At the beginning of September, the Department of Health and Human Services' (HHS) Office of Consumer Information and Insurance Oversight (OCIIO) issued guidance on the process for obtaining waivers of health plans' annual limits requirements under Public Health Service Act (PHSA) Sec. 2711, added by the Patient Protection and Affordable Care Act. The guidance is in Memorandum, OCIIO 2010-1.
PHSA Sec. 2711 requires the HHS to impose restrictions on the imposition of annual limits on the dollar value of essential health benefits for any participant or beneficiary in a new or existing group health plan or a new policy in the individual market for plan or policy years beginning on or after Sept. 23, 2010, and prior to Jan. 1, 2014. Specifically, HHS has the authority to determine what constitutes a "restricted annual limit" that can still be imposed under such plans or policies prior to Jan. 1, 2014.
Interim final regulations published on June 28 established guidance for these restricted annual limits. The regulations also provided that the HHS may waive these restricted annual limits if compliance with the interim final regulations would result in a significant decrease in access to benefits or a significant increase in premiums.
Plans affected. Certain group health plans and health insurance coverage, generally known as "limited benefit" plans or "mini med" plans, often have annual limits well below the restricted annual limits set out in the interim final regulations. These group plans and health insurance coverage often offer lower-cost coverage to part-time workers, seasonal workers, and volunteers who otherwise may not be able to afford coverage at all.
Waiver process. The OCIIO memorandum indicates that a group health plan or health insurer may apply for a waiver from the restricted annual limits set forth in the interim final regulations if the plan or the coverage offered by the insurer was offered prior to Sept. 23, 2010, for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011, by submitting an application not less than 30 days before the beginning of that plan or policy year, or in the case of a plan or policy year that begins before Nov. 2, 2010, not less than ten days before the beginning of that plan or policy year. The application must include the following information:
The terms of the plan or policy form(s) for which a waiver is sought;
The number of individuals covered by the plan or policy form(s) submitted;
The annual limit(s) and rates applicable to the plan or policy form(s) submitted;
A brief description of why compliance with the interim final regulations would result in a significant decrease in access to benefits for, or significant increase in premiums paid by, those currently covered by, those plans or policies, along with any supporting documentation; and
An attestation, signed by the plan administrator or chief executive officer of the issuer of the coverage, certifying that: (1) the plan was in force prior to Sept. 23, 2010, and (2) the application of restricted annual limits to such plans or policies would result in a significant decrease in access to benefits for, or a significant increase in premiums paid by, those currently covered by those plans or policies.
The memorandum indicates that the HHS will process complete waiver applications within 30 days of receipt, except that complete applications submitted for plan or policy years beginning before Nov. 2, 2010 will be processed no later than five days in advance of that plan or policy year.
Waiver approval. A waiver approval granted under this process applies only for the plan or policy year beginning between Sept. 23, 2010, and Sept. 23, 2011. A group health plan or health insurer must reapply for any subsequent plan or policy year prior to Jan. 1, 2014, when the waiver expires.
Where to send application. Plans may apply for the waiver by sending the required items within the specified time frames to HHS, Office of Consumer Information and Insurance Oversight, Office of Oversight, attention James Mayhew, Room 737-F-04, 200 Independence Ave. SW, Washington, DC20201 or by emailing the items to healthinsurance@hhs.gov (use "waiver" as the subject of the email).
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.
Provisions of the Patient Protection and Affordable Care Act will boost national health care spending and some insureds' costs only slightly from 2010 through 2019, while expanding the proportion of the population with insurance, the Office of the Actuary for the Centers for Medicare and Medicaid Services (CMS) has projected. The increased cost of a greater number of insured individuals is partly offset by savings from Medicare and from lower Medicaid payments. In addition, CMS found that the main driver of increased costs will be the estimated $38 billion cost of establishing the new state health insurance exchanges.
The report, National Health Spending Projections: The Estimated Impact Of Reform Through 2019, published in the online version of the journal Health Affairs, also estimated that the average annual growth rate in health care spending over the next ten years would be 6.3%, just 0.2 percentage points higher than the February estimate.
By 2019, the CMS projects that 92.7% of the population will be insured, compared with 85.6% of the population in 2009, with 32.5 million more people insured. Also in 2019, health care costs will represent nearly 20% of the U.S. gross domestic product (GDP), compared with 17.5% of GDP in 2009. More than half of the newly insured population will be covered by Medicaid, and that program along with the Children's Health Insurance Program (CHIP) will insure 82.2 million people, compared with 51.8 million people in 2009.
Coverage through health insurance exchanges is estimated to rise from 15.8 million people in 2014 to 30.6 million in 2019. Coverage through employment will decline by only 100,000 people due to individuals shifting to coverage through Medicaid or through an exchange. Employer spending for health insurance is estimated to reach $1.2 trillion in 2019, with annual cost increases averaging about 4.8% in the ten years from 2009. In contrast, public funds will pay $2.3 trillion for health care in 2019.
Two provisions of the Affordable Care Act that take effect this year or next are projected to increase national spending to $10.2 billion through 2013: the high-risk pools for people with preexisting conditions and the coverage extension for dependent young adults up to age 26. Enrollment is expected to peak at about 375,000 people in the high-risk pools in 2011 and at about 1.5 million young adults in their parents' plans in 2013.
The major coverage expansions provided by the Affordable Care Act begin in 2014 and are expected to boost the growth in national health spending that year to 9.2%, compared with 6.6% growth expected prior to the enactment of health reform, the CMS noted. For years 2015 through 2019, national spending is projected to rise 6.7% annually, on average; the CMS' February projection had been 2.8%.
Rising enrollment will contribute to faster spending growth rates through 2016. However, the growth will slow substantially after that due to Medicare reduced payment updates for providers and the excise tax on high-cost insurance plans beginning in 2018, the CMS explained.
"In this analysis, we have shown that the net impacts of key Affordable Care Act and other legislative provisions on total national health expenditures are moderate, but the underlying effects on payer spending levels and growth rates are much more pronounced and reflect the Affordable Care Act's many substantive changes to health care coverage and financing," the CMS concluded. "As the provisions are implemented over time, their actual impacts may well differ considerably from these estimates."
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.
The IRS has announced that beginning with expenses incurred on and after January 1, 2011, health FSA and HRA debit cards may not be used to purchase over-the-counter (OTC) medicines or drugs.
What's the reason for this change? According to IRS Notice 2010-59, it relates to changes made to the FSA rules under the Affordable Care Act. You'll recall that under the Act, the cost of an OTC medicine or drug can't be reimbursed from an FSA or similar account unless a prescription is obtained.
Unfortunately, current debit card systems can't ensure compliance with this new requirement, because the systems aren't capable of recognizing that the medicines or drugs in question are authorized by a prescription.
The IRS is providing a bit of wiggle room: it will not challenge the use of FSA debit cards for OTC expenses through January 15, 2011. This is intended to help facilitate making the necessary changes to existing systems. On and after January 16, 2011, though, OTC medicine or drug purchases at all providers and merchants (whether or not they have an inventory information approval system) must be substantiated before reimbursement may be made.
So, how can these expenses be substantiated for reimbursement from an FSA? The IRS offers a couple of examples. First, a customer receipt issued by a pharmacy that identifies: (1) the name of the purchaser (or the name of the person for whom the prescription applies), (2) the date and amount of the purchase and (3) an Rx number satisfies the substantiation requirements for OTC medicines or drugs. Second, a receipt without an Rx number accompanied by a copy of the latest related prescription also satisfies the requirements.
