Grappling With Small-Business Insurance
By Kara Nuzback Texas Medicine March 2015

How ACA Is Impacting Office Health Plans and How to Get Help

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Practice Management Feature — March 2015

Tex Med. 2015;111(3):59-63.

By Kara Nuzback
Reporter

The cost of offering health insurance to employees of a private practice is a big ticket item for physicians. Houston family physician David E. Auer, MD, says he was aghast when, in November, the premium for his office health plan with Humana jumped 80 percent. 

"I almost fell off my chair. It was so absurd," he said.

Physicians like Dr. Auer, who acts as his own office manager, are responsible for deciding whether to offer his employees health insurance and, if so, what insurance plan fits the office's needs and budget. While the Affordable Care Act made some insurance plans more affordable, it forced physicians like Dr. Auer to dig even deeper into their pockets.

The Texas Medical Association Insurance Trust (TMAIT) assists members in navigating insurance purchases, including helping private practice physicians offer suitable health plans to their employees.

Dr. Auer says the renewal notice for his solo practice, which covered one full-time employee, himself, and his two healthy daughters, showed the premium for him and his family jumped 80 percent — to $2,500 per month — a total of $30,000 a year, "with no services," he added. He says the plan carried a $1,500 deductible.

It was the largest increase Dr. Auer had seen in 20 years running his own office. No one on the plan suffered any major illness in the previous year, so he called the company to ask why the rate had gone up so exponentially.

He says neither he nor his insurance agent could get the carrier to explain the reason for the rate increase; it would only say the increase was attributable to ACA. 

"I didn't get any additional benefits due to the ACA," he said. Dr. Auer says he thinks that because the Humana plan was grandfathered — he purchased it before March 23, 2010 — the carrier raised his rates to incentivize him to give up the plan.

"They want you out of that, so they price them so you quit," he said. "And you don't have any recourse." 

Under ACA, carriers must cover certain essential health benefits, including emergency services, hospitalization and surgery, maternity and newborn care, mental health and substance use services, prescription drugs, lab services, and preventive and wellness services. 

Dr. Auer says the ACA coverage mandates mean more coverage for some patients, but insurance companies are charging more to all clients, including healthy ones, for those added services. Carriers are also removing choice from health care, he says.

Dr. Auer referenced a quote from Marcus Merz, the chief executive of Minnesota-based insurer Preferred One, who said, "We have to break people away from the choice habit that everyone has." The New York Times published the quote May 12, 2014, in the article, "More Insured, but the Choices Are Narrowing."

"That is a scary statement from a health insurance executive," Dr. Auer said. The government is telling carriers what to cover, so carriers are going to compensate for more services by raising fees and cutting consumer choice, he added.

"That is just sad," he said.

"And this is not the ACA plans purchased through the [federal marketplace] website," he added. "The big insurers are offering such poor plans, they're ruining their brand."

Dr. Auer told Humana he would "absolutely not" renew the plan. After shopping around for new plans with a broker, he opted to purchase individual coverage through Humana in December, which costs more than he was paying last year but less than the grandfathered group plan would have.

But then the carrier threw Dr. Auer another curve ball. Barely a month into the plan, Humana sent him another letter notifying him of a 17-percent increase in his individual plan.

Under ACA, all individual health plans cover a calendar year, beginning Jan. 1. So although Dr. Auer had his plan for only a month, the plan was up for renewal Jan. 1, and thus a rate increase.

"I'm 30 days in, and I'm getting another bump," he said. "I don't know what I'm going to do."

To top it off, Dr. Auer says as of mid-January, Humana had not sent him a bill to show him exactly how much the carrier would charge him each month in 2015.

"It's just such chaos," he said. "You just can't win."

Dr. Auer says physicians spend enough time wrestling with patients' carriers to get paid for services. To struggle with the same companies over your own health insurance exacerbates physicians' frustration, he says.

"Everybody loves the patient part, but the business side … it's just so crazy," he said. 

Help Without Hassle

Physician employers can apply for small-group coverage year-round. Individuals, however, are largely limited to the federal open enrollment period running from Nov. 15 through Dec. 15 of each year, with coverage starting Jan. 1.

TMAIT takes the reins for members by shopping around for small-group insurance, comparing rates, and coming up with quotes for physician employers within two working days. TMAIT small-group sales representative Kerrie Rodriguez says Dr. Auer's situation is not uncommon, and she is there to help when physician-employers see a drastic rate hike.

"I can't change the rates, but I can try to find something more affordable," she said.

Ms. Rodriguez says there's no catch-all plan for everyone, and TMAIT helps physician practice owners find a plan based on their needs and priorities. Plus, after members purchase insurance through TMAIT, the trust continues to act as a liaison between the group and the carrier.

"We don't just sell them something; we work for them after the sale," Ms. Rodriguez said. "If they have a claim that won't get paid, they'll call us, and we'll investigate the problem."

She says insurance carriers pay TMAIT a commission for each sale, but a portion of that money goes back into TMA to support the practice of medicine.

"We're here to support our physicians," she said.

TMAIT services more than 200 groups in four areas: West Texas, the Dallas area, the Houston area, and all other areas of the state. (See "What Practices Offer Employees, By Region.")

ACA doesn't require small-group employers to contribute toward employee premiums, but many insurance companies require employers to pay at least 50 percent of their employees' plan premiums. Employers may choose to pay a higher percentage than the company requires. Employers are not required to contribute toward the cost of dependent coverage.

Ms. Rodriguez says most groups she assists pay 100 percent of the employee cost and leave it to their employees to pay the premium for spouses and dependents. 

Physicians may choose to offer their employees a preferred provider organization (PPO), an HMO, a point-of-service (POS) plan, or a health savings account (HSA). Ms. Rodriguez says PPOs are the most popular, as HMOs offer a smaller network of care at a comparable price. HSAs are less expensive for physicians, but employees don't often favor them because many services are subject to a deductible, she says.

Many physicians choose to offer split plans, for example, a PPO/HSA, which gives employees the option to choose which plan they prefer.

Ms. Rodriguez says some physicians choose to stick with grandfathered insurance plans that are not compliant with the new law and are not required to contain the essential health benefits. 

The Kaiser Family Foundation's "2014 Employer Health Benefits Survey" shows that employers are trending away from grandfathered plans. According to the survey, 37 percent of firms across all industries had at least one grandfathered plan option in 2014, down from 54 percent in 2013, 58 percent in 2012, and 72 percent in 2011. 

In the health care industry, 40 percent of firms of all sizes offered at least one grandfathered plan in 2014. Twenty-three percent of health care workers covered by workplace insurance enrolled in a grandfathered plan last year, the survey shows.

The downside to grandfathered plans is that carriers are not barred from raising rates due to the number, type, and amount of claims, and the group rate could spike if someone in the office is sick. 

Insurance programs that comply with ACA are not allowed to charge more for preexisting conditions or for a higher frequency of claims.

Ms. Rodriguez says just because the plans she sells are ACA-compliant does not mean she's getting them from the federal marketplace. In fact, she says, marketplace plans often come with higher deductibles and a smaller network of health care professionals to choose from. 

Big names in the industry like Aetna, United, Blue Cross and Blue Shield, and Humana all have ACA-compliant plans with lower deductibles that are not sold on the federal marketplace, she says.

Ms. Rodriguez specializes in group insurance for 50 or fewer employees. If you're shopping around for a plan that better fits your practice's needs, email her, or visit the TMAIT website

SHOP Around

Physician-employers who choose to use the federal marketplace, either with help from TMAIT or on their own, can go to the Small Business Health Options Program (SHOP) Marketplace, which is open to employers and nonprofit organizations with 50 or fewer full-time employees. (See "What to Look for When Shopping for Coverage.")

If a practice has fewer than 25 full-time equivalent employees who make an average of $50,000 a year or less, it qualifies for a tax credit worth up to 50 percent of its contribution toward employees' premium costs. 

Physician practices with fewer than 10 employees who make an average of $25,000 or less qualify for even bigger tax credits. 

According to the Texas Department of Insurance (TDI), premiums may increase at each renewal term because of rising health care costs. "However, Texas law caps small-employer rate increases due to health factors — the amount of employee claims — at 15 percent per year," TDI states on its website. 

Under ACA, insurance companies are allowed to weigh the age of your employees, their use of tobacco, and the geographic area of your practice when determining rates.

According to TDI, practices with fewer than 50 employees, full-time or part-time, don't have to offer health insurance, but employers that do must offer it to all employees working 30 hours or more per week and their dependents.

In general, insurance companies require at least 75 percent of a small employer's full-time employees to participate in the health plan, TDI states. The law counts each 120 hours worked by part-time employees in a month as one full-time equivalent employee.

According to TDI, employers must give new employees at least 31 days from their start date to enroll in a health plan. Insurance companies can't impose coverage limits, exclusions, or waiting periods for employees with preexisting conditions who had a gap in coverage.

To read more about insurance for small businesses in Texas, visit http://tma.tips/TDIguide

Kara Nuzback can be reached by phone at (800) 880-1300, ext. 1393, or (512) 370-1393; by fax at (512) 370-1629; or by email.

SIDEBAR

What Practices Offer Employees, by Region

The Texas Medical Association Insurance Trust (TMAIT) services more than 232 groups in four areas: West Texas, the Dallas area, the Houston area, and all other areas of the state. Here's a breakdown of what type of insurance the group practices offer their employees:

West Texas (22 groups):

Medical insurance: 14 groups (64 percent)
Dental insurance: 8 groups (36 percent)
Vision insurance: 1 groups (5 percent)
Life insurance: 14 groups (64 percent)

Houston area (66 groups):

Medical insurance: 47 groups (71 percent)
Dental insurance: 31 groups (47 percent)
Vision insurance: 6 groups (9 percent)
Life insurance: 28 groups (42 percent)

Dallas area (69 groups):

Medical insurance: 56 groups (81 percent)
Dental insurance: 24 groups (35 percent)
Vision insurance: 5 groups (7 percent)
Life insurance: 18 groups (26 percent)

All other areas (75 groups):

Medical insurance: 64 groups (85 percent)
Dental insurance: 40 groups (53 percent)
Vision insurance: 7 groups (9 percent)
Life insurance: 18 groups (24 percent)

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SIDEBAR 

What to Look for When Shopping for Coverage

 

  • Compare plans and rates. Plans with higher deductibles and copayments generally have lower premiums. Keep in mind that your employees then would have to pay more out of pocket to access services or benefits. 
  • Consider factors other than cost, such as a company's financial strength and compliance record. You can find these by calling the Texas Department of Insurance Consumer Help Line at (800) 252-3439 or (512) 463-5515 in Austin. 
  • Buy only from licensed insurance companies and HMOs. Selling unlicensed coverage is illegal in Texas. If you buy from an unlicensed company, your employees' claims could go unpaid and you could be held liable for the full amount of your employees' claims and losses. You can learn whether a company is licensed by calling the Consumer Help Line. 
  • Understand that employee health coverage is different from workers' compensation insurance, which covers only job-related injuries and illnesses. Providing regular health coverage to employees isn't a legal alternative to providing workers' compensation insurance.  

Source: Texas Department of Insurance

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Last Updated On

April 20, 2018

Originally Published On

February 24, 2015

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