Protecting Against Catastrophic Loss Post-Health Care Reform Legal Aspects

Transcription

1 Protecting Against Catastrophic Loss Post-Health Care Reform Legal Aspects IFEBP Annual Conference Session 214 November 16, 17, 2010 Presented By Paul A. Green Mooney, Green, Washington, DC

2 Statutory Restrictions Prohibition Against Lifetime Maximums Restriction on Annual Limits Plan Years Beginning Before 2014 [A plan] may only establish a restricted annual limit on the dollar value of benefits for any participant or beneficiary with respect to the scope of benefits that are essential health benefits.... Plan Years Beginning in or after 2014, Annual Limits are Prohibited.

3 Statutory Restrictions (cont.) Key points: The Prohibition is restricted to limits on the dollar value of benefits The Prohibition Only Applies to Essential Health Benefits. The Prohibition does not apply if, on the first day of a plan year, the plan covers less than 2 participants who are current employees. Until 2014, restricted annual limits remain permitted.

4 Regulations Annual Limits Permitted Restricted Annual Limits General. For Plan Years Beginning During: 2011 $750, $1,250, $2,000, and Beyond Prohibited Entirely Waivers Reduced Annual Limits Permitted by Waiver For Plan Years Beginning Before For Plan Years Beginning in or after 2014, Annual Limits are prohibited, no waivers will be permitted.

5 Waivers Designed for so-called mini-med plans typically provided to low-wage employees who would otherwise have no coverage. [The otherwise applicable floor on] annual limits may be waived... if compliance... would result in a significant decrease in access to benefits under the plan... or would significantly increase premiums....

6 Waivers (cont.) Criteria: [the] plan... was offered prior to September 23, 2010 for the plan... year beginning between September 23, 2010 and September 23, 2011, an application [is submitted] not less than 30 days before the... plan... year..., The application must include: The terms of the plan for which a waiver is sought; The number of individuals covered by the plan... ; The annual limit(s) and rates applicable to the plan... ; A description why compliance with the [annual limitation restrictions] would result in a significant decrease in access to benefits for those currently covered by such plan..., or significant increase in premiums paid by those covered by such plans..., supporting documentation. Waiver rulings will be issued within 30 days. Waivers must be reapplied for each year.

7 Scope of Restrictions on Annual and Lifetime Limits Non-Coverage is permitted (although it may be prohibited by other federal or applicable state law). Separate internal limits on essential benefits are barred. These restrictions only apply to dollar value limitations. Other types of limitations are generally not covered. Non-monetary limitations may be prohibited where the benefit is a flat dollar allowance, and the number of benefits is limited. These restrictions do not specifically prohibit donut holes, deductibles or copayments.

8 An Actual Plan Primary Benefit Copayment Cap You pay next ( Donut Hole ): Copayment % after Satisfying Donut Hole Annual Cap Inpatient Preventive Care 0% $4,000 Doctors Visits 20% $4,000 Hospitalization 20% $8,000 $5,000 50% $750,000 Hospital Rm. & Bd. 0% $4,000 Outpatient 20% $4,000 Prescription Drugs $10/$20/$35 $1,200

9 Scope of Restrictions on Annual and Lifetime Limits (cont.) Plans covering less than 2 participants who are current employees are not affected. Retiree-only plans are not affected. Same rule that applies to the HIPAA mandatory coverage and nondiscrimination provisions, as well as the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of What about plans that have suspension rules mirroring pension plans? HHS has informally stated that phased retirement plans are not considered retiree-only plans. So-called Excepted Benefits are not covered. Restrictions only apply to Essential Benefits.

10 What Are Excepted Benefits? Four Types of Excepted Benefits 1. Excepted Under All Circumstances: Coverage only for accident, or disability income insurance, or any combination thereof. Liability insurance, including general liability insurance and automobile liability insurance. Coverage issued as a supplement to liability insurance. Workers' compensation or similar insurance. Automobile medical payment insurance. Credit-only insurance. Coverage for on-site medical clinics. Other similar insurance coverage, specified in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits.

11 What Are Excepted Benefits? (cont.) 2. Limited Excepted Benefits: Benefits Include: Limited scope dental or vision benefits. Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof. Such other similar, limited benefits as are specified in regulations. Only Excluded from PPACA Mandates if: Provided under a separate policy, certificate, or contract of insurance; or Otherwise not an integral part of the plan.

12 What Are Excepted Benefits? (cont.) 3. Noncoordinated Excepted Benefits: Benefits Include: Coverage only for a specified disease or illness. Hospital indemnity or other fixed indemnity insurance. Only Excluded From PPACA Mandates if: The benefits are provided under a separate policy, certificate, or contract of insurance. There is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan maintained by the same plan sponsor. Such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor.

13 What Are Excepted Benefits? (cont.) 4. Supplemental Excepted Benefits: Encompasses Medicare Supplemental Policies Only excluded if offered as part of a separate policy, certificate, or contract of insurance

14 What Are Essential Benefits? PPACA restrictions only apply to Essential Benefits. Separate, lower restrictions may be placed on non-essential benefits. Non-essential benefits may not be part of any permitted annual cap on essential benefits. A concept targeted primarily towards defining the minimum benefits required for a plan or policy to be eligible for listing on an exchange and for various other purposes. Some essential benefits are specifically enumerated in the statute. Ambulatory patient services. Emergency services. Hospitalization. Maternity and newborn care. Mental health and substance use disorder services, including behavioral health treatment. Prescription drugs. Rehabilitative and habilitative services and devices. Laboratory services. Preventive and wellness services and chronic disease management. Pediatric services, including oral and vision care.

15 What Are Essential Benefits (cont.) Other categories to be set by regulation. Based upon benefits provided under a typical employer plan, with the following caveats: Reflect an appropriate balance... so that benefits are not unduly weighted toward any category; Not... discriminate... because of... age, disability, or expected length of life; Take into account the health care needs of diverse segments of the population, including women, children, persons with disabilities, and other groups; Ensure that... benefits... not be subject to denial... on the basis of... age or expected length of life or of the individuals present or predicted disability, degree of medical dependency, or quality of life; Provide... coverage for emergency department services... without imposing any [additional] requirement..., limitation [or copayment for an out of network provider than for an in-network provider]....

16 What Are Essential Benefits (cont.) List of essential benefits is subject to change. Adult dental benefits are probably not essential benefits. How can you tell if a benefit is essential? In the absence of regulations, good faith compliance is all we have to go on. Don t confuse essential with necessary or medically necessary.

17 Reinsurance and Stop-Loss Early Retiree Reinsurance Although it provides some level of protection against loss, it is capped, so it will not protect against catastrophic loss. States Must Develop Reinsurance Programs for the Individual Insurance Market (targeting high risk individuals) by Existing Stop-Loss Market Will Have to Adjust to Reflect Healthcare Reform. Prior to passage of Healthcare Reform, unlimited stop-loss has been difficult or impossible to find. As we get closer to the date most plans must eliminate lifetime caps, more stop loss issuers are offering unlimited packages. Beginning 2014, the market will probably look totally different.

18 Questions? Answers!

19 Takeaways Lifetime Monetary Limits are Barred for All New Plan Years Annual Limits are Sharply Restricted Until They Are Barred Entirely in 2014 Other Types of Benefit Limitations Remain Possible Non-Essential Benefits and Certain Excepted Benefits Can Have Separate, Lower Limits Stop-Loss Insurance Becomes Crucial