Basically, the federal law mandates that health insurance companies “must spend a minimum of 80 percent of their revenue on payments for policyholders’ health care or improvement to their health coverage plans.” This might sound okay on the surface – more money going toward individual’s health care, and less money going toward executive salaries and overhead. But in reality, “overhead” also includes necessary and important items like employee training, education and liaising with doctor’s to better understand issues related to health. So by mandating an 80/20 medical loss ratio, the government is effectually limiting a health insurance carrier’s ability to perform actions that positively affect not only the company, but the consumer.

The consequence for spending more than 20 percent on such costs is a requirement to provide customers with rebates beginning in 2012. Texas was denied its waiver request because, according to officials from the U.S. Department of Health and Human Services, the state was unable to “prove that there would be destabilization of their insurance marketplace if it complied with this new regulation.”

As a result, it’s possible that Texas health insurance companies will be forced to pay out rebates worth $476 million to policyholders over the next three years.

Again, this sounds positive for consumers. But we’re not convinced that federal mandates are in the long term best interest of the people. By limiting health insurance carriers’ overhead costs, we can expect to see good programs like education and privacy protection reduced, since the law kills a carrier’s incentive to invest in such programs. The short sighted law requires health insurance companies to make business decisions based on federal regulations, rather than what’s best for consumers.

The primary issue to be disputed is whether the government has the power to require Americans to purchase health insurance by 2014 and to penalize those who don’t comply. Many pundits have noted that such an act is unconstitutional and steps outside the limits of regulating interstate commerce. But proponents of the legislation say that mandatory health insurance is the only way to implement coverage for the 30 million uncovered Americans.

According to USA Today, a group of 26 states, along with the National Federation of Independent Business and individual challengers, say that “if the law stands, it will mean new burdens for states and businesses.” They urged the justices to resolve the dispute quickly because of uncertainty about future business costs.

On the other side of the argument, the current administration stressed the law’s benefits, “including that more young Americans now have health insurance and that women can get mammograms and preventive services without out-of-pocket expenses.”

Earlier this year, a federal judge in Florida ruled the law unconstitutional, and four subsequent appeals have varied on their decisions. Two declared it constitutional and one found it unconstitutional, while another said that no challenge could be brought until a person was forced to pay the tax penalty.

Next year’s Supreme Court decision, which would supplant prior court findings, is likely to be handed down in late June, right before the 2012 Republican and Democratic conventions. Expect lots of posturing on both sides leading up to the hearings. In the meantime, don’t wait around to see what happens. Consumers will need affordable health insurance regardless of the decision. But if you do take the wait-and-see approach, we at least recommend a short-term health insurance plan or a high deductible plan with a low monthly premium so you’re covered should anything happen.

One option to quickly regain coverage is to join your spouse’s employer plan, if possible. However, that alternative seems to be becoming less popular. These days, we’re fielding lots of calls from people whose employer plan rates have skyrocketed for both individual and family health insurance. Group insurers are facing higher costs in attempts to meet new health insurance regulations, and these costs are passed along to the customer. Because of this, individual health insurance plans are becoming attractive options for replacing costly employer plans.

After losing their insurance, most people jump on the Internet to research their options. Of course, given all the providers, plans and prices, this typically leads to confusion and frustration. Since there’s no need to tackle it alone, we always recommend that people work with a local health insurance broker who represents multiple insurance carriers. A broker can help you navigate your options and steer you toward an affordable health insurance plan that’s right for you and your family.

As a Texas health insurance broker, one of the first questions we get asked is, “What’s your fee?” The thing is, reputable brokers like Custom Health Plans have no fee. We are compensated by the insurance companies, which means we can offer guidance and advice and set you up with a new plan without charging you a cent. And since we represent multiple carriers, we’re not beholden to anyone. We’re on your side.

Plus, if you have questions about your plan or coverage options, we’re your liaison. Rather than calling an 800 number, listening to a hundred automated prompts and finally dealing with someone who doesn’t know you, your history or your health needs, you can call us. We’ll deal with the insurance companies; and again, there’s no fee for our services. And if you’re worried about rates, rest assured because health insurance rates are state regulated. This means that the quote you get from a broker is the same as the quote you’d get straight from the insurance carrier for an equal plan. But for that rate, you’re also getting the broker’s guidance, expertise and customer service – three things you can rarely expect to receive from a big insurance company.

As evidenced by business closings and daunting details in nearly every news report, ObamaCare has caused much uncertainty in the market. Even though most changes won’t go into effect until 2014 – and there’s a possibility of repeal – consumers should do their best to stay prepared. A lapse in coverage can be dangerous for you and your family, so we always urge consumers to maintain coverage in some capacity.

And remember, if you want help finding a plan or even just want some answers to your questions, we’re here to help. For fast, free quotes or assistance, visit www.customhealthplans.com or call 877-749-2241.

“It’s a fairly predictable consequence of the regulation,” said Michael Abbott, president and CEO of American Enterprise Group. “The regulatory environment’s getting really complicated.” One specific stressor is the legislation’s impact on medical loss ratios, which mandate that insurers must spend at least 80 percent of premiums on medical care. Given the intensive time and high cost of administering health plans, such mandates can kill company’s operating costs and profits, driving them out of business.

In an attempt to keep its customer base insured, American Enterprise has negotiated an arrangement with Celtic Insurance Company, who will offer guaranteed-issue policies to American Enterprise customers. This is one route for consumers to take, but it allows little choice and personalization of policies. It pushes people into a plan rather than allowing them to choose one that’s best for their specific health needs and budget.

Consumers affected by the closing of American Enterprise’s individual insurance business are encouraged to explore their options. Custom Health Plans offers a variety of individual health insurance plans and family health insurance plans that can be tailored to fit our clients’ needs. Losing your health insurance can be very stressful, but we can help consumers navigate through the confusion.

Give us a call to discuss your options – (469) 361-4032

And stay tuned next week as we detail several alternative options to American Enterprise Group for finding an affordable health insurance plan that’s right for you.

According to The Financial Times, a survey of American employers shows that health insurance costs have significantly increased this year over last year. One figure from the Kaiser Family Foundation shows that family health insurance premiums in 2011 jumped nine percent from a year ago. “This year’s 9 percent increase in premiums is especially painful for workers and employers struggling through a weak recovery,” said Drew Altman, Kaiser’s chief executive.

One reason for the increase in family premiums could be the new law allowing children to remain on their parents’ plans until age 26, which can create additional costs. But more than that, cost-cutting measures included in the law were exaggerated, their benefits were inflated and their implementation has been slow.

Critics note that the health reforms are too myopic and should focus on all the factors that increase health insurance costs. Karen Ignagni, chief executive of America’s Health Insurance Plans, lists premium-raising reasons like “soaring prices for medical services, changes in the covered population that has resulted in an older and sicker risk pool, and new benefit and coverage mandates that add to the cost of insurance.”

The Obama administration offered a rebuttal of the study, arguing that premiums were set last year when insurers anticipated higher medical costs and that premium prices would decline as more provisions in the law were rolled out. But people are hurting now, and the health law isn’t helping. In a time when money and jobs are scarce, lowered health care costs would be a boon to many Americans. And as the numbers show, ObamaCare has not followed through on its claims.

While you were working, your employer probably paid the majority of your health insurance costs. But things change once you retire. The Boston Globe reports that a Kaiser Family Foundation study shows that, in 1988, 66 percent of large employers offered company health insurance coverage to employees who retired early. By 2010, that number had dropped to just 28 percent. And the way things are looking, the number will likely continue to drop. Fortunately, there are several insurance options for individuals who want to retire early.

The most feasible and accessible option is usually to get coverage under your spouse’s policy. But that’s not applicable to everyone, and it’s not always possible, so many people look to COBRA for coverage. Under COBRA you can continue the same health insurance coverage you had under your former employer’s plan for up to 18 months. Prices are often high, since the plan is no longer subsidized by your employer, but it’s still cheaper than paying out of pocket if you get sick.

Another option is to purchase an individual health insurance plan. These plans vary in price and scope, and most people can obtain an affordable plan that suits their health needs. But even better than the above options is to set up a high deductible health plan and health savings account prior to retirement. An HSA will let you save money year after year, accumulating tax-free funds to pay for future medical expenses. If you’re relatively healthy, that money accrues as you age. If you need to dip into the account to pay for medical expenses, you can. And you’ve still got that high deductible plan in place should you happen to fall ill or face an emergency.

Whichever route you choose, you can’t just wait for Medicare to kick in. Going without health insurance is a serious risk, both to your health and to your bank account. Planning ahead and ensuring you’ll be covered is the best bet for hanging onto your money and your livelihood and enjoying that early retirement.

People who enroll in a health savings account can save money for health expenses, all while accruing interest and lowering their taxes. It works like this: whatever you put into your health savings account before the tax deadline in April becomes an “above the line” deduction for your previous year’s tax return. So that money is not counted as income, and therefore it’s not subject to income tax or FICA tax. That can result in some serious savings.

AARP offers an easy overview on setting up a health savings account –

To get started, simply enroll in a qualifying high deductible health plan, and then open a dedicated savings account for making your tax-free deposits to pay for your medical care. You an enroll through insurance companies, banks, credit unions and approved employers. Once set up, you begin saving money for health expenses, and if you happen to reach your deductible, the insurance policy begins paying out benefits.  There are limits to the amount of money you can deposit into your account, and right now the absolute maximums are $3,050 a year for individuals and $6,150 for families. Plan members over age 55 are allowed an extra $1,000 per year to play catch up.

Perhaps best of all, unlike a flexible spending account, funds left over in an HSA at the end of the plan year simply roll over and accumulate year after year. And if you ever decide to stop contributing to your HSA, you won’t lose that money – it remains in your account, still available to be spent on qualified medical expenses.

A health savings account works well for a variety of consumers, whether they’re in the market for individual health insurance or family health insurance. Some employers even offer HSAs for their employees. In that case, employer contributions act just like personal deposits, in the sense that the contributions are not counted as income and, again, not subject to income tax.

If the tax incentives weren’t enough, most consumers reduce their medical expenses simply by being in charge of their own health care. They save the money, and they choose how to use it, rather than being subjected to one-size-fits-all group plans, which often leave participants paying for services they don’t even need.

Interested in learning more about health savings accounts and how they can save you money? Give us a call.

Experts say that CDHPs are becoming more attractive options because they cost considerably less than traditional health plans, like PPOs and HMOs, and they still meet the minimum requirements of health coverage mandated by the Patient Protection and Affordable Care Act.

“Unless there’s a significant change in any of the legislation, CDHPs will remain a viable option post-health care reform,” said Nick Calabrese, a vice president with CIGNA Corp. In fact, the number of CIGNA clients offering CDHPs surged after health care reform, along with enrollment in those plans.

Even before health care reform, more employers were looking into CDHPs like health savings accounts as cost containment strategies. Since CDHPs put consumers in the driver’s seat, the consumer is more conscious of his or her health care expenditures, benefiting both the employee and the employer.

Beyond that, many CDHPs have tax benefits. Consumers can save tax-free money to put toward their health care, and employers likely won’t have “Cadillac” taxes levied against their plans, as they’re typically below the Cadillac tax threshold.

“In some significant ways, health care reform is good for consumer-driven health plans since they tend to be more affordable,” said Helen Darling, president and CEO of the National Business Group on Health in Washington. “On the employer side, we are seeing more interest in, and transition to, full replacement CDHPs,” she added. “We also see more CDHPs as a choice and, as employee costs climb, we anticipate that more employees will find them attractive, because the contributions tend to be lower.”

Employers’ offering their employees more choices is always a good thing. And when employees can choose plans that put them in control of their finances, costs are lowered across the board. Here’s hoping that more and more consumers see the benefits of high-deductible CDHPs in Texas and across the country, both as a great health care option and as a way to lessen the burden of ObamaCare.

The study reports that workers should anticipate bigger expenses, as they’ll be asked to pick up more of those costs. “More than half of the companies say they’ll increase the percentage that employees contribute to premiums, while 39 percent say they’ll increase deductibles for workers who stay in-network for their healthcare.” Out-of-network deductibles and out-of-pocket maximums may also rise, so all in all, it’s a tough time to be an employee. But there is hope.

One option is to skip the employer plan altogether and test the individual health insurance market. Some consumers are finding these individually-tailored plans to be cheaper – or at least more streamlined – than one-size-fits-all group plans, which often leave you paying for services you don’t even need. Check quotes at Custom Health Plans (www.customhealthplans.com) to compare individual plans with rates from your employer, and choose whichever plan offers the most affordable health insurance.

Another alternative to consider is pairing a high deductible health plan with a health savings account, or enrolling in a flexible spending account. Both offer tax savings, but only an HSA allows you to accumulate savings for the future.

It may also pay to get creative with your insurance coordination between family members. Spouses can stay with their own employer’s plan, or choose whichever employer offers the best family health insurance plan. Young workers should weight their options too, as they may find it cheaper to remain on their parents’ plans than to enroll in their own.

So at least we’ve got some options to combat the looming price increases. Consumers may just have to do more research, or get more creative, in choosing a health insurance plan that gets them the coverage they need at rates they can afford.

Traditional health insurance plans are often broken into the following categories –

Preferred Provider Organization (PPO) – A PPO is a plan that has agreements with a network of doctors, hospitals, and other providers who charge discounted fees for their services. As part of this network, your cost sharing typically results in lower prices than if you were to seek care outside of the network. Plans vary, but it’s common for PPOs to operate with monthly premiums, co-pays and deductibles.

Health Maintenance Organization (HMO) – An HMO generally requires individuals to choose a primary care physician from a list of providers partnered with the HMO. If you need to be referred for other services, the primary care physician will do so, but you typically can’t go outside the network. One drawback of this plan is that some HMOs only offer small networks of doctors, so you may have little say in choosing your health care provider, or you may have long wait times to see a doctor.

Point-of-Service Plan – This plan is like a combination of the two above. In a point-of-service plan, consumers generally must select a primary care physician from a qualified list, but they can seek care outside the network, or be referred to a doctor outside the network, and still maintain some coverage.

Significantly different from the plans detailed above is the Health Savings Account (HSA), perhaps the most innovative health insurance option available. HSAs offer members more control over their health benefits, while typically reducing premiums. By combining a high-deductible health plan with a tax-exempt saving account, individuals can cover their health care needs, including preventative care, wellness and even some alternative therapies. Health savings accounts are very flexible, allowing members to visit any doctor they choose. But to decrease out of pocket expenses, most provide a PPO network of doctors to choose from. This gives the consumer maximum flexibility to receive the care they need, when they need it, all while controlling short term costs and saving money for the future.

Choosing an affordable health insurance plan largely depends on the specific needs of the consumer. But whether you need an individual health insurance plan, a family health insurance plan or even something for your small business, arming yourself with knowledge about options – and then analyzing which plan’s benefits best suit your needs – will help to make the choice much easier.

Of course, if you need help sifting through the options and analyzing the results, just let us know. We’re here to help!