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Individual mandate no longer in effect

While insurance rates are on the rise, employees now can opt out of employer coverage

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With insurance rate increases and the removal of the individual mandate penalty, the heath care landscape will be in transition in 2019.

Local health insurance officials say rates in Missouri are expected to increase in both non-grandfathered small group market plans and transitional plans, and employees now have the chance to opt out of employer plans.

Average insurance rates will increase for the non-grandfathered small group market, with Coventry Health Care of Missouri at 15.68 percent and Aetna Health Inc. at 14.4 percent being the highest, according to Missouri Department of Insurance data. The lowest average rate changes are UnitedHealthcare Insurance Co. at 3.3 percent and Healthy Alliance Life Insurance Co. at 4.28 percent.

MDI data show premium rates from Coventry are projected to increase to $785 from $578 with Aetna’s rates going to $851 from $590 for group market coverage.

Rates on the rise
Transitional plan rates, or plans for those between coverage, also are on the rise.

According to MDI data, Cox Health Systems Insurance Co. has the largest change statewide with an 11 percent increase, followed by UnitedHealthcare Insurance Co. at 9 percent and Healthy Alliance Life Insurance Co. and Anthem Blue Cross Blue Shield both at 6 percent.

“There’s a dynamic in the medical insurance world called medical inflation,” said Jacob Salinas, area vice president for Gallagher Benefit Services Inc. “Medical inflation, depending on the geographic region, varies from 6 to 8 percent a year. It varies on group. Historically over the last year, it’s anywhere from 5 to 10 percent depending on group and industry factors.”

Medical inflation applies to costs of medical treatment used to set premiums.

Salinas said a lot of his clients’ rates have followed the medical inflation trend.

Andy Ebbrecht, owner of Arrow Insurance Group LLC, said he hasn’t seen any major changes from group health insurance other than additional level-funded plans, or plans that are partially self-funded.

“There’s more level-funded plans because there’s underwriting on those, he said. “Any new group plans, if under 50 employees, there’s no underwriting. But if you go in and you’ve got a healthy group, you get a better rate. More groups are testing that.”

Down the road, Salinas said a multiyear strategy for different generations may be needed for companies as baby boomers retire and millennials fill the gap.

“Their needs will be quite different,” he said.

No more mandate
The individual mandate penalties from former President Barack Obama’s health care law will no longer apply after the passage of the Tax Cuts and Jobs Act in December 2017.

With the removal of the penalties for failing to obtain health care insurance coverage, the health insurance landscape is on the verge of change, said Dennis Hall, owner of Faith Immediate Care & Occupational Medicine.

“It’s going to blow it wide open,” Hall said. “What’s going to happen, as more and more opt out, statistically that’s going to raise the cost to insurance companies and the price of group plans.”

The annual mandate penalties were $695 per adult, $347.50 per child and up to $2,085 per family, according to Internal Revenue Service data.

The Congressional Budget Office estimates between 2018 and 2019 the number of people enrolled in the nongroup market will fall by 3 million due to the penalty being removed. “That may not be true if the employer is offering a strong compensative plan,” Salinas said of people opting out of employer plans. “People sometimes take jobs because of benefits.”

He said enrollment with Gallagher clients has been steady so far.

“We haven’t seen that personally with our clients, but it could happen,” he said of employees opting out of employer coverage.

Ebbrecht said the mandate wasn’t a big enough issue for some individuals to carry health insurance before the repeal. “I don’t think that mandate scared anybody,” he said. “You’re not going to pay $1,000 a month over a $695 one-time penalty.”

U.S. Census Bureau statistics show 11.4 percent of Greene County residents under the age of 65 do not have health insurance.

The ACA’s penalty mandate went into effect in 2014, and it was enforced on individual tax returns. While the penalty for individuals was removed, the mandate for health care insurance remains for companies employing more than 50 individuals.

The new risk without individual penalties is employees can opt out, Hall said, and if enough opt out, the employer will be fined.

“It’s leverage for the employees to use against the employers,” Hall said. “We need to worry about health care, not health insurance.”

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