First the storm, now the aftermath. Historic health care reform legislation becamse law on March 23 and its "fixes" bill -- the Health Care and Education Reconciliation Act -- came a week later.
What will specific provisions mean for large employer health plan sponsors? Benefits Selling has obtained an explanation of measures, courtesy of Buck Consultants, that will change the way employer-sponsored health plans are provided. The following provisions are the most immediate and have an effective date between 2010 and 2011. Revisit our Reform Watch next month as we examine provisions effective in 2012 and beyond, or to view the full report, go to www.BenefitsSellingMag.com.
Provisions applying to employer plans
Provision: Expansion of child coverage up to age 26 if not eligible for other group coverage.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Increased enrollment and costs for covering more dependents.
Provision: Income tax exclusion of employer health benefits expanded to include adult children through year in which child turns 26.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Simplifies payroll administration
Provision: Lifetime limits prohibited for essential benefits.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Plans might need to be improved; stop-loss would become more important.
Provision: Unreasonable annual limits prohibited for essential benefits.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Plans might need to be improved; stop-loss would become more important.
Provision: Cost reporting and rebates to enrollees for insured plans with loss ratio below 85 percent.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Employers may need to establish refund mechanism.
Provision: Uniform Explanation of Coverage - federally-prescribed appearance, content, language and timing. Notice due within two years of enactment.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Will need to be coordinated with other employee communications materials.
Provision: Pre-existing exclusions prohibited for children under 19.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Provision: Reporting plan value on W-2.
Effective Date: 2011
Implications for large employers: Value of coverage is disclosed but not taxed directly to employees.
Provision: Standardize definition of medical expenses prohibits reimbursement of over-the-counter drugs from FSAs, HRAs and HSAs.
Effective Date: 2011
Implications for large employers: May require amendments to spending account programs.
Provision: HSA nonqualified withdrawals penalty increased from 10 percent to 20 percent.
Effective Date: 2011
Implications for large employers: Plan sponsors may want to communicate.
CLASS Act
Provision: Government run long-term care program. Employers are expected, but not required, to allow for payroll deductions and automatically enroll employees.
Effective Date: 2011
Implications for large employers: Employers may want to provide supplemental long term care programs.
Collective Bargained Coverage
Provision: For coverage maintained under a CBA ratified before March 23, 2010, all new coverage and cost-sharing rules apply upon the termination of the last CBA relating to the coverage.
Effective Date: March 23, 2010
Implications for large employers: Provides needed flexibility for CBA plans.
Provisions that do not apply the Grandfathered Employer Plans
Provision: Preventive care services covered at 100 percent.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Provision: No discrimination in favor of highly compensated employees under insured plans.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Provision: OB/GYN, Pediatrician, ER Services - No preauthorization or referral can be required.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Provision: Mandatory internal and external appeals process.
Effective Date: Plan years beginning on or after Sept. 23, 2010
Implications for large employers: Similar to current ERISA requirements.
Retiree Health
Provision: Reinsurance Program for Early Retirees (55-64) allocates $5 billion to subsidize 80 percent of costs between $15K-$90K. Terminates December 31, 2013 or when funds expended.
Effective Date: June 21, 2010
Implications for large employers: Temporary bridge to support employer retiree plans until Exchange is effective; administration appears similar to RDS.
Provision: Review of retiree programs for compliance with plan requirements.
Effective Date: Various
Implications for large employers: Could have significant FAS/GASB implications.
Provision: Phase out of Donut Hole offers $250 rebate in 2010 for beneficiaries who reach donut hole. Phases out donut hole by 2020 in combination with brand drug discount.
Effective Date: 2010
Implications for large employers: Makes participation in Part D more attractive to employers relative to RDS. May result in plans failing actuarial equivalence.
Provision: Brand Drug Coverage in Part D Donut Hole Drug manufacturers required to discount brand drugs in donut hole by 50 percent.
Effective Date: 2011
Implications for large employers: Makes participation in Part D more attractive to employers relative to RDS.
Provision: Means-based Medicare Part D premiums will be increased for higher income retirees.
Effective Date: 2011
Implications for large employers: Makes employer-provided Rx that much more attractive to high income retirees.
Provision: Medicare Advantage plan funding payments will be frozen in 2011; reduced benchmarks starting in 2012.
Effective Date: 2011
Implications for large employers: Increased retiree premiums for Medicare Advantage plans; reduced enrollment.
Insurance Market Reform for Individuals and Small Groups
Provision: Medical loss ratios - minimum standards will be 80 percent individual market and small groups; 85 percent Group market.
Effective Date: Plan years beginning on/after March 23, 2010
Implications for large employers: More robust individual market is especially valuable to former employees, particularly early retirees.
Provision: Small Employer will get subsidies if they have up to 25 employees.
Effective Date: 2010
Implications for large employers: Will some large employers now be at a competitive disadvantage?
Taxes
Provision: Ten percent tax on indoor tanning services.
Effective Date: July 2010
Implications for large employers: Generally will not impact employer plans.
Provision: Pharmacy Manufacturer Tax will raise $2.5 billion in 2011 increasing to $4.2 billion in 2018; $2.8 billion in 2019+ .
Effective Date: 2011
Implications for large employers: Increased cost-shifting.
