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					 Prepared by Gallagher Benefit Services.




CEBS Meeting
  Discussion Outline




 February 17, 2011




                                           1
The Elephant in the Room




                           2
Topics - 2011

   Health Care Reform
        Coverage of Adult Children
        Preventive Care Services
        Coverage of OTC Drugs under “Prescription Programs”
        Disclosure Rules for Mini-Meds
        W-2 Reporting
   HIPAA Regulations for Wellness
   Early Retiree Reinsurance Program
   Mental Health Parity and Addiction Equity Act
   Round Table Discussion




                                                               3
Overview of Guidance Issued Since May 2010


Agency guidance
   Guidance issued in 21 areas of Title I of PPACA
      36 discrete agency (DOL, HHS, IRS) publications
      Proposed or interim final regulations; notices; facts sheets,
        FAQs, etc
   Guidance anticipated in 8 areas of Title I of PPACA
   And yet, the answer to so many questions remains: we are waiting
    for guidance




                                                                       4
   HCR: Timeline of Key Employer Changes
                                 • OTC drug
• Early retire                     reimbursements
  reinsurance                    • HSA penalties                                • FSA limits
• High-risk pools                • W-2 Reporting (voluntary)                    • Medicare tax
                                 • Employee notification                        • Part D drug subsidy
                                   requirements                                   eliminated

  6/23/10              9/23/10              1/1/11             1/1/12              1/1/13            1/1/14+


                                                                        • Employer and individual mandates
                    • Coverage expansion                                • Insurance exchanges
                      mandates
                                                                        • Patient protections
                    • Patient protections
                                                                        • “Cadillac” excise tax (2018)
Health Care Reform and Renewals after 9/23/10

   For non-grandfathered plans, the following required changes are
    effective on the first date of the plan following September 23, 2010:
        Provide coverage to all children up to age 26
        Eliminate lifetime maximums on essential benefits
        Eliminate pre-existing conditions limitations for children under the age of 19
        Offer preventive coverage in-network without cost sharing
        Provide emergency room services without pre-authorization and with the same
         benefit in and out of network
        No pre-authorization or referral for OB-GYN
        Allow designation of any available provider as PCP
        Include new appeal procedures
        For fully-insured plans: compliance with the nondiscrimination tests detailed in
         IRC Section 105 (h) (delayed until further guidance comes out)




                                                                                            6
Changes that Negate Grandfather Status

   The following adjustments will cause the plan to lose its
    grandfathered status:
      Reduce or eliminate coverage for a specific health condition or disease
      Increase the participant coinsurance level (e.g., increase from 20% to 30%)
      Increase copays by more than the greater of:
             $5, or
             Medical inflation plus 15 percentage points
      Increase deductibles by more than the cost of medical inflation plus 15
       percentage points
      Reduce the amount of employer subsidy of the health plan by more than 5%
      Add or reduce an annual limit on any service in the plan
      For fully-insured plans, change insurance carriers but only during the period after
       March 23, 2010 but prior to November 15, 2010




                                                                                         7
HCR: Adult Children
   Effective date: for plan years that begin/began on or after
    September 23, 2010
   Who may be eligible (depending on plan definitions):
        Biological children
        Stepchildren
        Adopted children
        Foster children
        Grandchildren or other related children only have to be covered if there is a
         dependent relationship
        Spouses and dependent children of adult children do not have to be covered
   Open Enrollment Notification:
      HCR reform requires a 30 day special enrollment period for “aged out”
       dependents
      Employees must be notified in writing no later than the first day of the plan year
       for which the change is effective


                                                                                            8
HCR: Adult Children

   Cost:
       The plan cannot charge more for an older child than a younger child, but it is
        permissible to increase the costs for all children
   Taxation:
     The federal government has amended the tax code to allow favorable tax status
      to non-dependent adult children covered by the medical plan
     However, each state is permitted to do otherwise
     New York, New Jersey and Connecticut all follow federal guidelines




                                                                                         9
HCR: Adult Children: Differences in Plan
Status
   Grandfathered Plans:
        Adult children must be offered coverage up to age 26, but only if they are not
         eligible for an employer provided plan through their own employment, or through
         a spouse’s employment
   Non-Grandfathered Plans:
        All adult children must be offered coverage up to age 26, even if they are eligible
         for an employer provided plan through their own employment, or through a
         spouse’s employment
   Just an aside – many carriers are opting to cover all adult children
    up to age 26 regardless of plan status




                                                                                          10
HCR: Preventive Care

   Grandfathered Plans: there are no mandates on how, or if,
    preventive care is covered
   Non-grandfathered Plans:
     The list of mandates includes all the expected services, such as physicals,
      immunizations, blood pressure and cholesterol screenings in accordance with
      the standard age guidelines
     But, it includes services that may not immediately come to mind:
     For adults:
            Screening and counseling for alcohol abuse and tobacco use
            Aspirin therapy for men age 45 and older and women age 55 and older
            Obesity screening and diet counseling
            STD screenings, prevention counseling
       For women only:
            Breast feeding inventions and support
            Folic acid for pregnant women
            Breast cancer chemoprevention



                                                                                    11
HCR: Preventive Care

   Non-grandfathered Plans: (cont’d)
       For children:
            Alcohol and drug abuse assessments
            Autism screening for children at 18 and 24 months
            Behavior assessments
            Iron supplements for at risk infants
            Fluoride supplements for areas without fluoridated water
            STI and HIV screenings and prevention counseling

   Complete guidelines are available from:
     The US Preventive Services Task Force recommendations with a rating of A or B
     Advisory Committee on Immunization Practices of the Centers for Disease
      Control
     Recommendations from the Health Resources and Services Administration




                                                                                 12
HCR: Preventive Care (cont’d)

   Other provisions:
      Whether cost sharing provisions are imposed on an office visit depends on how
       the bill is submitted – any visit that is billed as primarily prevention may not have
       a cost share
      If new services are added to the recommendations list those services must be
       covered with the next effective date
      But if a recommendation is dropped, the plan no longer has to cover that service
       from the date of the change




                                                                                          13
HCR: Over-the-Counter Drugs

   In the recent past, over-the-counter drugs could be covered by a
    flexible spending account
   Effective January 1, 2011, OTC drugs will only be reimbursed under
    a FSA (and HRA) if the medical provider has written a prescription
      However other OTC items will be covered without a script including diagnostic
       kits, equipment, or supplies
      Insulin may also be covered without a prescription

   When submitting an after the fact claim to the FSA or HRA, a copy
    of the store receipt and prescription is needed to substantiate the
    purchase
   However, many FSA and HRA plans had moved to debit cards



                                                                                       14
HCR: Over-the-Counter Drugs
   In order for a purchase to be made with a debit card, certain
    requirements have to be met:
      A script has be presented prior to purchase and the drug dispensed by the
       pharmacist in accordance to the applicable regulations and a rx number is
       assigned
      The vendor must comply with IRS recordkeeping rules which requires the rx
       number, name of patient/purchaser, date, and amount paid
      The records are available upon request by the employer
      The card system will only accept an OTC drug charge if there is an assigned rx
       number
   The IRS has also limited where debit cards can be used
   Cards must be used at “90 percent pharmacies” where 90% of gross
    receipts qualify for reimbursement under IRS Code 213(d), grocery
    stores with pharmacies, mail order houses that follow this procedure
    and organizations with a merchant code (e.g., hospital)

                                                                                        15
HCR: Lifetime Maximums & Mini-Med Plans

   HCR eliminated lifetime maximums for all “essential benefits”:
        Ambulatory patient services
        Emergency services
        Hospitalizations
        Maternity and newborn care
        Mental health and substance treatment
        Prescription drugs
        Rehabilitative services and devices
        Laboratory services
        Preventive and wellness services
        Pediatric services including oral and vision care
   Lifetime maximums may still be maintained for non-essential
    benefits

                                                                     16
HCR: Lifetime Maximums & Mini-Med Plans
(cont’d)

   Mini-med plans are generally low premium plans that provide a
    limited benefit – often more focused on wellness/prevention than
    major illness coverage
        The lifetime maximum is generally far lower than the average plan
   Plan sponsors may apply for a waiver of the lifetime maximum if the
    cost of the coverage would increase significantly or if the elimination
    of the plan would result in decreased access
   The application must be filed at least 30 days in advance of the plan
    year
   If a waiver is granted, it only applies to the annual maximum – all
    other provisions of HCR apply



                                                                             17
HCR: Lifetime Maximums & Mini-Med Plans
(cont’d)

   Further, if the waiver is granted a detailed notification must be
    provided to all current and eligible plan participants that includes:
      A statement that the plan does not meet HCR lifetime minimum annual amounts
       limits for essential benefits
      The actual annual dollar limit and a description of the benefits to which the limit
       applies
      A statement that the waiver is only for one year

   The notice must be in 14 point bold type
   The notice must be included in any educational materials, including
    SPDs or certificates of insurance and prominently displayed




                                                                                         18
W-2 Disclosure

   Initially, this was a requirement for calendar year 2011, but now has been
    made optional; it will be required for calendar year 2012
   The amount is not included in the employee’s gross income
   In light of limited guidance available, the cost is based on the same
    methodology as the current COBRA premium




                                                                                 19
HIPAA Regulations for Wellness

   Under the final HIPAA regulations, there was clarification around “wellness”
    programs
   Wellness programs are meant to promote overall good health or to prevent
    the onset of disease
   Under HIPAA, plan sponsors are permitted to provide a reward for the
    desired behavior up to 20% of the premium the individual is enrolled in
        If any of the dependents are enrolled in the program, the 20% is of the total premium the
         family is enrolled
   However, the government has rules for a “bona fide” wellness program:
        The reward must be reasonable for all participants to take advantage of
        An alternative must be provided if the initial standard presents difficulties for some of the
         participants to meet
        Any program requirements (including the alternate means of meeting the rewards’ standard)
         must be described



                                                                                                     20
HIPAA Regulations for Wellness (cont’d)

   Beginning in 2014, HCR increases the potential reward from 20% to 30%
    and it may potentially rise if certain government agencies find value in
    wellness programs
   Employers with less than 100 employees will be eligible to receive grants for
    comprehensive wellness programs
        $200 billion is available under a five year program
   However, there is some concern about how the wellness programs will meet
    the requirements of the Americans with Disabilities Act
        Under the Act, any medical examinations, activities, medical history taking, etc. must be
         voluntary unless the information is intrinsic to performing the position
        As the percentage reward increases, as well as the cost of health care, how does one define
         “voluntary”




                                                                                                  21
Early Retiree Reinsurance Program (ERRP)
   ERRP is another means of encouraging access to health insurance until
    2014 provides government plans
   The program has been allocated with $5 billion
   The program began in 2010 and will run until the money runs out
   Any plan sponsor that a plan covers early retirees between the ages of 55
    to 64 (e.g., not Medicare eligible) may apply for reimbursement of large
    claims
   The reimbursement is equal to 80% of claim dollars between $15,000 and
    $90,000
   In order to be eligible the plan must include a program that generates
    savings for participants with chronic and high cost conditions, AND, the
    monies must be used to reduce plan or participant costs (e.g., deductibles,
    copays, coinsurance



                                                                              22
ERRP (cont’d)
   The application requests specific information, including:
        Disease management programs
        Projected reimbursements for the next two plan years
        A statement that the plan has policies and procedures in place to detect fraud and waste
   HHS started accepting applications on June 29, 2010 and will continue to
    accept them until it is apparent that the funding has run out
   The approval notification process began on August 31st, 2010
   Once approved the designated account manager and account
    representative will receive an e-mail providing instructions to register on-line
   The on-line process will allow plan sponsors to submit participant and claim
    data, track submissions and reimbursements




                                                                                                    23
ERRP (cont’d)
   Participants must be notified that the plan is participating in the program, no
    later than after the first reimbursement
   The notice may be provided in any way, including inclusion in the
    educational materials, desk drop, mail, etc., that the plan sponsor is assured
    of delivery
   The notice must include general information about how the funds will be
    utilized to offset future increase
   Additional information is available at www.errp.gov




                                                                                 24
Mental Health Parity and Addiction Equity Act

   The original Mental Health Parity Act of 1996 was signed into law under
    President Bill Clinton and it eliminated dollar amount limits for these benefits
   Most plan sponsors then modified their programs to day/visit limits that
    generally equated to the dollar amounts
   Many advocates felt the law did not fully accomplish the hoped for change
    in attitude and coverage




                                                                                  25
Mental Health Parity and Addiction Equity Act

   The 2008 law, officially known as the, Mental Health Parity and Addiction
    Equity Act, (MHPAEA) expanded coverage to include substance abuse
    benefits as well as mental health benefits
   The law became effective for plan years effective 1/1/10, however, interim
    regulations were not issued until 2/2/10, thus forcing plan sponsors to re-
    think changes made for 1/1/10
   The regulations state that the employee cost sharing provisions for MH/SA
    must be substantially equal to the predominant limits that apply to
    medical/surgical benefits under the plan




                                                                              26
Mental Health Parity and Addiction Equity Act
(cont’d)
   Each category of benefits must be looked at separately to determine parity:
        Inpatient, in-network
        Inpatient, out-of-network
        Outpatient, in-network
        Outpatient, out-of-network
        Emergency care
        Prescription drugs
   To determine the minimum level of coverage, a plan sponsor must calculate
    the medical/surgical cost sharing in each category
   The cost sharing for MH/SA services must be equal to the cost sharing
    provisions of 2/3rds of the medical/surgical benefits
   Additionally, the same protocols must be followed; thus certain common
    requirements are likely not to be permitted:
        Requiring care through an EAP or other managed care vendor
        Prior authorization for care
        Step therapy
        Exclusions for non-compliance
                                                                              27
Mental Health Parity and Addiction Equity Act
(cont’d)

   Plan sponsors must also provide information regarding the standards used
    for the determination of medical necessity, if requested by the participant
   Also, the standard ERISA claim denial information applies:
        The reason for denial, including references to the materials utilized
        A description of the appeals process
        Access to any documents that the decision is based on
        The name of the medical providers who were consulted in the process
   There are a few plans that are exempt:
        Employers with no more than 50 employees in the prior year
        Plans which actuarial attest that the cost of implementing the changes will result in a
         percentage increase of 2% or more
        Self-funded non-federal governmental plans that opt out




                                                                                                   28
Mental Health Parity and Addiction Equity Act
(cont’d)

   Many states have mandated mental health and substance abuse benefits;
    any mandated benefit will trigger full parity
   Thus, fully-insured plans will have less flexibility than self-insured plans




                                                                                   29
Discussion/Horror Stories/Tales of Good
Health Insurance Gone Bad




                                          30

				
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