David M. Gilston Insurance Agency, Inc.

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.

On May 31, 2011, the U.S. Department of Health and Human Services (HHS) announced that premiums will be reduced and eligibility requirements will be eased when enrolling in the federally administrated Pre-Existing Condition Insurance Plan (PCIP).

Premium Reduction

Beginning July 1, 2011, premiums will drop as much as 40 percent in 17 states and the District of Columbia.  South Carolina’s premiums will be reduced 14.7% but you can click here to see how other states are impacted.  The intent of decreasing premiums is to make them more in line with the rates in each state’s individual insurance market.

Easing Eligibility

Starting July 1, 2011, people applying for coverage can simply provide a letter from a doctor, physician assistant, or nurse practitioner dated within the past 12 months stating that they have or, at any time in the past, had a medical condition, disability, or illness.  Applicants will no longer have to wait on an insurance company to send them a denial letter. 

What does this mean to you?

This is exciting news if you are a candidate for the high-risk pool.  However, there is still a big hurdle that remains; applicants must have been without health coverage for at lease the last six months.  If you are interested in enrolling, please see the decreased premiums below for South Carolinians beginning July 1, 2011.  Of course, we encourage you to contact the Gilston Agency for more information.

The AP (4/15) reports, “President Barack Obama has signed the first rollback of last year’s healthcare law, a bipartisan repeal of a burdensome tax-reporting requirement that’s widely unpopular with businesses.”  The law repeals a requirement established by the Affordable Care Act for businesses and landlords to file a Form 1099 document with the Internal Revenue Service for purchases of goods and services exceeding $600 a year.  While the filing requirement is unrelated to health care, the revenue generated by ensuring vendors paid taxes would have been used to pay for part of the new health care law.  But businesses complained it would bury them in paperwork. 

What does this mean to you?

Relief!  Reuters (4/15, Zakaria) quotes the President as stating, “I was pleased to take another step to relieve unnecessary burdens on small businesses.” He added, “Small business owners are the engine of our economy and because Democrats and Republicans worked together, we can ensure they spend their time and resources creating jobs and growing their business, not filling out more paperwork.”

We couldn’t agree more!

The DOL, HHS, and IRS issued Part VI of the FAQs regarding implementation of the market reform provisions of the Affordable Care Act and focus on grandfathered health plan provisions of health care reform. For simplicity, only the questions are included below.  You may view the government’s response here or read our previous blog articles regarding FAQs Part I, Part II, Part III, Part IV and Part V.

Q1: What is the scope of the anti-abuse rule in paragraph (b)(2) of the interim final regulations relating to grandfather status? In particular, what is a “bona fide employment-based reason” for employees enrolled in a benefit package that is being eliminated to be transferred into another benefit package?

Q2: My plan bases the level of cost sharing for brand-name prescription drugs on the classification of the drugs under the plan as having or not having generic alternatives. The classification of a drug that had no generic alternative changes because a generic alternative becomes available and is added to the formulary, with a resulting increase in the cost-sharing level for the brand-name drug. Does that increase cause my plan to relinquish its grandfather status?

Q3: A previous FAQ addressed the interaction of value-based insurance design (VBID) and the no cost-sharing preventive care services requirements. See http://www.dol.gov/ebsa/faqs/faq-aca5.html . In that example, a group health plan did not impose a copayment for colorectal cancer preventive services when performed in an in-network ambulatory surgery center. In contrast, the same preventive service provided at an in-network outpatient hospital setting generally required a $250 copayment, although the copayment was waived for individuals for whom it would be medically inappropriate to have the preventive service provided in the ambulatory setting. The FAQ indicated that this VBID did not cause the plan to fail to comply with the no cost-sharing preventive care requirements.

A question about a different situation has been raised. Under a group health plan, similar preventive services are available both at an in-network ambulatory surgery center and at an in-network outpatient hospital setting, but currently no copayment is imposed for these services in either setting. This has been the case since March 23, 2010. If this plan wished to adopt the VBID approach described in the example above by imposing a $250 copayment for these preventive services only when performed in the in-network outpatient hospital setting (i.e., not when performed in an in-network ambulatory surgery center), and with the same waiver of the copayment for any individuals for whom it would be medically inappropriate to have these preventive services provided in the ambulatory setting, would implementation of that new design now cause the plan to relinquish grandfather status?

Q4: A plan operating on a calendar plan year is considering an amendment to plan terms that will exceed the thresholds described in paragraph (g)(1) of the interim final regulations and cause it to relinquish grandfather status. If the plan sponsor decides to adopt this amendment on July 1, 2011, and the change becomes effective for the plan year beginning on January 1, 2012, at what point in time does the plan relinquish grandfather status?

Q5: A plan operating on a calendar plan year is considering an amendment to plan terms that will cause it to relinquish grandfather status, but wants the amendment to become effective before the first day of the next plan year. If the plan sponsor decides to make this amendment effective on July 1, 2011, does the plan relinquish grandfather status in the middle of the plan year?

Q6: A plan covers both retirees and active employees and is subject to the market reform requirements of the Affordable Care Act. For retirees, the employer that sponsors the plan contributes $300 per year multiplied by the individual’s years of service for the employer, capped at $10,000 per year. As the cost of coverage increases over time, how is it determined whether the employer’s contribution rate has decreased for purposes of maintaining grandfather status? 

On April 5^th, the US Senate voted to repeal the 1099 reporting provision that was included in the Affordable Care Act.  Since the US House of Representatives already passed the bill on March 3^rd, it now awaits the signature of President Obama.  It is expected that the President will sign the bill into law. 

What does this mean to you?

The 1099 provision would require all size businesses to send a 1099 to every vendor where purchases exceed $600.  This would have been particularly burdensome to small businesses that lack the manpower needed to maintain records and track this information.  This will be the first major change to health reform and is viewed as a victory for small businesses.

Today marks the first anniversary of PPACA, also known as health reform.  The question remains, is anyone celebrating? 

Unfortunately, a majority of Americans are “confused” about health reform as revealed by a Kaiser poll.  It’s been a challenge even for those of us in the health insurance industry to keep up with the implementation timeline and constant changes coming out of Washington.  We feel that this blog is a great avenue to share timely, relevant information and hope it has provided clarity to you this year and made you less “confused.”  If there are areas of interest that you would like to review, please select a topic from the tags section on the left-hand side.  We are proud to be your reform expert!