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Kristi Rodriguez

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'Obamacare' Enrollment Season Is Here

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The open enrollment period for 2023 individual major medical insurance rumbled to life today — and gives agents and advisors a new chance to talk to clients about prices, inflation and long-term financial planning.

Average premiums on benchmark coverage available through HealthCare.gov — the site created under the health care legislation dubbed Obamacare — will increase 4% next year, after falling an average of about 3% this year, according to the Centers for Medicare and Medicaid Services.

The Nationwide retirement research arm reported last week that 24% of the 1,140 U.S. adults it surveyed have reduced, or are preparing to reduce, retirement plan contributions because of health care expenses.

Kristi Rodriguez, a senior vice president at Nationwide Financial, says the high, and unpredictable, cost of health care gives financial professionals a chance to get clients’ and prospects’ attention.

Many people “are terrified about what rising health care expenses could mean for their retirement plans,” Rodriguez

The Background

Congress created the Affordable Care Act public exchange system, which is known to the general public as “Obamacare,” in an effort to encourage young, healthy people to sign up for private health coverage and hold down the premiums by lowering the overall average claims.

The exchange is supposed to provide a “Travelocity for health insurance.”

Originally, ACA drafters expected each state to run its own state-based exchange. Eighteen states now manage and run their own exchanges.

The Centers for Medicare and Medicaid Services set up HealthCare.gov to provide exchange services in states that were unwilling or unable to do that. HealthCare.gov now runs the ACA exchange programs in 30 states and administers exchange programs for three other states.

Exchange managers, insurers and regulators developed the enrollment period calendar system, or restrictions on when people can sign up for coverage without showing they have what the government classifies as a good reason to be signing up for coverage, in an effort to push healthy people to pay for coverage even when they do not expect to need health care.

The individual major medical open enrollment period will run from today through Jan. 15, 2023, in states that use HealthCare.gov to run or administer their exchange programs.

Other states can set their own enrollment period dates.

States usually use the same enrollment calendar for individual coverage sold outside the ACA exchange system, to avoid pushing sicker people toward, or away from, exchange plans.

The individual major medical open enrollment period is separate from the Medicare Advantage plan and Medicare Part D prescription drug plan annual election period, which runs from Oct. 15 through Dec. 7.

CMS has posted public exchange resources aimed at brokers and agents here.

A Georgetown University health policy arm, the Center on Health Insurance Reforms, has posted a guide aimed at non-agent public exchange guides, or navigators, here.

Early Indicators

There are early signs that enrollment activity for 2023 could be at least as strong as 2022 enrollment activity was.

HealthCare.gov had registered 64,848 individual health insurance agents and brokers for this enrollment period as of Monday, up 19% from the number it had registered by Oct. 31, 2021, and up 35% from the number it had registered by Oct. 31, 2020.

Google Trends, a website that provides summaries of Google search activity data, shows that search activity for health insurance enrollment-related terms such as “HealthCare.gov” has been about the same in the past week as it was before the start of the enrollment period for 2022 coverage.

More Reasons to Track It

Many life, annuity and retirement professionals got their start in health insurance sales, then gave up on major medical insurance for people 65 when implementation of the Affordable Care Act framework changed the products and slashed compensation for producers in the individual market.

Here are five reasons why companies like Nationwide are still showing an interest in major medical insurance.

1. Some clients get their health coverage that way.

Even in the income range for people with income over 400% of the federal poverty level, or $54,360 for an individual and $111,000 for a family of four in most of the country, 4.9% of adults ages 18 through 64 were uninsured when a government survey team interviewed them in 2020, and 6.6%, were paying for their own, directly purchased health coverage, according to the U.S. Centers for Disease Control and Prevention.

Some of the people who bought their own coverage obtained coverage through the ACA exchange system, and some bought individual coverage through the off-exchange market.

Access to individual coverage, purchased on or off the exchange, is especially important to the kinds of self-employed people who are candidates for using the kinds of life insurance policies, disability insurance policies, retirement plans and estate planning services aimed at self-employed clients.

2. It has created enormous health coverage distribution organizations.

About 14.5 million had signed up for 2023 health coverage through the ACA public exchange system as of January 2022, according to CMS data.

Publicly traded private web brokers have suggested that their health insurance customer relationships have a lifetime value of about $1,000 each. That suggests that the ACA public exchange programs may have enrollee relationships with a value of more than $14 billion.

HealthCare.gov has about 10 million enrollee relationships and an estimated client relationship valuy=e of about $10 billion.

The biggest state-based exchange has about 1.8 million enrollee relationships, and about $1.8 billion in enrollee relationship value.

Virginia is the latest state to begin the process of setting up its own, state-based ACA exchange. The state’s State Corporation Commission recently hired GetInsured, a company that sets up and runs exchanges for other states, to get an exchange website up and running for Virginia by fall 2023.

This year, Virginia is still using HealthCare.gov to administer its exchange program.

States with their own state-based exchanges suddenly have to think about how to persuade people to sign up and pay for health coverage, and to think about how public health insurance and financial services organization get and keep customers.

3. It increases state and federal officials’ interest in agents and brokers.

The Affordable Care Act framework helps lead government officials to think of agents and brokers as consumer outreach partners, as well as professionals to supervise.

State-based exchanges like Covered California, Connect for Health Colorado and Your Health Idaho have large agent and broker outreach organizations, and they have said they get about half of their sales through relationships with agents and brokers.

HealthCare.gov officials have not talked much about their distribution channels, but Health Agents for America posted a slidedeck showing a HealthCare.gov estimate that about 44% of its 2019 enrollees came in through agents and brokers.

4. It continues to be a source of uncertainty in Washington.

In the past, the U.S. Supreme Court has kept the Affordable Care Act framework in place.

The court rejected a challenge to the constitutionality of the ACA in June 2021, by arguing that the plaintiffs had no standing to bring their suit.

In the future, however, ACA opponents in Congress, or plaintiffs who oppose the ACA and have better cases, could find ways to kill part or all of the ACA.

Any sudden changes in the ACA framework could create enormous, all-hands-on-deck demand for services to help clients respond to sudden changes in health insurance subsidies, products and underwriting standards.

5. It could spawn new asset management vehicles and advisory opportunities.

The health savings account program has already given advisors to help employers and some individual clients set up their accounts for paying for health care-related products and services.

Because of a collision of policymaker goals and efforts to hold down federal budget deficits, the HSA program has many requirements that limit program use.

One rule requires HSA holders to use the accounts with high-deductible health plans that meet HSA program requirements.

Another rule blocks HSA holders from using the account assets to pay health insurance premiums.

Workers can use the value in two other, new types of account, the individual coverage health reimbursement arrangement and the qualified small employer health reimbursement arrangement, to pay for their own health coverage.

The ICHRA program is just starting, but contribution levels at employers that do have ICHRAs are high: PeopleKeep surveyed employers with ICHRAs and found that employers were contributing an average of $981 per month to employee ICHRAs in the 12-month period ending June 30, up 11% from the average for preceding 12-month period.

Today, health reimbursement account value belongs to the employer.

Republican opponents of the ACA framework have often proposed replacing it or improving it by creating new health account programs.

Sen. Ben Sasse, R-Neb., for example, has introduced S. 2113, the Qualified Health Savings Account Distribution Act of 2021 bill. That bill would let workers move account value from flexible spending arrangements and HRAs into HSAs.

Rep. Matt Rosendale Sr., R-Mont., has introduced H.R. 2808, the Health Freedom and Flexibility Act bill. One provision in that bill would let workers use HSA money to pay for individual major medical insurance premiums.

That means any conversations in Washington about changing the ACA framework could create openings for agents and advisors to give clients more help with health accounts and could lead to increases in health-account assets under management.

Kristi Rodriguez. (Photo: Nationwide)


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