Michael Parr is an employee benefits agent with Northwest Insurance Agency Inc., a division of George Petersen Insurance Agency in Santa Rosa. He will be featured on a broker panel at the North Bay Business Journal’s Health Care Conference.
Q: Generally speaking, what is the feeling among your clients regarding employee benefits? Have many struggled with the adaptation of the Affordable Care Act?
Mr. Parr: There has been some frustration with the added administration of Employee Benefits programs with the Affordable Care Act employer responsibilities. As always, it is important to work with a benefits broker or agency that provides the necessary information and assistance to make sure that employers are compliant with the bill and not subject to potential penalties.
There is also concern regarding all of the plan changes taking place — along with being fearful of significant renewal rate increases — in 2014.
Q: What impact does the decrease in Medi-Cal and Medicare reimbursements scheduled for Jan. 1 have on non-government coverage? Will it lead to cost shifting by carriers onto private plans?
There are a number of new Medicare benefits with the ACA, including the following:
- Medicare will pay for an annual checkup.
- Deductibles and co-payments for many preventive services and screenings (colonoscopies, mammograms and bone mass density tests, etc.) will be eliminated.
- If you are in the prescription drug “donut hole” and you are not getting other drug subsidies, you may qualify for a $250 rebate.
- Eventually (in 2019), the donut hole will be eliminated.
However, if you are in conventional Medicare, you can expect that reduced spending will average $290 in 2014. If you are in a Medicare Advantage plan, you can expect more severe cuts: $1,267 in 2014. If you are able to retain your coverage, these cuts most likely will lead to increases in premiums or reductions in benefits. Note that these cuts are on top of a planned 30 percent cut in doctor fees that are already part of current law, but that Congress has been postponing for the past nine years.
In addition, 27 million seniors will pay higher premiums for the Medicare Part D Plan to allow the donut hole to be closed. Only 4 million seniors are thought to reach the donut hole annually, but fewer than 1 million will surpass the threshold and receive the full benefit of closing the donut hole. I expect premiums to rise to pay for this benefit.
Regarding Medi-Cal, since the Federal Government is still paying the majority of Medi-Cal costs, I do not see the issue of decreased or low Medi-Cal reimbursements having a significant impact on private carrier plan premiums.
Q: Many small and mid-sized employers made a rush to renew health plans early this year, so as to have their plans roll over for another year and thus avoiding significant plan design changes. What is the practical impact of this, and what should those employers now expect in the coming year?
Mr. Parr: Not a great deal of impact really. The difficulty and challenge will be for the group health insurance carriers, brokers, and agencies that most likely will now have to renew the large majority of their small group clients (two-50 employees) by Dec. 1, 2014 to new plans that are different than an employer’s current plan.
Q: In your mind, has Covered California’ SHOP program been an adequate option for small business searching for employee coverage? Is so, why and if not, why not? What sort of improvements could be made?
Mr. Parr: The only advantage I can see for a small business to obtain Group Health Insurance through Covered California’s SHOP is that it is the only way in 2014 – and going forward — for a smaller company to obtain the Small Business Tax Credit. Other than that, there will be more plans available outside of the SHOP, and companies can fully utilize the experience and service of a broker or agency vs. a third-party administrator contracted by the state of California for their Group Health Insurance coverage. Also, there have been well-documented technical problems with the online enrollment process through the Federal Government Health Insurance web site and SHOP that has resulted in employer frustration — and data accuracy and security suspicion as well.
In regards to improvements, I believe there needs to be an effective feedback mechanism to the state and the website administrators on the SHOP website to provide suggestions and recommendations to improve the ease of use of the site, and to make the enrollment process as easy as possible.
Q: Brokers across the state have been racing to be certified by Covered California. How has this impacted your business?
Mr. Parr: Not that significantly. As agents and brokers, we are required to complete a certain number of Continuing Education credits each year to retain our license, and the Covered California training and certification has really been an add-on to existing training requirements. There is an all-day class and an exam that must be passed to allow an agent or broker to be certified to sell Group and Individual Health Insurance plans through the Covered California web site.
Several brokers have said that as a result of the Affordable Care Act, along with a general increase in professional services consolidation, insurance agents and brokers will likely have to move more into the HR realm to augment their employee benefits business. Do you agree with this?
Mr. Parr: I don’t actually. I believe there is as strong a need for Employee Benefits Brokers as ever. Employers need a contact to make sure they are in compliance with the Affordable Care Act, advise on the possible positive and negative aspects of renewing early, and assist with the myriad of changes taking place with the Group Health Insurance marketplace in 2014 and beyond. Specifically, determining if a company is in fact a large group (50-plus full-time equivalent employees) and whether they may be subject to fines/penalties regarding the Employer Mandate going into effect Jan. 1, 2015.
A lot has been said about “narrow” or “skinny” networks. Will such networks continue and will it help employers with health care costs?
Mr. Parr: I do believe they will continue. To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients through these “narrow” or “skinny” networks. However, there is significant concern that although these plans can provide consumers with more affordable health insurance coverage, will there be enough hospitals, care facilities, and doctors in these networks to serve the membership? Lower cost is good, but there may be a problem with providing adequate, timely health care.
Across Southern California, Health Net typically has the lowest rates, with monthly premiums as much as $100 cheaper than the closest competitor in some cases. That will make it a popular choice among some of the 1.4 million Californians expected to purchase coverage in the state exchange next year.
But Health Net also has the fewest doctors, less than half what some other companies are offering in Southern California, according to a Los Angeles Times analysis of insurance data.
In Los Angeles County, for instance, Health Net customers in the state exchange would be limited to 2,316 primary-care doctors and specialists. That’s less than a third of the doctors Health Net offers to workers on employer plans. In San Diego, there are only 204 primary-care doctors to serve Health Net patients.
Other major insurers have pared their list of medical providers too, but not to Health Net’s degree. Statewide, Blue Shield of California says exchange customers will be restricted to about 50 percent of its regular physician network.
In response, California officials have been pressing Health Net and other insurers to add more doctors since companies filed their initial rosters in May. The state exchange, Covered California, says it will monitor enrollment closely and it’s prepared to step in if problems arise.
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