Broker blog from Delta Dental

Category: ACA update

Follow the latest news related to HCR plans and the Affordable Care Act.

Policy pops: The long and short of short-term health plans

3-minute read

Join our guest blogger, Stephanie Berry, as she answers frequently asked questions about short-term limited duration health insurance plans (STLD). Stephanie is a Senior Legislative and Policy Analyst based in Rancho Cordova, California.

On October 2, the U.S. Department of Health and Human Services (HHS) put new rules into effect lengthening the maximum duration for short-term limited duration health insurance (STLD). Prior to the enactment of the Affordable Care Act (ACA), STLD plans were prevalent in the individual market for people who experienced temporary gaps in health coverage, such as losing or changing a job. Unlike “limited benefit” policies, such as cancer-only or hospital-only policies, STLD plans were considered akin to comprehensive medical plans, only differing in their limited term, previously 90 or less days. The new HHS regulations increase the duration of STLD plans, potentially making them more appealing to certain demographics, particularly younger, healthier consumers.


Q: How long can these new STLD plans last?

A: The new rules state that a short-term plan can last up to a year (364 days), and consumers will be able to renew that plan for a maximum of two additional years (up to 36 months). This is a change from the federal rules, which previously limited STLD plans to three months. Individual health plans have been guaranteed renewable since 1996, whereas STLD plans previously terminated at the end of the contract, meaning that a change in health status could cause policyholders to be dropped from coverage.

Q: Do STLD plans have to follow the same ACA rules regarding medical underwriting, pre-existing condition exclusions, etc.?

A: No. The ACA exempted STLD plans from market rules. As a result, the following are permissible under STLD plans:

  • Medical underwriting: Applicants can be excluded or charged higher premiums based on health status, gender, or age
  • Excluding coverage for pre-existing conditions
  • No coverage for essential health benefits that ACA-compliant plans must cover, such as pregnancy, prescription drugs, or mental health care
  • Lifetime or annual limits
  • No limit to out-of-pocket expenses

Q: Can dental be offered as an STLD product?

A: STLD products are meant to compete with major medical plans, and, as a result, there is not a clear role for stand-alone dental carriers in the STLD space.

Q: How do STLD plans differ from Association Health Plans?

A: Think of Association Health Plans as a way for members of associations to band together to purchase large group health insurance. As a result, an AHP could choose an STLD plan as the health insurance plan it offers to its members.

Q: What role do states play in regulating STLD products?

A: States can take action to comply with the new STLD regulations or implement their own restrictions and guidelines, many of which are already enshrined in state law. Brokers should reach out to state departments to understand any additional state requirements. Here are a few examples on how states are reacting to the new STLD regulations:

  • Four states currently prohibit STLD plans, including Massachusetts, New Jersey, New York and California (SB 910 in California was signed by the governor in September). Relatedly, Hawaii enacted a law this year (HB 1520) that bars residents from enrolling in STLD policies if they are otherwise eligible to purchase coverage from the federal health insurance marketplace during an open or special enrollment period. It also limits the duration of an STLD policy to less than 91 days.
  • States can – and have – adopted shorter maximum durations of an STLD policy. For instance, the South Carolina Department of Insurance has restricted STLD policies to 11 months or less, and limits renewals to a total of 33 months or less coverage. (This is intended to distinguish STLD policies from ACA-compliant policies.) Michigan, by contrast, limits STLD policies to six months or less out of any 365-day period.
  • States can impose requirements on disclosure and marketing. The Maine Bureau of Insurance issued a bulletin stating that when offering an STLD policy, a carrier or broker must provide clear language that the policy does not offer protections from pre-existing condition exclusions or guaranteed renewability. Both Nebraska and Iowa require a “free-look” period, whereby the newly-insured can cancel the policy within a set timeframe.
  • States can require STLD products to cover essential health benefits (EHBs) or other ACA-market protections. The Connecticut Insurance Department issued a bulletin to clarify that STLD plans must cover EHBs, and that any renewable STLD plan or any STLD that has a duration of six months or longer is prohibited from excluding coverage for pre-existing conditions. Maine law requires STLD plans to cover preventive health services and bars dollar limits on coverage.

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Policy pops: Is there a role for dental in Association Health Plans?

3-minute read

Join our guest blogger, Devin McBrayer, as she unpacks the Association Health Plan rule from the Department of Labor and its possible effects on the dental benefits industry. Devin is a Legislative and Policy Analyst based in Sacramento, California.

As you’ve probably heard, the Department of Labor (DOL) recently released the final rule regarding Association Health Plans. This rule makes it easier for small businesses to come together and form an “association health plan” (AHP). This allows businesses to leverage their combined bargaining power to purchase health benefits for their employees. Brokers will play an extremely important role in working with AHPs, especially newly-formed AHPs, which will likely have minimal experience working within the health benefits industry.

The new rule makes three major changes to the regulations concerning AHPs:

  1. AHPs can now form across geographic regions such as counties or states
  2. AHPs can consist of organizations from different industries as long as the organizations are within the same geographic region
  3. Self-employed individuals, for the first time ever, will be able to join an AHP

These changes were not as flexible as some organizations hoped. However, chambers of commerce in Nevada and Texas have already announced their intention to form AHPs to provide health benefits to their members, and we anticipate many more AHPs forming in the next several months.

Although the rule does not specifically mention dental benefits, it does state that AHPs can provide excepted benefits, such as dental or vision, to their members. AHPs that choose to obtain dental benefits for their members will likely want to take advantage of more flexible benefit designs, such as diagnostic-and-preventive-only plans.

Since AHPs are able to act as a large group, they do not have to follow certain ACA requirements such as meeting actuarial value standards or providing essential health benefits, which could bring down the cost of premiums. On the other hand, AHPs must continue to follow existing large group requirements such as providing preventive services without cost-sharing, guaranteed issue, or prohibitions on lifetime maximums.

The DOL rule states that new fully-insured AHPs are allowed to form starting September 1, 2018; existing self-insured AHPs are allowed to follow the new DOL rule starting January 1, 2019; and new self-insured AHPs will be allowed to form beginning April 1, 2019. However, some states already have laws on the books banning the formation of new AHPs, particularly laws that ban Multiple Employer Welfare Arrangements, which encompass AHPs. In addition, some states such as Vermont and Pennsylvania have taken steps to make it more difficult for AHPs to form in their states.

Time will tell whether AHPs will proliferate and there are still many questions that need to be answered as state insurance commissioners come to terms with this new rule. Brokers will be on the front lines and will likely be the first to hear about organizations that are interested in joining together to form an AHP. As always, the Public & Government Affairs team here at Delta Dental will be closely watching what happens next.

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Plain language policy: States move forward to stabilize insurance markets

Join our guest blogger, Stephanie Berry, as she unpacks state reactions to the removal of the ACA’s individual mandate. 

Stephanie is a Senior Legislative and Policy Analyst based in Sacramento, California.

As we reported recently, ending the penalty for individuals who choose not to purchase medical coverage (the individual mandate) could further destabilize the individual market. However, state policymakers aren’t waiting for further federal action on the ACA — leading to a notably active regulatory year as states are taking matters into their own hands. Here’s a summary of activity:

Weakening ACA regulations

Idaho unveiled a plan that openly defies the ACA by announcing earlier this year that the state would allow health plans to be offered that don’t comply with the ACA’s regulations on pre-existing medical conditions, essential health benefits, annual caps on benefits, and other key tenets of the law. These plans, of course, would be quite a bit cheaper than ACA plans and are designed to attract younger, healthier individuals. Because Idaho announced its intention to skirt ACA regulations, the federal government responded that it would step in and enforce the law if the state followed through with its plan.

Similarly, the Iowa legislature enacted a bill that allows non-ACA compliant plans to exist by creating an exemption for plans offered by the Iowa Farm Bureau, an association that is meant to serve Iowa’s farmers. To pass federal muster these plans cannot be called health insurance and therefore, cannot be regulated by the federal government or the Iowa Department of Insurance. It is likely that we will see other states follow suit.

Establishing reinsurance programs

Several states have introduced legislation to create state reinsurance programs — a way for carriers offering individual health insurance to get compensated for covering high healthcare costs. While bills are making their way through the legislatures in Louisiana, New Jersey, and other states that would require the state to apply for a federal waiver, Maryland has already enacted legislation that will support a reinsurance program by levying a surcharge on medical and dental carriers. This enacted legislation was designed to mirror the federal tax that was suspended for 2019.

Imposing state individual mandates

Finally, state legislatures — particularly those with state-based exchanges — are attempting to impose their own individual mandate that would require individuals to maintain health care coverage or pay a penalty. Legislation has been introduced in Connecticut, Vermont, New Jersey, Maryland, and Washington, but currently, only New Jersey’s bill — AB 3380 — appears close to enactment, while the bill in Washington has already died. It remains to be seen whether these individual mandate bills will be able to gain more traction this year or next.

Stay tuned for more health care policy updates from Delta Dental, and get to know our policy experts.

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Policy pops: How tax reform may affect dental enrollment

3-minute read

Join our guest blogger, Devin McBrayer, as she unpacks the Job and Tax Cuts Act of 2017 and its likely effect on dental benefits enrollment. Devin is a Legislative and Policy Analyst based in Sacramento, California.

government workers walking down stairs

When most people think of the Affordable Care Act (ACA) and the increase in Americans with insurance coverage, medical insurance is the first thing that comes to mind. What’s sometimes overlooked is the significant growth in dental insurance, particularly among adults.

Pediatric dental is considered an “essential health benefit” in the ACA, meaning insurance must cover it. Dental carriers are also able to offer stand-alone family dental coverage on the health insurance exchanges as long as the pediatric benefits are included. This has made dental coverage more widely available to the 1.9 million people who purchased stand-alone dental coverage through the marketplaces in 2017.

Dental coverage could be threatened, however, due to the Job and Tax Cuts Act of 2017. This bill effectively repealed the mandate requiring most Americans to have health insurance by eliminating the financial penalty for lack of coverage.

Without the individual mandate, it’s likely that medical and dental insurance enrollment will decrease in the coming years. The Congressional Budget Office, a non-partisan agency that conducts analyses for Congress, predicts that the U.S. will have 8–13 million more people living without health insurance by 2026.

Stand-alone dental plans on the exchanges in particular will struggle to sustain enrollment in the marketplace, because stand-alone dental plans cannot be purchased unless an individual has already purchased a medical plan. If consumers choose not to purchase medical insurance because they no longer have to pay the penalty, then those consumers will also not be able to purchase dental on the exchange.

Adding more strain on the uncertain future of the exchanges, heathier and younger people who believe that they do not need insurance are most likely to drop their coverage. The exchanges could soon face a scenario where older or sicker individuals will choose to keep their coverage, and healthier, younger people will choose to drop their coverage. An unhealthy risk mix, due to healthier people leaving the exchanges, would likely cause health insurance premiums to rise even higher.

On the bright side, open enrollment totals for health insurance exchanges in 2018 exceeded expectations. Nearly 65% of state-based exchanges saw an increase in their overall enrollment. Only time will tell if the exchanges can sustain their enrollment, while also maintaining a healthy risk mix, after the tax reform bill repealed the individual mandate.

Despite the uncertainty facing the marketplace, Delta Dental is still working hard to ensure that consumers continue to have access to the dental care that they need.

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The three Rs, and why dental shouldn’t be left out

Repeal, replace or repair? These are the three Rs dominating the news in recent weeks about how U.S. Congressional Republicans want to overhaul the Affordable Care Act.

Republicans, who represent the majority in both the House and Senate, have an opportunity to rewrite the health care law, but are generally split into three camps on how to do so: Repeal the whole law now and replace later, perhaps incrementally; repeal once a complete replacement is ready; or repair the ACA for now, then determine what to do next.

Regardless of which strategy they select, something new is on the horizon, and Delta Dental is working to ensure dental benefits aren’t left out of the discussion.

About one million previously uninsured Americans today have affordable dental coverage as a result of dental benefits sold in public health exchanges, while employer-sponsored plans continue to enjoy tax-exempt coverage. Since our mission is to advance dental health and access to care, we want to preserve this progress in whatever legislation may come.

To this end, here’s what we’re telling lawmakers:

  • Allow people with exchange dental coverage to renew those policies with the carriers they’ve selected—whether or not those marketplaces continue—to minimize disruption.
  • If a new law includes tax credits to help eligible Americans purchase benefits, let those credits be used for dental as well as medical coverage.
  • Keep the tax-exempt status for employer-sponsored dental benefits; expand that exemption to allow individuals to pay dental premiums with tax-free dollars.

Whether repeal, replace, or repair, the key “r” word for Delta Dental is ready.

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Dental and the ACA in 2017

New reports speculating on the future of the Affordable Care Act have come out almost daily since America elected Donald Trump to be the next president. Here at Delta Dental, our leadership involved with health care reform breaks down what all the hubbub may mean for the dental benefits industry in 2017.

Clients and enrollees won’t feel effects of any major changes for a few years

No “significant change to the health care market—medical or dental” is expected for three or four years, says Jeff Album, Delta Dental’s vice president of Public and Government Affairs.

“Repeal and replace has changed to repeal and delay,” Album says. “It’s clear that both Congress and the new administration are going to want to minimize disruption to the existing system.”

Album expects Congress will take action early in 2017 to defund parts of the law, but postpone when that takes effect. In the meantime, lawmakers will determine how the replacement will look.

As the new law is developed, he says, Delta Dental will take an active role by helping the industry “define its advocacy agenda” in terms that best serve existing and prospective customers’ needs.

Health Insurance Tax could be modified or repealed in 2017

Early this year, Album says, Congress will likely seek to find common ground on the future of taxes associated with the law, including the Cadillac tax and the health insurance tax (HIT). The HIT tax, charged to insurance carriers based on premiums earned, was put on a one-year moratorium for 2017.

The fate of the HIT is the “biggest question” this year for the Actuarial and Underwriting departments at Delta Dental as they prepare for 2018, says Tom Leibowitz, vice president and chief actuary.

Overall, Leibowitz says he expects rates for dental benefits will continue to stay largely stable for 2018.

“Unlike health care, dental had fairly small impact on rating requirements from the ACA,” he says, “so those huge cost increases that have been seen on the public exchanges for medical are not taking place in the dental world.”

Public exchanges are sticking around for now, and Delta Dental will stick with them

Delta Dental and its affiliate companies have already started work on 2018 exchange plan offerings.

“We are committed to the exchanges as long as they’re a viable platform through which we can sell standalone pediatric and family dental plans,” says Andrea Fegley, vice president of Legal & Regulatory. “Participation in public health care exchanges aligns well with our mission to advance dental health and access.”

Public exchange benefit offerings complement Delta Dental’s existing business strategy, adds MohammadReza Navid, vice president of Sales.

“Regardless of the ACA’s future, Delta Dental will continue to find innovative ways to increase dental access for all,” Navid says.

Both agreed that the company’s planning and strategic initiatives will keep Delta Dental at the forefront of the industry.

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