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Ohio Insurance Regulators Warning Of “Rate Shock” Under ACA

Over the weekend, a handful of sources, mainly regional or beltway publications, report on an analysis out of Ohio which predicted premiums in the state would rise under the Affordable Care Act, giving evidence to the right’s warnings of “rate shock.” The Cleveland Plain Dealer (6/9, Koff) reported that Ohio’s insurance regulators “are warning that some health policy premiums may skyrocket next year,” while critics “counter that the Ohio Department of Insurance used confusing and misleading information to arrive at that conclusion.”

Ohio is using a study by the Society of Actuaries and “estimates the cost to cover healthcare insurance will rise an average of 88 percent” for individual insurance policies. The Plain Dealer said HHS has found the society’s study “flawed” and “continued its criticism this week and, with other critics, said the state should have used actual 2013 figures rather than those from a study.”

The Hill (6/10, Baker) “Healthwatch” blog noted that “the cheapest policy available in Ohio after the Affordable Care Act takes full effect next year would cost roughly $280 per month.” Modern Healthcare (6/7, Block, Subscription Publication) also reported.

Roy Reacts To Ohio Rate Projections. Avik Roy, in a piece for Forbes (6/10), argues that the latest evidence out of Ohio proves that “Obamacare will dramatically increase the cost of insurance for people who buy it on their own.” Roy concludes, “the bottom line is this: President Obama and then-House Speaker Nancy Pelosi promised that premiums would go down for those who already have insurance.” And while “for those lower-income folks who benefit from the subsidies provided by other taxpayers, the costs they see may go down.” However, “middle-class Ohioans will pay more in taxes to pay for those subsidies, and more in premiums.”

Source:  NAHU Newswire

Wellness Programs and Rewards Final Regulations

Final regulations on wellness programs and rewards for group health plans were issued on May 29, 2013 by the Departments of Treasury, Labor and Health and Human Services. These regulations apply to insured and self-insured group plans, both grandfathered and non-grandfathered, for plan years beginning on or after January 1, 2014.

Groom Law released their memo on Wellness and rewards programs.

The final regulations confirmed the maximum wellness reward amounts that will be allowed.

  • The maximum wellness program reward is 30 percent of the total cost of medical coverage, including both employer and employee contributions.
  • The maximum wellness program total reward may be increased to 50 percent for programs related to tobacco use.
  • Rewards can take many forms, such as premium discounts or surcharges, reduced cost sharing, enhanced benefits, gift cards or deposits to Health Savings Accounts or Health Reimbursement Accounts.
  • The reward must be available at least once per year for all similarly situated individuals.
  • If family members participate in wellness programs, the reward can be based on the total cost of coverage for all covered family members. If some family members are eligible for the reward and others are not, employers have flexibility in determining the portion of the reward attributable to each family member.

There are two types of Wellness Programs: Participatory and Health-Contingent

1. Participatory Wellness Programs

Any Participatory Wellness program reward is based only on participation, not on meeting specific health standards. Examples of these types of programs include health club discounts or rewards for completing a health assessment. There are no limits on the rewards for Participatory Wellness programs.

2. Health-Contingent Wellness Programs

Health-Contingent Wellness programs require individuals to meet a health standard or participate in a health program to receive a reward. Every individual eligible for the program must be given an opportunity to qualify for the reward once a year. The reward cannot exceed the maximum amounts noted above.

Health-Contingent programs may be Activity-Only programs or Outcome-Based programs.

i. Activity-Only Wellness Programs

  • Individuals are rewarded for completing a program such as a walking, diet or exercise program.
  • Individuals are not required to achieve a specific result such as losing weight to earn the reward.
  • A physician may provide verification that a medical condition makes it unreasonably difficult or medically inadvisable for a person to perform the activity.

ii. Outcome-Based Wellness Programs

  • Individuals are required to achieve a health outcome such as a specific blood pressure or BMI level to receive the reward.
  • Individuals who do not meet the required standard must take additional steps such as working with a health coach or completing a health improvement plan to receive the reward.
  • Physician verification that a medical condition makes it unreasonably difficult or medically inadvisable for a person to meet the standard is not permitted for Outcome-Based programs.

iii. Reasonable Alternative Standards

If an individual does not qualify for a Health-Contingent reward, a reasonable alternative standard or waiver must be available.

  • For Activity-Only programs, a reasonable alternative for obtaining the reward must be provided if it is unreasonably difficult due to a medical condition or medically inadvisable for an individual to attempt to complete the activity.
  • For Outcome-Based programs, a reasonable alternative must be provided to all individuals who do not meet the initial standard.

As an example, a reasonable alternative for an individual who failed to meet a BMI standard might be participation in a weight loss program or the requirement to reduce BMI by a small amount or percentage over a year’s time.

Any materials provided to employees that describe wellness programs must include information about the availability of reasonable alternatives and contact information to request an alternative. Reasonable alternatives do not need to be defined in advance and can be determined on an individual basis.