Predicting Health Insurance Rates for 2016 in Illinois

Predicting Health Insurance Rates for 2016 in Illinois

By Robert Slayton

One good thing that came out of the Affordable Care Act is that any insurance company that is going to raise premiums more than 10 percent for individual or small group medical plans is required to file with the Federal Government. This information is made public so we can review it.
Unlike other states, Illinois has no authority to prevent the increases from being implemented as requested (this isn’t necessarily a bad thing, but just the way it is in Illinois). Based upon those rate increase requests, we have a pretty good idea of who will be the competitive players in the market for 2016.

BCBS of IL has requested increases from 12.83% to 38.24% for ACA plans. As a result, BCBS of IL is eliminating the Blue PPO (large PPO network) option in 2016 for ACA plans. All members on this plan will be migrated to the smaller Blue Choice network (which has about 40% of the doctors/hospitals as the larger network). This will impact approximately 173,000 people. Also expect BCBS to eliminate other plans that have been unprofitable.

If you are on a transitional plan, (plans written after 3/23/2010 to 12/31/2014) you may see increases of over 46%.

Coventry, Humana, and Health Alliance have also requested increases. If you look at the table below, it shows, generally, which increase impacts which plan. If you are on a subsidized plan, you will not see as dramatic of an increase if your income has stayed the same. Subsidies are based upon the second lowest silver plan. The assumption is that this plan will be more expensive in 2016 therefore providing you with a bigger subsidy. For everyone else, it will be a choice of paying the increase or keeping cable.

Aetna (who owns Coventry), Land of Lincoln Health, and IlliniCare are not listed as requesting a rate increase even though I’ve heard rumblings that some have. If we go with the assumption that they will increase rates less than 10%, then these will be some of the players who will win business away from BCBS.

One unknown is Land of Lincoln Health. I’ve had conversations with a board member who says the financials look good (doesn’t mean that they made a profit as it is difficult for any start up to make a profit in the first several years). If they continue to perform as they have, I’d say they will be the company most move to.

Expect all insurance companies to modify the plans they offer. We probably won’t know what these will look like until open enrollment begins on 11/1.

Below are the rates increase requests for ACA compliant plans.

For Transitional plans, here’s the rate table.

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.

Explanation of Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options

Explanation of Guidance on HRAs, Health FSAs and Certain Other Employer Healthcare Arrangement Options

By Larry Grudzien

Attorney-At-Law

September 16, 2013 

On Friday, September 13, the Departments of Labor, Treasury and Health and Human Services provided guidance on the application of certain provisions of the Affordable Care Act (Act) on health reimbursement arrangements (HRAs), certain health flexible spending arrangements (Health FSAs) and employee assistance programs (EAPs).   The following reviews this guidance:

1. Since HRAs are group health plans under ERISA, they must meet the market reforms under the Act.

2. HRAs integrated with a group health plan will be treated as complying with both the annual dollar limit prohibition and the preventive services requirement if certain conditions are met, as explained below.

3. An HRA can be integrated with the group health plan of the employer or of another employer.

4. An HRA used to purchase individual market coverage is treated as not integrated for the annual dollar limit prohibition or the preventive services requirements. 

5. For an HRA to be except from these requirements it must qualify as either a retiree medical plan or an "excepted benefit" under HIPAA. 

6. Amounts made available under an HRA that is integrated with an eligible employer sponsored plan can be used for determining affordability or minimum value, but not both.

7. If an HRA is integrated with a plan offered by another employer for purposes of the market reforms, such an HRA cannot count toward the affordability or minimum value requirement of the plan offered by the other employer.

8. An HRA will be treated as integrated with another group health plan for purposes of the annual dollar limit prohibition and the preventive services requirements if the requirements of at least one of two integration methods, Minimum Value Not Required and Minimum Value Required, are met

Minimum Value Not Required:   This method is met if:

a)         the employer offers a group health plan (other than the HRA) to the employee that does not consist solely of excepted benefits;

b)         the employee receiving the HRA is actually enrolled in a group health plan (other than the HRA) that does not consist solely of excepted benefits, regardless of whether the employer sponsors the plan (non-HRA group coverage);

c)          the HRA is available only to employees who are enrolled in non-HRA group coverage, regardless of whether the employer sponsors the non-HRA group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer's group health plan but are enrolled in other non-HRA group coverage, such as a plan maintained by the employer of the employee's spouse);

d)    the HRA is limited to reimbursement of one or more of the following-co-payments, co-insurance, deductibles, and premiums under the non-HRA group coverage, as well as medical care (as defined under Code Section 213(d)) that does not constitute essential health benefits; and

e)    under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

This opt-out feature is required because the benefits provided by the HRA generally will constitute minimum essential coverage and will therefore preclude the individual from claiming a premium tax credit.

 

Minimum Value Required. This method is met if:

a)    the employer offers a group health plan to the employee that provides minimum value;

b)    the employee receiving the HRA is actually enrolled in a group health plan that provides minimum value, regardless of whether the employer sponsors the plan (non-HRA MV group coverage);

c)     the HRA is available only to employees who are actually enrolled in non-HRA MV group coverage, regardless of whether the employer sponsors the non-HRA MV group coverage (for example, the HRA may be offered only to employees who do not enroll in the employer's group health plan but are enrolled in other non-HRA MV group coverage, such as a plan maintained by an employer of the employee's spouse); and

d)    under the terms of the HRA, an employee (or former employee) is permitted to permanently opt out of and waive future reimbursements from the HRA at least annually, and, upon termination of employment, either the remaining amounts in the HRA are forfeited or the employee is permitted to permanently opt out of and waive future reimbursements from the HRA.

9. An employee who ceases participation in a group health plan may use any remaining amounts credited in the HRA while integrated after being covered without causing the HRA to fail to comply with the market reforms.

10. If the requirements of Minimum Value Required Integration Method are met, an HRA integrated with that group health plan will not be treated as imposing an annual limit in violation of the annual dollar limit prohibition, even if that group health plan does not cover a category of essential health benefit and the HRA is available to cover that category of essential health benefits and limits the coverage to the HRA maximum benefit.

11. If a Health FSA offered by an employer does not qualify as excepted benefits, the Health FSA generally is subject to the market reforms. If they are not integrated with a group health plan, they will fail the preventive care requirements. There will be an exception for Health FSAs from the annual dollar limit prohibition that is offered under a cafeteria plan.

12.The above exception will not apply to HRAs that could be treated as Health FSAs.

13. An Employee assistance program will be considered to be an excepted benefit, but only if the program does not provide significant benefits in the nature of medical care or treatment. Since this term is not defined in the guidance, employers may use a reasonable, good faith interpretation of whether an EAP provides such care or treatment, until further guidance is released.

14. Premiums for coverage purchased on the marketplace cannot be reimbursed under a premium only plan under Code Section 125 for tax years beginning after December 31, 2013. For any premium only plans that have a noncalendar plan years as of September 13, 2013, this restriction will not apply before the first plan year beginning after December 31, 2013. Because of this, any individual may not claim a premium tax credit for any month in which he or she was covered by a qualified health plan purchased though a state marketplace and reimbursed under a premium only plan under Code Section 125.

This provision was added because several state marketplaces established before 2013 allowed individuals to be reimbursed for individual health insurance premiums purchased through a state marketplaces from premium only plan under Code Section 125.

These provisions apply for plan years beginning on or after January 1, 2014, but may be applied for all prior periods.

 

For More Information:

If you have any comments or questions regarding any of above information, please do not hesitate to call Robert Slayton at 630-779-1144 or Larry Grudzien at (708) 717-9638 

Pediatric Dental with the Affordable Care Act – What does this mean? Do I need to Buy it?

Pediatric Dental with the Affordable Care Act – What does this mean?

Today I will be talking about State Federal and Federally Facilitated Exchanges (also known as Marketplaces). State Based Exchanges will come up with their own rules so are not included here.

Pediatric Dental is one of the 10 Essential Health Benefits required to be on a health insurance plan starting in 2014. Below is what I've been able to figure out so far. As changes happen, this will be changing.

What is Pediatric Dental?

It simply means that all children under the age of 19 will have coverage for preventative, basic, major/restorative, and most will include “medically necessary” orthodontics. Picture your current dental plan. It usually looks like the following (this would be considered a “high plan” under the new rules):

Network		e.g. Delta Dental
Deductible Individual/ Family		$50/$150
In Network/Out Network %
Preventative Care		100%/100%
Basic Care		80%/80%
Major Care		50%/50%
Orthodontia		50%
Annual Maximum		$1,000.00
Lifetime Orthodontia  Max		$2,000.00

Pediatric dental plans can be offered both as a standalone product (similar to the above) within the exchange or embedded within the medical plan.

Stand Alone

If the plan is offered as a standalone product, it will look similar to the above plan (with different percentages). The big difference is that the annual out of pocket maximum will be $700 for one child and $1400 for 2+ children. This means that if orthodontia is deemed as medically necessary, the most someone would pay in one year would be $700. Furthermore, there is NO ANNUAL MAXIMUM for children (not adults). So if a child needs $4000 of covered work done, then the child’s family would pay only $700 within that year.

Embedded within a Medical Plan

We are still waiting to see how this may look. A health insurance company can have pediatric dental’s deductible be the same as the medical deductible or have it be separate.

Do I need to buy Pediatric Dental?

Technically yes. Some states will be including it with all plans. Most states will offer a standalone dental benefit that can be combined with a separate medical plan. They will also be offering medical plans with dental included within the medical plan.

Technically, all states will require “reasonable assurance” that you own a dental plan that covers children. If you are on a Federally Facilitated Marketplace (Exchange) website, it will allow you select a medical only plan and check out without selecting a separate dental plan. It will ask you whether you have other dental and if you say yes, then you can continue. Currently there is no verification as to whether you actually have a pediatric dental plan.

If I don’t have Pediatric Dental, but do have Medical, will I be subject to the Individual Mandate?

Probably not as I believe the question on the tax return will be whether you have been covered by a health insurance plan and not ask whether your plan includes pediatric dental. Furthermore, people on grandfathered plans will not be required to have pediatric dental and will not be subject to the Mandate.

What if my company offers dental already?

Chances are that pediatric dental will NOT be part of your company’s medical plan in 2014 as the requirement states that if a company offers a standalone dental plan that covers children, then they do not need to include pediatric dental within their medical plan.

Affordable Care Act Open Enrollment FAQ for the Individual Market

Good stuff from BCBS of IL on when an individual can enroll in a health insurance plan.


May 29, 2013

Legislative Update
Affordable Care Act Question of the Week: Exchange Open Enrollment [All Markets]

We have received a number of questions about the initial open enrollment period for the Affordable Care Act (ACA). Beginning Jan. 1, 2014, most U.S. citizens and legal residents will be required to have a minimum level of health care coverage. If you have a general question about an ACA provision, contact your account representative.

Q: If an uninsured does not enroll through a health insurance exchange (also known as a health insurance marketplace) during the open enrollment period for coverage effective Jan. 1, 2014, under what circumstances may an individual enroll and receive coverage during 2014?

A: The initial open enrollment period for the exchange begins Oct. 1, 2013, and extends through March 31, 2014.

If an individual does not enroll during the initial open enrollment period or future enrollment periods (for plan years beginning on or after Jan. 1, 2015, the annual open enrollment period begins Oct. 15 and extends through Dec. 7 of the preceding calendar year), they can enroll if circumstances triggered one of the following events:

A qualified individual and any dependents losing other minimum essential coverage.
A qualified individual gaining or becoming a dependent through marriage, birth, adoption or placement for adoption.
An individual, not previously lawfully present, gaining status as a citizen, national or lawfully present individual in the United States.
A qualified individual experiencing an error in enrollment.
An individual enrolled in a Qualified Health Plan (QHP) adequately demonstrating to the exchange that the QHP in which he or she is enrolled substantially violated a material provision of its contract.
An individual becoming newly eligible or newly ineligible for advance payments of the premium tax credit or experiencing a change in eligibility for cost-sharing reductions.
New QHPs offered through the exchange becoming available to a qualified individual or enrollee as a result of a permanent move.
The individual is an Indian, as defined by the Indian Health Care Improvement Act. (We solicited comment on the potential implications on the process for verifying Indian status for purposes of this special enrollment period.)
A qualified individual or enrollee meeting other exceptional circumstances, as determined by the Exchange or Health & Human Services (HHS). Loss of coverage does not include failure to pay premiums on a timely basis, including COBRA premiums prior to expiration of COBRA coverage.
Unless specifically stated otherwise, an individual or enrollee has 60 days from the date of a triggering event to select a plan. Note: This 60-day Special Enrollment Period (SEP) window applies to the individual market. Group market is 30 days for the SEP window.

Latest News on the Affordable Care Act

I've compiled a series of interesting articles this week about different aspects of the Affordable Care Act.

First, this piece on the Federal Pre-Existing Condition Insurance Plan’s solvency (or lack thereof). The Federal Government totally under estimated the claims of those people who went on it.

http://newsmanager.commpartners.com/nahuw/issues/2013-05-24/index.html

Second is a study of the current cost of health insurance. Please look at the dollars that are currently being spent and tell me whether this is sustainable.

http://newsmanager.commpartners.com/nahuw/issues/2013-05-24/2.html

Third is Chicago Politics as its best. What do politicians do once they are elected? They hire all of their supporters of course. It looks like if you’d like a job as an assister, go talk to HHS.

http://newsmanager.commpartners.com/nahuw/issues/2013-05-24/3.html

Oops, the Government forgot that some people don’t have bank accounts with which to pay for their premiums.

http://www.npr.org/blogs/health/2013/05/21/184814772/latest-health-hurdle-buying-insurance-without-a-bank-account

Here’s something that came to my attention last week. This is in California, but may apply to other states. Doctors may be stuck with paying for patients’ care due to non-payment of health insurance premiums.

http://www.sacbee.com/2013/05/21/5438115/loophole-in-health-care-law-could.html

Unions are figuring out that they are being treated like everyone else in regards to Health Reform. Businesses don’t get special treatment, but Unions believe they should.

http://thehill.com/business-a-lobbying/300881-labor-unions-break-ranks-on-health-law

Here’s an interesting study on the impact of increasing premiums and young adults purchasing insurance. Note that this is from an organization that doesn't like the ACA.

http://americanactionforum.org/topic/young-adults%E2%80%99-insurance-decisions-dependent-cost

Small Group and the Affordable Care Act - Do I really need to comply? NO!!!

You know how things kind of ruminate in the back of your mind for awhile before you "suddenly" have a realization? That's what happened to me a last week.

If your company is less than 50 employees (combining Full Time and Full Time Equivalents), then you are considered a "Small Group" under the definition set out by the Affordable Care Act. While everyone is talking about 30 hours this, Bronze, Silver, Gold, Platinum medal plans that, penalties for not offering minimum coverage and cost, etc. The reality is that you will not be subjected to the employer mandate and therefore will not face any penalties if you do not comply with that mandate such as not offering coverage, not making it "affordable", or not offering compliant coverage (Note that there are other items which you must comply with such as providing a Summary of Benefits of Coverage to each employee).

To be straight, I'm not talking about plan designs or things outside of your control. I'm talking about changing the amount you contribute to your employee's premium, number of hours they are required to work before they are considered full time, etc.

You don't have to offer a plan that meets one of the Medal plans even though the probability of a plan being available that doesn't meet the guidelines is close to zero. You don't have to offer coverage to dependents (BTW, spouses are, by ACA definition, NOT dependents). Of course you may not be able to

You don't have to make sure that the employee only pays no more than 9.5% of their income towards employee only coverage on your lowest compliant plan to meet "Safe Harbor." As a matter of fact, it's probably NOT in your best interest to do this. You may harm your employees unknowingly. For example, if you do offer a "Bronze" level plan and meet the "Safe Harbor" of the above for the employee and offer coverage to their dependents, then your employee is NOT ELIGIBLE FOR A SUBSIDY. If you have lower income employees, this could be bad as a plan within the individual/family exchange may be less expensive and cover more than the plan you offer. For higher income employees who are close to or over the 400% Federal Poverty Level for income, this doesn't impact them much.

What does this mean? It means you have more flexibility that you know. If you have 5 or more employees (for Illinois at least - every state is different, in New York, only employers with over 50 employees are allowed to look at the following plans), and your workforce is younger and healthy, then you may want to explore a "level funded benefit" plan. This is partially self-funding. In the eyes of the government, it is considered self funded and not subject to some of the restrictions of the ACA. In the eyes of your employees, it looks and works exactly like a fully insured plan except with the possibility of receiving money back after your plan year if claims were less than expected.

Also, if your agent hasn't mentioned that you can do an early renewal (this means renewing this year, then renewing again on 12/1/2013) to push off the reforms (including changes in plan designs) until the end of 2014, call and ask them about it.

In general, work with your agent, roll up your sleeves and see what works best for your business first, then employees (understanding that without happy employees, your business will go down the drain).

IRS Issues Guidance on Health Insurance Premium Tax Credit -Clarification

IRS Issues Guidance on Health Insurance Premium Tax Credit -Clarification

February 5, 2013

By Larry Grudzien, Attorney-At-Law

The IRS issued a final regulations on when an employer-sponsored plan is considered "affordable" for an individual related to the employee for purposes of eligibility for a premium tax credit. Under Health Care Reform, employees may be eligible for a premium tax credit to purchase health insurance through the future health insurance exchanges if, among other reasons, the employer plan is deemed unaffordable.

The final regulations clarify that for taxable years beginning before January 1, 2015, an eligible employer-sponsored plan is affordable for related individuals if the portion of the annual premium the employee must pay for self-only coverage does not exceed 9.5% of the taxpayer's household income.

An employer plan will be affordable for family members if the cost of self-only coverage does not exceed 9.5% of the employee's household income. In other words, for purposes of whether family members are eligible for tax credits, the affordability of family coverage is not taken into account; all that matters is that the cost of self-only coverage is affordable to the employee

For purposes of applying the affordability exemption from the individual

mandate in the case of related individuals, the required contribution is based on the premium the employee would pay for employer-sponsored family coverage.

For an employee eligible under an employer plan, affordability (for individual mandate exemption purposes) will be based on whether the cost of self-only coverage exceeds 8% of the employee's household income. For a related individual (such as a spouse or child), however, affordability for this purpose will be based on whether the cost of family coverage exceeds 8% of household income. Under these rules, members of an employee's family may qualify for an individual mandate exemption, even though the offer of affordable employer coverage to the employee would require the employee to enroll or risk paying a penalty.

These final regulations apply to taxable years ending after December 31, 2013.

For a copy of the final regulations, please click on the link below:

 http://www.gpo.gov/fdsys/pkg/FR-2013-02-01/pdf/2013-02136.pdf

If you have any comments or questions regarding any of above information, please do not hesitate to call me (Robert Slayton) at 630-779-1144 or Larry Grudzien at (708) 717-9638.

Health Reform Resources

As I'm giving a talk today and hate killing trees, I thought I'd create a listing of helpful resources related to the Affordable Care Act's health reform.

Timeline for Implementation put out by the National Association of Health Underwriters

http://robertslayton.com/PPACA_Timeline_Brochure.pdf

Government Websites

Healthreform.gov - The federal government's official website. Although biased, it does include a wealth of information

     -Preventative Services Included in Health Reform:  
       http://www.healthcare.gov/news/factsheets/2010/07/preventive-services-list.html

Website showing proposed paperwork for employers to prove their plans meet the minimum requirements along with paperwork for individuals to sign up on the exchange.

http://cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.html

Illinois Pre-Existing Condition Insurance Program - if you have been uninsured for 6 or more months and are ineligible for individual health insurance (due to health problems).

http://www.insurance.illinois.gov/ipxp/

Websites with a good overview of the issues

Kaiser Family Foundation is recognized as having one of the best websites on health reform available.

http://healthreform.kff.org/

National Center for Policy Analysis - It's view on health reform and how to fix the crisis

http://www.ncpa.org/healthcare/

Financial Calculators

These are online calculators designed to help assess both individual health insurance exchange subsidies or penalties for businesses.

http://healthreform.kff.org/subsidycalculator.aspx - subsidy calculator
www.retailmeansjobs.com/healthcare - this is for small businesses

Small Business Resources

What's crazy about the resources below is that almost all of them were issued within the last 2 months.

Employer requirements:

 http://www.irs.gov/pub/newsroom/reg-138006-12.pdf

Definition of full-time employee

 http://www.irs.gov/pub/irs-drop/n-12-58.pdf

 http://www.irs.ustreas.gov/pub/irs-drop/n-12-17.pdf

 http://www.irs.ustreas.gov/pub/irs-drop/n-11-36.pdf

90-day waiting period limitation

 http://www.irs.gov/pub/irs-drop/n-12-59.pdf

Affordability

 http://www.irs.ustreas.gov/pub/irs-drop/n-11-73.pdf

Minimum value

 http://www.irs.ustreas.gov/pub/irs-drop/n-12-31.pdf

W2 Guidance:

 http://www.irs.gov/uac/Form-W-2-Reporting-of-Employer-Sponsored-Health-Coverage

 http://www.irs.ustreas.gov/pub/irs-drop/n-12-09.pdf

Health Reform Questions - Premium Tax Credits & Cost-Sharing Subsidies

Health Reform Questions 

- Premium Tax Credits & Cost-Sharing Subsidies                 

By Larry Grudzien

 What premium tax credits and cost-sharing subsidies are available to individuals in 2014 and who is eligible for them?

To assist individuals and families who do not qualify for Medicare or Medicaid and are not offered affordable health coverage by their employers, a refundable tax credit (the "premium tax credit") and a cost sharing subsidy will be available beginning in 2014 to help pay for insurance purchased through an Exchange. Generally, taxpayers with income between 100% and 400% of the federal poverty line (FPL) who purchase insurance through an Exchange will qualify them, as provided in Code Section 36B. and Section 1402 of the Patient Protection and Affordable Care Act ("PPACA").

A premium assistance tax credit will be provided monthly to lower the amount of premium the individual or family must pay for their coverage. Cost sharing subsidies will limit the plan's maximum out-of-pocket costs, and for some individuals will also reduce other cost sharing amounts (i.e., deductibles, coinsurance or copayments) that would otherwise be charged to them by their coverage.

Both types of assistance will be tied in some way to the value of the coverage available in the Exchanges. Four levels of plans will be offered by insurers in the exchanges. All the plans must offer a set of essential health benefits. The four plan levels vary in the total value of coverage they must provide. This amount is sometimes called "actuarial value" and represents the proportion of health insurance expenditures for covered benefits that, for an average population, would be paid by the plan. Section 1302(d)(1) of PPACA requires that the actuarial value be 60% for "bronze" plans, 70% for "silver" plans, 80% for "gold" plans and 90% for "platinum" plans. In addition, the out-of-pocket maximum for any of these plans may not exceed a limit that is determined annually. For 2013, the limit is $6,250 for individual coverage and $12,500 for family coverage.  It will be adjusted higher for 2014.

Who is eligible for the premium tax credit and cost sharing subsidy?

Citizens and legal residents in families with incomes between 100% and 400% of poverty who purchase coverage through a health insurance exchange are eligible for a premium tax credit cost sharing subsidy to reduce the cost of coverage. individuals eligible for public coverage are not eligible for premium assistance in Exchanges. In states without expanded Medicaid coverage, individuals with incomes less than 100% of poverty will not be eligible for Exchange subsidies, while those with incomes at or above poverty will be.

Would an individual be eligible for premium tax credits and cost-sharing subsidies in the Exchange if he or she is offered "minimum essential coverage" by his or her employer in that it is both affordable and provides minimum value, but declines it and obtains coverage in the Exchange?

No. As a general rule, if an eligible employer-sponsored plan constitutes "minimum essential coverage" in that it is both affordable and provides minimum value merely being eligible for the plan will make an individual ineligible for the tax credit. In  Treasury Regulation Section 1.36B-2(c)(3)(iii)(A), the IRS indicates that an eligible employee who declines enrollment in such a plan remains ineligible for the tax credit for each month in the coverage period related to the enrollment period (e.g., for the full plan year in the case of an annual enrollment period).

Would an individual be eligible for premium tax credits and cost sharing subsidies in the Exchange if he or she is enrolled coverage offered by his or employer that is either unaffordable and does not provides minimum value?

If an employee actually enrolls in an eligible employer-sponsored plan, the tax credit is not available-even if the plan does not meet the affordability and minimum value conditions, as provided in Code Section 36B(c)(2)(C)(iii). Employees who are automatically enrolled in an eligible employer-sponsored plan have a grace period to unwind the enrollment to maintain their eligibility for the tax credit, as provided in Treasury Regulation Section 1.36B-2(c)(3)(vii)(B). An employee is not considered eligible for minimum essential coverage (i.e., may qualify for the tax credit) during any required waiting period before coverage becomes effective under an eligible employer-sponsored plan. The IRS is expected to provide a safe harbor under which an employer would not have to pay the shared responsibility tax penalty under Code § 4980H for failing to offer coverage for at least the first three months after an employee's hire date, as provided in Department of Labor Technical Release 2012-01, Q/A-3.

Individuals who meet these thresholds for unaffordable employer-sponsored insurance are eligible to enroll in a health insurance exchange and may receive tax credits to reduce the cost of coverage purchased through the exchange.

What are the amounts of the premium tax credit and cost- sharing subsidies to be provided?

Under Code Section 36B(b), the amount of the tax credit that a person can receive is based on the premium for the second lowest cost silver plan in the Exchange . A silver plan is a plan that provides the essential benefits and has an actuarial value of 70%. (A 70% actuarial value means that on average the plan pays 70% of the cost of covered benefits for a standard population of enrollees.)

Under Code Section 36B(b)(3), the amount of the tax credit varies with income such that the premium that the premium a person would have to pay for the second lowest cost silver plan would not exceed a specified percentage of their income (adjusted for family size), as follows:

Household Income (as percentage of  Federal Poverty Line (FPL) Premium as a Percent of Household Income

Up to133%           2%  of income

133-150%             3-4% of income

150-200%             4-6.3% of income

200-250%             6.3-8.05%  of income

250-300%             8.05-9.5% of income

300-400%             9.5% of income

 

In addition, Section 1402(b) of PPACA limits the total amount that people must pay out-of-pocket for cost sharing for essential benefits. Generally, the limits are based on the maximum out-of-pocket limits for Health Savings Account-qualified health plans ($6,250 for single coverage and $12,500 for family coverage in 2013), which will be indexed to the change in the Consumer Price Index until 2014 when the provision takes effect.

After 2014, the limits will be indexed to the change in the cost of health Coverage. Individuals with incomes at or below 400% of federal poverty line have their out-of-pocket liability capped at lower levels, as follows:

Household Income (as percentage of Federal Poverty Line (FPL) 

Reduction in Out-of-Pocket Liability

100-200%             Two-thirds of the maximum

200-300%             One-half of the maximum

300-400%             One-third of the maximum

 

The limits on out-of-pocket maximum amounts means that a person with income of 150% of poverty purchasing coverage in the exchange would have the limit on their out-of-pocket spending reduced to at least two-thirds of the generally applicable maximum value (for example, if the provision were in effect in 2013, the out-of-pocket maximum for single coverage for such a person would be about $2,083 for single coverage and $4,166 for family coverage).

In addition, Section 1402(c) of PPACA provides that federal payments will be made to health insurers to increase the actuarial value of the plan for individuals with household incomes under 250% of the federal poverty line. For example, for individuals with household incomes between 100% and 150% of federal poverty line, the actuarial value of the plan will be increased to 94%. That means that in addition to keeping within the lower out of pocket maximums established above, insurers must make other changes to increase the actuarial value of the coverage. Most likely this will mean reducing plan deductibles, coinsurance or copayments in order to meet the higher actuarial value requirements.

For individuals with household incomes over 250% of federal poverty line, the actuarial value of their plan may not exceed 70%, which is the basic value of the silver plan even for those who receive no financial assistance. This means that, for some individuals, some cost sharing amounts could increase. That would happen if their out of pocket maximum was decreased to keep within the required lower maximum, because the deductibles, copayments or coinsurance that would otherwise apply would have to be increased to keep the actuarial value at 70%.

The last cost sharing subsidy is summarized below:

Household Income (as percentage of Federal Poverty Line (FPL) Net Value of the Subsidy (% of Actuarial Value)

Out-of-Pocket Liability

100-150%                            94%

150-200%                         87%

200-250%                         73%

250-400%                         70%

Who determines an individual's eligibility for the premium tax credit and the cost-sharing subsidies?

Under 45 CFR Section 155.300, HHS is requiring the Exchanges to establish a system of coordinated eligibility and enrollment so that an individual can simultaneously apply for enrollment in a Qualified Health Plan ("QHP"), as well as Insurance Affordability Programs ("IAPs"), including the premium tax credit and cost-sharing reductions. Under Treasury Proposed Regulation Section 301.6103(l)(21). The IRS is permitted to disclose income and other specified information about an individual taxpayer to HHS for purposes of making eligibility determinations for advance payments of the premium tax credit or the cost-sharing reductions.

When an individual purchases a Qualified Health Plan how are any credits and subsidies applied?

Under the Actuarial Value and Cost-Sharing Reductions Bulletin (released by HHS), when an individual receives covered essential health benefits, the provider would collect from the individual only the amount of cost-sharing specified in the silver plan variation in which the individual is enrolled. The federal government would pay in advance to the insurer amounts estimated to cover the cost-sharing reductions associated with the specific silver plan variation. HHS intends to propose that this advance cost-sharing reduction payment to the insurer would occur monthly, and that after the end of the calendar year, the federal government would reconcile the advance payments to actual cost-sharing reduction amounts. 

The Exchange must report to the IRS and to each taxpayer required information for the Qualified Health Plan in which the employee (or a member of the employee's family) is enrolled through the Exchange, as provided in Treasury Regulation Section 1.36B-4. In turn, individuals who receive advance payments of the premium tax credit must file an income tax return for that taxable year, as provided in Treasury Regulation Section 1.36B-5.

For More Information:

If you have any comments or questions regarding any of above information, please do not hesitate to call (708) 717-9638 or e-mail at  larry[at]larrygrudzien[dot]com

Family Health Premiums reach $15,745 this year and how much you'll need to pay in 2014

I was reading USA Today this morning and an article listed two surveys stating that the average cost of coverage for a family is $15,745/year (http://usat.ly/PiBDpC) with employees paying $4,300/year of that cost. This translates into a 4% increase from last year, but with salary increases flat, the average family just lost buying power.

That said, let's see how the Affordable Care Act will impact the employee's portion of the cost of insurance in 2014. Here are the actual percent payouts based upon family income:

• 150% - 200% of Federal Poverty Level (FPL) equals people paying up to 6.3% of their income on health insurance. 
• 201% - 250% of FPL equals 8.05% of their income on health insurance. 
• 250% - 400% FPL equals 9.5% of their income on health insurance.

Let's see how this stacks up with the $4,300/year the average family pays towards their health insurance (assuming a family of 4).
In 2012, the FPL is $23,050 for a family of four.
150% of FPL = $34,575/year of income with a maximum spent on health insurance being $2,178.23.
200% of FPL = $46,100/year of income with a maximum spent on health insurance being $3,711.05.
250% of FPL = $57,625/year of income with a maximum spent on health insurance being $5,474.38.

What this means, especially in the Chicagoland area, is that you won't notice a change in your premium when health reform occurs. What health reform gives you is an opportunity of purchasing your own coverage and NOT being depended upon your employer. It will be interesting to see how many employees leave to start their own businesses or become consultants.

[Removed]

Again, the Affordable Care Act is not what it is hyped to be. There will be no "free healthcare" for the majority of Americans. Most likely, they will be paying the same or a little bit more for their coverage than what they are paying now. The best part of health reform is that anyone can obtain a plan (guaranteed issue), with no pre-existing conditions (everything is covered from day one - as long as the insurance plan covers the conditions), and a person cannot be charged an extra premium other than if they are a smoker (community rating).

IRS To Apply Tax Credits to All Health Insurance Exchanges

As stated in an Associated Press article, Republicans grilled the Internal Revenue Service on it's decision to apply tax credits to all exchanges, regardless of whether they are state run or federally run. The law itself is fuzzy in that many interpreted it to say that if the Federal Government ran the exchange, then there would be no tax credits for individuals.

Furthermore, one item which not enough people have realized is that the individual mandate has no teeth. The IRS cannot file criminal charges, seize bank accounts, or garner wages. All they can do is withhold a person's refund. As over 40% of the American population doesn't pay income tax, it really is a moot point.

Here's a link to the original article.

http://news.yahoo.com/republicans-grill-irs-commissioner-health-care-193257220.html

Transitional reinsurance program may add 3% - 4% to costs for individual and group health insurance according to United Healthcare

United Healthcare and Anthem Blue Cross Blue Shield both send out information on the transitional reinsurance program which is a part of the Affordable Care Act. According to United Healthcare, this program will increase cost 3% to 4% starting in 2014. The purpose of the reinsurance program is to stabilize the premiums of insurers who take on high cost people (think about your Aunt Edna who is 400 pounds, has high blood pressure, high cholesterol, diabetes, takes 8 medications/day and needs a double knee replacement) in the individual market due to it being guaranteed issue with no pre-existing conditions. This plan will compensate those insurance companies who insure those individuals. The reinsurance program fees will total $12 billion in 2014 and gradually decrease to $5 billion in 2016. States can actually increase these fees at their discretion.

What this means is that the average cost of a health insurance plan will be 3%-4% higher in 2014 due to this reinsurance program alone (fees are ultimately passed on to consumers).

Also starting September 30, 2012 there is a new fee assessed on health insurers (and self insured plans) of $1 per covered life and increasing to $2 per covered life in the second year. This fee helps to fund research on the effectiveness of medical treatments conducted by the new Patient-Centered Outcomes Research Institute (PCORI). The good news is that the most effective treatments will be found and recommended. The bad news is that I wouldn't be surprised if expensive and obscure treatments are "defunded" from health insurance plans (excluded from coverage). That second item is only speculation, but it seems to correlate with many single payer systems around the world.

By the way, if you offer an HRA, even if it is in conjunction with a fully insured plan, it is considered a self-funded plan and you will need to submit those fees to the government. Yes, this means you pay twice.

More updates will be coming.

Health Reform Questions - Employer Mandate

Health Reform Questions 

- Employer Mandate     

 By Larry Grudzien

What employers are subject to the employer mandate in 2014?  When are they subject to any penalties?  What are these penalties?

In general:

Beginning in 2014, certain large employers may be subject to a penalty tax (also called an "assessable payment") for failing to offer health care coverage for all full-time employees (and their dependents), offering minimum essential coverage that is unaffordable, or offering minimum essential coverage under which the plan's share of the total allowed cost of benefits is not at least 60% (referred to as "minimum value"). The penalty tax is due if any full-time employee is certified to the employer as having purchased health insurance through an Exchange  with respect to which a tax credit or cost-sharing reduction is allowed or paid to the employee, as provided in Code section  4980H.

What is a large employer for purposes of the employer mandate?

The penalty tax (or assessable payment) applies to "applicable large employers." An applicable large employer for a calendar year is an employer who employed an average of at least 50 "full-time employees" on business days during the preceding calendar year, as provided in Code Section 4980H(c)(2)(A).

What factors are used to determine whether an employer is an "applicable large employer"?

For purposes of determining whether an employer is an applicable large employer, an employer must include not only its full-time employees but also a full-time equivalent for employees who work part-time. To do so, the employer must add up all the hours of service in a month for employees who are not full-time and divide that aggregate number by 120. The result of that calculation is then added to the number of full-time employees during that month. Then, if the average number of employees for the year is 50 or more, the employer is an applicable large employer, as provided in Code Section 4980H(c)(2)(E).

Under Code Section 4980H(c)(2)(C)(i), all entities treated as a single employer under the employer aggregation rules will be treated as one employer.

How are seasonal employees counted in determining whether an employer is an "applicable large employer?

Under Code Section  4980H(c)(2)(B)(i), a special rule enables an employer that has more than 50 full-time employees solely as a result of seasonal employment to avoid being treated as an applicable employer. Under this rule, an employer will not be considered to employ more than 50 full-time employees if (a) the employer's workforce only exceeds 50 full-time employees for 120 days, or fewer, during the calendar year; and (b) the employees in excess of 50 who were employed during that 120-day (or fewer) period were seasonal workers.*"Seasonal worker" means a worker who performs labor or services on a seasonal basis as defined by the DOL, including agricultural workers covered by 29 CFR § 500.20(s)(1) and retail workers employed exclusively during holiday seasons , as provided  in Code Section 4980H(c)(2)(B)(ii).

Which employees are considered "full-time" for the employer mandate?

Under Code Section 4980H(c)(4)(A), a "full-time employee" for any month is an employee who is employed for an average of at least 30 hours of service per week.

What is the penalty if an applicable large employer does not offer minimum essential coverage to its employees?

Beginning in 2014, Code Section 4980H(a) provides that an applicable large employer will pay a penalty tax (i.e. make an assessable payment) for any month that-

(1) the employer fails to offer its full-time employees (and their dependents) the opportunity to enroll in "minimum essential coverage" under an "eligible employer-sponsored plan" for that month; and

(2) at least one full-time employee has been certified to the employer as having enrolled for that month in a QHP for which health coverage assistance is allowed or paid.

What is the amount of assessable payment (penalty tax)?

Code Section 4980H(a) provides that the penalty tax (assessable payment) is equal to the product of the "applicable payment amount" and the number of individuals employed by the employer (less the 30-employee reduction) as full-time employees during the month. The "applicable payment amount" for 2014 is $166.67 with respect to any month (that is, 1/12 of $2,000). The amount will be adjusted for inflation after 2014.

What is "minimum essential coverage"?

Under Code Section 5000A(f)(1), the term "minimum essential coverage" means coverage under any of the following: (a) a government-sponsored program, including coverage under Medicare Part A, Medicaid, the CHIP program, and TRICARE; (b) an "eligible employer-sponsored plan;" (c) a health plan offered in the individual market; (d) a grandfathered health plan; or (e) other health benefits coverage (such as a State health benefits risk pool) as HHS recognizes.

What is an "eligible employer-sponsored plan"?

Under Code Section 5000A(f)(2), it means a group health plan or group health insurance coverage offered by an employer to an employee that is (a) a governmental plan, or (b) any other plan or coverage offered in a state's small or large group market

Under what circumstances will an applicable large employer be subject to the penalty tax if it offers its employees minimum essential coverage?

Beginning in 2014, Code Section 4980H(b)(1) provides that an applicable large employer will pay a penalty tax (i.e., make an assessable payment) for any month that-

(1) the employer offers to its full-time employees (and their dependents) the opportunity to enroll in "minimum essential coverage" under an eligible employer-sponsored plan for that month; and

(2) at least one full-time employee of the employer has been certified to the employer as having enrolled for that month in a QHP for which a premium tax credit or cost-sharing reduction is allowed or paid. 

If an employee is offered affordable minimum essential coverage under an employer-sponsored plan, then the individual generally is ineligible for a premium tax credit and cost-sharing reductions for health insurance purchased through an Exchange.

When would employees offered minimum essential coverage by an employer be eligible for a premium tax credit and cost-sharing reductions for health insurance purchased through the Exchange?

Under Code Section 36B(c)(2)(C), employees covered by an employer-sponsored plan will be eligible for the premium tax credit if the plan's share of the total allowed costs of benefits provided under the plan is less than 60% of those costs (that is, the plan does not provide "minimum value"), or the premium exceeds 9.5% of the employee's household income. The employee must seek an affordability waiver from the Exchange. The penalty tax applies for employees receiving an affordability waiver. In order to get the premium tax credit and cost-sharing reduction, however, an employee must decline to enroll in the coverage and purchase coverage through the Exchange instead, as provided under Code Section 36B(c)(2)(C).

When would the penalty tax be assessed?

To be considered minimum essential coverage, the coverage will need to meet an affordability requirement (which compares cost to income and provide minimum value (i.e., it will need to pay at least 60% of the total allowed cost of benefits. The penalty tax is due if any full-time employee is certified to the employer as having purchased health insurance through an Exchange with respect to which a premium tax credit or cost-sharing reduction is allowed or paid to the employee. Employers who provide coverage under an eligible employer-sponsored plan that does not meet the affordability and minimum value requirements may nevertheless avoid the tax to the extent employees actually participate in the plan, as provided under Code Section  36B(c)(2)(C)(iii).

What is the amount of the assessable payment (penalty tax?)

Code Section 4980H(b)(1) provides that the penalty tax (assessable payment) is equal to $250 (1/12 of $3,000, adjusted for inflation after 2014) times the number of full-time employees for any month who receive premium tax credits or cost-sharing assistance (this number is not reduced by 30).  This penalty tax (assessable payment) is capped at an overall limitation equal to the "applicable payment amount" (1/12 of $2,000, adjusted for inflation after 2014) times the employer's total number of full-time employees, reduced by 30, as provided in Code Section  4980H(b)(2).

How will the minimum value for an employer-sponsored plan be determined?

In IRS Notice 2012-31, the IRS requested comments on several approaches to the minimum value determination, including evaluating plan designs that will cover part or all of 2014 and suggestions for transitional relief for plan years that start before and end in 2014. This determination of minimum value for employer plans will be consistent with previous HHS guidance on "actuarial value," which is relevant for determining coverage levels for qualified health plans ("QHPs) offered through the Exchanges.

In IRS Notice 2012-31, the IRS described three potential approaches, for determining minimum value. They include:

- Minimum Value Calculator:  The IRS will develop a MV calculator for use by self-insured plans and insured large group plans. Under this approach, plans with certain standard cost-sharing features (e.g., deductibles, co-insurance, and maximum out-of-pocket costs) will be able to enter information about four core categories of benefits (physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services) into the calculator based on claims data of typical self-insured employer plans. The calculator would also take into consideration the annual employer contributions to an HSA or amounts made available under an HRA, if applicable. Comments are specifically requested on how to adjust for other benefits (e.g., wellness benefits) provided under a plan using the calculator.

-Design-Based Safe Harbor Checklists:  As an alternative, an array of safe harbor checklists would be provided so plans may compare to their own coverage. The safe harbor checklists would be used to make minimum value determinations for plans that cover all of the four core categories of benefits and services (physician and mid-level practitioner care, hospital and emergency room services, pharmacy benefits, and laboratory and imaging services) and have specified cost-sharing amounts. Each safe harbor checklist would describe the cost-sharing attributes of a plan (e.g., deductibles, co-payments, co-insurance, and maximum out-of-pocket costs) that apply to the four core categories of benefits and services.

-Actuarial Certification:  The last approach  would be available for plans with "nonstandard" features (such as quantitative limits on any of the four categories of benefits, including, for example, a limit on the number of physician visits or covered days in a hospital) since these plans would not be able to use a calculator or the safe harbor checklists. Plans would be able to generate an initial value using a calculator and then engage a certified actuary to make appropriate adjustments that take into consideration the nonstandard features. Plans with nonstandard features of a certain type and magnitude would also have the option of engaging a certified actuary to determine the plan's actuarial value without the use of a calculator.

How can employer determine whether its coverage is affordable when it will not know the employee's household income?

In  finalized regulations to implement the premium tax credit through the Exchange, the IRS indicated that it was their intention to issue proposed regulations or other guidance that would allow employers to use an employee's Form W-2 earnings (instead of household income) in assessing affordability. 

What Can an Employer Do with the Medical Loss Ratio Rebates

From Guest Contributor Larry Grudzien (larrygrudzien.com).

My client sponsors a group health plan for its employees. It recently received a medical loss rebate check from its insurer. The employer is asking what he should do with it.   Can he keep it? Or does he have to give a portion of the rebate to the participants?  

Allocating the Rebate

Technical Release 2011-04, the Department of Labor (DOL) outlined how employers should handle rebates for their ERISA group insured health plans. The DOL indicated that to the extent that all or a portion of the rebate constitutes a "plan asset," the employer may have a fiduciary duty to share the rebate with participants.

In the absence of specific plan or policy language, the determination of whether a rebate is considered to be a plan asset will depend, in part, on the identity of the group policyholder. If the plan or trust is the policyholder, the rebate will likely be considered a plan asset under ordinary notions of property rights. This means it stays with the plan and the employer cannot share in any part of it.

If the employer is the policyholder, the determination will hinge on the source of the premium payments and the percentage of premiums paid by the employer, as opposed to plan participants. If a portion of the premium is paid by participants, that portion will be considered a plan asset and must be used for their benefit. An employer cannot use the rebate generated by one plan to benefit participants in another plan. Such action would constitute a breach of fiduciary duty.

If all or a portion of a rebate does constitute a plan asset, then the plan sponsor will have to determine how and to whom to allocate the rebate. For example, must a portion of the rebate be allocated to former plan participants? The selection of an allocation method must be reasonable and it must be made solely in the interest of plan participants and beneficiaries.

In making the determination, the plan fiduciary may weigh the costs to the plan - and the ultimate plan benefit - when deciding on an allocation method. If the cost of calculating and distributing shares of a rebate to former participants approximates (or exceeds) the amount of the proceeds, a plan fiduciary is permitted to limit the allocation to current plan participants.

If it is not cost-effective to distribute cash payments to plan participants (because the amounts are de minimis, or they would produce negative tax consequences for the participants), the fiduciary may use the rebate for other permissible plan purposes. These might include a credit against future participant premium payments or benefit enhancements.

Notices to Subscribers

Insurers must send written notices to group policyholders - and their subscribers -informing them that a rebate will be issued. Employers should be prepared to respond to questions from participants who receive these notices, particularly if the sponsor does not intend to share any of the rebate with those participants.

The notice must include information regarding:

* The purpose of the MLR requirement imposed by the ACA;

* The applicable MLR standard;

* The issuer's actual MLR for the reporting year at issue and its adjusted aggregate premium revenue;

* The rebate being provided; and

* If applicable, an explanation that the rebate is being provided to the policyholder.

For ERISA plans, this explanation must state that policyholders may have obligations under ERISA with respect to the handling of the rebate amount, and the contact information for the ERISA covered plan. For other group health plans (such as non-federal governmental plans), the explanation must explain how the policyholders will use the rebate to benefit subscribers

Likewise, even if an insurer meets the Medical Loss Ratio requirements, it must notify subscribers that no rebate will be issued. This notice must be included with the first plan document provided to enrollees on or after July 1, 2012. Model notices are available on the Centers for Medicare & Medicaid Services website.

Tax Consequences

For participants in a group plan, the tax consequences will depend on factors such as the source of the premium payments (employer versus participant), whether participant premiums were paid on an after-tax or pre-tax basis.

If the rebate is distributed as a premium reduction for the employee, then the amount paid for the coverage is less, resulting in increased taxable wages. If the rebate is distributed in cash, then the rebate is treated as taxable wages, subject to income and employment taxes.

A link to Technical Release 2011-04 is provided below:

http://www.dol.gov/ebsa/newsroom/tr11-04.htm

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

What We’re Reading -This is from NAHU.org's weekly update. It's lighthearted with many great links. Enjoy. Robert Slayton

From PPACA replacement plans to pregnant men, our reading list this past week has been very entertaining! A popular current speculation topic among health wonks everywhere right now is what will happen to the private health insurance marketplace if the Supreme Court strikes down PPACA’s individual mandate provision but upholds the rest of the rest of the law. Even the political satire site The Onion has gotten in on it, predicting that the administration will simply replace Obamacare with “Ointmentcare.” For those who prefer a more serious take on the potential problem, the Washington Post’s Wonk Blogand Bloomberg News have got you covered.  Guess what? Employer-provided private coverage is more robust than Medicare. This new study offers proof.  In case you were wondering, the GOP is working on a PPACA replacement plan, and the word on the street is that it will focus on cost containment. The New York Times has the scoop. Even if PPACA is completely struck down or eventually repealed, health insurance exchanges may live on in some states. Did you know that there are 17,000 pregnant men in Great Britain? Or more accurately, 17,000 men and Britain’s National Health Service are dealing with provider coding errors. Good thing in the United States we have an ICD-10 implementation delay and health insurance agents to help resolve claims issues! Sometimes the husband of a certain Washington Update author suggests that the words humor and health policy don’t really go together. But this week’s political cartoon from Kaiser Health News proves him wrong (again). While not exactly mainstream media, it does show that there are a few other people out there in the world who find jokes about risk pools, broccoli and the Supreme Court proceedings funny.