Soldevila.com Blog

New Plans starting on or after Thursday, September 23 Must Implement A Number of Important Health Reforms

Sponsors of group health plans should pay attention to a number of significant reforms to group health coverage that start as early as Thursday, September 23. The Patient Protection and Affordable Care Act ("Affordable Care Act" or "PPACA") mandates certain consumer protections in health plans, effective for plan years that start on or after September 23, 2010, which is six months from enactment of the Affordable Care Act.  For calendar year plans, these changes are effective January 1, 2011. 

Several of the reforms apply to "grandfathered" plans, which are plans that existed on March 23, 2010. Among the most important changes to all group health plans for plan years starting on or after September 23, 2010- regardless of grandfather status- are the following:

Extend Dependent Coverage Up to Age 26
For plan years starting on or after September 23, 2010, the law requires group health plans that cover dependents to continue to make dependent coverage available until age 26.  This rule applies to all plans in the individual market and to new employer plans. It also applies to existing employer plans unless the adult child has another offer of employer-based coverage (such as through his or her job). Beginning in 2014, children up to age 26 can stay on their parent's employer plan even if they have another offer of coverage through an employer.

Prohibit Lifetime Limits
For plan years starting on or after September, 23, 2010, group health plans may not impose lifetime limits on coverage for "essential health benefits."  

Restrict Annual Limits
For plan years starting on or after September 23, 2010, group health plans are prohibited from imposing annual limits other than on "restricted" annual limits.  Plans issued or renewed beginning September 23, 2010, will be allowed to set annual limits no lower than $750,000.  This minimum limit will be raised to $1.25 million beginning September 23, 2011, and to $2 million beginning on September 23, 2012. Beginning in 2014, plans may not impose annual limits on coverage.  Waivers for the annual limit rules are available to limited benefit plans.  Click here for guidance on the waiver process.

Drop Pre-Existing Condition Exclusions for Children
For plan years starting on or after September 23, 2010, group health plans must not exclude or limit coverage to children under age 19 on the basis of pre-existing conditions. Effective Jan. 1, 2014, group health plans may not impose pre-existing condition exclusions or limitations on adults or children.

No Rescission of Coverage
For plan years starting on or after September 23, 2010, group health plans are prohibited from rescinding a participant's coverage, absent fraud or an intentional misrepresentation of material fact.

Required Changes As Early As September for Non-Grandfathered Plans

The following changes are effective for plan years starting on or after September 23, 2010, for non-grandfathered plans. For more on grandfathered plans, including rules on maintaining grandfathered status, please click here.

Preventive Services without Cost Sharing
For plan years starting on or after September 23, 2010, group health plans that are not considered grandfathered must provide without cost-sharing (deductibles, copays or coinsurance) certain preventive services recommended by the United States Preventive Services Task Force (USPSTF) when delivered in-network. You can view the chart of covered services by clicking here. You can also view a list of covered services for adults, women (including pregnancy) and children by clicking here. The interim final regulations on preventive services under the Affordable Care Act are available here.

Internal Appeals
Under the new rules, new health plans beginning on or after September 23, 2010 must have an internal appeals process that:

• Allows consumers to appeal when a health plan denies a claim for a covered service or rescinds coverage; 
• Gives consumers detailed information about the grounds for the denial of claims or coverage;
• Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process; 
• Ensures a full and fair review of the denial; and 
• Provides consumers with an expedited appeals process in urgent cases.

External Review
New rules require plans to provide external reviews that meet standards set by the National Association of Insurance Commissioners.

**For more on health care reform, including required changes to group health plans after 2010, please contact us by clicking here.

Health Reform and Your Benefits

As you know, the House of Representatives passed the Senate health care bill and a reconciliation bill on Sunday. This bill has significant implications for employers who offer health care benefits and the employees and families covered by those plans.

We know you have a lot of questions and concerns about health care reform and how the legislation will impact your benefits. We have been closely following the health care reform legislation and the implications for employer-sponsored and individual health care benefits. However, since there were so many last-minute changes by the House this weekend and because the Senate bill passed in December also had so many complex provisions, it will take us some time to understand exactly what the legislation means for us. Some things will take effect very quickly after the bill is signed into law but many of the major provisions will not take effect for several years.

We are working with our peers and legal advisers to understand the bill and its implications.

We will get a complete update out to you as soon as we can. As changes occur we will provide simplified explanations and timelines. Attached is an updated timeline.

Health care reform will not change our commitment to finding and providing competitive health insurance that support your health and wellness—today and in the future.

As always, your benefits require you to be actively involved to get the most from our plans. While we evaluate the legislation, please focus on what you can do today to get the most from your plans. If you haven’t already, schedule your annual physical and make sure you and your family are getting the preventive care exams you need.

Again, we hope to have more details to you in the next few months. In the meantime, please send your questions to dale@soldevila.com .

 IMPLEMENTATION TIMELINE

2010

Business tax credits: Businesses with no more than 25 employees and average annual wages of $40,000 would get tax credits to help provide insurance to employees. The credit would be up to 35% in 2010 of the employer's contribution if the employer pays 50% of the total premium cost. Effective date — 2010 tax year, with the tax credit increasing to up to 50% in 2014

Temporary reinsurance program: A $5 billion program would be created for employers to provide coverage for retirees over the age of 55 who are not eligible for Medicare. Effective date — June 2010 (expires Jan. 1, 2014)

Tanning salon tax: A tax of 10% would be imposed on the cost of indoor tanning services. Effective date — Immediately

Temporary high-risk insurance pool: A $5 billion pool would be created to provide health to individuals with pre-existing medical conditions who have been uninsured for at least six months. Effective date — June 2010 (expires Jan. 1, 2014)   

Pre-existing conditions: Insurers would be barred from denying coverage to children who have pre-existing medical conditions. Effective date — Six months after enactment  

Adult dependent children: Insurance companies would have to provide coverage for dependent children up to the age of 26.  Effective date — Six months after enactment

Insurance coverage limits: Insurance plans would be prohibited from placing lifetime limits on how much they pay out to individual policyholders and from rescinding coverage except in cases of fraud. Effective date — Six months after enactment  

Preventive services: Health insurance plans would be required to cover preventive services such as immunizations for children and cancer screenings for women. Effective date — Six months after enactment  

Medicare drug rebates: Medicare patients who face a gap in prescription drug coverage would receive a one-year, $250 rebate to help pay for medication. Effective -Immediately

2011

Tax changes on health care savings accounts: The federal tax on individuals who spend money from health-care savings accounts on ineligible medical expenses would double to 20%. Effective date — Jan. 1, 2011   

Community health centers: Funding would increase by $11 billion for community health centers that provide medical care to patients who can't afford it. Effective date — Oct. 1, 2011   

Medicare "doughnut hole": Drug companies would provide a 50% discount on brand name prescription drugs for seniors who face a gap in drug coverage. More subsidies would be phased in through 2020, when the coverage gap would be closed. Effective date — Jan. 1, 2011

Primary care: Primary care doctors and general surgeons practicing in areas that lack primary care doctors would receive a 10% bonus payment under Medicare. Effective date — Jan. 1, 2011 through 2015   

Long-term care: A voluntary long-term care program called CLASS would be created. After at least five years of contributions, enrollees would be entitled to a $50-a-day cash benefit to pay for long-term care. Effective date — Jan. 1, 2011

New annual fees on Pharmaceutical companies: A total annual fee of $2.5 billion would be imposed on pharmaceutical manufacturers. Effective date — Jan. 1, 2011   

Insurance rebates: Health insurance companies would be required to provide rebates to enrollees if they spend less than 85% of their premium dollars on health care as opposed to administrative costs. Effective date — Jan. 1, 2011

2012-13

Annual fees on Pharmaceutical companies: The annual fee on pharmaceutical manufacturers would increase to $3 billion each year through 2016. Effective date — Jan. 1, 2012   

Contribution limits on health care savings accounts: The limit on how much individuals could contribute to flexible savings accounts that let people set aside money tax free for health costs would be set at $2,500. Currently, employers set the limit. Effective date — Jan. 1, 2013

Itemized deductions for unreimbursed medical expenses: The threshold for deducting such expenses would increase from 7.5% of adjusted gross income to 10%. Effective date — Jan. 1, 2013   

Medicare taxes: The Medicare tax rate would increase by 0.9 percentage points -- from 1.45% to 2.35% -- on earnings over $200,000 for individuals and $250,000 for families. Also, for the first time, a 3.8% Medicare tax would be imposed on investment income. Effective date — Jan. 1, 2013

2014

Individual mandate: Most Americans would be required to buy health insurance or pay fines of $95 per individual up to $285 per family or 1% of taxable household income, whichever is greater. Effective date — Jan. 1, 2014   

Employer requirements: Companies with 50 or more employees would pay a fine if any of their full-time workers qualified for federal health care subsidies. Effective date — Jan. 1, 2014

Individual mandate: Most Americans would be required to buy health insurance or pay fines of $95 per individual up to $285 per family or 1% of taxable household income, whichever is greater. Effective date — Jan. 1, 2014   

Employer requirements: Companies with 50 or more employees would pay a fine if any of their full-time workers qualified for federal health care subsidies. Effective date — Jan. 1, 2014

Medicaid expansion: The program for low-income Americans under the age of 65 would expand by increasing the income eligibility to 133% of federal poverty, or $29,327 for a family of four. Effective date — Jan. 1, 2014  

Federal subsidies: Federal subsidies, which vary based on household income, would help offset the cost of buying insurance for Americans and legal residents who qualify. Effective date — Jan. 1, 2014

Annual fee on insurance companies: An annual fee totaling $8 billion would be imposed on health insurance companies. Effective date — Jan. 1, 2014   

Health insurance exchanges: A state-based health care exchange -- a marketplace where uninsured individuals and small businesses could comparison shop for insurance policies -- would be created. Effective date — Jan. 1, 2014

2015-16

Individual mandate: Penalties for not carrying insurance would increase to $325 for each family member up to $975 per family or 2% of taxable household income, whichever is greater. Effective date — Jan. 1, 2015   

Annual fee on insurance companies: The annual fee on health insurance companies would increase to $11.3 billion. Effective date — Jan. 1, 2015   

Individual mandate: Penalties for not carrying insurance would increase to $695 for each family member up to $2,085 per family or 2.5% of taxable household income, whichever is greater. Effective date — Jan. 1, 2016 (Adjusted for inflation after 2016).

2017-18

Annual fees on pharmaceutical companies: The annual fee on pharmaceutical manufacturers would increase to $3.5 billion in 2017 and $4.2 billion in 2018. Effective date — Jan. 1  

Annual fee on insurance companies: The annual fee on health insurance companies would increase to $13.9 billion in 2017 and $14.3 billion in 2018. Effective date — Jan. 1, 2017   

Excise tax on high-cost insurance plans: A 40% excise tax would be imposed on health care plans that cost more than $10,200 for individual coverage and $27,500 for family coverage. Effective date — Jan. 1, 2018

Disclaimer…..

This is only a summary of the proposed timelines. Please refer to http://www.opencongress.org/bill/111-h3590/show

Or you can see a condensed version of the Senate Healthcare Bill along with the proposed House Reconciliation bill at http://www.kff.org/healthreform/upload/housesenatebill_final.pdf

Keeping you informed of legislative changes that may affect you and your employees is one of our goals. See below...

December 22, 2009
    
President Obama on Monday signed H.R. 3326, a measure that extends a federal COBRA subsidy program to help laid-off workers pay for continued health insurance coverage.

The law extends the subsidy an additional six months. Those eligible will now be able to receive the subsidy for a total of 15 months, instead of the current nine.

The law also extends eligibility two months. The date for eligibility was set to expire on Dec. 31, but has been extended to workers laid off between Jan. 1 and Feb. 28, 2010, in addition to those let go between Sept. 1, 2008, and Dec. 31, 2009, under the original program.

The COBRA premium subsidy was a provision included in the American Recovery and Reinvestment Act, which was enacted by Congress in February. Eligible individuals for the subsidy pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit.

The new provisions also do the following:

• Expand the ARRA premium subsidy to 15 months (an increase from the nine-month period under the original provisions);

• Allow for a 60-day period for the retroactive payment of premiums for assistance eligible individuals ("AEIs") (i.e., individuals who were entitled to the subsidy) whose subsidy period expired on November 30th and who failed to pay their premium for December coverage. The period will commence the day the provision is signed into law by the president, or, if later, 30 days after provision of the special notice (described below). The same refund/credit rules under the original bill will apply to any assistance eligible individual ("AEI") whose subsidy expired in November and who has since paid the full COBRA premium;

• Require a special notice describing the new subsidy provisions to all AEIs who are on COBRA on or after November 1, 2009 or whose qualifying event is an "involuntary termination" of employment occurring on or after November 1, 2009;

• Conditions eligibility for the COBRA subsidy on only one factor: a qualifying event that is an "involuntary termination" of employment occurring on or before the new February 28, 2010 sunset date. The previous version of the subsidy also took into account when the COBRA coverage period actually began. This means that employees who are involuntarily terminated before February 28, 2010 but still receive coverage subsidized by employers that defers the COBRA start date to a date later than February 28, 2010 will still be able to receive the subsidy.

The bill requires employers to notify current and future Cobra participants of the extended 15-month eligibility.

Please call us if you have questions or need help understanding your responsibilities regarding the new COBRA subsidy.
 
 
Dale Soldevila
Soldevila & Associates

504-834-3639

Image by RussBowling

Health reform is complicated. The more informed we are as citizens the better we can discuss our cause to our congressional representatives. Click this link for a brief comparison of the most likely plans before congress.  http://www.insurancejournal.com/news/national/2009/08/10/102872.htm.

 Don't be fooled by the rhetoric though. A government run health care plan is about power and control by the government, not covering every individual.  If the government wants to cover every individual their is a system in place for this. It's called health insurance through private insurers. The government could subsidize insurance carriers with incentives for competitive rates instead of trying to create a large govermental bureacracy. Great Britain has a goverment run health care system and it is the third largest employer in the world; with most of the employees being administrative staff.

One of the governments arguments is to create competition for the insurance industry. I don't think that is the governments role. What is to stop them from opening up gas stations and grocery stores to compete to get prices down.

We are the most powerful and prosperous nation in the world because of our capitalism. Please call your congressional representatives and let them know your position on government run health care.

WASHINGTON (AP) -- Democrats' health care bills would not meet President Barack Obama's goal of slowing the ruinous rise of medical costs, Congress' budget arbitrator warned Thursday, giving weight to critics who say the legislation could break the national bank.

The sobering assessment from Congressional Budget Office Director Douglas Elmendorf came as Democrats in the House of Representatives pushed to pass a partisan bill through committees. In the Senate, a small group of lawmakers continued to seek a deal that could win support from both Republicans and Obama's fellow Democrats.

Obama has made a new health care system the chief domestic goal of his first term. Among developed countries, the United States alone has no comprehensive health care plan for all its citizens, and close to 50 million of the 300 million Americans lack health insurance.

With pressure mounting on all sides, Senate Majority Leader Harry Reid dismissed as "a waste of money" a television ad campaign by Obama's political organization aiming to nudge moderates of both parties off the fence. He called it "Democrats running ads against Democrats." A spokesman later said Reid has no problem with the effort.

From the beginning of the health care debate, Obama has insisted that any overhaul must "bend the curve" of rapidly rising costs that threaten to swamp the budgets of government, businesses and families.

Asked by Senate Budget Committee Chairman Kent Conrad, a Democrat, whether the evolving legislation would bend the cost curve, the budget director responded that, as things stand now, "the curve is being raised."

Explained Elmendorf: "In the legislation that has been reported, we do not see the sort of fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount. And on the contrary, the legislation significantly expands the federal responsibility for health care costs."

Even if the legislation would not add to the federal deficit during the next years, Elmendorf said costs over the long run would keep rising at an unsustainable pace.

Part of the reason is that Obama and most Democrats have refused to accept a tax on high-cost health insurance plans as part of the overhaul. Wide agreement exists among economists that such a tax would give businesses and individuals an incentive to become thriftier consumers of health care. Senate Finance Committee Chairman Max Baucus, also a Democrat, said Thursday that Obama's position is not helping matters.

White House officials played down the significance of the budget director's assessment, which they said was premature. "At the end of the day, we'll have significant cost controls," presidential adviser David Axelrod told The Associated Press.

Senate Republican leader Mitch McConnell said the budget director's warning should be "a wake-up call," adding, "instead of rushing through one expensive proposal after another, we should take the time we need to get things right."

Despite the flashing yellow light from the budget office, Congress pushed ahead Thursday.

On the heels of the Senate health committee's approval Wednesday of a plan to provide coverage to the uninsured, three House committees shifted into action on their version of the legislation. The Democratic bills also would create a government-sponsored insurance plan to compete with private coverage, although they differ on the details.

House Democrats won a coveted endorsement of their legislation from the American Medical Association, which said the bill "includes a broad range of provisions that are key to effective, comprehensive health system reform." The insurance industry said it opposes key elements of the bill, saying a government plan "will cause millions of patients to lose their current coverage."

Benefits awareness and appreciation are rising in this troubled economy. This supports long-held beliefs that strong communications and education canincrease employee satisfaction and strengthen the bottom line.

In “Benefiting the Bottom Line:How a Strong Benefits Communication and Education Strategy Helps DriveBusiness,” the provider of disability, life and supplemental accident and healthinsurance policies found that 85% of employees are happy about benefitsenrollment when they’re armed with all the resources needed to make informeddecisions. Internal research was cited alongside other leading sources ofvoluntary benefits information for a comprehensive view of these issues.

But in an acknowledgement that much morecan be done to achieve critical objectives, just 21% of employers surveyedthink employees have a good understanding of their benefits, even though 90%agree of the respondents believe it’s important to help realize key businessand competitive advantages, such as recruiting and retaining top talent andbuilds morale and loyalty.

Perhaps with this in mind, 94% ofemployers would like access to resources that help educate employees aboutbenefits – an area where benefit service providers can increase the value ofbenefits plans by offering comprehensive communication and education services.

Changes of any type to an employee'sbenefits plan – whether it’s increased premiums, higher deductibles, a shift toemployee-paid voluntary benefits, or even just more options – can causeconfusion and concern for employees. That’s exactly why benefitscommunication is so important. We’ve found employees can accept changes, evenones that may cost them more, if they understand the reasons behind them.

There’s a dire need for employees to talk with someone about what can be doneto improve the financial protection for themselves and their families.

Today more than ever when moneyis so tight, a dollar invested in benefits communication is going to get anemployer a much greater return than a dollar invested in paying for a newbenefit or part of an existing benefit.