Maryland Individual Health Insurance Plans Poised for First Rate Reduction

Maryland individuals who purchase health insurance through the state's five-year-old Affordable Care Act exchange are poised to see the first decrease in their premium costs in 2019.

Following federal approval of a program that aims to stabilize the ACA-born insurance market, Kaiser Permanente and CareFirst BlueCross BlueShield are seeking price decreases for their individual market plans. The drop follows four consecutive years of double-digit percentage hikes. Consumer advocacy groups present at a public hearing on Monday lauded insurance officials' efforts around lowering prices, and said the decreases will be a welcome relief for residents who do not qualify for employer-based coverage and must purchase plans through the state's exchange.

The effort was initiated by a piece of bipartisan legislation passed in the Maryland General Assembly earlier this year. Maryland will put hundreds of millions of dollars behind a reinsurance program, which will allow the state's lone two carriers in the individual market to see major cost savings and stave off the need to again increase premium prices in 2019.

The Maryland Insurance Administration said during the hearing it is still finalizing details with the insurers, and plans to release the final 2019 rates later this week. Pending any major adjustments, the rates will look close to this:

CareFirst's individual HMO members will see about a 22.3 percent premium decrease, and a $104 monthly price decrease compared to 2018 rates.

Kaiser's individual HMO members will see about a 6.3 percent premium decrease, about a $23 per month swing from 2018.

CareFirst's individual PPO members — they are generally the sickest and most costly members in the market overall — will see about a 17.7 percent premium increase, which would result in an average price increase of about $121 per month compared to last year's rates.

Prior to the approval of Maryland's reinsurance plan, requested 2019 rates ranged between 18 percent to more than 90 percent increases. Now, insurers are seeking an average 13.9 decrease overall.

Peter Berry, chief actuary at CareFirst, the state's dominant health insurer, said he's scanned through the company's rate trends for the past 20 years. If the decrease is cleared, he said it would mark this first time in that period that some CareFirst members would see a year-over-year decrease in premiums.

"For the first time since I’ve been looking at health insurance since 1985, I’m speechless in a very good way," said Beth Sammis, president of advocacy group Consumer Health First. "This is a good day for consumers."

Sammis said next, industry officials need to put their efforts behind making sure that Maryland individual consumers understand their new options, and actually purchase these plans for the coming year.

Insurance Commissioner Al Redmer said part of the goal of the reinsurance program is to lure consumers who have opted to go without insurance the last few years due to unaffordability back to the market. The more people who pay into in a given insurance risk pool, the greater the price stability for everyone in the pool.

In an excerpt by Morgan Eichensehr  – Reporter, Baltimore Business Journal
Sep 17, 2018, 2:53pm

Medicare Part D Creditable Coverage Certificates to Employees

It is that time of the year again when the annual Notice of Creditable Coverage as required under Medicare Part D must be distributed by Employers. The notice informs participants if the prescription drug coverage offered under the Employer's group health plan is considered "creditable" or "non-creditable" coverage. Employers who sponsor a health plan that includes prescription drug benefits must provide the annual notice to all Medicare-eligible participants. The notice will explain whether or not the prescription drug benefits offered under the group health plan are at least as good as the benefits offered under the Medicare Part D plan. The Notice of Credible Coverage must be provided: At least once a year before October 15th (the start of the annual Medicare Part D enrollment period which is from October 15th through December 7th for 2019). Whenever a Medicare-eligible employee, spouse or dependent enrolls in the employer's health plan (including Medicare eligible COBRA individuals and their dependents; Medicare eligible disabled individuals covered under the group health plan's prescription drug plan and any retirees and their dependents). Whenever there is a change in the creditable or non-creditable status of the employer's health plan prescription drug coverage. Whenever an individual requests the notice. CMS (The Centers for Medicare and Medicaid Services) has posted forms and instructions for providing this notice. Forms are available in English and Spanish. To access more information on this subject, please click on the link below: https://www.cms.gov/CreditableCoverage/ To access the notices, please click on the link below: https://www.cms.gov/Medicare/Prescription-Drug-Coverage/CreditableCoverage/CCDisclosureForm.html

Important Note for Employers! Employers must provide a disclosure to CMS on an annual basis, via an online form, reporting whether their prescription drug coverage is creditable or non-creditable. CMS requires that the disclosure be provided within: 60 days after the beginning date of the Plan Year for which the entity is providing the Disclosure to CMS Form; 30 days after the termination of the prescription drug plan; and 30 days after any change in the creditable coverage status of the prescription drug plan. Information regarding the Employer's Disclosure to CMS can be found by clicking on the link below: https://www.cms.gov/medicare/prescription-drug-coverage/creditablecoverage/ccdisclosureform.html

House Passes Bill Enhancing HSA's

H.R. 6311, renamed the Increasing Access to Lower Premium Plans and Expanding Health Savings Accounts Act and passed 242-176, would allow the ACA's premium tax credit for low and moderate earners to be applied when buying lower-premium, "catastrophic" copper plans; let people over age 30 buy copper plans; and allow copper and bronze-level individual and small-group market plans to qualify for HSA contributions. The bill also would make these modifications to tax-advantaged accounts:

• Raise HSA contributions to $6,650 for individuals and $13,300 for families, which is the combined annual limit on out-of-pocket and deductible expenses under an HSA-qualified insurance plan in 2018. Currently, for 2018, HSA contribution limits are $3,450 for individuals and $6,900 for those covered under family medical plans.

• Permit HSAs to pay for qualified medical expenses as of the start of HDHP coverage if the accounts are opened within 60 days after coverage under a HDHP begins.

• Allow working seniors participating in Medicare Part A and covered by a qualifying HDHP to contribute to an HSA.

• Permit spouses over the age of 55 to make an annual catch-up contribution (an extra $1,000) to an HSA that's linked to a health plan providing family coverage. Currently, only the account holder can make an annual catch-up contribution.

• At an employer's discretion, allow employees with an FSA or a health reimbursement arrangement (HRA) who enroll in a qualifying high-deductible health plan with an HSA to transfer balances from their FSA or HRA to the HSA. Transfers would be capped at $2,650 for individuals and $5,300 for families.

• Permit health FSA balances to be carried over to the following plan year. This rollover could not exceed three times the annual FSA contribution limit.

Excerpt from SHRM Article Dated 7-27-18 by Stephen Miller, CEBS

Congress Eliminates the Insurer Tax for 2019 but Maryland Adds It Back

Lawmakers pass bill to generate $380 million with a 2019 tax on insurers

In April 2018, Gov. Hogan also signed SB387/HB1782 which will implement a 2.75 percent tax on insurers in the state in 2019. The fee will apply to insurers in all markets (ie, not just the individual market), including Medicaid managed care insurers, and will be used, in part, to provide the state’s portion of the funding for the reinsurance program. The ACA implemented a similar fee at the federal level, although there was a moratorium on the fee in 2017. The fee does apply in 2018, but in January 2018, Congress imposed another moratorium on collection of the fee for 2019. So the idea behind SB387 is to recoup the money that insurers would have otherwise paid if Congress hadn’t suspended the provider fee for 2019.
The measure is expected to generate $380 million ($365 million, according to the state’s draft 1332 waiver) for the Maryland Health Benefit Exchange fund. The money will be used to lower premiums, but it’s only a temporary fix, described as “a Band-Aid” by Senator Thomas Middleton, who sponsored the legislation.
Using the money generated from the insurer fee, the exchange will establish and oversee a “health care access program” that will be “designed to mitigate the impact of high-risk individuals on rates for health benefit plans in the individual market in the state, both inside and outside the exchange.” The money will be used to provide reinsurance and additional premium subsidies, contingent on approval of a 1332 waiver from the federal government.
SB387/HB1782 also limits short-term plans to no more than three months in duration, and prevents them from being renewed at the end of the policy term. The federal government has proposed regulatory reforms that would return to the definition of short-term plans that was used before 2017 (ie, a plan that lasts no more than 364 days). But states can implement more restrictive rules. State-based restrictions on short-term plans will be especially important starting in 2019, when there will no longer be a federal individual mandate penalty for people who rely on short-term insurance.
SB387/HB1782 also places restrictions on association health plans (which the Trump Administration is working to expand), clarifying that association health plans sold in the state will be subject to state regulations.

Source: https://www.healthinsurance.org/maryland-state-health-insurance-exchange/#premiumtax

Trump Administration releases final rule on Association Health plans

This afternoon the Trump Administration released a final rule regarding Association Health Plans as well as a fact sheet on the new rule. The rule was in response to an executive order issued by President Trump on October 12 directing federal agencies to expand the availability of AHPs, short-term limited duration insurance policies and Health Reimbursement Arrangements. The proposal calls for a revision to ERISA in order to redefine "employer" to allow more groups to qualify as associations and treating health coverage sponsored by an employer association as a single group health plan that would not be subject to the ACA's essential health benefits.
 

The final rule does not differ much from the proposed rule that came out in January, and the Congressional Budget Office now estimates that 4 million Americans, including 400,000 who otherwise would lack insurance, will join an AHP by 2023.
 

The goal of the rule is to provide small-business owners, employees of small businesses and family members of working owners/employees more coverage options, more affordable pricing, enhanced ability to self-insure, less regulatory burden and complexity, and reduced administrative costs.
 

The rule does this by eliminating the requirement that an association exist for a bona fide purpose other than offering health coverage. To qualify under the rule, employers would need to be either in the same trade, industry, line of business or profession, or have a principal place of business within a region that does not exceed the boundaries of the same state or the same metropolitan area. Therefore, AHPs could cross state lines if the metropolitan area includes more than one state. These plans would be subject to state regulation of insurance and plans across multiple states could be subject to varying rules. The Department of Labor has committed to continuing to partner with states to protect consumers and enforce state regulations.
 

Under the final rule, self-employed individuals, sole proprietors and common-law employees would be permitted to join an AHP. These individuals would be treated as an employee of the trade or business for purposes of being covered by the AHP. The proposal includes non-discrimination protections to avoid potential of adverse selection. It would require that the association not restrict membership based on any health factor, as defined in the HIPAA/ACA health nondiscrimination rules. These include health status, medical condition (including both physical and mental illnesses), claims experience, receipt of healthcare, medical history, genetic information, evidence of insurability, and disability.
 

The final rule has staggered dates for implementation:
 

· All associations (new or existing) may establish a fully insured AHP on September 1, 2018.
· Existing associations that sponsored an AHP on or before the date the final rule was published may establish a self-funded AHP on January 1, 2019.
· All other associations (new or existing) may establish a self-funded AHP on April 1, 2019.
 

From NAHU(National Association of Health Underwriters)

ACA’s Affordability Threshold Rises in 2019

Applicable Large Employers (ALE) should not overlook the Affordable Care Act's (ACA's) annual inflation-adjusted shift in cost-sharing limits for group health plan coverage, as they could face steep penalties for failing to provide affordable coverage under the ACA's shared-responsibility provisions.

On May 21, the IRS announced in Revenue Procedure 2018-34 the 2019 shared-responsibility affordability percentage. Based on the ACA's affordability standard as adjusted for inflation, health coverage will satisfy the requirement to be affordable if the lowest-cost self-only coverage option available to employees does not exceed 9.86 percent of an employee's household income, up from 9.56 percent in 2018.

For 2019 calendar-year plans using the federal poverty level (FPL) safe harbor to determine affordability, an employee's premium payment can't exceed $99.75 per month, up from $96.08 per month in 2018.


An Annual Adjustment

The affordability standard is the highest percentage of household income an employee can be required to pay for monthly plan premiums, based on the least-expensive employer-sponsored plan offered that meets the ACA's minimum essential coverage requirements.

Employers should consider the affordability standard in developing their 2019 health care plan cost-sharing strategies, since pricing at least one plan option below the threshold will avoid triggering employer-shared responsibility penalties under Section 4980H(b), which the ACA added to the tax code, said Ryan Moulder, a Los Angeles-based partner at Health Care Attorneys PC and general counsel at Accord Systems LLC, an ACA compliance software firm.

"An employer is in control as to whether the plan it is offering meets the affordability threshold," Moulder explained. "The significant increase [for 2019] compared to 2018 provides an employer that is toeing the line of the affordability threshold an opportunity to increase the price of its health insurance while continuing to provide affordable coverage."

Excerpt from SHRM article dated May 30, 2018 by Stephen Miller, CEBS

What to do if the IRS sends an ACA non-compliance notice in error

The Internal Revenue Service is beginning to send out Employer Shared Responsibility Payment notices to employers that it believes failed to comply with the ACA coverage requirements in 2015 calendar year.

Some employers receiving these notices actually complied with the ACA requirements in 2015, but the IRS received inaccurate or incomplete information and has thus incorrectly identified these employers as failing to satisfy the ACA coverage requirements.

If an employer receives an ESRP notice, the employer must dispute the IRS penalty within 30 days of the date of the notice.

We have seen employers receiving very large fines for periods in which they actually complied with the ACA coverage requirements. Accordingly, all employers that were subject to the ACA coverage requirements in 2015 should review their 2015 ACA filings (on Form 1094-C) to determine who at the company will receive the ESRP notice from the IRS; and make sure the contact address is correct. For reference, see Part 1; Lines 1 thru 8 of Form 1094-C).

If any of the contact information on the Form 1094-C is inaccurate or if the contact person is no longer employed by the company, the employer should consider updating its contact information with the IRS.

Bret Busacker
Busacker is a partner at Holland & Hart LLP.