On March 23rd, 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 23rd, 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 23rd, 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 23rd, 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 23rd, 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 23rd, 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 23rd, 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 23rd, 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 1st and those who apply by July 15th could have their coverage effective August 10th, 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 1st, 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.