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How does the ACA apply to LTD and STD recipients?

From Employee Benefits Advisor Magazine:

In order to avoid potential pay or play penalties, do employers need to make an offer of health plan coverage to individuals receiving payments from a short-term disability or long-term disability arrangement?

All large employers must offer health plan coverage to their full-time employees or potentially be subject to pay or play penalties. Under the ACA, a full-time employee is an individual that averages at least 30 hours of service per week, or 130 hours per month. When determining full-time status for purposes of making an offer of health plan coverage, you may use one of two measurement methods. Under the monthly measurement method, full-time status is determined on a monthly basis. Under the look-back measurement method, you determine full-time status by calculating the average hours of service during a look-back measurement period.

If you are using the monthly method, in order to avoid potential penalties you must offer health plan coverage to an employee for a month in which he or she received 130 hours of service. An employee is entitled to an hour of service for any hour in which they are paid or entitled to be paid. Payment includes STD and LTD pay, unless it is a STD or LTD arrangement paid for by the employee on an after tax basis. In other words, an employee who is credited with hours of service resulting from STD or LTD benefits will not be considered to be on an unpaid leave of absence. For example, if Bob is an ongoing employee and works 35 hours during each of the first two weeks of March and he receives STD payments resulting in 35 hours of credited service for each of the second two weeks of March, you must offer Bob coverage for the month of March because he was paid for more than 130

Under the look-back method the employee’s current hours of service are irrelevant to whether you must offer coverage or pay a penalty. After you determine that an individual is a full-time employee during a measurement period that determination will apply throughout the following stability period, regardless of the number of hours of service the employee receives during that period. If the employee receiving STD or LTD is considered full-time for the stability period in which his or her leave occurs, you must continue to offer coverage during the leave of absence. For example, if you determine during a twelve month measurement period that Bob is a full-time employee for 2016 and in 2016 Bob misses six months of work and is receiving STD payments during those six months, you must continue his offer of coverage during his leave in order to avoid potential penalties. You must also count his credited hours of service in the average for the measurement period in which he received the STD or LTD disability payments, which ultimately impacts whether he will be full-time in next year’s stability period

Why your broker won’t help you get coverage…

From insurance Business America, 2/11/16:

 

The bad news for health insurance agents continues.

Earlier this week, three of the largest insurance companies in the country announced they would not be paying broker commissions for consumers that sign up for plans after the open enrollment season deadline.

Anthem, Aetna and Cigna announced the ban on broker commissions independently, hoping the actions would dissuade people from signing up for their individual marketplace plans outside of the designated period.

Additionally, Cigna and Humana announced they will no longer pay commissions on the more expensive “gold” plans sold through the Affordable Care Act marketplaces in an effort to encourage enrollment in cheaper, higher-deductible plans at the “silver” or “bronze” level.

The actions come amid criticism from insurers on “special enrollment periods” that allow consumers to shop for insurance outside of the designated window each year. Health insurers have said that consumers are using the provisions granting a special enrollment period – such as job loss or a move – to sign up for insurance when they are sick and plan to use healthcare services.

Because they cannot bar consumers from signing up, however, they are pushing back by dissuading agents – who have been instrumental in enrolling customers to their plans – from taking the time to do so.

Agents have suffered heavy commission losses from the “Top 5” health insurer already this year, with UnitedHealth Group first scaling back and then altogether eliminating compensation for brokers.

Just weeks after UnitedHealth’s announcement, Manhattan-based startup Oscar sent a letter to agents saying it will no longer be paying brokers $14 per contract per month for individual subscribers or $26 for enrolled families as planned. Instead, all Oscar policies will generate only $6 per contract per month regardless of people in the plan.

These decisions have led agents to readjust their business models. Many have elected to no longer assist clients who select Oscar or UnitedHealth plans, while others are focusing more heavily on other markets.

Obamacare Pummels Blue Cross Blue Shield Of NC–What Can We Learn From This?

Forbes posted an article on January 30, 2016 with this title.  Very scary stuff-

According to this morning’s News and Observer, “The dramatic deterioration in Blue Cross’ ACA business is causing increasing alarm among agents and public health officials.”  In response to its bleak experience with the Obamacare exchange, the company has decided to eliminate sales commissions for agents, terminate advertising of Obamacare policies, and stop accepting applications on-line through a web link that provides insurance price quotes–all moves calculated to limited Obamacare enrollment.”

The losses incurred by Obamacare policies has caused the company to have an overall loss of $50.6 million dollars.  They have not lost money in more than a decade.  Considering that they are the largest carrier in North Carolina, and with United Healthcares’ announcement that they are likely leaving Obamacare as well, this does not bode well for individuals looking to get coverage next year.

Nor does it bode well for the United States’ ability to pay for this law, which has always been in question, and for the future of the law itself.

Read the full article here.

CIGNA banned from Medicare Sales

Cigna was temporarily banned from marketing its Medicare products to new customers, after the U.S. found deficiencies in how the health insurer ran its plans, citing widespread violations that the government said threatened patients’ health.  This means that existing customers can keep their policies but no new customers can be brought on board.

I appears this relates more to the Medicare Advantage plans than Prescription Plans.

It will remain to be seen if this impacts the pending merger with Anthem Health.

Why United healthcare is leaving the PPACA

While its not official, it is very clear that United Healthcare intends to leave the individual health marketplace next January 1.  Here is why:

  1.  Partial year insureds-  they sign up, run up a bunch of claims, and then stop paying premiums.  For example, they join, pay $400 a month for three months, have $100,000 heart surgery, and then stop paying premiums and cancel the insurance.  They are, by the way, free to do this every year!
  2. The exchanges are not attracting healthy individuals.  less than 30 percent of all enrollments are under age 34 – meaning more claims for less premiuns.
  3. Grandfathers Policies- while many states have recently allowed a big increase on these plans, as long as they exist, these (more likely healthy) people are not required to join the PPACA plans.
  4. Risk Corridor Payments- The bill promised a safety net on high claims, but paid only 12.5% of the promised amount.  That leaves a $2.5 billion shortfall – and that assumes the 12.5% ever actually gets paid (not as of today).  This is exactly the problem that put the Co-ops out of business (can you say HealthRepublic and Consumers Choice?)
  5. Pricing models- most people are buying the lowest price plans.

The only question I have is – are they the only major carrier that drops out?

 

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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.
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