Since late August, the Department of Health and Human Services (HHS) has approved nearly 3,000 applications for the early retiree reinsurance program (ERRP) established under the Affordable Care Act. HHS says applications for the program have been received from more than 50% of Fortune 500 companies, all major unions, and government entities in all 50 states and the District of Columbia. The approved applications represent nearly every sector of the economy: 32% of applications came from businesses, 26% from state and local governments, 22% from union sponsors, 14% from schools and other educational institutions, and 5% from nonprofit organizations.
Among the applicants for the ERRP are these nine states that are suing to overturn the Affordable Care Act: Alaska, Arizona, Florida, Idaho, Indiana, Louisiana, Michigan, Nebraska, and Nevada. Cities or counties in many other states that also are challenging the health reform law also have applied for the ERRP. Might as well take advantage of the program while it’s available—even while they fight it.
You may recall that this temporary reinsurance program reimburses part of the claims cost for participating employment-based plans that provide health insurance coverage for early retirees (ages 55 to 65), and their eligible spouses, surviving spouses, and dependents. The program is to reimburse plan sponsors 80% of individual claims between $15,000 and $90,000. The program is effective June 1, 2010, and ends on the earlier of Jan. 1, 2014, or when the $5 billion appropriated for the program is exhausted.
The intent of the ERRP is to encourage employers to continue to provide their early retirees with medical benefits, at least until the health insurance exchanges establised by the ACA become operational.
Beginning this month, approved applicants will begin to submit claims and receive reinsurance payments on those claims.
A complete list of approved applicants is available here.
Although many companies are taking advantage of ERRP, others have decided to phase out their current retiree coverage offerings because of health care reforms. For example, 3M Company has announced that it would replace its Retiree Group Medical Plan with a health reimbursement arrangement, beginning Jan. 1. 2013 for Medicare-eligible retirees amd spouses, and beginning Jan. 1, 2015, for non-Medicare eligible retirees and eligible dependents. Non-Medicare retirees and their families may use the HRA funds to purchase individual insurance through the insurance exchanges.
3M attributes to the ACA changes the company’s switch to an HRA. Health reform “should dramatically improve the individual insurance marketplace for non-Medicare eligible retirees and their eligible dependents,” a 3M spokesman explained. “At the same time, the 3M-sponsored retiree group medical plans will no longer have the advantages over the individual insurance marketplace that they once did.” The ACA presents an opportunity to shed costs, in 3M’s view.
Read all about it here!
Wednesday, October 6, 2010
Monday, October 4, 2010
McDonald's Insurer Quizzed On Loss Ratio Compliance
In an October 1 letter to BCS Financial Corporation, which provides medical benefits for McDonald’s hourly employees, Sen. Jay Rockefeller (W.Va.), Chairman of the U.S. Senate Committee on Commerce, Science, and Transportation, has requested premium and claims information to clarify the fast food restaurant chain’s health care coverage, which reportedly will not meet the medical loss ratio requirements instituted by the Patient Protection and Affordable Care Act.
According to the letter, a recent memo from McDonald’s to the Department of Health and Human Services warned that the company would not be able to meet the new minimum loss ratio requirements. Reportedly, McDonald’s provides low level medical coverage, (also called a mini-med plan) for workers at 10,500 U.S. locations, most of them franchised. A single worker pays up to $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.
Citing a recent Wall Street Journal article, Mr. Rockefeller tells BCS, “Your company is apparently spending a significantly lower percentage of McDonald’s employees’ health care premiums on their medical care than the benchmarks established in ACA. If this is the case, McDonald’s hourly wage workers are setting aside portions of their paychecks for an insurance product that may not be providing them a good value.”
Mr. Rockefeller added, “In addition to spending an insufficient portion of their premium dollars on medical care, the products BCS is selling to McDonald’s employees are not likely to protect them against the costs of a major health care episode. The $2,000 maximum annual coverage you apparently offer in your McDonald’s 'Basic Plan' would not come close to covering the costs of hospital emergency services or the delivery of a child.”
Just a day earlier, HHS acknowledged that it was working on regulations to clarify the loss ratio requirements. According to Jay Angoff, director of HHS’s Office of Consumer Information and Insurance Oversight, “The issue of the applicability of the medical loss ratio requirements to plans such as mini-med plans has come up. HHS has not yet issued regulations implementing the medical loss ratio requirements because the Affordable Care Act tasks the National Association of Insurance Commissioners (NAIC) with first making recommendations to the Secretary.”
“Although the NAIC is close to completing its work, Mr." Angoff said, “we understand that some employers must soon make decisions regarding coverage options for 2011. As such, we fully intend to exercise [HHS Secretary Kathleen Sebelius'] discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations. According to the Affordable Care Act, medical loss ratio 'methodologies shall be designed to take into account the special circumstance of smaller plans, different types of plans, and newer plans.' We recognize that mini-med plans are often characterized by a relatively high expense structure relative to the lower premiums charged for these types of policies. We intend to address these and other special circumstances in forthcoming regulations.”
Among the items Mr. Rockefeller requested from BCS by October 15 were the following:
1. the health insurance products BCS currently offers for sale to McDonald’s employees;
2. copies of all materials and communications McDonald’s employees receive in connection to the marketing or purchase of BCS health insurance products;.
3. the number of McDonald’s employees who currently are covered by BCS health insurance products.
4. the business arrangement under which McDonald’s allows BCS to sell health insurance products to McDonald’s employees;
5. for each of the last five calendar years, provide the following information regarding McDonald’s employees covered by BCS plans:
• the amount of premiums employees paid for coverage;
• the amount of all medical claims;
• the number employees who were covered at the end of each calendar year;
• the number employees who made payment claims for health services;
• the number employees covered who reached the products’ annual spending limits; and
• the average time period employees were covered before ending the coverage.
HHS already has initiated a waiver process for mini-med plans in regard to the minimum annual limit provision. According to Mr. Angoff, “HHS has approved dozens of these waiver requests, most often filed by so-called 'mini-med' plans, and in doing so, has ensured the continuation of health coverage for workers and their families. Complete waiver applications were generally processed in 48 hours.”
More information on health reform and loss ratio requirements is available here.
According to the letter, a recent memo from McDonald’s to the Department of Health and Human Services warned that the company would not be able to meet the new minimum loss ratio requirements. Reportedly, McDonald’s provides low level medical coverage, (also called a mini-med plan) for workers at 10,500 U.S. locations, most of them franchised. A single worker pays up to $14 a week for a plan that caps annual benefits at $2,000, or about $32 a week to get coverage up to $10,000 a year.
Citing a recent Wall Street Journal article, Mr. Rockefeller tells BCS, “Your company is apparently spending a significantly lower percentage of McDonald’s employees’ health care premiums on their medical care than the benchmarks established in ACA. If this is the case, McDonald’s hourly wage workers are setting aside portions of their paychecks for an insurance product that may not be providing them a good value.”
Mr. Rockefeller added, “In addition to spending an insufficient portion of their premium dollars on medical care, the products BCS is selling to McDonald’s employees are not likely to protect them against the costs of a major health care episode. The $2,000 maximum annual coverage you apparently offer in your McDonald’s 'Basic Plan' would not come close to covering the costs of hospital emergency services or the delivery of a child.”
Just a day earlier, HHS acknowledged that it was working on regulations to clarify the loss ratio requirements. According to Jay Angoff, director of HHS’s Office of Consumer Information and Insurance Oversight, “The issue of the applicability of the medical loss ratio requirements to plans such as mini-med plans has come up. HHS has not yet issued regulations implementing the medical loss ratio requirements because the Affordable Care Act tasks the National Association of Insurance Commissioners (NAIC) with first making recommendations to the Secretary.”
“Although the NAIC is close to completing its work, Mr." Angoff said, “we understand that some employers must soon make decisions regarding coverage options for 2011. As such, we fully intend to exercise [HHS Secretary Kathleen Sebelius'] discretion under the new law to address the special circumstances of mini-med plans in the medical loss ratio calculations. According to the Affordable Care Act, medical loss ratio 'methodologies shall be designed to take into account the special circumstance of smaller plans, different types of plans, and newer plans.' We recognize that mini-med plans are often characterized by a relatively high expense structure relative to the lower premiums charged for these types of policies. We intend to address these and other special circumstances in forthcoming regulations.”
Among the items Mr. Rockefeller requested from BCS by October 15 were the following:
1. the health insurance products BCS currently offers for sale to McDonald’s employees;
2. copies of all materials and communications McDonald’s employees receive in connection to the marketing or purchase of BCS health insurance products;.
3. the number of McDonald’s employees who currently are covered by BCS health insurance products.
4. the business arrangement under which McDonald’s allows BCS to sell health insurance products to McDonald’s employees;
5. for each of the last five calendar years, provide the following information regarding McDonald’s employees covered by BCS plans:
• the amount of premiums employees paid for coverage;
• the amount of all medical claims;
• the number employees who were covered at the end of each calendar year;
• the number employees who made payment claims for health services;
• the number employees covered who reached the products’ annual spending limits; and
• the average time period employees were covered before ending the coverage.
HHS already has initiated a waiver process for mini-med plans in regard to the minimum annual limit provision. According to Mr. Angoff, “HHS has approved dozens of these waiver requests, most often filed by so-called 'mini-med' plans, and in doing so, has ensured the continuation of health coverage for workers and their families. Complete waiver applications were generally processed in 48 hours.”
More information on health reform and loss ratio requirements is available here.
Friday, October 1, 2010
HR pros focusing on health reform’s short-term implications
As they learn more about the new health reform law, human resource professionals are addressing its short-term implications, according to a poll by the Society for Human Resource Management (SHRM).
According to SHRM, 75 percent or more of organizations are:
Start shifting to long-term strategies. “Although many organizations have been appropriately focused on the short-term implications of the law, attention should now be turning to more long-term strategies that consider both financial and human capital consequences,” says Mark Schmit, SHRM’s director of research.
For more information. 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.
According to SHRM, 75 percent or more of organizations are:
- Working with a legal or benefits counsel to better understand the law’s implications;
- Sending staff to classes—including seminars and webcasts—to learn details of the law and its impact; and
- Partnering with current health benefits providers to design 2011 plans to include areas affected by the law.
Start shifting to long-term strategies. “Although many organizations have been appropriately focused on the short-term implications of the law, attention should now be turning to more long-term strategies that consider both financial and human capital consequences,” says Mark Schmit, SHRM’s director of research.
For more information. 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.
