May 19, 2010

As the details of the Patient Protection and Affordable Care Act (PPACA) emerge, we will update you, through the HR Benefits Authority, on selected provisions that affect employers and employer-sponsored group health plans.
Specific  Topics.   In this issue, we take a closer look at the remaining PPACA provisions that go into effect in 2014:

• • Group  health  plans  and  insurance  carriers  may  not  impose  pre-existing condition limitations.
  • Group health plans and insurance carriers may not impose a waiting period longer than 90 days.
  • Insurance  carriers  and  self-funded  plans  must  report  health  insurance coverage information to both the covered individual and to the IRS.
  • Large employers and employers providing free choice vouchers must report health plan coverage information to both their full-time employees and to the IRS.
  • Group health plans may not deny a qualified individual’s participation in a clinical trial.
  • Increase in wellness program financial incentive maximum levels from 20% of the contribution amount to 30%.
  • Insurance carriers must guarantee availability and renewability of coverage for every individual and small employer in the state that applies for coverage and must renew existing policies upon request.
  • Group health plans may not impose limits on cost sharing in excess of the PPACA limits.

Pre-existing  Conditions.   Currently,  HIPAA  permits  pre-existing  condition limitations for up to 12 months (18 months for late enrollees) for conditions for which the individual received medical advice or services in the 6 months before his or her enrollment date.  The 12-month period (and 18-month period) must be reduced by any previous creditable coverage.
For plan years beginning on or after January 1, 2014, group health plans and health insurance carriers will no longer be able to impose pre-existing condition limitations for adults under group or individual coverage.  The PPACA eliminates the pre-existing condition exclusion for children under age 19 for plan years beginning on or after September 23, 2010.

Waiting Periods.  For plan years beginning on or after January 1, 2014, a group health plan or health insurance carrier may not require any waiting period that exceeds 90 days.
Insurer Reporting of Health Coverage.  For calendar years beginning after December  31,  2013, insurance  carriers  and  self-funded  group  health  plans  that provide minimum essential coverage to any individual must file an annual report with the IRS that includes:

• • the name, address, and taxpayer identification number of the primary insured, and the name and taxpayer identification number of each other individual obtaining coverage under the policy or plan;
  • the dates during which the individual was covered under the policy or plan during the calendar year;
  • whether the coverage is a qualified health plan offered through an exchange; and
  • the amount of any premium tax credit or cost-sharing reduction received by the individual with respect to such coverage.

To the extent health coverage is through an employer-provided group health plan, the insurer is also required to report the name, address and employer identification number of the employer, the portion of the premium, if any, required to be paid by the employer, and any other information the IRS may require to administer the new tax credit for eligible small employers.
This information must also be provided to covered individuals by the January 31 following the calendar year.
Employer Reporting of Health Coverage.  For calendar years beginning after December 31, 2013, each “large employer” and each employer who offers free choice vouchers must report certain health insurance coverage information to both its full- time employees and to the IRS.  A “large employer” is any employer with an average of at least 50 full-time employees in the previous calendar year.  The information required to be reported includes:

• • the name, address and employer identification number of the employer;
  • a certification as to whether the employer offers its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan;
  • the number of full-time employees of the employer for each month during the calendar year; and
  • the  name,  address  and  taxpayer  identification  number  of  each  full-time employee employed by the employer during the calendar year and the number of months, if any, during which the employee (and any dependents) was covered under a plan sponsored by the employer during the calendar year.

Employers who offer minimum essential coverage must also report:

• • in the case of a large employer, the length of any waiting period with respect to such coverage;
  • the months during the calendar year during which the coverage was available;
  • the monthly premium for the lowest cost option in each of the enrollment categories under the plan;
  • the employer’s share of the total allowed costs of benefits under the plan; and
  • in the case of an employer that provides vouchers, the option for which the employer pays the largest portion of the cost of the plan and the portion of the cost paid by the employer in each of the enrollment categories under each option.

The employer is required to report to each full-time employee the above information with respect to that employee, along with the name, address and contact information of the reporting employer, on or before January 31 of the year following the calendar year for which the information is required to be reported to the IRS. The PPACA provides that to the extent permitted by the IRS, the annual employer report may be combined with the insurer return described above.
The following provisions apply only to plans that are not grandfathered.  As explained in previous issues of the HR Benefits Authority, group health plans that were in effect on March 23, 2010 are exempt from certain PPACA provisions.  These include the following: 

• • Clinical Trials.  Group health plans and health insurance carriers that provide coverage to an individual eligible to participate in an approved clinical trial may not deny or limit coverage of routine costs for items and services associated with participation in the clinical trial.  Group health plans and health insurance carriers must allow the individual to participate in the clinical trial and may not discriminate against that individual for participating in the trial.
  • Wellness Programs.   PPACA increases the reward limitation that can be provided to employees for HIPAA wellness programs.  Financial awards associated with HIPAA wellness programs can be 30% of the cost of health coverage, instead of the current 20%.  The IRS/DOL/HHS may increase the reward level to up to 50%.
  • Guaranteed Availability and Renewability of Health Coverage.  Insurers will need to accept all individuals and small groups in the state that apply for coverage.  Insurers must also renew existing policies upon request.
  • Cost-Sharing Limits.  Group health plans may not have annual cost-sharing provisions (e.g., maximum deductibles and out-of-pocket costs) that exceed the  new  PPACA  limitations.   The  annual  out-of-pocket  maximums  cannot exceed the individual and family limits for high-deductible health plans that are in effect at that time.  For small employers, the deductibles may not be higher than $2,000 for single coverage or $4,000 for family coverage.

We will continue to follow the legislation and developing interpretations closely to provide you with updates as well as our analysis of what it means to you.