From Cost-Sharing to Rebates to Premium Relief: Health Insurers Look for Ways to Provide Relief During COVID-19
With shelter-in-place orders and work from home (WFH) policies in place for much of the year due to the ongoing COVID-19 pandemic and ensuing public health crisis, people have been leaving the house less and also delaying medical care. A lower than anticipated use of health insurance has led to record-high profits for health insurers. It is in this same environment that many people are struggling financially due to the economic fallout from the pandemic. There has been mounting public pressure for payers to give back and help, while also keeping members insured.
While we read (and saw ads and commercials for) auto insurers like State Farm and Allstate and how they are giving money back to their customers to share some of the savings, we know that healthcare works a bit differently. If health plans do not meet their medical loss ratio under the Affordable Care Act (ACA), they must issue rebates to individual policyholders or employer groups. For 2019, the health insurance industry paid out record-high rebates, reported the Kaiser Family Foundation. The numbers for 2020 could be more than double those numbers!
While rebates are designed to be paid out for the benefit of customers, a Forbes article observed that this process is not happening fast enough, given the current crisis. It is against this backdrop that the U.S. Department of Health and Human Services (HHS) urged companies to both reduce premiums and speed up the rebate process. Temporary authorization from the Centers for Medicare and Medicaid Services (CMS) allowed payers to use premium credits to temporarily lower the individual and small group exchange premiums for 2020.
Back in March, we wrote about how some health plans went above and beyond delivering great service to really amplify the overall customer experience. A few months later, based on lower claim totals, rising profits and policy changes, we wanted to check in on how health plans are countering revenues (and offering relief) during COVID-19.
- Cost sharing waivers – According to the Kaiser Family Foundation (KFF), many health insurers (about 88% of individual and fully insured group plans) are offering cost-sharing waivers for COVID-19 treatments.
- Premium relief – Although this is much less common, the KFF says that nearly one-fourth of individual and fully insured group plans offered premium credits or reductions.
- Payment grace periods – The KFF report also says that 7% of health insurers provided grace periods where consumers would not be penalized for paying their premiums on time. These numbers were all current as of late July 2020.
More specifically, here are a few examples of what individual payers have done to return premium revenue to members:
- Anthem is providing $2.5 billion in financial assistance for both providers and members.
- Many of the Blues have provided premium credits to employer-based customers, individual policyholders and small business groups.
- BlueCross Blue Shield of Massachusetts (BCBS MA) is giving Medicare Advantage members a one-month “premium holiday” before the end of 2020.
- Blue Cross & Blue Shield of Rhode Island provided a 25% dental premium credit for fully insured customers and is extended teledentistry services with in-network dentists.
- Harvard Pilgrim Health Care issued $32 million in premium credits to fully insured employer groups and Medicare supplement members.
- Priority Health issued premium credits for individual plan and small group employer policyholders. They also plan on giving large, fully funded employer groups premium credits in Q4.
- UCare is discounting premiums for about 100,000 seniors in its Medicare Advantage health plans.
Note that polices vary by insurer. While these are just a few specific examples of what health insurers are doing to counter soaring revenues in 2020, the KFF predicts overall that premium rebates should hit a record $2.7 billion this fall. As previously mentioned, this is double the amount of last year, which was a record at that time. We know that COVID-19 will continue to create ripple effects within the healthcare industry. As healthcare marketers, we have to stay agile and vigilant and offer support and insight whenever and wherever needed.
