Savoy Associates - Health Insurance Benefit Specialists

Joan Fusco, our Director of Research and Education and our resident Information Specialist, oversees Savoy Associates Insurance Education Services, our Continuing Education school, which is approved in New York, New Jersey, Pennsylvania and Delaware. In this area of expertise, Joan is entrusted with providing vital information to our personnel and broker partners. She researches legislation on a daily basis and gathers information at appropriate legislative and regulatory meetings.

In March of 2010, the Patient Protection and Affordable Care Act (PPACA) became law, and was subsequently amended through May 1, 2010. (Click HERE to view the 955 page law.) One year later, it is important to note what is effective now as some of the provisions have already become effective.

In an effort to assist brokers with the questions brokers and their clients have regarding the provisions and implementation of Health Care Reform law, Joan Fusco addresses the following most frequently asked questions:

Institute of Medicine Releases Essential Health Benefits Report Commissioned by HHS

The Patient Protection and Affordable Care Act of 2010 (ACA) is intended to help uninsured Americans obtain health insurance. As part of this effort, private health insurance plans will be offered to low- and moderate-income individuals and small business employers through state-based “purchasing exchanges,” often with financial help. To ensure a more consistent level of benefits, the ACA requires that certain insurance plans—including those participating in the state purchasing exchanges—cover a package of diagnostic, preventive, and therapeutic services and products that have been defined as “essential” by the HHS.

This package—commonly referred to as a set of essential health benefits (EHB)—constitutes a minimum set of benefits that the plans must cover, but insurers may offer additional benefits. The ACA requires that the EHB include at least 10 general categories of health services, and have benefits similar to those currently provided by a typical employer.

The ACA charged HHS with defining what the EHB package should include. To assist with this, HHS asked the IOM to recommend a process that would help HHS define the benefits that should be included in the EHB, and update the benefits to take into account advances in science, gaps in access, and the effect of any benefit changes on cost. The task of the IOM was not to decide what is covered in the EHB, but rather to propose a set of criteria and methods that should be used in deciding what benefits are most important for coverage. The committee recognized that the benefits included in the EHB must be sufficiently inclusive to enable access to essential services but must also be affordable so that as many as possible can purchase the coverage. The committee saw its primary task as finding the right balance between making a breadth of coverage available for individuals at a cost they could afford. This balance will help ensure that an estimated 68 million people have access to care covered by the EHB.

Under the regulations, non-grandfathered plans must cover without copay, coinsurance or deductible – certain preventive services that have "strong scientific evidence of their health benefits."

A full list of covered preventive services is available on HealthCare.gov, which is managed by the U.S. Department of Health and Human Services:

Information regarding a value-based plan design in connection with preventive care benefits can be found on the U.S. Department of Labor’s website:

Please note that some carriers have applied this to grandfathered plans as well.

Prevention Coverage for Women’s Health - Contraceptive Methods Treated as Preventive, Effective August 1, 2012

The Food and Drug Administration approved contraceptive methods, sterilization procedures, and patient education and counseling for all women with reproductive capacity.

Accordingly, non-grandfathered plans and issuers are required to provide coverage without cost sharing consistent with these guidelines in the first plan year (in the individual market, policy year) that begins on or after August 1, 2012.

For further details, please see the following release from the U.S. Department of Health and Human Services on its Health Resources and Services Administration (HRSA) website:

Representative John Barrow (D-GA) and Representative Mike Rogers (R-MI) have introduced a bill to amend the PPACA by removing agent and broker commissions from the MLR calculations. For further details, please click HERE to view NAHU’s release.

Note: Determining if an employer falls into small group versus large group is based on the total number of employees regardless of their eligibility for the health plan. For example, if five are eligible for the health plan, yet the employer also employs 80 part time and/or union employees, the employer would be in the large or 85% category. Some carriers are currently surveying employers to obtain this information.

In 2012, states must be aggressively planning how their exchange will look. Marketplace must have guidance early in 2012. The U.S. Department of Health and Human Services (HHS) Secretary must certify detailed operational progress by January 1, 2013 that states will be operational by January 1, 2014.

Following a recent (September 2011) District of Columbia-based meeting of officials from 46 states, the District of Columbia, and two territories, HHS announced additional details regarding the framework of a federal exchange. The federal fallback exchanges will be comprised of partnership options between states and the federal government when operating the state exchange marketplaces. The plan, called the “Affordable Insurance Exchange Partnership Options Initiative” offers states the choice of a permanent partnership or a temporary one serving as a transition step to a fully functional state-based exchange. Under the proposed federal framework model, states may choose one of three options: state plan management, state consumer assistance or both plan management as well as consumer assistance.

When choosing the plan management option, states will oversee the collection and analysis of plan information, monitoring and oversight of plans, and data collection and analysis. HHS would then coordinate with the state to handle plan oversight, including consumer complaints and any issues with enrollment reconciliation.

States selecting the consumer assistance functions would be responsible for overseeing in-person consumer assistance, management of the navigator program and conducting outreach and education for the exchange. Other functions such as call center operations, consumer website activities and written communication with consumers, and assisting in eligibility and enrollment would be operated by HHS.

HHS did make it clear that in states that adopt the federal framework, HHS would exercise the responsibility of ensuring the exchange meets all of the necessary standards.

In New York, Senate Insurance Chair Jim Seward and Senate Health Chair Kemp Hannon held a roundtable discussion on insurance exchanges the last week of April 2011. Ten representatives of stakeholder organizations were invited to participate. We will provide more information as this evolves and develops.

Following passage last year of the Patient Protection and Affordable Care Act (ACA), the State of New Jersey's Working Group on the ACA and the Rutgers University Center for State Health Policy (CSHP) sought information on the priorities the State of New Jersey should consider for implementation of key provisions of the ACA, and recently conducted a survey in May, 2011.

The Working Group - charged with planning New Jersey’s responses to the ACA - consists of senior officials from New Jersey’s Office of the Governor and selected state agencies. Under a planning grant from the U.S. Department of Health and Human Services, the State has contracted with CSHP to conduct a survey of interested stakeholders. CSHP will analyze the survey data and summarize the results which will be available to the public.

Click HERE to view the first four volumes in a series of reports by the CSHP prepared at the request of New Jersey’s Interagency Working Group on the ACA. These reports, funded by the Department of Banking and Insurance under a federal exchange planning grant, provide estimates of the impact of the ACA on health insurance eligibility and enrollment in the state and summarize stakeholder views about the design of exchanges for New Jersey.

Pennsylvania Act 147 states that only licensed producers can sell, solicit or negotiate contracts of insurance, but state lawmakers have discretion to make agents a marginal part of the equation if they so choose.

Alaska is the only state that has not as yet applied for funds to create a planning board.

The three proposed rules released by the Departments of Health and Human Services (HHS), and Treasury focus on the following:

These proposed rules are available for comment until October 26, 2011 (75 days from Federal Register posting date).

The departments expect to modify the proposed rules issued on August 12, 2011 based on the feedback received from the American people.

This provision would have required employers to submit a Form 1099 to the IRS for every vendor from which they purchase goods or services worth $600 or more. H.R. 4, which was passed by both the U.S. House of Representatives and the U.S. Senate, would repeal this tax reporting requirement. President Obama signed H.R. 4 on April 14, 2011.

Nondiscrimination Testing Delayed: Prohibition on Discrimination in Favor of Highly Compensated Individuals

This does not apply to grandfathered plans. Enforcement has been delayed until final guidance is released. For details, please click on this Quick Flash News article: http://www.savoyassociates.com/newsdetail.aspx?id=3676

The Patient Protection and Affordable Care Act (PPACA) created a mandatory reporting of the cost of employer-sponsored group health plan coverage. The Act had this provision as effective for taxable years beginning after 2010. As of October 2010, this requirement has been postponed for one year. Employers may want to comply earlier, but it is not mandatory until W-2 forms are due to be sent by January 31, 2013 for tax year 2012.

Employers are required to include on W-2 forms the aggregate cost of employer-sponsored health benefits for informational purposes only. The cost of benefits will not be included in the taxable income. If the employee receives health insurance coverage under multiple plans, the employer must disclose the aggregate value of all coverage, but exclude contributions to HSAs, Archer MSAs, and salary reduction contributions to FSAs.

The IRS has released the 2011 version of Form W-2 (Wage and Tax Statement) and related instructions. One change is the addition of new codes for Box 12 reporting, including a new code DD to be used for reporting the cost of employer-sponsored health coverage.

Important Update on W-2 Reporting - IRS Notice 2011-28, March 29, 2011

The IRS issued Notice 2011-28 on March 29, 2011 which provides guidance for employers on the 2012 Forms W-2 and those that choose to voluntarily comply earlier (on the 2011 Forms W-2 generally furnished to employees in January 2012). The notice includes information on how to report, what coverage to include and how to determine the cost of the coverage, and a Questions and Answers section. Click HERE to view IRS Notice 2011-28.

This new interim guidance states in Q&A No. 3 that transition relief applies to employers filing fewer than 250 Forms W-2. This applies until 2014.

Also, note in Q&A No. 6 that an employer is not required to report for employees who terminate and request their W-2 earlier than January of the following calendar year.

Subsequent guidance made such reporting optional for 2011. The instructions for employees on the back of Form W-2 include a reminder that the amount reported with Code DD is not taxable.

Click HERE to view the updated Form W-2 and instructions.

With respect to medicine and drug reimbursements under FSAs, HSAs and HRAs, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eyeglasses, contact lenses, copays and deductibles. The new standard applies only to purchases made on or after January 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer’s plan.

A similar rule goes into effect on January 1 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

"Donut Hole" Rebate for Medicare Recipients (who are not already receiving Medicare Extra Help)

Medicare recipients that reach the coverage gap this year and enter the "donut hole" or Medicare Part D coverage gap will receive a one-time $250 rebate check.

Rescissions/Federal Health Care Reform Restriction on Timing of Member Terminations, Effective September 23, 2010

Plan sponsors and insurers may only terminate a member’s coverage retroactively in specific circumstances. This affects all plans that are subject to the health care reform law, including individual, group, fully insured, self-funded, grandfathered and non-grandfathered plans. It is in effect as of each plan's first renewal or effective date after September 23, 2010.

Click HERE to learn what you and your customers need to know about the new rules concerning administrative retroactive terminations.

President Obama signed the final federal funding bill on April 15, 2011. The legislation, among other things, eliminated a provision in the Patient Protection and Affordable Care Act (PPACA) known as the Free Choice Voucher program. The provision was set to be implemented in 2014, along with the new state health care exchanges. The vouchers would have provided subsidies for certain employees to purchase health coverage through exchanges if their employer’s plan was defined as not affordable.

The Temporary Early Retiree Reinsurance Program is for employers that provide retiree health coverage for employees over age 55 who are not eligible for Medicare. This program reimburses employers retrospectively 80% of claims between $15,000 and $90,000. It was scheduled to end on January 1, 2014 and be financed by a $5 billion appropriation.

HHS announced on March 31, 2011 that the Early Retiree Reinsurance Program (ERRP) will stop accepting new applications effective May 6, 2011.

State high risk pools and Pre-Existing Condition Insurance Plans (PCIP) currently offer coverage for people that have been uninsured for six months and have a pre-existing condition.

For a comprehensive timeline of what will change from 2010 to 2014, please visit HealthCare.gov, which is managed by the U.S. Department of Health and Human Services.