|Accident | ACOs | Ancillary | Short Term | Critical Illness | Dental | Disability Income | Emergency | FB University | Group | Guaranteed Issue | HRA | HSA | High deductible | Immigrant | Individual | International | Life | Major Medical | Medigap | Mini-med | OnlineNavigator | Pre-existing Condition | PPO | Prescription | Small Business | Supplemental | Temporary | Travel|
by Tony Novak, CPA, MBA, MT August 14, 2013
Core Health Insurance has been the leading limited benefit insurance plan for individuals and small companies at Freedom Benefits for many years. Yet the requirements of the Affordable Care Act raises questions about how this insurance will be used in the future.
Core Health Insurance is a fixed indemnity policy offered through the SASid national online commercial health insurance exchange. Coverage is available in most states. This type of policy is defined by the Affordable Care Act as allowable and exempt from certain aspects of the law. The exemption allows these plans to be priced lower than other types of health insurance. Core Health Insurance will likely follow some technical changes and clarification of language for 2014 after the new federal law takes full effect.
Core Health Insurance is one of the two types of mini-med policies affected by passage of federal law known as the Affordable Care Act or Obamacare. Ironically, one of the effects of the law was the elimination of many of the nation's most affordable mini-med plans known as expense-incurred plans. These are expected to be gone from the market by the end of 2014. In contrast, the second type of mini-med plan known as limited benefit indemnity insurance is allowed and recognized under the new law. Core Health Insurance will undergo minor changes, mostly clarification of wording, in order to comply with the new law.
Limited benefit indemnity insurance is not qualified coverage under the Affordable Care Act. For more information on qualified health insurance, visit the federal government Web site at www.Healthcare.gov.
Core Health Insurance continues to be primarily regulated by slate insurance law rather than federal law. Six states have not approved the use of this type of insurance and no change is anticipated in these state laws.
Since the most affordable qualified health insurance plans on the insurance exchange have high deductibles and out-of-pocket expenses, they do not cover many of the most common types of medical bills. Core Health provides an affordable solution to soften the cost impact of ordinary medical expenses. The benefits are paid directly to the policy owner in addition to (and separately from) other health insurance benefits, so there is no concern about offset or co-ordination of benefits due to other insurance.
The new federal law allows applications during a prescribed open enrollment time. Coverage may be unavailable or limited outside of that prescribed open enrollment period. Healthy people who need coverage to fill the gap until this open enrollment period typically use short term major medical insurance. But those with significant health issues and ongoing treatment do not qualify for STM, so Core Health Insurance is often the next best option to fill the gap because it is issued without regard to past medical history.
Most Americans receive their health insurance through an employer-provided plan however this is not the case for a growing number of part-time workers. In fact, the number of part-time workers is expected to rise specifically because of the cost of providing the full coverage major medical plans required by the Affordable Care Act. Still, employers may want to provide some health coverage even if they cannot afford to pay the full cost of major medical insurance. In this case, benefits are provided through an employer-provided mini-med plan or through a Health Reimbursement Arrangement where the employee is reimbursed for individually purchased coverage. Core Health Insurance remains ideal for part-time employees who are not eligible for employer-provided major medical plan.
Coverage may be purchased by the employer or individually by the employee. When the employer pays for coverage, premium payments can be combined into a single list bill for all employees or handled through individual electronic transactions for each policy. Payroll system software is capable of handling these transactions efficiently without manual effort.
It is not clear whether supplemental health insurance like Core Health Insurance will be sold by the government insurance exchanges or their appointed navigators. The law is specifically designed to prevent a conflict of interest and some are concerned that consumers might be confused. Yet exchange managers and navigators have expressed eagerness to sell supplemental benefits like dental insurance and other indemnity type health insurance.
Core Health Insurance requires and agent to make an investment of $250 in order to obtain a producer appointment and this deters some lower-producers from offering the insurance.
Core Health Insurance may be sold in person by individuals canvassing neighborhoods or by telephone solicitation in most states but Freedom Benefits has advocated the sale only through online insurance exchange in order to minimize the chance of consumer confusion. There has been, in our opinion, a higher incidence of sales misconduct committed by telephone sales agents than through the online insurance exchanges.
Opinions expressed are the sole responsibility of the author Tony Novak and do not represent the opinion of any other person, company or entity mentioned. Information is from sources believed to be reliable but cannot be guaranteed. Freedom Benefits is not an agent, broker, producer or navigator for any federal or state health insurance exchange but may provide advice, reviews and referrals to these official resources. Novak is compensated as an accountant, adviser, affiliate consultant, marketer, reviewer, endorser, producer, lead generator or referrer to some of the commercial companies listed on this site.