Health Care Reform and Legislative Updates

1
Health Care Reform and Legislative Updates

• Fringe Benefits Consortium - Board Meeting
• January 23, 2009
• Presented by Maggie Beauchamp
• FBC Programs Manager

2
Agenda

• Update on Health Care Reform Reality Check
• Legislative Updates
• Mental Health Parity Act (MHPA)
• Michelles Law (Required coverage for Dependent
  Students)
• Genetic Information Nondiscrimination Act (GINA)
• What is a Disability on or after January 1, 2009?
• Family Medical Leave Act Amendments
• Heroes Earnings Assistance and Relief Tax Act
  (HEART)
• Centers for Medicare and Medicaid Services (CMS)
  Reporting

3
Statistics

• The biggest driver of health care reform is the
  uninsured or underinsured
• Why are so many uninsured?
• Rates are too high (CA rates are actually the 6th
  lowest in U.S.)
• Cant access coverage due to poor health and
  being declined
• Dont know what is available through public
  programs
• Low-cost plans are available, need education or
  resources
• Politics drive the issues

4
Update on Health Care Reform

• California Reform Provisions
• Expand eligibility for lower income
• Open to all California residents
• Guarantee Issue Coverage
• Mandate for everyone to buy coverage
• Create pools for the uninsured to provide a more
  affordable plan
• Employer pay or play mandate requiring employers
  to provide meaningful coverage or pay into a
  health care system for those with no coverage
• On an average, employers pay 10-11 towards
  employee benefits. (The pay or play program
  previously talked about a 4 payroll tax for
  employers who do not play. Who will want to play
  anymore at 10-11 when you would only pay 4 and
  who will pay for the difference in costs?)

5
Update on Health Care Reform

• Obamas Proposal
• Employer pay or play mandate requiring employers
  to provide meaningful coverage or pay into a
  national health care system for employees with no
  coverage
• National Health Plan for uninsured/low-income
  coverage would be based on the Federal Employee
  Health Benefit Program
• Expand eligibility for Medicaid/SCHIP programs so
  more can be covered
• Apply strict limits on loss ratios (Limit
  carriers on what they can spend on claims and
  what can be spent on administrative fees
  85/15)
• Guarantee Issue and Portability on a National
  Basis
• Require Electronic Medical Records and
  Transparency of Health Care Costs
• Federal Reinsurance to employers to cover
  catastrophic illness costs
• Subsidies for low-income who do not qualify for
  Medicaid or SCHIP

6
Universal Coverage vs. Single Payor

• Universal Coverage (Everyone has something that
  fits for them)
• Single Payor System (Government pays for your
  health care, no more insurance companies, similar
  to Medicare for all, funded by taxes)
• Closest example of a Single Payor System is
  Canada whose population is LESS than Californias
  population
• Does not include RX coverage
• Hospitals funded annually upfront, funds run out
  and programs are shut down
• Health care system consumed 45 of Canadas
  budget and that rate is growing at a fast rate,
  system is subject to budgets
• Costs associated with bureaucracy
• Rationing and waits for care, the average wait
  for an Emergency Room visit is 24 hours, to
  schedule an MRI is 6 months, Cancer treatment
  upon diagnosis wait is 6.5 weeks
• Minimum tax bracket in Canada is 35, the highest
  is 60
• Should government make life or death decisions
  based on cost?

7
Recent Health Care Reform Updates

• The U.S. House of Representatives voted on
  January 14, 2009, to expand a childrens program
  and raise cigarette taxes to pay for it
• The bill passed by the House aims to increase the
  number of children enrolled in the program to
  about 11 million from 6.7 million. The expanded
  program is paid for in part by raising the
  cigarette tax to 1 a pack. Taxes on cigars and
  other tobacco products also would rise
• The program is designed to provide health care to
  children in families who are unable to afford
  health insurance but earn too much to qualify for
  the Medicaid health care program for the poor

8
Reality of Health Care Reform

• Everyone has their hands in it legislators,
  activists, the media, social groups
• It is extremely difficult to fix the broken
  health care system
• There is NO MONEY and the economic crisis is a
  higher priority
• People always want choice and do not want
  government to make life/death decisions on their
  behalf based on cost
• The current system works for 85-95 of the
  people although some change is needed
• Consider the consequences and the overall impact
  of those changes and what the true end result of
  the costs will be
• Change is coming! Changes need to be made
  appropriately, reasonably and in increments

9
Mental Health Parity Act (MHPA)(HR 1424)

• MHPA was enacted in 1996 to provide parity
  between mental health and medical/surgical
  benefits in terms of lifetime or annual dollar
  limits. MHPA was extended year-by-year and had
  shortcomings
• Expanded mental health and substance abuse parity
  requirements have become law as part of EESA
  (Emergency Economic Stabilization Act of 2008)
• Current Goal for group health plans to provide
  mental health and substance abuse coverage on par
  with medical and surgical benefits
• Effective Dates
• For plan years beginning after October 3, 2009
  (January 1, 2010, for calendar-year plans)
• Collective Bargaining Agreements (CBAs) ratified
  before October 3, 2008, the later of January 1,
  2009, or termination date of the last CBA
  relating to the plan

10
Mental Health Parity Act (MHPA)(HR 1424)

• New parity requirements
• Financial limitations and treatment
  limitations parity prohibits more restrictive
  limitations for mental health or substance abuse
  disorder benefits than for medical/surgical
  benefits
• Financial limitations include deductibles,
  co-payments, co-insurance, and out-of-pocket
  expenses. Also, no separate cost-sharing
  arrangements
• Treatment limitations include limits on frequency
  of treatment, number of visits, days of coverage
  or other similar limits on the scope or duration
  of treatment
• Out of network coverage Required for mental
  health and substance abuse disorders if provided
  for medical and surgical benefits

11
Mental Health Parity Act (MHPA)(HR 1424)

• Items to note
• Flexibility in plan design retainedplan sponsor
  can define covered services subject to applicable
  federal and state laws
• DOES NOT require plans to provide mental health
  or substance abuse disorder benefits
• If there is such a coverage, parity requirements
  apply
• Requirement to provide out-of-network coverage if
  plan does so for medical and surgical
• Exemptions
• Not applicable to employers with fewer than 50
  employees
• Cost exemption
• Plan must establish that compliance with changes
  will result in a cost increase of more than 2 in
  the first year and more than 1 each subsequent
  year. Requires certification by qualified and
  licensed actuaries and notice to governmental
  agencies and participants

12
Michelles Law (Reqd coverage for Dependent
Students)

• NH HB 37 aka Michelles Law named after Michelle
  Morse
• Allows full-time college students to take up to
  12 months medical leave and requires
  non-termination of coverage
• Applies to students who are covered under their
  parents group health insurance plan
• Medical leave can mean that the student is
  absent from school or reduces his/her course load
  to part-time
• The date the medical leave begins is determined
  by a students physician with written
  certification to establish medical necessity
• Effective for plan years beginning on or after
  October 9, 2009
• (January 1, 2010 for calendar year plans)

13
Michelles Law (Reqd coverage for Dependent
Students)

• Entitled to same level of benefits during leave
  as prior to leave
• If changes are made to the plan, dependent
  remains eligible for changed coverage. Cannot
  single out those on medical leave
• Notice is required of the right of coverage
  should be included with any notice regarding a
  requirement for student status for coverage under
  the plan
• What is not as clear is how Michelles Law
  interacts with another law that protects plan
  participants when they lose eligibility for
  coverage COBRA. There are four areas that need
  additional clarity
• Length of COBRA coverage
• Alternative coverage
• Timing of COBRA election and certification of
  Michelles Law leave
• COBRA notice requirements

14
Genetic Information Nondiscrimination Act (GINA)

• Prohibits discrimination by Group Health Plans,
  insurers and employers based on genetic
  information
• Genetic information includes genetic tests of an
  individual or family member plus manifestation of
  a disease or disorder in family member
• Nondiscrimination requirements in health coverage
  with respect to premiums, genetic testing and
  underwriting, effective for plan years beginning
  after May 21, 2009
• Nondiscrimination requirements in employer
  practices with respect to compensation, terms,
  conditions or privileges of employment, cannot
  request genetic info or use known info, effective
  after November 21, 2009
• Revisions to HIPAAs privacy regulations to
  include GINA

15
What is a Disability on or after January 1,
2009?

• The purpose of the changes is to reinstate a
  broad scope of protection
• Definition of key terms added to expand the
  definition of Disability under ADA effective
  January 1, 2009
• Major life activities to now include
  communicating and reading to the list of
  major life activities (caring for oneself,
  performing manual tasks, walking, talking,
  breathing, concentrating, thinking and working
• Major bodily functions - includes but is not
  limited to, functions of the immune system,
  digestive, neurological, brain, respiratory,
  reproductive functions
• Substantially limits - in order to be
  considered a disability, an impairment that
  substantially limits one major life activity need
  not limit other major life activities

16
What is a Disability on or after January 1, 2009?

• The ADA Amendment Act provides rules of
  construction that are to be applied when
  determining whether an individual has a
  disability (In favor of broader coverage)
• An employer may not discriminate against a
  qualified individual on the basis of disability
  with respect to (among other things) fringe
  benefits, such as coverage provided under Group
  Health Plans

17
Family Medical Leave Act Amendments

• Updates the FMLA regulations to implement new
  military family leave entitlements enacted under
  the National Defense Authorization Act for FY
  2008 effective on January 16, 2009
• Military Caregiver Leave - eligible employees who
  are family members of covered servicemembers will
  be able to take up to 26 workweeks of leave in a
  single 12-month period to care for a covered
  servicemember with a serious illness or injury
  incurred in the line of duty on active duty
• This 26 workweek entitlement is a special
  provision that extends FMLA job-protected leave
  beyond the normal 12 weeks of FMLA leave. This
  provision also extends FMLA protection to
  additional family members (i.e., next of kin)
  beyond those who may take FMLA leave for other
  qualifying reasons

18
Family Medical Leave Act Amendments

• Qualifying Exigency Leave helps families of
  members of the National Guard and Reserves manage
  their affairs while the member is on active duty
  in support of a contingency operation.
• This provision makes the normal 12 workweeks of
  FMLA job-protected leave available to eligible
  employees with a covered military member serving
  in the National Guard or Reserves to use for any
  qualifying exigency arising out of the fact that
  a covered military member is on active duty or
  called to active duty status in support of a
  contingency operation. Defines qualifying
  exigency by referring to a number of broad
  categories for which employees can use FMLA
  leave
• Short-notice deployment
• Military events and related activities
• Childcare and school activities
• Financial and legal arrangements
• Counseling
• Rest and recuperation
• Post-deployment activities and
• Additional activities not encompassed in the
  other categories, but agreed to by the employer
  and employee

19
Heroes Earnings Assistance and Relief Tax Act
(HEART)

• Signed into law on June 17, 2008 provides
  benefits for U.S. Armed Forces members
• Differential Pay Starting in 2009, reservists
  differential pay will be treated as employee
  wages subject to income tax withholding, and
  therefore must be reported on Form W-2, not Form
  1099
• Health FSA Balances Employees called to perform
  military service for more than 179 days will be
  able to get their unused health FSA balances as a
  taxable cash distribution before the FSA plan
  year ends. (Effective for distributions after
  June 17, 2008) This is a plan option and is not
  a requirement of the employer. Plan documents
  need amendment if the employer elects this option
  for employees

20
Centers for Medicare and Medicaid Services (CMS)
Mandatory Reporting Requirement

• Effective January 1, 2009, new reports will help
  CMS more effectively enforce Medicare secondary
  payer (MSP) rules
• Which group health plans must meet this reporting
  requirement?
• Any plan, whether insured or self-insured, that
  an employer sponsors or to which an employer
  contributes
• Includes plans for current or former employees,
  business associates or their families union
  plans and federal or state governmental plans
• NOT Plans covering only retirees or other former
  employees
• Who must submit new reports?
• Insurers, TPAs, and administrators of group
  health plans that are both self-insured and
  self-administered are responsible for submitting
  the new reports to CMS
• Any of these entities can appoint an agent to
  handle reporting, and if a TPA manages an
  insurers claim payments, the TPA is responsible
  for the reports
• What are the next steps for employers?
• Work with insurers, TPAs or other reporting
  agents to monitor CMS guidance and identify the
  information required

21
Its Time for Jeopardy!

• Who is

Tom Daschle?

• President Obamas Nomination for the Position of

The Secretary of Health and Human Services
22
Thank you!

• The FBC Staff would like to thank you for your
  attendance today and for your continued support
  of the
• Fringe Benefits Consortium!