On 6/28/12, the Supreme Court resolved more than two years of litigation and upheld the provisions of the ACA.
The Supreme Court decided that the individual mandate requiring all Americans to have health insurance or pay a penalty was within Congress’ taxing authority. The Supreme Court invalidated a provision that empowered HHS to withhold all federal Medicaid funds from states that choose not to expand Medicaid as prescribed under the law.
Many of the key provisions of health care reform will not become effective until 2014. However, a number of changes to plan benefit design rules became effective sooner.
The ACA generally grandfathered all group health plans in existence on the day of enactment. A grandfathered group health plan (insured or self-insured) would not have to immediately comply with most of the health insurance reforms included in the Act. However, there were a number of new plan standards that were applicable to existing health plans and many of those provisions became effective 1/1/11 for employers with a calendar year plan.
A grandfathered health plan is any group health plan or individual coverage that was in effect on 3/23/10, the date of enactment. Even if an individual could re-enroll in a grandfathered health plan or new employees (and their families) could be added to the plan after 3/23/10 that dids not destroy the plan’s grandfathered status. Also, an individual who was covered by a grandfathered health plan could add his spouse or dependents to the plan after 3/23/10 without negating the plan’s grandfathered status as long as the plan allowed for dependent/family coverage on 3/23/10. The regulations applied separately to each benefit package available under a grandfathered plan.
On 6/17/10, an interim final rule outlining how a health plan may retain its grandfathered status under the ACA was published in the Federal Register. Plans would lose their grandfather status if they choose to significantly cut benefits or increase out-of-pocket spending.
If a plan lost its grandfathered status, then members in these plans gained additional new benefits required by ACA including coverage of recommended prevention services with no cost sharing and patient protections such as access to OB-GYNs and pediatricians without a referral by a separate primary care provider.
The EBSA posted a link to the regulations regarding grandfathered health plans and a model notice on its Web site at:
The above presents a very general overview of just one of ACA’s provisions regarding “grandfathered” status. The Trilogy Claims Administrative Handbook provides detailed and extensive information regarding all ACA provisions including an implementation timeline from 2010 through 2018 and multiple references for ACA compliance guidance.
The following summarizes a few of the 2014 ACA provisions detailed in the Handbook:
Reforming Health Insurance Regulations
Implements strong health insurance reforms that prohibit insurance companies from engaging in discriminatory practices that enable them to refuse to sell or renew policies due to an individual’s health status. Health plans can no longer exclude coverage for treatments based on pre-existing health conditions. It also limits the ability of insurance companies to charge higher rates due to heath status, gender, or other factors. Premiums can vary only on age (no more than 3:1), geography, family size, and tobacco use.
Eliminating Annual Limits
Prohibits all employer plans and new plans in the individual market from imposing annual limits on the amount of coverage an individual may receive.
Ensuring Coverage for Individuals Participating in Clinical Trials
Prohibits new health plans from dropping coverage because an individual chooses to participate in a clinical trial and from denying coverage for routine care that they would otherwise provide just because an individual is enrolled in a clinical trial. Applies to all clinical trials that treat cancer or other lifethreatening
Establishing Health Insurance Exchanges
Opens health insurance Exchanges in each State to individuals and small employers. This new venue will enable people to comparison shop for standardized health packages. It facilitates enrollment and administers tax credits so that people of all incomes can obtain affordable coverage.
A link to guidance relating to health insurance exchanges is available at:
Essential Health Benefits
The ACA requires that certain insurance plans including those participating in the state purchasing exchanges cover a package of diagnostic, preventive and therapeutic services and products that have been defined as essential health benefits (EHB) by HHS.
On 10/6/11, the Institute on Medicine (IOM) issued a report to HHS with a set of criteria and a recommended process for defining the benefits that should be considered as EHB and a process for updating the benefits.
http://www.iom.edu/About-IOM.aspx (keyword essential health benefits)
On 12/16/11, HHS issued an Essential Health Benefits Bulletin relating to the definition of essential health benefits under the ACA.
Providing Health Care Tax Credits
Makes premium tax credits available through the Exchange to ensure people can obtain affordable coverage. Credits are available for people with incomes above Medicaid eligibility and below 400 percent of poverty who are not eligible for or offered other acceptable coverage. They apply to both premiums and cost-sharing to ensure that no family faces bankruptcy due to medical expenses again.
Promoting Individual Responsibility
Requires most individuals to obtain acceptable health insurance coverage or pay a penalty of $95 for 2014, $325 for 2015, $695 for 2016 (or, up to 2.5 percent of income in 2016), up to a cap of the national average bronze plan premium. Families will pay half the amount for children, up to a cap of $2,250 per family. After 2016, dollar amounts are indexed. If affordable coverage is not available to an individual, they will not be penalized.
Promoting Employer Responsibility
The “pay or play” mandate is effective 1/1/14, regardless of the plan year and requires employers with 50 or more employees who do not offer minimum essential coverage that is affordable to their employees to pay $2,000 annually for each full-time employee over the first 30 as long as one of their employees receives a tax credit. It also precludes waiting periods over 90 days. Employers who offer coverage but whose employees receive tax credits are required to pay $3,000 for each worker receiving a tax credit up to an aggregate cap of $2,000 per full-time employee. The law defined a fulltime employee as one who works an average of at least 30 hours a week in a month.
CLICK HERE for more information regarding The Trilogy Claims Administrative Handbook and how your organization can obtain valuable information regarding the impact of ACA’s regulations on health plan claims administration.
On June 28, 2012, the U.S. Supreme Court upheld the Patient Protection and Affordable Care Act (ACA) which requires employers with more than 50 employees, starting in 2014, to offer health care coverage or pay a per-employee fee to the government.
Some health care benefit experts expect enactment of ACA could cause many employers to self-fund its benefit plans rather than purchase commercial coverage.
On May 1, 2012, the U.S. Department of Labor (DOL) issued a Request for Information (RFI) regarding how a small self-funded employer’s use of stop loss insurance affects the market for fully insured small group health coverage under ACA. The American Academy of Actuaries responded to questions in the RFI citing the following:
- 60% of covered workers are enrolled in plans that partially or completely self-fund, and
- 58% of employees covered by a self-funded plan (partially or completely) are also covered by stop loss.
The response stated that the ACA may accelerate the trend to self-fund because:
- Self-funding is not subject to ACA’s medical loss ratio (MLR) requirements and insurers may encourage clients to self-fund to avoid these requirements,
- MLR requirements may cause insurers to reduce or not pay commissions. Brokers who prefer commission based compensation may encourage clients to self-fund,
- The ACA 3:1 age-rate limit will make self-funding attractive to younger and predominantly male groups, and
- Overall, groups that have benefitted from significantly lower than average rates, will experience significant increases due to the elimination of many rating characteristics currently permitted.
It is theorized that lower cost groups will be attracted to self-funding and as a result, may not be available to subsidize the higher cost groups which remain fully insured. If a large number of employers decide to self-fund, this may adversely affect the new Small Employer Health Options programs, or SHOP exchanges. Furthermore, if a self-funded group’s risk worsens, the group may immediately become fully insured or covered by a SHOP exchange.
In 1995 the National Association of Insurance Commissioners (NAIC) issued Model Act 92 establishing a minimum specific attachment point of $20,000 to maintain self-funded stop loss status and avoid state insurance regulations. (Model Act 92 has only been adopted by 15 states.) NAIC also believes the ACA will cause a significant number of small employers to self-fund and has considered increasing the minimum recommended specific attachment point from $20,000 to $60,000.
Many self-insurance industry experts disagree that the ACA will cause a significant number of employers to self-fund. These experts argue self-funded plans will remain highly regulated under ACA and will be subjected to additional fees and taxes on health plans required by the ACA.
It remains to be seen what affect the ACA will have on the number of employers electing to self-fund instead of purchasing fully insured health coverage or to be covered by a SHOP exchange.
Additional information regarding stop loss and ACA can be found at:
Trilogy Consulting Group, Inc. has been providing audit and consulting services to Managing General Underwriters, Excess Loss Carriers, and Reinsurers for over 17 years. Click on “Services” above to read more about what Trilogy can do for your organization.
The U.S. Supreme Court has agreed to hear a case challenging the “individual mandate” provisions of the Patient Protection and Affordable Care Act (PPACA).
The case originated in Florida where 26 states sued the federal government (Florida, et al., v. Department of Health and Human Services, et al.).
The D.C. Circuit Court of Appeals and the 6th Circuit Court of Appeals have upheld the PPACA. The Circuit Court of Appeals ruled against the PPACA. The 4th Circuit Court of Appeals has ruled people cannot bring suit until after the law goes into affect in 2014.
The Court will address the following issues:
- Is the PPACA constitutional? Article 1 of the Constitution outlines the types of laws Congress may pass - such as laws to regulate interstate commerce. The Court must determine if the individual mandate requirement is within the power of Congress and the regulation of interstate commerce.
- If the Court determines the individual mandate to be unconstitutional, can the remainder of PPACA providing other insurance reforms stand? If not, the Court could strike down the entire law.
- Is the individual mandate penalty a tax? If the Court determines that the penalty is a tax, the Anti-Injunction Act requires payment of the tax before the government can be sued.
- Does PPACA’s expansion of eligibility for Medicaid benefits coerce states into violation of basic federalism principles? If states do not adhere to the PPACA’s Medicaid requirements, they risk losing all federal Medicaid funding.
The case is scheduled to be heard in March 2012 and a decision is expected in June 2012. Additional details regarding the case can be found at http://www.supremecourt.gov/docket/PPAACA.aspx.
Additional information regarding health insurance reform requirements can be found in the quarterly updates to The Trilogy Claims Administrative Handbook, published by Trilogy Consulting Group, Inc.
CLICK HERE for more information on the Trilogy Claims Administrative Handbook
August 19, 2011
The Affordable Care Act expands access to preventative services for women
Under The Affordable Care Act (ACA), the health insurance reform legislation signed into law on March 23, 2010, women’s preventive health care services (mammograms, cervical cancer screening, prenatal care, etc.) are already covered with no cost sharing for new health plans. On August 1, 2011, the Department of Health and Human Services (HHS) adopted additional guidelines to fill the gaps in the current preventive services guidelines.
The new coverage guidelines were developed by the Institute of Medicine and will help ensure that women receive a comprehensive set of preventive services without having to pay a co-pay, coinsurance or deductible. These guidelines are effective August 1, 2011 and non-grandfathered plans and issuers are required to provide coverage without cost-sharing consistent with these guidelines in the first plan year that begins on or after August 1, 2012.
The new coverage guidelines specify that well-woman visits, gestational diabetes screening, human papillomavirus testing, counseling for sexually transmitted infections, screening and counseling for human immume-deficiency virus, contraceptive methods and counseling, and screening and counseling for interpersonal and domestic violence will be covered without cost sharing. In addition, breastfeeding support, counseling and supplies, including the rental of breastfeeding equipment, will be covered without cost sharing.
The text of the amendments to the interim final rule can be found online at http://www.ofr.gov/OFRUpload/OFRData/2011-19684_PI.pdf.
Complete details regarding these requirements, as well as information on additional health insurance reform requirements, can be found in the quarterly updates to The Trilogy Claims Administrative Handbook, published by Trilogy Consulting Group, Inc.
CLICK HERE for more information on the Trilogy Claims Administrative Handbook