Wednesday, August 31, 2011

ACA, COBRA to play roles in ensuring health coverage after job loss

Most people (72%) who lost their health insurance when they lost their jobs during the last two years say that they skipped necessary health care or did not fill prescriptions because of their cost, according to a new report from the Commonwealth Fund. The same proportion is also struggling with medical bills or medical debt, compared to about half (49%) who lost jobs but not their health insurance.

According to the report, six in 10 working Americans rely on health insurance obtained through their employer, and when an estimated 15 million working-age adults lost their jobs and their employer-based insurance between 2008 and 2010, 9 million became uninsured. Though COBRA is an option, it’s a costly option and one not often used, says the report, noting that, because unemployed workers must pay the full premium, few people elect to continue their coverage through COBRA.

The American Recovery and Reinvestment Act of 2009 substantially offset the cost of COBRA for some unemployed workers by covering 65 percent of their COBRA premiums. Although several studies have found that COBRA enrollment among eligible individuals increased after the subsidies went into effect, helping millions of people who lost their jobs stay insured, these subsidies have not been offered to newly laid-off workers since 2010, the report points out.

The individual insurance market is also not a viable option for those who have lost a job and health insurance, the report suggests. According to the report, 60 percent of people who shopped for individual insurance policies over the last three years were unable to find a plan they could afford, and 35 percent were turned down by an insurer, charged more because of their health status, or had a specific health problem excluded from their coverage.

Impact of ACA. The report finds that once the major coverage provisions of the Affordable Care Act are implemented in 2014, job loss will not automatically mean going without health insurance, because the newly unemployed will have greatly expanded health insurance options, including subsidies to purchase insurance through exchanges, and expanded access to Medicaid coverage.

"Currently, for a majority of Americans, losing a job also means losing health insurance," said Commonwealth Fund Vice President and report co-author Sara Collins. "To make matters worse, once you are unemployed and uninsured, it's nearly impossible to afford COBRA or buy an individual policy. However, when it is fully implemented in 2014, the Affordable Care Act will usher in a new era for the unemployed, who will have a variety of options for comprehensive and affordable health insurance."

How health reform helps. Some early health reform provisions, including allowing young adults up to age 26 to remain on their parents' health insurance, and the creation of pre-existing condition insurance plans in all 50 states and the District of Columbia, are already helping some of the unemployed and uninsured, the Commonwealth report suggests.

However, the reforms that will have the most significant impact will take effect in 2014 when Medicaid is substantially expanded to cover single adults earning up to $14,484 a year and families of four making up to $29,726 a year. In addition sliding scale premium tax credits will be available for single adults earning up to $43,560 and families of four making up to $89,400 to purchase private policies through new state insurance exchanges. People who buy health insurance through the exchanges will enjoy new consumer protections that will assure they won't have to pay high premiums or be denied insurance because of their health status.

COBRA’s role to continue. Despite the new protections, the report authors say that there will still be a role for COBRA in 2014, to reduce the burden switching insurance plans places on families, and to curb federal and state administrative costs associated with changing plans to fill short gaps in coverage.

Between now and 2014, the report’s authors recommend that policy makers continue the current protections in place for unemployed Americans, including extending jobless benefits and re-establishing the COBRA subsidies that helped millions of Americans who lost their jobs during the recession keep their health insurance coverage.

Monday, August 29, 2011

HRAs receive exemption from annual limit restrictions in health reform

Health reimbursement arrangements (HRAs) have been exempted from the annual limit restrictions in the Patient Protection and Affordable Care Act and do not need to apply individually for waivers or waiver extensions from the restrictions, according to August 19, 2011, guidance from the Center for Consumer Information & Insurance Oversight (CCIIO).

In June, CCIIO announced that limited benefit plans have until September 22, 2011, to apply for or renew a temporary waiver from the annual limit restrictions. The CCIIO already has granted waivers to more than 1,500 plans.

In the most recent guidance, CCIIO notes that "all HRAs set limits on the amount that can be spent and, we believe, those limits would always be less than the applicable restricted annual limit amounts. Accordingly, applying the restrictions on annual limits ... to HRAs would result in a significant decrease in access to HRA benefits. Therefore, this guidance exempts as a class all HRAs that are subject to the requirements of [ACA Sec. 2711] and that were in effect prior to September 23, 2010 from having to apply individually for an annual limit waiver for plan years beginning on or after September 23, 2010 but before January 1, 2014."

If an employer that maintains an HRA also maintains other coverage, whether or not that coverage is integrated with the HRA, that other coverage must meet the annual limit requirements or obtain a waiver.

An HRA that is exempt from applying for an annual limit waiver still must comply with the record retention and Annual Notice requirements to participants and subscribers set forth in the supplemental guidance issued June. For instructions on these requirements for HRAs, please refer to the "Technical Instructions for the Waiver Extension and Waiver Application Process."

Waivers granted. By the end of July, the Center for Consumer Information and Insurance Oversight (CCIIO) had provided 1,472 one-year waivers and 106 three-year waivers to organizations covering more than 3.4 million employees. By the end of June, 1,471 plans had received waivers.

By type of applicant, the waivers granted so far are, as follows:

  • self-insured employers (631);

  • health reimbursement arrangements (491);

  • multi-employer plans (378);

  • health insurance issuers (41);

  • non-Taft Hartley union plans (30);

  • state-mandated policies (5); and

  • association plans (2).

For more information. A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Friday, August 26, 2011

Employers Continue To Plan For Health Reform Effects

Employers are well aware of the significant changes the Patient Protection and Affordable Care Act will make on their health care plans, and two recent national benefit surveys provide some insight into how employers are responding.

A recent Towers Watson survey acknoweldges that one of the driving forces behind significant health care design changes and cost shifting is health care reform. A majority of employers (53%) are confident that health care reform will be implemented within the anticipated timeline, but 70% of employers are skeptical that health insurance Exchanges will provide a viable alternative to employer-sponsored coverage for active employees in 2014 or 2015.

On top of that uncertainty, 56% of employers believe that they will trigger the excise tax on high cost insurance by 2018. Yet more than three-quarters believe that health care benefits will continue to be a key component of their overall employee value proposition beyond 2014.

Specifically, between now and 2014, employers are planning or considering the following actions, according to Towers Watson:

Increase offering of account-based health plans (health savings accounts (HSAs) and health reimbursement arrangments (HRAs)): 17% intend to add this plan design in 2013 or 2014, which would result in nearly three in four [74%] employers offering an ABHP)

Use value-based benefit designs (49%): Encouraged in the ACA, value-based design is the explicit use of plan incentives to encourage enrollee adoption and appropriate use of high-value services, healthy lifestyles and use of high-performance providers that adhere to evidence-based treatment guidelines

Increase use of preferred networks (58%).


A recent survey by the National Business Group on Health found that employers had made or were planning to makethe following changes in response to the ACA:

Annual benefit limits. The majority of employers (59%) are not making any changes for 2012 (full restrictions on benefit limits will be banned in 2014). However, 27% said they plan to make changes to annual limits for preventive and wellness services. Another 14% said they will make changes to annual limits for mental health and substance abuse services.

Grandfather status. Twenty-three percent will have at least one benefit option that keeps its grandfather status in 2012, while 19% will drop its grandfather status. Almost half (49%) did not have any benefit option in grandfather status this year.

Default plan for new hires. Twenty-seven percent plan to use their least costly health plan for employees as their default plan for new full-time hires as required by the ACA.

Additional surveys on employer responses to the ACA can be found here and here.

A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Wednesday, August 24, 2011

Duplication Looms For Employers With Benefits Summary Proposed Rules

By March 23, 2012, both insured and self-funded plans should have available a summary of benefits and coverage (SBC) that "accurately describes the benefits and coverage under the applicable plan or coverage." The SBC and related rules are Part of Public Health Service Act Sec. 2715, as added by the Patient Protection and Affordable Care Act.

On Aug. 22, the Department of Labor's Employee Benefits Security Administration (EBSA), the Internal Revenue Service, and the Department of Health and Human Services issued proposed rules to help construct the SBC.

Employers and administrators that already provide summary plan descriptions are understandably concerned about the duplications and additional costs associated with elements of the new SBC requirement ‑ including a uniform glossary and coverage facts labels.

The new proposed rules acknowledge these concerns and ask for comments on whether the SBC should be allowed to be provided within an SPD if the SBC is intact and prominently displayed at the beginning of the SPD (for example, immediately after a cover page and table of contents), and if the timing requirements for providing the SBC (described in paragraph (a) of the proposed regulations) are satisfied.

Comments also are requested on ways the SBC might be coordinated with other group health plan disclosure materials (for example, application and open season materials).

What’s In The Rules

The proposed regulations provide rules implementing Patient Protection and Affordable Care Act (ACA) provisions that would ensure consumers have access to two forms that will help them understand and evaluate their health insurance choices. These forms include:

  • an easy to understand Summary of Benefits and Coverage; and

  • a uniform glossary of terms commonly used in health insurance coverage, such as "deductible" and "co-pay".

The proposed summary form and glossary were developed through a public process led by the National Association of Insurance Commissioners (NAIC) and a working group composed of stakeholders, including representatives of health insurance-related consumer advocacy organizations, health insurers, health care professionals, patient advocates that include those representing individuals with limited English proficiency, and other qualified individuals. The August 22 guidance proposes to adopt the recommendations submitted by the NAIC as a result of that process.

Summary Of Benefits And Coverage

Under the proposed rules, insurance companies and group health plans will provide consumers with a concise document detailing, in plain language, simple and consistent information about health plan benefits and coverage. The proposed regulations contain standards designed to ensure that the Summary of Benefits and Coverage will help consumers better understand the coverage they have and, for the first time, allow them to easily compare different coverage options. It will summarize the key features of the plan or coverage, such as the covered benefits, cost-sharing provisions, and coverage limitations and exceptions. People will receive the summary when shopping for coverage, enrolling in coverage, at each new plan year, and within seven days of requesting a copy from their health insurance issuer or group health plan.

The Summary of Benefits and Coverage will include a new, standardized health plan comparison tool for consumers known as "coverage examples," much like the nutrition facts label required for packaged foods, the EBSA said. The coverage examples would illustrate what proportion of care expenses a health insurance policy or plan would cover for three common benefits scenarios—having a baby, treating breast cancer, and managing diabetes. Using clear standards and guidelines provided by the Center for Consumer Information and Insurance Oversight (CCIIO) in consultation with the National Guideline Clearinghouse, plans and insurers will simulate claims processing for each scenario so consumers can see an illustration of the coverage they get for their premium dollars under a plan. Additional scenarios may be added in the future. The examples will help consumers understand and compare their share of the costs of care under a particular plan and see how valuable the health plan will be at times when they need the coverage.

With the information provided in the Summary of Benefits and Coverage, as well as the specific illustrations of how this coverage will work, consumers can find the best coverage for themselves and their families—and employers can find the best coverage for their business and their employees.

Uniform Glossary Of Terms

Under the proposed regulations, consumers will have a new tool to help them understand some of the jargon that makes it impossible to figure out what is covered and how one insurance plan stacks up compared to another, the EBSA noted. To allow apples-to-apples comparison, terms would be the same across all plans. Insurance companies and group health plans will be required to make available upon request a uniform glossary of terms commonly used in health insurance coverage such as "deductible" and "co-pay." To help ensure the document is easily accessible for consumers, HHS and the DOL also will post the glossary on the new health care reform website, http://www.HealthCare.gov and http://www.dol.gov/ebsa/healthreform/.

Accessing Information

The proposed regulations specify that, beginning on March 23, 2012, all health insurance issuers and group health plans will provide the Summary of Benefits and Coverage and the uniform glossary to consumers, as follows.

Information when shopping for coverage. An issuer or health plan will automatically provide a Summary of Benefits and Coverage to a consumer prior to enrolling in coverage and 30 days prior to reissuance or renewal of their health coverage, so they are informed about the coverage they have.

Information when coverage changes. Individuals enrolled in a health plan must be notified of any significant changes to the terms of coverage reflected in the Summary of Benefits and Coverage at least 60 days prior to the effective date of the change.

Information on demand. A shopper or person enrolled in coverage can request a copy of the Summary of Benefits and Coverage and must receive it within seven days. The uniform glossary will also be made available upon request, as well as in a link provided in the coverage label by the plan or insurance company.

Use of Information Technology and reducing burden on employers and insurers. The Summary of Benefits and Coverage may be provided to consumers in electronic form. Thus, a plan or issuer might post the Summary of Benefits and Coverage on its website or on HealthCare.gov, or provide it by email. Electronic disclosure is expected to reduce costs while consumer safeguards are designed to ensure actual receipt by individuals.

Click here to send comments on the proposed rules.  When the comment page opens, select “Proposed Rule” as Document Type and “RIN 1210-AB52” as Keyword or ID.  You will then be able to send comments to the EBSA, CMS, or the IRS.

Not yet a subscriber to Wolters Kluwer Law & Business? A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Already a subscriber to Wolters Kluwer Law & Business? Get this recent health reform guidance:

Monday, August 22, 2011

Employer Guidance For Implementing Health Reform Picks Up Steam

Even as the fate of Patient Protection and Affordable Care Act inches closer towards resolution in the Supreme Court, more and more guidance is being issued that will help employers implement provisions of the law already in effect and provisions that will take effect in the future.

The Department of Health and Human Services already has issued guidelines for establishing Exchanges and the Small Business Health Options Program (SHOP).

There is much more that employers and plan administrators will have to attend to now or in the near future.

Premium Tax Credit

For example, the Internal Revenue Service published in the August 17 Federal Register proposed regulations relating to the health insurance premium tax credit

The proposed regulations provide guidance to individuals who enroll in qualified health plans through American Health Benefit Exchanges and claim the premium tax credit, and to Exchanges that make qualified health plans available to individuals and employers.

Beginning in 2014, under the ACA, individuals and small businesses will be able to purchase private health insurance through state-based competitive marketplaces called American Health Benefit Exchanges

ACA Sec. 1401 amended IRC Sec. 36B, which allows a refundable premium tax credit to help individuals and families afford health insurance coverage. The Sec. 36B credit is designed to make a qualified health plan affordable by reducing a taxpayer's out-of-pocket premium cost.  The credit is in part available to employees covered by employer-sponsored health plans that are deemed “unaffordable.”

An employer-sponsored plan is not affordable if the employee's required contribution for the plan exceeds 9.5% of the applicable taxpayer's household income for the taxable year.

Generally, a large employer that offers health coverage to its full-time employees and their dependents is subject to the assessable payment (or penalty) if at least one full-time employee is certified to receive a premium tax credit or cost-sharing reduction because the employer-sponsored coverage either does not provide minimum value or is unaffordable to the employee. However, employers have noted that they do not know employees' household income and would not be able to determine if their plans are affordable. Consequently, the IRS expects to develop and provide an affordability safe harbor for employers in future proposed regulations, as follows: an employer that meets certain requirements, including offering its full-time employees (and their dependents) the opportunity to enroll in eligible employer-sponsored coverage will not be subject to an assessable payment for an employee who receives a premium tax credit or cost-sharing reduction for a taxable year if the employee portion of the self-only premium for the employer's lowest cost plan that provides minimum value does not exceed 9.5% of the employee's current W-2 wages from the employer.

The ACA provides that an eligible employer-sponsored plan generally provides minimum value if the plan's share of the total allowed costs of benefits provided under the plan is at least 60% of those costs. Proposed regulations that HHS will issue later this year will apply in determining the percentage of "the total allowed costs of benefits" provided under a group health plan or health insurance coverage, taking into account that employer-sponsored group health plans and health insurance coverage in the large group market are not required to provide each of the essential health benefits or each of the ten categories of benefits. According to the IRS, "It also is anticipated that the regulations will seek to further the objective of preserving the existing system of employer-sponsored coverage, but without permitting the statutory employer responsibility standards to be avoided." The IRS also wrote that it is contemplating whether to provide appropriate transition relief for the minimum value requirement for employers currently offering health care coverage.

More Guidelines Coming

There is more, including proposals for plans to report summaries of benefits and coverage and increases in the levels of reimbursement under the Early Retiree Reimbursement Program (ERRP).

Not yet a subscriber to Wolters Kluwer Law & Business? A comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Already a subscriber to Wolters Kluwer Law & Business? Get this recent health reform guidance:

Friday, August 19, 2011

Health Care Reform Will Increase Costs, Access, And Care Quality

Most health care organizations expect health care reform to boost costs significantly, while increasing access to care and improving quality through a renewed focus on organizational effectiveness, according to a new survey of more than 200 health care professionals.

In Buck Consultants’ Health Care Organizations Health Care Reform Readiness Survey, many health care organizations anticipate that patients will benefit the most from the Patient Protection and Affordable Care Act (ACA), while employer health plans and the hospital system itself will experience challenges (70% of respondents indicated that these groups will be worse off). Respondents were evenly split on whether or not patients will be better off under the ACA–44% said yes and 45% said no. But most (60%) think that the nation will be worse off with the ACA, and 72% think it will adversely affect employer health plans.

The majority of survey respondents (75%) believe health care costs will rise as a result of the ACA, with 43% expecting a significant increase. To offset increased costs in their own plans, more than 90% of respondents anticipate passing some or all of these additional costs on to their employees through higher employee contributions or reduced coverage. Some employers (48%) plan to facilitate improvements in employee health by increasing their wellness initiatives. Virtually none of the respondents expect to reduce wellness programs.

As other surveys have shown, most employers (57%) remain committed to retaining their employees' health plans, with 46% of these indicating dropping their employee health benefits would make their company uncompetitive in hiring and retaining workers. However, 28% of the Buck survey respondents said they would consider eliminating health care benefits because of the ACA.

More than half (57%) of the respondents lost grandfathered status for some or all plans in 2011, primarily (65%) due to plan design changes implemented with plan savings exceeding the additional cost of complying with the health care reform requirements. “This is consistent with broader employer actions, and we anticipate that nearly all employer plans will lose grandfathering by 2014,” Buck noted.

Some three-fourths of respondents also thought that the requirement to extend dependent coverage to employees’ young adult children up to age 26 will increase plan costs, but only 30% raised the contribution levels for dependents, and even fewer changed the number of contribution tiers. More than half (55%) of respondents have either conducted a dependent eligibility audit or are planning one. Furthermore, more than two-thirds of employers who offer dental and vision coverage also extended eligibility for those benefits to dependents up to age 26. As a result of this requirement, the largest proportion of respondents (41%) reported young adult enrollment rose by 1% to 2%. Another 17% reported no increase.

About one-third (34%) of the respondents did not know what the effect the tax on “Cadillac” (expensive) plans will have on their health plans, 23% said it would have no effect, and 20% said their plans would be affected and that they likely would cut benefits in response.

Organizational Changes

Most respondents indicated that the ACA will likely prompt them to make organizational changes, create new management and leadership initiatives, and focus on efficiency and quality efforts.

“Health care employers especially should be on the forefront of this changing health care delivery market to reinforce new and emerging strategies and manage costs,” said Sheryl Grey, a principal with Buck Consultants. “Implementing plan changes aligned with quality and wellness initiatives, and the use of telemedicine, social media and smart phones allow employers to improve care.”

Health care organizations will probably adapt to the ACA within the next three years by taking the following initiatives:

  • Assessing information technology requirements (82%);

  • Structuring quality measures with their physicians (69%);

  • Developing an integrated care network (60%); and

  • Developing medical home services (41%);

Respondents expect these business changes to increase the efficiency and quality of care. Two-thirds (66%) of survey respondents believe that the ACA will boost access to care by some extent. Health care organizations are either currently implementing or planning to implement additional changes to improve care within the next three years:

  • Increasing focus on cooperation and collaboration on patient care (84%);

  • Taking steps to reduce patient readmissions (74%);

  • Using electronic health records (85%);

  • Using evidence-based or predictive-modeling technology tools (66%); and

  • Creating an accountable care organization (43%).

A clear majority of the organizations surveyed believe that the quality of health care over the next five years will improve or stay the same, and many are implementing these changes to ensure that efficiency is increased and that the overall quality of care improves within their own health care system, Buck reported.

For more information, visit http://www.buckconsultants.com.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Wednesday, August 17, 2011

HHS Issues Guidelines For The Small Business Health Options Program (SHOP)

In the August 17 Federal Register, the U.S. Department of Health and Human Services (HHS) has published a proposed rule for provisions in the Patient Protection and Affordable Care Act (ACA) governing the American Health Benefit Exchange eligibility and employer standards.

The specific Exchange functions in the HHS proposed rule include eligibility determinations for Exchange participation and insurance affordability programs and standards for employer participation in the Small Business Health Options Program (SHOP).

Under the ACA, by Jan. 1, 2014, each state must establish an American Health Benefit Exchange for that state that would facilitate the purchase of qualified health plans. Each state also is required establish a SHOP Exchange. A SHOP Exchange is designed to assist qualified small employers (those with 100 or fewer employees) in the state in enrolling their employees in qualified health plans (QHPs) in the state’s small group market.

A state may elect to provide for only one state Exchange that would provide both American Health Benefit Exchange services and SHOP Exchange services to both qualified individuals and qualified small employers.

According to the August 17 preamble, the proposed rule to a significant extent “mirrors and complements” Exchange rules proposed in July.

Employer SHOP Participation

Among other provisions, the August 17 proposed rule would do the following regarding employer participation in SHOP:

A qualified employer participating in SHOP shall disseminate information to its employees about the methods for selecting and enrolling in a QHP. The information should include at least the timeframes for enrollment, instructions for how to access the SHOP website and other tools to compare QHPs, and the SHOP toll-free hotline. The SHOP may assist qualified employers, for example by providing an easy-to-use toolkit explaining the key pieces of information to disseminate to its employees.

Qualified employers will provide the SHOP with information about individuals or employees whose eligibility to purchase coverage through the employer has changed. This notice include both newly eligible employees and dependents, as well as those no longer eligible for coverage. It includes a COBRA qualifying event. The SHOP may in turn notify the QHP to process the change in enrollment.

The employer retains all notice responsibilities under federal and state law. The HHS suggests that SHOPs direct employers to provide such notices within 30 days of the change in eligibility.

A qualified employer must adhere to the annual employer election period to change program participation for the next plan year. An employer may begin participating in the SHOP at any time. However, once an employer begins participating, it will adhere to an annual employer election period during which it may change employee offerings.

If an employer remains eligible for coverage and does not take action during the annual employer election period, such employers would continue to offer the same plan, coverage level, or plans selected the previous year for the next plan year unless the QHP or QHPs are no longer available.

Comments on the proposed rule are due 75 days after publication in the Federal Register (refer to file code CMS-9974) and should be sent via the Federal eRulemaking Portal at http://www.regulations.gov; or by regular mail to CMS, Department of Health and Human Services, Attention: CMS-9974-P, P.O. Box 8010, Baltimore, MD 21244-8010.

For more information, contact Laurie McWright at (301) 492-4372, for general information matters; Alissa DeBoy at (301) 492-4428, for general information and matters related to Exchange establishment standards and other related standards; Michelle Strollo at (301) 492-4429, for matters related to eligibility; or Naomi Senkeeto at (301) 492-4419, for matters related to employer interactions with Exchanges and SHOP participation.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Monday, August 15, 2011

Eleventh Circuit Strikes Down Individual Mandate

In ruling that the individual mandate in the Patient Protection and Affordable Care Act (ACA) is unconstitutional, the Eleventh Circuit U.S. Court of Appeals has set the stage for a final resolution of the the status of the health reform act in the Supreme Court.

The Eleventh Circuit’s 2-1 decision (State of Florida v. Department of Health and Human Services, Nos. 11-11021 & 11-11067) included three conclusions:

The ACA’s Medicaid expansion is constitutional.

  1. “The individual mandate was enacted as a regulatory penalty, not a revenue-raising tax, and cannot be sustained as an exercise of Congress’s power under the Taxing and Spending Clause.… Further, the individual mandate exceeds Congress’s enumerated commerce power and is unconstitutional.”

  2. The individual mandate, however, can be severed from the remainder of the [ACA’s] myriad reforms….The [ACA’s] other provisions remain legally operative after the mandate’s excision.”

Thus, the Eleventh Circuit affirmed in part the lower court decision that the individual mandate is unconstitutional, but reversed the ruling that the individual mandate could not be severed from the rest of the law and thus the whole law was unconstitutional.

The ruling, if upheld, would invalidate IRC Sec. 5000A, as added by the ACA. Sec. 5000A mandates that after 2013, individuals must maintain “minimum essential coverage” for themselves and their dependents, or pay a monetary penalty.

The Eleventh Circuit opinion is directly at odd with the ruling of the Sixth Circuit U.S. Court of Appeals, which ruled that the individual mandate stated that “is a valid exercise of Congress’s authority under the Constitution’s Commerce Clause.” This conflict allows the Supreme Court to take up the issue in order to resolve the differences in the appellate courts.

The Sixth Circuit’s ruling already has been appealed to the Supreme Court
. One other appellate court also has ruled on the ACA.

For more information on the Eleventh Circuit’s opinion, visit http://www.uscourts.gov/uscourts/courts/ca11/201111021.pdf.

For a comprehensive analysis of the ACA, and additional information on health reform and other developments in employee benefits, just click here.

Friday, August 12, 2011

Are you a fan of tans?

If you enjoy indoor tanning, but you’re not too fond of the 10-percent indoor tanning excise tax imposed by the Patient Protection and Affordable Care Act (ACA), you have an opportunity to be heard.

The IRS has scheduled a public hearing on proposed regulations providing guidance on the tanning tax. The hearing will be held on Tuesday, October 11, 2011, at 10:00 a.m. in the IRS Auditorium, Internal Revenue Service Building, 1111 Constitution Avenue NW., Washington, D.C. 20224.

Regulations on the tanning tax. Last summer, the IRS issued temporary and proposed regulations to implement the indoor tanning excise tax. The tax applies to amounts paid after June 30, 2010 for qualified indoor tanning services.

An indoor tanning service is a service employing any electronic product designed to incorporate one or more ultraviolet lamps and intended for the irradiation of an individual by ultraviolet radiation, with wavelengths in air between 200 and 400 nanometers, to induce skin tanning.

The excise tax is imposed on the total amount paid by an individual for indoor tanning services, including any amount paid by insurance. Liability for the tax is imposed at the time of payment for any indoor tanning service. Generally, the individual who pays for the indoor tanning service is deemed to be the person on whom the service is performed for purposes of collecting the tax.

The business receiving a payment for an indoor tanning service must collect and pay over the tax. If the recipient of the indoor tanning service fails to pay the tax or the provider fails to collect the tax, the provider of the indoor tanning service must pay the tax. Full payment is due at the time the provider timely files Form 720, Quarterly Federal Excise Tax Return.

Exemptions from the tax. Certain medical procedures are exempt from the excise tax. These include phototherapy service for the treatment of dermatological conditions; sleep disorders, seasonal affective disorder or other psychiatric disorders; neonatal jaundice; wound healing; and other qualified procedures.

Fitness centers with tanning services. A membership fee to a qualified physical fitness facility may include indoor tanning services in conjunction with other services. In this case, the indoor tanning service is treated as incident to the physical fitness facility’s predominant business and no liability for the excise tax attaches.

Spray tan, anyone? Just so you know – the tax does not apply to spray tans purchased at tanning salons. I think your dermatologist would agree this is a better option than subjecting your skin to a tanning bed.

Wednesday, August 10, 2011

ACA requirements do not weaken most employers' commitment to health care benefits

Enrollment in group health plans rose by 2% as a result of the dependent coverage extension for adult children up to age 26 required by the Patient Protection and Affordable Care Act, a survey by Mercer has found. Group health plan enrollment is expected to rise by another 2%, on average in 2014, when the ACA requires employers to automatically enroll new hires or newly eligible full-time employees. The Mercer June 2011 survey of employer strategy in response to the ACA provisions obtained responses from 894 private and public employers that participated in Mercer's National Survey of Employer-Sponsored Health Plans.

More than one-quarter (28%) of the respondents predict that the ACA provisions requiring automatic enrollment of new full-time employees, providing coverage for part-time employees that work at least 30 hours per week, and paying for at least 60% of covered services, will add at least 3% more to their health care costs. Another 27% of respondents anticipate that their costs will rise by at most 2%, while 15% did not anticipate much of an increase.

Employers don't plan to drop coverage. Few employers (2%) say they are "very likely" to drop their health insurance benefits when the health insurance exchanges become operational, and another 6% said they are "likely" to do so.

Employers have spent the past year studying the new law and developing strategies to deal with the increased costs and administrative burdens," said Beth Umland, director of research for health and benefits for Mercer. "But they don't seem to have changed their minds about the value of continuing to offer their employees health coverage."

Excise tax is big concern. The excise tax on high-cost plans that is scheduled to take effect in 2018 continues to concern to employers—for 22% it is of "very significant" concern and for 23% it is of "significant" concern. The excise tax is only a slight concern or altogether not an issue for the majority of responsdents (55%).

The top long-term cost management strategy for the great majority of Mercer respondents (92%) is to add or strengthen programs to encourage more health conscious behavior—54% are very likely to adopt this strategy, while 38% are likely to do so. More than one-quarter (29%) are likely to carve out and offer other benefits such as dental and vision coverage and offer them as voluntary benefits. Some two-fifths (38%) of all employer respondents said they are likely or very likely to reduce employer contributions for dependent coverage; most likely to do so are the largest employers (45%) with at least 5,000 workers. Only 30% of employers with fewer than 500 workers indicated having that strategy. One-quarter (26%) of respondents will consider keeping the employer contribution toward coverage the same for all health plans so that employees must pay more for the more expensive plans.

Employers worried about auto-enrollment. Auto-enrollment beginning in 2014 is of "very significant" or "significant" concern for 21% of all respondents, and for 28% of respondents with at least 5,000 employees, Mercer found. Of employers offering a choice of plans, 65% will use the lowest-cost plan as the default option and 29% will use the plan with the highest enrollment. About one-tenth (11%) of the largest employers said they were likely to add a new plan.

Providing coverage for part-time employees who work 30 or more hours per week poses a "very significant" or "significant" concern to wholesale/retail employers who are most likely to rely on such a workforce. More than one-quarter (28%) of the employer respondents with part-time employees currently do not offer health insurance to their part-time employees who work at least 30 hours per week and one-half of this group said that they will change their work policy to reduce the number of such part-time workers. On the other hand, all employees already are eligible for coverage at 72% of the respondents.

For a comprehensive analysis of the Patient Protection and Affordable Care Act, and additional information on health reform and other developments in employee benefits, just click here.

Monday, August 8, 2011

Third Circuit turns down health reform challenge

The Third Circuit U.S. Court of Appeals has upheld a district court ruling that those challenging the validity of the Patient Protection and Affordable Care Act (ACA) did not have standing to sue because they could not demonstrate any injury caused by the law.

The Third Circuit is the second appellate court to rule on the ACA.

In the Third Circuit case, Mario A. Criscito, a licensed New Jersey physician, "Patient Roe," a patient of Dr. Criscito's, and New Jersey Physicians, Inc., challenged the individual mandate and employer responsibility provisions of the ACA. A circuit court did not rule on the substance of the complaint but dismissed the case. because all three of the plaintiffs failed to demonstrate injury in fact and thus did not have standing to sue.

The plaintiffs appealed, and in New Jersey Physicians, Inc., v. President of U.S. (No. 10-460; Aug. 3, 2011), the Third Circuit upheld the district court. The Third Circuit noted that "Roe fails to set forth any current 'actual,' 'concrete, and particularized' injury. There are no facts alleged to indicate that Roe is in any way presently impacted by the [ACA] or the mandate."

In addition, according to the ruling, "The complaint sets forth no facts to establish that Dr. Criscito is suffering or will suffer an actual or imminent 'concrete and particularized' injury." The court came to the same conclusion for the claim of injury by New Jersey Physicians, Inc.

Lawyers for the plaintiffs have 90 days to appeal the decision to the Supreme Court.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

Friday, August 5, 2011

State implementation of health reform consumer protection: preliminary determinations issued

The Center for Consumer Information and Insurance Oversight (CCIIO) has issued preliminary determinations for states in regard to the implementation of the external health claims review process required under the Affordable Care Act (ACA).

If states do not meet the minimum consumer protections of the Uniform Health Carrier External Review Model Act from the National Association of Insurance Commissioners (NAIC), insurance coverage becomes subject to the requirements of an external review process under federal standards.

States have the following options to implement the consumer protections:

  • A state may meet the "strict standards" included in the interim final rules, which set forth 16 minimum consumer protections based on the NAIC model act;
  • A state may operate an external review process under similar standards to those outlined in the interim final rule (these similar standards apply only until Jan. 1, 2014) or;
  • If a state has implemented neither the "strict" standards nor the "similar" standards, issuers offering non-grandfathered plans and policies in the state will choose an HHS-administered process or contract with accredited independent review organizations to review external appeals on their behalf.
According to the August CCIIO determination, the following 23 states meet the "strict standard:" Arkansas, California, Colorado, Connecticut, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Nevada, New Jersey, New York, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Virginia, and Washington.

The following ten states meet the "similar standard:" Arizona, Delaware, Indiana, Kansas, Michigan, Minnesota, New Mexico, North Carolina, Tennessee, and Wyoming.

Seventeen states, according to CCIIO, as well as the District of Columbia, are subject to the HHS/independent review organization process: Alabama, Alaska, District of Columbia, Florida, Georgia, Louisiana, Massachusetts, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Pennsylvania, Texas, West Virginia, and Wisconsin.

Determinations are final if a state does not request a reconsideration of the preliminary determination. If a state requests reconsideration, final determinations will be made by Oct. 1, 2011. Additionally, if a state changes its external review process in the future, the state may request a new determination at any time.

For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

    Wednesday, August 3, 2011

    HHS announces guidelines for preventive services for women

    In its latest release of rules implementing the Affordable Care Act, the Department of Health and Human Services (HHS) on Monday announced new guidelines on women’s preventive health services. Developed by the independent Institute of Medicine, the new guidelines require new health insurance plans to cover women’s preventive health services without charging a co-payment, co-insurance or a deductible.

    Last summer, HHS released new insurance market rules under the Affordable Care Act (ACA) requiring all new private health plans to cover several evidence-based preventive services like mammograms, colonoscopies, blood pressure checks, and childhood immunizations without charging a copayment, deductible or coinsurance. The ACA also made recommended preventive services free for people on Medicare.

    This announcement builds on that by making sure women have access to a full range of recommended preventive services without cost sharing, including "well woman" visits, screening for gestational diabetes, HIV screening and counseling, and breastfeeding support, including supplies and related counseling.

    Contraceptives.  Also included in the list of preventive services is coverage for FDA-approved contraception methods and contraceptive counseling. The administration also released an amendment to the prevention regulation that allows religious institutions that offer insurance to their employees the choice of whether or not to cover contraception services. This regulation is modeled on the most common accommodation for churches available in the majority of the 28 states that already require insurance companies to cover contraception.

    Plan flexibility. The rules governing coverage of preventive services, which allow plans to use reasonable medical management to help define the nature of the covered service, also apply to women’s preventive services. Plans will retain the flexibility to control costs and promote efficient delivery of care by, for example, continuing to charge cost-sharing for branded drugs if a generic version is available and is just as effective and safe for the patient to use.

    Effective date. New health plans will need to include these services without cost sharing for insurance policies with plan years beginning on or after August 1, 2012.

    For more information. For a comprehensive analysis of the Patient Protection and Affordable Care Act, including the full text of the law and additional information on health reform implementation and other recent developments in employee benefits, just click here.

    Monday, August 1, 2011

    U.S. healthcare 2010--2020: more value for the money?

    Two studies issued this month confirm that even after ACA implementation has begun in earnest, the U.S. health care system will remain one of the most expensive in the world. Less clear is whether U.S. citizens can expect to see improvements in the quality of their care.

    Last week CMS actuaries predicted trends in U.S. health care costs during the period 2010--2020. Costs will continue to go up, they say, at an average rate of 5.8 percent for the ten year period. CMS experts project that the peak annual increase (8.3 percent) will occur in 2014, when, due to the ACA, an estimated 22.9 million people become insured, either via state health exchanges or an expanded Medicaid program.

    After that, increases level off for the period 2015--2020 to an average of 6.2 percent per year. This smaller cost increase is due in part to the excise tax on "Cadillac" plans due to kick in 2018. (The excise tax will force plans to provide incentives to enrollees to choose plans with lower premiums and higher cost-sharing requirements, thus slowing the growth in health services.)

    Impact of wellness? While this study takes into account the impact of increased coverage under health reform, it doesn't directly address the potential impact of wellness initiatives in the ACA. These include the increased premium discounts that will be available for wellness participation beginning in 2014. But, a look at a recent comparison of the U.S. health system to 12 other developed countries suggests that perhaps the next study should focus on wellness.

    Not surprisingly, the Commonwealth Fund found the U.S. health system (using 2008 data) to be by far the most expensive health system among the nations studied. In contrast, it found the quality of U.S. health care to be a mixed bag. Perhaps reflecting a penchant for early screening efforts, U.S. 5-year survival rates for certain cancers (breast, cervical, colorectal) were quite high.

    Other results were less encouraging. The U.S. ranked near the middle on the number of patients suffering from heart attack or stroke who died within 30 days of their hospitalization. And, the U.S. had the highest rate of hospitalization for three chronic diseases (asthma, congestive heart failure and diabetes).

    Sources: "National Health Spending Projections Through 2020: Economic Recovery and Reform Drive Faster Spending Growth", http://content.healthaffairs.org/, July 2011; "The U.S. Health System in Perspective: A Comparison of Twelve Industrialized Nations," July 2011, http://www.commonwealthfund.org/.