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Covered California Q&A

Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


June 2012 Archives


Affects of the SCOTUS Ruling

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Question: What are the immediate results of yesterday’s Supreme Court ruling on state exchanges?

Answer: The SCOTUS decision puts a lot of pressure on those states that have not done much to get their exchanges started while hoping the ACA would be declared unconstitutional. Now, they are under severe time constraints to implement an exchange. Many states will be left with no alternative to a federally run exchange. States must also decide whether to accept the Medicaid expansion program and will probably decide along party lines - many Republican dominated states choosing not to. The development of the California Exchange is way ahead of the curve relative to other states and will most surely continue with Medi-Cal expansion. So, other than a sigh of relief, no changes in California.


Exchange Enrollment Scenarios

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Question: How do you see the agent completing an enrollment in the Exchange? Will we be able to enroll subsidized members? What about our existing individual members?

Answer: It remains to be seen how the Exchange guides enrollments from the carrier and agent channels. The best I can do at this point is provide some likely scenarios.

  • Only a contracted carrier or the Exchange itself - acting as administrator for the carrier - can complete an enrollment. Agents and Navigators involved in outreach, education, and pre-screening will complete an application for enrollment and submit it to the Exchange.
  • Agents and Navigators could pre-screen individual health insurance applicants for eligibility for subsidized coverage in the Exchange or Medical, and transmit pre-populated applications and a warm hand-off to Exchange staff to complete enrollment.
  • Contracting carriers could partner with the Exchange in enrolling both current members who are subsidy-eligible, and new subsidy-eligible members that the carrier identifies as part of the its marketing efforts. This is a cost-effective means to provide a sizable portion of the Exchange’s projected first year enrollment.

The process we envision would be similar to the current method submitting an online application to a carrier for underwriting, Of course, post reform there will be no medical underwriting, but financial underwriting in its place.


Question: How will the Exchange handle the flow of premiums? Will policyholders pay the Exchange or the insurance carrier that issued their health plan? Will the federal subsidies go to the insured or the Exchange?

Answer: Individuals and families who enroll in qualified health plans in the California Exchange will pay their premiums directly to the health insurance companies who issued the insurance policy. In the case of individuals with federal subsidies, the U.S. Department of Treasury will make direct deposits to insurance companies of federal subsidies such as Advance Premium Tax Credits (APTC) and Cost-Sharing Reductions (CSR).

Conversely, the SHOP Exchange will bill the employer for the aggregate monthly premium for the group’s employees. The monthly premium payment is a combination of the employer contribution and employee pre-tax payroll deductions for the employee responsibility. The employer writes one check to the Exchange and the Exchange platform disburses the appropriate premiums to each employee-selected carriers.


Question: Will agent compensation in the Exchange truly match agent compensation outside the exchange? I am thinking of tiered compensation arrangements based on volume that are common in today's market.

Answer: Most of the details of the agent compensation picture is still in the TBD category, but the Exchange needs to insure that they have a level playing field in terms of agent compensation to protect against adverse selection. The requirement that agent compensation be the same in and out of the Exchange should extend to all forms of compensation - monetary as well as non-monetary incentives or considerations. Similarly, the principle should be applied to all bonuses, overrides, and like programs that reward high-volume agents and brokers. Such programs must calculate eligibility for bonuses equally, without regard to whether the enrolled lives are in Exchange or non-Exchange products.

The Exchange should also prohibit, by contract, participating issuers from paying product-specific bonuses in or out of the exchange. Such bonuses, if targeted for example only at non-exchange offerings, could thwart the goal of requiring that commissions be equal in and out of the Exchange.


Question: Will Navigators be sufficiently motivated by $58 per enrollment in QHPs and nothing at all for Medi-Cal enrollments?

Answer: You have wonder about the livelihood of navigators under this model. (See Navigator Compensation Update).This could not be the sole focus or job of any navigator. Furthermore, beyond 2014, enrollment is expected to decline by close to two thirds, providing even less opportunity for sustaining a livelihood in this space.

The Exchange is looking to Medi-Cal for ways to fund direct compensate for navigators assisting Medi-Cal enrollments, but if they are unsuccessful, they will be creating a model where navigators would be required to promote enrollment in a program without any financial incentives. I believe that unless navigators are appropriately compensated, enrolling individuals in Medi-Cal could pose a challenge. Navigators should have direct financial incentives to assist with any services they provide to facilitate enrollment.


Question: I was laid off - my medical coverage ended on 3/31/2012. I did not elect cobra. I purchased a high deductible, no prescription coverage, bare bones health insurance policy that begain on 6/1/2012. On 6/14 I was diagnosed with multiple Sclerosis. I am a Pennsylvania Resident. I have a meeting with an Attorney to start filing for disability, but this could take a year or more and possible denial. What is my best option to obtain better coverage at this point, so I’m not buried medical expenses?

Answer: You cannot improve your health insurance coverage at this point. On the plus side, you do have coverage and help is coming. Assuming the Affordable Care Act stays in force, you will be able to upgrade your coverage on January 1, 2014. With MS, the big out-of-pocket expense for you will be prescription drugs. Please read this article 7 Ways to Cheaper Drugs.


Question: How can the Exchange control the tendency for assisters to steer consumers to certain Qualified Health Plans rather than others?

Answer: The steerage concern is an important one. Both the ACA and the Exchange have safeguards in place to minimize it, For example, having the same commission structure both in and out of the Exchange. However, the steerage concern needs to be balanced against a far greater concern, particularly in the early years of the Exchange: the need to successfully enroll individuals on a massive scale. The failure to achieve very substantial participation rates in the Exchange will, more than any other single factor, undermine the viability of the Exchange, and force premiums up. It must be recognized that direct benefit assisters will have a financial incentive to enroll individuals in a particular way. Health plans will not extend great effort to enroll people into competing health plans. Providers will not generally enroll individuals into plans that exclude the provider from their networks. This must be recognized and accepted. Instead of attempting to eradicate the natural tendency of private entities to enroll individuals in their own systems, the Exchange might choose instead to embrace this incentive to generate the massive enrollment that will be needed for the Exchange to succeed.


Question: My nineteen year old son just graduated from high school in May and will be attending college full time in August. He has a part time job at Burger King working about thirty-two hours a week. Burger King offers insurance to it’s part-time workers but it costs more than he makes. My employer is kicking him off my insurance because he “has health insurance available through his employer.” He either has to quit his part-time job or go without health insurance until august. Is this legal? They state that this is Obama Care.

Answer: Your employer has no legal grounds for denying your dependent son coverage under your group health insurance plan - certainly not any part of “Obamacare”. But keep in mind that your employer can insist on a “company policy” that has no legal basis. That’s his prerogative. You may be legally right and loose your job.


Question: Do i have to offer health insurance to my employees?

Answer: No. Employer-sponsored health insurance is not mandatory in California or the any other state for that matter. Employers provide health insurance to maintain a competitive edge in hiring and retaining good employees. Beginning in 2014, larger employers - those with more than 50 full-time employees will face a play-or-pay tax if they do not provide group health insurance that meets standards set by the Affordable Care Act. Small employers - those with less than 50 full-time employees - will not be required to provide health insurance.


Question: I have bariatric surgery scheduled for July 3rd under my Group Plan. Today I received notificaiton from my company this plan is being withdrawn and preplaced with 2 other options as of July 1st. I’ve had 6 months of workup prepration for this surgery and now I’m loosing the insurance. I’ve called my surgeon to see if we can move up the date. I have a few questions: even if I selected a new goup plan that my company is forcing me to pick from and different than what I have now, assuming this procedure will be coverd under a new plan, will I be forced to go through all the work up again for the new plan? Can I be denied for pre-existing condition - whether I have the surgury sooner and not be forced to the new plan or wait and have surgery under the new plan? What if I have complicaitons after the surgery on the new plan. Mindful, the new plan is not my choice, but my employer will drop what I have now and offer other plans. Please advise. (I live in CT, have a primary Dr. in CT, but my insurance company is out of Mass.)

Answer: The crux of your question is which insurance company is responsible for a claim when there is a change of insurers. In your case this change is taking place on July 1st, so the current insurance company is responsible for all medical services you receive prior to July 1st. These responsibilities are based on the dates-of-service not the date the claim is submitted or received by the insurer. The “new” insurance company would be responsible for your surgery assuming it’s done as scheduled on July 3rd. If you have the surgery done before July 1 you will need routine follow-up and if there are complications that require treatment, those claims will be the responsibility of the “new” company. No - you cannot be denied coverage for preexisting conditions under Massachusetts laws.

Your primary problem right now is that you don’t know if the new insurance plan will cover the bariatric surgery. You need to find that out right away. It either does or it does not. It’s not based on your circumstances. If the answer is “no”, you have to move up your surgery up. If the answer is “maybe”, I would still advise you get it done before July 1st.

Secondarily, you will have to find out if your surgeon is in the new insurance company’s provider network. If not and you have to switch surgeons, then it’s quite possible the new surgeon will require additional surgical workup and your surgery will have to be rescheduled.


Exchange Enrollment Period

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Question: When will people be able to start buying insurance through the California Health Benefit Exchange?

Answer: The initial open enrollment period of the Exchange will start on October 1, 2013 and extend to March 31, 2014. While people can enroll as early as October 2013, coverage will not be effective until January 1, 2014.


Question: How will agents be compensated for placing business in the Exchange?

Answer: Agents will be compensated for facilitating enrollments in the individual exchange for both subsidized and non-subsidized enrollees. Agents will not be compensated for enrollments in public programs - Medi-Cal and Healthy Families. Compensation rates will be the same as outside the Exchange. Commissions will paid by the carriers directly to the producers.

Agents will be the primary sales channel for the SHOP Exchange. Unlike the individual exchange, the SHOP will pay agents directly. The Exchange will likely match carrier commissions although they are still considering the option to set their own commission rates which would also be based on the prevailing commissions. In either case, the Exchange supports a level playing field among the carriers and the SHOP program.


Qualifying Events List

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Question: If a dependent loses coverge on their parents policy due to reaching the maximum age, is that a qualifying event to pick up coverage under their own employer?

Answer: Yes. See #4

List of Qualifying Events

  1. Change in legal marital status, including marriage, death of a spouse, divorce, legal separation and annulment.
  2. A change in the number of dependents, including birth, death, adoption, and placement for adoption.
  3. A change in employment status of the employee, or the employee’s or retiree’s spouse or dependent, including termination or commencement of employment, a strike or lockout, a commencement of or return from an unpaid leave of absence, a change in worksite, and a change in working conditions (including changing between part‐time and full‐time or hourly and salary) of the employee, the employee’s or retiree’s spouse or dependent which results in a change in benefits they receive under a cafeteria plan or health or dental plan.
  4. A dependent ceasing to satisfy eligibility requirements for coverage due to attainment of age, student status, marital status, or other similar circumstances.
  5. A change in place of residence of the employee, retiree or their spouse or dependent and the current carrier is not available.
  6. Significant cost or coverage changes (including coverage curtailment and the addition of a benefit package).
  7. Family Medical Leave Act (FMLA) leave.
  8. Judgments, decrees or orders.
  9. A change in coverage of a spouse or dependent under another employer’s plan.
  10. Open enrollment under the plan of another employer.
  11. Health Insurance Portability and Accountability Act (HIPPA) special enrollment rights for new dependents and in the case of loss of other insurance coverage.
  12. A COBRA‐qualifying event.
  13. Loss of coverage under the group health plan of a governmental or educational institution (a state’s children’s health insurance program, medical care program of an Indian tribal government, state health benefits risk pool, or foreign government group health plan).
  14. Entitlement to Medicare or Medicaid.
  15. Any other situations in which the group health or dental plan is required by the applicable federal or state law to allow a change in coverage.

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