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2+: Health Net's Health Care Reform Updates
Oct 25, 2013
The Affordable Care Act (ACA) was signed into law on March 23, 2010. Health Net continues working on the implementation of this legislation, commonly referred to as “health care reform.” For the purposes of your plan renewal there is some important information you need to know.
Please give beere&purves or Health Net a call if you have questions about how these issues may impact your health plan. Before making any new health care coverage decisions, we recommend you consult with your legal counsel and tax advisors to determine the best approach for your company in light of health care reform.
The topics are listed in alphabetical order. Not all ACA provisions are included. Unless otherwise noted, the changes will apply at your group’s first renewal occurring on or after the effective date specified.
Important Affordable Care Act (ACA) Information for Employers
Bona Fide Associations
- If your group is an Association, Multiple Employer Welfare Association (MEWA), Professional Employer Organization (PEO) or a Joint Power Authority (JPA), and you wish for your group to be treated as a single “employer” when determining large v. small group market, you must complete and return a Health Net Association attestation package available through your Health Net Representative.
Employer Shared Responsibility
- Effective January 1, 2014, plans may not deny a qualified individual from participation in an approved clinical trial.
- Plans may not deny, limit or impose additional conditions on coverage for routine patient costs provided in connection with participation in the clinical trial.
Essential Health Benefits
- On July 2, 2013, the Department of Treasury (DOT) announced that the employer shared responsibility will be delayed for one year, and will become effective January 1, 2015.
- Effective January 1, 2014, small group, individual and family plans must cover Essential Health Benefits items and services as defined under the ACA.
- Essential Health Benefits have been identified as a comprehensive package of items and services which fit in 10 categories:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services, and chronic disease management
- Pediatric services, including dental and vision care
Grandfathered Plan Status
- Large group grandfathered and non‐grandfathered plans are not required to include all 10 categories of Essential Health Benefits. However, effective upon the group’s renewal January 1, 2014 and later, if a large group plan does include an Essential Health Benefit, the plan may not impose a dollar limit on that benefit. Health Net will update your plan to be ACA compliant upon your renewal effective January 1, 2014 and later.
Guaranteed Issue and Renewability
- Group health plans that were in effect on March 23, 2010 and have not been significantly changed do not need to comply with certain health care reform provisions, such as no cost-sharing for preventive services.
- If one or more of your current plans have grandfathered status and you have not made or plan to make significant changes that reduce benefits or increase cost‐sharing for your employees, you may renew the grandfathered plan without losing grandfathered plan status.
- Please refer to Health Net’s flyer “Is your benefit plan a ‘grandfathered’ plan? Eight questions to help you find the answer” for an overview of changes that will trigger a loss of the plan’s grandfathered status.
- There are some health care reform changes, which grandfathered plans do not need to make; however, many plan changes, including increasing the employees’ medical premium contribution rates by more than 5 percentage points (since March 23, 2010), may cause your plan to lose grandfathered status. When a plan loses grandfathered status, it must comply with some additional health reform changes. Please carefully review the impacts of maintaining or losing grandfathered status when making your selections. If you renew your grandfathered plan, you are certifying that you have not made any changes, including increases to your employees' medical premium contribution rates, which would result in the loss of your plan's grandfather status.
- Please continue to notify Health Net of any future changes that may affect the grandfathered status of your plan(s), including changes in your contribution rates.
Lifetime Limits and Restrictions on Annual Limits
- Applies to new and renewing plans effective January 1, 2014 and later.
- Requires guarantee issue and renewability of health insurance.
- An issuer may discontinue or not renew group coverage if:
- The group has failed to pay premiums or contributions under the terms of the coverage or the issuer has not received timely premium payments;
- The group has “performed an act or practice that constitutes fraud,” or made an intentional misrepresentation of material fact under the terms of coverage;
- The group has failed to comply with a material plan provision that relates to employer contribution or group participation rules, under applicable state law;
- The issuer ceases to offer coverage in the market in accordance with the rules requiring uniform termination of coverage, and applicable state law;
- The issuer that offers health insurance coverage in the market through a network plan no longer has any enrollee in connection with the plan who lives, resides, or works in the issuer’s service area (or in the area in which the issuer is authorized to do business), and in the case of the small group market, the issuer would deny enrollment with regard to such plan under the special rules for network plans; or
- The health insurance coverage is made available in the small or large group market only through one or more bona fide associations and the membership of an employer in the association (based on which the coverage is provided), ceases, but only if the coverage is terminated uniformly without regard to any health status‐related factor related to any covered individual.
Medical Loss Ratio (MLR) Requirements
- Effective January 1, 2014, a group health plan cannot place lifetime limits on the dollar value of coverage.
- In addition, a group health plan cannot have annual limits on the dollar value of an Essential Health Benefit.
Notification of Exchange
- Beginning with the 2011 plan year, insurers are required to spend at least 80% of premium dollars on medical care and health care quality improvement for small groups and at least 85% for large groups.
- From time to time, Health Net may contact you to verify your company’s total number of employees, so that your group may be correctly identified as a small or large group for the purpose of the MLR calculations and reporting.
- All employers subject to FSLA Section 18 must provide written notice to all current employees about the health insurance exchange (also called the “Marketplace”) by October 1, 2013 and to each new employee at the time of hire (beginning October 1, 2013).
- The written notification must include information about the Marketplace and whether or not the employer’s lowest cost health plan meets minimum value and affordability standards as defined under ACA.
- A plan meets minimum value if it covers at least 60% of allowable costs, and is considered affordable if the employee’s share of the premium for the lowest cost plan available to the employee is not more than 9.5% of the employee’s W‐2 wages.
- Employers may use model notices provided by the Department of Labor to meet this requirement. Model notices are available at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf
Patient‐Centered Outcomes Research Institute
- Non‐grandfathered plans must meet the following requirements upon the group’s renewal effective January 1, 2014 and later:
- The out-of-pocket maximum may not be greater than the limit for HSA compatible plans. In 2014, the out-of-pocket maximum may not be greater than $6,350 for an individual or $12,700 for a family.
- Deductibles, copayment and coinsurance for all medical benefits, including mental health and chiropractic benefits, must accumulate toward the member’s out-of-pocket maximum.
(PCORI)/Comparative/Effectiveness Research Fee
- For plan years ending on or after October 1, 2012, the ACA imposes a fee of $1 per member/year on health insurers.
- The fee increases to $2 per member/year for plan years beginning October 1, 2013.
- The fee applies to grandfathered and non‐grandfathered plans.
- For fully insured health plans, Health Net includes the PCORI fee as part of your premium and submits the fee to the IRS on your behalf.
Probationary Period/Waiting Period
- Effective upon renewal on or after January 1, 2014, plans are prohibited from excluding coverage for any eligible enrollee, regardless of age, health status, or pre‐existing conditions.
- Previously, health plans could not impose pre‐existing condition exclusion on children under 19 years old for plan years beginning on or after September 23, 2010.
- This change applies to all grandfathered and non‐grandfathered plans.
Summary of Benefits and Coverage (SBC) and Uniform Glossary
- Effective upon renewal on or after January 1, 2014, federal law requires that the waiting/probationary period cannot exceed 90 days.
- California state law further requires that the probationary period cannot exceed 60 days [CA AB 1083 (2012)].
- Groups that have a waiting period that falls outside the new limits must change their waiting period at renewal. The new provision applies to both grandfathered and non‐grandfathered plans.
Refer to the flyer “Ensure Your Employees Understand Their Health Care
" for instructions on printing and distributing the SBCs to your employees and dependents.
Taxes and Fees
- Last year, Health Net began providing SBCs to new and renewing groups with plans that are effective September 23, 2102 and later.
- Health Net will provide an electronic copy of the SBC to you upon your group’s renewal or plan change for you to distribute to your employees as required under the ACA. A printed copy of the SBC is available upon request.
- For plans effective January 1, 2014 and later, Health Net will use the new SBC template (issued by DOL on April 23, 2013), which includes information if the plan meets minimum value standards and minimum essential coverage. (In most cases, Health Net plans will meet minimum value standards and minimum essential coverage).
- Effective January 1, 2014, two new fees, the Health Insurance Tax and the Transitional Reinsurance Risk Pool Assessment Fee, will be collected to fund specific programs under the health care reform law.
- For renewing business in 2013, an adjustment to premiums will be made for ACA‐related fees that are attributable only to calendar year 2014. Since the policy periods for new and renewal business may include revenue and enrollment from two different calendar years, Health Net has elected to prorate, or smooth, the Health Insurance and Reinsurance Contribution fees over the full 12‐month policy period by applying a constant load factor for these fees over the 12‐month period.
- The fees apply to grandfathered and non‐grandfathered plans.
- Employers may offer employees rewards of up to 30%, potentially increasing to 50%, of the cost of coverage for participating in a wellness program and for meeting certain health‐related standards.
- If certain conditions are met, health plans may provide a discount or rebate when an individual satisfies a standard related to a health factor.
- Beginning with 2012 W‐2 forms distributed in January of 2013, employers who file 250 or more employee W‐2 forms are required to report the cost of employees’ health benefit coverage on the employee’s W‐2 form.
For assistance with health care reform updates or Health Net plan selection, contact your b&p Sales Team - 888.722.3373.