Health Care Reform Updates

1
Health Care Reform Updates Presented by Barb
Gerken, Legislative Co-Chair
2
Medical Loss Ratio Recent Activity

• HR 1206 Broker Bill
• Introduced by Representatives Rogers and Barrow
• Legislation to pass producer commissions
  through the MLR calculation
• Ensures agents/brokers are not adversely
  impacted by the regulations
• Over 170 co-sponsors

3
Medical Loss Ratio Recent Activity (cont.)

• S 2068 Senate version of Broker Bill
• The Access to Independent Health Insurance
  Advisors Act of 2012
• Introduced in the Senate by Mary Landrieu,
  Johnny Iakson, Ben Nelson and Lisa Murkowski
• Excludes the independent health insurance
  producer compensation from the MLR calculations

4
Medical Loss Ratio Recent Activity (cont.)

• S 2068 Senate version of Broker Bill
• Will not be identical to HR 1206 but will
  include improvements
• Congressman Rogers and Barrow have given their
  support of the revised version

5
W2 Reporting

• Additional interim guidance released by IRS on
  January 3, 2012
• Confirms that employers filing less than 250
  W-2s are not subject to requirement
• Indicates that specialty coverage, if included
  in medical benefits, must be reported
• does not impact employees taxable wages

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W2 Reporting (cont.)

• Section 6051(a) was added to the US Tax Code
  through PPACA
• Required for 2012 W-2 Forms
• Employer must report the aggregate cost of
  applicable employer-sponsored coverage

7
W2 Reporting (cont.)

• Applicable coverage coverage under any group
  health plan made available to the employee by an
  employer which is excludable from the employees
  gross income.

8
W2 Reporting (cont.)

• Doesnt include coverage for
• On-site medical clinics
• Long-term care
• Dental and vision plans independent of the
  medical plan
• Accident only coverage or disability coverage
• General liability insurance and automobile
  liability insurance
• Workers compensation
• Automobile medical payment insurance
• Credit-only insurance
• Coverage only for a specified disease or illness
• Hospital indemnity or other fixed indemnity
  insurance

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W2 Reporting (cont.)

• Not required of employers filing less than 250
  W-2 Forms
• Does not apply to Archer MSA or health savings
  account contributions
• Does not apply to the amount of any salary
  reduction contributions to a health flexible
  spending arrangement

10
W2 Reporting (cont.)

• Cost is reported on Form W-2 in Box 12, using
  code DD
• Employer may apply any reasonable method of
  reporting cost of coverage for terminated
  employee
• Should include costs for employee and any
  dependent covered under group plan
• COBRA costs are included

11
Essential Benefits Bulletin

• States would choose one of the following
  benchmark plans
• one of three largest small group plans in the
  state
• one of three largest state employee health plans
• one of the three largest federal employee health
  plan options
• largest HMO plan offered in the states
  commercial market

12
Essential Benefits Bulletin (cont.)

• PPACA requires that Essential Health Benefits
  include items and services in the following 10
  categories

Ambulatory patient services Prescription Drugs
Emergency Services Rehabilitative and habilitative services and devices
Hospitalization Laboratory services
Maternity and newborn care Preventive and wellness services and chronic disease management
Mental Health and Substance Use Disorder Services, including behavioral health treatment Pediatric services, including oral and vision care
13
Supreme Court Hearings

• Arguments are scheduled for 3 days beginning
  March 26
• Court has scheduled 6 hours of arguments (norm
  is 1 hour)
• Decision is expected in June, 2012

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Supreme Court Hearings (cont.)

• Monday - is court action premature
• Tuesday - is minimum coverage requirement
  provisions legal
• Wednesday can rest of law can take effect
  without individual insurance mandate

15
Coverage Summaries and Material Modification
Notice

• General Requirements
• Group Market health insurer is required to
  create and deliver summary of coverage and
  benefits to consumers shopping for coverage.
• Must be delivered ASAP but no later than 7 days
  after request.
• For individual, insurers compliance with web
  portal requirements satisfies the obligation

16
Coverage Summaries and Material Modification
Notice (cont.)

• General Requirements (cont.)
• Summary can be up to four pages front and back
• Electronic delivery is permitted. Different
  rules apply for individual, fully insured or ASO
  group
• Trumps state laws that require insurers to
  provide less information

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Coverage Summaries and Material Modification
Notice (cont.)

• Notice of Proposed Rulemaking released on August
  17, 2011
• Originally to be effective on March 23, 2012
• Updated Regulations released February 10, 2012
• New effective date of September 23, 2012

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Coverage Summaries and Material Modification
Notice (cont.)

• Applies to both grandfathered and
  nongrandfathered plans
• Applies to both fully insured and self insured
  plans
• No-carve out available for large group market
• For ASO plans, duty to issue a summary will be
  both the plan sponsor and its plan administrator

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Coverage Summaries and Material Modification
Notice (cont.)

• No longer require premium information
• Reduces number of coverage examples
• Diabetes well controlled
• Maternity normal delivery
• Requires a statement of meeting minimum
  essential coverage
• Requires statement of meeting actuarial value

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Coverage Summaries and Material Modification
Notice (cont.)

• No longer need to be delivered as stand alone
  document for group coverage
• can be included in SPD must be intact and
  prominent
• Must be stand alone for individual
• No longer required to be printed in color
• Standard template is required for first year
• use best efforts to display not standard
  benefits

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Coverage Summaries and Material Modification
Notice (cont.)

• Must be provided in culturally and
  linguistically appropriate manner
• If 10 or more of population in claimants county
  are literate in only the same non-English
  language
• Determined by the American Community Survey data
• Currently 255 U.S. Counties meet threshold
• 78 in Puerto Rico

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Coverage Summaries and Material Modification
Notice (cont.)

• Must use 12 point font
• Must customize all identifiable company
  information throughout document (websites, phone
  numbers)

23
Coverage Summaries and Material Modification
Notice (cont.)

• Requires plan sponsors or issuers to provide 60
  days advance notice to enrollees when making
  material modifications to the plan.
• Plan issuers or sponsors who willfully fail to
  provide timely notice will be subject to a fine
  of 1,000 per enrollee

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Coverage Summaries and Material Modification
Notice (cont.)

• The 60-day Notice of Material Modification does
  not apply to renewal of coverage.
• Duty can be satisfied by providing either a
  separate notice describing material modification
  or an updated coverage summary.

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Coverage Summaries and Material Modification
Notice (cont.)
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Questions