One of the provisions of the Affordable Care Act requires employers to notify employees of the existence of the new Health Insurance Marketplace (Exchanges).  Originally, this requirement was to be implemented by March of 2013 but the deadline was extended.  On May 8, the Department of Labor announced the new deadline and issued temporary guidance regarding employer compliance relative to the existence of the Exchanges as well as model language for such notification.

Employers will be required to notify existing employees by no later than October 1, 2013, and new hires are to be notified on the date of hire. There are two model notification letters: one for employers offering coverage and one for those not offering coverage.   In addition, the Department of Labor issued new model language for the COBRA election form.  The purpose of this form is to notify COBRA beneficiaries of the existence of the New Health Insurance Marketplace.   Additional information may be found by accessing the following link:  http://www.dol.gov/ebsa/healthreform/

What does this means to you?

At this point, we recommend reviewing the model language notices to get familiar with the process.  Additionally, employers need to establish an internal process as to when the employer will distribute the notifications to employees and how they will be distributed.  These notifications will most likely raise a great deal of questions from employees so we recommend contacting your Agent as soon as possible.  As we gain more information as to what carriers, products, and premiums will be available for purchase on the Exchange, your Agent will be able to provide you with accurate and timely answers to your questions.  Employers who must comply with COBRA need to meet with their advisors to draft their new notification letters to comply with this new regulation.

This blog is not intended to be a substitute for legal advice.

Beginning January 1, 2014 large employers, defined as 50 or more employees, will be subject to the Shared Responsibility (Play or Pay) provisions of the Affordable Care Act.  The IRS has issued transition rules as they relate to employer plans with renewal dates other than calendar year plans.  Many employer plans renew on dates other than January 1 and the significance of this ruling has to do with how it will impact those employers.  The transition rule allows large employers to avoid the penalties until their renewal in 2014.  To qualify for this transition relief, the employer’s plan must be in effect prior to December 27, 2012, been offered to at least one third of the company’s employees, or must have covered at least one quarter of the company’s employees.  Additionally, the employer must offer affordable minimum value coverage on the first day of their 2014 plan year in order to avoid the penalties.

What does this mean to you?

Employees who are  offered coverage and simply decline to take it will not have an impact on the employer during this transition period; however, those individuals refusing coverage that are not covered by a QHP (Qualified Health Plan) will be subject to the individual mandate.

As many of you are aware, part of the PPACA legislation included a new avenue for Small Businesses to purchase affordable health coverage.  Known as the Small Business Health Options Program, or SHOP, small business owners would have been able to provide their employees with different  qualified health coverage plans from numerous carriers, very similar to the process that Individuals will exposed to when buying on the federal/state exchange.   Every employee would have the option of selecting a qualified health insurance plan that best suits his/her needs.

However, as of April 2, the Obama Administration has decided to delay the development of the SHOP exchanges citing that additional information is needed.

Regardless of the delay, it will be important for Small Business Owners to develop a plan of action relative to health insurance plans.  Some questions that all business owners need to consider include the following: Do I plan to offer health insurance in the future?  If so, what is my budget for health insurance? What information will I need to determine if the coverage I provide is affordable to my employees? Will I need to offer dependent coverage?

What does this mean to you?

Most importantly, now is the time for Small Business Owners to seek guidance from  licensed, qualified Health Insurance Agents; in the long run, it will save the business owner time and energy and potentially, streamline his/her internal processes.

The Department of Health and Human Services (HHS) has released three new proposed regulations regarding the Patient Protection and Affordable Care Act’s (PPACA) essential health benefit requirements, the new rating rules for individual and small group market policies and new requirements for employer-based wellness programs.

The new regulations give states an extra month to choose a benchmark plan on which all essential health benefit mandates for their individual and small group markets will be based. Those states that do not choose a plan will become federal fallback states and HHS will base their benchmark on the largest plan within the state’s small group market.

Another proponent of the proposed regulation requires health insurers to submit proposed rate increases after 2014, which was done in an attempt to help CMS identify potential market disruptions and to “over see the new, market-wide reforms” in the health law. Although many business groups, groups of young adults and those in the insurance industry have been supporters for wider age rating bands, HHS claims “the new law does not permit greater flexibility in this area as currently written.” The administration proposed three age bands: one for children ages 0-20, adults 21-63 and a third for adults over 64. The proposed rule does allow insurers to implement rating “curves” in order to reduce rate shock when a customer ages from one band to the next. Insurers will also be allowed to charge higher rates for tobacco users, but only if they charge less for non-tobacco users, and rates may vary by family size and geographic location.

In the business market, the rule will allow insurers to have year round open enrollment periods while those in the small group market will be able to limit their enrollment periods to prevent people from only buying insurance when they need it.

What does this mean to you?

Although it may seem like the newly-released ACA rules gives states greater flexibility even as they require insurers to cover people with pre-existing conditions, these are all rough drafts of proposed requirements. Therefore, now is not the time to explain the rules to your clients for compliance purposes. Instead, it is the time to think about the ideas that have been presented and make suggestions about how they will or will not benefit the private health insurance marketplace and how they could possibly be improved.

In accordance with the Patient Protection and Affordable Care Act (PPACA), group health plans and health insurance issuers will begin issuing Summary of Benefits and Coverage (SBCs), starting September 23, 2012. According to Human and Health Services (HHS), this document explains “simple and consistent information about health plan benefits and coverage. People will receive the summary and glossary when shopping for coverage, enrolling in coverage, at each new plan year and within seven business days of requesting a copy from their health insurance issuer or group health plan.” SBCs will contain the following:

• Description of coverage for each category of benefits
• Cost sharing requirements (deductibles, coinsurance, copayment)
• Exceptions, reductions and limitations of coverage
• Two coverage examples
• Contact information for questions and obtaining a copy of plan document, policy etc.
• Internet address for provider network listin g and prescription drug coverage
• Internet address for the uniform glossary and the contact phone number for requesting paper copies
• Renewability provisions and appeal rights
• As of January 1, 2014, a statement regarding coverage of minimum essential benefits

Insurers will also be including a Uniform Glossary, which will help consumers understand some of the language used in health insurance such a “deductible” and “co-payment.” To help ensure the document is easily accessible for consumers, HHS will also post the glossary on the new health care reform website, www.HealthCare.gov and www.dol.gov/ebsa/healthreform.

What does this mean to you?
Although the SBC will make purchasing insurance easier to understand, the role of the agent is still needed as renewing or purchasing insurance will now be a more involved process to make sure employees have the correct documents. There is some concern about a compliance date of September 23, 2012 as employers and insurers requested an 18-month period from the final ruling that took place on February 9, 2012.

Starting August 1, 2012, women are getting greater control over their health care and adding eight new prevention-related health care services without paying more out of their pocket. Many insurance companies did not cover these preventative services for women at all under their health plans, as some women had to pay deductibles or copays for the care they needed to stay healthy. The new rules in the health care law requiring coverage of these services take effect at the next renewal date –on or after Aug. 1, 2012- for most health insurance plans.

The eight new prevention-related services are:

• Well-woman visits
• Gestational diabetes screening that helps protect pregnant women
• Domestic and interpersonal violence screening and counseling
• FDA-approved contraceptive methods and contraceptive education and counseling
• Breastfeeding support, supplies and counseling for sexually-active women
• HIV screening and counseling for sexually-active women

These services are based on recommendations from the Institute of Medicine, which relied on independent physicians, nurses, scientists, and other experts as well as evidence-based research to develop its recommendations. Group health plans and issuers that have maintained grandfathered status are not required to cover these services. In addition, certain nonprofit religious organizations, such as churches and schools, are not required to cover these services.

What does this mean to you?

At the time of renewal, coverage for these services will begin. Women can now make health decisions that will keep them healthy, catch potentially serious conditions at an earlier state, and protect them and their families from overwhelming medical bills.

Each carrier has specifics to these services and it is important to know the differences when dealing with multiple carriers. BlueCross BlueShield and BlueChoice HealthPlan have created a Women’s Preventive Services Bulletin, which applies to both.  Carolina Care Plan has explained their coverage of women’s preventive health services for non-grandfathered plans and as well as Wellpath.

On June 28, 2012, the US Supreme Court ruled that the Affordable Care Act’s (ACA) individual mandate is a constitutional exercise of Congress’s power to impose taxes. Due to the Court’s decision, compliance efforts likely will continue with major provisions of the ACA becoming effective in 2013 and 2014. According to Chief Justice Roberts, “The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”

In the Court’s analysis of the ACA’s Medicaid provisions, it held that it would be unconstitutional for the federal government to withhold all Medicaid funding in order to force states to comply with the Medicaid expansion. Chief Justice Roberts wrote, “Nothing … precludes Congress from offering funds under the ACA to expand the availability of health care, and requiring that states accepting such funds comply with the conditions on their use. What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

David Pankau, President and Chief Executive Officer of BlueCross BlueShield of South Carolina states, “We have consistently expressed our concern that the law does not address underlying root causes of rising health care cost, which affects our nation’s ability to be competitive in a global economy, stymies the enterprise of small business owners, and restricts the very access to care supported by this legislation.”

In preparation for the major coverage expansion to occur under the ACA in 2014, the Administration is expected to release a host of regulations dealing with the definition of minimum essential coverage, employer coverage and reporting requirements, and an array of new taxes and fees. Clients should be aware of provisions of the law set to take effect in 2013 and 2014, including:

2012

• Medicare hospital value-based purchasing program
• Increase in physician quality reporting requirements in Medicare
• Additional Medicare pilot programs on alternative payment methodologies, e.g., accountable care organizations
• Increased requirements for hospitals to maintain not-for-profit status
• Fees from insured (including self-insured) plans transferred to the Patient-Centered Outcomes Research Trust Fund

2013

• Increase Medicare payroll tax by 0.9% on high-income earners
• Impose a 3.8% tax on net investment income of high-income individuals
• $500,000 cap on health insurers’ deduction for executive compensation
• Eliminate employer deduction for Medicare Part D subsidy
• FSA limitations
• Excise tax on medical device manufacturers and importers
• Medical expense deduction floor increases to 10%
• Nationwide bundled payment pilot begins in Medicare
• Increased Medicaid reimbursement for primary care
• Medicare physician comparison data available to the public
• Reductions in Medicare payments for select hospital readmissions
• Expanded coverage of preventive services by Medicaid

2014

• Employer mandate and individual mandate
• Employer and insurer reporting requirements
• New health insurance market reforms take effect
• State health insurance Exchanges established
• Premium tax credits and cost-sharing subsidies available to certain individuals in Exchange   insurance products
• Medicaid expansion to new populations (100% federal match to states for newly-eligible populations through 2016)

• Annual fee on health insurers
• Medicare/Medicaid DSH payment cuts begin
• Independent Payment Advisory Board (IPAB) issues first report to Congress if Medicare spending exceeds growth target

Post-2014

• Excise tax on high-cost employer-sponsored coverage (2018) 

What does this mean to you?

The Health Insurance industry is continuing ahead with business as usual to comply with health reform. Agents and brokers will remain a constant for their individual and employer clients as we head toward full implementation of the law’s insurance-market reforms and other requirements in 2014. That being said, the Gilston Agency and our reform blog will continue to keep you up to date with new regulations or clarifications as they are released to keep you better informed.

An estimated 10.7 million American women use oral contraceptives, the leading method of contraceptive in the United States. The Patient Protection and Affordable Care Act now requires coverage of FDA-approved contraceptive methods for women at 100 percent, without charging a copayment, coinsurance or deductible, when filled at a network pharmacy. HHS commissioned an Institute of Medicine study to review what preventive services are necessary for women’s health and well being and should be considered in the development of comprehensive guidelines for preventive services for women.  

The specific preventive services that must be covered without cost sharing will include:

• Well-woman visits
• Screening for gestational diabetes
• Human papillomavirus (HPV) DNA testing for women 30 years and older
• Sexually-transmitted infection counseling
• Human immunodeficiency virus (HIV) screening and counseling
• FDA-approved contraception methods and contraceptive counseling
• Breastfeeding support, supplies, and counseling
• Domestic violence screening and counseling

What does this mean to you?
While many women will benefit from an increase in the number of preventive services available, this will once again have a negative impact on premium cost. Be sure to keep in mind that coverage effective dates vary between carriers. If the client has grandfathered status or meets the federal requirements for religious exemption as defined by the health reform law, and does not want contraceptive coverage, contact your Gilston Agency Representative for further instructions.

The bulk of PPACA’S provisions take effect in 2014 causes the question of whether or not large and small employers will cease to provide healthcare coverage to their employees. The Obama administration and the Congressional Budget Office say not too many will, but numerous studies, papers, briefs, reports, employer questionnaires, surveys and comments from other prominent Democrats suggest that at least a few more employers than official projections indicate may drop their coverage. According to a report by the Urban Institute’s Health Policy Center, discussed in a previous blog article, one argument is that through the new exchanges, companies will likely stop their sponsored coverage, increase their employee’s salaries to cover purchasing individual policies through the exchange and pay the penalties under the ACA.

The House Ways and Means Committee issued a report that suggests that PPACA’s subsidy costs could skyrocket, since many larger employers would be financially better off if they drop their group coverage and allow employees to seek individual coverage through the state-based health insurance exchanges. The Ways and Means report echoes the findings of a House Energy & Commerce Committee report released two weeks ago that also found that PPACA will “raise costs and increase uncertainty for job creators, and jeopardize coverage for American workers.”  

What does this mean to you?

If employers choose to drop coverage, they will lose a way to set themselves apart in a competitive market. This may not be in their best interest if they want to obtain high caliber employees. Employers will have to make a personalized decision about whether or not dropping employer-sponsored coverage could hinder their position in a highly competitive market. Agents will play a key role in helping employers make these important decisions.

The Kaiser Family Foundation released a report estimating the impact the Patient Protection and Affordable Care Act’s (PPACA) medical loss ratio (MLR) provisions will have on health insurance consumers this year in the form of premium rebate checks that are supposed to be mailed to health insurance consumers this August. Although $1.3 billion, the total amount of the projected rebates seems large, when you read the fine print, it becomes apparent that these rebates aren’t quite the bonus some have been predicting. Furthermore, the coverage disruptions, loss of agent services, and higher overall premiums caused by both the MLR requirements specifically and PPACA generally, negate any consumer benefit the rebates may provide.

The individual market is estimated to receive the highest rebates, where that possibly 31% of insurance consumers nationally will be getting an annual rebate of around $127 per person. In the small group market, about 28% of groups will be eligible for a rebate, with the average amount going to employers expected to be $21 per enrollee. In the large group market, 17% of fully insured large groups are sharing an estimate of $541 million in rebates. That translates to an average of $14 per enrollee over a year’s time.

What does this mean to you?

Kaiser based its estimates on preliminary data that health insurance carriers provided to their state department of insurance and the National Association of Insurance Commissioners on April 1. Actual rebate amounts, which will be reported to HHS by the heath insurance carriers using a slightly different form, have not yet been calculated and could vary. In addition, individuals and employers may receive a future premium credit from the insurance carrier, rather than an actual rebate check. Also, very significantly for most employer groups, the MLR rules allow employers to keep the portion of the rebate directly attributable to their employer contribution and use the remainder of the funds to benefit the employer plan generally.