David M. Gilston Insurance Agency, Inc.

On January 3, 2012 the Internal Revenue Service issued interim guidance, Notice 2012-9, an amendment of Notice 2011-28, discussing the PPACA requirement of employers to include the cost of employer-sponsored health insurance coverage on each employee’s annual W-2 Form. Notice 2011-28, issued last March, had postponed this requirement until tax year 2012 and made it optional for all employers for the 2011 W-2 Forms. Notice 2012-9 has postponed these requirements until tax year 2013 and will supersede Notice 2011-28. The new notice also states that if employers submit fewer than 250 W-2 forms, filing would remain optional until 2014. The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage. 

What does this mean to you?

If you are an employer filing fewer than 250 W-2 Forms, its optional until taxable year 2014 and if it’s over 250, it is optional until taxable year 2013.

Because the Patient Protection and Affordable Care Act’s Summary of Benefits and Coverage (SBC) and Uniform Glossary requirements are yet to be clearly defined, the Department of Labor (DOL) submitted guidance that has delayed the effective date of these changes, therefore causing concern of a new compliance date. As described in a previous reform blog article, the SBC is intended to provide insured members with information about the plan they have or can be used when shopping for coverage and comparing plans.  The Uniform Glossary is designed to help consumers have a better understanding of terminology when making a buying decision. The DOL, Internal Revenue Services (IRS) and the Department of Health and Human Services (HHS) had originally proposed March 23, 2012 as the compliance date. Due to the delay, a new compliance date is yet to be chosen. The guidance stated that, “until final rules are issued on this topic, group health plans and health insurance issuers are not required to comply.”  

There is now some concern about having enough time between the final ruling and the compliance date. The National Association of Health Underwriters (NAHU) suggested that once the final rule has been announced, employers and insurers be given an additional 18^th months to comply. NAHU feels that, “based on informal comments from the administration on this topic, it seems more like that a final rule will be issued within the next few months, with compliance potentially expected by January 1, 2013.” According to the DOL, it is anticipated that the once Departments’ final regulations are issued, it will include an applicability date that gives group health plans and health insurance issuers sufficient time to comply.

What does this mean to you?

Due to the large amount of information given in these two documents, there is a concern growing about having enough time for implementation along with a compliance date. Essentially, this gives a reprieve to the carriers in complying with this requirement under PPACA.  This again suggests that the implementation of many aspects of reform will continue to challenge the government to achieve it’s own expectations of meeting unrealistic timelines.

Employer-sponsored health insurance coverage has consistently decreased between 1995 and 2010 and this trend is expected to continue, according to a report created by the Employee Benefits Research Institute (EBRI). The implementation of the exchange program created by the Affordable Care Act (ACA), taking effect in 2014, could cause an increase of employers dropping coverage. 

 A report by the Urban Institute’s Health Policy Center and sponsored by the Robert Wood Johnson Foundation researched employers and offering health insurance coverage. One argument is that through the new exchanges, some companies will likely stop their sponsored coverage, increase their employees salaries to cover purchasing individual policies through the exchange, and pay the penalties under the ACA.

What does this mean to you?

Although dropping coverage could be a realistic option for some, companies that offer employer-sponsored benefits as a way to set themselves apart in a competitive market should consider that dropping their sponsored coverage may not be in the 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.

Nearly seven out of ten people turning 65 this year will experience some form of disability and will need paid or unpaid help with basic living activities. This creates the need for long-term care, which is quite expensive. The costs for nursing home care vary widely, averaging $6,500 per month. People who receive long-term care services at home spend an average of $1,800 per month. Medicare does not cover long-term care services. Medicaid pays for such services only for people with limited financial means; qualifying for Medicaid often means exhausting all other resources. To help provide another option, the government established the Community Living Assistance Services and Supports (CLASS) Act to be an optional, government-backed, long-term care insurance program for American workers to help pay for long-term services and supports they may need in the future. A five-year vesting period is required before benefits can be collected.

On October 14^th, Department of Health and Human Services (HHS) Secretary Kathleen Sebelius publically recommended to halt the implementation of the CLASS Act. Sebelius claims she “does not see a viable path forward for CLASS implementation at this time” and recommends a halt to the implementation efforts. In the days following Sebelius’ recommendation to halt implementation, the Obama Administration announced that it would not support the repeal of the CLASS Act.

What does this mean to you?

A major area of concern is the cost for the CLASS Act. Because no taxpayer funds may be used to pay plan benefits, it is unlikely that the program will remain financially solvent. Long-term care needs vary, and therefore may be better suited to remain a personalized decision. The suspension of CLASS Act does not affect the rest of the health care law.

 Click here to read a blog article by HHS Secretary Kathleen Sebelius about her recommendations.

Click here to read more information about the CLASS Act.

The essential benefits report, created by the Institute of Medicine (IOM), has been released. The Affordable Care Act requires the package to reflect benefits covered by a typical employer plan and include 10 categories. According to the report, HHS officials will compare potential services and products against a set of critera, created by the IOM, including medial effectiveness, safety and relative value compared with alternative options, and evaluate whether the package as a whole protects the most vulnerable individuals, promotes services that have proved effective and addresses the medical concerns of greatest important to the public. In keeping with their assigned task, the IOM did not address and specific types of benefits in their recommendations. It instead tells the Secretary  of HHS how to define the minimum benefits. Click here to view additional recourses by the IOM including the IOM’s press release, criteria, report brief and report release presentation.

What does this mean to you?

Starting with plan years or policy years that began on or after September 23, 2010, health plans can no longer enforce a lifetime dollar limit on spending for services defined under essential health benefits. All plans, except grandfathered individual health insurance policies, must phase out annual dollar spending limits for these services by 2014. PPACA defines essential health benefits to include at least the following general categories and the items and services covered within the categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. Insurance policies must cover these benefits in order to be certified and offered in Exchanges, and all Medicaid State plans must cover these services by 2014.

HHS, DOL, and IRS jointly issued proposed rules requiring group health plans, including grandfathered plans, to provide their members with two new forms beginning on March 23, 2012.  This ruling is currently open for public comment for a period of 60 days.

The first form is the Summary of Benefits and Coverage (SBC), which is intended to provide insured members with information about the plan they have or can be used when shopping for coverage and comparing plans. The proposed SBC template includes instructions for illustrating what portion of expenses are covered under the health plan using three required benefit scenarios: having a baby, managing diabetes and treating breast cancer.  This will help consumers compare their share of the cost under a particular plan when considering other coverage options.  The health plan will be required to provide the SBC 30 days prior to the renewal of their health coverage and may be disclosed in either paper or electronic form if certain safeguards are met. 

The second form is the Uniform Glossary of Terms commonly used in health insurance coverage such as “deductible” and “co-pay.”  This tool is designed to help consumers have a better understanding of terminology when making a buying decision.  To help ensure the document is easily accessible for consumers, HHS and DOL will also post the glossary on the new health care reform website, www.HealthCare.gov and www.dol.gov/ebsa/healthreform/.

What does this means to you?

While the government’s intent with this ruling was to make consumers more informed about their insurance options, most individuals do not understand the current benefit booklet carriers provide because of all the details. This attempt to simplify the buying decision assumes consumers will make a purchasing decision based on the new four- page SBC. The fact is, “dumbing down” the language is not going to help the consumer make a more informed buying decision.  It will, however, add to the cost of health insurance due to the additional administrative burden insurance companies assume as well as add additional responsibilities to employers and agents as it relates to timing and communication, particularly at the time of renewal. Again, the need for agents becomes very apparent because of the complexity of the process when shopping for benefits. 

Click here to see the fact sheet or news release.

HHS issued two rules on August 1^st addressing the preventive care requirements in the Patient Protection and Affordable Care Act (PPACA). The first is a proposed rule, which would require new health insurance plans to cover women’s preventive services without charging a co-payment, co-insurance or deductibles for plan years starting on or after August 1, 2012.  The requirement will not apply to grandfathered plans that were in effect before the law was enacted on March 23, 2010.

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

Second, HHS issued an amendment to the preventive care interim final rule issued July 19, 2010, which allows religious institutions that offer insurance to their employees the choice of whether or not to cover contraception services.

What does this mean to you?

While many women will benefit from an increase in the number of preventive services available to them with no cost sharing, we all will pay higher premiums to offset increased utilization.  An excerpt from the Chicago Tribune reinforces the anticipated adverse impact on premiums:

“For its part, the insurance industry is worried about the cost implications. “Unfortunately, the preventive care coverage recommendations recently issued by the IOM would increase the number of unnecessary physician office visits and raise the cost of coverage,” said Karen Ignagni, president of America’s Health Insurance Plans. Even if women don’t pay upfront for services, they and others will pay through premium increases and other cost-sharing features, insurers predict.”

On a side note, the article goes on to address several interesting points about the amount of controversary and potential pushback from the public associated with covering birth control pills and the morning after pill:

“Conservative organizations said the administration had crossed a dangerous line. “We’re concerned that the government would force pro-life Americans to pay through their private insurance plans for medications that may cause early abortions,” said Carrie Gordon Earll, a spokeswoman for Focus on the Family in Colorado Springs.

Many conservative groups believe that contraception can act as an abortion agent, causing a fertilized egg to be sloughed off, though scientific evidence does not prove this is the case. The controversial “morning-after” pill would be among the forms of contraception covered.”

Please visit our poll to say whether you are in favor of this ruling!

The first “unintended consequence” of the Patient Protection and Affordable Care Act (PPACA) addressed in Part 1 of the blog described how routine physical exams were not specifically listed as a preventive service under health reform so insurance companies do not have to cover this service.  The second “unintended consequence” of health reform addressed in Part 2 of the blog revealed how most insurance companies are not offering individual insurance policies to children under 19 since they are prohibited from applying pre-existing conditions exclusions.  The third and final “unintended consequence” of health reform that I will discuss relates to dependent children under the age of 26 staying on their parents’ plans.

 Dependent Children Under the Age of 26 Staying on Parents’ Plans

Health reform now allows children to stay on their parents’ plan until 26 years of age, even if they are married.  A situation recently arose where a husband and wife, both under age 26, elected to stay on their respective parents’ plans and the dependent married daughter became pregnant.  Unfortunately, most insurance plans do not cover maternity for dependents.  Now it will be virtually impossible for the husband and wife to secure individual coverage on their own since the wife is pregnant.  To make matters even worse, the newborn child will probably be uninsurable for reasons discussed in Part 2 of the blog. 

What does this mean to you?

Please take this scenario into consideration when deciding whether or not to have dependent married children stay on parents’ plans.  I cannot stress how important it is that you seek the guidance from your insurance professional when making important decisions regarding your insurance plan.

 As they say, the devil is in the details.  That is certainly the case with health reform.  I only highlighted three “unintended consequences” but I’m sure others will be uncovered in the future.

The first “unintended consequence” of the Patient Protection and Affordable Care Act (PPACA) addressed in Part 1 of our blog described how routine physical exams were not specifically listed as a preventive service under health reform so insurance companies do not have to cover this service.  Today, we will discuss the second “unintended consequence” of health reform, which addresses how new individual insurance policies are prohibited from applying pre-existing conditions exclusions for children under 19.

No Pre-existing Conditions Exclusions for Children Under 19

While PPACA’s intent was to make all children under 19 insurable in the individual marketplace regardless of their existing health conditions, the “unintended consequence” is that most insurance companies around the country stopped insuring children under 19 through individual policies.  As I discussed in a previous blog article, when you combine a mandatory open enrollment period that could last all year with a ban on excluding pre-existing conditions, you have a recipe for a disaster.  Why would parents purchase insurance for their children when they were healthy and pay for those insurance premiums when parents could just wait until a child was sick or injured and purchase insurance at that time?  Obviously insurance companies are in the business of insuring against “unforeseen risk”, and this government mandate removed “unforeseen” right out of the picture.

What does this mean to you?

Prior to September 23, 2010 healthy children were able to secure insurance coverage in the individual market.  Unfortunately, most insurance companies aren’t insuring children today regardless of how healthy they are.

Wikipedia states that the law of unintended consequences is a warning that an intervention in a complex system always creates unanticipated and often undesirable outcomes.  Unfortunately, health reform has “unintended consequences” written all over it.  Three specific examples include: preventive care, no pre-existing conditions for children under 19, and dependent children under the age of 26 staying on parents’ plans.  I’ll focus on the first topic today: preventive care.

Preventive Care

The Patient Protection and Affordable Care Act (PPACA) requires some insurance plans to cover certain preventive services without charging a co-pay, co-insurance, or deductible when a network provider delivers the services.  The U.S. Preventive Services Task Force made recommendations for adults and children and provided an extensive list of A & B services that qualify as preventive services.  While this list was intended to provide a wider variety of coverage for preventive services, the “unintended consequence” is that a routine physical exam is not specifically listed as a preventive service under health reform so insurance companies can deny this claim. 

What does this mean to you?

Prior to reform, an insurance company may have included a routine physical as a benefit in the plan since coverage for preventive services was much more limited.  Now that health reform is setting the stage for what constitutes a preventive service, you need to check with your insurance company to see how this benefit is being treated.  Just because it was a covered service last year doesn’t mean it will be covered this year.