Health Care Reform Timeline

Transcription

1 Health Care Refrm Timeline On March 23, 2010, President Obama signed int law the health care refrm bill, the Patient Prtectin and Affrdable Care Act. This legislatin, alng with the Health Care and Educatin Recnciliatin Act f 2010, makes sweeping changes t the U.S. health care system. These changes will be implemented ver the next several years. This Benefit Administratin Cmpany, LLC. Legislative Brief prvides a timeline f the implementatin f key refrm prvisins that affect emplyers and individuals. Please read belw fr mre infrmatin and cntact Benefit Administratin Cmpany, LLC. with any questins abut hw yu can prepare fr any f the health care refrm requirements. EXPANDED INSURANCE COVERAGE The health care refrm law cntains sme prvisins designed t prvide imprvements in access t health care cverage in Extended Cverage fr Yung Adults. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage that prvide dependent cverage f children must make cverage available fr adult children up t age 26. There is n requirement t cver the child r spuse f a dependent child. This requirement applies t grandfathered and new plans. Hwever, grandfathered plans need nt cver adult children wh are eligible fr ther emplyer-spnsred cverage, such as cverage thrugh their wn emplyer, until The Recnciliatin Act added a new tax prvisin related t health insurance cverage fr these adult children. Effective March 30, 2010, amunts spent n medical care fr an eligible adult child can generally be excluded frm taxable incme. Nte: a grandfathered plan is ne in which an individual was enrlled n March 23, 2010, and t which there is n significant change t existing cverage. Many requirements f the new law d nt apply t grandfathered plans and nthing in the law requires individuals terminate cverage in which they were enrlled when the law was passed. A plan can still be a grandfathered plan even if family members r new emplyees are allwed t jin. Access t Insurance fr Uninsured Individuals with Pre-Existing Cnditins. The health care refrm bill prvided fr the establishment f a temprary high risk health insurance pl prgram t prvide health insurance cverage fr certain uninsured individuals with pre-existing cnditins. The prgram will end in 2014, when the health insurance exchanges are set t be peratinal. Identifying Affrdable Cverage. As required, the Secretary f Health and Human Services (HHS) has established an Internet website thrugh which residents f any state may identify affrdable health insurance cverage ptins in that state. The website als includes infrmatin fr small businesses abut available cverage ptins, reinsurance fr early retirees, small business tax credits, and ther infrmatin f interest t small businesses. S-called mini-med r limited-benefit plans will be precluded frm listing their plicies n this website. Reinsurance fr Cvering Early Retirees. The new law established a temprary reinsurance prgram t prvide reimbursement t participating emplyment-based plans fr a prtin f the cst f prviding health insurance cverage t early retirees and their spuses, surviving spuses and dependents. This prgram is designed t end n Jan. 1, 2014, r earlier, if the $5 billin in funding is paid ut. Due t the prgram s ppularity, it clsed t new applicatins effective May 5, In early December 2011, HHS annunced that, because the prgram has already prvided mre than $4.5 billin in reimbursements, it will nt accept reimbursement requests fr claims incurred after Dec. 31,

2 HEALTH INSURANCE REFORM The health care refrm law als impses requirements n health insurance issuers t refrm certain insurance practices and imprve the cverage available. Eliminating Pre-Existing Cnditin Exclusins fr Children. Grup health plans and health insurance issuers may nt impse pre-existing cnditin exclusins n cverage fr children under age 19. This prvisin will apply t all emplyer plans and new plans in the individual market. This prvisin will als apply t adults in Cverage f Preventive Health Services. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage must prvide cverage fr preventive services. These plans als may nt impse cst sharing requirements fr preventive services. Grandfathered plans are exempt frm this requirement. Prhibiting Rescissins. The health care refrm law prhibits rescissins, r retractive cancellatins, f cverage. Grup health plans and health insurance issuers ffering grup r individual insurance cverage may nt rescind cverage nce the enrllee is cvered, except in cases f fraud r intentinal misrepresentatin. Plan cverage may nt be cancelled withut prir ntice t the enrllee. This prvisin applies t all new and existing plans. Limits n Lifetime and Annual Limits. In general, grup health plans and health insurance issuers ffering grup r individual health insurance cverage may nt establish lifetime limits n the dllar value f benefits fr any participant r beneficiary r impse unreasnable annual limits n the dllar value f benefits fr any participant r beneficiary. This requirement applies t all plans, althugh plans may request a waiver f the annual limit requirement. The annual limit waiver prgram will be clse t applicatins effective Sept. 22, Annual limits will als be prhibited beginning in HEALTH-PLAN ADMINISTRATION In additin t any administrative changes required by the cverage imprvements described abve, health plans will be subject t increased administrative duties under health care refrm. Imprved Appeals Prcess. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage must implement an effective appeals prcess fr appeals f cverage determinatins and claims. At a minimum, plans and issuers must: Have an internal claims prcess in effect; Prvide infrmatin t claimants in a culturally and linguistically apprpriate manner in sme situatins; and Allw enrllees t review their files, t present evidence and testimny as part f the appeals prcess, and t receive cntinued cverage pending the utcme f the appeals prcess. The internal claims prcess must initially incrprate the current claims prcedure regulatins issued by the Department f Labr in A grace perid fr sme f the internal appeals prcess rules has been prvided until plan years beginning n r after Jan. 1, Plans and issuers must als implement an external review prcess that meets applicable state r federal requirements. Nndiscriminatin Rules fr Fully Insured Plans. Fully insured grup health plans will have t satisfy nndiscriminatin rules regarding eligibility t participate in the plan and eligibility fr benefits. These rules prhibit discriminatin in favr f highly cmpensated individuals. This sectin des nt apply t grandfathered plans. This prvisin was set t take effect fr plan years beginning n r after Sept. 23, Hwever, it has been delayed indefinitely pending the issuance f regulatins. The regulatins will specify the new effective date. MEDICARE/MEDICAID The health care refrm law will further affect individuals by making certain changes t Medicare and Medicaid. Rebates fr the Medicare Part D Dnut Hle. Currently, there is a cverage gap, r dnut hle, in mst Medicare Part D plans. Once the plan and participant have paid $2,840 in ttal drug csts ($2,930 fr 2012), the participant is in the cverage gap. The cverage gap ends when the participant has spent $4,550 ($4,700 fr 2012) ut f pcket fr drug csts in a calendar year. Health care refrm prvides a $250 rebate check fr all Medicare Part D enrllees wh enter the dnut hle. Beginning in 2011, a 50 percent discunt n brand-name drugs will be instituted and generic drug cverage will be prvided in the dnut hle. The dnut hle gap will be filled by

3 Medicaid Flexibility fr States. States are given a new ptin under the health care refrm law t cver additinal individuals under Medicaid. States will be able t cver parents and childless adults up t 133 percent f the Federal Pverty Level (FPL). FEES AND TAXES With a ttal estimated cst f ver $900 billin dllars, the refrm f the natin s health care system cmes with additinal csts and fees. These fees will als be implemented ver the next several years. Hwever, health care refrm als includes sme subsidies, in the frm f tax credits, t help individuals and businesses pay fr cverage. Small Business Tax Credit. The first phase f the small business tax credit fr qualified small emplyers began in These emplyers can receive a credit fr cntributins t purchase health insurance fr emplyees. The credit is up t 35 percent f the emplyer s cntributin t prvide health insurance fr emplyees. There is als up t a 25 percent credit fr small nnprfit rganizatins. When health insurance exchanges are peratinal, tax credits will increase, up t 50 percent f premiums. Indr Tanning Services Tax. One additinal tax impsed by the health care refrm law is a 10 percent tax n amunts paid fr indr sun tanning services. EXPANDED INSURANCE COVERAGE 2011 Cmmunity Living Assistance Services and Supprts Prgram (CLASS Act). The health care refrm law creates a lng-term care insurance prgram fr adults wh becme disabled. Participatin will be vluntary and the prgram is t be funded by vluntary payrll deductins t prvide benefits t adults wh becme disabled. Althugh the prgram was technically effective Jan. 1, 2011, significant prtins are nt required t be established until Nte: Implementatin f the CLASS Act was suspended n Oct. 14, 2011 due t cncerns n fiscal sustainability and affrdability. HEALTH PLAN ADMINISTRATION Imprving Medical Lss Ratis. Health insurance issuers ffering grup r individual health insurance cverage (including grandfathered health plans) must annually reprt n the share f premium dllars spent n health care and prvide cnsumer rebates fr excessive medical lss ratis. Standardizing the Definitin f Qualified Medical Expenses. The health care refrm law cnfrms the definitin f qualified medical expenses fr HSAs, FSAs and HRAs t the definitin used fr the itemized tax deductin. This means that expenses fr ver-the-cunter (OTC) medicines and drugs may nt be reimbursed by these plans unless they are accmpanied by a prescriptin. There is an exceptin fr insulin. Als, OTC medical supplies and devices may cntinue t be reimbursed withut a prescriptin. Cafeteria Plan Changes. The new law creates a Simple Cafeteria Plan t prvide a vehicle thrugh which small businesses can prvide tax free benefits t their emplyees. This plan is designed t ease the small emplyer s administrative burden f spnsring a cafeteria plan. The prvisin als exempts emplyers wh make cntributins fr emplyees under a simple cafeteria plan frm certain nndiscriminatin requirements applicable t highly cmpensated and key emplyees. MEDICARE / MEDICAID Medicare Part D Discunts. In rder t make prescriptin drug cverage mre affrdable fr Medicare enrllees, the new law will prvide a 50 percent discunt n all brand-name drugs and bilgics in the dnut hle. It als begins phasing in additinal discunts n brand-name and generic drugs t cmpletely fill the dnut hle by 2020 fr all Part D enrllees. Additinal Preventive Health Cverage. The new law prvides a free, annual wellness visit and persnalized preventin plan services fr Medicare beneficiaries and eliminates cst-sharing fr preventive services beginning in FEES AND TAXES Increased Tax n Withdrawals frm HSAs and Archer MSAs. The health care refrm law increased the additinal tax n HSA withdrawals prir t age 65 that are nt used fr qualified medical expenses frm 10 t 20 percent. The additinal tax fr Archer MSA withdrawals nt used fr qualified medical expenses als increased frm 15 t 20 percent. 3

4 2012 HEALTH INSURANCE REFORM Preventive Care fr Wmen. Beginning in 2010, nn-grandfathered grup health plans and health insurance issuers ffering grup r individual nn-grandfathered health insurance cverage were required t prvide cverage fr preventive services with n cst-sharing requirements. Effective fr plan years beginning n r after August 1, 2012, the required preventive services include specific services fr wmen, including cntraceptives and cntraceptive cunseling. Exceptins t the cntraceptive cverage requirement apply t religius emplyers. EXPANDED INSURANCE COVERAGE Cmmunity Living Assistance Services and Supprts Prgram (CLASS Act). As nted abve, the CLASS Act, which creates a vluntary lng-term care insurance prgram, was technically effective Jan. 1, Hwever, significant aspects f the prgram, such as enrllment and premium payment rules, will nt be established until Nte: Implementatin f the CLASS Act was suspended n Oct. 14, 2011 due t cncerns n fiscal sustainability and affrdability. HEALTH PLAN ADMINISTRATION Unifrm Summary f Benefits and Cverage. All nn-grandfathered and grandfathered health plans will be required t prvide a unifrm summary f the plan s benefits and cverage t participants. The summary will have t be written in easily understd language and will be limited t fur pages. Any mid-year changes t the infrmatin cntained in the summary will have t be prvided t participants 60 days in advance. The health care refrm law indicated that plans wuld be required t start prviding the summary by March 23, Nte: On Nv. 17, 2011, the Department f Labr (DOL) issued guidance that delayed the deadline fr plans t begin prviding the summary until after the release f final regulatins. On Feb. 9, 2012, HHS, the DOL and the Treasury Department issued final regulatins n the summary f benefits and cverage requirement. The final guidance prvides that plans and issuers must start prviding the summary by the fllwing deadlines: Issuers must prvide the summary t health plans effective Sept. 23, 2012; Plans and issuers must prvide the summary t participants and beneficiaries wh enrll r reenrll during an pen enrllment perid starting with the first day f the first pen enrllment perid that begins n r after Sept. 23, 2012; Plans and issuers must prvide the summary t participants wh enrll fr cverage ther than thrugh an pen enrllment perid (fr example, newly eligible individuals and special enrllees) starting with the first day f the first plan year that begins n r after Sept. 23, Reprting Health Cverage Csts n Frm W-2. Emplyers will be required t disclse the value f the health cverage prvided by the emplyer t each emplyee n the emplyee s annual Frm W-2. Nte that this requirement is effective, but ptinal, fr the 2011 tax year and will be mandatry fr later years fr mst emplyers. This requirement is ptinal fr small emplyers (thse filing fewer than 250 Frm W-2s) at least fr the 2012 tax year and will remain ptinal until further guidance is issued. HEALTH PLAN ADMINISTRATION 2013 Administrative Simplificatin. Beginning in 2013, health plans must adpt and implement unifrm standards and business rules fr the electrnic exchange f health infrmatin t reduce paperwrk and administrative burdens and csts. Limiting Health Flexible Savings Accunt Cntributins. The health care law will limit the amunt f salary reductin cntributins t health FSAs t $2,500 per year, indexed by CPI fr subsequent years. 4

5 FEES AND TAXES Eliminating Deductin fr Medicare Part D Subsidy. Currently, emplyers that receive the Medicare Part D retiree drug subsidy may take a tax deductin fr their prescriptin drug csts, including csts attributable t the subsidy. The deductin fr the retiree drug subsidy will be eliminated in Increased Threshld fr Medical Expense Deductins. The health care refrm law increases the incme threshld fr claiming the itemized deductin fr medical expenses frm 7.5 percent f incme t 10 percent. Hwever, individuals ver 65 wuld be able t claim the itemized deductin fr medical expenses at 7.5 percent f adjusted grss incme thrugh Additinal Hspital Insurance Tax fr High Wage Wrkers. The new law increases the hspital insurance tax rate by 0.9 percentage pints n wages ver $200,000 fr an individual ($250,000 fr married cuples filing jintly). The tax is als expanded t include a 3.8 percent tax n net investment incme in the case f taxpayers earning ver $200,000 ($250,000 fr jint returns). Medical Device Excise Tax. The law als establishes a 2.3 percent excise tax n the first sale fr use f a medical device. Eye glasses, cntact lenses, hearing aids, and any device f a type that is generally purchased by the public at retail fr individual use are excepted frm the tax. COVERAGE MANDATES 2014 Individual Cverage Mandates. The health care refrm legislatin requires mst individuals t btain acceptable health insurance cverage r pay a penalty, beginning in The penalty will start at $95 per persn fr 2014 and increase each year. The penalty amunt increases t $325 in 2015 and t $695 (r up t 2.5 percent f incme) in 2016, up t a cap f the natinal average brnze plan premium. After 2016, dllar amunts are indexed. Families will pay half the penalty amunt fr children, up t a cap f $2,250 per family. Individuals may be eligible fr an exemptin frm the penalty if they cannt btain affrdable cverage. Emplyer Cverage Requirements. Emplyers with 50 r mre emplyees that d nt ffer cverage t their emplyees will be subject t penalties if any emplyee receives a gvernment subsidy fr health cverage. The penalty amunt is up t $2,000 annually fr each full-time emplyee, excluding the first 30 emplyees. Emplyers wh ffer cverage, but whse emplyees receive tax credits, will be subject t a fine f $3,000 fr each wrker receiving a tax credit, up t an aggregate cap f $2,000 per full-time emplyee. Emplyers will be required t reprt t the federal gvernment n health cverage they prvide. HEALTH INSURANCE EXCHANGES The health care refrm legislatin prvides fr health insurance exchanges t be established in each state in Individuals and small emplyers will be able t shp fr insurance thrugh the exchanges. Small emplyers are thse with n mre than 100 emplyees. If a small emplyer later grws abve 100 emplyees, it may still be treated as a small emplyer. Large emplyers with ver 100 emplyees are t be allwed int the exchanges in The health care refrm legislatin prvided that wrkers wh qualified fr an affrdability exemptin t the cverage mandate, but did nt qualify fr tax credits, culd use their emplyer cntributin t jin an exchange plan. This requirement is knwn as the free chice vucher prvisin. The federal apprpriatins bill signed by President Obama n April 15, 2011, eliminated the free chice vucher prvisin frm health care refrm. HEALTH INSURANCE REFORM Additinal health insurance refrm measures will be implemented beginning in Guaranteed Issue and Renewability. Health insurance issuers ffering health insurance cverage in the individual r grup market in a state must accept every emplyer and individual in the state that applies fr cverage and must renew r cntinue t enfrce the cverage at the ptin f the plan spnsr r the individual. Pre-existing Cnditin Exclusins. Effective Jan. 1, 2014, grup health plans and health insurance issuers may nt impse pre-existing cnditin exclusins n any cvered individual, regardless f the individual s age. Insurance Premium Restrictins. Health insurance issuers will nt be permitted t charge higher rates due t heath status, gender r ther factrs. Premiums will be able t vary based nly n age (n mre than 3:1), gegraphy, family size, and tbacc use. Nndiscriminatin Based n Health Status. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage (except grandfathered plans) may nt establish rules fr eligibility r cntinued eligibility based n health status-related factrs. 5

6 Nndiscriminatin in Health Care. Grup health plans and health insurance issuers ffering grup r individual insurance cverage may nt discriminate against any prvider perating within their scpe f practice. Hwever, this prvisin des nt require a plan t cntract with any willing prvider r prevent tiered netwrks. It als des nt apply t grandfathered plans. Plans and issuers als may nt discriminate against individuals based n whether they receive subsidies r cperate in a Fair Labr Standards Act investigatin. Annual Limits. Restricted annual limits will be permitted until Hwever, in 2014, the plans and issuers may nt impse annual limits n the amunt f cverage an individual may receive. Excessive Waiting Perids. Grup health plans and health insurance issuers ffering grup r individual health insurance cverage will nt be able t require a waiting perid f mre than 90 days. Cverage fr Clinical Trial Participants. Nn-grandfathered grup health plans and insurance plicies will nt be able t terminate cverage because an individual chses t participate in a clinical trial fr cancer r ther life-threatening diseases r deny cverage fr rutine care that they wuld therwise prvide just because an individual is enrlled in such a clinical trial. Cmprehensive Benefits Cverage. Health insurance issuers that ffer health insurance cverage in the individual r small grup market will be required t prvide the essential benefits package required f plans sld in the health insurance exchanges. This requirement des nt apply t grandfathered plans. Limits n Cst-Sharing. Nn-grandfathered grup health plans will be subject t limits n cst-sharing r ut-f-pcket csts. Out-f-pcket expenses may nt exceed the amunt applicable t cverage related t HSAs and deductibles may nt exceed $2,000 (single cverage) r $4,000 (family cverage). These amunts are indexed fr subsequent years. Further guidance n which plans will have t apply these limits wuld be helpful. EMPLOYER WELLNESS PROGRAMS Under health care refrm, the rules fr emplyer wellness prgrams will be changed slightly. Existing wellness regulatins under HIPAA permit wellness incentives f up t 20 percent f the ttal premium, as lng as the prgram meets certain cnditins. Under health care refrm, the ptential incentive increases t 30 percent f the premium in 2014 fr emplyee participatin in the prgram r meeting certain health standards. Emplyers must ffer an alternative standard fr thse emplyees whm it is unreasnably difficult r inadvisable t meet the standard. Fllwing a gvernmental study n wellness prgrams, the incentive may be increased t as much as 50 percent. FEES AND TAXES Individual Health Care Tax Credits. The new law makes premium tax credits available thrugh the exchanges t ensure peple can btain affrdable cverage. Credits are available fr peple with incmes abve Medicaid eligibility and belw 400 percent f pverty level wh are nt eligible fr r ffered ther acceptable cverage. The credits apply t bth premiums and cst-sharing. Small Business Tax Credit. The secnd phase f the small business tax credit fr qualified small emplyers will be implemented in These emplyers can receive a credit fr cntributins t purchase health insurance fr emplyees, up t 50 percent f premiums. Health Insurance Prvider Fee. The health care refrm law impses an annual, nn-deductible fee n the health insurance sectr, allcated acrss the industry accrding t market share. The fee des nt apply t cmpanies whse net premiums written are $25 millin r less. High-Cst Plan Excise Tax 2018 A 40 percent excise tax is t be impsed n the excess benefit f high cst emplyer-spnsred health insurance. This tax is als knwn as a Cadillac tax. The annual limit fr purpses f calculating the excess benefits is $10,200 fr individuals and $27,500 fr ther than individual cverage. Respnsibility fr the tax is n the cverage prvider which can be the insurer, the emplyer, r a third-party administratr. There are a number f exceptins and special rules fr high cverage cst states and different jb classificatins. This Benefit Administratin Cmpany, LLC. Legislative Brief is nt intended t be exhaustive nr shuld any discussin r pinins be cnstrued as legal advice. Readers shuld cntact legal cunsel fr legal advice. 6