Why Pay For Health Insurance For Those That Don’t Need It?

A Hidden Nugget In The Affordable Care Act

By Bill Rusteberg

A Plan Sponsor may be wise to consider a risk transfer strategy through a program created by the Affordable Care Act but which few plan sponsors are aware of.

Financial Assistance Policies (FAP) were created under the Affordable Care Act to address medical debt and increase transparency and are overseen by the Internal Revenue Service. Non-profit hospitals are required to have a financial assistance policy for emergent, non-elective services, providing up to free hospital care for patients whose income meets certain levels and must be available to all patients, regardless of their insurance coverage.

Many for-profit hospitals have Financial Assistance Policies too.

Typically, assistance is available for incomes of less than 350 – 600 percent of the Federal Poverty Level (FPL) (See federal poverty guidelines ) and can range from fairly generous to a bare minimum.

An example of a Financial Assistance Program can be found at Methodist’s eight hospital locations in San Antonio and Boerne, Texas. Patients that fall below 200 percent of the federal poverty guidelines receive 100 percent of their bill forgiven. Other discounts ranging from 40 to 90 percent apply if the patient’s total household income is over 200 percent and not more than 500 percent of the federal poverty guidelines.

A Plan Sponsor may be wise to consider a risk transfer strategy for those plan members who qualify for financial assistance, a program created by the Affordable Care Act that few plan sponsors are aware of.

A benefit plan can be designed to offer qualified members access to a full range of health care services including prescription drugs, primary care, specialty care combined with a limited indemnity benefit for all hospital related encounters. This benefit structure would effectively transfer most hospital related risk exposure to a hospital’s financial assistance program and would enable hospitals to fulfill their charitable mission.

In the case of San Antonio employers, a benefit plan can be structured around the Methodist hospital system encompassing eight locations throughout the area. (Methodist Hospital, Methodist Children’s Hospital, Methodist Hospital Metropolitan, Methodist Hospital Northeast, Methodist Hospital Specialty and Transplant, Methodist Hospital Stone Oak, Methodist Hospital Texsan, and Methodist Hospital South).

Another geographic area conducive to this strategy is the Scott & White service areas which has a more generous FAP than does Methodist.

A FAP benefit program can be added to any exiting benefit plan as a core benefit or part of a dual option. For example those employees who cannot afford family coverage may benefit by enrolling their dependents in what would be a very low cost FAP plan.

This strategy is ready to be put to work through a trusted third party intermediary who recognized it’s potential  some time ago and is standing by to assist plan sponsors towards that end.

Necessity drives imagination 

RiskManagers.us is a specialty company in the benefits market that, while not an insurance company, works directly with health entities, medical providers, and businesses to identify and develop cost effective benefits packages, emphasizing transparency and fairness in direct reimbursement compensation methods.