Phrases Made Easy: “Minimum Essential Coverage”

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Welcome back to another edition of “Phrases Made Easy.” This series at our blog aims to help make all of those long, drawn-out insurance phrases easier to understand. One thing we notice when talking about health insurance (and health benefits in general) is that the concepts can be “wordy” and boring. We emphasize fixing that here!

Our biggest goal is to help you tune in, understand, and put this knowledge to work for yourself or your company. We’re firm believers that informed consumers can make a really, really big difference in our industry.

The phrase that we’re talking about today is minimum essential coverage. This one sounds difficult, but it’s really not too bad. We’ve selected this phrase for one primary reason:

  1. Under the healthcare reform law (Obamacare, ACA)… minimum essential coverage is: the type of health insurance coverage that is required to be held by most Americans (per the individual mandate), in order to avoid individual tax penalties. 

In other words… you need to find a place where you can find minimum essential coverage (or pay a tax penalty). It doesn’t matter how rich you are or poor you are, where you live, or what kind of job you have… the law states that nearly every single American citizen will need to find minimum essential coverage by January 1st, 2014. It’s just that simple.

There are a number of different places where you can find minimum essential coverage. Here are the majority of options available for most people:

  • Coverage under an “eligible employer-sponsored plan,” which the proposed Treasury rule defines generally to mean coverage under a group health plan, whether insured or self-insured, including coverage under a federal or non-federal governmental plan (keeping it simple: coverage through your employer).
  • Coverage under an employer-sponsored retiree health plan.
  • Coverage under certain government programs, such as Medicare, Medicaid, the Children’s Health Insurance Program (CHIP) and TRICARE.
  • Coverage in the individual insurance market, including a plan offered by an Exchange** (if you’re in California, you’ll want to look at Covered California).
  • Other coverage recognized by HHS, including self-funded student health coverage and coverage under Medicare Advantage plans.

**Very important new concept to understand

Please note that coverage listed as “excepted benefits” (as defined by HIPAA) will not qualify as minimum essential coverage. IE: dental benefits, vision benefits, and FSAs will not qualify on their own.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

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Delayed: Employer Mandate (+50 FTE)

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Today’s blog post is about a change/delay in the healthcare reform law (Obamacare, ACA, the Affordable Care Act, or whatever you would like to call it). Last week, the White House announced that the “employer mandate” (ie: employers with 50 or more full time equivalent employees having to provide coverage) would be delayed until 2015.

The reason that this happened, is because many businesses had informed the Obama administration that they were greatly unprepared for this change to be implemented (citing administrative burdens, difficulties with technology, additional expenses, etc). As a result, the White House rolled-out a decision that the “employer mandate” would be delayed until 2015.

What does this mean?

  • Employers with +50 Full Time Equivalent Employees: You will not have to provide minimum essential coverage to employees by January 1st, 2014. This decision allows you to postpone your decision making (ie: pay or play) until January 1st, 2015 (one full year). If you are not currently providing health insurance coverage, you may have faced additional tax penalties. With this decision, you will have additional time to make your decisions about employee health benefits.
  • Employers with Less Than +50 Full Time Equivalent Employees: This recent determination has not changed your health benefits planning in any way. If you are currently providing health insurance to your employees, you can continue to do-so. If you are not currently providing health insurance to your employees, keep in mind that (as of now) the individual mandate is still in place, and your employees will need to find a way to find affordable health coverage (or face a tax penalty).

The Fallout:

  • Democrat/Liberal Interpretation: many employers with +50 FTE across the county are already currently offering health insurance coverage. Because the overwhelming majority of employers with 50 or more FTE are already offering health insurance, this is not much of a change, and will not affect the broad scope of healthcare reform overall. This is simply a means to allow those employers with 50 or more FTE to continue to make their necessary adjustments, with an extra year of time.
  • Republican/Conservative Interpretation: this is the beginning of many of the major “issues” for the healthcare reform bill (Obamacare). Many will argue that there is much potential for this bill to begin to “unravel,” and that the “train wreck” is yet to arrive. Additionally, be prepared to anticipate major changes as this bill is implemented (ie: will the individual mandate still hold up?).
  • Policy Advantage Insurance Services Interpretation: This decision gives employers with +50 FTE’s more time to make their decisions about whether-or-not to offer health insurance coverage. The healthcare reform bill was large and far-reaching legislation, and changes were anticipated. Be prepared for additional delays and changes along the way. There is no-doubt that this bill will continue to take shape as implementation moves forward. We will continue to stay up-to-date with changes… stay tuned, and keep informed.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

Facebook: http://www.facebook.com/PolicyAdvantage

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Benefits Chalk Talk: Premium Only Plan (POP)

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Welcome back to another edition of “Benefits Chalk Talk.” In this series at our blog, we provide you with valuable, up-to-date, relevant information about health benefits planning so that you can put the things in place that make the most sense for yourself or your company. At Policy Advantage Insurance Services, we feel that informed consumers can make a really big difference in our industry.

Today we’re going to be talking about “Premium Only Plans” (POP). The big reason we want to talk about this concept, is because there are some significant tax advantages that can be utilized by employers when adopting this strategy.

The concept of the Premium Only Plan (or POP) really is very simple. It’s exactly what it says it is: it’s a program that allows employees of an organization to pay for certain insurance premiums tax-free through payroll. That’s all there is to it. This concept is allowed under Section 125 of the IRS code.

Example: John Doe is an employee at Acme Corp. Acme Corp offers it’s employees an opportunity to purchase individual health insurance policies pre-tax through a Section 125 Premium Only Plan (POP). So, John Doe purchases a $250/month individual plan from Cigna, and submits his claim through Acme Corp’s POP third party administrator. By doing so, John Doe is now paying for his $250 monthly premium on a pre-tax basis (ie: before the government takes their money), and then paying taxes only on his remaining income.

As you can see in the above example, by pre-taxing his individual insurance premiums through a Section 125 POP, John Doe can save a lot of money on taxes over the course of the year. His employer (Acme Corp) can also reduce their FICA/FUTA liability (by ~7.65%).

Here are some of the types of policies that can be purchased w/ a Premium Only Plan (POP):

  • Major medical individual health insurance premiums (health insurance)
  • Limited benefit individual health insurance premiums
  • Dental & Vision
  • Medicare Part A or B, Medicare HMO (however, Long Term Care policy premiums cannot be reimbursed through a POP plan)
  • Employer Sponsored Health Insurance Premiums (group plans)
  • Qualified Ancillary Premiums (Accident Plans, Cancer Plans)
  • Medicare Advantage and Medicare Supplement Premiums
  • COBRA Premiums

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

Facebook: http://www.facebook.com/PolicyAdvantage

YouTube: http://www.youtube.com/PolicyAdvantage

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Professional Designations: RHU® and REBC®

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This blog post is about helping people understand insurance professional designations. Sometimes you’ll see a group (or grouping) of letters after a person’s name who works in the insurance industry. In most cases, these are advanced licenses and continuing education. The professional you’ve chosen has decided to further their education in the line of business that he or she works in (“lines of business” = life insurance, health insurance, property insurance, etc).

Today we’re going to take a closer look at the source of two of them:

  1. Registered Health Underwriter® (RHU®):
  2. Registered Employee Benefits Consultant® (REBC®):

The reason we’ve chosen these two is because they deal specifically in the areas of health insurance and employee benefits. If you’ve kept up with our content here at Policy Advantage Insurance Services, you’ll know that these are the primary areas where we work.

Professionals with these designations can be an extremely valuable resource for you. These designations are robust. These are individuals that have:

  • Passed rigorous examinations (this isn’t just a Saturday conference at the Holiday Inn… we’re talking about hundreds of hours of study, days of proctored testing, where the material needs to be known cover-to-cover, and all finals are final).
  • Have met experience requirements.
  • Adhere to strict ethical standards (ie: providing advise in the interest of the client).

According to NAHU ( the National Association of Health Underwriters):

The Registered Health Underwriter® designation is the undisputed professional credential for persons involved in the sale and service of disability income and health insurance. Individuals earning the RHU designation demonstrate a high level of knowledge about the principles and practices governing the disability income and health insurance business.

Here are some additional facts and information about these professional designations:

  • The RHU® and REBC® designations are issued by the Solomon S. Huebner School at The American College in Bryn Mawr, Pennsylvania.
  • The American College is a regionally accredited institution (the highest level of accreditation in the United States).
  • The college offers several professional designations, two types of master’s degrees, and a PhD program.
  • It is a non-profit private school that was established in 1927.
  • Solomon S. Huebner (who founded The American College) was a professor at the University of Pennsylvania in the early 1900’s, and was a pioneer in the insurance industry. For more/additional information about Huebner, click here.
  • Although the University of Pennsylvania and The American College are completely separate institutions, the University of Pennsylvania maintains the prestigious S.S. Huebner Foundation and Geneva Association.

As illustrated, these professional designations can be an extremely valuable asset for someone seeking advice and consultation in the areas of health insurance and employee benefits. You can count on the information that you receive to be valuable, up-to-date, relevant, and ethical. In future blog posts, we’ll describe the specific skill sets and detailed knowledge that holders of the RHU® and REBC® designations have.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

Facebook: http://www.facebook.com/PolicyAdvantage

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5 Reasons to “Give Yourself the Advantage”

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There are a lot of great reasons to put a health benefits broker to work for yourself or your company these days. As health insurance planning (and the health benefits industry in general) continues to grow more complex… having an informed, knowledgeable, and up-to-date adviser on your team can be a really big advantage.

Here are 5 great reasons to “give yourself the advantage” today:

  1. Healthcare Reform is Fast Approaching: The major portions of healthcare reform (ObamaCare, ACA, the Affordable Care Act, or whatever you want to call it) are quickly approaching. We can’t emphasize this enough. Although it will take years to implement (and there will no-doubt be changes), you’ll want to make sure that you have a good understanding about what is coming up in 2014 (and beyond). Whether you’re an individual or business, if you “miss the boat,” it could end up costing you a lot of money. Contact us with questions today. **Update 1/1/2014: Healthcare reform is here.
  2. Health Insurance and Health Benefits are Complex: As the health insurance and health benefits “system” continues to grow larger, navigating this landscape can become an increasingly burdensome chore for the typical consumer. We’ve got great news for you: we know this industry well, and can help you navigate it. There’s not a better feeling than having an informed friend on your side, helping you with the ins-and-outs. Just check our growing list of customer testimonials.
  3. Save Money and Improve Coverage: Yes, you heard that right. Individuals and business owners take note: with just a few simple adjustments to your current program, you may be able to improve your coverage, and save money at the same time. How’s that for a home run? Having someone in your corner (who knows the industry well) can help you accomplish this. Consider it a “tune-up” for your health insurance program, free of charge. Example: a minor adjustment with a tax incentive here, then a simple adjustment to a physician network there… and boom. You’ve got better coverage at a cheaper price. Granted, improvement doesn’t happen every single time, but in many cases, it’s possible. Contact us to help you look it over.
  4. Valuable, Up-to-Date, Relevant Information: This is one of our big areas of emphasis at Policy Advantage Insurance Services. We know this industry changes. Sometimes quickly. We stay up-to-date with the information that we provide using a number of different strategies. The two big ones: A) Professional Designations (ie: the RHU®/Registered Health Underwriter® and REBC®/Registered Employee Benefits Consultant are the undisputed professional credentials in our industry). B) Information from our partnerships and affiliations (ie: insurance companies, third party administrators, and educational institutions). Companies like Kaiser Permanente, Cigna, United Healthcare, and others are constantly providing us with fresh information that we get out to our client base and readers. We take great pride in providing you with up-to-date info.
    •  
  1. Insurance Company Choices and Options: With a broker, you don’t just choose from one insurance company, you get to choose from many. A broker is like an “insurance store.” This can be very important for a number of different reasons. Physician and hospital networks vary from insurance company to insurance company. Insurance premiums may also vary. The structure and the way that managed care organizations (or MCOs) operate  can also vary considerably. These are all good reasons why it’s a good idea to give yourself some choices when it comes to health insurance companies.

As you can see above, you can “give yourself the advantage” today. Our number one priority are our clients and customers, and helping you navigate the complex world of health insurance and health benefits.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

Facebook: http://www.facebook.com/PolicyAdvantage

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Phrases Made Easy: “Full Time Equivalent Employees”

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Welcome back to another edition of “Phrases Made Easy.” This series at our blog aims to help make all of those long, drawn-out insurance phrases easier to understand. One thing we notice when talking about health insurance (and health benefits in general) is that the concepts can be “wordy” and boring. We emphasize fixing that here! Our biggest goal is to help you tune in, understand, and put this knowledge to work for yourself or your company. We’re firm believers that informed consumers can make a really-really big difference in our industry.

Here we go: today’s phrase is “Full Time Equivalent Employees.” *Note: this is a SUPER important concept for employers with regard to healthcare reform. That’s the overwhelming reason we picked this phrase today. You’ll want to understand this one in 2013 (ie: BEFORE 2014 gets here). So highlight it, share it, pass it along, circle it in red, underline it, etc. Do what you need to do to make sure that you “get it”… and help others get it too.

Phew… after that, you’re wondering: “WHY is this one so important?” That’s the best question we’ve heard all day. Here’s why:

  • “Full Time Equivalent Employees” is extremely important because it is the sole factor in healthcare reform that determines which employers are mandated to provide health insurance coverage, and which employers are not mandated to provide health insurance coverage. 

As a business owner, this is one that can cost you money if you don’t get it right (ie: tax penalties that can be fairly sizable). We won’t get into details here, but we’re talking thousands of dollars (and in larger cases, even hundreds of thousands of dollars). You want to make sure that you get this one right so that you’re: A) avoiding tax penalties, and B) planning correctly and efficiently. That’s why there’s more of a sense of urgency in this post.

Question: What are “Full Time Equivalent Employees?”

Answer: Full Time Equivalent Employees (FTE) are employees that do not work full-time (defined as 30 or more hours per week) in your business or organization, but do count towards the full-time equivalent employee count. In other words, YES… part-time employees do count towards your overall employee grand total.

Question: Why is this so important when it comes to healthcare reform?

Answer: As mentioned above, the “Full Time Equivalent Employee” count is what matters when deciding which employers are mandated to provide health insurance coverage to their employees. Furthermore, employers with 50 or more “full time equivalent employees” must provide adequate health insurance coverage to their employees.

Question: OK got it. So how do I calculate how my part-time employees count towards this “full time equivalent employee” total? 

Answer: The following is an example of how this is calculated. For sake of simplicity, this example uses part-time employees that work year round (seasonal employees working 120 days per year or less do not count towards the employee count). Here you go:

————————————————————————————————————

ABC Corp has 42 full-time employees (each working +30 hours per week)

ABC Corp also has 18 part-time employees (these 18 employees work 15 hours per week)

To calculate part-time workers’ full-time equivalent status, you add up all of the part time employees’ monthly hours, and divide by 120. So in this example:

  • 18 part-time employees x 15 hours per week = 270 total part-time hours per week in the company.
  • Then, 270 part-time hours x 4 weeks in the month = 1080 part-time hours per month in the company.
  • So, 1080/120 = 9

In this example, this company has 9 additional “full-time equivalent employees” through their part timers. Add 9 to your full-time employees (42+9), and you have 51 FTE employees. So although they only have 42 full time employees, they have 51 “full-time equivalent employees” based on their part-timers’ hours, and would be required to provide coverage.

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The moral of the story: part-time employees DO count towards your employee grand total, when you apply the phrase “Full Time Equivalent Employees.” If you have further questions about this concept please contact us any time. It’s extremely important for businesses that are at (or near) 50 “Full Time Equivalent Employees” status to understand it. Please share this blog post with companies you think would find this information important.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

Facebook: http://www.facebook.com/PolicyAdvantage

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Phrases Made Easy: “Indemnity Insurance Policy”

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Welcome back to another addition of “Phrases Made Easy” at our blog. Our goal with this blog series is to take all of those confusing and complicated insurance words, and make them easier for you to understand. At Policy Advantage Insurance Services, we feel that informed consumers can make a really big difference in our industry.

Today’s phrase is “Indemnity Insurance Policy.” The words “Insurance Policy” are easy to understand, but it’s the word “Indemnity” that has a tendency to hang people up. You’ll see it in many different insurance products; that’s one of the reasons we’ve selected this phrase. And we’ve got good news for you: this phrase is really simple.

NotRocketScience

So here we go. Here’s “Indemnity Insurance Policy” made easy:

An Indemnity Insurance Policy is an insurance policy that pays cash either directly to you (the policyholder), or to the provider (ie: someone like a doctor, dentist, or hospital). That’s all it is. It’s a cash payment from an insurance company.

There are various types of  insurance products that function as “Indemnity Insurance Policies.” We won’t list them all, but here are a few of the more common ones:

  • Dental Insurance: some dental plans will have a value assigned to each procedure. For example, a crown may pay $250. This would be the amount paid to either you, or the dentist.
  • Supplemental Health Insurance: many supplemental health insurance plans are written as “Indemnity Insurance Policies.” For example, a supplemental cancer plan may pay the policyholder $300 per day that they’re confined to a hospital in a cancer situation.
  • “Mini-Med” or Hospital Indemnity Insurance: these are insurance plans that are not comprehensive major medical plans (ie: an HMO or PPO). They are plans designed to reimburse the policyholder (or hospital) in the event of a hospitalization. For example, a “Hospital Indemnity Policy” may pay the policyholder $1000 per day that they are confined to a hospital. This money can help offset some of the expenses associated with a hospital stay.

Here are a few additional important notes about “Indemnity Insurance Policies”:

  • In most cases, the cash benefit needs to be assigned to either the policyholder or the service provider (ie: the dentist, doctor, hospital, etc).
  • The cash benefit may pay for all, or only a portion of the bills. For example, some dental indemnity plans may pay the entire bill from the dentist. However, in many cases, a hospital indemnity plan will not cover the entire cost of a hospital stay.
  • When it comes to indemnity insurance policies, there are typically no networks. This can be especially nice in dental situations, because the policyholder can select any dentist of their choice.

Thanks again for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/PolicyAdvantage

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Insurance Alphabet: Letter E

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E is for:

“Exchange”

GreyE

Exchange: When used as a noun, an exchange is a place where goods or services are bought or sold. In this blog post, we’re specifically referring to exchanges that sell major-medical health insurance policies. These are otherwise known as health insurance exchanges.

The reason that we’ve selected this topic is because you’re going to hear a lot about “exchanges” over the next few years (and into the future in general), when it comes to health insurance. There are two types of health insurance exchanges:

  1. Public Health Insurance Exchanges
  2. Private Health Insurance Exchanges

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A Public Health Insurance Exchange is an exchange that is set up, funded, and administered by the government. There are a combination of ways that this takes place:

  • A) State-only administered exchanges.
  • B) Joint state/federally administered exchanges.
  • and C) Exchanges administered by the federal government only.

Public Health Insurance Exchanges were a large part of healthcare reform (ACA/Obamacare). These are the new exchanges that are mandated by the law. The purpose of these exchanges is to help expand affordable coverage to the uninsured. The state exchange in California is called “Covered California.”

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A Private Health Insurance Exchange is an exchange that is set up, funded, and administered by private parties. In other words, the government is not involved (examples of private parties: employers and their employees).

There are a number of different strategies when setting up a Private Health Insurance Exchange. Most of these strategies revolve around the “defined contribution” health planning concept that we’ve discussed in past blog posts. This concept (defined contribution) is gaining importance as we move forward in health benefits planning. Third party administrators (or TPAs) facilitate the administration of Private Health Insurance Exchanges.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

YouTube: http://www.youtube.com/policyadvantage

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Benefits Chalk Talk: Integrated HRAs

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Welcome back to another edition of “Benefits Chalk Talk.” In this series at our blog, we provide you with valuable, up-to-date, relevant information about health benefits planning so that you can put the things in place that make the most sense for yourself or your company. At Policy Advantage Insurance Services, we feel that informed consumers can make a really big difference in our industry.

Today we’re talking about “Integrated HRAs.” If you’ve been reading our blog, you’ve heard about HRAs (or Health Reimbursement Arrangements) before. We’re a big proponent of them (HRAs in general) for a number of different reasons. They’re a very “money smart” concept when it comes to health benefits planning. If you want to understand more about the general nature of HRAs before moving on, you can read about them here.

As we’ve mentioned, HRAs are a great way to help employers retain funds that would normally go to insurance companies. There are many different ways to utilize HRAs. There are various strategies and ways to set up an HRA. This blog post is specifically geared towards explaining “Integrated HRAs.”

Question: What is an Integrated HRA? 

Answer: Integrate means to combine parts with another so that they become a whole. In the case of an Integrated HRA, there are two parts that are being combined:

  1. A group health insurance plan.
  2. A health reimbursement arrangement (HRA).

Question: What kind of group health insurance plan works with an HRA?

Answer: Any kind of group health insurance plan works with an HRA, as long it (the group health plan) conforms with PHS 2711 (no lifetime or annual limits, etc). Without getting into details that will confuse you, PHS 2711 is one of the big reasons that HRAs integrate so well with a group health insurance plan.

Question: Why would I want to “integrate” an HRA with a group health insurance plan?

Answer: The integration of an HRA with a group health insurance plan can allow an employer to retain funds that would normally go to insurance companies as premiums. In essence, it is a way for an employer to “partially self-fund” their group health plan. Example:

  • An employer puts in a higher deductible PPO (with the higher deductible, premium dollars are saved). The employer then “integrates” an HRA with the higher deductible group health plan to help cover the raised deductibles, co-payments, and other out of pocket expenses. In this example, premiums are lowered, and the additional out-of-pocket risk (higher deductibles and co-pays) are picked up by the employer, tax-free.

Question: How much money can I give to each of my employees in their HRA?

Answer: There is no limit on this amount, because it is integrated with the group health insurance plan (which cannot have annual or lifetime limits). You can decide the amount that you would like to give to each employee. It’s very budgetable. You can also tier your contributions (ie: managers get $200/month, and drivers get $150/month). There are many different ways that this can be set up. It’s very manageable; you can customize your contributions how you like. Contributions are also distributed tax-free by employees into “qualified medical expenses” through Section 105.

As you can see, when properly designed, an “Integrated HRA” can be a valuable and important employee health benefit. They are a very “money smart” concept to help employers save money, and provide quality health coverage. The Integrated HRA can be also considered another form of defined contribution health planning (because an employer is defining a contribution to an HRA).

If you have further questions about setting up an Integrated HRA, please contact us at any time. They’re very simple to administer. We work with a couple of different HRA third party administrators.

Thanks for stopping by, we hope you found our information to be valuable. Check back at our blog to get further information about funding healthcare. Also, please share with your friends, clients, colleagues, and family. Here are a few of our other information outlets:

Home Page: https://policyadvantage.com

Twitter: http://www.twitter.com/policyadvantage

Facebook: http://www.facebook.com/policyadvantage

YouTube: http://www.youtube.com/policyadvantage

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Phrases Made Easy: “Guaranteed Issue”

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Welcome back to another edition of our blog series “Phrases Made Easy.” Generally speaking… insurance phrases, words, and concepts can sometimes be difficult to understand. Our goal is to make all of those long, drawn-out phrases easier to understand. We feel that informed consumers can make a really big difference in our industry.

Today we picked the phrase “Guaranteed Issue.” The reason that we picked this phrase is because starting on January 1st, 2014 all health insurance policies must be written as “guaranteed issue” policies. When we refer to health insurance, we’re talking about major medical (ie: HMO/PPO) policies. Products like supplemental health insurance, dental, vision, long term care, etc are not required to be “guaranteed issue.”

Easy

The first thing we’ll do is give you the longer definition of “guaranteed issue.” That way, the shorter and easier version will be really simple. Here’s the long definition of “guaranteed issue”:

Guaranteed issue is a term used in health insurance to describe a situation where a policy is offered to any eligible applicant without regard to health status. Often this is the result of guaranteed issue statutes regarding how health insurance may be sold, typically to provide a means for people with pre-existing conditions the ability to obtain health insurance of some kind.

Now that you know the longer definition of “guaranteed issue,” here is the simple version: if you apply for health insurance coverage, you must be accepted. It’s very simple, that’s all it is.

Here are some additional notes on guaranteed issue coverage:

  • All plans from all carriers must be “guaranteed issue” nationwide starting on January 1st, 2014
  • The “guaranteed issue” mandate applies to plans both inside and outside of state health insurance exchanges

“Guaranteed Issue” will take some “getting-use-to” by the public. When this concept is mentioned to our clients and potential clients, they still have a difficult time comprehending it. However, this is correct: regardless of your health status (any pre-existing conditions), you must be accepted for health insurance coverage if you apply for coverage starting on January 1st, 2014.

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