The Patient Protection and Affordable Care Act signed on March 23, 2010, and the provisions in the Health Care & Education Reconciliation Act of 2010 has many of us questioning the affect this new law, and subsequent amendments, will have on their group and individual and Medicare health coverage.
The majority of the changes will occur in 2014, but there are several items relating to coverage that will occur in 2010 and 2011 that we wanted to share with you:
What’s Changing and When?
--> implementation timeline
Group/Employer Policies
Do You Qualify for a Small Employer Health Care Tax Credit?
June 23, 2010
If an employer group is on a plan that was issued prior to March 23, 2010 and does not have significant changes after March 23, 2010; then it is Grandfathered. Deductible changes, coinsurance changes, co-payment changes and reduced employer contribution changes after March 23, 2010 would most likely result in a plan no longer being Grandfathered.
Is it a bad thing to not be Grandfathered? These items apply to non-Grandfathered, but not to Grandfathered plans:
- Coverage of recommended prevention services without cost to the member will apply to non-grandfathered plans on their effective date or renewal date after September 23, 2010. Depending upon the plan design, you had preventative coverage with either a copay or covered at no cost on HSA compatible plans. How could this additional benefit impact you? We believe that the cost of this benefit will be minimal based on final preventative definitions released probably in September. Plans in place prior to March 23, 2010 will continue to cover preventative as it has in the past and defined under the policy until you make a plan change.
- Patient Protection for guaranteed access to OB-GYN's and pediatricians. This is not an issue for our group clients, since the group plans we offer are PPO plans that allow access to specialists in the network without referral.
- Emergency services must be covered at in-network level regardless of the provider. This is already in place for our Texas policies due to an earlier State Mandate, so it should have minimal impact depending upon further clarification of definitions.
- Plan must comply with IRS Section 105(h) rules that prohibit discrimination in favor of highly compensated employees. Most of our employer groups do this already by offering all chosen plans to all employees.
Effective for plan years beginning 9/23/2010 the items listed below will apply to BOTH Grandfathered and Non-Grandfathered plans:
- No lifetime limits.
- No annual limits on specified standards that are to be defined in future regulations.
- Coverage for dependents to age 26 (currently in TX it is to age 25). Many carriers have already implemented this item.
- No coverage exclusions for children 19 and under with pre-existing conditions. This has been estimated to impact plans maybe 2 percent as this benefit was already available if coming from prior coverage.
- Six months after enactment, coverage for dependent children would be to age 26. Currently in Texas, for fully insured plans, the age for dependent children coverage is to age 25.
- Six months after enactment, lifetime benefit limits will be eliminated. Can impose annual limits, but only those determined by the Secretary of Dept. of Health and Human Services.
- Six months after enactment, provide coverage for some preventative services without cost sharing by the member. Services will be defined by the U.S. Preventative Services Task Force.
- For 2010 tax year, small businesses with no more than 25 employees and certain annual wage levels may receive tax credits if they provide insurance to employees For specific qualifications, we recommend consulting with your CPA or company tax consultant.
- In 2011, Health Savings Accounts will still have tax benefits, but if the funds are used for ineligible expenses you will be responsible for taxes on that amount and a penalty of 20%, instead of the current 10%penalty.
- In 2011, over the counter drugs that are obtained without a prescription will no longer qualify as an eligible expense for HSA's, FSA's or HRA's.
- Effective 2011, employers will be required to report on their employee's W2 form the aggregate cost of medical benefits, vision, dental, and supplemental insurance coverage.
- A voluntary long-term care program called CLASS will be created. After 5 years of contributions, enrollees would be entitled to defined benefits.
To see if you are eligible for the Small Business Health Care Tax Credit click on the link below.
http://www.irs.gov/pub/irs-utl/3_simple_steps.pdfIndividual Policies
June 23, 2010If your plan that was issued prior to March 23, 2010 and does not have significant changes after March 23, 2010; then it is Grandfathered. Deductible changes, coinsurance changes, co-payment changes after March 23, 2010 would most likely result in a plan no longer being Grandfathered.
Is it a bad thing to not be grandfathered? These items apply to non-Grandfathered, but not to Grandfathered plans:
- Coverage of recommended prevention services without cost to the member will apply to non-grandfathered plans on their effective date or renewal date after September 23, 2010. Depending upon the plan design, you had preventative coverage with either a copay or applied to your deductible/coinsurance (such as HSA compatible plans). How could this additional benefit impact you? We believe that the cost of providing this benefit would be calculated and included in the premium of plans issued after March 23, 2010 when final preventative definitions are released probably in September. Plans in place prior to March 23, 2010 will continue to cover preventative as it has in the past and defined under the policy until you make a plan change.
- Patient Protection for guaranteed access to OB-GYN's and pediatricians. This is not an issue for our individual clients, since the individual plans we offer are large PPO plans that allow access to specialists in the network without referral.
- Emergency services must be covered at in-network level regardless of the provider. This is already in place for our Texas policies due to an earlier State Mandate, so should have minimal impact depending upon further clarification of definitions.
- Children under 19 with pre-existing conditions cannot be declined for coverage after 9/23/2010.
Effective for plan years beginning 9/23/2010 the items listed below apply to BOTH Grandfathered and Non-Grandfathered plans:
- No lifetime limits
- No annual limits on specified standards that are to be defined in future regulations,
- Coverage for dependents to age 26 (currently in TX it is to age 25).
- 90 days after enactment, a temporary national high-risk insurance pool would be created to provide health coverage to individuals with pre-existing conditions and who have been uninsured for at least six months. Plan designs and pricing have yet to be determined.
- Six months after enactment, insurance companies would be barred from denying coverage to children under age 19 who have pre-existing medical conditions.
- Six months after enactment, coverage for dependent children would be to age 26. Currently in Texas for fully insured plans, the age for dependent children coverage is to age 25.
- Six months after enactment, lifetime benefit limits will be eliminated. Can impose annual limits, but only those determined by the Secretary of Dept. of Health and Human Services.
- Six months after enactment, provide coverage for some preventative services without cost sharing by the member. Services will be defined by the U.S. Preventative Services Task Force.
- In 2011, Health Savings Accounts will still have tax benefits, but if the funds are used for ineligible expenses you will be responsible for taxes on that amount and a penalty of 20%, instead of the current 10% penalty.
- In 2011, over the counter drugs that are obtained without a prescription will no longer qualify as an eligible expense for HSA's, FSA's or HRA's.
Medicare and Part D Policies
- 2010 - The immediate benefit will be a Medicare drug rebate for Medicare Part D members who meet the coverage gap. These members will receive a $250 rebate to help pay for medication.
• We do not know how you will receive this rebate yet. As regulations are developed we will keep you informed. - 2011 - Part D members will receive a 50% discount on brand-name drugs in the coverage gap.
- 2011 - Annual check-ups and defined preventive services/screenings will be covered at no cost to the member.
By 2020 the Part D coverage gap or doughnut hole is expected to be closed.