Assembly Bill 25, Domestic Partner Coverage
Summary
Requires carriers to offer domestic partner (DP) coverage to employer groups under the same terms and conditions as coverage provided to dependents of the employee. The law also defines DPs for the purposes of AB25 within the context of the existing state registry for DPs, as described
in the Family Code section 297.
The law may not be construed to expand the requirements of federal law in regard to COBRA, thus COBRA does not necessarily afford DPs continuation rights.
Compliance
* DPs may be covered today, either in a limited fashion or as any other dependent with underwriting approval
* The insurance company must offer DP coverage (as described above) to the group
* The group can accept it or not, at its discretion
* Effective January 1,2002
Assembly Bill 1401 – Expanded COBRA and CalCOBRA
AB 1401 is intended to allow persons who continue coverage either through federal COBRA or state CalCOBRA (for employer groups of 2-19 employees) to maintain their coverage for a maximum of 36 months in all cases.
The provision in AB 1401 that extends continuation coverage to 36 months will affect your employees who elect federal COBRA on or after January 1, 2003. The additional continuation will be priced at the CalCOBRA rate of 110% of that for covered employees. To illustrate, employees who terminate employment and elect COBRA are eligible for a continuation coverage for up to 18 months at 102% of the premium for covered employees. If they elect the additional continuation mandated by AB 1401, they may remain covered for an additional 18 months at 110% of the employee rate
One important thing to note is that AB 1401 does not amend federal COBRA. Disability extensions and second qualifying events are still factors. So if someone is disabled, is so certified by Social Security, and reports it to you within the required time frames, their federal COBRA will extend up to 11 months after the first 18 at 150% of the premium. After this 29-month period is over, the 150% rate would still apply for the remaining seven months of continuation available under AB 1401.
Another provision in AB 1401 stipulates that any conversion plans offered to employees who terminate after September 1, 2003 must be one of the carrier’s HIPAA Guaranteed Issue individual plans. Qualified applicants must make written application and initial premium payment within 63 days of termination of their group coverage rather than 31 days.
The Consumer-Driven Approach TO Dental - By Jeff Selzer
You can’t pick up an industry magazine these days without reading about the consumer-driven product craze. Many in the industry are calling it the magic bullet that will repair the flawed health care system. Others say it's just the latest fad and will pass into infamy by way of pet rocks and eight track tapes. Truth be told, reality is probably somewhere in between.
Recent studies show that fewer than 100,000 U.S. workers are on consumer driven plans. With many companies adopting a wait and see attitude, "Consumer-driven health plans won't become a standard offering by employers until 2005," says Blaine Bos, a consultant with New York employee benefit company, William M.Mercer. He went on to say, "Most are sitting back and waiting to see proof that these plans actually have a positive effect on the bottom line." Employers are timid about thrusting consumer-driven products on their employees because healthcare is sacred and employers are afraid of any backlash.
Employees can get accustomed to consumer-driven programs through ancillary products. Self-funded, direct reimbursement dental plans emerged in 2002 as the hottest new alternative in the marketplace. Recently versions of these plans have been profiled in industry magazines.
The resurgence in direct-reimbursement is due, in large part, to the fact that employers are looking for the consumers to participate in cost savings with the hope of offsetting their double-digit rate increases.
Some consumer-driven, self-funded dental plans have been in place for up to five years. Rates over the past five years have remained remarkably stable and significantly less then their traditional fully insured counterparts in many cases. This is not proof that consumer- driven products will work across the board, but it does speak well for them as they apply to dental.
Dental programs were originally designed as budgeting mechanisms that promoted preventive care and offset the out-of-pocket costs of more expensive procedures. Now insurance products are getting to a point where some have called their cost benefits into question.
Unlike traditional insurable events, dental care is predictable and the employers' maximum exposure is limited. This opens the door for direct reimbursement products.
For the consumer, direct-reimbursement have many advantages over more traditional plans:
* Dollar-based plan designs are easier for the consumer to understand.
* Dollar-based plan designs significantly reduce administrative costs and claims problems.
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Direct reimbursement plans are based on dollars spent on care, rather than on the type of treatment received.
* Far fewer restrictions are placed on treatments.
* There is no U&C, therefore there is no balance billing.
* Employees can easily calculate in advance what their out-of-pocket expenses will be when coordinating with a 125 program.
Many employers value the cost-saving aspect of direct reimbursement, but are leery of heavy administrative demands. Several employers are using third party administrators to outsource administrative issues and avoid legal problems.
Self-Funding Done One Better
A number of producers are variations on the direct-reimbursement theme. A third party administers them. One no-risk, self-funded, direct-reimbursement product allows organizations that normally would not be candidates for self-funding to offer a "no-risk" program on an employer-funded or voluntary basis.
Direct reimbursement offers significant cost saving for employers and offers more freedom and richer benefits for employees. The key benefits of direct reimbursement lie in the fact that a much greater percentage of every dollar goes to care - 80% to 85% versus 60% to 65% in most traditional plans.
The intent of consumer-driven products is two-fold – to control costs and to give patients more control of their care. The past 20 years have shown that managed care has not worked. Costs for care continues to climb as do the number of people requiring that care. Also, patients are growing more disillusioned with insurance companies.
In a recent report, the National Association of Dental Plans and Delta Dental Plans Association predicted a jump of almost 20 million new dental lives, or 11 % growth, over the next three-and-a-half years. California will dominate the US market, with almost 26 million total enrollees.
At the same time in a report recently published by Golin/Harris International, consumers ranked insurers as one of the most untrustworthy industries.
The report goes on to say that customer expectations and satisfying them consistently is the key. Here are a few of respondents' comments regarding the insurance industry:
"With all their limitations and qualifiers, they make it nearly impossible to understand what it is they are offering. Double-talk, not paying their portion of bills, slow to respond.”
“I have been carried by several different insurers and have found that I have had to fight for my coverage. Even the most basic claims have been returned for ‘more information.' I believe that most insurance companies simply make it hard to collect so you will eventually just give up and pay the bill yourself."
Consumer driven, dollar based, direct reimbursement plans offer a great opportunity to improve the industry's image and alter the general public's perception because the patient is in charge of his or her care. Also, with reimbursement plan there are far fewer treatment limitations and exclusions.
On the following page are essential of consumer-driven, dollar-based, direct reimbursement plans that help resolve the situation problems described above:
Problem: Dollar-based, direct reimbursement plans are not insurance.
Solution: By eliminating risk management fees self-funded programs save clients 20% to 25% and put the consumer in control of managing care.
Problem: Consumers don't trust carriers to make treatment decisions that are in their best interest.
Solution: Because direct reimbursement plans are dollar based they don't control procedures.
Problem: The plan is confusing to deal with.
Solution: Dollar-based, direct-reimbursement plans eliminate or drastically reduce plan limitations and exclusions. Dollar- based, direct-reimbursement plans are simple and easy to deal with and are designed to reduce or eliminate the main confusion consumers have with their dental plans, such as what's covered and when.
Problem: Plans are slow to respond and make it hard to collect so the consumer gives up.
Solution: Administration is one of the few functions that is outsourced. With dollar- based plans, an administrator's function is limited to reimbursing for expenses. Some even offer electronic reimbursement into the consumers checking or savings account for immediate response.
Problem: Claims are returned for more information.
Solution: Direct-reimbursement plans are easy for employees to understand. Reimbursements are made according to the plan design. There are no questionable decisions involved when processing claims.
Education Is Our Biggest Challenge Education needs to start with our own notions of what our clients are looking for. Sometimes agents and brokers are hesitant to present a consumer driven, direct-reimbursement option because they think that their clients might not understand it. The reality is that consumers understand reimbursement for dollars spent. In contrast, few employees understand the technical elements of their current benefits schedule. Clients who use a direct-reimbursement product, express their satisfaction by staying with the plan. Retention with direct-reimbursement plans is between 90% to 95%.
Here are a few additional points: consumers are unhappy with the status quo; managed care has not lived up to its promise of controlling costs; consumer-driven products are on the horizon; and it is a great first step to prepare your clients for that transition with an ancillary product, like dental.
A number of products are variations on the direct-reimbursement theme. They are administered by a third party and offer features that purely self-funded plans don't offer. There are a handful of self-funded, direct reimbursement products in the marketplace that offer organizations "no risk" versions on an employer-funded or voluntary basis. These products offer a sure-fire way to improve perception and leverage the growth opportunity in the marketplace.
Health Care Costs
Health Care Costs Continue to Soar - By Sam J. Cunningham, 1993-1994 AHIA President, Health Insurance Matters Newsletter, November 12, 2003