Group Health Insurance in Texas
Obtaining insurance coverage in a business setting is a more complex process than buying insurance as an individual. Most decently sized businesses choose group health insurance for their employees. The question is, however, what are the qualifications for both individuals and businesses for group health insurance in Texas?
Let’s briefly examine how group coverage works and how companies and individuals are affected by the requirements for eligibility.
A Basic Overview of Group Coverage
There are other groups that may be included in group insurance coverage, but for this article we’re strictly referring to a business with employees. Group medical coverage is a single policy issued to a group of individuals (or employees) and their dependents. On the flip side of the coin is individual medical coverage, which is a single policy provided to single person or family.
There are specific rules and regulations that group health insurance in Texas coverage must adhere to. This is primarily because of the calculated risk associated with specific coverage. For individual coverage, unlike group health insurance, premiums are based on the market and the general cost of coverage throughout the market you live in.
However, for small business group health insurance in Texas, the insurer dictates the premium price based on risk factors throughout the entire group. The Affordable Care Act requires businesses to provide health insurance to their employees or risk a $100 a day per employee fine.
Eligibility for Companies
Regardless of their health status, individual employees are guaranteed group coverage by their employee if they choose to purchase it. Both small and large companies are required to offer coverage. Businesses with more than 50 full-time employees, or full-time equivalent, fall under the Employer Shared Responsibility Payment. Small businesses with fewer than 50 full time or full-time equivalent employees, are not required to pay no penalty for not offering health insurance.
However, regardless of the size of the company, all employers are required to provide specific information about coverage options available on the marketplace.
Employers also have to adhere to strict group health insurance requirements. These include:
• Plans with No More than a 90 Day Wait Period
• Employers must provide a Summary of Benefits and Coverage (SBC) to employees
• Dependent Coverage Extension
These rules and regulations vary depending on the group health insurance plan. For more information about the requirements, Minimum Essential Coverage, and more, talk to our experienced HCI team.
Eligibility for Individuals
For individuals, group health coverage extends to any employee who works 30 or more hours per week on average. Coverage also extends to their dependents, including children, spouses and anyone they may be required to take care of physically or financially. Employers are required to share their coverage options with employees upon hiring. Additionally, dependent children may be covered until age 26. However, they’re employer must not offer health care coverage for the rule to apply.
Employees cannot be denied coverage for pre-existing conditions or because of previous medical conditions. Employees must be enrolled to ensure coverage for all of their dependents. If an employee does not enroll, dependents do not have coverage through the employer.
Group health insurance is one of the primary benefits of the Affordable Care Act. It is designed to provide coverage to all employees who fall under the full-time law. However, understanding how eligibility works and what coverage options are available, is critical to pursuing the best possible coverage available. Employers too need to fully understand the requirements for their group health insurance before committing to single plan.
For more information about group health insurance in Texas, contact the HCI team. We’d be happy to help.
10 Common 401k Questions
401(k) plans are the most common defined contribution retirement plans in the U.S. The problem is, not every worker fully understands how they work. To aid in clarifying how they work and how they can serve as a powerful retirement savings tool, here are a few commonly asked questions and answers.
1. Is it possible to spend some of my 401(k) before retirement?
Using funds from your 401(k) isn’t cut and dry. There are variables. Common exemptions to early-withdrawal penalties including first-time home buying and college expenses, apply strictly to IRAs not 401(k)s. Some cases where it is possible to withdraw funds from your 401(k) include withdrawing money for medical bills that go beyond 10% of your adjusted gross income. Individuals with permanent disabilities may also withdraw from the account with no penalties.
2. What happens if I retire early?
If you decide to retire before 59 1/2, you can withdraw funds from your 401(k) without penalties under certain circumstances. These include if the “separation from service” rule allows you to stop working for your employer after you turn 55 and receive your funds. Regardless if you’re fired, laid off or retire. You may be able to tap into the IRS’ substantially equal periodic payment known as (SEPP), wherein you agree to withdraw funds based on your life expectancy as calculated by the IRS.
3. What is the maximum amount I can contribute to my 401(k)?
In regards to the 2017 tax year, the IRS’ elective deferral limit for 401(k)s is $18,000, with each payment of $6,000 beyond that only being accepted by individuals 50 years and older. This amount doesn’t include employer contributions, automatic contributions, or other types of 401(k) contributions. The maximum amount for all source contributions is $54,000 for individuals under 50 and $60,000 for those over age 50
4. What is a good amount to contribute to my 401(k)?
There is no hard and fast rule to how much you should contribute. However, at the very least you want to contribute enough to take advantage of your employer’s matching program. Putting in less than that is like throwing away free money. Calculate how much you’ll earn by retirement and if it isn’t enough, start contributing more.
5. What does “vested” mean?
Vesting means that you own the money you put into your 401(k). While you 100% own your elective contributions, your employer’s contributions could be supervised by certain rules. Check with your employer to see what rules may be governing your contributions.
6. Is it possible to borrow from my 401(k)?
In cases where your employer allows you to borrow money from your 401(k) you may certainly do so, but you will likely have to pay yourself back with interest. You may borrow up to half of your balance or $50,000 whichever is less. However, it is generally recommended to avoid borrowing from your 401(k) because of compound growth and hefty penalties.
7. What about my 401(k) through my previous employer?
There are multiple options for your old 401(k) account. You may choose to leave it as is, only if it has a minimum threshold of $5,000. Another option is to roll it into an IRA. Finally, you may have the option to put it into your current employer plan. Cashing out is another option, but it’s generally recommended against.
8. What is the best way to invest my 401(k)?
While there is no clear way to tell you how to invest in your 401(k)s, you should be able to set up a primer on asset allocation. This allows you to dictate how much money should be in cash, bonds and stocks. Research what type of investments are available through your plan to learn more.
9. Is it possible to contribute to both an IRA and a 401(k)?
Yes, you can contribute to both. However, your income will dictate if you can take a tax deduction for traditional IRA contributions or if it’s possible to contribute to a Roth IRA at all. If your adjusted gross income is less than $62,000, and you’re single, you can deduct all of your IRA contributions.
10. Can I get a tax reduction for my 401(k) contributions?
Absolutely! 401(k) contributions are excluded from federally taxable income. They don’t come off your Social Security or Medicare taxes, but nonetheless this is still an excellent deduction. Additionally, you don’t have to itemize deductions to enjoy the perks. Your W-2 will show your 401(k) contributions automatically.
Have more questions that aren’t answered here? Then please contact our team. We’re happy to help you make the best retirement decisions.
Stand Alone HRA
On December 13, 2016, President Barack Obama signed the 21st Century Cures Act into law. This law allows small businesses the opportunity to sponsor a stand alone HRA (health reimbursement arrangements ) to fund employees who wish to purchase individual health plans through the free marketplace. While the larger bill focuses on improving the speed with which drugs are approved by the FDA, a provision within the bill has a direct effect on employer-provided health benefits. Small employers will now be able to pay for nongroup plan premiums using HRAs.
Before small employers deviate from the ACA law, clarification is needed.
Small employers with fewer than 50 full-time employees or full-time employee equivalents without a group health plan may now fund their employee HRAs to pay for out-of-pocket qualified medical expenses along with nongroup plan health insurance premiums.
Previously, the ACA restricted employers from providing money on a pretax basis for employees to buy their own health insurance through an open market. This new 21st Century Cures Act, integrates important components of the Small Business Healthcare Relief Act to breed a new form of HRA—a qualified small employer health reimbursement arrangement (QSEHRA).
What is the QSEHRA?
This new form of HRA provides specific benefits and regulations for small employers. These include:
- A maximum reimbursement of health expenses of $4,950 for single coverage and up to $10,000 for family coverage, and a provision for inflation adjustment.
- Employees are not allowed to contribute to the HRA either directly or indirectly through salary reductions.
- Maximum dollar amounts are prorated for those who are not covered by their QSEHRA throughout the entire year.
- Employees who have not yet worked for their employer for 90 days, are younger than 25, or who are covered by collective bargaining agreements for health benefits and accidents, part-time and seasonal workers are not covered under the QSEHRA.
How Small Employers Benefit
While the law goes into effect for coverage staring Jan. 1, 2017, it can prove beneficial for employers in the coming years. Small employers who are eligible under the new law can expect multiple benefits.
Employers no longer have to worry about penalties from the Internal Revenue Service or Department of Labor when using a stand alone HRA to fund their employee’s health care. This naturally leads to more flexibility in terms of benefit offerings while simultaneously allowing employers to help employees find and purchase affordable insurance plans that fit their needs.
Instead of being locked into one group or another, small employers can now provide either group market insurance or individual market insurance, with both providing tax advantages. With some 40 million Americans employed through small businesses, this will undoubtedly play a major role in keeping health care affordable.
Important Facts to Remember:
- Notice of the availability of a QSEHRA must be offered to employees some 90 days before the start of the new year, or the beginning of their eligibility. Issuing a notice in 2017 may be done as late as March, 13, 2017.
- Contribution amounts must be set according to the following:
Terms must be the same for each employee. Employers that offer 50 percent of premiums for employees and dependents, employees with a spouse and children could receive more reimbursement than one without dependents—this is legal. Employers cannot, however, pay 100 percent of premiums for their managers and 50 percent for their lower-earning employees.
The entire cost of the QSEHRA benefit must be covered by employers. It is illegal to reduce the pay of employee’s if they accept the QSEHRA benefit.
Maximum annual benefit caps must be kept. Prorated annual maximums must be kept up with, and monthly contributions cannot be exceeded or increased based on when an employee began working.
- Large employers are excluded from the law. Any company with more than 50 full-time employees or equivalents may not benefit from the QSEHRA law.
For further information about the 21st Century Cures Act, please contact the HCI team today.
There are Health Insurance Agents then there is Healthcare Consultants, Inc.
At HCI, we strive to have the best health insurance agents in Houston for our wide range of clients. Business executives and small business owners are turning to us for information and cost-efficient plans now more than ever.
Although the Affordable Healthcare Act has much to do with the recent uptick in health insurance agent services, the benefits of using these agents have long since contributed to companies around the nation. Let’s take a closer look at what companies and executives can expect from using a health insurance agent for their business.
Agents Provide a Customized Experience
Executives are looking for health insurance plans that fit their company’s needs and budget. Some turn to government exchange “navigators” only to be sorely disappointed when they get the bill for their premium. Licensed health insurance agents understand the ebb and flow of the market and create a customized plan for each of their clients. Navigators, on the other hand, aren’t licensed to help companies make decisions based on the health needs of their employees. For a more thorough, precise, and customized experience for your Houston-based business, you’ll need an experienced health insurance agent in Houston.
For Assistance Navigating a Complex Marketplace
The Affordable Healthcare Act was designed on the premise it would make buying health insurance easier for individuals and small businesses. However, the integration of this new law with the rules already in place, has caused massive headaches for small and large corporations alike.
Health insurance agents, conversely, can do the ground work for their client. They pull a variety of plan options, discuss how they work, and provide valuable information that pertains to their client’s budget and expectations. Once a client has purchased health insurance, their work has only begun. Approximately 80 percent of the work that agents do takes place after a purchase is made. They essentially become advocates in a complex marketplace that executives simply don’t have the time to sort through.
To Streamline Health Insurance
At HCI, our health insurance agents in Houston do the following and more:
- Aid with claim issues, write letters and documentation to make sure their client’s case is secure.
- Negotiate on their client’s behalf for lower rates.
- Handle problems with billing.
To Simplify Their Options
Executives know that most challenges can be simplified with the right help—including health insurance. They hire health insurance agents to do the heavy lifting for them, including reading the fine print and translating complex health insurance terminology. No matter how well educated an individual may be, it isn’t easy to compare health insurance plans without professional assistance.
Executives know this, and they delegate this important responsibility to licensed health insurance agents who fully grasp the meaning behind the words. These agents in turn clearly explain the options available and provide advice on the best route to take.
To Cut Costs
With an economy that is still on shaky ground, executives know the importance of cutting costs. Health insurance is expensive, especially in a group setting. To save on costs, they turn to health insurance agents. As health insurance agents in Houston, we offer our services completely free of charge to clients. Our focus is getting our clients the most affordable plans with the best benefits.
To Offer Better Employee Benefits
Employees of the new generation are seeking companies that not only pay well, but also offer better benefits. Health insurance is one of the most important of these benefits. Companies that provide comprehensive health care coverage fair better in a competitive job market than those that opt for the lowest acceptable benefit packages. A health insurance agent can compile a benefits package that holds out the greatest opportunity to attract the right talent.
As a health insurance agency in Houston, we help top level executives secure the right insurance coverage and employee benefits packages available. Our mission to save our client’s money and time lends itself to the results we achieve.
Future changes to the Healthcare Reform… AGAIN!
The election has come to an end, and with it serious changes to the Affordable Care Act could be coming soon. While no one can absolutely predict the future, there are some indicators as to what we can expect from this change in governance. The Republican controlled Congress and the new Republican president-elect Donald Trump, have all repeatedly vowed to repeal and replace the ACA. The question is, how does that effect the provisions in the law that are already there and liked by much of the insured population?
ACA insurance reforms are largely popular with the everyday insured folks. Some provisions under ACA group health plans are favorable, such as the inability to impose lifetime limits on group plan benefits. Before the ACA, lifetime limits were standard, meaning that if a person went beyond their agreed upon lifetime dollar limit for their plan they would no longer benefit from the plan. Lifetime limits don’t increase the cost of insurance by any significant factor, because so few individuals actually exceed them, and they are liked by the insured, so we won’t likely see any elimination of lifetime limits.
Annual limits for essential healthcare benefits are also likely to survive in any repeal or replace strategy—for the exact same reasons that lifetime limits are likely to be accepted. Dependent coverage is also likely to stick around. Before the ACA, children covered by group health plans would eventually “age out” of their parent’s plan once they hit age 19, with the exception of kids in college full-time. The ACA, however, required health plans to cover children until they reach the age of 26, no matter if they married or didn’t go to school. This provision of the ACA is one of its biggest successes, and young adults who are underemployed or unemployed can enjoy some protection thanks to its passage.
The uninsured rate for young people is around one third higher than it is for older employed adults. The coverage offered by the ACA has guaranteed health insurance for millions of young people. The ACA has enabled group health plans to eliminate pre-existing condition exclusions as well. According to some recently proposed Republican health insurance replacements, this pre-existing clause will be eliminated if the law is repealed. Instead of this option, insured individuals would be required to maintain continuous coverage to avoid preexisting exclusions or limitations.
The previous health care law encouraged responsible behavior by motivating people to stay within the insurance pool even when they don’t necessarily need insurance, which in turn helped to keep costs lower.
Another provision of the ACA is tax credits to small businesses who buy insurance. This aspect may survive the proverbial chopping block. Reforms made to Medicare will also likely live on, especially the Medicaid Expansion. Many other provisions simply won’t go on, however, since they are a broader part of the healthcare mandates of the ACA.
Speaking of mandates, that was one of Mr. Trump’s core messages, that Washington was giving too many mandates. His message didn’t go unnoticed, and now that he is president-elect, he will be taking a strong look at the “individual mandate,” which penalizes people who fail to get insurance. This is unlikely to continue under his Administration. Another important mandate of the ACA is the employer “pay-or-play” mandate. The repealing of this mandate will have a profound effect on businesses throughout America.
Currently, employers under the ACA have to establish individuals who work 30 hours a week as a “full-time” employee, and have to complete and file a massive list of complex reporting forms (1094 and 1095) to legally operate. If the ACA is repealed, businesses will no longer have to do this.
More Competition Between Health Insurance Carriers
Finally, the Cadillac Tax, slated to become law in 2020, will also be eliminated. The question is, what will its replacement look like? No one truly knows, but we can all be confident that Trump will spend a good deal of his time in discussions with Senate and House leaders to determine what proposal best fits his vision for the country.
As a candidate for the presidency, Mr. Trump honed in on key areas of the healthcare industry. His primary goal was to permit the sale of health insurance across state lines. Current federal law allows states to limit the sale of health insurance in their states. This has in turn lead to some insurance providers “owning” the market in their state. Mr. Trump has said he believes that increased competition will reduce costs and lead to better quality healthcare. For employers, however, eliminating a state’s ability to provide access to several carriers makes the jobs of single state and multi-state employers easier. Mr. Trump was equally interested in using Health Savings Accounts (HSAs) to improve costs, and for employers it could in fact turn out to be a good plan.
Any new ideas will likely be costly. The question is, how will the Trump administration pay for them? Modifying the tax-preference to employer-provided health insurance might be one option. Two common tax options are on the table via Republican lawmakers: 1)., A phase out of tax-free premiums based on income levels, or 2)., A phase out based on the total cost of premium. In the former, proposals are typically set up with reimbursement limits for when the tax-free nature of the insurance will be eliminated. In the latter, a limit will be imposed based on the value of the insurance coverage—which is similar to the Cadillac Tax. Either way it swings, taxes will have to increase somewhere to pay for changes to the law.
We can’t say for sure what will happen to healthcare under President Trump, but we can say that providing insurance will continue to be important for employers and to employees. Until we know for sure the outcome of this new administration, we cannot advocate making any changes to your current insurance plans. Forge ahead into the new year and realize that it will take years for a repeal to go into effect, if one does at all.
In accordance with the Affordable Care Act (ACA), health insurance issuers—or insurance carriers—along with self-funded group health plans, must fund transitional reinsurance programs that are in effect from 2014 to 2016. Health plans that meet minimum value are required to pay a reinsurance fee which is collected by the Department of Health and Human Services (HHS). Applicable fees are tallied by enrollment count for the first nine months of each calendar year. Enrollment count must be submitted each year by November 15.
Carriers are responsible for the reinsurance fee for any fully-insured groups, while employers using self-funded plans are liable for submitting counts, funding and paying reinsurance fees. In contrast with the PCORI fee, health reimbursement arrangements (HRAs) integrated with major medical do not have to pay this fee. The only exception is reinsurance fees are required for any group health plan that offers major medical.
How to Estimate Participants
There are several accepted methods self-insured group health plans can use to calculate their reinsurance fee. Despite the various accepted methods, all plans must use the same process consistently throughout any calendar year. Once that calendar year has expired, plans may use a different method the following year. Here are some of the accepted counting methods.
Plans can add the complete number of lives under coverage for each day of the first nine months of the plan year and divide it by the total number of days in those nine months.
For self-only coverage and any other than self-only coverage, you first calculate the total number of participants, such as employees or retirees, and the total number of participants with other than self-only plans and multiply this amount by 2.35.
Snapshot Count Process
The Snapshot count method requires you to add the total number of covered individuals on a given day in each day of the first three quarters and then divide that amount by the number of days on which you made a count. Those dates should be the same each time the count is calculated.
The Form 5500 Count
This count relies on the Annual Return/Report of the Employee Benefit Plan from the most recent year. There are a few ways to use this count. For self-only coverage, the rate can be determined by calculating the average number of participants in the plan and adding the total number of participants from the start of the plan year to the absolute total participants by the plan’s year end, which has been reported on the Form 5500, and divide that number by 2.
For any plan with both self-only and other than self coverage, you can use this method by calculating the average number of total individuals covered from the plans beginning to the end of the plan’s year, according to the reported Form 5500.
More Than One Plan
Any self-funded plan that has more than one self-funded plan, such as medical and pharmacy options, can treat their plans as a single self-funded plan to avoid the fee associated with double counting lives on the plan.
Schedules for Fees and Payment
The reinsurance fee may be submitted in either a single payment or a maximum of two payments by January 15, 2017. Should you opt to make the two installment payment for the 2016 year for $27 per member, the first portion of the fee totaling $21.60 per member will go to reinsurance payments and any administrative expenses which are also due on January 15. The second payment of $5.40 will be taken by the U.S. Treasury and must be paid by November 15, 2017. Any employers who pay their 2015 fee in two installments must pay the final installment of $11 per member by November 15, 2016.
The Federal government provides guidance for the best way to submit your annual enrollment count. Here’s their recommendation.
- Find the form on Pay.gov and use it as a guide.
- Give your company’s contact information, enrollment count for the correct year, and upload any documents required.
- The site will calculate your contribution totals.
- Choose whether you’ll pay your reinsurance fee in a single or double payment, and submit scheduled payments as necessary.
- Your payments will be taken from your account on the dates chosen.
- Be sure to notify your bank and share your Agency Location Code to the list of companies that approve of ACH debits. Make sure you complete this step to avoid any missed payments and added fees.
- Make your count and submit the total number of covered individuals on your plans via Pay.gov by no later than November 15.
If you feel lost when faced with insurance terminology or could benefit from an overview of the most critical components of an individual health insurance plan, rest assured you’re not alone. Understanding the cost and coverage details as they pertain to health insurance can help you make an informed decision when it comes time to select a plan.
Let’s First Brush Up on Some Terminology
All of these terms describe costs you can expect to pay in a given year for individual health insurance. It’s crucial to be familiar with the specifics of your health insurance coverage, that way you aren’t caught off guard by out-of-pocket costs or other unexpected expenses throughout the course of a year.
- Premium – the monthly payment you submit to your insurance company.
- Deductible – the set amount you’re responsible for paying until the insurer begins to pay their share. For example, if you have a $1,000 deductible, you must pay that in full before your provider will start to pay.
- Copayment (Copay) – the fixed amount you pay each time you have a prescription filled or visit the doctor’s office. Not all insurance plans have copayments, and the ones that do typically don’t count toward the deductible.
- Coinsurance – just as the prefix “co-“ implies, this is a cost shared between you and your insurance provider. Not all plans include coinsurance, so make sure to check on this when comparing and contrasting various options.
- Out-of-Pocket Maximum – the absolute most you will be required to pay for any and all medical expenses in a given year (after meeting your deductible, coinsurance, etc.) before your insurer steps in and assumes responsibility for any medical expenses you incur the rest of the year.
How to Determine Which Type of Coverage Is Best for You
While you can’t foresee the unexpected, such as freak accidents or illnesses/conditions that arise out of the blue, if everything goes according to plan you can generally come up with a rough estimate as to how much care you’re going to need in a given year. Having this estimate in mind when evaluating health insurance plans should help you select the one that will best fit your budget and coverage needs.
If You Don’t Anticipate Having to Use A Lot of Care During the Upcoming Year …
A plan with a lower monthly premium and higher deductible may provide the best of both worlds. While you’ll face higher costs when you do receive care, you’ll benefit from significantly lower payments each month. As long as you don’t need to frequently visit the doctor or require monthly prescriptions, this may be the best option for you.
To illustrate just how much you could be saving with a low-premium, high-deductible plan, consider that in 2015 the average individual with this type of plan saved $636 in monthly premium costs alone.
If You Do Anticipate Having to Visit the Doctor on a Regular Basis …
A plan with a higher monthly premium and lower deductible may better fit your needs. Although you’ll pay more each month, if you go to the doctor frequently you’ll benefit from lower copays, coinsurance, deductibles and out-of-pocket limits, which should save you money in the long run (so long as you’re truly receiving care on a regular basis, otherwise it may end up costing more).
Why It’s So Imperative to Have Adequate Health Insurance Coverage
Nobody plans or has the ability to foresee themselves getting sick or hurt, but over the years odds are you’re going to need some type of medical care. Without individual health insurance, you run the risk of facing incredibly high costs for medical services and also miss out on the array of benefits that go along with being covered.
To learn more about the numerous benefits of having adequate health coverage or to speak with a specialist about which plan will best meet your cost and coverage needs, contact us today. We’ll be happy to provide you with a free health insurance quote from all of our carriers at once!
The Affordable Care Act’s affect on the cost of care
Since the Affordable Care Act (ACA) became the law of the land in 2010 and later implemented into the markets in 2014, it has had a dramatic effect on the costs of healthcare in the United States. Whether for good or for bad, is a variable we haven’t quite determined.
With limited data only recently becoming available, we are beginning to see a bigger picture of how the ACA is affecting healthcare costs throughout Texas. One of the largest increases in healthcare has taken place in the pharmaceutical industry.
Correspondingly, the ACA doesn’t have hard and fast rules regarding what pharmaceutical manufacturers may charge for their products. This has led to more expensive prices being passed on to consumers.
Let’s dive a bit deeper into how the costs of drugs has increased during the past two years under the ACA.
Pharmaceutical Drug Costs
One of President Obama’s key points in the ACA was the promise of lowered pharmaceutical drug costs. The question is, have those promises come to fruition? In a word, no.
Between 2013 and 2014, generic drug groups and their pricing increased by 100 percent, according to Forbes. Other specialty generic drugs, the drug group responsible for keeping a lid on high drug costs, have risen as much as 4,000 percent from 2013 to 2014, according to the Health Affairs Blog.
For many years, Americans relied on generic brand pharmaceuticals to afford their medications. In fact, they account for approximately 80 percent of all prescriptions. A recent report released by AARP Policy Institute, found that the cost of 280 basket drugs fell only by 4 percent in 2013, which is the slowest rate of decline in 7 years.
Another related increase was brought to light by a USA Today report that showed prescription drug costs have raised 13% in 2014, higher than any other rate in a decade. However, it isn’t clear that these costs are directly related to the ACA. Worth mentioning, though, is the federal fee imposed on branded prescription drugs. This fee could very well be causing drug prescription prices to rise in conjunction with other fees brought on by the ACA.
One of the nation’s leading pharmacy benefits organizations, Express Scripts, says that prescription drug costs have nearly doubled in the last five years. The organization blamed the costs on scheming pharmacies and opportunistic manufacturers who have moved into the market.
In Texas, however, people with Medicare have enjoyed a lower cost for their medications, especially seniors. In 2014, 345,452 individuals in Texas saved $326 million per beneficiary. The costs directly related to pharmaceutical drugs are not necessarily impacting the costs individuals are paying for their medications.
Another area of concern is the costs associated with equipment doctors need to heal patients. A survey of physicians showed that 61% reported an increase in overhead costs. Electronic medical records and administrative costs that must comply with the ACA have caused doctors to increase their prices.
Adding to this the fact that Blue Cross Blue Shield, Texas’ largest insurer, has said they are seeking premium increases of 60% over one year in their HMO plans thanks to the ACA. We are beginning to get a clearer picture as to how the ACA is affecting Texas healthcare costs.
How All this Affects Insurance Rates in Texas
When the healthcare plans under the affordable care act started in 2014, premiums were set extremely low. Now that the care act is set in stone, insurers are set to seek higher insurance premiums to level their costs. Unfortunately Healthcare Consultants, Inc. is finding out that premium are going to increase in 2017, even in Texas.
By increasing the rates of insurance premiums, individual and group rate plans will undoubtedly be affected. From pharmaceuticals, healthcare costs, to facilities there are countless increases in costs as an indirect cause of the Affordable Care Act. Interestingly, group employer insurance has resulted in significant cost-savings for those participating in the new law.
Above all, the ACA was designed to support and heal an out of control healthcare marketplace. Unfortunately, there have been some unintended consequences of these changes. In Texas, the battle continues to rage on with state legislatures fighting parts of the law including the Medicare expansion.
At Healthcare Consultants, Inc. we agree that over the next decade we will begin to understand the full implications of the Affordable Care Act. Until then, we will have to watch as the market fluctuates and premiums rise and fall.
For any questions about this topic or other topics please feel free to contact us!