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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.

August 2012 Archives

Affordability for Young People

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Question: I’m 27, single, and I have a decent job, but I’m definitely not making the big bucks. I don’t get health insurance at work. I had my own policy for a while, paying out about $150 a month but I never used it. I had to lapse it when my car needed major work. Anyway, I read where the Obamacare mandate penalty is $95 a month. How much more will health insurance cost?

Answer: In 2014, the cost of health insurance will be a lot more than the ACA mandate penalty. The annual fine for not purchasing health insurance under the ACA is $95 per person in 2014 (or 1% of taxable income, whichever is greater), $325 in 2015 (or 2%), and $695 in 2016 (or 2.5%). Thereafter, the mandate fine is indexed to inflation. The monthly premium for the benchmarked essential-benefit qualified health plan plan individual plan in 2012 is about $300 per month for a male age 26. It will be higher in 2014.

But, if you are like many of the young people under 30 who are just entering the work force, you have a below-average income. If so, you will qualify for either Medi-Cal or private health insurance with premium subsidies, which will make your health insurance coverage either free or highly discounted.

Child Only Preexisting Condition

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Question: We have a child-only policy for our daughter. We have had the plan for about 5 months now. I took her into a new patient well check appointment where the dr found something that he wants to refer her to a pediatric neurologist for. She has not been diagnosed with anything during or prior to this appointment. Will my insurance look at this as something pre existing and deny anything if the specialist finds something to diagnose?

Answer: One of the earliest implemented - September 23, 2010 - consumer benefits of Obamacare was the removal of preexisting condition exclusions from child-only policies. What that means to you is, you never have to worry about coverage for preexisting conditions on your daughter’s insurance. All consumers will have the same benefits starting Jan1, 2014.

Multi-State In-Network Coverage

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Question: An adult needs to buy insurance in Georgia, but plans to be back in California in a few months. Can we get a policy that covers both states?

Answer: Most national health insurance carriers have multi-state networks, so as long as you select a PPO plan you’ll be OK. You have to have a residence in a given state to purchase health insurance, so you will probably be buying your coverage in Georgia. If you maintain a residence in California, I recommend that you purchase coverage in CA. It’s cheaper and you won’t have to change when you move back.

Network coverage in another state works like this: You are insured by BCBS GA but need medical services in CA. As long as you choose a network provider of either Blue Cross or Blue Shield (separate companies in CA), you will get the in-network benefit your policy provides just as if you were in your home state of GA. This multi-state network benefit is exclusive to PPO plans offered by national carriers.

Married on Parents' Insurance

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Question: I am 21 years old and I have a 5 month old son. My fiance and I are ready to get married as soon as we understand our health insurance situation. I am currently covered under my mothers insurance. My fiance is covered by his parents, and our baby has Medicaid right now. What are the options for each of us. I have heard that once you’re married you can not be covered under parents. I have also heard that is not true and that until you’re 26 or graduate college you can be covered. Which is true? And what are the options for our son? I know the new act effective in 2014 will offer us insurance, but for one that is a while from now, and two, is it REALLY affordable? We do not make much money, and won’t for a while. We are still studying in order to get better jobs.

Answer: You heard wrong. You can both stay on your respective parents’ health insurance coverage while married until you reach age 26. Being a student is no longer a consideration either. As long as your son qualifies for Medicaid, you can leave that alone too. In Jan 1, 2014, Obamacare will provide your family with either Medicaid or federally-subsidized private insurance at little or no cost to you (if you are still in the low-income range). So you are good to go. Get married. You have my blessing.

Question: I am about to retire and have secured independent coverage beginning 2 months before my actual retirement date. Can my company insurance carrier require me to stay on my plan until my retirement date or can I drop their coverage now?

Answer: In order to drop your group health insurance before the end of the plan year (open enrollment period), there has to be a qualifying event. For example, your retirement is a qualifying event. So you cannot drop your group health insurance coverage before your retirement date. Your mistake was in setting the effective date of your individual health insurance plan two months early. You can probably change that, ask your individual plan carrier to put off your effective date. If you show that you have coverage until then, there should be no problem.

Internet Quote and Final Premium

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Question: How much more can a health insurance carrier charge versus quote on internet?

Answer: All health insurance companies who offer individual health insurance must work off a published price list for individual health insurance rates. So the internet rate is the published rate - the lowest rate you can get. During the underwriting process, a risk or a grouping of risks, for example overweight and elevated cholesterol, may cause the underwriter to “rate-up” the applicant. The amount that the insurance company can rate-up the applicant varies among states. but it can be as much as much as 300% in some states. In that case the carrier is saying, “we’d rather not cover you, but if we must, you’re going to have to pay through the nose. Thankfully, this BS goes away in 16 months with health reform.

Question: Will the Exchange raise health insurance rates?

Answer: Yes. In the first few years of the Exchange’s life, health insurance premiums will be higher because, the Affordable Care Act (ACA) does nothing to immediately reduce medical costs on which insurance premiums are based and the ACA has several requirements that will tend to raise premiums over the short -term, namely:

  • The requirement that all insurance plans cover “essential benefits”,
  • The requirement that all plans meet a “minimum actuarial value” of 60 percent ,
  • The requirement that insurers spend 80 percent of individual-market premium costs on health expenses (medical loss ratio), and
  • Requirements that insurers align rates more closely between the young and the old (community rating).

The competitive efficiencies and economies of scale brought about by the Exchange should help to reduce the rates in the longer term.

Sign Waiver or Not?

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Question: My employer’s insurance agent is asking me to sign a form saying I deny insurance. I am opposed to signing this because I am not offered insurance since I am considered part-time (16 hrs/week). If I am not offered something, how can I deny it? What would be the reason for the insurance agent wanting the part-time employees to sign this? Couldn’t it potentially hurt me in the long run? In my opinion, I am being asked to lie on the form. Please advise.

Answer: If you are ineligible for your employer-sponsored health insurance coverage because you don’t work enough hours, there is no need to sign a waiver. Your employer’s contract with the insurance company - if self-insured their ERISA plan document - defines who is eligible for coverage. If you refuse to sign a waiver because it’s a matter of conscience for you, I don’t see how that could hurt you.

Question: I am currently covered by my husband’s employers’ plan. I started being covered by it because I was unemployed. Now I will start a new job in September with a company that offers group insurance option. Because of an ongoing medical treatment with the current healthcare provider ( husband’s employers’) I would prefer to stay insured with my husband’s plan. Can my husband’s employer deny me continuing this service? They don’t state it clearly in their policy but they do state that they need to be informed within 15 days of me becoming eligible for another group insurance so I just assume that they will not want to keep me. Is there something I can do about it or is it just perfectly ok because it’s a particular company’s policy?

Answer: There is no federal or state law, regulation or guideline that prevents you from waiving your employer’s group health insurance coverage in favor of remaining covered as a dependent on your spouse’s insurance. When you complete the waiver form, you will indicate that you are covered on your spouse’s plan. This should not be a problem for your employer as they will not have to make a contribution toward your health insurance. Please note: you will not be eligible for your employers health plan until the next open enrollment period unless you have a qualifying event before that time.

Monthly Premiums are Killing Us!

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Question: We live in PA. In 2010 my husband left his last job and went out on his own as a painting contractor. We shopped for health ins and were told we could no longer get covg as a sole proprietor as we had in the past in that situation. We now had to become an LLC and then they had to have my husband on one plan on his own and me as an “employee” on another plan w/our daughter. We all have pre-existing conditions. I alone had a heart attack w/stents placed in 2009 and we all 3 take about a total of 15 rx meds. Our total ins premiums right now through KHPE are over $1800 per month. That’s 1 1/2 times our mortgage. We can barely make these payments each month and are trying to figure out if there’s something better out there for us. Starting to feel really hopeless.

Answer: There is hope, but not immediately. If you can make those premium payments for another 16 months, you will be off the hook. In January 2014, you will able to purchase individual health insurance form the State Health Insurance Exchange in PA. Rates will be the same for all regardless of health conditions. In addition, federal subsidies will greatly reduce your premium. Hang in there. It’s not hopeless.

Question: Once the Exchange is up and running will an employer be able to pay the Exchange for employees who buy their own health insurance from the Exchange? Would that be pre-tax for the employer?

Answer: No. The employer cannot pay Covered California directly for the employees’ premiums in the individual exchange. If the employer reimburses some or all of the employees’ premiums those payments would NOT be tax deductible to the employer and such payments would be taxable income to the employee.

Pregnant with New insurance

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Question: My husband lost his job in May. We lost insurance the last day of May. He will now begin a new job next week. Im not exactly sure when we be able to start our insurance with them. My question is that I recently found out I am 5/6 week pregnant. Will I get denied coverage? For example if we can not begin to use the insurance until October? will my pregnancy then be considered a pre-exisiting condition. The insurance the company provides is a group insurance.

Answer: Whenever your group health insurance coverage starts, medical expenses connected with your pregnancy will be covered from that point on.

Question: Is it legal for my boss to pay more fro some employees’ health insurance and less for others?

Answer: Yes! An employer can give employees different contributions based on classes of employees. To comply with federal regulations, employee classes within the health plan must be based on bona-fide business differences. These may include job categories, geographic location, part-time or full-time status, date of hire, etc. Within each class, the employer must treat all “similarly situated” employees equally. By creating classes based on genuine job categories, all employees within a class will be “similarly situated”. Employers must not discriminate against unhealthy people. An employer cannot provide inferior benefits to specific individuals with adverse health conditions. Employers must spell out the requirements for classes and benefits in the ERISA plan document.

Question: I just recently found out my individual insurance with Anthem Blue Cross was canceled due to a book-keeping error on my part. I filed a grievance with them stating I would pay all fees and penalties. In the meantime, they told me to apply again for another plan. Being truthful, I told them that I was in the middle of having a physical and blood work. They denied this new policy and states they need to see the results of the blood work. I literally just received the blood work back today and it says I have high cholesterol (My BMI is 24.3)…I haven’t even had a chance to speak to the doctor about it yet. I’m now terrified to send the insurance company this result for fear of being denied coverage. I’m unsure what to do, this is the first time I’ve ever been without health insurance my entire life.

Answer: Based on what you’ve told me, I recommend that you comply with Anthem’s request for the records and finish that application. Your high cholesterol is not a “knock out factor” by itself. Your height and weight are within the guidelines, so you could be approved for coverage, but will probably be looking at a 25% to 50% rate increase for the cholesterol. If you don’t get what you want from Anthem, call my office at 800-557-5693 and we will try to find coverage for you.

Question: We purchased a short term policy for our family when I was between jobs. One of my daughters has pre-existing health conditions (one being asthma). The plan did cover her - but then did not pay for a hospitalzation which they say resulted from her asthma. These type of plans do state that they only pay for emergency care and not routine care and pre-existing conditions - but for children - aren’t they now required by law to cover emergency care related to a pre-existing conditions? Or, are they just required to cover them only for accidents etc… and not for hospital stays related to their pre-existing conditions?

Answer: The main caveat that goes with short-term health insurance is that all medical conditions that existed at or before the date of the application are considered pre-existing condition and thus not covered. So the insurance company was “right” in this case. The ACA rule regarding exclusions in childrens’ health insurance does not apply to short-term health insurance.

Can my Employer Do That?

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Question: While I am in the 3-month waiting period for group health coverage with my new employer, my husband decided to add me to his health plan because he didn’t want me to be without insurance for 3 months. His employer contributes toward the plan for him, leaving him responsible for only paying $28 a week for his own coverage. They allowed him to add me, but do not contribute to my cost at all, so he pays $75 a week out of pocket. I just submitted the forms to sign up for insurance with my own company, which should go into effect Sept 1. However, my benefits administrator called me today and told me I was not eligible to enroll myself for coverage since my husband’s employer insures me. I told her that they technically don’t insure me, they don’t pay toward my premium at all. She said it doesn’t matter, and that my employer will not cover me. This seems COMPLETELY wrong to me. How can they deny me coverage in a group that I qualify for??? This woman is relatively new in her position, and I think she’s mistaken. I could understand denying me if my husband’s employer was paying for my coverage, but they’re not. What should I do?

Answer: Not complaining, but I get this question very often. You are correct. Your employer can’t do that, I have only seen this in some funky self-funded union plans because they draft their own plan documents. However not for the majority of employers. Without knowing anything else other than what you wrote, you should insist on your right to be covered on you new employer’s health plan. If you haven’t already done so, your application should indicate that your coverage under your husband’s plan is ending September 1st. Once you are approved, cancel your coverage under your husband’s plan.

Question: How can employers contribute to individual health insurance premiums for their employees without violating federal law?

Answer: Employer can reimburse some or all of the employees’ premiums legally. But those payments would NOT be tax deductible to the employer and such payments would be taxable income to the employee.

Question: My boss had said that I could pick an individual health insurance plan and he would pay the premium, but his accountant told that there were tax penalties for doing that. Is that true?

Answer: Yes. Paying for your individual health insurance will put your employer out of compliance with federal regulations and increase the company’s tax liability and your’s also. There are two major reasons an employer should never pay for its employee’s individual health insurance plan:

  1. Federal Compliance Issues - Paying for Individual Health Insurance without a HRA Plan Causes the Employer to “Endorse” the Individual Health Insurance Plans
  2. Increased Tax Liability - Paying for Individual Health Insurance without an HRA Plan Causes the Payments to Become Taxable Income to the Employees.

When an employer pays directly for an individual health insurance plan, they effectively endorse each employee’s individual insurance plan as part of an employer-sponsored group health benefit offering. In other words, according to federal law, the employer is treating the individual plan as part of an employee welfare benefit plan regulated by ERISA. Because most individual health insurance plans, do not meet minimum ERISA group plan requirements, the employer is out of compliance.

Separately, an employer is not allowed to know the details of employees HIPAA-protected medical expenses. Because most individual health insurance costs are based on an employee’s health, the health insurance details must be HIPAA protected. When an employer pays for the individual policy, they can violate HIPAA-privacy requirements because they know the details of a HIPAA-protected employee expense.

The federal government has guidelines for employers who want to contribute to employee’s individual health insurance premiums without violating the HIPAA and ERISA regulations. An ERISA and HIPAA-compliant HRA health plan will ensure compliance with federal law. The IRS requires that legal plan documents be established in order for employees to deduct the individual health insurance premiums from taxable income on the annual W-2. An IRS-compliant HRA plan will ensure the tax deductibility of employee’s individual health insurance premiums as well.

Question: If the Republicans win in November and successfully cut off funding for Obamacare, will the Exchange survive?

Answer: Republicans have indicated they will seek to repeal the law if they win the White House and Congress in the November election. Whether they can actually do that remains to be seen, but uncertainties about federal funding for the Exchange challenge its viability. Federal subsidies are the Exchange’s main attraction, its “killer app” if you will. Experts agree that the Exchange could work without federal subsidies, but it wouldn’t attract nearly as many people.

Question: What power does the Exchange have to help to improve overall health care quality in California?

Answer: A recent Robert Wood Johnson Foundation Paper Exchanges & Quality -rwjf.org.pdf points out that states have a number of options for using their health insurance exchange to help drive quality improvement and delivery system reform, including:

  • Providing plan performance information on specific quality metrics important to consumers, so that they can more easily assess which plans do a better job providing the services they want.
  • Aligning quality improvement and reimbursement strategies for the exchange, Medi-Cal, CHIP, state employee benefits programs, and, possibly, private employer purchasing alliances, so that a critical mass of health plans are sending a common set of signals to their provider networks.
  • Using the exchange’s Web portal to give consumers relevant and actionable information on plan and provider quality, and Web-based decision support tools to promote higher-value plans as consumers consider their plan choices.

Question: I’m a union employee with health coverage at a minimal cost. My wife has health insurance thru her employer but pays approximately 50 percent of the premium. We also have two children and my wife has them on her policy. We’re thinking of saving money by adding everybody to my policy and dropping her insurance. I’m wondering if my insurance will say that her employer offers a policy even though we’re paying high premiums that her policy is primary coverage for the family. I would love to drop her policy and add the whole family to my policy. I would appreciate any feed back…Thank you, James.

Answer: James, your insurance company cannot refuse to cover your wife and kids as dependents on your group health insurance plan because your wife has access to coverage with her employer. However, your union may have their own rules or regulations that you need to inquire about.

Exchange and Cafeteria Plans

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Question: Will employees who opt for coverage in the Individual Exchange be allowed to use their employer-sponsored cafeteria plan to pay their premium with pre-tax dollars.

Answer: No. HHS regulations prohibit employers from permitting employees to use pre-tax dollars in their cafeteria plan to pay for coverage through a QHP in the Individual Exchange. It does permit SHOP enrollment using a cafeteria plan if the employer is eligible for the SHOP (50 employees or less). This recent provision amends section 125 of the Internal Revenue Code relating to cafeteria plans. It states that a qualified benefit does not include a (QHP) offered through an Exchange unless the employer is Exchange-eligible and offers employees the opportunity to enroll in a QHP through the SHOP Exchange. Effective date is for taxable years ending on or after Jan. 1, 2014.

Two Group Policies?

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Question: Hi my wife is 24 and is still on her mom’s group coverage through work, I recently graduated grad school and now have group coverage through my place of employment. I am wondering if we can use both group coverage plans as a primary/secondary for the operation, or is her mom’s group coverage not valid now that she is on mine?

Answer: The benefit of double coverage is limited. The secondary plan will only pay for the difference in coverage for a given medical expense where the primary plan’s coverage is not as good. For example, say the primary plan has a $500 copay for the in-hospital benefit and the secondary plan has a $250 copay for the same benefit. You would get an additional reimbursement of $250 from the secondary coverage. If the primary plan’s benefits are as good or better than the secondary plan, there is no real benefit in having double coverage.

Question: Is it better for a business with less than 25 employees to keep current employee healthcare plan in place or cancel it before 2014?

Answer: Your question is one many small business owners will be asking in the next year or two. Do I keep providing group health insurance for my employees or turn them loose to shop for individual health insurance on the Exchange? On a strictly objective level, your answer will depend on (1) the income level your employees and (2) the employment market for your employees. Let me give two examples to illustrate - a retail store with 25 employees versus a software development firm with 25 employees. The retail store employees are mostly low-income, many of whom will qualify for premium subsidies in the Exchange. Retail employees are relatively easy to hire and train. Conversely, the employment market for software developers is very competitive, so this business would do well to keep providing a comprehensive group health plan to attract and keep the employees it needs. Employers who choose to take advantage of the Exchange’s premium subsidies to help fund their employee health benefits may still offer group health insurance to a subset of their employees. The tax consequences and health plan regulations on how that will work are yet to be determined.

College Graduation or Age 26?

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Question: I had medical insurance until 7/31/2012 through my mother’s group plan coverage, when it expired due to the fact that I graduated form college. Before that coverage expired I applied at a different medical insurance plan but was denied due to a pre-existing condition (Chron’s). Can I be denied even if I am insured or have been during the preceding six months?

Answer: Yes. You can be denied for individual coverage for preexisting conditions regardless of your previous coverage. Chron’s Disease is a denial condition for all the individual health insurance underwriting guidelines that I know about.

However, (and here’s where you need to pay attention) the fact that you graduated from college is not a reason to be dropped from your parents coverage. You can stay covered on your mother’s health insurance until age 26. If you are not yet 26, have you mother reinstate you on her insurance right away.

Consumer Benefits

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Question: What are the benefits for the consumer in the california insurance exchange?

Answer: Here are the main benefits for individuals in the Exchange One Stop Shopping: The Exchange will offer qualified health plans (QHPs) from most of the health insurance issuers in California at affordable rates. Guaranteed Issue: All health insurance will be required to cover anyone who applies regardless of health history or pre-existing conditions. Premium Subsidies: Federal premium subsidies or “advance tax credits” are financial payments graduated on income level to support the purchase of QHPs exclusively through the Exchange. Essential Health Benefits: All health plans will offer at least the standard set of defined Essential Health Benefits. Consumers will be able to compare coverage much easier than today.

COBRA Dependent Coverage

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Question: Can i cancel cobra and keep my wife covered under cobra who has a preexisting condition?

Answer: The former employee (husband in this case) must be covered under COBRA continuation coverage in order for any dependent to be COBRA covered.

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