Health Care Reform

1
Health Care Reform

• Marcia S. Wagner, Esq.

2
Introduction

• Legislation
• Patient Protection and Affordable Care Act
• Health Care and Education Affordability
  Reconciliation Act of 2010
• Main Objectives Consequences
• Increase transparency and efficiency of the
  health care system
• Require health care coverage for individuals
• Provide premium subsidiaries for lower income
  individuals
• Impose new taxes, responsibilities, and penalties
  on employers and others

3
Mandatory Coverage for Individuals

• Effective 2014
• Most U.S. residents must have minimum essential
  health benefits or pay a penalty
• Penalty
• 95 or 1 of income in 2014
• 695 or 2.5 of income in 2016

4
Premium Assistance

• Small employer subsidies
• Employees eligible if income between 100 and
  400 of federal poverty level
• Cost sharing subsidy for those with income below
  200

5
American Health Benefit Exchanges

• Operational in 2014
• Offer Bronze, Silver, Gold, Platinum, and
  Catastrophic Plan coverage to individuals
• Out of pocket costs reduced for lower income
  individuals
• SHOP

6
Insurance Market

• Guaranteed Issue
• Guaranteed Renewability
• High Risk Pool
• Rating only by
• Family structure
• Community rating value of benefits
• Age
• Smoking

7
Medicare and Medicaid

• Reduce certain Medicaid payments
• Independent Advisory Panel
• Close Medicare Part D doughnut hole

8
Funding

• Additional taxes imposed on the insurance
  industry
• A 40 excise tax is imposed on Cadillac plans
• Increase Medicare portion of FICA
• A 3.8 surtax is imposed in 2013 on net
  investment income
• Reduction of Medicare Part D premium subsides
• Elimination of the deduction for expenses
  attributable to the Medicare Part D subsidy
• Increase in the deduction threshold on medical
  expenses from 7.5 to 10
• A 10 excise tax on indoor tanning services

9
Employer Group Health Plans Future
Consideration

• Employers with more than 50 employees who do not
  offer minimum essential health coverage will be
  assessed a fee of 2,000 per employee, with an
  exception for the first 30 employees
• If contributions are in excess of 9.8 of income,
  the employer will be assessed a penalty of 3,000
  for each employee who receives a premium tax
  credit, with an exception for the first 30
  employees
• Maximum 90 day waiting period
• Employers with more than 200 employees must
  automatically enroll their employees in the
  employer-sponsored group health plan

10
Employer Group Health Plans Future
Consideration (continued)

• Group health plans must have effective appeals
  processes
• Employer must offer a free choice voucher
• Health care flexible spending account plans will
  be limited to 2,500
• Notification requirements
• Uniform summary of benefits
• W-2 reporting
• Individual coverage report

11
Grandfather Rules

• Definitions
• A group health plan that was in existence on
  March 23, 2010
• Identity of participants may change
• Each benefit package examined separately
• To maintain grandfather status, a plan must
• Include a statement saying plan is a
  grandfathered health plan
• Maintain records that document the terms of the
  plan in effect of March 23, 2010
• Make records available
• Provide contact information

12
Grandfather Rules (continued)

• Grandfather status will be lost if the plan
• Enters into a new policy, certificate, or contact
  of insurance after March 23, 2010
• Eliminates substantially all benefits for a
  specific illness
• Increases co-insurance or cost sharing
• Decreases employer contribution percentage
• Imposes certain new annual limits on benefits

13
Provisions Applicable to All Plans

• Coverage for adult children
• Restrictions on annual and lifetime benefit
  limits
• Elimination of pre-existing condition exclusions
• Limitation of rescissions
• Over-the-counter medications

Provisions Applicable to
Non-Grandfathered Plans

• Provide free preventative care services
• Participants may select primary care providers,
  including pediatric care providers, and OB/GYNs
• Insured group health plans will be subject to
  nondiscrimination rules
• Emergency care services must be provided without
  prior authorization

14
Coverage of Adult Children

• Must make health care coverage available to
  children of plan participants until age 26
• May not consider
• Tax dependency
• Residency
• Student status
• Marital status
• Employment status
• May exclude adult child who is eligible for
  health coverage under another employers plan
• Cannot require additional contributions because
  child is adult

15
Coverage of Adult Children (Continued)

• Special enrollment period
• For adult children who lost, or never had,
  coverage
• Enrollment period must be at least 30 days
• Must receive written notice of enrollment
  opportunity
• Taxation
• No imputed income even if adult child not tax
  dependent until end of tax year in which child
  turned 27
• Pre-tax contributions to cafeteria plan permitted
  if plan amended
• Change in Status rules include adult,
  non-dependent children

16
Restrictions on Annual and Lifetime Benefit Limits

• No lifetime dollar limits on essential health
  benefits
• Must notify individuals who reached prior
  lifetime limit of 30-day opportunity to re-enroll
• Annual limits on essential health benefits must
  be at least
• 750,000 per plan years beginning after September
  22, 2010
• 1.25 million for plan years beginning after
  September 22, 2011
• 2 million for plan years beginning after
  September 22, 2012

17
Restrictions on Annual and Lifetime Benefit
Limits (Continued)

• Annual limit applies separately to each
  individual
• Annual limit cannot be offset by non-essential
  health benefits
• Exceptions to annual limit
• Health FSAs
• HSAs
• Mini-med or limited benefit plans
• New open enrollment period

18
Pre-Existing Conditions

• Pre-existing conditions definition
• Cannot impose on child under 19
• Cannot impose on anyone as of 2014
• Cannot exclude from coverage

Rescission

• Rescission is a retroactive cancellation of
  coverage
• Rescission only permitted for fraud or
  intentional misrepresentation
• Thirty day notice requirement

19
Over-the-Counter Medications

• Effective January 1, 2011
• Applies to all non-prescribed over-the-counter
  medications, except insulin
• Health Care FSAs, HRAs cannot reimburse. HSA
  distributions taxable

Preventative Care Services

• Cannot have cost sharing such as co-pays or
  deductibles
• Preventative Care includes
• Well baby care mammograms services recommended
  by certain government agencies services to be
  included by HHS

20
Choice of Health Care Provider and OB/GYN
Referrals

• Must allow selection of any primary care or
  pediatric care provider in plans network
• Referral to OB/GYN not required

Non-Discrimination Rules for Insured Plans

• Non-discrimination rules for insured plans will
  be similar to self-funded plan rules
• IRS guidance needed

21
Emergency Care Services

• Must be provided without prior authorization or
  regard to plans network
• Out-of-network and cost sharing requirements must
  be the same as for in-network
• Emergency Medical Conditions expectation of
  serious jeopardy or impairment to bodily
  functions or organs
• Emergency service provider may balance bill
  patient

22
Penalties

• 110 per day penalty for failure to provide
  compliant SPD
• HIPAA Penalties
• 100 to 50,000 based on number and nature of
  violations
• Maximum penalty 1,500,000 per year
• Separate violation occurs on each day of
  non-compliance

23
Conclusion Action Steps for Employers

• Determine if you are a grandfathered plan
• Assess plan with regards to new requirements
• Prepare in advance for
• Required open enrollments
• Plan amendments
• New required communication materials and notices
• Revisions of summary plan descriptions and new
  summaries of material modifications
• Keep Alert! Government agencies will be issuing
  additional regulations and revising those that
  have already been issued

24
Marcia S. Wagner, Esq. 99 Summer Street, 13th
Floor Boston, MA 02110 Tel [phone] Fax
[phone] Website www.erisa-lawyers.com
marcia_at_wagnerlawgroup.com

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