With the implementation of the Affordable Care Act (ACA) on January 1, 2014, Texas consumers now have a viable alternative to employer-sponsored group coverage. Prior to ACA, group coverage had an advantage over private insurance in Texas because:
- Group coverage offered more robust benefits than private insurance
- Group coverage subsidized the employee’s premium with the contribution made by the employer
- Group coverage was guaranteed issue which meant that health insurance was available to all employees and dependents regardless of health condition or medical history
- Group coverage enrollment was easy with a limited application process.
Private insurance for individuals and families in Texas did not offer these benefits. Private insurance benefits were restrictive and there was no premium subsidy. Applications were subject to underwriting with the application process intrusive and time consuming, after which coverage could be declined.
The playing field was leveled a great deal with ACA, and private insurance will be a competitive alternative to employer-sponsored group coverage. The changes to private insurance in Texas are significant.
Comprehensive Benefits – Private insurance must include core benefits, which are referred to as essential benefits. The requirements for essential health benefits were included to promote consistency across plans, to provide consumers protection by ensuring that plans cover a core package of benefits that are equal in scope to those offered by a typical employer plan, and to limit the consumer’s out-of-pocket expenses.
The package of benefits as directed by the Secretary of Health and Human Services (HHS) must include the following benefits at a minimum:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance abuse treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory Services
- Preventative and wellness services and chronic disease management
- Pediatric services including dental and vision
The addition of these benefits, especially maternity, will result in private insurance being on par with plans offered in the employer group market.
Premium Subsidy – Texas Department of Insurance (TDI) required employers to contribute at least 50% of the employee’s premium cost in order to increase participation. This was a minimum requirement, and employers typically contributed far greater than 50%. However, there was no requirement for the employer to contribute to the premium for the employee’s spouse or dependent children. Employees found it difficult to afford coverage for their family members, and private insurance did not provide the desired, like maternity benefits.
Plans offered under ACA will offer plans that include premium assistance for consumers who meet the eligibility requirements. Individuals and families who meet defined income requirements will be able to receive premium subsidies and financial assistance for out-of-pocket expenses. The subsidies, available to the policyholders and their spouses and dependents, will help consumers who cannot access affordable coverage from employers.
In order to be eligible for the subsidies and assistance with out-of-pocket expenses, an individual or family’s gross income will be compared to the federal poverty level (FPL). The level of assistance will be determined by the percentage of gross income to the FPL as determined by the number of family members. For example, in 2020 the FPL is $12,490 for a one-person household and increases by $4,420 for each additional family member. The FPL for a four-person family is starts at $25,570. In 2021 the FPL for a one-person household will be $12,760 and increase $4,480 for each additional family member. The FPL in 2021 for a four-person family will start at $26,200.
Subsidies will be available according to ACA rules for individuals and families with incomes ranging from 100% to 400% of the FPL. The subsidies will be used to reduce the premium cost for health insurance coverage offered within the health insurance exchanges. Assistance will be available for out-of-pocket expenses for those with incomes ranging from 100% to 250% of the FPL. Examples of out-of-pocket costs for which assistance will be provided are copays and deductibles that would typically be the responsibility of the policyholder.
The premium subsidies will provide consumers with a private insurance alternative to employer-sponsored coverage that may be too costly.
Guaranteed Issue – Guaranteed issue means that regardless of your health history or current conditions, you are guaranteed to receive health insurance with no restrictions or waiting periods related to pre-existing conditions. Prior to ACA, guaranteed issue was only available in the employer-sponsored group market, and private insurance was not guaranteed issue. An application included countless health questions, required full documentation of the applicant’s health history and was subject to complete underwriting review. An application could be declined, or the coverage could be altered by riders, which would modify the benefits for a specific health condition.
ACA has done away with disclosing health history, answering health questions and underwriting review. All applications will be issued, without riders to modify coverage, and an individual’s premium cannot be increased due to a health condition.
Texas consumers can apply for private insurance and not worry that the application will be declined or altered. The policy will be issued the same as if the coverage were offered by an employer.
Easy Enrollment – Private insurance as was previously indicated had an extensive application process that required underwriting review in order to determine suitability for coverage. Applications typically required a phone interview with the applicant, and many times medical records would be requested from the applicant’s doctors. All of these steps made for a complicated and time-consuming process. Although the application process had become much easier with the adoption of online applications, applying for coverage could take up to 45 days to determine if coverage would be issued.
The application for ACA plans will be much simpler since all health questions have been eliminated and detailed information from the applicant’s physician is not required. The issuance of effective dates will also be simplified. Applications that are submitted before the 15th of the month will have an effective date of the 1st day of the month following the submission of the application. Applications that are submitted between the 15th and the last day of the month will have an effective date of the 1st of the second month following submission of the application. Enrollment for ACA health insurance plans has been simplified.
All of these changes will make private insurance in Texas a much more competitive option to employer-sponsored group coverage and will give consumers the ability to weigh and evaluate which option best suite their family’s needs and budget.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.