ppaca healthcare reform timeline courtesy of: 6500 city west parkway suite 100 eden prairie, mn...

PPACA Healthcare Reform

Timeline

Courtesy of:

6500 City West Parkway

Suite 100

Eden Prairie, MN 55344

(952) 944-2929

www.horizonagency.com

Table of Contents

• Minimum Loss Ratios Page 4• Coverage Appeals Process Page 5• Expansion of Non Discrimination Rules Page 5• Annual Benefit Limits Page 6• Lifetime Benefit Limits Page 6• Increased Dependent Coverage Page 6• Coverage of Emergency Services Page 6• Coverage of Preventive Care Page 6• Designating a Primary Care Physician Page 7• Rebates for Medicare Part D “Donut Hole” Page 7• Reporting on W-2s Page 8• Long Term Care Program Page 8• Health FSA, HRA, HSA Reimbursements Page 8• HSA and Archer MSA Distribution Increases Page 8• Federal Study on Self-Insured Plans Page 8• Tax to Fund Comparative Effectiveness Research Page 9• New Plan Disclosure Requirement Page 9• Material Modification of Plan Provision Page 9• FSA Limit Page 9• Medicare Payroll Tax Increase Page 10• Medical Expense Deduction Page 10• New Employer Discloser Obligation Regarding Exchanges Page 10• New Reporting Obligation Regarding Employers Furnishing

Quality and Affordable Coverage Page 11

Copyright © Innovative Benefit Planning LLC 2010. All Rights Reserved.

Table of Contents

• New Obligation Regarding Employee’s “Minimum EssentialCoverage” Page 11

• Employee Waiting Period for Coverage Page 11• Free Choice Vouchers Page 12• Employer Penalty for Offering Coverage that’s not

“Qualifying” and “Affordable” Page 13• Determination and Potential Application of Employer

Penalty for Categories of Employees Page 14• Pre-Existing Conditions Page 15• Wellness Program Page 15• Coverage for Clinical Trials Page 15• Annual Benefit Limits Page 15• Modified Community Rating Requirements Page 16• State Based Exchanges Page

17-18• Excise Tax on High Value Health Plans “Cadillac Plans” Page 19• Auto Enrollment by Employers Page 19• Individual Mandate Page 20• Helping Employees Prepare for Health Care

Reform Legislation (Individual Refusal to Purchase Coverage)Page 21

• Health Care Reform – Estimated Financial Impact For Employers Page 22

• Health Care Reform “Grandfathered” Provision Page 23 - 26

• Preventive Care Services Page 27 - 29


TOPICEffective

Date of the Change

Description of the Change

Minimum Loss Ratios

(MLR)

Regulatory process with

DHHS and NAIC begins in 2010.

The standards and any potential

rebates to policyholders

being applied to the 2011 plan.

Minimum loss ratio requirements will be established for insurers in all markets (self-insured plans are exempt).

The Minimum Loss Ratio is:

o 85% for large group plans (101 employees or more)

o 80% for small group plans (100 and below)

o 80% for individual plans

The calculation is independent of:

o Federal taxes

o State taxes

o Any payments as a result of the risk adjustment provisions

o Any payments as a result of the reinsurance provisions

Carriers will have to issue a premium rebate to individuals for plans that fail to meet the Minimum Loss Ratio requirements.

Allows the Secretary of DHHS to make adjustments to the percentage if it proves to be destabilizing to the individual or small group markets.

The National Association of Insurance Commissioners (NAIC) is required to establish uniform definitions regarding the Minimum Loss Ratio and how the rebate is calculated by December 31, 2010.

Health Care Reform Effective Dates

4


TOPIC

Effective Date of

the Change


Coverage Appeals Process

Plan years beginning on

or after September 23, 2010

Requires plans to have an internal and external coverage appeals process for:

• Fully-insured individual health plans

• Fully-insured group plans

• Self-insured group health plans

At a minimum, plans and issuers must:

• have an internal claims process in effect, which process must initially incorporate the current claims procedure regulations issued by the Department of Labor in 2001

• provide notice to enrollees, in a culturally and linguistically appropriate manner, of available internal and external appeals processes, and the availability of any applicable office of health insurance consumer assistance or ombudsman to assist them with the appeals processes

• allow enrollees to review their files, to present evidence and testimony as part of the appeals process, and to receive continued coverage pending the outcome of the appeals process

• implement an external review process that meets applicable state requirements and guidance that is to be issued by HHS

Expansion of Non

Discrimination Rules for Fully Insured Groups


or after September 23,

2010

Discrimination testing applies to fully insured groups. The plan administrator will be subject to penalties if the plan fails to comply with the nondiscrimination rules. However highly compensated employees will not be taxed on excess reimbursements. The employer will be subject to a $100 per day/per affected participant excise tax for a failure to satisfy the nondiscrimination requirement.


5


TOPICEffective

Date of the Change


Annual Benefit Limit

(All Plans)



2010

Would be limited to DHHS-defined “non-essential” benefits for plans years beginning prior to January 1, 2014. Annual limits would

be prohibited entirely for plan years beginning on or after January 1, 2014.

Lifetime Benefit

Limits (All Plans)



2010

Prohibits lifetime limits on the dollar value of benefits for any participant or beneficiary

Increased Dependent Coverage (All Plans)



2010

Increases the age of dependents for health plan coverage to age 26 (including married

and/or non-student dependents)

Coverage of Emergency

Services (Non-

Grandfathered Plans)



2010

Emergency Services paid at in-network level, regardless of provider

Coverage of Preventive Care (Non-

Grandfathered Plans)



2010

Plans must not impose cost sharing on defined preventive care services. Services

are yet to be defined

Health Care ReformEffective Dates

6


TOPICEffective

Date of the Change


Designating a Primary

Care Physician



2010

Allows enrollees to designate an allopathic or osteopathic in-network doctor as their primary care physician (if plan requires a designation)

Rebates for Medicare

Part D "Donut Hole"

January 1, 2010 for

rebate.

Other measures noted

begin January 1, 2011.

There is a gap in Medicare prescription drug coverage (Medicare Part D) between $2,830 and $6,440 in total drug spending. The health care reform bill provides a $250 rebate check for all Medicare Part D enrollees who enter this “donut hole.”

Beginning in 2011, a 50 percent discount on brand-name drugs will be instituted and generic drug coverage will be provided in the donut hole. The donut hole gap will be filled by 2020.

Beginning in 2011, the beneficiary co-insurance rate in the Medicare Part D coverage gap will gradually reduce from the current 100% to 25% in 2020 with 75% discounts on brand and generic drugs.


7


TOPICEffective

Date of the Change


Reporting on W-2’s

January 1st, 2011Requires all employers to include on W-2’s

the aggregate cost of employer – sponsored health plans

Long Term Care Program

January 1st, 2011

Employers must enroll employees in new voluntary public long-term care program,

unless employee opts out; requires employer to payroll deduct premiums

Health FSA, HRA, HSA

Reimbursements

January 1st, 2011May no longer be reimbursed for (OTC) meds unless prescribed by a doctor.

Insulin RX is an exception

HSA and Archer MSA Distribution

Tax Increases

January 1st, 2011Increases the tax on nonqualified

distributions from HSA’s and Archer MSA’s from 10% to 20%

Federal Study on Self-

Insured PlansMarch 2011

Federal Dept of Labor begins mandated studies on self-insured plans using data

collected from Annual Form 5500


8


TOPICEffective

Date of the Change


Tax to Fund Comparativ

e Effectiveness Research

2012New Federal tax on fully insured and self-

funded group plans equal to $2 per enrollee

New Plan Disclosure

Requirement; (Benefit

Summaries)

March, 2012

All plan sponsors must supply applicants and participants at enrollment and re-

enrollment, a new form of plan summary that cannot exceed 4 pages but must

include information on benefits, exclusions, cost sharing requirements, and other information. Federal authorities will

provide a standard template. Penalty for noncompliance: $1,000 per

failure

Material Modification

of Plan Provision

March, 2012

Notice of material changes must be provided to enrollees not later than 60 days prior to the date on which such

modification will be come effective.

FSA Limit January 1st, 2013Limits Flexible Healthcare Spending contributions to $2,500 per year and

indexes the cap for inflation


9


TOPICEffective

Date of the Change


Medicare Payroll Tax

IncreaseJanuary 1st, 2013

An additional 0.9% Medicare Hospital Insurance Tax on employees with

respect to earning and wages received during the year above $200,000 for

individuals and $250,000 for joint filers (from 1.45% to 2.35% on amounts in

excess of threshold)

Medical Expense

DeductionJanuary 1st, 2013

Threshold to itemize deduction of medical expenses will increase to 10%

of Adjusted Gross Income (up from 7.5%) Will not apply to individuals 65

or older form 2013 to 2016

New Employer Discloser Obligation Regarding Exchanges

March 1st, 2013

Employers must supply employees with written notice regarding the existence

of the Insurance Exchange(s), the services supplied the Exchange, how

the employee may contact the Exchange, and if the employer is not

supplying qualifying coverage that the employee might qualify for subsidies in

the exchange, for the purchase of insurance


10


TOPICEffective

Date of the Change


New Reporting Obligation Regarding Employer’s

Furnishing of Qualifying and

Affordable Coverage

January 1st, 2014

Employers to annually report to government and to covered employees, by January 31, the details of the employer’s

coverage, eligibility, premium requirements, employer contribution and

health plan enrollees, to allow government to determine if surcharge applies.

Penalty: $50 for each missed statement to an employee, to max of $100,000

New Reporting Obligation Regarding

Employee’s “Minimum Essential

Coverage”

January 1st, 2014

Employers to provide an annual statement to the government and covered

individuals, reflecting the months during the calendar year for which the individual had “minimum essential coverage” so as to avoid the individual mandate penalty for those months. Penalty: $50 for each

missed statement to an employee, to max of $100,000

Employee Waiting Period for Coverage

(All Plans)

January 1st, 2014Employer’s waiting period for coverage

may not be in excess of 90 days


11


TOPICEffective

Date of the Change


Free Choice

Vouchers

January 1st, 2014

Employers offering coverage are required to provide “free choice vouchers” to qualified

employees to purchase insurance through the exchanges. To be eligible for the voucher the

employer’s plan would cost the employee between 8% and 9.8% of employee’s household income,

and the employee’s household income would be at or below 400% of the Federal Poverty Level.

Employer pays cost of voucher; Employer pays cost of voucher; voucher equals 100% of maximum contribution the employer

would have provided if the employee were enrolled in the group plan.


% of FPL

Single Income

8.0% (Monthl

y)

9.8% (Monthl

y)

Family of 4

Income

8.0% (Monthl

y)

9.8% (Monthl

y)

100% $10,830 $72.20 $88.45 $22,050 $147.00 $180.07

150% $16,245 $108.30 $132.67 $33,075 $220.50 $270.11

200% $21,660 $144.40 $176.89 $44,100 $294.00 $360.15

250% $27,075 $180.50 $211.11 $55,125 $367.50 $450.19

300% $32,490 $216.60 $265.34 $66,150 $441.00 $540.23

400% $43,320 $288.80 $353.78 $88,200 $588.00 $720.29

12


TOPICEffective

Date of the Change


Employer Penalty for

Offering Coverage that’s not

“Qualifying” and

“Affordable”

January 1st, 2014

Penalties assessed if employer coverage is considered “unaffordable”; employee

contributions to the plan must not exceed 9.5% of employee’s household income or if

the plan is not “qualifying” – has an actuarial value of less than 60% of covered health care expenses. Penalty: $3,000 per full time employee who receives a subsidy through an insurance Exchange; capped at $2,000 X total # of FTEs with 1st 30 FTEs

excluded.


% of FPL Max. %Single Income

Maximum Single

Premium

Family of 4 Income

Maximum Family of

4 Premium

133% 3.00% $14,404 $36.01 $29,327 $73.32

150% 4.00% $16,245 $54.15 $33,075 $110.25

200% 6.30% $21,660 $113.72 $44,100 $231.53

250% 8.05% $27,075 $181.63 $55,125 $369.80

300% 9.50% $32,490 $257.21 $66,150 $523.69

400% 9.50% $43,320 $342.95 $88,200 $698.25

13


Employee Category

How is this category of

employee used to determine “large

employer”

Once an employer is deemed to be a “larger

employer” could the employer be subject to a penalty if this type

of employee received a premium credit?

Full-timeCounted as one

employee, based on a 30 hour or more work week

Yes

Part-time

Prorated (calculated by taking the hours worked

by part-time employees in a month divided by 120)

No

SeasonalNot counted, for those working less than 120

days in a year

Yes, for the month in which a seasonal workers is full-time

Temporary Agency

Generally, counted as working for the temporary agency (except for those

workers who are independent contractors)

Yes, for those counted as working for the temporary

agency

Determination and Potential Application of Employer Penalty for

Categories of Employees

14


TOPICEffective

Date of the Change


Preexisting Condition

January 1st, 2014

Preexisting condition exclusions eliminated for all participants; coverage must guarantee

issue and guarantee renewable

Wellness Programs

January 1st, 2014

Employers can offer increased incentives or rewards to employees for participation in a

wellness program or for meeting certain health status targets. Reward or premium

reductions of to 30% of the cost of coverage are permissible.

(Regulations could increase to 50%)

Coverage for Clinical Trials

January 1st, 2014

Plans must provide coverage for participation in clinical trials for treatment of cancer or

other life-threatening diseases

Annual Benefit Limits

(All Plans)

January 1st, 2014

Annual limits on benefit coverage no longer permitted


15


TOPICEffective

Date of the Change


Modified Community-

Rating Requiremen

ts

January 1st, 2014

Strict modified community rating standards must be adhered to by:

• All individual health insurance policies

• All fully insured group policies of 100 lives and under

• Larger groups purchasing coverage through the exchanges

Premium variations would only be allowed for:

• Age (3:1)

• Tobacco use (1.5:1)

• Family composition

• Geographic regions to be defined by the states

Experience rating would be prohibited.

Wellness discounts are allowed for group plans under specific circumstances.


16



TOPICEffective

Date of the Change


State-Based

Exchanges

January 1st, 2014

Requires each state to create an Exchange to facilitate the sale of qualified benefit plans to individuals, including:

• The federally-administered multi-state plans

• Non-profit co-operative plans.

Levels of coverage to be offered through the Exchange:

• Bronze Plan - provides 60% of actuarial value of minimum qualifying coverage

• Silver Plan - provides 70% of actuarial value of minimum qualifying coverage

• Gold Plan - provides 80% of actuarial value of minimum qualifying coverage

• Platinum Plan - provides 90% of actuarial value of minimum qualifying coverage

• A catastrophic-only policy would be available for those 30 and younger.

"Actuarial value" - the anticipated amount of all eligible expenses (including deductibles, co-pays, etc.) that will be paid by the plan.

Deductible limits of $2,000 individual and $4,000 family, unless contributions are offered that offset excess deductibles.

17


TOPICEffective

Date of the Change


State-Based

Exchanges

January 1st, 2014

Out-of-Pocket limits for all Exchange plans must be no more than OOP limits for HSA-compatible HDHPs ($5,950 single; $11,900 family)

The states must create “SHOP Exchanges” to help small employers purchase such coverage.

The states can establish regional Exchanges.

The state can either: • Create one exchange to serve both

the individual and group market • Create a separate individual market

exchange and group SHOP exchange.

States can also apply for a modification waiver from DHHS.

U. S. territories would: • Be allowed to create Exchanges • Be treated like a state for funding

purposes, if they establish an Exchange

Exchanges must:• Maintain a call center• Provide consumer information

(including open enrollment)• Maintain a website• Submit financial reports• Comply with oversight investigations


18


TOPICEffective

Date of the Change


Excise Tax on High Value

Health Plans “Cadillac

Plans”

January 1st 2018

Employers offering health plans that exceed a certain cost (the total employee and employer cost) would be subject to 40% excise tax on amount above that

value. For individual coverage, the threshold would be $10,200; for family

coverage the threshold would be $27,500. These thresholds would be indexed at CPI plus one percentage point. Certain high-risk professions would have higher cost

thresholds. (Calculation includes value of Medical, Dental, Vision…, Reimbursement

from HRA and FSA, and Employer contributions to H.S.A)

Auto-Enrollment

by Employers (All Plans)

January 1, 2014

(After issuance of regulations)

Requires employers with 200 or more employees to auto-enroll all new

employees into any available employer-sponsored health insurance plan.

Employees may opt out if they have another source of coverage


19

Helping Employees Prepare for Health Care Reform Legislation (Individual Refusal to Purchase Coverage)

TOPICEffective

Date of the Change


Individual Mandate

January 1, 2014.

Requires all American citizens and legal residents to purchase qualified health insurance.Coverage considered qualifying for this purpose includes:

–Qualified Exchange plans–Grandfathered individual and group health plans–Medicare and Medicaid plans–Military and veterans' benefits–Any employer-sponsored plan

Existing policies could remain in effect - but only so long as an individual does not:

–Move –Change jobs–Experience any other material change in life status

Violators are subject to an excise tax penalty.

20

Household Income

2014 Penalty 2015 Penalty 2016 Penalty

$10,830 $108.30 $325.00 $695.00

$21,660 $216.60 $433.20 $695.00

$32,490 $324.90 $694.80 $812.25

$43,320 $433.20 $866.40 $1,083.00

$55,125 $551.25 $1,102.50 $1,378.13

$66,150 $661.50 $1,323.00 $1,653.75

$77,175 $771.75 $1,543.50 $1,929.38

$88,200 $882.00 $1,764.00 $2,205.00

Helping Employees Prepare for Health Care Reform Legislation (Individual Refusal to

Purchase Coverage)

Penalty Table

21


Health Care Reform – Estimated Financial Impact for Employers

ItemExpected

Medical Cost Impact*

SHORT-TERM:

No cost-sharing on preventative care: If preventative care is not currently covered**

3% - 4%

Remove existing cost-sharing from preventative care**

1% - 2%

Dependent age increase to 26 (Post-9/2010) 1.5% - 2%

Remove Lifetime maximum 0.1% - 0.5%

Federal Tax to fund research$2 per enrollee per

year

Remove pre-existing for enrollees under 19 Immaterial

LONG-TERM:

Cost shift due to public programs TBD

Tax assessments and fees TBD

Compliance/administrative impact TBD

*These are the impacts for typical cases. The impact for any specific case may vary from these amounts.

**Not required of Grandfathered Plans.22


Health Care Reform “Grandfathered” Provision

Reform Provision GrandfatheredNon

Grandfathered

Dependents to age 26 X X

Unlimited Lifetime Maximums X X

No Annual $ Limits X X

No Pre-Existing Conditions for Dependents

X X

100% Preventive Care X

Emergency Care at In-Network Level X

Pediatrician as Primary Care Physician X

No Referral to OB/GYN X

Non-Discrimination applies to fully insured group

X

Must Cover Essential Benefits 2014 X

Medical Loss Ratio X X

23


Healthcare Reform “Grandfathered” Provision

General Requirements

Regulations also condition grandfathered status on the sponsor taking the following affirmative steps:

• Including “in any plan materials provided to a participant or beneficiary that describes the benefits provided under the plan” (such as a summary plan description) a statement that the plan believes it is a grandfathered health plan within the meaning of Section 1251 of the Act. This statement must also provide contact information for questions and complaints. The regulations include model language that may be used to satisfy this disclosure requirement.

• Maintaining records that document the terms of the plan as in effect on March 23, 2010, along with any other documents necessary to verify, explain, or clarify, the plan’s status as grandfathered health plan. Those records must then be made available for examination upon request by a participant, beneficiary, or government agency.

• In addition to being in effect on March 23, 2010, a grandfathered plan must avoid taking any action that would undermine its grandfathered status. The types of actions that would cause a plan to lose its grandfathered status are described in the next section.

24



Actions that would result in losing “Grandfathered” status:

1. Change in insurance carrier, policy, certificate or contract.

2. Elimination of all benefits to diagnose or treat a particular condition.

3. Any increase in coinsurance.4. An increase in deductibles or copayments subject to

the applicable cost-adjustment test established by the federal government.

– Compared with copayments in effect on March 23, 2010, grandfathered plans will be able to increase those copayments by no more than the greater of $5 (adjusted annually for medical inflation) or a percentage equal to the medical inflation plus 15 percentage points.

– Compared with the deductible required as of March 23, 2010, grandfathered plans can only increase these deductible by a percentage equal to medical inflation plus 15 percentage points.

5. Change in funding status from self-funded to fully insured.

6. A decrease in employer contribution of more than 5%.

25



Actions that would NOT result in losing “Grandfathered” status:

1. Changes to premium – as long as there isn’t more than a 5% reduction in the percentage of the employer’s contribution.

2. Changes to increase benefits, or voluntarily comply with provisions of federal and state law as long as changes comply with the applicable grandfathering restrictions.

3. Changes to a provider network.4. Changes to a prescription drug formulary unless the

changes act to eliminate a benefit.5. Changes to accommodate mergers and acquisitions.6. Changes to a plan’s third party administrators as long

as the benefits continue to satisfy grandfathering.7. Changing funding status from fully insured to self-

insured as long as the benefits continue to satisfy grandfathering.

8. The regulations provide that the grandfathering rules apply separately to each "benefit package" made available under a health plan. Thus, a plan offering both an HMO and a PPO option might choose to modify the PPO's deductible or copayment in a way that would cause the PPO to lose its grandfathered status, without thereby forfeiting the HMO's grandfathered status.

26


Preventive Care ServicesThe following is a checklist of procedures and services that are classified as

“preventive services” under PPACA. These services are to be covered without copayment, coinsurance, and/or deductible when provided by an in-network provider effective September 23, 2010 or first plan renewal there

after.

Preventive Men WomenPregnant Women

Children

Screening for abdominal aortic aneurysm

X

Alcohol Misuse Screening and Behavioral Counseling Interventions and Assessments

X X

Aspirin for the Prevention of Cardiovascular Disease

X X

Asymptomatic Bacteriuria in Adults, Screening

X X

Breast Cancer, ScreeningBreast and Ovarian Cancer Susceptibility, Genetic Risk Assessment and BRCA Mutation Testing

X

Breastfeeding Primary Care Interventions to Promote

X X

Cervical Cancer, Screening

X

Chlamydia Infection, Screening

X X

Cholesterol Screening X X XColorectal Cancer Screening over age 50

X X

Congenital Hypothyroidism, Screening in Newborns

X

Dental Health Assessment & Fluoride Supplements

X

Depression Screening & Treatment

X X X

Diet, Behavioral Counseling in Primary Care

X X

27


Preventive Service Men WomenPregnant Women

Children

Gonorrhea, Screening X XGonorrhea, Prophylactic Medication for Newborns X

Hearing Loss in Newborns, Screening X

Hepatitis B Virus Infection, Screening X

High Blood Pressure, Screening X X

HIV, Screening X X X XIron Deficiency Anemia Prevention, Screening & Supplements

X X

Iron Deficiency Anemia Prevention, Screening & Supplements

X X

Physical Exam & Measurements X

Obesity Screening & Counseling X X X

Osteoporosis in Postmenopausal Women, Screening over 60

X

Phenylketonuria (PKU), Screening X

Rh (D) Incompatibility, Screening X

Sexually Transmitted Infections Prevention X X X

Sickle Cell Disease, Newborns Screening X

Syphilis Infection, Screening X X XTobacco Use and Tobacco-Caused Disease, Counseling X X X X

Type 2 Diabetes Mellitus in Adults, Screening X X

Visual Impairment in Children Younger than Age 5 Years, Screening

X

Preventive Care Services – con’t

28


Immunization Vaccines Men Women Up to 18

Dose/Age Vary

Diphtheria, Tetanus, Pertussis X X X

Haemophilus Influenzae Type B X

Hepatitis A X X X

Hepatitis B X X X

Herpes Zoster X X

Human Papillomavirus X X X

Inactivated Poliovirus X

Influenza X X X

Measles, Mumps, Rubella X X X

Meningococcal X X X

Pneumococcal X `X X

Rotavirus X

Varicella X X X

Preventive Care Services – con’t

29

ppaca healthcare reform timeline courtesy of: 6500 city west parkway suite 100 eden prairie, mn...

Documents

individual plans

health fsa

annual benefit limitspage

preventive care servicespage

lifetime benefit limitspage

affordable coveragepage

new reporting obligation

coverage thats