The Department of Health and Human Services (HHS) has issued a bulletin outlining the approach it intends to pursue in rulemaking to define essential health benefits. The Patient Protection and Affordable Care Act (ACA) requires health insurance plans offered in the individual and small group markets, both inside and outside of the Affordable Insurance Exchanges (Exchanges), to offer a comprehensive package of items and services, known as essential health benefits (EHB).
The bulletin addresses only the services and items covered by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in future bulletins, and cost-sharing rules will determine the actuarial value of the plan.
HHS indicates that it is releasing this intended approach to give consumers, states, employers and issuers timely information as they work toward establishing Exchanges and making decisions for 2014. According to HHS, this approach was developed with significant input from the public, as well as reports from the Department of Labor, the Institute of Medicine, and research conducted by HHS.
Intended regulatory approach. The HHS bulletin indicates that its goal is to pursue an approach that will:
• encompass the 10 categories of services identified in the statute;
• reflect typical employer health benefit plans;
• reflect balance among the categories;
• account for diverse health needs across many populations;
• ensure there are no incentives for coverage decisions, cost sharing or reimbursement rates to discriminate impermissibly against individuals because of their age, disability, or expected length of life;
• ensure compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA);
• provide states a role in defining EHB; and
• balance comprehensiveness and affordability for those purchasing coverage.
Benchmark plan types. HHS indicates it intends to propose that EHB be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state as required by ACA Sec. 1302(b)(2)(A). This approach is based on the approach established by Congress for the Children’s Health Insurance Program (CHIP) and for certain Medicaid populations.
States are permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their state and plans offered in the individual and small group markets in their state.
States would choose one of the following health insurance plans as a benchmark:
1) the three largest small group plans in the state;
2) the three largest state employee health plans;
3) the three largest federal employee health plan options; or
4) the largest HMO plan offered in the state’s commercial market.
The benefits and services included in the health insurance plan selected by the state would be the EHB package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.
Consistent with the law, states must ensure the EHB package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a plan that does not cover all ten categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan (FEHBP), to determine the type of benefits that will be included in the EHB package.
Defraying the cost of additional benefits. ACA Sec. 1311(d)(3)(B) requires states to defray the costs of state-mandated benefits in excess of EHB for individuals enrolled in any qualified health plan either in the individual market or in the small group market. Similar to other Exchange decisions, the state may select the benchmark plan.
According to HHS, the approach for 2014 and 2015 would provide a transition period for states to coordinate their benefit mandates while minimizing the likelihood the state would be required to defray the costs of these mandates in excess of EHB. In the transitional years of 2014 and 2015, if a state chooses a benchmark subject to state mandates – such as a small group market plan – that benchmark would include those mandates in the state EHB package.
Alternatively, a state also could select a benchmark such as an FEHBP plan that may not include some or all of the state’s benefit mandates, and, therefore, under ACA Sec. 1311(d)(3)(B), the state would be required to cover the cost of those mandates outside the state EHB package.
Updating EHB. ACA Secs. 302(b)(4)(G) and (H) direct the Secretary to periodically review and update EHB. As required by the ACA, HHS will assess whether enrollees have difficulties with access for reasons of coverage or cost, changes in medical evidence or scientific advancement, market changes not reflected in the benchmarks and the affordability of coverage as it relates to EHB. HHS invites comments on approaches to gathering information and making this assessment and also encourages public input on the entire proposed approach outlined in the bulletin. Comments are due by January 31, 2012 and can be sent to EssentialHealthBenefits@cms.hhs.gov.
SOURCE: Essential Health Benefits Bulletin, Center for Consumer Information and Insurance Oversight, December 16, 2011.
Showing posts with label benefits. Show all posts
Showing posts with label benefits. Show all posts
Wednesday, December 21, 2011
Friday, September 23, 2011
Close To A Million Young Adults Have Insurance Through Health Reform
As noted earlier, implementation of health reform provisions in 2014 is projected to dramatically reduce the number of uninsured.
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With little fanfare, mostly general support, and virtually no opposition, one provision of the Patient Protection and Affordable Care Act already has helped to cover between 500,000 and 900,000 new individuals.
According to recent figures from the Census Bureau, even though young adults are the age group least likely to have health insurance, 18-24 year olds were the only age group to experience a significant increase in the percentage with health insurance, from 70.7% in 2009 to 72.8% in 2010. This two percentage point increase in the share of adults 18-24 with coverage represents 500,000 more young adults with health insurance.
This increase in the share of 18-24 year olds is most likely due to the provision in the Patient Protection and Affordable Care Act (ACA) that allows children to remain on their parents' plans until age 26 According to an issue brief from the Department of Health and Human Services' Office of the Assistant Secretary for Planning and Evaluation, "Given that the fraction with health coverage was stable or decreasing in other groups, the two percentage point increase in share with health coverage among 18-24 year olds almost certainly reflects the effects of the extension of dependent coverage to age 26."
Data from the National Center for Health Statistics of the Centers for Disease Control and Prevention (CDC) agrees. Among adults aged 19–25, the percentage without health insurance at the time of the most recent National Health Interview Survey (NHIS) fell from 33.9% (10 million) in 2010 to 30.4% (9.1 million) according to the
This percentage is lower than in 1997, when 31.4% of adults aged 19–25 were uninsured.
This is especially good news for a population that is nearly three times as likely to be underemployed in the fourth quarter of 2009 as the oldest group of workers.
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Wednesday, September 21, 2011
Could Health Reform Really Eliminate Most Of The Uninsured And Underinsured?
Two recent reports suggest that the Patient Protection and Affordable Care Act (ACA) could reduce the majority of uninsured and underinsured in the country. Does that make the law worthwhile? For employees? For employers?
A Commonwealth Fund study found that provisions in the ACA to increase health insurance affordability could reduce the number of underinsured by 70%.
The number of underinsured adults—those with health insurance, but high medical expenses relative to income—rose by 80% between 2003 and 2010, from 16 million to 29 million, according to the Commonwealth Fund. The study defined underinsured adults as those who reported at least one of the following conditions:
- among low-income adults (those with incomes below 200% of the federal poverty level (FPL)), medical expenses that are 5% or more of income; or
- per-person deductibles that are 5% or more of income.
Nearly half (44%) of U.S. adults, or 81 million people, were either underinsured or uninsured in 2010, up from 75 million in 2007 and 61 million in 2003. Low-income families were most at risk of being underinsured, according to the Commonwealth Fund. Seventy-seven percent of those with incomes below 133% FPL, and 58% of those with incomes between 133% and 250% FPL were either underinsured or uninsured. If the ACA succeeds in reaching these individuals (those with incomes lower than 250% FPL), the number of underinsured could be reduced by 70% once the law is fully implemented.
According to the report, "The ACA can diminish these risks and alleviate concerns for families; however, the extent to which it will do so depends on benefit design, the choice of plans offered through the health insurance exchanges, and growth in health care costs relative to family income. If plan designs allow for high deductibles that apply to primary care and medications or high cost-sharing for essential care, more families will be exposed to financial risk. As such, designs will need to take a value-based approach that ensures access and financial protection for essential care."
The study, Affordable Care Act Reforms Could Reduce the Number of Underinsured U.S. Adults by 70 Percent, published in the online journal Health Affairs, contained responses from 4,005 adults age 19 and older in the continental United States.
Uninsured Could Be Down To 5%
In response to the ACA, three-quarters of Americans without health insurance are likely to obtain coverage starting in 2014, according to a recent survey by the Health & Life Sciences practice of Oliver Wyman, part of Marsh & McLennan Companies. Consequently, it appears that the ACA would reduce the proportion of uninsured to 5% of the population.
Under the ACA, approximately 33 million Americans will be required to purchase health insurance for themselves, and another 18 million uninsured will be eligible to receive coverage under Medicaid. Many will receive federal subsidies, and those who choose not to obtain coverage will pay a penalty.
The study, completed through detailed surveys of approximately 800 currently uninsured individuals, asked about their health status, their income, and their attitudes toward the health system. To determine how the uninsured would make buying decisions, participants were asked to choose from among a number of actuarial-appropriately priced potential options that may be available through the health insurance exchanges beginning in 2014. Participants also could elect to could buy insurance and instead pay the applicable penalty.
Overall, 76% of respondents chose to purchase insurance. "Our research shows that uninsured Americans overwhelmingly see value in coverage," said Terry Stone, a partner in Oliver Wyman's Health & Life Sciences practice. "But few really understand their options or even what a health care exchange is. They need to be educated."
Beginning in 2014, taxpayers with household income between 100% and 400% of the federal poverty line can qualify for a sliding-scale refundable health insurance premium assistance credit. With lower federal premium assistance credits, middle-income uninsured are less likely than low-income or high-income uninsured to buy health insurance: 34% of respondents with incomes between 300% and 400% of the FPL, and 28% of those with incomes between 250% and 300% of the FPL would not buy health insurance, compared with 18% of low income (those with incomes at 100% to 133% of FPL) and 19% of those with greater disposable income at 600% or higher of FPL.
"In today's political and economic climate, we can expect pressure to reduce subsidies," said Mr. Stone. "If that happens we're likely to see more people go without insurance—and unable to purchase coverage on their own. And the group most affected will not be the poorest, but middle-income Americans."
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Monday, September 19, 2011
Determining What’s Affordable Under Health Reform
The government recently responded to employers who have questioned how to determine whether their coverage is “affordable” under the Patient Protection and Affordable Care Act (ACA).
A large employer generally is subject to an assessable payment if any full-time employee is certified to receive an applicable premium tax credit or cost-sharing reduction and either
(1) the employer does not offer to its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage; or
(2) the employer offers its full-time employees (and their dependents) the opportunity to enroll in minimum essential coverage that either is unaffordable or does not provide minimum value.
Whether an employer's health coverage is affordable to its fulltime employees is essential in determining whether an employee can receive a premium tax credit and, in turn, whether the employer is subject to an assessable payment.
The Internal Revenue Service has proposed a safe harbor that would set the affordability standard at 9.5% of wages, instead of 9.5% of household income.
Proposed Safe Harbor
In Notice 2011-73, the IRS notes that the safe harbor it plans to develop is designed to make it easier for employers to determine whether the health coverage they offer is affordable coverage. Thus, the safe harbor would use 9.5% of wages that the employer paid to an employee, instead of the employee's household income, as the standard for affordability.
This modification would be made in response to employers' comments that they generally do not know employees' household income and would be unable to determine coverage affordability using that information. This contemplated safe harbor would only apply for purposes of the employer shared responsibility provision, and would not affect employees' eligibility for health insurance premium tax credits, the IRS emphasized. An employee's eligibility for the premium tax credit would continue to be based on the affordability of employer-sponsored coverage relative to an employee's household income.
Application of the safe harbor would be determined after the end of the calendar year and on an employee-by-employee basis, taking into account the W-2 wages and the employee contribution. So, for example, the employer would determine whether it met the proposed affordability safe harbor for 2014 for an employee by looking at that employee's W-2 wages for 2014 and comparing 9.5% of that amount to the employee's 2014 employee contribution for the employer-provided health insurance premiums.
An employer also could use the safe harbor prospectively, at the beginning of the year, by structuring its plan and operations to set the employee contribution at a level so that the employee contribution for each employee would not exceed 9.5% of that employee's W-2 wages for that year, the IRS said. "It is contemplated that employers, on a consistent basis, would be permitted to make reasonable and necessary adjustments for pay periods so that the employee contribution does not exceed 9.5% of the employee's W-2 wages."
In particular, IRS seeks comments on the following issues:
- Whether or how wages and employee contribution amounts would need to be determined for employees who are employed by an employer for less than a full year, employees who move between full-time and part-time status, situations in which the plan year is not a calendar year, and other similar special circumstances.
- Whether there are other possible safe harbor methods for determining the affordability of coverage under an employer-sponsored plan for purposes of calculating an employer's potential assessable payment under IRC Sec. 4980H(b).
- How to coordinate any affordability safe harbor with the full-time employee look-back/stability safe harbor described earlier in Notice 2011-36.
Comments may be submitted via email to Notice.Comments@irscounsel.treas.gov. The deadline for comments is Dec.13, 2011. Comments should include a reference to Notice 2011-73.
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Internal Revenue Service Notice 2011-73, issued on September 13, 2011.
The shared responsibility provisions will apply to certain employers starting in 2014. The proposed safe harbor would set the affordability standard at 9.5% of wages, instead of 9.5% of household income.
In Notice 2011-36, the IRS sought comments on potential approaches that could be incorporated in future proposed regulations addressing ACA "shared responsibility" provisions, particularly the definition of a "full-time employee."
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.
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- Text, Proposed Rule, Health Reform Health Insurance Premium Tax Credit
- Explanations of the premium tax credit
- News, DOL, HHS, IRS Issue Proposed Standards, Forms For Health Care Plan Information
- Text, Proposed Rule, Summary Of Benefits And Coverage Under Health Reform
- News, ERRP Reimbursement Levels Increased
Wednesday, October 13, 2010
No tax on health care benefits - until 2018
There have apparently been concerns among many employees that passage of health care reform would mean that they would have to pay tax on the value of health benefits they receive from their employers. One source of this rumor was probably the fact that there is now a space for employers to include, if they wish, the cost of health benefits on the 2011 W-2 Form, which the IRS has just released. Inclusion of the information will be mandatory starting in 2012.
One example, from charlestonteaparty.org, states "Starting in 2011, (next year folks), your W-2 tax form sent by your Employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired? So what; your gross will go up by the amount of insurance you get."
The entry goes on to state that: "You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse. This is how the government is going to buy insurance for the 15% that don’t have insurance and it’s only part of the tax increases."
However, in a blog on the White House website, http://www.whitehouse.gov/blog/2010/10/12/putting-old-rumor-rest, Stephanie Cutter, Assistant to the President for Special Projects, has pointed out that the amount definitely will not be taxed. The reason for the new reporting requirement in Box 12 of the W-2 Form is, according to Cutter, writing to consumers, “so you can know more about your benefits and you are an empowered consumer.”
This is not entirely true either, however. While the White House is busy crowing over the fact that it has, at least in this sense, proven the health care reform naysayers wrong, it should be pointed out that there will be a tax on the cost of some health benefits, just not until 2018.
A 40-percent excise tax will be imposed on health coverage providers starting in 2018, to the extent that the aggregate value of employer-sponsored health coverage for an employee exceeds a threshold amount (Code Sec. 4980I, as added by Act Sec 9001(a) of the Patient Protection and Affordable Care Act (P.L. 111-148), and amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).
This is the tax on so-called "Cadillac" health plans. The dollar limits for determining the tax thresholds will generally be $10,200 multiplied by a health cost adjustment percentage for an employee with self-only coverage, and $27,500 multiplied by a health cost adjustment percentage for an employee with coverage other than self-only coverage.
The good news for employees is that the insurance companies, not consumers, will be responsible for paying the tax, and the vast majority of plans are not likely to reach the threshold.
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.
One example, from charlestonteaparty.org, states "Starting in 2011, (next year folks), your W-2 tax form sent by your Employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired? So what; your gross will go up by the amount of insurance you get."
The entry goes on to state that: "You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many, it also puts you into a new higher bracket so it’s even worse. This is how the government is going to buy insurance for the 15% that don’t have insurance and it’s only part of the tax increases."
However, in a blog on the White House website, http://www.whitehouse.gov/blog/2010/10/12/putting-old-rumor-rest, Stephanie Cutter, Assistant to the President for Special Projects, has pointed out that the amount definitely will not be taxed. The reason for the new reporting requirement in Box 12 of the W-2 Form is, according to Cutter, writing to consumers, “so you can know more about your benefits and you are an empowered consumer.”
This is not entirely true either, however. While the White House is busy crowing over the fact that it has, at least in this sense, proven the health care reform naysayers wrong, it should be pointed out that there will be a tax on the cost of some health benefits, just not until 2018.
A 40-percent excise tax will be imposed on health coverage providers starting in 2018, to the extent that the aggregate value of employer-sponsored health coverage for an employee exceeds a threshold amount (Code Sec. 4980I, as added by Act Sec 9001(a) of the Patient Protection and Affordable Care Act (P.L. 111-148), and amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).
This is the tax on so-called "Cadillac" health plans. The dollar limits for determining the tax thresholds will generally be $10,200 multiplied by a health cost adjustment percentage for an employee with self-only coverage, and $27,500 multiplied by a health cost adjustment percentage for an employee with coverage other than self-only coverage.
The good news for employees is that the insurance companies, not consumers, will be responsible for paying the tax, and the vast majority of plans are not likely to reach the threshold.
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.
