VIEWS: 1 PAGES: 44 POSTED ON: 10/1/2012
AUGUST 2011 UPDATE Status of health care reform Grandfathered plans Early Retiree Reinsurance Program Annual limit waivers Employer reporting/disclosure Claims and appeals rules Preventive care guidelines for women Medical loss ratios and controlling premium increases Free choice vouchers Small employer tax credit 2 Patient Protection and Affordable Care Act (PPACA) – signed on March 23, 2010 Health Care and Education Reconciliation Act (Reconciliation Act) – signed on March 30, 2010 The health care reform law makes sweeping changes to our nation’s health care system 3 New plan rules generally apply to group health plan coverage Exceptions ◦ Excepted benefits • Some health FSAs • Certain types of benefits (AD&D, liability insurance, etc.) • Limited scope benefits (dental-only, vision-only) ◦ Retiree-only plans ◦ Group health plans covering fewer than 2 employees 4 Republicans control House and Democrats have majority in Senate GOP goal: repeal or change reform law ◦ Full repeal unsuccessful ◦ Form 1099 reporting requirement and free choice voucher program repealed Any changes will have to go through legislative process Legislative focus has recently shifted to other issues 5 District courts split on constitutionality ◦ Individual mandate is main issue ◦ Does Congress have power to force individuals to buy a product? ◦ Florida court held that entire law is invalid – ruling was stayed Sixth Circuit appeals court ruled that the individual mandate is constitutional Supreme Court expected to ultimately decide the issue 6 Grandfathered (GF) plans are exempt from some HCR requirements ◦ New employees can still enroll ◦ Family members of current employees can still join Certain changes to a plan’s design can cause loss of GF status Plans will have to analyze changes at each renewal 7 Patient Protections, including preventive care coverage Nondiscrimination rules for fully-insured plans New claims and appeals process Quality of care reporting Insurance premium restrictions Guaranteed issue and renewal of coverage Nondiscrimination based on health status/in health care Comprehensive health insurance coverage Limits on cost-sharing Coverage for clinical trials 8 Health Insurance Changes – Prohibitions on: ◦ Lifetime and annual limits ◦ Pre-existing condition exclusions ◦ Rescissions ◦ Excessive waiting periods Required coverage of adult children up to age 26 Automatic enrollment for large employers Summary of benefits and coverage Reporting medical loss ratio 9 Permitted Changes ◦ Cost adjustments consistent with medical inflation ◦ Adding new benefits ◦ Modest adjustments to existing benefits ◦ Voluntarily adopting new consumer protections under the health care reform law ◦ Changes to comply with state or federal laws ◦ Changing insurance carriers 10 Prohibited Changes ◦ Significantly reducing benefits or contributions ◦ Significantly raising co-payment charges or deductibles ◦ Raising co-insurance charges ◦ Adding or tightening annual limits Special rule for insured collectively bargained plans Additional Requirements ◦ Disclose GF status ◦ Status can be revoked if try to avoid compliance 11 Non-GF fully-insured plans must follow rules regarding nondiscrimination in favor of highly-compensated employees (HCEs) ◦ Cannot discriminate with respect to eligibility or benefits ◦ GF plans exempt HCEs:5 highest paid officers, more than 10% shareholder, or highest paid 25% of all employees Effective date delayed for regulations 12 Effective on date of enactment? ◦ Yes, but need regulations so compliance delayed ◦ Regulations to be issued by 2014 ◦ Applies to GF and non-GF plans Large employers that offer health benefits must automatically enroll new employees Adequate notice and opt-out option required Other questions to be addressed in regulations 13 ERRP established to provide reimbursement to employers that provide coverage for early retirees ◦ Early retiree = 55 and older and not eligible for Medicare ◦ Reimburses 80 percent of costs related to claims between $15,000 and $90,000 ◦ Must be used to lower plan costs (not for general revenue) 14 Temporary Program ◦ $5 billion total funding – HHS expects to pay out by end of fiscal year 2012 (maybe sooner) ◦ Applications for the program were accepted beginning June 29, 2010 ◦ Due to popularity and limited funding, deadline for applications was May 5, 2011 Claims can still be submitted if employer was certified More information available at www.errp.gov 15 General rule: plans cannot impose lifetime or annual limits on essential benefits Applies to GF and non-GF plans Until 2014, “restricted” annual limits are permitted Minimum annual limits for years before 2014 PY on or after 9/23/10: $750,000 PY on or after 9/23/11: $1.25 million PY on or after 9/23/12 (before 1/1/14): $2 million 16 Plans can apply for waiver of annual limit restrictions if compliance would: ◦ Result in a significant decrease in access to benefits; OR ◦ Significantly increase premiums Plan must have existed before Sept. 23, 2010 ◦ Exceptions for certain mandated or group policies Waivers do not cover plan years beginning on or after Jan. 1, 2014 – when all annual limits on essential benefits are prohibited 17 Under original guidance, plans were required to reapply for a waiver each year New guidance - Waiver application program will close on Sept. 22, 2011 ◦ Plans that have already received waivers can apply for extensions ◦ Plans that have not yet received waivers can submit new applications ◦ Plans do not need to reapply each year - waivers will last until 2014 18 If plan obtains waiver, must inform participants Must use model language (or obtain HHS approval) Must be provided annually for each plan year covered by the waiver Notice must be given as part of plan materials that describe coverage terms (example: SPDs) 19 Plans that receive waivers must provide annual updates to HHS by the end of each calendar year Must include same information as the waiver extension or new waiver application Record retention requirements 20 Employers must report aggregate cost of group health plan coverage on employees’ Forms W-2 ◦ Does not change the tax rules for health coverage ◦ Aggregate cost must be reported – employer/employee portions of cost do not matter ◦ Determined under rules similar for determining “applicable premium” under COBRA 21 Originally effective for the 2011 tax year (W-2 Forms provided in Jan. 2012) IRS later made 2011 reporting optional for all employers Recent IRS guidance ◦ For small employers (those that file fewer than 250 Forms W-2), reporting requirement is delayed until further guidance issued ◦ For larger employers, reporting is mandatory for 2012 (W-2 Forms provided in Jan. 2013) 22 Coverage under employer-sponsored group health plans must be reported Some types of coverage do not need to be reported – ◦ HRA coverage ◦ Stand-alone dental or vision coverage ◦ Multiemployer plan coverage ◦ Self-insured plans not subject to COBRA (church plans, for example) ◦ Accident or disability income insurance, etc. ◦ Salary reductions to FSAs 23 Form 1099 Reporting Requirement ◦ Scheduled to go into effect for 2012 ◦ REPEALED Quality of Care Reporting ◦ HHS must develop standards by March 2012 ◦ Does not apply to GF plans Health Care Coverage Reporting ◦ IRS reporting requirement for “minimum essential coverage” ◦ Effective for 2014 24 Expands on disclosure requirements for health plans Applies to GF and non-GF plans HHS to develop standards for uniform summary within 1 year of enactment - March 23, 2011 ?? Plans must start using within 2 years of enactment – March 23, 2012 25 Standards – What we know at this point ◦ Appearance: Cannot be longer than four pages 12-point or larger font ◦ Language: Easily understood language “Culturally and linguistically appropriate manner” 26 ◦ Content: Uniform definitions of standard terms Description of plan’s coverage Exceptions, reductions and limitations on coverage Cost-sharing provisions Renewability/continuation of coverage Examples of common benefits scenarios Statement whether coverage is “minimum essential coverage” and whether plan covers 60% of benefit costs Statement that outline is a summary of the plan Contact information for obtaining plan/SPD 27 Must be provided to applicants (at the time of application) and enrollees (upon enrollment and re-enrollment) Updating summaries: ◦ Any material modification not contained in most recent 4-page summary must be described in a summary of material modifications (SMM) ◦ Must be provided at least 60 days BEFORE modification becomes effective 28 Apply to non-GF plans Group health plans and health insurers must implement effective internal appeals process Must meet minimum requirements for external review Grace period until plan year beginning on or after Jan. 1, 2012 for some requirements 29 Must follow DOL claims procedure rules Must also incorporate additional standards ◦ Rescissions ◦ Urgent care claims – UPDATE: 72-hour rule remains permissible ◦ Full and fair review ◦ Conflicts of interest ◦ Notices – culturally and linguistically appropriate ◦ New content for notices ◦ Strict compliance 30 State External Review Process ◦ Applies to insured plans at least until end of transition period (Jan. 1, 2012) ◦ If process does not have minimum consumer protections, federal process will apply at end of transition period Federal External Review Process ◦ Process administered by HHS (insured plans) ◦ Process supervised by DOL and IRS (self-funded plans or insured plans) 31 HHS issued new guidelines for preventive care for women on Aug. 1, 2011 Applies to non-GF plans Must provide coverage for women’s preventive health services without any cost- sharing (no deductible, copayment or coinsurance) Effective for plan years beginning on or after Aug. 1, 2012 32 Covered health services: ◦ Well-women visits ◦ Gestational diabetes screening ◦ HPV DNA testing ◦ Sexually transmitted infection counseling ◦ HIV screening and counseling ◦ Contraceptives and contraceptive counseling ◦ Breastfeeding support, supplies and counseling ◦ Domestic violence screening and counseling 33 MLR Rules ◦ Insurers must spend 80-85% of premiums on medical care and quality improvement (not admin costs) or give rebates ◦ Effective Jan. 1, 2011 HHS issued final rule ◦ Adopted NAIC recommendations ◦ Outlines items counted as medical care/health care quality improvement (and items that are not) ◦ Provides rules for rebates 34 Issuer must provide proportionate rebate to each enrollee if MLR does not meet requirements Due by August 1st after reporting year (Aug. 1, 2012 for 2011) Issuer can arrange with group health plans to distribute rebates to enrollees Methods of payment ◦ Premium credit ◦ Lump sum check ◦ Reimbursement to account used to pay premium 35 If giving rebate, issuer must provide notice to each enrollee and a report to HHS Enrollee Notice: ◦ Description of MLR concept ◦ Purpose of setting MLR standard ◦ Applicable MLR standard ◦ Issuer’s MLR and aggregate premium revenue ◦ Rebate percentage and amount owed 36 HHS required to develop process for annual review of “unreasonable” premium increases for health insurance HHS issued final rule in May 2011 ◦ Applies to small group and individual markets ◦ Does not apply to GF plans or excepted benefits Starting: ◦ Sept. 1, 2011, proposed rate increases of 10% or more must be reviewed ◦ Sept. 1, 2012, 10% threshold will be replaced with a state-specific threshold 37 Increases subject to review must be publicly disclosed, along with the justification Increases will be reviewed by state or federal experts to determine if unreasonable Unreasonable = excessive, unjustified or unfairly discriminatory More information for consumers will be available at www.healthcare.gov 38 PPACA required certain employers to provide free choice vouchers to eligible employees beginning in 2014 ◦ Applied to employers that offered minimum essential coverage and paid any portion of premium ◦ To be eligible, employees had to meet income restrictions and could not be participating in employer’s plan ◦ Voucher equal to monthly amount employer would have paid for coverage Repealed in April 2011 as part of federal budget bill 39 Qualifying small employers that provide health care coverage to employees are eligible for the tax credit ◦ Have fewer than 25 full-time equivalent (FTE) employees ◦ Pay wages averaging less than $50,00 per employee per year ◦ Have a “qualifying arrangement” (pays premiums for each employee in a uniform percentage that is at least 50% of the cost of coverage) Available beginning in 2010 IRS guidance clarifies how to calculate FTEs and wages 40 Credit based on premiums paid by employer for health insurance coverage Credit amount = up to 35% of premium costs paid (25% for tax-exempt employers) ◦ In 2014, increases to 50% (35% for tax-exempt employers) Depends on employees and wages ◦ The credit gradually phases out for: Employers with average wages over $25,000 and Employers with more than 10 FTEs 41 Credit based on employer’s premium payments for health insurance coverage Plans that are not health insurance coverage: ◦ Self-insured plans (including HRAs and FSAs) ◦ Health savings accounts (HSAs) ◦ Employer contributions to these plans are not counted for credit Contributions to multiemployer plans can count if for health insurance coverage Contributions to church welfare plans count as insurance 42 QUESTIONS? 43 THANK YOU 44
"health insurance coverage"