September 14th, 2013 § § permalink
PPACA (aka “ObamaCare”) requires employers to provide employees with a written notice about the new health insurance marketplaces (exchanges) in which enrollment is set to commence October 1st.
On September 11th the Department of Labor (DOL) issued an “FAQ on Notice of Coverage Options”, clarifying there is no fine or penalty under the law for failing to provide the notice. However, that does not mean that noncompliance is a good option, or that the noncompliant employer may not be subject to other penalties or civil damages. To this point, employees in plans subject to ERISA will likely be granted the right in the future to recover damages sustained as a result of the employer failing to provide information as directed under the law’s notice requirement. ERISA also provides for recovery of legal fees and other related damages. Furthermore, in the future compliance with notice requirements could become a focus of routine DOL audits.
Aside from possible ERISA-related concerns, there are several other reasons why employers may still want to provide the notice. The notice can help employers answer employee questions about:
- What the Marketplace is;
- Whether the employer will still provide a plan once the Marketplace is operational;
- How Marketplace plans are different from the employer’s plan; and
- Whether the employer’s plan is intended to be affordable and provide minimum value.
In many cases, employer-sponsored coverage may be a better option for employees than Marketplace coverage. For example, premium contributions for employer-sponsored coverage through payroll will often be less expensive for the employee than the premiums for Marketplace coverage because of the employer’s level of subsidy. Additionally, the employee portion of the premium for employer-sponsored coverage is typically excluded from taxable income and is therefore tax-free. This is not the case at all with Marketplace plans.
Despite the lack of penalty, in the FAQ posting the DOL indicated that employers should provide the marketplace notices to employees and reiterated the content that should be included. The FAQ also provides links to the model notices issued by the DOL earlier in the year.
Please visit the DOL website or contact Benico, Ltd. at 847-669-4800 for more information on the Marketplace Notice requirement.
September 13th, 2013 § § permalink
On September 11th in its online FAQ, the Department of Labor confirmed the fact that currently there will be no penalties for employers surrounding a failure to issue Marketplace Notices (also known as “Notice of Exchange Coverage”) to employees. Some may have interpreted the new FAQ statement as being new guidance. In fact, the absence of penalties under the ACA surrounding the Exchange Notices, is not news, and has been a known under Fair Labor Standards Act (FLSA) §18b.
Employers subject to FLSA are still required to distribute a Marketplace Notice to all current employees by October 1, 2013, and new hires going forward.
As precautionary and to be completely clear: despite the fact that there is no statutory penalty, there could be ERISA fiduciary issues under case law related to the failure to communicate to participants in the absence of the employer communication. In general, employers that sponsor ERISA plans have a duty to be straightforward with participants. Therefore, we recommend that you comply with this requirement and we would not advise that an employer could safely disregard this obligation.
Below are some additional questions and answers surrounding the Exchange Notice requirement. If you have any additional questions on this, or any compliance issue, please contact us at your earliest convenience.
Question: If there is no penalty, if the notice is not sent out, and there is no “proof” of delivery requirement, what would the employer face if they did not send out the Exchange Notice and saved all that cost?
Answer: If the exchange has the employer’s contact information, it may establish a dialogue with an employer whose employee is applying for a subsidy, which at least notifies the employer that its employee may be getting a subsidy. Failure to provide the notice could also potentially be viewed as interfering with an employee’s ability to get a subsidy, which is generally prohibited under ACA.
Question: Regarding the model Notice of Exchanges that is required to be customized by employers, the notice itself does not include any required information in regards to payroll contribution for 2014 – there is a section on the second page that addresses this and it is marked as optional.
However, the data form on employer coverage (link to the Marketplace Application Checklist document is below) does provide a block where information must be provided on the payroll contributions for the plan.
The question is, what if the employer has not set their 2014 payroll contributions by October 1? If this has not been determined, how should an employer answer this item? Is there any employer penalty (or other ramifications) for not establishing the 2014 payroll contribution by October 1?
Marketplace Application checklist link – http://marketplace.cms.gov/getofficialresources/publications-and-articles/marketplace-application-checklist.pdf
Answer: There could be ramifications under ERISA.
An employer that is presented with a copy of the Employer Coverage Tool by an employee who is applying for Exchange coverage should complete it to the best of their ability.
The form notes that with respect to the question you reference about premiums (#16), an employer would only complete that section if the plan year is about to end and the employer knows the premium and other information for the upcoming year.
Question: We know the Exchange Notices need to be delivered by 10/1/13 to all current employees, and starting 10/1/13 on an ongoing basis to all new employees, but what is the frequency that this notice needs to be distributed going forward? Must an employer distribute it each year at their company’s renewal, each year prior to a set date or only when there is a change to the notice?
Answer: It is not an annual requirement based on current guidance.
Question: Does the notice need to be distributed only to those employees who work more than 30 hours per week? Or can an employer deliver one notice to those who work more than 30 hours and another notice to those who work less?
Answer: The notice should go to all employees regardless of hours or other status.
Question: Page 2 of the Notice outlines the eligibility requirements for the plan – can the employer provide a different notice to Seasonal, Variable Hour and Regular Employees since there are different eligibility requirements for each class?
Answer: The notice should go to all employees regardless of hours or other status. The notice is designed to be able to be provided to all employees without tailoring it to specific classes; however, it should generally be permissible for an employer to do so.
Question: If an employer is meant to use only one notice for all employees, how does an employer determine whether to check the box for whether the coverage meets the affordability requirements, IF the coverage provided is expected to be affordable for some employees, but not all (which may be the case, especially if the notice must be provided to those working less than 30 hours who are still eligible for benefits, Minimum Value coverage may still be offered to Part Time 20 hour/week employees, but for those employees that coverage may not be affordable)
Answer: An employer should consider the relevant facts and circumstances when deciding whether to check the box regarding affordability.
Question: If an employer’s plan is affordable and adequate, can they write a cover letter when sending out the exchange notice to notify their employees that they wouldn’t qualify for subsidies?
Answer: Yes, that would be fine. Note that the first page of the exchange notice also states that employees who are eligible for affordable, minimum value employer coverage will not be eligible for a subsidy.
August 27th, 2013 § § permalink
Free Series to Help Small Business Owners Runs Through September
The U.S. Small Business Administration and the Small Business Majority (a national nonprofit advocacy organization) have announced the next set of Affordable Care Act 101 Weekly Webinar dates:
- Thursday, August 22 at 2:00 PM ET;
- Thursday, September 5 at 2:00 PM ET;
- Thursday, September 12 at 2:00 PM ET;
- Thursday, September 19 at 2:00 PM ET; and
- Thursday, September 26 at 2:00 PM ET.
The first series of webinars began in July and will cover the same content; a second round of webinars featuring new content will be held in October to prepare for the opening of the Health Insurance Exchanges (Marketplaces).
During the hour-long presentation, business owners learn key pieces of the law, including what they should know about tax credits, the new small employer health insurance marketplace (SHOP), and more. A brief question and answer period follows each webinar.
Click here to register for the presentations. After registering, you will receive a confirmation email with all of the information needed to access the webinar by telephone.
May 30th, 2013 § § permalink
We have become aware of a very cost-effective group insurance product solution, one appearing to be completely legitimate, for firms / organizations that do not offer health insurance coverage to at least 95% of their “2014 PPACA eligible” employees. As we understand it, if implemented this particular product helps such firms/ organizations avoid the prospect of being exposed to the really onerous ObamaCare “no coverage” penalty of $2,000 per full-time employee (minus 30 full-time employees in the event that at least one employee applies for and receives a premium tax credit in 2014 for Exchange coverage).
To gain the benefit of some context and perspective about this, please be sure to first read the following Wall Street Journal article published on May 20th – “Employers Eye Bare-Bones Health Plans Under New Law” – http://on.wsj.com/17vhDhp. The article talks about “skinny plans” that are believed by many experts to be fully in compliance with the law. Quoting from this article – “Such policies would generally cost far less to provide than paying the penalty or providing more comprehensive benefits, say benefit-services firms. Some low-benefit plans would cost employers between $40 and $100 monthly per employee, according to benefit firms’ estimates.”.
The article’s author, Christopher Weaver, is interviewed in the WSJ video posted at http://on.wsj.com/18YUJNE.
Further, a gentleman by the name of Andy Adams, Vice President and General Counsel for Adams Insurance Service in Houston, writes a great blog post at http://bit.ly/140XwDK about this very same subject, and his conclusion is the same as ours – this is a good deal for many employers, particularly those firms / organizations that have a lot of low wage workers and high turnover. That said, the types of firms / organizations that are probably best suited for this product solution include restaurants, staffing companies, nursing homes, home health care agencies, hotels, resorts, casinos, and security companies.
Please let us know if you have any questions about or interest in this particular concept. We would be delighted to help in any way possible.
April 25th, 2013 § § permalink
On April 23, 2013, the Departments of Labor, Health and Human Services (HHS), and Treasury issued Frequently Asked Questions (FAQs) regarding implementation of the Summary of Benefits and Coverage (SBC) provision of the Patient Protection and Affordable Care Act (PPACA).
- Effective January 1, 2014, the SBC will need to state whether the plan provides “minimum essential coverage” (MEC) as required by the “individual mandate.”
- It will also need to state whether the plan meets the “minimum value” (MV) requirement. Minimum value means the plan pays at least 60% of allowed charges for covered services, as required by the “employer mandate.”
The Departments provided a new template that incorporates these statements, but allows plans or issuers that are unable to modify their SBCs to continue using the current template, as long as they provide a cover letter or other disclosure that confirms whether the plan meets the MEC/MV requirements.
What Stayed the Same?
- Coverage examples have not changed for 2014.
- The SBC template was not changed to reflect PPACA’s requirement to eliminate annual limits on essential health benefits. Original instructions still apply:
- Answer “no” where the template asks, “Is there an overall annual limit on what the plan pays?”
- In the Why This Matters column, state: “The chart starting on page 2 describes any limits on what the plan will pay for specific covered services, such as office visits.”
- As an alternative, plans/issuers are now permitted, but not required, to remove the entire row from the document if there are no plan level annual dollar limits.
Additional Safe Harbors Extended
Regulators are extending the safe harbors and enforcement relief provided last year. Penalties will not be imposed on plans/issuers that are working “diligently and in good faith” to comply.
The Departments will:
- Continue to work with plans/issuers to help them come into compliance.
- Allow modifications to the SBC for plan terms/conditions that do not fit within the SBC requirements, as long as the SBC is completed as closely in line with the instructions as possible.
- Allow electronic delivery if enrollment/renewal is electronic, if a person requests the SBC be provided electronically or in compliance with ERISA electronic delivery safe harbor.
- Permit continued use of the HHS coverage examples calculator.
- Allow carve out benefits to be provided in separate SBCs “until further guidance is issued.”
- Exempt fully insured and self-insured Expatriate and Medicare Advantage plans for 2014.
- Extend the anti-duplication rule to student health insurance – if another party (e.g., a health insurance issuer) provides a timely and complete SBC to the individual, the SBC requirement is satisfied.
- Extend relief to closed blocks of business to September 23, 2014, as long as the product is not actively marketed, never provided an SBC or was not marketed after September 23, 2012. Closed blocks are no longer sold, but may continue to have individuals enrolled in the plans.
Read the SBC FAQs
Access the New Template (PDF & Word)
View a Sample Completed SBC (PDF & Word)
March 8th, 2013 § § permalink
In recent weeks there has been a lot of buzz over which states will decide to expand their Medicaid programs. There has been a lot of discussion around what the governors will do, but as it turns out, we should have also been focusing on the state legislatures.
The health reform law initially required states to expand the Medicaid eligibility level to 133% of the poverty line across all categories, including uninsured adults with the federal government initially shouldering the entire cost of the expansion population, but gradually shifting at least 10% of expansion costs to the states. The Supreme Court, in Sebelius V. Florida, et al., ruled that the Obama Administration had to give the states the option of declining to expand their programs or opting into the expansion at any time.
Initially following last summer’s court decision, most Republican-led states indicated that they would not expand their programs, citing flaws in the Medicaid program generally and state funding concerns. But in recent weeks, GOP Governors like Rick Scott in Florida and Chris Christie in New Jersey have made headlines by changing their minds and opting for a Medicaid expansion. Right now, seven Republican governors have expressed a desire to expand Medicaid in their states.
That number however, may start to decrease. Governor Rick Scott of Florida just decided to expand Florida’s program, noting how the recent passing of his mother changed his perspective on the situation as well as how he could not in good conscience deny the people of his state access to coverage. Problem is, members of the Florida House of Representatives did not have the same change of heart. Just this week, the Florida House Republicans met to explore coverage options that do not include opting into the Medicaid expansion. However, even if they are successful, they will have to fund their solution using state dollars, not federal. The Florida State Senate, on the other hand, agreed to back Governor Scott’s decision to expand Medicaid. Looks like Florida politicians will be losing some sleep over the next few weeks.
Democratic Arkansas Governor Mike Beebe is also running into legislative difficulty after expressing his desire to expand Medicaid in his state. Beebe is up against a Republican-controlled state legislature and so far it does not seem as if his decision will make it through the state chambers. In his proposal, the governor included an interesting condition stating that Arkansas would only expand Medicaid if those dollars could be used to enroll new patients in the same private health plans that will be available for residents with higher incomes. “If the state Legislature approves the plan, all Arkansans earning below 133% of the federal poverty limit—or about $15,000 for a single person—will be able to get health insurance” says The National Journal. While some may claim that private insurance will actually increase the cost of the program, “Obama Administration officials say it could help families whose incomes often fluctuate, leaving them eligible for Medicaid one day and ineligible the next —which in turn would likely make them eligible for subsidized coverage on the exchange” according to Politico.
Also this week, Governor Pat McCrory of North Carolina signed legislation rejecting major components of the health reform law, including the Medicaid expansion that would have expanded Medicaid for 550,000 people. “The measure also prevents North Carolina from establishing a state-sponsored marketplace for health insurance, giving the control to the federal government, which will begin selling policies on the exchange in October” said The News Observer.
March 8th, 2013 § § permalink
While Washington may have gotten off easy with this week’s “snowquester,” the sequester is a different story. First of all, for the most part, funding for PPACA will remain untouched. Also, even though there are going to be delays at the airport and with navy deployments and food inspections, the Administration has made it clear that […]
March 8th, 2013 § § permalink
This comes as no shock to us, but it seems that more people are starting to realize that insurance premiums in almost every state will spike under the health reform law.
Congressional Republicans on the House Energy and Commerce Committee, the Senate Finance Committee and the Senate Health, Education, Labor and Pensions Committee have been doing their research and recently compiled an 8-page report highlighting how PPACA will cause insurance premiums to skyrocket. The report, released this past Tuesday, was compiled from more than 30 studies and analyses focused on PPACA.
The notion and promise that the health reform law would make health coverage for all Americans more affordable is shattered in this report. One of the first things highlighted is the fact that “President Obama’s promise that premiums would decrease by $2,500 has been broken. Since 2008 the average family premium has instead grown by over $3,000. Even more shocking is that these increases occurred before Obamacare’s most costly requirements go into effect in 2014.”
The report provides a state-by-state analysis of how premium costs are likely to increase under the law and the percentages are shocking. Premiums in the individual and small group market may rise as much as 106% in states such as Indiana, Kentucky, Missouri, Ohio and Wisconsin. Vermont and New York already “hyper-regulate” their insurance markets and will likely not see any premium increases.
The largest price tags are the guaranteed community rating, essential health benefits and taxes and fees on plans, drugs and medical devices. The law also fails to account for the relationship between premium increases and health insurance costs. Since premium costs are based on healthcare spending growth and the law makes already unaffordable coverage even more unaffordable, premium costs will inevitably skyrocket.
The Energy and Commerce Health Subcommittee was set to hold a hearing about the reports findings yesterday however, due to the “snow” that failed to stick in DC, the House adjourned a day early. The hearing will be rescheduled.
March 8th, 2013 § § permalink
Last Friday the Obama Administration released five regulations on various provisions in the health reform law.
First, the proposed rule on SHOP Exchanges for small businesses delayed two key aspects of the SHOP exchange for one year in federally facilitated and partnership exchanges. State-based SHOP exchanges will have the option of offering employees greater choices of SHOP plans in 2014, but for at least the first year of operations SHOP exchanges with a federal presence won’t. Federally facilitated and partnership exchanges also will not aggregate premiums for employers. These two changes are likely to significantly impact enrollment in and success of SHOP exchanges, since both are viewed as key reasons why employers and employees might like the SHOP option, especially when you consider the wide variety of private exchange options there are likely to be for small employers in 2014.
HHS decided to go with the one-year delay to respond to concerns about “whether issuers could meet the deadlines for submission of small group market [qualified health plans] given the new small group market rating rules; whether issuers could complete enrollment and accounting system changes required to interact with the SHOP enrollment and premium aggregation systems required by employee choice; and whether there would be adequate time to educate employers, employees and brokers about the employer and employee choices available in the SHOP.”
We have been speculating about low SHOP exchange take-up from the get-go, but we really predict it now.
The Office of Personnel Management (OPM) issued its final rule on Multistate Plans. The Multistate plan provisions in PPACA are a nod to two very different ideas that never made it into the final law—coverage across state lines and a government-run public plan option. The provision requires OPM (which runs the Federal Employees Health Benefit Plan) to contract with private insurers to offer at least two national plan options in health insurance exchanges. Multistate plans will be offered in exchanges in more than 30 states next year and in all 50 states and the District of Columbia within four years.
The final rule kept intact a provision that NAHU (my principal trade organization), many health insurers, and the National Association of Insurance Commissioners opposed when it was originally proposed in November 2012. Multistate insurance plans will not have to use the state-selected essential health benefits benchmark, but can instead decide to match any of the benchmark plans selected by the OPM. This idea was opposed due to unlevel playing field concerns, but OPM responded with the comment that “we are not aware of any compelling evidence that multiple benchmarks would lead to adverse selection or consumer confusion.” This rule is now slated to go into effect 60 days from its publication in the March 11th Federal Register.
A final rule entitled the Notice of Benefit and Payment Parameters for 2014 was also published and it includes details on risk adjustment, the temporary transitional reinsurance program and temporary risk corridors and a related interim final rule makes amendments to the Notice. The biggest takeaway we have had from this regulation so far is that HHS will extend medical loss ratio deadlines in 2014 by two months, meaning that MLR reporting will not occur until July 31st and rebates will not need to be issued until September 30th for MLR rebates based on calendar year 2014 on forward. This change is being made so that carriers will be able to adjust their MLRs for their insurance and other premium stabilization program contributions, since those new fees will be excluded from the MLR just as other taxes are excluded. This change will not impact the next two years, since this year’s rebates will focus on the 2012 calendar year and rebates issued in 2014 will cover the 2013 calendar year.
Finally, a proposed rule from the Department of Treasury details exactly how the new national health insurance tax on premium volume that will impact all individual and group fully insured health plans beginning January 1, 2014 will work.
March 4th, 2013 § § permalink
February 15th was the final deadline for states to decide whether or not they wanted to enter into a partnership with the federal government or default to a federally facilitated exchange. Leading up to the deadline, six states had yet to make a decision and some still remained undecided. States that failed to formally notify the federal government of their decision automatically defaulted to a federally facilitated exchange. As of the deadline, the federal government will be implementing 26 state exchanges, which is way more than they had originally anticipated.
The state-based exchange provision of PPACA was put in place to give state officials more control over their state’s health coverage marketplaces. But instead of embracing the idea of state control, many states took the “you want it, you build it” approach to exchange creation and implementation. The sheer workload, future costs and lack of guidance from the Administration also did not make the idea of creating a state-based exchange appealing to many states.
Among the states that had not made an official decision leading up to the deadline was New Jersey. Governor Chris Christie, who has repeatedly stated that the Administration had not provided the states with enough information to make a sound decision on exchanges, sent a letter to Secretary Kathleen Sebelius on Friday announcing his choice to default to a federally facilitated exchange. Governor Rick Scott of Florida, unsurprisingly, also defaulted to a federally facilitated exchange.
Iowa, Michigan, New Hampshire and West Virginia all submitted applications for federal partnership exchanges just before the February 15th deadline.
Following the deadline, Secretary Kathleen Sebelius of HHS, in a blog post, reminded the states that the decision they make now does not dictate their exchange model forever, it just determines what model they will use in preparation for the October 1st open enrollment date. States will have the opportunity to run their own exchanges in future years, said Sebelius.
March 4th, 2013 § § permalink
HHS released a final rule on Wednesday, February 20 that covers the definition of essential health benefits (EHBs) and the determination of actuarial value for the individual and small group markets. The new rule also sets the minimum value of coverage that large employers need to meet to avoid the health reform law’s employer mandate excise tax penalties. HHS released calculators for determining actuarial value in individual and small group plans and minimum value for employer plans subject to the responsibility requirements. If some of these documents looks familiar to you that is because the final rule is extremely similar to the proposed version that was issued in November 2012.
We still have affordability concerns with regard to the EHB and actuarial value requirements and this final rule is by no means perfect. But a few places where the final rule differs from the proposed version are key, and we are pleased to say a number of changes requested by our national trade association, the National Association of Health Underwriters (NAHU) in its formal comment letter were granted. First of all, with regard to the minimum value standard, NAHU members have been privately communicating to HHS that employers who have to buy small group market coverage, but also have to comply with the employer mandate provisions of the law, should not have to do any additional verification of their plan’s actuarial value for over a year. NAHU made this point again in official comments on the proposed rule, noting that requiring small employers to meet both standards would be “duplicative, unnecessary and overly burdensome.” Fortunately, HHS took NAHU’s recommendation seriously and created the exact safe harbor it requested for small employer plans.
The final rule also stipulates that the EHB requirements will apply to individual plans on a plan year basis, not on January 1, 2014. This change was requested by NAHU specifically, since many individual policies renew at other times of the year and the idea of significant benefit and policy changes hitting all of these policies and consumers mid plan-year scared us. Or, as NAHU put it to HHS, “created significant consumer protection and education concerns.”
Another important clarification was made in the final regulatory language that employer contributions to a health savings account (HSA) and amounts newly made available under an integrated health reimbursement account (HRA) that may be used only for cost sharing will be taken into account for determining a plan’s minimum and actuarial value. In addition, the final rule gives health plans an out with regard to the law’s small group $2000/$4000 deductible limit if they think it will prevent them from offering bronze level coverage options. We are still waiting for sub-regulatory guidance about how exactly that out will work, but it is good news nonetheless.
Finally, HHS granted a NAHU request regarding stand-alone dental plans, allowing them to be sold in combination with a QHP outside of state-based exchanges in order to satisfy the pediatric dental EHB requirement. Previously it was only clear that stand-alone plans could be used in conjunction with a QHP in exchange-based plans.
The final rule is a quick read—just 149 pages! But if you are pressed for time, courtesy of NAHU’s retained council Ernst and Young, key provisions of the rules are highlighted below.
Minimum value, actuarial value
The rule does not make major changes to minimum value ted provisions laid out in a proposed rule from HHS published in the November 26, 2012, Federal Register, and in Treasury Notice 2012-31. The rule outlined a number of ways to determine whether employer-sponsored self-insured group health plans and insured large group health plans meet the MV standard:
MV calculator. The rule states that employers will be able to determine whether a plan meets the MV standard by using an MV calculator, which HHS and the Internal Revenue Service posted online today. The calculator is similar to an actuarial value (AV) calculator that HHS also released today for use in the individual and small group markets. However, the MV calculator relies on continuance tables and a standard population reflecting claims data of self-insured employer plans, while the AV calculator has been developed using a set of claims data weighted to reflect the standard population projected to enroll in the individual and small group markets for the identified year of enrollment.
Design-based safe harbors. The proposed rule states that employers also can determine whether a plan meets the MV standard by using an array of design-based safe harbors published by HHS and IRS in the form of a checklist. As outlined in the November 26, 2012, proposed rule, each checklist would describe the cost-sharing attributes of a plan that apply to the following four categories of benefits and services:
Physician and mid-level practitioner care
Hospital and emergency room services
Laboratory and imaging services
HHS has stated that the four categories of benefits and services comprise the majority of group health plan spending.
Certified actuary. Employers could use a certified actuary to determine whether an employer-sponsored plan meets the MV standard only if the plan contains non-standard features and neither the MV calculator nor the design-based checklists applies to the plan.
Small group market metal categories. The final rule states that any plan in the small group market that provides the bronze, silver, gold or platinum level of coverage based on an actuarial value test will be considered to satisfy the MV requirement.
The final rule clarifies that employer contributions to a health savings account (HSA) and amounts newly made available under an integrated health reimbursement account (HRA) that may be used only for cost sharing will be taken into account for determining MV. An accompanying Minimum Value Calculator Methodology document explains that the MV calculator treats such contributions as covered “first-dollar” spending for covered services (see page 8 of “Minimum Value Calculator Methodology”). In addition, the final rule’s preamble states that the Administration is giving “further consideration” to the question of whether other integrated HRAs might be counted toward MV.
HHS asks that technical issues and operational concerns about the MV calculator be sent to firstname.lastname@example.org.
Essential health benefits
Large group plans and grandfathered plans are not required to cover the 10 benefit categories that the ACA requires EHBs to include; however, such plans may not impose lifetime or annual limits on any essential health benefit that they do offer. Plans offered in the individual and small group markets, whether inside or outside state-based Exchanges, must cover EHBs beginning in 2014. To define EHBs, HHS proposed that states select a benchmark plan from the following four options:
The largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market;
Any of the largest three State employee health benefit plans by enrollment;
Any of the largest three national Federal Employee Health Benefits Program plan options by enrollment; or
The largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.
Twenty-six states selected their own benchmark plan from the above options, and HHS designated the largest small-group product in the state as the default benchmark in the remaining states.
The rule requires qualified health plans (QHPs) in an Exchange to cover either one drug in each class or as many drugs as are covered in the state benchmark plan, whichever is greater. The November 26, 2012, proposed rule would have required QHPs to cover just one drug per class. HHS will issue future guidance directing plans to include procedures to allow individuals to gain access to clinically appropriate drugs.
Stand-alone dental coverage. With regard to the pediatric dental coverage category of EHB, the final rule states that stand-alone dental plans will be subject to a “reasonable” out-of-pocket maximum separate from the out-of-pocket maximum for the rest of the EHBs covered by QHPs in an Exchange. Exchanges will determine what constitutes a “reasonable” out-of-pocket maximum.
In addition, the final rule recognizes that the actuarial value calculator available for QHPs “would be inappropriate for stand-alone dental plans” and provides for stand-alone dental plans to be categorized as “high” (actuarial value of at least 85%) or “low” (actuarial value of at least 70%, reduced from 75% in the November 26, 2012, proposed rule). The rule requires the above actuarial values to be certified by a member of the American Academy of Actuaries using generally accepted actuarial principles.
The final rule also states that plans outside of the Exchange may sell products that do not include pediatric dental coverage if they are “reasonably assured” that such coverage is sold only to individuals who purchase Exchange certified stand-alone dental plans.
March 4th, 2013 § § permalink
On Friday, February 22nd HHS issued a final version of the market reform regulations for the individual and small group markets that take effect in 2014. For those of you not interested in slogging through 145 pages of requirements, HHS produced a handy one-page fact sheet on their work. On February 22, the Department of Labor (DOL) also issued interim final regulations on procedures for addressing complaints by employees that have suffered retaliation from their employers because they reported violations of the health reform consumer protections or because they have received advance premium tax credits.
The market rules set the final standards for the new modified community rating requirements that all individual and small group insurers will be subject to in the years ahead. Notably while everyone from employers to insurance commissioners to carriers to NAHU begged in their formal comment letters to HHS for transition relief for the new rating requirements to prevent rate shock, HHS did not yield. Therefore, unless Congress takes action to stop it, rates could raise significantly for small employers and younger individuals in the individual and small group markets. An Oliver Wyman study shows that rates for young participants in the individual market would increase 45% and a survey of insurers conducted by the American Action Forum shows that rates could go up for young, healthy individuals by 189%.
While HHS made no changes on the age rating requirements, other parts of the regulation did change significantly from the proposed rule. Key changes include:
- Allowing state discretion on geographic rating zones instead of mandating a maximum of seven zones as originally proposed. The final rule expands state discretion, continuing to require rating areas to be based on counties, three-digit zip codes, or MSAs, but permitting states to use geographic rating areas legally established by January 1, 2013, or after January 1, 2013, as long as the number of rating areas does not exceeding the number of MSAs in the state plus one. States may also establish more geographic rating areas with HHS approval.
- The final rule clarifies how tobacco rating will be handled and requires small group plans to offer tobacco cessation wellness-program discounts. The final rule defines “tobacco use” as the use of any tobacco product four or more times a week on average (other than for religious or ceremonial purposes) within the last six months. States can enact more consumer protective definitions or look-back periods, or reduce or eliminate the tobacco surcharge altogether. Insurers cannot rescind or deny coverage based on misrepresentations of tobacco use, but can recoup premiums that should have been paid based on tobacco rating since the beginning of the policy year.
- States who wish to establish stricter age or tobacco bands than what HHS requires or merge their individual and small-group risk pools, must report these decision to HHS within 30 days.
- The final rule does not permit insurers to impose small group market contribution or participation requirements on small-group employers, but they may limit msmall groups that do not meet minimum participation or coverage requirements to a one month open enrollment period annually between November 15 and December 15.
- The rule clarifies that student health insurance coverage is not subject to the single risk pool requirement of the law and that the premium rate charged by an issuer offering student health insurance coverage may be based on a school-specific group community rating. HHS also finalized its decision to exempt student health insurance coverage from the guaranteed availability and the guaranteed renewability requirements of the Public Health Service Act.
- The final rule does not specifically address penalties to prevent adverse selection in the individual and small group markets as many suggested, but it does promise future guidance on permissible approaches to this problem. The rule also requires an annual, end of the year, open enrollment period, and provides a one-time 30-day special enrollment period for 2014 for individuals whose policy years are not on a calendar year basis. States are permitted to establish more frequent open enrollment periods. Individuals are also able to purchase individual coverage at any time if they experience one of the “qualifying events” that would qualify them for COBRA coverage. Furthermore individuals will get limited open enrollment periods of 60 days if they experience any of the following triggering events: loss of minimum essential coverage; an individual gaining or becoming a dependent through marriage, birth, adoption, or placement for adoption; errors in enrollment; violation of a material provision of the insurance contract by the insurer; eligibility or ineligibility for premium tax credits or changes in eligibility for cost-sharing reductions; or an individual’s permanent move.
The DOL also issued an interim final rule to establish protection of employees who may have been subject to retaliation for 1) reporting violations of the ACA’s consumer protections, or cooperating in the investigation or prosecution of such violations, or 2) receiving premium tax credits, thereby exposing their employer to liability for failing to provide adequate and affordable health coverage. The rule includes procedures and time frames for employees to make complaints to the Occupational Safety and Health Administration (OSHA) and for investigations by OSHA, appeals of OSHA determinations to an administrative law judge (ALJ), review of ALJ decisions by the Administrative Review Board (ARB) (acting on behalf of the Secretary of Labor), and judicial review of the Secretary’s final decision.
January 31st, 2013 § § permalink
CMS announced this past Monday that they would be seeking public comment on “the new single, streamlined application for health insurance and the SHOP applications in preparation for the launch of a new Health Insurance Marketplace next fall.”
CMS says the individual application will represent a single point of entry to purchase private insurance on health insurance exchanges (which are being rebranded as Marketplaces) and to assess eligibility for assistance including Medicaid, CHIP and the advance payment of premium tax credits. The 21-page application draft is intended to help employees determine what, if any, federal tax credits, subsidies or programs they are eligible for. It does not enroll applicants in an insurance plan and employers and employees must fill out separate applications.
To comply with the Paperwork Reduction Act of 1995 (the ultimate oxymoron of all time) all applications may be filled out and submitted online. The application asks for information on all dependents seeking benefits (questions for up to 6 dependents is provided), their salaries, if they are employed and if health insurance benefits are available to them through that employment and if they are enrolled in a plan that is offered to them. All application questions referring to benefits, salaries and employment must be verified by the employer in order for the application to be complete. CMS has also developed online videos to demonstrate how the application should be filled out; one video follows an individual properly filling out an application and the other shows a family filling out an application.
January 31st, 2013 § § permalink
I want to draw this blog’s readers’ attention to a 6-minute YouTube video in which Milton Ezrati, Senior Economist for Lord Abbett, a mutual fund company, provides a very good, nonpartisan perspective around the Affordable Care Act’s rollout, and specifically the state-based exchanges, in 2013 – http://bit.ly/UxjhHa.
Second, as a point of information, one week ago today (http://bit.ly/VrW77Z) it was announced by HHS, DOL, and Treasury that the health insurance exchange reporting requirement that employer plan sponsors had been faced with @ March 1, 2013 has been delayed indefinitely. Quoting from businessinsurance.com:
In a set of frequently asked questions and answers jointly issued Thursday by the Departments of Health and Human Services, Labor and Treasury, regulators said the reporting requirement will not go into effect until regulations are issued and “become applicable.”
Regulators cited several reasons for delaying the March 1 reporting requirement, including the intent to set a date that would give employers more time and to coordinate more closely with exchanges’ open enrollment.
“We are committed to a smooth implementation process including providing employers with sufficient time to comply and selecting an applicability date that ensures that employees receive the information at a meaningful time,” regulators said in the FAQs.
Regulators now expect that the notices will be distributed in late summer or fall, which would coordinate with the Oct. 1 starting date for the exchanges’ open enrollment.
Regulators also said they are considering providing “model, generic language” that employers could use.
Okay, I will translate – “We don’t have our act together on this”.
January 31st, 2013 § § permalink
The AP (1/30, Alonso-Zaldivar) reports that a “glitch” in the Affordable Care Act could mean that some families will be “priced out of health insurance.” According to the AP, “IRS regulations issued Wednesday failed to fix the problem as liberal backers of the president’s plan had hoped,” and as a result, “some families that can’t afford the employer coverage that they are offered on the job will not be able to get financial assistance from the government to buy private health insurance on their own.” The Administration “says its hands were tied by the way Congress wrote the law,” noting that the “affordability glitch is one of a series of problems coming into sharper focus as the law moves to full implementation.”
For its part, Bloomberg News (1/31, Wayne, Rubin) reports that “an effort to allow looser rules for calculating whether workers will be eligible for U.S. subsidies to buy health insurance was rejected today by the Internal Revenue Service.” The article describes that “employees can receive government tax credits to buy insurance for their families if the coverage their employers offer would cost more than 9.5 percent of their income, the IRS said today in final regulations,” but “that calculation will be based on the cost of self-only coverage, not family coverage, which is more expensive and would give more people access to the credits.” Democratic lawmakers, “including U.S. Representatives Sander Levin of Michigan and Henry Waxman of California, had called for the IRS to use the more generous calculation to give families more access to policies on the insurance exchange, or marketplace.”
Meanwhile, the Wall Street Journal (1/31, Radnofsky, Subscription Publication) reports that a spokesman for the Treasury Department said the regulations are based on the language in the healthcare law.
The NPR (1/30, Appleby) “Shots” blog, in partnership with the Kaiser Health News “Capsules” blog, reports that “consumer groups had hoped to sway the IRS to base the affordability threshold on the cost of a family plan, saying the rules could prevent some children and spouses from getting coverage.” Joe Touschner, senior health policy analyst at Georgetown University’s Center for Children and Families, said, “It doesn’t make sense to test the affordability of children’s coverage by looking at the cost of covering one person, the employee.” However, “supporters of the rule, among them employer groups and insurance brokers, say it closely follows the wording in the law and will be easier to administer.”
The New York Times (1/31, A11, Pear, Subscription Publication) notes that HHS Secretary Sebelius “said Wednesday that she wanted to use her discretion to prevent the imposition of tax penalties on certain uninsured low-income people in states that choose not to expand Medicaid. A rule proposed by her department would guarantee an exemption from the penalties for anyone found ineligible for Medicaid solely because of a state’s decision not to expand the program.’”