Appeals court nixes subsidies for HHS exchange users

Originally posted July 22, 2014 by Allison Bell on

A three-judge panel at the D.C. Circuit Court of Appeals has issued a decision that could block efforts to expand access to private health coverage in states that decline to set up state-based insurance exchanges.

The judges ruled 2-1 in Jacqueline Halbig et al. vs. Sylvia Mathews Burwell et al. (Case Number 14-5018) that the Internal Revenue Service (IRS) has no authority under the Patient Protection and Affordable Care Act (PPACA) to provide premium tax credit subsidies for users of the PPACA public exchanges run by the U.S. Department of Health and Human Services (HHS).

The subsidies have helped cut the amount QHP buyers pay out-of-pocket for premiums to an average of less than $50 per month.

PPACA created a premium tax credit subsidy for people who buy qualified health plan (QHP) coverage through the exchanges by adding Section 36B to the Internal Revenue Code (IRC).

PPACA lets HHS set up public exchanges in states that decline to set up their own exchanges. IRC Section 36B talks about providing credits to users of state-based exchanges and makes no mention of any credits to be provided for people who buy QHP coverage through the HHS-run exchanges, Circuit Judge Thomas Griffith writes in an opinion for the majority.

"The fact is that the legislative record provides little indication one way or the other of congressional intent, but the statutory text does," Griffith writes. "Section 36B plainly makes subsidies available only on exchanges established by states. And in the absence of any contrary indications, that text is conclusive evidence of Congress’s intent."

Griffith notes that Congress explicitly imposed some key PPACA commercial health insurance provisions, such as guaranteed issue and community rating requirements, on federal territories without providing full exchange subsidy funding for the territories.

PPACA implements some health insurance requirements, such as the community rating requirements, by making changes to the federal Public Health Services Act. HHS last week decided that, because the territories are not going to receive full PPACA expansion funding, the Public Health Services Act excludes territories from its definition of "state," and the PPACA insurance requirements seem to be destabilizing the territories' health insurance markets, the territories can be exempt from the PPACA rules that were set by changing the Public Health Services Act.

Feds Post PPACA Risk Program Regs

Originally posted March 05, 2014 by Allison Bell on

Only the commercial health plans sold through the new public exchanges -- and some very similar plans -- will be able to participate in a new underwriting profit protection program.

The Centers for Medicare & Medicaid Services today ruled that only "qualified health plans" -- and plans that are "substantially the same as a QHP" -- can either make payments to or get cash from the federal "risk corridors" program.

The drafters of the Patient Protection and Affordable Care Act created the risk corridors program to protect QHP issuers against the possibility that all of the underwriting rules and benefits mandates PPACA is imposing could flood some insurers with claims.

Carriers with high operating profits are supposed to reimburse carriers with profit margins of less than 3 percent. If all health insurers do poorly, PPACA calls for the federal government to chip in.

CMS talks about the risk corridors program and many other PPACA provisions in the same 335-page anthology of PPACA final regulations that lets consumers keep non-PPACA-compliant individual policies for two extra years, if insurers and state regulators permit that, and that keeps the current March 31 PPACA individual QHP enrollment deadline.

Commenters on a draft of the regulations asked CMS to let all health plans that comply with PPACA rules, including non-exchange health plans, participate in the risk corridors program.

Limiting the program to QHPs and very similar plans will preserve the intent of the program, which is to stabilize QHP premiums, officials say.

Other sections of the new CMS regulations deal with everything from whether agents and brokers can use their own websites to enroll employers in small-group exchanges' QHPs to whether short-term medical plans have to pay for another PPACA risk-management program, a temporary reinsurance program.

CMS officials say they are comfortable with the idea of a state-based exchange letting brokers enroll businesses in exchange plans, but it's probably not going to make that feature available through the public exchanges it runs for HHS in 2015.

Short-term medical plan issuers might have to pay reinsurance program assessments, if the plans offer a minimum level of coverage value.

Elsewhere in the batch, CMS says.

  • Connecticut is the only state taking advantage of a PPACA provision that lets states run their own reinsurance programs.
  • The 2014 attachment point, or deductible, for PPACA reinsurance for health plans will be cut to $45,000, from $60,000, and the 2015 PPACA reinsurance premium will be $44 per enrollee per year.
  • The HHS exchange user fee for 2015 will be 3.5 percent of premium.

CMS is preparing to publish the new PPACA regulations in the Federal Register March 11.

The IRS, meanwhile, is preparing to publish PPACA employer coverage mandate reporting final regulations for large employers and minimum essential coverage (MEC) regulations March 10.

In the IRS MEC regulations, for example, the IRS gives details about what address a reporting entity should use when it's sending workers' MEC statement.

In the final MEC regulations, the IRS says it will offer short-term relief for companies that get taxpayer identification numbers, dates of birth or other information wrong on returns filed in 2016 for the 2015 tax year.

But the relief is only available for employers or other reporting entities that make a good faith effort to comply with the regulations, officials say.

"No relief is provided in the case of reporting entities that do not make  a good faith effort to comply with these regulations or that fail to timely file an  information return or furnish a statement," officials warn in the preamble to the MEC regulations.

The IRS also is stating that sending a notice to a recipient's last known permanent address, or, if no permanent address is available, a temporary address, discharges the requirement to furnish a statement, even if the statement is returned.


Another PPACA deadline delayed

Originally posted December 12, 2013 by Allison Bell on

The Obama administration has issued new regs that public exchanges – and participating carriers – can use to cope with startup problems. Most importantly, it pushes the selection and payment deadline for Jan.1 plan coverage to Dec. 23.

The Centers for Medicare & Medicaid Services has given the batch of “interim final regulations” the title “Maximizing January 1, 2014, Coverage Opportunities” and is preparing to publish the regs in the Federal Register next week.

The Dec. 23 deadline applies to all sorts of exchange plans, including Small Business Health Options Program QHPs, multi-state plans and standalone dental pans, officials said. The original deadline was Dec. 15.

Insurers selling commercial plans through the exchanges with coverage dates starting Jan. 1 now must accept premium payments as late as Dec. 31.

State-based exchanges can set later deadlines for either individual or SHOP coverage.

Managers of state-based exchanges who want to offer more flexibility can push the payment deadline for coverage that starts Jan. 1 back to Jan. 31, “if a QHP issuer is willing to accept such enrollments,” officials said.

Officials also included rules for provider directories.

If a QHP issuer has trouble keeping its provider directory up to date, it should add consumer safeguards, such as using the version of a provider directory available to consumers in a given month to determine whether care from a provider will be classified as in-network care, officials said.

It was the second PPACA-related delay a day after HHS Secretary Kathleen Sebelius testified before Congress.

Why employers need to pay attention to ACA's insurance exchanges

Originally posted November 06, 2013 by Al Karr on

When the Affordable Care Act first passed, most self-insured employers thought they wouldn't need to pay much attention to the new health insurance exchanges (or marketplaces) created by the law. After all, they were intended to help uninsured people get access to insurance, and their employees were obviously insured. And President Obama did promise that if people liked their employer coverage, they would get to keep it. So there wasn't really anything for self-insured employers to worry about, right?

Well, it turns out that things aren't that simple. Employers do need to pay attention to the exchanges that have launched in their states — either by the state or the federal government — because even if their employees don't use them, the functioning of the exchanges depends pretty heavily on some critical interactions among exchanges, employers, and their employees.

Most employers are aware by now that the requirement for large employers to offer coverage has been delayed for one year. But there are still many provisions in the ACA that place burdens and obligations on employers related to the exchanges. Most importantly, all employers (regardless of whether they currently offer insurance) must still provide notification to their employees describing the exchanges, and explaining the implications of applying for a tax credit on the exchange. There are also regulatory processes for exchanges to verify with employers information that individuals provide on exchange enrollment applications.

So employers are starting to realize that they really do need a communications strategy for how to tackle exchange education with their employees. Simply mailing the required notification form to all employees and calling it a day won't cut it.

Confused employees

Employees are going to have questions — lots of them. Some have been following the health care reform discussion, and those that hadn't been following it probably are now, thanks to the major issues the federal exchange has been having since its launch on October 1. Employees are seeing TV ads, print ads in magazines and newspapers, in addition to the media coverage on the exchange launch. And policy experts have noticed that some of these advertisements are totally devoid of any mention that the exchange is Obamacare or the ACA, and most don't mention anything at all about the individual mandate and that the exchanges are how to fulfill the mandate.

Employees could come into contact with navigators, certified application counselors, or in-person assisters (individuals hired by exchanges to assist with enrollment), all of which will be emphasizing the exchanges and the individual mandate, but probably don't know much about employer-sponsored plans in general, let alone each individual's circumstances regarding employer-sponsored coverage.

Recent polls have shown that as many as half of Americans believe the ACA was either repealed, or held unconstitutional, so these messages will no doubt be confusing for employees to hear. Despite all of the media coverage of the disastrous exchange launch, there are still people out there who might know about exchanges, but don't know what the ACA means to them.

Employers should be taking action now to devise a communications strategy aimed at their employees that is relevant to their workforces and fits appropriately within their company cultures. We all know that employees don't read the volumes of (boring) information employers provide during open enrollment season. Educating employees about exchanges is going to require a different and more ongoing approach. Some of the tactics employers should consider include:


  • Human resources staff should be meeting with executive leadership to devise and invest in an employee communications strategy
  • Contracting with a call center to do outbound calling to every employee
  • Requiring all employees to meet face-to-face with an HR staff member
  • Producing short videos about the exchanges for use in company communications
  • Requiring attendance at "all staff" meetings
  • Creating one-pagers to post on company intranet sites or to distribute through company newsletters


One thing that has been discussed by some employers, but that may not be the best thing to rely on as a sole tactic, are the navigators. While a lot of organizations have become navigators, there is general agreement among policy makers that the program itself is woefully underfunded. And since some exchanges are run by states themselves, and the federal government runs others, it’s anticipated that the number of navigators hired and the training they will receive will vary from state to state. Also, there is no statutory requirement that navigators be trained on the nuances of employer-sponsored coverage, so there is no guarantee that they will be able to answer employees' questions about the coverage they are offered at work.

Can Obamacare Beat Your Employer's Insurance?

Originally posted October 14, 2013 by Susan Ladika on

If you already have health insurance through your job, you're probably wondering whether Obamacare will give you some new options. Will you be able to comparison-shop for a plan on the new online exchanges that might be better than your employer health insurance? The answer is a big, resounding "maybe."

Like almost everything else having to do with health care reform, there are plenty of nuances and caveats. Trying to decipher them and choose the best health insurance plan for your situation "makes homeowners insurance seem really simple," says Brian Haile, senior vice president for health policy at the tax services company Jackson Hewitt.

Exchanges will be open to all, but ...

The exchanges are online health insurance marketplaces set up under the Affordable Care Act. In 34 states, the marketplaces operate through the federal government's website, while 16 states and the District of Columbia are running their own exchanges.

Even if your employer already offers health insurance, there's nothing to prevent you from shopping on your state's exchange. However, if you decide to leave your work-based plan and purchase coverage on the exchange, you "may not qualify for some of the benefits that the uninsured have," notes E. Denise Smith, a professor of health care management at Gardner-Webb University in Boiling Springs, N.C.

Here's the big hiccup: Unless your employer's coverage for an individual is considered unaffordable under the law (that is, if your share of the premiums costs more than 9.5 percent of your household income) or inadequate (picking up less than 60 percent of the cost of covered benefits), you aren't eligible for a government subsidy to help pay for your insurance. Subsidies are one of the things that can make plans on the new state exchanges appealing.

Subsidies in the form of tax credits are available even if you earn up to 400 percent of the federal poverty level, currently about $46,000 for an individual and $94,000 for a family of four. The subsidies vary based on income and the size of your family.

Trade in your employer plan?

And that brings us back to the central question: If you have employer health insurance, should you check out the Obamacare exchanges anyway? There are differing opinions.

"It would generally not benefit an employee to leave their employer-sponsored plan," Smith concludes, adding that your employer would be under no obligation to help pay for an exchange plan.

Haile says you may not be able to do better than your work-based coverage. "Look at how robust your employer plan is" and the benefits it provides, such as whether it includes dental and vision care, which are not part of the essential health benefits that must be offered with plans sold in the Obamacare exchanges, he says.

Still, if your employer-sponsored health insurance seems to eat up a big chunk of your budget, you might want to explore your options on the state exchange, Haile says.

Few workers have 'unaffordable' plans

Again, one of the key criteria of whether you'd qualify for subsidized insurance through your state's exchange is if your share of the premium for an individual health plan where you work would amount to more than 9.5 percent of your household income. Whether you take more expensive family coverage doesn't matter; the benchmark is what an individual policy would cost.

The rule means that someone earning $40,000 a year and paying $3,775 for individual coverage would not be eligible for a subsidy, says Brian Poger, CEO of Benefitter, a software company that's helping employers navigate their way through health care reform. That same worker paying even more for family coverage would still not be eligible because, again, the premium for an individual is less than $3,800 (or 9.5 percent of $40,000).

The 9.5 percent-of-income threshold is one that few workers would meet, according to one recent study. The ADP Research Institute found that only 8.6 percent of employees are required to pay premium contributions that would meet the Affordable Care Act's definition of "unaffordable."

How will you know whether your premiums and income put you in that group and make you a good candidate for an exchange plan? Right now, it's a little unclear.

"The answer is sort of a mish-mash," Haile says. Many of Obamacare's employer requirements were delayed until 2015, though companies were still supposed to provide notices by Oct. 1 telling workers whether their current coverage would be considered affordable. But the U.S. Labor Department says there's no fine or penalty for failing to provide the notices.

Exchange coverage for family members

Under those same delayed "employer mandate" provisions, companies with at least 50 full-time workers will be required to offer health insurance to their workers and the workers' dependent children in 2015. But coverage for workers' spouses will not be mandatory, notes Christine Barber, senior policy analyst at Community Catalyst, a health care advocacy group.

"If your spouse isn't covered by your employer's insurance and doesn't have insurance through his or her own employer, your spouse could shop for insurance on the exchange and potentially qualify for a subsidy," Barber says.

Others who might find it valuable to shop on the exchanges are working singles under the age of 30 who don't have health issues and would be able to purchase a catastrophic plan, Haile says.

Catastrophic plans available on the state exchanges will have low monthly premiums but high deductibles. According to Haile, they're not eligible for subsidies.

All workers at a particular company often pay the same rate for their employer health insurance, regardless of age or medical history, he says. Opting for an Obamacare catastrophic plan "could be cheaper if you're the young kid on the block," especially if your co-workers are decades older, which could drive up everybody's insurance costs.


State exchanges not viable choice for active employees

Originally posted October 03, 2013 by Andrea Davis on

The state and federally facilitated health care exchanges are not a realistic option for active employees, according to one expert. Bryce Williams, managing director of exchange solutions for Towers Watson maintains that while the public exchanges offer a good solution for early retirees and COBRA-eligible participants, “it’s not yet a viable alternative to move [active employees] to state or public exchanges.”

Employers showed little confidence in public exchanges, according to a recent survey from Towers Watson that was released prior to the public exchange launch earlier this week. Eighty-eight percent of employers said they were not confident that the public health insurance exchanges would provide a viable alternative to employer-sponsored coverage for active full-time employees in 2014.

“They were prescient in terms of what would happen given the complexity of the launch,” says Williams.

Employers expressed skepticism even heading into 2015, with 71% saying they were not confident the public exchanges would provide a viable alternative to employer-sponsored coverage for active full-time employees.

“We believe later this fall public exchanges will right themselves and be in good shape, but certainly they’ve gotten off to a bumpy start,” says Williams, adding he continues to see employers not making any big changes this year. “They want to see results.”

Still, “public exchanges continue to be a great alternative to early retiree coverage, to any of the mini-meds they’re providing to seasonal and part-time workers – this [public exchange] is a vastly better ecosystem and [offers] better coverage,” he says.

Towers Watson runs three private exchanges: OneExchange Retiree, a Medicare exchange for retirees; OneExchange Active, a self-insured exchange for active employees; and OneExchange Access, a concierge service that connects part-time employees, early retirees, dependents and others who aren’t eligible for employer-sponsored coverage, to the state exchanges.

9 tips to help employees transition to public exchanges

Originally posted on

According to the Obama administration, the state insurance marketplaces set up under ACA are on schedule to begin open enrollment on Oct. 1. To aid in communicating health care reform changes this fall, here are nine tips for transitioning employees into the public marketplace from Sara Taylor, health solutions development leader at Aon Hewitt.

Supplement the 'Notice of Exchanges'

While the model notice provided by Health and Human Services helps employers comply with provisions of the Affordable Care Act, the notice itself is likely to generate confusion and more questions from employees than it answers. Employers should supplement the model notice with additional education on the ACA and proactively answer the question, "What do I need to do with this notice?"

Provide context

Explain your benefits strategy and provide context on how the public marketplaces fit within your benefits strategy.

Target your communication strategy as needed

The ACA and marketplaces may impact different employee groups in different ways. Think through the messages that impact all employees and those messages that affect only specific audiences.

Clearly explain required action and timing

What do employees need to do and by when? This information can get lost. Be sure to clearly call out specific required action steps and deadlines – both for your benefits plans and for marketplaces.

Don’t forget Medicaid

Public marketplaces are only one option for employees to obtain medical insurance. With many states expanding Medicaid eligibility, Medicaid or other public programs may be viable alternatives for some employees.

Be prepared for questions

No matter how well you communicate, some employees will have questions or need additional assistance and they will likely look to you for help. Ahead of time, determine who will be handling questions, identify likely questions and have answers and others resources prepared ahead of time.

Take advantage of external resources

Enrolling in health benefits can be overwhelming for many individuals, and the introduction of the marketplaces adds a whole new layer of complexity. There are resources and tools available today that can help individuals understand their options, model program eligibility — including whether they may qualify for a premium tax credit (or subsidy) in a marketplace — and in some cases, enroll in a health plan.

Engage HR and management

Ensure that your leadership is aware of and on board with your benefits strategy and how the public marketplaces fit into that strategy. Encourage your HR team and managers to be advocates for your strategy to employees.

Supply the details

Employees that apply for financial assistance in the marketplaces need to provide information about any health insurance available to them from an employer (e.g., cost of "you only" coverage). Individuals will be instructed to ask their employers to fill out the employer information section of the form. Know how you will handle these requests. Or better yet, give employees self-service access so they can complete the application themselves.


Should exchanges be part of your company's plan?

Originally posted August 06, 2013 by Justyn Harkin on

Although considering the new health care exchanges may have seemed radical a few weeks ago, now that everybody gets to drop ten and punton the employer mandate penalty in 2014, the idea may not be so strange.

Sure, migrating employees to the exchanges isn’t right for every organization. If the move would upset your workforce, then keeping your current group plan is probably best. But if employees would view exchange offerings as equal or better than what they current have, then there could be plenty of upsides.

If you think the exchanges would be better than what you have now for both your company and your employees, or even if you just want to get a leg up on communications (and believe me, that’s never a bad idea), then you and your employees have three options — public exchanges, private exchanges (fully insured), private exchanges (self-insured).

Which one might be best for your organization? Let's see.

Public exchanges

One of the most attractive ideas about moving to a public exchange has to be handing over the considerable financial and administrative burdens for running your company’s health benefits.

For some organizations, the move might be cheaper than what they are doing now. Even when you factor in the likely, eventual activation of the $2,000-per-employee fine for not providing insurance, you could still be paying less than what you would if you were covering premiums.

Of course, sending employees to public exchanges isn’t necessarily a slam-dunk move. Your workforce could straight-up riot if you tell them you’re cutting health benefits, and even if you raise salaries (oh, hello there, higher payroll taxes) to help them cover the costs of buying their own insurance, your recruiting efforts could take a hit if your competitors keep their health benefits.

Private exchanges with fully insured plans

Perhaps the biggest advantage of using a private exchange is the ability to shift some of the rising costs of health care to employees and give them the ability to control their spending.

In a private exchange, employees get an allowance from their employer that can be used to buy insurance. The idea is that giving employees control of the purchasing decision takes some of the heat off of your company. After all, if the cost of health care rises, that’s not your fault?

So what’s the downside to this type of exchange? Well, in the worse-case scenario it’s a less healthy, less productive workforce. Because employees will be making purchasing decisions, they may choose lower premiums over better coverage, and that can contribute to poorer health and higher rates of absenteeism.

Private exchanges with self-insured plans

The last of your exchange options are private exchanges with self-insured plans. Compared with the types of plans offered on public exchanges and private exchanges with fully insured plans, the plans available on private exchanges with self-insured plans can seem very attractive employees — generally lower premiums, more generous plan features, and more in-network doctors — but they will be more expensive.

The self-insured private exchange option might be slightly more expensive than what you could do with a fully insured private exchange, that’s true, but the available plans would be more oriented toward long-term health.

Still, using self-insured plans means you’ll have to assume all the risk and pay for all your employees’ claims. Also your employees will become customers of the private exchange insurance companies, and that means you won’t have the same influence (over the companies or choices) that you would otherwise have.

How will you spend the bonus year?

Assistant Secretary for Tax Policy Mark J. Mazur’s July 3 announcement might have seemed like the best health care reform–related thing to happen to employers all year.

If you take the “transition year” at face value, meaning the mandatory employer and insurer reporting requirements are being postponed, then you have the perfect chance to carefully consider your company’s next moves.

Maybe you’ll decide to take the plunge. Perhaps you’ll rule out the exchanges altogether. You might even decide to let other companies test the waters first so you can be prepared later on.

No matter what path you chose, though, the most important thing is taking the time to make the best decision for your company and your employees. And then communicate that decision in a clear and engaging way. Good luck!

What’s Ahead this Year as Health Insurance Exchanges are Rolled-out Nationwide

Original article

By Cindy Gillespie

Exchanges are a key component of the Affordable Care Act (ACA). Here’s a snapshot of exchange developments across the country, potential regulations to watch for, and where exchanges might be by October 2013 for open enrollment and by January 1, 2014, when they are slated to “go live” nationwide.

Health Insurances Exchanges: The Vision

The ACA directed each state to establish two types of exchanges or have the federal government do so on its behalf — the American Health Benefits Exchange (AHBE) for individuals and the Small Business Health Options Program (SHOP) for small employers. Under the statute, individuals are eligible to buy insurance on the AHBE if they are:

  • a U.S. citizen or legal alien
  • not incarcerated
  • a resident of the state in which the exchange is based


The ACA includes robust premium and cost-sharing subsidies for individuals who purchase insurance through the individual exchange who are living at levels between 100 and 400 percent of the federal poverty level — between approximately $12,000 and $46,000 a year — and who are not eligible for other public insurance programs (i.e. Medicaid, Medicare, Tricare) and who do not receive “affordable” insurance coverage through their employers (that meets minimum value standards).

Employers which have more than 50 employees whom are eligible for tax credit subsidies, either because the employer does not offer coverage or because the coverage offered is unaffordable to the employee according to ACA standards, or not of minimum value, will be subject to a penalty.


Meanwhile, the ACA allows employers with up to 100 full-time employees to purchase insurance through SHOP, although the state has the option to limit access to employers with 50 employees or less for the first two years. Most states have taken advantage of this option in order to maintain consistency with the outside market’s definition of “small employer.” States also maintain the option to allow employers with more than 100 employees to purchase insurance through the SHOP beginning in 2017, with approval of the U.S. Department of Health and Human Services (HHS).

Tax credit subsidies are also available to employers who purchase coverage on SHOP for employers with less than 25 employees who have an average taxable wage under $50,000 per year. Employers cannot claim the tax credit for more than two consecutive years.

Health Insurances Exchanges: 3 Primary Models

Although the ACA envisioned 50 different exchanges championed by individual states, the reality of ACA implementation has been far different. Indeed, political, logistical, and operational challenges faced by both HHS and the states have led only a subset of states to embrace exchanges. The update below provides a snapshot of how exchanges are developing across the country.


Seventeen states and the District of Columbia are developing State-based Exchanges as envisioned under the ACA. These states have received “conditional approval” from HHS to operate them for the 2014 plan year. Under these exchanges, states execute all functions but may turn to the federal government for issues such as tax-credit eligibility determination, risk adjustment, and reinsurance.

While several of these states have been making great strides toward October 1, 2013 open enrollment, others are relatively behind in the planning process and may struggle to meet the impending deadlines. For example, some states still lack legal authority to operate a State-based Exchange, while others have yet to procure any IT-related services necessary to make the exchange function.


Seven states have received conditional approval from HHS to operate State Partnership Exchanges. This exchange model, not envisioned under the ACA, is an option created by HHS for states that may want to play a small role in exchange operations either permanently or as they move toward a State-based Exchange. States have two primary options for pursuing State Partnership Exchanges: a plan management partnership or a consumer partnership. States also have the choice to participate in both partnership models.

States participating in a plan management partnership assume responsibility for issuer account management and issuer oversight as well as monitoring, quality reporting, and data collection. In addition, these states also play a key role in determining qualified health plan (QHP) certification. Plan management partnerships will recommend which plans should be certified as QHPs to HHS, which has the legal authority to make QHP certifications.

States also have the option to pursue a consumer partnership exchange. States choosing this approach control the day-to-day management of Navigators and in-person consumer assistors, and will have the option to engage in outreach, education, and branding activities. Navigators and in-person consumer assistors will be the “boots on the ground” in states to help educate consumers about plan choices and coverage options. For states choosing a Federally-facilitated Exchange (FFE), consumer partnership states oversee and provide technical assistance to Navigators, but HHS retains authority over the Navigator programs.


Twenty-six states have decided not to pursue a State-based or Partnership Exchange. In these states, the federal government is establishing a Federally-facilitated Exchange (FFE). Under an FFE, the federal government performs all exchange functions with states, maintaining the option to make final Medicaid determination and operate its reinsurance program. Although the option to operate reinsurance programs has yet to gain traction, many FFE states have expressed interest in maintaining the responsibility to make final Medicaid determination for individuals assessed as eligible for Medicaid.

Marketplace Plan Management

Several federal requirements necessary for health insurance plans to be qualified in order to be offered on the exchange are already criteria commonly examined as part of routine, state insurance regulatory activities. HHS has indicated that its preference is to integrate states’ existing regulatory activities into its decision-making for qualified health plan (QHP) certification, even in states with an operating FFE.

To further facilitate this relationship, HHS has indicated it will offer states a marketplace plan management option, essentially allowing states to perform activities associated with a plan management partnership but without requiring them to submit a formal exchange blueprint. HHS guidance dated February 20, 2013 also indicates that states can apply for federal funds to support these activities, similarly as it did for the State-based and State Partnership models.

3 Issues to Watch in 2013

As the clock ticks on the path to open enrollment, there are several issues still under consideration that are worth tracking, particularly for the small and large employer communities.

Recent guidance from HHS indicates that employee choice and premium aggregation will not be required of SHOP exchanges in the 2014 plan year. In the same set of proposed rules, HHS also indicates that federally-facilitated SHOPs (FF-SHOPs) will not offer these services in their first year of operation.

As you may recall, employee choice and premium aggregation (the process of collecting premiums from qualified employers and delivering a single streamlined payment to insurers) are two tools at the disposal of SHOP exchanges to help drive enrollment. This recently proposed approach could potentially undermine the viability of SHOP exchanges and the small business market nationwide.

Additional rules from HHS surrounding 10 essential health benefits indicate that to meet these requirements outside the exchange, health insurance plans will need to either embed pediatric oral services, the tenth category of essential health benefits coverage, or be “reasonably assured” that the individual has obtained dental coverage from an exchange- certified, stand-alone dental plan. This is a new proposal from HHS and is therefore receiving significant scrutiny from several stakeholder groups, as the requirements could cause operational challenges in the market. Stay tuned.

HHS released additional details regarding employers’ interface with the exchange in January. Most interestingly, the rules verify that there is no central databank containing details on employer-sponsored health insurance plans. As a result, until that information is available, exchange applicants must attest to the details surrounding their employer-sponsored health insurance plans when seeking health insurance on the exchange. The exchange will then use available data sources to attempt to verify individuals’ claims. Absent inconsistencies in available information, the exchange will be permitted to proceed to enroll the applicant in a health insurance plan along with the applicable subsidies. Employers will be notified of employees who claim a tax credit on the exchange. However, exchanges must select a valid sample of people for whom employer coverage details could not be verified and verbally call employers for additional information. If the exchange cannot obtain information within 90 days, eligibility will remain unchanged.

Looking Toward 2014

The issues described above are only a select set of developments that have emerged in recent months. Indeed, there are a host of unanswered questions and operational challenges that stand between today and open enrollment. ACA implementation process has passed the window for planned delay. Employers and the health benefits industry should expect for exchanges to “go live” and for tax credits to be available beginning January 1, 2014. The Stakeholders should prepare for implementation, albeit with hiccups along the way, as scheduled.


6 key compliance deadlines for 2013 and beyond

As PPACA moves forward, employers must keep track of 6 key compliance deadlines for 2013 and beyond

Original article

By Kathleen Koster

For plan sponsors, 2013 is a year of crossing Ts and dotting Is on PPACA compliance for their health care plans and strategizing for next year, when the employer mandate and public exchanges go into effect. The health care reform law has many moving parts and a great deal of regulations yet to come, which will keep benefits professionals on their toes all year.

"Employers have never experienced this complexity and oversight in compliance for their health plans. Employers are used to a compliance-rich environment around their retirement plans, but they need an equally robust and hands-on approach to managing the compliance of their health plans," says Mike Thompson, a principal in the human resources services practice of PricewaterhouseCoopers. He adds that "the rules, regulations and level of enforcement have never been greater."

Thompson believes "2013 is a period of strategic re-evaluation of whom the employer will provide benefits to in light of the changes in the individual market allowing guaranteed issue and subsidies for lower- and middle-income Americans."

He believes that employers will also transition around financing as "more employers look at community-type programs with the interest of moving away from their own programs and potentially contributing towards a private exchange or facilitating access to coverage in the open market."

To help employers keep all their compliance ducks in a row while managing and determining long-term strategies for their plans, EBN asked legal and health care experts for top issues to keep in mind for 2013 and beyond.

1. Preparing for the 2014 employer mandate

"At the top of the list is the interpretation of employer responsibility provisions that includes what constitutes minimum essential coverage that employers have to provide or be subject to penalties. Along with that, there are very important issues around the minimum value of the coverage they provide as well as who they have to provide it to," says Paul Dennett, senior vice president of health care reform at the American Benefits Council.

The employer mandate applies only to large employers. Whether an employer is defined as large under PPACA (generally companies with 50 or more employees) depends on the number of its full-time equivalent employees. Companies with 50 or more full-time workers (averaging at least 30 hours per week) must offer minimum health care coverage that is affordable.

In 2013, an employer ought to be determining whether it is a large employer and, therefore, subject to the mandate. "If they offer coverage in 2014, the coverage must meet the minimum value standards and the contributions the employer requires of employees cannot be so high the coverage is unaffordable relative to the employee's household income," says Jean C. Hemphill, practice leader of Ballard Spahr's health care group.

To determine the minimum value, fully insured plans will rely on their insurance carrier for information on whether they meet the minimum value of 60% for their plan. Self-insured plans can turn to an actuary or determine their value with the aid of a government-provided calculator or government-provided checklists.

When it comes to determining the affordability of the plan, an employer cost-sharing arrangement must be affordable relative to the employees' household income, as stated under PPACA. So, "the employee's contribution and cost-sharing obligations can't exceed 9.5% of their household income," says Hemphill.

However, the IRS acknowledges that employers don't know workers' household income, and suggests employers use W-2 wage information instead to determine their plan's affordability.

Hemphill expects more guidance on this issue since employees' contributions are typically much greater for dependents coverage than their own. An employee offered otherwise qualifying coverage by their employer can't use the public exchange unless they prove their employer-sponsored coverage is unaffordable.

The affordability issue may be of greater concern to employers with fairly low-income workforces or for employers not offering comprehensive plans to employees or all employees, such as the mini-medical plans sometimes offered in the retail industry. Employers only need to offer one affordable plan with minimum value to satisfy the rules, however mini-medical plans will be illegal after 2014.

Actuarial experts predict that most high-deductible health plans with deductibles in the $2,000-$3,000 range will most likely qualify, however those with much higher cost-sharing may not meet the minimum value.

While sponsors can vary the deductible and coinsurance amount of HDHPs, they should remember that the higher the deductible, the lower actuarial value of the plan.

"There are variables that can be adjusted in the plan design, but the most important one is where to set the amount of the deductible," says Dennett. He adds that guidance so far has indicated employer contributions toward HSAs or credits toward HRAs will count toward the minimum value. The question is whether the amount contributed is counted 100% to the plan or if it is discounted in the actuarial value formula that HHS would use in the calculation of actuarial value coverage.

Overall, "the Affordable Care Act was designed so employers don't need to make too many plan design changes to their plan," says J.D. Piro, national practice leader for Aon Hewitt's health and benefits legal department. "They may need to open it up to more employees but, generally speaking, they should be able to meet the affordability and minimum value requirements."

2. Public exchanges

Employers are required to provide employees with notice alerting them of the existence of public insurance exchanges. It is thought that the government will issue a model notice for this purpose. At press time, the government had yet to produce this model notice or other guidance about the notice requirement. The March 1 notification deadline has been extended until "late summer or fall," according to a recent FAQ announcement from the Centers for Medicare and Medicaid Services.

"There may still be unanswered questions about whether the state exchanges, partnership exchanges or the federal exchanges are really at an operational readiness stage to be able to go live as of October 2013," says Dennett.

Assuming the exchanges are on track and sponsors receive the guidance they need, they should expect many questions from workers about how the process affects them.

"While most major employers will continue to offer coverage to employees, there will be some confusion around the availability of coverage in the public exchanges and what the implications are [for employees] getting coverage from their employer, says Thompson.

He suggests employees will primarily want to know:

* Do I still have coverage through my employer?

* Am I eligible to get coverage through the exchange?

* Can I potentially get subsidies through the exchange?

* Is it in my best interest to go through the exchange?

3. Waiting periods

Another design-related issue employers must factor into their plans is that under PPACA, waiting periods for health care coverage cannot exceed 90 days. The 90-day period begins when the employee is otherwise eligible for coverage. Employers with a high-turnover workforce that currently have long waiting periods will have to shorten them.

If an employer requires employees to work a minimum number of hours to qualify for coverage, it may need to monitor workers' timesheets in 2013 to determine if and when coverage needs to be offered in 2014; this may be complicated for seasonal employees and other employees with variable hours.

Thompson believes this is part of a larger question of meeting qualifications for providing coverage.

"It's part of a package in my mind," he says. "Employers must evaluate employee classes when looking at whether they meet the minimum threshold of providing coverage to full-time employees. Seasonal, temporary, or contract workers are classes that need to be evaluated in order to avoid or at least understand what the penalties might be."

4. Pre-existing and non-discrimination prohibitions

"The non-discrimination rules are new for insured plans in 2014," says Hemphill. Even though these prohibitions should already be in effect, government agencies have delayed enforcement until they release regulations.

"It will be an important issue because right now there is no requirement to offer coverage to part-time employees, but with the definition of full-time employees as an average of 30 hours per week and new non-discrimination testing rules, the employer obligation may be different," she says.

Either way, employers can expect notice and guidance well before implementation because, "it is a big plan design issue," says Edward I. Leeds, counsel in the employee benefits and executive compensation group at Ballard Spahr.

5. Wellness programs

PPACA includes rules that prohibit plans from discriminating against individuals based on a range of health-related factors. Plans cannot impose restrictions on eligibility or increase employee costs for coverage based on these factors.

"When the government issued guidance under ACA, they actually revised the HIPAA regulations. So now the ACA and HIPAA rules ... will be the same," says Leeds. "By and large the rules follow HIPAA with some changes, the most significant of which is that the potential reward for meeting requirements under the wellness programs will increase as of January 1, 2014."

The potential reward for meeting a wellness requirement will increase from 20% of cost of coverage to 30% of cost of coverage. Incentives related to tobacco cessation will increase up to 50%. (For more details, read "Regs increase wellness rewards," page 28.)

6. Upcoming fees and taxes

Patient-Centered Outcomes Research Institute, established by PPACA, will collect and publish information about clinical effectiveness of treatments for patients. It will be paid for through fees assessed against insurers and self-funded plans equal to $2 ($1 in the first year) per covered life. The assessment will last seven years and eventually be adjusted for inflation. Employers with self-funded plans will need to report and pay these fees starting in July 2013.

The Transitional Reinsurance Program aims to stabilize the individual health insurance market as insurers provide coverage, starting in 2014, to large numbers of individuals who do not currently have coverage and present uncertain risks. The program will provide reinsurance payments to insurers that take on high-risk individuals. The program is funded through a three-year tax (expected to be $63 per covered life in the first year.)

The Additional Medicare Tax, in effect this year, is an additional 0.9% tax applied to high-income individuals. Employers are responsible for withholding the tax from wages or compensation it pays to an employee in excess of $200,000 in a calendar year.