Obama's "You Can Keep Your Plan" Announcement Isn't Up to Him

It's been awhile since I've posted due to trying to see every client I have along with renewing most of my groups with a December renewal date, but I thought I'd jump into the fray.

1. I've been amazed at how many times the Oval Office has made an announcement changing the law without due process. If a law is passed and someone wants to amend it, typically an amendment needs to be written and approved. This has not been the case with the Affordable Care Act (sorry, it's a beef of mine - I believe in following due process).

2. Now that the President has stated that insurance companies may be allowed to continue their plans up to the end of 2014, both the Directors of Insurance of each state AND the insurance companies within each state now need to make decisions.

3. The Director of Insurance (DoI) is the person who can decide whether to allow insurance companies to continue existing plans within that state. If the DoI chooses to disallow it, then it will be as if the President didn't make that announcement.

4. If the DoI says yes, the individual insurance companies can still say no. Insurance companies need to weigh the split in risk pools this may cause (or if they are pooling the risk pools, how the decrease in premium for existing plans will impact it). One of the reasons to force people onto the new plans is to get enough healthy people in the risk pool to pay for the unhealthy people. The whole risk model will change if this is the case and insurance companies need to carefully assess whether this makes sense. Furthermore, if insurance companies have already cancelled plans or people have chosen plans to migrate to, will the insurance companies be willing to go back and allow people to back on their old plans?

5. Let's say that insurance companies choose to continue existing plans. Policyholders should still see an increase in their premiums due to the new taxes that the Affordable Care Act has imposed. You have the $5.25/month belly button tax (transitional reinsurance fee paid for each person on a health insurance plan), person's portion of the health insurer tax (around 3% - 4% of the cost of the plan), and patient centered research outcome fee of $2/year. For a family of 4 whose current premium is $1000/month, this will mean the following extra costs: $21/month, $35/month (estimated at 3.5% health insurer fee), and $0.17/month pcori fee ($57.17/month total) assuming no other items included.

Essential Health Benefits, who needs to provide them starting in 2014.

Essential Health Benefits, who needs to provide them starting in 2014. 

This section also says that plans will continue to impose restrictions on services consistent with the plan option the state chooses for their essential health benefits (EHB) plan. For example, limiting the number of physical therapy visits.

#10 of the following guidance states:

Q: How would the intended EHB policy affect self-insured group health plans, grandfathered group health plans, and the large group market health plans?  How would employers sponsoring such plans determine which benefits are EHB when they offer coverage to employees residing in more than one State?

A:  Under the Affordable Care Act, self-insured group health plans, large group market health plans, and grandfathered health plans are not required to offer EHB.

However, the prohibition in PHS Act section 2711 on imposing annual and lifetime dollar limits on EHB does apply to self-insured group health plans, large group market health plans, and grandfathered group market health plans.  These plans are permitted to impose non-dollar limits, consistent with other guidance, on EHB as long as they comply with other applicable statutory provisions.  In addition, these plans can continue to impose annual and lifetime dollar limits on benefits that do not fall within the definition of EHB.

To determine which benefits are EHB for purposes of complying with PHS Act section 2711, the Departments of Labor, Treasury, and HHS will consider a selfinsured group health plan, a large group market health plan, or a grandfathered group health plan to have used a permissible definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that is authorized by the Secretary of HHS (including any available benchmark option, supplemented as needed to ensure coverage of all ten statutory categories).  Furthermore, the Departments intend to use their enforcement discretion and work with those plans that make a good faith effort to apply an authorized definition of EHB to ensure there are no annual or lifetime dollar limits on EHB.

For the full FAQ, go to the website listed below.

http://cciio.cms.gov/resources/files/Files2/02172012/ehb-faq-508.pdf