health care reform legal update presented by: tiffany d. downs [email protected] ford &...
TRANSCRIPT
Health Care Reform Legal Update
Presented by:
Tiffany D. [email protected]
Ford & Harrison, LLP
NECA Labor Relations Conference
March 8, 2012
Recent Activity on Health Care Reform
• United States Supreme Court to hear oral arguments on validity of Health Care Reform on March 26 through 28, 2012 for 5 ½ hours
• 2012 Presidential Election
• Amended Regulations and some Effective Dates Delayed
Background• Health Care Reform Applies to Group Health Plans
- Fully insured and self funded - Exception to some (but not all) requirements based on size- Sponsored by private or public entities and multiemployer
plans
• Does Not Apply to:- Plans providing HIPAA excepted benefits (health FSAs,
limited scope dental and vision benefits if provided in separate policy)
- Stand alone retiree plans- Plans that are not group health plans (life, disability, etc.)
2011 Coverage Mandates
These provisions are effective for all plans for plan years beginning on or after 9/23/2010
(1/1/2011 for calendar year plans)
• No annual or lifetime limits on essential health benefits (restricted annual limits allowed until 1/1/2014)
• Restrictions on rescissions • Coverage of adult child to age 26 (except if adult child eligible
for employer coverage before 1/1/2014 for “grandfathered” plans)
• No pre-existing condition exclusions for children under age 19
2011 Coverage Mandates
Essential Health Benefits• Ambulatory patient services; emergency services; hospitalization; maternity
and new born care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care
• Agencies to issue regulations to further define essential health benefits using “flexible approach” or benchmarks
• Essential health benefits must include coverage of services and items in all 10 statutory categories
2011 Coverage MandatesNon-Grandfathered PlansEffective for non-grandfathered plans only for plan years
beginning on or after 9/23/2010
• Preventive care coverage required on first dollar basis
• Non-discrimination requirements extended to fully insured plans
• Internal and external appeals process required
• Must cover emergency services as in-network and without prior authorization
• Must allow expanded designation of Primary Care Providers
Early Retiree Reinsurance Program Ending
• Program reimbursed 80% of claims for early retirees (55-64) between $15,000 and $90,000 incurred in a policy year
– Submit claims list and summary cost data for claims incurred and paid on or before December 31, 2012
– Submit error free claim list to CMS by March 31, 2012 or lose reimbursements due to missing data
– CMS requests/requires completion of ERRP survey– CMS to begin audits– Recovery of funds from audits
2012 Medical Loss Ratios
• Medical Loss Ratio report must be provided to HHS annually by insurers– if amount of premium revenue spent on non-claims cost
exceed 15% (20% small group) then rebate is owed– Rebate is a plan asset and must be used for benefit of
enrollees– Rebate may be used toward premium credit or benefit
enhancements– Rebates must be paid by insurers by August 1 of each
year, beginning 2012– Notice of rebates and ratios must be provided to enrollees
2012 W-2 Reporting
• Multiemployer plan coverage is excluded from reporting requirement
• IRS Notice 2011-28
• Applies initially to employers issuing more than 250 W-2 forms
• Penalties: $200 per W-2; $3 million per employer
Auto Enrollment• Employers with 200 or more employees
and offer 1 or more health plans must:– automatically enroll all new full-time
employees– continue the enrollment of current employees– provide opt-out notice
• Effective date delayed until after issuance of regulations
Delayed Effective Dates for 2011
• Automatic enrollment due to coordination with 90 waiting period and employer mandate
• Non-discrimination requirements for fully insured plans (applicable only to non-grandfathered plans)
2012 Summary of Benefits Coverage• Summary of benefits must be provided to all participants prior to
enrollment or re-enrollment
– state whether “minimum essential coverage” is provided– provide summary of benefits under the plan– provide coverage examples– provide on the first day of open enrollment which occurs on or after
September 23, 2012– provide to new enrollees or employees who exercise a special
enrollment right on the first day of the first plan year that begins on or after September 23, 2012
– 4 pages (double-sided);12 point font; Times New Roman– Non-compliance: Up to $1,000 fine per failure and excise tax
When SBC is Distributed?
• Open Enrollment Period
• Within 7 days of request or request for special enrollment rights
• Advanced distribution required for automatic renewals during enrollment periods (30 days) and mid-year modifications (60 days)
Distribution Methods
• Paper (by hand, payroll insert, or mail)
• Electronic Media, if not enrolled and notice is given of posting of documents
• Compliance with DOL electronic disclosure safe harbor regulations, if enrolled in plan
2013 – Notice Requirements
• Beginning 3/1/2013 employers must notify all employees of– information regarding the Exchange– information on tax credits and reductions in
cost-sharing if the employer share of the total cost of benefits under employer’s plan is less than 60%
2014 Coverage and Design Mandates
• For plan years beginning on or after 1/1/2014– no pre-existing condition exclusions for anyone– required coverage of essential health benefits for small
group fully insured plans– no more than 90-day waiting period– required coverage of routine cost for qualified clinical trials– cost-sharing limitations
► out-of-pocket expenses cannot exceed amount related to HSA compatible HDHP
► deductibles for small group fully insured plans cannot exceed $2K single and $4K family average (as indexed)
2014 Coverage and Design Mandates (Not Applicable to Grandfathered Plans)
• For plan years beginning on or after 1/1/2014
– guaranteed issue and renewal of fully insured plans
– increased wellness program maximum incentive from 20% to 30% (possible increase to 50% by HHS)
2014 Insurance Market Reforms
• Uniform Rating Rules• Fair insurance premiums – imposes limitations
on premium setting (e.g. based on age, tobacco use, etc.) by insurer
• Risk Corridors for small group fully insured plans– expires after 2016
2014 Reporting Requirements
• Required notices– to IRS and all covered individuals regarding
minimum essential coverage provided and the amount paid by employer (IRC 6055)
– to IRS and full time employees certain health plan information (IRC 6056)
► applies to employers with 50 or more employees
2014 Individual Play or Pay Mandates• Applicable individuals must ensure minimum essential coverage for self and
any dependents each month beginning 1/1/2014• Failure to maintain coverage results in monthly penalty calculated as 1/12 th
of the greater of:– 2014, $95 per uninsured individual or 1% of household income over IRS
filing threshold– 2015, $325 per uninsured individual or 2% of household income over
IRS filing threshold– 2016, $695 per uninsured individual or 2.5% of household income over
IRS filing threshold• Penalty is cut in half for individuals under 18• Penalty amount capped at 300% of per adult amount or the national
average premium for “Bronze” level coverage through the Exchange
2014 Individual Play or Pay Mandate
• Exceptions to the requirement include the following:– persons who are not a US Citizen or legal resident– those for whom coverage is unaffordable (contributions
exceed 8% household income)– those below 100% of federal poverty level– incarcerated individuals– those with a hardship waiver– persons who claim a religious exemption– individuals without coverage for less than 3 months during
the year incur no penalty
2014 Employer Play or Pay Mandates No Coverage
• Effective 1/1/2014, employers with 50 or more full-time employees (avg. 30 or more hours per week) who fail to provide minimum essential coverage to its full-time employees are accessed a penalty
• Penalty applies if no coverage offered and– at least 1 full-time employee enrolls in an Exchange plan
and– is eligible for tax subsidy or cost-share reduction
• Monthly penalty = $166.67 x number of full-time employees (excluding first 30 employees)
2014 Employer Play or Pay MandatesUnaffordable Coverage
• Effective 1/1/2014, employers with 50 or more full-time employees (i.e. avg. 30 hours per week) who only provide “unaffordable” coverage to full-time employees are accessed a penalty
• Penalty applies if coverage is– unaffordable – employee premium above 9.5% of household
income or employer pays less than 60%– at least 1 full-time employee declines employer coverage, enrolls
in Exchange plan, and is eligible for either tax subsidies or cost-share reduction
• Monthly penalty = $250 x number of full-time employees enrolled in Exchange plan and receiving tax subsidy or cost-share reduction (capped at monthly penalty amount for “No Coverage”)
2014 Exchange Plans
• Beginning 1/1/2014 states are required to establish a health insurance exchange for individuals and small employers (100 or less employees) to purchase health coverage
• Coverage premiums may be paid pre-tax through cafeteria plan
2018 Key Provisions – “Cadillac Plan” Tax
• Excise tax of 40% on the value of coverage exceeding
– $10,200/single coverage ($11,800 for retirees and high-risk jobs)
– $27,500/family coverage ($30,950 for retirees and high risk jobs)
• Applies to all health plans except dental, vision, LTC, accident/disability and post tax indemnity plans
• Multiemployer plan calculates the penalty
