Californians with Individual Health Coverage Spent Significantly Less on Healthcare

California residents who bought insurance through the individual market spent significantly less on health care in 2014 than they did the year before. The year, 2014 marks the first year of the Affordable Care Act (ACA). The report by the California HealthCare Foundation reveals that median out-of-pocket spending for families with individual coverage dropped from $7,345 in 2013 to $4,893 in 2014. Thirty-five percent of Californians with individual coverage said that health care costs ate up more than 10% of their household income compared to 43% in 2013. The reduced spending is likely due to premium tax credits and cost-sharing subsidies available for the first time in 2014 through Covered California. Spending declines were more pronounced in California than in the rest of the country. In fact, it’s likely California’s spending declines helped pull down the national averages.

Employment-based Health Coverage Holds Steady

Although health insurance coverage rates are rising, the percentage of Americans with employment-based coverage remains unchanged, according to a report by the Employee Benefits Research Institute (EBRI). In 2014, 88% of non-elderly people people were covered, up from 84.6% in 2013. Twelve percent of people under 65 were uninsured in 2014, down from 15% in 2013. Among the entire population, 13% had individual coverage in 2014 compared to 9% in 2013. There was no change in the percentage of the non-elderly population with coverage through an employment-based health plan. More people were covered by employment-based coverage in 2014 than in 2013 because of population growth, but the percentage with employment-based health coverage was unchanged at 62%.

How Health Coverage Differs Between Small Firms and Large Firms

HealthcareBalance

Small and large employers vary substantially in health insurance offer rates and costs, according to a study by the Kaiser Family Foundation. Small employers are less likely to offer coverage. Also, workers at small firms have higher cost sharing. (The study defines small employers as those with three to 199 workers and large employers as those with 200 or more.)

The smallest employers (three to nine workers) are less than half as likely as are large employers to offer health coverage. While family premiums are less expensive at small firms, covered workers face higher premium contributions and higher higher deductibles. The study reveals the following:

Offer Rates
  • 56% of small employers offer health insurance to at least some employees, compared to 98% of large employers.
  • 47% of very small employers (three to nine workers) offer health insurance.
  • 41% of small employers did not offer coverage because of the cost of health insurance.
  • 18% of small employers offer health benefits to part-time workers compared to 35% of  large employers.
  • 3% of small employers offer health benefits to temporary workers compared to 11% of large employers.
Waiting Periods
  • 81% of covered workers at small firms have a waiting period to get benefits compared to 71% of workers at large firms. The average waiting period is 2.2 months at small firms and 1.8 months at large firms.
Premiums
  • In the West, average premiums for single and family coverage are lower for workers at small firms than at large firms.
  • Workers for small firms have average annual premiums for family coverage of $17,938 compared to $16,625 for workers at large firms.
  • Since 2010, average family premiums have grown 25% for small employers and 28% for large employers. Dating back to 2000, family premiums have grown 155% for small employers and 180% for large employers.
Premium Contributions
  • Workers for small firms contribute an average of $899 to their premiums for single coverage compared to $1,146 for workers at large firms.
  • Workers at small firms contribute an average of $5,904 for family coverage compared to an average of $4,549 for workers at large firms.
  • Thirty-two percent of workers at small firms contribute more than half of the premium for family coverage compared to just 8% of workers at large firms.
  • Workers’ contributions to family premiums at small employers have increased 27% since 2010 and 204% since 2000.
  • 34% of small employers contribute more for workers enrolled in family coverage than in single coverage compared to 67% of large employers.
Plan Types
  • 19% of workers in small firms enroll in a point-of-service (POS) plan compared to 6% of workers at large firms.
  • 41% of workers in small firms are in a PPO compared to 56% of workers in large firms.
Deductibles
  • 63% of workers for small firms with single coverage have a deductible of $1,000 or more compared to 39% of workers at large firms.
  • 36% of workers at small firms with single coverage have a deductible of $2,000 or more compared to 12% of workers in large firms.
  • Workers with single coverage at small firms have annual deductibles averaging $700 more than those in large firms. The average difference between small and large employers is more than $1,400 for those with family coverage.
  • The average general annual deductible for single coverage for all covered workers at small firms is $1,507 (up 51% from 2010) and $890 for all covered workers at large firms (up 95% from 2010).
PEOs
  • Many small employers outsource the administrative functions of their health programs. Some employers provide health benefits by entering into a co-employment relationship with a professional-employer organization (PEO). The employer manages the employees, but the PEO hires employees and acts as the employer for insurance, benefits, and other administrative purposes. Five percent of employers with three to 499 workers with health benefits offer coverage with a PEO.
  • 6% of covered workers with health benefits at firms with three to 499 workers are enrolled in a plan offered through a PEO.
Self-Funded Plans
  • 83% of covered workers at large firms are  in a self-funded plan compared to 17% at small firms. The percentage of covered workers at small employers enrolled in a self-funded health plan is unchanged from 1999.

Out-of-Pocket Costs Send People Shopping

Research conducted by Change Healthcare confirms what experts have long presumed: As out-of-pocket costs go up, so does the likelihood that people will shop for value-based care. Change Healthcare President and CEO Doug Ghertner said, “Our study looked at employee engagement relative to plan design – across two PPOs and six high-deductible health plans – and out-of-pocket costs, including deductible, co-pay and co-insurance. What we found is that healthcare costs and consumer engagement are directly related – as employees are faced with greater responsibility for the cost of care, they are more likely to shop for medical and pharmacy services…Those with higher out-of-pocket plan designs had consistently higher engagement scores across the three clients.”

Researchers measured engagement by looking at how people used the Change Healthcare Engagement Platform, including logging in, updating user preferences, completing savings thresholds, and using online tools. Employees with higher out-of-pocket costs used the transparency tool more often and in a more meaningful way. It’s important to understand the correlation between cost and consumer engagement, especially since more than 80% of employers will offer a CDHP option in 2015, and 30%-plus will offer only a CDHP, he added. “For plan sponsors considering such moves, transparency tools will prove critical, as they support employee/member satisfaction and retention, as well as population health and cost containment,” Ghertner added. For more information, visit www.changehealthcare.com.

Employers Still Have Strong Incentives to Offer Health Coverage

Employers have a strong incentive to offer health insurance, primarily since employer-sponsored health insurance is not subject to federal or state income taxes, Medicare, or the Social Security payroll tax, according to a report by the Urban Institute. The largest firms still have a strong incentive to offer health coverage under the ACA. Firms with fewer than 50 employees may face significantly lower, but still positive incentives to offer coverage.

The Affordable Care Act is expected to have modest effects on employer-sponsored insurance coverage, with estimates ranging from a loss of 6 million to a gain of 13.6 million covered lives. Studies consistently find larger gains in coverage among small firms than among large firms. The percentage of firms that expect to stop offering employee health benefits because of the Affordable Care Act is in the single digits. The Affordable Care Act could increase incentives for small firms to self-insure in states that don’t regulate stop-loss coverage, particularly those with employees at low risk of high medical expenses. The Affordable Care Act increases incentives to switch full-time workers to part-time to avoid the employer mandate penalty. But the effect of these incentives is likely to be small. So far, there has not been a shift toward part-time work because of the Affordable Care Act.  For more information, visit www.urban.org

Employers Shift Health Care Burden to Employees

moneyburdenEmployer-based healthcare plans are in a state of flux following this year’s implementation of the Affordable Care Act (ACA). Since health care costs in retirement have long been considered a major source of financial stress, changes to coverage are affecting how Americans tackle retirement planning, according to an analysis by Mike Flower and Brad Bofford, managing partners of Financial Principles, LLC in Fairfield, NJ. Until recently, most of the focus of the ACA has been on coverage for the previously uninsured or of those covered through individual health plans. But the conversation is shifting toward how insurance exchanges are affecting employer-based group plans. While information on enrollment and coverage changes will not be available for some time. Principles, LLC has worked with several small businesses that have switched their healthcare coverage this year from group pricing to individual pricing. Traditionally, employees would choose from price-fixed categories such as, married with children, married couple, single parent with children, and single person. By moving to individual pricing, coverage is based on the age of the employee, spouse, and each child — maxing out at three children. What is surprising is the time and effort that are now going into collecting the data needed to administer these plans before and after enrollment since every employee is paying a different price.

Some insurance companies are increasing their premiums in order to move employees out of the top-of-the-line Cadillac plans. It forces employers to accept lesser service plans for the same price as what was paid for the Cadillac just two years ago. Increased deductibles, higher co-pays, and more restricted pharmacy benefits are just a few examples of how these changes to employer-base plans are shifting more and more costs to employees. Employees are forced to allocate more of their own money on health and less on retirement vehicles. The authors says that the market trend is moving toward more consumer responsibility and less employer control. The analysis advises employees to ask their employers following:

1. Will there be bigger paycheck deductions for employee and/or dependent coverage?
2. Are there plans to move employees into a private insurance exchange? If so, will it be within a defined contribution framework?
3. Will part-time workers continue to receive coverage?

Employees are also advised to do the following:

1. Consider a high deductible health plan with an HSA, and research the federal or state exchanges.
2. While it’s tempting to reallocate money otherwise put into retirement accounts to pay for increasing healthcare costs, don’t do it. Look for other ways to cut back on spending and keep saving to ensure you have enough money to last through your entire retirement years.
3. Work with an independent financial advisor.

For more information, visit www.financialprinciples.com.

The Future of Employer Based Coverage

employer-based health coverageEmployers are likely to continue providing health coverage as long as they get a federal tax incentive. They will also provide coverage as long as it remains a competitive advantage to do so, since workers want group health coverage, said Chris Jennings, president of Jennings Policy Strategies. He addressed a recent a May forum in Washington, D.C., sponsored by the Employee Benefits Research Institute.

Noam Levey, who covers national healthcare policy for The Los Angeles Times said, “It is interesting to hear what people in Washington think is going to happen with employer-provided coverage, and then you talk to people in the benefits world, and you get a very different picture. The simple fact of the matter is that employer-provided health coverage clearly has a value for employers.” Levey said that employers are working to tier their benefits, at different levels for different workers. He said that he real wild card with health benefits is the federal tax treatment of health coverage and how Congress may change it. “The Cadillac tax obviously is going to be something that’s going to get a lot of debate here, and when it actually goes into effect, I’ll guarantee you we’re going to have some fireworks in Washington,” he said.

A recent EBRI survey reveals how much employees value health benefits. Seventy percent of workers rate health coverage as the most important benefit and another 10% rate it as second most important. Of the 60% of workers who report rising health care costs, one-third reduced their retirement plan contributions, which means trading off retirement benefits to maintain health benefits.

When considering a specific job, 77% of workers say health benefits are the most important benefit while only 11% say retirement savings plans are most important.

Ninety percent of workers are confident that their benefits are less expensive than what they could purchase on their own, and 80% are confident that their employer had picked the best plan for them. Ninety percent are satisfied with their health coverage, and 75% are satisfied with the mix of health coverage and wages. Ninety percent want in more choice in their health plans, which may explain the interest in health care exchanges. EBRI found that 45% of employees prefer something along the lines of a defined contribution health offering. Fronstin added, “It’s going to be interesting to see what happens down the road as workers understand more about the benefits of public exchanges and as employers introduce private exchanges. We’ll see what kind of shift there is and whether it’s employer-driven or worker-driven.”

Jennings predicts that many employers will go into private exchanges. The most likely candidates are small businesses, retailers, and employers with part-time, low-income work forces. While many employers are considering private health exchanges, Americans who work for larger employers will probably not see that change immediately, he said.

Jennings said, “It’s going to take a few years for all that to shake out. Employers are slow to react…They want to see how the exchanges are operating. They want to see satisfaction rates.” However, Jennings said that employers will have more incentive to look at alternatives if there is a major resurgence in healthcare-cost inflation. Jennings doesn’t anticipate an abrupt reduction in benefits among employers since larger employers are already preparing for the Cadillac tax and high-cost plan assessment.

George Washington University professor Joe Antos cited an Aon Hewitt study of workers in its own private exchange, which found that 58% selected a different level of coverage from one year to the next. “What that says is that having somebody else decide what your coverage should be probably isn’t going to suit a lot of people. A private exchange gives people more choices. It’s an opportunity to find out what people really want and not pour more money into something that may not be of such great value.”

Antos said that the Affordable Care Act’s (ACA) coverage mandate primarily affects lower-wage workers. Higher-income workers generally work for companies that already offer coverage. Antos said, “If you’re a part-time worker and you’re working 32 hours a week, you might drop to 29 hours because your employer doesn’t want to get caught in all of this. Are you going to be able to make up those hours? Are you going to be able to get another job?” He cited a recent study by the Urban Institute that calls for eliminating the employer mandate since relatively few people will not have insurance. Antos said that it’s highly unlikely that the federal government will enforce the unpopular employer mandate. He also said that a shift to defined contribution health plans is inevitable. For more information, visit http://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5435

Feds settle on penalty caps for not buying health coverage

The government has placed an upper limit on the penalties Americans will be asked to pay if they fail to purchase health insurance this year, capping the figures at at $2,448 for individuals and $12,240 for a five-member family. The penalty for the initial year begins at $95 for each adult and $47.50 for each child under 18. The Times-Picayune (New Orleans)/The Associated Press (7/24)

How Small Business Can Get the Best Health Coverage at Most Affordable Price

Frank Saltzburg, a partner with Healthcare Solutions Team, LLC (www.ushcre.com) outlines his strategies for businesses to lower their health care premiums while providing the most comprehensive health plans:
•  Always use a professional, state-licensed broker or agent who is certified as a health care reform specialist. They are trained and educated to be aware of the best plans in the ever-changing current market, both in the private and public exchanges. It does not cost you any more to use a broker since major medical rates are already approved by your State Insurance Commissioner.
•  Don’t use a public online quote engine as your final answer. It is only a starting point and is susceptible to data breaches leading to identity theft.
•  Be aware of the limitations of public exchange call center navigators who don’t hold a state-issued health insurance license. In many cases, navigators are not state-licensed to represent major medical coverage and are not even government-certified as health care reform specialists in the Affordable Care Act.
•  Use the bundle concept to give you better coverage at a more affordable price with less out-of-pocket financial exposure.

Saltzburg says there has been an influx of online insurance quote engines through the public insurance exchanges. “The problem here is these public exchange quote engines will list  ‘bargain health plans’ that typically have the smallest network of doctors and hospitals. Many people are shocked to learn their plan’s network is limited to one county within their state and their doctors are not part of these networks. A recent Associated Press survey found that most cancer hospitals don’t accept Obamacare,” he stated.

“One big, ongoing concern is that the average deductible is estimated at $5,000. However, what everyone should really be looking at is the out-of-pocket maximum per calendar year. This is the true financial exposure we all experience. We design our plans so that the deductible and the maximum out-of-pocket exposure are no longer a major issue…We bundle our plans to include accidental coverage to pay up to the deductible amount and cover out-of-pocket expenses. Plus, we offer critical illness coverage to also offset the deductible and any out-of-pocket expenses. The critical illness coverage offers the ability to have a lump sum payout allowing the insured to have an extra $5,000 to $200,000 of living expense money. While people are recuperating from their critical illness, they won’t worry about paying daily living bills. Bundling allows the insured to have a more comprehensive plan with true peace of mind,” he said. For more information, visit http://www.ushcre.com.

Health Insurance Coverage Increased ER Use in Massachusetts

Health reform in Massachusetts led to a small, but consistent increase in emergency department use, according a study to be published online in Annals of Emergency Medicine. “This obviously has implications about what we can expect to see nationally as the roll-out of the Affordable Care Act continues. We cannot say, for sure, why more people came to the ER – whether it’s a lack of access to primary care or the result of pent-up demand, but we need to be ready. Other states should be prepared for equal or greater influxes of patients into the ER after reform is fully implemented,” said Peter Smulowitz MD, FACEP, of Beth Israel Deaconess Medical Center in Boston, Mass.

“Our study should further weaken the long-held notion that high use of the emergency department is driven mainly by the uninsured, said Dr. Smulowitz. Barriers to primary care are serious and persistent across the country. It appears that when people have health insurance, they will seek medical care wherever they can get it, which is sometimes only the ER,” he added. Emergency department visits increased by as much as 1.2% from October 1, 2006 to September 30, 2007 after Massachusetts implemented its first-in-the-nation law to increase health care insurance coverage. That rose to a 2.2% increase in ER visits for the period ending September 30, 2009. Emergency visits by under 65 uninsured people decreased from 9.5% of visits before health reform to 5.7%  after health reform. Emergency department visits from those 65 and older remained steady at about 1%. For more information, visithttp://www.acep.org.

Last Updated 05/05/2021

Arch Apple Financial Services | Individual & Family Health Plans, Affordable Care California, Group Medical Insurance, California Health Insurance Exchange Marketplace, Medicare Supplements, HMO & PPO Health Care Plans, Long Term Care & Disability Insurance, Life Insurance, Dental Insurance, Vision Insurance, Employee Benefits, Affordable Care Act Assistance, Health Benefits Exchange, Buy Health Insurance, Health Care Reform Plans, Insurance Agency, Westminster, Costa Mesa, Huntington Beach, Fountain Valley, Irvine, Santa Ana, Tustin, Aliso Viejo, Laguna Hills, Laguna Beach, Laguna Woods, Long Beach, Orange, Tustin Foothills, Seal Beach, Anaheim, Newport Beach, Yorba Linda, Placentia, Brea, La Habra, Orange County CA

12312 Pentagon Street - Garden Grove, CA 92841-3327 - Tel: 714.638.0853 - 800.731.2590
Email:
Jay@ArchApple.com
Copyright @ 2015 - Website Design and Search Engine Optimization by Blitz Mogul