Articles

by: Robert Lenoil
posted: March 12, 2024

Over the years, I’ve had a few clients cancel their health insurance because they decided, over my objections, to join a health care sharing ministry. Health care sharing ministries are charities, usually religious-based, to whom people pay money each month to help cover each other’s medical expenses. This sounds like a classic risk retention group, a type of insurance entity, but health care sharing ministries are not considered insurance companies and the coverage they provide is not considered health insurance because they do not meet all the requirements of health insurance stipulated by the Affordable Care Act.

California exempts health care sharing ministry participants from the state penalty for not having health insurance, which has caused participation to jump significantly as people look for alternatives to their monthly health insurance premiums. This particularly applies to higher-income individuals who don’t receive large premium tax credits under the Affordable Care Act to lower their premiums. But California’s penalty exemption does not exempt health care sharing ministry participants from the inviolable rule that you get what you pay for. A 2023 KFF Health News article sums it up very well:

Sharing plans do not guarantee payment for health services and are not held to the same standards and consumer protections as health insurance plans. Sharing plans are not required to cover preexisting conditions or provide the minimum health benefits mandated by the Affordable Care Act. And unlike health insurance, sharing plans can place annual or lifetime caps on payments. A single catastrophic health event can easily exceed a sharing plan’s limits.

A 2020 New York Times article explains how sharing plans are largely unregulated, citing many examples of people whose health care bills were not reimbursed. And if you think that somehow doesn’t apply to us here in El Dorado County, you’re mistaken: In November, one of my clients who dropped their health insurance for a health care sharing ministry called me to switch back after the ministry didn’t cover their hospital stay, leaving them with a $50,000 bill to pay. That was a very expensive lesson for them.

Here is a comparison of the health care sharing ministry plan of one of my life insurance clients, versus what they could get through Covered California for their family of six without having to change their doctor:

This client and their family left Covered California in 2019, before Congress eliminated the subsidy cliff for high income households in 2021. Even with a nice six figure income, they would have been eligible for advanced premium tax credits that reduced their monthly premium cost to below what they were paying for their health care sharing ministry—plus their premium payments would now be tax-deductible because they were self-employed. Unfortunately, while the client’s spouse is self-employed, the client’s employer offered them coverage that is considered affordable under the Affordable Care Act (less than 8.39% of adjusted gross income for 2024), making them ineligible for advanced premium tax credits even though they opted out of their employer’s plan.

I was going to switch this family our of their health care sharing ministry, giving them superior coverage and saving them thousands of dollars on their taxes, because Covered California decided to extend open enrollment until March 26th. While it didn’t work out for them, if you haven’t signed up for health coverage yet and would rather not wait until next year to get it, you only have two more weeks before the Covered California extra time window runs out. Call us now!

by: Robert Lenoil
posted: October 20, 2023
updated: October 23, 2023

Open enrollment has begun for Medicare and Covered California renewals, and open enrollment for new Covered California applicants starts November 1st. Here’s what’s new for 2024:

Medicare

Part B

For 2024, the Medicare part B monthly premium will increase from $164.90 to $174.70, and the calendar year part B deductible will increase from $226 to $240. The part B income-related monthly adjustment amount (IRMAA) will range from $0 to $419.30 based on your modified adjusted gross income (details).

Part D

The part D IRMAA will range from $0 to $81.00 based on your modified adjusted gross income (details). The standard part D deductible is increasing from $505 to $545. The part D coverage gap (AKA the donut hole) phase is increasing from $4,660–$7,600 to $5,030–$8,000. However, the 5% coinsurance for the catastrophic coverage phase has been eliminated, meaning there is now a calendar year maximum out-of-pocket limit of $8,000 for part D prescription drugs.

Marketing Rules

Medicare requires a scope of appointment form, listing what Medicare insurance products a client wishes to discuss, be signed prior to meeting in person or by phone with an insurance agent to purchase Medicare Advantage or prescription drug plans. This form used to be able to be signed at the start of the meeting; beginning this open enrollment season it must be signed at least 48 hours prior to the meeting. An exception is made for walk-ins, which includes inbound phone calls, so if you call us you can sign an SOA and meet immediately; if we call you we must wait at least 48 hours before meeting after you sign the form. The waiting requirement is also waived in the last four days of open enrollment or any other valid special election period. Finally, the disclaimer we must include in written materials and read to you over the phone must now also state the number of plans that we market in your area. Personally, I think this is almost as helpful as the caution: contains nuts disclaimer on bags of peanuts; thank you in advance for your patience as we comply with these rules.

Covered California

Premium Increase

Premiums for 2024 in Covered California rating region 3 (El Dorado, Placer, Sacramento, and Yolo counties) are increasing by an average of 10.6%. Since the Affordable Care Act provides tax credits to cap health insurance costs to a certain percentage of a household’s income, many consumers will not see any increase; those who do can likely mitigate the increase by changing plans or carriers. Remember that ACA tax credit amounts are based on the price of the second lowest cost silver plan (SLCSP) available to you; if you purchase a silver plan from a carrier who charges more than the SLCSP, or purchase a gold or platinum plan, you pay the difference in price between it and the SLCSP. Note that carriers who charge lower premiums typically have smaller networks of doctors, so check that your doctors are in a carrier’s network before switching.

Enhanced Cost-Sharing Reduction Plans

Households with incomes between 138% and 250% of the federal poverty level have been able to purchase cost-sharing reduction (CSR) silver plans with reduced deductibles, copayments, and coninsurance under the Affordable Care Act. This year, the state of California is enhancing the cost-sharing reduction plans, removing annual deductibles and lowering copayments and maximum out of pocket amounts. Here are some of the changes:

	Silver 73		Silver 87		Silver 94
	Standard	Enhanced	Standard	Enhanced	Standard	Enhanced
Medical Deductible	$5,400	$0	$800	$0	$75	$0
Drug Deductible	$150	$0	$50	$0	$0	$0
Out of Pocket Maximum	$7,550	$6,100	$3,150	$3,000	$1,150	$1,150
Primary Care Visit	$50	$35	$15	$15	$5	$5

Actuarially, the enhancements put the silver 73 plan on par with a gold plan and the silver 87 on par with a platinum plan (the silver 94 is better than platinum), leading Covered California to automatically switch people on renewal as per the chart below. However, the enhanced silver plans do not offer the fixed copayments for surgery or hospitalization that gold or platinum HMO plans do, so they are not unequivocally better than a gold or platinum HMO. People expecting a surgery or hospital stay might be better off with a gold or platinum HMO than an enhanced silver plan, depending on the difference in premium.

2023 plan	Will renew in 2024 to	If silver premium is…
Bronze	Silver 73, 87, or 94	$0
Gold	Silver 87 or 94	at or below the 2024 gold plan
Platinum	Silver 94	at or below the 2024 platinum plan

Affordability Percentage

Premium tax credits under the Affordable Care Act aren’t available to people whose employers offer them affordable coverage. Affordable is defined as the lowest cost plan the employer offers the employee costing less than a certain percentage of the employee’s household income. For 2024, the affordability percentage is decreasing from 9.12% to 8.39% of household income. If the lowest cost employee-only plan is less than 8.39% of the household’s modified adjusted gross income, then the employee will not be eligible for premium tax credits. If the lowest cost family plan exceeds 8.39% of household income then the non-employee family members will be eligible for premium tax credits to purchase coverage through Covered California. When there are multiple wage-earners being offered coverage through their employers, affordability testing must be done for each employer.

If your employer offers you health insurance, we strongly recommend you get (our 😉) help figuring out whether or not you are eligible for subsidized coverage through Covered California. If you incorrectly state that your employer’s coverage is unaffordable and you’re audited, you could end up having to pay back all the premium tax credits that you received.

Health Savings Accounts

Every year the IRS adjusts the contribution limit for Health Savings Accounts for inflation, along with the minimum deductible and maximum out of pocket expense that a qualifying health plan may offer. Here are the changes for 2024:

Wow—you made it all the way through this article! If you have any questions or would like help choosing a plan this open enrollment season, give us a call!

by: Robert Lenoil
posted: September 22, 2023

This information appeared on our health insurance page a year ago, but we’re archiving it here as we update that page for 2024.

New carrier: Aetna

Aetna is entering the individual marketplace with an HMO product. It is competitively priced, but in our service area their provider network is not robust. The biggest impact of Aetna’s entry will be in eastern El Dorado County, where there will now be three carriers instead of two. Since the Affordable Care Act bases premium tax credits on the cost of the second cheapest silver plan in a given zip code, and because there is a wide gap between Aetna and Anthem’s prices, which are similar, and Blue Shield’s PPO, which is much higher, Blue Shield PPO subscribers in eastern El Dorado County are going to see significant cost increases in 2023. Switching to Aetna or Anthem will alleviate the price increase, but you may need to travel west for your medical care, except in an emergency situation where you are allowed to use out of network providers.

Changes to silver plans: higher deductibles and copayments

This table shows some of the substantial increases in deductible and copayments for silver plans in 2023. Costs shown are per-person, per visit, and in-network.

Some relief for the family glitch: Dependents will now be eligible for premium tax credits if your employer doesn’t subsidize the cost of their insurance, making it unaffordable

Prior to 2023, if an employer offered health coverage to an employee, the additional cost to cover the employee’s dependents was not considered when determining whether or not the employer’s coverage was affordable. This family glitch prevented many families from getting subsidies for dependent coverage from Covered California. For example, if an employer paid for an employee’s health insurance but charged $1,000/month to cover the spouse, the spouse’s coverage was considered affordable.

In 2023, the cost of covering the entire family is considered; if the family cost (employee plus dependents) exceeds 9.12% of the household’s income, then the dependents are eligible to receive premium tax credits for coverage through Covered California. Note that the cost of an employee’s coverage is still considered separately from the family cost; employees whose employee-only coverage costs less than 9.12% of household income cannot get premium tax credits for themselves, even if their dependents can. This means that the family glitch isn’t completely fixed. For example, if a married couple both work and each spouse’s cost for coverage through their respective employer costs 9% of the household’s income (total cost: 18% of household income), neither spouse would be eligible for premium tax credits.

The reason the glitch wasn’t fully fixed is because the wording of the Affordable Care Act as to whether or not an employee’s coverage is affordable is flawed, testing each employee’s affordability of coverage as a percentage of the entire household’s income. The Internal Revenue Service was able to add a regulation as to the affordability of coverage for dependents who aren’t employed by an employer who offers them health coverage, but it couldn’t work around the wording of the law with respect to a family member whose employer does offer them coverage. Completely fixing the family glitch will require Congress to amend the law, which has so far been impossible due to partisan politics.

Note that Covered California does not perform any of these tests; it is up to the applicant to correctly answer the is this coverage affordable question in the Covered California application. Let us sign you up and we’ll do the math for you!

by: Robert Lenoil
posted: May 3, 2023
updated: May 16, 2023

Update: Covered California announced on May 9th that they will allow the public health emergency qualifying life event to be used through May 31st, giving people until the end of the month to still sign up or make changes to their health coverage.

On March 13, 2020 the federal government declared the COVID-19 pandemic to be a public health emergency. That emergency declaration is ending on May 11th, resulting in big changes that affect Medi-Cal enrollees and people wanting to obtain health insurance. These changes aren’t really new—we’re just going back to how things worked before COVID—but we’ve been operating under emergency measures for so long that it’s important to remind everyone how the normal rules work.

The Affordable Care Act guarantees coverage to people regardless of any preexisting health conditions, but that poses a problem: With coverage guaranteed, people could save money by not getting insurance until they get sick. Insurance works by having a broad pool of people, healthy and sick, all paying premiums. If only sick people bought insurance, the premiums would have to be much higher, because there’d be far fewer people paying premiums to cover the same amount of claims. To avoid this adverse selection problem, the ACA does the same thing that employer-sponsored group health plans, which also have no preexisting condition limitations, do: Enrollments are limited to a brief annual open enrollment period, plus a small window when people can sign up after a qualifying life event like having a child or getting married. Additionally, coverage doesn’t begin immediately after you sign up. For Covered California, the annual enrollment period is November 1 to January 31, the qualifying life event enrollment window is 60 days from the QLE, and coverage doesn’t begin until the following month (or January 1 during open enrollment, if later).

Effect on Covered California

Covered California has been allowing people to use the public health emergency as their qualifying life event, effectively letting people sign up and make changes to their coverage year-round. After the public health emergency ends on May 11th, people can only sign up or change plans if another qualifying life event applies. If you’ve held off on buying health insurance and are more than 60 days from a qualifying life event, you only have until May 11th 31st to do so; after that you’ll have to wait until open enrollment to buy coverage that starts next year. Call us before time runs out, and keep in mind that, due to a major system upgrade, Covered California’s system will be down from noon tomorrow until 6AM on Monday, during which time we cannot sign people up nor make any changes.

Effect on Medi-Cal

During the COVID-19 public health emergency, states were prohibited from dropping people from the Medicaid program (called Medi-Cal in California), even if they no longer met the qualifications for the program. That prohibition ended on April 1st, so Medi-Cal has resumed sending annual renewal questionnaires and will begin dropping people who do not respond or no longer qualify. Questionnaire due dates coincide with the anniversary of being enrolled into Medi-Cal. The first Medi-Cal non-renewals will be effective on July 1st. Medi-Cal recipients should go to https://KeepMediCalCoverage.org for information on how to update their information with Medi-Cal and on what to do if they get a letter saying they will be dropped from the program.

If you are dropped from Medi-Cal, you will automatically be transitioned into the lowest cost silver plan available to you through Covered California. You will have one month after your Medi-Cal coverage ends to accept the new plan or choose another one, and make the first month’s premium payment, if any; otherwise the Covered California coverage will not take effect and you will not have health coverage. If you do not obtain coverage within 60 days of being dropped from Medi-Cal, you will have to wait until open enrollment to sign up for coverage that takes effect the following year. Call us and we can help you pick a plan and make a payment so that you can retain health coverage for you and your family.

by: Robert Lenoil
posted: December 29, 2022

In the waning days of 2022, I’m excited to unveil our revamped web site, which features this blog page, expanded content, and a site search capability. The new content won’t show up in the site search until Bing’s robot next indexes our site, which could be a few days or weeks from now. I dusted off my computer science degree and coded all of this myself in HTML, CSS, Javascript and PHP. It was fun to get geeky again and catch up on modern day web technology!

The reason I had the time to do this was the sale of our property and casualty insurance division to O’Donnell Insurance Services on July 1st. Our focus is now exclusively on health, life, and disability insurance, which has left me with more time for family and hobbies (and programming this web site😊). My former employees have all found work with other insurance agencies. We’re now open Monday through Friday from 9AM to 5PM, with office hours by appointment only, as I’ve rented out the office to eXp Realty and use their conference room to meet clients. Please call O’Donnell for service on an existing P&C policy that we wrote or for quotes on new P&C business.

2022 was a busy year on the legal and regulatory front, with several changes affecting our industry:

• Since October 15th, we’ve needed to record all phone calls that involve Medicare Advantage and prescription drug plan products. We also need to print a disclaimer on our web site and other Medicare-related communications and read it out loud on the phone calls we must record. A new California law will also require emails we send starting January 1st to include our insurance license numbers. My emails have always contained my license number, but now it will have to appear on a different line of my email signature; I’m sure you’re as thrilled as I am about this dramatic improvement. Seriously though, most regulations come about due to a few bad apples whose misdeeds we all end up paying for through increased oversight. At some point, the regulatory overhead sucks the joy out of the job; that was a major reason why I stopped selling investment products in 2018. Medicare oversight is heading in that direction, but hopefully the call recording regulations will be enough to weed out the bad apples.

• The American Rescue Plan Act of 2021 eliminated the Affordable Care Act’s subsidy cliff for people earning over 400% of the federal poverty level, but only for 2021 and 2022. The Inflation Reduction Act extended this through the end of 2025. Since Congress usually looks at a bill’s cost over ten years and this is a very costly benefit, in all likelihood it will keep deferring the subsidy cliff for a few years at a time instead of applying a permanent fix.

  The Inflation Adjustment Act also made substantial changes to Medicare drug plan coverage, but to keep the ten-year cost of the bill down these changes are being phased in over the next few years. The only change for 2023 is that the cost of insulin will be capped at $35 for a one month supply.

• The ARPA prohibited states from removing people from Medicaid (called Medi-Cal in California) during the federal COVID emergency. This has led to wasteful absurdities: a person who got laid off from a high-paying job could apply for and get Medi-Cal, and then keep it after getting a new high-paying job. The 2023 omnibus spending bill, which was just signed into law, allows states to resume income-testing Medi-Cal recipients and disenrolling them, starting in April of 2023.

Finally, I’m pleased to announce that my wife Nancy obtained her health and life insurance license last month. Just as I advise my clients to hope for the best and plan for the worst through life insurance and estate planning, getting Nancy licensed was key to our own estate plans, to prevent a forced sale of the agency if I were to suddenly die. I will acquaint her with the agency’s operations over time so that she could eventually step in if I needed help. It’s a great comfort having plans in place to take care of the people you love! Call us if we can help you with your own contingency plans using disability and life insurance products.

Best wishes for 2023.