New Federal Mandates for Health Plans
Written by Tom Seltz, Marvin A. Address and Associates, Inc. (9/23/2010)
Today marks the sixth-month anniversary of the enactment of the Patient Protection and Affordable Care Act (PPACA). While a handful of changes under this Act took effect immediately (see Health Reform Bulletins #1 and #2 for more details) and others still will be phased in over the next three years, several important mandates take effect upon your health plan’s next annual renewal occurring on or after today. To make things really complicated, some of these mandates apply to ALL health plans regardless of their “Grandfathered Status” and some will only apply once a plan has lost its “Grandfathered Status”, or effective January 1, 2014 (whichever is sooner).
While an entire Health Reform Bulletin could be dedicated to what defines a Grandfathered Health Plan, for these purposes I will summarize by saying that a Grandfathered Health Plan is one that was in place with at least one insured on March 23, 2010 AND who has not made any significant changes pertaining to plan design, Copay amounts, coinsurance levels, insurance carrier and/or the percentage of premium contribution paid by the employee. [Of course that doesn’t tell the whole story, so more details on Grandfathered Status, what a “significant change” is, and the consequences will be explained further in an upcoming bulletin.]
So without any further ado, here are the changes you need to know about as your next health renewal approaches:
CHANGES AFFECTING ALL HEALTH PLANS
The following changes will occur on the first day of your health policy’s Plan Year beginning on or after September 23, 2010, regardless of whether yours is a “Grandfathered Plan”:
• Removal of Lifetime Benefit Limits. Lifetime limits on the dollar value of benefits for any participant or beneficiary will no longer be allowed. Most non-dollar-amount limits may still apply, for example a limit on the particular number of visits for chiropractic care, physical therapy, etc. Some annual limits may also be allowed. Because there are also special provisions for certain “mini-med” plans or non-traditional medical plan types, if you have a plan with a lifetime maximum benefit and you are unsure if the plan is exempted from this rule, please discuss with Sandra or me, or contact your insurance carrier directly as appropriate. Otherwise, in most circumstances the carrier will remove the lifetime limit from the plan automatically in accordance to the new rules, and plan highlights and brochures will be updated shortly.
• Benefits for Pre-Existing Conditions for Dependents until Age 19. All group and individual health plans will have to provide benefits for pre-existing conditions for all children up to age 19. If your plan has a pre-existing condition exclusion, it will still apply to adults and any dependents age 19 and older as was the case prior to this change. If your health plan does not have a pre-existing condition exclusion, this change will not affect you.
• Eligibility for Dependents until Age 26. Insurance carriers are no longer allowed to exclude eligibility to dependents under the age of 26 except in very narrow circumstances. Most carriers including CareFirst, United Healthcare and others have already implemented part or most of these changes in advance of the deadline, however this expansion will now apply under full force of the law. [NOTE to DC Groups: A new DC law now requires plans to allow certain dependents to stay on the plan through the last day of the calendar year during which their 26th birthday occurred, not just the last day of the month containing their 26th birthday. More information on that to follow...]
• Additional Restrictions on Health Insurance Rescissions. Health coverage rescissions will be prohibited except for cases of fraud or intentional misrepresentation. Those purposefully deceiving insurance carriers are still eligible for rescission, just as is currently the case.
CHANGES APPLICABLE UPON LOSS OF GRANDFATHERED STATUS (as well as all plans effective March 24, 2010 or later)
In addition to the changes listed above, the following changes will apply to any new health plans written after March 23, 2010 as well as to any plans that loose their Grandfathered Status between now and January 1, 2014:
• Nondiscrimination Rules. Group plans will be required to comply with the Internal Revenue Section 105(h) rules that prohibit discrimination in favor of highly compensated individuals in plan years beginning on or after September 23, 2010, unless grandfathered. Again, more details will be sent to you about this in an upcoming Health Reform Bulletin.
• Preventive Care Services. All group and individual plans will have to cover certain preventive care services with NO cost-sharing, meaning that some services previously subject to an in-network Copay or deductible (or both) will no longer apply.
• Provider Flexibility Rules. All applicable health plans must allow members a choice of primary care physician, allow an individual to choose a pediatrician as their primary care physician, and are required to permit women direct access to obstetricians and gynecologists. If your plan does not require the selection of a Primary Care Physician and/or referrals are not required to see specialists, these rules will not affect your plan.
• Emergency Coverage Expansion. All group and individual plans will have to cover emergency services at the in-network level regardless of provider.
• External Review Process. Insurers are required to implement an appeals process that includes an external review.
• Annual Reports. Many group plans will be required to provide annual reports to the department of Health and Human Services regarding health care quality and wellness programs.
Please note that ALL of the above mandates, and others, will apply to ALL group health plans on January 1, 2014 when the Grandfathered Status distinction will be discontinued.
Of course, upon your group’s renewal please take timely steps to notify your employees and other plan beneficiaries so that they may take advantage of these changes. Attached is sample notification language issued by United Healthcare, for your reference (this can be modified regardless of your carrier… I understand CareFirst has developed something similar). Also, as with any change, please be sure to update your health plan’s ERISA Summary Plan Description (SPD) and/or provide Summary of Material Modification (SMM) as appropriate.
Also for your reference I have attached a simplified PPACA timeline published by the National Association of Health Underwriters, which contains not only a summary of the changes that are occurring now but also the key changes scheduled to occur between now and 2014. Additional information can be found at www.dol.gov, www.dol.gov/ebsa, and www.hhs.gov.
Finally, please note that this bulletin will be posted in the News & Resources section of our website (www.AddressInsurance.com) for your future reference. If you have any questions please contact Sandra or me, your accountant or legal council, or the IRS or the Department of Labor, as appropriate.