VCU WEBCAST: PRIVATE HEALTH COVERAGE Presenter: Daniel Fortuno Captioning Provided By: Caption First, Inc. >> DANIEL FORTUNO: Thank you so much for the opportunity to be here, and with that, let's go ahead and begin. We're going to be talking about private health coverage. Now, many people, when they discuss health coverage and they're talking about private coverage usually refer to the term "insurance." We're not going to be doing that, because when you say "insurance," you actually are referring to specific products and you'll understand that a little bit better as we continue this morning. Now, health coverage comes in two parts. Basically, there's public coverage and there is private coverage. Many of you familiar with the public coverage that comes from Medicaid or from Medicare, and as work incentives we're familiar with 1619(b), Medicaid buy-in programs that exist, and the 8-year additional amount that is offered to Medicare beneficiaries. With the new prescription benefits coming about, understanding private health coverage is really important. It's a work incentive that's not very well known about. Many people, when they are on disability-based benefits, considering working, focus mostly on retaining what they've had in the past. What we're hoping to do today is to get you to understand that people with disabilities who have been on benefits or not been on benefits can actually access this as an incentive to be able to take employment that offers this type of coverage. When accessing private health coverage, there's a couple of different ways it can be done. You can access it individually, through the marketplace or a broker, or you can access it through group coverage, which is utilizing an employer, professional group, or an association. The thing to consider is that there is medical underwriting where they review a medical record to determine if they're going to cover the individual or the family member. If you're in the individual marketplace, they can look back 10 years. The benefit of accessing group coverage is, there is no medical underwriting. If it is accessed during the initial enrollment period. Now, a couple of things to pay attention to. Some things that most people don't consider is that there is an active work requirement which is a minimum number of hours per week to be eligible for benefits, and that could be for any of the benefits that an employer may be offering. And it can range anywhere from 20 to 40 hours per week. For example, if you have an association, they may simply require that you be an associate member. The Screen Actors Guild, they actually require that you meet certain criteria, work a certain amount of time, and utilize a system where they give you kind of like coupons, if you would. That is not the correct term, but you collect those and once you have enough of those, then you're going to be eligible to actually access their health coverage. So it is very dependent on the source that you're getting the coverage from. Now, there's also the service wait. That's the time period before the coverage is eligible -- or you're eligible for the coverage, that is. And that can be anywhere from you get your coverage immediately, or you may have to wait as long as six months. Some of you, the jobs that you're at right now, you may have waited three months to enroll. Service wait is the time period that a person has to be employed or a member of the group before they're actually able to access the coverage. Now, another thing to consider is the initial enrollment period that I mentioned earlier and open enrollment. Now, the initial is that very, very first time the coverage is being offered. That is the one point that there is no medical underwriting requirement. If a person chooses to access coverages and misses that initial enrollment period, they can access an open enrollment, which is a normal annual period, but medical underwriting will apply and they can actually look at a medical record 10 years back. So it's really important that the consumers that are looking at taking jobs access the coverage during the initial enrollment period. Now, these are the different types of health coverages we're going to talk about. We're going to be talking about HMOs, health maintenance organizations, indemnity plans, preferred provider organizations, point of service, self-insured/self-funded trusts and then later, we're going to be talking about continuation, which is COBRA/OBRA, and then state continuation. With that, let's begin with HMO. The HMOs are actually not health insurance. A lot of people, here again is where people call this product health insurance. It's a prepaid health plan, and it's where a prepaid health plan contracts with specific medical providers. The individual or family is assigned a primary care provider, and that is kind of like the gatekeeper who's responsible to keep the expenses down. They actually receive incentive pay. Whether that's right or wrong or we're comfortable with it, it's the truth of the matter and it's the structure of the service. If you're consumers know that up front, they'll make sure that the primary care provider they work with is actually somebody they're comfortable with. Now, another reason people may access it as part of the feature is that there's low copayments per visit, and the costs for enrollment usually is lower. There are no deductibles. The office visits can range anywhere from 5 to $25, and hospitalizations usually around 50 to $200. So the expenses are a lot less than other types of coverage. Now, let's talk about indemnity plans. Now, indemnity plans is an old style of coverage. We don't see it in all parts of the country as much, but it does allow freedom to choose any physician that an individual wants, or family, for that matter. But it does require deductible, co-payment, and co-insurance. The co-payment is what the individual or family is responsible for, and the co-insurance is what the plan is liable for. It also provides an out-of-pocket maximum. Now, something to consider is that whenever an individual works in an indemnity plan, they need to make sure that the providers they work with are within the usual and customary rate of that plan. If the provider does not accept that usual and customary rate, that individual or family can be responsible for the difference. So as a point of reference, when somebody takes on a new provider, always, always let them know it's important to make sure that that provider works within the usual and customary rate of that indemnity plan. Now, let's give you an example. Let's say you have an indemnity plan that has a $600 deductible, a 30% co-payment, which means that the insurance now is going to cover 70%, and there is a 3,000 out-of-pocket maximum. That would mean annually with this example that the individual or family would be responsible for $3,600. So let's take it a step further and say we have someone who has $50,000 in medical expenses. The individual is only responsible for that deductible and the out-of-pocket maximum, and in this example, the insurance would pay 46,400. Preferred provider organization, PPO. Features of a PPO. They contract with specific medical providers and they provide services at a specified rate. That is considered to be the preferred provider rate. Hence is where the name comes from. It also has a deductible, co-payment, and co-insurance, and also provides for an out-of-pocket maximum. Now, if someone chooses to work outside of the preferred provider group, there will be a higher deductible, co-payment, and at that point the individual or family needs to look at the usual and customary rate and make sure that it is negotiated. So let's look at an example here where we're showing somebody working within the PPO and working outside of the PPO. As you can see here, the deductible does increase, the co-payment increases, the insurance pays less, and the out-of-pocket maximum does increase and the individual is responsible to negotiate a rate. The person has more choice, but there is more cost. Point of service, POS. It provides coverage through multiple tiers. There could be 2 to 3 tiers. Depends on the plan that's being offered. Now, the way these are structured, I'm showing here an example of 3 tiers. Let's say in Tier 1 you're assigned a primary care provider. You do not have a deductible. Your copayments are the small 5 to $15 office visits. And the hospitalization could be anywhere from 50 to $200. If you work within the assigned group, it's like working with a PPO. You then have a deductible that's placed on you, but you don't have to be referred by anybody; you can self-refer. You will have a co-payment and an out-of-pocket maximum. And then if you choose to go outside of the group entirely, you do have that choice, but, again, you need to negotiate the rate. You'll have a higher deductible. The co-payment amount that you're responsible for will go up. And your out-of-pocket maximum will go up. Self-insured trusts. Now, this, again, is not health insurance. It's where medical costs are paid with funds set aside specifically for the healthcare. Do not confuse this with a medical savings plan. A medical savings plan is when an individual sets money aside for themself or their family, and it usually is a small amounts of number compared to a trust. A trust is usually multi-million dollar amounts that a large company, a union, will set aside and then they actually pay medical expenses out of that. They can be provided through a third party, which is when they may use like MetLife, Great West, there's a variety of different companies that will sit in that position to provide that service, although a lot of people don't know that they're in a self-insured trust. They actually think that MetLife is providing their health coverage. Now, they can be structured very much like a PPO or an indemnity plan, so depending upon the structure that has been set up, the usual and customary rate may need to be negotiated. They also may have limitations on preexisting conditions for the first year. So it's important that an individual, when accessing this coverage, take a look at that and be aware of that. Now, let's talk about my favorite law, and no that it sounds a little bit corny and I will admit being a benefits nerd, but the Health Insurance Portability and Accountability Act I discovered in 1997. A lot of you are familiar with it because of the accountability piece. The part that I find to be beneficial for the consumers that I've worked with is the issue of portability. Portability offers protection for people with disabilities and preexisting conditions. Now, let's talk about utilizing credit, because I'm going to focus on two parts of this law. The first being utilizing credit from previous coverage. What that actually does is improves access to group health coverage for individuals who have preexisting medical conditions, and it's available when they change employment or they're returning or entering into the workforce. Now, let's get into a preexisting condition. The beauty of this law is that it establishes an even playing field nationally as to what a preexisting condition is, when it comes to health coverage. And that is, when an individual seeks treatment six months or prior to enrolling in that group coverage. Now, that can be taking medications or even a physician consultation. It's not uncommon for people to do testing, sometimes, for certain medical conditions that is anonymous. There is not a documented test in the medical record, but that physician consultation now qualifies that that person does have that condition. It's not the end of the world, but it's really important people realize that they have a preexisting when they're entering into group coverage. Exclusionary periods. A preexisting condition exclusionary period simply is when that group coverage excludes for the preexisting condition. That doesn't mean the coverage will never cover the condition. There's a specified time period that they do not have to cover it. Now, part of the HIPAA law is that preexisting condition exclusionary period cannot be greater than 12 months for any group coverage nationally. The beauty of this is group coverage, again, is employer sponsored and association affiliated. Therefore, anywhere in the country, if an individual or family member, is trying to access group coverage, they will not have a problem that the preexisting -- the preexisting condition exclusionary period cannot be greater than 12 months. Using prior coverage. Now, this is where the law actually starts to get interesting. Any prior coverage -- individual or group -- can be used to reduce the length of any preexisting condition exclusionary period when enrolling in group coverage, as long as the gap between the old and the new is 63 days or less. Now, remember we discussed the service wait. That's that time period that a person has to wait before they're actually enrolled in the coverage. That doesn't count against that 63 days, so you can have an individual who's been on a health plan for a varied amount of time and, all of a sudden, loses the coverage a month prior to taking employment and they may have a 6-month service wait. They still get to use that. So the service wait never counts against the 63 days. Now, this example here, I'd like us to start on the right and work left. So this talks about the fact that no health coverage -- that is, group -- can have more than a 12-month preexisting condition exclusionary period, and this period is reduced month by month by previous coverage, going to the left, if there's not more than 63-day gaps. And what determines it is the month -- number of months of previous coverage. So month by month -- so if a person has 6 months of previous coverage, they go into any group coverage, they get that 6-month credit as they enter in. And the best part of this law is that Medicaid and Medicare are public health coverage that qualifies. So the rumor that goes around, "Well I've been on MediCal or Medicaid or Medicare and I've been on disability and I'll never qualify for an employer coverage" is not true. It's just people don't know about this law that's been around since 1997. Now, in certain states, there are specific laws that actually make that 12-month amount, which is a national maximum, less. So in some states, HMOs, POSs, PPOs and indemnity plans, have lesser than the 12 months. For you to be able to find out in your state, I would highly recommend that you go to the National Association of Insurance Commissioners website. You can find your local state department of insurance and then find out what the laws are in your area. Now, let's talk about access to individual health coverage. This is a part of HIPAA that allows individuals losing access to group coverage to enter into the individual marketplace. So we're going from a group coverage now into the individual marketplace. Now, it's available when there is an end of COBRA, if a person is not disabled, and when an employer no longer exists and the group ends. For example, a company may go bankrupt. If the company goes bankrupt, there is no group. Therefore, the group cannot continue. Now, employers are not obligated by law to notify individuals about this provision. Now, to qualify, an individual must have at least 18 months of previous group health coverage, no longer be eligible for any COBRA or any other coverage, including Medicaid or Medicare, and then the individual has 63 days from that date of the previous coverage to actually obtain coverage. During that time period, they can access individual health coverage without worrying about providing proof of good health or review of their medical record based on any preexisting condition. Now, plans are purchased through insurance brokers, although some states you can go to their -- the state insurance website and actually find the listing of the HIPAA products, and some do not. Some brokers don't get real high commissions, so finding a HIPAA product can be a challenge, another with some consumers it's worthwhile. They sometimes refer to them as HIPAA products. And the cost can be high, because there is no regulation on how high or how low they can be. Now, let's talk about group continuation. First we're going to talk about COBRA. It's a federal law of employers -- and this is employer group continuation -- of 20 or more employees. The right to continue health coverage for the employee and their dependents based on a qualifying event. Now, there are many different types of qualifying events. Actually, a lot of people think if I get fired, if I let -- get let go, I'm going to not be able to have COBRA. It's not true. The only reason that an individual wouldn't qualify is if they commit gross misconduct. That would be arson, embezzlement, certain employees from Enron may not qualify for COBRA, but it is based on a qualifying event. And we very rarely see individuals not qualify. Now, what does it actually provide? Well, it allows a continuation of the group coverage that the individual has, the same exact coverage, for a period of up to 18 months or until the individual's eligible for Medicare. There are separate periods of time for spouses and children. And the premium is equal to 102% of the total health insurance cost. And the reason why I say emphasize "total" is many times people will be on a plan and pay a portion of the insurance, where the employer is paying the balance. Well, on COBRA, you pay the full amount, plus the additional 2%. Now, what are the deadlines, people who are trying to access COBRA, are going to experience? Well, the employer deadline is they have 30 days to provide the application or the COBRA notice. A lot of times people receive these in the mail and they toss them because they figure, "Well I don't really know what this is or I really can't afford to pay the premiums." But employers are obligated by law to provide that. Now, let's talk about the individual deadlines. The individual has 60 days to sign up, plus an additional 45 days to pay whatever premiums are due. It's really important that they pay attention to these deadlines and pay the premiums, because if they don't, the service providers will have the ability to come against them for whatever medical expenses that they've incurred, and that can be very uncomfortable and costly for an individual. Now, let's talk about OBRA. OBRA is another federal law, and it's for employers of 20 or more who have a Social Security-approved disability. Now, this is a Social Security-approved disability within 60 days of that original COBRA qualifying event. Now, it is a continuation for a maximum of 11 months or until the individual is eligible for Medicare. Now, premiums that the individual is responsible for goes up 48%. It's 150% of the total health insurance cost. So mind you, it's the full amount that the employer pays for the individual, plus an additional 50%. Now, to be eligible, a copy of the Social Security award letter needs to be provided to the previous employer or COBRA administrator if the company has chosen to use another entity to administer their COBRA within 60 days of their receiving it. Note also that that award letter must indicate, as we mentioned previously, that COBRA qualifying event is within 60 days of when the person -- or what the award letter is showing the disability onset date to be. COBRA is 18 months; OBRA is 11 months. Hence, 29. OBRA was actually put in place to carry people to Medicare eligibility. Now, what do we do if we have individuals that are in small groups? Well, there are state continuations and they vary greatly from state to state. There really wouldn't be enough time to go into the different versions that we are familiar with, but they are referred to generally as mini-COBRA. And they're for employers of less than 20, and, again, it follows the same suit, that it's a right to continue health coverage. In some cases for the employees and in others also for their dependents. Based on qualifying events. Now, each state law has the right to determine the size of the group required to participate, and the length of coverage that they're actually going to provide. Now, the group size can be anywhere from 2 to 19. There are some states that require it be from 10 to 19, and coverage can be as little as one month and in some states it can go as long as 36 months or until Medicare eligible. Now, these are three websites that are sponsored by insurance companies. I'm not promoting an insurance company, but they do talk about mini-COBRAs, and I'm giving you three because each of them have a couple of different things that they point out that will help you to find what mini-COBRAs, and what is the basic structure, that exists in your state. With that, I'd like to say thank you very much. It's truly been an honor to be here today, and I wish you the best with your consumers in finding the best private health coverage that is available to them. (Webcast ended at 1:30 p.m. CT)