The Sacramento Bee – Sept. 28:

As Congress and President Barack Obama began wading into national healthcare reform earlier this year, California’s leaders were already embroiled in debate over what they could do on their own turf.

Congress might eventually enact changes that address consumer complaints about being denied insurance coverage or being thrown off individual health plans, a practice called rescission.   Federal lawmakers also might get around to outlawing practices that allow some insurers to charge women more because of their gender, or extra to get maternity benefits.

But like other states, California has the power to pass its own laws to provide relief, absent federal solutions. “It’s critically important we do these things, whether it’s rescission reform or maternity reform at the state level,” said Anthony Wright, executive director of Health Access California.

“Things could change with federal reform,” he said, “but we can’t wait.”

 Three key bills that health care advocates lobbied for were approved by the Democratic-controlled state Legislature this year. But the proposals didn’t garner Republican support, and the insurance industry opposes them. The bills are on Gov. Arnold Schwarzenegger’s desk, awaiting his signature or veto.

More individual policies

More than 2.6 million Californians buy insurance individually rather than through a group, and purchases are growing. Buyers included the self-employed, early retirees, part-timers and young adults who no longer have parental coverage.

One bill stops insurers from charging women more so-called gender rating for coverage they buy on the individual market. Ten states already prohibit it.

Another bill requires that all individual policies include maternity benefits. Right now, if a woman wants to add that coverage, it can cost hundreds of dollars a month extra.

The third bill requires insurers to prove to a review panel that individual-market customers “willfully” lied about health histories before policies can be revoked. Such cancellations, or rescission, of thousands of policies in California for flimsy reasons prompted a class-action lawsuit. A 2007 settlement with state regulators requires insurers to offer some restitution to customers stuck with medical bills.

The insurance industry is urging the governor to veto the bills and insiders are confident he’s listening to them. The rescission bill, the industry says, goes too far in its attempt to control insurers. 

The gender-related bills, the industry also says, could push some people to drop coverage because they won’t want to absorb higher premiums for maternity coverage.

Issue of cost vs. bias

Assemblyman Dave Jones, D-Sacramento, is author of the bill prohibiting gender rating, which for women can result in paying premiums 10 to 25 percent higher than men for identical coverage.

“I am very hopeful,” Jones said, “the governor will not march in lock step with those who would discriminate against women.” Federal law prohibits gender rating in group policies. It also requires that maternity coverage be offered as a routine matter in employer plans with more than 15 people.

During the 1990s, 10 states, including New York and New Jersey, banned gender rating within the individual market. Two states limit it. Anne Eowan, vice president of the Association of California Life and Health Insurance Companies, which opposes Jones’ bill, said gender rating makes sense in the smaller universe of individual plans.

Although it is hard to isolate the impact that banning gender rating has on insurance markets, none of the states that have prohibited it reported a surge in costs, said Richard Cauchi, who tracks state health-related proposals for the National Conference of State Legislatures.

A biological reality

Five states have also enacted laws that require the individual market to include maternity coverage, the other gender-related proposal now before Schwarzenegger. In 1993, Montana’s Supreme Court ruled it was gender discrimination not to include maternity coverage in individual health plans.

Schwarzenegger vetoed two previous bills requiring individual-market maternity coverage. He said that “a mandate, no matter how small, will only serve to increase the overall cost of health care.”

Opponents, including the National Federation of Independent Business, agree, arguing that a mandate eliminates choices for customers who struggle to find affordable plans and don’t need maternity benefits.

They said such bills only add to the affordability problem that the president and Congress are trying to solve. Assemblyman Hector De la Torre, D-South Gate, the maternity bill’s author, said opponents are exaggerating cost increases.

A state analysis estimates that the bill would extend maternity coverage to 207,000 women between the ages of 19 and 44, and that on average it would increase premium payments by about $7 a month.

New York Times – Aug. 10:

Washington – With the debate over the future of health care now shifted from Capitol Hill to town halls, supporters and critics of the Democrats’ legislative proposals are polishing their sound bites and sharpening their attack lines.

Increasingly, the battle looks like a presidential contest, with expensive advertising campaigns and Internet-driven efforts to mobilize local support. It can be difficult to sort fact from fiction, as angry protesters denounce the legislation at raucous public forums.

President Obama and his Democratic allies in Congress have made the health care overhaul their top priority, putting their political futures on the line. Democrats had hoped to spend the month whipping up support for the legislation, but instead find themselves on the defensive, responding to what Mr. Obama describes as “outlandish rumors” spread by critics.

Many Republicans view fighting the president as a smart political strategy, turning a potentially wonkish debate over Medicare reimbursement rates and subsidies for the uninsured into an ideological battle over the government’s role in health care.

Each side hopes to win ground by boiling down one of the most complex policy discussions in history into digestible nuggets. For beachside viewers who might be more interested in iced-tea service than fee-for-service, here is a guide to the main fight points.

KEEP IT OR LOSE IT?

Mr. Obama has said repeatedly, as he told the American Medical Association in June: “If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you’ll be able to keep your health care plan, period. No one will take it away, no matter what.”

These assurances reflect an aspiration, but may not be literally true or enforceable.

The legislation does not require insurers or employers to continue offering the health benefits they now provide. The House bill sets detailed standards for “acceptable health care coverage,” which would define “essential benefits” and permissible co-payments.

Employers that already offer insurance would have five years to bring their plans into compliance with the new federal standards. The Senate health committee bill goes somewhat further by offering an “option to retain current insurance coverage.”

The legislation could have significant implications for individuals who have bought coverage on their own. Their policies might be exempted from the new standards, but the coverage might not be viable for long because insurers could not add benefits or enroll additional people in noncompliant policies.

Dallas L. Salisbury, president of the Employee Benefit Research Institute, a private nonpartisan group, said: “The president and Democrats in Congress are saying what they would like.

Their promises may not be literally true because your health plan may change, and your doctor may no longer accept your insurance.”

SOCIALIZED MEDICINE

Or Uniquely American? Republicans harshly criticize Democratic proposals to create a government-run insurance plan, or public option, to compete with private insurers.

Republicans say the public plan would drive insurers out of business and lead to “socialized medicine” or a government takeover of health care. Democrats say they want a “uniquely American” system with public and private elements.

For now, the Republican criticism seems overblown. Major versions of the legislation all rely heavily on a continuation of private health plans, offered by employers and by insurance companies, subject to sweeping new federal regulations.

Whether a public plan would crowd out private insurers depends on details yet to be decided, including its premiums and its payment rates for health care providers. The public plan is not even a certainty.

To win bipartisan support for the overhaul, some Democrats have proposed private nonprofit health care cooperatives, instead of a public plan, to compete with private insurers.

The Congressional Budget Office has estimated that, under the House bill, the number of people with employer-sponsored insurance would climb to 162 million in 2016, which is 3 million more than expected under current law. Further, it said, enrollment in the proposed public plan might total 11 million, far lower than estimates cited by Republicans.

An additional 10 million people, most of them now uninsured, would enroll in Medicaid, the budget office said. At any rate, the federal government already holds sway over the health care system through Medicare, Medicaid and various insurance programs for children, veterans, military personnel and other federal employees.

The federal government will account for 35 percent of the expected $2.5 trillion in health spending this year, and that does not include subsidies built into the tax code.

BLAMING INSURERS

Or Ensuring Blame? Democrats have unleashed a blistering attack on private health insurers as they try to convince the vast majority of Americans who already have coverage that the current system is tilted in favor of corporate profits, not patients, and that insurers are a main obstacle to passing legislation.

Insurers say they support some of the most important Democratic proposals, including a ban on denying coverage or charging higher premiums based on pre-existing medical conditions.

The insurance industry does oppose a government-run insurance plan and could eventually mobilize against the overhaul. But insurers appear to be less of an obstacle than public apprehension over such sweeping change and skittishness among lawmakers, including centrist Democrats from Republican-leaning districts.

Most Americans do not know the full cost of their employer-sponsored insurance. And it is easier for Democrats to paint insurers as greedy than to explain the complex math that shows current health care spending is unsustainable.

DEFICIT-NEUTRAL

Or Budget-Buster?

Mr. Obama has avoided dictating specific provisions of health care legislation. But he has insisted that the bill not add to the federal debt, leading Democrats to say that the overhaul will be “deficit neutral,” with the roughly $1 trillion, 10-year cost to be offset by reduced spending or new taxes.

New York Times – July 28: The major health care bills moving through Congress would require nearly all Americans to have health insurance. But as lawmakers struggle to achieve the goal of universal coverage, a critical question is whether the plans will be affordable to those who are currently uninsured.

All the bills offer some kind of assistance to lower-income people who do not get health benefits through the workplace. The bills would provide premium subsidies to millions of people and would establish limits on consumers’ out-of-pocket costs. But lawmakers and consumer groups say insurance could still be out of reach for many families with modest incomes who receive small subsidies or none at all.

‘We have to make sure that the health plans are affordable to average Americans, and to low-wage workers who are not eligible for Medicaid, because they would confront a penalty if they do not have health insurance,’ said Senator Olympia J. Snowe of Maine, a Republican who is leading efforts to forge a bipartisan bill.

The question of how to make insurance affordable to all Americans is just one of the difficult issues facing Congress as it debates what is President Obama’s top domestic priority. The House speaker, Nancy Pelosi, despite resistance from conservative Democrats, vowed on Sunday that a health care overhaul would pass. ‘When I take this bill to the floor, it will win,’ Ms. Pelosi said on CNN.

Under the legislation, insurers generally must accept all applicants and could not deny coverage because of a person’s medical history. But Senator Ron Wyden, Democrat of Oregon, acknowledged that ‘there are some questions’ about whether insurance would be affordable. ‘People who are making $50,000 or $60,000 a year and are spending $13,000 on health insurance may not get much of a subsidy,’ said Mr. Wyden, a member of the Finance committee. ‘Those people will ask, ‘How am I going to make this work for me and my family?’

When President Bill Clinton and Hillary Rodham Clinton tried to overhaul the health care system in 1993-94, they proposed an employer mandate requiring companies to pay about 80 percent of the cost of coverage for their workers.

In response, many businesses rallied against the Clinton plan and helped defeat it. Besides requiring employers to help finance coverage, Democrats this year would also require individuals to have insurance and would impose financial penalties on those who do not meet the requirement.

Under all the major bills, people could obtain exemptions from the requirement to carry insurance if they could show financial hardship. But such exemptions do not help achieve the purpose of the legislation, which is to get people insured. More than 45 million people do not have health coverage.

In a letter to Congress last week, advocates for patients including AARP, the American Cancer Society and the American Heart Association said the affordability of insurance was ‘of paramount importance.’

After analyzing the leading House and Senate bills, Stephen E. Finan, a health economist at the cancer society, said, ‘Subsidies do not appear to be adequate even for coverage in the lowest-cost plans.’

‘Under the bill approved by the Senate health committee,’ Mr. Finan said, ‘a family with annual income of $40,000 could obtain subsidies, but would still have to pay premiums of $1,760 a year and might have to pay as much as $2,320 in co-payments and deductibles, for a total of $4,080, or 10 percent of family income. And they might have to pay more if they use specialists outside the network of doctors in their health plan.’

Subsidies are a major factor in the cost of the legislation, and lawmakers are desperately hunting for ways to pay for it. The Congressional Budget Office says the government would spend $773 billion on subsidies from 2013 to 2019 under the House bill. Among people who receive assistance, it said, the average subsidy would be $4,600 in 2014, rising to $6,000 a person in 2019.

Under the House bill and a similar measure approved by the Senate health committee, premium subsidies would be available to families with incomes up to four times the poverty level, or $88,200 for a family of four. With income at that level, a family could be required to pay as much as 12.5 percent of its income in premiums under the Senate bill and 11 percent under the House measure.

Lower-income families would receive more help. A family of four with income of $34,000 might pay 1 percent to 3 percent of its income in premiums. But lawmakers said that federal aid for low-income families could be pared back as Congress struggles to hold down the overall cost of the legislation.

Premiums, which increase with health care costs, are rising much faster than personal income. So federal subsidies must also increase to keep insurance affordable.

The Senate Finance Committee is considering proposals to limit eligibility for subsidies, a move favored by some fiscally conservative Democrats in the House Blue Dog Coalition. One proposal would bar subsidies for people with incomes over 300 percent of the poverty level ($66,150 for a family of four.)

Richard J. Kirsch, the national campaign manager of Health Care for America Now, a consumer group, expressed concern. ‘If Congress sets the limit at 300 percent of the poverty level,’ Mr. Kirsch said, ‘millions of middle-income families would not be able to buy insurance because they could not afford the premiums on their own.’

The median income for married-couple families was about $73,000 in 2007, the last year for which Census Bureau figures are available. Bruce Lesley, president of First Focus, a bipartisan advocacy group for children, said, ‘We are very concerned that as the legislation evolves, insurance will become less and less affordable than under the original proposals.’

Asked whether insurance would be affordable to everyone, Senator Snowe said: ‘That’s unknown. That will really be a test of this initiative in the final analysis.’

Still, Ronald F. Pollack, executive director of Families USA, a liberal-leaning consumer group, said the proposed subsidies would ‘make health insurance significantly more affordable than it is today.’

In addition, sponsors of the legislation said it would make insurance more affordable by slowing the growth of health costs in the long run. The Senate health committee bill says ‘coverage is defined to be unaffordable if the premium paid by an individual is greater than 12.5 percent’ of the person’s adjusted gross income.

In Massachusetts, which requires all adults to have health insurance, about 76,000 people qualified for hardship exemptions in 2007, the first year of an innovative state program to expand coverage. Nearly 430,000 are newly insured, the state says.

The Sacramento Bee -

July 16: Nearly a million Californians, more than in any other state, will lose their health insurance coverage during a three-year period ending in 2010, according to a report released Wednesday that showed the sobering impact of rising insurance premiums and unemployment.

This year alone, more than 330,000 people are expected to lose coverage in California, according to Families USA, a Washington, D.C.-based health care advocacy group.

The report underscores the need for quick action on legislation aimed at overhauling the country’s health system, said Ron Pollack, the group’s executive director.

“With each passing week, more Americans are losing their health coverage,” he said.

“We have a wonderful opportunity now with a broad consensus in support of action and momentum to enact meaningful health reform. The longer Congress waits to act, the more California families will lose coverage.”

Federal legislators are currently steeped in the business of drafting legislation that could profoundly rewrite how health care is delivered.

A key focus is on how to deal with the country’s growing ranks of uninsured, now estimated at about 46 million and increasing with every tick in the unemployment rate.

Democrats are proposing a public health plan that would compete with private insurers, ostensibly to boost competition and put pressure on insurance companies to lower premiums.

From 1999 to 2008, the average cost of health insurance premiums has more than doubled, from $5,791 to $12,680, according to the Kaiser Family Foundation.

“As health insurance premiums rise so quickly, employers … are finding that coverage is increasingly unaffordable,” Pollack said, noting that a rising number of companies are reducing health coverage, dropping health plans or passing more of their premium costs on to workers.

The downturn in the economy has added to the challenges, although federal officials eased the sting of unemployment by providing deep subsidies for those electing to extend employer-based health coverage under the COBRA insurance program.

Pollack said he supports a public health plan. “We want to see insurance market reform,” he said, adding that new rules are needed to prevent insurers from denying coverage to those with pre-existing conditions or other factors.

Overhauling the health care system has been a top priority for the Obama administration, which has pushed Congress to act quickly.

Debate is expected to be fierce. A House version of the overhaul unveiled Tuesday includes a 5.4 percent tax increase on the country’s wealthiest.

The plan would penalize companies that don’t provide health coverage, but it provides exemptions for qualifying small businesses. It also would require workers to sign up for health insurance or face having their wages garnished.

In all, the House plan could cost as much as $1.5 trillion. Two key Senate committees are also drafting their own proposals.

The Orange County Register – July 10:

It’s nearly impossible to grasp a number like America’s annual $2 trillion medical bill. So as Shari Carter avidly follows news from Washington on the summer of health care reform, she thinks about $1,059 the monthly amount that cost Carter her HMO.

“I’ve never gone without health insurance,” she said. “It’s scary. I’m at the age where they want to get rid of you real bad.” The Orange hairdresser, 60, sacrificed to pay her previous premium of $647, and then she received a letter advising her of a 64-percent increase:

“At Health Net we appreciate that it’s never a good time to ask you to pay more for your health insurance coverage. We realize it’s especially difficult during these tough economic times…Premiums are going up now due to rising prescription drug costs, increased use of health care services and higher priced technologies.”

As an older woman with high blood pressure, Carter falls into the age, gender and preexisting condition categories that pay the highest rates on the individual heath insurance market. And it’s exactly those formulas that are coming into question as lawmakers attempt to hash out legislation that would preserve the private insurance industry but require coverage for everyone.

Already, the health insurance industry is responding to complaints about out-of-reach premiums and denials based on preexisting conditions. If all Americans are covered, industry officials have said they would be willing to stop charging women more than men and no longer charge the sick higher premium rates.

All this comes as new research from Harvard University shows that medical bills account for 62 percent of bankruptcies. Among those, three-fourths had health insurance.

“You can kind of see in the next few years down the line the numbers increasing because of more people being uninsured and having no way to pay for their medical bills,” said Jami Teagle-Burgos, an attorney for the Legal Aid Society of Orange County who specializes in medical debt.

For Carter, an earlier letter warned her to expect a premium increase tied to her 60th birthday last month. Before the 64-percent jump, Carter spent more than half her monthly income on the coverage.

She keeps a thick file of her correspondence with Health Net. Her records show that in 2001 she paid $258 a month for her insurance. But the increases kept coming.

This time, she could no longer afford to keep her insurance. “It’s kind of like jumping off a cliff,” she said. “It has crossed my mind a couple times that I’d better be a little bit careful about everything.”

She has applied for coverage through California’s Major Risk Medical Insurance Program for those with no other option for coverage. But there’s a $75,000 cap on coverage and a three-month waiting period. “That you can do in three days in the hospital, but it’s better than nothing,” Carter said.

About 7 percent of Americans buy their own insurance on the private market, while more than 60 percent receive coverage through group plans at their jobs. Some small business owners hope that Congress will address the disparity between corporations and the self-employed for health insurance tax breaks.

Ron Werthe, owner of an appliance repair business in San Clemente, said Blue Cross coverage for himself and his wife went from $528 in 2006 for their HMO to $946 in March. Werthe, 54, switched from a PPO to an HMO to cut costs, but he said he’s locked in since his wife was diagnosed with cancer two years ago.

He wants to see the tax code amended to allow him to deduct health insurance premiums on his business taxes like corporations do. “I think they’re hypocrites,” Werthe said of lawmakers. “They want people to have health coverage. They want children to be insured. And they say small businesses are the backbone of the country. You take a small business owner and charge him Social Security taxes on his premium, but they don’t do that to corporations.”

Judee Slack, a Fountain Valley enrolled agent, said she hears complaints from other small business owners about paying an extra 15 percent in self-employment taxes on their health insurance. “Health insurance is considered to be a personal expense,” Slack said. “I don’t know why. It used to be that you couldn’t deduct it at all.”

Boston Globe -

July 7: Three major hospital associations have offered to contribute about $155 billion over 10 years to help pay for a U.S. healthcare overhaul, The Washington Post reported on Monday, citing industry sources.

The agreement with the Obama administration and leaders of the Senate Finance Committee was expected to be announced on Tuesday by Vice President Biden, the newspaper said. Two hospital sources said most of the savings about $100 billion would come through lower-than-expected Medicare and Medicaid payments to hospitals, the Post reported.

About $40 billion would be saved by slowly reducing the subsidies paid to hospitals to care for the uninsured. The Post said White House officials declined comment. A source close to the negotiations said agreement was reached after discussions about the “shared responsibility” of the entire health-care system, the report said.

Two weeks ago, the pharmaceutical industry offered some $80 billion in prescription discounts over the next decade to help defray the cost of healthcare reform proposals. The reported agreement with the hospitals comes as the U.S. Congress resumes efforts to find common ground on the huge and costly healthcare overhaul that is President Barack Obama’s top legislative priority.

Lawmakers are struggling to meld five separate healthcare bills into versions that can pass the Senate and House of Representatives by the August 8 start of a month-long recess.

They are trying to trim costs, find ways to cover a price tag of $1 trillion or more, and gather Republican support for a Democratic-backed government-run public insurance option to cover about 46 million uninsured Americans. The president has called for Congress to pass legislation he can sign by the end of the year.

New York Times -

June 22: House Democrats on Friday answered President Obama’s call for a sweeping overhaul of the health care system, unveiling a bill that they said would cover 95 percent of Americans. But they said they did not know how much it would cost and had not decided how to pay for it.

The proposal would establish a new public health insurance plan to compete with private plans. Republicans and insurance companies strenuously oppose such an entity, saying it could lead to a government takeover of health care.

The draft bill would require all Americans to carry health insurance. Most employers would have to provide coverage to employees or pay a fee equivalent to 8 percent of their payroll. The plan would also end many insurance company practices that deny coverage or charge higher premiums to sick people.

‘Health insurance for most American families is just one big surprise,’ said Representative George Miller of California, the chairman of the Education and Labor Committee. ‘When you go to use it, you find out it’s not quite as it’s represented, and you spend hours on the phone with exclusions and discussions and referrals to other legal documents that you didn’t have at the time you purchased it.’

The 852-page House bill, as expected, is more expansive than the legislation taking shape in the Senate, where work on the issue bogged down this week after early cost estimates came in far higher than expected. The initial price tag for a measure drafted by the Senate Finance Committee, for example, was $1.6 trillion over 10 years.

Similar sticker shock could hit House members when they see the cost of their bill, which incorporates many ideas from health policy experts about how to fix the health system.

Industry critics of the emerging Senate bill are likely to have even more objections to the House version, but House Democratic leaders can probably push their measure through on a party-line vote.

Under the House bill, health insurance would be regulated by a powerful new federal agency, headed by a presidential appointee known as the health choices commissioner.

The draft bill was unveiled by three committee chairmen — Mr. Miller; Henry A. Waxman of California, chairman of the Energy and Commerce Committee; and Charles B. Rangel of New York, chairman of the Ways and Means Committee. The chairmen, all first elected in the 1970s, have worked together in secret for months to develop a single bill.

The proposal would expand Medicaid eligibility, increase Medicaid payments to primary care doctors and gradually close a gap in Medicare coverage of prescription drugs known as a doughnut hole. The bill would also reverse deep cuts in Medicare payments to doctors scheduled to occur in the next five years. Taken together, these provisions could significantly drive up the bill’s cost.

The bill would impose a new ‘tax on individuals without acceptable health care coverage.’ The tax would be based on a person’s income and could not exceed the average cost of a basic health insurance policy. People could be exempted from the tax ‘in cases of hardship.’

Asked why there was no cost estimate for the bill, the House Democratic leader, Steny H. Hoyer of Maryland, said: ‘Until we have a final product, we are reluctant to ask the Congressional Budget Office for a score. But whatever we do will be fully paid for.’

House Democrats pledged to offset the cost of their legislation by reducing the growth of Medicare and imposing new, unspecified taxes. Republicans, who had no role in developing the bill, denounced it as a blueprint for a vast increase in federal power and spending.

‘Families and small businesses who are already footing the bill for Washington’s reckless spending binge will not support it,’ said the House Republican leader, John A. Boehner of Ohio, who raised the specter of federal bureaucrats’ making medical decisions for millions of people.

Business groups also were not pleased. ‘There is enough to see here already to know that we would be compelled to oppose this bill,’ said E. Neil Trautwein, a vice president of the National Retail Federation. But John J. Sweeney, president of the A.F.L.-C.I.O., praised the House bill, saying it provided ‘a road map for what health care reform should look like.’

The House chairmen described their bill as a starting point in a battle that would dominate Congress this summer and ultimately involve the full range of interest groups in Washington. The three House committees plan to hold as many as six hearings on the bill next week. Mr. Waxman said lawmakers were committed to considering all ideas, even a proposal to tax some employer-provided health benefits, which he opposes.

The House bill shows what Democrats mean when they speak of a ‘robust’ public insurance plan. Under the bill, the public plan would be run by the Department of Health and Human Services and would offer three or four policies, with different levels of benefits. The plan would initially use Medicare fee schedules, paying most doctors and hospitals at Medicare rates, plus about 5 percent. After three years, the health secretary could negotiate with doctors and hospitals.

But the bill says, ‘There shall be no administrative or judicial review of a payment rate or methodology’ used to pay health care providers in the public plan.

With the sinking economy, many companies are cutting back to help make ends meet.  Too often, health insurance programs are the first thing to go.  But what if you lose your employer sponsored group health plan while you are in the middle of treatment, or have pre-existing medical conditions and cannot qualify for an individual health plan?

HIPAA stands for Health Insurance Portability and Accountability Act of 1996.  HIPAA health plans are guarantee issue, individual health plans that you may be able to enroll in after losing your group coverage.  To qualify you must:

• have completed a minimum of 18 months of continuous health coverage, most recently under an employer-sponsored group health plan;
• have elected and exhausted continuation of coverage under COBRA or Cal-COBRA, if available;
• have lost coverage within the last 63 days;* and
• not be eligible for Medi-Cal or Medicare, or have any other medical coverage.

If you live in California, have recently lost group health coverage through your employer and have been declined for individual health insurance, I may be able to help you.  Please contact me for more information at (800) 303-3737.

* For reasons other than fraud or non-payment of premiums.

Health Savings Accounts (HSAs) and HSA-compatible health plans can seem confusing or overwhelming, but they really aren’t difficult when you look at low-cost health coverage alternatives.  Here are some answers to your questions so you can make an informed decision whether an HSA-compatible health plan and an HSA are the right fit for you.

Q.  What is a Health Savings Account?

A.  An HSA is a personal savings account that allows you to pay for qualified medical expenses with tax-advantaged dollars.  You (and/or your employer) contribute money to an HSA through pre-tax or post-tax contributions.  The The money contributed to the account is not subject to federal income tax at the time of deposit.  Funds in an HSA roll over and accumulate year after year if not spent.  All money in your HSA is owned by you.

Q.  How does an HSA work?

A.  When you enroll in an HSA-compatible health plan, you are eligible to open an HSA.  Once you open an HSA, you contribute money to your HSA through pre-tax or post-tax contributions.  You can use the money in your HSA to pay for qualified medical expenses.  Many financial institutions will provide a debit card or checkbook for easy access to your HSA funds.  Any money you don’t use in one year simply gets rolled over to the next year.

Q.  Who is eligible to open an HSA?

A.  Individuals may open an HSA if they are enrolled in an HSA-compatible health plan.

Q.  How much does an HSA cost?

A.  An HSA is not something you purchase – it’s a savings account where you deposit money on a tax-preferred basis, and out of it, you pay for qualified medical expenses.  However, the financial institution you set up your HSA with may charge monthly service fees for your account just like any other savings account.

Q.  What is an HSA-compatible health plan?

A.  HSA-compatible health plans are high-deductible health plans (HDHPs) that offer lower premiums/dues and higher deductibles than health plan which are not HSA-compatible and can be used with an HSA to obtain tax advantages. 

Q.  How much and how often can I/do I contribute to my HSA?

A.  The U.S. Treasury states that for 2009, if you have individual HDHP coverage, you can contribute $3,000, and your limit is $5,950 if you have family coverage.  If you are age 55 or older, you can also make additional “catch-up” contributions.  These amounts will continue to increase for inflation.

As for how often you can contribute in a lump sum or in any amounts of frequency you wish.  However, the financial institution that holds your account can impose minimum deposit and balance requirements.  The same is true if you are receiving contributions from an employer.

Q.  Can my spouse have a separate HSA?

A.  Yes.  You can each have a and contribute to an HSA as long as neither of you has family coverage.

Q.  Do I earn interest in my HSA account?  Can I invest my HSA?

A.  Yes, HSAs are like IRAs in that they can earn interest and be invested, depending on requirements by your financial institution.  The same types of investments permitted for IRAs are allowed for HSAs, including stocks bonds, mutual funds, and certificates of deposits.

So, you’ve decided on an individual health plan for you and/or your family and are filling out the application to apply.  The paperwork required can be quite daunting, to say the least. 

Most individual health plan applications will require medical history on you and all applying family members going back TEN years.  These are some of the health conditions they will ask about:

• Brain/Nervous
• Heart/Circulatory
• Lungs/Respiratory
• Digestive
• Urinary
• Male/Female Reproductive System
• Musculoskelatal
• Endocrine/Metabolic
• Cancer/Tumors or Growths/Leukemia/Cysts
• Skin Disorder/Problems
• Eyes, Ears, Nose & Throat
• Nervous, Mental, Emotional, Behavioral
• Congenital Abnormalities/Birth Defects
• Prescribed Medications
• Undiagnosed Conditions or Symptoms
• Hospital, Clinic, Surgicenter, Sanatorium or Medical Facility Stays
• Abnormal Physical Exams, X-rays, EKG, MRI, or CT Scans
• Tobacco Use
• Use of Illegal Drugs or Controlled Substances
• Alcoholic Beverages

If you answer YES to any of the above conditions, the carrier may request to see a copy of your medical records or an APS (Attending Physician’s Statement) before making a decision.  With your signed permission, the carrier will generally request these records directly from your doctor.  This procedure can take several weeks and will delay the processing of your application. 

Once the medical records have been received and reiviewed by the underwriter, a decision will be made.  If the medical condition meets the criteria for their underwriting guidelines, the applicant will be approved at “Level I” or “Tier I”.  That means you will be offered the coverage at the published, or quoted rate.  If the condition is mild, or if you are taking a prescription(s) for the condition and it is controlled, you may be offered the coverage at a higher rate.  For instance, a Level 1 +25 or Tier 2 rating would mean they are offering you the coverage at a higher rate (usually 25% higher).  Depending on the severity of the condition, ratings can be offered up to 100% over the quoted or published price.

However, if you do not meet the carrier’s underwriting criteria, you will be declined coverage.  This can be a very frustrating experience.  There may still be options for you, but they can be very pricey.  For more information on what to do if you are declined for a California individual health insurance plan, please contact me at:  (619) 667-2111, ext. 304.