Healthcare Reform laws taking place in 2010

On March 23^rd, 2010, the current administration and the President signed into law healthcare reform, referred to as The Patient Protection and Affordable Care Act (PPACA). This healthcare reform has created a lot of questions as to what and when these laws are going into effective and whom these laws will apply to. Although the specific regulations for how this will be implemented are still being written, we are providing a summary of what we understand at the present time. Below is a basic summary and links to further information of what is included in the PPACA for 2010.

A. Lifetime Limits Eliminated

Lifetime limits on the dollar value of benefits for any participant or beneficiary for all fully insured and self insured groups and individual plans will be prohibited in plan years beginning on or after September 23^rd, 2010. Annual limits will be allowed only through plan years beginning prior to January 1, 2014, however will be completely prohibited in 2014.

This law applies to Grandfathered plans, those plans in existence on March 23^rd, 2010.

For the model notices that need to be used to notify members of this lifetime limit change, please refer to:

http://www.dol.gov/ebsa/lifetimelimitsmodelnotice.doc

B. Dependent Age Limit

All group and individual plans in plan years beginning on or after September 23, 2010 will have to cover dependents through age 26. Dependents can be married and will also be eligible for the group health insurance income tax exclusion.

The confusion with this particular benefit is in regards to how this law pertains to children who may be coming off of their parent’s policies before September 23^rd, 2010. Unfortunately, each carrier is implementing this law differently until it goes into effect in September. 

Children who become eligible to enroll because of this coverage requirement must be provided with a written notice of their enrollment rights and be allowed to have 30 days to enroll. This notice must be provided no later than the first day of the first plan year beginning on or after September 23^rd, 2010.

Plan years before 2014, grandfathered plans/groups only would have to offer extended coverage if  the dependent was not eligible for other group coverage.

For the model notices that need to be used to notify members of this dependent age extension, please refer to:

http://www.dol.gov/ebsa/dependentsmodelnotice.doc

C. Pre-Existing Conditions

All groups and individual health plans will have to cover pre-existing conditions for children 19 and under in plan years beginning on or after September 23, 2010. 

This law applies to Grandfathered plans, those plans in existence on March 23^rd, 2010.

D. Preventive Care, ER Services, OB/GYN & PCP/Pediatrician Access & Choice

All group and individual plans will have to cover specific preventive care services with no cost sharing in plan years beginning on or after September 23, 2010.  This means that specific preventive care services will be covered at 100%.

Emergency Services will be covered at the in-network level regardless of provider. This requires same cost sharing in/out of network, coverage without pre-authorization and prudent layperson interpretation.

Grandfathered Plans do not have to apply to these provisions.

When applicable, group health plans and insurers are required to notify participants of their rights to:  (1) choose a primary care provider or a pediatrician from within the plan’s network or (2) obtain obstetrical or gynecological care without prior authorization. This notice must be provided whenever the plan or issuer provides a participant with an SPD or other similar description of benefits starting no later than the first day of the first plan year beginning on or after September 23^rd, 2010.

For the model notices that need to be used to notify members of their Patient Protection, please refer to:

http://www.dol.gov/ebsa/patientprotectionmodelnotice.doc

E. Grandfather Plans

Plans in existence on March 23, 2010 may be grandfathered from complying with certain requirements. Grandfather health plans will be able to make routine changes to their policies and maintain their status.

Compared to their policies in effect on March 23^rd, 2010, grandfathered plans:

1. Cannot Significantly Cut or Reduce Benefits
2. Cannot Raise Co-Insurance Charges
3. Cannot Significantly Raise Co-Payment Charges: Grandfathered plans will be able to increase copay by no more than the greater of $5 or a percentage equal to medical inflation plus 15 percentage points.
4. Cannot Significantly Raise Deductible: Can only raise equal to medical inflations plus 15%
5. Cannot Significantly Lower Employer Contributions: Employer Premium cannot be decreased by more than 5%

F. Federal Risk Pool Program (also known as They Pre-Existing Condition Insurance Plan)

This temporary high risk federal pool program is for U.S citizens or legal residents who have been uninsured for at least six months and have been denied coverage from a private health insurance company due to a pre-existing condition. This program will be running in 21 states, including TX, LA and FL, all offering the same plan design with individual premiums ranging from $140 - $900/month depending on the state and age of the applicant. However, health conditions WILL NOT affect premium rates.

Federal Government began taking applications on July 1^st and those who apply by July 15^th could have their coverage effective August 10^th, 2010.

This program will be in place until the new health insurance exchanges open in 2014 or until they exhaust the budgeted $5 billion in federal funding used to fund this program.

There are a few requirements to meet before you can enroll: 

1. You must be a citizen or national of the United States or lawfully present in the United States
2. You must have been uninsured for at least the last 6 months
3. You must have had a problem getting insurance due to a pre-existing condition

To apply and for further information, please refer to: http://www.pcip.gov/

G. Early Retirement Reinsurance Program: (ERRP)

Temporary re-insurance programs for employers that provide retiree health coverage for employees 55+ are in effect beginning June 29, 2010. This ERRP program has been established to provide reimbursements to participating employment based plans for a portion of the cost of providing health insurance coverage to early retirees and eligible dependents up until January 1^st, 2014 or until funds are depleted. This program will reimburse the employer plan 80% of costs for health benefits between $15,000 - $90, 000.

The Official ERRP Application and instructions are now available and are posted here:

http://www.hhs.gov/ociio/regulations/index.html

H. Small Business Tax Credit

Beginning on March 23, 2010 the day of Healthcare Reform enactment, small business were able to receive a tax credit if they purchased and contributed towards a medical group health plan for their employees.  In order to qualify and receive this tax credit, employers must have:

1.  No more than 25 full-time equivalent employees
2. Pay average annual wages of less than $50,000 per full-time equivalent employee
3. Pays premium under a “qualifying arrangement”.
4. Employer must contribute at least 50% of the premium.

This tax credit is equal to 35% of employer costs (25% for tax-exempt employers) subject to certain limitations. This tax credit will be in effect from 2010 – 2013.

Please refer to attached document to help determine if you qualify for this tax credit.

For more information please refer to the following link:

http://www.irs.gov/newsroom/article/0,,id=220839,00.html

I. Administration launches Healthcare.gov

The Obama administration unveiled Healthcare.gov on Thursday intended to help small business owners and people who aren’t able to get insurance through their employer. This site will allow people to sort through health insurance options and make side-by-side comparisons, however to receive actual pricing and purchase the plans, one must still click through to carrier’s own websites.

Users will answer a series of questions about their age, zip code, job status and financial situation and the site returns a list of options from private plans as well as Medicare & Medicaid and even nearby clinics offering low-or no-cost care.

Please visit www.healthcare.gov  for more information

*This Legislative eBulletin is provided as informational service content to clients and associates. Benefit Solutions, L.P. It should not be construed as legal advice on any specific matter and does not represent or guarantee specific outcomes.

Over The Counter no longer Eligible after 01/01/2011

One of the more immediate reforms in the Patient Protection and Affordable Care Act (Affordable Care Act) is the requirement that affects Flexible Spending Accounts, Health Savings Accounts and Health Reimbursement Arrangements. Starting January 1, 2011 all OTC (Over The Counter) items eligible for reimbursement must be accompanied by a doctor's prescription and a reimbursement request (claim form). They may no longer be purchased using the benefits card.

When does this change go into effect?

This change will go into effect January 1, 2011 and will apply to the taxable year. This means that both calendar year and off plan year FSA's and HRA's will have the change at the same time.

What if my plan year runs from October 1, 2010 through September 30, 2011? Can I get reimbursed for OTC items through the end of my plan year?

No. Eligibility for OTC items ends on December 31, 2010 regardless of plan end date. However, you may still use remaining funds for all other eligible expenses until the end of your plan year.

I am a diabetic. Will I need a doctor's prescription to get reimbursed for my insulin after December 31, 2010?

No. Insulin that is currently purchased over-the-counter without a prescription will still be eligible for reimbursement. However, the benefits card will no longer be accepted as payment after December 31, 2010, and a manual claim form will be required for reimbursement.

Will I still be able to use my benefits card to get reimbursed for my regular prescription medications?

Yes, prescription drug reimbursement will not be affected by this change and you can still use your card.

If I do get a doctor's prescription for an OTC, can I still use my benefits card to get reimbursed?

No. The benefits card may no longer be used as payment for any OTC items. However, you may use another form of payment then submit a reimbursement request along with the doctor's prescription. You can then mail, email, or FAX your receipt and prescription along with a completed claim form to us. All claims are generally processed in 48-72 hours of receipt.

What if I purchase an OTC item December 31 of 2010 but do not submit the expense until March 2011?

You will still be reimbursed for OTC items purchased prior to January 1, 2011. The new rule only affects those items purchased after January 1, 2011.

What are some of the OTC items that will no longer be eligible for reimbursement without a doctor's prescription under the new legislation?

The items no longer eligible for reimbursement under the new law will include item categories such as cough medicines, pain relievers, acid controllers, and allergy medications, to name a few. A complete list of items being affected by this change has not been made available yet. If a list is made available we will pass along to you.

Does this affect purchases with my benefits card for any other type of expenses?

This legislation will not affect expenses related to doctor's office co-pays, dental co-pays, orthodontia, vision exams, eye glasses, and more. Participants will continue to enjoy the convenience of eliminating up-front and out-of-pocket costs with your benefits card or by manually filing claims.

See attached

Principal 

How Satisfaction Levels Vary by Type of Health Plan

Does the level of satisfaction with a health plan vary depending on the type of plan? The 2009 EBRI/MGA Consumer Engagement in Health Care Survey, which provides nationally representative data regarding the growth of consumer-driven health plans (CDHP) and high-deductible health plans (HDHP), answers that and other questions about overall consumer satisfaction for the years 2005 through 2009. Here are some of the details:

• Traditional plan enrollees were more likely than CDHP and HDHP enrollees to be extremely or very satisfied with the overall health plan in all years of the survey.

• In 2009, 66 percent of traditional plan enrollees were extremely or very satisfied with the plan, compared with 52 percent among CDHP enrollees and 40 percent among HDHP enrollees.

• The overall satisfaction levels among CHDP enrollees increased from 37 percent to 47 percent between 2006 and 2007 and were 52 percent in 2009, while the overall satisfaction rates for traditional enrollees were unchanged.

• Differences in out-of-pocket costs may explain a significant portion of the difference in overall satisfaction rates between traditional plan, HDHP, and CDHP enrollees.

Traditional = Health plan with no deductible or less than $1,000 deductible for an individual and less than $2,000 for a family.

HDHP = Health plan with deductible of $1,000 or more for an individual and $2,000 or more for a family, and no health reimbursement account (HRA) or health savings account ( HSA).

CDHP = Consumer-driven health plan with deductible of $1,000 or more for an individual and $2,000 or more for a family, with a HRA or HSA.

More details of the 2005–2007 EBRI/Commonwealth Fund Consumerism in Health Care Surveys, and the 2008–2009 EBRI/MGA Consumer Engagement in Health Care Surveys, including more information about consumer satisfaction levels, appear in the December 2009 EBRI Issue Brief, available at www.ebri.org

-Employee Benefit Research Institute