Insurance firms offer 1-year rates reprieve

Plans extend coverage till end of ’14

Health-insurance companies are offering options to Arkansans that put off for one year the higher premiums that some with individual health plans will face under the 2010 federal healthcare overhaul law.

Arkansas Blue Cross and Blue Shield, United Healthcare and QualChoice Health Insurance - which collectively control more than 90 percent of the individual insurance market in Arkansas - will each allow customers to renew their individual policies on Dec. 31 of this year.

That will allow the customers to stay through Dec. 30, 2014, in plans that do not meet new requirements that kick in Jan. 1.

In addition, more than half of the more than 90,000 people covered by full-year Blue Cross individual insurance plans were enrolled before March 23, 2010, when President Barack Obama signed the Patient Protection and Affordable Care Act.

Those plans are considered “grandfathered,” meaning they can be renewed after Jan. 1 without being modified to meet the Affordable Care Act requirements.

Blue Cross, which controls the largest share of the market, also is offering another option: a 364-day plan that will not have to meet the overhaul law’s requirements, even for policies issued after Jan. 1, because it’s a “limited duration” policy.

The Arkansas Blue Cross website describes the plan, Essential Blue Freedom, as providing “comprehensive coverage with benefits that are not dictated by the new health care law.”

The plan does not meet the requirement for an individual to have coverage under the Affordable Care Act, meaning that those who sign up will still be subject to a penalty next year.

Even with the penalty, Essential Blue Freedom will be cheaper for some people than plans that do meet the Affordable Care Act requirements, Arkansas Blue Cross spokesman Max Greenwood said.

“What people have to weigh is whether or not the cost of the policy plus the penalty would be more affordable” than a plan that meets the Affordable Care Act requirements, she said.

REGARDING PREMIUMS

The premiums have not yet been announced for Affordable Care Act-compliant insurance plans that will be offered in Arkansas for coverage starting Jan. 1, but insurance company representatives say that for some people they will be higher than the premiums for policies that are available now.

That’s because insurance companies will not be able to turn down people who have costly medical conditions or charge them more. Companies also cannot charge women higher premiums than men. And the companies will be limited in how much more they can charge older people than younger people.

The changes are likely to mean lower premiums for some people - especially those who are older and have high medical bills - and higher premiums for others.

Insurance plans also will be required to cover 10 “essential health benefits,” including some that most insurance policies don’t cover now.

However, those with incomes below 400 percent of the poverty level - $45,960 for an individual or $94,200 for a family of four - will be eligible for subsidies to cover all or part of the premiums if they sign up for coverage on the exchange.

Under the expansion of the state’s Medicaid program approved by the state Legislature this year, adults with incomes of up to 138 percent of the poverty level will be able to sign up for a plan on the exchange and have their premiums paid by Medicaid.

That income threshold is $15,860 for an individual or $32,500 for a family of four.

People can enroll in the Medicaid-funded plans throughout the year starting Oct. 1. Enrollment in other individual insurance plans for coverage next year starting Jan. 1 or later can take place only during an enrollment period from Oct. 1 through March 31 or after certain events, such as the loss of a job.

Greenwood said Essential Blue Freedom is designed for those who need coverage only for a short period, who will not qualify for subsidies or who “will benefit from a lower-priced plan because they can pass medical underwriting.”

Unlike those who sign up for a full-year plan, she said, those who enroll in Essential Blue Freedom will have to reapply for coverage at the end of 364 days and could be turned down, charged a higher rate or have a medical condition excluded from coverage as a result of their health status.

A brochure for the plan does not mention that it will not meet the Affordable Care Act’s requirement to have coverage. Greenwood said customers are warned about the penalty when they apply.

THE OFFERINGS

For 2014, the penalty is $95 or 1 percent of an individual’s income, whichever is greater.

The penalties do not apply to those who would have to pay more than 8 percent of their incomes to obtain coverage from their employers or through the insurance exchange.

In July, the first month Blue Cross began offering the plan, 163 people applied for coverage, Greenwood said.

Blue Cross plans issued after the federal law was signed cannot be renewed after Jan. 1 unless they are amended to meet the law’s requirements. The company will terminate the plans Dec. 31, 2014, Greenwood said.

In the meantime, people enrolled in the plans will not be subject to a penalty next year. The company plans to stop marketing the plans Oct. 1, when enrollment on Arkansas’ health insurance exchange will begin.

Blue Cross, the national Blue Cross and Blue Shield Association, QualChoice, and Centene Insurance Co.’s Arkansas Health and Wellness Solutions, formerly known as Celtic Insurance Co., have applied to offer plans on the exchange.

Greenwood said Blue Cross has asked its customers to call the company for a “health insurance checkup” to help them evaluate their options, including whether they would qualify for a subsidy on the exchange.

“There’s not just a black or white answer because there are so many variables,” Greenwood said.

Little Rock-based Qual-Choice notified the Arkansas Insurance Department in July that it will renew customers’ plans on Dec. 31 for a one year period. Those plans do not provide all the benefits required by the Affordable Care Act for plans issued in 2014, but do satisfy the requirement for individuals to have coverage, Chief Executive Officer Mike Stock said.

People will be able to sign up for those plans through Dec. 1, he said.

“We’re sort of anticipating that there could be a potential rush toward the end of the year,” Stock said.

The company currently has short-term plans that provide coverage for up to 180 days. He said the company may consider offering short-term plans that provide coverage for longer periods next year.

United HealthCare notified the Insurance Department in July that it was establishing a plan year beginning at 12:01 a.m. on Dec. 31 and ending at 12:01 a.m on Dec. 31, 2014.

On its website, the Minnetonka, Minn., company warns that the requirements taking effect next year “may result in higher premium costs” and that subsidies offered on the exchange “may not be enough to allow some to afford a guarantee issue health insurance plan.”

A United HealthCare spokesman didn’t return a call seeking comment Friday.

COVERAGE PERIODS

Sabrina Corlette, a senior research fellow at the Georgetown University Health Policy Institute’s Center on Health Insurance Reforms, said she’s concerned that insurance companies are marketing policies that do not meet the Affordable Care Act’s requirements more aggressively to younger, healthier people.

If only older, less healthy people sign up for plans in the exchange, “that will be reflected in premiums in 2015,” she said.

“Everybody’s going to be paying a higher price because there are fewer people to spread those costs around,” she said.

The center says on its website that it strives to improve access to affordable and adequate health insurance by providing balanced, evidence-based research, analysis and strategic advice.

Some states have restricted companies from offering coverage extending into 2014 that does not meet the Affordable Care Act requirements.

In a bulletin issued April 29, Illinois Department of Insurance Director Andrew Boron said he would not approve requests from insurance companies to change plan years so that they would renew at the end of this year.

A spokesman said in a statement that the Illinois department supports the Affordable Care Act and does not want consumers to “fall victim to any insurance carriers that attempt to shift plans to delay terms as set forth by the federal law.”

The Oregon Department of Business and Consumer Services’ Insurance Division has prohibited companies from issuing plans that offer coverage starting this year and continuing past March 31, 2014. Instead, plans that offer coverage past March 31 must start coverage on Jan. 1 or later, meaning they would have to meet the Affordable Care Act requirements.

Insurance Commissioner Laura Cali said the department wanted a “level playing field” for plans offered for coverage in 2014.

“I think it had a positive effect in terms of removing uncertainty for insurance companies,” Cali said.

Arkansas Deputy Insurance Commissioner Dan Honey said Arkansas officials felt that allowing consumers to keep their plans issued in 2013 through the end of next year was a “consumer-friendly” approach, allowing some people to keep lower rates for one more year.

The department is requiring insurance companies to tell customers about subsidized coverage that will be available on the exchange, he said.

“I think there will be some that will choose to stay on their policy, but I don’t think it will be a majority by any means,” Honey said.

Blue Cross and QualChoice are allowing companies with fewer than 50 employees to renew employer-sponsored insurance plans in December, allowing the companies to put off requirements for those plans that take effect Jan. 1. People with employer-sponsored coverage will not have to pay a penalty under the health care law.

Lynn Quincy, a senior health policy analyst with Consumers Union, the nonprofit publisher of Consumer Reports, said people with individual insurance plans should investigate all their options, including whether they will qualify for subsidies on the exchange.

In addition to comparing premiums, consumers should look at whether a plan will cover their health-care expenses, she said.

“It costs you money at the other end if there are big holes,” she said.

Front Section, Pages 1 on 09/01/2013

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