America’s Health Insurance Plans and the Blue Cross and Blue Shield Association urged the feds not to allow workers to use health reimbursement arrangements to buy short-term limited-duration health plans that don’t have to comply with the Affordable Care Act or cover people with pre-existing conditions. The proposed rule does not allow an HRA to integrate with short-term health coverage, but federal agencies asked for comments on whether the final rule should.
America’s Health Insurance Plans, which largely welcomed the new insurance options available to companies and their workers under the proposed rule, wrote in a comment that the success of the rule depends on workers being able to access affordable, robust coverage. Weakening the non-discrimination protections included in the rule or allowing an HRA to be used to purchase a short-term plan could lead to higher premiums in the individual market, the group said.
“Permitting HRAs to be integrated with (short-term limited-duration insurance) would open the door to employers replacing coverage that is prohibited from discriminating based on pre-existing conditions with coverage that may charge more for preexisting conditions or deny enrollment outright,” AHIP wrote. “It could also lead to significant increases in individual market insurance premiums in states where a significant number of employees are offered integrated HRAs by their employer.”
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That’s because healthy workers may disproportionately opt to enroll in the cheaper short-term plan, while high-cost workers enroll in the more comprehensive individual market coverage.
The rule, proposed in October by the CMS, the Department of Labor and the Internal Revenue Service, would allow employers of all sizes to offer employees health reimbursement accounts to buy insurance in the individual market starting January 2020. HRAs are tax-sheltered accounts funded and owned by employers that typically are offered to reimburse employees for out-of-pocket medical expenses.
The proposed rule would also allow employers to offer a different type of HRA, funded up to $1,800 a year, that could be used by employees to pay for dental and vision insurance or short-term plan premiums. Public comments were due by Dec. 28. Some small business groups, insurers and regulators submitted early comments warning the rule would let employers reduce their healthcare costs by sending older and sicker workers to the individual market, driving up premiums for those enrolled there.
The Blue Cross and Blue Shield Association, which represents 36 independent Blue Cross and Blue Shield companies, joined AHIP in urging the federal agencies to ditch that proposal, saying allowing employees to enroll in short-term plans “runs the risk of upending the individual market and dramatically increasing costs.”
The Blues association also urged the agencies to maintain the “guardrails” included in the proposed rule that are meant to mitigate the risk that employer health plans will dump their sickest workers to save costs. For example, the proposed rule prohibits employers from offering the same class of employees, such as part-time workers, seasonal or full-time workers, both a traditional group health plan and an HRA integrated with an individual health plan. Employers who choose to offer an HRA must offer it on the same terms to every worker within a certain class and may only vary the amount based on age and number of dependents.
But the Blues recommended that the Trump administration avoid defining a class of employees based on age and adopt a minimum threshold of employees that can constitute a class to avoid the potential for employers to segment their employees by health status and steer them away from the group health plan.
“Without the protections in the proposed rule, there could be devastating impacts on the individual market due to the strong financial incentive for some employers to segment their risk and encourage their highest cost employees to enroll in individual market coverage,” the Blues association wrote.
AHIP also urged the agencies to nix the class based on geographic rating area, which could be used to segment workers based on their health: “Classes of employees should be based only on factors that have a clear, bona fide relationship to employment, rather than anything that can be a direct or indirect classification based on likely health risk.”
Both lobbying groups recommended the federal government delay implementing the rule no earlier than 2021 so HRAs can be designed and administered effectively.