Up-Front Deductible Payments on the Rise

Need to see the doctor? Be prepared to pay at the door.

Up-front deductible payments

The Affordable Care Act has prompted a shift toward low-premium, higher-deductible health plans, both employer-provided and available on the exchange. In order to collect as much of the out-of-payment cost as possible, many health providers have responded by requiring up-front payment from patients before receiving nonemergency treatment. Insured patients at these facilities must pay their co-pay, co-insurance, and deductible up front, and uninsured patients are responsible for the full (estimated) cost of treatment.

Administrators at facilities currently using this practice argue that it is the most effective way to receive payment, particularly when so much of the burden is shifting to the patient. A great deal of costs for medical treatment become bad debt – in 2011 alone, hospitals provided $41 billion in care that was never paid for. Hospitals attribute this to patients’ reluctance to make their health spending a priority, and to a lack of awareness of financial assistance programs that can eliminate the strain of a single large payment.

The up-front model is an extension of one already in practice in most doctors’ offices around the country, where co-pays and co-insurance are collected at the check-in for an appointment. By implementing the practice in hospitals, administrators state that they can connect patients to financial assistance sooner and increase the likelihood of full payment.

Opponents of the idea, however, point out that up-front payments may create a barrier to receiving health care. As deductibles continue to rise, patients will be increasingly unable to cover the cost of their care and may elect not to seek treatment – in effect, creating a situation directly opposite the intended outcome of the Affordable Care Act.

PRN Funding offers healthcare factoring and medical receivables factoring services to vendors and facilities struggling to bridge the cash flow gap. Before shifting to the up-front model, contact us to see how we can help you meet your cash flow needs and continue to provide quality care to your patients.

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Obamacare Initiative Targets 500,000 Signups in First Month

Enrollment projections for the online marketplaces were high before countless computer glitches came into play. With the rollout of new ACA provisions, the Obama administration estimated that in October alone almost 500,000 people would sign up to participate in the new health insurance marketplace.

An internal memo issued on September 5 by Health and Human Services Secretary Kathleen Sebelius listed monthly enrollment goals for Obamacare for each state, including Washington, D.C., up until March 31. Within the memo was an estimate provided by officials, stating that 494,620 people would enroll in the new healthcare initiative by the end of October.

These new health insurance markets, also known as exchanges in some states, were created to serve as accessible outlets to affordable coverage for the nearly 50 million uninsured people across the country. Four tiers of private, subsidized plans are available for middle-class individuals, while low-income consumers may be eligible for an expanded version of Medicaid that is available in states that have agreed to extend the program.

While the White House viewed the official launch of the new healthcare marketplace as a pressing priority, the October 1 rollout was quickly complicated with countless computer glitches. Consequently, several potential customers were unable to enroll for coverage. Although insurers have reported that signups have slowly been rolling through, the Obama administration still will not reveal enrollment numbers.

Aside from these glitches, other factors that may created enrollment issues were underlying problems that were bypassed in initial testing. As several users flocked online to sign up for the new coverage plans, software flaws and design mishaps that had been ignored earlier soon derailed the enrollment process. Regardless, the administration continues to work toward finding a solution to eliminating ongoing enrollment issues.

ACA: Healthcare Coverage in the Online Marketplace

Now that federal and state online healthcare exchanges are live, questions are swirling about the available coverage for eligible consumers. How much will it cost? What will it cover? What if I don’t sign up?

The marketplaces will vary from state to state, even those run by the federal government at healthcare.gov. Variations include plan availability and pricing, Medicaid eligibility, and how the exchange itself is run.

However, there are consistent policies that will apply to consumers in all fifty states and the District of Columbia:

  • All plans will cover, at a minimum, ten benefits defined by the ACA as “essential.”
  • Five levels of coverage will be available with sliding price scales, from Catastrophic (only the most basic disaster coverage) to Platinum (plan pays 90 percent of costs)
  • No plan’s availability or price can be affected by pre-existing conditions
  • If you are not otherwise exempt, you will face an increasing annual fine for not having insurance…
  • BUT you may be eligible for tax credits or rebates to lower premiums and out-of-pocket costs, in some states by as much as half

Young people will absorb higher premiums than are currently available in every state on the federal exchange, though this goes hand-in-hand with the more comprehensive plans that will replace currently available coverage. In addition, older and sicker consumers who purchase coverage through the marketplace will benefit from lower premiums that are unaffected by pre-existing conditions or a dodgy medical history, as noted above. In all, healthcare pricing will depend on where you live, your age, and current tobacco use.

Tax subsidies for purchasing insurance are dependent on household income and the availability and cost of qualifying employer-provided insurance.

PRN Funding can help small to mid-sized healthcare vendors who do not qualify for tax subsidies to purchase insurance through their state’s marketplace. Healthcare factoring gives vendors immediate access to cash through the sale of their receivables, which they can then use to cover premiums and other expenses. Read more about PRN Funding’s factoring services.

Online Health Insurance Marketplaces Face Tech Hurdles

The rollout of online health marketplaces was marked with technological difficulties at various stages of the process.

Users attempting to access the federal marketplace via healthcare.gov experienced glitches when signing up for an account, which the Center for Medicare and Medicaid Services attributes to overwhelming visitor traffic during the first several hours the exchange was live. While the CMS claims they addressed initial issues right away, the marketplace was still fraught with issues well into the afternoon and eventually shut down.

State-run marketplaces in 17 different states also reported high traffic and sporadic glitches. Users may seek assistance via the live chat function or call centers, or they may contact a local healthcare representative. Unfortunately, these avenues will not allow customers to compare plans or view more detailed information regarding each plan’s deductibles and coverage. Some states are still experiencing issues today.

While not unexpected, these issues have frustrated and dismayed many consumers who are eager to realize the promise of affordable healthcare. Still, a number of people have successfully used the marketplace to purchase insurance, and consumers still have plenty of time to sign up for insurance – the deadline for coverage beginning January 1 is December 15, and the open enrollment period will continue until March 31, 2014. Officials maintain that glitches are normal for any large-scale tech rollout (see: Apple); for the moment, consumers may be better off just waiting it out.

Currently, approximately 15 percent of the population is expected to use the marketplace to purchase insurance in the absence of employer-provided health plans or benefits from the VA, Medicare, and Medicaid.

Learn how factoring can provide the cash flow to provide insurance to your employees.

Final Obamacare Regulations are in Place

Of the many provisions found in the Affordable Care Act, none is as contentious as the individual mandate. This provision, which requires that affected American purchase health insurance or pay a fine, goes into effect January 1, 2014. The Obama administration released the final regulations for the healthcare reform mandate earlier this week; however, these regulations indicate that the individual mandate will not be the healthcare enforcer that both proponents and opponents claim it to be.

The individual mandate will require taxpayers to cover their dependents (as reported on annual tax returns) or assume the fine for not doing so. The employer mandate, meanwhile, does not require employers to offer insurance for dependents. This could potentially force many individuals to seek supplemental health coverage for their spouses and children in the healthcare marketplace.

In addition, any employer-sponsored coverage will largely meet the mandate’s threshold of “minimum essential coverage”. This has already led to employers offering low-cost plans that cover very few services, and will be a strong incentive to other employers to follow suit.

Both of these are troubling characteristics of a hugely unpopular mandate. Other regulations, though, exempt as much as 40 percent of the population from the individual mandate; people exempt from the individual mandate include:

• The elderly, whose higher premiums and lower income may drive the cost of their coverage over the established limit of eight percent of household income (though a much lower income will qualify individuals for tax subsidies, in which case the mandate applies);
• Those who don’t file IRS tax returns;
• “Members of recognized religious sects” – these protected populations belong to groups such as the Amish that have existed since the end of 1950 and whose tenets are opposed to taking advantage of benefits such as Social Security, Medicare, and Medicaid in addition to health and life insurance plans;
• American Indians – members of recognized Indian tribes already receive government health care through the Indian Health Service.

The prescribed fine (the loftily-titled “Shared Responsibility Payment for Not Maintaining Minimum Essential Coverage”) for failing to purchase health care is itself minimal compared to the potential costs of purchasing outside health coverage. Each taxpayer is responsible for their individual fine as well as the fines for up to two dependents. The fine will increase parallel with cost-of-living adjustments, from the greater of $95/1% of income to the greater $695/2.5% of income per person from 2014-2016.

Even so, the fine’s increase is still smaller than annual insurance premium increases historically. It may be a better financial decision for some people to pay the fine and continue without coverage. Furthermore, the IRS is specifically prohibited from penalizing non-exempt taxpayers who fail to purchase health care or pay the fine; the only thing they are able to do is withhold the fine from your tax return (if you don’t file, see above).

The effectiveness of the individual mandate remains to be seen for consumers, facilities, and vendors, but combined with the employer mandate we will see a large number of new enrollments in healthcare plans around the country.

To ease the transition, and offset the added cost of exempt or non-compliant patients, consider healthcare factoring to keep your cash flow sound.

The Affordable Care Act Defines Full-Time Employment

As provisions of the Patient Protection and Affordable Care Act (ACA) continue to take effect, there is considerable friction over the ACA’s definition of a “full-time employee” and its implications for providing health coverage to those employees. The Fair Labor Standards Act defers to employers to define full-time employment; however, the ACA bases its definition of full-time employment on the Internal Revenue Code of 1986: “an employee who is employed on average at least 30 hours of service per week”.

Such a designation, opponents argue, may cause employers to choose between providing healthcare to a greater number of employees and cutting full-time employees’ weekly hours by at least 25 per cent to force them below the full-time threshold. Senator Susan Collins (R-ME) has introduced the “Forty Hours Is Full Time Act of 2013” on two separate occasions in an attempt to revise the IRC and, by extension, the ACA. Economist Casey Mulligan argues in The New York Times, however, that passage of such a law would actually cause more employers to cut their employees’ hours and result in more of a taxpayer burden.

According to Mulligan, it is easier for an employer to cut an employee’s hours from, say, 45 to 39 without drastically affecting the work schedule. Projections of employer cost between full-time, part-time at <30 hours and part-time at <40 hours show that the difference in a 39-hour work week and a 40-hour work week is almost negligible for employers; meanwhile, the employee becomes eligible for ACA tax incentives to purchase private insurance on the marketplace – costing the taxpayer more – and ends up with an increase in take-home pay at the same time.

The arguments above suggest that business owners need not shy away from expanding or offering full-time benefits to their employees in an attempt to cut costs; rather, service providers in medical industries may find themselves at an advantage. After all, some facilities will choose to scale back their in-house staff and rely on outside contracts, leaving a great opening for vendors to expand their own businesses.

Healthcare factoring can help those companies close the gap between their own cash flow and expenses, and ease the strain of expansion by providing the capital to cover increased overhead. Find out how PRN Funding’s accounts receivable factoring program can be tailored to your company’s needs.

Obamacare Out-of-Pocket Caps Provision Delayed

Another important provision of the Affordable Care Act has been postponed. The provision that would set caps for out-of-pocket insurance costs will be delayed for more than one year. Under Obamacare, the limit on out-of-pocket costs like deductibles and co-payments was not supposed to exceed $6,350 for individuals and $12,700 for a family. Now, it appears that a one year grace period has been granted to some insurers which enables them to raise limits, or in some cases, set no limits until 2015. Also, if a drug plan doesn’t currently set out-of-pocket limits, they won’t have to impose any until 2015.

The delay will leave some consumers paying much more for health insurance and drug coverage. The lag allows many group health plans to maintain separate out-of-pocket limits.

Why the health care reform delay? The New York Times reported that federal officials wanted to provide insurers and employers more time to comply because they used “separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs. In many cases, the companies have separate computer systems that cannot communicate with one another.”

The chief executive of the National Health Council said the delay will “disproportionately harm people with complex chronic conditions and disabilities.” For those with chronic illnesses like cancer, out-of-pocket costs can swell to tens of thousands of dollars each year. The same applies to prescription drug plans. Many patients will have to wait for access to affordable prescription drugs because of the out-of-pocket cost cap delay. The American Cancer Society noted that some new cancer drugs can cost more than $100,000 per year.

Obamacare still affords some consumer protections. Consumers can’t be denied insurance or face higher premium costs due to pre-existing conditions. Subsidies may be available to help bring down costs as well.

Affordable Care Act Could Lower Insurance Costs for Some Small Businesses

Numerous small business employers and owners are worried about their insurance costs rising under the health law next year. However, for some businesses, especially those with older workers or those who have employees who have been ill, costs may actually decrease according to business owners and insurance brokers.

Under a stipulation of the Affordable Care Act (ACA), which goes into effect in January, insurers will be forbidden from setting rates for healthcare coverage based on the health status of employers or their employees are at businesses with less than 50 or 100 workers, depending on the state. Rather, the rates will be announced on government-run health insurance marketplaces, or online exchanges, which are meant to extend the additional costs of insuring higher-risk policyholders, like those with prior sicknesses or pre-existing medical conditions.

A survey conducted in April by The Wall Street Journal and San Diego-based executive mentoring group Vistage International Inc., found that 12% of 783 businesses with less than $20 in yearly revenue believe their insurance premiums will be cheaper or stay roughly the same under the ACA. Similarly, a survey by eHealthInc. done in February found that 11%of 259 small business employers, most with less than 10 workers employed at their businesses, said they think their rates will go down next year.

Some business owners say costs could go down if the exchanges produce cheaper rates on individual plans, which would lead some employees to drop their employer-sponsored plans completely.

Both early renewals and self-funded plans will end up keeping more groups off the exchanges, which will reduce the savings for high-risk policyholders. Besides that, any savings from the exchanges will be contingent on whether they’re up and running by Oct. 1, the deadline for offering coverage that will be effective come January.

The federal government’s own health-insurance exchange for small businesses, called the Small Business Health Options Program, or SHOP, which it will supervise in 33 states, isn’t expected to be fully operational and available until 2015.

Employer Mandate is Delayed, but Individual Mandate Stands

The employer mandate provision of the Affordable Care Act (ACA) has been delayed by a year, but the individual mandate still stands as law. The individual mandate portion of the ACA states that uninsured individuals must have insurance by January 1, 2014 or face penalties (most likely 1% of family income). The uninsured will be eligible for federal subsidies of up to $5,000 depending on income to purchase insurance on healthcare exchanges. Those in the very low income brackets could qualify for Medicaid.

House Republicans are pushing for an individual mandate delay, but won’t likely get very far when it comes to overturning this portion of the law. Most major physician groups stand behind the Obamacare individual mandate because requiring everyone to have insurance lowers healthcare costs for all.

The employer mandate delay leaves about a million people to find insurance coverage to meet ACA requirements, according to the Urban Institute. A source at the Urban Institute noted that the point of the employer mandate was to make sure that employers offered coverage rather than forcing employees into the state-run insurance exchanges, but that’s pretty much the case due to the delay.

Health Care Reform May Lower Insurance Costs for Some Businesses

Numerous small business employers and owners are worried about their insurance costs rising under the health law next year. However, for some businesses, especially those with older workers or those who have employees who have been ill, the Wall Street Journal reports that costs may actually decrease according to business owners and insurance brokers.

Under a stipulation of the Affordable Care Act (ACA), which goes into effect in January, insurers will be forbidden from setting rates for healthcare coverage based on the health status of employers or their employees are at businesses with less than 50 or 100 workers, depending on the state. Rather, the rates will be announced on government-run health insurance marketplaces, or online exchanges, which are meant to extend the additional costs of insuring higher-risk policyholders, like those with prior sicknesses or pre-existing medical conditions.

A survey conducted in April by The Wall Street Journal and San Diego-based executive mentoring group Vistage International Inc., found that 12% of 783 businesses with less than $20 in yearly revenue believe their insurance premiums will be cheaper or stay roughly the same under the ACA. Similarly, a survey by eHealthInc. done in February found that 11%of 259 small business employers, most with less than 10 workers employed at their businesses, said they think their rates will go down next year.

Some business owners say costs could go down if the exchanges produce cheaper rates on individual plans, which would lead some employees to drop their employer-sponsored plans completely.

“If I insure fewer people, my benefit costs go down,” says Kurt Gabrick, who runs a software-consulting firm in Tucson, Ariz., with eight full-time employees. Right now, Gabrick says he pays half of his employees’ health-insurance costs—a total of around $4,000 a month—as part of a small group plan.

Both early renewals and self-funded plans will end up keeping more groups off the exchanges, which will reduce the savings for high-risk policyholders. Besides that, any savings from the exchanges will be contingent on whether they’re up and running by Oct. 1, the deadline for offering coverage that will be effective come January.

The federal government’s own health-insurance exchange for small businesses, called the Small Business Health Options Program, or SHOP, which it will supervise in 33 states, isn’t expected to be fully operational and available until 2015.