Federal Waiver can help your Health Insurance plan from being cancelled
Texas Can be a Leader in Health Care by Removing Regulatory Barriers
Bureaucratic Red Tape. It’s annoying, disruptive, expensive, and in some cases, entirely preventable.
Such is the case for health care insurance coverage in the small group market… small businesses with 2 to 50 employees. Many of these businesses are served by local agents and brokers across the state, who are members of the Texas Association of Health Underwriters (TAHU).
TAHU members service the health insurance needs of employers as well as people seeking individual health insurance coverage. Every day, TAHU members work to obtain insurance for clients who are struggling to balance their desire to purchase high-quality and comprehensive health coverage with the reality of rapidly escalating medical care costs. TAHU’s primary goal is to do everything we can to promote access to affordable health insurance coverage.
Many consumers don’t know that federal law allows for states to seek “innovation waivers” from the federal healthcare law we know as Affordable Care Act (ACA) or “ObamaCare.” An innovation waiver is needed in the small group market because of a needless regulatory barrier that causes chaos for many small businesses across Texas every year when their health insurance policies are terminated at the end of the year.
In 2017, the Texas Legislature passed a law – Senate Bill 1406 – which authorizes the Texas Department of Insurance (TDI) to apply for a Section 1332 State Innovation Waiver. TAHU supports TDI applying for such a waiver of Section 1302 of the ACA – that section defines the metallic level structure of benefits for small group plans as it relates to the requirements for plans to meet a certain actuarial value (AV). Actuarial values refer to the portion of the premium dollar which is expected to be paid out directly for essential health benefits.
Under ACA, the bronze level plan refers to any plan that has a minimum of 60% actuarial value, silver equals 70%, gold equals 80%, and platinum equals 90%. The ACA initially allowed a small variation each year (referred to as “de minimus”) of plus or minus 2% at each minimal level which allowed each plan some wiggle room within the year to account for unforeseen changes on the expense side.
However, that +/-2% de minimis zone has proven to be too restrictive, resulting in more than 70% of all small group plans to fall out of the approved band range and requiring termination of those plans at year end in 2017. Indicating its acknowledgment of the significance of the problem, HHS announced an adjustment effective in January 2018 to be +2/-4% which was intended to prevent the mass cancellations and re-filing of the majority of policies every year.
However this adjustment will not provide much relief and a large portion of plans will still have to be cancelled in 2018, requiring notice to the consumer, re-filing with the regulator and time-consuming research and purchase process by the consumer every year. At this time, estimates are that up to 40% of all plans will again have to be cancelled at the end of this year due to the unintended consequences of the de minimis zone.
The de minimis zone results in a “no man’s land” of health plans that land in a 4% range above each metallic level. A plan can sell a policy with an AV of more or less than these requirements, but it can’t sell a plan that falls within this seemingly random zone. The statutorily required cancellation and reclassification of these plans causes an enormous administrative cost and hassle factor for the consumer, the insurance agent and the health plan every year. This results in additional costs and people leaving the market.
TAHU recommends that the de minimis zone be increased to plus or minus 5% in each direction. This would eliminate any gaps in the classification of metal bands of policies. It would also avoid the need for cancellation and reissuance of most of the plans on the market. This will ultimately result in lower costs, less hassle and more people buying insurance.
This solution would allow people to keep their plan if they like it. Metal distinctions will still exist and small group consumers would still have that added transparency and protection. This is a simple solution to a complicated problem.
Texas can be a leader in health care insurance policy by seeking a federal waiver. And Texas consumers will benefit by reducing confusion, administrative costs, and stripping away the bureaucratic red tape in the health insurance marketplace.
Texas Association of Health Underwriters (TAHU) is a statewide membership association representing licensed health insurance agents, brokers, consultants and benefit professionals who serve the health insurance needs of employers and individual consumers seeking health insurance. TAHU is a state affiliate of the National Association of Health Underwriters
|Texas Association of Health Underwriters Website|
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