employers

THE LAW OF DISPROPORTIONATE COSTS: SMALL NUMBER OF EMPLOYEES ACCOUNT FOR LION’S SHARE OF GROUP HEALTH PLAN MEDICAL COSTS

There’s plenty of cost related analytics available to support the disproportionate cost premise that medical expenses are highly concentrated among a very small proportion of enrolled employees.  These highlights, for example, from a Agency for Healthcare Research and Policy (AHRQ) are pretty telling:

  • 1 % of the population accounts for 21.4 % of total health care expenditures nationally
  • 5 % of the population account for 49.9 % of total expenditures
  • 10 % of accounts for 65.6 % of all medical costs

EMPLOYER REIMBURSEMENT OF INDIVIDUAL HEALTHPLAN PREMIUMS REMAINS A BANNED PRACTICE UNDER ACA

While this was more of a hot topic when the full monty of healthcare reform was implemented back in 2014, some employers perhaps unaware of the turmoil in the individual marketplace still ask about reimbursing employees for individual health insurance policies.

The IRS, the Department of Labor and Health and Human Services have all released several directives and guidelines that pretty clearly prohibit the practice. The most recent was issued in December 2015 (n-15-17).

Definition of Predicament: People Who Don’t Have Access to Employer Coverage, Aren’t Medicare Eligible, and Don’t Qualify for Subsidies

Yes, this is a bit anecdotal. Nevertheless, I think it’s  worth reporting and some may find it interesting.

First, recently our team managed the annual open enrollment process for the group health plan of one of our employer clients. After a quick but thoughtful evaluation of options, one employee who was previously covered by an individual market policy opted to enroll on the employer’s group plan (family coverage) and terminate coverage under the individual market plan. Both the individual plan and the group plan were Qualified Health Plans (QHP) under ACA. The plans had similar benefits. And, they were underwritten by the same large insurance carrier.

Savings?

$600 a month in gross premium. That’s quite a spread.  Add in the employer contribution and the savings to the employee were even greater.

The HHS Move to Curtail the Availability of Short Term Health Coverage Will Hurt Consumers In Need of an Affordable Bridge To Other Coverage……

………Like Medicare or Other Employer-Sponsored Coverage.

Yesterday the Obama Administration and HHS announced they were significantly curtailing the availability and use of short-term health insurance.

Their reasons? Not exactly sure.

Maybe it’s due to the myriad of current issues in the individual market – rising rates, carriers pulling out, and actuarially not enough covered lives (especially healthy people) – and the need to get more healthy people to buy individual policies. Take away options and hopefully it’ll drive more people to buy on the exchange.

Maybe, it’s a shot at UnitedHealthcare (UHC is one of the main providers of short –term or temporary coverage). Retribution, possibly, for UHC pulling out of the exchanges?

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