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Starting on September 23rd, 2010, several new provisions become law as part of the Patient Protection and Affordable Care Act, also known as Obamacare or Health Reform.  These changes include:

• No annual or lifetime limits on essential benefits
• Preventative care must be paid for 100% by the insurance company with no co-payments, deductibles, or co-insurance required
• Children under age 19 cannot be denied coverage for pre-existing conditions

These provisions will only apply to plans applied for after September 23rd, although there has been speculation that all plans written since the bill was signed on March 23rd must include the above provisions as a modification to existing benefits.  

There are several issues that have yet to be clarified for when the changes take effect.  Those include, but aren’t necessarily limited to the following:

 

• What are considered “essential benefits” that cannot have annual or lifetime maximums?  If companies that previously limited benefits such as prescriptions must now offer them on an unlimited basis, premiums may rise substantially
• Which companies will continue to allow child-only health insurance policies?  Many of the top carriers have already stopped offering them and may continue to do so.
• Which companies will stop offering family coverage altogether to avoid having to issue guaranteed coverage for children?
• How will plans be priced when children who would otherwise be considered uninsurable are on the plan?  Will the rates be increased for all ages to spread the impact, or will children be able to be assigned large rate adjustments to cover the additional risk?

Some companies have already announced rate increases of more than 20% based on the new requirements.  As rates continue to rise at a rapid pace, more families will be taking a closer look at their coverage and making tough decision.  If you are considering changing your family health insurance plan, make sure to take these questions into consideration as more information becomes available.  Click here to compare instant health insurance quotes or give us a call at 1-877-656-1436 if you have any questions.

Well, today is the first day that the rates for the new Pre-Existing Condition Insurance Plan (also known as the national high risk health insurance pool) are posted.  In Virginia, the plan is run by the federal government since the state opted not to run a plan on its own and did not have a state risk pool before July 1, 2010.  According to the posted information, it looks like a family of 4 uninsurable individuals could end up spending around $1800/month in premiums with up to $23,800 in expenditures out of pocket on top of the premiums. There is no mention about family rates, so as far as I can tell you can only apply on an individual basis. Here is an excerpt from the government website regarding the coverage:

 

PCIP will cover a broad range of health benefits, including primary and specialty care, hospital care, and prescription drugs. All covered benefits are available for you, beginning on your coverage effective date, even if it's to treat a pre-existing condition - there are no waiting periods.  The monthly premiums for your state are:

Age:
00-34     $289
35-44     $347
45-54     $443
55+ $616

In addition to your monthly premium, you will pay other costs. Covered in-network services are subject to a $2,500 annual deductible (except for preventive services) before the plan starts to pay benefits. Once you've met the deductible, you will pay a $25 copayment for doctor visits, $4 to $30 for most drugs at a retail pharmacy for the first two prescriptions and 50% of the cost of the prescriptions after that. If you use mail order, you will pay $10 for generic drugs or $75 for brand drugs on the plan formulary for a 90 day supply. You will pay 20% of the cost of any other covered benefits received from a network provider. Your out-of-pocket costs cannot be more than $5,950 per year. However, your out-of-pocket costs may be higher if you go outside the plan's network. See below for a benefits summary.

 

Health insurance rates on the individual market remain substantially less expensive for the same type of benefits and unless you have a medical condition that makes you completely uninsurable AND you have been uninsured for six months or longer, you would still likely be better off purchasing your own policy.  You can click here to compare Virginia health insurance rates instantly or give us a call at 1-877-656-1436 to discuss your options in more detail. 

The Virginia (and many other states) health insurance risk pool for uninsurable individuals is now open for enrollment.  Rates and benefit information will be posted on July 15th, but applications for coverage can be submitted as early as July 1, 2010. You can get information about the Pre-existing Condition Insurance Plan (PCIP) from Healthcare.gov

In order to qualify for the risk pool, applicants must meet the following criteria:

•    Be a citizen or national of the United States or lawfully present in the United States.
•    Have been uninsured for at least the last six months.
•    Have had a problem getting insurance due to a pre-existing condition.

While the government has good intentions behind setting up these risk pools, they will be massively underfunded and people who want to be covered need to apply as soon as possible.  Enrollment may be capped to avoid skyrocketing expenses.  As an example, Virginia is scheduled to receive $113 million for funding, or about $32 million per year.  If the average annual claims for people in the risk pool is $5,000, that would only leave room for 6,400 Virginia residents to be on the plan.  If the average claims were $10,000 per year, that would only leave 3,200 spots.  I can guarantee there are many more than 6,400 residents that will be eligible for the plan and want to jump in.  Demand is going to far exceed supply.  

Additionally, the risk pool adds the perverse incentive for individuals with exclusions for pre-existing conditions on their current policies to drop their coverage and hope nothing bad happens to their health, and then apply for the risk pool after they’ve been uninsured for six months.  So what happens when people take this approach and then find out enrollment is closed and now they can’t get any other insurance?  Meanwhile, the people with pre-existing conditions paying high rates for health insurance are ineligible to enroll in the risk pool because they’ve had insurance within the past six months.  That’s a nice reward for doing the right thing.

Obviously, there are many flaws in the new risk pool system.  On the bright side, a few thousand lucky individuals in each state will get the massively subsidized benefit of these risk pools, which charge rates similar to those for healthy people.  Rates in Virginia are expected to be around $440-558 per month for a 50 year old.  If you have questions about the Virginia health insurance risk pool, feel free to give us a call at 1-877-656-1436 or send us an This e-mail address is being protected from spambots. You need JavaScript enabled to view it

John Hancock, one of the largest long term care insurance companies in the industry, recently announced a large rate increase for new applicants on a significant part of their portfolio.  As of June 7, 2010, the following changes will be made:

• Leading Edge will no longer be available (except in Florida) for individual market sales
• Preferred rate discount for individuals lowered from 15% to 10%
• Preferred rate discount for couples lowered from 40% to 35% if both approved and 30% to 25% if only one approved
• Unlimited lifetime benefit options will no longer be available on Custom Care II Enhanced
• Rates for new applications will increase by approximately 5% for Consumer Price Index inflation adjustment option and approximately 32% for applicants choosing a 5% compound inflation protection rider
• More strict guidelines for what providers are qualified to provide care under the available plans

What remains to be seen is whether changes will also effect existing policyholders.  Hopefully the new changes will allow current policyholders to continue with their current rates (Virginia long term care insurance rates and rates in other states are not guaranteed and subject to change).  As insurance carriers begin to realize losses from people living longer, receiving care for an extended period of time, and the cost of care rapidly rising, more changes may be seen in the near future at other long term care insurers.

TermInsuranceBrokers.com offers long term care insurance from many of the industry’s leading companies and is happy to help provide a comparison of available options.  Please feel free to give us a call at 1-800-571-2980 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it if you have any questions.

If you have read my past blog entries, you may have been following the current battle in Massachusetts that the state government is waging against health insurance companies.  To recap, Massachusetts passed a small-scale version of Obamacare about four years ago.  The state requires health insurance to be guaranteed-issue regardless of health status, which has led to premiums becoming increasingly unaffordable for individuals and businesses that offer health benefits.  

Recently, most of the major health insurance companies in the state requested rate increases ranging from 15-40% depending upon the type of plan to cover the rapidly increasing cost of care.  The state government denied the requested increases, accusing the insurance companies of trying to generate “excess profits” off the backs of hard-working citizens and freezing the rates at 2009 levels.  The insurance companies filed a lawsuit against the state, arguing that the increases were necessary to generate a profit.  Today, the Boston Globe reports these very same health insurance companies posted massive losses (over $150 million) in the first quarter of 2010 due to the rate caps imposed by the government.  

The first reaction most people would have to this news is “if they can’t make a profit, why don’t they pack up and leave?”  Well, we may end up seeing that very action if nothing changes.  After all, businesses must make a profit to continue operating.  So what happens if all of the largest companies decide to stop selling insurance?  That’s a good question – maybe Maine, which only has one major health insurance company left, has the answer for them.