Group Health

Taming the Big Cat? A Primer on Stop Loss Insurance

Taming the Big Cat?  A Primer on Stop Loss Insurance

As we transition from Halloween to Thanksgiving, we know many of our clients and their service teams are preparing for or have already conducted open enrollment. While most employees appreciate their benefits, they are not familiar with all the work that HR and executive leaders put into what gets delivered at the enrollment meeting. One of the major reasons for providing health insurance is to protect families from a catastrophic financial loss. This is why most employers buy stop loss insurance to cover large claims.  

Speaking Out On Transgender Benefits

Speaking Out On Transgender Benefits

I recently came across this article, published by Business Insurance with the following headline "Few employers offer transgender benefits".  This article, along with the growing news coverage around bathroom use for transgender, prompted me to investigate exactly what percentage of the population here is impacted.   According to two of  the largest surveys ever conducted on the topic, approximately .3 percent or 700,000 people in the United States identify as transgender.   

What Millenials Crave at Work?

As a latchkey kid that grew up watching the Brady Bunch, the family I wished to emulate had three boys, three girls, Carol and Mike as  parents and a maid named Alice.   Amidst parents that divorced when I was six years old, me and many of my GenX colleagues learned to fend for ourselves by working through high school and cooking our own dinner.   While my mother did her best to support us with dad's alimony check and her high school education, me and my two sisters grew up quickly and were taught not  to complain, get a good education and strive for a career that included a Rolex watch at a long-tenured employer.

The Business of Winning by Jimmy Johnson

The Business of Winning by Jimmy Johnson

For those of us who enjoyed those Super Bowl wins of the 1990's in Dallas, we all know that the Dallas Cowboys became a franchise team under Coach Jimmy Johnson. Jerry had the money and the smarts to hire his old Arkansas Razorback teammate, but Coach Johnson brought the formula for success.   It was honed in Florida at the University of Miami, where each Hurricane was conditioned to be faster, stronger, and have greater endurance than his competitor.  As Coach Johnson explains in this video from ESPN's 30 for 30, "Fatigue makes cowards of us all."

Holmes Murphy Launches Healthy Insurance Pool (HIP) in DFW

When we sit down with the leadership of our clients and their HR/Benefit departments, we usually get heads nodding when we share that 40-50% of Americans born after 2000 will have  diabetes.   There are plenty of peer-reviewed  case studies to show that leading companies who invest in establishing a culture of health and accountability in the right way experience returns that go far beyond the expense side of the ledger.

Accountable Care - Transforming Healthcare Delivery

At no other time in the history of our country has the healthcare delivery system so rapidly transformed as it has since the passage of the Affordable Care Act (ACA).   With healthcare consuming nearly 20% of our country's GDP, traditional fee for service medicine simply was not sustainable.   Accountable Care Organizations ("ACO's") hope to change that with the aim of improving population health, improving the care experience and reducing the per-capita cost. The Centers for Medicare and Medicaid Services (CMS) have very clear rules and definitions as to what might comprise an ACO for the Medicare market, but when it comes to what it means for the private sector, definitions vary. An ACO is a health care delivery system that has partnered with a payer or purchaser of health care to develop arrangements that align financial interests with the delivery of effective and quality care for a specific population.   However, if you have seen one ACO ... you have seen one ACO since success is contingent upon IT integration, physician-led affiliation, care coordination, access, prevention and convenience, and payment reform that aligns stakeholder interests.

Many plan sponsors might first think an ACO of today is simply warmed over "HMO soup", reheated from the 1990's.   What's different is that we have advances in technology, larger systems of care with greater physician/hospital collaboration, bigger federal incentives and a decade of best practices to guide us.   Many systems will be smart to avoid the  mistakes made  during the HMO era when the market greatly underpriced  premiums, withheld care and failed to model risk accurately.   We're only in the first inning of the ACO era that will continue to  lead to pay for performance, bundled payments, episodic risk sharing and more fully capitated transfer of risk for health sytems.

According to Leavitt Partners latest study, there are over 600  ACOs now across the United States:

ACO's Across the Country

There are three considerations that should prompt employers of all sizes to  consider ACO's in their employee benefits portfolio:

1) Available Now  - Traditional health insurers, physician groups and health systems have been hard at work building partnerships that incorporate shared risk arrangements.   Last year, ACOs began rolling their products out to our  benefit consulting teams for us to share with our clients.   We were pleased to learn  the health systems and carriers are "eating at their own restaurant" by  enrolling their employees into their own ACO over the last couple of years.   For the early adopter seeking alternatives that promise greater value   with a narrower network or steerage mechanisms, ACO options are available now throughout the country.   Our firm has examples of clients who have deployed narrow network strategies in partnership with hospital based systems anchored in DFW.   One of the largests now boasts a network of approximately 50 hospitals, 500 patient access points and 6,000 affiliated physicians.

2) Geographic Density -  Since ACOs are about the delivery of healthcare at the local level, employers with great density (concentrations of a large number of employees) will fare better with this strategy.   In California for instance, CALPERS, one of the state's largest plan sponsors, had enough clout to form a direct contract with a upside  premium credit of nearly $16MM  with a physicians group, Blues plan and hospital system.   This alliance was formed to compete against the dominate player in the area, Kaiser of California.   If you are the major employer in an area, you and other employers have more clout than you might think in this new era of ACO alignment.

3) Show Me the Money -  The most fundamental change that ACOs may bring to the market is a substantial increase in the levels of collaboration among payors and providers.   So how will more integrated models prove to the private sector they can truly remove waste, impact steerage, align incentives with greater patient satisfaction?   These integrated systems realize they must offer up savings in the form of guarantees, ,risk-adjusted PMPMs and total cost guarantees for us to consider their offering.   Initial actuarial projections are targeting PMPM savings ranging from 5-10% off of current spending levels, as contracts mature.

But accountability is up to every organization and every body with a body. The ACO cannot foster health alone ... and that's why the early adopters must be prepared to lead with  executive sponsorship, design and contribution alignment to drive steerage, coordination and communications  that lend support to these exciting options. I am a voracious reader of  Benefits Quarterly,  a publication for peers in my industry.   This excerpt, written by Isabelle Wang and Michael Maniccia of Deloitte, provides a good primer for employers to consider on the topic of ACOs and is available on their website or download here:    

Benefits Insight from a Twitter Founder

Jack DorseyJack Dorsey, the founder of Twitter (and now Square) once famously quipped that as business leaders we should "make every detail perfect and limit the number of details to perfect". As employee benefit advisers, human resource and benefit professionals and service providers deal  with new regulations, burden shifting and changing roles in a fast-changing employee benefits industry, we sometimes lose sight of who we are serving. As long as an employer is paying the majority of the costs, the employee benefit programs is an investment that reflects the culture and value placed upon the people in the organization.

It might surprise some business owners to learn that the "perceived" value of the benefits actually has less to do with the family out-of-pocket amount and office visit copay and more to do with benefit  experiences throughout the year.   This was reinforced through a study by Deloitte that identified the high direct and indirect expense of turnover when good people leave their jobs because of bad management and poor culture. Employee benefits did not even make the top ten list of the reasons to jump ship.

Sure, getting the benefits design of your programs to reflect your company's core beliefs is an important first step along with selecting the right service providers and making sure we are in federal and state compliance.   But all too often we run out of time to pay attention to the details that matter most ... the enrollment and user experience for our customer.   Selecting a plan provider and paying the majority of the premium is hardly where the responsibility ends.

Have you seen this before in your benefit materials ... Call this number to set up an appointment, fax this form to this group, set up another user name and password to qualify for this, watch this video and fill out this form to get this, do these 10 meaningless things that will not impact your health ... and my favorite ... read this ... but don't take any action now (I just want you to inform you of these things that will add more stress to your world ... along with work and family obligations, missing planes, Ebola viruses, impending Cold War and Middle East unrest) but check back later for more details from your HR team. Also, plan to keep an an eye out in your inbox for more important dribble about your employee benefits that does not have any call to action or benefit to you or your family members.

Jack Dorsey gets   it right ... because he cares about the ultimate detail, design and user experience.   Twitter was about a simpler way to communicate.   Square and Apple Pay are trying to improve the buying experience.   When it comes to delivering employee benefits, we are always on target if we ask how we  can  make the service experience better for  those whom we serve.

Carrots and Sticks are for Donkeys and Mules

The following is a must watch for anyone who endeavors to change the health risk of a population. Our industry needs to move beyond treating our people like they are asses.  We assume humans are like farm animals motivated by dangling a carrot or giving a smack on the rear. As Dr. BJ Fogg explains in the video below, an employee's level of motivation is hardly the culprit.     

The research and understanding of "B=MAT" - behavior = motivation, ability and trigger ... is worth the small time investment it will take to watch this video.  Dr. Fogg’s research is some of the most groundbreaking in terms of how human beings change behavior. Dr. B.J. Fogg is the Director of the Persuasive Technology Lab at Stanford University.

I came across this video at Rock Health when launching my own startup in the digital health technology space.

Health Care Pricing ... All Over the Map

Health Care Prices All Over the MapIt's always fun to watch shoppers each holiday season camp out for hours to snap up bargains that pale in comparison to the savings available in the health care marketplace.   If buyers put as much emphasis on shopping for health services throughout the year as we do on enrolling for coverage once a year, we could make greater strides to flatten the cost trajectory of care. If there is one city that knows how to shop it's Big D, so here's a three-step process for any employer hoping to put a little "Black Friday" in their health plan:

1. Offer A High-Deductible Plan:

A 'quiet revolution in health insurance' is taking place as the number of employees enrolled in a plan with an annual deductible of $1,000 or more has risen to nearly 40% in 2013.   Among all plans, the average annual deductible among covered workers is over $1,100 and exceeds $1,700 for small firms (under 200 workers).   (Kaiser/HRET Survey of Employer Sponsored Health Plans).

Milton Friedman wisely quipped "Nobody spends somebody else's money as wisely as he spends his own.   Putting in a high deductible plan enables your employees to be economically rewarded for shopping around and strategically aligns your insurance plan to cover infrequent and high cost medical events.

2. Arbitrage your Network

In the 20th century days of health care consulting, we used to attend to great detail to reprice claims for employers wanting to select the right insurer and network health plan.   This focus on network discount has given way to more sophisticated value equation models.   Once your health plan/network is in place, the employer must then teach employees to exploit hidden value within the network throughout the year.

60% of medical and pharmacy claims come from non-emergent services.   As an example, three facilities within a five-mile radius in Dallas offer the same in-network MRI for prices ranging from $600 to $3,000.   Transparency laws are now enabling big data analytics software to quickly review over a billion national claim records for price and quality comparisons at the push of a button.

3. Shop with a trusted friend

The best health price transparency providers have realized that shopping for care is best delivered when technology is married with an independent consumer advocate.   As an example, there are over thirty types of knee surgery, so having a personal concierge to help me navigate my options enables my family to build trust with an advisor that does not have a financial interest in the outcome.   To revolutionize the system, we need to help our employees act on information, not just provide data.

Many DFW employers are well on their way to creating a shoppers mentality among their health plan enrollees.   Consumer advocacy and pricing transparency programs have already returned annualized savings anywhere from four to twenty-four times the cost of the service.

In a town that continues to reinvent the shopping experience, we anticipate more companies to get on the "Black Friday" bandwagon when it comes to savings in their health plan. The best part is we can all be empowered to score health deals that would make a Walmart clerk gush just by picking up the phone.

Top Ten Healthcare Predictions for 2014

20141. With UT falling to Baylor, another 50/50 season for the Dallas Cowboys and a botched rollout in 2013, predictions for 2014 have head coach, Jason Garrett and U.S. Secretary of Health and Human Services, Kathleen Sebelius joining the ranks of Mack Brown and the unemployed ... At least they will have a new health insurance option available to them when they leave their employer. 2. Consumer health devices, mobile and telehealth initiatives will continue to bring about market-based reforms that enable better tracking, monitoring, and care coordination for patients with chronic conditions, who lack access to primary and specialty care or for those payers and providers willing to experiment with technology enabling solutions.

3. Watch for continued M&A activity with health systems similar to Baylor Scott & White or Tenet (Vanguard Health) in other areas of the country. Health care delivery systems will continue to survive and thrive through specialization, mergers, or partnerships that lead to even bigger systems of care.

4. After the elections in November 2014, more carriers will exit the exchange system or become even more selective with their markets and propose double digit premium rate increases as the demographic underpinnings of the exchange fail to capture the 18-34 age group needed for the law to succeed.

5. With less than predicted young people signing up for, watch for legislative push to increase penalties for those who did not adhere to the requirements in the law in 2014. There will also be a healthy amount of debate over whether the penalties should be waived in 2014 due to the botched website rollout of [The penalty for 2014 is the greater of $95 a year or 1% of adjusted gross income].

6. The political rhetoric of "repeal and replace" will eventually give way to the demands of the American people searching for bipartisan amendments and solutions that target the real enemy in this country ... a broken fee for service environment that pays for the reimbursement of treating disease. The government will not shut down in 2014.

7. Employers will continue to adopt tax-efficient plans (such as high deductible health plans with health savings accounts) as new taxes (associated with ACA's funding) become more transparent to higher wage earners. Private health exchanges will grab the attention of employers interested in defined contribution approaches to funding their benefits.

8. Companies will abandon large incentives associated with traditional first generation wellness offerings (HRA's, Biometrics, and Wellness Content) in favor of programs that actually show promise of changing behavior to combat the effects of smoking, obesity, metabolic syndrome and diabetes — Pharmacotherapy and surgical options will gain more traction for those who qualify.

9. Watch for the continued proliferation of programs that provide price transparency and consumer advocacy. Consumers and large payers will become more educated around the disparity in pricing among health care facilities and providers. Congress will try and respond with everything from price controls to transparency bills.

10. Congress will not be able to agree to the Medicare cuts that are the underpinnings of the Affordable Care Act. The Office of Management and Budget (OMB) will run new actuarial calculations that increase the size of the federal deficit beyond what our children can bear.

Where Will You Choose to Swim Next Summer?


As the summer winds down, I could not help but be thankful for the fun we had in our backyard pool.   It suddenly dawned on me that our private swimming pool provided many analogies as it relates to the direction of our federal health care reform initiatives. Many Americans, like my younger sister, will be the first to benefit from affordable coverage without any restrictions for preexisting conditions on January 1, 2014.   The Affordable Care Act ("ACA") allows older Americans to pay a higher rate than younger Americans, but the community rating band will be broken down by only three different age groups.     AARP lobbied strongly for this and it is an absolute boon to the baby boomers and a real shaft to Generation X, Y, and Millennials who will bear the brunt of the top third oldest risk tier by age.   As an example, state exchanges will have age rating bands of 3:1 that will prevent insurers from charging an adult age 64 or older more than three times the premium they charge a 21 year old for the same coverage.   Many believe the bands will be modified to reflect more of a 5:1 ratio as the individual market typically uses today.

Roughly 60% of Americans receive private health coverage through their employer.   Think of each one of these employers as having their own swimming pool.   When I look out at my own pool, our crystal blue waters are meticulously maintained by a cleaning crew that our family gets to select.   When the job doesn't get done, we simply hire another supplier to get better results.   We also get to decide who goes in and out of our family oasis (aside from a random duck that finds his way every year or so to the deep end).   We have control over the environmental factors of our pool like if I want a salt-water or a chlorine pool.   Additionally, we use brushers, skimmers and a Polaris as preventive measures that keep the water clean and healthy.   This is not any different from an employer that sponsors their own corporate health and wellness plan.

On January 1, 2014, there will be another option - a public pool.   When I was little I used to go to our community rec pool and my mom would pay to gain entry or buy a summer pass.   Twenty-seven states (27) have agreed to run a community pool but do not really want to manage it.   This leaves the cleanup and maintenance to a much larger pool cleaning company called the Federal Government.   While Kathleen Sebelius and others will try hard to sell annual passes to younger Americans with lower health risk, there are three groups that will likely end up donning their swimming caps and jumping into the water:

a. Early retirees - This pre-Medicare eligible group is one of the most costly to have on your health plan with claims costs that are actuarially equivalent to three times that of the normal working population.   A report by the Employee Health Benefit Research Institute (EBRI), shows around 17% of employers offered such coverage.   The number of non-working early retirees who enroll through their employer is around 2 million lives.    In a recent Aon Hewitt Survey, nearly a third of employers who provide early retiree coverage plan to direct them to the individual exchange market.   Minnesota based 3M company is exhibit A here after eliminating their group plan for early retirees in favor of redirection to the public exchange pools in each state in 2014.   This is typically done through transition credits through a health reimbursement arrangement (HRA).   Not to blame 3M, as this  is a rational market response when comparing premiums under three-tiered banded rates.

b. State continuation enrollees - As the insurer of last resort, state continuation enrollees and participants in the federal Pre-existing Condition Insurance Plan  will be another group that will contribute to the losses in the state exchanges.   About a quarter of a million Americans fall into this category with more than a dozen states declaring intentions to close their plans in the first six months of 2014.   ACA provides a three-year transition period during which the costs of these programs will be shared across the market.   However, many feel the $5 billion appropriation will not be enough to help states offset the costs through ACA.

c. Low-income Americans - There are numerous studies that unfortunately show a direct correlation between low-income wage earners who are uninsured and the propensity to be obese, have chronic illness and pre-existing conditions.   This group will continue to be attracted to the community pool and have higher health risks when compared to their private plan cohort.   While those who qualify for subsidies (household incomes of between 100-400% of the federal poverty level) are the ones who need it most, their risk factors should predictably drive costs higher each year over private plans.   Over two-thirds of enrollment (CBO estimates) in the exchanges are anticipated to come from those receiving premium credits.   This is something for employers contemplating "pay or play" moves should consider as a one year cost comparison may prove to be short-sighted without thinking through the tax implications and future trends of wading through the public waters.

What is the x-factor that will help keep public exchange costs in check? - those young invincibles ("Young-ens") with no claims who are predicted to enroll.   Lets not count on them rushing in for fear of an underfunded IRS staff that will struggle to collect a paltry penalty (the higher of $95 per year or 1% of family income) from the uninsured.   Keep in mind that ACA is a law whose details are unfamilair to two-thirds of Americans.   Unless the IRS blocks access to the Young-ens X-Boxes until they join an Exchange, this group is going to take awhile to put on their swimming suits.   Those of us who studied actuarial science and risk management in college know that  the dreaded "death-spiral" can occur when younger healthier risks avoid the pool as costs go up leaving behind poorer risks with costs escalating higher each year.

Advice for Tending to Your Own "Swimming" Pool

An August 2013 Towers Watson survey confirmed that 98% of employers surveyed will retain their active medical plans for 2014 and 2015.   The rationale given was that they view maintaining their own health plan (or swimming pool) as an important part of the employee value proposition and a competitive advantage for their companies.

My advice to my colleagues in senior level HR and Benefits who serve as the "lifeguards" of their private pools:

Hire the right crew and invest each year in preventive measures that deliver crystal clear waters.


The "Tsunami Effect" Makes Waves in Group Health

In March 2011, the coast of Japan experienced one of the most devastating tsunamis to ever hit a populated industrialized economy of this magnitude.   But the forces that drive a tsunami come as a result of shifts that occur beneath the surface of the water, not visible when the cause triggers the effect above the sea line.   This event became one of the most documented natural disasters in history due to two things.   The first is the advancements in meteorology that signaled the massive 8.9 magnitude earthquake along a huge stretch of Japan's north-east coast and personal technology that allowed real-time media capture for anyone with a modern day smart phone.     

This real life tsunami is really a metaphor for what occurs beneath the "sight line" of our health plans everyday.   It's also why pouring through outdated historical experience to project future costs is as outdated as the "old midpoint trend method we all learned in underwriting boot camp.   To have a more accurate line of sight into your health plan, you will want to collect three primary components: 1) first is to leverage a firm that can gather your firm's claims in a longitudinal data analytics warehouse.   This helps identify key drivers of health costs and gaps in care 2) second is to get a baseline of biometric measures on the greatest number of engaged participants.   This helps identify certain health risks factors of an individual, and 3) the final ingredient comes about by gathering self-reported health assessment responses to gauge lifestyle related factors missed by the other two components.

When you have all three, Dee Edington's (PhD, Health Management Research Center, University of Michigan) research confirms an accuracy rating of between 70-85% predictability in identifying low, medium and high risk individuals three years before they manifest.   Our  firm utilizes the InfoLock system comprised of 1.3 million individual's claim records over a multi-year look back period that helps our health risk management and clinical staff identify cost drivers and gaps in care.

Once your HIPAA compliant business associates can identify these individuals, your organization can begin aligning the health of your people with the health of your business.   Health management programs must be data-driven and evidence-based, otherwise you could find the waves crashing over your head with escalating trend.

  If your interested in learning which health carriers our InfoLock system automatically interfaces with please submit your question through our "Contact" section to learn more.

The Medicare Part D Accelerated Annual Enrollment Period


Health plan sponsors are required to supply, at least annually, a special notice to their enrollees who are also covered by Medicare. The special notice indicates whether the plan's prescription drug coverage is "creditable" - that is, at least as good as Medicare Part D, on an actuarial basis. The "Medicare Part D notice" helps enrollees who are covered by Medicare make informed and timely decisions about whether and when to enroll in Medicare Part D, and avoid a Medicare late enrollment penalty. Although a plan sponsor's obligation to supply a notice extends only to enrollees who are covered by Medicare, plans sometimes do not know which enrollees actually have Medicare coverage. As a result, plans often simply distribute the Part D notice to all participants. As a part of my firm's services, we furnish our clients with the actuarial attestation of Medicare Part D creditable coverage along with the sample notice. What should be important to plan sponsors is an impending distribution notice due this year as early as October 15th.   If you are interested in receiving our firm's analysis of the rules impacting this notice distribution deadline, a complimentary copy is being made available to members of our BenefitU group in LinkedIn.   

IRS Affordability Standard - New Health Reform Guidance

What an interesting week in the land of employee benefits.   A federal appeals court struck down the constitutionality of the healthcare reform's individual mandate virtually guaranteeing that the Supreme Court will weigh in on the disputes now surfacing between the 11th Circuit and others.   Remember hanging-chad anyone?   Once again our politics got in the way so our  national policies will be determined by the "heavies" in the highest court in the land. Now onto two federal healthcare requirements that had our employer plan sponsor clients wondering if sanity would prevail in Washington.   As a reminder, the statute requires employers with 50 full-time employees or more to offer health insurance to employees and dependents in 2014.   The law requires the coverage to be both "affordable" and "qualifying" in order to avoid penalties.

The answer to both is good news for  employer plan sponsors.   The IRS  used broad discretionary powers to define affordability if the employee is not required to pay more than 9.5% of an employee's current W-2 wages.   The more muddier definition of  household income through AGI verfication now gives way to something the employer has in their purview as a data point.  So an employee earning $40k a year would be prohibited from single contributions in excess of $316.67 a month.

Additionally, employers caught a reprieve by IRS guidance on the new "qualifying" definition, which varies from the standard imposed in the state exchanges.   The 60% standard has now been interpreted to mean the percentage of charges covered by the plan.   So for every dollar of eligible health expenses incurred under the plan, Uncle Sam wants to see the plan picking up sixty cents of the tab.   Finally, employers were given another bonus by exempting plan sponsors from the "essential benefits" definition being crafted for plans under the state exchanges.

For more information and a nice write up by our Health Reform Advisor Practice, please go here.

Health Insurance - When You've Tried Everything Else

Are you no longer eligible for benefits under a group health plan? Have your COBRA benefits been exhausted? Have you been denied coverage due to a preexisting condition? Finding individual health coverage can be discouraging, especially when you have a health condition.   But this post is about throwing you   a lifeline.    Texas is among many states which offer the Pre-Existing Condition Insurance Plan (PCIP), a federally funded insurance  plan which offers insurance to people with ongoing or chronic medical conditions, at prices that are now more affordable.

These plans offer a broad range of coverage, including primary and specialty care, hospital care and prescription drug coverage.   Maximum annual out of pocket cost for covered services is $5950 for network services and $7000 for out-of-network care.      With a little help from the federal government, annual premiums are on the decline.   Kathleen Sebelius, Secretary of Health and Human Services,  announced  recently that premiums have been reduced 10-20% in Texas.   Similar cuts were made in Georgia, Indiana, Louisiana, Mississippi, Nebraska, South Carolina, Tennessee, West Virginia and the District of Columbia.   Even greater cuts, some up to 40%,  were  made  in Alabama, Arizona, Delaware, Florida, Kentucky, Minnesota, Nevada and Virginia.    And, most remaining states have opted to take this federal money and design their own  similar programs.   So, no matter where you reside, you should be able to find a plan to fit your needs without denial from a reputable insurance company.

You  may be eligible for the PCIP if you:

    1. Have been without health coverage for at least six months
    2. Have a preexisting condition or have been denied health coverage because of a health condition
    3. Are a U.S. citizen or reside in the U.S. legally

To  apply for coverage  in Texas, you  must provide proof of residency and proof that  you have been denied  coverage.   Proof of coverage denial may be a doctor's letter dated within the last 12 months, a denial letter from a Texas-licensed insurance company, a letter of ineligibility from a Texas-liscensed agent or insurance company, or an offer of coverage that excludes  one's preexisting condition.

Getting the protection you need is simple.    Apply online at, or visit the website to print out the application and submit it by mail or fax.

For questions about this and other state and federally supported insurance plans, you may  contact the Texas Consumer Health Assistance Program (CHAP); they have the resources to  help  you when  you need it the most.   Contact 1-855-TEX-CHAP, Monday through Friday, from 8 am to 5 pm CST, or go online at

If this post helped you or a former employee looking for assistance ... please let us know.   It is important for us to hear feedback when information we publish helps others.

Sources:   Dallas Morning News, TDI Newsletter

December 31st, 2011 Deadline Approaching - HRA to HSA Conversion?


The purpose of this post is to alert you to a deadline associated with the HRA/FSA to HSA conversions required by January 1, 2012.

With higher taxes coming our way, we have to applaud any health care fund that shields an employee from paying more taxes than necessary, whether it's a Flexible Spending Account (FSA), Health Reimbursement Arrangement (HRA) or Health Savings Account (HSA).   Many employers were quick to jump on the HRA bandwagon when the private letter ruling allowed for their adoption, but HSAs are emerging as the clear winner with an adoption rate double that of HRA's.   In fact, HSAs have been growing at a rate that has exceeded that of HMO's when they were first introduced.   This SHRM  article confirms that in 2011, 41% of companies adopted an HSA (compared to 20% HRA) with another 12 percent of companies expected to do so in 2012.

So if you jumped into the HRA game and are considering a move to a more tax-efficient account that will allow your employee skin in the game and greater tax savings ... you need to know that IRS will allow a rollover conversion, but the one-time rollover opportunity ends in 2011.

In working with our clients through these conversions, we have compiled the following IRS service rules that govern the rollover:

  1. Employee can transfer the balance of the HRA to an HSA.   The transfer must be made by December 31, 2011 and can only be done once;
  2. The qualified HSA distribution from the HRA cannot exceed the lesser of the balance of the HRA on September 21, 2006 or the date of the distribution;
  3. The employer must amend HRA plan document by December 31, 2011 to allow the qualified HSA distribution;
  4. There should be no prior qualified HSA distribution from the HRA on behalf of any employee with respect to that particular HRA;
  5. The employee must have HDHP coverage as of January 1, 2012;
  6. The employee must elect by December 31, 2011 to have the employer make a qualified HSA distribution from the HRA to the employee's HSA;
  7. The HRA may make no reimbursements to the employee after December 31, 2011 (i.e. the plan year-end balance is "frozen"); and
  8. The employer must make the qualified HSA transfer directly to the trustee or custodian of the employee's HSA by March 15, 2012; and either a)  after the qualified HSA distribution there is a $0 balance in the HRA, and the employee is no longer a participant in any non-HSA compatible health plan; or b)  effective on or before the date of the qualified HSA distribution, the general purpose HRA is converted into an HSA-compatible HRA for all participants.

For more information concerning one-time rollover opportunities, you may elect to read this Lockton Benefit Group Compliance Alert.

Health Claim Appeals - Two too Many IRO's

The law mandates that emplyees in non-grandfathered   health care plans be able to request a federal external review if a claim is being denied.   Under the interim final rules applicable to all plans with plan years on or after October 1, 2010, the group health plan must give claimants up to four months to request an external review after an adverse claim decision.   As an example, lets say a patient disagrees with a decision by the insurance company to cover an FDA approved procedure or device deemed to be experimental by one of the four national [monopolistic -sarcasm mine] health insurance companies.   This would be an adverse claim decision you may wish to appeal.   An "adverse benefit determination" is by  definition  a denial, reduction, or termination of, or a failure to provide or make payment for, a benefit. Many employers already have claim review processes in place, but utilize ONE independent review organization.   The new federal law will required to contract  with AT LEAST THREE independent reivew organization and rotate claims  assignments  among them.   The Feds must have feared market forces would have failed to keep the IROs honest if only one were required by law.   This part of the law is a big shock to employers who must now bear the cost of coordinating   this triple-contract vendor review.   While employers can follow a state's external review as an alternative to federal, we will be encouraging our clients to follow a uniform process across multiple state sites.   There are 43 IROs affiliated with URAC has accreditted and only 10 of these operate in multiple states.

Here are the timelines associated with the process:

  • Claimants have four (4) months to request an external review
  • Preliminary review must be completed within five (5) business days of request
  • External review must be copmleted within forty-five (45) business days
  • Claimant can ask for expedited review in life-threating situations
  • IRO must turn expedited reviews around within 72 hours

When seeking to contract with an independent review organization (IRO), an employer or their consultant will want to find a large panal of physicians in multiple specialties with a geographic presence that aligns where your plan participants reside.   Additionally, make sure they are a member of the National Association of Independent Review Organizations (NAIRO), as this is  the "good housekeeping seal of approval" in the IRO business.   The average cost for external review is around $600 and claims requiring.   Not adhering to these rules can subject a health plan sponsor or health insurance issuer to a $100 per day per violation excise tax imposed under the Internal Revenue Code, in addition to giving the claimant a green light to file suit.

It is true that only a fraction of the health plan claims undergo appeal, but requiring THREE IRO's is TWO TOO MANY.   Incidentally, my firm will soon be releasing guidance and recommended IRO's with model contract language as a service to our clients.

Unintended Consequences of Losing "Grandfather"

As President Barrack Obama stated in his push for federal healthcare reform, "If you like your current coverage, you can keep it."   This pledge has been upheld as employers who offer group health coverage grapple with the decision to essentially freeze their coverage provisions to maintain "grandfathered" status or make greater changes to keep their programs affordable.   The first plan sponsors to make this decision are those with ERISA plans with October 1, 2010 anniversary dates. As we have been counseling our clients using our company's Actuarial  Reform Modeling and Compliance Forecaster, most employers cannot afford to maintain "grandfathered" status in this economy and are electing to move ahead with reform's 2010 provisions.   We feel certain grandfathered plans will become rarer than living survivors of the Titanic, but for the majority of employers who lose grandfathered status it is important to understand the new guidelines.

I must give credit to Strasburger & Price, LLP's esteemed ERISA attorney, Gary Lawson, J.D. for pointing out one such guideline at the law firm's Annual Tax Symposium on Monday, August 23rd at The Westin Galleria Dallas.   Gary reminded the attendees that non-discrimination rules (IRS Sec. 105(h) that prohibited favorable treatment for highly compensated employees for eligibility and benefits would now be applicable to fully insured plans that lose grandfathered status.   The example he Gary illustrated is commonly used in mergers and acquisition situations when severance packages are awarded to an executive.   The common practice would allow the company to pick up all or a portion of the the cost of COBRA for the executive, as negotiated in the severance agreement.   This practice will now be prohibited under a health plan that loses grandfathered status.

If you forego the new rules, the penalty is equivalent to $100 per day / per participant.   So saying goodbye to "grandfather" will also mean saying goodbye to executive perks that could get expensive if we neglect the fine print of PPACA.