Tag / MedCon Benefit Systems

by Medcon Benefit Systems Group, Inc.

Small Group and Individual Markets: New Rating Restrictions for Health Insurance Premiums

Effective for 2014, the Affordable Care Act (ACA) reforms the rating practices of health insurance issuers in the individual and small group markets by limiting the factors that can vary premium rates. These rating restrictions do not apply to grandfathered plans, large group plans or self-funded plans.

Under the ACA’s reforms, issuers may vary the premium rate charged to a non-grandfathered plan in the individual or small group market from the rate established for that particular plan only based on the following factors:

  • Age (within a ratio of 3:1 for adults)
  • Family Size (individual or family)
  • Tobacco Use (within a ratio of 1.5:1)
  • Geography (rating area)

All other rating factors are prohibited. This means that several factors commonly used by issuers to set higher premiums prior to 2014, such as health status, claims history, duration of coverage, gender, occupation, small employer size and industry, can no longer be used.

Rating Methodology

In the final rule, HHS directs issuers to use the per-member rating methodology in the small group market. According to HHS, per-member rating ensures compliance with the requirement that age and tobacco rating only be apportioned to an individual family member’s premium, enhances employee choice inside the Exchanges’ Small Business Health Options Program (SHOP) and promotes the accuracy of the ACA’s risk adjustment methodology.

States may require issuers to offer premiums based on average employee amounts where every employee in the group is charged the same premium. Also, according to HHS, the age bands, as implemented by the per-member-rating methodology, are consistent with the Age Discrimination in Employment Act of 1967 (or the ADEA).

PERMISSIBLE RATING FACTORS

Age

The premium rate charged by an issuer for non-grandfathered health insurance coverage in the individual or small group market may vary by age, except that the rate may not vary by more than 3:1 for adults. The final rule defines “adults” as individuals age 21 and older.

The final rule specifies the following standard age bands for use in all states and markets subject to the ACA’s premium rating restrictions:

  • Children: A single age band for children ages 0 through 20.
  • Adults: One-year age bands for adults ages 21 through 63.
  • Older adults: A single age band for adults ages 64 and older.

Age for rating purposes is based on the date of policy issuance and renewal. However, for individuals who are added to the plan or coverage other than on the date of policy issuance or renewal, age may be determined as of the date they are added or enrolled in the coverage.

Geography

States may establish rating areas based on certain geographic divisions—counties, three-digit zip codes or metropolitan statistical areas (MSAs) and non-MSAs. The final rule provides flexibility for states regarding the rating area configurations that will be presumed adequate by HHS. If a state does not establish rating areas, the default will be one rating area for each MSA in the state and one rating area for all other non-MSA portions of the state.

The final rule provides that states may establish different rating areas for the individual or small group markets, but rating areas must apply uniformly within each market and may not vary by product. If a state merges its individual and small group markets, rating areas will apply uniformly in both the individual and small group markets in the state.

Also, the final rule clarifies that the ACA does not limit the amount by which rates may vary based on geography. Thus, states and issuers may determine the appropriate variation for the geographic rating area factor. However, HHS cautions that rating area factors should be actuarially justified to ensure that individuals and employers are not charged excessively high premiums that would make the ACA’s guaranteed availability protections meaningless.

Family Size

Under the ACA’s rating restrictions, issuers may vary premiums based on the number of individuals covered under a policy, or family size. The final rule instructs issuers to develop premiums for family coverage by adding up the rates of covered family members. However, no more than the three oldest covered children under age 21 may be included in the family rate. According to HHS, this cap on covered children will mitigate premium increases for larger families. The final rule does not contain a cap on the number of family members age 21 and older whose per-member rates are added into the family premium.

The final rule does not specify the minimum categories of family members that must be rated together on a family policy. Since state laws differ with respect to marriage, adoption and custody, HHS believes that states are in the best position to make decisions regarding family coverage practices. Thus, states have the flexibility to require issuers to include specific types of individuals on a family policy.

Tobacco Use

The premium rate charged by an issuer for non-grandfathered health insurance coverage offered in the individual or small group market may vary for tobacco use, except that the rate may not vary by more than 1.5:1. The final rule clarifies that issuers may vary rates for tobacco only based on individuals who may legally use tobacco under federal and state law.

The final rule defines “tobacco use” as use of tobacco an average of four or more times per week within no longer than the past six months, including all tobacco products but excluding religious and ceremonial uses of tobacco. Tobacco use will be based on when a tobacco product was last used.

Issuers in the small group market may apply the tobacco rating factor only in connection with a wellness program that allows a tobacco user to avoid paying the full amount of the tobacco factor by participating in a tobacco cessation program.

Also, if an enrollee provides false or incorrect information about their tobacco use, the final rule allows an issuer to retroactively apply the appropriate tobacco use rating factor to the enrollee’s premium. However, the issuer may not rescind the coverage.

 

This MedCon Benefit Systems Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.

by Medcon Benefit Systems Group, Inc.

Employer Mandate Delay – How Will it Affect Your Group?

On July 9, 2013, the Internal Revenue Service (IRS) issued Notice 2013-45 to provide formal guidance on the delay of the Affordable Care Act (ACA) large employer “pay or play” rules and related information reporting requirements. The provisions affected by the delay are:

  • § 4980H employer shared responsibility provisions;
  • § 6055 information reporting requirements for insurers, self-insuring employers and certain other providers of minimum essential coverage; and
  • § 6056 information reporting requirements for applicable large employers.

*For 2014, compliance with the information reporting rules is completely optional and the IRS will not assess penalties under the pay or play rules. Both the information reporting and the employer pay or play requirements will be fully effective for 2015.

One-year Implementation Delay

According to the IRS, the delay of the reporting requirements provides additional time for input from employers and other reporting entities in an effort to simplify these requirements, consistent with effective implementation of the ACA. This delay is also intended to provide employers, insurers and other providers of minimum essential coverage time to adapt their health coverage and reporting systems.

The delay of the employer mandate penalties was required because of issues related to the reporting requirements. Because the reporting rules were delayed, the Treasury believed it would be nearly impossible to determine which employers owed penalties under the shared responsibility provisions.

The pay or play regulations issued earlier this year left many unanswered questions for employers. The IRS highlighted several areas where it would be issuing more guidance. Presumably, the additional time will give the IRS and Treasury the opportunity to provide more comprehensive guidance on implementing these requirements.

Effect on Other ACA Provisions

The delay does not affect any other provision of the ACA, including individuals’ access to premium tax credits for coverage through an Exchange and the individual mandate.

Individuals will continue to be eligible for the premium tax credit to purchase coverage through an Exchange as long as they meet the eligibility requirements (for example, their household income is within a specified range and they are not eligible for other minimum essential coverage).

Click here for a chart illustrating the provisions that will and will not be affected by the employer mandate delay.

**This Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
by Medcon Benefit Systems Group, Inc.

2013 Compliance Checklist

In light of the Supreme Court’s June 28, 2012, decision to uphold the health care reform law, or Affordable Care Act (ACA), employers must continue to comply with ACA mandates that are currently in effect. Employers must also prepare to comply with ACA changes that will go into effect in the future. To prepare for upcoming changes, employers need to be aware of the ACA mandates that will go into effect in 2013.

This MedCon Benefit Systems, Inc. Legislative Brief provides a compliance checklist for employers for 2013. Please contact your MedCon Benefit Systems, Inc. representative for assistance or if you have questions about changes that were required in previous years.

GRANDFATHERED PLAN STATUS

A grandfathered plan is one that was in existence when health care reform was enacted on March 23, 2010. If you make certain changes to your plan that go beyond permitted guidelines, your plan is no longer grandfathered. Contact your MedCon Benefit Systems, Inc. representative if you have questions about changes you have made, or are considering making, to your plan.

□    If you have a grandfathered plan, determine whether it will maintain its grandfathered status for the 2013 plan year. Grandfathered plans are exempt from some of the health care reform requirements. A grandfathered plan’s status will affect its compliance obligations from year-to-year.

□    If you move to a non-grandfathered plan, confirm that the plan has all of the additional patient rights and benefits required by ACA. This includes, for example, coverage of preventive care without cost-sharing requirements.

ANNUAL LIMITS

Effective for plan years beginning on or after Jan. 1, 2014, health plans will be prohibited from placing annual limits on essential health benefits. Until then, however, restricted annual limits are permitted.

□    Unless a health plan received an annual limit waiver, its annual limit on essential health benefits for the 2013 plan year cannot be less than $2 million. (This limit applies to plan years beginning on or after Sept. 23, 2012, but before Jan. 1, 2014.)

SUMMARY OF BENEFITS AND COVERAGE

Health plans and health insurance issuers must provide a Summary of Benefits and Coverage (SBC) to participants and beneficiaries. The SBC is a relatively short document that provides simple and consistent information about health plan benefits and coverage in plain language. A template for the SBC is available, along with instructions and examples, and a uniform glossary of terms.

Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period beginning with the first open enrollment period that begins on or after Sept. 23, 2012. The SBC also must be provided to participants and beneficiaries who enroll other than through an open enrollment period (including individuals who are newly eligible for coverage and special enrollees) effective for plan years beginning on or after Sept. 23, 2012.

□    If your plan has an open enrollment period beginning on or after Sept. 23, 2012, confirm that the SBC is included with the open enrollment package. For participants and beneficiaries who enroll outside of the open enrollment period, confirm that the SBC will be provided to these individuals beginning with the plan year starting on or after Sept. 23, 2012.

  • If you have a self-funded plan, the plan administrator is responsible for providing the SBC.
  • If you have an insured plan, both the plan and the issuer are obligated to provide the SBC, although this obligation is satisfied for both parties if either one provides the SBC. Thus, if you have an insured plan, you should work with your health insurance issuer to determine which entity will assume responsibility for providing the SBC. Please contact your MedCon Benefit Systems, Inc. representative for assistance.

60-DAY NOTICE OF PLAN CHANGES

□    A health plan or issuer must provide 60 days’ advance notice of any material modifications to the plan that are not related to renewals of coverage. Notice can be provided in an updated SBC or a separate summary of material modifications. This 60-day notice requirement becomes effective when the SBC requirement goes into effect for a health plan.

PREVENTIVE CARE SERVICES FOR WOMEN

□    Effective for plan years beginning on or after Aug. 1, 2012, non-grandfathered health plans must cover specific preventive care services for women without cost-sharing requirements.

The covered preventive care services for women include: well-woman visits; gestational diabetes screening; human papillomavirus (HPV) testing; sexually transmitted infection (STI) counseling; human immunodeficiency virus (HIV) screening and counseling; FDA-approved contraception methods and contraceptive counseling; breastfeeding support, supplies and counseling;  and domestic violence screening and counseling. Exceptions to the contraception coverage requirement apply to certain religious employers. The preventive care guidelines for women are available at: www.hrsa.gov/womensguidelines/.

$2,500 CONTRIBUTION LIMIT FOR HEALTH FSAs

□    Effective for plan years beginning on or after Jan. 1, 2013, an employee’s annual pre-tax salary reduction contributions to a health flexible spending account (FSA) must be limited to $2,500. (The $2,500 limit will be indexed for cost-of-living adjustments for 2014 and later years.)

Health FSA plan sponsors are free to impose an annual limit that is lower than the ACA limit for employees’ health FSA contributions. Also, the $2,500 limit does not apply to employer contributions to the health FSA and it does not impact contributions under other employer-provided coverage. For example, employee salary reduction contributions to an FSA for dependent care assistance or adoption care assistance are not affected by the $2,500 health FSA limit.

W-2 REPORTING

□    Beginning with the 2012 tax year, employers that are required to issue 250 or more W-2 Forms must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms. The cost must be reported beginning with the 2012 W-2 Forms, which are issued in January 2013.

ACA’s W-2 reporting requirement is optional for smaller employers until further guidance is issued. Also, the reporting is for informational purposes only; it does not affect the taxability of benefits.

RETIREE DRUG SUBSIDY

The Medicare Part D program includes a Retiree Drug Subsidy (RDS) to encourage employers to continue providing prescription drug coverage to Medicare-eligible retirees. The RDS is available to certain employers that sponsor group health plans covering retirees who are entitled to enroll in Medicare Part D but elect not to do so. Employers receive RDS payments tax-free. In addition, before 2013, employers receiving the RDS could take a tax deduction for their retiree prescription drug costs, unreduced for the subsidy amount.

□    Beginning in 2013, employers receiving the RDS will no longer be permitted to take a tax deduction for the subsidy amount.

MEDICARE TAX INCREASES

□    Effective Jan. 1, 2013, the Medicare Part A (hospital insurance) tax rate increases by 0.9 percent (from 1.45 percent to 2.35 percent) on wages over $200,000 for an individual taxpayers and $250,000 for married couples filing jointly. (The tax is also expanded to include a 3.8 percent tax on unearned income in the case of individual taxpayers earning over $200,000 and $250,000 for married couples filing jointly).

An employer must withhold the additional Medicare tax on wages or compensation it pays to an employee in excess of $200,000 in a calendar year. An employer has this withholding obligation even though an employee may not be liable for the additional Medicare tax because, for example, the employee’s wages or other compensation together with that of his or her spouse (when filing a joint return) does not exceed the $250,000 liability threshold. Any withheld additional Medicare tax will be credited against the total tax liability shown on the individual’s income tax return (Form 1040).

EMPLOYEE NOTICE OF EXCHANGES

□    Effective March 1, 2013, employers must provide all new hires and current employees with a written notice about ACA’s health insurance exchanges (Exchanges). In general, the notice must:

  • Inform employees about the existence of the Exchange and give a description of the services provided by the Exchange;
  • Explain how employees may be eligible for a premium tax credit or a cost-sharing reduction if the employer’s plan does not meet certain requirements;
  • Inform employees that if they purchase coverage through the Exchange, they may lose any employer contribution toward the cost of employer-provided coverage, and that all or a portion of the employer contribution to employer-provided coverage may be excludable for federal income tax purposes; and
  • Include contact information for the Exchange and an explanation of appeal rights.

Federal agencies are expected to issue more specific guidance on this notice requirement and provide a model notice for employers to use.

CER FEES

ACA created the Patient-Centered Outcomes Research Institute (Institute) to help patients, clinicians, payers and the public make informed health decisions by advancing comparative effectiveness research. The Institute’s research is to be funded, in part, by fees paid by health insurance issuers and sponsors of self-insured health plans. These fees are called comparative effectiveness research fees or CER fees.

□    Self-funded plans and health insurance issuers must pay a $1 per covered life fee for comparative effectiveness research. Fees are effective for plan years ending on or after Oct. 1, 2012. Fees increase to $2 the next year and will be indexed for inflation after that. Full payment of the research fees will be due by July 31 of each year. It will generally cover plan years that end during the preceding calendar year. Thus, the first possible deadline for paying the CER fees is July 31, 2013.

HIPAA CERTIFICATION

□    Health plans must file a statement with the Department of Health and Human Services (HHS), certifying their compliance with HIPAA’s electronic transaction standards and operating rules. Under ACA, the first deadline for certifying compliance with certain HIPAA standards and rules is Dec. 31, 2013. HHS has indicated that it intends on issuing more guidance on this requirement in the future.

This MedCon Benefit Systems, Inc. Legislative Brief is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.
© 2012 Zywave, Inc. All rights reserved. EEM 10/12
by Medcon Benefit Systems Group, Inc.

Self-Funded Plans Under Health Care Reform

The Affordable Care Act (ACA) includes numerous reforms affecting the health coverage that employers provide to their employees. Many of these reforms apply to all group health plans, regardless of their method of funding. Plans that have grandfathered status under ACA, however, are not required to comply with select health care reform requirements. In addition, self-insured plans are exempt from certain ACA requirements. This MedCon Benefit Systems, Inc. Legislative Brief summarizes how the health care reform law applies to self-insured plans.
REFORMS THAT APPLY TO SELF-INSURED PLANS

As noted above, many of ACA’s reforms affect all group health plans, regardless of whether they are fully insured or self-insured. For example, among many other reforms, self-insured and fully insured plans must comply with the following ACA provisions:

  • Dependent coverage for adult children up to age 26;
  • Coverage of preventive health services without cost-sharing (grandfathered plans are exempt);
  • No rescissions of coverage, except in the case of fraud or intentional misrepresentation of material fact;
  • No lifetime limits on essential health benefits and annual limits are restricted until 2014 (in 2014, all annual limits are prohibited); and
  • Improved internal claims and appeals process and minimum requirements for external review (grandfathered plans are exempt).

In addition, both self-insured and fully insured plans are subject to ACA’s requirement to provide participants and beneficiaries with the uniform summary of benefits and coverage. Sponsors of self-insured and fully insured plans alike must also comply with ACA’s requirement to report the aggregate cost of employer-sponsored group health plan coverage on their employees’ Forms W-2.

REFORMS THAT DO NOT APPLY TO SELF-INSURED PLANS

Essential Health Benefits Package
Beginning in 2014, non-grandfathered insurance plans in the individual and small group markets must offer a comprehensive package of items and services, known as essential health benefits. This requirement applies to plans offered inside and outside of the state insurance exchanges (Exchanges). ACA identified in broad terms 10 benefit categories that must be included as essential health benefits. Within these broad categories, the individual states have flexibility to select their own benchmarks for defining essential health benefits.

Self-insured group health plans, health insurance coverage offered in the large group market and grandfathered plans are not required to cover essential health benefits.

Medical Loss Ratio Rules

The medical loss ratio (MLR) rules became effective on Jan. 1, 2011. These rules require health insurance issuers to spend 80 to 85 percent of their premium dollars on medical care and health care quality improvement, rather than administrative costs. Issuers that do not meet these requirements must provide rebates to consumers beginning in 2012. The MLR rules do not apply to self-insured plans.

Small Employer Tax Credit

Beginning with 2010 tax years, ACA created a tax credit for eligible small employers that provide health care coverage to their employees. In order to be eligible for the health care tax credit, an employer must:

  • Have fewer than 25 full-time equivalent employees (FTEs);
  • Pay average annual wages of less than $50,000 per FTE; and
  • Pay at least half of employee health insurance premiums (based on single coverage).

For tax years 2010 through 2013, the maximum health care tax credit is 35 percent of premiums for small business employers and 25 percent of premiums for small tax-exempt employers. An enhanced version of the credit will be effective in 2014.

The tax credit is only available for the purchase of health insurance coverage, and so it does not apply to self-insured coverage.

Review of Premium Increases

ACA required the Department of Health and Human Services (HHS) to establish a process for the annual review of unreasonable increases in premiums for health insurance coverage. HHS’s process provides that effective Sept. 1, 2011, issuers seeking rate increases of 10 percent or more for nongrandfathered plans in the individual and small group markets must publicly disclose the proposed increases, along with justification for the increases. Starting Sept. 1, 2012, the 10 percent threshold will be replaced with a state specific threshold to reflect insurance and health care cost trends particular to that state. The increases will be reviewed by either state or federal experts to determine whether they are unreasonable. This review process for rate increases applies to issuers in the small group and individual markets. However, it does not apply to grandfathered health plan coverage or to excepted benefits (for example, liability insurance, workers’ compensation insurance, limited scope dental or vision benefits, long-term care or nursing home benefits and hospital indemnity insurance). It also does not apply to self-insured plans.

Annual Insurance Fee

ACA’s revenue raising provisions require certain health insurance providers to pay an annual fee beginning in 2014. Issuers with net premiums in a calendar year of $25 million or less are exempt from the fee. Employers that self insure their employees’ health coverage are also exempt from the fee.

Methods to Allocate Insurance Risk

ACA includes reforms related to the allocation of insurance risk through reinsurance, risk corridors and risk adjustment. The purpose of these reforms, which become effective in 2014, is to protect against risk selection and market uncertainty as insurance changes and the Exchanges are implemented.

Self-insured plans are not subject to some of these provisions, such as the risk adjustment charges that states may impose on non-grandfathered plans in the individual and small group market. However, under ACA, each state must establish a transitional reinsurance program to help stabilize premiums for coverage in the individual market during the first three years of Exchange operation (2014-2016). Administrators of self-insured plans will be required to contribute to this program.

Insurance Market Reforms

Effective for 2014, health insurance issuers must comply with a new set of market reforms. Market reforms that are inapplicable to self-insured arrangements include:

  • Guaranteed Issue and Renewability – Health insurance issuers offering coverage in the individual or group market in a state must accept every employer and individual in the state that applies for coverage and must renew or continue to enforce the coverage at the option of the plan sponsor or the individual.
  • Insurance Premium Restrictions – Health insurance issuers will not be permitted to charge higher rates due to heath status, gender or other factors. Premiums will be able to vary based only on age (no more than 3:1), geography, family size and tobacco use.

Should you have questions about self-funded plans, health care reform, or any employee benefits, please feel free to contact the professionals at MedCon.

by Medcon Benefit Systems Group, Inc.

Health Care Reform Supreme Court Ruling – What It Means For Employers

On June 28, 2012, after much anticipation and speculation, the U.S. Supreme Court essentially upheld the entire Affordable Care Act (ACA) as constitutional. The main issue in the case was whether Congress had the authority under the U.S. Constitution to enact ACA’s individual mandate. Beginning in 2014, the individual mandate requires most individuals to obtain health care coverage or pay a penalty.

Because the Court upheld ACA, employers must continue to comply with ACA’s reforms.

  • ACA changes that have already been implemented will remain in effect, such as the requirement to cover adult children until age 26 and the requirement for non-grandfathered plans to cover certain preventive care services without cost-sharing.
  • ACA’s provisions that are not currently in effect will continue to be implemented as planned. For example, effective for 2013 plan years, participants’ pre-tax contributions to health flexible spending accounts (FSAs) will be limited to $2,500 per year.

While it is possible that changes will be made to ACA through future legislation or court rulings, ACA is the health care reform law currently in effect. Thus, employers should continue to prepare for ACA changes that become effective in 2012 and 2013. Employers should also keep in mind the ACA reforms that will take place in 2014.

ACA REFORMS – 2012 AND 2013

Annual Limits

Beginning Jan. 1, 2014, group health plans will no longer be able to impose annual limits on essential health benefits. However, until then, certain minimum annual limits are permitted. Unless a plan received a waiver of the annual limit requirements, its annual limits on essential health benefits should be set at least as high as the following amounts for each applicable plan year:

  • $750,000 for plan years beginning on or after Sept. 23, 2010, but before Sept. 23, 2011;
  • $1.25 million for plan years beginning on or after Sept. 23, 2011, but before Sept. 23, 2012; and
  • $2 million for plan years beginning on or after Sept. 23, 2012, but before Jan. 1, 2014.

Form W-2 Reporting Requirements

Beginning with the 2012 tax year, employers that are required to issue 250 or more W-2 Forms must report the aggregate cost of employer-sponsored group health coverage on employees’ W-2 Forms. The cost must be reported beginning with the 2012 W-2 Forms, which are due in January 2013. This requirement is optional for smaller employers for the 2012 tax year and until further guidance is issued. This reporting is for informational purposes only; it does not affect the taxability of benefits.

Women’s Preventive Care Services

Effective for plan years starting on or after Aug. 1, 2012, non-grandfathered plans must cover specific preventive health services for women without cost-sharing, such as deductibles, copayments and coinsurance. These services include well-woman visits, breastfeeding support, domestic violence screening, STD screening and contraceptives.

Exceptions to the contraceptive coverage requirement apply to religious employers.

Medical Loss Ratio Rebates

Fully insured plans may receive rebates in August 2012 if they qualify for a rebate from their health insurance issuers due to the medical loss ratio (MLR) rules. The MLR rules require insurance companies to spend a certain percentage of premium dollars on medical care and health care quality improvement, rather than administrative costs. Employers may receive rebates from issuers in the form of a premium credit, lump-sum payment or premium holiday, if permissible under state law. Any portion of a rebate that is a plan asset must be used for the exclusive benefit of the plan’s participants and beneficiaries. This may include, for example, reducing participants’ premium payments.

Summary of Benefits and Coverage

Plans and insurance issuers must provide a summary of benefits and coverage (SBC) to participants and beneficiaries. The SBC is intended to be a concise document – no more than four double-sided pages – providing simple and consistent information about health plan benefits and coverage in plain language. A template for the SBC is available, along with instructions and examples for completing the template and a uniform glossary of terms.

Plans and issuers must start providing the SBC as follows:

  • Issuers must provide the SBC to health plans effective Sept. 23, 2012.
  • Plans and issuers must provide the SBC to participants and beneficiaries who enroll or re-enroll during an open enrollment period beginning with the first day of the first open enrollment period that begins on or after Sept. 23, 2012. Thus, many plans will need to include the SBC in their open enrollment packages for 2013.
  • For participants who enroll in coverage other than through an open enrollment period (for example, newly eligible individuals and special enrollees), plans and issuers must provide the SBC beginning on the first day of the first plan year that begins on or after Sept. 23, 2012.

If either the plan or issuer provides the SBC to a participant or beneficiary in accordance with the timing and content requirements, both will have satisfied their SBC obligations. Thus, a fully-insured plan will satisfy the requirement to provide an SBC to an individual if the issuer provides a timely and complete SBC to the individual.

In addition, once the SBC requirement becomes effective, plans and issuers must provide 60 days’ advance notice of any material modifications to the plan that are not related to renewals of coverage. Notice can be provided in an updated SBC or a separate summary of material modifications.

CER Fees

Self-funded plans and health insurance issuers must pay comparative effectiveness research fees, or CER fees, to help fund ACA’s new Patient-Centered Outcomes Research Institute. The CER fees apply for plan years ending on or after Oct. 1, 2012. The CER fees do not apply for plan years ending on or after Oct. 1, 2019. For calendar year plans, the research fees will be effective for the 2012 through 2018 plan years.

For plan years ending before Oct. 1, 2013 (that is, 2012 for calendar year plans), the CER fee is $1 multiplied by the average number of lives covered under the plan. The CER fee will increase to $2 for the next plan year. For plan years ending on or after Oct. 1, 2014, the CER fee amount will be indexed for inflation.

Sponsors of self-funded plans and issuers must report and pay their CER fees by July 31 of each year for the plan year that ended during the preceding calendar year. The first possible due date for reporting and paying CER fees is July 31, 2013.

FSA $2,500 Contribution Limit

Effective for plan years beginning on or after Jan. 1, 2013, an employee’s salary reduction contributions to a health FSA offered under a cafeteria plan are limited to $2,500. The $2,500 limit will be indexed for cost-of-living adjustments for 2014 and later years.

Elimination of Retiree Drug Subsidy Deduction

Employers that receive the Medicare Part D retiree drug subsidy have been able to take a tax deduction for their prescription drug costs, including costs attributable to the subsidy. Also, these employers do not have to pay tax on the drug subsidy amount. Effective for 2013, the deduction for the retiree drug subsidy will be eliminated.

Additional Medicare Tax Withholding

Effective Jan. 1, 2013, an additional 0.9 percent Medicare tax will apply to high-income individuals. Employers are required to withhold the additional Medicare tax on an employee’s wages in excess of $200,000 ($250,000 for married couples filing jointly).

Health Insurance Exchanges – Notice of Availability

Employers must provide all new hires and current employees with a written notice about ACA’s health insurance Exchanges and the consequences if an employee decides to forgo employer-sponsored coverage and purchase a qualified health plan through an Exchange. This notice requirement generally becomes effective as of March 1, 2013. The Department of Health and Human Services (HHS) has indicated that it intends to issue model Exchange notices.

More agency guidance is also expected on this notice requirement.

ACA REFORMS – 2014

Additional ACA coverage mandates and reforms become effective in 2014. For example, effective for plan years beginning on or after Jan. 1, 2014, group health plans and issuers may not:

  • Impose pre-existing condition exclusions on any covered individual, regardless of the individual’s age;
  • Have a waiting period for coverage that exceeds 90 days; or
  • Apply any annual limits on essential health benefits.

In addition, effective in 2014, ACA’s state-based insurance Exchanges are scheduled to be operational. Also in 2014, the individual mandate will become effective, as will ACA’s “pay or play” penalties for employers. Under the pay or play rules, certain employers with at least 50 full-time equivalent employees will face penalties if one or more of their full-time employees obtains a premium credit through an Exchange. An individual may be eligible for a premium credit either because the employer does not offer health care coverage or the employer offers coverage that is either not “affordable” or does not provide “minimum value.”

FUTURE OF HEALTH CARE REFORM

Although ACA survived a major hurdle when the Supreme Court upheld it, changes may be made to the health care reform law in the future by the courts or by Congress. Legal challenges to ACA’s validity are likely to continue. For instance, Catholic-affiliated institutions have already filed lawsuits challenging ACA’s contraceptive coverage requirement on the basis that it violates their religious freedoms. Also, Republican lawmakers are continuing with their efforts to eliminate or modify some of ACA’s controversial provisions. However, major legislative changes to ACA will likely require a significant shift in power in the legislative and executive branches of government and, thus, will depend on the outcome of the November 2012 elections.

MedCon Benefit Systems, Inc. will continue to monitor the status of the health care reform law, and will provide updated information as it becomes available.

by Medcon Benefit Systems Group, Inc.

Health Care Reform in the Supreme Court

Last week, the Supreme Court began hearings regarding the constitutionality of the PPACA. Unum U.S. Senior Vice President and General Counsel Chris Collins released a summary of the major issues to be reviewed by the Court regarding the PPACA.

Likely the most discussed issue thus far has been the constitutionality of the individual mandate, followed by the question of whether or not the PPACA would continue to stand if the individual mandate is deemed unconstitutional. The Court will also need to determine if the case can be decided before 2014 when the “tax penalty” goes into effect.

For the full summary from Chris Collins of Unum, please click here to view. Keep checking back as we follow the Supreme Court activity regarding Health Care Reform.

by Medcon Benefit Systems Group, Inc.

Comparison Shopping For Medical Care

Have you ever wondered what it would be like if you could comparison shop for your medical costs?  When you go to buy a car, you spend $20,000 or $30,000, maybe even over $40,000.  The likelihood of you walking into the dealership and paying sticker without any questions is slim to nil. Yet, millions of Americans do just that with their healthcare every year.  Have you ever asked, “how much is the surgery going to cost?” or “how much exactly is the cat scan?”  Yet, these are procedures that can potentially cost upwards of tens of thousands of dollars and we have them performed at the directive of our physicians with no questions asked.
Once you have selected your insurance carrier and designed  your health plan, you hope the strength of the design is enough to deter over  utilization.  Employees are deciding where to go for treatment and surgery blindly.  Are they making the choice based on the cost to the employer’s insurance plan?  The answer is: not likely.  Consumers of health care services are not like most other consumers.  Employees do not, and in the past could not, compare prices before they bought.  In the past you could not find out a price for a diagnostic colonoscopy or a tonsilitomy.  Again, compare that decision to that of buying a car.
What if we could add to your program a service that allowed your employees to find out exactly what that cost would be up front?  Not only with one provider, but let’s say up to three?  How about if they compared three and then proceeded to schedule the appointment for your employees.  Imagine the time and money that could be saved.
If this is something of interest to you and your employees, contact us! We have the answers.
MedCon Benefit Systems Group, Inc.
214.739.5215
by Medcon Benefit Systems Group, Inc.

Self Funding – Act II

Having been in the insurance industry for over 25 years, collectively our agency specializes in “self funding.”  It is with great pleasure that we welcome the resurgence of this funding instrument back to center stage.

Self funding gives the employers back the control — the control over both plan design and the financing of their health care benefit plan.  While the employer assumes the risk of expected claims, you will purchase insurance (stop loss coverage, both specific and aggregate) to protect your plan against unpredictable or catastrophic claims.

The financial control is gained by paying for only the claims that your employees incur, when they incur them.  In a fully insured environment you pay a monthly premium up front for what the insurance company believes your claims are going to be, advance premium payments.  This also translates to the insurance company holding/investing your money.

By funding your own claims, you are also avoiding the costs of claim reserves as well as premium taxes.  Included in these charges are the insurance company’s profit margins, risk charges, and their administrative fees.  There will be administrative fees associated with your  self funded plan but typically much lower than those of a fully insured plan.

The self-funded vehicle allows the employer to design the health benefit plan to meet their specific needs.  It offers the flexibility to manage costs and make changes to better manage utilization and take advantage of discounts offered through third party vendors.  All of which can help in the making of a much more cost effective plan.

We will be discussing the advantages  of self funding in more detail in future blog posts.  Should you have a questions please feel free to contact Sharon McReynolds at 214/739-5212 or email smcreynolds@medconbenefit.com.