One could never say that the world of employee benefits and insurance is dull. Not only must brokers be informed about the different products and insurance company underwriting rules, it’s critical that we stay on top of all the regulators and regulations that continue to effect the markets.
In my insurance practice we represent 4 distinct markets that may overlap: Small employer sponsored groups with under 100 employees, Employer sponsored Groups with over 100 employees, Individuals under age 65, and Individuals over age 65 or Medicare eligible,.
One of the recent Executive Orders (EO) from President Trump has the potential to effect employer groups and most likely those with under 100 employees.
The EO directs the Secretary of Labor to consider proposing regulations or revising guidance to expand Association Health Plans (AHP). These AHP’s would be formed by employers in the same line of business anywhere in the country who would to join together to offer healthcare coverage to their employees.
These could be existing organizations, or new ones created for the express purpose of offering group insurance. This could be something like an association of contractors or accountants, any professional association or trade group that might offer insurance across state lines.
However, more action will need to be taken by the Department of Labor and State Insurance Commissioners before this option can be available. This type of plan was allowed many years ago and had a checkered past. Some of the association plans failed miserably and left their members without access to the group market. This was before some of the “guaranteed issue” protections were first introduced in the 1990’s.
There are those that believe selling across state lines could save some costs for insurers if they did not have to obtain regulatory approval from every state. My concern is that while there is some administrative savings, it’s critical to remember that claims costs currently represent 85% of your premium dollar. So in order to effect any real savings, we must look at ways to reduce the actual claims costs.
Another feature of the EO directs the revision of regulations or guidance to expand short-term insurance plans past the current three month limit set by the Obama Administration.
The EO also directs the secretaries of HHS, Treasury, and Labor to consider proposing regulations or revising guidance to expand Health Reimbursement Arrangements, potentially allowing employers to contribute more to their employees' accounts. HRAs are employer-funded accounts that reimburse employees for healthcare expenses, including deductibles and copayments. The IRS does not count funds contributed to an HRA as taxable income. The intent of this directive is to expand HRAs, which could provide employees with more flexibility in how their healthcare is financed.
What Happens Next?
The EO directs the Secretary of Labor to act within 60 days to consider proposing regulations or revising guidance on AHPs. It also directs the secretaries of Treasury, Labor and HHS to act within 60 days to consider proposing regulations or revising guidance on STLDIs, and for the agencies to act within 120 days to consider changes to HRAs.
Within 180 days, the Secretary of HHS, in consultation with the secretaries of Treasury, Labor and the Federal Trade Commission, must report to the president on state and federal laws, regulations and policies that limit healthcare competition and choice, as well as on actions that federal and state governments could take to increase competition and choice and reduce consolidation in healthcare markets.
The EO does not provide specific regulations; therefore, in order for any policies to change, the agencies will have to go through the traditional rulemaking procedures of providing a proposed rule for public comment before being able to enact any final rules. Interested parties and lobbying groups will be sure to stay involved to further their own positons. But none of this will produce a material change for many months.
VERY IMPORTANT NOTE:
Recently, we were informed of something that could be very troubling to our individual under age 65 clients insured with Anthem. The 2018 product will only cover providers physically located in the service area in which Anthem offers individual plans with two exceptions.
According to Suzanne Meraz of Anthem “We have included UC San Francisco and UC Davis, along with its associated medical groups and physicians, in our individual EPO network. While UCSF and UCD are included in network, other providers outside of regions 1, 7 and 10 would be considered out-of-network. The EPO benefit plan does include coverage for emergency or urgent care outside of the network as well.”
The areas included are: 1 – Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity, Tuolumne, Yuba 7– Santa Clara 10 Mariposa, Merced, San Joaquin, Stanislaus, Tulare.