Health insurance exchanges should be able to make real-time determinations of eligibility for various types of coverage using data from the Treasury Department and the IRS, officials from the U.S. Department of Health and Human Services (HHS) said at a recent regional forum on implementing the Patient Protection and Affordable Care Act (PPACA) in Washington, D.C.
The PPACA generally requires states to establish American Health Benefit Exchanges by January 1, 2014. If a state decides not to establish an exchange for its residents, HHS will operate a federally facilitated exchange (FFE). Qualified taxpayers will be able to purchase health insurance coverage through the exchanges. Some taxpayers may be eligible for the Code Sec. 36B premium assistance tax credit to help them obtain coverage. The Treasury and the IRS have issued guidance on the Code Sec. 36B tax credit (I.R.B. 2012-24).
HHS officials said that, through the exchanges, individuals will be able to learn if they are eligible for programs to make insurance more affordable, such as eligibility for the premium assistance tax credit, or health programs such as Medicaid and the Children’s Health Insurance Program (CHIP). HHS is aiming for real-time determinations of eligibility for coverage, the officials said.
Federal agencies are planning a "data services hub" to facilitate the exchange of information, the officials said. An inter-agency task force is currently meeting to develop the parameters of the hub. "There is an incredible amount of complex work going on," one official said.
Friday, August 24, 2012
Wednesday, August 22, 2012
HHS establishes safe harbor for adverse benefit notices of non-federal governmental plans
The Department of Health and Human Services (HHS) has established an enforcement safe harbor with respect to the content of the adverse benefit determinations and final internal adverse benefit determinations issued by non-federal governmental plans. Guidance issued on August 17 indicates that HHS will not enforce the requirement, under Public Health Service Act (PHSA) Sec. 2719, that non-federal governmental plans provide notice of the private right of action under ERISA.
Similarly, HHS will not enforce the requirement that non-federal governmental plans provide contact information for the EBSA or a state department of insurance. This safe harbor is applicable as long as such a plan provides contact information for member assistance provided by any third-party administrator or health insurance issuer that is hired by or contracts with the plan, and, if available, consumer assistance offered directly by the plan such as applicable member services, employee services, human relations or fiscal or personnel department, or consumer support services, if applicable.
Notice requirement. PHSA Sec. 2719 requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage have an effective internal claims and appeals process. PHSA Sec. 2719(a)(2)(A) requires that such plans and health insurance issuers in the group market provide an internal claims and appeals process that initially incorporates the procedures of 29 CFR 2560.503-1 (the Department of Labor claims procedure regulation) and update such procedures in accordance with any standards established by the Secretary of Labor for such plans and issuers.
The Department of Labor claims procedure regulation clarifies the manner and content of notification of benefit determinations, which include certain disclosures. Among these required disclosures is a statement of the claimant’s right, under ERISA Sec. 502(a), to bring a civil action following review of an adverse benefit determination. ERISA Sec. 502(a) permits a plan participant or beneficiary to bring a civil action, among other purposes, “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
In addition, the Departments of the Treasury, Labor, and HHS have provided model notices for adverse benefit determinations. The model notices outline information that must be provided to claimants, including contact information for EBSA or a state’s department of insurance, as well as contact information for a consumer assistance program established under PHSA Sec. 2793 if one is available in that state.
Private right of action not available. The private right of action under ERISA Sec. 502(a) is not available to participants or beneficiaries of non-federal governmental plans, and the EBSA does not provide services to these participants or beneficiaries. In some cases, state departments of insurance do not provide services to these participants or beneficiaries. However, PHSA Sec. 2722(a) requires that non-federal governmental plans comply with the requirements found in the Department of Labor’s claims procedure regulation and the rules implementing PHSA Sec. 2719, including providing information on the private right of action under ERISA Sec. 502(a), and the information contained in the model notices. HHS indicates that complying with these requirements would place non-federal governmental plans in the difficult position of providing inaccurate information to participants or beneficiaries.
Consumer assistance program. In states that do not have a consumer assistance program, non-federal governmental plans that seek to take advantage of this safe harbor must provide the contact information for HHS’ Health Insurance Assistance Team (HIAT). The contact information for HIAT is 888-393-2789.
Other requirements still apply. This guidance does not provide non-federal governmental plans with relief from any other requirements of the PHSA, including the requirement that they provide all other notices required by the Department of Labor claims procedure regulation. Furthermore, to the extent that a non-federal governmental plan purchases a fully-insured health insurance policy for its participants or beneficiaries, or to the extent that state departments of insurance provide services to these participants or beneficiaries, HHS expects that participants and beneficiaries will receive the required contact information for the state department of insurance (or any other applicable state department).
Similarly, HHS will not enforce the requirement that non-federal governmental plans provide contact information for the EBSA or a state department of insurance. This safe harbor is applicable as long as such a plan provides contact information for member assistance provided by any third-party administrator or health insurance issuer that is hired by or contracts with the plan, and, if available, consumer assistance offered directly by the plan such as applicable member services, employee services, human relations or fiscal or personnel department, or consumer support services, if applicable.
Notice requirement. PHSA Sec. 2719 requires that non-grandfathered group health plans and health insurance issuers offering non-grandfathered group or individual health insurance coverage have an effective internal claims and appeals process. PHSA Sec. 2719(a)(2)(A) requires that such plans and health insurance issuers in the group market provide an internal claims and appeals process that initially incorporates the procedures of 29 CFR 2560.503-1 (the Department of Labor claims procedure regulation) and update such procedures in accordance with any standards established by the Secretary of Labor for such plans and issuers.
The Department of Labor claims procedure regulation clarifies the manner and content of notification of benefit determinations, which include certain disclosures. Among these required disclosures is a statement of the claimant’s right, under ERISA Sec. 502(a), to bring a civil action following review of an adverse benefit determination. ERISA Sec. 502(a) permits a plan participant or beneficiary to bring a civil action, among other purposes, “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
In addition, the Departments of the Treasury, Labor, and HHS have provided model notices for adverse benefit determinations. The model notices outline information that must be provided to claimants, including contact information for EBSA or a state’s department of insurance, as well as contact information for a consumer assistance program established under PHSA Sec. 2793 if one is available in that state.
Private right of action not available. The private right of action under ERISA Sec. 502(a) is not available to participants or beneficiaries of non-federal governmental plans, and the EBSA does not provide services to these participants or beneficiaries. In some cases, state departments of insurance do not provide services to these participants or beneficiaries. However, PHSA Sec. 2722(a) requires that non-federal governmental plans comply with the requirements found in the Department of Labor’s claims procedure regulation and the rules implementing PHSA Sec. 2719, including providing information on the private right of action under ERISA Sec. 502(a), and the information contained in the model notices. HHS indicates that complying with these requirements would place non-federal governmental plans in the difficult position of providing inaccurate information to participants or beneficiaries.
Consumer assistance program. In states that do not have a consumer assistance program, non-federal governmental plans that seek to take advantage of this safe harbor must provide the contact information for HHS’ Health Insurance Assistance Team (HIAT). The contact information for HIAT is 888-393-2789.
Other requirements still apply. This guidance does not provide non-federal governmental plans with relief from any other requirements of the PHSA, including the requirement that they provide all other notices required by the Department of Labor claims procedure regulation. Furthermore, to the extent that a non-federal governmental plan purchases a fully-insured health insurance policy for its participants or beneficiaries, or to the extent that state departments of insurance provide services to these participants or beneficiaries, HHS expects that participants and beneficiaries will receive the required contact information for the state department of insurance (or any other applicable state department).
Monday, August 20, 2012
House committee spotlights IRS need to prepare for health reform law implementation
The House Committee on Oversight and Government Reform, chaired by Rep. Darrell Issa, R-Calif., held a hearing recently to examine the IRS’s implementation of the Patient Protection and Affordable Care Act (PPACA). Issa said the law "has raised serious concerns about big government intrusion into Americans’ private lives," including questions about the "privacy of personal information once held only by the IRS but now shared with state [health care] exchanges." Issa also raised questions about the ability of Americans to comply with the law’s requirements, such as a requirement to provide, within 30 days, notification to a government agency about "key information": changes in income, household composition, marriage status and insurance coverage.
IRS Commissioner Douglas H. Shulman testified that "important progress on implementation has been made." In response to questioning from Rep. Danny Davis, D-Ill., Shulman said that the IRS will not have access to private health care information and will only get "barebones information. The IRS’s role has been way overstated. The IRS won’t have access to health care information except for the fact of coverage." The information provided will include whether the taxpayer has coverage, how many months the taxpayer has had coverage, and the identity of the insurer, Shulman indicated.
Shulman said that 92 percent of the IRS’s budget request for PPACA implementation for fiscal year 2013 is for operations support, information technology and operations investments. Shulman denied reports that the IRS will be hiring 16,000 agents to verify health insurance coverage and to enforce the health care law. "Generally, revenue agents…would not work on resolving these types of issues. Typically, these issues are addressed and resolved through written correspondence," he said.
Communication, education needed. IRS National Taxpayer Advocate Nina Olson told the committee that "the IRS has made significant progress toward ACA implementation," but "there remain significant concerns." Olson said a top IRS priority should be "communication and outreach to the many Americans who will not interact with the IRS on health insurance for the first time. In particular, these taxpayers may need education on the method by which the premium assistance tax credit is advanced to insurers and later reconciled with their tax returns. Finally, channels must be open for taxpayer referrals where another agency [such as the Department of Health and Human Services] makes a determination that the IRS must execute, and vice versa."
Olson testified that "certain ACA provisions have tax consequences that require Americans to understand their role beyond traditional return-filing at year-end. In particular, taxpayers at certain income levels may qualify for a premium assistance tax credit advanced by the government to their insurer. If their income at year-end turns out to be more than anticipated, the credit may be less than the amount advanced, and the IRS may recover the excess as a tax. To avoid receiving an excess, taxpayers may need to update information if their income or other relevant circumstances change. In effect, the premium assistance tax credit requires not only an initial application and a year-end tax return but ongoing updates on major life changes throughout the year. Because this updating role will be new, education of taxpayers is necessary to avoid unexpected tax consequences."
Former IRS Commissioner Mark W. Everson, vice-chairman of alliantgroup, L.P., Houston, Tex., stated that the need for the updating and timely provision of information will be new for taxpayers. Everson expressed concern that there will be "new players" handling tax-related information, such as exchanges, state governments and insurers, and that it will be challenging for these actors to protect against the improper disclosure of information.
Premium assistance tax credits questioned. Rep. Scott DesJarlais, R-Tenn., and other members of the committee questioned whether the IRS had exceeded its authority by providing for the premium assistance tax credit when taxpayers obtained affordable insurance through an exchange established by the federal government, as opposed to state governments. Shulman defended the IRS regulatory process and the Service’s reliance on career attorneys to draft proper regulations. The committee also heard from Michael Cannon, director of health policy studies, Cato Institute, Washington, D.C., who testified that premium assistance tax credits are not available through federal exchanges, and Prof. Timothy Jost, Washington and Lee University, Lexington, Va., who disagreed with Cannon.
IRS Commissioner Douglas H. Shulman testified that "important progress on implementation has been made." In response to questioning from Rep. Danny Davis, D-Ill., Shulman said that the IRS will not have access to private health care information and will only get "barebones information. The IRS’s role has been way overstated. The IRS won’t have access to health care information except for the fact of coverage." The information provided will include whether the taxpayer has coverage, how many months the taxpayer has had coverage, and the identity of the insurer, Shulman indicated.
Shulman said that 92 percent of the IRS’s budget request for PPACA implementation for fiscal year 2013 is for operations support, information technology and operations investments. Shulman denied reports that the IRS will be hiring 16,000 agents to verify health insurance coverage and to enforce the health care law. "Generally, revenue agents…would not work on resolving these types of issues. Typically, these issues are addressed and resolved through written correspondence," he said.
Communication, education needed. IRS National Taxpayer Advocate Nina Olson told the committee that "the IRS has made significant progress toward ACA implementation," but "there remain significant concerns." Olson said a top IRS priority should be "communication and outreach to the many Americans who will not interact with the IRS on health insurance for the first time. In particular, these taxpayers may need education on the method by which the premium assistance tax credit is advanced to insurers and later reconciled with their tax returns. Finally, channels must be open for taxpayer referrals where another agency [such as the Department of Health and Human Services] makes a determination that the IRS must execute, and vice versa."
Olson testified that "certain ACA provisions have tax consequences that require Americans to understand their role beyond traditional return-filing at year-end. In particular, taxpayers at certain income levels may qualify for a premium assistance tax credit advanced by the government to their insurer. If their income at year-end turns out to be more than anticipated, the credit may be less than the amount advanced, and the IRS may recover the excess as a tax. To avoid receiving an excess, taxpayers may need to update information if their income or other relevant circumstances change. In effect, the premium assistance tax credit requires not only an initial application and a year-end tax return but ongoing updates on major life changes throughout the year. Because this updating role will be new, education of taxpayers is necessary to avoid unexpected tax consequences."
Former IRS Commissioner Mark W. Everson, vice-chairman of alliantgroup, L.P., Houston, Tex., stated that the need for the updating and timely provision of information will be new for taxpayers. Everson expressed concern that there will be "new players" handling tax-related information, such as exchanges, state governments and insurers, and that it will be challenging for these actors to protect against the improper disclosure of information.
Premium assistance tax credits questioned. Rep. Scott DesJarlais, R-Tenn., and other members of the committee questioned whether the IRS had exceeded its authority by providing for the premium assistance tax credit when taxpayers obtained affordable insurance through an exchange established by the federal government, as opposed to state governments. Shulman defended the IRS regulatory process and the Service’s reliance on career attorneys to draft proper regulations. The committee also heard from Michael Cannon, director of health policy studies, Cato Institute, Washington, D.C., who testified that premium assistance tax credits are not available through federal exchanges, and Prof. Timothy Jost, Washington and Lee University, Lexington, Va., who disagreed with Cannon.
