Health Care Reform

2012 - Health care reform

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. 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.

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). A final rule on SBCs was released by the departments of Labor, Health and Human Services, and Treasury on Feb. 9, 2012. 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 with open enrollment beginning on or after Sept. 23, 2012 as groups renew.

• 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, these 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.

• Learn more about the preventive care coverage requirements for women

Comparative effectiveness research fee

Most insurers and self-insured health plans will pay a fee to fund research into the clinical effectiveness of medical treatments. For calendar year plans, the fee will begin on Jan. 1, 2012 and will end on Dec. 31, 2018. The fee will be $1 times the average number of covered lives for plan/policies ending on or after 10/1/2012 and before 10/1/2013 for the first year and $2 for plan/policies ending on or after 10/1/2013 and before 10/1/2014.

W2 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.

Quality of care reporting

Group plans and insurers are required to submit annually a report to enrollees and Health and Human Services measuring the quality of care. Grandfathered plans are exempt. The secretary of HHS is required to develop reporting requirements not later than March 2012 and provide the effective date for reporting. To date, no requirements have been issued.

Advance notice of mid-year changes

Health plans and insurers must provide a 60 day advance notice of material modification to any terms of the plan or coverage not reflected in the most recent Summary of Benefits and Coverage. The advance notice does not apply to changes in connection with a renewal.

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. Rebates must be provided by Aug. 1 of the following year for the previous calendar year, beginning Aug. 2012 for CY 2011.

CLASS

The Community Living Assistance Services and Supports program (CLASS Act) was designed to expand options for people who become disabled and require long-term care services. The Act was repealed by the American Taxpayer Relief Act, which also created a new commission to develop viable long-term care options.

2013 - Health care reform

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. 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.

Administrative simplification

Providers and health plans must comply with established HIPAA transaction standards for certain electronic transactions. The Health Care Reform law requires the adoption of certain “operating rules” for each type of HIPAA transaction, in order to increase uniformity in these electronic transactions, and thereby reduce administrative costs. The first operating rules (for plan eligibility and claim status transactions) are effective Jan. 1, 2013. Others will be effective Jan. 1, 2014, and the remaining operating rules on Jan. 1, 2016. Health plans will be required to certify compliance.

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 Jan. 1, 2013 as plans renew.

Medicare Part D coverage

Continuing the phasing in of federal subsidies to cover brand-name prescriptions filled in the Medicare Part D coverage gap, Part D enrollees who reach the “donut hole” gap of coverage between $2,840-$4,550, will receive a 50 percent manufacturer discount on the total cost of their brand name medications. Beginning in 2013, in addition to the 50 percent discount, a portion of the cost of brand name medications in the gap will be covered to reach the ultimate benefit of 75 percent coverage by 2020. Generics also will have a portion of costs covered.

Medicare tax rate increase

Individuals earning more than $200,000 ($250,000 married, filing jointly) will pay an additional 0.9 percent of Medicare tax on wages and self-employment income.

Employer notice requirements regarding exchanges and premium credits

Employers are required to provide written notice informing employees about the health insurance exchanges and employees’ potential eligibility for subsidies. If the employer’s share of costs is less than 60 percent of the allowed total cost of benefits, employees must be informed that they may be eligible for a premium tax credit or cost sharing reduction through the Exchange. Temporarily delayed. More guidance expected by fall of 2013.

2014 - Health care reform

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. 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.

Exchanges

Each state (or the federal government on the state’s behalf) will establish an exhange where individuals and small employers can purchase private health insurance. Only qualified health plans will be available in an exchange. To offer a qualified health plan through the exhange, an insurer must offer certain types of health coverage and charge the same premium for each plan whether inside or outside the exchange. To make coverage more affordable for those purchasing in the individual market, federal subsidies in the form of premium assistance tax credits will be made available to individuals and families with incomes between 100 percent and 400 percent of the federal poverty level. These tax subsidies are only available for products sold in the exchange.

Small business tax credit

The small business tax credit will increase to up to 50 percent of employer costs. 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 Jan. 1, 2014. Beginning in 2014, however, employers must participate in the exchange to get a tax credit.

• Learn more about the small business tax credit

New content requirements for SBCs

Uniform Summaries of Benefits of Coverage 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. The Departments are expected to issue updated materials for 2014.

Automatic enrollment

Employers with more than 200 employees that offer health insurance coverage will be required to automatically enroll new full-time employees in coverage. Employees will have the opportunity to opt-out of coverage. This provision will be effective following the issuance of guidance, which reportedly will not occur before 2015.

No annual limits on essential benefits

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

• $750,000 on or after Sept. 23, 2010
• $1.25 million on or after Sept. 23, 2011
• $2 million on or after Sept. 23, 2012 to Jan. 1, 2014

There is no restriction on non-essential benefits.

Waiting periods

Eligibility waiting periods of more than 90 days will not be allowed for group coverage.

Coverage for individuals participating in clinical trials

Plans and insurers may not deny individual participation in approved clinical trials or deny, limit or impose conditions on coverage of routine patient costs for items and services furnished in connection with participation in the trial.

Taxes and assessments

Required taxes and fees vary based on the employer group by size and funding arrangement, but may include:

• Comparative Effectiveness Fee (PCORI) (see above).
• Transitional Reinsurance Program fee funds a program to offset the high-cost individuals moving in to insurance plans and is effective for plan years January 2014-2016. This tax applies to small and large fully insured employers, and self-insured employers. It is estimated at $63 per covered life in 2014 and declines in 2015 and 2016.

Premium variation for wellness programs

Beginning in 2014 employers will be able to offer incentives up to 30 percent of the cost of coverage (50 percent for tobacco users) for employee participation in certain health promotion and disease prevention programs.

State basic health plan option

Health and Human Services will establish a basic health program, under which states will be able to contract with standard health plans offering at least essential health benefits. The plans will offer coverage for people with income above Medicaid eligibility but below 200 percent of the federal poverty level. Eligible individuals and families will have access to coverage options through these plans rather than through the exchange. Delayed until 2015 at the earliest.

Individual mandates

Individuals will be responsible for obtaining minimum essential coverage (individual market policies, job-based coverage, Medicare, Medicaid, CHIP, TRICARE and certain other coverage) for themselves and their dependents. The penalty for noncompliance , which is paid as part of the individual’s income tax return is the greater of $95 per individual or 1 percent of household income over the filing threshold. The penalty will rise to $325 or 2 percent in 2015, and $695 or 2.5 percent in 2016.

Employer Shared Responsibility

Employer Shared Responsibility is a provision designed to provide coverage for employees and their dependents. Sometimes called the "free rider assessment" and "pay or play penalty," Employer Shared Responsibility is a series of new requirements related to benefit offerings and corresponding contribution strategies. Provisions go into effect on Jan. 1, 2014.

• Q&As on the provision

Essential health benefits

The ACA requires that health plans offered in the individual and small group markets include a benefit plan covering "essential health benefits" or EHB. Large employers do not have to cover EHB, but if they do, they cannot apply annual or lifetime dollar limits on them beginning 2014. EHB is defined on a stat-specific basis through a "benchmark plan" but there are 10 general benefit categories including:

1. Ambulatory patient services
2. Emercency services
3. Hospitalization
4. Maternity and newborn care

Guaranteed issuance and renewablility

Beginning Jan. 1, 2014, the ACA requires insurance companies to issue a health plan to any individual or group applicant regardless of health status or other factors. Currently, in most states, insurers are not required to guarantee issue policies to individuals. Insurers can still deny coverage if the applicant does not live in their plan’s service area. For small employers, the group must still meet minimum participation requirements and contribution rules.