CAREFIRST DECIDES HOW TO HANDLE THE PRESIDENTS CHANGE OF HEART

As we all know the President is now allowing the states to decide whether they let individuals keep their plans if they want. (Even if they aren't grandfathered)  It appears that this would only be a one year reprieve in any regard.  It also passes the buck to the States.  There was also a question if small employer groups would be allowed to remain with their current plans without having to be forced into reform coverage.  According to Carefirst, Individuals who have received termination notices will be given the opportunity to remain on their current plans if they renew them by mid-December.  In reference to the small group employers (those under 50 full-time employees)  there will be no change from current procedure.  In other words, non-grandfathered small group plans will need to move to reform plans at their renewal in 2014.  

NEVERMIND, YOU CAN KEEP YOUR PLAN.....ATLEAST FOR INDIVIDUALS

Today in a statement from the President, individual policyholders will now be allowed to maintain their current health plan if they so choose.  This was on the heels of tremendous pressure put on the President because of statements made by him....."if you like your health plan, you can keep your health plan, period".  As we all know this turned out to be untrue.  What seems to be overlooked are all of the individuals and families in employer based coverage being forced into reform plans. (Employer Group Under 50 Employees)  If employer based plans are not "Grandfathered" same as individual market, they would lose their current plan and be forced into a plan that now conforms to the Affordable Care Act (health reform).  The individual market is being addressed, the small group employer market is being overlooked.  

HEALTH REFORM (PPACA) COMPLIANCE....SAVE THE DATE!!

So here we are, on the heels of a presidential election, a bit over a year away from the full effects of the Affordable Care Act (Health Reform) and employers need to make sure they are remaining compliant or it could cost, a lot.  Below is a time-line and essential changes that you may want to earmark.  In past posts I have shared these with you but thought were important enough for a re-visit.

2012

1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  

2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.

3) Summary of Benefits Coverage (SBC)-Applies to first Open Enrollment period after September 23, 2012.  Insurers and Plan Administrators must provide a summary of benefits and coverage to employers and plan participants.  For employer groups the responsibility to get these to the employees relies primarily on the employer.  Under this provision, there is a 60 Day Advance Notice of Material Change where carriers must provide a 60 day advance notification if any material changes to the coverage are to go into effect.

4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.

6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

PPACA-HEALTH REFORM UPDATE

As we all wait for the Supreme Court to rule on the future of health reform, there are items in the law that will be taking place in the near future.  Below is a listing of those items:


1)  August, 2012-Rebates will be issued by insurers if medical loss ratio is less than 80% in small group market and 85% in large group market.  Rebates will be issued at the employer level.  


2)  August, 2012-Non-Grandfathered Health plans will be required to offer coverage for Gestational Diabetes Screening and Contraceptive for non-religious, non-exempt employers.
(I  am thinking that most carriers will offer this coverage as its easier for them to manage than trying to determine Grandfathered and Non-Grandfathered eligibility)


3)  Plan years beginning after September 23, 2012-Summary of Benefits will need to be updated to include more easily readable and understandable benefit descriptions.  This responsibility will fall mainly on insurers for fully insured plans.


4)  October, 2012-Comparative Effectiveness Fee-Plans that began after 10-2-2011 will be required to pay $1 per covered life for research to determine effectiveness of medical treatments. This is the portion of the law that concerned a great many people as they believed that these panels would undermine life saving care in place of cost savings.  This fee goes up to $2 per life in 2013 and supposedly goes away in 2019.


5)  Jan, 2013-Flexible Spending Account (FSA) spending limits capped at $2500 for Individual and $5000 for family.  Cap applies to plan years that began after December 31, 2012.


6) 2012 Tax Year-W-2's distributed in 2013 for tax year 2012 for employers who issue more than 250 W-2's will be required to include the total cost of group medical coverage.  

McKinsey Report: Act II

ACT II

This whole McKinsey report thing has been a mess, and a lot of publicity for McKinsey.  The McKinsey Report was a survey of more than 1,000 employer groups and found that approximately 30% would "definitely" or "probably stop offering employer sponsored health coverage to their employees because it could be less costly to send the employees to the exchange and pay a penalty, if any.  

The White House is still pushing McKinsey to release more information on the findings since the outcome of the McKinsey Report was so different from that of the Congressional Budget Office, RAND or Urban Institutes findings. 

McKinsey commissioned IPSOS, the third largest market and research firm in the world to conduct the survey.  The survey was comprised using employer groups ranging from less that 20 employees to more than 10,000 and from a pool of hundreds of thousands of people in IPSOS databases. 

There are many surveys and some will have countering views.  However, if I am an employer and paying $10,000 a year for my employees health care and they can go to an exchange and get it cheaper while I pay a $2000 penalty, I may just do that.  And so may many other employers.  However, many won't because they may believe that keeping their coverage intact, keeps them more competitive. 

I guess time will tell and we will see what happens in 2014.  Cause if you can't keep the plan you have, as the President promised, it may be big pill to swallow for many people. 

Funding for Free Choice Vouchers Gets Cut in 2011 Budget

Under Health Reform if an employer has over 50 employees and offers "Minimal Essential Coverage", and the the cost for coverage is between 8% and 9.8% of an employees annual income, they, in 2014, could take those employer dollars to the Health Care Exchanges and purchase coverage under the "Free Choice Voucher Program".  Except, that under the latest budget negotiations, funding for the "Free Choice Voucher" has been eliminated.   This means that employees will no longer be able to take those employer health care dollars to the exchanges. 

Also, in agreements made, there will be several studies performed on the impact of several health care reform law provisions including: Impact on Premiums, Comparative Effectiveness (coming in 2012-Non-Government Entity used to gather and disseminate findings to health care decision makers) and Limited Benefit Plans. 

Boring But Important-States Can Opt-Out of Health Care Plan (Mandates) 3 Years Earlier

"If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act (PPACA) does, without increasing the deficit, you can implement that plan, and we'll work with you to do it."  This is was President Obama said while speaking at the National Governors Association 2011 Meeting in Washington, D.C.  on February 28th.  What this means is that states would be able to withdraw from some of the law's regulatory mandates in 2014 instead of 2017 through a "state innovation waiver".

In bipartisan support of "Empowering States to Innovate Act" it allows states to establish independent insurance regulatory models instead of Health Exchanges.  In addition it also allows those states to have no individual mandate and no penalties for those companies with more than 50 employees that do not meet PPACA requirements.  This could be of great interest to those states who filed a lawsuit against the PPACA's individual mandate, in Florida.

Even though there would be more flexibility for the states, they still would be required to offer policies that are as comprehensive and affordable as those offered through the exchange, cover as many residents as would have through PPACA and not increase the deficit.  In addition, certain mandates would need to stay, including: No lifetime limits, Dependents can stay on parents plan until age 26, Patients can choose any network physician and Carriers must spend at least 80% on Health Care and no more that 20% on administrative costs.

The questions I have would be how would the fed be able to police these plans?  In other words how would they ever be able to prove how many residents would have been covered under PPACA versus the states own version?  Also, states will have the opportunity to do more.  In other words they could go the other way and set-up a government run single-payer plan. 

Thou Shalt Not Discriminate. Wait.......You Can For Now But...

Under Health Reform (PPACA) and effective on your company's first health insurance renewal after September 23, 2010, employers may not discriminate in favor of highly compensated employees.  However, this applies to health plans that have lost "grandfathered status" under the rules defined in the Health Reform Law (PPACA).  You may recall in previous posts that when an employer loses grandfathered status they are then subject to many rules under the Health Reform (PPACA), including not discriminating in favor of highly compensated employees.

 Your health plan will lose grandfathered status and become non-grandfathered if:

1. Employer significantly raises co-pays.  This is the greater of $5 or Medical inflation +15% 
2. Employer significantly raises deductibles.
3. Employer significantly lowers employer contributions. Can't decrease percentage by more than 5%
4. Employer Raises Co-Insurance
5. When PPACA first arrived employers couldn't change health plans, even if it was better coverage, without losing grandfathered status but this has since been rescinded.....probably because it didn't make any sense.

For the most part, it seems, many/most employers will eventually lose grandfathered status simply because it will become increasingly difficult to maintain current levels of coverage while maintaining their contribution levels. 

Therefore, under section 2716 of the Public Health Service Act (PHS) under the PPACA, it provides that a group health plan must satisfy the requirements of section 105(h) of the code. What this section essentially states is that a health plan does not discriminate in favor of highly compensated individuals as to eligibility to participate or benefits provided under the plan. 

Failure to comply with the code could result in a civil action to force employer groups to comply, and/or an excise tax of $100 per day per individual discriminated against and/or civil penalty of $100 per day for each individual discriminated against.

Some side thoughts........

This could be a good thing for many employees:  If you are an employee of a company, and you know that significant changes have been made to your health plan, first renewal after September 23, 2010, chances are you should be paying the same cost for your health care as everyone else in your company.

This could be a bad thing for some business owners:  If you are an owner of a company who has taken a risk to get it started, has provided jobs to many people, possibly put their own livelihood on the line, shouldn't that person possibly be rewarded by the company paying a larger percentage of their health care costs?

But Wait, There's More! 

The IRS on December 22, 2010 just announced in notice 2011-1 that compliance with the Non-Discrimination rules will be "Delayed" until the regulations or other administrative guidance has been issued.  The IRS said that plans would not be subject to the Non-Discrimination rules until plan years following  the issuance of the guidance. 

Could This Be The First Signs That The Hard Shell of Health Reform May Be Softening??!!!!

 "A LITTLE BIT SOFTER NOW........."  Below is information sent directly from Cigna Health Plan.  If you recall, any employer that made any kind of material changes to their health plan, including moving from one carrier to another, lost Grandfathered Status.  In Interim Revised Regulations, a health plan, after November 17th, 2010, will not lose Grandfathered Status simply because they move from one carrier to another.  Which is good because this part of the law was ridiculous and truly made no sense. Many plans may want to retain Grandfathered status so that their Health plan would not need to adhere to many of the provision in the PPACA (Health Reform).  This is also important because it could be seen as the hard shell of the PPACA under Democratic Rule starting to soften with the New Republican Controlled  House of Congress getting ready to be installed.

Grandfathered Status Amendment Allows Plans to Change Policies and Carriers On November 15, the Departments of Treasury, Labor, and Health and Human Services jointly announced that they are amending the Interim Final Regulations on grandfathered health plan status under the Patient Protection and Affordable Care Act (PPACA). The amendment allows employers to switch insurance carriers and/or change their funding from Administrative Services Only (ASO) to fully insured without losing grandfathered status. The original Interim Final Regulations stated that changing insurance carriers would cause an insured group health plan that was in effect on March 23, 2010 (the date PPACA became law) to lose its grandfather status. For plans wanting to maintain grandfather status, this has been an important consideration. The Interim Final Regulations are amended as of November 17, 2010 to reflect the following changes for group health plans. These changes are not retroactive, nor do they apply to individual policies. Change of Insurer: If an insured plan changes insurance policies (new carrier) and the new policy is effective: Prior to November 17, 2010: The plan will lose grandfathered status. On or after November 17, 2010: The plan will not lose grandfathered status, provided no other changes are made to the plan that trigger loss of status (i.e., reductions in benefits or employer contribution). ASO to Insured: If a plan changes funding from self-insured to insured and the new policy is effective: Prior to November 17, 2010: The plan will lose grandfathered status. On or after November 17, 2010: The plan will not lose grandfathered status, provided no other changes are made that trigger loss of status. Documentation: The new health insurance carrier must obtain documentation of the prior plan’s terms from the new policyholder so the new carrier can determine whether the change in insurance policies will result in a reduction in benefits or employer contribution sufficient to trigger loss of grandfather status. There’s dual responsibility as the policyholder must also sufficiently provide the documentation to the carrier. Documentation includes: Benefits Individual cost-sharing Employer contributions Annual limits Yet to be Clarified The Federal government has yet to clarify whether a change in prescription drug formulary, network or funding status from insured to ASO will cause a loss in grandfathered status.