Blue Cross Blue Shield discontinued Randy Uhrmacher’s group insurance plan at the beginning of 2018.
The Nebraska farmer and his wife, Kathy, joined her employer’s insurance plan for a year, but it was more expensive.
“We were looking for better options,” Uhrmacher says.
While attending a farm show, they met an insurance agent selling Lifestyle Health Plans. These are insurance plans for businesses with a minimum of two employees. The premiums were more affordable if you qualified through the health underwriting process.
“It’s kind of like the old-school health insurance,” Uhrmacher says. Premiums are adjusted based on preexisting conditions. He compared two other brand-new options offered by the Nebraska Farm Bureau (NEFB) and his local co-op, Cooperative Producers Inc. (CPI), which is a part of the Land O’Lakes cooperative system.
Ultimately, Uhrmacher and his wife decided to go through Lifestyle’s underwriting process when Farmers Business Network launched its plan, which is done in a partnership with Lifestyle.
“By the time it all shook out and we got it all done, Farmers Business Network added a little bit more savings,” Uhrmacher says. Representatives from Farmers Business Network say their plan usually results in a 7 to 10% discount over buying a Lifestyle plan directly or other plans available to farmers.
In all, Uhrmacher’s premium came in at about $900 a month compared to the quotes of about $1,650 he received with insurance from CPI, Farm Bureau or his wife’s employer. The $750-per-month savings goes a long way.
“That’s not pocket change. I said, ‘Right there’s a pickup payment.’”
Uhrmacher says he’s glad he had a number of options to choose from in 2019 without having to go to Nebraska’s Affordable Care Act exchange. He doesn’t know what an exchange plan would have cost, but from what he’s heard from neighbors, it’s expensive if you don’t qualify for a subsidy.
“Holy cow. I don’t know how you can afford that stuff,” he says.
RULE CHANGES OPEN OPTIONS
Nebraska is often seen as the poster child for the Affordable Care Act’s (ACA) failings. Blue Cross Blue Shield left Nebraska’s exchange at the end of 2016. Aetna exited at the end of 2017, leaving Medica as the state’s only carrier.
As insurers left, rates jumped. The average premium increased by 35% in 2017 and 31% in 2018, according to healthinsurance.org, a consumer education nonprofit previously known as the Health Insurance Resource Center. Premiums only grew by 2% for the most recent enrollment period, which ended Dec. 15, 2018.
In late 2017, Congress voted to repeal the ACA’s individual mandate, leading to a legal challenge that once again calls the law’s constitutionality into question.
At the same time, the Trump Administration and several states loosened the rules around association health plans, opening up new options for small businesses such as farmers. Iowa and Minnesota changed their laws regulating association plans in recent years. Tennessee has allowed them for farmers since 1993.
Kev Coleman, a consumer advocate and president of Association Health Plans, notes farmers and rural Americans often bear the brunt of the ACA’s shortcomings. In many rural counties, the exchange only offers one carrier, or the networks included in ACA plans are so narrow they aren’t practical.
“It’s probably also one of the reasons we’ve seen the agricultural industry be very interested in association health plans,” he says.
Association health plans, also referred to as AHPs, allow people or organizations that share a regional or professional tie to band together to buy health insurance under the same rules as large companies. By pooling together, association plans increase in scale and negotiating power, earning greater discounts from medical providers.
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AHPs can be self-funded, which means the group holds the risk of future medical claims instead of transferring those risks to a third-party insurance company.
“That way, you’re not paying profit to a third-party health insurance company, and you’re also avoiding things like the health insurance premium taxation that normal insurance plans have to pay,” Coleman explains.
All of these factors allow association plans to offer lower premiums than what can be found on the individual market.
For the most part, new association plans offer fairly comprehensive benefits, Coleman adds. But, since they’re regulated under federal law, not all are required to be ACA-compliant. That means some may not cover all of the 10 essential health benefits included in plans on state exchanges. However, preexisting conditions are covered within their benefits. Additionally, health factors cannot be used to determine insurance eligibility or to raise premiums.
The Department of Labor finalized the new rules in June 2018, and Coleman expects to see significant growth in the number of available plans and enrollment as 2019 progresses. The Department of Labor estimates association health plans will eventually cover up to 11 million Americans.
If 2018 enrollments are any indicator, association plans will be a popular choice with farmers.
Rob Robertson, NEFB’s chief administrator, says more than 700 people signed up for the Bureau’s plan during the October-to-December enrollment period. NEFB’s partner on the plan is Medica, and it offers six plan options with varying deductibles and networks; but the cost, on average, is about 25% less than plans on the exchange.
“Not a day went by without hearing a story of somebody signing up and saving three, five, eight, 10 thousand dollars on their policy,” he explains. “That’s big money.”
Nebraska’s plan is ACA-compliant, and premiums only change based on age and geographical location. There are a few eligibility components. First, participants have to have been an NEFB member for six months before they qualify for the insurance. To be eligible in the 2020 calendar year, you must have been a member by July 1, 2019.
“Essentially, we wanted a six-month waiting period. We didn’t want the next hundred Farm Bureau members to be members all needing knee replacements,” Robertson says.
The second requirement for eligibility is that 50% of an applicant’s gross income must come from production agriculture. That applies to farmers and ranchers, but also to agribusinesses with 50 employees or less.
Robertson expects enrollment numbers to go up in future years as more people compare plans and consider their options. As the plan becomes more established, enrollment grows and the group’s risk becomes more stable, he thinks Medica will “be able to knock those prices of premiums down even farther.”
ACROSS STATE LINES
Land O’Lakes launched a plan for member cooperatives offering health insurance to employees eight years ago. The plan has grown to cover more than 12,000 people. Minnesota, where the cooperative is headquartered, changed AHP laws in 2017. Land O’Lakes launched a pilot plan under those rule changes for its farmer members in 2018. About 750 enrolled.
“We were hearing from a lot of our other co-ops and other states that they needed it [too],” says Land O’Lakes senior director of benefits Pam Grove. “We want to be there to help the ones that do need a different option.”
For 2019, Land O’Lakes is using the new AHP regulations for its plans and is the first to offer plans across state lines. It chose to expand into Nebraska because it had a large enough base of cooperatives, and there was only one carrier on the individual exchange. It also expanded to cover its farmer members’ employees, which helps agriculture attract and keep talent, especially at businesses like dairy farms.
The plan is ACA-compliant, and the only factors that influence premiums are age and location. On average, premiums are 25 to 35% less costly than comparable plans on the individual exchange and have lower out-of-pocket costs, Grove notes. Participation does require membership in a Land O’Lakes-affiliated cooperative. Applicants are also checked to see if they are Medicare-eligible or qualify for a subsidy on the individual exchange. That could result in the applicant finding a more affordable insurance option.
“We found a few people that were eligible for the subsidy, and they were very thankful that we gave them both options,” Grove explains.
Land O’Lakes announced its expansion into Nebraska mid-November, and more than 1,000 people enrolled. Minnesota enrollment more than doubled to nearly 1,200 people.
The cooperative is considering where to expand next.
“The problem is that not all states are association-health-plan-friendly,” Grove explains. “We’re still having to go in and meet their guidelines, and in some states, it’s just not possible.”
Lucas Strom, vice president of business development at Farmers Business Network (FBN), says the state-by-state regulatory framework of creating association health plans didn’t fit its goal of covering farmers across a wider swath of America.
By partnering with Lifestyle Health to offer a level-funded plan, it is better able to serve its national member base (currently 40 states) and leverage that network to provide better solutions to farmers.
A level-funded plan means each policy is individually underwritten. Those policies are pooled together and reinsured. Strom says it feels like a policy you’d be offered if you worked for a large company.
“As a network representing more than 7,600 farms, we’re able to negotiate better rates by using strength in numbers. [We] tailor it more to farmers, and quite honestly, the real key here is we can create a support structure,” he explains.
Strom gives an example of a farmer from Oklahoma he spoke with. Most of the plans available to him required he see doctors and use hospitals within the state. This was not a good choice, because the nearest urban center for him was Amarillo, Texas. FBN is working with Lifestyle to address that issue, Strom says.
Eligibility for FBN’s plan is more complicated because it’s medically underwritten, which means premiums are higher for people with certain preexisting conditions, and some people may not qualify. Those who do qualify often save significantly over other policies. To participate, farms have to have at least two employees from a tax standpoint, meaning they receive W-2s.
Strom says anyone can call to get a quote, even if they’re not an FBN member. “If a nonmember in Nebraska goes through the quoting process and finds out they can save $5,000 to $10,000 this year, but it costs $700 to become an FBN member, it’s kind of a no-brainer” to sign up for a membership, Strom says. FBN also offers dental and vision coverage.
Farmers can enroll year-round and are eligible for coverage the first day of the following month. FBN Health is available in 40 states. Visit its website for the details (see “For More Information” below).
TIME AND RESEARCH
“I always say health care is complex, and there is no silver bullet [that works for everyone],” Strom notes.
He, Grove and Robertson stress every farm and financial situation is different, and it’s important to shop around to find the best insurance fit. While that’s what the ACA exchanges were intended to provide, they haven’t worked that way for many rural Americans.
“I don’t see the exchanges getting better anytime soon,” Grove says. “I see them … probably always struggling and going higher.”
Uhrmacher, the Nebraska farmer who found significant savings this year, is grateful to have options outside of the exchanges. But, he says that’s just the start.
“I hope that, nationally, they can try and solve some of the issues with overpricing and stuff like that. It’s not just an insurance problem, it’s a whole industry problem,” he stresses. “I don’t have the answers, but something needs to be done.”
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