Category Archives: Health Care Reform

Thoughts on the Wall Street Article…

It is a difficult time for an employer.  With Health Care Reform looming in 7 months, almost every employer I talk to is nervous, concerned, worried – and looking for the loophole that allows them to continue to do what they are doing today.

Last week an article in the Wall Street Journal, click here, spoke to this.  The Concept?  The rules only apply to small groups;  large groups of 50+ employees can get around the law by offering “skinny” medical plans.  Which, in fact, is probably technically true.  Large Groups are required to provide unlimited preventive coverage, but not much more.  The lawmakers “assumed” that large employers would want to provide “high quality insurance.”  PPACA is poorly written in many instances.

So what’s a “Skinny Plan?” – a watered down plan that, as an example, doesn’t cover surgery, prenatal care and x-rays, and perhaps only reimburses $150 a day for a hospital visit.

Before jumping on the “someone found a solution!” bandwagon, we need to look at this from a couple of viewpoints:

Employer- Everyone loves a good “loophole,” its the American way.  Philosophically is this the coverage you really want to offer your employees?  Many retail, temporary and restaurant groups currently offer “Limited Medical Plans” which are essentially the same thing, and will probably jump at the opportunity.  However, with the cost to attract, hire, train and retain a new employee estimated at between $3000-$5000, is this really the pathway you want to follow?

Government- Is this really a loophole?  Clearly the intention of the government regulators was to require employers to offer “comprehensive” insurance to all employees;  that’s why they came up with the fine/penalty/tax system – to prevent you from doing exactly this.  How long will it take the current administration to close this gap in a poorly written law?  Or will it be decided by the courts (who have supported the law and the administration)?

If and when the administration closes the loophole, or worse simply says the interpretation was wrong, will they then set an example and fine your company $2000 per employee retroactively?

Employees- Again, does this kind of approach match the philosophy your employees have come to understand about your company?  And what happens when they have a big claim, the surgery and hospitalization are not covered and they owe the hospital $40,000?  Will they decide they didn’t understand the insurance they bought, they weren’t informed, that both your company and the insurance carrier are “big Bad guys” – and sue everyone involved?

There are approaches being developed and designed to help us all survive Health Care Reform without closing our businesses.  I will be attending the National Health Underwriters meeting in June at Atlanta and expect to bring a lot of ideas back from that session.  More to follow… – Reeve





Employers Eye Bare-Bones Health Plans Under New Law

This article appeared last week in the Wall Street Journal and has created ALOT of buzz.  See my thoughts and comments in the next article – Reeve


Employers are increasingly recognizing they may be able to avoid
certain penalties under the federal health law by offering very limited
plans that can lack key benefits such as hospital coverage.

Benefits advisers and insurance brokers—bucking a commonly held expectation that
the law would broadly enrich benefits—are pitching these low-benefit
plans around the country. They cover minimal requirements such as
preventive services, but often little more. Some of the plans wouldn’t
cover surgery, X-rays or prenatal care at all. Others will be paired
with limited packages to cover additional services, for instance, $100 a
day for a hospital visit.

Federal officials say this type of plan, in concept, would appear to qualify as
acceptable minimum coverage under the law, and let most employers avoid
an across-the-workforce $2,000-per-worker penalty for firms that offer
nothing. Employers could still face other penalties they anticipate
would be far less costly.

It is unclear how many employers will
adopt the strategy, but a handful of companies have signed on and an
industry is sprouting around the tactic. More than a dozen brokers and
benefit-administrators in 10 states said they were discussing the
strategy with their clients.

“There had to be a way out” of the
penalty for employers with low-wage workers, said Todd Dorton, a
consultant and broker for Gallagher Benefit Services Inc., a unit of
Arthur J. Gallagher & Co., who has enrolled several employers in the
limited plans.

Pan-American Life Insurance Group Inc. has
promoted a package including bare-bones plans, according to brokers in
California, Kansas and other states and company documents. Carlo
Mulvenna, an executive at New Orleans-based Pan-American, confirmed the
firm is developing these types of products, and said it would adjust
them as regulators clarify the law.

The idea that such plans
would be allowable under the law has emerged only recently. Some
benefits advisers still feel they could face regulatory uncertainty. The
law requires employers with 50 or more workers to offer coverage to
their workers or pay a penalty. Many employers and benefits experts have
understood the rules to require robust insurance, covering a list of
“essential” benefits such as mental-health services and a high
percentage of workers’ overall costs. Many employers, particularly in
low-wage industries, worry about whether they—or their workers—can
afford it.

But a close reading of the rules makes it clear that
those mandates affect only plans sponsored by insurers that are sold to
small businesses and individuals, federal officials confirm. That
affects only about 30 million of the more than 160 million people with
private insurance, including 19 million people covered by employers,
according to a Citigroup Inc. report. Larger employers, generally with
more than 50 workers, need cover only preventive services, without a
lifetime or annual dollar-value limit, in order to avoid the
across-the-workforce penalty.

Such policies would generally cost
far less to provide than paying the penalty or providing more
comprehensive benefits, say benefit-services firms. Some low-benefit
plans would cost employers between $40 and $100 monthly per employee,
according to benefit firms’ estimates.

“For certain organizations, it may be an ideal solution to minimize the cost
of opting out,” said David Ellis, chief executive of Youngtown,
Ariz.-based LifeStream Complete Senior Living, which employs about 350
workers, including low-wage housekeepers and kitchen staff. Mr. Ellis,
who was recently pitched a low-benefit plan, said it is one option the
firm may consider to lower costs and still comply with the law, he said.

Administration officials confirmed in interviews that the skinny plans, in concept,
would be sufficient to avoid the across-the-workforce penalty. Several
expressed surprise that employers would consider the approach.

“We wouldn’t have anticipated that there’d be demand for these types of
band-aid plans in 2014,” said Robert Kocher, a former White House health
adviser who helped shepherd the law. “Our expectation was that
employers would offer high quality insurance.” Part of the problem:
lawmakers left vague the definition of employer-sponsored coverage,
opening the door to unexpected interpretations, say people involved in
drafting the law.

The low-benefit plans are just one strategy
companies are exploring. Major insurers, including UnitedHealth Group
Inc., Aetna Inc. and Humana Inc., are offering small companies a chance
to renew yearlong contracts toward the end of 2013. Early renewals of
plans, particularly for small employers with healthy workforces, could
yield significant savings because plans typically don’t need to comply
with some health law provisions that could raise costs until their first
renewal after Jan. 1, 2014.

Insurers and health-benefits
administrators are also offering small companies a chance to switch to
self-insurance, a form of coverage traditionally used by bigger
employers that will face fewer changes under the law. Employers are also
considering limiting workers’ hours to avoid the coverage requirements
that apply only to full-time employees.

“You’re looking at ways
to avoid being subject to the law,” said Christopher F. Koller, health
insurance commissioner of Rhode Island.

Regulators worry that
some of these strategies, if widely employed, could pose challenges to
the new online health-insurance exchanges that are a centerpiece of the
health law. Among employees offered low-benefit plans, sicker workers
who need more coverage may be most likely to opt out of employer
coverage and join the exchanges. That could drive up costs in the

“The whole idea is to get healthy people in and
not-so-healthy people in” the marketplaces, said Linda Sheppard, special
counsel for the Kansas Insurance Department.

Experts worried
that plans lacking hospital or other major benefits could leave workers
vulnerable to major accidents and illnesses. “A plan that just covers
some doctor visits and preventive care, I wouldn’t say that’s real
health-insurance protection,” said Karen Pollitz, a senior fellow at the
Kaiser Family Foundation and former federal health official.

Officials at the Department of Health and Human Services said they haven’t seen
widespread evidence of such strategies. They said the health law would
bring new options, including the subsidized exchange plans, to
low-income workers, and that most employers who offer coverage now
choose to provide much more robust benefits.

“Any activities  that take place on the margins by a small number of employers would not
have a significant impact on the small group or the individual market,”
said Mike Hash, director of the department’s Office of Health Reform.

Limited plans may not appeal to all workers, and while employers would avoid
the broader $2,000-per-worker penalty for all employees not offered
coverage, they could still face a $3,000 individual fee for any employee
who opts out and gets a subsidized policy on the exchanges.

But the approach could appeal to companies with a lot of low-wage workers
such as retailers and restaurant operators, who are willing to bet that
those fees would add up slowly because even with subsidies, many workers
won’t want to pay the cost of the richer exchange coverage.

A  full-time worker earning $9 an hour would have to pay as much as $70 a
month for a midlevel exchange plan, even with the subsidies, according
to Kaiser. At $12 an hour, the workers’ share of the premium would rise
to as much as $140 a month.

Firms now offering low-cost policies known as mini-meds, generally plans that cap benefits at low levels,
could favor the tactic. Companies sought federal health department
waivers to cover nearly four million with mini-meds and other similar
plans, which will be barred next year. Some employers are “thinking of
this as a replacement for the mini-med plan,” said Tracy Watts, national
leader for health-care reform at Mercer, a consulting unit of Marsh
& McLennan Cos.

San Antonio-based Bill Miller Bar-B-Q, a
4,200-worker chain, will replace its own mini-med with a new, skinny
plan in July and will aim to price the plan at less than $50 a month,
about the same as the current policy, said Barbara Newman, the chain’s
controller. The new plan will have no dollar limits on benefits, but
will cover only preventive services, six annual doctors’ visits and
generic drugs. X-rays and tests at a local urgent care chain will also
be covered. It wouldn’t cover surgeries or hospital stays.

Because the coverage is limited, workers who need richer benefits can still go
to the exchanges, where plans would likely be cheaper than a more robust
plan Bill Miller has historically offered to management and that costs
more than $200 per month. The chain plans to pay the $3,000 penalty for
each worker who gets an exchange-plan subsidy.

But, “those are going to be the people who will be ill and need a more robust plan,” and
insuring them directly could cost even more, Ms. Newman said.

Many more workers, she expects, will continue to go without insurance,
despite the exchanges and the limited plan. Currently, only one-quarter
of workers eligible for the mini-med plan take it. Ms. Newman said, “We
really feel like the people who are not taking it now will not take it

Tex-Mex restaurant chain El Fenix also said it would offer
limited plans to its 1,200 workers, covering doctors visits, preventive
care and drugs, but not hospital stays or surgery. “What our goal was
all along was to make [offering coverage] financially palatable for the
company as a whole, so we didn’t do damage and have to let people go or
slow down our growth,” said Brian Livingston, chief financial officer of
Dallas-based Firebird Restaurant Group LLC, owner of El Fenix.

Some benefits advisers worry that since the idea of the low-benefit plans is
so new, they could yet invite scrutiny from regulators, and may run
afoul of other health law requirements.

John Owens, a broker for  the Lewer Agency in Kansas City, Mo., said a large Midwestern
convenience store chain is considering signing up for such a policy and
is awaiting guidance from regulators.

“What I’m telling people
is, this may work, but you better have a plan B,” said Andrew Ky Haynes,
a Kansas City, Mo.-based benefits lawyer.

Write to Christopher Weaver at and Anna Wilde Mathews at

Health Care CO-OPs; a Compelling New Option

y Ranee Randby, Communications Director | Community Health Alliance
Beginning January 2014, health insurance in the United States will become mandatory just as car insurance is in many states.

Many factors go into choosing a health insurance plan, depending on your age and life
circumstances. Consumer Operated and Oriented Health Insurance Plans, or
CO-OPs, are a compelling new option under the Affordable Care Act.
Individuals and small businesses that live or operate in a CO-OP state
will have another option to traditional health insurance.
Gone are the pre-existing condition exclusions and arbitrary cancellations;
additionally, dollar limits on coverage will be restricted. More
Americans will have access to health care and will be required to take a
more active role in their health, ushering in a new era for health care
coverage in many ways.

A lot of attention has been given to the Health Insurance Exchanges (now called the
Marketplace), with 26 states choosing the federal government-run online
insurance Marketplace, 17 states electing to run their own and seven
deciding to split the duties in a partnership. But a lesser known – but
equally important – health care revolution is happening in the 23 states
where applications were approved for CO-OPs.

What is a CO-OP?

The CO-OP model was created by a Congressional bipartisan panel under the Affordable Care
Act to promote competition in the health insurance industry. As state
and federally regulated health insurance plans, CO-OPs have a specific
mandate to provide health insurance that is responsive to individuals
and small business needs through fair and effective competition. CO-OPs
will begin member enrollment in 23 states in October 2013 for coverage
effective on Jan. 1, 2014.

“You could say that the traditional insurance company is like a big bank,”
said Jerry Burgess, the president and CEO of the South Carolina and
Tennessee CO-OPs, Consumer’s Choice Health Plan and Community Health
Alliance. “They are managed the same way, with comparable business
goals: to make money, gain market share and avoid losses. A health
insurance CO-OP is nonprofit by definition, so it’s more like a credit
union, with members governing the business and benefitting from the
organization’s success.”

CO-OPs are unlike any other health insurance company. The emphasis is on the consumer. No
traditional health insurance company is governed by its members,
providers and brokers who elect representatives from each group to the
board of directors. A few ways they are different include:
“Member-governance promotes a bottom-up business strategy for managing the plan and
encourages the exchange of ideas and best practices,” said Martin
Hickey, MD, New Mexico Health Connections CEO. “And most importantly,
care, communications and business practices center around the
member/patient – which is different from the traditional health
insurance company model.”

All the approved CO-OPs were funded through loans from the U.S. Department of Health and Human
Services (HSS) to help set up and maintain CO-OP health insurance
issuers. CO-OP loans must be repaid with interest, and
loans have been made only to private, nonprofit entities that
demonstrate a high probability of becoming financially viable. The
Centers for Medicaid and Medicare (CMS, a division of HSS) closely
monitors CO-OPs to ensure they are meeting program milestones. CO-OP
loan recipients are subject to strict monitoring, audits, and reporting
requirements for the length of the loan repayment period plus 10 years.

Approved CO-OPs, their loan amounts and websites:

  • Land of Lincoln Health (incorporated as Metropolitan Chicago Healthcare Council CO-OP), Illinois, $160,154,812
  • Compass Cooperative Health Network, Arizona, $93,313,233
  • Colorado Health Insurance Cooperative, Inc. (CHI), Colorado, $69,396,000
  • HealthyCT, Connecticut, $75,801,000
  • CoOportunity Health (formerly Midwest Members Health), Iowa and Nebraska, $112,612,100
  • Kentucky Health Care Cooperative, Kentucky, $58,831,500
  • Louisiana Health Cooperative, Inc., Louisiana, $65,040,660
  • Maine Community Health Options (MCHO), Maine, $62,100,000
  • Evergreen Health Cooperative Inc., Maryland, $65,450,900
  • Minutemen Health, Inc., Massachusetts, $88,498,080
  • Michigan Consumer’s Healthcare CO-OP, Michigan, $71,534,300
  • Montana Health Cooperative, Montana, $58,138,300
  • Hospitality Health CO-OP, Nevada, $65,925,396
  • Freelancers CO-OP of New Jersey, New Jersey, $107,213,300
  • New Mexico Health Connections, New Mexico, $70,364,500,
  • Freelancers Health Service Corporation, New York, $174,445,000
  • Coordinated Health Plans of Ohio, Inc., Ohio, $129,225,604,­ website under construction
  • Freelancers CO-OP of Oregon, Oregon, $59,487,500
  • Oregon’s Health CO-OP (Incorporated as Community Care of Oregon), Oregon, $56,656,900
  • Consumers’ Choice Health Insurance Company, South Carolina, $87,578,208
  • Community Health Alliance Mutual Insurance Company, Tennessee, $73,306,700
  • Arches Community Health Care (AHC or Arches), Utah, $85,400,303
  • Common Ground Healthcare Cooperative, Wisconsin, $56,416,600
  • Vermont Health CO-OP, Vermont,$33,837,800


CHA is Tennessee’s health insurance CO-OP. For more information, visit or call 888-415.3332. Ranee Randby may be reached directly at

Eliminating non-exchange programs in D.C.?

Witnesses debate D.C. small-group proposal
This is in the “boring-but-important” category.  There is a push to require all small group coverage in Washington D.C. to go through the SHOP exchange. – Reeve

By |May 14, 2013 | Lifehealthpro

Talk about the future of the private small-group health insurance market is heating up at the District of Columbia Council.

The council’s health committee recently held a 7-hour hearing
on the district’s Patient Protection and Affordable Care Act (PPACA)
exchange program manager, the District of Columbia Health Benefit
Exchange Authority.

The witness list included Dr. Mohammed Akhter, the exchange authority
board chairman, and member representatives from trade groups and
advocacy groups, including the District of Columbia Insurance
Federation, the District of Columbia Chamber of Commerce, Consumers
Union and AARP.

Yvette Alexander, the health committee chairperson, said she would
like to get exchange legislation considered by the council on an
emergency basis later this month.

The exchange board wants to be able to require insurers to sell all
non-grandfathered small-group coverage sold in the district through the
district’s Small Business Health Options Program (SHOP) program exchange
within a year after the exchange program starts up. Exchange
managers have said that, even if the transactions take place through
the exchange, agents and brokers could still help small groups buy the
coverage and collect commissions from the insurers that issue the

Hearing witnesses supporting the exchange-only small-group approach
argued that the D.C. market is too small to support an exchange
small-group market and a non-exchange small-group market.

Stacy Pace, a lawyer who testified, said she supports the small-group
exchange proposals, because she thinks they’ll increase her ability to
take on full-time employees and offer health benefits.

Wayne McOwen, who spoke for the insurance federation, said insurers
want to see how the exchange works before the district makes a decision
about whether all small-group business should go through the exchange.

Julie Gallion, a human resources consultant for nonprofit
organizations, said she opposes the exchange-only approach, because she
believes that most of the groups she serves that have more than 20
employees already provide platinum-level benefits and may be getting
better coverage for lower prices than they could get through the

“So much of the D.C. exchange is unknown,” Gallion said.

The D.C. council might be able to improve the exchange proposals if
it applies the “exchange only” rule only to employers with fewer than 20
employees, and if it provides a waiver program for employers that
already offer good health benefits, Gallion said.

Alexander expressed an interest in the idea of letting small
businesses over a certain size continue to buy coverage outside the
exchange system.

Some witnesses recommended that the district council consider
addressing concerns about “rate shock” by giving insurance regulators
more authority to control rate increases.

2014 HSA limits announced

The 2014 limits for HSAs have been released by the IRS in Revenue Procedure 2013-25. The HSA contribution limits and

high deductible health plan out-of-pocket maximums are up slightly over 2013. The HDHP minimum required deductibles have stayed the same.

Minimum Annual Deductibles

For 2014, the minimum annual deductible for a plan to be considered a “high deductible health plan”, or “HDHP” is still $1,250 for single coverage and $2,500 for family coverage (no change from 2013 levels).

Out-of-Pocket Maximums

The maximum out-of-pocket maximums for HDHPs for 2014 will increase to $6,350 for single coverage and $12,700 for family coverage (2013 levels are $6,250 single/ $12,500 family).

Annual Individual Contribution Limit

The maximum permitted contribution to the HSA on behalf of an individual increases slightly to $3,300 for an individual with

single coverage and $6,550 for an individual with family coverage (2013 levels are $3,250 single/ $6,450 family).

Catch-Up Contributions

For those age 55 or older, the catch-up contributions will continue to be $1,000.

In cases where the HDHP renewal date is after the beginning of the calendar year, any required changes to the annual deductible or out-of-pocket maximum may be implemented as of the next renewal date.

Rev. Proc. 2012-26 can be found at:

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Reeve Conover is a Registered Representative. Securities offered through Cambridge Investment Research, Inc., a Broker/dealer member FINRA/SPIC. Cambridge and Conover Consulting are not affiliated. Licensed in SC, NC, NY, CT, NJ, and CA. - SIPC - Brokercheck