Source: Kaiser Health News
If you own a restaurant, plumbing company or other small business, you may be intrigued by the expected expansion of association health plans under a new rule that got a stamp of approval from the Trump administration last week.
Will they meet your needs? Save you money?
Those are important questions for small businesses and self-employed people who struggle to buy affordable insurance for themselves and their workers.
Federal officials said the new rule would help level the playing field for these businesses, giving the kind of flexibility on benefits and leverage to negotiate with providers that large companies may have.
When announcing the policy on June 19, President Donald Trump said it would “result in very low prices, much more choice, much more freedom, including in many cases new opportunities to purchase health insurance. You’ll be able to do this across state lines.”
But detractors say the plans may not provide the full protection that workers need, plus the changes likely will drive up costs in the regular individual and small-group markets, where people who need comprehensive coverage would be forced to seek insurance.
Critics also point to “the long history of fraud and scams and insolvencies” for these plans, said Timothy Jost, emeritus professor of law at Washington and Lee University in Virginia.
“I think consumers are going to be in for a pretty wild ride,” Jost said.
Here are some details about what association health plans could mean for you.
Q: What are association health plans and what did the administration change?
Association health plans (sometimes called AHPs) allow small businesses to band together to buy insurance. Some plans have been in place for years, and those plans can continue to operate after the new rule takes effect. But the Trump administration’s regulation loosens the rules for additional plans to enter the market, allowing more small businesses, including individuals who work for themselves, to join these plans.
In contrast to earlier AHPs that generally required the association’s members to share an economic or other common purpose beyond enrolling in health insurance, new AHP members can be connected by geography alone or by business and professional interests. And under the new rule, providing members with insurance can be the main purpose of the association health plans.
Q: When will the plans be available?The new rule will be phased in starting in September. It’s uncertain how soon after that date plans will be offered.
Q: The ACA added some popular protections, including requiring plans to cover preventive care without charging consumers anything out-of-pocket and allowing people to keep their kids on their plan until they reach age 26. How will these provisions be handled under association health plans?
Those provisions still apply to association health plans.
Q: How are preexisting medical conditions handled in the new rule?
Association health plans that are established under the new rule won’t be allowed to discriminate against individuals if they’re sick. But that doesn’t necessarily mean that people with preexisting medical conditions won’t encounter roadblocks in finding affordable, comprehensive coverage.
In the final rule, the administration lays out a variety of circumstances that could affect affordability. For example, an association plan could charge companies that employ construction workers higher premiums than firms that are in the hospitality business. The rule also allows plans to charge different rates based on gender, age and location.
Q: Will the plans cover a broad range of benefits?
It’s unclear. Association health plans are intended to make health insurance more affordable for small businesses in part by giving them the same kind of flexibility that large companies have in choosing which benefits they offer.
Flexibility may have a downside, though. AHP insurers don’t have to include the 10 “essential health benefits” that are required under the health law for plans in the individual and small-group market, typically companies with fewer than 50 employees. They might exclude coverage for prescription drugs or rehab services, for example.
Even though they’re not required to, large companies typically provide comprehensive benefits to compete for top talent. Smaller companies with fewer resources may find it tougher to afford generous employee perks.
Association health plans that cover employers with at least 15 employees will have to offer maternity coverage — one of the ACA’s essential health benefits — under the new rule. But smaller employers could skip that requirement.
The plans have to abide by the annual maximum out-of-pocket spending limitfor the essential health benefits they decide to cover, and they can’t impose annual or lifetime limits on coverage of those benefits.
But since plans don’t have to cover all the essential health benefits, those protections aren’t as meaningful, some say.
“It waters down the out-of-pocket cap protection if you don’t have essential health benefit coverage requirements,” said Sarah Lueck, a senior policy analyst at the Center on Budget and Policy Priorities.
Q: How could premiums be affected?
The new rule allows health insurers to use several factors that may provide clues that people are likely to be expensive to insure, including gender, age, industry and geography, when setting rates for employers. A company with older workers who are more likely to have chronic conditions, for example, could face higher rates — as might one that employs lots of women, who might rack up charges for maternity care. In addition, individuals within a company could be charged different premiums based on their occupation or other factors not related to their health status if the employer chooses to do so, Jost said.
Q: Who’s likely to benefit under the rule?
Companies that have relatively young, healthy employees could fare well.
“For young men in certain low-risk industries, who are currently healthy, they’re likely to encounter a relatively low premium,” said Justin Giovannelli, an associate research professor at Georgetown University’s Center on Health Insurance Reforms.
The Blue Cross Blue Shield Association, when filing comments on the proposed rule, said association health plan premiums for women in their early 30s might be more than 30 percent higher than rates under regular individual and small-group rules. It also estimated that rates for young men of a similar age could be more than 40 percent lower than ACA rates.
Similarly, companies in some industries could see lower premiums than others, according to BCBS. Rates for engineering companies could be about 9 percent lower than what insurers would charge on the individual and small-group market, for example, while those for the taxicab industry could be nearly 15 percent higher.
Q: What if an employer offers a really skimpy plan? Are workers stuck with it?
That depends. If an employer offers coverage that doesn’t meet minimum standards, workers can shop for subsidized health insurance on the marketplace, and the employer may face penalties. (Companies with fewer than 50 workers are exempt from penalties, however.) In 2018, that means that single coverage can’t cost workers more than 9.56 percent of their entire household income and plans have to pay at least 60 percent of the cost of covered benefits. The same rules apply if an employer offers coverage through an association health plan.
Some policy experts say they’re worried that people who work for small businesses may get burned if their companies, which do not offer any plans now, start offering coverage through an association health plan. The new plan may be skimpier and more expensive than the comprehensive coverage they’ve been getting on the ACA exchange.
“Even though the AHP coverage might be skimpy, employees would no longer be eligible for subsidized coverage on the exchange,” said Katie Keith, a health policy consultant who writes frequently about health law.
Source: New York Times
The Trump administration issued a sweeping new rule on Tuesday to make it easier for small businesses to band together and set up health insurance plans that skirt many requirements of the Affordable Care Act, offering lower costs but also fewer benefits.
President Trump, speaking at a 75th anniversary celebration of the National Federation of Independent Business, said the new rule would allow small businesses to “escape some of Obamacare’s most burdensome mandates” by creating new entities known as association health plans.
“You’re going to save massive amounts of money and have much better health care,” Mr. Trump said to cheers from the audience of small-business owners. “It’s going to cost you much less.”
As a result, he said, “you’re going to save a fortune.”
Labor Secretary Alexander Acosta said the rule would give small businesses access to insurance options like those available to large companies, starting as soon as Sept. 1. Millions of people could benefit, he said.
“As the cost of insurance for small businesses has been increasing,” Mr. Acosta said, “the percentage of small businesses offering health care coverage has been dropping substantially. Today the Trump administration helps level the playing field between large companies and small businesses.”
The new entities would be exempt from many of the consumer-protection mandates in the Affordable Care Act. They may not have to provide certain “essential health benefits” like mental health care, emergency services, maternity and newborn care, and prescription drugs.
Labor Department officials said that association health plans would not be able to deny coverage or charge higher rates to individual employees with pre-existing medical conditions.
Still, consumer groups and many state officials have opposed the push for association health plans. They say the new plans will draw healthy people out of the Affordable Care Act marketplace, driving up costs for those who need comprehensive insurance.
Senator Chuck Schumer of New York, the Democratic leader, said on Tuesday that the new rule would open the door to “junk health insurance.” It is, he said, “the latest act of sabotage of our health care system by the Trump administration.”
Trump administration officials said premiums were already soaring because of flaws inherent in the Affordable Care Act, President Barack Obama’s signature domestic achievement.
The new final rule carries out an executive order signed by Mr. Trump on Oct. 12.
The rule will allow small-business owners, their employees, sole proprietors and other self-employed people to join together to buy or provide insurance in the large-group market through association health plans.
Because they will be exempt from many requirements of the 2010 health law, Mr. Trump has said, the association health plans can “provide more affordable health insurance options to many Americans, including hourly wage earners, farmers, and the employees of small businesses and entrepreneurs that fuel economic growth.”
The new health plans might, for example, appeal to restaurant workers, real estate agents, dry cleaners, florists, plumbers and painters, officials said.
Under the rule, Mr. Acosta said, “business associations from city chambers of commerce to nationwide industry groups can offer health care insurance to the employees of their employer members through the large-group market.”
Trump administration officials said that small businesses and self-employed people in the same industry, state or region could band together and obtain health coverage as if they were a single large employer — even if they had no other connections to one another.
Until now, the Labor Department has required a much greater “commonality of interest” among small businesses that wanted to be treated as a large group when buying insurance. To qualify under prior rules, small businesses generally had to have some purpose “unrelated to the provision of benefits.” And the government often looked at the size of each company, rather than the group as a whole, to determine if it was a large or small employer.
The new rule takes a step toward fulfilling Mr. Trump’s campaign promise to make it easier for companies to sell insurance across state lines.
“For the first time ever,” Mr. Trump said on Tuesday, “sole proprietors will be able to come together and buy lower-cost group insurance instead of getting ripped off by this disaster that we all know as Obamacare. These actions will result in very low prices, much more choice, much more freedom, including in many cases new opportunities to purchase health insurance. You’ll be able to do this across state lines.”
Critics said the new plans would cost less because they would provide fewer benefits.
Republicans in Congress have been trying for two decades to promote association health plans through legislation. Now the Trump administration is using its regulatory authority to accomplish what Congress could not.
Trade groups like the National Restaurant Association, the National Retail Federation and the National Federation of Independent Business have supported association health plans and could potentially sponsor them.
But consumer groups, state officials and Blue Cross Blue Shield plans have expressed concern. They say association health plans will tend to attract employers with younger, healthier workers, leaving behind sicker people in more comprehensive, more expensive plans that fully comply with the Affordable Care Act.
People with serious illnesses like cancer could face “ever-increasing premiums for comprehensive coverage,” said Chris Hansen, the president of the lobbying arm of the American Cancer Society.
Similar small-business health plans have a history of fraud and abuse that have left employers and employees with hundreds of millions in unpaid medical bills. The problems are described in dozens of court cases and enforcement actions taken over more than a decade by federal and state officials.
In past years, the Labor Department said, it has identified many “unscrupulous promoters who sell the promise of inexpensive health benefit insurance, but default on their obligations.”
The Coalition Against Insurance Fraud, representing insurers, consumer groups and law enforcement officials, met with Trump administration officials last month and emphasized the need for states to have a strong role in combating possible fraud by association health plans.
“Tens of thousands of innocent consumers and small businesses were victimized by a surge of fake health insurance plans that swept across the country in the early 2000s,” James Quiggle, a spokesman for the coalition, said on Tuesday. “We have to avoid a repeat of that sorry history.”
In another move this summer, Mr. Trump is expected to issue a final rule expanding access to “short-term, limited-duration” insurance, allowing such policies to run for 364 days, instead of the current limit of three months.
These plans — originally intended for people between jobs — are cheaper than comprehensive insurance, provide fewer benefits and would also be exempt from many requirements of the Affordable Care Act.
2019 HSA and HDHP Limits ReleasedThe Internal Revenue Service (IRS) has announced the 2019 inflation-adjusted amounts for Health Savings Accounts (HSAs) and high deductible health plans (HDHPs).
2019 HSA Contribution Limits
For calendar year 2019, the annual limit on HSA contributions for an individual with self-only coverage under an HDHP will be $3,500, up from $3,450 for 2018. The annual limit on HSA contributions for an individual with family coverage under an HDHP will be $7,000, up from $6,900 for 2018.
2019 HDHP Amounts
For calendar year 2019, an HDHP will be defined as a health plan with an annual deductible that is not less than $1,350 for self-only coverage or$2,700 for family coverage, and annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) that do not exceed $6,750 for self-only coverage or $13,500 for family coverage.
Click here to read the IRS announcement.
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