2013 “early renewals” in the small employer group market and end of 2014 compliance and cost management strategies

March 3rd, 2014 § 0 comments § permalink

At the end of 2013 many companies and organizations with less than 50 employees did something called an “early renewal” with their group health insurance plans as a means of kicking the can down the road, many until December 1, 2014, to defer their compliance with Health Care Reform for up to 11 months.  The principal reason for doing such in most cases was to avoid a significant rate increase at the end of 2013 with the thought of “Let’s buy some time”.

QUESTION – If your company is one of these companies that bought some time by doing an early renewal, what is your strategy at the end of 2014 for reasonably managing costs of complying then?

Did you know that there are viable group health insurance financing options available in the market to help you avoid the Health Care Reform “cost conundrum” later this year when your company’s / organization’s group plan renews?   Self-insurance either with an insurance company or third party administrator (TPA) providing plan administration and purchasing catastrophic insurance coverage called “stop loss insurance” will, no doubt, be a solution for many small employers wrestling with this issue this year.

Self-insured medical plans are exempt from some of the more onerous provisions of Health Care Reform, such as the Health Insurance Tax (HIT) and Modified Community Rating.  Avoiding these two aspects of Health Care Reform alone can result in saving tens and even potentially hundreds of thousands of dollars of expense.

Benico, Ltd. provides private companies, public sector employers, and not-for-profit organizations of all sizes with strategic advice around the design, risk management, communication, and enrollment of their health and welfare plans and with compliance around the laws and regulations relating to the same.  To discuss your company’s situation, please contact Benico’s principal, John Garven, at 847-669-4800, ext. 202.


2014 health care reform update

March 3rd, 2014 § 0 comments § permalink

The purpose of this blog post is to provider our readers with some perspective about where things currently stand and where they are headed this year with regard to the timing and types of guidance around the Affordable Care Act (“ACA”, aka “ObamaCare”) that we should expect to receive from the federal agencies having jurisdiction (principally HHS, DOL, and the IRS).

First, we believe everyone will agree that February was a VERY BUSY MONTH with regard to ACA guidance.  To this point, the final regulations around the employer mandate were released on Monday, February 10th.  Following are our thoughts about this development:

1)    Generally speaking, we are sure the fact of the delay for compliance with the employer mandate until 2016 for businesses / organizations having less than 100 but more than 50 full-time equivalent employees (FTEs) will at least come as welcome news in the short term.

2)    Perhaps even as significant as the 1st point, though, is the transitional relief afforded businesses / organizations having 100 or more FTEs under Section 4980H(a) of the law.  Specifically, larger employers next year will NOT be subject the $2,000-per-employee “no coverage” penalty if they, in fact, offer compliant, “qualified” coverage to at least 70% of their full-time employees. This is a change from the proposed rule, under which employers would have had to offer coverage to at least 95% of their full-time employees right away.  

3)    It should be kept in mind that next year under the 70% standard and, in 2016 and thereafter under the 95% standard for all “applicable large employers” (businesses / organizations with 50 or more FTEs), employers may still be subject to an “affordability” penalty of $3,000 for any otherwise eligible employee who obtains government-subsidized coverage through the public exchange.

4)    It should also be kept in mind by businesses / organizations that the “no coverage” and “affordability” penalties are excise taxes, meaning that they’re NOT deductible business expenses for tax purposes.  

5)    There is some helpful guidance in the final regulations around seasonal employees who may be excluded entirely if they work less than 6 months as well as for educational employees.

Second, we anticipate that the rest of 1Q2014 will prove to be a very important period in terms of guidance and developments, including the final stretch before the end of the Marketplace open enrollment period on March 31st.  It was recently reported that there are 56 active items of ACA guidance currently in the works between the IRS, DOL, and HHS.  43 of the 56 items are expected to be released during 2014, and several of them are frankly needed very soon.  In addition, the continued Congressional negotiations on the debt ceiling and the federal budget could have ACA implications.

Finally, just a note that our firm offers the following “on-demand” Health Care Reform (HCR) resources:

  • Inform on Reform© is an HCR compliance resource provided exclusively by the Smart Partner® member firms of the Benefit Advisors Network and its Compliance Director, Peter Marathas, a Partner in the Employee Benefits, Executive Compensation & ERISA Litigation Practice Center of Proskauer Rose, LLP. You may access this particular resource by logging in at www.benefitadvisorsoffice.com/HCReform.
  • Visit http://benico.com/health-care-reform-updates/ for the latest HCR updates.  This particular feed is constantly being updated through a professional outsourced service that Benico contracts with.


If you are not a client yet but would like access to Inform on Reform© please email a note requesting such to info@benico.com.  If you make such a request, we will also email you our 2014 Health Care Reform Compliance Checklist which provides the reader with virtually everything that the he / she needs to know with regard to important dates and actionable steps needing to be taken during 2014.

In closing, our continued challenge is education.  Most Americans (62% according to a recent Kaiser Health News poll) do not realize that most significant ACA provisions have taken effect.  2013 was in many ways a year of survival.  2014 will be a year of strategy.  To this end, our firm stands ready to engage with our clients to deliver real-world and practicable solutions that fit their strategy around compliance and cost management.

Five things you need to know about individual medical plans in 2014

January 22nd, 2014 § 0 comments § permalink

  1. The open enrollment period is expected to end on March 31, 2014.  Anyone can sign up for an individual medical plan during this time period. There is speculation that the open enrollment period will be extended because of the problems with the initial roll-out of the exchanges, but for now it is still scheduled to end on March 31, 2014.
  2. Applications and premium payments for coverage, whether purchased on the exchange or off, must be received by the 15th of the month to receive an effective date of the 1st of the following month.  For example, an application must be submitted and the initial premium must be paid by January 15th to receive a February 1st effective date.  The application submission dates and premium due dates may be different for off-exchange health plans.
  3. After the open enrollment period ends on March 31st, individuals must experience a qualifying event to be eligible to enroll in a medical plan or make a plan change mid-year. Individuals will have 60 days from the date of the qualifying event to sign up for coverage or make a plan change.  See the list of qualifying events below.
  4. As long as an individual submits an application by March 31st they will be exempt from the health care law’s individual mandate penalties provided they maintain coverage throughout the rest of the year.  This statement holds true even if the individual receives an effective date that would cause them to be without coverage for more than 3 consecutive months.  Individuals that are without coverage for 3 or more consecutive months out of the year for other reasons will be subject to the Individual Mandate penalties unless they qualify for an exemption.
  5. The next open enrollment period will occur from Nov. 15, 2014 to Jan. 15, 2015.  It was originally scheduled to occur between Oct. 15, 2014 and Dec. 7, 2014, but has since changed.  During this time period anyone may sign up for coverage or make a plan change without a qualifying event.


List of Qualifying Events – Special Enrollment Periods for Individual Medical Plans

 If an individual experiences a qualifying event he/she will have 60 days from the date of the qualifying event to apply for an individual medical plan or make a change to their existing coverage. The following list outlines the qualifying events that have been identified by the Affordable Care Act (ACA).

  1.  Involuntary loss of minimum essential coverage, for example, because of a job loss (voluntarily terminating coverage or policies that are canceled for non-premium payment are not qualifying events);
  2. Change of family structure (i.e. marriage, divorce, death, newborn);
  3. Gaining citizenship or permanent resident status;
  4. Becoming newly eligible for a premium or cost sharing subsidy (generally results from mid-year income changes);
  5. Becoming ineligible for a premium or cost sharing subsidy (generally results from mid-year income changes);
  6. Change of residential address that results in new medical plan options available;
  7. Did not enroll during the open enrollment period because of a mistake, misrepresentation or inaction of an officer, employee or agent of the Health Insurance Marketplace;
  8. The insurance company substantially violated a material provision of its health insurance contract;
  9. The individual is a member of an American Indian Tribe (can enroll or make a plan change one time per month); or
  10. The individual can demonstrate to the Health Insurance Marketplace that he/she has other extenuating circumstances that qualify him/her for special enrollment.

Departments Release New FAQ Guidance on ACA and MHPAEA Implementation Issues

January 20th, 2014 § 0 comments § permalink

On January 9, 2014, the Departments of Treasury, Labor, and Health and Human Services (collectively, the “Departments”) published the eighteenth installment of a series of answers toFrequently Asked Questions (FAQ) regarding implementation of the Affordable Care Act (ACA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The FAQ provides guidance on a number of issues, including new recommendations made by the U.S. Preventive Services Task Force and how they affect the ACA’s preventive care requirement, limits on participant cost-sharing (i.e., out-of-pocket limits), expatriate health plans, wellness programs, fixed-indemnity insurance, and guidance on the ACA’s impact on the MHPAEA.

The FAQ generally confirms previous Department guidance on the issues addressed and does not significantly change the application of these rules and mandates to employer-sponsored group health plans.

The Affordable Care Act and Rising Health Insurance Premiums

December 9th, 2013 § 0 comments § permalink

Benefit Advisors Network (BAN) Compliance Director, Peter Marathas, discusses the Affordable Care Act and rising health insurance premiums. BAN Smart Partner, Benico, Ltd., can help companies address the concerns mentioned in this short, informative video.

DOL Says No Penalties for Failing to Provide Marketplace (Exchange) Notice

September 14th, 2013 § 0 comments § 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.

More Information

Please visit the DOL website or contact Benico, Ltd. at 847-669-4800 for more information on the Marketplace Notice requirement.

More about the September 11, 2013 DOL guidance around the Marketplace Notices

September 13th, 2013 § 0 comments § 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.



Affordable Care Act Webinars

August 27th, 2013 § 0 comments § 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.

Employers Eye Bare-Bones Health Plans Under New Law

May 30th, 2013 § 0 comments § 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.


Summary of Benefits and Coverage (SBC) – Guidance for 2014

April 25th, 2013 § 0 comments § 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).

What’s New?

  • 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)

State legislatures are beginning to push back on Medicaid expansion

March 8th, 2013 § 0 comments § 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.

The Sequester and Healthcare

March 8th, 2013 § 0 comments § 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 […]

Rate Shock! Insurance Premiums to Spike under Health Reform

March 8th, 2013 § 0 comments § 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.

Regulations, regulations, and more regulations!

March 8th, 2013 § 0 comments § 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.

Another Exchange Deadline Has Come and Gone, States Still Left Undecided

March 4th, 2013 § 0 comments § 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.


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