ACA Penalties Add Up Over a Lifetime

A new analysis from the folks at suggests that paying an Affordable Care Act (ACA) penalty for no health insurance coverage can add up over a lifetime.

Whether you choose not to buy coverage because you believe you can’t afford it or you oppose the program on philosophical, you might want to consider long term cost of the penalties.

While the cost varies for each person based on income, if someone age 27 is required to have health insurance under the ACA and does not purchase coverage at any time before becoming eligible for Medicare at age 65, calculates a minimum of $36,556 in penalties for an individual and a minimum of $109,668 in penalties for a family of four. Calculations are based on a 2% increase in the annual cost of living.

Penalties could be less if a person is older or he or she buys coverage at some point before reaching retirement age. But, on the other hand, the penalties could be larger based on a higher income, since the penalty increases to 2% of income in 2015 and 2.5% of income in 2016 and beyond. notes that because ACA penalties increase over time, it is likely health exchange sign-up rates could be higher in 2015 and 2016. For example, someone who makes around $200,000 in 2016 faces a penalty of $4,500 to $5,000 for one year. Depending on the person’s age, this amount could be greater than the cost of health insurance, so there’s no financial incentive not to purchase coverage.

Maryland Votes to Replace State Health Exchange System

The Maryland health insurance exchange board has voted to replace its troubled state online exchange technology; it will instead be adopting the system developed by Deloitte Consulting that is already being used by Connecticut’s insurance marketplace. According to published reports, the current Maryland system is “broken beyond repair” in spite of an investment of millions of dollars

Near the end of March, Maryland reported having signed up just 49,000 residents. And on the last day of open enrollment, March 31, lines formed outside many enrollment assistance centers as residents couldn’t get online to complete their applications.

Maryland is not the only state that has dealt with ongoing problems with its exchange website. Hawaii, Minnesota, and Oregon have also faced considerable challenges in processing enrollments. (Oregon announced it has negotiated with Health & Human Services for an extended deadline of April 30th for residents to apply for coverage.)

While the technology replacement is underway in Maryland, residents who have a qualifying event and need to change health plans or enroll in new coverage may still be able to use the site. The timetable for the replacement system is not yet public, nor is a final estimate of the cost to create a new, fully functioning system.

Oregon Extends Grace Period for Exchange Enrollments

Cover Oregon, the troubled state health exchange for residents of Oregon, has given Oregonians an extra month to apply for health insurance coverage.

“I know that for too many Oregonians, the Cover Oregon website and its ongoing technical problems have created delays, confusion, and frustration,” said Gov. John Kitzhaber in a statement. “I worked with (U.S. Department of Health and Human Services) Secretary (Kathleen) Sebelius to give Oregonians more opportunity to secure health coverage and get the financial help they deserve.”

Residents of the Beaver State have until April 30 to apply for insurance. Cover Oregon’s chief communications officer Amy Fauver says a $1 million ad campaign now underway features Oregonians who have successfully enrolled, and it encourages procrastinators and young people to apply now.

A new agreement between the Oregon exchange and insurers will enable small businesses with 50 or fewer full-time employees to access tax credits for employee coverage even if they purchase Cover Oregon-certified coverage after April 1 directly from an insurance company. Employers who apply and enroll in plans outside of the state exchange in April could still face a partial penalty.

Broader Health Plan Networks Expected in 2015

The White House has ordered health plans taking part in the federally facilitated marketplace, which was set up as part of the Affordable Care Act, to broaden their provider networks in 2015. This follows criticism from some ACA enrollees over the limited doctor and hospital networks being made available by health plans in 2014.

Under the directive, health plans offering coverage on the federal marketplace in 2015 must include 30 percent of “essential community providers” in a given area. This number is up 50 percent from the 2014 requirement.

Also in 2015, the Centers for Medicare & Medicaid Services (CMS) will expand the review of health plan networks. This analysis will include an evaluation of whether the plans offered through include adequate access to hospitals, primary care physicians, and specialists like mental health providers and oncologists.

How these changes may impact individual health plan rates for 2015 is not yet known. Insurers have until May 31, 2014, to file their planned rates for next year.

Towers Watson Offering Employers a New Retiree Medical Option

Towers Watson, a global professional services company, announced last month the launch of Towers Watson Longitude Solution, a new employer option for retiree medical. Through the use of the patent-pending solution, U.S. employers can overcome the traditional barriers to fully exit their legal, accounting, and regulatory responsibilities for retiree medical benefits. The new program is also designed to provide retirees with security and peace of mind, as the annuity guarantees tax-free funding for medical benefits for the rest of the retirees’ lives.

“Most large employers consider retiree medical benefits an expensive obligation with little shareholder value,” said Mitchell Cole, managing director, Towers Watson Retiree Insurance Solutions. “The benefits do not engage or attract new talent, yet they create balance sheet volatility and income statement expense, and divert management time. Historically, employers who wanted to exit retiree medical without adverse consequences to both the company and their retirees couldn’t do so. Now they can.”

Longitude Solution is a turnkey solution, with Towers Watson and outside experts assisting employers with the legal, actuarial, and accounting evaluation and documentation necessary to consider and implement the solution.

For the group annuity portion of the solution, employers can select a life insurer from a list of Towers Watson’s preferred partners. Towers Watson then guides employers through a streamlined RFP process with transparent pricing, and works with groups to introduce the solution and explain its advantages to retirees.

Employee Satisfaction with Benefits Highest in a Decade

MetLife’s latest U.S. Employee Benefit Trends Study, released last month, reveals employee satisfaction with benefits reached 50 percent in 2013 – the highest level since the study began more than a decade ago.

“Employees who are very satisfied with their benefits are more than twice as likely to report being very satisfied with their jobs. Because of this, offering a wider variety of benefits pays dividends for both employers and employees,” said Todd Katz, executive vice president, Group, Voluntary, and Worksite Benefits, at MetLife. “The Study takes this even further, showing that benefits are a strong driver for employee loyalty – 44 percent of employees say having benefits customized to meet their needs would increase their loyalty.”

The research also shows the ability to personalize benefits selections appeals to employees. More than three quarters of employees (78 percent) want a greater variety of benefits to choose from and 80 percent would value benefits customized to individual circumstances and age. More than ever, employees are ready to share this responsibility, with 60 percent willing to bear more of the cost in order to have benefits choices that meet their needs.

The MetLife employees survey comprised 1,203 interviews with full-time employees age 21 and over at companies with a minimum of two employees.

AHIP CEO Pushes for New ACA Coverage Tier

The president and CEO of America’s Health Insurance Plans (AHIP), an insurance industry trade group, is advocating a new “Copper” tier of coverage to be offered through state and federally facilitated health insurance exchanges established under the Affordable Care Act (ACA).

Appearing in an interview on C-SPAN’s “Newsmakers” program, Karen Ignagni said “I would create a lower tier, so people could gradually get into the program, so they could be part of the risk pool, so we don’t hold the healthier people outside.”

Currently, four “metal tiers” of coverage are offered under the ACA; each metal corresponds to the ratio of total costs shared by the plan and the insured. A Platinum plan offers 90 percent coverage, with the patient paying 10 percent of costs. A Gold plan offers 80 percent coverage, with the patient paying 20 percent. A Silver plan offers 70 percent coverage, while a Bronze plan pays 60 percent of healthcare costs. The proposed new Copper plan would pay 50 percent of healthcare costs, with the patient also paying 50 percent.

The current political split in the U.S. Congress, with Republicans controlling the House of Representatives and Democrats controlling the U.S. Senate, means it is unlikely any change to the ACA’s metal tiers will be implemented before President Obama leaves office in January 2017.

Many Uninsured Likely to Stay That Way

According to a report released in March by, one-third of America’s uninsured are likely to remain uninsured in spite of the Affordable Care Act (ACA) requirement that most Americans have health insurance.

A majority of those taking part in the survey, 41 percent, said cost was the main reason they would not purchase health insurance. But, it’s important to note, 70 percent of uninsured Americans reportedly do not know about the ACA’s premium subsidies that reduce the cost of health insurance.

Thirteen percent of uninsured respondents say they will not purchase insurance because they are healthy. For those ages 18 to 29, more than 60 percent say they will sign up for health insurance this year, while 28 percent say they will remain uninsured. Of those planning to remain uninsured, 31 percent say it’s because they’re healthy and don’t need insurance. Thirty-nine percent of those between 30 and 49 say they will remain without health insurance – and almost half (47 percent) say it’s due to cost.

Seventeen percent of the uninsured say they will not purchase insurance because they oppose the ACA. That includes more than one fifth of male respondents (22 percent), but just eight percent of uninsured females.

Looking at finances, 54 percent of uninsured Americans with an annual income between $50,000 and $74,999 say they intend to stay uninsured in 2014. A January 2014 survey by found members of this group said they were the most likely to be negatively affected by the ACA.

Hawaii Health Connector Denied Extension on Federal Funding

The Hawaii Health Connector won’t be able to count on continuing federal funding for operations and maintenance in 2015. While interim executive director Tom Matsuda had hoped the Aloha state’s exchange would be allowed to continue to spend Health & Human Services (HHS) funds in 2015, federal authorities have said only the design development and implementation funds can be extended into next year; other funding will end this year.

The Hawaii Health Connector has received $204 million in federal funding in the past two and one-half years. That includes a $14.4 million grant in November 2011, $61.8 million awarded in August 2012, and $128 million from April 2013. Of the latter amount, about $30 million has been spent or obligated to date.
Federal guidelines call for state-run exchanges or marketplaces to be self-sustaining by next year, but Matsuda has said previously that would be difficult in Hawaii. “The market dynamics in Hawaii are not right for an online marketplace of this type, and there is little chance of the Hawaii Health Connector becoming self-sustaining under its current board-approved revenue model.”

The Hawaii exchange has been characterized by critics as weak from the beginning. Earlier this month, Hawaii State Senator Sam Slom suggested he might call for an investigation of expenses for what he said has been a lack of transparency. “My conclusion is that this Connector was flawed fatally from the beginning with an unrealistic business plan. No change of personnel, tweaking, or additional subsidies will solve its failures,” he said in a statement.

Hawaii officials reported last month that the Hawaii Health Connector was at 43 percent of its target enrollment for the October 1, 2013 through March 31, 2014 enrollment period. More recently a spokesperson said the agency could be facing a “five-figure backlog” on processing of applications.

Employer Commitment to Benefits Remains Strong

A closely watched annual survey conducted by the National Business Group on Health (NBGH), an association of large employers, and global professional services firm Towers Watson finds while employers are sharing more of their benefits cost with their employees, business leaders remain committed to offering benefits.

According to the 19th Annual Towers Watson/NBGH Employer Survey on Purchasing Value in Health Care, 95 percent of large U.S. employer respondents say subsidizing health care coverage for active employees is a very important part of their rewards package. But in spite of their commitment, 92 percent anticipate moderate to significant benefit changes by 2018. One of those changes is a shift in the contribution toward spouse coverage, so employees now pay more.

The survey found employer health insurance costs are likely to exceed $9,500 per employee in 2014 – up 4.4% from 2013. The employees’ share of costs is up more than $100 per month in the past three years, so employees now contribute more than one-third (37%) toward their insurance.

As employers consider future ways to save on health insurance, two-thirds of companies surveyed said they see private health insurance exchanges as a viable option for employer-sponsored coverage as early as 2015. Private exchanges typically give employees more health care options, while also offering employers a method to control costs through defined contribution.