December 2006

IEEE Association Medical Plan Caught in U.S. Dilemma

Part Two of a Two-Part Series

By Trudy E. Bell

[For essential introductory background, see Part One (October 2006) at http://www.todaysengineer.org/2006/Oct/Medical_plan.asp]

Well, the other shoe has dropped.

On 7 November, CIGNA mailed certified letters to all the participants in IEEE's member group comprehensive health care insurance plan (available only to U.S. members), which is underwritten by CIGNA, a global insurance company that has earned an A- rating from A. M. Best.

The bad news is: Effective 1 January 2007, benefits will be cut; rates will rise again; and the plan is now closed to new participants.

The good news is: The IEEE is dedicating extraordinary effort to help find new health-insurance options for members and their families. "The last few years, the IEEE Insurance Committee has agonized how to preserve the program and protect members," said James Breeding, a professional risk manager and Chair of the IEEE Insurance Committee since 2005. "We have gone to great lengths to find another player to take over the program from CIGNA, with no success," he noted. At this time CIGNA cannot close the plan unless the plan group shrinks to fewer than 50 persons insured.

The IEEE has set up a Web site with general information, as well as a member hotline to broker/administrator Marsh Affinity Group Services to answer questions and assist members in deciding the best course of action for their individual family situations. Marsh has also partnered with Extend Benefits Group, LLC, a health insurance management company, to help those members remaining in the Comprehensive HealthCare Plan explore other health care options.

No Sugar Coating

In two charts, CIGNA summarizes the entire dramatic situation. One compares current coverage with the benefits that will be in effect as of 1 January  (www.ebview.com/pdfgenerator/ViewPdf/IEEE_CDHC/chc_plan_comparison.pdf). The other elaborates all the benefits effective 1 January for both in-network and out-of-network physicians (www.ebview.com/pdfgenerator/ViewPdf/IEEE_CDHC/ER_summary.pdf ).

In summary, the highlights are:

• Higher deductibles (between double and sextuple, depending on a member's current plan and physician network);

• Higher annual out-of-pocket maximums (between double and quintuple, depending on a member's current plan and physician network);

• Lifetime maximum coverage of $1 million (down from no lifetime maximum, but meter won't start running until 1 January 2007);

• Prescription drug benefits will change from co-payments to co-insurance, where participants pay a percentage of actual cost instead of a fixed co-pay;

• Health Savings Accounts (HSAs) will cease to exist, although you may continue to pay medical bills with funds you have accumulated prior to 1 Janaury 2007. After 1 January, you will no longer be able to make contributions to your HSA, unless you procure a non-IEEE health care plan that is HSA-qualified.

• Coverage will cease for members who are eligible for Medicare, as well as for their spouses (more on this below).

Moreover, from January onward, CIGNA will be assessing the financial situation of the plan monthly. It may re-rate the plan at any time, either if claims paid exceed premiums collected, or if the number of participants changes by 15 percent. In other words, premiums may not stay fixed for an entire year, as they have in the past; indeed, rate hikes could be made retroactive.

"The IEEE Board of Directors recognizes that the new, high deductible, coupled with an environment in which rates for the plan could be changing as frequently as monthly, causes the plan to be of greatly reduced value as a member benefit," the certified letter read. "Therefore, the Board has decided to no longer accept applications for new participants in the plan. (bold emphasis is in the original)" For additional information on the benefit changes, history of the IEEE Comprehensive HealthCare Plan, or HIPAA guidelines and how it affects you, please visit www.ieeeinsurance.com.

One of the steps taken by the IEEE's committees to mitigate the impact of CIGNA's mandated changes to coverage is to amend the eligibility for IEEE's group plan: as of 1 January, it will exclude the Medicare-eligible. "That sounds harsh, but it's really doing them a favor so they are not trapped in the plan," explained Martin Greubel, Vice President of Marsh Affinity Group Services, IEEE's insurance broker/administrator. If Medicare-eligible participants voluntarily leave a health-insurance plan that coordinates with Medicare, to get a Medicare Supplement plan they must be underwritten (meaning every participant had to undergo a thorough review of past medical history and possible a physical exam) — which may mean higher rates or outright declination if they have a preexisting condition. But if they leave involuntarily — such as being excluded from coverage — and have six months or more of creditable coverage, then an insurance carrier offering Medicare Supplements must accept them without underwriting. "The same is true of Medicare Part D for drug reimbursements," Greubel added. "If you exit an a health insurance program through no fault of your own, you can enroll in Medicare Part D without monetary penalty or waiting until the next enrollment period."

Questions, Questions

"The big question on the minds of members who are still insured by the CIGNA plan is "what happens next?'" said Lynn Koblin, manager of IEEE Member Benefits. IEEE Member Benefits is monitoring the insurance plan to gauge the best way to meet the needs of insured members. "Marsh and CIGNA are advising IEEE about members' phone calls and comments in response to the 2007 plan changes outlined in the certified letters. IEEE staff are also receiving member reactions," she said.

"In the first quarter of 2007, the IEEE Insurance Committee, the Individual Benefits and Services Committee, and the Executive Committee of the IEEE Board of Directors will be advised exactly how many members migrated out of the plan, and the status of those who remain," Koblin continued. "If the committees perceive that most members will be best served by closing the plan, then IEEE can accomplish this."

The plan was not immediately terminated by the IEEE, because some participants may still want the revised coverage, and the IEEE certainly wants to give all the participants the opportunity to assess their situation. "Attrition from the plan, comments from insured members, and the ongoing financial condition of the plan will all be considered by the Insurance Committee and the Individual Benefits and Services Committee, who agree that the priority is to proceed with caution and compassion for all affected members," she noted.

If the IEEE terminates the plan, then all the insureds who have had at least 18 months of creditable coverage will be able to become insured in individual policies available on the market. Updates to this evolving situation will be posted at www.ieeeinsurance.com.

So What Is a Member to Do?

What if you are currently in the CIGNA plan or are in need of health insurance?

First, thoroughly research the coverage options. IEEE Member Benefits have set up online resources to allow members to explore alternative options through online tools at www.ExtendBenefits.com and www.ehealthinsurance.com. Once you feel you have narrowed down your options to two or three health plan options that seem appropriate, call Marsh Affinity at +1 800 493 4333 to request a call from an Extend Benefits representative. (The IEEE has arranged that individual members can discuss personal situations at no charge and no obligation with this health insurance specialty company.) Also, be sure to consult your own personal local insurance agent. Either Extend Benefits or your local health insurance agent can help you not only with the final decision but also with the application process.

To research the cost of medical insurance premiums for your specific situation, in most cases you can receive a quote by providing a minimal amount of medical information. One important fact to remember: when you receive an initial quote for coverage (prior to filling out an application), you will be quoted the standard rate for that product; the actual rate you will be offered may be higher if you have a significant medical history. Or it's possible you can even be declined coverage. Equally important, once you are offered a rate for your own policy, an individual or family cannot be singled out for a future rate action.

Moreover, if one carrier declines you for coverage, it's likely that other insurers in your state may also. Although there is no communication between insurance carriers about applicants, the criteria that carriers use to accept, rerate or decline are very similar. If you are declined for coverage, an insurance carrier must provide you with the reason for the declination. Useful tip: Sometimes, pre-existing health conditions do not result in declination for all medical coverage; the carrier may exclude that one specific condition temporarily or permanently (known in the insurance business as a rider), while offering full coverage for all other health circumstances.

If you find yourself unable to procure coverage from the carriers in your state, then find out whether your state has a state-sponsored health insurance plan, also known as high-risk pools. In general, but not always, the rates for the state plans will be more expensive than the health plans offered in the general market place, or may offer more limited benefits. But don't despair. Although a state high-risk pool may be your only option at this time, should your medical condition improve or resolve, then you may possibly qualify for coverage offered by a different carrier in your state in the future. To explore options for the state-sponsored health plans, speak with a representative at Extend Benefits or your local health insurance agent. If you would like to research state plan options on your own, www.ieeeinsurance.com will direct you to links to those states that have a web site devoted to the options offered. Useful tip: All family members do not need to be on the same policy. It may be to your financial and coverage advantage to consider obtaining coverage for healthier family members on one plan, and placing the difficult-to-insure family member on a separate policy.

For those persons planning to continue CIGNA coverage with the IEEE Comprehensive HealthCare Plan you may wish to consider several options for supplementing your coverage. Hospital Income Plans (HIP) provide cash payable directly to the owner of the policy in the event of hospitalization, or, in some instances, home recovery. Consider adding additional disability coverage or accident-only insurance. These products may help offset the increase in deductibles and out of pocket expenses. Again, however, each individual's situation is different, so thoroughly research the options to determine if they are appropriate.

IEEE Members who are self-employed, but who have no employees, are generally treated as individuals for health insurance. A few states, however, do permit groups of one, which would be guarantee-issue insurance, meaning that no one could be turned away for medical problems or preexisting conditions (although premiums may be high). For groups of two or more, an employer can obtain a group policy which can be either a defined contribution plan or a guarantee-issue plan, for higher premium. Extend Benefits is a specialist in small employer group plans, and their advice can be of assistance to IEEE members owning their own firms.

At the time of this writing, extensive resources pertaining to the CIGNA insurance program are posted on the www.ieeeinsurance.com. Updates, changes, or deletions to these links may occur in the future. Members of the IEEE who have personal questions not answered by this site may call the insurance administrator, Marsh Affinity at +1 800 493 4333 (where they may also request a call from Extend Benefits), or contact the IEEE Financial Advantage Program department at fap-team@ieee.org.

Trudy E. Bell, senior editor for IEEE Spectrum magazine from 1983 to 1997, and the lead writer for IEEE's millennium book Engineering Tomorrow (with Dave Dooling, edited by Janie Fouke, IEEE Press 2000), writes frequently for The Institute, Spectrum and Today's Engineer.