in their individual market plans. But New Mexico Health Connections sold their employer-sponsored plans to a new for-profit entity in 2018, leaving the CO-OP with just the individual market segment. And New Mexico Health Connections will close altogether at the end of 2020; its 14,000 individual market enrollees will need to select plans from other insurers for 2021.
Lawmakers had originally planned to provide $10 billion in grants to get the CO-OPs up and running in every state. But insurance industry lobbyists and fiscal conservatives in Congress succeeded in reducing the total to $6 billion, and turning it into loans — with relatively short repayment schedules — instead of grants (and CO-OPs were not permitted to use federal loan money for marketing purposes). Then, during budget negotiations in 2011, those loans were cut by another $2.2 billion. And in 2012, during the fiscal cliff negotiations, CO-OP funding was reduced even further — and applications from 40 prospective CO-OPs were rejected
Ultimately, the Centers for Medicare and Medicaid (CMS) awarded about $2.4 billion in loans to 23 CO-OPs across the country (there were 24 CO-OPs, but Vermont Health CO-OP never became operational. CMS retracted their loan in September 2013 — before the exchanges opened for the first open enrollment — because there were doubts that the program could be viable with Vermont’s impending switch to single-payer healthcare in 2017; ironically, Vermont pulled the plug on their single-payer vision in late 2014).
The CO-OP failures have been due in large part to a combination of premiums that were too low, benefits that were too generous, enrollees who were sicker than anticipated, competition from bigger carriers with larger reserves, the risk corridor shortfall that was announced in the fall of 2015, and the risk adjustment payment announcements that were made in June 2016 (see below for a timeline of the closures).
But despite those issues, the four remaining CO-OPs continue to operate successfully. So although the individual market is still a challenging environment, the remaining CO-OPs do seem to have carved a sustainable niche.
Focus on cost savings and reinvested profits
How do CO-OPs increase cost efficiencies?
CMS laid out guidelines for CO-OPs to use “private purchasing councils” through which CO-OP carriers can use collective purchasing power to obtain lower costs on a variety of items and services, including claims administration, accounting, health IT, or reinsurance. Private purchasing councils are allowed to use their collective purchasing power to negotiate rates or network arrangements with providers and health care facilities, as antitrust issues could otherwise arise.
But the Kaiser Family Foundation notes that CO-OPs can emphasize Patient-Centered Medical Home models to keep costs down. (the PCMH model allows physicians to use health information technology and care managers to provide a full spectrum of care that’s coordinated among each patient’s various providers. The goal is to keep patients healthy – and out of the hospital – by using best practices and evidence-based medicine. If PCMH doctors are successful, they qualify for bonuses).
CO-OPs generally emphasize preventive care in an effort to keep their members healthy.
A challenge for CO-OPs was developing provider networks. At least 15 of the original CO-OPs were renting networks from other insurers, which added to their administrative expenses. In Maine, Community Health Options (the one profitable CO-OP in 2014, and one of only four CO-OPs still operational in 2020) built its own provider network from the ground up, a move that CEO Kevin Lewis noted as one of the reasons for CHO’s success. CO-OPs also have the option to hire doctors directly, rather than contract with them through provider networks (the upside for the doctors is that the CO-OP then handles the administrative details, and the doctor can focus on healthcare instead).
Where are CO-OPs still selling plans in 2021?
There are three CO-OPs that are offering plans in five states in 2021. Although the vast majority of the original CO-OPs have failed, these three have shown signs of overall stability, including rate decreases for some plans in 2019, 2020, and/or 2021.
Community Health Options (CHO) This was originally called Maine Community Health Options, but the name was changed to reflect the carrier’s expansion outside of Maine. 44,000 people enrolled in coverage through the exchange in 2014, and 83 percent of them selected Community Health Options, making the CO-OP’s first year an amazing success.
CHO expanded into New Hampshire for 2015, fueled by their initial success in 2014 and by a new loan from CMS. During the second open enrollment period, CHO once again dominated the Maine market, securing about 80 percent of the exchange market share. They also enrolled about 5,000 people in New Hampshire. However, CHO reported significant losses in the third quarter of 2015, and decided to limit enrollment in individual plans for 2016. Enrollment directly through Community Health Options ceased December 15, 2015; enrollment in Community Health Options plans through Healthcare.gov ceased December 26.
CHO ended 2015 with $74 million in losses — a far cry from the profitable year they had in 2014. In early 2016, Maine’s Insurance Superintendent proposed putting the CO-OP in receivership and canceling a portion of its plans (about 20,000 members would have been transitioned to other coverage). But CMS didn’t allow that, saying that the plan cancellations would run afoul of the ACA’s guaranteed-renewable provision. Instead, the CO-OP is under increased oversight from the Maine Bureau of Insurance, which puts out monthly reports that detail how the CO-OP is faring relative to its business plan.
CHO is the only remaining CO-OP that received money—as opposed to having to pay out money—under the risk adjustment program for 2015 and again for 2016. For 2017, Community Health Options had an average rate increase of 25.5 percent in Maine, where the bulk of their members lived. They exited New Hampshire entirely at the end of 2016, and reverted to operating solely in Maine, as they did in 2014. They implemented an average rate increase of 15.8 percent for 2018 in the individual market. For 2019, and again for 2020, however, CHO increased average premiums by less than 1 percent each year.
CHO’s total membership was 67,539 at the end of 2016, and had dropped to 44,015 by the first quarter of 2017 (all in Maine, since they’re no longer offering plans in New Hampshire). By September 2018, the CO-OP’s membership stood at 51,583, but it had dropped again, to 37,135, by late 2019 (about three-quarters were in the individual market, the rest were in the group market — mostly small group, but some large group as well).
Mountain Health Cooperative Montana Health CO-OP started in Montana, and expanded to Idaho in 2015. Then-CEO Jerry Dworak noted in 2015 that the CO-OP didn’t expand too quickly, and maintained substantial reserves; they were not relying as heavily as other CO-OPs on risk corridor payments to shore up their financial position.
Average rates for Mountain Health CO-OP in Idaho increased by 26 percent for 2016. For 2017, Mountain Health CO-OP’s average rate increase was 29 percent in Idaho, and 31 percent in Montana. As of December 22, 2016, the CO-OP ceased enrollments in Montana due to the “large number of new members for 2017.” The enrollment freeze was lifted in July 2017 for off-exchange enrollments; on-exchange enrollments in Montana were expected to become available in the summer of 2017 as well. In both cases, this was ahead of schedule, as the CO-OP had originally expected the lift the enrollment freeze as of November 1, at the start of open enrollment.
In another indication of the CO-OP’s increasing viability, their average proposed rate increase for 2018 was only 4 percent in Montana. This demonstrates that the 31 percent average rate increase for 2017 may have been enough to stabilize the CO-OP and “right-size” the premiums. Ultimately, the average rate increase for 2018 ended up being considerably higher, at 16.6 percent, due to the Trump Administration’s decision to eliminate federal funding for cost-sharing reductions (CSR).
For 2019, the CO-OP implemented an average rate increase of 10.3 percent in Montana and 7 percent in Idaho. And for 2020, their average rates decreased by nearly 12 percent in Montana, and increased by 6 percent in Idaho. And rates in both years would have been lower if not for the Trump Administration’s decisions to expand access to short-term plans and association health plans, and the GOP tax bill provision that eliminated the individual mandate penalty after the end of 2018 (all of these changes ultimately reduce the number of healthy people who purchase coverage in the ACA-compliant market).
The CO-OP’s board of directors announced in June 2018 that Richard Miltenberger would serve as the new CEO of Mountain Health CO-OP. In 2018, the CO-OP had about 25,000 members in Montana, and 24,000 in Idaho. In Montana, the CO-OP had more individual market enrollees than either of the other two insurers that offer plans in the state.
For 2021, the CO-OP raised rates only slightly in both Montana and Idaho, and has also expanded into neighboring Wyoming, which has only had one individual market insurer since 2016.
For 2018, Common Ground’s average rate increase was 63 percent. But it would only have been about 20 percent if the Trump Administration hadn’t eliminated federal funding for cost-sharing reductions. The rate increase for 2018 applied to about 29,000 members who had coverage in the individual market.
But for 2019, the CO-OP’s average premiums decreased by almost 19 percent. For 2020, they decreased again, by about 9 percent, and for 2021, they decreased again, by more than 6 percent. This series of rate decreases indicates a much more stable environment than they were facing for 2018.
2015 risk adjustment: 9 of 10 CO-OPs owed payments
Under the ACA’s risk adjustment program, health insurers with lower-risk enrollees end up paying money to health insurers with higher-risk enrollees. The idea is to prevent insurers from designing plans that appeal only to healthy enrollees, and to ensure that premiums reflect benefit levels, rather than the overall health of a plan’s enrollees. But CO-OPs found themselves disproportionately having to pay into the risk adjustment program, which hampered their financial progress and resulted in several having to close their doors.
On June 30, 2016, HHS released data on risk adjustment numbers for 2015. Of the 10 CO-OPs that were still operational at that point, nine had to pay into the risk adjustment program for 2015; only one remaining CO-OP – Community Health Options (operating in Maine and New Hampshire at that point) – received a risk adjustment payment. Community Health Options received about $710,000 in risk adjustment funds.
Some of the remaining CO-OPs had begun to be profitable in early 2016 (details below), but their financial situations now had to be considered in conjunction with the fact that the CO-OPs had to pay out the following amounts in risk adjustment payments, making their financial futures even more uncertain (of the nine CO-OPs that owed money in 2016 for the risk adjustment program, six have closed or are facing impending closure; only the CO-OPs listed in bold continue to be fully operational)
Mountain Health CO-OP/Montana Health CO-OP (Idaho and Montana): $481,000
Oregon Health CO-OP (Community Care of Oregon): $914,000 (closed; plans ended July 31, 2016)
Common Ground CO-OP (Wisconsin): $1.9 million
Minuteman (operates in Massachusetts and New Hampshire, but risk adjustment outlay was for NH; MA operates its own risk adjustment program): $11 million (Minuteman has filed a lawsuit against CMS in an effort to “invalidate the illegal Risk Adjustment methodology and institute necessary changes immediately.” Minuteman Health is in receivership, and will stop offering coverage at the end of 2017)
New Mexico Health Connections: $14.6 million. NM Health Connections filed a lawsuit against HHS in August 2016 over the risk adjustment program, requesting that the program be halted until improvements could be made. A judge sided with the CO-OP, and the Trump Administration briefly halted all risk adjustment collections and payments in response to the ruling. This would have been destabilizing to the individual markets nationwide if it had continued, but CMS announced in late July 2018 that insurers expecting risk adjustment payments for 2017 would receive them, on schedule, in the fall of 2018.
Healthy CT: $13.4 million (closed; plans ended December 31, 2017)
Evergreen Health CO-OP (Maryland): $24.2 million (Evergreen filed a lawsuit in 2016 to block the collection of the risk adjustment payments; a district judge denied the CO-OP’s request, and the CO-OP immediately appealed the decision; Between $2 million and $3 million of the risk adjustment payment was to be withheld by CMS in mid-July from funds owed to the CO-OP for premium subsidies and cost-sharing reductions, and the remainder of the payment had to be remitted by Evergreen by August 15). Evergreen noted that they would have profited between $2 million and $3 million in 2016 if it weren’t for the $24 million they had to pay into the risk adjustment program. As a result of the losses, they began the process of being acquired by private investors and converting to a for-profit entity (this process ultimately didn’t happen fast enough for Evergreen to be able to sell or renew individual plans for 2017; in July 2017 the investors terminated the acquisition, and Maryland regulators ultimately placed Evergreen Health in receivership).
Land of Lincoln (Illinois): $31.8 million (the state ordered Land of Lincoln to withhold payment until if and when the CO-OP received the money they were supposed to get in 2015 for the 2014 risk corridors program. That tactic didn’t work however, and in July 2016, Illinois regulators began the process of closing Land of Lincoln Health; the CO-OP was placed in liquidation as of October 1, 2016).
Freelancer’s CO-OP (Health Republic Insurance of New Jersey): $46.3 million (in September 2016, regulators placed Health Republic in rehabilitation, and the CO-OP stopped selling new plans; the risk adjustment payment — which was much more than they had previously been advised it would be — was cited as a primary reason for the CO-OP’s financial instability).
HHS implemented changes to the risk adjustment program for 2018, to make it more equitable and less burdensome for new, smaller carriers. But risk adjustment has remained a contentious issue. New Mexico Health Connections sued the federal government over the risk adjustment formula, arguing that it disadvantaged smaller, newer insurers (like the CO-OP) and favored larger, more established insurers. A judge agreed with the CO-OP, and ruled that the federal government needed to justify its risk adjustment formula for 2014-2018.
The Trump Administration responded by announcing in July 2018 that all risk adjustment payments and collections, nationwide, would cease for the time being, which caused widespread uncertainty and concern among health insurers and state regulators. But in late July, CMS announced that they would resume payments under the risk adjustment program, and insurers due to receive a total of $5.2 billion in risk adjustment payments for 2017 will receive that money in the timely fashion in the fall of 2018.
2016 risk adjustment: 4 out of 5 remaining CO-OPs once again owed money
On June 30, 2017, HHS published the risk adjustment report for 2016. Maine Community Health Options was once again the only remaining CO-OP to receive funding under the risk adjustment program; they got $9.1 million.
The report also detailed the amount that insurers owe or would receive for 2016 under the ACA’s temporary reinsurance program (2016 was the last year for the reinsurance program). All five of the remaining CO-OPs received money from the 2016 reinsurance program, but in most cases, it was not as much as they had to pay out under the risk adjustment program.
Maine Community Health Options — the only remaining CO-OP receiving funding under the risk adjustment program for 2016 — also received $21 million under the 2016 reinsurance program, which was far more than any of the other CO-OPs received.
Common Ground CO-OP had to pay $3.7 million in risk adjustment (but received $10.5 million in reinsurance)
Mountain Health CO-OP/Montana Health CO-OP had to pay $8.3 million in risk adjustment (but received $2.9 million in reinsurance)
New Mexico Health Connections had to pay $8.9 million in risk adjustment (but received $3 million in reinsurance) NM Health Connections sued the federal government in 2016 over the risk adjustment program, arguing that the system was set up in a way that ultimately ends up taking money from smaller, newer insurers and giving it to larger, more established insurers. A judge sided with the CO-OP, and the Trump Administration responded by briefly suspending payments and collections under the risk adjustment program nationwide.
Minuteman, which closed at the end of 2017, had to pay $25.4 million in risk adjustment for 2016 (but received $3 million in reinsurance). Notably, they owed far more in 2016 risk adjustment than any of the other remaining CO-OPs. They explained in June 2017, in conjunction with their announcement that they would no longer be a CO-OP after 2017 (at that point, they hoped to re-open as a for-profit insurer, but that plan was scrapped when they were unable to raise enough capital to secure a license for 2018), that the amount they had been forced to pay into the risk adjustment program amounted to about a third of the premiums they had collected.
2017 risk adjustment
On July 9, 2018, CMS published the risk adjustment report for 2017, showing which insurers owed money into the program, and which would receive money. Ironically, this came just three days after CMS had announced that they would freeze risk adjustment transfers as a result of the New Mexico court ruling regarding the risk adjustment methodology. But by the end of July, the risk adjustment program had been restarted (with additional justification for the methodology, the comply with the judge’s request), and payments to insurers were expected to be made on schedule, in the fall of 2018.
But once again, CHO was the only CO-OP that will receive funds under the risk adjustment program for 2017. The other three remaining CO-OPs all owed money:
Community Health Options received $10 million from the risk adjustment program.
Common Ground CO-OP had to pay $1.15 million into the risk adjustment program. This was due to their small group plans; they received a small amount of money under the risk adjustment program for their individual market plans, but it was more than offset by the amount they had to pay in the small group market.
New Mexico Health Connections had to pay $5.6 million into the risk adjustment program.
Mountain Health CO-OP/Montana Health CO-OP had to pay $36.6 million into the risk adjustment program.
2016: New HHS regulations to stabilize CO-OPs, but ultimately too little too late for most CO-OPs
In May 2016, after extensive input from stakeholders, HHS issued new regulations in an effort to help the remaining CO-OPs become financially viable. Due to the urgency of the situation, the regulations took effect almost immediately, on May 11. The new regulations made a variety of changes to make it easier for CO-OPs to seek outside investments and expand their coverage offerings beyond the individual and small group markets:
Prior to 2016, there were relatively strict rules governing the makeup of CO-OP boards. CO-OP board members could not be representatives or employees of any federal, state, or local government entity, and they could also not be representatives or employees of any health insurance carrier that was operational as of July 2009. These rules were established to prevent conflicts of interest among CO-OP board members (for example, an employee of a competing insurance company might have a conflict of interest and might not make decisions solely based on the best interests of the CO-OP). The new regulations relaxed these rules, as HHS had discovered that the rules were too strict, and were preventing well-qualified experts from joining CO-OP boards. The new regulations allow government employees and representatives to be on CO-OP boards as long as they’re not in senior or high-level positions in the government. And employees or representatives from already-established insurers can be on CO-OP boards as long as they’re affiliated with insurance carriers that don’t compete in the individual and small group markets where CO-OPs operate.
The old rules also required all of a CO-OP’s board of directors to be elected by CO-OP members, and required all members of the board of directors to also be members of the CO-OP. The new regulations allow for some leeway here too. Only a majority of the board members must be elected by CO-OP members, and board members are no longer required to be members of the CO-OP. This allows outside entities that are providing loans, investments, and services to the CO-OP to have representatives on the board of directors, and will — in theory — make it easier for CO-OPs to attract new investments. HHS noted that including investor representatives on boards of directors is a common practice in the private sector. The old rules made it difficult for CO-OPs to find willing and qualified individuals to serve on their boards of directors, and the new rules allow them to seek outside experts to provide assistance via being on the board of directors. The CO-OPs are member-driven though, as the majority of board members must still be elected by CO-OP members. New Mexico Health Connections announced in 2016 that they planned to work with Raymond James, a New York based investment firm, to raise “a substantial amount” of funding for New Mexico Health Connections. Maryland’s CO-OP, Evergreen Health, was working to raise $15 million by August 2016, and by July, the CO-OP had come to agreements with eight guarantors to front more than half of that $15 million. But Evergreen Health later opted for the ultimate private investor arrangement, with plans for private investors to acquire the CO-OP in 2017. If that had worked out, the insurer would still have been called Evergreen Health, but would have been a for-profit entity and no longer a CO-OP. Ultimately, the new arrangement didn’t receive federal approval in time to continue to offer coverage for 2017, and Maryland’s Insurance Commissioner announced on December 8 that Evergreen would not sell or renew any individual plans for 2017. They had planned to return to the individual market in 2018, but the private investors terminated the acquisition in July 2017, and Maryland regulators imposed an administrative order that ultimately resulted in the CO-OP entering receivership.
The ACA requires that at least two-thirds of a CO-OP’s policies must be issued in the individual and small group markets in the state where the CO-OP is licensed. Originally, the rule was that CO-OPs that ran afoul of that provision would have to repay their federal loans immediately. The new regulations allow for more leeway: CO-OPs that aren’t meeting the two-thirds rule don’t necessarily have to repay their loans immediately, but they do have to demonstrate a plan for getting into compliance with the two-thirds rule, and be acting in good faith to achieve that standard (most CO-OPs only operate in the individual and small group markets thus far, but HealthyCT in Connecticut was an exception – they offered large group plans in addition to individual and small group plans. New Mexico Health Connections also had large group enrollments until 2018, when they partnered with a for-profit entity that is now covering their employer groups; New Mexico Health Connections is continuing to provide CO-OP coverage for their individual market enrollees). The new flexibility allows CO-OPs to enter into other markets – including large group, Medicare, Medicaid, and ancillary products such as dental and vision, without having to be overly concerned with running afoul of the two-thirds rule and triggering an immediate payback requirement for federal loans.
Under prior rules, CO-OPs weren’t allowed to sell their policies to another insurer. So when 12 CO-OPs failed by the end of 2015, the only option was to send their members back to the general market – on or off-exchange – to seek new coverage. The new HHS regulations allow insolvent CO-OPs to sell their policies to another insurer, although the transaction would have to be approved by CMS. The idea here was to preserve coverage for existing members if additional CO-OPs fail. But of the ten CO-OPs that were still operational when the new rules were finalized, six have since folded, and all of their members have had to purchase new coverage, as none of the failed CO-OPs have been purchased by other insurers.
Membership surpassed a million enrollees by 2015, but has declined sharply with CO-OP closures
During the 2014 open enrollment period, just over 400,000 people enrolled in CO-OPs nationwide. That climbed to over a million by the end of the 2015 open enrollment period – despite the fact that CoOpportunity (Iowa and Nebraska) stopped selling policies in December 2014, and their once-robust enrollment (120,000 members) had dropped to about 2,000 people by mid-February 2015. While enrollment in private plans through the exchanges increased by 46 percent in 2015 (from 8 million people in the first open enrollment period, to 11.7 million in the second open enrollment period), enrollment in CO-OPs increased by 150 percent.
At the end of 2015, however, more than 500,000 of those enrollees had to switch to a different plan, as 11 of the 22 remaining CO-OPs closed at the end of 2015 (in large part due to the fact that insurers did not receive most of the risk corridor money they were owed for 2014). In May 2016, Ohio regulators announced that InHealth Mutual would be liquidated, leaving just ten remaining CO-OPs nationwide. And only three of them were not subject to enhanced federal oversight as of 2016: New Mexico Health Connections, Mountain Health Cooperative (Montana and Idaho), and Minuteman Health, Inc (Massachusetts and New Hampshire). The other eight CO-OPs still in operation at that point were all under “corrective action plans” from the federal government.
Seven of the eleven CO-OPs that were still operational at the end of 2015 had at least 25,000 enrollees as of mid-2015, which was the minimum number that CMS said was necessary for financial solvency. The other four had not yet achieved that benchmark by early 2016, and two of them—in Oregon and Ohio—were among the four CO-OPs that had failed by July 2016. Of the remaining six CO-OPs, five had membership in excess of 25,000 people as of mid-2015.
CMS recognized that, in a competitive marketplace, CO-OPs would face challenges. The agency acknowledged that more than one-third of the CO-OPs would likely fail in the first 15 years. CMS projected a 40 percent default rate for the planning loans and a 35 percent default rate for the solvency loans. But with only four of 23 CO-OPs still in business as of 2018, the failure rate is 83 percent, after four and a half years of operations.
The remaining CO-OPs had roughly the following enrollment totals as of 2019, including individual and group plans:
New Mexico Health Connections: About 19,000 members (this had dropped to about 14,000 by mid-2020)
Common Ground: About 52,000 members
How many CO-OPs have failed?
Since 2013, 20 of the original 23 CO-OPs have closed.
:
ARIZONA (Meritus Health Partners): In a deviation from the norm, Meritus offered year-round enrollment outside the exchange until late summer 2015; tax credits were only available inside the exchange, and regular open enrollment dates applied to plans purchased in the exchange. Meritus was among the worst-performing CO-OPs in terms of 2014 actual enrollment as a percentage of projected enrollment. HHS reported that just 869 people had enrolled through Meritus as of the end of 2014, out of a projected 24,000. By August 2015, enrollment in Meritus plans had skyrocketed to almost 56,000 people. But just two days prior to the start of the 2016 open enrollment period, the Arizona Department of Insurance announced that Meritus could no longer sell or renew policies, and that existing plans would terminate at the end of 2015.
COLORADO (Colorado HealthOP): The CO-OP got roughly 13 percent of the exchange market share in 2014 (the second-highest of any carrier in the exchange), but they lowered their prices considerably for 2015, and garnered nearly 40 percent of the exchange’s enrollees during the second open enrollment period. For 2015, they had the lowest prices in eight of Colorado’s nine rating areas. Colorado Health OP was also facing a shortfall from the risk corridors program, and immediately began working to overcome it. But their efforts were not sufficient, and the Colorado Division of Insurance decertified them from the exchange on October 16, 2015.
CONNECTICUT (HealthyCT): The CO-OP had 15.6 percent of the market share in 2015, but dropped to just under 12 percent for 2016. The CO-OP raised its premiums by an average of 7.2 percent for 2016. Unlike many other CO-OPs, HealthyCT wasn’t counting on the risk corridors payout that they were owed for 2014, so the shortfall wasn’t as significant for HealthyCT as it was for some of the other CO-OPs. Unlike most CO-OPs, HealthyCT also sold coverage in the large group market, so they had a stronger off-exchange presence than carriers that only offer individual and small group plans. HealthyCT also built its own provider network, instead of having to rent an already-established network from another carrier, as many CO-OPs did. But ultimately, the CO-OP succumbed to the $13.4 million bill that they received for the 2015 risk adjustment program. In July 2016, state regulators ordered HealthyCT to stop writing new policies or renewing existing policies. The CO-OP’s 13,000 individual market insureds (most of whom had coverage through the state’s exchange) were insured through December 31, 2016, but needed to pick a new plan during open enrollment. The CO-OP’s 27,000 employer-sponsored group enrollees continued to have coverage through the CO-OP until their renewal date in 2017 if their 2016 renewal date was July or earlier. Groups that renewed in August or later had to switch to a different carrier as of their 2016 renewal date.
ILLINOIS (Land of Lincoln Health): The CO-OP weathered the initial risk corridor storm, as they weren’t counting on full payment from CMS. But they limited small group enrollments for the last two months of 2015, and they also capping 2016 enrollment at about 65,000 to 70,000 people (roughly a 30 percent increase over their 2015 membership) in order to sustainably manage their growth. Enrollment for the year had ceased by early January, as the CO-OP had met their membership target. During the first quarter of 2016, Land of Lincoln lost $7.1 million, up from the $5.3 million they lost in the first quarter of 2015. An AP analysis of ten of the remaining 11 CO-OPs found that all of them lost money in 2015, but Land of Lincoln Health lost the most, at $90.8 million. Nevertheless, the CO-OP was on the hook for a $31.8 million payment for 2015 risk adjustment. In late June, state regulators ordered Land of Lincoln to withhold payment until if and when the CO-OP receives the $73 million they were supposed to get in 2015 for the 2014 risk corridors program. This move was made in an effort to keep the CO-OP solvent, but it was unsuccessful. On July 12, regulators in Illinois announced that they were beginning the process of shutting down Land of Lincoln Health; the CO-OP closed on September 30, 2016, and the 49,000 enrollees were granted a special enrollment period to select a new plan.
IOWA and NEBRASKA (CoOportunity Health): CoOportunity Health was taken over by Iowa state regulators in late December 2014. Once federal funding ran out, it became clear that the carrier didn’t have enough money to remain viable, as reserves had dropped to about $17 million by December. At the time, HHS said that the other 22 CO-OPs appeared to still be financially viable early in 2015. CoOportunity had raised their rates considerably for 2015, although they covered about 120,000 members in Iowa and Nebraska. Most existing policyholders transitioned to other carriers by mid-February 2015, but there were still about 2,000 members at that point. Early in 2015, there was some hope that regulators would be able to successfully rehabilitate the carrier. But by February 18, the Insurance Division announced that they would begin the process of liquidating the carrier before the end of the month, and the remaining insureds had to transition to other carriers by March 1.
KENTUCKY (Kentucky Health Care Cooperative): By the end of the first open enrollment period, Kentucky Health Cooperative had garnered 75 percent of the exchange enrollments in Kentucky. By the end of 2014, Kentucky Health Cooperative was covering nearly 56,000 people. The CO-OP had planned to expand into West Virginia for 2015, but backed out just a week before open enrollment over worries that their infrastructure wasn’t ready for the new influx of members. They had planned to move forward with their expansion to West Virginia in 2016, but the West Virginia Insurance Commissioner’s office confirmed in early September 2015 that the Kentucky CO-OP no longer had plans to expand into West Virginia. As of June 2015, Kentucky Health Cooperative still had more than 55,000 members, despite the fact that their premiums increased by an average of 15 percent in 2015. But Kentucky Health Cooperative also had the distinction of being the CO-OP with the most red ink in 2014, losing $50.4 million by the end of 2014 (although losses had diminished considerably in 2015; by the end of the first half of the year, losses totaled just $4 million). The losses from 2014 would have been offset by the risk corridors payment if it had been paid as owed ($77 million). Instead, the CO-OP was going to receive less than $10 million from the risk corridors program, and that simply wasn’t enough to sustain them. Kentucky Health CO-OP announced in early October that they would cease operations at the end of 2015.
LOUISIANA (Louisiana Health Cooperative Inc.): In July 2015, the Louisiana Department of Insurance announced that the CO-OP would be winding down its operations this year, and would not participate in the upcoming open enrollment for 2016. The existing 17,000 enrollees were able to remain with the carrier for the rest of 2015.
MASSACHUSETTS and NEW HAMPSHIRE (Minuteman Health Inc.) Enrollment exceeded 22,500 in the first quarter of 2016, and the CO-OP ceased its advertising campaign in an effort to avoid enrolling too many members. The CO-OP had a profitable first quarter of 2016, as opposed to the $3.8 million loss they suffered in the first quarter of 2015. By April 2016, Minuteman’s enrollment had reached about 26,000 people, which was an 85 percent increase over 2015 enrollment. More than 21,000 of Minuteman’s QHP enrollees were in New Hampshire, and the state also has more than 3,400 Premium Assistance Program (privatized Medicaid) members with Minuteman coverage. All Minuteman Health enrollees in New Hampshire and Massachusetts needed to secure new coverage for 2018, as the CO-OP closed at the end of 2017.
MARYLAND (Evergreen Health Cooperative Inc.): Enrollment was under 30,000 at the end of 2015, and had grown to 40,000 by March 2016. Evergreen had its first-ever profitable quarter at the beginning of 2016, with a net income of $547,000. That’s compared with a loss of $2.3 million in the first quarter of 2015. For 2015, Evergreen Health CO-OP lost money, as did all of the CO-OPs. But their loss was the smallest of the 11 remaining CO-OPs, at $10.8 million. In 2016, Evergreen would have been profitable for the full year, except for the $24 million they had to pay into the risk corridor program for 2015. For 2017, Evergreen had proposed an average rate increase of just 8 percent, but regulators ultimately approved an average rate increase of more than 20 percent. Evergreen owed CMS $24.2 million in risk adjustment funds for 2015, which was more than a quarter of the carrier’s total revenue. They had worked out an arrangement under which they would be acquired by private investors and converted to a for-profit (ie, not a CO-OP) insurance company, but the investors terminated the acquisition in July 2017, leading state regulators to determine that the CO-OP was no longer financially viable. The CO-OP was placed in receivership in 2017, and did not offer plans for 2018.
MICHIGAN (Consumers Mutual Insurance of Michigan): Nearly 80 percent of the CO-OP’s enrollees in 2015 were off-exchange. Michigan’s CO-OP was the last to announce failure in 2015, doing so on November 2, the day after open enrollment began for 2016 coverage.
NEVADA (Nevada Health Cooperative): In late August 2015, officials at Nevada Health CO-OP announced — amid mounting financial losses and “challenging market conditions” — that the carrier would be ceasing operations by the end of the year. The CO-OP had about a third of the individual enrollments in the Nevada exchange for 2015, but they had to switch to another carrier for 2016. One issue that created problems for Nevada Health CO-OP was their generous enrollment protocol. From 2014 – 2019, Nevada was the only state in the country that allowed off-exchange enrollment to run year-round. But carriers could implement a 90-day waiting period for benefits to begin, in order to discourage people from waiting until they needed care to sign up. But the CO-OP let people enroll with no waiting period initially, and later added a 30-day waiting period in late 2014 The result was a membership that skewed towards sicker enrollees with higher claims costs.
NEW JERSEY (Health Republic Insurance of New Jersey): The CO-OP ended 2014 with 4,254 members, according to HHS. By June 2015, the CO-OP’s enrollment had reached 60,000 people, thanks to new plan designs and lower premiums. Rate increases for 2016 ranged from 9 percent to 18 percent. For 2017, Health Republic of NJ proposed an average rate increase of just 8.5 percent, but ultimately the carrier was placed in rehabilitation in mid-September, and had to stop offering new plans at that point. State regulators initially said that it was possible the CO-OP could return to the market in 2018, but that ultimately was not the case, and an order of liquidation was filed in February 2017. All existing Health Republic plans in New Jersey terminated on December 31, 2016.
NEW MEXICO (New Mexico Health Connections): By the end of the 2016 open enrollment period, New Mexico Health Connections had more than 50,000 members, and the CO-OP had added several big-name employers, including Goodwill Industries of New Mexico, Youth Development Inc., and Heritage Hotels & Resorts. But in 2018, New Mexico Health Connections sold its employer-sponsored market segment to a for-profit entity that is now providing coverage to the employer groups that were previously covered by the CO-OP (that entity also entered the individual market in New Mexico in 2020, coming into direct competition with the CO-OP). New Mexico Health Connections only offered coverage in the individual market in 2019 and 2020, and closed its doors for good at the end of 2020. Enrollment in 2019 stood at 18,689, but had dropped to about 14,000 in 2020. The New Mexico Office of the Superintendent of Insurance has published a set of FAQ about the CO-OP closure.
NEW YORK (Health Republic Insurance of New York): The CO-OP enrolled 19 percent of the people who purchased plans through NY State of Health (the state-run exchange) during the first open enrollment period, for 2014 coverage. Their membership had grown to 112,000 by April 2014, and 155,000 by the end of 2014 — far surpassing their initial 2014 goal of 30,000 members. In 2015, they again garnered 19 percent of NY State of Health’s private plan enrollees, and had a total enrollment of about 200,000 people by the time regulators announced in September 2015 that the CO-OP would be closing. There were 16 carriers offering plans through NY State of Health, and only one had a slightly higher market share than the CO-OP. But Health Republic of NY lost $35 million in 2014, and $52.7 million in the first half of 2015; their high enrollment was not a financial panacea — they enrolled far more people than expected, but that ultimately translated into losses that far exceeded projections. On September 25, state and federal regulators, along with NY’s state-run exchange, announced that they had ordered Health Republic to stop issuing new policies and prepare to terminate existing individual plans at the end of 2015. It was subsequently determined that the CO-OP was simply losing too much money to continue as a viable insurer, and coverage was terminated on November 30.
OHIO (InHealth Mutual): InHealth Mutual enrolled just 11 percent of its target membership for 2014. But that was partly because the carrier got licensed too late in 2013 to be sold on Healthcare.gov. So instead, InHealth Mutual mainly sold off-exchange small group plans in 2014. But for the 2015 open enrollment period, InHealth Mutual was available through the exchange, and enrollment had more than doubled to 16,000 by mid-January. However, during the first six months of 2015, InHealth reported $9.1 million in net losses. Ultimately, state regulators announced in late May 2016 that the CO-OP would be liquidated, and that its 21,800 enrollees would have a 60 day special enrollment period during which they would be able to switch to a different carrier. Enrollees who remained with InHealth Mutual had coverage through the end of 2016, but it was through the state guaranty fund, which means it had a cap of $500,000 and would subject the enrollees to the ACA’s penalty for not having minimum essential coverage.
OREGON (Health Republic Insurance of Oregon): Health Republic’s failure was blamed in large part on the risk corridor shortfall, as was the case with many of the CO-OPs that failed in late 2015. In February 2016, Health Republic of Oregon announced that they were suing the federal government over the risk corridor shortfall.
OREGON (Oregon’s Health CO-OP): Oregon had two CO-OPs. Oregon Health CO-OP was officially called “Community Care of Oregon.” It had fewer than 1,600 members at the end of 2014. By January 2015, their membership had grown to 10,000 people, and by April 2015, they said they were on track to hit 20,000 by the end of the year, and had “healthy financial reserves.” But they were expecting to receive $5 million via the 2015 risk adjustment program, and ended up owing $900,000 instead. That pushed the CO-OP into insolvent territory, and the state announced in July 2016 that they were placing the CO-OP in receivership. All Oregon Health CO-OP plans terminated on July 31, 2016. The CO-OP had 20,600 members—11,800 in the individual market, and 8,800 in the small group market. Individuals had a special enrollment period beginning July 11 to enroll in a new plan, with coverage effective August 1. The state also worked out an arrangement to ensure that CO-OP members get credit for their out-of-pocket spending during the first seven months of 2016, even after transferring to a new carrier starting in August.
SOUTH CAROLINA (Consumer’s Choice Health Insurance Company): Consumers Choice had the same CEO as neighboring Tennessee’s Community Health Alliance Mutual Insurance Company, which also closed at the end of 2015. Consumer’s Choice had 67,000 members in 2015.
TENNESSEE (Community Health Alliance Mutual Insurance Company): The CO-OP had fewer than 2,300 members at the end of 2014 — out of a projected 25,000 — and had a loss of $22 million in 2014. But they lowered their premiums for 2015 and experienced a surge in enrollment signing up more than 35,000 members as of May 2015. Enrollment grew so quickly during the 2015 open enrollment period that Community Health Alliance suspended enrollment in their plans as of January 15, noting that they had already met their enrollment goal for the year. They proposed a 32.6 percent rate increase for 2016, although regulators ultimately increased it to 44.7 percent in order to preserve the CO-OP’s viability. The CO-OP had planned to resume selling coverage during the 2016 open enrollment period, but regulators announced in mid-October 2015 that the carrier would instead be closing at the end of the year, and all members would need to transition to another carrier for 2016.
UTAH (Arches Mutual Insurance Company): Arches insured roughly a quarter of Utah’s exchange enrollees in 2015. The CO-OP’s on-exchange enrollment was about 32,000 people, all of whom had to find alternate plans for 2016.
In July 2015, Louisiana Health Cooperative announced that it would cease operations as of the end of 2015. LHC was the second CO-OP to fail; CoOpportunity, which served Nebraska and Iowa, received liquidation orders from state regulators in February 2015.
At the end of August, the Nevada Health CO-OP announced they would also close at the end of 2015. And in September, New York officials announced that Health Republic of New York, the nation’s largest CO-OP, would begin winding down operations immediately, and that individual Health Republic of NY policies would terminate at the end of 2015.
On October 1, 2015 the federal government notified health insurance carriers across the country that risk corridors payments from 2014 would only amount to 12.6 percent of the total owed to the carriers. The program is budget neutral as a result of the 2015 benefit and payment parameters released by HHS in March 2014. And the “Cromnibus bill” that was passed at the end of 2014 eliminated the possibility of the risk corridors program being anything but budget neutral, despite the fact that HHS had said they would adjust the program as necessary going forward.
But very few carriers had lower-than-expected claims in 2014. So the payments into the risk corridors program were far less than the amount owed to carriers – and the result is that the carriers essentially get an IOU for a total of $2.5 billion that may or may not be recouped with 2015 and 2016 risk corridors funding (risk corridors still have to be budget neutral in 2015 and 2016, so if there’s a shortfall again, carriers would fall even further into the red).
Many health insurance carriers – particularly smaller, newer companies – faced financial difficulties as a result of the risk corridors shortfall. CO-OPs were particularly vulnerable because they were all start-ups and tended to be relatively small. All of the CO-OPs that announced closures in the last quarter of 2015 attributed their failure to the risk corridor payment shortfall.
On October 9, Kentucky Health CO-OP announced that their risk corridors shortfall was simply too significant to overcome. (The CO-OP was supposed to receive $77 million, but was only going to get $9.7 million as a result of the shortfall.) The CO-OP did not offer plans for 2016, and their 2015 policies terminated at the end of the year. About 51,000 CO-OP members in Kentucky had to shop for new coverage for 2016.
And then on October 14, Tennessee regulators announced that Community Health Alliance would also close at the end of the year. CHA stopped enrolling new members in January 2015, but it had planned to sell policies during the 2016 open enrollment period, albeit with a 44.7 percent rate increase. Ultimately, the risk of the CO-OP’s failure in 2016 was too great, and it wound down operations by the end of the year instead.
Almost immediately after that, Oregon’s Health Republic Insurance, also a CO-OP, announced that it would not offer 2016 plans, and would wind down its operations by the end of 2015. Health Republic had 15,000 members.
On October 22, The South Carolina Department of Insurance announced that Consumers Choice would voluntarily wind down its operations by year-end, and would not sell plans for 2016. Consumers Choice was run by the same CEO – Jerry Burgess – as Community Health Alliance in Tennessee. 67,000 Consumers Choice members had to switch to a new carrier for 2016. The South Carolina Department of Insurance put together a series of FAQs for impacted plan members.
On October 27, the Utah Insurance Department announced that they were placing Arches Health Plan in receivership, and the carrier would wind down operations by the end of the year. Arches Health Plan garnered roughly a quarter of Utah’s exchange market share in 2015, but those enrollees had to switch to a new carrier for 2016.
On October 30, just two days before the start of the 2016 open enrollment period, the Arizona Department of Insurance announced that Meritus would cease selling and renewing coverage, and existing plans would terminate at the end of 2015. Healthcare.gov removed Meritus plans from the exchange website, and current enrollees — who comprised roughly a third of the private plan enrollees in the Arizona exchange at that point — had to obtain new coverage for 2016. Meritus was unique in that they allowed people to enroll off-exchange year-round up until late-summer 2015. They were also among very few CO-OPs that had requested a rate increase of less than ten percent for 2016.
Open enrollment for 2016 coverage began on November 1, 2015, and coverage was still available at that point from the remaining 12 CO-OPs. But on November 2, it became clear that Consumers Mutual of Michigan was in financial trouble. The carrier announced that they would not offer plans in the exchange in 2016, although at that point, there was still a possibility that they would continue to offer plans outside the exchange. But on November 4, they announced that they would wind down their operations by the end of the year, and all 28,000 members would need to find new coverage for 2016.
In May 2016, state regulators in Ohio announced that InHealth Mutual would shut down and that members would have a 60 day special enrollment period to select a new plan.
In July 2016, state regulators in Connecticut announced that HealthyCT would shut down at the end of 2016 (employer groups were able to keep their coverage through the renewal date in 2017, as long as the plan’s renewal date in 2016 was July or earlier).
In July 2016, state regulators in Oregon announced that Oregon Health CO-OP would shut down at the end of July 2016.
In July 2016, state regulators in Illinois announced that they were beginning the process of taking over Land of Lincoln Health and winding down the CO-OP’s operations. A special enrollment period was created for the CO-OP’s 49,000 enrollees.
In September 2016, state regulators in New Jersey placed Health Republic Insurance of New Jersey into rehabilitation, and the CO-OP ceased selling new plans. Health Republic’s existing plans terminated at the end of 2016.
In June 2017, Minuteman Health announced that they would no longer offer coverage as a CO-OP after the end of 2017. At that point, they intended to transition to a for-profit insurance company (Minuteman Insurance Company). However, they were unable to raise enough capital by the August 2017 deadline for securing a license for 2018, and thus did not re-open as a for-profit insurer. Minuteman Health is in receivership, and enrollees needed to obtain new coverage for 2018.
In July 2017, Maryland regulators issued an administrative order blocking Evergreen Health from selling or renewing any plans (they only had group plans in force at that point, having terminated individual market plans at the end of 2016). The order noted that it was expected that the process would culminate in receivership, and the receivership announcement came by the end of July.
The four CO-OPs that were still operational as of 2018 were all still operational in 2020. But New Mexico Health Connections closed at the end of 2020, leaving just three CO-OPs still operational in five states as of 2021.
CO-OPs’ unique challenges
In July 2015, HHS released financial and enrollment data for the 23 CO-OPs, as of December 2014. The outlook based on the report was not particularly great: all but one of the CO-OPs operated at a loss in 2014, and 13 of the CO-OPs fell far short of their enrollment goals for 2014. The audit called into question the CO-OPs’ ability to repay the loans that they received from the federal government under Obamacare.
The risk corridor shortfall was directly implicated in the failure of CO-OPs in Kentucky, Tennessee, Colorado, Oregon, South Carolina, Utah, Arizona, and Michigan. There is no way around the fact that such a significant financial blow is hard to overcome, particularly for carriers that were new to the market in 2014. Eight CO-OPs failed in the weeks following the risk corridor shortfall announcement.
Those eight CO-OPs were in serious financial jeopardy as a result of the risk corridor shortfall and other factors, and state Insurance Commissioners made the difficult decision to shut them down prior to the start of open enrollment, or shortly thereafter. It’s much less complicated to wind down operations in an orderly fashion in the last couple months of a year than it is to have a carrier become financially insolvent mid-year.
That, coupled with the late announcement regarding the risk corridors shortfall, explains the rash of CO-OP failures announced in late 2015. It should be noted that it was not just CO-OPs feeling the pain from the risk corridor shortfall; in Wisconsin, Anthem exited the exchange market in three counties and scaled back operations in 34 other counties for 2016, partially as a result of the risk corridor shortfall. And in Wyoming, WINhealth exited the individual market because of the risk corridor shortfall; in Alaska and Oregon, Moda nearly exited the market for 2016, due in large part to the risk corridor shortfall (Moda ultimately left Alaska’s market at the end of 2016, in order to focus fully on the Oregon market).
But with 12 out of 23 CO-OPs going under in 2015, it wasn’t surprising that the mood in late 2015 was relatively pessimistic regarding the CO-OP model. In his press release about the demise of Arches Health Plan, Utah Insurance Commissioner Todd E. Kiser noted that “It is regrettable that the co-op model has not worked across the country.” That didn’t bode well for the remaining 11 CO-OPs, and ultimately only four of them are still operational in 2018.
All 11 of the remaining CO-OPs suffered losses in 2015, amounting to a total of about $400 million (Evergreen lost the least, at $10.8 million; Land of Lincoln lost the most, at $90.8 million). The bulk of the losses were in the fourth quarter, indicating that consumers try to get as much value as possible from their coverage before the end of the plan year.
The fact that lawmakers decided at the end of 2014 to retroactively require the risk corridors program to be budget-neutral was a significant blow to the CO-OPs. The CO-OPs – along with the rest of the carriers – had set their premiums for 2014 (and by that time, for 2015 as well) with the expectation that risk corridors payments would mitigate losses if they experienced higher-than-expected claims.
Clearly, that did not pan out, and it certainly put the CO-OPs in a tough spot. To clarify, HHS said in 2013 that the risk corridor program would NOT be budget-neutral, and that federal funds would be used to make up any shortfalls; carriers set their rates for 2014 based on that.
But then in 2014, HHS announced in 2014 that they had made several adjustments to the risk corridor program, and that they projected “that these changes, in combination with the changes to the reinsurance program finalized in this rule, will result in net payments that are budget neutral in 2014. We intend to implement this program in a budget neutral manner, and may make future adjustments, either upward or downward to this program (for example, as discussed below, we may modify the ceiling on allowable administrative costs) to the extent necessary to achieve this goal.” But this was after rates for 2014 were long-since locked in, and enrollment nearly complete. At the end of 2014, congress passed the Cromnibus Bill, requiring risk corridors to be budget neutral, with no wiggle room for HHS.
We do have to keep in mind, however, that CMS knew from the get-go that some CO-OPs would fail. They expected at least a third of them to fail in the first 15 years, and that was long before the risk corridors program was retroactively changed to be budget neutral.
Will the few remaining CO-OPs survive?
It’s too soon to tell. In many states, the CO-OPs started out in a David and Goliath situation, competing with carriers that had dominated the health insurance landscape for years. Premiums that carriers — including CO-OPs — set for 2014 and 2015 were little more than educated guesses from actuaries, since there was very little in the way of actual claims data on which to rely (there was no data at all when the 2014 rates were being set, and only a couple months of early data available when 2015 rates were being set). Once the CO-OPs had more than a year of claims history in the books, they were able to be more accurate in pricing their policies.
But the uncertainty that the Trump administration and GOP lawmakers created for the insurance markets resulted in spiking premiums for 2017 and 2018 (not just for CO-OPs, but for the majority of insurers in most states). That uncertainty continued in 2019, with the Trump administration finalizing rules to expand access to short-term plans and association health plans, and GOP lawmakers’ tax bill that repealed the individual mandate penalty after the end of 2018. But despite all of that, the remaining CO-OPs have had fairly stable pricing in recent years, with several rate decreases in 2019 and 2020, and some modest increases.
CO-OP supporters had hoped that the new carriers would disrupt existing markets, driving down premiums and shaking up the market share among commercial insurers. Although most of the CO-OPs struggled financially, average premiums market-wide were lower in both 2014 and 2015 in states that had CO-OPs than in states without CO-OPs. A GAO report found that average CO-OP premiums in 2014 and 2015 in most states tended to be lower than the average premiums across all carriers in those states. And enrollment in CO-OPs increased at a much faster pace than overall enrollment growth (across all carriers) from 2014 to 2015.
CMS acknowledged from the start that not all of the CO-OPs would be likely to succeed — just as a crop of new for-profit health insurance carriers wouldn’t all be expected to succeed. The three remaining CO-OPs are all in their eighth year of providing coverage as of 2021, demonstrating their staying power. And one of those three expanded into a new state for 2021, which is certainly a sign of insurer stability. And the other two decreased their premiums for 2021, which is generally another sign of stability.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
https://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance.png512512wpmaddoxinshttps://www.maddoxinsured.com/wp-content/uploads/2020/12/maddox-insurance-agency.pngwpmaddoxins2021-01-04 09:49:112021-01-06 18:22:31CO-OP health plans: patients’ interests first
Will you owe a penalty under Obamacare?
Key takeaways
No longer a federal penalty, but some states impose a penalty on residents who are uninsured
Although there is no longer an individual mandate penalty – or “Obamacare penalty” – at the federal level, some states have implemented their own individual mandates and associated penalties:
Vermont enacted legislation to create an individual mandate as of 2020, but lawmakers failed to agree on a penalty for non-compliance, so although the mandate took effect in 2020, it has thus far been essentially toothless (the same as the federal individual mandate, which remains in effect but has no penalty for non-compliance). Vermont could impose a penalty during a future legislative session, but the most recent legislation the state has enacted (H.524/Act63, in June 2019) calls for the state to use the individual mandate information that tax filers report on their tax returns to identify uninsured residents and “provide targeted outreach” to help them obtain affordable health coverage.
2014-2018: Everything you need to know about the federal individual mandate penalty
Although the ACA included provisions to make it easier to buy health insurance – including Medicaid expansion, premium subsidies, and guaranteed-issue coverage – it also included an individual mandate that requires Americans to purchase health coverage or face a tax penalty, unless they were eligible for an exemption).
But the GOP tax bill that was signed into law in late 2017 repealed the individual mandate penalty, starting in 2019 (See Part VIII, Section 11081 of the text of the Tax Cuts and Jobs Act). Although the law was enacted in 2017, there was a delay of more than a year before the Obamacare penalty repeal took effect, and people who were uninsured in 2018—after the law was enacted—still had to pay the individual mandate penalty when they filed their tax returns in 2019.
The individual mandate penalty helped to keep premiums lower than they would otherwise have been. There was no Obamacare penalty back when insurers were allowed to reject applicants with pre-existing conditions, but with coverage now guaranteed-issue, it was important to have a mechanism to ensure that healthy people would remain in the pool of insureds. The individual mandate was part of that, but the ACA’s premium subsidies are likely playing an even larger role, as they keep coverage affordable for most middle-class enrollees, regardless of whether they’re healthy or not.
The Congressional Budget Office has estimated that premiums in the individual market will generally trend 10 percent higher without the individual mandate penalty than they would have been with the penalty. Unsurprisingly, most of the rate filings for 2019 included a rate increase related to the elimination of the penalty. That is now baked into the standard premiums going forward, so the higher rates apply in future years as well.
The individual mandate has long been the least-popular consumer-facing provision of the ACA, although most Americans already had health insurance before the ACA, and didn’t need to worry about the penalty for being uninsured.
It’s worth noting that the elimination of the individual mandate penalty is the crux of the Texas v. US (California v. Texas) lawsuit, which seeks to overturn the entire ACA. The case was heard by the Supreme Court in November 2020, and a ruling is expected in the spring or early summer of 2021.
Uninsured tax filers were more likely to get an exemption than a penalty
Although there were still 33 million uninsured people in the US in 2014, the IRS reported that just 7.9 million tax filers were subject to the penalty in 2014 (out of more than 138 million returns). According to IRS data, 12 million filers qualified for an exemption.
The number of filers subject to the ACA’s penalty was lower for 2015 (on returns that were filed in 2016), as overall enrollment in health insurance plans had continued to grow. The IRS reported in January 2017 that 6.5 million 2015 tax returns had included individual shared responsibility payments. But far more people—12.7 million tax filers—claimed an exemption for the 2015 tax year. For 2016, the IRS reported that 10.7 tax filers had claimed exemptions by April 27, 2017, and that only 4 million 2016 tax returns had included a penalty at that point.
A full list of exemptions and how to claim them is available here, including a summary of how the Trump administration made it easier for people to claim hardship exemptions (hardship exemptions continue to be important in 2019 and beyond, as they’re necessary for people age 30 and older to be able to purchase catastrophic health insurance plans).
Most Americans weren’t affected by the penalty
As noted above, only 4 million tax returns for 2016 included the ACA’s individual mandate penalty (as of late April, 2017; people who got a tax filing extension hadn’t yet filed by that point, so the total number of filers who owed a penalty likely ended up higher than 4 million). The vast majority of tax filers had health insurance, and even among those who didn’t, penalty exemptions were more common than penalty assessments.
Most Americans already get health insurance either from an employer or from the government (Medicaid, Medicare, VA); they didn’t need to worry about the penalty because employer-sponsored and government-sponsored health insurance count as minimum essential coverage.
Individual market major medical plans available on or off-exchange are considered minimum essential coverage, and so are grandfathered plans and grandmothered plans. And although health care sharing ministries are not considered minimum essential coverage, people with sharing ministry coverage were eligible for one of the exemptions under the ACA.
Plans that aren’t considered major medical coverage are not subject to the ACA’s regulations, and do not count as minimum essential coverage, meaning people were subject to the penalty if they relied on something like a short-term plan and were not otherwise exempt from the Obamacare penalty. Things like accident supplements and prescription discount plans may be beneficial, but they do not fulfill the requirement to maintain health insurance.
How big were the penalties?
The IRS reported that for tax filers subject to the penalty in 2014, the average penalty amount was around $210. That increased substantially for 2015, when the average penalty was around $470. The IRS published preliminary data showing penalty amounts on 2016 tax returns filed by March 2, 2017. At that point, 1.8 million returns had been filed that included a penalty, and the total penalty amount was $1.2 billion — an average of about $667 per filer who owed a penalty.
Although the average penalties are in the hundreds of dollars, the ACA’s individual mandate penalty is a progressive tax: if a family earning $500,000 decided not to join the rest of us in the insurance pool, they would have owed a penalty of more than $16,000 for 2018. But to be clear, the vast majority of very high-income families do have health insurance.
Today, the median net family income in the United States is roughly $56,500 (half of U.S. families earn less; half earn more.) For 2018, the penalty for a middle-income family of four earning $60,000 was $2,085 (the flat-rate penalty would have been used, because it was larger than the percentage of income penalty; see details below, under “how the penalty works”). This is far less than the penalty a more affluent family would have paid based on a percentage of their income.
The penalty could never exceed the national average cost for a bronze plan, though. The penalty caps are readjusted annually to reflect changes in the average cost of a bronze plan:
The maximum penalties rarely applied to very many people, since most wealthy households were already insured.
No longer a question on federal tax return about health coverage (but it’s still on some state returns, and Form 8962 is still applicable if you get a premium subsidy)
From 2014 through 2018, the federal Form 1040 included a line where filers had to indicate whether they had health insurance for the full year (see the upper right corner, under the spaces for Social Security numbers).
But since 2019, Form 1040 has no longer included that question, as there’s no longer a penalty for being without coverage.
But state tax returns for DC, Massachusetts, New Jersey, California, and Rhode Island do include a question about health coverage. Maryland’s tax return also asks about health insurance coverage, in order to try to connect uninsured residents with affordable coverage. Colorado’s tax return will have a similar feature as of early 2022 (but Maryland and Colorado do not penalize residents who don’t have health insurance).
In addition, nothing has changed about premium subsidy reconciliation on the federal tax return. People who receive a premium subsidy (or those who enroll through the exchange in a full-price plan but want to claim the subsidy at tax time) will continue to use Form 8962 to reconcile their subsidy. Exchanges, insurers, and employers will continue to use Forms 1095-A, B, and C to report coverage details to enrollees and the IRS.
How the penalty worked
[Note that in most cases, the states that are implementing their own individual mandates are following this same basic outline in terms of how the penalty works, with the details based on the federal penalty levels that applied in 2018.] Your individual mandate tax is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income (up to the national average cost of a Bronze plan , as determined by the IRS and adjusted annually to reflect changes in premiums).
This means wealthier households will wind up using the second formula, and may be impacted by the upper cap on the penalty. For example: for 2017, an individual earning less than $37,000 would pay just $695 (flat-dollar calculation) while an individual earning $200,000 would pay a penalty equal to the national average cost of a bronze plan ($3,396 for 2018). This is because 2.5% of his income above the tax filing threshold would work out to about $4,740, which is higher than the national average cost of a bronze plan. The IRS publishes the national average cost of a bronze plan in August each year; that amount is used to calculate penalty amounts when returns are filed the following year.
1) Flat-dollar amount
In 2014, the flat-dollar penalty was $95 per uncovered adult (it climbed to $325 in 2015, and $695 in 2016) plus half that amount for each uninsured child under age 18. Your total household penalty is capped at three times the adult rate, no matter how many children you have.
In 2014, that was $285 ($975 in 2015, and $2085 in 2016). Starting in 2017, the flat-rate penalty is subject to annual adjustment for inflation. But for 2017, the IRS confirmed that there was no inflation adjustment, so the flat-rate penalty continued to be $695 per adult in 2017, with a maximum of $2,085 per family. And for 2018, that was once again the case, as the IRS confirmed that the flat rate penalty would remain unchanged in 2018. After 2018, there is no longer be a penalty imposed by the IRS, although New Jersey, Massachusetts, and DC now impose their own penalties; California and Rhode Island will join them in 2020.
2) Percentage of income
In 2014, the penalty was 1 percent. It rose to 2 percent in 2015, and to 2.5 percent for 2016 and beyond.
The penalty is capped at the average cost of a Bronze plan, which for 2018 was $3,396 for an individual and $16,980 for a family of five or more (those maximum amounts are prorated monthly for tax filers who were uninsured for only part of the year). The percentage of income penalty is calculated based on the household’s income above the tax filing threshold.
For most people, “household income” is simply adjusted gross income from Form 1040. But if you have non-taxable Social Security benefits, tax-exempt interest, or foreign earned income and housing expenses for Americans living abroad, you’ll need to add those amount to your AGI from your 1040. Be sure to include income from any dependents who are required to file a tax return.
The post Will you owe a penalty under Obamacare? appeared first on healthinsurance.org.
The Scoop: health insurance news – January 13, 2021
In this edition
Open enrollment for 2021 health plans will end in five states on Friday
Open enrollment for individual/family health plans ended a month ago in most of the country, but it’s still underway in ten states and Washington, DC. In five of those states, there are only a few days left. Open enrollment ends this Friday, January 15, in five states:
Residents in those states can currently enroll in a plan with a February 1 start date. But after Friday, enrollment in those states will only be possible for people who experience a qualifying event (and most qualifying events require that the person already had minimum essential coverage within the prior 60 days).
Exchange enrollment has already surpassed last year’s total
As of January 12, confirmed enrollment in individual market plans via the exchanges stood at 11.5 million, according to Charles Gaba of ACA Signups. And open enrollment is still ongoing in ten states and Washington, DC (plus a special enrollment period for uninsured Maryland residents). What’s more, four states – Idaho, New York, Rhode Island, and Vermont – haven’t yet reported any of their enrollment data for 2021 plans.
Last year, when all was said and done, enrollment reached 11.4 million, so it’s already surpassed the 2020 total – the first time since 2016 that year-over-year enrollment has grown during the open enrollment period. Once open enrollment closes in all states and final data are reported, Gaba projects that this year’s enrollment will exceed 12 million.
HHS extends COVID public health emergency through mid-April
Last week, HHS Secretary Alex Azar announced that the COVID-19 public health emergency was being extended for another 90 days, through April 21, 2021. The ongoing public health emergency – which was first declared in January 2020 and extended several times since then – plays a key role in various rules related to health insurance coverage.
For the duration of the emergency period, for example, most health insurance plans must cover the cost of COVID testing and vaccines without cost-sharing. States will continue to receive additional federal matching funds for Medicaid through June 2021, and cannot disenroll people from their Medicaid programs during the COVID emergency period, unless the person moves out of state or requests a coverage termination. The public health emergency also expands access to telehealth and reduces reporting burdens for hospitals.
Tennessee’s Medicaid block grant waiver approved
In November 2019, Tennessee submitted a waiver proposal to CMS, seeking approval to transition to a block grant funding approach for the state’s Medicaid program. Last week the Trump administration announced that the state’s proposal had been approved for 10 years, with the extended timeframe intended to “reduce administrative burden and allow the state sufficient time to evaluate its innovative approach.” Instead of the open-ended matching system that the federal government uses with the rest of the states, Tennessee will have an annual spending cap, which can grow if enrollment grows, but which will not adjust to keep up with increasing healthcare spending.
In its approval letter, the Trump administration repeatedly touts the flexibility that the block grant waiver will provide for Tennessee. But block grants for Medicaid funding have been widely panned by public health experts, and are strongly opposed by leading patient advocacy groups due to the potential for reduced benefits, increased costs for enrollees, reductions in payments to providers, and state budget shortfalls.
Although the incoming Biden administration can make changes to 1115 waivers via a review process, Margo Sanger-Katz reported last week that CMS has sent letters to all 45 states that have active waivers, asking them to sign contracts that would make it harder for a new administration to terminate waivers “on a political whim.”
CMS auditing hospitals for compliance with new price transparency requirements
The hospital price transparency rule that CMS finalized in late 2019 took effect on January 1. It requires hospitals to “provide clear, accessible pricing information online” for 300 “shoppable” services, in both machine-readable and consumer-friendly formats. And the pricing information has to include payer-specific negotiated rates, which is much more useful than hospital “chargemaster” rates that don’t really reflect the amounts that payers and consumers actually pay.
There is widespread anecdotal evidence that compliance is spotty thus far (and the maximum annual penalty for non-compliance would only amount to about $100,000, which is equal to about four hospital admissions), but CMS is currently conducting an audit of some hospitals to determine whether they’re in compliance with the new rule. Hospital compliance is expected to ramp up in the coming weeks, but a lot remains to be seen in terms of how much impact the transparency rules will actually have on consumer decision-making.
Legislation in Minnesota would expand MinnesotaCare, create a public option
HF11, sponsored by Rep. Jennifer Shultz (DFL, District 7A), was introduced in Minnesota last week, calling for various changes to the MinnesotaCare program that would allow more people to enroll. MinnesotaCare is a Basic Health Program, which provides coverage to people who aren’t eligible for Medicaid and who have household incomes of up to 200 percent of the poverty level.
HF11 would extend MinnesotaCare eligibility to undocumented immigrants, and would also eliminate the “family glitch” for MinnesotaCare eligibility. HF11 would also create a public option, via MinnesotaCare buy-in, for people with income above 200 percent of the poverty level, with a sliding fee scale for premiums. The legislation would also allow small employers to buy into the MinnesotaCare program as a means of providing coverage for their employees.
Rep. Shultz published an op-ed in the Minnesota Reformer last week, outlining her goals for health care reform and the incremental steps that Minnesota could take to make coverage and care more accessible and affordable in the state.
Utah Insurance Department proposes new minimum standards for short-term health plans
The Utah Insurance Department has proposed new minimum standards for short-term health insurance coverage, including a benefit cap of at least $1 million, copayments/coinsurance that can’t exceed 50 percent of covered charges, and various inpatient and outpatient services that would have to be covered. But the three benefit categories that are most commonly excluded on short-term plans – outpatient prescription drugs, mental health care, and maternity care – are not among the mandated benefits that the Department has proposed. The Department is accepting public comments on the proposal until March 3.
BCBS Association suspends contributions to members of Congress who voted to reject electoral college results
Last Friday, the Blue Cross Blue Shield Association announced that it was suspending political contributions “to lawmakers who voted to undermine our democracy,” referring to the members who challenged the electoral college results from the November presidential election. Numerous other companies have followed suit, including Disney and Wal-Mart, but the Blue Cross Blue Shield Association was the first major healthcare group to take this step. Others have since announced similar decisions, including PhRMA, and to a lesser degree, Cigna. The Blue Cross Blue Shield Association represents the 36 independent Blue Cross Blue Shield insurers that operate across the country, insuring more than 107 million Americans.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post The Scoop: health insurance news – January 13, 2021 appeared first on healthinsurance.org.
Tennessee and the ACA’s Medicaid expansion
Key takeaways
Medicare expansion in Tennessee
Federal
poverty level
calculator
123456789101112
What state do you live in?
0.0%
of Federal Poverty Level
Tennessee has not expanded Medicaid coverage (which is called TennCare) as allowed under the Affordable Care Act, which means that there are an estimated 117,000 residents in the coverage gap — ineligible for Medicaid and also ineligible for premium subsidies in the exchange. This group is comprised of non-disabled adults with income below the poverty level and without minor children.
If the state were to expand Medicaid, at least 250,000 people (some studies have put this number quite a bit higher) would gain access to coverage, including nearly 100,000 who currently have access to premium subsidies and cost-sharing reductions in the exchange, but who would have access to much lower out-of-pocket costs under Medicaid.
But Medicaid expansion in Tennessee has been a non-starter for most Republican lawmakers, and the GOP holds a strong majority in both chambers of the state’s legislature. Instead, GOP lawmakers voted in 2018 to impose a work requirement on low-income parents who are currently eligible for Tennessee Medicaid. They propose using TANF funding to cover the cost of implementing the work requirement.
Tennessee also enacted legislation in 2019 to seek federal permission for a block grant funding model for Medicaid — an approach that Congress rejected in 2017, but that Republican lawmakers have long supported. The state’s block grant funding proposal was approved by the Trump administration in its waning days, although changes might be made under the Biden administration.
In addition, 128,000 children have been removed from the Tennessee Medicaid program — in some cases because they were no longer eligible, but in others because of missing or erroneous paperwork.
Tennessee receives CMS approval for block grant Medicaid funding
In January 2021, just days before the end of President Trump’s presidency, CMS announced that Tennessee’s Medicaid block grant waiver proposal had been approved. The waiver approval, which is valid for ten years (much longer than typical 1115 waiver approval periods), will allow Tennessee to be the first state in the nation that utilizes a block grant approach to federal Medicaid funding, although Puerto Rico has long used a block grant funding model for Medicaid, which has led to significant funding shortfalls in the territory’s Medicaid program.
The incoming Biden administration may make changes to the approved waiver, but they would have to go through a review process. It’s noteworthy that law professor Nicholas Bagley pointed out in 2019 that Tennessee’s proposal was likely not legal under the existing rules for Medicaid and the constraints of what can and can’t be changed with 1115 waivers.
In May 2019, Tennessee Governor Bill Lee signed H.B.1280 into law. The legislation directed the state to seek federal permission to convert the state’s current federal Medicaid matching funds into a block grant, indexed for inflation and population growth. The Trump administration had expressed willingness to consider such proposals, but Tennessee was the first state in the nation to enact legislation to get the ball rolling on it (and in November 2019, the White House Office of Management and Budget removed the administration’s guidance on block grant waivers).
In September 2019, Tennessee officials published the state’s block grant proposal (along with a summary and FAQ page), opening up a 30-day public comment period that ran through mid-October. During the comment period, advocates expressed concerns that Tennessee might use the waiver authority to reduce benefits for the state’s most vulnerable residents (Tennessee has not expanded Medicaid, so enrollees are all low-income and also either pregnant, elderly, disabled, children, or very low-income parents of minor children).
But the final version of the proposal, which was submitted to the Trump administration for review in November, was modified (changes noted in red font), in part to clarify that the state wouldn’t use their waiver authority to make benefit reductions, and that any benefit changes would be “additive in nature” (i.e., the revised proposal states that Tennessee can add benefits to the TennCare program without seeking additional CMS authority, but cannot use the block grant waiver authority to reduce the existing benefits package; the approval that CMS granted in January 2021 states that “Any coverage or benefit changes to existing populations covered are limited to those that are additive in nature, and the state is not authorized to make reductions to its current approved coverage or benefits package without approval of an amendment.“) Even so, a group of 21 prominent patient advocacy groups expressed strong opposition to Tennessee’s block grant waiver, noting that “It is irresponsible to approve this waiver during this public health crisis, and especially to do so for an unprecedented 10-year period. This waiver agreement, if implemented, will limit Tennessee’s flexibility in responding to recessions, pandemics, new treatments and natural disasters – and as a consequence moves in the opposite direction of the lessons learned from 2020.”
Tennessee’s proposal included a provision that would allow the state to share in any savings that the program generates, and was clear in noting that the state is proposing a modified block grant approach that would boost federal funding if enrollment in the program was to increase (as opposed to a traditional block grant model, which could result in a funding shortage for a state in the event of a recession or other incident that causes a sharp increase in the number of people eligible for Medicaid).
Tennessee expects the block grant approach to result in “significant additional federal funding,” and hopes to use the money to provide additional services, such as nutritional assistance, housing support, and dental care.
The state’s proposal calls for calculating the block grant based on “core medical services and related expenditures” for Tennessee’s Medicaid population, although some costs — such as prescription drugs, payments to hospitals for uncompensated care, and costs for Medicare-Medicaid dual-eligible enrollees — will not be included.
The idea of switching to a block grant model for federal Medicaid funding is not new. In 2017, the American Health Care Act (which passed in the House) and the Graham-Cassidy bill (which was introduced in the Senate but did not pass) both called for a block grant approach, and Republican lawmakers have long advocated this change. But for now, federal Medicaid funding continues to be an open-ended commitment from the federal government, with states receiving varying matching percentages to fund their Medicaid programs (in Tennessee, for every dollar the state spends on Medicaid, the federal government sends them $1.87. So federal funding covers about two-thirds of the cost of Tennessee’s Medicaid program).
Tennessee seeks CMS approval for a Medicaid work requirement, despite rejecting Medicaid expansion
Tennessee is also one of several states with Medicaid work requirement proposals that are currently pending CMS approval. Tennessee’s 1115 waiver proposal was submitted in December 2018, under the terms of H.B.1551, which was signed by Governor Bill Haslam in May 2018. In the waiver proposal that was submitted to CMS, the state notes that they received “a number of comments in opposition” to the work requirement proposal, but pointed out that state law (H.B.1551) requires the state to seek federal permission to implement a Medicaid work requirement (regardless of public opinion or comments).
The Trump administration approved Medicaid work requirement waivers for several states, but a federal judge has blocked implementation of the work requirements in some states, and the others have been paused either in response to pending lawsuits or in response to the COVID pandemic (during the COVID public health emergency period, states are receiving additional federal Medicaid funding, but are not allowed to disenroll people from Medicaid, thus effectively preventing a work requirement from being implemented). Tennessee’s work requirement is still pending CMS approval as of January 2021, and the Biden administration is unlikely to approve any Medicaid work requirements.
But under the proposed waiver, Tennessee Medicaid enrollees subject to the work requirement would have to work or participate in various community engagement activities for at least 20 hours per week in order to retain their Medicaid eligibility. The legislation also calls for the state to seek federal permission to use TANF funding to implement the work requirement, which is noted in the state’s 1115 waiver proposal.
The terms of H.B.1551 call for a work requirement for TennCare enrollees who are “able-bodied working-age adult enrollees without dependent children under the age of six.” No other exemptions were specified in the text of the bill. But the proposal that was submitted to CMS in late 2018 includes various other exempt populations, including people age 65 and older (most other states with proposed or approved work requirements have opted to exempt people at a younger age, usually closer to 55), people who are medically frail, people who are mentally or physically unable to work (as certified by a medical professional), and people who are caring for a disabled individual over the age of six (in addition to one caretaker per household who is caring for any children under the age of six). A full list of exemptions is on page 3 of the work requirement proposal, and the state also notes that they would reserve the right to temporarily waive the work requirement in counties that are economically distressed.
Since Tennessee has not expanded Medicaid, the only population that would be subject to the work requirement would be parent and caretaker relatives — a population that qualifies for Medicaid in Tennessee with income up to 101 percent of the poverty level (96 percent plus a 5 percent income disregard).
The state is proposing a monthly reporting requirement for members subject to the work requirement, but compliance would only be checked once every six months, and members would need to have been compliant for at least four months out of the six-month period in order to retain Tennessee Medicaid eligibility. Those who hadn’t complied with the work requirement (and successfully reported their compliance) for at least four months would lose access to TennCare until if and when they demonstrate one month of compliance.
Who would be subject to the proposed work requirement?
There are about 1.5 million people enrolled in TennCare, but the work requirement would not apply to the vast majority of them, including children, the elderly, and disabled enrollees. According to the fiscal note for H.B.1551, there are about 300,000 TennCare enrollees in the parent and caretaker relatives eligibility category at any given time. Roughly half of them already meet, or are exempt from, the existing TANF/SNAP work requirements in Tennessee, so they would automatically be deemed compliant with a Medicaid work requirement.
Nearly 49,000 of the remaining 150,000 enrollees are assumed to be the primary caregiver for a child under the age of six, and would thus be exempt from the work requirement. According to the fiscal note, additional exemptions, for people who are elderly, disabled, or in drug addiction treatment, bring the estimated number of people who would be subject to the work requirement down to 86,439. Assumptions about exemptions are in the accompanying fiscal note (it’s important to note that the legislation itself did not include any exemption details other than the exemption for a primary caretaker of a child under six years old — unlike other bills that were introduced with exemption language included in the text — but the final waiver proposal did include a variety of exemptions).
Interestingly, the fiscal note stated that an estimated 1.22 percent of the parent and caretaker TennCare population would be exempt from the work requirement due to being in treatment for drug addiction, but a proposed amendment to the bill, which would have explicitly exempted people going through substance abuse treatment, was tabled in a 68-22 vote in the House. The proposed waiver, however, does include an exemption for people undergoing “inpatient or residential treatment or an Intensive Outpatient Program (IOP) for a substance use disorder.”
The fiscal note includes an estimate (based on Kaiser Family Foundation data) that 57 percent of the people subject to the work requirement are already working, leaving roughly 37,000 people who are not currently working, but who would be subject to the work requirement if it’s enacted. The state’s expectation is that about 10 percent of those people would lose their Medicaid coverage due to failure to comply with the work requirement.
In a scathing report on the proposed waiver, however, Georgetown University’s Health Policy Institute notes that coverage losses could end up being far higher than the state has estimated, citing the extensive coverage losses in Arkansas after a work requirement was implemented there.
It’s noteworthy that Arkansas did expand Medicaid, and thus allows able-bodied adults to be covered by the program even if they don’t have children (and the Arkansas work requirement includes an exemption for parents with children under the age of 18, while Tennessee’s proposal only exempts one parent per household if they are taking care of a child under age six). In Tennessee, the only able-bodied, non-elderly adults enrolled in Medicaid are those who have dependent children and income that doesn’t exceed 101 percent of the poverty level, since the state has steadfastly rejected federal funding to expand its Medicaid program to cover more low-income adults.
GOP lawmakers want to use TANF money to impose work requirement
H.B.1551 was amended by the House in March 2018, adding a section to the bill to require the state to also seek federal approval to use TANF (Temporary Assistance for Needy Families) funding or other federal funding to implement the work requirement. The state initially estimated that implementing the work requirement would cost more than $18 million per year in state funds, and Republican lawmakers want to use TANF money — designated to provide assistance to very low-income families — to cover the cost of imposing a work requirement that is expected to strip health coverage away from several thousand impoverished Tennessee residents (the waiver language states that Tennessee is requesting federal approval to use TANF funding to implement the work requirement “and to provide additional supports to individuals subject to the work requirement.”
Lawmakers noted in 2018 that TANF had $400 million in reserves in Tennessee, but one analysis clarifies that the surplus is due to the paltry level of support that TANF provides in Tennessee: a maximum of $185/month in benefits for a family of three.
Proponents of the work requirement and the proposed TANF funding note that one of TANF’s stated goals is to get people into the workforce and encourage self-sufficiency. But stripping low-income parents of their health insurance is not likely to prove beneficial in the quest to help people get back on their feet. And the “supports” that the state has proposed include providing Medicaid enrollees with “access to information and services designed to prepare and support persons in obtaining and maintaining employment.” And people who need to complete secondary education, “will be connected to adult education opportunities sponsored by the Tennessee Department of Labor & Workforce Development.” More robust supports, including state-sponsored childcare, transportation, Internet access, etc. are not included in the proposed waiver.
H.B.1551 passed in the Tennessee House in March, on a 72-23 party-line vote. The text of the amended legislation that passed in the House clarifies that if the federal government does not approve the use of TANF funding (or other federal funding) to implement the work requirement, the state won’t move forward with seeking a waiver to impose a Medicaid work requirement.
House Democrats tried in vain to add several other amendments to the bill, including:
An identical bill, S.B.1728, was introduced in the Senate in January 2018, but the Senate opted to substitute the amended version of H.B.1551 (with the requirement that the state must obtain TANF funding or other federal funding to implement the work requirement), voting on it in mid-April, and passing it overwhelmingly (23-2). In the Senate, several amendments were also rejected, including:
Although the Senate passed the measure in April, Tennessee officials had already posted a job opening for a “Policy Analyst to implement a new Medicaid work requirements program,” before the bill was even scheduled for a vote in the Senate. Critics of the proposed work requirement have denounced the state’s decision to post the job opening before the bill has been voted on in the Senate. But Tennessee’s Medicaid program defended the job listing, noting that if the bill did not pass, the state simply wouldn’t fill the position.
Former Governor Haslam pursued modified expansion
In March 2013, Tennessee’s then-Governor, Bill Haslam unveiled his “Tennessee Plan” for Medicaid expansion. His proposal involved using federal Medicaid funding to purchase private coverage for up to 175,000 to 200,000 low-income Tennessee residents. It also called for copays for some enrollees, payment systems for providers that are based on outcomes rather than fee-for-service, and a clause that requires future renewal of Medicaid expansion to be approved by the legislature.
In November 2014, Haslam announced that his negotiations with the federal government were ongoing, and this was still the case in December, although Haslam stated he had “verbal” approval from the federal government for his plan. In January 2015, Governor Haslam called for a special session of the Tennessee legislature to address his Insure Tennessee plan.
But Senate committees shut it down
But the following month, the Senate Health and Welfare Committee voted 7-4 against Haslam’s Medicaid expansion proposal, blocking it from going any further in the legislative process during the 2015 session. Although representatives from the Tennessee Hospital Association, the Tennessee Medical Association, and the Tennessee Business Roundtable all provided support for the Medicaid expansion proposal, it was not enough to sway the conservative lawmakers who were concerned about the long-term costs to the state or the difficulty the state would face if it were to try to repeal Medicaid expansion a few years down the road.
For the record, the federal government paid 100 percent of the cost of covering newly-eligible Medicaid enrollees through 2016, and the state’s share will gradually rise to 10 percent by 2020 — but will never exceed 10 percent.
The Insure Tennessee legislation was considered again by another Senate Committee in March 2015, but it too was ultimately rejected. That version called for the state to wait until the Supreme Court ruled on King v. Burwell before proceeding with Medicaid expansion (in June 2015, the Court ruled that premium subsidies are legal in every state, thus preventing destabilization in the individual insurance market in Tennessee). It also called for a six-month waiting period before Medicaid coverage could be reinstated if it were terminated because an enrollee didn’t pay premiums, and it required the state to obtain a letter from HHS stating that Medicaid expansion could be terminated at any time, at the state’s discretion.
A variety of bills, including SJR0103, HB1324, and HB1271, were introduced to expand Medicaid during the 2015 legislative session, but none of them advanced to a full vote.
Haslam had considered calling lawmakers back for another special session to address Medicaid expansion again, but said in April 2015 that he wouldn’t do so until it appeared that legislators had softened to the idea of Medicaid expansion, or were at least beginning to agree on modifications to the current proposal. Tennessee relies heavily on uncompensated care funding from the federal government, and by the fall of 2015, it was clear that the funding was in peril. Expanding Medicaid would eliminate much of the need for ongoing uncompensated care funding.
3-Star Healthy Task Force
In April 2016, Tennessee House Speaker Beth Harwell detailed the creation of a legislative task force to address access to healthcare in the state. Democrats roundly criticized the task force, calling it a joke and noting that there were no Democrats on the task force. Governor Haslam stopped short of saying that the 3-Star Healthy Project’s formation indicated that Insure Tennessee was dead, but acknowledged that Insure Tennessee hasn’t been able to get traction with the legislature, and noted that the plan that would work best would be one that could garner support from Tennessee lawmakers.
The “3-Star Healthy Project” task force began meeting to come up with proposals that could be sent to the federal government, and by September, they had a TennCare expansion proposal ready to send to CMS, although by early November, the schedule was that it would be submitted to CMS by the end of 2016. While it was better than nothing, it was a far cry from Haslam’s Insure Tennessee proposal.
In its initial phase, the pilot program was slated to expand TennCare eligibility only to people with mental health and substance abuse disorders, and to veterans. These groups would have been eligible for TennCare with income up to 138 percent of the poverty level, under the terms of the expansion pilot.
But when Donald Trump won the presidential election in November 2016, and the TennCare expansion proposal was put on hold while the state waited to see what would happen with healthcare reform at the federal level under the new Administration. Ultimately, the ACA was not repealed (as some had expected after Trump’s victory), but the Trump Administration has opened the door for Medicaid waivers with provisions that the Obama Administration never allowed, including work requirements and block grants.
In 2018, Tennessee submitted a waiver proposal seeking permission to implement a Medicaid work requirement (aimed at the parent/caretaker population, as non-disabled, non-elderly adults in Tennessee are already ineligible for Medicaid since the state has refused to expand coverage). If approved and enacted, the work requirement would essentially be the opposite of Medicaid expansion, as it would serve to reduce the number of people with Medicaid coverage in Tennessee. Tennessee has also enacted legislation in 2019 that directs the state to seek federal permission to switch to a block grant funding model, instead of the current open-ended federal match.
Republican lawmakers introduced legislation (S.B.118 and H.B.69) in 2017, based in part on the work done by the 3-Star Healthy Task Force, calling for the state to propose a federal waiver to expand Medicaid using a block grant. Both bills were tabled in 2017, but reconsidered in 2018. Ultimately, H.B.69 was tabled again in 2018, and S.B.118 failed in committee. Ultimately, the state has enacted legislation that simply calls for the state to seek a transition to a block grant, but without expanding Medicaid.
Medicaid expansion via Insure Tennessee was also introduced again in the Tennessee House in 2018, but did not advance. A bipartisan proposal to allow people age 55 or older to purchase TennCare (i.e., a Medicaid buy-in program) also did not advance.
Who is eligible for Tennessee Medicaid?
Because Tennessee has not yet expanded Medicaid under the ACA, eligibility guidelines are unchanged from 2013, and non-disabled, non-pregnant adults without dependent children are ineligible for Medicaid, regardless of their income. TennCare is available to the following legally-present Tennessee residents, contingent on immigration guidelines:
How does Medicaid provide financial assistance to Medicare beneficiaries in Tennessee?
Many Medicare beneficiaries receive Medicaid’s help with paying for Medicare premiums, affording prescription drug costs, and covering expenses not reimbursed by Medicare – such as long-term care.
Our guide to financial assistance for Medicare enrollees in Tennessee includes overviews of these benefits, including Medicare Savings Programs, long-term care coverage, and eligibility guidelines for assistance.
How do I enroll in Medicaid in Tennessee?
Enrollment in TennCare is year-round; you do not need to wait for an open enrollment period if you’re eligible for Medicaid
Prior to 2019, the only way to enroll online was through HealthCare.gov. But after five years of delays, Tennessee debuted their TennCare Connect system in March 2019. The new program allows applicants to determine eligibility, enroll, and manage benefits online.
TennCare had initially planned to build a new system that would be functional by October 1, 2013. But that didn’t work out, and the old system didn’t have the functionality to be upgraded properly. So the state spent several years building the new system.
Tennessee Medicaid enrollment numbers
During the first open enrollment period (October 2013 through April 2014) 83,591 people in Tennessee enrolled in Medicaid or CHIP through HealthCare.gov. TennCare requested an additional $180 million from the state in late 2013 because of the rapidly increasing enrollment they were seeing soon after open enrollment began on the exchange.
As of August 2016, TennCare was covering 1.55 million people in Tennessee. A total of 1,628,196 people had coverage through Tennessee’s Medicaid and CHIP programs as of July 2016. That was a 31 percent increase since the end of 2013, despite the fact that the state had not expanded Medicaid. This is known as the “woodwork effect,” as people who were already eligible for Medicaid under the existing guidelines “come out of the woodwork” thanks to the outreach and enrollment efforts under the ACA.
Enrollment in Tennessee’s Medicaid/CHIP coverage fell sharply since 2016 amid the state’s efforts to purge children from the coverage rolls (due in some cases to paperwork falling through the cracks, and in others to families’ eligibility status changing). As of February 2019, total enrollment stood at just over 1.3 million people enrolled as of February 2019.
As of June 2020, Tennessee Medicaid and CHIP enrollment was 1,489,536.
Tennessee Medicaid history
Tennessee was among the last states to implement Medicaid, with their program taking effect in January 1969, three years after Medicaid was enacted.
TennCare was created in 1994 under a federal waiver that allowed for some deviations from the standard Medicaid program. TennCare was the first Medicaid program to utilize private sector managed care for all of its members. Initially, TennCare was available at no-cost for Medicaid-eligible residents, and also on a sliding-fee scale (premiums were subsidized) for Tennessee residents who were not able to obtain other private insurance, particularly those who couldn’t get other coverage because of pre-existing conditions.
By 1995, amid soaring enrollment, TennCare stopped accepting applications from non-Medicaid eligible adults unless they were unable to get other coverage because of pre-existing conditions. And later the “uninsurable” population eligible for TennCare was reduced by implementing income caps for their eligibility.
TennCare’s financial viability continued to be in question, and in 2005 the state removed about 190,000 beneficiaries from the program, implemented benefit reductions, and put caps on the number of prescriptions a TennCare member could get.
Eventually, Tennessee created CoverTN and AccessTN to provide coverage for certain small business groups, the self-employed, and people who were otherwise uninsurable. Following the reforms and the shift to only insuring the Medicaid-eligible population through TennCare, the program’s budget seemed to be getting back on track by the late 00’s.
When the ACA was created, it was intended that Medicaid expansion would be nationwide, so subsidies in the exchange were not designed to apply to people living below the poverty level, since they were expected to have access to Medicaid. But in 2012, the Supreme Court ruled that states could opt out of Medicaid expansion, and Tennessee is one of 19 states that have not yet expanded their programs.
Because the state has rejected Medicaid expansion under the ACA, Tennessee is missing out on $22.5 billion in federal funding from 2013 to 2022. In addition, Tennessee residents will pay $7.8 billion in federal taxes that will be used to fund Medicaid expansion in states that are expanding coverage — while getting no Medicaid expansion funds for their own state.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Tennessee and the ACA’s Medicaid expansion appeared first on healthinsurance.org.
Short-term health insurance in Utah
Short-term health plans in Utah
Utah’s short-term health insurance regulations
Utah Insurance Code 31A-1-301(172) defines a short-term health insurance plan as having an initial term of less than 12 months, and a total duration of no more than 36 months, including renewals or extensions. This lines up with the federal limits that apply to short-term health plans, under a rule change that was made by the Trump administration in late 2018.
It’s noteworthy, however, that Utah’s code has changed on this matter. As of late 2018, when the new federal rules were taking effect, Utah insurance code 31A-30-103(19) — which now refers to small employer carriers and no longer defines short-term health insurance — stated that a short-term plan was a nonrenewable policy with a duration of “less than 364 days.” As long as a plan met those standards, it was not subject to the “health benefit plan” rules in Utah.
The current statute also confirms that short-term plans are not considered health benefit plans (and are thus not subject to the rules that apply to such plans), but the definition has been expanded to allow Utah’s short-term health plans to be renewable and last up to three years if the insurer chooses to offer renewability.
There are state-based filing requirements for short-term health insurance in Utah, which are outlined here.
Short-term plans duration in Utah
The maximum initial term limit for short-term health insurance in Utah is under 12 months. If the policy is renewable, total duration can be up to 36 months. This aligns the state’s rules with the Trump Administration’s rules for short-term plans, which took effect in late 2018.
Proposed minimum standards for short-term health plans
In January 2021, the Utah Insurance Department proposed new minimum standards for short-term health insurance plans. The Department is accepting public comments until March 3, 2021, and the earliest possible effective date for the proposed changes is March 10, 2021.
The proposed rule change calls for several minimum coverage requirements on short-term plans, including a benefit cap of at least $1,000,000, and coinsurance/copayments that cannot exceed 50 percent of the covered charges. Most of the currently available short-term health plans in Utah already have benefit caps of at least $1 million, but there are some plans with benefit caps of $500,000.
Various inpatient services would have to be covered under the proposed minimum standards, including anesthesia, prescription drugs, imaging and lab services, etc. And various outpatient services would also have to be covered, including dialysis, office visits, physical/speech/occupational therapy, and diagnostic and lab services—but notably, not prescription drugs, unless it’s related to a surgical procedure.
And mental/behavioral health services would not have to be covered, nor would maternity care. These three benefit categories (outpatient prescriptions, mental health care, and maternity care) are often excluded on short-term health plans, and Utah’s proposed minimum standards would allow them to continue to be excluded.
Which companies offer short-term health insurance plans in Utah?
Several health insurance companies offer short-term medical insurance in Utah. Early in the COVID pandemic, the Utah Insurance Department asked all healthcare insurers in the state, including those offering short-term health plans, to complete a survey indicating how their plans would cover various scenarios related to COVID-19 costs. The survey responses are linked for each of the state’s short-term insurance companies:
SelectHealth also offers ACA-compliant major medical plans in Utah. In some states, there is no overlap between the insurance companies that offer short-term policies and those that offer ACA-compliant policies.
Who can get short-term health insurance in Utah?
Short-term health insurance in Utah can be purchased by residents who qualify under the underwriting guidelines of insurers. In general, this means being under 65 years old and in fairly good health.
Folks in Utah should consider that short-term health medical insurance plans typically include exclusions for all pre-existing conditions (typically a blanket exclusion for any pre-existing condition, rather than specific exclusion riders for each condition) so these types of plans are not adequate for someone who needs medical care for ongoing or pre-existing conditions.
It’s also important to understand that although short-term plans are often more affordable than regular major medical coverage (unless the person is eligible for a premium subsidy, in which case the major medical coverage might be less expensive), they have shortcomings that can result in much higher out-of-pocket medical costs if a serious health condition arises, even if it’s not related to a pre-existing condition.
Short-term healthcare plans do not have to cover the essential health benefits, and often exclude coverage for at least some of them (maternity care, prescription drugs, and mental health care are the most commonly excluded). In addition, short-term plans generally impose benefit caps on the total amount they’ll pay for your care.
If you’re in Utah and need health insurance, check to see if you’re eligible for a special enrollment period that would allow you to enroll in an ACA-compliant major medical plan (ie, an Obamacare plan). There are several qualifying life events that will trigger a special enrollment period and allow you to buy a plan through the health insurance exchange in Utah, and these plans will offer better coverage than a short-term health insurance policy.
ACA-compliant individual major medical plans (obtained through the exchange or directly from an insurance company) are purchased on a month-to-month basis, so you can enroll in a plan even if you only need coverage for a few months before another policy takes effect. And if your annual household income makes you eligible for a premium subsidy, you can receive the subsidy for the months you have coverage, even if it’s only a few months.
Should I consider short-term health insurance in Utah?
Although short-term health plans do not provide the level of protection that an ACA-compliant plan will provide, they’re better than having no coverage at all. And there are some scenarios in which they might be your only option or your only realistic option:
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Short-term health insurance in Utah appeared first on healthinsurance.org.
How to keep your health insurance when you move to another state
Since individual market coverage is regulated and marketed at the state level, a new plan is needed when you move from one state to another. But prior to 2014, health insurance was often an obstacle for people who wanted to move to a new state. In all but five states, individual market coverage was medically underwritten, so people with pre-existing conditions often found it difficult, expensive, or impossible to enroll in new coverage if they were going to need to purchase their own plan (as opposed to getting coverage from an employer, Medicare, or Medicaid).
Many states had state-run high-risk pools, and federal pre-existing condition insurance pools (PICP) were implemented in the years leading up to 2014. But high-risk pools could impose waiting periods for new arrivals to the state, and coverage through the risk pools was often prohibitively expensive and generally had benefit caps that weren’t always adequate.
That’s all a thing of the past, thanks to the Affordable Care Act. In every state, health insurance is guaranteed-issue for all applicants during open enrollment and special enrollment periods — and moving to a new state will trigger a special enrollment period as long as you already had coverage before your move. And the price is the same regardless of whether you have pre-existing conditions. Premiums can vary based on age, zip code, and tobacco use, so you might find that coverage in your new area is priced differently. But if you’re eligible for premium subsidies, the subsidy amount will adjust to reflect the cost of the benchmark plan in your new area.
How do I get new health insurance coverage when I move to a different state?
If you work for a large employer that has business locations throughout the country, you may find that your coverage remains unchanged with your move. But if you buy your health insurance in the individual market, you’ll have to purchase a new plan.
Individual market coverage is guaranteed-issue thanks to Obamacare, but it’s only available for purchase during open enrollment, and during special enrollment periods triggered by qualifying events. Moving to an area where different health plans are available (which includes moving to a new state) is a qualifying event, as long as you already had coverage in your prior location. (This prior coverage requirement took effect in July 2016.)
So you cannot move to a new state in order to take advantage of a special enrollment period if you were uninsured prior to the move. But as long as you had coverage before the move, you’ll have a 60-day enrollment window during which you can pick a new plan – in the exchange or off-exchange – in your new state.
It’s optional for exchanges to allow access to special enrollment periods in advance of a move (as opposed to only after the move has occurred), but there’s no requirement that exchanges offer this feature. So your enrollment period likely won’t begin until the day you move, and the earliest effective date you’ll be eligible for will be the first of the following month. (Normal effective date rules are followed in this case, which means that in most states, you need to enroll by the 15th of the month in order to have coverage effective the first of the following month; this requirement will no longer be used by HealthCare.gov as of 2022, when they will simply allow coverage to be effective the first of the month after you enroll, regardless of the date you enroll.)
That means you may end up having a gap in coverage, depending on the date you move and how far into your 60-day enrollment period you are when you select a new plan in your new state. You’ll want to find out how your current health insurance plan works in your new state; you may only have coverage for emergencies once you leave the state in which your policy was issued.
If you’re concerned about the possibility of having a gap in coverage, you could enroll in a short-term plan to cover you until your new plan takes effect. Short-term plans are not regulated by the ACA, and they don’t count as minimum essential coverage. But they’re specifically designed to cover short gaps in coverage, and they’re perfect for a situation in which your new plan will be taking effect within a few weeks and you only need “just in case” coverage in the meantime.
A short-term plan can have an effective date as early as the day after you apply, and short-term plans are available in nearly every state. Be aware, however, that they generally don’t cover any pre-existing conditions, and they can also reject your application if you have significant pre-existing medical conditions.
How will my health insurance provider network change when I move to a new state?
Particularly in the individual market, health insurers have been moving towards HMOs and narrower networks. So it’s becoming rare for plans to offer network coverage in multiple states. Be prepared for the fact that you will almost certainly have a new provider network with your new plan.
It’s also important to note that even if your health insurer is a big-name carrier that offers plans throughout the country, it will have different individual market plans in each state. So although you might have a Cigna plan already, and Cigna might also be available in the individual market in the state where you’re moving, you’ll need to re-enroll in the new plan once you move.
And although Blue Cross Blue Shield is a household name in the health insurance market, their coverage varies from state to state. The Blue Cross Blue Shield name is licensed by 36 different health insurance carriers across the country; a Blue Cross Blue Shield plan in one state is not the same as a Blue Cross Blue Shield plan in another state.
Additional resources
You can also browse our extensive collection of state health insurance resources, and details about the health insurance exchanges in each state. If your income doesn’t exceed 138 percent of the poverty level (or even higher, if you’re pregnant or looking for coverage for your children), you’ll want to pay attention to the details about how each state’s Medicaid program works and what you need to know about switching to a new state’s Medicaid program.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post How to keep your health insurance when you move to another state appeared first on healthinsurance.org.
Minnesota health insurance
Health insurance in Minnesota
This page is dedicated to helping consumers quickly find health insurance resources in the state of Minnesota. Here, you’ll find information about the many types of health insurance coverage available. You can find the basics of the Minnesota health insurance marketplace and how open enrollment and special enrollment periods work; a brief overview of Medicaid expansion in Minnesota; a quick look at short-term health insurance rules in the state; statistics about state-specific Medicare rules; as well as a collection of Minnesota health insurance resources for residents.
Minnesota’s health insurance marketplace
Minnesota’s marketplace enrollment uses a state-run exchange: MNsure. In 2017, state lawmakers voted to convert MNSure to a federally run marketplace, but the legislation was vetoed by then-Governor Mark Dayton.
MNsure is a place where people can purchase individual/family health insurance. This is a valuable service for people who are not eligible for Medicare or employed by a company that provides group health insurance. Medicaid enrollment can also be done through MNsure, although enrollment in some types of Medicaid (for the elderly, disabled, etc.) is done through the state’s Medicaid office.
Minnesota open enrollment period and dates
Read our detailed overview of the Minnesota health insurance marketplace – including news updates and exchange history.
For 2021 coverage, open enrollment ran from November 1 to December 22, 2020. This was one week longer than open enrollment in states that use HealthCare.gov. Enrollment is still possible for people experiencing a qualifying event, including loss of other coverage, but the application will require proof of the qualifying event.
In response to the Covid-19 pandemic, MNSure created a month-long emergency Special Enrollment Period in the spring of 2020. During that period, anyone who was uninsured could enroll without certifying the kind of “life change,” such as loss of job-based insurance, normally required for enrollment outside of the annual open enrollment period. Partly as a result of the SEP, nearly 100,000 Minnesotans enrolled in private or public medical insurance plans from March 1 through June 21.
Six insurers – Blue Plus, Group Health, Medica, UCare, Quartz, and PreferredOne – offer individual market coverage in Minnesota (Quartz is new for 2021). PreferredOne offers only off-exchange coverage, while the other five all make their plans available through MNsure. For 2021, they have implemented overall average rate increases that range from about 1 percent to about 4 percent. The insurers have varying service areas, so more plans are available in some areas than in others.
Minnesota’s enrollment dropped for the first time in 2019, when 113,552 people enrolled in individual market plans through MNsure. But it climbed again, to 117,520, during the open enrollment period for 2020 coverage, and to 122,269 people who enrolled during the open enrollment period for 2021 coverage.
Read more about Minnesota’s health marketplace.
Medicaid expansion and Basic Health Program in Minnesota
In February 2013, Governor Mark Dayton signed HF9, a bill that expanded access to Minnesota’s Medicaid program under the ACA. From late 2013 to August 2020, enrollment in Minnesota Medicaid plans (Medical Assistance) and CHIP plans increased by 28 percent. During the Covid-19 pandemic, enrollment in Minnesota’s managed Medicaid plans surged nearly 17% from February through October 2020.
Minnesota also established a Basic Health Program (BHP) under the ACA, and is one of only two states to do so (New York is the other). Basic Health Programs provide robust, low-premium coverage to people with income between the Medicaid eligibility threshold and 200 percent of the poverty level, as well as to legally present non-citizens with incomes below 138 percent FPL who are time-barred from enrolling in Medicaid. In Minnesota, the Basic Health Program is known as MinnesotaCare, a program that predates the ACA but was revamped to serve as a BHP as of January 2015.
[New York also created a BHP as of 2016; to date, New York and Minnesota are the only states that have BHPs, although DC’s Medicaid eligibility extends to 210 percent of the poverty level.]
Premiums and out-of-pocket costs in MinnesotaCare are lower than in plans offered at low incomes in other ACA marketplaces. At various points Minnesota lawmakers have considered extending access to MinnesotaCare to higher income levels or even all income levels, but such plans have not been enacted.
Read more about Minnesota’s Medicaid expansion.
Short-term health insurance in Minnesota
Short-term health insurance plans in Minnesota cannot last more than 185 days unless the insured is in the hospital on the day that the plan would have terminated and the insurer extends the coverage until the end of the hospital stay.
Short-term plans are nonrenewable in Minnesota, but a person can buy additional plans as long as their total time with short-term coverage doesn’t exceed 365 days out of any 555-day period – plus any days that a plan is extended to cover an insured who is in the hospital on the day the plan would have ended. Buying a new plan entails starting over with a new deductible.
Read more about short-term health insurance coverage in Minnesota.
The Affordable Care Act in the North Star State
In the 2010 passage of the Affordable Care Act, Minnesota’s two Democratic senators – Amy Klobuchar and Al Franken – both voted in support of health reform. Franken is credited for the inclusion of a medical loss ratio (MLR) requirement in the reform bill, which has resulted in marketplace insurers sending rebates — often substantial ones — to enrollees when the percentage of collected premiums spent on enrollees’ medical bills is below the allowable minimum.
One of the early, popular provisions of the ACA, MLR requires insurance companies to issue refunds if they spend more than 20 percent of premiums on administrative items (15 percent for large-group plans). The MLR rule resulted in $1.1 billion in refunds in 2012, and by the end of 2019, total cumulative refunds had reached more than $5 billion.
Franken resigned in 2017, and Minnesota’s Lieutenant Governor, Tina Smith, was appointed to fill his spot in the Senate. Smith then won the special election for the seat in 2018. Klobuchar also won her re-election bid in 2018, so both of Minnesota’s Senators continue to be Democrats.
Minnesota’s eight representatives split their votes on the ACA in 2009/2010, with Democrat Collin Peterson joining three Republicans in voting no. Peterson did not support 2017 House Republicans in their efforts to pass the American Health Care Act, a partial ACA repeal bill, but his votes on health care reform have been a mixed bag over the years, and he continues to represent the rural, fairly conservative 7th District, winning his 15th term in 2018.
Minnesota’s House delegation consists of three Republicans and five Democrats in 2020. Four districts (1st, 2nd, 3rd, and 8th) flipped in the 2018 election, but two flipped to the Democrats and two flipped to the Republicans.
Minnesota’s former governor, Mark Dayton, had long been a proponent of Obamacare. Dayton chose not to run for a third term in 2018, but Tim Walz, the DFL (Democratic-Farmer-Labor) candidate, won the election, so the governor’s seat continues to be occupied by a Democrat.
After Democrats gained control of Minnesota’s House and Senate in the 2012 election, legislation was passed to implement a state-run health insurance exchange. Minnesota also expanded Medicaid, which it calls Medical Assistance, to residents with household incomes up to 138 percent of the federal poverty level. Medicaid expansion was a key ACA strategy to reduce the uninsured rate. And as noted above, Minnesota also created a Basic Health Program under the Affordable Care Act, further protecting residents with income a little above the Medicaid eligibility cut-off.
Has Obamacare helped Minnesotans?
Minnesota has enjoyed a low uninsured rate for years due to generous Medicaid eligibility standards and MinnesotaCare, a health insurance program for uninsured, working residents. Under the Affordable Care Act, Minnesota not only expanded Medicaid, it also created a state-based health insurance exchange called MNsure.
As of the first half of 2020, there were nearly 107,000 people with private individual market coverage through MNsure. All of them have coverage for the ACA’s essential health benefits with no lifetime or annual caps on the benefits. And more than 59,000 of them were receiving premium subsidies that make health insurance more affordable.
According to U.S. Census data, Minnesota’s uninsured rate fell from 8.2 percent in 2013 to 4.1 percent in 2016. But it increased slightly, to 4.4 percent as of 2018, and increased again, to 4.9 percent, as of 2019. That uptick in the uninsured rate was common across the country after the Trump administration took office. It was due in part to new federal policies that undercut the ACA, but also to rising health insurance premiums — themselves due in part to Trump administration and GOP congressional actions — that made coverage less affordable for people who don’t qualify for premium subsidies.
Does Minnesota have a high-risk pool?
Before the ACA reformed the individual health insurance market, coverage was underwritten in nearly every state, including Minnesota. As a result, people with pre-existing conditions were often unable to purchase coverage in the private market, or if coverage was available it came with a higher premium or with pre-existing condition exclusion riders.
The Minnesota Comprehensive Health Association (MCHA) was created in 1976 to give people an alternative if they were ineligible to purchase individual health insurance because of their medical history. (Only Connecticut has a risk pool as old as Minnesota.)
Under the ACA, all new health insurance policies became guaranteed-issue starting on January 1, 2014. This change largely eliminated the need for high-risk pools and MCHA stopped enrolling new members as of December 31, 2013. It remained operational for existing members until the end of 2014.
Medicare coverage and enrollment in Minnesota
By October 2020, there were 1,051,433 people enrolled in Medicare in Minnesota.
Minnesotans can choose Medicare Advantage plans instead of Original Medicare if they wish to obtain additional benefits and don’t mind the restrictions (including network restrictions) that go along with having a private plan. Nearly half of all Medicare beneficiaries in Minnesota are enrolled in private plans — mostly Medicare Advantage, but also Medicare Cost plans, a form of commercial Medicare coverage that pre-dates Medicare Advantage. Minnesota has long had the nation’s highest enrollment in Medicare Cost plans, but about 300,000 enrollees had to switch to different coverage (Original Medicare or Medicare Advantage) when their Cost plans were phased out in 2019.
Read more about Medicare in Minnesota, including details related to Medigap plans and Medicare Part D.
Minnesota health insurance resources
State-based health reform legislation
Scroll to the bottom of this page to see a summary of recent Minnesota health reform legislation.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Minnesota health insurance appeared first on healthinsurance.org.
Minnesota health insurance marketplace: history and news of the state’s exchange
Key takeaways
Minnesota health exchange overview
Minnesota’s state-run exchange, MNsure, has five participating insurers for 2021, up from four in 2020. The exchange enrolled more than 122,000 people in individual market coverage for 2021.
As a result of the COVID-19 pandemic, MNsure joined most of the other state-run exchanges in offering a special enrollment period during which people who were uninsured could enroll in a health plan during the spring of 2020. Nearly 9,500 Minnesota residents enrolled in private plans through MNsure during this window, as well as another 13,700 who enrolled in MinnesotaCare or Medicaid (enrollment in those programs is open year-round for eligible residents).
Allison O’Toole, who led MNsure as CEO for three years, announced her resignation in March 2018, and the exchange named Nate Clark, the MNsure COO, as acting CEO. A few months later, the MNsure board named Clark as the permanent CEO. O’Toole left MNsure to work as director of state affairs for United States of Care, a non-profit created by Andy Slavitt, who was the acting administrator of CMS under the Obama Administration.
Throughout 2017, Minnesotans who bought their own health insurance (on or off-exchange) and weren’t eligible for ACA subsidies were provided with 25 percent premium rebates from the state as a result of S.F.1, signed into law by Governor Dayton in early 2017. The subsidies helped to offset the large premium increases that applied in Minnesota in 2017, and helped to stabilize the individual health insurance market in 2017. But the premium rebate program expired at the end of 2017.
Thanks in large part to the new reinsurance program that Minnesota created (details below), premiums decreased in Minnesota’s individual market in 2018, 2019, and again in 2020, although rates increased modestly for 2021. In May 2019, Minnesota leaders reached an agreement on a budget that included an extension of the reinsurance program through 2020 and 2021 (it has already been granted federal approval through the end of 2022, but the state has to continue to cover its share of the cost; Minnesota Governor Tim Walz had hoped to implement a premium subsidy program and a new tax credit in Minnesota starting in 2020. But a compromise in the budget ended up with the state opting to continue the existing reinsurance program for two more years instead.).
Open enrollment for 2021 health plans extended through December 22, 2020; Insurers implemented modest rate increases for 2021, after three years of overall rate decreases
MNsure enabled window shopping for 2021 health plans as of October 12, 2020. This gave residents a few weeks to browse the available plans before open enrollment started on November 1, 2020. And MNsure announced that open enrollment would continue through December 22, 2020, which was a week longer than the open enrollment period that applied in states that use the federally-run exchange; the flexibility to extend open enrollment is often cited as one of the benefits of having a fully state-run exchange. (MNsure had a similar extension in December 2019, for 2020 health plans).
For 2021, Quartz joined the Minnesota marketplace. Quartz already offered plans in Illinois and Wisconsin, and expanded into Minnesota for 2021. And two of the existing insurers — HealthPartners and UCare — expanded their coverage areas for 2021 (BluePlus and Medica already offered coverage statewide, and continue to do so in 2021).
The following average rate changes were approved for MNsure’s insurers:
PreferredOne Insurance Company, which offers plans outside the exchange, increased premiums by 1.05 percent (down from an initially proposed average increase of 5.09 percent).
Rate changes in previous years
Approved rates for 2016 were announced on October 1, 2015, ranging from about 15 percent for Medica to 49 percent for Blue Cross Blue Shield of Minnesota. In general, the carriers cited higher-than-expected claims costs over the past year, along with the impending phase-out of the ACA’s reinsurance program as justification for their 2016 rate requests. But Governor Mark Dayton called some of the higher proposed increases “outrageous,” and promised a rigorous review of the filed rate changes and justifications. Ultimately, regulators were able to limit the highest rate increases to 49 percent — as opposed to the 54 percent that had been requested by Blue Plus and BCBS of MN — but the final weighted average rate increase in the individual market in Minnesota still ended up being the highest in the nation. But Minnesota still had the lowest overall premiums in the upper midwest (although Minnesota had the highest average rate increase in the country for 2016, they had the lowest overall rates in the country in 2014 and 2015).
Minnesota Commerce Commissioner Mike Rothman called the rate increases “unacceptably high,” and Gov. Dayton noted that he was “extremely unhappy” with the rate changes. But Rothman noted that his office “objected to all of the rates across the board,” and “squeezed out everything we could that was not actuarial justified.” In other words, the final rates, although much higher than officials and policyholders would have liked, were justified based on medical claims costs — the population enrolled in individual health plans in Minnesota was sicker than expected, and drug costs had been particularly onerous.
Only about 55 percent of people who had 2015 coverage through MNsure received premium subsidies. But due to the sharp premium increases, that had increased to about 63 percent for the people who had purchased or renewed coverage as of June 2016.
2017: When the Minnesota Department of Commerce announced health insurance rates for 2017 for the individual and small group markets, the rate hikes were somewhat reasonable in the small group market (ranging from a decrease of 1 percent to an increase of 17.8 percent), but the individual market was “experiencing serious disruptions in 2017” and “on the verge of collapse.” The four carriers that offered plans through MNsure had the following average rate increases in 2017:
The enrollment caps that HealthPartners, Medica, and UCare employed for 2017 were approved as part of the rate review process, and are designed to protect carriers from further financial losses as they absorb BCBSMN’s enrollees who are shopping for new coverage during open enrollment.
In a news release relating to the rate announcement for 2017, the Minnesota Department of Commerce didn’t mince words. They noted that the individual market in the state was on the brink of collapse, and that they did everything in their power to save the market. While they succeeded in keeping the state’s individual market viable for 2017, with only one carrier exiting (BCBSMN, although their HMO affiliate, Blue Plus, remained in the exchange), they reiterated very clearly that substantial reforms would be needed to keep the market stable in future years, and highlighted the fact that rates would be sharply higher and that carriers would limit enrollment in 2017.
2018: Final rates for 2018 were approved in October 2017 (comprehensive information about the approved rates is here), based on the Minnesota Premium Security Plan (MSPS) being implemented but cost-sharing reductions (CSR) not being funded by the federal government (the cost of CSRs was added to on-exchange Silver plans). Average approved rate changes for MNsure insurers ranged from a 13.3 percent decrease for UCare to a 2.8 percent increase for Blue Plus. Three of the four MNsure insurers decreased their average premiums for 2018.
On September 21, MNsure had posted a notice indicating that if the reinsurance program were not approved, rates would be about 20 percent higher than they would otherwise be in 2018. Fortunately for Minnesota residents, the reinsurance program did receive federal approval, and average rates declined slightly for 2018.
But some enrollees who don’t get ACA premium subsidies still experienced a rate increase, due to the termination of the one-year, state-funded 25 percent premium rebates at the end of 2017.
PreferredOne, which exited MNsure at the end of 2014 and only offers coverage in the off-exchange market, proposed dramatically lower rates for 2018: a 38 percent average decrease if MSPS were to be approved, and a 23 percent average decrease if not. The 38 percent decrease was implemented, and no adjustments were necessary to account for CSR funding, since PreferredOne does not offer plans in the exchange, and CSRs are only available on silver exchange plans.
2019: Average premium decrease of 12.4 percent. Average premiums dropped for all five insurers in the individual market in 2019. This was the second year in a row of declining rates in Minnesota, but Blue Plus had a small rate increase for 2018, so 2019 was the first year that all five insurers decreased their average rates. Minnesota insurance regulators noted that rates in 2019 were about 20 percent lower than they would have been without the reinsurance program.
But most of Minnesota’s insurers charged higher rates in 2019 than they would have if the individual mandate penalty hadn’t been eliminated, and if access to short-term plans and association health plans hadn’t been expanded by the Trump administration. For example, UCare’s rate filing notes that while average rates were decreasing by about 10 percent, the rate decrease would have been nearly 15 percent if the individual mandate penalty had remained in place.
At ACA Signups, Charles Gaba calculated a weighted average rate decrease of 12.4 percent for 2019 in Minnesota, but noted that the average decrease would have been nearly 19 percent without those changes at the federal level.
2020: Average premium decrease of 1 percent. Four of the five insurers (including PreferredOne, which only offers coverage off-exchange) in Minnesota’s individual market decreased their average premiums for 2020. This was the third year in a row that average individual market premiums dropped in Minnesota’s individual market, due in large part to the reinsurance program that the state has established.
The following average rate changes were implemented for 2020:
PreferredOne, which only offers off-exchange coverage, reduced their rates by an average of 20 percent, on the heels of an 11 percent decrease in 2019.
MNsure enrollment reaches a record high for 2021
From 2014 through 2018, enrollment in MNsure’s individual market plans increased every year, reaching 116,358 people by 2018. Enrollment dropped for the first time in 2019, when 113,552 people enrolled in individual market plans through MNsure. In most states that use HealthCare.gov, enrollment peaked in 2016. But MNsure’s drop-off in 2019, which amounted to only a 2.4 percent reduction in enrollment, is the only time year-over-year enrollment has declined. Notably, the ACA’s individual mandate penalty was eliminated as of 2019, and regulations that the Trump administration implemented in late 2018 now make it more feasible for healthy people to use short-term plans instead of ACA-compliant plans (Minnesota has its own rules for short-term plans, but they’re more relaxed than the Obama-era federal rules that applied in 2017 and most of 2018).
For 2020, enrollment grew again, reaching a record high of 117,520 enrollees. And another record high was reached during the open enrollment period for 2021 coverage, when 122,269 people signed up for private coverage (in addition to 33,111 people who enrolled in Medicaid or MinnesotaCare, both of which have year-round enrollment).
Here’s a look at the number of people who have signed up for individual market plans through MNsure during each year’s open enrollment period:
These numbers all represent total enrollment at the end of open enrollment. Effectuated enrollment is always lower, and MNsure provides periodic effectuated enrollment data on their board meeting materials page. It’s also worth noting that the enrollment numbers reported by CMS are always lower than the numbers reported in MNsure’s press releases (for example, CMS reported an official enrollment total of 110,042 enrollees for 2020, whereas MNsure reported 117,520).
Insurer participation in MNsure: 2014-2021
2014: Five insurers offered individual policies through MNsure for 2014: Blue Cross Blue Shield of Minnesota, HealthPartners/Group Health, Medica, PreferredOne, and UCare. Kaiser Health News reported that Minnesota offered some of the lowest premiums for silver (mid-level) plans in the U.S. Four of Minnesota’s nine regions made Kaiser’s list of the 10 least expensive places to buy health insurance.
2015: But PreferredOne, which offered the lowest rates in the nation in 2014 and captured a large portion of 2014 enrollees, withdrew from MNsure for 2015. PreferredOne said remaining on the exchange was “not administratively and financially sustainable.” A Star Tribune business writer attributed PreferredOne’s departure as a market dynamics issue rather than a problem with MNsure.
However, Blue Plus (an affiliate of Blue Cross Blue Shield of MN, offering HMO plans) joined the exchange for 2015, so there were still five insurers offering plans for 2015: Blue Cross Blue Shield of Minnesota, Blue Plus, Health Partners/Group Health, Medica, and UCare. MNsure offered 84 plans statewide, up from 78 for 2014.
2016: BCBSMN, Blue Plus, Health Partners/Group Health, Medica, and UCare offered individual market plans through MNsure for 2016.
2017: In an effort to recruit more carriers to offer plans through MNsure for 2017 — particularly outside the Twin Cities metro area — state regulators sent out a request for proposals from health insurers on August 15, 2016. Regulators noted that insurers could propose waivers of regulations in order to make it feasible for them to offer coverage through MNsure, although any such waiver requests would have to be approved by regulators.
Steven Parente, a health insurance expert at the University of Minnesota, called the state’s effort to recruit insurers to MNsure a “distress call” and noted that August 15 is awfully late in the year to be putting out a request for insurer participation, given that open enrollment begins November 1. And ultimately, no new insurers opted to join MNsure for 2017.
Blue Cross Blue Shield of MN dropped their individual market PPO plans at the end of 2016 due to significant financial losses. That left Blue Plus (which offered HMOs and covered roughly 13,000 people in 2016 in the individual market) as the only BCBSMN affiliate in the exchange. Roughly 103,000 people had to select new plans during open enrollment.
Most of those BCBSMN enrollees had off-exchange coverage, though. There were only about 20,400 MNsure enrollees (a little more than one in five MNsure enrollees) with coverage under BCBSMN who needed to switch to another plan during open enrollment. BCBSMN had individual PPO options available in all 87 counties in Minnesota through MNsure in 2016, while the Blue Plus coverage area — comprised of four separate HMO networks — was available in 77 of the state’s counties.
Nationwide, carriers have been shifting away from PPOs and towards HMOs and EPOs. In Colorado, Anthem Blue Cross Blue Shield also dropped their PPOs at the end of 2016. In Indiana, there were no PPOs available in the individual market by 2017. Blue Cross Blue Shield of New Mexico dropped all of their individual market plans at the end of 2015 except one off-exchange HMO. Blue Cross Blue Shield of Texas dropped their individual market PPO plans at the end of 2015.
Minnesota does still have PPO options available however. There are PPOs offered by Blue Cross Blue Shield of Minnesota and HealthPartners for 2021.
The broad network offered by PPOs tends to be attractive to enrollees who have health problems; they’re often willing to pay higher premiums in trade for access to broad network of hospitals and specialists. But PPOs are expensive for carriers, as enrollees don’t need primary care referrals to see specialists, and it’s more challenging for carriers to hold down costs when there are more providers in the network.
All of the MNsure carriers except Blue Plus are also limiting their total enrollment for 2017. By November 11, 2016, less than two weeks into open enrollment for 2017 coverage, Medica had hit their 50,000 member enrollment cap for 2017 (including on and off-exchange enrollments, and also accounting for expected renewals of 2016 Medica plans), and their policies were no longer available in the individual market in Minnesota, on or off-exchange. The only exception was five counties (Benton, Crow Wing, Mille Lacs, Morrison, and Stearns) where Medica agreed not to limit enrollment, as all of the other available carriers in those counties have imposed enrollment caps too. In those five counties, Medica plans continued to be available.
At that point, Medica’s market share in MNsure for 2017 stood at 34.2 percent. By December 14, Medica’s market share had dropped to 27.7 percent, as enrollments had continued to climb for the remaining carriers.
On January 31, Medica re-opened enrollment for 2017. This was because a smaller-than-expected number of 2016 Medica enrollees renewed their plans for 2017, meaning that the carrier still had some wiggle room under their 50,000 member cap; at that point, they had room for about 7,000 more enrollees. Medica plans were thus available throughout the duration of the special enrollment period that was added on at the end of open enrollment, and continue to be available for people with qualifying events.
2018: Plans continued to be available from Blue Plus, Health Partners/Group Health (GHI), Medica, UCare. In the months before a decision was reached regarding an extension of the open enrollment window for 2018 plans (the first year that the federal government imposed a shorter, month-and-a-half enrollment window), two of MNsure’s participating insurers had differing positions: UCare believed the exchange should add an additional two-week special enrollment period, while Medica did not want the exchange to have the option to extend the newly-scheduled six-week enrollment window. Notably, Medica capped their enrollment very early during the 2017 open enrollment period, and while UCare also had an enrollment cap, it was set with a target of nearly doubling their 2016 enrollment. But Medica is the only MNsure insurer that didn’t set an enrollment cap for 2018.
As was the case for 2017, enrollment caps were used in the individual market in Minnesota for 2018 by all insurers other than Medica (Medica did have an enrollment cap for 2017, which they hit very early in open enrollment; however, they resumed enrollments at the end of January 2017). Details about the insurers’ enrollment caps are in the plan binders in SERFF. For 2018, MNsure insurers implemented the following enrollment caps:
MNsure confirmed in May 2018 that none of their insurers had hit their enrollment caps for 2018.
Outside the exchange, PreferredOne had an enrollment cap of 3,000 members, although their 2017 membership was only about 300 people.
2019 and 2020: Blue Plus, Health Partners/Group Health, UCare, and Medica have continued to offer plans through MNsure, and all of them continued to participate in 2020 as well. Blue Plus expanded to once again offer statewide coverage in 2020, for the first time since 2016.
2021: Quartz joined the exchange for 2021, joining the four existing insurers. HealthPartners and UCare both expanded their coverage areas for 2021.
Minnesota Premium Security Plan: 1332 waiver proposal approved by CMS, but with a significant funding cut for MinnesotaCare
In May 2017, Minnesota Governor Mark Dayton submitted a 1332 waiver proposal to CMS. The 1332 waiver was based on H.F.5, which was enacted without Dayton’s signature in April 2017 (Dayton had proposed an alternative measure that would have allowed people in Minnesota to buy into MinnesotaCare; that measure was not able to pass the state’s Republican-dominated legislature).
[For more than two decades, MinnesotaCare was a state program subsidizing health insurance for low-income residents. As of January 1, 2015, it transitioned to a Basic Health Program under the ACA, becoming the first BHP in the nation.]
H.F.5 created the Minnesota Premium Security Plan (MPSP), which is a state-based reinsurance program (similar to the one the ACA implemented on a temporary basis through 2016, and that Alaska created for 2017; several other states have since implemented reinsurance programs). The reinsurance program, which took effect in Minnesota in 2018, covers a portion of the claims that insurers face, resulting in lower total claims costs for the insurers, and thus lower premiums (average individual market premiums in Minnesota decreased from 2017 to 2018 as a result of the reinsurance program). The reinsurance kicks in once claims reach $50,000, and covers them at 80 percent up to $250,000 (this is similar to the coverage under the transitional reinsurance program that the ACA provided from 2014 through 2016).
H.F.5 was contingent upon approval of the 1332 waiver, because it relies partially on federal funding, in addition to state funding. Under the federal approval that was granted in September 2017, the federal government is giving Minnesota the money that they save on premium tax credits, and that money is combined with state funds to implement the reinsurance program (lower premiums — as a result of the reinsurance program — result in the federal government having to pay a smaller total amount of premium tax credits, since the tax credits are smaller when premiums are smaller).
It was expected that CMS would approve the state’s 1332 waiver proposal, and Governor Dayton requested that the approval process be swift so that the state could move forward with the implementation of the Minnesota Premium Security Plan in time for the 2018 plan year. Dayton indicated that his office had been told that approval would come in August 2017, but CMS didn’t approve the waiver until September 22. And the waiver approval letter noted that the federal savings for MinnesotaCare (the state’s Basic Health Program, or BHP) resulting from the reinsurance program would not be eligible to be passed along to the state — in other words, CMS would keep those savings instead.
[Federal BHP funding is equal to 95 percent of the amount that the federal government would have otherwise spent on premium subsidies and cost-sharing reductions for the population that ends up being eligible for the BHP. So lower premiums — as a result of reinsurance — for qualified health plans in the exchange means that the amount the federal government would have had to spend on premium subsidies for that population is lower. That translates into a smaller amount of funding for the state’s BHP, according to the approach that HHS took for Minnesota’s waiver approval.]
And based on the scathing letter that Dayton sent CMS a few days earlier, it appeared at that point that Minnesota could actually lose money on the deal — losing more in federal funding for MinnesotaCare than they gain in reinsurance funding. Dayton noted in his letter that the 1332 waiver approval process had been “nightmarish,” and that Minnesota went to great lengths to follow instructions from CMS at every turn, throughout the process of drafting H.F.5 and the 1332 waiver proposal. He explains that CMS provided Minnesota with explicit guidance in terms of how to draft the reinsurance program while maintaining full federal funding for MinnesotaCare, and highlighted the fact that the state never deviated from the instructions that were provided.
The StarTribune editorial board called out then-Secretary of HHS, Tom Price and the Trump Administration for their lack of clarity on the issue, for apparently misleading the state during the 1332 waiver drafting process, and for effectively punishing the state of Minnesota for taking an innovative approach to ensuring that as many people as possible have health insurance.
Insurers filed rates based on reinsurance being available. And by the time the waiver was approved, there was very little time to evaluate the potential impacts of the funding changes, as rates had to be finalized by October 2 in Minnesota. The finalized rates did incorporate the reinsurance program; the state has accepted the approved waiver, but Gov. Dayton sent a letter to HHS on October 3, asking them to reconsider the MinnesotaCare funding cuts, but the issue has remained unresolved.
Elimination of CSR funding results in additional funding cut for MinnesotaCare, but a lawsuit has partially restored that funding
Nationwide, 54 percent of exchange enrollees benefit from cost-sharing subsidies. But in Minnesota, only 13 percent of exchange enrollees are receiving cost-sharing subsidies. This is because of MinnesotaCare, which covers all enrollees with income up to 200 percent of the poverty level. That’s the same group that would otherwise benefit the most from cost-sharing subsidies, so the fact that MinnesotaCare is available means that most of the people who would otherwise be enrolled in cost-sharing subsidy plans are instead enrolled in MinnesotaCare.
At first glance, this would appear to have made the uncertainty surrounding cost-sharing subsidy funding in 2017 a little less of a pressing issue in Minnesota than it was in many other states, since private insurers weren’t facing the sort of losses that insurers in other states were facing without federal funding for CSR. But when the Trump Administration eliminated federal funding for CSR in October 2017, HHS took the position tha t since CSR funding had been eliminated, the CSR portion of the federal funding for the BHPs in New York and Minnesota would be reduced to $0. This was not a cut-and-dried conclusion, however, as explained earlier in 2017 by Michael Kalina.
In January 2018, the Attorneys General for New York and Minnesota filed a lawsuit against the US Department of Health and Human Services, seeking to restore funding for their Basic Health Programs. A judge ruled in favor of the states in May 2018, ensuring that MinnesotaCare would continue to receive at least some CSR-based funding. The amount awarded to the state for the first quarter of 2018 was just over half of what the state had initially expected in CSR-related funding, but a larger chuck of the funding was restored later in 2018. According to the Star Tribune, however, Minnesota still ended up losing $161 million in federal funding for MinnesotaCare due to the CSR funding cuts.
In early 2019, the Trump administration proposed yet another funding cut (a third, after the cuts imposed by the reinsurance program and the elimination of CSR funding) as part of a new methodology for calculating BHP funding. This one was much smaller than the other two cuts, but taken together the funding reductions are pushing MinnesotaCare towards a looming budget shortfall.
SHOP exchange: down to one carrier as of 2016, zero by 2018 (and still zero in 2019)
In 2015, there were two carriers in MNsure’s SHOP exchange for small businesses: Blue Cross Blue Shield of Minnesota, and Medica. But Medica announced in 2015 that they would exit the SHOP exchange in Minnesota, North Dakota, and Wisconsin at the end of the year. That left BCBS as the only small group carrier available through MNsure in 2016, but it didn’t change much from a practical standpoint, since 83 percent of MNsure’s small groups were enrolled in plans through BCBS in 2015. Indeed, Medica’s reason for exiting the small business exchange was based on low enrollment in the first two years.
Blue Cross Blue Shield of Minnesota continued to be the only insurer offering SHOP coverage via MNsure in 2017, but announced in July 2017 that they would no longer offer SHOP coverage in 2018, and would instead transition their SHOP enrollees to small business coverage outside the exchange. At that point, there were only 3,287 people enrolled in SHOP coverage in Minnesota — far below the 155,000 people that were originally projected to have coverage through MNsure’s SHOP program by 2016 (this much lower-than-anticipated enrollment has been the case in nearly every state’s SHOP exchange; this situation is not unique to Minnesota).
State law provided 25% premium rebate in 2017; amendment to allow plans without essential benefits was cut from final legislation
Throughout 2016, then-Governor Dayton called for a state-funded premium rebate for people who buy their own insurance but aren’t eligible for the ACA’s premium subsidies (those are only available for people with income up to 400 percent of the poverty level, or $100,400 for a family of four in 2019).
Governor Dayton also noted that the government needed to act quickly to stabilize the individual market in Minnesota, and by late November 2016, his patience with lawmakers was wearing thin. In a November 23 press conference, Dayton said that House Republicans needed to “stop dilly-dallying” and decide whether to move forward with Dayton’s rebate proposal.
Dayton had also indicated that he was considering calling a special session of the legislature after election day to address the situation, and that was being negotiated for December 20. But the talks fell through when Dayton and Republican House Speaker Kurt Daudt couldn’t agree on the three bills that would have been addressed in the special session; as a result, there was no special session.
Instead, the issue was taken up by lawmakers as soon as the 2017 legislative session began. On January 5, Minnesota Senators Michelle Benson (R, 31st District) and Gary Dahms (R, 16th District) introduced S.F.1. The bill called for using $300 million in state funding to provide a 25 percent rebate to roughly 125,000 people in Minnesota.
S.F.1 passed the Minnesota Senate by a 35-31 vote on January 12. Only one DFL Senator (Melisa Franzen, from Edina) voted with Republicans in favor of the legislation. It was then sent to the House, where an amendment was added that stripped out the requirement that health plans provide various mandated benefits (see “Journal of the Day” section “Top of page 154” in this version of the bill; under the terms of the amendment, as long as a carrier offered at least one plan with all the mandated benefits, they would have been allowed to offer others without mandated benefits).
The amended bill was sent back to the Senate on January 23; differences between the bills that the two chambers passed had to be reconciled before being sent to Governor Dayton for his signature. By that point, the amendment to allow less-robust plans to be sold had garnered national attention, and public outrage helped to push lawmakers away from the provision. S.F.1 had also called for $150 million to be appropriated for fiscal year 2018 (through June 30, 2019) from the state general fund to a state-based reinsurance program to stabilize the individual market (Alaska did something similar in 2016, preventing a market collapse), but that provision was also removed in the final version (Minnesota did ultimately set up a reinsurance program, effective in 2018, which has served to stabilize the market and reduce premiums).
A Conference Committee in the Senate recommended that the House “recede from its amendments” and the Conference Committee report passed the Senate on a 47-19 vote. The House passed the bill a few hours later, 108-19. It was sent to Governor Dayton, who immediately signed it into law. DFLers did have to compromise on one issue during the process: S.F.1 allows for-profit HMOs to begin operating in Minnesota’s individual market, which had long been limited to non-profit HMOs.
Consumers were told to expect the premium rebates to show up by April 2017, but they were retroactively effective to January 2017. So a person who had been paying full price for a plan since January 2017 saw a substantial premium reduction on the April or May invoice. Going forward, for the remainder of the year, a 25 percent rebate applied each month.
Since S.F.1 was signed into law with only a few days remaining in open enrollment (it ended January 31 that year), Governor Dayton and exchange officials were worried that there wouldn’t be enough time for people to learn about the rebate and apply for coverage before January 31. In December, Dayton had asked HHS to allow MNsure to extend its enrollment deadline to February 28 (instead of January 31) in order to allow lawmakers more time to work out the details of a state-based premium rebate while still allowing people to enroll after the legislative process is complete.
HHS denied the request for a blanket extension, but MNsure used their own authority on January 28 to grant a one-week special enrollment period (February 1 to February 8) due to exceptional circumstances. Although the state-based 25 percent premium rebate was available on or off the exchange, the one-week extension was only valid through MNsure; health insurers did not have to accept off-exchange enrollments without a qualifying event after January 31.
The 25 percent premium rebate program in Minnesota was only authorized for one year, so the rebates did not continue into 2018. And although almost 100,000 people received premium relief through the program in 2017, it ended up costing less than the legislature had allocated, and about $100 million was returned to the state’s budget at the end of 2017.
Protecting Medicaid enrollees from estate liens
In every state, Medicaid is jointly funded by the state and the federal government. Longstanding federal regulations, which predate the ACA, require states to “seek recovery of payments from the individual’s estate for nursing facility services, home and community-based services, and related hospital and prescription drug services” for any Medicaid enrollee over the age of 55. This applies essentially to long-term care services, but states also have the option to go after the individual’s estate to recover costs for other care that was provided by Medicaid after age 55.
Prior to 2014, this wasn’t typically an issue, as Medicaid eligibility was generally restricted by asset tests or requirements that applicants be disabled or pregnant (although Minnesota did have much more generous Medicaid eligibility guidelines than most states prior to 2014). But as of 2014, in states that expanded Medicaid under the ACA, the only eligibility guideline is income. Applicants with income that doesn’t exceed 138 percent of the poverty level are directed to Medicaid, regardless of any assets they might have.
When applicants use the health insurance exchange — MNsure in Minnesota — they’re automatically funneled into Medical Assistance (Medicaid) if their income is under 138 percent of the poverty level. But what these enrollees didn’t know was that the state also had a program in place to put liens on estates for Medicaid-provided services for people age 55 and older.
The combination of these systems caught numerous residents off guard. They were enrolled in Medical Assistance through MNsure based on their income, but were not aware that liens were being placed on their homes so that the state could recoup the costs upon their deaths.
State Senator Tony Lourey (DFL, District 11) addressed the issue with language included in HF2749, the Omnibus supplemental budget bill, which was signed into law by Governor Dayton on June 1, 2016. The legislation limits estate recovery to just what’s required under federal Medicaid rules (ie, essentially, long-term care costs for people age 55 or older), and makes the provision retroactive to January 1, 2014.
Early tech struggles
MNsure opened for business in the fall of 2013, but technological issues persisted well into 2015, despite numerous improvements throughout 2014. Given MNsure’s difficult launch, the state conducted a series of audits and reviews. The first audit reviewed how MNsure spent state and federal money. Auditors concluded that the exchange has generally adequate internal controls and found no fraud or abuse. The review was conducted by the state Office of the Legislative Auditor, and the report was published in October 2014.
Another audit, also conducted by the Office of the Legislative Auditor and released in November 2014, found that the MNsure system in some cases incorrectly determined who qualified for public health benefits. The errors occurred during the first open enrollment period, before a series of system fixes were implemented. The audit did not quantify the total financial impact of the errors. The state Human Services commissioner said a consultant working on technical fixes to MNsure concluded that the eligibility functionality was working correctly as of June 2014.
A third audit, a performance evaluation report released in February 2015, said “MNsure’s failures outweighed its achievements.” Among other criticisms, auditors said MNsure staff withheld information from the board of directors and state officials, the enrollment website was seriously flawed and launched without adequate testing, and the first-year enrollment target was unrealistically low.
In April 2014, MNsure hired Deloitte Consulting to audit MNsure’s technology and improve the website to make enrolling in coverage and updating life events easier and more streamlined. Deloitte has been involved in successful state-run marketplaces for Connecticut, Kentucky, Rhode Island and Washington.
Software upgrades were installed in August 2014, and system testing continued right up until the start of open enrollment. To reduce wait times for consumers and insurance professionals, MNsure increased its call center and support staff and launched a dedicated service line for agents and brokers.
More in-person assisters were available in Minnesota for the 2015 open enrollment period. MNsure encourages residents to utilize the exchange’s assister directory to find local navigators and brokers who can help with the enrollment process.
MNsure has improved dramatically in terms of its technology since the early days of ACA implementation, and enrollment increased every year from 2014 through 2019.
Lawmakers approved switching to HealthCare.gov as of 2019, but governor vetoed
On May 9, 2017, lawmakers in Minnesota passed SF800, an omnibus health and human services bill. Among many other things, the legislation called for switching from MNsure to the federally-run marketplace (HealthCare.gov) starting in 2019 (see Section 5). But Governor Dayton vetoed it.
Gov. Dayton has long been supportive of MNsure, and had previously clarified that he would veto the bill. In noting his plans to veto the legislation, Dayton made no mention of the transition to HealthCare.gov that was included in the legislation, but focused instead on the sharp budget cuts in the bill. But his veto ensured that MNsure would remain in place, at least for the time being.
The Senate’s original version of SF800 did not call for scrapping MNsure, but the bill went through considerable back-and-forth between the two chambers, and the version that passed was the 4th engrossment of the bill.
In March 2015, Dayton had asked the legislature to create a Task Force on Health Care Financing that would study MNsure along with possible future alternatives. Dayton noted in his letter that he supported making MNsure “directly accountable to the governor and subject to the same legislative oversight as other state agencies” and his budget included half a million dollars devoted to the task force. The spending bill was approved by the legislature in May, and the 29-member task force was appointed in the summer.
One of the possibilities that the task force considered was the possibility of switching to Healthcare.gov, but it’s clear that there was no cut-and-dried answer to the question of whether Minnesota is better served by having a state-run exchange, switching to a federally-run exchange, or teaming up with the federal government on either a supported state-based marketplace or partnership exchange.
In a December 2015 meeting of the task force, the MN Department of Human Services presented a financial analysis of the alternatives available to MNsure. They determined that switching entirely to Healthcare.gov would cost the state an additional $5.1 million in one-time costs from June 2016 to June 2017. And switching to a supported state-based marketplace would cost an additional $6.6 million during that same time frame. If the state had opted to switch to Healthcare.gov, the soonest it could have happened was 2018, since HHS requires a year’s notice from states wishing to transition to Healthcare.gov, and Minnesota wouldn’t have been in a position to make a decision until sometime in 2016.
There were significant reservations about making that switch prior to the Supreme Court’s ruling on King v. Burwell. The Court ruled in June 2015 that subsidies are legal in every state, including those that use Healthcare.gov. Prior to the decision, a switch to Healthcare.gov could have jeopardized subsidies for tens of thousands of Minnesota residents. But once it was clear that Healthcare.gov’s subsidies are safe, some stakeholders began calling for Minnesota to scrap its state-run exchange and use Healthcare.gov instead. Because the MNsure task force was included in the 2016 budget, no hasty decisions were made.
In January 2016, the task force submitted their recommendations to the legislature. They covered a broad range of issues, but did not recommend that MNsure transition to the federal enrollment platform. Lawmakers essentially left the exchange alone during the 2016 legislative session.
The magnitude of the 2016 rate increases that were announced in October resulted in MNsure opponents renewing their calls to switch to Healthcare.gov. But it’s important to keep in mind that the 41 percent weighted average rate hike in Minnesota was market-wide, and did not just apply to MNsure enrollees. In fact, the off-exchange carrier (PreferredOne) had among the highest rate hikes in the state for 2016, at 39 percent, and the exchange’s weighted average rate increase (38.5 percent) was lower than the weighted average rate increase for the whole individual market (41 percent).
Minnesota health insurance exchange links
MNsure
855-3MNSURE (855-366-7873)
State Exchange Profile: Minnesota
The Henry J. Kaiser Family Foundation overview of Minnesota’s progress toward creating a state health insurance exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Minnesota health insurance marketplace: history and news of the state’s exchange appeared first on healthinsurance.org.
Avoid scams while shopping for insurance
It’s been more than seven years since the health insurance marketplaces (exchanges) first opened for business. Well over 11 million people have enrolled in plans through the exchanges for 2021, and some people also have ACA-compliant individual market coverage obtained outside the exchanges (directly from insurers). And thanks in large part to the ACA’s expansion of Medicaid, enrollment in Medicaid coverage has grown by nearly 20 million people since 2013 (there’s been a significant increase in Medicaid enrollment as a result of the COVID pandemic). And the uninsured rate is still in the single digits, despite the fact that it’s been rising during the Trump administration’s tenure, after dropping to a record low by 2016.
But while there’s plenty to celebrate, any major change like the ACA — especially with the subsequent decade of additional health care reform debate — comes with scammers who take advantage of the confusion that invariably surrounds a major policy shift. Here are some tips to keep in mind:
Scammers tap into confusion over ACA
The ACA was signed into law in 2010, and almost immediately, scammers began looking for ways to make a quick buck. Soon after the law passed, Jim Quiggle, spokesman for the Coalition Against Insurance Fraud, says he wasn’t surprised by the sudden influx of health insurance scams. “Crooks are exploiting the mass confusion over what the health reform means to the average consumer,” Quiggle said. “With each new aspect of reform, another opportunity for fraudulent marketing opens up.”
Quiggle explained that rip-off artists go door to door and use blast emails or pop-up ads to convince unsuspecting customers that they’re selling “ObamaCare.” And, to create a sense of urgency, the scammers tell potential scam victims that the law requires them to buy the insurance they’re selling and do it before an “enrollment period” closes.
It’s true that the ACA created an annual open enrollment period for individual market health insurance; outside of open enrollment, coverage can only be obtained if you have a qualifying event (prior to 2014, people could apply for individual health insurance whenever they liked, but the applications were then medically underwritten and could be rejected based on medical history). But again, buyer beware. If in doubt, double-check the facts with a third party to make sure you’re dealing with a legitimate source of coverage.
Marc Young, spokesman for Insurance Commissioner Kim Holland, co-chair of the National Association of Insurance Commissioners’ Anti-Fraud Task Force, explains that criminals sometimes cleverly mask themselves as insurance companies, selling plans that are completely fraudulent. “Unfortunately, the criminals provide all of the materials that legitimate companies provide,” Young says. “They’ll use the industry language to describe levels of coverage. They’ll issue authentic-looking insurance cards.”
Some companies will even set up storefronts in communities, selling policies and sticking around just long enough to file bogus claims – only to completely vanish into thin air overnight. These companies are “very deceptive, very misleading, with very professional looking materials,” Young says.
Again, it’s a good idea to double-check with your state’s department of insurance to make sure that the person and company you’re dealing with are both licensed to do business in your state.
Understand your state’s exchange
In addition to outright scams like identity theft, consumers need to be aware of the possibility that some agents might try to portray their agency as “the exchange” and attract customers who think they’re purchasing coverage through the official exchange. This is further complicated by the fact that licensed agents and brokers who are certified by their state’s exchange can help consumers enroll in exchange plans.
Individual policies can still be purchased outside of the exchanges. Like exchange plans, they are ACA-qualified which means they are guaranteed issue, cover the essential health benefits, and have the ACA’s limits on out-of-pocket maximums. Some are sold by carriers who also sell policies in the exchange, but some carriers only offer plans outside the exchange.
From a consumer perspective, the primary difference between exchange and non-exchange plans is the availability of subsidies. Premium subsidies and cost-sharing subsidies are only available on plans that are purchased through the exchange. Each state has just one official exchange where subsidies are available and in 36 states as of 2021, it’s Healthcare.gov.
If you’re in DC or one of the 14 states that run their own exchanges, you can still use Healthcare.gov to get to the exchange website in your state so that there’s no doubt you’re on the correct site. If a certified broker or agent assists you with your exchange plan application, you will still be submitting your application on the official exchange web site. If you’re submitting an application anywhere else, you’re applying for an off-exchange plan and subsidies will not be available.
It’s important to understand, however, that there are approved direct enrollment entities that are authorized to enroll people in on-exchange plans via their own websites, without having to use the actual exchange website. HealthSherpa is an example of this; they only enroll people in on-exchange plans, and enrolled 1.9 million of the 8.2 million people who signed up for plans through the federally-run marketplace (HealthCare.gov) for 2021. CMS has a list of entities that are approved to provide direct enrollment. But if you’re using one of them, you’ll still want to confirm that you’re enrolling in an on-exchange plan, if that’s your preference.
Know how the law affects you, or doesn’t
Another commonly misunderstood aspect of the ACA – and one that scammers have tried to target – is that the majority of Americans do not need to obtain health insurance through the exchanges.
Most Americans haven’t had to make any changes at all under the ACA. If you get your coverage through Medicare, Medicaid, or your employer, you do not need to worry about the exchanges at all.
[If you’re enrolling in Medicaid, you may be able to do so through the exchange, depending on why you’re eligible for Medicaid. For MAGI-based Medicaid (most enrollees under the age of 65), some states have switched their entire application system to run through the exchange, so check with your state Medicaid office if you have questions.]
In addition to being a portal for Medicaid enrollment, the exchanges were primarily designed to provide a shopping platform for people who purchase individual health insurance (and for small-business health plans if the employer chooses to obtain coverage through the SHOP exchange, which is still available in some states). This includes people who already had individual health insurance prior to 2014, as well as people who were previously uninsured and didn’t have access to a group plan through an employer. But nearly two-thirds of the population have either employer-sponsored coverage or Medicare — and can ignore the exchanges — while another 20 percent have Medicaid and may be able to ignore the exchange, depending on how their states have set up the enrollment and renewal process.
If you’re purchasing individual health insurance, the exchanges are likely the best option if you’re eligible for subsidies. If not, you can shop both in and out of the exchange to find the policy that best fits your needs and budget. Although the exchanges’ online comparison and enrollment features have been heavily publicized, applicants can also enroll by mail or in person. You can contact your state’s department of insurance to verify that the person, agency, or website you’re working with is certified with the state’s exchange.
If you’re shopping for an off-exchange plan, your state’s department of insurance can help you make sure you’re working with a properly licensed agent and buying a legitimate health insurance policy.
Watch out for fakes and frauds
Navigators and brokers will not charge you any sort of fee for their services (in a few states, brokers are allowed to charge fees if they’re not paid a commission by the insurer; but these fee-based brokers are rare and there are extensive rules regarding the disclosures they have to provide to their clients). The only money you need to pay is your first month’s premium, either when you enroll or once you get the invoice. If people are asking you for any additional fee, be wary of a scam.
Seniors who are enrolled in Medicare don’t need to do anything differently. They benefit from Obamacare, but don’t need to make any changes to their coverage and certainly don’t need to “enroll in Obamacare” or do anything with the exchanges.
If you enroll in a health plan, you’ll need to provide relatively extensive personal information, particularly if you’re applying for premium subsidies (and if you get a premium subsidy, you have to reconcile it on your tax return). There’s no legitimate way to enroll in just a minute or two with nothing more than a name and social security number, so be wary of potential scams in which the salesperson is attempting to gather some basic — but personal — information under the pretense of enrolling you in health coverage.
If the plan you’re enrolling in will take effect immediately, chances are it’s not an ACA-compliant plan. The same is true if it excludes pre-existing conditions or doesn’t cover some of the essential health benefits. Here’s more about how you can determine whether the plan you’re considering is compliant with the ACA.
Discount card scams leave consumers holding the bag
Some salespeople offer discount medical cards or “buyers clubs” – some of which legitimately provide discounts on certain expenses such as prescription drug costs and dental services through a network of providers. In some cases, however, unscrupulous marketers are overstating the size of those networks, or offering unbelievable discounts – “sometimes up to 85 percent off,” Quiggle says.
And, in some cases, consumers are being drawn into those plans on the false promise that the discount card programs will pay for major medical expenses. “We see cases where people are showing up at hospitals presenting their discount card because they think they have health insurance, only to be told they’ll have to pay for services out of pocket,” Quiggle says.
In other cases, consumers incur large medical expenses, then find out that “pre-authorized surgeries” or other large expenses won’t be reimbursed.
Discount plans have existed since long before the ACA was written. But since they’re not considered insurance, they’re not regulated under the ACA, which means that unless a state takes steps to limit them, they can still legally be sold. They don’t provide much in the way of benefits though, particularly in the case of a large claim.
What has changed as a result of Obamacare is the affordability of real health insurance for people with low- and mid-range incomes. Discount plans stood out in the past because of their price, which was far cheaper than real health insurance. But because of the ACA’s premium tax credits (subsidies), the average after-subsidy premium for the 86 percent of exchange enrollees who got a subsidy in 2020 was just $84/month.
Ignore exchange naysayers
It’s inevitable that there have been some unscrupulous people who attempt to sell worthless “insurance” under the guise of Obamacare. If a policy seems too good to be true, it probably is. If in doubt, contact your state’s department of insurance before you submit an application.
Consumers should also be aware that some groups have a vested interest in fighting against Obamacare. They are often politically motivated, and aren’t above spreading outright lies about the ACA in order to turn people against it. Focus on what’s best for you and your family, and ignore people who tell you to avoid the exchanges without having any knowledge of your specific situation.
There is no one-size-fits-all when it comes to healthcare, which is why there are a variety of plans available in the individual market, both in and out of the exchanges. Open enrollment for 2021 individual market coverage ended in most states in December 2020, but opportunities to enroll in ACA-compliant coverage are available year-round if you experience a qualifying event. If you do, take your time, compare all of the available plans, seek help from a reputable source, and be sure that you read the fine print on the plans you’re considering before you enroll.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Avoid scams while shopping for insurance appeared first on healthinsurance.org.
How to avoid the surprise of health plan ‘mapping’
I’ve written a lot about why you might want to avoid letting your health insurance plan auto-renew – including the possibility that your premium costs could be significantly different in the new year. But if you choose to auto-renew your current plan, you could be in for another alarming surprise: an entirely new plan that was selected by your health insurance carrier on your behalf in a process called “mapping.”
And starting with the 2017 plan year, the exchange can also select a new plan for you, if your carrier is leaving the exchange altogether (details on the changes that took effect for 2017 — and later years — are in the Notice of Benefit and Payment Parameters for 2017). This has become fairly rare in recent years, although it does still happen — New Mexico’s CO-OP shut down at the end of 2020, for example.
When your plan is phased out
Prior to 2014, individual health insurance in almost every state was medically underwritten. When carriers made changes to a plan, they would typically “sunset” the old plan: existing enrollees could remain on it, but only the new version was available to new applicants. In this scenario, premiums for the sunset plan tended to increase significantly over time, as the risk pool would no longer be adding newly underwritten members.
Pre-2014, if carriers made changes to a plan and applied them to existing enrollees, state regulations could require the carrier to allow existing enrollees to transition to any of the carrier’s other plans, with no medical underwriting. Carriers tended to avoid that scenario in an effort to prevent adverse selection.
But that’s no longer an issue. Every policy is available to every applicant during open enrollment. Medical underwriting is no longer used, and people are no longer stuck with the plan they have because of their medical history. So it no longer makes sense for carriers to sunset products; instead, they make changes as necessary, applying them to existing policyholders as well as new applicants. And in turn, every policyholder has the option of switching to any other plan during open enrollment, regardless of pre-existing conditions.
Although new plan designs were rolled out on a regular basis prior to 2014, carriers are working in a significantly different landscape now. Nationwide, many individual market carriers struggled with financial losses in the first few years of ACA implementation. The adjustments they made in order to remain viable and competitive mean that plan changes became more common than they were prior to 2014.
When plan designs are phased out and replaced, carriers “map” insureds to different plans that are the “most similar” to what they currently have. It’s a better option than having policyholders lose their coverage altogether if they don’t return to their exchange to actively research and select a new plan.
Unfortunately, even if you’re mapped to the “most similar” plan, it could mean that the premium, provider network, and design of your mapped policy could all be different from what’s in your existing plan.
Mapping and the exchanges
In September 2014, HHS clarified that auto-renewal would be the default provision to avoid gaps in coverage for exchange enrollees who don’t return to actively select a new plan for the coming year during open enrollment. State-run exchanges are free to set their own guidelines, but all of the state-run exchanges have auto-renewal as the default, as long as the insurer is continuing to offer coverage in the exchange; for cases where the insurer is leaving the exchange, there’s a bit more variation among state-run exchanges in terms of how to handle it, but this has become a rare scenario now that the marketplaces have mostly stabilized and insurers are joining rather than exiting.
And as long as the same plan continues to be available for the coming year, enrollees who don’t return to the exchange to select a plan during open enrollment are simply auto-renewed in their current plan. But there can still be small changes to the plan, such as an increase in the deductible or maximum out-of-pocket limit.
So auto-renewal is available for most enrollees from one year to the next. But that does not mean they’ll all be renewed onto the same plan they had the year before, or that the provider network will still be the same. If a current plan will no longer be available, the carrier can “map” insureds to a new plan that they deem to be “most similar” to the current plan. And if the carrier is exiting the exchange, the enrollee can be automatically re-enrolled in the plan that the exchange deems the closest match, assuming that the enrollees don’t return to the exchange to pick their own new plans.
Mapping to the ‘most similar’ plan
For cases where an existing plan won’t be available in the coming year, HHS implemented a hierarchy in 2015 for determining what plan would be considered “most similar” to an enrollee’s current plan. HHS noted that the insurance carriers (as opposed to state regulators or the exchanges) are uniquely qualified to determine which plan is most similar to a plan that will no longer be available.
When a plan must be replaced, the carrier submits a “crosswalk” designation to the exchange, indicating which plan should be substituted during the auto-renewal process. The exchange uses that data to map current enrollees onto plans for the coming year, assuming the enrollees don’t return to the exchange to actively select their own plan.
Starting with 2016 coverage, it became increasingly popular for carriers to eliminate PPO plans in favor of HMOs, which allow carriers more control over costs. Illinois, Texas, and Arizona are examples of states where some enrollees were auto-renewed onto different plans with narrower networks in 2016 because their carriers stopped offering PPO networks and/or benefit designs (in all cases, insureds also have the option to return to the exchange and pick their own plan; auto-renewal only happens if you don’t pick a plan yourself).
Can you be mapped to a new carrier?
For 2017, and again for 2018, we saw a not-insignificant number of carriers leaving the exchanges altogether. Obviously, all of the impacted enrollees had the option to return to the exchange during open enrollment to pick a new plan. But not everyone in that situation will do so. How does auto-renewal work in that situation?
For 2015 and 2016 coverage, HHS guidelines prevented the exchange from mapping enrollees to a plan offered by a different carrier. So if your health insurance carrier was exiting the exchange or pulling out of the individual market altogether – as was the case with 12 CO-OPs at the end of 2015 – the exchange generally couldn’t automatically re-enroll you in a similar plan from a different carrier. (New York State of Health made an exception for CO-OP members who lost coverage at the end of November 2015.)
But for 2017, new rules were implemented, and they’re still in use (although the trend has reversed in recent years; insurers have joined or rejoined the exchanges in large numbers for 2019, 2020, and 2021, with very few exits, making the auto-renewal protocol much less needed than it was in 2017 and 2018). In the Benefit and Payment Parameters for 2017, HHS noted that
“whenever feasible, the Exchange should, and the FFE will attempt to, re-enroll enrollees in silver metal-level QHPs no longer available through the Exchange into the silver metal-level QHP offered by another issuer through the Exchanges of the same product network type with the lowest premium.
If the QHPs that have become unavailable are in metal levels other than silver, then whenever feasible, the Exchange should and the FFE will seek to re-enroll the affected enrollees in the QHP available on the Exchange of the same metal level of the same product network type with the lowest premium.
Exchanges should, and the FFEs will endeavor to, implement such a re-enrollment process for enrollees of QHPs whose issuers are discontinuing their coverage, for as many groups as is feasible given the short timelines and complex operations that could be required in these scenarios.”
Essentially, the exchange will — if possible — assign people to a new plan from a different carrier in the exchange, if the enrollee’s current carrier will no longer be offering plans in the exchange after the end of the year. Note that they use the words “the FFE will attempt to…” and “the FFE will endeavor to…”
State-based exchanges can use the federally exchange’s protocol for mapping enrollees to new plans when an insurer leaves the marketplace, but they are not required to do so. For example, Idaho’s exchange confirmed that they were mapping BridgeSpan members to new plans for 2018, and Washington’s exchange mapped Community Health Plan & Regence members to new plans. But Maryland’s exchange did not map Cigna members to new plans for 2018 (Cigna enrollees in Maryland’s exchange were uninsured as of January 1, 2018 if they didn’t pick a new plan by December 31, 2017, but they had a special enrollment period that continued for the first 60 days of 2018, during which they can pick a new plan)
Can you be mapped to an off-exchange plan?
The 2017 Benefit and Payment Parameters also address the scenario where a carrier exits the exchange but continues to offer off-exchange coverage for the coming year. HHS explains:
“we are finalizing a rule that would provide for auto-reenrollment through the Exchange, as opposed to permitting auto-reenrollment outside the Exchange. Under this rule, an enrollee could automatically be re-enrolled into a QHP from a different issuer through the Exchange.”
So if your health insurer is leaving the exchange but remaining in the off-exchange market, the exchange will be able to auto-re-enroll you in a plan from a different carrier (assuming you don’t return to the exchange to pick a new plan), but your carrier will not be able to auto-renew your coverage to an off-exchange version of your plan.
HHS notes that carriers can communicate with their insureds, letting them know that the off-exchange plans are available. But they cannot simply switch insureds to the off-exchange plans automatically. This is beneficial to consumers, since premium subsidies are only available in the exchange, and most enrollees do qualify for premium subsidies each year.
Could you be mapped to a higher premium?
It’s possible that the mapped plan could have a higher premium, despite the fact that it will be the plan deemed “most similar” to what you’ve got now. Overall average rate changes have been much smaller in the last few years than they were in 2017 and 2018, but the rate changes for specific plans vary quite a bit from one to another, and this could be the case for the plan that your insurer or the exchange maps for you.
Because the cost of cost-sharing reductions has been added to silver plan rates in most states, premium subsidies are generally much larger than they were prior to 2018. This is resulting in free bronze plans in some areas, and gold plans that are less expensive than silver plans in some areas. Because of the sharp variation in premiums by metal level, it’s strongly recommended that people return to the exchange to select their own plan during open enrollment (or during a special enrollment period triggered by the impending loss of other coverage) regardless of whether their current plan will continue to be available.
Can you avoid mapping?
If you want to have a hand in determining your new plan, you have to return to the exchange and actively select a plan for the coming year. In most states, the deadline to do that – and have the coverage effective in January – is December 15 (there are quite a few exceptions to this deadline, but December 15 is a good general rule of thumb, as none of the states have a deadline prior to that)
Pay attention to the notices you receive from your health insurer and your exchange in the early fall – they’ll tell you in advance if your current plan is being discontinued or modified.
And don’t rely on auto-renewal. Instead, log back into your exchange account and actively select a plan for the new year. That will give you a chance to compare all of the available plans, which may be very different from what was available when you shopped last year or the year before. It will also give you a chance to update your personal information with the exchange, including any recent changes in income (resulting in fewer surprises when you reconcile your subsidy on your tax return).
And in the event that your existing plan will no longer be available after the end of the year, selecting your own replacement plan gives you much more control over the situation than simply letting your health insurer or the exchange assign you to the plan they consider most similar to what you had this year.
What happens after December 15?
If you find out that your plan has changed and you’d rather pick a different option, you may still be able to make a change to your coverage after December 15 or even after the first of the year, depending on where you live and whether your insurer is leaving the market in your area at the end of the year.
If your plan is being terminated at year-end and you pick a new plan during your special enrollment period (triggered by loss of coverage) by December 31, the new plan will take effect on January 1. But if your plan is terminated and you use your special enrollment period after December 31, the earliest possible effective date you’ll have for your new plan will be February 1. In that case, the plan onto which you were mapped will be in force from January 1 until your new plan selection takes effect (or, if you’re in a state-run exchange that doesn’t map you to a new plan, you’ll be uninsured until your own plan selection takes effect).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post How to avoid the surprise of health plan ‘mapping’ appeared first on healthinsurance.org.
How to buy health insurance during the COVID-19 crisis
Can you buy health insurance now?
The COVID-19 pandemic has caused millions of Americans to lose their jobs, and in many cases, that means losing health insurance as well. About half of all Americans get their health insurance from an employer’s plan, and it’s a cruel irony that so many people have lost their jobs in the midst of a time when we need health coverage more than ever. A Commonwealth Fund analysis found that by June 2020, nearly 15 million Americans had lost their employer-sponsored health insurance. And about 5.4 million of them became uninsured (as opposed to switching to another form of health coverage), resulting in the largest-ever increase in the uninsured rate.
But the good news is that loss of coverage triggers a special enrollment period during which you can buy ACA-compliant individual health insurance. You can buy your new coverage on- or off-exchange, although premium subsidies and cost-sharing reductions are only available through the exchange.
Loss of a job does not, in and of itself, trigger a special enrollment period. The special enrollment period only applies if you’re losing health coverage (the plan you had must have been minimum essential coverage – which all employer-sponsored plans are – and you can’t have voluntarily canceled the plan or lost it due to non-payment of premiums).
A drop in income that makes a person newly-eligible for financial assistance in the exchange will trigger a special enrollment period during which a person can switch plans – but that only applies if they already had minimum essential coverage in place before the income change.
If you’re uninsured, whether it’s a recent development or a long-term situation, you may still be able to obtain coverage for 2021. Here’s a summary of your options:
1. ACA-compliant coverage via extended open enrollment or a COVID-19 special enrollment period
Click to see which states are offering special enrollment periods in response to the coronavirus pandemic.
In most states, open enrollment for 2021 health plans ran from November 1 to December 15, 2020. This gave people an opportunity to sign up for new individual/family health coverage if they needed it. And in 10 states and DC, open enrollment is still underway as of early January 2021.
In addition, Maryland has opened another COVID-related special enrollment period for uninsured residents (people who don’t currently have minimum essential coverage), which will continue through March 15, 2021. Unlike normal enrollment period rules, Maryland is allowing retroactive coverage in some cases, and effective dates that are never more than two weeks after the enrollment is submitted.
Maryland previously offered a COVID special enrollment period that ran from March to December in 2020. Most of the other fully state-run exchanges also offered special enrollment periods in 2020 to address the COVID pandemic, allowing people without health coverage a chance to sign up without having to wait for open enrollment or experience a specific qualifying event. But with the exception of Maryland, those windows are no longer ongoing.
Most states use HealthCare.gov, which is run by the Department of Health and Human Services (HHS). Throughout 2020, the Trump administration refused to open a special enrollment period through HealthCare.gov – despite the fact that several states that use the federally run exchange asked HHS to do so. The Biden administration might open a COVID-related special enrollment period after taking office in January 2021; this is one of the recommendations that state insurance commissioners have made to President-elect Biden, and it’s well within the scope of immediate changes the incoming administration could make to ensure more people are covered.
The takeaway point here is that if you’re uninsured, you’ll want to check to see if open enrollment is ongoing in your state (it continues through the end of January in a few states), and keep an eye out to see if a COVID-related special enrollment period becomes available via HealthCare.gov. If you’re eligible to enroll — either because the exchange is offering an extended enrollment period or a special enrollment period, or because you’ve experienced a qualifying event — it’s in your best interest to enroll in an ACA-compliant plan as quickly as possible.
2. Loss-of-coverage special enrollment period (and other SEPs that might apply to your situation)
If you’re in a state where open enrollment has ended, you’ll need to have a qualifying event in order to enroll in coverage. Our guide to qualifying events and special enrollment periods covers all of the details about how these work, including rules for effective dates and prior coverage requirements.
And if your income has taken a hit, know that if you enroll in a plan through the exchange during a special enrollment period, you may qualify for financial assistance (premium subsidies and cost-sharing subsidies). Use this subsidy calculator to estimate the size of your subsidy.
For most qualifying events, your coverage will take effect either the first of the next month, or the first of the month after that, depending on how late in the month you enroll. Typically, if you enroll during the first 15 days of the month, your coverage will take effect on the first day of the next month. Enroll after the 15th and coverage won’t kick in until the first of the following month.
But the effective date rules are different if your qualifying event is the loss of your existing health coverage. If you’re losing your coverage, you can enroll up until the last day you have coverage and your new plan will take effect the first of the following month. Since health plans usually terminate on the last day of a month, this means you can have seamless coverage in most cases, as long as you enroll by the day that your old plan ends, and assuming your old plan is ending on the last day of the month (if your plan is ending on a day other than the last day of the month, it will likely not be possible to have seamless coverage unless you’re able to qualify for Medicaid). So for example, if you’re getting laid off and your employer-sponsored coverage is going to end on January 31, you have until January 31 to enroll in a new plan (on- or off-exchange) and your coverage will take effect August 1.
It’s important to understand that in many cases, you’re only eligible for a special enrollment period if you already had some sort of minimum essential coverage in place before the qualifying event – this is obviously true if your qualifying event is loss of coverage, but it’s also true for several other qualifying events. You can read more about the rules for each type of qualifying event here.
Native Americans can enroll in plans through the exchange year-round, although the coverage doesn’t take effect until the first of the next month or the first of the month after that, depending on the enrollment date. As is the case with special enrollment periods, Native Americans must enroll by the 15th to have coverage effective the first of the next month.
Not eligible for a SEP or Medicaid (or CHIP, a Basic Health Program, Medicare, etc.)? Unless a blanket COVID special enrollment period is opened via HealthCare.gov (and other state-run exchanges follow suit), you’ll have to wait until next fall’s open enrollment to buy coverage, and the plan won’t take effect until next January. But as described below, a short-term health insurance plan might still be an option, and it would allow you to have coverage this year.
3. Losing your income? Apply for Medicaid.
Federal
poverty level
calculator
123456789101112
What state do you live in?
0.0%
of Federal Poverty Level
Millions of Americans have faced a sudden drop in income as a result of the COVID-19 pandemic. But the majority of the states have expanded Medicaid under the Affordable Care Act, which allows residents with low income (up to 138 percent of the poverty level) to enroll in Medicaid.
Medicaid enrollment is year-round, as is CHIP (Children’s Health Insurance Program) enrollment. And CHIP eligibility extends to higher income levels than Medicaid. For both Medicaid and CHIP eligibility, income is calculated on a monthly basis, so they are available if your current income is within the eligible range – even if your income later in the year is expected to be much higher.
Medicaid coverage can also be immediate, or backdated to the first of the month or even a previous month, depending on the state and the circumstances. (States can seek federal approval to eliminate prior month retroactive coverage availability, and some have done so under the Trump administration). So you won’t have to wait for your Medicaid coverage to take effect.
In states that have not expanded Medicaid, coverage is not available based solely on income; low-income residents have to also meet other criteria, such as being pregnant, caring for minor children, being elderly, or being disabled. But if you’re facing a loss of income, you’ll want to check with your state’s Medicaid program to see if you might be eligible for coverage.
When your income picks back up in the future and makes you ineligible for Medicaid, that will trigger a loss-of-coverage special enrollment period during which you can enroll in a private individual market plan or an employer-sponsored plan if one is available to you. Note that in order to qualify for the additional federal Medicaid funding that’s being provided to states to address the COVID-19 pandemic, states cannot take action to terminate Medicaid coverage until after the COVID-19 emergency ends. Your Medicaid coverage can be terminated if you request it — perhaps because you become eligible for a new employer’s plan, or your income increases enough to make you eligible for premium subsidies in the exchange — or if you move out of state. But otherwise, your Medicaid coverage should continue until the end of the COVID-19 emergency period. If you request a termination or move out of state, however, your Medicaid coverage will end and that will trigger a special enrollment period during which you can sign up for a private plan.
This federal poverty level calculator will help you determine whether you meet the Medicaid eligibility level for your state. Your eligibility for ACA subsidies also depends on your income and percentage of the federal poverty level (FPL).
4. The short-term fix
For millions of Americans who aren’t eligible for a SEP or Medicaid, buying a short-term medical plan offers the fastest way to get some level of coverage in place. Short-term plans aren’t ACA-compliant, but can still provide protection from catastrophic medical expenses – and you can purchase the plans at any time during the year.
That means you could buy a short-term plan today and – if you’re approved through the underwriting process – you could have coverage in force as soon as tomorrow.
Short-term coverage is temporary, but federal regulations now allow short-term plans to have initial terms of up to 364 days, and total duration, including renewals, of up to three years. Many states have their own rules, however, that limit short-term plans to shorter durations than the federal rules allow.
Many short-term health plans have voluntarily agreed to waive cost-sharing for COVID-19 testing. But the general rules that the federal government imposed to require insurers to fully pay for COVID-19 testing and COVID-19 vaccines do not apply to short-term plans, so their actions on this are voluntary rather than mandated (unless a state takes action to further regulate short-term plans). And although many ACA-compliant health plans agreed to temporarily waive cost-sharing for COVID-19 treatment in 2020 (as opposed to just testing, as required by law), very few short-term plans agreed to take this step.
And the basic rules of thumb for short-term plans still apply: Pre-existing conditions are generally not covered at all, and insurers will tend to look back at your medical records if and when you have a claim, to make sure that the claim isn’t related to any condition you might have had before enrolling. Short-term plans are also not required to cover the ACA’s essential health benefits, which means that some of the treatment you might need for COVID-19 (or other conditions) might not be covered at all by the plan. Many short-term plans do not, for example, cover outpatient prescription drugs. Others place limits on how much they’ll pay for inpatient hospital care.
5. NY, MN, and MA residents with fairly low income can enroll year-round
New York and Minnesota have Basic Health Programs (the Essential Plan and MinnesotaCare), both of which offer year-round enrollment and are available to residents with income up to 200 percent of the poverty level.
Massachusetts has a program called ConnectorCare, which is available to residents with income up to 300 percent of the poverty level. ConnectorCare enrollment is available year-round, but only for people who are newly eligible or who haven’t enrolled previously.
If you’re in one of these states and have an eligible income, you may still be able to sign up for coverage regardless of what time of year it is.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post How to buy health insurance during the COVID-19 crisis appeared first on healthinsurance.org.
If an individual pays for an exchange plan, how do they pay for the premium pre-tax as would someone with an employer plan?
Q. If an individual pays for an exchange plan, how do they pay for the premium pre-tax, the way they would if they had an employer-sponsored plan? This can be a substantial cost impact for the middle-class taxpayer who doesn’t qualify for the tax credit/subsidy. If you itemize, you do not get the full benefit that other taxpayers get. Am I missing something?
A. If you’re self-employed, you can generally deduct the full amount you pay in premiums without having to itemize your deduction. (Here’s more the self-employed health insurance deduction.)
But if you’re not self-employed, the only way to deduct your health insurance premiums is to itemize your deductions. You can only deduct your total medical expenses that exceed 7.5 percent of your AGI, although health insurance premiums count towards your total medical expenses. So as an example, if your AGI is $60,000 and your total medical expenses are $8,000 for the year (including health insurance premiums), you’d be allowed to deduct $3,500 in medical expenses as part of your itemized deductions on schedule A. (7.5 percent of $60,000 is $4,500, so you’re allowed to deduct the portion of your total medical expenses that exceeds $4,500).
Note that the medical expense deduction threshold used to be 7.5 percent of income; the ACA changed it to 10 percent, but it soon reverted to 7.5 percent and has remained at that level.
[The GOP tax bill that was enacted in December 2017 put the medical expenses deduction back to 7.5 percent, but only for 2017 and 2018. Then Section 103 of the Further Consolidated Appropriations Act, 2020, enacted in December 2019, kept that lower threshold in place for tax years 2019 and 2020. And finally, the Consolidated Appropriations Act, 2021 (Title I, Section 101) permanently reset the threshold at 7.5 percent, making it this deduction more accessible for more people going forward.]
The deductibility of health insurance premiums is an issue that has come up in health reform discussions many times over the years, and it’s undeniable that employees who must purchase their own health insurance are at a disadvantage tax-wise. Future legislation could change this, but for now, individual health insurance premiums are generally not deductible without itemizing unless you’re self-employed.
But if you qualify for a premium tax credit (the vast majority of exchange enrollees do), it will offset some or even all of the monthly premium you have to pay, putting you on much more equal footing with people who get employer-sponsored health coverage.
The post If an individual pays for an exchange plan, how do they pay for the premium pre-tax as would someone with an employer plan? appeared first on healthinsurance.org.
Can I deduct my exchange premiums when I file taxes?
Q. I’ve always had employer-sponsored health insurance, and the premiums were paid pre-tax. But I left that job last year, and have now purchased individual health insurance in the exchange. Do I get to deduct the premiums I’ve paid when I file my taxes?
Our 2021 Open Enrollment Guide: Everything you need to know to enroll in an affordable individual-market health plan.
A. If you’re self-employed, yes. If not, it will depend on how much you spend on medical expenses during the year.
When you had employer-sponsored health insurance, your share of the premium was likely payroll deducted on a pre-tax basis, and thus your W2 reflected that fact. You did not have to deduct the premiums when you filed your taxes, because they were not included in the taxable income reported to you on your W2.
Now that you’re buying your own health insurance, there are several things to keep in mind:
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Can I deduct my exchange premiums when I file taxes? appeared first on healthinsurance.org.
Affordable Care Act’s Basic Health Program
Under the ACA, most states have expanded Medicaid to people with income up to 138 percent of the poverty level. But people with incomes very close to the Medicaid eligibility cutoff frequently experience changes in income that result in switching from Medicaid to ACA’s qualified health plans (QHPs) and back. This “churning” creates fluctuating healthcare costs and premiums, and increased administrative work for the insureds, the QHP carriers and Medicaid programs.
The out-of-pocket differences between Medicaid and QHPs are significant, even for people with incomes just above the Medicaid eligibility threshold who qualify for cost-sharing subsidies.
The Basic Health Program (BHP) – section 1331 of the ACA — was envisioned as a solution, although most states did not establish a BHP. Under the ACA (aka Obamacare), states have the option to create a Basic Health Program for people with incomes a little above the upper limit for Medicaid eligibility, and for legal immigrants who aren’t eligible for Medicaid because of the five-year waiting period.
The Basic Health Program was originally scheduled to begin January 1, 2014, but was postponed until 2015. And even then, only two states chose to implement a BHP: Minnesota‘s BHP was effective in January 2015 (see Minnesota’s BHP blueprint), and New York‘s took effect in January 2016 (see New York’s BHP blueprint).
Why Minnesota and New York?
For several reasons, it made sense for Minnesota and New York to establish BHPs. With a BHP, the federal government pays the state 95 percent of what they would have paid in cost-sharing subsidies and premium subsidies if the BHP enrollees had instead enrolled in the second-lowest-cost Silver health insurance plan in the exchange. The state contributes additional funding as needed, and directs all the money to the managed care organizations that provide benefits under the BHP.
Coverage under the BHP is available to people who aren’t eligible for Medicaid, don’t have access to an affordable employer-sponsored plan, and whose household income doesn’t exceed 200 percent of the poverty level (a little more than $43,000 for a family of three). And it’s also available to legal immigrants with income up to 138 percent of the poverty level who aren’t eligible for Medicaid because of the five-year waiting period.
Under the ACA, legal immigrants who are ineligible for Medicaid (because of the five-year waiting period) are eligible for premium subsidies in the exchange with income as low as $0. But starting in 2001, New York allowed low-income legal immigrants to enroll in state-funded (no federal matching funds) Medicaid. Since a BHP receives significant federal funding, switching to a BHP allowed New York to save money on the state-funded Medicaid they provide for low-income immigrants.
New York’s BHP (aka The Essential Plan) also presents a better deal for enrollees. NY Department of Financial Services noted that a person earning about $20,000/year would spend less than half as much in total healthcare costs on the BHP in 2016 (the first year the state’s BHP was available) than they would have on a subsidized private health plan in 2015. As of 2021, the state’s fact sheet about the Essential Plan indicated that premiums have remained at $20/month (or zero dollars, depending on income), although there is an extra fee to add dental and vision coverage if you’re on the higher end of the eligible income range for BHP coverage. Total enrollment in the Essential Plan stood at nearly 800,000 people as of 2020.
In Minnesota, the state has operated MinnesotaCare since 1992. The state-funded program offered health coverage to residents who weren’t eligible for Medicaid, and the eligibility threshold extended as high as 275 percent of the poverty level for families with children, and 175 percent of the poverty level for adults without children. By converting MinnesotaCare to a BHP as of January 2015 (it’s still called MinnesotaCare), the state was able to take advantage of the much more generous federal funding that goes with a BHP.
Enrollees in MinnesotaCare also have far lower out-of-pocket exposure and premiums than they’d pay if they were enrolled in a private, subsidized plan through the exchange. MinnesotaCare’s copay for an inpatient hospitalization is $250 in 2021, and copays for prescriptions are $7 or $25, depending on the drug, up to a maximum of $70 per month. MinnesotaCare had 94,953 enrollees as of January 2021.
So by implementing BHPs, New York and Minnesota are able to utilize federal funding to provide coverage that they were previously offering under state-funded programs. And their residents are able to obtain coverage with lower premiums and lower cost-sharing than they’d get if they had to enroll in private health plans instead.
Massachusetts has a program called ConnectorCare that supplements exchange subsidies for enrollees with incomes up to 300 percent of the poverty level. It’s not a BHP though — ConnectorCare was created as part of an 1115 Medicaid waiver and uses Medicaid funds to supplement the subsidies.
Millions could benefit, but most states keep status quo
Prior to 2014, a Kaiser Family Foundation analysis projected that nationwide, approximately 34 percent of total projected exchange enrollment would be people with incomes between 138 percent and 200 percent of the poverty level.
Among people who purchased private plans through Healthcare.gov for 2021, about 57 percent — more than 4.7 million people — had income between 100 percent and 200 percent of the poverty level, but the enrollment report didn’t distinguish between people with income from 100 – 138 percent of the poverty level and those with income from 139 – 200 percent (instead, it broke it down to about 3 million with income between 100 – 150 percent, and about 1.7 million with income between 150 – 200 percent). For 2021 coverage, there are 14 states on the Healthcare.gov platform that have not expanded Medicaid, which means they had a much higher percentage of enrollees with incomes from 100 – 150 percent of the poverty level (in Medicaid expansion states, Medicaid covers the majority of people in that category, since eligibility extends up to 138 percent of the poverty level; in non-expansion states, subsidy eligibility begins at 100 percent of the poverty level).
A 2012 Health Affairs study found that if all states were to implement BHPs, 1.8 million fewer adults would churn between Medicaid and QHPs each year. To address the problem of churn, New York’s BHP eligibility is determined annually. That means BHP enrollees aren’t subject to churning between Medicaid, the BHP, and private health plans based on income fluctuations during the year.
At least eight states were considering implementing a BHP in 2015, although Minnesota was the only state that moved ahead with their plans. New York joined Minnesota in offering a BHP starting in 2016, but no other states have followed suit.
The ACA requires states that operate a BHP to coordinate BHP eligibility and enrollment with Medicaid, CHIP (Children’s Health Insurance Plan), and QHPs in the exchange, but states are given plenty of leeway in designing their BHPs within the basic guidelines established by HHS. States can create BHPs that contract with Medicaid managed care organizations and jointly administer BHPs with Medicaid, effectively creating seamless coverage for everyone under 200 percent of poverty level, with continuity of benefits and providers. States also have the option of combining BHP risk pools with exchange risk pools in order to avoid destabilization of the private market that might occur if too many people were shifted to a separate BHP risk pool.
Both New York and Minnesota have made their BHPs available through their state-run exchanges, and both have opted to have BHP enrollment run year-round, like Medicaid, rather than having defined open enrollment periods like QHPs.
Lower costs for enrollees
A BHP must limit premiums and cost-sharing to no more than the amounts that insureds would otherwise have paid in the exchanges with the regular premium and cost-sharing subsidies. But in reality, they’re likely to be far lower since BHPs are generally modeled on Medicaid and CHIP. This is certainly the case in New York and Minnesota, where BHP enrollees face far less in out-of-pocket spending and premiums than they would if they had to purchase even heavily-subsidized QHP coverage in the exchange.
Lower premiums and out of pocket costs in BHPs will likely lead to higher enrollment and coverage retention among the population with incomes under 200 percent of poverty level.
Funding for BHPs comes from a combination of state and federal money, as well as some cost-sharing for enrollees.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Affordable Care Act’s Basic Health Program appeared first on healthinsurance.org.
Self-employed health insurance deduction
Key takeaways
Self-employment and entrepreneurship are a dream for many people, and Obamacare has made that option easier to pursue, thanks to guaranteed-issue coverage, premium subsidies, and Medicaid expansion. For entrepreneurs who don’t have access to a spouse’s group health insurance plan, being self-employed usually means purchasing a policy in the individual health insurance market.
Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.
And for those who are used to having an employer cover all or most of the premiums on a group plan, paying for an individual policy can induce a bit of sticker shock. This was particularly true prior to 2014, when the self-employed had to pay the full premium for an individual policy. But thanks to the ACA’s premium tax credits, many self-employed Americans are now getting help paying for their coverage.
In addition to the premium tax credits, there are other ways that the self-employed can use the tax code to save a few dollars when it comes to healthcare. There are several deductions and tax credits that self-employed people can utilize:
Is there a health insurance deduction for the self-employed?
If you buy your own health insurance, you should definitely know about the long-standing health insurance premium deduction for the self-employed.
Congress implemented a 25% deduction for self-employed health insurance premiums in 1987 and made it permanent in 1994. The self-employed received even better news in 2003 when premiums became 100 percent deductible.
The deduction – which you’ll find on Line 16 of Schedule 1 (attached to your Form 1040) – allows self-employed people to reduce their adjusted gross income by the amount they pay in health insurance premiums during a given year. You’ll find the deduction on your personal income tax form, and you can file for it if you were self-employed and showed a profit for the year.
If you’re also eligible for a premium tax credit (premium subsidy), you can only deduct the part of the premiums you pay yourself. That can get into some circular math, but there are two methods that the IRS will let you use to determine your deduction and your tax credit.
You can’t take the self-employed premium deduction if you were eligible for group insurance from your spouse’s employer (or your own employer, if you have another job in addition to your self-employment). That includes eligibility for reimbursements via a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA).
The ACA and more-than-2% S-corp shareholders
Since 2008, more-than-2% shareholders of an S-corp have been allowed to buy individual health insurance in their own name, and then get reimbursed by the S-corp. The premiums were included on the shareholder’s W2, and then the shareholder was allowed to deduct the premiums on the first page of Form 1040, resulting in a lower AGI (see example 4 on page 4 of the IRS regulation from 2008).
But the ACA’s ban on employers reimbursing employees for individual health insurance premiums seemed to run counter to this provision, depending on how many S-corp shareholders were involved. This explanation from the IRS (updated December 2014) explains that a shareholder who is the sole corporate employee in an S-corp may continue to be reimbursed from the S-corp for individual health insurance (and this is clarified in Notice 2015-17, described in more detail below).
But until February 2015, the IRS had not directly addressed the issue of multiple more-than-2% shareholders, and the concern was that if there was more than one 2% shareholder, the corporation could run afoul of the market reforms in the ACA and be subject to significant penalties ($100 per day, per reimbursed employee).
At the time, most accountants—and the IRS attorney I spoke with in January 2015—agreed that if there were multiple shareholders or employees (including spouses), it was best to err on the side of caution and not get reimbursed by the S-corp if the shareholders were covered by individual (ie, non-group) health insurance.
In February 2015 however, the IRS released Notice 2015-17, and it was very good news for more-than-2% S-corp shareholders, as well as any other small business subject to the market reforms that prohibit the reimbursement of individual insurance premiums. Several provisions in Notice 2015-17 are applicable if you’re self-employed:
In the years since 2015, there have been some rule changes regarding employers reimbursing employees for individual market premiums. When the ACA was first implemented, the federal government took a hard-line approach (as noted above) and prohibited any form of employer reimbursements for individual market insurance premiums. But the 21st Century Cures Act brought QSEHRAs into being, allowing small employers to reimburse employees for individual health insurance premiums starting in 2017. And then the Trump administration further expanded the rules, allowing ICHRAs to exist as of 2020.
But the rules described above for more-than-2% shareholders of an S-corp are even easier. The S-corp isn’t required to establish a QSEHRA or ICHRA. It can simply reimburse the shareholder for some or all of the cost of the individual market health plan, and then include the reimbursement amount in the shareholder’s W2 income (so if the shareholder earns a W2 wage of $50,000 and also receives $5,000 in health insurance premium reimbursements, their income reported in W2 Box 1 would be $55,000).
The shareholder can then deduct that amount using the self-employed health insurance deduction when they file their 1040 (so in the example above, they’d receive $55,000 in compensation from the S-corp, but they would only pay federal income tax on $50,000 of it). The self-employed health insurance deduction is taken “above the line,” which means it’s deducted before AGI is calculated, resulting in a lower AGI (in contrast, itemized deductions are taken after AGI is calculated), and thus also a lower ACA-specific MAGI.
HSAs allow insureds to pay for medical expenses with pre-tax dollars
Although being self-employed means that there’s no employer footing the bill for health insurance, it also gives entrepreneurs a lot of flexibility in terms of what type of health insurance they purchase. One popular option is an HSA-qualified high deductible health plan (HDHP).
Although some people have expressed concerns that market reforms under the ACA would be incompatible with HSAs, that has not proved to be the case, and HSA-qualified plans are still a popular choice in the individual market.
Coverage under an HDHP makes the insured eligible to open an HSA and make pre-tax contributions that can be used later to pay for medical expenses. In 2021, the contribution limit is $3,600 for people who have individual coverage under an HDHP, and $7,200 for those who have family coverage (two or more people) under an HDHP.
As is the case with the self-employed health insurance deduction, HSA contributions are deducted “above the line” on the 1040, which means the deduction is available to filers regardless of whether they itemize deductions. And there are no income limits in terms of who can contribute to an HSA — anyone who has an HSA-qualified HDHP (and meets the rest of the eligibility requirements set by the IRS) can contribute to an HSA with pre-tax money. You have until the tax filing deadline (around April 15 of the following year) to make some or all of your HSA contributions.
Although the money in an HSA can be withdrawn without penalties or taxes to pay for qualified medical expenses, some insureds choose to treat their HSAs as secondary retirement accounts, with tax implications similar to traditional IRAs: contributions are tax-deductible and distributions during retirement are taxed as income, assuming you’re using the money for something other than qualified medical expenses.
Do ACA tax credits make health insurance more affordable for the self-employed?
Thanks to the ACA, federal tax credits (subsidies) – obtained via the exchanges – are helping many families subsidize the purchase of individual health insurance. The tax credits are great for the self-employed, who had to foot the entire bill for their health insurance prior to 2014. Employees who get employer-sponsored health insurance typically enjoy a substantial subsidy in the form of pre-tax premiums and employer contributions to the premium. The ACA makes similar subsidies available for many self-employed people.
The tax credits are available to households with incomes of at least 100% of the federal poverty level (FPL) but not more than 400 percent of FPL, as long as the enrollees do not have access to Medicaid or employer-sponsored health insurance that is considered affordable (and as long as the unsubsidized cost of coverage is above the level that the IRS considers affordable). For coverage effective in 2021, the 2019 poverty level is used, and the upper annual income threshold for subsidy eligibility is $51,040 for a single individual and $122,720 for a family of five (in the continental US; Alaska and Hawaii have higher poverty level guidelines).
The relatively high income limits mean that premium tax credits are widely available: of the more than 10.5 million people who had effectuated coverage with private health plans through the exchanges as of 2020, about 86 percent qualified for premium tax credits. Nationwide, the average premium subsidy in 2020 was $491 per month (versus average full-price health insurance premiums of about $575 per month; premium subsidies cover most of the premium for most enrollees).
The tax credits can be paid directly to health insurance carriers on a monthly basis to reduce the amount that insureds have to pay for their coverage, which is the most popular option. But it’s not the only choice: people can opt to pay full price for a plan purchased through the exchange, and then claim the tax credit in full on their tax returns.
For eligible self-employed people, the tax credits make individual health insurance significantly more affordable than it would otherwise be. And since the ACA also did away with medical underwriting in the individual health insurance market, people who avoided entrepreneurship in the past because of pre-existing health conditions can now become self-employed without having to worry about being ineligible to purchase health insurance.
Can the self-employed deduct medical expenses?
If you face high medical bills and itemize your deductions, you might be able to deduct some of your medical expenses. The deduction – found on Schedule A of your income tax return — covers a wide range of medical expenses, and also includes premiums you pay for health insurance (including Medicare) or qualified long-term care. You can’t double deduct, though — if you deduct your health insurance premiums under the self-employed health insurance deduction explained above, you can’t include them in your itemized medical expenses.
And you can only deduct expenses in excess of 7.5 percent of your adjusted gross. This is the threshold that was in effect through 2012, but the ACA increased the threshold to 10 percent, meaning that people could only deduct medical expenses that exceeded 10 percent of their income. However, the Tax Cuts and Jobs Act that was enacted in December 2017 contained a provision that temporarily reset the threshold to 7.5 percent, for 2017 and 2018. And Section 103 of the Further Consolidated Appropriations Act, 2020, enacted in December 2019, keeps that lower threshold in place for tax years 2019 and 2020. Then the Consolidated Appropriations Act, 2021 (Title I, Section 101) permanently reset the threshold at 7.5 percent, making it easier for tax filers to continue to qualify for this deduction.
Spending 7.5 percent of your income on medical costs can be a hard target to hit unless you’re dealing with a significant illness or injury (and keep in mind that you can only deduct the portion of your expenses that exceed that threshold). Still, it’s one more good reason to keep track of your medical bills and health insurance premiums – just in case.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Self-employed health insurance deduction appeared first on healthinsurance.org.
Health insurance and high-risk pools
High-risk pools were, in many cases, the only coverage available pre-2014 for people with serious pre-existing conditions who didn’t have access to health insurance from an employer or the government (Medicare, Medicaid, CHIP, etc.). But they were often underfunded, the coverage was expensive, and plan choices were limited. People who used to have high-risk pool coverage are now eligible for coverage in the exchanges (or off-exchange, without subsidies), with access to the same plans that that healthy people can buy.
A brief history of high-risk pools
One of the goals of the Affordable Care Act was to make health insurance available to nearly all Americans, including those with pre-existing conditions. Although group health insurance has long been guaranteed-issue for eligible employees, people who purchased their own health insurance prior to 2014 had to go through a medical underwriting process that historically resulted in roughly 20 percent of individual health insurance applications being denied.
In order to offer a viable alternative for these applicants, 35 states established their own high-risk pools (mostly in the 1990s), generally supported by a combination of state funds, enrollee premiums, and fees assessed on private health insurance carriers.
In addition to those plans, the ACA included a provision for the Pre-Existing Condition Insurance Plan (PCIP), which created a new state or federally run high-risk pool in every state to make a bridge to 2014 and guaranteed issue health insurance. The ACA was signed into law in March of 2010, and at that point, the requirement – starting January 2014 – that all policies be guaranteed issue was still nearly four years in the future.
Now that the consumer protections in the ACA have been fully implemented, risk pools are no longer necessary the way they were in the past. Health insurance applications are no longer denied because of medical history, and people are no longer offered policies with increased premiums or exclusions based on pre-existing conditions.
HHS announced in March 2014 that PCIP insureds could keep their coverage until April 30,2014 if they had not yet enrolled in an exchange plan. (Total PCIP enrollment had dropped to around 30,000 people by January 2014, down from about 85,000 three months earlier. The majority of PCIP insureds had already transitioned to a new plan).
All PCIP coverage ended on April 30, 2014. Enrollees in those plans were able to transition to exchange plans during open enrollment, and they also had another 60-day special enrollment period that began on May 1 if they were still insured by a PCIP policy that terminated at the end of April (involuntary loss of coverage is a qualifying event that triggers a special enrollment period). By the end of June 2014, that special enrollment period had closed, although it’s highly likely that almost all of the remaining PCIP members were able to transition to a new ACA-compliant plan by that point.
But what about the 35 state-run risk pools that pre-dated the ACA? Many of them have also ceased operations or closed their pools to new applicants, but it varies from one state to another. This chart shows the 17 plans that ended coverage in the first half of 2014, along with the 18 state risk pools that were still operational for at least some existing enrollees as of mid-2014 — and some of them were still accepting new members as well.
Which states still have operational high-risk pools?
The following states have risk pools that remain operational as of 2021. Some of them are still accepting new members, although enrollees would have to meet the existing eligibility guidelines (note that some of these high-risk pools are still operational in order to provide supplemental coverage to disabled Medicare beneficiaries under the age of 65 in states where they do not have access to Medigap plans):
Bridging the gap
The ACA’s temporary Pre-Existing Condition Insurance Plans (PCIP) were initially run by state governments in 27 states and by the federal government in 23 states and the District of Columbia. By July 2013, 17 states that had been operating their own PCIP had turned their plans over to the federal government. New-member enrollment ceased in early 2013, and all PCIP coverage ended on April 30, 2014.
The PCIP program was well-intentioned but struggled financially from the outset, with lower enrollment and higher costs than originally projected. In order to help keep the program afloat as long as possible, HHS made some changes along the way.
In 2011, eligibility requirements were eased in order to increase enrollment. Premiums were also lowered by up to 40 percent in 18 states where the PCIP is administered by the federal government, to bring the premiums closer to the rates in each state’s individual health insurance market.
In the face of higher-than-expected costs, however, the government increased enrollees’ maximum out-of-pocket annual expenses for 2013 from $4,000 to $6,250. The rate increase took effect on January 1, and applied to plans administered by the federal government, which impacted enrollees in 40 states and the District of Columbia.
Risk pools by the numbers
Roughly 135,000 people enrolled in PCIP plans nationwide between 2010 and 2013. To qualify, people had to have been without health insurance for at least six months and must have a pre-existing health condition or have been denied coverage as a result of a health condition.
The PCIP program’s high cost was attributed in part to the fact that the population served is disproportionately older. More than seven in 10 people enrolled were age 45 and above.
Nearly four in ten claims paid in 2012 were for one of four diagnoses: cancers, ischemic heart disease, degenerative bone diseases, and the follow-up medical care required after major surgery or cancer treatments. In 2012, the average cost per person was $32,108. However, just 4.4 percent of enrollees averaged costs of $225,000 accounting for more than half of all claims paid.
Now that PCIP enrollees have transitioned to the private marketplace (either on or off-exchange) or to Medicaid, their medical expenses are being pooled with a much larger group of people, including healthy insureds. This helps to spread the costs over a larger population and better manage the health care costs of the sicker individuals who were covered by PCIP policies between 2010 and 2014.
High-risk pools are still favored in GOP health care reform proposals
House Republicans published a health care reform proposal in June 2016 that outlined their vision of the path forward, and it included a return to high-risk pools. Their plan called for $25 billion in federal funding for high-risk pools. States would partner with the federal government to run the pools; premiums would be capped, and enrollment waiting lists would not be allowed. (Pre-ACA, some states had high-risk pools that were no longer accepting applicants, due to enrollment caps.)
Although the GOP plan called for significant federal funding for the risk pools, it’s worth noting that the ACA-created CO-OPs were originally supposed to be established via $10 billion in federal grants. But the CO-OPs ended up receiving a quarter of that amount, and as short-term loans, rather than grants. Lawmakers also changed the rules at the end of 2014 to retroactively make the ACA’s risk corridors program budget-neutral, which meant that health insurers only received about $362 million out of the $2.87 billion they were supposed to receive for the 2014 risk corridors program (2015 funding also fell far short). As a result of the risk corridor shortfalls, numerous health insurers – mostly smaller carriers, like the CO-OPs – ended up closing at the end of 2015.
So while $25 billion in federal funding would help with the sustainability of high-risk pools, there are certainly questions in terms of why high-risk pools were so underfunded in the ’90s and ’00s, where the money would come from if it wasn’t available for the CO-OPs and risk corridors programs, and whether it would actually be $25 billion in reality by the time all was said and done.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Health insurance and high-risk pools appeared first on healthinsurance.org.
The Scoop: health insurance news – January 6, 2021
In this edition
Democrats win both Georgia Senate races, paving way for federal health policy reforms
The biggest health policy news this week is the victory of both Rev. Raphael Warnock and Jon Ossoff in Georgia’s runoff Senate races. Their wins bring the Senate to a 50-50 split, with Vice President-elect Kamala Harris casting tie-breaking votes as necessary. There is a wide range of administrative health policy actions that the Biden administration will be able to implement without involving Congress, but the shift in power in the Senate opens the door for a variety of changes that require legislation but that can be accomplished with just 51 votes in the Senate – including making the California v. Texas lawsuit moot before the Supreme Court issues its ruling later this year.
Maryland opens new COVID-related special enrollment period
Maryland was one of just two state-run exchanges that opted to not extend open enrollment for 2021 coverage. But Maryland announced this week a new COVID-related special enrollment period for uninsured residents, which will continue through March 15. Maryland previously offered one of the nation’s longest COVID-related special enrollment periods, which began last March and continued through December 15, 2020. The new special enrollment period offers the same generous effective date rules that the state was using in 2020, allowing uninsured residents to sign up for coverage with an effective date that’s either retroactive or no more than two weeks after the date they enroll. Uninsured Maryland residents who enroll by January 15 will have coverage backdated to January 1.
Open enrollment ends in five states on January 15
Open enrollment for individual/family health plans is still ongoing in ten states and DC. But it ends next Friday, January 15, in five of those states:
Residents in those states can still enroll in a plan with a February 1 effective date. But after January 15, a qualifying event will be necessary in order to enroll.
Legislation introduced in New York to create a health insurance guaranty fund
Legislation has been introduced in New York that would create a health insurance guaranty fund that would step in to cover unpaid claims if a health insurance company becomes insolvent. Most states already have health insurance guaranty funds, but New York’s existing guaranty fund covers life insurance companies but not health insurance companies.
New York’s legislature considered similar legislation in 2016 after New York’s health insurance CO-OP failed (and again in each of the subsequent legislative sessions). But it was opposed by both Gov. Cuomo and the state’s health insurers, who objected to the assessment that would have been charged to fund the program. The current bill has 35 sponsors in New York’s Assembly, all of whom are Democrats.
North Dakota legislation calls for longer but more robust short-term health insurance plans
Legislation (SB2073) has been introduced in North Dakota, at the request of Insurance Commissioner Jon Godfread, that would allow for short-term health insurance plans with longer durations but also stronger consumer protections. Under North Dakota’s current rules, short-term health insurance plans can have terms of no more than 185 days. One renewal is permitted, but the total duration of these plans cannot exceed one year, including the renewal period.
The newly introduced legislation calls for the state to allow association short-term limited duration health plans to follow current federal rules, which means they could have total durations of up to 36 months. But while federal rules allow short-term plans to be renewable (for up to 36 months in total), North Dakota’s SB2073 would require association short-term plans to be renewable at the option of the insured.
SB2073 would also require association short-term health plans to cover all of the ACA’s essential health benefits, with the exception of pediatric dental and vision services. This would be a significant change, as short-term health plans are not currently required to cover essential health benefits, and most tend to lack coverage in at least a few of the essential health benefit categories.
Haven closing three years after beginning joint venture to improve healthcare quality and affordability
Three years ago, Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. announced a new partnership to “address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs.” Their new joint venture, named Haven, was an independent entity, “free from profit-making incentives and constraints,” which set out to shake up the conventional health insurance model and provide “simplified, high-quality and transparent healthcare at a reasonable cost.”
But as David Anderson noted at the time, this was never going to be an easy road. And Haven announced this week that it will no longer exist as an independent entity as of the end of February. Amazon, Berkshire Hathaway, and JPMorgan Chase & Co. plan to “continue to collaborate informally” as they work on health care solutions for their own employees, but they’re winding down their joint venture.
Appeals court panel allows Trump administration to deny visas to immigrants without health insurance, but Biden expected to reverse this rule
More than a year ago, the Trump administration issued a proclamation that requires immigrants to have health insurance – or proof that they would have coverage within 30 days of entering the country – in order to obtain a visa. The rule was blocked by a judge before it could take effect, but a three-judge panel for the U.S. Court of Appeals for the Ninth Circuit overturned that injunction last week in a 2-1 ruling. The court’s ruling does not take effect immediately, however, and the Biden administration is expected to overturn the rule soon after taking office, making it unlikely that the health insurance requirements for immigrants will be implemented.
California prohibits insurers from denying gender-affirming medical care based on age
Last week, the California Department of Insurance notified health insurers in the state that they cannot deny coverage solely based on age when an insured is undergoing a gender-affirming female-to-male transition and seeking male chest reconstruction surgery. The Department was made aware of several insurers that had denied these claims solely due to the patient being under the age of 18, and took action to address the issue. The state’s letter to insurers clarifies that mastectomy and male chest reconstruction can be carried out while the person is still a minor, and that any claims decisions should be made on a case-by-case basis and cannot discriminate based on age.
New prior authorization consumer protections in Minnesota
A new law took effect on January 1 in Minnesota, expanding consumer protections with regards to prior authorization in health insurance. When a consumer switches from one health plan to another, the state now requires the person’s new insurer to honor, for at least the first 60 days, any prior authorizations that had been granted by the prior insurer. The new law also prohibits insurers from revoking already-approved prior authorizations unless the authorization was based on fraud or misinformation or was in conflict with state or federal law. And insurers are required to publicize a wide range of data pertaining to prior authorizations, making it easier for consumers to see how frequently these requests are approved or denied, and the reasons that prior authorization requests are rejected.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post The Scoop: health insurance news – January 6, 2021 appeared first on healthinsurance.org.
Qualifying events that can get you coverage
Key takeaways
Open enrollment for health insurance plans in the individual market (on- and off-exchange) runs from November 1 to December 15 in most states. DC, California, and Colorado have extended open enrollment windows, and most of the other fully state-run exchanges generally extend their enrollment windows by at least a week each year.
Once open enrollment ends, ACA-compliant plans are only available to people who experience a qualifying event. The plans available outside of open enrollment without a qualifying event are not regulated by the ACA, and most are not a good choice to serve as stand-alone coverage (short-term health insurance is intended to serve as stand-alone coverage for a short period of time, but it’s much less robust than ACA-compliant coverage).
Qualifying events
Outside of open enrollment, you can still enroll in a new plan if you have a qualifying event that triggers your own special open enrollment (SEP) window.
People with employer-sponsored health insurance are used to both open enrollment windows and qualifying events. In the employer group market, plans have annual open enrollment times when members can make changes to their plans and eligible employees can enroll. Outside of that time frame, however, a qualifying event is required in order to enroll or change coverage.
In the individual market, this was never part of the equation prior to 2014 — people could apply for coverage anytime they wanted. But policies were not guaranteed issue, so pre-existing conditions meant that some people couldn’t get coverage or had to pay more for their policies.
All of that changed thanks to the ACA. Individual coverage is now quite similar to group coverage. As a result, the individual market now utilizes annual open enrollment windows and allows for special enrollment windows triggered by qualifying events.
So you could still have an opportunity to enroll in ACA-compliant coverage outside of the open enrollment window if you experience a qualifying event. Depending on the circumstances, you may have a special open enrollment period – generally 60 days but sometimes there’s an additional 60-day window before the event as well – during which you can enroll or switch to a different plan.
Got a qualifying event? You’ll need proof
It’s important to note that HHS began ramping up enforcement of special enrollment period eligibility in 2016, amid concerns that enforcement had previously been too lax.
In February 2016, HHS confirmed that they would begin requiring proof of eligibility in order to grant special enrollment periods triggered by birth/adoption/placement for adoption, a permanent move, loss of other coverage, and marriage (together, these account for three-quarters of all qualifying events in Healthcare.gov states).
The new SEP eligibility verification process was implemented in June 2016. In September 2016, HHS answered several frequently asked questions regarding the verification process for qualifying events, and noted that SEP enrollments since June were down about 15 percent below where they had been during the same time period in 2015 (after staying roughly even with 2015 numbers in the months prior to the implementation of the new eligibility verification process).
But HHS stopped short of issuing an explanation for the decline: it could be that people were previously enrolling who didn’t actually have a qualifying event, but it could also be that the process for enrolling had become more cumbersome due to the added verification step, deterring healthy enrollees from signing up. The vast majority of people who are eligible for SEPs do not enroll in coverage during the SEP, and this could simply have been heightened by the new eligibility verification process.
Nevertheless, the eligibility verification process was further stepped-up in 2017, thanks to “market stabilization” rules that HHS finalized in April 2017.
Starting in June 2017, HHS was planning to implement a pilot program to further enhance SEP eligibility verification (this plan was created by HHS under the Obama Administration). Fifty percent of SEP enrollees were to be randomly selected for the pilot program, and their enrollments would be pended until their verification documents were submitted. They’d have 30 days to submit their proof of SEP eligibility, and as long as they did so, their policy would be effective as of the date determined by the date of their application/plan selection (so for example, a person could enroll on July 10 for an August 1 effective date, but the enrollment would then be pended. If the applicant submitted proof of SEP eligibility on August 5, the enrollment would be completed, with coverage effective August 1).
Under the new rules finalized in April 2017, however, that SEP eligibility verification process began to apply to 100 percent of SEP applications, starting in June 2017. So if you’re planning to enroll in a HealthCare.gov plan outside of open enrollment, be prepared to provide proof of your qualifying event when you apply. Most of the state-run exchanges have followed suit, and HHS has proposed a requirement that state-run exchanges conduct SEP eligibility verification for at least 75 percent of all SEP applications by 2022.
The SEP verification program has generated controversy, with some consumer advocates noting that it could further deter healthy people from enrolling when they’re eligible for a SEP. At Health Affairs, Tim Jost suggested some alternative solutions, including a requirement that insurance carriers pay broker commissions for SEP enrollments in order to incentivize brokers to help more people enroll (at that point, insurers were increasingly paying no commissions for SEP enrollments, although many have started doing so in more recent years), and a requirement that group health plans provide certificates of creditable coverage to people losing their group coverage (this used to be required, but isn’t any longer; reinstating a requirement that the certificates be issued would make it easier for people to easily prove that they had lost coverage and had thus become eligible for a SEP).
But as a general rule, be prepared to provide proof of your qualifying event when you enroll.
Off-exchange special enrollment periods
Note that most qualifying events apply both inside and outside the exchanges. There are a few exceptions, however. For policies sold outside the exchanges, there are a few qualifying events that HHS does not require carriers to accept as triggers for special enrollment periods (however, the carriers can accept them if they wish). These include gaining citizenship or a lawful presence in the US or being a Native American (within the exchanges, Native Americans can make plan changes as often as once per month, and enrollment runs year-round).
In addition, when exchanges grant special enrollment periods based on “exceptional circumstances” those special enrollment periods apply within the exchanges; off-exchange, it’s up to the carriers as to whether or not they want to implement similar special enrollment periods.
And carriers tend to have fairly strict rules regarding proof of SEP eligibility. If you’re enrolling directly with an insurer, outside of open enrollment, you will need to provide proof of your qualifying event (the insurer will let you know what will count as acceptable documentation; these same documentation requirements are generally enforced for on-exchange enrollments as well).
What counts as a qualifying event?
Although special enrollment period windows are generally longer in the individual market, many of the same life events count as a qualifying event for employer-based plans and individual market plans. But some are specific to the individual market under Obamacare. [For reference, special enrollment period rules for employer-sponsored plans are detailed here; for individual market plans, they’re detailed here and described in more detail below and in our guide to special enrollment periods.]
When will coverage take effect if I enroll during a special enrollment period?
For most qualifying events, in states using HealthCare.gov and some of the state-run exchanges, applications completed by the 15th of the month will be given a first-of-the-following-month effective date.
Massachusetts and Rhode Island both allow enrollees to sign up as late as the 23rd of the month and have coverage effective the first of the following month.
Applications received from the 16th (or the 24th if you’re in MA or RI) to the end of the month will have an effective date of the first of the second following month. (Marriage, loss of other coverage, and birth/adoption have special effective date rules, described below.)
Starting in 2022, the federally-run marketplace (HealthCare.gov, which is used in 36 states as of 2021) will eliminate the requirement that applications be submitted by the 15th of the month in order to get coverage the first of the following month. For all special enrollment periods, coverage will simply take effect the first of the month after the application is submitted. States will have the option to require this of off-exchange insurers, and fully state-run exchanges will also have the option to switch all of their special enrollment periods to first-of-the-following-month effective dates, regardless of when the application is submitted.
Note that in early 2016, HHS eliminated some little-used special enrollment periods that were no longer necessary. For example, the special enrollment period that had previously been available for people whose Pre-Existing Conditions Health Insurance Program (PCIP) had ended; coverage under those plans ended in 2014; but there’s still a special enrollment period for anyone whose minimum essential coverage ends involuntarily).
12 special open enrollment triggers
The qualifying events that trigger special enrollment periods are discussed in more detail in our extensive guide devoted to qualifying events and special enrollment periods. But here’s a summary:
[Note that in most cases, the market stabilization regulations now prevent enrollees from using a special enrollment period to move up to a higher metal level of coverage; so if you have a bronze plan and move to a new area mid-year, for example, you would not be allowed to purchase a gold plan during your special enrollment period.]
Involuntary loss of other coverage
The coverage you’re losing has to be minimum essential coverage, and the loss has to be involuntary. Cancelling the plan or failing to pay the premiums does not count as involuntary loss, but voluntarily leaving a job and thus losing employer-sponsored health coverage does count as an involuntary loss of coverage. In most cases, loss of coverage that isn’t minimum essential coverage does not trigger a special open enrollment.
[There is an exception for pregnancy Medicaid, CHIP unborn child, and Medically Needy Medicaid: These types of coverage are not minimum essential coverage, but people who lose coverage under these plans do qualify for a special enrollment period (this includes a woman who has CHIP unborn child coverage for her baby during pregnancy, but no additional coverage for herself; she will qualify for a loss of coverage SEP for herself when the unborn child CHIP coverage ends). And although they are not technically considered minimum essential coverage, they do count as minimum essential prior coverage in the case of special enrollment periods that require a person to have previously had coverage (this is a requirement for most special enrollment periods).]
Your special open enrollment begins 60 days before the termination date, so it’s possible to get a new ACA-compliant plan with no gap in coverage, as long as your prior plan doesn’t end mid-month. (See details in Section (d)(6)(iii) the code of federal regulations 155.420, and the updated regulation that makes advance open enrollment possible for people with individual coverage as well as employer-sponsored coverage.) You also have 60 days after your plan ends during which you can select a new ACA-compliant plan.
If you enroll prior to the loss of coverage, the effective date is the first of the month following the loss of coverage, regardless of the date you enroll (ie, if your plan is ending June 30, you can enroll anytime in May or June and your new plan will be effective July 1). But if you enroll in the 60 days after your plan ends, the exchange can either allow a first-of-the-following-month effective date regardless of the date you enroll, or they can use their normal deadline, which is typically the 15th of the month in order to get a plan effective the first of the following month.
As noted above, starting in 2022, the federally-run marketplace (HealthCare.gov) will eliminate the requirement that enrollments be submitted by the 15th of the month to have coverage effective the first of the following month. So as of 2022, a person who loses coverage and enrolls in a new plan after the coverage loss will simply have coverage effective the first of the month after the enrollment is submitted.
Individual plan renewing outside of the regular open enrollment
HHS issued a regulation in late May 2014 that included a provision to allow a special open enrollment for people whose health plan is renewing — but not terminating — outside of regular open enrollment. Although ACA-compliant plans run on a calendar-year schedule, that is not always the case for grandmothered and grandfathered plans, nor is it always the case for employer-sponsored plans.
Insureds with these plans may accept the renewal but are not obligated to do so. Instead, they can select a new ACA-compliant plan during the 60 days prior to the renewal date and 60 days following the renewal date. Initially, this special enrollment period was intended to be used only in 2014, but in February 2015 HHS issued a final regulation that confirms this special enrollment period would be on-going. So it continues to apply to people who have grandfathered or grandmothered plans that renew outside of open enrollment each year. And HHS also confirmed that this SEP applies to people who have a non-calendar year group plan that’s renewing; they can keep that plan or switch to an individual market plan using an SEP. [Note that if the employer-sponsored plan is considered affordable and provides minimum value, the applicant is not eligible for premium subsidies in the exchange.]
Becoming a dependent or gaining a dependent
Becoming or gaining a dependent (as a result or birth, adoption, or placement in foster care) is a qualifying event. Coverage is back-dated to the date of birth, adoption, or placement in foster care (subsequent regulations also allow parents the option to select a later effective date). Because of the special rules regarding effective dates, it’s wise to use a special enrollment period in this case, even if the child is born or adopted during the general open enrollment period.
The current regulation states that anyone who “gains a dependent or becomes a dependent” is eligible for a special open enrollment window, which obviously includes both the parents and the new baby or newly adopted or fostered child. But HealthCare.gov accepts applications for the entire family (including siblings) during the special open enrollment window.
The market stabilization rule that HHS finalized in April 2017 added some new restrictions to this SEP: If a new parent is already enrolled in a QHP, he or she can add the baby/adopted child to the plan (or enroll with the new dependent in a plan at the same metal level, if for some reason the child cannot be added to the plan). Alternatively, the child can be enrolled on its own into any available plan. But the SEP cannot be used as an opportunity for the parent to switch plans and enroll in a new plan with the child. New rules issued in 2018 clarify that existing dependents do not have an independent SEP to enroll in new coverage separately from the person gaining a dependent or becoming a dependent. But they do state that an individual who gains a dependent “may enroll in or change coverage along with his or her dependents, including the newly-gained dependent(s) and any existing dependents.” That would seem to indicate that a new parent who already has individual market coverage does have the option to switch to a different plan using the SEP. As is the case with other SEPs, if you live in a state that is running its own exchange, check with your exchange to see how they have interpreted the regulations.
Marriage
Divorce
Becoming a United States citizen or lawfully present resident
A permanent move
This special enrollment period applies as long as you move to an area where different qualified health plans (QHPs) are available. This special enrollment period is only available to applicants who already had minimum essential coverage in force for at least one of the 60 days prior to the move (with exceptions for people moving back to the US from abroad, newly released from incarceration, or previously in the coverage gap in a state that did not expand Medicaid; there’s also an exemption for people who move from an area where there were no plans available in the exchange, although there have never been any areas without exchange plans).
For people who meet the prior coverage requirement, a permanent move to a new state will always trigger a special open enrollment period, because each state has its own health plans. But even a move within a state can be a qualifying event, as some states have QHPs that are only offered in certain regions of the state. So if you move to a part of the state that has plans that were not available in your old area, or if the plan you had before is not available in your new area, you’ll qualify for a special open enrollment period, assuming you had coverage prior to your move.
HHS finalized a provision in February 2015 that allows people advance access to a special enrollment period starting 60 days prior to a move, but this is optional for the exchanges. It was originally scheduled to be mandatory starting in January 2017 (ie, that exchanges would have to offer a special enrollment period in advance of a move), but HHS removed that deadline in May 2016, making it permanently optional for exchanges to allow people to report an impending move and enroll in a new health plan. If the exchange in your state offers that option, you can enroll in a new health plan on or before the date of your move and the new plan will be effective the first of the following month. If you enroll during the 60 days following the move, the effective date will follow the normal rules outlined above (ie, in most states, enrollments submitted by the 15th of the month will have first of the following month effective dates, although HealthCare.gov will remove this deadline as of 2022).
In early 2016, HHS clarified that moving to a hospital in another area for medical treatment does not constitute a permanent move, and would not make a person eligible for a special enrollment period. And a temporary move to a new location also does not trigger a special enrollment period. However, a person who has homes in more than one state (for example, a “snowbird” early retiree) can establish residency in both states, and can switch policies to coincide with a move between homes (HHS has noted that this person might be better served by a plan with a nationwide network in order to avoid resetting deductibles mid-year, but such plans are not available in many areas).
An error or problem with enrollment
Employer-sponsored plan becomes unaffordable or stops providing minimum value
An employer-sponsored plan is considered affordable in 2021 as long the employee isn’t required to pay more than 9.83 percent of household income for just the employee’s portion of the coverage. And a plan provides minimum value as long as it covers at least 60 percent of expected costs for a standard population and also provides substantial coverage for inpatient and physician services.
A plan design change could result in a plan no longer providing minimum value. And there are a variety of situations that could result in a plan no longer being affordable, including a reduction in work hours (with the resulting pay cut meaning that the employee’s insurance takes up a larger share of their household income) or an increase in the premiums that the employee has to pay for their coverage.
In either scenario, a special enrollment period is available, during which the person can switch to an individual market plan instead. And premium subsidies are available in the exchange if the person’s employer-sponsored coverage doesn’t provide minimum value and/or isn’t affordable.
An income increase that moves you out of the coverage gap
There are 13 states where there is still a Medicaid coverage gap, and an estimated 2.3 million people are unable to access affordable health coverage as a result. (Wisconsin has not expanded Medicaid under the ACA, but does not have a coverage gap; Oklahoma and Missouri will expand Medicaid in mid-2021 and will no longer have coverage gaps at that point).
For people in the coverage gap, enrollment in full-price coverage is generally an unrealistic option. HHS recognized that, and allows a special enrollment period for these individuals if their income increases during the year to a level that makes them eligible for premium subsidies (ie, to at least the poverty level).
As mentioned above, the new market stabilization rules only allow a special enrollment period triggered by marriage if at least one partner already had minimum essential coverage before getting married. However, if two people in the coverage gap get married, their combined income may put their household above the poverty level, making them eligible for premium subsidies. In that case, they would have access to a special enrollment period despite the fact that neither of them had coverage prior to getting married.
Gaining access to a QSEHRA or Individual Coverage HRA
This is a new special enrollment period that became available in 2020, under the terms of the Trump Administrations’s new rules for health reimbursement arrangements that reimburse employees for individual market coverage. QSEHRAs became available in 2017 (as part of the 21st Century Cures Act) and allow small employers to reimburse employees for the cost of individual market coverage (up to limits imposed by the IRS). But prior to 2020, there was no special enrollment period for people who gained access to a QSEHRA.
As of 2020, the Trump administration’s new guidelines allow employers of any size to reimburse employees for the cost of individual market coverage. And the new rules also add a special enrollment period — listed at 45 CFR 155.420(d)(14) — for people who become eligible for a QSEHRA benefit or an Individual Coverage HRA benefit.
This includes people who are newly eligible for the benefit, as well as people who were offered the option in prior years but either didn’t take it or took it temporarily. In other words, anyone who is transitioning to QSEHRA or Individual Coverage HRA benefits — regardless of their prior coverage — has access to a special enrollment period during which they can select an individual market plan (or switch from their existing individual market plan to a different one), on-exchange or outside the exchange.
This special enrollment period is available starting 60 days before the QSEHRA or Individual Coverage HRA benefit takes effect, in order to allow people time to enroll in an individual market plan that will be effective on the day that the QSEHRA or Individual Coverage HRA takes effect.
An income or circumstance change that makes you newly eligible (or ineligible) for subsidies or CSR
If your income or circumstances change such that you become newly eligible or newly ineligible for premium tax credits or newly-eligible for cost-sharing subsidies, you’ll have an opportunity to switch plans. This rule already existed for people who were already enrolled in a plan through the exchange (and as noted above, for people in states that have not expanded Medicaid who experience a change in income that makes them eligible for subsidies in the exchange — even if they weren’t enrolled in any coverage at all prior to their income change).
But in the 2020 Benefit and Payment Parameters, HHS finalized a proposal to expand this special enrollment period to include people who are enrolled in off-exchange coverage (ie, without any subsidies, since subsidies aren’t available off-exchange), and who experience an income change that makes them newly-eligible for premium subsidies or cost-sharing subsidies.
This special enrollment period was added at 45 CFR 155.420(d)(6)(v), although it is optional for state-run exchanges. HealthCare.gov planned to make it available as of 2020, although there have been numerous reports from enrollment assisters indicating that it’s still difficult to access as of mid-2020. This is an important addition to the special enrollment period rules, particularly given the “silver switch” approach that many states have taken with regards to the loss of federal funding for cost-sharing reductions (CSR). In 2018 and 2019, people who opted for lower-cost off-exchange silver plans (that didn’t include the cost of CSR in their premiums) were stuck with those plans throughout the year, even if their income changed mid-year to a level that would have been subsidy-eligible. That’s because an income change was not a qualifying event unless you were already enrolled in a plan through the exchange (or moving out of the Medicaid coverage gap). But that will change in 2020 in states that use HealthCare.gov, and in states with state-run exchanges that opt to implement this special enrollment period.
[It’s important to keep in mind, however, that a mid-year plan change will result in deductibles and out-of-pocket maximums resetting to $0, so this may or may not be a worthwhile change, depending on the circumstances.]
As of 2022, there will also be a special enrollment period for exchange enrollees with silver plans who have cost-sharing reductions and then experience a change in income or circumstances that make them newly ineligible for cost-sharing subsidies. This will allow people in this situation to switch to a plan at a different metal level, as the current rules limit them to picking only from among the other available silver plans.
For people already enrolled in the exchange, SEP applies if the plan substantially violates its contract
Who doesn’t need a qualifying event?
In some circumstances, enrollment is available year-round, without a need for a qualifying event:
Medicaid and CHIP enrollment are also year-round. For people who are near the threshold where Medicaid eligibility ends and exchange subsidy eligibility begins, there may be some “churning” during the year, when slight income fluctuations result in a change in eligibility.
If income increases above the Medicaid eligibility threshold, there’s a special open enrollment window triggered by loss of other coverage. Unfortunately, in states that have not expanded Medicaid, the transition between Medicaid and QHPs in the exchange is nowhere near as seamless as lawmakers intended it to be.
Need coverage at the end of the year?
If you find yourself without health insurance towards the end of the year, you might want to consider a short-term policy instead of an ACA-compliant policy. There are pros and cons to short-term insurance, and it’s not the right choice for everyone. But for some, it’s an affordable solution to a temporary problem.
Short-term insurance doesn’t cover pre-existing conditions, so it’s really only an appropriate solution for healthy applicants. And for applicants who qualify for premium subsidies in the exchange, an ACA-compliant plan is also likely to be the best value, since there are no subsidies available to offset the cost of short-term insurance.
But if you’re healthy, don’t qualify for premium subsidies, and you find yourself without coverage for a month or two at the end of the year, a short-term plan is worth considering. You can enroll in a short-term plan for the remainder of the year, and sign up for ACA-compliant coverage during open enrollment with an effective date of January 1. The temporary health plan would certainly be better than going without coverage for the last several weeks of the year, and it would be considerably less expensive than an ACA-compliant plan for people who don’t get premium subsidies.
So for example, if your employer-sponsored coverage ends in October and you want to use a short-term plan to bridge the gap to January, that may be a good option. Be aware, however, that it may not be a good idea to drop your ACA-compliant plan and switch to a short-term plan at the end of the year, particularly if you’re in an area with limited availability of ACA-compliant plans. The market stabilization rules allow insurers to require applicants to pay any past-due premiums from the previous 12 months before being allowed to enroll in new coverage. If you receive premium subsidies and you stop paying your premiums, your insurer will ultimately terminate your plan, but the termination date will be a month after you stopped paying premiums (if you don’t get premium subsidies, your plan will terminate to the date you stopped paying for your coverage). In that case, you essentially got a month of free coverage, and the insurer is allowed to require you to pay that month’s premiums before allowing you to sign up for any of their plans during open enrollment.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Qualifying events that can get you coverage appeared first on healthinsurance.org.
Is there still a penalty for being uninsured?
Key takeaways
Q. Is there still a penalty for being uninsured?
A. When the Affordable Care Act was written, lawmakers knew that it would be essential to get healthy people enrolled in coverage, since insurance only works if there are enough low-cost enrollees to balance out the sicker, higher-cost enrollees. So the law included an individual mandate, otherwise known as the shared responsibility provision.
This controversial provision stipulated that people who didn’t have minimum essential coverage would be subject to a tax penalty unless they were exempt from the shared responsibility provision.
But that tax penalty was eliminated after the end of 2018, under the terms of the Tax Cuts and Jobs Act of 2017. Technically, the individual mandate itself is still in effect, but there’s no longer a penalty to enforce it.
(The continued existence of the mandate – but without the penalty – is the crux of the California v. Texas lawsuit, in which 18 states are challenging the constitutionality of the mandate without the penalty, and arguing that the entire ACA should be overturned if the mandate is unconstitutional. A judge ruled in December 2018 that the ACA should indeed be overturned, and Trump Administration agrees. The case was appealed to the Fifth Circuit and oral arguments were heard in July 2019. The ruling was issued in late 2019, essentially just kicking the can down the road: The appeal court panel agreed with the lower court that the individual mandate is unconstitutional but remanded the case back to the lower court to determine which aspects of the ACA should be overturned. The case was then heard by the Supreme Court in the fall of 2020, with a ruling expected in the spring of 2021. But with the Biden administration and a very slim Democratic majority in Congress, it may be possible to make the case moot before the ruling is issued.)
DC, Massachusetts, New Jersey, California, and Rhode Island have penalties for being uninsured
Although the IRS is not penalizing people who are uninsured in 2019 and beyond, states still have the option to do so. A handful of states have their own individual mandates and penalties for non-compliance:
Vermont enacted a mandate but opted not to impose any penalty for non-compliance
Vermont enacted legislation in 2018 to create a state-based individual mandate, but they scheduled it to take effect in 2020, instead of 2019, as the penalty details weren’t included in the 2018 legislation and were left instead for lawmakers to work out during the 2019 session. But the penalty language was ultimately stripped out of the 2019 legislation (H.524) and the version that passed did not include any penalty. So although Vermont does technically have an individual mandate as of 2020, there will not be a penalty associated with non-compliance (ie, essentially the same thing that applies at the federal level).
Maryland also removed penalty language from 2019 legislation
Maryland enacted HB814/SB802 in 2019. The legislation initially included an individual mandate and penalty that would have taken effect in 2021. But that portion of the bill was removed before passage, despite support from insurers and the Maryland Hospital Association, and the final version did not include any of the original mandate penalty language. Instead, the new law creates an “easy enrollment health insurance program” that will use tax return data to identify people who are uninsured and interested in obtaining health coverage, and then connect them with the Maryland health insurance exchange (more details here, in the fiscal note).
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post Is there still a penalty for being uninsured? appeared first on healthinsurance.org.
How immigrants can obtain health coverage
Key takeaways
Did the ACA improve access to health coverage for immigrants?
For more than a decade, roughly one million people per year have been granted lawful permanent residence in the United States. In addition, there are about 11 million undocumented immigrants in the U.S, although that number has fallen from a high of more than 12 million in 2005.
New immigrants can obtain health insurance from a variety of sources, including employer-sponsored plans, the individual market, and health plans that are marketed specifically for immigrants.
The Affordable Care Act has made numerous changes to our health insurance system over the last several years. But recent immigrants are often confused in terms of what health insurance options are available to them. And persistent myths about the ACA have made it hard to discern what’s true and what’s not in terms of how the ACA applies to immigrants.
So let’s take a look at the health insurance options for immigrants, and how they’ve changed – or haven’t changed – under the ACA.
Use our calculator to estimate how much you could save on your ACA-compliant health insurance premiums.
Can any immigrant select from available health plans during open enrollment?
Open enrollment for individual-market health insurance coverage runs from November 1 to December 15 in most states.
During this window, any non-incarcerated, lawfully present U.S. resident can enroll in a health plan through the exchange in their state – or outside the exchange, if that’s their preference, although financial assistance is not available outside the exchange.
Are immigrants eligible for health insurance premium subsidies?
You do not have to be a U.S. citizen to benefit from the ACA. If you’re in the U.S. legally – regardless of how long you’ve been here – you’re eligible for subsidies in the exchange if your income is in the subsidy-eligible range and you don’t have access to an affordable, minimum value plan from an employer. Premium subsidies are available to exchange enrollees if their income is between 100 percent and 400 percent of the federal poverty level (FPL), but subsidies also extend below the poverty level for recent immigrants, as described below.
(A new rule issued by the Trump administration in 2019 expanded on the long-standing “public charge” rule. This rule took effect in early 2020. It was vacated by a federal judge as of November 2020, but that order was stayed by an appeals court just two days later, meaning that the Trump administration’s public charge rule can still be implemented while litigation continues on this case. Under the public charge rule, receiving premium subsidies in the exchange does not make a person a public charge under the new rule, but not receiving premium subsidies is considered a “heavily weighted positive factor” in the overall determination of whether a person is likely to be a public charge. This is discussed in more detail below.)
Lawfully present immigrant status applies to a wide range of people, including those with “non-immigrant” status such as work visas and student visas. So even if you’re only in the U.S. temporarily — for a year of studying abroad, for example — you can purchase coverage in the health insurance exchange for the state you’re living in while in the US. And depending on your income, you might be eligible for a premium subsidy to offset some of the cost of the coverage.
Special enrollment period for new citizens
When you become a new U.S. citizen or gain lawfully present status, you’re entitled to a special enrollment period in your state’s exchange. You’ll have 60 days from the date you became a citizen or a lawfully present resident to enroll in a plan through the exchange, with subsidies if you’re eligible for them.
There are a variety of other special enrollment periods that apply to people experiencing various qualifying life events. These special enrollment periods are available to immigrants and non-immigrants alike.
Are recent immigrants eligible for ACA subsidies?
The ACA called for expansion of Medicaid to all adults with income up to 138 percent of the poverty level, and no exchange subsidies for enrollees with income below the poverty level, since they’re supposed to have Medicaid instead. But Medicaid isn’t available in most states to recent immigrants until they’ve been lawfully present in the U.S. for five years. To get around this problem, Congress included a provision in the ACA to allow recent immigrants to get subsidies in the exchange regardless of how low their income is.
Low-income, lawfully present immigrants – who would be eligible for Medicaid based on income, but are barred from Medicaid because of their immigration status – are eligible to enroll in plans through the exchange with full subsidies during the five years when Medicaid is not available. Their premiums for the second-lowest-cost Silver plan are capped at 2.07 percent of income in 2021 (this number changes slightly each year).
In early 2015, Andrew Sprung explained that this provision of the ACA wasn’t well understood during the first open enrollment period, even by call center staff. So there may well have been low-income immigrants who didn’t end up enrolling due to miscommunication. But this issue is now likely to be much better understood by exchange staff, brokers, and enrollment assisters. If you’re in this situation and are told that you can’t get subsidies, don’t give up — ask to speak with a supervisor who can help you (for reference, this issue is detailed in ACA Section 1401(c)(1)(B), and it appears on page 113 of the text of the ACA).
Lawmakers included subsidies for low-income immigrants who weren’t eligible for Medicaid specifically to avoid a coverage gap. Ironically, there are currently about 2.3 million people in 13 states who are in a coverage gap that exists because those states have refused to expand Medicaid (two of those states — Missouri and Oklahoma — will expand Medicaid as of mid-2021, and Georgia will partially expand Medicaid, eliminating the coverage gap; at that point, there will only be 10 states with coverage gaps). Congress went out of their way to ensure that there would be no coverage gap for recent immigrants, but they couldn’t anticipate that the Supreme Court would make Medicaid optional for the states and that numerous states would block expansion, leading to a coverage gap for millions of U.S. citizens.
Can recent immigrants 65 and older buy exchange health plans?
Most Americans become eligible for Medicare when they turn 65, and no longer need individual-market coverage. But recent immigrants are not eligible to buy into the Medicare program until they’ve been lawfully present in the U.S. for five years.
Prior to 2014, this presented a conundrum for elderly immigrants, since individual market health insurance generally wasn’t available to anyone over the age of 64. But now that the ACA has been implemented, policies in the individual market are available on a guaranteed-issue basis, regardless of age. And if the plan is purchased in the exchange, subsidies are available based on income, just as they are for younger enrollees. (It’s unlawful to sell an individual market plan to anyone who has Medicare, but recent immigrants cannot enroll in Medicare).
The ACA also limits premiums for older enrollees to three times the premiums charged for younger enrollees. So there are essentially caps on the premiums that apply to elderly recent immigrants who are using the individual market in place of Medicare, even if their income is too high to qualify for subsidies.
Are undocumented immigrants eligible for ACA coverage?
Although the ACA provides benefits to U.S. citizens and lawfully present immigrants alike, it does not directly provide any benefits for undocumented immigrants.
The ACA specifically prevents non-lawfully present immigrants from enrolling in coverage through the exchanges [section 1312(f)(3)]. And they are also not eligible for Medicaid under federal guidelines. So the two major cornerstones of coverage expansion under the ACA are not available to undocumented immigrants.
Some states have implemented programs to cover undocumented immigrants, particularly children and/or pregnant women. For example, Oregon’s Cover All Kids program provides coverage to kids in households with income up to 305 percent of the poverty level, regardless of immigration status. California has had a similar program for children since 2016, and as of 2020, it also applied to young adults through the age of 25. New York covers kids and pregnant women in its Medicaid program regardless of income, and covers emergency care for other undocumented immigrants in certain circumstances.
It’s important to understand that if you’re lawfully present, you can enroll in a plan through the exchange even if some members of your family are not lawfully present. Family members who aren’t applying for coverage are not asked for details about their immigration status. And HealthCare.gov clarifies that immigration details you provide to the exchange during your enrollment and verification process are not shared with any immigration authorities.
How many undocumented immigrants are uninsured?
In terms of the insurance status of undocumented immigrants, the numbers tend to be rough estimates, since exact data regarding undocumented immigrants can be difficult to pin down. But according to Pew Research data, there were 11 million undocumented immigrants in the U.S. as of 2014.
According to a recent Kaiser Family Foundation analysis, undocumented immigrants are significantly more likely to be uninsured than U.S. citizens: 45 percent of undocumented immigrants are uninsured, versus about 8 percent of citizens.
So more than half of the undocumented immigrant population has some form of health insurance coverage. Kaiser Family Foundation’s Larry Levitt noted via Twitter that “some are buying non-group, but I’d agree that it’s primarily employer coverage.” And in 2014, Los Angeles Times writer Lisa Zamosky explained the various options that undocumented immigrants in California were using to obtain coverage, including student health plans, employer-sponsored coverage, and individual (i.e., non-group) plans purchased off-exchange (on-exchange, enrollees are required to provide proof of legal immigration status).
Uninsured undocumented immigrants do have access to some healthcare services, regardless of their ability to pay. Federal law (EMTALA) requires Medicare-participating hospitals to provide screening and stabilization services for anyone who enters their emergency rooms, without regard for insurance or residency status.
Since emergency rooms are the most expensive setting for healthcare, local officials in many areas have opted for less expensive alternatives. Of the 25 U.S counties with the largest number of undocumented immigrants, the Wall Street Journal reports that 20 have programs in place to fund primary and surgical care for low-income uninsured county residents, typically regardless of their immigration status.
Do ACA exchanges check the status of immigrants who want to buy coverage?
As part of the enrollment process, the exchanges are required to verify lawfully present status. In 2014, enrollments were terminated for approximately 109,000 people who had initially enrolled through HealthCare.gov, but who were unable to provide the necessary proof of legal residency (enrollees generally have 95 days to provide documentation to resolve data matching issues for immigration status).
By the end of June 2015, coverage in the federally facilitated exchange had been terminated for roughly 306,000 people who had enrolled in coverage for 2015 but had not provided adequate documentation to prove their lawfully-present status. In the first three months of 2016, coverage in the federally facilitated exchange was terminated for roughly 17,000 people who had unresolved immigration data matching issues, and coverage was terminated for the same reason for another 113,000 enrollees during the second quarter of 2016.
There’s concern among consumer advocates that some lawfully present residents have encountered barriers to enrollment – or canceled coverage – due to data-matching issues. If you’re lawfully present in the U.S (which includes a wide range of immigration statuses), you can legally use the exchange, and qualify for subsidies if you’re otherwise eligible. Be prepared, however, for the possibility that you might have to prove your lawfully present status.
There are enrollment assisters in your community who can help you with this process if necessary. But if you’re not lawfully present, you cannot enroll through the exchange, even if you’re willing to pay full price for your coverage. You can, however, apply for an ACA-compliant plan outside the exchange, as there’s no federal restriction on that.
Should immigrants consider short-term health insurance?
Immigrants who are unable to afford ACA-compliant coverage might find that a short-term health insurance plan will fit their needs, and it’s far better than being uninsured. Short-term plans are not sold through the health insurance exchanges, so the exchange requirement that enrollees provide proof of legal residency does not apply with short-term plans.
Short-term plans provide coverage that’s less comprehensive than ACA-compliant plans, and for the most part, they do not provide any coverage for pre-existing conditions. But for healthy applicants who can qualify for coverage, a short-term plan is far better than no coverage at all. And the premiums for short-term plans are far lower than the unsubsidized premiums for ACA-compliant plans.
Recent immigrants who are eligible for premium subsidies in the exchange will likely be best served by enrolling in a plan through the exchange — the coverage will be comprehensive, with no limits on annual or lifetime benefits and no exclusions for pre-existing conditions. But healthy applicants who aren’t eligible for subsidies (including those affected by the family glitch, and those with income just a little above 400 percent of the poverty level), as well as those who might find it difficult to prove their immigration status to the exchange, may find that a short-term policy is their best option.
With any insurance plan, it’s important to read the fine print and understand the ins and outs of the coverage. But that’s particularly important with short-term plans, as they’re not regulated by federal law (other than the rules that limit their terms to no more than 364 days, and total duration to no more than 36 months including renewals). Some states have extensive rules for short-term plans, so availability varies considerably from one state to another (you can click on a state on this map to see how the state regulates short-term plans).
Travel insurance plans are another option, particularly for people who will be in the U.S. temporarily and who don’t qualify for premium subsidies in the exchange. Just like short-term plans, travel insurance policies are not compliant with the ACA, so they generally won’t cover pre-existing conditions, tend to have gaps in their coverage (since they don’t have to cover all of the essential health benefits) and will come with limits on how much they’ll pay for an enrollee’s medical care. But if the other alternative is to go uninsured, a travel insurance plan is far better than no coverage at all.
How are states making efforts to insure undocumented immigrants?
California wanted to open up its state-run exchange to undocumented immigrants who can pay full price for their coverage. The state already changed the rules to allow for the provision of Medicaid (Medi-Cal) to undocumented immigrant children, starting in 2016 (and expanded this to young adults as of 2020). As a result, about 170,000 children in California gained access to coverage.
And in June 2016, California Governor Jerry Brown signed SB10 into law, setting the stage for the state to eventually allow undocumented immigrants to enroll in coverage (without subsidies) through Covered California, the state-run exchange.
In September 2016, after obtaining public comment on the proposal, Covered California submitted their 1332 Innovation Waiver to CMS, requesting the ability to allow undocumented immigrants to enroll in full-price coverage through Covered California. But in January 2017, just two days before Donald Trump’s inauguration, the state withdrew their waiver proposal, citing concerns that the Trump Administration might use information from Covered California to deport undocumented immigrants.
New York lawmakers considered legislation in 2019 that would have allowed undocumented immigrants to purchase full-price coverage in NY’s state-based exchange, but it did not progress in the legislature. As noted in the text of the legislation, New York would have needed to obtain federal permission to implement this law if the state had enacted it.
Trump administration’s public charge rule and immigrant health insurance rule: Both have been blocked by the courts, but the public charge rule can still be implemented in many states and an appeals court has vacated the injunction that had blocked the immigrant health insurance rule
In August 2019, the Trump administration finalized rule changes for the government’s existing “public charge” policy, after proposing changes nearly a year earlier. And in October 2019, President Trump issued a proclamation to suspend new immigrant visas for people who are unable to prove that they’ll be able to purchase (non-taxpayer funded) health insurance within 30 days of entering the US “unless the alien possesses the financial resources to pay for reasonably foreseeable medical costs.” But both of these rules have since been blocked by federal judges, but subsequent court rulings have relaxed or overturned those earlier actions. The Biden administration is expected to reverse the rule changes in the fairly near future.
The public charge rule was slated to take effect October 15, 2019, but federal judges blocked it on October 11, temporarily delaying implementation. In January 2020, the Supreme Court ruled (in a 5-4 vote) that the public charge rule could take effect while an appeal was pending, and it took effect in February 2020. The Supreme Court declined to temporarily pause the rule amid the COVID pandemic. But U.S. District Judge Gary Feinerman, in Chicago, vacated the rule in its entirety, nationwide, as of November 2020. Just two days later, however, the Seventh Circuit Court of Appeals stayed Judge Feinerman’s order, allowing the Trump administration’s version of the public charge rule to continue to be implemented while litigation on this case continues. On December 2, however, the Ninth Circuit Court of Appeals blocked the rule from being applied in 18 states and DC. So as of December 2020, the public charge rule can be used by immigration officials in some states but not in others.
A 2019 Kaiser Family Foundation analysis of the rule indicated that millions of people might disenroll from Medicaid and CHIP (even though CHIP enrollment is not a negatively weighted factor under the new rule) over concerns about the public charge rule, and that “coverage losses also will likely decrease revenues and increase uncompensated care for providers and have spillover effects within communities.”
In addition to the public charge rule being vacated (albeit very temporarily, as the order was soon stayed and the rule is allowed to continue to be implemented for the time being, although not in the states where the Ninth Circuit Court of Appeals has blocked it), the health insurance rules for immigrants were also initially blocked by the courts.
In November 2019, the day before the proclamation regarding health coverage for immigrants was to take effect, a 28-day restraining order was issued by District Judge Michael H. Simon. Judge Simon subsequently issued a preliminary injunction, blocking the rule from taking effect. And an appeals court panel upheld the ruling in May 2020. But in December 2020, a three-judge panel from the U.S. Court of Appeals for the Ninth Circuit vacated the preliminary injunction, issuing a 2-1 ruling in favor of allowing the Trump administration’s immigrant health insurance requirements to be implemented.
The ruling is not immediately binding, however, and the challengers to the immigrant health insurance rule have 45 days to petition for a rehearing with the full Ninth Circuit. By that point, the Biden administration will be in place, and is expected to reverse the rule, making it unlikely that it will actually be implemented.
Even before they were initially blocked by the courts, the new public charge rule and the new immigrant health insurance requirement did not change anything about eligibility for premium subsidies in the exchange — subsidies continued to be available to legally-present residents who meet the guidelines for subsidy eligibility. But these new rules were designed to make it harder for people to enter the US in the first place, and had the effect of deterring otherwise eligible people from applying for financial assistance with their health coverage, including assistance via Medicaid or CHIP for their US-born children.
Here are more details about both rules:
Public charge rule
The public charge rule was initially delayed for a few months amid legal challenges, but it was implemented in February 2020. It was vacated by a federal judge in November 2020, but that order was soon stayed by the Seventh Circuit Court of Appeals, allowing the Trump administration’s version of the public charge rule to continue to be implemented while litigation on the case continues. Soon thereafter, the Ninth Circuit Court of Appeals blocked the rule from being used by immigration officials in 18 states and DC, but it can still be used in the majority of the states.
And advocates note that the rule, which was proposed in 2018, began to lead to coverage losses immediately, even though it didn’t take effect until 2020. The rule has to numerous immigrants forgoing the benefits for which they and their children are eligible, out of fear of being labeled a public charge. Georgetown University’s Health Policy Institute, Center for Children and Families noted this fall that the public charge rule change was one of the factors linked to the sharp increase in the uninsured rate among children in the U.S.
The longstanding public charge rule states that if the government determines that an immigrant is “likely to become a public charge,” that can be a factor in denying the person legal permanent resident (LPR) status and/or entry into the U.S.
For two decades, the rules have excluded Medicaid (except when used to fund long-term care in an institution) from the services that are considered when determining if a person is likely to become a public charge. The new rule changed that: Medicaid, along with Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and several low-income housing programs were added to the list of services that would push a person into the “public charge” category. The National Immigration Law Center notes that the public charge assessment does not apply to lawful permanent residents who are renewing their green cards.
Critically, CHIP and ACA premium subsidies are not included among the new additions to the public charge determination, although the final rule does incorporate a “heavily weighted positive factor” that essentially gives the person credit for having private health insurance without using the ACA’s premium subsidies. (In other words, a person’s likelihood of being labeled a public charge will decrease if they have health insurance without premium subsidies, but enrolling in a subsidized plan through the exchange will not count as a negative factor in determining whether the person is likely to become a public charge.)
Very few new immigrants are eligible for Medicaid, due to the five-year waiting period that applies in most cases. But immigrants who have been in the U.S. for more than five years can enroll in Medicaid, and more recent immigrants can enroll their U.S.-born children in Medicaid; these are perfectly legal uses of the Medicaid system. But even before the new rule was scheduled to take effect, it was making immigrants fearful about applying for subsidies, CHIP, or health coverage in general — for themselves as well as for their family members who are U.S. citizens and thus entitled to the same benefits as any other citizen.
Health insurance proclamation for new immigrants
The restraining order for the health insurance proclamation, the subsequent preliminary injunction, and the appeals court panel’s ruling were in response to a lawsuit filed in October 2019, in which plaintiffs argued that the new health insurance rules for immigrants are arbitrary and simply wouldn’t work, given the actual health insurance options available for people who haven’t yet arrived in the US. The court system has, for the time being, blocked the proclamation from taking effect nationwide. And although the Ninth Circuit Court of Appeals has vacated the injunction that had been blocking the rule, the Biden administration is expected to overturn the immigrant proclamation soon after taking office.
This Q&A with Immigration attorney William Stock provides some very useful insight into the implications of the health insurance proclamation for new immigrants, if it had been allowed to take effect. The new rules wouldn’t have applied to immigrant visas issued prior to November 3, 2019 (the date the rules were slated to take effect), but people applying to enter the US on an immigrant visa after that date would have had to prove that they have or will imminently obtain health insurance, or that they have the financial means to pay for “reasonably foreseeable medical costs” — which is certainly a very grey area and very much open to interpretation (these rules could take effect at a later date, if and when the proclamation is allowed to take effect).
The rule would not have allowed new immigrants to plan to enroll in a subsidized health insurance plan in the exchange. Premium subsidies would have continued to be available to legally present immigrants, but new immigrants entering the US on an immigrant visa would have had to show that their plan for obtaining health insurance did not involve premium subsidies in the exchange. And applicants cannot enroll in an ACA-compliant plan unless they’re already living in the US, so people trying to move to the US would not have been able to enroll until after they arrive.
There are also concerns about the logistics of getting a plan in place if a person wanted to sign up for a full-price ACA-compliant plan: Gaining lawfully-present immigration status is a qualifying event that allows a person to enroll in a plan through the exchange (but not outside the exchange), but the special enrollment period is not available in advance; it starts when the person gains their immigration status. At that point, the person has 60 days to enroll. If they sign up by the 15th of the month, coverage starts the following month. But if they sign up after the 15th of the month, coverage starts the first of the second following month, which might be more than 30 days after the person arrives in the country. In short, the requirements of the proclamation don’t necessarily match up with the logistics of how enrollment works in the ACA-compliant market.
Under the terms of the proclamation, short-term health insurance plans would have been considered an acceptable alternative for new immigrants. But short-term plans often have a requirement that non-US-citizens have resided in the US for a certain amount of time prior to enrolling, which would make them unavailable for people living outside the US who are applying for an immigrant visa. A travel/expat policy (which has a limited duration, just like short-term coverage) would be available in these scenarios, however, and can be readily obtained by healthy people who are going to be living or traveling outside of their country of citizenship.
Under a Democratic administration, would health insurance assistance for immigrants expand?
The Medicare for All bills introduced by Senator Bernie Sanders and by Representative Pramila Jayapal would expand coverage to virtually everyone in the U.S., including undocumented immigrants. Some leading Democrats prefer a more measured approach, similar to Hillary Clinton’s 2016 healthcare reform proposal, which included a provision similar to California’s subsequently withdrawn 1332 waiver proposal. (It would have allowed undocumented immigrants to buy coverage in the exchanges, although without subsidies.) Joe Biden’s health care plan includes a similar proposal, which would allow undocumented immigrants to buy into a new public option program, albeit without any government subsidies.
But over the first seven years of exchange operation, roughly 85 percent of exchange enrollees have been eligible for subsidies, and only 15 percent have paid full price for their coverage. So although public option plans are expected to be a little less expensive than private plans, it’s unclear how many undocumented immigrants would or could actually enroll in public option without financial assistance.
Harold Pollack has noted that our current policy of entirely excluding undocumented immigrants from the exchanges is “morally unacceptable.” As Pollack explains, Clinton’s plan (and now Biden’s plan) to extend coverage to undocumented immigrants by allowing them to buy unsubsidized coverage in the exchange is a good first step, but it must be followed with comprehensive immigration reform to “bring de facto Americans out of the shadows into full citizenship.”
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post How immigrants can obtain health coverage appeared first on healthinsurance.org.
CO-OP health plans: patients’ interests first
Key takeaways
Only three CO-OPs are operational as of 2021, but one has expanded into a new state
When the first ACA open enrollment period got underway in the fall of 2013, there were 23 Consumer Operated and Oriented Plans (CO-OPs). But within a few years, just four CO-OPs were still operational, offering health insurance plans in five states. That was the case from 2018 through 2020, but one of the four remaining CO-OPs, — New Mexico Health Connections — closed at the end of 2020, leaving only three CO-OPs operational as of 2021. However, Mountain Health CO-OP expanded into Wyoming for 2021, and is now offering coverage in three states. Here’s how the CO-OP landscape looks for 2021 coverage:
For 2021 individual market plans, the CO-OPs mostly decreased premiums or increased them only slightly:
New Mexico Health Connections had proposed an average rate increase of nearly 32 percent for 2021, but subsequently announced that all plans would terminate at the end of 2020 and enrollees would need to select coverage from another insurer for 2021.
How many people are enrolled in CO-OP plans?
In 2019/2020, there were only a little more than 135,000 people enrolled in four CO-OPs. That’s down from more than a million enrollees in 2015, when the CO-OPs were at their peak and most were still operational.
What are CO-OPs and how are they different?
CO-OPs were created under a provision of the Affordable Care Act (aka Obamacare). The idea for CO-OPs was proposed by Senator Kent Conrad (D-ND) when the original public plan option was jettisoned during the health care reform debate. Lawmakers added the CO-OP provision to the Affordable Care Act to placate Democrats who had pushed for a government-run, Medicare-for-all type of health insurance program.
At the time, progressives who preferred a public option derided CO-OPs as a poor alternative because they can’t utilize the efficiencies of scale that would come with Medicare For All, nor do they have the market clout that a single payer system would have when negotiating reimbursement rates with providers.
But supporters noted that because CO-OPs are neither government agencies nor commercial insurers, they could put patients first, without having to focus on investors or Congressional politics.
Instead of paying shareholders, CO-OP profits are reinvested in the plan to lower premiums or improve benefits (since most of the CO-OPs were not financially sustainable and ended up closing, profits have been few and far between). And customers’ health insurance needs and concerns become a top priority because the CO-OP’s customers/members elect their own board of directors. And a majority of these directors must themselves be members of the CO-OP.
CO-OPs are private, nonprofit, state-licensed health insurance carriers. Their plans can be sold both inside and outside the health insurance exchanges, depending on the state, and can offer individual, small group, and large group plans. But they’re limited to having no more than a third of their policies in the large group market (a more lucrative market than individual or small group). Most of the CO-OPs’ membership has been concentrated in the individual market. New Mexico Health Connections was an exception, as they had more enrollees in their employer-sponsored plans (including large group plans) than in their individual market plans. But New Mexico Health Connections sold their employer-sponsored plans to a new for-profit entity in 2018, leaving the CO-OP with just the individual market segment. And New Mexico Health Connections will close altogether at the end of 2020; its 14,000 individual market enrollees will need to select plans from other insurers for 2021.
Lawmakers had originally planned to provide $10 billion in grants to get the CO-OPs up and running in every state. But insurance industry lobbyists and fiscal conservatives in Congress succeeded in reducing the total to $6 billion, and turning it into loans — with relatively short repayment schedules — instead of grants (and CO-OPs were not permitted to use federal loan money for marketing purposes). Then, during budget negotiations in 2011, those loans were cut by another $2.2 billion. And in 2012, during the fiscal cliff negotiations, CO-OP funding was reduced even further — and applications from 40 prospective CO-OPs were rejected
Ultimately, the Centers for Medicare and Medicaid (CMS) awarded about $2.4 billion in loans to 23 CO-OPs across the country (there were 24 CO-OPs, but Vermont Health CO-OP never became operational. CMS retracted their loan in September 2013 — before the exchanges opened for the first open enrollment — because there were doubts that the program could be viable with Vermont’s impending switch to single-payer healthcare in 2017; ironically, Vermont pulled the plug on their single-payer vision in late 2014).
The CO-OP failures have been due in large part to a combination of premiums that were too low, benefits that were too generous, enrollees who were sicker than anticipated, competition from bigger carriers with larger reserves, the risk corridor shortfall that was announced in the fall of 2015, and the risk adjustment payment announcements that were made in June 2016 (see below for a timeline of the closures).
The Trump Administration’s approach to health care reform — including the expansion of short-term plans and association health plans — and GOP lawmakers’ efforts to repeal the ACA (including their success in repealing the individual mandate penalty after the end of 2018), have further increased uncertainty for insurers, making the situation even more precarious for small insurers like the remaining CO-OPs.
But despite those issues, the four remaining CO-OPs continue to operate successfully. So although the individual market is still a challenging environment, the remaining CO-OPs do seem to have carved a sustainable niche.
Focus on cost savings and reinvested profits
How do CO-OPs increase cost efficiencies?
Where are CO-OPs still selling plans in 2021?
There are three CO-OPs that are offering plans in five states in 2021. Although the vast majority of the original CO-OPs have failed, these three have shown signs of overall stability, including rate decreases for some plans in 2019, 2020, and/or 2021.
MAINE:
Community Health Options (CHO) This was originally called Maine Community Health Options, but the name was changed to reflect the carrier’s expansion outside of Maine. 44,000 people enrolled in coverage through the exchange in 2014, and 83 percent of them selected Community Health Options, making the CO-OP’s first year an amazing success.
CHO expanded into New Hampshire for 2015, fueled by their initial success in 2014 and by a new loan from CMS. During the second open enrollment period, CHO once again dominated the Maine market, securing about 80 percent of the exchange market share. They also enrolled about 5,000 people in New Hampshire. However, CHO reported significant losses in the third quarter of 2015, and decided to limit enrollment in individual plans for 2016. Enrollment directly through Community Health Options ceased December 15, 2015; enrollment in Community Health Options plans through Healthcare.gov ceased December 26.
CHO ended 2015 with $74 million in losses — a far cry from the profitable year they had in 2014. In early 2016, Maine’s Insurance Superintendent proposed putting the CO-OP in receivership and canceling a portion of its plans (about 20,000 members would have been transitioned to other coverage). But CMS didn’t allow that, saying that the plan cancellations would run afoul of the ACA’s guaranteed-renewable provision. Instead, the CO-OP is under increased oversight from the Maine Bureau of Insurance, which puts out monthly reports that detail how the CO-OP is faring relative to its business plan.
CHO is the only remaining CO-OP that received money—as opposed to having to pay out money—under the risk adjustment program for 2015 and again for 2016. For 2017, Community Health Options had an average rate increase of 25.5 percent in Maine, where the bulk of their members lived. They exited New Hampshire entirely at the end of 2016, and reverted to operating solely in Maine, as they did in 2014. They implemented an average rate increase of 15.8 percent for 2018 in the individual market. For 2019, and again for 2020, however, CHO increased average premiums by less than 1 percent each year.
CHO’s total membership was 67,539 at the end of 2016, and had dropped to 44,015 by the first quarter of 2017 (all in Maine, since they’re no longer offering plans in New Hampshire). By September 2018, the CO-OP’s membership stood at 51,583, but it had dropped again, to 37,135, by late 2019 (about three-quarters were in the individual market, the rest were in the group market — mostly small group, but some large group as well).
MONTANA and IDAHO and WYOMING:
Mountain Health Cooperative Montana Health CO-OP started in Montana, and expanded to Idaho in 2015. Then-CEO Jerry Dworak noted in 2015 that the CO-OP didn’t expand too quickly, and maintained substantial reserves; they were not relying as heavily as other CO-OPs on risk corridor payments to shore up their financial position.
Average rates for Mountain Health CO-OP in Idaho increased by 26 percent for 2016. For 2017, Mountain Health CO-OP’s average rate increase was 29 percent in Idaho, and 31 percent in Montana. As of December 22, 2016, the CO-OP ceased enrollments in Montana due to the “large number of new members for 2017.” The enrollment freeze was lifted in July 2017 for off-exchange enrollments; on-exchange enrollments in Montana were expected to become available in the summer of 2017 as well. In both cases, this was ahead of schedule, as the CO-OP had originally expected the lift the enrollment freeze as of November 1, at the start of open enrollment.
In another indication of the CO-OP’s increasing viability, their average proposed rate increase for 2018 was only 4 percent in Montana. This demonstrates that the 31 percent average rate increase for 2017 may have been enough to stabilize the CO-OP and “right-size” the premiums. Ultimately, the average rate increase for 2018 ended up being considerably higher, at 16.6 percent, due to the Trump Administration’s decision to eliminate federal funding for cost-sharing reductions (CSR).
For 2019, the CO-OP implemented an average rate increase of 10.3 percent in Montana and 7 percent in Idaho. And for 2020, their average rates decreased by nearly 12 percent in Montana, and increased by 6 percent in Idaho. And rates in both years would have been lower if not for the Trump Administration’s decisions to expand access to short-term plans and association health plans, and the GOP tax bill provision that eliminated the individual mandate penalty after the end of 2018 (all of these changes ultimately reduce the number of healthy people who purchase coverage in the ACA-compliant market).
The CO-OP’s board of directors announced in June 2018 that Richard Miltenberger would serve as the new CEO of Mountain Health CO-OP. In 2018, the CO-OP had about 25,000 members in Montana, and 24,000 in Idaho. In Montana, the CO-OP had more individual market enrollees than either of the other two insurers that offer plans in the state.
For 2021, the CO-OP raised rates only slightly in both Montana and Idaho, and has also expanded into neighboring Wyoming, which has only had one individual market insurer since 2016.
WISCONSIN:
Common Ground Healthcare Cooperative — The CO-OP offers coverage in 20 eastern Wisconsin counties.
After losing money from 2014 through 2017, Common Ground Healthcare posted a positive net income of $2.7 million in the first quarter of 2017.
For 2018, Common Ground’s average rate increase was 63 percent. But it would only have been about 20 percent if the Trump Administration hadn’t eliminated federal funding for cost-sharing reductions. The rate increase for 2018 applied to about 29,000 members who had coverage in the individual market.
But for 2019, the CO-OP’s average premiums decreased by almost 19 percent. For 2020, they decreased again, by about 9 percent, and for 2021, they decreased again, by more than 6 percent. This series of rate decreases indicates a much more stable environment than they were facing for 2018.
2015 risk adjustment: 9 of 10 CO-OPs owed payments
Under the ACA’s risk adjustment program, health insurers with lower-risk enrollees end up paying money to health insurers with higher-risk enrollees. The idea is to prevent insurers from designing plans that appeal only to healthy enrollees, and to ensure that premiums reflect benefit levels, rather than the overall health of a plan’s enrollees. But CO-OPs found themselves disproportionately having to pay into the risk adjustment program, which hampered their financial progress and resulted in several having to close their doors.
On June 30, 2016, HHS released data on risk adjustment numbers for 2015. Of the 10 CO-OPs that were still operational at that point, nine had to pay into the risk adjustment program for 2015; only one remaining CO-OP – Community Health Options (operating in Maine and New Hampshire at that point) – received a risk adjustment payment. Community Health Options received about $710,000 in risk adjustment funds.
Some of the remaining CO-OPs had begun to be profitable in early 2016 (details below), but their financial situations now had to be considered in conjunction with the fact that the CO-OPs had to pay out the following amounts in risk adjustment payments, making their financial futures even more uncertain (of the nine CO-OPs that owed money in 2016 for the risk adjustment program, six have closed or are facing impending closure; only the CO-OPs listed in bold continue to be fully operational)
HHS implemented changes to the risk adjustment program for 2018, to make it more equitable and less burdensome for new, smaller carriers. But risk adjustment has remained a contentious issue. New Mexico Health Connections sued the federal government over the risk adjustment formula, arguing that it disadvantaged smaller, newer insurers (like the CO-OP) and favored larger, more established insurers. A judge agreed with the CO-OP, and ruled that the federal government needed to justify its risk adjustment formula for 2014-2018.
The Trump Administration responded by announcing in July 2018 that all risk adjustment payments and collections, nationwide, would cease for the time being, which caused widespread uncertainty and concern among health insurers and state regulators. But in late July, CMS announced that they would resume payments under the risk adjustment program, and insurers due to receive a total of $5.2 billion in risk adjustment payments for 2017 will receive that money in the timely fashion in the fall of 2018.
2016 risk adjustment: 4 out of 5 remaining CO-OPs once again owed money
On June 30, 2017, HHS published the risk adjustment report for 2016. Maine Community Health Options was once again the only remaining CO-OP to receive funding under the risk adjustment program; they got $9.1 million.
The report also detailed the amount that insurers owe or would receive for 2016 under the ACA’s temporary reinsurance program (2016 was the last year for the reinsurance program). All five of the remaining CO-OPs received money from the 2016 reinsurance program, but in most cases, it was not as much as they had to pay out under the risk adjustment program.
Maine Community Health Options — the only remaining CO-OP receiving funding under the risk adjustment program for 2016 — also received $21 million under the 2016 reinsurance program, which was far more than any of the other CO-OPs received.
Minuteman, which closed at the end of 2017, had to pay $25.4 million in risk adjustment for 2016 (but received $3 million in reinsurance). Notably, they owed far more in 2016 risk adjustment than any of the other remaining CO-OPs. They explained in June 2017, in conjunction with their announcement that they would no longer be a CO-OP after 2017 (at that point, they hoped to re-open as a for-profit insurer, but that plan was scrapped when they were unable to raise enough capital to secure a license for 2018), that the amount they had been forced to pay into the risk adjustment program amounted to about a third of the premiums they had collected.
2017 risk adjustment
On July 9, 2018, CMS published the risk adjustment report for 2017, showing which insurers owed money into the program, and which would receive money. Ironically, this came just three days after CMS had announced that they would freeze risk adjustment transfers as a result of the New Mexico court ruling regarding the risk adjustment methodology. But by the end of July, the risk adjustment program had been restarted (with additional justification for the methodology, the comply with the judge’s request), and payments to insurers were expected to be made on schedule, in the fall of 2018.
But once again, CHO was the only CO-OP that will receive funds under the risk adjustment program for 2017. The other three remaining CO-OPs all owed money:
2016: New HHS regulations to stabilize CO-OPs, but ultimately too little too late for most CO-OPs
In May 2016, after extensive input from stakeholders, HHS issued new regulations in an effort to help the remaining CO-OPs become financially viable. Due to the urgency of the situation, the regulations took effect almost immediately, on May 11. The new regulations made a variety of changes to make it easier for CO-OPs to seek outside investments and expand their coverage offerings beyond the individual and small group markets:
Membership surpassed a million enrollees by 2015, but has declined sharply with CO-OP closures
During the 2014 open enrollment period, just over 400,000 people enrolled in CO-OPs nationwide. That climbed to over a million by the end of the 2015 open enrollment period – despite the fact that CoOpportunity (Iowa and Nebraska) stopped selling policies in December 2014, and their once-robust enrollment (120,000 members) had dropped to about 2,000 people by mid-February 2015. While enrollment in private plans through the exchanges increased by 46 percent in 2015 (from 8 million people in the first open enrollment period, to 11.7 million in the second open enrollment period), enrollment in CO-OPs increased by 150 percent.
At the end of 2015, however, more than 500,000 of those enrollees had to switch to a different plan, as 11 of the 22 remaining CO-OPs closed at the end of 2015 (in large part due to the fact that insurers did not receive most of the risk corridor money they were owed for 2014). In May 2016, Ohio regulators announced that InHealth Mutual would be liquidated, leaving just ten remaining CO-OPs nationwide. And only three of them were not subject to enhanced federal oversight as of 2016: New Mexico Health Connections, Mountain Health Cooperative (Montana and Idaho), and Minuteman Health, Inc (Massachusetts and New Hampshire). The other eight CO-OPs still in operation at that point were all under “corrective action plans” from the federal government.
Seven of the eleven CO-OPs that were still operational at the end of 2015 had at least 25,000 enrollees as of mid-2015, which was the minimum number that CMS said was necessary for financial solvency. The other four had not yet achieved that benchmark by early 2016, and two of them—in Oregon and Ohio—were among the four CO-OPs that had failed by July 2016. Of the remaining six CO-OPs, five had membership in excess of 25,000 people as of mid-2015.
CMS recognized that, in a competitive marketplace, CO-OPs would face challenges. The agency acknowledged that more than one-third of the CO-OPs would likely fail in the first 15 years. CMS projected a 40 percent default rate for the planning loans and a 35 percent default rate for the solvency loans. But with only four of 23 CO-OPs still in business as of 2018, the failure rate is 83 percent, after four and a half years of operations.
The remaining CO-OPs had roughly the following enrollment totals as of 2019, including individual and group plans:
How many CO-OPs have failed?
Since 2013, 20 of the original 23 CO-OPs have closed.
:
A timeline of the CO-OP closures
In July 2015, Louisiana Health Cooperative announced that it would cease operations as of the end of 2015. LHC was the second CO-OP to fail; CoOpportunity, which served Nebraska and Iowa, received liquidation orders from state regulators in February 2015.
At the end of August, the Nevada Health CO-OP announced they would also close at the end of 2015. And in September, New York officials announced that Health Republic of New York, the nation’s largest CO-OP, would begin winding down operations immediately, and that individual Health Republic of NY policies would terminate at the end of 2015.
On October 1, 2015 the federal government notified health insurance carriers across the country that risk corridors payments from 2014 would only amount to 12.6 percent of the total owed to the carriers. The program is budget neutral as a result of the 2015 benefit and payment parameters released by HHS in March 2014. And the “Cromnibus bill” that was passed at the end of 2014 eliminated the possibility of the risk corridors program being anything but budget neutral, despite the fact that HHS had said they would adjust the program as necessary going forward.
But very few carriers had lower-than-expected claims in 2014. So the payments into the risk corridors program were far less than the amount owed to carriers – and the result is that the carriers essentially get an IOU for a total of $2.5 billion that may or may not be recouped with 2015 and 2016 risk corridors funding (risk corridors still have to be budget neutral in 2015 and 2016, so if there’s a shortfall again, carriers would fall even further into the red).
Many health insurance carriers – particularly smaller, newer companies – faced financial difficulties as a result of the risk corridors shortfall. CO-OPs were particularly vulnerable because they were all start-ups and tended to be relatively small. All of the CO-OPs that announced closures in the last quarter of 2015 attributed their failure to the risk corridor payment shortfall.
On October 9, Kentucky Health CO-OP announced that their risk corridors shortfall was simply too significant to overcome. (The CO-OP was supposed to receive $77 million, but was only going to get $9.7 million as a result of the shortfall.) The CO-OP did not offer plans for 2016, and their 2015 policies terminated at the end of the year. About 51,000 CO-OP members in Kentucky had to shop for new coverage for 2016.
And then on October 14, Tennessee regulators announced that Community Health Alliance would also close at the end of the year. CHA stopped enrolling new members in January 2015, but it had planned to sell policies during the 2016 open enrollment period, albeit with a 44.7 percent rate increase. Ultimately, the risk of the CO-OP’s failure in 2016 was too great, and it wound down operations by the end of the year instead.
Two days later, on October 16, Colorado Health OP was decertified from the exchange by the Colorado Division of Insurance, resulting in the CO-OP’s demise; Colorado Health OP’s 80,000 individual members all needed to transition to new carriers for 2016.
Almost immediately after that, Oregon’s Health Republic Insurance, also a CO-OP, announced that it would not offer 2016 plans, and would wind down its operations by the end of 2015. Health Republic had 15,000 members.
On October 22, The South Carolina Department of Insurance announced that Consumers Choice would voluntarily wind down its operations by year-end, and would not sell plans for 2016. Consumers Choice was run by the same CEO – Jerry Burgess – as Community Health Alliance in Tennessee. 67,000 Consumers Choice members had to switch to a new carrier for 2016. The South Carolina Department of Insurance put together a series of FAQs for impacted plan members.
On October 27, the Utah Insurance Department announced that they were placing Arches Health Plan in receivership, and the carrier would wind down operations by the end of the year. Arches Health Plan garnered roughly a quarter of Utah’s exchange market share in 2015, but those enrollees had to switch to a new carrier for 2016.
On October 30, just two days before the start of the 2016 open enrollment period, the Arizona Department of Insurance announced that Meritus would cease selling and renewing coverage, and existing plans would terminate at the end of 2015. Healthcare.gov removed Meritus plans from the exchange website, and current enrollees — who comprised roughly a third of the private plan enrollees in the Arizona exchange at that point — had to obtain new coverage for 2016. Meritus was unique in that they allowed people to enroll off-exchange year-round up until late-summer 2015. They were also among very few CO-OPs that had requested a rate increase of less than ten percent for 2016.
Open enrollment for 2016 coverage began on November 1, 2015, and coverage was still available at that point from the remaining 12 CO-OPs. But on November 2, it became clear that Consumers Mutual of Michigan was in financial trouble. The carrier announced that they would not offer plans in the exchange in 2016, although at that point, there was still a possibility that they would continue to offer plans outside the exchange. But on November 4, they announced that they would wind down their operations by the end of the year, and all 28,000 members would need to find new coverage for 2016.
In May 2016, state regulators in Ohio announced that InHealth Mutual would shut down and that members would have a 60 day special enrollment period to select a new plan.
In July 2016, state regulators in Connecticut announced that HealthyCT would shut down at the end of 2016 (employer groups were able to keep their coverage through the renewal date in 2017, as long as the plan’s renewal date in 2016 was July or earlier).
In July 2016, state regulators in Oregon announced that Oregon Health CO-OP would shut down at the end of July 2016.
In July 2016, state regulators in Illinois announced that they were beginning the process of taking over Land of Lincoln Health and winding down the CO-OP’s operations. A special enrollment period was created for the CO-OP’s 49,000 enrollees.
In September 2016, state regulators in New Jersey placed Health Republic Insurance of New Jersey into rehabilitation, and the CO-OP ceased selling new plans. Health Republic’s existing plans terminated at the end of 2016.
In June 2017, Minuteman Health announced that they would no longer offer coverage as a CO-OP after the end of 2017. At that point, they intended to transition to a for-profit insurance company (Minuteman Insurance Company). However, they were unable to raise enough capital by the August 2017 deadline for securing a license for 2018, and thus did not re-open as a for-profit insurer. Minuteman Health is in receivership, and enrollees needed to obtain new coverage for 2018.
In July 2017, Maryland regulators issued an administrative order blocking Evergreen Health from selling or renewing any plans (they only had group plans in force at that point, having terminated individual market plans at the end of 2016). The order noted that it was expected that the process would culminate in receivership, and the receivership announcement came by the end of July.
The four CO-OPs that were still operational as of 2018 were all still operational in 2020. But New Mexico Health Connections closed at the end of 2020, leaving just three CO-OPs still operational in five states as of 2021.
CO-OPs’ unique challenges
In July 2015, HHS released financial and enrollment data for the 23 CO-OPs, as of December 2014. The outlook based on the report was not particularly great: all but one of the CO-OPs operated at a loss in 2014, and 13 of the CO-OPs fell far short of their enrollment goals for 2014. The audit called into question the CO-OPs’ ability to repay the loans that they received from the federal government under Obamacare.
The risk corridor shortfall was directly implicated in the failure of CO-OPs in Kentucky, Tennessee, Colorado, Oregon, South Carolina, Utah, Arizona, and Michigan. There is no way around the fact that such a significant financial blow is hard to overcome, particularly for carriers that were new to the market in 2014. Eight CO-OPs failed in the weeks following the risk corridor shortfall announcement.
Those eight CO-OPs were in serious financial jeopardy as a result of the risk corridor shortfall and other factors, and state Insurance Commissioners made the difficult decision to shut them down prior to the start of open enrollment, or shortly thereafter. It’s much less complicated to wind down operations in an orderly fashion in the last couple months of a year than it is to have a carrier become financially insolvent mid-year.
That, coupled with the late announcement regarding the risk corridors shortfall, explains the rash of CO-OP failures announced in late 2015. It should be noted that it was not just CO-OPs feeling the pain from the risk corridor shortfall; in Wisconsin, Anthem exited the exchange market in three counties and scaled back operations in 34 other counties for 2016, partially as a result of the risk corridor shortfall. And in Wyoming, WINhealth exited the individual market because of the risk corridor shortfall; in Alaska and Oregon, Moda nearly exited the market for 2016, due in large part to the risk corridor shortfall (Moda ultimately left Alaska’s market at the end of 2016, in order to focus fully on the Oregon market).
But with 12 out of 23 CO-OPs going under in 2015, it wasn’t surprising that the mood in late 2015 was relatively pessimistic regarding the CO-OP model. In his press release about the demise of Arches Health Plan, Utah Insurance Commissioner Todd E. Kiser noted that “It is regrettable that the co-op model has not worked across the country.” That didn’t bode well for the remaining 11 CO-OPs, and ultimately only four of them are still operational in 2018.
All 11 of the remaining CO-OPs suffered losses in 2015, amounting to a total of about $400 million (Evergreen lost the least, at $10.8 million; Land of Lincoln lost the most, at $90.8 million). The bulk of the losses were in the fourth quarter, indicating that consumers try to get as much value as possible from their coverage before the end of the plan year.
The fact that lawmakers decided at the end of 2014 to retroactively require the risk corridors program to be budget-neutral was a significant blow to the CO-OPs. The CO-OPs – along with the rest of the carriers – had set their premiums for 2014 (and by that time, for 2015 as well) with the expectation that risk corridors payments would mitigate losses if they experienced higher-than-expected claims.
Clearly, that did not pan out, and it certainly put the CO-OPs in a tough spot. To clarify, HHS said in 2013 that the risk corridor program would NOT be budget-neutral, and that federal funds would be used to make up any shortfalls; carriers set their rates for 2014 based on that.
But then in 2014, HHS announced in 2014 that they had made several adjustments to the risk corridor program, and that they projected “that these changes, in combination with the changes to the reinsurance program finalized in this rule, will result in net payments that are budget neutral in 2014. We intend to implement this program in a budget neutral manner, and may make future adjustments, either upward or downward to this program (for example, as discussed below, we may modify the ceiling on allowable administrative costs) to the extent necessary to achieve this goal.” But this was after rates for 2014 were long-since locked in, and enrollment nearly complete. At the end of 2014, congress passed the Cromnibus Bill, requiring risk corridors to be budget neutral, with no wiggle room for HHS.
We do have to keep in mind, however, that CMS knew from the get-go that some CO-OPs would fail. They expected at least a third of them to fail in the first 15 years, and that was long before the risk corridors program was retroactively changed to be budget neutral.
Will the few remaining CO-OPs survive?
It’s too soon to tell. In many states, the CO-OPs started out in a David and Goliath situation, competing with carriers that had dominated the health insurance landscape for years. Premiums that carriers — including CO-OPs — set for 2014 and 2015 were little more than educated guesses from actuaries, since there was very little in the way of actual claims data on which to rely (there was no data at all when the 2014 rates were being set, and only a couple months of early data available when 2015 rates were being set). Once the CO-OPs had more than a year of claims history in the books, they were able to be more accurate in pricing their policies.
But the uncertainty that the Trump administration and GOP lawmakers created for the insurance markets resulted in spiking premiums for 2017 and 2018 (not just for CO-OPs, but for the majority of insurers in most states). That uncertainty continued in 2019, with the Trump administration finalizing rules to expand access to short-term plans and association health plans, and GOP lawmakers’ tax bill that repealed the individual mandate penalty after the end of 2018. But despite all of that, the remaining CO-OPs have had fairly stable pricing in recent years, with several rate decreases in 2019 and 2020, and some modest increases.
CO-OP supporters had hoped that the new carriers would disrupt existing markets, driving down premiums and shaking up the market share among commercial insurers. Although most of the CO-OPs struggled financially, average premiums market-wide were lower in both 2014 and 2015 in states that had CO-OPs than in states without CO-OPs. A GAO report found that average CO-OP premiums in 2014 and 2015 in most states tended to be lower than the average premiums across all carriers in those states. And enrollment in CO-OPs increased at a much faster pace than overall enrollment growth (across all carriers) from 2014 to 2015.
CMS acknowledged from the start that not all of the CO-OPs would be likely to succeed — just as a crop of new for-profit health insurance carriers wouldn’t all be expected to succeed. The three remaining CO-OPs are all in their eighth year of providing coverage as of 2021, demonstrating their staying power. And one of those three expanded into a new state for 2021, which is certainly a sign of insurer stability. And the other two decreased their premiums for 2021, which is generally another sign of stability.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
The post CO-OP health plans: patients’ interests first appeared first on healthinsurance.org.