Tag Archives: group health insurance

Commercial health insurance: Overview of 2016 financial results and emerging enrollment and premium data

In this report, Milliman’s Paul Houchens, Jason Clarkson, and Jason Melek provide a detailed review of the commercial health insurance industry’s financial results in 2016 and evaluate changes in the market’s expense structure and enrollment prior to relative years. They also provide enrollment and Advanced Premium Tax Credits estimates for 2017.

Five ways the Amazon/Berkshire Hathaway/JPMorgan Chase deal could change healthcare in the U.S.

This week, Amazon, Berkshire Hathaway, and JPMorgan Chase announced plans to join forces in order to provide their U.S. employees with healthcare solutions that are “simplified, high-quality and transparent.” Large employers are growing increasingly frustrated with the challenge of providing their employees with affordable, high quality healthcare, and the announcement has many speculating that the partnership could disrupt the U.S. market.

Amazon, Berkshire Hathaway, and Chase bring a fascinating blend of perspectives to this area. And while we don’t know exactly how they will transform healthcare, we do have ideas of what could be possible (imagine a world where insurance claims might be a thing of the past). In this article, Milliman experts explore the ways in which healthcare could change as a result of this venture.

Commercial health insurance financial results provide insight into ACA program stability

Milliman has released its annual report on the commercial health insurance market’s financial results, which provides a clear picture of health insurers’ financial experience in a given year. The report, based on medical loss ratio data submitted to the Centers for Medicare and Medicaid Services (CMS) and released in the fall of 2016, provides a final accounting of insurers’ financial results after “3R” transfer payments have been completed. Today’s report details results for 2015, the second full year of implementation of the Patient Protection and Affordable Care Act (ACA). The report also summarizes estimated effectuated insurance marketplace enrollment through 2016 and corresponding federal expenditures on premium and cost-sharing assistance. As the United States approaches a potential new round of healthcare reform, Milliman’s report is a helpful tool in analyzing the effect of current ACA financial assistance components to consumers and the impact on the health insurance industry from the insurance marketplaces and “3R” programs.

Key takeaways from Milliman’s report include:

• Underwriting margins in the individual market deteriorated from a 6.0% earned premium loss in 2014 to a 9.6% loss in 2015. The 2015 underwriting losses were due in large part to the risk corridor program funding shortfall.
• With no funding currently scheduled, the cumulative risk corridor payment shortfall has reached $8.3 billion, with nearly 90% owed to insurers in the individual market.
• Since 2013, individual market enrollment has increased from 10.9 million to 17.5 million, driven by the introduction of the insurance marketplaces and associated premium assistance. Conversely, the fully insured small group enrollment has shrunk from 17.3 million to 14.7 million, which is attributable primarily to fewer small employers offering coverage.
• The insurance marketplaces continued to take on a greater role in the individual health insurance market, with 56% of estimated 2016 market-wide enrollment attributable to coverage purchased in the marketplaces, relative to only 36% in 2014.
• From 2014 to 2016, the percentage of individual market enrollees receiving premium assistance has increased from 31% to 47%. Similarly, enrollment in cost-sharing reduction plans is estimated to have increased from 21% to 32% of national individual market enrollment.

Milliman’s overview of financial results provides a comprehensive look at insurers’ financial experience as well as the number of Americans impacted by marketplace subsidies under the ACA. As new healthcare proposals are debated in Washington, we believe this report provides a valuable tool for policymakers and insurers looking to better understand how insurance markets may react to future regulatory and legislative changes.

To receive regular updates of Milliman’s healthcare reports, contact us at here.

2014 commercial health insurance: Overview of financial results

The commercial health insurance markets in the United States in 2014 experienced a significant change relative to prior years. These changes were most dramatic in the individual health insurance market, with the conversion from medical underwriting to adjusted community rating in many states, as well as the implementation of the federal and state insurance marketplaces, facilitating premium assistance to many Americans who were previously uninsured. The 2014 edition of Milliman’s annual report on the commercial health insurance market provides an overview of financial results in the individual and group insurance markets. The report also focuses on enrollment changes in the individual market and the impact of the Patient Protection and Affordable Care Act of 2010’s (ACA) risk adjustment and risk corridor programs.

Mid-market group medical plan trends

Based on an analysis conducted by Milliman’s Terry Bierman and Sarah Coates, the following three trends have emerged in mid-market group medical plans the last 10 years.

1. Consumer-driven health plans (CDHPs) have become more prevalent.
2. Changes in plan designs have shifted more out-of-pocket expenses to employees.
3. Premiums have outpaced inflation, but the percentage of that premium paid by employees electing single coverage has remained relatively constant.

To learn more about the development of these trends, read Bierman and Coates healthcare reform paper entitled “The changing employer-sponsored group medical plan.”

On track to have Social Security numbers for group health plan reporting?

Employers that sponsor group health plans are reminded that the Patient Protection and Affordable Care Act (ACA) requires the reporting of employees’ minimum essential coverage for calendar year 2015 and that doing so will necessitate the collection of taxpayer identification numbers (TINs) for all covered individuals, including employees and their dependents. Although the statements for 2015 must be furnished to individuals by Feb. 1, 2016, and filed with the IRS by Feb. 29, 2016 (paper) or March 31, 2016 (electronically), the requesting of Social Security numbers (SSNs) needs to begin now.

Under tax code section 6055 reporting, employers (or parties reporting on behalf of employers) are required to report TINs for all covered individuals. In most cases, TINs are the individuals’ SSNs. This reporting will enable the IRS to confirm that the individuals have minimum essential coverage and are not subject to the penalty for not having appropriate health insurance. The IRS will match the information about dependents on individuals’ tax returns (e.g., Form 1040) with the names and TINs reported by employers. (See also Client Action Bulletin 14-4R)

As reporting entities, group health plan sponsors must make reasonable efforts to obtain TINs, and may do so via oral, written, or electronic means. The efforts should be documented. The IRS’s final rule, issued in March 2014, outlined the following general steps as a reasonable effort:

• Make an initial solicitation for the TIN at the time the relationship with the employee is established, such as at initial enrollment or upon hire, unless the reporting entity already has the employee’s TIN and uses that TIN for all relationships with the employee.
• If TINs are not received at that initial solicitation, the first annual solicitation is generally required by Dec. 31 of the year in which the relationship with the employee began (Jan. 31 of the following year if the relationship begins in December).
• If the TINs are still not provided, a second solicitation is required by Dec. 31 of the following year.
• If at this point the TINs are still not provided, the reporting entity has acted in a responsible manner and need not continue to solicit TINs for those individuals.

A failure to receive a TIN does not authorize the employer to terminate coverage. Reporting entities also are permitted to voluntarily report TINs for individuals not enrolled in coverage.

The final rule allows for the reporting of dates of birth in lieu of TINs, but only if the reporting entity is either informed that an individual has no TIN or unable to obtain a TIN after making the aforementioned reasonable efforts. In addition, if an employee adds a new dependent, the employer must again take reasonable efforts to obtain a TIN for that new dependent. Renewed efforts to solicit TINs for individuals already covered are not required.

Employers may use truncated taxpayer identification numbers in lieu of the full identification number when providing the information to the employee. A TIN is truncated when the first five of the nine digits are replaced by asterisks or X marks (e.g., 123-45-6789 becomes XXX-XX-6789). The full TIN must be used in the forms submitted to the IRS.

Noncompliance with the section 6055 reporting requirements subjects the employer to the penalties for a failure to file correct information return and/or for a failure to furnish correct employee statements. The IRS will grant temporary relief from these penalties for incorrect or incomplete information reported on returns and statements filed and furnished in 2016 (relating to coverage in 2015), but only for entities that can demonstrate they made good faith efforts to comply with the requirements.

For additional information about the 6055 information reporting requirements, please contact your Milliman consultant.