Minding Ag's Business

Insurance Terminated? Get a Plan B

Millions of policyholders have been put on notice: Their existing health insurance will be terminated Jan. 1 because they aren't compliant with federal standards under the Affordable Care Act.

As I'll report in DTN's Nov. 1 health care series installment, farm families like Julie and Brian Taylor of Stockbridge, Mich., are among those hunting for something that doesn't double their monthly premiums. For a similar plan, their rates for themselves and their 24-year-old son could jump to $876/mo., up from the $434 they pay now, Blue Cross Blue Shield tells them. The cheapest Silver PPO plan on the Michigan marketplace website would run $862 for a three-adult family plan if the couple earned $80,000. Under $78,000 in income, and tax credits would kick in.

Many terminated plans never covered basics that Big Group plans considered essential, things like trips to the emergency room, hospitalization, rehab coverage, mental health, maternity care or prescription drugs, points out Rhett Buttle, a vice president for Small Business Majority. "It's tough to compare policies of the past with policies of the future, because so many features of these new plans have improved."

However, some consumers opted for them because price and circumstance fit their needs: Kaiser Permanente in California says one big block of those losing coverage were enrolled in a popular $4,000 deductible plan with no maternity benefits, according to Kaiser Health News.

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Why pay for coverage you're not going to use? It's about spreading risk, Kansas Insurance Commissioner Sandy Praeger explains in the Kaiser story. Men don't need maternity care, but women don't need treatment for prostate cancer. Young people don't need artificial hips or treatment for heart attacks that affect their parents and grandparents, but may have more accidents.

Fortunately, small business owners possess advantages that other individuals lack. Small businesses with 50 or fewer employees can buy group plans on their state SHOP and may qualify for tax credits if they do. You can ask your insurance broker to do the heavy lifting for you, although when I talked to Lewiston, Idaho insurance broker Mike MacDowell last week, he hadn't been able to get through his state exchange to compare policy options either. He's giving the website a few more weeks to get fixed before he panics.

In Julie and Brian's case, they may qualify for a Health Reimbursement Plan that' s ideal for proprietors who hire their spouse and have no other employees eligible for coverage. These so called 105 plans have been popular with farm couples because they are a tax deduction for the employer (Brian), but offer tax-free health costs to the employee (Julie), who is reimbursed for the family health expenses. A typical client can save $5,000 a year using the plan, says TASC, a company that administers these plans. Going forward, a farm family would need to weigh those tax savings against the potential for tax credits for insurance purchased inside an exchange.

Health Reimbursement Accounts won't be as generous in 2014 and beyond for larger employers, however. For small business clients with more than one employee, 105s will be limited to reimbursements for ancillary benefits such as dental and vision, says Chris Hesse, a principal in the federal tax resource group at CliftonLarsonAllen.

However, everyone I interviewed agrees the exchanges need to get up and running asap. Farm families and their employees don't just suffer the normal aches and pains of the U.S. population. This year I've already had an Iowa friend fall off a 40-foot grain bin, heard of an 80-year-old Minnesotan die in a combine accident and a New Yorker hit a high-power line with heavy equipment during planting. The agriculture industry takes health insurance reform seriously because farm families need decent coverage and they don't want an employee's tragedy to weigh on their conscience. Share your stories with me at Marcia.Taylor@dtn.com or here for public comment.

For Kaiser Health New's story explaining insurance cancellations, go to http://www.kaiserhealthnews.org/…

Follow me on Twitter@MarciaZTaylor

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