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Democrats cheer lower 2015 health insurance premiums and ignore illegal bail outs to insurers

Democrats are cheering an August 1, 2014 initial analysis  of 2015 health insurance premium increases performed by Price Waterhouse Cooper. Many on the political Left are pointing to this as proof that “Obamacare is working”. That depends on how you define “working”. If robbing taxpayers of $10 billion dollars in 2014 and then handing it to the health insurance industry is “working” then Democrats are right.

As I have stated before, Obamacare is the greatest transfer of wealth from the U.S. Treasury to the health insurance industry in U.S. history. Those massive transfers of wealth are just getting started via the Obamacare “Three Rs” provision. The truth is that without the Obamacare Three Rs consisting of Risk Adjustment, Reinsurance and “Risk Corridors”, premiums would be dramatically higher  in 2015 as most of us policy wonks predicted. What does just one leg of the “Three Rs” accomplish? Cori Uccello – Senior Health Fellow at the American Academy of Actuaries spelled out for us what the “Reinsurance” part does during a recent testimony in congress:

“In 2014, $10 billion will be collected from health plans (CBS says this will cost policyholders $25 billionwhich will then be used to pay plans in the individual market when an individual’s claims exceed $45,000. Plans will be reimbursed (by taxpayers) for 80% of an individual’s health claims between $45,000 and $250,000.” – Cori Uccello.

Already we are seeing health insurers lining up for their taxpayer funded bailouts under the “Reinsurance” program:
Aetna wants $50,000,000
Assurant Health wants $140,000,000
Humana is asking for than half a billion

In fact 12 out of the 15 health insurers  that provided information to the House Oversight Committee expect to get big bail out checks from the taxpayer to cover their losses this year. So you see these premium increases aren’t even close to the actual cost of health insurance under Obamacare. The truth is whilst the health insurance industry is releasing lower premium increases for 2015 with one hand they are picking your wallet with the other hand.

The worst part is that just before Kathleen Sebellius left her post at HHS  she aided and ebbeted these actions by illegally and unilaterally expanding the Obamacare risk corridor program without congress so that the health insurance industry can get even more of your money without any approval from congress. There are reasons our founders required separations of power. This is just one example of why they did.


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Humana One to terminate most individual ‘non-grandfathered’ policies by 12/31/14

Humana One insurance company just announced that they will be terminating most ‘non-grandfathered’ individual and family health insurance plans (purchased after 3/23/2010) no later than 12/31/2014. In other words, Barack Obama lied when he said “if you like your plan, you can keep your plan.” This is of course no surprise to high information voters.

The truth is these plans would have been terminated last year but Barack Obama used his “pen and his phone” to unilaterally delay the termination of these policies for one additional year or in the case of United HealthOne even longer. This was done to help the Democrats in the upcoming mid term elections in November 2014.

Unfortunately for Humana One members that ‘transitional delay’ is over. Below are the states where these policies will be terminated

  • Association Policies:  All Individual PHP Refresh Major Medical plans in the states of AL, AZ, FL, IL, MI, and WI issued with an Association contract will be terminated December 31, 2014.
  • Alabama:  All Non-Grandfathered PHP Evolutionary plans will be terminated December 31, 2014.  This includes plans that were amended to be ACA compliant as of January 1, 2014.
  • Colorado:  At this time we do not have the detailed information to provide you regarding plans that will terminate in the state of Colorado.  Detailed information will be provided to you in August.
  • Florida (South Miami Dade):  All PHP Refresh plans with the Florida HMO Premier Network will be terminated December 31, 2014.  This includes plans that were amended to be ACA compliant as of January 1, 2014.
  • Illinois:  All Non-Grandfathered plans issued prior to January 1, 2014 will be terminated December 31, 2014.
  • Kentucky:  All Non-Grandfathered PHP Evolutionary and PHP Refresh plans effective October 2, 2013 through December 31, 2013 including plans that have a signed policy year amendment will be terminated as of December 31, 2014.  Plans that were scheduled to renew in November and December of 2014 will also terminate on December 31, 2014. Any remaining Non-Grandfathered Non-ACA compliant plans will terminate as of the renewal date in 2015.
  • Michigan:  All Non-Grandfathered PHP Evolutionary plans will terminate as of December 31, 2014.  This includes plans that were amended to be ACA compliant as of January 1, 2014.
  • Oklahoma:  All Non-Grandfathered PHP Evolutionary plans will terminate as of December 31, 2014.  This includes plans that were amended to be ACA compliant as of January 1, 2014.

No worries though! The Obama administration is confident that you will enjoy your new Bronze, Silver, Gold or Platinum plan that you will be forced to accept under the Patient Protection and Affordable Care Act a.k.a. “Obamacare”. You can begin shopping for your new plan on November 15, 2014 as we all move ‘forward’ to the “fundamental transformation” that our dear leader promised.

The types of Humana One plans schedule to be terminated as of 12/31/2014 are listed below:

PHP Evolutionary Plans PHP Refresh Plans
Potrait Share 80 Plus RX Enhanced Copay / 80%
Monogram Total Plus RX Copay / 80%
Autograph Share 80 Plus RX Copay / 70%
Autograph Share 70 Plus RX Value / 100%
Autograph Share 80 HSA – Single HDHP Enhanced HSA / 100%
Autograph Share 80 HSA – Family HDHP HSA / 100%
Autograph Total HSA – Single HDHP HU GI Refresh – Florida IMM – Copay / 70%
Autograph Total HSA – Family HDHP
Autograph Total Plus RX HSA – Single HDHP
Autograph Total Plus RX HSA – Family HDHP
HU GI PHP – Florida IMM – Portrait
HU GI PHP – Florida IMM – Monogram
HU GI PHP – Florida IMM – Autograph Share 80
HU GI PHP – Florida HSAQ – Autograph Total Plus RX


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The biggest threat to Obamacare yet is right around the corner.

A case about to be decided by the U.S. Court of Appeals for the D.C. Circuit could stop Obamacare dead in its tracks in 36 states. ‘Halbig v Burwell’ is based on an illegal action taken by the Internal Revenue Service in 2012.  Below I will outline that illegal action and the two sections of the PPACA (Obamacare) that are relevant in this case.

State-based exchanges and federally facilitated exchanges

Section 1311 of the PPACA describes state-based health insurance exchanges. That section outlines the powers granted to the IRS to provide APTC – “Advance Premium Tax Credits” (a.k.a. ‘subsidies’) that will be used to artificially lower the high cost of health insurance offered in a state-based exchange. Tied to those APTC’s is also the power granted to the IRS to levy a $2,000 or $3,000 excise tax (non-tax deductible) on all employers with 50 or more full-time employees (first 30 employees waived) if they do not provide PPACA approved health insurance. This is a lot of new power granted to the IRS and this is the primary reason the IRS is hiring thousands of new agents.

Section 1321 of the PPACA describes federally-facilitated exchanges and state-federal partnership exchanges – like the exchange the state of Illinois has chosen to establish. In these types of exchanges, the IRS is granted no authority to provide APTC’s or to levy excise taxes on any employer in that state for not providing PPACA approved health insurance. Since the crafters of the PPACA assumed that every state would willingly establish a state-based exchange, there was no money appropriated for federally-facilitated exchanges.

Thus far 36 states have chosen not to open a state-based health insurance exchange. As such federally-facilitated exchanges have been implemented in those states regardless of the wishes of those state’s legislatures.

The illegal action taken by the IRS 

Here’s the kicker, in order to ‘fix’ this legal ‘opt out’ that section 1321 provides to states that choose not to open a state-based exchange. The Internal Revenue Service finalized a proposed rule on the 2 year anniversary of the passage of the PPACA that offers APTC’s -Advance Premium Tax Credits – through exchanges “established under section 1311 OR 1321 of the PPACA. Those six characters—”or 1321″—constitute as Cato’s  Michael Cannon correctly describes “an unconstitutional and as such illegal rewriting of the statute.” By issuing tax credits where Congress did not authorize them, this rule triggers billlions of dollars in taxpayer provided “subsidies” and imposes excise taxes on employers with 50 or more full-time employees in all 50 states.  Whether they have a state-based, state-federal partnership or federally facilitated exchange. Since the IRS is not a Legislative branch, this action was illegal.  It was not authorized by Congress and as such it should not stand. 

Worse yet, President Obama is following this new proposed rule as if it was codified law. This illegal action taken by the IRS and President Obama’s support of it is the crux of the Halbig v Burwell case. If the U.S. Court of Appeals upholds the rule of law in this case it will mean the end of Obamacare  in 36 states. In turn, it may be the final death blow to an unconstitutional and wildy unpopular law. 

July 22, 2014 UPDATE

D.C. Circuit Court of Appeals rules in favor of Halbig plaintiffs! The Obama administration will of course appeal this decision to the entire court.  Seven of that court’s 11 judges were nominated by Democratic presidents, including four by Barack Obama. If the Obama administration fails there, the case will head to the U.S. Supreme Court. If the Obama adminstration loses there, 57 million Americans who work for an employer and 8 million individuals in more than three dozen states will be FREED from the unconstitutional tyranny of the Obamacare individual and employer mandate. This will also be the beginning of the end of Obamacare. We still have a long battle coming on this issue.

Read today’s ruling from the D.C. Circuit Court of Appeals here >$file/14-5018-1503850.pdf 

Hours after the D.C. Circuit Court of Appeals struck down the illegaly granted IRS subsidies the 4th Circuit Court of Appeals in Richmond, Virginia upheld them.

If Obama wins in the D.C. Circuit Court of Appeals there will then be two cases ruling against the rule of law in the lower courts. However, there are three other cases that need to be decided in the lower courts. They are King V. BurwellIndiana v. IRS and Pruitt v. Burwell. If the rule of law prevails in either of those court decisions there will then be descending opinions in the lower courts. This would then force the U.S. Supreme Court to hear the case. Even if the case reaches the U.S. Supreme Court, there is the problem of chief justice John Roberts. In June of 2012 he committed one of the greatest miscarriages of justice in U.S. history by changing the word ‘fine’ to ‘tax’ and allowing the unconstitutional Obamacare law to move “forward”. Needless to say, I have no faith in the U.S. Supreme Court. Pray for justice.

Update:  On Friday, November 7, 2014 the U.S. Supreme Court agreed to hear the King V. Burwell case early next year with a decision most likely being rendered in June of 2015. Again, pray for justice.


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Illinois FINALLY begins implementing common sense Medicaid reforms.

Nearly 7  years after former Indiana governor Mitch Daniels began reforming the formerly bankrupt Indiana Medicaid program by implementing “Healthy Indiana“.  Illinois finally begins moving in the right direction with our Medicaid program. Between now and the fall of 2014, 1.7 million Illinois Medicaid recipients will begin receiving outlines of coverage for their new private health insurance plans.

This is the second positive step Illinois officials have taken to reform our Illinois Medicaid program. The first step begin in 2012 when among other things, Illinois finally implemented a TPA – Third Party Administrator. TPAs perform duties such as routine audits to determine if existing Medicaid recipients are actually eligible for Medicaid based on their income, still living in Illinois or for that matter still breathing. When I say ‘still breathing’ I’m not being facetious. Recent audit results found that our Illinois Medicaid program paid an estimated $12 million for medical services to people listed as deceased!

Examples of Illinois Medicaid waste, fraud and abuse.

Other results of our first audit of Illinois’ Medicaid rolls are shocking indeed. According to the Chicago TribuneOf the first 20,500 recipients screened by an outside contractor, the auditors recommend that 13,709 be removed from the rolls. Yes, that’s two-thirds of the first group screened, flagged as ineligible to receive their current Medicaid benefits. How so? In some cases, the recipients make too much money to qualify. In other cases, they don’t live in Illinois.”

Even more shocking is the recent arrest of the CEO and 5 other Sacred Heart hospital officials for rampant fraud. Not to mention, in 2010 75% of those enrolled on our “All Kids Covered” program were classified as “illegal immigrants”. Add to that, the fact that the “All Kids Covered” program itself was an illegal expansion of our Medicaid program facilitated by currently incarcerated, former Illinois governor Rod Blagoyevich and you can see why our Medicaid program is in desperate need of real reform..

What else needs to be done?

1.) Implement reasonable co pays or access fees to deter overuse of emergency rooms by penalizing non emergency room visits. This will steer Medicaid recipients towards far less expensive doctor’s offices for non emergency cases. Traditional Medicaid does not allow the use of higher co pays to discourage overuse of emergency rooms. Many state Medicaid programs charge a co pay of $5 or less to visit an emergency room. These low co pay do not exist in the private sector for this reason.

2.)  Establish defined PPO or HMO networks for Medicaid recipients to seek non emergency treatment. Traditional Medicaid allows recipients to see any willing provider. This discourages reasonable price controls that the rest of us in the private sector already adhere to in order to control costs.

3.) Implement significantly higher co pays for brand name prescription drugs. This will incentivize recipients to use generic drugs when available. If generic drugs are not medically compatible with the patient then implement the same ‘step therapy’ program that we in the private sector have to follow. This way a patient will at least have to try generic drugs and will need physician approval before using more expensive brand name drugs.

4.) Implement Indiana’s POWER HSA (Health Savings Account) which works in harmony with high deductible coverage. By high deductible I don’t mean the $6,350 high deductible that we in the private sector have to assume with Obamacare’s cheapest “Bronze’ plan. Indiana’s HIP – “Healthy Indiana Plan” subjects members to only a $1,100 deductible. However, the POWER HSA  is used to cover that deductible.

HIP members make means tested monthly payments to their POWER HSA accounts. These payments are based on income and can not be more than 2% of income for members below 100% of the FPL – Federal Poverty Level. Medicaid funds then cover the gap between the HIP member’s payments and the $1,100 deductible. If the HIP member is working, their employer can contribute up to 50% of their employee’s annual HSA contribution. Non profit organizations can contribute up to 75% of a HIP member’s HSA contributions as well.

The key point here is that whatever amount of a HIP member’s POWER HSA account that they do not use they keep and it rolls over to the following year. This reduces their required POWER HSA contributions for the following year. This thereby encourages smarter spending habits by giving Medicaid recipients some ‘skin in the game’.

5.) Preventive care must be incentivized. The HIP program does this by offering state defined routine preventive care tests and exams that the HIP member can utilize. If they do not utilize these services than only their much smaller POWER HSA contributions are rolled over to the following year. If they do utilize these service then the entire POWER HSA balance rolls over to the following year. Including all contributions made on their behalf by either an employer, the taxpayer or a charitable organization. This provides a very big incentive for HIP members to stay healthy. By doing so they also reduce the long term costs of the entire HIP program for all parties involved.

This is not rocket science it is common sense. By implementing proven reforms already adopted by states such as Indiana and Florida, Illinois will not only save taxpayers billions but they can provide better care for those truly in need. Whilst it is good to see Illinois legislators begin to adopt some of these reforms, it is my hope that they adopt the others outlined in this article as well. With the state of Illinois facing more than $20 billion in unpaid Medicaid bills and the cost for our Medicaid program projected to increase by more than 40% by 2017 do we really have any other choice?


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Employers can still send employees to the exchanges but not with pre-tax dollars.

As a licensed health insurance broker, I have recommended many cost reduction options to employers over the last 20 years so that they may continue to attract and maintain quality employees. One of the most lucrative alternatives for both the employer and the employee was for the employer to consider offering a stipend to their employees for them to use to purchase their own individual health insurance on the open market. Contrary to popular belief when comparing apples to apples, individual health insurance premiums are almost always cheaper than employer sponsored group health insurance premiums. This is especially true when you subtract the amount the employer pays towards the premium.

Since employer sponsored group health insurance is not taxable to the employer, recommending that employers provide a stipend to their employees to purchase their own individual health insurance would create a taxable event for both them and their employees. However, if the employer deposits that additional stipend into an FSA – Flexible Spending Account – then they would be able to retain the same tax advantages that they have always enjoyed by providing group health insurance. That concept worked and saved both the employer and the employee considerable dollars on premium and significantly reduced tax liabilities. All of this worked great…until Obamacare.

New rules

On September 13, 2013 the IRS issued yet another set of ‘new rules’ that sent a shock wave through the health insurance broker and human resources community. IRS Notice 2013-54, essentially put an end to this arrangement. In this notice, the IRS stated: “An employer payment plan, as the term is used in this notice, generally does not include an arrangement under which an employee may have an after-tax amount applied toward health coverage or take that amount in cash compensation.”

When that notice was issued health insurance brokers all over the nation suddenly realized that one of the most useful tools we had utilized for years had been snatched away from us by an ever encroaching federal government. A federal government ruled by an administration with a never ending thirst for more ‘revenue increases’ a.k.a. tax dollars. Little did we know back in September how severe the ramifications would be for an employer who would continue to use this strategy in the future.

Even More New Rules

On May 13, 2014 the IRS clarified how stiff the penalties will be for an employer who continues to pursue the aforementioned tax and premium saving alternative. It applied the same penalties it outlined back in 2011 to any employer who ‘fails to meet certain group health plan requirements‘ under Obamacare. These fines equate to a $100 fine per day per employee. $100 a day multiplied by 365 days equals an annual fine of $36,500 per employee for each year that the employer remains out of compliance with Obamacare.

In A Nutshell

So what does this all mean in laymen terms? This means that employers can still cancel their existing employer sponsored group health insurance plans and ‘dump‘ their employees into the Obamacare exchanges. In other words, they can still provide a stipend for their employees to purchase individual health insurance either on or off the Obamacare exchanges. They just can’t do so using pre-tax dollars. Not without facing a tremendous IRS penalty.

In the end, this ruling will save taxpayers a lot of money because we won’t be subsidizing premiums for millions of employees who would normally have their health insurance paid for in part or in whole by their employer. That’s the good part. The bad part is as health insurance premiums continue to rise sharply (largely because of Obamacare) employers may be forced to react to this latest government health care scheme by terminating employment. Premiums can only rise so much until something breaks. The last thing we need is to increase our unemployment numbers which are much higher than what the Obama administration has ever reported.


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COBRA recipients now have until 7/1/14 to replace COBRA with a QHP and Individuals with renewing 2013 plans now qualify for Special Enrollment.

On May 2, 2014 HHS issued a new bulletin. This bulletin provides a “special enrollment” period until July 1, 2014 for individuals who have already elected COBRA continuation coverage. This new rule will allow those who have already elected COBRA continuation coverage to drop their COBRA coverage and select a potentially lower priced QHP – “Qualified Health Plan” on or off the exchange at any time before July 1, 2014.

Before this new bulletin was published, those eligible for COBRA continuation coverage only qualified for a special enrollment period when they first become eligible for COBRA or when they exhausted their COBRA continuation coverage (typically 18 months later). This new rule only applies to states that have a “Federally Facilitated Exchange” like the state of Illinois.  See if your state has a “Federally Facilitated Exchange” click here

Those with 2013 Individual health plans that renew in 2014 now qualify for a “Special Enrollment” period.

The new May 2, 2014 bulletin also allows those who purchased 2013 plans from the ‘old market’ to qualify for a ‘special enrollment’ period if their 2013 plan renews in 2014. The applicants can apply for a QHP up to 60 days before their plans terminate and they may also apply up to 60 days after their plan’s renewal date. In this April 8, 2014 article I noted that before this new bulletin Assurant Health was the only carrier that was offering a QHP to those with plans from the ‘old market’ outside of ‘open enrollment’ periods. With this new May 2, 2014 bulletin all carriers will eventually need to comply. As of the date of this writing Blue Cross Blue Shield of Illinois had not stated when they will comply. If and when they do I will add their statement to this post.

New options for those with Americorps, VISTA or National Civilian Community Corps

This new bulletin also creates a third new ‘special enrollment’ period when members of these programs begin their service and when their service ends. Since members of these programs are often times under-insured on plans that do not contain “minimum essential health benefits” this bulletin grants a hardship exemption from the ‘individual responsibility’ TAX for non compliance. That per person TAX in 2014 is either $95 or 1% of your MAGI – Modified Adjusted Gross Income.


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Breaking news! Renewal of an individual plan from the old market is a qualifying event with Assurant Health.

I just received outstanding news from Assurant Health insurance company. In February I wrote this article that referred to a federal regulation which states that if you have an individual health insurance policy from the ‘old market’ – non grandfathered plans from 2013, 2012, 2011, 2010 and even grandfathered plans purchased prior to 3/23/2010. And, that policy renews in 2014 you can purchase a new 2014 ‘Medal’ plan on a guaranteed issue basis (no preexisting conditions) all year long, even outside of ‘open enrollment’ periods. The problem is other carriers are not considering the renewal of an old policy to be a ‘qualifying event’. So up until now, I was told that short term (temporary health Insurance) would be the only alternative for those who still have pre-2014 policies that are renewing this year.

Assurant Health announced yesterday that they are now honoring this regulation that states quite clearly that if you have an ‘old’ policy from the ‘old’ market and that plan renews you can purchase a 2014 ‘qualified’ Bronze, Silver, Gold or Platinum health insurance plan on or off the exchange on a guaranteed issue basis between open enrollment periods. This is VERY good news for anyone who has an ‘old policy’ that renews this year and is facing a large premium increase and/or has exclusion riders on their existing policy and wishes to purchase a new 2014 plan without exclusion riders. 

At this juncture, Assurant Health is the only carrier that I am aware of that is honoring the aforementioned regulation and as such they have a corner on the market until the next open enrollment period begins on November 15, 2014 for coverage effective dates beginning no sooner than January 1, 2014. As I stated in this recent article, many health insurance carriers like Aetna and Humana are not even offering short term (temporary) health insurance products until the next open enrollment period and the few carriers who are offer them with dangerously low lifetime maximum coverage amounts. It must also be reiterated that if you purchase short term coverage these policies do not cover preexisting conditions and you will be subject to a 1% of your MAGI ‘fine’ (TAX) from the IRS if you purchase short term coverage because those plans are not considered ‘qualified health plans’ under CMS and HHS regulations.

If your old health insurance plan is renewing in 2014 and you wish to get quotes from Assurant Health for a qualified replacement plan click their logo below. There is a now a new section on the application where you will need to either upload a copy of your existing health insurance ID card proving that you have a policy from the old market or you can fax a copy of your old ID card to the fax number provided on the application. This is necessary to prove that you qualify for a special enrollment period as an applicant with a qualifying event. 


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