California Personal Injury and Insurance Blog

California First State to Begin Health Insurance Exchange

This week, the California legislature passed two bills to set up a health-insurance marketplace. This move comes after the health care reform bill, which was passed in March, directed states to set up their own health care exchanges, or else their residents will receive access to a federal exchange. Governor Schwarzenegger is expected to sign the bills.

 

California is the first state to begin implementation of a health-care exchange. Massachusetts and Utah already had exchanges in place when the bill was passed. California’s exchange will most likely be the largest one established by one state. As many as 8.3 million individuals may be eligible to purchase insurance plans through the exchange. Under federal law, businesses with up to 100 employees can buy coverage through the exchange. The limit may be raised by states in 2017.

 

The exchange will most likely offer insurance through a website that will provide detailed information about plans. The plans will be standardized. Live helpers will be available to explain the plans to consumers. The plans aren’t required to be operating until January 2014. Under the plan, California will sell insurance in five categories, which will vary widely in coverage and price.

 

This legislation comes on the heels of an announcement by California’s Department of Insurance that it will allow premium increases by Anthem Blue Cross (14% increase) and Blue Shield of California (9% increase).

California Strengthening Laws to Prevent Illegal Health Insurance Cancellations

On August 18, new regulations go into effect in California that are aimed at preventing illegal cancellations of health insurance policies.

 

Rescission, which is the practice of cancelling health insurance policies for mistakes on the health insurance applications, even minor mistakes, is targeted in the new regulations. According to the government, rescission is estimated to add $300 million in profits to the health insurance industry.

 

The new regulations require questions on a health insurance application to be clear, specific and understandable. The applications are not allowed to use double-negatives or some types of compound questions. Insurance companies will be required to take into account the level of knowledge an average individual with no medical training may have when formulating the questionnaires. Questions on the application must be relevant to the underwriting process. In addition, applicants must be allowed to check that they are unsure or cannot remember to questions on the application. Consumers must also have the right to respond during rescission investigations.

 

The California Department of Insurance is going to publish a new approved questionnaire for insurance companies to use in obtaining applicants’ medical history. Insurance companies that decide not to use the pre-approved questionnaire cannot use unapproved questionnaires as the basis of a rescission later.

 

You can read in more detail about the new regulations here and here.  The new regulations are here.

Many Small Businesses Not Aware of Health Insurance Tax Credits

Although virtually all business owners are aware of the recently-enacted health care reform law, many do not know that tax credits for small businesses that provide health insurance to their workers take effect this year. In California alone, over 400,000 small businesses could qualify for the credit.

 

Under the law, companies with no more than 25 workers, and whose average salaries are less than $50,000, are eligible for a tax credit of up to 35 percent of the employer’s contribution for health insurance premiums. The maximum credit for non-profit small businesses is 25 percent. Companies must pay 50 percent of its employees’ health care premiums to qualify for the credit. Almost 80 percent of small businesses are expected to qualify for the credit. There are approximately 4 million small businesses nationwide.

 

The credit was designed as an incentive for more companies to offer health benefits to their employees. Small companies typically pay 18 percent more for insurance than large companies. The credits will last until 2014, when health insurance exchanges will be available to help small businesses provide health insurance to employees.

 

Under the new law, companies with at least 50 employees will have to pay penalties if they do not offer health insurance to workers.

New Insurance Pool for High-Risk Californians Created

At the end of June, Govhigh-risk individualsernor Schwarzenegger signed two bills that create insurance pools for  who have been denied insurance due to pre-existing conditions. The program is restricted to individuals who have been without health insurance for at least six months.

 

The program will receive about $761 million in federal funding but will be run by the state. It is expected to provide approximately 25,000 to 30,000 Californians obtain health insurance. Currently, about 250,000 Californians have been denied insurance coverage because of pre-existing health care problems.

 

The high-risk is designed to provide health insurance for high-risk individuals until 2014, when insurers will be prevented from denying health insurance to adults with pre-existing conditions. Beginning in September, insurers will no longer be able to deny health insurance coverage to children with pre-existing conditions.

 

The new insurance pool will be operated by California’s Managed Risk Medical Insurance Board. The Board has begun taking names of individuals interested in the program, although it hasn’t yet designed the insurance applications or the policies. The applications are expected to be available within a month.  To learn more about the insurance pools or to request an application, visit http://www.mrmib.ca.gov/.

California Insurance Commissioner to Review Rate Increases

The California Department of Insurance announced that it will be reviewing plans for rate increases for individual health insurance policies for its four largest individual policy providers: Anthem Blue Cross, Aetna, Health Net, and Blue Shield of California. The review will only occur for policies that are purchased by individuals, not by employers or Medicare.

 

Currently, California law requires 70 percent of all health insurance premiums paid to be spent on medical benefits. Anthem announced plans in February to raise rates on its individual policy holders by up to 39 percent.

 

However, an analysis found errors in Anthem’s proposal which meant that after the raise in premiums, Anthem would be spending less than 70 percent of premiums on benefits. Anthem withdrew the proposal and will resubmit its rate hikes. Blue Shield wants rate hikes of 18 percent, and Aetna wants a 19 percent raise in rates.

 

The Department of Insurance appointed an independent actuary to review the companies to make sure they are following state insurance laws when raising rates. Aetna and Blue Shield are being reviewed now. Anthem Blue Cross and Health Net will face reviews in the future.

Is Life Insurance for Stay at Home Parents Necessary?

When evaluating their life insurance, many couples assume they only need life insurance for an employed spouse. After all, stay at home parents, caregivers for elderly parents and other non-employed spouses typically don’t contribute financially to the household. In addition, many U.S. companies offer life insurance benefits to their employees, which typically aren’t available to a non-employed spouse.

 

However, often the contributions a non-working spouse makes to the family can be tremendous, and those contributions should be valued. In fact, a recent survey from Salary.com determined that a stay at home mom’s salary, if she got paid for the 10 most common tasks she performs, would be just over $117,000 per year. Because there is not an income to be replaced, many factors must be taken into account to determine the amount of life insurance needed, instead of simply calculating annual salary and multiplying it by a factor determined by the insured.

 

Some factors to consider when deciding how much life insurance to purchase for a non-employed spouse are:

 

• How much would it take to hire extra support people, such as housekeeping help and childcare providers?
• Will the surviving spouse have extra expenses to cover associated with his or her spouse’s death?
• Will the surviving spouse have to cut back on hours at work in order to assume duties formerly provided by the non-employed spouse?

 

I strongly encourage my clients, when shopping for life insurance, to consider not only replacing the employed spouse’s income, but also to get an amount to replace the non-employed spouse’s family contributions.

Health Insurers Mining Data

The Washington Post is reporting that health insurers are now mining data from a variety of databases when you apply for insurance.  From the story by Ellen Nakashima:

"Health and life insurance companies have access to a powerful new tool for evaluating whether to cover individual consumers: a health "credit report" drawn from databases containing prescription drug records on more than 200 million Americans."

This shouldn't really surprise anyone. Insurance companies make decisions based on information. The more information they have, the more accurately they can underwrite. When they underwrite people accurately, the premiums charged.

Consumer groups, myself included, get upset when insurance companies conduct "post claims underwriting." Post claims underwriting is when an insurance company looks at records after a claim is filed and then decides if it should cancel the policy. Post claims underwriting is, quite simply, wrong.

So, the solution? Let the insurance companies do the underwriting at the claims stage. Insurance companies get medical records now and do this. This process just allows them to do it faster and cheaper. I just don't see the problem. 

Health insurance to be reinstated

The California Department of Managed Health Care did a good thing. It brokered a deal with Health Net and Kaiser to reinstate health insurance policies to 1,200 people whose policies were rescinded by the insurance companies. The State is trying to reach a similar deal with PacifiCare, Blue Shield, and my favorite, Anthem Blue Cross. (By the way, adding Anthem to their name does not change the humor to the YouTube video.)

In a nutshell, these people had policies cancelled when they started to run up large medical bills. The insurance companies would dig through to find some technicality to use to cancel coverage. The DMHC determined this was not proper underwriting. Health Net, in fact, agreed to a fine, but admitted no wrongdoing. (For once, wouldn't it be nice for someone to actually admit wrong doing a la Charles Barkley.)

This is good news for people who have had policies cancelled.

Keep Looking on the Bright Side of Death

I wrote previously and posted a few funny cartoons. One was a Blue Cross video on YouTube. Some poor guy was sick and Blue Cross called it a pre-existing condition and denied coverage. Here is the video, if you want to see it again. Really funny!

Well, it may be more true than funny. Blue Cross, according to the LA Times, is sending out applications for new members to the doctor who will treat the member. Blue Cross is asking the doctors to report to report pre-existing conditions. According to the letter "Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately."

Amazingly, Blue Cross wants the doctors to conduct its underwriting. And, it wants them to violate the doctor-patient relationship all in the name of PROFIT. Now, I have nothing wrong with making money, but there is a right way to do it and a wrong way. This, my friends, falls under the wrong way.

The Health Insurance Crisis

Now, it is not often that I get political. And, it is not often that I post cartoons, but today seemed like a good day. Why? Because I received two today.

The first, found here, Download new_yorker_cartoon.pdf,  is a cartoon from "The New Yorker." Pretty funny.

The second one is a YouTube video. Yes, YouTube. This is brought to you by SickofBlueCross. It is a spoof of Monty Python's "Bright Side of Life."

Enjoy!