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MEBS Healthcare Reform Guide - July 2012
The MEBS Healthcare Reform Guide for 2012 is for our clients to use in navigating through these changes in the law. To review this guide, please click the link below.
MEBS Healthcare Reform Guide for 2012
U.S. Supreme Court Ruled on Healthcare Reform cases - June 28, 2012
The U.S. Supreme Court (USSC) ruled on the Patient Protection Affordable Care Act (PPACA) (a.k.a. Healthcare Reform) challenges on June 28, 2012. The USSC ruled that the individual mandate was constitutional under Congress' power to impose taxes. The USSC also ruled that the Medicaid expansion is constitutional but Congress cannot take away States Medicaid funding if they do not join in the Medicaid expansion.
Medical Loss Ratio Notices - May 2012
Under Healthcare Reform, insurers were required to report to HHS how they spend premium dollars and must provide rebates to enrolless unless a certain percentage of premium dollars (85% for large group market and 80% for small group and individual markets) are spent on clinical services and health care quality improvement. The reporting was due on June 1, 2012.
The MLR rules initially only required insurers that did not meet the applicable percentages to provide notices and rebates to enrollees. However, HHS issued a final rule that amends the MLR rules to require insurers in the individual and group markets to send a notice for MLRs that meets or exceeds the applicable MLR for the 2011 reporting year only unless an exception applies. The notice is to improve the transparency of health insurance markets. The notice has specific content and distribution requirements.
Guidance on Summary of Benefits and Coverage (SBC) - May and March 2012
The Departments of Labor, Health and Human Services, and Treasury issued additional Frequently Asked Questions (FAQs) on the implementation of the summary of benefits and coverage (SBC). Some of the guidance issued was these areas below.
- Minor adjustments to the SBC such as to expand columns for a plan or insurer's information.
- Updated SBC template for appearance changes (i.e. bolding, underlining, shading, capitalization, margin justifications, use of hyphens, and row and column sizing) to ensure the SBC is accessible to individuals with disabilities.
The Departments of Labor, Health and Human Services, and Treasury issued Frequently Asked Questions (FAQs) on the implementation of the summary of benefits and coverage (SBC). Some of the highlights from this guidance are below.
- During the first year, the Departments will not impose penalties on plans and insurers that are working in good faith to comply with these requirements.
- Plans and insurers may combine information for different coverage tiers (i.e. self-only, employee+one, family) into one SBC, if the appearance is understandable.
- Guidance for plans and insurers to complete the SBC.
Proposed rules issued on Patient-Centered Outcomes Research Trust Fund fees - April 2012
The proposed rules assess fees on insurers of specified health insurance policies and certain self-insured health plans. The fee contributes to the fund, which establishes a non-profit corporation for comparative effectiveness research.
To calculate the fee owed, insurers and plan sponsors must use the applicable fee amount for the policy/plan year multiplied by the average number of lives covered under the policy/plan year using one of the permitted methods. The fee starts for plan and policy years ending on or after October 1, 2012 and ends on October 1, 2019. Insurers and plan sponsors may rely on these proposed rules until the final rules are issued.
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Four Page Summary of Benefits and Coverage
Final Rules Issued
These final rules requires insurers and group health plans (plan) to distribute the Summary of Benefits and Coverage (SBC) along with a Uniform Glossary at certain times containing required information.
SBC Purpose Uniform Glossary
To accurately describe the benefits and coverage so consumers can better understand their coverage and compare coverage options.
To provide common health related coverage and medical terms.
Insurers must distribute the SBC to plans beginning September 23, 2012.
Plans and insurers must provide the SBC to participants and beneficiaries who enroll or re-enroll in group health coverage through an open enrollment period (including re-enrollees and late enrollees) beginning on the first day of the first open enrollment period that begins on or after Sept. 23, 2012.
Plans and issuers must provide the SBC to participants and beneficiaries who enroll in group health coverage other than through an open enrollment period (i.e. newly eligible individuals and special enrollees) beginning on the first day of the first plan year that begins on or after Sept. 23, 2012.
Appearance, Language, and Content Requirements
The SBC must meet certain appearance, language, and content requirements.
Form W-2 Health Coverage Reporting
Healthcare Reform initially added a requirement that the aggregate cost of employer-sponsored health coverage be reported on an employee's Form W-2 beginning in the 2011 tax year.
Reporting - Optional for 2011
This reporting is optional for 2011. The 2011 Form W-2 is available so employers may use it to report the cost of employer-sponsored health coverage in Box 12. This is to provide employers with additional time to make any necessary changes to their payment systems and procedures for compliance with this requirement.
Reporting for smaller employers - Optional for 2012
The IRS issued additional guidance providing relief for smaller employers (those filing less than 250 W-2 forms) by making this reporting optional for 2012 and until further guidance is issued.
Purpose of Reporting
The health coverage amounts reported on Form W-2 are not taxable. The purpose of the reporting is informational only and will show employees the value of their health benefits so that they can be more informed customers.
Flexible Spending Arrangment (FSA) Limit
Summary Healthcare Reform imposes a $2,500 annual limit on salary reduction contributions to FSAs offered under cafeteria plans. This limit is effective for taxable years starting after December 31, 2012. Plans should review their current FSAs set-up and update their FSA plans before the beginning of the plan year, as necessary.
Additional Preventive Services to be covered for women
Plans and issuers are required to provide coverage for additional women's preventive services without cost-sharing for plan years starting on or after August 1, 2012. These services are listed below. The frequency of coverage varies based on the service provided. The services to be covered are the following:
- Well-woman visits
- Screening for gestational diabetes
- Human papillomavirus testing
- Couseling for sexually transmitted infections
- Counseling and screening for human immune-deficiency virus
- FDA approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity
- Breastfeeding support, supplies, and counseling
- Screening and counseling for interpersonal and domestic violence
Medical Loss Ratios (MLR) MLR defined
The percentage of health insurance premium costs that an insurance plan uses to pay medical claims.
Summary of MLR requirements
The MLR regulation outlines disclosure and reporting requirements, how insurance companies will calculate their MLR and provide rebates, and how adjustments could be made to the MLR standard to guard against market destabilization.
The MLR requirements generally apply to health insurance issuers offering group or individual health insurance coverage for plan years beginning on or after January 1, 2011. However, these requirements do not apply to self-insured plans, including self-plans offered through an association or trust.
Health insurers, must -
1. Annually report on the share of premium dollars spent on medical care and
activities to improve health care quality versus profits or administration.
2. Spend 80% (small groups) and 85% (large groups) of consumers' premiums
on direct care for patients and efforts to improve care quality.
Rebates if MLR requirements not met
If insurance companies do not meet the applicable MLR standard, they will be required to provide a rebate to the entity that paid the premium for the enrollee starting in 2012 and on an annual basis. The rebates are designed to provide value to policyholders and create incentives for issuers to become more efficient in their operations.
Timing of Reporting and Rebates
The first report containing the 2011 MLR calendar year (for the plan) data is due in 2012. Insurers are required to make the first rebates, if any, in August 2012.
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