CalCPA ProtectPlus

As trusted financial advisors to millions of Californians, CPAs are in a position to know if their clients have uninsured children under the age of 19. According to a new state law (AB 2244) that took effect January 1, an important open enrollment window for obtaining individual insurance closes March 1. Applying for a child’s health insurance after that exposes families to much higher premiums.

While missing the window doesn’t mean children can’t be covered at a later date—they can enroll during their birthday month—but their premiums will be higher.

Authored by Assemblyman Mike Feuer, AB 2244 passed in response to the decision by California insurers late last year to stop selling individual policies to children under 19 years of age and was written as a defensive measure against insurance industry attempts to circumvent provisions in the federal health reform law.

Also keep in mind that the opportunity for parents to obtain individual coverage without regard to a child’s health status is here. Pre-existing condition clauses are no longer allowed. Low-income families may have good choices through Medi-Cal or the Healthy Families program. Information is available at 1-877-KIDS NOW.

While the new legislation doesn’t directly affect employer-based group plans, it is a good idea for employed parents to ask if their children under 19 can enroll and at what cost.

The California Department of Insurance has created a web page that explains how to take advantage of this time-limited opportunity. The message is: Act now to save money before the window closes on March 1 and premiums are raised.

Insurance Insider guest blog from Doug Hessel, CalCPA Protectplus Program Director, Ancillary Products at Hover Insurance Services – dhessel@hoverinsurance.com, (800) 805-9480, ext. 4

Disclaimer: Internal Revenue Service Circular 230 Disclosure

Please note that any discussion of or advice regarding United States or State of California tax matters contained herein (including any attachments hereto) does not meet the requirements necessary to be a “covered opinion” as defined in Internal Revenue Service Circular 230, and therefore, is not intended or written to be relied upon or used and cannot be relied upon or used for the purpose of avoiding federal or state tax penalties that may be imposed or for the purpose of promoting, marketing, or recommending any tax-related matters or advice to another party.

The following news release was issued last week by the Employee Benefit Research Institute (EBRI):

COBRA Premium Subsidy Helped Fewer Than Expected

The federal subsidy to help laid-off American workers pay for continued health care through the COBRA program helped fewer individuals than expected–in part because COBRA premiums remained unaffordable for many families even with the subsidy, according to a new article by the non-partisan Employee Benefit Research Institute (EBRI).

As part of congressional efforts to blunt the impact of the recent economic recession, the American Recovery and Reinvestment Act of 2009 (ARRA) included a provision for the federal government to pay 65 percent of the premium for individuals who were covered under COBRA and who incurred an involuntary job loss between Sept. 1, 2008, and Dec. 31, 2009.

The subsidy was made available for up to nine months, and was extended by Congress three times, with the last extension occurring in April 2010. This article examines trends in coverage through a former employer to analyze the impact of the COBRA subsidy.

In assessing how the program performed, EBRI notes that there are widely conflicting estimates of how many people benefited from the COBRA subsidy, but generally there has been lower-than-expected take-up of the subsidy. EBRI used the latest data from the U.S. Census Bureau’s Survey of Income and Program Participation (SIPP), a nationally representative survey, as the best available benchmark.

“The COBRA subsidies that became available in April 2009 do appear to have had an impact on the percentage of non-workers with coverage through a former employer,” said Paul Fronstin, director of EBRI’s Health Research and Education Program, and author of the article. “But they appear to have assisted far fewer than the originally estimated 7 million individuals.”

Fronstin said these findings have implications for the impact of the subsidies that will become available in 2014 under provisions of the Patient Protection and Affordable Care Act of 2010 (PPACA), and may mean the number of uninsured may not fall as much as predicted.

The full article is published in the October issue of EBRI Notes, available online at www.ebri.org.

Among the article’s findings:

Costs of COBRA Coverage: The lower-than-expected take-up may be due to the fact that, even after the subsidy, COBRA premiums may not be affordable for many families, especially at a time when they have seen a decline in income. Health insurance premiums averaged $4,824 a year for employee-only coverage and $13,375 for family coverage in 2009. After the subsidy, premiums would be $1,688 for employee-only coverage and $4,681 for family coverage. Furthermore, whereas premiums for current workers’ employment-based coverage are either excluded from taxable income or reduce taxable income, COBRA premiums are generally not tax deductible. (continue reading…)

The end of the calendar year marks the ProtectPlus annual open enrollment period. It’s also the time to make plan changes. For employees who opted not to enroll in ProtectPlus for whatever reason, this is another chance to join. For current subscribers it’s an opportunity to make changes in their coverage.

Maintaining the longer open enrollment period adopted in 2007, the Group Insurance Trust has announced that open enrollment begins on November 2 and ends December 31.

CalCPA member firms that haven’t offered ProtectPlus plans to their employees can, of course, enroll in Group Insurance Trust plans at any time.

Firms can consider the full range of offerings for 2010 that include;

• 5 copay plans
• 3 HSA-eligible plans
• 2 Anthem Blue Cross HMO plans

This is also the time of year that the Trust announces plan changes and premium adjustments. As always, premium  increases are anticipated with concern, but the good news is:

The Trust has been able to maintain its single digit  premium increases for the seventh consecutive year.

This is a remarkable achievement when you consider that ProtectPlus also beat industry averages in each of these years.

Several benefit improvements will be implemented in 2010.

• All ProtectPlus copay plans will see a reduction in the copay amount for generic prescription drugs from $15 to $10.
• Improved coverage for mental health and substance abuse services on all copay, HSA-eligible, and Anthem Blue Cross HMO plans.
• Medical plans will now align all mental health and substance abuse member cost-sharing provisions with those offered for in-network and out-of-network medical services and remove any visit limitations (in accordance with the Mental Health Parity and Addiction Equity Act of 2008).

The Trust will also combine several copay plans for 2010.
Last year the Trust offered eight copay plans, including both regular and enhanced versions of:

• Protect 15
• Protect 25
• Protect 35

The enhanced versions of these plans—which waive the deductible for the first six in-network office visits—proved so popular that trustees were persuaded to include the enhanced benefits as standard features in the copay plans at these levels.

For 2010 the Protect 15, Protect 25 and Protect 35 plans will all feature the enhanced benefit of six office visits that are not subject to the plan’s deductible, while the Protect 10 and Protect 45 plans will retain their original structure.

Vision Service Plan and Delta Dental rates will be restructured for 2010.
Going forward, rates for both plans will be based on firm size in much the same way the medical plan rates are structured.

• Effective January 1, 2010, firms with two or more participants will see a reduction in VSP and Delta Dental rates while others will note a small increase.

Changes in Premiums
Some ProtectPlus members will see changes in their premiums next year that reflect altered geographical rate bands. Anthem Blue Cross has re-aligned several zip codes in rate areas one, two, and three, and the Trust has followed its lead in order stay consistent. For some, these changes will mean lower than average premium increases, while for others, unfortunately, it may mean an increase in excess of the average overall premium increase.

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