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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.

September 2012 Archives

How to Cover Minor Child's New Baby

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Question: My employer is telling me that my 16 year old daughter’s baby will not be able to be covered under my insurance plan because it isn’t MY child. However, the state is telling me that if I make too much, they can’t enroll the child on state coverage. How am I supposed to make sure the new baby is covered by insurance?

Answer: You will have to purchase child-only individual health insurance for your grandchild.

Question: I am getting medical coverage from my husband’s work. He is going to retire and I am not at retirement age yet. As I understand, he will start getting medical coverage through Medicare. 1. What is going to happen to my med coverage? 2. What if I have “pre-existing conditions”?

Answer: When your husband retires, your family’s health insurance coverage will end. He will be covered by Medicare (if he is 65 years old or disabled). You will have to purchase your own health insurance and I understand you may not qualify for individual health insurance because you have preexisting medical conditions. If you are declined individual health coverage, you will qualify for guaranteed issue health insurance coverage under the federal HIPAA law. Most health insurance companies who market individual health insurance offer HIPAA qualified coverage. HIPAA plans are usually high deductible PPO plans at a substantial mark-up over the standard rate for a “healthy” applicant. The idea being that HIPAA applicants are a greater risk as a group. You may be able to purchase a HIPAA plan from your current insurer, but can shop for HIPAA plans from any other carrier in your state. A second option may be available - major-risk pool health insurance. Availability varies by state.

Small Group Market at Risk?

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Question: You obviously believe that the ACA puts the group health insurance market in California at risk. Yet, most of the press coming out of the health insurance industry says that most employers will continue to provide group health insurance. Who’s right?

Answer: There’s room for disagreement on the published surveys to which you refer. Most are biased toward maintaining the status-quo, partly because that’s what the entities conducting the surveys want to hear, but mostly because the respondents have no idea how to answer the question. They don’t yet understand how the ACA will affect them and their employees. Here are some other reasons:

  • Under the ACA, small-business employers (less than 50 employees) are not required to provide employer-sponsored health insurance and there is no penalty for not doing so. The California small group market accounts for about 3 million lives today. About 1.2 million individuals currently in the small-group market qualify for premium subsidies which are only available in the individual Exchange.
  • Small-business employers are struggling with what to do with health care costs. The solution available today is an “average” solution that maybe meets the needs of half of their employees. They don’t have a solution that is tailored to the individual. The individual Exchange is going to have something that is tailored to what the person is trying to buy.
  • The incumbent small-group carriers - Anthem, Kaiser, and Blue Shield - who control two-thirds of the market, are not highly motivated to defend this market. They probably expect to maintain their market-share in a migration to individual plans in the Exchange. While their more profitable market - larger employers with more that 50 employees - account for 12 million lives.
  • Another possibility is that there is a disruption in this market, that is a different group of health plans captures this emerging individual market because they master the kinds of skills and build the kind of model that allows them to capture this new growth opportunity.

Question: How big could the individual health insurance market be, say by 2016?

Answer: No one really knows exactly what the size of the California individual market is going to be, but it is certainly going to be much larger than it is today, which is about 1.5 million people. About 500,000 of those currently self-insured in the individual market will qualify for premium subsidies and move to the Exchange. About 3 million currently uninsured are expected to enroll in individual market through the Exchange. Non-Exchange individual business could add another 1 million people. So, the 2014-2015 individual insurance market in California should be about 5 million lives. Also, it remains to be seen how many employers - especially those under 50 (employees) - will decide to drop coverage and point their employees to the Exchange. California could have anywhere between 5 million and 8 million people in individual health plans by 2016.

Qualifying Event Timing?

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Question: I’m the primary carrier (insured). And we will be losing our current family insurance coverage in December. My wife’s open enrollment is October and one of our family members has a preexisting condition and we don’t mind paying both premiums for the 2 months….so is it better to wait for our current insurance coverage to stop in December and add onto my wife’s insurance then as a “qualifying event”? or should we just add onto my wife’s insurance in October and carry both insurances until we lose our coverage in December?

Answer: There is no need to pay for two health plans. Wait until your group health coverage expires in December and apply for coverage on your wife’s group plan to be effective January 1, 2013. You are correct: your loss of group coverage is a qualifying event.

HSA Money

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Question: I have unused HSA account money. Do I have to do anything?

Answer: HSA money can be used to pay for many eligible medical expenses beyond what is covered by your insurance plan. These expenses include dental, vision, alternative medicine, long-term care services, prescription drug and certain over-the-counter drugs. Click here for a complete list of qualified medical expenses. If you use the HSA money for anything else, you’ll have to pay income tax and a penalty on the money you take out.

Defined Contribution Cost-Sharing

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Question: I have an employee in another state than the rest of us. His insurance premium is going to be over $28k a year vs. $13K for and in state family. I don’t want to miss out on this policy since it is very good the the in state employees, but I can’t afford the $28K for one person. Is there a way I can “pass on” more of the premium to this one person, without charging more for the in state employees?

Answer: The simplest solution to this problem is to use a defined contribution method of cost-sharing with your employees. For example, you establish a dollar amount that you are willing to contribute towards the family premium - let’s say $1000 per month. The out-of-state employee will have to make up the difference. You should allow them the option of opting out of the group plan and purchasing an individual health insurance policy and still get the defined contribution.

Exchange Brand Name Delayed?

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Question: I expected the Exchange to announce their new brand name today at their monthly board meeting but they did not. When can we expect it?

Answer: You’re right. The Exchange would have liked to announce it today, but they are not there yet. They will make a selection of the final 1 to 3 names next week. So far the list has been narrowed down to 5 names.

  1. Covered, CA
  2. CaliHealth
  3. Avocado
  4. Ursa
  5. Eureka

How Much Choice Among QHPs

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Question: How much choice among QHPs in each tier should consumers be offered?

Answer: I believe that the best selling products on the Exchange will be Bronze and Silver plans. Therefore, the Exchange needs to cut the carriers some slack to design additional plans for those tiers. Carriers should be allowed to design 3-4 Bronze and 3-4 Silver plans to encourage innovative benefit designs and give individuals additional options for the plans that are likely to be most popular. For the Gold and Platinum plans, one plan design each for the individual exchange and 2 Gold plans and 1 Platinum plan for the small group exchange should be sufficient.

Drop Individual Coverage for Group?

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Question: Is it a good idea to drop your individual health insurance for a group plan if you have a pre-existing condition?

Answer: I don’t know the particulars of your situation, but I’m going out on a limb and say, “No. Don’t drop your individual health insurance now.” Why? Because you could loose your group health insurance if you’re laid off later. Your individual coverage is permanent as long as you pay your premium.

Question: Why is the Exchange opposed to charging higher premiums for tobacco users?

Answer: Consumer groups have advised the Exchange board that rating-up tobacco users will raise an additional obstacle (higher premiums) to a group of people who need to be insured. I think that’s a mistake. We need affordability to be job one. I believe that issuers should to be allowed to use the tobacco use rating factors (up to 50% premium surcharge) permitted by the ACA . If carriers are allowed to set their own tobacco rating factors rather than having them set by the state, premiums for all Californians will be lower.

Exchange Jobs

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Question: Where can I find a listing of the government job openings for the CA Health Benefit Exchange?

Answer: Click Here

Primary vs Secondary Stalemate

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Question: I am employed and have health insurance through my company. When my wife and I got married I added her to my policy. Apparently since she’s under 26 she’s allowed to be on her parents insurance as well. We had a baby and now the bills are starting to roll in. The problem is my insurance is refusing to pay because it’s their “policy” to make her secondary since she’s been with her moms insurance longer. Now her moms insurance is saying that since I married her she’s my responsibility and they become secondary. Both insurance claim to be secondary and neither will pay. My question is ..who is my wife’s primary health care? I don’t care which it is I just want the bills paid

Answer: Sorry, I don’t have a direct answer for you. All states have adopted a specific set of rules, called Coordination of Benefits (COB) Guidelines to determine which health insurance plan pays first when double covered. In your case each insurance carrier is interpreting the guidelines differently and you are at a stalemate. It looks like you will have to go to your state’s Department of Insurance to resolve this. I know, it’s a hassle but your medical expenses will eventually be paid. Incidentally, your mother-in-law’s coverage of your wife will not cover your child going forward, so once this claim is satisfied that policy should be cancelled. Of course, you must add your newborn to your group coverage right away. As you can see, double coverage can cause more harm than good and somebody is paying for the extra coverage.

Employee Wants Dependent Coverage

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Question: My father and i work for the same company and same corporation, i currently am 22 years of age.i should be able to stay on my fathers plan untill im 22 years of age but because we work for the same company they are denieng me to stay on his policy and making me pay for my own medical insurance. which doesnt make since because he has to pay the same amount whether im on it or not, basically my question is do they have the right to deny me benifits provided by my father as i being 22. because we work for the same company.

Answer: The Affordable Care Act (ACA) (Obamacare) extended dependent health insurance coverage to age 26. Since September 23, 2010, insurance companies nationwide have had to comply with this aspect of the law. However, employers are free to define their employment contract with their employees. They can make it a condition of employment that workers and their dependents choose to be insured by their own employers if available. So yes, your employer has the legal right to do just that. While your out-of-pocket costs may be higher, you are not being denied coverage.

Question: My wife is 52 and is diagnosed bi-polar, paranoid schizophrenia, ptsd, multiple personalities and depression. She has been in psychiartric hospitals off and on since about 1995.The insurance I have at work changed around 2005 and now each family member has a lifetime cap of 50 days inpatient psychiatric. My wife hit her limit in november of 2011. She has been hospitalized twice since then. She never worked enough to get her minimum credits for social security and hasn’t worked much at all since 1979. I live in PA and was told I made too much money for her to get medicaid. The last hospital bill was for 28 days and costs about $25,000. Two months earlier it was 10 days and costs $9000. I don’t make enough money to pay these bills, I don’t want to abandon her or divorce her and sadly, she will probably have problems her whole life. Is there any help she can receive in the form of medical coverage for her psychiatric stays?

Answer: (Please take this to your HR Representative) The Affordable Care Act (ACA) prohibits the imposition of lifetime and annual benefit limits for essential health benefits. Mental health and substance abuse disorder services, including behavioral health treatment are included under essential health benefits. Federal regulations provide for a three-year phase-in period—September 23, 2010 to January 1, 2014—during which a group health plan or health insurer offering group or individual health insurance coverage may establish an annual limit on the dollar amount of benefits that are subject to specified dollar amounts. While any health plan or insurer offering group or individual health insurance coverage may establish a higher limit or impose no annual limits at all, the annual limit on essential health benefits for each of the three years may not be less than the following:

  • $750,000 for a plan year (policy year in the case of individual coverage) beginning on or after September 23, 2010 but before September 23, 2011;
  • $1,250,000 for a plan year (policy year in the case of individual coverage) beginning on or after September 23, 2011 but before September 23, 2012; and
  • $2,000,000 for plan years (policy years in the case of individual coverage) on or after September 23, 2012 but before January 1, 2014.

Group health plans must comply with the ACAs provisions prohibiting annual limits on essential health benefits—including the restricted phase-in limits— whether or not the plans are grandfathered.

Question: Can I wait until I am ill to purchase health insurance under the affordable care act?

Answer: While there will be a tax penalty for not having health insurance after January 1, 2014, it will not be illegal not to have health insurance. However, if your plan is to wait until you are ill to purchase health insurance in California, it may be too late by then. If you pass up on health insurance when it first becomes available to you, you will have to wait until the year-end open enrollment period or have a qualifying event (loss of employment, divorce, childbirth, etc.) before you can purchase health insurance coverage. These restrictions are necessary to protect the market against adverse selection,

Paying Off the HRA Advance Payment

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Question: My husband works for a mid sized business. They changed health plans a year ago. The premiums are deducted pre tax from his pay. With co-pays and additional bills from doctors the plan is not affordable. The plan promotes “one bill” where the insurance company pays your provider and then bills you. Currently his employer is trying to force employees to payroll deduct for unpaid medical bills. I think we will be forced out of the plan if we refuse. Is this common practice?

Answer: Yes. Your employer can collect what you owe them through payroll deduction. Here’s why you owe the employer that money. The “one bill” plan to which you refer is actually a health reimbursement arrangement (HRA). The HRA works in conjunction with your health insurance coverage. The employer (not the insurance company) pays the employees’ out-of-pocket costs (copays, coinsurance, and other out-of-pocket medical expenses) directly to the providers - doctors, hospitals pharmacies. It’s like an advanced reimbursement. Your employer paid the bill for you, now you owe your employer that money.

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