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Health Reform

Health Reform. Summary. This presentation will introduce you to the pressing issues concerning the Patient Protection and Affordable Care Act signed into law March 2010

ashely-caldwell
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Health Reform

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  1. Health Reform MBI 101410A

  2. Summary This presentation will introduce you to the pressing issues concerning the Patient Protection and Affordable Care Act signed into law March 2010 Our goal is to help you better understand the impact this will have on you and your business, and to let you know how we may be able to assist you Information in this presentation is not considered exhaustive nor is it considered legal advice MBI 101410A

  3. Currently On-going Grandfathered Health Plans Employer Subsides of Medicare D Minimum Loss Ratios Adoption Coverage Breaks for Nursing Mothers MBI 101410A

  4. Grandfathered Health PlansOverview • A grandfathered health plan is any plan in which at least one individual was enrolled on March 23, 2010, and the policy or plan must have continuously covered someone since that date. • Grandfathered plans remain subject to: Mental Health Parity provisions Newborns’ and Mother’s Health Protection Act provisions Women’s Health and Cancer Rights Act Michelle’s Law • If an employer offers multiple health plan options, each option is treated separately in terms of its grandfathered status • Grandfathered plan rules are not limited to individuals enrolled on the date of enactment but rather • New employees (and their families) may be covered under an employer’s grandfathered plan • Family members of current employees who are covered by the grandfathered plan may also be added, if their enrollment was permitted under plan terms on March 23, 2010 MBI 101410A

  5. Grandfathered health plans are exempt from various provisions of the health reform law, including: • Coverage of preventive services without cost-sharing • Cost-sharing limits • Insured group health plan nondiscrimination rules • Claims appeals and review process • Selection of doctors and referral requirements • Coverage of clinical trials • No discrimination against providers • In addition, an exception is made for employers that have scheduled plan changes as a result of a collective bargaining agreement MBI 101410A

  6. Keeping Grandfathered Status • Individuals and employer group plans that wish to keep their current policy on a grandfathered basis would only be able to do so if the only plan changes made were to add or delete new employees and any new dependents. • Regulation allows for changes in plan benefit structure, except for the following: • Eliminating all or substantially all benefits to diagnose or treat a particular condition • Increasing a coinsurance or other percentage-based cost-sharing requirement above the level in effect on March 23, 2010 • Increasing a fixed-dollar cost-sharing requirement, such as annual deductible or out-of-pocket limit, by total percentage – measured from march 23, 2010 – that exceeds the sum of the medical inflation rate plus 15% points • Increasing co-payment by an amount exceeding greater of • The amount just described for other fixed-amount cost-sharing requirements • $5 increased by the medical inflation rate since March 23, 2010. • Decreasing rate of employer contributions to the plan (for any tier, such as employee-only or family) by more than 5% points below rate that was effect on March 23, 2010 • Adopting or decreasing an annual benefit limit, with the specific rules depending on whether the plan had already imposed an annual or lifetime limit as of March 23, 2010 MBI 101410A

  7. Provisions applicable to all group health plans as of the law’s relevant effect date, regardless of “grandfathered” status, include: • Coverage of adult children up to age 26 (grandfathered group health plans do not have to comply with this requirement until the first plan year beginning on or after January 1, 2014, if the adult child is eligible for coverage under another eligible employer-sponsored health plan) • Lifetime/annual limit restrictions • Rescission restrictions • Preexisting condition exclusions • 90-days waiting period limit • Uniform summary of benefits MBI 101410A

  8. Keeping Grandfathered Status • As of now, other types of benefit modifications will not cause a loss of grandfathered status. • Example: the regulation’s preamble asks for comments on whether changing a plan’s network provider, changing from an insured to a self-funded plan, or changing a prescription drug formulary should be added as events causing a loss of grandfathered status. The preamble assures us that any such change in the regulation would be applied only prospectively • The regulations provide that the grandfathering rules apply separately to each “benefit package” made available under a health plan. Thus, a plan offering both an HMO and PPO option might choose to modify the PPO’s deductible or co-payment in a way that would cause the PPO to lose its grandfathered status, without thereby forfeiting the HMO’s grandfathered status. MBI 101410A

  9. Keeping Grandfathered Status • Implies that, beginning in 2014, premiums can vary more widely for grandfathered plans than for non-grandfathered plans for employers with up to 100 employees • Plan sponsors that have decided to maintain grandfathered status must provide participants with a statement that the plan intends to preserve the basic health coverage that was in effect on March 23, 2010, and that some of the consumer protections of the Act may not apply. In addition, to maintain status as a grandfathered plan, the plan sponsor must retain records of the plan terms in existence on March 23, 2010, including plan documents, insurance policies, summary plan descriptions (SPDs), and other cost-sharing documentation. MBI 101410A

  10. Grandfathered Provision: Transition Rules • For plans that made changes prior to March 23, 2010 (even if they take effect after March 23, 2010), grandfather status is retained if such changes were adopted pursuant to a legally binding contract, insurance filing, or written plan amendment. • For plans that made routine changes between March 23, 2010 and June 17, 2010, a good faith compliance standard will be applied and any changes that only modestly exceed any grandfather requirements will be allowed for the current plan year. The good faith standard has been extended until July 1, 2011 • For plans that made significant changes prior to June 17, 2010 that would cause them to lose grandfathered status are allowed a grace period lasting until the start of the next plan year beginning after September 23, 2010 to bring their coverage terms in compliance with PPACA. MBI 101410A

  11. Grandfathered Plan Summary Chart • Summary of 2010-2014 changes (see handout) MBI 101410A

  12. Employer Subsidies of Medicare Part D Premiums • Eliminates the deduction for the subsidy to employers who maintain prescription drug plans for their Medicare Part D eligible retirees. • In order for coverage to be available under this part for covered part D drugs of a manufacturer, the manufacturer must: • Participate in the Medicare coverage gap discount program under section 1860D-14A • Have entered into and have in effect an agreement described in subsection (b) of such section with the Secretary MBI 101410A

  13. Have entered into and have in effect, under terms and conditions specified by the Secretary, entered into a contract with under subsection (d)(3) of such section: • (b) Effective date – shall apply to covered part D drugs • (c) Authorizing coverage for drugs not covered under agreement - subsection (a) shall not apply to the dispensing of a covered part D drug if: • The Secretary has made a determination that the availability of the drug is essential to the health of beneficiaries under this part; or • The Secretary determines that in the period beginning on July 1, 2010, and ending on December 31, 2010, there were extenuating circumstances. MBI 101410A

  14. Minimum Loss Ratios • Health plans, including “grandfathered plans”, must annually report on the share of premium dollars spent on medical care and provide consumer rebates for excessive medical loss ratios. (regulatory process starts 2010) • Applies to “issuers” not employers directly • Administered by the HHS • States are permitted to set higher MLR standards • Self insured plans are exempt • The amendment made by this section shall apply to taxable years beginning after December 31, 2009 MBI 101410A

  15. The minimum loss ratios are as follows: • 85% for large group plans (101 or more employees) • 80% for small group plans (100 or less employees) • 80% for individual plans • Carriers must issue rebates to each enrollee on a pro rata basis for plans that that fail to meet MLR requirements starting in 2011. • By December 31, 2010, the NAIC is required to establish: • Uniform definitions • Standard MLR calculation methodology • Rebate calculation methodology MBI 101410A

  16. Adoption Coverage • Limit for employer sponsored assistance for adoptions increase from $10,000 to $13,170 • Employee may exclude QAE from gross income that is reimbursed under employer provided program • Credit is extended through 2011 • Phased out for high income earners starting at $182,000 • Tax payer may file an amendment to claim credit for QAE for 2008 and 2009 MBI 101410A

  17. Breaks for Nursing Mothers • All employers with 50 or more employees to provide private areas (not restrooms) where mothers of children less than one year old can pump breast milk in private • Employers must provide “reasonable” unpaid time for this • Smaller employers may be exempted if undue hardship can be demonstrated MBI 101410A

  18. Health Reform 2010 MBI 101410A

  19. Summary • Non-Discrimination Testing • Early Retiree Re-insurance • Pre-existing Conditions • Increase in Dependent Coverage • OBGYN Non Referral Provision • Coverage of Preventive Care • Coverage Appeals Process MBI 101410A

  20. Summary • Wellness Grants • Tanning Tax • HSA and MSA Tax • Emergency Service Coverage • Designation of Primary Care Doctor • Web Based Information Portal MBI 101410A

  21. Non-Discrimination Testing • Requires all group health plans to comply with current IRC § 105(h)(2) rules that prohibit discrimination in favor of highly compensated individuals in terms of eligibility and benefits. • All non-Grandfathered plans must pass discrimination testing similar but not exactly like other cafeteria plans. • Under the new nondiscrimination rules, fully insured group health plan need to meet these requirements: • It cannot discriminate in favor of highly compensated individuals • It must demonstrate that it benefits at least 70% of all employees • It cannot discriminate in favor of participants who are highly compensated individuals MBI 101410A

  22. Non-Discrimination TestingPenalties for Non-Compliance • $100 per day for each employee whose benefits are not in compliance capped at 10% of the cost of the group health plan or $500,000 which ever is less. MBI 101410A

  23. Early Retiree Re-insurance Program • Creates a new temporary reinsurance program to help companies (including self-funded plans) that provide early retiree health benefits for those ages 55-64 offset the cost of that coverage. Employers must apply to the HHS in order to participate in this program. • The federal government will allocate $5 billion toward the creation of a temporary reinsurance program for employer-sponsored early retiree coverage that will reimburse 80% of claims between $15,000 and $90,000. The purpose of the program is to encourage employers that currently offer retiree medical coverage to continue to do so until the Exchanges are up and running. MBI 101410A

  24. Cumulative health benefits incurred in a given plan year and paid for a particular early retiree that fall between those amounts will be eligible for reimbursement (rather than reimbursement being made only for discrete health benefit items or services whose reimbursement total falls between those amounts). Reimbursement will be made only for claims that are incurred during the applicable plan year, and paid. Thus, eligible employers can save up to $60,000 per early retiree each year. • Eligible claims are those for individuals at least age 55 (and their dependents) who are not eligible for Medicare and are not active workers. • Includes documented retiree cost-sharing (deductibles, copays, coinsurance, etc.) • Includes medical and prescription drug claims. • Excludes HIPAA-excepted benefits (e.g., long-term care and limited scope dental or vision benefits). MBI 101410A

  25. Eligible plans must apply for the program and meet minimum requirements for management of participants with chronic and high-cost conditions. Reinsurance payments received by employers must be used to reduce participant and/or sponsor costs. A sponsor must be able to explain how reimbursements will be applied to maintain its level of effort in contributing to support the plan. • Reimbursements are not treated as taxable income to the employer. • The program is effective June 1, 2010, and ends January 1, 2014, or sooner, if funds are depleted. Sponsors may apply for plan years that begin before June 1, 2010, but end after that date. In that case, the amount of claims incurred before June 1, 2010 (up to $15,000) count toward the $15,000 cost threshold and the $90,000 cost limit. The amount of claims incurred before June 1, 2010, in excess of $15,000 is not eligible for reimbursement and does not count toward the cost limit. The reinsurance amount to be paid is based solely on claims incurred on and after June 1, 2010, and that fall between the cost threshold and cost limit for the plan year. MBI 101410A

  26. Pre-Existing Condition Coverage for Individual Market • Federal High Risk Pool for Individuals with a Pre-Existing Condition (June 2010) • Provides eligible individuals access to coverage that does not impose any coverage exclusions for pre-existing health condition. This provision ends when Exchanges are operational. • May be administered by nonprofit organizations under contract from HHS. • No preexisting condition limitations • Plan must cover at least 65% of medical costs • Limitation on total out of pocket expenses • Rates based upon a standard population with age rating factor max of 4:1 • Eligibility: • Legal resident of the United States • No creditable coverage six months prior to March 23, 2010 or the date on which they apply for coverage under the pool • Has preexisting condition, as determined in a manner consistent with guidance issued by Secretary. • Health plans and employers must reimburse the program if they have discouraged individuals from being enrolled based on health status. • 5 billion dollars appropriated to pay claims in excess of premiums. MBI 101410A

  27. As of 10/5/10, most health insurance carriers in the state of VA have voluntarily removed themselves from offering health insurance for children under the age of 19 for child only policies. Many carriers will still write policies assuming there is at least 1 adult on the policy. MBI 101410A

  28. Eliminating Pre-Existing Conditions Exclusion for Children • Bars health insurance companies from imposing pre-existing condition exclusions on children less than 19 years of age (October 2010) MBI 101410A

  29. Increases in Dependent Coverage • Increases the age of a dependent (regardless of status regarding marriage, full-time student, place of residence, or financial dependency) for health plan coverage until the age of 26 (coverage is not provided on the dependent’s 26th birthday) for: Fully insured individual health plans Fully insured group plans Self Insured group health plans COBRA coverage • Dependent children include: son/daughter; stepchildren; adopted children; foster children. MBI 101410A

  30. If child is eligible under these rules, and parent not currently covered, the parent must be allowed to enroll or switch to another plan. • For grandfathered plans until 2014, they only have to offer to those dependents NOT eligible for other source of employer sponsored coverage. • Transition rules say a plan or issuer must provide a written notice to enroll within 30 days. • Nothing in this section shall be construed to modify the definition of ‘dependent’ as used in the Internal Revenue Code of 1986 with respect to the tax treatment of the cost of coverage. MBI 101410A

  31. This provision generally is effective for the first plan year beginning on or after September 23, 2010 (i.e., January 1, 2011, for calendar year plans), although collectively bargained plans may have a later effective date. Until the first plan year beginning on or after January 1, 2014, grandfathered group health plans are not required to extend coverage to adult children (up to age 26) who have access to another eligible employer-sponsored health plan (a group health plan or group health insurance coverage which is a governmental plan, or any other plan or coverage offered in the small or large group market within a State). MBI 101410A

  32. OBGYN Non Referral Provision • General Rights • Direct Access- A group health plan, or health insurance issuer offering group or individual health insurance coverage, described in paragraph (2) may not require authorization or referral by the plan, issuer, or any person including a primary care provider described in paragraph(2)(B)) in the case of a female participant, beneficiary, or enrollee who seeks coverage for obstetrical or gynecological care provided by a participating health care professional who specializes in obstetrics or gynecology. Such professional shall agree to otherwise adhere to such plan's or issuer’s policies and procedures, including procedures regarding referrals and obtaining prior authorization and providing services pursuant to a treatment plan (if any) approved by the plan or issuer. MBI 101410A

  33. ‘‘(B) OBSTETRICAL AND GYNECOLOGICAL CARE.—A group health plan or health insurance issuer described in paragraph(2) shall treat the provision of obstetrical and gynecological care, and the ordering of related obstetrical and gynecological items and services, pursuant to the direct access described under subparagraph (A), by a participating health care professional who specializes in obstetrics or gynecology as the authorization of the primary care provider. MBI 101410A

  34. Coverage of Preventive Care • In general – a group health plan and a health insurance issuer offering group or individual health insurance coverage shall, at a minimum provide coverage for and shall not impose any cost sharing requirements for: • 1. Evidence-based items or services that have an effect a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Service Task Force; (See handout) MBI 101410A

  35. Update as of August 1, 2010 • Be sure preventive service is separate from an office visit unless purpose of the visit is preventive in nature • In-network ONLY • All new group health plans and plans in the individual market must provide first dollar coverage for preventive services • This provision appears to eliminate deductibles or other cost sharing mechanisms for preventative care MBI 101410A

  36. Coverage Appeals ProcessUpdate as of July 2010 • Requires that any new group health plan or new plan in the individual market implement an effective appeals process for coverage determinations and claims. • (Update as of July 23, 2010): Under new rules, non-grandfathered heath plans must implement an internal appeals process for denied claims that conforms to new requirements which are MORE RIGOUROUS than those currently required under ERISA. Furthermore, plans must allow for an external appeals process to be utilized in the event that the internal appeal does not yield a favorable result for the participant. MBI 101410A

  37. Coverage Appeals Process (Internal Claims Appeal) • A group health plan and the health insurance issuer offering group and individual health insurance coverage shall implement an effective appeals process for appeals of coverage determinations and claims for: • 1- determination of an individual’s eligibility to participate in a plan • 2- determination that a benefit is not a covered benefit • 3- Imposition of a preexisting condition exclusion on otherwise covered benefit • 4- determination that a benefit is experimental, investigational or not medically necessary MBI 101410A

  38. Coverage Appeals Process (Internal Claims Appeal) • Plan or insurer must notify claimant of benefit determination not later than 24 hours (if urgent care is involved) • Claimant must be provided with new evidence considered, rationale, notice to enrollees, impartiality of personal involved making the decision and reason(s) for final determination. • Continued coverage will be provided during internal review process. MBI 101410A

  39. Coverage Appeals Process (External Appeal Process) • State or Federal external review can be filed within four months of adverse internal claims review determination • During external appeals process, the following will be considered: • Medical records, health professional’s recommendation, terms of coverage, appropriate practice guidelines, documents from health carrier • Within 45 days, written decision of determination will be provided MBI 101410A

  40. Wellness Grants • The Secretary shall award grants to eligible employers to provide their employees with access to comprehensive workplace wellness programs. • The grant program established under this section shall be conducted for a 5-year period. • The term “eligible employer” means an employer (including a non-profit employer) that: • A. employs less than 100 employees who work 25 hours or greater per week • B. does not provide a workplace wellness program as of the date of enactment of this Act. MBI 101410A

  41. An eligible employer desiring to participate in the grant program under this section shall submit an application to the Secretary, in such manner and containing such information as the Secretary may require, which shall include a proposal for a comprehensive workplace wellness program that meet the criteria and requirements. • For purposes of carrying out the grand program under this section, there is authorized to be appropriated $ 200,000,000 for the period of fiscal years 2011-2015. Amounts appropriated pursuant to this subsection shall remain available until expended. MBI 101410A

  42. Tanning Tax • To help pay for the plan, a 10% tax on indoor tanning service • Began July 2010 MBI 101410A

  43. HSA and MSA Tax Increases • Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent. • HSAs- Section 223(f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “10 percent” and inserting “20 percent”. • Archer MSAs- Section 220 (f)(4)(A) of the Internal Revenue Code of 1986 is amended by striking “15 percent” and inserting “20 percent”. • Effective Date- The amendments made by this section shall apply to distributions made after December 31, 2010. MBI 101410A

  44. Emergency Services Coverage • Mandates coverage of emergency services at in-network level regardless of provider for: • Fully-insured individual health plans • Fully-insured group plans • Self-insured group health plans • Carriers only have to pay the provider at the greater level of: • Amount you would have paid in network • The insurance carrier’s normal reasonable and customary level • Medicare • Patients can be balance billed MBI 101410A

  45. Designation of Medical Provider as a Primary Doctor • Allows for designation of any participating primary care doctor or pediatrician as primary care doctor • No preauthorization or referral necessary for OB/GYN services MBI 101410A

  46. Web-Based PortalUpdate as of July 2010 • Immediate establishment – not later than July 1, 2010, the Secretary, In consultation with the States, shall establish a mechanism, including an Internet website, through which a resident of any state may identify affordable health insurance coverage options in that State. • www.healthcare.gov MBI 101410A

  47. MBI 101410A

  48. Connecting to affordable coverage- An Internet website established under paragraph (1) shall, to the extent practical, provide ways for residents of any States to receive information on at least the following coverage option: • Health insurance coverage offered by health insurance issuers, other than coverage that provides reimbursement only for the treatment or mitigation • Medicaid coverage under title XIX of the Social security Act. • Coverage under title XXI of the Social Security • A State health benefits high risk pool, to the extent that such high risk pool is offered in such State; and • Coverage under a high risk pool under section 1101. MBI 101410A

  49. Health Reform 2011 MBI 101410A

  50. Summary • Reporting on W-2’s • Qualified Medical Expenses • Cafeteria Plan Safe Harbor • Non-Retaliation Provision • CLASS Act MBI 101410A

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