Health Care Reform

On March 23, 2010, President Obama signed federal health care reform into law, also known as the Patient Protection and Affordability Act. A second, or reconciliation, bill was also signed by the President shortly after. This page addresses the details of the legislation and will be updated as more information becomes available. If you have additional questions, please e-mail your HealthPartners sales representative or healthcarereform@healthpartners.com.

Overview

As your health care partner, we vow to be a trusted resource to help guide you through all the details of health care reform. As we monitor, analyze and implement provisions we will keep you up to date on the latest changes.

Please note that these documents are subject to further clarification and correction. Many of the provisions are subject to change and/or are awaiting further guidance from regulators.

• Review the Frequently Asked Questions
• View a summary of the legislation

Standardized Summaries of Benefits and Coverage

Health care reform law requires all individual and group plans, regardless of grandfather status, provide standardized Summaries of Benefits and Coverage (SBCs). The new SBC format, which includes standard templates and instructions, coverage examples and a uniform glossary of health coverage and medical terms, will be required for plans beginning on or after September 23, 2012 as groups renew. In 2014, the SBCs must state whether the plan provides minimum essential coverage and the plan’s share of the total allowed costs of benefits is at least 60 percent of the actuarial value.

• Learn more about the requirement.
• Review the proposed template.

Preventive care coverage requirements for women

On the first plan renewal on or after Aug. 1, 2012, the following items must be covered at 100 percent: FDA- approved contraceptive methods and counseling for women, breastfeeding support, supplies and counseling. These are in addition to previous preventive services already required. The provision applies to all fully and self-insured groups except for those that are grandfathered. The rules have exceptions for certain religious organizations.

Medical Loss Ratios and rebates

Group and individual health plan insurers must provide rebates if their medical loss ratios (MLRs) are below 85 percent in the large group market and below 80 percent in the small group and individual market. Generally speaking, MLR = (claims + amount spent on improving health care quality) / (total premiums-specified taxes and fees). This requirement does not apply to self-insured plans. In most cases, rebates provided to employer groups must be shared with employees through reduction in future premiums or in other ways which are not taxable. Rebates must be provided by Aug. 1 of the following year for the previous calendar year, beginning Aug. 2012 for CY 2011.

No annual limits on essential benefits

Group health plans can not establish annual dollar limits on essential health benefits beginning January 1, 2014. The allowable limits for plan years beginning before January 1, 2014 are:

• $750,000 on or after September 23, 2010
• $1.25 million on or after September 23, 2011
• $2 million on or after September 23, 2012 to January 1, 2014

There is no restriction on non-essential benefits.

Early Retiree Reinsurance Program (ERRP) – program has ended

The Early Retiree Reinsurance Program (ERRP) is a provision of federal health care reform that establishes a reinsurance program for employer-based early retiree plans. This program pays for up to 80 percent of the expenses incurred and paid between $15,000 and $90,000 per eligible early retiree, spouse or dependent, per plan year. The Department of Health and Human Services released a final date for which ERRP funds received by employers can be used. The ERRP reimbursement funds must be used as soon as possible, but no later than December 31, 2014.

To learn more about the ERRP or to apply, visit errp.gov.

Flexible Spending Account changes

The maximum amount that can be withheld for a health care FSA is $2,500, regardless of grandfathered status. This provision goes into effect January 1, 2013. Use this sample communication to let your employees know about this change.

Changes to appeals and external review requirements

Health care reform sets forth new requirements for appeals and extends external review requirements to self-insured plans. Previously, external review obligations only applied to fully insured plans. These changes go into effect the first time a plan is renewed on or after September 23, 2010. Learn more about the requirements.

Small business health care tax credit

The small business tax credit will increase to up to 50 percent of employer costs in 2014. Prior to 2014, the small business tax credit was up to 35 percent of employer costs for health insurance. A provision of health care reform provides small business tax credits beginning in 2010. This tax credit is designed to be an incentive for small businesses to offer heath care coverage to their employees through January 1, 2014. Beginning in 2014, however, employers must participate in the exchange to get a tax credit.

Health care reform extends the Internal Revenue Service (IRS) non-discrimination requirements that previously only applied to self-insured plans to all fully insured, non-grandfathered plans beginning as plans renew on or after September 23, 2010. At the end of Dec.2010, the Internal Revenue Service (IRS) announced that compliance with non-discrimination rules for fully insured plans will not be required until the agencies issue regulations or other guidance regarding the rules. More information will be posted once the guidance becomes available.

W-2 reporting requirements

Employers must report the value of health care coverage provided to employees: voluntary in 2012 for small employers (less than 250 W2s), large employers must begin for 2012 (W2s sent in Jan. 2013), small employers begin reporting for 2013 (W2s sent in Jan. 2014). For more information, please contact your payroll administrator or broker, or learn more by clicking on the links from the IRS below.

Health care reform establishes criteria for “grandfathered” plans, which are not required to adopt some of the provisions of health care reform. The Interim Final Regulation on grandfathered plans clarifies what constitutes a grandfathered plan as well as how a plan or policy can retain its “grandfathered status”.

• Learn more about grandfathered status
• Use this checklist to see which changes would cause a plan to lose its grandfathered status

View an overview of the health care reform exemptions for grandfathered plans.

Mega-Reg overview

The Mega-Reg provides guidance on many of the near-term impacts of health care reform. In June 2010, the Interim Final Rule provided guidance on many provisions of health care reform that must be implemented as groups renewed on or after September 23, 2010. Learn more about the requirements.

Dependents to age 26 provision

Under federal health care reform that went into effect upon renewal, on or after September 23, 2010, the definition of “dependent” changed. Dependents must be covered by health plans up to age 26. To prevent young adults from losing coverage due to age in the interim, we extended dependent coverage from age 25 to age 26 for fully insured plans in May 2010.

• Review the full impact of this provision
• Learn more about HealthPartners’ early implementation of this provision
• Model notice used to notify your employees of this eligibility