SUPREME COURT UPHOLDS THE INDIVIDUAL MANDATE

At approximately 10:00 today, in a vote of 5-4 Chief Justice Roberts, siding with the liberal Justices, read that the Individual Mandate under the Affordable Care Act (Health Reform) is constitutional not as interstate commerce but as a tax.  In other words the government can't force individuals to purchase health care but they can impose a tax penalty if they don't.  


For people in favor of the law, this is an obvious win in their direction.  However, people not in favor of the law, the President, or continued government over-reach could see this as helpful for Romney's presidential bid in November.

PPACA-CAREFIRST TO ISSUE MEDICAL LOSS RATIO (MLR) REBATES

PLEASE SEE BELOW FROM CAREFIRST:

The Affordable Care Act requires CareFirst to rebate part of the premiums it received if it does not spend at least 80 percent of the premiums CareFirst receives on health care services, such as doctors and hospital bills, and activities to improve health care quality, such as efforts to improve patient safety. No more than 20 percent of premiums may be spent on administrative costs such as salaries, sales and advertising. This is referred to as the “Medical Loss Ratio” standard or the 80/20 rule. The 80/20 rule in the Affordable Care Act is intended to ensure that consumers get value for their health care dollars. You can learn more about the

80 /20 rule and other provisions of the health reform law at: http://www.healthcare.gov/law/features/costs/value-for-premium/index.html.

What the Medical Loss Ratio Rule Means to You

The Medical Loss Ratio rule is calculated on a State by State basis. In the District of Columbia,  CareFirst did not meet the 80/20 standard. In Virginia the Small and Large Group HMO plans did not meet the 80/20 Standard and in Maryland the Individual Consumer-Driven Only Market was affected.   In 2011, CareFirst spent only 79.2%of a total of $1,000,000 in premium dollars on health care and activities to improve health care quality. Since it missed the 80 percent target by .8% of premium it receives, CareFirst must rebate .8% of the total health insurance premiums paid by the employer and employees in your group health plan. We are required to send this rebate by August 1, 2012, or apply this rebate to the health insurance premium that is due on or after August 1, 2012. Employers or group policyholders must follow certain rules for distributing the rebate.

Ways in Which an Employer Can Distribute the Rebate

If your group health plan is a non-Federal governmental plan, the employer or group policyholder must distribute the rebate in one of two ways: Directed to: Small Groups Platform: Facets

• Reducing premium for the upcoming year; or

• Providing a cash rebate to employees or subscribers that were covered by the health insurance on which the rebate is based. 

Beginning July 9, 2012, CareFirst will distribute rebate checks to 9,870 fully insured employer groups for the 2011 calendar year.

• Rebates differ by product and jurisdiction. The typical group will receive a rebate check between $561 and $10,785.

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.  

PPACA-W-2 REPORTING-IRS GUIDANCE CHART

Below please see additional guidance from the IRS regarding reporting value of employee benefits on form W-2.  If you have a hard time reading please go directly to the IRS site here

MARYLAND HB 443 AND SB 238 ALLOWS AGENTS AND CONSULTANTS TO BROKER HEALTH PLANS THROUGH PUBLIC EXCHANGES

According to the Legislative Wrap-Up (please see below) Maryland House Bill 443 and Senate Bill 238 allow agents and consultants to broker plans through the public exchanges.  This is wonderful news as it gives employers and individuals access to both private insurance programs as well as those offered through the public exchanges while maintaining their relationship with agents/consultants.  Hopefully, this will help spur competition and ultimately lower insurance costs making coverage more affordable for everyone.  Of course the Supreme Court may throw a wrinkle or two as to how the law will go into effect.  But  come January 1, 2014, I would assume that regardless of what the Supreme Court decides, Maryland will plow forward with their version of Health Reform.

The Legislative Wrap-Up Library and Information Services, Department of Legislative Services

Maryland Health Benefit Exchange Act of 2012
HB 443 (passed) makes various updates to Maryland’s Health Benefit Exchange laws. This Administration bill, as amended, expands the operating structure of the Maryland Health Benefit Exchange by, among other things, authorizing the exchange to contract with health insurance carriers in a certain manner, establishing the framework for the Small Business Health Options Program (SHOP) Exchange, and establishing navigator programs for the SHOP and Individual exchanges. The bill requires SHOP Exchange navigators to be licensed, Individual Exchange navigators to be certified, and insurance producers to be authorized to sell qualified plans in the SHOP and/or Individual exchanges. The bill also establishes a process for selecting the benchmark plan that will serve as the standard for the essential health benefits for health benefit plans offered in the small group and individual markets, both inside and outside the exchange.

The legislation has a general effective date of June 1, 2012, although some provisions do not take effect until January 1, 2014.

HAGGLING OVER HEALTHCARE-A SUPREME DECISION

Is making individuals pay for health insurance or pay a penalty constitutional?  That, over three days last week, was being argued in front of the US Supreme Court.  At this point it's any body's guess, however, a decision will be reached sometime in June. 

In additional to the individual mandate, what else will need to be taken out of the Health Reform Law in order to protect it from abuse?  At the very least, guaranteed issue coverage would need to be taken off the table.  And possibly open enrollment periods added in.  Without this there would be no way to protect from people jumping on and off plan when they needed care......which would be catastrophic. 

During the several days of testimony the more liberal Justices seemed to drive questions that would uphold the law while the conservative Justices were not as sure about congress' power regarding making people purchase health coverage.  The Justices include 5 Republicans and 4 Democrats. 

This is a very big deal to the Obama Administration.  He has even issued a "Challenge" to the Supreme Court to uphold the law.  If this law fails or at least a major portion (Individual Mandate), it could have devastating impacts on his re-election effort.

GAME TIME!....U.S .SUPREME COURT TO HEAR ARGUMENTS ON INDIVIDUAL MANDATE

Admit it, you thought I was talking about March Madness, right? The U.S. Supreme Court is set to hear arguments later this month regarding the constitutionality of the Individual Mandate.  If you recall, the individual mandate is that provision in PPACA (Health Reform) that states all people must have individual medical coverage or face a fine.  How the outcome could affect the way employers offer medical coverage could go several different ways.

If the Mandate is ruled constitutional, health reform will continue on its path, states will continue to set-up their exchanges and employers will need to make decisions whether to continue to offer coverage or send employees to the exchanges or a combination of both.  Employer groups of under 50 employees will see little or no monetary adverse consequence to sending employees to the exchange or not because there are no penalties to do so.  If the employer has over 50 employees, not offering some form of minimal essential coverage could cause fines and penalties levied on them.  There are decisions, especially for employers under 50 employees, if its financially prudent to shut down their medical plans and send all employees to the exchanges.  There are schools of thought that for some employers, in order to stay competitive, they will need to continue to offer employer sponsored coverage.

If the Mandate is ruled unconstitutional there is no requirement for employees or anyone else to elect medical coverage.  Since the individual mandate is a guard against "adverse selection" and allows risk to be spread among everyone, it could potentially be the death of the health reform law as it is written.  Since there are no pre-existing condition exclusions and individuals would be able to come onto plan when they wanted, mostly the people electing coverage would be those that needed it.  In other words there is no incentive, or dis-incentive not to carry coverage.  So the risk pool would be made of mostly sick people and eventually would make the cost of coverage unaffordable leaving us in a much worse place then we are now. 

If the individual mandate was removed, other provisions like no pre-existing condition limitations may need to be adjusted to keep people from hopping on-plan simply when they need coverage.  Some thoughts could be limited open enrollment periods, higher premiums for those outside of this period, etc. 

In all, health reforms are needed.  Forcing people to carry coverage may or may not be a good thing.  As far as employers are concerned there is much to keep our eye on in the upcoming months as we draw closer to full implementation of health reform.