Page 41 - Delaware Medical Journal - July-August 2018

MSDIS CORNER
Individual Health Insurance — Countdown to the End
At some point in our lives, most
of us have been insured by some type of individual health insurance plan. Maybe it was a short-term medical plan between jobs. Perhaps it was an individual health insurance plan for our child who is still in school at age 26. Even well into their careers, many physicians have terminated their group plans to go out and purchase an individual policy. There has been a long list of reasons to purchase individual health insurance. One of the most common reasons for buying an individual policy was “because it is more affordable.” Although this may come as a shock, individual insurance in Delaware and Pennsylvania averages a net cost of almost 50% higher than group insurance premiums.
Pre-Healthcare Reform
Individual policies in states such as Delaware and Pennsylvania were very cheap because the insurance companies only approved the healthiest applicants. That may have seemed unfair, but the rates were affordable for those who were able to be approved. The issue
was whether you and your staff were able to secure an individual policy because of your medical history.
The Affordable Care Act (ACA)
The individual health insurance market
(and the insurance companies) were turned upside down overnight because of the rules put in place on individual policies. The new individual plans had several popular features:
• The company may not turn down (or “rate up”) someone whose health is poor
• Pre-existing conditions may not be excluded from coverage
• Open Enrollment occurs every year
This was great news for anyone who could not get coverage because of a medical condition. However, this was terrible news for people who were already on individual coverage. Most of these people saw rates go up 100-200%. Many middle-income families expected that they would be able to buy an individual health policy for $100 per month, which proved to be untrue.
The legislators assumed that everyone would buy insurance, regardless of the cost. Instead, many people determined that the premiums did not outweigh the penalty for being were taking). The majority of those people who continue renewing their individual policy are those whose medical bills are guaranteed to exceed their premium.
Even worse for the individual rates is the fact that someone can join a health plan in January, have a major procedure covered, then drop the insurance in February. They can repeat the same behavior at the start of every year. For this reason, the individual health insurance companies are losing money and raising rates. The exception has been individuals, such as physicians, who uninsured and remain covered all year. There simply are not enough healthy people remaining insured all year to pay for those who are ill, and those who take advantage of the system every year.
In 2014 and 2015, the individual rates averaged about 25-30% less than group plans. We saw increases of roughly more than 20% in 2016, 2017 and 2018. Since 2017, that makes the individual premiums more expensive than a group premium for a physician.
The higher we raise rates, the more individuals drop coverage or choose not to everyone to be covered and keep coverage for the entire year, the pool of individual health insureds will spiral to a place that no one will be able to afford.
Many practices dropped coverage in the
last three to four years in place of sending employees to the individual marketplace. For practices with fewer than 50 employees, there was no penalty for ending the group plans. Despite seeing large increases, we still run across many practices that are unaware that the group plans would be less expensive. To make matters worse, many employees and physicians are forced to pay for individual premiums with after-tax dollars, while group premiums can be paid with pre-tax dollars.
It’s also important to note that group plans allow physicians or staff who do not need coverage to waive off of the plan. You can even write a group plan with only one participant in Delaware. So any practice (small or large) should be taking another look at the group insurance options.
The combination of lower premiums, more plan choices, and pre-tax dollars will make group insurance very important to your plans for 2018 and beyond.
We may not be able to tell you where the stock market is heading, or what type of
to see that things are not working out for the individual health insurance marketplace. Fortunately, you don’t need a crystal ball or insider trading tips to understand the health insurance market. You simply have to keep an open mind and explore all of the available options for your practice and your family.
■ AARON MITCHELL is MSDIS’s lead Employee Benefits marketing representative, coordinating all lines of insurance. His team can be contacted with questions on this article or any insurance topic. Contact Aaron at (302) 397-0170 or aaron.mitchell@usi.com.
Medical Society of Delaware Insurance Services (MSDIS) is a wholly owned insurance brokerage subsidiary of the Medical Society of Delaware and powered by USI Insurance Services. MSDIS was formed by Delaware physicians for Delaware physicians. We serve all insurance needs for your practices, your families, and your friends.
Del Med J | July/August 2018 | Vol. 90 | No. 6 213