Cmpliance Guidebk Revised September 21, 2010 Health Care Refrm Laws f 2010 Patient Prtectin and Affrdable Care Act and Health Care and Educatin Recnciliatin Act f 2010 Table f Cntents Overview Cmpliance Deadlines Grandfathered vs. Nn-Grandfathered Immediate Requirements: 2010 2011 Future Requirements: 2012 2014 Sample Amendment Agreement t Cmply Imprtant: This Cmpliance Guidebk is a summary f ntable, emplyee-related prvisins f the Health Care Refrm Laws f 2010; based n Delta Health Systems interpretatin f the regulatins. The laws, and a result this Cmpliance Guidebk, are subject t change based n final regulatins and interpretatins prvided by the regulatry agencies.
Cmpliance Deadlines The fllwing table utlines Health Care Refrm Laws f 2010 cmpliance deadlines. Grup Health Plan r Individual Cverage (Self-Insured Plans and Fully-Insured Plans) Cllective Bargaining Agreements (Self-Insured) If the PLAN YEAR begins: Then the Plan Will Need t be in Cmpliance: Between March 23, 2010 thrugh September 22, 2010 Fr the next plan year beginning in 2011 Between September 23, 2010 thrugh December 31, 2010 On the date that the plan year begins On, r after, January 1, 2011 On, r after, January 1, 2011 Definitin f Health Plans Generally, the "insurance market refrm" prvisins f PPACA (all f which apply t bth insured and self-funded plans), apply t "grup health plans," which are defined as emplyee welfare benefit plans prviding medical benefits. These prvisins amended the HIPAA prtability prvisins f the Public Health Service Act (PHSA), which already cntained several exceptins (ften referred t cllectively as "excepted benefits"). These include: Listed Excepted Benefits: Accident cverage, disability incme cverage, liability insurance, supplements t liability insurance, wrkers' cmpensatin and similar cverage, autmbile liability insurance, credit-nly insurance (including mrtgage insurance), and cverage fr n-site medical clinics. Limited Scpe Benefits: Benefits that are nt an integral part f a grup health plan. Examples f these benefits include limited-scpe dental and visin benefits fr which a separate electin must be made and lng-term care benefits prvided under a separate plicy. Nn-crdinated Benefits: Benefits that are prvided nly fr a specified disease r illness, r any fixed indemnity insurance (fr example, paying a set dllar amunt per day f hspitalizatin). The benefits must be prvided under a separate plicy with n crdinatin between the plicy and a grup health plan maintained by the same spnsr. Supplemental Benefits: Medicare supplemental insurance r similar supplemental cverage prvided under a separate plicy, certificate, r cntract f insurance. While there arguably are sme drafting errrs in sme f these prvisins, PPACA appears t retain the exceptins listed abve with respect t the insurance market refrm requirements. S, many visin and dental plans will be excluded frm these new requirements if they fall under the "limited scpe" benefits exceptin. 2
Grandfathered vs. Nn-Grandfathered Status Nte: Additinal, detailed infrmatin is prvided n the fllwing pages. One f the first steps in cmplying with the prvisins f the Health Care Refrm Laws f 2010 is t understand whether r nt a plan has grandfathered status. Grandfathered and nn-grandfathered plans have different cmpliance requirements. Belw is a list f questins t assist with the determinatin f a plan s status. 1. Was yur grup health plan in existence n March 23, 2010? Yes N 2. Regardless f the cmpany s Plan Year and/r when the cmpany needs t cmply with the Health Care Refrm Laws f 2010, the fllwing changes are measured frm March 23, 2010. Please check any bx belw that applies t the cmpany s existing plan: eliminating all, r substantially all, benefits t diagnse r treat a particular cnditin; increasing the participant s cinsurance percentage; significantly increasing the participant s c-payment charges; significantly increasing the participant s deductibles; significantly lwering emplyer cntributins by mre than 5 percent; adding r tightening an annual limit n what the insurer pays; r changing insurance cmpanies. These changes are based n interim final regulatins issued n June 14, 2010. Fr further explanatin, see Detailed Infrmatin Abut Grandfathered vs. Nn-Grandfathered Status. Example: If a cmpany des nt have t cmply until July 1, 2011, that cmpany must still live within the limits set abve if it wants t maintain grandfather status when it becmes required t cmply with the laws. If the cmpany has made ne r mre f the changes listed abve between March 23, 2010 and June 14, 2010, the cmpany has until the first day f its first plan year n r after September 23, 2010, t revke any impermissible changes and mdify the plan, thereby preserving its grandfathered status. If yu are eligible fr grandfathered status, and yu chse t make any f the abve changes in #2 t yur plan, then the plan will lse its grandfathered status; yu will be respnsible fr fllwing the prvisins f the Health Care Refrm Laws f 2010 fr nn-grandfathered plans. 3. If the plan is eligible fr grandfathered status, and yu are nt making any f the changes listed abve, then the plan will keep its grandfathered status even if: an existing participant renews cverage; an existing participant enrlls family members; a new participant (and his r her family members) enrll in cverage under the plan; the plan reasnably raises premiums t keep pace with health care csts; the plan makes sme changes in the benefits that it ffers; r the plan, within limits, increases deductibles and ther ut-f-pcket expenses. If yu are eligible fr grandfathered status, and yu chse t make any f the abve changes in #3 t yur plan, then the plan may still maintain its grandfathered status. 3
4. In rder fr a plan t maintain grandfathered status, a plan is required t prvide: a statement which prvides that the grup health plan believes it is a grandfathered health plan within the meaning f Sectin 1251 f the Patient Prtectin and Affrdable Care Act (PPACA), and the plan s cntact infrmatin fr questins and cmplaints. 5. A plan s grandfathered status can be revked under the Health Care Refrm Laws f 2010 if the plan: frces cnsumers t switch t anther grandfathered plan that, when cmpared t the current plan, has less benefits r a higher cst sharing in rder t avid the requirements f the Health Care Refrm Laws f 2010, r is bught by, r merges with, anther plan in rder t avid cmpliance with the Health Care Refrm Laws f 2010. 4
Detailed Infrmatin Abut Grandfathered vs. Nn-Grandfathered Status 1. Was yur grup health plan in existence n March 23, 2010? Yes* N** *If yur plan was in existence n March 23, 2010, then the plan is eligible fr grandfathered status. A plan s grandfathered status extends nt nly t emplyees and their family members enrlled n that date, but als t later added family members f already enrlled emplyees and t new emplyees (whether newly hired r newly enrlled) and their family members. If a plan is eligible fr grandfathered status, then the plan may be exempt frm certain cmpliance prvisins f the new Health Care Refrm Laws f 2010. ** A nn-grandfathered plan is a plan that was nt in existence n March 23, 2010. If yu entered int a new (ie., nt renewed) plicy, certificate r cntract f insurance after March 23, 2010, then that new plicy, certificate r cntract f insurance is nt a grandfathered plan. If the plan is nt eligible fr grandfathered status, then the plan must cmply with certain prvisins f the new Health Care Refrm Laws f 2010. Imprtant: The determinatin f grandfathered health plan status is made separately with respect t each benefit plan available frm a cmpany. 2. Under interim final regulatins issued n June 14, 2010, a plan's grandfathered status can be lst by implementing the fllwing changes measured frm March 23, 2010: eliminating all, r substantially all, benefits t diagnse r treat a particular cnditin; [Fr example, if a grandfathered plan decides t n lnger cver care fr patients with diabetes, cystic fibrsis r HIV/AIDS, then the plan will lse its grandfathered status.] increasing the participant s cinsurance percentage; [Fr example, if a grandfathered plan requires a patient t pay 20% f a hspital bill, a grandfathered plan cannt increase this percentage. If the plan increases the cinsurance percentage, then the plan will lse its grandfathered status.] significantly increasing the participant s c-payment charges; [If a grandfathered plan requires a patient t pay a fixed-dllar amunt fr a dctr s ffice visit and ther services, then, cmpared with the cpayments in effect n March 23, 2010, the grandfathered plan will be able t increase thse cpays by n mre than the greater f $5 (adjusted annually fr medical inflatin) r a percentage equal t medical inflatin plus 15 percentage pints. Fr example, if a plan raises its cpayment frm $30 t $50 ver the next 2 years, then the plan will lse its grandfathered status.] significantly increasing the participant s deductibles; [If a grandfathered plan requires a patient t pay a deductible (i.e., the first $500, $1,000 r $1,500 f the bills the patient receives each year), then, cmpared with the deductible in effect n March 23, 2010, the grandfathered plan can nly increase these deductibles by a percentage equal t medical inflatin plus 15 percentage pints. In recent years, medical csts have risen an average f 4-5%; this frmula wuld allw deductibles t increase, fr example, by 19-20% between 2010 and 2011, r by 23-25% between 2010 and 2012. Fr a family with a $1,000 annual deductible, the grandfathered plan is allwed t increase the deductible $190 r $200 frm 2010 t 2011; the grandfathered plan culd then increase the deductible again by anther $50 the fllwing year. If the deductible s percentage increases are larger, then the plan will lse its grandfathered status.] 5
significantly lwering emplyer cntributins by mre than 5 percent; [If a grandfathered plan allws fr the emplyer t cntribute a prtin f its emplyee s premiums fr insurance, then the grandfathered plan cannt decrease the percent f premiums the emplyer pays by mre than 5 percentage pints. Fr example, under the grandfathered plan, the emplyer cannt decrease its share f the premium payment and increase the emplyees share f the premium frm 15% t 25%. If the plan decreases the emplyer s premium payment by mre than 5 percent (and shifts the cst t the patient), then the plan will lse its grandfathered status.] adding r tightening an annual limit n what the insurer pays; r [An insurer may limit the amunt that the insurer will pay fr cvered services each year. If a plan wants t retain its status as a grandfathered plan, then the plan cannt reduce any annual dllar limit in place as f March 23, 2010. If a grandfathered plan des nt have an annual dllar limit in place, the grandfathered plan cannt add a new ne unless the grandfathered plan is replacing a lifetime dllar limit with an annual dllar limit that is at least as high as the lifetime limit.] changing insurance cmpanies. [If an emplyer chses t purchase insurance fr its emplyees frm a different insurance cmpany, then this change in new insurance cmpanies will cause the plan t lse its grandfathered status. A plan will nt lse its grandfathered status if an emplyer, which prvides its wn insurance t its emplyees, replaces plan administratrs r switches t cllective bargaining agreements.] 6
Immediate Requirements: 2010 2011 IMPORTANT: The fllwing chart is a prvisinal summary f the Health Care Refrm Laws f 2010; the infrmatin may be subject t change based n final regulatins and interpretatins prvided by the regulatry agencies. Plan Changes Grandfathered In existence n 03/23/10 Nn-Grandfathered A New Plan r a Plan that has lst Grandfathered Status Effective Date Material Mdificatins 1. N pre-existing cnditin limitatins permitted fr children under age 19 (2014, n pre-existing cnditins fr adults either) Plan Year beginning n r after 9/23/10 2. N lifetime maximum n essential benefits (as listed n the next page) Plan Year beginning n r after 9/23/10 3. Dependent cverage up t age 26, regardless f: Marital status Financial dependency Enrllment in schl Residency Plan Year beginning n r after 9/23/10 Issue: Can a plan exclude adult children wh are eligible t enrll in an emplyer-spnsred health plan (ther than that f their parent)? Yes, until 2014 N Nte: Plans are nt required t cver grandchildren. 4. N rescissin f cverage unless prir ntice has been Plan Year beginning n prvided (except fraud r misrepresentatin) r after 9/23/10 5. Essential benefits may nly have restricted annual limits. Plan Year beginning n See infrmatin n the fllwing page fr details r after 9/23/10 6. Ntificatin f Material Mdificatins: At least 60 days prir t See Material effective date f change Mdificatins and Ntificatin t Emplyees 7. N reimbursement frm FSA/HRA fr ver-the-cunter drugs, 1/1/11 except when prescribed by a physician 8. Preventive Care and Immunizatins: Prvided withut cst N/A unless Plan Year beginning n sharing (within specified guidelines) status is lst r after 9/23/10 9. Access: Designatin f any PCP (including pediatrician & N/A unless Plan Year beginning n OB/GYN care) withut referral r prir authrizatin status is lst r after 9/23/10 10. Emergency Services: N prir-authrizatin r ut-f-netwrk N/A unless Plan Year beginning n cst sharing status is lst r after 9/23/10 11. Re-vamped appeals prcess: A plan must prvide bth internal N/A unless Plan Year beginning n and external reviews (in accrdance with HHS) status is lst r after 9/23/10 Plan Amendment Nt Required IRS Reprting: Emplyer must reprt value f each emplyee s 1/1/11 health cverage n W-2 < 100 Emplyees: Simplified Cafeteria Plans Simplified 1/1/2011 nndiscriminatin rules apply if an emplyer makes a cntributin tward benefits fr each eligible emplyee. All Benefits ptins ffered n equal terms t emplyees with 1000 hurs f service 200+ Emplyees: Autmatic Enrllment 3/23/10 (Pending regulatry guidance) * Under these interim final regulatins, individuals wh reached a lifetime limit under a plan r health insurance cverage prir t the applicability date f these interim final regulatins and are therwise still eligible under the plan r health insurance cverage must be prvided with a ntice that the lifetime limit n lnger applies. If such individuals are n lnger enrlled in the plan r health insurance cverage, these interim final regulatins als prvide an enrllment (in the individual market, reinstatement) pprtunity f r such individuals. 7
Restricted annual limits n essential benefits Definitin f essential benefits (as defined in Sectin 1302(b) f the Affrdable Care Act): ambulatry care, emergency care, hspitalizatin, maternity/newbrn care, mental health and substance abuse use disrder services, prescriptin drugs, rehabilitatin services, lab services, preventive/wellness care, chrnic disease management, and pediatric care, including ral and visin care*. Regulatins under sectin 1302(b) f the Affrdable Care Act have nt yet been issued. Fr plan years beginning befre the issuance f regulatins defining "essential health benefits", fr purpses f enfrcement, IRS, DOL, and HHS will take int accunt gd faith effrts t cmply with a reasnable interpretatin f the term "essential health benefits." Fr this purpse, a plan r issuer must apply the definitin f essential health benefits cnsistently. *Pending regulatry guidance n what cnstitutes ral/visin care as well as if any age limitatins apply. The fllwing restricted annual limits are fr essential benefits (cmbined) per individual: $750,000 fr plan years beginning n r after 9/23/2010 but befre 9/23/2011 $1.25 millin fr plan years beginning n r after 9/23/2011 but befre 9/23/2012 $2 millin fr plan years beginning n r after 9/23/2012 but befre 1/1/2014 Material Mdificatins and Ntificatin t Emplyees Under the ntice f mdificatins prvisin in the Health Care Refrm Laws f 2010, a plan spnsr must prvide persns cvered by the plan with a ntice f mdificatin(s) t the plan at least 60 days prir t the effective date f the change. Cnfusin has arisen regarding the effective date fr this ntice. Additinal agency guidance will be required t cnfirm the effective date. Tw interpretatins can be viewed fr the material mdificatin effective date: the effective date fr the material mdificatin ntice is the same as the effective date fr the new Summary f Benefits dcument that must be prvided t plan enrllees (i.e., cmpliance must be met by March 23, 2012); r the effective date fr the material mdificatin ntice is the same as the effective date fr ther legal requirements in surrunding sectins f the law (i.e., cmpliance must be met fr plan years beginning n, r after, September 23, 2010). The mre cnservative apprach is t apply the effective date as September 23, 2010, which will require plans with a plan year beginning n, r after, September 23, 2010, t becme cmpliant. This will allw plan spnsrs t be mre prepared. NOTE: If a plan is unable t prvide a ntice f material mdificatin due t timing factrs, then the plan shuld pstpne the effective date f the plan changes until the 60 day prir ntice requirement can be met. What is a Material Mdificatin? Under the interim disclsure rules, a material reductin in cvered services r benefits means any mdificatin t a grup health plan r change in the infrmatin required t be included in the summary plan descriptin that, independently r in cnjunctin with ther cntempraneus mdificatins r changes, wuld be cnsidered by the average plan participant t be an imprtant reductin in cvered services r benefits under the grup health plan. The interim rules cite examples f reductins in cvered services r benefits as generally including any plan mdificatin r change that: eliminates benefits payable under the plan, 8
reduces benefits payable under the plan, including a reductin that ccurs as a result f a change in frmulas, methdlgies r schedules that serve as the basis fr making benefit determinatins, increases deductibles, c-payments r ther amunts t be paid by a participant r beneficiary, reduces the service area cvered by a health maintenance rganizatin, r establishes new cnditins r requirements (e.g., preauthrizatin requirements) t btain services r benefits under the plan. 9
Future Requirements: 2012 2014 IMPORTANT: The fllwing chart is a list f the Health Care Refrm Laws f 2010; the infrmatin may be subject t change based n final regulatins and interpretatins prvided by the regulatry agencies. 2012 Issuance f a standardized Summary f Benefits (utlined belw) Annual Reprts: HHS is required t develp reprting requirements by 3/23/12 2013 FSA: Annual cntributin is $2,500 Medicare Tax: Emplyee prtin f Medicare tax increases t 2.35% fr wages ver $200,000 2014 N waiting perids lnger than 90 days N pre-existing cnditins fr adults N annual dllar limits n essential health benefits Clinical trials Deductibles: Fr small emplyers, deductibles may be capped Emplyers with 50+ Emplyees must prvide affrdable health care cverage t full-time emplyees r pay a penalty Free Chice vuchers Excise ( Cadillac ) tax n high cst plans 2018 Summary f Benefits Checklist The Patient Prtectin and Affrdable Care Act (PPACA) implemented additinal, new reprting requirements fr health plans. By March 23, 2011, the US Department f Health & Human Services is required t establish standards fr grup health plans t fllw in prviding benefits summaries and cverage explanatins, which accurately explain the benefits and cverage prvided under the plan. In additin t the Summary Plan Descriptin, a new Summary f Benefits dcument is t be prvided t plan applicants, enrllees and plicy hlders (regardless f grandfather status) by March 23, 2012. This new Summary f Benefits dcument: may nt be lnger than fur (4) pages in length, and must use language that is understandable t the average plan enrllee. The Summary f Benefits dcument must include the fllwing items: unifrm definitins f standard insurance and medical terms (t be develped by HHS); descriptin f cverage fr (i) essential health benefits and (ii) ther benefits t be identified by HHS; exceptins, reductins and limitatins n cverage; cst-sharing prvisins, including descriptins f deductibles, cinsurance, and c-pays; renewability and cntinuatin f cverage prvisins; cmmn benefit scenaris based n clinical practice guidelines t illustrate csts fr pregnancy and serius r chrnic medical cnditins; a statement that the plan prvides minimum essential cverage; a statement that the plan s share f ttal allwed csts f benefits is nt less than 60% f csts; a statement that the utline is a summary f the plan and that the cverage dcument (SPD) shuld be cnsulted t determine the plan s gverning cntractual prvisins; and a cntact number fr the cnsumer t call with additinal questins and an internet web address where a cpy f the actual plan dcument can be reviewed r btained. 10
Client Lg Sample Health Care Refrm Amendment Issue: Lifetime Maximum Amendment: 1 f 11 Effective Date: January 1, 2012 Dcument being Amended: 2010 Summary Plan Descriptin As f [Mnth/Day/Year], [Client Name] has: Grandfathered Status Nn-Grandfathered Status Effective, in cmpliance with the Patient Prtectin and Affrdable Care Act (PPACA) and the Health Care and Educatin Recnciliatin Act f 2010, [Client] hereby amends the plan as fllws: Placement f Change Page Number Sectin Header 1. Page 25: Summary f Deductibles, Out-f-Pcket Maximums and Lifetime Maximums 2. 3. 4. Current Lifetime Maximum $2,000,000 Imprtant: Each change that will need t be made by emplyees fr each Issue (as utlined in the title abve) will be listed by page number; there will be ne amendment per issue. New There is n lnger a Lifetime Maximum n Essential Benefits. Replace $2,000,000 with Unlimited. It is understd and agreed by [Client] that the abve stated amendment and the prvisins cntained in the Summary Plan Descriptin as amended herein are acceptable and will be the basis fr the administratin f the plan beginning. In witness wheref, this Agreement has been executed this day f, 2010. Name (printed) Signature Title Date Imprtant: Future amendments will include the fllwing language: Effective Date The date the Material Mdificatin(s) will be effective; must be at least 60 days frm the date Emplyees are ntified f the change; see Ntificatin Date belw. Ntificatin Date The date Emplyees were ntified f the changes (i.e., Material Mdificatin) that are being made t the plan. Ntificatin Methd Methd used t ntify Emplyees f the changes (i.e., Material Mdificatin). 11