Powered by the Michigan Osteopathic Association and Association Benefits Company
Patient Protection and Affordable Care Act (PPACA)
IMPLEMENTATION TIMELINE 2013-2018 Updated 09/26/2013
The Patient Protection and Affordable Care Act of 2010 The Patient Protection and Affordable Care Act of 2010 (the Act) brings significant and sweeping changes to how Americans access and pay for health care. And while change is good, it can be challenging. We are navigating these changes together. Changes in federal law are just one way to move toward a more modern health care delivery system. The Patient Protection and Affordable Care Act will ensure that all Americans have access to quality, affordable health care and will create the transformation within the health care system necessary to contain costs. The Congressional Budget Office (CBO) has determined that the Patient Protection and Affordable Care Act is fully paid for, will provide coverage to more than 94% of Americans while staying under the $900 billion limit that President Obama established, bending the health care cost curve, and reducing the deficit over the next ten years and beyond. PENALTY PAYMENT QUESTION: Who receives the penalty monies? ANSWER: Penalties are essentially taxes paid to the Internal Revenue Service. The penalties may be paid either by individuals in conjunction with their normal annual federal tax returns (due to their failure to comply with the individual mandate beginning in 2014) or excise taxes paid by employers that fail to offer minimum essential coverage ($2,000 per employee) or fail to offer affordable minimum essential coverage ($3,000 per employee who receives a Subsidy through the exchanges).
Page 2 of 53
$100-a-day penalties: ACA non-compliance can be expensive By Keith R. McMurdy September 13, 2013
While a lot of employers are focused on the penalties associated with not offering appropriate coverage (the $2,000 penalty) or not offering affordable coverage (the $3,000 penalty), what can get overlooked is the myriad of daily penalties that come with noncompliance. Take the Oct. 1 exchange notice requirement as an example. While the regulations do not identify a specific penalty for failing to comply with the notice requirement, the Affordable Care Act has a $100-a-day general non-compliance penalty. This general penalty requires employers to correct compliance failures within 30 days of discovery or self-report a $100-a-day penalty for failing to comply on IRS Form 8928 for each day the employer failed to comply with an ACA mandate. Some other things that can result in $100-a-day penalties: 1. Violating the non-discrimination rules (when they are finally written for insured plans) 2. Violating the limits restrictions 3. Failing to extend coverage to dependents to age 26 4. Having retroactive rescission of benefits 5. Failing to cover preventative care 6. Failing to have a revised appeal process (including external appeals) 7. Failing to provide timely notices 8. Violating the restrictions on emergency room visits 9. Violating restrictions on designation of primary care physicians 10.Improper pre-existing condition exclusions 11.Having excessive out-of-pocket costs 12.Violations of the 90-day waiting period limit Employers who simply assume that an insured plan complies with these requirements, or who assume that their self-funded plan already complies, could find themselves in a sticky (and costly) situation if an audit reveals they have failed to comply. This is particularly important now that employers are required to self-report penalties. Both the internal Revenue Service and U.S. Department of Labor could become involved. The solution is to sit down with your plan and go line by line, requirement by requirement, to make sure there are no violations. Even though there is an extension on the employer mandate, there is no extension on offering a compliant plan. So get with your professionals and get the answers. Donâ€™t let the $100-a-day penalties catch you by surprise.
Page 3 of 53
A Summary of taxes and fees assessed by the Affordable Care Act January 31, 2013
One of the biggest questions asked about health reform is "how are we going to pay for all of this?" Unfortunately, the answer is taxes. Under the Affordable Care Act, five new taxes and fees will be added to the purchase of health insurance. The rules, timing and amounts for each of these vary so we're providing a summary table with explanation for your convenience. First, let's run down the purpose of each of the taxes and fees: •
Annual fee on health insurance carriers — This annual fee will be assessed on all fully funded health plans based on premium. (Note: Final regulations have not been released on this fee.)
Transitional Reinsurance Program — Fees collected from all commercial plans (fully and self-funded) sold both on and off the exchange and in both the group and the individual markets. This will be used to pay for high-cost claimants insured in the individual market throughout the country. The program is temporary and runs from 2014 through 2016.
Risk Adjustment Admin fee — A fee used to develop a risk adjustment methodology that will compensate certain plans with membership that is less healthy than average by assessing plans with membership that is healthier than average. This fee is assessed on all individual and small group policies.
Patient-Centered Outcomes Research Institute (PCORI) fee — This fee will fund the PCORI, which conducts comparative effectiveness research. The fee will also be assessed on all fully-insured and selffunded plans including health reimbursement arrangements. The fee will be from 2012 through 2019. Self-funded employer groups are responsible for paying this assessment and filing an annual excise tax return (Form 720) with the IRS.
Exchange user fee — Fee that will be applied to all plans purchased from the exchange both individual and Small Business Health Options Program (SHOP).
Finally, let's review what these fees would look like against 2013 average premiums. Small group
Annual fee on health insurance carriers*
2.5%-4.0% of premium (PPO) 0.75%-1.5% of premium (HMO/POS)
Transitional Reinsurance Program
$5.25 PMPM beginning in 2014. However, the fee is subject to change if not enough is collected nationally.
Risk Adjustment Admin Fee**
Patient-Centered Outcomes Research Institute Fee
2014: $2 PMPY 2015: $2 PMPY 2015-2019 $2 PMPY + medical inflation
Exchange user fee
3.5% of premium
Projected total cost based on 2013 premiums (reflected as PMPM) ^
$22-27 PPO $9-13 HMO
$19-24 PPO $12-17 PPO $11-15 HMO $5-13 HMO
If purchased on Exchange
0.75%-1.5% of premium
N/A 3.5% of premium
PMPM = Per member per month PMPY = Per member per year *Final regulations are pending. Information noted is based on preliminary rules. **Does not apply to grandfathered plans. ^Projected PMPM costs are based on fees assessed in 2014. These amounts are expected to increase
Page 4 of 53
Last updated: 08/13/2013
Patient Protection & Affordable Care Act Timeline ANY PENALTIES CHARGED WILL NOT BE TAX DEDUCTIBLE PER CURRENT GUIDANCE
Full-Time Hours Per Week Summary of Benefits and Coverage document
Limitation on health flexible spending account salary reduction contributions Form W-2 reporting DELAYED FOR ↓2 5 0
Full time will become 30 hours per week. Part Time will be 29 hours per week or less A Summary of Benefits and Coverage document must be provided to applicants and enrollees before enrollment or re-enrollment in a health benefit plan. There will be a $2,500 limit on annual salary reduction contributions to health flexible spending accounts offered under cafeteria plans. An employer issuing 250 or more Form W-2s must report the aggregate cost of employer-sponsored health coverage in box 12 using code DD.
Notice of Exchange
Employers must provide all new hires and current employees with a written notice about the Health Benefit Exchange and some of the consequences if an employee decides to purchase coverage through the Exchange in lieu of employer-sponsored coverage.
Pre-existing condition exclusions
Group health plans and insurers may not impose pre-existing condition exclusions against enrollees. Group health plans and insurers may not impose annual limits on the dollar value of essential health benefits. Employers are required to complete a 12 page form entitled, "Application for Health Coverage and Help Paying Costs"
Annual Limits Application for Advance Premium Credits: Prohibition against excessive waiting periods
Group health plans and insurers cannot require any waiting period in excess of 90 days.
Page 5 of 53
Effective the first day of the plan/renewal year beginning on or after January 1, 2014. Originally effective 9/23/12 – must be given to all new hires (within 14 days of hire) and at Open Enrollment - $1000 penalty per occurrence when not provided. Effective for plan years beginning after 12/31/2012. An employer may need to update its cafeteria plan to reflect this new limit. Tax year 2013 – EVERYONE was to comply HOWEVER - Employers who issued less than 250 W-2's were given temporary relief from this mandate. The relief lasts "until further guidance is issued" and nothing has yet been issued. Original deadline was 3/1/2013. As of May 8, 2013 – DOL Technical Release (may not be final guidance) provided employers a safe harbor until additional guidance is issued. Also announced the availability of two model notices that employers can use. Employers must provide the notice to each new employee at the time of hire beginning 10/1/2013. Employers must distribute the notice automatically to all employees no later than October 1, 2013. For individuals over age 19 - effective as of the first plan year beginning on or after 1/01/2014. 1/01/2014 When requested by employees who are applying for advance premium tax credits when purchasing coverage on the market. Effective the first day of plan year beginning on or after January 1, 2014.
Reporting of health insurance coverage
Any person who provides minimum essential coverage to an individual during a calendar year must report certain health insurance coverage information to the Internal Revenue Service and provide a written statement to the individual.
1/01/2014 Eff 7/2/2013 – it will delay enforcement until 2015
Unless otherwise exempt, individuals must have health coverage or pay a penalty.
Employer mandate DELAYED
Employers with 50+FTEs must provide affordable health coverage of a minimum value to full-time employees and their dependents or pay a penalty.
1/01/2014. 1 Year Penalty – The greater of $95 per adult (caps at 3) and $47.50 per child (up to $285) or 1% of household income 1/01/2014 - Eff 7/2/2013 – it will delay enforcement until 2015
Cost-Sharing Limits DELAYED
Guaranteed renewability Guaranteed availability Wellness Programs
Non-discrimination rules for fully-insured plans
Automatic enrollment in an employer’s health plan
Excise tax on high-cost health coverage (the “Cadillac Tax”)
Cost-Sharing Limits. The regulations provide that the annual limit on costsharing will be set at the annual high deductible health plan limit for out-ofpocket expenses.
For 2014, this limit will be $6,350 for selfonly coverage and $12,700 for other tiers of coverage - includes deductibles, copays, co-insurance. Eff 8/13/2013 – it will delay enforcement until 2015
Insurers must renew or continue current coverage at the option of the employer or individual. Insurers must accept every employer or individual in the state that applies for coverage. Reward for participation in a healthcontingent wellness program increase to 30% to 50% to when in connection with a program designed to prevent or reduce tobacco use. Fully-insured plans must comply with nondiscrimination rules related to eligibility and benefits that are similar to those nondiscrimination rules currently effective for self-insured plans.
Employers with more than 200 full-time employees must automatically enroll new full-time employees in one of the employer’s health benefit plans and automatically continue the enrollment of current employees. The amount of employer-sponsored health coverage that exceeds a certain threshold ($10,200 for self-only coverage and $27,500 for other coverage) will be subject to a 40% excise tax.
Page 6 of 53
1/01/2014 Will be effective for plan years on or after 1/01/2014
After 1/1/2014 - Penalties: $100 per day per employee discriminated against. Penalties top off at $500,000. Self-funded plans - penalties impose a tax on employees who receive a higher level of benefits. This provision will not become effective until sometime after regulations are issued to assist with compliance.
Effective for taxable years beginning January 1, 2018
ADDITIONAL CHANGES TO PPACA EFFECTIVE JULY 2013: On July 9, 2013, the IRS issued Notice 2013-45 which provided guidance on the delay of enforcement of the employer mandate under the Affordable Care Act (ACA). This guidance followed the July 2, 2013 announcement from Mark J. Mazur, Assistant Treasury for Tax Policy at the U.S. Department of Treasury, of the delay until 2015 of the employer health insurance reporting requirements. The Notice addresses the delay until 2015, and encourages employers and other reporting entities to voluntarily comply in 2014 with the reporting provisions. It adds that this delay has no effect on the effective date or application of other Affordable Care Act Provisions. Thus, for example, the delay does not apply to the individual mandate, which takes effect in 2014. Everyone is confused and wondering what ACA provisions are delayed and what ACA provisions remain in force. The following is a brief summary:
WHAT ACA REQUIREMENTS ARE DELAYED IN 2014? *Employer Mandate: Employers must offer coverage to employees who work on average 30+ hours per week or be subject a penalty. *Affordability: Coverage must be affordable to avoid a penalty (i.e., the employee's share of the coverage cost cannot exceed 9.5% of the employee's household income). *Minimum Value: Coverage must provide minimum value to avoid a penalty (although this requirement is waived, employer must still report whether a plan provides minimum value on the SBC). *Certain Reporting Requirements: Employers (and insurers) must provide information regarding employees and coverage in order to facilitate enforcement of the employer mandate.
WHAT ACA REQUIREMENTS REMAIN EFFECTIVE IN 2014 FOR EMPLOYERS? *SBC: Summaries of Benefits and Coverage must be distributed during open enrollment for the 2014 coverage period and must indicate whether the plan provides minimum value. *Exchange Notices: Employers must distribute exchange notices to employees by October 1, 2013, and thereafter to new employees upon hire. *Application for Advance Premium Credits: Employers are required to complete a 12 page form entitled, "Application for Health Coverage and Help Paying Costs" when requested by employees who are applying for advance premium tax credits when purchasing coverage on the market. *W-2 Reporting: Employers must continue to report the aggregate value of health coverage on Forms W-2 The rules for 2013 will be the same as applied for 2012. Page 7 of 53
*Counting Period for Employer Mandate: Employers that need to determine whether they will be subject to the employer mandate in 2015 (50 or more full-time or full-time equivalent employees in 2014) will need to record employee hours in 2014. It is not yet clear whether a short counting period will be available which means that employers may wish to track hours on a per-employee, monthly basis beginning January 1, 2014. *Measurement Period for Employer Mandate: Employers will need to count employees and record hours over the applicable measurement period to determine which employees are eligible for coverage offers effective January 1, 2015, under the employer mandate. It is not clear whether the transitional measurement period will no longer be available and employers may want to count hours over a 12month Standard Measurement Period commencing November 1, 2013. This would afford employers a two-month administrative period at the end of 2014 in which to evaluate eligibility data and extend coverage offers to eligible employees. It is not clear whether the employer mandate will be effective on January 1, 2015 or the renewal date in 2015. *Benefit Mandates For All Plans: Plan design requirements for all plans continue to apply (e.g., maximum 90-day waiting period, no limits on pre-existing conditions or essential health benefits, and expansion of wellness incentives). *Benefit Mandates for Non-Grandfathered Plans Only: Plan design requirements for nongrandfathered plans only continue to apply (e.g., limits on out-of-pocket maximums, coverage for clinical trial-related services, and provider nondiscrimination, and for small group health plans, limits on annual deductibles).
WHAT ACA REQUIREMENTS FOR INDIVIDUALS REMAIN IN EFFECTIVE IN 2014? *Individual Mandate: Individuals must have health care coverage or pay a penalty. *Exchanges (Marketplaces): Public exchanges are still scheduled to offer coverage effective January 1, 2014. *Subsidies: Premium subsidies will be available to help eligible individuals buy policies on the exchange. There Are Three (3) Methods For Determining The Number of Covered Lives For Purposes Of Calculating The Taxes and Fees: • •
Actual Count Method – add the total number of lives covered each day of the plan year and divide by the number of days. Snapshot Method or “Look Back” Method – add the total # of lives covered on one date in each quarter and divide by the number of days on which the count was made. The date(s) for each quarter must be the same (1st day of the quarter, last day of the quarter, first day of each month, etc.). Form 5500 Method – add together the number of participants covered at the beginning and the end of the plan year as reported on the Form 5500 and then divide by two.
The same method must be used for the duration of the plan year. A different method may be used from one plan year to the next. Page 8 of 53
ATES TO 2011 PROVISIONS PPACA IMPLEMENTATION TIMELINE Amplified Version 2012 Annual Maximum on Essential Benefits – 2012 No Annual Maximum on Essential Benefits - 2014 October 2, 2012 In accordance with the Affordable Care Act, the maximum limit on annual benefits which can be imposed by a health plan increased to $2 million on Sept. 23, 2012. Employers must eliminate annual limits by 2014. Until then, plans may place only "restrictive" annual limits on essential health benefits. From Sept. 23, 2012 until Dec. 31, 2013, the restrictive annual maximum is set by the federal government at $2 million. This requirement is effective for plans renewing on and after Sept. 23, 2012. Grandfathered plans must comply with the annual maximum requirement. Annual limits apply on an individual-by-individual (not family) basis. PPACA also eliminated lifetime limits, or caps, on benefits in 2010.
HHS defines 'essential health benefits' under PPACA By Edward I. Leeds and Jean C. Hemphill December 7, 2012
The Department of Health and Human Services has issued two sets of proposed regulations issued under the Patient Protection and Affordable Care Act that will affect the design, availability and cost of health insurance plans, primarily in the individual and small group markets. Most significantly, HHS has published proposed regulations defining the “essential health benefits” that must be included in insurance plans in these markets. These regulations address cost-sharing limits and the valuation of coverage. The second set of regulations addresses specific insurance market reforms. All of this guidance generally takes effect in 2014. Essential Health Benefits. The PPACA defines “essential health benefits” by specifying 10 categories of benefits that must be covered by all health insurance plans offered through an exchange. These categories are:
Ambulatory patient services Emergency services Hospitalization Maternity and newborn care Mental health and substance abuse disorder services Prescription drugs Rehabilitative and habilitative services and devices Laboratory services Preventive and wellness services and chronic disease management Pediatric services, including oral and vision care Page 9 of 53
The final rule generally follows the proposed rule, which allowed states to choose a benchmark plan for essential benefit plans in 2014 and 2015. Key highlights include: 1
• • • •
Habilitative services: The final rule does not expand the definition of habilitative services but gives states the option of defining which habilitative services must be offered. On Jan. 7, 2013, the Michigan Insurance Commissioner issued a bulletin that defined applied behavior analysis services for autism as a habilitative service. Prescription drugs: Health plan issuers must offer at least one drug in every essential health benefit category and class, or the same number of drugs in each category and class of the benchmark plan. Mental health: The final rule requires that all new small group and individual market plans cover mental health and substance use disorder services, as well as comply with the federal parity law requirements beginning in 2014. Non-discrimination: The final rule clarifies that issuers may use factors such as age and family history to manage medical care supported by reasonable and evidence-based treatments. Out-of-pocket maximum: The final rule clarifies that large group and self-insured coverage must comply with the Affordable Care Act maximum out-of-pocket requirements (estimated for 2014 at $6,400 for self-only coverage and $12,800 for coverage other than self-only). • In a corresponding FAQ issued by HHS and the Department of Labor, and Treasury, the agencies provided a safe harbor for group health plans if the major medical coverage or any carve outs (e.g., prescription drug coverage) do not exceed $6,400. This exception is for one year only. Pediatric Dental: The final rule states that for plans sold off Marketplace, issuers must cover the 10 essential health benefit categories including pediatric dental benefits for small group and individual products. The issuer does not have to provide pediatric dental benefits if an individual purchased standalone dental coverage certified by the Marketplace and meets the essential health benefit requirements. The final rule also clarifies that the Marketplace will determine the reasonable out-of-pocket maximum requirement for standalone dental plans.
The new regulations extend the rules to all non-grandfathered plans offered in the individual and small group (generally less than 100 employees) markets and define the expenses that must be covered within the 10 categories. In line with proposals that have been published previously, the regulations establish a list of permissible benchmark plans. Each state is required to designate an EHB benchmark plan from that list to serve as the standard for benefits in those categories. MICHIGAN’S DESIGNATED EHB BENCHMARK PLAN: September 28, 2012 – Governor Rick Snyder sent a letter to The Honorable Kathleen Sebelius, Secretary of the US Department of Health and Human Services stating, “Priority Health’s HMO plan has been selected as Michigan’s benchmark essential health benefits plan for coverage years 2014 and 2015. Priority Health’s HMO plan – as supplemented by MIChild dental program (for pediatric dental coverage) and the FEDVIP Blue Vision High Plan (for pediatric vision coverage) will form the minimum coverage requirements under the ACA for Michiganders in the non-grandfathered small group and individual insurance markets. The benchmark plan defines the benefits to be covered, but does not identify cost-sharing levels. The regulations address a number of more specific issues with respect to EHB. For example:
In an attempt to balance access with affordability, the proposed regulations require plans to cover at least one prescription drug in each category or class in a specified list (most likely to be categories and classes identified by U.S. Pharmacopeia). Plans must also cover at least the same number of drugs in each category and class as the EHB-benchmark plan.
A state may require an Exchange plan to cover benefits in addition to the EHB, but the cost of any of these additional benefits mandated after December 31, 2011, must be defrayed by the state. HHS intends to publish a list of state-required benefits for Exchanges to use as a reference tool. Page 10 of 53
Any issuer that offers coverage on the Exchange must offer the same EHB package in policies offered on the individual or small group market outside the Exchange.
Health plans in the individual and small group markets will be well advised to recall that the ACA uses the term “essential health benefits” in its prohibition of annual and lifetime dollar limits, as well as in its rules governing which health plans will be available in those markets (particularly through an Exchange). Cost-Sharing Limits. The regulations provide that the annual limit on cost-sharing (which includes all deductibles, copayments, co-insurance and similar employee charges applicable to EHB) will be set at the annual high deductible health plan limit for out-of-pocket expenses. For 2013, this limit will be $6,250 for self-only coverage and $12,500 for other tiers of coverage. DELAYED ONE (1) YEAR: For 2014, this limit will be $6,350 for self-only coverage and $12,700 for other tiers of coverage. Deductibles will be subject to a separate limit that, in 2014, will be $2,000 for self-only coverage and $4,000 for other tiers. Adjustments to the deductible limits may apply in certain circumstances. The limits on deductibles and costsharing will increase by the average percentage increase in health insurance premiums. For network-based plans, cost-sharing amounts for out-of-network providers (with whom the plan does not have a contractual relationship) will not generally count toward the annual limit on cost-sharing.
Actuarial Value The final rule largely follows the proposed rule with a few minor changes. The final rule provides flexibility in the small group market by permitting issuers to exceed the annual deductible limits in order to meet and offer coverage at a particular metal level. HHS released the final actuarial value calculator which allows for issuers to input cost-sharing factors to determine the actuarial value of their products. In 2014, the actuarial value calculator uses a national standard population, but for plan years 2015 and after, the rule would allow states to submit state-specific claim data for use in the calculator. Actuarial Value of Coverage for Metal Level Plans. The regulations adopt a standard methodology for determining the level of coverage under a health plan and allow for small variations in these levels of up to +/2%: •
Bronze (which covers 60% of the AV of expenses),
Gold (80%) or
To provide a cost-efficient means for making the AV calculations, HHS has developed an AV calculator linked to its website. This calculator measures a health plan's generosity by determining the percentage of expected health care costs that the health plan will cover, based substantially on cost-sharing information that an employer provides about its plan, and various assumptions that are programmed into the calculator. Are HSA contributions included in the actuarial value calculation? For group health plans, employer contributions to a health savings account will be included in the actuarial value determination. HSA contributions paid directly by the individual would not count towards actuarial value. Employer contributions to a health reimbursement arrangement also impact actuarial value. Per IRS rules, employees cannot contribute to an HRA. Page 11 of 53
Minimum Value The minimum value calculator(similar to the AV calculator) allows for issuers to input information about the plan’s benefits and cost-sharing to determine whether the plan covers 60 percent of the benefit costs as required under the Affordable Care Act. The calculator allows for two-tier plan designs, HRA and HSA contributions, narrow network designs, and separate out-of-pocket maximums for medical and drug. The MV calculator assumptions will be based on a standard population of participants typical of self-funded employer plans rather than those in the individual and small group markets. Employers may use the MV calculator or an alternative, specifically certain safe harbor checklists and (particularly for plans not suited to the MV calculator or checklists) actuarial certification. If the terms of the employer-sponsored plan are consistent with, or more generous than, any one of the safe harbor checklists, the plan would be treated as providing minimum value. The final rule clarifies, however, that any small group plan that is Affordable Care Act compliant will be considered to meet the 60 percent minimum value standard. It also clarifies that the out-of-pocket limits will apply only to innetwork providers. Minimum Value Calculations. To satisfy the employer mandate, group health plans maintained by employers with at least 50 full-time employees must cover at least 60% of the total allowed cost of health care. As a result, many employer-sponsored group health plans will need to calculate the value of the coverage that they provide. For this purpose, HHS and the IRS will make a minimum value calculator available. Other Matters. The new guidance addresses a number of other subjects relating to health insurance offered in the individual and small group markets, including:
The use of a stand-alone dental plan to meet the requirement to provide pediatric dental coverage
The establishment of a process for reviewing and approving other accreditation entities
Various insurance requirements relating to the fairness in premiums and rate increases, the guaranteed availability and renewability of coverage, risk pools, catastrophic coverage, and student health insurance (this guidance collectively comprises one of the two new sets of proposed regulations)
Beginning in 2014, the rules will substantially affect health insurance products purchased by individuals and small employers. The compliance burden starts earlier, but falls mostly on the insurers themselves and on state regulators, particularly regulators implementing an exchange. LARGER GROUP/SELF-FUNDED GROUPS: The new requirements will have a meaningful, but smaller effect on the health insurance purchased by large employers. Employers with self-funded plans will need to follow the rules on MV calculations for purposes of complying with the employer mandate. Otherwise, the direct effect of the new rules on self-funded plans is relatively minimal. EFFECTIVE JULY 2, 2013 - Continuing to Implement the ACA in a Careful, Thoughtful Manner By: Mark J. Mazur 7/2/2013 The Obama Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow the government to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition.
Page 12 of 53
Preventive Services Covered Under the Affordable Care Act If you have a new health insurance plan or insurance policy beginning on or after September 23, 2010 (a nongrandfathered PPACA employer group), the following preventive services must be covered without having to pay a copayment or co-insurance or meet your deductible. This applies only when these services are delivered by a network provider and when there is NO diagnosis code listed on the billing. If services are not delivered by a network provider, there is no coverage.
Preventive Services For Children The following preventive services must be covered without having to pay a copayment or co-insurance or meet your deductible. This applies only when these services are delivered by a network provider and when there is NO diagnosis code listed on the billing. If services are not delivered by a network provider, there is no coverage. • • • • • • • • • • • • • • • • •
Alcohol and Drug Use assessments for adolescents Autism screening for children at 18 and 24 months Behavioral assessments for children of all ages Blood Pressure screening for children Cervical Dysplasia screening for sexually active females Congenital Hypothyroidism screening for newborns Depression screening for adolescents Developmental screening for children under age 3, and surveillance throughout childhood Dyslipidemia screening for children at higher risk of lipid disorders Fluoride Chemoprevention supplements for children without fluoride in their water source Gonorrhea preventive medication for the eyes of all newborns Hearing screening for all newborns Height, Weight and Body Mass Index measurements for children Hematocrit or Hemoglobin screening for children Hemoglobinopathies or sickle cell screening for newborns HIV screening for adolescents at higher risk Immunization vaccines for children from birth to age 18 —doses, recommended ages, and recommended populations vary: o Diphtheria, Tetanus, Pertussis o Haemophilus Influenzae Type B o Hepatitis A o Hepatitis B o Human Papillomavirus o Inactivated Poliovirus o Influenza o Measles, Mumps, Rubella o Meningococcal o Pneumococcal o Rotavirus o Varicella Iron supplements for children ages 6 to 12 months at risk for anemia Lead screening for children at risk of exposure Page 13 of 53
• • • • • • •
Medical History for all children throughout development Obesity screening and counseling Oral Health risk assessment for young children Phenylketonuria (PKU) screening for this genetic disorder in newborns Sexually Transmitted Infection (STI) prevention counseling and screening for adolescents at higher risk Tuberculin testing for children at higher risk of tuberculosis Vision screening for all children
Covered Preventive Services
Preventive Services For Adults
Abdominal Aortic Aneurysm one-time screening for men of specified ages who have ever smoked Alcohol Misuse screening and counseling Aspirin use for men and women of certain ages – Consultation for aspirin for the prevention of cardiovascular disease – aspirin may not be payable by your plan (BCBSM, BCN does not cover aspirin). • Blood Pressure screening for all adults • Cholesterol screening for adults of certain ages or at higher risk • Colorectal Cancer screening for adults over 50 • Depression screening for adults • Type 2 Diabetes screening for adults with high blood pressure • Diet counseling for adults at higher risk for chronic disease • HIV screening for all adults at higher risk • Immunization vaccines for adults--doses, recommended ages, and recommended populations vary: o Hepatitis A o Hepatitis B o Herpes Zoster o Human Papillomavirus o Influenza o Measles, Mumps, Rubella o Meningococcal o Pneumococcal o Tetanus, Diphtheria, Pertussis o Varicella • Obesity screening and counseling for all adults • Sexually Transmitted Infection (STI) prevention counseling for adults at higher risk • Tobacco Use screening for all adults and cessation interventions for tobacco users • Syphilis screening for all adults at higher risk Covered Preventive Services • • •
Covered Preventive Services for Women, Including Pregnant Women The following preventive services must be covered without having to pay a copayment or co-insurance or meet your deductible. This applies only when these services are delivered by a network provider and when there is NO diagnosis code listed on the billing. If services are not delivered by a network provider, there is no coverage. • • • •
Anemia screening on a routine basis for pregnant women Bacteriuria urinary tract or other infection screening for pregnant women BRCA counseling about genetic testing for women at higher risk Breast Cancer Mammography screenings every 1 to 2 years for women over 40 Page 14 of 53
• • • • • • • • • • •
Breast Cancer Chemoprevention counseling for women at higher risk Breast Feeding interventions to support and promote breast feeding Cervical Cancer screening for sexually active women Chlamydia Infection screening for younger women and other women at higher risk Folic Acid supplements for women who may become pregnant Gonorrhea screening for all women at higher risk Hepatitis B screening for pregnant women at their first prenatal visit Osteoporosis screening for women over age 60 depending on risk factors Rh Incompatibility screening for all pregnant women and follow-up testing for women at higher risk Tobacco Use screening and interventions for all women, and expanded counseling for pregnant tobacco users Syphilis screening for all pregnant women or other women at increased risk Women's Preventive Services: Required Health Plan Coverage Guidelines Effective the Plan Year AFTER August 1, 2012
SUMMARY: This amendment applies to non-grandfathered individual insurance policies as well as nongrandfathered insured and self-insured group health plans. For plan years beginning on or after August 1, 2012, non-grandfathered plans will be required to cover the certain preventive care services for women with no cost sharing. With respect to all Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity -- Plans may impose cost sharing on brand name preventive drugs if a generic version is available and is just as effective and safe for the patient to use. Cost sharing would not be permitted on the generic drug.
Required Health Plan Coverage Guidelines: Type of Preventive Service
HHS Guideline for Health Insurance Coverage
Well-woman preventive care visit annually for adult women to obtain the recommended preventive services that are age and developmentally appropriate, including preconception and prenatal care. This wellwoman visit should, where appropriate, include other preventive services listed in this set of guidelines, as well as others referenced in section 2713.
Annual, although HHS recognizes that several visits may be needed to obtain all necessary recommended preventive services, depending on a woman’s health status, health needs, and other risk factors.* (see note)
Screening for gestational diabetes.
Screening for gestational diabetes.
In pregnant women between 24 and 28 weeks of gestation and at the first prenatal visit for pregnant women identified to be at high risk for diabetes.
Human papillomavirus testing.
High-risk human papillomavirus DNA testing in women with normal cytology results.
Screening should begin at 30 years of age and should occur no more frequently than every 3 years.
Counseling for sexually transmitted infections.
Counseling on sexually transmitted infections for all sexually active women.
Counseling and screening for Counseling and screening for human immunehuman immune-deficiency virus. deficiency virus infection for all sexually active women.
Page 15 of 53
Contraceptive methods and counseling. ** (see note)
All Food and Drug Administration approved As prescribed. This requirement does not contraceptive methods, sterilization procedures, include abortifacient drugs. and patient education and counseling for all The "morning after" pill or RU-486 or will be women with reproductive capacity.++ covered with no cost-sharing. It has been approved by the FDA and does not cause an abortion. It causes a person to not get pregnant.
Breastfeeding support, supplies, Comprehensive lactation support and In conjunction with each birth. and counseling. counseling, by a trained provider during pregnancy and/or in the postpartum period, and costs for renting breastfeeding equipment. Screening and counseling for interpersonal and domestic violence.
Screening and counseling for interpersonal and domestic violence.
* Refer to recommendations listed in the July 2011 IOM report entitled Clinical Preventive Services for Women: Closing the Gaps concerning individual preventive services that may be obtained during a well-woman preventive service visit. ** Group health plans sponsored by certain religious employers, and group health insurance coverage in connection with such plans, are exempt from the requirement to cover contraceptive services. A religious employer is one that: (1) has the inculcation of religious values as its purpose; (2) primarily employs persons who share its religious tenets; (3) primarily serves persons who share its religious tenets; and (4) is a non-profit organization under Internal Revenue Code section 6033(a)(1) and section 6033(a)(3)(A)(i) or (iii). 45 C.F.R. ยง147.130(a)(1)(iv)(B). ++ Plans may impose cost sharing on brand name preventive drugs if a generic version is available and is just as effective and
safe for the patient to use. Cost sharing would not be permitted on the generic drug.
Page 16 of 53
Summary of Benefit Coverage (SBC) Requirement – 2012 Glossary of Important Health Care Reform Terms Effective September 23, 2012
Providing Clear and Consistent Information to Consumers about Their Health Insurance Coverage Today, consumers lack access to information in plain English to help them understand the health insurance coverage they have or, when they shop for a new plan, the differences in health plan benefits and coverage. The same is true for employers who offer coverage to employees or who are shopping for health coverage to offer their employees. As a result of the difficulty in obtaining comparable information across and within health insurance markets, consumers have trouble finding and choosing the coverage that best meet the health and financial needs of themselves, their families, or their employees. This is about to change! Description Health carriers and group health plans are required to provide current and prospective members with a Summary of Benefits and Coverage (SBC) along with a Uniform Glossary. SBCs are designed to provide clear, consistent and comparable information about health benefits and coverage. By creating uniform tools, consumers can compare their coverage options across different types of plans and insurance products. The information is intended to assist consumers in making informed decisions regarding health care coverage. SBCs are general overview documents and are not intended to be a contract or replace marketing materials currently used for sales purposes. Insurance carriers are responsible for creating the SBC for each plan (for a sample, click here). Each SBC must include the following: • • •
Chart outlining benefits with specific criteria outlined Two coverage examples (1 - Having a Baby, 2 - Managing Type 2 Diabetes) Glossary of Medical and Insurance Terms (Uniform Glossary)
Effective date: The final regulations revised the effective date for health insurance issuers and group health plans to provide the SBCs from September 23, 2012, to the following: Members must receive an SBC at certain triggering events. The table below identifies the triggering events that dictate when a member must receive an SBC. Open Enrollment
During which members can choose from available plan options.
No new coverage agreements required (i.e., no benefit changes).
Applies anytime group signs new coverage agreements (i.e., benefit change at renewal or mid-year or adds a new line of business).
Upon SBC Changes
After application and only required if change occurs between application and enrollment and if change alters the content of SBC.
Member becomes eligible for coverage (i.e., new hire). Page 17 of 53
Any request from group or member at any time.
New enrollments that meet HIPAA special enrollment criteria, such as marriage, adoption or birth of a child.
For Groups Triggering Event
When To Provide:
Provide during open enrollment with Benefits-at-a-glance.
Provide to members thirty (30) days before the beginning of the plan year.
As soon as possible, but no later than seven (7) days following receipt of application/ first date on which the member is eligible to enroll in coverage..
Upon SBC Change
No later than first (1 ) day of coverage.
Provide existing SBC to newly eligible member with enrollment application and materials, or if there are none, no later than first day of eligibility for coverage.
As soon as possible, but no later than seven (7) days following request.
90 days from enrollment (if requested the â€œupon requestâ€? deadline applies (7 days).
Notice of Material Modification The law states that a group health plan or insurance issuers (group or individual) provide notice of a material modification of coverage (as defined under ERISA section 102). The notice must be provided to enrollees (or, in the individual market, policyholders) no later than 60 days prior to the date on which such change will become effective, if it is not reflected in the most recent SBC provided. This applies to mid-year changes only and does not affect changes made in connection with a renewal or reissuance. The notice of modification may consist of a new SBC or a specific notice detailing the change. Penalties If a carrier or employer willfully fails to provide an SBC within the required timeframe, fines and penalties may need to be paid. According to CMS, as long as appropriate efforts are being made to comply, fines and penalties will not be applied during the first year. Penalties
$1,000 per affected individual for each instance.
$100 per day per affected individual until the carrier or employer complies.
Do we have to also send a Summary of Material Modification (SMM) to the plan participants if we have sent out the SBC advance notice? No. If you provide the advance notice of a material modification in a timely manner, the notice will also satisfy your obligation to provide a Summary of Material Modification (SMM) as required under ERISA. Page 18 of 53
PPACA Implementation Timeline Amplified Version 2013 Cap on Medical Flexible Spending Account Contributions – 2013 Health Reform Caps Health FSAs at $2,500 Approximately 33 million workers contribute part of their pre-tax salary into flexible spending accounts (FSAs) to pay for out-of-pocket health care expenses like copayments, deductibles and orthodontia. Effective Jan. 1, 2013, the Affordable Care Act (ACA) requires a new $2,500 annual salary-deferral limit for health care FSAs. Prior to 1/1/2013 there is no legal limit, and according to one study, 78% of large employers set the cap at $5,000 or higher. Plan years beginning after December 31, 2012 Employer groups with cafeteria plans must be amended to reflect the $2,500 limit. A Section 125 plan may only offer qualified benefits. A cafeteria plan that fails to comply with the $2,500 limit would be offering non-qualified benefits, and employees may be subject to taxes on these benefits. For plan years beginning after December 31, 2012, salary reduction contributions (this does not apply to certain employer non-elective contributions) to a Health Flexible Spending Account (FSA) will be limited to $2,500 per year. In future years, this limit will be adjusted annually for inflation. The contribution applies on a plan year basis. Exclusions - The new limit does not apply to: • • • • •
Non-elective health FSA contributions Cafeteria plans that are used to pay an employee’s share of health coverage premiums (or the corresponding employee contribution share under a self-insured, employer-sponsored health plan). Dependent care FSAs Health Savings Accounts (HSAs) Health Reimbursement Arrangements (HRAs),
Page 19 of 53
The Patient-Centered Outcomes Research Institute (PCORI) Formerly, “The Comparative Effectiveness Fee” These fees are effective for policy or plan years ending after September 30, 2012 and generally apply for each policy or plan year from 2012 through 2018 (for calendar year plans).
The Patient Protection and Affordable Care Act (PPACA) imposes a fee on health insurance carriers (including retiree-only and grandfathered plans) and the sponsors of self-funded group health plans to create a PatientCentered Outcomes Research Trust Fund. This fund will financially support comparative effectiveness research that evaluates and compares health outcomes, clinical effectiveness, risks and benefits of two or more medical treatments/services. Fully Insured Groups: The fee will be paid to the IRS by the insurance carrier. There is no direct responsibility for the agent or group. Self-Funded Groups: According to the proposed rule of April 7, 2012, plan sponsors must annually file a federal excise tax return (Form 720) reporting liability for the fee, and remit payment by July 31 of the calendar year immediately following the last day of the plan year. The fee is equal to the average number of covered lives for the policy year, times the applicable dollar amount. • • •
For plans ending on or after October 1, 2012, the applicable dollar amount is $1. For plans ending on or after October 1, 2013, the applicable dollar amount is $2. For plans ending on or after October 1, 2014, the applicable dollar amount will be adjusted to account for medical inflation. Plans Ending on or After
October 1, 2012
October 1, 2013
October 1, 2014 – 2019*
Adjusted to account for medical inflation
*This provision ends with plan or policy years ending in the federal fiscal year 2019. Carriers and self-funded plans must pay the fee annually using IRS Form 720. (Despite the form being titled Quarterly Federal Excise Tax Return, a plan sponsor that files a Form 720 only to report the fee is not required to file a Form 720 at other times during the year.) The form and payment in full will be due by July 31 of each year, beginning July 31, 2013, for most plan sponsors.
Page 20 of 53
Form W-2 Informational Reporting of the Cost of Employer-Sponsored Group Health Plan Coverage 2012, 2013 Tax Years and Thereafter January 2013 - Last Updated 1/16/2013 Description Employers who issued more than 250 W-2 forms in 2011 must report the aggregate cost of employer-sponsored health care coverage on the 2012 W-2 forms (due in January 2013) in Box 12, Code DD. DELAYED: Employers who issued less than 250 W-2 Forms in 2011 should start to consider how they will capture this information when the relief from this requirement is issued in the future. As of 01/2013: relief from this requirement for groups who issued less than 250 W-2’s in 2011 is expected to continue until further guidance is released by the IRS. It is meant to be a tool to provide employees with useful information about the cost of their health care coverage. The Notice clarified that the aggregate reportable cost includes the portion of the cost paid by the employer and the employee, regardless of whether or not it is paid on a pre-tax basis. The IRS reiterated in the Notice that this reporting on the Form W-2 is for an employee's information only and is intended only to inform the employee of the cost of his or her health care coverage. It will not cause employerprovided health care coverage that is otherwise excludable from an employee's gross income to become taxable to the employee. Penalties: The penalties for non-compliance with this requirement - $200 per W-2, capped at $3 million per employer – are substantial. This chart for tax-year 2012 and beyond was created at the suggestion of and in collaboration with the IRS’ Information Reporting Program Advisory Committee (IRPAC). Until further notice, items listed as "optional" are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance. Coverage Type
Report on form W-2
Major medical Dental or vision plan not integrated into another medical or health plan Dental or vision plan which gives the choice of declining or electing and paying an additional premium Health Flexible Spending Arrangement (FSA) funded solely by salary-reduction amounts Health FSA value for the plan year in excess of employee’s cafeteria plan salary reductions for all qualified benefits Health Reimbursement Arrangement (HRA) contributions Health Savings Arrangement (HSA) contributions (employer or employee) Archer Medical Savings Account (Archer MSA) contributions (employer or employee) Hospital indemnity or specified illness (insured or self-funded), paid on aftertax basis Hospital indemnity or specified illness (insured or self-funded), paid through
Page 21 of 53
Do Not Report on Form W-2
X X X X X X X X X
salary reduction (pre-tax) or by employer Employee Assistance Plan (EAP) providing applicable employer-sponsored healthcare coverage On-site medical clinics providing applicable employer-sponsored healthcare coverage Wellness programs providing applicable employer-sponsored healthcare coverage Multi-employer plans Domestic partner coverage included in gross income Military plan provided by a governmental entity Federally recognized Indian tribal government plans and plans of tribally charted corporations wholly owned by a federally recognized Indian tribal government Self-funded plans not subject to Federal COBRA Accident or disability income Long-term care Liability insurance Supplemental liability insurance Workers' compensation Automobile medical payment insurance Credit-only insurance Excess reimbursement to highly compensated individual, included in gross income Payment/reimbursement of health insurance premiums for 2% shareholderemployee, included in gross income Other Situations Employers required to file fewer than 250 Forms W-2 for the preceding calendar year Forms W-2 furnished to employees who terminate before the end of a calendar year and request, in writing, a Form W-2 before the end of that year Forms W-2 provided by third-party sick-pay provider to employees of other employers
Page 22 of 53
Required if employer charges a COBRA premium Required if employer charges a COBRA premium Required if employer charges a COBRA premium
Optional if employer does not charge a COBRA premium Optional if employer does not charge a COBRA premium Optional if employer does not charge a COBRA premium X
X X X X X X X X X X X X X Report
Do Not Report
Optional X X X
Information Regarding PPACA Exchanges (Marketplaces) Why were exchanges renamed as “Marketplaces”? In January 2013, the Obama administration announced that it would begin to refer to “health insurance exchanges” as “health insurance marketplaces.” Anton Gunn, director of External Affairs at the U.S. Department of Health and Human Services, said the rebranding of the insurance exchanges as "marketplaces" was geared toward the 12 million Spanish speakers who are eligible for insurance. He claimed the word “exchange” doesn’t translate to anything meaningful in Spanish, while the word “marketplace” does.
CMS has revised the previously released draft applications for the marketplace, creating three shorter, more focused applications: • one for individuals seeking financial assistance (tax subsidies/reduced cost-sharing), 5 pages •
one for individuals not seeking financial assistance, 5 pages
one for families. 12 pages
The Patient Protection and Affordable Care Act (PPACA) requires each state to establish an “Affordable Insurance Exchange,” including a “Small Business Health Options Program” (SHOP exchange), by October 1, 2013. The main functions of a Marketplace, as described by PPACA, include: • • • • • •
Certifying, recertifying, and decertifying health plans offering coverage through the marketplace Assigning ratings to each plan offered through the marketplace on the basis of relative quality and price Providing consumer information on plans offered through the marketplace, in a standardized format Creating an electronic calculator to allow consumers to assess the cost of coverage after application of any advance premium tax credits and cost-sharing reductions Operating an internet website and toll-free telephone hotline offering comparative information on the plans offered, and allowing consumers to apply for and purchase coverage if eligible Determining eligibility for the marketplace, tax credits and cost-sharing reductions for private insurance, and other public health coverage programs (premium tax credits, Medicaid, and Children’s Health Insurance Plan (CHIP), and facilitating enrollment of eligible individuals in those programs Determining exemption from requirements for individuals to carry health insurance, granting approvals to individuals relating to hardship or other exemptions Establishing a “navigator” program to assist consumers in making choices about their health care options and accessing their new health care coverage, including access to premium tax credits for some consumers
The three types of exchanges are: • • •
Federally-Facilitated Exchange: Federal government assumes primary responsibility for running the exchange State-Based Exchange: States run their own program State-Federal Partnership Exchange: Allows for combined management of exchange functions for an easier transition to a fully state-based exchange in the future
As of March 2013, Michigan plans to have a federally-facilitated marketplace. Page 23 of 53
Small Business Health Options Program (SHOP) Open Enrollment - October 1, 2013 for effective dates of January 1, 2014, and after.
UPDATE – September 26, 2013 Delay in SHOP Online Exchanges
The Obama administration is delaying another part of Health Care Reform – this time postponing online enrollment in some of the small-business exchanges scheduled to open Oct. 1, 2013. Small businesses looking to enroll in coverage on the health insurance exchanges run by the federal government (including Michigan) - also referred to as SHOP exchanges - will be able to submit a paper application on Oct. 1st – they just won’t be able to enroll online. The SHOP applications represent the latest glitch in the federal exchange infrastructure. Federal health officials recently said they won’t be able to transfer Medicaid applications to states right away. Sources say there’s been very little information about how applications will be transmitted from federal-run SHOPs to insurers selling the health plans.
UPDATE – March 21, 2013 Delay Employee Choice On March 21, 2013, HHS issued a new proposed rule to postpone employee choice on the SHOP. Click here to read more. On March 1 the Department of Health and Human Services (HHS) released a new proposed rule that would postpone the employee choice (allowing SHOP employers to offer multiple qualified health plan/carrier options for employees to choose from) and the premium aggregator in the Small Business Health Options Program (SHOP) until 2015. The premium aggregator is a tool that consolidates billing for employers who have employees enrolled in multiple QHPs. Description The Patient Protection and Affordable Care Act (PPACA) requires each state to establish an affordable insurance exchange (marketplace) including a Small Business Health Options Program (SHOP), by October 1, 2013. The SHOP is a competitive health insurance marketplace where small employers and their employees will have access to coverage in qualified health plans (QHPs). Eligibility and Enrollment Standards The SHOP must establish an integrated enrollment system to facilitate determination of eligibility and successful enrollment in the health coverage that best fits the needs of eligible applicants. The rule governing SHOP provides for: •
A single application for all available programs
CMS has issued drafts of the Health Insurance Marketplace Applications. To read more, click here. • •
Coordination with other state programs, such as Medicaid and Children’s Health Insurance Plan (CHIP) Easy notification process for qualifying life events and annual eligibility re-determination Page 24 of 53
Use of existing electronic data sources to reduce paperwork for consumers New options for interacting with Medicaid agencies when making eligibility determinations that facilitate the administration of premium tax credits
The SHOPs are expected to have toll-free call centers and updated websites to help educate consumers, so that they may make informed choices about the coverage available, and to facilitate consumer enrollment. Eligibility: Employers with fewer than 100 employees may participate in the SHOP, although states may limit eligibility to employers with 50 or fewer employees until 2016. • • •
Employer must have an office within the service area of the SHOP Employer must attest to offering all full-time employees coverage through a SHOP Sole proprietors are considered individuals and will purchase through the individual exchange, not through a SHOP
Enrollment: Open enrollment for the SHOP will first begin on Oct. 1, 2013, with coverage effective beginning January 1, 2014. • •
Unlike the individual exchange (marketplace), which will have a set enrollment period each year, the SHOP will have "rolling enrollment" throughout the year, permitting employers to establish an open enrollment period that coincides with the group's plan year Employees can enroll online.
Some employers may qualify for a Small Business Tax Credit when they enroll through the SHOP. Additional Notes about the SHOP •
An employer’s rates remain the same throughout the plan year
A health insurance issuer may change rates as often as quarterly for new business and renewals and new plans may be introduced during the year.
STATE EXCHANGES (MARKETPLACES) AND “SHOP” REQUIREMENTS The health plans offered on an individual marketplace or SHOP must meet standard requirements for affordability, essential health benefits, and consumer protections. Coverage choices will be classified into four ‘metal” levels representing the actuarial value of covered essential health benefits. PPACA defines four coverage levels: • • • •
Bronze Plan: Covers 58-62 percent of the actuarial value of the covered benefits Silver Plan: Covers 68-72 percent of the actuarial value of the covered benefits Gold Plan: Covers 78-82 percent of the actuarial value of the covered benefits Platinum Plan: Covers 88-92 percent of the actuarial value of the covered benefits
Plans also have the option to offer a catastrophic plan to individuals under the age of 30. Available to individuals up to age 30, or to those who are exempt from the mandate to purchase coverage. Provides catastrophic Page 25 of 53
coverage only, with the coverage level set at the current High Deductible Health Plan levels except that preventive benefits and coverage for three primary care visits would be exempt from the deductible. These marketplaces must include: Adjusted community rating rules with rates only varying by: • • • •
Age Tobacco use Geography (location of the employer group’s headquarters) Family status (Single, Couple, Family)
Requirements also include: • • • •
Essential health benefits requirements Limits on individual cost-sharing Subsidies up to 400 percent of federal poverty level Penalties for individuals who don’t obtain coverage, and for employers with more than 50 employees who don’t offer the minimum level of coverage
In addition, specific support services must be offered, including: • • • • • • •
Certification of plans qualified for the exchange Support for calculation of subsidies Health plan rating system and rate review Standardized format and definitions for plan options and coverage Eligibility and enrollment facilitation Website and toll-free hotline Educational materials for the public, including auxiliary aids and services for people with disabilities
Eligibility and Enrollment Standards Marketplaces must establish an integrated enrollment system to facilitate determination of eligibility and successful enrollment in the health coverage that best fits the needs of eligible applicants. The rule provides for: • • • • •
A single application for all available programs Coordination with other state programs such as Medicaid and CHIP Easy notification process for life events and annual eligibility redetermination Use of existing electronic data sources to reduce paperwork for consumers New options for interacting with Medicaid agencies when making eligibility determinations that facilitate the administration of premium tax credits
The individual marketplace will have a set enrollment period each year, and annual open enrollment periods for calendar years after the initial enrollment period. Proposed standards for marketplaces related to the initial and annual open enrollment periods include: • •
An initial open enrollment period that allows a qualified individual to enroll in a QHP from October 1, 2013 through February 28, 2014. An annual open enrollment period from October 15 through December 7 of each year, starting in October 2014 for coverage beginning January 1, 2015. As an alternative annual open enrollment period, November 1 Page 26 of 53
through December 15 of each year to provide a 45-day window, close to the end of the year, that would be easy to remember. HIPAA and Medicare guidelines will be followed when establishing qualifying events that trigger a special enrollment period. Tax Credits The federal government will provide subsidies (PAID DIRECTLY TO THE CARRIERS) to certain low-and moderateincome individuals. Premium tax credits are generally available for coverage purchased on the individual marketplace if household income is between 133 and 400 percent of the federal poverty level (FPL) and the individual does not have access to affordable employer-sponsored coverage. For those qualifying for premium tax credits, cost-sharing subsidies may be available if household income does not exceed 250 percent FPL. 2013 Annual Federal Poverty Guidelines Note: The 100 percent column shows the federal poverty level (FPL) for each family size, and the percentage columns that follow represent income levels that are commonly used as guidelines for health programs. Household Size
For each additional person add
Coordinating with Medicaid and CHIP The marketplace will coordinate with Medicaid and CHIP to ensure that an applicant experiences a seamless eligibility and enrollment process, regardless of where they submit an application. The Navigator Program PPACA requires the marketplace to establish a navigator program that informs individuals and small employers about the availability of QHPs within the marketplace and facilitates enrollment of qualified individuals into such health plans. Since the marketplace will determine eligibility for advanced premium tax credits, cost-sharing reductions, Medicaid, CHIP, and the Basic Health Program as applicable, the role of the navigators also includes outreach and education efforts, and assistance applying for coverage in such programs. Page 27 of 53
Employer Notification Regarding State Exchanges (Marketplace) - 2013 Among the key changes in health care reform is an employee's choice, if eligible, to choose a plan from a staterun or federally run exchange/Marketplace.
Required Notice of Marketplace (Exchange) Health Care Reform requires employers to provide existing employees and new hires with a written notice about health insurance exchanges (“Exchanges”), informing the employee of the existence of the Exchanges, a description of the services provided by the Exchanges, and how to contact the Exchanges.
Update The Department of Labor recently issued a Technical Release providing clarification regarding the Notice of Exchange, along with model notices (which can be found in the Action Sheets column at right). Employers must provide Notice of Exchange to current employees by October 1, 2013, and to newly hired employees within 14 days of their start date. This notice must meet the criteria outlined below.
Regulators Issue Much Anticipated Guidance on the Notice of Exchanges (Marketplaces) to Employees
In a technical release, issued late in the day on May 8, the Department of Labor (the “DOL”) provided temporary guidance regarding the notice employers must provide to employees about their options under health insurance Exchanges (currently rebranded as “Marketplaces”). In general, health care reform amends current law to require employers to provide each employee with this written notice. Description This provision of the Patient Protection and Affordable Care Act (PPACA) requires that employers provide their current employees with a Notice of Exchange by March 1, 2013. For employees hired after March 1, 2013, this notice must be provided at time of hire. The notice must: • •
Inform the employees that the exchange exists, the services available on the exchange and information on how to contact the exchange. Inform the employees on whether or not the employer offers a medical plan, if that plan meets the definition of minimum essential benefits and if it does not, that employees may be eligible for a premium tax credit and/or cost-sharing reductions if they purchase coverage on the exchange. Inform employees that if they purchase coverage on the exchange, they will lose any available employer contribution for employer-sponsored health coverage, and that some, if not all, of this contribution may be excludable from federal income tax. With respect to employees who are current employees before October 1, 2013, employers are required to provide the notice not later than October 1, 2013. The notice is required to be provided automatically, free of charge. The notice must be provided in writing in a manner calculated to be understood by the average employee. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor's electronic disclosure safe harbor at 29 CFR 2520.104b-1(c) are met.
While the technical release may not be the final guidance that the DOL issues on the Marketplace notice, it does provide employers a safe harbor until additional guidance is issued. In addition to providing temporary guidance Page 28 of 53
regarding the Marketplace notice, the technical release also announced the availability of two model notices that employers can use, if they so desire; and, an updated model election notice for group health plans for COBRA, which includes additional information regarding health coverage alternatives offered through the Marketplaces. Providing Notice to Employees Two model notices were provided with the guidance (explained below). • One model notice is for employers that offer health plan coverage and • One model notice for employers not offering plan coverage. Employers must provide a “Notice of Coverage Options” to each employee, regardless of whether the employee is enrolled in the plan and to both full-time and part-time employees. The notice need only be provided to the employee. Timing and Delivery of Notice Employers must provide the notice to each new employee at the time of hiring beginning October 1, 2013. For 2014, the Department will consider a notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. Employers must distribute the notice automatically to employees hired before October 1, 2013 no later than October 1, 2013 and it must be provided free of charge. As with other required communications, the notice must be provided in writing. It may be provided by first-class mail. Alternatively, it may be provided electronically if the requirements of the Department of Labor’s electronic disclosure safe harbor are met. There is a DOL electronic disclosure safe harbor requirements. Model Notice To assist employers with meeting their obligations, the DOL released model notices that employers can use to satisfy the notice requirement. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan to some or all employees. Model COBRA Election Notice In addition to the model notices for the Marketplace notice requirement, the DOL released a revised model COBRA election notice which references the new Marketplaces. In general, the DOL revised the COBRA notice removing information relating to the effect of a 63-day lapse in coverage (no longer necessary), information regarding the Trade Adjustment Act tax credit and to help make qualified beneficiaries aware of other coverage options available in the Marketplaces. Requirements for Providing Electronic Materials Rules for electronic distribution of documents vary depending on the recipient of the material, the location where electronic documents will be provided, and the electronic method selected. Employers with at least 50 full-time equivalents that decide not to offer a health benefit plan to their employees, and instead leverage the Exchange, are subject to penalties referred to as the EMPLOYER MANDATE. These penalties have been delayed one (1) year as of 7/2/2013. Certain small employers (employing fewer than 50 full-time employees) are exempt from the $2,000 and $3,000 penalties as noted.
Page 29 of 53
Guidelines for Counting Employees Under Health Care Reform Dec. 4, 2012 Starting in 2014, employers with 50 or more full-time or full-time-equivalent (FTE) employees must offer employees (and their dependents) an opportunity to enroll in minimum essential coverage, which meets certain comprehensive and affordability standards under an employer-sponsored plan. If such a plan is not offered, employers will be assessed a penalty (known as the "pay-or-play" provision). But do employers really know how many full-time employees they have? The answer might surprise you. Essentially, the government says there are two conditions in which an employer must count employees: 1. To see if they qualify as a large employer and have 50 or more full-time (or equivalent) employees 2. To determine if these employees qualify for coverage as full time (the law doesn't require coverage for part-time employees) Determining Company Size If an employer has 50 or more full-time (or equivalent) employees, the company is considered large and must offer benefits to full-time employees. Full time means any employee who works 30 or more hours on average per week. How to calculate full-time "equivalents" Add the number of hours worked by all employees who are not full time and divide by 120. This must be done for every month in the prior calendar year, and also needs to be performed annually to see if your responsibility has changed. Example Employer XYZ has 20 employees who worked 30-plus hours per week last month. This employer also employs 100 part-time employees, each of whom works 15 hours per week. Collectively, the part-time employees worked 6,000 hours last month. By dividing the 6,000 hours by 120, we can determine that employer XYZ has 50 full-time equivalents. So 20 full-time employees plus 50 full-time equivalents means this employer has 70 employees and is a large employer. (There's an exception for seasonal employees that says employers are not large if they exceed the 50 employee count for 120 days or fewer.) Breaking up a large company into smaller subsidiaries There has been lots of creative thinking around reorganizing companies into smaller corporations in order to avoid the employer responsibility. However, the federal government has indicated that employees of multiple corporations must be combined at the ownership level when determining employer size. Remember, this guidance has not been established as official regulation, but reflects the federal government's intent of how it plans implement the law. Determining who is eligible for coverage All employees who work 30 or more hours per week must be offered affordable coverage that meets a minimum value. Minimum value is defined as a plan that offers at least 60% coverage, and affordable means the employee's cost for single coverage cannot exceed 9.5% of employee wages. Page 30 of 53
In the example above, only the 20 employees who work 30-plus hours per week must be offered benefits. Employees with variable hours There are special rules for employees whose work hours fluctuate. IRS Notice 2012-58 created a stability lookback measurement period of 3-12 months (the employer chooses how many months). If the employee worked an average of 30 hours (or more) per week during this period, the employee will be considered full time, and must be offered coverage for the same period of time as the look-back (but at least 6 months). For example, if the company looks back 12 months and assesses who is full time, they must then offer coverage to the full-time employees for 12 months before assessing again. Newly hired variable hour employees must be measured the same way, and employers need to consistently use the same stability period. However, different look-back measurement periods can be used for different populations of employees, including: • • • •
Employees covered by collectively bargained agreements versus non-CBA employees Hourly versus salary Employees of different entities Employees in different states
A walk-through on full-time vs. part-time for PPACA By L. Scott Austin and David Mustone- Employee Benefits News April 12, 2013 With a substantial portion of the Patient Protection and Affordable Care Act set to go into effect in 2014, employers are working to determine how the law will impact them, their business and their employees. Because the law will require most employers to provide affordable minimum essential health insurance coverage to full-time employees or face financial penalties, employers must understand how the law defines full-time workers, as well as the penalties that businesses can face for failing to comply or choosing not to provide coverage. Under provisions called the employer shared responsibility rules, the PPACA requires large employers (generally those with 50 or more full-time employees) to provide affordable group health coverage with sufficient value to full-time employees and their dependents. Full-time employees are generally defined as those who work on average at least 30 hours per week. Employers that fail to comply with these rules can face penalties. What are the potential penalties? The failure to offer coverage penalty applies if at least one full-time employee obtains subsidized coverage on an exchange where the employer does not offer coverage to at least 95% of its full-time employees and their dependents. This penalty – which can be up to $2,000 per year for each full-time employee (in excess of 30) – will be based on the total number of full-time employees an employer has, regardless of how many employees have government-subsidized exchange coverage. The insufficient coverage penalty applies if the employer offers full-time employees coverage, but the coverage is either unaffordable (individual premium cost exceeds 9.5% of the employee’s household income) or does not provide minimum value (plan pays less than 60%of the covered costs). Proposed regulations released by the IRS provide guidance and alternative safe harbors for calculating whether health coverage is unaffordable, including use of an employee’s W-2 earnings. The potential penalty for insufficient coverage is $3,000 per year for each employee who obtains government-subsidized coverage on an exchange. Page 31 of 53
Employers also should note that in determining whether an employer is subject to these provisions (i.e., is a “large employer”), the IRS controlled group rules are applied – meaning that all affiliated employers for which there is 80% or greater common ownership will be treated as a single employer. However, compliance with the employer shared responsibility rules – and any associated penalties – will generally be assessed on an employer-by-employer basis. Who is considered a full-time employee? As an employer, the determination of who is a full-time employee will be crucial in evaluating your options for complying with the employer shared responsibility rules, and equally important, designing your group health plan’s eligibility and participation requirements. Because there can be various ways of assessing what constitutes a full-time employee eligible for coverage under the PPACA, the IRS has issued guidance in the form of several notices, as well as temporary regulations. These guidelines set out criteria and standards that can help employers make accurate determinations when hiring new employees, including:
Initial measurement period – A designated period of not less than three months or more than 12 months used in determining whether a newly hired variable or seasonal employee is full-time.
Standard measurement period – An annual designated period of not less than three months or more than 12 months used to determine whether an ongoing variable or seasonal employee is full-time.
Administrative period – A period of up to 90 days for making full-time determinations and offering/implementing full-time employee coverage.
Stability period – An annual designated period of not less than six months (and not less than the corresponding measurement period) during which the employer must offer affordable minimum essential health coverage to all full-time employees, or face financial penalties for not doing so.
Full-time employees – If a new employee is reasonably expected to average at least 30 hours per week at the time of hire, the employee must automatically be treated as full-time and offered group health coverage within three months of hire.
Variable hour and seasonal employees – A variable hour employee is someone whom the employer cannot reasonably determine will average at least 30 hours per week at the time of hire. No definition is provided for a seasonal employee, but presumably it would include anyone who works on a seasonal basis. Employers may use the initial measurement period to determine whether a newly hired variable or seasonal employee actually averages at least 30 hours per week, and the standard measurement period to determine whether an ongoing variable or seasonable employee actually averages at least 30 hours per week. If the employee does average at least 30 hours per week during the initial measurement period or standard measurement period, the employer must offer affordable minimum essential health coverage during the stability period, or face financial penalties for not doing so.
Transition from new to ongoing employee status – Once a new employee has completed an initial measurement period and has been employed for a full standard measurement period, the employee must be tested for full-time status under the ongoing employee rules for that standard measurement period, regardless of whether the employee was full-time during the initial measurement period.
Will Temporary Employees Be Covered Under the Affordable Care Act? By Anthony Kaylin - Article courtesy of SBAM Approved Partner ASE The fast answer is “likely.” Beginning in 2014, large employers—i.e., those with at least 50 full-time employees Page 32 of 53
working at least 30 hours weekly or 130 hours monthly, on average—who want to offer group health insurance must extend that coverage to these employees or pay a penalty. Under the Affordable Care Act (ACA), “full-time employees” are those working 30 or more hours per week. There is an exception for employers whose population of seasonal workers put them over the 50-employee mark. Seasonal workers are either agricultural workers who work seasonally or retail workers employed exclusively during holiday seasons. According to the law, calculating FTEs means dividing the aggregate number of hours of service of non-full-time employees (i.e., those who averaged less than 30 hours per week) for the month by 120. For example, if six parttime employees each work 25 hours per week, they would be the equivalent of five full-time employees ([6x25x4]/120) = [600/120] = 5). Thus, these six part-time employees would be counted as five FTEs toward determining whether or not the employer has 50 full-time employees. Employers not sure whether they have part-time or full-time employees may be able to get relief from the government that will get them through 2014, under Notice 2012-58, I.R.B. 2012-41 from the U.S. Dept. of Treasury. According to Treasury attorney Kevin Knopf, certain variable-hour employees may not need to be treated as full time based on the uncertainty of their hours and their expected tenure in the job. Further, certain types of employees such as on-call employees or leased employees are not addressed yet in any guidance. Nevertheless, says Knopf, the department hopes to issue proposed and final regulations by January 1, 2014, the effective date of this part of the law. However, until any guidance is provided, most employers who use contingent employees—including variable, paid interns, paid co-ops, and other as-needed workers—will likely have to count their hours in the calculation of their FTE total. The implications of these requirements could be far-reaching. For example, employers on the cusp of 50 FTEs may end up reconsidering whether, how or how much to use temporary employees or paid interns or paid co-ops. Or, they may choose to run all their contingent employees through a third-party payroll provider (ASE is one) to payroll these types of employees. There is an additional implication that affects 1099 contractor/employees. The U.S. DOL and the IRS have made it their mission to determine appropriate classifications of contract employees. If a 1099 worker is found to be misclassified and should be an employee, the ramifications will be more intense than just payroll and normal benefit issues. Healthcare eligibility will definitely be involved. The real kicker is that employers are going to have to make hard financial decisions when looking at healthcare insurance, and determine whether to offer it or not quite apart from the attraction/retention benefits it may hold for them. They will have to decide if the penalty cost for sending employees out to the public exchange, even though there is no tax benefit, will make better financial sense than offering health insurance internally. Mercer conducted a study on cost savings on compensation and benefits and found that companies that switched workers from full-time to part-time status in order to save money did save $5 million in compensation and benefits but ultimately lost $30 million in productivity, possibly due to turnover and lower motivation. If the ACA plays out as above, it will hasten the arrival of the so-called “on-demand” workforce. In the world of the on-demand workforce, employers will add heads only when projects require them and drop them immediately after, all the time looking to further reduce their number of what we used to think of as “permanent” employees, whether full-time or part-time. It is not the old HR anymore. Page 33 of 53
Health Reform Questions - Non-calendar Plan Years & the Employer Mandate in 2014 UPDATE â€“ Penalties for Employer Mandate Delayed One (1) year until 2015 February 20, 2013 An employer's health plan's plan year begins on September 1 each year. If the employer is a "large employer" under health care reform, when is the employer subject to the employer mandate, January 1, 2014 or September 1, 2014? The employer mandate (which has been delayed one (1) year from 2014 to 2015) is generally effective on January 1, 2014. However, two transition rules apply that may delay the assessment of penalties until the first day of your first plan year that starts on or after January 1, 2014. The transition rules say that if the employer maintained a non-calendar year plan as of December 27, 2012, and all of its full-time employees are offered affordable coverage that provides minimum value no later than that first day of the plan year that starts in 2014, penalties will not be assessed for the months prior to the first day of the plan year that starts in 2014 for: 1. Any employee (whenever hired) that would be eligible for coverage, as of the first day of the first plan year that begins in 2014 under the eligibility terms of the plan as in effect on December 27, 2012; and 2. Any other employees if (a) the employer's non-calendar year plan was offered to at least one third of its employees (full-time and part-time) at the most recent open season; or (b) its non-calendar year plan covered at least one quarter of its employees. Therefore, for any employees who are eligible to participate in the plan under its terms as of December 27, 2012 (whether or not they take the coverage), the employer will not be subject to a penalty for those employees until the first day of it non-calendar plan year that starts in 2014 if employees are offered affordable coverage that provides minimum value no later than that first day of the plan year that starts in 2014. For any other employees that were not eligible to participate under the terms of the plan in effect on December 27, 2012, if the employer offered coverage under its non-calendar year plan starting on September 1, 2012 to at least one third of your employees, or if the plan covered at least one quarter of its employees, the employer could avoid liability for a penalty until September 1, 2014 if it expands the plan to offer coverage that is affordable and meets the minimum required value to the full-time employees who had previously not been offered coverage. For purposes of determining whether the plan covers at least one quarter of the employees, the employer can use any day between October 31, 2012 and December 27, 2012 for doing the calculation.
Page 34 of 53
Amplified Version 2014 Maximum 90-Day Limit on Waiting Periods - 2014 Effective Date: Plan years beginning on and after January 1, 2014. Applies to grandfathered health plans. UPDATED MARCH 25, 2013 - On March 18, 2013, the Departments of Labor, Health and Human Services and Treasury (the "Departments") issued proposed regulations implementing the 90-day waiting period limit under health care reform. The regulations also amend existing regulations, including those relating to preexisting condition limits and other HIPAA portability provisions, to reflect changes made by health care reform. Plan years beginning on or after January 1, 2014 Currently if an employer group has a waiting period for new hires of greater than 90 days you will need to implement a change to be in compliance by the first day of their plan year beginning on or after January 1, 2014. Description A group health plan or insurer offering group health insurance coverage shall not apply any waiting period that exceeds 90 days. A waiting period is defined as the period that must pass before coverage for an employee or dependent who is otherwise eligible to enroll under the terms of a group health plan can become effective. Being eligible for coverage means having met the planâ€™s substantive eligibility conditions (such as being in an eligible job classification or achieving job-related licensure requirements specified in the planâ€™s terms). The guidance recognizes that it might take time to determine whether a newly hired employee will work a sufficient number of hours to qualify for health coverage. The guidance offers several examples of different scenarios that employers might encounter. This provision does not require employers to cover part-time employees (less than 30 hours per week). However, if coverage is offered to part-time employees, the waiting period cannot exceed 90 days. If an employee moves from part-time to full-time, the 90-day period would begin when the employee becomes eligible for coverage.
Page 35 of 53
Healthcare Reform Expands Non-Discrimination Rules To Fully-Insured Health Plans This was put on hold in 2011. Will Become Effective in 2014 or Shortly Thereafter
PPACA prohibits most insured group health plans from discriminating in favor of highly-paid employees. If an employer’s plan fails to satisfy this requirement, the employer will be subject to significant financial penalties. Implementation of this requirement has been delayed to give regulators time to issue guidance. However, it is expected that this requirement will begin applying in 2014 or shortly thereafter. If you are offering different plans, eligibility periods, or premium subsidies to different groups of employees, it is likely that you will need to adjust your offerings to comply with these new nondiscrimination requirements. Compliance with the new rules is not effective until regulations are issued. Employer groups should be aware of these regulations so they can plan for compliance when they take effect.
When will the Non-Discrimination Rule officially go in to effect? January 1, 2014? Or another date? There is no effective date at this point. It could be finalized any time.
When this ‘rule’ goes in to effective --What is going to be considered discriminatory? A company will be unable to offer a plan to only a certain segment or certain people and not others.
Can a company have different cost-sharing amounts based on specific segments of the employees? Premium Contributions – it is unclear what the rules will be for contribution strategies that will be allowed. However, once the rules are finalized an employer cannot compensate certain employees more than others in terms of premium contribution. Again, without the rules clearly defined and finished we can't be sure of what exactly will be considered discriminatory except for that we know a group cannot blatantly offer coverage to some full-timers and not others, and cannot compensate certain employees more than others by paying more premium contribution.
Internal Revenue Code Section 105 (h) currently prohibits discrimination in favor of highly compensated employees for self-funded groups. Under the Patient Protection and Affordable Care Act (PPACA), this prohibition will be extended to fully-insured non-grandfathered groups as well, though an effective date for the implementation of this policy has not yet been issued. Initially, this provision of PPACA was to be effective for plan years beginning on or after September 23, 2010. However, on December 22, 2010, the Internal Revenue Service and Departments of Treasury, Labor, and Health and Human Services (HHS) announced that enforcement would be delayed to give plans more time to comply with the non-discrimination rules. This delay only applies to fully insured group plans. The non-discrimination provision is designed to limit employers’ ability to provide extra compensation in the form of benefits to highly compensated employees and/or key executives. In addition to traditional health benefits, this provision also applies to long-term care (LTC) policies. Page 36 of 53
Under IRC Section 105 (h), highly compensated individuals are defined as those who are: (a) among the five highest paid officers; (b) shareholders owning more than 10 percent of the company; or (c) the highest paid 25 percent of employees. While this provision applies to both self-funded and fully insured plans, penalties for non-compliance will be administered differently. Self-Funded Plans: The consequence for failing to meet non-discrimination requirements in this market is delivered via taxation to the highly compensated individual. That is to say that benefits received which lie above and beyond the employerâ€™s standard are treated as income for the recipient, and taxed accordingly. Fully-Insured/Fully-Funded Plans: The consequence for failing to meet non-discrimination requirements in this market will fall on the employer, in the form of a punitive excise tax. Employers will be levied a tax of $100 per day, per participant. Pending Legislation Expect additional legislation to include the effective date of the provision as well as additional clarification on the rules. What are the penalties if we violate the nondiscrimination rule for insured, non-grandfathered plans? An insured group health plan failing to comply with the nondiscrimination requirements is subject to an excise tax of $100 per day per individual discriminated against for each day the plan does not comply with the requirement.
Increased Wellness Program Incentives - 2014 June 11, 2013 - Final guidance on wellness programs released On May 29, the Department of Health and Human Services (HHS), Treasury, and the Department of Labor (DOL) released joint guidance on nondiscriminatory group wellness programs under the Affordable Care Act (ACA). This final rule establishes standards for all grandfathered and non-grandfathered group health plans with plan years beginning on or after January 1, 2014. The final rule largely maintains the guidance issued in the proposed rule, but makes a number of clarifications. The final rules support workplace health promotion and prevention as a means to reduce the burden of chronic illness, improve health, and limit growth of health care costs, while ensuring that individuals are protected from unfair underwriting practices that could otherwise reduce benefits based on health status. Under the rule, wellness programs are divided into two categories: Participatory wellness programs â€˘ Participatory wellness programs (non-health contingent wellness programs) are programs that are made available to all individuals and that either do not provide a reward or do not include any conditions for obtaining a reward that are based on an individual satisfying a standard that is related to a health factor. o Participatory wellness programs do not include walking programs, weight-loss programs, or exercise programs. Such programs would be considered health-contingent wellness programs.
Page 37 of 53
Health-contingent wellness • Health-contingent wellness programs require an individual to satisfy a standard related to a health factor to obtain a reward, or require an individual to do more (based on a health factor) than a similarly situated individual to obtain the same reward. • The annual reward available under a health-contingent wellness program may not exceed 30 percent of the cost of coverage. If the health-contingent program is tied to tobacco cessation, an additional 20 percent incentive may be provided. Plans have the flexibility to determine apportionment of the reward among family members, as long as the method is reasonable. • This final rule divides health contingent wellness programs into two subcategories: activity only and outcomes based. o Activity-only wellness programs require an individual to perform or complete an activity related to a health factor to obtain a reward. Activity-only wellness programs do not require an individual to attain or maintain a specific health outcome: Walking program Diet program Exercise class Outcomes-based programs require an individual to attain or maintain a specific health outcome (such as not smoking or attaining certain results on biometric screenings) to obtain an award. It has been the experiences of many, that wellness programs that are designed correctly can lower your health care costs over a 3 year period, increase health care awareness and ultimately create a healthier workforce. For plan years beginning on or after January 1, 2014, the Patient Protection and Affordable Care Act (PPACA) will allow employers to increase the maximum permissible reward under a health-contingent wellness program from 20% to 30% of the cost of health coverage, and further increase the maximum reward to as much as 50% for programs designed to prevent or reduce tobacco use. The cost is determined by the total amount the employer and employee contribute to the benefit package. Incentives could be in the form of premium discounts or rebates, employer contribution, waivers of cost-sharing requirements (such as deductibles, copayments, or coinsurance) or the absence of a premium surcharge. Although HIPAA generally prohibits group health plans from charging employees different premiums based on their health status, it allows employers to provide financial incentives for employees who participate in health or wellness promotion programs (participation-based) or achieve certain health targets (standard-based). Participation-Based Program Examples: Health education seminar participation incentives Gym membership reimbursement Smoking cessation program reimbursement (regardless of outcome) Standard-Based Program Examples: Premium discounts for cholesterol Deductible waiver for BMI Premium discounts for blood pressure < 140/90
Page 38 of 53
Standard-based incentive programs have additional requirements. They must be reasonably designed to promote health or prevent disease, with an opportunity to qualify at least once per year. If medically inadvisable or unreasonably difficult to meet the standard, a reasonable alternative standard must be available and disclosed in written materials. Evidence shows that workplace health programs have the potential to promote healthy behaviors; improve employeesâ€™ health knowledge and skills; help employees get necessary health screenings, immunizations, and follow-up care; and reduce workplace exposure to substances and hazards that can cause diseases and injury. The proposed rules would not specify the types of wellness programs employers can offer, and invite comments on additional standards for wellness programs to protect consumers. The final rules will be effective for plan years beginning on or after Jan. 1, 2014.
Page 39 of 53
Limit on Employee Out-Of-Pocket Expenses - 2014 Obama grants DELAY OF ONE YEAR on limits to out-of-pocket health costs By Kate Randall - August 14, 2013 With the deadline for the full implementation of the Patient Protection and Affordable Care Act (ACA) now less than five months away, news came Tuesday that yet another consumer protection provision is being delayed. Federal officials have granted a one-year grace period for insurers to adhere to limits on the out-of-pocket costs of health care for individuals and families they insure. Plan years beginning on or after January 1, 2014 - Last Updated 1/16/2013 For fully insured plans, carriers will be developing products that comply with these new guidelines. Cost sharing refers to out of pocket expenses such as coinsurance, copayments and deductibles, but does not include premiums, balance billing amounts for non-network providers, or spending for non-covered services. Simply put, it includes the services covered by your insurance provider for which you share the cost.
Description The Patient Protection and Affordable Care Act (PPACA) requires non-grandfathered health insurance plans to cover preventive services and immunizations, as well as preventive services for women, including FDA-approved forms of contraception, checkups, and certain screenings without cost sharing (coinsurance, copayments and/or deductibles). In 2014, non-grandfathered group health plans are prohibited from imposing a deductible greater than $2,000 for self-only coverage ($4,000 for other than self-only). 2014 Coverage Type
Other than self-only (2 person, family)
HSA-compatible High-deductible Health Plans (HDHP) The maximum out-of-pocket cost for an HSA-compatible (health savings account) HDHP is: 2013
Other than self-only (family, 2-person)
Page 40 of 53
In 2014, non-grandfathered individual and group coverage is prohibited from imposing annual out-of-pocket maximums on essential health benefits that exceed the out-of-pocket maximum threshold that applies to HSAcompatible high-deductible health plans. For more details, see the Essential Health Benefits and Restrictions on Rescissions and Annual & Lifetime Limits HCR Guides. Pending Legislation Guidance clarifying how cost-sharing limits will be handled for out-of-network coverage is expected.
No “Pre-Existing Conditions” Exclusions - 2014 One of the hallmarks of the Patient Protection and Affordable Care Act signed into law in March 2010 is the elimination of pre-existing condition requirements imposed by health plans. Effective September 2010, children (below age 19) with pre-existing conditions may not be denied access to their parents' health plan and insurance companies will no longer be allowed to insure a child, but exclude treatments for that child's pre-existing condition. Starting with plan years on or after January 1, 2014, the prohibition on preexisting condition exclusions in health policies will be extended to adults 19 years of age and older. The preexisting condition rule will apply to all group health policies and non-grandfathered individual policies.
New Premium Rate Restrictions Begin (Premium Surcharges) - 2014 The Patient Protection and Affordable Care Act (“PPACA”) includes new federal rules limiting the extent to which insurance companies can impose premium surcharges on individuals and small businesses based on such factors as health status, age, tobacco use and gender. Traditionally, this practice has been regulated by the states, with wide variations in how much insurers are allowed to adjust rates. Starting January 1, 2014, insurance companies must adhere to minimum premium rating rules for individuals and small businesses. Other factors traditionally used by plans to charge higher rates, such as health status and gender, will no longer be allowed.
Health plans will be allowed to adjust premiums only for the following factors:
Self-only or family enrollment; Geographic area; Age (except the rate cannot vary by more than 3 to 1 for adults) ; and Tobacco use (except the rate cannot vary by more than 1.5 to 1)
Starting in 2014, plans in all states will have to meet the new federal standards and cancer patients and others with high health costs will no longer face higher premiums because of their health condition (although they may be charged more because of their age, or if they smoke). The new federal standards set a floor, so states that wish to retain or enact a tougher standard may do so.
Issues to Consider Higher Rates for Some The new rating rules in PPACA will have the effect of redistributing the amount of premiums paid by individuals and small businesses. This means that many healthy individuals and groups will pay more than they have been, Page 41 of 53
and those who are sicker will pay less. For example, where states have enacted community rating, studies have shown higher average premiums in those markets. However, any potential increase in premiums under PPACA should be moderated somewhat by the influx of more healthy and young people into the risk pool as a result of the individual mandate. Adverse Selection PPACA requires plans that sell to individuals and small businesses to adhere to the new rating rules -- these rating rules apply to plans both in and out of the new exchanges. However, “grandfathered” plans and plans in the large group and self-insured markets will not have to comply with these rules, as well as a number of the other new market reforms. This could result in adverse selection against plans subject to the new rating and other market rules, because their premiums will likely be higher than those of exempted plans.
PPACA’s provisions providing more regulation of premium rates and the redistribution of costs will help make insurance coverage more affordable for cancer patients and their families. However, insurance companies will still be allowed to charge significantly more to older individuals and those who smoke. And some individuals in grandfathered plans, or who work for large and self-insured employers, will not receive the same rating protections. Lastly, all of the insurance market rules provided under PPACA, including the new rating limits, must be adequately monitored and enforced through an unprecedented state-federal partnership.
Required Coverage for Clinical Trials For Life-Threatening Diseases - 2014 Effective January 1, 2014 insurers will be prohibited from dropping or limiting coverage because an individual chooses to participate in a clinical trial. This applies to all clinical trials that treat cancer or other life-threatening diseases.
Small Employer Tax Credit up to 50% for Two Years - 2014 What You Need to Know about the Small Business Health Care Tax Credit http://www.irs.gov/uac/Small-Business-Health-Care-Tax-Credit-for-Small-Employers
How will the credit make a difference for you? For tax years 2010 through 2013, the maximum credit is 35% for small business employers and 25% for small taxexempt employers such as charities. An enhanced version of the credit will be effective beginning Jan. 1, 2014. Additional information about the enhanced version will be added to IRS.gov as it becomes available. In general, on Jan. 1, 2014, the rate will increase to 50 percent and 35 percent, respectively. Here’s what this means for you. If you pay $50,000 a year toward workers’ health care premiums – and if you qualify for a 15 percent credit, you save … $7,500. If you save $7,500 a year from tax year 2010 through 2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20 percent, your savings go from $7,500 a year to $12,000 a year. Even if you are a small business employer who did not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments are more than the Page 42 of 53
total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments. There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability. And finally, if you can benefit from the credit this year but forgot to claim it on your tax return there’s still time to file an amended return. Can you claim the credit? To be eligible, you must cover at least 50 percent of the cost of single (not family) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 a year. Let us break it down for you even more. You are probably wondering: what IS a full-time equivalent employee. Basically, two half-time workers count as one full-timer. Here is an example, 20 half-time employees are equivalent to 10 full-time workers. That makes the number of FTEs 10 not 20. Now let’s talk about average wages. Say you pay total wages of $200,000 and have 10 FTEs. To figure average wages you divide $200,000 by 10 – the number of FTEs – and the result is your average wage. The average wage would be $20,000. Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000, the amount of the credit you receive will be less. How do you claim the credit? You must use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. For detailed information on filling out this form, see the Instructions for Form 8941. If you are a small business, include the amount as part of the general business credit on your income tax return. If you are a tax-exempt organization, include the amount on line 44f of the Form 990-T, Exempt Organization Business Income Tax Return. You must file the Form 990-T in order to claim the credit, even if you don't ordinarily do so. Don’t forget … if you are a small business employer you may be able to carry the credit back or forward. And if you are a tax-exempt employer, you may be eligible for a refundable credit.
Page 43 of 53
THE PPACA EMPLOYER MANDATE EFFECTIVE JANUARY 1, 2014 The Employer Mandate requires large employers (50 Full-Time Equivalents) to offer affordable health coverage of a minimum valute to full-time employees (30 hours or more per week) and their dependents or pay a penalty. Effective 7/2/2013 â€“ The Obama administration will not penalize businesses that do not
provide health insurance in 2014 - it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015.
Page 44 of 53
THE PPACA INDIVIDUAL MANDATE EFFECTIVE JANUARY 1, 2014 The Individual Mandate requires most individuals to maintain health insurance coverage or pay a penalty.
Page 45 of 53
Stand-Alone Dental on the Exchange/Marketplace May 31, 2012 â€“ BCBSM Alert Will stand-alone dental be offered on the Exchange? The Department of Health and Human Services released a final rule on Exchanges on March 12, 2012. The rule codified that Exchanges must allow limited scope dental benefit plans to be offered through the Exchange, so long as the plan covers at least the pediatric dental essential benefit. The final rule clarified that stand-alone dental plans offered through an Exchange must offer the pediatric dental essential benefits without annual or lifetime dollar limits. Who is responsible for certification of stand-alone dental plans? Exchanges will also be responsible for developing the certification standards that dental plans must adhere to. Is stand-alone dental an essential health benefit? All qualified health plans, and all individual and small group market health insurance, either on or off the Exchange, must provide essential health benefits*. While the Affordable Care Act defines pediatric oral care as an essential benefit, more guidance is needed on what types of services are included in pediatric oral care. Who can receive the benefit? Stand-alone dental benefits can be offered through Exchanges if: â€˘ â€˘
The stand-alone dental plan covers the pediatric oral care essential benefit AND The stand-alone dental plan qualifies as a limited scope dental benefit per the excepted benefits rules**.
QHPs operating under the Exchange do not have to offer the pediatric dental essential benefit as long as there is at least one stand-alone dental plan on the Exchange that offers the pediatric dental essential benefit. * Adult dental is not considered an essential benefit. ** Dental benefits that qualify as limited scope dental are considered "excepted benefits" in federal rules, and have not been subject to health insurance reforms, including, but not limited to, the elimination of lifetime and annual limits, and the expansion of coverage to dependent children up to age 26.
Child-Only Coverage on the Exchange/Marketplace May 25, 2012 Are child-only plans allowed on the Exchange? Section 1302 of the Affordable Care Act states that any qualified health plan offered on the Exchange at any metal level of coverage must also be offered as a corresponding child-only plan at the same metal level of coverage. For all plans BCBSM offers on the Exchange, BCBSM will also have to create a separate child-only option. Issuers participating on the Exchange must offer at a minimum one gold and one silver plan on the Exchange, and therefore all issuers participating on the Exchange must offer, at minimum, one gold and one silver child-only plan on the Exchange. What is included in a child-only plan? Child-only plans must include the essential benefits and are tied to the same actuarial value categories as other plans on the Exchange. It is unclear what benefits constitute the essential health benefits at this time and we expect the state of Michigan to make a decision regarding essential benefits sometime in the fall of 2012. Blue Page 46 of 53
Cross Blue Shield of Michigan will continue to monitor regulations and updates will be provided as soon as they become available. Who qualifies for child-only policies? Individuals who have not attained the age of 21 at the beginning of the plan year are eligible for child-only plans. However, according to the definition of "qualifying child," for purpose of determining tax dependency, a taxpayer cannot include children age 19 through 20 in determination of the taxpayer's premium tax credit eligibility, unless the 19- or 20-year-old fits the criteria for tax dependent status (example, the child is a student). What about tax credits? Premium tax credits are available to taxpayers who purchase coverage on behalf of a qualifying dependent child. A dependent child is defined in the IRS code as: • A child of the taxpayer or descendent of such child or the brother, sister, stepbrother, or stepsister of the taxpayer or a descendent of any such relative; and • Has the same principal place of abode as the taxpayer for more than half of the year; and • Has not turned 19 by the end of the calendar year, is a student who has not turned 24 but the end of the calendar year, or is permanently and totally disabled; and • Has not provided over one-half of his or her own support for the calendar year; and • Has not filed a joint return with his or her spouse. The ACA specifies that the parent who claims the child on their tax return is responsible for providing that child with coverage. In some cases, this may not correspond with child or medical support orders.
New Hire Automatic Enrollment – 2014 Employers will not be required to comply with this provision until regulations are issued. Regulations are not expected before 2014. Agent Action At this time, there is no need for employers to develop a plan to automatically enroll employees in coverage Description The Patient Protection and Affordable Care Act (PPACA) requires employers with more than 200 full-time employees, that offer one or more health benefit plan options, to automatically enroll new full-time employees (full-time employees are those who work, on average, 30 or more hours per week) in one of these plans. The employer must give "adequate notice" to employees of their automatic enrollment and the opportunity to opt out of coverage. Employers must also automatically continue existing elections for current full-time employees from year to year. Automatic enrollment is subject to any applicable waiting periods authorized by law. Waiting periods in excess of 90 days will be prohibited under PPACA as of 2014. Pending Legislation: We are awaiting regulations that detail when this will be effective, how it will be implemented and which plan the employee must be automatically enrolled in when an employer offers multiple plan options.
Page 47 of 53
PPACA Timeline 2015 IMPROVING QUALITY AND LOWERING COSTS Paying Physicians Based on Value Not Volume. Effective January 1, 2015 a new provision will tie physician payments to the quality of care they provide. Physicians will see their payments modified so that those who provide higher value care will receive higher payments than those who provide lower quality care.
PPACA Timeline 2018 CBO reduces 'Cadillac' tax, employer penalty estimates EBN - May 20, 2013
The “Cadillac tax” that is part of PPACA might not cost employers nearly as much as initially estimated. The Congressional Budget Office projects in a new report that taxes on employers' high-premium insurance plans will generate roughly $80 billion over the next 10 years. That figure represents a decline of almost 42 percent from the $137 billion in excise tax revenue in the CBO’s February forecast. Starting in 2018, the IRS will impose a 40 percent excise tax on employer-sponsored health benefits totaling more than $10,200 for individual coverage and $27,500 for family coverage as part of the Patient Protection and Affordable Care Act. The 40 percent non-deductible tax takes is designed to discourage plans from including features that promote over- or unnecessary use of medical care, such as low or non-existent deductibles and copays. The CBO’s latest report says that it lowered the forecasted excise tax revenue figure because of new trends in employer-sponsored health benefits. “As a result, we now expect fewer employment-based plans to be subject to the excise tax on high-premium insurance plans and, consequently, have reduced our estimate of revenues from that tax by $58 billion over the 10-year period,” the CBO’s report said. Additionally, the CBO reduced its estimates for penalty revenue that is part of PPACA’s employer mandate. This mandates requires that employers with at least 50 full-time workers who work 30 hours or more a week must offer qualified, affordable group health benefit plans in 2014. Employers face a $2,000-per-employee tax penalty if its health care plans are not offered to at least 95 percent of full-time employees and just one full-time employee uses a premium subsidy to buy coverage offered through a state- or federal-facilitated health insurance exchange. According to CBO estimates, the federal government will collect approximately $140 billion from the employer mandate penalties during those 10 years. This is down from its $150 billion prediction it made in February. The revision mostly stems from refinements in the IRS' calculation of households' projected marginal tax rates, resulting in a minor uptick in the number of those predicted to elect an employment-based health plan. The CBO also determined that the expected net decline in the number of lives enrolled in employer-sponsored plans significantly balanced the gains.
Page 48 of 53
“That slight increase in projected employment-based coverage increases the estimated loss of government revenues from the exclusion from taxation of employers' payments of health insurance premiums for their employees,” the CBO says. Do I pay the excise tax or does the insurance carrier/TPA pay it? How do they know the amount? The tax would apply to your fully insured and self-funded group health plans, but not to any plans sold in the individual market, except for coverage eligible for the deduction for self-employed individuals. Although the issuer of the fully-insured plan is required to pay the tax, it is the employer’s responsibility to calculate the amount of benefits that are subject to the tax and calculate the tax. For multi-employer plans, the plan sponsor is required to calculate the tax. If your plan is self-funded, you (as either the plan administrator or employer) would be responsible to both calculate and pay the tax. When do I have to start paying the excise tax on these so-called “Cadillac plans”? This new tax will be effective for taxable years beginning January 1, 2018.
Page 49 of 53
STATE LAW UPDATES –
Per BCBSM - Autism Mandate Coverage - Frequently Asked Questions In April 2012, the Lt. Governor signed into law legislation requiring underwritten group and individual health plans to provide coverage for the diagnosis and treatment of autism spectrum disorders. Michigan will become the 30th state with mandated coverage for Autism Spectrum Disorder (ASD). This is a significant piece of legislation. The mandate/coverage went into effect October 15, 2012. Blues release more detail on autism benefit expansion October 10, 2012 - Blue Cross Blue Shield of Michigan and Blue Care Network of Michigan are expanding coverage for the diagnosis and treatment of autism spectrum disorders. BCBSM and BCN coverage for autism spectrum disorder will include benefits for: • • • • •
Applied behavior analysis, a specialized treatment for autism Physical therapy/speech therapy/occupational therapy as part of ASD treatment Nutritional counseling as part of ASD treatment Other mental health benefits to diagnose and treat autism Other medical services used to diagnose and treat autism
There’s been a change in the services that apply toward the $50,000 annual benefit limit for autism services. Physical therapy, occupational therapy, speech therapy and nutritional counseling won’t be applied to the annual benefit limit. The Blues will continue to apply a limit of $50,000 per year for applied behavior analysis services through age 18. Services beyond the age or dollar limit will be reviewed for medical appropriateness and may be covered if medically necessary. Here's what must occur for applied behavior analysis treatment to be payable: • • • • • • •
A Blues-approved autism evaluation center, or AAEC, participating with the member’s health plan, must confirm a diagnosis of autism spectrum disorder for the member. The treatment plan recommendations prepared by the AAEC must include a recommendation for applied behavior analysis. The member must seek care with a board-certified behavior analyst. For BCN coverage, the BCBSA must participate with the member’s health plan, unless plan design allows out-of-network benefits. The board-certified behavior analyst must obtain approval from BCBSM or BCN before providing applied behavior analysis services. BCBSM– For approval, the BCBSA must call Magellan at 800-762-2382 for ABA therapy. Magellan will verify member and provider eligibility, review for medical necessity and make an authorization decision. BCN– For approval, the BCBSA must contact BCN behavioral health for ABA prior authorization. Authorization decision letters are sent to the member and provider
BCBSM members receiving services other than applied behavior analysis to treat ASD need not receive the ASD diagnosis from an AAEC. BCN members must go to a provider in the BCN network unless plan design allows out-ofnetwork benefits. At this time for BCBSM, prior approval is only required for applied behavior analysis treatment. Autism providers •
Approved autism evaluation centers– To help ensure access to appropriate care, BCBSM and BCN are working to expand the number of AAECs in the state. We’ve contacted all hospitals in Michigan to inform them of the opportunity to apply for AAEC designation. Board-certified behavior analysts– We’ve contacted the certified behavior analysts we’re aware of in the state that currently treat children with autism and have invited them to apply to be a network provider. Page 50 of 53
Mandated coverage for autism treatment is new to all insurers and health care providers in the state and it may take some time to build the appropriate networks to meet the need in the community. Information about facilities and specialists that can provide autism treatment services to members with a diagnosis of ASD will appear on bcbsm.com and mibcn.com. Out-of-state residents For the mandated autism benefit, we’ll handle out-of-state claims as they normally are through Blue Card, with the exception of applied behavior analysis treatment. ABA services will only be covered in Michigan. Here are the services covered at the applicable cost share when provided outside the State of Michigan: • • • •
Physical therapy/speech therapy/occupational therapy are provided as part of the treatment of ASD Nutritional counseling is provided as part of the treatment of ASD Other mental health benefits for the diagnosis and treatment of autism Other medical services used to diagnose and treat autism
ASC opt-in process The autism mandate applies to underwritten and individual business regardless of renewal dates or plan years; selffunded groups aren’t included. ASC groups can choose to opt in for an effective date of Jan. 1, 2013 or after. You can read more information about ASC group opt-in in this Blue Alert September 26, 2012 Opt-in autism benefit available for Blues ASC customers The Blues aren’t charging any fees to administer the benefit program. NOTE: This doesn’t include the Michigan Autism Coverage Reimbursement Program to reimburse plans for claims paid for autism spectrum disorders services provided in Michigan. State reimbursement program The Michigan Autism Coverage Reimbursement Program will reimburse plans for claims paid for autism spectrum disorder services provided in Michigan to Michigan residents. We’ll provide more information on the reimbursement program when the state issues its final guidance. Are there prescription drugs for the treatment of autism that are covered under the mandate? Currently, there are no drugs that are specific to the treatment of autism. Coverage for prescription drugs would be subject to the member’s current benefit plan. Evidence based autism services are required, but not limited, as follows: * Treatment ages: 0-18 years * Coverage will be provided for children with the medical diagnosis on the autism spectrum * Covers Applied Behavior Analysis (ABA), Speech and Language Therapy, and Occupational Therapy * Allows insurance companies and HMO’s to cap combined annual coverage of ABA Therapy, Occupational Therapy, Speech Therapy and other behavioral services (such as Psychiatry) at the following levels: - $50,000 (6 years and younger) - $40,000 (7-12 years) - $30,000 (13-18 years) Due to decades of no coverage, Michigan lacks enough providers to immediately serve the needs of all of the children in the state with autism. There are currently about 115 Board Certified Behavior Analysts (BCBA) in Michigan, and only about 30 of those provide services to families with autism. There are over 15,000 kids in Michigan with the disability. Building the provider network is of greatest importance. Immediately upon passing this legislation many providers are hoping to expand intervention services. Stay tuned to www.autismallianceofmichigan.org and www.Michigan.gov/autism for updates. Page 51 of 53
STATE LAW UPDATES – BCBSM clarify role in wake of new motorcycle helmet law When a law releasing motorcyclists from the responsibility of wearing a helmet became effective earlier this month, one of its provisions prompted a flurry of calls to insurance companies. Gov. Rick Snyder signed a legislative repeal of the so-called mandatory helmet law April 13, 2012. Here are some highlights of the new law: • •
Motorcyclists younger than 21 must continue to wear helmets. Motorcyclists over 21 aren’t required to wear a helmet when: o The driver has a motorcycle endorsement on his or her driver’s license for at least two years; and o The driver carries at least $20,000 in first-party medical benefits on his or her motorcycle insurance policy.
It’s that last provision, the one requiring a certain level of medical benefits that has some of our members asking questions. Here are the facts: • • •
The new law doesn’t impact the coverage BCBSM and BCN currently provide. Blues coverage doesn’t qualify as the $20,000 minimum medical coverage outlined in the law. This minimum is medical coverage that must be added to the individual’s motorcycle insurance; it’s not separate health insurance. ASC groups may be able to ask for a plan modification to either coordinate with members’ motorcycle insurance or exclude the payment for services that are the result of a motorcycle accident. o If a group asks for a plan modification, it’s important to note that this will be difficult to administer and that BCBSM can’t be proactive with our approach. We’ll make reasonable efforts to ascertain whether a submitted claim is the result of a motorcycle accident, but the reality is that BCBSM likely won’t know. BCBSM will rely on the group for help in identifying which claims result from motorcycle accidents. "Every year, millions of dollars leave our state because of Michigan's outdated mandatory helmet law," Pavlov said in a statement. "This bipartisan plan will keep our dollars here, attract even more tourists to Michigan and help our state in these tough economic times." The law was written with input from American Bikers Aiming Toward Education (ABATE) of Michigan, a motorcycle association dedicated to improving motorcycle safety and car driver awareness of motorcyclists on the roads. The new law gives Michigan the strictest requirements for riding helmet-free of any state that has modified mandatory helmet laws for adult choice, according to a news release from ABATE. "On behalf of all ABATE's members statewide and motorcyclists around the country who can now travel into Michigan and enjoy this great state with or without a helmet, I want to extend our gratitude to all of the legislative officials and Governor Rick Snyder who courageously supported freedom in the face of an onslaught of baseless and emotional arguments perpetuated by our opponents," said Vince Consiglio, president of ABATE of Michigan. Michigan originally implemented its helmet-use law in 1967 to comply with U.S. Department of Transportation requirements for federal funds.
Page 52 of 53
The intent of this analysis is to provide general information regarding the provisions of current healthcare reform legislation. It does not necessarily fully address all your organizationâ€™s specific issues. It should not be construed as, nor is it intended to provide, legal advice. Your organizationâ€™s general counsel or an attorney who specializes in this practice area should address questions regarding specific issues.
Page 53 of 53