A Season of Surprises in Health Care

The Zombies sing, “It’s the time of the season for loving,” but this year employers and employees are not loving insurance carriers, and the lyrics could be changed to, “It’s the time for a season of surprises.” Under the Affordable Care Act, 80 percent of small employers had to renew their plans by Dec. 1, followed by open enrollment for their employees. It’s a less-than-magical annual opportunity to choose a new plan or stick with your existing health insurance, and it was made even more dicey this year as the law’s unintended consequences created a long list of surprises. They come in the form of the new plans and benefits. This year, 95 percent of all companies moved to the new ACA-compliant plans. In addition, insurance carriers could not handle the volume of renewing and new groups, causing employees to stress over not having ID cards and access to coverage. That caused their employers headaches. ACA benefit surprises also included higher co-pays and out-of-pocket costs, increased drug costs, new limited provider networks and smaller lists of approved drugs. At my employee benefits agency, a client in Van Nuys with 20 employees saw its renewal cost drop by 5 percent and on the surface looked great until the employees looked at the benefits. Office visit co-pays that used to cost $30 now cost $40 and $60, and the out-of-pocket annual maximum rose from $3,000 to $6,250. Prescription drugs that used to run $10 for generics and $25 for brand names are now $15 and $50, respectively, while nonpreferred drugs went from $40 to $70. Surprise! Employers are concerned about premium cost increases but the decrease in benefits also causes employees grief. Often, they find the Affordable Care Act is not affordable for them to seek medical services. The deduction per paycheck might go down but office visit costs could double. And if you get really sick and go to the hospital, you’re on the hook for an extra $3,250 or more. Another client in Chatsworth with 40 employees wanted to keep its costs level and not increase the costs for employees so the company decided to look at some of the limited-provider network plans. Although Kaiser has one HMO network, the other carriers have three to five different networks. Surprise! The employees had to choose new medical groups and new primary care physicians. President Barak Obama said, “If you like your doctor, you will be able to keep your doctor, period.” Unless your employer changes the HMO network. The other major surprise this year is the list of drugs covered by the major insurance carriers. Under ACA, carriers can lower the number of drugs on their lists as long as they have drugs in each category. Anthem Blue Cross and Blue Shield in California now have drug lists that are much smaller than last year. One used to have 500 drugs on their list, and now – surprise! – it is down to 300. Carriers usually know how many companies renew Dec. 1 and some later by Jan. 1 and plan for the volume. This year, some were unprepared for the barrage of renewals and companies changing carriers. The processing times for group approvals were much longer than usual and after a group was approved there were delays in individual employees obtaining identification numbers. We have one client in Encino with 33 employees that was changing carriers Jan. 1. We submitted its applications Dec. 15, which used to be plenty of time for a Jan. 1 effective date. This carrier did not even approve the company until Jan. 8 and employees did not receive their ID numbers until Jan. 12. Surprise again! This carrier outsourced the data entry for new employees and changes into the computer system and the contractor closed for two weeks during the holidays. I hope the insurance executive who had this great idea no longer has a job. This open enrollment period is the season for surprises, and I’m looking forward to Valentine’s Day so I can go back to the season of loving. Barry Cohn is president of Really Great Employee Benefits in Canoga Park.