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  • Writer's picturePAHA Staff
    • Dec 31, 2020
    • 6 min read

Comment - PA Senate Bill SB939


Copy of Letter sent to Senator Vincent Hughes regarding this memorandum:



MEMORANDUM

Posted: December 22, 2020 05:11 PM

To: All Senate members

Subject: Prohibiting Annual or Lifetime Limits on Health Insurance Policies

 

Attn:


12/29/20


Good morning Senators,


First off, I’d like to say thank you for taking the time to hear our concerns regarding the reintroduction of Senate Bill 939.


PA Health Advocates, LLC, is a nonpartisan health insurance agency and consumer advocacy organization based in Lancaster PA. We recognize the importance of quality insurance and tend to be one of many behind the scenes trying to help when complex cases arise. We currently serve clients in 11 states, across all health lines; Medicare, Individual Medical, Group Benefits. Additionally, we are a community-based organization with COMPASS access for Medicaid, and CHIP. Our firm was founded due to a personal health event when our principal’s son was born on New Years Day and insurers required two deductibles to be met as his son was born in one plan year and the mother was admitted in a different plan year. Our firm not only assists with binding insurance but also, we will serve as power of attorney to clients who are wrongfully billed. Our most extreme example being a client in New Jersey whose daughter was born in the NICU. Between the birth and discharge, the hospital system and insurer ended their contract to be in-network. More than $750,000 of medical debt was forwarded to the insured. We were able to negotiate with the hospital and insurer to get all bills covered under the policy.


We feel that your motivations are without a doubt in the right place. Consumers that meet an annual or lifetime limit are forced to address medical debt that they anticipated the insurer to manage. Our concern is that SB939 casts too broad a stroke and may limit viable solutions in the future from being available to PA Residents. With the Affordable Care Act, the requirement to eliminate annual and lifetime limits on claims to be considered ACA compliant is already established. For ACA compliance, a carrier must have this provision in order to file with the commissioner as an H16I(Individual Health Insurance Plan), and market their plan on the exchange; in PA’s case, Pennie. SB939 stands to impact some but not all of the alternative medical solutions outside of the scope of ACA. It will reduce access to H16I.004 Short Term, but exempts o H21 Health – Other or H15I Individual Health – Hospital/Surgical/Medical Expense. Page two, line 16 of SB939 makes indemnity policies(H21/H15I) exempt but is not clear on Short Term. Instead, it identifies “Any other similar policies providing for limited benefits” with a broad stroke leaving the bill up to interpretation. Although insurers and their legal teams may see an opportunity, if the insurance commissioner interprets the bill as narrowly as possible, this solution may be removed.


Within the individual market, the three largest groups that access individual health are Self Employed Solopreneurs, employees of businesses with fewer than 50 employees, and those that retire prior to age 65. According to the Pennsylvania Department of Community and Economic Development1, we have nearly 1,000,000 small businesses within the commonwealth. For many of these businesses, the underlying employee makeup is a mix of rank and file employees and senior leadership. The employees average $30,000 to $50,000 and are largely eligible for Tax Credits and in turn ACA compliant plans. For the senior leadership, however, trying to find viable options means looking at all solutions presented to them, whether on exchange, off exchange, faith based, CHIP, or Short-Term Medical options. Finally, for retirees, income is the number one determinant to find affordable insurance. If they live primarily off of rental income or systematic 401(k)/IRA withdraws they may exceed 400% of the federal poverty limit and not eligible for Premium Tax Credits.


If a household of one exceeds $51,040 or a household of two exceeds $68,960, they are not eligible for tax credits through the ACA2. To put this in perspective, the cheapest ACA plan, without tax credits, available to a 60-year-old couple in Lancaster County is $1,471.69 per month. This is the Capital Blue PPO Choice plan with a $7,100 deductible per person and no Rx benefits until that deductible is met. The one benefit is a $50 copay for Primary care visits and $85 copay for specialists. For that same couple, the second cheapest silver plan (the plan the ACA uses to benchmark tax credits) would cost them $2,227.27 per month. How does a couple at say $70,000 who doesn’t qualify for tax credits, then turn around and pay $26,727.24 in just premium? Let alone if they use the insurance? This is where short term medical has come in to fit a need. In states like New Jersey, legislation has forced Short Term Medical carriers out of the state which either results in consumers going uninsured (which is bad for the system) or draining retirement savings in order to simply pay for health insurance.


With Short Term Medical, we agree that not all plans are created equal. In addition, Short Term medical policies with annual/lifetime limits that are too low and Fixed Indemnity policies peddled as Short-Term Medical should not be allowed. For our clients, the only Short-Term medical policies we recommend are properly filed with the state, go through an exhaustive screening process each fall, and meet the minimum criterion to be recommended. An annual limit of $100,000 is useless against a heart attack or cancer. For the 2021 Plan year, we are utilizing UnitedHealthcare’s $2,000,000 limit Copay Select A. The likelihood of hitting $2,000,000 in a years’ time is very small. We explain to clients the shortcomings of these plans include a lifetime limit on claims, no free preventative care, no prenatal care, and preexisting condition exclusions. If they understand those shortcomings then a Short Term Medical policy with a $5,000 deductible would run $787.65 with United. It would be a savings of $17,275.44 from the silver plan. Although prenatal care is not covered, for most of the 40+ population that is not a reason not to enroll. For free preventative care, they won't spend $17,275.44 out of pocket even if they got a colonoscopy, 3D mammogram, blood work, OB/GYN, and annual physicals. For the lifetime limit we recognize, in the event, the client is reaching claims to that extent, their income sources are generally altered. For a small business, sustaining income through a catastrophic medical event is difficult. That reduction in income makes them eligible for ACA or Medicaid options. Additionally, with preexisting condition exclusions baked into these plans, what it does is force individuals with higher claims in years past to go back to the ACA for future claims. This is good because for the years a client is healthy, they can save premium dollars and have an adequate pool of funds (2,000,000) to manage large claims. At that point, where it is medically necessary to move back to the ACA, they can. The preexisting exclusion provisions put a stop to enrollment in the wrong plans.


Our recommendations:


  1. Make carriers require income inputs for all plans. Require a disclaimer that consumers attest stating “Based upon your income, you may be eligible for tax credits that could bring your premiums to xx” Rate tables are available every September on the Department of Insurance website. This should not cause a burden for insurers to calculate APTC and the cheapest Bronze plan to at least encourage consumers to verify their options before they sign on the dotted line.

  2. During the 10-day free look of the policy, allow a Special Enrollment Provision that allows a consumer to enroll in an ACA plan should they be denied short term medical coverage, or if the plan was misrepresented by the broker.

  3. Audit Short Term Medical policies to ensure they are properly filed in SERFF

  4. Require Annual/Lifetime limits to be greater than or equal to $1,000,000 as a baseline.

  5. Provide better consumer literacy on the differences between these solutions (Medicaid, CHIP, Major Medical, Fixed Indemnity, Faith-Based)


If Major Medical ACA is akin to a nail, Short Term is a screw. Both are important fasteners that have their place. Our job as the broker is to make sure the consumer knows about both and when to use them. https://www.pahealthadvocates.com/post/evaluating-the-pros-and-cons-of-individual-medical-vs-stm-coverage is an example of such Consumer Literacy pieces we share with clients who don’t qualify for the tax credits through the ACA. Our challenge is brokers facilitate change on a Micro scale. Our voice and your legislation have the potential to affect change on a Macro scale to the 1,000,000 small businesses across the commonwealth.


Thank you for your time,


Joshua Brooker, REBC®, ABHP, ESP, ASFC

Principal | PA Health Advocates



1| https://dced.pa.gov/paproudblog/support-local-small-businesses-shopping-small-november-30/

2| Federal poverty limit multiplied by 400% | FPL Guidelines: https://aspe.hhs.gov/poverty-guidelines

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