3a. Flexible Choices Q&A

Q1. Defined Contribution Plans. - How are they supported under the Georgia Health Reform?
A1.  Defined Contribution plans are encouraged by clarifying past egisaltion that Health Reimbursements ONLY Arrangements (HRAs) are not insurance under Georgia law.  HRAs are simply employer allocations for employee use in paying for healthcare expenses (e.g. office visits, prescription drugs) or health insurance premiums. In addition, the legislation makes clear that accomodating the collection, packaging or submittal of HRA funds for the purchase of individual health policies does not constitute the establishment of a group plan. This is important to assure that individual policies purchased this way do not fall under the group guaranteed issue laws.
IMPACT:  Can significantly lowers the number of uninsured by allowing alternative funding when employer financial support is limited. Small employers could provide premium support for the purchase of portable individual insurance policies, even if they can not yet afford to provide a higher level of contribution required to offer a group plan. Multiple employers can contribute to separate HRAs that could then be used to cover the full cost on an individual insurance policy. 
Expansion of Defined Contribution funding allows for more individual plans and provides for portability not available under group coverages.
Q2. Health Improvement Incentives - Why is change needed to allow incentives?
A2.  This change expandes the ability of insurers to provide financial incentives to plan members who are complicant with healthy initatives.  Outdated rebate laws prevent insurers from providing incentive that have been shown to improve health, lower unneeded use of medical care, and improve quality.  Incentives can be offerred for wellness, condition management, disease managment, and health improvement programs.   Incentives can include: merchandise, gift cards, debit cards, premium discounts, HSA contributions, copayment reductions, deductible reductions, coinsurance reductions, or lower employee contributuons. 
IMPACT:  Allows fully insured small employers (state regulated) to benefit from cost effective incentive strategies proven to lower costs in large self-insurance plans (covered under ERISA).
COST IMPACT:  Lowers the cost of insurance by 20% or more, by providing incentives up to federal DOL limits of 20% of premiums for health status incentives and unlimited incentives for participation rewards. 
Q3. Minimum Out-of-Network Coverage - What is the insurance protection for out of network coverage? 
A3. Services provided by non-preferred providers (out of network coverage) can not be reimbured at less than 50% of the benefits under the policy. In addition, with the state requirement that non-preferred providers must be covered at no less than 50%, there is no required differential between preferred providers and non-preferred providers. That is, an insurer could offer a plan with 100% for preferred providers and 50% for non-preferred providers.
COST IMPACT:  First, plans can lower premiums by 1-2% for the change in Georgia law from a minimum of 60% to a minimum of 50% for non-preferred providers. Second, plans can now offer more options and complete coverage with 100% for preferred providers without having to increase non-preferred provider reimbursements to 70%.  Third, this allowed out-of-network change is consistent with most other states and less expensive products offered in other states.
Q4. Comprehensive Major Medical Premium Tax Deductibility - Can Individual Insurance be taxed the same as Group? 
A4. Almost.  We can't change federal tax law, but we can change Georgia taxation differentials between indivudal and group insurance. Under the reform legislation Comprehensive Major Medical plans will be allowed to deduct the individual premium costs from Georgia taxable income. From the state perspective, this provides individuals equal use of pre-tax dollars to purchase health insurance.  This is an expansion of existing state law that allows Georgia deductions for the premiums of individual HSA eligible plans. 
COST IMPACT:  Lowers the after tax cost by 6% for individual Comprehensive Major Medical polices in Georgia.   
Q5.  Employer Tax Credits - How can tax credits encourage start up and small businesses to provide health plans?  
A5. Small and start up employers (10 or fewer fewer employees) are allowed a $250 tax credit under the reform legislation for each employee enrolled in a Comprehensive Major Medical if the employer pays at least 50% of the premium and the insurance is made available to all employees.  This both an expansion and a contraction of existing Georgia law.  Existing law allows the tax credit for HSA eligible plans only.  Existing law provides the tax credit group of 50 or fewer lives.  The tax credit is limnited to three years for any plan.  The tax credit opportunity will expire ten years from the legislative effetive date.
IMPACT:  Makes group health insurance more affordable for small and start up businesses in their early stages of development.  Early adoption of insurance in this job creating market segment will allow job creation as potential employees are freed from "job lock" for insurance in large or existing employer plans.
COST IMPACT: Employee Only Coverage: Lowers an employers net total employee premiums by up to 5.6%.  If applied to the employer's contribution, the tax credit lowers an employers contribution for employee only coverage by up to 6.5%. If applied to the employee's contribution, the tax creidt lowers an employees contribution by up to 42.4%. 
                      Family Coverage: Lowers an employers net total family premiums by up to 2.0%.  If applied to the employer's family coverage contribution, the tax credit lowers an employer's contribution for family coverage by up to 2.5%. If applied to the employee's family coverage contribution, the tax creidt lowers an employee's contribution for family coverage by up to 8.1%. 
Q6. Insurer Premium Tax Exemption - Can the state remove the "sales tax" on health insurance premiums?
A6.  Yes, originally "sales taxes" called premium taxes were added to home owner insurance plans to compensate states for fire and police home protection services.  Health premium taxes were added years ago before health insurance became so expensive. Today it adds cost and increases the uninsureds without any added value.  The reform legislation eliminates premium taxes on individual and group Comprehensive Major Medical plans.  This is an extension of current law that eliminates premium taxes on both state and local HSA eligible plans.   The reform legislation the premium tax only on the state portion for Comprehensive Major Medical plans.
COST IMPACT:   Lowers premiums by up to 2.25% on Comprehensive Major Medical plans.
Q7. Exclusive Provider Organizations - Are lower cost policies allowed with only in network providers?
A7. Yes, the reform legislation provides for the offerring of lower cost exclusive provider organizations (EPOs) that cover only in-network providers.  In-network provider costs are typically lower and more stable because of pre-negotiated fees, agreed upon medical procedures, and medical reviews with set appeal processes.   Emergency services are considered in-network regardless and providers and services not otherwise available in-network are covered as in-network.  EPOs are growing in populatity and interest among large self-insured plans. This legislation allows fully insured plans to offer similar plans to small employers.   
COST IMPACT: EPOs can lower the cost of insurance by 5-6% or more.   
Q8.  Any Willing Prefered and Exclusive Provider - Can my doctors continue to treat me if they agree to the reimbursements and standards of a network? 
A8. Yes, if you change plans to either a preferred provider or an exclusive provider organization and your doctor can continue to treat you.  If they are not a part of your new plan's network they can apply to be in the network if they agree to the standards of the insurers network.  Insurers are not required to admit providers if they can demonstrate that the inclusion is adverse to quality of services they provide or with inclusion will increase premiums.
COST IMPACT:  The existing state law requires an extra premium charge to allow your physician into a network (whether they actually join or not). This extra premium is eliminated by this reform.  In addition, this provision provides consumer provider options and assures continuity of care if your plan changes carriers.
Q9. Concierge Services - Can my doctor sell a fixed price special services treatment contract?
A9. Yes, under the reform legislation physicians can enter into direct financial arrangements with their customers for specific services and not be subject to insurance laws, if the service charges are less than $3000 per year.  Under existing law, a fixed price or capitation rate for specific services would mean that a physician would need to satisfy all insurance laws. 
COST IMPACT:  Cost savings could be lowered by 2-3% or more as higher deductible insurance could be selected with a special services contract for a specific current condition.  In addition, the concierge option provides choice for consumers who want specialized or personalized healthcare from their physicians.