Early Retiree Reinsurance Program Application Now Available (from BCBSGA)

As many of you know, the health care legislation enacted by Congress and signed into law by President Barack Obama on March 23, 2010, requires the U.S. Department of Health and Human Services (HHS) to establish an early retiree reinsurance program (ERRP), which must be operational within 90 days after enactment.

Recently, HHS released interim final rules relating to the Early Retiree Reinsurance Program and called for a 30-day public comment. This week, HHS published the official ERRP application, official application instructions and application submission “dos and don’ts” (including the address for submitting an application). All of these documents may be accessed through the following link: http://www.hhs.gov/ociio/regulations/index.html#early_retiree

In general, the program provides $5 billion in financial assistance to employers to offset a portion of the costs of providing health coverage for early retirees, ages 55-64, who are not yet eligible for Medicare and their spouses, surviving spouses and dependents.

The interim final rule was effective on June 1, 2010. Applications are expected to be accepted and processed by HHS on a first-come, first-served basis. The program will end on January 1, 2014, or when the $5 billion Congress allocated through the legislation is exhausted.

Advertisements

Carey Benefits Earns Green Certification

Chase Carey is a cut above more insurance agents in many ways. He is pro-active, a community leader, and an absolute professional. Chase is the owner.operator of Caery Benefits, and he recently worked with Damon Sgrignoli to earn a Green business certification from the Green Business League.
Chase Carey has taken steps to be a quality business as well as a Green business. It started with changing the old ways of pesticides, cleaning products, and recycling the trash. The office has switched to energy efficient lights, placed timers on certain appliances, and added insulation to cut energy costs.
Water use is being cut, paper use is transferred to paperless systems, and ink and toner purchase are from recycled ink services.
CAREY Benefit Associates believes that Benefits and Insurance are important factors in Employees choosing which Employer and in Individuals protecting their families’ health and income. Because of that, we offer a broad variety of Benefits and Insurance from the top carriers. Why the top carriers? Because they have the depth to stay the course, which you and your family deserves.
This company also believes in the betterment of the community. Going Green is only a token effort for many businesses, but all members of the Green Business League undergo a thorough audit every year to continually improve their Green practices and reduce their carbon footprint.
The Green Business League is pleased to grant the Chase Carey Benefits office the silver level Green Business Certification.
Please check out this link:
http://greenbusinessleague.com/blog/carey-benefits

Health Care Reform Tax Credit CALCULATOR For Small Businesses in Georgia

Most smaller businesses should be receiving a post card from the IRS in the next couple of weeks that tells you that your business may be eligible for a Health Care Tax Credit for the 2010 tax year.
What Are The Qualifying Parameters?
In short, your business will qualify for a 35% reimbursement (via a dollar for dollar tax reduction) of the premium your business pays for its group medical benefits if you meet all of the following conditions:
1. You have fewer than 25 Full Time Equivalents (FTE) working for you;
2. Your average wages are less than $50,000 per year per FTE; and
3. You pay at least 1/2 of the medical premium for Employee-Only coverage.
We’ve posted a Health Care Reform Tax Credit CALCULATOR on LinkenIn at http://www.LinkedIn.com/In/ChaseCarey . The calculator is pretty self explanatory and requires that you input just a few specific pieces of information in the YELLOW boxes. Your CFO/Finance Manager should be able to plug in estimates pretty easily. If not, please give us a call and we’ll help he or she out. By the way, the 35% tax credit is scheduled to increase to 50% by 2014.
Note
Please consider that this is a BETA version of our calculator; it is based on IRS notices and other information available to date, not all of which is that detailed. But the calculator should be a good estimator. This calculator is programmed for GEORGIA for-profit businesses only. Businesses in each state are eligible for the Tax Credit as well as non-profits but they have different parameters and credit percentages. (It is interesting to note that the cost of health insurance in Georgia ranks 41 out of 50 states, meaning there are only 9 states that have lower health insurance costs).
Share with Your CFO/Finance Manger/Business Accountant
Please share our HCR Tax Credit Calculator with your CFO/Finance Manger and Business Accountant; we’d love to hear their feedback.

Georgia Continuation Update – Extended for 15 Months

The Governor of Georgia signed Act 362 on May 20th, 2010. This provision extends coverage for former employees under GA Continuation from 9 to 15 months. This extension applies to Assistance Eligible Individuals who are those who were involuntarily terminated or lost coverage due to an involuntary termination between September 1, 2008 and May 31, 2010.

Attached is the text of the ACT, which originated as HB 1268:

10 HB 1268/AP
House Bill 1268 (AS PASSED HOUSE AND SENATE)
By: Representative Knox of the 24th

A BILL TO BE ENTITLED
AN ACT

To amend Title 33 of the Official Code of Georgia Annotated, relating to insurance, so as to revise the time periods and eligibility for continuation coverage under certain group accident and sickness insurance plans; to provide for related matters; to provide an effective date; to repeal conflicting laws; and for other purposes.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF GEORGIA:

SECTION 1.
Title 33 of the Official Code of Georgia Annotated, relating to insurance, is amended by revising Code Section 33-24-21.1, relating to conversion privilege and continuation right provisions for group accident and sickness insurance, as follows:
“33-24-21.1.
(a) As used in this Code section, the term:
(1) ‘Assistance eligible individual’ shall have the same meaning as provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act of 2009, as amended.
(2) ‘Creditable coverage’ under another health benefit plan means medical expense coverage with no greater than a 90 day gap in coverage under any of the following:
(A) Medicare or Medicaid;
(B) An employer based accident and sickness insurance or health benefit arrangement;
(C) An individual accident and sickness insurance policy, including coverage issued by a health maintenance organization, nonprofit hospital or nonprofit medical service corporation, health care corporation, or fraternal benefit society;
(D) A spouse’s benefits or coverage under medicare or Medicaid or an employer based health insurance or health benefit arrangement;
(E) A conversion policy;
(F) A franchise policy issued on an individual basis to a member of a true association as defined in subsection (b) of Code Section 33-30-1;
(G) A health plan formed pursuant to 10 U.S.C. Chapter 55;
(H) A health plan provided through the Indian Health Service or a tribal organization program or both;
(I) A state health benefits risk pool;
(J) A health plan formed pursuant to 5 U.S.C. Chapter 89;
(K) A public health plan; or
(L) A Peace Corps Act health benefit plan.
(3) ‘Eligible dependent’ means a person who is entitled to medical benefits coverage under a group contract or group plan by reason of such person’s dependency on or relationship to a group member.
(4) ‘Group contract or group plan’ is synonymous with the term ‘contract or plan’ and means:
(A) A group contract of the type issued by a nonprofit medical service corporation established under Chapter 18 of this title;
(B) A group contract of the type issued by a nonprofit hospital service corporation established under Chapter 19 of this title;
(C) A group contract of the type issued by a health care plan established under Chapter 20 of this title;
(D) A group contract of the type issued by a health maintenance organization established under Chapter 21 of this title; or
(E) A group accident and sickness insurance policy or contract, as defined in Chapter 30 of this title.
(5) ‘Group member’ means a person who has been a member of the group for at least six months and who is entitled to medical benefits coverage under a group contract or group plan and who is an insured, certificate holder, or subscriber under the contract or plan.
(6) ‘Insurer’ means an insurance company, health care corporation, nonprofit hospital service corporation, medical service nonprofit corporation, health care plan, or health maintenance organization.
(7) ‘Qualifying eligible individual’ means:
(A) A Georgia domiciliary, for whom, as of the date on which the individual seeks coverage under this Code section, the aggregate of the periods of creditable coverage is 18 months or more; and
(B) Who is not eligible for coverage under any of the following:
(i) A group health plan, including continuation rights under this Code section or the federal Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA);
(ii) Part A or Part B of Title XVIII of the federal Social Security Act; or
(iii) The state plan under Title XIX of the federal Social Security Act or any successor program.
(a.1) Any group member or qualifying eligible individual who is an assistance eligible individual as provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, during the period permitted under such act whose coverage has been terminated and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits that it replaces, for at least six months immediately prior to such termination, shall be entitled to have his or her coverage and the coverage of his or her eligible dependents continued under the contract or plan in accordance with paragraph (2) of subsection (c) of this Code section. Such coverage shall continue for the fractional policy month remaining, if any, at termination plus nine up to the maximum number of additional policy months specified in paragraph (2) of subsection (c) of this Code section upon payment of the premium to the insurer by cash, certified check, or money order, at the same rate for active group members set forth in the contract or plan, on a monthly basis in advance as such premium becomes due during this coverage period. An assistance eligible individual who is in a transition period as defined in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, shall be treated for purposes of any continuation of coverage provision as having timely paid such premium if such individual was covered under the continuation of coverage to which such premium relates for the period immediately preceding such transition period, if such individual remains eligible for such continuation of coverage, and if such individual pays the amount of such premium not later than 30 days after the date of provision of notice regarding eligibility for extended continuation of coverage. For the period that the assistance eligible individual is eligible for the premium reduction assistance subsidy as provided in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, such premium payment shall be calculated as 35 percent of the rate for active group members including any portion of the premium paid by a former employer or other person if such employer or other person no longer contributes premium payments for this coverage.
(a.2) The rights and benefits under this Code section attributable to Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, shall expire when that act expires. Any extension of such benefits shall require an Act of the Georgia General Assembly. Under no circumstances shall the extended benefits for assistance eligible individuals become the responsibility of the State of Georgia or any insurer after September 30, 2010 the expiration of the premium subsidy made available to individuals pursuant to Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended.
(b) Each group contract or group plan delivered or issued for delivery in this state, other than a group accident and sickness insurance policy, contract, or plan issued in connection with an extension of credit, which provides hospital, surgical, or major medical coverage, or any combination of these coverages, on an expense incurred or service basis, excluding contracts and plans which provide benefits for specific diseases or accidental injuries only, shall provide that members and qualifying eligible individuals whose insurance under the group contract or plan would otherwise terminate shall be entitled to continue their hospital, surgical, and major medical insurance coverage under that group contract or plan for themselves and their eligible dependents.
(c)(1) Any group member or qualifying eligible individual whose coverage has been terminated and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits which it replaces, for at least six months immediately prior to such termination, shall be entitled to have his or her coverage and the coverage of his or her eligible dependents continued under the contract or plan. Such coverage must continue for the fractional policy month remaining, if any, at termination plus three additional policy months, except the period of continuation coverage for assistance eligible individual in subsection (a.1) of this Code section, shall be nine months, upon payment of the premium by cash, certified check, or money order, at the option of the employer, to the policyholder or employer, at the same rate for active group members set forth in the contract or plan, on a monthly basis in advance as such premium becomes due during this coverage period. Such premium payment must include any portion of the premium paid by a former employer or other person if such employer or other person no longer contributes premium payments for this coverage. At the end of such period, the group member shall have the same conversion rights that were available on the date of termination of coverage in accordance with the conversion privileges contained in the group contract or group plan.
(2) A covered individual Any group member or qualifying eligible individual who is an assistance eligible individual has a right to elect continuation of his or her coverage and the coverage of his or her dependents at any time between May 5, 2009, and 60 days after receiving notice from the employer’s insurer of the right to participate in a second election period for state continuation benefits under this Code section in accordance with Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, if:
(A) The individual was involuntarily terminated from employment between September 1, 2008, and February 17, 2009, as defined or otherwise experienced a loss of coverage due to qualifying events specified in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended;
(B) The individual was eligible for state continuation under this chapter at the time of termination;
(C) The individual continues to be eligible for state continuation benefits under this chapter, provided that the total period of continuous eligibility shall not exceed nine the number of policy months equal to the maximum premium reduction period specified in Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended, as measured from the month of the qualifying event making the individual an assistance eligible individual or the date of the election as provided in this paragraph, whichever is later; and
(D) The individual or the employer of the individual contacts the insurer and informs the insurer that the individual wants to take advantage of the second election period for state continuation coverage under the provisions of Section 3001 of Title III of the federal American Recovery and Reinvestment Act (P.L. 111-5), as amended.
(3) In addition to the group policy under which the group member was insured, the group member and any qualifying eligible individual shall, to the extent that such plan is currently offered under the group plans offered by the company, also be offered the option of continuation coverage through a high deductible health plan, or its actuarial equivalent, that is eligible for use with a health savings account under the applicable provisions of Section 223 of the Internal Revenue Code. Such high deductible health plans shall have premiums consistent with the underlying group plan of coverage rated relative to the standard or manual rates for the benefits provided.
(4) Claims for a covered individual under continuation of coverage shall not be considered in rating or rerating the group premiums for the group from which the continuation of coverage is provided, except that the pooled experience for all of the insurer’s continuation of coverage claims for fully insured claims may impact all such groups on an equal percentage basis.
(d)(1) A group member shall not be entitled to have coverage continued if: (A) termination of coverage occurred because the employment of the group member was terminated for cause; (B) termination of coverage occurred because the group member failed to pay any required contribution; or (C) any discontinued group coverage is immediately replaced by similar group coverage including coverage under a health benefits plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. Section 1001, et seq. Further, a group member shall not be entitled to have coverage continued if the group contract or group plan was terminated in its entirety or was terminated with respect to a class to which the group member belonged. This subsection shall not affect conversion rights available to a qualifying eligible individual under any contract or plan.
(2) A qualifying eligible individual shall not be entitled to have coverage continued if the most recent creditable coverage within the coverage period was terminated based on one of the following factors: (A) failure of the qualifying eligible individual to pay premiums or contributions in accordance with the terms of the health insurance coverage or failure of the issuer to receive timely premium payments; (B) the qualifying eligible individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact under the terms of coverage; or (C) any discontinued group coverage is immediately replaced by similar group coverage including coverage under a health benefits plan as defined in the federal Employee Retirement Income Security Act of 1974, 29 U.S.C. Section 1001, et seq. This subsection shall not affect conversion rights available to a group member under any contract or plan.
(e) If the group contract or group plan terminates while any group member or qualifying eligible individual is covered or whose coverage is being continued, the group administrator, as prescribed by the insurer, must notify each such group member or qualifying eligible individual that he or she must exercise his or her conversion rights within:
(1) Thirty days of such notice for group members who are not qualifying eligible individuals; or
(2) Sixty-three days of such notice for qualifying eligible individuals.
(f) Every group contract or group plan, other than a group accident and sickness insurance policy, contract, or plan issued in connection with an extension of credit, which provides hospital, surgical, or major medical expense insurance, or any combination of these coverages, on an expense incurred or service basis, excluding policies which provide benefits for specific diseases or for accidental injuries only, shall contain a conversion privilege provision.
(g) Eligibility for the converted policies or contracts shall be as follows:
(1) Any qualifying eligible individual whose insurance and its corresponding eligibility under the group policy, including any continuation available, elected, and exhausted under this Code section or the federal Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), has been terminated for any reason, including failure of the employer to pay premiums to the insurer, other than fraud or failure of the qualifying eligible individual to pay a required premium contribution to the employer or, if so required, to the insurer directly and who has at least 18 months of creditable coverage immediately prior to termination shall be entitled, without evidence of insurability, to convert to individual or group based coverage covering such qualifying eligible individual and any eligible dependents who were covered under the qualifying eligible individual’s coverage under the group contract or group plan. Such conversion coverage must be, at the option of the individual, retroactive to the date of termination of the group coverage or the date on which continuation or COBRA coverage ended, whichever is later. The insurer must offer qualifying eligible individuals at least two distinct conversion options from which to choose. One such choice of coverage shall be comparable to comprehensive health insurance coverage offered in the individual market in this state or comparable to a standard option of coverage available under the group or individual health insurance laws of this state. The other choice may be more limited in nature but must also qualify as creditable coverage. Each coverage shall be filed, together with applicable rates, for approval by the Commissioner. Such choices shall be known as the ‘Enhanced Conversion Options’;
(2) Premiums for the enhanced conversion options for all qualifying eligible individuals shall be determined in accordance with the following provisions:
(A) Solely for purposes of this subsection, the claims experience produced by all groups covered under comprehensive major medical or hospitalization accident and sickness insurance for each insurer shall be fully pooled to determine the group pool rate. Except to the extent that the claims experience of an individual group affects the overall experience of the group pool, the claims experience produced by any individual group of each insurer shall not be used in any manner for enhanced conversion policy rating purposes;
(B) Each insurer’s group pool shall consist of each insurer’s total claims experience produced by all groups in this state, regardless of the marketing mechanism or distribution system utilized in the sale of the group insurance from which the qualifying eligible individual is converting. The pool shall include the experience generated under any medical expense insurance coverage offered under separate group contracts and contracts issued to trusts, multiple employer trusts, or association groups or trusts, including trusts or arrangements providing group or group-type coverage issued to a trust or association or to any other group policyholder where such group or group-type contract provides coverage, primarily or incidentally, through contracts issued or issued for delivery in this state or provided by solicitation and sale to Georgia residents through an out-of-state multiple employer trust or arrangement; and any other group-type coverage which is determined to be a group shall also be included in the pool for enhanced conversion policy rating purposes; and
(C) Any other factors deemed relevant by the Commissioner may be considered in determination of each enhanced conversion policy pool rate so long as it does not have the effect of lessening the risk-spreading characteristic of the pooling requirement. Duration since issue and tier factors may not be considered in conversion policy rating. Notwithstanding subparagraph (A) of this paragraph, the total premium calculated for all enhanced conversion policies may deviate from the group pool rate by not more than plus or minus 50 percent based upon the experience generated under the pool of enhanced conversion policies so long as rates do not deviate for similarly situated individuals covered through the pool of enhanced conversion policies;
(3) Any group member who is not a qualifying eligible individual and whose insurance under the group policy has been terminated for any reason, including failure of the employer to pay premiums to the insurer, other than eligibility for medicare (reaching a limiting age for coverage under the group policy) or failure of the group member to pay a required premium contribution, and who has been continuously covered under the group contract or group plan, and under any contract or plan providing similar benefits which it replaces, for at least six months immediately prior to termination shall be entitled, without evidence of insurability, to convert to individual or group coverage covering such group member and any eligible dependents who were covered under the group member’s coverage under the group contract or group plan. Such conversion coverage must be, at the option of the individual, retroactive to the date of termination of the group coverage or the date on which continuation or COBRA coverage ended, whichever is later. The premium of the basic converted policy shall be determined in accordance with the insurer’s table of premium rates applicable to the age and classification of risks of each person to be covered under that policy and to the type and amount of coverage provided. This form of conversion coverage shall be known as the ‘Basic Conversion Option’; and
(4) Nothing in this Code section shall be construed to prevent an insurer from offering additional options to qualifying eligible individuals or group members.
(h) Each group certificate issued to each group member or qualifying eligible individual, in addition to setting forth any conversion rights, shall set forth the continuation right in a separate provision bearing its own caption. The provisions shall clearly set forth a full description of the continuation and conversion rights available, including all requirements, limitations, and exceptions, the premium required, and the time of payment of all premiums due during the period of continuation or conversion.
(i) This Code section shall not apply to limited benefit insurance policies. For the purposes of this Code section, the term ‘limited benefit insurance’ means accident and sickness insurance designed, advertised, and marketed to supplement major medical insurance. The term limited benefit insurance includes accident only, CHAMPUS supplement, dental, disability income, fixed indemnity, long-term care, medicare supplement, specified disease, vision, and any other accident and sickness insurance other than basic hospital expense, basic medical-surgical expense, and comprehensive major medical insurance coverage.
(j) The Commissioner shall adopt such rules and regulations as he or she deems necessary for the administration of this Code section. Such rules and regulations may prescribe various conversion plans, including minimum conversion standards and minimum benefits, but not requiring benefits in excess of those provided under the group contract or group plan from which conversion is made, scope of coverage, preexisting limitations, optional coverages, reductions, notices to covered persons, and such other requirements as the Commissioner deems necessary for the protection of the citizens of this state.
(k)(1) Except as provided in paragraph (2) of this subsection, this Code section shall apply to all group plans and group contracts delivered or issued for delivery in this state on or after July 1, 2009, and to group plans and group contracts then in effect on the first anniversary date occurring on or after July 1, 2009.
(2) The provisions of paragraphs (1), (2), and (3) of subsection (c) of this Code section shall apply to all group plans and group contracts in effect on September 1, 2008.
(l) As soon as practicable, but no later than June 4, 2009, the Commissioner shall develop and direct insurers to issue notices for assistance eligible individuals regarding availability of expanded eligibility, second election, and continuation coverage assistance to be sent to the last known addresses of such assistance eligible individuals.
(m) Nothing in this chapter shall imply that individuals entitled to continuation coverage who are not assistance eligible individuals shall receive benefits beyond the period of coverage provided in paragraph (1) of subsection (c) of this Code section or that assistance eligible individuals are entitled to any continuation benefit period beyond what is provided by Section 3001 of Title III of the federal American Recovery and Reinvestment Act of 2009 or extensions to that Act which are enacted on and after May 5, 2009.”

SECTION 2.
This Act shall become effective upon its approval by the Governor or upon its becoming law without such approval.

SECTION 3.
All laws and parts of laws in conflict with this Act are repealed.

Early Retiree Reinsurance Program

(Reprinted from BCBSGA)
The Patient Protection and Affordable Care Act includes an early retiree reinsurance program that is available to group health plan sponsors who provide medical coverage to early retirees and their spouses, surviving spouses and dependents. It is intended to encourage employers to provide health coverage to early retirees until state health exchanges and federal subsidies for health coverage are implemented. This temporary program will provide $5 billion to help employers to continue to provide coverage to certain retirees. The program provides for reimbursement of an early retiree’s (and covered dependents’) health care claims in an amount equal to 80% of the costs between $15,000 and $90,000.
The employer is then expected to use the reimbursement to help lower health care costs (such as premium contributions, copays and deductibles) for participating enrollees. The program provides for reimbursement of an early retiree’s (and covered dependents’) claims in an amount equal to 80% of health benefits costs between $15,000 and $90,000.
This program is expected to be effective from June 1, 2010, to January 1, 2014. After January 1, 2014, retirees will have additional coverage options through the health insurance exchanges. Both self-insured and fully insured employer groups can participate. To participate in the program, employers must first submit applications (likely available beginning in June) to the Department of Health and Human Services.

Scam Artists Take Advantage of New Health Care Law

Here’s something we just picked up from the AP via Fox News.

Scam artists are taking advantage of the new health insurance law to peddle phony policies.

Health and Human Services Sec. Kathleen Sebelius said Tuesday she is warning state officials about a proliferation of scams involving phony health insurance policies. Federal investigators are also on the lookout.

Some of the hustlers are going door to door claiming there’s a limited open-enrollment period to buy health insurance now. But the big expansion of coverage won’t come for another four years, and door-to-door salespeople are unlikely to be part of the plan then.

“Unfortunately, scam artists and criminals may be using the passage of these historic reforms as an opportunity to confuse and defraud the public,” Sebelius wrote in a letter to state insurance commissioners and attorneys general.

In the letter, released Tuesday, she urged vigorous prosecution of anyone caught selling fraudulent policies.

The new health care law will ultimately provide coverage to more than 30 million uninsured, but those changes will come slowly, beginning with smaller steps.

As early as the summer, people who have been turned down for coverage because of a medical problem will be able to buy a plan through a new high-risk health insurance pool. Many states already operate such pools, but the coverage has been expensive, and only about 200,000 are signed up. The new health care law provides an infusion of federal dollars to bring down costs and cover more people.

Then in the fall, two other consumer benefits take effect. Insurance plans will no longer be able to deny coverage to children with medical problems. And parents will be able to keep their adult children on their policies until they turn 26.

While those measures may make a big difference for particular families, experts say it will only lead to a small decline in the number of uninsured people, which now is nearly 50 million.

The big push to cover the uninsured comes in 2014, when new health insurance marketplaces will open for business and federal tax credits will start flowing to millions of working families and individuals. At the same time, Medicaid will be expanded to more people living near the poverty line. And health insurers will not be able to turn anyone down on account of a medical problem.

Once those tax credits and new consumer protections are in place, most Americans will be required to carry health insurance. The nearly $1 trillion, ten-year law will provide coverage to an estimated 94 percent of eligible Americans when it is fully phased in.

House Passes Health Reform Legislation

After intense negotiations that included a budget reconciliation process, the House of Representatives passed health care reform legislation. The House passed both H.R. 3590, the Patient Protection and Affordable Care Act (the Affordable Care Act), and H.R. 4872, the Health Care and Education Reconciliation Act of 2010 (the Reconciliation Act).
The Affordable Care Act was approved by the Senate on December 24, 2009, and it can now go to President Barack Obama for his signature. The Health Care Reconciliation Act strikes out or modifies a number of tax and revenue provisions in the Senate’s Affordable Care Act to which the House objected. Under budget reconciliation rules, the House Health Care Reconciliation Act now goes to the Senate, which can pass the bill with a 51 majority that is not subject to the 60-vote filibuster rules for other legislation considered in the Senate.
The Senate is expected to take up the Health Care Reconciliation Act this week, and Senate Democrats have the goal of sending a final package to the White House before its scheduled April recess begins on March 29. However, if the Senate makes any changes, the House and the Senate versions will go to a conference of House and Senate negotiators. An agreement by negotiators then will go back to the House and the Senate for a simple majority final vote by the two chambers under strict rules that set a timetable for action and that prohibit any amendments. Assuming passage of this conference committee agreement, it will be sent to the President Obama for his signature.
The president’s signature to both H.R. 3590 and 4872 will put into effect the provisions of the Affordable Care Act as amended by the Health Care Reconciliation Act. These provisions include the following:
Employer Responsibilities. Effective in 2014, assess certain employers a fee of $2,000 per full-time employee, excluding the first 30 employees from the assessment: employers with more than 50 employees that do not offer coverage and have at least one full-time employee who receives a premium tax credit. Employers with more than 50 employees that offer coverage but have at least one full-time employee receiving a premium tax credit, will pay the lesser of $3,000 for each employee receiving a premium credit or $750 for each fulltime employee. (Effective January 1, 2014).
Employers with 50 or fewer employees are exempt from penalties.
Effective in 2014, employers that offer coverage would be required to provide a free choice voucher to employees with incomes less than 400% FPL whose share of the premium exceeds 8% but is less than 9.8% of their income and who choose to enroll in a plan in the Exchange. The voucher amount is equal to what the employer would have paid to provide coverage to the employee under the employer’s plan and will be used to offset the premium costs for the plan in which the employee is enrolled. Employers providing free choice vouchers will not be subject to penalties for employees that receive premium credits in the Exchange.
Employers with more than 200 employees must automatically enroll employees coverage offered by the employer. Employees may opt out of coverage.
Individual Reponsibilities. Citizens and legal residents are required to have “qualifying health coverage.” Those without coverage pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount ($2,085) per family or 2.5% of household income. The penalty will be phased-in according to the following schedule: $95 in 2014, $325 in 2015, and $695 in 2016 for the flat fee or 1.0% of taxable income in 2014, 2.0% of taxable income in 2015, and 2.5% of taxable income in 2016. After 2016, the penalty will be increased annually by the cost-of-living adjustment. Exemptions will be granted for those for whom the lowest cost plan option exceeds 8% of an individual’s income, and those with incomes below the tax filing threshold (in 2009 the threshold for taxpayers under age 65 was $9,350 for singles and $18,700 for couples).
Health Benefit Exchanges. Effective in 2014, state-based American Health Benefit Exchanges and Small Business Health Options Program (SHOP) Exchanges are established, administered by a governmental agency or non-profit organization, through which individuals and small businesses with up to 100 employees can purchase qualified coverage. States are permitted to allow businesses with more than 100 employees to purchase coverage in the SHOP Exchange beginning in 2017. States may form regional Exchanges or allow more than one Exchange to operate in a state as long as each Exchange serves a distinct geographic area. (Funding available to states to establish Exchanges within one year of enactment and until January 1, 2015)
Individual subsidies. Refundable and advanceable premium credits are made available to eligible individuals and families with incomes between 133 and 400% of the federal poverty level to purchase insurance through the Health Insurance Exchanges. The premium credits will be tied to the second lowest cost silver plan in the area and will be set on a sliding scale.
Employer subsidies. Small employers with no more than 25 employees and average annual wages of less than $40,000 that purchase health insurance for employees are provided with a tax credit.
For 2010 through 2013, a tax credit of up to 35% of the employer’s contribution toward the employee’s health insurance premium is provided if the employer contributes at least 50% of the total premium cost or 50% of a benchmark premium.
For 2014 and later, for eligible small businesses that purchase coverage through the state Exchange, a tax credit is provided of up to 50% of the employer’s contribution toward the employee’s health insurance premium if the employer contributes at least 50% of the total premium cost. The credit will be available for two years. The full credit will be available to employers with 10 or fewer employees and average annual wages of less than $25,000.
Effective 90 days after enactment and extending until Jan. 1, 2014, a temporary reinsurance program is established for employers providing health insurance coverage to retirees over age 55 who are not eligible for Medicare. The program will reimburse employers or insurers for 80% of retiree claims between $15,000 and $90,000
Financing of health reform. Beginning in 2014, a tax on individuals without qualifying coverage is imposed that is the greater of $695 per year up to a maximum of three times that amount or 2.5% of household income.
Effective in 2018, an excise tax is imposed on insurers of employer-sponsored health plans with aggregate values that exceed $10,200 for individual coverage and $27,500 for family coverage. The tax is equal to 40% of the value of the plan that exceeds the threshold amounts and is imposed on the issuer of the health insurance policy, which in the case of a self-insured plan is the plan administrator or, in some cases, the employer. The aggregate value of the health insurance plan includes reimbursements under a flexible spending account for medical expenses (health FSA) or health reimbursement arrangement (HRA), employer contributions to a health savings account (HSA), and coverage for supplementary health insurance coverage, excluding dental and vision coverage.
Benefit design. Effective in 2014, an essential health benefits package is established that provides a comprehensive set of services, covers at least 60% of the actuarial value of the covered benefits, limits annual cost-sharing to the current law HSA limits ($5,950/individual and $11,900/family in 2010), and is not more extensive than the typical employer plan. Require the Secretary to define and annually update the benefit package through a transparent and public process.
Abortion coverage is prohibited from being required as part of the essential health benefits package.
Effective in 2014, all qualified health benefits plans, including those offered through the Exchanges and those offered in the individual and small group markets (except grandfathered plans) are required to offer at least an essential health benefits package.
Private Insurance. Effective within 90 days of enactment and extending through Jan. 1, 2014, a temporary national high-risk pool is established to provide health coverage to individuals with pre-existing medical conditions. Individuals who have a pre-existing medical condition and who have been uninsured for at least six months will be eligible to enroll in the high-risk pool and receive subsidized premiums. Premiums for the pool will be established for a standard population and may vary by no more than 4 to 1 due to age; maximum cost-sharing will be limited to the current law HSA limit ($5,950/individual and $11,900/family in 2010).
Effective in 2010, health insurance plans are required to report the proportion of premium dollars spent on clinical services, quality, and other costs. Effective in 2011, insurers must provide rebates to consumers for the amount of the premium spent on clinical services and quality that is less than 85% for plans in the large group market and 80% for plans in the individual and small group markets. A process is established for reviewing increases in health plan premiums and requiring plans to justify increases. States are required to report on trends in premium increases and recommend whether certain plan should be excluded from the Exchange based on unjustified premium increases.
Effective six months after enactment, all individual and group policies must provide dependent coverage for children through age 26; individual and group health plans are prohibited from placing lifetime limits on the dollar value of coverage and insurers are prohibited from rescinding coverage except in cases of fraud; plans are prohibited from imposing pre-existing condition exclusions for children
Beginning in January 2014, individual and group health plans are prohibited from placing annual limits on the dollar value of coverage. Prior to January 2014, plans may only impose annual limits on coverage as determined by the Secretary.
Six months following enactment, grandfathered plans are required to extend dependent coverage to age 26, prohibit rescissions of coverage, eliminate waiting periods for coverage of greater than 90 days, and eliminate pre-existing condition exclusions for children. Beginning in 2014, grandfathered group plans must eliminate lifetime limits on coverage and eliminate annual limits on coverage.
Effective in 2014, waiting periods for coverage are limited to 90 days and states have the option of merging the individual and small group markets.
Financing. The Congressional Budget Office estimates the cost of the coverage components of the reconciliation bill in combination with the Patient Protection and Affordable Care Act to be $940 billion over ten years. These costs are financed through a combination of savings from Medicare and Medicaid and new taxes and fees, including an excise tax on high-cost insurance, which CBO estimates will raise $32 billion over ten years. CBO estimates the proposal will reduce the deficit by $143 billion over ten years.
Additional Medicare tax. A 40 percent excise tax will be imposed on high-dollar insurance plans and an increase in Medicare payroll taxes on taxpayers in the $200,000 plus income category ($250,000 for joint filers), beginning in 2013.
Medicare: Several provisions link quality outcomes and payments under Medicare. Quality measure reporting programs, already in place for inpatient acute hospitals, will be developed for long-term care hospitals, rehabilitation hospitals, hospice programs, and PPS-exempt cancer hospitals.
Starting in fiscal year 2015, hospitals in the top 25th percentile of rates of hospital-acquired conditions for certain high-cost procedures will be subject to a payment penalty.
A value-based purchasing (VBP) program for hospitals will be implemented in 2013. A portion of a hospital’s Medicare payment will be linked to the hospital’s performance on quality measures related to common and high-cost conditions, such as cardiac, surgical, and pneumonia care. Similar programs will be introduced for other health care providers as well.
Reimbursement for most types of Medicare providers will be adjusted to improve payment accuracy. Medicare Advantage payments will be adjusted to be more in line with Medicare fee-for-service payments.
Physician fee schedule. Payments would increase by 0.5 percent increase over 2009 rates.
Rural health care. Medicare payments will increase to providers in any state where at least 50 percent of the counties are “frontier counties,” those having a population density less than six people per square mile. Several existing statutes related to improving Medicare payments to providers in rural areas are extended.
Prescription drugs. Changes to Medicare Part D, prescription drug reimbursement, includes an attempt to close the “donut hole” for prescription drug coverage.
Medicaid: Access to Medicaid, as well as the types of services that are covered under Medicaid is expanded, including preventive services and long-term care. Additional revenue is allocated for specific maternal and child health services.
Expanded eligibility. States will have the option starting in 2014 to expand Medicaid eligibility to nonelderly, non-pregnant individuals who are not otherwise eligible for Medicare, with incomes up to 133 percent of the federal poverty level (FPL). From 2014 through 2016, the federal government will pay 100 percent of the cost of covering newly eligible individuals.
Children’s Health Insurance Program. States are required to maintain income eligibility levels for CHIP through the end of fiscal year 2019. Enrollment changes. Individuals may apply for or enroll in Medicaid, CHIP, or an insurance plan offered by one of the new state-based Exchanges through one state-run website. Hospitals are allowed to provide Medicaid services during a period of presumptive eligibility of all Medicaid eligibility categories.
Expansion of services. Medicaid will cover services provided by free-standing birth centers. States will have the option of offering community-based attendant services to disabled Medicaid beneficiaries who would otherwise need institutional care. State also may provide more home- and community-based services through a state plan amendment rather than a waiver.
Fraud prevention. Provisions to prevent fraud in federal healthcare programs and to increase the program integrity of both Medicare and Medicaid will be implemented.
CCH Law, Explanation and Analysis of Health Reform Act Available Soon
CCH’s LAW, EXPLANATION AND ANALYSIS of the Patient Protection and Affordable Care Act of 2010 provides the most comprehensive and practical guidance available to professionals needing to make sense of this historic legislation. CCH editorial staff, together with leading experts, provides clear and practical guidance on the many new areas of compliance in the law, so professionals can quickly understand, comply with new requirements, and plan for the future. The book is now available for purchase. The cost is $149.00.
Note that Internet customers will receive an electronic version of the book. Chapters are being posted as they are completed.
• To access on IntelliConnect, visit “News” under the Browse tree menu “Health Care Compliance and Reimbursement.”
• To access on the Internet Research Network, click on “Patient Protection and Affordable Care Act: Law, Explanation, and Analysis” on the “Health Care Reimbursement” tab, under the “Medicare and Medicaid Guide” blue bar.
• To access on the Tax Research NetWork, click on “Patient Protection and Affordable Care Act: Law, Explanation, and Analysis” on the “Pension & Payroll” tab under the “Primary Sources” blue bar.
For more information or to order, please call 1-800-248-3248 or visit [http://health.cch.com/Products/ProductID-7127.asp