Commitment to employer-sponsored health plans on the rise

Source: https://www.benefitspro.com

By Kathryn Mayer

What a difference a year can make. A new industry report finds that significantly more employers than last year say they will “definitely” continue to provide health care coverage when health exchanges come online next year.

According to preliminary survey results from the International Foundation of Employee Benefit Plans, 69 percent of employers said they will definitely continue to provide employer-sponsored health care in 2014, while another 25 percent said they are very likely to continue employer-sponsored health care.

That’s a 23 point increase from 2012, when 46 percent reported being certain that they would continue employer-sponsored health care.

Opponents of President Obama’s Patient Protection and Affordable Care Act have argued that employers are likely to drop health coverage as an unintended consequence of the law that will negatively affect employees who want to stick with the coverage they know and like.

Estimates have varied widely on just what reform will do to employer-based health coverage. A Deloitte report last summer estimated that one in 10 employers will drop coverage for their employees, while consulting firm McKinsey & Co. drew fire when it stated 30 percent of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014.

The IFEBP survey found the vast majority of employers (90 percent) have moved beyond a “wait and see” mode, and more than half are developing tactics to deal with the implications of reform. Organizations maintaining a wait-and-see mode decreased from 31 percent in 2012 to less than 10 percent in 2013.

Since the foundation’s first survey regarding reform’s impact on employer-sponsored coverage in 2010, employers have most commonly said keeping compliant was their top focus. In 2013, for the first time, most employers said their top focus is developing tactics to deal with implications of the law.

Still, the survey found estimates of cost increases directly associated with the PPACA have increased from 2012 to 2013. Employers with 50 or fewer employees are reporting the largest anticipated cost increase. Conversely, larger employers are the least likely to see significant cost increases.

Reform is expected to have a bigger impact on smaller employers than larger ones. Small businesses are making more employment-based decisions with hiring, firing and reallocating hours than larger employers, and they are more likely to drop coverage due to PPACA.

Despite employers' commitment to employer-sponsored health coverage, Gallup reported earlier this year that 44.5 percent of Americans got employer-based coverage in 2012, the lowest percentage since President Obama took office.

Results are based on survey responses submitted by more than 950 employee benefit professionals and practitioners through March 26.

 

by 6d-destani

Important Transition Relief for Non-Calendar Year Plans

Source: United Benefit Advisors

The January 1, 2014 effective date of the Pay-or-Play requirements under health care reform presents special issues for employers with non-calendar year plans.  Prior to the release of the proposed regulations under the shared responsibility rules, employers with non-calendar year plans would either need to comply with the Pay-or-Play requirements at the beginning of the 2013 plan year or change the terms and conditions of the plan mid-year in order to comply.  Recognizing that compliance as of January 1, 2014 caused a special hardship for non-calendar year plans, the proposed regulations, provide special transition relief.  Employers with non-calendar year plans in existence on December 27, 2012 can avoid the Pay-or-Play penalties for months preceding the first day of the 2014 plan year (the plan year beginning in 2014) for any employee who was eligible to participate in the non-calendar year plan as of December 27, 2012 (whether or not they actually enrolled).  Under this relief, the employer would not be subject to Pay-or-Play penalties for any such employees until the first day of the plan year beginning in 2014, provided they are offered coverage that is affordable and provides minimum value as of the first day of the 2014 plan year.

The relief also provides an employer maintaining a non-calendar year plan with additional time to expand the plan's eligibility provisions and offer coverage to employees who were not eligible to participate under the plan's terms as of December 27, 2012.  If the employer had at least one-quarter of its employees (full and part-time) covered under a non-calendar year plan, or offered coverage under a non-calendar year plan to one-third or more of its employees (full and part-time) during the most recent open enrollment period prior to December 27, 2012, it will not be subject to Pay-or-Play penalties for any of its employees until the first day of the plan year beginning in 2014.   For purposes of determining whether the plan covers at least one-third (or one-quarter) of the employer's employees, an employer can look at any day between October 31, 2012 and December 27, 2012.  Again, this transition relief is dependent upon the plan offering affordable, minimum value coverage to these employees no later than the first day of the 2014 plan year.
This important transition rule raises the question of what is considered to be a plan's plan year.  If a plan is not required to file an Annual Report, Form 5500, as is the case with a fully insured plan with fewer than 100 participants, or the plan has failed to prepare a summary plan description that designates a plan year, the plan year generally will be the policy year, presuming that the plan is administered based on that policy year.  If a policy renews on January 1 and any annual open enrollment changes take effect January 1, the plan year likely will be deemed to start January 1.  If the policy renews on July 1, however, and open enrollment changes become effective on January 1 of each year, the lack of a summary plan description leaves the plan year determination open to question.   The employer in this situation may want the plan year to start on July 1 in order to delay the date on which the plan has to comply with the requirements under health care reform.  If the plan is administered on a calendar-year basis, however, the government could reasonably argue that the plan year is the calendar year.  Employers should be taking steps now to identify the plan year for their group health plan(s) in order to ensure that they are timely complying with the applicable requirements under health care reform.
If the employer has prepared and distributed a summary plan description for its group health plan or the plan files an Annual Report, Form 5500, the plan year has already been identified.  If the employer has not complied with the ERISA disclosure and/or reporting requirements, then additional analysis of the 12-month period over which the plan is administered and operated is needed to identify the plan year.  That analysis should take place now and not when an auditor asks the question.
For employers in this situation, it would be advisable to adopt a plan document to address this issue.  Since insurance companies are not directly subject to ERISA, their policies may not contain all of the provisions necessary to meet ERISA's disclosure requirements.  An insurance policy typically does not contain certain desired provisions describing the relationship between the employer and plan participants.  Such provisions might include the employer's indemnification of its employees who perform plan functions, the employer's right to amend the plan, a description of the plan's enrollment process, and the allocation of the cost of coverage between the employer and participants.  A wrap plan can address these issues, as well as enable an employer to aggregate all its welfare benefits under a single plan so that a consolidated Annual Report, Form 5500 may be filed for all ERISA welfare benefit plans subject to annual reporting obligations.

by 6d-destani

A walk-through on full-time vs. part-time for PPACA

Source: https://eba.benefitnews.com

By L. Scott Austin and David Mustone

With a substantial portion of the Patient Protection and Affordable Care Act set to go into effect in 2014, employers are working to determine how the law will impact them, their business and their employees. Because the law will require most employers to provide affordable minimum essential health insurance coverage to full-time employees or face financial penalties, employers must understand how the law defines full-time workers, as well as the penalties that businesses can face for failing to comply or choosing not to provide coverage.

Under provisions called the employer shared responsibility rules, the PPACA requires large employers (generally those with 50 or more full-time employees) to provide affordable group health coverage with sufficient value to full-time employees and their dependents. Full-time employees are generally defined as those who work on average at least 30 hours per week. Employers that fail to comply with these rules can face penalties.

What are the potential penalties?

The failure to offer coverage penalty applies if at least one full-time employee obtains subsidized coverage on an exchange where the employer does not offer coverage to at least 95% of its full-time employees and their dependents. This penalty – which can be up to $2,000 per year for each full-time employee (in excess of 30) – will be based on the total number of full-time employees an employer has, regardless of how many employees have government-subsidized exchange coverage.

The insufficient coverage penalty applies if the employer offers full-time employees coverage, but the coverage is either unaffordable (individual premium cost exceeds 9.5% of the employee’s household income) or does not provide minimum value (plan pays less than 60%of the covered costs). Proposed regulations released by the IRS provide guidance and alternative safe harbors for calculating whether health coverage is unaffordable, including use of an employee’s W-2 earnings. The potential penalty for insufficient coverage is $3,000 per year for each employee who obtains government-subsidized coverage on an exchange.

Employers also should note that in determining whether an employer is subject to these provisions (i.e., is a “large employer”), the IRS controlled group rules are applied – meaning that all affiliated employers for which there is 80% or greater common ownership will be treated as a single employer. However, compliance with the employer shared responsibility rules – and any associated penalties – will generally be assessed on an employer-by-employer basis.

Who is considered a full-time employee?

As an employer, the determination of who is a full-time employee will be crucial in evaluating your options for complying with the employer shared responsibility rules, and equally important, designing your group health plan’s eligibility and participation requirements.

Because there can be various ways of assessing what constitutes a full-time employee eligible for coverage under the PPACA, the IRS has issued guidance in the form of several notices, as well as temporary regulations. These guidelines set out criteria and standards that can help employers make accurate determinations when hiring new employees, including:

  • Initial measurement period – A designated period of not less than three months or more than 12 months used in determining whether a newly hired variable or seasonal employee is full-time.
  • Standard measurement period – An annual designated period of not less than three months or more than 12 months used to determine whether an ongoing variable or seasonal employee is full-time.
  • Administrative period – A period of up to 90 days for making full-time determinations and offering/implementing full-time employee coverage.
  • Stability period – An annual designated period of not less than six months (and not less than the corresponding measurement period) during which the employer must offer affordable minimum essential health coverage to all full-time employees, or face financial penalties for not doing so.
  • Full-time employees – If a new employee is reasonably expected to average at least 30 hours per week at the time of hire, the employee must automatically be treated as full-time and offered group health coverage within three months of hire.
  • Variable hour and seasonal employees – A variable hour employee is someone whom the employer cannot reasonably determine will average at least 30 hours per week at the time of hire. No definition is provided for a seasonal employee, but presumably it would include anyone who works on a seasonal basis. Employers may use the initial measurement period to determine whether a newly hired variable or seasonal employee actually averages at least 30 hours per week, and the standard measurement period to determine whether an ongoing variable or seasonable employee actually averages at least 30 hours per week. If the employee does average at least 30 hours per week during the initial measurement period or standard measurement period, the employer must offer affordable minimum essential health coverage during the stability period, or face financial penalties for not doing so.
  • Transition from new to ongoing employee status – Once a new employee has completed an initial measurement period and has been employed for a full standard measurement period, the employee must be tested for full-time status under the ongoing employee rules for that standard measurement period, regardless of whether the employee was full-time during the initial measurement period.

 

by 6d-destani

Understanding Exchanges Still a Struggle for Consumers

Source: https://www.benefitspro.com

By Kathryn Mayer

Yet another poll is out underscoring one of the main concerns over health reform — that consumers just don’t get it.

According to this survey, released Thursday by InsuranceQuotes.com, 90 percent of Americans don’t know when the new health insurance exchanges will open.

A major component of the Patient Protection and Affordable Care Act, the new health insurance exchanges will be available for online and telephone enrollments beginning Oct. 1. Coverage begins on Jan. 1, 2014. Exchanges are intended to give families and small-business owners accurate information to make apples-to-apples comparisons of private insurance plans and get financial help to make coverage more affordable if they’re eligible.

The exchanges are a core component of the individual mandate that will require all Americans to obtain health insurance or pay a fine. As a result, tens of millions of previously uninsured Americans are expected to gain access to health insurance.

The survey of roughly 1,000 U.S. adults found that 40 percent expect health reform to have a major effect on their lives, while 39 percent think the law will have a minor effect and 19 percent expect no effect.

The survey found that Americans were more knowledgeable about other aspects of health reform. For instance, 73 percent correctly answered that health plans cannot deny coverage based on preexisting health conditions. And 66 percent accurately said that health plans must extend coverage to dependent children up to age 26. Those two provisions have been among the most popular.

Still, insurance experts say having only some knowledge isn’t enough.

“A lot of people need to study up on health care reform and what it means to them,” said Laura Adams, senior insurance analyst at InsuranceQuotes.com. “We found a very inconsistent understanding of the Affordable Care Act, and we fear that many people will miss key deadlines and benefits because they don’t adequately understand the new law.”

Uninformed consumers who are unaware of what the exchanges do and what health reform means for them has been a huge hurdle of PPACA. It’s something that government officials are working to alleviate. In January, The Department of Health and Human Services relaunched healthcare.gov, a website aimed at informing consumers about the health reform law while giving them a place to purchase insurance.

In total, 39 percent of Americans said they are somewhat knowledgeable about PPACA, 28 percent said they aren’t too knowledgeable, 21 percent said they aren’t at all knowledgeable and only 10 percent said they are very knowledgeable.

The survey was conducted March 7-10 by telephone by Princeton Survey Research Associates International.

 

by 6d-destani

Three PPACA Coverage Terms Explained

Source: United Benefit Advisors

The Patient Protection and Affordable Care Act (PPACA) uses terms that sound alike for three very different things.  Here’s a closer look at these terms, and when they’re used.

Essential Health Benefits
Significantly affects individuals and small employers with a fully insured plan.  Has a limited impact on self-funded and large insured plans.

Beginning in 2014, policies in the individual and small group markets* will be required to provide coverage for each of the 10 “essential health benefits” regardless whether the policy is purchased through or outside the exchange.  Self-funded plans (regardless of size), large group plans, and grandfathered plans (regardless of size) do not have to cover all 10 essential health benefits, but they will not be allowed to put lifetime or annual dollar limits on an essential health benefit.

Each state will have its own “benchmark” essential health benefits package. The essential health benefit categories are ambulatory/outpatient, emergency, hospitalization, maternity and newborn care, mental health and substance use, prescription drugs, rehabilitative and habilitative services and devices (for example, speech, physical and occupational therapy), laboratory services, preventive and wellness services and chronic disease management, and pediatric services, including pediatric dental and vision care.

Minimum Essential Coverage
Affects most individuals and all employers with 50 or more employees (regardless whether its plan is self-funded or fully insured).

Beginning in 2014, most Americans will be required to have “minimum essential coverage” or pay a penalty with their tax return. (In 2014, the penalty will be the greater of 1 percent of income or $95.)  A person will have minimum essential coverage if he or she is covered under an eligible employer-sponsored plan, an individual policy (through or outside the exchange), or a government plan (Medicare, Medicaid, CHIP, TRICARE, VA, etc.).

Also beginning in 2014, employers with 50 or more full-time or full-time equivalent employees will be required to offer minimum essential coverage to nearly all of their employees who work 30 or more hours a week, or pay a penalty.  (If minimum essential coverage isn’t offered to at least 95 percent of full-time employees and their dependent children, a penalty of $2,000 per year per full-time employee, excluding 30 full-time employees, will apply.)

A clear definition of “minimum essential coverage” for employer-provided benefits has not been provided yet, but it appears that fairly basic medical coverage will be enough.  “Eligible employer-sponsored coverage” includes any plan offered in the small or large group market in a state, as well as self-funded plans, unless the plan only provides “excepted benefits.”  Excepted benefits are those that provide very limited medical coverage, like hospital indemnity, long-term care and cancer plans, on-site medical clinics, disability income and accident plans, and dental- and vision-only coverage.  Plans with annual dollar limits on essential health benefits will not be allowed after 2014, so it is unlikely that a standalone HRA will provide minimum essential coverage.

Minimum Value Coverage
Affects employers with 50 or more employees (regardless whether its plan is self-funded or fully insured) and individuals who may be eligible for premium tax credits/subsidies.

Beginning in 2014, employers with 50 or more full-time or full-time equivalent employees that offer coverage that is less than “minimum value” will have to pay a penalty.  (The penalty for not providing minimum value, affordable coverage is $3,000 for each full-time employee who obtains coverage through a public exchange and receives a premium tax credit/subsidy.  Individuals will not be eligible for a subsidy if their employer offers them affordable, minimum value coverage.)

Minimum value coverage is coverage with an actuarial value of at least 60 percent – this means that on average the plan is designed to pay at least 60 percent of covered charges.  (The employee would be responsible for the other 40 percent through the deductible, copays and coinsurance.)  In the self-funded and large markets, employers will be able to use a calculator provided by the government, and possibly safe harbor plan designs, to make sure their plan meets the 60 percent standard.  The proposed calculator can be found here (under the “Plan Management” section, look for Feb. 20, 2013 / Minimum Value Calculator): Regulations and Guidance | cciio.cms.gov.  According to HHS, 97 percent of the employer-sponsored plans they surveyed already meet the 60 percent requirement.

In the individual and small group markets, a “bronze” policy will have an actuarial value of 60 percent.

In a nutshell, then:

  • Essential health benefits are the kinds of care small plans must cover
  • Minimum essential coverage is what individuals must have and large employers must offer if they don’t want to pay tax penalties
  • Minimum value coverage is what large employers must offer to avoid a different tax penalty

 * It is still unclear what size makes a plan “large” or “small” under the essential health benefits rules.  Clearly, a plan with fewer than 50 employees is “small” and a plan with more than 100 employees is “large.”  States have the option to consider plans below 100 as “small” until 2016, but it is not clear yet how they make that choice.  (It is clear that a plan is “large” under the minimum essential and minimum value requirements if there are 50 or more full-time or full-time equivalent employees in its control group.)

 

by 6d-destani

Young Adults Should Have Reasonable Plan Options On Exchanges

Source: https://www.kaiserhealthnews.org

By Michelle Andrews

As landmark dates approach in the health-care overhaul, readers are trying to figure out how the new insurance exchanges will work. Here are some recent questions:

Q. After the exchanges go live in 2014, will consumers still be able to buy individual health insurance directly from carriers, without going through those state-based marketplaces? I fear the rules of the plans operating within the exchange will make the premiums unnecessarily high for younger, healthy people.

A. Consumers will be able to buy individual health insurance next year either through the state insurance exchanges or on the private market. Regardless of where they buy a plan, however, all new individual policies will have to meet certain standards related to coverage and cost.

Under the law, premiums for older people cannot be more than three times higher than those for younger ones. Currently, the gap between how much younger, typically healthier people pay for coverage and how much older people pay is larger than that, leading some experts to predict that younger people's rates will skyrocket next year.

An analysis published last month by the Urban Institute suggests that will not happen. Although premiums will be higher for many young people under the new rules, this increase will have very little impact on their out-of-pocket costs, the study found. The reason: The vast majority of young people will be eligible for subsidized coverage -- through the exchanges, Medicaid or their parents' health plans. On the health insurance exchanges, premium subsidies will be available to people with incomes up to 400 percent of the federal poverty level -- $45,960 for an individual in 2013.

"If you're young, you do want to go on the exchanges because you'll qualify for subsidies," says Jen Mishory of Young Invincibles, an advocacy group.

In addition to enrolling in regular plans, people up to age 30 will have the option of using the exchanges to buy less expensive, high-deductible policies that protect primarily against catastrophic events. Although these policies might require large out-of-pocket payments by members -- the deductible probably will be more than $6,000, for starters -- they will be required to cover preventive care without any co-pay or cost sharing, and three primary-care visits will be covered even if the deductible has not been met.

Q. If employers stop providing coverage and employees have to purchase individual policies on or off the exchanges, do the employees lose the option to make pre-tax contributions to their health savings accounts?

A. You'll be able to make pre-tax contributions as long as you buy a policy that meets federal standards for plans that can be linked to health savings accounts.

This means a high-deductible policy. In 2013, HSA-qualified plans must have a deductible of at least $1,250 for individual coverage and $2,500 for a family plan, among other requirements.

The amount that individuals and their employers can contribute to the accounts limited to $3,250 and $6,450 for individual and family coverage, respectively. (The Internal Revenue Service makes cost-of-living adjustments to these and other limits annually.) Even if your employer no longer offers health insurance in 2014, any money in the HSA is yours to use for medical expenses.

Some of the policies offered on the exchanges may qualify as HSA plans, says Carrie McLean of eHealthInsurance.com, an online vendor. But it's too soon to know whether carriers will offer such plans or the exchanges will choose to carry them, she says.

Q. In 2014, can someone who works for a company drop his coverage and buy it through a state exchange instead?

A. Next year, most people will be able to choose to buy a health plan on the exchange. As I said above, individuals whose income is less than 400 percent of the federal poverty level may be eligible for a subsidy. This can make buying a policy on the exchange an attractive option.

But even if you meet the income requirements, you won't be eligible for a subsidized exchange plan unless your job-based coverage is considered unaffordable (because premiums for individual coverage cost more than 9.5 percent of the individual's income) or inadequate (because the plan covers less than 60 percent of allowed medical expenses).

Q. What's to stop people from just paying the individual mandate penalty and buying coverage when they need it, since insurers won't be able to turn them down because of a preexisting condition?

A. If you decide to drop coverage altogether, the penalty for not having insurance in 2014 will be either $95 or 1 percent of your taxable income, whichever is greater. To discourage people from waiting to buy insurance until they're sick, there will be an open enrollment period for buying coverage on the exchanges from October 2013 through March 2014. If you don't sign up during that time and you subsequently get sick, you won't be able to sign up until the following year in most cases.

 

by 6d-destani

3-year anniversary: Important milestones for PPACA

Source: https://eba.benefitnews.com

By Gillian Roberts

On the third anniversary of President Barack Obama signing the Patient Protection and Affordable Care Act, we take a quick look at important dates on the passage, implementation and ongoing struggles about the law that’s set to change America.

  • March 23, 2010: The day Obama signed PPACA into effect. He reflects on that day in a statement released Saturday, “Three years ago today, I signed into law the principle that in the wealthiest nation on Earth, no one should go broke just because they get sick.”
  • June, 2013: Kathleen Sebelius, Secretary of the Department of Health and Human Services, made multiple media appearances at the end of last week around the anniversary. She authored a blog on the Huffington Post, discussing another step to come: “In June, the site will be unveiling the new Marketplace. You'll be able to learn everything you need to know about the Marketplace, including how it works, the benefits of health insurance, how to choose a plan based on your needs and lifestyle, and more. Then in the fall, you can use this site to enroll in a plan from home, or from any place you can access the Web.”
  • Oct. 1, 2013: The day the state, federal and partnership exchanges are scheduled to begin open enrollment for those who are currently uninsured or looking to switch to the exchanges. There has been growing speculation growing over the amount of work HHS has yet to do to meet this deadline. Earlier in March the executive director of the National Governors Association, Dan Crippen, told a crowd of carriers at AHIP’s policy conference that there is a chance some of the exchanges won’t be ready by Oct. 1, but HHS will continue to work hard towards the deadline.
  • Jan. 1, 2014: The day coverage begins for those who have enrolled on the public exchanges. The Congressional Budget Office released updated predictions in February of this year that 6 - 7 million people will gain coverage on the exchange in the first year. This is a decrease of 13 million people from CBO’s initial projections about health reform in March 2010.

by 6d-destani

The Affordable Care Act Three Years Post-Enactment

Source: https://www.kff.org

Three years ago, on March 23, 2010, the Affordable Care Act (ACA) was signed into law. Although the date for full implementation of most provisions of the law is January 1, 2014, the ACA has already had an impact on the goals of expanded coverage of the uninsured, improved access and better care delivery models, broader access to community-based long-term care, and more integrated care and financing for beneficiaries who are dually eligible for Medicare and Medicaid. Although the ACA remains controversial, with many debates about its future as well as provisions already implemented, implementation is proceeding.

Much remains to be put in place leading up to 2014. This brief summarizes ACA-related activities to date in terms of tangible benefits and policy changes on the ground with respect to private insurance and Exchanges, Medicaid coverage, access to primary care, preventive care, Medicare, and Medicare and Medicaid dual eligible beneficiaries.

Private Insurance and Exchanges

  • Young adults up to age 26 can stay on their parents’ insurance policies. Young adults can qualify for this coverage even if they are no longer living with a parent, are not a dependent on a parent’s tax return, or are no longer a student. Census data show that over two million young adults have gained coverage, contributing to the decline of 1.3 million in the number of uninsured Americans in 2011.
  • Many states are moving forward with building new health insurance marketplaces. To date, 17 states and the District of Columbia are establishing state-based health insurance exchanges while another seven states will partner with the federal government to run their exchanges. These states are making critical decisions about how insurers will participate in the exchanges, what types and how many plans will be offered, and what types of consumer assistance will be available to help people enroll in coverage. States are also building the IT infrastructure for the exchanges to be ready when open enrollment begins on October 1. In the remaining 26 states, the federal government will operate a federally-facilitated exchange, and residents will get the same benefits and tax subsidies as in states operating their own Exchanges.
  • Coverage exclusions for children with pre-existing conditions were prohibited as of September 23, 2010. Insurers are no longer permitted to deny coverage to children due to their health status, or exclude coverage for pre-existing conditions. Protections for adults will take effect in 2014. In addition, lifetime limits on coverage in private insurance have been eliminated and annual limits are being phased out.
  • Medical loss ratio and rate review requirements are improving value and lowering premium growth for consumers. Medical loss ratio standards require insurers to spend 80-85% of premium dollars on direct medical care instead of on administrative costs, marketing, or profits, or pay rebates back to consumers. Failure to meet these standards has resulted in insurer payments of over $1 billion in rebates to consumers. In addition, expanded review of insurance premium increases by states and the federal government has led to some rate increases requested by insurers being denied, withdrawn, or lowered, which has slowed overall premium growth.
  • All health plans must provide a standardized, easy-to-read Summary of benefits and Coverage (SBC). The SBC gives consumers consistent information about what health plans cover and what limits, exclusions, and cost-sharing apply. It includes illustrations of how coverage works by estimating what a plan would pay and what consumers would be left to pay for common health care needs such as an uncomplicated pregnancy or management of diabetes. Kaiser Family Foundation tracking polls indicate the SBC is one of the most popular provisions in the ACA.

Medicaid coverage

  • More than half the Governors have announced support for the Medicaid expansion. Twenty-seven Governors intend to implement the Medicaid expansion. Another seven are still weighing their options. Seventeen Governors have stated their opposition to the expansion.
  • Seven states have expanded Medicaid to adults since the enactment of the ACA, helping to build on the very limited base of coverage available to low-income adults today. While the enhanced federal funding for the ACA Medicaid expansion to low-income adults does not take effect until January 1, 2014, seven states – CA, CO, CT, DC, MN, NJ, and WA – have used the ACA option to expand Medicaid earlier at their regular match rate, or used Section 1115 waiver authority to do so. Nearly all these states previously covered low-income adults using state-only dollars, but transitioning that coverage to Medicaid enabled them to preserve and, in some cases, expand adult coverage by securing federal matching funds.
  • Medicaid and CHIP have remained primary sources of coverage for low-income children and pregnant women. To help preserve the existing base of coverage in the period leading up to the coverage expansions in 2014, the ACA required states to maintain the Medicaid and CHIP eligibility, enrollment, and renewal policies they had in place when the ACA was enacted. Notwithstanding the recent recession and state budget pressures, eligibility for these programs has remained largely stable, and the programs have remained primary sources of coverage for low-income children and pregnant women. The preservation of Medicaid and CHIP coverage has been important to progress in reducing the number of uninsured Americans – which declined by 1.3 million in 2011.
  • Nearly all states are modernizing and streamlining their Medicaid enrollment systems. Taking advantage of a time-limited 90% federal match rate available for systems development, almost all states are already moving forward with major improvements to their information technology (IT) infrastructure to prepare for the ACA’s new streamlined, coordinated enrollment system. In addition, an increasing number of states – now totaling 37 – have implemented an electronic online application in Medicaid or CHIP, and the number of states with an online renewal process rose from 20 in 2011 to 28 in 2012. Over two-thirds of states now provide online accounts.
  • Ten states have adopted the ACA’s new Medicaid option to provide health homes for those with chronic conditions or serious mental illness. Another five states plan to implement health homes. Health homes are among the ACA’s broader set of initiatives to improve care and better manage spending for people with complex and high-cost needs. Building on patient-centered medical homes, health homes incorporate comprehensive care management, health promotion, transitional care, and other services and supports to provide more integrated, “whole person” care for Medicaid beneficiaries with multiple chronic conditions or a serious and persistent mental illness.
  • States are taking advantage of new and expanded opportunities to provide home and community-based long-term services. Many people with long-term care needs prefer to receive services at home or in the community rather than in institutional settings, and home and community-based services (HCBS) are often less expensive. The ACA expands states’ opportunities to rebalance their long-term care programs toward community-based care and provides new federal funding for this purpose. A total of 46 states, including DC, have received federal grant money to transition Medicaid beneficiaries from institutions back to their homes or community-based settings through the “Money Follows the Person” demonstration program, which the ACA extended. Sixteen of these states first undertook a demonstration this past year. A growing number of states – 25 currently – are responding to other new flexibility and federal financial incentives the ACA provided to increase access to HCBS.

Access to Primary care

  • Primary care providers get increased Medicare and Medicaid payment rates under the ACA. The ACA provides for a 10% bonus payment on top of the regular Medicare fee schedule amount for many primary care services provided by primary care physicians (and other practitioners) from 2011 through 2015. The law also requires states to raise their Medicaid payment rates in 2013 and 2014 to Medicare payment levels for many primary care physician services. As a result, Medicaid primary care fees will increase by 73%, on average, in 2013 although the size of the increase will vary by state. The Medicaid increase is fully federally funded up to the difference between states’ July 1, 2009 fees and Medicare fees in 2013 and 2014.
  • Because of new ACA investments in the health center program, health centers’ patient capacity has expanded. The ACA created a five-year $11 billion Health Center Trust Fund to support health center growth in preparation for the coverage expansion beginning in 2014. Drawing on this fund, health centers are serving an additional 1.5 million patients, and they have been able to maintain their capacity to serve another 2.2 million patients whom they were earlier able to reach only because of a (now-expired) temporary increase in federal funding when the recession was at its deepest. In addition, over 700 health centers received grants for capital improvements from funds provided by the ACA for this purpose.
  • Thousands of new primary care providers have been added to the ranks of the national health Service Corps (nhSC), bolstering the health care workforce in medically under served communities. The ACA provided increased funding of $1.5 billion for the NHSC, which provides loan repayment to medical students and others in exchange for service in low-income under served communities. Health centers, which serve millions of people in these communities, rely heavily on the NHSC to recruit their physicians, dentists, and other health care professionals. As a result of the ACA investment and earlier investments by the American Reinvestment and Recovery Act of 2009, the number of NHSC clinicians is at an all-time high – triple the number in 2008.Today nearly 10,000 NHSC providers are providing primary care to approximately 10.4 million people at nearly 14,000 health care sites in urban, rural, and frontier areas.
  • Additional efforts to expand the primary care workforce are also underway. New training and retention programs have also been created to develop and strengthen the primary care workforce. The ACA has increased the number of graduate medical education residency programs, including establishing 11 Teaching Health Centers to support primary care training in ambulatory care settings. Other efforts include investments in training for nurses and physician assistants, and financial support for nurse-managed clinics.

Access to Preventive Services

  • Preventive benefits with no patient cost-sharing are now required in Medicare and private insurance (except for grandfathered plans). The benefits that must be covered include services found to be effective by the USPSTF, immunizations for adults and children endorsed by the CDC Advisory Committee on Immunization Practices, and pediatric services recommend by HRSA’s Bright Futures for Children. Private plans must cover additional preventive services for women without cost-sharing, including all FDA-approved contraceptive methods (non-profit, religious employers that object to that requirement are exempt) and at least one annual well-woman visit. HHS estimates that, as a result of the ACA, 71 million children and adults with private insurance, and 34 million Medicare beneficiaries have received no-cost preventive care. Enhanced federal matching funds in Medicaid are available to states providing all USPSTF-recommended preventive benefits without cost-sharing, but, to date, few states have made the changes required to gain the higher match rate.
  • The ACA supports population-based prevention activities through a new Prevention and Public health fund. This Fund has been used to make over $1 billion in critical investments in programs aimed at reducing the burden of chronic disease and improving the overall health of communities. Funding has supported Community Transformation Grants in 36 states to reduce the incidence of heart attacks, strokes, cancer, and other diseases; rebuilding the immunization infrastructure; tobacco cessation programs; and substance abuse and suicide prevention activities.

Medicare 

  • Medicare beneficiaries enrolled in Part d drug plans are receiving additional help with their “doughnut hole” prescription drug costs. The ACA required drug manufacturers to offer a 50% discount on brand-name drugs in the coverage gap phase of the Medicare drug benefit, known as the “doughnut hole,” beginning in 2011. It also required Part D plans to offer additional coverage for brand-name and generic drugs for enrollees who reach the coverage gap, and phases out the gap by 2020. In 2013, plans pay for 21% of the cost of generic drugs and 2.5% of the cost of brands, on top of the 50% manufacturer discount. According to HHS, as of March 2013, 6.3 million Medicare beneficiaries have saved over $6.1 billion on prescription drugs in the Medicare Part D doughnut hole since the ACA was enacted.
  • New initiatives testing delivery system and payment reforms are being developed and implemented rapidly around the country, including Accountable Care organizations (ACos) and bundled payments. The ACA established a new Center on Medicare and Medicaid Innovation charged with reducing costs in Medicare, Medicaid, and CHIP while preserving or enhancing quality of care. The Innovation Center develops, tests, and supports new delivery models to increase coordination of care and improve quality, along with new payment systems to encourage more value-based care and move away from fee-for-service payment. For example, the Innovation Center has approved more than 250 ACOs to participate in the Medicare Shared Savings Program in 47 states and territories; these ACOs cover more than four million beneficiaries in traditional Medicare.
  • Medicare savings in the ACA have helped extend the solvency of the Medicare Part A trust fund. The ACA included Medicare savings measures that were projected to reduce growth in Medicare spending over time. The measures included reduced payments to Medicare Advantage plans, smaller updates in payment levels to hospitals and other providers, and increased premiums for higher-income beneficiaries. These changes, along with a payroll tax increase for higher-income taxpayers, contributed to the extended solvency of the Medicare Part A trust fund. Medicare spending per beneficiary is projected to grow more slowly than private health insurance spending per capita over the next decade, and premiums and cost-sharing for many Medicare-covered services are lower than what they would be without the ACA.

Medicare and Medicaid Dual Eligible Beneficiaries

by 6d-destani

HHS finalizes Medicaid rule

Source: https://www.benefitspro.com

By Kathryn Mayer

Health officials on Friday issued a final rule guaranteeing 100 percent funding for new Medicaid beneficiaries as part of the Patient Protection and Affordable Care Act.

Health reform authorizes states to expand Medicaid to adult Americans under age 65 with income of up to 133 percent of the federal poverty level—about $15,000 for a single adult in 2012—and provides unprecedented federal funding for these states.

Under the new regulations, the federal government will pay all of the cost of certain newly eligible adult Medicaid beneficiaries through 2016, phasing down to a permanent 90 percent matching rate by 2020. It will remain there permanently.

The rule, issued by the U.S. Department of Health and Human Services, will take effect in January of next year.

“This is a great deal for states and great news for Americans,” HHS Secretary Kathleen Sebelius said. “Thanks to the Affordable Care Act, more Americans will have access to health coverage and the federal government will cover a vast majority of the cost. Treating people who don’t have insurance coverage raises health care costs for hospitals, people with insurance, and state budgets.”

HHS said the rule builds on several years of work that the department has done to support and provide flexibility to states’ Medicaid programs ahead of the 2014 expansion. The rule also offers more collaboration with states on audits that track down fraud and outlines ways states can make Medicaid improvements without going through a waiver process, HHS said in comments.

The administration will take comments from interested parties and the public for 60 days. The full text of the rule can be found here.

 

by 6d-destani

Is There Room in the Medicare Reform Debate Climate?

Source: https://medicarenewsgroup.com

by Bob Rosenblatt

Medicare has been considered the blue-ribbon, A-plus health insurance plan since its inception in 1966, when it began covering millions of disabled and elderly.

But this perception may change in a big way on Jan. 1, 2014, when the Affordable Care Act (ACA) brings a new protection to consumers covered by private coverage. These policies will have annual out-of-pocket spending limits, offering protection for those facing big medical bills. The average maximum annual amount will be $6,400 for a single person and $12,800 for a family.

Suddenly, Medicare will be the lone health insurance policy without any protection on the catastrophic end, meaning there is no limit to the amount a patient may be forced to pay out-of-pocket.

This is already sparking a new policy debate on what sort of protections should be offered to Medicare beneficiaries against the threat of huge financial losses from medical bills. This question is becoming entangled with the discussion of Medicare’s fiscal future and the desire to slow its spending.

Debate “over these changes will be contentious,” warned the Kaiser Family Foundation in a recent study.

A Medicare beneficiary may face severe financial risk from medical costs. For a hospital stay, there is a deductible of $1,184 for a hospital stay of 1-60 days; $296 per day for days 61 to 90; $592 per day for days 91 through 150; and all costs for each day beyond 150. For outpatient visits to a doctor under Part B, there is a $147 annual deductible, and then a 20 percent co-payment for further expenses. In addition, there is the cost of the Part B premium at $104.90 per month (higher for individuals with income over $85,000 a year), and another premium if drug coverage under Part D has been selected. In addition, many beneficiaries also buy Medicare supplementary insurance, known as Medi-gap, back-up insurance to help with co-payment costs.

Add together the co-payments, deductibles and premiums, and it can become a financial struggle for many people, Kaiser Family Foundation Vice President Tricia Neuman told a Congressional health subcommittee of the House Ways and Means Committee in February, in a report titled, “Changing Medicare's Benefit Design: Implications For Beneficiaries.”

“Even with Medicare, and supplemental insurance, beneficiaries tend to have relatively high out-of-pocket health costs,” she said. “In 2009, half of all Medicare beneficiaries spent 15 percent or more of their income on health-related expenses, including premiums, cost sharing for Medicare-covered services, and services not covered by Medicare; more than one-third of all beneficiaries (39%) spent at least 20 percent of their income on medical expenses that year.”

The majority of people on Medicare derive their income from their monthly Social Security check. Social Security’s annual cost-of-living increase is pegged to the general rate of inflation in the economy. This provision, in effect since 1974, is designed to provide a measure of income security over time, so that the value of a retiree’s check keeps pace with expenses.

But the flaw here is that the cost of medical care is rising faster than the general rate of inflation, and thus it is eroding the value of the Social Security check. According to a 2011 Kaiser Family Foundation report, “Medicare the expense of Medicare—the total cost of the monthly premiums, the deductibles and co-payments—was equal to 27 percent of the average Social Security retirement check in 2010. By the year 2030, the report says, Medicare costs will consume 36 percent of the average Social Security check.

“The benefit structure has long been criticized for being too complex, and for promoting overutilization of care which, in turn, translates into higher costs for seniors,” Sen. Orrin Hatch (R-Utah) said in a recent call for a cap on out-of-pocket costs. “Streamlining the cost-sharing will make it easier for seniors to navigate Medicare more efficiently while also reducing costs. Most importantly, it will give seniors financial security in cases of high out-of-pocket costs.”

He sought to bring back into the debate the proposal put forth by the deficit reduction Simpson-Bowles Commission, which had been appointed by President Obama. In 2010, the commission called for a combined annual deductible of $550, instead of the separate Part A and Part B deductibles. It also called for a 20 percent co-payment schedule, and an annual out-of-pocket limit of $7,500. This would have saved the federal government approximately $110 billion over a 10-year period.

Putting an annual limit on financial exposure would save money for some of the sickest people on Medicare, but it would force nearly everyone else to pay more, Neuman said in the Congressional hearing.

She also said that a variation of the Simpson-Bowles plan would have offered some beneficiaries a 5 percent savings (an average of $1,570 a year) but 71 percent would have faced larger bills (an average increase of $180 a year).

The views of these proposals depend on politics. Conservatives, who worry about the deficit, say measures are needed to slow down Medicare’s growth, while limiting the financial threat to the Medicare beneficiaries with the biggest bills.

Liberals oppose any measure they say would shift expenses to already hard-pressed beneficiaries.

Liberals want more affluent people to pay more. The liberal Center for American Progress has offered this proposal: the out-of-pocket maximum should be $5,000 a year for those with incomes below 400 percent of the federal poverty level; $7,500 a year for people with income between 400 percent and 600 percent of the poverty standard; and $10,000 when income exceeds 600 percent of the poverty level.

AARP, the powerful lobby on behalf of those ages 50 and older, has been studiously neutral in discussions of this issue, offering ammunition to both sides of the argument in a brief by its Public Policy Institute.

“If an annual out-of-pocket spending cap were included in this redesign, Medicare beneficiaries—particularly those with high utilization—would have more financial protection from expenses caused by severe and often unexpected illnesses,” AARP said. “In addition, increased cost-sharing could make beneficiaries more price- sensitive in using health care services, resulting in lower utilization and greater Medicare savings. These savings would improve the long-term stability of the Medicare program for both current and future beneficiaries.”

Then, arguing for the other side, the AARP analysis said, “Medicare beneficiaries, especially those with modest incomes or no supplemental coverage, could find it difficult to afford these cost-sharing requirements. These beneficiaries may decide not to get the medical care that they need in order to avoid paying coinsurance or deductible amounts, which could lead to poorer health outcomes and higher Medicare costs in the long run.”

With AARP viewing the issue as an on-the-one-hand, on-the-other hand hard choice, Congress and the president are certain to tread delicately as they maneuver around this politically explosive issue.

 

by 6d-destani