Legislative Webinar - August 6, 2010

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On Friday, August 6, 2010, BenefitMall hosted a Healthcare Reform Webinar. During the presentation, Sharon Alt covered Medical Loss Ratio, Dependant Coverage and Grandfathered Plans.

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Legislative Webinar - August 6, 2010

  1. 1. Coverage of Adult Children, Grandfathering, and the MLR Presented by Sharon Alt
  2. 2. TODAY’S AGENDA • Coverage of Adult Children to Age 26 • Grandfathering Rules • Minimum Medical Loss Ratio (MLR) Source: www.HealthCare.gov
  3. 3. Coverage of Adult Children a.k.a. “The Slacker Mandate” Quote: Greg Scandlen, President, Consumers for Health Care Choices
  4. 4. Coverage Under your Parent’s Health Insurance Until Age 26 • Until now, most young adults “aged off” their parent’s health insurance when they turned 19 or graduated from college. This is about to change. • Under the Affordable Care Act, starting as early as September 2010, if you’re currently covered under your parent’s policy, you may be able to remain covered up to age 26. You don’t need to live with your parents to be eligible for this coverage. You can also remain covered if you’re married. Source: www.HealthCare.gov
  5. 5. Coverage Under your Parent’s Health Insurance Until Age 26 • Even if you already “aged off” of your parent’s policy, you will have a chance to rejoin. Starting as early as September 2010, job-based health plans and insurance policies must give young adults who qualify an opportunity to enroll that continues for at least 30 days (many insurers started this protection early). • Job-based health plans and insurance policies must provide written notice about this special enrollment opportunity. Source: www.HealthCare.gov
  6. 6. Protecting Young Adults and Eliminating Burdens on Families and Businesses • Young adults have the highest rate of uninsured of any age group. • Young adults have the lowest rate of access to employer- based insurance. • Young adults’ health and finances are at risk. Source: www.HealthCare.gov
  7. 7. Providing Relief for Young Adults • Plans and issuers that offer dependent coverage must offer coverage to enrollees’ adult children until age 26, even if the young adult no longer lives with his or her parents, is not a dependent on a parent’s tax return, or is no longer a student. • There is a transition for certain existing group plans that generally do not have to provide dependent coverage until 2014 if the adult child has another offer of employer-based coverage aside from coverage through the parent. • The new policy providing access for young adults applies to both married and unmarried children, although their own spouses and children do not qualify. • Effective for plan or policy years beginning on or after September 23, 2010. Source: www.HealthCare.gov
  8. 8. Providing Relief for Young Adults All Eligible Young Adults will have a Special Enrollment Opportunity. For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided no later than the first day of the first plan or policy year beginning on or after September 23, 2010. Source: www.HealthCare.gov
  9. 9. Same Benefits/Same Price • Any qualified young adult must be offered all of the benefit packages available to similarly situated individuals who did not lose coverage because of cessation of dependent status. The qualified individual cannot be required to pay more for coverage than those similarly situated individuals. • The new policy applies only to health insurance plans that offer dependent coverage in the first place: while most insurers and employer- sponsored plans offer dependent coverage, there is no requirement to do so. Source: www.HealthCare.gov
  10. 10. Access to Insurance: What Young Adults and Parents Need to Do Check for Immediate Options Private health insurance companies that cover the majority of Americans have volunteered to provide coverage earlier than the implementation deadline for young adults losing coverage as a result of graduating from college or aging out of dependent coverage on a family policy. This stop-gap coverage, in many cases, is available now. Ask your employer and insurer about this option. Source: www.HealthCare.gov
  11. 11. Access to Insurance: What Young Adults and Parents Need to Do Watch for Open Enrollment If early coverage is not an option with your employer or insurance company, then young adults will qualify for an open enrollment period to join their parents’ family plan or policy beginning on or after September 23, 2010. Insurers and employers are required to provide notice for this special open enrollment period. Source: www.HealthCare.gov
  12. 12. New Tax Benefits for Adult Child Coverage The new regulation complements guidance issued by the Treasury Department on April 27, 2010, on the tax benefits provided for such coverage through the Affordable Care Act. • Under a new tax provision in the Affordable Care Act and the Treasury guidance, the value of any employer-provided health coverage for an employee's child is excluded from the employee’s income through the end of the taxable year in which the child turns 26. • This tax benefit applies regardless of whether the plan is required by law to extend health care coverage to the adult child or the plan voluntarily extends the coverage. Source: www.HealthCare.gov
  13. 13. Key Elements • Tax benefit continues beyond extended coverage requirement • Available immediately • Broad eligibility • Both employer and employee shares of health premium are excluded from income Source: www.HealthCare.gov
  14. 14. Companies Responding to Secretary Sebelius’ Call for Early Implementation • The law says that the extension of dependent coverage for children is effective for plan years beginning on or after six months after the enactment of the law – that means plan years beginning on or after September 23, 2010. • However, the Administration has urged insurance companies and employers to prevent a gap in coverage for young adults aging off of their parents’ policy prior to this effective date. Source: www.HealthCare.gov
  15. 15. Companies Responding to Secretary Sebelius’ Call for Early Implementation Early implementation by health plan insurers will avoid gaps in coverage for new college graduates and other young adults and save on insurance company administrative costs of un-enrolling and re-enrolling them between May 2010 and the start of the plan or policy year beginning on or after September 23, 2010. Source: www.HealthCare.gov
  16. 16. Model Notice on DOL Website Plans must provide a notice of the enrollment opportunity to individuals whose coverage ended, or who were denied coverage (or were not eligible for coverage) under a group health plan or health insurance coverage because, under the terms of the plan or coverage, the availability of dependent coverage of children ended before the attainment of age 26. The notice must be provided no later than the first day of the first plan year (in the individual market, policy year) beginning on or after September 23, 2010. http://www.dol.gov/ebsa/dependentsmodelnotice.doc Source: www.HealthCare.gov
  17. 17. Grandfathering Rules Is Grandfather Dead? Quote: Craig Keohan, Chairman Emeritus of ABA’s HSA Council
  18. 18. News Release: June 14, 2010 U.S. Departments of Health and Human Services, Labor and Treasury Issue Regulation on “Grandfathered” Health Plans under the Affordable Care Act Allowing Americans to Keep Current Health Plans or Choose a New Plan While Extending Important New Benefits to All Consumers The U.S. Departments of Health and Human Services, Labor and Treasury today issued a new regulation that makes good on President Obama’s promise that Americans who like their health plan can keep it. Source: www.DHHS.gov
  19. 19. Kathleen Sebelius (HHS) The Affordable Care Act gives American families more control over their health care by providing greater benefits, cost savings and protections. Today, with the announcement of the new ‘grandfather’ rule, we’re providing the market stability and flexibility to ensure that families and businesses can make the choices that work best for them. Source: www.DHHS.gov
  20. 20. Grandfathered Plans While the Affordable Care Act requires all health plans to provide important new benefits to consumers, under the law, plans that existed on March 23, 2010 are exempt from some new requirements. Source: www.DHHS.gov
  21. 21. Consumer Protections: All Plans All health plans – whether or not they are grandfathered plans – must provide certain benefits to their customers for plan years starting on or after September 23, 2010 including: • No lifetime limits on coverage for all plans; • No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application; and • Extension of parents’ coverage to young adults under 26 years old. Source: www.DHHS.gov
  22. 22. Consumer Protections: Employer Plans For the vast majority of Americans who get their health insurance through employers, additional benefits will be offered, irrespective of whether their plan is grandfathered, including: • No coverage exclusions for children with pre-existing conditions; and • No “restricted” annual limits (e.g., annual dollar-amount limits on coverage below standards to be set in future regulations). Source: www.DHHS.gov
  23. 23. Michael Mundaca (Treasury) The Affordable Care Act positions consumers, instead of insurance companies, as decision makers when it comes to their health care. The rule we’re announcing today preserves individuals’ ability to keep their current plan and provides strong consumer protections that give Americans more control over their health insurance choices. Source: www.DHHS.gov
  24. 24. “Routine Changes” are Okay Grandfathered health plans will be able to make routine changes to their policies and maintain their status. These routine changes include: • Cost adjustments to keep pace with medical inflation, • Adding new benefits, • Making modest adjustments to existing benefits, • Voluntarily adopting new consumer protections under the new law, or • Making changes to comply with state or other federal laws. Source: www.DHHS.gov
  25. 25. “Routine Changes” are Okay Premium changes are not taken into account when determining whether or not a plan is grandfathered. Plans WILL lose their grandfathered status if they choose to make significant change that reduce benefits or increase cost to the consumers. Source: www.DHHS.gov
  26. 26. “Significant Changes” are Not If a plan loses its grandfathered status, then consumers in these plans will gain additional new benefits 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. Source: www.DHHS.gov
  27. 27. Compared to their Policies in Effect on March 23, 2010, Grandfathered Plans: Cannot: • Significantly cut or reduce benefits • Raise co-insurance charges • Raise co-payment charges • Significantly raise deductibles Source: www.DHHS.gov
  28. 28. Compared to their Policies in Effect on March 23, 2010, Grandfathered Plans: Cannot: • Significantly lower employer contributions • Add or tighten an annual limit on what the insurer pays • Change insurance company Source: www.DHHS.gov
  29. 29. Protecting Against Abuse of Grandfathered Health Plan Status To prevent health plans from using the grandfather rule to avoid providing important consumer protections, the regulation provides for: • Promoting transparency; • Revoking a plan’s grandfathered status if it forces consumers to switch to another grandfathered plan that, compared to the current plan, has less benefits or higher cost sharing as a means of avoiding new consumer protections; or • Revoking a plan’s grandfathered status if it is bought by or merges with another plan simply to avoid complying with the law. Source: www.DHHS.gov
  30. 30. Projected Impact: Large Employer Plans The 133 million Americans with employer-sponsored health insurance through large employers (100 or more workers) —who make up the vast majority of those with private health insurance today—will not see major changes to their coverage as a result of this regulation. Note: By 2011, between 71% and 87% of large employers will remain grandfathered. By 2013, between 36% and 66% are expected to maintain their grandfathered status. Source: www.DHHS.gov
  31. 31. Projected Impact: Small Employer Plans The roughly 43 million people insured through small businesses will likely transition from their current plan to one with the new protections over the next few years. Note: By 2011, between 58% and 80% of small employers will remain grandfathered. By 2013, between 20% and 51% are expected to maintain their grandfathered status. Source: www.DHHS.gov
  32. 32. Projected Impact: Individual Health Market The 17 million people who are covered in the individual health insurance market, where switching of plans and substantial changes in coverage are common, will receive the new protections of the Affordable Care Act sooner rather than later. Source: www.DHHS.gov
  33. 33. Projected Impact: Special Types of Plans Fully-insured health plans subject to collective bargaining agreements will be able to maintain their grandfathered status until their agreement terminates. Source: www.DHHS.gov
  34. 34. MLR Minimum Medical Loss Ratios MLR.. Does that mean Money Lost Rapidly?
  35. 35. Public Reporting of the Ratio of Incurred Claims to Earned Premiums (Medical Loss Ratio) PPACA sections 1001 and 10101 added Section 2718 of the PHS Act, which, among other provisions, requires health insurance issuers offering individual or group coverage to submit annual reports to the Secretary on the percentages of premiums that the coverage spends on reimbursement for clinical services and activities that improve health care quality, and to provide rebates to enrollees if this spending does not meet minimum standards for a given plan year. Source: www.HealthReform.gov
  36. 36. Public Reporting of the Ratio of Incurred Claims to Earned Premiums (Medical Loss Ratio) Section 2718(a) requires that each report include the percentage of total premium revenue -- after accounting for collections or receipts for risk adjustment and risk corridors and payments of reinsurance -- that the coverage spends: • On reimbursement for clinical services provided to enrollees; • For activities that improve health care quality; and • On all other non-claims costs, including an explanation of the nature of these costs, and excluding federal and state taxes and licensing or regulatory fees. Source: www.HealthReform.gov
  37. 37. Uniform Definitions Section 2718(c) of the PHS Act directs the National Association of Insurance Commissioners (NAIC) to establish uniform definitions of the activities being reported to the Secretary under Section 2718(a), and standardized methodologies for calculating measures of these activities no later than December 31, 2010. Source: www.HealthReform.gov
  38. 38. Uniform Definitions – Section 2718(C) Section 2718(c) • Specifies that NAIC’s responsibilities relating to this provision are to define which activities constitute the activities that improve quality (under Section 2718(a)(2)). • Directs that the uniform methodologies that NAIC develops are to be designed to take into account the special circumstances of smaller plans, different types of plans, and newer plans. • Specifies that the uniform definitions and standardized methodologies that NAIC develops are to be subject to the certification of the Secretary. Source: www.HealthReform.gov
  39. 39. Minimum Medical Loss Ratios The “applicable minimum standards” are as follows: • 85% for coverage offered in the large group market (or a higher percentage that a given state may have determined by regulation); and • 80% for coverage offered in the small group market or in the individual market (or a higher percentage that a given state may have determined by regulation), except that the Secretary may adjust this percentage for a state if the Secretary determines that the application of the 80% minimum standard may destabilize the individual market in that state). Source: www.HealthReform.gov
  40. 40. Annual Rebate for Failure to Meet MLR Section 2718(b)(1)(A) requires that the annual rebate be paid to each enrollee on a “pro rata basis”. Section 2718(b)(1)(B)(i) specifies that the total amount of the annual rebate required under this provision shall be equal to the product of: • The amount by which the applicable minimum standard exceeds the actual ratio of the issuer’s expenditures to its premium revenue as described above; and • The total amount of the premium revenue described above. Source: www.HealthReform.gov
  41. 41. Enforcement PPACA requires the Secretary to publish regulations for enforcing the provisions of this section, and specifies that the Secretary may provide for appropriate penalties. Source: www.HealthReform.gov
  42. 42. Effective Dates Section 1004(a) of the PPACA provides that the provisions of Section 2718 of the PHS Act shall become effective for plan years beginning on or after the date that is six months after the date of enactment of PPACA. (The date of enactment of PPACA is March 23, 2010). Source: www.HealthReform.gov
  43. 43. Thank You Additional Questions can be submitted through HealthcareExchange.com

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